REGISTERED NUMBER: 13094344 (England and Wales)

Group Strategic Report, Report of the Director and

Consolidated Financial Statements for the Year Ended 30 September 2025

for

Bridgegate Holdings Limited

Page

Company Information

1

Group Strategic Report

2

Report of the Director

5

Report of the Independent Auditors

7

Consolidated Income Statement

11

Consolidated Other Comprehensive Income

12

Consolidated Balance Sheet

13

Company Balance Sheet

14

Consolidated Statement of Changes in Equity

15

Company Statement of Changes in Equity

16

Consolidated Cash Flow Statement

17

Notes to the Consolidated Cash Flow Statement

18

Notes to the Consolidated Financial Statements

20

DIRECTOR:

Mr J R Clark

SECRETARY:

Mr J R Clark

REGISTERED OFFICE:

9 Woodlands Business Park

Maidenhead

SL6 3UA

REGISTERED NUMBER:

13094344 (England and Wales)

AUDITORS:

WP Audit Limited

Statutory Auditors

TOR

Saint-Cloud Way

Maidenhead

Berkshire

SL6 8BN

The director presents his strategic report of the company and the group for the year ended 30 September 2025.

REVIEW OF BUSINESS

The group continued to operate primarily as a specialist design and build business in the electrical fit out of commercial office space trading under the Bridgegate Electrical brand. The group also has a residential property investment business.

The group delivered a strong performance during the year, with trading broadly in line with the directors' expectations. Turnover increased in the year ended 30 September 2025 compared with 2024. This improvement reflects the successful planning and execution of a number of key projects, supported by the group's established reputation and long-standing relationships with a broad spectrum of clients. The directors consider the group to be well positioned within its sector and remain confident that these client relationships will continue to support profitable trading into 2026.

Operationally, the business continued to focus on delivering high-quality projects on time and within budget. This was achieved despite challenging market conditions, including rising input costs and supply chain constraints affecting the wider industry. The group's project management capabilities and disciplined cost control enabled it to maintain consistency in both gross and net profitability throughout the year.

PRINCIPAL RISKS AND UNCERTAINTIES

Market risk

The group's main risks derive from the uncertainty in the UK economy that could affect performance in its business, as as well as leading to supply chain and inflationary pressures. In addition there is a potential impact to staffing resource in the local market. This has not had a significant impact on the group in the period although there is an increased risk of supply chain disruptions and wider economic disruption that may impact margins in the future.

Staff risk

The group also faces risk in relation to the retention of key staff and labour shortages. The group provides a competitive pay structure which is designed to retain key members of staff. The main staff risk stems from recruitment and some element of retention which is being countered by the group continuing to review terms and conditions of employment relative to the wider market.

Information security risk

Due to the legislative environment including GDPR, an ongoing attention to information security is key to the business. The group has firewall software in place to restrict the impact of cyber-attack and regular training is provided to staff regarding cyber security and being aware of phishing attacks.

Tax risk

The group does not engage in any aggressive tax planning and all transactions undertaken by the group have a business purpose and commercial rationale.

Financial instruments

The group has a normal level of exposure to price, credit, liquidity and cash flow risks arising from trading activities which are almost entirely conducted in sterling, with bank accounts held in these currencies with no material exposure to exchange rate volatility. The group does not enter into any formally designated hedging arrangements.

KEY PERFORMANCE INDICATORS

The company's key financial performance indicators during the period were as follows:

2025

2024

£   s

£   s

Turnover

21,100

14,074

Operating profit margin

8.9%

5.9%

Operating profit

1,885

830

Depreciation

23

8

EBITDA

1,908

838

Shareholders' funds

3,861

2,764

The directors use a number of key performance indicators ("KPIs") to assess the financial and operational performance of the group. The principal KPIs monitored during the year included:

- Turnover - Turnover increased during the year and remained in line with the directors' expectations. Growth reflected both the planned scheduling of key contracts and continued demand from the company's core client base.

- Gross Profit and Gross Profit Margin - The group maintained strong gross profit levels, supported by effective cost management and successful project delivery across its portfolio. Gross margins remained consistent with prior year performance.

- Net Profit Margin - Despite industry-wide increases in material and labour costs, net margins remained stable due to proactive cost control, efficient project planning, and continued monitoring of variable and fixed overheads.

- Operational Delivery Metrics - The directors also monitor non-financial KPIs including project delivery timeliness, budget adherence, cost variance, and client satisfaction measures. These indicators support the group's strategic aim of delivering projects to a high standard while protecting margin performance.

The directors consider the group's operational and financial KPIs to be satisfactory for the year and reflective of a resilient performance in challenging market conditions.

FUTURE DEVELOPMENTS

The directors expect the group to continue trading profitably during 2026. The forward order book and client pipeline remain strong, supported by the group's established market position and ongoing investment in project management capability.

While cost pressures and supply chain challenges are expected to continue into the foreseeable future, the business remains focused on maintaining operational efficiency, controlling costs, and delivering projects to the high standards expected by its clients. The directors believe that these strengths will support further growth and stable profitability in the coming financial year.

ON BEHALF OF THE BOARD:

Mr J R Clark - Director

13 May 2026

The director presents his report with the financial statements of the company and the group for the year ended 30 September 2025.

DIVIDENDS

An interim dividend of 4.995p per share was paid on 30 September 2025. The director recommends that no final dividend be paid.

The total distribution of dividends for the year ended 30 September 2025 will be £ 294,462 .

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.

DIRECTOR

Mr J R Clark held office during the whole of the period from 1 October 2024 to the date of this report.

POLITICAL DONATIONS AND EXPENDITURE

During the year donations were made to various charities totalling £965 (2024: £2,455).

STATEMENT OF DIRECTOR'S RESPONSIBILITIES

The director is responsible for preparing the Group Strategic Report, the Report of the Director and the financial statements in accordance with applicable law and regulations.

Company law requires the director to prepare financial statements for each financial year. Under that law the director has 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 director must not approve the financial statements unless he is 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 director is 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 director is 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 him to ensure that the financial statements comply with the Companies Act 2006. He is 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 director is 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 he 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.

ON BEHALF OF THE BOARD:

Mr J R Clark - Director

13 May 2026

Opinion

We have audited the financial statements of Bridgegate Holdings Limited (the 'parent company') and its subsidiaries (the 'group') for the year ended 30 September 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 30 September 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 director's 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 director with respect to going concern are described in the relevant sections of this report.

Other information

The director is responsible for the other information. The other information comprises the information in the Group Strategic Report and the Report of the Director, 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 Director 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 Director 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 Director.

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 director's remuneration specified by law are not made; or

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

Responsibilities of director

As explained more fully in the Statement of Director's Responsibilities set out on page five, the director is 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 director determines 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 director is 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 director either intends to liquidate the group or the parent company or to cease operations, or has 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:

- the engagement partner ensures that the engagement team collectively had the appropriate competence, capabilities and skills to identify or recognise non-compliance with applicable laws and regulations;

- we identified the laws and regulations applicable to the group and the parent company through discussions with directors and other management, and from our commercial knowledge and experience of the sector;

- we focused on specific laws and regulations which were considered may have a direct material effect on the financial statements or the operations of the group and the parent company, including the Companies Act 2006, taxation legislation, anti-bribery, employment and health and safety legislation;

- we assessed the extent of compliance with the laws and regulations identified above through making enquiries of management and inspecting legal correspondence; and

- identified laws and regulations were communicated within the audit team regularly and the team remained alert to instances of non-compliance throughout the audit.

- We assessed the susceptibility of the group's and the parent company's financial statements to material misstatement, including obtaining an understanding of how fraud might occur by;

- making enquiries of management as to where they considered there was susceptibility to fraud, their knowledge of actual, suspected and alleged fraud;

- considering the internal controls in place to mitigate risks of fraud and non-compliance with laws and regulations and;

- understanding the design of the group and the parent company's remuneration policies.

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 rational behind significant or unusual transactions.

Audit response to risks identified

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 disclosures to underlying supporting documentation;

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

- reviewing correspondence with HMRC, relevant regulators and the group's legal advisors.

There are inherent limitations in our audit procedures described above. The more removed that laws and regulations are from financial transactions, the less likely it is that we would become aware of non-compliance. Auditing standards also limit the audit procedures required to identify non-compliance with laws and regulations to enquiry of the directors and other management and the inspection of regulatory and legal correspondence, if any.

Material misstatements that arise due to fraud can be harder to detect than those that arise from error as they may involve deliberate concealment or collusion.

A further description of our responsibilities for the audit of the financial statements is located on the Financial Reporting Council's website at www.frc.org.uk/auditorsresponsibilities. This description forms part of our Report of the Auditors.

Use of our report

This report is made solely to the company's members, as a body, in accordance with Chapter 3 of Part 16 of the Companies Act 2006. Our audit work has been undertaken so that we might state to the company's members those matters we are required to state to them in a Report of the Auditors and for no other purpose. To the fullest extent permitted by law, we do not accept or assume responsibility to anyone other than the company and the company's members as a body, for our audit work, for this report, or for the opinions we have formed.

Philippa Duckworth BSc FCCA (Senior Statutory Auditor)

for and on behalf of WP Audit Limited

Statutory Auditors

TOR

Saint-Cloud Way

Maidenhead

Berkshire

SL6 8BN

21 May 2026

TURNOVER

21,100,627

14,073,891

Cost of sales

(18,637,371

)

(12,812,735

)

GROSS PROFIT

2,463,256

1,261,156

Administrative expenses

(577,678

)

(431,089

)

OPERATING PROFIT

4

1,885,578

830,067

Income from fixed asset investments

17,500

-

1,903,078

830,067

Gain/loss on revaluation of investment property

15,395

(15,403

)

1,918,473

814,664

Interest payable and similar expenses

5

(42,806

)

(46,603

)

PROFIT BEFORE TAXATION

1,875,667

768,061

Tax on profit

6

(485,005

)

(195,615

)

PROFIT FOR THE FINANCIAL YEAR

1,390,662

572,446

Profit attributable to:

Owners of the parent

1,390,662

572,446

PROFIT FOR THE YEAR

1,390,662

572,446

OTHER COMPREHENSIVE INCOME

-

-

TOTAL COMPREHENSIVE INCOME FOR THE YEAR

1,390,662

572,446

Total comprehensive income attributable to:

Owners of the parent

1,390,662

572,446

FIXED ASSETS

Tangible assets

9

147,179

22,910

Investments

10

50,000

100,000

Investment property

11

1,304,999

1,289,605

1,502,178

1,412,515

CURRENT ASSETS

Debtors

12

4,760,844

2,704,007

Cash at bank and in hand

2,216,020

1,549,297

6,976,864

4,253,304

CREDITORS

Amounts falling due within one year

13

(4,027,865

)

(2,284,761

)

NET CURRENT ASSETS

2,948,999

1,968,543

TOTAL ASSETS LESS CURRENT LIABILITIES

4,451,177

3,381,058

CREDITORS

Amounts falling due after more than one year

14

(509,594

)

(570,590

)

PROVISIONS FOR LIABILITIES

19

(80,906

)

(45,991

)

NET ASSETS

3,860,677

2,764,477

CAPITAL AND RESERVES

Called up share capital

20

5,895,000

5,895,000

Other reserves

21

(5,749,898

)

(5,749,898

)

Retained earnings

21

3,715,575

2,619,375

SHAREHOLDERS' FUNDS

3,860,677

2,764,477

The financial statements were approved by the director and authorised for issue on 13 May 2026 and were signed by:

Mr J R Clark - Director

FIXED ASSETS

Tangible assets

9

-

-

Investments

10

5,749,999

5,749,999

Investment property

11

-

-

5,749,999

5,749,999

CURRENT ASSETS

Debtors

12

1,180,524

851,691

Cash at bank

5,001

2,931

1,185,525

854,622

CREDITORS

Amounts falling due within one year

13

(8,260

)

(11,706

)

NET CURRENT ASSETS

1,177,265

842,916

TOTAL ASSETS LESS CURRENT LIABILITIES

6,927,264

6,592,915

CAPITAL AND RESERVES

Called up share capital

20

5,895,000

5,895,000

Retained earnings

21

1,032,264

697,915

SHAREHOLDERS' FUNDS

6,927,264

6,592,915

Company's profit for the financial year

628,811

1,101,321

The financial statements were approved by the director and authorised for issue on 13 May 2026 and were signed by:

Mr J R Clark - Director

Called up

share

Retained

Other

Total

capital

earnings

reserves

equity

£

£

£

£

Balance at 1 October 2023

5,895,000

2,719,503

(5,749,898

)

2,864,605

Changes in equity

Dividends

-

(672,574

)

-

(672,574

)

Total comprehensive income

-

572,446

-

572,446

Balance at 30 September 2024

5,895,000

2,619,375

(5,749,898

)

2,764,477

Changes in equity

Dividends

-

(294,462

)

-

(294,462

)

Total comprehensive income

-

1,390,662

-

1,390,662

Balance at 30 September 2025

5,895,000

3,715,575

(5,749,898

)

3,860,677

Called up

share

Retained

Total

capital

earnings

equity

£

£

£

Balance at 1 October 2023

5,895,000

269,168

6,164,168

Changes in equity

Dividends

-

(672,574

)

(672,574

)

Total comprehensive income

-

1,101,321

1,101,321

Balance at 30 September 2024

5,895,000

697,915

6,592,915

Changes in equity

Dividends

-

(294,462

)

(294,462

)

Total comprehensive income

-

628,811

628,811

Balance at 30 September 2025

5,895,000

1,032,264

6,927,264

Cash flows from operating activities

Cash generated from operations

1

1,767,612

1,650,858

Interest paid

(42,806

)

(46,603

)

Tax paid

(197,803

)

(214,539

)

Net cash from operating activities

1,527,003

1,389,716

Cash flows from investing activities

Purchase of tangible fixed assets

(147,194

)

(8,872

)

Purchase of investment property

-

(148,153

)

Sale of fixed asset investments

50,000

-

Dividends received

17,500

-

Net cash from investing activities

(79,694

)

(157,025

)

Cash flows from financing activities

Loan repayments in year

(102,662

)

(100,000

)

Amount introduced by directors

294,462

390,002

Amount withdrawn by directors

(677,924

)

(382,002

)

Equity dividends paid

(294,462

)

(672,574

)

Net cash from financing activities

(780,586

)

(764,574

)

Increase in cash and cash equivalents

666,723

468,117

Cash and cash equivalents at beginning of year

2

1,549,297

1,081,180

Cash and cash equivalents at end of year

2

2,216,020

1,549,297

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

30.9.25

30.9.24

£

£

Profit before taxation

1,875,667

768,061

Depreciation charges

22,924

7,666

(Gain)/loss on revaluation of fixed assets

(15,395

)

15,403

Finance costs

42,806

46,603

Finance income

(17,500

)

-

1,908,502

837,733

(Increase)/decrease in trade and other debtors

(1,674,238

)

2,045,342

Increase/(decrease) in trade and other creditors

1,533,348

(1,232,217

)

Cash generated from operations

1,767,612

1,650,858

2.	CASH AND CASH EQUIVALENTS

The amounts disclosed on the Cash Flow Statement in respect of cash and cash equivalents are in respect of these Balance Sheet amounts:

Year ended 30 September 2025

30.9.25

1.10.24

£

£

Cash and cash equivalents

2,216,020

1,549,297

Year ended 30 September 2024

30.9.24

1.10.23

£

£

Cash and cash equivalents

1,549,297

1,081,180

3.	ANALYSIS OF CHANGES IN NET FUNDS

At 1.10.24

Cash flow

At 30.9.25

£

£

£

Net cash

Cash at bank and in hand

1,549,297

666,723

2,216,020

1,549,297

666,723

2,216,020

Debt

Debts falling due within 1 year

(100,000

)

41,666

(58,334

)

Debts falling due after 1 year

(570,590

)

60,996

(509,594

)

(670,590

)

102,662

(567,928

)

Total

878,707

769,385

1,648,092

1.	STATUTORY INFORMATION

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

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

2.	ACCOUNTING POLICIES

Basis of preparing the financial statements

These financial statements have been prepared in accordance with Financial Reporting Standard 102 "The Financial Reporting Standard applicable in the UK and Republic of Ireland" and the Companies Act 2006. The financial statements have been prepared under the historical cost convention as modified by the revaluation of certain assets.

Basis of consolidation

The group financial statements consolidate the financial statements of the company and its subsidiary undertakings drawn up to 30th September each year. The results of subsidiaries acquired or sold are consolidated for the periods from or to the date on which control passed.

Business combinations are accounted for under the merger accounting method as the group was created by way of a share for share reorganisation which fulfils the requirements of FRS102 to permit merger accounting. Where necessary, adjustments are made to the financial statements of subsidiaries to bring the accounting policies used into line with those used by the group. All intra-group transactions, balances, income and expenses are eliminated on consolidation.

Bridgegate Properties Limited is exempt from the requirements of the Companies Act 2006 relating to the audit of their accounts for the financial period ended 30 September 2025 by virtue of Section 479A of that Act.

Related party exemption

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

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

Significant judgements and estimates

In the application of the company's accounting policies the directors are required to make judgements, estimates and assumptions about the carrying amounts of assets and liabilities that are not readily apparent from other sources. The estimates and associated assumptions are based on historical experience and other factors that are considered to be relevant. Actual results may differ from these estimates.

The estimates and underlying assumptions are reviewed on an ongoing basis. Revisions to accounting estimates are recognised in the period in which the estimate is revised 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 company does not make significant estimates and assumptions concerning the future.

Turnover

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

The group derives its turnover from project work which is recognised on a stage completion basis over the life of the contract.

Tangible fixed assets

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

Office equipment

-

25% on cost

Fixtures and fittings

-

25% on cost

Motor vehicles

-

25% on cost

Computer equipment

-

25% on cost and Straight line over 5 years

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.

Financial instruments

Financial assets and financial liabilities are recognised when the company becomes a party to the contractual provisions of the instrument. Financial liabilities and equity instruments are classified according to the substance of the contractual arrangements entered into. An equity instrument is any contract that evidences a residual interest in the assets of the company after deducting all of its liabilities.

(i) Financial assets and liabilities

All financial assets and liabilities are initially measured at transaction price (including transaction costs), except for those financial assets classified as at fair value through profit or loss, which are initially measured at fair value (which is normally the transaction price excluding transaction costs), unless the arrangement constitutes a financing transaction. If an arrangement constitutes a financing transaction, the financial asset or financial liability is measured at the present value of the future payments discounted at a market rate of interest for a similar debt instrument. Financial assets and liabilities are only offset in the statement of financial position when, and only when there exists a legally enforceable right to set off the recognised amounts and the company intends either to settle on a net basis, or to realise the asset and settle the liability simultaneously.

Debt instruments which meet the following conditions are subsequently measured at amortised cost using the effective interest method:

(a) The contractual return to the holder is (i) a fixed amount; (ii) a positive fixed rate or a positive variable rate; or (iii) a combination of a positive or a negative fixed rate and a positive variable rate.

(b) The contract may provide for repayments of the principal or the return to the holder (but not both) to be linked to a single relevant observable index of general price inflation of the currency in which the debt instrument is denominated, provided such links are not leveraged.

(c) The contract may provide for a determinable variation of the return to the holder during the life of the instrument, provided that (i) the new rate satisfies condition (a) and the variation is not contingent on future events other than (1) a change of a contractual variable rate; (2) to protect the holder against credit deterioration of the issuer; (3) changes in levies applied by a central bank or arising from changes in relevant taxation or law; or (ii) the new rate is a market rate of interest and satisfies condition (a).

(d) There is no contractual provision that could, by its terms, result in the holder losing the principal amount or any interest attributable to the current period or prior periods.

(e) Contractual provisions that permit the issuer to prepay a debt instrument or permit the holder to put it back to the issuer before maturity are not contingent on future events, other than to protect the holder against the credit deterioration of the issuer or a change in control of the issuer, or to protect the holder or issuer against changes in levies applied by a central bank or arising from changes in relevant taxation or law.

(f) Contractual provisions may permit the extension of the term of the debt instrument, provided that the return to the holder and any other contractual provisions applicable during the extended term satisfy the conditions of paragraphs (a) to (c).

Debt instruments that are classified as payable or receivable within one year on initial recognition and which meet the above conditions are measured at the undiscounted amount of the cash or other consideration expected to be paid or received, net of impairment. With the exception of some hedging instruments, other debt instruments not meeting these conditions are measured at fair value through profit or loss. Commitments to make and receive loans which meet the conditions mentioned above are measured at cost (which may be nil) less impairment.

Financial assets are derecognised when and only when (a) the contractual rights to the cash flows from the financial asset expire or are settled, (b) the company transfers to another party substantially all of the risks and rewards of ownership of the financial asset, or (c) the company, despite having retained some, but not all, significant risks and rewards of ownership, has transferred control of the asset to another party. Financial liabilities are derecognised only when the obligation specified in the contract is discharged, cancelled or expires.