REGISTERED NUMBER: 03167858 (England and Wales)

LOGAN CONSTRUCTION (SOUTH EAST) LTD

STRATEGIC REPORT, REPORT OF THE DIRECTORS AND

FINANCIAL STATEMENTS

FOR THE YEAR ENDED 30 JUNE 2025

Page

Company Information

1

Strategic Report

2

Report of the Directors

5

Report of the Independent Auditors

8

Income Statement

11

Other Comprehensive Income

12

Balance Sheet

13

Statement of Changes in Equity

14

Cash Flow Statement

15

Notes to the Cash Flow Statement

16

Notes to the Financial Statements

17

DIRECTORS:

W P Logan Snr

W P Logan Jnr

S Bunyan

A D Kemp

J D Thorp

SECRETARY:

M M Logan

REGISTERED OFFICE:

Unit 7 Business Park

238 Green Lane

Eltham

London

SE9 3TL

BUSINESS ADDRESS:

Unit 1 Logan Buiness Centre

92-100 Upper Stone Street

Maidstone

Kent

ME15 6HD

REGISTERED NUMBER:

03167858 (England and Wales)

AUDITORS:

Lakeview Southern Audit Limited

Chartered Accountants and

Statutory Auditors

2 Lakeview Stables

Lower St. Clere

Kemsing

Sevenoaks

Kent

TN15 6NL

The directors present their strategic report for the year ended 30 June 2025.

REVIEW OF BUSINESS

The Company exceeded budget expectations during the year ended 2025, demonstrating an ability to expand its geographical coverage and capitalise on its strong market brand within the healthcare sector to secure larger value project opportunities. An emphasis remains on selective tendering with a focus to retain stability and resilience in managing changing market conditions and construction-related risks. The Directors are satisfied with the Company's performance for the year and its financial position at the year end.

The Company continued to deliver projects using a non-adversarial, open-book approach, supported by transparent and structured communication with clients and supply chain partners. A disciplined approach to credit control, bid selection, and risk profiling was maintained across all new business opportunities within the Company's chosen market sectors.

Operational performance continues to be underpinned by accreditation to ISO 9001 (Quality), ISO 14001 (Environmental Management), and ISO 18001 (Health & Safety), supporting strong governance, compliance, and continual improvement. The business remains well positioned to respond to prevailing market and economic conditions.

Financial Performance

The Company maintains strong internal financial controls and procedures to support effective monitoring of performance, risk profiling, and the management of obligations across the business.

(£   's) 2025 2024

Revenue 61,021 45,609

Gross Profit 16,748 10,598

Net Profit After Tax 5,348 3,065

Revenue increased 32% from £45.6m in FYE 2024 to £61.0m in FYE 2025, reflecting a strategic focus on targeting selected larger value projects to underpin growth objectives. The Company continues to target selected higher-value contracts, supported by a balanced portfolio of medium and smaller contract values in line with its business model.

Gross profit margin increased to 27.3% in FYE 2025 (2024: 23.2%). This improvement was driven by effective risk management through project deliveries along with more stable market conditions, reduced inflationary volatility, and the successful close-out of several legacy project final accounts. As a result, profitability returned to levels more consistent with those achieved in earlier financial periods.

The Company exceeded its anticipated profit levels for the year.

PRINCIPAL RISKS AND UNCERTAINTIES

The Company continues to identify, assess, and manage risks to support sustainable long-term performance. The Directors take a balanced and informed approach to decision-making and are not influenced by short-term revenue targets or external pressures.

Key principal risks and uncertainties:

Supply Chain Risk

The construction sector continues to experience elevated levels of insolvency across supply chains. While the Company supports its supply chain through prompt payment and fair commercial practices, it recognises that suppliers may have external exposures beyond its control. Increased engagement and monitoring of supply chain partners is undertaken to mitigate risk and ensure delivery capability.

Regulatory Risk - Building Safety Act 2022

The Company continues to embed the requirements of the Building Safety Act 2022 into its procurement and project delivery processes. This includes enhanced documentation, compliance monitoring, and staff training. The Company recognises that additional regulatory requirements may impact programme delivery, costs, and project viability.

Economic and Market Conditions

The Company is exposed to wider macro-economic uncertainty. However, active pipeline management, cost control, and a strong understanding of the fixed cost base support the Company's ability to adapt to changing conditions.

Contract and Delivery Risk

The Company closely monitors contract performance, commercial exposure, and delivery risk through structured reporting and review processes. A collaborative approach with clients is maintained, while avoiding unreasonable or unquantifiable risk transfer.

SECTION 172(1) STATEMENT

In the decisions taken by the Board, the Directors consider, both individually and together, that they have acted in such a way as they consider, in good faith, would be most likely to promote the success of the Company for the benefit of its members as a whole, and in doing so have regard (amongst other matters) to:

(a) the likely consequences of any decision in the long term;

(b) the interests of the Company's employees;

(c) the need to foster the Company's business relationships with suppliers, customers and others;

(d) the impact of the Company's operations on the community and the environment;

(e) the desirability of the company maintaining a reputation for high standards of business conduct; and

(f) the need to act fairly as between members of the Company.

FINANCIAL POSITION AND GOING CONCERN

The Company remains financially robust, supported by a strong balance sheet, good liquidity, and cash reserves. The Directors consider the Company to be well positioned to meet its obligations as they fall due and to continue as a going concern.

Non-Financial Matters

Health and Safety

The Company continues to prioritise health and safety through investment in systems, training, and technology. High standards are embedded across operations and throughout the approved supply chain.

Environmental Matters and Net Zero

The Company has published a Carbon Reduction Plan and is committed to achieving net zero carbon emissions across scopes 1, 2, and 3 in line with UK Government guidance.

Social Responsibility

The Company is committed to delivering positive social value in the communities in which it operates. It works collaboratively with clients and uses recognised social value reporting frameworks to monitor and report outcomes.

Future Prospects

The Company will continue to focus on disciplined growth within its chosen sectors, maintaining strong governance, financial control, and risk management. The Directors remain confident in the Company's ability to adapt to market conditions while delivering sustainable value for clients, employees, and stakeholders.

ON BEHALF OF THE BOARD:

W P Logan Jnr - Director

12 January 2026

The directors present their report with the financial statements of the company for the year ended 30 June 2025.

PRINCIPAL ACTIVITY

The principal activity of the Company during the year continued to be that of a Principal Contractor, delivering construction and restoration works predominantly for public sector clients across the Health & Science, Education, Community, and wider Public Service sectors.

DIVIDENDS

No dividends will be distributed for the year ended 30 June 2025.

DIRECTORS

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

W P Logan Snr

W P Logan Jnr

S Bunyan

A D Kemp

J D Thorp

POLITICAL DONATIONS AND EXPENDITURE

Charitable donations amounting to £2,567 were made in the year.

DIRECTORS' INSURANCE

The company had in place qualifying third party indemnity provisions by way of directors' and officers' liability insurance compliant with the requirements of the Companies Act 2006, for the benefit of the company, the directors and its officers, throughout the year and ongoing.

ENGAGEMENT WITH SUPPLIERS, CUSTOMERS AND OTHERS

The directors have had regard to the need to foster business relationships with suppliers, customers and others, which has been reflected in the principal decisions they have taken during the year, as outlined throughout the Strategic Report.

STREAMLINED ENERGY AND CARBON REPORTING

Introduction

The below statement contains Logan Construction's annual energy consumption, associated relevant greenhouse gas emissions, and additional related information, as required under the Companies (Directors’ Report) and Limited Liability Partnerships (Energy and Carbon Report) Regulations 2018.

Methodology

The methodology applied to the calculation of Greenhouse Gas emissions is the ‘GHG Protocol Corporate Accounting and Reporting Standard’. An ‘operational control’ boundary has been applied. Carbon conversion factors have been taken from ‘UK Government GHG Conversion Factors for Company Reporting – 2025’. Emissions are reported as CO2e. Scope 2 emissions have been reported as ‘location based’ and ‘market based’.

Energy Use and Greenhouse Gas Emissions

The table below shows the total annual UK energy use and emissions associated with the operation of buildings and fuel consumed for relevant business transport purposes, for the period 1st July 2024 – 30th June 2025 and a comparison with 2023-24.

Table - Energy Consumption and Emissions

2024-25

2023-24

24-25 vs 23-24 % change

On-site combustion (kWh)

72,303

87,002

-16.9%

Electricity (kWh)

66,710

66,327

0.6%

Road Transport (kWh)

256,977

263,705

-2.6%

Total Energy (kWh)

395,990

417,034

-5.0%

Scope 1 Emissions (tCO2e)

63.4

61.2

3.5%

Scope 2 Location Based Emissions (tCO2e)

11.8

13.7

-13.9%

Scope 2 Market Based Emissions (tCO2e)

1.8

9.0

-80%

Scope 3 Emissions (tCO2e)

16.0

22.8

-29.9%

Total Market Based Emissions (tCO2e)

81.2

93.0

-12.7%

Emissions Intensity (tCO2e/FTE)

1.2

1.3

-7.7%

Emissions Intensity

For purposes of baselining and ongoing comparison, it is required to express the emissions using a carbon intensity metric. The intensity metric chosen is staff numbers in FTE. The resultant emissions intensity is 1.2 tCO2e/FTE.

Energy Efficiency Action

Several energy efficiency actions have been taken by Logan Construction in the reporting year. One of the two boilers in the Eltham office was removed, and the remaining one was upgraded to improve its efficiency. In addition to this, business travel has been reduced through the increased use of video calls for site and client meetings instead of physically visiting them. This has also allowed for a reduction in van fleet size. From September 2024 onwards, both sites changed their electricity to a renewable energy provider which has drastically reduced market-based emissions.

DIRECTORS' RESPONSIBILITIES STATEMENT

The directors are responsible for preparing the 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 of the profit or loss of the company 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;

-	state whether applicable accounting standards have been followed, subject to any material departures disclosed and explained in the financial statements;

-	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 transactions and disclose with reasonable accuracy at any time the financial position of the company 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 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 company'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 company's auditors are aware of that information.

AUDITORS

The auditors, Lakeview Southern Audit Limited, will be proposed for re-appointment at the forthcoming Annual General Meeting.

ON BEHALF OF THE BOARD:

W P Logan Jnr - Director

12 January 2026

Opinion

We have audited the financial statements of Logan Construction (South East) Ltd (the 'company') for the year ended 30 June 2025 which comprise the Income Statement, Other Comprehensive Income, Balance Sheet, Statement of Changes in Equity, Cash Flow Statement and Notes to the 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 company's affairs as at 30 June 2025 and of its 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 company 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 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 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 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 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 company and its environment obtained in the course of the audit, we have not identified material misstatements in the 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, or returns adequate for our audit have not been received from branches not visited by us; or

-	the 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 six, 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 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 company or to cease operations, or have no realistic alternative but to do so.

Auditors' responsibilities for the audit of the financial statements

Our objectives are to obtain reasonable assurance about whether the financial statements as a whole are free from material misstatement, whether due to fraud or error, and to issue a Report of the Auditors that includes our opinion. Reasonable assurance is a high level of assurance, but is not a guarantee that an audit conducted in accordance with ISAs (UK) will always detect a material misstatement when it exists. Misstatements can arise from fraud or error and are considered material if, individually or in the aggregate, they could reasonably be expected to influence the economic decisions of users taken on the basis of these financial statements.

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

We considered the central laws and regulations to the entity and identified those being of significance. We undertook an enquiry of management and those charged with governance to evaluate those of significance and any instances of non-compliance.

Through discussion and, where appropriate, written representation we obtained an understanding of the entity's policies and procedures in relation to fraud risks, including knowledge of any actual, suspected or alleged fraud.

The Senior Statutory Auditor has assessed that the engagement team collectively have the appropriate competence and capabilities to identify or recognise non-compliance with laws and regulations within the areas that they are responsible for testing.

Where necessary, documentation scrutiny was used to determine the significance of any instances with non-compliance of central laws and regulations and reviewed disclosures made in the financial statements to ensure these were appropriately made. We also reviewed the journals processed by the finance team and reviewed all transactions outside the normal course of the entity's business.

We communicated relevant identified laws and regulations and potential fraud risks to all engagement team members and remained alert to any indications of fraud or non-compliance with laws and regulations throughout the audit.

Irregularities that result from fraud are inherently more difficult to detect from irregularities that result from error.

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.

Adrian Hull (Senior Statutory Auditor)

for and on behalf of Lakeview Southern Audit Limited

Chartered Accountants and

Statutory Auditors

2 Lakeview Stables

Lower St. Clere

Kemsing

Sevenoaks

Kent

TN15 6NL

12 January 2026

TURNOVER

4

61,020,789

45,608,652

Cost of sales

44,272,804

35,010,593

GROSS PROFIT

16,747,985

10,598,059

Administrative expenses

10,341,629

6,876,122

6,406,356

3,721,937

Other operating income

79

55

OPERATING PROFIT

6

6,406,435

3,721,992

Interest receivable and similar income

744,059

390,564

7,150,494

4,112,556

Interest payable and similar expenses

7

5,516

-

PROFIT BEFORE TAXATION

7,144,978

4,112,556

Tax on profit

8

1,797,225

1,047,677

PROFIT FOR THE FINANCIAL YEAR

5,347,753

3,064,879

PROFIT FOR THE YEAR

5,347,753

3,064,879

OTHER COMPREHENSIVE INCOME

-

-

TOTAL COMPREHENSIVE INCOME FOR THE YEAR

5,347,753

3,064,879

FIXED ASSETS

Tangible assets

9

88,589

73,699

CURRENT ASSETS

Stocks

10

6,896

5,850

Debtors

11

11,047,268

7,453,773

Investments

12

11,164,198

12,236,759

Cash at bank and in hand

17,752,017

4,746,667

39,970,379

24,443,049

CREDITORS: AMOUNTS FALLING DUE WITHIN ONE YEAR

13

22,568,928

12,378,183

NET CURRENT ASSETS

17,401,451

12,064,866

TOTAL ASSETS LESS CURRENT LIABILITIES

17,490,040

12,138,565

PROVISIONS FOR LIABILITIES

15

22,147

18,425

NET ASSETS

17,467,893

12,120,140

CAPITAL AND RESERVES

Called up share capital

16

3,000

3,000

Retained earnings

17

17,464,893

12,117,140

SHAREHOLDERS' FUNDS

17,467,893

12,120,140

The financial statements were approved by the Board of Directors and authorised for issue on 12 January 2026 and were signed on its behalf by:

W P Logan Jnr - Director

Called up

share

Retained

Total

capital

earnings

equity

£

£

£

Balance at 1 July 2023

3,000

9,052,261

9,055,261

Changes in equity

Total comprehensive income

-

3,064,879

3,064,879

Balance at 30 June 2024

3,000

12,117,140

12,120,140

Changes in equity

Total comprehensive income

-

5,347,753

5,347,753

Balance at 30 June 2025

3,000

17,464,893

17,467,893

Cash flows from operating activities

Cash generated from operations

1

12,167,663

5,011,227

Finance costs paid

(5,516

)

-

Tax paid

(936,761

)

(762,049

)

Net cash from operating activities

11,225,386

4,249,178

Cash flows from investing activities

Purchase of tangible fixed assets

(36,655

)

-

Purchase of current asset investments

-

(8,000,000

)

Sale of current asset investments

1,000,000

-

Interest received

816,619

228,237

Net cash from investing activities

1,779,964

(7,771,763

)

Increase/(decrease) in cash and cash equivalents

13,005,350

(3,522,585

)

Cash and cash equivalents at beginning of year

2

4,746,667

8,269,252

Cash and cash equivalents at end of year

2

17,752,017

4,746,667

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

30.6.25

30.6.24

£

£

Profit before taxation

7,144,978

4,112,556

Depreciation charges

21,766

32,018

Finance costs

5,516

-

Finance income

(744,059

)

(390,564

)

6,428,201

3,754,010

(Increase)/decrease in stocks

(1,046

)

1,634

(Increase)/decrease in trade and other debtors

(3,593,495

)

3,410,390

Increase/(decrease) in trade and other creditors

9,334,003

(2,154,807

)

Cash generated from operations

12,167,663

5,011,227

2.	CASH AND CASH EQUIVALENTS

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

Year ended 30 June 2025

30.6.25

1.7.24

£

£

Cash and cash equivalents

17,752,017

4,746,667

Year ended 30 June 2024

30.6.24

1.7.23

£

£

Cash and cash equivalents

4,746,667

8,269,252

Cash equivalents includes rolling one month treasury deposits amounting to a total of £10,000,000.

3.	ANALYSIS OF CHANGES IN NET FUNDS

At 1.7.24

Cash flow

At 30.6.25

£

£

£

Net cash

Cash at bank and in hand

4,746,667

13,005,350

17,752,017

4,746,667

13,005,350

17,752,017

Liquid resources

Current asset investments

12,236,759

(1,072,561

)

11,164,198

12,236,759

(1,072,561

)

11,164,198

Total

16,983,426

11,932,789

28,916,215

1.	STATUTORY INFORMATION

Logan Construction (South East) Ltd is a private company, limited by shares, registered in England and Wales. The registered office is Unit 7 Business Park, 238 Green Lane, Eltham, London SE9 3TL.

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.

Revenue

Revenue 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.

When cash inflows are deferred and represent a financing arrangement, the fair value of the consideration is the present value of the future receipts. The difference between the fair value of the consideration and the nominal amount received is recognised as interest income.

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 and costs from construction contracts are 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 agreed valuations and costs incurred in relation to labour and materials at the year end, to the final anticipated outcome. A prudent approach is taken when recognising profits in respect of ongoing contracts. 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. When it is probable that contract costs will exceed the total contract turnover, the expected loss is recognised as an expense immediately.

Property, plant and equipment

Depreciation is provided at the following annual rates in order to write off each asset over its estimated useful life.

Plant and machinery

-

25% on cost

Motor vehicles

-

25% on reducing balance

Property, plant and equipment are initially measured at cost and subsequently measured at cost or valuation, net of depreciation and any impairment losses.

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

Stock

Stock is 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 inventories to their present location and condition.

Stock 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.

Financial instruments

At each reporting date, an assessment is made for impairment. Any excess of the carrying amount of over its stock estimated selling price less costs to complete and sell is recognised as an impairment loss in profit or loss. Reversals of impairment losses are also recognised in profit or loss.

The company has elected to apply the provisions of Section 11 'Basic Financial Instruments' and Section 12 'Other Financial Instruments Issues' of FRS 102 to all of its financial instruments.

Financial instruments are recognised in the company's statement of financial position when the company becomes party to the contractual provisions of the instrument.

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

Other financial assets

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

Impairment of financial assets

Financial assets, other than those held at fair value through profit and loss, are assessed for indicators of impairment at each reporting end date.

Financial assets are impaired where there is objective evidence that, as a result of one or more events that occurred after the initial recognition of the financial asset, the estimated future cash flows have been affected. 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 a 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.

Derecognition of financial assets

Financial assets are derecognised only when the contractual rights to the cash flows from the asset expire or are settled, or when the company transfers the financial asset and substantially all the risks and rewards of ownership to another entity, or if some significant risks and rewards of ownership are retained but control of the asset has transferred to another party that is able to sell the asset in its entirety to an unrelated third party.

Basic financial liabilities

Basic financial liabilities, including trade and other payables, bank loans, loans from fellow group companies and preference shares that are classified as debt, 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. Financial liabilities classified as payable within one year are not amortised.

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. Amounts 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.

Other financial liabilities

Derivatives, including interest rate swaps and forward foreign exchange contracts, are not basic financial instruments. Derivatives are initially recognised at fair value on the date a derivative contract is entered into and are subsequently re-measured at their fair value. Changes in the fair value of derivatives are recognised in profit or loss in finance costs or finance income as appropriate, unless hedge accounting is applied and the hedge is a cash flow hedge.

Debt instruments that do not meet the conditions in FRS 102 paragraph 11.9 are subsequently measured at fair value through profit or loss. Debt instruments may be designated as being measured at fair value through profit or loss to eliminate or reduce an accounting mismatch or if the instruments are measured and their performance evaluated on a fair value basis in accordance with a documented risk management or investment strategy.

Derecognition of financial liabilities

Financial liabilities are derecognised when the company's contractual obligations expire or are discharged or cancelled.

Changes in the fair value of derivatives that are designated and qualify as fair value hedges are recognised in profit or loss immediately, together with any changes in the fair value of the hedged asset or liability that are attributable to the hedged risk.

Taxation

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

Current or deferred taxation assets and liabilities are not discounted.

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

Deferred tax

Deferred tax liabilities are generally recognised for all timing differences and deferred tax assets are recognised to the extent that it is probable that they will be recovered against the reversal of deferred tax liabilities or other future taxable profits. Such assets and liabilities are not recognised if the timing difference arises from goodwill or from the initial recognition of other assets and liabilities in a transaction that affects neither the tax profit nor the accounting profit.

The carrying amount of deferred tax assets is reviewed at each reporting end date and reduced to the extent that it is no longer probable that sufficient taxable profits will be available to allow all or part of the asset to be recovered.

Deferred tax is calculated at the tax rates that are expected to apply in the period when the liability is settled or the asset is realised. Deferred tax is charged or credited in the income statement, except when it relates to items charged or credited directly to equity in which case the deferred tax is also dealt with in equity. Deferred tax assets and liabilities are offset when the company has a legally enforceable right to offset current tax assets and liabilities and the deferred tax assets and liabilities relate to taxes levied by the same tax authority.

Retirement benefits

Payments to defined contribution retirement benefit schemes are charged as an expense as they fall due.

Cash and cash equivalents

Cash and cash equivalents are basic financial assets and include cash in hand, deposits held at call with banks, other short-term liquid investments with original maturities of three months or less, and bank overdrafts. Bank overdrafts are shown within borrowings in current liabilities.

Provisions

Provisions are recognised when the company has a legal or constructive present obligation as a result of a past event, it is probable that the company will be required to settle that obligation and a reliable estimate can be made of the amount of the obligation.

The amount recognised as a provision is the best estimate of the consideration required to settle the present obligation at the reporting end date, taking into account the risks and uncertainties surrounding the obligation. Where the effect of the time value of money is material, the amount expected to be required to settle the obligation is recognised at present value. When a provision is measured at present value, the unwinding of the discount is recognised as a finance cost in profit or loss in the period in which it arises.

Employee benefits

The costs of short-term employee benefits are recognised as a liability and an expense, unless those costs are required to be recognised as part of the cost of stock or non-current assets.

The cost of any unused holiday entitlement is recognised in the period in which the employee's services are received.

Termination benefits are recognised immediately as an expense when the company is demonstrably committed to terminate the employment of an employee or to provide termination benefits.

Retirement Benefits

Payments to defined contribution retirement benefit schemes are charged as an expense as they fall due.