ALFA_LEISUREPLEX_GROUP_LI - Accounts

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

Alfa Leisureplex Group Limited became majority employee owned in July 2015, with 75% of the shares in the Group being held by a trust, which is operated on behalf of the employees. The principal activity of the Company is to act as holding company for Alfa Travel Limited, Leisureplex Hotels Limited and Alfa Coaches Limited.

The principal activity of the Group is the provision of an inclusive holiday offering in the UK and Europe, the operation of 21 Hotels across the UK and the operation of a fleet of coaches, which provide transport for the holiday business. Within the group, 99% of the revenue of Alfa Coaches Limited is generated by trading with its parent company, Alfa Travel Limited, and almost 60% of the revenue of Leisureplex Hotels Limited is generated from trading with Alfa Travel Limited.

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.

The key financial highlights are;

• The Group recorded a 16.9% increase in profit (excluding the exceptional item in 2016), a record performance for the business.

• Turnover increased by 5.2% to £40.8m due to increased volumes and tariff.

• Financing costs fell by £0.1m due to a £2m early loan repayment to Lloyds Bank

• Net assets for the group increased by £6.3m, due to revaluation of the Company’s Hotel portfolio and the strong underlying trading performance.

• The cash position at the year end was only £0.2m lower than the previous year, despite an early loan repayment of £2m.

• The Group remains in a strong financial position, which has enabled it to make a further £2m early loan repayment on the 3 January 2018.

• The tax free dividend paid to the employees as shareholders increased by 231%, whilst pay including employer costs per employee also increased by 4.7% on the previous year, as the group continues with its strategy to invest in its employees.

• Due to the cyclical nature of the Group’s cashflow, the Group shows net current liabilities at its year end, when cashflow is at the bottom of the cycle.

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

The Group continues to focus on its core business activity; the provision of inclusive holiday products across the UK and Europe, the operation of leisure hotels across the UK and the operation of its Coach Fleet.

The Group continues to seek suitable acquisitions in the UK to add to its current portfolio of hotels. One of the Group’s subsidiaries, Leisureplex Hotels Limited has an unconditional contract to sell its Cottage Hotel in St Ives in October 2018. There are no plans to divest any further of the Group's hotel portfolio.

Focus for the current year will be to continue to increase passenger numbers and to maximise sales opportunities within the existing estate, whilst maintaining the high levels of customer satisfaction and tight control of operating costs.

This report was approved by the Board of Directors on 1 May 2018 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 activities of the group are the operation of inclusive tours and provision of hotel accommodation.

The company’s principal activity is holding company of the trading companies of Alfa Travel Limited and Leisureplex Hotels Limited.

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 11.

Dividends were paid amounting to £250,000 (2016: £100,000). The directors recommend payment of a further dividend of £285,000.

The Hotels held in freehold and leasehold property were revalued to fair value by the directors during the year, based on multiples of turnover, cashflow and per room value metrics that are commonly used in the industry when valuing hotels. The current market value of the property portfolio is not materially different to that shown in the accounts.

Details of the movements in fixed assets are set out in note 14 to the financial statements.

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

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

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

Customer terms are payment before the service is provided. Credit terms may be offered, but are subject to credit verification procedure and regular monitoring. 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 truegroup has chosen in accordance with Companies Act 2006, s. 414C(11) to set out in the group'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 auditor of the company 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 auditor of the company is aware of that information.

The Company’s auditor, MHA Moore and Smalley have issued a qualified audit opinion on the basis of a limitation of scope with respect to the valuation of the Freehold and Leasehold Property, in the Company's subsidiary, Leisureplex Hotels Limited.

The Directors note that the auditor has been provided with the following independent evidence during the course of the audit in respect of the Directors’ valuation;

• An independent valuation undertaken by Christie and Co at 31 December 2014, which supports the basis of valuation at the time and metrics used by the Directors to arrive at their valuation.

• Details of properties currently being marketed for sale, which support the Directors' valuation.

• Explanations for all differences in individual property valuations, as requested by the auditor, based on the implied metrics at the date of the 2014 independent valuation.

• Details of an independent published property index, which show market growth of 11.9% over the same period the Directors’ valuation has increased by 12% (excluding the revaluation of the hotel for which an unconditional sale agreement is in place).

Furthermore, the Company completed an acquisition of a hotel in July 2016, which provides further independent evidence of the basis of valuation used.

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 group and parent company financial statements in accordance with United Kingdom Generally Accepted Accounting Practice. 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 group and parent company and of the profit or loss of the group for that period. In preparing these financial statements, the directors are required to:

•     select suitable accounting policies and then apply them consistently;

•     make judgements and accounting estimates that are reasonable and prudent;

•     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 group’s and the parent company’s transactions and disclose with reasonable accuracy at any time the financial position of the group and parent 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 group and parent company and hence for taking reasonable steps for the prevention and detection of fraud and other irregularities.

Qualified opinion

We have audited the financial statements of Alfa Leisureplex Group Limited (the 'parent company') and its subsidiaries (the 'group') for the year ended 31 December 2017 set out on pages 11 to 37. 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).

Except for the effects of the matter described in the Basis for Qualified Opinion section of our report, 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

As detailed in accounting policy 1.5 the company adopts the revaluation model in respect of its portfolio. An independent valuation of all the company’s hotel properties was performed by Christie & Co in December 2014. In subsequent years, as detailed in note 2 to the financial statements, these valuations have been reviewed and updated by the directors, based on multiples of turnover, cashflow and per room value metrics. Consideration is also given to annual movements in the property markets, specific local considerations for each property and similar properties currently on the open market, before arriving at the final valuation. The current year’s balance sheet includes freehold and leasehold property, equipment, fixtures, fittings and goodwill at a directors’ valuation of £45,038,642 and deferred tax liability of £2,725,329 has been provided in respect of accumulated revaluation surpluses. This results in a net balance on the revaluation reserve of £5,351,264 which has all arisen since the last independent valuation in December 2014. Included in the £5,351,264 is £1,935,633 net of deferred tax relating to one hotel property for which an unconditional sales agreement has been signed before the current year end. Comprehensive income for the current year includes total revaluation of £4,170,000 with a further deferred tax charge of £494,389 provided for, both figures including the hotel under the unconditional sale agreement. Except for the one hotel property for which an unconditional sales agreement had been signed before the year end included at the sales value of £4,675,000, which resulted in a net revaluation surplus since the last valuation of £1,935,633, we were unable to obtain sufficient independent appropriate evidence about the directors' valuations and related deferred tax movements. Consequently, we were unable to determine whether any adjustments to these amounts were necessary.

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 group's or the parent 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 other information comprises the information included in the annual report, other than the financial statements and our auditor’s report thereon. The directors are responsible for the other information. 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 our 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.

In respect solely of the limitation on our work relating to the valuation of the hotel portfolio detailed in the Basis for Qualified Opinion section of our report above:

• we have not received all the information and explanations we require for our audit.

We have nothing to report in respect of the following matters in relation to which 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.

As explained more fully in the Directors' Responsibilities Statement set out on page 7, 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 group's and the parent company’s ability to continue as a going concern, disclosing, as applicable, matters related to going concern and using the going concern basis of accounting unless the directors either intend to liquidate the group or the parent company or to cease operations, or have no realistic alternative but to do so.

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.

As permitted by s408 Companies Act 2006, the Company has not presented its own profit and loss account and related notes. The Company’s profit for the year was £2,081,675 (2016 - £2,868,037).

Alfa Leisureplex Group Limited (“the company”) is a limited company domiciled and 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 on the historical cost convention, modified to include the revaluation of freehold properties and certain financial instruments at fair value. 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 3.17 (d) and Section 33 Related Party Disclosures paragraph 33.7.

As permitted by s408 Companies Act 2006, the Company has not presented its own profit and loss account and related notes. The Company’s profit for the year was £2,081,675 (2016 - £2,868,037).

The cost of a business combination is the fair value at the acquisition date of the assets given, equity instruments issued and liabilities incurred or assumed, plus costs directly attributable to the business combination. The excess of the cost of a business combination over the fair value of the identifiable assets, liabilities and contingent liabilities acquired is recognised as goodwill.

The cost of the combination includes the estimated amount of contingent consideration that is probable and can be measured reliably, and is adjusted for changes in contingent consideration after the acquisition date.

Provisional fair values recognised for business combinations in previous periods are adjusted retrospectively for final fair values determined in the 12 months following the acquisition date.

The consolidated financial statements incorporate those of Alfa Leisureplex Group Limited and all of its subsidiaries (ie entities that the group controls through its power to govern the financial and operating policies so as to obtain economic benefits).

All financial statements are made up to 31 December 2017. Where necessary, adjustments are made to the financial statements of subsidiaries to bring the accounting policies used into line with those used by other members of the group.

All intra-group transactions, balances and unrealised gains on transactions between group companies are eliminated on consolidation. Unrealised losses are also eliminated unless the transaction provides evidence of an impairment of the asset transferred.

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 the directors continue to adopt the going concern basis of accounting in preparing the financial statements.

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

Goodwill represents the excess of the cost of acquisition of subsidiaries over the fair value of net assets acquired. It is initially recognised as an asset at cost and is subsequently measured at cost less accumulated amortisation and accumulated impairment losses. Goodwill is considered to have a finite useful life and is amortised on a systematic basis over its expected life, which is 5 years.

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

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

No depreciation is provided in respect of freehold and leasehold property as, in the opinion of the directors, the policy of fully maintaining the properties, the costs of which are charged to expenditure in the year of incidence, means that the estimated useful lives of the properties are so long, or their estimated residual values are so high as to render any depreciation charges and accumulated depreciation to be immaterial. Annual impairment reviews are performed in respect of all freehold and leasehold properties.

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.

Properties whose fair value can be measured reliably are held under the revaluation model and are carried at a revalued amount, being their fair value at the date of valuation less any subsequent accumulated depreciation and subsequent impairment losses. The fair value of land and buildings is usually recognised to be their market value.

Land and buildings in relation to hotel operation, the directors base their valuation on multiples of turnover, cash flow and per room value metrics. Consideration is given to annual movements in the property markets, specific local considerations for each property, in addition to recent completed acquisitions and the valuations of other hotels currently on the open market, before arriving at the final valuation.

Land and buildings in relation to office space, the current valuation has been reviewed based at 31 December 2017, by comparing the current value to those of similar properties currently being marketed and no adjustment to the current valuation is necessary.

Revaluation gains and losses are recognised in other comprehensive income and accumulated in equity, except to the extent that a revaluation gain reverses a revaluation loss previously recognised in profit or loss or a revaluation loss exceeds the accumulated revaluation gains recognised in equity; such gains and losses are recognised in profit or loss.

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 group 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 group.

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 group’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 if, and only if, there is 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.

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.

Rental income from operating leases is recognised on a straight line basis over the term of the relevant lease. Initial direct costs incurred in negotiating and arranging an operating lease are added to the carrying amount of the leased asset and recognised on a straight line basis over the lease term.

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.

Research and Development

In-house research expenditure is written off to the profit and loss account in the year in which it is incurred.

In the application of the group’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 following judgements (apart from those involving estimates) have had the most significant effect on amounts recognised in the financial statements.

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.

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.

As described in note 14 to the financial statements, freehold and leasehold properties held by Leisureplex Hotels Limited, whose fair value can be measured reliably are held under the revaluation model and are carried at a revalued amount, being their fair value at the date of valuation less any subsequent accumulated depreciation and subsequent impairment losses. The fair value of land and buildings is usually recognised to be their market value.

The directors base their valuation on multiples of turnover, cashflow and per room value metrics. Consideration is given to annual movements in the property markets, specific local considerations for each property, in addition to recent completed acquisitions and the valuations of other hotels currently on the open market, before arriving at the final valuation.

The Directors have determined that an appropriate rate of discounting for the deferred consideration is 6%.  This reflects the additional risk associated with the debt, in comparison to fixed rates available from the market at the time of acquisition.

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

The average monthly number of persons (including directors) employed by the group and 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).

All remuneration is paid by other companies within the group.

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

In addition to the amount charged to the profit and loss account, the following amounts relating to tax have been recognised directly in other comprehensive income:

In the prior year the group entered into a sale agreement to dispose of a hotel. The sale was completed on 1 November 2016.

A profit of £1,151,028 arose on the disposal, being the proceeds of the sale, less the carrying amount of the business assets. The results have been classified as discontinued operations in the profit and loss account.

The net book value of land and buildings comprises:

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

The historical cost of fixtures, fittings, plant and equipment includes an amount apportioned to this category of asset and agreed with the vendor on the acquisition of each hotel. No attempt is made to attribute such sums between various individual items of fixtures, fittings etc. As a result it is impossible to eliminate the cost and cumulative depreciation from the accounts when an item in this category is replaced. It has, however, been assumed that it has been replaced when it becomes fully depreciated and the figure shown for disposals includes the value of fully depreciated items at the balance sheet date. Regular maintenance is carried out, particularly on items of plant and equipment, and charged to the Profit and Loss Account as incurred.

The directors have considered the value of all fixtures, fittings, plant and equipment in service at the balance sheet date and consider their value to be not less than that shown in the accounts.

Properties whose fair value can be measured reliably are held under the revaluation model and are carried at a revalued amount, being their fair value at the date of valuation less any subsequent accumulated depreciation and subsequent impairment losses. The fair value of land and buildings is usually recognised to be their market value.

The directors base their valuation on multiples of turnover, cashflow and per room value metrics. Consideration is given to annual movements in the property markets, specific local considerations for each property, in addition to recent completed acquisitions and the valuations of other hotels currently on the open market, before arriving at the final valuation.

If revalued assets were stated on an historical cost basis rather than a fair value basis, the total amounts included would have been as follows:

Land and buildings with a carrying amount of £36,448,351 (2016: 32,278,351) has been used as security against borrowings.

Details of the company's subsidiaries at 31 December 2017 are as follows:

The investments in subsidiaries are all stated at cost.

Alfa Travel Limited is the intermediate parent company of Alfa Coaches Limited.

The principal amount of the deferred consideration in July 2015 was £24m to be paid on a fixed schedule over 10 years without interest. The loan is measured at the present value of the future payments discounted at a rate of 6%.

Included in the deferred consideration figure is preference shares totalling £5.

The long-term loans are secured by an unlimited debenture over the company, an omnibus guarantee and set off agreement between Alfa Leisureplex Group Limited, Leisureplex Hotels Limited, Alfa Travel Limited and Alfa Coaches Limited, and a first legal charge over all the leasehold buildings and over the freehold land and buildings of each hotel held by the Leisureplex Hotels Limited with the exception of the Cliffe Norton in Tenby.

The bank loan interest is calculated at market rate over a 15 year period on a revolving 5 year facility and repayments are made quarterly.

Finance lease payments represent rentals payable by the group for certain vehicles. All finance leases are taken out over a period of 5 years. All leases are on a fixed repayment basis and no arrangements have been entered into for contingent rental payments.

Deferred tax assets and liabilities are offset where the group or company has a legally enforceable right to do so. The following is the analysis of the deferred tax balances (after offset) for financial reporting purposes:

As at the signing date of these financial statements, the group 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.

A defined contribution pension scheme is operated for all qualifying employees. The assets of the scheme are held separately from those of the group in an independently administered fund.

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 Coaches 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.

At the reporting end date the group 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 ultimate controlling party is the Alfa Leisureplex Employee Ownership Trust.

The remuneration of key management personnel, who are also directors, is disclosed in note 7.

Group

In the year, the group traded with The Sugarloaf Company Limited, a company with a common director. Recharges of costs amounted to £1,000 (2016: £722). At the year end the debtor outstanding from The Sugarloaf Company Limited was £7,732 (2016: £5,448).

Company

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.