Abbreviated Company Accounts - EARTHWORM OPERATIONS LIMITED

1Accounting Policies

Basis of measurement and preparation of accounts
The full financial statements, from which these abbreviated accounts have been extracted, have
been prepared under the historical cost convention and in accordance with the Financial Reporting
Standard for Smaller Entities (effective January 2015).

Turnover policy
Turnover comprises revenue recognised by the company in respect of goods and services supplied during the period, exclusive of Value Added Tax and trade discounts.

Other accounting policies
Going concern
The accounts have been prepared on a going concern basis and the Directors consider that this is appropriate. This conclusion is based on the continued support of its parent company and their belief that the further fundraising round in 2015 will be successful. These funds will be used to settle outstanding creditors and to provide working capital which was not available under the existing funding structure. Additionally the directors have confirmed their continued support of the company. Based on the above, the directors are confident that the accounts should be prepared on a going concern basis.

Intangible fixed assets and amortisation
Amortisation is calculated so as to write off the cost of an asset, net of anticipated disposal proceeds, over the useful economic life of that asset as follows:
Website Design Costs - 20% Straight Line

Tangible fixed assets and depreciation
Tangible fixed assets are stated at cost less depreciation. Depreciation is provided at rates calculated to write off the cost of fixed assets, less their estimated residual value, over their expected useful lives on the following bases:
Leasehold property - Over the period of the lease
Plant and machinery - 10 - 20 years straight line
Fixtures and fittings - 10 years straight line

Leasing and hire purchase
Assets obtained under hire purchase contracts and finance leases are capitalised as tangible fixed assets. Assets acquired by finance lease are depreciated over the shorter of the lease term and their useful lives. Assets acquired by hire purchase are depreciated over their useful lives. Finance leases are those where substantially all of the benefits and risks of ownership are assumed by the company. Obligations under such agreements are included in creditors net of the finance charge allocated to future periods. The finance element of the rental payment is charged to the Profit and Loss Account so as to produce a constant periodic rate of charge on the net obligation outstanding in each period.

Operating leases
Rentals under operating leases are charged to the Profit and Loss Account on a straight line basis over the lease term.

Stocks and work in progress
Stocks and work in progress are valued at the lower of cost and net realisable value after making due allowance for obsolete and slow-moving stocks. Cost includes all direct costs and an appropriate proportion of fixed and variable overheads.

Deferred taxation
Full provision is made for deferred tax assets and liabilities arising from all timing differences between the recognition of gains and losses in the financial statements and recognition in the tax computation.
A net deferred tax asset is recognised only if it can be regarded as more likely than not that there will be suitable taxable profits from which the future reversal of the underlying timing differences can be deducted.
Deferred tax assets and liabilities are calculated at the tax rates expected to be effective at the time the timing differences are expected to reverse.
Deferred tax assets and liabilities are not discounted.

Financial instruments
Financial instruments are classified and accounted for, according to the substance of the contractual arrangement, as either financial assets, financial liabilities or equity instruments. An equity instrument is any contract that evidences a residual interest in the assets of the company after deducting all of its liabilities.

ULTIMATE PARENT UNDERTAKING AND CONTROLLING PARTY
The ultimate parent company is Featherie Limited, a company incorporated in the United Kingdom and consolidated accounts are produced and available to the public. In the opinion of the directors there is no ultimate controlling party.