REGISTERED NUMBER: 15938524 (England and Wales)

GROUP STRATEGIC REPORT, REPORT OF THE DIRECTORS AND

CONSOLIDATED FINANCIAL STATEMENTS

FOR THE PERIOD 5 SEPTEMBER 2024 TO 31 OCTOBER 2025

FOR

CIFO LIMITED

Page

Company Information

1

Group Strategic Report

2

Report of the Directors

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

DIRECTORS:

R M Cummings

D T Moist

M B Turner

SECRETARY:

REGISTERED OFFICE:

Unit 13

Tudhoe Lane Ind Est

Spennymoor

Co. Durham

DL16 6TL

REGISTERED NUMBER:

15938524 (England and Wales)

AUDITORS:

Momentum Taxation & Accountancy Limited

Statutory Auditor

Harelands Courtyard Offices

Moor Road

Melsonby

Richmond

North Yorkshire

DL10 5NY

The directors present their strategic report of the company and the group for the period 5 September 2024 to 31 October 2025.

The parent company is a non-trading intermediate holding company. Accordingly, this Group Strategic Report focuses primarily on the performance, development, and principal risks associated with the group's operating and trading subsidiary.

REVIEW OF BUSINESS

During this year we continued to work on our direct contract with National Highways for traffic management works on the country's main infrastructure.

We have continued to work throughout this year to consolidate our position including continued work to refine our management systems and ensuring key personnel are established in key positions.

Turnover has increased with sales of £35 million (2024 £34 million). The gross profit percentage has fallen slightly to 17.0% from 18.9% in 2024.

Profit before tax this year decreased to £1.6million compared to £1.9 million in 2024.

The outlook for the future continues to be positive, and the National Highways works are progressing as expected with other works continuing to develop.

PRINCIPAL RISKS AND UNCERTAINTIES

The management of the business and the execution of the strategy are subject to a number of risks. In assessing the main risks and uncertainties the company has considered their potential impact, their likelihood and the control measures it has or can put in place to mitigate these risks. These risks and uncertainties can be broadly considered as - operational, financial and market risk.

a) Operational risk

The operational risks faced by the company include system failures, fraud and theft, failure to comply with taxation requirements and breach of other statutory regulations. The main impact of these is financial and the Company has various controls in place to minimise these risks.

b) Financial Risk

The company is exposed to financial risk primarily through cash flow caused by bad or non-payment by clients. The company has a relatively small number of clients and endeavours to keep abreast of their financial position and be aware of any early warning signs that they may be in difficulty. The company also reviews cash flow on a regular basis and ensures regular contact with clients to ensure that payments are received timeously and has negotiated terms with suppliers to mirror standard payment terms from clients. These combined measures are continuing to minimise the risk.

c) Market Risk

The main market risks relate to a downturn in the industry and new or increased competition from other companies. The company continually monitors the market for any signs of a slowdown and has considered various options should that situation arise. The company can do nothing to prevent competition but market intelligence makes us aware of our·competitors and their pricing levels. We believe these measures continue to ensure our competitiveness and significantly reduce the risk.

KEY PERFORMANCE INDICATORS

In continuing economically challenging times the business has delivered a set of results for the year in line with expectations.

The summary below shows how the key measures in the trading subsidiary compare against prior years. We remain pleased with the progress of the business as it continues to develop in line with our plans.

Performance is measured with reference to the following KPI's below :

2025

2024

2023

Turnover

£34.8m

£33.6m

£25.4m

Turnover % increase

3.6%

32.4%

76.4%

Gross Margin as a % of sales

17.0%

18.9%

21.3%

Pre-tax profit as a % of sales

5%

6%

7%

Performance has been in line with our expectations.

The key performance indicators used by the directors and management to monitor and control the performance of the company include monthly management accounts, monthly performance reviews and regular progress meetings to compare actual performance against expected performance.

FINANCIAL RISK MANAGEMENT POLICY

The company's principal. financial instruments comprise cash and cash equivalents. Other financial assets and liabilities, such as trade debtors and trade creditors, arise directly from the company's operating activities. The main risks associated with the company's financial assets and liabilities are set out below.

Interest rate risk

The company invests surplus cash in short/medium term variable interest bank accounts; The company has not resorted to bank borrowing over the last twelve months and that continues to be the plan for the foreseeable future. The exposure to this particular risk is therefore limited to a reduction in interest received generated by falling interest rates, which are unlikely to fall below their current level.

Bad debt/credit risk

The company has suffered previously though the insolvency of others and future insolvencies remain a high concern. It is apparent that main contractors have been working on projects secured at low prices and have struggled to complete contracts within budget, thus affecting their profitability and eventual solvency.

Liquidity risk

The company aims to mitigate liquidity risk by careful management of cash generated and the ongoing monitoring of assets sales and purchases. All capital expenditure is approved by the directors whilst ensuring flexibility of cash resources being readily available in short term bank deposits.

Cash flow risk

Cash flow has always been important but is even more critical since writing off of bad debts in previous years. The management team have therefore introduced more stringent cash flow forecasting and collection procedures.

Employees

The Company places considerable value on the involvement of its employees at all levels with the aim of ensuring their views are taken into account when decisions are made that are likely to affect their interests and that all employees are aware of the financial and economic performance of the business. Staff members are kept informed of performance through briefing meetings and internal communications.

Equal Opportunities

We are committed to' equal opportunities in employment. The policies and practices of the Company aim to promote an environment that is free from all forms of unlawful or unfair discrimination and values the diversity of all people. At the heart of our policy, we seek to treat people fairly and with dignity and respect.

ON BEHALF OF THE BOARD:

D T Moist - Director

3 September 2026

The directors present their report with the financial statements of the company and the group for the period 5 September 2024 to 31 October 2025.

INCORPORATION

The group was incorporated on 5 September 2024 .

DIVIDENDS

An interim dividend of £70,000 per share was paid on 7 April 2025. The directors recommend that no final dividend be paid.

The total distribution of dividends for the period ended 31 October 2025 will be £ 210,000 .

DIRECTORS

The directors who have held office during the period from 5 September 2024 to the date of this report are as follows:

R M Cummings - appointed 5 September 2024

D T Moist - appointed 5 September 2024

M B Turner - appointed 5 September 2024

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

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, Momentum Taxation & Accountancy Limited, will be proposed for re-appointment at the forthcoming Annual General Meeting.

ON BEHALF OF THE BOARD:

D T Moist - Director

3 September 2026

Opinion

We have audited the financial statements of CIFO Limited (the 'parent company') and its subsidiaries (the 'group') for the period ended 31 October 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 31 October 2025 and of the group's profit for the period then ended;

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

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

Basis for opinion

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

Conclusions relating to going concern

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

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

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

Other information

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

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

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

Opinions on other matters prescribed by the Companies Act 2006

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

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

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

Matters on which we are required to report by exception

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

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

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

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

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

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

Responsibilities of directors

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

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

Auditors' responsibilities for the audit of the financial statements

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

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

As part of designing our audit, we determined materiality and assessed the risks of material misstatement in the financial statements, including how fraud may occur by enquiring of management of its own consideration of fraud. In particular, we looked at where management made subjective judgements, for example in respect of significant accounting estimates that involved making assumptions and considering future events that are inherently uncertain. We also considered potential financial or other pressures, opportunity and motivations for fraud. As part of this discussion we identified the internal controls established to mitigate risks related to fraud or non-compliance with laws and regulations and how management monitor these processes. Appropriate procedures included the review and testing of manual journals and key estimates and judgements made by management.Our tests included agreeing the financial statements disclosures to underlying supporting documentation and enquiries with management. We did not identify any key audit matters relating to irregularities, including fraud. We also addressed the risk of management override of internal controls including testing journals and evaluation whether there was evidence of bias by the directors that represented a risk of material misstatement due to fraud. Our audit procedures were designed to respond to risks of material misstatement in the financial statements,recognising that 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,misrepresentations or through collusion. There are inherent limitations in the audit procedures performed and the more remote that the non-compliances (eg with laws and regulations) are from the events and transactions reflected in the financial statements, the less likely we are to become aware of it.

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.

Peter Cartwright FCCA (Senior Statutory Auditor)

for and on behalf of Momentum Taxation & Accountancy Limited

Statutory Auditor

Harelands Courtyard Offices

Moor Road

Melsonby

Richmond

North Yorkshire

DL10 5NY

3 September 2026

TURNOVER

34,805,316

Cost of sales

28,876,316

GROSS PROFIT

5,929,000

Administrative expenses

4,559,893

1,369,107

Other operating income

29,752

OPERATING PROFIT

4

1,398,859

Interest receivable and similar income

3,840

1,402,699

Interest payable and similar expenses

5

563,012

PROFIT BEFORE TAXATION

839,687

Tax on profit

6

413,574

PROFIT FOR THE FINANCIAL PERIOD

426,113

Profit attributable to:

Owners of the parent

426,113

PROFIT FOR THE PERIOD

426,113

OTHER COMPREHENSIVE INCOME

-

TOTAL COMPREHENSIVE INCOME FOR THE PERIOD

426,113

Total comprehensive income attributable to:

Owners of the parent

426,113

FIXED ASSETS

Intangible assets

9

4,182,325

Tangible assets

10

32,718

Investments

11

-

4,215,043

CURRENT ASSETS

Stocks

12

31,285

Debtors

13

4,888,445

Cash at bank

2,093,277

7,013,007

CREDITORS

Amounts falling due within one year

14

6,918,215

NET CURRENT ASSETS

94,792

TOTAL ASSETS LESS CURRENT LIABILITIES

4,309,835

CREDITORS

Amounts falling due after more than one year

15

4,093,719

NET ASSETS

216,116

CAPITAL AND RESERVES

Called up share capital

19

3

Retained earnings

20

216,113

SHAREHOLDERS' FUNDS

216,116

The financial statements were approved by the Board of Directors and authorised for issue on 3 September 2026 and were signed on its behalf by:

D T Moist - Director

FIXED ASSETS

Intangible assets

9

-

Tangible assets

10

-

Investments

11

5,885,827

5,885,827

CURRENT ASSETS

Debtors

13

105,003

CREDITORS

Amounts falling due within one year

14

2,005,469

NET CURRENT LIABILITIES

(1,900,466

)

TOTAL ASSETS LESS CURRENT LIABILITIES

3,985,361

CREDITORS

Amounts falling due after more than one year

15

3,979,757

NET ASSETS

5,604

CAPITAL AND RESERVES

Called up share capital

19

3

Retained earnings

20

5,601

SHAREHOLDERS' FUNDS

5,604

Company's profit for the financial year

215,601

The financial statements were approved by the Board of Directors and authorised for issue on 3 September 2026 and were signed on its behalf by:

D T Moist - Director

Called up

share

Retained

Total

capital

earnings

equity

£

£

£

Changes in equity

Issue of share capital

3

-

3

Dividends

-

(210,000

)

(210,000

)

Total comprehensive income

-

426,113

426,113

Balance at 31 October 2025

3

216,113

216,116

Called up

share

Retained

Total

capital

earnings

equity

£

£

£

Changes in equity

Issue of share capital

3

-

3

Dividends

-

(210,000

)

(210,000

)

Total comprehensive income

-

215,601

215,601

Balance at 31 October 2025

3

5,601

5,604

Cash flows from operating activities

Cash generated from operations

1

2,661,874

Interest paid

(278,613

)

Tax paid

(177,929

)

Net cash from operating activities

2,205,332

Cash flows from investing activities

Sale of tangible fixed assets

4,166

Subsidiaries cash balance on acquisition

1,072,639

Interest received

3,840

Net cash from investing activities

1,080,645

Cash flows from financing activities

Loan repayments in year

(720,000

)

Repayment of subsidiary loans

(162,700

)

Amount introduced by directors

215,000

Amount withdrawn by directors

(315,003

)

Share issue

3

Equity dividends paid

(210,000

)

Net cash from financing activities

(1,192,700

)

Increase in cash and cash equivalents

2,093,277

Cash and cash equivalents at beginning of period

2

-

Cash and cash equivalents at end of period

2

2,093,277

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

£

Profit before taxation

839,687

Depreciation charges

474,512

Loss on disposal of fixed assets

2,614

Finance costs

563,012

Finance income

(3,840

)

1,875,985

Decrease in stocks

206,548

Decrease in trade and other debtors

195,567

Increase in trade and other creditors

383,774

Cash generated from operations

2,661,874

2.	CASH AND CASH EQUIVALENTS

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

Period ended 31 October 2025

31/10/25

5/9/24

£

£

Cash and cash equivalents

2,093,277

-

3.	ANALYSIS OF CHANGES IN NET DEBT

At 5/9/24

Cash flow

At 31/10/25

£

£

£

Net cash

Cash at bank

-

2,093,277

2,093,277

-

2,093,277

2,093,277

Debt

Debts falling due within 1 year

-

(1,654,033

)

(1,654,033

)

Debts falling due after 1 year

-

(4,093,719

)

(4,093,719

)

-

(5,747,752

)

(5,747,752

)

Total

-

(3,654,475

)

(3,654,475

)

1.	STATUTORY INFORMATION

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

2.	ACCOUNTING POLICIES

Basis of preparing the financial statements

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

Basis of consolidation

The consolidated financial statements combine the financial statements of the Company and its subsidiaries as of 31October 2025.

Subsidiaries are all entities over which the Group has control. The Group controls an entity when it is exposed to, or has rights to, variable returns from its involvement with the entity and has the ability to affect those returns through its power over the entity. Subsidiaries are fully consolidated from the date on which control is transferred to the Group. They are deconsolidated from the date that control ceases.

Inter-company transactions, balances, and unrealised gains on transactions between group companies are eliminated. Unrealised losses are also eliminated unless the transaction provides evidence of an impairment of the transferred asset. When necessary, adjustments are made to the financial statements of subsidiaries to bring their accounting policies into line with the Group's accounting policies.

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 amount 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 where the revision affects only that period, or in the period of the revision and future periods where the revision affects both current and future periods.

The key assumptions concerning the future and other key sources of estimation uncertainty at the balance sheet date that have significant risk of causing a material adjustment to the carrying amounts of assets and liabilities within the next financial year are as follows:

Revenue and profit recognition

The estimation techniques used for revenue and profit recognition in respect of contracts require forecasts to be made of the outcome of long-term contracts which require assessments and judgements to be made on the recovery of pre-contract costs, changes in the scope of work, contract programmes, maintenance and defects liabilities and changes in costs.

Recoverable value of recognised receivables

The recoverability of trade and other receivables is regularly reviewed in the light of available economic information specific to each receivable and provisions are recognised for balances considered to be irrecoverable.

Estimates included within these financial statements include depreciation and asset impairments (for example provisions against debtors). None of the estimates made in the preparation of these financial statements are considered to carry significant estimation uncertainty, nor bear significant risk of causing a material adjustment to the carrying amounts of assets and liabilities within the next financial year.

Turnover

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

Revenue from contracts for the provision of services is recognised by reference to the stage of completion when the stage of completion, costs incurred and costs to complete can be estimated reliably. The stage of completion is calculated by comparing costs incurred, mainly in relation to contractual hourly staff rates and materials, as a proportion of total costs.

Goodwill

Goodwill arising on acquisitions represents the excess of the fair value of the consideration given over the fair value of the identifiable assets and liabilities acquired. Goodwill is initially recognized at cost and is subsequently measured at cost less accumulated amortisation and accumulated impairment losses.

Goodwill is amortised on a straight-line basis over its estimated useful life, which is considered to be 10 years.

Acquisitions are reviewed for impairment at the end of the first full financial year following the acquisition and in other periods if events or changes in circumstances indicate that the carrying value may not be recoverable.

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.

Long leasehold

-

4% on cost

Plant and machinery

-

25% on cost

Motor vehicles

-

25% on cost

Computer equipment

-

33% on cost

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

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

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

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

Basic financial assets

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

Impairment of financial assets

Financial assets, other than those held at fair value through profit and loss, are assessed for indicators of impairment at each reporting end date.

Financial assets are impaired where there is objective evidence that, as a result of one or more events that occurred after the initial recognition of the financial asset, the estimated future cash flows have been affected. If an asset is impaired, the impairment loss is the difference between the carrying amount and the present value of the estimated cash flows discounted at the asset's original effective interest rate. The impairment loss is recognised in profit or loss.

If there is a decrease in the impairment loss arising from an event occurring after the impairment was recognised, the impairment is reversed. The reversal is such that the current carrying amount does not exceed what the carrying amount would have been had the impairment not previously been recognised. The impairment reversal is recognised in profit or loss.

Derecognition of financial assets

Financial assets are derecognised only when the contractual rights to the cash flows from the asset expire or are settled, or when the company transfers the financial asset and substantially all of the risks and rewards of ownership to another entity, or if some significant risks and rewards of ownership are retained but control of the asset has transferred to another party that is able to sell the asset in its entirety to an unrelated third party.

Classification of financial liabilities

Financial liabilities and equity instruments are classified according to the substance of the contractual arrangements entered into.

An equity instrument is any contract that evidences a residual interest in the assets of the company after deducting all of its liabilities.

Basic financial liabilities

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

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

Trade creditors are obligations to pay for goods or services that have been acquired in the ordinary course of business from suppliers. Amounts payable are classified as current liabilities if payment is due within one year or less. If not, they are presented as non-current liabilities. Trade creditors are recognised initially at transaction price and subsequently measured at amortised cost using the effective interest method.

Taxation

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

Current or deferred taxation assets and liabilities are not discounted.

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

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 period 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.