REG - Minoan Group PLC - Interim Results Announcement <Origin Href="QuoteRef">MIN.L</Origin>
06/09/2014 22:41
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Minoan Group PLC
31 July 2014
31 July 2014
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 2014
HIGHLIGHTS
Financials (comparisons to the 6 months ending 30 April 2013)
· Group total transaction value of £24.2m, up 22% (£19.8m)
· Group loss after share based payments charge and before tax £694,000 a
23% decrease from £903,000
· Travel and Leisure ("T&L") division profit before tax £149,000, up 27%
( £117,000)
· Completion of "buy in" of the 20% stake in T&L for £930,000, which the
directors believe will be earnings enhancing
· Completion since half-year end of acquisition of Martin Singer Travel
· The Candia Investment Corporation, together with third parties
syndicated into its interests, complete a £1 million investment in the Crete
project ("the Project") and collectively now have a 5% economic interest in
the Project
· Discussions underway with potential partners to move the Project
forward and crystallise value for shareholders as soon as possible after the
granting of the Presidential Decree
Operational
· Strong progress made in the first half and continuing into the third
quarter, developing the Group into a successful international travel and
leisure business
· Robust performance from the T&L division - building on growth from year
end
· T&L profit before tax up. Trading growth from continuing operations in
T&L with increased gross margin and gross profit into third quarter 2014
· Strategic Environmental Assessment approved by Greek Ministry of
Culture following the unanimous positive opinion of the Central Archaeological
Council of Greece
Christopher Egleton, Minoan Chairman, said:
"We are pleased with the continuing progress underway in enhancing shareholder
value across the Group. The growth during the first half in total transaction
value generated by the Travel and Leisure division and, importantly, both
gross margin and profits has continued into the second half. We are more than
capitalising on the upturn in the overall economy with the division's
corporate travel and cruise offerings registering annual sales growth rates of
over 25%. With the Project in Fast Track and all the necessary reaffirmations
of support in place both from the Local Municipality and the Greek Government,
we are progressing talks over the summer with a number of third parties who
have expressed an interest in participating in the Project once the
Presidential Decree has been granted."
The Company's unaudited interim results for the 6 months ended 30 April 2014
can be viewed on Minoan's website, www.minoangroup.com, with effect from 31
July 2014.
For further information visit www.minoangroup.comor contact:
Minoan Group Plc
Christopher Egleton christopher.egleton@minoangroup.com
Duncan Wilson 0141 226 2930
Bill Cole 020 8253 4305
WH Ireland Limited 020 7220 1666
Adrian Hadden/Nick Field
Throgmorton Street Capital 020 7071 0808
Forbes Cutler
Morgan Rossiter 020 3195 3240
Richard Morgan Evans/James Rossiter
Chairman's Statement
Introduction
In the period since the year end the Group's Travel and Leisure business has
performed well and the "buy and build" strategy has been continued
successfully.
During the same period, the Group's project in Greece has achieved a number of
significant milestones in the procedure which leads to the issue of the
Presidential Decree.
Greece
The confirmation by the relevant Ministerial Committee in November 2013 that
the Group's Project will be assessed under the new Article 24 of the amended
Fast Track Laws confirmed its Fast Track status. The Fast Track Law and other
legislation passed in 2013 signified a number of changes in the Greek
Government's policy, the overall intention of which is to make the development
process simpler with a clear framework which is easily understandable by both
Greek and foreign investors.
Major legislative changes of this nature, although enacted in order to speed
up the planning process, can take time to implement into new working practices
and require the completion of amendments to a pre-existing, often onerous
bureaucratic process. The recent temporary pause in the procedure required to
issue the Presidential Decree is a manifestation of how long the
implementation of such new processes can take.
Nonetheless, our internal work is now broadly complete. The Greek Council of
State, which is responsible for reviewing the Presidential Decree, is now in
summer recess until September and we are confident of a positive outcome in
the period following the reconvening of the Court.
Having received the support of the local municipality in Sitia, the Strategic
Environmental Assessment ("SEA") received the positive vote of the Regional
Government of Crete, the Periphery, with the strong support of a large number
of professional unions, including various hotel and commercial unions from the
Lasithi prefecture. In addition, the SEA was approved by the Greek Ministry of
Culture following the unanimous positive opinion of the Central Archaeological
Council of Greece.
During the period The Candia Investment Corporation, together with third
parties syndicated into its interests, completed the £1 million investment
announced previously and collectively now have a 5% economic interest in the
Project.
As always the primary objective for the directors is the crystallisation of
value for shareholders. To this end, during the recess, we intend to progress
ongoing discussions with a number of parties who have expressed an interest in
participating in the Project after the Presidential Decree has been granted.
This should save us time in moving forward with joint ventures and partnership
agreements post such issuance.
Chairman's Statement (continued)
Travel and Leisure
The Group's travel and leisure division has had another successful period with
total transaction value growing to £24.2 million, an increase of 22% over the
half year ended 30 April 2013. At the gross profit level a comparison is not
relevant owing to the change in the settlement system adopted during the same
period in 2013. I am pleased to report, however, that profit before tax has
increased by approximately 27% to £149,000 (6 months ended 30 April 2013:
£117,000).
The division continues its strategy to move away from traditional retail
business towards higher margin business.
In February the Group announced the "buy in" of the 20% stake in its travel
and leisure business for a consideration of £930,000. The stake had been sold
in the previous year and the directors believe that the acquisition will be
earnings enhancing and is in shareholders' best interests.
Since the end of the period the Group has announced the completion of its
acquisition of the trade and assets of Martin Singer Travel a successful, long
established, profitable independent business within 8 miles of Aberdeen
Airport
The Group's management is now examining a number of acquisitions which would
give rise to a "step change" in the travel and leisure business and allow it
to reach critical mass in terms of both total transaction value and profit
before taxation.
The growth in the trading performance of the division has continued since the
period end.
In respect of the continuing business streams, gross profit for the three
months since the end of April has increased by 21% over the like period in
2013. The division's best performing areas continue to be Corporate Travel and
Cruise, both of which are registering annual sales growth rates of over 25%.
Conclusion
The Board is pleased that the success of the previous year has been continued
in the period under review and my colleagues and I look forward to reporting
to shareholders on further significant progress in all areas of the Group's
business in the next few months.
Christopher W Egleton
Chairman
31 July 2014
Unaudited Consolidated Statement of Comprehensive Income
6 months ended 30 April 2014
6 months ended 30.04.14 £'000 6 months ended 30.04.13 £'000 Year ended 31.10.13 £'000
Total transaction value 24,215 19,849 51,164
Revenue 2,496 5,457 9,217
Cost of sales - 2,948 4,021
Gross profit 2,496 2,509 5,196
Operating expenses (2,665) (2,754) (5,416)
Other operating expenses
Corporate development costs (262) (416) (457)
Charge in respect of share-based payments (163) (193) (386)
Operating loss (594) (854) (1,063)
Finance costs (100) (49) (119)
Loss before taxation (694) (903) (1,182)
Taxation credit - - 32
Loss after taxation (694) (903) (1,150)
Profit for period attributable to non-controlling interest - - 22
Loss for period attributable to equity holders of the Company (694) (903) (1,172)
Loss per share attributable to equity holders of
the Company: Basic and diluted (0.42)p (0.60)p (0.78)p
Unaudited Statement of Changes in Equity
6 months ended 30 April 2014
6 months ended 30 April 2014
Share capital£'000 Share premium£'000 Mergerreserve £'000 Retained earnings Non-controlling interest £'000 Totalequity
£'000 £'000
Balance at 1 November 2013 14,693 28,781 9,349 (11,997) 919 41,745
Loss for the period - - - (694) - (694)
Net proceeds from shares issued 56 498 - - 554
Acquisition of non-controlling interest - - - - (919) (919)
Share-based payments:
Current year charges - - - 163 - 163
Settlement of liabilities - - - 439 - 439
Balance at 30 April 2014 14,749 29,279 9,349 (12,089) - 41,288
6 months ended 30 April 2013
Share capital£'000 Share premium£'000 Mergerreserve £'000 Retained earnings Totalequity
£'000 £'000
Balance at 1 November 2012 14,541 28,349 9,349 (11,084) 41,155
Loss for the period - - - (903) (903)
Net proceeds from shares issued 17 48 - - 65
Share-based payments - - - 193 193
Balance at 30 April 2013 14,558 28,397 9,349 (11,794) 40,510
Year ended 31 October 2013
Share capital£'000 Share premium£'000 Mergerreserve £'000 Retained earnings Non-controlling interest Total equity
£'000 £'000 £'000
Balance at 1 November 2012 14,541 28,349 9,349 (11,084) - 41,155
(Loss)/ profit for the year - - - (1,172) 22 (1,150)
Net proceeds from share issues 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
Unaudited Consolidated Balance Sheet as at 30 April 2014
As at 30.04.14 As at 30.04.13 As at 31.10.13
£'000 £'000 £'000
Assets
Non-current assets
Intangible assets 8,979 8,302 8,678
Property, plant and equipment 745 20,985 719
Total non-current assets 9,724 29,287 9,397
Current assets
Inventories 39,017 17,158 38,367
Receivables 922 1,193 896
Cash and cash equivalents 73 819 271
Total current assets 40,012 19,170 39,534
Total assets 49,736 48,457 48,931
Equity
Share capital 14,749 14,558 14,693
Share premium account 29,279 28,397 28,781
Merger reserve account 9,349 9,349 9,349
Retained earnings (12,089) (11,794) (11,997)
41,288 40,510 40,826
Non-controlling interest - - 919
Total equity 41,288 40,510 41,745
Liabilities
Non-current liabilities 2,542 - 1,159
Current liabilities 5,906 7,947 6,027
Total liabilities 8,448 7,947 7,186
Total equity and liabilities 49,736 48,457 48,931
Unaudited Consolidated Cash Flow Statement
6 months ended 30 April 2014
6 months ended 30.04.14£'000 6 months ended 30.04.13£'000 Year ended 31.10.13£'000
Cash flows from operating activities
Net cash (outflow)/inflow from continuing operations (note 1) (1,009) 592 (2,066)
Finance costs (100) (49) (119)
Net cash (used in)/generated from operating activities (1,109) 543 (2,185)
Cash flows from investing activities
Purchase of property, plant and equipment (81) (329) (371)
Purchase of intangible assets (246) (52) (315)
Net cash used in investing activities (327) (381) (686)
Cash flows from financing activities
Loans received 1,701 - 1,760
Net proceeds from sale of shares in subsidiary company - - 770
Acquisition of shares in subsidiary company (430) - -
Payments of hire purchase liabilities (33) - (45)
Net cash generated from financing activities 1,238 - 2,485
Net (decrease)/increase in cash (198) 162 (386)
Cash at beginning of period 271 657 657
Cash at end of period 73 819 271
Notes to the Unaudited Consolidated Cash Flow Statement
6 months ended 30 April 2014
1 Cash flows from operating activities
6 months ended 30.04.14 £'000 6 months ended 30.04.13 £'000 Year ended 31.10.13 £'000
Loss before taxation (694) (903) (1,182)
Finance costs 100 49 119
Depreciation 101 56 124
Amortisation 5 - 45
Loss on disposal of property, plant and equipment - - 102
Exchange loss/(gain) relevant to property, plant and equipment 5 (6) (11)
Increase in inventories (650) (395) (1,291)
Share-based payments 602 193 386
(Increase)/decrease in receivables (26) (130) 175
Decrease in non-current liabilities (100) - -
(Decrease)/increase in current liabilities (636) 1,684 (278)
Non cash movement in non-current assets - - 20,313
Non cash movement in intangible assets (100) - (179)
Non cash movement in investments - (21) -
Non cash movement in inventories - - (20,313)
Non cash movement in current liabilities (39) 65 -
Non cash movement in equity 423 - (76)
Net cash (outflow)/inflow from continuing operations (1,009) 592 (2,066)
Notes to the unaudited interim results
6 months ended 30 April 2014
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 2013 has
been delivered to the Registrar of Companies. The auditors' 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 2013 were approved by the Board on 1 April 2014.
The interim financial statements for the 6 months ended 30 April 2014 comprise
an Unaudited Consolidated Statement of Comprehensive Income, Unaudited
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 2013.
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 ("T&L") business. In particular, the directors have
reviewed the matters referred to below.
Having received approval for the Project to qualify as a strategic investment
and to be eligible for inclusion under the provisions of the Fast Track Law,
the new process approved by the Greek Government allowing for quicker
permitting time for Fast Track projects, the Company is currently awaiting the
approval of the Strategic Environmental Assessment ("SEA") in respect of the
Project, which was submitted on 23 December 2013. Since submission the SEA has
been approved by both the Regional Government of Crete and the Greek Ministry
of Culture.
The public consultation period for the SEA, which includes the relevant
ministries, has been completed and the process of preparing the Presidential
Decree approving the SEA has commenced
Accordingly, the directors consider it relevant that having completed a
financial joint venture agreement prior to Fast Track and any other consents,
they will conclude further Project joint venture agreements in the near term.
In addition, the directors are considering a number of other agreements which
are likely to have a major beneficial impact on the Group's resources.
Notes to the unaudited interim results (continued)
6 months ended 30 April 2014
2. Basis of preparation (continued)
Going concern (continued)
In addition to specific Project related matters as noted above, and as has
been the case in the past, the Group continues to 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 the first acquisitions in the planned expansion of its T&L business
having been completed, 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 2014
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 2014
Luxury Resorts Travel and Leisure Corporate Development Total
£'000 £'000 £'000 £'000
Total transaction value - 24,215 - 24,215
Revenue - 2,496 - 2,496
Cost of sales - - - -
Gross profit - 2,496 - 2,496
Operating expenses (337) (2,328) (262) (2,927)
(337) 168 (262) (431)
Charge in respect of share based payments (163) - - (163)
Operating (loss)/profit (500) 168 (262) (594)
Finance costs (81) (19) - (100)
(Loss)/profit before taxation (581) 149 (262) (694)
Operating expenses include:
Depreciation and amortisation 3 103 - 106
Operating leases - plant and equipment - 22 - 22
Assets/liabilities
Non-current assets 6,286 3,438 - 9,724
Current assets 39,151 861 - 40,012
Total assets 45,437 4,299 - 49,736
Non-current liabilities 2,500 42 - 2,542
Current liabilities 5,475 431 - 5,906
Total liabilities 7,975 473 8,448
Notes to the unaudited interim results (continued)
6 months ended 30 April 2014
3. Segmented information (continued)
6 months ended 30 April 2013
Luxury Resorts Travel and Leisure Corporate Development Total
£'000 £'000 £'000 £'000
Total transaction value - 19,849 - 19,849
Revenue - 5,457 - 5,457
Cost of sales - 2,948 - 2,948
Gross profit - 2,509 - 2,509
Operating expenses (362) (2,392) (416) (3,170)
(362) 117 (416) (661)
Charge in respect of share-based payments (193) - - (193)
Operating (loss)/profit (555) 117 (416) (854)
Finance costs (49) - - (49)
(Loss)/profit before taxation (604) 117 (416) (903)
Operating expenses include:
Depreciation 5 51 - 56
Operating leases - plant and equipment - 25 - 25
Assets/liabilities
Non-current assets 26,607 2,680 - 29,287
Current assets 18,047 1,123 - 19,170
Total assets 44,654 3,803 - 48,457
Current liabilities 5,680 2,267 - 7,947
Notes to the unaudited interim results (continued)
6 months ended 30 April 2014
3. Segmented information (continued)
Year ended 31 October 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)
Contribution to central costs, including management 150 (150) - -
Charge in respect of share-based payments (386) - - (386)
Operating (loss)/profit (805) 199 (457) (1,063)
Finance costs (119) - - (119)
(Loss)/profit before taxation (924) 199 (457) (1,182)
Taxation receipt - 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
Non-current assets 6,292 3,105 - 9,397
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 non-current assets and 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 E100 million, which was included in the Company's AIM readmission
document published on 30 September 2011 and which was reaffirmed in March
2012.
Notes to the unaudited interim results (continued)
6 months ended 30 April 2014
4. Goodwill (continued)
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.
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 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 are now 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.
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.
Gross profit
Gross profit represents the aggregate amount earned on bookings where the
Group acts as either agent or principal. In previous periods, when the Group
has acted as principal, gross profit is the difference between the sales price
to the customer (total transaction value) and the cost of services purchased.
6. 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 to purchase Ordinary Shares of 1p each. A
charge has been made in the consolidated statement of comprehensive income in
respect of the LTIP and options 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.
Notes to the unaudited interim results (continued)
6 months ended 30 April 2014
7. 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 2014 was 166,024,704 (6 months
ended 30 April 2013: 150,239,962, year ended 31 October 2013: 150,942,792).
8. Post Balance Sheet Events
1. On 28 May 2014 the Company announced that it had placed 5,725,000 Ordinary
Shares of 1p each at
12 pence per share with institutional and other investors.
2. On 2 June 2014 the Company announced that it had completed the acquisition
of the trade and assets of
Martin Singer Travel.
This information is provided by RNS
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