REGISTERED NUMBER: 10150585 (England and Wales)

Group Strategic Report, Report of the Directors and

Consolidated Financial Statements

for the Year Ended 31 December 2025

for

Crest Group Limited

Page

Company Information

1

Group Strategic Report

2

Report of the Directors

4

Report of the Independent Auditors

5

Consolidated Statement of Comprehensive Income

9

Consolidated Balance Sheet

10

Company Balance Sheet

11

Consolidated Statement of Changes in Equity

12

Company Statement of Changes in Equity

13

Consolidated Cash Flow Statement

14

Notes to the Consolidated Financial Statements

15

DIRECTORS:

P Singh

G S Brar

REGISTERED OFFICE:

Crest Hotels Group

Arnos Manor Hotel

470 Bath Road

Bristol

Somerset

BS4 3HQ

REGISTERED NUMBER:

10150585 (England and Wales)

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

REVIEW OF BUSINESS

The performance of the group during the financial year and the results of those operations can be found on page 8 of the financial statements. The directors believe that the results for the year are satisfactory whilst the group has carried out major refurbishment programmes from 2022 to 2025 across its hotels which has temporarily reduced profitability in those periods.

The group's overall aim is to increase shareholder value and the directors intend to continue with the strategy of achieving sustainable growth across its hotels in the future.

Key performance Indicators

The group made an operating profit before interest charges of £244,474 (2024: profit £983,191).

2025

2024

Gross Profit (%)

37.98%

39.6%

Gross profit / Turnover

The directors are of the opinion that, given the straightforward nature of the business, further analysis using key performance indicators is not necessary for an understanding of the development, performance or position of the group.

PRINCIPAL RISKS AND UNCERTAINTIES

The principal risks and uncertainties facing the group are in relation to the group as a whole and include the following:

1) The impact of current economic conditions on consumer spending levels: the Group operates in an industry which is impacted by consumer spending levels. Crest Hotels Group operates in a variety of markets including corporate, leisure, conference and functions. This usually provides the Group with adequate sheltering from the impact of any drop in consumer spending levels.

2) Debtors: the company maintains strong relationships with its key customers and related parties and has established credit control parameters. Appropriate credit terms are agreed with key customers and these are closely monitored. The group's exposure to bad debts as a result was minimal.

3) Competitive risk: the company operates in competitive markets. Facilities developments by competitors could adversely affect the group. The group's focus on quality and standards together with the continual investment in its facilities reduces the possible effect of any action by any single competitor.

4) Political risk: the situation in Ukraine with rising prices in the period since March 2022 for oil and gas and in Iran since March 2026 has affected the UK and Europe particularly not to mention globally and the directors have taken steps to mitigate its costs accordingly.

The financial statements have been prepared on a going concern basis, as explained in note 3 to the financial statements.

FUTURE DEVELOPMENTS

The group is continuing to support the development of the facilities offered by its hotels in the coming year to achieve continued growth with the directors aim to build upon the existing reputations of the hotels in their portfolio.

ON BEHALF OF THE BOARD:

G S Brar - Director

30 June 2026

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

DIVIDENDS

The total distribution of dividends for the year ended 31 December 2025 is £59,999 (2024: £71,998).

DIRECTORS

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

P Singh

G S Brar

CHARITABLE DONATIONS AND EXPENDITURE

The group made a charitable donation of £Nil (2024 £10,000) in the year.

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.

ON BEHALF OF THE BOARD:

G S Brar - Director

30 June 2026

Opinion

We have audited the financial statements of Crest Group Limited (the 'parent company') and its subsidiaries (the 'group') for the year ended 31 December 2025 which comprise the Consolidated Statement of 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 December 2025 and of the group's loss for the year then ended;

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

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

Basis for opinion

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

Conclusions relating to going concern

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

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

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

Other information

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

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

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

Opinions on other matters prescribed by the Companies Act 2006

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

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

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

Matters on which we are required to report by exception

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

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

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

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

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

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

Responsibilities of directors

As explained more fully in the Statement of Directors' Responsibilities set out on page four, the directors are responsible for the preparation of the financial statements and for being satisfied that they give a true and fair view, and for such internal control as the directors determine necessary to enable the preparation of financial statements that are free from material misstatement, whether due to fraud or error.

In preparing the financial statements, the directors are responsible for assessing the group's and the parent company's ability to continue as a going concern, disclosing, as applicable, matters related to going concern and using the going concern basis of accounting unless the directors either intend to liquidate the group or the parent company or to cease operations, or have no realistic alternative but to do so.

Auditors' responsibilities for the audit of the financial statements

Our objectives are to obtain reasonable assurance about whether the financial statements as a whole are free from material misstatement, whether due to fraud or error, and to issue a Report of the Auditors that includes our opinion. Reasonable assurance is a high level of assurance, but is not a guarantee that an audit conducted in accordance with ISAs (UK) will always detect a material misstatement when it exists. Misstatements can arise from fraud or error and are considered material if, individually or in the aggregate, they could reasonably be expected to influence the economic decisions of users taken on the basis of these financial statements.

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

Capability of the audit in detecting irregularities, including fraud

Based on our understanding of the Group and industry, we identified that the principal risks of non-compliance with laws and regulations related to health and safety, employment law and company legislation, and we considered the extent to which non-compliance might have a material effect on the financial statements of the Group. We also considered those laws and regulations that have a direct impact on the preparation of the financial statements such as the Companies Act 2006 and taxation legislation. We evaluated management's incentives and opportunities for fraudulent manipulation of the financial statements (including the risk of override of controls), and determined that the principal risks were related to posting inappropriate journal entries to increase revenue or reduce expenditure, and management bias in accounting estimates and judgemental areas of the financial statements. Audit procedures performed by the audit engagement team included:

-

Discussions with management, including consideration of known or suspected instances of non-compliance with laws and regulations and fraud;

-

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

-

Reviewing the Group's legal costs to check for non-compliance with laws and regulations and fraud;

-

Review of tax compliance with the involvement of our tax specialists in the audit;

-

Designing audit procedures to incorporate unpredictability around the nature, timing or extent of our testing of expenses;

-

Testing transactions entered into outside of the normal course of the Group's business; and

-

Identifying and testing journal entries, in particular any journal entries with fraud characteristics such as journals with round numbers.

There are inherent limitations in the audit procedures described above and the further removed non-compliance with laws and regulations is from the events and transactions reflected in the financial statements, the less likely we would become aware of it. Also, the risk of not detecting a material misstatement due to fraud is higher than the risk of not detecting one resulting from error, as fraud may involve deliberate concealment by, for example, forgery or intentional misrepresentations, or through 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.

David Black (Senior Statutory Auditor)

for and on behalf of Sumer Auditco Limited

Statutory Auditor

Chartered Accountants

Suite B, Blackdown House

Blackbrook Park Avenue

Taunton

Somerset

TA1 2PX

1 July 2026

TURNOVER

13,253,962

13,402,116

Cost of sales

8,221,342

8,100,683

GROSS PROFIT

5,032,620

5,301,433

Distribution costs

13,057

17,163

Administrative expenses

5,066,087

4,459,028

5,079,144

4,476,191

(46,524

)

825,242

Other operating income

4

289,174

157,949

OPERATING PROFIT

6

242,650

983,191

Interest receivable and similar income

1,695

23,996

244,345

1,007,187

Interest payable and similar expenses

7

917,903

1,096,705

LOSS BEFORE TAXATION

(673,558

)

(89,518

)

Tax on loss

8

32,970

150,311

LOSS FOR THE FINANCIAL YEAR

(706,528

)

(239,829

)

OTHER COMPREHENSIVE INCOME

Revaluations of properties

263,999

-

Income tax relating to other comprehensive income

-

-

OTHER COMPREHENSIVE INCOME FOR THE YEAR, NET OF INCOME TAX

263,999

-

TOTAL COMPREHENSIVE INCOME FOR THE YEAR

(442,529

)

(239,829

)

Loss attributable to:

Owners of the parent

(706,528

)

(239,829

)

Total comprehensive income attributable to:

Owners of the parent

(442,529

)

(239,829

)

FIXED ASSETS

Intangible assets

11

625,766

1,349,011

Tangible assets

12

28,481,757

28,922,313

Investments

13

-

-

29,107,523

30,271,324

CURRENT ASSETS

Stocks

14

98,471

92,478

Debtors

15

4,690,750

3,972,776

Cash at bank and in hand

483,098

760,117

5,272,319

4,825,371

CREDITORS

Amounts falling due within one year

16

9,843,826

6,805,188

NET CURRENT LIABILITIES

(4,571,507

)

(1,979,817

)

TOTAL ASSETS LESS CURRENT LIABILITIES

24,536,016

28,291,507

CREDITORS

Amounts falling due after more than one year

17

(11,127,699

)

(14,233,817

)

PROVISIONS FOR LIABILITIES

21

(1,818,335

)

(1,965,180

)

NET ASSETS

11,589,982

12,092,510

CAPITAL AND RESERVES

Called up share capital

22

406,886

406,886

Revaluation reserve

7,811,885

7,782,322

Capital redemption reserve

1,691,785

1,691,785

Merger reserve

351,330

351,330

Retained earnings

1,328,096

1,860,187

SHAREHOLDERS' FUNDS

11,589,982

12,092,510

The financial statements were approved by the Board of Directors and authorised for issue on 30 June 2026 and were signed on its behalf by:

G S Brar - Director

P Singh - Director

FIXED ASSETS

Intangible assets

11

-

-

Tangible assets

12

-

-

Investments

13

7,920,437

9,813,354

7,920,437

9,813,354

CURRENT ASSETS

Debtors

15

3,350,502

3,332,780

Cash at bank

11,362

7,832

3,361,864

3,340,612

CREDITORS

Amounts falling due within one year

16

8,580,234

8,227,060

NET CURRENT LIABILITIES

(5,218,370

)

(4,886,448

)

TOTAL ASSETS LESS CURRENT LIABILITIES

2,702,067

4,926,906

CAPITAL AND RESERVES

Called up share capital

22

406,886

406,886

Capital redemption reserve

1,691,785

1,691,785

Retained earnings

603,396

2,828,235

SHAREHOLDERS' FUNDS

2,702,067

4,926,906

Company's (loss)/profit for the financial year

(2,164,840

)

5,514

The financial statements were approved by the Board of Directors and authorised for issue on 30 June 2026 and were signed on its behalf by:

P Singh - Director

G S Brar - Director

Called up

share

Retained

Revaluation

capital

earnings

reserve

£

£

£

Balance at 1 January 2024

406,886

1,937,578

8,016,758

Changes in equity

Dividends

-

(71,998

)

-

Total comprehensive income

-

(239,829

)

-

Revaluation depreciation

transfer

-

234,436

(234,436

)

Balance at 31 December 2024

406,886

1,860,187

7,782,322

Changes in equity

Dividends

-

(59,999

)

-

Total comprehensive income

-

(706,528

)

263,999

Revaluation depreciation

transfer

-

234,436

(234,436

)

Balance at 31 December 2025

406,886

1,328,096

7,811,885

Capital

redemption

Merger

Total

reserve

reserve

equity

£

£

£

Balance at 1 January 2024

1,691,785

351,330

12,404,337

Changes in equity

Dividends

-

-

(71,998

)

Total comprehensive income

-

-

(239,829

)

Balance at 31 December 2024

1,691,785

351,330

12,092,510

Changes in equity

Dividends

-

-

(59,999

)

Total comprehensive income

-

-

(442,529

)

Balance at 31 December 2025

1,691,785

351,330

11,589,982

Called up

Capital

share

Retained

redemption

Total

capital

earnings

reserve

equity

£

£

£

£

Balance at 1 January 2024

406,886

2,894,719

1,691,785

4,993,390

Changes in equity

Dividends

-

(71,998

)

-

(71,998

)

Total comprehensive income

-

5,514

-

5,514

Balance at 31 December 2024

406,886

2,828,235

1,691,785

4,926,906

Changes in equity

Dividends

-

(59,999

)

-

(59,999

)

Total comprehensive income

-

(2,164,840

)

-

(2,164,840

)

Balance at 31 December 2025

406,886

603,396

1,691,785

2,702,067

Cash flows from operating activities

Cash generated from operations

27

1,976,118

529,835

Interest paid

(942,708

)

(1,095,830

)

Tax paid

(121,789

)

(1,211

)

Net cash from operating activities

911,621

(567,206

)

Cash flows from investing activities

Purchase of tangible fixed assets

(313,163

)

(616,032

)

Interest received

1,695

23,996

Net cash from investing activities

(311,468

)

(592,036

)

Cash flows from financing activities

New loans in year

-

3,000,000

Loan repayments in year

(601,700

)

(2,500,330

)

Amount introduced by directors

59,999

71,998

Amount withdrawn by directors

(275,472

)

(623,366

)

Equity dividends paid

(59,999

)

(71,998

)

Net cash from financing activities

(877,172

)

(123,696

)

Decrease in cash and cash equivalents

(277,019

)

(1,282,938

)

Cash and cash equivalents at beginning of year

28

760,117

2,043,055

Cash and cash equivalents at end of year

28

483,098

760,117

1.	STATUTORY INFORMATION

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

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

The company's principal place of business is 470 Bath Rd, Arnos Vale, Bristol BS4 3HQ.

2.	STATEMENT OF COMPLIANCE

The financial statements of the Group have been prepared in compliance with United Kingdom Accounting Standards, including Financial Reporting Standard 102, "The Financial Reporting Standard applicable in the United Kingdom and the Republic of Ireland ("FRS 102") and the Companies Act 2006.

3.	ACCOUNTING POLICIES

Basis of preparing the financial statements

The financial statements have been prepared under the historical cost convention as modified by the revaluation of certain assets.

Going Concern

The company is part of the Crest Hotels Group. During the period 2022 to 2025 the group has been carrying out major refurbishment programmes in its hotels. Therefore, profitability has been temporarily reduced during the refurbishment programmes. Banking facilities across the group have either been renewed during 2023 or 2024 and after considering the working capital and other requirements of the group for at least 12 months from the anticipated date of signing the financial statements the directors are satisfied that the group and company will be able to meet its liabilities as they fall due. Therefore, the financial statements have been prepared on the going concern basis which assumes that the group and company will continue in operational existence for the foreseeable future.

Functional and presentation currency

The group's functional and presentational currency is the pound Sterling. All amounts in the financial statements have been rounded to the nearest pound.

Basis of consolidation

The consolidated financial statements include the financial statements of the company and its subsidiary undertakings made up to 31 December 2025. Unless the merger accounting method is permitted by FRS 102, the purchase method has been adopted. Under this method, the results of the subsidiary undertakings acquired or disposed of in the year are included in the consolidated income statement from the date of acquisition or up to the date of disposal.

The cost of the business combination is measured at the aggregate of the fair values (at the date of exchange) of assets given, liabilities incurred or assumed, and equity instruments issued by the Group in exchange for control of the acquiree, plus costs directly attributable to the business combination. Any excess of the cost of the business combination over the Group’s interest in the net fair value of the identifiable assets and liabilities is recognised as goodwill. For the purpose of impairment testing, the goodwill acquired in a business combination is allocated, on acquisition date, to the cash generating units that are expected to benefit from the synergies of the combination.

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.

Turnover

Turnover is recognised when the significant risks and rewards of the goods and services provided are transferred to the buyer, the amount of turnover can be measured reliably and it is probable that the economic benefits associated with the rendering transaction will flow to the group.

Turnover represents the total invoice value, excluding value added tax, of sales made during the year.

Turnover for the group comprises of the following streams:

1) Sale of goods - Turnover from the sale of food and beverages is recognised at the point of sale.

2) Rendering of services - Turnover from room sales and other guest services is recognised when rooms are occupied and as services are provided.

Goodwill

Goodwill is represented by the amount paid in connection with the acquisitions of businesses in 2002, 2005, 2022 and 2023. The goodwill purchased in 2002 and 2005 was amortised evenly over its estimated useful life of five years and is fully amortised.

The goodwill recognised upon the acquisitions in 2022 and 2023 is being amortised over 10 years from that date being its estimated useful life.

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 straight line basis

Fixtures and fittings

-

25% on reducing balance

Freehold Land is not depreciated.

The company has a policy of revaluation for its freehold property in accordance with FRS 102 section 17.

Freehold Property is stated in the balance sheet at its revalued amounts. The revalued amounts equate to the fair value at the date of revaluation, less any depreciation or impairment losses subsequently accumulated. Revaluations are carried out regularly so that the carrying amounts do not materially differ from using the fair value at the date of the balance sheet.

All fixed assets are initially recorded at cost. Expenditures incurred after the fixed assets have been put into operation, such as repairs and maintenance and overhaul costs, are normally charged to the profit and loss account in the period in which the costs are incurred. In situations where it can be clearly demonstrated that the expenditures have resulted in an increase in the future economic benefits expected to be obtained from the use of the item of property and equipment beyond its originally assessed standard of performance, the expenditures are capitalised as an additional cost of property and equipment.

Subsequent additions and major components

Subsequent costs are included in the asset's carrying amount or recognised as a separate asset, as appropriate, only when it is probable that economic benefits associated with the item will flow to the company and the cost can be measured reliably.

The carrying amount of any replaced component is derecognised. Major components are treated as a separate asset when they have significantly different patterns of consumption of economic benefits and are depreciated separately over its useful life.

Derecognition

Tangible assets are derecognised on disposal or when no future economic benefits are expected. On disposal, the difference between the net disposal proceeds and the carrying amount is recognised in profit or loss.

Stocks

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

Financial instruments

Financial assets

Basic financial assets, including trade and other debtors, cash and bank balances, are initially recognised at transaction price, 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.

Such assets are subsequently carried at amortised cost using the effective interest method.

Financial assets are derecognised when:

a) the contractual rights to the cash flows from the asset expire or are settled, or

b) substantially all the risks and rewards of the ownership of the asset are transferred to another party, or

c) the asset has been transferred to another party who has the practical ability to unilaterally sell the asset to an unrelated third party without imposing additional restrictions.

Financial liabilities

Basic financial liabilities, including trade and other creditors and bank loans and overdrafts, 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 receipts discounted at a market rate of interest.

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. Trade creditors 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.

Financial liabilities are derecognised when the liability is extinguished, that is when the contractual obligation is discharged, cancelled or expires.

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 balance sheet date.

Deferred tax

Deferred tax is recognised in respect of all timing differences that have originated but not reversed at the balance sheet 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.

Hire purchase and leasing commitments

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

Pension costs and other post-retirement benefits

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

The group provides a range of benefits to employees, including paid holiday arrangements and defined contribution pension plans.

Short term benefits

Short term benefits, including holiday pay and other similar non-monetary benefits, are recognised as an expense in the period in which the service is received.

Impairment of assets

Assets, other than those measured at fair value, are assessed for indicators of impairment at each balance sheet date. If there is objective evidence of impairment, an impairment loss is recognised in profit or loss as described below:

Non-financial assets

At each balance sheet date non-financial assets not carried at fair value are assessed to determine whether there is an indication that the asset (or asset's cash generating unit) may be impaired. If there is such an indication the recoverable amount of the asset (or asset's cash generating unit) is compared to the carrying amount of the asset (or asset's cash generating unit).

The recoverable amount of the asset (or asset's cash generating unit) is the higher of the fair value less costs to sell and value in use. Value is use is defined as the present value of the future cash flows before interest and tax obtainable as a result of the asset's (or asset's cash generating unit) continued use. These cash flows are discounted using a pre-tax discount rate that represents the current market risk-free rate and risks inherent in the asset.

If the recoverable amount of the asset (or asset's cash generating unit) is estimated to be lower than the carrying amount, the carrying amount is reduced to its recoverable amount. An impairment loss is recognised in the profit and loss account, unless the asset has been revalued when the amount is recognised in other comprehensive income to the extent of any previously recognised revaluation. Thereafter an excess is recognised in profit or loss.

If an impairment loss is subsequently reversed, the carrying amount of the asset (or asset's cash generating unit) is increased to the revised estimate of its recoverable amount, but only to the extent that the revised carrying amount does not exceed the carrying amount that would have been determined (net of depreciation or amortisation) had no impairment loss been recognised in prior periods. A reversal of an impairment loss is recognised in the profit and loss account.

Financial assets

For financial assets carried at amortised cost, the amount of an impairment is the difference between the asset's carrying amount and the present value of estimated future cash flows, discounted at the financial asset's original effective interest rate.

For financial assets carried at cost less impairment, the impairment loss is the difference between the asset's carrying amount and the best estimate of the amount that would be received for the asset if it were to be sold at the report date.

Where indicators exist for a decrease in impairment loss, and the decrease can be related objectively to an event occurring after the impairment was recognised, the prior impairment loss is tested to determine reversal. An impairment loss is reversed on an individual impaired financial asset to the extent that the revised recoverable value does not lead to a revised carrying amount higher than the carrying value had no impairment been recognised.