REGISTERED NUMBER: 00131937 (England and Wales)

Strategic Report, Report of the Directors and

Financial Statements

for the Year Ended 28 February 2025

for

Deacon & Son (Swindon) Limited

Page

Company Information

1

Strategic Report

2

Report of the Directors

3

Report of the Independent Auditors

4

Income Statement

7

Other Comprehensive Income

8

Balance Sheet

9

Statement of Changes in Equity

10

Cash Flow Statement

11

Notes to the Cash Flow Statement

12

Notes to the Financial Statements

13

DIRECTORS:

R H Deacon

Miss S R Deacon

SECRETARY:

R H Deacon

REGISTERED OFFICE:

11-15 Wood Street

SWINDON

Wiltshire

SN1 4AN

REGISTERED NUMBER:

00131937 (England and Wales)

The directors present their strategic report for the year ended 28 February 2025.

REVIEW OF BUSINESS

During the year to 28th February 2025 the company continued to trade successfully from its headquarters at 11-15 Wood Street, Old Town, Swindon and from its branch at 44/45 High Street, Marlborough. Although turnover was slightly down from £10.8 million (2024) to £10.4 million (2025), profits remained strong. There was a small drop in retail sales due to a slightly smaller Rolex watch allocation compared to the previous year, this was mirrored across all Rolex stockists.

Although sales of diamond jewellery stayed level with the previous year, prices fell due to the effect of laboratory grown diamonds being introduced more widely to the market. It has been the company's long held policy not to sell laboratory grown diamonds and whilst it remains uncertain how long natural diamond prices will stay suppressed, there are already signs that the market will recover as the general public begin to realise that laboratory grown diamonds are essentially worthless.

Although costs have risen the company has continued to improve its cash position whilst paying down its loan from Lloyds bank. Despite the threat of on going economic uncertainty, the company is well placed to withstand any potential downturn.

PRINCIPAL RISKS AND UNCERTAINTIES

The directors have identified the following principal risks and uncertainties affecting the Company:

Price risk

The company is affected by the fluctuations in the prices of precious metals and gemstones which are core to the activities of the business. In particular, the cost of gold and silver have increased steadily throughout the year. The company manages its exposure to these movements by regularly reviewing the recommended retail prices of stock held and purchasing stock when prices are lowest.

Market risk

The company is impacted by changing customer preferences and actions of competitors. In particular, the rising number of online retailers and the increasing popularity of lab grown diamonds. The Company manages this risk by maintaining a strong presence in the local area and good reputation for customer service. A diverse range of products are stocked to cater to a wide range of customers.

Liquidity risk

The directors acknowledge their responsibility for ensuring the company can meet its financial obligations as they fall due. The Company manages its liquidity by arranged banking facilities and borrowings. Forecast and actual cash flows are reviewed regularly to align resources with the maturity of financial liabilities.

KEY PERFORMANCE INDICATORS

The company monitors its performance using a number of measures. These include:

2025

2024

Turnover

£10.4m

£10.6m

Gross profit margin

20.6%

21.0%

Net profit margin

2.5%

4.3%

FUTURE DEVELOPMENTS

The company will continue to look for growth through the marketing of its superb state of the act workshop facilities opened by HM Queen Camilla in January 2024. The future continues to be bright for unique bespoke pieces of jewellery as well as the superb on site watch workshop that enables servicing of Rolex, Omega and Cartier watches. Although challenging the next year will be an exciting one for Deacons.

ON BEHALF OF THE BOARD:

R H Deacon - Director

20 November 2025

The directors present their report with the financial statements of the company for the year ended 28 February 2025.

PRINCIPAL ACTIVITIES

The principal activities of the company in the year under review were those of the sale and repair of jewellery, watches, clocks, china, glass and gifts. There were no significant developments in these activities during the year.

DIVIDENDS

During the period the company has paid dividends totalling £143,368 (2024: £76,186).

DIRECTORS

The directors shown below have held office during the whole of the period from 1 March 2024 to the date of this report.

R H Deacon

Miss S R Deacon

CHARITABLE DONATIONS

During the year, the company made donations of £3,125 (2024: £3,665) to registered charities including the British Red Cross, NAJ Educational Trust and the Prospect Hospice.

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). 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:

R H Deacon - Director

20 November 2025

Opinion

We have audited the financial statements of Deacon & Son (Swindon) Limited (the 'company') for the year ended 28 February 2025 which comprise the Income Statement, Other Comprehensive Income, Balance Sheet, Statement of Changes in Equity, Cash Flow Statement and Notes to the 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 company's affairs as at 28 February 2025 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 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 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:

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

-

Discussions with management, including consideration of known or suspected instances of non-compliance

with laws and regulations and fraud;

-

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

-

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

-

Review of tax compliance;

-

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

of expenses;

-

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

-

Identifying and testing journal entries, in particular any journal entries with fraud characteristics

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

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

Other matters which we are required to address

The comparative figures for the year ended 29 February 2024 were not subject to audit.

Use of our report

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

David Iain Black (Senior Statutory Auditor)

for and on behalf of Sumer Auditco Limited

Statutory Auditors

Hermes House

Fire Fly Avenue

Swindon

Wiltshire

SN2 2GA

20 November 2025

TURNOVER

3

10,404,241

10,632,485

Cost of sales

8,261,674

8,395,175

GROSS PROFIT

2,142,567

2,237,310

Distribution costs

532,581

552,779

Administrative expenses

1,230,980

1,185,627

1,763,561

1,738,406

379,006

498,904

Other operating income

30,436

13,068

OPERATING PROFIT

5

409,442

511,972

Interest receivable and similar income

1,647

-

411,089

511,972

Interest payable and similar expenses

6

39,313

32,408

PROFIT BEFORE TAXATION

371,776

479,564

Tax on profit

7

107,044

70,796

PROFIT FOR THE FINANCIAL YEAR

264,732

408,768

PROFIT FOR THE YEAR

264,732

408,768

OTHER COMPREHENSIVE INCOME

-

-

TOTAL COMPREHENSIVE INCOME FOR THE YEAR

264,732

408,768

FIXED ASSETS

Intangible assets

9

77,357

28,434

Tangible assets

10

2,786,928

2,872,839

2,864,285

2,901,273

CURRENT ASSETS

Stocks

11

3,050,064

2,960,077

Debtors

12

92,138

109,447

Cash at bank and in hand

24,718

1,048

3,166,920

3,070,572

CREDITORS

Amounts falling due within one year

13

1,207,877

1,435,710

NET CURRENT ASSETS

1,959,043

1,634,862

TOTAL ASSETS LESS CURRENT LIABILITIES

4,823,328

4,536,135

CREDITORS

Amounts falling due after more than one year

14

(216,262

)

(41,288

)

PROVISIONS FOR LIABILITIES

19

(274,828

)

(283,955

)

NET ASSETS

4,332,238

4,210,892

CAPITAL AND RESERVES

Called up share capital

20

1,920

1,920

Share premium

21

99,889

99,889

Retained earnings

21

4,230,429

4,109,083

SHAREHOLDERS' FUNDS

4,332,238

4,210,892

The financial statements were approved by the Board of Directors and authorised for issue on 20 November 2025 and were signed on its behalf by:

R H Deacon - Director

Miss S R Deacon - Director

Called up

share

Retained

Share

Total

capital

earnings

premium

equity

£

£

£

£

Balance at 1 March 2023

1,920

3,776,501

99,889

3,878,310

Changes in equity

Dividends

-

(76,186

)

-

(76,186

)

Total comprehensive income

-

408,768

-

408,768

Balance at 29 February 2024

1,920

4,109,083

99,889

4,210,892

Changes in equity

Dividends

-

(143,386

)

-

(143,386

)

Total comprehensive income

-

264,732

-

264,732

Balance at 28 February 2025

1,920

4,230,429

99,889

4,332,238

Cash flows from operating activities

Cash generated from operations

1

242,900

853,949

Interest paid

(33,510

)

(27,304

)

Interest element of hire purchase payments paid

(5,700

)

(5,001

)

Finance costs paid

(103

)

(103

)

Tax paid

-

(144,249

)

Net cash from operating activities

203,587

677,292

Cash flows from investing activities

Purchase of intangible fixed assets

(59,080

)

(665

)

Purchase of tangible fixed assets

(52,446

)

(698,024

)

Sale of tangible fixed assets

1,100

-

Interest received

53

-

Net cash from investing activities

(110,373

)

(698,689

)

Cash flows from financing activities

New loans in year

404,000

-

Loan repayments in year

(252,605

)

(66,888

)

Capital repayments in year

(4,504

)

(1,326

)

Amount introduced by directors

26,691

39,995

Amount withdrawn by directors

(39,668

)

-

Equity dividends paid

(143,386

)

(76,186

)

Net cash from financing activities

(9,472

)

(104,405

)

Increase/(decrease) in cash and cash equivalents

83,742

(125,802

)

Cash and cash equivalents at beginning of year

2

(59,024

)

66,778

Cash and cash equivalents at end of year

2

24,718

(59,024

)

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

2025

2024

(Unaudited)

£

£

Profit before taxation

371,776

479,564

Depreciation charges

163,003

164,549

Loss on disposal of fixed assets

3,397

-

Finance costs

39,313

32,408

Finance income

(1,647

)

-

575,842

676,521

(Increase)/decrease in stocks

(89,987

)

143,102

Decrease/(increase) in trade and other debtors

18,903

(12,844

)

(Decrease)/increase in trade and other creditors

(261,858

)

47,170

Cash generated from operations

242,900

853,949

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 28 February 2025

28.2.25

1.3.24

£

£

Cash and cash equivalents

24,718

1,048

Bank overdrafts

-

(60,072

)

24,718

(59,024

)

Year ended 29 February 2024

29.2.24

1.3.23

(Unaudited)

£

£

Cash and cash equivalents

1,048

66,778

Bank overdrafts

(60,072

)

-

(59,024

)

66,778

3.	ANALYSIS OF CHANGES IN NET DEBT

Other

non-cash

At 1.3.24

Cash flow

changes

At 28.2.25

£

£

£

£

Net cash

Cash at bank

and in hand

1,048

23,670

24,718

Bank overdrafts

(60,072

)

60,072

-

(59,024

)

83,742

24,718

Debt

Finance leases

(42,176

)

4,504

(18,986

)

(56,658

)

Debts falling due

within 1 year

(138,373

)

13,753

-

(124,620

)

Debts falling due

after 1 year

(2,950

)

(165,147

)

-

(168,097

)

(183,499

)

(146,890

)

(18,986

)

(349,375

)

Total

(242,523

)

(63,148

)

(18,986

)

(324,657

)

1.	STATUTORY INFORMATION

Deacon & Son (Swindon) 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 Company Information page.

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

2.	ACCOUNTING POLICIES

Basis of preparing the financial statements

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

The company's functional and presentation currency is the pound sterling and the accounts have been rounded to the nearest pound.

Going concern

After reviewing the Company's forecasts and projections, which cover the 12-month period from the date of signing the financial statements, the directors have a reasonable expectation that the Company has adequate resources to continue in operational existence for the foreseeable future.

Financial Reporting Standard 102 - reduced disclosure exemptions

The company has taken advantage of the following disclosure exemption in preparing these financial statements, as permitted by FRS 102 "The Financial Reporting Standard applicable in the UK and Republic of Ireland":

•

the requirement of paragraph 33.7.

The directors believe that key management personnel are the directors of the company, therefore no separate disclosure is required under paragraph 33.7.

Critical accounting judgements and key sources of estimation uncertainty

The preparation of financial statement in conformity with FRS 102 requires the use of certain critical accounting estimates. It also requires management to exercise its judgement in the process of applying the company's accounting policies. The areas involving a higher degree of judgement or complexity, or areas where assumptions and estimates are significant to the financial statements are disclosed below.

Estimates and judgements are continually evaluated and are based on historical experience and other factors, including expectations of future events that are believed to be reasonable under the circumstances.

Critical accounting estimates and assumptions

The company makes estimates and assumptions concerning the future. The resulting accounting estimates will, by definition, seldom equal the related actual results. The estimates and assumptions that have a significant risk of causing a material adjustment to the carrying amounts of assets and liabilities within the next financial year are addressed below:

(i) Stock impairment and provision

As part of the stock valuation, market trends are taken into consideration to establish if there is a need for a a provision against certain lines of stock. Gold and diamond prices can fluctuate with changing market conditions therefore stock value could be overstated, without a suitable provision.

Revenue recognition

Revenue is measured at the fair value of the consideration received or receivable and represents the amount receivable for goods supplied or services rendered, net of returns, discounts and rebates allowed by the company and value added taxes.

The Company recognises revenue when the following conditions are satisfied:

i. the Company has transferred to the buyer the significant risks and rewards of ownership of the goods;

ii. the Company retains neither continuing managerial involvement to the degree associated with ownership nor effective control over the goods sold;

iii. the amount of revenue can be measured reliably;

iv. it is probable that the economic benefits associated with the transaction can be measured reliably.

Sale of goods and services

Turnover from the sale of goods is recognised when the goods are physically delivered to the customer. Turnover from the supply of services represents the value of services provided under contracts to the extent that there is a right to consideration and is recorded at the fair value of the consideration received or receivable. Where a contract has only been partially completed at the balance sheet date turnover represents the fair value of the service provided to date based on the stage of completion of the contract activity at the balance sheet date. Where payments are received from customer in advance of services provided the amounts are recorded as deferred income and included as part of creditors due within one year.

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.

Website development costs are being amortised evenly over their estimated useful life of ten years.

Stocks

Stock is stated at the lower of cost and estimated selling price less costs to complete and sell. Stock is recognised as an expense in the period in which the related revenue is recognised.

At the end of each reporting period stock is assessed for impairment. If an item of stock is impaired, the identified stock is reduced to its selling price less costs to complete and sell and an impairment is recognised in the profit and loss account. Where a reversal of the impairment is recognised the impairment charge is reversed, up to the original impairment loss, and is recognised as a credit in the profit and loss account.

Foreign currency transactions and balances

Foreign currency transactions are translated into the functional currency using the spot exchange rates at the dates of the transactions.

At each period end foreign currency monetary items are translated using the closing rate. Non-monetary items measured at historical cost are translated using the exchange rate at the date of the transaction and non-monetary items measured at fair value are measured using the exchange rate when fair value was determined.

Foreign exchange gains and losses resulting from the settlement of transactions and from the translation at period-end exchange rates of monetary assets and liabilities denominated in foreign currencies are recognised in the profit and loss account.

Hire purchase and leasing commitments

Assets obtained under hire purchase contracts or finance leases are capitalised in the balance sheet. 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 profit or loss over the relevant period. The capital element of the future payments is treated as a liability.

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

Employee benefits

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

Short term benefits

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

Defined contribution pension plans

The company operates a defined contribution plan for its employees. A defined contribution plan is a pension plan under which the company pays fixed contributions into a separate entity. Once the contributions have been paid the company has no further payment obligations. The obligations are recognised as an expense when they are due. Amounts not paid are shown in accruals in the balance sheet. The assets of the plan are held separately from the company in independently administered funds.

Taxation

Taxation expense for the period comprises current and deferred tax recognised in the reporting period. Tax is recognised in the profit and loss account, except to the extent that it relates to items recognised in other comprehensive income or directly in equity. In this case tax is also recognised in other comprehensive income or directly in equity respectively.

Current or deferred taxation assets and liabilities are not discounted.

Current tax

Current tax is the amount of income tax payable in respect of the taxable profit for the year or prior years. Tax is calculated on the basis of tax rates and laws that have been enacted or substantively enacted by the period end.

Management periodically evaluates positions taken in tax returns with respect to situations in which applicable tax regulation is subject to interpretation. It establishes provisions where appropriate on the basis of amount expected to be paid to the tax authorities.

Deferred tax

Deferred tax arises from timing differences that are differences between taxable profit and total comprehensive income as stated in the financial statements. These timing differences arise from the inclusion of income and expenses in tax assessment in periods different from those in which are recognised in financial statements.

Deferred tax is recognised on all timing differences at the reporting date except for certain exceptions. Unrelieved tax losses and other deferred tax assets are only recognised when it is probable that they will be recovered against the reversal of deferred tax liabilities or other future taxable profits.

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.

Tangible fixed assets

Tangible assets are stated at cost less accumulated depreciation and accumulated impairment losses. Cost includes the original purchase price, costs directly attributable to bringing the asset to its working condition for its intended use, dismantling and restoration costs and borrowing costs capitalised.

Depreciation and residual values

Depreciation is provided on all tangible fixed assets, other than investment properties and freehold land, at rates calculated to write off the cost or valuation, less estimated residual value, of each asset over its expected useful life as follows:

Freehold property

-

2% on straight line basis

Short leasehold

-

over the period of the lease

Fixtures and fittings

-

15% on reducing balance

Motor vehicles

-

20% on reducing balance

The assets' residual values and useful lives are reviewed, and adjusted, if appropriate, at the end of each reporting period. The effect of any changes is accounted for prospectively.

Leased assets

At inception the company assesses agreements that transfer the right to use assets. The assessment considers whether the arrangement is, or contains, a lease based on the substances of the arrangement.

Finance leased assets

Leases of assets that transfer substantially all the risks and rewards incidental to ownership are classified as finance leases.

Finance leases are capitalised at commencement of the lease as assets at their value of the lease asset or, if lower, the present value of the minimum lease payments calculated using the interest rate implicit in the lease. Where the implicit rate cannot be determined the company's incremental borrowing rate is used. Incremental direct costs, incurred in negotiating and arranging the lease, are included in the cost of the asset.

Assets are depreciated over the shorter of the lease term and the estimated useful life of the asset. Assets are assessed for impairment at each reporting date.

The capital element of lease obligations is recorded as a liability on inception of the arrangement. Lease payments are apportioned between capital repayment and finance charge, using the effective interest rate method, to produce a constant rate of charge on the balance of the capital repayments outstanding.

Operating leased assets

Leases that do no transfer all the risks and rewards of ownership are classified as operating leases. Payments under operating leases are charged to the profit and loss account on a straight-line basis over the period of the lease.

Cash and cash equivalent

Cash and cash equivalents includes cash in hand, deposits held at call with banks and other short-term highly liquid investments with original maturities of three months or less.

Financial instruments

The company has chosen to adopt the Sections 11 and 12 of FRS 102 in respect of financial instruments.

Financial assets

Basic financial assets, including trade and other receivables, cash and bank balances, are initially recognised at transaction price, unless the arrangement constitutes a financing transaction, where the transaction is measured at the present value of the future receipts discounted at a market rate of interest.

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

At the end of each reporting period financial assets measured at amortised cost are assessed for objective

evidence of impairment. 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 assets 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 amount would have been had the impairment not previously been recognised. The impairment reversal is recognised in profit or loss.

Financial assets are derecognised when (a) the contractual rights to the cash flows from the asset expire or are settled, or (b) substantially all the risks and rewards of the ownership of the asset are transferred to another party or (c) control of the asset has been transferred to another party who has the practical ability to unilaterally sell the asset to an unrelated third party without imposing additional restrictions.

Financial liabilities

Basic financial liabilities, including trade and other payables, bank loans and overdrafts and loans from fellow group companies, are initially recognised at transaction price, unless the arrangement constitutes a financing transaction, where the debt instrument is measured at the present value of the future receipts discounted at a market rate of interest.

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

Trade payables are obligations to pay for goods or services that have been acquired in the ordinary course of business from suppliers. Accounts 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 payables are recognised initially at transaction price and subsequently measured at amortised cost using the effective interest method.

Preference shares are classified as financial liabilities. Preference dividends payable on the shares are recognised as a finance cost in the profit and loss accounts in the period in which they relate.

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

Share capital

Ordinary shares are classified as equity. Incremental costs directly attributable to the issue of new ordinary shares or options are shown in equity as a deduction, net of tax, from the proceeds.

Redeemable preference shares

Preference shares, which are redeemable at the discretion of the company, are classified as liabilities. The dividends on these preference shares are taken o the income statement as a finance cost.