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 Year Ended 30 November 2021

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

9

Consolidated Other Comprehensive Income

10

Consolidated Statement of Financial Position

11

Company Statement of Financial Position

12

Consolidated Statement of Changes in Equity

13

Company Statement of Changes in Equity

14

Consolidated Statement of Cash Flows

15

Notes to the Consolidated Statement of Cash Flows

16

Notes to the Consolidated Financial Statements

17

DIRECTORS:

C D Brown

R O Paige

P Fryer

M Greaves

SECRETARY:

M Greaves

REGISTERED OFFICE:

Unit 4

6 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 year ended 30 November 2021.

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 12 months period after taxation is £1,476,572 (2020 - 18 Month period: £263,870). The directors do not propose a final dividend.

12 Months

18 Months

2021

2020

Change

£'000

£'000

%

Turnover

5,756

12,268

Operating profit

1,497

358

Post tax profit for the financial year/period

1,477

264

Shareholder's equity

7,619

6,151

+24%

Net current assets

6,403

7,713

-17%

Net cash

4,284

4,978

-14%

Debt

613

696

-12%

Pension liability

0

3,148

-100%

In line with the directors' November 2020 Strategic Report, the group's turnover and operational activities continued to be significantly impacted by restrictions associated with the COVID-19 pandemic during the early part of the financial year. Although the group's UK activities started to improve during the second half of the financial year, the challenges associated with international travel continued to significantly impact the group's export business for the full year.

In anticipation of a reduction in turnover, the Group had implemented and bore the cost of a restructuring of its operations in the previous financial period, aimed at aligning the future cost base to anticipated levels of business. These past actions positively impacted upon the results for the year to November 2021 and will continue to benefit the group in future trading periods.

Despite reduced sales activity, the group was able to benefit from the support offered by the UK Government Coronavirus Job Retention Scheme, and this greatly assisted the retention of skills and experience within the business.

During the year the group completed the project of consolidating its administration and head office activities onto a single site and in addition, completed the sale of a freehold property. The profit from the sale of the property has significantly improved cash and operating profits for the year. Although this was a one-off profit, the resulting benefits of a reduced cost base and the improved operational efficiencies of a single site, will continue to positively impact upon the group's performance in future years.

In common with many UK businesses, the group has a Defined Benefit Pension Scheme and for a number of years the Board has worked with the scheme advisors to ensure that the group continues to be in a position to satisfy its statutory obligations to the scheme and its members. During the year, as a result of positive actuarial movements and cash contribution payments from the group into the scheme, totalling £3.1m (2020 - £0.2m), the group has been able to generate an accounting surplus in the scheme, such that the liability included on the Group's Consolidated Statement of Financial Position has been reduced to £0, (2020 £3.15m). The reduction in the value of this liability significantly reduces the groups risk to external factors, such as, financial market variability and bond yields, which could have a considerable negative impact on the net assets of the group.

Heading into 2022, the Board continue to be mindful of significant upward pressure on input costs, particularly those associated with labour, energy and 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

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 and cost 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 the principal 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

7 March 2022

The directors present their report with the financial statements of the company and the group for the year ended 30 November 2021.

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

The total distribution of dividends during the year was £87,000 (2020:£nil).

DIRECTORS

The directors shown below have held office during the whole of the period from 1 December 2020 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

7 March 2022

Opinion

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

In auditing the financial statements, we have concluded that the directors' use of the going concern basis of accounting in the preparation of the financial statements is appropriate.

Based on the work we have performed, we have not identified any material uncertainties relating to events or conditions that, individually or collectively, may cast significant doubt on the group's and the parent company's ability to continue as a going concern for a period of at least twelve months from when the financial statements are authorised for issue.

Our responsibilities and the responsibilities of the directors with respect to going concern are described in the relevant sections of this report.

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 this gives rise to a material misstatement in the financial statements themselves. 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 an auditor’s report that includes the auditor’s opinion. Reasonable assurance is a high level of assurance, but is not a guarantee that an audit conducted in accordance with International Standards on Auditing (UK) (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.

The extent to which our procedures are capable of detecting irregularities , including fraud is set out below:

Our approach to identifying and assessing the risks of material misstatement in respect of irregularities, including fraud and non-compliance with laws and regulations, was as follows:

- the engagement partner ensured that the engagement team collectively had the appropriate competence, capabilities and skills to identify or recognise non-compliance with applicable laws and regulations;

- we identified the laws and regulations applicable to the group and company through discussions with the directors and other management, and from our commercial knowledge and experience of the industry;

- we focused on specific laws and regulations which we considered may have a direct material effect on the financial statements or the operations of the group and company, including the Companies Act 2006, taxation legislation and data protection, employment and health and safety legislation;

- we assessed the extent of compliance with the laws and regulations identified above through making enquiries of management and inspecting legal correspondence; and

- identified laws and regulations were communicated within the audit team regularly and the team remained alert to instances of non-compliance throughout the audit.

- we assessed the susceptibility of the company’s financial statements to material misstatement, including obtaining an understanding of how fraud might occur, by:

- making enquiries of management as to where they considered there was susceptibility to fraud, their knowledge of actual, suspected and alleged fraud; and

- considering the internal controls in place to mitigate risks of fraud and non-compliance with laws and regulations.

To address the risk of fraud through management bias and override of controls, we:

- performed analytical procedures to identify any unusual or unexpected relationships;

- tested journal entries to identify unusual transactions;

- assessed whether judgements and assumptions made in determining the accounting estimates were indicative of potential bias; and

- investigated the rationale behind significant or unusual transactions.

In response to the risk of irregularities and non-compliance with laws and regulations, we designed procedures which included, but were not limited to:

- agreeing financial statement disclosures to underlying supporting documentation;

- reading the minutes of meetings of those charged with governance;

- enquiring of management as to actual and potential litigation and claims; and

- reviewing correspondence with HMRC, and relevant regulators.

There are inherent limitations in our audit procedures described above. The more removed that laws and regulations are from financial transactions, the less likely it is that we would become aware of non-compliance. Auditing standards also limit the audit procedures required to identify non-compliance with laws and regulations to enquiry of the directors and other management and the inspection of regulatory and legal correspondence, if any.

Material misstatements that arise due to fraud can be harder to detect than those that arise from error as they may involve deliberate concealment or collusion.

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

7 March 2022

REVENUE

3

5,756,294

12,267,590

Cost of sales

(3,657,869

)

(8,772,369

)

GROSS PROFIT

2,098,425

3,495,221

Administrative expenses

(637,535

)

(3,376,072

)

1,460,890

119,149

Other operating income

35,867

238,726

OPERATING PROFIT

6

1,496,757

357,875

Interest receivable and similar income

135

2,766

1,496,892

360,641

Interest payable and similar expenses

7

(26,032

)

(44,608

)

PROFIT BEFORE TAXATION

1,470,860

316,033

Tax on profit

8

5,712

(52,163

)

PROFIT FOR THE FINANCIAL YEAR

1,476,572

263,870

Profit attributable to:

Owners of the parent

1,476,572

263,870

PROFIT FOR THE YEAR

1,476,572

263,870

OTHER COMPREHENSIVE INCOME/(LOSS)

Actuarial gain/(loss) on pension scheme

2,240,510

(249,391

)

Irrecoverable surplus on pension scheme

(1,424,000

)

-

Income tax relating to components of other comprehensive income/(loss)

(738,340

)

35,340

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

78,170

(214,051

)

TOTAL COMPREHENSIVE INCOME FOR THE YEAR

1,554,742

49,819

Total comprehensive income attributable to:

Owners of the parent

1,554,742

49,819

FIXED ASSETS

Intangible assets

11

-

-

Property, plant and equipment

12

1,756,877

2,218,545

Investments

13

-

-

1,756,877

2,218,545

CURRENT ASSETS

Inventories

14

1,995,872

2,436,484

Debtors

15

978,079

1,069,953

Cash at bank and in hand

4,284,023

4,977,616

7,257,974

8,484,053

CREDITORS

Amounts falling due within one year

16

(854,889

)

(771,138

)

NET CURRENT ASSETS

6,403,085

7,712,915

TOTAL ASSETS LESS CURRENT LIABILITIES

8,159,962

9,931,460

CREDITORS

Amounts falling due after more than one year

17

(527,110

)

(612,978

)

PROVISIONS FOR LIABILITIES

20

(14,215

)

(19,927

)

PENSION LIABILITY

23

-

(3,147,660

)

NET ASSETS

7,618,637

6,150,895

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

7,517,637

6,049,895

SHAREHOLDERS' FUNDS

7,618,637

6,150,895

The financial statements were approved by the Board of Directors and authorised for issue on 7 March 2022 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

1,608,285

2,018,750

Investments

13

382,261

382,261

1,990,546

2,401,011

CURRENT ASSETS

Debtors

15

163,432

764,592

Cash at bank

2,269,597

2,747,916

2,433,029

3,512,508

CREDITORS

Amounts falling due within one year

16

(181,134

)

(208,861

)

NET CURRENT ASSETS

2,251,895

3,303,647

TOTAL ASSETS LESS CURRENT LIABILITIES

4,242,441

5,704,658

CREDITORS

Amounts falling due after more than one year

17

(527,110

)

(612,978

)

PENSION LIABILITY

23

-

(3,147,660

)

NET ASSETS

3,715,331

1,944,020

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

3,614,331

1,843,020

SHAREHOLDERS' FUNDS

3,715,331

1,944,020

Company's profit for the financial year

1,780,141

198,208

The financial statements were approved by the Board of Directors and authorised for issue on 7 March 2022 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 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

Changes in equity

Dividends

-

(87,000

)

-

-

(87,000

)

Total comprehensive income

-

1,554,742

-

-

1,554,742

Balance at 30 November 2021

43,500

7,517,637

32,500

25,000

7,618,637

Called up

Capital

share

Retained

redemption

Other

Total

capital

earnings

reserve

reserves

equity

£

£

£

£

£

Balance at 1 June 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

Changes in equity

Dividends

-

(87,000

)

-

-

(87,000

)

Total comprehensive income

-

1,858,311

-

-

1,858,311

Balance at 30 November 2021

43,500

3,614,331

32,500

25,000

3,715,331

Cash flows from operating activities

Cash generated from operations

1

1,105,793

2,469,327

Interest paid

(26,032

)

(44,608

)

Tax paid

(61,872

)

(136,663

)

Net cash from operating activities

1,017,889

2,288,056

Cash flows from investing activities

Purchase of tangible fixed assets

-

(35,430

)

Sale of tangible fixed assets

1,573,395

8,301

Interest received

135

2,766

Net cash from investing activities

1,573,530

(24,363

)

Cash flows from financing activities

Loan repayments in year

(82,522

)

(117,302

)

Defined benefit pension contributions

(3,115,490

)

(181,391

)

Equity dividends paid

(87,000

)

-

Net cash from financing activities

(3,285,012

)

(298,693

)

(Decrease)/increase in cash and cash equivalents

(693,593

)

1,965,000

Cash and cash equivalents at beginning of year

2

4,977,616

3,012,616

Cash and cash equivalents at end of year

2

4,284,023

4,977,616

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

Period

1.6.19

Year ended

to

30.11.21

30.11.20

£

£

Profit before taxation

1,470,860

316,033

Depreciation charges

65,540

120,159

(Profit)/loss on disposal of fixed assets

(1,177,267

)

8,632

Pension scheme finance costs

46,000

118,000

Finance costs

26,032

44,608

Finance income

(135

)

(2,766

)

431,030

604,666

Decrease in inventories

440,612

649,450

Decrease in trade and other debtors

91,874

1,981,231

Increase/(decrease) in trade and other creditors

142,277

(766,020

)

Cash generated from operations

1,105,793

2,469,327

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 30 November 2021

30.11.21

1.12.20

£

£

Cash and cash equivalents

4,284,023

4,977,616

Period ended 30 November 2020

30.11.20

1.6.19

£

£

Cash and cash equivalents

4,977,616

3,012,616

3.	ANALYSIS OF CHANGES IN NET FUNDS

At 1.12.20

Cash flow

At 30.11.21

£

£

£

Net cash

Cash at bank and in hand

4,977,616

(693,593

)

4,284,023

4,977,616

(693,593

)

4,284,023

Debt

Debts falling due within 1 year

(82,976

)

(3,346

)

(86,322

)

Debts falling due after 1 year

(612,978

)

85,868

(527,110

)

(695,954

)

82,522

(613,432

)

Total

4,281,662

(611,071

)

3,670,591