REGISTERED NUMBER: 01957036 (England and Wales)

Strategic Report, Report of the Directors and

Financial Statements for the Year Ended 31 January 2026

for

Tong Engineering Ltd

Page

Company information

1

Strategic report

2

to

3

Report of the directors

4

to

5

Report of the independent auditors

6

to

9

Income statement

10

Other comprehensive income

11

Statement of financial position

12

Statement of changes in equity

13

Statement of cash flows

14

Notes to the statement of cash flows

15

Notes to the financial statements

16

to

34

Directors:

Mr S J Lee

Mr N Martin

Mrs T C Morgan

Mr E C Tong

Mr C E Tong

Registered office:

Tong Engineering Limited

Vale Road

Spilsby

Lincolnshire

PE23 5HE

Registered number:

01957036 (England and Wales)

Auditors:

Sumer Auditco Limited

Bank House

Broad Street

Spalding

Lincolnshire

PE11 1TB

The directors present their strategic report for the year ended 31 January 2026.

Review of business

Results for the year ended 31 January 2026 showed sales and profit are comparable to the prior year. Maintaining efficiencies in the manufacturing of our products and reduction of inflationary costs of materials been deemed the leading factors for this.

The gross profit percentage has improved slightly due to the sales mix. The directors continue to control and review the company's operating costs. The company continues to conduct research and development activity.

The pension scheme surplus is nil (2025 - nil). The amount reported by the actuary valued the surplus at £241,000, but this has not been recognised in line with treatment prescribed under FRS 102. The main reasons for the largely static surplus over the period can be summarised as follows:

1) Returns on the Scheme's invested assets were higher than assumed. This has increased the surplus by £123,000.

2) Allowing for actual inflation-linked increases being higher than previously assumed over the period slightly increases the Scheme's liabilities by approximately £114,000.

3) The rise in bond yields over the period increased the discount rate and therefore reduced the value placed on liabilities. The overall impact of this change in market conditions is to decrease the Scheme's liabilities by £43,000.

4) Employer contributions of £134,000 during the period increased the asset value and hence offset the surplus reduction.

Overall, the directors are satisfied with the company's performance and position in 2024-25 and believe that the company will consolidate its position during the subsequent financial year.

Principal risks and uncertainties

The principal risks and uncertainties facing the company are largely the inflationary price rises affecting margins and the pension scheme.

With regards to the pension scheme the directors continue to monitor the current situation, and where possible, adjust company contributions into the scheme.

Financial key performance indicators

Results for the year ended 31 January 2026 show a change in sales to £22,197,531 (2025 - £22,251,276) with a change in gross profit margin to 27.6% (2025 - 25.7%).

An increase in gross profit margin, this has resulted in the company reporting a profit before tax of £896,618 compared to £906,482 achieved in the prior year.

The results of the period have meant that shareholders' funds have increased from £8,581,617 to £9,198,168.

Other key performance indicators

The directors closely monitor sales mix, supplier turnover, production output, staff attendance and working capital. These key performance indicators are within the targets set for the year.

On behalf of the board:

Mr E C Tong - Director

21 October 2026

The directors present their report with the financial statements of the company for the year ended 31 January 2026.

Dividends

No dividend was declared for those shareholders holding Ordinary A shares or Ordinary shares at the year end.

Research and development

The company continues to invest in research and development activity.

Future developments

Tong Engineering Limited has a long history of manufacturing in the agriculture sector and continues to focus on this core activity as well as other product handling markets. The company purchased land surrounding their main manufacturing site, in order to ensure space is available for future expansion opportunities as they arise.

Directors

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

Mr S J Lee

Mr N Martin

Mrs T C Morgan

Mr E C Tong

Mr C E Tong

Other changes in directors holding office are as follows:

Mr C M Rich - resigned 24 June 2025

Financial instruments

The company makes sales on credit, and manages the risks arising through its credit control procedures.

The company makes sales in foreign currencies. If the value of the sale is significant, forward exchange contracts for the value of the order are entered into when the order is placed. This eliminates the impact of the exchange risk on the pricing of sales.

Statement of directors' responsibilities

The directors are responsible for preparing the 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), including Financial Reporting Standard 102 'The Financial Reporting Standard applicable in the UK and Republic of Ireland'. 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 of the profit or loss of the company 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 transactions and disclose with reasonable accuracy at any time the financial position of the company 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 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 company's auditors are unaware, and each director has taken all the steps that he or she ought to have taken as a director in order to make himself or herself aware of any relevant audit information and to establish that the company's auditors are aware of that information.

Auditors

The auditors, Sumer Auditco Limited, will be proposed for re-appointment at the forthcoming Annual General Meeting.

On behalf of the board:

Mr E C Tong - Director

21 October 2026

Opinion

We have audited the financial statements of Tong Engineering Ltd (the 'company') for the year ended 31 January 2026 which comprise the Income statement, Other comprehensive income, Statement of financial position, Statement of changes in equity, Statement of cash flows and Notes to the 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 company's affairs as at 31 January 2026 and of its 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 company 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 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 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 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 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 company and its environment obtained in the course of the audit, we have not identified material misstatements in the 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, or returns adequate for our audit have not been received from branches not visited by us; or

-	the 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 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 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 approach to identifying and assessing the risks of material misstatement in respect of irregularities, including fraud and non-compliance with laws and regulations, was as follows:

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

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

- we focused on specific laws and regulations which we considered may have a direct material effect on the financial statements or the operations of the company, including such as the Companies Act 2006 and taxation legislation;

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

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

We assessed the susceptibility of the company's financial statements to material misstatement, including obtaining an understanding of how fraud might occur, by:

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

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

To address the risk of fraud through management bias and override of controls, we:

- performed analytical procedures to identify any unusual or unexpected relationships;

- tested journal entries to identify unusual transactions;

- assessed whether judgements and assumptions made in determining the accounting estimates were indicative of potential bias; and

- investigated the rationale behind significant or unusual transactions;

In response to the risk of irregularities and non-compliance with laws and regulations, we designed procedures which included, but were not limited to:

- agreeing financial statement disclosures to underlying supporting documentation;

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

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

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

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

Use of our report

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

Hannah Butcher ACA, FCCA (Senior Statutory Auditor)

for and on behalf of Sumer Auditco Limited

Bank House

Broad Street

Spalding

Lincolnshire

PE11 1TB

23 October 2026

Turnover

3

22,197,531

22,251,276

Cost of sales

16,062,279

16,543,157

Gross profit

6,135,252

5,708,119

Distribution costs

294,343

248,850

Administrative expenses

4,796,802

4,441,044

5,091,145

4,689,894

1,044,107

1,018,225

Other operating income

25,000

62,714

Operating profit

5

1,069,107

1,080,939

Interest receivable and similar income

9,718

7,115

1,078,825

1,088,054

Interest payable and similar expenses

6

152,207

152,572

Other finance costs

21

30,000

29,000

182,207

181,572

Profit before taxation

896,618

906,482

Tax on profit

7

176,067

174,555

Profit for the financial year

720,551

731,927

Profit for the year

720,551

731,927

Other comprehensive income

Actuarial (Loss)/gain on pension scheme

(134,000

)

12,000

Derecognition of pension scheme surplus

30,000

(117,000

)

Income tax relating to components of other comprehensive income

-

-

Other comprehensive income for the year, net of income tax

(104,000

)

(105,000

)

Total comprehensive income for the year

616,551

626,927

Fixed assets

Tangible assets

8

8,014,609

7,915,205

Investments

9

24,660

24,660

8,039,269

7,939,865

Current assets

Stocks

10

3,593,557

4,064,688

Debtors

11

2,950,530

2,735,560

Cash at bank and in hand

778,681

1,142,916

7,322,768

7,943,164

Creditors

Amounts falling due within one year

12

4,711,106

5,878,667

Net current assets

2,611,662

2,064,497

Total assets less current liabilities

10,650,931

10,004,362

Creditors

Amounts falling due after more than one year

13

(555,647

)

(615,086

)

Provisions for liabilities

18

(897,116

)

(807,659

)

Net assets

9,198,168

8,581,617

Capital and reserves

Called up share capital

19

157,500

157,500

Capital redemption reserve

20

145,000

145,000

Retained earnings

20

8,895,668

8,279,117

Shareholders' funds

9,198,168

8,581,617

The financial statements were approved by the Board of Directors and authorised for issue on 21 October 2026 and were signed on its behalf by:

Mr E C Tong - Director

Called up

Capital

share

Retained

redemption

Total

capital

earnings

reserve

equity

£

£

£

£

Balance at 1 February 2024

157,500

7,652,190

145,000

7,954,690

Total comprehensive income

-

626,927

-

626,927

Balance at 31 January 2025

157,500

8,279,117

145,000

8,581,617

Total comprehensive income

-

616,551

-

616,551

Balance at 31 January 2026

157,500

8,895,668

145,000

9,198,168

Cash flows from operating activities

Cash generated from operations

1

590,217

1,286,035

Interest paid

(102,879

)

(124,582

)

Interest element of hire purchase payments paid

(49,328

)

(27,990

)

Pension contributions and interest

(134,000

)

(134,000

)

Net cash from operating activities

304,010

999,463

Cash flows from investing activities

Purchase of tangible fixed assets

(587,588

)

(150,234

)

Sale of tangible fixed assets

90,012

31,792

Interest received

9,718

7,115

Net cash from investing activities

(487,858

)

(111,327

)

Cash flows from financing activities

New loans in year

1,070,325

-

Loan repayments in year

(1,145,773

)

(169,185

)

Capital repayments in year

(104,939

)

(282,215

)

Amount withdrawn by directors

-

(39,664

)

Net cash from financing activities

(180,387

)

(491,064

)

(Decrease)/increase in cash and cash equivalents

(364,235

)

397,072

Cash and cash equivalents at beginning of year

2

1,142,916

745,844

Cash and cash equivalents at end of year

2

778,681

1,142,916

1.	Reconciliation of profit before taxation to cash generated from operations

2026

2025

£

£

Profit before taxation

896,618

906,482

Depreciation charges

403,951

367,269

Profit on disposal of fixed assets

(5,780

)

(8,360

)

Finance costs

182,207

181,572

Finance income

(9,718

)

(7,115

)

1,467,278

1,439,848

Decrease/(increase) in stocks

471,131

(275,310

)

(Increase)/decrease in trade and other debtors

(214,969

)

1,122,400

Decrease in trade and other creditors

(1,133,223

)

(1,000,903

)

Cash generated from operations

590,217

1,286,035

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 January 2026

31.1.26

1.2.25

£

£

Cash and cash equivalents

778,681

1,142,916

Year ended 31 January 2025

31.1.25

1.2.24

£

£

Cash and cash equivalents

1,142,916

745,844

3.	Analysis of changes in net debt

At 1.2.25

Cash flow

At 31.1.26

£

£

£

Net cash

Cash at bank and in hand

1,142,916

(364,235

)

778,681

1,142,916

(364,235

)

778,681

Debt

Finance leases

(489,487

)

104,939

(384,548

)

Debts falling due within 1 year

(1,140,110

)

57,083

(1,083,027

)

Debts falling due after 1 year

(335,610

)

18,365

(317,245

)

(1,965,207

)

180,387

(1,784,820

)

Total

(822,291

)

(183,848

)

(1,006,139

)

1.	Statutory information

Tong Engineering 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 Company Information page.

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

2.	Accounting policies

Basis of preparing the financial statements

The financial statements have been prepared under the historical cost convention and in accordance with Financial Reporting Standard 102 (FRS 102), the Financial Reporting Standard applicable in the United Kingdom and the Republic of Ireland and the Companies Act 2006.

The company's accounting reference date is 31 January. These financial statements are for the period 27 January to 25 January 2026. The comparative figures are for the period 29 January 2024 to 26 January 2025.

Preparation of consolidated financial statements

The financial statements contain information about Tong Engineering Limited as an individual company and do not contain consolidated financial information as the parent of a group. The company is exempt under Section 402 of the Companies Act 2006 from the requirement to prepare consolidated financial statements.

Significant judgements and estimates

In the application of the Company's accounting policies, management is required to make judgements, estimates and assumptions about the carrying value of assets and liabilities that are not readily apparent from other sources. The estimates and underlying assumptions are based on historical experiences 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 estimates is revised if the revision affects only that period, or in the period of the revision and future periods if the revision affects both current and future periods.

The key sources of estimation uncertainty that have a significant effect on the amounts recognised in the financial statements are described below.

(i) Work in progress assumptions

The estimations and assumptions used to assess that work in progress under contract is valued in line with applicable accounting frameworks are the contracted sales price (exclusive of VAT) and the stage of completion. The stage of completion is estimated by senior management using standardised methodology and is regularly reviewed.

(ii) Defined benefit pension scheme assumptions

The estimations and assumptions supplied by the actuary when preparing the actuarial report for the defined benefit pension scheme operated by the client are in line with market conditions at the time of the report. The actuary is an experienced and qualified actuarial institution, and subject to the standards and regulations of the relevant governing body.

Turnover

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

Sale of goods are recognised upon delivery to the customer, or upon collection by the customer, when title has passed.

Revenue from construction contracts is recognised based on the stage of completion of the contracted activity over the course of the contract.

Tangible fixed assets

Fixed assets are stated at cost or valuation less accumulated depreciation and accumulated impairment losses. Cost includes costs directly attributable to making the asset capable of operating as intended.

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

Land & freehold property (land)

- Not provided for on land

Land & freehold property (buildings)

- 2% straight line

Plant and machinery

- 5 - 10% straight line

Office Equipment

- 10 - 20% straight line and 33% straight line

Motor vehicles

- 25 -33% straight line

The assets' residual values, useful lives and depreciation methods are reviewed, and adjusted prospectively if appropriate, or if there is an indication of a significant change since the last reporting date.

Impairment

Assets not measured at fair value are reviewed for any indication that the asset may be impaired at each reporting year end date. If such indication exists, the recoverable amount of the asset or the asset's cash generating unit, is estimated and compared to the carrying amount. Where the carrying amount exceeds its recoverable amount, an impairment loss is recognised in the income statement unless the asset is carried at a revalued amount where the impairment loss is recognised in the revaluation reserve.

Investments in subsidiaries and associates

Investments in subsidiary and associate undertakings are recognised at cost.

Stocks

Raw material and work in progress stocks are stated at the lower of cost and the estimated selling price less costs to complete and sell. Cost is based on the cost of purchase on a first in, first out basis. Work in progress includes labour and attributable overheads.

Contracted work in progress stocks are stated at the estimated revenue due from customers for contract work performed as at the reporting date. Work performed to date is valued using the percentage of completion method as prescribed under FRS 102. On the realisation of income arising from construction contracts, additional costs incurred in excess of the costs recognised are presented within work in progress.

Finished machines are valued at the lower of cost and the estimated selling price less costs to complete and sell after making due allowance for obsolete and slow moving stocks. Cost is determined by reference to the sales price less the margin. For part complete machines, the stage of completion of the machine is estimated and multiplied by the cost to determine the stock value.

At each financial reporting date, stocks are assessed for impairment. If stock is impaired, the carrying amount is reduced to its selling price less costs to complete and sell. The impairment loss is recognised immediately in profit and loss.

Financial instruments

The company only enters into basic financial instrument transactions that result in the recognition of financial assets and liabilities like trade and other accounts receivable and payable, loans from banks, other third parties and related parties.

Financial assets that are measured at cost and amortised cost are assessed at the end of each reporting period for objective evidence of impairment. If objective evidence of impairment is found, an impairment loss is recognised in the income statement.

For financial assets measured at amortised cost, the impairment loss is measured as the difference between an asset's carrying amount and the present value of estimated cash flows discounted at the asset's original effective interest rate.If a financial asset has a variable interest rate, the discount rate for measuring any impairment loss is the current effective interest rate determined under the contract.

For financial assets measured at cost less impairment, the impairment loss is measured as the difference between an asset's carrying amount and best estimate, which is an approximation of the amount that the Company would receive for the asset if it were to be sold at the financial reporting date.

Financial assets and liabilities are offset and the net amount reported in the statement of financial position when there is as 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.

The company does not generally apply hedge accounting in respect of forward foreign exchange contracts held to manage the cash flow exposure of forecast transactions denominated in foreign currencies.

Taxation

Taxation for the year comprises current and deferred tax. Tax is recognised in the 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 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.

Research and development

Expenditure on research and development is written off in the year in which it is incurred.

Hire purchase and leasing commitments

Assets obtained under hire purchase contracts or finance leases are capitalised in the statement of financial position. Those held under hire purchase contracts are depreciated over their estimated useful lives. Those held under finance leases are depreciated over their estimated useful lives or the lease term, whichever is the shorter.

The interest element of these obligations is charged to the income statement over the relevant period. The capital element of the future payments is treated as a liability.

Rentals paid under operating leases are charged to the income statement on a straight line basis over the period of the lease.

Pension costs and other post-retirement benefits