TIDMMIN
RNS Number : 4030V
Minoan Group PLC
08 April 2019
Preliminary Results Announcement
Minoan Group Plc (or "the Group") announces its Preliminary
Results for the year ended 31 October 2018
Highlights
-- Travel & Leisure division sold during the year partly in
order to pay-down group debt. The division has been treated as a
non-current asset held for sale in the Financial Statements.
-- The Group made a loss after taxation of GBP3,022,000 (2017: GBP2,516,000)
-- Loans classified as current liabilities decreased to GBP1,443,000 from GBP6,118,000.
-- Total equity at 31 October of GBP40,596,000 (2017: GBP42,289,000).
-- The Group has appointed a team of internationally recognised
planners, architects and designers, which includes the Chicago
Consultants Studio Inc., renowned experts in master planning,
Vassily Laffineur an Associate at the award winning Renzi Piano
Building Workshop and leading designers Desani. The Group has
recently received an approach and is in discussions to create a
joint venture on one of the five hotel and villa sites.
Minoan Chairman, Christopher Egleton commented:
"From the Company's perspective, 2018 was notable for the sale
of Stewart Travel Limited and a marked reduction in Group
indebtedness. There is now clear evidence of price increases in the
Greek property market and increased activity and confidence. We are
hopeful that 2019 will finally witness the commencement of the
realisation of the value of our Crete project."
Minoan Group Plc's Preliminary Results Announcement for the year
ended 31 October 2018 can be viewed on the Company's website,
www.minoangroup.com, with effect from 8 April 2018.
For further information please visit www.minoangroup.com or
contact:
Minoan Group Plc
Christopher Egleton christopher.egleton@minoangroup.com
Bill Cole william.cole@minoangroup.com
WH Ireland Limited 020 7220 1666
Adrian Hadden/Chris Viggor
Cornhill Capital Limited 020 7710 9610
Daniel Gee
Sapience Communications Limited 020 3195 3240
Richard Morgan Evans
Chairman's Statement
Introduction
As shareholders will be aware from the Company's announcements
in March, September and October 2018, the year under review was
marked by the decision to dispose of its Travel and Leisure
division ("Stewart Travel") and the completion of the sale during
the year. The sale was completed after some costly delays as a
result of aborted negotiations with two private equity
counterparties. Stewart Travel was sold to Zachary Asset Holdings
Ltd (a company associated with Hillside, the Group's principal
lender) on 9 October 2018, just prior to our year-end, for the sum
of GBP6,564,520 plus the repayment of inter-company debt of
GBP781,749. The overall effect of the transaction was to reduce our
indebtedness to Hillside to GBP942,000 at 31 October 2018.
The delays in the sale meant that more management time was
devoted to it but following its completion, and the concomitant
reduction in debt, the Board's focus is on the realisation of the
value inherent in the Group's project in Crete as well as on those
matters outlined in my previous Statements and Updates including,
inter alia, reducing the Group's cost base.
Financial Review
The sale of Stewart Travel during the year to 31 October 2018
means that the results themselves are not strictly comparable to
those of the previous year. Nevertheless it is worth noting that
Consolidated Statement of Profit and Loss and Other Comprehensive
Income showed a loss for the year of GBP3,022,000 (2017:
GBP2,516,000). The loss primarily reflects the net loss on the sale
of Stewart Travel in the amount of GBP1,617,000, which itself arose
largely as a result of increases in finance and other costs
attributable to the Hillside Loan and the delayed sale. Also worthy
of note is that corporate development costs fell in the period to
GBP92,000 (2017: GBP504,000). The Consolidated Statement of
Financial Position shows that the Group had total equity at 31
October of GBP40,596,000 (2017: GBP42,289,000).
Post balance sheet financing
Following the sale of Stewart Travel, the Group has no current
sources of operating revenue with which to meet its working capital
requirements. Accordingly, it has continued to be reliant on equity
and debt fundraisings in order to meet its corporate overheads and
associated expenses whilst implementing the declared strategy of
monetising the Group's project through the use of Joint Ventures
and Partnerships where appropriate.
The Group successfully raised GBP525,000 in December 2018 by the
issue of 21m new shares and also announced a reduction of
liabilities of GBP408,000 by the issue of 14.8m new shares in
January 2019.
The Group's current cash resources are low and it is managing
its working capital position carefully in order to meet it
short-term liabilities. Accordingly the Group is in advanced
discussions with funding partners to provide additional financing
and expects to make a further announcement very shortly.
Greece
The Greek Property Market
I said in my Statement of a year ago that the Greek property
market was showing clear signs of improvement and this has been
borne out by the evidence from the rest of the year. According to
the Bank of Greece, overall Greek residential property values fell
by 43% from 2008 to 2017. The year 2018 finally witnessed a clear
reversal in trend with, for example, residential prices in Athens
increasing at an annualised rate of nearly 3% and offices (January
- June 2018) by over 8%. Perhaps of greater note was the increase
in market confidence as indicated by the volume of transactions and
property transfers recorded at the Athens land registry, which
increased by nearly 60% in the first eight months of the year
compared with the same period in 2017.
The Hellenic Statistical Authority also reported that the number
of construction permits rose by 9% year on year in the first nine
months of 2018 and, according to the Bank of Greece, private
construction activity increased by 30% during 2018.
The Project
This improvement in prices and market confidence augurs well for
the Group's project in Crete. As shareholders will be aware any
such market trends should impact favourably on our 6,000 acre plot,
with 28 kilometres of coastline and consent for a "complex resort"
project comprising up to 108,000 square metres of built space. In
my 2018 Interim Statement I also highlighted the steady improvement
in the travel infrastructure of the area with an enlarged Sitia
International Airport showing flights up 36% during 2018 and
passenger numbers a remarkable 95% increase year on year (source:
HCAA).
It is as well to remind shareholders that sites of this size in
this kind of location are rare and, as such, have major pluses, but
they also require more care than normal in their master planning in
order to maximise value whilst maintaining integrity and quality.
To this end, and at the same time to attract the most valued
partners, it is extremely important to have a design team to whom
the right kind of partners can relate. As a result of this
requirement, I am pleased to inform shareholders that we have been
able to recruit a team who will not only produce the best possible
designs but also attract the kind of partners who will help us to
maximise value for the Company, the Foundation Panagia Akrotiriani,
and the local community.
New Design Team
After lengthy discussions, which started in the summer of 2018,
we have been able to appoint an internationally recognised team of
designers, architects, and planners (the "Team") to provide designs
and plans, which themselves will enhance the site's natural
attractions to partners. The Team includes, inter alia, Desani, an
internationally known design consultancy with offices in Los
Angeles, Chicago, London and Athens, Vassily Laffineur an Associate
at the award winning architects, Renzo Piano Building Workshop (the
Workshop), plus the renowned group of master planners at Chicago
Consultants Studio (CCS).
Both Desani and the Workshop are experienced in Greece, where
the Workshop were the architects for the Stavros Niarchos
Foundation Cultural Centre in Athens, a EUR566m project completed
in 2016 and gifted to the Greek state in 2017.
For Itanos Gaia the task has been to create an updated master
plan plus contemporary and high-end plans for the villas and hotels
within the Project. These designs, under the new title the
'Cloisters of Toplou' (a name derived from the beautiful cloisters
within the Holy Monastery of Toplou whose donation of land made the
Project possible), have been released to selected international
clients of the Team who have expressed an interest in partnering
with Minoan for hotel and or villa development. The reaction has
been very positive and discussions continue.
Desani's task was to work on how the interiors of high-end
villas and the public spaces of the hotels at Itanos Gaia will
look. During 2016 Desani sponsored an exhibition of the celebrated
artist Philip Tsiaris at the Westin Hotel, Astir Palace, Athens,
and are the designers for the luxury villas at the newly developed
Astir Peninsula, which also includes a new Four Seasons hotel. In
addition, Desani have worked with numerous hospitality companies,
for example, including Ritz Carlton.
The main task for CCS has been to re-examine all aspects of the
site in order to make the best use of its natural attributes within
the rules laid down in the Presidential Decree and to ensure that
the best aspects are preserved and, where possible, enhanced for
international visitors and the local population alike.
The Team's initial work is now largely complete and some of the
designs will be incorporated into the Minoan Group website in the
near future so that shareholders have a better view of their
Company's Project.
Shareholders should also be aware that we are already beginning
to see the benefits of the appointment of such a Team and the
substantial increase in credibility which it brings to the
Project.
Shareholder Loyalty Scheme
A shareholder loyalty scheme (the "Scheme") was established in
2003 with the intention of
recognising the support of shareholders holding at least 5,000
shares in Minoan for a period of twelve months or more was
suspended in 2011. The Scheme benefit was that qualifying
shareholders would benefit from a right to buy a completed villa or
apartment in the Project at a discount to its end value. With the
impending involvement of joint venture partners during 2019 the
Board have been advised that the quantum of this small reduction in
the Project's gross development value ("GDV") needs to be
determined. The Board believe this sum is not material within the
context of the site's GDV and will not involve any depletion of
cash resources.
Negotiations
The Directors and management of the Group continue to progress
Joint Venture and Partnership discussions in respect of the
Project. A number of principals, or prequalified intermediaries,
have executed non-disclosure agreements and, as a result, numerous
meetings have taken place in Crete, Athens, and London.
In that respect the Group can disclose that it has recently
received an early stage written approach that, if it were to
progress, would result in the formation of a joint venture ("JV")
with the objective of developing one of the five hotel and villa
areas within the Project. The proposal would see the Group
contributing land with an ascribed value to the JV and its JV
partner providing equity, project finance, development expertise,
and established links with an international hotel group that is a
proven operator at the luxury end of the resort and villa rental
market. Any transaction would include the right for the Group to
monetise a large part of its JV interest. The discussions around
value indicate that, if completed in line with those discussions, a
figure would be realised at an indicative value which the Board
believe that shareholders would find attractive.
At the current time, because due diligence is being carried out
on the proposal and the counterparty and various conditions
precedent and details are being either satisfied or determined,
there can be no certainty that the approach will progress to an
agreed transaction.
Outlook
During the current year it is hoped that the absence of the
non-recurring losses the Group experienced in the year to 31
October 2018 together with the continued control of overheads and
corporate development costs, the benefit of lower levels of debt
and further financing will lead to an improvement in the Group's
performance at the net before taxation level.
I and my colleagues believe that 2019 will finally witness the
beginning of monetisation of the Group's interest in the Project
and hope that the market value of the Group begins to reflect that
of its assets as further news of JVs and other transactions
materialises.
Christopher W Egleton
Chairman
8 April 2019
Consolidated Statement of Profit and Loss and Other
Comprehensive Income
Year ended 31 October 2018
2018 2017
GBP'000 GBP'000
--------------------------- ---------------------------
Revenue - -
Cost of sales - -
--------------------------- ---------------------------
Gross profit - -
Operating expenses (602) (480)
Other operating expenses:
Corporate development costs (92) (504)
Charge related to assets held
for sale (2,560) (650)
Charge in respect of share-based
payments (63) (186)
--------------------------- ---------------------------
Operating loss (3,317) (1,820)
Finance costs (648) (1,184)
Profit from discontinued operations 943 488
Loss before taxation (3,022) (2,516)
Taxation - -
--------------------------- ---------------------------
Loss after taxation (3,022) (2,516)
Other Comprehensive Income for - -
the year
--------------------------- ---------------------------
Total Comprehensive Income for
the year (3,022) (2,516)
--------------------------- ---------------------------
Loss for year attributable to
equity holders of the Company (3,022) (2,516)
Loss per share attributable to
equity holders of
the Company: Basic and diluted (1.36)p (1.23)p
--------------------------- ---------------------------
Consolidated Statement of Changes in Equity
Year ended 31 October 2018
Year ended 31 October 2018
Merger Warrant Total
Share capital Share premium reserve Reserve Retained earnings equity
GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000
---------------- -------------------- ------------- -------- ------------- ----------------- -------------------
Balance at 1
November
2017 15,297 33,659 9,349 2,441 (18,457) 42,289
Loss for the
year - - - - (3,022) (3,022)
Issue of
ordinary
shares
at a premium 163 714 - - - 877
Share based
payments - - - - 63 63
Extension of
warrant
expiry date
(see note
17) - - - 389 - 389
Balance at 31
October
2018 15,460 34,373 9,349 2,830 (21,416) 40,596
---------------- -------------------- ------------- -------- ------------- ----------------- -------------------
Year ended 31 October 2017
Share Merger Warrant Retained Total
capital Share premium reserve Reserve earnings equity
GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000
---------------- -------------------- ------------- -------- ------------- ----------------- ----------
Balance
at 1 November
2016 15,119 32,585 9,349 2,119 (16,127) 43,045
Loss for
the year - - - - (2,516) (2,516)
Issue of
ordinary
shares at
a premium 178 1,074 - - - 1,252
Share based
payments - - - - 186 186
Extension
of warrant
expiry date
(see note
17) - - - 322 - 322
Balance
at 31 October
2017 15,297 33,659 9,349 2,441 (18,457) 42,289
---------------- -------------------- ------------- -------- ------------- ----------------- ----------
Consolidated Statement of Financial Position as at 31 October
2018
2018 2017
GBP'000 GBP'000
-------- --------
Assets
Non-current assets
Intangible assets 3,583 3,583
Property, plant and equipment 161 161
Non-current assets held for sale - 6,882
Total non-current assets 3,744 10,626
-------- --------
Current assets
Inventories 45,381 44,163
Receivables 215 326
Cash and cash equivalents 20 21
Total current assets 45,616 44,510
-------- --------
Total assets 49,360 55,136
-------- --------
Equity
Share capital 15,460 15,297
Share premium account 34,373 33,659
Merger reserve account 9,349 9,349
Warrant reserve 2,830 2,441
Retained earnings (21,416) (18,457)
-------- --------
Total equity 40,596 42,289
-------- --------
Liabilities
Current liabilities 8,764 12,847
Total equity and liabilities 49,360 55,136
-------- --------
Consolidated Cash Flow Statement
Year ended 31 October 2018
2018 2017
GBP'000 GBP'000
--------------------------- ---------------------------
Cash flows from operating activities
Net cash (outflow) from continuing
operations (2,175) (1,041)
Net cash inflow from discontinued
operations 901 518
Finance costs for continuing
operations (1,508) (262)
Finance costs for discontinued
operations (-) (75)
Net cash used in operating
activities (2,782) (860)
--------------------------- ---------------------------
Cash flows from divesting/(investing)
activities in discontinued
operations
Purchase of property, plant
and equipment (-) (128)
Purchase of intangible assets:
Goodwill consideration (-) (425)
IT project (-) (4)
Proceeds from sale of discontinued
business 6,075 -
Net cash generated from/(used
in) investing activities in
discontinued operations 6,075 (557)
--------------------------- ---------------------------
Cash flows from financing activities
in continuing operations
Net proceeds from the issue
of ordinary shares 550 450
Loans (repaid) / received (3,844) 895
--------------------------- ---------------------------
Net cash (used in)/generated
from financing activities in
continuing operations (3,294) 1,345
--------------------------- ---------------------------
Net decrease in cash (1) (72)
Cash transferred to non-current
assets held for sale (-) (11)
--------------------------- ---------------------------
(1) (83)
Cash at beginning of year 21 104
--------------------------- ---------------------------
Cash at end of year 20 21
--------------------------- ---------------------------
Note to the Consolidated Cash Flow Statement
Year ended 31 October 2018
1 Cash flows from operating activities in continuing operations
2018 2017
GBP'000 GBP'000
--------------------------- ---------------------------
Loss before taxation (3,022) (3,004)
Finance costs 1,148 1,184
Depreciation 1 8
Exchange gain relevant to property,
plant and equipment - (11)
Increase in inventories (1,218) (1,601)
Share-based payments 63 186
Decrease/(Increase) in receivables 111 122
Increase in current liabilities 415 623
Liabilities settled by the issue of
ordinary shares 327 802
Non cash movement in assets held for
sale - 650
Net cash outflow from continuing operations (2,175) (1,041)
--------------------------- ---------------------------
Notes to the Financial Statements
Year ended 31 October 2018
1 General information
The financial information set out in this announcement does not
constitute statutory financial statements for the year ended 31
October 2018 or 31 October 2017. The report of the auditors on the
statutory financial statements for the year ended 31 October 2018
and 31 October 2017 was not qualified.
The report of the auditor on the statutory financial statements
for each of the years ended 31 October 2018 and 31 October 2017 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 2017 have been delivered to the Registrar of Companies. The
financial statements for the year ended 31 October 2018 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 2018 on 8 April 2019.
Adoption of new and revised Standards
The International Accounting Standards Board and IFRIC have
issued the following new and revised standards and interpretations
with an effective date after the date of these financial
statements, which have been endorsed and issued by the EU:
Standard/Interpretation Title Effective
date
IFRS 9 Financial instruments 1 January
2018
IFRS 15 Revenue from contracts 1 January
with customers 2018
IFRS 16 Leases 1 January
2019
IFRIC 23 Uncertainty over income 1 January
tax position 2019
The directors anticipate that the adoption of IFRS 9 and IFRIC
23 in future periods will have no material impact on the profit of
the financial statements of the Group. The directors have not
deemed it necessary to measure the impact of IFRS 15 and 16 in
future periods given that Revenue and Leases were only within
Stewart Travel Limited, which was sold on 9 October 2018.
Notes to the Financial Statements (continued)
Year ended 31 October 2018
2 Accounting policies (continued)
Going concern
The directors have considered the financial and commercial
position of the Group in relation to its project in Crete (the
"Project"). 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. The
appeals lodged against the Presidential Decree have now been
rejected by the Greek Supreme Court.
Accordingly, the directors consider it relevant that having
completed financial joint venture agreements (see note 12) prior to
the above, 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.
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.
Having taken these matters into account, the directors consider
that the going concern basis of preparation of the financial
statements is appropriate.
Basis of consolidation
The consolidated financial statements incorporate the financial
statements of the Company and all its subsidiaries as at 31 October
2018 using uniform accounting policies. The Group's policy is to
consolidate the result of subsidiaries acquired in the year from
the date of acquisition to the Group's next accounting reference
date. Intra-group balances are eliminated on consolidation.
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 of the
assets given, liabilities incurred and equity instruments issued by
the Group in exchange for control of the acquired business.
Acquisition related costs are recognised in the consolidated
statement of comprehensive income as incurred
Notes to the Financial Statements (continued)
Year ended 31 October 2018
2 Accounting policies (continued)
Critical accounting estimates and judgements
The preparation of the financial statements in accordance with
generally accepted financial accounting principles requires the
directors to make critical accounting estimates and judgements that
affect the amounts reported in the financial statements and
accompanying notes. The estimates and assumptions that have a
significant risk of causing material adjustments to the carrying
value of assets and liabilities within the next financial year are
discussed below:
-- in capitalising the costs directly attributable to the
Project (see inventories below), and continuing to recognise
goodwill relating to the Project, the directors are of the opinion
that the Project will be brought to fruition and that the carrying
value of inventories and goodwill is recoverable; and
-- as set out above, the directors have exercised judgement in
concluding that the company and group is a going concern.
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.
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
Where the carrying amount of an asset is greater than its
estimated recoverable amount, it is written down immediately to its
recoverable amount.
Notes to the Financial Statements (continued)
Year ended 31 October 2018
2 Accounting policies (continued)
Intangible assets/Research and development
Research expenditure is recognised as an expense when it is
incurred. Development expenditure is recognised as an expense
except where the expenditure meets the following criteria:
a) the technical feasibility of completing the intangible asset
so that it will be available for use or sale.
b) its intention to complete the intangible asset and use or sell it.
c) its ability to use or sell the intangible asset.
d) how the intangible asset will generate probable future
economic benefits. Among other things, the entity can demonstrate
the existence of a market for the output of the intangible asset or
the intangible asset itself or, if it is to be used internally, the
usefulness of the intangible asset.
e) the availability of adequate technical, financial and other
resources to complete the development and to use or sell the
intangible asset.
f) its ability to measure reliably the expenditure attributable
to the intangible asset during its development.
The expenditure is amortised over its useful economic life of
five years.
Investments
Investments in subsidiaries are stated at cost less any
impairment deemed necessary.
Inventories
Inventories represent the actual costs of goods and services
directly attributable to the acquisition and development of the
Project and are stated at the lower of cost and net realisable
value.
Notes to the Financial Statements (continued)
Year ended 31 October 2018
2 Accounting policies (continued)
Foreign currency
A foreign currency transaction is recorded, on initial
recognition in Euros, by applying to the foreign currency amount
the spot exchange rate between the functional currency and the
foreign currency at the date of the transaction.
At the end of the reporting period:
- foreign currency monetary items are translated using the
closing rate;
- non-monetary items that are measured in terms of historical
cost in a foreign currency are translated using the exchange rate
at the date of the transaction; and
- non-monetary items that are measured at fair value in a
foreign currency are translated using the exchange rates at the
date when the fair value was determined.
Exchange differences arising on the settlement of monetary items
or on translating monetary items at rates different from those at
which they were translated on initial recognition during the period
or in previous annual financial statements are recognised in profit
or loss in the period in which they arise.
When a gain or loss on a non-monetary item is recognised to
other comprehensive income and accumulated in equity, any exchange
component of that gain or loss is recognised to other comprehensive
income and accumulated in equity. When a gain or loss on a
non-monetary item is recognised in profit or loss, any exchange
component of that gain or loss is recognised in profit or loss.
Cash flows arising from transactions in a foreign currency are
recorded in Euros by applying to the foreign currency amount the
exchange rate between the Euros and the foreign currency at the
date of the cash flow.
Cash and cash equivalents
Cash and cash equivalents include cash in hand and short-term
deposits, with a maturity of less than three months, held with
banks.
Trade and other receivables
Trade and other receivables are recognised initially at fair
value and shown less any provision for amounts considered
irrecoverable. They are subsequently measured at an amortised cost
using the effective interest rate method, less irrecoverable
provision for receivables.
Trade and other payables
Trade and other payables are recognised initially at fair value
and subsequently measured at amortised cost using the effective
interest rate method.
Notes to the Financial Statements (continued)
Year ended 31 October 2018
2 Accounting policies (continued)
Loans
Loan borrowings are recognised initially at fair value net of
transaction costs incurred. Borrowings are subsequently stated at
amortised cost and any difference between the proceeds (net of
transaction costs) and the redemption value is recognised as a
borrowing cost over the period of the borrowings using the
effective interest method
Leasing commitments
Rentals paid under operating leases are charged to profit or
loss on a straight line basis over the period of the lease.
Revenue (Discontinued operations)
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.
Non-current assets held for sale and discontinued operations
Where an asset, or disposal group (an asset together with
related liabilities), is to be recovered principally through a sale
transaction and not through continuing use, and an active plan has
been entered into to dispose of the asset or disposal group, it is
reclassified as held for sale. On reclassification, the asset is
measured at the lower of its carrying amount or fair value less
costs to sell. Any losses on re-measurement are recognised in
profit or loss.
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. The fair values of the LTIP awards, options and
warrants are calculated using the Black-Scholes and Binomial option
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.
Where warrants are issued in conjunction with a loan instrument,
the fair value of the warrants forms part of the total finance cost
associated with that instrument and is released to profit or loss
through finance costs over the term of that instrument using the
effective interest method.
Notes to the Financial Statements (continued)
Year ended 31 October 2018
2 Accounting policies (continued)
Pensions
Loyalward Limited operates a stakeholder pension scheme for its
employees. Contributions payable to the pension scheme are charged
to profit or loss in the period to which they relate.
Taxation
Current taxes, where applicable, are based on the results shown
in the financial statements and are calculated according to local
tax rules using tax rates enacted, or substantially enacted, by the
balance sheet date and taking into account deferred taxation.
Deferred tax is computed using the liability method. Under this
method, deferred tax assets and liabilities are determined based on
temporary differences between the financial reporting and tax bases
of assets and liabilities and are measured using enacted rates and
laws that will be in effect when the differences are expected to
reverse. Deferred tax is not accounted for if it arises from
initial recognition of an asset or liability in a transaction that
at the time of the transaction affects neither accounting, nor
taxable profit or loss. Deferred tax assets are recognised to the
extent that it is probable that future taxable profits will arise
against which the temporary differences will be utilised.
Deferred tax is provided on temporary differences arising on
investments in subsidiaries except where the timing of the reversal
of the temporary difference is controlled by the Group and it is
probable that the temporary difference will not reverse in the
foreseeable future. Deferred tax assets and liabilities arising in
the same tax jurisdiction are offset.
The Group is entitled to a tax deduction for amounts treated as
compensation on exercise of certain employee share options. As
explained under "Share-based payments" above, a compensation
expense is recorded in the Group's statement of comprehensive
income over the period from the grant date to the vesting date of
the relevant options. As there is a temporary difference between
the accounting and tax bases a deferred tax asset is recorded. The
deferred tax asset arising is calculated by comparing the estimated
amount of tax deduction to be obtained in the future (based on the
Company's share price at the balance sheet date) with the
cumulative amount of the compensation expense recorded in the
statement of comprehensive income. If the amount of estimated
future tax deduction exceeds the cumulative amount of the
remuneration expense at the statutory rate, the excess is recorded
directly in equity against retained earnings.
Notes to the Financial Statements (continued)
Year ended 31 October 2018
3 Information regarding directors and employees
Directors' and key management remuneration
Costs taken
Costs taken to
to profit or
inventories loss Total
GBP'000 GBP'000 GBP'000
------------- ------------ --------
Year ended 31 October 2018
Fees 93 280 373
Sums charged by third parties
for
directors' and key management
services 331 70 401
Share-based payments - 63 63
424 413 837
------------- ------------ --------
Year ended 31 October 2017
Fees 244 388 632
Sums charged by third parties
for
directors' and key management
services 333 70 403
Share-based payments (note
17) - 79 79
577 537 1,114
------------- ------------ --------
The total directors' and key management remuneration shown above
includes the following amounts in respect of the directors of the
Company.
2018 2017
Fees/Sums
Fees/Sums charged Share-based charged by Share-based
by third parties payments third parties payments
GBP'000 GBP'000 GBP'000 GBP'000
----------------- ----------- -------------- -----------
C W Egleton (Chairman) 297 30 320 42
D C Wilson (see
Note) - 22 250 20
B D Bartman 35 3 35 6
G D Cook 35 2 35 4
T R C Hill 53 3 46 7
420 60 686 79
----------------- ----------- -------------- -----------
Notes to the Financial Statements (continued)
Year ended 31 October 2018
3 Information regarding directors and employees (continued)
Staff costs during the period (including directors and key
management)
Costs taken
Costs taken to
to profit or
inventories loss Total
GBP'000 GBP'000 GBP'000
----------------------------- ----------------------------- -----------------------------
Year ended 31 October
2018
Salaries and fees 347 124 471
Social security cost 53 33 86
Share-based payments - 63 63
----------------------------- ----------------------------- -----------------------------
400 220 620
----------------------------- ----------------------------- -----------------------------
Year ended 31 October
2017
Salaries and fees 315 4,655 4,970
Social security cost 51 432 483
Share-based payments - 96 96
----------------------------- ----------------------------- -----------------------------
366 5,183 5,549
----------------------------- ----------------------------- -----------------------------
Note: Staff costs exclude sums charged by third parties for
directors' services.
2018 2017
No. No.
------------------------------ -------------------------------
Monthly average number of persons employed
Directors 8 5
Management, administration and sales 4 226
------------------------------ -------------------------------
4 Loss before taxation
The loss before taxation is stated after charging:
2018 2017
GBP'000 GBP'000
------------------------------ ------------------------------
Depreciation 1 132
------------------------------ ------------------------------
Amortisation - 345
------------------------------ ------------------------------
Operating leases - 54
------------------------------ ------------------------------
Auditor's remuneration:
------------------------------ ------------------------------
Audit fees 20 72
------------------------------ ------------------------------
Tax services 2 5
------------------------------ ------------------------------
Audit fees in respect of the Company were GBP20,000 (31 October
2017: GBP20,000). Tax services fees in respect of the Company were
GBP2,500 (31 October 2017: GBP4,000).
Notes to the Financial Statements (continued)
Year ended 31 October 2018
5 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 and which is a continuing
operation;
-- the Travel and Leisure division (UK), being the operation and
management of the travel businesses, which is a discontinued
operation (see note below re sale); and
-- the corporate development division (UK) as described above,
which is a continuing operation.
The information presented below is consistent with how
information is presented to the Board, with the Group's accounting
policies and with the geographical location of the relevant
divisions.
Notes to the Financial Statements (continued)
Year ended 31 October 2018
5 Segmental information (continued)
2018
Luxury Travel Corporate
Resorts and Leisure Development Total
GBP'000 GBP'000 GBP'000 GBP'000
Total transaction value - - -
--------------- ------------------- -------------------- --------------------
Revenue - - - -
Cost of sales - - - -
--------------- ------------------- -------------------- --------------------
Gross profit - - - -
Operating expenses (602) - (92) (694)
--------------- ------------------- -------------------- --------------------
(602) - (92) (694)
Charge in respect of share-based
payments (63) - - (63)
Charge related to assets
held for sale (2,560) - - (2,560)
--------------- ------------------- -------------------- --------------------
Operating (loss)/profit (3,225) - (92) (3,317)
Finance costs (648) - - (648)
(Loss)/Profit from Discontinued
Operation - 943 - 943
(Loss)/profit before taxation (3,873) 943 (92) (3,022)
Taxation - - - -
--------------- ------------------- -------------------- --------------------
(Loss)/profit after taxation (3,873) 943 (92) (3,022)
Operating expenses include:
Depreciation and amortisation 1 - - 1
Operating leases - plant - - - -
and equipment
--------------- ------------------- -------------------- --------------------
Assets/liabilities
Goodwill 3,583 - - 3,583
Other non-current assets 161 - - 161
Current assets 45,616 - - 45,616
Total assets 49,360 - 49,360
--------------- ------------------- -------------------- --------------------
Total and current liabilities 8,764 - - 8,764
--------------- ------------------- -------------------- --------------------
Notes to the Financial Statements (continued)
Year ended 31 October 2018
5 Segmental information (continued)
2017
Luxury Travel Corporate
Resorts and Leisure Development Total
GBP'000 GBP'000 GBP'000 GBP'000
Total transaction value - 80,320 - 80,320
---------------- -------------------- -------------------- ----------------------
Revenue - 8,700 - 8,700
Cost of sales - (354) - (354)
---------------- -------------------- -------------------- ----------------------
Gross profit - 8,346 - 8,346
Operating expenses (480) (7,783) (504) (8,767)
---------------- -------------------- -------------------- ----------------------
(480) 563 (504) (421)
Charge in respect of
share-based
payments (186) - - (186)
Charge related to assets
held for sale (650) - - (650)
---------------- -------------------- -------------------- ----------------------
Operating (loss)/profit (1,316) 563 (504) (1,257)
Finance costs (1,184) (75) - (1,259)
(Loss)/profit before taxation (2,500) 488 (504) (2,516)
Taxation - - - -
---------------- -------------------- -------------------- ----------------------
(Loss)/profit after taxation (2,500) 488 (504) (2,516)
Operating expenses include:
Depreciation and amortisation 2 468 - 470
Operating leases - plant
and equipment - 54 - 54
---------------- -------------------- -------------------- ----------------------
Assets/liabilities
Goodwill 3,583 5,610 - 9,193
Other non-current assets 161 1,237 - 1,398
Current assets 44,510 1,889 - 46,399
Charge related to asset
held for sale - (250) (250)
---------------- -------------------- -------------------- ----------------------
Total assets 48,254 8,486 - 56,740
---------------- -------------------- -------------------- ----------------------
Total and current liabilities 12,847 1,604 - 14,451
---------------- -------------------- -------------------- ----------------------
As stated in the Strategic Report, the Group completed the sale
of its travel business on 9 October 2018 and the results for the
year ended 31 October 2018 have been presented in accordance with
IFRS 5. As a consequence, the Profit after taxation of the Travel
and Leisure business in the amount of GBP943,000 (31 October 2017:
GBP488,000) appears in the Consolidated Statement of Comprehensive
Income for the year ended 31 October 2018 as Profit from
discontinued operation.
This information is provided by RNS, the news service of the
London Stock Exchange. RNS is approved by the Financial Conduct
Authority to act as a Primary Information Provider in the United
Kingdom. Terms and conditions relating to the use and distribution
of this information may apply. For further information, please
contact rns@lseg.com or visit www.rns.com.
END
FR EAKLPELLNEEF
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