Last checked at 24 Feb 2010 07:00
MINOAN GROUP PLC
24 February 2010
Preliminary Results Announcement
Minoan Group Plc ("Minoan or "the Company"), the AIM-quoted leisure resort developer, announces its preliminary results for the year ended 30 September 2009
HIGHLIGHTS
·; Operating expenses reduced by 59% to a loss of £582,016 (2008: £1,422,176 loss)
·; Operating loss reduced by 64.5% to a loss of £921,327 (2008: £2,597,906 loss)
·; Loss per share reduced by 66.4% to 1.68p (2008: 5.00p)
·; Net cash £137,869 (2008: £575,199)
POST PERIOD HIGHLIGHTS
·; Agreed to acquire a number of solar energy licences in Greece, which will provide recurring cashflow
·; Continuing to look at complementary revenue generating businesses
·; Raised £1,001,100 via placings
·; Restructured Board
Minoan Chairman, Christopher Egleton commented:
"During the current, well publicised crisis in Greece, various Government ministers have made statements referring to the need to promote foreign investment. This encourages us as we continue to work towards the development of the Cavo Sidero Project whilst still awaiting the court's decision. Furthermore, the addition of a new income stream in the renewable energy sector and the potential opportunities apparent in the tourism and leisure sector provide scope for optimism."
The financial information set out in this Preliminary Results Announcement, which has been extracted from the audited Report and Financial Statements, does not constitute the Company's statutory accounts for the year ended 30 September 2009.
The report of the auditor on the Report and Financial Statements for the year ended 30 September 2009 is not qualified and does not include a statement under s498(2) to s498(4) of the Companies Act 2006.
Minoan Group Plc's Preliminary Results Announcement for the year ended 30 September 2009 can be viewed on the Company's website, www.minoangroup.com, with effect from 24 February 2010.
For further information contact:
Christopher Egleton Minoan Group Plc christopher.egleton@minoangroup.com
Bill Cole Minoan Group Plc 01689 897397
Nicola Marrin Seymour Pierce Limited 020 7107 8000
Sam Tully Seymour Pierce Limited 020 7107 8000
Dru Edmonstone Rivington Street Corporate Finance Ltd 020 7562 3351
Nick Rome/Gemma O'Hara Bishopsgate Communications Ltd 020 7562 3350
Chairman's Statement
Introduction
Shareholders will have seen a considerable amount of publicity about the seriousness of the financial situation in Greece. The new PASOK government, led by Mr George Papandreou, has announced major plans to reduce government expenditure and borrowing whilst at the same time increasing taxation. Although, as I write, there is a certain amount of public opposition to these plans opinion polls show that a majority of the population support the Prime Minister.
The importance of increasing foreign investment has been acknowledged by a number of Greek ministers and commentators. We believe that such investment will be a major factor in assisting the Government to resolve some of the long standing issues its plans are designed to address. We therefore remain optimistic as we continue to work towards the development of the Cavo Sidero Project whilst awaiting the court judgement.
In order to sustain the growth of the Company and to provide income we have previously highlighted plans to add a compatible activity to our operations. As such, after the year end, we announced that we have agreed terms for the acquisition of a number of solar energy licences. The Company remains focused on developing its Cavo Sidero Project whilst, in addition to its plans in renewable energy, exploring growth opportunities in the tourism and leisure sector.
The Cavo Sidero Project
Discussions are ongoing in respect of joint venture and partnership arrangements to enhance the Cavo Sidero development. We remain focused on our environmental credentials and continue to examine ways of reducing the Project's carbon footprint. With regard to commencing activity at Cavo Sidero, we await the court's judgement. As soon as the decision is published we will update shareholders as to the main points of the judgement and how they might affect the development.
Financial Results
At 30 September 2009 the book value of the Cavo Sidero Project was £33,834,082 (30 September 2008: £31,974,563). Expenditure capitalised in the year, while adversely affected by the appreciation of the value of the Euro against Sterling, is in line with the Board's expectations. The nature of the Company's business means that certain expenses, although attributable to the Project in overall terms, have to be written off as incurred. These costs give rise to a loss for the year ended 30 September 2009 of £919,690 (period ended 30 September 2008: £2,493,581), which is also in line with the Board's expectations. The costs include a charge in respect of share based payments in the amount of £339,311 (period ended 30 September 2008: £1,175,730). The loss per share, including the share based payments charge, was 1.68p (period ended 30 September 2008: 5.00p). The share based payments charge is an accounting entry required by International Financial Reporting Standards and involves no movement of cash. The loss per share excluding this charge is 1.06p (period ended 30 September 2008: 2.64p).
Outlook
Until November 2009, when the Company announced its agreement to acquire its first two solar energy licences in Greece, Minoan was a single project company. The licence acquisitions represent the initial stages of the Company's planned expansion into the Greek renewable energy sector, a market with compelling cash-generation characteristics which also strengthens Minoan's environmental credentials.
In addition, the Company is in substantive discussions regarding potential transactions in the tourism and leisure sector. The businesses being investigated are expected to provide strong cashflows and profit growth. It is our intention that any such businesses will be acquired through separate subsidiaries, possibly with other partners, so as not to dilute the underlying value of the Cavo Sidero Project for existing shareholders.
Chairman's Statement (continued)
Outlook (Continued)
After the year end, in order to help develop its projects, the Company restructured its executive management team naming Duncan Wilson Managing Director. Duncan is a travel professional with over 25 years experience and an in-depth knowledge of the tourism and leisure industry. Additionally, Operations Director Tim Hill has become a Non-Executive Director and Geoffrey Brown, the Company's Project Director, has left the Board. Geoffrey left in order to concentrate on his private interests although his considerable expertise will remain available to the Company when required. The restructured Board will drive Minoan forward, looking for further opportunities to create additional value and cashflow for the Company whilst retaining the underlying value of Cavo Sidero.
To help underpin these plans the Company has raised £1,001,100 since the year end. The funds raised have been earmarked to enable the Company to bring the Cavo Sidero Project nearer to fruition and to help progress the Company's development.
Conclusion
The addition of a potential new income stream in the Greek renewable energy market, taken together with potential opportunities in the tourism and leisure sector, provide scope for optimism moving forward.
I and my fellow directors remain fully committed to the success of the Company and to providing long term value for shareholders. We expect to update shareholders with further developments in the coming months.
Thank you all for your ongoing patience and support.
Christopher W Egleton
Chairman
22 February 2010
Consolidated Income Statement
Year ended 30 September 2009
| | | Year ended 30.09.09 £ | 18 months ended 30.09.08 £ |
| Revenue | | - | - |
| Cost of sales | | - | - |
| Gross profit | | - | - |
| | | | |
| Operating expenses | | (582,016) | (1,422,176) |
| Charge in respect of share based payments | | (339,311) | (1,175,730) |
| Operating loss | | (921,327) | (2,597,906) |
| | | | |
| Finance income | | 1,637 | 104,325 |
| Loss before taxation | | (919,690) | (2,493,581) |
| Taxation expense | | - | - |
| Loss for period attributable to equity holders of the Company | | (919,690) | (2,493,581) |
| | | | |
| Loss per share attributable to equity holders of the Company | | (1.68)p | (5.00)p |
| | | | |
| Loss per share attributable to equity holders of the Company (excluding the charge in respect of share based payments) | | (1.06)p | (2.64)p |
All of the above arises from continuing activities.
Statement of Changes in Equity
Year ended 30 September 2009
| | Share capital £ | Share premium £ | Merger Reserve £ | Retained earnings £ | Total equity £ |
| Balance at 1 October 2008 | 13,578,674 | 19,181,032 | 9,348,724 | (7,814,910) | 34,293,520 |
| Loss for the year | - | - | - | (919,690) | (919,690) |
| Net proceeds from shares issued | 56,439 | 874,611 | - | - | 931,050 |
| Share based payments | - | - | - | 339,311 | 339,311 |
| Balance at 30 September 2009 | 13,635,113 | 20,055,643 | 9,348,724 | (8,395,289) | 34,644,191 |
18 months ended 30 September 2008
| | Share capital £ | Share premium £ | Merger Reserve £ | Retained earnings £ | Total equity £ |
| Balance at 1 April 2007 | 11,937,653 | 17,794,904 | 9,348,724 | (6,497,059) | 32,584,222 |
| Loss for the period | - | - | - | (2,493,581) | (2,493,581) |
| Net proceeds from shares issued | 1,641,021 | 1,386,128 | - | - | 3,027,149 |
| Share based payments | - | - | - | 1,175,730 | 1,175,730 |
| Balance at 30 September 2008 | 13,578,674 | 19,181,032 | 9,348,724 | (7,814,910) | 34,293,520 |
Consolidated Balance Sheet as at 30 September 2009
|
|
| 30.09.09 £ | 30.09.08 £ |
| Assets |
|
|
|
| Non-current assets |
|
|
|
| Intangible assets |
| 3,572,776 | 3,572,776 |
| Property, plant and equipment |
| 183,593 | 175,795 |
| Total non-current assets |
| 3,756,369 | 3,748,571 |
| Current assets |
|
|
|
| Inventories |
| 33,834,082 | 31,974,563 |
| Receivables |
| 36,526 | 63,911 |
| Cash and cash equivalents |
| 137,869 | 575,199 |
| Total current assets |
| 34,008,477 | 32,613,673 |
|
|
|
|
|
| Total assets |
| 37,764,846 | 36,362,244 |
|
|
|
|
|
| Equity |
|
|
|
| Share capital |
| 13,635,113 | 13,578,674 |
| Share premium account |
| 20,055,643 | 19,181,032 |
| Merger reserve account |
| 9,348,724 | 9,348,724 |
| Retained earnings |
| (8,395,289) | (7,814,910) |
| Total equity |
| 34,644,191 | 34,293,520 |
|
|
|
|
|
| Liabilities |
|
|
|
| Current liabilities |
| 3,120,655 | 2,068,724 |
| Total liabilities |
| 3,120,655 | 2,068,724 |
|
|
|
|
|
| Total equity and liabilities |
| 37,764,846 | 36,362,244 |
Company registration number: 3770602
These financial statements were approved and authorised for issue by the Board of Directors on 22 February 2010.
Signed on behalf of the Board of Directors
C W Egleton
Director
Consolidated Cash Flow Statement
Year ended 30 September 2009
|
|
| Year ended 30.09.09 £ | 18 months ended 30.09.08 £ |
|
|
|
|
|
| Cash flows from operating activities |
|
|
|
| Net cash used in continuing operations |
| (1,112,041) | (4,460,148) |
| Net cash used in operating activities |
| (1,112,041) | (4,460,148) |
|
|
|
|
|
| Cash flows from investing activities |
|
|
|
| Purchase of property, plant and equipment |
| (1,176) | (26,005) |
| Net cash used in investing activities |
| (1,176) | (26,005) |
|
|
|
|
|
| Cash flows from financing activities |
|
|
|
| Interest received |
| 1,637 | 104,325 |
| Net proceeds from the issue of ordinary shares |
| 674,250 | 1,145,910 |
| Net cash generated from financing activities |
| 675,887 | 1,250,235 |
|
|
|
|
|
| Net decrease in cash |
| (437,330) | (3,235,918) |
|
|
|
|
|
| Cash at beginning of period |
| 575,199 | 3,811,117 |
| Cash at end of period |
| 137,869 | 575,199 |
|
|
|
|
|
Notes to the preliminary results
Year ended 30 September 2009
1. General information
The Company is a public limited company incorporated in the UK and quoted on AIM. The Company's principal activity is the design, creation, development and management of its luxury resort development at Cavo Sidero in North East Crete.
2. Basis of preparation
These consolidated financial statements are prepared in accordance with EU Endorsed 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 these financial statements are set out below. These policies have been consistently applied to all the periods represented, unless otherwise stated.
Going concern
The financial statements have been prepared on the going concern basis.
The directors have considered the financial and commercial position of the Company in relation to its Project at Cavo Sidero and, in particular, have reviewed the matters referred to below.
The decision of the Greek Conseil d'Etat on the appeal lodged against the Greek Government's approval of the Company's Environmental Impact Assessment in respect of the Cavo Sidero Project is still awaited. Should the appeal be dismissed, the Project will move to the next stage. Should the appeal be upheld, the directors have been advised and remain confident that, subject to receiving the detailed judgement of the Court, the Company will continue to be in a position to move forward, whether with the Project or with the other opportunities that it is considering, including those announced recently.
As has been the case in the past, in order to meet ongoing working capital requirements, the Group is currently involved in discussions with its financial advisers and potential sources of finance. The Board has considered the cash resources required in the period up to the court decision referred to above, and for the period thereafter, having made appropriate assumptions as to the time scale. While recognising that there remains some uncertainty, in the light of discussions with potential funders, the directors consider that the Group will have sufficient resources for the period up to the appeal decision. Following the removal of the uncertainty regarding the outcome of the court decision, the directors also consider that the funds required for the period after the decision will be determined and successfully raised as required.
Having taken these matters into account, the directors consider that the going concern basis of preparation of the financial statements is appropriate.
Further comment on the above matters appears in the Chairman's Statement.
The financial statements do not include any adjustment that would be required if the Company was unable to continue as a going concern.
Notes to the preliminary results (continued)
Year ended 30 September 2009
3. Charge in respect of 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 are met.
As required under IFRS 2, a charge has been made for the value of the LTIP using the Black-Scholes or Monte Carlo 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.
An appropriate charge has been made in the income statement of earlier years reflecting the fair value of the shares under option.
4. Loss per share attributable to the 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. In the case of losses however, these shares are antidilutive and as such they are ignored in calculating diluted loss per share. 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 30 September 2009 was 54,858,945 (period ended 30 September 2008: 49,825,571).
5. Goodwill
As stated above, IFRS require that goodwill be tested annually for impairment and not amortised. In the Group's case, the requirement to amortise goodwill ceased with effect from 31 March 2006. The most recent independent valuation of the land at Cavo Sidero, by AXIES S.A. on 27 April 2007, indicates a value of €170 million (approximately £150 million) with all relevant approvals in place. This valuation, plus the current progress of the Cavo Sidero Project, means that the directors are of the opinion that the project site has longer term value in excess of the value of both goodwill and inventories.
The directors consider that, at present, the business consists of one cash generating unit.