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| Share Name | Share Symbol | Market | Type | Share ISIN | Share Description |
|---|---|---|---|---|---|
| All Leisure | LSE:ALLG | London | Ordinary Share | GB00B24CH603 | ORD 1P |
| Price Change | % Change | Share Price | Bid Price | Offer Price | High Price | Low Price | Open Price | Shares Traded | Last Trade | |
|---|---|---|---|---|---|---|---|---|---|---|
| 0.00 | 0.00% | 1.75 | 0.00 | 00:00:00 |
| Industry Sector | Turnover | Profit | EPS - Basic | PE Ratio | Market Cap |
|---|---|---|---|---|---|
| 0 | 0 | N/A | 0 |
From Nov 2019 to Nov 2024
TIDMALLG
RNS Number : 9231E
All Leisure Group PLC
16 February 2015
16 February 2015
All Leisure Group plc
Preliminary results for the year ended 31 October 2014
Financial Highlights
-- Underlying operating profit* before separately disclosed items and gains/losses on derivative contracts improves to GBP0.9 million (2013: GBP0.8 million).
-- Improvement in results despite GBP1.9 million lower earnings due to the unfortunate political events in Crimea and Ukraine. This issue caused three key cruises to be re-scheduled, causing customer cancellations and heavy discounting to achieve occupancy levels on these cruises.
-- Before separately disclosed items the net profit was GBP0.6 million, an improvement of GBP4.3 million in comparison to 2013.
-- Full year pre-tax loss of GBP7.2 million (2013: loss of GBP13.6 million). This result is after a charge of GBP8.2 million (2013: GBP9.9 million) for separately disclosed items, primarily the loss on disposal of the mv Discovery vessel (GBP7.1 million loss in the year).
-- Improved cash position; Total bank and cash of GBP15.1 million (2013: GBP14.3 million) at the balance sheet date.
Operational Highlights
-- On a like-for-like basis** passengers grew 1%, with Cruise passengers up an excellent 10% and Tour passengers down 2% in the year. Average Revenue per Passenger grew 2.7% to GBP2,410 in the year. Including passenger numbers from activities now discontinued and from the political uncertainty impacting our Discover Egypt business, total passengers fell by 5%.
-- The sale of the loss-making mv Discovery vessel in October was a significant step forward in de-risking the business and positioning the Group for improved future profitability.
-- Continued consolidation of the cruise and tour operating businesses within one head office location in Market Harborough, realising GBP2.3m selling and administration savings in addition to the GBP1m disclosed last year.
-- The senior management team was further strengthened. -- Successful launch of over 70 new Travelsphere and Just You tours.
Strategy
-- Achieve profitable growth through the provision of an increasing choice of niche holidays targeted at the UK over 55's market.
Commenting on the results the Chairman Roger Allard said
"Over the past year, the Group has continued its work to consolidate the former "All Leisure Group" and "Page & Moy" businesses into one business. This work, together with the further strengthening of the management team, has created an organisation that is fit for the future with effective leadership and a lean, cost-effective structure."
For further information:
All Leisure Group plc 01858 410 456 Roger Allard Chairman Ian Smith Chief Executive Officer Nigel Arthur Group Finance Director Financial Public Relations: Citigate Dewe Rogerson Lindsay Noton 020 7282 1032 Broker and Nominated Panmure Gordon Adviser Andrew Godber/ Charles Leigh-Pemberton 020 7886 2500
*Underlying profit is stated before certain items separately disclosed in the Group's Annual Report. These items total GBP8.2 million (2013: GBP9.9 million) before tax and are disclosed in note 6.
**Like-for-like passenger figures exclude the European River Cruise charter programme and Discover Egypt given the effect of political uncertainty on sales to this destination.
All Leisure Group plc
Chairman's Statement
Over the past year, the Group has continued its work to consolidate the former "All Leisure Group" and "Page & Moy" companies into one business. This work, together with the further strengthening of the management team, has created an organisation that is fit for the future with effective leadership and a lean, cost-effective structure.
I am delighted to report that, before separately disclosed items and gains/losses on derivative contracts, the Group generated an underlying operating profit of GBP0.9m for the year, GBP0.1m ahead of last year. Furthermore, underlying Profit after tax improved by GBP4.4m versus last year to close at GBP0.6m. Our net result for the year after separately disclosed items was a loss of GBP7.5m, although this is largely due to the GBP7.1m loss on disposal of mv Discovery in October. Total passengers fell by 5%, however increased by 1% in the year on a like-for-like basis, and total Revenue also grew 1% on a like-for-like basis. Like-for-like figures exclude the European River Cruise charter programme and Discover Egypt given the effect of political uncertainty on sales to this destination.
This was a creditable performance given some of the headwinds that we faced in 2013/14, the most significant of which was the crisis in Crimea and the Ukraine. Here we had no option but to make late changes to our three scheduled Black Sea and Eastern Mediterranean itineraries, cruises that are normally amongst our most profitable. The changes resulted in substantial cancellations and subsequent discounting to fill capacity. The profit contribution from these cruises was GBP1.7m lower than the equivalent itineraries last year, and GBP1.9m lower than our expectations in the year. The political situation in Egypt also impacted our Tour Operating performance, causing sales of our Discover Egypt brand to fall by GBP1.2m in the year.
Tour Operations passengers declined by 10% in the year, partly offset by a 4% increase in average revenue per passenger. The decline in passenger numbers was largely due to continuing political uncertainty in Egypt combined with a decision to discontinue the European River Cruise charter programme. Excluding these items, like-for-like passengers declined 2%. Overall the Tour Operating business benefitted from an innovative programme of new product development; in 2014 the Group launched over 70 new tour itineraries across the Travelsphere and Just You brands, taking the overall programme size to over 200 separate holiday itineraries. For Travelsphere, North America remains a core destination and has had a good year, driven by the introduction of some new tours. Italy and Croatia have also traded well, with Croatia being the destination of our best-selling new holiday of 2014. Following its re-launch in September 2013, Just You performed well this year with like-for-like passengers up 1%, demonstrating the potential of this brand. Like Travelsphere, Italy and North America performed well for Just You in 2014 and our City break programme has been very popular.
Overall the Tour Operating business continues to operate profitably and enjoys a strong following from its loyal customer base.
Despite the Crimea/Ukraine issues, the Cruising business had a stronger year with revenues GBP1.7m higher and total passenger numbers up 10% at 17.9k versus 16.3k last year. I am particularly delighted with the progress made in the year to build the Voyages of Discovery brand. Firstly, the disposal of mv Discovery was a major step in our turnaround as the vessel was loss-making and in need of significant investment. The vessel was sold for $5m in October 2014, giving rise to a loss on disposal of GBP7.1m which we have disclosed separately. During the year we continued to establish mv Voyager as the flagship of the Voyages of Discovery brand. We also continue to invest in mv Hebridean Princess to maintain her 5 star status and profitable contribution to the business.
Over the past year we have continued our efforts to turn around the cruise business, and we believe the foundations for growth have now been firmly established.
The outlook for 2015 remains challenging, as the UK economy continues its slow recovery. The rationalisation work that has been carried out over the last few years will continue to benefit the results, as we have a leaner cost base and a more focussed organisation. Lower fuel prices will also help the Group to contain its costs, although our marine fuel requirements are circa 50% hedged for the coming year at higher prices and the full benefit of current fuel pricing will therefore not be realised until 2016. Furthermore, the variability of marine fuel price is limited by the fixed costs of processing and transport inherent in the product. The currency outlook is a mixed picture for 2015; the weaker Euro is expected to stimulate demand for European Tours in particular, whilst the current strength of the US Dollar against Sterling is expected to make our popular US Tour destinations less attractive to UK consumers and will impact dollar-denominated fuel and destination costs.
In summary, the Group has made significant progress in the past year and the Directors and I are confident of a positive future for the business. My sincere thanks go to all staff across the Group, for their commitment, hard work and dedication in 2014.
R J Allard
Chairman
Key Performance Indicators
The following table provides current and historical key performance indicators ('KPI's) employed by the Group:
Hot Features
Premium
FY2014 FY2013
Revenues (GBPm) 138.9 142.1
Underlying operating profit* before gains/losses
on derivative contracts and separately disclosed
items (GBPm) 0.9 0.8
Operating loss before gains/losses on derivative
contracts (GBPm) (7.3) (9.1)
Underlying operating profit/(loss)* for the
financial year (GBPm) 1.3 (3.5)
Underlying profit/(loss) before tax for the
financial year (GBPm) 1.0 (3.8)
Loss before tax for the financial year (GBPm) (7.2) (13.6)
Net assets (GBPm) 11.7 19.2
Cash generated/(used) by operating activities
(GBPm) 4.1 (3.3)
Capital expenditure (GBPm) 2.4 8.3
Total assets (GBPm) 80.2 92.9
Basic loss per share (pence) (12.1) (21.7)
Other operating data
The following table provides the current and historical figures for the principal operating KPIs employed by the Group:
FY2014 FY2013
Passengers carried - cruise 17,885 16,274
Passengers carried - tour operations 39,762 44,286
Average revenue per passenger -
cruise (GBP) 3,778 4,045
Average revenue per passenger -
tour (GBP) 1,794 1,723
Average revenue per passenger -
overall (GBP) 2,410 2,347
Cruise
Passenger nights (i) 235,850 213,760
Available lower berth nights ("ALBNs")
(ii) 308,668 276,677
Occupancy (%) 76% 77%
Fuel consumption (metric tonnes)
(iii) 15,744 14,754
Fuel cost per metric tonne GBP
(iii) 433 473
Ships - owned 2 3
Ships - leased 1 1
Notes:
(i) Calculated as the total passengers carried multiplied by the total number of revenue sailing days.
(ii) Calculated as the ship capacity multiplied by the total number of revenue sailing days.
(iii) Excludes unrealised gains and losses on fuel hedges and fuel consumption during Allways charter.
* Underlying profit is stated before certain items separately disclosed in the Group's Annual Report. These items total GBP8.2 million (2013: GBP9.9 million) before tax and are disclosed in note 6.
All Leisure Group plc
Consolidated Income Statement
For the year ended 31 October 2014
Note 2014 Restated
(see note
13)
GBP'000 2013
Total GBP'000
Total
Revenue 4,5 138,912 142,143
Costs, expenses and other income
Operating (117,549) (116,271)
Selling and administrative (23,558) (28,173)
Depreciation 7 (3,863) (5,487)
Amortisation 7 (1,253) (1,344)
Operating loss before gains/(losses)
on derivative contracts (7,311) (9,132)
Gains/(losses) on derivative contracts 5 445 (4,277)
Operating loss 5,7 (6,866) (13,409)
Investment revenue 4 70 160
Finance costs (429) (387)
Loss before tax (7,255) (13,636)
Tax (charge)/credit 8 (258) 226
Loss for the financial year 5 (7,483) (13,410)
Earnings per share (pence):
Basic 10 (12.1)p (21.7)p
Diluted 10 (12.1)p (21.7)p
The results are after separately disclosed items of GBP8.0m (2013: GBP9.6m), further details of these items are included in note 6.
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 2014
2014 2013
GBP'000 GBP'000
Total Total
Loss for the financial year (7,483) (13,410)
Items that will not be reclassified
subsequently to profit or loss:
Gains/(losses) on property revaluation 380 (24)
Re-measurement of net defined
benefit liability (491) 1,258
Deferred tax on pensions 98 (365)
Total comprehensive loss for
the financial year (7,496) (12,541)
All Leisure Group plc
Consolidated Statement of Changes in Equity
At 31 October 2014
Share Currency
Share premium Revaluation translation Retained
capital account reserve reserve earnings Total
GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000
At 1 November 2012 617 13,346 47 12 17,756 31,778
______ _______ ________ ______ _______ ______
Loss for the financial
year - - - - (13,410) (13,410)
Revaluation of property - - (24) - - (24)
Re-measurement of net
defined benefit liability - - - - 1,258 1,258
Deferred tax on pensions - - - - (365) (365)
______ _______ ________ ______ _______ ______
Total comprehensive loss
for the financial year - - (24) - (12,517) (12,541)
______ _______ ________ ______ _______ ______
At 31 October 2013 617 13,346 23 12 5,239 19,237
======= ======== ========= ======= ======== ======
At 1 November 2013 617 13,346 23 12 5,239 19,237
_______ _______ _______ _______ _______ _______
Loss for the financial
year - - - - (7,483) (7,483)
Revaluation of property - - 380 - - 380
Re-measurement of net
defined benefit liability - - - - (491) (491)
Deferred tax on pensions - - - - 98 98
Total comprehensive loss
for the financial year - - 380 - (7,876) (7,496)
Disposal of property (23) - 23 -
At 31 October 2014 617 13,346 380 12 (2,614) 11,741
Revaluation reserve: At 31 October 2014 Budworth Hardcastle, an external valuer, carried out a valuation of Compass House, Market Harborough which confirmed the property value at open market value with vacant possession to be GBP3,750,000.
Currency translation reserve: At 31 October 2014 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 2014
2014 2013
GBP'000 GBP'000
Non-current assets
Intangible assets 20,185 21,324
Property, ships, plant and equipment 29,132 39,567
Trade and other receivables 3,686 3,840
Deferred tax asset 1,450 1,739
54,453 66,470
Current assets
Inventories 1,402 2,312
Trade and other receivables 9,230 9,400
Derivative financial instruments 20 91
Assets held for sale - 350
------------- --------
Restricted bank balances 3,530 3,594
Cash and bank balances 11,600 10,685
------------- --------
Total current bank balances
and cash in hand 15,130 14,279
25,782 26,432
Total assets 80,235 92,902
Current liabilities
Trade and other payables (53,532) (57,321)
Current tax liabilities (17) (5)
Borrowings (580) (580)
Provisions (1,497) (358)
Derivative financial instruments (4,431) (4,947)
(60,057) (63,211)
Net current liabilities (34,275) (36,779)
Non-current liabilities
Borrowings (4,050) (4,622)
Deferred tax liabilities (2,153) (2,299)
Retirement benefit obligations (2,234) (2,101)
Long term provisions - (1,432)
(8,437) (10,454)
Total liabilities (68,494) (73,665)
Net assets 11,741 19,237
Equity
Share capital 617 617
Share premium account 13,346 13,346
Revaluation reserve 380 23
Currency translation reserve 12 12
Retained earnings (2,614) 5,239
Total equity 11,741 19,237
The financial statements of All Leisure Group plc, registered number 01609517, were approved by the Board of directors and authorised for issue on 12 February 2015.
They were signed on its behalf by:
N Arthur
Director
All Leisure Group plc
Consolidated Cash Flow Statement
For the year ended 31 October 2014
2014 2013
Note GBP'000 GBP'000
Net cash inflow/(outflow) from operating
activities 11 4,077 (3,312)
Investing activities
Interest received 70 152
Rental income 6 8
Proceeds on disposal of property,
ships, plant and equipment 3,133 499
Proceeds on disposal of assets held
for sale 350 250
Purchases of property, ships, plant
and equipment and intangible assets (2,428) (8,348)
Movement in restricted cash held
on deposit 64 1,972
Net cash generated/(used) from investing
activities 1,195 (5,467)
Financing activities
Repayment down of borrowings (580) (580)
Net cash generated/(used) in financing
activities (580) (580)
Net increase/(decrease) in cash and
cash equivalents 4,692 (9,359)
Cash and cash equivalents at beginning
of year 10,685 18,242
Effect of foreign exchange rate changes (3,777) 1,802
Cash and cash equivalents at end
of year 11,600 10,685
All Leisure Group plc
Notes to the Preliminary Results
For the year ended 31 October 2014
1. Financial information
The financial information set out in the announcement does not constitute the Company's statutory financial statements for the years ended 31 October 2014 or 31 October 2013, but is derived from those financial statements. Statutory accounts for the year ended 31 October 2013 have been delivered to the Registrar of Companies and those for the year ended 31 October 2014 will be delivered following the Company's annual general meeting. The auditor has reported on those financial statements: 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 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 2014. 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 strategic 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 12 February 2015 and is signed on its behalf by:
Roger Allard - Executive Chairman
Nigel Arthur - 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.
The principal accounting policies adopted are set out below. These policies have been applied consistently unless otherwise stated.
2. Significant accounting policies (continued)
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 power over the investee; - Is exposed, or has rights, to variable return from its involvement with the investee; and - Has the ability to use its power to affect its returns.
The Company reassesses whether or not it controls an investee if facts and circumstances indicate that there are changes to one or more of the three elements of control listed above.
All subsidiaries are 100% owned and there are no non-controlling interests in the Group.
Consolidation of a subsidiary begins when the Company obtains control over the subsidiary and ceases when the Company loses control of the subsidiary. Specifically, the results of subsidiaries acquired or disposed of during the year are included in the consolidated income statements from the date the Company gains control until the date when the Company ceases to control the subsidiary.
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.
Going concern
The directors have, at the time of approving the financial statements, a reasonable expectation that the Company and the Group have adequate resources to continue in operational existence for the foreseeable future. Thus they continue to adopt the going concern basis of accounting in preparing the financial statements.
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 units 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.
2. Significant accounting policies (continued)
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:
Customer relationships 5% - 10% Trademarks 4% Computer software 25%
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 timely 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 pounds sterling, which is the functional currency of the Group, 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 subsidiaries 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.
2. Significant accounting policies (continued)
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 Page & Moy Travel Group Air Holidays Ltd was revalued in October 2014.
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:
Freehold buildings 2% per annum straight line Cruise ships 5% - 100% per annum straight line Leasehold improvements Over lease period Office equipment 25% per annum straight line Computer equipment 33% per annum straight line Motor vehicles 25% per annum straight line
The carrying values of property, ships, plant and equipment are reviewed for impairment 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. Further details regarding the residual values of the cruise ships are provided in note 3.
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.
2. Significant accounting policies (continued)
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. Management must be committed to the sale which should be expected to qualify for recognition as a completed sale 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.
2. Significant accounting policies (continued)
Financial instruments (continued)
Financial assets
All financial assets are recognised and derecognised on a trade date where the purchase or sale of a financial asset is under a contract whose terms require delivery of the financial asset within the timeframe established by the market concerned, and are initially measured at fair value, plus transaction costs, except for those financial assets classified as at fair value through profit or loss, which are initially measured at fair value.
Financial assets are classified into the following specified categories: financial assets 'at fair value through profit or loss' (FVTPL), 'held-to-maturity' investments, 'available-for-sale' (AFS) financial assets and 'loans and receivables'. The classification depends on the nature and purpose of the financial assets and is determined at the time of initial recognition. Currently the Group does not have any financial assets that are classified as 'held to maturity' or 'available-for-sale'.
Loans and receivables
Trade receivables, loans, and other receivables that have fixed or determinable payments that are not quoted in an active market are classified as 'loans and receivables'. Loans and other receivables are measured 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 are classified as at FVTPL when the financial asset is either held for trading or is designated as at FVTPL. A financial asset is classified as held for trading if:
- It has been acquired principally for the purpose of selling in the near term; or
- On initial recognition it is part of a portfolio of identified financial instruments that the Group manages together and has a recent actual pattern of short-term profit-taking; or
- It is a derivative that is not designated and effective as a hedging instrument.
Financial assets at FVTPL are stated at fair value, with any gains or losses arising on re-measurement recognised in profit or loss., Financial assets at FVTPL can include the Group's fuel and foreign currency derivatives..
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 bank 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.
2. Significant accounting policies (continued)
Financial instruments (continued)
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 'other 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 financial liabilities that can be classified as FVTPL 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 gains or losses arising on re-measurement recognised in profit or loss. The net gain or loss recognised in profit or loss incorporates any interest paid on the financial liability.
De-recognition of financial liabilities
The Group derecognises financial liabilities when, and only when, the Group's obligations are discharged, cancelled or they expire.
Derivative financial instruments
The Group has chosen to measure all its fuel and currency derivatives at fair value through profit and loss (FVTPL), with the movement being disclosed on the face of the income statement.
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.
2. Significant accounting policies (continued)
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 obligation (legal or constructive) as a result of a past event, it is probable that an outflow of economic benefits will be required to settle the obligation and a reliable estimate can be made of the amount of 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.
When some or all of the economic benefits required to settle a provision are expected to be recovered from a third party, a receivable is recognised as an asset if it is virtually certain that reimbursement will be received and the amount of the receivable can be measured reliably.
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
2. Significant accounting policies (continued)
Taxation (continued)
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 nor 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
Equity-settled share-based payments to employees are measured at the fair value of the equity instruments at the grant date.
The fair value determined at the grant date of the equity-settled share-based payments is expensed on a straight-line basis over the vesting period, based on the Group's estimate of equity instruments that will eventually vest. At each balance sheet date, the Group revises its estimate of the number of equity instruments expected to vest as a result of the effect of non-market-based vesting conditions. The impact of the revision of the original estimates, if any, is recognised in profit or loss such that the cumulative expense reflects the revised estimate, with a corresponding adjustment to equity reserves.
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 and finance costs.
2. Significant accounting policies (continued)
Income statement presentation and separately disclosed items
Certain items are disclosed separately to enable a better understanding of the Group's results.. These include;
-- Asset impairment charges -- Profit/Loss on disposal of significant assets (e.g. vessels) -- Amortisation of business combination intangibles -- Other items that because of their size, nature or incidence merit separate disclosure. 3. Critical accounting judgements and key sources of estimation 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 that are not readily apparent from other sources. 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.
Residual value of cruise ships
The residual value of the Group's cruise ships is measured at scrap value, which is based on an estimate provided by independent specialists. 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.
Valuation of derivative financial instruments
The Group has derivative assets and liabilities on its balance sheet as at 31 October 2013 and 31 October 2014, which are carried at fair value as required by IAS 39, Financial instruments: Recognition and Measurement. The calculation of fair value involves judgements and is performed by independent experts.
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.
Revaluation of land and buildings
The Group's land and buildings are carried at a revalued amount. Valuations are undertaken by an independent firm of Chartered Surveyors.
3. Critical accounting judgements and key sources of estimates uncertainty (continued)
Impairment of assets
The Group has completed a detailed impairment review of certain assets as detailed below. Based on these reviews, the Group is satisfied that the assets are not impaired at the balance sheet date.
Swan Hellenic intangible assets
GBP'000
Carrying value at 31 October 2014 1,875
In determining the recoverable amount of the Swan Hellenic cash generating unit (CGU), the Group has used the following principal inputs:
Measure
Discount rate - pre tax 13.5%
Cash flow forecast period 5 years + terminal
value
Rate of increase of revenue rate per night beyond 3% (0% after
the budget period 5 years)
Rate of increase of costs beyond the budget period 3% (0% after
5 years)
Goodwill
GBP'000
Carrying value at 31 October 2014 9,517
Determining whether goodwill is impaired requires an estimation of the value in use of the CGU to which goodwill has been allocated.
In determining the recoverable amount, the Group has used the following principal inputs:
Measure
Discount rate - pre tax 13.5%
Cash flow forecast period 2 years + terminal
value
Growth rate 0%
Ship values
GBP'000
Carrying value at 31 October 2014 21,518
During the year the Group has undertaken an impairment review of mv Voyager, and has used the following principle inputs in determining the recoverable amount:
Measure
Discount rate - pre tax 13.5%
Cash flow forecast period 16 years
Rate of increase of annual profit beyond the budget
period 3%
Rate of increase of central overhead costs beyond
the budget period 2%
3. Critical accounting judgements and key sources of estimates uncertainty (continued)
Impairment of assets (continued)
In the prior year the Group undertook a detailed impairment review of mv Discovery following an independent valuation which indicated that the current market value of the ship was significantly lower than its carrying value.
Based on this review, the Group estimated that the fair value of the asset was GBP6,700,000 less than its carrying value, and this amount was therefore recognised as a charge to the income statement in 2013.
4. Revenue
An analysis of the Group's revenue is as follows:
2014 2013
GBP'000 GBP'000
Continuing operations
Sales of cruise holidays and ancillary services 67,567 65,824
Sales of escorted tours and ancillary services 71,345 76,319
138,912 142,143
Investment revenue 70 160
138,982 142,303
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.
5. Business and geographical segments
The Group has identified 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).
Reporting segment revenues and results
The following is an analysis of the Group's revenue and results by reportable segments in 2014.
Central salary costs and gains on derivative financial instruments have not been allocated to either of the Group's two reporting segments and are shown separately as Corporate items.
Cruising Tour Operating Corporate Consolidated
2014 2014 2014 2014
GBP'000 GBP'000 GBP'000 GBP'000
Revenue
External sales 67,567 71,345 - 138,912
Result
Underlying (loss)/profit from operations (1,627) 3,510 (987) 896
Separately disclosed items (7,224) (486) - (7,710)
Amortisation of business combination
intangibles - (497) - (497)
Operating (loss)/profit before
adjustment for derivative financial
instruments (8,851) 2,527 (987) (7,311)
Gains on derivative financial instruments - - 445 445
Operating loss (8,851) 2,527 (542) (6,866)
Investment revenues 70
Finance costs (429)
Loss before tax (7,225)
Tax charge (258)
Loss for the financial year (7,483)
5. Business and geographical segments (continued)
The following is an analysis of the Group's revenue and results by reportable segments in 2013:
Cruising Tour Operating Corporate Consolidated
2013 2013 2013 2013
GBP'000 GBP'000 GBP'000 GBP'000
Revenue
External sales 65,824 76,319 - 142,143
======= ======= ======== ========
Result
Underlying (loss)/profit from operations (1,944) 4,117 (1,420) 753
Separately disclosed items (8,556) (500) (332) (9,388)
Amortisation of business combination
intangibles - (497) - (497)
________ ________ ________ _________
Operating (loss)/profit before
adjustment for derivative financial
instruments (10,500) 3,120 (1,752) (9,132)
Losses on derivative financial
instruments - - (4,277) (4,277)
________ ________ _________ _________
Operating loss (10,500) 3,120 (6,029) (13,409)
Investment revenues 160
Finance costs (387)
Loss before tax (13,636)
Tax credit 226
Loss for the financial year (13,410)
Segment assets
2014 2013
GBP'000 GBP'000
Cruising 36,788 52,547
Tour operating 38,904 36,024
________ ________
Total segment assets 75,692 88,571
Unallocated assets 4,543 4,331
________ _________
Consolidated total assets 80,235 92,902
======== ========
The unallocated corporate assets primarily relate to Group properties.
5. Business and geographical segments (continued)
Other segment information
Depreciation and Additions to
amortisation non-current assets
2014 2013 2014 2013
GBP'000 GBP'000 GBP'000 GBP'000
Cruising 4,140 5,624 1,638 7,865
Tour operating 684 775 114 428
Unallocated 292 432 676 55
5,116 6,831 2,428 8,348
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:
Sales revenue Non-current assets
by
geographical market
2014 2013 2014 2013
GBP'000 GBP'000 GBP'000 GBP'000
UK 124,648 129,358 54,453 66,470
USA 4,790 5,428 - -
Rest of the world 9,474 7,357 - -
138,912 142,143 54,453 66,470
Revenues are attributed to individual countries on the basis of region of booking.
6. Separately disclosed items
2014 2013
GBP'000 GBP'000
Operating items - income/(expense)
Onerous lease provision 104 (139)
Restructuring costs (719) (1,655)
Impairment of ship - (6,700)
Loss on disposal of ship (7,095) -
Cruise cancellation costs - (563)
Software costs write off - (263)
Loss on disposal of property - (68)
Amortisation of business combination intangibles (497) (497)
_________ _________
Total operating items (8,207) (9,885)
Deferred tax on business combination intangibles 172 311
_________ __________
Total separately disclosed items (8,035) (9,574)
======== =========
In October 2014 the Group disposed of mv Discovery incurring a loss on disposal of GBP7,095k.
Restructuring costs of GBP719k (2013: GBP1,655k) have arisen during the year as a result of the ongoing integration of the cruise and tour operating businesses.
During the prior year the Group announced the closure of its offices in Southampton. An onerous lease provision of GBP139k was recognised in respect of the ongoing lease commitment for the Southampton premises. During the current year the Group entered into a contract to sub-lease this office and therefore the remaining balance on the onerous lease provision of GBP104k has been released back to the income statement.
Certain business combination intangible assets were recognised on acquisition of Page & Moy Travel Group Limited. The amortisation of these intangible assets is separately disclosed to enable a full understanding of the Group's results.
Items relating to prior year only
The Group undertook an impairment review in respect of mv Discovery (see note 3 for further details). This revealed a decline in the market value of the ship and an impairment charge of GBP6,700k was therefore recognised.
Costs of GBP563k were incurred due to the cancellation of certain cruises following major mechanical problems on-board mv Voyager.
Costs of GBP263k were written off in relation to expenditure on software prior to the integration of the businesses.
The Group disposed of Lynnem House, Burgess Hill and incurred a loss on disposal of GBP68k.
7. Operating loss
2014 2013
GBP'000 GBP'000
Operating loss has been arrived at after charging/(crediting):
Foreign exchange loss/(gain) 3,777 (1,802)
Depreciation of property, ships, plant and equipment 3,863 5,487
Amortisation of intangibles assets 1,253 1,344
Cost of inventories recognised as expense 13,184 13,777
Loss on disposal of ships 7,095 -
Loss on disposal of property - 68
Staff costs 10,501 12,126
Provision arising from a contractual arrangement
(note 6) (104) 139
Impairment of ship (note 6) - 6,700
Other separately disclosed items (note 6) 719 2,481
8. Tax charge/(credit)
a) Tax charge/(credit) on loss
2014 2013
GBP'000 GBP'000
Current tax
- Current year 17 7
- Adjustment with respect to prior
years - (5)
17 2
Deferred tax 241 (228)
Total tax charge/(credit) 258 (226)
Corporation tax is calculated at 21.8% (2013 - 23.4%) of the estimated taxable profit for the year.
8. Tax charge/(credit) (continued) (b) Factors affecting the tax (credit)/charge for the year
The tax assessed for the year differs from (2013- differs from) that resulting from applying the standard rate of corporation tax in the UK of 21.8% (2013 - 23.4%). The differences are explained below:
2014 2013
GBP'000 GBP'000
Loss before tax:
Continuing operations (7,225) (13,636)
Tax at the UK corporation tax rate of 21.8% (2013:
23.4%) (1,575) (3,191)
Adjustments from income taxed under the tonnage
tax regime 2,279 2,564
Expenses not allowable for tax purposes 18 1,195
Income not taxable (171) -
Brought forward losses utilised in year (369) (580)
Unutilised losses carried forward 8 137
Capital allowances in excess of depreciation (181) (162)
Other timing differences 8 44
Adjustment in respect of prior years - (5)
Deferred tax movement 241 (228)
Total tax charge/(credit) 258 (226)
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.
In addition to the amount charged to the income statement, the following amounts relating to tax have been recognised in other comprehensive income:
2014 2013
GBP'000 GBP'000
Deferred tax:
Items that will not be reclassified subsequently
to profit or loss:
Re-measurement of net defined benefit liability 98 (365)
________ ________
98 (365)
8. Tax charge/(credit) (continued)
(c) Factors affecting future tax charge
At the balance sheet date, the Finance Act 2013 had been substantively enacted confirming that the main UK corporation tax rate will be 20% from 1 April 2015. Therefore, at 31 October 2014, deferred tax assets and liabilities have been calculated based on a rate of 20%.
9. Dividends
No dividends were paid in the year. It was announced on 27 July 2012 that the Group is proposing not to pay dividends for the foreseeable future.
10. Earnings per share
2014 2013
Basic and diluted loss per share Pence Pence
Basic (12.1) (21.7)
Diluted (12.1) (21.7)
The calculation of the basic and diluted earnings per share is based on the following data:
Earnings GBP'000 GBP'000
Earnings for the purposes of basic and diluted
earnings per share being net loss attributable
to equity holders of the parent (7,483) (13,410)
Number of shares No. No.
Weighted average number of ordinary shares for
the purposes of basic and diluted earnings per
share 61,744,777 61,744,777
All results derive from continuing operations and accordingly total earnings per share and earnings per share from continuing operations are the same.
2014 2013
Underlying* basic and diluted profit/(loss) per
share Pence Pence
Basic 0.9 (6.2)
Diluted 0.9 (6.2)
* The underlying profit/loss is calculated as profit/loss before separately disclosed items (please see note 6 for further details).
11. Notes to the cash flow statement
2014 2013
GBP'000 GBP'000
Loss for the financial year (7,483) (13,410)
Adjustments for:
Investment revenues (70) (160)
Rental income (6) (8)
Finance costs 429 387
Other gains and losses 6,132 232
Income tax charge/(credit) 258 (226)
Depreciation and amortisation 5,116 6,831
Impairment losses - 6,700
Foreign exchange movements 3,777 (1,802)
Movement in fair value of derivatives (445) 4,277
(Decrease)/increase in provisions (293) 206
Adjustment for pension funding (440) (440)
_________ _________
Operating cash flows before movements in working
capital 6,975 2,587
Decrease/(increase) in inventories 910 (683)
Decrease in receivables 324 1,422
Decrease in payables (3,762) (6,630)
________ _________
Cash inflow/(outflow) generated from operations 4,447 (3,304)
Income taxes paid (5) (8)
Interest paid (365) -
_________ _________
Net cash inflow/(outflow) from operating activities 4,077 (3,312)
======== ========
12. 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:
Purchase of
services Amounts owed to
Years ended 31 related parties
October At 31 October
2014 2013 2014 2013
GBP GBP GBP GBP
Roger Allard Limited 184,317 179,061 52,865 53,851
PB Consultancy Services
Limited 12,950 38,413 2,508 1,623
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 GBP350,000 during the year ended 31 October 2014.
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 GBP3.3m. The consideration was funded with a GBP5.8m 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:
Loan Amount
Year ended 31 Interest accrued
October At 31 October
2014 2013 2014 2013
GBP GBP GBP GBP
R J Allard and interests 3,620,000 4,010,000 117,328 437,968
N J Jenkins 200,000 225,000 6,482 24,972
D A Wiles and interests 320,000 360,000 10,372 39,668
======= ======= ======= =======
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.
2014 2013
GBP'000 GBP'000
Short-term employee benefits 1,755 2,670
Post employment benefits 73 181
13. Prior year restatement
Costs totalling GBP3,307k have been reclassified from selling and administrative expenses to operating expenses in the prior year income statement following a review of the categorisation of all income and expenditure items.
14. Principal risks and uncertainties
The Directors continually identify, evaluate and manage material risks faced by the Group which could adversely affect the Group's business. The list below details the principal risks identified by the Directors and the action taken to mitigate these risks. This list is not intended to be exhaustive and other risks may emerge over time:
Area Description of risk Examples of mitigating activities
Economic
* The Group is competing for a share of disposable * The Group invests in brand awareness and pays
income of its target customers, making revenue significant attention to customer feedback in order
vulnerable to the impact of an economic downturn. to maximise brand loyalty.
* Volatility in markets such as currency and fuel can
undermine budgets. * The Group continues to maintain its currency and fuel
hedging policies as part of its financial planning.
Geopolitics
* The Group is at risk of geo-political events or * The Group plans its itineraries with care and offers
natural disasters affecting our business. a broad geographic spread of destinations within its
products. In the event of a major event, the Group
endeavours to respond quickly to the issue and
minimise its ongoing exposure.
Competition
* The Group operates in a highly competitive market * We undertake market research to ensure that our own
resulting in the threat of our competitors launching products continue to meet the needs of our customers
new products or adding products before we make and we plan new product development with care to
corresponding updates and developments to our own ensure that we have products that remain focused on
range. This could render our products out-of-date an our niche market.
d
could result in rapid loss of market share.
14. Principal risks and uncertainties (continued)
Area Description of risk Examples of mitigating activities
Regulation
* Changes to legislation (principally regarding the * The Group closely monitors regulatory developments
operation of cruise shipping) could result in the across the travel industry through its active
Group's vessels (mv Minerva, mv Hebridean Princess membership of industry bodies and the Directors'
and mv Voyager) becoming uneconomic or inoperable. significant contacts and experience in the travel
mv industry.
Hebridean Princess and mv Voyager are owned by the
Group and this could further impact the carrying
value of these significant assets. * The Group manages cash levels carefully in order to
meet any unexpected operational expenditure that may
arise.
* The Group must satisfy Civil Aviation Authority
("CAA") and Association of British Travel Agents
("ABTA") licensing conditions for airlines and * The Group continually reviews the operating assets to
package holidays. Failure to fulfil CAA and ABTA plan any replacements and the timing of replacement.
licensing conditions could result in substantial
fines and reputational damage and, in the
* The Group adheres to all safety regulations imposed
upon it and liaises closely with its regulators and
very worst case, an inability industry groups to ensure it is abreast of all
to trade due to loss of matters.
licence.
* The Group actively ensures regulations are adhered to
through the tracking of key licensing parameters on a
periodic basis throughout the course of the year and
as part of the annual budget process.
Operational
* The Group's ships carry a risk of operational failure * All ships operated by the Group are maintained
and/or causing environmental damage thus impacting according to the required maritime standards,
revenues and/or costs. including two dry dock inspections per ship in every
five year period for mv Minerva and mv Voyager and
annual dry dock inspections for mv Hebridean
* The Group outsources a significant element of its Princess.
cruise operations (namely hotel services and deck and
engine maintenance) to third parties. Any damage to
these relationships could have a detrimental impact * The Executive Directors meet regularly with the
on our business. Group's key suppliers in order to maintain good
working relationships.
* The tour operating division of the business is
reliant on the delivery of acceptable standards of
service by overseas suppliers. A failure by these * Service level agreements are entered into with
hoteliers, coach companies and other ancillary suppliers and overseas inspection visits are
service providers to maintain expected high standards undertaken. These inspection visits include quality
of quality could result in business disruption, control and health and safety assessments. The Group
reputational damage and loss of profits through also conducts thorough post-departure customer
customer compensation claims. satisfaction reviews, the results of which are
considered on a supplier by supplier basis during the
following year's supplier contracting process.
* The Group is dependent on information technology
systems, the failure of which would impact its
ability to process sales.
* Investment in technology ensures that system
reliability is optimised and procedures are in place
to minimise the time that any selling system is
inoperable.
14. Principal risks and uncertainties (continued)
Financial
* A significant proportion of the Group's cost base is * Key performance indicators are closely monitored to
fixed and therefore a substantial reduction in ensure that yields are optimised.
revenue would impact profitability.
* The Group has significant dollar and euro denominated * The Group holds significant multicurrency cash
operating costs that are matched with significant balances on deposit and uses a variety of currency
sterling denominated revenues. derivatives to manage actively the Group's foreign
exchange exposure.
This information is provided by RNS
The company news service from the London Stock Exchange
END
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