32816-Lucy-Group-AR-2025 web ready spreads_FINAL

Notes to the Company Accounts continued

FINANCIAL STATEMENTS

1. Accounting policies continued Investment properties

1. Accounting policies continued Recognition and measurement

The current income tax charge is calculated on the basis of tax rates and laws that have been enacted or substantively enacted by the reporting date. Cash and cash equivalents Cash and cash equivalents comprise cash balances, call deposits and investments in certain money market funds. The Group’s investments in money market funds can generally be converted to cash with less than one day’s notice and the risk of day-to-day changes in the value of the investments is considered to be insignificant. Financial instruments Financial assets and liabilities are recognised in the balance sheet when the Company becomes party to the contractual provisions of the instrument. The Company classifies financial assets into one of three categories; i) amortised cost, ii) fair value through other comprehensive income (FVOCI) and iii) fair value through profit or loss (FVTPL). The Group’s business model for managing the assets and their cash flows determines which classification is applied to each financial asset. Assets held under the ‘held to collect’ business model are classified at amortised cost, those ‘held to collect and for sale’ at FVOCI and assets held under any other business The Group operates a centralised treasury function, which is responsible for managing liquidity, interest, commodity and foreign currency risks for the Group. As part of its strategy for the management of these risks at a Group level, the Company uses financial derivatives in accordance with the Group treasury policy. The Company uses derivative financial instruments, currency and commodity (copper) swaps to manage currency and commodity risks associated with the Group’s underlying business activities and the financing of these activities. The Company does not undertake any speculative activity, in accordance with the Group treasury policy. model to the above are classified at FVTPL. Derivative financial instruments

Provisions are measured at the estimated expenditure required to settle the present obligation, based on the most reliable evidence available at the reporting date, including the risks and uncertainties associated with the present obligation. Provisions are discounted to their present values, where the time value of money is material. In those cases where the possible outflow of economic resources as a result of present obligations is considered improbable or remote, no liability is recognised. Significant management judgement in applying accounting policies and estimation uncertainty When preparing the financial statements, management undertakes a number of judgements, estimates and assumptions about the recognition and measurement of assets, liabilities, income and expenses. The following judgements and estimates have had the most significant effect on amounts recognised in the financial statements: Recognition of deferred tax assets The extent to which deferred tax assets can be recognised is based on an assessment of the probability of the Company’s future taxable income against which the deferred tax assets can be utilised. In addition, significant judgement is required in assessing the impact of any legal or economic limits or uncertainties in various tax jurisdictions. Defined benefit obligation Management’s estimate of the defined benefit obligation is based on a number of critical underlying assumptions such as standard rates of inflation, mortality, discount rate and anticipation of future salary increases. Variation in these assumptions may significantly impact the defined benefit obligation amount and the annual defined benefit expenses. Fair value measurement Management uses valuation techniques to determine the fair value of financial instruments (where active market quotes are not available) and non-financial assets. Management bases its assumptions on observable data as far as possible, but this is not always available. In that case, management uses the best information available. Investment properties are valued using appropriate professional advice.

Investment properties are valued annually and are included in the financial statements at fair value after taking appropriate professional advice. Changes in fair value are recognised in the income statement. No depreciation is provided in respect of investment properties. Investments Investments in subsidiaries including long-term loans are held at cost less any provision for impairment. Impairment provisions are based upon an assessment of the net recoverable amount of each investment. Other investments are measured at cost and are subject to impairment. Investments in equity securities are classified as available-for-sale financial assets and are initially measured at cost, which is considered to equal fair value. Subsequently, such investments are measured at fair value and changes therein are recognised in other comprehensive income. Leases The Company recognises a right-of-use asset and a lease liability at the lease commencement date. The asset is initially measured at cost and subsequently depreciated using the straight-line method from the commencement date to the end of the useful life of the asset or the end of the lease term, whichever is earlier. The lease liability is initially measured at the present value of the lease payments that are not paid at the commencement date, discounted using the interest rate implicit in the lease or, if this is not available, the Company’s incremental borrowing rate. Generally, the incremental borrowing rate is used. The lease liability is subsequently measured at amortised cost using the effective interest method. The Company has elected not to recognise right-of-use assets and liabilities for short-term leases of assets that have a lease term of less than 12 months and leases where the underlying asset is of low value. Such leases are recognised as an expense on a straight-line basis over the term of the lease. Current and deferred tax The tax expense for the period comprises current and deferred tax. Tax is recognised in profit or loss, except that a charge attributable to an item of income or expense recognised as other comprehensive income (OCI) or to an item recognised directly in equity is also recognised in OCI or directly in equity, respectively.

All derivative financial instruments are initially recognised at fair value on the date on which a derivative contract is entered into and are subsequently remeasured at fair value. Derivatives are carried as assets when the fair value is positive and as liabilities when the fair value is negative. Derivative financial instruments are formally documented at the initial designation of the hedge, the documentation describes the relationship between the hedged item and hedging instrument, risk management strategy and the method for assessing hedge effectiveness. Cash flow hedging Derivative financial instruments classified as cash flow hedges are those that hedge the Group’s net variability in cash flows attributable to a particular risk associated with a recognised asset or liability or a highly probable forecast transaction. These include commodity (copper) swaps and foreign currency exchange forwards and swaps. Equity, reserves and dividend payments Share capital represents the nominal value of shares that have been issued. Share premium includes any premiums received on issue of share capital. Incremental transaction costs directly attributable with the issuing of shares are deducted from share premium, net of any related income tax benefits. Post-employment benefits plans The Company contributes to a pension scheme operated by the Group providing benefits based on final pensionable pay for eligible employees who joined on or before 10 April 2002. The scheme is administered by trustees and the funds are independent of the Company’s finances. The pension cost of the defined benefit scheme is charged to the income statement so as to spread the cost of pensions over employees’ working lives with the Company. For UK employees not in this scheme, the Group provides the Lucy Group Personal Pension Plan. Eligible employees in the UK who are not covered by these schemes were enrolled into a scheme established under Part 1 of the Pensions Act 2008. The pension costs of these schemes are charged as incurred. Provisions A provision is recognised when the Company has a present legal or constructive obligation as a result of a past event, it is probable that an outflow of economic resources will be required from the Company and amounts can be estimated reliably.

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Lucy Group Ltd Annual Report & Accounts 2025

LUCYGROUP.COM

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