Preliminary Results

All Leisure group plc

Announcement of Results

Highlights

·; Profits before derivatives (after ash cloud costs) in line with expectations at £3.4m (2008/09: £4.5m).

·; Loss for the financial year £2.1m (2009 - profit £2.7m).

·; Full year contribution from Hebridean Island Cruises and maiden contribution from mv Alexander von Humboldt.

·; Final dividend of 1.31p per share (2008/09: 1.22p).

·; Net assets per share (excluding derivatives) of 50.2p (2008/09: 46.5p).

·; Year end cash (including restricted cash) £18.1m (2008/09: £31.2m) following fleet investment.

·; Group winter 2010/11 ocean cruise capacity is currently 77% sold (71%) and Group summer 2011 ocean cruise capacity is currently 52% sold (49%).

Chairman Roger Allard said " Without a doubt 2010 has been the most challenging year the Group has experienced since listing. Despite this, it is testament to the strength of the Group's brands and the commitment of our staff that at a trading level the Group was profitable, and that like for like bookings are currently ahead of this time last year ."

This announcement of All Leisure group plc ("All Leisure", "the Group", "the Company") is based on audited results and contains some forward-looking information and statements that involve known and unknown risks and uncertainties, including statements about the Group's plans, objectives and intentions. The information and statements contained herein are stated by the Directors in good faith as at the date of this report and there exists the risk that actual results and outcomes may differ from the information and statements made.

For further information:

Chairman's Statement

The financial year ended 31st October 2010 is best characterised as one of significant investment by the Group in the face of difficult economic and operational conditions. The Group has made significant investment during the year in its latest acquisition the mv Alexander von Humboldt, with a total current investment in the vessel of c$29 million. In FY2011 we intend to make additional investment in order to add new cabins and balconies to the ship. This acquisition means that the £10 million of new capital raised at the time of the initial public offering in October 2007 has now been invested fully in the fleet as promised.

Difficult trading conditions during the year were not helped by the eruption of Eyjafjallajoekull and the subsequent disruption to European flights between 14th and 21st April 2010. Given that mv Discovery and mv Minerva were operating fly cruises at the time, the closure of a significant part of European airspace led to the cancellation of some cruises and further costs associated with accommodating and repatriating passengers. The total trading impact of this travel disruption was £1.4m (being £583,000 of associated costs (see Note 7) and £771,000 of lost net contribution). The Group's Consolidated Income Statement reflects only the associated cost figure of £583,000.

Despite these challenges, and the continued weakness of sterling and rising fuel prices, I am pleased to report a Group profit before tax and certain derivative adjustments (and after the impact of the Ash Cloud) in line with expectations at £3.4m (2008/09: £4.5m). Further details are contained in the Finance Director's report where this profit is reconciled to the Group's overall loss before taxation of £2.0m (2009 - £2.6m profit).

An increase of 7% in the proposed final dividend payment to 1.31p per share (making a full year dividend of 1.95p) should be positive news for our shareholders. The Board is particularly pleased to have continued its unbroken dividend payment record which it believes is testament to a management style that stems from having a significant board representation on the share register.

Hebridean Island Cruises has performed in line with management expectations in its first full year of ownership, the highlight of which was the Royal charter in July. Following the purchase of the mv Alexander von Humboldt the Group subsequently announced a charter with Phoenix Reisen GmbH between May and October 2010 which operated well and performed to budget. The Group's balance sheet remains net cash-positive despite the scheduled loan repayments related to the completed purchase of the mv Discovery in May 2005, including a final balloon payment of $4.75 million in May 2010.

Results

Turnover during the year increased by 12% to £82.6m (2009: £73.6m). This was due largely to a full year contribution from mv Hebridean Princess and a first time contribution from mv Alexander von Humboldt. Operating results for the financial year decreased by £5.0m to a loss of £2.4m (2009: £2.6m profit ), although prior year comparisons benefitted from credits associated with year on year change in the mark to market valuation of derivatives (£3.1m), a premium paid for derivative contracts (£1.2m) and an excess of acquiror's interest in the net fair value of the Hebridean Princess and other associated assets (£3.4m). The current year operating loss figure also carries a net £5.5m charge (2009: £0.7m charge) for current and previous year mark to market adjustments related to the valuation of certain derivative items used for hedging purposes. Group pre-tax losses were £2.0m

(2009: £2.6m profit). A proposed final dividend of 1.31p per share will, if approved, result in a total payment for the year of 1.95p per share (2009: 1.82p). The Group ended the financial year with bank deposits and cash balances of £18.1m (including restricted cash of £3.0m) (2009: £31.2m; restricted cash £2.9m).

In line with the presentation of the results for the year ended 31st October 2009, the Group is also presenting results before the impact of certain derivative adjustments (see Finance Director's report for details). These show a profit before certain derivative adjustments for the financial year ended 31st October 2010 in line with the Board's expectations at £3.4m compared with a profit of £4.6m for the same period last year. This figure does include, however, a £0.6m total cost associated with the travel disruption in April 2010.

Strategy

The Group's strategy remains unchanged, namely to achieve growth by exploiting the increasing demand for destination-led cruise holidays and by providing an increasing choice of other niche holiday products into the

over-55 English speaking market.

The Directors believe that the Group's chosen niche markets have a number of fundamental attractions:

·; Significant barriers to entry. The Directors believe that a growing focus by regulators on safety and consumer protection is raising the barriers to entry for those wishing to enter the Group's markets. This is benefiting established brands with strong balance sheets.

·; High levels of repeat business. The Group has again enjoyed significant repeat passenger business during the year, underlining the benefits of customer loyalty.

·; Strong revenue visibility. Despite a trend towards later booking in recent months, the Group enjoys significant forward visibility on its cruise bookings compared with other package holiday products. Cruises go on sale at least twelve months prior to departure and the Group generally achieves 80% of expected bookings before the season commences.

·; An attractive tax regime. The mv Discovery, mv Minerva, mv Alexander von Humboldt and mv Hebridean Princess all qualify for taxation under the tonnage tax regime. As a result, the Directors expect the Group tax rate to be lower than the current level of UK corporation tax for the foreseeable future.

In addition, the Group has other considerable strengths:

·; Well established brands. Swan Hellenic was established in 1954, Hebridean Island Cruises in 1988, Voyages of Discovery was established in 1994 and Discover Egypt in 1999. By virtue of their history, we believe that all four brands represent trusted names, generating significant customer loyalty in their niche markets, both in the UK and overseas.

·; Operational excellence. On-board surveys of ocean cruise passenger attitudes reveal that nine out of ten of last year's passengers surveyed intend to cruise with the Group in the future.

·; A committed and experienced management team. The Board and two other senior executives together own 73.5 per cent of the shares in issue. The management team brings a wide range of complementary experience from both inside and outside the travel industry.

·; Strong asset backing. The Group owns three freehold properties as well as the ships mv Discovery, mv Hebridean Princess and mv Alexander von Humboldt. All assets are clear of any outstanding debt. Independent valuations of the Group's fleet are significantly higher than current book value.

·; Significant balance sheet liquidity.Despite asset purchases (specifically, the mv Alexander von Humboldt) and significant scheduled dry-dock work for all three owned vessels, the Group ended the financial year with unrestricted cash (including advanced customer receipts) of £15.1m (2009: £28.3m).

Set out in the Directors' report within the Business Review are details of the Group's principal risks and uncertainties together with examples of the Group's mitigating activities concerning those risks and uncertainties.

Currency and Fuel Management

In order to maintain an active currency management strategy, the Group employs a variety of financial instruments of varying complexity. These help the Group to achieve its budgeted exchange rates which are often higher than market rates, albeit with risks that often differ from those of a vanilla forward contract. The majority of the Group's currency requirements for FY2010 were covered by derivative contracts and in addition the Group has similar arrangements in place to cover the majority of its requirements for the year ahead. Given that some of the derivatives used by the Group do not qualify for hedge accounting, the Group has chosen to value all of its derivatives at fair value through the profit or loss.

In March 2009 the Group entered into fuel swaps expected to correlate with future movements in marine fuel prices. The value of the swaps entered into represented approximately 50% of the Group's anticipated calendar 2010 fuel requirements. In May 2010 the Group took out fuel swaps to cover approximately 30% of anticipated exposure in FY2011.

As at the balance sheet date of 31st October 2010 the net mark-to-market valuation of these derivative positions was a liability of £3.0m. Such figures are significant, particularly within the context of the Group's current level of profitability, however it is important to put these accounting definitions into a commercial context.

Firstly the value of our foreign exchange and fuel hedges (which are non cash accounting items) vary significantly over time. For example, as at 31st December 2010, the £3.0m net liability in our balance sheet referred to above had been independently re-valued as a liability of £360,000, a fall of over £2.6m. Secondly in order to deliver currency to the Group at rates at or above the budgeted rate used to price our product, the Group generally holds derivatives to maturity irrespective of fluctuations in their mark to market valuation. Thirdly, as predominantly over-the-counter instruments, the Group has extensive experience of further managing its currency purchases by revising contract terms as market conditions change. For these reasons the Board is confident that the current risk management strategy is correct despite any potential liabilities that may from time to time be reflected in the Group income statement, and any potential obligation to buy foreign currency in quantities that might exceed the Group's short term requirements.

Dividend policy

2009/10 final dividend

On 13th July 2010 the Board proposed a 7% increase in the interim dividend to 0.64p per share (0.60p). The Board is now proposing a final dividend of 1.31p per share (FY2009: 1.22p) to be paid on Thursday 21st April 2011 to shareholders on the register as at 25 March 2011, resulting in a full year FY2010 dividend of 1.95p per share (FY2009: 1.82p).

Current year dividends

The Directors reiterate that they intend to continue a policy which, subject to satisfactory trading and having regard to prevailing circumstances and opportunities, will provide for the distribution of a proportion of the consolidated profit after tax of the Group, whilst continuing to retain the balance of the Group's earnings to facilitate the Board's strategy for the continued growth of the Group.

Senior management changes

On 8th December the Group announced the planned departure of Finance Director Guy Marchant at the end of January 2011. On behalf of the Board I would like to thank Guy for his contribution over the last three years as well as taking the opportunity to welcome Neil Morris into the role from 24th January 2011. Another key appointment during the year was that of Alan Murray into the role of Managing Director, Voyages of Discovery. Alan joined us in December 2010 and has also been appointed to the Board of the Group's main trading subsidiary, All Leisure Holidays Limited.

Outlook

Group winter 2010/11 ocean cruise capacity is currently 77% sold (71%) and Group summer 2011 ocean cruise capacity is currently 52% sold (49%). It is still the case, however, that the continued weakness of sterling puts pressures on costs that are very difficult to offset in the current recession. The sterling cost of Brent crude oil, for example, is close to the highs of the last few years and as a result we will be introducing a new booking fuel supplement for passengers travelling from this summer which will help mitigate some of this cost increase. This is despite the fact that our passengers are still experiencing all time low levels of interest on their savings.

Rising sterling costs are also not naturally hedged by our predominantly sterling revenue base. The recent time charter arrangements on Minerva (spring 2010) and Alexander von Humbolt (summer 2010) allowed the Group to increase its non-sterling revenues in FY2009 but the current year will see lower non sterling revenues from such sources. Weather continues to cause disruptions to our passengers' travel arrangements. The conditions experienced prior to Christmas have clearly had an impact on our first quarter results. All of these factors, combined with the decision to make further investment in the Alexander von Humboldt, have delayed the Board's expectations for the timing of a full recovery in Group margins. Bookings at Discover Egypt are particularly pleasing, currently up

37% year on year thanks in part to us being able to hold or even reduce some of our prices.

From a cash-flow perspective the Group will benefit in FY2011 from an absence of Discovery debt repayments (FY2010: $5.5million) and a more modest fleet investment programme. The Board continues to look for further investment opportunities that current market conditions might reveal, however it remains confident that the recent investments will underpin the Group's development for the foreseeable future.

R J Allard

Chairman

Chief Executive's Report

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

The Group has two segments, a cruising segment and a tour operating segment.

(i) Cruising

The following table provides the current and historical figures for the principal operating KPIs employed by the cruising sector, including the gross fuel spend:

Notes:

(i) Calculated as the total passengers carried multiplied by the total number of revenue sailing days. The first mv Hebridean Princess contribution is Winter FY2009. The mv Alexander von Humboldt was on charter in Summer 2010 and therefore is not included in this calculation.

(ii) On 17 November 2009 the Group announced the purchase of the mv Alexander von Humboldt from the Admiralty Marshal.

(iii) Spend includes the impact of fuel hedging.

(iv) Hebridean Princess FY2009 figures cover 24th April 2009 to 31st October 2009 only. In FY2010 the vessel was in scheduled annual dry dock between 23 November 2009 and 1 March 2010.

(v) The Alexander von Humboldt entered service for the Group after extensive post-acquisition technical work in May 2010.

Voyages of Discovery

Voyages of Discovery offers niche year-round destination-led cruises on board the mv Discovery which appeal to mature customers and include a wide variety of itineraries worldwide. During the winter 2009/10 season mv Discovery (20,216 gross tons, 356 cabins and offers a maximum of 708 lower berths) carried 6,878 passengers (2008/09: 5,910). The first half of the year included a scheduled 17 day dry dock for mv Discovery in Barcelona (a revenue impact of c.£1.2m). During the summer 2010 season, mv Discovery carried 11,284 revenue passengers (2009: 10,594).

Sales are generated through a number of sources. Cruises sold in the UK are generally sold directly to the public or on the Group's behalf by specific travel agents with an expertise in the cruise market. The direct sales to the public are either to repeat customers of the Group or generated through passenger referrals, advertising and other promotions. In the US and Canada cruises are sold via the Group's Fort Lauderdale sales office and across the rest of the English speaking world, via the Group's arrangements with general sales agents in the Netherlands, Australia, and New Zealand.

In line with our strategy of offering our customers the widest possible choice, we are introducing a programme of cruises to and from Australia during Winter 2011/12.

Swan Hellenic

In July 2007 the Group acquired the Swan Hellenic brand and other associated assets, with several senior members of Swan Hellenic's management team joining the existing management team. Mv Minerva has a gross tonnage of 12,449 tons and has 197 cabins offering a maximum of 394 lower berths

Following a successful winter season for mv Minerva in Antarctica, including a 67 day charter to Phoenix Reisen, the vessel began its summer cruise programme in Cadiz, and operated out of its home port of Dover to Northern Europe and the Mediterranean. During the summer 2010 season mv Minerva carried 3,668 passengers (summer 2009: 3,755). During winter 2009/10 Minerva carried 2,792 passengers (winter 2008/09: 2,697).

We have introduced a number of exciting new cruises in the Far East and Asia for Winter 2010/11 towards the end of which the vessel is scheduled to enter dry dock.

Our summer 2010 Swan river cruise programme on the Danube, Rhone and Rhine was successful and will continue in summer 2011, with the addition of one further Rhone cruise. We plan to expand the programme further in future years.

Hebridean Island Cruises

In April 2009 the Group acquired the mv Hebridean Princess, the associated trade and certain associated assets from the administrator of Hebridean International Cruises Limited. A number of staff also joined the Group operating from an office in Skipton, North Yorkshire. The Hebridean Princess is a five star vessel weighing 2,112 gross tons and has 30 cabins offering a maximum of 49 lower berths. The ship operates principally from Oban between March and November and offers a range of cruises around the Scottish Islands and Highland coastline. Between autumn 2009 and spring/summer 2010 the Hebridean Princess carried 1,655 passengers (between 23 April 2009 and 31 October 2009: 1,176 passengers). During the vessel's winter 2011 dry dock the capacity of the ship will be increased by one to a maximum of 50 passengers.

mv Alexander Von Humboldt

On 16 November 2009 the board announced that it had successfully tendered in an auction, conducted by the Admiralty Marshal, for the mv Alexander von Humboldt. This vessel, which has a gross tonnage of 15,271 tonnes, came into service in 1990 and has 520 lower berths. The vessel has 260 passenger cabins, 90% of which are outside cabins. The Group undertook an extensive technical upgrade programme on the ship between November 2009 and May 2010, bringing the total investment in the vessel to approximately US$29 million. This investment was met from the Group's existing cash resources and the vessel was subsequently chartered to Phoenix Reisen GmbH between May and October 2010. The vessel will undergo further technical upgrades and modifications this winter including the addition of a further 18 passenger cabins together with a further 24 balconies.

Operations

Consistent with the board's policy, the delivery of services on board mv Discovery, mv Minerva and mv Alexander von Humboldt is mainly outsourced but is strategically, technically and commercially controlled by the senior management of the Company in the UK. There are two main suppliers for services on board the vessels, V Ships and Sea Chefs. V Ships Leisure employs the deck and engine crew responsible for the ships' maintenance, mechanical operations and health and safety. Sea Chefs employs the hotel, catering and spa staff. Harding Brothers Limited are responsible for the operation of the onboard shop. Celtic Marine (Guernsey) Limited, on behalf of All Leisure Holidays Limited, employs 15 key staff on mv Discovery and up to 38 on Hebridean Princess including the captains and chief engineers. Ship and crew management for Hebridean Princess is provided by Andrew Weir Shipping and Viking Recruitment respectively.

(ii) Tour operating

Discover Egypt

In FY2009/10 Discover Egypt carried 7,513 passengers at an average price of £1,080 per passenger. This compares with passenger numbers in FY2008/09 of 8,998 at an average price of £962 per passenger.

The majority of Discover Egypt's customers take packaged holidays that include seven-night Nile cruises between Luxor and Aswan, flights, accommodation and a number of excursions. Other customers use Discover Egypt to arrange bespoke holidays. The majority of revenues are generated by direct sales to the public, mostly through its website, newspaper advertising and repeat customers. The business also produces brochures and uses a small number of agents.

Current Trading

In recent years Discover Egypt has seen a greater propensity for bespoke two centre holidays which have been sold at a higher margin than the traditional one week Nile cruise. As a result, it has managed to diversify away from traditional one week cruises. Discover Egypt has been successful in meeting this demand given their extensive knowledge of its niche market. This trend has allowed it to continue differentiating its offering in the marketplace and to increase average spend per passenger in what are otherwise difficult trading conditions, characterised by significant discounting at the lower end of the market. In the current year the company has also had the opportunity to complement its higher priced products with more price competitive offerings. At an operational level and given the current market environment, Discover Egypt traded satisfactorily in FY2009 and continues to do so.

R D Bryant

Chief Executive

Finance Director's Report

The result for the year was a loss of £2.1m (2009: profit £2.7m). The loss for the year is primarily attributable to the year on year change in the mark to market value of the Group's unsettled derivative contracts which amounted to a loss of £5.5m in the year (2009: loss of £1.9m) and the loss of business, disruption and additional costs arising from the closure of UK airspace following the Icelandic volcano eruption in April 2010, which the Group estimates at £1.4m.

The Group takes out foreign exchange derivative contracts as part of its brochure pricing process so that the risk attributable to the majority of the foreign currency denominated cost base is covered at the time brochures are priced and go on sale. The mark to market liability on the derivative contracts resulted primarily from target accrual forward foreign exchange contracts (TARFs) and foreign currency swaps which were taken out in line with the Group's derivative management policy to mitigate exposure to foreign exchange risk. This is the first year in which TARFs have formed part of foreign exchange risk management and their high volatility and the duration of the contracts has led to an overall increase in derivative related accounting risk compared with previous years when less volatile instruments were used. The derivative contracts entered into have enabled the Group to price brochures based on a more favourable US Dollar exchange rate than would otherwise have been the case had the Group had no derivative contracts in place. The fair value of the foreign exchange derivative position at 31 October 2010 is a liability of £3.5m (2009: asset of £1.1m), and this reflects market expectations at that time of future spot rates and the potential volatility in these. Actual spot rates may differ at the time of settlement and the Group may take further mitigating action to amend the terms of these contracts prior to their settlement.

The Group has estimated that the lost contribution from cruises which did not sail during the closure of UK airspace following the Icelandic volcano eruption was c.£0.8m. In addition the Group incurred costs associated with this disruption and these cruises which primarily included hotel and meal costs for stranded inbound and outbound customers and the cost of repatriation of inbound customers. These costs totalled £0.6m giving a total estimated impact on gross profit of £1.4m.

As a result of the substantial impact on the Group of the fair value of derivative contracts, the following analysis is presented on an adjusted basis before the impact of derivative items.

The Group made a loss before tax of £2.0m (2009: profit before tax of £2.7m). The underlying trading result, as presented above, was an adjusted profit before tax (before certain derivative items) of £3.4m (2009: £4.6m).

Turnover

Group turnover increased 12.2% during the year to £82.6m (2009: £73.6m). The increase was primarily as a result of the addition of mv Alexander von Humboldt to the fleet as well as the full year performance of the Group's ownership of Hebridean Island Cruises.

Gross profit

Gross profit has increased 13.8% to £9.7m (2009: £8.6m). Gross profit, adjusted for certain derivative related adjustments and the volcanic ash event, increased 64.7% to £15.2m (2009: £9.2m). Gross margin increased from 11.6% to 11.8%. As set out above, had there been no disruption from the closure of UK airspace following the eruption of the Icelandic volcano, the Group has estimated that gross profit would have increased to £11.1m with a margin of 13.4%.

Administrative expenses

Administrative expenses in 2008/09 were £12.2m compared with £9.4m in the prior year. The increase is due to a combination of factors including a full year of Hebridean Island Cruises overhead and higher payroll costs. Additionally a contingent asset (£520k) relating to a Minerva insurance claim was booked to administrative expenses in the prior year.

Operating profit and operating profit before certain derivative related adjustments

The Group incurred an operating loss of £2.4m (2009: profit £2.6m) largely as a result of losses arising on derivative contracts.

Operating profit before certain derivative related adjustments recorded in cost of sales and the volcanic ash event decreased 6.1% to £3.1m (2009: £3.3m).

Investment revenues and finance costs

Investment revenues decreased to £0.4m (2009: £1.4m) following major capital expenditure predominantly on the Alexander von Humbdolt. This led to less cash on deposit, which also earned lower interest rates than in prior years.

Finance costs decreased following repayment of the mv Discovery loan in the year. A prior year cost amounting to £1.1m relating to a premium paid to secure more favourable terms for a currency derivative contract did not recur in the year.

(Loss)/profit before taxation

The loss before taxation amounted to £2.0m (2009: profit £2.6m). Profit before taxation, adjusted for certain derivative related items, decreased by £1.1m to £3.4m in 2009, a decrease of 23.9%.

Taxation

The 2010 effective corporation tax rate was 1.6% (2009: -2.5%). All ocean cruise shipping activities are taxed within the UK tonnage tax regime based on the net tonnage of the relevant vessel. All the Group's ships have qualified for tonnage tax status throughout the financial year. Non tonnage tax activities which principally comprise the Discover Egypt tour operating business, attract corporation tax at the standard rate of 28% (2009: 28%).

(Loss)/earnings per share

Basic and diluted (loss) / earnings per share were (3.4)p (2009: profit 4.4p).

Capital expenditure

The Group has invested heavily in its fleet this year, firstly in the acquisition, refurbishment and upgrade of mv Alexander von Humboldt, and secondly in routine dry docks for mv Discovery and mv Hebridean Princess in which upgrade work to passenger areas was also carried out. In total the Group capitalised £22.9m of fixed assets in the year (2009 - £2.1m). The mv Discovery ship loan was fully repaid in the year and the Group is now debt free. Cash raised on flotation in September 2007 has now been fully invested in ship assets to grow the cruise business in line with the strategy set out in the Group's AIM admission document.

The cash position now stands at £18.1m (2009: £31.2m) with free cash (excluding restricted balances) of £15.1m (2009: £28.2m). Net assets have reduced to £28.0m (2009: £31.2m). The Group continues to have sufficient liquidity in order to meet the demands of the business.

Cash Flows

Net cash inflow from operating activities was £10.9m higher than prior year at £13.1m (2009: £2.3m). Of significance to cash flow during the year were: capital expenditure, which included the acquisition of the ship Alexander von Humboldt and dry docks on other Group ships, of £21.9m, repayment of the ship mv Discovery loan amounting to £3.6m and a dividend payment of £1.1m.

Total cash and balances at bank at the year-end amounted to £18.1m (2009: £31.2m), of which £9.5m (2009: £15.5m) is classified as cash and cash equivalents, £3.0m (2009: £2.9m) classified as restricted cash, and £5.6m (2009: £12.7m) as interest bearing bank deposits. The Group has immediate access to all of these balances, other than the amounts reported as restricted cash. Customer deposits at 31 October 2010 amounted to £19.1m

(2009: £14.7m).

Going concern

The Group ended the year with net assets of £28.0m (2009: £31.2m), net current (liabilities)/assets of (£14.4m) (2009: £8.7m) and no debt (2009: a gross gearing ratio (debt to equity) of 10.4%).

The Group's business activities, together with the factors likely to affect its future development, performance and position are set out above and in the statements of the Chairman and Chief Executive.

The Directors have prepared a forecast for the business for the two years to 31 October 2012 taking into account key assumptions about future trading performance and their plans for the Group. These forecasts show that the Group will continue to have significant cash resources over this period.

The Directors therefore have a reasonable expectation that the Group has adequate resources to continue in operational existence for the foreseeable future and they continue to adopt the going concern basis of accounting in preparing the annual financial statements.

G S Marchant

Finance Director

Consolidated Income Statement

For the year ended 31 October 2010

There were no discontinued operations during the year.

All results are attributable to equity holders of the parent Company.

Consolidated Statement of Comprehensive Income

For the year ended 31 October 2010

Consolidated Statement of Changes in Equity

At 31 October 2010

Consolidated Balance Sheet

At 31 October 2010

The financial statements of All Leisure group plc, registered number 01609517, were approved by the board of directors and authorised for issue on 21 January 2011.

They were signed on its behalf by:

G S Marchant

Director

Consolidated Cash Flow Statement

For the year ended 31 October 2010

1. Financial information

The financial information has been abridged from the financial statements for the year ended 31 October 2010 and year ended 31 October 2009. The consolidated financial statements have been prepared under the historical cost convention. The Directors are required to prepare the Group financial statements in accordance with International Financial Reporting Standards (IFRSs) as adopted by the European Union and Article 4 of the IAS Regulation and have chosen to prepare the parent company financial statements in accordance with United Kingdom Generally Accepted Accounting Practice (United Kingdom Accounting Standards and applicable law). The Group financial statements are also required by law to be properly prepared in accordance with Companies Act 2006 and the AIM Rules for Companies.

The financial information set out in the announcement does not constitute the company's statutory accounts for the years ended 31 October 2009 or 31 October 2010. Statutory accounts for the year ended 31 October 2009 have been delivered to the registrar of Companies and those for the year ended 31 October 2010 will be filed with the Registrar in due course. The auditors have reported on those accounts: their reports were unqualified, did not draw attention to any matters by way of emphasis and did not contain statements under s498 (2) or (3) of the Companies Act 2006. While the financial information included in this preliminary announcement has been prepared in accordance with the recognition and measurement criteria of International Financial Reporting Standards (IFRSs), this announcement does not itself contain sufficient information to comply with IFRSs. The Company expects to publish full financial statements that comply with IFRSs later this month.

The financial statements have been prepared on the historical cost basis, except for the revaluation of certain properties and financial instruments. The principal accounting policies adopted are set out below. The financial statements have been prepared on a going concern basis. The responsibility statement below has been prepared in connection with the company's full annual report for the year ended 31 October 2010. Certain parts thereof are not included within this announcement. We confirm to the best of our knowledge:

·; the financial statements, prepared in accordance with IFRSs as adopted by the European Union, give a true and fair view of the assets, liabilities, financial position and profit or loss of the company and the undertakings included in the consolidation taken as a whole; and

·; the management report, which is incorporated into the directors' report, includes a fair review of the development and performance of the business and the position of the company and the undertakings included in the consolidation taken as a whole, together with a description of the principal risks and uncertainties they face.

This responsibility statement was approved by the board of directors on 21 January 2011 and is signed on its behalf by:

Roger Allard

Guy Marchant

Executive Chairman

Chief Financial Officer

A copy of the Group's full annual report for the year ended October 31 2010 will shortly be available on the Group's website at www.allleisuregroup.com

2. Significant accounting policies

Basis of accounting

The financial statements have been prepared in accordance with International Financial Reporting Standards (IFRSs) adopted by the European Union.

The financial statements have been prepared on the historical cost basis, except for the revaluation of certain properties and financial instruments. The principal accounting policies adopted are set out below.

The financial statements have been prepared on a going concern basis as discussed in the Financial Director's Report and Corporate Governance Statement.

The Group adopted IFRS 8 during the year and as a result of adopting this new standard the directors have presented balance sheets for the current financial year and the two preceding financial years.

Basis of consolidation

The consolidated financial statements incorporate the financial statements of the Company and entities controlled by the Company (its subsidiaries) made up to 31 October each year. Control is achieved when the Company has the power to govern the financial and operating policies of an investee entity so as to obtain benefits from its activities.

All subsidiaries are 100% owned and there are no minority interests in the Group.

The results of subsidiaries acquired or disposed of during the year are included in the consolidated income statement from the effective date of acquisition or up to the effective date of disposal, as appropriate.

Where necessary, adjustments are made to the financial statements of subsidiaries to bring the accounting policies used into line with the IFRS policies used by the Group.

All intra-group transactions, balances, income and expenses are eliminated on consolidation.

Business combinations

The acquisition of a subsidiary undertaking or a business undertaking is accounted for using the purchase method. The cost of the acquisition is measured at the aggregate of the fair values, at the date of exchange, of assets given, liabilities incurred or assumed, and equity instruments issued by the Group in exchange for control of the acquiree, plus any costs directly attributable to the business combination.

The acquiree's identifiable assets, liabilities and contingent liabilities that meet the conditions for recognition under IFRS 3 are recognised at their fair value at the acquisition date, except for non-current assets (or disposal groups) that are classified as held for sale in accordance with IFRS 5 Non Current Assets Held for Sale and Discontinued Operations, which are recognised and measured at fair value less costs to sell.

Goodwill arising on acquisition is recognised as an asset and initially measured at cost, being the excess of the cost of the business combination over the Group's interest in the net fair value of the identifiable assets, liabilities and contingent liabilities recognised. If, after reassessment, the Group's interest in the net fair value of the acquiree's identifiable assets, liabilities and contingent liabilities exceeds the cost of the business combination, the excess is recognised immediately in the income statement.

Foreign exchange

The individual financial statements of each Group company are presented in the currency of the primary economic environment in which it operates (its functional currency). For the purpose of the consolidated financial statements, the results and financial position of each Group company are expressed in pounds sterling, which is the functional currency of the Company, and the presentation currency for the consolidated financial statements.

In preparing the financial statements of the individual companies, transactions in currencies other than the entity's functional currency (foreign currencies) are recorded at the rates of exchange prevailing on the dates of the transactions. At each balance sheet date, monetary assets and liabilities that are denominated in foreign currencies are retranslated at the rates prevailing at the balance sheet date. Non-monetary items carried at fair value that are denominated in foreign currencies are translated at the rates prevailing at the date when the fair value was determined. Non-monetary items that are measured in terms of historical cost in a foreign currency are not retranslated.

For the purpose of presenting consolidated financial statements, the assets and liabilities of the Group's foreign operations are translated at exchange rates prevailing on the balance sheet date. Income and expense items are translated at the average exchange rates for the period, unless exchange rates fluctuate significantly during that period, in which case the exchange rates at the date of transactions are used. Exchange differences arising, if any, are classified as equity and recognised in the Group's foreign currency translation reserve. Such translation differences are recognised as income or as expenses in the period in which the operation is disposed of.

Property, ships, plant and equipment

Property, ships, plant and equipment are stated at cost or valuation less accumulated depreciation and any impairment in value.

Depreciation

Depreciation is provided on all property, dry docks, ship improvements and plant and equipment, other than freehold land, at rates calculated to write off the cost or revalued amount, less estimated residual value of each asset evenly over its expected useful life, as follows:

The carrying values of property, ships, plant and equipment are reviewed at least annually for impairment or if events or changes in circumstances indicate the carrying value may not be recoverable.

The assets' residual values, useful lives and depreciation methods are reviewed, and adjusted if appropriate, at each financial year end. The residual values of the mv Discovery and mv Alexander von Humboldt are currently above the carrying values of these vessels and consequently no depreciation was charged in respect of the hulls of these ships during the period.

Land and buildings held for administrative purposes are stated in the balance sheet at their revalued amounts, being the fair value at the date of revaluation, less any subsequent accumulated depreciation and subsequent accumulated impairment losses.

Revaluations are performed with sufficient regularity such that the carrying amount does not differ materially from that which would be determined using fair values at the balance sheet date. Freehold property was last revalued in October 2009.

Any revaluation increase arising on the revaluation of such land and buildings is credited to the properties' revaluation reserve, except to the extent that it reverses a revaluation decrease for the same asset previously recognised as an expense, in which case the increase is credited to the income statement to the extent of the decrease previously charged. A decrease in carrying amount arising on the revaluation of such land and buildings is charged as an expense to the extent that it exceeds the balance, if any, held in the properties' revaluation reserve relating to a previous revaluation of that asset.

Depreciation on revalued buildings is charged to income. On the subsequent sale of a revalued property, the attributable revaluation surplus remaining in the properties' revaluation reserve is transferred directly to retained earnings.

Investment property

Investment property, which is property held to earn rentals, is stated at deemed cost as the Group elected, under the transitional arrangements available under IFRS 1, to use the previous carrying value under UK GAAP as deemed cost on transition to IFRS. The investment property is depreciated on a straight-line basis at 2% per annum. The land on which it is situated is not depreciated.

Intangible assets

Intangible assets with a finite useful life are carried at cost less amortisation and any impairment losses. Intangible assets represent items which meet the recognition criteria of IAS 38, "Intangible Assets".

Amortisation of intangible assets is calculated over the following periods:

Impairment of tangible and intangible assets

At each balance sheet date, the Group reviews the carrying amounts of its tangible and intangible assets to determine whether there is any indication that those assets have suffered an impairment loss. If any such indication exists, the recoverable amount of the asset is estimated in order to determine the extent of the impairment loss (if any). Where the asset does not generate cash flows that are independent from other assets, the Group estimates the recoverable amount of the cash-generating unit to which the asset belongs.

Recoverable amount is the higher of fair value less costs to sell and value in use. In assessing value in use, the estimated future cash flows are discounted to their present value using a pre-tax discount rate that reflects current market assessments of the time value of money and the risks specific to the asset for which the estimates of future cash flows have not been adjusted.

If the recoverable amount of an asset (or cash-generating unit) is estimated to be less than its carrying amount, the carrying amount of the asset (or cash-generating unit) is reduced to its recoverable amount. An impairment loss is recognised in the income statement as an expense immediately, unless the relevant asset is carried at a revalued amount, in which case the impairment loss is treated as a revaluation decrease.

Where an impairment loss subsequently reverses, the carrying amount of the asset (or cash-generating unit) is increased to the revised estimate of its recoverable amount, but so that the increased carrying amount does not exceed the carrying amount that would have been determined had no impairment loss been recognised for the asset (or cash-generating unit) in prior years. A reversal of an impairment loss is recognised as income immediately, unless the relevant asset is carried at a revalued amount, in which case the reversal of the impairment loss is treated as a revaluation increase.

Financial instruments

Financial assets and financial liabilities are recognised on the Group's balance sheet at fair value when the Group becomes a party to the contractual provisions of the instrument.

Financial assets

In accordance with IAS 39, 'Financial Instruments: Recognition and Measurement' financial assets are classified into the following specified categories:

·; financial assets 'at fair value through profit or loss' (FVTPL);

·; 'held-to-maturity' investments;

·; 'available-for-sale' (AFS) financial assets; and

·; 'loans and receivables'.

The classification depends on the nature and purpose of the financial assets and is determined at the time of initial recognition. Currently the Group has financial assets classified as 'loans and receivables' and financial assets at 'fair value through profit or loss'. No financial assets are classified as 'held to maturity' or 'available-for-sale'.

Loans and receivables

Trade receivables, loans, and other receivables that have fixed or determinable payments that are not quoted in an active market are classified as loans and receivables. Loans and receivables are measured at amortised cost using the effective interest method, less any impairment. Interest income is recognised by applying the effective interest rate, except for short-term receivables when the recognition of interest would be immaterial.

The effective interest method is a method of calculating the amortised cost of a financial asset and of allocating interest income over the relevant period. The effective interest rate is the rate that exactly discounts estimated future cash receipts (including all fees that form an integral part of the effective interest rate, transaction costs and other premiums or discounts) through the expected life of the financial asset, or, where appropriate, a shorter period.

The principal financial assets included in this measurement category are:

Trade receivables

Trade receivables represent net amounts receivable and payments made in the normal course of business. All amounts which are not interest bearing are stated at their nominal value as reduced by appropriate allowances for estimated irrecoverable amounts, which are charged to the income statement.

Bank balances and cash in hand

Bank balances and cash in hand comprises all balances held by the Group with banking institutions and cash in hand (principally held on board the ships). This category includes the following:

·; Short and long term restricted bank balances which comprises bank deposits over which counterparties have guarantees charged, such that the Group cannot access the funds until the guarantee is released. The principal amounts of this nature arise from the bare boat charter agreement for mv Minerva, which has a cash guarantee in place for $4.1m; and,

·; interest bearing bank deposits with a maturity of over three months. Whilst the Group has immediate access to these funds, the Group typically retains these funds in the deposit account until the deposit term expires as the counterparty financial institution has the right to restrict interest payments in the event of early withdrawal.

Financial assets at fair value through profit and loss (FVTPL)

Financial assets are classified as at FVTPL where the financial asset is either held for trading or it is designated as at FVTPL. The Group has not designated any financial assets as being at FVTPL and accordingly only holds financial instruments in this category that are deemed to be held for trading under the provisions of IAS 39.

With respect to the Group, all financial assets that are held for trading are derivative instruments that are not designated and effective as hedging instruments (see the derivative accounting policy below).

Financial assets at FVTPL are stated at fair value, with any resultant gain or loss recognised in profit or loss.

Impairment of financial assets

Financial assets, other than those at FVTPL, are assessed for indicators of impairment at each balance sheet date. Financial assets are impaired where there is objective evidence that, as a result of one or more events that occurred after the initial recognition of the financial asset, the estimated future cash flows of the investment have been reduced.

Objective evidence of impairment could include:

·; significant financial difficulty of the counterparty; or

·; default on payments; or

·; it becoming probable that the counterparty will enter bankruptcy or financial re-organisation.

For certain categories of financial asset, such as trade receivables, assets that are assessed not to be impaired individually are subsequently assessed for impairment on a collective basis.

The carrying amount of the financial asset is reduced by the impairment loss directly for all financial assets with the exception of trade receivables, where the carrying amount is reduced through the use of an allowance account. When a trade receivable is considered uncollectible, it is written off against the allowance account.

Subsequent recoveries of amounts previously written off are credited against the allowance account. Changes in the carrying amount of the allowance account are immediately recognised in profit or loss.

If, in a subsequent period, the amount of the impairment loss decreases and the decrease can be related objectively to an event occurring after the impairment was recognised, the previously recognised impairment loss is reversed through the income statement to the extent that the carrying amount of the financial asset at the date the impairment is reversed does not exceed what the amortised cost would have been had the impairment not been recognised.

De-recognition of financial assets

The Group derecognises a financial asset only when the contractual rights to the cash flows from the asset expire; or it transfers the financial asset and substantially all the risks and rewards of ownership of the asset to another entity. If the Group neither transfers nor retains substantially all the risks and rewards of ownership and continues to control the transferred asset, the Group recognises its retained interest in the asset and an associated liability for amounts it may have to pay. If the Group retains substantially all the risks and rewards of ownership of a transferred financial asset, the Group continues to recognise the financial asset and also recognises a collateralised borrowing for the proceeds received.

Financial liabilities and equity

Financial liabilities and equity instruments are classified according to the substance of the contractual arrangements entered into.

Equity instruments

An equity instrument is any contract that evidences a residual interest in the assets of the Group after deducting all of its liabilities. Equity instruments issued by the Group are recorded at the proceeds received, net of direct issue costs

Financial liabilities

Financial liabilities are classified as either financial liabilities 'at FVTPL' or 'other financial liabilities'.

Financial liabilities at FVTPL

Financial liabilities are classified as at FVTPL where the financial liability is either held for trading or it is designated as at FVTPL. The Group has not designated any financial liabilities as being at FVTPL and accordingly only holds financial instruments in this category that are deemed to be held for trading under the provisions of IAS 39.

With respect to the Group, all financial liabilities that are held for trading are derivative instruments that are not designated and effective as hedging instruments (see the derivative accounting policy below).

Financial liabilities at FVTPL are stated at fair value, with any resultant gain or loss recognised in profit or loss. The net gain or loss recognised in profit or loss incorporates any interest paid on the financial liability.

Other financial liabilities

Other financial liabilities, including borrowings, are initially measured at fair value, net of transaction costs. Other financial liabilities are subsequently measured at amortised cost using the effective interest method, with interest expense recognised on an effective yield basis. The effective interest method is a method of calculating the amortised cost of a financial liability and of allocating interest expense over the relevant period. The effective interest rate is the rate that exactly discounts estimated future cash payments through the expected life of the financial liability, or, where appropriate, a shorter period.

De-recognition of financial liabilities

The Group derecognises financial liabilities when, and only when, the Group's obligations are discharged, cancelled or they expire.

Derivative financial instruments

The Group's activities expose it primarily to the financial risks of changes in foreign exchange rates and changes in the price of fuel for the ships. Derivative financial instruments are used by the Group to mitigate its exposure to movements in currency exchange rates and movements in the price of fuel.

Some of the Group's derivatives do not meet the hedge classification criteria of IAS 39. The Group has chosen to measure all its derivatives at fair value through profit and loss. Accordingly, the Group includes the fair value movements on derivative financial instruments within cost of sales. The amounts in the year are included in note 7.

Derivative financial instruments are measured at fair value as described above.

A derivative is presented as a non-current asset or a non-current liability if the remaining maturity of the instrument is more than 12 months and it is not expected to be realised or settled within 12 months. Other derivatives are presented as current assets or current liabilities.

Dividends

Dividends are provided for in the period in which they become a binding liability on the Company.

Provisions

A provision is recognised in the balance sheet when the Group has a present legal or constructive obligation as a result of a past event, and it is probable that an outflow of economic benefits will be required to settle the obligation. Provisions are measured at the Directors' best estimate of the expenditure required to settle the obligation at the balance sheet date, and are discounted to present value where the effect is material.

Inventories

Inventories representing engineering spares, fuels and lubricants are stated at the lower of cost (being purchase price to the Group) and net realisable value.

Where necessary, provision is made for obsolete and damaged stocks.

Leases

Leases taken by the Group are assessed individually as to whether they are finance leases or operating leases. 

Leases where the lessor retains substantially all the risks and benefits of ownership of the asset are classified as operating leases. Operating lease rental payments are recognised as an expense in the income statement on a straight-line basis over the lease term. The benefit of any lease incentives is spread over the term of the lease.

All Group leases (which include Bareboat Charter agreements) are classified as operating leases.

Taxation

The tax expense represents the sum of current tax expense and deferred tax expense.

Current tax expense is based on taxable profit for the period. Taxable profit differs from net profit as reported in the income statement because it excludes items of income or expense that are taxable or deductible in other periods and it further excludes items that are never taxable or deductible. The Group's liability for current tax is calculated using tax rates that have been enacted or substantively enacted by the balance sheet date. Certain of the Group subsidiary companies are subject to taxation under the UK Tonnage Tax regime. Under this regime, a shipping company may elect to have its taxable profits computed by reference to the net tonnage of each of the qualifying ships it operates.

Deferred tax is provided, using the liability method, on temporary differences at the balance sheet date between the tax bases of assets and liabilities and their carrying amounts for accounting purposes. Deferred tax balances are not significant to the Group due to the majority of the operations being within the tonnage tax regime, or taxed on a basis equivalent to the accounting basis.

Where relevant, deferred tax is measured at the tax rates that are expected to apply in the period when the liability is settled or the asset is realised, based upon tax rates and legislation that have been enacted or substantively enacted at that balance sheet date. Deferred tax is charged or credited to the income statement, except where it relates to items charged or credited directly to equity, in which case the deferred tax is also recognised in equity.

Share capital and share premium account

There is one class of shares. When new shares are issued, they are recorded in share capital at their par value. The excess of the issue price over the par value is recorded in the share premium account.

Incremental external costs directly attributable to the issue of new shares are recorded in equity as a deduction, net of tax, in the share premium account.

Share-based payment

The Group has applied the requirements of IFRS 2, 'Share-based Payment', to all grants of equity instruments. The Group issued equity-settled share-based payments to its former NOMAD in the year ended 31 October 2007 and issued equity-settled share-based payments to directors in the year ended 31 October 2009. Equity-settled share-based payments are measured at fair value (excluding the effect of non market-based vesting conditions) of the equity instruments at the date of grant. The fair value determined at the grant date of the equity-settled share-based payments was expensed immediately as the options vested on grant. The fair value excludes the effect of non market-based vesting conditions.

Fair value is measured by use of the Black-Scholes pricing model. The expected life used in the model has been adjusted, based on management's best estimate, for the effects of non-transferability, exercise restrictions, and behavioural considerations.

Revenue recognition

Revenue comprises sales to third parties (excluding VAT and similar sales, port and other taxes). Cruise revenues and cruise charter revenues, together with revenues from onboard and other activities, which include transportation and shore excursion revenues, are recognised in income for each day of the cruise as it progresses. Discover Egypt revenue is recognised over the period of the tour package.

Client monies received at the balance sheet date relating to holidays commencing after the year end are deferred and included within trade and other payables.

Interest income is accrued on a time basis, by reference to the principal outstanding and at the effective interest rate applicable, which is the rate that exactly discounts estimated future cash receipts through the expected life of the financial asset to that asset's net carrying amount.

Retirement benefit costs

The Group operates a defined contribution pension scheme. The amount charged to the income statement in respect of pension costs and other post-retirement benefits is the contributions payable in the year. 

Differences between contributions payable in the year and contributions actually paid are shown as either accruals or prepayments in the balance sheet.

Operating profit

Operating profit is stated before investment income and finance costs.

3. Critical accounting judgements and key sources of estimates uncertainty

In the application of the Group's accounting policies, which are described in note 2, the Directors are required to make judgements, estimates and assumptions about the carrying amounts of assets and liabilities. The estimates and associated assumptions are based on historical experience and other factors that are considered to be relevant. Actual results may differ from these estimates.

The estimates and underlying assumptions are reviewed on an ongoing basis. Revisions to accounting estimates are recognised in the period in which the estimate is revised if the revision affects only that period, or in the period of the revision and future periods if the revision affects both current and future periods.

Critical judgements in applying the Group's accounting policies

The following are the critical judgements, apart from those involving estimations (which are dealt with separately below), that the Directors have made in the process of applying the Group's accounting policies and that have the most significant effect on the amounts recognised in financial statements.

Residual value of mv Discovery and depreciation

As in the prior year, the residual value of mv Discovery is measured on the basis of an operating cruise ship at the current projected end of its useful life to the Group. It is intended that the Group will sell the ship to a third party as an operating cruise ship at that time. The estimate of the residual value reflects independent specialist advice received by the Company from a member of the Institute of Chartered Ship Brokers, relating to the likely disposal value of the ship being US$31.0m at the projected end of the useful life to the Group. This advice indicates that the ship has reached a certain age, such that the passage of time has a much less significant impact on the value of the ship than the state of repair and maintenance. Mv Discovery is maintained to a high and increasing standard through ongoing maintenance programmes and regular dry docks such that the residual value is not considered to be decreasing over time in real terms. Currently, the residual value exceeds the carrying value.

Residual value of mv Alexander von Humboldt and depreciation

The residual value of mv Alexander von Humboldt is measured on the basis of an operating cruise ship at the current projected end of its useful life to the Group.

The ship was purchased as a non-operational ship. Considerable investment has been made in the ship both to restore her to full working order and to upgrade passenger areas. This involved a prolonged period in dry dock, during which time no revenues were generated and there was the risk that during this work previously unidentified problems would be uncovered. The advice received from an independent member of the Institute of Chartered Ship Brokers is that in its current condition, the current market value of the ship is substantially in excess of the aggregate amount paid to purchase the ship and undertake the refurbishment and that this reflects the benefit to a potential purchaser of acquiring a ship that has already been restored to a seaworthy condition without the associated risk that this would involve.

It is intended that the Group will sell the ship to a third party as an operating cruise ship at the end of its useful life to the Group. The estimate of the residual value reflects independent specialist advice received by the Company from the same ship broker, relating to the likely disposal value of the ship being US$35.0m. This is greater than the current carrying value of the ship.

Residual value of mv Hebridean Princess and depreciation

The operational life of mv Hebridean Princess is currently restricted by the longevity of the engines. An exercise is underway to ascertain whether it will be economically possible to replace the current engines on the ship and thereby extend the life of the ship beyond ten years.

Due to the uniqueness of the ship the Directors do not currently consider that it is appropriate to assume that it will be economically possible to replace the engines. They have therefore concluded that the residual value of the ship in ten years time will be its scrap value. The residual value has therefore been based on the market price of steel scrap as at the balance sheet date.

Key sources of estimation uncertainty

The key assumptions concerning the future, and other key sources of estimation uncertainty at the balance sheet date, that have a significant risk of causing a material adjustment to the carrying amounts of assets and liabilities within the next financial year, are discussed below.

Valuation of derivative financial instruments

The Group has significant derivative assets and liabilities on balance sheet as at 31 October 2009 and 31 October 2010, which are carried at fair value as required by IAS 39, Financial instruments: Recognition and Measurement. The fair value is reported in the income statement and creates volatility in reported results. The Group uses external consultants who are engaged to professionally value the Group's derivatives. The Group believes that the derivative market value at the year end is based on appropriate estimates. The Group notes though that the valuation of derivative financial instruments requires significant estimates, and is subject to change outside of the control of the Group, through changes in forward currency rates, changes in fuel prices and market expectations of future volatility between the balance sheet date and the date that the relevant contracts mature.

Dry dock provisions

The bareboat charter agreement for mv Minerva establishes certain minimum return conditions on the vessel at the end of the agreement. To the extent that these are considered unavoidable, the Group records a provision for the best estimate of the expected expenditure to be incurred, with a corresponding asset recorded. The asset is depreciated to the date that the work is planned to be completed. The estimation of the provision requires significant judgment, and has inherent uncertainties relating to the cost of the work to be completed. Further, the liability will be settled principally in Euro and is carried in a US Dollar functional currency entity. Accordingly, the level of the liability at Group level is subject to both fluctuations in value between the US$ and Euro exchange rate, and the Euro and £ sterling exchange rate. Due to the significance of the provided amounts, the estimate of the provision and associated foreign exchange fluctuations can create volatility in the Group reported financial position and financial performance, and ultimately in the Group cash flows in the period that the repair and maintenance obligations are discharged.

Hebridean Princess Insurance claim

On 23 April 2009 (the "Acquisition Date") All Leisure Holidays Limited ("the Company") acquired the ship mv Hebridean Princess, trade, various related assets and immaterial detention creditors from the administrators of Hebridean International Cruises Limited ("HICL") and immediately began operating the vessel under the name of Hebridean Island Cruises. The Sale and Purchase agreement signed with the administrators expressly waived any obligation on the part of the Group to honour bookings previously made with HICL by passengers travelling after the Acquisition Date. After consideration of the significant level of non-charter bookings for HICL cruises departing after the acquisition-date, and in order to preserve the value inherent in the customer relationships acquired, the Company wrote to affected non-charter HICL customers to inform them that, subject to affected HICL customers entering into a new contract with the Company with various conditions including the requirement to pay in full for the new cruise , the Company would allow them to travel on a new cruise similar to the one originally booked with HICL departing after the Acquisition Date. Many of the passengers contacted were covered by insurance designed to pay out in the event of a financial failure of HICL. Accordingly, the Company allowed payment for the new cruise to be delayed pending receipt of monies claimed under the passengers' insurance policies. A number of these passengers have now assigned to the Company their rights to claim under this policy in return for consideration for the new cruise operated by Hebridean Island Cruises. The Group is currently taking legal action (as assignee) to recover the monies due under the policies assigned to it of £2.0m but given the current uncertainty surrounding both the timing and outcome of this action, no contingent asset has been recognised.

Impairment

The Directors have considered whether the assets of the Group are impaired at the balance sheet date. The principal assets are attributable to the Swan Hellenic, the Voyages of Discovery or the Hebridean Island Cruises brands. The principal asset in the Voyages of Discovery brand is the ship, mv Discovery, which is not considered to be impaired due to the factors noted above in the section on key accounting judgments relating to the residual value of the ship exceeding its carrying value. There are no indications of impairment for Hebridean Island Cruises which has traded in line with budget for the year.

The Group has completed a detailed impairment review of the assets in the Swan Hellenic cash generating unit (CGU) due to the loss in this CGU during the year. The table below summarises the results of that impairment review:

The Swan Hellenic brand is currently used for cruises on the mv Minerva. The lease on this ship ends in 2013. The recoverable amount assumes that from this date cruises under this brand will take place on a replacement vessel. In determining the recoverable amount, the Group has used the following principal inputs:

The Group prepares cash flow forecasts derived from the most recent financial budgets for the next five years and calculates a terminal value for periods thereafter. These assumptions have been revised in the year in light of the current economic environment. Management estimates discount rates using pre-tax rates that reflect current market assessments of the time value of money and the risks specific to the CGU. Changes in selling prices and direct costs are based on past practices and expectations of future changes in the market and the ship on which the brand operates. It is anticipated that sales volumes will increase over the next year as the economic recovery gathers pace and the demand for cruise holidays increases.

The Group has conducted a sensitivity analysis on the impairment test of each CGU's carrying value. A cut in the growth rate by three percentage points would result in the recoverable amount of the CGU reducing by £0.2m.

Based on this review, which concluded that the value in use is higher than the net book value of the CGU, the Group is satisfied that the assets of Swan Hellenic are not impaired at the balance sheet date. The Directors note that the assumptions made in preparing the impairment review have a significant impact on the recoverable amount of the CGU, and actual events may differ materially from expectation.

4. Revenue

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

Ancillary services revenue included within sales of cruise holiday and ancillary services includes all revenue derived directly from the cruise holidays sold, other than the principal cruise. Ancillary services revenue includes excursions revenue, on board revenue such as bar, laundry and other, and insurance income. None of these revenue streams account for more than 10% of the overall revenue and are considered by the Directors to be a component of the overall revenues derived on cruises.

5. Business and geographical segments

Adoption of IFRS 8, Operating Segments

The Group has adopted IFRS 8 Operating Segments with effect from 1 November 2009. IFRS 8 requires operating segments to be identified on the basis of internal reports about components of the Group that are regularly reviewed by the Chief Executive to allocate resources to the segments and to assess their performance. In contrast, the predecessor Standard (IAS 14 Segment Reporting) required the Group to identify two sets of segments (business and geographical), using a risks and returns approach, with the Group's system of internal financial reporting to key management personnel serving only as the starting point for the identification of such segments. Following the adoption of IFRS 8 the Group has identified that each of its brands is an operating segment and that these operating segments meet the criteria to be aggregated into the two reporting segments: Cruising and Tour Operating.

Reporting segment revenues and results

The Group is currently organised into two reporting segments as follows:

Cruising: This is the Group's largest reporting segment and includes the cruise operating segments. Revenue streams are principally from the UK but also from the USA and rest of the world.

Tour operating: This segment represents the Group's Discover Egypt operation, providing holidays in Egypt to the UK market.

Information about these businesses is presented below:

Segment assets

The unallocated corporate assets primarily relate to cash and group properties.

Segment liabilities

Other segment information

Geographical segments

The following table provides an analysis of the Group's sales by geographical market, irrespective of the origin of the goods/services:

6. Derivatives

The Group has in place various derivative financial instruments comprising fuel and currency contracts. These contracts do not qualify for hedge accounting under IAS 39, and accordingly are revalued through the income statement at each balance sheet date, resulting in a net income statement gain or loss reported in cost of sales and finance costs.

These contracts are used to mitigate against the Group's future exposure to commodity and currency fluctuations. Accordingly, while they are included in the current year income statement in arriving at gross profit, they relate to items that may eventually be cash flows in future periods. The Group believes it is beneficial for users of the financial statements to present the impact on the income statement of these derivative financial instruments to the extent that they would not impact the Group's results were they presented under UK GAAP.

* In 2009 the Group paid a premium to secure more favourable terms for a 2010 US dollar currency derivative contract

7. Operating (loss) / profit

Foreign exchange gains and losses

All foreign exchange gains and losses on bank balances are reported in administrative expenses (being gains of £0.2m for 2010, and £0.2m for 2009). Other foreign currency gains and losses including those on the settlement of derivatives are reported in cost of sales.

Gain on early settlement of derivative contracts

In the prior year the Group settled a number of forward currency contracts with Allied Irish Bank before the end of their contractual term. The Group realised a gain of £1.8m on this transaction.

Excess of acquirer's interest in the net fair value of acquiree's identifiable assets and liabilities over the cost of the Hebridean Princess and other associated assets and business acquisition

On 23 April 2009 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. Details of the assets and liabilities acquired, their fair values and the consideration paid are shown in note 11.

Mv Minerva generator failure additional costs

mv Minerva suffered the failure of both her generators during 2008 which resulted in temporary generators having to be hired pending a permanent repair, and additional harbour and dry dock costs being incurred. Additional costs were incurred in the previous year in excess of the forecast costs accrued in 2008.

Mv Minerva generator insurance payment on account

During the previous year the Directors lodged a claim in the mv Minerva's hull and machinery insurance policy for costs incurred in acquiring and fitting two generators.

Volcano impact

Following the eruption of the Eyjafjallajokull volcano in Iceland in April 2010, there was a period of closure of UK and European airspace. The Group has attributed specific costs to this airspace closure. These comprise £446,000 of incremental costs that are principally hotel and meal costs for stranded inbound and outbound customers and the cost of repatriation of inbound customers. They also include £137,000 of marketing costs related to cruises which did not sail.

8. Tax charge/(credit)

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

The tax assessed for the year is lower than that resulting from applying the standard rate of corporation tax in the UK of 28.0% (2009 - 28%). The differences are explained below:

For accounting periods beginning on or after 1 January 2000 a shipping company or group may elect to have its taxable profits computed by reference to the net tonnage of each qualifying ship it operates subject to meeting various conditions. Accordingly, the majority of the Group's profits are not subject to taxation under the normal corporation tax regime. This results in a significant reduction in the taxation liability of the Group, reflected above in the income taxed under tonnage tax regime line item.

 9. Dividends

The interim dividend 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 as paid and accordingly, the interim dividend in respect of financial year 2009/10 has not been included as a liability in these financial statements.

The proposed final dividend of £790,000 is subject to approval by shareholders at the Annual General Meeting and has also not been included as a liability in these financial statements.

10. (Loss)/earnings per share

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

All results derive from continuing operations and accordingly total (loss) / earnings per share and earnings per share from continuing operations are the same. None of the accounting standards adopted during the year, as set out in note 2, had an impact on (loss) / earnings per share

11. Acquisition of MV Hebridean Princess and the business undertaking, various assets and liabilities from the administrators of Hebridean International Cruises Limited

On 23 April 2009, 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.

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 £3,376,000. This is calculated as follows:

As required by IFRS 3, the discount on acquisition has been credited to the income statement (see note 7)

12. Notes to the cash flow statement

13. Related party transactions

Transactions between the Company and its subsidiaries, which are related parties, have been eliminated on consolidation and are not disclosed in this note. Transactions between the Group and other related parties are disclosed below:

Trading transactions

During the year, Group companies entered into the following transactions with related parties who are not members of the Group:

Roger Allard Limited is a company owned and controlled by Mr R J Allard a director of the Company and majority shareholder of the Group and the payments made are for consultancy services.

PB Consultancy services 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.

14. Principal risks and uncertainties

The Directors continually identify, evaluate and manage material risks and uncertainties faced by the Group which could adversely affect the Group's business, operating results and financial position. The list below details what the Directors consider to be the principal risks and uncertainties and the actions taken, or to be taken, to mitigate the adverse consequences. This list is not intended to be exhaustive and other risks may emerge over time: