Final Results

15 February 2016

All Leisure Group plc

Preliminary results for the year ended 31 October 2015

Financial Highlights

· All Leisure Group closed the year to 31 October 2015 with an overall Profit after Taxation of £0.5m, compared to a loss of £(7.5)m in the prior year

· Underlying operating profit/loss* before movement in the provision for derivative contracts was a loss of £1.5 million (2014: profit of £0.9 million). Underlying Operating profit was £1.1 million (2014: £1.3 million).

· Revenue of £127.3 million (2014: £138.9 million) was lower due to dry-dock periods for both the Voyager and Minerva vessels, together with lower numbers of Tours passengers.

· Strong cost control delivered Underlying Selling and Administrative cost savings of £0.9m in the year.

· Underlying net profit was £1.0 million (2014: profit of £0.6 million), an improvement of £0.4 million.

· Full year pre-tax profit was £0.2 million (2014: loss of £7.2 million).

· After tax, there was a profit for the year of £0.5m (2014: loss of £7.5 million).

· Total bank and cash declined to £10.2 million (2014: £15.1 million) at the balance sheet date, given higher capital expenditure in the period plus losses incurred on foreign currency hedge contracts that have subsequently expired.

· On 30 November 2015 the Group entered a sale and leaseback in relation to the Hebridean Princess vessel, raising £3.0 million cash (less expenses) to improve liquidity. This was a post balance sheet event, not reflected in these financial statements.

Operational Highlights

· Overall passenger numbers declined 6%, with Cruise passengers down 1% and Tour passengers down 9% in the year. Bookings to the Eastern Mediterranean and North Africa, notably Egypt, Turkey and Cyprus were heavily impacted by the geo-political issues in the Middle East, whilst the Russian tours programme was cancelled due to restrictive new visa regulations that deterred passengers from booking.

· Popular Black Sea cruise itineraries to Crimea remain off limits due to the ongoing political situation in the region.

· Average Revenue per Passenger was £2,360 (2014: £2,410) in the year, the decline driven by the Cruise division as a consequence of the dry docks for both main vessels.

Strategy

· The board is actively considering delisting from the AIM market.

· Achieve profitable growth through the provision of an increasing choice of niche holidays targeted at the UK over 55's market.

Commenting on the results the Chairman Roger Allard said

"I am delighted to report that the All Leisure Group closed the year to 31 October 2015 with an overall Profit after Taxation of £0.5m, compared to a loss of £(7.5)m in the prior year. On an Underlying basis, there was a Profit after tax in the year of £1.0m (2014: profit of £0.6m). Trading conditions are however expected to remain very challenging, especially in view of the escalating conflict in the Middle East and recent acts of terrorism, and the effect these events may have on consumers' propensity to travel.

"My sincere thanks go to all staff across the Group for their commitment, hard work and dedication throughout the year.

"The board is actively considering delisting from the AIM market. It is mindful of the on-going costs of remaining as a publicly quoted company and the limited current and potential benefits available to the company. A further announcement will be made in due course."

For further information:

* Underlying figures are stated before certain items that, due to their material size or nature, are separately disclosed to provide the user of the financial statements with a clearer understanding.

All Leisure Group plc

Chairman's Statement

I am delighted to report that the All Leisure Group closed the year to 31 October 2015 with an overall Profit after Taxation of £0.5m, compared to a loss of £(7.5)m in the prior year. On an underlying* basis, there was a Profit after tax in the year of £1.0m compared to an underlying* Profit of £0.6m in 2014.

Operating Profit for the period was £0.5m compared to a loss of £(6.9)m in 2014, although on an underlying* basis lower revenues caused Operating Profit to decline to £1.1m from £1.3m in 2014. Revenue for the period was £127.3m, down from £138.9m in 2014. This was the result of lower Tour passenger numbers and fewer cruising days as a result of the time spent in dry dock by our Cruise vessels.

Our "Travelsphere" and "Just You" brands continued to offer Escorted Tours to an exciting range of destinations across the world. Total passenger numbers for Tours were 36.2k, down from 39.8k in 2014, with average revenue per passenger up 2%. Our "Just You" brand showed growth in passenger numbers of 2%, which was very pleasing. Passenger numbers to Italy, our most popular destination, showed growth along with Greece, Canada, Japan and certain Scandinavian destinations. Demand for tours to Turkey and the Middle East was sharply down however due to the events in the wider region, and we cancelled much of our tour programme to Russia as a result of lower demand and restrictive new visa requirements. Tours generated an Operating profit of £1.4m, down from £2.5m in 2014, largely as a result of lower passenger revenues.

In the Cruise business, passengers numbered 17.8k (2014: 17.9k), slightly reduced due to dry dock maintenance periods for both Voyager and Minerva, as reported at the half year. However occupancy of available cabins improved to 77% (2014: 76%). The cruise division continued to be unprofitable, although the Operating loss of £(2.6)m represented an improvement in comparison to the Operating loss of £(8.9)m in 2014 when a charge was taken in relation to the disposal of the mv Discovery vessel.

 After the year-end, on 30 November 2015, the Group completed the £3m sale and leaseback of the Hebridean Princess cruise vessel and certain related assets to HP Shipping, a company owned by a syndicate of private investors led by myself. The transaction provided important additional liquidity to the Group, whilst making the Group less asset intensive and still retaining the business of the Hebridean Island Cruises division and the positive cash flow it generates. All scheduled cruises of the division will go ahead as planned.

Trading conditions are expected to remain very challenging, especially in view of the escalating conflict in the Middle East and recent acts of terrorism, and the effect these events may have on consumers' propensity to travel.

My sincere thanks go to all staff across the Group for their commitment, hard work and dedication throughout the year.

R J Allard

Chairman

* Underlying figures are stated before certain items that, due to their material size or nature, are separately disclosed to provide the user of the financial statements with a clearer understanding.

Key Performance Indicators

The following table provides current and historical key performance indicators ('KPI's) employed by the Group:

Other operating data

The following table provides the current and historical figures for the principal operating KPIs employed by the Group:

Notes:

(i) Calculated as the total passengers carried multiplied by the total number of revenue sailing days.

(ii) Calculated as the ship capacity multiplied by the total number of revenue sailing days.

(iii) Excludes unrealised gains and losses on fuel hedges and fuel consumption during Allways charter.

* Underlying figures are stated before certain items that, due to their material size or nature, are separately disclosed to provide the user of the financial statements with a clearer understanding.

All Leisure Group plc

Consolidated Income Statement

For the year ended 31 October 2015

The results are after separately disclosed items of £0.5m (2014: £8.0m), further details of these items are included in note 6.

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 2015

All Leisure Group plc

Consolidated Statement of Changes in Equity

At 31 October 2015

Revaluation reserve: At 31 October 2014 Budworth Hardcastle, an external valuer, carried out a valuation of Compass House, Market Harborough which confirmed the property value at open market value with vacant possession to be £3,750,000.

Currency translation reserve: At 31 October 2015 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 2015

The financial statements of All Leisure Group plc, registered number 01609517, were approved by the Board of directors and authorised for issue on 11 February 2016.

They were signed on its behalf by:

N Arthur

Director

All Leisure Group plc

Consolidated Cash Flow Statement

For the year ended 31 October 2015

All Leisure Group plc

Notes to the Preliminary Results

For the year ended 31 October 2015

1. Financial information

The financial information set out in the announcement does not constitute the Company's statutory financial statements for the years ended 31 October 2015 or 31 October 2014, but is derived from those financial statements. Statutory accounts for the year ended 31 October 2014 have been delivered to the Registrar of Companies and those for the year ended 31 October 2015 will be delivered following the Company's annual general meeting. The auditor has reported on those financial statements: 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 2015. 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 strategic 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 11 February 2016 and is signed on its behalf by:

Roger Allard - Executive Chairman

Nigel Arthur - 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.

The principal accounting policies adopted are set out below. These policies have been applied consistently unless otherwise stated.

2. Significant accounting policies (continued)

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 power over the investee;

- Is exposed, or has rights, to variable return from its involvement with the investee; and

- Has the ability to use its power to affect its returns.

The Company reassesses whether or not it controls an investee if facts and circumstances indicate that there are changes to one or more of the three elements of control listed above.

All subsidiaries are 100% owned and there are no non-controlling interests in the Group.

Consolidation of a subsidiary begins when the Company obtains control over the subsidiary and ceases when the Company loses control of the subsidiary. Specifically, the results of subsidiaries acquired or disposed of during the year are included in the Consolidated Income Statements from the date the Company gains control until the date when the Company ceases to control the subsidiary.

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.

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 acquiree. 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 units 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.

2. Significant accounting policies (continued)

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:

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 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 timely 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 Group, 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 subsidiaries 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.

2. Significant accounting policies (continued)

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 Page & Moy Travel Group Air Holidays Ltd was revalued in October 2014.

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:

The carrying values of property, ships, plant and equipment are reviewed for impairment 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.

2. Significant accounting policies (continued)

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. Management must be committed to the sale which should be expected to qualify for recognition as a completed sale 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. 

2. Significant accounting policies (continued)

Financial instruments (continued)

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.

Financial assets are classified into the following specified categories: financial assets 'at fair value through profit or loss' (FVTPL), 'held-to-maturity' investments, 'available-for-sale' (AFS) financial assets and 'loans and receivables'. 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'.

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.

Financial assets at FVTPL

Financial assets are classified as at FVTPL when the financial asset is either held for trading or is designated as at FVTPL. A financial asset is classified as held for trading if:

- It has been acquired principally for the purpose of selling in the near term; or

- On initial recognition it is part of a portfolio of identified financial instruments that the Group manages together and has a recent actual pattern of short-term profit-taking; or

- It is a derivative that is not designated and effective as a hedging instrument.

Financial assets at FVTPL are stated at fair value, with any gains or losses arising on re-measurement recognised in profit or loss. Financial assets at FVTPL can include the Group's fuel and foreign currency derivatives.

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 bank 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 asset 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.

2. Significant accounting policies (continued)

Financial instruments (continued)

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 'other 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 interest 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.

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 financial liabilities that can be classified as FVTPL 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 gains or losses arising on re-measurement recognised in profit or loss. The net gain or loss recognised in profit or loss incorporates any interest paid on the financial liability.

De-recognition 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 has chosen to measure all its fuel and currency derivatives at fair value through profit and loss (FVTPL), with the movement being disclosed on the face of the income statement.

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.

2. Significant accounting policies (continued)

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.

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

2. Significant accounting policies (continued)

Taxation (continued)

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 nor 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 when 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.

Share-based payment

Equity-settled share-based payments to employees are measured at the fair value of the equity instruments at the grant date.

The fair value determined at the grant date of the equity-settled share-based payments is expensed on a straight-line basis over the vesting period, based on the Group's estimate of equity instruments that will eventually vest. At each balance sheet date, the Group revises its estimate of the number of equity instruments expected to vest as a result of the effect of non-market-based vesting conditions. The impact of the revision of the original estimates, if any, is recognised in profit or loss such that the cumulative expense reflects the revised estimate, with a corresponding adjustment to equity reserves.

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 comprehensive income. 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 and finance costs.

2. Significant accounting policies (continued)

Income statement presentation and separately disclosed items

Certain items are disclosed separately to enable a better understanding of the Group's results. These include:

· Asset impairment charges

· Profit/Loss on disposal of significant assets (e.g. vessels)

· Amortisation of business combination intangibles

· Other items that because of their size, nature or incidence merit separate disclosure.

3. Critical accounting judgements and key sources of estimation 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.

Residual value of cruise ships

The residual value of the Group's cruise ships is measured at scrap value, which is based on an estimate provided by independent specialists. 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.

Valuation of derivative financial instruments

The Group has derivative assets and liabilities on its balance sheet as at 31 October 2014 and 31 October 2015, which are carried at fair value as required by IAS 39, Financial instruments: Recognition and Measurement. The calculation of fair value involves judgements and is performed by independent experts.

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.

Revaluation of land and buildings

The Group's land and buildings are carried at a revalued amount. Valuations are undertaken by an independent firm of Chartered Surveyors.

3. Critical accounting judgements and key sources of estimates uncertainty (continued)

Impairment of assets

The Group has completed a detailed impairment review of certain assets as detailed below. Based on these reviews, the Group is satisfied that the assets are not impaired at the balance sheet date.

Goodwill

Determining whether goodwill is impaired requires an estimation of the value in use of the Cash Generating Unit to which goodwill has been allocated.

In determining the recoverable amount, the Group has used the following principal inputs:

Ship values

During the year the Group has undertaken an impairment review of mv Voyager, and has used the following principle inputs in determining the recoverable amount:

4. Revenue

An analysis of the Group's revenue is as follows:

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 and on board revenue such as bar, laundry and other. 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.

5. Business and geographical segments

The Group has identified 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 following is an analysis of the Group's revenue and results by reportable segments in 2015.

Central salary costs and the movement in provision for derivative financial instruments have not been allocated to either of the Group's two reporting segments and are shown separately as Corporate items.

* Underlying figures are stated before certain items that, due to their material size or nature, are separately disclosed to provide the user of the financial statements with a clearer understanding. 

5. Business and geographical segments (continued)

The following is an analysis of the Group's revenue and results by reportable segments in 2014:

* Underlying figures are stated before certain items that, due to their material size or nature, are separately disclosed to provide the user of the financial statements with a clearer understanding.

Segment assets

The unallocated corporate assets primarily relate to Group properties.

5. Business and geographical segments (continued)

Other segment information

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:

Revenues are attributed to individual countries on the basis of region of booking.

6. Separately disclosed items

In 2012 the Group made an onerous lease provision in respect of losses anticipated to be incurred from the bareboat charter of mv Voyager to a third party. During the year, the Group successfully rejected the outstanding claim and £168k has been released back to the income statement in respect of this.

Restructuring costs of £261k (2014: £719k) have arisen during the year as a result of the closure of the Group's office in Fort Lauderdale and other redundancy costs. Restructuring costs in the prior year relate to the ongoing integration of the cruise and tour operating businesses.

Certain business combination intangible assets were recognised on acquisition of Page & Moy Travel Group Limited. The amortisation of these intangible assets is separately disclosed to enable a full understanding of the Group's results.

Items relating to prior year

In 2013 the Group announced the closure of its offices in Southampton. An onerous lease provision of £139k was recognised in 2013 in respect of the ongoing lease commitment for the Southampton premises. In 2014 the Group entered into a contract to sub-lease this office and therefore the remaining balance on the onerous lease provision of £104k was released back to the income statement.

In October 2014 the Group disposed of mv Discovery incurring a loss on disposal of £7,095k.

7. Operating proft/(loss)

8. Tax (credit)/charge

a) Tax (credit)/charge on proft/(loss)

Corporation tax is calculated at 20.4% (2014: 21.8%) of the estimated taxable profit for the year.

8. Tax (credit)/charge (continued)

(b) Factors affecting the tax (credit)/charge for the year

The tax assessed for the year differs from (2014: differs from) that resulting from applying the standard rate of corporation tax in the UK of 20.4% (2014: 21.8%). The differences are explained below:

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.

In addition to the amount recognised in the income statement, the following amounts relating to tax have been recognised in other comprehensive income:

(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 20% from 1 April 2015. Therefore, at 31 October 2015, deferred tax assets and liabilities have been calculated based on a rate of 20%.

At summer budget 2015, the government announced legislation setting the corporation tax rate at 19% for the years starting 1 April 2017, 2018 and 2019 and at 18% for the year starting 1 April 2020.

9. Dividends

No dividends were paid in the year (2014:nil). It was announced on 27 July 2012 that the Group is proposing not to pay dividends for the foreseeable future.

10. Earnings per share

The calculation of the basic and diluted earnings per share is based on the following data:

All results derive from continuing operations and accordingly total earnings per share and earnings per share from continuing operations are the same.

* The underlying profit is calculated as profit before separately disclosed items (please see note 6 for further details).

11. Notes to the cash flow statement

12. 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:

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 Limited 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.

In addition to the above transactions, the Group sold a property to Mr R J Allard for £350,000 during the year ended 31 October 2014. 

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 £3.3m. The consideration was funded with a £5.8m 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:

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.

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. 

13. Principal risks and uncertainties

The Directors continually identify, evaluate and manage material risks faced by the Group which could adversely affect the Group's business. The list below details the principal risks identified by the Directors and the action taken to mitigate these risks. This list is not intended to be exhaustive and other risks may emerge over time:

13. Principal risks and uncertainties (continued)

14. Post Balance Sheet Event

After the year-end, on 30 November 2015, the Group completed the sale and leaseback of the Hebridean Princess cruise vessel and certain related assets to HP Shipping, a company owned by a syndicate of private investors led by Mr Roger Allard, the Chairman and controlling shareholder of All Leisure Group. The transaction provided important additional liquidity to the Group, whilst making the Group less asset intensive and still retaining the business of the Hebridean Island Cruises division and the positive cash flow it generates. 

The proceeds of the transaction were £3 million, allocated £2.9 million to the disposal of the vessel and related assets, and £0.1 million relating to arrangements to share customer data. This gave rise to a profit on disposal of the assets of £1.1 million after costs, which will be recorded in the 2015/16 financial year. Property, Ships, Plant and Equipment is reduced by £1.5 million. An annual lease charge of £0.5 million will be paid by All Leisure Group under the lease arrangements until 31 December 2023.