Preliminary Results for period ended 31.10.11

RNS Number : 5241A

Minoan Group PLC

30 March 2012

 



30 March 2012

Preliminary Results Announcement 

Minoan Group Plc ("Minoan or the "Company") announces its preliminary results for the 13 months ended 31 October 2011

HIGHLIGHTS

·     Submission of application for Crete project to be admitted to Fast Track Process;

·     Acquisition of first cluster of travel businesses; and

·     The Travel and Leisure division of the Group contributed a profit of £154,000 prior to exceptional costs.

Minoan Chairman, Christopher Egleton commented:

"The period under review has seen a transformation of the Group into a revenue generating business for the first time. The recently announced trading update indicates that in a poor market our revenues are holding up extremely well and I believe that this will continue for the rest of the year.

In addition, I am very pleased that we have submitted our final application to Invest in Greece for the Project to be admitted to the Fast Track Process"

Minoan Group Plc's Preliminary Results Announcement for the 13 months ended 31 October 2011 can be viewed on the Company's website, www.minoangroup.com, with effect from 30 March 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

Nicola Marrin/David Foreman (Corporate Finance)  

Rivington Street Corporate Finance Limited   020 7562 3384

Jon Levinson

Bishopsgate Communications Limited              020 7562 3350                               

Nick Rome/Shabnam Bashir

Chairman's Statement     

Introduction

The period under review has seen the successful completion of the first stage in the Group's transition into a widely based travel and leisure business. Whilst the full effects of this transition on both revenue and cash flow will only be felt in the current year and the future, I am very pleased that the strategy set out in my last annual statement and the admission document published in September last year is now bearing fruit.

Contemporaneously, following numerous changes to the applicable laws and the iterations which were made necessary, the design of the Group's new project in Crete (the "Project") has been finalised and the application for the Project to be recognised as a strategic investment and, as such, to qualify for inclusion in the Fast Track Process has now been submitted.

The Project

Most of the new laws referred to above were introduced by the Greek government after June 2011 when the Company's first presentation to Invest in Greece was announced. The re-designs necessary involved considerable effort and cost to ensure that the project not only complied with all the new legislation but also remained environmentally friendly and sustainable.

As shareholders will know from previous announcements, the Fast Track Process is designed to simplify and speed up the overall planning regime. The timescale should be measured in months - a substantial improvement compared with the previous long drawn out procedure. According to the law the relevant decision on our Project's inclusion in Fast Track should be made no more than 45 working days from the date of submission. Thereafter Invest in Greece will coordinate the overall planning process.

Notwithstanding the Group's expansion in the travel sector, the Project remains a major asset of the Group and I look forward to keeping shareholders informed of progress.

Travel and Leisure

Since my last annual statement the Group has acquired King World Travel Limited and John Semple Travel Limited as well as completing a number of agreements with various product suppliers, notably Sunwing Airlines of Canada.

In the period since the year end the Group has agreed to acquire the assets and business of Stewart Travel Centre, having purchased a stake of 19.9% at the end of May 2011.

As a result, the first phase of the implementation of the Group's strategy in this sector is now substantially complete and total transaction value for the current year is expected to exceed £50 million.

Whilst I am very pleased with the progress so far, the Group's expansion from the existing Scottish cluster is very much on the directors' minds and a number of potential acquisition targets as well as additional product supplier agreements are under review.

Chairman's Statement (continued)     

Financial Results

The loss before taxation for the period ended 31 October 2011, which includes for the first time the figures for the Group's travel and leisure businesses, is £1,615,000 (year ended 30 September 2010: £1,261,000), which is also in line with the Board's expectations. The loss includes exceptional costs in the amount of £842,000 specifically related to the acquisitions of travel businesses during the period. Included in these exceptional costs are the costs of re-admission to AIM in October 2011 in the amount of £317,000 and the legal and professional fees related to the acquisitions which, in accordance with the latest accounting standards, are required to be written off rather than capitalised.

As can be seen in note 3 to the preliminary results, the Travel and Leisure division of the Group contributed a profit of £154,000 prior to the exceptional costs. The loss before taxation also includes a charge in respect of share based payments in the amount of £349,000 (year ended 30 September 2010: £535,000), which is an accounting charge required by International Financial Reporting Standards that involves no movement of cash. The loss per share was 1.77p (year ended 30 September 2010: 1.77p).

In order to reflect the Company's long term commitment to the Project certain of the costs related thereto, totalling £19,820,000, have been reallocated to non-current assets as a prior year adjustment. As a consequence, the value of the Project remaining in Inventories is £15,652,000 (30 September 2010: £14,904,000). Expenditure capitalised in the period is in line with the Board's expectations.

Conclusion

The period under review has seen a transformation of the Group into a revenue generating business for the first time. I and your Board believe that revenues and profits from the travel businesses will continue to grow and not only provide support for the Project but also create substantial shareholder value in the future.

The recently announced trading update indicates that in a poor market our revenues are holding up extremely well and I believe that this will continue for the rest of the year. I will keep shareholders informed of progress in the coming months.

Thank you all for your ongoing support.

Christopher W Egleton

Chairman

30 March 2012

Consolidated Statement of Comprehensive Income

13 months ended 31 October 2011

		13 months ended 31.10.11                         £'000	Year ended       30.09.10                          £'000
Sales/commission		7,388	-
Cost of sales		6,405	-
Gross profit		983	-
Operating expenses		(1,407)	(726)
Exceptional costs  related to acquisitions, including AIM admission		(842)	-
Charge in respect of share based payments		(349)	(535)
Loss before taxation		(1,615)	(1,261)
Taxation expense		-	-
Loss for period  attributable to equity holders of the Company		(1,615)	(1,261)
Loss per share attributable to equity holders of
the Company		(1.77)p	(1.77)p

Statement of Changes in Equity

13 months ended 31 October 2011

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
Share based payments	-	-	-	349	349
Balance at 31 October 2011	14,054	24,809	9,349	(10,388)	37,824

Year ended 30 September 2010

	Share capital £'000	Share premium £'000	Merger reserve  £'000	Retained earnings £'000	Total equity £'000
Balance at 1 October 2009	13,635	20,056	9,349	(8,396)	34,644
Loss for the year	-	-	-	(1,261)	(1,261)
Net proceeds from shares issued	133	1,697	-	-	1,830
Share based payments	-	-	-	535	535
Balance at 30 September 2010	13,768	21,753	9,349	(9,122)	35,748

Consolidated Balance Sheet as at 31 October 2011

		31.10.11 £'000	30.09.10 £'000 Restated
Assets
Non-current assets
Intangible assets		6,477	3,573
Property, plant and equipment		20,782	19,992
Investments		378	-
Total non-current assets		27,637	23,565
Current assets
Inventories		15,652	14,904
Receivables		342	38
Cash and cash equivalents		509	71
Total current assets		16,503	15,013
Total assets		44,140	38,578
Equity
Share capital		14,054	13,768
Share premium account		24,809	21,753
Merger reserve account		9,349	9,349
Retained earnings		(10,388)	(9,122)
Total equity		37,824	35,748
Liabilities
Current liabilities		6,316	2,830
Total liabilities		6,316	2,830
Total equity and liabilities		44,140	38,578

Consolidated Cash Flow Statement

13 months ended 31 October 2011

		13 months ended 31.10.11 £'000	Year ended       30.09.10 £'000
Cash flows from operating activities
Net cash used in continuing operations		(812)	(1,334)
Net cash used in operating activities		(812)	(1,334)
Cash flows from investing activities
Acquisitions of subsidiary companies		(1,061)	-
Cash acquired with subsidiary companies		1,407	-
Purchase of property, plant and equipment		(565)	(4)
Net cash used in investing activities		(219)	(4)
Cash flows from financing activities
Net proceeds from the issue of ordinary shares		1,469	1,271
Net cash generated from financing activities		1,469	1,271
Net increase/(decrease) in cash		438	(67)
Cash at beginning of period		71	138
Cash at end of period		509	71

Notes to the Consolidated Cash Flow Statement

13 months ended 31 October 2011

1      Cash flows from operating activities

	13 months ended 31.10.11 £'000	Year ended       30.09.10 £'000
Loss before taxation	(1,615)	(1,261)
Depreciation	18	15
Exchange gain relevant to property, plant and equipment	(5)	(1)
Increase in inventories	(748)	(891)
Share based payments	349	535
Increase in receivables	(32)	(2)
Increase/(decrease) in current liabilities	1,096	(291)
Non cash movement in current liabilities	125	562
Net cash outflow from continuing operations	(812)	(1,334)

2         Reconciliation of net cash flow to net funds

	13 months ended 31.10.11 £'000	Year ended       30.09.10 £'000
Increase/(decrease)  in cash in period	438	(67)
Cash at beginning of period	71	138
Cash at end of period	509	71

Notes to the preliminary results

13 months ended 31 October 2011

1. General information

The financial information set out in this Preliminary Results Announcement, which has been extracted from the Report and Financial Statements, does not constitute the Company's statutory accounts for the 13 months ended 31 October 2011.

The auditors have indicated that their report on the Report and Financial Statements for the 13 months ended 31 October 2011 will not be qualified and will not include a statement under s498(2) to s498(4) of the Companies Act 2006.

However, as in previous years, the report of the auditor is likely to contain an Emphasis of matter - in respect of the project in Crete: "In forming our opinion on the financial statements, which is not modified, we have considered the adequacy of the disclosures made in the Chairman's Statement, the Directors' Report and in note 1 to the financial statements concerning the uncertainty regarding the group's ability to secure detailed planning consents and project finance in order to bring its project in Crete to fruition.

The financial statements do not include any adjustments to the carrying value of property, plant and equipment, inventories and goodwill that would result if the group was unsuccessful in this regard".

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

These consolidated financial statements are prepared in accordance with EU adopted International Financial Reporting Standards ("IFRS") and IFRIC interpretations and the Companies Act 2006.

Going concern

The 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 now 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 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.

Notes to the preliminary results (continued)

13 months ended 31 October 2011

Going concern (continued)

Having taken these matters into account, the directors consider that the going concern basis of preparation of the financial statements is appropriate.

3. Segmented information

For management purposes, commencing for the first time in the current period, the Group is organised into two divisions:

the luxury resorts division, currently being the development of a luxury resort in Crete; and

the travel and leisure division, being the operation and management of travel businesses.

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 sections. For the purposes of presentation the central administration costs of the Group continue to be allocated to its original business, the luxury resort.

13 months ended 31 October 2011
	Luxury Resorts	Travel and Leisure	Total
	£'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)	(1,407)
Charge in respect of share based payments	(349)	-	(349)
(Loss)/profit before exceptional costs	(927)	154	(773)
Exceptional costs related to acquisitions, including AIM admission	-	(842)	(842)
Loss before taxation	(927)	(688)	(1,615)
Operating expenses include:
Depreciation	14	4	18
Assets/liabilities
Non-current assets	6,572	752	7,324
Current assets	36,203	693	36,896
Total assets	42,775	1,445	44,220
Current liabilities	4,860	1,536	6,396

Notes to the preliminary results (continued)

13 months ended 31 October 2011

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 site 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 travel and leisure 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 Company the opportunity to realise certain economies of scale thus improving cash flow and profitability.

Goodwill arising from acquisitions has been recognised as an asset.

5. Property, plant and equipment

Certain costs in respect of the Project to date and at the prior year end have been 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. 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.

7. 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 period ended 31 October 2011 was 91,103,126  (year ended 30 September 2010: 71,458,212).

Notes to the preliminary results (continued)

13 months ended 31 October 2011

8. Events after the balance sheet date 

On 17 February 2012 the Company announced that it had placed 4,031,000 Ordinary Shares of 1p each at a price of 5.5 pence per share and agreed to issue 2,000,000 Ordinary Shares at a price of 7.5 pence per share. In addition, the Company granted Options to subscribe for up to 201,550 Ordinary Shares at a price of 5.5 pence per share. The Options will expire on 16 February 2015.

On 15 March 2012 the Company announced the acquisition of the assets and business of Stewart Travel Centre by Stewart Travel Limited, a wholly owned subsidiary of Minoan Group Plc, and the terms thereof.

 

END

 

 

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