Registered number:
FOR THE YEAR ENDED 31 DECEMBER 2019
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SUNSHINE CRUISE HOLIDAYS LIMITED
COMPANY INFORMATION
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SUNSHINE CRUISE HOLIDAYS LIMITED
CONTENTS
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SUNSHINE CRUISE HOLIDAYS LIMITED
GROUP STRATEGIC REPORT
FOR THE YEAR ENDED 31 DECEMBER 2019
The directors present their strategic report of the Company and the Group for the year ended 31 December 2019.
The Group maintained its strategy to maximise long-term profitability, regardless of the departure date of the products sold. Despite geopolitical events driving adverse cruise ship deployment changes, together with the continued fragile consumer confidence caused by the ongoing Brexit uncertainty and compounded by the Thomas Cook failure, the business achieved very healthy double digit growth in the ticket value of holidays sold.
In an extremely competitive market, success for cruise specialist travel agents in 2020 will continue to be driven by the ability to add value, offer consumer choice, deliver operational efficiency and react quickly to the COVID-19 pandemic. Sunshine Cruise Holidays’ product innovation combined with Dreamlines' expertise in online marketing and systems development allow us to provide unique and attractive holiday products whilst controlling our cost base. The Group's swift action in cutting costs has enhanced its ability to face the challenges of the ongoing COVID-19 pandemic. The results of the Group show a turnover of £91,915,902 (2018 - £76,122,988) and a profit on ordinary activities before taxation of £1,830,338 (2018 - loss of £179,204).
The management of the business and the execution of the Group's strategy are subject to a number of risks. The key business risks and uncertainties affecting the Group are considered below.
- The Group is exposed to various regulators, including the Civil Aviation Authority ("CAA") which issues an Air Travel Organisers Licence ("ATOL") which is required in order for the Group to operate. This license is renewed in September each year and is subject to assessments of fitness and financial criteria, the framework of which is available on the CAA's website (www.caa.co.uk). - Competition - The Group operates in a competitive market particularly around price and product availability. This results in downward pressure on ticket prices and margins. This risk is mitigated by seeking out opportunities to differentiate its product offering by packaging cruises with other holiday elements. - Supplier failure - The Group is reliant on its suppliers to ensure all elements of the holidays it sells are provided to its customers where the Group has acted as a tour organiser. In the event that a supplier is unable to fill its contractual obligations the Group is liable to provide a suitable alternative or a full refund to the customer. The Group mitigates against this risk by spreading its business over a number of selected suppliers. - Economic uncertainty - The demand for cruises is affected by local economic conditions. The uncertainty created by the COVID-19 pandemic along with Brexit, and the ensuing volatility in exchange rates and consumer confidence creates a fragile trading environment. Despite the negative impact upon the cruise industry, the directors believe that the Group is able to quickly adapt to changes in the local market demand, however a prolonged period of booking slowdown could adversely affect financial results.
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SUNSHINE CRUISE HOLIDAYS LIMITED
GROUP STRATEGIC REPORT (CONTINUED)
FOR THE YEAR ENDED 31 DECEMBER 2019
The nature of the business exposes the Group to various commercial risks which may affect the trading performance of the Company. These include:
- acts of terrorism, particularly in key tourist destinations - epidemics in key tourist destinations which threaten the health of tourists - wars or other international uncertainty which affects air travel - natural disasters in key tourist destinations - weather conditions, both in the UK and key tourist destinations - changes in customer behaviour and preferences - increase in government taxes These factors may affect the Group by causing potential customers to cancel or postpone travel plans, reducing the earnings potential of the Group. The Group seeks to minimise such risks by operating a flexible limited commitment business model with the ability to shift capacity amongst a variety of destinations where necessary. In the case of a global shut down of the cruise industry, as we are now experiencing due to the COVID-19 pandemic, the Group seeks to mitigate risk by aggressive cost cutting, while protecting its ability to effectively compete in the future.
The Group's operations expose it to limited financial risks that include liquidity risk, price risk and foreign exchange rate risk. Given the size of the Group, the responsibility of monitoring financial risk management is managed by the board of directors.
- Liquidity risk - The nature of the Group's tour operator business is that expenditure on sales and marketing activities to generate bookings takes place many months prior to the date of departure of the holiday, at which point the Group earns its revenue, and also that the pattern of bookings and departures varies throughout the year. The Group does not borrow externally, and maintains a mixture of cash deposits and inter-company trading balances to ensure that it has sufficient funds available for operations. - Price risk - The Group is exposed to price risk through competitor activities in the cruise markets in which the Group operates. Competitor prices are monitored frequently and appropriate remedial action is taken. Where possible the Group seeks to differentiate its product offering in order to avoid direct price competition. - Foreign exchange risk - The Group is exposed to foreign exchange rate risk when it purchases overseas holiday services in currencies other than British Pounds. Monetary assets and liabilities are translated at the exchange rate prevailing at the statement of financial position date. All exchange gains and losses so arising are taken to the income statement. The Group operates a policy of hedge accounting and, accordingly, bears little risk associated with such foreign exchange movements.
This report was approved by the board on 27 April 2020
and signed on its behalf.
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SUNSHINE CRUISE HOLIDAYS LIMITED
DIRECTORS' REPORT
FOR THE YEAR ENDED 31 DECEMBER 2019
The directors present their report and the financial statements for the year ended 31 December 2019.
The directors are responsible for preparing the Group Strategic Report, the Directors' Report and the
consolidated
financial statements in accordance with applicable law and regulations.
Company law requires the directors to prepare financial statements for each financial year
. Under that law the directors have elected to prepare the financial statements in accordance with applicable law and United Kingdom Accounting Standards (United Kingdom Generally Accepted Accounting Practice), including Financial Reporting Standard 102 ‘The Financial Reporting Standard applicable in the UK and Republic of Ireland'. Under company law the directors must not approve the financial statements unless they are satisfied that they give a true and fair view of the state of affairs of the Company and the Group 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 for the Group's financial statements and then apply them consistently;
∙
make judgments and accounting estimates that are reasonable and prudent;
∙
state whether applicable UK Accounting Standards have been followed, subject to any material departures disclosed and explained in the financial statements;
∙
prepare the financial statements on the going concern basis unless it is inappropriate to presume that the Group will continue in business.
The directors are responsible for keeping adequate accounting records that are sufficient to show and explain the Company's transactions and disclose with reasonable accuracy at any time the financial position of the Company and the Group and to enable them to ensure that the financial statements comply with the Companies Act 2006. They are also responsible for safeguarding the assets of the Company and the Group and hence for taking reasonable steps for the prevention and detection of fraud and other irregularities.
The profit for the year, after taxation, amounted to £
1,337,154
(2018 -
loss
£
287,710
)
.
The total distribution of dividends for the year ended 31 December 2019 was £Nil (2018 - £864,550). The directors do not recomend a final dividend.
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SUNSHINE CRUISE HOLIDAYS LIMITED
DIRECTORS' REPORT (CONTINUED)
FOR THE YEAR ENDED 31 DECEMBER 2019
The directors who served during the year were:
The Group constantly reviews opportunities to expand profitable distribution of cruise holidays, including new overseas markets, marketing channels, partnerships, or products. Such opportunities are commercially sensitive and will be communicated at the appropriate time.
Each of the persons who are
directors at the time when this Directors' Report is approved has confirmed that:
There have been no significant events affecting the Group since the year end, except for the outbreak of the Coronavirus pandemic, which has had a significant impact upon the industry in which the Group operates, as described in note 2.3.
During 2020, the Group will continue to operate as outlined in the principal activity note above.
The auditors, White Hart Associates (London) Limited, will be proposed for reappointment in accordance with
section 485 of the Companies Act 2006.
This report was approved by the board on
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SUNSHINE CRUISE HOLIDAYS LIMITED
INDEPENDENT AUDITORS' REPORT TO THE MEMBERS OF SUNSHINE CRUISE HOLIDAYS LIMITED
We have audited the financial statements of Sunshine Cruise Holidays Limited (the 'parent Company') and its subsidiaries (the 'Group') for the year ended 31 December 2019, which comprise the Group Income Statement, the Group Statement of Comprehensive Income, the Group and parent Company Statements of Financial Position, the Group Statement of Cash Flows, the Group and parent Company Statement of Changes in Equity
and the related notes, including a summary of significant accounting policies. The financial reporting framework that has been applied in their preparation is applicable law and United Kingdom Accounting Standards,
including Financial Reporting Standard 102 ‘The Financial Reporting Standard applicable in the UK and Republic of Ireland' (United Kingdom Generally Accepted Accounting Practice).
In our opinion the financial statements:
We conducted our audit in accordance with International Standards on Auditing (UK) (ISAs (UK)) and applicable law. Our responsibilities under those standards are further described in the Auditors' responsibilities for the audit of the financial statements section of our report. We are independent of the Group in accordance with the ethical requirements that are relevant to our audit of the financial statements in the United Kingdom, including the Financial Reporting Council's Ethical Standard, and we have fulfilled our other ethical responsibilities in accordance with these requirements. We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our opinion.
The impact of uncertainties due to the COVID-19 pandemic on our audit
Uncertainties related to the effects of the COVID-19 pandemic are relevant to understanding our audit of the financial statements. All audits assess and challenge the reasonableness of estimates made by the directors, such as recoverability of investments, intangible assets and related disclosures and the appropriateness of the going concern basis of preparation of the financial statements. All of these depend on assessments of the future economic environment and the Company's future prospects and performance. The COVID-19 pandemic has had an unprecedented impact upon the worldwide economy and in particular upon the travel industry, with many consumers cancelling or delaying travel plans as a result. At the date of this report, the full range of possible effects upon travel companies cannot be estimated or assessed due to the current levels of uncertainty around government and consumer responses to what might happen. We have applied a standardised firm-wide approach in response to that uncertainty when assessing the Group's future prospects and performance. However, no audit is able, or should be expected, to predict unknowable factors or all possible future implications for a group and this is particularly the case in relation to the COVID-19 pandemic.
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SUNSHINE CRUISE HOLIDAYS LIMITED
INDEPENDENT AUDITORS' REPORT TO THE MEMBERS OF SUNSHINE CRUISE HOLIDAYS LIMITED (CONTINUED)
In forming our opinion on the financial statements, which is not modified, we have considered the adequacy of the disclosure made in note 2.3 to the financial statements concerning the Group's ability to continue as a going concern.
As explained in note 2.3, the current COVID-19 pandemic has had an unprecedented impact upon the global economy and especially upon the cruise industry. This has led many consumers to hold off on booking new holidays or cancel existing holidays until the global situation stabilises, resulting in greatly reduced cash flows for travel companies. These problematic trading conditions, in combination with a difficult upcoming ATOL renewal process in September 2020, have negatively impacted the Group's trade as well as its immediate and projected cash flows. In the event that the COVID-19 pandemic worsens for a prolonged period of time, there would be significant doubt about the Group's ability to continue as a going concern. The financial statements do not include the adjustments that would result if the Group were unable to continue as a going concern.
The directors are responsible for the other information. The other information comprises the information included in the Annual Report, other than the financial statements and our Auditors' Report thereon. Our opinion on the financial statements does not cover the other information and, except to the extent otherwise explicitly stated in our report, we do not express any form of assurance conclusion thereon.
In connection with our audit of the financial statements, our responsibility is to read the other information and, in doing so, consider whether the other information is materially inconsistent with the financial statements or our knowledge obtained in the audit or otherwise appears to be materially misstated. If we identify such material inconsistencies or apparent material misstatements, we are required to determine whether there is a material misstatement in the financial statements or a material misstatement of the other information. If, based on the work we have performed, we conclude that there is a material misstatement of this other information, we are required to report that fact.
We have nothing to report in this regard.
In our opinion, based on the work undertaken in the course of the audit:
∙
the information given in the Group Strategic Report and the Directors' Report for the financial year for which the financial statements are prepared is consistent with the financial statements; and
∙
the Group Strategic Report and the Directors' Report have been prepared in accordance with applicable legal requirements.
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SUNSHINE CRUISE HOLIDAYS LIMITED
INDEPENDENT AUDITORS' REPORT TO THE MEMBERS OF SUNSHINE CRUISE HOLIDAYS LIMITED (CONTINUED)
In the light of the knowledge and understanding of the Group and the parent Company and its environment obtained in the course of the audit, we have not identified material misstatements in the Group Strategic Report or the Directors' Report.
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:
As explained more fully in the Directors' Responsibilities Statement on page 3, 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 Auditors' Report that includes our opinion. Reasonable assurance is a high level of assurance, but is not a guarantee that an audit conducted in accordance with ISAs (UK) will always detect a material misstatement when it exists. Misstatements can arise from fraud or error and are considered material if, individually or in the aggregate, they could reasonably be expected to influence the economic decisions of users taken on the basis of these 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:
www.frc.org.uk/auditorsresponsibilities
. This description forms part of our Auditors' Report.
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SUNSHINE CRUISE HOLIDAYS LIMITED
INDEPENDENT AUDITORS' REPORT TO THE MEMBERS OF SUNSHINE CRUISE HOLIDAYS LIMITED (CONTINUED)
This report is made solely to the Company's members
in accordance with Chapter 3 of Part 16 of the Companies Act 2006. Our audit work has been undertaken so that we might state to the Company's members those matters we are required to state to them in an Auditors' Report and for no other purpose. To the fullest extent permitted by law, we do not accept or assume responsibility to anyone other than the Company and the Company's members for our audit work, for this report, or for the opinions we have formed.
for and on behalf of
Chartered Accountants and Statutory Auditors
2nd Floor
Nucleus House
2 Lower Mortlake Road
TW9 2JA
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SUNSHINE CRUISE HOLIDAYS LIMITED
CONSOLIDATED INCOME STATEMENT
FOR THE YEAR ENDED 31 DECEMBER 2019
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SUNSHINE CRUISE HOLIDAYS LIMITED
CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME
FOR THE YEAR ENDED 31 DECEMBER 2019
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SUNSHINE CRUISE HOLIDAYS LIMITED
REGISTERED NUMBER:
03931005
CONSOLIDATED STATEMENT OF FINANCIAL POSITION
AS AT
31 DECEMBER 2019
The financial statements were approved and authorised for issue by the board and were signed on its behalf on 27 April 2020
.
The notes on pages 17 to 39 form part of these financial statements.
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SUNSHINE CRUISE HOLIDAYS LIMITED
REGISTERED NUMBER:
03931005
COMPANY STATEMENT OF FINANCIAL POSITION
AS AT
31 DECEMBER 2019
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SUNSHINE CRUISE HOLIDAYS LIMITED
REGISTERED NUMBER:
03931005
COMPANY STATEMENT OF FINANCIAL POSITION
(CONTINUED)
AS AT
31 DECEMBER 2019
The financial statements were approved and authorised for issue by the board and were signed on its behalf on
The notes on pages 17 to 39 form part of these financial statements.
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CONSOLIDATED STATEMENT OF CHANGES IN EQUITY
FOR THE YEAR ENDED
31 DECEMBER 2019
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SUNSHINE CRUISE HOLIDAYS LIMITED
COMPANY STATEMENT OF CHANGES IN EQUITY
FOR THE YEAR ENDED
31 DECEMBER 2019
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SUNSHINE CRUISE HOLIDAYS LIMITED
CONSOLIDATED STATEMENT OF CASH FLOWS
FOR THE YEAR ENDED 31 DECEMBER 2019
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SUNSHINE CRUISE HOLIDAYS LIMITED
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2019
As disclosed in the Directors' Report, the principal activity of the Company and Group in the year under review was that of a travel provider, primarily selling cruise holidays, as both a travel agent and tour organiser.
The Company is a private company limited by shares and is incorporated in England. The address of the Company's principal place of business and registered office is: Unit F1A Lowry Outlet Mall Salford Quays Salford M50 3AH
2.
Accounting policies
The financial statements have been prepared under the historical cost convention unless otherwise specified within these accounting policies and in accordance with Financial Reporting Standard 102, the Financial Reporting Standard applicable in
the UK and the Republic of Ireland and the Companies Act 2006
.
The preparation of financial statements in compliance with FRS 102 requires the use of certain critical accounting estimates. It also requires Group management to exercise judgment in applying the Group's accounting policies (see note 3).
The Company has taken advantage of the exemption allowed under section 408 of the Companies Act 2006 and has not presented its own Income Statement in these financial statements.
The following principal accounting policies have been applied:
The consolidated financial statements present the results of the Company and its own subsidiaries ("the Group") as if they form a single entity. Intercompany transactions and balances between group companies are therefore eliminated in full.
The consolidated financial statements incorporate the results of business combinations using the purchase method. In the Statement of Financial Position, the acquiree's identifiable assets, liabilities and contingent liabilities are initially recognised at their fair values at the acquisition date. The results of acquired operations are included in the Consolidated Income Statement from the date on which control is obtained. They are deconsolidated from the date control ceases. In accordance with the transitional exemption available in FRS 102, the group has chosen not to retrospectively apply the standard to business combinations that occurred before the date of transition to FRS 102, being 01 January 2015.
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SUNSHINE CRUISE HOLIDAYS LIMITED
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2019
2.
Accounting policies (continued)
The current COVID-19 pandemic has had an unprecedented impact upon the global economy and in particular upon the cruise industry, causing many consumers to cancel or amend their holiday arrangements.
Additionally, with the majority of consumers no longer seeking to book holidays until the global situation stabilises, many travel companies are struggling to cope with greatly reduced cash flows. As a result of this, and in addition to already problematic trading conditions, the upcoming ATOL renewal process in September 2020 will likely be very difficult, with regulators seeking measures to ensure that consumer monies are sufficiently protected. The directors have taken immediate steps to review the Group's financial position, downgraded its forecasts and planned mitigation actions in order to neutralise the financial impact from the significant downturn in trading. The directors have also performed a sensitivity analysis to assess the financial impact of a further slow down in trading from the reforecast and its impact on the liquidity of the business. As a result, the directors believe that it is still appropriate to apply the going concern basis for the foreseeable future.
Functional and presentation currency
The Groups's functional and presentational currency is GBP.
Transactions and balances
Foreign currency transactions are translated into the functional currency using the spot exchange rates at the dates of the transactions.
At each period end foreign currency monetary items are translated using the closing rate. Non-monetary items measured at historical cost are translated using the exchange rate at the date of the transaction and non-monetary items measured at fair value are measured using the exchange rate when fair value was determined.
Foreign exchange gains and losses resulting from the settlement of transactions and from the translation at period-end exchange rates of monetary assets and liabilities denominated in foreign currencies are recognised in the Consolidated Income Statement
except when deferred in other comprehensive income as qualifying cash flow hedges.
Foreign exchange gains and losses that relate to borrowings and cash and cash equivalents are presented in the Consolidated Income Statement within 'finance income or costs'. All other foreign exchange gains and losses are presented in the Consolidated Income Statement within 'other operating income'.
On consolidation, the results of overseas operations are translated into Sterling at rates approximating to those ruling when the transactions took place. All assets and liabilities of overseas operations are translated at the rate ruling at the reporting date. Exchange differences arising on translating the opening net assets at opening rate and the results of overseas operations at actual rate are recognised in other comprehensive income.
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SUNSHINE CRUISE HOLIDAYS LIMITED
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2019
2.
Accounting policies (continued)
Turnover, which excludes value added tax, represents gross ticket sales where the Group is acting as a tour organiser, net commission income where the Group is acting as a travel agent and amounts invoiced for other services provided. Turnover is measured as the fair value of the consideration received or receivable, excluding discounts, rebates, value added tax and other sales taxes.
Turnover relating to sales of holidays where the Group is acting as a tour organiser is recognised on the date of departure of the holiday. Turnover relating to sales of holidays where the Group is acting as a travel agent is recognised on the date of booking of the holiday. Turnover relating to other services is recognised when the service has been provided. Additionally, the Group's subsidiaries in Australia and Singapore recognise turnover 8 weeks prior to the holiday's departure date, as this is the point that the booking becomes unconditional and no cancellation refunds are offered, in accordance with their terms and conditions. Trade debtors still represent gross amounts receivable and trade creditors still represent gross amounts payable in respect of travel and holiday arrangements.
In order to provide the user of the financial statements with a measure of the gross value of business, the gross value of all sales transactions is shown as a memorandum item at the top of the statement of comprehensive income.
Gross retail turnover does not represent statutory turnover in accordance with Section 23 of FRS 102. Where the Group acts as an agent, gross retail turnover represents the price at which products or services have been sold, inclusive of any service fees but excluding commissions paid to third party distributors and any associated sales taxes. In cases where the Group does act as principal, gross retail turnover represents the price at which products or services are sold, net of any value added taxes.
Rentals paid under operating leases are charged to the Consolidated Income Statement on a straight line basis over the lease term.
Benefits received and receivable as an incentive to sign an operating lease are recognised on a straight line basis over the lease term, unless another systematic basis is representative of the time pattern of the lessee's benefit from the use of the leased asset.
The Group has taken advantage of the optional exemption available on transition to FRS 102 which allows lease incentives on leases entered into before the date of transition to the standard on 01 January 2015 to continue to be charged over the period to the first market rent review rather than the term of the lease.
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SUNSHINE CRUISE HOLIDAYS LIMITED
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2019
2.
Accounting policies (continued)
In the research phase of an internal project it is not possible to demonstrate that the project will generate future economic benefits and hence all expenditure on research shall be recognised as an expense when it is incurred. Intangible assets are recognised from the development phase of a project if and only if certain specific criteria are met in order to demonstrate the asset will generate probable future economic benefits and that its cost can be reliably measured. The capitalised development costs are subsequently amortised on a straight line basis over their useful economic lives, which range from 3 to 6 years.
If it is not possible to distinguish between the research phase and the development phase of an internal project, the expenditure is treated as if it were all incurred in the research phase only. Research and development work continues to be directed towards websites' ability to deliver effective search results for customers. This requires the developers to continually undertake improvements to the software architecture.
Interest income is recognised in the Consolidated Income Statement using the effective interest method.
Finance costs are charged to the Consolidated Income Statement over the term of the debt using the effective interest method so that the amount charged is at a constant rate on the carrying amount. Issue costs are initially recognised as a reduction in the proceeds of the associated capital instrument.
Defined contribution pension plan
The Group operates a defined contribution plan for its employees. A defined contribution plan is a pension plan under which the Group pays fixed contributions into a separate entity. Once the contributions have been paid the Group has no further payment obligations.
The contributions are recognised as an expense in the Consolidated Income Statement when they fall due. Amounts not paid are shown in accruals as a liability in the Statement of Financial Position. The assets of the plan are held separately from the Group in independently administered funds.
Page 20
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SUNSHINE CRUISE HOLIDAYS LIMITED
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2019
2.
Accounting policies (continued)
Where share options are awarded to employees, the fair value of the options at the date of grant is charged to the Consolidated Income Statement over the vesting period. Non-market vesting conditions are taken into account by adjusting the number of equity instruments expected to vest at each Statement of Financial Position date so that, ultimately, the cumulative amount recognised over the vesting period is based on the number of options that eventually vest. Market vesting conditions are factored into the fair value of the options granted. The cumulative expense is not adjusted for failure to achieve a market vesting condition.
The fair value of the award also takes into account non-vesting conditions. These are either factors beyond the control of either party (such as a target based on an index) or factors which are within the control of one or other of the parties (such as the Group keeping the scheme open or the employee maintaining any contributions required by the scheme). Where the terms and conditions of options are modified before they vest, the increase in the fair value of the options, measured immediately before and after the modification, is also charged to Consolidated Income Statement over the remaining vesting period. Where equity instruments are granted to persons other than employees, the Consolidated Income Statement is charged with fair value of goods and services received.
Deferred tax balances are recognised in respect of all timing differences that have originated but not reversed by the Statement of Financial Position date, except that:
Deferred tax balances are not recognised in respect of permanent differences except in respect of business combinations, when deferred tax is recognised on the differences between the fair values of assets acquired and the future tax deductions available for them and the differences between the fair values of liabilities acquired and the amount that will be assessed for tax. Deferred tax is determined using tax rates and laws that have been enacted or substantively enacted by the reporting date.
All borrowing costs are recognised in the Consolidated Income Statement in the year in which they are incurred.
Page 21
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SUNSHINE CRUISE HOLIDAYS LIMITED
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2019
2.
Accounting policies (continued)
All intangible assets are considered to have a finite useful life. If a reliable estimate of the useful life cannot be made, the useful life shall not exceed ten years.
The estimated useful lives range as follows:
At each reporting date the company assesses whether there is any indication of impairment. If such indication exists, the recoverable amount of the asset is determined which is the higher of its fair value less costs to sell and its value in use. An impairment loss is recognised where the carrying amount exceeds the recoverable amount.
Depreciation is charged so as to allocate the cost of assets less their residual value over their estimated useful lives, using the straight-line method.
Depreciation is provided on the following basis:
The assets' residual values, useful lives and depreciation methods are reviewed, and adjusted prospectively if appropriate, or if there is an indication of a significant change since the last reporting date.
Gains and losses on disposals are determined by comparing the proceeds with the carrying amount and are recognised in the Consolidated Income Statement.
Investments in subsidiaries are measured at cost less accumulated impairment.
Short term debtors are measured at transaction price, less any impairment. Loans receivable are measured initially at fair value, net of transaction costs, and are measured subsequently at amortised cost using the effective interest method, less any impairment.
Page 22
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SUNSHINE CRUISE HOLIDAYS LIMITED
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2019
2.
Accounting policies (continued)
Cash is represented by cash in hand and deposits with financial institutions repayable without penalty on notice of not more than 24 hours. Cash equivalents are highly liquid investments that mature in no more than three months from the date of acquisition and that are readily convertible to known amounts of cash with insignificant risk of change in value.
In the Consolidated Statement of Cash Flows, cash and cash equivalents are shown net of bank overdrafts that are repayable on demand and form an integral part of the Group's cash management.
Short term creditors are measured at the transaction price. Other financial liabilities, including bank loans, are measured initially at fair value, net of transaction costs, and are measured subsequently at amortised cost using the effective interest method.
Provisions are made where an event has taken place that gives the Group a legal or constructive obligation that probably requires settlement by a transfer of economic benefit, and a reliable estimate can be made of the amount of the obligation.
Provisions are charged as an expense to the Consolidated Income Statement in the year that the Group becomes aware of the obligation, and are measured at the best estimate at the Statement of Financial Position date of the expenditure required to settle the obligation, taking into account relevant risks and uncertainties. When payments are eventually made, they are charged to the provision carried in the Statement of Financial Position.
Page 23
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SUNSHINE CRUISE HOLIDAYS LIMITED
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2019
2.
Accounting policies (continued)
Debt instruments (other than those wholly repayable or receivable within one year), including loans and other accounts receivable and payable, are initially measured at present value of the future cash flows and subsequently at amortised cost using the effective interest method. Debt instruments that are payable or receivable within one year, typically trade debtors and creditors, are measured, initially and subsequently, at the undiscounted amount of the cash or other consideration expected to be paid or received. However, if the arrangements of a short-term instrument constitute a financing transaction, like the payment of a trade debt deferred beyond normal business terms or in case of an out-right short-term loan that is not at market rate, the financial asset or liability is measured, initially at the present value of future cash flows discounted at a market rate of interest for a similar debt instrument and subsequently at amortised cost, unless it qualifies as a loan from a director in the case of a small company, or a public benefit entity concessionary loan.
Derivatives, including interest rate swaps and forward foreign exchange contracts, are not basic financial instruments. Derivatives are initially recognised at fair value on the date a derivative contract is entered into and are subsequently re-measured at their fair value. The method of recognising a gain or loss depends on whether the derivative is designated as a hedging instrument and, if so, the nature of the item being hedged.
The Group designates certain derivatives as either: - Hedges of the fair value of recognised assets or liabilities or a firm commitment (fair value hedge); - Hedges of a particular risk associated with a recognised asset or liability or a highly probable forecast transaction (cash flow hedge); or - Hedges of a net investment in a foreign operation (net investment hedge). The Group documents at the inception of the transaction the relationship between hedging instruments and hedged items, as well as its risk management objectives and strategy for undertaking various hedging transactions. The Group also documents its assessment, both at hedge inception and on an ongoing basis, of whether the derivatives that are used in hedging transactions are highly effective in offsetting changes in fair values or cash flows of hedged items. The full fair value of a hedging derivative is classified as a non-current asset or liability when the remaining hedged item is recognised after more than 12 months, and as a current asset or liability when the remaining maturity of the hedged item is less than 12 months. Trading derivatives are classified as a current asset or liability.
Page 24
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SUNSHINE CRUISE HOLIDAYS LIMITED
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2019
2.
Accounting policies (continued)
The Group uses foreign currency forward contracts to manage its exposure to cash flow risk on its future creditors payable in foreign currencies. These derivatives are measured at fair value at each balance sheet date.
To the extent the cash flow hedge is effective, movements in fair value are recognised in other comprehensive income and presented in a separate cash flow hedge reserve. Any ineffective portions of those movements are recognised in profit or loss for the year.
Gains and losses on the hedging instruments and the hedged items are recognised in profit or loss for the year. When a hedged item is an unrecognised firm commitment, the cumulative hedging gain or loss on the hedged item is recognised as an asset or liability with a corresponding gain or loss recognised in profit or loss.
Equity dividends are recognised when they become legally payable. Interim equity dividends are recognised when paid. Final equity dividends are recognised when approved by the shareholders at an annual general meeting.
In the application of the Group's accounting policies, the directors are required to make judgments, 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 estimates are recognised in the period in which the estimates are 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.
Page 25
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SUNSHINE CRUISE HOLIDAYS LIMITED
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2019
Analysis of turnover by source market:
Page 26
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SUNSHINE CRUISE HOLIDAYS LIMITED
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2019
Page 27
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SUNSHINE CRUISE HOLIDAYS LIMITED
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2019
Page 28
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SUNSHINE CRUISE HOLIDAYS LIMITED
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2019
Page 29
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SUNSHINE CRUISE HOLIDAYS LIMITED
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2019
12.
Taxation (continued)
There are no other factors that may affect future tax charges.
Page 30
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SUNSHINE CRUISE HOLIDAYS LIMITED
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2019
14.
Intangible assets (continued)
Page 31
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SUNSHINE CRUISE HOLIDAYS LIMITED
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2019
Page 32
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SUNSHINE CRUISE HOLIDAYS LIMITED
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2019
15.
Tangible fixed assets (continued)
Page 33
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SUNSHINE CRUISE HOLIDAYS LIMITED
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2019
Page 34
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SUNSHINE CRUISE HOLIDAYS LIMITED
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2019
Page 35
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SUNSHINE CRUISE HOLIDAYS LIMITED
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2019
The above loan in the sum of £1,093,343 (2018: £1,076,624) is from the Group's ultimate parent company, Dreamlines GmbH, and is subject to a subordinated undertaking in favour of the Civil Aviation Authority, in relation to the Company's ATOL licence and cannot be repaid without the Civil Aviation Authority's prior written consent. This loan carries an interest rate of 6% per annum.
Page 36
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SUNSHINE CRUISE HOLIDAYS LIMITED
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2019
21.
Deferred taxation (continued)
Page 37
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SUNSHINE CRUISE HOLIDAYS LIMITED
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2019
Share premium account
Foreign exchange reserve
Other reserves
Profit and loss account
At 31 December 2019, there were contingent liabilities outstanding in respect of counter indemnities given by the Group, in the normal course of business, to the Group's bond insurance obligors in respect of ABTA, IATA and CAR travel bonds amounting to £3,163,570 (2018 - £2,867,866).
The Group operates a defined contributions pension scheme. The assets of the scheme are held separately from those of the Group in an independently administered fund. The pension cost charge represents contributions payable by the Group to the fund and amounted to £305,861 (2018 - £258,501). Contributions totalling £65,486 (2018 - £54,769) were payable to the fund at the reporting date and are included in creditors.
Page 38
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SUNSHINE CRUISE HOLIDAYS LIMITED
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2019
The Group's immediate and ultimate holding company is Dreamlines GmbH, a company registered in Germany which owns all of the issued share capital of the company. Copies of the financial statements of Dreamlines GmbH can be obtained from Hermannstraße 9, 20095 Hamburg, Germany.
Page 39
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