All Leisure Group PLC
At a first (quick) glance of the All Leisure Group website and being completely honest, I couldn’t quite understand how the company structure worked. I could see that the All Leisure Group was a company which provided travel services to a target group of people aged over 55 years, however this service was not provided directly by All Leisure Group, but by a subsidiary company which has six brands under it.
Having never studied business or accounting before, this is all a bit new and exciting to me, therefore I am also new to the different ways in which a business can be structured.
It wasn’t until I started looking into the History of the company and “googling” some of the terms used that I started to gain some insight into the understanding of how my company is structured and the benefits of this.
All Leisure Group is a Holding company for All Leisure Holidays which as I have stated in the welcome message owns the tour operators for six brands.
A holding company (being one of the terms I googled) is:
“A holding company is a parent corporation, limited liability company or limited partnership that owns enough voting stock in another company to control its policies and management. A holding company exists for the sole purpose of controlling another company, which might also be a corporation, limited partnership or limited liability company, rather than for the purpose of producing its own goods or services.” http://www.investopedia.com/terms/h/holdingcompany.asp
After doing a little reading about how a holding company structure works, I have noted that some of the benefits of structuring a company in this way is that the holding company itself is protected from the losses. Therefore if one of the subsidies was to go bankrupt then the holding company experiences a capital loss and decline in net worth, but the bankrupt company’s debtors and creditors can’t chase the holding company for remuneration.
Another note I have made is that structuring a company this way can also limit tax liability by strategically basing certain parts of the business in jurisdictions with lower tax rates.
Review of the Annual Report and Financial Accounts
My company’s currency is £
Reviewing the annual report and financial statements I have noted that 2013 (latest annual report and financial statements) appeared not to be such a great year for All Leisure Group.
Whilst the operating profit of the Group before separately disclosed items was £800,000, overall the group delivered a loss before tax for the financial year of £13.600,000. Quite a change from the 2012 financial statements that show a profit before tax of £800,000 for the year ended.
The immediate questions that occur to me from this summarised information are what has occurred in 2013 that differs from 2012 and how can I find this information through the annual report and financial statements.
After doing some digging into the annual report for 2013 I can see in the results section of the Chairman’s statement and again in the financial performance section of the report it refers to a number of separately disclosed items and material one off charges that have contributed to the results of the company’s financial outcome for the year.
I located these separately disclosed items and material one off charges in section 7 of the financial statements and these include such items as restructuring the group, Impairment of ship, impairment of property, Cruise cancellations, and loss on disposal of property.
By looking at the separately disclosed items and material one off charges, I can see that these total to £9,574,000 which if taken away from the total loss for the financial year puts the total loss at £3,836,000. This is quite a big proportion of the total loss which has had a big effect on the company’s financial results for 2013.
A question that has occurred to me with regards to the company’s financial loss for the year is that with the acquisition of Page and Moy Travel Group (yet another subsidy for the holding company) how have they still resulted in a loss of £13,600,000?
Were there a lot of other associated costs after the initial acquisition of the company and are these displayed in another way within the financial statements?
Strategy Statement
Despite the latest results in the financial statements the Group’s strategy continues to be one of achieving growth through the provision of an increasing choice of niche holiday products into the UK for the over 55’s market. Following the acquisition of Page and Moy Travel Group on 15 May 2012 the cruise and tour operating businesses feel they have been successfully delivering a significant improvement in operating efficiency of the Group. The Strategy statement also states that significant improvements in underlying performance through improved yield and reduced costs have been delivered. At the same time, the Board is also committed to reducing the levels of committed risk within the Group.
It is also written that during the year the Group has established a new management team to run the business and although they are aware of the challenges ahead presented by the current economic climate and the geo political events, the directors have confidence in the future for the enlarged business.
The Chairman (R J Allard) has stated that the acquisition of the Page & Moy travel group has provided significant cross selling opportunities to the respective customer bases, and the successful integration of this business into the group will enable the company to create a much stronger business capable of delivering sustained growth.
In conclusion, what I can see from the All Leisure Group’s annual report and financial statements on a brief scale is that they have had a number of one off costs which made up a lot of their overall loss for the year. However whilst the company have determined that they have adequate resources to continue operating into the next year, they are aware that the company have a lot of challenges ahead.
A General Observation
An observation that I have made from reviewing my companies accounts and a few of other students company accounts is mainly around the design and the way in which the report is presented. I feel as if the beginning of the report which generally includes a statement from the chairman (or equivalent) is almost worded to make you feel as though the business is doing really well, regardless of the actual results.
Particularly in my company’s (All Leisure Group) annual report, whilst reading the Chairman’s statement I honestly became confused as to whether the company had resulted in a positive year or a negative year. (This is at a first impression of the company’s annual report)After looking into the actual statements I could see that this was not the case and that the company had actually had quite a substantial loss for 2013.
Some Further Questions
I would be interested to do a little more digging around what are some of the challenges ahead presented by the "current economic climate and the geo political events", as stated in the annual report? More specifically how are the challenges having impact on different areas of the company?
I would be interested to read more into what the how the board are going to approach the new year, with the new management team in place and their statement in the report saying "the directors have confidence in the future for the enlarged business". It is one thing to say that they have full confidence, however a plan provided in their annual report may give some confirmation that they do have a path in place to approach the challenges ahead.
