REGISTERED NUMBER: 12451338 (England and Wales)

HH PROPERTIES (MIDLANDS) LIMITED

GROUP STRATEGIC REPORT,

REPORT OF THE DIRECTORS AND

CONSOLIDATED FINANCIAL STATEMENTS

FOR THE YEAR ENDED 31 JANUARY 2025

Page

Company Information

1

Group Strategic Report

2

Report of the Directors

3

Report of the Independent Auditors

5

Consolidated Income Statement

8

Consolidated Other Comprehensive Income

9

Consolidated Balance Sheet

10

Company Balance Sheet

11

Consolidated Statement of Changes in Equity

12

Company Statement of Changes in Equity

13

Consolidated Cash Flow Statement

14

Notes to the Consolidated Cash Flow Statement

15

Notes to the Consolidated Financial Statements

16

DIRECTORS:

Mr N.G. Higgitt

Mr P.J. Hargreaves

Mrs S J Higgitt

Mrs T Hargreaves

REGISTERED OFFICE:

15-17 Church Street

Stourbridge

West Midlands

DY8 1LU

REGISTERED NUMBER:

12451338 (England and Wales)

AUDITORS:

Folkes Worton LLP

Chartered Accountants and Statutory Auditor

15-17 Church Street

Stourbridge

West Midlands

DY8 1LU

The directors present their strategic report of the company and the group for the year ended 31 January 2025.

REVIEW OF BUSINESS

The holding company did not trade in the year.

The principal activity of the company during the year was the manufacture of industrial furniture.

The directors are of the opinion that the company’s performance met expectations, enabling the entity to achieve its goals. The directors deem the key performance indicators to be those that communicate the financial performance of the company, being turnover, gross margin, net profit, and net assets.

The turnover of the company has decreased in the year from £8,276,916 for the year ended 31 January 2024 to £8,097,736 in the current year.

The gross margin for the year is 35%. This was despite the unprecedented levels of price increases for raw materials and services, steel costs having fluctuated wildly throughout the year.

Loss for the year is £503 compared to profit before tax of £276,706 previous year. This again was affected in large part by the higher prices experienced, driven by electricity and gas volatility.

The directors consider investment to be a key source of growth for the business and have always looked to bring new ways of manufacturing to bear on its existing product line, as well as enabling it to develop new products. This year the installation of the Solar PV system was hoped to reduce our energy consumption and carbon footprint.

The company has several financial instruments, comprising, bank balances, trade debtors, trade creditors, invoice finance and loans to the business. The main purpose being to finance the day-to-day activities of the business.

Liquidity risk is managed by maintaining a balance between cash in the current bank account and the flexibility of the invoice discounting. Sufficient funds are maintained to ensure upcoming payments are met.

Trade debtors are managed in respect of credit and cash flow risk by stringent policies concerning the amount of credit offered to customers and the amount of time granted on the debt. Customers are regularly monitored for both level of credit and time. The amounts presented in the balance sheet are net of any allowances for doubtful debtors.

Trade creditors are managed by ensuring sufficient funds are available to meet amounts due.

PRINCIPAL RISKS AND UNCERTAINTIES

The environment and market we operate in is extremely competitive and challenging, margins are continually being placed under pressure not only from existing competitors but also new entrants. However, with our strong management team and continuous drive to improve the products and the manufacturing process, we consider the company to be in a strong position to maintain its leading position in the market.

With this said, we remain aware that unforeseen national and international events, outside of our control, can have an impact on our plans and projections for the future, we are however, confident that we have the management team in place with diverse expertise to adapt to the prevailing conditions.

ON BEHALF OF THE BOARD:

Mr P.J. Hargreaves - Director

29 August 2025

The directors present their report with the financial statements of the company and the group for the year ended 31 January 2025.

PRINCIPAL ACTIVITY

The principal activity of the company and group continued to be that of manufacturing industrial furniture.

DIVIDENDS

An interim dividend of £224.65 per share was paid on 31 January 2025. The directors recommend that no final dividend be paid.

The total distribution of dividends for the year ended 31 January 2025 will be £ 44,480 .

DIRECTORS

The directors shown below have held office during the whole of the period from 1 February 2024 to the date of this report.

Mr N.G. Higgitt

Mr P.J. Hargreaves

Other changes in directors holding office are as follows:

Mrs S J Higgitt - appointed 1 April 2024

Mrs T Hargreaves - appointed 1 April 2024

STATEMENT OF DIRECTORS' RESPONSIBILITIES

The directors are responsible for preparing the Group Strategic Report, the Report of the Directors and the financial statements in accordance with applicable law and regulations.

Company law requires the directors to prepare financial statements for each financial year. Under that law the directors have elected to prepare the financial statements in accordance with United Kingdom Generally Accepted Accounting Practice (United Kingdom Accounting Standards and applicable law). Under company law the directors must not approve the financial statements unless they are satisfied that they give a true and fair view of the state of affairs of the company and the group and of the profit or loss of the group for that period. In preparing these financial statements, the directors are required to:

-	select suitable accounting policies and then apply them consistently;

-	make judgements and accounting estimates that are reasonable and prudent;

-	prepare the financial statements on the going concern basis unless it is inappropriate to presume that the company will continue in business.

The directors are responsible for keeping adequate accounting records that are sufficient to show and explain the company's and the group's transactions and disclose with reasonable accuracy at any time the financial position of the company and the group and enable them to ensure that the financial statements comply with the Companies Act 2006. They are also responsible for safeguarding the assets of the company and the group and hence for taking reasonable steps for the prevention and detection of fraud and other irregularities.

STATEMENT AS TO DISCLOSURE OF INFORMATION TO AUDITORS

So far as the directors are aware, there is no relevant audit information (as defined by Section 418 of the Companies Act 2006) of which the group's auditors are unaware, and each director has taken all the steps that he or she ought to have taken as a director in order to make himself or herself aware of any relevant audit information and to establish that the group's auditors are aware of that information.

AUDITORS

The auditors, Folkes Worton LLP, will be proposed for re-appointment at the forthcoming Annual General Meeting following their appointment this year.

ON BEHALF OF THE BOARD:

Mr P.J. Hargreaves - Director

29 August 2025

Opinion

We have audited the financial statements of HH Properties (Midlands) Limited (the 'parent company') and its subsidiaries (the 'group') for the year ended 31 January 2025 which comprise the Consolidated Income Statement, Consolidated Other Comprehensive Income, Consolidated Balance Sheet, Company Balance Sheet, Consolidated Statement of Changes in Equity, Company Statement of Changes in Equity, Consolidated Cash Flow Statement and Notes to the Consolidated Cash Flow Statement, Notes to the Financial Statements, including a summary of significant accounting policies. The financial reporting framework that has been applied in their preparation is applicable law and United Kingdom Accounting Standards, including Financial Reporting Standard 102 'The Financial Reporting Standard applicable in the UK and Republic of Ireland' (United Kingdom Generally Accepted Accounting Practice).

In our opinion the financial statements:

-	give a true and fair view of the state of the group's and of the parent company affairs as at 31 January 2025 and of the group's loss for the year then ended;

-	have been properly prepared in accordance with United Kingdom Generally Accepted Accounting Practice; and

-	have been prepared in accordance with the requirements of the Companies Act 2006.

Basis for opinion

We conducted our audit in accordance with International Standards on Auditing (UK) (ISAs (UK)) and applicable law. Our responsibilities under those standards are further described in the Auditors' responsibilities for the audit of the financial statements section of our report. We are independent of the group in accordance with the ethical requirements that are relevant to our audit of the financial statements in the UK, including the FRC's Ethical Standard, and we have fulfilled our other ethical responsibilities in accordance with these requirements. We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our opinion.

Conclusions relating to going concern

In auditing the financial statements, we have concluded that the directors' use of the going concern basis of accounting in the preparation of the financial statements is appropriate.

Based on the work we have performed, we have not identified any material uncertainties relating to events or conditions that, individually or collectively, may cast significant doubt on the group's and the parent company's ability to continue as a going concern for a period of at least twelve months from when the financial statements are authorised for issue.

Our responsibilities and the responsibilities of the directors with respect to going concern are described in the relevant sections of this report.

Other information

The directors are responsible for the other information. The other information comprises the information in the Group Strategic Report and the Report of the Directors, but does not include the financial statements and our Report of the Auditors thereon.

Our opinion on the financial statements does not cover the other information and, except to the extent otherwise explicitly stated in our report, we do not express any form of assurance conclusion thereon.

In connection with our audit of the financial statements, our responsibility is to read the other information and, in doing so, consider whether the other information is materially inconsistent with the financial statements or our knowledge obtained in the audit or otherwise appears to be materially misstated. If we identify such material inconsistencies or apparent material misstatements, we are required to determine whether this gives rise to a material misstatement in the financial statements themselves. If, based on the work we have performed, we conclude that there is a material misstatement of this other information, we are required to report that fact. We have nothing to report in this regard.

Opinions on other matters prescribed by the Companies Act 2006

In our opinion, based on the work undertaken in the course of the audit:

-	the information given in the Group Strategic Report and the Report of the Directors for the financial year for which the financial statements are prepared is consistent with the financial statements; and

-	the Group Strategic Report and the Report of the Directors have been prepared in accordance with applicable legal requirements.

Matters on which we are required to report by exception

In the light of the knowledge and understanding of the group and the parent company and its environment obtained in the course of the audit, we have not identified material misstatements in the Group Strategic Report or the Report of the Directors.

We have nothing to report in respect of the following matters where the Companies Act 2006 requires us to report to you if, in our opinion:

-	adequate accounting records have not been kept by the parent company, or returns adequate for our audit have not been received from branches not visited by us; or

-	the parent company financial statements are not in agreement with the accounting records and returns; or

-	certain disclosures of directors' remuneration specified by law are not made; or

-	we have not received all the information and explanations we require for our audit.

Responsibilities of directors

As explained more fully in the Statement of Directors' Responsibilities set out on page three, the directors are responsible for the preparation of the financial statements and for being satisfied that they give a true and fair view, and for such internal control as the directors determine necessary to enable the preparation of financial statements that are free from material misstatement, whether due to fraud or error.

In preparing the financial statements, the directors are responsible for assessing the group's and the parent company's ability to continue as a going concern, disclosing, as applicable, matters related to going concern and using the going concern basis of accounting unless the directors either intend to liquidate the group or the parent company or to cease operations, or have no realistic alternative but to do so.

Auditors' responsibilities for the audit of the financial statements

Our objectives are to obtain reasonable assurance about whether the financial statements as a whole are free from material misstatement, whether due to fraud or error, and to issue a Report of the Auditors that includes our opinion. Reasonable assurance is a high level of assurance, but is not a guarantee that an audit conducted in accordance with ISAs (UK) will always detect a material misstatement when it exists. Misstatements can arise from fraud or error and are considered material if, individually or in the aggregate, they could reasonably be expected to influence the economic decisions of users taken on the basis of these financial statements.

The extent to which our procedures are capable of detecting irregularities, including fraud is detailed below:

The key procedures we undertook to detect irregularities including fraud during the course of the audit included:

- Identifying and testing journal entries and the overall accounting records, in particular those that were significant and unusual.

- Reviewing the financial statement disclosures and determining whether accounting policies have been appropriately applied,

- Reviewing and challenging the assumptions and judgements used by management in their significant accounting estimates,

- Assessing the extent of compliance, or lack of, with the relevant laws and regulations,

- Testing key income lines, in particular cut-off, for evidence of management bias.

- Documenting and verifying all significant related party and consolidation balances and transactions.

- We have reviewed intergroup transactions to ensure these were at an arm's length.

Owing to the inherent limitations of an audit, there is an unavoidable risk that we may not have detected some material misstatements in the financial statements, even though we have properly planned and performed our audit in accordance with auditing standards. For example, the further removed non-compliance with laws and regulations (irregularities) is from the events and transactions reflected in the financial statements, the less likely the inherently limited procedures required by auditing standards would identify it. In addition, as with any audit, there remains a risk of not detecting irregularities, as these may include collusion, forgery, intentional omissions, misrepresentations or the override of internal controls. We are not responsible for preventing non-compliance and cannot be expected to detect non-compliance with.

A further description of our responsibilities for the audit of the financial statements is located on the Financial Reporting Council's website at www.frc.org.uk/auditorsresponsibilities. This description forms part of our Report of the Auditors.

Use of our report

This report is made solely to the company's members, as a body, in accordance with Chapter 3 of Part 16 of the Companies Act 2006. Our audit work has been undertaken so that we might state to the company's members those matters we are required to state to them in a Report of the Auditors and for no other purpose. To the fullest extent permitted by law, we do not accept or assume responsibility to anyone other than the company and the company's members as a body, for our audit work, for this report, or for the opinions we have formed.

Mr Neil Smith (Senior Statutory Auditor)

for and on behalf of Folkes Worton LLP

Chartered Accountants and Statutory Auditor

15-17 Church Street

Stourbridge

West Midlands

DY8 1LU

29 August 2025

TURNOVER

3

8,097,736

8,276,916

Cost of sales

5,288,012

5,326,358

GROSS PROFIT

2,809,724

2,950,558

Administrative expenses

2,713,965

2,588,289

95,759

362,269

Other operating income

50,105

52,110

OPERATING PROFIT

5

145,864

414,379

Interest receivable and similar income

6

1,421

14,790

147,285

429,169

Interest payable and similar expenses

7

147,788

152,463

(LOSS)/PROFIT BEFORE TAXATION

(503

)

276,706

Tax on (loss)/profit

8

4,052

221,508

(LOSS)/PROFIT FOR THE FINANCIAL YEAR

(4,555

)

55,198

(Loss)/profit attributable to:

Owners of the parent

(4,555

)

55,198

(LOSS)/PROFIT FOR THE YEAR

(4,555

)

55,198

OTHER COMPREHENSIVE INCOME

-

-

TOTAL COMPREHENSIVE INCOME FOR THE YEAR

(4,555

)

55,198

Total comprehensive income attributable to:

Owners of the parent

(4,555

)

55,198

FIXED ASSETS

Intangible assets

11

-

-

Tangible assets

12

6,221,454

6,485,894

Investments

13

-

-

6,221,454

6,485,894

CURRENT ASSETS

Stocks

14

1,049,966

1,066,622

Debtors

15

2,194,935

1,825,043

Cash at bank and in hand

46,960

129,244

3,291,861

3,020,909

CREDITORS

Amounts falling due within one year

16

2,193,569

1,903,113

NET CURRENT ASSETS

1,098,292

1,117,796

TOTAL ASSETS LESS CURRENT LIABILITIES

7,319,746

7,603,690

CREDITORS

Amounts falling due after more than one year

17

(2,417,875

)

(2,643,401

)

PROVISIONS FOR LIABILITIES

21

(976,925

)

(986,308

)

NET ASSETS

3,924,946

3,973,981

CAPITAL AND RESERVES

Called up share capital

22

2

2

Revaluation reserve

23

2,109,163

2,138,279

Capital redemption reserve

23

1

1

Retained earnings

23

1,815,780

1,835,699

SHAREHOLDERS' FUNDS

3,924,946

3,973,981

The financial statements were approved by the Board of Directors and authorised for issue on 29 August 2025 and were signed on its behalf by:

Mr P.J. Hargreaves - Director

FIXED ASSETS

Intangible assets

11

-

-

Tangible assets

12

625,000

625,000

Investments

13

2

2

625,002

625,002

CURRENT ASSETS

Cash at bank

1

-

NET CURRENT ASSETS

1

-

TOTAL ASSETS LESS CURRENT LIABILITIES

625,003

625,002

CAPITAL AND RESERVES

Called up share capital

22

2

2

Retained earnings

23

625,001

625,000

SHAREHOLDERS' FUNDS

625,003

625,002

Company's profit for the financial year

44,481

-

The financial statements were approved by the Board of Directors and authorised for issue on 29 August 2025 and were signed on its behalf by:

Mr P.J. Hargreaves - Director

Called up

Capital

share

Retained

Revaluation

redemption

Total

capital

earnings

reserve

reserve

equity

£

£

£

£

£

Balance at 1 February 2023

2

1,701,168

2,217,612

1

3,918,783

Changes in equity

Total comprehensive income

-

134,531

(79,333

)

-

55,198

Balance at 31 January 2024

2

1,835,699

2,138,279

1

3,973,981

Changes in equity

Dividends

-

(44,480

)

-

-

(44,480

)

Total comprehensive income

-

24,561

(29,116

)

-

(4,555

)

Balance at 31 January 2025

2

1,815,780

2,109,163

1

3,924,946

Called up

share

Retained

Total

capital

earnings

equity

£

£

£

Balance at 1 February 2023

2

625,000

625,002

Changes in equity

Balance at 31 January 2024

2

625,000

625,002

Changes in equity

Dividends

-

(44,480

)

(44,480

)

Total comprehensive income

-

44,481

44,481

Balance at 31 January 2025

2

625,001

625,003

Cash flows from operating activities

Cash generated from operations

1

314,029

644,927

Interest paid

(117,851

)

(126,657

)

Interest element of hire purchase payments paid

(29,937

)

(25,806

)

Tax paid

(100

)

(2,480

)

Net cash from operating activities

166,141

489,984

Cash flows from investing activities

Purchase of tangible fixed assets

(13,885

)

(183,079

)

Sale of tangible fixed assets

9,753

-

Interest received

1,421

14,790

Net cash from investing activities

(2,711

)

(168,289

)

Cash flows from financing activities

Repayment of bank loans

(184,124

)

(182,496

)

Capital repayments in year

(17,110

)

(203,742

)

Equity dividends paid

(44,480

)

-

Net cash from financing activities

(245,714

)

(386,238

)

Decrease in cash and cash equivalents

(82,284

)

(64,543

)

Cash and cash equivalents at beginning of year

2

129,244

193,787

Cash and cash equivalents at end of year

2

46,960

129,244

1.	RECONCILIATION OF (LOSS)/PROFIT BEFORE TAXATION TO CASH GENERATED FROM OPERATIONS

2025

2024

£

£

(Loss)/profit before taxation

(503

)

276,706

Depreciation charges

255,566

271,778

Loss on disposal of fixed assets

13,006

-

Finance costs

147,788

152,463

Finance income

(1,421

)

(14,790

)

414,436

686,157

Decrease in stocks

16,656

95,281

(Increase)/decrease in trade and other debtors

(369,892

)

342,735

Increase/(decrease) in trade and other creditors

252,829

(479,246

)

Cash generated from operations

314,029

644,927

2.	CASH AND CASH EQUIVALENTS

The amounts disclosed on the Cash Flow Statement in respect of cash and cash equivalents are in respect of these Balance Sheet amounts:

Year ended 31 January 2025

31/1/25

1/2/24

£

£

Cash and cash equivalents

46,960

129,244

Year ended 31 January 2024

31/1/24

1/2/23

£

£

Cash and cash equivalents

129,244

193,787

3.	ANALYSIS OF CHANGES IN NET DEBT

At 1/2/24

Cash flow

At 31/1/25

£

£

£

Net cash

Cash at bank and in hand

129,244

(82,284

)

46,960

129,244

(82,284

)

46,960

Debt

Finance leases

(717,520

)

17,110

(700,410

)

Debts falling due within 1 year

(181,108

)

(7,940

)

(189,048

)

Debts falling due after 1 year

(1,566,333

)

192,064

(1,374,269

)

(2,464,961

)

201,234

(2,263,727

)

Total

(2,335,717

)

118,950

(2,216,767

)

1.	STATUTORY INFORMATION

HH Properties (Midlands) Limited is a private company, limited by shares , registered in England and Wales. The company's registered number and registered office address can be found on the General Information page.

2.	ACCOUNTING POLICIES

Basis of preparing the financial statements

These financial statements have been prepared in accordance with FRS 102 The Financial Reporting Standard applicable in the UK and Republic of Ireland (FRS 102) and the requirements of the Companies Act 2006.

The financial statements are prepared in sterling, which is the functional currency of the company. Monetary amounts in these financial statements are rounded to the nearest £.

The financial statements have been prepared under the historical cost convention, modified to include the revaluation of freehold properties and to include investment properties and certain financial instruments at fair value. The principal accounting policies adopted are set out below.

Basis of consolidation

The consolidated group financial statements consist of the financial statements of the parent company HH Properties (Midlands) Ltd together with all entities controlled by the parent company (its subsidiaries) and the group’s share of its interests in joint ventures and associates.

All financial statements are made up to 31 January 2025. Where necessary, adjustments are made to the financial statements of subsidiaries to bring the accounting policies used into line with those used by other members of the group.

All intra-group transactions, balances and unrealised gains on transactions between group companies are eliminated on consolidation. Unrealised losses are also eliminated unless the transaction provides evidence of an impairment of the asset transferred.

Subsidiaries are consolidated in the group’s financial statements from the date that control commences until the date that control ceases.

Entities in which the group holds an interest and which are jointly controlled by the group and one or more other venturers under a contractual arrangement are treated as joint ventures. Entities other than subsidiary undertakings or joint ventures, in which the group has a participating interest and over whose operating and financial policies the group exercises a significant influence, are treated as associates.

Investments in joint ventures and associates are carried in the group statement of financial position at cost plus post-acquisition changes in the group’s share of the net assets of the entity, less any impairment in value. The carrying values of investments in joint ventures and associates include acquired goodwill.

If the group’s share of losses in a joint venture or associate equals or exceeds its investment in the joint venture or associate, the group does not recognise further losses unless it has incurred obligations to do so or has made payments on behalf of the joint venture or associate.

Unrealised gains arising from transactions with joint ventures and associates are eliminated to the extent of the group’s interest in the entity.

Significant judgements and estimates

In the application of the company’s accounting policies, the directors are required to make judgements, estimates and assumptions about the carrying amount of assets and liabilities that are not readily apparent from other sources. The estimates and associated assumptions are based on historical experience and other factors that are considered to be relevant. Actual results may differ from these estimates.

The estimates and underlying assumptions are reviewed on an ongoing basis. Revisions to accounting estimates are recognised in the period in which the estimate is revised where the revision affects only that period, or in the period of the revision and future periods where the revision affects both current and future periods.

Key sources of estimation uncertainty

The estimates and assumptions which have a significant risk of causing a material adjustment to the carrying amount of assets and liabilities are as follows.

Investment property

The property is held at fair value based on the market value of the property at the reporting date.

Going concern

At the time of approving the financial statements, the directors have a reasonable expectation that the group has adequate resources to continue in operational existence for the foreseeable future. Thus the directors continue to adopt the going concern basis of accounting in preparing the financial statements.

Turnover

Turnover is recognised at the fair value of the consideration received or receivable for goods provided in the normal course of business, and is shown net of VAT and other sales related taxes. The fair value of consideration takes into account trade discounts, settlement discounts and volume rebates.

When cash inflows are deferred and represent a financing arrangement, the fair value of the consideration is the present value of the future receipts. The difference between the fair value of the consideration and the nominal amount received is recognised as interest income.

Revenue from the sale of goods is recognised when the significant risks and rewards of ownership of the goods have passed to the buyer (usually on despatch of the goods), the amount of revenue can be measured reliably, it is probable that the economic benefits associated with the transaction will flow to the entity and the costs incurred or to be incurred in respect of the transaction can be measured reliably.

Revenue from rentals of property are recognised when the amount of revenue can be measured reliably, it is probable that the economical benefits associated with the transactions will flow to the entity and the costs incurred in respect of the transaction can be measured reliably.

Goodwill

Goodwill represents the excess of the cost of acquisition of unincorporated businesses over the fair value of net assets acquired. It is initially recognised as an asset at cost and is subsequently measured at cost less accumulated amortisation and accumulated impairment losses. Goodwill is considered to have a finite useful life and is amortised on a systematic basis over its expected life, which is five years.

The goodwill within the financial statements relates to the purchase of a business in 2012 which has now been fully amortised.

For the purposes of impairment testing, goodwill is allocated to the cash-generating units expected to benefit from the acquisition. Cash-generating units to which goodwill has been allocated are tested for impairment at least annually, or more frequently when there is an indication that the unit may be impaired. If the recoverable amount of the cash-generating unit is less than the carrying amount of the unit, the impairment loss is allocated first to reduce the carrying amount of any goodwill allocated to the unit and then to the other assets of the unit pro-rata on the basis of the carrying amount of each asset in the unit.

Intangible assets

Intangible assets are initially measured at cost. After initial recognition, intangible assets are measured at cost less any accumulated amortisation and any accumulated impairment losses.

Tangible fixed assets

Tangible fixed assets are initially measured at cost and subsequently measured at cost or valuation, net of depreciation and any impairment losses.

Depreciation is recognised so as to write off the cost or valuation of assets less their residual values over their useful lives on the following bases:

Freehold land and buildings

2% on cost

Plant and equipment

10% - 20% on cost

Fixtures and fittings

20% on cost

Motor vehicles

20% on cost

Freehold land is not depreciated.

The gain or loss arising on the disposal of an asset is determined as the difference between the sale proceeds and the carrying value of the asset, and is credited or charged to profit or loss.

At each reporting period end date, the company reviews the carrying amounts of its tangible and intangible assets to determine whether there is any indication that those assets have suffered an impairment loss. If any such indication exists, the recoverable amount of the asset is estimated in order to determine the extent of the impairment loss (if any). Where it is not possible to estimate the recoverable amount of an individual asset, the company estimates the recoverable amount of the cash-generating unit to which the asset belongs.

Recoverable amount is the higher of fair value less costs to sell and value in use. In assessing value in use, the estimated future cash flows are discounted to their present value using a pre-tax discount rate that reflects current market assessments of the time value of money and the risks specific to the asset for which the estimates of future cash flows have not been adjusted.

If the recoverable amount of an asset (or cash-generating unit) is estimated to be less than its carrying amount, the carrying amount of the asset (or cash-generating unit) is reduced to its recoverable amount. An impairment loss is recognised immediately in profit or loss, unless the relevant asset is carried at a revalued amount, in which case the impairment loss is treated as a revaluation decrease.

Stocks

Stocks are stated at the lower of cost and estimated selling price less costs to complete and sell. Cost comprises direct materials and, where applicable, direct labour costs and those overheads that have been incurred in bringing the stocks to their present location and condition.

Stocks held for distribution at no or nominal consideration are measured at the lower of cost and replacement cost, adjusted where applicable for any loss of service potential.

Cost is calculated using the first in, first out formula.

At each reporting date, an assessment is made for impairment. Any excess of the carrying amount of stocks over its estimated selling price less costs to complete and sell is recognised as an impairment loss in profit or loss. Reversals of impairment losses are also recognised in profit or loss.