Jackson's Art Supplies Ltd - Limited company accounts 22.3

REGISTERED NUMBER: 03913002 (England and Wales)

JACKSON'S ART SUPPLIES LTD

GROUP STRATEGIC REPORT,

REPORT OF THE DIRECTORS AND

CONSOLIDATED FINANCIAL STATEMENTS

FOR THE YEAR ENDED 31 DECEMBER 2021

Page

Company Information

1

Group Strategic Report

2

Report of the Directors

4

Report of the Independent Auditors

6

Consolidated Income Statement

8

Consolidated Other Comprehensive Income

9

Consolidated Balance Sheet

10

Company Balance Sheet

11

Consolidated Statement of Changes in Equity

12

Company Statement of Changes in Equity

13

Consolidated Cash Flow Statement

14

Notes to the Consolidated Cash Flow Statement

15

Notes to the Consolidated Financial Statements

16

DIRECTORS:

M K C Venus

G L Thompson

P M Thompson

A Venus

S Small

SECRETARY:

M K C Venus

REGISTERED OFFICE:

1 Farleigh Place

Farleigh Road

London

N16 7SX

REGISTERED NUMBER:

03913002 (England and Wales)

AUDITORS:

Keelings Limited

Statutory Auditors, Chartered Tax Advisers

and Chartered Certified Accountants

Broad House

The Broadway

Old Hatfield

Hertfordshire

AL9 5BG

The directors present their strategic report of the company and the group for the year ended 31 December 2021.

REVIEW OF BUSINESS

The year to December 2021 has been a good year in achieving an increase in revenue while also keeping control over the costs of sales and admin expenses.

Revenue for the twelve months was £22,746,251 up from £21,986,980 for the previous year, an increase of 3%. Cost of sales have increased slightly higher than inline with revenue from £13,998,163 in 2020 to £14,590,702.

The gross profit margin has declined slightly from 36.33% last year to 35.85% this year, this is expected given the economic climate for the year.

Administrative costs have increased the year under review by £59,945 from £5,275,059 to £5,335,004. At the operating level, we reported a profit of £2,865,890 compared to a profit of £2,763,623 for 2020.

Overall the net profit after tax for the financial year amounted to £2,328,757 compared to £2,183,810 for the previous year, an increase of 7%.

During the year Jackson's Art Supplies Ltd acquired a controlling interest in an entity registered in the United States of America. The expansion into American operations will allow the Company to sell fine art supplies directly to the American market and somewhat mitigate the supply chain and foreign exchange rate risks noted below.The Directors are confident that continued global expansion for the Company will meet its strategic objectives.

PRINCIPAL RISKS AND UNCERTAINTIES

Risk management is built into the company's business systems and procedures.

Income and expenditure is constantly reviewed and monitored.

Longer term plans are reviewed continually to ensure that the underlying strategy is maintained to achieve the planned results. This includes development of staff by way of internal and external training and regular monitoring of their skills.

Jackson's operates a strict GDPR policy to ensure the security of customer data. The policy can be viewed on www.jacksonsart.com.

SUPPLY CHAIN RISK MANAGEMENT

Demand for art materials and supplies was heightened during last year and the beginning of this year due to the global pandemic. As people found more time at home to enjoy their hobbies which included arts and crafts. To meet this demand and the added impact of Brexit on supply, Jackson's maintained strong relationships with suppliers and invested in materials to ensure delivery to customers was not affected

FINANCIAL RISK MANAGEMENT

As a result of transactions in a number of different countries and a global customer presence, Jackson's is exposed to movement in foreign exchange rates. It limits these exposures through sound business practices and ensuring a high level of working capital within the business.

The UK left the European Union on 31 January 2020 and entered a period of transition until 1 January 2021. The impact of this on Jackson's is in the import of materials and the export of goods to customers. the supply chain team at Jackson's have studied new laws and regulations and have worked hard to ensure minimal disruption to operations.

EXCHANGE RISK MANAGEMENT

The company is exposed for exchange rate movements which has recently become unpredictable. The company is aware of large any exchange rate movements and will keep reasonable holdings are foreign currencies to offset the risk.

GOING CONCERN

The company continues to assess the going concern basis and maintains a healthy financial position and performance, even in light of a global volatile economic climate.

ON BEHALF OF THE BOARD:

M K C Venus - Director

7 November 2022

The directors present their report with the financial statements of the company and the group for the year ended 31 December 2021.

PRINCIPAL ACTIVITY

The principal activity of the group in the year under review was that of the sale, by mail-order, of artists' materials.

DIVIDENDS

No interim dividends (2020: £100,000) were paid during the year; no final dividend is recommended.

FUTURE DEVELOPMENTS

The directors will continue to grow the business by identifying new products and new markets where possible.

There are no plans to move away from the core business of supplying Fine Art materials to those markets.

Early in 2022 a new subsidiary was set up in Australia supplying Fine Art materials to that region.

DIRECTORS

The directors shown below have held office during the whole of the period from 1 January 2021 to the date of this report.

M K C Venus

G L Thompson

P M Thompson

A Venus

S Small

DISABLED EMPLOYEES

The policies the company undertakes for disabled employees are as follows:

- provide employees systematically with information affecting them as employees.

- consult them regularly on decisions likely to affect their interests,

- achieve a common awareness by all employees of the financial and economic factors affecting the company's performance.

DIRECTORS' RESPONSIBILITIES STATEMENT

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.

The directors are responsible for the maintenance and integrity of the corporate and financial information included on the company's website.

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

AUDITORS

The auditors Keelings Limited, Statutory Auditor, were appointed this year to carry out a statutory audit on Jackson's Art Supplies Ltd.

ON BEHALF OF THE BOARD:

M K C Venus - Director

7 November 2022

Opinion

We have audited the financial statements of Jackson's Art Supplies Ltd (the 'parent company') and its subsidiaries (the 'group') for the year ended 31 December 2021 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 December 2021 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 Directors' Responsibilities Statement set out on page four, 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:

We gained an understanding of the legal and regulatory framework applicable to the Entity and the industry in which it operates and considered the risk of acts by Management which were contrary to applicable laws and regulations, including fraud. These included, but were not limited to, compliance with Financial Reporting Framework FRS 102, Companies Act 2006, General Data Protection Regulations, and applicable Health and Safety and Employment Legislation. We made enquiries of the Directors of the Company to obtain further understanding of the risks of non-compliance. We focused on laws and regulations that could give rise to a material misstatement in the financial statements. Our tests included, but were not limited to:

- agreement of the financial statement disclosures to underlying supporting documentation;

- enquiries of Management regarding known or suspected instances of non-compliance with laws and regulations;

- review of minutes of the Board meetings throughout the year; and

- obtaining an understanding of the control environment in place to prevent and detect irregularities.

Our audit procedures were designed to respond to risks of material misstatement in the financial statements, recognising that the risk of not detecting a material misstatement due to fraud is higher than the risk of not detecting one resulting from error. Because of the inherent limitations of an audit, there is a risk that we will not detect all irregularities, including those leading to a material misstatement in the financial statements or non-compliance with regulation. This risk increases the more that compliance with a law or regulation is removed from the events and transactions reflected in the financial statements, as we will be less likely to become aware of instances of non-compliance. The risk is also greater regarding irregularities occurring due to fraud rather than error, as fraud involves intentional concealment, forgery, collusion, omission or misrepresentation.

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.

John Carroll FCCA CTA (Senior Statutory Auditor)

for and on behalf of Keelings Limited

Statutory Auditors, Chartered Tax Advisers

and Chartered Certified Accountants

Broad House

The Broadway

Old Hatfield

Hertfordshire

AL9 5BG

7 November 2022

TURNOVER

3

22,746,251

21,986,980

Cost of sales

14,590,702

13,998,163

GROSS PROFIT

8,155,549

7,988,817

Administrative expenses

5,335,004

5,275,059

2,820,545

2,713,758

Other operating income

4

45,240

54,910

OPERATING PROFIT

6

2,865,785

2,768,668

Interest receivable and similar income

112

-

2,865,897

2,768,668

Interest payable and similar expenses

7

7

5,045

PROFIT BEFORE TAXATION

2,865,890

2,763,623

Tax on profit

8

537,133

579,813

PROFIT FOR THE FINANCIAL YEAR

2,328,757

2,183,810

Profit attributable to:

Owners of the parent

2,339,477

2,183,810

Non-controlling interests

(10,720

)

-

2,328,757

2,183,810

PROFIT FOR THE YEAR

2,328,757

2,183,810

OTHER COMPREHENSIVE INCOME

-

-

TOTAL COMPREHENSIVE INCOME FOR THE YEAR

2,328,757

2,183,810

Total comprehensive income attributable to:

Owners of the parent

2,339,477

2,183,810

Non-controlling interests

(10,720

)

-

2,328,757

2,183,810

FIXED ASSETS

Intangible assets

11

388,269

214,521

Tangible assets

12

1,099,175

1,030,540

Investments

13

209,267

-

1,696,711

1,245,061

CURRENT ASSETS

Stocks

14

3,539,585

2,740,186

Debtors

15

1,187,134

2,455,192

Cash at bank

5,113,308

4,477,055

9,840,027

9,672,433

CREDITORS

Amounts falling due within one year

16

3,268,350

4,985,763

NET CURRENT ASSETS

6,571,677

4,686,670

TOTAL ASSETS LESS CURRENT LIABILITIES

8,268,388

5,931,731

PROVISIONS FOR LIABILITIES

18

94,344

86,444

NET ASSETS

8,174,044

5,845,287

CAPITAL AND RESERVES

Called up share capital

19

120

120

Retained earnings

20

8,184,644

5,845,167

SHAREHOLDERS' FUNDS

8,184,764

5,845,287

NON-CONTROLLING INTERESTS

(10,720

)

-

TOTAL EQUITY

8,174,044

5,845,287

The financial statements were approved by the Board of Directors and authorised for issue on 7 November 2022 and were signed on its behalf by:

M K C Venus - Director

FIXED ASSETS

Intangible assets

11

206,556

214,521

Tangible assets

12

1,078,357

1,030,540

Investments

13

209,638

-

1,494,551

1,245,061

CURRENT ASSETS

Stocks

14

3,430,388

2,740,186

Debtors

15

1,525,828

2,455,192

Cash at bank

5,082,190

4,477,055

10,038,406

9,672,433

CREDITORS

Amounts falling due within one year

16

3,228,836

4,985,763

NET CURRENT ASSETS

6,809,570

4,686,670

TOTAL ASSETS LESS CURRENT LIABILITIES

8,304,121

5,931,731

PROVISIONS FOR LIABILITIES

18

94,344

86,444

NET ASSETS

8,209,777

5,845,287

CAPITAL AND RESERVES

Called up share capital

19

120

120

Retained earnings

20

8,209,657

5,845,167

SHAREHOLDERS' FUNDS

8,209,777

5,845,287

Company's profit for the financial year

2,364,490

2,183,810

The financial statements were approved by the Board of Directors and authorised for issue on 7 November 2022 and were signed on its behalf by:

M K C Venus - Director

Called up

share

Retained

Non-controlling

Total

capital

earnings

Total

interests

equity

£

£

£

£

£

Balance at 1 January 2020

120

3,761,357

3,761,477

-

3,761,477

Changes in equity

Dividends

-

(100,000

)

(100,000

)

-

(100,000

)

Total comprehensive income

-

2,183,810

2,183,810

-

2,183,810

Balance at 31 December 2020

120

5,845,167

5,845,287

-

5,845,287

Changes in equity

Total comprehensive income

-

2,339,477

2,339,477

(10,720

)

2,328,757

Balance at 31 December 2021

120

8,184,644

8,184,764

(10,720

)

8,174,044

Called up

share

Retained

Total

capital

earnings

equity

£

£

£

Balance at 1 January 2020

120

3,761,357

3,761,477

Changes in equity

Dividends

-

(100,000

)

(100,000

)

Total comprehensive income

-

2,183,810

2,183,810

Balance at 31 December 2020

120

5,845,167

5,845,287

Changes in equity

Total comprehensive income

-

2,364,490

2,364,490

Balance at 31 December 2021

120

8,209,657

8,209,777

Cash flows from operating activities

Cash generated from operations

1

2,109,450

2,962,336

Interest paid

(7

)

(5,045

)

Tax paid

(869,525

)

(149,258

)

Other items

(677

)

-

Net cash from operating activities

1,239,241

2,808,033

Cash flows from investing activities

Purchase of intangible fixed assets

(197,720

)

(120,094

)

Purchase of tangible fixed assets

(196,039

)

(121,802

)

Purchase of fixed asset investments

(209,341

)

-

Sale of tangible fixed assets

-

1,500

Interest received

112

-

Net cash from investing activities

(602,988

)

(240,396

)

Cash flows from financing activities

Equity dividends paid

-

(100,000

)

Net cash from financing activities

-

(100,000

)

Increase in cash and cash equivalents

636,253

2,467,637

Cash and cash equivalents at beginning of year

2

4,477,055

2,009,418

Cash and cash equivalents at end of year

2

5,113,308

4,477,055

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

2021

2020

£

£

Profit before taxation

2,865,890

2,763,623

Depreciation charges

152,053

133,835

Profit on disposal of fixed assets

-

(1,500

)

Finance costs

7

5,045

Finance income

(112

)

-

3,017,838

2,901,003

Increase in stocks

(799,398

)

(420,340

)

Decrease/(increase) in trade and other debtors

876,696

(1,976,355

)

(Decrease)/increase in trade and other creditors

(985,686

)

2,458,028

Cash generated from operations

2,109,450

2,962,336

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 December 2021

31.12.21

1.1.21

£

£

Cash and cash equivalents

5,113,308

4,477,055

Year ended 31 December 2020

31.12.20

1.1.20

£

£

Cash and cash equivalents

4,477,055

2,009,418

3.	ANALYSIS OF CHANGES IN NET FUNDS

At 1.1.21

Cash flow

At 31.12.21

£

£

£

Net cash

Cash at bank

4,477,055

636,253

5,113,308

4,477,055

636,253

5,113,308

Total

4,477,055

636,253

5,113,308

1.	STATUTORY INFORMATION

Jackson's Art Supplies 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.

Basis of consolidation

The Group consolidated financial statements include the financial statements of the Company and its subsidiary undertakings.

A subsidiary is an entity controlled by the group. Control is the power to govern the financial and operating policies of an entity so as to obtain benefits from its activities. Where the Group owns less than 50% of the voting power of an entity but controls the entity by virtue of an agreement with other investors which gave it control of the financial and operating policies of the entity it accounts for that entity as a subsidiary.

Where a subsidiary has different accounting policies to the Group, adjustments are made to those subsidiary financial statements to apply the Group's accounting policies when preparing the consolidated financial statements.

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

Related party exemption

For the purpose of these financial statements, a related party is considered to be a related party to the Company as defined by FRS 102.

Significant judgements and estimates

The preparation of the financial statements requires management to make judgements, estimates and assumptions that affect the amounts reported for assets and liabilities as at the balance sheet date and the amounts reported for revenues and expenses during the year. However, the nature of estimation means that actual outcomes could differ from those estimates. In the Director's opinion, there are no significant judgements or key sources of estimation uncertainty.

Turnover

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

Revenue from the sale of goods is recognised when all the following conditions are satisfied:

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

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

- the amount of revenue can be measured reliably;

- it is probable that the economic benefits associated with the transaction will flow to the Company; and

- the costs incurred or to be incurred in respect of the transaction can be measured reliably. Specifically, revenue from the sale of goods is recognised when goods are delivered and legal title is passed.

Goodwill

The Goodwill was achieved from the acquisition of a business this year, it will be amortised over its useful life.

Tangible fixed assets

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

Freehold property

-

2% on cost

Fixtures and fittings

-

25% on cost

Computer equipment

-

25% on cost

Government grants

Government grants given in respect of the Coronavirus Job Retention Scheme have been accounted for under the accrual model, recognised as other income against the period to which they relate. During the year, £5,240 (2020 - £14,910) has been recognised. There were no unfulfilled conditions or contingencies attached to the grant.

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 company only enters into basic financial instruments that result in the recognition of financial assets and liabilities like trade and other debtors and creditors, loans from banks and other third parties, loans to related parties and investments in non-puttable ordinary shares.

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

Financial assets and liabilities are offset and the net amount reported in the Balance Sheet when there is an 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.

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.

Deferred tax

Deferred tax is recognised in respect of all timing differences that have originated but not reversed at the balance sheet date.

Timing differences arise from the inclusion of income and expenses in tax assessments in periods different from those in which they are recognised in financial statements. Deferred tax is measured using tax rates and laws that have been enacted or substantively enacted by the year end and that are expected to apply to the reversal of the timing difference.

Unrelieved tax losses and other deferred tax assets are recognised only to the extent that it is probable that they will be recovered against the reversal of deferred tax liabilities or other future taxable profits.

Foreign currencies

Assets and liabilities in foreign currencies are translated into sterling at the rates of exchange ruling at the balance sheet date. Transactions in foreign currencies are translated into sterling at the rate of exchange ruling at the date of transaction. Exchange differences are taken into account in arriving at the operating result.

Pension costs and other post-retirement benefits

The group operates a defined contribution pension scheme. Contributions payable to the group's pension scheme are charged to profit or loss in the period to which they relate.

A defined contribution plan is a pension plan under which fixed contributions are paid into a pension fund and the Company has no legal or constructive obligation to pay further contributions even if the fund does not hold sufficient assets to pay all employees the benefits relating to employee service in the current and prior periods.

Contributions to defined contribution plans are recognised as employee benefit expense when they are due. If contribution payments exceed the contribution due for service, the excess is recognised as a prepayment

Lease commitments

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