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| 2. |
Summary of Significant Accounting Policies |
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The following accounting policies have been applied consistently in dealing with items which are considered material in relation to the company's financial statements. |
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Statement of compliance |
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These financial statements have been prepared in compliance with Section 1A of FRS 102, ‘The Financial Reporting Standard applicable in the UK and the Republic of Ireland‘. |
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Basis of preparation |
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The financial statements have been prepared on the historical cost basis, as modified by the revaluation of certain financial assets and liabilities and investment properties measured at fair value through profit or loss. The financial statements are prepared in sterling, which is the functional currency of the entity. |
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Turnover |
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Turnover is measured at the fair value of the consideration received or receivable for goods supplied and services rendered, net of discounts and Value Added Tax. Revenue from the sale of goods is recognised when the significant risks and rewards of ownership have transferred to the buyer (usually on despatch of the goods); the amount of revenue can be measured reliably; it is probably that the associated economic benefits will flow to the entity; and the costs incurred or to be incurred in respect of the transactions can be measured reliably. |
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Financial instruments |
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The company has elected to apply the provisions of Section 11 ‘Basic Financial Instruments’ of FRS 102. Trade and other debtors and creditors are initially recognised at transaction price and subsequently measured at amortised cost. The company does not hold or issue any complex financial instruments. |
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Tangible assets and depreciation |
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Tangible assets are stated at cost or at valuation, less accumulated depreciation. Cost comprises purchase price and other directly attributable costs. The charge to depreciation is calculated to write off the original cost or valuation of tangible assets, less their estimated residual value, over their expected useful lives as follows: |
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Short leasehold property |
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20% Straight line |
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Plant and machinery |
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25% Reducing balance |
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Fixtures, fittings and equipment |
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20% Straight line |
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Equipment |
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33% Straight line |
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A review for indicators of impairment of tangible fixed assets is carried out at each reporting date. Where the carrying value exceeds the recoverable amount, an impairment loss is recognised in profit or loss. |
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Stocks |
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Stocks are measured at the lower of cost and estimated selling price less costs to complete and sell. Cost includes all costs of purchase, costs of conversion and other costs incurred in bringing the stock to its present location and condition. |
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Trade and other debtors |
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Trade and other debtors are initially recognised at fair value and thereafter stated at amortised cost using the effective interest method less impairment losses for bad and doubtful debts except where the effect of discounting would be immaterial. In such cases the receivables are stated at cost less impairment losses for bad and doubtful debts. |
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Cash and cash equivalents |
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Cash and cash equivalents comprise cash at bank and in hand, demand deposits with banks and other short-term highly liquid investments with original maturities of three months or less and bank overdrafts. In the Abridged Statement of Financial Position bank overdrafts are shown within Creditors. |
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Trade and other creditors |
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Trade and other creditors are initially recognised at fair value and thereafter stated at amortised cost using the effective interest rate method, unless the effect of discounting would be immaterial, in which case they are stated at cost. |
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Taxation and deferred taxation |
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The taxation expense represents the aggregate amount of current and deferred tax recognised in the reporting period. Tax is recognised in profit or loss, except to the extent that it relates to items recognised in other comprehensive income or directly in equity, respectively. Current tax is recognised on taxable profit for the current and past periods. Current tax is measured at the amounts of tax expected to pay or recover using the tax rates and laws that have been enacted or substantively enacted at the reporting date. Deferred tax is recognised in respect of all timing differences at the reporting date. Unrelieved tax losses and other deferred tax assets are recognised to the extent that it is probably that they will be recovered against the reversal of deferred tax liabilities or future taxable profits. Deferred tax is measured using the tax rates and laws that have been enacted or substantively enacted by the reporting date that are expected to apply to the reversal of the timing difference. |
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Dividends |
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Dividends are recognised as a liability when they are appropriately authorised and no longer at the discretion of the Company. Final dividends are recognised when approved by the shareholders; interim dividends are recognised when paid. Dividends are paid only from distributable reserves after consideration of the Company’s cash requirements and overall financial position. |
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Foreign currencies |
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Foreign currency transactions are initially recorded in the functional currency, by applying the spot exchange rate as at the date of the transaction. Monetary assets and liabilities denominated in foreign currencies are translated at the exchange rate ruling at the reporting date, with any gains or losses being taken to the profit and loss account. |
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Pensions |
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The company operates a defined contribution pension scheme for employees. The assets of the scheme are held separately from those of the company. Annual contributions payable to the company's pension scheme are charged to the Statement of Income and Retained Earnings in the period to which they relate. |
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Ordinary share capital |
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The ordinary share capital of the company is presented as equity. |