REGISTERED NUMBER: 02803383 (England and Wales)

Strategic Report, Report of the Directors and

Financial Statements for the Year Ended 31 August 2024

for

Kedem Europe Limited

Page

Company Information

1

Strategic Report

2

Report of the Directors

7

Report of the Independent Auditors

9

Income Statement

13

Other Comprehensive Income

14

Balance Sheet

15

Statement of Changes in Equity

16

Cash Flow Statement

17

Notes to the Cash Flow Statement

18

Notes to the Financial Statements

19

DIRECTORS:

M Halpern

M Herzog

B Stern

SECRETARY:

B Stern

REGISTERED OFFICE:

6 Bruce Grove

London

N17 6RA

REGISTERED NUMBER:

02803383 (England and Wales)

AUDITORS:

RDP Newmans LLP

Lynwood House

373/375 Station Road

Harrow

Middlesex

HA1 2AW

The directors present their strategic report for the year ended 31 August 2024.

This report provides a strategic overview of Kedem Europe’s performance in the financial year 2024. While there has been a slight decrease in sales compared to the previous year, the company remains in a strong position with solid fundamentals, continued operational efficiencies, and strategic initiatives underway.

Due to the structure of the Jewish calendar and its impact on the timing of seasonal sales, a portion of revenues were shifted to the next financial year.

REVIEW OF BUSINESS

Background

Founded in 1993, Kedem Europe remains a leading wholesaler of alcoholic and non-alcoholic beverages, with a special focus on kosher products. The company prides itself on its diverse product range, competitive pricing, strong supplier relationships, and commitment to excellent customer service.

1. Revenue Performance

The company’s revenue decreased from £11,386,041 in 2022/23 to £10,942,823 in 2023/24, representing a 3.9% decline. This reduction is primarily due to the timing of seasonal sales influenced by the Jewish calendar. In the current year, the Jewish New Year fell in October, resulting in the majority of bulk sales occurring in September, which falls outside the current financial year. In contrast, in the previous year, the Jewish New Year occurred in mid-September, meaning a larger proportion of sales was recorded in the financial year. This calendar shift has therefore contributed to the decrease in turnover.

2. Profitability Analysis

• Gross Profit Margin: Remained fairly stable at 23.5%, consistent with the prior year at 25.9%, indicating that operational efficiency has been maintained despite the shift in revenue timing.

• Net Profit: Decreased from £978,444 in 2022/23 to £715,748 in 2023/24, a reduction of 27%. This decline reflects the lower revenue recognised within the financial year and associated fixed costs that have not proportionally reduced.

3. Return on Equity (ROE)

The ROE decreased from 19% to 14%, reflecting a 5 percent point reduction in the return generated for shareholders. This is largely influenced by the reduction in net profit resulting from the shifted timing of bulk seasonal sales.

4. Leverage and Financial Risk

The Debt-to-Equity Ratio remained fairly constant at 0.6 (2023: 0.4) indicating that the company’s capital structure and financial leverage have been maintained. Financial risk remains moderate.

5. Overall Financial Position

At the period end, the company demonstrates stable operational efficiency, but profitability and shareholder returns have decreased, mainly due to the timing of sales affected by the Jewish calendar. Revenue and net profit are expected to improve in the following year when bulk seasonal sales are fully recognised. The company’s financial risk remains moderate, supported by a consistent debt to equity ratio.

Quantitative Key Performance Indicators (KPIs) Summary - Year-on-Year Change:

31.8.24

31.8.23

Change

Revenue

£10,942,823

£11,386,041

-3.89%

Gross Profit Margin

23.5%

25.9%

-2.4%

Net Profit

£715,748

£978,444

-26.85%

Return on Equity

14%

19%

-5%

Debt to Equity

0.6

0.4

0.2

PRINCIPAL RISKS AND UNCERTAINTIES

The Company is exposed to a variety of financial risks in the normal course of business, including price risk, credit risk, liquidity risk, and cash flow risk. The Company’s overall risk management strategy focuses on ensuring sufficient liquidity to meet operational requirements while managing the potential impact of market and credit risks.

1. Price Risk

The Company is exposed to price risk arising from fluctuations in the cost of wine, which may be influenced by international market conditions, supply availability, and currency exchange rates for imported wines. To mitigate this risk, the Company monitors wholesale market prices and maintains diversified supplier relationships.

2. Credit Risk

The Company’s credit risk primarily arises from trade receivables from customers. While most sales are settled promptly, the Company undertakes credit assessments of new and existing customers and applies credit limits to reduce the risk of financial loss. Historically, bad debts have been minimal due to close customer relationships and regular monitoring of outstanding accounts.

3. Liquidity Risk

Liquidity risk arises from the Company’s need to meet short-term operational obligations, including supplier payments and overheads. The Company manages liquidity by maintaining sufficient cash reserves.

4. Cash Flow Risk

The Company is exposed to cash flow risk in relation to fluctuations in sales volumes and timing of receipts from customers. While no formal cash flow forecast is prepared, management closely monitors cash receipts and payments to ensure sufficient liquidity to support ongoing operations.

Other Risks

1.External Analysis

Political:

Regulatory changes surrounding alcohol labelling and health warnings remain a focus. Import tariffs have remained stable post-Brexit but must be monitored for future shifts.

Economic:

General economic recovery remains slow, with inflation impacting discretionary spending. Nevertheless, demand for essential and celebratory kosher beverages remains resilient.

Social:

Increased health awareness is driving interest in organic, low-sugar, and non-alcoholic products, aligning with Kedem Europe’s product innovation strategy.

Technological:

Implementation of robust sales and accounting systems and introduction of Power BI (Business Intelligence) for better reporting and decision-making.

Environmental:

Efforts to reduce packaging waste and promote sustainable practices have been well received by customers and stakeholders.

Legal:

Ongoing compliance with labelling and advertising regulations remains a priority.

2. Industry Analysis

• Competitive Rivalry: Intense but manageable through differentiation and niche positioning.

• Threat of New Entrants: Moderate due to high entry barriers (supply chains, certifications).

• Bargaining Power of Suppliers: Stable.

• Bargaining Power of Customers: High, especially among large retailers.

• Threat of Substitutes: Growing but countered by loyalty to trusted kosher brands.

3. Internal Analysis

Strengths:

• Strong reputation within the kosher market.

• Well-established supplier and customer networks.

• Resilient core product categories.

Weaknesses:

• Revenue vulnerability to seasonal timing shifts (Jewish calendar effect).

• Limited diversification outside kosher markets.

Opportunities:

• New product launches (organic wines, premium spirits).

• Expansion into new regional markets.

Threats:

• Increased competition from online beverage retailers.

• Regulatory pressures on alcohol advertising.

Conclusion

The Company regularly reviews its financial risk exposure and implements measures to manage these risks, ensuring that the impact on financial performance is minimised.

STRATEGIC OBJECTIVES

Short-term Goals:

• Recover and grow sales by 7% in the next financial year.

• Expand product lines with 2 new health-focused beverage options.

• Strengthen marketing around seasonal events aligned with the Jewish calendar.

Long-term Goals:

• Achieve 25% revenue growth over the next five years.

• Deepen penetration into European markets beyond the UK.

STRATEGIES

1. Strategy Formulation

Corporate-Level Strategy:

Maintain stronghold in kosher markets while expanding selectively into broader markets.

Business-Level Strategy:

Differentiate via superior product quality, health-oriented offerings, and excellent customer service.

Functional-Level Strategy:

• Marketing: Emphasise key seasonal periods; leverage digital marketing for broader brand awareness.

• Operations: Optimise inventory and supply chains to adjust for calendar-driven fluctuations.

• Finance: Maintain a strong cash reserve to support expansion and manage seasonality.

2. Implementation Plan

Action Plans:

• Launch "Health & Heritage" marketing campaign around Jewish holidays.

• Strengthen B2B partnerships with synagogues, schools, and kosher retailers.

• Target key European cities with high Jewish populations.

Resource Allocation:

• Allocate £200k for marketing and business development activities.

• Invest £70k into improving supply chain coordination and partnerships with distributors.

Timeline:

• New product launches: within 6 months.

• Marketing campaigns: roll out during major Jewish festivals.

• Expansion strategy: planning phase completed within 12 months.

Responsibilities:

• Sales Director: drive new customer acquisitions.

• Marketing Manager: execute new campaigns.

• Operations Manager: align logistics to seasonal peaks.

3. Monitoring and Evaluation

Monitoring Process:

• Monthly internal performance reviews.

• Market share analysis every quarter.

• Customer feedback collection post-major sales seasons.

Evaluation Methods:

• Compare projected vs. actual sales aligned with Jewish holiday peaks.

• ROI analysis on marketing and promotional initiatives.

CONCLUSION

Despite a slight dip in reported revenues for FY 2024, Kedem Europe remains fundamentally strong and strategically well positioned for growth. The temporary decline is largely due to the shifting timing of key seasonal sales, an expected fluctuation in businesses aligned with the Jewish calendar.

With robust internal structures, strong market presence, and new initiatives in place, Kedem Europe is poised to enter the next financial year with momentum and a clear path toward continued success.

ON BEHALF OF THE BOARD:

M Herzog - Director

7 November 2025

The directors present their report with the financial statements of the company for the year ended 31 August 2024.

DIVIDENDS

Interim dividends per share were paid as follows:

392,000

- 5 December 2023

392,000

- 20 May 2024

784,000

The directors recommend that no final dividend be paid.

The total distribution of dividends for the year ended 31 August 2024 will be £ 784,000 .

DIRECTORS

The directors shown below have held office during the whole of the period from 1 September 2023 to the date of this report.

M Halpern

M Herzog

B Stern

DISCLOSURE IN THE STRATEGIC REPORT

The company has chosen in accordance with Companies Act 2006, s414C(11) to set out in the company's strategic report, information required by Large and Medium-sized Companies and Groups (Accounts and Reports) Regulations 2008, Sch. 7 to be contained in the directors' report.

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 ought to have taken as a director in order to make himself aware of any relevant audit information and to establish that the company's auditors are aware of that information.

AUDITORS

The auditors, RDP Newmans LLP, will be proposed for re-appointment at the forthcoming Annual General Meeting.

Medium-sized companies exemption

This report has been prepared in accordance with the provisions applicable to companies entitled to the medium-sized companies exemption.

ON BEHALF OF THE BOARD:

M Herzog - Director

7 November 2025

Opinion

We have audited the financial statements of Kedem Europe Limited (the 'company') for the year ended 31 August 2024 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 31 August 2024 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 seven, 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.

Irregularities, including fraud, are instances of non-compliance with laws and regulations. We design procedures in line with our responsibilities, outlined above, to detect material misstatements in respect of irregularities, including fraud.The extent to which our procedures are capable of detecting irregularities, including fraud, is detailed below.

The extent to which the audit was considered capable of detecting irregularities including fraud

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 the Companies Act 2006, Health and Safety Acts, Licensing Act 2003, taxation legislation and data protection, anti-bribery and employment legislation;

· we assessed the extent of compliance with the laws and regulations identified above through making enquiries of management and inspecting legal correspondence; 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;

· reviewed and tested journal entries to identify unusual transactions and other adjustments for appropriateness, and evaluating the business rationale of significant transactions outside the normal course of business;

· assessed whether judgements and assumptions made in determining the accounting estimates set out in note 3 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:

· reviewing and agreeing financial statement disclosures and testing to underlying supporting documentation;

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

· reviewing correspondence with HMRC and bankers.

No instances of material non-compliance were identified. However, the likelihood of detecting irregularities, including fraud, is limited by the inherent difficulty in detecting irregularities, the effectiveness of the entity’s controls, and the nature, timing and extent of the audit procedures performed. 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.

A R Gangola FCA (Senior Statutory Auditor)

for and on behalf of RDP Newmans LLP

Lynwood House

373/375 Station Road

Harrow

Middlesex

HA1 2AW

12 November 2025

TURNOVER

4

10,942,823

11,386,041

Cost of sales

8,372,321

8,442,476

GROSS PROFIT

2,570,502

2,943,565

Distribution costs

1,169,289

1,213,255

Administrative expenses

479,363

509,673

1,648,652

1,722,928

921,850

1,220,637

Other operating income

5

24,094

-

OPERATING PROFIT

8

945,944

1,220,637

Interest receivable and similar income

45,598

3,361

PROFIT BEFORE TAXATION

991,542

1,223,998

Tax on profit

9

275,794

245,554

PROFIT FOR THE FINANCIAL YEAR

715,748

978,444

PROFIT FOR THE YEAR

715,748

978,444

OTHER COMPREHENSIVE INCOME

-

-

TOTAL COMPREHENSIVE INCOME FOR THE YEAR

715,748

978,444

FIXED ASSETS

Tangible assets

11

107,614

125,153

CURRENT ASSETS

Stocks

12

1,963,266

1,937,777

Debtors

13

2,329,153

2,908,008

Cash at bank

3,942,611

2,535,649

8,235,030

7,381,434

CREDITORS

Amounts falling due within one year

14

3,184,686

2,299,621

NET CURRENT ASSETS

5,050,344

5,081,813

TOTAL ASSETS LESS CURRENT LIABILITIES

5,157,958

5,206,966

PROVISIONS FOR LIABILITIES

17

19,244

-

NET ASSETS

5,138,714

5,206,966

CAPITAL AND RESERVES

Called up share capital

18

300

300

Retained earnings

19

5,138,414

5,206,666

SHAREHOLDERS' FUNDS

5,138,714

5,206,966

The financial statements were approved by the Board of Directors and authorised for issue on 7 November 2025 and were signed on its behalf by:

M Herzog - Director

Called up

share

Retained

Total

capital

earnings

equity

£

£

£

Balance at 1 September 2022

300

4,228,222

4,228,522

Changes in equity

Total comprehensive income

-

978,444

978,444

Balance at 31 August 2023

300

5,206,666

5,206,966

Changes in equity

Dividends

-

(784,000

)

(784,000

)

Total comprehensive income

-

715,748

715,748

Balance at 31 August 2024

300

5,138,414

5,138,714

Cash flows from operating activities

Cash generated from operations

1

2,384,075

49,117

Tax paid

(220,739

)

(128,271

)

Net cash from operating activities

2,163,336

(79,154

)

Cash flows from investing activities

Purchase of tangible fixed assets

(17,972

)

(141,380

)

Interest received

45,598

3,361

Net cash from investing activities

27,626

(138,019

)

Cash flows from financing activities

Equity dividends paid

(784,000

)

-

Net cash from financing activities

(784,000

)

-

Increase/(decrease) in cash and cash equivalents

1,406,962

(217,173

)

Cash and cash equivalents at beginning of year

2

2,535,649

2,752,822

Cash and cash equivalents at end of year

2

3,942,611

2,535,649

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

31.8.24

31.8.23

£

£

Profit before taxation

991,542

1,223,998

Finance income

(45,598

)

(3,361

)

945,944

1,220,637

Increase in stocks

(25,489

)

(193,138

)

Decrease/(increase) in trade and other debtors

578,555

(122,518

)

Increase/(decrease) in trade and other creditors

885,065

(855,864

)

Cash generated from operations

2,384,075

49,117

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 August 2024

31.8.24

1.9.23

£

£

Cash and cash equivalents

3,942,611

2,535,649

Year ended 31 August 2023

31.8.23

1.9.22

£

£

Cash and cash equivalents

2,535,649

2,752,822

3.	ANALYSIS OF CHANGES IN NET FUNDS

At 1.9.23

Cash flow

At 31.8.24

£

£

£

Net cash

Cash at bank

2,535,649

1,406,962

3,942,611

2,535,649

1,406,962

3,942,611

Total

2,535,649

1,406,962

3,942,611

1.	STATUTORY INFORMATION

Kedem Europe 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.

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 financial statements are prepared in sterling, which is the functional currency of the company. Monetary amounts in these financial statements are rounded to the nearest £.

Turnover

Turnover is recognised at the fair value of the consideration received or receivable for goods provided in the normal course of business, and is shown net of VAT. It is represented by one class of business within the U.K.

Turnover from the sale of goods is recognised when the significant risks and rewards of ownership of the goods have passed to the buyer, the amount of revenue can be measured reliably, it is probable that the economic benefits associated with the transaction will flow to the entity and the costs incurred or to be incurred in respect of the transaction can be measured reliably.

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

-

Amortised over a useful life of 5 years

Plant and machinery

-

25% on reducing balance

Fixtures and fittings

-

25% on reducing balance

Computer equipment

-

25% on reducing balance

Tangible fixed assets are measured at cost net of depreciation and any impairment losses.

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 profit or loss.

Impairment of fixed assets

At each reporting period end date, the company reviews the carrying amounts of its tangible 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). Where it is not possible to estimate the recoverable amount of an individual asset, the company estimates the recoverable amount of the cash-generating unit to which the asset belongs.

Recoverable amount is the higher of fair value less costs to sell and value in use. In assessing value in use, the estimated future cash flows are discounted to their present value using a pre-tax discount rate that reflects current market assessments of the time value of money and the risks specific to the asset for which the estimates of future cash flows have not been adjusted.

If the recoverable amount of an asset (or cash-generating unit) is estimated to be less than its carrying amount, the carrying amount of the asset (or cash-generating unit) is reduced to its recoverable amount. An impairment loss is recognised immediately in profit or loss, unless the relevant asset is carried at a revalued amount, in which case the impairment loss is treated as a revaluation decrease.

Recognised impairment losses are reversed if, and only if, the reasons for the impairment loss have ceased to apply. Where an impairment loss subsequently reverses, the carrying amount of the asset (or cash-generating unit) is increased to the revised estimate of its recoverable amount, but so that the increased carrying amount does not exceed the carrying amount that would have been determined had no impairment loss been recognised for the asset (or cash-generating unit) in prior years. A reversal of an impairment loss is recognised immediately in profit or loss, unless the relevant asset is carried at a revalued amount, in which case the reversal of the impairment loss is treated as a revaluation increase.

Stocks

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

At each reporting date, an assessment is made for impairment. Any excess of the carrying amount of stocks over its estimated selling price less costs to complete and sell is recognised as an impairment loss in profit or loss. Reversals of impairment losses are also recognised in profit or loss.

Financial instruments

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

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

Fair value measurement of financial instruments

Other financial assets are initially measured at fair value, which is normally the transaction price. Such assets are subsequently carried at fair value and the changes in fair value are recognised in profit or loss, except that investments in equity instruments that are not publicly traded and whose fair values cannot be measured reliably are measured at cost less impairment.

Basic financial assets

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

Impairment of financial assets

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

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

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

Derecognition of financial assets

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

Classification of financial liabilities

Financial liabilities and equity instruments are classified according to the substance of the contractual arrangements entered into. An equity instrument is any contract that evidences a residual interest in the assets of the company after deducting all of its liabilities.

Other financial liabilities

Derivatives, including interest rate swaps and forward foreign exchange contracts, are not basic financial instruments. Derivatives are initially recognised at fair value on the date a derivative contract is entered into and are subsequently re-measured at their fair value. Changes in the fair value of derivatives are recognised in profit or loss in finance costs or finance income as appropriate, unless hedge accounting is applied and the hedge is a cash flow hedge.

Debt instruments that do not meet the conditions in FRS 102 paragraph 11.9 are subsequently measured at fair value through profit or loss. Debt instruments may be designated as being measured at fair value through profit or loss to eliminate or reduce an accounting mismatch or if the instruments are measured and their performance evaluated on a fair value basis in accordance with a documented risk management or investment strategy.

Derecognition of financial liabilities

Financial liabilities are derecognised when the company’s contractual obligations expire or are discharged or cancelled.

Basic financial liabilities

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

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

Foreign exchange

Transactions in currencies other than pounds sterling are recorded at the rates of exchange prevailing at the dates of the transactions. At each reporting end date, monetary assets and liabilities that are denominated in foreign currencies are retranslated at the rates prevailing on the reporting end date. Gains and losses arising on translation in the period are included in profit or loss.

Tax

The tax expense represents the sum of the tax currently payable and deferred tax.

Current tax

The tax currently payable is based on taxable profit for the year. Taxable profit differs from net profit as reported in the profit and loss account because it excludes items of income or expense that are taxable or deductible in other years and it further excludes items that are never taxable or deductible. The company’s liability for current tax is calculated using tax rates that have been enacted or substantively enacted by the reporting end date.

Deferred tax

Deferred tax liabilities are generally recognised for all timing differences and deferred tax assets are recognised to the extent that it is probable that they will be recovered against the reversal of deferred tax liabilities or other future taxable profits. Such assets and liabilities are not recognised if the timing difference arises from goodwill or from the initial recognition of other assets and liabilities in a transaction that affects neither the tax profit nor the accounting profit.

The carrying amount of deferred tax assets is reviewed at each reporting end date and reduced to the extent that it is no longer probable that sufficient taxable profits will be available to allow all or part of the asset to be recovered. Deferred tax is calculated at the tax rates that are expected to apply in the period when the liability is settled or the asset is realised. Deferred tax is charged or credited in the profit and loss account, except when it relates to items charged or credited directly to equity, in which case the deferred tax is also dealt with in equity. Deferred tax assets and liabilities are offset when the company has a legally enforceable right to offset current tax assets and liabilities and the deferred tax assets and liabilities relate to taxes levied by the same tax authority.

Cash and cash equivalents

Cash and cash equivalents are basic financial assets and include cash in hand, deposits held at call with banks, other short-term liquid investments with original maturities of three months or less, and bank overdrafts. Bank overdrafts are shown within borrowings in current liabilities.

Employee and retirement benefits

Employee benefits

The costs of short-term employee benefits are recognised as a liability and an expense, unless those costs are required to be recognised as part of the cost of stock or fixed assets.

The cost of any unused holiday entitlement is recognised in the period in which the employee’s services are received.

Termination benefits are recognised immediately as an expense when the company is demonstrably committed to terminate the employment of an employee or to provide termination benefits.

Retirement benefits

Payments to defined contribution retirement benefit schemes are charged as an expense as they fall due.

Leases

Rentals payable under operating leases, including any lease incentives received, are charged to profit or loss on a straight-line basis over the term of the relevant lease except where another more systematic basis is more representative of the time pattern in which economic benefits from the leases asset are consumed.

3.	JUDGEMENTS AND KEY SOURCES OF ESTIMATION UNCERTAINTY

In the application of the company’s accounting policies, the directors are required to make judgements, estimates and assumptions about the carrying amount of assets and liabilities that are not readily apparent from other sources. The estimates and associated assumptions are based on historical experience and other factors that are considered to be relevant. Actual results may differ from these estimates.

The estimates and underlying assumptions are reviewed on an ongoing basis. Revisions to accounting estimates are recognised in the period in which the estimate is revised where the revision affects only that period, or in the period of the revision and future periods where the revision affects both current and future periods.

Critical judgements

The following judgements have had the most significant effect on amounts recognised in the financial statements.

Stock provision

Significant management judgement is required in determining the net realisable value of stock. Management uses their experience to determine if any provision is required in respect of the carrying value of stock.