Registered number:
FOR THE YEAR ENDED 31 OCTOBER 2023
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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 2023
The directors present the strategic report for the period ended 31 October 2023.
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 54 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.
Hobs Reprographics was established in Liverpool over 54 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 2023
The group once again experienced a healthy growth in revenues, increasing by £0.58m (4.1%) in the year to £14.86m, with new opportunities being exploited in the FM space contributing £0.3m revenue in the year.
Operating loss for the year was £0.46m, including £0.1m of one-off exceptional costs, against an operating loss of £0.97m in 2022. The revenue growth in the year has been contributed entirely by Hobs Reprographics, which is in the process of working back to pre-covid revenue levels whilst making significant reductions in its cost base. 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 2024, resulting in a ratio of current assets to current liabilities for the group of 0.78 at October 2023, down from 0.87 at October 2022. As at 31st October 2023 the group had cash reserves of £0.21m. The above are considered to be KPI's of the Group. The group has continued its drive to bring it back to profitability by reducing its cost base where prudent and allowable, and is now positioned well to take advantage of new opportunities as they arise. The directors monitor performance through the production of a 2-year business plan, supported by the production of detailed annual budgets and forecasts and the comparison of actual performance against these budgets. Having reviewed these plans the directors are confident that the company will continue to trade as a going-concern. 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 four years.
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HOBS GROUP LIMITED
GROUP STRATEGIC REPORT (CONTINUED)
FOR THE YEAR ENDED 31 OCTOBER 2023
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 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. Hobs is also partnered with Print Releaf, whereby Hobs customers can offset their carbon footprint by measuring, offsetting, and verifying the successful reforestation of their paper consumption. This year the group has also started to measure its carbon footprint in order for this to provide a marker against which reduction in energy usage can be measured. 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 £9,000 for Alzheimers UK.
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HOBS GROUP LIMITED
GROUP STRATEGIC REPORT (CONTINUED)
FOR THE YEAR ENDED 31 OCTOBER 2023
The principal risks and uncertainty facing the Group's business are as follows:
• The impact of the wider economy and specifically the AEC sector. The stabilisation of interest rates in 2024 has helped steady the housing market and therefore some of the largest customers of Hobs. However there continues to be some high-profile business failures in the construction sector. It is anticipated that the new government’s commitment to house-building will provide a boost to this important sector. • Price risk – With inflation now back under control, this risk is reducing. Hobs implemented two price increases in September 2023 and June 2024 to combat the cost pressures during the high inflation experienced in 2023 and early 2024. • Technology – With print technology constantly evolving, the directors invest in new machinery when needed and within the financial constraints of the business. • 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. Hobs has taken a variety of measures to improve its network resilience over the past 18 months and now has Cyber Insurance in place. • 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 28 November 2024 and signed on its behalf.
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HOBS GROUP LIMITED
DIRECTORS' REPORT
FOR THE YEAR ENDED 31 OCTOBER 2023
The directors present their report and the financial statements for the year ended 31 October 2023.
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.
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;
∙state whether applicable UK Accounting Standards have been followed, subject to any material departures disclosed and explained in the financial statements;
∙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 £678,613 (2022 - loss £2,103,390).
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 2023
The strategy set in 2023 will continue with positive results already surfacing. Our leadership team is committed to continue with developing environmentally friendly solutions that our clients can take advantage of for presentations and exhibitions. Print Relief world reforestation will further support our efforts and assist in offsetting the carbon footprint of our clients.
Our development of new channels of business is continuing through our management team. Previously unexplored sectors have been targeted with engagement campaigns and are showing encouraging results. We will continue to probe in these sectors and seek to establish our brand and reputation for ongoing sales developments. FM and digital post rooms will continue to grow alongside hybrid models of service delivery. Web2print is uncovering numerous opportunities to allow our clients to procure on a more strategic basis and streamline their own supply chains whilst gaining an improved service through a tighter partnership approach. Our own supply chain which has seen some turbulent times due to high inflation and cross border shipping pressures has now settled and we are seeing new innovative products which are allowing us to enhance our own work through either environmentally sensitive medias or utilising new technologies to speed up processes.
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.
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 2023, 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 due to the difficult trading circumstances over the past few years, there are scenarios where the Group may exceed its banking facilities within the next 12 months. 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 2023
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HOBS GROUP LIMITED
REGISTERED NUMBER: 12712449
CONSOLIDATED STATEMENT OF FINANCIAL POSITION
AS AT 31 OCTOBER 2023
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HOBS GROUP LIMITED
REGISTERED NUMBER: 12712449
CONSOLIDATED STATEMENT OF FINANCIAL POSITION (CONTINUED)
AS AT 31 OCTOBER 2023
The financial statements were approved and authorised for issue by the board and were signed on its behalf on 28 November 2024.
The notes on pages 21 to 41 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 2023
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HOBS GROUP LIMITED
REGISTERED NUMBER: 12712449
COMPANY STATEMENT OF FINANCIAL POSITION (CONTINUED)
AS AT 31 OCTOBER 2023
The financial statements were approved and authorised for issue by the board and were signed on its behalf on
The notes on pages 21 to 41 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 2023
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HOBS GROUP LIMITED
COMPANY STATEMENT OF CHANGES IN EQUITY
FOR THE YEAR ENDED 31 OCTOBER 2023
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HOBS GROUP LIMITED
CONSOLIDATED STATEMENT OF CASH FLOWS
FOR THE YEAR ENDED 31 OCTOBER 2023
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HOBS GROUP LIMITED
CONSOLIDATED STATEMENT OF CASH FLOWS (CONTINUED)
FOR THE YEAR ENDED 31 OCTOBER 2023
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HOBS GROUP LIMITED
CONSOLIDATED ANALYSIS OF NET DEBT
FOR THE YEAR ENDED 31 OCTOBER 2023
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HOBS GROUP LIMITED
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 OCTOBER 2023
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 2023
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 November 2025.
During 2023 the group continued to build on its revenue streams, increasing turnover by 4.1% and reducing operating losses by over 50%, and in 2024 has returned to profit on this measure, with a draft operating profit of £170k. This has been driven by a combination of increased sales (5% increase in 2024) and significant payroll reductions, which are now fully baked in to the cost base. The group’s plans for the next 2 years will help further grow revenue without requiring a commensurate increase in costs, which it is anticipated will move the group further into a profit-making position. In terms of cash flow, the group has had to weather a number of exceptional legacy costs, as well as dilapidations settlements whilst the directors continue to reduce the cost of the lease estate. This has created a drag on cash which will continue for some months as the lease estate is rationalised further. The Group projections incorporate significant assumptions in relation to deferral of various payments in December 2024 to February 2025 together with several cost saving measures to ensure that the Group remains within its banking facilities during this period. Under these assumptions, the projections provide for sufficient liquidity for the Group to continue as a going concern, however the directors recognise that, whilst they are confident that the deferral of various payments will be agreed, the cost saving measures will be implemented and they expect the trading performance to improve as per the financial projections, there is 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 December 2025 will now be deferred until August 2026 to allow the group to rebuild its cash reserves. We are also in the process of agreeing with all loan note holders that no loan note interest will be paid for the foreseeable future and the cashflow projections do not include any loan note interest payments.
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 2023
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.
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HOBS GROUP LIMITED
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 OCTOBER 2023
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.
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HOBS GROUP LIMITED
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 OCTOBER 2023
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:
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.
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HOBS GROUP LIMITED
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 OCTOBER 2023
2.Accounting policies (continued)
Provisions are measured as the best estimate of the amount required to settle the obligation, taking into account the related risks and uncertainties.
Page 26
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HOBS GROUP LIMITED
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 OCTOBER 2023
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.
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 debtors, cash and bank balances, are initially measured at their transaction price (adjusted for transaction costs except in the initial measurement of financial assets that are subsequently measured at fair value through profit and loss) 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 debtors due with the operating cycle fall into this category of financial instruments.
Impairment of financial assets
At the end of each reporting period financial assets measured at amortised cost are assessed for objective evidence of impairment. If an asset is impaired the impairment loss is the difference between the carrying amount and the present value of the estimated cash flows discounted at the asset’s original effective interest rate. The impairment loss is recognised in profit or loss.
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
Financial liabilities and equity instruments are classified according to the substance of the contractual arrangements entered into. An equity instrument is 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 creditors, bank loans, other loans and loans due to fellow group companies are initially measured at their transaction price (adjusting for transaction costs except in the initial measurement of financial liabilities that are subsequently measured at fair value through profit and loss). When this constitutes a financing transaction, whereby the debt instrument is measured at the present value of the future payments discounted at
Page 27
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HOBS GROUP LIMITED
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 OCTOBER 2023
2.Accounting policies (continued)
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 creditors are obligations to pay for goods and services that have been acquired in the ordinary course of business from suppliers. Trade creditors are classified as current liabilities if the payment is due within one year. If not, they represent non-current liabilities. Trade creditors 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.
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 28
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HOBS GROUP LIMITED
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 OCTOBER 2023
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.
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HOBS GROUP LIMITED
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 OCTOBER 2023
The whole of the turnover is attributable to the principal activities of the group.
Analysis of turnover by country of destination:
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HOBS GROUP LIMITED
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 OCTOBER 2023
Page 31
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HOBS GROUP LIMITED
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 OCTOBER 2023
Page 32
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HOBS GROUP LIMITED
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 OCTOBER 2023
11.Taxation (continued)
Tax losses amounting to £6,367,136 are carried forward and are available to reduce the tax liabilities arising from future trading profits.
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HOBS GROUP LIMITED
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 OCTOBER 2023
Page 34
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HOBS GROUP LIMITED
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 OCTOBER 2023
Page 35
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HOBS GROUP LIMITED
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 OCTOBER 2023
Page 36
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HOBS GROUP LIMITED
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 OCTOBER 2023
Page 37
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HOBS GROUP LIMITED
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 OCTOBER 2023
Obligations under finance lease and hire purchase contracts are secured on the assets concerned.
Page 38
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HOBS GROUP LIMITED
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 OCTOBER 2023
Page 39
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HOBS GROUP LIMITED
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 OCTOBER 2023
Share premium account
Profit and loss account
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 £45,115 (2022 - £24,097) were payable to the fund at the reporting date and are included in creditors.
27.Other financial commitments
The Company is party to a cross guarantee relating to amounts owed to IGF Business Credit Limited. The amount outstanding at the year end was £690,835 (2022 - £690,835 due to HSBC UK Bank PLC).
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HOBS GROUP LIMITED
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 OCTOBER 2023
There is considered to be no controlling party as no one shareholder holds in excess of 50% of the issued share capital.
Page 41
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