REG - Minoan Group PLC - Annual Results for the Year Ended 31 October 2022
28/04/2023 07:15
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RNS Number : 8523X Minoan Group PLC 28 April 2023
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
28 April 2023
Minoan Group Plc
("Minoan", the "Group" or the "Company")
Results Announcement
Minoan Group Plc announces its results for the year ended 31 October 2022
Project highlights
· Substantial financial returns whether on existing basis
or amended contract.
· New Project Masterplan and revised Business Plans.
· Additional senior management and experienced
international real estate consultants.
· NDAs signed with first hotel group and financial
partners.
· Key milestones and timeline now clear.
Financial highlights
· Loss before taxation of £1,065,000 (2020/21:
£749,000) due to increased loan interest charges.
· Operating costs slightly increased to £541,000
(2020/21: £511,000).
· Net assets increased to £42,689,000 (2020/21:
£42,406,000).
George Mergos, Chairman of Loyalward Limited, said
"The period under review has seen the vision for the Project crystallise,
following significant effort to create a clear route forward so that
Shareholders are able to have a much better idea of the very substantial value
that is being established within the Group."
Christopher Egleton, Chairman of Minoan, said:
"The Company is now able to move forward with more certainty and we will
continue our discussions with the Foundation while focusing on the Project
commercialisation."
Minoan Group Plc's Report and Financial Statements for the year ended 31
October 2022 can be viewed on the Company's website with effect from 28 April
2023. A copy of the Report and Financial statements is also being posted to
shareholders today.
For further information visit www.minoangroup.com or contact:
Minoan Group Plc
Christopher Egleton
christopher.egleton@minoangroup.com
George
Mergos
georgios.mergos@minoangroup.com
W H Ireland
Limited
020 7220 1666
Antonio Bossi / Enzo Aliaj
Peterhouse Capital Limited
020 7469 0930
Duncan Vasey
Chairman's Statement
Introduction
During the year under review, which commenced in November 2021, as well as
subsequently, your Company has been active in progressing the Itanos Gaia
Project in Crete (the "Project"). In the period we completed the new Project
Masterplan, revised Business Plans, made additions to the senior management
team and appointed further experienced international consultants.
The continuing constructive discussions with the Public Welfare Ecclesiastical
Foundation Panagia Akrotiriani (the "Foundation") are not impeding progress on
the Project itself, as we are moving forward based on the existing contractual
documentation. On this basis, Shareholders will be able to see from the report
of George Mergos, Chairman of Loyalward, that the key numbers relating to the
Project are very strong.
Financial Review
Operating costs for the year slightly increased to £541,000 compared to
£511,000 for the year to 31 October 2022. The loss before taxation for the
year was £1,065,000 compared to £749,000 recorded for the year to 31 October
2021 due to increased loan interest charges.
The Company's net assets at 31 October 2022 increased to £42,689,000 from
£42,406,000. Capitalised project costs, being costs associated with acquiring
and developing the site in Crete, planning and other design costs, increased
by £600,000 to £47,358,000.
Terms for the renewal of the DAGG loan have been received and subject to
finalising final details, the Company expects to enter into a new agreement
with DAGG in the next few days. A further announcement will be made in due
course.
The Project and Greece
The good progress, as reported in the Statement of the Chairman of Loyalward
Limited, which follows this report has enabled the management team to move
forward with certainty and to undertake and later complete the Commercial and
other negotiations that have been in progress for some time as evidenced by
the signing of the first of a number of Non Disclosure Agreements with various
interested parties. The Commercialisation of the Project for the benefit of
shareholders is now the main focus.
During the year Savills, the Global Real Estate Advisors using both their
British and Greek teams, were appointed to work alongside the Company's
Project Team and Deloitte Financial Consultants to review the real estate
portion of the resorts at the Project and to ensure it is positioned correctly
in the international market. The political and economic situation in Greece
has remained stable during the period under review although a general election
has been called for next month.
It is important to see Greece and the Project in the context of the Greek and
International markets, where the market for top end resorts and villas remain
buoyant with room rates having increased significantly above inflation.
Further, there are various incentive and loan packages that are being offered
by the Greek Government combined with the EU. We will be writing to
shareholders on these and other financial matters as they affect the Project
going forward.
Boards and Management
As previously noted, during the year under review the Board welcomed George
Mergos to the board of Minoan Group Plc and as Chairman of Loyalward Limited,
the Group's wholly owned subsidiary and owner of the Project. In October we
announced the team had been further strengthened with the appointment of Marco
Nijhof to work alongside George. Marco has extensive board level experience
within the international five-star luxury hotel and retail hospitality
industry, developing, commercialising and operating world class tourism and
other businesses.
We expect to make further appointments to both the Management and advisory
teams as we progress.
Chairman's Statement (continued)
Outlook
I am pleased that the Company is able to move forward with more certainty. We
will continue our discussions with the Foundation and will be focusing on the
Project and its commercialisation. In this context both George Mergos and I
expect to be able to report further progress shortly.
Christopher W Egleton
Chairman
28 April 2023
Statement of the Chairman of Loyalward Limited, the Project Owner
As Shareholders are aware I joined the Boards of Loyalward and Minoan
something over a year ago. My aims were to help ensure that the Masterplan,
the Business Plan, and the discussions with the Public Welfare Ecclesiastical
Foundation Panagia Akrotiriani (the "Foundation") were on a stable base and,
in the case of the Foundation, in a position to move forward. I am pleased to
be able to confirm that, as reported previously, those objectives have been
achieved with the Masterplan and Business Plan having been submitted to the
Foundation. In parallel, discussions with the Foundation are progressing
well and are continuing both with their advisors as well as the Bishop of
Irapetra and Sitia as Chairman of the Foundation with a view to achieving the
optimum solution for both parties.
The discussions with the Foundation and its advisors cover the key legal,
technical and economic aspects of the Project and have confirmed that the new
law on Epifania (the equivalent of a ground lease in English law) best serves
the interests of both parties. The current Project design relates to Complex
Resorts and may be realised on the basis of the existing legal title
documentation as well as on the basis of an amended contract with Epifania
(the equivalent of a ground lease in English law). Shareholders will be
pleased to learn that in both cases the Project produces very substantial
returns to all parties and we can only expect them to improve further in the
future.
All of those involved in the discussions have continually reiterated their
wish to see the vision for the Itanos Gaia Project in Crete (the "Project")
realised on the ground. In this context, in order to avoid or reduce any
further unnecessary delays in delivery, the Company is progressing all the
elements of the Project including the preparation of additional detailed
Studies necessary for the Environmental Assessment ("EA") to ensure that
everything remains in line with the Environmental rules set out in the
Presidential Decree. We expect to lodge the EA later this year. In the
meantime, we are now able to deal with the other elements of the Project from
a position of certainty which, in turn, means that we can enter into the
commercial and financing arrangements necessary for implementation.
The EA (together with the Masterplan upon which it is based) is the underlying
document which encapsulates the vision for the Project as it moves forward.
This vision is, in part, to create one of the most environmentally friendly
resorts in the Mediterranean, set in an unrivalled location, famed in
mythology as the place where Europa was born and where the Greek Gods went to
celebrate their victories and regenerate their spirits, whilst at the same
time allowing guests the sort of experience that is today expected of top end
resorts.
The Project will be a very high quality hotel and villa tourism Project set in
25 square kilometres of the Cavo Sidero Peninsula in Eastern Crete, with 28
kilometres of coastline and permitted build space of 108,000 square metres.
Current plans include four luxury hotel and villa complexes, three of which
are adjacent to the coastline in spectacular locations with the fourth being
set within the golf area in the centre of the site. All hotel rooms and villas
will have a view of the Mediterranean and will, for the most part, provide
privacy not usually available in such locations.
The key milestones and timeline that we expect are as follows:
Hotel Letters of Intent: 2023
Environmental Permitting: 2023/24
Financial Partnerships and Project Finance Agreements: 2023/24
Building Permits: 2024/25
Commencement of Construction: 2025
Commencement of first Hotel Operations: 2026
Overall construction period: 5-7 years.
Statement of the Chairman of Loyalward Limited, the Project Owner
(continued)
Based on the timeline above and the Business Plan(s) prepared with Deloitte
the key numbers are:
Turnover at maturity (excluding villa disposals): €160m
Expected Gross Operating Profit: in excess of 30%
Equity IRR: in excess of 20%.
Whilst these figures are themselves extremely good, they are not set in stone
and we believe they will be seen to be conservative as the Project moves
forward.
Management and Advisors
Shareholders will be aware that we have improved the Project's management team
by the addition of Marco Nijhof to the Board of Loyalward and have appointed
Savills to advise on the real estate components. We are also in the process of
recruiting other members of both the advisory and management teams about which
we will inform you in the next few months.
Conclusion
The period under review has seen the vision for the Project crystallise,
allowed the results of the heavy workload to create a clear route forward so
that Shareholders are able to have a much better idea of the very substantial
value that is being established within the Group. I expect to be able to
inform Shareholders of real progress in respect of both Hospitality and
Financial partnerships in the near future.
George Mergos
Chairman, Loyalward
Limited
28 April 2023
Consolidated Statement of Comprehensive Income
Year ended 31 October 2022
2022 2021
£'000 £'000
Revenue - -
Cost of sales - -
Gross profit - -
- -
Operating expenses (541) (511)
Other operating expenses:
Corporate development costs - -
Operating loss (541) (511)
Finance costs (524) (238)
Loss before taxation (1,065) (749)
Taxation - -
Loss after taxation (1,065) (749)
Other Comprehensive income for the year - -
Total Comprehensive income for the year (1,065) (749)
Loss for year attributable to equity holders of the Company (1,065) (749)
Loss per share attributable to equity holders of
the Company: Basic and diluted (0.16)p (0.14)p
Consolidated Statement of Changes in Equity
Year ended 31 October 2022
Year ended 31 October 2022
Share Share premium Merger Warrant Retained earnings £'000
capital £'000 reserve £'000 Reserve Total
£'000 £'000 equity
£'000
Balance at 1 November 2021 19,021 36,583 9,349 2,571 (25,118) 42,406
Loss for the year - - - - (1,065)
(1,065)
1,300 - - - - 1,300
Issue of ordinary shares at a premium
Increase in Warrant Reserve (note 17) - - - 48 - 48
20,321 36,583 9,349 2,619 (26,183) 42,689
Balance at 31 October 2022
Year ended 31 October 2021
Share Share premium Merger Warrant Retained earnings £'000
capital £'000 reserve £'000 Reserve Total
£'000 £'000 equity
£'000
Balance at 1 November 2020 17,959 36,476 9,349 2,527 (24,369) 41,942
Loss for the year - - - - (749)
(749)
1,062 107 - - - 1,169
Issue of ordinary shares at a premium
Reduction in Warrant Reserve (note 17) - - - 44 - 44
19,021 36,583 9,349 2,571 (25,118) 42,406
Balance at 31 October 2021
Consolidated Statement of Financial Position as at 31 October 2022
2022 2021
£'000
£'000
Assets
Non-current assets
Intangible assets 3,583 3,583
Property, plant and equipment 157 157
Total non-current assets 3,740 3,740
Current assets
Inventories 47,388 46,758
Receivables 167 162
Cash and cash equivalents 130 20
Total current assets 47,685 46,940
Total assets 51,425 50,680
Equity
Share capital 20,321 19,021
Share premium account 36,583 36,583
Merger reserve account 9,349 9,349
Warrant reserve 2,619 2,571
Retained earnings (26,183) (25,118)
Total equity 42,689 42,406
Liabilities
Current liabilities 8,736 8,274
Total equity and liabilities 51,425 50,680
Consolidated Cash Flow Statement
Year ended 31 October 2022
2022 2021
£'000 £'000
Cash flows from operating activities
Loss before taxation (1,065) (749)
Finance costs 524 238
Depreciation - -
Increase in inventories (630) (327)
(Increase) / decrease in receivables (5) 63
Increase / (decrease) in current liabilities 370 (514)
Net cash (outflow) from operations (806) (1,289)
Finance costs (476) (194)
Net cash used in operating activities (1,282) (1,483)
Cash flows from investing activities
Purchase of property, plant and equipment - -
Net cash used in investing activities - -
Cash flows from financing activities
Net proceeds from the issue of ordinary shares 1,300 1,169
Loans received 92 328
Net cash generated from financing activities 1,392 1,497
Net increase in cash 110 14
Cash at beginning of year 20 6
Cash at end of year 130 20
Notes to the Financial Statements
Year ended 31 October 2022
1 General information
The financial information set out in this announcement does not constitute
statutory financial statements for the year ended 31 October 2022 or 31
October 2021. The report of the auditors on the statutory financial statements
for the year ended 31 October 2022 and 31 October 2021 was not qualified.
The report of the auditors on the statutory financial statements for each of
the years ended 31 October 2022 and 31 October 2021 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 2021 have been delivered to the
Registrar of Companies. The financial statements for the year ended 31 October
2022 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. 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 plus the provision of general management services.
2 Accounting policies
Basis of preparation
The financial statements are prepared under the historical cost convention
except for where financial instruments are stated at fair value.
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 United Kingdom at 31 October 2022:
Standard Details of amendment Effective date
IAS 1 Presentation of Financial statements IASB defers effective date of Classification of Liabilities as Current or 1 January 2023
Non-current (Amendments to IAS 1) to 1 January 2023
IAS1 Presentation of Financial statements Amended by Non-current Liabilities with Covenants (Amendments to IAS 1) 1 January 2024
IAS 12 Income Taxes Amended by Deferred Tax related to Assets and Liabilities arising from a 1 January 2023
Single Transaction (Amendments to IAS 12)
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 been rejected by
the Greek Supreme Court. Accordingly, the directors consider that they will
conclude further Project joint venture agreements in the near term.
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.
Notes to the Financial Statements (continued)
Year ended 31 October 2022
2 Accounting policies (continued)
Going concern (continued)
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 2022 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.
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:
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.
Investments
Investments in subsidiaries are stated at cost less any impairment deemed
necessary.
Notes to the Financial Statements (continued)
Year ended 31 October 2022
2 Accounting policies (continued)
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.
Foreign currency
A foreign currency transaction is recorded, on initial recognition in
Sterling, 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
Sterling by applying to the foreign currency amount the exchange rate between
the Sterling 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.
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.
Share-based payments
The Company has granted options and warrants to purchase Ordinary Shares. The
fair values of the options and warrants are calculated using the Black-Scholes
and Binomial option pricing models as appropriate at the grant date. The fair
value of the options is charged to profit or loss with a corresponding entry
recognised in equity. This charge does not involve any cash payment by the
Group.
Notes to the Financial Statements (continued)
Year ended 31 October 2022
2 Accounting policies (continued)
Share-based payments (continued)
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.
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 statement of financial
position 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
statement of financial position 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.
3 Information regarding directors and employees
Directors' and key management remuneration
Costs taken to Costs taken to Total
inventories
profit or loss
£'000 £'000 £'000
Year ended 31 October 2022
Fees 65 90 155
Sums charged by third parties for - 85 85
directors' and key management services
Share-based payments - - -
65 175 240
Year ended 31 October 2021
Fees 35 115 150
Sums charged by third parties for 2 100 112
directors' and key management services
Share-based payments - - -
37 225 262
Notes to the Financial Statements (continued)
Year ended 31 October 2022
3 Information regarding directors and employees (continued)
The total directors' and key management remuneration shown above includes the
following amounts in respect of the directors of the Company. No director has
a service agreement with a notice period that exceeds twelve months.
2022 2021
Fees/Sums charged by third parties Share-based payments Fees/Sums charged by third parties Share-based payments
£'000 £'000 £'000 £'000
C W Egleton (Chairman) 40 - 40 -
B D Bartman (Retired 15/2/22) 10 - 35 -
G D Cook 35 - 35 -
T R C Hill 35 - 35 -
G Mergos 30 - - -
150 - 145 -
2022 2021
No. No.
Group monthly average number of persons employed
Directors 9 7
Management, administration and sales - -
4 Loss before taxation
The loss before taxation is stated after charging:
2022 2021
£'000 £'000
Depreciation - -
Auditor's remuneration 23 17
Foreign exchange variances - -
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