SSJR MORTON HOUSE LIMITED

he Company has chosen to adopt Sections 11 and 12 of FRS 102 in respect of financial

instruments.

Financial liabilities

Basic financial liabilities, including trade and other payables, 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 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

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

The tax currently payable is based on taxable profit for the year. Taxable profit differs from profit as reported in the statement of comprehensive income because of items of income or expense that are taxable or deductible in other year and 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 end of the reporting period.

Deferred tax is recognised on timing differences between the carrying amounts of assets and liabilities in the financial statements and the corresponding tax bases used in the computation of taxable profit. Deferred tax liabilities are generally recognised for all taxable timing differences. Deferred tax assets are generally recognised for all deductible temporary differences to the extent that it is probable that taxable profits will be available against which those deductible timing differences can be utilised. The carrying amount of deferred tax assets is reviewed at the end of each reporting period 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 assets and liabilities are measured at the tax rates that are expected to apply in the period in which the liability is settled or the asset realised, based on tax rates (and tax laws) that have been enacted or substantively enacted by the end of the reporting period. Deferred tax liabilities are presented within provisions for liabilities and deferred tax assets within debtors. The measurement of deferred tax liabilities and asset reflects the tax consequences that would follow from the manner in which the Company expects, at the end of the reporting period, to recover or settle the carrying amount of its assets and liabilities.

Current or deferred tax for the year is recognised in profit or loss, except when they related to items that are recognised in other comprehensive income or directly in equity, in which case, the current and deferred tax is also recognised in other comprehensive income or directly in equity respectively.