Preliminary results for the year ended 31 Oct 2012

RNS Number : 7220A

Minoan Group PLC

25 March 2013

 



25 March 2013

Minoan Group Plc

(the "Company" or the "Group")

Preliminary results for the year ended 31 October 2012

HIGHLIGHTS

·    Strategy to develop the Group into a successful travel and leisure business implemented

·    Travel business is trading well - gross sales of £37 million and a rise of over 150% in profit before tax for the year

·    Four significant acquisitions completed and a landmark agreement signed with the National Federation of Sub Postmasters to offer travel services

·    First significant external investment in the Group's Crete Project by Candia establishes an implied value for the project, pre-planning, of £20 million

·    Crete project recognised as a strategic investment by the Greek Government and granted Fast Track Status. Despite appeal, Government confirms support and expects speedy resolution

·    With the establishment of a Glasgow central office and a highly-capable management team in place, the Group is well positioned to capitalise on further commercial opportunities in the travel and leisure sector

Minoan Chairman, Christopher Egleton commented:

"We have made excellent progress over the past 12 months in our strategy of transforming the Group into a successful travel and leisure business. Our management team's ambition and vision is translating into solid achievement. The fast-expanding travel business is performing well, delivering increases in both revenues and profits, and with the recent agency additions now integrated there are firm foundations for further strong growth, both organically and through more acquisitions.

The inclusion of the Crete Project in Fast Track and the Greek Government's re-affirmation of its support for the Project despite the recent appeals are very positive. The current conditions in Greece and the continuing liberalisation of planning and privatisation laws augers well for the realisation of the Project and for other opportunities.

The outlook for the coming year is very positive and we will seek to capitalise on this year's successes to further enhance the Group's performance and move the business forward strongly over the next 12 months."

Minoan Group Plc's Preliminary Results Announcement for the year ended 31 October 2012 can be viewed on the Company's website, www.minoangroup.com, with effect from 25 March 2013.

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

Minoan Group Plc
Christopher Egleton	[e-mail]
Duncan Wilson	0141 226 2930
Bill Cole	020 8253 4305
WH Ireland Limited	020 7220 1666
Adrian Hadden / Nick Field
Throgmorton Street Capital	020 7071 0808
Forbes Cutler
Morgan Rossiter	020 7629 9101 / 07985117887
Richard Morgan Evans / James Rossiter

Chairman's Statement     

Introduction

The Group has made substantial progress in both its divisions in the year under review. Its transition into a successful widely based travel and leisure business has continued.

In our travel business it was a particularly busy year with the completion of the acquisition of Stewart Travel Centre and Ski Travel Centre and their integration into the Group. This expansion continued after the year end with two further acquisitions and the announcement of the agreement with the National Federation of Sub Postmasters ("NFSPM"). Although we now have a travel team capable of managing a substantially larger travel business, we rejected a number of acquisition opportunities during the year as they did not meet our strict earnings enhancing criteria.

The growing core profitability of our travel business has helped to offset our corporate developments costs, including those of developing the Crete project (the "Project"), and we remain in line with our three year strategy to move the Group into overall profitability. We are now halfway through this transformation and are confident of continuing improvement.

In overall terms the Group has had a successful year and is better placed than ever to take advantage of opportunities which are arising in Greece and in the travel sector. 

Greece

The two major events during the year were the announcement by the Greek Government that the Project would be granted Fast Track status and the first significant external investment in the Project by Candia. These two events demonstrate serious Government intent and third party confidence.

Following the Fast Track approval in December an appeal against the Government's decision was lodged. The Government has made it clear that it wishes to see a speedy resolution of the appeal, which is currently due to be heard on 5 April. 

In the meantime the Group is pressing ahead with the various studies necessary for its submission for environmental approval.

Travel and Leisure

Our travel business has had a successful year.

The acquisition of the remaining 80% of Stewart Travel Centre and Ski Travel Centre has driven our gross sales to £37 million for the year. By the fourth quarter sales had reached an annualised rate of £45 million. The post year end acquisitions, Classic Travel Limited and the Golf Concierge brand, will also contribute to the growth of this division in the current year.

The integration of the different businesses has gone well and we expect that the effect of this on our profitability will become evident in the current year. The travel division's profit before tax for the year ended 31 October 2012 of £413,000 compares with £154,000 in the previous period.

As reported in my statement in July, which accompanied the Group's interim results announcement, the establishment of the central office in Glasgow and the level of expertise and commitment to be found in the management team mean that the Group now has the infrastructure to support a significantly larger travel business without further central costs.

Financial Results

The Group loss before taxation for the year ended 31 October 2012 is £1,347,000 (13 months ended 31 October 2011: £1,615,000).  The loss before taxation includes a share based payments charge of £290,000 (13 months ended 31 October 2011: £349,000), which is an accounting charge required by IFRS that involves no outflow of cash. The loss per share is 1.12p (13 months ended 31 October 2011: 1.77p).

Outlook

Greece

Since my last statement the Greek Government has announced further changes in a number of laws relating to the planning regime - all designed to simplify and speed up the planning and privatisation processes. The changes, taken together with the progress the Government is making in dealing with the Country's fiscal problems, indicate a new, more positive attitude towards foreign investment in Greece.

As far as the Group is concerned, these changes mean that not only will the Project move forward more quickly, but that there will also be numerous new opportunities to enable the Group to benefit from its expertise and experience of operating in the Greek market. Any fresh opportunities will be pursued with financial partners in order to limit the Group's financial risk.

In Greece the changed atmosphere will, I believe, lead to the crystallisation of the Project and substantial value for shareholders as well as other significant opportunities.

Travel and Leisure

Since the year end trading in the travel business has been positive both against the prior year and the market as a whole. All acquired businesses are significantly ahead, and at the end of the first quarter of the current financial year total commissions in our travel business were up over 20% year on year and more than £200,000 of additional commission has been earned. The Group has invested significantly in IT infrastructure and telephony and the legacy of multiple front and back office systems will be eliminated by the end of April. This will yield significant opportunities to eliminate duplicate costs, reduce the need for bonding and substantially improve efficiency.

Whilst it is too early to quantify the earning potential of the NFSPM venture - the first 50 kiosks only being fully deployed by the end of January - we are cautiously encouraged by the level of activity to date.

Our travel business continues to examine selective acquisition targets, which we will pursue to the extent that they are expected to be earnings enhancing.

Conclusion

Both I and my colleagues are confident that further progress towards our goals of building a successful specialist travel business and realising the substantial potential of the Crete Project, together with other opportunities in Greece, will be made in the next twelve months.

Christopher W Egleton

Chairman

25 March 2013

Consolidated Statement of Comprehensive Income

Year ended 31 October 2012

		Year ended 31.10.12 £'000	13 months ended 31.10.11 £'000
Revenue		37,379	7,388
Cost of sales		33,646	6,405
Gross profit		3,733	983
Operating expenses		(3,867)	(1,407)
Other operating expenses:
Corporate development costs		(866)	(525)
Exceptional costs re AIM readmission		-	(317)
Charge in respect of share based payments		(290)	(349)
		(1,290)	(1,615)
Finance costs		(57)	-
Loss before taxation		(1,347)	(1,615)
Taxation expense		(24)	-
Loss for period  attributable to equity holders of the Company		(1,371)	(1,615)
Loss per share attributable to equity holders of
the Company		(1.14)p	(1.77)p

Statements of Changes in Equity

Year ended 31 October 2012

Year ended 31 October 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 year	-	-	-	(1,371)	(1,371)
Net proceeds from shares issued	487	3,540	-	-	4,027
Share based payments:
Current year charges	-	-	-	290	290
Settlement of brought forward liabilities	-	-	-	385	385
Balance at 31 October 2012	14,541	28,349	9,349	(11,084)	41,155

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:
Charge in period	-	-	-	349	349
Balance at 31 October 2011	14,054	24,809	9,349	(10,388)	37,824

Consolidated Balance Sheet

as at 31 October 2012

		31.10.12 £'000	31.10.11 £'000
Assets
Non-current assets
Intangible assets		8,229	6,477
Property, plant and equipment		20,706	20,782
Investments		-	378
Total non-current assets		28,935	27,637
Current assets
Inventories		16,763	15,652
Receivables		1,063	342
Cash and cash equivalents		657	509
Total current assets		18,483	16,503
Total assets		47,418	44,140
Equity
Share capital		14,541	14,054
Share premium account		28,349	24,809
Merger reserve account		9,349	9,349
Retained earnings		(11,084)	(10,388)
Total equity		41,155	37,824
Liabilities
Current liabilities		6,263	6,316
Total liabilities		6,263	6,316
Total equity and liabilities		47,418	44,140

Consolidated Cash Flow Statement

Year ended 31 October 2012

	Notes to the Consolidated Cash Flow Statement	Year ended  31.10.12 £’000	13 months ended 31.10.11 £’000
Cash flows from operating activities
Net cash outflow from continuing operations	1	(965)	(812)
Finance costs		(57)	-
Net cash used in operating activities		(1,022)	(812)
Cash flows from investing activities
Acquisition of trade and assets of Stewart Travel Centre		(360)	-
Acquisition of subsidiaries		-	(1,061)
Cash acquired with Stewart Travel Centre		286	-
Cash acquired with subsidiaries		-	1,407
Purchase of property, plant and equipment		(45)	(565)
Purchase of intangible assets		233	-
Net cash used in investing activities		(352)	(219)
Cash flows from financing activities
Net proceeds from the issue of ordinary shares		1,522	1,469
Net cash generated from financing activities		1,522	1,469
Net increase in cash		148	438
Cash at beginning of year		509	71
Cash at end of year		657	509

Notes to the Consolidated Cash Flow Statement

Year ended 31 October 2012

1      Cash flows from operating activities

	Year ended 31.10.12 £'000	13 months ended 31.10.11 £'000
Loss before taxation	(1,347)	(1,615)
Finance costs	57	-
Depreciation	59	18
Gain on disposal of property, plant and equipment	(4)	-
Exchange loss/(gain) relevant to property, plant and equipment	19	(5)
Increase in inventories	(1,111)	(748)
Movement in share based payment reserve	675	349
Increase in receivables	(599)	(32)
(Decrease)/increase in current liabilities	(1,294)	1,096
Non cash movement in fixed assets	200	-
Non cash movement in current liabilities	100	-
Non cash movement in current liabilities	2,280	125
Net cash outflow from continuing operations	(965)	(812)

Notes to the preliminary results

Year ended 31 October 2012

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 year ended 31 October 2012.

The auditors have confirmed that their report on the Report and Financial Statements for the year ended 31 October 2012 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 paragraph, which, for the current year under review, will be as follows: "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 and to continue as a going concern, which is dependent on the Group's ability to continue to  raise capital to finance its working capital requirements to move forward, whether with the Project or with the travel and leisure business.

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 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

These consolidated 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.

Going concern

The financial statements have been prepared on the going concern basis

The Company has now received approval 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 process approved by the Greek Government. allowing for quicker permitting time for Fast Track projects. This decision to award Fast Track Status has been the subject of an appeal. However, the Company is hopeful of a speedy and positive resolution thereof. Accordingly, the directors consider it relevant that having completed a financial joint venture agreement prior to Fast Track and any other consents, they will conclude further Project joint venture agreements in the near term. In addition, the directors are considering a number of other agreements which are likely to 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 raise capital in order to meet its existing working capital requirements and the directors consider that any necessary funds will be raised as required.

2. Accounting policies (continued)

Going concern (continued)

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

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

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;

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

·      the corporate development division (UK) 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.

	Year ended 31 October 2012
	Luxury Resorts	Travel and Leisure	Corporate Development	Total
	£'000	£'000	£'000	£'000
Results
Revenue	-	37,379	-	37,379
Cost of sales	-	33,646	-	33,646
Gross profit	-	3,733	-	3,733
Operating expenses	(547)	(3,320)	(866)	(4,733)
Charge in respect of share based payments	(290)	-	-	(290)
	(837)	413	(866)	(1,290)
Finance costs	(57)	-	-	(57)
(Loss)/profit before taxation	(894)	413	(866)	(1,347)
Operating expenses include:
Depreciation	6	53	-	59
Gain on disposal	-	(4)	-	(4)
Operating leases	-	32	-	32
Assets/liabilities
Non-current assets	26,602	2,333	-	28,935
Current assets	16,859	1,624	-	18,483
			-
Total assets	43,461	3,957	-	47,418
Current liabilities	4,471	1,792	-	6,263

	13 months ended 31 October 2011
	Luxury Resorts	Travel and Leisure	Corporate Development	Total
	£'000	£'000	£'000	£'000
Results
Revenue	-	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
Operating leases	-	8	-	8
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	4,977	1,339	-	6,316

4. Goodwill

Goodwill arising on acquisitions represents the difference between the total net assets of those entities on the respective dates of acquisition and the consideration paid.

Goodwill is tested annually for impairment. In particular, the directors have considered the current value of the Group's overall interest in the Project and its progress 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, which was included in the Company's AIM readmission document published on 30 September 2011 and which was reaffirmed in March 2012.

In addition, the directors are of the opinion that the projected value of the Travel and Leisure businesses acquired, which is treated as one cash generating unit, 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

Costs identified as being in respect of acquiring, maintaining and protecting the Group's acquisition of its interest in the Project to date have been reallocated from inventories to property, plant and equipment in prior years in order to better reflect the Group's long term commitment to its investment in Crete.

Property, plant and equipment are 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:

The Project:                                    over the life of the asset from contract activation

Freehold land:                                capital cost not depreciated

Acquisition costs of land:            3 years

Freehold property:                         50 years

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. The directors consider that the book values of non-current assets do not differ materially from the market values.

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 the consolidated statement of comprehensive income 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 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 year. 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 year ended 31 October 2012 was 120,434,862 (13 months ended 31 October 2011: 91,103,126).

8. Events after the balance sheet date 

1. On 21 November 2012 the Company issued 4,909,230 Ordinary Shares of 1p each at 10 pence per 

share in order to redeem various loans to be settled by the issue of shares and to satisfy certain existing liabilities.

2. On the same day the Company announced, subject to regulatory approvals, the acquisition of

    Classic Travel Limited, trading as Classic4Travel, an award-winning specialist travel agent with 

    over 30 years' experience in the travel and holiday market, plus the acquisition of the Golf  

    Concierge brand, which sells specialist world-class golfing breaks to both UK inbound and

    outbound tourists, offering more than 50 courses and associated resorts across 17 countries.

3.  In December 2012 the Group entered into agreements to purchase 50 Dual Head Lectern Kiosks for

     installation in sub post offices. The total capital commitment is £224,000 to be settled over a period

     of 3 years.

 

END

 

 

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