REGISTERED NUMBER: NI019798 (Northern Ireland)

STRATHROY DAIRY LIMITED

Strategic Report, Directors' Report and

Financial Statements for the Year Ended 31 July 2025

Page

Company Information

1

Strategic Report

2

Directors' Report

5

Independent Auditors' Report

8

Income Statement

12

Statement of Financial Position

13

Statement of Changes in Equity

14

Statement of Cash Flows

15

Notes to the Statement of Cash Flows

16

Notes to the Financial Statements

17

DIRECTORS:

Patrick Cunningham

Ruairi Cunningham

Aidan McCarron

Kate McMahon

REGISTERED OFFICE:

Shergrim

Mountjoy East

Omagh

Co. Tyrone

BT79 7JD

REGISTERED NUMBER:

NI019798 (Northern Ireland)

INDEPENDENT AUDITORS:

Cooper Parry Audit (Ireland) Limited

Statutory Auditor

Unit 7 Dyehouse

Linen Green

Dungannon

Co. Tyrone

BT71 7HB

BANKERS:

Bank of Ireland

25 Campsie Road

Omagh

Co. Tyrone

BT79 0AE

SOLICITORS:

Logan & Corry Solicitors

24 Dublin Road

Omagh

Co. Tyrone

BT78 1HE

PRINCIPAL ACTIVITIES

The principal activity of the company is the production and distribution of milk and dairy products.

REVIEW OF BUSINESS AND PERFORMANCE

The directors aim to present a balanced and comprehensive view of the development and performance of the company during the year and its position at the year end. The review is consistent with the size and nature of the company and is written in the context of the risks and uncertainties faced.

An analysis of the key performance indicators of the business are presented below. The directors are satisfied with the performance of the company in the year. The directors continue to monitor costs on an ongoing basis.

Revenue during the year increased from £134,701,209 to £176,048,013 whilst gross profit decreased from £11,581,449 to £9,746,479. The company's net asset position also increased during the year from £10,665,376 to £11,120,004.

The Key Performance Indicators during the year were as follows:

2025

2024

£

£

Revenue

176,048,013

134,701,209

Gross profit

5.54%

8.60%

Shareholders' funds

11,120,004

10,665,376

Average number of employees

163

165

PRINCIPAL RISKS AND UNCERTAINTIES

The main risks from the company's operations are competition, food and product safety and inflationary cost pressures. The directors review and agree policies for managing each of these risks and they are summarised below.

Competition risk:

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

Food and product safety:

The directors are aware that, if they fail to deliver excellent standards of hygiene and safety in their products, there is a potential to harm customers and damage the business' reputation. Food safety is of paramount importance.

Inflationary cost pressures:

Producers continue to be exposed to pressures created by ongoing world events, 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.

SECTION 172(1) STATEMENT

The directors must act in accordance with their duties under the Companies Act 2006 ("The Act"). These include: a fundamental duty to promote the success of the company for the benefit of its members and stakeholders. This duty has been central to the Board's decision-making processes and outcomes. The information which follows below describes how, in performing their duties during the year, the Directors have had regard to the matters set out in Section 172 (I) (a) to (f) of the Act and constitutes the Board's Section 172 Statement for the year ended 31 July 2025.

How stakeholder interests have influenced decision making

Stakeholder engagement across a broad-spectrum including employees, supply chain, customer base, communities and environment is of paramount importance to the directors. As part of the decision-making process by directors, the outcomes of this engagement, together with the requirement to maintain high standards of ethical conduct are duly considered.

Employees

People remain a key priority, and the company continues to ensure their health and safety and to invest in their training and development. In the last year there has been a continued focus on wellbeing, with the introduction of further initiatives in this important area. Regular communication with employees is conveyed through various formal and informal platforms including meetings, surveys, appraisals, and internal newsletters.

Suppliers

Our supply chain plays a critical role in the delivery of our quality product. Key relationships are managed via in-person meetings and regular supplier visits.

Customers

Successful company activity centres on the delivery of high-quality products to our diversified consumer base. Continued focus concentrates on customer satisfaction and further engagement is undertaken via social media.

Lenders

The company continues to engage with investors and lenders through regular meetings and dialogue. We meet regulatory reporting requirements promptly and performance information is provided monthly to investors and lenders.

STRATEGY

The company's success is dependent on the ongoing management of business risk. The directors continue to work closely with suppliers, customers, staff and financial institutions to carefully manage the company's operations.

BUSINESS ENVIRONMENT

The dairy sector in Northern Ireland is currently facing challenging times. The company has responded to this trading environment by improving operational efficiencies so that a competitive price is still being offered to suppliers.

FUTURE DEVELOPMENTS

The directors are committed to long term creation of shareholder value by increasing its market share in the market. The directors are confident that their strategy will result in continued growth and profitability.

ENVIRONMENT

The Company recognises its corporate responsibility to carry out its operations whilst ensuring that there is minimal environmental impact. The directors continued aim is to comply with all applicable environmental legislation, prevent pollution and reduce wastage wherever possible.

ON BEHALF OF THE BOARD:

Patrick Cunningham - Director

24 April 2026

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

FINANCIAL RISK MANAGEMENT

The company`s operations expose them to a variety of financial risks that include price risk, foreign currency risk, credit risk, liquidity risk and Interest rate risk.

Price risk

The company is exposed to commodity price risk because of its operations, with on-going inflationary pressures due to a myriad of factors. However, given the size of the company's operations, the costs of managing exposure to commodity price risk exceed any potential benefits. The directors will revisit the appropriateness of this policy should the company's operations change in size or nature.

Foreign currency risk:

The company's exposure to foreign currency risk arises primarily from revenues received in Euro. However, the company also has expenditure in Euro which minimises the risk.

Credit risk:

Credit risk arises primarily on third party derived revenues. Company policy is aimed at minimising such risk through the application of satisfactory creditworthiness procedures.

Liquidity risk:

The company's liquidity risk is managed by the company's senior finance management through daily assessment of required cash levels and resultant utilisation of available bank facilities.

Interest rate risk:

The company has both interest-bearing assets and interest-bearing liabilities. Interest bearing assets include cash balances, which earn interest at a variable rate. Interest bearing liabilities relate to shareholder loans and other loans and obligations under finance lease agreements, which bear interest at market rates.

PRINCIPAL ACTIVITY

The principal activity of the company is the production and distribution of milk and dairy products.

DIVIDENDS

No dividends will be distributed for the year ended 31 July 2025 (2024: £Nil).

RESEARCH AND DEVELOPMENT

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

DIRECTORS

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

Patrick Cunningham

Ruairi Cunningham

Aidan McCarron

Kate McMahon

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, future developments and employment policy in the company's Strategic Report which would otherwise be required to be disclosed in the Directors' Report.

EMPLOYEES

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

STREAMLINED ENERGY AND CARBON REPORTING

The following Streamlined Energy and Carbon Report (SECR) provides environmental impact information in accordance with the Companies Act 2006 (Strategic Report and Directors' Report) Regulations 2013.

The company aims to ensure the environment is left in a better condition for future generations, this strategy underlines the importance of Environmental, Social and Governance (ESG) as well as sustainability in supporting the future growth and development of the business. As a company we have made meaningful progress in the last financial year in understanding our environmental impact and developing mitigation measures.

Measure

For the year ended 31 July 2025

For the year ended31 July 2024

Units

Energy consumption used to calculate emissions

11,174,073

8,811,348

kWh

Usage consumption

-

-

Litres

Emission from purchased electricity

-

-

tCO2e

Emission from gas oil

4,493

3,808

tCO2e

Total Gross tCO2e

4,493

3,808

tCO2e

Intensity ratio

25.52

28.21

Gross tCO2e/£Million sales revenue

Methodology

For the majority of the calculation, primary data has been sourced (e.g. meter readings, supplier invoices) but in some cases where complete datasets are not available estimated or aggregated data has been used. While a reasonable attempt has been made to provide a complete view; some exclusions have been made on the basis of materiality such as de minimis office and staff related expenses which could not be separately identified through our systems.

Electricity emissions were calculated using energy consumption obtained from meter readings.

Energy Efficiency

Energy efficiency has been a priority for the company and at the end of the year investment began on new equipment in the production process with the focus on reducing overall emissions during general production activities and achieving Net Zero carbon emissions.

DIRECTORS' RESPONSIBILITIES STATEMENT

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

ON BEHALF OF THE BOARD:

Patrick Cunningham - Director

24 April 2026

Opinion

We have audited the financial statements of Strathroy Dairy Limited (the 'Company') for the year ended 31 July 2025 which comprise the Income Statement, Statement of Financial Position, Statement of Changes in Equity, Statement of Cash Flows and Notes to the 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 Company's affairs as at 31 July 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 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 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 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 Company and its environment obtained in the course of the audit, we have not identified material misstatements in the 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, 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 pages six and seven, 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 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

Unit 7 Dyehouse

Linen Green

Dungannon

Co. Tyrone

BT71 7HB

24 April 2026

REVENUE

5

176,048,013

134,701,209

Cost of sales

(166,301,534

)

(123,119,760

)

GROSS PROFIT

9,746,479

11,581,449

Distribution costs

(6,095,848

)

(5,512,277

)

Administrative expenses

(2,942,502

)

(4,815,190

)

708,129

1,253,982

Other operating income

448,928

283,253

OPERATING PROFIT

8

1,157,057

1,537,235

Finance costs

9

(38,657

)

(24,527

)

PROFIT BEFORE TAXATION

1,118,400

1,512,708

Tax on profit

10

(663,772

)

234,127

PROFIT FOR THE FINANCIAL YEAR

454,628

1,746,835

OTHER COMPREHENSIVE INCOME

Company purchase of own shares

-

(642,000

)

Capital redemption reserve

-

11,112

Income tax relating to components of other comprehensive income

-

-

OTHER COMPREHENSIVE INCOME FOR THE YEAR, NET OF INCOME TAX

-

(630,888

)

TOTAL COMPREHENSIVE INCOME FOR THE YEAR

454,628

1,115,947

NON-CURRENT ASSETS

Intangible assets

11

1,000

2,000

Property, plant and equipment

12

19,170,927

17,587,980

19,171,927

17,589,980

CURRENT ASSETS

Inventories

13

3,862,976

2,230,059

Receivables

14

25,288,214

18,687,561

Cash at bank

2,197,920

1,737,222

31,349,110

22,654,842

PAYABLES

Amounts falling due within one year

15

(36,628,790

)

(27,427,716

)

NET CURRENT LIABILITIES

(5,279,680

)

(4,772,874

)

TOTAL ASSETS LESS CURRENT LIABILITIES

13,892,247

12,817,106

PAYABLES

Amounts falling due after more than one year

16

-

(43,259

)

PROVISIONS FOR LIABILITIES

20

(2,772,243

)

(2,108,471

)

NET ASSETS

11,120,004

10,665,376

CAPITAL AND RESERVES

Called up share capital

21

100,000

100,000

Capital redemption reserve

11,112

11,112

Retained earnings

11,008,892

10,554,264

SHAREHOLDERS' FUNDS

11,120,004

10,665,376

The financial statements were approved by the Board of Directors and authorised for issue on 24 April 2026 and were signed on its behalf by:

Patrick Cunningham - Director

Called up

Capital

share

Retained

redemption

Total

capital

earnings

reserve

equity

£

£

£

£

Balance at 1 August 2023

111,112

9,449,429

-

9,560,541

Changes in equity

Issue of share capital

(11,112

)

-

-

(11,112

)

Total comprehensive income

-

1,104,835

11,112

1,115,947

Balance at 31 July 2024

100,000

10,554,264

11,112

10,665,376

Changes in equity

Total comprehensive income

-

454,628

-

454,628

Balance at 31 July 2025

100,000

11,008,892

11,112

11,120,004

Cash flows from operating activities

Cash generated from operations

1

3,292,504

2,611,665

Interest paid

-

(2,468

)

Interest element of hire purchase payments paid

(38,657

)

(22,059

)

Net cash from operating activities

3,253,847

2,587,138

Cash flows from investing activities

Purchase of tangible fixed assets

(3,916,298

)

(4,442,216

)

Sale of tangible fixed assets

222,636

-

Purchase of own shares

-

(642,000

)

Net cash from investing activities

(3,693,662

)

(5,084,216

)

Cash flows from financing activities

Loan repayments in year

-

(189,201

)

HP repayments in year

(265,013

)

(296,000

)

Net cash from financing activities

(265,013

)

(485,201

)

Decrease in cash and cash equivalents

(704,828

)

(2,982,279

)

Cash and cash equivalents at beginning of year

2

112,619

3,094,898

Cash and cash equivalents at end of year

2

(592,209

)

112,619

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

2025

2024

£

£

Profit before taxation

1,118,400

1,512,708

Depreciation charges

2,107,788

1,992,164

Loss on disposal of fixed assets

3,927

-

Finance costs

38,657

24,527

3,268,772

3,529,399

Increase in inventories

(1,632,917

)

(259,346

)

(Increase)/decrease in trade and other debtors

(6,857,863

)

1,440,110

Increase/(decrease) in trade and other creditors

8,514,512

(2,098,498

)

Cash generated from operations

3,292,504

2,611,665

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 July 2025

31/7/25

1/8/24

£

£

Cash and cash equivalents

2,197,920

1,737,222

Bank overdrafts

(2,790,129

)

(1,624,603

)

(592,209

)

112,619

Year ended 31 July 2024

31/7/24

1/8/23

£

£

Cash and cash equivalents

1,737,222

6,437,478

Bank overdrafts

(1,624,603

)

(3,342,580

)

112,619

3,094,898

3.	ANALYSIS OF CHANGES IN NET DEBT

At 1/8/24

Cash flow

At 31/7/25

£

£

£

Net cash

Cash at bank

1,737,222

460,698

2,197,920

Bank overdrafts

(1,624,603

)

(1,165,526

)

(2,790,129

)

112,619

(704,828

)

(592,209

)

Debt

Finance leases

(278,016

)

265,013

(13,003

)

(278,016

)

265,013

(13,003

)

Total

(165,397

)

(439,815

)

(605,212

)

1.	STATUTORY INFORMATION

Strathroy Dairy Limited is a private company, limited by shares , registered in Northern Ireland. The company's registered number and registered office address can be found on the Company Information page.

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. 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 company's financial statements.

The financial statements are prepared in Sterling which is the functional currency of the company, and rounded to the nearest pound, except when otherwise stated.

Revenue

Revenue is recognised to the extent that it is probable that the economic benefits will flow to the company and the revenue can be reliably measured. Revenue is measured as the fair value of the consideration received or receivable, excluding discounts, rebates, value added tax and other sales taxes. The following criteria must also be met before revenue is recognised:

Sale of goods:

Revenue from the sale of goods is recognised when all of the following conditions are satisfied:

- the significant risks and rewards of ownership have been transferred to the buyer;

- the company retains no continuing involvement or control over the goods;

- the amount of revenue can be measured reliably;

- it is probable that future economic benefits will flow to the company

- the costs incurred or to be incurred in respect of the transaction can be measured reliably.

Sale of services:

Revenue from a contract to provide services is recognised in the period in which the services are provided. The following criteria must also be met before revenue is recognised:

- the amount of revenue can be measured reliably;

- it is probable that future economic benefits will flow through the company

- the costs incurred or to be incurred in respect of the transaction can be measured reliably

Property, plant and equipment and depreciation

Property, plant and equipment are stated at cost or at valuation, less accumulated depreciation. The cost of fixed assets is their purchase cost, together with any incidental costs of acquisition. 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

- 2% Straight line

Plant and machinery

- 10% Reducing balance

Computer equipment

- 25% Reducing balance

Motor vehicles

- 20% Reducing balance

Bulk tanks

- 20% Reducing balance

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

Inventories

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

Financial instruments

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

(i) Financial assets

Basic financial assets, including trade and other receivables, cash and bank balances and amounts owed by related parties and are initially recognised at transaction price, unless the arrangement constitutes a financing transaction, where the transaction is measured at the present value of the future receipts discounted at a market rate of interest. Such assets are subsequently carried at amortised cost using the effective interest method.

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

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

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

(ii) Financial liabilities

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

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

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

(iii) Offsetting

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