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The principal accounting policies adopted in the preparation of these financial statements are set out below. They have all been
applied consistently throughout the year and the preceding year, unless otherwise stated.
Accounting basis
The financial statements are prepared under the historical cost convention, as modified by the previous revaluation of properties, in
compliance with the provisions of the Companies Act 2006, the requirements of the Listing Rules of the Financial Services Authority
and applicable United Kingdom Accounting Standards. Whilst the consolidated accounts have been prepared under IFRS, as required
by European law, the Companys accounts continue to be prepared under UK GAAP as permitted.
Depreciation
Tangible fixed assets are stated at cost or valuation less depreciation, where cost includes the original purchase price of the asset
and the costs attributable to bringing the asset to its working condition for its intended use. Depreciation is provided at rates
calculated to write down the cost of all tangible fixed assets, except freehold land, over their estimated useful lives on a straight
line basis. The estimated average life for each major asset category is:
Freehold buildings - 15 to 40 years
Computers and office equipment - 3 to 5 years
l Cars - 3 years
l Plant and machinery - 10 to 15 years.
l
l
Leased assets
The cost of operating leases is charged to the profit and loss account on a straight line basis over the term of the lease.
Pensions
The defined benefit pension obligations of the Company are financed by contributions to separate funds. As the Company is unable
to reliably and consistently measure its share of the underlying assets and liabilities of the funds, the Company accounts as though
the funds were defined contribution funds and charges contributions paid directly to the profit and loss account.
Currency translations
Monetary assets and liabilities are translated at the exchange rates ruling at the end of the financial period. Exchange profits or
losses on trading transactions are included in the profit and loss account. Other exchange differences arising from non-trading items
are dealt with through reserves.
Financial instruments
The Company uses derivative financial instruments to hedge its exposure to interest rates and short-term currency rate fluctuations.
Derivative financial instruments are recorded initially at cost. Subsequent measurement depends on the designation of the
instrument as either: (i) a hedge of the fair value of recognised assets or liabilities or a firm commitment (fair value hedge); or (ii) a
hedge of highly probable forecast transactions (cash flow hedge);
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Dividends
Shares acquired by the trustees, funded by the Company and held for the continuing benefit of the Company are shown as a
reduction in shareholders funds. Movements in the year arising from additional purchases by the trustees of shares or the receipt
of funds due to the exercise of options by employees are accounted for within reserves and shown as a movement in shareholders
funds in the year. Administration expenses of the trusts are charged to the Companys profit and loss account as incurred.
All dividends, including preference dividends, are recognised as a liability when the liability is irrevocable. Accordingly, final
dividends are recognised when approved by shareholders and interim dividends are recognised when paid.
Taxation
The charge for taxation is based on the profit for the year and takes into account taxation deferred because of temporary differences
between the treatment of certain items for taxation and other accounting purposes. Temporary differences arise from the inclusion
of profits and losses in the accounts in different periods from which they are recognised in tax assessments and primarily arise as a
result of the difference between tax allowances on tangible fixed assets and the corresponding depreciation charge. Full provision
is made for the tax effects of these differences. No provision is made for unremitted earnings of foreign subsidiaries where there
is no commitment to remit such earnings. Similarly, no provision is made for temporary differences relating to investments in
subsidiaries since realisation of such differences can be controlled and is not probable in the foreseeable future. Deferred tax assets
are recognised to the extent that it is probable that future taxable profit will be available against which the temporary differences
can be utilised. All taxation is calculated on the basis of the tax rates and laws enacted or substantively enacted at the balance
sheet date.
Borrowings
Borrowings are recognised initially at fair value, net of transaction costs incurred. Any difference between the proceeds (net of
transaction costs) and the redemption value is recognised in the income statement over the period of the borrowings using the
effective interest method. Borrowings are classified as current liabilities unless the Company has an unconditional right to defer
settlement of the liability for at least 12 months after the balance sheet date.
Investments
Shares in subsidiary undertakings
Shares in subsidiary undertakings are initially stated at cost. Provision is made where, in the opinion of the directors, a permanent
diminution in value has occurred.
Unquoted securities
Investments in unquoted securities are carried at fair value unless such value cannot be reliably measured, in which case the
investments are carried at cost.
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