REG - Minoan Group PLC - Preliminary Results Announcement <Origin Href="QuoteRef">MIN.L</Origin>

MinoanAnnouncement

31/03/2017 12:45

RNS Number : 1906B
Minoan Group PLC
31 March 2017
31 March 2017
Preliminary Results Announcement
Minoan Group Plc (or "the Group") announces its preliminary results for the year ended 31 October 2016
Highlights
 Greek Media has reported the dismissal of the appeals against the Presidential Decree which, if confirmed, will be a transformational event for the Group.
 Discussions continue with various potential partners including, inter alia, Hotel Operators, Joint Venture Partners, Financiers and Investors to consider the best route for the project to deliver maximum value for shareholders.
 Total Group transaction value up by over 11% to 67,820,000 from 60,964,000 
 Group gross profits increased by 8% to 7,044,000 from 6,493,000 
 The Travel and Leisure delivered EBITDA in excess of 700,000 despite the negative impact of Brexit. This has been followed up by a strong start to the current year (commission earned up 16%)
 Group is well positioned to capitalise on the transformational event of securing the Presidential Decree in Greece, when it is confirmed. 
Minoan Chairman, Christopher Egleton commented:
"On the assumption that the reports in the Greek media are correct, the next twelve months are likely to be the most value enhancing in the Group's history."
Minoan Group Plc's Preliminary Results Announcement for the year ended 31 October 2016 can be viewed on the Company's website, www.minoangroup.com, with effect from 31 March 2017.
For further information please 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 Prowting



Throgmorton Street Capital
020 7071 0808
Forbes Cutler



Morgan Rossiter 
020 3195 3240
Richard Morgan Evans/James Rossiter

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.
Chairman's Statement 
Introduction
The status of the Itanos Gaia project in Crete (the "Project") and of the Appeals against the issue of the Presidential Decree ("PD") and the positive outlook for the future will be the focus of my Statement.
The dismissal of the Appeals against the PD would be transformational for the Group and the status of our Travel and Leisure business ("T&L") is equally encouraging albeit on a less significant scale.
Once again T&L reports strong year on year growth of 11% in total transaction value. This was achieved despite the Brexit referendum which caused an immediate and significant short term drop in business, exacerbated by a 50% drop in Turkish travel following terrorist activity.
Greece
In the Group's Interim Results Announcement in July last year, I reported that Appeals against the issue of the PD had been lodged and that we awaited a Court Hearing at which we anticipated a decision to dismiss the appeals and confirm the granting of the equivalent of outline planning permission for the Project.
On 24 March 2017 we announced on AIM that we noted Greek media reports stating that the Appeals had indeed been rejected by the Greek Supreme Court (the "Court"). The timing of this Chairman's Statement is such that an official announcement has not yet been made by the Court and, therefore, it is difficult to expand more on the Greek media reports other than, once again, to note them.
Your Board has remained confident in the Greek justice system throughout the long process of seeking the appropriate planning consent for the Project and, of course, the turn of events noted above gives every reason for this confidence to be sustained. The Greek Supreme Court, like most others, does not work to a published timetable and whilst it is possible that a decision is published in a few weeks, shareholders should not be concerned if it takes longer.
The confirmation of the Appeals being dismissed will, of itself, be a transformational event on many levels for the Group. It will necessitate considerable effort in a relatively short timeframe in order to pursue more vigorously various ongoing discussions and negotiations with potential partners and others in readiness for, and to continue after, the official notification from the Court. 
It should be noted however, that joint ventures and other complex real estate transactions are not, by their nature, quick or easy to bring to a conclusion. In our case, the fact that the Project is in a country where there is economic uncertainty will also have an impact. Nevertheless, your Board is confident in its ability to achieve a satisfactory solution for all shareholders.
I will report in due course when notification is received from the Court.
Travel and Leisure 
T&L has again reported a solid set of financial results that reflect a continued growth in revenue and gross profit despite the Brexit impact. This growth has funded a continued investment in operating costs in order to take the business into the next phase of organic growth.
Chairman's Statement (continued)
Travel and Leisure (continued)
Total transaction value has increased in the period under review by 11% from 61m to 68m and gross profit shows a year on year increase of 551,000 (8%) to 7,044,000 (2015: 6,493,000). The investment in operating costs referred to above has increased the overhead cost to 6,772,000 (2015: 6,106). EBITDA increased to 715,000 (2015: 698,000) whilst the effect of an increase in depreciation charge sees operating profit decrease to 272,000 (2015: 387,000).
Having made the investment to secure continued growth the bounce back from the Brexit dip has continued and I regard it as encouraging that gross profit in the current year is running at a year on year growth rate of 16% and I expect a significantly better result in the current year.
Financial Review
The growth in revenue and gross profit is attributable to T&L as set out above.
In respect of Operating Expenses, a year on year increase in costs associated with the Project and in Corporate Development, together with the investment in the T&L cost base noted above, has resulted in an increase of 247,000 in the current year's operating loss to 788,000 (2015: 541,000). The cost increase and consequent decrease in operating profit is in line with the Group's plan and is, in the main, a function of investing for growth in T&L.
An increase in finance costs of 462,000 (which includes an increase in the warrants charge of 282,000) sees the reported net loss move to 2,272,000 (2015: 1,620,000).
In respect of the balance sheet, and as noted above subject to receipt of formal notifications from the Greek Supreme Court, we will be working hard on crystallisation of the value of the Project (which I have previously reported to shareholders has been valued at "around 100m"). The value of the Project in the Consolidated Balance Sheet is 43m. We reported to shareholders in October 2016 the extension of the Loan Facility with Hillside International Holdings Limited to 30 June 2017. Settlement of this loan will form part of our considerations in securing shareholder value for the Project.
Outlook
In respect of the Project, we await confirmation and the publication of the decision from the Greek Supreme Court. Once confirmation is received, the Group will be in a good position to negotiate maximum value from partners and developers and, jointly, plan the next steps.
In respect of T&L, I have noted above that the levels of organic growth remain healthy. However, in order to achieve major stepped growth in this division through acquisition, the Board will continue to work with advisors in considering the possibility of a separation of T&L from the rest of the Group as well as other solutions.
Chairman's Statement (continued)
Conclusion 
It is difficult to fully express my own and the Board's gratitude for the patience of our shareholders, and the whole team's efforts in bringing the Project to this stage. The delays suffered in Greece have also adversely affected the growth of T&L where, for the past few years we have not been able to acquire a number of businesses, for fear of creating unnecessary dilution in the value per share expected from the Project.
On the presumption that the dismissal of the Appeals is confirmed in the not too distant future I believe that 2017 will bring much better news for shareholders.
The next year is destined to be the most value enhancing in the Group's history and I look forward to making further announcements in the future. 
Christopher W Egleton
Chairman 
31 March 2017
Consolidated Statement of Comprehensive Income
Year ended 31 October 2016
 2016
 '000
 2015
 '000
Total transaction value
67,820
60,964
Revenue
7,317
6,816
Cost of sales
(273)
(323)
Gross profit
7,044
6,493
Operating expenses
(7,261)
(6,523)
Other operating expenses:
Corporate development costs
(595)
(511)
Credit/(charge) in respect of share-based payments
24
(57)
Operating loss
(788)
(598)
Finance costs
(1,484)
(1,022)
Loss before taxation
(2,272)
(1,620)
Taxation
-
-
Loss after taxation
(2,272)
(1,620)
Loss for year attributable to equity holders of the Company
(2,272)
(1,620)
Loss per share attributable to equity holders of
the Company: Basic and diluted
(1.19)p
(0.89)p
Consolidated Statement of Changes in Equity
Year ended 31 October 2016
Year ended 31 October 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 year
-
-
-
-
(2,272)
(2,272)
Issue of ordinary shares at a premium
144
1,150
-
-
-
1,294
Share based payments
(24)
(24)
Extension of warrant expiry date
-
-
-
215
-
215
Balance at 31 October 2016
15,119
32,585
9,349
2,119
(16,127)
43,045
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 payments
-
-
-
1,591
57
1,648
Balance at 31 October 2015
14,975
31,435
9,349
1,904
(13,831)
43,832
Consolidated Balance Sheet as at 31 October 2016
2016
'000
2015
'000
Assets
Non-current assets
Intangible assets
9,771
9,835
Property, plant and equipment
728
711
Total non-current assets
10,499
10,546
Current assets
Inventories
42,562
41,266
Receivables
2,610
2,171
Cash and cash equivalents
104
145
Total current assets
45,276
43,582
Total assets
55,775
54,128
Equity
Share capital
15,119
14,975
Share premium account
32,585
31,435
Merger reserve account
9,349
9,349
Warrant reserve
2,119
1,904
Retained earnings
(16,127)
(13,831)
Total equity
43,045
43,832
Liabilities
Current liabilities
12,730
10,296
Total liabilities
12,730
10,296
Total equity and liabilities
55,775
54,128
Consolidated Cash Flow Statement
Year ended 31 October 2016
 2016
'000
 2015
'000

Cash flows from operating activities
Net cash inflow/(outflow) from continuing operations
458
(348)
Finance costs
(255)
(394)
Net cash generated from/(used) in operating activities
203
(742)
Cash flows from investing activities
Purchase of property, plant and equipment
(103)
(116)
Purchase of intangible assets:
Goodwill - deferred consideration
(130)
-
IT project
(140)
(62)
Net cash used in investing activities
(373)
(745)
Cash flows from financing activities
Net proceeds from the issue of ordinary shares
-
70
Loans received
129
1,435
Net cash generated from financing activities
129
 1,505
Net (decrease)/increase in cash
(41)
18
Cash at beginning of year
145
127
Cash at end of year
104
145
Note to the Consolidated Cash Flow Statement
Year ended 31 October 2016
Cash flows from operating activities
2016
'000
2015
'000
Loss before taxation
(2,272)
(1,620)
Finance costs
1,484
1,022
Depreciation
122
103
Amortisation
334
208
Exchange (gain)/loss relevant to property, plant and equipment
(36)
 19
Increase in inventories
(1,296)
(1,224)
Share-based payments
(24)
57
Increase in receivables
(439)
(579)
Increase/(decrease) in current liabilities
1,291
430
Non cash movement in equity
1,294
1,236
Net cash inflow/(outflow) from continuing operations
458
(348)
Notes to the preliminary results 
Year ended 31 October 2016
1. General information
The financial information set out in this announcement does not constitute statutory financial statements for the year ended 31 October 2016 or 31 October 2015. The report of the auditor on the statutory financial statements for the year ended 31 October 2016 and 31 October 2015 was not qualified.
The report of the auditor on the statutory financial statements for each of the years ended 31 October 2016 and 31 October 2015 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 2015 have been delivered to the Registrar of Companies. The financial statements for the year ended 31 October 2016 will be delivered to the Registrar of Companies following the Company's Annual General Meeting.
The Company is a public limited company incorporated in England and Wales and quoted on AIM. The Company's principal activity in the year under review was that of a holding and management company of a Group involved in the design, creation, development and management of environmentally friendly luxury hotels and resorts and in the operation of independent travel businesses, through which the Group provides a broad range of services including, inter alia, transportation, hotel and other accommodation and leisure services.
2. Accounting policies
Basis of preparation
While the financial information included in this preliminary announcement has been prepared in accordance with the EU adopted International Financial Reporting Standards (IFRS), this announcement does not itself contain sufficient information to comply with IFRS. The Company expects to publish full financial statements for the year ended 31 October 2016 that comply with IFRS in April 2017.
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. 
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. Reports in the Greek media have stated that the appeals lodged against the Presidential Decree have been rejected by the Greek Supreme Court.
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.
Notes to the preliminary results (continued) 
Year ended 31 October 2016
2. Accounting policies (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 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.
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 continues to generate 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. Segmental information
The Group strategy and growth objectives necessitate the building of an associated infrastructure. The Group considers it appropriate to identify separately the corporate development division together with costs related to acquisitions. Accordingly, the Group is organised into three divisions both by business segment and geographical location:
 the luxury resorts division, currently being the development of a luxury resort in Crete, which includes the central administration costs of the Group; 
 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 preliminary results (continued) 
Year ended 31 October 2016
3. Segmental information (continued)

2016

Luxury Resorts 
Travel and Leisure
Corporate Development
Total

'000
'000
'000
'000
Total transaction value
-
67,820 
-
67,820 





Revenue
-
7,317
-
7,317
Cost of sales
-
(273)
-
(273)
Gross profit
-
7,044 
-
7,044





Operating expenses
(489)
(6,772)
(595)
(7,856)
(489)
172
(595)
(812)
Credit in respect of share-based payments
24
-
-
24
Operating (loss)/profit
(465)
272
(595)
(788)
Contribution to central costs
100
(100)
-
-
Finance costs
(1,341)
(143)
-
(1,484)
(Loss)/profit before taxation
(1,706)
29
(595)
(2,272)
Taxation 
-
-
-
-
(Loss)/profit after taxation
(1,706)
29
(595)
(2,272)





Operating expenses include:




Depreciation and amortisation
13
443
-
456
Operating leases - plant and equipment 
-
83
-
83





Assets/liabilities




Goodwill
6,127
2,641
-
8,768
Other non-current assets
157
1,574
-
1,731
Current assets
43,491
1,785
-
45,276
Total assets
49,775
6,000
-
55,775





Total and current liabilities
 10,561
2,169
-
 12,730
Notes to the preliminary results (continued) 
Year ended 31 October 2016
3. Segmental information (continued)

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 current 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 Project is assessed using fair value less costs to sell. The directors have assessed the recoverable amount of the Project as being greater than the combined carrying value of the goodwill and inventories of 48,689,000 at 31 October 2016 on the basis of valuations previously carried out and the positive progress made in the period since. 
Notes to the preliminary results (continued) 
Year ended 31 October 2016
4. Goodwill (continued)
The goodwill allocated to the Travel and Leisure business is 2,641,000. The recoverable amount of the Travel and Leisure business has been assessed using a value in use model. The net present value of projected cash flows is compared with the carrying value of the CGU's assets and goodwill. Cash flow forecasts are based upon management approved budgets for a period of one year and a revenue growth rate of 5% for a further four years, this being consistent with recent historical performance. Thereafter growth rates are reduced to zero. Cash flows are discounted using a pre-tax discount rate of 11%. 
5. Property, plant and equipment
Property, plant and equipment is stated at historical cost less accumulated depreciation and any recognised impairment loss. 
Depreciation is provided in order to write off the cost of each asset, less its estimated residual value, over its estimated useful life on a straight line basis as follows:
Freehold land:
capital cost not depreciated
Leasehold improvements:
over the term of the lease
Plant and equipment:
3 to 5 years
Fixtures and fittings:
3 years
Motor vehicles:
3 to 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. 
6. Revenue
As the Group acts as an agent between the service provider and the end customer, revenue is presented on a net basis as the difference between the sales to the customer and the cost of services purchased and not the total transaction value. When acting as an agent, revenue is recognised when it is notified by the principal as having been earned and due for payment.
Where the Group provides management or consultancy services, the value of such services is included in revenue and is recognised in the period in which these services are provided.
7. 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. The fair values of the LTIP awards, options and warrants are calculated using the Black-Scholes and Monte Carlo fair value pricing models as appropriate at the grant date. The fair value of LTIP awards and options are charged to profit or loss over their vesting periods, with a corresponding entry recognised in equity. This charge does not involve any cash payment by the Group.
Notes to the preliminary results (continued) 
Year ended 31 October 2016
7. Share-based payments (continued)

 '000
Year ended 31 October 2016

Share-based payments - directors
(24)

(24)
Year ended 31 October 2015

Share-based payments - directors 
 57

 57
8. 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 potential dilutive ordinary shares. As the Group is loss making, there are no dilutive instruments in issue, and 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 2016 was 190,972,389 (31 October 2015: 182,214,717). See note 9 for potentially dilutive share options issued after the balance sheet date.
9. Events after the balance sheet date
1. On 22 December 2016 the Company announced the issue of 2,700,000 Ordinary Shares of 1p each at 8p 
 per share to settle certain existing liabilities.
2. Also on 22 December 2016 the Company announced that the expiry dates of certain Options granted to
 certain directors and executives be extended from 31 December 2016 to 31 December 2017 (see note 17).
3. On 10 January 2017 the Company announced that, in order to satisfy certain existing commitments, it has
 granted Options to subscribe for 6,000,000 Ordinary Shares of 1p each at 10p per share. The Options to
 expire on 9 July 2018.
4. On 11 January 2017 the Company announced that, as part of his employment arrangements, it has 
 issued an Option to subscribe for 1,000,000 Ordinary Shares of 1p each at 8p per share to Brian 
 Cassidy, a Person Discharging Managerial Responsibilities. The Option to expire on 9 January 2020.
5. On 24 March 2017 the Company announced that it has noted reports in the Greek Media stating that the 
 appeals against the Presidential Decree granting land use approval for its Project in Crete have been 
 rejected by the Greek Supreme Court.

This information is provided by RNS
The company news service from the London Stock Exchange
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