Hobson & Sons Group Limited - Limited company accounts 20.1

REGISTERED NUMBER: 00150363 (England and Wales)

Group Strategic Report,

Report of the Directors and

Audited

Consolidated Financial Statements

for the Period

1 June 2019 to 30 November 2020

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:

Unit 4

Isabella Road

Garforth

Leeds

LS25 2DY

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 period 1 June 2019 to 30 November 2020.

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 18 monthe period after taxation is £263,870 (2019 - year: £902,753). The directors do not propose a final dividend.

18 Months

12 Months

2020

2019

Change

£'000

£'000

%

Turnover

12,268

10,217

Operating profit

358

1,077

Post tax profit for the financial year

264

903

Shareholder's equity

6,151

6,101

+1%

Net currents assets

7,713

7,542

+2%

Net cash

4,978

3,013

+65%

Debt

696

813

-14%

In line with the directors' May 2019 Strategic Report, the previous trading year to May 2019 had seen turnover benefit from first-year volumes of contracts, awarded in the previous financial year, that were significantly in excess of expectations. As a result, an anticipated prorated reduction in turnover was recorded for the 18 months period ending in November 2020. In addition to this anticipated reduction, sales were further impacted by the COVID-19 pandemic, which significantly reduced the Group's home and export business.

Despite the loss of contribution from the reduced sales activity, the group was able to benefit from the support offered by the UK Government Coronavirus Job Retention Scheme, which greatly assisted in the retention of skills and experience within the business. In line with the strategic plan, the Group also continued to restructure its operations to drive efficiencies and align the cost base to future, anticipated levels of business. This restructuring programme continues into the new financial year.

Although the costs of restructuring reduced the profitability in the period, the Board were satisfied at being able to post a 2.9% operating profit, despite the impact of a 'once in a lifetime' pandemic affecting 50% of the trading period.

In line with the expectations communicated in the director's May 2019 Strategic Report, cash improved significantly over the 18 months period to November 2020. Cash increased by 65% from £3m to £4.9m and at the same time, debt reduced by 14%. This was achieved by a continued focus on inventory management and credit control. The directors continue to believe that the management and preservation of a strong net current asset position is a key factor in the Group's strategic planning and operations.

Turnover and operational activities continue to be impacted by the COVID-19 restrictions during the early months of the new financial year and although there remains considerable uncertainty over the longevity of these effects and the resultant impact upon financial performance, the director's prudent financial forecasts provide confidence that the group will be able to maintain a strong net asset and cash position, despite the challenges being faced.

During the period, the UK Government continued its protracted negotiations with the European Union and the resultant uncertainty negatively impacted upon the group's input costs, particularly though the reduction in sterling exchange rates. Post year end, exit from the EU was completed and currency markets have become more favourable for the Group. However, the global situation continues to result in significant upward pressure on specific input costs, particularly those associated with freight to and from the overseas supply chains. The directors will continue to monitor the position and assess the identifiable risks and opportunities.

REVIEW OF BUSINESS - CONTINUED

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 includes in the business planning, any future anticipated positive, or negative, movements. Although the group was able to deliver a post-tax profit of £264K for the 18 months period to November 2020, the annual actuarial movement resulted in a loss of £214K being charged against these profits and this has limited the group's growth in net assets to only £50K (1%). In line with observations in the previous Strategic Reports, the group has limited ability to influence these highly variable movements, which, when negative, significantly restrict the net asset growth rate and the value of dividends which the directors can distribute to shareholders.

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 and foreign currency risk

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

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 April 2021

The directors present their report with the financial statements of the company and the group for the period 1 June 2019 to 30 November 2020.

PRINCIPAL ACTIVITY

The principal activity of the group in the period 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

The total distribution of dividends during the period was £ Nil (2019:£43,500).

DIRECTORS

The directors shown below have held office during the whole of the period from 1 June 2019 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 April 2021

Opinion

We have audited the financial statements of Hobson & Sons Group Limited (the 'parent company') and its subsidiaries (the 'group') for the period ended 30 November 2020 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 30 November 2020 and of the group's profit for the period 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 April 2021

REVENUE

3

12,267,590

10,217,228

Cost of sales

(8,772,369

)

(6,676,845

)

GROSS PROFIT

3,495,221

3,540,383

Administrative expenses

(3,376,072

)

(2,463,360

)

119,149

1,077,023

Other operating income

238,726

-

OPERATING PROFIT

6

357,875

1,077,023

Interest receivable and similar income

2,766

-

360,641

1,077,023

Interest payable and similar expenses

7

(44,608

)

(33,383

)

PROFIT BEFORE TAXATION

316,033

1,043,640

Tax on profit

8

(52,163

)

(140,887

)

PROFIT FOR THE FINANCIAL PERIOD

263,870

902,753

Profit attributable to:

Owners of the parent

263,870

902,753

PROFIT FOR THE PERIOD

263,870

902,753

OTHER COMPREHENSIVE LOSS

Actuarial gain/(loss) on pension scheme

(249,391

)

(583,023

)

Income tax relating to other comprehensive loss

35,340

48,640

OTHER COMPREHENSIVE LOSS FOR THE PERIOD, NET OF INCOME TAX

(214,051

)

(534,383

)

TOTAL COMPREHENSIVE INCOME FOR THE PERIOD

49,819

368,370

Total comprehensive income attributable to:

Owners of the parent

49,819

368,370

FIXED ASSETS

Intangible assets

11

-

-

Property, plant and equipment

12

2,218,545

2,320,207

Investments

13

-

-

2,218,545

2,320,207

CURRENT ASSETS

Inventories

14

2,436,484

3,085,934

Debtors

15

1,069,953

3,071,402

Cash at bank and in hand

4,977,616

3,012,616

8,484,053

9,169,952

CREDITORS

Amounts falling due within one year

16

(771,138

)

(1,627,465

)

NET CURRENT ASSETS

7,712,915

7,542,487

TOTAL ASSETS LESS CURRENT LIABILITIES

9,931,460

9,862,694

CREDITORS

Amounts falling due after more than one year

17

(612,978

)

(734,982

)

PROVISIONS FOR LIABILITIES

20

(19,927

)

(29,636

)

PENSION LIABILITY

23

(3,147,660

)

(2,997,000

)

NET ASSETS

6,150,895

6,101,076

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

6,049,895

6,000,076

SHAREHOLDERS' FUNDS

6,150,895

6,101,076

The financial statements were approved by the Board of Directors and authorised for issue on 21 April 2021 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

2,018,750

2,043,094

Investments

13

382,261

382,261

2,401,011

2,425,355

CURRENT ASSETS

Debtors

15

764,592

1,360,044

Cash at bank

2,747,916

2,242,446

3,512,508

3,602,490

CREDITORS

Amounts falling due within one year

16

(208,861

)

(336,000

)

NET CURRENT ASSETS

3,303,647

3,266,490

TOTAL ASSETS LESS CURRENT LIABILITIES

5,704,658

5,691,845

CREDITORS

Amounts falling due after more than one year

17

(612,978

)

(734,982

)

PENSION LIABILITY

23

(3,147,660

)

(2,997,000

)

NET ASSETS

1,944,020

1,959,863

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

1,843,020

1,858,863

SHAREHOLDERS' FUNDS

1,944,020

1,959,863

Company's profit for the financial year

198,208

757,858

The financial statements were approved by the Board of Directors and authorised for issue on 21 April 2021 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 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

Changes in equity

Total comprehensive income

-

49,819

-

-

49,819

Balance at 30 November 2020

43,500

6,049,895

32,500

25,000

6,150,895

Called up

Capital

share

Retained

redemption

Other

Total

capital

earnings

reserve

reserves

equity

£

£

£

£

£

Balance at 1 June 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

Changes in equity

Total comprehensive loss

-

(15,843

)

-

-

(15,843

)

Balance at 30 November 2020

43,500

1,843,020

32,500

25,000

1,944,020

Cash flows from operating activities

Cash generated from operations

1

2,287,936

(1,032,618

)

Interest paid

(44,608

)

(33,383

)

Tax paid

(136,663

)

(110,692

)

Net cash from operating activities

2,106,665

(1,176,693

)

Cash flows from investing activities

Purchase of tangible fixed assets

(35,430

)

(35,500

)

Sale of tangible fixed assets

8,301

-

Interest received

2,766

-

Net cash from investing activities

(24,363

)

(35,500

)

Cash flows from financing activities

Loan repayments in year

(117,302

)

(77,657

)

Equity dividends paid

-

(43,500

)

Net cash from financing activities

(117,302

)

(121,157

)

Increase/(decrease) in cash and cash equivalents

1,965,000

(1,333,350

)

Cash and cash equivalents at beginning of period

2

3,012,616

4,345,966

Cash and cash equivalents at end of period

2

4,977,616

3,012,616

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

Period

1.6.19

to

Year ended

30.11.20

31.5.19

£

£

Profit before taxation

316,033

1,043,640

Depreciation charges

120,159

76,713

Loss on disposal of fixed assets

8,632

-

Finance costs

44,608

33,383

Finance income

(2,766

)

-

486,666

1,153,736

Decrease/(increase) in inventories

649,450

(648,328

)

Decrease/(increase) in trade and other debtors

1,981,231

(1,754,933

)

(Decrease)/increase in trade and other creditors

(829,411

)

216,907

Cash generated from operations

2,287,936

(1,032,618

)

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:

Period ended 30 November 2020

30.11.20

1.6.19

£

£

Cash and cash equivalents

4,977,616

3,012,616

Year ended 31 May 2019

31.5.19

1.6.18

£

£

Cash and cash equivalents

3,012,616

4,345,966

3.	ANALYSIS OF CHANGES IN NET FUNDS

At 1.6.19

Cash flow

At 30.11.20

£

£

£

Net cash

Cash at bank and in hand

3,012,616

1,965,000

4,977,616

3,012,616

1,965,000

4,977,616

Debt

Debts falling due within 1 year

(78,274

)

(4,702

)

(82,976

)

Debts falling due after 1 year

(734,982

)

122,004

(612,978

)

(813,256

)

117,302

(695,954

)

Total

2,199,360

2,082,302

4,281,662