Page 50 - Hardide-Annual-Report-2021
P. 50

  50 Notes to the Group Financial Statements
Property, plant and equipment
Property, plant and equipment are stated at cost
less accumulated depreciation and any recognised impairment loss. Depreciation is provided on the cost of assets less any residual value over their estimated useful lives, using the straight line method, as follows:
Leases – IFRS 16
The Group leases property and other equipment for the purposes of its operations. Lease terms contain a wide range of different terms and conditions. The lease agreements do not impose any covenants other than the security interests in the leased assets that are held by the lessor.
Until the 2019 financial year, leases were classified
as an operating lease. From 1 October 2019, leases
are recognised as a right-of-use asset and a corresponding liability at the date at which the leased asset is available for use.
Assets and liabilities arising from a lease are initially measured on a present value basis. The net present value of the lease liability includes the present value of the lease payments not made at the date of transition and lease payments made before the commencement date less any lease incentives received. The right- of-use asset is measured at this net present value of lease liability plus an estimate of the costs expected
to be incurred in returning the leased property to its original condition. Lease payments to be made under reasonably certain extension options are included in the measurement of the liability.
The lease payments are discounted using the rate implicit in the lease agreement. If that rate cannot be readily determined, the lessee's incremental borrowing rate is used.
Lease payments are allocated between their principal payments and the finance cost. The finance cost is charged to the Statement of Profit or Loss over the lease period.
Right-of-use assets are depreciated over the life of the lease on a straight line basis.
Short term leases with a lease term of less than 12 months or leases with low value assets are recognised on a straight line basis as an expense in the Statement of Profit or Loss.
Financial Instruments
The Group does not enter into hedging or speculative derivative contracts.
Financial assets and liabilities are recognised on the Group’s Statement of Financial Position when the Group becomes a party to the contractual provisions of the instrument.
Income and expenditure arising on financial instruments is recognised on the accruals basis, and credited or charged to the profit and loss account in the financial period to which it relates.
 Plant & machinery Leasehold improvements Fixtures & fittings Computer equipment
2 to 10 years
Over remaining term of lease 4 years
4 years
    Depreciation is not charged on assets under construction.
The carrying values of property, plant and equipment and investments measured using a cost basis, are reviewed for impairment only when events indicate the carrying value may be impaired.
Investments held as fixed assets are stated at cost less any provision for impairment.
Inventories are valued at the lower of cost and net realisable value. The costs incurred in bringing each product to its present location and condition are accounted for as follows:
 Raw materials
Work in Progress and Finished goods
Cost of purchase on a first in, first out basis
Cost of raw materials and direct labour and a proportion of manufacturing overheads based on the normal level of activity
  Net realisable value is based on the estimated selling price less estimated costs to completion and estimated costs necessary to make the sale. Inventory is regularly tested for obsolescence, any items so identified are written off to the P&L account. There is no general obsolescence provision.

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