66 Franchise Brands plc Annual Report and Accounts 2018 NOTES FORMING PART OF THE FINANCIAL STATEMENTS continued For year ended 31 December 2018 12 Property, plant and equipment Leasehold improvements £’000 Fixtures and fittings £’000 Computer equipment £’000 Motor vehicles £’000 Plant and equipment £’000 Total £’000 Cost At 1 January 2017 111 110 148 243 24 635 Additions on acquisition – 15 33 – 5 53 Additions 11 4 31 40 12 98 Disposals – – (2) (130) (9) (141) At 31 December 2017 122 129 210 153 31 645 Additions 3 7 34 24 282 350 At 31 December 2018 125 136 244 177 313 995 Depreciation At 1 January 2017 (93) (96) (141) (165) (17) (512) Additions on acquisition – – – – – – Charge for year (7) (13) (20) (46) (10) (96) Disposals – – 3 115 9 127 At 31 December 2017 (100) (109) (158) (96) (18) (481) Charge for year (10) (14) (32) (36) (40) (131) At 31 December 2018 (110) (123) (190) (132) (58) (613) Net book value At 31 December 2018 15 13 54 45 255 382 At 31 December 2017 22 20 52 54 14 162 At 1 January 2017 18 14 7 75 7 121 The net book value of assets held under hire purchase agreements under Group property, plant and equipment include an amount of £13,000 (2017: £52,000). The related depreciation charge on these assets for the year was £39,000 (2017: £39,000). The Company has no fixed assets at 31 December 2018 or 31 December 2017. 13 Inventories Group 2018 £’000 2017 £’000 Finished goods and goods for resale 245 252 All amounts are carried at cost and therefore no amounts are carried at fair value less costs to sell. There are no material stock provisions at either period end. No material amounts have been written-off in either year ended 31 December 2018 or 31 December 2017 within the income statement of the Company. £835,000 of inventories were recognised as an expense within the year (2017: £936,000). 14 Trade and other receivables The Group applies the IFRS 9 simplified approach to measuring expected credit losses using a lifetime expected credit loss provision for trade receivables and contract assets. To measure expected credit losses on a collective basis, trade receivables and contract assets are grouped separately. Our contract assets represent assets with our franchise network, therefore the assets are reviewed on the basis of the health of individual franchisees. The expected loss rates are based on the Group’s historical credit losses experienced over the three year period prior to the period end. The historical loss rates are then adjusted for current and forward-looking information on macroeconomic factors affecting the Group’s customers. In particular we look at the differing segmental risks to which we are exposed in respect of Metro Rod’s customer base, with water utilities (for example) carrying much lower risks than our exposure to the Facilities Management segment. In relation to the Company, the credit risk for amounts owed by Group undertakings has not increased significantly since their initial recognition. No expected credit loss provision has been recognised on the basis of the significant net assets and positive cash flows of subsidiaries.