MINOAN GROUP PLC — Earnings Release 2016

Jul 14, 2016

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RNS Number : 1288E

Minoan Group PLC

14 July 2016

14 July 2016

Interim Results Announcement

Minoan Group Plc

(the "Group" or the "Company" or "Minoan")

announces its unaudited interim results for the 6 months ended 30 April 2016

HIGHLIGHTS

·      Group total transaction value up by circa 15% to £33,106,000 from £28,723,000

·      Travel and Leisure gross profit up by circa 19% to £3,544,000 from £2,981,000

·      Travel and Leisure profit at EBITDA level increased by circa 12% to £332,000 from £297,000

Christopher Egleton, Minoan Chairman, said:

"We are very pleased that we have made progress across both our key operating divisions over the past six months. Our Travel Business has continued to expand organically and invest for future expansion while with regard to our Crete Project, we are encouraged by the shortest possible delay in the hearing of the appeals against the issuance of the Presidential Decree ("PD") granting outline planning consent for the Group's project in Crete and the fact that the PD has already been judged to be legal by this court on two occasions. In summary, I believe we have never been closer to fulfilling our substantial potential."

The Company's unaudited interim results for the 6 months ended 30 April 2016 can be viewed on Minoan's website, www.minoangroup.com, with effect from 14 July 2016.

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

In reviewing the 6 months ended 30 April 2016 during the current momentous events in the UK I am pleased that the Group was able to make progress in both divisions.  

In summary, our travel business continued to expand organically and invest for future expansion whilst in Greece, albeit as usual the subject of appeals, the Presidential Decree ("PD") granting the equivalent of outline planning permission for the Project was issued on 11 March 2016.

Greece

The general situation in Greece appears to have become more stable. Funds from the current 'Bailout' have been released and the Banks have been recapitalised. These two factors alone are expected to lead to more activity in the economy which, after so many years of austerity, is a welcome development.

The very short delay of the hearing date for the appeals against the issue of the PD to 16 September 2016 is, we are advised, the first possible date after the Council of State's summer recess. Your Board and I hope that the Court will reach an early decision and are encouraged by the fact that the PD has already been judged to be legal by this Court on two occasions.

In the meantime, in light of the Greek Government's continued support for Foreign Direct Investments, we continue to make progress with the Project itself as well as with a number of discussions taking place with potential partners and financing institutions.

Travel and Leisure ("T&L")

The first six months of the year have been marked by two principal matters.

First, continued organic growth which has seen an increase in gross profit by circa 19% to £3,544,000 from £2,981,000. This has been achieved against the negative background of reduced demand in our market in Turkey as a result of security concerns.

Second, notwithstanding further significant investments for the future expansion of the business, I am pleased to report that at the EBITDA level profit has increased by circa 12% to £332,000 from £297,000. These investments were in 'soft' infrastructure and the June opening of a new hi-tech service centre in Ayr to facilitate the ongoing growth of our web based businesses, which now account for roughly two thirds of our total transaction value.

Stewart Travel and its brands are agency businesses and as such do not carry the fixed cost or significant foreign exchange risks associated with suppliers of 'product' such as tour operators, hotels and airlines.

We continue to progress various options to facilitate future growth for the travel business, particularly through acquisitions, for the best advantage of the Group as a whole.

Outlook

In Greece the Court hearing in September is of prime importance. We have confidence in the Greek justice system and hope for an early decision. Meanwhile, we continue to prepare for a successful outcome and the crystallisation of value for shareholders.

Chairman's Statement (continued)     

Outlook (continued)

Discussions regarding the plans for our travel business are in progress with advisors and others. I expect to be able to give shareholders more information in the near future.

The 'Brexit' vote, together with its effect on Sterling, may have significant impacts on both our businesses. In travel it is likely to put up the cost of travel and holidays, which may affect the level of bookings going forward although increased prices may also result in higher commission. The effect in Greece is that the underlying value of the Project, which is based on Euros/Dollars, means that a lower Sterling exchange rate will lead to an increase in the equivalent Sterling value.

In conclusion, whilst there are momentous events over which we have no control, we have never been closer to fulfilling our substantial potential.

Christopher W Egleton

Chairman

14 July 2016

Unaudited Consolidated Statement of Comprehensive Income

6 months ended 30 April 2016

	6 months ended 30.04.16                         £'000	6 months ended 30.04.15                      £'000	Year ended 31.10.15                          £'000
Total transaction value	33,106	28,723	60,964
Revenue	3,544	2,981	6,816
Cost of sales	-	-	(323)
Gross profit	3,544	2,981	6,493
Operating expenses	(3,618)	(3,011)	(6,523)
Other operating expenses
Corporate development costs	(222)	(244)	(511)
Charge in respect of share based payments	(14)	(28)	(57)
Operating loss	(310)	(302)	(598)
Finance costs	(746)	(457)	(1,022)
Loss before taxation	(1,056)	(759)	(1,620)
Taxation	-	-	-
Loss for period  attributable to equity holders of the Company	(1,056)	(759)	(1,620)
Loss per share attributable to equity holders of
the Company: Basic and diluted	(0.56)p	(0.43)p	(0.89p)

Unaudited Consolidated Statement of Changes in Equity

6 months ended 30 April 2016

6 months ended 30 April 2016

	Share capital £'000	Share premium £'000	Merger reserve £'000	Warrant reserve £000	Retained earnings £'000	Total equity £'000
Balance at 1 November 2015	14,975	31,435	9,349	1,904	(13,831)	43,832
Loss for the period	-	-	-	-	(1,056)	(1,056)
Issue of ordinary shares at a premium	82	800	-	-	-	882
Share based payment charge	-	-	-	-	14	14
Balance at 30 April 2016	15,057	32,235	9,349	1,904	(14,873)	43,672

6 months ended 30 April 2015

	Share capital £'000	Share premium £'000	Merger reserve £'000	Warrant reserve £'000	Retained earnings £'000	Total equity £'000
Balance at 1 November 2014	14,843	30,261	9,349	313	(12,268)	42,498
Loss for the period	-	-	-	-	(759)	(759)
Issue of ordinary shares at a premium	80	531	-	-	-	611
Share based payment charge	-	-	-	-	310	310
Balance at 30 April 2015	14,923	30,792	9,349	313	(12,717)	42,660

Year ended 31 October 2015

	Share capital £'000	Share premium £'000	Merger reserve £'000	Warrant reserve £'000	Retained earnings £'000	Total equity £'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 payment charge	-	-	-	1,591	57	1,648
Balance at 31 October 2015	14,975	31,435	9,349	1,904	(13,831)	43,832

Unaudited Consolidated Balance Sheet as at 30 April 2016

	As at 30.04.16 £'000	As at 30.04.15 £'000	As at 31.10.15 £'000
Assets
Non-current assets
Intangible assets	9,818	9,568	9,835
Property, plant and equipment	688	718	711
Total non-current assets	10,506	10,286	10,546
Current assets
Inventories	41,781	40,607	41,266
Receivables	2,683	1,916	2,171
Cash and cash equivalents	67	539	145
Total current assets	44,531	43,062	43,582
Total assets	55,037	53,348	54,128
Equity
Share capital	15,057	14,923	14,975
Share premium account	32,235	30,792	31,435
Merger reserve account	9,349	9,349	9,349
Warrant reserve	1,904	313	1,904
Retained earnings	(14,873)	(12,717)	(13,831)
Total equity	43,672	42,660	43,832
Liabilities
Non-current liabilities	-	4,000	-
Current liabilities	11,365	6,688	10,296
Total liabilities	11,365	10,688	10,296
Total equity and liabilities	55,037	53,348	54,128

Unaudited Consolidated Cash Flow Statement

6 months ended 30 April 2016

	6 months ended 30.04.16 £'000	6 months ended 30.04.15 £'000	Year ended 31.10.15 £'000
Cash flows from operating activities
Net cash inflow/(outflow) from continuing operations (note 1)	(490)	396	(348)
Finance costs	(265)	(175)	(394)
Net cash (used in)/generated from operating activities	(755)	221	(742)
Cash flows from investing activities
Purchase of property, plant and equipment	(24)	(64)	(116)
Purchase of intangible assets	(51)	(256)	(629)
Net cash used in investing activities	(75)	(320)	(745)
Cash flows from financing activities
Net proceeds from the issue of ordinary shares	-	11	70
Loans received	752	500	1,435
Net cash generated from financing activities	752	511	1,505
Net (decrease)/increase in cash	(78)	412	18
Cash at beginning of period	145	127	127
Cash at end of period	67	539	145

Notes to the Unaudited Consolidated Cash Flow Statement

6 months ended 30 April 2016

1             Cash flows from operating activities

	6 months ended 30.04.16                    £'000	6 months ended 30.04.15                          £'000	Year ended 31.10.15                          £'000
Loss before taxation	(1,056)	(759)	(1,620)
Finance costs	265	175	394
Depreciation	51	52	103
Amortisation	158	102	208
Exchange loss relevant to property, plant and equipment	6	11	19
Increase in inventories	(515)	(565)	(1,224)
Share based payments	495	310	685
Increase in receivables	(512)	(324)	(579)
Decrease in non-current liabilities	-	-	430
Increase in current liabilities	593	794	-
Non cash movement in equity	25	600	1,236
Net cash inflow/(outflow) from continuing operations	(490)	396	(348)

Notes to the unaudited interim results

6 months ended 30 April 2016

1. General information

The Company is a public limited company incorporated in England and Wales and quoted on AIM. The Company's principal activity in the period 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. Basis of preparation

The interim financial statements are unaudited and do not constitute statutory accounts as defined in Section 434(3) of the Companies Act 2006. A copy of the audited Report and Financial Statements for the year ended 31 October 2015 has been delivered to the Registrar of Companies. The auditor's report on these accounts was unqualified and did not contain statements under s498(2) to s498(4) of the Companies Act 2006. The Report and Financial Statements for the year ended 31 October 2015 were approved by the Board on 30 March 2016.

The interim financial statements for the 6 months ended 30 April 2016 comprise an Unaudited Consolidated Statement of Comprehensive Income, Unaudited Consolidated Statement of Changes in Equity, Unaudited Consolidated Balance Sheet and Unaudited Consolidated Cash Flow statement plus relevant notes.

The interim 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.

The principal accounting policies adopted in the preparation of the interim financial statements are consistent with those adopted in the Report and Financial Statements for the year ended 31 October 2015.

Going concern

The interim unaudited financial statements have been prepared on the going concern basis.

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 has been published in the Government Gazette. The planning rules for the Project are now enshrined in law.  Appeals against the Presidential Decree have been lodged and the hearing by the Greek Council of State of these appeals will be on 16 September 2016.

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.

Notes to the unaudited interim results (continued)

6 months ended 30 April 2016

2. Basis of preparation (continued)

Going concern (continued)

With a number of acquisitions in the planned expansion of its Travel and Leisure business having been completed over 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.

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.

Notes to the unaudited interim results (continued)

6 months ended 30 April 2016

3. Segmented information (continued)

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.

	6 months ended 30 April 2016
	Luxury Resorts	Travel and Leisure	Corporate Development	Total
	£'000	£'000	£'000	£'000
Total transaction value	-	33,106	-	33,106
Revenue	-	3,544	-	3,544
Cost of sales	-	-	-	-
Gross profit	-	3,544	-	3,544
Operating expenses	(197)	(3,421)	(222)	(3,840)
	(197)	123	(222)	(296)
Charge in respect of share based payments	(14)	-	-	(14)
Operating (loss)/profit	(211)	123	(222)	(310)
Finance costs	(680)	(66)	-	(746)
(Loss)/profit before taxation	(891)	57	(222)	(1,056)
Operating expenses include:
Depreciation and amortisation	-	209	-	209
Operating leases - plant and equipment	-	8	-	8
Assets/liabilities
Goodwill	6,127	2,601	-	8,728
Other non-current assets	138	1,640	-	1,778
Current assets	42,638	1,893	-	44,531
Total assets	48,903	6,134	-	55,037
Total liabilities	7,859	3,506	-	11,365

Notes to the unaudited interim results (continued)

6 months ended 30 April 2016

3. Segmented information (continued)

	6 months ended 30 April 2015
	Luxury Resorts	Travel and Leisure	Corporate Development	Total
	£'000	£'000	£'000	£'000
Total transaction value	-	28,723	-	28,723
Revenue	-	2,981	-	2,981
Cost of sales	-	-	-	-
Gross profit	-	2,981	-	2,981
Operating expenses	(173)	(2,838)	(244)	(3,255)
	(173)	143	(244)	(274)
Charge in respect of share based payments	(28)	-	-	(28)
Operating (loss)/profit	(201)	143	(244)	(302)
Finance costs	(426)	(31)	-	(457)
(Loss)/profit before taxation	(627)	112	(244)	(759)
Operating expenses include:
Depreciation and amortisation	-	154	-	154
Operating leases - plant and equipment	-	11	-	11
Assets/liabilities
Goodwill	6,127	2,451	-	8,578
Other non-current assets	134	1,574	-	1,708
Current assets	41,402	1,660	-	43,062
Total assets	47,663	5,685	-	53,348
Non-current liabilities	4,000	-	-	4,000
Current liabilities	5,247	1,441	-	6,688
Total liabilities	9,247	1,441	-	10,688

Notes to the unaudited interim results (continued)

6 months ended 30 April 2016 

3. Segmented information (continued)

	Year ended 31 October 2015
	Luxury Resorts	Travel and Leisure	Corporate Development	Total
	£'000	£'000	£'000	£'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 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 directors consider that there have been no indicators of impairment of goodwill for either the Project or the Travel and Leisure CGU since the last annual review and therefore do not consider that an interim review is required.

Notes to the unaudited interim results (continued)

6 months ended 30 April 2016

5. 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 period. 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 6 months ended 30 April 2016 was 188,729,546 (6 months ended 30 April 2015: 177,502,902, year ended 31 October 2015: 182,214,717).

6. Share based payments charge

	6 months ended 30.04.16                         £'000	6 months ended 30.04.15                      £'000	Year ended 31.10.15                          £'000
Share based payments - directors	14	28	57
Share based payments - warrants finance charges	481	282	628
	495	310	685

In accordance with IAS 32, the share based payments charge in respect of warrants finance charges shown above has been included in Finance costs in the Unaudited Consolidated Statement of Comprehensive Income.

This information is provided by RNS

The company news service from the London Stock Exchange

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