All Leisure Group Share Discussion Threads

[somerset lad] 06/1/2015 10:38

From memory, 60 to 90% hedged, so some immediate benefits as well.

Also, £3-4m p/a profit boost from vessel sale.

[stemis] 06/1/2015 10:04

Shares don't seem to have benefited from fall in oil price. Notwithstanding any hedging, I'd have thought this was positive for fuel cost outlook?

[diku] 03/12/2014 15:40

That is some list of Directorships held.....and a big list of companies in liquidation...is that a jinx?...

[mesquida] 06/11/2014 14:08

trjones - is this the one ?

[gfrae] 20/10/2014 18:28

Thanks,Somerset lad.

[somerset lad] 16/10/2014 12:09

Net debt of £5.5m before taking account of the $5m sale proceeds.

[gfrae] 16/10/2014 11:30

Do they have much debt outstanding?

[somerset lad] 16/10/2014 10:25

We're now approaching six months without a post...

I liked yesterday's announcement about the disposal of Discovery. Whilst ALLG had said they intended to sell the vessel at the end of the Summer, I had been worried that they wouldn't be able to. After all, if the vessel was losing >£3m p/a, it's not obvious why buyers would be interested: if there were profitable uses, you would have expected that ALLG would have pursued them itself or leased the vessel to someone to pursue them. So, it was not a surprise that the consideration was less than book value.

But we are now in a position where profits will improve by over £3m p/a from next year.

FWIW, the relative recent strength of sterling and the weakness of oil should also both help ALLG.

So, there will be (one off) pain in this year's results with the write down of Discovery's value and the Ukraine & Crimea issues, but IMO we seem finally to have reached take off point.

This is not the view of Mr Market though!

[somerset lad] 22/4/2014 10:22

Interesting articles on p. 3 of the FT yesterday. The main story was under the heading "Cruise industry sets course for another year of buoyant growth" and the subsidiary story (of most interest) was "Hebridean Princess Wake to a dram in your porridge: the floating country pile fit for a queen". I can't post links because of copyright. A nice bit of free advertising to an affluent readership.

[somerset lad] 25/2/2014 16:34

There should also be an improvement in operating profit if current trading trends continue:

• Travelsphere is "in line" with expectations
• Just You is "trading well" (presumably better than in line)
• Cruising trading performance relative to previous year "is strong"
o Hebridean Islands has seen better sales and better prices.
o Voyages of Discovery and Swan Hellenic have seen better sales at lower prices (giving better total revenues).

[somerset lad] 25/2/2014 16:13

Canteatvalue,

On your post 151, I don't think you should add in the restructuring costs of £2.1m when calculating the underlying operating profit.

The underlying operating profit of £0.8m is stated before the restructuring costs. So, ALLG has taken the benefit of the synergies (c. £1m in year 1) in stating the figure of £0.8m but stripped out the one-off costs of obtaining them.

I have:

Underlying Group operating profit £0.8m
Add back cancelled and curtained cruises: £1.0m.
Incremental synergies from year 2 onwards (originally said to rise from £1m in year 1 to £1.5m in year 2; but synergies were said at the AGM to be greater): >£0.5m
mv Discovery: £4m p/a from 31.10.14

This gives >£2.3m for FY to 31.10.14 and >£6.3m for FY to 31.10.15, which is roughly in line with the figures reported in the travelmole piece.

[masurenguy] 24/2/2014 15:43

Sure Mark - count me in too.

SL - Slater does indeed hold circa 4.1% of the shares in ALLG within his Recovery Fund, as noted in the Header above. He acquired them early last year and I think that he paid circa 30p.

[somerset lad] 24/2/2014 15:30

I'm interested, thank you.

[canteatvalue] 24/2/2014 15:01

Masurenguy,

I do indeed still hold here - it's one of my biggest positions. Considering trimming it for portfolio management reasons but still think it should be worth far more if management can execute well.

Somersetguy, I agree with your analysis in terms of the balance sheet. As you say the management incentives are well aligned with shareholders and they've shown good behaviour with regards to minority shareholders before. That said, I'm still not sure why profits for next year should be forecast so low at £2.5m compared to my normalised estimates (which only uses the numbers management have supplied, above) given all the one-offs should surely have run off by then?

I'm tempted to organise a conference call with management, would anyone else here be interested in this?

[somerset lad] 24/2/2014 14:29

Canteatvalue,

I do like Paul Scott's blog, but think that he's overlooking the value in ALLG. I posted the following reply on his blog:

"Paul,

To give a different perspective on All Leisure (ALLG), which attracts your "bargepole" rating, it has two components, cruises and tour operations.

The tour operations were expanded with the acquisition of Page & Moy in May 2012. P&M had been bought by private equity for £180m in 2006, but was sold to ALLG for just £4.2m by the banks. It generated underlying operating profits of £4.1m in FY to 31.10.13 and so looks to have been a canny buy.

The hidden value in the cruise operations lies in the decision to dispose of the "loss-making" mv Discovery at the end of the Summer. The prelims don't disclose the losses, but the previous trading statement identified them as around £4m p/a. This is why the forecast profits rise from £2.5m this year to £6.5m in to 31.10.15 -- quite attractive with a market cap (using the mid of 42p) of £25.9m.

The outlook statements are strong: good trading is reported and the general statements include "confident that we will see a significant improvement in financial performance in 2014 and beyond".

Will it go bust? Management holds a very large stake which is normally associated with prudent stewardship -- in contrast to companies with managements with few if any shares and lots of options. The ALLG management are also scrupulously fair to their shareholders -- when they needed cash for the P&M acquisition, the insiders waived their rights to dividends but paid them to private holders, not something you see every day or at all!

As to the unreliable old ships, the Queen is partial to holidaying on the Hebridean Princess, which charges premium prices as you can see from the website, and the group has spent heavily on its retained vessels during the down-turn (a strategy which makes sense since management's interests are aligned with those of the long-term shareholders).

I'm happy with the idea that customers pay up front: it's an attractive part of the business (same as supermarkets sell first and pay later). So too is Mark Slater, who holds in his Recovery fund.

Disclosure: I hold."

[masurenguy] 24/2/2014 14:28

Following the above comment - are you still a holder here Mark ?

[canteatvalue] 24/2/2014 14:10

Ok so, here's how I see it:

P&M profit: £4.1m
Cruising losses: £-1.9m
Corporate central costs: £-1.4m
Restructuring costs: £1.5m + £0.6m = £2.1m
mv Discovery annual loss rate: £4.0m
mv Voyager trouble costs: £1.6m

I assume all derivative contract P&L nets off in the long term vs currency gains/losses.

Hence I make normalised operating profit to be: £8.5m

Market Cap: £26m

That said it does seem to be one different problem after another, and I don't really understand why Discovery's results are so terrible compared to the rest of the cruising business. Cruising is no where near pre-2007 margins of ~11%. If we can just have one year without any big hiccups...!

A good investor friend I respect a lot, Paul Scott, is very negative on the balance sheet with this to say in his daily blog:

"In line with its nautical theme, I'm going to award it my bargepole status - on account of the terrible Balance Sheet, which shows current assets of £14.3m, yet current liabilities of £63.2m! That's one of the worst working capital positions I've ever seen.

There are another £10.5m of long term creditors. Fixed assets of £39.6m represent mainly old, small cruise ships that are prone to fairly major mechanical breakdowns with depressing regularity, which has caused a hefty loss for the year ended 31 Oct 2013, reported today.

The creditors are I believe up-front payments by customers for future cruises, which appear as a deferred income creditor. The cash has all been spent by All Leisure long before the cruise actually happens. It amazes me that it's legal to operate like this, but many travel firms, airlines, etc, do the same thing - financing the entire business on up-front payments by customers.

With unreliable old ships, it's only a matter of time before there is some catastrophic breakdown, and no income can be generated, and the whole group goes bust. In my opinion. There are no dividends for the foreseeable future either. Hence the shares have to be seen as extremely high risk in my view."

My main point of contention here is that, as he rightly points out, many firms finance their business this way using customer upfront payments - I don't believe it's as unsustainable a situation as he believes it to be, it depends heavily on the business model of the company in question as to whether it could lead to a liquidity crisis. That being said, it does increase the risk profile here, and as the current asset situation deteriorates (which it has) it decreases the margin of safety for the business to ride out the (frequent!) future trading problems.

[masurenguy] 15/2/2014 17:59

"The travel firm, which specialises in the over 55s market, said it was 'structuring itself for the future'. Forecasts for 2014 are £2.5m profit and for 2015, £6.5m. This is expected to come from higher revenues and better load factors in cruising and due to re-structuring and slightly higher pricing in tour operating."

[somerset lad] 15/2/2014 16:02

2015 forecast profit of £6.5m:

[somerset lad] 13/2/2014 15:52

The key bit is: "it has been decided that the loss-making mv Discovery will be disposed of at the end of this summer. Following the planned disposal, the company's underlying profits should benefit from the elimination of mv Discovery trading losses which are currently in the region of £4m per annum."

Assuming the mv Discovery is sold, underlying profits should increase from £0.9m to £4.9m p/a.

Market cap is 61.75m x 0.40 (mid) = £24.7m.

Presumably the sale proceeds will clear the debt. (I can't find the book value of the mv Discovery as the accounts provide data for the vessels as a whole.)

As to the rest: the catalogue of exceptionals is quite lengthy, so lengthy that a cynic might think that some of them should be treated as ordinary incidents of trading...

But it's not every day that a company says it will quintuple its profits and the share price falls in response. (I've been shopping today at 41p.)

[emmo1210] 13/2/2014 12:05

Poor update, surprised this hasn't taken a bigger hit.

[mesquida] 08/1/2014 14:31

Last time we were up at this level was when Mark Slater was busy buying, but not sure if he is still aboard if you will pardon the pun !

[diku] 08/1/2014 14:03

Its going for the 50p bullseye...

[diku] 06/1/2014 14:16

This is on the move again...

[diku] 02/1/2014 19:43

This is on the move again...