REGISTERED NUMBER: 15895027 (England and Wales)

Hallmark Doors Group Limited

Group Strategic Report, Report of the Directors and

Consolidated Financial Statements

for the Period 13th August 2024 to 31st December 2025

Page

Company Information

1

Group Strategic Report

2

Report of the Directors

4

Report of the Independent Auditors

6

Consolidated Income Statement

9

Consolidated Other Comprehensive Income

10

Consolidated Balance Sheet

11

Company Balance Sheet

12

Consolidated Statement of Changes in Equity

13

Company Statement of Changes in Equity

14

Consolidated Cash Flow Statement

15

Notes to the Consolidated Cash Flow Statement

16

Notes to the Consolidated Financial Statements

18

DIRECTORS:

S Chapman

R Gray

M Green

P J Spencer

M Whittaker

D Wilson

S Windas

REGISTERED OFFICE:

Valletta House

Valletta Street

Hedon Road

Hull

East Yorkshire

HU9 5NP

REGISTERED NUMBER:

15895027 (England and Wales)

AUDITORS:

Smailes Goldie

Chartered Accountants

Statutory Auditor

Regent's Court

Princess Street

Hull

East Yorkshire

HU2 8BA

The directors present their strategic report of the company and the group for the period 13th August 2024 to 31st December 2025.

Business

The company was incorporated on 13 August 2024.

On 29th October 2024 the company acquired Hallmark Door Systems Group Limited and its subsidiaries.

This resulted in the company acquiring six wholly owned trading subsidiaries being Hallmark Door Systems Group Limited, Hallmark Group Holdings Limited, Hallmark Group Products Limited, Hallmark Panels Limited, Laminated Supplies Limited and Valletta Surplus Limited.

There are three manufacturing companies in the group. Hallmark Panels Limited manufacture laminated products, doors and door panels. Laminated Supplies Limited manufacture laminated products and Valletta Surplus Limited sells surplus goods.

REVIEW OF BUSINESS

The group has had a very successful trading period, achieving an EBITDA of £5,643,843 for the 14 month trading period reflected in these financial statements and EBITDA of £5,175,810 for the 12 months to 31 December 2025.

Following the acquisition of Hallmark Door Systems Group Limited, the consolidated financial statements reflected goodwill of £23,138,628 which is being amortised over a 10 year period which substantially suppresses the reported profit on page 9. The group is continuing to monitor costs closely to ensure it can continue to trade competitively and successfully in the future. Sufficient working capital is in place to support the group's activities.

The group maintain a number of key performance indicators in respect of sales growth, gross margin and circulation numbers.

The key financial and other performance indicators during the year were as follows:

2025 (14 month period

)

12 month January to December 2025

£

£

Turnover

37,266,401

34,374,811

Profit before taxation

1,381,854

1,138,545

Equity shareholders' funds

11,775,577

11,610,393

EBITDA

5,643,843

5,175,810

The full results for the year are set out on page 9. The directors have paid an interim dividend amounting to £209,921 and do not recommend payment of a final dividend.

PRINCIPAL RISKS AND UNCERTAINTIES

The group faces competition risk from other companies in the industry resulting in pressure to keep prices low whilst ensuring quality remains high. Another key risk is the performance of the UK and European economies.

SECTION 172(1) STATEMENT

The directors have considered the matters set out in section 172 (1) (a) to (f) when performing their duty to

promote the success of the company and the group. The directors continue to ensure that any business decisions consider the long-term impact on all key stakeholders. This includes when evaluating growth opportunities. During the period there has been a strong focus on the continued integration of systems and processes to ensure that going forward the business can function in a single consistent manner. This integration promotes employee development and allows supplier and customer relationships to be elevated to a group level. Environmental issues continue to be a major focus of the business and are a key consideration as the Board compiles its strategy. The board encourages sharing of best practices between group companies to ensure the business operates at the highest possible standard and endeavours for all members to be treated fairly.

In addition, the directors consider the company's employees, suppliers and customers to be integral to its continued success. The directors have reported on engagement with employees, suppliers, customers and others within the Report of the Directors.

FINANCIAL INSTRUMENTS

The group's principal financial instruments comprise bank balances, invoice discounting, trade debtors, trade creditors and asset finance agreements. The main purpose of these instruments is to raise funds for the group's operations and to finance the group's operations.

Due to the nature of the financial instruments used by the group there is minimal exposure to price risk. The group's approach to managing other risks applicable to the financial instruments is shown below.

In respect of bank balances the liquidity risk is managed by maintaining a balance between the continuity of funding and flexibility through the use of invoice discounting facilities within the group.

In respect of bank loans, these comprise loans from financial institutions. The interest rates on the loans are variable and the monthly repayments are fixed. The group manages the liquidity risk by ensuring there are sufficient funds to meet the payments.

In respect of asset finance agreements, the interest rate and monthly repayments are fixed. The group manages the liquidity risk by ensuring there are sufficient funds to meet the payments.

Trade debtors are managed in respect of credit and cash flow risk by policies concerning the credit offered to customers and the regular monitoring of amounts outstanding for both time and credit limits. This is also managed by the use of invoice discounting, which ensures reduced exposure to bad debts and also offers a funding facility for which interest and charges are made.

Trade creditors liquidity risk is managed by ensuring sufficient funds are available to meet amounts as they fall due.

FUTURE OUTLOOK

New products are constantly being added to the group's comprehensive range to meet the demand of its customers.

The board believes that the company's strategy together with its experienced management will be a solid foundation for future successful performance.

ON BEHALF OF THE BOARD:

S Chapman - Director

13th May 2026

The directors present their report with the financial statements of the company and the group for the period 13th August 2024 to 31st December 2025.

INCORPORATION

The group was incorporated on 13th August 2024 .

DIVIDENDS

The total distribution of dividends for the period ended 31st December 2025 will be £209,921.

DIRECTORS

The directors who have held office during the period from 13th August 2024 to the date of this report are as follows:

S Chapman - appointed 13th August 2024

R Gray - appointed 24th October 2024

M Green - appointed 24th October 2024

P J Spencer - appointed 24th October 2024

M Whittaker - appointed 24th October 2024

D Wilson - appointed 24th October 2024

S Windas - appointed 24th October 2024

All the directors who are eligible offer themselves for election at the forthcoming first Annual General Meeting.

EMPLOYEE INVOLVEMENT

During the year, the policy of providing employees with information about the company has been continued through internal media methods in which employees have also been encouraged to present their suggestions and views on the company's performance. Regular meetings are held between local management and employees to allow a free flow of information and ideas.

ENGAGEMENT WITH EMPLOYEES

The directors make use of the senior management teams throughout the group to ensure that all employees are kept up to date with key and relevant information which may concern them as employees. Each location consults its employees as necessary when making material decisions which may affect them. Employees are encouraged to have an interest in the performance of the company and a general awareness of the group's performance.

ENGAGEMENT WITH SUPPLIERS, CUSTOMERS AND OTHERS

The directors continuously consider key stakeholder relationships and develops them through the senior management team. The group considers relationships with customers and suppliers on a global scale and maintains strong relationships at a local and group level. Major group actions take into consideration these business relationships.

STREAMLINED ENERGY AND CARBON REPORTING

The company consumes less than 40,000 kWh of energy each year, therefore energy efficiency disclosures under the Streamlined Energy and Carbon Reporting regulations ("SECR") are not included. On a consolidated basis there is no additional disclosure on the basis that all subsidiary companies are not required to report under the SECR in their own right due to either being non- large companies or consuming less than 40,000 kWh of energy annually.

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;

-	state whether applicable accounting standards have been followed, subject to any material departures disclosed and explained in the financial statements;

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

The directors are responsible for keeping adequate accounting records that are sufficient to show and explain the company's 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 ought to have taken as a director in order to make himself aware of any relevant audit information and to establish that the group's auditors are aware of that information.

AUDITORS

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

ON BEHALF OF THE BOARD:

S Chapman - Director

13th May 2026

Opinion

We have audited the financial statements of Hallmark Doors Group Limited (the 'parent company') and its subsidiaries (the 'group') for the period ended 31st December 2025 which comprise the Consolidated Income Statement, Consolidated Other 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 31st December 2025 and of the group's profit for the period 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:

Our approach to identifying and assessing the risks of material misstatement in respect of irregularities, including fraud and non-compliance with laws and regulations, was focused on specific laws and regulations which we considered may have a direct material effect on the financial statements or the operations of the company, including the Companies Act 2006, tax legislation, data protection, anti-bribery, employment, environmental and health and safety legislation. An understanding of these laws and regulations and the extent of compliance was obtained through discussion with management and inspecting legal and regulatory correspondence.

We assessed the susceptibility of the company's financial statements to material misstatement, including obtaining an understanding of how fraud might occur, by making enquiries of management and considering the internal controls in place to mitigate risks of fraud and non-compliance with laws and regulations.

To address the risk of fraud through management bias and override of controls, we:

-

performed analytical procedures to identify any unusual or unexpected relationships;

-

tested journal entries to identify unusual transactions;

-

assessed whether judgements and assumptions made in determining the accounting estimates were indicative of potential bias; and

-

investigated the rationale behind significant or unusual transactions.

In response to the risk of irregularities and non-compliance with laws and regulations, we designed procedures which included, but were not limited to:

- agreeing financial statement disclosures to underlying supporting documentation;

- reading the minutes of meetings of those charged with governance;

- enquiring of management as to actual and potential litigation and claims; and

- reviewing correspondence with HMRC, relevant regulators including the Health and Safety Executive, and the company's legal advisors.

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.

Michael Stocks FCA (Senior Statutory Auditor)

for and on behalf of Smailes Goldie

Chartered Accountants

Statutory Auditor

Regent's Court

Princess Street

Hull

East Yorkshire

HU2 8BA

13th May 2026

TURNOVER

37,266,401

Cost of sales

25,456,859

GROSS PROFIT

11,809,542

Administrative expenses

9,470,706

OPERATING PROFIT

4

2,338,836

Interest receivable and similar income

4,137

2,342,973

Interest payable and similar expenses

5

961,119

PROFIT BEFORE TAXATION

1,381,854

Tax on profit

6

1,000,262

PROFIT FOR THE FINANCIAL PERIOD

381,592

Profit attributable to:

Owners of the parent

381,592

PROFIT FOR THE PERIOD

381,592

OTHER COMPREHENSIVE INCOME

-

TOTAL COMPREHENSIVE INCOME FOR THE PERIOD

381,592

Total comprehensive income attributable to:

Owners of the parent

381,592

FIXED ASSETS

Intangible assets

9

20,484,715

Tangible assets

10

4,032,639

Investments

11

-

24,517,354

CURRENT ASSETS

Stocks

12

3,215,252

Debtors

13

4,421,765

Cash at bank and in hand

660,228

8,297,245

CREDITORS

Amounts falling due within one year

14

13,196,266

NET CURRENT LIABILITIES

(4,899,021

)

TOTAL ASSETS LESS CURRENT LIABILITIES

19,618,333

CREDITORS

Amounts falling due after more than one year

15

(7,084,054

)

PROVISIONS FOR LIABILITIES

18

(759,172

)

NET ASSETS

11,775,107

CAPITAL AND RESERVES

Called up share capital

19

11,603,436

Retained earnings

20

171,671

11,775,107

The financial statements were approved by the Board of Directors and authorised for issue on 13th May 2026 and were signed on its behalf by:

S Chapman - Director

FIXED ASSETS

Intangible assets

9

-

Tangible assets

10

-

Investments

11

24,143,085

24,143,085

CURRENT ASSETS

Debtors

13

3,289,519

Cash at bank

5,042

3,294,561

CREDITORS

Amounts falling due within one year

14

7,974,229

NET CURRENT LIABILITIES

(4,679,668

)

TOTAL ASSETS LESS CURRENT LIABILITIES

19,463,417

CREDITORS

Amounts falling due after more than one year

15

6,325,714

NET ASSETS

13,137,703

CAPITAL AND RESERVES

Called up share capital

19

11,603,436

Retained earnings

20

1,534,267

13,137,703

Company's profit for the financial year

1,744,188

The financial statements were approved by the Board of Directors and authorised for issue on 13th May 2026 and were signed on its behalf by:

S Chapman - Director

Called up

share

Retained

Total

capital

earnings

equity

£

£

£

Changes in equity

Issue of share capital

11,603,436

-

11,603,436

Dividends

-

(209,921

)

(209,921

)

Total comprehensive income

-

381,592

381,592

Balance at 31st December 2025

11,603,436

171,671

11,775,107

Called up

share

Retained

Total

capital

earnings

equity

£

£

£

Changes in equity

Issue of share capital

11,603,436

-

11,603,436

Dividends

-

(209,921

)

(209,921

)

Total comprehensive income

-

1,744,188

1,744,188

Balance at 31st December 2025

11,603,436

1,534,267

13,137,703

Cash flows from operating activities

Cash generated from operations

1

5,458,190

Interest paid

(895,666

)

Interest element of hire purchase payments paid

(65,453

)

Tax paid

(822,647

)

Net cash from operating activities

3,674,424

Cash flows from investing activities

Purchase of tangible fixed assets

(565,702

)

Acquisition of subsidiary

(2,216,335

)

Cash acquired on acquisition

463,601

Sale of tangible fixed assets

120,646

Interest received

4,137

Net cash from investing activities

(2,193,653

)

Cash flows from financing activities

Loan repayments in year

(545,647

)

Amount withdrawn by directors

(64,975

)

Equity dividends paid

(209,921

)

Net cash from financing activities

(820,543

)

Increase in cash and cash equivalents

660,228

Cash and cash equivalents at beginning of period

2

-

Cash and cash equivalents at end of period

2

660,228

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

£

Profit before taxation

1,381,854

Depreciation charges

3,432,884

Loss on disposal of fixed assets

116,794

Finance costs

961,119

Finance income

(4,137

)

5,888,514

Increase in stocks

(600,990

)

Increase in trade and other debtors

(655,701

)

Increase in trade and other creditors

826,367

Cash generated from operations

5,458,190

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:

Period ended 31st December 2025

31.12.25

13.8.24

£

£

Cash and cash equivalents

660,228

-

3.	ANALYSIS OF CHANGES IN NET DEBT

At 13.8.24

Cash flow

At 31.12.25

£

£

£

Net cash

Cash at bank and in hand

-

660,228

660,228

-

660,228

660,228

Debt

Finance leases

-

(1,064,506

)

(1,064,506

)

Debts falling due within 1 year

-

(1,244,713

)

(1,244,713

)

Debts falling due after 1 year

-

(17,206

)

(17,206

)

-

(2,326,425

)

(2,326,425

)

Total

-

(1,666,197

)

(1,666,197

)

4.	ACQUISITION OF BUSINESS

On 29th October 2024 the group acquired the entire share capital of Hallmark Door Systems Group Limited. The amounts recognised at the acquisition date for each class of asset and cost of the business combination were as follows:

Intangible Fixed Assets - Goodwill

23,138,628

Intangible Fixed Assets - Other

45,594

Tangible Fixed Assets

4,032,732

Stocks

2,614,262

Debtors

3,698,689

Cash

463,601

Creditors due within 1 year

7,841,890

Creditors over 1 year

1,242,368

Provisions for liabilities

766,163

24,143,085

Consideration paid in cash

2,000,000

Deferred consideration

4,000,000

Issue of Ordinary share capital

7,600

Issue of Redeemable preference share capital

6,325,714

Issue of Irredeemable preference share capital

11,593,436

Transaction costs

216,335

24,143,085

1.	STATUTORY INFORMATION

Hallmark Doors Group 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.

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 financial statements consolidate the financial statements of Hallmark Doors Group Limited and all its subsidiaries for the period ended 31 December 2025. The subsidiary undertakings have been accounted for under the acquisition method of accounting. No company Statement of Comprehensive Income is presented for Hallmark Doors Group Limited as permitted by section 408 of the Companies Act 2006.

Critical accounting judgements and key sources of estimation uncertainty

In the application of the company's accounting policies, management have been required to make judgments, estimates and assumptions. These estimates which relate to the carrying value of assets and liabilities, where not readily available from other sources, are based on underlying assumptions and experience. Actual results may differ from these estimates. These estimates and assumptions are reviewed on an on-going basis

Sources of estimation uncertainty:

Depreciation rates are based on estimates of the useful lives and residual values of the associated assets.

Bad debt provisions are based on the likely recover of debtor balances.

Warranty provisions are based on an estimated additional spend per unit, for remedial costs applicable to products already delivered.

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 is being amortised over its useful life of 10 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.

Development costs are being amortised evenly over their estimated useful life of nil years.

Operating leases: the Company as lessee

Rentals paid under operating leases are charged to profit or loss on a straight-line basis over the lease term.

Benefits received and receivable as an incentive to sign an operating lease are recognised on a straight-line basis over the lease term, unless another systematic basis is representative of the time pattern of the lessee's benefit from the use of the leased asset.

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

Long leasehold

-

10% on cost

Plant and machinery

-

20% on cost, 6.67% on cost, 5% - 15% on cost and 10% - 20% straight line

Fixtures and fittings

-

between 3 and 10 years

Motor vehicles

-

25% on cost and between 3 and 10 years

Stocks

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

Cost is calculated using the first-in, first-out method and includes all purchase, transport, and handling costs in bringing stocks to their present location and condition.

Finance costs

Finance costs are charged to profit or loss over the term of the debt using the effective interest method so that the amount charged is at a constant rate on the carrying amount. Issue costs are initially recognised as a reduction in the proceeds of the associated capital instrument.

Debtors

Short-term debtors are measured at transaction price, less any impairment. Loans receivable are measured initially at fair value, net of transaction costs, and are measured subsequently at amortised cost using the effective interest method, less any impairment.

Creditors

Short-term creditors are measured at the transaction price. Other financial liabilities, including bank loans, are measured initially at fair value, net of transaction costs, and are measured subsequently at amortised cost using the effective interest method.

Provisions for liabilities

Provisions are recognised when an event has taken place that gives rise to a legal or constructive obligation, a transfer of economic benefits is probable and a reliable estimate can be made.

Provisions are measured as the best estimate of the amount required to settle the obligation, taking into account the related risks and uncertainties.

Increases in provisions are generally charged as an expense to profit or loss.

Dividends

Equity dividends are recognised when they become legally payable. Interim equity dividends are recognised when paid. Final equity dividends are recognised when approved by the shareholders at an annual general meeting.

Basic financial assets

Basic financial assets, which include trade and other receivables, cash and bank balances, are initially measured at their transaction price including transaction costs and are subsequently carried at their amortised cost using the effective interest method, less any provision for impairment, 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.

Discounting is omitted where the effect of discounting is immaterial. The company's cash and cash equivalents, trade and most other receivables due with the operating cycle fall into this category of financial instruments.

Other financial assets

Other financial assets, which includes investments in equity instruments which are not classified as subsidiaries, associates or joint ventures, are initially measured at fair value, which is normally the recognised transaction price. Such assets are subsequently measured at fair value with the changes in the fair value being recognised in the profit or loss. Where other financial assets are not publicly traded, hence their fair value cannot be measured reliably, they are measured at cost less impairment.

Impairment of financial assets

Financial assets are assessed for indicators of impairment at each reporting date. Financial assets are impaired when events, subsequent to their initial recognition, indicate the estimated future cash flows derived from the financial asset(s) have been adversely impacted. The impairment loss will be the difference between the current carrying amount and the present value of the future cash flows at the asset(s) original effective interest rate.

If there is a favourable change in relation to the events surrounding the impairment loss then the impairment can be reviewed for possible reversal. The reversal will not cause the current carrying amount to exceed the original carrying amount had the impairment not been recognised. The impairment reversal is recognised in the profit or loss.

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 the deduction of all its liabilities.

Basic financial liabilities, which include trade and other payables, bank loans and other loans are initially measured at their transaction price after transaction costs. When this constitutes a financing transactions, whereby the debt instrument is measured at the present value of the future receipts discounted at a market rate of interest. Discounting is omitted where the effect of discounting is immaterial.

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

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

Taxation

Taxation for the period comprises current and deferred tax. Tax is recognised in the Consolidated Income Statement, 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 balance sheet date.