The Large and Medium-sized Companies and Groups (Accounts and Reports) Regulations 2008

Made: 19th February 2008

Coming into force: 6th April 2008

The Secretary of State makes the following Regulations in exercise of the powers conferred by sections 396(3), 404(3), 409(1) to (3), 412(1) to (3), 416(4), 421(1) and (2), 445(3)(a) and (b), 677(3)(a), 712(2)(b)(i), 831(3)(a), 832(4)(a), 836(1)(b)(i) and 1292(1) (a) and (c) of the Companies Act 2006 .

In accordance with sections 473(3) and 1290 of the Companies Act 2006 a draft of this instrument was laid before Parliament and approved by a resolution of each House of Parliament.

PART 1 — INTRODUCTION

Citation and interpretation

1

• (1) These Regulations may be cited as the Large and Medium-sized Companies and Groups (Accounts and Reports) Regulations 2008.

• (2) In these Regulations “the 2006 Act” means the Companies Act 2006.

Commencement and application

2

• (1) These Regulations come into force on 6th April 2008.

• (2) Subject to paragraph (3), they apply in relation to financial years beginning on or after 6th April 2008.

• (3) The requirement for disclosure in paragraph 4 of Schedule 8 to these Regulations (directors' remuneration report: disclosure relating to consideration of conditions in company and group) applies in relation to financial years beginning on or after 6th April 2009.

• (4) These Regulations apply to companies other than those which are subject to the small companies regime under Part 15 of the 2006 Act.

PART 2 — FORM AND CONTENT OF ACCOUNTS

Companies Act individual accounts (companies other than banking and insurance companies)

3

• (1) Subject to regulation 4, the directors of a company—

• (a) for which they are preparing Companies Act individual accounts under section 396 of the 2006 Act (Companies Act: individual accounts), and

• (b) which is not a banking company or an insurance company,

must comply with the provisions of Schedule 1 to these Regulations as to the form and content of the balance sheet and profit and loss account, and additional information to be provided by way of notes to the accounts.

• (2) The profit and loss account of a company that falls within section 408 of the 2006 Act (individual profit and loss account where group accounts prepared) need not contain the information specified in paragraphs 65 to 69 of Schedule 1 to these Regulations (information supplementing the profit and loss account).

Medium-sized companies: exemptions for Companies Act individual accounts

4

• (1) This regulation applies to a company—

• (a) which qualifies as medium-sized in relation to a financial year under section 465 of the 2006 Act , and

• (b) the directors of which are preparing Companies Act individual accounts under section 396 of that Act for that year.

• (2A) The individual accounts for the year need not comply with paragraph 45 (disclosure with respect to compliance with accounting standards) of Schedule 1 to these Regulations.

• (2B) Paragraph 72 (related party transactions) applies with the modification that only particulars of transactions which have not been concluded under normal market conditions with the following must be disclosed—

• (a) owners holding a participating interest in the company;

• (b) companies in which the company itself has a participating interest; and

• (c) the company's directors.

• (3) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

Companies Act individual accounts: banking companies

5

• (1) The directors of a company—

• (a) for which they are preparing Companies Act individual accounts under section 396 of the 2006 Act, and

• (b) which is a banking company,

must comply with the provisions of Schedule 2 to these Regulations as to the form and content of the balance sheet and profit and loss account, and additional information to be provided by way of notes to the accounts.

• (2) The profit and loss account of a banking company that falls within section 408 of the 2006 Act (individual profit and loss account where group accounts prepared) need not contain the information specified in paragraphs 85 to 91 of Schedule 2 to these Regulations (information supplementing the profit and loss account).

• (3) Accounts prepared in accordance with this regulation must contain a statement that they are prepared in accordance with the provisions of these Regulations relating to banking companies.

Companies Act individual accounts: insurance companies

6

• (1) The directors of a company—

• (a) for which they are preparing Companies Act individual accounts under section 396 of the 2006 Act, and

• (b) which is an insurance company,

must comply with the provisions of Schedule 3 to these Regulations as to the form and content of the balance sheet and profit and loss account, and additional information to be provided by way of notes to the accounts.

• (2) The profit and loss account of a company that falls within section 408 of the 2006 Act (individual profit and loss account where group accounts prepared) need not contain the information specified in paragraphs 83 to 89 of Schedule 3 to these Regulations (information supplementing the profit and loss account).

• (3) Accounts prepared in accordance with this regulation must contain a statement that they are prepared in accordance with the provisions of these Regulations relating to insurance companies.

Information about related undertakings (Companies Act or IAS individual or group accounts)

7

• (1) Companies Act or IAS individual or group accounts must comply with the provisions of Schedule 4 to these Regulations as to information about related undertakings to be given in notes to the company's accounts.

• (2) In Schedule 4—

• Part 1 contains provisions applying to all companies

• Part 2 contains provisions applying only to companies not required to prepare group accounts

• Part 3 contains provisions applying only to companies required to prepare group accounts

• Part 4 contains additional disclosures for banking companies and groups

• Part 5 contains interpretative provisions.

• (3) Information otherwise required to be given by Schedule 4 need not be disclosed with respect to an undertaking that—

• (a) is established under the law of a country outside the United Kingdom, or

• (b) carries on business outside the United Kingdom,

if the conditions specified in section 409(4) of the 2006 Act are met (see section 409(5) of the 2006 Act for disclosure required where advantage taken of this exemption). This paragraph does not apply in relation to the information otherwise required by paragraph 3, 7 or 21 of Schedule 4.

Information about directors' benefits: remuneration (Companies Act or IAS individual or group accounts: quoted and unquoted companies)

8

• (1) Companies Act or IAS individual or group accounts must comply with the provisions of Schedule 5 to these Regulations as to information about directors' remuneration to be given in notes to the company's accounts.

• (2) In Schedule 5—

• Part 1 contains provisions applying to quoted and unquoted companies,

• Part 2 contains provisions applying only to unquoted companies, and

• Part 3 contains supplementary provisions.

Companies Act group accounts

9

• (1) Subject to paragraphs (2) and (3), where the directors of a parent company prepare Companies Act group accounts under section 403 of the 2006 Act (group accounts: applicable accounting framework), those accounts must comply with the provisions of Part 1 of Schedule 6 to these Regulations as to the form and content of the consolidated balance sheet and consolidated profit and loss account, and additional information to be provided by way of notes to the accounts.

• (2) The directors of the parent company of a banking group preparing Companies Act group accounts must do so in accordance with the provisions of Part 1 of Schedule 6 as modified by Part 2 of that Schedule.

• (3) The directors of the parent company of an insurance group preparing Companies Act group accounts must do so in accordance with the provisions of Part 1 of Schedule 6 as modified by Part 3 of that Schedule.

• (4) Accounts prepared in accordance with paragraph (2) or (3) must contain a statement that they are prepared in accordance with the provisions of these Regulations relating to banking groups or to insurance groups, as the case may be.

PART 3 — DIRECTORS' REPORT

Directors' report

10

• (1) The report which the directors of a company are required to prepare under section 415 of the 2006 Act (duty to prepare directors' report) must disclose the matters specified in Schedule 7 to these Regulations.

• (2) In Schedule 7—

• Part 1 relates to matters of a general nature including political donations and expenditure,

• Part 2 relates to the acquisition by a company of its own shares or a charge on them,

• ...

• ...

• Part 6 relates to certain disclosures required by publicly traded companies, ...

• Part 7 relates to disclosures in relation to greenhouse gas emissions, energy consumption and energy efficiency action by quoted companies,

• Part 7A relates to disclosures in relation to greenhouse gas emissions, energy consumption and energy efficiency action by unquoted companies, ...

• Part 8 relates to the statement of corporate governance arrangements , and

• Part 9 relates to a company’s payment practices and performance in respect of payments made by the company to its suppliers.

PART 4 — DIRECTORS' REMUNERATION REPORT

Directors' remuneration report (quoted companies ...)

11

• (1) The remuneration report which the directors of a quoted company ... are required to prepare under section 420 of the 2006 Act (duty to prepare directors' remuneration report) must contain the information specified in Schedule 8 to these Regulations, and must comply with any requirement of that Schedule as to how information is to be set out in the report.

• (1A) The document setting out a revised directors’ remuneration policy in accordance with section 422A of the 2006 Act must contain the information specified in Schedule 8 to these Regulations, and must comply with any requirements in that Schedule as to how that information is to be set out.

• (2) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

• (3) For the purposes of section 497 in Part 16 of the 2006 Act (auditor's report on auditable part of directors' remuneration report), “the auditable part” of a directors' remuneration report is the information set out in the report as identified in Part 5 of Schedule 8 to these Regulations.

PART 5 — INTERPRETATION

Definition of “provisions”

12

Schedule 9 to these Regulations defines “provisions” for the purposes of these Regulations and for the purposes of—

• (a) section 677(3)(a) (Companies Act accounts: relevant provisions for purposes of financial assistance) in Part 18 of the 2006 Act,

• (b) section 712(2)(b)(i) (Companies Act accounts: relevant provisions to determine available profits for redemption or purchase by private company out of capital) in that Part, ...

• (c) sections 831(3)(a) (Companies Act accounts: net asset restriction on public company distributions), 832(4)(a) (Companies Act accounts: investment companies distributions) and 836(1)(b)(i) (Companies Act accounts: relevant provisions for distribution purposes) in Part 23 of that Act, and

• (d) section 841(2)(a) (Companies Act accounts: provisions to be treated as realised losses) in that Part.

General interpretation

13

Schedule 10 to these Regulations contains general definitions for the purposes of these Regulations.

SCHEDULE 1 — COMPANIES ACT INDIVIDUAL ACCOUNTS: COMPANIES WHICH ARE NOT BANKING OR INSURANCE COMPANIES

PART 1 — GENERAL RULES AND FORMATS

SECTION A — GENERAL RULES

1

• (1) Subject to the following provisions of this Schedule—

• (a) every balance sheet of a company must show the items listed in either of the balance sheet formats in Section B of this Part, and

• (b) every profit and loss account must show the items listed in any one of the profit and loss account formats in Section B.

• (2) References in this Schedule to the items listed in any of the formats in Section B are to those items read together with any of the notes following the formats which apply to those items.

• (3) The items must be shown in the order and under the headings and sub-headings given in the particular format used, but—

• (a) the notes to the formats may permit alternative positions for any particular items, and

• (b) the heading or sub-heading for any item does not have to be distinguished by any letter or number assigned to that item in the format used.

2

• (1) Where in accordance with paragraph 1 a company’s balance sheet or profit and loss account for any financial year has been prepared by reference to one of the formats in Section B, the company’s directors must use the same format in preparing Companies Act individual accounts for subsequent financial years, unless in their opinion there are special reasons for a change.

• (2) Particulars of any such change must be given in a note to the accounts in which the new format is first used, and the reasons for the change must be explained.

3

• (1) Any item required to be shown in a company’s balance sheet or profit and loss account may be shown in greater detail than required by the particular format used.

• (2) The balance sheet or profit and loss account may include an item representing or covering the amount of any asset or liability, income or expenditure not otherwise covered by any of the items listed in the format used, save that none of the following may be treated as assets in any balance sheet—

• (a) preliminary expenses,

• (b) expenses of, and commission on, any issue of shares or debentures, and

• (c) costs of research.

4

• (1) Where the special nature of the company’s business requires it, the company’s directors must adapt the arrangement, headings and sub-headings otherwise required in respect of items given an Arabic number in the balance sheet or profit and loss account format used.

• (2) The directors may combine items to which Arabic numbers are given in any of the formats in Section B if—

• (a) their individual amounts are not material to assessing the state of affairs or profit or loss of the company for the financial year in question, or

• (b) the combination facilitates that assessment.

• (3) Where sub-paragraph (2)(b) applies, the individual amounts of any items which have been combined must be disclosed in a note to the accounts.

5

• (1) Subject to sub-paragraph (2), the directors must not include a heading or sub-heading corresponding to an item in the balance sheet or profit and loss account format used if there is no amount to be shown for that item for the financial year to which the balance sheet or profit and loss account relates.

• (2) Where an amount can be shown for the item in question for the immediately preceding financial year that amount must be shown under the heading or sub-heading required by the format for that item.

6

Every profit and loss account must show the amount of a company’s profit or loss on ordinary activities before taxation.

7

• (1) For every item shown in the balance sheet or profit and loss account the corresponding amount for the immediately preceding financial year must also be shown.

• (2) Where that corresponding amount is not comparable with the amount to be shown for the item in question in respect of the financial year to which the balance sheet or profit and loss account relates, the former amount may be adjusted, and particulars of the non-comparability and of any adjustment must be disclosed in a note to the accounts.

8

Amounts in respect of items representing assets or income may not be set off against amounts in respect of items representing liabilities or expenditure (as the case may be), or vice versa.

9

The company’s directors must, in determining how amounts are presented within items in the profit and loss account and balance sheet, have regard to the substance of the reported transaction or arrangement, in accordance with generally accepted accounting principles or practice.

SECTION B — THE REQUIRED FORMATS FOR ACCOUNTS

Balance sheet formats	Balance sheet formats	Balance sheet formats	Balance sheet formats	Balance sheet formats	Balance sheet formats
Format 1	Format 1	Format 1	Format 1	Format 1	Format 1
A.	Called up share capital not paid (1)	Called up share capital not paid (1)	Called up share capital not paid (1)	Called up share capital not paid (1)	Called up share capital not paid (1)
B.	Fixed assets	Fixed assets	Fixed assets	Fixed assets	Fixed assets
		I.	Intangible assets	Intangible assets	Intangible assets
				1.	Development costs
				2.	Concessions, patents, licences, trade marks and similar rights and assets (2)
				3.	Goodwill (3)
				4.	Payments on account
		II.	Tangible assets	Tangible assets	Tangible assets
				1.	Land and buildings
				2.	Plant and machinery
				3.	Fixtures, fittings, tools and equipment
				4.	Payments on account and assets in course of construction
		III.	Investments	Investments	Investments
				1.	Shares in group undertakings
				2.	Loans to group undertakings
				3.	Participating interests
				4.	Loans to undertakings in which the company has a participating interest
				5.	Other investments other than loans
				6.	Other loans
				7.	Own shares (4)
C.	Current assets	Current assets	Current assets	Current assets	Current assets
		I.	Stocks	Stocks	Stocks
				1.	Raw materials and consumables
				2.	Work in progress
				3.	Finished goods and goods for resale
				4.	Payments on account
		II.	Debtors (5)	Debtors (5)	Debtors (5)
				1.	Trade debtors
				2.	Amounts owed by group undertakings
				3.	Amounts owed by undertakings in which the company has a participating interest
				4.	Other debtors
				5.	Called up share capital not paid (1)
				6.	Prepayments and accrued income (6)
		III.	Investments	Investments	Investments
				1.	Shares in group undertakings
				2.	Own shares (4)
				3.	Other investments
		IV.	Cash at bank and in hand	Cash at bank and in hand	Cash at bank and in hand
D.	Prepayments and accrued income (6)	Prepayments and accrued income (6)	Prepayments and accrued income (6)	Prepayments and accrued income (6)	Prepayments and accrued income (6)
E.	Creditors: amounts falling due within one year	Creditors: amounts falling due within one year	Creditors: amounts falling due within one year	Creditors: amounts falling due within one year	Creditors: amounts falling due within one year
				1.	Debenture loans (7)
				2.	Bank loans and overdrafts
				3.	Payments received on account (8)
				4.	Trade creditors
				5.	Bills of exchange payable
				6.	Amounts owed to group undertakings
				7.	Amounts owed to undertakings in which the company has a participating interest
				8.	Other creditors including taxation and social security (9)
				9.	Accruals and deferred income (10)
F.	Net current assets (liabilities) (11)	Net current assets (liabilities) (11)	Net current assets (liabilities) (11)	Net current assets (liabilities) (11)	Net current assets (liabilities) (11)
G.	Total assets less current liabilities	Total assets less current liabilities	Total assets less current liabilities	Total assets less current liabilities	Total assets less current liabilities
H.	Creditors: amounts falling due after more than one year	Creditors: amounts falling due after more than one year	Creditors: amounts falling due after more than one year	Creditors: amounts falling due after more than one year	Creditors: amounts falling due after more than one year
				1.	Debenture loans (7)
				2.	Bank loans and overdrafts
				3.	Payments received on account (8)
				4.	Trade creditors
				5.	Bills of exchange payable
				6.	Amounts owed to group undertakings
				7.	Amounts owed to undertakings in which the company has a participating interest
				8.	Other creditors including taxation and social security (9)
				9.	Accruals and deferred income (10)
I.	Provisions for liabilities	Provisions for liabilities	Provisions for liabilities	Provisions for liabilities	Provisions for liabilities
				1.	Pensions and similar obligations
				2.	Taxation, including deferred taxation
				3.	Other provisions
J.	Accruals and deferred income (10)	Accruals and deferred income (10)	Accruals and deferred income (10)	Accruals and deferred income (10)	Accruals and deferred income (10)
K.	Capital and reserves	Capital and reserves	Capital and reserves	Capital and reserves	Capital and reserves
		I.	Called up share capital (12)	Called up share capital (12)	Called up share capital (12)
		II.	Share premium account	Share premium account	Share premium account
		III.	Revaluation reserve	Revaluation reserve	Revaluation reserve
		IV.	Other reserves	Other reserves	Other reserves
				1.	Capital redemption reserve
				2.	Reserve for own shares
				3.	Reserves provided for by the articles of association
				4.	Other reserves
		V.	Profit and loss account	Profit and loss account	Profit and loss account
Balance sheet formats	Balance sheet formats	Balance sheet formats	Balance sheet formats	Balance sheet formats	Balance sheet formats
---	---	---	---	---	---
Format 2	Format 2	Format 2	Format 2	Format 2	Format 2
ASSETS	ASSETS	ASSETS	ASSETS	ASSETS	ASSETS
A.	Called up share capital not paid (1)	Called up share capital not paid (1)	Called up share capital not paid (1)	Called up share capital not paid (1)	Called up share capital not paid (1)
B.	Fixed assets	Fixed assets	Fixed assets	Fixed assets	Fixed assets
		I.	Intangible assets	Intangible assets	Intangible assets
				1.	Development costs
				2.	Concessions, patents, licences, trade marks and similar rights and assets (2)
				3.	Goodwill (3)
				4.	Payments on account
		II.	Tangible assets	Tangible assets	Tangible assets
				1.	Land and buildings
				2.	Plant and machinery
				3.	Fixtures, fittings, tools and equipment
				4.	Payments on account and assets in course of construction
		III.	Investments	Investments	Investments
				1.	Shares in group undertakings
				2.	Loans to group undertakings
				3.	Participating interests
				4.	Loans to undertakings in which the company has a participating interest
				5.	Other investments other than loans
				6.	Other loans
				7.	Own shares (4)
C.	Current assets	Current assets	Current assets	Current assets	Current assets
		I.	Stocks	Stocks	Stocks
				1.	Raw materials and consumables
				2.	Work in progress
				3.	Finished goods and goods for resale
				4.	Payments on account
		II.	Debtors (5)	Debtors (5)	Debtors (5)
				1.	Trade debtors
				2.	Amounts owed by group undertakings
				3.	Amounts owed by undertakings in which the company has a participating interest
				4.	Other debtors
				5.	Called up share capital not paid (1)
				6.	Prepayments and accrued income (6)
		III.	Investments	Investments	Investments
				1.	Shares in group undertakings
				2.	Own shares (4)
				3.	Other investments
		IV.	Cash at bank and in hand	Cash at bank and in hand	Cash at bank and in hand
D.	Prepayments and accrued income (6)	Prepayments and accrued income (6)	Prepayments and accrued income (6)	Prepayments and accrued income (6)	Prepayments and accrued income (6)
LIABILITIES	LIABILITIES	LIABILITIES	LIABILITIES	LIABILITIES	LIABILITIES
A.	Capital and reserves	Capital and reserves	Capital and reserves	Capital and reserves	Capital and reserves
		I.	Called up share capital (12)	Called up share capital (12)	Called up share capital (12)
		II.	Share premium account	Share premium account	Share premium account
		III.	Revaluation reserve	Revaluation reserve	Revaluation reserve
		IV.	Other reserves	Other reserves	Other reserves
				1.	Capital redemption reserve
				2.	Reserve for own shares
				3.	Reserves provided for by the articles of association
				4.	Other reserves
		V.	Profit and loss account	Profit and loss account	Profit and loss account
B.	Provisions for liabilities	Provisions for liabilities	Provisions for liabilities	Provisions for liabilities	Provisions for liabilities
				1.	Pensions and similar obligations
				2.	Taxation, including deferred taxation
				3.	Other provisions
C.	Creditors (13)	Creditors (13)	Creditors (13)	Creditors (13)	Creditors (13)
				1.	Debenture loans (7)
				2.	Bank loans and overdrafts
				3.	Payments received on account (8)
				4.	Trade creditors
				5.	Bills of exchange payable
				6.	Amounts owed to group undertakings
				7.	Amounts owed to undertakings in which the company has a participating interest
				8.	Other creditors including taxation and social security (9)
				9.	Accruals and deferred income (10)
D.	Accruals and deferred income (10)	Accruals and deferred income (10)	Accruals and deferred income (10)	Accruals and deferred income (10)	Accruals and deferred income (10)

Notes on the balance sheet formats

(1)	Called up share capital not paid

(Formats 1 and 2, items A and C.II.5.)

This item may be shown in either of the two positions given in formats 1 and 2.

(2)	Concessions, patents, licences, trade marks and similar rights and assets

(Formats 1 and 2, item B.I.2.)

Amounts in respect of assets are only to be included in a company’s balance sheet under this item if either—

• (a) the assets were acquired for valuable consideration and are not required to be shown under goodwill, or

• (b) the assets in question were created by the company itself.

(3)	Goodwill

(Formats 1 and 2, item B.I.3.)

Amounts representing goodwill are only to be included to the extent that the goodwill was acquired for valuable consideration.

(4)	Own shares

(Formats 1 and 2, items B.III.7 and C.III.2.)

The nominal value of the shares held must be shown separately.

(5)	Debtors

(Formats 1 and 2, items C.II.1 to 6.)

The amount falling due after more than one year must be shown separately for each item included under debtors.

(6)	Prepayments and accrued income

(Formats 1 and 2, items C.II.6 and D.)

This item may be shown in either of the two positions given in formats 1 and 2.

(7)	Debenture loans

(Format 1, items E.1 and H.1 and format 2, item C.1.)

The amount of any convertible loans must be shown separately.

(8)	Payments received on account

(Format 1, items E.3 and H.3 and format 2, item C.3.)

Payments received on account of orders must be shown for each of these items in so far as they are not shown as deductions from stocks.

(9)	Other creditors including taxation and social security

(Format 1, items E.8 and H.8 and format 2, item C.8.)

The amount for creditors in respect of taxation and social security must be shown separately from the amount for other creditors.

(10)	Accruals and deferred income

(Format 1, items E.9, H.9 and J and format 2, items C.9 and D.)

The two positions given for this item in format 1 at E.9 and H.9 are an alternative to the position at J, but if the item is not shown in a position corresponding to that at J it may be shown in either or both of the other two positions (as the case may require).

The two positions given for this item in format 2 are alternatives.

(11)	Net current assets (liabilities)

(Format 1, item F.)

In determining the amount to be shown for this item any amounts shown under “prepayments and accrued income” must be taken into account wherever shown.

(12)	Called up share capital

(Format 1, item K.I and format 2, item A.I.)

The amount of allotted share capital and the amount of called up share capital which has been paid up must be shown separately.

(13)	Creditors

(Format 2, items C.1 to 9.)

Amounts falling due within one year and after one year must be shown separately for each of these items and for the aggregate of all of these items.

Profit and loss account formats[^f00005]	Profit and loss account formats[^f00005]	Profit and loss account formats[^f00005]
Format 1	Format 1	Format 1
(see note (17) below)	(see note (17) below)	(see note (17) below)
	1.	Turnover
	2.	Cost of sales (14)
	3.	Gross profit or loss
	4.	Distribution costs (14)
	5.	Administrative expenses (14)
	6.	Other operating income
	7.	Income from shares in group undertakings
	8.	Income from participating interests
	9.	Income from other fixed asset investments (15)
	10.	Other interest receivable and similar income (15)
	11.	Amounts written off investments
	12.	Interest payable and similar charges (16)
	13.	Tax on profit or loss on ordinary activities
	14.	Profit or loss on ordinary activities after taxation
	15.	Extraordinary income
	16.	Extraordinary charges
	17.	Extraordinary profit or loss
	18.	Tax on extraordinary profit or loss
	19.	Other taxes not shown under the above items
	20.	Profit or loss for the financial year
Profit and loss account formats[^f00006]	Profit and loss account formats[^f00006]	Profit and loss account formats[^f00006]
---	---	---
Format 2	Format 2	Format 2
	1.	Turnover
	2.	Change in stocks of finished goods and in work in progress
	3.	Own work capitalised
	4.	Other operating income
	5.	(a)
		(b)
	6.	Staff costs
		(a)
		(b)
		(c)
	7.	(a)
		(b)
	8.	Other operating charges
	9.	Income from shares in group undertakings
	10.	Income from participating interests
	11.	Income from other fixed asset investments (15)
	12.	Other interest receivable and similar income (15)
	13.	Amounts written off investments
	14.	Interest payable and similar charges (16)
	15.	Tax on profit or loss on ordinary activities
	16.	Profit or loss on ordinary activities after taxation
	17.	Extraordinary income
	18.	Extraordinary charges
	19.	Extraordinary profit or loss
	20.	Tax on extraordinary profit or loss
	21.	Other taxes not shown under the above items
	22.	Profit or loss for the financial year
Profit and loss account formats[^f00007]	Profit and loss account formats[^f00007]	Profit and loss account formats[^f00007]
---	---	---
Format 3	Format 3	Format 3
(see note (17) below)	(see note (17) below)	(see note (17) below)
A.	Charges	Charges
		1.
		2.
		3.
		4.
		5.
		6.
		7.
		8.
		9.
		10.
		11.
B.	Income	Income
		1.
		2.
		3.
		4.
		5.
		6.
		7.
		8.
		9.
Profit and loss account formats[^f00008]	Profit and loss account formats[^f00008]	Profit and loss account formats[^f00008]
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Format 4	Format 4	Format 4
A.	Charges	Charges
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B.	Income	Income
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Notes on the profit and loss account formats

(14)	Cost of sales: distribution costs: administrative expenses

(Format 1, items 2, 4 and 5 and format 3, items A.1, 2 and 3.)

These items must be stated after taking into account any necessary provisions for depreciation or diminution in value of assets.

(15)	Income from other fixed asset investments: other interest receivable and similar income

(Format 1, items 9 and 10; format 2, items 11 and 12; format 3, items B.5 and 6 and format 4, items B.7 and 8.)

Income and interest derived from group undertakings must be shown separately from income and interest derived from other sources.

(16)	Interest payable and similar charges

(Format 1, item 12; format 2, item 14; format 3, item A.5 and format 4, item A.7.)

The amount payable to group undertakings must be shown separately.

(17)	Formats 1 and 3

The amount of any provisions for depreciation and diminution in value of tangible and intangible fixed assets falling to be shown under items 7(a) and A.4(a) respectively in formats 2 and 4 must be disclosed in a note to the accounts in any case where the profit and loss account is prepared using format 1 or format 3.

PART 2 — ACCOUNTING PRINCIPLES AND RULES

SECTION A — ACCOUNTING PRINCIPLES

Preliminary

10

• (1) The amounts to be included in respect of all items shown in a company’s accounts must be determined in accordance with the principles set out in this Section.

• (2) But if it appears to the company’s directors that there are special reasons for departing from any of those principles in preparing the company’s accounts in respect of any financial year they may do so, in which case particulars of the departure, the reasons for it and its effect must be given in a note to the accounts.

Accounting principles

11

The company is presumed to be carrying on business as a going concern.

12

Accounting policies must be applied consistently within the same accounts and from one financial year to the next.

13

The amount of any item must be determined on a prudent basis, and in particular—

• (a) only profits realised at the balance sheet date are to be included in the profit and loss account, and

• (b) all liabilities which have arisen in respect of the financial year to which the accounts relate or a previous financial year must be taken into account, including those which only become apparent between the balance sheet date and the date on which it is signed on behalf of the board of directors in accordance with section 414 of the 2006 Act (approval and signing of accounts).

14

All income and charges relating to the financial year to which the accounts relate must be taken into account, without regard to the date of receipt or payment.

15

In determining the aggregate amount of any item, the amount of each individual asset or liability that falls to be taken into account must be determined separately.

SECTION B — HISTORICAL COST ACCOUNTING RULES

Preliminary

16

Subject to Sections C and D of this Part of this Schedule, the amounts to be included in respect of all items shown in a company’s accounts must be determined in accordance with the rules set out in this Section.

Fixed assets

General rules

17

• (1) The amount to be included in respect of any fixed asset must be its purchase price or production cost.

• (2) This is subject to any provision for depreciation or diminution in value made in accordance with paragraphs 18 to 20.

Rules for depreciation and diminution in value

18

In the case of any fixed asset which has a limited useful economic life, the amount of—

• (a) its purchase price or production cost, or

• (b) where it is estimated that any such asset will have a residual value at the end of the period of its useful economic life, its purchase price or production cost less that estimated residual value,

must be reduced by provisions for depreciation calculated to write off that amount systematically over the period of the asset’s useful economic life.

19

• (1) Where a fixed asset investment falling to be included under item B.III of either of the balance sheet formats set out in Part 1 of this Schedule has diminished in value, provisions for diminution in value may be made in respect of it and the amount to be included in respect of it may be reduced accordingly.

• (2) Provisions for diminution in value must be made in respect of any fixed asset which has diminished in value if the reduction in its value is expected to be permanent (whether its useful economic life is limited or not), and the amount to be included in respect of it must be reduced accordingly.

• (3) Any provisions made under sub-paragraph (1) or (2) which are not shown in the profit and loss account must be disclosed (either separately or in aggregate) in a note to the accounts.

20

• (1) Where the reasons for which any provision was made in accordance with paragraph 19 have ceased to apply to any extent, that provision must be written back to the extent that it is no longer necessary.

• (2) Any amounts written back in accordance with sub-paragraph (1) which are not shown in the profit and loss account must be disclosed (either separately or in aggregate) in a note to the accounts.

Development costs

21

• (1) Notwithstanding that an item in respect of “development costs” is included under “fixed assets” in the balance sheet formats set out in Part 1 of this Schedule, an amount may only be included in a company’s balance sheet in respect of development costs in special circumstances.

• (2) If any amount is included in a company’s balance sheet in respect of development costs the following information must be given in a note to the accounts—

• (a) the period over which the amount of those costs originally capitalised is being or is to be written off, and

• (b) the reasons for capitalising the development costs in question.

Goodwill

22

• (1) The application of paragraphs 17 to 20 in relation to goodwill (in any case where goodwill is treated as an asset) is subject to the following.

• (2) Subject to sub-paragraph (3), the amount of the consideration for any goodwill acquired by a company must be reduced by provisions for depreciation calculated to write off that amount systematically over a period chosen by the directors of the company.

• (3) The period chosen must not exceed the useful economic life of the goodwill in question.

• (4) In any case where any goodwill acquired by a company is shown or included as an asset in the company’s balance sheet there must be disclosed in a note to the accounts—

• (a) the period chosen for writing off the consideration for that goodwill, and

• (b) the reasons for choosing that period.

Current assets

23

Subject to paragraph 24, the amount to be included in respect of any current asset must be its purchase price or production cost.

24

• (1) If the net realisable value of any current asset is lower than its purchase price or production cost, the amount to be included in respect of that asset must be the net realisable value.

• (2) Where the reasons for which any provision for diminution in value was made in accordance with sub-paragraph (1) have ceased to apply to any extent, that provision must be written back to the extent that it is no longer necessary.

Miscellaneous and supplementary provisions

Excess of money owed over value received as an asset item

25

• (1) Where the amount repayable on any debt owed by a company is greater than the value of the consideration received in the transaction giving rise to the debt, the amount of the difference may be treated as an asset.

• (2) Where any such amount is so treated—

• (a) it must be written off by reasonable amounts each year and must be completely written off before repayment of the debt, and

• (b) if the current amount is not shown as a separate item in the company's balance sheet, it must be disclosed in a note to the accounts.

Assets included at a fixed amount

26

• (1) Subject to sub-paragraph (2) , assets which fall to be included—

• (a) amongst the fixed assets of a company under the item “tangible assets”, or

• (b) amongst the current assets of a company under the item “raw materials and consumables”,

may be included at a fixed quantity and value.

• (2) Sub-paragraph (1) applies to assets of a kind which are constantly being replaced where—

• (a) their overall value is not material to assessing the company's state of affairs, and

• (b) their quantity, value and composition are not subject to material variation.

Determination of purchase price or production cost

27

• (1) The purchase price of an asset is to be determined by adding to the actual price paid any expenses incidental to its acquisition and then subtracting any incidental reductions in the cost of acquisition.

• (2) The production cost of an asset is to be determined by adding to the purchase price of the raw materials and consumables used the amount of the costs incurred by the company which are directly attributable to the production of that asset.

• (3) In addition, there may be included in the production cost of an asset—

• (a) a reasonable proportion of the costs incurred by the company which are only indirectly attributable to the production of that asset, but only to the extent that they relate to the period of production, and

• (b) interest on capital borrowed to finance the production of that asset, to the extent that it accrues in respect of the period of production,

provided, however, in a case within paragraph (b), that the inclusion of the interest in determining the cost of that asset and the amount of the interest so included is disclosed in a note to the accounts.

• (4) In the case of current assets distribution costs may not be included in production costs.

28

• (1) The purchase price or production cost of—

• (a) any assets which fall to be included under any item shown in a company's balance sheet under the general item “stocks”, and

• (b) any assets which are fungible assets (including investments),

may be determined by the application of any of the methods mentioned in sub-paragraph (2) in relation to any such assets of the same class, provided that the method chosen is one which appears to the directors to be appropriate in the circumstances of the company.

• (2) Those methods are—

• (a) the method known as “first in, first out” (FIFO),

• (b) the method known as “last in, first out” (LIFO),

• (c) a weighted average price, and

• (d) any other method reflecting generally accepted best practice.

• (3) Where in the case of any company—

• (a) the purchase price or production cost of assets falling to be included under any item shown in the company's balance sheet has been determined by the application of any method permitted by this paragraph, and

• (b) the amount shown in respect of that item differs materially from the relevant alternative amount given below in this paragraph,

the amount of that difference must be disclosed in a note to the accounts.

• (4) Subject to sub-paragraph (5), for the purposes of sub-paragraph (3)(b), the relevant alternative amount, in relation to any item shown in a company's balance sheet, is the amount which would have been shown in respect of that item if assets of any class included under that item at an amount determined by any method permitted by this paragraph had instead been included at their replacement cost as at the balance sheet date.

• (5) The relevant alternative amount may be determined by reference to the most recent actual purchase price or production cost before the balance sheet date of assets of any class included under the item in question instead of by reference to their replacement cost as at that date, but only if the former appears to the directors of the company to constitute the more appropriate standard of comparison in the case of assets of that class.

Substitution of original stated amount where price or cost unknown

29

• (1) This paragraph applies where—

• (a) there is no record of the purchase price or production cost of any asset of a company or of any price, expenses or costs relevant for determining its purchase price or production cost in accordance with paragraph 27, or

• (b) any such record cannot be obtained without unreasonable expense or delay.

• (2) In such a case, the purchase price or production cost of the asset must be taken, for the purposes of paragraphs 17 to 24, to be the value ascribed to it in the earliest available record of its value made on or after its acquisition or production by the company.

SECTION C — ALTERNATIVE ACCOUNTING RULES

Preliminary

30

• (1) The rules set out in Section B are referred to below in this Schedule as the historical cost accounting rules.

• (2) Those rules, with the omission of paragraphs 16, 22 and 26 to 29, are referred to below in this Part of this Schedule as the depreciation rules; and references below in this Schedule to the historical cost accounting rules do not include the depreciation rules as they apply by virtue of paragraph 33.

31

Subject to paragraphs 33 to 35, the amounts to be included in respect of assets of any description mentioned in paragraph 32 may be determined on any basis so mentioned.

Alternative accounting rules

32

• (1) Intangible fixed assets, other than goodwill, may be included at their current cost.

• (2) Tangible fixed assets may be included at a market value determined as at the date of their last valuation or at their current cost.

• (3) Investments of any description falling to be included under item B III of either of the balance sheet formats set out in Part 1 of this Schedule may be included either—

• (a) at a market value determined as at the date of their last valuation, or

• (b) at a value determined on any basis which appears to the directors to be appropriate in the circumstances of the company.

But in the latter case particulars of the method of valuation adopted and of the reasons for adopting it must be disclosed in a note to the accounts.

• (4) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

• (5) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

Application of the depreciation rules

33

• (1) Where the value of any asset of a company is determined on any basis mentioned in paragraph 32, that value must be, or (as the case may require) be the starting point for determining, the amount to be included in respect of that asset in the company's accounts, instead of its purchase price or production cost or any value previously so determined for that asset. The depreciation rules apply accordingly in relation to any such asset with the substitution for any reference to its purchase price or production cost of a reference to the value most recently determined for that asset on any basis mentioned in paragraph 32.

• (2) The amount of any provision for depreciation required in the case of any fixed asset by paragraphs 18 to 20 as they apply by virtue of sub-paragraph (1) is referred to below in this paragraph as the adjusted amount, and the amount of any provision which would be required by any of those paragraphs in the case of that asset according to the historical cost accounting rules is referred to as the historical cost amount.

• (3) Where sub-paragraph (1) applies in the case of any fixed asset the amount of any provision for depreciation in respect of that asset—

• (a) included in any item shown in the profit and loss account in respect of amounts written off assets of the description in question, or

• (b) taken into account in stating any item so shown which is required by note (14) of the notes on the profit and loss account formats set out in Part 1 of this Schedule to be stated after taking into account any necessary provision for depreciation or diminution in value of assets included under it,

may be the historical cost amount instead of the adjusted amount, provided that the amount of any difference between the two is shown separately in the profit and loss account or in a note to the accounts.

Additional information to be provided in case of departure from historical cost accounting rules

34

• (1) This paragraph applies where the amounts to be included in respect of assets covered by any items shown in a company's accounts have been determined on any basis mentioned in paragraph 32.

• (2) The items affected and the basis of valuation adopted in determining the amounts of the assets in question in the case of each such item must be disclosed in the note on accounting policies (see paragraph 44 of this Schedule).

• (3) In the case of each balance sheet item affected, the comparable amounts determined according to the historical cost accounting rules must be shown in a note to the accounts.

• (4) In sub-paragraph (3), references in relation to any item to the comparable amounts determined as there mentioned are references to—

• (a) the aggregate amount which would be required to be shown in respect of that item if the amounts to be included in respect of all the assets covered by that item were determined according to the historical cost accounting rules, and

• (b) the aggregate amount of the cumulative provisions for depreciation or diminution in value which would be permitted or required in determining those amounts according to those rules.

Revaluation reserve

35

• (1) With respect to any determination of the value of an asset of a company on any basis mentioned in paragraph 32, the amount of any profit or loss arising from that determination (after allowing, where appropriate, for any provisions for depreciation or diminution in value made otherwise than by reference to the value so determined and any adjustments of any such provisions made in the light of that determination) must be credited or (as the case may be) debited to a separate reserve (“the revaluation reserve”).

• (2) The amount of the revaluation reserve must be shown in the company's balance sheet under a separate sub-heading in the position given for the item “revaluation reserve” under “Capital and reserves” in format 1 or 2 of the balance sheet formats set out in Part 1 of this Schedule....

• (3) An amount may be transferred—

• (a) from the revaluation reserve—

• (i) to the profit and loss account, if the amount was previously charged to that account or represents realised profit, or

• (ii) on capitalisation,

• (b) to or from the revaluation reserve in respect of the taxation relating to any profit or loss credited or debited to the reserve.

The revaluation reserve must be reduced to the extent that the amounts transferred to it are no longer necessary for the purposes of the valuation method used.

• (4) In sub-paragraph (3)(a)(ii) “capitalisation”, in relation to an amount standing to the credit of the revaluation reserve, means applying it in wholly or partly paying up unissued shares in the company to be allotted to members of the company as fully or partly paid shares.

• (5) The revaluation reserve must not be reduced except as mentioned in this paragraph.

• (6) The treatment for taxation purposes of amounts credited or debited to the revaluation reserve must be disclosed in a note to the accounts.

SECTION D — FAIR VALUE ACCOUNTING

Inclusion of financial instruments at fair value

36

• (1) Subject to sub-paragraphs (2) to (5), financial instruments (including derivatives) may be included at fair value.

• (2) Sub-paragraph (1) does not apply to financial instruments that constitute liabilities unless—

• (a) they are held as part of a trading portfolio,

• (b) they are derivatives, or

• (c) they are financial instruments falling within sub-paragraph (4).

• (3) Unless they are financial instruments falling within sub-paragraph (4), sub-paragraph (1) does not apply to—

• (a) financial instruments (other than derivatives) held to maturity,

• (b) loans and receivables originated by the company and not held for trading purposes,

• (c) interests in subsidiary undertakings, associated undertakings and joint ventures,

• (d) equity instruments issued by the company,

• (e) contracts for contingent consideration in a business combination, or

• (f) other financial instruments with such special characteristics that the instruments, according to generally accepted accounting principles or practice, should be accounted for differently from other financial instruments.

• (4) Financial instruments which under UK-adopted international accounting standards may be included in accounts at fair value, may be so included, provided that the disclosures required by such accounting standards are made.

• (5) If the fair value of a financial instrument cannot be determined reliably in accordance with paragraph 37, sub-paragraph (1) does not apply to that financial instrument.

• (6) In this paragraph—

• “associated undertaking” has the meaning given by paragraph 19 of Schedule 6 to these Regulations;

• “joint venture” has the meaning given by paragraph 18 of that Schedule.

Determination of fair value

37

• (1) The fair value of a financial instrument is its value determined in accordance with this paragraph.

• (2) If a reliable market can readily be identified for the financial instrument, its fair value is determined by reference to its market value.

• (3) If a reliable market cannot readily be identified for the financial instrument but can be identified for its components or for a similar instrument, its fair value is determined by reference to the market value of its components or of the similar instrument.

• (4) If neither sub-paragraph (2) nor (3) applies, the fair value of the financial instrument is a value resulting from generally accepted valuation models and techniques.

• (5) Any valuation models and techniques used for the purposes of sub-paragraph (4) must ensure a reasonable approximation of the market value.

Hedged items

38

A company may include any assets and liabilities, or identified portions of such assets or liabilities, that qualify as hedged items under a fair value hedge accounting system at the amount required under that system.

Other assets that may be included at fair value

39

• (1) This paragraph applies to—

• (a) stocks,

• (b) investment property, and

• (c) living animals and plants.

• (2) Such stocks, investment property, and living animals and plants may be included at fair value, provided that, as the case may be, all such stocks, investment property, and living animals and plants are so included where their fair value can reliably be determined.

• (3) In this paragraph, “fair value” means fair value determined in accordance with generally accepted accounting principles or practice.

Accounting for changes in value

40

• (1) This paragraph applies where a financial instrument is valued in accordance with paragraph 36 or 38 or an asset is valued in accordance with paragraph 39.

• (2) Notwithstanding paragraph 13 in this Part of this Schedule, and subject to sub-paragraphs (3) and (4), a change in the value of the financial instrument or of the investment property or living animal or plant must be included in the profit and loss account.

• (3) Where—

• (a) the financial instrument accounted for is a hedging instrument under a hedge accounting system that allows some or all of the change in value not to be shown in the profit and loss account, or

• (b) the change in value relates to an exchange difference arising on a monetary item that forms part of a company's net investment in a foreign entity,

the amount of the change in value must be credited to or (as the case may be) debited from a separate reserve (“the fair value reserve”).

• (4) Where the instrument accounted for—

• (a) is an available for sale financial asset, and

• (b) is not a derivative,

the change in value may be credited to or (as the case may be) debited from the fair value reserve.

The fair value reserve

41

• (1) The fair value reserve must be adjusted to the extent that the amounts shown in it are no longer necessary for the purposes of paragraph 40(3) or (4).

• (2) The treatment for taxation purposes of amounts credited or debited to the fair value reserve must be disclosed in a note to the accounts.

PART 3 — NOTES TO THE ACCOUNTS

Preliminary

42

• (1) Any information required in the case of a company by the following provisions of this Part of this Schedule must be given by way of a note to the accounts.

• (2) These notes must be presented in the order in which, where relevant, the items to which they relate are presented in the balance sheet and in the profit and loss account.

General

Reserves and dividends

43

There must be stated—

• (a) any amount set aside or proposed to be set aside to, or withdrawn or proposed to be withdrawn from, reserves,

• (b) the aggregate amount of dividends paid in the financial year (other than those for which a liability existed at the immediately preceding balance sheet date),

• (c) the aggregate amount of dividends that the company is liable to pay at the balance sheet date, and

• (d) the aggregate amount of dividends that are proposed before the date of approval of the accounts, and not otherwise disclosed under sub-paragraph (b) or (c).

Disclosure of accounting policies

44

The accounting policies adopted by the company in determining the amounts to be included in respect of items shown in the balance sheet and in determining the profit or loss of the company must be stated (including such policies with respect to the depreciation and diminution in value of assets).

45

It must be stated whether the accounts have been prepared in accordance with applicable accounting standards and particulars of any material departure from those standards and the reasons for it must be given (see regulation 4(2) for exemption for medium-sized companies).

Information supplementing the balance sheet

46

Paragraphs 47 to 64 require information which either supplements the information given with respect to any particular items shown in the balance sheet or is otherwise relevant to assessing the company's state of affairs in the light of the information so given.

Share capital and debentures

47

• (1) The following information must be given with respect to the company's share capital—

• (a) where shares of more than one class have been allotted, the number and aggregate nominal value of shares of each class allotted, and

• (b) where shares are held as treasury shares, the number and aggregate nominal value of the treasury shares and, where shares of more than one class have been allotted, the number and aggregate nominal value of the shares of each class held as treasury shares.

• (2) In the case of any part of the allotted share capital that consists of redeemable shares, the following information must be given—

• (a) the earliest and latest dates on which the company has power to redeem those shares,

• (b) whether those shares must be redeemed in any event or are liable to be redeemed at the option of the company or of the shareholder, and

• (c) whether any (and, if so, what) premium is payable on redemption.

48

If the company has allotted any shares during the financial year, the following information must be given—

• (a) the classes of shares allotted, and

• (b) as respects each class of shares, the number allotted, their aggregate nominal value, and the consideration received by the company for the allotment.

49

• (1) With respect to any contingent right to the allotment of shares in the company the following particulars must be given—

• (a) the number, description and amount of the shares in relation to which the right is exercisable,

• (b) the period during which it is exercisable, and

• (c) the price to be paid for the shares allotted.

• (2) In sub-paragraph (1) “contingent right to the allotment of shares” means any option to subscribe for shares and any other right to require the allotment of shares to any person whether arising on the conversion into shares of securities of any other description or otherwise.

50

• (1) If the company has issued any debentures during the financial year to which the accounts relate, the following information must be given—

• (a) the classes of debentures issued, and

• (b) as respects each class of debentures, the amount issued and the consideration received by the company for the issue.

• (2) Where any of the company's debentures are held by a nominee of or trustee for the company, the nominal amount of the debentures and the amount at which they are stated in the accounting records kept by the company in accordance with section 386 of the 2006 Act (duty to keep accounting records) must be stated.

Fixed assets

51

• (1) In respect of each item which is or would but for paragraph 4(2)(b) be shown under the general item “fixed assets” in the company's balance sheet the following information must be given—

• (a) the appropriate amounts in respect of that item as at the date of the beginning of the financial year and as at the balance sheet date respectively,

• (b) the effect on any amount shown in the balance sheet in respect of that item of—

• (i) any revision of the amount in respect of any assets included under that item made during that year on any basis mentioned in paragraph 32,

• (ii) acquisitions during that year of any assets,

• (iii) disposals during that year of any assets, and

• (iv) any transfers of assets of the company to and from that item during that year.

• (2) The reference in sub-paragraph (1)(a) to the appropriate amounts in respect of any item as at any date there mentioned is a reference to amounts representing the aggregate amounts determined, as at that date, in respect of assets falling to be included under that item on either of the following bases, that is to say—

• (a) on the basis of purchase price or production cost (determined in accordance with paragraphs 27 and 28), or

• (b) on any basis mentioned in paragraph 32,

(leaving out of account in either case any provisions for depreciation or diminution in value).

• (3) In respect of each item within sub-paragraph (1) there must also be stated—

• (a) the cumulative amount of provisions for depreciation or diminution in value of assets included under that item as at each date mentioned in sub-paragraph (1)(a),

• (b) the amount of any such provisions made in respect of the financial year,

• (c) the amount of any adjustments made in respect of any such provisions during that year in consequence of the disposal of any assets, and

• (d) the amount of any other adjustments made in respect of any such provisions during that year.

52

Where any fixed assets of the company (other than listed investments) are included under any item shown in the company's balance sheet at an amount determined on any basis mentioned in paragraph 32, the following information must be given—

• (a) the years (so far as they are known to the directors) in which the assets were severally valued and the several values, and

• (b) in the case of assets that have been valued during the financial year, the names of the persons who valued them or particulars of their qualifications for doing so and (whichever is stated) the bases of valuation used by them.

53

In relation to any amount which is or would but for paragraph 4(2)(b) be shown in respect of the item “land and buildings” in the company's balance sheet there must be stated—

• (a) how much of that amount is ascribable to land of freehold tenure and how much to land of leasehold tenure, and

• (b) how much of the amount ascribable to land of leasehold tenure is ascribable to land held on long lease and how much to land held on short lease.

Investments

54

• (1) In respect of the amount of each item which is or would but for paragraph 4(2)(b) be shown in the company's balance sheet under the general item “investments” (whether as fixed assets or as current assets) there must be stated how much of that amount is ascribable to listed investments.

• (2) Where the amount of any listed investments is stated for any item in accordance with sub-paragraph (1), the following amounts must also be stated—

• (a) the aggregate market value of those investments where it differs from the amount so stated, and

• (b) both the market value and the stock exchange value of any investments of which the former value is, for the purposes of the accounts, taken as being higher than the latter.

Information about fair value of assets and liabilities

55

• (1) This paragraph applies where financial instruments or other assets have been valued in accordance with, as appropriate, paragraph 36, 38 or 39.

• (2) There must be stated—

• (a) the significant assumptions underlying the valuation models and techniques used to determine the fair value of the instruments or other assets,

• (b) for each category of financial instrument or other asset, the fair value of the assets in that category and the changes in value—

• (i) included directly in the profit and loss account, or

• (ii) credited to or (as the case may be) debited from the fair value reserve,

in respect of those assets, and

• (c) for each class of derivatives, the extent and nature of the instruments, including significant terms and conditions that may affect the amount, timing and certainty of future cash flows.

• (3) Where any amount is transferred to or from the fair value reserve during the financial year, there must be stated in tabular form—

• (a) the amount of the reserve as at the date of the beginning of the financial year and as at the balance sheet date respectively,

• (b) the amount transferred to or from the reserve during the year, and

• (c) the source and application respectively of the amounts so transferred.

56

Where the company has derivatives that it has not included at fair value, there must be stated for each class of such derivatives—

• (a) the fair value of the derivatives in that class, if such a value can be determined in accordance with paragraph 37, and

• (b) the extent and nature of the derivatives.

57

• (1) This paragraph applies if—

• (a) the company has financial fixed assets that could be included at fair value by virtue of paragraph 36,

• (b) the amount at which those items are included under any item in the company's accounts is in excess of their fair value, and

• (c) the company has not made provision for diminution in value of those assets in accordance with paragraph 19(1) of this Schedule.

• (2) There must be stated—

• (a) the amount at which either the individual assets or appropriate groupings of those individual assets are included in the company's accounts,

• (b) the fair value of those assets or groupings, and

• (c) the reasons for not making a provision for diminution in value of those assets, including the nature of the evidence that provides the basis for the belief that the amount at which they are stated in the accounts will be recovered.

Information where investment property and living animals and plants included at fair value

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• (1) This paragraph applies where the amounts to be included in a company's accounts in respect of stocks, investment property or living animals and plants have been determined in accordance with paragraph 39.

• (2) The balance sheet items affected and the basis of valuation adopted in determining the amounts of the assets in question in the case of each such item must be disclosed in a note to the accounts.

• (3) In the case of investment property, for each balance sheet item affected there must be shown, either separately in the balance sheet or in a note to the accounts—

• (a) the comparable amounts determined according to the historical cost accounting rules, or