REGISTERED NUMBER: 07921852 (England and Wales)

Group Strategic Report,

Report of the Directors and

Consolidated Financial Statements

for the Year Ended 31 August 2025

for

Ark Property & Investments Ltd

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 Financial Statements

16

DIRECTORS:

Mrs R L Marks

Mrs K R Glover

Mr J C Webb

REGISTERED OFFICE:

140 Bay View Road

Northam

Bideford

Devon

EX39 1BJ

REGISTERED NUMBER:

07921852 (England and Wales)

AUDITORS:

Streets Audit LLP

Metherell Gard

Burn View

Bude

Cornwall

EX23 8BX

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

FAIR REVIEW OF THE BUSINESS

The board are pleased with the performance in the year, in view of the current economic climate and the constraints of local authorities constantly questioning fee levels, this coupled with the investment that has been implemented across all of our homes and our latest home, the performance this year was expected.

PRINCIPAL RISKS AND UNCERTAINTIES

The care sector continues to operate in a challenging environment, with ongoing pressures affecting income streams, operating costs, regulatory compliance, and workforce availability. Reduced government funding, increasing employment costs, inflationary pressures, and recruitment challenges remain significant risks to the business and the wider sector. These financial pressures have required the Company to carefully review its operational structure to ensure long-term sustainability. During the year, redundancies were implemented across certain areas of the business to improve operational efficiency, streamline management structures, and reduce costs in response to lower funding levels. While these decisions were difficult, they were considered necessary to protect the long-term viability of the Company and maintain high-quality service delivery.

While agency staff continue to be utilised where necessary to maintain safe staffing levels and high-quality care, reliance on agency usage has reduced as the Company strengthens recruitment and retention of its permanent workforce.

The Company has continued to invest significantly in its properties through repairs, maintenance, and capital expenditure programmes to ensure its homes remain safe, compliant, functional, and welcoming for residents. These major refurbishment projects are nearing completion and are expected to conclude in the next quarter, reducing future exceptional capital demands.

Recent managerial changes across parts of the business impacted occupancy levels and contributed to higher staffing costs during the year. However, with updated management teams now in place, these transitional effects are not expected to materially impact future trading. The Board remains focused on stabilising occupancy, improving operational efficiency, and maintaining high standards of care across all services.

Following the year end, the Company completed the sale of Valley View Residential Care Home as part of its strategic review of operations and asset portfolio. This disposal supports the Company's broader objectives of strengthening financial resilience, focusing resources on core operations, and enhancing long-term sustainability.

Despite ongoing sector-wide uncertainties, including regulatory changes, fee pressures, workforce shortages, and continued funding constraints, the Company remains committed to delivering high-quality care, maintaining operational excellence, and adapting strategically to market conditions.

OBJECTIVE AND POLICIES

Ark continues to develop its working practices, governance frameworks, and operational procedures to ensure its services consistently meet and exceed Care Quality Commission (CQC) standards. Internal quality assurance systems are aligned closely with CQC inspection frameworks, ensuring that compliance, safety, and quality of care remain central to all operational activities.

The Company's extensive refurbishment and capital improvement programmes are approaching completion, with a clear emphasis on creating enhanced environments for residents, staff, and visitors while ensuring long-term operational efficiency.

Looking ahead, the Company is focused on sustainable growth through prudent financial management, targeted cost-saving initiatives, and operational efficiencies, including organisational restructuring, workforce optimisation, and the continued reduction of agency staffing dependency. Strategic priorities also include workforce development, occupancy growth, and the effective deployment of resources following the post year-end sale of Valley View Residential Care Home. These measures are intended to strengthen the Company's market position, improve resilience, and support continued delivery of high-quality care services despite ongoing financial pressures from reduced public sector funding and an increasingly competitive and regulated sector.

FINANCIAL RISKS

Price risk - The group is exposed to price risk as a result of its operations. Increases in costs cannot easily be offset by increases in tariffs. Instead, operational efficiencies have been identified to maintain profitability and occupancy levels are constantly monitored.

Credit risk - A large proportion of the groups customers are in the public sector; however for the private sector the group has implemented policies that require appropriate credit checks before contracts are entered. The credit given to customers is subject to limits which are determined and reassessed by the directors.

Liquidity risk - The group ensures that it has sufficient available funds for operations and planned expansions.

Cash Flow risk - The group maintains adequate cash balances to ensure that there are no cash flow issues.

KEY PERFORMANCE INDICATORS

The profit before tax for the year was £439,808 (2024: £60,657) and occupancy of beds across care homes was 92.2% (2024:90.2%).

ENVIRONMENTAL AND SOCIAL MATTERS

Information about environmental matters, the companies employees, social community and human rights issues have not been provided as the directors do not believe this is material to gain an understanding of the business.

ON BEHALF OF THE BOARD:

Mrs R L Marks - Director

20 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 ACTIVITIES

The principal activities of the group continued to be that of investment property rental, provision of residential care services and a nursing agency.

DIVIDENDS

An interim dividend of £5,000 per share was paid on 21st July 2025. The directors recommend that no final dividend be paid.

The total distribution of dividends for the year ended 31 August 2025 will be £15,000.

EVENTS SINCE THE END OF THE YEAR

Information relating to events since the end of the year is given in the notes to the financial statements.

DIRECTORS

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

Mrs R L Marks

Mrs K R Glover

Mr J C Webb

DISABLED WORKERS

In line with our recruitment policy, we interview and onboard individuals with the appropriate competences for a role. If the new recruit was a person with a disability, we would work with the individual to establish what reasonable adjustments may need to be made in order for them to reach their full potential whilst working for the Group.

We as an employer are also aware that life can be hard and individuals in our employment can become disabled at some point throughout their journey with us. We would consider reasonable adjustments such as shift changes, adaptation of computer systems such as voice activation, and structural changes to our premises if required amongst others. This would all be undertaken with full involvement of the employee in question.

In line with our Equal Opportunities Policy, the Group is committed to creating an environment in which differences are recognised and valued. Everyone is entitled to work within an environment that promotes dignity and respect to all.

ENGAGEMENT WITH EMPLOYEES

The directors are committed to engaging with our employees throughout the company on subjects that affect them and providing updates on the wider market as well as the business. This is done by different methods: we use anonymous online platforms, site visits, face to face meetings, staff committee meetings and written updates to ensure updates are provided throughout the year. The directors believe this is a beneficial way of staying in touch with our employees through this variety of methods and through a variety of people in the business as opposed to one person.

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.

Strategic report

The group has chosen in accordance with Companies Act 2006, s.414C(11) to set out in the group's strategic report information required by Large and Medium-sized Companies and Groups (Accounts and Reports) Regulations 2008 Sch. 7 to be contained in the directors' report. It has done so in respect of the 'Review of Business' and Development and Performance' of the group during the year.

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 R L Marks - Director

20 May 2026

Opinion

We have audited the financial statements of Ark Property & Investments Ltd (the 'parent company') and its subsidiaries (the 'group') for the year ended 31 August 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 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 pages four and 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.

Extent to which the audit was considered capable of detecting irregularities, including fraud

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

Because of the inherent limitations of an audit, there is a risk that we will not detect all irregularities, including those leading to a material misstatement in the financial statements or non-compliance with regulation. This risk increases the more that compliance with a law or regulation is removed from the events and transactions reflected in the financial statements, as we will be less likely to become aware of instances of non-compliance. The risk of not detecting a material misstatement resulting from fraud is higher than for one resulting from error, as fraud may involve collusion, forgery, intentional omissions, misrepresentations, or the override of internal control.

As part of our audit planning, we obtained an understanding of the legal and regulatory framework that is applicable to the entity. We gained an understanding of the entity and the industry in which the entity operates as part of this assessment to identify the key laws and regulations affecting the entity. We also considered those laws and regulations that have a direct impact on the preparation of the financial statements, primarily the companies Act 2006.

We discussed with management and those charged with governance around how the compliance with these laws and regulations is monitored and discussed policies and procedures in place. As part of our planning procedures, we assessed the risk of any non-compliance with laws and regulations on the entity's ability to continue trading and the risk of material misstatement to the accounts.

We also evaluated management's incentives and opportunities for fraudulent manipulation of the financial statements. Management bias was also reviewed in regard to accounting estimates and judgemental areas which have a direct impact on the entity's profits.

Based on this understanding we designed our audit procedures of any non-compliance with such laws and regulations. Our procedures involved the following:

- Enquires of management regarding their knowledge of any non-compliance with laws and regulations that could affect the financial statements. As part of these enquiries we also discussed with management whether there have been any known instances of fraud;

- Understanding of management's internal controls designed to prevent and detect irregularities, and fraud;

- Designing audit procedures to incorporate unpredictability around the nature, timing or extent of our testing of income and expenses in regard to cut-off and valuation;

- Auditing the risk of management override of controls, including through testing journal entries and other adjustments

for appropriateness, and evaluating the business rationale of significant transactions outside the normal course of

business;

- Reviewing estimates and judgements made in the accounts for any indication of bias and challenged assumptions

used by management in making the estimates.

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.

David Nigel Cox (Senior Statutory Auditor)

for and on behalf of Streets Audit LLP

Metherell Gard

Burn View

Bude

Cornwall

EX23 8BX

20 May 2026

TURNOVER

3

9,206,740

8,638,148

Cost of sales

6,990,006

6,667,510

GROSS PROFIT

2,216,734

1,970,638

Distribution costs

250

240

Administrative expenses

1,804,329

1,944,148

1,804,579

1,944,388

412,155

26,250

Other operating income

4

12,418

7,816

OPERATING PROFIT

6

424,573

34,066

Interest receivable and similar income

8

27,087

26,591

451,660

60,657

Interest payable and similar expenses

9

11,852

-

PROFIT BEFORE TAXATION

439,808

60,657

Tax on profit

10

173,100

73,499

PROFIT/(LOSS) FOR THE FINANCIAL YEAR

266,708

(12,842

)

Profit/(loss) attributable to:

Owners of the parent

266,708

(12,842

)

PROFIT/(LOSS) FOR THE YEAR

266,708

(12,842

)

OTHER COMPREHENSIVE INCOME

-

-

TOTAL COMPREHENSIVE INCOME FOR THE YEAR

266,708

(12,842

)

Total comprehensive income attributable to:

Owners of the parent

266,708

(12,842

)

FIXED ASSETS

Intangible assets

13

713,220

831,496

Tangible assets

14

5,121,821

4,587,730

Investments

15

-

-

Investment property

16

1,950,000

1,950,000

7,785,041

7,369,226

CURRENT ASSETS

Debtors

17

492,289

573,626

Cash at bank and in hand

1,785,251

1,262,091

2,277,540

1,835,717

CREDITORS

Amounts falling due within one year

18

1,521,271

913,641

NET CURRENT ASSETS

756,269

922,076

TOTAL ASSETS LESS CURRENT LIABILITIES

8,541,310

8,291,302

PROVISIONS FOR LIABILITIES

19

148,297

149,997

NET ASSETS

8,393,013

8,141,305

CAPITAL AND RESERVES

Called up share capital

20

3

3

Other reserves

21

493,795

493,795

Retained earnings

21

7,899,215

7,647,507

SHAREHOLDERS' FUNDS

8,393,013

8,141,305

The financial statements were approved by the Board of Directors and authorised for issue on 20 May 2026 and were signed on its behalf by:

Mrs R L Marks - Director

FIXED ASSETS

Intangible assets

13

-

-

Tangible assets

14

4,762,355

4,191,240

Investments

15

102

102

Investment property

16

1,950,000

1,950,000

6,712,457

6,141,342

CURRENT ASSETS

Debtors

17

1,621,170

1,074,426

Cash at bank

185,149

171,783

1,806,319

1,246,209

CREDITORS

Amounts falling due within one year

18

399,952

3,317,699

NET CURRENT ASSETS/(LIABILITIES)

1,406,367

(2,071,490

)

TOTAL ASSETS LESS CURRENT LIABILITIES

8,118,824

4,069,852

PROVISIONS FOR LIABILITIES

19

104,697

104,897

NET ASSETS

8,014,127

3,964,955

CAPITAL AND RESERVES

Called up share capital

20

3

3

Other reserves

21

493,795

493,795

Retained earnings

21

7,520,329

3,471,157

SHAREHOLDERS' FUNDS

8,014,127

3,964,955

Company's profit for the financial year

4,064,172

162,257

The financial statements have been prepared in accordance with the provisions applicable to companies subject to the small companies regime.

The financial statements were approved by the Board of Directors and authorised for issue on 20 May 2026 and were signed on its behalf by:

Mrs R L Marks - Director

Called up

share

Retained

Other

Total

capital

earnings

reserves

equity

£

£

£

£

Balance at 1 September 2023

3

7,660,349

493,795

8,154,147

Deficit for the year

-

(12,842

)

-

(12,842

)

Total comprehensive income

-

(12,842

)

-

(12,842

)

Total transactions with owners, recognised directly in equity

-

-

-

-

Balance at 31 August 2024

3

7,647,507

493,795

8,141,305

Profit for the year

-

266,708

-

266,708

Total comprehensive income

-

266,708

-

266,708

Dividends

-

(15,000

)

-

(15,000

)

Total transactions with owners, recognised directly in equity

-

(15,000

)

-

(15,000

)

Balance at 31 August 2025

3

7,899,215

493,795

8,393,013

Called up

share

Retained

Other

Total

capital

earnings

reserves

equity

£

£

£

£

Balance at 1 September 2023

3

3,308,900

493,795

3,802,698

Changes in equity

Total comprehensive income

-

162,257

-

162,257

Balance at 31 August 2024

3

3,471,157

493,795

3,964,955

Changes in equity

Total comprehensive income

-

4,064,172

-

4,064,172

Dividends

-

(15,000

)

-

(15,000

)

Balance at 31 August 2025

3

7,520,329

493,795

8,014,127

Cash flows from operating activities

Cash generated from operations

26

814,192

234,178

Interest paid

(11,852

)

-

Tax paid

-

(106,944

)

Net cash from operating activities

802,340

127,234

Cash flows from investing activities

Purchase of tangible fixed assets

(710,724

)

(168,683

)

Sale of tangible fixed assets

-

29,999

Interest received

27,087

26,591

Net cash from investing activities

(683,637

)

(112,093

)

Cash flows from financing activities

Other loans - see related party note

206,456

-

Amount introduced by directors

213,001

-

Amount withdrawn by directors

-

(128,631

)

Equity dividends paid

(15,000

)

-

Net cash from financing activities

404,457

(128,631

)

Increase/(decrease) in cash and cash equivalents

523,160

(113,490

)

Cash and cash equivalents at beginning of year

27

1,262,091

1,375,581

Cash and cash equivalents at end of year

27

1,785,251

1,262,091

1.	STATUTORY INFORMATION

Ark Property & Investments Ltd 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

Accounting convention

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 as modified by the revaluation of certain assets.

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

Financial Reporting Standard 102 - reduced disclosure exemptions

This company is a qualifying entity for the purposes of FRS 102, being a member of a group where the parent of that group prepares publicly available consolidated financial statements, including this company, which are intended to give a true and fair view of the assets, liabilities, financial position and profit or loss of the group. The company has therefore taken advantage of exemptions from the following disclosure requirements:

- Section 4 'Statement of Financial Position': Reconciliation of the opening and closing number of shares;

- Section 7 'Statement of Cash Flows': Presentation of a statement of cash flow and related notes and disclosures;

- Section 11 'Basic Financial Instruments' and Section 12 'Other Financial Instrument Issues': Carrying amounts, interest income/expense and net gains/losses for each category of financial instrument; basis of determining fair values; details of collateral, loan defaults or breaches, details of hedges, hedging fair value changes recognised in profit or loss and in other comprehensive income;

- Section 26 'Share based Payment': Share-based payment expense charged to profit or loss, reconciliation of opening and closing number and weighted average exercise price of share options, how the fair value of options granted was measured, measurement and carrying amount of liabilities for cash-settled share-based payments, explanation of modifications to arrangements;

- Section 33 'Related Party Disclosures': Compensation for key management personnel.

Basis of consolidation

The consolidated group financial statements consist of the financial statements of the parent company Ark Property & Investments Ltd together with all entities controlled by the parent company (its subsidiaries) and the group's share of its interests in joint ventures and associates.

All financial statements are made up to 31 August 2025. Where necessary, adjustments are made to the financial statements of subsidiaries to bring the accounting policies used into line with those used by other members of the group.

All intra-group transactions, balances and unrealised gains on transactions between group companies are eliminated on consolidation. Unrealised losses are also eliminated unless the transaction provides evidence of an impairment of the asset transferred.

Going concern

At the time of approving the financial statements, the directors have a reasonable expectation that the company has adequate resources to continue in operational existence for the foreseeable future. Accordingly, the directors continue to adopt the going concern basis of accounting in preparing the financial statements.

Turnover

Turnover is recognised at the fair value of the consideration received or receivable for goods and services provided in the normal course of business, and is shown net of VAT and other sales related taxes. The fair value of consideration takes into account trade discounts, settlement discounts and volume rebates.

Revenue from contracts for the provision of professional services is recognised as the services are performed.

Intangible fixed assets - goodwill

Goodwill represents the excess of the cost of acquisition of a business over the fair value of net assets acquired. It is initially recognised as an asset at cost and is subsequently measured at cost less accumulated amortisation and accumulated impairment losses. Goodwill is considered to have a finite useful life and is amortised on a systematic basis over its expected life, which is 10 years.

Tangible fixed assets

Tangible fixed assets are initially measured at cost and subsequently measured at cost, net of depreciation and any impairment losses.

Depreciation is recognised so as to write off the cost or valuation of assets less their residual values over their useful lives on the following basis:

Freehold property

2% straight line

Leasehold improvements

Straight line over 50 years

Plant and equipment

15% reducing balance

Fixtures and fittings

25% straight line and 15% reducing balance

Motor vehicles

25% straight line

The gain or loss arising on the disposal of an asset is determined as the difference between the sale proceeds and the carrying value of the asset, and is credited or charged to profit or loss.

Investment properties

Investment property, which is property held to earn rentals and/or for capital appreciation, is initially recognised at cost, which includes the purchase cost and any directly attributable expenditure. Subsequently it is measured at fair value at the reporting end date. Changes in fair value are recognised in profit or loss net of the related tax impact.

Fixed asset investments

Equity investments are measured at fair value through profit or loss, except for those equity investments that are not publicly traded and whose fair value cannot otherwise be measured reliably, which are recognised at cost less impairment until a reliable measure of fair value becomes available.

In the parent company financial statements, investments in subsidiaries, associates and jointly controlled entities are initially measured at cost and subsequently measured at cost less any accumulated impairment losses.

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

Impairment of fixed assets

At each reporting period end date, the group reviews the carrying amounts of its tangible and intangible assets to determine whether there is any indication that those assets have suffered an impairment loss. If any such indication exists, the recoverable amount of the asset is estimated in order to determine the extent of the impairment loss (if any). Where it is not possible to estimate the recoverable amount of an individual asset, the company estimates the recoverable amount of the cash-generating unit to which the asset belongs.

The carrying amount of the investments accounted for using the equity method is tested for impairment as a single asset. Any goodwill included in the carrying amount of the investment is not tested separately for impairment.

Recoverable amount is the higher of fair value less costs to sell and value in use.

If the recoverable amount of an asset (or cash-generating unit) is estimated to be less than its carrying amount, the carrying amount of the asset (or cash-generating unit) is reduced to its recoverable amount. An impairment loss is recognised immediately in profit or loss, unless the relevant asset is carried at a revalued amount, in which case the impairment loss is treated as a revaluation decrease.

Recognised impairment losses are reversed if, and only if, the reasons for the impairment loss have ceased to apply. Where an impairment loss subsequently reverses, the carrying amount of the asset (or cash-generating unit) is increased to the revised estimate of its recoverable amount, but so that the increased carrying amount does not exceed the carrying amount that would have been determined had no impairment loss been recognised for the asset (or cash-generating unit) in prior years. A reversal of an impairment loss is recognised immediately in profit and loss, unless the relevant asset is carried at a revalued amount, in which case the reversal of the impairment loss is treated as a revaluation increase.

Cash at bank and in hand

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

Financial instruments

The group has elected to apply the provisions of Section 11 'Basic Financial Instruments' and Section 12 'Other Financial Instruments Issues' of FRS 102 to all of its financial instruments.

Financial instruments are recognised in the group's balance sheet when the group becomes party to the contractual provisions of the instrument.

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

Basic financial assets

Basic financial assets, which include debtors and cash and bank balances, are initially measured at transaction price included transaction costs and are subsequently carried at amortised cost using the effective interest method unless the arrangement constitutes a financing transaction, where the transaction is measured at the present value of the future receipts discounted at a market rate of interest. Financial assets classified as receivable within one year are not amortised.

Basic financial liabilities

Basic financial liabilities, including creditors, bank loans, loans from fellow group companies and preference shares that are classified as debt, are initially recognised at transaction price unless the arrangement constitutes a financing transaction, where the debt instrument is measured at the present value of the future payments discounted at a market rate of interest. Financial liabilities classified as payable within one year are not amortised.

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. Amounts payable are classified as current liabilities if payment is due within one year or less. If not, they are presented as non-current liabilities.Trade creditors are recognised initially at transaction price and subsequently measured at amortised cost using the effective interest method.

Equity instruments

Equity instruments issued by the group are recorded at the proceeds received, net of transaction costs. Dividends payable on equity instruments are recognised as liabilities once they are no longer at the discretion of the group.

Taxation

The tax expense represents the sum of the tax currently payable and deferred tax.

Current tax

The tax currently payable is based on taxable profit for the year. Taxable profit differs from net profit as reported in the profit and loss account because it excludes items of income or expense that are taxable or deductible in other years and it further excludes items that are never taxable or deductible. The group's liability for current tax is calculated using tax rates that have been enacted or substantively enacted by the reporting end date.

Deferred tax

Deferred tax liabilities are generally recognised for all timing differences and deferred tax assets are recognised to the extent that it is probable that they will be recovered against the reversal of deferred tax liabilities or other future taxable profits. Such assets and liabilities are not recognised if the timing difference arises from goodwill or from the initial recognition of other assets and liabilities in a transaction that affects neither the tax profit nor the accounting profit.

The carrying amount of deferred tax assets is reviewed at each reporting end date and reduced to the extent that it is no longer probable that sufficient taxable profits will be available to allow all or part of the asset to be recovered. Deferred tax is calculated at the tax rates that are expected to apply in the period when the liability is settled or the asset is realised. Deferred tax is charged or credited in the profit and loss account, except when it relates to items charged or credited directly to equity, in which case the deferred tax is also dealt with in equity. Deferred tax assets and liabilities are offset when the company has a legally enforceable right to offset current tax assets and liabilities and the deferred tax assets and liabilities relate to taxes levied by the same tax authority.