This decision has been taken by HHL in the light of long-term uncertainty over supply-chain constraints. While there will be onetime impairment to the extent of GBP 869,000 in the books of HHL on account of this exit, HHL will be saving significant recurring overheads from second half of FY 21 thus improving its operating profits. HHL, on its own, is already in the process of building alternate supply chains (including India sourcing) for part of the products that were originally proposed to be sourced from the JV.
Given the size of the Subsidiary, the impact due to this exit will not be material with respect to sales revenue or to total assets / liabilities of the Subsidiary HHL and to that of the Company's consolidated financials.