REGISTERED NUMBER: 14183391 (England and Wales)

E G LEWIS GROUP INVESTMENT SERVICES LTD

GROUP STRATEGIC REPORT,

REPORT OF THE DIRECTORS AND

CONSOLIDATED FINANCIAL STATEMENTS

FOR THE YEAR ENDED

31 JANUARY 2026

Page

Company Information

1

Group Strategic Report

2

Report of the Directors

3

Report of the Independent Auditors

4

Consolidated Income Statement

7

Consolidated Balance Sheet

8

Company Balance Sheet

9

Consolidated Statement of Changes in Equity

10

Company Statement of Changes in Equity

11

Consolidated Cash Flow Statement

12

Notes to the Consolidated Cash Flow Statement

13

Notes to the Consolidated Financial Statements

14

DIRECTORS:

T F Lewis

Mrs S W Lewis

R Perry

Mrs C Scoberg

G Summerhayes

REGISTERED OFFICE:

Tank Farm Road

Llandarcy

Neath

SA10 6EN

REGISTERED NUMBER:

14183391 (England and Wales)

AUDITORS:

Bevan Buckland Audit Ltd (Statutory Auditors)

Ground Floor Cardigan House

Castle Court

Swansea Enterprise Park

Swansea

SA7 9LA

The directors present their strategic report of the company and the group for the year ended 31 January 2026.

REVIEW OF BUSINESS

Group turnover for the year was £6.2 million (2025: £7.8 million), a decrease of 21%. The gross profit margin was 38.7% (2025: 40.9%), and operating profit was £669,186 (2025: £1,696,072).

Profit before taxation was £558,769 (2025: £1,160,807). This is after a charge of £409,243 (2025: £nil) arising from the write-off of amounts due from related parties, included within administrative expenses, and an exceptional charge of £76,692 (2025: £500,000) arising from the waiver of a loan due from a related party. Net assets increased to £4,520,128 (2025: £4,277,585), and the group ended the year with cash balances of £1,860,058 (2025: £1,868,463).

Looking forward, the directors see opportunities in supporting industries transitioning to sustainable practices and in continued infrastructure and construction activity.

PRINCIPAL RISKS AND UNCERTAINTIES

Market conditions

Demand for the group’s hire and employment services is linked to activity in the industrial, infrastructure and construction sectors. A downturn in these sectors could reduce utilisation and income.

Reliance on connected entities

A significant proportion of the group’s income is generated from entities under common control. The group’s performance is therefore dependent on the continued trading of the wider E G Lewis group. The directors manage this through regular group-wide management reporting and common oversight by the board.

Employment costs

The payroll and employment services activity is exposed to increases in employment costs, including changes to employer National Insurance contributions and the National Living Wage.

Property

The investment property is exposed to changes in market rents and yields and to the risk of tenant default.

Credit risk

The group has balances due from related parties, which the directors monitor for recoverability.

KEY PERFORMANCE INDICATORS

2026

2025

Turnover

£6,164,812

£7,839,233

Gross Profit Margin

38.7%

40.9%

Operating Profit

£669,186

£1,696,072

Profit Before Tax

£558,769

£1,160,807

Net Assets

£4,520,128

£4,277,585

Cash At Bank

£1,860,058

£1,868,463

ON BEHALF OF THE BOARD:

T F Lewis - Director

28 October 2026

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

DIVIDENDS

No dividends will be distributed for the year ended 31 January 2026.

EVENTS SINCE THE END OF THE YEAR

Information relating to events since the end of the year is given in the notes to the financial statements.

DIRECTORS

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

T F Lewis

Mrs S W Lewis

R Perry

Mrs C Scoberg

G Summerhayes

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 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 group's auditors are aware of that information.

ON BEHALF OF THE BOARD:

T F Lewis - Director

28 October 2026

Opinion

We have audited the financial statements of E G Lewis Group Investment Services Ltd (the 'parent company') and its subsidiaries (the 'group') for the year ended 31 January 2026 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 January 2026 and of the group's profit for the year then ended;

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

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

Basis for opinion

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

Conclusions relating to going concern

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

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

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

Other information

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

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

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

Opinions on other matters prescribed by the Companies Act 2006

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

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

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

Matters on which we are required to report by exception

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

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

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

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

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

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

Responsibilities of directors

As explained more fully in the Statement of Directors' Responsibilities set out on page three, 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:

Extent to which the audit was considered capable of detecting irregularities, including fraud

We identify and assess the risks of material misstatement of the Financial Statements, whether due to fraud or error, and then, design and perform audit procedures responsive to those risks, including obtaining audit evidence that is sufficient and appropriate to provide a basis for our opinion.

We discussed our audit independence complying with the Revised Ethical Standard 2024 with the engagement team members whilst planning the audit and continually monitored our independence throughout the process.

Identifying and assessing potential risks related to irregularities.

In identifying and assessing risks of material misstatement in respect of irregularities, including fraud and non-compliance with laws and regulations, our procedures included the following:

-

enquiring of management, including obtaining and reviewing supporting documentation, concerning the Company's policies and procedures relating to:

-

identifying, evaluating and complying with laws and regulations and whether they were aware of any instances of non-compliance;

-

detecting and responding to the risks of fraud and whether they have knowledge of any actual. suspected or alleged fraud;

-

the internal controls established to mitigate risks related to fraud or non-compliance with laws and regulations;

-

discussing among the engagement team how and where fraud might occur in the Financial Statements and any potential indicators of fraud.

-

obtaining an understanding of the legal and regulatory frameworks that the Company operates in, focusing on those laws and regulations that had a direct effect on the Financial Statements or that had a fundamental effect on the operations of the Company, The key laws and regulations we considered in this context included the UK Companies Act and relevant tax legislation.

Audit response to risks identified

In addition to the above, our procedures to respond to risks identified included the following:

-

reviewing the financial statement disclosures and testing to supporting documentation to assess compliance with relevant laws and regulations;

-

enquiring of management concerning actual and potential litigation and claims; performing analytical procedures to identify any unusual or unexpected relationships that may indicate risks of material misstatement due to fraud;

-

reading minutes of meetings of those charged with governance and reviewing correspondence with HMRC; and

-

in addressing the risk of fraud through management override of controls, testing the appropriateness of journal entries and other adjustments;

-

assessing whether the judgements made in making accounting estimates are indicative of a potential bias; and

-

evaluating the business rationale of any significant transactions that are unusual or outside the normal course of business.

We also communicated relevant identified laws and regulations and potential fraud risks to all engagement team members and remained alert to any indications of fraud or non-compliance with laws and regulations throughout the audit.

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.

Henry Lloyd-Davies (Senior Statutory Auditor)

for and on behalf of Bevan Buckland Audit Ltd (Statutory Auditors)

Ground Floor Cardigan House

Castle Court

Swansea Enterprise Park

Swansea

SA7 9LA

28 October 2026

TURNOVER

3

6,164,812

7,839,233

Cost of sales

3,781,253

4,630,124

GROSS PROFIT

2,383,559

3,209,109

Administrative expenses

1,705,125

1,515,503

678,434

1,693,606

Other operating income

(9,248

)

2,466

OPERATING PROFIT

5

669,186

1,696,072

Related party loan waiver

6

76,692

500,000

592,494

1,196,072

Interest receivable and similar income

1,278

15,290

593,772

1,211,362

Interest payable and similar expenses

7

35,003

50,555

PROFIT BEFORE TAXATION

558,769

1,160,807

Tax on profit

8

316,226

421,833

PROFIT FOR THE FINANCIAL YEAR

242,543

738,974

FIXED ASSETS

Intangible assets

11

163,954

273,257

Tangible assets

12

382,682

627,849

Investments

13

-

-

Investment property

14

3,505,000

3,505,000

4,051,636

4,406,106

CURRENT ASSETS

Stocks

15

4,500

4,500

Debtors

16

388,993

229,726

Cash at bank

1,860,058

1,868,463

2,253,551

2,102,689

CREDITORS

Amounts falling due within one year

17

898,215

1,271,407

NET CURRENT ASSETS

1,355,336

831,282

TOTAL ASSETS LESS CURRENT LIABILITIES

5,406,972

5,237,388

CREDITORS

Amounts falling due after more than one year

18

(451,212

)

(506,516

)

PROVISIONS FOR LIABILITIES

21

(435,632

)

(453,287

)

NET ASSETS

4,520,128

4,277,585

CAPITAL AND RESERVES

Called up share capital

22

100

100

Fair value reserve

23

1,752,631

1,752,631

Retained earnings

23

2,767,397

2,524,854

SHAREHOLDERS' FUNDS

4,520,128

4,277,585

The financial statements were approved by the Board of Directors and authorised for issue on 28 October 2026 and were signed on its behalf by:

T F Lewis - Director

FIXED ASSETS

Intangible assets

11

-

-

Tangible assets

12

-

-

Investments

13

3,931,600

3,931,600

Investment property

14

-

-

3,931,600

3,931,600

CURRENT ASSETS

Debtors

16

1,559,900

999,900

Cash at bank

61,935

691,606

1,621,835

1,691,506

CREDITORS

Amounts falling due within one year

17

284,361

678,361

NET CURRENT ASSETS

1,337,474

1,013,145

TOTAL ASSETS LESS CURRENT LIABILITIES

5,269,074

4,944,745

CAPITAL AND RESERVES

Called up share capital

22

100

100

Retained earnings

23

5,268,974

4,944,645

SHAREHOLDERS' FUNDS

5,269,074

4,944,745

Company's profit for the financial year

324,329

984,784

The financial statements were approved by the Board of Directors and authorised for issue on 28 October 2026 and were signed on its behalf by:

T F Lewis - Director

Called up

Fair

share

Retained

value

Total

capital

earnings

reserve

equity

£

£

£

£

Balance at 1 February 2024

100

1,789,880

1,752,631

3,542,611

Changes in equity

Dividends

-

(4,000

)

-

(4,000

)

Total comprehensive income

-

738,974

-

738,974

Balance at 31 January 2025

100

2,524,854

1,752,631

4,277,585

Changes in equity

Total comprehensive income

-

242,543

-

242,543

Balance at 31 January 2026

100

2,767,397

1,752,631

4,520,128

Called up

share

Retained

Total

capital

earnings

equity

£

£

£

Balance at 1 February 2024

100

3,963,861

3,963,961

Changes in equity

Dividends

-

(4,000

)

(4,000

)

Total comprehensive income

-

984,784

984,784

Balance at 31 January 2025

100

4,944,645

4,944,745

Changes in equity

Total comprehensive income

-

324,329

324,329

Balance at 31 January 2026

100

5,268,974

5,269,074

Cash flows from operating activities

Cash generated from operations

1

587,981

1,176,789

Interest paid

(35,003

)

(50,555

)

Tax paid

(521,014

)

(702,659

)

Net cash from operating activities

31,964

423,575

Cash flows from investing activities

Purchase of tangible fixed assets

(17,470

)

(258,858

)

Sale of tangible fixed assets

17,898

-

Interest received

1,278

15,290

Net cash from investing activities

1,706

(243,568

)

Cash flows from financing activities

Loan repayments in year

(45,180

)

-

Amount introduced by directors

3,105

-

Amount withdrawn by directors

-

(30,000

)

Equity dividends paid

-

(4,000

)

Net cash from financing activities

(42,075

)

(34,000

)

(Decrease)/increase in cash and cash equivalents

(8,405

)

146,007

Cash and cash equivalents at beginning of year

2

1,868,463

1,722,456

Cash and cash equivalents at end of year

2

1,860,058

1,868,463

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

2026

2025

£

£

Profit before taxation

558,769

1,160,807

Depreciation charges

220,567

224,190

Loss on disposal of fixed assets

24,173

8,739

Amortisation of Goodwill

109,303

109,303

Related Party Loan Waiver (non-cash)

260,935

-

Finance costs

35,003

50,555

Finance income

(1,278

)

(15,290

)

1,207,472

1,538,304

Increase in stocks

-

(4,500

)

(Increase)/decrease in trade and other debtors

(420,202

)

678,231

Decrease in trade and other creditors

(199,289

)

(1,035,246

)

Cash generated from operations

587,981

1,176,789

2.	CASH AND CASH EQUIVALENTS

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

Year ended 31 January 2026

31.1.26

1.2.25

£

£

Cash and cash equivalents

1,860,058

1,868,463

Year ended 31 January 2025

31.1.25

1.2.24

£

£

Cash and cash equivalents

1,868,463

1,722,456

3.	ANALYSIS OF CHANGES IN NET FUNDS

At 1.2.25

Cash flow

At 31.1.26

£

£

£

Net cash

Cash at bank

1,868,463

(8,405

)

1,860,058

1,868,463

(8,405

)

1,860,058

Debt

Debts falling due within 1 year

(39,980

)

(10,124

)

(50,104

)

Debts falling due after 1 year

(506,516

)

55,304

(451,212

)

(546,496

)

45,180

(501,316

)

Total

1,321,967

36,775

1,358,742

1.	STATUTORY INFORMATION

E G Lewis Group Investment Services Ltd is a private company, limited by shares , registered in England and Wales. The company's registered number and registered office address can be found on the General Information page.

2.	ACCOUNTING POLICIES

Basis of preparing the financial statements

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

Basis of consolidation

The consolidated financial statements incorporate the financial statements of E G Lewis Group Investment Services Ltd and its subsidiary undertakings, E G Lewis Group Hire Services Ltd, E G Lewis Developments Ltd and E G Lewis Payroll Services Ltd made up to 31 January each year.

Subsidiaries are entities controlled by the company. Control exists where the company has the power to govern the financial and operating policies of an entity so as to obtain benefits from its activities. The results of subsidiaries acquired or disposed of during the year are included from the date control passes or until the date control ceases.

Business combinations are accounted for using the purchase method. Where necessary, adjustments are made to the financial statements of subsidiaries to bring their accounting policies into line with those used by the group.

All intra-group transactions, balances, income and expenses are eliminated on consolidation

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 of the group.

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

Significant judgements and estimates

In preparing the financial statements, the directors are required to make judgements, estimates and assumptions that affect the reported amounts of assets, liabilities, income and expenses. Estimates and underlying assumptions are reviewed on an ongoing basis, and revisions are recognised prospectively.

Critical judgements

Classification of investment property. The directors have assessed that the property held by E G Lewis Developments meets the definition of investment property, being held to earn rental income and not occupied by the group.

Recoverability of amounts owed by related parties. The directors have assessed the recoverability of balances due from entities under common control of £341,283 (2025: £180,096). They have concluded that no provision is required beyond the amounts written off and waived during the year totalling £485,935 (2025: £500,000).

Key sources of estimation uncertainty

Valuation of investment property. Investment property is carried at fair value of £3,505,000, based on a valuation performed in 2024 and reviewed by the directors at the reporting date. The valuation depends on assumptions about market rents, yields and comparable transactions. A change in these assumptions could materially affect the carrying amount.

Useful lives of tangible fixed assets and goodwill. Depreciation and amortisation are sensitive to the estimated useful lives and residual values of assets, particularly the plant and vehicle hire fleet. Goodwill is amortised over five years, which the directors consider to be the period over which the group expects to benefit from the acquired business. Useful lives are reviewed annually.

Turnover

Plant and machinery hire income is recognised over the period of hire, with income relating to hire periods spanning the year end apportioned on a time basis.

Rental income from investment property let under operating leases is recognised on a straight-line basis over the term of the lease. Lease incentives granted are recognised as an integral part of the total rental income and spread over the lease term.

Goodwill

Goodwill, being the amount paid in connection with the acquisition of a business in 2022, is being amortised evenly over its estimated useful life of five years.

Intangible assets

Intangible assets are initially measured at cost. After initial recognition, intangible assets are measured at cost less any accumulated amortisation and any accumulated impairment losses.

Tangible fixed assets

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

Improvements to property

-

2% on cost

Plant and Machinery

-

Straight line over 4 years

Motor vehicles

-

25% reducing balance and 25% on cost

Computer equipment

-

Straight line over 4 years

A fixed asset is derecognised upon disposal or when no future economic benefits are expected to arise from the continued use of the asset. The gain or loss arising on the disposal of an asset is determined as the difference between the sale proceeds and the carrying value of the asset, and is credited or charged to the income statement.

Impairment of fixed assets

At each reporting date, the company reviews the carrying amounts of its tangible and intangible assets to determine whether there is any indication that those assets have suffered an impairment loss. If any such indication exists, the recoverable amount of the asset is estimated in order to determine the extent of the impairment loss (if any).

Recoverable amount is the higher of fair value less costs to sell and value in use.

If the recoverable amount of an asset is estimated to be less than its carrying amount, the carrying amount of the asset is reduced to its recoverable amount. An impairment loss is recognised immediately in profit or loss.

Government grants

Government grants are recognised using the accrual model and are not recognised until there is reasonable assurance that the group will comply with the conditions attaching to them and that the grants will be received.

Grants relating to revenue are recognised in other operating income on a systematic basis over the periods in which the group recognises the related costs the grant is intended to compensate. Grants receivable as compensation for expenses already incurred, or for immediate financial support with no future related costs, are recognised in income in the period in which they become receivable.

Grants relating to assets are recognised as deferred income and released to other operating income on a systematic basis over the expected useful lives of the assets to which they relate.

Investment property

Investment property is shown at most recent valuation. Any aggregate surplus or deficit arising from changes in fair value is recognised in profit or loss.

Investment property comprises property held to earn rentals and/or for capital appreciation, and is not occupied by the group.

Investment property is initially recognised at cost and subsequently measured at fair value at each reporting date, with changes in fair value recognised in profit or loss. No depreciation is provided on investment property.

Deferred tax is provided on fair value gains and losses at the rates expected to apply when the property is sold. Cumulative fair value gains, net of related deferred tax, are transferred from retained earnings to a non-distributable revaluation reserve.

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 group 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 group’s balance sheet when the group becomes party to the contractual provisions of the instrument.

Financial assets and liabilities are offset, with 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 include trade and other debtors, amounts owed by related parties, and cash and bank balances. They are initially measured at transaction price including transaction costs, and are subsequently carried at amortised cost using the effective interest method. Where the arrangement is a financing transaction, the asset is instead measured at the present value of the future receipts, discounted at a market rate of interest. Debtors receivable within one year, and amounts owed by related parties that are repayable on demand, are measured at the undiscounted amount of cash expected to be received.

Impairment of financial assets

At each reporting date, financial assets measured at amortised cost are assessed for objective evidence of impairment. Where there is such evidence, an impairment loss is recognised in profit or loss. The loss is the difference between the asset’s carrying amount and the present value of its estimated future cash flows, discounted at the asset’s original effective interest rate. If the impairment loss later decreases, and the decrease can be related objectively to an event after the impairment was recognised, the loss is reversed. The reversal is limited so that the carrying amount does not exceed what it would have been had no impairment been recognised.

Basic financial liabilities

Basic financial liabilities include trade and other creditors, bank loans and amounts owed to related parties. They are initially recognised at transaction price, net of transaction costs, and are subsequently carried at amortised cost using the effective interest method. Where the arrangement is a financing transaction, the liability is instead measured at the present value of the future payments, discounted at a market rate of interest. Creditors payable within one year, and amounts owed to related parties that are repayable on demand, are measured at the undiscounted amount of cash expected to be paid.

Derecognition

Financial assets are derecognised when the contractual rights to the cash flows expire or are settled, or when substantially all the risks and rewards of ownership are transferred to another party. Financial liabilities are derecognised when the obligation is discharged, cancelled or expires.

Taxation

Taxation for the year 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.