ALFA_COACHES_LIMITED - Accounts

The directors present the strategic report for the year ended 31 December 2017.

The principal activity of the company is the operation of a coach fleet across the UK and Europe. The Groups mission is to exceed customers’ expectations in providing a memorable, high quality holiday experience, characterised by professional standards of service and a warm and friendly welcome.

Alfa Coaches Limited is part of the Alfa Leisureplex Group which became majority employee owned in July 2015 and also includes Alfa Leisureplex Group Limited, Alfa Travel Limited and Leisureplex Hotels Limited. Over 99% of the Companies revenue is generated from transactions with another Group Company and its parent company, Alfa Travel Limited, which provides a range of holidays and short breaks.

Due to the trading relationship between Alfa Coaches Limited and its parent company, Alfa Travel Limited, the consolidated results of the two companies are considered together to provide a review of the overall trading performance;

• Revenue increased by 5.3% to £31.3m due to an increase in passengers and an increase in sales price achieved.

• Passengers increased 3.1%, with a record number of passengers travelling.

• Load factor, a measure of the number of passengers travelling on each coach and a key performance indicator for the business, increased by 0.5%.

• Net assets have increased by £0.7m, due to the retained profit and after payment of £0.7m dividend to the parent company.

The Company has identified the following key risks and mitigating factors that are relevant to its business.

The company continues to focus on its core business activity; the operation of a fleet of Coaches across the UK and Europe, for its parent company, Alfa Travel Limited.

Focus for the current year will be to continue to maximise vehicle utilisation, whilst keeping tight control of other operating costs.

This report was approved by the Board of Directors on …………… and signed on behalf of the Board by

The directors present their annual report and financial statements for the year ended 31 December 2017.

The principal activity of the company is and continues to be the provision of coach travel.

The directors who held office during the year and up to the date of signature of the financial statements were as follows:

The results for the year are set out on page 9.

Ordinary dividends were paid amounting to £1,600,000 (2016: £1,500,000). The directors do not recommend payment of a final dividend.

The company manages its cash and borrowing requirements in order to maximise interest income and minimise interest expense, whilst ensuring the company has sufficient liquid resources to meet the operating needs of the business.

The company is exposed to fair value interest rate risk on its fixed rate borrowings and cash flow interest rate risk on floating rate deposits and bank overdrafts. The Board reviews the exposure to interest rate risk on a regular basis to manage the mix of fixed and variable debt so as to reduce its exposure to changes in interest rates.

Investments of cash surpluses and borrowings are made through banks that are approved by the Board.

Customer terms are payment before the service is provided, or managed via credit limits. Trade debtors are monitored on an ongoing basis and provision is made for doubtful debts where necessary.

The group gives full consideration to applications for employment from candidates with a disability where the candidate's particular aptitudes and abilities are consistent with adequately meeting the requirements of the job. Opportunities are available for employees with a disability for training, career development and promotion. Where existing employees become disabled, it is the group's policy to provide continuing employment wherever practicable in the same or an alternative position and to provide appropriate training to achieve this aim.

The Company is part of an employee owned group and the Trust operated on behalf of the employees is the majority shareholder. The Group operates a framework for employee information and consultation which complies with the requirement of the Information and Consultation of Employees Regulations 2004. During the year, the policy of providing employees with information about the Group has continued through employee emails, the employee newsletter and employee intranet, in which the employees have been encouraged to present their suggestions. The Group undertakes an annual employee engagement survey and conducts roadshows to involve employees across the Group's diverse locations. Employees participate directly in the success of the business as shareholders, via payment of an annual dividend.

The company has chosen in accordance with Companies Act 2006, s. 414C(11) to set out in the company's strategic report information required by Large and Medium-sized Companies and Groups (Accounts and Reports) Regulations 2008, Sch. 7 to be contained in the directors' report. It has done so in respect of future developments.

So far as each person who was a director at the date of approving this report is aware, there is no relevant audit information of which the company’s auditor is unaware. Additionally, the directors individually have taken all the necessary steps that they ought to have taken as directors in order to make themselves aware of all relevant audit information and to establish that the company’s auditor is aware of that information.

The directors are responsible for preparing the annual report 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). 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 of the profit or loss of the company 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;

•     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 company 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 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 hence for taking reasonable steps for the prevention and detection of fraud and other irregularities.

We have audited the financial statements of Alfa Coaches Limited (the 'company') for the year ended 31 December 2017 set out on pages 9 to 23. The financial reporting framework that has been applied in their preparation is applicable law and United Kingdom Accounting Standards, including FRS 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 company's affairs as at 31 December 2017 and of its 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 Auditor's responsibilities for the audit of the financial statements section of our report. We are independent of the company in accordance with the ethical requirements that are relevant to our audit of the financial statements in the UK, including the FRC’s Ethical Standard, and we have fulfilled our other ethical responsibilities in accordance with these requirements. We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our opinion.

Conclusions relating to going concern

We have nothing to report in respect of the following matters in relation to which the ISAs (UK) require us to report to you where:

• the directors' use of the going concern basis of accounting in the preparation of the financial statements is not appropriate; or

• the directors have not disclosed in the financial statements any identified material uncertainties that may cast significant doubt about the company’s ability to continue to adopt the going concern basis of accounting for a period of at least twelve months from the date when the financial statements are authorised for issue.

Other information

The directors are responsible for the other information. The other information comprises the information included in the annual report, other than the financial statements and our auditor’s report thereon. Our opinion on the financial statements does not cover the other information and, except to the extent otherwise explicitly stated in our report, we do not express any form of assurance conclusion thereon.

In connection with our audit of the financial statements, our responsibility is to read the other information and, in doing so, consider whether the other information is materially inconsistent with the financial statements or our knowledge obtained in the audit or otherwise appears to be materially misstated. If we identify such material inconsistencies or apparent material misstatements, we are required to determine whether there is a material misstatement in the financial statements or a material misstatement of the other information. If, based on the work we have performed, we conclude that there is a material misstatement of this other information, we are required to report that fact.

We have nothing to report in this regard.

Opinions on other matters prescribed by the Companies Act 2006

In our opinion, based on the work undertaken in the course of our audit:

• the information given in the 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 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 company and its environment obtained in the course of the audit, we have not identified material misstatements in the Strategic Report and the Directors' Report.

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, or returns adequate for our audit have not been received from branches not visited by us; or

•     the 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.

As explained more fully in the Directors' Responsibilities Statement set out on page 5, 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 is 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 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 company or to cease operations, or have no realistic alternative but to do so.

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 our opinion. Reasonable assurance is a high level of assurance, but is not a guarantee that an audit conducted in accordance with ISAs (UK) will always detect a material misstatement when it exists. Misstatements can arise from fraud or error and are considered material if, individually or in the aggregate, they could reasonably be expected to influence the economic decisions of users taken on the basis of these financial statements.

A further description of our responsibilities for the audit of the financial statements is located on the Financial Reporting Council’s website at: http://www.frc.org.uk/auditorsresponsibilities. This description forms part of our auditor’s 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 auditor's 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.

The statement of comprehensive income has been prepared on the basis that all operations are continuing operations.

Alfa Coaches Limited is a private company limited by shares incorporated in England and Wales. The registered office is Alfa Building, Euxton Lane, Euxton, Chorley, PR7 6AF.

These financial statements have been prepared in accordance with FRS 102 “The Financial Reporting Standard applicable in the UK and Republic of Ireland” (“FRS 102”) and the requirements of the Companies Act 2006.

The financial statements are prepared in sterling, which is the functional currency of the company. Monetary amounts in these financial statements are rounded to the nearest £.

The financial statements have been prepared under the historical cost convention. The principal accounting policies adopted are set out below.

As a qualifying entity, the company has taken advantage of the disclosure exemptions relating to the requirements of FRS 102 Section 7 Statement of Cash Flows, Section 3 Financial Statement Presentation paragraph 3.17 (d) and Section 33 Related Party Disclosures paragraph 33.7.

Alfa Coaches Limited is a wholly owned subsidiary of Alfa Travel Limited and the results of Alfa Coaches Limited are included in the consolidated financial statements of Alfa Leisureplex Group Limited which are available from Alfa Building, Euxton Lane, Euxton, Chorley PR7 6AF.

At the time of approving the financial statements, the directors have a reasonable expectation that the company has adequate resources to continue in operational existence for the foreseeable future. Thus they continue to adopt the going concern basis of accounting in preparing the financial statements.

Turnover is measured at the fair value of the consideration received or receivable and represents amounts receivable for coach tour services provided in the normal course of business, net of discounts, VAT and other sales related taxes.

Tangible fixed assets are initially measured at cost and subsequently measured at cost, net of depreciation and any impairment losses.

Depreciation is recognised so as to write off the cost of assets less their residual values over their useful lives on the following bases:

The gain or loss arising on the disposal of an asset is determined as the difference between the sale proceeds and the carrying value of the asset, and is recognised in the profit and loss account.

At each reporting end date, the carrying amounts of tangible and intangible assets are reviewed to determine whether there is any indication that those assets have suffered an impairment loss. If any such indication exists, the recoverable amount of the asset is estimated in order to determine the extent of the impairment loss. If the estimated recoverable amount is lower, the carrying amount is reduced to its estimated recoverable amount and an impairment loss recognised in the profit and loss account.

Stocks are stated at the lower of cost and net realisable value.

Cost is calculated using the FIFO method.

Cash and cash equivalents include cash in hand, deposits held at call with banks and bank overdrafts.

The group has elected to apply the provisions of Section 11 ‘Basic Financial Instruments’ and Section 12 ‘Other Financial Instruments Issues’ of FRS 102 to all of its financial instruments.

Debtors

Short term debtors are measured at transaction price less impairment.

Creditors and other liabilities

Short term trade creditors are measured at the transaction price. Other financial liabilities including bank loans, are initially measured at transaction price and are measured subsequently at amortised cost using the effective interest method.

Classification of 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 deducting all of its liabilities.

Equity instruments issued by the company are recorded at the proceeds received, net of direct issue costs. Dividends payable on equity instruments are recognised as liabilities once they are no longer at the discretion of the company.

The tax expense represents the sum of the current tax and deferred tax.

The tax currently payable is based on taxable profit for the year. Taxable profit differs from net profit as reported in the profit and loss account because it excludes items of income or expense that are taxable or deductible in other years and it further excludes items that are never taxable or deductible. The company’s liability for current tax is calculated using tax rates that have been enacted or substantively enacted by the reporting end date.

Deferred tax liabilities are generally recognised for all timing differences and deferred tax assets are recognised to the extent that it is probable that they will be recovered against the reversal of deferred tax liabilities or other future taxable profits. Such assets and liabilities are not recognised if the timing difference arises from goodwill or from the initial recognition of other assets and liabilities in a transaction that affects neither the tax profit nor the accounting profit.

The carrying amount of deferred tax assets is reviewed at each reporting end date and reduced to the extent that it is no longer probable that sufficient taxable profits will be available to allow all or part of the asset to be recovered. Deferred tax is calculated at the tax rates that are expected to apply in the period when the liability is settled or the asset is realised. Deferred tax is charged or credited in the profit and loss account, except when it relates to items charged or credited directly to equity, in which case the deferred tax is also dealt with in equity. Deferred tax assets and liabilities are offset when the company has a legally enforceable right to offset current tax assets and liabilities and the deferred tax assets and liabilities relate to taxes levied by the same tax authority.

The costs of short-term employee benefits are recognised as a liability and an expense, unless those costs are required to be recognised as part of the cost of stock or fixed assets.

The cost of any unused holiday entitlement is recognised in the period in which the employee’s services are received.

Termination benefits are recognised immediately as an expense when the company is demonstrably committed to terminate the employment of an employee or to provide termination benefits.

Payments to defined contribution retirement benefit schemes are charged as an expense as they fall due.

Leases are classified as finance leases whenever the terms of the lease transfer substantially all the risks and rewards of ownership to the lessees. All other leases are classified as operating leases.

Assets held under finance leases are recognised as assets at the lower of the assets fair value at the date of inception and the present value of the minimum lease payments. The related liability is included in the balance sheet as a finance lease obligation. Lease payments are treated as consisting of capital and interest elements. The interest is charged to the profit and loss account so as to produce a constant periodic rate of interest on the remaining balance of the liability.

Rentals payable under operating leases, including any lease incentives received, are charged to income on a straight line basis over the term of the relevant lease except where another more systematic basis is more representative of the time pattern in which economic benefits from the lease asset are consumed.

In the application of the company’s accounting policies, the directors are required to make judgements, estimates and assumptions about the carrying amount of assets and liabilities that are not readily apparent from other sources. The estimates and associated assumptions are based on historical experience and other factors that are considered to be relevant. Actual results may differ from these estimates.

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.

The estimates and assumptions which have a significant risk of causing a material adjustment to the carrying amount of assets and liabilities are outlined below.

In categorising leases as finance leases or operating leases, management makes judgements as to whether significant risks and rewards of ownership have transferred to the Company as lessee.

In determining the appropriate depreciation rates for the Company’s assets, management reviews the operating policies of the business and makes judgements as to the applicable useful economic lives of the assets, considering residual values.

An analysis of the company's turnover is as follows:

The average monthly number of persons (including directors) employed by the company during the year was:

Their aggregate remuneration comprised:

The number of directors for whom retirement benefits are accruing under defined contribution schemes amounted to 4 (2016 - 6).

Included in remuneration is £181,573 (2016: £159,139) and £44,430 (2016: £44,197) in pension contributions paid by fellow group companies.

The actual charge for the year can be reconciled to the expected charge for the year based on the profit or loss and the standard rate of tax as follows:

The net carrying value of tangible fixed assets includes the following in respect of assets held under finance leases or hire purchase contracts.

Included within creditors due within one year are bank overdrafts of £109,581 which are secured by way of a fixed and floating charge over the assets of the company and an omnibus guarantee and set off agreement with Alfa Leisureplex Group Limited, Alfa Travel Limited and Leisureplex Hotels Limited.

Included within creditors due within one year are obligations under finance leases of £1,321,411 (2016: £1,118,879) which are secured on the assets to which they relate.

Included within creditors due after more than one year are obligations under finance leases of £1,665,880 (2016: £1,854,832) which are secured on the assets to which they relate.

Finance lease payments represent rentals payable by the company for certain vehicles. Leases include purchase options at the end of the lease period, and no restrictions are placed on the use of the assets. The average lease term is 5 years. All leases are on a fixed repayment basis and no arrangements have been entered into for contingent rental payments.

The following are the major deferred tax liabilities and assets recognised by the company and movements thereon:

As at the signing date of these financial statements, the company has not finalised its capital expenditure programme for the forthcoming year and therefore an assessment as to the likely movement of other relating timing differences cannot be made.

The company operates a defined contribution pension scheme for all qualifying employees. The assets of the scheme are held separately from those of the company in an independently administered fund.

The company has taken the advantage of the disclosure exemption conferred in FRS 102 section 33 in that transactions entered into between two or more members of the group are not disclosed, provided that any subsidiary which is a party to the transaction is wholly owned by such a member.

The company has entered into a guarantee and set off agreement in the favour of Lloyds Plc, with Alfa Travel Limited, Leisureplex Hotels Limited and Alfa Leisureplex Group Limited. The company has also entered into an unlimited debenture in favour of Lloyds Plc secured by way of a fixed and floating charge over the assets of the company. The total group exposure under these guarantees at the year end was £15,778,620.

Operating lease payments represent rentals payable by the company for machinery and properties.

At the reporting end date the company had outstanding commitments for future minimum lease payments under non-cancellable operating leases, which fall due as follows:

Amounts contracted for but not provided in the financial statements:

The company's immediate parent company is Alfa Travel Limited.

The company is wholly owned by Alfa Travel Limited and its results are consolidated into the group financials statements of Alfa Leisureplex Group Limited, copies of which are available from its registered office: Alfa Building, Euxton Lane, Euxton, Chorley, Lancashire PR7 6AF.

The ultimate controlling party is the Alfa Leisureplex Employee Ownership Trust.