The directors present the strategic report for the year ended 28 February 2023.
The results for the year were impacted by Covid-19 pandemic and the financial position at the year end were considered satisfactory by the directors due to the measures taken to ensure the going concern.
S.172 statement
The information provided below is intended to explain how the directors considered the group's key stakeholders and the broader matters set out in s.172 of the Companies Act 2006 when performing their duties to promote the success of the group.
Group culture
The group culture focuses on the importance of strong financial and operational risk management controls, ensuring it complies with all applicable laws, regulations and ethical principals, locally, nationally and internationally.
The directors regularly assess/monitor the fulfilment of this culture at an operational level by requesting, receiving and analysing reports at various business levels, ensuring improvements can be made where necessary.
By protecting the reputation and economic viability of the company, the directors believe that enhancing this culture is for the long-term benefit of the company and interests of its stakeholders.
Long term strategy
The group's long term strategy is to grow revenues by adding new markets and increase profits through improving margins and optimising operational cost. This is to be achieved by providing high levels of service to customers whilst managing financial, operational, regulatory and legal risks and increasing efficiency at all levels.
To achieve these objectives, the directors consider it is essential to maintain adequate financial resources, through both internal operational mechanisms and access to external funding, to maintain stakeholder confidence at all times, to invest in information technology, to conduct a policy to promote exemplary customer services, to ensure staff are professionally trained and to ensure the group adheres to statutory regulations relating to information security.
Stakeholder relationships
The group's stakeholders are business customers (travel agents, OTA’s, intermediaries), suppliers, staff and shareholders, the relationship with and interest of, are upper most in the directors' minds when making decisions to promote the group. The strategic goals and conduits to achieve them, as listed above, are specifically crafted by the directors to benefit stakeholders and foster better relationships with them.
Community and environment
The group does whatever it can within its resources to promote better community relations and foster good environmental credentials.
The management of the business and the execution of the group's strategies are subject to risks, the key risks being competition in the market place, operational risk and liquidity risk.
There continues to be uncertainties around the Covid-19 pandemic and the long term effects on the economy. The group reacts to the rapid changing environment to help manage the risk.
Financial risk management
The group's principal financial instruments comprise bank balances, trade creditors, trade debtors and balances due from group and associated companies as well as individuals. The main purpose of these instruments is to raise funds for the group's operations and to finance the company's trading activities.
The group's approach to managing other risks applicable to the financial instruments concerned is shown below.
In respect of bank balances, the liquidity risk is managed by maintaining a balance between the continuity of funding. Balances are also held in foreign currencies in order for the group to trade with its suppliers and its customers.
Trade debtors are managed in respect of credit and cash flow risk by policies concerning the credit offered to customers and the regular monitoring of amounts outstanding for both time and credit limits.
Trade creditors liquidity risk is managed by ensuring funds are available to meet amounts due.
In respect of balances due from group and associated companies, the directors are aware of the individual companies' finance requirements and had determined that these will only be repaid, in whole or in part, when sufficient funds are available.
Cyber security risk management
Travco utilises many of the most recommended companies to support cyber security and the group has implemented Crowd Strike virus protection across its network which protects the group from malicious software viruses and phishing via a technical attack. The group has IPS (intrusion prevention system) running on its main firewalls to protect itsnetwork from malicious attacks.
The group utilises Mimecast for email protection that filters out and tries to catch phishing emails that are aimed at obtaining customer/supplier and/or staff information for extortion. Further to this nearly all Travco systems/infrastructure can only be accessed from a computer within the domain, or accessed via a secure VPN connection for which the group uses SonicWall VPN solutions that require secure authenticated log-ins.
The group's key financial performance indicators during the year are as follows:
| 2023 | 2022 |
| £ | £ |
Turnover | 103,102,889 | 25,045,529 |
Gross profit | 11,774,247 | 2,522,605 |
Earnings before interest, tax, depreciation, amortisation, |
|
|
and bad debts (EBITDAB) | 3,672,056 | (1,904,943) |
The directors also consider the following non-financial KPI of the business in relation to the year ended 28 February 2023.
Total room nights booked
The total room nights booked have increased from 238,046 nights in the year ended 28 February 2022 to 900,255 nights in the current year to 28 February 2023. This is an increase of 280% in comparison to the previous financial year.
The coronavirus pandemic which developed in 2020 had a significant impact on the global travel sector as many countries imposed travel restrictions on their citizens. As a result the group saw almost total collapse in demand for its services and an associated significant adverse impact on both cancellations and forward bookings has resulted in devastating effects on Travco's sales in year ended 28 February 2021. The group has seen recovery in the year to 28 February 2023 and almost 60% of the business is recovered in the latter half of the year. The group is collaborating with its hotels and travel partners (customers) to optimise margins and volumes, to sustain and improve its market share. The directors anticipate a sales recovery in 2023/2024 to be 70% of 2020 levels, with anticipated EBITDAB of approximately £6.5m.
The second half of 2022/2023 has seen significant improvement in turnover and cashflow. The group has managed to repay £500k of its CLBILS government-backed loan which was taken during coronavirus pandemic. The directors have considered the funding and liquidity position of the group to be appropriate to prepare the financial statements on the going concern basis.
On behalf of the board
The directors present their annual report and financial statements for the year ended 28 February 2023.
The results for the year are set out on page 9.
No ordinary dividends were paid. The directors do not recommend payment of a final dividend.
No preference dividends were paid. The directors do not recommend payment of a final dividend.
The directors who held office during the year and up to the date of signature of the financial statements were as follows:
The directors have focused on technological advancements via its in-house reservation system by developing functionalities to support the product growth along with flexibility to meet technological requirements of clients.
The group's only significant area of energy consumption and energy use is from the UK office.
Energy consumption at the group's offices is based on meter readings provided by the energy supplier.
Emissions were calculated based on Government conversion factors 2023 for company reporting of greenhouse gas emissions.
The chosen intensity measurement ratio is total gross emissions in metric tonnes CO2e per UK employee.
The group's only significant area of energy consumption and energy use is from the UK office within which we have installed low wattage lamps which are turned off when staff are not present. Allowing Travco staff to work from home is now much more acceptable and prevalent so reducing the staff carbon footprint for commuting. Travco also encourages staff to participate in the UK Goverments Cycle to work scheme.”
We have audited the financial statements of Travco Group Limited (the 'parent company') and its subsidiaries (the 'group') for the year ended 28 February 2023 which comprise the group statement of comprehensive income, the group balance sheet, the company balance sheet, the group statement of changes in equity, the company statement of changes in equity, the group statement of cash flows, the company statement of cash flows and notes to the financial statements, including 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).
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 group and parent 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.
Going concern
The directors have prepared the financial statements on the going concern basis as they do not intend to liquidate the group or to cease its operations, and as they have concluded that the company's financial position means that this is realistic. They have also concluded that there are no material uncertainties that could have cast significant doubt over its ability to continue as a going concern for at least a year from the date of approval of the financial statements ("the going concern period").
We are required to report to you if we have concluded that the use of the going concern basis of accounting is inappropriate or there is an undisclosed material uncertainty that may cast significant doubt over the use of that basis for the going concern period.
In our evaluation of the directors' conclusions, we considered the inherent risks to the group's business model and analysed how those risks might affect the group's financial resources or ability to continue operations over the going concern period.
We have nothing to report in these respects.
Our responsibilities and the responsibilities of the directors with respect to going concern are described in the relevant sections of this report.
Other information
The 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 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.
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 group and the parent company and their environment obtained in the course of the audit, we have not identified material misstatements in the strategic report or the directors' report.
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 by the parent company, or returns adequate for our audit have not been received from branches not visited by us; or
the parent company financial statements are not in agreement with the accounting records and returns; or
certain disclosures of directors' remuneration specified by law are not made; or
we have not received all the information and explanations we require for our audit.
As explained more fully in the directors' responsibilities statement, 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 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 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.
The extent to which our procedures are capable of detecting irregularities, including fraud, is detailed below.
Our approach to identifying and assessing the risks of material misstatement in respect of irregularities, including fraud and non-compliance with laws and regulations, was as follows:
the client partner ensured that the engagement team collectively had the appropriate competence, capabilities and skills to identify and recognise non-compliance with applicable laws and regulations;
we identified the laws and regulations applicable to the group through discussions with directors, key management personnel and from our commercial knowledge and experience;
we focused on specific laws and regulations which we considered may have a direct effect on the financial statements or the operations of the company including the Companies Act 2006, current taxation legislation, data protection, anti-bribery and money laundering, employment and health and safety legislation;
we assessed the extent of compliance with the laws and regulations identified above through making enquiries of management;
identified laws and regulations were communicated within the audit team regularly and the team remained alert to instances of non-compliance throughout the audit.
We assessed the susceptibility of the company's financial statements to material misstatement, including obtaining an understanding of how fraud might occur by;
making enquiries of management as to where they considered there was susceptibility to fraud, their knowledge of actual suspected and alleged fraud; and
considering the internal controls in place to mitigate risks of fraud and non-compliance with laws and regulations.
To address the risk of fraud through management bias and override of controls, we:
performed analytical procedures to identify any unusual or unexpected relationships;
tested journal entries to identify unusual transactions;
investigated the rationale behind significant or unusual transactions.
In response to the risk of irregularities and non-compliance with laws and regulations, we designed procedures which included, but were not limited to:
agreeing financial statements disclosures to underlying supporting documentation;
enquiring of management as to actual and potential litigation and claims; and
reviewing correspondence with HMRC, enquiring of management over health and safety.
There are inherent limitations in our audit procedures described above. Auditing standards also limit the audit procedures required to identifying non-compliance with laws and regulations to enquiry of the directors and other management and the inspection of regulatory and legal correspondence, if any.
Material misstatements that arise due to fraud can be harder to detect than those that arise from error as they may involve deliberate concealment or collusion.
A further description of our responsibilities is available on the Financial Reporting Council’s website at: https://www.frc.org.uk/auditorsresponsibilities. This description forms part of our auditor's report.
Use of our report
This report is made solely to the company’s members, as a body, in accordance with Chapter 3 of Part 16 of the Companies Act 2006. Our audit work has been undertaken so that we might state to the company’s members those matters we are required to state to them in 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 total comprehensive income has been prepared on the basis that all operations are continuing operations.
As permitted by s408 Companies Act 2006, the company has not presented its own profit and loss account and related notes. The company’s loss for the year was £53,964 (2022 - £38,546 ).
Travco Group Limited (“the company”) is a private limited company domiciled and incorporated in England and Wales. The registered office and business address is Travco House, 92-94 Paul Street, London, EC2A 4UX.
The group consists of Travco Group Limited and all of its subsidiaries.
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, modified to include the revaluation of freehold properties. The principal accounting policies adopted are set out below.
The consolidated financial statements incorporate those of Travco 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). Subsidiaries acquired during the year are consolidated using the purchase method. Their results are incorporated from the date that control passes.
All financial statements are made up to 28 February 2023. 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, which arises globally from the group's principal activities, is the amount derived from the provision of services falling within the group's ordinary activities after deduction of trade discounts and value added tax.
Turnover derived from hotel bookings is recognised at the point at which the reservation commences, i.e. upon arrival.
Freehold land is not depreciated.
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 accumulated impairment losses. The fair value of the land and buildings is usually considered to be their market value.
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 loss are recognised in profit or loss.
In the parent company financial statements, investments in subsidiaries, are initially measured at cost and subsequently measured at cost less any accumulated impairment losses.
At each reporting period end date, the group reviews the carrying amounts of its tangible and intangible assets 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 any).
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.
Financial instruments are recognised in the group's balance sheet when the group becomes party to the contractual provisions of the instrument.
Financial assets and liabilities are offset and 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, which include debtors and cash and bank balances, are measured at transaction price including transaction costs. Financial assets classified as receivable within one year are not amortised.
Financial assets, other than those held at fair value through profit and loss, are assessed for indicators of impairment at each reporting end date.
Financial assets are impaired where there is objective evidence that, as a result of one or more events that occurred after the initial recognition of the financial asset, the estimated future cash flows have been affected. If an asset is impaired, the impairment loss is the difference between the carrying amount and the recoverable amount. The impairment loss is recognised in profit or loss.
Basic financial liabilities, including creditors and bank loans that are classified as debt, are initially recognised at transaction price unless the arrangement constitutes a financing transaction, where the debt instrument is measured at the present value of the future payments discounted at a market rate of interest. Financial liabilities are not amortised.
Trade creditors are obligations to pay for goods or services that have been acquired in the ordinary course of business from suppliers. Amounts payable are classified as current liabilities if payment is due within one year or less. If not, they are presented as non-current liabilities.
Equity instruments issued by the group are recorded at the proceeds received, net of direct issue costs.
The tax expense represents the sum of the tax currently payable 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.
Deferred tax is calculated at the tax rates that are expected to apply in the period when the liability is settled. 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.
The group operates a defined contribution plan. A defined contribution plan is a pension plan under which the group pays fixed contributions into a separate fund. Under defined contribution plans, the group has no legal or constructive obligations to pay further contributions if the fund does not hold sufficient assets to pay all employees the benefits relating to employee service in the current period.
Government grants are recognised at the fair value of the asset received or receivable when there is reasonable assurance that the grant conditions will be met and the grants will be received.
A grant that specifies performance conditions is recognised in income when the performance conditions are met. Where a grant does not specify performance conditions it is recognised in income when the proceeds are received or receivable. A grant received before the recognition criteria are satisfied is recognised as a liability.
Transactions in currencies other than pounds sterling are recorded at the rates of exchange prevailing at the dates of the transactions. At each reporting end date, monetary assets and liabilities that are denominated in foreign currencies are retranslated at the rates prevailing on the reporting end date. Gains and losses arising on translation in the period are included in profit or loss.
Preference shares
The Redeemable Preference shares are classified as equity in accordance with Section 22 (liabilities and equity) as they are redeemable at the option of the issuer and do not carry a right to a return.
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 estimates and assumptions which have a significant risk of causing a material adjustment to the carrying amount of assets and liabilities are as follows.
Intangible fixed assets consist of goodwill. The annual amortisation charge depends on the estimated useful economic life of the asset. The directors regularly review the remaining useful life of the asset. Changes in asset useful economic life can have a significant impact on amortisation charge for the period. Detail of the useful economic life is included in accounting policies.
Tangible fixed assets, consisting primarily of plant and machinery, fixtures and fittings and freehold land and buildings. The annual depreciation charge depends primarily on the estimated useful economic lives of each type of asset and estimated residual values. The directors regularly review these asset useful lives and change them as necessary to reflect current thinking on remaining lives in light of prospective economic utilisation and physical condition of the assets concerned. Changes in asset useful lives can have a significant impact on depreciation charges for the period. Detail of the useful economic lives is included in the accounting policies.
The group makes an estimate of the recoverable value of the trade and other debtors. The group uses estimates based on historical experience determining the level of debts, which the group believes, will not be collected. These estimates include such factors as the current credit rating of the debtor, the aging profile of the debtors and historical experience. Any significant reduction in the level of customers that default on payments or other significant improvements that resulted in a reduction in the level of bad debt provision would have a positive impact on the operating results. The level of provision required is reviewed on an on-going basis and is disclosed in note 15.
An analysis of the group's turnover is as follows:
In the opinion of the directors it would be seriously prejudicial to the interests of the group to disclose the geographical market breakdown of turnover in these financial statements.
The average monthly number of persons (including directors) employed by the group and company during the year was:
Their aggregate remuneration comprised:
Directors are also considered to be the only key management personnel.
The actual charge for the year can be reconciled to the expected credit for the year 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 opinion of the directors, there is no material difference between the carrying value of the freehold land and buildings in the accounts and the open market value as at the balance sheet date.
If revalued assets were stated on a historical cost basis rather than a fair value basis, the total amounts included would have been as follows:
Details of the company's subsidiaries at 28 February 2023 are as follows:
Registered office addresses (all UK unless otherwise indicated):
Audit exemption of subsidiaries
For the financial year ended 28 February 2023, Travco International Limited claimed exemption from audit under section 479A of the Companies Act 2006 relating to subsidiary companies.
The fair value of trade and other receivables approximate to their carrying amounts. Trade debtors are stated after provisions for doubtful debts of £150,000 (2022: £200,000).
The bank loans are secured by a legal charge on the freehold property owned by the company. Interest is charged on the bank loan at a commercial rate. The bank loans were initially repayable in June and August 2023 but since then have been amalgamated and is fully repayable by June 2026.
The following is the analysis of the deferred tax balances for financial reporting purposes:
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 one class of ordinary shares which carry no right to fixed income.
The redeemable preference shares do not carry voting rights.
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:
There is a debenture secured by way of a fixed and floating charge against the assets of the group. There are cross guarantees between the group companies in respect this debenture.
Group
Included in other debtors, is a balance of £822,548 (2022: £Nil) due from the directors. The maximum balance outstanding during the year was £822,548 (2022: £95,281) and during the year interest of £6,534 (2022: £1,977) was charged on this balance at HMRC's official rate.
The group is controlled by the directors with no single party having an overall control.