Basis of preparation
The accounts are prepared under the historical cost convention and in accordance with applicable accounting standards.

Basis of consolidation
The consolidated accounts incorporate the accounts of the Company and of each of its subsidiaries for the period to 31 December 2004. The results of subsidiaries acquired are included in the Group profit and loss account from the effective date of acquisition and accounted for using the acquisition method of accounting. The results of disposed subsidiaries are included in the Group profit and loss account up to the date of disposal.

Intangible assets
Goodwill arising on the acquisition of subsidiary undertakings and businesses, representing any excess of the fair value of the consideration given over the fair value of the identifiable assets and liabilities acquired, is capitalised and written off on a straight line basis over its useful economic life, which is between two and a maximum of twenty years. It is reviewed for impairment at the end of the first full financial year following the acquisition and in other periods if changes in circumstances indicate that the carrying value may not be recoverable.

Goodwill arising on acquisitions in the year ended 30 April 1998 and earlier periods was written off to reserves in accordance with the accounting standard then in force. As permitted by the current accounting standard the goodwill previously written off to reserves has not been reinstated on the balance sheet. On disposal or closure of a previously acquired business, the attributable amount of goodwill previously written off to reserves is included in determining the profit or loss on disposal.

Other intangible assets are capitalised at cost and are subject to an annual impairment review.

Investments in subsidiary undertakings
Investments in the Company balance sheet are stated at cost less any impairment. The carrying value of investments is reviewed for impairment when events or changes in circumstances indicate that the carrying value may not be recoverable.

Depreciation
Depreciation is provided on all tangible assets, other than freehold land, on a straight line basis at rates calculated to write off the cost, less estimated residual value, of each asset over its expected useful life as follows:

The carrying values of tangible fixed assets are reviewed for impairment if events or changes in circumstances indicate that the carrying value may not be recoverable.

Deferred taxation
Deferred tax is recognised in respect of all timing differences that have originated but not reversed at the balance sheet date where transactions or events have occurred at that date that will result in an obligation to pay more, or a right to pay less or to receive more, tax, save that deferred tax assets are recognised only to the extent that the Directors consider that it is 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 is measured on an undiscounted basis at the tax rates that are expected to apply in the periods in which timing differences reverse, based on tax rates and laws enacted or substantively enacted at the balance sheet date.

Leased assets
Assets held under leasing arrangements that transfer substantially all the risks and rewards of ownership to the Group are capitalised. The capital element of the related rental obligations is included in creditors. The interest element of the rental obligations is charged to the profit and loss account so as to produce a constant periodic rate of charge. Rentals in respect of all other leases are charged to the profit and loss account on a straight-line basis over the term of the lease.

Turnover
Turnover represents the sales value of services provided in the year, net of value added tax, and principally originates in the United Kingdom.

Pension costs
The Group operates a defined contribution pension scheme for certain Spring Group employees. The assets of the scheme are held separately from those of the Group in funds administered by independent trustees. Contributions to the scheme are charged to the profit and loss account as incurred.

Foreign currencies
Transactions in foreign currencies are recorded at the rates ruling on the transaction dates. Monetary assets and liabilities denominated in foreign currencies are translated at the rate of exchange ruling at the balance sheet date. All differences thus arising are taken to the profit and loss account.

The results of overseas subsidiary undertakings are translated at a weighted average rate of exchange with assets and liabilities outstanding at the period end translated at the rate of exchange ruling at the balance sheet date. The exchange difference on the retranslation of opening net assets is taken to reserves. All other translation differences are taken to the profit and loss account.

Vacant leasehold property
Provisions for vacant leasehold property costs are made up to the expected date of assignment or surrender of the lease and are discounted at 5.25% back to present value.

Employee share option schemes
Where share options are granted to employees as part of their remuneration, the difference between market value of the underlying shares at the date of grant and, if lower, the exercise price of the options is charged to the profit and loss account on a straight line basis over the relevant performance period.

Own shares held by ESOP Trust
Own shares held by the ESOP Trust are carried at cost and disclosed within shareholders’ funds.