Preliminary Results

18 February 2013

All Leisure group plc

Preliminary results for the year ended 31 October 2012

Financial Highlights

·; Successful acquisition of Page & Moy Travel Group Limited ("Page & Moy") for a gross consideration of £4.2m (£3.3m net)

·; Acquisition has resulted in total revenue increasing by 58.5% to £127.4m (2011: £80.4m)

·; Underlying operating profit of £2.6 million (2011: £2.7 million)

·; Full year pre-tax profit of £0.8 million (2011: £5.7 million) following a strong performance by the tour operating brands, delivering better than expected results mitigated by disappointing results from the cruise brands following Costa Concordia and the cancellation of a charter

·; Net increase in cash and cash equivalents of £10.0 million (2011: net decrease of £2.7m)

·; Total current bank and cash position of £23.8 million (2011: £7.2 million) as at the balance sheet date

·; Business backed by net assets of £31.8 million (2011: £32.5 million)

Operational Highlights

·; As a result of the acquisition of Page & Moy, Travelsphere and Just You have joined the portfolio of successful All Leisure brands

·; Re-introduction of mv Minerva to the Swan Hellenic brand following a major upgrade

·; Continued operational excellence as indicated by on-board customer surveys revealing that over 9 out of 10 passengers would travel with All Leisure brands again

·; Discover Egypt remaining profitable despite the ongoing political issues

Strategy

·; Consistent strategy: to achieve growth by exploiting the increasing demand for destination-led holidays and by providing an increasing choice of other niche holiday products into the over-55 English speaking market.

Commenting on the results the Chairman Roger Allard said

"This year we have added strength and depth to our management team and with this high level of experience we are clearly focused on the priorities of addressing the challenges presented to our industry by the current economic climate and geo-political events. Furthermore the acquisition of Page & Moy has given us the opportunity to offer a range of escorted tours that complement our existing cruise products to a combined active database of c881,000 households of similar demographic. It is our intention to ensure that the Group is optimally structured to derive maximum benefit from our scale, to create a stronger business centred on our core operations with a view to delivering sustainable growth for the longer term."

For further information:

All Leisure group plc

Chairman's Statement

The tragic events that occurred in Giglio, Italy in January 2012 allied to the euro-zone crisis and geo-political events throughout the world have all provided a challenging backdrop to the year. 2011/12 was a year that also saw trading adversely affected by persistent low interest rates, a weak pound, high oil prices and reduced discretionary customer spending. In spite of this, I am pleased to announce that the Group has delivered a modest profit for the year.

Results

Group revenue for the year increased from £80.4m to £127.4m, an increase of 58.5% overall. This reflects the acquisition of Page & Moy Travel Group on 15 May 2012. During the year, revenue from cruising decreased by 18.5% resulting from the decision to reduce capacity by undertaking an extensive upgrade programme for over half the winter period for mv Minerva and the late failure of a charter of mv Alexander von Humboldt. 

Overall the Group reported a profit before tax of £0.8m (2011: £5.7m). The Cruise business reported a loss of £8.1m (2011: profit of £4.3m) largely as a result of the failure of a proposed charter of mv Alexander von Humboldt resulting in the ship being laid up for the year and mv Minerva being out of service for extensive upgrade. This was offset by the strong post acquisition performance of the Tour Operator business that earned profits of £8.7m (2011: £0.2m) in the year. The remaining profit resulted from gains on derivative instruments of £1.7m (2011: £1.9m) that were partly offset by corporate costs that included Directors' remuneration and legal costs of £1.4m (2011: £1.1m).

Dividend Policy

As outlined in our interim results statement on 27 July 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. We remain confident that shareholders will see a significant improvement in returns once we have achieved synergy benefits and the adverse economic, commodity and exchange rate environment finally abates.

Strategy

The Group's strategy, namely to achieve growth by exploiting the increasing demand for destination-led cruise holidays, and have greater control over its shipping assets, has evolved over the year. The acquisition of Page & Moy Travel Group has enabled the Group to provide an increasing choice of niche holiday products into the over-55's market, whilst at the same time reducing the proportionate level of committed risk within the Group. It has presented a significant opportunity to improve the operating efficiency of the Group, delivering significant improvement in performance through improved yield and a reduction of the cost base.

Corporate Governance

As an AIM-traded entity, the Group is not required to comply with the requirements of the UK Corporate Governance Code. However, the Group seeks to apply aspects of the Code that the Board feels are appropriate to a group of this size and aims to improve where possible. The Board reviews Corporate Governance Policy in light of changes and implications to the Group. Please refer to the Group's Corporate Governance Statement for further details.

Senior Management Changes

 As a result of the acquisition of Page & Moy Travel Group on 15 May 2012, there have been further changes to the senior management team in addition to those outlined in my announcement of 30 August 2012. Operations Director Tracey McKinnon, Sales Director Colin Wilson and Marketing Director Andrew Dufty were all appointed to the Board of All Leisure Holidays Limited, whilst Geoff Lawrence, Colin Stone, Mike Deegan, Gill Harvey and Sally Carrol left the Group. I would like to take this opportunity of thanking them for their service.

Operational Review and Plans for 2013

The outlook for the industry in general over the next 12 months remains challenging and we are actively managing the impact on trading by reducing committed capacity in the cruising division. As per my trading update of 26 November 2012, we are continuing to focus on the closer integration of our Tour Operating and Cruise businesses and have already successfully implemented a number of Group-wide cost and operational efficiencies.

Integration plans are well advanced and synergy benefits in excess of £1m for 2012/13 have already been identified. It is anticipated that one off costs of £1.5m will be incurred realising these synergies in the next financial year. The full year benefit of these synergies in 2013/14 is expected to deliver savings in excess of £1.5m.

Cruising Division

Swan Hellenic is operating mv Minerva in the Middle and Far East this winter. A significant upgrade during the winter period 2011/12, which included, but was not restricted to, adding 32 balconies to cabins, has benefited our yield potential.

At the end of August 2012 we announced mv Discovery, having completed an extensive dry dock in Genoa, would leave the Voyages of Discovery brand and enter a Joint Venture, between All Leisure Holidays and Cruise & Maritime Voyages, with the first cruises scheduled to commence at the end of this month until November 2013, and recommencing next February for 257 days.

mv Voyager (formerly Alexander von Humboldt) entered service for the Voyages of Discovery brand in December 2012 and is currently circumnavigating South America. The vessel underwent a significant upgrade over the summer period with the result that Voyages of Discovery now operate a four-star product. We are pleased to confirm that we have entered into a charter agreement with Allways of Belgium for mv Voyager for over 70 days in both 2013 and 2014.

Hebridean Princess has recently completed her annual dry dock and sea trials prior to recommencing operations early next month.

Tour Operating

Since the acquisition of Page & Moy Travel Group in May both the 'Travelsphere' and 'Just You' brands have performed exceptionally well. Their contribution to the Group's financial performance in 2012 was better than expected.

The ongoing political situation in Egypt continues to have an impact on 'Discover Egypt'. However, with the vast majority of this winter's committed flying sold, no ongoing flying commitment for the summer, or committed ground costs, the brand remains profitable.

Outlook

This year we have added strength and depth to our management team and with this high level of experience we are clearly focused on the priorities of addressing the challenges presented to our industry by the current economic climate and geo-political events. Furthermore the acquisition of Page & Moy Travel Group has given us the opportunity to offer a range of escorted tours that complement our existing cruise products to a combined database of c881,000 households of similar demographic. It is our intention to ensure that the All Leisure Group is optimally structured to derive maximum benefit from our scale, to create a stronger business centred on our core operations with a view to delivering sustainable growth for the longer term.

Given the Group's current forward visibility of trading, combined with the benefits of new business and the cost reduction measures we are taking, the Directors' have increased confidence for the future of the enlarged business.

My sincere thanks go to all staff across the Group, who remain committed in these challenging conditions.

R J Allard

Chairman

All Leisure group plc

Chief Executive's Report

Operating Review

2011/12 has been a year of growth for the Group as a whole. The acquisition of the Page & Moy Travel Group added scale to the business. We now have three well-known brands in our Tour Operating Division, which complement the three well-established brands within our Cruising Division. This has already had a significant impact on the Group's financial position.

Cruise

Voyages of Discovery

Voyages of Discovery offers niche year-round, destination-led cruises on board mv Discovery (gross tonnage 20,216 tonnes). The ship has 356 cabins. For the financial year 2011/12 mv Discovery operated 365 cruise nights, a total of 240,240 Available Lower Berth Nights (ALBN's). The current economic climate, the unfortunate Costa Concordia incident, and difficult market conditions, as evidenced by aggressive discounting by competitors, led to a 10% decrease in occupancy and 17% decrease in cruise revenue on the previous year. To rectify the situation the decision was made to operate a smaller ship from Winter 12/13 that reduced cabin capacity.

During Winter 12/13 mv Discovery was taken out of service and entered dry dock. A sizeable sum is being spent on technical upgrade and refit before mv Discovery is chartered to Cruise & Maritime Voyages, who will operate the vessel in a joint venture with the Group as a value brand for a period of 242 days in 2013 and 257 days in 2014.

From Winter 12/13 Voyages of Discovery is operating the vessel formerly known as Alexander von Humboldt (gross tonnage of 15,271 tonnes).

For Summer 12 Alexander von Humboldt was expected to be under charter to a third party operator. The charter failed to operate and this contributed significantly to the loss reported by the cruising division of the All Leisure Group in the 2011/12 financial year. As a result of the vessel being out of service during the year, the opportunity was taken for further technical upgrade and a planned £1.7 million hotel refurbishment (delivered within budget and on time)

The vessel entered service for Voyages of Discovery as its flagship in December 2012, successfully re-launched and renamed mv Voyager (270 cabins). At the start of the winter 2012, mv Voyager was in the exceptional position of being 82% sold for that season prior to her inaugural sailing. Currently revenues per diem for mv Voyager are forecast to be 20% higher than achieved 2011/12 on mv Discovery. This is driven by the increased number of outside and balcony cabins and less capacity.

Swan Hellenic

Swan Hellenic also offers niche year-round, destination-led cruises on a leased vessel mv Minerva (gross tonnage of 12,449 tonnes). A leader in small ship discovery cruising with the focus on history and culture, Swan Hellenic include a tailor-made shore excursion at every port on each cruise. The company also offers a limited summer programme of destination-led river cruises on Europe's major rivers on board river cruisers chartered from A-ROSA.

Over the winter 2011/12, mv Minerva was out of service for just over three months, whilst a substantial technical upgrade was carried out. During this time the ship also underwent an extensive upgrade to both public areas and the 197 cabins. 73% of the cabins are outside cabins and clever use of space increased the number of balcony cabins from 12 to 44. A new observation lounge added to Promenade Deck increases the on board facilities. Passenger response to the upgraded vessel has been extremely positive.

As a result of the upgrade the cruise nights for the financial year 2011/12 decreased from 365 to 266 and the ALBNs decreased by 36%. This resulted in a 24% decrease in cruise revenue on the previous year, albeit the achieved fare per diem increased by 11%.

Hebridean Island Cruises

mv Hebridean Princess is a 5-star vessel (gross tonnage of 2,112 tonnes) with 30 cabins offering a maximum of 50 lower berths. The ship operates between March and November offering cruises around Scotland and the Scottish Islands. She also sails to other countries in the British Isles and re-visited Southern Ireland for the first time in recent years. As a result of difficult market conditions the achieved fare per diem decreased by 5.4% in the financial year 2011/12, although this is expected to increase in 2012/13.

Strategically extending the season increased the number of ALBNs by 2.25% to generate additional contribution to the cruise revenue. mv Hebridean Princess has recently completed her annual winter dry dock. In Summer 2012 Hebridean Island Cruises successfully introduced a limited programme of four European river cruises aboard the 5-star Royal Crown. This will increase to five in 2013.

Operations

The delivery of services on board mv Discovery, mv Minerva and mv Voyager (formerly Alexander von Humboldt) is mainly outsourced. This is consistent with the Board's policy. It is however 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. We use V Ships to employ the deck and engine crew, who are responsible for the ships' maintenance, mechanical operations, and health and safety. We use Sea Chefs to employ the hotel, catering and spa staff. We also use Harding Brothers, who are responsible for the operation of the on board shop. On behalf of All Leisure Holidays Limited, Celtic Marine (Guernsey) Limited employs 13 key staff on board mv Discovery, 6 key staff on board mv Minerva and up to 37 on mv Hebridean Princess including the Captains and Chief Engineers. On mv Hebridean Princess we use also Andrew Weir Shipping and Viking Recruitment, who provide the ship and crew management respectively.

Tour Operating

Travelsphere

Since the acquisition of the Page & Moy Travel Group Travelsphere carried 24,585 passengers in the 2011/12 financial year. Travelsphere is a tour operator specialising in fully escorted holidays for couples in the more mature market. Their comprehensive fly-tour programme encompasses destinations worldwide and Travelsphere is currently one of the UK's leading tour operators to China. An extensive customer survey has helped re-shape the brand, which was re-launched in September 2012. Travelsphere is now firmly re-established as a 3-star/4-star brand offering value for money holidays. Tours are designed to include, and go beyond, the iconic sights giving an experience of local culture. Travelsphere is well-known for its knowledgeable Tour Managers, experts and local guides, and enjoys exceptional customer loyalty. The brand also offers a limited chartered river-cruise programme. Travelsphere operates a low-risk business model and has no forward financial commitment for hotel costs, transportation costs, or aviation capacity for Summer 2013.

Just You

Since the acquisition of the Page & Moy Travel Group Just You carried 8,624 passengers in the 2011/12 financial year. Just You is a tour operator specialising in fully escorted holidays for mature passengers travelling on their own. They offer a worldwide fly-tour programme and a number of European tours by rail. City breaks and all-inclusive holidays are also part of the programme. The holidays are designed to recognise the needs of customers travelling on their own and each holiday includes sole occupancy rooms at no single supplement, welcome and farewell drinks, a number of meals and some excursions. Experienced Tour Managers, chosen for their knowledge and approachability, accompany all holidays with the group size averaging between 20 and 30 people. The brand also offers a limited river-cruise programme. Just You operates a low-risk model and has no forward financial commitment for hotel costs, transportation costs, or aviation capacity for Summer 2013.

The new financial year for both brands shows customers carried in Winter 2012/13, as well as sales for 2013, are in line with expectations.

Page & Moy

During the 2012 season, The Page & Moy Travel Group traded under a third brand; namely Page & Moy. The brand was the Group's second couples brand within the Page & Moy Travel Group. Prior to the acquisition and after extensive market research, the decision was taken to phase-out the Page & Moy brand and from September 2012 the Travelsphere and Page & Moy collection of holidays have been marketed under the Travelsphere brand. To date the number of passengers converting from Page & Moy to Travelsphere is in line with company expectations. The brand carried 8,613 passengers during the 2011/12 financial year in the post-acquisition period.

Discover Egypt

Continuing to diversify away from their traditional one week Nile Cruises, Discover Egypt is seeing an upward trend towards their bespoke two-centre holidays, which carry a higher margin. Despite the ongoing unrest and change of government in Egypt, Discover Egypt carried a higher a number of passengers, albeit at a lower margin with a 4% decrease in revenue year on year.

As in the past, we have no financial commitment on the ground and neither have we contracted any aviation capacity for Summer 2013.

In light of the ongoing political situation in Egypt, we are satisfied with current trading.

Outlook

Geo-political events and the wider economic outlook look likely to remain uncertain, but by planning accordingly we have demonstrated we can succeed against this backdrop. Through the acquisition of the Page & Moy Travel Group, the All Leisure Group has significantly increased the size and scale of its Tour Operating division. This new enlarged division, with its established portfolio of products, has performed particularly strongly in 2012. Following a detailed strategic review of the Page and Moy Travel Group brands and product portfolio prior to its acquisition, a number of underperforming products and business lines have been discontinued for 2013. Ceasing to operate the ex UK coaching holidays and components of the Christmas programme was part of this strategy, along with the decision to phase out the Page & Moy brand and incorporate the profitable components of the business into Travelsphere's portfolio of tours. The Group then re-launched the Travelsphere brand as a value for money, yet quality product. The end of year results show this has been very successful and going forwards the flexible business model of our Tour Operating Division allows us to align our capacity to fluctuating demand. Across the cruising division we have also taken the strategic decision to reduce our committed capacity. A two-year rolling short-term charter of mv Voyager to Allways, and third party charter of mv Discovery in a Joint Venture with Cruise & Maritime Voyages trading as 'Discovery Sailaway' has allowed us to achieve this. It is still early in the booking cycle for Summer 2013 and Winter 2013 - 2014, however trading to date across all brands has been encouraging. Across the business there is a resolute drive for improvement and a momentum for change, and it is now our intention to focus on integration and synergy delivery. The demand for high quality, attractive holiday products that offer value for money remains, and we are confident that the actions we are taking will strengthen our business and its prospects for long-term growth.

I Smith

Chief Executive

All Leisure group plc

Finance Director's Report

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

Other operating data

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

Notes:

(i) Calculated as the total passengers carried multiplied by the total number of revenue sailing days. Excludes tour operations passengers and passengers carried on mv Alexander von Humboldt charters for 2011.

(ii) Excludes passengers carried on the mv Alexander von Humboldt charters for 2011.

(iii) Excludes mv Alexander von Humboldt and unrealised gains and losses on fuel hedges.

Financial Performance

Group revenue for the year increased to £127.4m, an increase of £47m on the previous year. The acquired Page & Moy Travel Group contributed £60.9m of additional revenue to the Group. During the year, revenue from cruising decreased by 18.5% resulting from the decision to reduce capacity by undertaking an extensive upgrade programme for mv Minerva, and the late failure of a charter of mv Alexander von Humboldt.

Overall the Group has delivered a profit before tax for the financial year of £0.8m compared to a profit before tax of £5.7m for the year ended 31 October 2011. This is despite the challenges facing the travel industry as a whole. This result includes a number of one off and other separately disclosable items. These items have been disclosed in note 7. The underlying profit for the Group excluding these items was £2.5m compared to a profit of £3.1m in the previous year. The underlying result before gains on certain derivative contracts has improved year on year from £0.8m to £0.9m

These headline results should not detract from a difficult year for the cruise business as evidenced in note 6 where it can be seen that the cruising division reported an underlying loss from operations of £(6.9)m compared to an underlying profit of £1.7m in 2011. As stated above, this was largely due to the late failure of a charter for mv Alexander von Humboldt and the upgrade programme for mv Minerva that lead to a reduction in the group's year on year passenger nights as evidenced in the KPI's above. The Chairman's and CEO's outlooks for 2013 have already highlighted that, going forward mv Alexander von Humboldt having been renamed mv Voyager will be deployed in the Voyages of Discovery programme.

Acquisition of Page and Moy Travel Group

On 15th May 2012 the Group acquired Page and Moy Travel Group for a gross consideration of £4.2m; the equivalent of £3.3m net of deductions. The goodwill of £9.5m arising from the acquisition reflects the anticipated benefits of synergies, revenue growth, future market development and the assembled workforce of the business. The business performed strongly during the year generating underlying profits from operations of £8.9m before tax in the post acquisition period. Further details of the acquisition are provided in note 4.

Currency and Fuel Management

In order to maintain an active currency management strategy the Group employs a variety of derivative 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 FY2012 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 most 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.

As at the balance sheet date of 31 October 2012, the net mark-to-market valuation of these derivative positions was a liability of £0.6m, compared with £1.0m as at 31 October 2011. 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. 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 hedging strategy is correct despite any costs 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.

Capital Expenditure

The group has invested heavily in its fleet. Over the winter, mv Hebridean Princess underwent an annual routine dry dock and Mv Minerva had an extensive upgrade. Over the summer mv Alexander von Humboldt underwent a technical upgrade and a major hotel refurbishment prior to entering service as mv Voyager.

In total, capital expenditure for the year ended 31 October 2012 totalled £5.4m, demonstrating management's ongoing commitment to investing in the Group's product.

Looking forward, mv Discovery is undergoing a technical upgrade in dry dock this winter. From February 2013 the ship will be on charter to Cruise & Maritime Voyages in a joint venture with the Group to be marketed as the Discovery Sailaway brand. mv Hebridean Princess is undergoing another routine annual dry dock over the winter.

Cash Flows

Net cash flows from operating activities have increased by £0.9m compared to 2011 resulting in a net cash inflow of £0.2m for the year ended 31 October 2012. 

Total cash and balances at bank at the year-end amounted to £23.8m (2011: £7.2m), of which £18.2m (2011: £6.7m) is classified as cash and cash equivalents and £5.6m (2011: £0.5m) classified as restricted cash.. The Group has immediate access to all of these balances, other than the amounts reported as restricted cash. Customer deposits at 31 October 2012 amounted to £30.2m (2011: £13.4m). At 31st October 2012 the Group had borrowings of £5.8m (2011: £nil)

Of significance to the cash flow were capital expenditure, which included the additions described above of £4.5m, net cash acquired from the acquisition of Page and Moy Travel Group of £5.9m and draw down of borrowings of £5.8m

Going Concern

The Group ended the year with net assets of £31.8m (2011: £32.5m), net current liabilities of £28.4m (2011: £13.4m) and total cash of £23.8m (2011: £7.2m). In addition, the Group had borrowings of £5.8m (2011: £nil)

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, detailing the challenging trading environment the Group faces at present.

In view of the trading environment, coupled with the reduction in liquid resources available to the Group, the Directors have prepared a forecast for the business for 24 months from the balance sheet date to 31 October 2014 taking into account key assumptions about future trading performance and their plans for the Group. This forecast also includes variances to take into account events that may not materialise in line with expectations. The results show that the Group will continue to have sufficient 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.

C J Gadsby

Group Finance Director

All Leisure group plc

Consolidated Income Statement

For the year ended 31 October 2012

All results are derived from continuing operations

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

All Leisure group plc

Consolidated Statement of Comprehensive Income

For the year ended 31 October 2012

All Leisure group plc

Consolidated Statement of Changes in Equity

At 31 October 2012

Revaluation reserve: Hamptons International, an external valuer, carried out a valuation in the year of Discovery Mews, Copthorne, Surrey, which confirmed the property value at open market value with vacant possession as at 31 October 2012 remaining at £400,000.

Currency translation reserve: At 31 October 2012 one of the Group's subsidiary companies has a US$ functional currency and the translation reserve represents the exchange gains and losses arising on the retranslation of the net assets of this subsidiary entity.

All Leisure group plc

Consolidated Balance Sheet

At 31 October 2012

The financial statements of All Leisure group plc, registered number 01609517, were approved by the Board of directors and authorised for issue on 18 February 2013. 

They were signed on its behalf by:

C J Gadsby

Director

All Leisure group plc

Consolidated Cash Flow Statement

For the year ended 31 October 2012

1. Financial information

The financial information set out in the announcement does not constitute the Company's statutory accounts for the years ended 31 October 2012 or 31 October 2011, but is derived from those accounts. Statutory accounts for the year ended 31 October 2011 have been delivered to the Registrar of Companies and those for the year ended 31 October 2012 will be delivered following the Company's annual general meeting. 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 in January 2012.

The financial statements have been prepared on the historical cost basis, except for the revaluation of certain properties, financial instruments and defined benefit scheme related employee benefits. The principal accounting policies adopted are set out below. The financial statements have been prepared on a going concern basis. The responsibility statement below has been prepared in connection with the Company's full annual report for the year ended 31 October 2012. Certain parts thereof are not included within this announcement. We confirm to the best of our knowledge:

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

- The 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 as a whole, together with a description of the principal risks and uncertainties they face.

The responsibility statement was approved by the board of directors on 18 February 2013 and is signed on its behalf by:

Roger Allard - Executive Chairman

Chris Gadsby - Group Finance Director

2. Significant accounting policies

Basis of accounting

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

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

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

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 non-controlling 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

Acquisitions of subsidiaries and businesses are accounted for using the acquisition method. The consideration for each acquisition is measured at the aggregate of the fair values (at the date of exchange) of assets given, liabilities incurred or assumed, and equity instruments issued by the Group in exchange for control of the acquire. Acquisition-related costs are recognised in profit or loss as incurred.

The acquiree's identifiable assets, liabilities and contingent liabilities that meet the conditions for recognition under IFRS 3 are recognised at their fair value at the acquisition date, except that deferred tax assets and liabilities or assets related to employee benefit arrangements are recognised and measured in accordance with IAS 12 Income Taxes and IAS 19 Employee benefits respectively.

Intangible Assets - Goodwill

Goodwill arising in a business combination is recognised as an asset at the date that control is acquired (the acquisition date). Goodwill is measured as the excess of the sum of the consideration transferred and the fair value of the acquirer's previously held equity over the net of the acquisition-date amounts of the identifiable assets acquired and the liabilities assumed.

If, after reassessment, the Group's interest in the net fair value of the acquiree's net assets exceeds the sum of the consideration transferred, the excess is recognised immediately in profit or loss as a bargain purchase gain.

Goodwill is not amortised but is reviewed for impairment at least annually. For the purpose of impairment testing, goodwill is allocated to each of the Group's cash-generating units expected to benefit from the synergies of the combination. Cash-generating unit's to which goodwill has been allocated are tested for impairment annually, or more frequently when there is an indication that the unit may be impaired. If the recoverable amount of the cash-generating unit is less than the carrying amount of the unit, the impairment loss is allocated first to reduce the carrying amount of any goodwill allocated to the unit and then to the other assets of the unit pro-rata on the basis of the carrying amount of each asset in the unit. An impairment loss recognised for goodwill is not reversed in a subsequent period.

On disposal of a subsidiary, the attributable amount of goodwill is included in the determination of the profit or loss on disposal.

Intangible assets - Other

Intangible assets other than goodwill with a finite useful life are carried at cost less amortisation and any impairment losses. Intangible assets with indefinite useful lives are not amortised, For all other intangibles, amortisation is charged on a straight-line basis over the asset's useful life, as follows:

Revenue recognition

Revenue comprises sales to third parties (excluding VAT and similar sales, port and other taxes).

Cruise revenues and cruise charter revenues, together with revenues from onboard and other activities, which include transportation are recognised in income for each day of the cruise as it progresses. Shore excursion revenue is recognised on the date of the excursion.

Tour operating revenues, including excursions, insurance revenue and other services supplied to customers in the ordinary course of business, are taken to the income statement on holiday departure.

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

Interest income is recognised when it is probable that the economic benefits will flow to the Group and the amount of income can be measured reliably. Interest income is accrued on a 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.

Other revenue and associated expenses are taken to the income statement as earned or incurred.

Revenue and expenses exclude intra-group transactions.

Foreign exchange

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

Borrowing costs

Borrowing costs directly attributable to the acquisition, construction or production of qualifying assets, which are assets that necessarily take a substantial period of time to get ready for their intended use or sale, are added to the cost of those assets, until such time as the assets are substantially ready for their intended use or sale.

All other borrowing costs are recognised in profit or loss in the period in which they are incurred.

Property, ships, plant and equipment

Land and buildings held for administrative purposes are stated in the balance sheet at their revalued amounts, being the fair value at the date of revaluation, less any subsequent accumulated depreciation and subsequent accumulated impairment losses. Revaluations are performed with sufficient regularity such that the carrying amount does not differ materially from that which would be determined using fair values at the balance sheet date. The freehold property owned by All Leisure Holidays Ltd was revalued in October 2012 and the freehold property owned by Page & Moy Travel Group Air Holidays Ltd was fair valued at entry into the Group on 15 May 2012.

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

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

Freehold land is not depreciated.

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

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

The carrying values of property, ships, plant and equipment are reviewed 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. There has been no material impact of any adjustments in the year.

Costs relating to mandatory cruise ship dry docks are capitalised and depreciated over the period up to the next dry dock where appropriate.

An item of property, ships and equipment is derecognised upon disposal or when no future economic benefits are expected to arise from the continued use of the asset. Any gain or loss arising on the disposal or retirement of an item of property, ships and equipment is determined as the difference between sales proceeds and the carrying amount of the asset and is recognised in profit or loss.

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.

An investment property is derecognised upon disposal or when the investment property is permanently withdrawn from use and no future economic benefits are expected from the disposal. Any gain or loss arising on derecognition of the property (calculated as the difference between the net disposal proceeds and the carrying amount of the asset) is included in the profit or loss in the period in which the property is derecognised.

Non-current assets held for sale

The Group classifies non-current assets held for sale if their carrying amount will be recovered through a sale transaction rather than through continuing use. To be classified as held for sale, the asset must be available for immediate sale in its present condition subject only to terms that are usual and customary for the sale of such assets, and their sale must be highly probable. Sale is considered to be highly probably when management is committed to a plan to sell the assets and an active programme to locate a buyer and complete the plan has been initiated at a price that is reasonable in relation to their current fair value, and there is an expectation that the sale will be completed within one year from the date of classification.

Non-current assets classified as held for sale are carried on the Group's balance sheet at the lower of their carrying amount and fair value less costs to sell.

Impairment of tangible and intangible assets

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

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

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

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

Financial instruments

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

Financial assets

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

·; loans and receivables; and

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

The classification depends on the nature and purpose of the financial assets and is determined at the time of initial recognition. Currently the Group does not have any financial assets that are classified as 'held to maturity' or 'available-for-sale', as defined by IAS 39.

Loans and receivables

Loans and other receivables are non-derivative financial instruments with fixed or determinable payments that are not quoted in an active market. These assets are carried at amortised cost using the effective interest method, if the time value of money is significant, less any provision for impairment. Gains and losses are recognised in income when the loans and receivables are derecognised or impaired. This category of financial asset includes trade receivables.

Financial assets at FVTPL

Financial assets at FVTPL are measured at fair value after initial recognition with any gains or losses arising being included in the consolidated income statement. In respect of the Group, financial assets at FVTPL can include the Group's fuel and foreign currency derivatives with their fair value being determined by external valuers using market data.

Bank balances and cash in hand

Restricted cash comprises cash deposits which have restrictions governing their use and are classified as current or non-current dependent on the remaining length of the restriction, which is determined from contractual terms governing the restriction. Cash and cash equivalents comprise cash in hand, cash held in banks accounts with no access restrictions and bank or money market deposits repayable on demand or maturing within three months of inception. If the bank or money market deposits have an original maturity of three months or more these are disclosed as 'interest bearing bank deposits' outside cash and cash equivalents. This reflects the contractual terms of the deposit agreements such that whilst the Group often has immediate access to the bank deposits, the counterparty has the right to restrict interest payments in the event of early withdrawal. Interest income on these balances is recognised using the effective interest method.

Impairment of financial assets

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

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

If, in a subsequent period, the amount of the impairment loss decreases and the decrease can be related objectively to an event occurring after the impairment was recognised, an appropriate portion of the loss previously recognised is reversed.

De-recognition of financial assets

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

Financial liabilities

Financial liabilities are classified as either financial liabilities at FVTPL or financial liabilities measured at amortised cost.

Financial liabilities at amortised cost

Other financial liabilities, including borrowings, are initially measured at fair value, net of transaction costs. Other financial liabilities are subsequently measured at amortised cost using the effective interest method, with interest expense recognised on an effective 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. This category of financial liabilities includes trade payables, accruals, deferred income and borrowings.

Financial liabilities at FVTPL

Financial liabilities are classified as at FVTPL where the financial liability is either held for trading or it is designated as at FVTPL. The 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, the financial liabilities that can be classified as financial liabilities that are held for trading are the derivative instruments that are not designated and effective as hedging instruments (see the derivative accounting policy below).

Financial liabilities at FVTPL are stated at fair value, with any 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.

Derecognition 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.

The majority 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 (FVTPL), with the movement being disclosed on the face of the income statement.

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.

Equity instruments

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

Share capital and share premium account

There is one class of shares. When new shares are issued, they are recorded in share capital at their par value. The excess of the issue price over the par value is recorded in the share premium account. Incremental external costs directly attributable to the issue of new shares are recorded in equity as a deduction, net of tax, in the share premium account.

Dividends

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

Provisions

A provision is recognised in the balance sheet when the Group has a present 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, lubricants and consumables are stated at the lower of cost (being purchase price to the Group) and net realisable value.

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

Leases

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

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

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

Taxation

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

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

Deferred tax is the tax expected to be payable or recoverable on differences between the carrying amounts of assets and liabilities in the financial statements and the corresponding tax bases used in the computation of taxable profit, and is accounted for using the balance sheet liability method. Deferred tax liabilities are generally recognised for all taxable temporary differences and deferred tax assets are recognised to the extent that it is probable that taxable profits will be available against which deductible temporary differences can be utilised. Such assets and liabilities are not recognised if the temporary difference arises from the initial recognition of goodwill or from the initial recognition (other than in a business combination) of other assets and liabilities in a transaction that affects neither the taxable profit not the accounting profit.

The carrying amount of deferred tax assets is reviewed at each balance sheet date and reduced to the extent that it is no longer probable that sufficient taxable profits will be available to allow all or part of the asset to be recovered.

Deferred tax liabilities are recognised for taxable temporary differences arising on investment in subsidiaries, except where the group is able to control the reversal of the temporary difference and it is probable that the temporary difference will not reverse in the foreseeable future.

Deferred tax is calculated at the tax rates that are expected to apply in the period when the liability is settled or the asset is realised based on tax laws and rates that have been enacted or substantively enacted at the balance sheet date. Deferred tax is charged or credited in the income statement, except it relates to items charged or credited in other comprehensive income, in which case the deferred tax is also dealt with in other comprehensive income.

Deferred tax assets and liabilities are offset when there is a legally enforceable right to set off current tax assets against current tax liabilities and when they relate to income taxes levied by the same taxation authority and the Group intends to settle its current tax assets and liabilities on a net basis.

Share-based payment

In prior periods the Group has issued equity-settled share options to certain employees as part of their total remuneration. The fair values of the share options were calculated at the date of grant, using an appropriate option pricing model. These fair values were charged to profit or loss in full immediately as the options vested on grant. On the basis that both schemes are immaterial to the financial statements, the full disclosure requirements of IFRS 2, 'Share based payment' has not been included.

Retirement benefit costs

The Group operates defined contribution pension schemes. The assets of the schemes are held separately from those of the Group in independently administered funds. The amount charged to the income statement in respect of pension costs and other post-retirement benefits is the contributions payable in the year. 

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

The Group also operates a defined benefit scheme. The pension liabilities recognised on the balance sheet in respect of this scheme represent the difference between the present value of the Group's obligations under the scheme (calculated using the projected unit credit method) and the fair value of the scheme's assets. Actuarial gains or losses are recognised in the period in which they arise within the consolidated statement of changes in equity. The current service cost, representing benefits accruing over the year, is included in the consolidated income statement as an administrative expense. The unwinding of the discount rate on the scheme liabilities and the expected return on scheme assets are presented as investment revenues. Past service costs are recognised immediately in the income statement as administrative expenses

Operating profit

Operating profit is stated before investment revenues.

Income statement presentation and separately disclosed items

For information purposes management believe it is helpful to disclose certain items separately.

These items are presented within their relevant income statement category, but highlighted through separate disclosure. This is the first year the Group has presented the income statement in this manner and management intend to consistently disclose these items each year.

Items which are included within the category of separately disclosed items include:

- Costs of acquisitions

- Asset impairments

- Other individually material items that are unusual because of their size, nature or incidence but which are considered not to be related specifically to the underlying result.

Material business combination intangible assets were acquired as a result of the acquisition of Page & Moy Travel Group Limited. The amortisation of these intangible assets is significant and the Group's management consider that it should be disclosed separately to enable a full understanding of the Group's results.

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 cruise ships

As in the prior year, the residual value of the Group's cruise ships is measured on the basis of either an operating cruise ship or scrap value at the current projected end of its useful life to the Group. In the cases where it is planned to dispose of the ship as a working vessel, the estimate of the residual value reflects independent specialist advice received by the Company from members of the Institute of Chartered Ship Brokers, relating to the current value of the vessels coupled with the likely disposal value of the ship at the projected end of the useful life to the Group. If it is assumed the ship will be scrapped, the residual value is based on external market data for the scrap value of steel and estimated sales proceeds of any removable assets from the ship. Ship residual values are determined in US Dollars or Euros and are therefore subject to foreign exchange risk. Residual values are reviewed annually to take account of market conditions.

Acquisition of Page & Moy Travel Group Limited

The acquisition of Page & Moy Travel Group Limited was accounted for using the acquisition method based on the fair value of the consideration paid. The assets and liabilities were measured at fair value and the purchase price was allocated to assets and liabilities based on these fair values. Determining the fair values of assets and liabilities acquired involves the use of significant estimates and assumptions, including discount rates, asset lives and recoverability. With regards to assets and liabilities measured at fair value, the value of the freehold property was measured using a qualified surveyor on an open market basis and the valuation of the defined benefit pension liability was prepared by qualified actuaries. With regards to the purchase price allocation and determination of intangible assets, management engaged recognised experts in this field to assist in the process, who also benchmarked key assumptions, such as discount rates and asset lives, against industry peers.

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 2011 and 31 October 2012, 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 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, primarily:

- The spot rate at the balance sheet;

- The forward rate;

- Time, in terms of remaining contractual term and fixing date(s) contained within it; and

- Market volatility.

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 Euros 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 Dollar 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.

Retirement benefits

The consolidated financial statements include costs in relation to, and provision for, retirement benefit obligations. The costs and the present value of any related pension assets and liabilities depend on such factors as life expectancy of the members, the salary progression of current employees, the returns that plan assets generate and the discount rate used to calculate the present value of the liabilities. The Group uses previous experience and independent actuarial advice to select the values of critical estimates.

Impairment of Swan Hellenic

The Group has completed a detailed impairment review of the assets in the Swan Hellenic cash generating unit (CGU).

The Swan Hellenic brand is currently used for cruises on the mv Minerva. Following improvements and modernisation of the vessel undertaken during the financial year, the lease on this ship has been extended to 2021.

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.

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.

Impairment of Goodwill

Determining whether goodwill is impaired requires an estimation of the value in use of the CGU to which goodwill has been allocated. The value in use calculation requires the directors to estimate the future cash flows expected to arise from the CGU and a suitable discount rate in order to calculate present value.

The carrying amount of goodwill at 31 October 2012 was £9,517,000 (2011: £nil). There was no impairment of goodwill in the year.

Provision against a material counterparty

A provision has been made against a material receivable from a counterparty which arose in the year 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.

Recognition of deferred tax asset relating to carry-forward unused losses

Other than a deferred tax asset arising from deductible temporary differences, the Group has recognised a deferred tax asset relating to unused losses arising from the Page & Moy Travel Group. The quantum of the asset recognised has been calculated based on the extent it is probable that future taxable profit will be available against which they can be utilised in the context of Page & Moy Travel Group's trading performance in recent financial years, which management have determined as budgeted taxable profits one year from the balance sheet date.

4. Acquisition of subsidiary

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 gross consideration of £4.2m, the equivalent of £3.3m net of deductions. The acquisition of PMTGL has resulted in the majority of All Leisure's revenues being derived from Tour Operating as opposed to Cruise, which was one of the main reasons for completing the transaction, albeit there are similar customer demographics for both businesses.

Page & Moy Travel Group Limited is a holding company. The principal activity of its subsidiaries is tour operating; offering touring holidays to a wide range of overseas destinations.

The amounts recognised in respect of the identifiable assets acquired and liabilities assumed are set out in the table below.

The amount indicated above for trade and other receivables represents the fair value of the acquired receivables and is equal to the gross contractual cash flows, all of which are expected to be recoverable.

There are no contingent liabilities.

Acquisition related costs (included in administrative expenses) amounted to £0.3m.

The purchase price of each asset component of the acquisition represents a preliminary assessment of their fair value, based on management's best estimates, and may be amended in the next financial period.

The goodwill of £9,517,000 arising from the acquisition reflects the anticipated benefits of synergies, revenue growth, future market development and the assembled workforce of PMTGL. These benefits are not recognised separately from Goodwill as they do not meet the criteria for identifiable intangible assets. None of the goodwill is expected to be deductible for tax purposes.

The acquired business contributed revenue of £60,867,000 and profit before tax of £8,935,000 to the Group for the period from acquisition to 31 October 2012.

If the acquisition had occurred on 1 November 2011, it would have contributed £93,927,000 to consolidated revenue and £4,644,000 to consolidated profit for the year.

5. Revenue

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

Ancillary services revenue included within sales of cruise holidays and ancillary services includes all revenue derived directly from the cruise holidays sold, other than the principal cruise. Ancillary services revenue includes excursions revenue, 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.

Ancillary service revenue included within sales of escorted tours and ancillary services includes non inclusive tours, visa services and flight upgrades. None of these revenue streams account for more than 10% of the overall revenue and are considered by the Directors to be components of the overall revenues derived on escorted tours.

6. Business and geographical segments

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 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 escorted tours operation, providing escorted tour holidays to a wide range of overseas destinations. Revenue streams are from the UK.

The Group holds all its derivative contracts to maturity and for this reason, coupled with being unable to hedge account under IAS 39, the information on these instruments is reported separately to the chief operating decision maker. Furthermore, these movements are not allocated to any one reporting segment in the management accounts. As a consequence the information is presented below with an adjustment that reconciles the operating profit on an IFRS basis, which includes the mark-to-market impact of the Group's open derivative financial instruments.

The following is an analysis of the Group's revenue and results by reportable segments in 2012:

The following is an analysis of the Group's revenue and results by reportable segments in 2011:

Segment assets

The unallocated corporate assets primarily relate to certain cash balances 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 and the location of the Group's non-current assets:

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

7. Separately disclosed items

The onerous lease provision arises as a result of losses incurred, or anticipated to be incurred, from the bareboat charter of mv Voyager to a third party.

The provision against a material counterparty has arisen as a result of an ongoing dispute.

The impairment of property has arisen as a result of the decrease in the market values of Lynnem House and 54 The Hundred.

Other income relates to monies received from insurance claims.

Acquisition costs of £310,000 (2011: £nil) have arisen as a result of the acquisition of Page & Moy Travel Group Limited and are not expected to recur in future years.

Material business combination intangible assets were acquired as a result of the acquisition of Page & Moy Travel Group Limited. The amortisation of these intangible assets is significant and the Group's management consider that it should be separately disclosed to enable a full understanding of the Group's results.

8. Other income

Insurance claims

The insurance claims amount relates to the settlement of insurance claims made in respect of technical matters experienced on ships operated by the Group based on events in previous periods.

Damages awarded

The damages awarded arose from the Company's success against the insurers underwriting the financial failure insurance provided to passengers of Hebridean Island Cruises Limited ("HICL"), a policy which was designed to indemnify the passengers in respect of any net ascertained financial loss sustained from cancellation / curtailment of their travel arrangements as a result of insolvency. This matter was disclosed in 'Key sources of estimation uncertainty' in note 4 in the prior year signed financial statements and is referred to in more detail in the Chairman's Statement and the Finance Director's Report of the FY2011 Group Financial Statements.

The Insurers refused to pay out under the policy because the Company operated identical replacement cruises for the passengers at no extra cost. In September 2009, the passengers formally assigned their claims under the policy to the Company and in March 2010, the Company's solicitors issued a claim on behalf of the Company in the Commercial Court ("the Court").

The Court ruled in the Company's favour on all accounts and awarded the Company the full amount claimed. The amount presented above is shown net of insignificant unrecoverable legal costs incurred.

9. Operating profit

Provision arising from a contractual arrangement

This item arises as a result of losses incurred, or anticipated to be incurred, from the bareboat charter of mv Voyager to a third party.

Provision against a material counterparty

This item represents the provision made against a material receivable from a counterparty which arose during the year and in respect of which there is an on-going dispute. Management have estimated the amount recoverable, based on available evidence, and have used this to determine the provision required.

10. Tax charge/ (credit)

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

Corporation tax is calculated at 24.8% (26.8%) of the estimated taxable profit for the year

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

The tax assessed for the year differs from (2011- differs from) that resulting from applying the standard rate of corporation tax in the UK of 24.8% (2011 - 26.8%). The differences are explained below:

For accounting periods beginning on or after 1 January 2000 a shipping company or group may elect to have its taxable profits computed by reference to the net tonnage of each qualifying ship it operates subject to meeting various conditions. Accordingly, the profits or losses arising from the cruising segment are not subject to taxation under the normal corporation tax regime.

(c) Factors affecting future tax charge

At the balance sheet date, the Finance Act 2012 had been substantively enacted confirming that the main UK corporation tax rate will be 23% from 1 April 2013. Therefore, at 31 October 2012, deferred tax assets and liabilities have been calculated based on a rate of 23% where the temporary difference is expected to reverse after 1 April 2013.

Further proposals to reduce the main UK corporation tax rate to 22% on 1 April 2014 has not been substantively enacted at the balance sheet date and are therefore not included in these financial statements.

This may reduce the Group's future current tax charge accordingly. It has not yet been possible to quantify the full anticipated effect of the announced further 1% rate reduction, although this should further reduce the Group's future current tax charge and reduce the Group's deferred tax liabilities/assets accordingly.

11. Dividends

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 2011 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 on 27 April 2012.

No interim dividend was paid in the year. It was announced on 16 May 2012 that no final dividend has been proposed for the year ended 31 October 2012.

12. Earnings per share

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

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

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

13. Notes to the cash flow statement

14. 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.

On 15 May 2012, All Leisure Group PLC acquired 100% of the issued share capital of Page & Moy Travel Group Limited ("PMTGL"), on a debt free basis, for a consideration of £3.3m. The consideration was funded with a £5.8m loan from a consortium of individual investors, some of whom were related parties. The lenders who meet the definition of related parties, and the amounts loaned to the Group are as follows:

N J Jenkins is a director and shareholder in All Leisure group plc. D A Wiles is a director of All Leisure Holidays Limited, a subsidiary of All Leisure group plc.

Remuneration of key management personnel

The remuneration of the Directors of the Company and subsidiary company directors, who are the key management personnel of the Group, is set out below in aggregate for each of the categories specified in IAS 24 Related Party Disclosures.

15. 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 potential adverse consequences. This list is not intended to be exhaustive and other risks may emerge over time: