REG - Minoan Group PLC - Preliminary Results for the year ended 31 Oct 2020

MinoanAnnouncement

30/04/2021 07:05

RNS Number : 1495X
  
Minoan Group PLC
  
30 April 2021
  
 

Preliminary Results Announcement 
Minoan Group Plc (or "the Company" or "the Group") announces its Preliminary Results for the year ended 31 October 2020
Highlights
·    Overall Group loss reduced by circa £1,201,000 to £876,000 (2020: £2,077,000).
·    Finance costs reduced by £1,266,000
·    Total equity at 31 October 2020 of £41,942,000 (2019: £42,257,000)
·    Group has continued to progress the Crete project
·    Refinanced its only secured indebtedness 
·    Reduced its overall cost base in Greece and the UK 
·    Appointed Deloitte to assist board and review plans
·    Progressed with discussions re adjustments to its contract 
·    In a strong position to move towards commercialisation
 
Minoan Chairman, Christopher Egleton commented:
 
I am pleased that we have been able to make progress in what has been a very difficult period for any business associated with the tourism industry. The Crete project's inherent flexibility allows it to meet the changing demands in the post Covid world.
  
Minoan Group Plc's Preliminary Results Announcement for the year ended 31 October 2020 can be viewed on the Company's website, www.minoangroup.com, with effect from 30 April 2021. 
 
 
For further information please visit www.minoangroup.com or contact: 




Minoan Group Plc


 




Christopher Egleton 


christopher.egleton@minoangroup.com
 




Bill Cole


william.cole@minoangroup.com
 




WH Ireland Limited


020 7220 1666




Adrian Hadden/Lydia Zychowska


 




Pello Capital Limited


020 7710 9610




Mark Treharne


 




Sapience Communications Limited 


020 3195 3240




Richard Morgan Evans


 




 
 
Chairman's Statement
Introduction
 
The period under review, the year ended 31 October 2020, was dominated by the effects of the Covid pandemic. Nevertheless I am pleased to report that, as forecast, the loss for the year was substantially reduced.
During the year, the Group continued to progress the Crete project (the "Project") and refinanced its only secured indebtedness, whilst successfully reducing its overall cost base in Greece and the UK. Notwithstanding the pandemic, we have made steady progress and are well placed to progress the Project as we move into the post-pandemic environment, embracing the vacation environments most applicable to the post-pandemic world.
 
Financial Review
 
The reduction in the loss before taxation to £876,000 from £2,077,000 was largely due to the cancellation of warrants, which led to a credit rather than a charge for share based payments. This credit will not be repeated in the current year but neither will some of the other finance costs and, therefore, I expect that the costs going forward will remain at much lower levels than has been the case in recent years.
Operating costs rose to £864,000 from £799,000 wholly as a result of increases in legal and professional fees.
I am also pleased to report that discussions with our debt provider regarding a rearrangement of the existing terms have commenced.
 
The Project and Greece
 
Covid-19 has undoubtedly led to delays in the timetable we set ourselves in my Chairman's Statement last year. It has, however, been fortuitous in other ways. The true potential of the Project is being highlighted by the very changes in the market that have been driven by Covid-19, with the advantages of space, privacy and luxury already proving to be highly valued.
In order to ensure that the Company's business plan is robust we appointed Deloitte in Athens to conduct a review. This review, which involved all the key hotel financial and commercial assumptions as well as the legal and planning background alongside current and predicted conditions in the tourism market and the experience and expertise of the Group's team, is largely complete.  I am pleased to be able to confirm that both Deloitte and we are satisfied that the current plan is both robust and practical in the current market.   
As I reported last year, at the top end of the market the early indications of the effects of the Covid pandemic seemed to revolve around providing the space for enhanced social distancing.  It now appears to have started to increase the attractiveness of "villas", partly because this style of  accommodation and holiday allows guests a range of choices between complete privacy (isolation)  whilst retaining the ability to be part of a  wider hotel community.
The size, location, and topography of the Site allow for variations in design and therefore future product and mean that the Project is ideally suited to provide the flexibility necessary to meet changing market demands.
All of these factors have an impact on overall value, and shareholders will be pleased to know that, following discussions with its valuers, the Company is of the view that the value of the Project has not been impaired by the effects of the pandemic.
Further, as shareholders are aware from the updates already provided, discussions with The Public Welfare Ecclesiastical Foundation Panagia Akrotiriani regarding desirable adjustments to its contract and long lease are in progress.
Once these have been agreed we will accelerate commercial discussions with new and existing parties and bring them to conclusion.
Outlook
Whilst the pandemic has undoubtedly slowed progress over the last year, it has presented us with the opportunity to work on refining the master contract and highlighted the continuing value of the Project as the sector adapts to the changing needs of a post pandemic world.  This puts us in a very strong position as we move towards commercialisation.
We have launched a new website in recent months, which I hope highlights to both shareholders and potential partners the scale of the opportunity in front of us. This can be found at www.minoangroup.com and we encourage investors to visit it. 
I am pleased to be able to say that I believe that I will be able to update shareholders on progress on all the major issues more frequently over the coming weeks and months.    
 
Christopher W Egleton
Chairman                                                                                                                                         
29 April 2021
 
 
 
 
 
Consolidated Statement of Profit and Loss and Other Comprehensive Income
Year ended 31 October 2020
 




 


                    2020
                   £'000


                    2019
                   £'000




Revenue


-


-




Cost of sales


-


-




Gross profit


-


-




 


 


 




Operating expenses


(864)


(799)




 


 


 




Other operating expenses:


 


 




Corporate development costs


-


-




Operating loss


(864)


(799)




 


 


 




Finance costs


(12)


(1,278)




 


 


 




Loss before taxation


(876)


(2,077)




 


 


 




Taxation


-


-




Loss after taxation


(876)


(2,077)




Other Comprehensive Income for the year


-


-




Total Comprehensive Income for the year


(876)


(2,077)




Loss for year  attributable to equity holders of the Company


(876)


(2,077)




 


 


 




Loss per share attributable to equity holders of 


 


 




the Company: Basic and diluted


(0.20)p


(0.61)p




 


 


 




 
 
 
Consolidated Statement of Changes in Equity
Year ended 31 October 2020
 
Year ended 31 October 2020




 


Share capital
£'000


Share premium
£'000


Merger
reserve  £'000


Warrant 
Reserve
 £'000


Retained earnings  £'000


               
             Total
equity
                                                                    £'000




Balance at 1 November 2019


17,188


    36,119


9,349


         3,094  


      (23,493)


                                                                    42,257




Loss for the year


-


-


-


-


(876)


            
 (876)




 
Issue of ordinary shares at a premium 


771


357


-


-


                 -


1,128  




Share based payments reduction in Warrant reserve


                    -


-


-


(567)


-


(567)




 


 


 


 


 


 


 




 
Balance at 31 October  2020


17,959


36,476    


9,349


2,527           


      (24,369)


41,942  




 
Year ended 31 October 2019




 


Share capital
£'000


Share premium
£'000


Merger
reserve  £'000


Warrant 
Reserve
 £'000


Retained earnings  £'000


               
             Total
equity 
                 £'000




Balance at 1 November 2018


15,460


    34,373


9,349


         2,830  


      (21,416)


                                                                    40,596




Loss for the year


-


-


-


-


(2,077)


            
 (2,077)




 
Issue of ordinary shares at a premium 


                           1,728          


1,746


-


-


                 -


3,474 




Share based payments


                    -


-


-


-


-


-




Extension of warrant expiry date (see note 17) 


-


-


-


264


             -                


               
264




 
Balance at 31 October  2019


17,188


    36,119


9,349


         3,094  


      (23,493)


42,257 




 
 
 
Consolidated Statement of Financial Position as at 31 October 2020
 




 


2020

£'000


2019

£'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


46,431


45,848




Receivables


225


211




Cash and cash equivalents


6


24




Total current assets


46,662


46,083




 


 


 




Total assets


50,402


49,823




 


 


 




Equity


 


 




Share capital


17,959


17,188




Share premium account


36,476


36,119




Merger reserve account


9,349


9,349




Warrant reserve


2,527


3,094




Retained earnings


(24,369)


(23,493)




Total equity


41,942


42,257




 


 


 




Liabilities


 


 




Current liabilities


8,460


7,566




 


 


 




Total equity and liabilities


50,402


49,823




 
 
Consolidated Cash Flow Statement
Year ended 31 October 2020 
 




 


Note to the Consolidated Cash Flow Statement


2020
£'000


2019
£'000




 


 


 


 




Cash flows from operating activities


 


 


 




Net cash (outflow) from continuing operations


1


(567)


(1,909)




Finance costs for continuing operations


 


(12)


(1,278)




Net cash generated from/(used) in operating activities


 


(579)


(3,187)




 


 


 


 




Cash flows from (investing) / divesting activities in discontinued operations


 


 


 




Purchase of property, plant and equipment


 


-


-




Net cash used in investing activities in discontinued operations


 


-


-




 


 


 


 




Cash flows from financing activities in continuing operations


 


 


 




Net proceeds from the issue of ordinary shares


 


1,128


3,738




Loans (repaid) / received


 


(567)


(547)




Net cash generated from financing activities in continuing operations


 


561


3,191




Net increase/(decrease) in cash


 


(18)


4




Cash transferred to non-current assets held for sale


 


-


-




 


 


(18)


4




Cash at beginning of year


 


24


20




Cash at end of year


 


6


24




 
 
 
Note to the Consolidated Cash Flow Statement
Year ended 31 October 2020
 
1      Cash flows from operating activities in continuing operations
 




 


                    2020
£'000


                    2019
£'000




Loss before taxation


(876)


(2,077)




Finance costs


12


1,278




Depreciation


-


-




Exchange gain relevant to property, plant and equipment


-


4




Increase in inventories


(583)


(467)




(Decrease)/Increase in receivables


(14)


4




Increase/(Decrease) in current liabilities


894


(651)




Net cash (outflow) from continuing operations


(567)


(1,909)




 


Notes to the Financial Statements 
Year ended 31 October 2020 
 
1         General information
The financial information set out in this announcement does not constitute statutory financial statements for the year ended 31 October 2020 or 31 October 2019. The report of the auditors on the statutory financial statements for the year ended 31 October 2020 and 31 October 2019 was not qualified.
The report of the auditor on the statutory financial statements for each of the years ended 31 October 2020 and 31 October 2019 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 2019 have been delivered to the Registrar of Companies. The financial statements for the year ended 31 October 2020 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 EU: 
 




Standard


 


      Details of amendment


 


 Effective     
  date


 




IFRS 3 Business Combinations      Amendments updating a reference to                           1 January 2022
                                                           the Conceptual Framework
 
 
IAS 1   Presentation of Financial   Amendments regarding the classification of                1 January 2023 
            Statements                           liabilities
                                                           Amendments regarding the disclosure of                      1 January 2023
                                                                 accounting policies                                                                                                  
IAS 8   Accounting Policies,           Amendments regarding the definition of                       1 January 2023
            Changes in Accounting      accounting estimates                                      
            Estimates and Errors
 
IAS 16  Property, Plant and        Amendments prohibiting a company from                      1 January 2022
             Equipment                       deducting from the cost of property, plant and
                                                            equipment amounts received from selling items 
                                                        produced while the company is preparing the asset            
                                                            for its intended use
 
IAS 37  Provisions, Contingent   Amendments regarding the costs to include                   1 January 2022
          Liabilities and                     when assessing whether a contract is onerous
             Contingent Assets
 
 
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, 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 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.
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 2020 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. 
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 Euros, 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 Euros by applying to the foreign currency amount the exchange rate between the Euros 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 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. The fair values of the LTIP awards, options and warrants are calculated using the Black-Scholes and Binomial option 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.
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

inventories


Costs taken to

profit or loss






Total




 


£'000


£'000


£'000




Year ended 31 October 2020


 


 


 




Fees


35


144


179




Sums charged by third parties for

directors' and key management services


134


70


204




Share-based payments (note 17)


-


-


-




 


169


214


383




 


 


 


 




Year ended 31 October 2019


 


 


 




Fees


(85)


274


189




Sums charged by third parties for

directors' and key management services


111


70


181




Share-based payments (note 17)


-


-


 




 


26


344


370




 
The total directors' and key management remuneration shown above includes the following amounts in respect of the directors of the Company.
 




 


2020


2019




 


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)


134


-


162


-




B D Bartman


35


-


35


-




G D Cook


35


-


35


-




T R C Hill


35


-


48


-




 


239


-


280


-




 
 
Staff costs during the period (including directors and key management)
 




 




   Costs taken to

        inventories


Costs taken to

profit or loss






                      Total




 


                     £'000


                     £'000


                     £'000




Year ended 31 October 2020


 


 


 




Salaries and fees


35


145


180




Social security cost


6


13


19




 


41


158


199




 


 


 


 




Year ended 31 October 2019


 


 


 




Salaries and fees


-


250


250




Social security cost


-


30


30




 


-


280


280




 
Note: Staff costs exclude sums charged by third parties for directors' services.




 


                   2020


                   2019




 


                           No.


                           No.




Group monthly average number of persons employed


 


 




Directors


7


7




Management, administration and sales


-


2




 
 
4      Loss before taxation
 
The loss before taxation is stated after charging:
 




 


                       2020
£'000


                       2019
£'000




Auditor's remuneration:


 


 




Group audit fees


20


21




 
 
5     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 two 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 and which is a continuing operation;
 
·    the corporate development division (UK) as described above, which is a continuing operation.
 
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.
 




 


2020




 


Luxury Resorts


Corporate Development


Total




 


£'000


£'000


         £'000




Operating expenses


(864)


-


         (864)




 


(864)


-


(864)




Charge in respect of share-based payments


        -  


-


               -




Charge related to assets held for sale


          -


-


            -




Operating (loss)/profit


(864)


-


(864)




Finance costs


(12)


                 -


(12)




(Loss)/profit before taxation


(876)


-


(876)




Taxation


            -


                 -


                     -




(Loss)/profit after taxation


(876)


-


      (876)




 


 


 


 




Operating expenses include:


 


 


 




Depreciation and amortisation


-              


                  -


-




 


 


 


 




Assets/liabilities


 


 


 




Goodwill


3,583


                  -


3,583




Other non-current assets


157


                  -


157




Current assets


46,662


                  -


46,662




Total assets


50,402


                  -


50,402




 


 


 


 




Total and current liabilities


8,460


                   -


8,460




 
 




 


2019




 


Luxury Resorts


Corporate Development


Total




 


£'000


£'000


         £'000




Operating expenses


(799)


-


         (799)




 


(799)


-


(799)




Charge in respect of share-based payments


        -  


-


               -




Charge related to assets held for sale


          -


-


            -




Operating (loss)/profit


(799)


-


(799)




Finance costs


(1,278)


                 -


(1,278)




(Loss)/profit before taxation


(2,077)


-


(2,077)




(Loss)/profit after taxation


(2,077)


-


      (2,077)




 


 


 


 




Operating expenses include:


 


 


 




Depreciation and amortisation


-              


                  -


-




 


 


 


 




Assets/liabilities


 


 


 




Goodwill


3,583


                  -


3,583




Other non-current assets


157


                  -


157




Current assets


46,083


                  -


46,083




Total assets


49,823


                  -


49,823




 


 


 


 




Total and current liabilities


7,566


                   -


7,566




 
 
 
 
 

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