(1) A company's first financial year is the period beginning with the date of its incorporation and ending on a date no more than 18 months after that date.

(2) Each subsequent financial year of a company begins with the day immediately after its previous financial year end date and, subject to subsection (4), continues for -

(a) 12 months, or

(b) such other period, not being more than 7 days shorter or longer than 12 months, as the directors may determine to its next financial year end date,

and the power of the directors to make such a determination is referred to in subsection (5) as the "subsection (2)(b) power".

(3) Except where there are substantial reasons not to do so, which reasons shall be disclosed in the notes to the statutory financial statements of the company, the directors of a holding company shall ensure the financial year end dates of each of the subsidiary undertakings included in the consolidation concerned coincide with that of the holding company.