REGISTERED NUMBER: 11630883 (England and Wales)

Group Strategic Report,

Report of the Directors and

Consolidated Financial Statements

for the Year Ended 31 December 2025

for

Sumgib Holdings Limited

Page

Company Information

1

Group Strategic Report

2

Report of the Directors

5

Report of the Independent Auditors

6

Consolidated Statement of Comprehensive Income

9

Consolidated Balance Sheet

10

Company Balance Sheet

11

Consolidated Statement of Changes in Equity

12

Company Statement of Changes in Equity

13

Consolidated Cash Flow Statement

14

Notes to the Consolidated Cash Flow Statement

15

Notes to the Consolidated Financial Statements

16

DIRECTORS:

S A Summers

J F Gibson

P J Jackson

REGISTERED OFFICE:

The Old Post Office

41-43 Market Place

Chippenham

Wiltshire

SN15 3HR

REGISTERED NUMBER:

11630883 (England and Wales)

AUDITORS:

Mander Duffill

Chartered Accountants & Statutory Auditor

The Old Post Office

41-43 Market Place

Chippenham

Wiltshire

SN15 3HR

The directors present their strategic report of the company and the group for the year ended 31 December 2025.

REVIEW OF BUSINESS

Sumgib Holdings Limited is the holding company for Middledale Foods Ltd.

Privately owned, Middledale Foods Ltd has in the last 30 years, established itself to be one of the UK's largest independent specialised ingredient suppliers to the food industry. Working closely with its supply partners, the company offers a broad base of dairy and egg-based products with an increasing range of organic and plant-based options. In recent years, developing innovative solutions for customers has been a key driver of growth. Throughout the year the company has increased its digital presence to broaden awareness of Middledale Foods, its product range and ability to meet customers' changing needs.

Turnover increased 28% to £31.2M with underlying volumes accounting for 12% of this with the rest a combination of increased prices, reflecting higher commodity costs, and higher value products.

PBT increased by £0.45M to £1.06M, driven by an increase of £0.6M in Gross Profit less £0.15M of additional resources, mainly commercial and technical, to deliver the growth and retain control.

Effective working capital and cash management delivered an increase of £0.6M in Net Assets to £2.9M underpinned by £0.7M increase in retained cash to £3.4M. Despite the significant increase in turnover, movements in Stock, Debtors and Creditors over the year remained broadly neutral. Trade receipts and payments were collected and paid to terms during the year. The group remains free of any third-party loans or borrowings.

In the last 12 months, the company has again invested significantly in employee engagement, development and well-being as measured through an annual staff engagement survey.

PRINCIPAL RISKS AND UNCERTAINTIES

Fluctuations in commodity prices and supply, and their impact on margins, remain the key risk for the company. Effective management of cost movements is centred on "back to back" purchasing at the point sales are contracted, supported by forward currency contracts where required. Supply Agreements and Terms of sale, including pricing mechanics and collaborative planning, protect both the company and its customers.

Occasional short term supply issues are handled directly with supply partners with stock and alternative supply routes used to mitigate any problems.

Cash collection is managed well with minimal overdue balances and backed by credit insurance which mitigates any material risk. The group policy intends to maintain a very strong cash position as a further hedge to trading risks.

KEY PERFORMANCE INDICATORS

Financially the group focusses on cash generation by developing gross margin and controlling overhead costs. Margin performance at customer and product levels is reviewed monthly against prior year, budget and forecast, focusing on sustainable cash margins. Staff and overhead costs are reviewed monthly by the board as part of the Management Accounts review of EBITDA and PBT performance.

Quarterly, bottom up, forecasts are prepared producing phased Income, Balance Sheet and Cashflow for the rest of the year to track performance, reflecting any impacts on trading. Corrective action is identified and agreed as required to achieve the group's objectives for the year. Cash is tracked and reported weekly against the latest forecast, with a collective cross functional review to resolve any cash collection issues. Finance is charged with ensuring supply partners are paid to terms.

The management team reviews supply chain and customer service metrics monthly to track performance and initiate action on any recurring issues as well as opportunities for improvement.

From a food safety and quality perspective, the business continues to operate robust and effective quality management systems. These systems were subject to external audit in the period , resulting in the successful renewal of our key certifications (BRCGS Agent & Broker and Organic Food Federation) with zero non-conformances. This outcome reflects not only the strength of the group's systems and controls, but also a positive and well-embedded food safety and quality culture across the organisation, with strong engagement and accountability at all levels.

The group undertook its second annual Customer Satisfaction survey, generating another year at the 90% mark level.

DEVELOPMENT

2026 will see a continuation of working with existing and new supply partners and customers to drive growth in existing product ranges as well as new categories. Establishing long-term supply agreements both with supply partners and customers, to underpin recent growth and new developments, will continue to be a key feature. Commercial and technical resource will support the development of "joint" business plans with strategic partners.

After recently strengthening Commercial, Technical and Finance teams in 2025 the focus in 2026 will be on training and personal development. Action plans are in place to further enhance employee engagement and fulfillment, boosting well-being, improved performance and staff retention levels.

The business continues to invest in its systems infrastructure to further improve business process efficiency, business controls and cyber security.

YEAR END POSITION

Following a period of price stability, at record highs, rising global milk production is now driving price deflation although recent events with US tariffs, war in the middle east and the ongoing conflict in the Ukraine bringing uncertainty. The business has also seen further consolidation within the food sector; the group's strategic commercial planning should enable us to maintain sales growth against this background and the pipeline of developments and opportunities remains strong. On balance, 2026 is expected to see modest growth and a year of consolidating previous gains with trading and profitability along the lines of 2025.

The group has no third-party borrowing and with significant cash reserves, at £3.4M, is well placed to navigate challenging conditions.

The business has started the new trading year in line with director expectations.

ON BEHALF OF THE BOARD:

S A Summers - Director

5 May 2026

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

DIVIDENDS

The total distribution of dividends for the year ended 31 December 2025 will be £ 132,854 .

DIRECTORS

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

S A Summers

J F Gibson

P J Jackson

STATEMENT OF DIRECTORS' RESPONSIBILITIES

The directors are responsible for preparing the Group 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 the group and of the profit or loss of the group for that period. In preparing these financial statements, the directors are required to:

-	select suitable accounting policies and then apply them consistently;

-	make judgements and accounting estimates that are reasonable and prudent;

-	prepare the financial statements on the going concern basis unless it is inappropriate to presume that the company will continue in business.

The directors are responsible for keeping adequate accounting records that are sufficient to show and explain the company's and the group's transactions and disclose with reasonable accuracy at any time the financial position of the company and the group and enable them to ensure that the financial statements comply with the Companies Act 2006. They are also responsible for safeguarding the assets of the company and the group and hence for taking reasonable steps for the prevention and detection of fraud and other irregularities.

STATEMENT AS TO DISCLOSURE OF INFORMATION TO AUDITORS

So far as the directors are aware, there is no relevant audit information (as defined by Section 418 of the Companies Act 2006) of which the group's auditors are unaware, and each director has taken all the steps that he or she ought to have taken as a director in order to make himself or herself aware of any relevant audit information and to establish that the group's auditors are aware of that information.

AUDITORS

The auditors, Mander Duffill, will be proposed for re-appointment at the forthcoming Annual General Meeting.

ON BEHALF OF THE BOARD:

S A Summers - Director

5 May 2026

Opinion

We have audited the financial statements of Sumgib Holdings Limited (the 'parent company') and its subsidiaries (the 'group') for the year ended 31 December 2025 which comprise the Consolidated Statement of Comprehensive Income, Consolidated Balance Sheet, Company Balance Sheet, Consolidated Statement of Changes in Equity, Company Statement of Changes in Equity, Consolidated Cash Flow Statement and Notes to the Consolidated 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 group's and of the parent company affairs as at 31 December 2025 and of the group's profit for the year then ended;

-	have been properly prepared in accordance with United Kingdom Generally Accepted Accounting Practice; and

-	have been prepared in accordance with the requirements of the Companies Act 2006.

Basis for opinion

We conducted our audit in accordance with International Standards on Auditing (UK) (ISAs (UK)) and applicable law. Our responsibilities under those standards are further described in the Auditors' responsibilities for the audit of the financial statements section of our report. We are independent of the group in accordance with the ethical requirements that are relevant to our audit of the financial statements in the UK, including the FRC's Ethical Standard, and we have fulfilled our other ethical responsibilities in accordance with these requirements. We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our opinion.

Conclusions relating to going concern

In auditing the financial statements, we have concluded that the directors' use of the going concern basis of accounting in the preparation of the financial statements is appropriate.

Based on the work we have performed, we have not identified any material uncertainties relating to events or conditions that, individually or collectively, may cast significant doubt on the group's and the parent company's ability to continue as a going concern for a period of at least twelve months from when the financial statements are authorised for issue.

Our responsibilities and the responsibilities of the directors with respect to going concern are described in the relevant sections of this report.

Other information

The directors are responsible for the other information. The other information comprises the information in the Group Strategic Report and the 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 Group 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 Group 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 group and the parent company and its environment obtained in the course of the audit, we have not identified material misstatements in the Group Strategic Report or the 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 by the parent company, or returns adequate for our audit have not been received from branches not visited by us; or

-	the parent company financial statements are not in agreement with the accounting records and returns; or

-	certain disclosures of directors' remuneration specified by law are not made; or

-	we have not received all the information and explanations we require for our audit.

Responsibilities of directors

As explained more fully in the 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 group's and the parent company's ability to continue as a going concern, disclosing, as applicable, matters related to going concern and using the going concern basis of accounting unless the directors either intend to liquidate the group or the parent company or to cease operations, or have no realistic alternative but to do so.

Auditors' responsibilities for the audit of the financial statements

Our objectives are to obtain reasonable assurance about whether the financial statements as a whole are free from material misstatement, whether due to fraud or error, and to issue 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:

In planning and designing our audit tests, we identify and assess the risks of material mis-statements, whether due to fraud or error. Our risk assessment procedures included:

- Enquiries of management about the entities policies and procedures on compliance with laws and regulations and whether they were aware of any instances of noncompliance together with the internal controls established to mitigate risks of fraud or non-compliance with laws and regulations.

- Enquiries of management about the entities policies and procedures on fraud risks, including any actual, suspected or alleged fraud.

- Considered the nature of the industry and sector, control environment and business performance including the key drivers for directors' remuneration, bonus levels and performance targets.

- Reading minutes of meetings of those charged with governance.

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.

We obtained an understanding of the legal and regulatory frameworks that the entity operates in, through discussions with the director, and from our commercial knowledge and experience of the sector in which the company operates, to enable us to identify the key laws and regulations applicable to the company. We focused on specific laws and regulations which we considered may have a direct material effect on the financial statement or the operations of the company, including the Companies Act 2006, taxation legislation, data protection, anti-bribery, employment, environmental and health and safety legislation.

As a result of these procedures, we considered the opportunities and incentives that may exist within the organisation for fraud. In common with all audits under ISAs (UK), we are also required to perform specific procedures to respond to the risk of management override of controls including the following:

- Reviewing financial statement disclosures and testing to supporting documentation to assess compliance with applicable laws and regulations.

- Enquiry of management concerning actual and potential litigation and claims.

- Reviewing correspondence with HMRC, and the company's legal advisors.

- Addressing the risk of fraud through management override of controls, testing the appropriateness of journal entries and other adjustments, assessing whether judgements made in making accounting estimates are indicative of a potential bias, and evaluating the business rationale of any significant transactions that are unusual or outside the normal course of business.

Owing to the inherent limitations of an audit, there is an unavoidable risk that we may not have detected some material misstatements in the financial statements, even though we have properly planned and performed our audit in accordance with auditing standards. The more removed that laws and regulations are from financial transactions, the less likely it is that we would become aware of non-compliance.

In addition, as with any audit, there remained a higher risk of non-detection of fraud, as these may involve collusion, forgery, intentional omissions, misrepresentations, or the override of internal controls. Our audit procedures are designed to detect material misstatement. We are not responsible for preventing non-compliance or fraud and cannot be expected to detect non-compliance with all laws and regulations.

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.

Julian Duffill FCA (Senior Statutory Auditor)

for and on behalf of Mander Duffill

Chartered Accountants & Statutory Auditor

The Old Post Office

41-43 Market Place

Chippenham

Wiltshire

SN15 3HR

12 May 2026

TURNOVER

3

31,232,062

24,395,830

Cost of sales

29,044,102

22,815,724

GROSS PROFIT

2,187,960

1,580,106

Administrative expenses

1,178,024

1,009,209

OPERATING PROFIT

5

1,009,936

570,897

Interest receivable and similar income

56,240

43,548

PROFIT BEFORE TAXATION

1,066,176

614,445

Tax on profit

7

266,448

153,480

PROFIT FOR THE FINANCIAL YEAR

799,728

460,965

OTHER COMPREHENSIVE INCOME

-

-

TOTAL COMPREHENSIVE INCOME FOR THE YEAR

799,728

460,965

Profit attributable to:

Owners of the parent

799,728

460,965

Total comprehensive income attributable to:

Owners of the parent

799,728

460,965

FIXED ASSETS

Intangible assets

10

-

-

Tangible assets

11

11,045

28,540

Investments

12

-

-

11,045

28,540

CURRENT ASSETS

Stocks

13

176,817

79,948

Debtors

14

3,252,413

2,983,075

Cash at bank and in hand

3,477,448

2,786,845

6,906,678

5,849,868

CREDITORS

Amounts falling due within one year

15

3,924,600

3,545,024

NET CURRENT ASSETS

2,982,078

2,304,844

TOTAL ASSETS LESS CURRENT LIABILITIES

2,993,123

2,333,384

PROVISIONS FOR LIABILITIES

18

-

7,135

NET ASSETS

2,993,123

2,326,249

CAPITAL AND RESERVES

Called up share capital

19

735

735

Share premium

20

100,259

100,259

Retained earnings

20

2,892,129

2,225,255

SHAREHOLDERS' FUNDS

2,993,123

2,326,249

The financial statements were approved by the Board of Directors and authorised for issue on 5 May 2026 and were signed on its behalf by:

S A Summers - Director

P J Jackson - Director

J F Gibson - Director

FIXED ASSETS

Intangible assets

10

-

-

Tangible assets

11

-

-

Investments

12

1,295,053

1,295,053

1,295,053

1,295,053

CURRENT ASSETS

Debtors

14

256,292

230,721

Cash at bank and in hand

105,300

103,690

361,592

334,411

CREDITORS

Amounts falling due within one year

15

38,743

28,867

NET CURRENT ASSETS

322,849

305,544

TOTAL ASSETS LESS CURRENT LIABILITIES

1,617,902

1,600,597

CAPITAL AND RESERVES

Called up share capital

19

735

735

Share premium

20

100,259

100,259

Retained earnings

20

1,516,908

1,499,603

SHAREHOLDERS' FUNDS

1,617,902

1,600,597

Company's profit for the financial year

150,159

77,277

The financial statements were approved by the Board of Directors and authorised for issue on 5 May 2026 and were signed on its behalf by:

S A Summers - Director

J F Gibson - Director

P J Jackson - Director

Called up

share

Retained

Share

Total

capital

earnings

premium

equity

£

£

£

£

Balance at 1 January 2024

727

1,840,010

100,259

1,940,996

Changes in equity

Issue of share capital

8

-

-

8

Dividends

-

(75,720

)

-

(75,720

)

Total comprehensive income

-

460,965

-

460,965

Balance at 31 December 2024

735

2,225,255

100,259

2,326,249

Changes in equity

Dividends

-

(132,854

)

-

(132,854

)

Total comprehensive income

-

799,728

-

799,728

Balance at 31 December 2025

735

2,892,129

100,259

2,993,123

Called up

share

Retained

Share

Total

capital

earnings

premium

equity

£

£

£

£

Balance at 1 January 2024

727

1,498,046

100,259

1,599,032

Changes in equity

Issue of share capital

8

-

-

8

Dividends

-

(75,720

)

-

(75,720

)

Total comprehensive income

-

77,277

-

77,277

Balance at 31 December 2024

735

1,499,603

100,259

1,600,597

Changes in equity

Dividends

-

(132,854

)

-

(132,854

)

Total comprehensive income

-

150,159

-

150,159

Balance at 31 December 2025

735

1,516,908

100,259

1,617,902

Cash flows from operating activities

Cash generated from operations

1

935,194

586,423

Tax paid

(154,286

)

2

Net cash from operating activities

780,908

586,425

Cash flows from investing activities

Purchase of tangible fixed assets

(7,339

)

(3,968

)

Interest received

56,240

43,548

Net cash from investing activities

48,901

39,580

Cash flows from financing activities

Amount withdrawn by directors

(6,352

)

22,939

Share issue

-

8

Equity dividends paid

(132,854

)

(75,720

)

Net cash from financing activities

(139,206

)

(52,773

)

Increase in cash and cash equivalents

690,603

573,232

Cash and cash equivalents at beginning of year

2

2,786,845

2,213,613

Cash and cash equivalents at end of year

2

3,477,448

2,786,845

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

31.12.25

31.12.24

£

£

Profit before taxation

1,066,176

614,445

Depreciation charges

24,834

7,136

Finance income

(56,240

)

(43,548

)

1,034,770

578,033

(Increase)/decrease in stocks

(96,869

)

120,381

Increase in trade and other debtors

(243,623

)

(800,604

)

Increase in trade and other creditors

240,916

688,613

Cash generated from operations

935,194

586,423

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 31 December 2025

31.12.25

1.1.25

£

£

Cash and cash equivalents

3,477,448

2,786,845

Year ended 31 December 2024

31.12.24

1.1.24

£

£

Cash and cash equivalents

2,786,845

2,213,613

3.	ANALYSIS OF CHANGES IN NET FUNDS

At 1.1.25

Cash flow

At 31.12.25

£

£

£

Net cash

Cash at bank and in hand

2,786,845

690,603

3,477,448

2,786,845

690,603

3,477,448

Total

2,786,845

690,603

3,477,448

1.	STATUTORY INFORMATION

Sumgib Holdings 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 General Information page.

The presentation currency of the financial statements is the Pound Sterling (£).

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.

Basis of consolidation

The consolidated financial statements consolidate the financial statements of the company and its subsidiary undertaking drawn up to 31 December 2025.

A subsidiary is an entity controlled by the group. Control is achieved where the company has the power to govern the financial and operating policies of an entity so as to obtain benefits from its activities.

The acquisition method of accounting has been used to account for business combinations/reconstruction that result in the acquisition of the subsidiary of the group.

Accounting policies of subsidiaries are consistent with that of the group.

Related party exemption

The company has taken advantage of exemption, under the terms of Financial Reporting Standard 102 'The Financial Reporting Standard applicable in the UK and Republic of Ireland', not to disclose related party transactions with wholly owned subsidiaries within the group.

Transactions between group entities which have been eliminated on consolidation are not disclosed within the financial statements.

Significant judgements and estimates

In the application of the company's accounting policies, management is required to make judgements, estimates and assumptions about carrying values of assets and liabilities that are not readily apparent from other sources. The estimates and underlying 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 if the revision affects that period, or in the period of the revision and future periods if the revision affects both current and future periods.

The key sources of estimation uncertainty that have a significant effect on the amounts recognised in the financial statements are described below:

Trade and other receivables - The allowance for doubtful debts involves significant management judgement and review of individual receivables based on individual customer creditworthiness, current economic trends and analysis of historical bad debts.

Turnover

Turnover is measured at the fair value of the consideration received or receivable, excluding discounts, rebates, value added tax and other sales taxes.

Goodwill

Goodwill, being the amount paid in connection with the acquisition of a business in 2021, is being amortised evenly over its estimated useful life of three years.

Intangible assets

Intangible assets are initially measured at cost. After initial recognition, intangible assets are measured at cost less any accumulated amortisation and any accumulated impairment losses.

Tangible fixed assets

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

Plant and machinery

-

20% on reducing balance

Furniture, fixtures and fittings

-

33% on cost and 20% on cost

Stocks

Stocks are valued at the lower of cost and net realisable value, after making due allowance for obsolete and slow moving items.

Stock has been valued at the lower of cost and estimated selling price less costs to sell. In respect of work in progress, cost includes a relevant proportion of overheads according to the stage of manufacture or completion.

Financial instruments

The group has chosen to adopt the requirements of sections 11 and 12 of FRS 102 in respect of the measurement and disclosure of financial instruments.

Trade and other debtors

Trade and other debtors are initially recognised at fair value and thereafter 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.

Cash and cash equivalents

Cash and cash equivalents comprise cash at bank and on 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 statements of financial position, bank overdrafts are shown within borrowings or current liabilities.

Impairment of financial assets

Financial assets, are assessed for indicators of impairment at the end of each reporting period. Financial assets are considered to be impaired when 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 of the investment have been affected.

For all financial assets, objective evidence of impairment could include:

- significant financial difficulty of the issuer or counterparty;

- breach of contract, such as a default or delinquency in interest or principal payments;

- it becoming probable that the borrower will enter bankruptcy or financial re-organisation; or

- the disappearance of an active market for that financial asset because of financial difficulties.

For certain categories of financial asset, such as trade debtors, assets that are assessed not to be impaired individually are, in addition, assessed for impairment on a collective basis. Objective evidence of impairment for a portfolio of trade debtors could include the company's past experience of collecting payments, an increase in the number of delayed payments in the portfolio past the average credit period, as well as observable changes in national or local economic conditions that correlate with default of trade debts.

For financial assets carried at amortised cost, the amount of the impairment loss recognised is the difference between the assets carrying amount and the present value of estimated future cash flows, discounted at the financial assets original effective interest rate.

For financial assets carried at cost, the amount of the impairment loss is measured as the difference between the asset's carrying amount and the present value of the estimated future cash flows discounted at the current market rate of return for a similar financial asset. Such impairment loss will not be reversed in subsequent periods.

For financial assets measured at amortised cost, if, in a subsequent period, the amount of the impairment loss decreases and the decrease can be related objectively to an event occuring after the impairment was recognised, the previously recognised impairment loss is reversed through profit or loss to the extent that the carrying amount at the date the impairment is reversed does not exceed the amortised cost had the impairment not been recognised.

Trade and other creditors

Trade and other creditors are initially recognised at fair value and thereafter stated at amortised cost using the effective interest method unless the effect of discounting would be immaterial, in which case they are stated at cost.