Unaudited Interim Results

11th July 2014

All Leisure group plc ("All Leisure", the "Company" or the "Group")

Unaudited interim results for the six months ended 30 April 2014

Highlights

Revenue for the seasonally quieter first half was £49.1m. The Group's result for the six months ended 30 April 2014 is a loss after tax of £15.6m compared to a loss of £13.4m for the equivalent six month period last year. This loss includes unrealised losses on derivatives of £3.9m (six months ended 30 April 2013: loss of £1.0m). The loss before tax and derivatives has improved to a loss of £11.5m (six months ended 30 April 2013: loss of £12.6m) largely as a result of a reduction in restructuring costs which were £0.3m in the period (six months ended 30 April 2013: costs of £1.3m) following the successful integration of the Tour Operations business last year. Highlights of the period under review include:

· Improved year on year Tour Operating performance despite a significantly reduced Egyptian Nile programme that resulted from geopolitical events.

· Year on Year revenue growth within cruise with a slight increase in losses due to longer planned winter programme.

· Both tour operating and cruise performed in line with expectations.

· The successful integration of the Tour Operating business realising significant synergy savings to the Group.

· The Group has fully hedged, to the end of the financial year its foreign currency requirements (2013 - over 95%) as well as over 50% (2013 - 30%) of its projected cruise fuel requirement, for the same period.

Outlook

The performance in the first half of the year has been in line with expectations despite a continued tough trading environment. We have currently sold 85% of budgeted escorted tour revenue and 91% of budgeted cruise revenue for FY14. We advertised and sold very well two Black Sea cruises in the second half of the year which originally included ports of call in Ukraine and Crimea. Recent political and civil unrest in this area has impacted on trading and we have had to offer customers the opportunity to cancel which a number have done, or transfer to alternative cruises. These two cruises are currently being offered with revised itineraries and the financial impact of these two cruises will not be known until later in the year. Looking further forward, the successful integration of the tour operating business and consequent restructuring program have placed the Group in a stronger position to maximise the benefits of the increase in year-on-year revenues that we are seeing for 2015. We remain committed to our previously announced plan to dispose of mv Discovery at the end of the current financial year. Going forward, this will have a beneficial impact on the financial performance of the Group.

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

"I am extremely pleased to report that we are continuing to enjoy the benefits of integrating the Tour Operating and Cruise divisions into the Group with the Tour Operating division complementing our existing products even after a sizeable reduction in our Egyptian Nile tour programme and creating encouraging cross-selling opportunities. The majority of the business has now been relocated to our freehold premises in Market Harborough, after the closure of our Swan office in Southampton at the end of the calendar year. Furthermore, I am excited for the future of the Group following the successful integration of Page & Moy where full year synergy savings in excess of £1.5m have been achieved and our decision to reduce the risk of the cruise division by our proposed disposal of mv Discovery.

"The recent political and civil unrest in the Ukraine and Crimea has regrettably led to cruises being rescheduled and has resulted in a large number of cancellations. We are currently reselling the cabins with two revised itineraries; these cruises are departing August and October respectively.

"We believe that we have laid solid foundations for future growth which can be enjoyed once the wider economic environment and trading conditions improve."

For further information:

All Leisure group plc

Roger Allard, Executive Chairman 07836 382 767

Ian Smith, Chief Executive Officer 01858 588 396

Chris Gadsby, Group Finance Director 01858 588 216

Broker and Nominated Adviser

Panmure Gordon Andrew Godber/Charles Leigh-Pemberton 020 7886 2500

Financial Public Relations

Citigate Dewe Rogerson Ginny Pulbrook 020 7282 2945

Unaudited Interim Condensed Financial Statements

Chairman's Statement

Overview

The first half of the 2014 financial year has again been challenging. The Group continues to operate in a trading environment characterised by adverse geo-political events and challenging market conditions. Against this back-drop, the cruise business has benefitted from a strategic decision to reduce the risk of the business through the continued joint venture with Cruise & Maritime Voyages Ltd. This has enabled us to improve performance by more effectively deploying our ships throughout the year.

The Group reports a loss after tax for the half year ended 30 April 2014 of £15.6m (half year ended 30 April 2013: loss of £13.4m; full year ended 31 October 2013: loss of £13.4m). Loss per share - basic and diluted - for the half year ended 30 April 2014 was 25.2 pence compared with 21.7 pence loss per share for the comparative period (full year ended 31 October 2013: 21.7 pence loss per share).

The Group's result before tax and losses on derivative contracts for the half year ended 30 April 2014 was a loss of £11.5m (half year ended 30 April 2013: loss of £12.6m; full year ended 31 October 2013: loss of £9.4m).

In terms of cash, half year gross cash balances at 30 April 2014 stood at £8.6m (unrestricted: £5.1m, restricted: £3.5m) compared with £13.3m at 30 April 2013 (unrestricted: £9.6m, restricted: £3.7m) and £14.3m at 31 October 2013 (unrestricted: £10.7m, restricted: £3.6m).

Operational Review

Cruise

In the six months to April 2014 mv Minerva completed a full winter itinerary sailing in South America and the Caribbean. Mv Voyager also operated a full winter itinerary sailing around India and Asia. In Spring mv Discovery entered its second year of charter to Cruise and Maritime Voyages Limited under our arrangement with them. Mv Hebridean Princess is operating its usual autumn and spring season around West Scotland.

Tour Operating

Although volumes are lower in the tour operating division compared to 2013, our gross margins for Travelsphere and Just You brands improved year on year. This has more than mitigated the impact of a significantly curtailed Discover Egypt Program.

Hedging

As was the case in the prior year, a significant element of the Group's costs are in non-sterling denominations, especially US dollars and Euros. The Group is actively engaged in managing the impact of these currency headwinds, but unfortunately the nature and deployment of the instruments used preclude the application of hedge accounting.

Both currency and fuel hedging remain important tools for managing the cost base. The Group has fully hedged its foreign currency requirements for the current financial year, at or better than budgeted rates. Looking forward, we have currently hedged 95% of our 2015 currency requirements. For calendar year 2014, we have hedged approximately 50% of our projected cruise fuel requirement.  

Future Outlook

Looking forward there are some positive signs for future trading. Where previously the Group had experienced later bookings, trading at this early stage of the financial year 2014/15 has started well in both the Cruising and Tour Operating divisions. Sales remain ahead of last year.

In summary, the UK cruise market continues to be challenging with the continuing themes of political unrest and economic uncertainty impacting trade. However, the Group continues to see the benefits of the acquisition of Page & Moy with new cross-selling initiatives and significant synergy savings identified, especially since the closure of the Burgess Hill office. The Group will benefit further next year from further capacity reduction in the Cruise division through the previously announced disposal of mv Discovery. We expect these factors to provide the basis of a significant improvement in shareholder returns.

Roger Allard

Chairman

Unaudited Interim Condensed Financial Statements

Consolidated Income Statement

For the six months ended 30 April 2014

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

Unaudited Interim Condensed Financial Statements

Consolidated Statement of Comprehensive Income

For the six months ended 30 April 2014

Unaudited Interim Condensed Financial Statements

Consolidated Balance Sheet

At 30 April 2014

Unaudited Interim Condensed Financial Statements

Consolidated Statement of Changes in Equity

For the six months ended 30 April 2014

Unaudited Interim Condensed Financial Statements

Consolidated Cash Flow Statement

For the six months ended 30 April 2014

Unaudited Interim Condensed Financial Statements

Notes to the Unaudited Interim Condensed Financial Statements

For the six months ended 30 April 2014

1. Basis of presentation

The interim condensed unaudited financial statements of the Group for the six months ended 30 April 2014 have been prepared in accordance with the International Financial Reporting Standards ('IFRS') accounting policies adopted by the Group and set out in the annual report and financial statements for the year ended 31 October 2013. IAS 19 (revised) and the related consequential amendments have not impacted the accounting for the Group's defined benefit schemes. The Group does not anticipate any changes in these accounting policies for the year ended 31 October 2014. The following standard has been adopted in the period:

• IFRS 13 Fair Value Measurement: This standard applies to IFRSs that require or permit fair value measurements or disclosures and provides a single IFRS framework for measuring fair value and requires disclosures about fair value measurement. The adoption of this standard has had no impact on the measurement of fair value for the Group's assets and liabilities and no retrospective changes were required as a result of adopting this standard. Additional disclosures required by this standard have been included within the interim financial statements (note 10).

As permitted, this interim report has been prepared in accordance with the AIM rules and not in accordance with IAS 34 "Interim financial reporting". While the financial figures included in these interim condensed financial statements have been computed in accordance with IFRSs applicable to interim periods, this announcement does not contain sufficient information to constitute an interim financial report as that term is defined in IFRSs.

The financial information contained in the interim report also does not constitute statutory financial statements for the purposes of s434 of the Companies Act 2006. The financial information for the year ended 31 October 2013 is based on the statutory financial statements for the year ended 31 October 2013. The auditor reported on those financial statements. This report was unqualified, did not draw attention to any matters by way of emphasis and did not contain a statement under s498(2) or (3) Companies Act 2006.

Going concern

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

Operating loss

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

Unaudited Interim Condensed Financial Statements

Notes to the Unaudited Interim Condensed Financial Statements

For the six months ended 30 April 2014

2. Critical accounting judgements and key sources of estimation uncertainty

The directors are required to make judgements, estimates and assumptions about the carrying amounts of assets and liabilities at each period end. The estimates and associated assumptions are based on historical experience and other factors that are considered to be relevant. Actual results may differ from these estimates.

The following are the critical accounting judgements and estimates 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

· Valuation of derivative financial instruments

· Dry dock provisions

· Retirement benefits

· Impairment of Swan Hellenic assets

· Impairment of goodwill

· Impairment of ship values

· Provision against a material counterparty

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

The estimates and underlying assumptions are reviewed on an ongoing basis. There has been no change to the application of critical accounting judgements or key sources of estimation uncertainty from those set out in the 31 October 2013 financial statements.

Unaudited Interim Condensed Financial Statements

Notes to the Unaudited Interim Condensed Financial Statements

For the six months ended 30 April 2014

3. Business segments

The Group has identified that each of its divisions is an operating segment and that these operating segments meet the criteria to be aggregated into the two reporting segments: Cruising (including the Voyages of Discovery, Swan Hellenic and Hebridean Island Cruises brands) and Tour Operating (including the Travelsphere, Just You and Discover Egypt brands).

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 2014:

Unaudited Interim Condensed Financial Statements

Notes to the Unaudited Interim Condensed Financial Statements

For the six months ended 30 April 2014

3. Business segments (continued)

Unaudited Interim Condensed Financial Statements

Notes to the Unaudited Interim Condensed Financial Statements

For the six months ended 30 April 2014

4. Exceptional costs

The restructuring costs disclosed above relate to costs associated with the closure of the Group's offices in Burgess Hill and Southampton, and relocation of operations to Market Harborough.

During the year ended 31 October 2013 the Group announced the closure of its offices in Southampton. The onerous lease provision arises as a result of the ongoing lease commitment for the Southampton premises.

At 31 October 2013 an impairment review was undertaken in respect of mv Discovery. This revealed a decline in the market value of the ship and an impairment charge of £6,700k was therefore incurred.

Costs of £563k were incurred during the year ended 31 October 2013 due to the cancellation of certain cruises following major mechanical problems on-board mv Voyager.

Costs of £263k were written off during the year ended 31 October 2013 in relation to expenditure on software prior to the integration of the businesses.

The Group disposed of Lynnem House, Burgess Hill during the year ended 31 October 2013 and incurred a loss on disposal of £68k.

5. Income taxes

The tax charge of £183,000 (six months ended 30 April 2013: credit of £262,000; year ended 31 October 2013: credit of £226,000) represents an effective rate of (1.2)% (six months ended 30 April 2013: 1.9%; year ended 31 October 2013: 1.7%). 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.

6. Dividends

It was announced on 27 July 2012 that the Group is not proposing to pay dividends for the foreseeable future (please refer to the Chairman's Statement in the 2013 Annual Report and Financial Statements for further details on the Group's dividend policy).

Unaudited Interim Condensed Financial Statements

Notes to the Unaudited Interim Condensed Financial Statements

For the six months ended 30 April 2014

7. Loss per share (pence)

8. Property, plant and equipment

During the period, the Group spent £977,000 on capital expenditure. The majority of this was in relation to the annual dry dock of MV Hebridean Princess.

9. Share capital

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

Unaudited Interim Condensed Financial Statements

Notes to the Unaudited Interim Condensed Financial Statements

For the six months ended 30 April 2014

10. Financial Instruments fair value disclosures

The only assets and liabilities of the Group in the current period and proceeding period and year which have been measured at fair value through profit and loss are its derivative financial instruments. The fair values of these are derived from those inputs other than quoted prices that are observable for the asset or liability, either directly (i.e. as prices) or indirectly (i.e. derived from prices) and they therefore are categorised within level 2 of the fair value hierarchy set out in IFRS 7. Accordingly, no table presenting an analysis of financial instruments that are measured subsequent to initial recognition at fair value by Levels 1 - 3 is presented.

For the derivative financial instruments (both currency and fuel), the fair value has been calculated by discounting the future estimated cash flows based on the applicable yield curve derived from quoted interest rates. The derivatives are carried at fair value and accordingly, the book value and fair value are the same.

Unaudited Interim Condensed Financial Statements

Notes to the Unaudited Interim Condensed Financial Statements

For the six months ended 30 April 2014

11. Notes to the consolidated cash flow statement

Unaudited Interim Condensed Financial Statements

Notes to the Unaudited Interim Condensed Financial Statements

For the six months ended 30 April 2014

12. Related party transactions

Trading transactions

During the period/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.

In addition to the above transactions, the Group sold a property to Mr R J Allard for £350,000 during the period ended 30 April 2014. This transaction was made on an arms-length basis based on an independent valuation.

Unaudited Interim Condensed Financial Statements

Notes to the Unaudited Interim Condensed Financial Statements

For the six months ended 30 April 2014

12. Related party transactions (continued)

Trading transactions (continued)

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.

13. Ultimate Controlling Party

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

Unaudited Interim Condensed Financial Statements

Independent Review Report to All Leisure group plc

We have been engaged by the Company to review the condensed set of financial statements in the half-yearly financial report for the six months ended 30 April 2014 which comprises the Consolidated Income Statement, the Consolidated Statement of Comprehensive Income, the Consolidated Balance Sheet, the Consolidated Statement of Changes in Equity, the Consolidated Cash Flow Statement and related notes 1 to 13. We have read the other information contained in the half-yearly financial report and considered whether it contains any apparent misstatements or material inconsistencies with the information in the condensed set of financial statements.

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

Directors' responsibilities

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

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

Our responsibility

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

Scope of Review

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

Conclusion

Based on our review, nothing has come to our attention that causes us to believe that the condensed set of financial statements in the half-yearly financial report for the six months ended 30 April 2014 is not prepared, in all material respects, in accordance with the AIM Rules of the London Stock Exchange.

Deloitte LLP

Chartered Accountants and Statutory Auditor

Nottingham, United Kingdom

11 July 2014