REGISTERED NUMBER: 02069720 (England and Wales)

Strategic Report, Report of the Directors and

Financial Statements for the Year Ended 31 December 2025

for

Dana SAC UK Limited

Page

Company Information

1

Strategic Report

2

Report of the Directors

5

Report of the Independent Auditors

7

Statement of Profit or Loss

11

Statement of Profit or Loss and Other Comprehensive Income

12

Statement of Financial Position

13

Statement of Changes in Equity

15

Statement of Cash Flows

16

Notes to the Statement of Cash Flows

17

Notes to the Financial Statements

18

DIRECTORS:

R Marsh

R N Hillman

SECRETARY:

R Marsh

REGISTERED OFFICE:

Bridgeway House

Bridgeway

Stratford Upon Avon

CV37 6YX

REGISTERED NUMBER:

02069720 (England and Wales)

SENIOR STATUTORY AUDITOR:

Janine Boyo BFP FCA MAAT

AUDITORS:

Voisey & Co LLP

8 Winmarleigh Street

Warrington

Cheshire

WA1 1JW

The directors present their strategic report for the year ended 31 December 2025.

PRINCIPAL ACTIVITIES

The principal activity of the company during the year was the import, assembly, installation, inspection, service and repair of Dana power transmission and fluid power products. Development of complete drive system solutions incorporating both Dana and non-Dana products, spares & components.

REVIEW OF BUSINESS

The Company is part of the worldwide Dana Incorporated Group ("the Group"), a company incorporated in the United States. The strategic objectives of the Company are aligned with those of the Group. Further details on the strategy and performance of the Group can be found in the Management's Discussion and Analysis of Financial Condition and Results of Operations section of the 2025 Form 10-K for Dana Incorporated, which does not form part of this report. Alternatively, visit the Group company website results at www.dana.com.

The Company achieved turnover at £12.2m despite the challenges presented by international events. The Company's presence in a wide range of market sectors supported revenue growth to OE customers. AFM remained at a good level. Despite global insecurity & tariff concerns, 2025 was a record year for order intake, setting a strong foundation for 2026 and continuing to demonstrate the company's diverse offering.

The Company proactively managed its base costs well and maintained overheads within budget levels despite the increase in cost pressures.

The Company continues to recruit & develop personnel and their contribution should have a continued and increased positive impact in 2026.

The company paid Dividends in the year of £1,200,000.

Company Balance Sheet remained in a strong position at £2.6 million (2024: £3.2 million )

Key Performance Indicators

The directors monitor progress with reference to the following key performance indicators:

2025

2024

Definition and method of calculation

£'000

£'000

Turnover

12,178

12,129

Gross Profit

5,056

5,235

Earnings before interest, tax,

EBITDA

972

1,608

depreciation and amortisation

Profit before administration and

Gross Profit as a % of turnover

41.52%

43.15%

exceptional costs

Earnings before interest receivable

Operating Profit as a % of turnover

6.38%

11.57%

and interest payable

Annual purchases divided by the

Stock Turnover

3.75

4.95

year end stock balance

The net assets of the Company as at 31 December 2025 were £2.6 million (2024: £3.2 million).

PRINCIPAL RISKS AND UNCERTAINTIES

The principle non-financial risks and uncertainties facing the Company are:

Sources and availability of products

The majority (80%) of the products sold are sourced through other Dana entities. Other 3rd party purchases are made from multiple qualified sources.

Customer dependence

The company has multiple customers across a diverse range of sectors. The Company differentiates itself through offering both quality standard products and bespoke solutions.

Financial risk management policies and procedures

The following are the principal risks identified by the directors and the measures taken to address them.

Liquidity risk

The financial risks of the Company are managed centrally by the Group's European Treasury Department; however, the Company manages its cash and borrowing requirements to maximise interest income and minimise interest expense, whilst ensuring the Company has sufficient resources to meet the operating needs of the business.

The company reviews its short-term cash requirements using cashflow forecasts. This policy ensures there are sufficient funds available for the current and future operations of the Company.

Foreign currency risk

As the Company acquires a small element of product in Euros and US Dollars, the Company is exposed to currency exchange fluctuations. Customers are generally quoted sales prices in sterling for the UK based operations, however, where customers prefer, they may be quoted in the same currency which the company purchases its products, therefore reducing exchange rate risk via a natural hedge.

Interest rate risk

The company is part of a group cash pooling agreement. Group arrangements may from time to time be exposed to interest rate risk on floating rate deposits and bank overdrafts. The company manages the risk by minimising borrowing.

Price risk

The company is exposed to commodity price risk because of its operations. This exposure is minimised wherever possible via commodity index agreements with customers and long-term commitments with suppliers.

Credit risk

The company mitigates credit risk using a Credit Insurance policy and strong credit control.

All customers who wish to trade on credit terms are subject to credit verification procedures. Trade debtors are monitored on an ongoing basis and provision is made for doubtful debts where necessary.

People

The company's continued investment in training and development has assisted in sourcing, retaining & developing staff which remains a key challenge but one in which the company has had great success.

Performance Quality

The Company's performance and continuing reputation is an asset and key selling feature. It is maintained by adherence to the ISO 9001 2015 quality systems, High Internal Standards of Dana operating systems, strong staff commitment and personnel development.

BUSINESS RELATIONSHIPS

The company maintains numeorus business relationships including the following:

Suppliers - Our suppliers being Group and 3rd party companies are critical to our operations, and we take a long-term collaborative approach to working with them, including adhering to payment terms.

Customers - Our customers value our products, which are produced to the highest quality and are made to last to provide great value. The company engages with customers for their feedback which has helped us continually improve our service and products which are at the forefront of our industry.

Others - The directors consider our shareholders, employees, customers and suppliers to be the core stakeholder groups. Our ultimate shareholder is the Group. We create value for the Group by generating sustainable results which will ultimately translate into dividends. We present our performance in monthly summaries to the board. The directors routinely engage with the Group on topics of strategy, governance and performance including information on the impact on each of our stakeholders.

FUTURE DEVELOPMENTS

During 2025, Dana Inc. completed the sale of its Off Highway business, of which the Company is part, to Allison Transmission Inc. The combined company, headquartered in Indianapolis, USA, will form a $5.5 billion revenue global enterprise with operations spanning 29 countries. The global footprint is positioned to meet growing demand for advanced high-performance mobility and work solutions across infrastructure, energy, agriculture, construction and national security.

The Off Highway business has developed a strategic plan detailing how we will operate and the key areas of focus. Continuing our existing market presence and maintaining the relationships already established; where new opportunities arise, we will look to capitalise on those. We will continue to invest in our people committing to meeting training needs.

ON BEHALF OF THE BOARD:

R Marsh - Director

21 April 2026

The directors present their report with the financial statements of the company for the year ended 31 December 2025.

PRINCIPAL ACTIVITIES

The principal activities of the company in the year under review were those of the importing, assembling and distribution of engineering components.

DIVIDENDS

The total distribution of dividends for the year ended 31 December 2025 will be £ 1,200,000 .

DIRECTORS

The directors shown below have held office during the whole of the period from 1 January 2025 to the date of this report.

R Marsh

R N Hillman

DISCLOSURE IN THE STRATEGIC REPORT

As permitted by the Large and Medium Sized Companies and Groups (Accounts and Reports) Regulations 2008, certain matters which are required to be disclosed in the Directors' report have been omitted as they are included in the Strategic Report. These matters relate to the financial management risk and future developments.

STATEMENT OF DIRECTORS' RESPONSIBILITIES

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 UK-adopted international accounting standards. 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;

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

AUDITORS

A resolution proposing the re-appointment of Voisey & Co LLP will be proposed at the forthcoming Annual General Meeting.

ON BEHALF OF THE BOARD:

R Marsh - Director

21 April 2026

Opinion

We have audited the financial statements of Dana SAC UK Limited (the 'company') for the year ended 31 December 2025 which comprise the Statement of Profit or Loss, the Statement of Profit or Loss and Other Comprehensive Income, the Statement of Financial Position, the Statement of Changes in Equity, the 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 International Financial Reporting Standards (IFRSs) as adopted by the UK.

In our opinion the financial statements:

-	give a true and fair view of the state of the company's affairs as at 31 December 2025 and of its profit for the year then ended;

-	have been properly prepared in accordance with IFRSs as adopted by the UK; 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 Statement of Directors' Responsibilities set out on page five, the directors are responsible for the preparation of the financial statements and for being satisfied that they give a true and fair view, and for such internal control as the directors determine necessary to enable the preparation of financial statements that are free from material misstatement, whether due to fraud or error.

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

Irregularities, including fraud, are instances of non-compliance with laws and regulations. We design procedures in line with our responsibilities, outlined above, to detect material misstatements in respect of irregularities, including fraud. The extent to which our procedures are capable of detecting irregularities, including fraud is detailed below:

1 - We enquired of management and those charged with governance about actual and potential litigation and claims, including review of relevant nominal ledger accounts.

2 - We obtained an understanding of laws, regulations and guidance that affect the Company, focusing on those that had a direct effect on the financial statements or that had a fundamental effect on its operations. Key laws, regulations and guidance that we identified included the Companies Act 2006, health and safety legislation and employment legislation.

3 - We enquired of management and those charged with governance to identify any instances of non-compliance with laws and regulations.

4 - We reviewed the Company's financial statement disclosures and agreed to supporting documentation to assess compliance with the applicable laws and regulations discussed above.

5 - We gained an understanding of the controls that management have in place to prevent and detect fraud. We enquired of management about any incidences of fraud that had taken place during the accounting period.

6 - The risk of fraud and non-compliance with laws and regulations was discussed within the audit team and tests were planned and performed to address these risks.

7 - In addressing the risk of fraud due to management override of controls, we performed testing of journal entries and other adjustments for appropriateness, evaluating the business rationale of significant transactions outside the normal course of business and reviewing accounting estimates for bias.

8 - We also challenge management assumptions with regard to accounting estimates.

Despite appropriate planning and performing our work in accordance with International Auditing Standards, there are always inherent limitations that non-compliance is not detected. Non-compliance with laws and regulations is often further removed from the events and transactions reflected in the financial statements and material misstatements due to fraud can be deliberately concealed from auditors, for example through misrepresentation, forgery or collusion.

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.

Janine Boyo BFP FCA MAAT (Senior Statutory Auditor)

for and on behalf of Voisey & Co LLP

8 Winmarleigh Street

Warrington

Cheshire

WA1 1JW

21 April 2026

CONTINUING OPERATIONS

Revenue

3

12,178,311

12,129,231

Cost of sales

(7,122,181

)

(6,894,467

)

GROSS PROFIT

5,056,130

5,234,764

Other operating income

2,751

(9,754

)

Administrative expenses

(2,718,203

)

(2,320,150

)

Other operating expenses

(1,563,082

)

(1,501,853

)

OPERATING PROFIT

777,596

1,403,007

Finance costs

5

(3,634

)

(3,332

)

Finance income

5

58,224

112,220

PROFIT BEFORE INCOME TAX

6

832,186

1,511,895

Income tax

7

(238,249

)

(393,384

)

PROFIT FOR THE YEAR

593,937

1,118,511

PROFIT FOR THE YEAR

593,937

1,118,511

OTHER COMPREHENSIVE INCOME

-

-

TOTAL COMPREHENSIVE INCOME FOR THE YEAR

593,937

1,118,511

ASSETS

NON-CURRENT ASSETS

Owned

Property, plant and equipment

9

860,815

964,851

Right-of-use

Property, plant and equipment

9, 17

80,194

47,616

941,009

1,012,467

CURRENT ASSETS

Inventories

10

1,740,142

1,280,778

Trade and other receivables

11

2,779,560

2,310,637

Tax receivable

166,548

-

Cash and cash equivalents

12

882,221

2,182,315

5,568,471

5,773,730

TOTAL ASSETS

6,509,480

6,786,197

EQUITY

SHAREHOLDERS' EQUITY

Called up share capital

13

655,000

655,000

Retained earnings

14

1,938,325

2,544,388

TOTAL EQUITY

2,593,325

3,199,388

LIABILITIES

NON-CURRENT LIABILITIES

Financial liabilities - borrowings

Lease liabilities

16, 17

49,606

23,879

Deferred tax

18

44,464

52,712

94,070

76,591

CURRENT LIABILITIES

Trade and other payables

15

2,900,938

3,075,546

Financial liabilities - borrowings

Bank overdrafts

16

890,559

173,871

Lease liabilities

16, 17

30,588

23,552

Tax payable

-

237,249

3,822,085

3,510,218

TOTAL LIABILITIES

3,916,155

3,586,809

TOTAL EQUITY AND LIABILITIES

6,509,480

6,786,197

The financial statements were approved by the Board of Directors and authorised for issue on 21 April 2026 and were signed on its behalf by:

R Marsh - Director

Called up

share

Retained

Total

capital

earnings

equity

£

£

£

Balance at 1 January 2024

655,000

2,225,877

2,880,877

Changes in equity

Dividends

-

(800,000

)

(800,000

)

Total comprehensive income

-

1,118,511

1,118,511

Balance at 31 December 2024

655,000

2,544,388

3,199,388

Changes in equity

Dividends

-

(1,200,000

)

(1,200,000

)

Total comprehensive income

-

593,937

593,937

Balance at 31 December 2025

655,000

1,938,325

2,593,325

Cash flows from operating activities

Cash generated from operations

1

(189,031

)

797,212

Lease interest paid

(3,634

)

(3,332

)

Tax paid

(650,294

)

(85,843

)

Net cash from operating activities

(842,959

)

708,037

Cash flows from investing activities

Purchase of tangible fixed assets

-

(13,742

)

Interest received

58,224

112,220

Net cash from investing activities

58,224

98,478

Cash flows from financing activities

Payment of lease liabilities

(32,047

)

(34,156

)

Equity dividends paid

(1,200,000

)

(800,000

)

Net cash from financing activities

(1,232,047

)

(834,156

)

Decrease in cash and cash equivalents

(2,016,782

)

(27,641

)

Cash and cash equivalents at beginning of year

2

2,008,444

2,036,085

Cash and cash equivalents at end of year

2

(8,338

)

2,008,444

1.	RECONCILIATION OF PROFIT BEFORE INCOME TAX TO CASH GENERATED FROM OPERATIONS

31.12.25

31.12.24

£

£

Profit before income tax

832,186

1,511,895

Depreciation charges

136,268

92,646

(Increase): owed by group undertaking

(44,552

)

-

(Decrease): owed to group undertaking

(568,950

)

-

Decrease: owed by group undertaking

-

88,286

(Decrease): owed to group undertaking

-

(712,688

)

Finance costs

3,634

3,332

Finance income

(58,224

)

(112,220

)

300,362

871,251

(Increase)/decrease in inventories

(459,364

)

492,111

Increase in trade and other receivables

(424,371

)

(253,368

)

Increase/(decrease) in trade and other payables

394,342

(312,782

)

Cash generated from operations

(189,031

)

797,212

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 December 2025

31.12.25

1.1.25

£

£

Cash and cash equivalents

882,221

2,182,315

Bank overdrafts

(890,559

)

(173,871

)

(8,338

)

2,008,444

Year ended 31 December 2024

31.12.24

1.1.24

£

£

Cash and cash equivalents

2,182,315

2,209,362

Bank overdrafts

(173,871

)

(173,277

)

2,008,444

2,036,085

1.	STATUTORY INFORMATION

Dana SAC UK Limited is a private company, limited by shares , registered in England and Wales. The company's registered number and registered office address can be found on the Company Information page.

2.	ACCOUNTING POLICIES

Basis of preparation

These financial statements have been prepared in accordance with UK-adopted international accounting standards and with those parts of the Companies Act 2006 applicable to companies reporting under IFRS. The financial statements have been prepared under the historical cost convention.

The financial statements have been prepared on the historical cost basis.

The preparation of the financial statements, in conformity with generally accepted accounting principles ('GAAP') under IFRS, requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting period. Although these estimates are based on management's best knowledge of the amount, event or actions, actual results ultimately may differ from these estimates.

The financial statements are prepared in sterling, which is the functional currency. Monetary amounts in these financial statements are rounded to the nearest £.

Significant judgements and key sources of estimation uncertainty

In the application of the company's accounting policies, the directors are required to make judgements, estimates and assumptions about the carrying amount of assets and liabilities that are not readily apparent from other sources. The estimates and associated assumptions are based on historical experience and other factors that are considered to be relevant. Actual results may differ from these estimates. The estimates and underlying assumptions are reviewed on an ongoing basis. Revisions to accounting estimates are recognised in the period in which the estimate is revised where the revision affects only that period, or in the period of the revision and future periods where the revision affects both current and future periods.

The key assumptions concerning the future and other key sources of estimation include uncertainties at the reporting date, which may have a risk of causing a material adjustment to the carrying amounts of assets and liabilities within the next financial periods, are discussed below.

Management do not consider the company to have any significant accounting judgements or key sources of

estimation uncertainty.

Revenue recognition

Revenue from the sale of goods shall be recognised when all the following conditions have been satisfied:

- the entity has transferred to the buyer the significant risks and rewards of ownership of the goods;

- the entity retains neither continuing managerial involvement to the degree usually associated with ownership nor effective control over the goods sold;

- the amount of revenue can be measured reliably;

- it is probable that the economic benefits associated with the transaction will flow to the entity;

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

Revenue from the sale of goods is generally recognised when they are handed over to the transport firms which, under the terms of current contracts, mark the time when the above risks and rewards are transferred.

Revenue is not recognised if its recoverability is considered to be uncertain.

Revenue is stated net of discounts, allowances, rebates and returns, and does not include the proceeds from the disposal of raw materials.

Revenue includes also minor cost connected with the sales process, such as:

- recoveries from customers of accessories costs;

- recoveries of after-sales costs;

- recoveries of cost of transport, packaging, insurances etc.

Revenue for services rendered is recorded in the income statement on the basis of the percentage of completion at the balance sheet reference date.

Cash and cash equivalents

Cash represents cash in hand and deposits held on demand with financial institutions. Cash equivalents are short-term, highly-liquid investments with original maturities of three months or less (as at their date of acquisition). Cash equivalents are readily convertible to known amounts of cash and subject to an insignificant risk of change in that cash value.

In the presentation of the Statement of Cash Flows, cash and cash equivalents also include bank overdrafts. Any such overdrafts are shown within borrowings under ‘current liabilities’ on the Statement of Financial Position.

Property, plant and equipment

Depreciation is provided at the following annual rates in order to write off each asset over its estimated useful life or, if held under a finance lease, over the lease term, whichever is the shorter.

Freehold property

-

Nil - Land, 2%-2.5% - Buildings

Plant and machinery

-

20% on cost and 6.66% on cost

Fixtures and fittings

-

25% on cost

Motor vehicles

-

33% on reducing balance

Computer and office equipment

-

25% on cost

The company has introduced a policy of only capitalising assets over the value of £4,200.

Assets in the course of construction are not depreciated and are in respect of costs to upgrade the company's IT network.

Assets are initially capitalised at their cost price and are then subsequently measured at cost less depreciation and any impairment losses.

Cash and cash equivalents

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

Financial instruments

The carrying amounts of each financial instrument category are as defined in IAS 39.

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 net asset and settle the liability simultaneously.

Basic financial assets

Basic financial assets, which include debtors and cash and bank balances, are initially measured at transaction price including transaction costs and are subsequently carried at amortised costs using the effective interest method 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. Financial assets classified as receivable within one year are not amortised.

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 publically 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 or 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.

Classification of financial liabilities

Financial liabilities and equity instruments are classified according to the substance of the contractual

arrangements entered into. An equity instrument is any contract that evidences a residual interest in the assets of the company after deducting all of its liabilities.

Basic Financial Liabilities

Basic financial instruments, include 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 receipts discounted at a market rate of interest. Financial liabilities classified as payable within one tear 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 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.

Equity instruments

Financial liabilities issued by the company are recorded at the proceeds received, net of direct issue costs.

Dividens payable on equity instruments are recognised as liabilities once they are no longer at the discretion of the company.

Derivatives

Derivatives are initially recognised at fair value at the date a derivative contract is entered into and are subsequently remeasured to fair value at each reporting end date. The resulting gain or loss is recognised in profit or loss immediately unless the derivative is designated and effective as a hedging instrument. In which event the timing of the recognition in profit or loss depends on the nature of the hedge relationship.

A derivative with a positive fair value is recognised as a financial asset, whereas a derivative with a negative fair value is recognised as a financial liability.

Inventories

The cost of inventories should comprise all costs of purchase, costs of conversion and other costs incurred in bringing the inventories to their present location and condition.

The costs of purchase include: purchase price, import duties and other non-recoverable taxes, transport and handling costs, and other costs directly attributable to the acquisition of finished goods, materials and services. Any trade discounts or rebates received are deducted in determining the costs of purchase of an item.

The costs of conversion include costs directly related to the units of production such as: direct materials and labour, and a systematic allocation of the fixed and variable production overheads incurred in converting materials into finished goods.

For Original Equipment Service (OES) and Aftermarket product, slow moving inventory is defined as the difference between the balances on hand for each part number less the average monthly usage of that part number during the prior 48 months. On hand amounts with less than 36 months of average monthly usage require no reserve; on hand amounts with between 36-60 months of average monthly usage are reserved as slow-moving at a minimum of fifty percent (50%) and on hand amounts over 60 months of average monthly usage are reserved as slow moving at ninety-five percent (95%).

For Original Equipment (OES) product, obsolete inventory is defined as any part number that has had zero usage in the prior 48 months, and for which no open orders exist. One hundred percent (100%) of the value of these parts is reserved as Obsolete, unless otherwise supported and approved.

Taxation

Current taxes are based on the results shown in the financial statements and are calculated according to local tax rules, using tax rates enacted or substantially enacted by the statement of financial position date.

Deferred tax assets have been recognised in respect of all tax losses and other temporary differences giving rise to deferred tax assets where the directors believe it is probable that these assets will be recovered.

Foreign currencies

Foreign exchange transactions are converted on the basis of the exchange rates in force on the date that the related transactions were carried out. Monetary assets and liabilities shall be converted at the exchange rate in force on the balance sheet reference date. Foreign exchange differences arising from conversion shall be entered in the income statement. Non-monetary assets and liabilities valued at historic cost shall be converted at the exchange rates in force on the date of the related transaction. Monetary assets and liabilities, stated at fair value, are converted into sterling (£) at the exchange rate in force on the date in respect of which the relative fair value was determined.

Leases

Leases are recognised as finance leases. The lease liability is initially recognised at the present value of the lease payments which have not yet been made and subsequently measured under the amortised cost method. The initial cost of the right-of-use asset comprises the amount of the initial measurement of the lease liability, lease payments made prior to the lease commencement date, initial direct costs and the estimated costs of removing or dismantling the underlying asset per the conditions of the contract.

Where ownership of the right-of-use asset transfers to the lessee at the end of the lease term, the right-of-use asset is depreciated over the asset’s remaining useful life. If ownership of the right-of-use asset does not transfer to the lessee at the end of the lease term, depreciation is charged over the shorter of the useful life of the right-of-use asset and the lease term.