REG - Minoan Group PLC - Preliminary Results for Year Ended 31 October 2017
Preliminary Results Announcement
Minoan Group Plc (or "the Group") announces its Preliminary Results for the year ended 31 October 2017
Highlights
· Un-appealable outline planning consent has been granted by the Greek government on the Site in Greece.
· The Board have taken the decision to dispose of the Travel & Leisure division (subject to shareholder approval) partly in order to pay-down group debt. The division has been treated as a Non-current asset held for sale in the Financial Statements. Note 4 of the preliminary results sets out segmental information in a format shareholders will be familiar with.
· Total transaction value of T&L up by over 18% to £80,320,000 (2016: £67,820,000)
· Gross profit of T&L increased by 18% to £8,346,000 (2016: £7,044,000)
· The Group made a loss after taxation of £2,516,000 (2016: £2,272,000)
· Although Loans classified as current liabilities increased to £6,118,000 (2016: £5,086,000) the directors believe that following the sale of Travel and Leisure the Group will be substantially debt free.
Minoan Chairman, Christopher Egleton commented:
"Following the expected sale of the Travel and Leisure Division, which I hope to be announcing the completion of in the near future, I and my colleagues will be concentrating our efforts on optimising the value of the Group's project in Crete for the benefit of all shareholders."
Minoan Group Plc's Preliminary Results Announcement for the year ended 31 October 2017 can be viewed on the Company's website, www.minoangroup.com, with effect from 6 April 2018.
For further information please visit www.minoangroup.com or contact:
Minoan Group Plc
Christopher Egleton
christopher.egleton@minoangroup.com
Duncan Wilson
0141 226 2930
Bill Cole
020 8253 4305
WH Ireland Limited
020 7220 1666
Adrian Hadden
Alex Bond
Morgan Rossiter
020 3195 3240
Richard Morgan Evans/James Rossiter
Chairman's Statement
Introduction
My statement will focus on the status of the Group's project in Greece (the "Project") and the position of and prospects for the Group after the intended disposal of its Travel and Leisure ("T&L") business as announced on 13 March 2018. I remarked in that announcement that following the sale of T&L your Board expected the Group to be substantially debt free in relation to its loan obligations and this continues to be the case.
The results for the year ended 31 October 2017 include the trading results of the travel business for the full year and demonstrate the division's continuing growth. Nevertheless, the decision to sell the division results from a number of other factors including, but not limited to, the view of the Board that all efforts must be concentrated on delivering the value of the Project to shareholders and that this will be much easier to achieve without a major burden of debt.
In view of the proposed sale of T&L (the impact of which has been to present the division as a Discontinued Operation within the accounts), the results themselves cannot give a good guide to the Group's prospects for the coming period, which I and my colleagues believe will begin to repay the faith shown by all stakeholders in the future and value of the Project.
Greece
As announced in 2017, we now have un-appealable outline planning consent for a development set on a 6,000 acre plot within a peninsula site with 28 kilometres of coastline on the island of Crete through the Presidential Decree originally issued on 11 March 2016. The consent is for a "complex resorts" project comprising up to 108,000 square metres of built space split between five main locations which are, and will be, designed in such a manner that the development will be largely invisible to the casual observer.
It is intended that we, together with major partners both financial and operating, will develop one of the most environmentally friendly and "soft" major projects in Europe with a build footprint of less than 0.5% of the site and through this and other criteria create a landmark for tourism in Greece.
The size of site is unusual in a region as crowded as the Eastern Mediterranean. This, combined with the consent and development intentions, makes the whole "package" extremely rare in a region where low cost mass tourism has previously been the main driver for development. The area of Crete in which the Project sits is, however, not just mass tourism as will be seen in some of the well-known "resorts" around the village of Elounda which is also in the Prefecture of Lasithi, the Easternmost in Crete.
The upgrading of the tourist product supply since the inception of the Project idea has been accompanied by a steady improvement in the travel infrastructure of the area. The main road along the North Coast running from the capital, Heraklion to Sitia in the East has been significantly improved and journey times have been reduced by at least 30 minutes in this period. The completely rebuilt Sitia International airport is fully open and taking flights to and from various cities in Scandinavia, Germany and the Netherlands.
During this summer season the airport expects an increase in international traffic of over 200%, albeit from a very low base, with a further major increase looking likely in 2019.
During the past year, one of the major changes that has occurred in Greece has been the increasing activity in the purchase and sale of tourism based assets including hotels. In the last few months there have been a number of tourism asset sales where the prices achieved have seen substantial increases over the levels expected less than six months ago. These sales, which for the most part have been operating assets, have been driven by the Greek banks which are beginning to make inroads into their non-performing loan portfolios. Within Athens, which has the largest property market in Greece, the price of residential property has also risen substantially.
All of the above factors, which have an impact on the value of the Group's interest in the site and the Project, are being considered by the Board in their discussions with prospective financial and other partners. Shareholders will be aware that the last "Opinion of Value" of this interest on a development appraisal basis was circa €100m given by CBRE in 2011 around the time of the "Fast Track" application, which itself resulted in the grant of the Presidential Decree.
In light of the rapid and positive changes taking place in the market for tourism assets in Greece, it is very difficult to be precise as to the sterling value to be placed upon the Group's interest. The increases in values which have been, and are being, seen in Greece over the past year or so are driven by the belief that the tourism industry in Greece will continue its recent expansion. The depreciation of Sterling relative to the Euro has increased the value potential of the Project in Sterling terms.
As shareholders will be aware from the announcement earlier in March, the Company is continuing to progress the Project on the ground and has commissioned a number of studies to ensure the most efficient use of resources pending the conclusion of JV or partnership arrangements with prospective partners and/or investors. In these, and other potential discussions, it is likely that the Company will have more than one "partner". Although, at this stage, it is difficult to predict precisely what kind of relationships will be finalised it is likely that one or more of the "partners" will be making significant financial contributions. The application of those "contributions" insofar as creating the optimum value for shareholders will be foremost in the Board's consideration as to kind of partnership offer(s) to encourage.
All in all the substantial increase in tourism in Greece in the last two years together with the significant increase in tourism asset values augurs well for future of the Project, its timing, potential partnerships and the creation of value for the Company and its shareholders.
Travel and Leisure
As the Board has taken the decision to sell T&L (subject to shareholder approval), as previously stated the division has been classified as a Discontinued Operation under IFRS 5. The impact of this on the Group's income statement is to present revenue and expenses associated with T&L's operations as a net line item. More granular information (as referred to in this section) may be found under note 4 Segmental information.
Total transaction value has increased in the period under review by approximately 18% from £68m to £80m and gross profit shows a year on year increase of £1,302,000 (18%) to £8,346,000 (2016: £7,044,000). Operating expenses have increased to £7,783,000 (2016: £6,772,000) resulting in an increase in operating profit to £563,000 (2016: £272,000).
Travel trading in the year achieved the above noted increases in particular via our Lapland business, which once again grew far in excess of the average. Cruise continued its growth as planned, although management believe that the rate of growth was slowed by difficulties in the Caribbean cruise market following the devastation to Puerto Rico and a number of destination islands.
Since the year end, travel has continued on its upward trajectory. In the first quarter of the financial year ending 2018, Total Transaction Value is up 14% and gross profit up close to 9%, the variations in increase once again being due to Caribbean cruise sales which, until recently, have been among our most profitable.
Shareholders will be aware from my previous statements and other announcements that the decision to dispose of the travel business has not been taken lightly.
The two main drivers of this decision have been the fact that we were unable to expand the business as fast as we had intended for fear of diluting the Group's capital unnecessarily and, with the advent of the grant of outline planning consent in Greece, the need to concentrate our efforts on creating value without a significant debt overhang with its concomitant costs.
I very much hope we will be able to report in more detail on this transaction in the near future.
As I have stated previously the Board expects the sale of the division to leave the Group substantially debt free.
Financial Review
In accordance with the relevant Accounting Standard, the Consolidated Statement of Comprehensive Income presents the revenue and associated expenses of the T&L division as one net item under heading "Profit from discontinued operations". This Standard means that once a decision to sell has been reached the business concerned is treated as a discontinued activity and the detailed results are omitted from the Consolidated Statement. The details of the growth in total transaction value and gross profit of T&L referred to above are set out in the Segmental information (Note 4).
Although there has been a reduction in corporate developments costs of £91,000, the operating loss for the year has increased by £860,000 due to an increase in operating expenses of £91,000, an increase in the charge for share based payments of £210,000 and, in particular, a non-cash charge of £650,000 in relation to assets held for sale.
With a reduction in finance costs of £157,000, the reported net loss for the year has increased by £244,000 from £2,272,000 to £2,516,000.
During the year the Group raised a limited amount of new equity (£450,000) and satisfied the bulk of its financing needs through new loans (£895,000). As already stated the Board believes that following the sale of the T&L business the Group will be substantially debt free in relation to its loan obligations. It is the Board's intention that all indebtedness should be cleared as soon as possible after the sale and to this end other discussions with investors and potential JV Partners will be accelerated.
Outlook
It is clear from my earlier comments that, following the sale of T&L, the Group's sole focus will be on optimising the value of the Project for shareholders. This is likely to result in a number of changes to the management structure of the Group about which I will be writing after the sale.
In anticipation of the sale of what is, currently, its only revenue generating division, the Board is examining the cost structure of the Group in order to keep costs to a minimum during the subsequent period when the Company will be dependent on the support of its shareholders and other stakeholders before any income deriving from the Project is forthcoming. The Board are hopeful, and intend, that this period will be kept to a minimum.
In July last year I said that the next twelve months were likely to be the most rewarding in the Company's history. I remain convinced that we are in the most rewarding period in the Company's history and that 2018 will see major developments.
Conclusion
The past year has been eventful for your Company. We have received the Consent for which we have been striving for so long although the directors believe that the Company's share price performance has not fully reflected this achievement. The decision to dispose of the travel business was a difficult one but both I and the Board believe it will be in best interest of shareholders going forward. I hope to be making further announcements in the near future and wish to thank shareholders and all our stakeholders for their patience pending what I believe will be very welcome news over the coming months.
Christopher W Egleton
Chairman
6 April 2018
Consolidated Statement of Comprehensive Income
Year ended 31 October 2017
2017
£'000
2016
£'000
Revenue
-
-
Cost of sales
-
-
Gross profit
-
-
Operating expenses
(480)
(389)
Other operating expenses:
Corporate development costs
(504)
(595)
Charge related to assets held for sale
(650)
-
Credit/(charge) in respect of share-based payments
(186)
24
Operating loss
(1,820)
(960)
Finance costs
(1,184)
(1,341)
Profit from discontinued operations
488
29
Loss before taxation
(2,516)
(2,272)
Taxation
-
-
Loss after taxation
(2,516)
(2,272)
Loss for year attributable to equity holders of the Company
(2,516)
(2,272)
Loss per share attributable to equity holders of
the Company: Basic and diluted
(1.23)p
(1.19)p
Consolidated Statement of Changes in Equity
Year ended 31 October 2017
Year ended 31 October 2017
Share capital
£'000
Share premium
£'000
Merger
reserve
£'000Warrant
Reserve
£'000
Retained earnings
£'000
Total
equity
£'000Balance at 1 November 2016
15,119
32,585
9,349
2,119
(16,127)
43,045
Loss for the year
-
-
-
-
(2,516)
(2,516)
Issue of ordinary shares at a premium
178
1,074
-
-
-
1,252
Share based payments
-
-
-
-
186
186
Extension of warrant expiry date
-
-
-
322
-
322
Balance at 31 October 2017
15,297
33,659
9,349
2,441
(18,457)
42,289
Year ended 31 October 2016
Share capital
£'000
Share premium
£'000
Merger
reserve
£'000Warrant
Reserve
£'000
Retained earnings
£'000
Total
equity
£'000Balance 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
Consolidated Balance Sheet as at 31 October 2017
2017
£'0002016
£'000Assets
Non-current assets
Intangible assets
3,583
9,771
Property, plant and equipment
161
728
Non-current assets held for sale
6,882
-
Total non-current assets
10,626
10,499
Current assets
Inventories
44,163
42,562
Receivables
326
2,610
Cash and cash equivalents
21
104
Total current assets
44,510
45,276
Total assets
55,136
55,775
Equity
Share capital
15,297
15,119
Share premium account
33,659
32,585
Merger reserve account
9,349
9,349
Warrant reserve
2,441
2,119
Retained earnings
(18,457)
(16,127)
Total equity
42,289
43,045
Liabilities
Current liabilities
12,847
12,730
Total equity and liabilities
55,136
55,775
Consolidated Cash Flow Statement
Year ended 31 October 2017
2017
£'000
2016
£'000
Cash flows from operating activities
Net cash outflow from continuing operations
(1,041)
(325)
Net cash inflow from discontinued operations
518
783
Finance costs for continuing operations
(262)
(255)
Finance costs for discontinued operations
(75)
-
Net cash generated from/(used) in operating activities
(860)
203
Cash flows from investing activities in discontinued operations
Purchase of property, plant and equipment
(128)
(103)
Purchase of intangible assets:
Goodwill consideration
(425)
(130)
IT project
(4)
(140)
Net cash used in investing activities in discontinued operations
(557)
(373)
Cash flows from financing activities in continuing operations
Net proceeds from the issue of ordinary shares
450
-
Loans received
895
129
Net cash generated from financing activities in continuing operations
1,345
129
Net (decrease) in cash
(72)
(41)
Cash transferred to non-current assets held for sale
(11)
-
(83)
(41)
Cash at beginning of year
104
145
Cash at end of year
21
104
Note to the Consolidated Cash Flow Statement
Year ended 31 October 2017
1 Cash flows from operating activities in continuing operations
2017
£'000
2016
£'000
Loss before taxation
(3,004)
(2,301)
Finance costs
1,184
1,341
Depreciation
8
13
Exchange gain relevant to property, plant and equipment
(11)
(36)
Increase in inventories
(1,601)
(1,296)
Share-based payments
186
(24)
Decrease/(Increase) in receivables
122
(67)
Increase in current liabilities
623
751
Liabilities settled by the issue of ordinary shares
802
1,294
Non cash movement in assets held for sale
650
-
Net cash (outflow) from continuing operations
(1,041)
(325)
Notes to the Financial Statements
1 General information
The financial information set out in this announcement does not constitute statutory financial statements for the year ended 31 October 2017 or 31 October 2016. The report of the auditor on the statutory financial statements for the year ended 31 October 2017 and 31 October 2016 was not qualified.
The report of the auditor on the statutory financial statements for each of the years ended 31 October 2017 and 31 October 2016 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 2016 have been delivered to the Registrar of Companies. The financial statements for the year ended 31 October 2017 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 2017 on 6 April 2018.
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 at 31 October 2017:
Standard/Interpretation
Title
Effective date
IFRS 9
Financial instruments
1 January 2018
IFRS 15
Revenue from contracts with customers
1 January 2018
IFRS 16
Leases
1 January 2019
The directors anticipate that the adoption of IFRS 9 in future periods will have no material impact on the profit of the financial statements of the Group. The directors have not deemed it necessary to measure the impact of IFRS 15 and 16 in future periods given that Revenue and Leases are only within Stewart Travel Limited, which has been re-classified as Non-current assets held for sale.
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. The appeals lodged against the Presidential Decree have now been rejected by the Greek Supreme Court.
Accordingly, the directors consider it relevant that having completed financial joint venture agreements prior to the above, 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.
Since the year end the Company has announced the extension of the repayment date of the Hillside International Holdings Limited loan facility from 31 December 2017 to 30 June 2018. Should it be required, the Company is of the view that, following negotiation, the repayment date of the loan facility would be further extended as in the past.
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 2017 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:
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.
Intangible assets/Research and development
Research expenditure is recognised as an expense when it is incurred. Development expenditure is recognised as an expense except where the expenditure meets the following criteria:
a) the technical feasibility of completing the intangible asset so that it will be available for use or sale.
b) its intention to complete the intangible asset and use or sell it.
c) its ability to use or sell the intangible asset.
d) how the intangible asset will generate probable future economic benefits. Among other things, the entity can demonstrate the existence of a market for the output of the intangible asset or the intangible asset itself or, if it is to be used internally, the usefulness of the intangible asset.
e) the availability of adequate technical, financial and other resources to complete the development and to use or sell the intangible asset.
f) its ability to measure reliably the expenditure attributable to the intangible asset during its development.
The expenditure is amortised over its useful economic life of five years.
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 exchange
Transactions denominated in foreign currencies are translated into sterling at the rates ruling at the date of the transactions. Monetary assets and liabilities denominated in foreign currencies at the balance sheet date are retranslated at the rates ruling at that date. Any translation differences arising are dealt with in the consolidated statement of comprehensive income.
The directors consider UK pounds sterling to be the functional currency of the Group, as this is the currency of the majority of revenue and expenditure.
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
Leasing commitments
Rentals paid under operating leases are charged to profit or loss on a straight line basis over the period of the lease.
Revenue (Discontinued operations)
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.
Non-current assets held for sale and discontinued operations
Where an asset, or disposal group (an asset together with related liabilities), is to be recovered principally through a sale transaction and not through continuing use, and an active plan has been entered into to dispose of the asset or disposal group, it is reclassified as held for sale. On reclassification, the asset is measured at the lower of its carrying amount or fair value less costs to sell. Any losses on re-measurement are recognised in profit or loss.
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.
Pensions
Loyalward Limited operates a stakeholder pension scheme for its employees and Stewart Travel Limited operates a defined contribution pension scheme. Contributions payable to the pension scheme are charged to profit or loss in the period to which they relate.
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 balance sheet 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 balance sheet 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
inventoriesCosts taken to
profit or loss
Total
£'000
£'000
£'000
Year ended 31 October 2017
Fees
244
388
632
Sums charged by third parties for
directors' and key management services333
70
403
Share-based payments
-
79
79
577
537
1,114
Year ended 31 October 2016
Fees
236
431
667
Sums charged by third parties for
directors' services342
70
412
Share-based payments
-
(24)
(24)
578
477
1,055
The total directors' and key management remuneration shown above includes the following amounts in respect of the directors of the Company.
2017
2016
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)
320
42
296
(12)
D C Wilson
250
20
250
(9)
B D Bartman
35
6
35
(1)
G D Cook
35
4
35
-
T R C Hill
46
7
37
(1)
686
79
653
(23)
Notes to the Financial Statements (continued)
Year ended 31 October 2017
3 Information regarding directors and employees (continued)
Staff costs during the period (including directors and key management)
Costs taken to
inventoriesCosts taken to
profit or loss
Total
£'000
£'000
£'000
Year ended 31 October 2017
Salaries and fees
315
4,655
4,970
Social security cost
51
432
483
Share-based payments
-
96
96
366
5,183
5,549
Year ended 31 October 2016
Salaries and fees
363
4,063
4,426
Social security cost
34
352
386
Share-based payments
-
(24)
(24)
397
4,391
4,788
Note: Staff costs exclude sums charged by third parties for directors' services.
2017
2016
No.
No.
Monthly average number of persons employed
Directors
5
5
Sales and administration
226
203
4 Loss before taxation
The loss before taxation is stated after charging:
2017
£'000
2016
£'000
Depreciation
132
122
Amortisation
345
334
Operating leases
54
83
Auditor's remuneration:
Audit fees
72
54
Tax services
5
4
4 Loss before taxation (continued)
Audit fees in respect of the Company were £20,000 (31 October 2016: £17,000). Tax services fees in respect of the Company were £4,000 (31 October 2016: £500).
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 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 and which is a continuing operation;
· the Travel and Leisure division (UK), being the operation and management of the travel businesses, which is a discontinued operation (see note below); and
· 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.
2017
Luxury Resorts
Travel and Leisure
Corporate Development
Total
£'000
£'000
£'000
£'000
Total transaction value
-
80,320
-
80,320
Revenue
-
8,700
-
8,700
Cost of sales
-
(354)
-
(354)
Gross profit
-
8,346
-
8,346
Operating expenses
(480)
(7,783)
(504)
(8,767)
(480)
563
(504)
(421)
Charge in respect of share-based payments
(186)
-
-
(186)
Charge related to assets held for sale
(650)
-
-
(650)
Operating (loss)/profit
(1,316)
563
(504)
(1,257)
Finance costs
(1,184)
(75)
-
(1,259)
(Loss)/profit before taxation
(2,500)
488
(504)
(2,516)
Taxation
-
-
-
-
(Loss)/profit after taxation
(2,500)
488
(504)
(2,516)
Operating expenses include:
Depreciation and amortisation
2
468
-
470
Operating leases - plant and equipment
-
54
-
54
Assets/liabilities
Goodwill
3,583
5,610
-
9,193
Other non-current assets
161
1,237
-
1,398
Current assets
44,510
1,889
-
46,399
Charge related to asset held for sale
-
(250)
(250)
Total assets
48,254
8,486
-
56,740
Total and current liabilities
12,847
1,604
-
14,451
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)
272
(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
3,583
5,185
-
8,768
Other non-current assets
157
1,574
-
1,731
Current assets
43,491
1,785
-
45,276
Total assets
47,231
8,544
-
55,775
Total and current liabilities
10,561
2,169
-
12,730
As stated in the Strategic Report, the Group has announced its intention to sell the travel business and the results for the year ended 31 October 2017 have been presented in accordance with IFRS 5. As a consequence, the profit after taxation of the Travel and Leisure business in the amount of £488,000 appears in the Consolidated Statement of Comprehensive Income as Profit from discontinued operations. Similarly, the net assets of the Travel and Leisure business are shown as non-current assets held for sale in the Consolidated Balance Sheet and the lower of its fair value and carrying value.
This information is provided by RNSThe company news service from the London Stock ExchangeENDFR DGGDSBGGBGIU
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