Interim Results

27 July 2012

Financial Highlights

Unaudited interim results for the six months ended 30 April 2012

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

"During these extremely challenging market conditions rather than batten down the hatches -we have taken steps to ensure the medium term future of the business. Namely, the acquisition of the tour operator Page & Moy brings to the business a database of circa 4 million new customers and will transform our future revenue streams, as well as continuing to invest in the ships' infrastructure and ensuring our guests have excellent holidays."

"We believe that the measures we have taken will mean that, although 2012 results for cruising will be below expectations, we remain confident that shareholders will see a significant improvement in returns once the adverse economic, commodity and exchange rate environment finally abates."

Financial Highlights (continued)

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

Unaudited Interim Condensed Financial Statements

Chairman's Statement

Overview

The tragic events that occurred in Giglio, Italy in January overlaid against the backdrop of continuing geo-political events, challenging market conditions, including reduced discretionary customer spending, persistent low interest rates, increased oil prices and the eurocrisis, have conspired to make an already challenging market place even more demanding, especially for the cruise sector of the overall travel market.

In view of this I am able to announce that the Group's result for the six months ended 30 April 2012 is a loss of £11.2m, which is in-line with budget, despite a rise of over 20% in fuel prices year on year, which resulted in an additional cost of US$1.1m in respect of mv Discovery's winter itinerary alone and the uncertainty over Egypt.

As noted in my outlook statements of 25 January and 12 April 2012, the fact that the Group has only been operating one vessel for the whole winter period has had an impact on the Group's result for this financial period and indeed the financial year ended 31 October 2012.

Despite this adversity the Group is continuing to invest and strengthen its market position and since the half year end date, on 15 May 2012, the Group completed the acquisition of Page & Moy Travel Group Limited ("Page & Moy") for a consideration of £4.2m. before deduction of Page & Moy's transaction costs, payable in cash, and excluding the Group's deal costs of £0.35m; this transaction is discussed further in 'Post Balance Sheet Events and Future Outlook' below.

The Group reports a loss after tax for the half year ended 30 April 2012 of £11.2m (half year ended 30 April 2011: loss of £4.2m; full year ended 31 October 2011: profit of £5.7m). Loss per share - basic and diluted - for the half year ended 30 April 2012 was 18.2 pence compared with 6.7 pence loss per share for the comparative period (full year ended 31 October 2011: profit of 9.2 pence per share).

The Group's result before gains/(losses) on certain derivative contracts, which is the primary profit measure used internally, for the half year ended 30 April 2012 was a loss of £11.4m (half year ended 30 April 2011: loss of £4.4m; full year ended 31 October 2011: profit of £3.4m). The Group benefits from being taxed under the tonnage tax regime with regards to its ocean-going trading results, hence the tax charge for the period is negligible, being a charge of £4,000 for the half year ended 30 April 2012 (half year ended 30 April 2011: credit of £23,000; year ended 31 October 2011: credit of £19,000).

In terms of cash, half year gross cash balances at 30 April 2012 stood at £6.3m (unrestricted: £5.8m, restricted: £0.5m) compared with £7.5m at 30th April 2011 (unrestricted: £7.0m, restricted: £0.5m) and £7.2m at 31 October 2011 (unrestricted: £6.7m, restricted: £0.5m).

As stated in the Group's announcement regarding the acquisition of Page & Moy on 16 May 2012, the Group is proposing not to pay dividends for the foreseeable future as it will be concentrating on maximising profits and shareholder value in the medium to long term.

Operational Review

Cruise

As noted in Overview above, only mv Discovery completed a full winter itinerary, sailing eastward to the Far East and Australia, with mv Hebridean Princess operating its usual short season around the Scottish mainland and islands whilst mv Minerva underwent an extensive dry-dock and upgrade programme which resulted in her being out of operation for the majority of the winter. As a result of mv Minerva's dry-dock, Group Available Lower Berth Nights ("ALBN") fell 19.3% to 155,000 across the ocean fleet. By vessel, mv Discovery's winter programme was similar to that of 2010 with 120,000 ALBNs for both periods, mv Minerva's upgrade resulted in a 56% decrease in ALBN for its winter programme over the prior year. In respect of Hebridean Princess, due to a slightly longer programme and the availability of the additional berth for the whole season, the ALBN increased by 9% over H1 2011. Overall, across all three ships, occupancy levels in H1 2011/12 were 74% (2011: 79%). In addition due to the discounting which has afflicted the market post Costa Concordia, with the exception of Swan Hellenic, these load factors have been achieved at lower yields and due to fuel, against a higher cost base.

Whilst most direct operating costs have decreased in line with the curtailment of Swan Hellenic's winter programme the Group's overall fuel and payroll costs rose. This was due to fuel price increases and the cost of fuel and crew for the mv Alexander von Humboldt ("AvH") which due to its dry dock were not incurred during H1 2011.

In addition there was a provision made against a material receivable arising in the period as set out in note 2.

Customer satisfaction scores continue to be pleasing: for mv Discovery's winter itinerary, 95% of passengers responding to on-board surveys intend to sail with us again (2011: 93%), whilst on mv Hebridean Princess the proportion of passengers intending to sail on her again was 98% (2011: 98%). In view of the curtailment of Swan Hellenic's winter programme it is not representative to compare to prior year, however since the reintroduction of mv Minerva, 95% of passengers have stated they intend to sail on her again.

With regards to AvH, she has now left Turkish waters following the resolution of issues arising from the 2011 charter.

The Swan Hellenic and Hebridean Island Cruises European river cruise programmes only operate on selected dates between May and October each year.

Tour Operating

The ongoing political unrest in the Arab world has continued to impact Discover Egypt's business, with revenues falling by 21% on 2011 to £3.2m, largely due to the change from bespoke, longer duration, dual centre holidays (Cairo/Luxor) that were sold prior to the Arab Spring to seven night Luxor based Nile river cruises using scheduled flights. However, through the management of commitment, Discover Egypt has continued to trade profitably albeit, the achieved margin has fallen by 22% on 2011. Despite the political situation in Egypt, passenger volumes are similar to those achieved in 2011.

Hedging

A significant element of the Group's costs is in non-sterling denominations, especially US dollars and euros. 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 US dollar revenues and thus reducing, on a like-for-like basis, its overall hedging requirements. It should be noted that following the purchase of Page & Moy, the Group's foreign currency requirements has increased. 

Both currency and fuel hedging remain important tools for managing the cost base. The enlarged Group (inclusive of Page & Moy) has hedged over 95% of its foreign currency requirements for the current financial year as well as over 30% of its projected fuel requirement.

Post Balance Sheet Events and Future Outlook

The acquisition of Page & Moy on 15 May will result in the majority of All Leisure's future revenues being derived from Tour Operating as opposed to Cruise which, as noted in the market statement post acquisition, was one of the main reasons for completing the transaction, albeit there are similar customer demographics for both businesses.

The consideration paid was a total of £4.2m before the deduction of certain costs incurred by Page & Moy and was funded by way of a £5.8m loan from a consortium of lenders, some of whom are related parties (see note 11). The loan will attract a fixed interest rate of 7.0% per annum and repayment of the principal of 10% per annum, plus interest, will be paid annually for the first four years with the balance to be repaid on 15 May 2017. The loan is secured against the AvH, albeit limited to the principal and interest outstanding.

Since completion of the acquisition, the operations and performance of the business has been in line with our prior expectations. The Group is currently undertaking a full review of its existing and acquired business as part of the ongoing integration process to develop both revenue and cost synergies, a process that is likely to take up to 36 months to deliver in full and it is also anticipated that there will be significant costs and further capital expenditure required to obtain these future benefits.

In terms of Page & Moy's trading post acquisition to 31 October 2012, despite the challenging trading conditions, 95% of its forecast volume has been achieved to date and it remains on target to deliver its profit target for the full year. Accordingly, profits from acquired operations are expected to be earnings enhancing for the period to 31 October 2012.

For cruising the market continues to be extremely challenging. As a result of the political situation in Greece, regrettably the proposed charter of AvH fell through just prior to its commencement and as a result she will not trade prior to entering the fleet in December 2012 as mv Voyager. For the rest of the fleet, for Summer 2012 the ALBN (excluding AvH) will be similar to Summer 2011 at c.200,000 and the remaining 2012 capacity is currently 72% sold (2011: 86%). The remaining capacity reflects the difficult UK cruise market and it should also be noted that in view of the discounting that has afflicted the cruise market post Costa Concordia, with the exception of Swan Hellenic, much of these load factors have been achieved at lower yields and, due to fuel, against a higher cost base.

Once again the small Swan Hellenic river cruise programme for Summer 2012 has sold at a satisfactory level and in addition the new Hebridean Island Cruises river programme has been a success.

For Winter 2012/13, mv Minerva will be sailing East whilst AvH will enter the Voyages of Discovery fleet as mv Voyager to sail southwards to the Caribbean and South America. mv Discovery will undergo an extended dry dock this winter before returning to service in March 2013 whilst mv Hebridean Princess will receive her annual winter dry dock.

In summary, the UK cruise market, post Costa Concordia, has never been so challenging and this is against a backdrop of continued geo-political unrest and economic uncertainty, particularly in the eurozone and UK, neither of which show signs of abating in the near future. However, the Group as a whole will benefit from the acquisition of Page & Moy and whilst 2012's results for cruising will be below expectations, the fact that the acquisition provides access to a database approaching 4 million potential customers, increased distribution and cross selling opportunities as well as cost savings, mean that management remain confident that shareholders will see a significant improvement in returns once the adverse economic, fuel and exchange rate environment finally abates.

Roger Allard

Chairman

Unaudited Interim Condensed Financial Statements

Consolidated Income Statement

For the six months ended 30 April 2012

All results derive from continuing operations and are attributable to owners of the parent.

Unaudited Interim Condensed Financial Statements

Consolidated Statement of Comprehensive Income

For the six months ended 30 April 2012

Unaudited Interim Condensed Financial Statements

Consolidated Balance Sheet

At 30 April 2012

Unaudited Interim Condensed Financial Statements

Consolidated Statement of Changes in Equity

For the six months ended 30 April 2012

Unaudited Interim Condensed Financial Statements

Consolidated Cash Flow Statement

For the six months ended 30 April 2012

Unaudited Interim Condensed Financial Statements

Notes to the Unaudited Interim Condensed Financial Statements

For the six months ended 30 April 2012

1. Basis of presentation

The interim condensed unaudited financial statements of the Group for the six months ended 30 April 2012, 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 2011 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 ended 31 October 2012. 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 financial statements for the purposes of s434 of the Companies Act 2006. The financial information for the year ended 31 October 2011 is based on the statutory accounts for the year ended 31 October 2011. The auditor reported on those accounts: This 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 combined All Leisure and Page & Moy 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.

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 , key sources of estimation uncertainty or the principal risks and uncertainties facing the Group from those set out in the 31 October 2011 financial statements other than the quantum of a provision made against a material receivable from a counterparty which arose during the period and in respect of which there is an on-going dispute. Management have estimated the amount recoverable, based on the available evidence, and have used this to determine the provision required. 

3. Other income

Other income for the period ended 30 April 2011 relates to the settlement of two insurance claims made in respect of technical matters experienced on one of the ships operated by the Group. For the year ended 31 October 2011 other income also includes damages awarded from insurers underwriting the financial failure insurance provided to passengers of Hebridean Island Cruises Ltd.

4. Income taxes

The tax charge of £4,000 (six months ended 30 April 2011: credit of £23,000; year ended 31 October 2011: credit of £19,000) represents an effective rate of nil (six months ended 30 April 2011: 0.5%; year ended 31 October 2011: 0.3%). 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 24%.

5. Dividends

The interim dividend for 2011 of £395,000 was payable to shareholders on the register on 14 October 2011 and was paid on 11 November 2011. 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 2011 has been recorded in the current period.

As trading has been considerably more challenging this year than envisaged, the Board unanimously agreed to waive the proposed dividend for the year ended 31 October 2012 in relation to shareholdings held by the board (74.01%) of the issued share capital), but voted to pay a final dividend of 1.31p per share to all other shareholders. The final dividend was approved by the shareholders at the Annual General Meeting on 11 April 2011 and was paid 27 April 2012.

No interim dividend has been proposed in respect of the six-month period ended 30 April 2012.

6. (Loss)/earnings 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 2011: 1,641,970 and 31 October 2011: 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.

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.

Please refer to note 11 for details of further related party transactions that arose subsequent to the period end.

10. Ultimate Controlling Party

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

11. Events after the Reporting Period

Subsequent to the period end, 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 £4.2 million before the deduction of PMTGL's transaction costs. The consideration was funded with a £5.8m loan from a consortium of individual investors, some of whom were related parties (please see below for further details), with the excess cash providing additional working capital to fund existing PMTGL guarantees and bonds.

For the year ended 30 November 2011, PMTGL's revenue was £107.6 million, an operating loss of £5.6m and, following the one-off impairment of the Group's goodwill of £35.6m, a loss before tax of £45.1m.

As noted above, the consortium of individual lenders providing the £5.8m loan comprised a number of related parties, as defined by the Companies Act 2006 and IAS 24, "Related Party Disclosures". The lenders, who meet the definition of a related party, and the amounts loaned to the Group, are as follows:

R J Allard's relationship with All Leisure group PLC is disclosed in noted 9 and 10. 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.

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 interim financial report for the six months ended 30 April 2012 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 11. 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 the 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 the 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 2012 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

26 July 2012