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HF Holidays’ Annual Report & Accounts 2017 | 1

Annual Report & Accounts

2017

2 | HF Holidays’ Annual Report & Accounts 2017

OVERVIEW

2 | Chair’s Statement

3 | CEO’s Address

STRATEGIC REPORT

3 | Financial Headlines

4 | Key Financial Drivers

5 | Exploring the World

6 | Guest Experience

6 | External Recognition

6 | Next Generation

7 | A Growing & Engaged Membership

7 | Plans for the Future

7 | Governance

8 | Investing in Your Property

9 | Investing in Our People

10 | Investing in Our Communities

11 | Board of Directors

FINANCIAL STATEMENTS

12 | Statements of Accounts

15 | Notes to the Accounts

CONTENTS

The Board is very aware of the heritage of HF Holidays and our role as custodian of the UK estate. I am

will help us in the next stage of development so as to ensure that we can continue to provide great experiences in the outdoors for future generations.

We’ve made good progress against the 2020 goals which have focused the entire organisation to deliver our strategy. Whether a Board Member, in a Product team, in Reservations, or working in a house, everyone understands how their own goals contribute to delivering on 2020.

Your feedback, both through the holiday feedback forms and the recent Member Survey provides a vital link back into HF, helping us to understand where we have got it right and where we have missed the mark. You’ve given us top marks for improved food and great bedrooms and responded to the removal of the single person supplement by booking out all the single premium rooms! You’ve let us know when the food isn’t quite right and where our bedrooms haven’t yet improved.

You will remember that one of our tasks was to start reversing the trend towards older guests and I am

signs of change in this area. Our weekend short breaks, challenger walks, trails and family holidays

lead the way. It’s very encouraging and our policy of evolution rather than radical change means that we continue to deliver the best holidays to our current guests whilst exploring new ideas for the future. Our wide range of holidays are all planned to help our members and guests enjoy the great outdoors and other activities in whichever way suits them best.

Our challenges continue to be addressed. Our UK estate is full of interesting properties that will always need work and improved occupancy means we need to look at how to create more space in some of our smaller houses. Feedback that you want your membership funds to be focused on the custodianship of our houses has really helped our planning. Political and economic uncertainty and

to our Abroad teams, particularly Worldwide; the digital age continues to develop at a faster and faster speed and we need to increase our investment in that area to keep pace; in 2018 extra costs imposed from outside such as the removal of credit card fees and the rise in statutory pension contributions will make our cost management more of a challenge.

statement from OUR CHAIR

Cheryl Hunnisett Chair, HF Holidays


CEO’s address

Turnover for 2016/17 was £30,206,000 (2016: £28,467,000) and Operating Surplus was £351,000 (2016: £43,000). Guest Weeks rose from 38,230 to 39,235.

Net member investment was £970,000 (2016 £442,000).

UK Guided Walking, Leisure Activities, Groups and Self-Guided holidays grew strongly as we continued to focus upon our core business. Key initiatives such as short breaks, dynamic pricing and new products worked well. The single supplement for a standard single room was also removed in response to guest feedback.

Guest numbers on European holidays and Trails grew strongly. Our Worldwide holidays did not have such a strong year, resulting in similar sales to 2016.

Looking after our UK properties remains a priority and through cash generated from operations and member investment we were able to put £2.1m back into their upkeep and improvement.

We are encouraged by progress this year, with the initiatives driving the pursuit of our strategic goals starting to have a material impact on our performance. This includes our work to acquire the next generation of HF guests and members – thus ensuring that we will continue to provide sociable ways to explore the great outdoors for many years to come.

Authority is sought to pay shareholding interest

at a rate of 1.75% in accordance with Rule 25

FINANCIALHEADLINES

Turnover

Revenue grew £1.7m, or 6.1%

Operating Surplus

2016

£43,000

2017

£351,000

Jim Forward CEO, HF Holidays

2016

£28,467,000

2017

£30,206,000

2017 INTEREST

Operating surplus grew £308k


Year-on-Year Growth in UK Sales

Core Holiday Sales at UK

HousesB&B Sales at UK Houses

£672,000

5.0%

-53%

-£219,000

KEY FINANCIAL DRIVERSUK House Based Holidays

Year-on-Year Growth in Abroad & Trails Holidays

European Holidays

Trails: UK & Abroad

Worldwide Holidays

Abroad & Trails Holidays

European Walking & Leisure Activities holiday sales reached record levels with an 8.1% rise in guests weeks and 4.1% increase in Revenue Per Guest Week.

Sales growth was strong amongst both foreign and domestic guests, with the weak pound, increased digital marketing and

Our Trails holidays had an exceptional year, with both UK and Abroad Trails gaining in popularity. 2017 was a

holidays, where global crises,

on results causing a 2% drop in guest weeks.

£966,00012.6%

£147,00017.5%

£27,0000.6%

Our focus on the core Guided Walking, Families, Groups, Leisure Activities & Self-Guided holiday products continued to work well with a 4.2% guest week and 0.7% Revenue Per Guest Week growth. Achieved

removal of the standard single supplement.

Guided Walking and Family guest weeks combined reached the highest level since the year 2000. As part of our strategic focus on core activities, Bed & Breakfast sales fell by 53% and the cafés at Derwentwater and Alnmouth were closed.

Holiday Costs

Gross Margin (%)

Gross Margin (Gross Surplus over Revenue) increased 0.7%.

Margin was improved in the UK through volume and price growth, well controlled costs and estate management – and continues to recover post the 2011/12 house acquisitions.

Abroad, while absolute contribution increased, margins reduced as higher than expected European sales meant we had to go back into the market to purchase more Euros at poorer rates than originally

Worldwide trips.

19.3%

20162017

20.0%

Central Costs

Central Administration costs rose £192,000, or 3.4%, as a result of increased spend on

increases, recruitment costs, fewer vacancies, new positions and performance related pay.

Savings were made in marketing, print, insurance and phone costs.

Central headcount was 94 Full Time Equivalents.

Professional Fees and Other Charges increased by £172,000. This was mostly due to foreign exchange impact. In 2016 the revaluation of held currency at the end of the year resulted in a gain; in 2017 no such gain occurred.

Administration Expenses

£5,652,000

2016

£5,844,000

2017


1.4m mileswalked by our guests and leaders

(that’s 177 times around the world)

795 Walking Leaders

volunteered 250,000 hours of their time to lead our holidays

x177

47 countries visited over250,000 hours

SNAPSHOT

Exploring Europe, walking Wales, or trekking Tasmania, our holidays span the globe. For over 100 years our team of employed and volunteer specialists have been enthusiastically researching, putting together, and delivering exceptional walking and activity holidays across the world.

Our guests continue to enjoy traditional favourites: scaling the Lake District fells, soaking up the spectacular Cornish coast, or discovering the charming rural landscapes of Spain and Italy. We also continue to innovate to meet evolving aspirations. Wildlife treks in the Namibian desert, wine tasting walks in Dorset, and a high-level tour through the Swiss mountains were just some of the new

of our Family Walking Adventures – we are delighted to be introducing so many children to the great outdoors. Our guests also responded positively to our growing range of short breaks and self-guided holidays.

As well as our well-known walking holidays, we also operate

our guests and members to enjoy.

Much has changed over the last 104 years, yet we maintain our never-ending desire “to provide shared holiday experiences, which inspire friendship, fun, and an active enjoyment of the great outdoors.”

EXPLORING THE WORLD


GUEST EXPERIENCEOverall Enjoyment Value for Money

Guests continued to rate HF Holidays very highly for Value For Money, with 94% giving Very Good or Good ratings.

Recommendation was also high, with 94% of guests saying that they would recommend HF to a friend.

The proportion of Very Good Value For Money ratings particularly grew in the UK. This was helped by: improving guest satisfaction

removal of the standard single supplement, and early bookers getting the best prices all helped.

Enjoyment of Walks remained high across both UK and Abroad.

HF Holidays continues to be recognised by consumers and the travel industry. This included the accolade of being voted Which? number one provider amongst holiday companies. In the SilverTravel

Best Activity Tour Operator. With a score of 4.5 out of 5, we gained Feefo’s highest award of Gold Trusted Service. We were rated the Best Accommodation provider in the Group Leisure & Travel Awards, and

Awards, achieving a 96% score amongst their readers.

Our initiatives to bring in the Next Generation of HF Holidays’ guests have started to

(excluding Family Holidays) this decade. Several things have contributed, including working on our accommodation, food, and marketing. UK short breaks (especially those including a weekend) have been a key driver and Outdoor Escapes and Challenger Weekends are also working well. Separately, Family Holidays also grew by 30% in 2017 and were an additional source of Next Generation guests.

Average age of new UK Guided Walking guests (excluding Family Holidays)

66

64

62

60

58

56

542010 2011 2012 2013 2014 2015 2016 2017

58.960.3 60.5

61.8 62.063.9

64.663.1

Levels of Overall Enjoyment remained very high with 98% of guests providing a Very Good or Good rating.

In the UK, strong improvements were seen in accommodation, food, and WiFi ratings. Helpfulness of team received the highest rating. Abroad scores were mostly stable although there were a number of

hotels. Ratings of our website improved but it is an area where we need to invest more development time.

Nearly 10,000 guests complete our holiday feedback questionnaires each year for which we are very grateful.

Very Good/Good Ratings Very Good/Good RatingVery Good/Good Ratings

HF Holidays’ Annual Report & Accounts 2017 | 7HF Holidays Annual Report & Accounts 2017 | 7

ENGAGED

membership&Net increase in members

2017 2016

779

1,775

Net increase in member investment

2017 2016

£442,000

£970,000

2017 was an exceptional year for attracting new members. A net 1,775 new members were added, compared to the recent average of 1,000 – bringing total membership to 38,875. The fee charged to non-members increased and encouragement to join came through higher levels of communication about membership and rising levels of guest satisfaction. We continue to be proud of our strength as a co-operative membership society and to

holiday, including exclusive rewards and discounts, plus an annual dividend.

investmentAlong with cash generated from operations, the investment made by our members is used to maintain, improve, and at times grow our portfolio of UK properties. 2017

to £970,000 – compared to £628,000 average over the last 5 years. The new and increased investment was made by members across all levels of shareholding.

Plans for the future2020 GOALSThe strategic direction of the Society is currently directed by the pursuit of 20 Goals for 2020, originally agreed by the Board in 2015. Progress towards the Goals is reviewed each year, along with future plans, and the Goals themselves. This provides the framework by which HF Holidays will develop as a business, society, employer, citizen, and holiday provider over the next few years. Of the 20 Goals, the six that the Board has

Delivering memorable and sociable holidays Providing high quality accommodation

Increasing numbers of next generation guests Delivering a “cash surplus” of 5% of sales (where cash surplus = surplus+depreciation)

GOVERNANCEThe Society continues to be governed according to its published Rules. Wherever these Rules permit, as a member of Co-operatives UK the Society also complies with the Corporate Governance Code for consumer co-operative societies. Information on the few areas of non-compliance is provided in the membership section of the Society’s website, along with information about the activities of our Search Committee aimed at enhancing best practice at Board level.

HF Holidays Annual Report & Accounts 2017 | 7


the last 4 years INVESTING IN YOUR PROPERTY: 2014-2017

Successful purchase of

Longmynd House, Church

Stretton£2.7m invested in

refurbishing our

bedrooms

Guest satisfaction

ratings +12% bedrooms

+9% exterior & grounds

Increased spend on repairs and equipment

to £0.6m per annum

INVESTMENT APPEALBuilding upon the increasing strength of the UK operation, the Board of HF Holidays is launching an appeal to members to further invest in the future of the Society. With the successful purchase of Longmynd House and the improvement of hundreds of bedrooms now complete we are asking members to increase their shareholding to

of the Peak, the replacement of outdated chalet accommodation, and the

Hall and Abingworth Hall.

Our UK country houses are special: their quality is a key part of the holiday experience;

Holidays and its members.

Since 2014 £2.7m has been invested in refurbishing over half of the bedrooms across our estate. In 2017 the bedrooms at Conistonwater were fully refurbished and Premium Single Rooms were created across all houses. As a result, Very Good ratings of bedrooms by guests have risen 12 percentage points over the last 4 years.

During these years the average annual expenditure on repairs has been over £500,000. As well as a maintenance person at every house, there is a new multi-year maintenance

Safety items, plus new beds, boilers and other general repairs.

Longmynd House in Church Stretton – which was bought with the support of our members

This concerted approach to estate development, anchored around a formal annual estate

properties up to the standard desired by our members, and strengthen the Balance Sheet.

8 | HF Holidays

OURFUTURE


INVESTING IN OUR PEOPLE

The selection and training of our leaders, the majority of whom are volunteers, is second to none. As well as having to provide initial and ongoing evidence of their ability to guide guests safely, competently, and passionately through walks and activities, all our leaders are chosen for their talent in providing a sociable and fun holiday.

houses, are focused on providing a holiday experience which members enjoy and are happy to recommend to others. This involves constant moves forward on the creation, development and delivery of services to over 55,000 guests each year.

We continue to invest in the development of our team and ways of working. In 2017 we helped more of our team to experience our holidays, started a leadership development programme, introduced more apprenticeships, and worked on further embedding our 5 key values of Trusted, Collaborative, Exceptional Experiences, Ownership, and Inspiring, Passionate & Fun.

The Board would like to express its profound thanks to all these people, with their hard work and commitment we are exceptionally well placed to carry on helping guests enjoy the great outdoors for many more years to come.

People are at the very heart of HF Holidays. In addition

and activity leaders and an employed team of over 300. All provide an invaluable contribution to the pursuit of our mission to deliver brilliant holidays that enable our

GABRIELLA

CLARE ALBAN

STUART

RAJ

SIMON

David Allen: Volunteer Walks LeaderRaj Joshi: Volunteer Walks LeaderSean Rogers: Chef, Dolgellau

Reservations Team Andy Watson: UK Walking ProductTeamStuart Mitchell: Hotel OperationsHelen Brigham: Volunteer Walks LeaderKhushalee Pindoria: Finance TeamSimon Cox: Hotel Operations Area Manager Clare Gauntlett: Worldwide, Product TeamChristine Walkden: Horticultural Tours LeaderGabriella Uifzlean: House Manager, Dovedale Alban O’Brien: Leisure Activity Leader

ANDY

DAVID

HELEN

SEAN

JACKSON

CHRISTINE

KHUSH


Our Pathways Fund is built up from direct contributions by our members and is used to support the creation, maintenance and repair of walking routes, bridges, stiles, gates, and signage across the UK and Europe.

This year £24,000 has been distributed to support projects in the Isle of Wight, North Pennines, Lake District and also Norcia. A further £39,000 is committed to future projects.

Increasingly we are looking for ways to reduce our environmental footprint while still enabling our

guests to explore the world.

Our house refurbishments include initiatives to save energy – such as insulation, thermostatic valves, and new boilers – and to reduce water usage. Parts of our grounds

waste in our houses, and our marketing is progressively moving to digital means and the use of paper from sustainable sources.

In 2017 we were delighted to receive 10 Green Tourism Awards for our UK houses – including the Gold Award at the newly refurbished Conistonwater and Freshwater Bay.

drive sales through direct marketing, being a good environmental citizen provides its challenges, but we remain committed to further reduce our environmental footprint where we can.

The Family Holiday AssociationThrough the Pathways Fund and corporate donations HF Holidays has supported The Family Holiday Association since 2013, providing the opportunity for 128 families so far to experience our holidays, when

This support continued in 2017 and we are proud to

Family Holiday Association has on peoples’ lives.

During 2017 HF Holidays made corporate charitable donations of £10,000 to Mountain Rescue and Air Ambulance operations. We continue to be grateful to these committed individuals who help ensure we are

situations.

INVESTING IN OUR COMMUNITIES

Io


BOARD OF Directors

The Board’s role is to ensure the long-term prosperity of the organisation and is elected by and accountable to the HF Holidays

Our 12 Directors are all unpaid volunteers. Normal tenure is for 4 years; Directors attend 7 Board Meetings each year and host the AGM. Directors also contribute by serving on themed working groups with the Executive, Board only Committees and by ongoing engagement with members through attending member weekends, experiencing our holidays and member communications such as Footnotes and occasional surveys. It is important that we continue to have a wide range of skills on the Board and more information on becoming a Director can be found at hfholidays.co.uk/board

CHERYL HUNNISETTChair of the Board2017 Governance Committee2017 Product & Marketing Working Group ELECTED 2017

ANNE ELLMESChair, 2017 Governance Committee2017 Finance & Estates Working Group ELECTED 2014

STEPHEN SWIFTVice-Chair of the Board2017 Search Committee2017 Services & Administration Working Group ELECTED 2017

KATE GEAL2017 Search Committee2017 Product & Marketing Working Group ELECTED 2015

STEVEN D BOOTH 2017 Finance & Estates Working Group ELECTED 2015

WENDY SUDBURYChair, 2017 Search Committee2017 Product & Marketing Working Group ELECTED 2017

BRIAN TILLEY2017 Services & Administration Working Group ELECTED 2016

DAVID BROWNChair, 2017 Services & Administration Working Group2017 Governance Committee ELECTED 2014

ROBERT AINSWORTH Chair, 2017 Finance & Estates Working Group2017 Governance Committee ELECTED 2016

NICOLA HOWARTH 2017 Services & Administration Working Group ELECTED 2014

STEVE BISHOP Chair, 2017 Product & Marketing Working Group2017 Search Committee ELECTED 2017

ROBERT LOCKE2017 Finance & Estates Working Group ELECTED 2016


CONSOLIDATED INCOME STATEMENT FOR THE YEAR ENDED 31 OCTOBER 2017

2017 2016 £’000 £’000TURNOVER 30,206 28,467EXPENDITURE (29,855) (28,424)

OPERATING SURPLUS 351 43 before taxation and exceptional items

Taxation – Current Year 0 0

351 43EXCEPTIONAL ITEMS

of freehold and buildings 0 (282) Surplus arising from bequests 24 20 Surplus attributable to Shareholders 375 (219)

Proposed interest to eligible members in accordance with Rule 25 (150) (100)

(643) 771

(418) 452

CONSOLIDATED OTHER COMPREHENSIVE INCOME STATEMENT FOR THE YEAR ENDED 31 OCTOBER 2017

GROUP 2017 2016 £’000 £’000

(819) (194)

Total comprehensive income for the year (594) (513)

SOCIETY 2017 2016 £’000 £’000

(819 ) (194)

Total comprehensive income for the year (581) (509)

CONSOLIDATED DETAILED INCOME STATEMENTFOR THE YEAR ENDED 31 OCTOBER 2017

2017 2016 NOTE £’000 £’000 £’000 £’000Revenue 29,399 27,916Expenditure (23,506) (22,527)

Surplus 5,893 5,389

Other Income 28 807 649 6,700 6,038

Overhead Expenditure AdministrationPrinting, Stationery, Postage & Telephone 109 130 Salaries 3,281 2,951 Data Processing 395 322 Travel 65 102 Rent, Rates, Insurance, Heat & Light 380 413 Depreciation 218 246 Repairs, Renewals & Sundry 182 248 Publications & Publicity 1,214 1,241 5,844 5,652

General Professional Fees & Other Charges 352 180 Bank Interest & Charges 80 77 432 256

Membership Services

AGM & Annual Report 40 38 Administration & members’ newsletters 21 -6,349 43 -5995 73 (6,349) 87 (5,995)

and Exceptional Items 351 43

Exceptional Items 24 (262)

Proposed Interest to eligible members in accordance with Rule 25 (150) (100)

(643) 771

(418) 452


NOTE £’000 £’000 £’000 £’000 £’000 £’000 £’000 £’000

Intangible Fixed Assets 9 0 0 0 0 Tangible Fixed Assets 10 23,239 23,239 23,162 23,162Investment Property 11 425 425 425 425 Investments 12 3 3 3 3

CURRENT ASSETS

Stock 209 209 260 260 Derivative asset 24 24 667 667 Prepayments & Sundry Debtors 1,247 1,247 1,430 1,430Cash at Bank and in Hand 1,799 1,799 2,299 2,299 3,279 3,279 4,656 4,656 CURRENT LIABILITIES Trade Creditors 900 900 1,197 1,197 Accruals and Provisions 2,003 2,018 2,398 2,426 Secured Debts 15 183 183 105 105 Advance Bookings 4,182 4,182 4,446 4,446 7,268 7,283 8,145 8,174

Net Current Liabilities (3,989) (4,004) (3,489) (3,518)

LONG TERM LIABILITIES Secured Debts 15 (606) (606) (866) (866) Accruals and Provisions payable within 2-5 years 19,072 19,057 19,234 19,206

CAPITAL AND RESERVES Share Capital 13 8,580 8,580 7,519 7,519 Capital Reserve 5 2,669 2,669 3,488 3,488 Capital Redemption Reserve 6 18 18 18 18 Revenue Reserve 7 7,727 7,712 8,145 8,117

SHAREHOLDERS’ FUNDS 18,994 18,979 19,170 19,142

FUNDSPathways Fund 78 78 64 64

19,072 19,057 19,234 19,206

CONSOLIDATED AND SOCIETY BALANCE SHEETAS AT 31 OCTOBER 2017

Consolidated Society Consolidated Society 2017 2017 2016 2016

CONSOLIDATED CASH FLOW STATEMENT YEAR ENDED 31 OCTOBER 2017

2017 2016

NOTE £’000 £’000 £’000 £’000

Net cash generated from operating activities 16 211 1,727

(2,792)

Proceeds from realisation of assets & Investments 101 1,602Interest (80) (43)

Net cash from investing activities (1,537) (1,233)

Term Loan (182) (282)Movement in share capital 970 442 Movement in capital redemption 0 7Bequests 24 20 Pathways Fund 14 (11)

826 176 Net Increase/ (Decrease) in cash 17 (500) 670

and cash equivalents

Cash and cash equivalents at the beginning of the year 2,299 1,629 Cash and cash equivalents at the end of the year 1,799 2,299

C Hunnisett Chair of the Board

S Swift Vice Chair of the Board

J Forward CEO


CONSOLIDATED STATEMENT OF CHANGES IN EQUITYFOR THE YEAR ENDED 31 OCTOBER 2017

Called up Capital Capital Revenue TOTAL Share Reserve Redemption Reserve Capital Reserve £’000 £’000 £’000 £’000 £’000

At 1 November 2015 6,977 3,682 11 7,963 18,363

Proposed interest to members 0 0 0 (100) (100)

Other recognised surpluses/ 0 (194) 0 0 (194)

Fair value movement on 0 0 0 771 771

New share capital subscribed 823 0 7 0 830 Withdrawal of share capital (281) 0 0 0 (281)

At 31 October 2016 7,519 3,488 18 8,145 19,170



Fair value movement on 0 0 0 (643) (643)

New share capital subscribed 1,248 0 0 0 1,248 Withdrawal of share capital (187) 0 0 0 (187)

At 31 October 2017 8,580 2,669 18 7,727 18,994

SOCIETY STATEMENT OF CHANGES IN EQUITYFOR THE YEAR ENDED 31 OCTOBER 2017

Called up Capital Capital Revenue TOTAL Share Reserve Redemption Reserve Capital Reserve £’000 £’000 £’000 £’000 £’000

At 1 November 2015 6,977 3,682 11 7,661 18,331



Fair value movement on 0 0 0 771 771

New share capital subscribed 823 0 7 0 830 Withdrawal of share capital (281) 0 0 0 (281)

At 31 October 2016 7,519 3,488 18 8,117 19,142



Fair value movement on 0 0 0 (643) (643)

New share capital subscribed 1,248 0 0 0 1,248 Withdrawal of share capital (187) 0 0 0 (187)

At 31 October 2017 8,580 2,669 18 7,712 18,979


NOTES TO THE ACCOUNTS

1. Society Information

The Society is governed according to its own rules and

of the society is Catalyst House, 720 Centennial Court, Centennial Park, Elstree, Hertfordshire, WD6 3SY

The principal activity of the Society is organising outdoor holidays.

Basis of Preparation

accordance with ‘Financial Reporting Standard 102, the Financial Reporting Standard applicable in the UK and Republic of Ireland’ and the Companies Act 2006. The

historical cost convention except that certain freehold and leasehold land and buildings are stated at valuation.

capital reserve.

is also the functional currency for the Society.

Going concernAfter reviewing the Group’s forecasts and projections and taking into account the economic conditions and possible changes in trading performance, the directors have a reasonable expectation that the Group has adequate resources to continue in operational existence for the foreseeable future. The Group therefore continues

statements.

Basis of Consolidation

controlled by the group. Control is achieved where the

activities.

The results of subsidiaries which are acquired or disposed of during the year are included in total comprehensive income from the date of acquisition and to the date of disposal applying accounting policies that are consistent with the Group. All intra-group transactions, balances, income and expenses are eliminated in full on consolidation.

GoodwillAcquisitions of subsidiaries and businesses are accounted for using the purchase method. The cost of the business combination is measured at the aggregate of the fair values (at the date of exchange) of assets given, liabilities incurred or assumed, and equity instruments issued by the group in exchange for control of the acquiree plus costs directly attributable to the business combination.

Any excess of the cost of the business combination over

assets and liabilities is recognised as goodwill. If the net fair

cost of the business combination the excess is recognised separately on the face of the consolidated statement of

intangible assets less their residual values over their estimated useful lives on a straight line basis. The

economic lives:

Goodwill – 5 years

useful life or residual value of the asset, amortisation is

accumulated depreciation and accumulated impairment losses.

No depreciation is provided on freehold land or buildings.

Freehold land and buildings are revalued every three years and therefore any annual charge would be immaterial.

Other leasehold properties are depreciated over the period of the lease.

per annum. Items which have been fully depreciated are deleted from the accounts.

determine whether there is any indication that those assets

of possible impairment, the recoverable amount of any

amount. If the estimated recoverable amount is lower, the carrying amount is reduced to its estimated recoverable amount and an impairment loss is recognised immediately

If an impairment loss subsequently reverses, the carrying amount of the asset is increased to the revised estimate of its recoverable amount, but not in excess of the amount that would have been determined had no impairment loss been recognised for the asset in prior years. A reversal of impairment is recognised immediately in

Investment PropertyInvestment properties are included in the balance sheet at open market value. Depreciation is not provided on freehold investment properties. This treatment represents a departure from the requirements of UK GAAP, including Financial Reporting Standard 102 The Financial Reporting Standard applicable in the United Kingdom and Republic

these properties are not held for consumption but for investment and the directors consider that systematic annual depreciation would be inappropriate. The accounting

to give a true and fair view. Depreciation is only one of the

amount which might otherwise have been shown cannot be



Investments Investments comprise investments in unquoted equity instruments which are measured at fair value. Changes

estimated by using an appropriate valuation technique.

Investments in unquoted equity instruments whose fair values cannot be measured reliably are measured at cost less impairment.

Stock Stocks are stated at the lower of cost and net realisable value, being the estimated selling prices less costs to complete and sell. Cost is based on the cost of purchase and any freight or duty charges incurred on an average cost

and attributable overheads.

At each balance sheet date, stocks are assessed for impairment. If stock is impaired, the carrying amount is reduced to its selling prices less costs to complete and

or loss.

Trade and other receivables Trade and other receivables are measured at transaction price less any impairment unless the arrangement

the transaction is measured at the present value of the future receipts discounted at the prevailing market rate of interest. Loans are initially measured at fair value and are subsequently measured at amortised

impairment.

using a valuation technique with any gains or losses being reported in the income statement.

in the balance sheet under the appropriate heading and any fair value movements are recognised in the income statement.

Trade and other payables Trade and other payables are measured at their transaction

transaction in which case the transaction is measured at present value of future payments discounted at prevailing

measured at fair value net of their transaction costs. They are subsequently measured at amortised cost using the

Provisions Provisions are recognised when the company has a present obligation, either legal or constructive, as a result of a past event and it is probable that the company will be required to settle the obligation and a reliable estimate can be made.

obligation is recognised at the present value adopting a pre-tax discount rate. The unwinding of the discount is

period in which it arises.

The Group recognises a provision for accumulated annual leave accrued by employees as a result of services rendered in the current period for which employees can carry forward and use within the next year. The provision is measured at the salary cost of the respective employee in relation to the period of absence.

Capital Reserve The capital reserve relates to the accumulated unrealised

and investment land and buildings.

Turnover Turnover represents total amounts received from holiday operations including commission and cancellation fees, excluding value added tax.

Interest income

method.

Taxation Current tax is recognised for the amount of income tax

or past reporting periods using tax rates that have been enacted or substantively enacted by the reporting date.

Deferred tax is recognised in respect of all timing

and other deferred tax assets are recognised only to the extent that it is probable that they will be recovered against

liabilities.

Deferred tax relating to a non-depreciable asset that is measured using the revaluation model, or to investment properties measured at fair value, is measured using the tax rates and allowances that apply to the sale of the asset.

Deferred tax is calculated using tax rates that have been enacted or substantively enacted by the reporting date that are expected to apply to the reversal of the timing

No provision is made for capital gains tax which would become payable in the event of the freehold and leasehold

Pension costs

separate entity. Once the contributions have been paid, the company has no further payment obligation. The

loss account when they fall due.

Amounts not paid are shown within accruals in the balance sheet. The assets of the plan are held separately from the company in independently administered funds.

Operating lease Rentals payable under operating leases are charged in the

term. Lease incentives are recognised over the lease term on a straight line basis.



Cash and cash equivalents Cash and cash equivalents in the balance sheet comprise cash at banks and in hand and short term deposits with an original maturity date of three months or less. For the

cash equivalents consist of cash and cash equivalents as

management to make judgements, estimates and assumptions about the carrying values of assets and liabilities that are not readily apparent from other sources. The estimates and underlying assumptions are based on historical experience and other factors that are considered

estimates.

The estimates and underlying assumptions are reviewed on a continuing basis. Revisions to accounting estimates are recognised in the period in which the estimate is revised

current and future periods.

The key judgements and sources of estimation uncertainty

Goodwill Goodwill is amortised over its useful life taking into account residual values, where appropriate. The actual life of the asset and residual value are assessed annually and may vary depending on a number of factors. In re-assessing asset lives, factors such as technological innovation, product life cycles and maintenance programmes are taken into account. Residual value assessments consider issues such as future market conditions, the remaining life of the asset and projected disposal values.

Determine whether there are indicators of impairment of the Group’s tangible assets. Factors taken into consideration in reaching such a decision include

performance of the asset and where it is a component of a larger cash-generating unit, the viability and expected future performance of that unit.

Buildings are depreciated over their useful lives taking into account residual values, where appropriate. The actual lives of the assets and residual values are assessed annually and may vary depending on a number of factors. In re-assessing asset lives, factors such as technological innovation, product life cycles and maintenance programmes are taken into account. Residual value assessments consider issues such as future market conditions, the remaining life of the asset and projected disposal values.

Stock valuation

at the lower of cost and the estimated selling price less costs to sell. In assessing the value of the Group’s stock, consideration is given to any impairment in its value as a result of any stock which is likely to become obsolete or which has an estimated selling price less than its cost price. LeasesDetermine whether leases entered into by the company

leases. These decisions depend on an assessment of whether the risks and rewards of ownership have been transferred from the lessor to the lessee on a lease-by-lease basis.



The operating surplus is arrived at after charging/(crediting) 2017 2016 £’000 £’000

Depreciation 584 676 Amortisation of goodwill 0 8 Auditor’s remuneration 33 33 Bank interest and charges 82 77 Bank interest receivable (2) (6)

2017 2016 £’000 £’000At 1 November 3,488 3,682Revaluation movement (819) (194) 2,669 3,488

£1,585,521 arising on the revaluation of freehold and leasehold land and buildings included in note 10. In the event of these properties being disposed of at these valuations, a liability to corporation tax would arise at an amount estimated not to exceed £25,000.

2017 2016 £’000 £’000As at 1 November 18 11Income and expenditure account Share Donation 7

18 18

The Capital Redemption Reserve represents the change in share price in 2013

7. Revenue reserve 2017 2016 £’000 £’000As at 1 November 8,145 7,693Income and expenditure account (418) 452

7,727 8,145 The Revenue Reserve includes all of the current and prior period retained surpluses and

Dandelion Hospitality Limited is a 100% owned subsidiary incorporated in the UK on the

Limited Properties.

The trading results of Dandelion Hospitality Limited for the period 01 November 2016 to 31 October 2017 are as follows:

2017 2016 £’000 £’000Revenue 116 246 Food Costs 52 79 Payroll 37 109

Rent and Facilities 40 59 Administrative expenses 0 3

(13) (4)

expenditure.

The assets and liabilities of Dandelion Hospitality Limited were:

2017 2016 £’000 £’000

Debtors 19 32 less current liabilities (4) (4)

Net Assets 15 28

Representing: 15 28

Shareholders’ Funds 15 28


Group & Society Goodwill TOTAL £’000 £’000 Cost At 1 November 2016 145 145 Additions 0 0

At 31 October 2017 145 145

Amortisation At 1 November 2016 145 145 Charge for the year 0 0

At 31 October 2017 145 145

Net Book Value 0 0At 31 October 2017 0 0

At 31 October 2016 0 0

Freehold Leasehold Computer Fixtures & TOTAL Land & Property Equipment Fitting, heavy Buildings & Motor Catering Equipment Vehicles & Lodges £’000 £’000 £’000 £’000 £’000

Cost or Valuation At 1 November 2016 20,326 2,484 2,438 2,865 28,113Additions 964 266 65 263 1,558Disposals and Deletions 0 0 (6) (171) (177)Valuation Movement (819) 0 0 0 (819)

At 31 October 2017 20,471 2,750 2,497 2,957 28,675

Depreciation & Amortisation At 1 November 2016 0 1,434 1,496 2,021 4,951Disposals and Deletions 0 (99) (99) Charge for the year 0 122 207 255 584

At 31 October 2017 0 1,556 1,703 2,177 5,436

Net Book Value At 31 October 2017 20,471 1,194 794 780 23,239

At 31 October 2016 20,326 1,050 942 844 23,162

Freehold and Leasehold Land and Building Valuations All properties are subject to professional valuation on a regular basis. The basis of valuation is open market value. The total book value of all properties at 31 October 2017 of £20.471m is represented by cost of £18.001m and revaluation of £2.470m.

Capital Commitments Capital Commitments at 31 October 2017 were £807,001 (2016 - £162,238)



11. Investment Properties

The society owns a property know as Altachorvie which has been rented to a third party since 2014 and the current property value is £425,000.

2017 2016 £’000 £’000Cost or valuation Balance b/f 425 1,020 Disposals 0 (854) Valuation Movement 0 259

At 31 October 2017 425 425 Net Book Value As at 31 October 2016 425 425

12. Investments

Group & Society

2017 2016 £’000 £’000Unquoted investments at valuation 3 3

3 3 The Society owns 100% of the issued share capital of Anglo Dutch Sports Limited, a dormant company incorporated in England and Wales.

The Society owns 100% of the £100 issued share capital of Dandelion Hospitality Limited; see note 8 for the trading results of the subsidiary.

2017 2016 £’000 £’000Share capital consists of £1 shares Opening balance 7,519 6,977 Net additions during the year 1,061 542

At 31 October 2017 8,580 7,519

leasehold land and buildings due to the reliefs which are available as a result of improvements to and

corporation tax until such time as currently owned properties are sold (note 5).

Taxation recoverable is nil (2016 - nil).

At the year end, HF Holidays has a bank loan amounting to £789,000 which was secured by a mortgage on Abingworth Hall, Dolserau Hall, Derwent Bank, Chy Morvah, Harrington House ,

2017 2016 £’000 £’000Bank loan due within one year 183 105 Bank loan within one to two years 183 400

0 0

789 971

2017 2016 £’000 £’000Operating (loss) / surplus 351 43 Depreciation & Amortisation 584 684 Interest paid 82 77 Interest received (2) (6)

Decrease /(Increase) in stock 51 (32) Decrease /(Increase) in debtors 183 (159) (Decrease) /Increase in advance bookings (264) 393 (Decrease) /Increase in creditors (692) 745

Net cash generated from operating activities 211 1,727



2017 2016 £’000 £’000 Opening balance 2,299 1,629

(500) 670

Balance at 31 October 1,799 2,299

Share Share Capital Capital 2017 2016 £’000 £’000 Opening balance 7,519 6,977 Increase in share capital 1,248 823 Withdrawal of share capital (187) (281)

Balance at 31 October 8,580 7,519

19. Reconciliation of Movements of Shareholders’ Funds

Consoliated Society Consolidated Society 2017 2017 2016 2016 £’000 £’000 £’000 £’000

375 388 (219) (215)Proposed interest to members (150) (150) (100) (100)Fair value movement on

(643) (643) 771 771 (418) (405) 452 456

Other recognised surpluses/ (819) (194) (194)

Share Donations 7 7Net share capital subscribed 1,061 1,061 542 542

(176) (163) 807 811

Shareholders’ funds at 1 November 2016 19,170 19,142 18,363 18,331

Shareholders’ funds at

31 October 2017 18,994 18,979 19,170 19,142

separately from those of the Society and are invested with independently administered funds. The pension cost represents contributions payable by the Society to the funds and amounted to £180,931 (2016 - £163,000). There were no material amounts due to the funds at the year end.

From 30 March 2008, the Civil Aviation Authority bond was replaced by ATOL protection contributions made by passengers. From 31 March 2008, the Association of Bonded Travel Organisers Trust bank guarantee was replaced by a bond with Travel and General Insurance Company Plc for the sum of £1,275,000.

There were no Post Balance Sheet events.

Group & Soceity

The future minimum operating lease payments are as follows

Land & Buildings 2017 2016 £’000 £’000For leases expiring: Within one year 364 325 Between one and 5 years 837 902 In more than 5 years 1,785 1,969

24. Related Party Transactions

There are no related party transactions to note.




2017 2016 £’000 £’000Key management personnel compensation 540 513

Number NumberFull time equivalents (Admin) 94 85 Full time equivalents (Houses) 239 238

333 323

The Group has exposure to two main areas of risk - foreign exchange currency exposure and liquidity risk.

Foreign exchange transactional currency exposure

and operating expenses being denominated in non-sterling currencies. The net exposure of each currency is monitored and managed by the use of forward foreign exchange contracts. The forward foreign exchange contracts all mature within 12 months.

Liquidity risk

-gations the group has facilities available. Given the maturity of the bank loan in note 15, the group is in position to meet its commitments and obligations as they come due.

2017 2016 £’000 £’000GroupFinancial assets measured at 24 667

Financial assets measured at 3 179 amortised cost Financial liabilities measured 900 1,197 at amortised costFinancial liabilities measured at 0 0

Society Financial assets measured at 24 667

Financial assets measured at 3 179 amortised cost Financial liabilities measured 900 1,197 at amortised cost Financial liabilities measured at 0 0

2017 2016 £’000 £’000Cancellation Charges 470 356TOMS Vat Credit 188 129Non-Associate Fees/Insurance/Other Sundry Income 149 164

807 649


22 | HF Holidays Annual Report & Accounts 2017


PATHWAYS FUNDINCOME STATEMENT FOR THE YEAR ENDED 31 OCTOBER 2017 2017 2016 £’000 £’000 Income 38 20 Expenditure & grants (24) (25)

14 (5)

At 31 October 2017 the balance of the Pathways Fund was £77,870 (2016 - £64,434)

SUMMARY OF SHAREHOLDERSAS AT 31 OCTOBER 2017

No of shares No of members Value £’000 25 to 99 13,918 760100 to 999 22,759 3,140 1,000 and more 22,198 4,680

Withdrawal of share capital 38,875 8,580

As at 31 October 2016

No of shares No of members Value £’000 25 to 99 14,354 784100 to 999 20,825 2,899 1,000 and more 21,922 3,835

Withdrawal of share capital 37,101 7,519

BEQUESTS FOR THE YEAR ENDED 31 OCTOBER 2017 2017 2016 £ £Morris Sols LLP (Late John C Moore) 20,108 0Jacobs & Reeves (Late John F Foyle) 3,593 0Peter Barnicott 6,136Melvyn Colin Brown 2,500Irene Vera Dickenson 8,290Maurice Loader 2,643Rosemary Weaver 0 500 23,701 20,068



Opinion

Limited (the ‘company’) for the year ended 31 October 2017 which comprise the Income Statement, Other Comprehensive Income, Balance Sheet, Statements of Changes in Equity, Cash Flow Statements and the related

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).

• give a true and fair view of the state of the company’s • • then ended; • have been properly prepared in accordance with United • Kingdom Generally Accepted Accounting Practice; and • have been prepared in accordance with the requirements • • Act 2014.

Basis for opinionWe conducted our audit in accordance with International Standards on Auditing (UK) (ISAs (UK) and applicable law. Our responsibilities under those standards are further described in the Auditors’ responsibilities for the audit of

independent of the company in accordance with the ethical

statements in the UK, including the FRC’s Ethical Standard,

accordance with these requirements. We believe that

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 • • is not appropriate; or • • • • continue to adopt the going concern basis of accounting • for a period of at least twelve months from the date when •

Other informationThe directors are responsible for the other information. The other information comprises the information in the

statements and our Report of the Auditors thereon. Our

other information and we do not express any form of assurance conclusion thereon.

responsibility is to read the other information and, in doing so, consider whether the other information is materially

obtained in the audit or otherwise appears to be materially misstated. 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.

Opinion on other matters prescribed by the Co-operative

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

• the information given in the Report of the Directors for • • • the Report of the Directors has been prepared in • accordance with applicable legal requirements

Matters on which we are required to report by exceptionIn the light of the knowledge and understanding of the company and its environment obtained in the course of the

Report of the Directors.

We have nothing to report in respect of the following

Societies Act 2014 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 • • accounting records and returns; or • • law are not made; or • we have not received all the information and explanations • we require for our audit

Responsibilities of directorsAs explained more fully in the Statement of Directors’ Responsibilities set out on page two, the directors are

and for such internal control as the directors determine

that are free from material misstatement, whether due to fraud or error.

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.

statements

Our objectives are to obtain reasonable assurance about

material misstatement, whether due to fraud or error, and to issue a Report of the Auditors that includes our opinion. Reasonable assurance is a high level of assurance, but is

REPORT OF THE INDEPENDENT AUDITORS TO THE MEMBERS OF HF HOLIDAYS LIMITED


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

statements.

A further description of our responsibilities for the

Financial Reporting Council’s website at frc.org.uk/auditorsresponsibilities. This description forms part of our Report of the Auditors.

Use of our report

This report is made solely to the company’s members, as a body, in accordance with section 87 of the Co-operative

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.

Catherine Cooper (Senior Statutory Auditor) for and on behalf of Wilkins Kennedy LLP Statutory AuditorChartered AccountantsGreytown House221-227 High StreetOrpington Kent BR6 0NZ

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