MINOAN GROUP PLC — Earnings Release 2014

Mar 31, 2015

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RNS Number : 9083I

Minoan Group PLC

31 March 2015

31 March 2015

Preliminary Results Announcement 

Minoan Group Plc (or "the Group") announces its preliminary results for the year ended 31 October 2014

HIGHLIGHTS

·     Substantial progress has been made in both of the Group's divisions during the year under review, the major benefits of which will be felt in the current year

·     Total transaction value and gross profit for the Travel and Leisure ("T&L") division for the new financial year are cumulatively ahead year-on-year in excess of 15%

·     Gross profit for the year ended 31 October 2014 was up approximately 10% from £5,196,000 to £5,680,000.

·     Plenum of the Greek Council of State has unanimously approved the terms of the Presidential Decree in respect of the Group's Project in Crete (the "Project")

·     Final steps will be for the Presidential Decree to be signed by the relevant Ministers and President of the Greek Republic

·     Discussions with joint venture partners and others have been ongoing and are expected to accelerate following the issuance of the Presidential Decree

·     Group well-positioned to reap the benefits of the excellent progress made in securing final approval for the Project and of the buoyant trading performance of the T&L division

Minoan Chairman, Christopher Egleton commented:

"Significant advances were made across both divisions over the past financial year leaving the Group in an enhanced position to further expand its operations and bring to fruition its Crete Project.

The T&L division's acquisition and brand integration strategy are driving a strong trading performance, underpinned by margin growth, which is boosting gross profit and provides a strong platform for planned further expansion to transform the division into a robust international leisure and travel business.

The Group has never been closer to realising its ambitions in respect of the Project. The issuance of the Presidential Decree will not only generate immediate value but will also allow the Group to implement its plans to develop an environmentally respectful, world-class tourist resort. This should have a long-term positive impact and would be a significant asset for the Greek tourist industry, which the new Government has championed as a key part of the economy.

Given these developments, the Group looks forward to realising the benefits of the substantial progress made, both through an improved trading performance and in terms of boosting shareholder value."

Minoan Group Plc's Preliminary Results Announcement for the year ended 31 October 2014 can be viewed on the Company's website, www.minoangroup.com, with effect from 31 March 2015.

For further information 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/Mark Leonard
Throgmorton Street Capital	020 7071 0808
Forbes Cutler
Morgan Rossiter	020 3195 3240
Richard Morgan Evans/James Rossiter

Chairman's Statement     

Introduction

Substantial progress has been made in both of the Group's divisions during the year under review, the major benefits of which will be felt in the current year.

In Greece, the focus has been on the preparatory work for the Presidential Decree in respect of the Group's project in Crete (the "Project"). This successfully resulted in the recent announcement that the Plenum of the Greek Council of State has unanimously approved its terms.  It now only remains for the Presidential Decree to be signed by the relevant Ministers and, finally, the President of the Greek Republic.

In the Travel and Leisure business, the increase in trading margins during the year is a very good illustration of the benefits of synergies that are beginning to emerge following brand integration, which we anticipate will accelerate in the current year

The increase has been reflected in the Group's annual results, with the loss before taxation reducing from £1,182,000 to £1,036,000 despite an increase of £253,000 in the charge in respect of share-based payments.

Greece

Work on the Project has continued. Discussions with joint venture partners and other interested parties have been ongoing and, although necessarily complex, these are expected to accelerate following the issuance of the Presidential Decree.

The recent change of Government in Greece has, as shareholders will have expected, caused a delay in the timetable but the announcement of the favourable decision of the Council of State indicates that Government business is ongoing.

With regard to the macro economic situation in Greece, it is not entirely clear what the future holds. In this context it is worth repeating that the new Greek Government has stated that it wishes to support the tourism industry as a major part of the Greek economy.

In the meantime, notwithstanding the economic crisis, work has continued on Sitia International airport where building works and the baggage handling facilities for the new International Terminal are complete. The terminal will be open for the summer season when an increased number of flights is expected. The new airport will have a positive long-term impact on the local tourist industry.

Travel and Leisure ("T&L")

The T&L Division has had a good year although this is not immediately obvious from a comparison of gross revenue. In April 2013, for regulatory purposes, the Group commenced the settlement of its travel business through the Hays Independence Group, which has resulted in a change in the way total transaction value, revenue and cost of sales are reported. The Group has also continued its policy of reducing the sale of lower margin travel products. The combination of both these factors means that the year on year figures are not comparable. Given this, the best figure to focus on is gross profit, which remains comparable and has increased by approximately 10% from £5,196,000 to £5,680,000.

With regard to the current year, in a market generally reported in the trade as flat, Stewart Travel is enjoying the best start to the year in its history. All subdivisions are showing healthy rises in both revenue and gross profit. From the beginning of the new financial year total transaction value and gross profit are cumulatively ahead year-on-year in excess of 15%.

Finally, since the year end new travel bureaux have been opened in Nottingham and Belfast.

Chairman's Statement (continued)

Outlook

The Board believes that the Group is now well-positioned to reap the benefits of the hard work of recent years.

In Greece we are awaiting the issuance of the Presidential Decree in respect of the Project and, as stated above, the Group's travel business is enjoying the best start to a trading year in its history.

Conclusion

The coming months promise to be very exciting for the Group, its shareholders, Directors and staff and I look forward to making further announcements in the near future.

Christopher W Egleton

Chairman

30 March 2015

Consolidated Statement of Comprehensive Income

Year ended 31 October 2014

		2014                    £'000	2013                    £'000
Total transaction value		50,757	51,164
Revenue		5,932	9,217
Cost of sales		(252)	(4,021)
Gross profit		5,680	5,196
Operating expenses		(5,306)	(5,416)
Other operating expenses:
Corporate development costs		(501)	(457)
Charge in respect of share-based payments		(639)	(386)
Operating loss		(766)	(1,063)
Finance costs		(270)	(119)
Loss before taxation		(1,036)	(1,182)
Taxation credit		-	32
Loss after taxation		(1,036)	(1,150)
Profit for year attributable to non-controlling interest		-	22
Loss for year  attributable to equity holders of the Company		(1,036)	(1,172)
Loss per share attributable to equity holders of
the Company: Basic and diluted		(0.61)p	(0.78)p

All of the activities of the Group are classed as continuing.

The Group had no recognised gains and losses other than the results for the year set out above.

Statements of Changes in Equity

Year ended 31 October 2014

Year ended 31 October 2014

	Share capital £'000	Share premium £'000	Merger reserve £'000	Retained earnings £'000	Non-controlling interest £'000	Total               equity £'000
Balance at 1 November 2013	14,693	28,781	9,349	(11,997)	919	41,745
(Loss)/ profit for the year	-	-	-	(1,036)		(1,036)
Issue of ordinary shares at a premium	150	1,480	-	-	-	1,630
Acquisition of non-controlling               interest	-	-	-	-	(919)	(919)
Share-based payments:
Current year charges	-	-	-	639	-	639
Settlement of liabilities	-	-	-	439	-	439
Balance at 31 October 2014	14,843	30,261	9,349	(11,955)	-	42,498

Year ended 31 October 2013

	Share capital £'000	Share premium £'000	Merger reserve £'000	Retained earnings £'000	Non-controlling interest £'000	Total equity £'000
Balance at 1 November 2012	14,541	28,349	9,349	(11,084)	-	41,155
Loss for the year	-	-	-	(1,172)	22	(1,150)
Issue of ordinary shares at a premium	152	432	-	-	-	584
Disposal of non-controlling               interest	-	-	-	(127)	897	770
Share-based payments	-	-	-	386	-	386
Balance at 31 October 2013	14,693	28,781	9,349	(11,997)	919	41,745

Consolidated Balance Sheet as at 31 October 2014

		2014 £'000	2013 £'000
Assets
Non-current assets
Intangible assets		9,414	8,678
Property, plant and equipment		717	719
Total non-current assets		10,131	9,397
Current assets
Inventories		40,042	38,367
Receivables		1,592	896
Cash and cash equivalents		127	271
Total current assets		41,761	39,534
Total assets		51,892	48,931
Equity
Share capital		14,843	14,693
Share premium account		30,261	28,781
Merger reserve account		9,349	9,349
Retained earnings		(11,955)	(11,997)
		42,498	40,826
Non-controlling interest		-	919
Total equity		42,498	41,745
Liabilities
Non-current liabilities		3,500	1,159
Current liabilities		5,894	6,027
Total liabilities		9,394	7,186
Total equity and liabilities		51,892	48,931

Consolidated Cash Flow Statement

Year ended 31 October 2014

		2014 £'000	2013 £'000
Cash flows from operating activities
Net cash outflow from continuing operations		(2,138)	(1,887)
Finance costs		(270)	(119)
Net cash used in operating activities		(2,408)	(2,006)
Cash flows from investing activities
Purchase of property, plant and equipment		(122)	(371)
Purchase of intangible assets		(713)	(315)
Non cash movement in intangible assets		(153)	(179)
Acquisition of shares in subsidiary company		(430)	-
Net cash used in investing activities		(1,418)	(865)
Cash flows from financing activities
Net proceeds from the issue of ordinary shares		667	-
Loans received		3,081	1,760
Net proceeds from sale of shares in subsidiary company		-	770
Payments of hire purchase liabilities		(66)	(45)
Net cash generated from financing activities		3,682	2,485
Net decrease in cash		(144)	(386)
Cash at beginning of year		271	657
Cash at end of year		127	271

Note to the Consolidated Cash Flow Statement

Year ended 31 October 2014

Cash flows from operating activities

	2014 £'000	2013 £'000
Loss before taxation	(1,036)	(1,182)
Finance costs	270	119
Depreciation	102	124
Amortisation	130	45
Loss on disposal of property, plant and equipment	-	102
Exchange loss/(gain) relevant to property, plant and equipment	22	(11)
Increase in inventories	(1,675)	(1,291)
Share-based payments	1,078	386
(Increase)/decrease in receivables	(696)	175
Decrease in current liabilities	(126)	(278)
Non cash movement in non-current assets	-	20,313
Non cash movement in inventories	-	(20,313)
Non cash movement in equity	(207)	(76)
Net cash outflow from continuing operations	(2,138)	(1,887)

Notes to the preliminary results

Year ended 31 October 2014

1. General information

The financial information set out in this Preliminary Results Announcement, which has been extracted from the Report and Financial Statements, does not constitute the Company's statutory accounts for the year ended 31 October 2014.

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

These consolidated financial statements are prepared in accordance with EU adopted International Financial Reporting Standards ("IFRS") and the International Financial Reporting Interpretations Committee ("IFRIC") interpretations and the Companies Act 2006 applicable to companies reporting under IFRS.

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.

A Plenum of the Greek Council of State, the highest court in Greece, has unanimously approved the draft presidential decree in respect of the Project with no dissenting opinions. The draft presidential decree approves the development plan and the strategic environmental impact study. The presidential decree now goes to the relevant Ministers and the President of the Greek Republic for signing.

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. 

In addition to specific Project related matters as noted above, and as has been the case in the past, the Group continues to raise capital in order to meet its existing working capital requirements and the directors consider that any necessary funds will be raised as required.

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 is now generating 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.

Notes to the preliminary results (continued)

Year ended 31 October 2014

3. Segmented 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.

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.

	2014
	Luxury Resorts	Travel and Leisure	Corporate Development	Total
	£'000	£'000	£'000	£'000
Total transaction value	-	50,757	-	50,757
Revenue	-	5,932	-	5,932
Cost of sales	-	(252)	-	(252)
Gross profit	-	5,680	-	5,680
Operating expenses	(428)	(4,878)	(501)	(5,807)
	(428)	802	(501)	(127)
Charge in respect of share-based payments	(639)	-	-	(639)
Operating (loss)/profit	(1,067)	802	(501)	(766)
Contribution to central costs	300	(300)	-	-
Finance costs	(222)	(48)	-	(270)
(Loss)/profit before taxation	(989)	454	(501)	(1,036)
Taxation	-	-	-	-
(Loss)/profit after taxation	(989)	454	(501)	(1,036)
Operating expenses include:
Depreciation and amortisation	1	231	-	232
Operating leases - plant and equipment	-	49	-	49
Assets/liabilities
Goodwill	6,127	2,451	-	8,578
Other non-current assets	146	1,407	-	1,553
Current assets	40,457	1,304	-	41,761
Total assets	46,730	5,162	-	51,892
Non-current liabilities	3,500	-	-	3,500
Current liabilities	4,862	1,032	-	5,894
Total liabilities	8,362	1,032	-	9,394

Notes to the preliminary results (continued)

Year ended 31 October 2014

3. Segmented information (continued)

	2013
	Luxury Resorts	Travel and Leisure	Corporate Development	Total
	£'000	£'000	£'000	£'000
Total transaction value	-	51,164	-	51,164
Revenue		9,217		9,217
Cost of sales	-	(4,021)	-	(4,021)
Gross profit	-	5,196	-	5,196
Operating expenses	(569)	(4,592)	(457)	(5,618)
	(569)	604	(457)	(422)
Non-recurring expenses	-	(255)	-	(255)
Charge in respect of share-based payments	(386)	-	-	(386)
Operating (loss)/profit	(955)	349	(457)	(1,063)
Contribution to central costs	150	(150)	-	-
Finance costs	(119)	-	-	(119)
(Loss)/profit before taxation	(924)	199	(457)	(1,182)
Taxation	-	32	-	32
(Loss)/profit after taxation	(924)	231	(457)	(1,150)
Operating expenses include:
Depreciation and amortisation	15	154	-	169
Operating leases - plant and equipment	-	69	-	69
Assets/liabilities
Goodwill	6,127	2,048	-	8,175
Other non-current assets	165	1,057	-	1,222
Current assets	38,627	907	-	39,534
Total assets	44,919	4,012	-	48,931
Non-current liabilities	1,100	59	-	1,159
Current liabilities	5,739	288	-	6,027
Total liabilities	6,839	347	-	7,186

4. Goodwill

Goodwill arising on acquisitions represents the difference between the fair value of the net assets acquired and the consideration paid.

Goodwill is tested annually for impairment. In particular, the directors have considered the current value of the Group's overall interest in the Project and its progress and are of the opinion that the Project site has longer term value in excess of the carrying value of inventories.

The directors' opinion of the current value also takes into account the estimate dated 27 June 2011 of the development value of the Project site in the order of €100 million, which was included in the Company's AIM readmission document published on 30 September 2011 and which was reaffirmed in March 2012.

In addition, the directors are of the opinion that the projected value of the Travel and Leisure business, which is treated as one cash generating unit, is in excess of the value of the amount of goodwill attributable to it. This opinion is arrived at on the basis of the good names of the businesses acquired and the fact that the establishment of business clusters affords the Company the opportunity to realise certain economies of scale thus improving cash flow and profitability.

Notes to the preliminary results (continued)

Year ended 31 October 2014

4. Goodwill (continued)

Goodwill arising from acquisitions has been recognised as an asset.

5. Property, plant and equipment

In a prior year, certain costs in respect of the Project were reallocated to non-current assets.  Although its long term commitment to the Project remains unchanged, the Group re-assessed the treatment of this asset in the year ended 31 October 2013 in the light of changes in the project financing market and its previously stated intention to develop the Project with joint venture partners and other interested parties. In order to provide flexibility in its future plans, and having taken relevant advice, the Group decided that the costs in respect of the Project previously shown in non-current assets should be shown as a current asset as at 31 October 2013. As a result, these costs were included in inventories. It is envisaged that any joint venture or partnership arrangements will preserve the nature of the Group's long term commitment to the Project.

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
Acquisition costs of land:	3 years
Freehold property:	50 years
Plant and equipment:	3 to 5 years
Fixtures and fittings:	3 years
Motor vehicles:	3 to 5 years
IT projects:	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. The directors consider that the book values of non-current assets do not differ materially from their market values.

6. Revenue

Depending upon the contractual arrangements with the customer the Group acts either as agent or principal. Where the Group acts as principal, revenue is stated at the contractual value of goods and services provided and is recognised typically when the customer pays the final balance due on the holiday purchased. 

Where 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. Gross Profit

Gross profit represents the aggregate amount earned on bookings where the Group acts as either agent or principal.  In the case of the Group acting as principal, gross profit is the difference between the sales price to the customer (total transaction value) and the cost of services purchased.

Notes to the preliminary results (continued)

Year ended 31 October 2014

8. 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. A charge has been made in the consolidated statement of comprehensive income in respect of the LTIP, options and warrants using the Black-Scholes and Monte Carlo fair value pricing models as appropriate at the grant date and charged over the vesting periods. This charge does not involve any cash payment. A corresponding entry is recognised in equity.

9. 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 dilutive potential ordinary shares. There are no dilutive instruments in issue, 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 2014 was 168,636,782 (31 October 2013: 150,942,792).

10. Events after the balance sheet date 

1. On 6 November 2014, subsequently updated on 26 November 2014, the Company announced that it had

agreed to issue three-year unsecured convertible loan notes up to a maximum amount of £1.5 million with a

coupon of 10% per annum. A conversion price of 15.5 pence per share applies to £650,000 of the above

with the balance of £850,000 being converted at 18.0 pence per share.

2. On the 26 November 2014 the Company announced the issue of 100,775 new Ordinary Shares at 5.5 pence

per share in respect of the exercise of Options and a further 101,053 new Ordinary Shares at 14.25 pence per

share to settle certain existing liabilities.

3. On 24 March 2015 the Company announced the issue of 11,011,765 new Ordinary Shares at 8.5 pence per

share to settle loans and a further 100,775 new Ordinary Shares at 5.5 pence per share in respect of the

exercise of Options.

This information is provided by RNS

The company news service from the London Stock Exchange

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