Half Yearly Report

RNS Number : 7391I

Minoan Group PLC

30 July 2012

 



30 July 2012

Interim Results Announcement 

Minoan Group Plc

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

announces its unaudited interim results for the 6 months ended 30 April 2012

HIGHLIGHTS

·     Completion of first phase of the Group's travel and leisure strategy;

·     establishment of Glasgow central office; and

·     the signing of a joint venture agreement in respect of the Group's Crete project post the balance sheet date.

Minoan Chairman, Christopher Egleton commented:

"We are delighted with the progress made in the Group's travel and leisure business and the potential to continue this growth.

In a recent interview, Greece's newly appointed tourism minister, Olga Kefalogianni, who is the country's first dedicated minister for the sector since 2009, stated that 'Greece hopes to increase visitor numbers by focusing on a variety of niche markets, including golfing and yachting holidays, conferences and incentive travel, medical tourism, sustainability and cruising'. She also stated that 'the UK is the second largest tourism market to Greece but in terms of importance it is number one. We have strong ties with the British market'.

With its project in Crete (the "Project"), Minoan is in a unique position to take advantage of this new incentive to promote tourism in Greece. The recently announced signing of a joint venture agreement represents a significant step in bringing the Project to fruition plus it provides the potential to create revenue through the purchase and/or operation of leisure related assets in Greece via a special purpose vehicle.

The more positive news emerging from Greece combined with the progress made in the Group's travel and leisure business gives the Board considerable cause for optimism for the future."

The Company's unaudited interim results for the 6 months ended 30 April 2012 can be viewed on Minoan's website, www.minoangroup.com, with effect from 30 July 2012.

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

Minoan Group Plc
Christopher Egleton	[e-mail]
Bill Cole	020 8253 4305
Seymour Pierce Limited	020 7107 8000
David Foreman/Rick Thompson
Peterhouse Corporate Finance Limited	020 7469 0937
Jon Levinson/Tom Stockton
Bishopsgate Communications Limited	020 7562 3350
Nick Rome/Anna Michniewicz/Ivana Petkova

Chairman's Statement     

Introduction

The period since my last annual statement has seen the completion of the first phase of the implementation of the Group's strategy in the travel and leisure sector together with the signing of a number of product/supplier agreements.

The Group is awaiting approval for its project in Crete (the "Project") to be recognised as a strategic investment and, as such, to qualify for inclusion in the Fast Track Process. Notwithstanding, a major initial investment in the Project has been agreed with a joint venture partner (the "Partner") with the opportunity for the Partner to acquire a further substantial percentage after the receipt of Environmental Approval (see note 9).

The Company and the Partner have also agreed to establish a special purpose vehicle to examine the possibility of creating a revenue producing business through the purchase and/or operation of leisure-related assets in Greece.

The Project

As announced previously, the need to hold two elections in Greece before establishing a working government has, inevitably, resulted in a slowing down of all bureaucratic processes. I am pleased to report, however, that these processes have now recommenced and the directors are hopeful that approval for the re-designed Project to qualify for inclusion in the Fast Track Process will be received in the near future.

The Board remains committed to bringing this major asset to fruition and the intention is to finalise and submit the Group's updated  Environmental Impact Assessment via Invest in Greece, which will coordinate the overall planning process, as soon as practical after the above approval is received.

The signing of the joint venture agreement is the first step in the Board's previously stated intention of developing the Project by means of such agreements, and provides for the:

·      establishment of a value for the Project as at today;

·      establishment of a potential value for the Project immediately after the receipt of Environmental Approval but prior to commencing development; and

·      potential to generate revenue through a special purpose vehicle, in which the Company's stake will be 51%, in other areas of Greece.

Travel and Leisure ("T&L")

The first phase of the Group's strategy in this sector is now complete and the integration of the businesses of King World Travel Limited, John Semple Travel Limited, Stewart Travel Centre and Ski Travel Centre has been successful.

The T&L business continues to trade well despite the difficulties suffered in the sector in recent months. We have now established a central office in Glasgow with the capacity and infrastructure to service a substantially greater volume of business in the future.

The level of expertise and commitment brought to the business by the management team, now strengthened by the arrival of Willie Stewart and the members of the Semple family, means the Group is in position to take advantage of commercial opportunities as they arise. A number of discussions are currently ongoing and further announcements are expected in the near future.

Financial Results

The unaudited interim results for the six months ended 30 April 2012 are set out below and are in line with the Board's expectations. As set out in note 3, the Group is now organised into three divisions in order to better reflect its strategy and growth objectives.

The Unaudited Consolidated Income Statement includes the results of both King World Travel Limited and John Semple Travel Limited for the first time. The cyclical nature of the travel business means that these results cover a period of lesser activity than can be expected in the second half of the Group's trading year.

The Unaudited Consolidated Income Statement includes a charge in respect of share based payments. The share based payments charge is an accounting entry required by International Financial Reporting Standards and involves no movement of cash (note 7).

The segmental information in note 3 now enables shareholders to see the results of the Group's different activities.

Conclusion

Your Board believes that revenues and profits from the T&L businesses will continue to grow and create substantial shareholder value in the future.

We remain confident that the Project will take another step towards fruition in the coming months and in the continued expansion of the travel and leisure business.

Thank you all for your ongoing support.

Christopher W Egleton

Chairman

30 July 2012

Unaudited Consolidated Statement of Comprehensive Income

6 months ended 30 April 2012

	6 months ended 30.04.12                         £'000	6 months ended 31.03.11          £'000	13 months ended 31.10.11                          £'000
Sales/commission	12,563	610	7,388
Cost of sales	11,409	534	6,405
Gross profit	1,154	76	983
Operating expenses	(1,386)	(316)	(1,407)
Costs related to acquisitions and corporate development (see note 3)	(415)	(96)	(525)
Exceptional costs re AIM Admission	-	-	(317)
Charge in respect of share based payments	(133)	(162)	(349)
Loss before taxation	(780)	(498)	(1,615)
Taxation	-	-	-
Loss for period  attributable to equity holders of the Company	(780)	(498)	(1,615)
Loss per share attributable to equity holders of
the Company	(0.74)p	(0.65)p	(1.77)p

Unaudited Statement of Changes in Equity

6 months ended 30 April 2012

6 months ended 30 April 2012

	Share capital £'000	Share premium £'000	Merger reserve  £'000	Retained earnings  £'000	Total equity £'000
Balance at 1 November 2011	14,054	24,809	9,349	(10,388)	37,824
Loss for the period	-	-	-	(780)	(780)
Net proceeds from shares issued	214	1,542	-	-	1,756
Movement in share based payment reserve	-	-	-	485	485
Balance at 30 April 2012	14,268	26,351	9,349	(10,683)	39,285

6 months ended 31 March 2011

	Share capital £'000	Share premium £'000	Merger reserve£'000	Retained earnings£'000	Total equity£'000
Balance at 1 October 2010	13,768	21,753	9,349	(9,122)	35,748
Loss for the period	-	-	-	(498)	(498)
Net proceeds from shares issued	103	1,186	-	-	1,289
Movement in share based payment reserve	-	-	-	162	162
Balance at 31 March 2011	13,871	22,939	9,349	(9,458)	36,701

13 months ended 31 October 2011

	Share capital £'000	Share premium £'000	Merger reserve£'000	Retained earnings£'000	Total equity£'000
Balance at 1 October 2010	13,768	21,753	9,349	(9,122)	35,748
Loss for the period	-	-	-	(1,615)	(1,615)
Net proceeds from shares issued	286	3,056	-	-	3,342
Movement in share based payment reserve	-	-	-	349	349
Balance at 31 October 2011	14,054	24,809	9,349	(10,388)	37,824

Unaudited Consolidated Balance Sheet as at 30 April 2012

	As at 30.04.12 £'000	As at 31.03.11   Restated £'000	As at 31.10.11 £'000
Assets
Non-current assets
Intangible assets	6,477	4,313	6,477
Property, plant and equipment	20,565	20,186	20,782
Investments	378	-	378
Total non-current assets	27,420	24,499	27,637
Current assets
Inventories	16,372	15,193	15,652
Receivables	467	246	342
Cash and cash equivalents	1,079	1,094	509
Total current assets	17,918	16,533	16,503
Total assets	45,338	41,032	44,140
Equity
Share capital	14,268	13,871	14,054
Share premium account	26,351	22,939	24,809
Merger reserve account	9,349	9,349	9,349
Retained earnings	(10,683)	(9,458)	(10,388)
Total equity	39,285	36,701	37,824
Liabilities
Current liabilities	6,053	4,331	6,316
Total liabilities	6,053	4,331	6,316
Total equity and liabilities	45,338	41,032	44,140

Unaudited Consolidated Cash Flow Statement

6 months ended 30 April 2012

	6 months ended 30.04.12 £'000	6 months ended 31.03.11 £'000	13 months ended 31.10.11 £'000
Cash flows from operating activities
Net cash generated from/(used in) continuing operations (note A)	160	753	(812)
Net cash generated from/(used in) operating activities	160	753	(812)
Cash flows from investing activities
Acquisitions of subsidiary companies	-	(429)	(1,061)
Cash acquired with subsidiary companies	-	-	1,407
Net disposal/(purchase) of property, plant and equipment	188	(11)	(565)
Net cash used in investing activities	188	(440)	(219)
Cash flows from financing activities
Net proceeds from the issue of ordinary shares	222	710	1,469
Net cash generated from financing activities	222	710	1,469
Net increase in cash	570	1,023	438
Cash at beginning of period	509	71	71
Cash at end of period (note B)	1,079	1,094	509

Notes to the Unaudited Consolidated Cash Flow Statement

6 months ended 30 April 2012

A            Cash flows from operating activities

	6 months ended 30.04.12                         £'000	6 months ended 31.03.11          £'000	13 months ended 31.10.11                          £'000
Loss before taxation	(780)	(498)	(1,615)
Depreciation	10	7	18
Exchange loss/(gain) relevant to property, plant and equipment	19	-	(5)
Increase in inventories	(720)	(477)	(748)
Movement in share based payment reserve	485	162	349
Increase in receivables	(125)	(207)	(32)
(Decrease)/increase in current liabilities	(263)	1,501	1,096
Non cash movement in intangible assets	-	(311)	-
Non cash movement in current liabilities	1,534	576	125
Net cash generated from/(used in) operating activities	160	753	(812)

B            Reconciliation of net cash flow to net funds

	6 months ended 30.04.12                         £'000	6 months ended 31.03.11          £'000	13 months ended 31.10.11                          £'000
Increase in cash in period	570	1,023	438
Cash at beginning of period	509	71	71
Cash at end of period	1,079	1,094	509

Notes to the unaudited interim results

6 months ended 30 April 2012

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 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 13 months ended 31 October 2011 has been delivered to the Registrar of Companies. The auditors' report on these accounts was unqualified and did not contain statements under s498(2) to s498(4) of the Companies Act 2006. The Report and Financial Statements for the 13 months ended 31 October 2011 were approved by the Board on 2 April 2012.

The interim financial statements for the 6 months ended 30 April 2012 comprise an Unaudited Consolidated Statement of Comprehensive Income, Unaudited Statement of Changes in Equity, Unaudited Consolidated Balance Sheet and Unaudited Consolidated Cash Flow statement plus relevant notes.

The interim financial statements are prepared in accordance with EU adopted International Financial Reporting Standards ("IFRS") and 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 13 months ended 31 October 2011.

Going concern

The interim unaudited financial statements have been prepared on the going concern basis.

The directors have considered the financial and commercial position of the Group in relation to its project in Crete ("the Project") and also in respect of its travel and leisure ("T&L") business. In particular, the directors have reviewed the matters referred to below.

The Company has submitted its formal application for the Project to qualify as a strategic investment and to be eligible for inclusion under the provisions of the Fast Track Law, the new permitting process approved by the Greek Government. The Project masterplan is for the creation of a smaller, higher quality, fully sustainable development than previously.

As has been the case in the past, the Group continues to raise capital in order to meet its existing working capital requirements and the directors consider that any necessary funds will continue to be raised as required.

With the first acquisitions in the planned expansion of its T&L business having been completed, the Group is now in a position to generate profits and cash flow within this sector of its activities.

The Group has also agreed a substantial investment and joint venture in the Project.

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 is now at the stage at which it is considered appropriate to identify separately the corporate development division together with costs related to acquisitions. Accordingly, the Group is now organised into three divisions

·      the luxury resorts division, currently being the development of a luxury resort in Crete, which includes the central administration costs of the Group;

·      the T&L division, being the operation and management of the travel businesses; and

·      the corporate development division as described above.

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 2012
		Luxury Resorts	Travel and Leisure	Corporate Development	Total
		£'000	£'000	£'000	£'000
Results
Sales/commission		-	12,563	-	12,563
Cost of sales		-	11,409	-	11,409
Gross profit		-	1,154	-	1,154
Operating expenses		(242)	(1,144)	(415)	(1,801)
Charge in respect of share based payments		(133)	-	-	(133)
(Loss)/profit before taxation		(375)	10	(415)	(780)
Operating expenses include:
Depreciation		2	8	-	10
Assets/liabilities
Non-current assets		26,885	535	-	27,420
Current assets		16,762	1,156	-	17,918
Total assets		43,647	1,691	-	45,338
Current liabilities		3,347	2,706	-	6,053

	6 months ended 31 March 2011
		Luxury Resorts	Travel and Leisure	Corporate Development	Total
		£'000	£'000	£'000	£'000
Results
Sales/commission		-	610	-	610
Cost of sales		-	534	-	534
Gross profit		-	76	-	76
Operating expenses		(248)	(68)	(96)	(412)
Charge in respect of share based payments		(162)	-	-	(162)
(Loss)/profit before taxation		(410)	8	(96)	(498)
Operating expenses include:
Depreciation		5	2	-	7
Assets/liabilities
Non-current assets		24,493	6	-	24,499
Current assets		16,331	202	-	16,533
Total assets		40,824	208	-	41,032
Current liabilities		2,876	1,455	-	4,331

	13 months ended 31 October 2011
		Luxury Resorts	Travel and Leisure	Corporate Development	Total
		£'000	£'000	£'000	£'000
Results
Sales/commission		-	7,388	-	7,388
Cost of sales		-	6,405	-	6,405
Gross profit		-	983	-	983
Operating expenses		(578)	(829)	(525)	(1,932)
Charge in respect of share based payments		(349)	-	-	(349)
(Loss)/profit before exceptional costs		(927)	154	(525)	(1,298)
Exceptional costs re AIM Admission		-	-	(317)	(317)
(Loss)/profit before taxation		(927)	154	(842)	(1,615)
Operating expenses include:
Depreciation		14	4	-	18
Assets/liabilities
Non-current assets		26,885	752	-	27,637
Current assets		15,810	693	-	16,503
Total assets		42,695	1,445	-	44,140
Current liabilities		4,780	1,536	-	6,316

4. Goodwill

Goodwill is tested annually for impairment. In particular, the directors have considered the current value of the Group's interest in the Project and are of the opinion that the Project has longer term value in excess of the carrying value of non-current assets and inventories. The directors' opinion of the current value also takes into account the estimate, dated 27 June 2011, of the development value of the Project site in the order of €100 million as included in the Company's AIM admission document published on 30 September 2011.

In addition, the directors are of the opinion that the projected value of the T&L businesses acquired is in excess of the value of the amount of goodwill attributable to them. This opinion is arrived at on the basis of the good names of the businesses acquired and the fact that the establishment of business clusters affords the Group the opportunity to realise certain economies of scale thus improving cash flow and profitability.

Goodwill arising from acquisitions has been recognised as a non-current asset.

5. Property, plant and equipment

As at 31 October 2011, and at the prior year end, certain costs in respect of the Project were reallocated from inventories to property, plant and equipment in order to better reflect the Group's long term commitment to its investment in Crete.

6. Inventories

As at 31 October 2011 certain costs related to the Group's project in Crete, totalling £19,820,000 were reallocated to non-current assets as a prior year adjustment. As a consequence, the value of the Project remaining in Inventories is £16,372,000 (31 March 2011: £15,193,000, 31 October 2011: £15,652,000).

7. Share based payments

The Group has a Long Term Incentive Plan ("LTIP") in which any director or employee selected by the remuneration committee may participate. Awards under the LTIP have been granted on the basis that certain performance conditions will be met.

The Company has also granted options to purchase Ordinary Shares of 1p each.

A charge has been made in respect of the LTIP and options using the Black-Scholes and Monte Carlo fair value pricing models as appropriate and charged over the vesting periods. This charge, shown as a charge in respect of share based payments in the consolidated income statement, does not involve any cash payment.

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

Earnings per share are calculated by dividing the earnings attributable to the equity holders of a company by the weighted average number of ordinary shares in issue during the 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 2012 was 105,901,621 (6 months ended 31 March 2011: 76,104,773, 13 months ended 31 October 2011: 91,103,126).

9. Events after the balance sheet date 

1.     On 31 May 2012, the Company announced the acquisition of the trade and business assets of Ski Travel Centre a leading Glasgow-based travel agency, arranging winter sports holidays in Europe and North America for clients in the UK, Ireland and beyond, ranging from families of first-time beginners to large groups and clubs.

2.     On 20 June 2012, the Company announced that it had entered into an agreement (the "Agreement") with The Candia Investment Corporation ("the Partner") to create a financial joint venture regarding its project in North Eastern Crete (the "Project").

The key terms of the Agreement being:

o  The Partner will earn a 10% economic interest in the Project in exchange for an investment of £2 million to be made available in tranches.

o  The Partner will have the right to purchase a further 25% share in the Project for an additional £12.5 million during an agreed period after receipt of Environmental Approval for the Project.

o  The Partner will be also granted an option to subscribe for up to 4 million new Ordinary Shares in the Company at an exercise price of 8p per share. Subject to certain conditions, the option is exercisable between 1 February 2013 and 30 September 2015.

o  The Agreement contains clauses which may lead to a limited adjustment in both parties' interests in the Project.

o  The Partner and the Company have agreed to establish a special purpose vehicle ("SPV") to examine the possibility of creating a revenue producing business through the purchase and/or operation of leisure-related assets in Greece. The SPV will be majority controlled by Minoan holding 51%, whilst the Partner will hold 49%.

 3.     On 16 July 2012, the Company announced:

o  the vendors of John Semple Travel Limited Semple had elected to receive ordinary shares of 1p each ("Ordinary Shares") to settle the loan of £320,000, plus accrued interest and, as a consequence, the issue of 2,860,476 Ordinary Shares at 12 pence per share to the vendors;

o  the issue of 1,111,120 Ordinary Shares at 12.5 pence per share in accordance with an existing convertible loan agreement; and

o  following regulatory approval, the completion of the acquisition of 100% of the assets and business of Stewart Travel Centre in accordance with the terms announced on 16 March 2012.

 

END

 

 

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