HILLHOUSE_ESTATES_LIMITED - Accounts

The directors present the strategic report for the year ended 31 March 2020.

The Directors of the Group, as those of all UK companies, must act in accordance with a set of general rules.
These duties are detailed in section 172 of the UK Companies Act 2006 which is summarised as follows:

A director of a company must act in the way they consider, in good faith, would be most likely to promote the success of the company for the benefit of its shareholders as a whole and, in doing so have regard (amongst other matters) to:

• The likely consequences of any decisions in the long-term;

• The interests of the company’s employees;

• The need to foster the company’s business relationships with suppliers, customers and others;

• The impact of the company’s operations on the community and environment;

• The desirability of the company maintaining a reputation for high standards of business conduct; and

• The need to act fairly as between shareholders of the Company.’

The group seeks to ensure that it operates on an ethical and fair basis in a manner that helps foster agreeable relationships with is customers, suppliers and the wider business community. The group considers and takes steps where possible to mitigate and reduce the impact of adverse factors that may place unacceptable strain on valued business relationships. Aligned with this the group strives to set sector leading standards and achieve a reputation for a high degree of professional business conduct starting with employees through to suppliers, customer, shareholders and the wider community both locally and beyond.

Likewise, the group has policies in place to remove or minimise any possible adverse impact of the group’s operations on the wider community and environment. The group commits to adhere to and where possible go beyond all relevant legislation that seeks to protect the community and environment.

The group's principle activities during the year were the manufacture and supply of quarry materials, farming, estate management and provision of accommodation and related services.

In the year a profit on ordinary activities before taxation of £3.8m was achieved (2019 - profit of £3.9m). Turnover for the group was £52.8m (2019 - £46.9m). The group's net asset value has increased from £41.3m to £43.1m at 31 March 2020.

Capital expenditure for the year was £6.6m.

During the period under review the group completed the acquisition of Mac Asphalt Limited and has successfully integrated this business with the existing contracts division.

The company's key financial and other performance indicators during the year were as follows:

2020         2019

£             £

Turnover                        52,794,869        46,898,894

Operating profit                      3,362,448         3,806,441

Profit before tax                      3,754,715         3,876,592

Shareholders funds                 43,128,697        41,302,618

Average number of employees             208         182

The business continues to develop with emphasis being placed on maintaining and improving the quality of the product and service to our customers.

The group's principal financial instruments comprise cash, short-term deposits and borrowings, the main purpose of which is to provide finance for its normal operations.

The group has various other financial instruments such as trade debtors and creditors that arise directly from its trading operations.

The main risks arising from the group's financial instruments are interest rate risk and liquidity risk. The Group has clear policies for managing each of these risks, as summarised below.

Covid-19

Following the global outbreak of the Covid-19 virus, there has been a significant increase in risk and uncertainty in the economy.

The business was met with unprecedented challenges and demands as a result of the Covid-19 pandemic and subsequent Government enforced lockdown towards the end of March 2020.

Our quarry sites closed from mid March 2020 throughout April and May and during this time, the group took advantage of Government support measures where available and managed its working capital and cash flow closely to ensure it maintained sufficient financial resources at all times.

From late June 2020, our sites started to re-open and the group has returned to near normal operating levels.

The group is following Government guidance for the Quarry industry concerning all aspects of the pandemic to ensure best practice precautions are applied and risk to staff is mitigated. The group continues to communicate regularly with its staff, its suppliers, and customers as Government advice develops.

The risks and uncertainties surrounding the going concern status of the group are detailed in full in Note 1.3 to the Consolidated Financial Statements.

The group holds cash balances on floating rate short-term deposit and maintains borrowings, where this is considered to be commercially appropriate. The group's policy is to monitor the level of these balances to ensure that funds are available as required; recognising that interest earnings will be subject to interest rate fluctuations.

The group aims to minimise such loans and require that deferred credit terms are granted only to customers who demonstrate an appropriate payment history and satisfy credit worthiness procedures. Individual exposures are monitored, with customers subject to credit limits to ensure that the company exposure to bad debts is not significant. Goods may be sold on cash-with-order basis to mitigate credit risk.

The group aims to mitigate liquidity risk by managing cash generation by its operations and applying cash collection targets. Investment is carefully controlled, with authorisation limits operating at different levels up to group board level.

Future outlook

From late June 2020, our sites re-opened following the COVID-19 enforced closures and trading has returned to near normal operating levels.

The group does however acknowledge this could change suddenly depending on how the COVID-19 situation evolves and whether this results in further business interruptions.

The strength of our customer and supplier relationships puts the group in a strong position to continue to grow and move forward once the disruption has ended.

On behalf of the board

The directors present their annual report and financial statements for the year ended 31 March 2020.

The directors who held office during the year and up to the date of signature of the financial statements were as follows:

The results for the year are set out on page 10.

A final dividend in respect of the year ended 31 March 2019 of £2.02 per share was paid on 5 July 2019 to Ordinary and B shareholders.

An interim dividend of £1.97 per share was paid on 14 November 2019 to Ordinary and B shareholders, and an interim dividend of £67,511 per share was paid on 25 September 2019 to C shareholders.

Total dividends were paid amounting to £901,821.

The group has analysed its consumption of UK energy use as our operations are primarily in the industrial heavy building materials sector. The group requires to utilise a range of energy products including electricity, LPG, kerosene and gas oil with liquid fuel being an integral part of our production process.

The total Kwh consumption across all our operations is 63,698,844 for the year ended 31st March 2020. This is split between electricity (5,740,875), LPG (16,545,911), Kerosene (26,704,167) and gas oil (14,707,891).

This converted into emissions in tonnes of carbon dioxide equivalent (CO2e) equates to 16,816,179 tonnes.

The group is aware of its obligations as an industrial user and emitter of CO2 greenhouse gases, to reduce consumption and protect the environment. All new production processes and machinery are procured with energy reduction in mind. In addition, we understood that minimising the time taken during the production process through operational efficiencies not only reduces power consumption but reduces cost.

All existing processes, equipment or infrastructure are under constant review to seek out opportunities to upgrade and replace with more power efficient alternatives. Recent programmes include the replacement of Kerosene with LPG in the production of our coated products.

The Group mitigates our emissions through our own Hydro scheme. Of the 5,740,875 kWh of electricity consumed, 81,132 of this was generated by our Hydro scheme which also fed in an additional 2,895,375 kWh to the Grid. This is an equivalent of being the equivalent of 734,209 tonnes of CO2.

The methodology used by the group to calculate UK energy CO2 emission was taken from the UK Government GHG Conversion Factors for Company Reporting.

The directors are responsible for preparing the Annual Report 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 group and company, 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;

•     state whether applicable UK Accounting Standards have been followed, subject to any material departures disclosed and explained in the financial statements;

•     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 group’s and company’s transactions and disclose with reasonable accuracy at any time the financial position of the group and company 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 group and company and hence for taking reasonable steps for the prevention and detection of fraud and other irregularities.

The directors have truechosen in accordance with Companies Act 2006, s. 414C(11) to set out in the group's strategic report information required by Large and Medium-sized Companies and Groups (Accounts and Reports) Regulations 2008, Sch. 7 to be contained in the directors' report. It has done so in respect of financial risk management and exposure to risks and uncertainties.

So far as each person who was a director at the date of approving this report is aware, there is no relevant audit information of which the auditor of the company is unaware. Additionally, the directors individually have taken all the necessary steps that they ought to have taken as directors in order to make themselves aware of all relevant audit information and to establish that the auditor of the company is aware of that information.

The group's review of the business, the financial risk management objectives and exposures to credit and liquidity risk are set out in the Strategic Report.

The group has considerable financial resources together with a number of customers and suppliers across different industries. As a consequence, the directors believe that the group is well placed to manage business risks successfully.

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

The main operating subsidiary Hillhouse Quarry Group Limited was accredited ISO 14001:2004 across its activities along with ISO 9001:200. We continue to invest in training and development for our staff to improve the business overall.

Recycling has been introduced to several areas of our business and continue to be an area of development for the future.

Reduction of carbon emissions from our processes and the minimisation of waste help improve our Environmental credentials while minimising on natural resource consumption.

We have audited the financial statements of Hillhouse Estates Ltd (the 'parent company') and its subsidiaries (the 'group') for the year ended 31 March 2020 which comprise the group profit and loss account, the group statement of comprehensive income, the group balance sheet, the company balance sheet, the group statement of changes in equity, the company statement of changes in equity, the group statement of cash flows and 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 FRS 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 the parent company's affairs as at 31 March 2020 and of the group's profit 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 Auditor's responsibilities for the audit of the financial statements section of our report. We are independent of the company 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

We have nothing to report in respect of the following matters in relation to which the ISAs (UK) require us to report to you where:

• the directors' use of the going concern basis of accounting in the preparation of the financial statements is not appropriate; or

• the directors have not disclosed in the financial statements any identified material uncertainties that may cast significant doubt about the group's or the parent company’s ability to continue to adopt the going concern basis of accounting for a period of at least twelve months from the date when the financial statements are authorised for issue.

Other information

The other information comprises the information included in the annual report other than the financial statements and our auditor's report thereon. The directors are responsible for the other information. 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 there is a material misstatement in the financial statements or a material misstatement of the other information. 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 our audit:

• the information given in the strategic report and the directors' report for the financial year for which the financial statements are prepared is consistent with the financial statements; and

• the strategic report and the directors' report have been prepared in accordance with applicable legal requirements.

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 strategic report and the directors' report.

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.

As explained more fully in the directors' responsibilities statement, 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 is 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 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 company or to cease operations, or have no realistic alternative but to do so.

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 an auditor's report 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.

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

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 an auditor's report 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.

As permitted by s408 Companies Act 2006, the company has not presented its own profit and loss account and related notes. The company’s loss for the year was £809,137 (2019 - £377,441 loss).

Hillhouse Estates Limited (“the company”) is a private limited company domiciled and incorporated in Scotland. The registered office is Hillhouse Quarry, Troon, Ayrshire, KA10 7HX.

The group consists of Hillhouse Estates Limited and all of its subsidiaries.

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. The principal accounting policies adopted are set out below.

In the parent company financial statements, the cost of a business combination is the fair value at the acquisition date of the assets given, equity instruments issued and liabilities incurred or assumed, plus costs directly attributable to the business combination. The excess of the cost of a business combination over the fair value of the identifiable assets, liabilities and contingent liabilities acquired is recognised as goodwill. The cost of the combination includes the estimated amount of contingent consideration that is probable and can be measured reliably, and is adjusted for changes in contingent consideration after the acquisition date. Provisional fair values recognised for business combinations in previous periods are adjusted retrospectively for final fair values determined in the 12 months following the acquisition date. Investments in subsidiaries, joint ventures and associates are accounted for at cost less impairment.

Deferred tax is recognised on differences between the value of assets (other than goodwill) and liabilities recognised in a business combination accounted for using the purchase method and the amounts that can be deducted or assessed for tax, considering the manner in which the carrying amount of the asset or liability is expected to be recovered or settled. The deferred tax recognised is adjusted against goodwill or negative goodwill.

The consolidated group financial statements consist of the financial statements of the parent company Hillhouse Estates 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 March 2020. 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.

The directors are required to prepare the statutory financial statements on the going concern basis unless it is inappropriate to presume that the group will continue in business.

The group has paid special attention to the recent COVID-19 pandemic and the associated impact on the business. These risks include:

•    A further suspension of the ability to trade due to an enforced lockdown;

•    Interruption to operations due to measures taken to contain an outbreak on our sites;

•    The impact of the above on the group's ability to satisfy its liabilities as they fall due.

The group's going concern assessment considers its principal risks, including those in respect of Covid-19 and is dependent on a number of factors including financial performance and access to funding facilities. The directors acknowledge that the group could be adversely affected by the pandemic depending on how the situation evolves and how this impacts the quarry market moving forward.

The current and future financial position of the group, its cash flows and liquidity position have been reviewed by the directors. Following this review, the directors have a reasonable expectation that the group has adequate resources to continue in operational existences for the foreseeable future. This includes ensuring the group has sufficient headroom to meet any additional cash requirements that would be contingent on a downturn in activity in relation to the Covid-19 pandemic.

The group's secured pipeline of work and long-term forecast outlook has provided further assurance to the directors regarding its financial position. As such, the directors consider that it is appropriate to prepare the financial statements on the going concern basis.

Turnover is recognised at the fair value of the consideration received or receivable for goods and services 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.

Sale of goods

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 dispatch 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.

Construction contracts

Where the outcome of a construction contract can be estimated reliably, revenue and costs are recognised by reference to the stage of completion of the contract activity at the reporting end date. Variations in contract work, claims and incentive payments are included to the extent that the amount can be measured reliably and its receipt is considered probable.

When it is probable that total contract costs will exceed total contract turnover, the expected loss is recognised as an expense immediately.

Where the outcome of a construction contract cannot be estimated reliably, contract costs are recognised as expenses in the period in which they are incurred and contract revenue is recognised to the extent of contract costs incurred where it is probable that they will be recoverable.

Supply of hydro electric power

Revenue is recognised in the period in which the power is generated.

Provision of accommodation and related services

Revenue is recognised at the point the accommodation or related service has been provided

Goodwill represents the excess of the cost of acquisition of a business 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 5 years.

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.

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

Depreciation is provided on all tangible fixed assets, other than freehold land, at rates calculated to write off the cost of each asset over its expected useful life.

The annual rates of depreciation range from 2% to 25% according to the nature of the assets.

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 recognised in the profit and loss account.

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

Assets in course of construction are not depreciated until they are brought into use.

Mineral resources are amortised in line with their depletion.

Investment property, which is property held to earn rentals and/or for capital appreciation, is initially recognised at cost, which includes the purchase cost and any directly attributable expenditure. Subsequently it is measured at fair value at the reporting end date. Changes in fair value are recognised in profit or loss.

Equity investments are measured at fair value through profit or loss, except for those equity investments that are not publicly traded and whose fair value cannot otherwise be measured reliably, which are recognised at cost less impairment until a reliable measure of fair value becomes available.

In the parent company financial statements, investments in subsidiaries, associates and jointly controlled entities are initially measured at cost and subsequently measured at cost less any accumulated impairment losses.

A subsidiary is an entity controlled by the group. Control is the power to govern the financial and operating policies of the entity so as to obtain benefits from its activities.

At each reporting period end date, the group 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.

The carrying amount of the investments accounted for using the equity method is tested for impairment as a single asset. Any goodwill included in the carrying amount of the investment is not tested separately for impairment.

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.

Recognised impairment losses are reversed if, and only if, the reasons for the impairment loss have ceased to apply. Where an impairment loss subsequently reverses, the carrying amount of the asset (or cash-generating unit) is increased to the revised estimate of its recoverable amount, but so that the increased carrying amount does not exceed the carrying amount that would have been determined had no impairment loss been recognised for the asset (or cash-generating unit) in prior years. A reversal of an impairment loss is recognised immediately in profit or loss, unless the relevant asset is carried at a revalued amount, in which case the reversal of the impairment loss is treated as a revaluation increase.

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.

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.

Cash and cash equivalents are basic financial assets and include cash in hand, deposits held at call with banks, other short-term liquid investments with original maturities of three months or less, and bank overdrafts. Bank overdrafts are shown within borrowings in current liabilities.

The group has elected to apply the provisions of Section 11 ‘Basic Financial Instruments’ and Section 12 ‘Other Financial Instruments Issues’ of FRS 102 to all of its financial instruments.

Financial instruments are recognised in the group's balance sheet when the group becomes party to the contractual provisions of the instrument.

Financial assets and liabilities are offset and the net amounts presented in the financial statements when there is a legally enforceable right to set off the recognised amounts and there is an intention to settle on a net basis or to realise the asset and settle the liability simultaneously.

Basic financial assets, which include debtors and cash and bank balances, are initially measured at transaction price including transaction costs and are subsequently carried at amortised cost using the effective interest method unless the arrangement constitutes a financing transaction, where the transaction is measured at the present value of the future receipts discounted at a market rate of interest. Financial assets classified as receivable within one year are not amortised.

Other financial assets, including investments in equity instruments which are not subsidiaries, associates or joint ventures, are initially measured at fair value, which is normally the transaction price. Such assets are subsequently carried at fair value and the changes in fair value are recognised in profit or loss, except that investments in equity instruments that are not publicly traded and whose fair values cannot be measured reliably are measured at cost less impairment.

Financial assets, other than those held at fair value through profit and loss, are assessed for indicators of impairment at each reporting end date.

Financial assets are impaired where there is objective evidence that, as a result of one or more events that occurred after the initial recognition of the financial asset, the estimated future cash flows have been affected. If an asset is impaired, the impairment loss is the difference between the carrying amount and the present value of the estimated cash flows discounted at the asset’s original effective interest rate. The impairment loss is recognised in profit or loss.

If there is a decrease in the impairment loss arising from an event occurring after the impairment was recognised, the impairment is reversed. The reversal is such that the current carrying amount does not exceed what the carrying amount would have been, had the impairment not previously been recognised. The impairment reversal is recognised in profit or loss.

Financial assets are derecognised only when the contractual rights to the cash flows from the asset expire or are settled, or when the group transfers the financial asset and substantially all the risks and rewards of ownership to another entity, or if some significant risks and rewards of ownership are retained but control of the asset has transferred to another party that is able to sell the asset in its entirety to an unrelated third party.

Financial liabilities and equity instruments are classified according to the substance of the contractual arrangements entered into. An equity instrument is any contract that evidences a residual interest in the assets of the group after deducting all of its liabilities.

Basic financial liabilities, including creditors, bank loans, loans from fellow group companies and preference shares that are classified as debt, are initially recognised at transaction price unless the arrangement constitutes a financing transaction, where the debt instrument is measured at the present value of the future payments discounted at a market rate of interest. Financial liabilities classified as payable within one year are not amortised.

Debt instruments are subsequently carried at amortised cost, using the effective interest rate method.

Trade creditors are obligations to pay for goods or services that have been acquired in the ordinary course of business from suppliers. Amounts payable are classified as current liabilities if payment is due within one year or less. If not, they are presented as non-current liabilities. Trade creditors are recognised initially at transaction price and subsequently measured at amortised cost using the effective interest method.

Financial liabilities are derecognised when the group's contractual obligations expire or are discharged or cancelled.

Equity instruments issued by the group are recorded at the proceeds received, net of transaction costs. Dividends payable on equity instruments are recognised as liabilities once they are no longer at the discretion of the group.

The tax expense represents the sum of the tax currently payable and deferred tax.

The tax currently payable is based on taxable profit for the year. Taxable profit differs from net profit as reported in the profit and loss account because it excludes items of income or expense that are taxable or deductible in other years and it further excludes items that are never taxable or deductible. The group’s liability for current tax is calculated using tax rates that have been enacted or substantively enacted by the reporting end date.

Deferred tax liabilities are generally recognised for all timing differences and deferred tax assets are recognised to the extent that it is probable that they will be recovered against the reversal of deferred tax liabilities or other future taxable profits. Such assets and liabilities are not recognised if the timing difference arises from goodwill or from the initial recognition of other assets and liabilities in a transaction that affects neither the tax profit nor the accounting profit.

The carrying amount of deferred tax assets is reviewed at each reporting end date and reduced to the extent that it is no longer probable that sufficient taxable profits will be available to allow all or part of the asset to be recovered. Deferred tax is calculated at the tax rates that are expected to apply in the period when the liability is settled or the asset is realised. Deferred tax is charged or credited in the profit and loss account, except when it relates to items charged or credited directly to equity, in which case the deferred tax is also dealt with in equity. Deferred tax assets and liabilities are offset if, and only if, there is a legally enforceable right to offset current tax assets and liabilities and the deferred tax assets and liabilities relate to taxes levied by the same tax authority.

The costs of short-term employee benefits are recognised as a liability and an expense, unless those costs are required to be recognised as part of the cost of stock or fixed assets.

The cost of any unused holiday entitlement is recognised in the period in which the employee’s services are received.

Termination benefits are recognised immediately as an expense when the company is demonstrably committed to terminate the employment of an employee or to provide termination benefits.

The group operates the Hillhouse Estates Limited Staff Retirement Benefits Plan (1977) defined benefit pension scheme.

The scheme requires contributions to be made to a separately administered fund. The cost of providing benefits under the defined benefit plans is determined by using the projected unit credit method, which attributes entitlement to benefits to the current period (to determine current service cost) and to the current and prior periods (to determine the present value of defined benefit obligations) and is based on actuarial advice.

When a settlement or a curtailment occur the change in the present value of the scheme liabilities and the fair value of the plan assets reflects the gain or loss which is recognised in the income statement during the period in which it occurs. The net interest element is determined by multiplying the net defined benefit liability by the discount rate, at the start of the period taking into account any changes in the net defined benefit liability during the period as a result of contribution and benefit payments. The net interest is recognised in profit or loss as other finance revenue or cost.

Re-measurements, comprising actuarial gains and losses, the effect of the asset ceiling and the return on the net defined benefit liability (excluding amounts included in net interest) are recognised immediately in other comprehensive income in the period in which they occur. Re-measurements are not reclassified to profit and loss in subsequent periods.

The defined net benefit pension asset or liability in the balance sheet comprises the total of the present value of the defined benefit obligation (using a discount rate based on high quality corporate bonds), less the fair value of plan assets out of which the obligations are to be settled directly. Fair value is based on market price information and in the case of quoted securities is the published bid price. The value of a net pension benefit asset is limited to the amount that may be recovered either through reduced contributions or agreed refunds from the scheme.

Contributions to defined contribution schemes are recognised in the profit and loss account in the period in which they become payable.

Leases are classified as finance leases whenever the terms of the lease transfer substantially all the risks and rewards of ownership to the lessees. All other leases are classified as operating leases.

Assets held under finance leases are recognised as assets at the lower of the assets fair value at the date of inception and the present value of the minimum lease payments. The related liability is included in the balance sheet as a finance lease obligation. Lease payments are treated as consisting of capital and interest elements. The interest is charged to profit or loss so as to produce a constant periodic rate of interest on the remaining balance of the liability.

Rentals payable under operating leases, including any lease incentives received, are charged to profit or loss on a straight line basis over the term of the relevant lease except where another more systematic basis is more representative of the time pattern in which economic benefits from the leased asset are consumed.

Rental income from operating leases is recognised on a straight line basis over the term of the relevant lease. Initial direct costs incurred in negotiating and arranging an operating lease are added to the carrying amount of the leased asset and recognised on a straight line basis over the lease term.

In the application of the group’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.

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.

The company estimates the outcome of its construction contracts. This is normally measured by the proportion that contract costs incurred for work performed to date bear to the estimated total contract costs, except where this would not be representative of the stage of completion.

Estimated total contract costs are based on management’s detailed budgets and projections. Where management judge that the outcome of a construction contract cannot be estimated reliably, contract revenue is recognised to the extent of contract costs incurred where it is probable they will be recoverable.

Turnover represents the invoiced amount of goods sold, services provided and farming subsidies, stated net of value added tax.

An analysis of the group's turnover is as follows:

All turnover relates to the United Kingdom.

The average monthly number of persons (including directors) employed by the group and company during the year was:

Their aggregate remuneration comprised:

The number of directors for whom retirement benefits are accruing under defined benefit schemes amounted to 4 (2019 - 3).

Investment income includes the following:

The actual charge for the year can be reconciled to the expected charge for the year based on the profit or loss and the standard rate of tax as follows:

The net carrying value of tangible fixed assets includes the following in respect of assets held under finance leases or hire purchase contracts.

Fair value of the investment property was based on a valuation carried out at August 2019 by Colliers International Valuation UK LLP, who are not connected with the company. The valuation was made on an open market value basis by reference to market evidence of transaction prices for similar properties.

The directors are satisfied that cost represents the fair value of the investment property at 31 March 2020.

Listed investments included above:

Details of the company's subsidiaries at 31 March 2020 are as follows:

Companies with registered offices in Scotland have a registered address of Hillhouse Quarry, Troon, Ayrshire, KA10 7HX.

Bowldown Farms Limited has a registered office address of Bowldown Farm, Tetbury, Gloucestershire, England, GL8 8UD.

Other loans are due for repayment on or after the 31 October 2025. Interest of 6.75% is charged on the loans and repayment is not made by way of instalments.

Finance lease payments represent rentals payable by the company or group for certain items of plant and machinery. Leases include purchase options at the end of the lease period, and no restrictions are placed on the use of the assets. The average lease term is five years. All leases are on a fixed repayment basis and no arrangements have been entered into for contingent rental payments.

Net obligations under hire purchase contracts are secured over the assets to which they relate.

The following are the major deferred tax liabilities and assets recognised by the group and company, and movements thereon:

The deferred tax liabilities relating to accelerated capital allowances and short term timing differences are expected to reverse within 12 months and expected to mature within the same period.

Deferred tax liabilities relating to capital gains are not expected to reverse within the next 12 months.

The company operates the Hillhouse Estates Limited Staff Retirement Benefits Plan (1977), which is a defined benefit pension scheme. The assets of the scheme are held separately from those of the group in funds administered by the trustees. The most recent final actuarial valuation at 1 April 2018 showed that the market value of the scheme's assets was £15.63m and that the scheme specific funding level was 111%. The Scheme was closed to future accrual on 31 March 2014.

The disclosures under FRS 102 have been calculated by a qualified independent actuary based on the results of 31 March 2019 rolled forward to 31 March 2020. The company expects to contribute £nil to the defined benefit plan in the next financial year.

The current projected pension asset in relation to the Hillhouse Estates Limited Staff Retirement Benefits Plan (1977) that has been noted by the actuary has not been recognised in this set of financial statements. This is based on our determination that the Company does not have an unconditional right to refund of the surplus based on the Scheme's Trust Deed and Rules.

Assumed life expectations on retirement at age 65:

Amounts recognised in the profit and loss account

Amounts taken to other comprehensive income

The amounts included in the balance sheet arising from obligations in respect of defined benefit plans are as follows:

Movements in the present value of defined benefit obligations

The defined benefit obligations arise from plans which are wholly or partly funded.

Movements in the fair value of plan assets

Fair value of plan assets at the reporting period end

Ordinary Shares carry one vote per share. There are no restrictions in respect to distribution of dividends and repayment of capital.

B Shares carry no voting rights and the distribution of dividends is subject to the consent of the Company in a general meeting.

C Shares carry no voting rights and the distribution of dividends is subject to the passing of a unanimous resolution by the holders of the B shares.

Preference shares carry one vote per share and have preferential right to return of capital on winding up. Preference shares are entitled to a fixed cumulative preferential dividend of 10% per annum on the capital.

On 18 October 2019 the group acquired 100 percent of the issued capital of Mac Asphalt Limited.

Turnover and loss reflect post acquisition trading in Mac Asphalt Limited to November 2019.

At this date the trade and assets were hived up to Hillhouse Quarry Group Limited.

An unlimited inter-company guarantee is in place between Hillhouse Estates Limited, Hillhouse Quarry Group Limited, Glendoe Limited, Bowldown Farms Limited and Hillhouse Events Limited in respect of bank borrowings.

At the reporting end date the group had outstanding commitments for future minimum lease payments under non-cancellable operating leases, which fall due as follows:

Amounts contracted for but not provided in the financial statements:

Key management personnel are considered to be the directors of the company. Remuneration in respect of the directors can be seen in note 7 to these financial statements.

During the year the group entered into the following transactions with related parties:

The following amounts were outstanding at the reporting end date:

Other related parties

Loan notes of £864,000 were provided by MV Hillhouse Trust, of which shareholder's are trustees.

The following amounts were outstanding at the reporting end date:

The company has taken advantage of exemption, under the terms of Financial Reporting Standard 102 'The Financial Reporting Standard applicable in the UK and Republic of Ireland', not to disclose related party transactions with wholly owned subsidiaries within the group.

Other related parties

A loan of £70,000 was provided to Hurlingham Motor Company, of which a shareholder's son-in-law is a director and controlling shareholder.

The company was under the joint control of Mr H R M Vernon, Mr G E M Vernon and Mr A R R Vernon by virtue of their shareholding throughout the current and previous period.