TIDMALLG
RNS Number : 6894A
All Leisure Group PLC
24 February 2014
24 February 2014
All Leisure group plc
Preliminary results for the year ended 31 October 2013
Financial Highlights
-- Full year benefit of the acquisition of the Page & Moy
Travel Group has contributed to the additional GBP10m of tour
operating revenue generated in the year
-- Underlying operating profit[1] before separately disclosed
items and derivatives of GBP0.8 million (2012: GBP0.9 million)
-- Full year pre-tax loss of GBP13.6 million (2012: GBP0.8
million profit). This result reflects a loss on derivative
contracts of GBP4.3 million (2012: GBP1.7 million gain), and also
includes losses of GBP9.9 million (2012: 1.7 million) in relation
to one off, mostly non-cash items
-- Net decrease in cash and cash equivalents of GBP9.4 million
(2012: net increase of GBP10.0m)
-- Total current bank and cash position of GBP14.3 million
(2012: GBP23.8 million) as at the balance sheet date
-- Business backed by net assets of GBP19.2 million (2012: GBP31.8 million)
-- Tour operating division continues to perform strongly,
generating underlying operating profits of GBP4.1 million (2012:
GBP9.1 million) in its first full year within the Group, which
includes seasonal winter losses for the first time
-- Retirement benefit obligations reduced to GBP2.1 million (2012: GBP3.8 million)
Operational Highlights
-- Successful integration of the cruise and tour operating
businesses within one owned freehold head office location in Market
Harborough
-- Appointment of new members to the senior management team
-- Introduction of mv Voyager to the Voyages of Discovery brand
-- Continued operational excellence as indicated by on-board
customer surveys revealing that over 9 out of 10 passengers would
travel with All Leisure brands again
-- Deployment of mv Discovery in a joint arrangement with Cruise
& Maritime Voyages Ltd
-- Discover Egypt remaining profitable despite the ongoing political issues
Strategy
-- Consistent strategy: to achieve growth by exploiting the
increasing demand for destination-led holidays and by providing an
increasing choice of other niche holiday products into the over-55
English speaking market
Commenting on the results the Chairman Roger Allard said
"During the year we have established a new and very experienced
management team to run the business. I believe that we are well
positioned to address the challenges presented by the current
economic climate and geo-political events. The acquisition of the
Page & Moy Travel Group has provided significant cross selling
opportunities to the respective customer bases and will continue to
do so. The successful integration of this business into the Group
has enabled us to realise significant synergies and efficiencies
enabling us to create a much stronger business capable of
delivering sustained growth."
For further information:
All Leisure group plc
Roger Allard Chairman
Tel: CDR 0207 282
2945
Ian Smith Chief Executive Officer
Chris Gadsby Group Finance Director
Tel: 01858 410 456
Financial Public Relations: Citigate Dewe Rogerson
Ginny Pulbrook Tel: 020 7282 2945
Broker and Nominated Panmure Gordon
Adviser
Andrew Godber/ Adam
Pollock 020 7459 3600
All Leisure group plc
Chairman's Statement
Despite the early signs of general consumption-led economic
recovery in the UK, economic conditions remained tough throughout
the trading period for the Group's customers given the low real
returns on savings. There have been a number of other operational
headwinds including continued geo-political uncertainty throughout
the world which have impacted to various degrees on our North
American, African and Middle Eastern products, particularly in the
key market of Egypt. During 2012/13 trading was also adversely
impacted by further technical problems experienced on mv Voyager.
This affected three cruises during her important summer cruise
programme. On the positive side, the management team successfully
integrated the Group's core businesses into Market Harborough
following the closure of the former Head Office in Burgess Hill and
the Swan Hellenic office in Southampton. Finally, despite the
issues above, the underlying operating performance of the Group's
core businesses has remained positive.
Results
Group revenue for the year increased from GBP127.4m to
GBP142.1m, an increase of 11.5% overall. This reflected the full
year impact of the acquisition of Page & Moy Travel Group on 15
May 2012 leading to a 15% increase in Tour Operating revenue.
During the year, revenue from the Cruise division increased by 7.8%
due in part to the year round operation of mv Minerva in 2012/13
following a substantial upgrade in Winter 2011/12.
Overall the Group reported a loss before tax of GBP13.6m (2012
profit before tax GBP0.8m). The underlying operating profit of the
Group before separately disclosed items and derivative contracts
was GBP0.8m (2012: GBP0.9m). This performance included the negative
impact of GBP1.0m lost revenue on the cancelled and curtailed
cruises referred to above. The overall Group performance was
severely impacted by the non-cash negative impact of revaluing
ongoing derivative contracts which resulted in a loss of GBP4.3m
(2012 profit of GBP1.7m). It was also necessary to include under
separately disclosed items a number of material one off charges in
the year's results. These included the cost of restructuring the
Group (GBP1.8m), plus a further GBP0.3m in respect of the write off
of software, and disposal of the former freehold head office in
Burgess Hill. We have also written down the value of the
loss-making mv Discovery by GBP6.7m (non-cash charge), reflecting a
recent third party valuation of the vessel. The Board subsequently
took the decision to market the ship for sale at the end of the
2014 season.
The Cruise business reported an underlying operating loss of
GBP1.9m (2012: loss of GBP6.9m) reflecting the impact of GBP1.0m of
lost revenue on cancelled cruises. This was offset by the continued
strong performance of the Tour Operator business that earned
underlying profits of GBP4.1m (2012: GBP9.1m) in the year. The
decrease in performance resulted from the inclusion of seasonal
winter losses from Page & Moy Travel Group for the first full
year.
Dividend Policy
As explained in last year's results statements, the Board is
proposing not to pay dividends for the foreseeable future, as it
will be concentrating the Group's cash resources on maximising
profits and shareholder value in the medium to long term. The Board
remains confident that shareholders will see a significant
improvement in returns once the cost savings and synergy benefits
that have been achieved are not hampered by the ongoing adverse
economic, commodity and exchange rate environments.
Strategy
The Group's strategy continues to be one of achieving growth
through the provision of an increasing choice of niche holidays
products into the UK over-55's market. Following the acquisition of
Page and Moy Travel Group on 15 May 2012 the cruise and tour
operating businesses have been successfully integrated delivering a
significant improvement in operating efficiency of the Group.
Significant improvements in underlying performance through improved
yield and reduced costs have been delivered. At the same time, the
Board is also committed to reducing the levels of committed risk
within the Group.
Corporate Governance
As an AIM-traded entity, the Group is not required to comply
with the requirements of the UK Corporate Governance Code. However,
the Group seeks to apply aspects of the Code that the Board feels
are appropriate to a group of this size and aims to improve where
possible. The Board reviews Corporate Governance Policy in light of
changes and implications to the Group. Please refer to the Group's
Corporate Governance Statement in the Annual Report for further
details.
Senior Management Changes
As a result of the acquisition of Page & Moy Travel Group,
there were changes to the senior management team to reflect the
Group's new structure. During the year, Group Board Directors Rob
Bryant and Neil Morris left the Group. Director of Fleet
Operations; Stuart Horne, Director of Group Purchasing David
Bryson, Group HR Director Julie Morrison and Chief Operating
Officer Hebridean Island Cruises Ken Charleson were all appointed
to the Board of All Leisure Holidays Limited, replacing Board
members Patrick Ryan, Alan Murray, Mr Gilbert Rutter, Nigel Cressey
and Jos Dewing who all left the Group. I would like to take this
opportunity of thanking them for their service.
Operational Review and Plans for 2014
The outlook for the industry in general over the next 12 months
remains challenging and we are actively managing the impact on
trading by adjusting committed capacity in the cruising division.
For the "Voyages of Discovery" and "Swan Hellenic" brands, we have
adopted a strategy of focusing on earlier sales in order to
minimise discounting and improve load factor. This strategy has
resulted in the average selling price being slightly lower than the
same time last year, although total sales and revenues are greater.
In contrast, the "Hebridean Island Cruises" brand which has limited
capacity, has seen both increased sales and prices in comparison to
last year. As per my trading update of 13 February 2014, I am
delighted with the success of the integration of our Tour Operating
and Cruise businesses. This project has already realised a number
of Group-wide cost savings and operational efficiencies. Synergy
benefits in excess of GBP1m for 2012/13 have already been delivered
and further benefits of these synergies are expected in 2013/14 and
beyond.
Cruising Division
Swan Hellenic is operating mv Minerva in South America this
winter. A significant upgrade during the winter period 2011/12,
which included, adding 32 balconies to cabins, has benefited our
yield on these itineraries.
In February 2013, mv Discovery left the Voyages of Discovery
brand and entered a Joint Venture, between All Leisure Holidays and
Cruise & Maritime Voyages. A similar arrangement is in place
for 257 days this financial year. The Group has decided to dispose
of the loss-making mv Discovery at the end of this financial year,
upon completion of the joint venture.
mv Voyager entered service for the Voyages of Discovery brand in
December 2012 and is currently cruising the Far East. The
unfortunate failure of two generators necessitated the curtailment
of a UK cruise in May 2013 and the two subsequent cruises were also
cancelled to enable the necessary repairs. The repairs were
completed in time for the ship to enter into a 70 day charter
agreement with Allways of Belgium. A similar arrangement with
Allways is in place for 2014 and 2015.
mv Hebridean Princess has recently completed her annual dry dock
and sea trials prior to re-entering service next week.
Tour Operating
In their first full year of ownership, the 'Travelsphere' and
'Just You' brands have continued to perform well. Reported profits
have reduced due to the inclusion, for the first time, of the usual
seasonal winter losses. However, their contribution to the Group's
financial performance in 2013 exceeded budget expectations.
The on-going political situation in Egypt continues to have an
impact on 'Discover Egypt'. The business remained profitable in
2012/13 despite the impact of travel embargos imposed by the
Foreign & Commonwealth Office in July 2013. This is testimony
to the low risk, no commitment operating model used by the
business.
Outlook
During the year we have established a new and very experienced
management team to run the business. I believe that we are well
positioned to address the challenges presented by the current
economic climate and geo-political events. The acquisition of the
Page & Moy Travel Group has provided significant cross selling
opportunities to the respective customer bases and will continue to
do so. The successful integration of this business into the Group
has enabled us to realise significant synergies and efficiencies
enabling us to create a much stronger business capable of
delivering sustained growth.
Given the Group's current forward visibility of trading,
combined with the benefits of capacity management and the cost
reduction measures that have been implemented, the Directors have
increased confidence for the future of the enlarged business.
My sincere thanks go to all staff across the Group, who remain
committed in these challenging conditions.
R J Allard
Chairman
All Leisure group plc
Chief Executive's Report
Operating Review
The disappointing headline results of the Group, largely
resulting from a series of exceptional events, should not detract
from a year of great accomplishment for the Group. Underlying trade
improved significantly in the year with the tour operation
acquisition continuing to perform strongly and the benefits of
capacity reduction in the cruise business having an immediate
impact. In keeping with the strategy of cruise capacity reduction
the Board has taken the decision that the loss-making mv Discovery
will be disposed of at the end of this summer.
2012/13 has also been a very successful year of integration and
synergising delivery for the Group. Our plans to streamline
operations and amalgamate our knowledge base led to the closure of
our Burgess Hill office in May followed by the Southampton office
in December - ahead of schedule. All expertise has now been
centralised at our Head Office in Market Harborough. The
integration exercise was exceedingly well planned and executed
and
has delivered even greater than expected synergies to the Group. I am delighted with the outcome.
Tour Operating
Travelsphere
After extensive customer research helped to re-shape the brand,
Travelsphere was re-launched in September 2012. It is now firmly
re-established as a 3/4-star brand offering value for money, fully
escorted holidays for couples in the more mature market. It also
offered a limited chartered river-cruise programme in 2013.
The brand operates a low-risk business model and has no forward
financial commitment for hotel costs, transportation costs, or
aviation capacity for Summer 2014. It is well known for its
knowledgeable Tour Managers, experts and local guides, and enjoys
exceptional customer loyalty. All of this was tested in October
2013 when the US Government closed all federal and national
buildings for a period of 16 days. A combination of resourceful
Tour Managers and a superb crisis team meant that only three
Travelsphere tours had to be curtailed or cancelled and customer
feedback was very positive given the circumstances.
This year saw the launch of the 'Relax and Discover' range
offering a combination of both relaxation and exploration.
Additionally a number of new partnership products have been
developed with companies such as the Daily Mail. A significant
highlight over the past year has been with hotel quality.
Travelsphere CSQ scores for "Hotel Overall" has increased by two
percentage points to 74% in 2013 demonstrating a substantial shift
upwards in the quality of our hotels.
Travelsphere is currently trading in line with expectations for
2013/14.
Just You
Just You is a tour operator historically specialising in fully
escorted holidays for mature passengers travelling on their own. In
2013 we undertook a comprehensive research & re-branding
initiative leading to a re-launch in September. A new, contemporary
look was designed along with the key message that Just You is not
just for single people. It is for individuals who have a passion
for travel and a desire to fulfil their travel dreams.
The product range is also being expanded following the research.
In addition to the worldwide fly-tour programme, European tours by
rail and all-inclusive holidays there was a lot of evidence to
suggest that City holidays were the main thing missing from our
brochure. We developed 11 new holidays from York to New York and
early signs are promising. New York, perhaps unsurprisingly, is
proving to be an early favourite.
All holidays are designed to recognise the needs of customers
travelling on their own and each holiday includes sole occupancy
rooms at no single supplement, welcome and farewell drinks, a
number of meals and some excursions. Just You operates a low-risk
model and has no forward financial commitment for hotel costs,
transportation costs, or aviation capacity for Summer 2014.
Just You is currently trading well for 2013/14.
Discover Egypt
Despite good early season trading figures, from July last year
Discover Egypt was adversely affected by political unrest in
principal destinations. During the extended duration of the travel
restrictions, the lack of ground and aviation commitment enabled us
to significantly reduce the cost base of the business.
Since the year end, travel restrictions have been relaxed and
the business has been able to recommence its tour programme to
Egypt.
Cruise
Voyages of Discovery
In 12/13, the brand offered niche year-round destination led
cruise on board mv Discovery. During Winter 12/13 this ship was
taken out of service and after a period of technical upgrade and
refit was chartered to Cruise and Maritime Voyages who operated the
vessel in a joint venture with the Group for 242 days. A similar
arrangement for 257 days is planned in 2014, after which the joint
venture will cease.
Following a GBP1.7 million hotel refurbishment, delivered within
budget and on time, mv Voyager entered service for Voyages of
Discovery as its flagship in December 2012. The brand continues to
offer niche, year-round, destination-led cruises on a smaller but
more modern vessel (gross tonnage of 15,271 tonnes, 270 cabins).
The ship has been well received by the Voyages of Discovery
customers in her first year of operation.
As part of our reduction in committed capacity we also began a
four-year rolling short-term charter of mv Voyager to Allways with
a very successful eighty-day, six-cruise summer season in 2013. A
similar programme will operate in 2014.
Despite the clear success enjoyed by mv Voyager in her first
year of operation the overall financial picture has been distorted
by two consecutive incidents in May 2013 which led to the
cancellation of a number of cruises and the repatriation of
passengers on board. Following a lubrication oil inefficiency, both
of the ships' main generators suffered overheating problems on the
approach to Killybegs in Ireland. Further investigations revealed
that a full re-build of the main generators was required so the
cruise was curtailed and the guests transported home. A further
problem was identified with the stern seal which could only be
repaired in a Dry-dock. Emergency plans were put in place and the
Dry-dock in Bremerhaven, Germany, was contracted to take the
vessel. Voyager returned to service just in time for the Allways
charter. These incidents cost the business GBP1.6 million; GBP0.6m
as one off exceptional costs and GBP1m as the resultant loss of
margin from the cruises that did not operate.
Trading performance for 2013/14 is encouraging with 84% of
Winter sales having been achieved before the commencement of the
season.
Swan Hellenic
Swan Hellenic also offers niche year-round, destination-led
cruises on a leased vessel mv Minerva (gross tonnage of 12,449
tonnes). A leader in small ship discovery cruising with the focus
on history and culture, Swan Hellenic include a tailor-made shore
excursion at every port on each cruise.The company also offers a
limited summer programme of destination-led river cruises on
Europe's major rivers on board river cruisers chartered from
A-ROSA.
In 2012/13 the ship operated for 365 nights; an increase of 99
nights over the previous year and revenue increased by over
GBP7.5m. Trading for next year is also encouraging; with over 90%
of Winter sales having been achieved before the commencement of the
season.
Hebridean Island Cruises
Hebridean Island Cruises operates the five star cruise vessel
Hebridean Princess along with limited programme of European River
cruises.
Hebridean Princess (gross tonnage of 2,112 tonnes) carries a
maximum of 50 guests and sails from early March until mid-November.
She operates mainly around the west coast of Scotland, the Western
Isles and includes visits to Northern Ireland, the Isle of Man and
the Northern Isles of Orkney and Shetland.
Hebridean Princess continues to operate successfully and saw a
significant increase in year on year revenue between 2011/12 and
2012/13. This trend is expected to continue in 2013/14 driven by an
increased daily rate.
The vessel has recently and successfully completed its annual
winter dry dock and maintenance programme including undergoing its
statutory 5 year survey and will return to service on the 1(st) of
March.
During the 2014 season the vessel will operate within its normal
cruising grounds as well as returning to Norway for the first time
in five years where she will operate three separate cruise
itineraries from and to Bergen during August.
Following the introduction of a successful European river
cruising programme during 2012 this programme was repeated during
the 2013 season. Hebridean Island Cruises will continue with its
European river cruise programme again in 2014.
Operations
The delivery of services on board mv Voyager, mv Minerva and mv
Discovery is mainly outsourced. This is consistent with the Board's
policy. It is however strategically, technically and commercially
controlled by the senior management of the Company in the UK. There
are two main suppliers for services on board the vessels, V Ships
and Sea Chefs. We use V Ships to employ the deck and engine crew,
who are responsible for the ships' maintenance, mechanical
operations, and health and safety. We use Sea Chefs to employ the
hotel, catering and spa staff.
Outlook
Geo-political events and the wider economic outlook look likely
to remain uncertain but the actions and initiatives already taken
by the Group leave us in a much stronger position to combat these
challenges.
The focus within the Tour Operating business is to introduce new
product and grow both passenger numbers and profitability. A number
of initiatives have already been launched.
For Travelsphere we have added some new pioneering tours into
the 2014 programme. Kashmir, El Salvador, Lithuania, United Arab
Emirates, Nova Scotia and Snowdonia all feature in the 2014
programme.
Our focus for Just You has been around creating a brand new
range of City holidays. We did extensive research with customers
and potential customers as part of the Just You rebrand. In January
we launched 2 new Explore tours, and again we have seen a positive
reaction to these holidays and there will be more to come later in
the year.
Looking ahead, our big volume areas, Italy, North America &
Vietnam, are all performing really well for us for 2014 across both
the Travelsphere and Just You brands.
The Cruise strategy remains one of managing committed capacity.
The joint arrangement with Cruise & Maritime Voyages and our
charter arrangement with Allways will continue in 2014. Within our
own brands, we continue to offer a full and varied programme of
destination led cruises. The demand for this product remains high
and our trading performance relative to previous years is
strong.
The above factors together with the undoubted success of our
integration activities in 2013 make us confident that we will see a
significant improvement in financial performance in 2014 and
beyond.
I Smith
Chief Executive
All Leisure group plc
Finance Director's Report
Financial Performance
Group revenue for the year increased to GBP142.1m, an increase
of GBP14.8m on the previous year. The full year benefit of the
acquisition of the Page & Moy Travel Group contributed to the
additional GBP10.0m of Tour Operating revenue generated by the
Group. During the year, revenue from cruising increased by 7.8%
reflecting the full year operation of mv Minerva. The impact of the
cancelled cruises referred to in the Chairman's statement were
responsible for GBP1.0m of lost revenue.
The operating profit of the Group before separately disclosed
items was GBP0.8m (2012: GBP0.9m). Overall the Group has delivered
a loss before tax for the financial year of GBP13.6m compared to a
profit before tax of GBP0.8m for the year ended 31 October 2012.
This result reflects GBP4.3m of losses on derivative contracts
(2012: profit of GBP1.7m). These are non cash items. This result
also includes GBP9.9m (2012: GBP1.7m) of one off and other
separately disclosed items. These items have been categorised in
the Group's income statement and in note 7 to the financial
statements and included an impairment of mv Discovery of GBP6.7m,
restructuring costs of GBP1.8m and costs relating to cancelled
cruises of GBP0.6m
Notwithstanding these headline results, the Cruise business
showed significant year on year improvement in underlying
performance from GBP6.9m loss in 2012 to GBP1.9m in 2013 inclusive
of GBP1m of lost revenue on cancelled cruises. Underlying Tour
Operating profit reduced from GBP9.1m in 2012 to GBP4.1m in 2013
although this was attributable to the inclusion of Page and Moy
Travel Group winter losses for the first time.
Currency and Fuel Management
In order to maintain an active currency management strategy the
Group employs a variety of derivative financial instruments of
varying complexity. These help the Group to achieve its budgeted
exchange rates which are often higher than market rates, albeit
with risks that often differ from those of a vanilla forward
contract. The majority of the Group's currency requirements for
FY2013 were covered by derivative contracts and in addition the
Group has similar arrangements in place to cover the majority of
its requirements for the year ahead. Given that most of the
derivatives used by the Group do not qualify for hedge accounting,
the Group has chosen to value all of its derivatives at fair value
through the profit and loss.
As at the balance sheet date of 31 October 2013, the net
mark-to-market valuation of these derivative positions was a
liability of GBP4.9m, compared with GBP0.6m as at 31 October 2012.
Such figures are significant, particularly within the context of
the Group's current level of profitability, however it is important
to put these accounting definitions into a commercial context.
Firstly the value of our foreign exchange and fuel hedges (which
are non-cash accounting items) vary significantly over time.
Secondly, in order to deliver currency to the Group at rates at or
above the budgeted rate used to price our product, the Group
generally holds derivatives to maturity irrespective of
fluctuations in their mark to market valuation. Thirdly, as
predominantly over-the-counter instruments, the Group has extensive
experience of further managing its currency purchases by revising
contract terms as market conditions change. For these reasons the
Board is confident that the current hedging strategy is correct
despite any costs that may from time to time be reflected in the
Group income statement, and any potential obligation to buy foreign
currency in quantities that might exceed the Group's short term
requirements.
Capital Expenditure
The Group has invested heavily in its fleet. Over the winter, mv
Hebridean Princess underwent an annual routine dry dock, mv Voyager
underwent a further technical upgrade and hotel refurbishment
before entering the Voyages of Discovery brand and mv Discovery
underwent a technical upgrade and refit before being chartered to
Cruise & Maritime Voyages.
In total, capital expenditure for the year ended 31 October 2013
totaled GBP8.3m, demonstrating management's ongoing commitment to
investing in the Group's product.
Looking forward, mv Hebridean Princess will undergo a further
annual routine dry dock. No other dry dock activity is scheduled
for the 2013/14 financial year.
Cash Flows
Net cash flows from operating activities have decreased by
GBP3.7m compared to 2012 resulting in a net cash outflow of GBP9.4m
for the year ended 31 October 2013.
Total cash and balances at bank at the year-end amounted to
GBP14.3m (2012: GBP23.8m), of which GBP10.7m (2012: GBP18.2m) is
classified as cash and cash equivalents and GBP3.6m (2012: GBP5.6m)
classified as restricted cash. The Group has immediate access to
all of these balances, other than the amounts reported as
restricted cash. Customer deposits at 31 October 2013 amounted to
GBP31.3m (2012: GBP30.2m). At 31 October 2013 the Group had
borrowings of GBP5.2m (2012: GBP5.8m).
Of significance to the cash flow was capital expenditure which
included additions paid for in the year of GBP8.3m.
Retirement Benefit Schemes
The Group operates a defined benefit scheme, the Page & Moy
Limited Retirement Benefits Scheme. At 31 October 2012 the deficit
in the scheme was assessed at GBP3.8m. As at 31 October 2013 the
deficit had reduced significantly to GBP2.1m. This was, in part,
reflective of contributions of GBP0.4m made by the Group during the
period, as agreed in the Recovery Plan.
Going Concern
The Group ended the year with net assets of GBP19.2m (2012:
GBP31.8m), net current liabilities of GBP36.8m (2012: GBP28.4m) and
total cash of GBP14.3m (2012: GBP23.8m). In addition, the Group had
borrowings of GBP5.2m (2012: GBP5.8m).
The Group's business activities, together with the factors
likely to affect its future development, performance and position
are set out above and in the statements of the Chairman and Chief
Executive, detailing the challenging trading environment the Group
faces at present.
In view of the trading environment, coupled with the reduction
in liquid resources available to the Group, the Directors have
prepared a forecast for the business for 24 months from the balance
sheet date to 31 October 2015 taking into account key assumptions
about future trading performance and their plans for the Group
including the previously mentioned fleet reduction. This forecast
also includes variances to take into account events that may not
materialise in line with expectations. The results show that the
Group will continue to have sufficient cash resources over this
period.
The Directors therefore have a reasonable expectation that the
Group has adequate resources to continue in operational existence
for the foreseeable future and they continue to adopt the going
concern basis of accounting in preparing the annual financial
statements.
C J Gadsby
Group Finance Director
Key Performance Indicators
The following table provides current and historical key
performance indicators ('KPI's) employed by the Group:
FY2013 FY2012
Revenues (GBPm) 142.1 127.4
(Loss)/profit before tax for the financial
year (GBPm) (13.6) 0.8
Underlying (loss)/profit[2] before tax for
the financial year (GBPm) (3.8) 2.5
Operating loss before losses/gains on derivative
contracts (GBPm) (9.1) (0.8)
Underlying operating profit2 before losses/gains
on derivative financial instruments and separately
disclosed items (GBPm) 0.8 0.9
Net assets (GBPm) 19.2 31.8
Cash (used)/generated by operating activities
(GBPm) (3.3) 0.4
Capital expenditure (GBPm) 8.3 4.5
Dividends paid (GBPm) - 0.6
Total assets (GBPm) 92.9 110.1
Basic (loss)/profit per share (pence) (21.7) 0.8
Other operating data
The following table provides the current and historical figures
for the principal operating KPIs employed by the Group:
FY2013 FY2012
Passenger nights (i) 213,760 277,854
Available lower berth nights ("ALBNs") 276,677 357,670
Occupancy (%) 77% 78%
Passengers carried - cruise 16,274 21,254
Passengers carried - tour operations 44,286 47,679
Fuel consumption (metric tonnes)
(ii) 14,754 15,723
Fuel cost per metric tonne GBP
(ii) 473 430
Ships - owned 3 3
Ships - leased 1 1
Notes:
(i) Calculated as the total passengers carried multiplied by the
total number of revenue sailing days.
(ii) Excludes unrealised gains and losses on fuel hedges and
fuel consumption during Allways charter.
All Leisure group plc
Consolidated Income Statement
For the year ended 31 October 2013
Note 2013 2012
GBP'000 GBP'000
Total Total
Revenue
Cruising 65,824 61,044
Tour operating 76,319 66,349
Total revenue 5 ,6 142,143 127,393
Costs, expenses and other income
Operating:
Cruising (58,265) (51,919)
Tour operating (54,699) (49,178)
Total (112,964) (101,097)
Selling and administrative (31,488) (22,213)
Depreciation 9 (5,487) (4,426)
Amortisation 9 (1,344) (950)
Other income 8 - 475
Rental income 5 8 16
Operating loss before (losses)/gains
on derivative contracts (9,132) (802)
(Losses)/gains on derivative contracts 6 (4,277) 1,671
Operating (loss)/profit 6,9 (13,409) 869
Investment revenue 5 160 131
Finance costs (387) (197)
(Loss)/profit before tax (13,636) 803
Tax credit/(charge) 10 226 (304)
(Loss)/profit for the financial
year 6 (13,410) 499
Earnings per share (pence):
Basic 12 (21.7)p 0.8p
Diluted 12 (21.7)p 0.8p
All results are derived from continuing operations
All results are attributable to equity holders of the parent
Company.
All Leisure group plc
Consolidated Statement of Comprehensive Income
For the year ended 31 October 2013
2013 2012
GBP'000 GBP'000
Total Total
(Loss)/profit for the financial
year (13,410) 499
Items that will not be reclassified
subsequently to profit or loss:
Losses on property revaluation (24) -
Actuarial gains/(losses) on defined
benefit pension schemes 1,258 (820)
Deferred tax on pensions (365) 188
Total comprehensive loss for
the financial year (12,541) (133)
All Leisure group plc
Consolidated Statement of Changes in Equity
At 31 October 2013
Share Currency
Share premium Revaluation translation Retained
capital account reserve reserve earnings Total
Note GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000
At 1 November 2011 617 13,346 47 12 18,494 32,516
Profit for the financial
year - - - - 499 499
Actuarial losses on
defined benefit pension
schemes - - - - (820) (820)
Deferred tax on pensions - - - - 188 188
Total comprehensive
loss for the financial
year - - - - (133) (133)
Dividends paid 11 - - - - (605) (605)
At 31 October 2012 617 13,346 47 12 17,756 31,778
At 1 November 2012 617 13,346 47 12 17,756 31,778
Loss for the financial
year - - - - (13,410) (13,410)
Revaluation of property - - (24) - - (24)
Actuarial gains on defined
benefit pension schemes - - - - 1,258 1,258
Deferred tax on pensions - - - - (365) (365)
Total comprehensive loss
for the financial year - - (24) - (12,517) (12,541)
At 31 October 2013 617 13,346 23 12 5,239 19,237
Revaluation reserve: At 31 October 2013 the group reclassified
Discovery Mews, Copthorne, Surrey as held for sale, and revalued
the property to its fair value of GBP350,000.
Currency translation reserve: At 31 October 2013 one of the
Group's subsidiary companies has a US$ functional currency and the
translation reserve represents the exchange gains and losses
arising on the retranslation of the net assets of this subsidiary
entity.
All Leisure group plc
Consolidated Balance Sheet
At 31 October 2013
Note 2013 2012
GBP'000 GBP'000
Non-current assets
Intangible assets 21,324 22,452
Property, ships, plant and
equipment 39,567 44,725
Investment property - -
Trade and other receivables 3,840 3,840
Deferred tax asset 1,739 2,318
66,470 73,335
Current assets
Inventories 2,312 1,629
Trade and other receivables 9,400 10,822
Derivative financial instruments 91 247
Assets held for sale 350 250
Restricted bank balances 3,594 5,566
Cash and cash equivalents 10,685 18,242
Total current bank balances
and cash in hand 14,279 23,808
26,432 36,756
Total assets 92,902 110,091
Current liabilities
Trade and other payables (57,321) (63,561)
Current tax liabilities (5) (11)
Borrowings (580) (580)
Provisions (358) (219)
Derivative financial instruments (4,947) (827)
(63,211) (65,198)
Non-current liabilities
Borrowings (4,622) (5,202)
Deferred tax liabilities (2,299) (2,741)
Retirement benefit obligations (2,101) (3,807)
Long-term provisions (1,432) (1,365)
(10,454) (13,115)
Total liabilities (73,665) (78,313)
Net assets 19,237 31,778
Equity
Share capital 617 617
Share premium account 13,346 13,346
Revaluation reserve 23 47
Currency translation reserve 12 12
Retained earnings 5,239 17,756
Total equity 19,237 31,778
The financial statements of All Leisure group plc, registered
number 01609517, were approved by the Board of directors and
authorised for issue on 21 February 2014.
They were signed on its behalf by:
C J Gadsby
Director
All Leisure group plc
Consolidated Cash Flow Statement
For the year ended 31 October 2013
2013 2012
Note GBP'000 GBP'000
Net cash (outflow)/inflow from operating
activities 13 (3,312) 397
Investing activities
Interest received 152 131
Rental income 8 16
Proceeds on disposal of property,
plant and equipment 499 -
Proceeds on disposal of assets held
for sale 250 -
Purchases of property, plant and
equipment (8,348) (4,542)
Purchase of subsidiaries (net of
cash acquired) - 5,872
Movement in restricted cash held
on deposit 1,972 2,899
Net cash (used)/generated from investing
activities (5,467) 4,376
Financing activities
Dividends paid - (605)
(Repayment)/draw down of borrowings (580) 5,782
Net cash (used)/generated in financing
activities (580) 5,177
Net (decrease)/increase in cash and
cash equivalents (9,359) 9,950
Cash and cash equivalents at beginning
of year 18,242 6,735
Effect of foreign exchange rate changes 1,802 1,557
Cash and cash equivalents at end
of year 10,685 18,242
1. Financial information
The financial information set out in the announcement does not
constitute the Company's statutory accounts for the years ended 31
October 2013 or 31 October 2012, but is derived from those
accounts. Statutory accounts for the year ended 31 October 2012
have been delivered to the Registrar of Companies and those for the
year ended 31 October 2013 will be delivered following the
Company's annual general meeting. The auditors have reported on
those accounts: their reports were unqualified, did not draw
attention to any matters by way of emphasis and did not contain
statements under s498 (2) or (3) of the Companies Act 2006.
While the financial information included in this preliminary
announcement has been prepared in accordance with the recognition
and measurement criteria of International Financial Reporting
Standards (IFRSs), this announcement does not itself contain
sufficient information to comply with IFRSs.
The financial statements have been prepared on the historical
cost basis, except for the revaluation of certain properties,
financial instruments and defined benefit scheme related employee
benefits. The principal accounting policies adopted are set out
below. The financial statements have been prepared on a going
concern basis. The responsibility statement below has been prepared
in connection with the Company's full annual report for the year
ended 31 October 2013. Certain parts thereof are not included
within this announcement. We confirm to the best of our
knowledge:
- The financial statements, prepared in accordance with IFRSs as
adopted by the European Union, give a true and fair view of the
assets, liabilities, financial position and profit and loss of the
Company and the undertakings included in the consolidation taken as
a whole; and
- The management report, which is incorporated into the
directors' report, includes a fair review of the development and
performance of the business and the position of the Company and the
undertakings included in the consolidation as a whole, together
with a description of the principal risks and uncertainties they
face.
The responsibility statement was approved by the board of
directors on 24 February 2014 and is signed on its behalf by:
Roger Allard - Executive Chairman
Chris Gadsby - Group Finance Director
2. Significant accounting policies
Basis of accounting
The financial statements have been prepared in accordance with
International Financial Reporting Standards (IFRSs) adopted by the
European Union.
The financial statements have been prepared on the historical
cost basis, except for the revaluation of certain properties and
financial instruments. The principal accounting policies adopted
are set out below.
The financial statements have been prepared on a going concern
basis as discussed in the Finance Director's Report.
The principal accounting policies adopted are set out below.
These policies have been applied consistently unless otherwise
stated.
Basis of consolidation
The consolidated financial statements incorporate the financial
statements of the Company and entities controlled by the Company
(its subsidiaries) made up to 31 October each year. Control is
achieved when the Company has the power to govern the financial and
operating policies of an investee entity so as to obtain benefits
from its activities.
All subsidiaries are 100% owned and there are no non-controlling
interests in the Group.
The results of subsidiaries acquired or disposed of during the
year are included in the consolidated income statement from the
effective date of acquisition or up to the effective date of
disposal, as appropriate.
2. Significant accounting policies (continued)
Basis of consolidation (continued)
Where necessary, adjustments are made to the financial
statements of subsidiaries to bring the accounting policies used
into line with the IFRS policies used by the Group.
All intra-group transactions, balances, income and expenses are
eliminated on consolidation.
Going concern
The directors have, at the time of approving the financial
statements, a reasonable expectation that the Company and the Group
have adequate resources to continue in operational existence for
the foreseeable future. Thus they continue to adopt the going
concern basis of accounting in preparing the financial statements.
Further detail is contained in the Finance Director's report.
Business combinations
Acquisitions of subsidiaries and businesses are accounted for
using the acquisition method. The consideration for each
acquisition 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 acquire. Acquisition-related costs are recognised in profit
or loss as incurred.
The acquiree's identifiable assets, liabilities and contingent
liabilities that meet the conditions for recognition under IFRS 3
are recognised at their fair value at the acquisition date, except
that deferred tax assets and liabilities or assets related to
employee benefit arrangements are recognised and measured in
accordance with IAS 12 Income Taxes and IAS 19 Employee benefits
respectively.
Intangible Assets - Goodwill
Goodwill arising in a business combination is recognised as an
asset at the date that control is acquired (the acquisition date).
Goodwill is measured as the excess of the sum of the consideration
transferred and the fair value of the acquirer's previously held
equity over the net of the acquisition-date amounts of the
identifiable assets acquired and the liabilities assumed.
If, after reassessment, the Group's interest in the net fair
value of the acquiree's net assets exceeds the sum of the
consideration transferred, the excess is recognised immediately in
profit or loss as a bargain purchase gain.
Goodwill is not amortised but is reviewed for impairment at
least annually. For the purpose of impairment testing, goodwill is
allocated to each of the Group's cash-generating units expected to
benefit from the synergies of the combination. Cash-generating
unit's to which goodwill has been allocated are tested for
impairment annually, or more frequently when there is an indication
that the unit may be impaired. If the recoverable amount of the
cash-generating unit is less than the carrying amount of the unit,
the impairment loss is allocated first to reduce the carrying
amount of any goodwill allocated to the unit and then to the other
assets of the unit pro-rata on the basis of the carrying amount of
each asset in the unit. An impairment loss recognised for goodwill
is not reversed in a subsequent period.
On disposal of a subsidiary, the attributable amount of goodwill
is included in the determination of the profit or loss on
disposal.
Intangible assets - Other
Intangible assets other than goodwill with a finite useful life
are carried at cost less amortisation and any impairment losses.
Intangible assets with indefinite useful lives are not amortised.
For all other intangibles, amortisation is charged on a
straight-line basis over the asset's useful life, as follows:
Customer relationships 5% - 10%
Trademarks 2% - 4%
Computer software 25%
2. Significant accounting policies (continued)
Revenue recognition
Revenue comprises sales to third parties (excluding VAT and
similar sales, port and other taxes).
Cruise revenues and cruise charter revenues, together with
revenues from onboard and other activities, which include
transportation are recognised in income for each day of the cruise
as it progresses. Shore excursion revenue is recognised on the date
of the excursion.
Tour operating revenues, including excursions, insurance revenue
and other services supplied to customers in the ordinary course of
business, are taken to the income statement on holiday
departure.
Client monies received at the balance sheet date relating to
holidays commencing after the year end are deferred and included
within trade and other payables.
Interest income is recognised when it is probable that the
economic benefits will flow to the Group and the amount of income
can be measured reliably. Interest income is accrued on a time
basis, by reference to the principal outstanding and at the
effective interest rate applicable, which is the rate that exactly
discounts estimated future cash receipts through the expected life
of the financial asset to that asset's net carrying amount.
Other revenue and associated expenses are taken to the income
statement as earned or incurred.
Revenue and expenses exclude intra-group transactions.
Foreign exchange
The individual financial statements of each Group company are
presented in the currency of the primary economic environment in
which it operates (its functional currency). For the purpose of the
consolidated financial statements, the results and financial
position of each Group company are expressed in pounds sterling,
which is the functional currency of the Company, and the
presentation currency for the consolidated financial
statements.
In preparing the financial statements of the individual
companies, transactions in currencies other than the entity's
functional currency (foreign currencies) are recorded at the rates
of exchange prevailing on the dates of the transactions. At each
balance sheet date, monetary assets and liabilities that are
denominated in foreign currencies are retranslated at the rates
prevailing at the balance sheet date. Non-monetary items carried at
fair value that are denominated in foreign currencies are
translated at the rates prevailing at the date when the fair value
was determined. Non-monetary items that are measured in terms of
historical cost in a foreign currency are not retranslated.
For the purpose of presenting consolidated financial statements,
the assets and liabilities of the Group's foreign operations are
translated at exchange rates prevailing on the balance sheet date.
Income and expense items are translated at the average exchange
rates for the period, unless exchange rates fluctuate significantly
during that period, in which case the exchange rates at the date of
transactions are used. Exchange differences arising, if any, are
classified as equity and recognised in the Group's foreign currency
translation reserve. Such translation differences are recognised as
income or as expenses in the period in which the operation is
disposed of.
Borrowing costs
Borrowing costs directly attributable to the acquisition,
construction or production of qualifying assets, which are assets
that necessarily take a substantial period of time to get ready for
their intended use or sale, are added to the cost of those assets,
until such time as the assets are substantially ready for their
intended use or sale.
All other borrowing costs are recognised in profit or loss in
the period in which they are incurred.
Property, ships, plant and equipment
Land and buildings held for administrative purposes are stated
in the balance sheet at their revalued amounts, being the fair
value at the date of revaluation, less any subsequent accumulated
depreciation and subsequent accumulated impairment losses.
Revaluations are performed with sufficient regularity such that the
carrying amount does not differ materially from that which would be
determined using fair values at the balance sheet date. The
freehold property owned by All Leisure Holidays Ltd was revalued in
October 2013 and the freehold property owned by Page & Moy
Travel Group Air Holidays Ltd was fair valued at entry into the
Group on 15 May 2012.
2. Significant accounting policies (continued)
Property, ships, plant and equipment (continued)
Any revaluation increase arising on the revaluation of such land
and buildings is credited to the properties' revaluation reserve,
except to the extent that it reverses a revaluation decrease for
the same asset previously recognised as an expense, in which case
the increase is credited to the income statement to the extent of
the decrease previously charged. A decrease in carrying amount
arising on the revaluation of such land and buildings is charged as
an expense to the extent that it exceeds the balance, if any, held
in the properties' revaluation reserve relating to a previous
revaluation of that asset.
Depreciation on revalued buildings is charged to income. On the
subsequent sale of a revalued property, the attributable
revaluation surplus remaining in the properties' revaluation
reserve is transferred directly to retained earnings.
Freehold land is not depreciated.
Property, ships, plant and equipment are stated at cost or
valuation less accumulated depreciation and any impairment in
value.
Depreciation is provided on all property, dry docks, ship
improvements and plant and equipment, other than freehold land, at
rates calculated to write off the cost or revalued amount, less
estimated residual value of each asset evenly over its expected
useful life, as follows:
Freehold buildings 2% per annum straight line
Cruise ships 5% - 50% per annum straight line
Leasehold improvements Over lease period
Office equipment 25% per annum straight line
Motor vehicles 25% per annum straight line
The carrying values of property, ships, plant and equipment are
reviewed at least annually for impairment or if events or changes
in circumstances indicate the carrying value may not be
recoverable.
The assets' residual values, useful lives and depreciation
methods are reviewed, and adjusted if appropriate, at each
financial year end. Further details regarding the residual values
of the cruise ships are provided in note 3.
Costs relating to mandatory cruise ship dry docks are
capitalised and depreciated over the period up to the next dry dock
where appropriate.
An item of property, ships and equipment is derecognised upon
disposal or when no future economic benefits are expected to arise
from the continued use of the asset. Any gain or loss arising on
the disposal or retirement of an item of property, ships and
equipment is determined as the difference between sales proceeds
and the carrying amount of the asset and is recognised in profit or
loss.
Investment property
Investment property, which is property held to earn rentals, is
stated at deemed cost as the Group elected, under the transitional
arrangements available under IFRS 1, to use the previous carrying
value under UK GAAP as deemed cost on transition to IFRS. The
investment property is depreciated on a straight-line basis at 2%
per annum. The land on which it is situated is not depreciated.
An investment property is derecognised upon disposal or when the
investment property is permanently withdrawn from use and no future
economic benefits are expected from the disposal. Any gain or loss
arising on derecognition of the property (calculated as the
difference between the net disposal proceeds and the carrying
amount of the asset) is included in the profit or loss in the
period in which the property is derecognised.
Non-current assets held for sale
The Group classifies non-current assets held for sale if their
carrying amount will be recovered through a sale transaction rather
than through continuing use. To be classified as held for sale, the
asset must be available for immediate sale in its present condition
subject only to terms that are usual and customary for the sale of
such assets, and their sale must be highly probable. Sale is
considered to be highly probable when management is committed to a
plan to sell the assets and an active programme to locate a buyer
and complete the plan has been initiated at a price that is
reasonable in relation to their current fair value, and there is an
expectation that the sale will be completed
2. Significant accounting policies (continued)
Non-current assets held for sale (continued)
within one year from the date of classification.
Non-current assets classified as held for sale are carried on
the Group's balance sheet at the lower of their carrying amount and
fair value less costs to sell.
Impairment of tangible and intangible assets
At the end of each reporting period, the Group reviews the
carrying amounts of its tangible and intangible assets to determine
whether there is any indication that those assets have suffered an
impairment loss. If any such indication exists, the recoverable
amount of the asset is estimated in order to determine the extent
of the impairment loss (if any). Where the asset does not generate
cash flows that are independent from other assets, the Group
estimates the recoverable amount of the cash-generating unit to
which the asset belongs.
Recoverable amount is the higher of fair value less costs to
sell and value in use. In assessing value in use, the estimated
future cash flows are discounted to their present value using a
pre-tax discount rate that reflects current market assessments of
the time value of money and the risks specific to the asset for
which the estimates of future cash flows have not been
adjusted.
If the recoverable amount of an asset (or cash-generating unit)
is estimated to be less than its carrying amount, the carrying
amount of the asset (or cash-generating unit) is reduced to its
recoverable amount. An impairment loss is recognised in the income
statement as an expense immediately, unless the relevant asset is
carried at a revalued amount, in which case the impairment loss is
treated as a revaluation decrease.
Where an impairment loss subsequently reverses, the carrying
amount of the asset (or cash-generating unit) is increased to the
revised estimate of its recoverable amount, but so that the
increased carrying amount does not exceed the carrying amount that
would have been determined had no impairment loss been recognised
for the asset (or cash-generating unit) in prior years. A reversal
of an impairment loss is recognised as income immediately, unless
the relevant asset is carried at a revalued amount, in which case
the reversal of the impairment loss is treated as a revaluation
increase.
Financial instruments
Financial assets and financial liabilities are recognised on the
Group's balance sheet at fair value when the Group becomes a party
to the contractual provisions of the instrument.
Financial assets
All financial assets are recognised and derecognised on a trade
date where the purchase or sale of a financial asset is under a
contract whose terms require delivery of the financial asset within
the timeframe established by the market concerned, and are
initially measured at fair value, plus transaction costs, except
for those financial assets classified as at fair value through
profit or loss, which are initially measured at fair value.
In accordance with IAS 39, 'Financial Instruments: Recognition
and Measurement', the Group's financial assets are classified into
the following specified categories:
-- loans and receivables; and
-- financial assets 'at fair value through profit or loss' ("FVTPL").
The classification depends on the nature and purpose of the
financial assets and is determined at the time of initial
recognition. Currently the Group does not have any financial assets
that are classified as 'held to maturity' or 'available-for-sale',
as defined by IAS 39.
Loans and receivables
Trade receivables, loans, and other receivables that have fixed
or determinable payments that are not quoted in an active market
are classified as 'loans and receivables'. Loans and other
receivables are measured at amortised cost using the effective
interest method, if the time value of money is significant, less
any provision for impairment. Gains and losses are recognised in
income when the loans and receivables are derecognised or impaired.
This category of financial asset includes trade receivables.
2. Significant accounting policies (continued)
Financial assets at FVTPL
Financial assets at FVTPL are stated at fair value, with any
gains or losses arising on remeasurement recognised in profit or
loss. In respect of the Group, financial assets at FVTPL can
include the Group's fuel and foreign currency derivatives with
their fair value being determined by external valuers using market
data (please refer to note 3 for further details).
Bank balances and cash in hand
Restricted cash comprises cash deposits which have restrictions
governing their use and are classified as current or non-current
dependent on the remaining length of the restriction, which is
determined from contractual terms governing the restriction. Cash
and cash equivalents comprise cash in hand, cash held in banks
accounts with no access restrictions and bank or money market
deposits repayable on demand or maturing within three months of
inception. If the bank or money market deposits have an original
maturity of three months or more these are disclosed as 'interest
bearing bank deposits' outside cash and cash equivalents. This
reflects the contractual terms of the deposit agreements such that
whilst the Group often has immediate access to the bank deposits,
the counterparty has the right to restrict interest payments in the
event of early withdrawal. Interest income on these balances is
recognised using the effective interest method.
Impairment of financial assets
Financial assets, other than those at FVTPL, are assessed for
indicators of impairment at each balance sheet date. Financial
assets are impaired where there is objective evidence that, as a
result of one or more events that occurred after the initial
recognition of the financial asset, the estimated future cash flows
of the investment have been reduced.
For certain categories of financial asset, such as trade
receivables, assets that are assessed not to be impaired
individually are subsequently assessed for impairment on a
collective basis.
If, in a subsequent period, the amount of the impairment loss
decreases and the decrease can be related objectively to an event
occurring after the impairment was recognised, an appropriate
portion of the loss previously recognised is reversed.
De-recognition of financial assets
The Group derecognises a financial asset only when the
contractual rights to the cash flows from the asset expire; or it
transfers the financial asset and substantially all the risks and
rewards of ownership of the asset to another entity. If the Group
neither transfers nor retains substantially all the risks and
rewards of ownership and continues to control the transferred
asset, the Group recognises its retained interest in the asset and
an associated liability for amounts it may have to pay. If the
Group retains substantially all the risks and rewards of ownership
of a transferred financial asset, the Group continues to recognise
the financial asset and also recognises a collateralised borrowing
for the proceeds received.
Financial liabilities
Financial liabilities are classified as either financial
liabilities at FVTPL or financial liabilities measured at amortised
cost.
Financial liabilities at amortised cost
Other financial liabilities, including borrowings, are initially
measured at fair value, net of transaction costs. Other financial
liabilities are subsequently measured at amortised cost using the
effective interest method, with interest expense recognised on an
effective yield basis. The effective interest method is a method of
calculating the amortised cost of a financial liability and of
allocating interest expense over the relevant period. The effective
interest rate is the rate that exactly discounts estimated future
cash payments through the expected life of the financial liability,
or, where appropriate, a shorter period. This category of financial
liabilities includes trade payables, accruals, deferred income and
borrowings.
2. Significant accounting policies (continued)
Financial liabilities at FVTPL
Financial liabilities are classified as at FVTPL where the
financial liability is either held for trading or it is designated
as at FVTPL. The Group has not designated any financial liabilities
as being at FVTPL and accordingly only holds financial instruments
in this category that are deemed to be held for trading under the
provisions of IAS 39.
With respect to the Group, the financial liabilities that can be
classified as financial liabilities that are held for trading are
the derivative instruments that are not designated and effective as
hedging instruments (see the derivative accounting policy
below).
Financial liabilities at FVTPL are stated at fair value, with
any resultant gain or loss recognised in profit or loss. The net
gain or loss recognised in profit or loss incorporates any interest
paid on the financial liability.
Derecognition of financial liabilities
The Group derecognises financial liabilities when, and only
when, the Group's obligations are discharged, cancelled or they
expire.
Derivative financial instruments
The Group's activities expose it primarily to the financial
risks of changes in foreign exchange rates and changes in the price
of fuel for the ships. Derivative financial instruments are used by
the Group to mitigate its exposure to movements in currency
exchange rates and movements in the price of fuel.
The majority of the Group's derivatives do not meet the hedge
classification criteria of IAS 39. The Group has chosen to measure
all its derivatives at fair value through profit and loss (FVTPL),
with the movement being disclosed on the face of the income
statement.
Derivative financial instruments are measured at fair value as
described above.
A derivative is presented as a non-current asset or a
non-current liability if the remaining maturity of the instrument
is more than 12 months and it is not expected to be realised or
settled within 12 months. Other derivatives are presented as
current assets or current liabilities.
Equity instruments
An equity instrument is any contract that evidences a residual
interest in the assets of the Group after deducting all of its
liabilities. Equity instruments issued by the Group are recorded at
the proceeds received, net of direct issue costs.
Share capital and share premium account
There is one class of shares. When new shares are issued, they
are recorded in share capital at their par value. The excess of the
issue price over the par value is recorded in the share premium
account. Incremental external costs directly attributable to the
issue of new shares are recorded in equity as a deduction, net of
tax, in the share premium account.
Dividends
Dividends are provided for in the period in which they become a
binding liability on the Company.
Provisions
A provision is recognised in the balance sheet when the Group
has a present obligation (legal or constructive) as a result of a
past event, it is probable that an outflow of economic benefits
will be required to settle the obligation and a reliable estimate
can be made of the amount of the obligation. Provisions are
measured at the Directors' best estimate of the expenditure
required to settle the obligation at the balance sheet date, and
are discounted to present value where the effect is material.
When some or all of the economic benefits required to settle a
provision are expected to be recovered from a third party, a
receivable is recognised as an asset if it is virtually certain
that reimbursement will be received and the amount of the
receivable can be measured reliably.
2. Significant accounting policies (continued)
Inventories
Inventories representing engineering spares, fuels, lubricants
and consumables are stated at the lower of cost (being purchase
price to the Group) and net realisable value.
Where necessary, provision is made for obsolete and damaged
stocks.
Leases
Leases taken by the Group are assessed individually as to
whether they are finance leases or operating leases.
Leases where the lessor retains substantially all the risks and
benefits of ownership of the asset are classified as operating
leases. Operating lease rental payments are recognised as an
expense in the income statement on a straight-line basis over the
lease term. The benefit of any lease incentives is spread over the
term of the lease.
All Group leases (which include Bareboat Charter agreements) are
classified as operating leases.
Taxation
The tax expense represents the sum of current tax expense and
deferred tax expense.
Current tax payable is based on taxable profit for the year.
Taxable profit differs from net profit as reported in the income
statement because it excludes some of the items of income or
expense that are taxable or deductible in other years and it
further excludes items that are never taxable or deductible. The
Group's liability for current tax is calculated using tax rates
that have been enacted or substantively enacted by the balance
sheet date. Certain of the Group subsidiary companies are subject
to taxation under the UK Tonnage Tax regime. Under this regime, a
shipping company may elect to have its taxable profits computed by
reference to the net tonnage of each of the qualifying ships it
operates.
Deferred tax is the tax expected to be payable or recoverable on
differences between the carrying amounts of assets and liabilities
in the financial statements and the corresponding tax bases used in
the computation of taxable profit, and is accounted for using the
balance sheet liability method. Deferred tax liabilities are
generally recognised for all taxable temporary differences and
deferred tax assets are recognised to the extent that it is
probable that taxable profits will be available against which
deductible temporary differences can be utilised. Such assets and
liabilities are not recognised if the temporary difference arises
from the initial recognition of goodwill or from the initial
recognition (other than in a business combination) of other assets
and liabilities in a transaction that affects neither the taxable
profit not the accounting profit.
The carrying amount of deferred tax assets is reviewed at each
balance sheet date and reduced to the extent that it is no longer
probable that sufficient taxable profits will be available to allow
all or part of the asset to be recovered.
Deferred tax liabilities are recognised for taxable temporary
differences arising on investment in subsidiaries, except where the
group is able to control the reversal of the temporary difference
and it is probable that the temporary difference will not reverse
in the foreseeable future.
Deferred tax is calculated at the tax rates that are expected to
apply in the period when the liability is settled or the asset is
realised based on tax laws and rates that have been enacted or
substantively enacted at the balance sheet date. Deferred tax is
charged or credited in the income statement, except it relates to
items charged or credited in other comprehensive income, in which
case the deferred tax is also dealt with in other comprehensive
income.
Deferred tax assets and liabilities are offset when there is a
legally enforceable right to set off current tax assets against
current tax liabilities and when they relate to income taxes levied
by the same taxation authority and the Group intends to settle its
current tax assets and liabilities on a net basis.
2. Significant accounting policies (continued)
Share-based payment
In prior periods the Group has issued equity-settled share
options to certain employees as part of their total remuneration.
The fair values of the share options were calculated at the date of
grant, using an appropriate option pricing model. These fair values
were charged to profit or loss in full immediately as the options
vested on grant. On the basis that both schemes are immaterial to
the financial statements, the full disclosure requirements of IFRS
2, 'Share based payment' has not been included.
Retirement benefit costs
The Group operates defined contribution pension schemes. The
assets of the schemes are held separately from those of the Group
in independently administered funds. The amount charged to the
income statement in respect of pension costs and other
post-retirement benefits is the contributions payable in the
year.
Differences between contributions payable in the year and
contributions actually paid are shown as either accruals or
prepayments in the balance sheet.
The Group also operates a defined benefit scheme. The pension
liabilities recognised on the balance sheet in respect of this
scheme represent the difference between the present value of the
Group's obligations under the scheme (calculated using the
projected unit credit method) and the fair value of the scheme's
assets. Actuarial gains or losses are recognised in the period in
which they arise within the consolidated statement of changes in
equity. The current service cost, representing benefits accruing
over the year, is included in the consolidated income statement as
an administrative expense. The unwinding of the discount rate on
the scheme liabilities and the expected return on scheme assets are
presented as investment revenues. Past service costs are recognised
immediately in the income statement as administrative expenses.
Operating profit
Operating profit is stated before investment revenues.
Income statement presentation and separately disclosed items
For information purposes management believe it is helpful to
disclose certain items separately.
These items are presented within their relevant income statement
category, but highlighted through separate disclosure. This is the
second year the Group has presented the income statement in this
manner and management intend to consistently disclose these items
each year.
Items which are included within the category of separately
disclosed items include:
-- Costs of acquisitions
-- Asset impairments
-- Other individually material items that are unusual because of
their size, nature or incidence but which are considered not to be
related specifically to the underlying result.
Material business combination intangible assets were acquired as
a result of the acquisition of Page & Moy Travel Group Limited.
The amortisation of these intangible assets is significant and the
Group's management consider that it should be disclosed separately
to enable a full understanding of the Group's results.
3. Critical accounting judgements and key sources of estimates uncertainty
In the application of the Group's accounting policies, which are
described in note 2, the Directors are required to make judgements,
estimates and assumptions about the carrying amounts of assets and
liabilities that are not readily apparent from other sources. The
estimates and associated assumptions are based on historical
experience and other factors that are considered to be relevant.
Actual results may differ from these estimates. The estimates and
underlying assumptions are reviewed on an ongoing basis. Revisions
to accounting estimates are recognised in the period in which the
estimate is revised if the revision affects only that period or in
the period of the revision and future periods if the revision
affects both current and future periods.
3. Critical accounting judgements and key sources of estimates uncertainty (continued)
Critical judgements in applying the Group's accounting
policies
The following are the critical judgements, apart from those
involving estimations (which are dealt with separately below), that
the Directors have made in the process of applying the Group's
accounting policies and that have the most significant effect on
the amounts recognised in financial statements.
Residual value of cruise ships
As in the prior year, the residual value of the Group's cruise
ships is measured on the basis of either an operating cruise ship
or scrap value at the current projected end of its useful life to
the Group. In the cases where it is planned to dispose of the ship
as a working vessel, the estimate of the residual value reflects
independent specialist advice received by the Company from members
of the Institute of Chartered Ship Brokers, relating to the current
value of the vessels coupled with the likely disposal value of the
ship at the projected end of the useful life to the Group. If it is
assumed the ship will be scrapped, the residual value is based on
external market data for the scrap value of steel and estimated
sales proceeds of any removable assets from the ship. Ship residual
values are determined in US
Dollars or Euros and are therefore subject to foreign exchange
risk. Residual values are reviewed annually to take account of
market conditions.
Acquisition of Page & Moy Travel Group Limited
The acquisition of Page & Moy Travel Group Limited, as
disclosed in note 4, was accounted for using the acquisition method
based on the fair value of the consideration paid. The assets and
liabilities were measured at fair value and the purchase price was
allocated to assets and liabilities based on these fair values.
Determining the fair values of assets and liabilities acquired
involves the use of significant estimates and assumptions,
including discount rates, asset lives and recoverability. With
regards to assets and liabilities measured at fair value, the value
of the freehold property was measured using a qualified surveyor on
an open market basis and the valuation of the defined benefit
pension liability was prepared by qualified actuaries. With regards
to the purchase price allocation and determination of intangible
assets, management engaged recognised experts in this field to
assist in the process, who also benchmarked key assumptions, such
as discount rates and asset lives, against industry peers.
Key sources of estimation uncertainty
The key assumptions concerning the future, and other key sources
of estimation uncertainty at the balance sheet date, that have a
significant risk of causing a material adjustment to the carrying
amounts of assets and liabilities within the next financial year,
are discussed below.
Valuation of derivative financial instruments
The Group has significant derivative assets and liabilities on
balance sheet as at 31 October 2012 and 31 October 2013, which are
carried at fair value as required by IAS 39, Financial instruments:
Recognition and Measurement. The fair value is reported in the
income statement and creates volatility in reported results. The
Group believes that the derivative market value at the year end is
based on appropriate estimates. The Group notes though that the
valuation of derivative financial instruments requires significant
estimates, primarily:
- The spot rate at the balance sheet;
- The forward rate;
- Time, in terms of remaining contractual term and fixing date(s) contained within it; and
- Market volatility.
3. Critical accounting judgements and key sources of estimates uncertainty (continued)
Dry dock provisions
The bareboat charter agreement for mv Minerva establishes
certain minimum return conditions on the vessel at the end of the
agreement. To the extent that these are considered unavoidable, the
Group records a provision for the best estimate of the expected
expenditure to be incurred, with a corresponding asset recorded.
The asset is depreciated to the date that the work is planned to be
completed. The estimation of the provision requires significant
judgment, and has inherent uncertainties relating to the cost of
the work to be completed. Further, the liability will be settled
principally in Euros and is carried in a US Dollar functional
currency entity. Accordingly, the level of the liability at Group
level is subject to both fluctuations in value between the US
Dollar and Euro exchange rate, and the Euro and GBP sterling
exchange rate. Due to the significance of the provided amounts, the
estimate of the provision and associated foreign exchange
fluctuations can create volatility in the Group reported financial
position and financial performance, and ultimately in the Group
cash flows in the period that the repair and maintenance
obligations are discharged.
Retirement benefits
The consolidated financial statements include costs in relation
to, and provision for, retirement benefit obligations. The costs
and the present value of any related pension assets and liabilities
depend on such factors as life expectancy of the members, the
salary progression of current employees, the returns that plan
assets generate and the discount rate used to calculate the present
value of the liabilities. The Group uses previous experience and
independent actuarial advice to select the values of critical
estimates.
Impairment of Swan Hellenic
The Group has completed a detailed impairment review of the
assets in the Swan Hellenic cash generating unit (CGU).
The Swan Hellenic brand is currently used for cruises on the mv
Minerva. Following improvements and modernisation of the vessel
undertaken during the previous financial year, the lease on this
ship has been extended to 2021.
The recoverable amount assumes that from this date cruises under
this brand will take place on a replacement vessel. In determining
the recoverable amount, the Group has used the following principal
inputs:
Measure
Discount rate - pre tax 14.09%
Cash flow forecast period 7 years + terminal
value
Rate of increase of revenue rate per night beyond 2.5% (0% after
the budget period 6 years)
Rate of increase of costs beyond the budget period 3% (0% after
6 years)
The Group prepares cash flow forecasts derived from the most
recent financial budgets for the next five years and calculates a
terminal value for periods thereafter. These assumptions have been
revised in the year in light of the current economic environment.
Management estimates discount rates using pre-tax rates that
reflect current market
assessments of the time value of money and the risks specific to
the CGU. Changes in selling prices and direct costs are based on
past practices and expectations of future changes in the market and
the ship on which the brand operates. It is anticipated that sales
volumes will increase over the next year as the economic recovery
gathers pace and the demand for cruise holidays increases.
Based on this review, which concluded that the value in use is
higher than the net book value of the CGU, the Group is satisfied
that the assets of Swan Hellenic are not impaired at the balance
sheet date. The Directors note that the assumptions made in
preparing the impairment review have a significant impact on the
recoverable amount of the CGU, and actual events may differ
materially from expectation.
3. Critical accounting judgements and key sources of estimates uncertainty (continued)
Impairment of Goodwill
Determining whether goodwill is impaired requires an estimation
of the value in use of the CGU to which goodwill has been
allocated. The value in use calculation requires the directors to
estimate the future cash flows expected to arise from the CGU and a
suitable discount rate in order to calculate present value.
The carrying amount of goodwill at 31 October 2013 was
GBP9,517,000 (2012: GBP9,517,000). There was no impairment of
goodwill in the year.
Impairment of ship values
The Group has completed a detailed impairment review of mv
Discovery following an independent valuation which indicated that
the current market value of the ship was significantly lower than
its carrying value.
Based on this review, the Group estimated that the fair value of
the asset was GBP6,700,000 less than its carrying value, and this
amount has therefore been recognised as a charge to the income
statement.
Provision against a material counterparty
A provision was made in the prior year against a material
receivable from a counterparty in respect of which there is an
on-going dispute. Management has estimated the amount recoverable,
based on the available evidence, and used this to determine the
provision required.
Recognition of deferred tax asset relating to carry-forward
unused losses
Other than a deferred tax asset arising from deductible
temporary differences, the Group has recognised a deferred tax
asset relating to unused losses arising from the Page & Moy
Travel Group. The quantum of the asset recognised has been
calculated based on the extent it is probable that future taxable
profit will be available against which they can be utilised in the
context of Page & Moy Travel Group's trading performance in
recent financial years, which management have determined as
budgeted taxable profits one year from the balance sheet date.
4. Acquisition of subsidiary
On 15 May 2012, All Leisure group PLC acquired 100% of the
issued share capital of Page & Moy Travel Group Limited
("PMTGL"), on a debt free basis, for a consideration of GBP3.3m.
The acquisition of PMTGL has resulted in the majority of All
Leisure's revenues being derived from Tour Operating as opposed to
Cruise, which was one of the main reasons for completing the
transaction, albeit there are similar customer demographics for
both businesses.
Page & Moy Travel Group Limited is a holding company. The
principal activity of its subsidiaries is tour operating; offering
touring holidays to a wide range of overseas destinations.
The amounts recognised in respect of the identifiable assets
acquired and liabilities assumed are set out in the table
below.
Amount
recognised
at acquisition
date
GBP'000
Net assets acquired
Intangible assets 8,550
Property, plant and equipment 3,669
Deferred tax asset 2,552
Inventories 51
Trade and other receivables 4,380
Cash and cash equivalents 9,168
Restricted cash 8,000
Trade and other payables (35,541)
Pension liability (3,075)
Deferred tax liability (2,767)
Derivative financial liability (1,208)
Total identifiable net liabilities (6,221)
Goodwill 9,517
Total consideration 3,296
Satisfied by cash 3,296
Net cash inflow from acquisitions
Cash consideration for shares (3,296)
Cash and cash equivalents acquired 9,168
5,872
4. Acquisition of subsidiary (continued)
The amount indicated above for trade and other receivables
represents the fair value of the acquired receivables and is equal
to the gross contractual cash flows.
There are no contingent liabilities.
Acquisition related costs (included in administrative expenses)
amounted to GBP0.3m.
The purchase price of each asset component of the acquisition
was determined in the prior year and represented a preliminary
assessment of their fair value, based on management's best
estimates. There have been no changes during the year, and
management therefore consider these amounts to be final.
The goodwill of GBP9,517,000 arising from the acquisition
reflects the anticipated benefits of synergies, revenue growth,
future market development and the assembled workforce of PMTGL.
These benefits are not recognised separately from Goodwill as they
do not meet the criteria for identifiable intangible assets. None
of the goodwill is expected to be deductible for tax purposes.
The acquired business contributed revenue of GBP60,867,000 and
profit before tax of GBP8,935,000 to the Group for the period from
acquisition to 31 October 2012.
If the acquisition had occurred on 1 November 2011, it would
have contributed GBP93,927,000 to consolidated revenue and
GBP4,644,000 to consolidated profit for the year.
5. Revenue
An analysis of the Group's revenue is as follows:
2013 2012
GBP'000 GBP'000
Continuing operations
Sales of cruise holidays and ancillary services 65,824 61,044
Sales of escorted tours and ancillary services 76,319 66,349
142,143 127,393
Property rental income 8 16
Investment revenue 160 131
142,311 127,540
Ancillary services revenue included within sales of cruise
holidays and ancillary services includes all revenue derived
directly from the cruise holidays sold, other than the principal
cruise. Ancillary services revenue includes excursions revenue, on
board revenue such as bar, laundry and other, and insurance income.
None of these revenue streams account for more than 10% of the
overall revenue and are considered by the Directors to be a
component of the overall revenues derived on cruises.
Ancillary service revenue included within sales of escorted
tours and ancillary services includes non inclusive tours, visa
services and flight upgrades. None of these revenue streams account
for more than 10% of the overall revenue and are considered by the
Directors to be components of the overall revenues derived on
escorted tours.
6. Business and geographical segments
The Group has identified that each of its divisions is an
operating segment and that these operating segments meet the
criteria to be aggregated into the two reporting segments: Cruising
(including the Voyages of Discovery, Swan Hellenic and Hebridean
Island Cruises brands) and Tour Operating (including the
Travelsphere, Just You and Discover Egypt brands).
Reporting segment revenues and results
The Group is currently organised into two reporting segments as
follows:
Cruising: This includes the cruise operating segments. Revenue
streams are principally from the UK but also from the USA and rest
of the world.
Tour operating: This segment represents the Group's escorted
tours operation, providing escorted tour holidays to a wide range
of overseas destinations. Revenue streams are from the UK.
The Group holds all its derivative contracts to maturity and for
this reason, coupled with being unable to hedge account under IAS
39, the information on these instruments is reported separately to
the chief operating decision maker. Furthermore, these movements
are not allocated to any one reporting segment in the management
accounts. As a consequence the information is presented below with
an adjustment that reconciles the operating profit on an IFRS
basis, which includes the mark-to-market impact of the Group's open
derivative financial instruments.
The following is an analysis of the Group's revenue and results
by reportable segments in 2013:
Cruising Tour Operating Corporate Consolidated
2013 2013 2013 2013
GBP'000 GBP'000 GBP'000 GBP'000
Revenue
External sales 65,824 76,319 - 142,143
Total revenue 65,824 76,319 - 142,143
Result
Underlying (loss)/profit from operations (1,944) 4,117 (1,420) 753
Separately disclosed items (8,556) (500) (332) (9,388)
Amortisation of business combination
intangibles - (497) - (497)
Operating (loss)/profit before
adjustment for derivative financial
instruments (10,500) 3,120 (1,752) (9,132)
Losses on derivative financial
instruments (4,277)
Operating loss (13,409)
Investment revenues 160
Finance costs (387)
Loss before tax (13,636)
Tax credit 226
Loss for the financial year (13,410)
6. Business and geographical segments (continued)
The following is an analysis of the Group's revenue and results
by reportable segments in 2012:
Cruising Tour Operating Corporate Consolidated
2012 2012 2012 2012
GBP'000 GBP'000 GBP'000 GBP'000
Revenue
External sales 61,044 66,349 - 127,393
Total revenue 61,044 66,349 - 127,393
Result
Underlying (loss)/profit from
operations (6,868) 9,128 (1,361) 899
Separately disclosed items (1,244) (72) - (1,316)
Amortisation of business combination
intangibles - (385) - (385)
Operating (loss)/profit before
adjustment for derivative financial
instruments (8,112) 8,671 (1,361) (802)
Gains on derivative financial
instruments 1,671
Operating profit 869
Investment revenues 131
Finance costs (197)
Profit before tax 803
Tax charge (304)
Profit for the financial year 499
Segment assets
2013 2012
GBP'000 GBP'000
Cruising 52,547 63,425
Tour operating 36,024 45,231
Total segment assets 88,571 108,656
Unallocated assets 4,331 1,435
Consolidated total assets 92,902 110,091
The unallocated corporate assets primarily relate to group
properties.
6. Business and geographical segments (continued)
Other segment information
Depreciation and Additions to
amortisation non-current assets
2013 2012 2013 2012
GBP'000 GBP'000 GBP'000 GBP'000
Cruising 5,624 4,702 7,865 9,279
Tour operating 775 497 428 24,362
Unallocated 432 177 55 -
6,831 5,376 8,348 33,641
Geographical segments
The following table provides an analysis of the Group's sales by
geographical market, irrespective of the origin of the
goods/services and the location of the Group's non-current
assets:
Sales revenue Non-current assets
by
geographical market
2013 2012 2013 2012
GBP'000 GBP'000 GBP'000 GBP'000
UK 129,358 117,131 66,470 73,335
USA 5,428 5,448 - -
Rest of the world 7,357 4,814 - -
142,143 127,393 66,470 73,335
Revenues are attributed to individual countries on the basis of
region of booking.
7. Separately disclosed items
2013 2012
GBP'000 GBP'000
Operating items - (expense)/income
Onerous lease provision (139) (304)
Provision against a material counterparty - (906)
Restructuring costs (1,655) (175)
Impairment of property - (96)
Other income - 475
Acquisition costs - (310)
Impairment of ship (6,700) -
Cruise cancellation costs (563) -
Software costs write off (263) -
Loss on disposal of property (68) -
Total operating items (9,388) (1,316)
Amortisation of business combination intangibles (497) (385)
Deferred tax on business combination intangibles 311 80
Total separately disclosed items (9,574) (1,621)
During the year the group announced the closure of its offices
in Southampton. The onerous lease provision arises as a result of
the ongoing lease commitment for the Southampton premises. In the
prior year an onerous lease provision arose as a result of losses
incurred, or anticipated to be incurred, from the bareboat charter
of mv Voyager to a third party.
Restructuring costs of GBP1,655k have arisen during the year as
a result of the relocation of the group's operations in Burgess
Hill and Southampton to Market Harborough.
At the year end an impairment review was undertaken in respect
of mv Discovery (see note 3 for further details). This revealed a
decline in the market value of the ship and an impairment charge of
GBP6,700k has therefore been incurred.
Costs of GBP563k were incurred due to the cancellation of
certain cruises following major mechanical problems on-board mv
Voyager.
Costs of GBP263k were written off during the year in relation to
expenditure on software prior to the integration of the
businesses.
The group disposed of Lynnem House, Burgess Hill during the year
and incurred a loss on disposal of GBP68k.
The provision against a material counterparty in the prior year
arose as a result of an ongoing dispute. Please refer to note 3 for
further details.
The impairment of property in the prior year arose as a result
of the decrease in the market values of Lynnem House and 54 The
Hundred.
Other income in the prior year relates to monies received from
insurance claims. Please refer to note 8 for further details.
Acquisition costs of GBP310,000 arose in the prior year as a
result of the acquisition of Page & Moy Travel Group
Limited.
Material business combination intangible assets were acquired as
a result of the acquisition of Page & Moy Travel Group Limited.
The amortisation of these intangible assets is significant and the
Group's management consider that it should be separately disclosed
to enable a full understanding of the Group's results.
8. Other income
2013 2012
GBP'000 GBP'000
Insurance claims - 343
Damages awarded - 132
- 475
Insurance claims
The insurance claims amount relates to the settlement of
insurance claims made in respect of technical matters experienced
on ships operated by the Group based on events in previous
periods.
Damages awarded
The damages awarded arose from the Company's success against the
insurers underwriting the financial failure insurance provided to
passengers of Hebridean Island Cruises Limited. The Insurers
refused to pay out under the policy because the Company operated
identical replacement cruises for passengers at no extra cost. In
September 2009, the passengers formally assigned their claims under
the policy to the Company and in March 2010, the Company's
solicitors issued a claim on behalf of the Company in the
Commercial Court ("the Court").
The Court ruled in the Company's favour on all accounts and
awarded the Company the full amount claimed. The amount presented
above is shown net of insignificant unrecoverable legal costs
incurred.
Further details are disclosed in the Group's FY2011 and FY2012
financial statements.
9. Operating loss
2013 2012
GBP'000 GBP'000
Operating loss has been arrived at after (crediting)/charging:
Foreign exchange (gain)/loss (1,802) (1,866)
Depreciation of property, ships, plant and equipment 5,487 4,420
Depreciation of investment property - 6
Amortisation of intangibles assets 1,344 950
Impairment of property - 96
Loss on disposal of plant and equipment - 325
Loss on disposal of property 68 -
Staff costs 12,126 8,044
Provision arising from a contractual arrangement 139 304
Provision against a material counterparty - 906
Impairment of ship 6,700 -
Other separately disclosed items 2,481 310
10. Tax (credit)/charge
a) Tax (credit)/charge on (loss)/profit
2013 2012
GBP'000 GBP'000
Current tax
- Current year 7 11
- Adjustment with respect to prior
years (5) (49)
2 (38)
Deferred tax (228) 342
Total tax (credit)/charge (226) 304
Corporation tax is calculated at 23.4% (2012: 24.8%) of the
estimated taxable profit for the year
(b) Factors affecting the tax (credit)/charge for the year
The tax assessed for the year differs from (2012 - differs from)
that resulting from applying the standard rate of corporation tax
in the UK of 23.4% (2012 - 24.8%). The differences are explained
below:
2013 2012
GBP'000 GBP'000
(Loss)/profit before tax:
Continuing operations (13,636) 803
Tax at the UK corporation tax rate of 23.4% (2012:
26.8%) (3,191) 199
Adjustments from income taxed under the tonnage
tax regime 2,564 2,062
Expenses not allowable for tax purposes 1,195 140
Brought forward losses utilised in year (580) (499)
Unutilised losses carried forward 137 -
Recognition of new deferred tax asset for losses - (1,443)
Capital allowances in excess of depreciation (162) (126)
Other timing differences 44 20
Adjustment in respect of prior years (5) (49)
Deferred tax movement (228) -
Total tax (credit)/charge (226) 304
For accounting periods beginning on or after 1 January 2000 a
shipping company or group may elect to have its taxable profits
computed by reference to the net tonnage of each qualifying ship it
operates subject to meeting various conditions. Accordingly, the
profits or losses arising from the cruising segment are not subject
to taxation under the normal corporation tax regime.
10. Tax (credit)/charge (continued)
In addition to the amount charged to the income statement, the
following amounts relating to tax have been recognised in other
comprehensive income:
2013 2012
GBP'000 GBP'000
Deferred tax:
Items that will not be reclassified subsequently
to profit or loss:
Remeasurement of net defined benefit liability (365) 188
(365) 188
(c) Factors affecting future tax charge
At the balance sheet date, the Finance Act 2013 had been
substantively enacted confirming that the main UK corporation tax
rate will be 21% from 1 April 2014 and 20% from 1 April 2015.
Therefore, at 31 October 2013, deferred tax assets and liabilities
have been calculated based on rates of 21% or 20% where the
temporary differences are expected to reverse after 1 April 2014 or
1 April 2015 respectively.
11. Dividends
2013 2012
GBP'000 GBP'000
Amounts recognised as distributions to equity
holders in the year:
Final dividend for the year ended 31 October
2011 of 1.31p
(2010: 1.31p) per share. - 210
Interim dividend for the year ended 31 October
2011 of 0.64p
(2010: 0.64p) per share. - 395
- 605
No interim dividend was paid in the year. It was announced on 27
July 2012 that the Group is proposing not to pay dividends for the
foreseeable future (please refer to the Chairman's Statement for
further details on the Group's dividend policy).
12. Earnings per share
2013 2012
Basic and diluted (loss)/profit per share Pence Pence
Basic (21.7) 0.8
Diluted (21.7) 0.8
The calculation of the basic and diluted earnings per share is
based on the following data:
Earnings GBP'000 GBP'000
Earnings for the purposes of basic and diluted
earnings per share being net (loss)/profit attributable
to equity holders of the parent (13,410) 499
Number of shares No. No.
Weighted average number of ordinary shares for
the purposes of basic and diluted earnings per
share 61,744,777 61,744,777
All results derive from continuing operations and accordingly
total earnings per share and earnings per share from continuing
operations are the same.
2013 2012
Underlying* basic and diluted (loss)/profit per
share Pence Pence
Basic (6.2) 3.4
Diluted (6.2) 3.4
* The group has identified a number of one off, non-recurring
items which have been separately disclosed (please see note 7 for
further details). These items have been exluded when calculating
the underlying (loss)/profit.
13. Notes to the cash flow statement
2013 2012
GBP'000 GBP'000
(Loss)/profit for the financial year (13,410) 499
Adjustments for:
Investment revenues (160) (131)
Rental income (8) (16)
Finance costs 387 197
Other gains and losses 232 325
Income tax (credit)/charge (226) 304
Depreciation and amortisation 6,831 5,376
Impairment losses 6,700 96
Foreign exchange movements (1,802) (1,866)
Movement in fair value of derivatives 4,277 (1,671)
Increase/(decrease) in provisions 206 (633)
Adjustment for pension funding (440) -
Operating cash flows before movements in working
capital 2,587 2,480
(Increase) in inventories (683) (33)
Decrease/(increase) in receivables 1,422 (3,914)
(Decrease)/increase in payables (6,630) 1,872
Cash (outflow)/inflow generated from operations (3,304) 405
Income taxes paid (8) (8)
Net cash (outflow)/inflow from operating activities (3,312) 397
14. Related party transactions
Transactions between the Company and its subsidiaries, which are
related parties, have been eliminated on consolidation and are not
disclosed in this note. Transactions between the Group and other
related parties are disclosed below:
Trading transactions
During the year, Group companies entered into the following
transactions with related parties who are not members of the
Group:
Purchase of
services Amounts owed to
Years ended 31 related parties
October At 31 October
2013 2012 2013 2012
GBP GBP GBP GBP
Roger Allard Limited 179,061 174,276 53,851 24,275
PB Consultancy Services
Limited 38,413 39,835 1,623 4,728
Roger Allard Limited is a company owned and controlled by Mr R J
Allard a director of the Company and majority shareholder of the
Group and the payments made are for consultancy services.
PB Consultancy services is owned and controlled by Mr P E
Buckley the Company Secretary of the Group and the payments are for
consultancy, accounting and Company Secretarial services.
On 15 May 2012, All Leisure Group PLC acquired 100% of the
issued share capital of Page & Moy Travel Group Limited
("PMTGL"), on a debt free basis, for a consideration of GBP3.3m.
The consideration was funded with a GBP5.8m loan from a consortium
of individual investors, some of whom were related parties. The
lenders who meet the definition of related parties, and the amounts
loaned to the Group are as follows:
Loan Amount
Year ended 31 Interest accrued
October At 31 October
2013 2012 2013 2012
GBP GBP GBP GBP
R J Allard and interests 4,010,000 4,400,000 437,968 142,608
N J Jenkins 225,000 250,000 24,972 12,964
D A Wiles and interests 360,000 400,000 39,668 8,103
N J Jenkins is a director and shareholder in All Leisure group
plc. D A Wiles is a director of All Leisure Holidays Limited, a
subsidiary of All Leisure group plc.
14. Related party transactions (continued)
Remuneration of key management personnel
The remuneration of the Directors of the Company and subsidiary
company directors, who are the key management personnel of the
Group, is set out below in aggregate for each of the categories
specified in IAS 24 Related Party Disclosures.
2013 2012
GBP'000 GBP'000
Short-term employee benefits 2,670 2,249
Post employment benefits 181 177
15. Principal risks and uncertainties
The Directors continually identify, evaluate and manage material
risks and uncertainties faced by the Group which could adversely
affect the Group's business, operating results and financial
position. The list below details what the Directors consider to be
the principal risks and uncertainties and the actions taken, or to
be taken, to mitigate potential adverse consequences. This list is
not intended to be exhaustive and other risks may emerge over
time:
Area Description of risk Examples of mitigating activities
Economic
* The Group is competing for a share of disposable * The Group invests in brand awareness and pays
income of its target customers, making revenue significant attention to customer feedback in order
vulnerable to the impact of an economic downturn. to maximise brand loyalty.
* Volatility in markets such as currency and fuel can
undermine budgets. * The Group continues to maintain its currency and fuel
hedging policies as part of its financial planning.
Geopolitics
* The Group is at risk of geo-political events or * The Group maintains a flexible business model, plans
natural disasters affecting our business. its itineraries with care and offers a broad
geographic spread of destinations within its
products. In the event of a major event, the Group
endeavours to respond quickly to the issue and
minimise the Group's ongoing exposure.
Competition
* The Group operates in a highly competitive market * We undertake market research to ensure that our own
resulting in the threat of our competitors launching products continue to meet the needs of our customers
new products or adding products before we make and we plan new product development with care to
corresponding updates and developments to our own ensure that we have products that remain focused on
range. This could render our products out-of-date an our niche market.
d
could result in rapid loss of market share.
15. Principal risks and uncertainties (continued)
Area Description of risk Examples of mitigating activities
Regulation
* Changes to legislation (principally regarding the * The Group closely monitors regulatory developments
operation of cruise shipping) could result in the across the travel industry through its active
Group's vessels (mv Discovery, mv Minerva, mv membership of industry bodies and the Directors'
Hebridean Princess and mv Voyager) becoming significant contacts and experience in the travel
uneconomic or inoperable. mv Discovery, mv Hebridean industry.
Princess and mv Voyager are owned by the Group and
this could further impact the carrying value of these
significant assets. * The Group manages cash levels carefully in order to
meet any unexpected operational expenditure that may
arise.
* The Group must satisfy Civil Aviation Authority
("CAA") and Association of British Travel Agents
("ABTA") licensing conditions for airlines and * The Group continually reviews the operating assets to
package holidays. Failure to fulfil CAA and ABTA plan any replacements and the timing of replacement.
licensing conditions could result in substantial
fines and reputational damage and, in the very worst
case, an inability to trade due to loss of licence. * The Group adheres to all safety regulations imposed
upon it and liaises closely with its regulators and
industry groups to ensure it is abreast of all
matters.
* The Group actively ensures regulations are adhered to
through the tracking of key licensing parameters on a
periodic basis throughout the course of the year and
as part of the annual budget process.
* The Group is dependent on information technology * Investment in technology ensures that system
systems, the failure of which would impact its reliability is optimised and procedures are in place
ability to process sales. to minimise the time that any selling system is
inoperable.
Financial
* A significant proportion of the Group's cost base * Key performance indicators are closely monitored to
remains constant notwithstanding changes to the level ensure that yields are optimised.
of revenues.
* The Group has significant dollar and euro denominated * The Group holds significant multicurrency cash
operating costs that are matched with significant balances on deposit and uses a variety of currency
sterling denominated revenues. derivatives to manage actively the Group's foreign
exchange exposure.
* The Group has significant cash balances and is * The Group holds significant cash balances on fixed
therefore exposed to interest rate risk. rate deposits.
[1] Underlying profit is stated before certain items separately
disclosed in the Group's Annual Report. These items total GBP9.9
million before tax and are disclosed in note 7.
[2] Underlying profit is stated before certain items separately
disclosed in the Group's Annual Report. These items total GBP9.9
million before tax and are disclosed in note 7.
This information is provided by RNS
The company news service from the London Stock Exchange
END
FR BRGDDBBDBGSB
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