TIDMMIN
RNS Number : 1906B
Minoan Group PLC
31 March 2017
31 March 2017
Preliminary Results Announcement
Minoan Group Plc (or "the Group") announces its preliminary
results for the year ended 31 October 2016
Highlights
-- Greek Media has reported the dismissal of the appeals against
the Presidential Decree which, if confirmed, will be a
transformational event for the Group.
-- Discussions continue with various potential partners
including, inter alia, Hotel Operators, Joint Venture Partners,
Financiers and Investors to consider the best route for the project
to deliver maximum value for shareholders.
-- Total Group transaction value up by over 11% to GBP67,820,000 from GBP60,964,000
-- Group gross profits increased by 8% to GBP7,044,000 from GBP6,493,000
-- The Travel and Leisure delivered EBITDA in excess of
GBP700,000 despite the negative impact of Brexit. This has been
followed up by a strong start to the current year (commission
earned up 16%)
-- Group is well positioned to capitalise on the
transformational event of securing the Presidential Decree in
Greece, when it is confirmed.
Minoan Chairman, Christopher Egleton commented:
"On the assumption that the reports in the Greek media are
correct, the next twelve months are likely to be the most value
enhancing in the Group's history."
Minoan Group Plc's Preliminary Results Announcement for the year
ended 31 October 2016 can be viewed on the Company's website,
www.minoangroup.com, with effect from 31 March 2017.
For further information please visit www.minoangroup.com or
contact:
Minoan Group Plc
Christopher Egleton christopher.egleton@minoangroup.com
Duncan Wilson 0141 226 2930
Bill Cole 020 8253 4305
WH Ireland Limited 020 7220 1666
Adrian Hadden/Nick Prowting
Throgmorton Street Capital 020 7071 0808
Forbes Cutler
Morgan Rossiter 020 3195 3240
Richard Morgan Evans/James
Rossiter
The information contained within this announcement is deemed to
constitute inside information as stipulated under the Market Abuse
Regulation (EU) No. 596/2014. Upon the publication of this
announcement, this inside information is now considered to be in
the public domain.
Chairman's Statement
Introduction
The status of the Itanos Gaia project in Crete (the "Project")
and of the Appeals against the issue of the Presidential Decree
("PD") and the positive outlook for the future will be the focus of
my Statement.
The dismissal of the Appeals against the PD would be
transformational for the Group and the status of our Travel and
Leisure business ("T&L") is equally encouraging albeit on a
less significant scale.
Once again T&L reports strong year on year growth of 11% in
total transaction value. This was achieved despite the Brexit
referendum which caused an immediate and significant short term
drop in business, exacerbated by a 50% drop in Turkish travel
following terrorist activity.
Greece
In the Group's Interim Results Announcement in July last year, I
reported that Appeals against the issue of the PD had been lodged
and that we awaited a Court Hearing at which we anticipated a
decision to dismiss the appeals and confirm the granting of the
equivalent of outline planning permission for the Project.
On 24 March 2017 we announced on AIM that we noted Greek media
reports stating that the Appeals had indeed been rejected by the
Greek Supreme Court (the "Court"). The timing of this Chairman's
Statement is such that an official announcement has not yet been
made by the Court and, therefore, it is difficult to expand more on
the Greek media reports other than, once again, to note them.
Your Board has remained confident in the Greek justice system
throughout the long process of seeking the appropriate planning
consent for the Project and, of course, the turn of events noted
above gives every reason for this confidence to be sustained. The
Greek Supreme Court, like most others, does not work to a published
timetable and whilst it is possible that a decision is published in
a few weeks, shareholders should not be concerned if it takes
longer.
The confirmation of the Appeals being dismissed will, of itself,
be a transformational event on many levels for the Group. It will
necessitate considerable effort in a relatively short timeframe in
order to pursue more vigorously various ongoing discussions and
negotiations with potential partners and others in readiness for,
and to continue after, the official notification from the
Court.
It should be noted however, that joint ventures and other
complex real estate transactions are not, by their nature, quick or
easy to bring to a conclusion. In our case, the fact that the
Project is in a country where there is economic uncertainty will
also have an impact. Nevertheless, your Board is confident in its
ability to achieve a satisfactory solution for all
shareholders.
I will report in due course when notification is received from
the Court.
Travel and Leisure
T&L has again reported a solid set of financial results that
reflect a continued growth in revenue and gross profit despite the
Brexit impact. This growth has funded a continued investment in
operating costs in order to take the business into the next phase
of organic growth.
Chairman's Statement (continued)
Travel and Leisure (continued)
Total transaction value has increased in the period under review
by 11% from GBP61m to GBP68m and gross profit shows a year on year
increase of GBP551,000 (8%) to GBP7,044,000 (2015: GBP6,493,000).
The investment in operating costs referred to above has increased
the overhead cost to GBP6,772,000 (2015: GBP6,106). EBITDA
increased to GBP715,000 (2015: GBP698,000) whilst the effect of an
increase in depreciation charge sees operating profit decrease to
GBP272,000 (2015: GBP387,000).
Having made the investment to secure continued growth the bounce
back from the Brexit dip has continued and I regard it as
encouraging that gross profit in the current year is running at a
year on year growth rate of 16% and I expect a significantly better
result in the current year.
Financial Review
The growth in revenue and gross profit is attributable to
T&L as set out above.
In respect of Operating Expenses, a year on year increase in
costs associated with the Project and in Corporate Development,
together with the investment in the T&L cost base noted above,
has resulted in an increase of GBP247,000 in the current year's
operating loss to GBP788,000 (2015: GBP541,000). The cost increase
and consequent decrease in operating profit is in line with the
Group's plan and is, in the main, a function of investing for
growth in T&L.
An increase in finance costs of GBP462,000 (which includes an
increase in the warrants charge of GBP282,000) sees the reported
net loss move to GBP2,272,000 (2015: GBP1,620,000).
In respect of the balance sheet, and as noted above subject to
receipt of formal notifications from the Greek Supreme Court, we
will be working hard on crystallisation of the value of the Project
(which I have previously reported to shareholders has been valued
at "around EUR100m"). The value of the Project in the Consolidated
Balance Sheet is GBP43m. We reported to shareholders in October
2016 the extension of the Loan Facility with Hillside International
Holdings Limited to 30 June 2017. Settlement of this loan will form
part of our considerations in securing shareholder value for the
Project.
Outlook
In respect of the Project, we await confirmation and the
publication of the decision from the Greek Supreme Court. Once
confirmation is received, the Group will be in a good position to
negotiate maximum value from partners and developers and, jointly,
plan the next steps.
In respect of T&L, I have noted above that the levels of
organic growth remain healthy. However, in order to achieve major
stepped growth in this division through acquisition, the Board will
continue to work with advisors in considering the possibility of a
separation of T&L from the rest of the Group as well as other
solutions.
Chairman's Statement (continued)
Conclusion
It is difficult to fully express my own and the Board's
gratitude for the patience of our shareholders, and the whole
team's efforts in bringing the Project to this stage. The delays
suffered in Greece have also adversely affected the growth of
T&L where, for the past few years we have not been able to
acquire a number of businesses, for fear of creating unnecessary
dilution in the value per share expected from the Project.
On the presumption that the dismissal of the Appeals is
confirmed in the not too distant future I believe that 2017 will
bring much better news for shareholders.
The next year is destined to be the most value enhancing in the
Group's history and I look forward to making further announcements
in the future.
Christopher W Egleton
Chairman
31 March 2017
Consolidated Statement of Comprehensive Income
Year ended 31 October 2016
2016 2015
GBP'000 GBP'000
--------------------------- ---------------------------
Total transaction value 67,820 60,964
--------------------------- ---------------------------
Revenue 7,317 6,816
Cost of sales (273) (323)
--------------------------- ---------------------------
Gross profit 7,044 6,493
Operating expenses (7,261) (6,523)
Other operating expenses:
Corporate development
costs (595) (511)
Credit/(charge) in respect
of share-based payments 24 (57)
--------------------------- ---------------------------
Operating loss (788) (598)
Finance costs (1,484) (1,022)
Loss before taxation (2,272) (1,620)
Taxation - -
--------------------------- ---------------------------
Loss after taxation (2,272) (1,620)
Loss for year attributable
to equity holders of the
Company (2,272) (1,620)
--------------------------- ---------------------------
Loss per share attributable
to equity holders of
the Company: Basic and
diluted (1.19)p (0.89)p
--------------------------- ---------------------------
Consolidated Statement of Changes in Equity
Year ended 31 October 2016
Year ended 31 October 2016
Share Share Merger Warrant Retained Total
capital premium reserve Reserve earnings equity
GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000
----------------------- -------- -------- -------- -------- ------------- ----------
Balance at 1 November
2015 14,975 31,435 9,349 1,904 (13,831) 43,832
Loss for the year - - - - (2,272) (2,272)
Issue of ordinary
shares at a premium 144 1,150 - - - 1,294
Share based payments (24) (24)
Extension of warrant
expiry date - - - 215 - 215
Balance at 31 October
2016 15,119 32,585 9,349 2,119 (16,127) 43,045
----------------------- -------- -------- -------- -------- ------------- ----------
Year ended 31 October 2015
Share Share Merger Warrant Retained Total
capital premium reserve Reserve earnings equity
GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000
---------------------- -------- -------- -------- -------- --------- ---------
Balance at 1 November
2014 14,843 30,261 9,349 313 (12,268) 42,498
Loss for the year - - - - (1,620) (1,620)
Issue of ordinary
shares at a premium 132 1,174 - - - 1,306
Share based payments - - - 1,591 57 1,648
Balance at 31 October
2015 14,975 31,435 9,349 1,904 (13,831) 43,832
---------------------- -------- -------- -------- -------- --------- ---------
Consolidated Balance Sheet as at 31 October 2016
2016 2015
GBP'000 GBP'000
-------- --------
Assets
Non-current assets
Intangible assets 9,771 9,835
Property, plant and equipment 728 711
Total non-current assets 10,499 10,546
-------- --------
Current assets
Inventories 42,562 41,266
Receivables 2,610 2,171
Cash and cash equivalents 104 145
-------- --------
Total current assets 45,276 43,582
-------- --------
Total assets 55,775 54,128
-------- --------
Equity
Share capital 15,119 14,975
Share premium account 32,585 31,435
Merger reserve account 9,349 9,349
Warrant reserve 2,119 1,904
Retained earnings (16,127) (13,831)
-------- --------
Total equity 43,045 43,832
-------- --------
Liabilities
Current liabilities 12,730 10,296
Total liabilities 12,730 10,296
-------- --------
Total equity and liabilities 55,775 54,128
-------- --------
Consolidated Cash Flow Statement
Year ended 31 October 2016
2016 2015
GBP'000 GBP'000
--------------------------- ---------------------------
Cash flows from operating
activities
Net cash inflow/(outflow)
from continuing operations 458 (348)
Finance costs (255) (394)
Net cash generated from/(used)
in operating activities 203 (742)
--------------------------- ---------------------------
Cash flows from investing
activities
Purchase of property,
plant and equipment (103) (116)
Purchase of intangible
assets:
Goodwill - deferred
consideration (130) -
IT project (140) (62)
Net cash used in investing
activities (373) (745)
--------------------------- ---------------------------
Cash flows from financing
activities
Net proceeds from the
issue of ordinary shares - 70
Loans received 129 1,435
Net cash generated from
financing activities 129 1,505
--------------------------- ---------------------------
Net (decrease)/increase
in cash (41) 18
--------------------------- ---------------------------
Cash at beginning of
year 145 127
--------------------------- ---------------------------
Cash at end of year 104 145
--------------------------- ---------------------------
Note to the Consolidated Cash Flow Statement
Year ended 31 October 2016
Cash flows from operating activities
2016 2015
GBP'000 GBP'000
-------- -------------
Loss before taxation (2,272) (1,620)
Finance costs 1,484 1,022
Depreciation 122 103
Amortisation 334 208
Exchange (gain)/loss relevant to
property, plant and equipment (36) 19
Increase in inventories (1,296) (1,224)
Share-based payments (24) 57
Increase in receivables (439) (579)
Increase/(decrease) in current
liabilities 1,291 430
Non cash movement in equity 1,294 1,236
Net cash inflow/(outflow) from
continuing operations 458 (348)
-------- -------------
Notes to the preliminary results
Year ended 31 October 2016
1. General information
The financial information set out in this announcement does not
constitute statutory financial statements for the year ended 31
October 2016 or 31 October 2015. The report of the auditor on the
statutory financial statements for the year ended 31 October 2016
and 31 October 2015 was not qualified.
The report of the auditor on the statutory financial statements
for each of the years ended 31 October 2016 and 31 October 2015 did
not contain statements under section 498(2) or (3) of the Companies
Act 2006. The statutory financial statements for the year ended 31
October 2015 have been delivered to the Registrar of Companies. The
financial statements for the year ended 31 October 2016 will be
delivered to the Registrar of Companies following the Company's
Annual General Meeting.
The Company is a public limited company incorporated in England
and Wales and quoted on AIM. The Company's principal activity in
the year under review was that of a holding and management company
of a Group involved in the design, creation, development and
management of environmentally friendly luxury hotels and resorts
and in the operation of independent travel businesses, through
which the Group provides a broad range of services including, inter
alia, transportation, hotel and other accommodation and leisure
services.
2. Accounting policies
Basis of preparation
While the financial information included in this preliminary
announcement has been prepared in accordance with the EU adopted
International Financial Reporting Standards (IFRS), this
announcement does not itself contain sufficient information to
comply with IFRS. The Company expects to publish full financial
statements for the year ended 31 October 2016 that comply with IFRS
in April 2017.
Going concern
The directors have considered the financial and commercial
position of the Group in relation to its project in Crete (the
"Project") and also in respect of its travel and leisure business.
In particular, the directors have reviewed the matters referred to
below.
Following the unanimous approval of a Plenum of the Greek
Council of State, the highest court in Greece, the Presidential
Decree granting land use approval for the Project was issued on 11
March 2016 and was published in the Government Gazette. The
planning rules for the Project are now enshrined in law. Reports in
the Greek media have stated that the appeals lodged against the
Presidential Decree have been rejected by the Greek Supreme
Court.
Accordingly, the directors consider it relevant that having
completed financial joint venture agreements prior to the above,
and any other consents, they will conclude further Project joint
venture agreements in the near term. In addition, the directors are
considering other options which would have a major beneficial
impact on the Group's resources.
Notes to the preliminary results (continued)
Year ended 31 October 2016
2. Accounting policies (continued)
Going concern (continued)
In addition to specific Project related matters as noted above,
and as has been the case in the past, the Group continues to need
to raise capital in order to meet its existing finance and working
capital requirements. While the directors consider that any
necessary funds will be raised as required, the ability of the
Company to raise these funds is, by its nature, uncertain.
With a number of acquisitions in the planned expansion of its
Travel and Leisure business having been completed over a period of
time, the Group continues to generate profits and cash flow within
this sector of its activities.
Having taken these matters into account, the directors consider
that the going concern basis of preparation of the financial
statements is appropriate.
3. Segmental information
The Group strategy and growth objectives necessitate the
building of an associated infrastructure. The Group considers it
appropriate to identify separately the corporate development
division together with costs related to acquisitions. Accordingly,
the Group is organised into three divisions both by business
segment and geographical location:
-- the luxury resorts division, currently being the development
of a luxury resort in Crete, which includes the central
administration costs of the Group;
-- the Travel and Leisure division (UK), being the operation and
management of the travel businesses; and
-- the corporate development division (UK) as described above.
Notes to the preliminary results (continued)
Year ended 31 October 2016
3. Segmental information (continued)
2016
Luxury Travel Corporate
Resorts and Leisure Development Total
GBP'000 GBP'000 GBP'000 GBP'000
Total transaction
value - 67,820 - 67,820
--------- ------------- ------------- --------------
Revenue - 7,317 - 7,317
Cost of sales - (273) - (273)
--------- ------------- ------------- --------------
Gross profit - 7,044 - 7,044
Operating expenses (489) (6,772) (595) (7,856)
--------- ------------- ------------- --------------
(489) 172 (595) (812)
Credit in respect
of share-based payments 24 - - 24
--------- ------------- ------------- --------------
Operating (loss)/profit (465) 272 (595) (788)
Contribution to central
costs 100 (100) - -
Finance costs (1,341) (143) - (1,484)
--------- ------------- ------------- --------------
(Loss)/profit before
taxation (1,706) 29 (595) (2,272)
Taxation - - - -
--------- ------------- ------------- --------------
(Loss)/profit after
taxation (1,706) 29 (595) (2,272)
Operating expenses
include:
Depreciation and amortisation 13 443 - 456
Operating leases -
plant and equipment - 83 - 83
--------- ------------- ------------- --------------
Assets/liabilities
Goodwill 6,127 2,641 - 8,768
Other non-current
assets 157 1,574 - 1,731
Current assets 43,491 1,785 - 45,276
--------- ------------- ------------- --------------
Total assets 49,775 6,000 - 55,775
--------- ------------- ------------- --------------
Total and current
liabilities 10,561 2,169 - 12,730
--------- ------------- ------------- --------------
Notes to the preliminary results (continued)
Year ended 31 October 2016
3. Segmental information (continued)
2015
Luxury Travel Corporate
Resorts and Leisure Development Total
GBP'000 GBP'000 GBP'000 GBP'000
Total transaction
value - 60,964 - 60,964
--------- ------------- ------------- --------
Revenue - 6,816 - 6,816
Cost of sales - (323) - (323)
--------- ------------- ------------- --------
Gross profit - 6,493 - 6,493
Operating expenses (417) (6,106) (511) (7,034)
--------- ------------- ------------- --------
(417) 387 (511) (541)
Charge in respect
of share-based payments (57) - - (57)
--------- ------------- ------------- --------
Operating (loss)/profit (474) 387 (511) (598)
Contribution to central
costs 100 (100) - -
Finance costs (968) (54) - (1,022)
--------- ------------- ------------- --------
(Loss)/profit before
taxation (1,342) 233 (511) (1,620)
Taxation - - - -
--------- ------------- ------------- --------
(Loss)/profit after
taxation (1,342) 233 (511) (1,620)
Operating expenses
include:
Depreciation and amortisation - 311 - 311
Operating leases -
plant and equipment - 59 - 59
--------- ------------- ------------- --------
Assets/liabilities
Goodwill 6,127 2,511 - 8,638
Other non-current
assets 134 1,774 - 1,908
Current assets 42,082 1,500 - 43,582
--------- ------------- ------------- --------
Total assets 48,343 5,785 - 54,128
--------- ------------- ------------- --------
Total and current
liabilities 7,181 3,115 - 10,296
--------- ------------- ------------- --------
4. Goodwill
Goodwill arising on acquisitions represents the difference
between the fair value of the net assets acquired and the
consideration paid and is recognised as an asset.
Goodwill arising on acquisition is allocated to cash-generating
units. The recoverable amount of the cash-generating unit to which
goodwill has been allocated is tested for impairment annually, or
on such other occasions that events or changes in circumstances
indicate that it might be impaired. Any impairment is recognised
immediately as an expense and is not subsequently reversed.
The Group conducts an annual impairment test on the carrying
value of goodwill based on the recoverable amount of two cash
generating units: the Project and the Travel and Leisure
business.
The Project is assessed using fair value less costs to sell. The
directors have assessed the recoverable amount of the Project as
being greater than the combined carrying value of the goodwill and
inventories of GBP48,689,000 at 31 October 2016 on the basis of
valuations previously carried out and the positive progress made in
the period since.
Notes to the preliminary results (continued)
Year ended 31 October 2016
4. Goodwill (continued)
The goodwill allocated to the Travel and Leisure business is
GBP2,641,000. The recoverable amount of the Travel and Leisure
business has been assessed using a value in use model. The net
present value of projected cash flows is compared with the carrying
value of the CGU's assets and goodwill. Cash flow forecasts are
based upon management approved budgets for a period of one year and
a revenue growth rate of 5% for a further four years, this being
consistent with recent historical performance. Thereafter growth
rates are reduced to zero. Cash flows are discounted using a
pre-tax discount rate of 11%.
5. Property, plant and equipment
Property, plant and equipment is stated at historical cost less
accumulated depreciation and any recognised impairment loss.
Depreciation is provided in order to write off the cost of each
asset, less its estimated residual value, over its estimated useful
life on a straight line basis as follows:
Freehold land: capital cost not depreciated
Leasehold improvements: over the term of the
lease
Plant and equipment: 3 to 5 years
Fixtures and fittings: 3 years
Motor vehicles: 3 to 5 years
Where the carrying amount of an asset is greater than its
estimated recoverable amount, it is written down immediately to its
recoverable amount.
6. Revenue
As the Group acts as an agent between the service provider and
the end customer, revenue is presented on a net basis as the
difference between the sales to the customer and the cost of
services purchased and not the total transaction value. When acting
as an agent, revenue is recognised when it is notified by the
principal as having been earned and due for payment.
Where the Group provides management or consultancy services, the
value of such services is included in revenue and is recognised in
the period in which these services are provided.
7. Share-based payments
The Group has a Long Term Incentive Plan ("LTIP") in which any
director or employee selected by the remuneration committee may
participate. Awards under the LTIP have been granted on the basis
that certain performance conditions will be met.
The Company has also granted options and warrants to purchase
Ordinary Shares of 1p each. The fair values of the LTIP awards,
options and warrants are calculated using the Black-Scholes and
Monte Carlo fair value pricing models as appropriate at the grant
date. The fair value of LTIP awards and options are charged to
profit or loss over their vesting periods, with a corresponding
entry recognised in equity. This charge does not involve any cash
payment by the Group.
Notes to the preliminary results (continued)
Year ended 31 October 2016
7. Share-based payments (continued)
GBP'000
----------------------------
Year ended 31 October
2016
Share-based payments
- directors (24)
(24)
Year ended 31 October
2015
Share-based payments
- directors 57
----------------------------
57
----------------------------
8. Loss per share attributable to equity holders of the
Company
Earnings per share are calculated by dividing the earnings
attributable to the equity holders of a company by the weighted
average number of ordinary shares in issue during the year. Diluted
earnings per share are calculated by adjusting basic earnings per
share to assume the conversion of all potential dilutive ordinary
shares. As the Group is loss making, there are no dilutive
instruments in issue, and therefore the basic loss per share and
diluted loss per share are the same. The weighted average number of
shares used in calculating basic and diluted loss per share for the
year ended 31 October 2016 was 190,972,389 (31 October 2015:
182,214,717). See note 9 for potentially dilutive share options
issued after the balance sheet date.
9. Events after the balance sheet date
1. On 22 December 2016 the Company announced the issue of
2,700,000 Ordinary Shares of 1p each at 8p
per share to settle certain existing liabilities.
2. Also on 22 December 2016 the Company announced that the
expiry dates of certain Options granted to
certain directors and executives be extended from 31 December
2016 to 31 December 2017 (see note 17).
3. On 10 January 2017 the Company announced that, in order to
satisfy certain existing commitments, it has
granted Options to subscribe for 6,000,000 Ordinary Shares of 1p
each at 10p per share. The Options to
expire on 9 July 2018.
4. On 11 January 2017 the Company announced that, as part of his employment arrangements, it has
issued an Option to subscribe for 1,000,000 Ordinary Shares of
1p each at 8p per share to Brian
Cassidy, a Person Discharging Managerial Responsibilities. The
Option to expire on 9 January 2020.
5. On 24 March 2017 the Company announced that it has noted
reports in the Greek Media stating that the
appeals against the Presidential Decree granting land use
approval for its Project in Crete have been
rejected by the Greek Supreme Court.
This information is provided by RNS
The company news service from the London Stock Exchange
END
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