Hobson & Sons Group Limited - Limited company accounts 18.2

REGISTERED NUMBER: 00150363 (England and Wales)

Group Strategic Report,

Report of the Directors and

Audited

Consolidated Financial Statements

for the Year Ended 31 May 2019

for

Hobson & Sons Group Limited

Page

Company Information

1

Group Strategic Report

2

Report of the Directors

4

Report of the Independent Auditors

6

Consolidated Income Statement

8

Consolidated Other Comprehensive Income

9

Consolidated Statement of Financial Position

10

Company Statement of Financial Position

11

Consolidated Statement of Changes in Equity

12

Company Statement of Changes in Equity

13

Consolidated Statement of Cash Flows

14

Notes to the Consolidated Statement of Cash Flows

15

Notes to the Consolidated Financial Statements

16

DIRECTORS:

C D Brown

R O Paige

P Fryer

M Greaves

SECRETARY:

M Greaves

REGISTERED OFFICE:

Kenneth Road

Thundersley

Benfleet

Essex

SS7 3AF

REGISTERED NUMBER:

00150363 (England and Wales)

AUDITORS:

Parker Cavendish

Chartered Accountants

Registered Auditor

28 Church Road

Stanmore

Middlesex

HA7 4XR

The directors present their strategic report of the company and the group for the year ended 31 May 2019.

REVIEW OF BUSINESS

In accordance with The Companies Act 2006 (Strategic Report and Directors' Report) Regulations 2013 the

directors set out the following review of the business.

The consolidated profit for the year after taxation is £902,753 (2018: £522,974). The directors do not propose

a final dividend.

2019

2018

Change

£'000

£'000

%

Turnover

10,217

7,501

+36%

Operating profit

1,077

664

+62%

Post tax profit for the financial year

903

523

+73%

Shareholder's equity

6,101

5,776

+6%

Net currents assets

7,542

7,051

+7%

Net cash

3,013

4,346

-31%

Debt

813

891

-9%

In line with the directors' May 2018 Strategic Report, turnover for the year to May 2019 increased primarily

due to the benefits from having secured new public sector contracts during the year ending May 2018. At an

increase of 36%, this growth in turnover was in excess of anticipated levels as the group benefitted from the

first-year volumes of these contracts exceeding previous expectations. Having focussed on controlling costs

at all levels within the group the contribution generated from these additional sales significantly increased

operating profits, returning these to levels comparable to those delivered in Y/E May 2017.

In terms of turnover and profit, the May 2019 performance was notable, however the closing cash position

does show a deterioration as at the year end. This was partly as a result of the group utilising its cash to

optimise input costs but moreover due to the impact of a particular high month of sales in May 2019 which

resulted in year end Trade Debtors increasing significantly and the group's year end cash position reducing.

Post year end cash balances improved significantly to levels in excess of those reported as at May 2018, and

during Y/E May 2020 it is expected that there will be a further improvement in the cash position as further

benefits are derived from the group's working capital management.

During Y/E May 2020, it is predicted that Sterling will remain weak against the major currencies and the

pressure on input costs will impact upon profitability. The directors will continue to focus on aligning costs with

turnover and profitability, in order to return a satisfactory level of trading performance, whilst at the same time

managing cash levels to enable any potential new business opportunities to be developed. The directors

believe that the management and preservation of a strong net current asset position is a key factor in the

group's operations.

In common with many UK businesses, the group has a Defined Benefit Pension Scheme Liability within its

Statement of Financial Position. The annual actuarial accounting adjustment is highly dependent upon

external market conditions, bond yields and other financial factors and the directors continue to work with the

scheme advisors to ensure that the group monitors and factors into their business planning any future

anticipated positive, or negative, movements. Although the group's post tax profits for Y/E May 2019 were

£380k better than May 2018, the annual actuarial movement for Y/E May 2019 was £756K worse than Y/E

May 2018. The group has limited ability to influence these hugely variable movements, which, when negative,

significantly restrict the net asset growth rate and the value of dividends which the directors can distribute to

shareholders.

The outcome of the UK's protracted negotiations with the European Union continues to be unclear. The

directors have given consideration to the most likely outcomes and the effect that these may have on the

business and taken appropriate action. The directors will continue to monitor the situation until further details

become clear and any additional requirements are identified.

PRINCIPAL RISKS AND UNCERTAINTIES

The directors regularly review and evaluate various risks and uncertainties across the group.

Market and Competitive Risk

The directors believe that the principal risks and uncertainties which the business faces result from the

changing nature of the markets in which it operates and the associated and continuing price pressures in both

the public and private sectors.

In the UK, a large proportion of the group's turnover is subject to competitive tendering, which introduces

different risks to other forms of business. However, by maintaining net asset strength to satisfy the stringent

financial eligibility criteria, continually assessing the specific customer and market requirements and by

appropriately evolving the group's business offering to satisfy the ever increasing demands, the directors

believe that they are managing these principle risks and uncertainties appropriately.

Financial related risks

The Group operates a centralised treasury function which is responsible for managing the liquidity, interest

and foreign currency risks associated with the group's activities.

The Group's principal financial instruments include bank overdrafts and loans, the main purpose of which is to

raise finance for the Group's operations. In addition, the Group has various other financial assets and

liabilities such as; trade receivables and trade payables, arising directly from its operations.

Liquidity risks

The Group manages its cash and borrowing requirements centrally to maximise interest income and minimise

interest expense, whilst ensuring that the Group has sufficient liquid resources to meet the operating needs of

its business.

Interest rate risk

The Group finances its operations through a mixture of retained profits and bank borrowings.

Foreign currency risk

The Group's principal foreign currency exposures arise from trading overseas. Group policy permits, but does

not demand, that these exposures may be hedged in order to fix the cost in sterling.

Credit risk

Investments of cash surpluses and borrowings are made through banks. All customers who wish to trade on

credit terms are subject to credit verification procedures. Receivable balances are monitored on an on-going

basis and provision is made for doubtful debts where necessary.

ON BEHALF OF THE BOARD:

R O Paige - Director

21 August 2019

The directors present their report with the financial statements of the company and the group for the year

ended 31 May 2019.

PRINCIPAL ACTIVITY

The principal activity of the group in the year under review was that of the manufacture and supply of uniform

clothing and equipment.

The principal activity of the company continued to be that of a holding company with trading subsidiaries and

an investment company.

DIVIDENDS

An interim dividend of £1 per share was paid on 12 March 2019. The directors recommend that no final

dividend be paid.

The total distribution of dividends during the year was £43,500.

DIRECTORS

The directors shown below have held office during the whole of the period from 1 June 2018 to the date of

this report.

C D Brown

R O Paige

P Fryer

M Greaves

DISCLOSURE IN THE STRATEGIC REPORT

In accordance with The Companies Act 2006 (Strategic Report and Directors' Report) regulations 2013 the

directors now include a review of the business in the group strategic report on pages 2 and 3 of the financial

statements , together with an assessment of the principal risks and uncertainties facing the group.

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), including

Financial Reporting Standard 102 'The Financial Reporting Standard applicable in the UK and Republic of

Ireland'. 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 ought to have taken as a director in order to make himself aware of any relevant audit information and

to establish that the group's auditors are aware of that information.

AUDITORS

The auditors, Parker Cavendish, will be proposed for re-appointment at the forthcoming Annual General

Meeting in accordance with section 485 of the Companies Act 2006.

ON BEHALF OF THE BOARD:

M Greaves - Director

21 August 2019

Opinion

We have audited the financial statements of Hobson & Sons Group Limited (the 'parent company') and its

subsidiaries (the 'group') for the year ended 31 May 2019 which comprise the Consolidated Income

Statement, Consolidated Other Comprehensive Income, Consolidated Statement of Financial Position,

Company Statement of Financial Position, Consolidated Statement of Changes in Equity, Company

Statement of Changes in Equity, Consolidated Statement of Cash Flows and Notes to the Consolidated

Statement of Cash Flows, 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 May 2019 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 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

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 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 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 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 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 four, 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.

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.

Marco Gazza (Senior Statutory Auditor)

for and on behalf of Parker Cavendish

Chartered Accountants

Registered Auditor

28 Church Road

Stanmore

Middlesex

HA7 4XR

21 August 2019

REVENUE

3

10,217,228

7,500,730

Cost of sales

(6,676,845

)

(4,340,374

)

GROSS PROFIT

3,540,383

3,160,356

Administrative expenses

(2,463,360

)

(2,496,117

)

OPERATING PROFIT

6

1,077,023

664,239

Interest payable and similar expenses

7

(33,383

)

(35,772

)

PROFIT BEFORE TAXATION

1,043,640

628,467

Tax on profit

8

(140,887

)

(105,493

)

PROFIT FOR THE FINANCIAL YEAR

902,753

522,974

Profit attributable to:

Owners of the parent

902,753

522,974

PROFIT FOR THE YEAR

902,753

522,974

OTHER COMPREHENSIVE (LOSS)/INCOME

Actuarial gain/(loss) on pension scheme

(583,023

)

335,137

Income tax relating to other comprehensive (loss)/income

48,640

(113,388

)

OTHER COMPREHENSIVE (LOSS)/INCOME FOR THE YEAR, NET OF INCOME TAX

(534,383

)

221,749

TOTAL COMPREHENSIVE INCOME FOR THE YEAR

368,370

744,723

Total comprehensive income attributable to:

Owners of the parent

368,370

744,723

FIXED ASSETS

Intangible assets

11

-

-

Property, plant and equipment

12

2,320,207

2,361,420

Investments

13

-

-

2,320,207

2,361,420

CURRENT ASSETS

Inventories

14

3,085,934

2,437,606

Debtors

15

3,071,402

1,296,251

Cash at bank and in hand

3,012,616

4,345,966

9,169,952

8,079,823

CREDITORS

Amounts falling due within one year

16

(1,627,465

)

(1,028,514

)

NET CURRENT ASSETS

7,542,487

7,051,309

TOTAL ASSETS LESS CURRENT LIABILITIES

9,862,694

9,412,729

CREDITORS

Amounts falling due after more than one year

17

(734,982

)

(815,799

)

PROVISIONS FOR LIABILITIES

20

(29,636

)

(31,084

)

PENSION LIABILITY

23

(2,997,000

)

(2,789,640

)

NET ASSETS

6,101,076

5,776,206

CAPITAL AND RESERVES

Called up share capital

21

43,500

43,500

Capital redemption reserve

22

32,500

32,500

Other reserves

22

25,000

25,000

Retained earnings

22

6,000,076

5,675,206

SHAREHOLDERS' FUNDS

6,101,076

5,776,206

The financial statements were approved by the Board of Directors on 21 August 2019 and were signed on its

behalf by:

C D Brown - Director

R O Paige - Director

FIXED ASSETS

Intangible assets

11

-

-

Property, plant and equipment

12

2,043,094

2,059,323

Investments

13

382,261

382,261

2,425,355

2,441,584

CURRENT ASSETS

Debtors

15

1,360,044

1,484,002

Cash at bank

2,242,446

1,712,633

3,602,490

3,196,635

CREDITORS

Amounts falling due within one year

16

(336,000

)

(252,892

)

NET CURRENT ASSETS

3,266,490

2,943,743

TOTAL ASSETS LESS CURRENT LIABILITIES

5,691,845

5,385,327

CREDITORS

Amounts falling due after more than one year

17

(734,982

)

(815,799

)

PENSION LIABILITY

23

(2,997,000

)

(2,789,640

)

NET ASSETS

1,959,863

1,779,888

CAPITAL AND RESERVES

Called up share capital

21

43,500

43,500

Capital redemption reserve

22

32,500

32,500

Other reserves

22

25,000

25,000

Retained earnings

22

1,858,863

1,678,888

SHAREHOLDERS' FUNDS

1,959,863

1,779,888

Company's profit for the financial year

757,858

144,038

The financial statements were approved by the Board of Directors on 21 August 2019 and were signed on its behalf by:

C D Brown - Director

R O Paige - Director

Called up

Capital

share

Retained

redemption

Other

Total

capital

earnings

reserve

reserves

equity

£

£

£

£

£

Balance at 1 June 2017

43,500

5,017,483

32,500

25,000

5,118,483

Changes in equity

Dividends

-

(87,000

)

-

-

(87,000

)

Total comprehensive income

-

744,723

-

-

744,723

Balance at 31 May 2018

43,500

5,675,206

32,500

25,000

5,776,206

Changes in equity

Dividends

-

(43,500

)

-

-

(43,500

)

Total comprehensive income

-

368,370

-

-

368,370

Balance at 31 May 2019

43,500

6,000,076

32,500

25,000

6,101,076

Called up

Capital

share

Retained

redemption

Other

Total

capital

earnings

reserve

reserves

equity

£

£

£

£

£

Balance at 1 June 2017

43,500

1,400,101

32,500

25,000

1,501,101

Changes in equity

Dividends

-

(87,000

)

-

-

(87,000

)

Total comprehensive income

-

365,787

-

-

365,787

Balance at 31 May 2018

43,500

1,678,888

32,500

25,000

1,779,888

Changes in equity

Dividends

-

(43,500

)

-

-

(43,500

)

Total comprehensive income

-

223,475

-

-

223,475

Balance at 31 May 2019

43,500

1,858,863

32,500

25,000

1,959,863

Cash flows from operating activities

Cash generated from operations

1

(1,032,618

)

868,911

Interest paid

(33,383

)

(35,772

)

Tax paid

(110,692

)

(118,086

)

Net cash from operating activities

(1,176,693

)

715,053

Cash flows from investing activities

Purchase of tangible fixed assets

(35,500

)

(27,870

)

Sale of tangible fixed assets

-

311

Net cash from investing activities

(35,500

)

(27,559

)

Cash flows from financing activities

Loan repayments in year

(77,657

)

(66,657

)

Equity dividends paid

(43,500

)

(87,000

)

Net cash from financing activities

(121,157

)

(153,657

)

(Decrease)/increase in cash and cash equivalents

(1,333,350

)

533,837

Cash and cash equivalents at beginning of year

2

4,345,966

3,812,129

Cash and cash equivalents at end of year

2

3,012,616

4,345,966

1.	RECONCILIATION OF PROFIT BEFORE TAXATION TO CASH GENERATED FROM OPERATIONS

2019

2018

£

£

Profit before taxation

1,043,640

628,467

Depreciation charges

76,713

72,873

Finance costs

33,383

35,772

1,153,736

737,112

(Increase)/decrease in inventories

(648,328

)

43,752

(Increase)/decrease in trade and other debtors

(1,754,933

)

337,897

Increase/(decrease) in trade and other creditors

216,907

(249,850

)

Cash generated from operations

(1,032,618

)

868,911

2.	CASH AND CASH EQUIVALENTS

The amounts disclosed on the Statement of Cash Flows in respect of cash and cash equivalents are in

respect of these Statement of Financial Position amounts:

Year ended 31 May 2019

31.5.19

1.6.18

£

£

Cash and cash equivalents

3,012,616

4,345,966

Year ended 31 May 2018

31.5.18

1.6.17

£

£

Cash and cash equivalents

4,345,966

3,812,129