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Minoan Group PLC (MIN)

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Tuesday 31 July, 2018

Minoan Group PLC

Interim Results

RNS Number : 2226W
Minoan Group PLC
31 July 2018
 

 

Minoan Group Plc

(the "Group" or the "Company" or "Minoan")

 

announces its unaudited interim results for the 6 months ended 30 April 2018

 

HIGHLIGHTS

 

·     Activity in the tourism asset market in Greece is showing a substantial increase

 

·     Discussions and negotiations with prospective partners and investors in Greece are increasing in momentum

 

·     The Board has 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 3 of the interim results sets out segmental information in a format shareholders will be familiar with

 

·     Group total transaction value up by circa 19% to £47,395,000 from £39,729,000

 

·     Travel and Leisure gross profit up by circa 15% to £4,678,000 from £4,052,000

 

·     Loans classified as current liabilities increased to £6,832,000 (October 2017: £6,118,000). The directors believe that following the sale of Travel and Leisure the Group will be substantially debt free.

 

 Christopher Egleton, Minoan Chairman, said:

 

"As previously stated, the completion of the sale of the Travel & Leisure Division will allow me and my fellow directors to concentrate our efforts to optimise the value for shareholders of the Group's project in Crete."

 

The Company's unaudited interim results for the 6 months ended 30 April 2018 can be viewed on Minoan's website, www.minoangroup.com, with effect from 31 July 2018.

 

For further information visit www.minoangroup.com or contact:

Minoan Group Plc

 

Christopher Egleton

[email protected]

Duncan Wilson

[email protected]

Bill Cole

[email protected]

 

 

WH Ireland Limited

020 7220 1666

Adrian Hadden/ Chris Viggor/ Alex Bond

 

 

 

Cornhill Capital Limited

020 7710 9610

Daniel Gee

 

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

 

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 completion of the disposal of its Travel and Leisure ("T&L") business.

 

The results for the half year ended 30 April 2018 include as a single line "profit from discontinued operations", the trading results of the travel business together with the costs incurred in progressing the Project and accordingly cannot give a good guide to the Group's prospects for the coming period.  In this coming period I believe that we will conclude the sale of the T&L business and thus take forward a substantially debt free Group that will deliver long awaited value to stakeholders by concentrating on maximising the value of the Project 

 

Greece

From my previous statements and various announcements shareholders will be aware of the key points regarding the progress to date on the Project:

 

·     We have an 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;

·     The consent is for a "complex resorts" project comprising up to 108,000 square metres of built space which may be split between five main locations within a development that will be designed in such a manner that it will be largely invisible to the casual observer;

·     It will be one of the most environmentally friendly and "soft" major projects in Europe with a build footprint of less than 0.5% of the Site that, through this and other criteria, will create a landmark for tourism in Greece;

·     The 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 considerably;

·     Sitia International airport, which is adjacent to the Site, is fully operational taking flights from various European cities and experiencing a major increase in international flights; and

·     Activity in the purchase and sale of tourism based assets including hotels in Greece continues to increase. 

 

Greece (continued)

 

The momentum of our discussions and negotiations with prospective partners and investors continues to increase, particularly in their depth. The current backdrop of positivity surrounding tourist assets in Greece gives the Board every reason to be encouraged when considering the value for shareholders and stakeholders. As I have explained previously, it is difficult to predict precisely the kind of transactions that are likely to be finalised but it remains true that one or more of the "partners" with whom we are working is likely to make 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 the kind of partnership offer(s) to encourage.

 

Travel and Leisure ("T&L")

 

The Board has taken the decision to sell its T&L business (subject to shareholder approval) and,  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 3 Segmental information.

 

Total transaction value has increased in the period under review by approximately 19% from £39m to £47m and gross profit shows an increase of £626,000 (15%) to £4,678,000 (2017: £4,052,000) over the like period in 2017. Operating expenses have increased to £4,216,000 (2017: £3,832,000) resulting in an increase in operating profit to £462,000 (2016: £220,000).

 

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 are 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 granting to us of outline planning consent in Greece, the need to concentrate our efforts on creating value without a significant debt overhang with its concomitant costs and other less obvious burdens.

 

I anticipate that we will be able to report in more detail on this transaction in the near future.

 

Financial Review

 

The operating loss for the half year has decreased by £103,000 but the reported net loss for the period has increased from £907,000 to £1,095,000 due to an increase in finance costs of £327,000.

 

On the 12 July 2018 the Company announced the extension of its loan facility. The repayment date for the facility has been extended to allow time for the sale of the T&L business to be completed and is now on demand with a long stop date for completion of the sale of 31 August 2018.  

 

 

Outlook

 

As I have made clear, following the sale of the T&L business, 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.

 

The Board continues to examine the cost structure of the Group in order to keep costs to a minimum during the period subsequent to the sale of T&L and until realisation of the Project.  The Board intends that this period will be kept to a minimum.

 

Conclusion

 

Despite having to make the difficult decision to dispose of the T&L business, I remain confident that we are approaching a very rewarding period in the Company's history and that the latter part of 2018 will see major developments.

 

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

31 July 2018

 

 

Unaudited Consolidated Statement of Comprehensive Income

6 months ended 30 April 2018

 

 

6 months ended 30.04.18

                       £'000

6 months ended 30.04.17

                        £'000

Year ended 31.10.17

                        £'000

 

 

 

 

Revenue

-

-

-

Cost of sales

-

-

-

Gross profit

-

-

-

 

 

 

 

Operating expenses

(313)

(252)

(480)

 

 

 

 

Other operating expenses

 

 

 

Corporate development costs

(192)

(238)

(504)

Charge related to assets held for sale

-

-

(650)

Charge in respect of share based payments

(88)

-

(186)

Operating loss

(593)

(490)

(1,820)

 

 

 

 

Finance costs

(957)

(587)

(1,184)

Profit from discontinued operations

455

170

488

Loss before taxation

(1,095)

(907)

(2,516)

 

 

 

 

Taxation

-

-

-

Loss for period  attributable to equity holders of the Company

(1,095)

(907)

 

(2,516)

 

 

 

 

Loss per share attributable to equity holders of 

 

 

 

the Company: Basic and diluted

(0.51)p

(0.46)p

(1.23p)

 

 

 

 

 

 

 

Unaudited Consolidated Statement of Changes in Equity

6 months ended 30 April 2018

 

6 months ended 30 April 2018

 

 

Share capital

£'000

Share premium

£'000

Merger

reserve £'000

Warrant reserve

£000

Retained earnings  £'000

Total

equity  £'000

Balance at 1 November 2017

15,297

33,659

9,349

2,441

(18,457)

     42,289

Loss for the period

-

-

-

-

(1,095)

 (1,095)

Issue of ordinary shares at a premium

58

195

-

-

              -

         253

Share based payments

-

-

-

-

              88

            88

Extension of warrant expiry date

-

-

-

293

           -     

         293

Balance at 30 April 2018

15,355

33,854

9,349

2,734

(19,464)

41,828

 

6 months ended 30 April 2017

 

 

Share capital

£'000

Share premium

£'000

Merger

reserve  £'000

Warrant reserve

£000

Retained earnings  £'000

Total

equity £'000

Balance at 1 November 2016

    43,045

Loss for the period

Issue of ordinary shares at a premium

              -

         617 

Share based payments

           -     

        293

Balance at 30 April 2017

 

Year ended 31 October 2017

 

 

Share capital

£'000

Share premium

£'000

Merger

reserve  £'000

Warrant reserve

£000

Retained earnings  £'000

Total

equity   £'000

Balance at 1 November 2016

    43,045

Loss for the year

Issue of ordinary shares at a premium

      1,074

              -

      1,252 

Share based payments

          186

       186 

Extension of warrant expiry date

               -

         322

Balance at 30 April 2017

 

 

 

 

Unaudited Consolidated Balance Sheet as at 30 April 2018

 

 

 

As at 30.04.18
£'000

 

As at 30.04.17
£'000

As at 31.10.17
£'000

Assets

 

 

 

Non-current assets

 

 

 

Intangible assets

3,583

9,892

3,583

Property, plant and equipment

159

743

161

Non-current assets held for sale

7,138

-

6,882

Total non-current assets

10,880

10,635

10,626

 

 

 

 

Current assets

 

 

 

Inventories

44,817

43,458

44,163

Receivables

652

2,947

326

Cash and cash equivalents

22

88

21

Total current assets

45,491

46,493

44,510

 

 

 

 

Total assets

56,371

57,128

55,136

 

 

 

 

Equity

 

 

 

Share capital

15,355

15,228

15,297

Share premium account

33,854

33,093

33,659

Merger reserve account

9,349

9,349

9,349

Warrant reserve

2,734

2,412

2,441

Retained earnings

(19,464)

(17,034)

(18,457)

Total equity

41,828

43,048

42,289

 

 

 

 

Liabilities

 

 

 

Current liabilities

14,543

14,080

12,847

Total liabilities

14,543

14,080

12,847

 

 

 

 

Total equity and liabilities

56,371

57,128

55,136

 

 

 

Unaudited Consolidated Cash Flow Statement

6 months ended 30 April 2018

 

 

6 months ended 30.04.18

£'000

6 months ended 30.04.17

£'000

  Year ended 31.10.17

£'000

 

 

 

 

Cash flows from operating activities

 

 

 

Net cash outflow from continuing operations (note 1)

(243)

(650)

(1,041)

Net cash inflow/(outflow) from discontinued operations

(50)

-

518

Finance costs for continuing operations

(386)

-

(262)

Finance costs for discontinued operations

(7)

(96)

(75)

 

Net cash used in operating activities

(686)

(746)

 

(860)

 

 

 

 

Cash flows from investing activities

 

 

 

Purchase of tangible assets:

 

 

 

Continuing operations

-

(78)

-

Discontinued operations

(31)

-

(128)

Purchase of intangible assets:

 

 

 

Continuing operations

-

(30)

-

Discontinued operations

-

-

(429)

Net cash used in investing activities

(31)

(108)

(557)

 

 

 

 

Cash flows from financing activities

 

 

 

Net proceeds from the issue of ordinary shares

17

-

450

Loans received

713

838

895

Net cash generated from financing activities

730

838

                    1,345

 

 

 

 

Net increase/(decrease) in cash

13

(16)

(72)

Cash transferred to non-current assets held for sale

(12)

-

(11)

 

1

(16)

(83)

Cash at beginning of period

21

104

104

Cash at end of period

22

88

21

 

 

 

 

 

Notes to the Unaudited Consolidated Cash Flow Statement

6 months ended 30 April 2018

 

1             Cash flows from operating activities

 

 

6 months ended 30.04.18

                   £'000

6 months ended 30.04.17

                   £'000

Year ended 31.10.17

                        £'000

Loss before taxation

(1,095)

(907)

(3,004)

Finance costs

957

637

1,184

Depreciation & Amortisation

2

229

8

Exchange gain/(loss) relevant to property, plant and equipment

-

9

(11)

Increase in inventories

(654)

(896)

(1,601)

Share based payments

88

-

186

(Increase)/decrease in receivables

(326)

(337)

122

Increase in current liabilities

712

498

623

Liabilities settled by the issue of ordinary shares

236

117

802

Non cash movement in assets held for sale

(163)

-

650

Net cash outflow from continuing operations

(243)

(650)

(1,041)

 

 

 

Notes to the unaudited interim results

6 months ended 30 April 2018

 

1. General information

 

The Company is a public limited company incorporated in England and Wales and quoted on AIM. The Company's principal activity in the period under review was that of a holding and management company of a Group involved in the design, creation, development and management of environmentally friendly luxury hotels and resorts and in the operation of independent travel businesses, through which the Group provides a broad range of services including, inter alia, transportation, hotel and other accommodation and leisure services.

 

2. Basis of preparation

 

The interim financial statements are unaudited and do not constitute statutory accounts as defined in Section 434(3) of the Companies Act 2006. A copy of the audited Report and Financial Statements for the year ended 31 October 2017 has been delivered to the Registrar of Companies. The auditor's report on these accounts was unqualified and did not contain statements under s498(2) to s498(4) of the Companies Act 2006. The Report and Financial Statements for the year ended 31 October 2017 were approved by the Board on 5 April 2018.

 

The interim financial statements for the 6 months ended 30 April 2018 comprise an Unaudited Consolidated Statement of Comprehensive Income, Unaudited Consolidated Statement of Changes in Equity, Unaudited Consolidated Balance Sheet and Unaudited Consolidated Cash Flow statement plus relevant notes.

 

The interim financial statements are prepared in accordance with EU adopted International Financial Reporting Standards ("IFRS") and the International Financial Reporting Interpretations Committee ("IFRIC") interpretations and the Companies Act 2006 applicable to companies reporting under IFRS.

 

The principal accounting policies adopted in the preparation of the interim financial statements are consistent with those adopted in the Report and Financial Statements for the year ended 31 October 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. 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.

 

 

Notes to the unaudited interim results (continued)

6 months ended 30 April 2018

 

2. Basis of preparation (continued)

 

Going concern (continued)

The Company has announced its intention to sell its travel business and to utilise the proceeds of sale in paying down the debt facility with Hillside International Holdings Limited ("Hillside").  The facility is now in the name of Zachary Asset Holdings Limited, a company related to Hillside.  The repayment date for the Hillside facility has been extended to allow time for the sale of the travel business to be completed and is now on demand with a long stop date for completion of the sale of 31 August 2018.   

 

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 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.

 

 

 

Notes to the unaudited interim results (continued)

6 months ended 30 April 2018

 

3. Segmental information (continued)

 

The information presented below is consistent with how information is presented to the Board, with the Group's accounting policies and with the geographical location of the relevant divisions.

 

 

                                                                                                    6 months ended 30 April 2018

 

Luxury Resorts

Travel and Leisure

Corporate Development

Total

 

£'000

£'000

£'000

£'000

Total transaction value

        -

        47,395

-

     47,395

 

 

 

 

 

Revenue

-

          4,865 

-

       4,865  

Cost of sales

-

            (187)

-

         (187)

Gross profit

-

         4,678

-

      4,678

 

 

 

 

 

Operating expenses

(313)

       (4,216)

(192)

(4,721)

 

(313)

            462  

(192)

(43)

Charge in respect of share based payments

            (88)

                -

                   -

            (88)

Operating (loss)/profit

(401)

            462      

(192)

(131)

Finance costs

(957)

               (7)

                 -

(964)

(Loss)/profit before taxation

(1,358)

          455       

  (192)

(1,095)

 

 

 

 

 

Operating expenses include:

 

 

 

 

Depreciation and amortisation

2

208

                     -

210

 

 

 

 

 

Assets/liabilities

 

 

 

 

Goodwill

3,583

           5,610

-

9,193

Other non-current assets

160

1,060

-

          1,220

Current assets

45,490

2,305

-

47,795

Charge related to asset held for sale

-

(250)

-

(250)

Total assets

49,233

8,725

-

57,958

 

 

 

 

 

Total liabilities

14,543

1,587

-

16,130

 

 

 

 

 

 

 

 

Notes to the unaudited interim results (continued)

6 months ended 30 April 2018

 

3. Segmental information (continued)

 

 

                                                                                                    6 months ended 30 April 2017

 

Luxury Resorts

Travel and Leisure

Corporate Development

Total

 

£'000

£'000

£'000

£'000

Total transaction value

        -

        39,729

-

     39,729

 

 

 

 

 

Revenue

-

         4,223

-

       4,223

Cost of sales

-

            (171)

-

         (171)

Gross profit

-

         4,052

-

    4,052

 

 

 

 

 

Operating expenses

(252)

       (3,832)

(238)

(4,322)

 

(252)

            220

(238)

(270)

Charge in respect of share based payments

            -

                -

                   -

-

Operating (loss)/profit

(252)

            220

(238)

(270)

Finance costs

(587)

              (50)

                 -

(637)

(Loss)/profit before taxation

(839)

           170

  (238)

(907)

 

 

 

 

 

Operating expenses include:

 

 

 

 

Depreciation and amortisation

-

229

                     -

229

 

 

 

 

 

Assets/liabilities

 

 

 

 

Goodwill

6,127

            3,765

-

9,892

Other non-current assets

159

584

-

             743

Current assets

44,513

1,980

-

46,493

Total assets

50,799

6,329

-

57,128

 

 

 

 

 

Total liabilities

11,710

2,370

 

14,080

 

 

 

 

Notes to the unaudited interim results (continued)

6 months ended 30 April 2018 

 

3. Segmental information (continued)

 

 

Year ended 31 October 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

(595)

(2,516)

Taxation

            -

                 -

                 -

                     -

(Loss)/profit after taxation

(2,500)

                 488

(595)

(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

 

The Group has announced its intention to sell the travel business and the results for the half year ended 30 April 2018 and 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 £455,000 (30 April 2017: £170,000, 31 October 2017: £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 at the lower of its fair value and carrying value.

 

 

 

Notes to the unaudited interim results (continued)

6 months ended 30 April 2018

 

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.

 

5. Loss per share attributable to equity holders of the Company

 

Earnings per share are calculated by dividing the earnings attributable to the equity holders of a company by the weighted average number of ordinary shares in issue during the period. Diluted earnings per share are calculated by adjusting basic earnings per share to assume the conversion of all dilutive potential ordinary shares. There are no dilutive instruments in issue, therefore the basic loss per share and diluted loss per share are the same. The weighted average number of shares used in calculating basic and diluted loss per share for the 6 months ended 30 April 2018 was 216,173,939 (6 months ended 30 April 2017: 197,769,617, year ended 31 October 2017: 204,548,735).

 

6. Share based payments charge

 

 

6 months ended 30.04.18

                       £'000

6 months ended 30.04.17

                       £'000

Year ended 31.10.17

                        £'000

Share based payments - directors

41

-

79

Share based payments - others

47

-

107

Share based payments - warrants finance charges

293

293

459

 

381

293

645

 

 

 

 

In accordance with IAS 32, the share based payments charge in respect of warrants finance charges shown above has been included in Finance costs in the Unaudited Consolidated Statement of Comprehensive Income.


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