Registered number:
FOR THE YEAR ENDED 31 OCTOBER 2022
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HOBS GROUP LIMITED
COMPANY INFORMATION
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HOBS GROUP LIMITED
CONTENTS
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HOBS GROUP LIMITED
GROUP STRATEGIC REPORT
FOR THE YEAR ENDED 31 OCTOBER 2022
The directors present the strategic report for the period ended 31 October 2022.
Hobs Group Limited (‘Hobs’) provides a fully integrated print and document management service to support customers in designing, producing, sharing, storing and retrieving their documents and data.
Hobs has been a leading name in its sector for the last 52 years and over time has developed deep and loyal relationships with its customers. From supporting some of the UK’s largest companies in the full range of document management services, Hobs has become an invaluable and seamless extension of its clients’ businesses. Throughout its history, Hobs has focused on providing the highest level of service, on-time, every time. This consistency of service has ensured a high level of customer loyalty in the Company’s key market sectors, with the customers of Hobs finding the services exceptional value for money. Hobs currently operates from two trading divisions: • Hobs Reprographics - a national chain of 20 business centres providing customers with a 24/7 service for all copying, scanning and bespoke reprographics needs. • Hobs 3D - provides in the areas of 3D printing, model making and prototyping as well as the very latest in 3D visualisation with proprietary VR solutions. Operating from its site in the London Olympic Park, Hobs has invested significantly in this division to enable it to meet anticipated demand in the growing market.
The Company was established in Liverpool over 52 years ago and initially focused on providing construction drawing printing services to companies in the Architecture, Engineering and Construction (‘AEC’) sector. Whilst the AEC sector remains Hobs’ largest sector its current multi-layered, technology-driven service solution has evolved significantly from the company’s original offering. The company was proud to be awarded a Royal Warrant in 2003.
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HOBS GROUP LIMITED
GROUP STRATEGIC REPORT (CONTINUED)
FOR THE YEAR ENDED 31 OCTOBER 2022
With Covid lockdowns eventually finishing in early 2022, the Group was able to significantly increase its revenues, resulting in a £2.6m (22.6%) year-on-year increase in Group sales to £14.3m for the year. This was reflected in all operating regions of the business.
Although the accounts show a £0.08m increase in the operating loss from 2021, once the additional £0.9m of government covid support that the Group received in 2021 is removed, operating losses were reduced by c£0.9m year-on-year, on a like-for-like basis. The above results are reflective of both trading divisions in terms of revenue and profit growth into the second half of 2022 and beyond. Hobs 3D still requires the support of Hobs Group whilst it makes the transition from loss-making to profit-making. Working capital has been managed very tightly during the year and into 2023, resulting in a ratio of current assets to current liabilities for the Group of 0.87 at October 2022, down from 1.24 at October 2021. The final covid-related debt was repaid to HMRC in October 2022. As at 31st October 2022 the Group had cash reserves of £0.3m. The above are considered to be KPI's of the Group. Having emerged successfully from the pandemic, there is still a requirement to closely manage cash and working capital while the business invests for a more profitable and stable future but, given the varied nature of industries we sell to, and with continued focus on credit risk and cost control, the Board is confident of the going concern status of the Group, and therefore have prepared the financial statements on a going concern basis. The directors monitor performance through the production of a 3-year business plan, supported by the production of detailed annual budgets and forecasts that cover all trading divisions in the Group and the comparison of actual performance against these budgets. The Group’s business activities, together with the factors likely to affect its future development, performance and position are set out in this report. The directors would like to go on record to express their sincere thanks to all staff within the group for their continued support through what has been a very difficult period over the last three years.
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HOBS GROUP LIMITED
GROUP STRATEGIC REPORT (CONTINUED)
FOR THE YEAR ENDED 31 OCTOBER 2022
ISO 9001
The business is now fully accredited under ISO9001 and has its own Quality Management System to ensure continued compliance with the standard. Health & Safety The business has also implemented its own Health & Safety Management System with a dedicated director responsible for this area. Corporate social responsibility Environment Hobs has always been conscious of the impact we have on the local community, the environment and our sustainability. We are committed to reducing our impact on the environment. The business is fully accredited under ISO14001, and this forms part of the Quality Management System mentioned above. Through our network of suppliers, we continue to use FSC paper as standard, and for bespoke jobs wherever possible. We print onto various recycled papers and we use various inks including vegetable-based inks that have a low impact on the environment. We continually review our production processes to minimise levels of waste, reuse or recycle materials and product whenever possible, and only dispose of waste via licensed waste contractors. During the year Hobs partnered with Print Releaf, whereby Hobs customers can offset their carbon footprint by measuring, offsetting, and verifying the successful reforestation of their paper consumption. Charities As a business, Hobs sponsors a number of charity fundraising events each year, either from individual branches or from Head Office. In May 2023 a team from Hobs completed the Three Peaks Challenge to climb Ben Nevis, Scafell Pike, and Snowdon in 24 hours, which raised in excess of £6,000 for Alzheimers UK.
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HOBS GROUP LIMITED
GROUP STRATEGIC REPORT (CONTINUED)
FOR THE YEAR ENDED 31 OCTOBER 2022
The principal risks and uncertainty facing the Group's business are as follows:
• The impact of the wider economy and specifically the AEC sector. In the short-term the steep rise in interest rates poses a threat to the property market and therefore to the number of new housebuilding and infrastructure projects. • Price risk is now a reality with inflation proving difficult to bring under control in the UK. The directors took the decision in April 2022 to implement a price increase to Hobs customers having absorbed all supplier price increases for the previous two years. A further price increase was implemented in April 2023. • Technology – The emergence of 3D Printing and associated services are having a significant impact on the AEC sector’s pre-construction processes. Consequently, Hobs Group has invested large sums in this new technology to secure its market share in the sector, and also to take advantage of new sectors opening up in the 3D field. The directors intend to ensure that Hobs Group remains at the forefront of this market by continuing its investment in new technology. • Competition – Hobs Group is now the largest independent national supplier of printing and reprographics services. However, the directors are aware of market competition at both national and local level, and constantly strive to capture new business as well as retain existing customers by close scrutiny of management information data and the setting of targeted sales incentives. • Cyber and Internet Security – As businesses become more reliant on technology the risks increase. This year saw us invest in various steps to make our business more resilient. • GDPR – the regulation effective in May 2018 further crystallises the risk in information security. The company obtained ISO27001 accreditation in 2021. The directors carry out a regular review of the risk environment in which the company operates. The board believes that the company has adequate procedures and processes in place to ensure these risks are monitored and managed appropriately.
This report was approved by the board on 27 October 2023 and signed on its behalf.
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HOBS GROUP LIMITED
DIRECTORS' REPORT
FOR THE YEAR ENDED 31 OCTOBER 2022
The directors present their report and the financial statements for the year ended 31 October 2022.
The directors are responsible for preparing the Group strategic report, the Directors' report and the consolidated 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 applicable law and United Kingdom Accounting Standards (United Kingdom Generally Accepted Accounting Practice), 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 for the Group's financial statements and then apply them consistently;
∙make judgments 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 Group will continue in business.
The directors are responsible for keeping adequate accounting records that are sufficient to show and explain the Company's transactions and disclose with reasonable accuracy at any time the financial position of the Company and the Group and to 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.
The loss for the year, after taxation, amounted to £2,103,390 (2021 - loss £1,163,493).
No ordinary dividends were paid. The directors do not recommend payment of a final dividend.
The directors who served during the year were:
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HOBS GROUP LIMITED
DIRECTORS' REPORT (CONTINUED)
FOR THE YEAR ENDED 31 OCTOBER 2022
As mentioned in the Strategic Report above, the company is now experiencing a post-Covid recovery, although it is gradual one, and caution is still observed due to the head-winds of inflation and supply chain issues currently being experienced in the wider economy. The business forecasts have been prepared on this basis, and the directors continue to constantly monitor trading levels.
The company continues to work through to its plan of developing a model that provides new and developed sales channels of creative, print, managed services and consultancy. Further investment and time have gone into developing a nationwide offering in our Digital business where enhancement provides added value to the clients in bringing additional and chargeable special enhancements to their print or digital files. We also push on in our development of our hub-and-spoke model which now incorporates a Visual Communications element. This will provide the business with both increased productivity and capacity to challenge this growth sector in print. Our commitment to the environment continues to be the focus of the leadership team that has deployed the already successful Print Releaf world reforestation scheme, which has seen Hobs be responsible for planting of 7,000 trees in our efforts to assist our clients in their carbon offset. Further development will go into our online offerings bringing Web2Print functionality to the front end of our website, offering quick and real-time quoting and further choices to those who wish to procure on the web. The next year will also see Hobs grow its market share in managing digital post rooms alongside internal print rooms, providing market leading solutions that are scalable to our clients in this area, and which has already provided value within our strategy. 3D continues to recover from the downturn of the past three years with growth in 3D Printing and model making both from the property sector and from a new art sector. Visualisation is also benefitting from the property sector in use of interactive touchscreens within sales and marketing suites. Further growth in visualisation is expected in the next year.
There have been no significant events affecting the Group since the year end.
The auditors, Langtons Professional Services Limited, will be proposed for reappointment in accordance with section 485 of the Companies Act 2006.
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HOBS GROUP LIMITED
DIRECTORS' REPORT (CONTINUED)
FOR THE YEAR ENDED 31 OCTOBER 2022
This report was approved by the board on
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HOBS GROUP LIMITED
INDEPENDENT AUDITORS' REPORT TO THE MEMBERS OF HOBS GROUP LIMITED
We have audited the financial statements of Hobs Group Limited (the 'parent Company') and its subsidiaries (the 'Group') for the year ended 31 October 2022, which comprise the Consolidated statement of comprehensive income, the Consolidated Statement of Financial Position, the Company Statement of Financial Position, the Consolidated Statement of Cash Flows, the Consolidated Statement of Changes in Equity, the Company Statement of Changes in Equity and the related notes, 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).
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 United Kingdom, including the Financial Reporting Council'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.
We draw attention to note 2.3 in the financial statements, which indicates that should the current difficult trading circumstances continue, there are scenarios where the current sales projections may not be achieved. As stated in note 2.3, these events or conditions, along with the other matters as set forth in note 2.3, indicate that a material uncertainty exists that may cast significant doubt on the Group's or the parent Company's ability to continue as a going concern. Our opinion is not modified in respect of this matter.
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. Our evaluation of the directors' assessment of the Group's ability to continue to adopt the going concern basis of accounting included a detailed review of current trading results and projections prepared by the directors.
Our responsibilities and the responsibilities of the directors with respect to going concern are described in the relevant sections of this report.
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HOBS GROUP LIMITED
INDEPENDENT AUDITORS' REPORT TO THE MEMBERS OF HOBS GROUP LIMITED (CONTINUED)
The other information comprises the information included in the Annual Report other than the financial statements and our Auditors' report thereon. The directors are responsible for the other information contained within the Annual Report. 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. 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 course of 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.
In our opinion, based on the work undertaken in the course of the audit:
∙the information given in the Group strategic report and the Directors' report for the financial year for which the financial statements are prepared is consistent with the financial statements; and
∙the Group strategic report and the Directors' report have been prepared in accordance with applicable legal requirements.
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 Directors' report.
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HOBS GROUP LIMITED
INDEPENDENT AUDITORS' REPORT TO THE MEMBERS OF HOBS GROUP LIMITED (CONTINUED)
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 Auditors' report 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 Group financial statements.
Irregularities, including fraud, are instances of non-compliance with laws and regulations. We design procedures in line with our responsibilities, outlined above, to detect material misstatements in respect of irregularities, including fraud. The extent to which our procedures are capable of detecting irregularities, including fraud is detailed below:
The objectives of our audit, in respect to fraud, are: • to identify and assess the risks of material misstatement of the financial statements due to fraud; • to obtain sufficient appropriate audit evidence regarding the assessed risks of material misstatement due to fraud, through designing and implementing appropriate responses; and • to respond appropriately to fraud or suspected fraud identified during the audit. However, the primary responsibility for the prevention and detection of fraud rests with both those charged with governance of the entity and management. Our approach was as follows: • We obtained an understanding of the legal and regulatory frameworks that are applicable to the Company and determined that the most significant are those that relate to the reporting framework (FRS 102 and the Companies Act 2006), the relevant tax compliance regulations in the UK and the EU General Data Protection Regulation (GDPR). • We understood how the Company is complying with those frameworks by making enquiries of management. Through consideration of the results of our audit procedures we were able to either corroborate or provide contrary evidence which was then followed up. • Based on our understanding we designed our audit procedures to identify non-compliance with laws and regulations. Our procedures involved: enquiries of management; and journal entry testing, with a focus on manual consolidation journals and journals indicating large or unusual transactions based on our understanding of the business. • We assessed the susceptibility of the Company’s financial statements to material misstatement, including how fraud might occur by meeting with management to understand where it considered there was susceptibility to fraud. We also considered performance targets and their propensity to influence efforts made by management to manage revenue and earnings. Where the risk was considered to be higher, including areas impacting key performance indicators or management remuneration, we performed audit procedures to address each identified fraud risk or other risk of material misstatement. These procedures included those on revenue recognition detailed above, the assessment of items identified by management as non-recurring and testing manual journals and were designed to provide reasonable assurance that the financial statements were free from material fraud or error.
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HOBS GROUP LIMITED
INDEPENDENT AUDITORS' REPORT TO THE MEMBERS OF HOBS GROUP LIMITED (CONTINUED)
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 Auditors' 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 an Auditors' report 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.
for and on behalf of
Chartered Accountants
Statutory Auditors
The Plaza
100 Old Hall Street
L3 9QJ
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HOBS GROUP LIMITED
CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME
FOR THE YEAR ENDED 31 OCTOBER 2022
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HOBS GROUP LIMITED
REGISTERED NUMBER: 12712449
CONSOLIDATED STATEMENT OF FINANCIAL POSITION
AS AT 31 OCTOBER 2022
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HOBS GROUP LIMITED
REGISTERED NUMBER: 12712449
CONSOLIDATED STATEMENT OF FINANCIAL POSITION (CONTINUED)
AS AT 31 OCTOBER 2022
The financial statements were approved and authorised for issue by the board and were signed on its behalf on 27 October 2023.
The notes on pages 22 to 43 form part of these financial statements.
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HOBS GROUP LIMITED
REGISTERED NUMBER: 12712449
COMPANY STATEMENT OF FINANCIAL POSITION
AS AT 31 OCTOBER 2022
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HOBS GROUP LIMITED
REGISTERED NUMBER: 12712449
COMPANY STATEMENT OF FINANCIAL POSITION (CONTINUED)
AS AT 31 OCTOBER 2022
The financial statements were approved and authorised for issue by the board and were signed on its behalf on
The notes on pages 22 to 43 form part of these financial statements.
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HOBS GROUP LIMITED
CONSOLIDATED STATEMENT OF CHANGES IN EQUITY
FOR THE YEAR ENDED 31 OCTOBER 2022
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HOBS GROUP LIMITED
COMPANY STATEMENT OF CHANGES IN EQUITY
FOR THE YEAR ENDED 31 OCTOBER 2022
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HOBS GROUP LIMITED
CONSOLIDATED STATEMENT OF CASH FLOWS
FOR THE YEAR ENDED 31 OCTOBER 2022
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HOBS GROUP LIMITED
CONSOLIDATED STATEMENT OF CASH FLOWS (CONTINUED)
FOR THE YEAR ENDED 31 OCTOBER 2022
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HOBS GROUP LIMITED
CONSOLIDATED ANALYSIS OF NET DEBT
FOR THE YEAR ENDED 31 OCTOBER 2022
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HOBS GROUP LIMITED
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 OCTOBER 2022
Hobs Group Limited ("the company") is a private limited company domiciled and incorporated in England and Wales. The registered office is Lower Ground Floor, 3 Temple Lane, Liverpool, L2 5BA.
The group consists of Hobs Group Limited and all of its subsidiaries. The company's and the group's principal activities and nature of its operations are disclosed in the Directors' Report.
2.Accounting policies
The financial statements have been prepared under the historical cost convention unless otherwise specified within these accounting policies and in accordance with Financial Reporting Standard 102, the Financial Reporting Standard applicable in the UK and the Republic of Ireland and the Companies Act 2006.
The preparation of financial statements in compliance with FRS 102 requires the use of certain critical accounting estimates. It also requires Group management to exercise judgment in applying the Group's accounting policies (see note 3).
The Company has taken advantage of the exemption allowed under section 408 of the Companies Act 2006 and has not presented its own Statement of comprehensive income in these financial statements.
The following principal accounting policies have been applied:
The consolidated financial statements present the results of the Company and its own subsidiaries ("the Group") as if they form a single entity. Intercompany transactions and balances between group companies are therefore eliminated in full.
The consolidated financial statements incorporate the results of business combinations using the purchase method. In the Statement of financial position, the acquiree's identifiable assets, liabilities and contingent liabilities are initially recognised at their fair values at the acquisition date. The results of acquired operations are included in the Consolidated statement of comprehensive income from the date on which control is obtained. They are deconsolidated from the date control ceases.
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HOBS GROUP LIMITED
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 OCTOBER 2022
2.Accounting policies (continued)
The financial statements have been prepared on the going-concern basis which assumes that the group will be able to continue to trade for at least 12 months from the date these accounts are signed. In assessing the future viability of the business, the directors have reviewed the forecasts for the period up to October 2023 and the projections for the following two years to October 2025.
Following the covid pandemic and its associated lockdowns the group has significantly grown its turnover in 2022, and the directors continue to reduce costs wherever possible, particularly in the group’s lease estate when the opportunity arises. The group’s plans for the next 3 years will help further grow revenue without requiring a commensurate increase in costs, which it is anticipated will move the group back into a profit-making position. The Group projections incorporate significant cost saving measures which are currently being implemented and include potential payments to be made under an onerous lease contract as noted in note 24. The projections provide for sufficient liquidity for the Group to continue as a going concern, and the directors have already started to execute plans to increase revenue in several areas of the business which should provide a significant proportion of the additional revenue forecast in the forthcoming 12-18 months. However the directors recognise that, should the current difficult trading circumstances continue, particularly in London, there are scenarios where the current sales projections may not be achieved. Under these circumstances there would be a material uncertainty as to the ability of the business to continue to operate as a going concern. It should be noted that it has been agreed with the group’s loan note holders that any redemptions due before October 2025 will now be deferred until 2026 to allow the group to rebuild its cash reserves.
Functional and presentation currency
Transactions and balances
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HOBS GROUP LIMITED
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 OCTOBER 2022
2.Accounting policies (continued)
Turnover is recognised at the fair value of the consideration received or receivable for goods and services provided in the normal course of business, and is shown net of VAT and other sales related taxes. The fair value of consideration takes into account trade discounts, settlement discounts and volume rebates.
Turnover is recognised in relation to separately identifiable components of a single transaction when necessary to reflect the substance of the arrangement and in relation to two or more linked transactions when necessary to understand the commercial effect. Revenue from the sale of goods and licences is recognised when the significant risks and rewards of ownership of the goods have passed to the buyer (usually on dispatch of the goods), the amount of revenue can be measured reliably, it is probable that the economic benefits associated with the transaction will flow to the entity and the costs incurred or to be incurred in respect of the transaction can be measured reliably. Revenue from provision of services is recognised straight line over the period to which the contract relates.
Page 24
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HOBS GROUP LIMITED
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 OCTOBER 2022
2.Accounting policies (continued)
Grants of a revenue nature are recognised in the Consolidated statement of comprehensive income in the same period as the related expenditure.
Page 25
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HOBS GROUP LIMITED
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 OCTOBER 2022
2.Accounting policies (continued)
All intangible assets are considered to have a finite useful life. If a reliable estimate of the useful life cannot be made, the useful life shall not exceed ten years.
The estimated useful lives range as follows:
Page 26
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HOBS GROUP LIMITED
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 OCTOBER 2022
2.Accounting policies (continued)
Depreciation is charged so as to allocate the cost of assets less their residual value over their estimated useful lives, using the straight-line method.
Depreciation is provided on the following basis:
The assets' residual values, useful lives and depreciation methods are reviewed, and adjusted prospectively if appropriate, or if there is an indication of a significant change since the last reporting date.
Gains and losses on disposals are determined by comparing the proceeds with the carrying amount and are recognised in profit or loss.
Page 27
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HOBS GROUP LIMITED
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 OCTOBER 2022
2.Accounting policies (continued)
Provisions are charged as an expense to profit or loss in the year that the Group becomes aware of the obligation, and are measured at the best estimate at the reporting date of the expenditure required to settle the obligation, taking into account relevant risks and uncertainties. When payments are eventually made, they are charged to the provision carried in the Statement of financial position.
Page 28
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HOBS GROUP LIMITED
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 OCTOBER 2022
2.Accounting policies (continued)
The Group has elected to apply the provisions of Section 11 “Basic Financial Instruments” of FRS 102 to all of its financial instruments.
The Group has elected to apply the recognition and measurement provisions of IFRS 9 Financial Instruments (as adopted by the UK Endorsement Board) with the disclosure requirements of Sections 11 and 12 and the other presentation requirements of FRS 102.
Financial instruments are recognised in the Group's Statement of financial position when the Group becomes party to the contractual provisions of the instrument.
Financial assets and liabilities are offset, with the net amounts presented in the financial statements, when there is a legally enforceable right to set off the recognised amounts and there is an intention to settle on a net basis or to realise the asset and settle the liability simultaneously.
Basic financial assets
Basic financial assets, which include trade and other receivables, cash and bank balances, are initially measured at their transaction price including transaction costs and are subsequently carried at their amortised cost using the effective interest method, less any provision for impairment, unless the arrangement constitutes a financing transaction, where the transaction is measured at the present value of the future receipts discounted at a market rate of interest.
Discounting is omitted where the effect of discounting is immaterial. The Group's cash and cash equivalents, trade and most other receivables due with the operating cycle fall into this category of financial instruments.
Other financial assets
Other financial assets, which includes investments in equity instruments which are not classified as subsidiaries, associates or joint ventures, are initially measured at fair value, which is normally the recognised transaction price. Such assets are subsequently measured at fair value with the changes in fair value being recognised in the profit or loss. Where other financial assets are not publicly traded, hence their fair value cannot be measured reliably, they are measured at cost less impairment.
Impairment of financial assets
Financial assets are assessed for indicators of impairment at each reporting date.
Financial assets are impaired when events, subsequent to their initial recognition, indicate the estimated future cash flows derived from the financial asset(s) have been adversely impacted. The impairment loss will be the difference between the current carrying amount and the present value of the future cash flows at the asset(s) original effective interest rate.
If there is a favourable change in relation to the events surrounding the impairment loss then the impairment can be reviewed for possible reversal. The reversal will not cause the current carrying amount to exceed the original carrying amount had the impairment not been recognised. The impairment reversal is recognised in the profit or loss.
Financial liabilities
Page 29
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HOBS GROUP LIMITED
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 OCTOBER 2022
2.Accounting policies (continued)
Financial liabilities and equity instruments are classified according to the substance of the contractual arrangements entered into. An equity instruments any contract that evidences a residual interest in the assets of the Group after the deduction of all its liabilities.
Basic financial liabilities, which include trade and other payables, bank loans, other loans and loans due to fellow group companies are initially measured at their transaction price after transaction costs. When this constitutes a financing transaction, whereby the debt instrument is measured at the present value of the future receipts discounted at a market rate of interest. Discounting is omitted where the effect of discounting is immaterial.
Debt instruments are subsequently carried at their amortised cost using the effective interest rate method.
Trade payables are obligations to pay for goods and services that have been acquired in the ordinary course of business from suppliers. Trade payables are classified as current liabilities if the payment is due within one year. If not, they represent non-current liabilities. Trade payables are initially recognised at their transaction price and subsequently are measured at amortised cost using the effective interest method. Discounting is omitted where the effect of discounting is immaterial.
Other financial instruments
Derivatives, including forward exchange contracts, futures contracts and interest rate swaps, are not classified as basic financial instruments. These are initially recognised at fair value on the date the derivative contract is entered into, with costs being charged to the profit or loss. They are subsequently measured at fair value with changes in the profit or loss.
Debt instruments that do not meet the conditions as set out in FRS 102 paragraph 11.9 are subsequently measured at fair value through the profit or loss. This recognition and measurement would also apply to financial instruments where the performance is evaluated on a fair value basis as with a documented risk management or investment strategy.
Derecognition of financial instruments
Derecognition of financial assets
Financial assets are derecognised when their contractual right to future cash flow expire, or are settled, or when the Group transfers the asset and substantially all the risks and rewards of ownership to another party. If significant risks and rewards of ownership are retained after the transfer to another party, then the Group will continue to recognise the value of the portion of the risks and rewards retained.
Derecognition of financial liabilities
Financial liabilities are derecognised when the Group's contractual obligations expire or are discharged or cancelled.
Page 30
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HOBS GROUP LIMITED
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 OCTOBER 2022
The estimates and underlying assumptions are reviewed on an ongoing basis. Revisions to accounting estimates are recognised in the period in which the estimate is revised where the revision affects only that period, or in the period of the revision and future periods where the revision affects both current and future periods. Critical judgements The following judgements (apart from those involving estimates) have had the most significant effect on amounts recognised in the financial statements. Categorisation of leases In categorising leases as finance leases or operating leases, management makes judgements as to whether significant risks or rewards of ownership have transferred to the group as a lessee. Key sources of estimation uncertainty The estimates and assumptions which have a significant risk of causing a material adjustment to the carrying amount of assets and liabilities are as follows. Valuation of intangible assets The recoverable amount of goodwill and other intangible assets is based on value in use which requires estimates in respect of the allocation of goodwill to cash generating units, the future cash flows and an appropriate discount rate. The key inputs to the value in use calculations are the discount rate and the future earnings growth; a change in these assumptions could impact on the level of goodwill recognised. Useful life of fixed assets In making decisions regarding the depreciation of fixed assets, management must estimate the useful life of said assets to the business. A change in the estimate would result in a change in the depreciation charged to profit or loss each year. Provisions Management must estimate at each reporting date the impact of dilapidations resulting from the occupation of leased properties.
Page 31
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HOBS GROUP LIMITED
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 OCTOBER 2022
The whole of the turnover is attributable to the principal activities of the group.
Analysis of turnover by country of destination:
Page 32
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HOBS GROUP LIMITED
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 OCTOBER 2022
Page 33
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HOBS GROUP LIMITED
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 OCTOBER 2022
Page 34
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HOBS GROUP LIMITED
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 OCTOBER 2022
Page 35
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HOBS GROUP LIMITED
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 OCTOBER 2022
12.Taxation (continued)
Tax losses amounting to £6,002,133 are carried forward and are available to reduce the tax liabilities arising from future trading profits.
Page 36
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HOBS GROUP LIMITED
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 OCTOBER 2022
Page 37
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HOBS GROUP LIMITED
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 OCTOBER 2022
Page 38
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HOBS GROUP LIMITED
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 OCTOBER 2022
Page 39
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HOBS GROUP LIMITED
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 OCTOBER 2022
Obligations under finance lease and hire purchase contracts are secured on the assets concerned.
Page 40
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HOBS GROUP LIMITED
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 OCTOBER 2022
Page 41
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HOBS GROUP LIMITED
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 OCTOBER 2022
Share premium account
Profit and loss account
Page 42
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HOBS GROUP LIMITED
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 OCTOBER 2022
The Group operates a defined contributions pension scheme. The assets of the scheme are held separately from those of the Group in an independently administered fund. The pension cost charge represents contributions payable by the Group to the fund. Contributions totalling £24,097 (2021 - £27,686) were payable to the fund at the reporting date and are included in creditors.
29.Other financial commitments
The Company is party to a cross guarantee relating to amounts owed to HSBC UK Bank PLC. The amount outstanding at the year end was £690,835 (2021 - £520,444).
There is considered to be no controlling party as no one shareholder holds in excess of 50% of the issued share capital.
Page 43
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