REGISTERED NUMBER: 02158288 (England and Wales)

BAY TREE NURSERIES LIMITED

GROUP STRATEGIC REPORT,

REPORT OF THE DIRECTORS AND

CONSOLIDATED FINANCIAL STATEMENTS

FOR THE YEAR ENDED 31 AUGUST 2025

Page

Company Information

1

Group Strategic Report

2

to

3

Report of the Directors

4

Report of the Independent Auditors

5

to

8

Consolidated Statement of Comprehensive Income

9

Consolidated Statement of Financial Position

10

Company Statement of Financial Position

11

Consolidated Statement of Changes in Equity

12

Company Statement of Changes in Equity

13

Consolidated Statement of Cash Flows

14

Notes to the Consolidated Statement of Cash Flows

15

Notes to the Consolidated Financial Statements

16

to

27

DIRECTORS:

R F F Biehler

Mrs Y Biehler

N Wallis

Mrs J Whitworth Biehler

Mrs E Biehler-Birch

SECRETARY:

Mrs J Whitworth Biehler

REGISTERED OFFICE:

High Road

Weston

Spalding

Lincolnshire

PE12 6JU

REGISTERED NUMBER:

02158288 (England and Wales)

AUDITORS:

Duncan & Toplis Audit Limited, Statutory Auditor

Enterprise Way

Pinchbeck

Spalding

Lincolnshire

PE11 3YR

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

REVIEW OF BUSINESS

Despite difficult trading conditions during 2024/25 the Bay Tree consolidated accounts reported a pre-tax profit of £425,448 from sales of £8,281,532.

2024/25 financial year has been a turbulent year, with the continuation of the war in Ukraine and the one in and around Israel. The British Government was in turmoil and Labour voted in during July 24. Energy prices increased at a slower rate and inflation seemed to settle around 3%

No assets at either site will require impairment. Depreciation will be calculated in the normal way for the next financial year. Any asset purchase made in 2024 will be considered and comply with the both group and bank policies.

All current liabilities are paid in full, including the vat and corporation tax to HMRC. Suppliers are paid in full and in a timely manner in accordance to their negotiated trade agreements.

Cost savings are reviewed on an ongoing basis to ensure best price is paid. These include utility bills, credit card and cash collection charges and other overheads. Wastage is monitored and recorded and savings made where possible with upcycling and recycling.

The bank has agreed to an ongoing overdraft for both sites. The overdrafts are in place for 'just in case' scenarios and not required for the day to day running of the business.

Our franchises continue to support us and there has been interest shown by other parties to come on site.

The next twelve months of trading will continue to test us and ensure that we continue to innovate. We must retain the customers that we have and entice new ones to shop with us. It is a fact that high streets and retail outlets are struggling but I feel garden centres when promoted and managed correctly will keep on drawing customers in.

Our main strategy for 2025/26 will be:

- To tighten stock control.

- To monitor spend closely and to ensure that any variances in overheads are investigated.

- Ensuring that our online presence continues to be positive and current.

- To foresee any problems before they manifest.

- To look at our energy use and look to alternative supplies.

- To keep up to date with any government guidelines.

- To take advantage of any government assistance.

- To continue to train and retain our core members of staff.

- To give our customers the best service we can even in difficult condition.

In my opinion, both sites are positive going concerns and that whilst next year will be challenging, we are best prepared for any obstacles that come our way.

KEY PERFORMANCE INDICATORS

The main key performance indicator for the group is the gross profit margin as seen in the consolidated profit and loss account. Given the straightforward nature of the group, the directors are of the opinion that a more detailed analysis using key performance indicators is not necessary for an understanding of the development, performance or position.

PRINCIPAL RISKS AND UNCERTAINTIES

The major risks that the group faces are from competition from new garden centres and the consolidation being seen in the industry.

A second risk faced by the group is that of reduced disposable income of customers due to the inflation, interest rate rises and energy prices.

Both of these risks are mitigated by the group's reputation which has helped to retain a loyal customer base. The group also offers a wide range within its centre to be a destination, not just a garden centre. We have increased production in our nursery to help to mitigate cost inflation. This also endorses our greener policy because we use less transport when growing our own plants on site.

A third risk is that business rates are due to increase for retail businesses to the level they were at pre covid. We are also acutely aware that the new government are not business friendly, with an expected increase in both minimum wage and employers N.I. contributions. Also the proposed changes to employment law will have an impact on staffing. The costing of these changes will have a major impact on the business.

A fourth risk is the rise in minimum wage and the increase in NI and pension contribution.

A final risk is the weather, as bad weather in the key sales period between April and July reduces customer gardening activities and thus customer spending.

ON BEHALF OF THE BOARD:

Mrs J Whitworth Biehler - Director

6 May 2026

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

PRINCIPAL ACTIVITY

The principal activity of the group in the year under review was that of the operation of garden centres.

DIVIDENDS

Interim dividends per share were paid during the year as follows:

A Ordinary £1

-

0.929p

- 22 April 2025

B Ordinary £1

-

8.488p

- 22 April 2025

C Ordinary £1

-

0.625p

- 22 April 2025

The total distribution of dividends for the year ended 31 August 2025 will be £ 109,000 .

DIRECTORS

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

R F F Biehler

Mrs Y Biehler

N Wallis

Mrs J Whitworth Biehler

Mrs E Biehler-Birch

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.

ON BEHALF OF THE BOARD:

Mrs J Whitworth Biehler - Director

6 May 2026

Opinion

We have audited the financial statements of Bay Tree Nurseries Limited (the 'parent company') and its subsidiaries (the 'group') for the year ended 31 August 2025 which comprise the Consolidated Statement of Comprehensive Income, Consolidated Statement of Financial Position, Company Statement of Financial Position, Consolidated Statement of Changes in Equity, Company Statement of Changes in Equity, Consolidated Statement of Cash Flows and Notes to the Consolidated 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 group's and of the parent company affairs as at 31 August 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 four, 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:

We have identified areas of laws and regulations that could reasonably be expected to have a material effect on the financial statements from our general commercial experience, knowledge of the sector, a review of regulatory and legal correspondence and through discussions with Directors and other management obtained as part of the work required by auditing standards. We have also discussed with the Directors and other management the policies and procedures relating to compliance with laws and regulations. We communicated laws and regulations throughout the team and remained alert to any indications of non-compliance throughout the audit.

The potential impact of different laws and regulations varies considerably. Firstly, the company is subject to laws and regulations that directly impact the financial statements (for example financial reporting legislation) and we have assessed the extent of compliance with such laws as part of our financial statements audit. We evaluated management's incentives and opportunities for fraudulent manipulation of the financial statements (including risk of override of controls) and determined that the principal risks were related to management bias in accounting estimates and judgemental areas of the financial statements such as depreciation of tangible fixed assets, as well as the risk of inappropriate journal entries to increase reported profitability. Audit procedures performed by the engagement team included the identification and testing of material and unusual journal entries and challenging

management on key accounting estimates, assumptions and judgements made in the preparation of the financial statements. We carried out detailed substantive tests on accounting estimates, including reviewing the methods used by management to make those estimates, re-performing the calculation, and reviewing the outcome of prior year estimates.

Secondly, the company is subject to other laws and regulations where the consequence for non-compliance could have a material effect on the amounts or disclosures in the financial statements. We identified the following areas as those most likely to have such an effect: Health and Safety regulations, Food Safety regulations and Employment laws.

Auditing standards limit the required audit procedures to identify non-compliance with these laws and regulations to enquiry of the Directors and other management and inspection. This inspection included an assessment of the company's employment and health and safety controls. Through these procedures, if we became aware of any non-compliance, we considered the impact on the procedures performed on the related financial statement items.

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 further removed non-compliance with laws and regulations is from the events and transactions reflected in the financial statements, the less likely the inherently limited procedures required by auditing standards would identify it. As with any audit, there is a greater risk of non-detection of irregularities as these may involve collusion, intentional omissions of the override of internal controls. We are not responsible for preventing non-compliance 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.

Alistair Main FCA (Senior Statutory Auditor)

for and on behalf of Duncan & Toplis Audit Limited, Statutory Auditor

Enterprise Way

Pinchbeck

Spalding

Lincolnshire

PE11 3YR

12 May 2026

TURNOVER

8,281,532

7,446,216

Cost of sales

5,963,674

5,419,823

GROSS PROFIT

2,317,858

2,026,393

Administrative expenses

2,191,050

2,064,518

126,808

(38,125

)

Other operating income

350,322

335,521

OPERATING PROFIT

4

477,130

297,396

Interest receivable and similar income

23,862

15,525

500,992

312,921

Interest payable and similar expenses

5

75,544

92,765

PROFIT BEFORE TAXATION

425,448

220,156

Tax on profit

6

140,854

93,463

PROFIT FOR THE FINANCIAL YEAR

284,594

126,693

OTHER COMPREHENSIVE INCOME

-

-

TOTAL COMPREHENSIVE INCOME FOR THE YEAR

284,594

126,693

Profit attributable to:

Owners of the parent

284,594

126,693

Total comprehensive income attributable to:

Owners of the parent

284,594

126,693

FIXED ASSETS

Intangible assets

9

224,378

277,244

Tangible assets

10

5,070,033

5,045,539

Investments

11

-

-

Investment property

12

370,436

370,436

5,664,847

5,693,219

CURRENT ASSETS

Stocks

13

986,644

911,996

Debtors

14

187,995

107,629

Cash at bank and in hand

1,703,385

1,505,643

2,878,024

2,525,268

CREDITORS

Amounts falling due within one year

15

1,475,491

1,127,381

NET CURRENT ASSETS

1,402,533

1,397,887

TOTAL ASSETS LESS CURRENT LIABILITIES

7,067,380

7,091,106

CREDITORS

Amounts falling due after more than one year

16

(810,799

)

(993,631

)

PROVISIONS FOR LIABILITIES

20

(68,192

)

(84,680

)

NET ASSETS

6,188,389

6,012,795

CAPITAL AND RESERVES

Called up share capital

21

4,750,000

4,750,000

Share premium

22

8,898

8,898

Retained earnings

22

1,429,491

1,253,897

SHAREHOLDERS' FUNDS

6,188,389

6,012,795

The financial statements were approved by the Board of Directors and authorised for issue on 6 May 2026 and were signed on its behalf by:

Mrs J Whitworth Biehler - Director

FIXED ASSETS

Intangible assets

9

224,378

277,244

Tangible assets

10

3,412,632

3,475,867

Investments

11

1

1

Investment property

12

370,436

370,436

4,007,447

4,123,548

CURRENT ASSETS

Stocks

13

701,318

655,095

Debtors

14

481,291

400,241

Cash at bank and in hand

1,117,899

862,069

2,300,508

1,917,405

CREDITORS

Amounts falling due within one year

15

1,024,657

760,856

NET CURRENT ASSETS

1,275,851

1,156,549

TOTAL ASSETS LESS CURRENT LIABILITIES

5,283,298

5,280,097

PROVISIONS FOR LIABILITIES

20

51,687

66,550

NET ASSETS

5,231,611

5,213,547

CAPITAL AND RESERVES

Called up share capital

21

4,750,000

4,750,000

Share premium

22

8,898

8,898

Retained earnings

22

472,713

454,649

SHAREHOLDERS' FUNDS

5,231,611

5,213,547

Company's profit for the financial year

127,064

38,045

The financial statements were approved by the Board of Directors and authorised for issue on 7 May 2026 and were signed on its behalf by:

Mrs J Whitworth Biehler - Director

Called up

share

Retained

Share

Total

capital

earnings

premium

equity

£

£

£

£

Balance at 1 September 2023

4,750,000

1,180,704

8,898

5,939,602

Changes in equity

Dividends

-

(53,500

)

-

(53,500

)

Total comprehensive income

-

126,693

-

126,693

Balance at 31 August 2024

4,750,000

1,253,897

8,898

6,012,795

Changes in equity

Dividends

-

(109,000

)

-

(109,000

)

Total comprehensive income

-

284,594

-

284,594

Balance at 31 August 2025

4,750,000

1,429,491

8,898

6,188,389

Called up

share

Retained

Share

Total

capital

earnings

premium

equity

£

£

£

£

Balance at 1 September 2023

4,750,000

470,104

8,898

5,229,002

Changes in equity

Dividends

-

(53,500

)

-

(53,500

)

Total comprehensive income

-

38,045

-

38,045

Balance at 31 August 2024

4,750,000

454,649

8,898

5,213,547

Changes in equity

Dividends

-

(109,000

)

-

(109,000

)

Total comprehensive income

-

127,064

-

127,064

Balance at 31 August 2025

4,750,000

472,713

8,898

5,231,611

Cash flows from operating activities

Cash generated from operations

1

797,765

589,618

Interest paid

(75,409

)

(92,685

)

Interest element of hire purchase or finance lease rental payments paid

(135

)

(80

)

Tax paid

(105,045

)

(35,230

)

Net cash from operating activities

617,176

461,623

Cash flows from investing activities

Purchase of tangible fixed assets

(199,863

)

(49,611

)

Sale of investment property

-

238,432

Interest received

23,862

15,525

Net cash from investing activities

(176,001

)

204,346

Cash flows from financing activities

Loan repayments in year

(126,030

)

(96,641

)

Amount withdrawn by directors

(8,403

)

(7,575

)

Equity dividends paid

(109,000

)

(53,500

)

Net cash from financing activities

(243,433

)

(157,716

)

Increase in cash and cash equivalents

197,742

508,253

Cash and cash equivalents at beginning of year

2

1,505,643

997,390

Cash and cash equivalents at end of year

2

1,703,385

1,505,643

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

2025

2024

£

£

Profit before taxation

425,448

220,156

Depreciation charges

228,235

230,472

Profit on disposal of fixed assets

-

(29,579

)

Finance costs

75,544

92,765

Finance income

(23,862

)

(15,525

)

705,365

498,289

(Increase)/decrease in stocks

(74,648

)

31,504

Increase in trade and other debtors

(80,366

)

(57,527

)

Increase in trade and other creditors

247,414

117,352

Cash generated from operations

797,765

589,618

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 August 2025

31.8.25

1.9.24

£

£

Cash and cash equivalents

1,703,385

1,505,643

Year ended 31 August 2024

31.8.24

1.9.23

£

£

Cash and cash equivalents

1,505,643

997,390

3.	ANALYSIS OF CHANGES IN NET FUNDS

At 1.9.24

Cash flow

At 31.8.25

£

£

£

Net cash

Cash at bank and in hand

1,505,643

197,742

1,703,385

1,505,643

197,742

1,703,385

Debt

Debts falling due within 1 year

(72,041

)

(56,802

)

(128,843

)

Debts falling due after 1 year

(993,631

)

182,832

(810,799

)

(1,065,672

)

126,030

(939,642

)

Total

439,971

323,772

763,743

1.	GENERAL INFORMATION

Bay Tree Nurseries Limited is a limited company incorporated in England and Wales. The address of the registered office is given in the company information on page one of these financial statements. The nature of the company's operations and principal activities are detailed in the report of the directors on page 5.

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

The significant accounting policies applied in the preparation of these financial statements are set out below. These policies have been consistently applied to all years presented unless otherwise stated.

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 group accounts consolidate the financial statements of the company and its subsidiary undertakings. Intra-group profits are eliminated on consolidation.

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 group's accounting policies, management is required to make judgements, estimates and assumptions about the carrying value 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 only 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 stock provisions on 'live' products.These are based on knowledge of the product range and review of losses throughout the year.

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 arising on the acquisition of a business is capitalised as an intangible asset and amortised against profit over 20 years, or it's expected useful life, whichever is the shorter.

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.

Freehold property

-

2% on cost

Fixtures and fittings

-

15% on reducing balance

Motor vehicles

-

25% on reducing balance

Computer equipment

-

25% on reducing balance and 15% on reducing balance

Tangible fixed assets are stated at cost (or deemed cost) or valuation less accumulated depreciation and accumulated impairment losses. Cost includes costs directly attributable to making the asset capable of operating as intended.

Investment property

Investment property is shown at most recent valuation. Any aggregate surplus or deficit arising from changes in fair value is recognised in profit or loss.

Stocks

Stocks are valued at the lower of cost and estimated selling price less costs to complete and sell and after making due allowance for obsolete and slow moving items.

Financial instruments

Basic financial assets, including trade and other debtors and cash and bank balances are initially recognised at transaction price, unless the arrangement constitute a financing transaction, where the transaction is measured at the present value of the future receipts discounted at a market rate of interest.

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 the income statement.

Debt instruments are subsequently carried at amortised cost, using the effective interest rate method.

Trade creditors 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 creditors are recognised initially at transaction price and subsequently measured at amortised cost using the effective interest method.

Taxation

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

Current or deferred taxation assets and liabilities are not discounted.

Current tax is recognised at the amount of tax payable using the tax rates and laws that have been enacted or substantively enacted by the statement of financial position date.

Deferred tax

Deferred tax is recognised in respect of all timing differences that have originated but not reversed at the statement of financial position date.

Timing differences arise from the inclusion of income and expenses in tax assessments in periods different from those in which they are recognised in financial statements. Deferred tax is measured using tax rates and laws that have been enacted or substantively enacted by the year end and that are expected to apply to the reversal of the timing difference.

Unrelieved tax losses and other deferred tax assets are recognised only to the extent that it is probable that they will be recovered against the reversal of deferred tax liabilities or other future taxable profits.

Foreign currencies

Assets and liabilities in foreign currencies are translated into sterling at the rates of exchange ruling at the statement of financial position date. Transactions in foreign currencies are translated into sterling at the rate of exchange ruling at the date of transaction. Exchange differences are taken into account in arriving at the operating result.