Notes to the consolidated financial statements continued For the year ended 30 June 2025
4. Material accounting policies continued
4(p) Right-of-use assets and lease liabilities Right-of-use assets are initially recognised at cost which is measured at the initial amount of the lease liability, reduced for any lease incentives received and increased for lease payments made at or before commencement of the lease, initial direct costs incurred and the amount of any provision recognised where the Group is required to dismantle, remove or restore the asset. Additionally, they may be re-measured to reflect reassessment due to lease modifications. The right-of-use asset is subsequently depreciated using the straight-line method from the commencement date to the end of the lease term. Additionally, the right-of-use asset is periodically reduced by impairment losses, if any, and adjusted for certain remeasurements of the lease liability. The Group initially records a lease liability reflecting the present value of the future contractual cash flows to be made over the lease term, discounted using the Group’s incremental borrowing rate. Interest is accrued on the lease liability using the effective interest rate method to give a constant rate of return over the life of the lease whilst the balance is reduced as lease payments are made. If the Group revises its estimate of the term of any lease, it will adjust the carrying amount of the lease liability to reflect the payments to be made over the revised term, discounted at the revised discount rate. An equivalent adjustment is made to the carrying value of the right-of-use asset, with the revised carrying amount being amortised over the remaining (revised) lease term. 4(q) Trade payables Trade payables are obligations to pay for goods or services that have been acquired in the ordinary course of business from suppliers. These are classified as current liabilities if payment is due within one year or less. Otherwise, they are presented as non-current liabilities in the consolidated statement of financial position. Trade payables are initially recognised at fair value and subsequently measured at amortised cost using the effective interest method. 4(r) Employee Benefit Trust (“EBT”) The EBT is considered to be a structured entity, as defined in note 32. In substance, the activities of the trust are being conducted on behalf of the Group according to its specific business needs, to obtain benefits from its operation. On this basis, the assets held by the trust are consolidated into the Group’s financial statements.
4(l) Foreign currency translation The Group’s functional and presentational currency is Pound Sterling (“£”). Foreign currency transactions are translated using the exchange rate prevailing at the transaction date. At the reporting date, monetary assets and liabilities that are denominated in foreign currencies are retranslated at the prevailing rates on that date. Foreign exchange gains and losses resulting from the settlement of such transactions, and from the translation of period-end monetary assets and liabilities, are recognised in the consolidated statement of comprehensive income. 4(m) Retirement benefit costs Contributions in respect of the Group’s defined contribution pension scheme are charged to the consolidated statement of comprehensive income as they fall due. 4(n) Taxation Tax on the profit for the financial year comprises current and deferred tax. Current tax is the expected tax payable on the taxable income for the financial year, using tax rates enacted, or substantively enacted, at the reporting date, and any adjustment to tax payable in respect of previous years. Deferred tax is provided in full, using the liability method, on temporary differences arising between the tax bases of assets and liabilities and their carrying amounts in the Group’s Financial statements. Deferred tax assets and liabilities are measured at the tax rates that are expected to apply to the period when the asset is realised or the liability settled based on tax rates (and laws) that have been enacted, or substantively enacted, at the reporting date. Deferred tax assets are only recognised to the extent that it is probable that future taxable profit will be available against which the temporary differences can be utilised. Deferred tax balances are presented on the consolidated statement of financial position as the net deferred tax balance by each jurisdiction the Group operates within. The gross deferred tax assets and liabilities are disclosed within the deferred tax in note 27. 4(o) Trade receivables Trade receivables represent amounts due for services performed in the ordinary course of business. They are recognised in trade and other receivables and, if collection is expected within one year, they are recognised as a current asset. If collection is expected in greater than one year, they are recognised as a non-current asset. Trade receivables are measured at amortised cost less any expected credit losses.
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Brooks Macdonald Group plc Annual Report and Accounts 2025
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