REGISTERED NUMBER: 11929711 (England and Wales)

GROUP STRATEGIC REPORT,

REPORT OF THE DIRECTORS AND

CONSOLIDATED FINANCIAL STATEMENTS

FOR THE YEAR ENDED 31 DECEMBER 2025

FOR

ROCKBAY CAPITAL LTD

Page

Company Information

1

Group Strategic Report

2

Report of the Directors

4

Report of the Independent Auditors

6

Consolidated Statement of Comprehensive Income

9

Consolidated Statement of Financial Position

10

Company Statement of Financial Position

11

Consolidated Statement of Changes in Equity

12

Company Statement of Changes in Equity

13

Consolidated Statement of Cash Flows

14

Notes to the Consolidated Statement of Cash Flows

15

Notes to the Consolidated Financial Statements

16

DIRECTORS:

A P Walker

S A Walker

REGISTERED OFFICE:

Avocet House

Wilford Bridge Road

Melton

Woodbridge

Suffolk

IP12 1RB

REGISTERED NUMBER:

11929711 (England and Wales)

AUDITORS:

Walter Wright

Chartered Accountants

Statutory Auditor

89 High Street

Hadleigh

Ipswich

Suffolk

IP7 5EA

The directors present their strategic report on the financial statements for the year ended 31 December 2024.

The group operates in the manufacture and distribution of sporting goods in the UK and throughout the world. It also continues to build a real estate portfolio.

REVIEW OF BUSINESS

The two main key performance indicators for the business are turnover and operating profit as these are the key drivers of profitability. Turnover for the period was £17,295,531 (year ended 31 December 2024 - £14,864,268) and operating profit was £4,564,243 (year ended 31 December 2024 - £4,396,184).

The group enjoyed a strong position at the period end with net assets of £32,985,971 (31 December 2024 - £30,347,526) including cash balances of £10,640,462 (31 December 2024 - £8,777,085).

PRINCIPAL RISKS AND UNCERTAINTIES

The markets in which the group operates remain competitive. Whilst the group retains a strong market position, inflationary pressures are leading to rising costs coupled with reduced disposable income among customers. There is therefore a potential for reduced demand. Exporting to the EU remains challenging although the group is mitigating the extra regulation requirements via the implementation of automated systems. The group seeks to retain market share by continually developing and improving products and providing excellent customer service for both the distribution network and end user.

The market sector that the group operates in is subject to a number of risks involving legislation on firearms and associated accessories. The group's product range includes riflescopes which are on the military list in some countries and require an export licence. The group has been compliant with all regulations governing the licences. The overall risks of tighter gun control or further export regulation are lessened by operating in several countries.

FINANCIAL RISK MANAGEMENT

The activities of the business expose it to several financial risks. Management of these risks is outlined below:

Credit risk

The group's credit risk is primarily attributable to its trade debtors. Credit risk is managed by running credit checks on new customers and by monitoring accounts receivable against agreed parameters.

Price risk

The group is exposed to movement in foreign exchange, specifically USD to GBP and EUR to GBP. The group carefully monitors foreign exchange movements in order to achieve competitive pricing on the goods that it purchases. The group manages this risk by diversification of foreign currencies with transactions across a number of countries.

Liquidity risk

The group monitors cash flow as part of its day to day control procedures. The board considers cash flow projection on a monthly basis and ensures that appropriate facilities are available to be drawn upon as necessary.

FUTURE DEVELOPMENTS

The group seeks to retain market share by continually developing and improving products and providing excellent customer service for both the distribution network and end user. The group continues to build a real estate investment portfolio.

ON BEHALF OF THE BOARD:

A P Walker - Director

7 July 2026

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

PRINCIPAL ACTIVITY

The principal activity of the group in the year under review was that of the manufacture and distribution of sporting goods in the UK and throughout the world.

DIVIDENDS

Interim dividends per share were paid as follows:

Ordinary £1 shares

£910.00

-

Redeemable preference £1 shares

NIL

A Redeemable Preference £1 shares

8.308p

-

The directors recommend that no final dividends be paid.

The total distribution of dividends for the year ended 31 December 2025 will be £ 472,000 .

DIRECTORS

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

A P Walker

S A Walker

FINANCIAL INSTRUMENTS

The group's financial risk management objective is broadly to seek to make neither a profit nor loss from exposure to currency or interest rate risks. Its policy is to finance working capital through retained earnings and where necessary borrowings at prevailing market interest rates.

A natural foreign currency hedge exists in respect of income generated in Euros and US Dollars, and costs denominated in US Dollars.

The group does not use hedging instruments and does not use hedge accounting.

QUALIFYING THIRD PARTY INDEMNITY PROVISIONS

During the year the group had in force a qualifying third party indemnity insurance policy in favour of one or more directors.

STATEMENT OF DIRECTORS' RESPONSIBILITIES

The directors are responsible for preparing the Group Strategic Report, the Report of the Directors and the financial statements in accordance with applicable law and regulations.

Company law requires the directors to prepare financial statements for each financial year. Under that law the directors have elected to prepare the financial statements in accordance with United Kingdom Generally Accepted Accounting Practice (United Kingdom Accounting Standards and applicable law). Under company law the directors must not approve the financial statements unless they are satisfied that they give a true and fair view of the state of affairs of the company and the group and of the profit or loss of the group for that period. In preparing these financial statements, the directors are required to:

-	select suitable accounting policies and then apply them consistently;

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

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

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

STATEMENT AS TO DISCLOSURE OF INFORMATION TO AUDITORS

So far as the directors are aware, there is no relevant audit information (as defined by Section 418 of the Companies Act 2006) of which the group's auditors are unaware, and each director has taken all the steps that he 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, Walter Wright, will be proposed for re-appointment at the forthcoming Annual General Meeting.

ON BEHALF OF THE BOARD:

A P Walker - Director

7 July 2026

Opinion

We have audited the financial statements of Rockbay Capital Ltd (the 'parent company') and its subsidiaries (the 'group') for the year ended 31 December 2025 which comprise the Consolidated Statement of Comprehensive Income, Consolidated Statement of Financial Position, Company Statement of Financial Position, Consolidated Statement of Changes in Equity, Company Statement of Changes in Equity, Consolidated Statement of Cash Flows and Notes to the Consolidated Statement of Cash Flows, Notes to the Financial Statements, including a summary of significant accounting policies. The financial reporting framework that has been applied in their preparation is applicable law and United Kingdom Accounting Standards, including Financial Reporting Standard 102 'The Financial Reporting Standard applicable in the UK and Republic of Ireland' (United Kingdom Generally Accepted Accounting Practice).

In our opinion the financial statements:

-	give a true and fair view of the state of the group's and of the parent company affairs as at 31 December 2025 and of the group's profit for the year then ended;

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

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

Basis for opinion

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

Conclusions relating to going concern

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

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

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

Other information

The directors are responsible for the other information. The other information comprises the information in the Group Strategic Report and the Report of the Directors, but does not include the financial statements and our Report of the Auditors thereon.

Our opinion on the financial statements does not cover the other information and, except to the extent otherwise explicitly stated in our report, we do not express any form of assurance conclusion thereon.

In connection with our audit of the financial statements, our responsibility is to read the other information and, in doing so, consider whether the other information is materially inconsistent with the financial statements or our knowledge obtained in the audit or otherwise appears to be materially misstated. If we identify such material inconsistencies or apparent material misstatements, we are required to determine whether this gives rise to a material misstatement in the financial statements themselves. If, based on the work we have performed, we conclude that there is a material misstatement of this other information, we are required to report that fact. We have nothing to report in this regard.

Opinions on other matters prescribed by the Companies Act 2006

In our opinion, based on the work undertaken in the course of the audit:

-	the information given in the Group Strategic Report and the Report of the Directors for the financial year for which the financial statements are prepared is consistent with the financial statements; and

-	the Group Strategic Report and the Report of the Directors have been prepared in accordance with applicable legal requirements.

Matters on which we are required to report by exception

In the light of the knowledge and understanding of the group and the parent company and its environment obtained in the course of the audit, we have not identified material misstatements in the Group Strategic Report or the Report of the Directors.

We have nothing to report in respect of the following matters where the Companies Act 2006 requires us to report to you if, in our opinion:

-	adequate accounting records have not been kept by the parent company, or returns adequate for our audit have not been received from branches not visited by us; or

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

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

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

Responsibilities of directors

As explained more fully in the Statement of Directors' Responsibilities set out on 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.

The extent to which our procedures are capable of detecting irregularities, including fraud is detailed below:

Our procedures in relation to fraud included but were not limited to:

- obtained an understanding of the nature of the sector, including the legal and regulatory framework that the group operates in.

- enquiries of management whether they have knowledge of any actual, suspected or alleged fraud;

- gaining an understanding of the internal controls established to mitigate risk related to fraud and management override.

- discussion amongst the engagement team regarding risk of fraud such as opportunities for fraudulent manual journal entries to manipulate financial performance, management bias through judgements and assumptions in significant accounting estimates; and

- addressing the risk of fraud through management override of controls by performing journal entry testing.

- challenging accounting estimates to ensure no indication of management bias.

The primary responsibility for the prevention and detection of irregularities including fraud rests with both those charged with governance and management. As with any audit, there remained a risk of non-detection of irregularities, as these may involve collusion, forgery, intentional omissions, misrepresentations or the override of internal controls.

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.

Kevin Brown ACA MAAT (Senior Statutory Auditor)

for and on behalf of Walter Wright

Chartered Accountants

Statutory Auditor

89 High Street

Hadleigh

Ipswich

Suffolk

IP7 5EA

7 July 2026

TURNOVER

3

17,295,531

14,864,268

Cost of sales

9,354,007

7,795,762

GROSS PROFIT

7,941,524

7,068,506

Administrative expenses

4,865,132

4,029,943

3,076,392

3,038,563

Other operating income

4

1,336,506

1,357,621

Gain/loss on revaluation of investment property

151,345

-

OPERATING PROFIT

6

4,564,243

4,396,184

Interest receivable and similar income

7

435,733

411,884

4,999,976

4,808,068

Gain/loss on revaluation of investments

269,620

-

5,269,596

4,808,068

Interest payable and similar expenses

8

130,573

381

PROFIT BEFORE TAXATION

5,139,023

4,807,687

Tax on profit

9

1,028,578

1,137,478

PROFIT FOR THE FINANCIAL YEAR

4,110,445

3,670,209

FIXED ASSETS

Intangible assets

12

1,190,927

1,545,204

Tangible assets

13

1,908,962

1,866,319

Investments

14

3,269,620

-

Investment property

15

6,633,505

6,051,505

13,003,014

9,463,028

CURRENT ASSETS

Stocks

16

6,623,464

9,457,024

Debtors

17

4,770,707

4,730,570

Cash at bank

10,640,462

8,777,085

22,034,633

22,964,679

CREDITORS

Amounts falling due within one year

18

2,041,006

1,967,857

NET CURRENT ASSETS

19,993,627

20,996,822

TOTAL ASSETS LESS CURRENT LIABILITIES

32,996,641

30,459,850

PROVISIONS FOR LIABILITIES

20

10,670

112,324

NET ASSETS

32,985,971

30,347,526

CAPITAL AND RESERVES

Called up share capital

21

2,100,400

3,100,400

Capital redemption reserve

22

17,200,000

16,200,000

Retained earnings

22

13,685,571

11,047,126

SHAREHOLDERS' FUNDS

32,985,971

30,347,526

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

A P Walker - Director

FIXED ASSETS

Intangible assets

12

-

-

Tangible assets

13

-

-

Investments

14

18,360,300

18,360,300

Investment property

15

-

-

18,360,300

18,360,300

CURRENT ASSETS

Debtors

17

1,046,394

1,954,244

CREDITORS

Amounts falling due within one year

18

106,294

1,014,144

NET CURRENT ASSETS

940,100

940,100

TOTAL ASSETS LESS CURRENT LIABILITIES

19,300,400

19,300,400

CAPITAL AND RESERVES

Called up share capital

21

2,100,400

3,100,400

Capital redemption reserve

17,200,000

16,200,000

SHAREHOLDERS' FUNDS

19,300,400

19,300,400

Company's profit for the financial year

1,472,000

2,129,000

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

A P Walker - Director

Called up

Capital

share

Retained

redemption

Total

capital

earnings

reserve

equity

£

£

£

£

Balance at 1 January 2024

5,100,400

9,505,917

14,200,000

28,806,317

Changes in equity

Shares redeemed

(2,000,000

)

-

-

(2,000,000

)

Purchase of own shares

-

(2,000,000

)

2,000,000

-

Dividends

-

(129,000

)

-

(129,000

)

Total comprehensive income

-

3,670,209

-

3,670,209

Balance at 31 December 2024

3,100,400

11,047,126

16,200,000

30,347,526

Changes in equity

Shares redeemed

(1,000,000

)

-

-

(1,000,000

)

Purchase of own shares

-

(1,000,000

)

1,000,000

-

Dividends

-

(472,000

)

-

(472,000

)

Total comprehensive income

-

4,110,445

-

4,110,445

Balance at 31 December 2025

2,100,400

13,685,571

17,200,000

32,985,971

Called up

Capital

share

Retained

redemption

Total

capital

earnings

reserve

equity

£

£

£

£

Balance at 1 January 2024

5,100,400

-

14,200,000

19,300,400

Changes in equity

Shares redeemed

(2,000,000

)

-

-

(2,000,000

)

Purchase of own shares

-

(2,000,000

)

2,000,000

-

Dividends

-

(129,000

)

-

(129,000

)

Total comprehensive income

-

2,129,000

-

2,129,000

Balance at 31 December 2024

3,100,400

-

16,200,000

19,300,400

Changes in equity

Shares redeemed

(1,000,000

)

-

-

(1,000,000

)

Purchase of own shares

-

(1,000,000

)

1,000,000

-

Dividends

-

(472,000

)

-

(472,000

)

Total comprehensive income

-

1,472,000

-

1,472,000

Balance at 31 December 2025

2,100,400

-

17,200,000

19,300,400

Cash flows from operating activities

Cash generated from operations

1

8,685,294

7,248,463

Interest paid

(40

)

(381

)

Tax paid

(1,377,502

)

(1,100,726

)

Taxation refund

271,162

-

Net cash from operating activities

7,578,914

6,147,356

Cash flows from investing activities

Purchase of tangible fixed assets

(140,065

)

(4,199

)

Purchase of fixed asset investments

(3,000,000

)

-

Purchase of investment property

(30,655

)

(484,303

)

Interest received

438,196

473,282

Net cash from investing activities

(2,732,524

)

(15,220

)

Cash flows from financing activities

New loans in year

14,538

-

Loan repayments in year

(2,963,489

)

(2,366,352

)

Net cash from financing activities

(2,948,951

)

(2,366,352

)

Increase in cash and cash equivalents

1,897,439

3,765,784

Cash and cash equivalents at beginning of year

2

8,777,085

5,022,272

Effect of foreign exchange rate changes

(34,062

)

(10,971

)

Cash and cash equivalents at end of year

2

10,640,462

8,777,085

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

2025

2024

£

£

Profit before taxation

5,139,023

4,807,687

Depreciation charges

451,699

439,772

Gain on revaluation of fixed assets

(420,965

)

-

Exchange adjustments

34,062

10,971

Finance costs

130,573

381

Finance income

(435,733

)

(411,884

)

4,898,659

4,846,927

Decrease in stocks

2,833,560

2,059,938

(Increase)/decrease in trade and other debtors

(99,153

)

1,552,409

Increase/(decrease) in trade and other creditors

1,052,228

(1,210,811

)

Cash generated from operations

8,685,294

7,248,463

2.	CASH AND CASH EQUIVALENTS

The amounts disclosed on the Statement of Cash Flows in respect of cash and cash equivalents are in respect of these Statement of Financial Position amounts:

Year ended 31 December 2025

31.12.25

1.1.25

£

£

Cash and cash equivalents

10,640,462

8,777,085

Year ended 31 December 2024

31.12.24

1.1.24

£

£

Cash and cash equivalents

8,777,085

5,022,272

3.	ANALYSIS OF CHANGES IN NET FUNDS

At 1.1.25

Cash flow

At 31.12.25

£

£

£

Net cash

Cash at bank

8,777,085

1,863,377

10,640,462

8,777,085

1,863,377

10,640,462

Total

8,777,085

1,863,377

10,640,462

1.	STATUTORY INFORMATION

Rockbay Capital 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.

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.

In preparing the separate financial statements of the parent company, advantage has been taken of the following disclosure exemptions available in FRS 102:

- No statement of cash flows or net debt reconciliation has been presented for the parent company.

- No disclosure has been given for the aggregate remuneration of the key management personnel of the parent company as their remuneration is included in the totals for the group as a whole.

Basis of consolidation

The consolidated financial statements present the results of the company and its own subsidiaries ("the group") as if they form a single entity. Intercompany transactions and balances between group companies are therefore eliminated in full.

The consolidated financial statements incorporate the results of business combinations using the purchase method. At the balance sheet, the acquiree's identifiable assets, liabilities and contingent liabilities are initially recognised at their fair value at the acquisition date. The results of acquired operations are included in the consolidated statement of comprehensive income from the date on which control is obtained. They are deconsolidated from the date control ceases.

Critical accounting judgements and key sources of estimation uncertainty

In preparing these financial statements. the directors have made the following judgements:

- Determine where there are indicators of impairment of the group's tangible assets and investments. Factors taken into consideration in reaching such a decision include the economic viability and expected future financial performance of the asset and where it is a component of a larger cash-generating unit, the viability and expected future performance of that unit.

- Investment properties are revalued to fair value annually. The group recognises the property at fair value, defined as the estimated amount for which a property should exchange on the date of the valuation between a willing buyer and seller in an arm's length transaction, through the use of comparable values of similar properties observable in the market. The directors access the carrying value at each reporting date to ensure that the carrying value is adjusted to fair value.

There are no other key sources of estimation uncertainty.

Turnover

Turnover represents the sales of goods, retail and trade, is recognised on dispatch of the goods and excludes value added tax.

Goodwill

Goodwill represents the difference between amounts paid on the cost of a business combination and the acquirer's interest in the fair value of the group's share of the identifiable assets and liabilities of the acquiree at the date of acquisition. Subsequent to initial recognition, goodwill is measured at cost less accumulated amortisation and accumulated impairment losses. Goodwill is amortised on a straight line basis to the consolidated statement of comprehensive income over its useful economic life, 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.

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

Office equipment

-

15% on reducing balance

Motor vehicles

-

25% on reducing balance

Computer equipment

-

33% on cost

Investment in subsidiaries

Investments in subsidiary undertakings are recognised at cost less any provision for impairment.

Investment property

Investment properties are included in the statement of financial position at their open market value and are not depreciated. This treatment is contrary to the Companies Act 2006 which states that fixed assets should be depreciated but is, in the opinion of the directors, necessary to give a true and fair view.

The investment properties held by the group are periodically valued by the directors on an open market existing use basis. The directors then access whether the valuation is reasonable or requires amending at each year end.

Any gain or loss on the revaluation of investment properties is recognised in the statement of comprehensive income.

Stocks

Stocks are valued using the first in first out basis at the lower of cost and net realisable value after making due allowance for obsolete and slow moving stocks. Cost includes all direct costs including import duties and shipping costs.

At the reporting date, stocks are assessed for impairment. If stock is impaired, the carrying amount is reduced to its selling price less selling costs. The impairment loss is recognised immediately in the statement of comprehensive income.

Investments

The listed investments comprise investments in unit trusts. These are recognised at fair value with the gain or loss on revaluation being recognised in the income statement

Taxation

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

Current or deferred taxation assets and liabilities are not discounted.

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

Deferred tax

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

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

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

Foreign currencies

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

Pension costs and other post-retirement benefits

The group operates a defined contribution pension scheme. Contributions payable to the group's pension scheme are charged to profit or loss in the period to which they relate.

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.

Hire purchase and leasing

Where assets are financed by leasing arrangements that give rights approximating to ownership (finance leases), the assets are treated as if they had been purchased outright. The amount capitalised is the present value of the minimum lease payments payable over the term of the lease. The corresponding leasing commitments are shown as amounts payable to the lessor. Depreciation on the relevant asset is charged to the statement of comprehensive income over the shorter of estimated useful economic life and the term of the lease.

Lease payments are analysed between capital and interest components so that the interest element of the payment is charged to the statement of comprehensive income over the term of the lease and is calculated so that it represents a constant proportion of the balance of capital payments outstanding. The capital part reduces the amount payable to the lessor.

All other leases are treated as operating leases. Their annual rentals are charged to the statement of comprehensive income on a straight-line basis over the term of the lease.