Interim Results

23rd Jul 2009 07:00



23 July 2009

All Leisure group plc

Unaudited interim results for the six months ended 30 April 2009

Highlights

First half performance in line with expectations.

Unrestricted cash (including advanced customer receipts) at half year 2009 of £28.7m (at 30 April 2008: £27.7m; at 31 October 2008: £29.9m).

Successful acquisition of Hebridean Princess.

Interim dividend of 0.6p per share (2008: 2.44p).

Outlook

Summer cruise capacity 83% sold (2008: 79% like for like), albeit average prices down 10-15% in line with the  market.

Management taken prudent view to purchase swaps to hedge Fuel costs to protect 50% of the Group's anticipated fuel purchases for calendar years 2009 and 2010.

Majority of currency exposure hedged for the current financial year (2009/2010: nil).

Commenting Roger Allard, Executive Chairman of All Leisure group said:

"We are pleased to have met expectations, although the cruising market remains very challenging given the later booking patterns appearing across the whole industry. At the preliminary stage the commercial market was significantly weak but since February, we have seen the market stabilise and have gained better visibility of the year ahead's trading. We, therefore, feel more confident and are recognising this fact today by paying a modest interim dividend."

For further information:

All Leisure group plc Roger Allard  Rob Bryant Guy Marchant Ross Jobber	Chairman Chief Executive Officer Group Finance Director Group Chief Operating Officer	01444 462103
Broker and Nominated Adviser Panmure Gordon Andrew Godber/Callum Stewart		020 7459 3600
Financial Public Relations Citigate Dewe Rogerson Ginny Pulbrook/Hannah Dean		020 7282 2945

  

Unaudited Interim Condensed Financial Statements

Financial highlights

	Half year to 30 April 2009 Unaudited £'000	Half year to 30 April 2008 Unaudited £'000	Full year to 31 October 2008 Audited £'000
Revenue	34,610	32,855	67,512
Operating (loss)/ profit	(1,844)	494	7,599
(Loss)/profit before tax	(1,134)	1,164	9,052
(Loss)/profit for the financial period	(1,162)	941	8,814
(Loss)/earnings per share - Basic and diluted (pence)	(1.9p)	1.5p	14.4p
Pre-derivative profit before taxation - note i	1,694	485	6,275
Adjusted profit before taxation - note i	121	855	7,697
Adjusted profit for the financial period - note i	93	632	7,459
Adjusted earnings per share - Basic and diluted (pence) - note i	0.2p	1.0p	12.1p
Dividend per share (pence)	0.6p	2.4p	3.7p
Unrestricted bank balances and cash in hand	28,716	27,661	29,909
Total equity	27,820	22,051	30,358

Note i - Adjusted amounts are calculated as described in note 4 to the Unaudited Condensed Interim Financial Statements.

Chairman's Statement

Overview

I am pleased to announce that, despite difficult market conditions and adverse exchange rate movements, the Group has delivered profits in line with expectations. This has been assisted by tight control over costs and the successful acquisition of Hebridean Princess in the last week of the period at an attractive price. Despite taking mv Minerva out of service for the first half of November 2008 as previously announced, Group revenues were £34.6m (Half year ended 30 April 2008: £32.9m; full year ended 31 October 2008: £67.5m). The Group reports underlying adjusted profit of £0.1m for the period (half year ended 30 April 2008:£0.6m; full year ended 31 October 2008 of £7.5m) and a statutory loss after tax for the six months ended 30 April 2009 of £1.2m compared with a profit for the same period last financial year of £0.9m (full year ended 31 October 2008: £8.8m). (Loss)/ earnings per share - basic and diluted for the six months ended 30 April 2009 was a loss per share of 1.9 pence compared with an earnings per share for the comparative period of 1.5 pence (full year ended 31 October 2008: 14.4 pence).

In line with the presentation of the results for the year ended 31 October 2008, the Group is also presenting results before the impact of derivative financial instruments (see note 4 to the attached unaudited condensed interim financial statements for details). These show an adjusted profit before tax for the financial period ended 30 April 2009 of £1.7m compared with a profit of £0.5m for the same period last year (full year ended 31 October 2008: pre derivative  profit before tax £6.3m).

The Group tax rate of 2.5% (period ended 30 April 2008: 19.2%; full year ended 31 October 2008: 2.6%) reflects the fact that the ocean vessels Discovery, Minerva and Hebridean Princess all operate under the UK tonnage tax regime. 

 The interim dividend of 0.6p per share will be paid on 12 November 2009. 

 Half year gross cash balances at 30 April 2009 stood at £32.0m (£28.7m unrestricted, restricted, £3.3m) compared with £30.2m at 30 April 2008 (unrestricted: £27.7m, restricted £2.5m) and £33.0m at 31 October 2008 (unrestricted: £29.9m, restricted £3.1m). After debt of £6.7m (excluding derivative instrument liabilities) (30 April 2008: £4.7m, 31 October 2008: £5.0m). Net cash stands at £25.3m as at 30 April 2009 (at 30 April 2008: £25.5m; at 31 October 2008: £28.0m).

Operational Review

Ocean Cruises

During H1 2009 the major operational challenge was the upgrading of mv Minerva's generators in November 2008. This operation went smoothly and we expect shortly to enjoy the lower fuel costs that this upgrade allows. At the half year, both mv Discovery and mv Minerva had completed successful Winter itineraries in the southern hemisphere, with overall occupancy levels of 73% (2008: 73%) albeit at lower prices. Customer satisfaction scores were particularly pleasing. On mv Discovery 92.4% of passengers responding to on-board surveys, intend to sail with us again (2008: 90.7%). On Minerva, our newer leased ship, 97% of responding passengers rated their overall experience as excellent or outstanding. 

In April 2009 the Group increased its fleet with the acquisition of mv Hebridean Princess and other assets from the administrators of Hebridean International Cruises Limited. The Princess expands our cruise offering into the luxury end of our chosen niche destination-led market segment and will provide significant future cross selling opportunities, particularly with our Swan Hellenic brand. In order to make the integration as smooth as possible, we are running a programme of cruises on the Princess identical to that originally advertised. As with Discovery and Minerva, Princess also qualifies for tonnage tax.

River Cruises

Discover Egypt had a successful Winter 2008/09 season, carrying approximately 5,600 passengers, a small reduction of only 2.5% on the previous year. This planned reduction was partly compensated by higher average prices, up 20%, as a greater proportion of bespoke holiday packages were sold. 

Hedging

We continue to manage our costs closely, and our fuel spend in particular. The Group's Summer 2009 fuel hedging policy was effective for four months of H1, by which time prices had fallen. The Board still feels, however, that it is prudent to mitigate the risk of rising future costs and, as is the case with the current year, has purchased swaps designed to protect 50% of the Group's anticipated fuel spend in calendar years 2009 and 2010. The Group will also look to hedge a percentage of its currency requirement for the next financial year, later this year

Outlook

The Summer 2009 ocean programme has started with higher levels of like for like occupancy year-on-year albeit at lower prices. Revenues, in line with the industry, are in the region of 10-15% down on Summer 2008. However this has been somewhat mitigated by cost savings (such as fuel) and higher load factors, and Minerva and Discovery have approximately 25% less cabins to sell for the remainder of this Summer when compared with the same time last year. Since the acquisition of Hebridean Princess new bookings have been satisfactory for the remainder of this year and, as announced at the time of acquisition, we expect the Hebridean Princess operation to be broadly income statement neutral in the current financial year.

The new Swan European River cruising programme has started well. We are currently over 78% sold on our Rhone and Danube itineraries and are pleased to announce the expansion of the programme in 2010 with an additional offering on the Rhine.

Given the absence of commitments on new future capacity that many of our competitors have, the Group is comfortable with its current trading risk profile. However given the uncertain medium term global outlook, management continues to investigate ways to manage existing capacity risk. To this end, the Group has again chartered the Swan Hellenic ship mv Minerva from Phoenix Reisen GmbH, this time from the latter part of the Antarctic season (30 January 2010) to 7 April 2010. The relatively small unit size of the Group's fleet offers an ideal opportunity for third parties to introduce cruise product into their own offerings without the capital commitments or capacity risk that would normally accompany cruise ship operation. The Group is also investigating other ways of mitigating capacity risk over the next 18 months.

Despite having acquired Hebridean Princess during the period, the Group remains extremely well placed to take further advantage of current market conditions by using its significant balance sheet strength to acquire appropriate niche, destination-led companies to add to its portfolio.

Roger Allard

Chairman

23 July 2009

Unaudited Interim Condensed Financial Statements

Consolidated Income Statement

For the six months ended 30 April 2009

	Note		Six month period ended 30 April 2009 Unaudited £'000	Six month period ended 30 April 2008 Unaudited £'000	Year ended 31 October 2008 Audited £'000
Revenue			34,610	32,855	67,512
Cost of sales			(30,888)	(27,535)	(50,755)
Gross profit			3,722	5,320	16,757
Administrative expenses			(5,579)	(4,838)	(9,192)
Rental income			13	12	34
Operating (loss)/profit	4		(1,844)	494	7,599
Investment revenues			819	782	1,681
Finance costs			(109)	(112)	(228)
(Loss)/profit before taxation			(1,134)	1,164	9,052
Tax charge	5		(28)	(223)	(238)
(Loss)/profit for the financial period/year			(1,162)	941	8,814

(Loss)/earnings per share (pence):
Basic and diluted	7		(1.9p)	1.5p	14.4p

All results derive from continuing operations and are attributable to equity holders of the parent company. 

The comparatives for the period ended 30 April 2008 have been restated as described in note 13. 

 

Unaudited Interim Condensed Financial Statements

Consolidated Balance Sheet

At 30 April 2009

	Note		At 30 April 2009 Unaudited £'000	At 30 April 2008 Unaudited £'000	At 31 October 2008 Audited £'000
Non-current assets
Intangible assets			6,428	3,234	3,130
Property, ship, plant and equipment			17,105	12,831	14,882
Investment property			270	274	272
Restricted bank balances			2,765	2,145	2,635
			26,568	18,484	20,919
Current assets
Inventories			1,100	1,194	1,485
Trade and other receivables			4,163	2,793	5,041
Current tax asset			14	-	-
Derivative financial instruments	3		967	-	3,686
Interest bearing bank deposits			26,084	21,394	26,645
Restricted bank balances			506	379	464
Cash and cash equivalents			2,632	6,267	3,264
Total current bank balances and cash in hand			29,222	28,040	30,373
Total current assets			35,466	32,027	40,585
Total assets			62,034	50,511	61,504
Current liabilities
Trade and other payables			(24,289)	(22,087)	(24,230)
Current tax liabilities			-	(81)	(60)
Borrowings			(3,582)	(1,322)	(1,645)
Derivative financial instruments	3		(602)	(327)	(493)
Provisions			(1,129)	-	-
			(29,602)	(23,817)	(26,428)
Non-current liabilities
Borrowings			(3,103)	(3,391)	(3,330)
Deferred tax liabilities			(54)	(67)	(54)
Provisions			(1,455)	(1,185)	(1,334)
			(4,612)	(4,643)	(4,718)
Total liabilities			(34,214)	(28,460)	(31,146)
Net assets			27,820	22,051	30,358
Equity
Share capital	9		618	615	615
Share premium account	9		13,346	12,774	12,774
Revaluation reserve			11	11	11
Currency translation reserve			767	31	465
Retained earnings			13,078	8,620	16,493
Total equity			27,820	22,051	30,358

The comparatives for the period ended 30 April 2008 have been restated as described in note 13.

Unaudited Interim Condensed Financial Statements

Consolidated Statement of Changes in Equity

For the six months ended 30 April 2009

	Note	Six month period ended 30 April 2009	Six month period ended 30 April 2008	Year ended 31 October 2008
		Unaudited	Unaudited	Audited
		£'000	£'000	£'000
Opening total equity		30,358	24,159	24,159
(Loss)/profit for the financial period/year		(1,162)	941	8,814
Total (loss)/income for the financial period/year		(1,162)	941	8,814
Issue of share capital	9	575	-	-
Exchange gain on translation of subsidiary entities		302	21	455
Dividends paid	6	(2,253)	(3,070)	(3,070)
Closing total equity		27,820	22,051	30,358

The comparatives for the period ended 30 April 2008 have been restated as described in note 13.

Unaudited Interim Condensed Financial Statements

Consolidated Cash Flow Statement

For the six months ended 30 April 2009

	Note		Six month period ended 30 April 2009 Unaudited £'000	Six month period ended 30 April 2008 Unaudited £'000	Year ended 31 October 2008  Audited £'000
Net cash (outflow)/inflow from operating activities	10		(608)	4,488	5,550
Investing activities:
Interest received			567	695	1,476
Acquisition of subsidiary			-	900	900
Acquisition of trade and assets			(1,360)	-	-
Rental income			13	12	34
Purchases of property, plant and equipment			(255)	(260)	(268)
Movement from/(to) short-term interest bearing cash deposits			1,109	(4,299)	(9,551)
Net cash used in investing activities			74	(2,952)	(7,409)
Financing activities:
Dividends paid			(1,678)	(3,070)	(3,070)
Repayment of loans			(1,014)	(852)	(1,667)
New loans raised	11		2,165	-	-
Decrease/(increase) in restricted cash			108	(2,163)	(1,988)
Net cash used in financing activities			(419)	(6,085)	(6,725)
Net decrease in cash and cash equivalents			(953)	(4,549)	(8,584)
Cash and cash equivalents at the start of the period/year			3,264	10,599	10,599
Effect of foreign exchange rate changes			321	217	1,249
Cash and cash equivalents at the end of the period/year			2,632	6,267	3,264

The comparatives for the period ended 30 April 2008 have been restated as described in note 13.

Unaudited Interim Condensed Financial Statements

Notes to the Unaudited Interim Condensed Financial Statements

For the six months ended 30 April 2009

1. Basis of presentation

The interim financial statements of the Group for the six months ended 30 April 2009, which are unaudited, have been prepared in accordance with the International Financial Reporting Standards ('IFRS') accounting policies adopted by the Group and set out in the annual report and accounts for the year ended 31 October 2008.  The Group does not anticipate any change in these accounting policies for the year ended 31 October 2009. As permitted, this interim report has been prepared in accordance with the AIM rules and not in accordance with IAS 34 "Interim financial reporting". While the financial figures included in this preliminary interim earnings announcement have been computed in accordance with IFRSs applicable to interim periods, this announcement does not contain sufficient information to constitute an interim financial report as that term is defined in IFRSs. 

The financial information contained in the interim report also does not constitute statutory accounts for the purposes of section 240 of the Companies Act 1985. The financial information for the year ended 31 October 2008 is based on the statutory accounts for the year ended 31 October 2008. The auditors reported on those accounts: their report was unqualified, did not draw attention to any matters by way of emphasis and did not contain a statement under s237(2) or (3) Companies Act 1985.

After conducting a further review of the Group's forecasts of earnings and cash over the next twelve months and after making appropriate enquiries as considered necessary, the directors have a reasonable expectation that the Company and Group have adequate resources to continue in operational existence for the foreseeable future. Accordingly, they continue to adopt the going concern basis in preparing the half yearly condensed financial statements.

2. Critical accounting judgements and key sources of estimates uncertainty

The directors are required to make judgements, estimates and assumptions about the carrying amounts of assets and liabilities at each period end. 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. Other than as discussed below, there have been no changes to the application of critical accounting judgements or key sources of estimation uncertainty from those set out in the 31 October 2008 financial statements.

Minerva Insurance claim

During the year ended 31 October 2008, the generators on mv Minerva, the Group's leased ship, ceased to operate and were replaced in November 2008, when the ship was in dry dock with enhanced, more fuel efficient generators. The cost of the replacement is the subject of an insurance claim that the Group is in the process of submitting. The Group is currently in advanced discussions with loss adjusters on this claim.

As at 31 October 2008, the Directors determined that it was appropriate to record an insurance receivable asset under the terms of the insurance contract, which covers the insured loss. There has been no change to the accounting treatment for the costs associated with the insurance claim and the Group continues to recognise an insurance receivable for the minimum amount that the Group can be assured to recover under the terms of the insurance contract on mv Minerva.  Further expenditure above this minimum amount in the 2009 interim period has been expensed as incurred - see note 4.

  Hebridean Princess transactions

Bargain purchase

On 23 April 2009 the Group acquired the ship mv Hebridean Princess, trade, various related assets and immaterial detention creditors as set out in note 8, from the administrators of Hebridean International Cruises Limited. The administration of that company provided the Group with an opportunity to acquire valuable assets at an attractive price compared to the fair value that would be payable in an open market transaction (a 'bargain transaction'). The directors have determined that the transaction meets the criteria of a business combination under IFRS 3, 'Business combinations'. In arriving at this conclusion the directors assessed that the assets acquired, being a combination of tangible and intangible assets enabling the performance of the full operation of mv Hebridean Princess, comprised an integrated set of activities and assets that operate collectively as a business to generate economic benefits.

Immediately prior to the date of acquisition, the directors commissioned a ship valuation from a qualified independent ship valuer to assist in assessing the acquisition.  mv Hebridean Princess was valued at $6,000,000. Due to the unique nature of the vessel, this valuation includes both the value of the core ship and her trade. The value ascribed by the ship valuer to mv Hebridean Princess, aggregated with the Directors' or administrator's valuation of other assets and liabilities acquired comprising stock, fixtures and fittings, detention creditors and the Hebridean Spirit customer database exceeded the cash consideration paid for the trade and assets, which amounted to £1,360,000. As a result of the value of the assets and liabilities acquired exceeding in aggregate the consideration paid, the directors considered the detailed requirements of IFRS 3. As part of this process they commissioned an independent valuation from a firm of Independent Chartered Accountants of the mv Hebridean Princess intangible assets acquired using a recognised valuation methodology. This independent valuation provided a separable open market value for customer relationships and the Hebridean Princess brand. Taking into consideration all available evidence provided by the independent valuation of the ship and associated intangible assets in aggregate (which represents a market price for the identified and related assets) the separate valuation of intangible assets and tangible assets, and the book value or comparable active market value of other assets and liabilities acquired, the directors concluded that there was sufficient evidence to support the recognition of a gain arising from the bargain purchase. An excess of the acquirer's interest in the net fair value of the acquiree's identifiable assets and liabilities over the cost of the acquisition arose amounting to £3,380,000. This has been immediately credited to the income statement as required by IFRS 3, and recorded within cost of sales. 

Onerous contract provision

As at the date of acquisition the Group had no obligation under the purchase agreement to honour the advance cruises that were booked on mv Hebridean Princess.  This is expressly stated in the purchase agreement signed with the administrators. After consideration of the significant level of future bookings, and in order to preserve the value inherent in the customer relationships acquired, the Group wrote to non-charter customers booked to travel in the financial year of Hebridean International Cruises ended 30 November 2009 ('pre-booked customers') to inform them that, subject to the pre-booked customers entering into a new contract with All Leisure Holidays Limited with various conditions, the Group would operate the future 2009 non-charter cruises. Customers who had booked with the previous operator of mv Hebridean Princess had an insurance policy to cover them for losses in the event of Hebridean International Cruises Limited's failure and inability to provide the booked cruise. Conditional to All Leisure Holidays accepting a booking from a pre-booked customer for summer 2009 was the agreement that the customer would firstly claim, and secondly forward, any monies recovered from this insurance policy to the Group, in return for the Group providing the cruise. The directors are taking legal advice regarding the recovery of these monies but are currently not virtually certain that monies paid by pre-booked customers prior to acquisition will be recovered and have made a provision for £1,129,000 against the losses currently forecast on these cruises. These losses, recorded within cost of sales, will principally arise in the second half of the current financial year. In arriving at this position, the directors have considered the specific cruise contracts, under IAS 37, 'Provisions, contingent liabilities and contingent assets' and have concluded that they represent onerous contracts on the Group. 

The decision to operate the summer 2009 cruises was taken after the acquisition was concluded and as such the provision does not form part of the acquisition accounting.

  

3. Derivative financial instruments 

The Group has in place various derivative financial instruments comprising fuel and currency contracts. These contracts do not qualify, or have not been designated, as hedges under IAS 39. Accordingly the instruments are revalued through the income statement each period, resulting in a net income statement gain or loss which is reported in Cost of sales.

The movement in the Group's derivative financial instruments for the period can be analysed as follows:

	Six month period ended 30 April 2009 Unaudited
	Currency	Fuel	Total
	£'000	£'000	£'000
At 1 November 2008 - asset/(liability)	3,686	(493)	3,193
Gain/(loss) in the period recorded in income statement	2,039	(201)	1,838
Cash (inflow)/outflow	(5,095)	429	(4,666)
At 30 April 2009 - asset/(liability)	630	(265)	365

	Six month period ended 30 April 2008 Unaudited
	Currency	Fuel	Total
	£'000	£'000	£'000
At 1 November 2007 - (liability)	(1,006)	-	(1,006)
Gain in the period recorded in income statement	679	-	679
At 30 April 2008 - (liability)	(327)	-	(327)

	Year ended 31 October 2008 Audited
	Currency	Fuel	Total
	£'000	£'000	£'000
At 1 November 2007 - (liability)	(1,006)	-	(1,006)
Gain/(loss) in the year recorded in income statement	4,692	(1,915)	2,777
Cash outflow	-	1,422	1,422
At 31 October 2008 - asset/(liability)	3,686	(493)	3,193

  

4. Operating (loss)/profit and details of various pro-forma adjustments

In order to aid the comparability of the amounts reported for each period, in accordance with the presentation of results to the Board of Directors of the Company, the Group identifies certain items of income and expenditure that are material to the Group, and are either volatile or non-recurring. These are consistent with the manner in which the financial year 2008 results were disclosed and are described below in more detail. They are also adjusted for in the calculation of an adjusted earnings per share figure in note 7. 

The Group presents pro-forma results determined as follows:

	Six month period ended 30 April 2009 Unaudited £'000	Six month  period ended 30 April 2008 Unaudited £'000	Year ended 31 October 2008 Audited £'000
(Loss)/profit before tax	(1,134)	1,164	9,052
Adjustment for derivative financial instruments	2,828	(679)	(2,777)
Pre-derivative profit before taxation	1,694	485	6,275
Adjustment for other items	(1,573)	370	1,422
Adjusted profit before taxation	121	855	7,697
Tax	(28)	(223)	(238)
Adjusted profit after taxation	93	632	7,459

The various adjustments to arrive at the pro-forma results are described below.

Adjustment for derivative financial instruments

As disclosed in note 3, the Group has in place various derivative financial instruments comprising fuel and currency contracts. These contracts are not accounted for under the hedge accounting provisions of IAS 39, and accordingly are revalued through the income statement each period, resulting in a net income statement gain or loss which is reported in Cost of sales.

These contracts represent economic hedges against the Group's future exposure to commodity and currency fluctuations. Accordingly, while the periodic mark to market of the investments is included in the relevant period income statement in arriving at gross profit, the fair value adjustment on the contracts relates to items that will principally be cash flows in future periods. 

Where the cash flows represent economic hedges, the Board monitors the results for the period net of cash flows arising for derivative financial instruments on a cash basis, rather than on a mark to market basis. Accordingly, the Board has monitored the result for the periods on the basis of the following pro forma adjustments for derivatives in each period:

  

	Six month period ended 30 April 2009 Unaudited £'000	Six month period ended 30 April 2008 Unaudited £'000	Year ended 31 October 2008 Audited £'000
Increase/(decrease) in gross profit, operating (loss)/profit  and (loss)/profit before tax arising from:
Add back periodic mark to market of derivative financial  instruments - (reduction)/increase	(1,838)	(679)	(2,777)
Replace periodic mark to market with derivative cash  inflow/(outflow) relating to the period	4,666	-	-(*)
Increase/(decrease) in pro forma result	2,828	(679)	(2,777)

(*)  No adjustment is reported for the cash flows arising in the year ended 31 October 2008 of £1,422,000 on fuel contracts. This cash outflow arose on the renegotiation of fuel contracts in the year ended 31 October 2008 to reduce the forward purchase price. Accordingly, the cash outflow related to future periods, rather than being the realisation of the economic hedge that the derivative provide to the Group.

Other items

Certain items of income and expense are non-recurring and material such that the Group considers it appropriate to draw attention to these items. Consistent with the approach adopted for the year ended 31 October 2008 in accordance with the Group accounting policy for exceptional items, these have been separately analysed and disclosed to provide additional information and to assist in the comparability of the current period results with those of the comparative periods. The items are:

	Six month period ended 30 April 2009 Unaudited £'000	Six month period ended 30 April 2008 Unaudited £'000	Year ended 31 October 2008 Audited £'000
Gain arising on the purchase of the trade and certain assets and liabilities of Hebridean International Cruises Limited  - included in cost of sales	(3,380)	-	-
Onerous provision arising from pre-booked customers on mv Hebridean International Princess  - included in cost of sales	1,129	-	-
mv Minerva generator failure additional costs  - included in cost of sales	678	-	1,052
Swan Hellenic start up costs  - included in administrative expenses	-	370	370
(Decrease)/increase in pro forma result	(1,573)	370	1,422

 

The nature of the amounts reported in the current period for gains arising on the purchase of certain trade and assets and liabilities of Hebridean International Cruises Limited and the associated provision for onerous contracts is provided in note 2.

mv Minerva generator failure additional costs

mv Minerva suffered the failure of both her generators during the year ended 31 October 2008 which resulted in temporary generators having to be hired pending a permanent repair, and additional harbour and dry dock costs being incurred. mv Minerva entered dry dock on 27 October 2008 for two replacement, higher specification generators to be installed. The expenditure which has not been included in the insurance claim receivable is expensed on an incurred basis to the income statement.  Note 2 provides further details concerning the insurance claim.

Swan Hellenic start up costs

Swan Hellenic start up costs relate to increased marketing, and office costs incurred prior to the launch of the Swan Hellenic programme in May 2008.

5. Income taxes 

The tax charge of £28,000 (six months ended 30 April 2008: charge of £223,000, year ended 31 October 2008: charge of £238,000) represents an effective rate of 2.5% (six months ended 30 April 2008: 19.2%, year ended 31 October 2008: 2.6%).  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. 

As a result of the majority of the Group's operations and profits being taxable under the UK Tonnage Tax regime, the directors anticipate that the Group will continue to have a low effective tax rate compared with the current corporation tax rate of 28%.

6. Dividends

			Six month period ended 30 April 2009 Unaudited £'000	Six month period ended 30 April 2008 Unaudited £'000	Year ended 31 October 2008  Audited £'000
Interim dividend for the year ended 31 October 2008 of 2.44p (2007: nil) per share			1,498	-	-
Final dividend for the prior year recognised in the period of 1.22p (2007: 5p) per share			755	3,070	3,070
Total			2,253	3,070	3,070

The interim dividend for 2008 of £1,498,000 was payable to shareholders on the register on 19 September 2008 and was paid on 12 November 2008. Interim dividends only become binding liabilities on the Company when declared as paid and accordingly, the interim dividend in respect of financial year ended 31 October 2008 has been recorded in the current period. 

Shareholders had the opportunity to receive their interim dividend payment in either cash or scrip dividend. £923,000 was paid in cash with the balance being paid by way of 338,221 new ordinary 1p shares. 

The proposed final dividend for the year ended 31 October 2008 of £755,000 was approved by the shareholders at the Annual General Meeting on 14 April 2009 and was paid on 24 April 2009 to shareholders on the register on 18 March 2009.

An interim dividend of 0.6p per share has been proposed in respect of the six month period ended 30 April 2009, amounting in total to £370,469. In accordance with IAS37, this dividend has not been provided for as a liability in these unaudited interim condensed financial statements. 

7. (Loss)/earnings per share (pence)

		Six month period ended 30 April 2009 Unaudited £	Six month period ended 30 April 2008 Unaudited £	Year ended 31 October 2008  Audited £
(Loss)/earnings per share (pence)
Basic and diluted		(1.9p)	1.5p	14.4p
The calculation of basic and diluted (loss)/earnings per share is based on the following data:
		£'000	£'000	£'000
(Loss)/earnings
(Loss)/earnings for the purposes of basic and diluted earnings per share being net (loss)/profit attributable to shareholders of the parent		(1,162)	941	8,814
		Number	Number	Number
Number of shares
Weighted average number of ordinary shares for the  purposes of basic earnings per share		61,722,354	61,406,556	61,406,556
Effect of potential dilutive ordinary shares: Options		-	29,241	2,402
Weighted average number of ordinary shares for the  purposes of diluted earnings per share		61,722,354	61,435,797	61,408,958

Adjusted (loss)/earnings per share

The Group presents below an adjusted (loss)/earnings per share figure in order to aid the comparability of the amounts reported for each period, in accordance with the presentation of results to the Board of Directors of the Company. The adjustments are discussed in notes 2 and 4. This presentation does not conform with IFRS and does not represent a superior measure of the Group's performance but is provided to aid comparability.  The number of shares for the purpose of the calculation is as per the Basic and Diluted earnings per share:

	Six month  period ended 30 April 2009 Unaudited	Six month period ended 30 April  2008 Unaudited	Year ended  31 October  2008 Audited
	£'000	£'000	£'000
(Loss)/earnings for the purpose of basic and diluted earnings per share	(1,162)	941	8,814
Adjustments (as detailed in note 4):
Adjustment for derivative contracts	2,828	(679)	(2,777)
Other items	(1,573)	370	1,422
Adjusted earnings for the purpose of basic and diluted adjusted earnings per share	93	632	7,459
Adjusted earnings per share (pence):
Basic	0.2p	1.0p	12.1p
Diluted	0.2p	1.0p	12.1p

8. Acquisition of MV Hebridean Princess and various assets and liabilities from the administrators of Hebridean International Cruises Limited

The Group acquired the trade and various related assets and liabilities, including the ship mv Hebridean Princess from the administrators of Hebridean International Cruises Limited on 23 April 2009. Details of the acquisition are provided note 2, including the factors resulting in the recognition of a gain from the bargain purchase.

The excess of the acquirer's interest in the net fair value of the acquiree's identifiable assets and liabilities over the cost of acquisition arose, amounting to £3,380,000 is calculated as follows:

					Provisional Fair Value £'000
Net assets acquired
mv Hebridean Princess					1,384
Customer relationships					2,489
Brand					593
Customer databases					292
Inventories					24
Detention creditors					(42)
					4,740
Discount on acquisition					(3,380)
Satisfied by cash					1,360

As required by IFRS 3, the discount on acquisition has been credited to the income statement and recorded within cost of sales.

The following methodologies were applied to determine the fair value of assets and liabilities acquired:

mv Hebridean Princess - the value was determined based on the replacement cost of a similarly equipped vessel, based on extrapolated available market evidence for the sale of vessels of a similar tonnage. Due to the unique nature of the vessel, direct comparator vessels are not available. 

customer relationships - the value was determined by using an excess earnings model and assessed using a range of possible inputs. 

brand - the value was determined using a relief of royalty valuation. 

customer databases - the value was determined by reference to the active market that exists in the purchase of access to relevant and comparable customer databases and the Group's previous experience of such purchases adjusted to reflect the most conservative future economic benefits to the Group.

inventories and detention creditors - the value was determined by reference to the book value, which is considered to represent the fair value.

The fair values reported above are provisional pending final settlement with the administrators which may alter the value of the detention creditors. The directors do not anticipate a significant change in the values ascribed to the tangible or intangible fixed assets acquired. 

Including unavoidable future operating losses arising under onerous contracts of £1,129,000 (note 2) and excluding the gain reported for the bargain purchase of £3,380,000, mv Hebridean Princess contributed £1,268,000 loss for the period to 30 April 2009. The directors anticipate that the acquisition will be broadly neutral on group results for the full year and will be profit enhancing from the start of the next financial year.

The result attributable to mv Hebridean Princess in the period prior to acquisition that would have been included in the Group result for the period had the acquisition been effected on 1 November 2008 would have been a loss of £0.7 million reflecting the seasonality in the ship's cruising business.

9. Share capital

	At 30 April 2009 unaudited £'000	At 30 April 2008 unaudited £'000	At 31 October 2008 audited £'000
Authorised:
100,000,000 ordinary shares of 1p each	1,000	1,000	1,000
Issued and fully paid:
61,744,777 (31 October 2008 and 30 April 2008 - 61,406,556) ordinary shares of 1p each	618	615	615

The Company has one class of ordinary shares which carry no rights to fixed income. On 12 November 2008, the Company issued 338,221 1p ordinary shares by means of a scrip dividend increasing the issued share capital to 61,744,777. The shares were issued at £1.70 per ordinary share, resulting in an increase in the share capital of the Company of £3,382 and an increase in the share premium of the Company of £571,594.

The Company has in issue 1,074,615 (31 October 2008 and 30 April 2008: 1,074,615) outstanding options over ordinary 1p shares in the Company.

  

10. Notes to the cash flow statement

				Six month period ended 30 April 2009 Unaudited £'000	Six month period ended 30 April 2008 Unaudited £'000	Year ended 31 October 2008 Audited £'000
(Loss)/profit for the financial period/year				(1,162)	941	8,814
Adjustments for:
Investment revenues				(819)	(782)	(1,681)
Rental income				(13)	(12)	(34)
Finance costs				109	112	228
Income tax				28	223	238
Depreciation of property, plant and equipment				460	450	907
Depreciation of investment property				2	2	4
Amortisation of intangible assets				82	-	270
Excess of acquirer's interest in fair value of identifiable net  assets acquired over cost of acquisition				(3,380)	-	-
Unrealised foreign exchange gain on intercompany				(242)	(177)	(725)
Foreign exchange gain on bank balances				(870)	(204)	(1,200)
Movement in fair value of derivatives				(1,838)	(678)	(2,777)
Net cash inflow/(outflow) from derivatives				4,666	-	(1,422)
Increase/(decrease) in provisions				1,129	-	(209)
Operating cash (outflows)/inflows before movements in working capital				(1,848)	(125)	2,413
Decrease/(increase) in receivables				1,164	(776)	162
Decrease/(increase) in inventories				385	453	(2,511)
(Decrease)/increase in payables				(309)	4,981	5,543
Cash (outflow)/inflow generated from operations				(608)	4,658	5,607
Income taxes paid				-	(45)	(57)
Net cash (outflow)/inflow from operating activities				(608)	4,488	5,550

11. Related party transactions

During the period Mr R J Allard, Director and Executive Chairman, lent the Group a short term interest free loan of £2,165,000.  The loan was fully repaid on 18 May 2009. 

12. Ultimate controlling party

By virtue of his majority shareholding, the ultimate controlling party is Mr R J Allard.

13. Restatement of the 30 April 2008 Unaudited Interim Condensed Financial Statements

As disclosed in detail in note 5 to the Group financial statements for the year ended 31 October 2008 ('the 2008 Financial Statements'), subsequent to the issue of the unaudited condensed interim consolidated financial statements for the six month period ended 30 April 2008, the Group received a comments letter from the Financial Reporting Review Panel ('FRRP') dated 5 August 2008. The Group paid particular attention to the comments raised in this initial letter and co-operated fully with the FRRP. As a result of the comments raised through the dialogue with the FRRP, and internally initiated improvements in the Group's accounting function and processes, certain further adjustments were identified as being required to present fairly the Group's financial position, financial performance and cash flows under IFRS for the period ended 30 April 2008. 

We present below details of the restatements required to the amounts previously reported under IFRS for the financial position of the Group as at 30 April 2008, and for the results of operations and cash flows for the six month period then ended.  There are no new adjustments from those disclosed in the financial statements for the year ended 31 October 2008.

Unaudited Income Statement restatement for the six month period ended 30 April 2008

	As previously stated	Disclosure refinements and corrections	Correction to Atholl acquisition accounting	Ship Accounting and functional currency adjustments	As restated
	£'000	£'000	£'000	£'000	£'000
Revenue	32,855	-	-	-	32,855
Cost of sales	(28,113)	679	(101)	-	(27,535)
Gross profit	4,742	679	(101)	-	5,320
Administrative expenses	(4,543)	(679)	-	384	(4,838)
Rental income	12	-	-	-	12
Operating profit	211	-	(101)	384	494
Investment revenues	782	-	-	-	782
Finance costs	(112)	-	-	-	(112)
Profit before tax	881	-	(101)	384	1,164
Tax charge	(265)	250	(208)	-	(223)
Profit for the period	616	250	(309)	384	941

Disclosure refinements and corrections relate to the presentation of foreign exchange gains in cost of sales where they relate to direct operating costs. In addition the tax charge for the half year has been restated in line with the effective tax rate for the year to 31 October 2008 that should have been applied in the 30 April 2008 interims.

Correction to Atholl acquisition accounting reflects the restatement of the Atholl Shipping Corporation Limited acquisition accounting following a revision to the accounting treatment as set out in note 31 of the 2008 Financial Statements.

Ship accounting and functional currency adjustments are a result of the refinement to ship accounting policies in accordance with IFRS and the recognition and restatement of Discovery Cruises Limited to a US dollar functional currency entity. Full details are provided in notes 5.1.5 and 5.2.5.2 of the 2008 Financial Statements.

  

Unaudited Balance Sheet restatement as at 30 April 2008 

	As previously reported	Disclosure refinements and corrections	Correction to Atholl acquisition accounting	Ship accounting and functional currency adjustments	As restated
	£'000	£'000	£'000	£'000	£'000
Non-current assets
Intangible assets	3,234	-	-	-	3,234
Property, ship, plant and  equipment	13,226	-	935	(1,330)	12,831
Investment property	274	-	-	-	274
Restricted bank balances	-	2,145	-	-	2,145
	16,734	2,145	935	(1,330)	18,484
Current assets
Inventories	1,194	-	-	-	1,194
Trade and other receivables	2,743	50	-	-	2,793
Interest bearing bank deposits	-	21,394	-	-	21,394
Restricted bank balances	-	379	-	-	379
Cash and cash equivalents	30,185	(23,918)	-	-	6,267
	34,122	(2,095)	-	-	32,027
Total assets	50,856	50	935	(1,330)	50,511
Current liabilities
Trade and other payables	(22,028)	-	(59)	-	(22,087)
Current tax liabilities	(331)	250	-	-	(81)
Borrowings	(1,094)	-	-	(228)	(1,322)
Derivative financial instruments	(327)	-	-	-	(327)
	(23,780)	250	(59)	(228)	(23,817)
Non-current liabilities
Borrowings	(3,632)	-	-	241	(3,391)
Deferred tax liabilities	(13)	(54)	-	-	(67)
Provisions	-	-	(1,185)	-	(1,185)
	(3,645)	(54)	(1,185)	241	(4,643)
Total liabilities	(27,425)	196	(1,244)	13	(28,460)
Net assets	23,431	246	(309)	(1,317)	22,051
Equity
Share capital	615	-	-	-	615
Share premium account	12,049	725	-	-	12,774
Revaluation reserve	226	(215)	-	-	11
Other reserves	83	(83)	-	-	-
Currency translation reserve	42	(51)	-	40	31
Retained earnings	10,416	(130)	(309)	(1,357)	8,620
Total equity	23,431	246	(309)	(1,317)	22,051

  

Disclosure refinements and corrections set out corrections to the prior year interim results following refinements and corrections to the Group accounting policies as set out in note 5 of the financial statements of the 2008 Accounts. They relate principally to:

	The definition of cash and cash equivalents, interest bearing funds and restricted cash as set out in note 5.1.5 of the 2008 Financial Statements;
	A correction relating to the period ended 31 October 2007 for IPO costs as set out in note 5.1.5 of the 2008 Financial Statements;
	A correction to the accounting for investment property as set out in note 5.2.5 of the 2008 Accounts; and
	The correction of the prior year tax charge to reflect the current annual effective tax rate.

Correction to Atholl acquisition accounting reflects the restatement of the Atholl Shipping Corporation Limited acquisition accounting following a revision to the accounting treatment as set out in note 31 of the 2008 Financial Statements.

Ship accounting and functional currency adjustments are a result of the refinement to ship accounting policies in line with IFRS and the recognition and restatement of Discovery Cruises Limited to US$ functional currency entity. Full details are provided in notes 5.1.5 and 5.2.5.2 of the 2008 Financial Statements.

  

Unaudited Cash Flow Statement restatement

	As Previously reported	Disclosure refinements and corrections	Correction to Atholl acquisition accounting	Ship accounting and functional currency adjustment	As restated
	£'000	£'000	£'000	£'000	£'000
Profit for the period	616	250	(309)	384	941
Adjustments for:
Investment revenues	(782)	-	-	-	(782)
Rental income	-	(12)	-	-	(12)
Finance costs	112	-	-	-	112
Income tax	265	(42)	-	-	223
Depreciation	304	-	-	146	450
Depreciation of investment property	-	-	-	2	2
Unrealised gain on intercompany balances	-	-	-	(176)	(176)
Foreign exchange gain on bank balances	-	-	-	(204)	(204)
Movement in fair value of interest rate swap	(679)	-	-	-	(679)
Operating cash (outflows)/inflows before movements in working capital	(164)	196	(309)	152	(125)
(Increase)/decrease in receivables	(1,286)	(50)	560	-	(776)
Decrease./(increase) in inventories	(389)	-	842	-	453
Increase/(decrease) in payables	7,537	(196)	(2,360)	-	4,981
Cash generated by operations	5,862	(246)	(958)	-	4,658
Income taxes paid	(45)	-	-	-	(45)
Net cash from operating activities	5,653	(50)	(1,267)	152	4,488
Interest received	695	-	-	-	695
Acquisition of subsidiary	-	-	900	-	900
Rental income	-	12	-	-	12
Purchases of property, plant and equipment	(283)	23	-	-	(260)
Movement on short-term interest bearing cash deposits	-	(4,299)	-	-	(4,299)
Net cash used in investing activities	412	(4,264)	900	-	(2,952)
Dividends paid	(3,070)	-	-	-	(3,070)
Repayment of loans	(865)	-	-	13	(852)
Movement to restricted cash	-	(2,163)	-	-	(2,163)
Net cash used in financing activities	(3,935)	(2,163)	-	13	(6,085)
Net decrease in cash and cash equivalents	2,130	(6,477)	(367)	165	(4,549)
Opening cash and cash equivalents	28,055	(17,456)	-	-	10,599
Effect of foreign exchange rate changes	-	217	-	-	217
Closing cash	30,185	(23,716)	(367)	165	6,267

Unaudited Interim Condensed Financial Statements

Independent Review Report to All Leisure group Plc

We have been engaged by the Company to review the condensed set of financial statements in the half-yearly financial report for the six months ended 30 April 2009 which comprise the Consolidated Income Statement, the Consolidated Balance Sheet, the Consolidated Statement of Changes in Equity, the Consolidated Cash Flow Statement and related notes 1 to 13.  We have read the other information contained in the half-yearly financial report and considered whether it contains any apparent misstatements or material inconsistencies with the information in the condensed set of financial statements.

This report is made solely to the Company in accordance with International Standard on Review Engagements (UK and Ireland) 2410 "Review of Interim Financial Information Performed by the Independent Auditor of the Entity" issued by the Auditing Practices Board. Our work has been undertaken so that we might state to the Company those matters we are required to state to them in an independent review report and for no other purpose. To the fullest extent permitted by law, we do not accept or assume responsibility to anyone other than the Company, for our review work, for this report, or for the conclusions we have formed.

Directors' responsibilities

The half-yearly financial report is the responsibility of, and has been approved by, the directors. The directors are responsible for preparing the half-yearly financial report in accordance with the AIM Rules of the London Stock Exchange.

As disclosed in note 1, the annual financial statements of the Group are prepared in accordance with IFRSs as adopted by the European Union. The condensed set of financial statements included in this half-yearly financial report have been prepared in accordance with the accounting policies the Group intends to use in preparing its next annual financial statements.

Our responsibility

Our responsibility is to express to the Company a conclusion on the condensed set of financial statements in the half-yearly financial report based on our review.

Scope of Review 

We conducted our review in accordance with International Standard on Review Engagements (UK and Ireland) 2410 "Review of Interim Financial Information Performed by the Independent Auditor of the Entity" issued by the Auditing Practices Board for use in the United Kingdom. A review of interim financial information consists of making inquiries, primarily of persons responsible for financial and accounting matters, and applying analytical and other review procedures. A review is substantially less in scope than an audit conducted in accordance with International Standards on Auditing (UK and Ireland) and consequently does not enable us to obtain assurance that we would become aware of all significant matters that might be identified in an audit. Accordingly, we do not express an audit opinion.

Conclusion

Based on our review, nothing has come to our attention that causes us to believe that the condensed set of financial statements in the half-yearly financial report for the six months ended 30 April 2009 is not prepared, in all material respects, in accordance with the AIM Rules of the London Stock Exchange.

Deloitte LLP

Chartered Accountants and Statutory Auditors

Crawley, United Kingdom

23rd July 2009

ENDIR CKBKDFBKDOOB

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