Interim Results

All Leisure group plc

Unaudited Interim Condensed Financial Statements

Financial Highlights

Unaudited interim results for the six months ended 30 April 2011

Highlights

·; Despite unprecedented natural disasters and geo-political events, challenging market conditions, persistent low interest rates, increased oil prices and a weak pound, the Group delivered operating results ahead of 2010

·; First half revenues totalled £34.8 million (2010: £32.4 million)

·; Group Available Lower Berth Nights ("ALBN") up 14.8% to 195,000 across the ocean fleet

·; Occupancy levels for Discovery, Minerva and Hebridean Princess increased to 79% (2010: 76%)

·; Investment of €7.5m in Alexander von Humboldt increased number of cabins from 260 (10 with balconies) to 278 (30 with balconies), resulting in improved third party valuation of €35 million compared to a valuation €25 million as at 31 October 2010

·; Discover Egypt Winter 2010/11 passenger traffic down 24% due to Arab Spring, but partially offset by increase in average spend per head of 6%

Outlook

·; Prevailing market conditions are the most challenging ever seen along with a reduction in UK disposable income

·; Hedged over 95% of foreign expenditure requirements for the current financial year

·; Hedged 31% of projected fuel requirements

·; Remaining Summer 2011 capacity currently 86% sold (2010: 84%), albeit at lower prices and with a higher cost base, in particular fuel and aviation

·; mv Alexander von Humboldt chartered for Summer 2011

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

"The Board are satisfied with the first half year result particularly when you take into account the disruption to our operations caused by the snow in December 2010, the cancellation of our peak Nile cruise programme in Egypt (including repatriation costs), and also rising fuel prices. It is pleasing that occupancy on our Ocean fleet has increased to 79% from 76% and that we have also invested in the mv Alexander von Humboldt by adding 18 further cabins and 20 new balconies."

For further information:

All Leisure group plc

Roger Allard, Chairman 01444 462103

Rob Bryant, Chief Executive Officer

Neil Morris, Group Finance Director

Broker and Nominated Adviser

Panmure Gordon Andrew Godber/Callum Stewart 020 7459 3600

Financial Public Relations

Citigate Dewe Rogerson Ginny Pulbrook/Lindsay Noton 020 7282 2945

Financial Highlights (continued)

Unaudited Interim Condensed Financial Statements

Chairman's Statement

Overview

Against a backdrop of unprecedented natural disasters and geo-political events, and despite challenging market conditions, reduced discretionary customer spending, persistent low interest rates, increased oil prices and a weak pound, I am pleased to announce that the Group has delivered operating results ahead of those for interim 2010. As noted in my outlook statement of 22 March 2011, the financial impact of the political situation in Egypt was envisaged to have a negative financial impact of £550k on Discover Egypt. Regrettably, the impact for the year will be £800k due to a worsening position, of which £275k has been realised in our interim results. Following the uprising in Egypt, the Group immediately addressed its contractual exposure to ensure that we had no forward ground commitments with local suppliers and minimal flying commitments for the rest of the financial year.

The Group reports a loss after tax for the six months ended 30 April 2011 of £4.2m (half year ended 30 April 2010: loss of £4.5m, full year ended 31 October 2010: loss of £2.1m). Loss per share - basic and diluted - for the six months ended 30 April 2011 was a loss per share of 6.7 pence compared with a loss per share for the comparative period of 7.2 pence per share (full year ended 31 October 2010: loss of 3.4 pence per share).

As described in note 1 to the Unaudited Interim Condensed Financial Statements, the Group has taken the opportunity to change the presentation of the costs in the income statement by nature as opposed to by function, the method used in previous financial reports. This has enabled the Group to present its operating result before the impact of unrealised gains or losses on fuel and foreign exchange hedging instruments. Using this measure, the Group's operating loss for the financial period ended 30 April 2011 was £4.4m compared with a loss of £5.6m for the same period last year (full year ended 31 October 2010: profit of £3.1m).

The Group tax credit of £23k reflects an over-accrual made at 31 October 2010 offset by the fact that the ocean vessels mv Discovery, Minerva and Hebridean Princess still operate under the UK tonnage tax regime (period ended 30 April 2010: nil%; full year ended 31 October 2010: 1.6% charge).

Further to the winter losses, the significant upgrade and refurbishment of mv Alexander von Humboldt (AvH) of £6.7m (€7.5m) during the period has had, as planned and anticipated, a significant impact on the Group net cash position. Half year gross cash balances at 30 April 2011 stood at £9.9m (unrestricted: £7.0m, restricted: £2.9m) compared with £18.4m at 30th April 2010 (unrestricted: £15.2m, restricted: £3.2m) and £18.1m at 31 October 2010 (unrestricted: £15.1m, restricted: £3.0m).

The company is intending to pay a dividend of £395,000 (representing 0.64p per share), which will be paid on 11th November 2011 to shareholders on the register on 14th October 2011.

Operational Review

Ocean Cruises

At the half year, mv Discovery, Minerva and Hebridean Princess had completed successful winter itineraries. Discovery circumnavigated South America and the Caribbean, Minerva sailed in the Far-East and Hebridean Princess operated a short season around the Scottish mainland and islands. Group Available Lower Berth Nights ("ALBN") rose 14.8% to 195,000 across the ocean fleet. The fact that there was no dry dock required for mv Discovery resulted in ALBN increasing by 12% on 2010, whilst the move to a Far-East programme instead of a capacity restricted Antarctic programme for mv Minerva resulted in a 22% increase in ALBN for the Swan Hellenic programme over the prior year. In respect of Hebridean Princess, due to a slightly longer programme, the ALBN increased by 4% over H1 2010. Overall, across all three ships, occupancy levels in H1 2010/11 were 79% (2010: 76%).

The increase in commissions, transportation and other costs of £2.2m over the prior year half year largely arises from the fact that for Swan Hellenic's Winter 2009/10 programme the flying costs were incurred by a third party, whereas for this Winter they were the Group's responsibility, together with an increase in capacity and aviation costs in general.

Customer satisfaction scores continue to be pleasing. On mv Discovery's winter itinerary, 93% of passengers responding to on-board surveys intend to sail with us again. On mv Minerva, 96% of responding passengers intend to sail with us again, whilst on mv Hebridean Princess the proportion of passengers intending to sail on her again was 98%.

Following the acquisition of the AvH in November 2009, the opportunity was taken to expand the schedule of works undertaken whilst in wet dock this winter to increase the number of balcony cabins on the vessel from 10 to 30. In addition we converted a number of other areas into cabins, resulting in the ship now having 278 cabins (30 balconies) compared with 260 previously (10 balconies). Whilst this has resulted in the overall investment in the vessel increasing to €26m, the investment made has increased the open market value of the ship in excess of the costs of improvement and the AvH now has a third party valuation of €35m compared to the valuation of €25m as at 31 October 2010. The AvH has been chartered for the summer 2011.

Winter River Cruises

Until the 'Arab Spring' uprising in January 2011, Discover Egypt had a successful Winter 2010/11 season. Over the winter period 3,446 passengers travelled with Discover Egypt, compared to 4,505 in the same period for 2010, with the fall of 24% being wholly attributable to the uprising. The uprising resulted in cancelling four weekly departures, repatriating all passengers and a lack of late sales causing a £275k reduction in forecasted operating results in the first half of the year. Despite the reduced passenger numbers, the average spend per head increased by 6% as the trend for the brand to sell more bespoke holiday packages of higher value continued. However, this increase was not sufficient to offset the impact of the uprising and, as a result, Discover Egypt is trading behind budget.

The Swan Hellenic European river cruise programme only operates from May to October each year.

Hedging

A significant element of the Group's costs is in non-sterling denominations, especially US dollars and euros. In recent years currency markets have conspired to drive up relentlessly the Group's sterling costs, with the pound weakening against the dollar by c.20% since the Group commenced trading on the AIM market on 1st October 2007. Over the same period the pound has also weakened against the euro by a similar percentage despite recent Euro weakness.

The Group is actively engaged in managing the impact of these currency headwinds, but unfortunately the nature and deployment of the instruments used preclude the application of hedge accounting. Management are active in reducing dollar costs as well as increasing dollar revenues and thus reducing, on a like-for-like basis, its overall hedging requirements.

Both currency and fuel hedging remain important tools for managing the cost base. The Group has hedged over 95% of its foreign currency requirements for the current financial year as well as over 31% of its projected fuel requirement. 

Outlook

For Summer 2011 the ALBN (excluding AvH) will be similar to Summer 2011 at c.200,000. Despite the economic environment, remaining Summer 2011 capacity is currently 86% sold, including charters, (2010: 84%). However, these load factors have been achieved at lower yields and against a higher cost base. Furthermore we envisage that fuel costs over the year will continue to rise and are now, in sterling terms, at their highest ever levels. Accordingly we believe fuel costs will be £1.3m higher than the previous financial year, and due to the continued weak UK economic environment it has not been possible to pass on this increase. Whilst April's results benefited from passengers taking advantage of the additional bank holidays, this had a detrimental impact across the industry for revenue and load factors for May and June.

Once again the small Swan Hellenic river cruise programme for Summer 2011 has sold very well.

For Winter 2011/12 both mv Discovery and Minerva will be sailing to the Far-East but it is also planned for mv Minerva to go into a dry dock.

In addition to continued geo-political unrest, unprecedented natural disasters, the current global economic environment and continued low UK interest rates, the last six months has also seen no alleviation of the adverse cost environment that the Group is operating in - a situation primarily caused by the weakness of sterling. Despite the difficult cost environment, it is encouraging that the strength of our brands and quality of our customer service have secured strong booking levels and for this reason I am confident that shareholders will see a significant improvement in returns once the adverse economic and exchange rate environment finally abates. 

Roger Allard

Chairman

Unaudited Interim Condensed Financial Statements

Consolidated Income Statement

For the six months ended 30 April 2011

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

* As restated for comparison purposes - see note 1.

Unaudited Interim Condensed Financial Statements

Consolidated Statement of Comprehensive Income

For the six months ended 30 April 2011

Unaudited Interim Condensed Financial Statements

Consolidated Balance Sheet

At 30 April 2011

Unaudited Interim Condensed Financial Statements

Consolidated Statement of Changes in Equity

For the six months ended 30 April 2011

Unaudited Interim Condensed Financial Statements

Consolidated Cash Flow Statement

For the six months ended 30 April 2011

Unaudited Interim Condensed Financial Statements

Notes to the Unaudited Interim Condensed Financial Statements

For the six months ended 30 April 2011

1. Basis of presentation

The interim condensed financial statements of the Group for the six months ended 30 April 2011, 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 2010 except as noted below. Other than the change noted below, the Group does not anticipate any further change in these accounting policies for the year to 31 October 2011. 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 these interim condensed financial statements 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 s434 of the Companies Act 2006. The financial information for the year ended 31 October 2010 is based on the statutory accounts for the year ended 31 October 2010. 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 s498(2) or (3) Companies Act 2006.

Going concern

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, including exposure to external risks as described in the Chairman's Statement, 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.

Changes to method of analysis of income statement from function to nature

In the financial statements for the year ended 31 October 2010 the Group presented an analysis of its expenses in the income statement by function, i.e. cost of sales, administrative expenses, etcetera. Following a review of the presentation methodology applied by industry peers, the income statement will now present analysis of expenses by nature.

Operating (loss)/profit

Operating (loss)/profit is stated as (loss)/profit before tax, investment income, finance costs and other gains and losses.

2. Critical accounting judgements and key sources of estimation 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. There has been no change to the application of critical accounting judgements or key sources of estimation uncertainty from those set out in the 31 October 2010 financial statements.

3. Other income

Other income relates to the settlement of two insurance claims made in respect of technical matters experienced on one of the ships operated by the Group.

4. Income taxes

The tax credit of £23,000 (six months ended 30 April 2009: credit of £1,000; year ended 31 October 2010: charge of £32,000) represents an effective rate of 0.5% (six months ended 30 April 2009: 0%; year ended 31 October 2010: 1.6%). 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%.

5. Dividends

The interim dividend for 2010 of £395,000 was payable to shareholders on the register on 15 October 2010 and was paid on 12 November 2010. Interim dividends only become binding liabilities on the Company when declared and paid and accordingly, the interim dividend in respect of financial year ended 31 October 2010 has been recorded in the current period.

The proposed final dividend for the year ended 31 October 2010 of £809,000 was approved by the shareholders at the Annual General Meeting on 22 March 2011 and was paid on 21 April 2011 to shareholders on the register on 25 March 2011.

An interim dividend of 0.64p per share has been proposed in respect of the six-month period ended 30 April 2011 amounting in total to £395,000. In accordance with IAS 37, this dividend has not been provided for as a liability in the balance sheet as at 30 April 2011.

6. Loss per share (pence)

7. Share capital

The Company has one class of ordinary shares which carry no rights to fixed income. 

The Company has in issue 1,641,970 (30 April 2010: 1,641,970 and 31 October 2010: 1,641,970) outstanding options over ordinary 1p shares in the Company.

8. Notes to the consolidated cash flow statement

9. Related party transactions

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.

Light Blue Travel Limited is a company of which Mr R J Allard is a director and shareholder and the payments made are for travel services.

PB Consultancy services is owned and controlled by Mr P E Buckley, the Company Secretary of the Group, and the payments are for consultancy, accounting and Company Secretarial services.

10. Ultimate Controlling Party

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

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 2011 which comprise the Consolidated Income Statement, the Consolidated Statement of Comprehensive Income, the Consolidated Balance Sheet, the Consolidated Statement of Changes in Equity, the Consolidated Cash Flow Statement and related notes 1 to 10. 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 2011 is not prepared, in all material respects, in accordance with the AIM Rules of the London Stock Exchange.

Deloitte LLP

Chartered Accountants and Statutory Auditor

Crawley, United Kingdom

28 July 2011