Minoan Group Plc
Report and Financial Statements
Year ended 31 October 2015
Company registration no: 3770602
Minoan Group Plc
Report and Financial Statements
Year ended 31 October 2015
Contents
Directors and Advisers
Chairman’s Statement
Strategic Report
Directors’ Report
Independent Auditor’s Report
Consolidated Statement of Comprehensive Income
Consolidated Statement of Changes in Equity
Company Statement of Changes in Equity
Consolidated Balance Sheet
Company Balance Sheet
Consolidated Cash Flow Statement
Note to the Consolidated Cash Flow Statement
Company Cash Flow Statement
Note to the Company Cash Flow Statement
Notes to the Financial Statements
1
2-4
5-6
7-8
9-10
11
12
13
14
15
16
17
18
19
20-48
Minoan Group Plc
Directors and Advisers
Directors
C W Egleton FCA (Chairman)
D C Wilson (Managing Director)
B D Bartman BSc (Econ), FCA
G D Cook MA, ACA
T R C Hill B.Arch
Company secretary
W C Cole FCA
Registered office
30 Crown Place
London
EC2A 4ES
Bankers
HSBC Bank plc, London
Barclays Bank Plc, Glasgow
Legal advisers
Pinsent Masons LLP, London
Nominated adviser and broker
WH Ireland Limited, London
Head office
3rd Floor
Sterling House
20 Renfield Street
Glasgow
G2 5AP
Administration office
3rd Floor
AMP House
Dingwall Road
Croydon
Surrey
CR0 2LX
Registrars
Neville Registrars Limited, Halesowen, West Midlands
Independent auditor
Moore Stephens LLP
Chartered Accountants and Statutory Auditor
150 Aldersgate Street
London
EC1A 4AB
1
Minoan Group Plc
Chairman’s Statement
Introduction
The issue of the Presidential Decree in respect of the Group’s Itanos Gaia project in Crete (the “Project”) in
March will, naturally, be the dominant feature of my Statement because of its pivotal nature for the Group’s
business. Its positive impacts cannot be over emphasised and some of these will be dealt with later in my
review.
The year ended 31 October 2015 was extremely busy with the teams in Greece and the UK making very good
progress.
In the Travel and Leisure (“T&L”) business, total transaction value increased by 20% over the comparable
figure in the previous financial year although, as referred to in the announcement of the Group’s Interim
Results in July last year, the business suffered a number of “one-off” impacts resulting from a dispute with the
provider of back office services. This was successfully resolved but its overall impact resulted in a decline in
profit before tax. Were it not for this, the T&L profit before tax would have shown a significant increase and
the growth in total transaction value would have been even strongr.
Greece
The Presidential Decree granting land use approval for the Project has been issued and published in the Greek
Government Gazette. As a result, the planning rules for the Project are now enshrined in law.
The Presidential Decree was unanimously approved by the Plenum of the Greek Council of State and then
endorsed by the current Government before being signed by the President of the Hellenic Republic, Mr
Prokopios Pavlopoulos. As I said at the time, this is a transformational event and is the result of many years of
hard work by the Group, its advisors and our Greek team who have had to cope with five changes of
Government in the last five years alone.
In this context, it is also important to note that this approval is the first for a major foreign leisure development
in the past 30 years.
Having created substantial value, the Board is now focusing its attention on achieving the best outcome for all
stakeholders in the Project, including the local community where we have full support. After so much time and
effort the maximisation of value and returns to our investors is the first priority. Shareholders will be aware
that the last “opinion of value” as per estimate dated 27 June 2011, which was reaffirmed in March 2012,
estimated that the Group’s interest in the land was “around €100m” and that there have been numerous
discussions with various potential partners including, inter alia, Hotel Operators, Joint Venturers, Financiers
and Investors. These and other discussions with the advisors working on the details for the fruition of the
development, which will bring a new type of tourism to Crete, are now being accelerated. Crystallising
discussions and negotiations such as these is a complex process and it can take some time to arrive at the best
conclusion, especially where more than one party is involved. Nevertheless, the Board is confident of
achieving a successful outcome in due course.
Due to its location, Crete has not suffered any material adverse effect from the current migration problems
being experienced in other parts of Greece and remains the destination of choice for millions of visitors.
2
Minoan Group Plc
Chairman’s Statement (continued)
Greece (continued)
The general situation in Greece, however, continues to be difficult with the migrant issue being the latest to
exacerbate the Country’s overall difficulties. Notwithstanding, the Greek Government continues to re-affirm its
support of the tourism industry as a major part of the Greek economy.
I am pleased to confirm that Sitia International airport, which is approximately 30 minutes from Itanos Gaia, is
now fully operational and will have a beneficial and growing impact on the local tourist industry.
Travel and Leisure
The T&L Division has continued to show significant volume growth with total transaction value increasing by
20% from £50,757,000 to £60,964,000 and gross profit increasing by 14% from £5,680,000 to £6,493,000.
This growth was offset by an increase in operating expenses in order to prepare for further expansion in the
current year. The net profit of the division, however, decreased from £454,000 to £233,000 for a number of
reasons including the dispute announced in July last year.
This dispute affected numerous parts of the business including total transaction value, the restriction of our
expected expansion into foreign exchange and an increase in costs. The total impact of what was a completely
unexpected and one off event is estimated to have amounted to approximately £410,000. All these matters have
now been successfully resolved.
The current year has started well with gross revenues up 16% despite the current widely reported problems
causing a number of popular tourist destinations to suffer major reductions in bookings.
Financial Review
The financial results for the year ended 31 October 2015 reflect what has been, as I noted earlier, a highly
encouraging year in advancing our dual strategies to maximise value from the Greek side of our business and
to continue the trend of underlying growth in T&L.
Notwithstanding the successes of the year, the Consolidated Statement of Comprehensive Income has been
affected by various items that are worthy of explanation. In particular, the accounting treatment afforded to the
Charge in respect of share-based payments, by definition a non cash item, has been changed in the results for
2015 and restated in the comparatives (moving the majority of this charge to finance costs). Further, the T&L
dispute referred to above adversely impacted the Loss after taxation.
The Consolidated Balance Sheet continues to be dominated by the value attributed to the Project which, as I
have noted above, with the granting of the Presidential Decree is now more than ever advancing towards value
maximisation for our investors and shareholders. Also worthy of note is that as a result of the delay in
receiving the Presidential Decree, and in keeping with normal accounting rules, the loan owed to one of our
major investors has moved from non-current liabilities to current liabilities.
3
Minoan Group Plc
Chairman’s Statement (continued)
Financial Review (continued)
To summarise, the change in accounting treatment of the Charge in respect of share-based payments has
increased Finance costs reported in the Consolidated Statement of Comprehensive Income for the year ended
31 October 2015 by £628,000 (with an associated reduction in the Charge in respect of share-based payments).
The impact of this change in accounting treatment is neutral on the net result. However, as stated above, the
impact of the T&L dispute served to increase the expected loss in the year by approximately £410,000, which,
together with higher interest charge, gave rise to our reported loss of £1,620,000 (2014: £1,036,000). Whilst
the quantum of this impact is greater than had been expected it is entirely of a one-off nature.
Outlook
In Greece, the Group is now extremely well-positioned to reap the benefits of the hard work of recent years
whilst in the UK the travel business will continue to identify new businesses it wishes to acquire to enhance its
performance and create value for shareholders. In this latter context your Board is examining various ways of
unlocking value for shareholders both from the Project, as I have described, and from the T&L division where
its expansion has, in part, been hampered by not being independent.
It is essential that the “buy and build” process of our T&L division is accelerated and to this end the Board is
considering the benefits of separating it in whole, or in part, from the Greek project in whichever is the best
way to achieve additional value. Amongst other methods a separate quotation may be sought as soon as the
division is of sufficient scale.
Conclusion
In the meantime, I wish to record my own and the Board’s thanks to our shareholders and staff for their
patience and support in reaching the milestone constituted by the Presidential Decree.
The next year is destined to be the most exciting and fruitful for the Group, its shareholders, Directors and staff
and I look forward to making further announcements in the future.
Christopher W Egleton
Chairman
30 March 2016
4
Minoan Group Plc
Strategic Report
The directors present their Strategic Report and the audited consolidated financial statements for the year
ended 31 October 2015.
Review of business
A review of the Group’s business is given in the Chairman’s Statement on page 2.
The key performance indicators used in the travel businesses are total transaction value and gross profit. Total
transaction value has increased to £60,964,000 from £50,757,000 and gross profit has increased to £6,493,000
from £5,680,000. This reflects volume growth and the Group’s strategy of changing its business mix to
concentrate on more profitable products.
The directors are of the opinion that analysis using key performance indicators for the Project is not necessary
for an understanding of the development, performance or position of that operation.
Principal risks and uncertainties
The Group’s key risks currently remain centred round the Project. The Group has an ongoing requirement to
raise capital to finance its working capital. As has been the case for the past several years, the Group is in
continual discussions with a variety of individuals and commercial parties regarding the provision of funding
to enable the Group’s current and future obligations and requirements to be met. These discussions are at
varying stages of development and the Board is confident that all necessary funding will be forthcoming within
a timescale which will enable the Group to move forward to provide a return to shareholders in due course (see
also note 1).
As the Project now moves towards its implementation stage, the normal risks associated with a development of
its size and nature will apply. These include, inter alia, detailed planning consents, availability of project
finance, construction costs and market demand.
The risks relating to the travel businesses are primarily its reliance on supply from tour operators and airlines,
and changes in general economic and other business conditions which may adversely affect demand for
tourism products. There are no material risks related to currency.
Going concern
The Board is confident that the value of the Group’s asset in Crete, combined with its capital raising ability and
the future prospects for development in other areas of activity, justifies the conclusion that it is appropriate to
prepare the financial statements on the going concern basis (as described in more detail in note 1).
The directors envisage that any joint venture or partnership arrangements will preserve the nature of the
Group’s long term commitment to the Project.
5
Minoan Group Plc
Strategic Report (continued)
Corporate social responsibility
The Group has demonstrated its social responsibilities through its iterative approach to the evolution of the
Project, which has involved a transparent process and extensive consultation with stakeholders. The Project
design embraces the principles of the five capitals of sustainable development (i.e. natural, human, social,
manufactured and financial) to ensure that all related matters have been taken into account. Thus the more
usual concerns related to the protection of the environment, flora, fauna, hydrogeology and the ecology
generally have drawn in considerations of wider issues including social, cultural, human and economic matters
as well as those related to the extensive use of renewable energy and many other items contributing to a
healthy carbon footprint. The Project is strictly focused on the long term restoration and preservation of the
environment as a whole and puts in place a sustainable management plan, involving local representatives and
experts, to ensure a robust, pro-active management system is implemented aimed at protecting the area for
future generations.
In conducting its travel business the Group ensures that it is compliant with all appropriate regulations,
including those applicable to the protection of clients’ funds. In addition, the Group ensures, as far as possible,
that only reputable providers of holiday products are dealt with.
Approved by the Board of Directors and signed by order of the Board.
C W Egleton
Director
30 March 2016
6
Minoan Group Plc
Directors’ Report
The directors present their annual report for the year ended 31 October 2015.
Principal activities
The Company is a public limited company incorporated in England and Wales and quoted on AIM. The
Company’s principal activity in the year 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 acts as agent
in providing a broad range of services including, inter alia, transportation, hotel and other accommodation and
leisure services.
Results and dividends
The financial statements are prepared in accordance with EU adopted International Financial Reporting
Standards (“IFRS”) and IFRIC interpretations and the Companies Act 2006.
The Group made a loss for the year, after taxation, of £1,620,000 (31 October 2014: £1,036,000). The loss also
includes a charge in respect of share-based payments (note 17) in the amount of £685,000 (31 October 2014:
£639,000). This charge does not involve any cash payment.
No dividend is proposed for the year (31 October 2014: Nil).
The Group’s financial instruments and risk management are discussed in note 15.
Statement of directors’ responsibilities
The directors are responsible for preparing and reporting the financial statements in accordance with applicable
laws and regulations. Company law requires the directors to prepare financial statements for each financial
year. Under that law the directors have prepared the Group and Parent Company financial statements in
accordance with IFRS as adopted by the EU. The financial statements are required by law to give a true and
fair view of the state of affairs of the Company and the Group as at the end of the financial period and of the
profit or loss of the Group for that period.
In preparing the financial statements, the directors are required to:
•
•
•
•
select suitable accounting policies and then apply them consistently;
make judgements and estimates that are reasonable and prudent;
state the financial statements comply with IFRS as adopted by the EU; and
prepare the financial statements on the going concern basis unless it is inappropriate to presume that the
Group will continue in business.
The directors confirm that they have complied with the above requirements in preparing the financial
statements.
The directors are responsible for keeping adequate accounting records that are sufficient to show and explain
the Group’s transactions and disclose with reasonable accuracy at any time the financial position of the
Company and Group and enable them to ensure that the financial statements comply with the Companies Act
2006. They are also responsible for safeguarding the assets of the Company and the Group and hence for
taking reasonable steps for the prevention and detection of fraud and other irregularities.
7
Minoan Group Plc
Directors’ Report (continued)
Statement of directors’ responsibilities (continued)
The directors are responsible for the maintenance and integrity of the Group website, www.minoangroup.com.
Legislation in the UK governing the preparation and dissemination of financial statements may differ from
legislation in other jurisdictions.
Each director as at the date of this report has confirmed that, to the best of his knowledge, the Group financial
statements, which have been prepared in accordance with IFRS as adopted by the EU,
•
•
give a true and fair view of the assets, liabilities, financial position and loss of the Group; and
include in the Chairman’s Statement, the Strategic Report and Directors’ Report a fair review of the
development, performance and position or the Group, together with a description of the principal
risks and uncertainties it faces.
Under company law the directors must not approve the financial statements unless they are satisfied that they
give a true and fair view of the state of affairs of the Company and the Group and of the profit or loss of the
Group for that year.
The directors in office throughout the period and at the end thereof, as referred to on page 1, remain in office as
at the date of signing of the Directors’ Report.
Insurance
The Company had in place during the year, and remaining in place at the date of this report, Directors and
Officers Liability Insurance covering the directors of all group companies.
Events after the balance sheet date
The directors draw attention to the events disclosed in note 20.
Auditor and disclosure of information to the auditor
Each director, as at the date of this report, has confirmed that insofar as they are aware there is no relevant
audit information (that is, information needed by the Group’s auditor in connection with preparing their report)
of which the Group’s auditor is unaware, and that they have taken all the steps that they ought to have taken as
directors in order to make themselves aware of any relevant audit information and to establish that the Group’s
auditor is aware of that information.
Following the merger on 1 May 2015 between Chantrey Vellacott DFK LLP and Moore Stephens LLP,
Chantrey Vellacott DFK LLP resigned as auditor of the company and the directors appointed Moore Stephens
LLP to fill the casual vacancy. A resolution to appoint Moore Stephens LLP as the auditor for the ensuing year
will be proposed at the Annual General Meeting..
Approved by the Board of Directors and signed by order of the Board.
C W Egleton
Director
30 March 2016
8
Minoan Group Plc
Independent Auditor’s Report to the members of Minoan Group Plc
We have audited the financial statements of Minoan Group Plc for the year ended 31 October 2015 which
comprise the consolidated statement of comprehensive income, the consolidated and company statements of
changes in equity, the consolidated and company balance sheets, the consolidated and company cash flow
statements and the related notes. The financial reporting framework that has been applied in their preparation is
applicable law and International Financial Reporting Standards (IFRS) as adopted by the European Union and
as regards the Parent Company financial statements, as applied in accordance with the provisions of the
Companies Act 2006.
This report is made solely to the Company’s members, as a body, in accordance with Chapter 3 of Part 16 of
the Companies Act 2006. Our audit work has been undertaken so that we might state to the Company’s
members those matters we are required to state to them in an auditor’s report and for no other purpose. To the
fullest extent permitted by law, we do not accept or assume responsibility to anyone other than the Company
and the Company’s members as a body, for our audit work, for this report, or for the opinions we have formed.
Respective responsibilities of directors and the auditor
As explained more fully in the statement of directors’ responsibilities, the directors are responsible for the
preparation of the financial statements and for being satisfied that they give a true and fair view. Our
responsibility is to audit and express an opinion on the financial statements in accordance with applicable law
and International Standards on Auditing (UK and Ireland). Those standards require us to comply with the
Auditing Practices Board’s Ethical Standards for Auditors.
Scope of the audit of the financial statements
An audit involves obtaining evidence about the amounts and disclosures in the financial statements sufficient
to give reasonable assurance that the financial statements are free from material misstatement, whether caused
by fraud or error. This includes an assessment of whether the accounting policies are appropriate to the
Group’s and the Parent Company’s circumstances and have been consistently applied and adequately
disclosed; the reasonableness of significant accounting estimates made by the directors; and the overall
presentation of the financial statements.
In addition, we read all the financial and non-financial information in the Report and Financial Statements to
identify material inconsistencies with the audited financial statements and to identify any information that is
apparently materially incorrect based on, or materially inconsistent with, the knowledge acquired by us in the
course of performing the audit. If we become aware of any apparent material misstatements or inconsistencies
we consider the implications for our report.
Opinion on financial statements
In our opinion:
•
the financial statements give a true and fair view of the state of the Group’s and of the Parent
Company’s affairs as at 31 October 2015 and of the Group’s loss for the year then ended.
9
Minoan Group Plc
Independent Auditor’s Report to the members of Minoan Group Plc
(continued)
Opinion on financial statements (continued)
•
•
•
the Group financial statements have been properly prepared in accordance with IFRS as adopted by
the European Union;
the Parent Company financial statements have been properly prepared in accordance with IFRS as
adopted by the European Union and as applied in accordance with the provisions of the Companies
Act 2006;
the financial statements have been prepared in accordance with the requirements of the Companies
Act 2006.
Emphasis of matter - project in Crete and going concern
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 Strategic 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. This is, in
turn, 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 that would result if the Group was unsuccessful in this
regard.
Opinion on other matter prescribed by the Companies Act 2006
In our opinion the information given in the strategic report and the directors’ report for the financial year for
which the financial statements are prepared is consistent with the financial statements.
Matters on which we are required to report by exception
We have nothing to report in respect of the following where under the Companies Act 2006 we are required to
report to you if, in our opinion:
•
•
adequate accounting records have not been kept by the Parent Company, or returns adequate for our
audit have not been received from branches not visited by us; or
the Parent Company financial statements are not in agreement with the accounting records and
returns; or
•
certain disclosures of directors’ remuneration specified by law are not made; or
• we have not received all the information and explanations we require for our audit.
Neil Tustian (Senior Statutory Auditor)
for and on behalf of MOORE STEPHENS LLP
Chartered Accountants and Statutory Auditor
LONDON
30 March 2016
10
Minoan Group Plc
Consolidated Statement of Comprehensive Income
Year ended 31 October 2015
Total transaction value
Revenue
Cost of sales
Gross profit
Notes to
the
Financial
Statements
2015
2014
£’000
£’000
60,964
50,757
6,816
(323)
6,493
5,932
(252)
5,680
Operating expenses
(6,523)
(5,306)
Other operating expenses:
Corporate development costs
Charge in respect of share-based payments
Operating loss
Finance costs
Loss before taxation
Taxation
Loss after taxation
17
17
3
5
(511)
(57)
(598)
(1,022)
(1,620)
-
(1,620)
(501)
(326)
(453)
(583)
(1,036)
-
(1,036)
Loss for year attributable to equity holders of the
Company
(1,620)
(1,036)
Loss per share attributable to equity holders of
the Company: Basic and diluted
6
(0.89)p
(0.61)p
All of the activities of the Group are classed as continuing.
The notes on pages 20 to 48 form part of these financial statements.
11
Minoan Group Plc
Consolidated Statement of Changes in Equity
Year ended 31 October 2015
Year ended 31 October 2015
Share
capital
£’000
Share
premium
£’000
Merger
reserve
Warrant
Reserve
£’000
£’000
Retained
earnings
Non-controlling
interest
Total
equity
£’000
£’000
£’000
Balance at 1 November 2014
14,843
30,261
9,349
313
(12,268)
-
42,498
Loss for the year
-
-
Issue of ordinary shares at a premium
132
1,174
Share based payment charge
-
-
-
-
-
-
(1,620)
(1,620)
-
- -
-
1,306
1,591
57 -
1,648
Balance at 31 October 2015
14,975
31,435
9,349
1,904
(13,831)
-
43,832
Year ended 31 October 2014
Share
capital
£’000
Share
premium
£’000
Merger
reserve
Warrant
Reserve
£’000
£’000
Retained
earnings
Non-controlling
Total
interest
equity
£’000
£’000
£’000
Balance at 1 November 2013
14,693
28,781
9,349
Loss for the year
Issue of ordinary shares at a
premium
Acquisition of non-controlling
interest
Share-based payments:
Current year charge
Settlement of liabilities
-
-
150
1,480
-
-
-
-
-
-
-
-
-
-
-
-
-
(11,997)
919
41,745
(1,036)
(1,036)
- -
-
1,630
-
(919)
- (919)
313
326
-
-
439
-
639
439
Balance at 31 October 2014
14,843
30,261
9,349
313
(12,268)
-
42,498
12
Minoan Group Plc
Company Statement of Changes in Equity
Year ended 31 October 2015
Year ended 31 October 2015
Balance at 1 November 2014
Profit for the year
Issue of ordinary shares at a
premium
Share-based payments charge:
Share
capital
£’000
14,843
-
Share
premium
£’000
Warrant
Reserve
£’000
Retained
earnings
Total
equity
£’000
£’000
30,261
-
313
2,364
- 1,325
47,781
1,325
132
1,174
-
-
1,306
Current year charges
-
-
1,591 57
1,648
Balance at 31 October 2015
14,975
31,435
1,904
3,746
52,060
Year ended 31 October 2014
Share
capital
£’000
Share
premium
£’000
Warrant
Reserve
£’000
Retained
earnings
Total
£’000
equity
£’000
Balance at 1 November 2013
14,693
28,781
Loss for the year
Issue of ordinary shares at a
premium
Share-based payments charge:
Current year charges
Settlement of liabilities
-
150
-
-
-
1,480
-
-
-
-
-
313
-
2,673
46,147
(1,074)
(1,074)
-
1,630
326
439
639
439
Balance at 31 October 2014
14,843
30,261
313
2,364
47,781
13
Minoan Group Plc
Consolidated Balance Sheet as at 31 October 2015
Notes to
the
Financial
Statements
2015
£’000
2014
£’000
Assets
Non-current assets
Intangible assets
Property, plant and equipment
Total non-current assets
Current assets
Inventories
Receivables
Cash and cash equivalents
Total current assets
Total assets
Equity
Share capital
Share premium account
Merger reserve account
Warrant reserve
Retained earnings
Total equity
Liabilities
Non-current liabilities
Current liabilities
Total liabilities
7
8
10
11
14
12
12
9,835
711
10,546
41,266
2,171
145
43,582
9,414
717
10,131
40,042
1,592
127
41,761
54,128
51,892
14,975
31,435
9,349
1,904
(13,831)
43,832
-
10,296
10,296
14,843
30,261
9,349
313
(12,268)
42,498
3,500
5,894
9,394
Total equity and liabilities
54,128
51,892
The financial statements on pages 11 to 48 were approved and authorised for issue by the Board of Directors
on 30 March 2016.
Signed on behalf of the Board of Directors
C W Egleton
Director
14
Minoan Group Plc
Company Balance Sheet as at 31 October 2015
Assets
Non-current assets
Investments
Total non-current assets
Current assets
Receivables
Cash and cash equivalents
Total current assets
Total assets
Equity
Share capital
Share premium account
Warrant reserve
Retained earnings
Total equity
Liabilities
Non-current liabilities
Current liabilities
Total liabilities
Note to the
Financial
Statements
2015
£’000
2014
£’000
9
11
14
12
12
28,286
28,286
28,756
1
28,757
27,366
27,366
26,763
1
26,764
57,043
54,130
14,975
31,435
1,904
3,746
52,060
-
4,983
4,983
14,843
30,261
313
2,364
47,781
3,500
2,849
6,349
Total equity and liabilities
57,043
54,130
Company registration number: 3770602
The financial statements on pages 11 to 48 were approved and authorised for issue by the Board of Directors
on 30 March 2016.
Signed on behalf of the Board of Directors
C W Egleton
Director
15
Minoan Group Plc
Consolidated Cash Flow Statement
Year ended 31 October 2015
Note to the
Consolidated
Cash Flow
Statement
2015
£’000
2014
£’000
Cash flows from operating activities
Net cash outflow from continuing operations
1
Finance costs
Net cash used in operating activities
Cash flows from investing activities
Purchase of property, plant and equipment
Purchase of intangible assets
Non cash movement in intangible assets
Acquisition of shares in subsidiary company
Net cash used in investing activities
Cash flows from financing activities
Net proceeds from the issue of ordinary shares
Loans received
Payments of hire purchase liabilities
(348)
(394)
(742)
(116)
(629)
-
-
(2,138)
(270)
(2,408)
(122)
(713)
(153)
(430)
(745)
(1,418)
70
1,435
-
667
3,081
(66)
Net cash generated from financing activities
1,505 3,682
Net increase/(decrease) in cash
Cash at beginning of year
Cash at end of year
18
127
145
(144)
271
127
16
Minoan Group Plc
Note to the Consolidated Cash Flow Statement
Year ended 31 October 2015
1 Cash flows from operating activities
Loss before taxation
Finance costs
Depreciation
Amortisation
2015
£’000
2014
£’000
(1,620)
(1,036)
394
103
208
270
102
130
Exchange loss relevant to property, plant and equipment
19
22
Increase in inventories
Share-based payments
Increase in receivables
Increase/(decrease) in current liabilities
Non cash movement in equity
Net cash outflow from continuing operations
(1,224)
685
(579)
430
1,236
(348)
(1,675)
1,078
(696)
(126)
(207)
(2,138)
17
Minoan Group Plc
Company Cash Flow Statement
Year ended 31 October 2015
Note to the
Company
Cash Flow
Statement
2015
£’000
2014
£’000
Cash flows from operating activities
Net cash outflow from continuing operations
1
Finance costs
Net cash used in operating activities
Cash flows from investing activities
Acquisition of shares in subsidiary company
Net cash used in investing activities
Cash flows from financing activities
Net proceeds from the issue of ordinary shares
Loans received
Net cash generated from financing activities
Net decrease in cash
Cash at beginning of year
Cash at end of year
(1,166)
(339)
(1,505)
-
-
70
1,435
1,505
-
1
1
(3,130)
(222)
(3,352)
(430)
(430)
667
3,081
3,748
(34)
35
1
18
Minoan Group Plc
Note to the Company Cash Flow Statement
Year ended 31 October 2015
1 Cash flows from operating activities
Profit/Loss before taxation
Finance costs
Share-based payments
Increase in receivables
(Decrease)/increase in current liabilities
Non cash movement in investments
Non cash movement in equity
Net cash outflow from continuing operations
2015
£’000
2014
£’000
1,325
339
685
(1,993)
(1,838)
(920)
1,236
(1,166)
(1,074)
222
1,078
(3,347)
209
-
(218)
(3,130)
19
Minoan Group Plc
Notes to the Financial Statements
Year ended 31 October 2015
1 Accounting policies
These consolidated 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 these financial statements are set out below.
These policies have been consistently applied to all the periods presented, unless otherwise stated.
Basis of accounting
The financial statements are prepared under the historical cost convention except for where financial
instruments are stated at fair value.
No statement of comprehensive income is presented by the Company as permitted by Section 408 of the
Companies Act 2006. The Company’s profit before taxation for the year ended 31 October 2015 was
£1,325,000 (31 October 2014: Loss of £1,074,000). This includes a gain on the write off of intercompany
balances of £2,543,000 (2014: nil).
Comparative figures
The results for 2014 have been restated to show share based payment charges of £313,000 that relate to the
issue of warrants linked to the Group’s £5million loan facility as finance costs rather than within administrative
expenses. Similarly the fair value of the warrants have been shown as a separate Warrant Reserve within equity
and an equal amount netted from the principal of the loan within liabilities to reflect the amortised cost.
Adoption of new and revised Standards
The International Accounting Standards Board and IFRIC have issued the following new and revised standards
and interpretations with an effective date after the date of these financial statements, which have not yet been
endorsed by the EU:
Standard/Interpretation
IFRS 9
IFRS 15
Title
Financial instruments
Revenue from contracts with customers 1 January 2018
Effective date
1 January 2018
The directors anticipate that the adoption of these standards in future periods will have no material impact on
the financial statements of the Group.
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 has been
published in the Government Gazette (see note 20). The planning rules for the Project are now enshrined in
law.
20
Minoan Group Plc
Notes to the Financial Statements (continued)
Year ended 31 October 2015
1 Accounting policies (continued)
Going concern (continued)
Accordingly, the directors consider it relevant that having completed financial joint venture agreements (see
note 12) prior to the above, and any other consents, 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 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 a number of acquisitions in the planned expansion of its Travel and Leisure business having been
completed over a period of time, 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.
Basis of consolidation
The consolidated financial statements incorporate the financial statements of the Company and all its
subsidiaries as at 31 October 2015 using uniform accounting policies. The Group’s policy is to consolidate the
income of subsidiaries acquired in the year from the date of acquisition to the Group’s next accounting
reference date. The financial statements of Loyalward Hellas S.A., the Company’s Greek subsidiary, are
consolidated using the currency exchange rate ruling at the period end. Intra-group balances are eliminated on
consolidation.
Acquisitions of subsidiaries and businesses are accounted for using the acquisition method. The consideration
for each acquisition is measured at the aggregate of the fair values of the assets given, liabilities incurred and
equity instruments issued to the Group in exchange for control of the acquired business. Acquisition related
costs are recognised in the consolidated statement of comprehensive income as incurred.
Critical accounting estimates and judgements
The preparation of the financial statements in accordance with generally accepted financial accounting
principles requires the directors to make critical accounting estimates and judgements that affect the amounts
reported in the financial statements and accompanying notes. The estimates and assumptions that have a
significant risk of causing material adjustments to the carrying value of assets and liabilities within the next
financial year are discussed below:
● in capitalising the costs directly attributable to the Project (see inventories below), and
continuing to recognise goodwill relating to the Project, the directors are of the opinion that the
Project will be brought to fruition and that the carrying value of inventories and goodwill is
recoverable.
21
Minoan Group Plc
Notes to the Financial Statements (continued)
Year ended 31 October 2015
1 Accounting policies (continued)
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 (see note 7).
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.
Property, plant and equipment
Property, plant and equipment is 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:
Freehold land:
Leasehold improvements:
Plant and equipment:
Fixtures and fittings:
Motor vehicles:
capital cost not depreciated
over the term of the lease
3 to 5 years
3 years
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.
Intangible assets/Research and development
Research expenditure is recognised as an expense when it is incurred. Development expenditure is recognised
as an expense except where the expenditure meets the criteria for capitalisation as set out in IAS 38 paragraph
57. The expenditure is amortised over its useful economic life of five years.
Investments
Investments in subsidiaries are stated at cost less any impairment deemed necessary.
Inventories
Inventories represent costs of goods and services directly attributable to the acquisition and development of the
Project and are stated at the lower of cost and net realisable value.
Foreign exchange
Transactions denominated in foreign currencies are translated into sterling at the rates ruling at the date of the
transactions. Monetary assets and liabilities denominated in foreign currencies at the balance sheet date are
retranslated at the rates ruling at that date. Any translation differences arising are dealt with in the consolidated
statement of comprehensive income.
Cash and cash equivalents
Cash and cash equivalents include cash in hand and short-term deposits held with banks.
22
Minoan Group Plc
Notes to the Financial Statements (continued)
Year ended 31 October 2015
1 Accounting policies (continued)
Trade and other receivables
Trade and other receivables are recognised initially at fair value and shown less any provision for amounts
considered irrecoverable.
Trade and other payables
Trade and other payables are recognised initially at fair value.
Leasing commitments
Rentals paid under operating leases are charged to the consolidated statement of comprehensive income on a
straight line basis over the period of the lease.
Revenue
Depending upon the contractual arrangements with the customer the Group acts either as agent or principal.
Where the Group acts as an agent between the service provider and the end customer, revenue is presented on a
net basis as the difference between the sales to the customer and the cost of services purchased and not the total
transaction value. When acting as an agent, revenue is recognised when it is notified by the principal as having
been earned and due for payment.
Where the Group acts as principal, revenue is stated at the contractual value of goods and services provided
and is recognised typically when the customer pays the final balance due on the holiday purchased.
Where the Group provides management or consultancy services, the value of such services is included in
revenue and is recognised in the period in which these services are provided.
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 and warrants to purchase Ordinary Shares of 1p each. A charge has
been made in the consolidated statement of comprehensive income in respect of the LTIP, options and warrants
using the Black-Scholes and Monte Carlo fair value pricing models as appropriate at the grant date and charged
over the vesting periods. This charge does not involve any cash payment by the Group. A corresponding entry
is recognised in equity.
Pensions
Loyalward Limited operates a stakeholder pension scheme for its employees.
Stewart Travel Limited operates a defined contribution pension scheme. Contributions payable to the pension
scheme are charged to the consolidated statement of comprehensive income in the period to which they relate.
23
Minoan Group Plc
Notes to the Financial Statements (continued)
Year ended 31 October 2015
1 Accounting policies (continued)
Taxation
Current taxes, where applicable, are based on the results shown in the financial statements and are calculated
according to local tax rules using tax rates enacted, or substantially enacted, by the balance sheet date and
taking into account deferred taxation. Deferred tax is computed using the liability method. Under this method,
deferred tax assets and liabilities are determined based on temporary differences between the financial
reporting and tax bases of assets and liabilities and are measured using enacted rates and laws that will be in
effect when the differences are expected to reverse. Deferred tax is not accounted for if it arises from initial
recognition of an asset or liability in a transaction that at the time of the transaction affects neither accounting,
nor taxable profit or loss. Deferred tax assets are recognised to the extent that it is probable that future taxable
profits will arise against which the temporary differences will be utilised.
Deferred tax is provided on temporary differences arising on investments in subsidiaries except where the
timing of the reversal of the temporary difference is controlled by the Group and it is probable that the
temporary difference will not reverse in the foreseeable future. Deferred tax assets and liabilities arising in the
same tax jurisdiction are offset.
The Group is entitled to a tax deduction for amounts treated as compensation on exercise of certain employee
share options. As explained under “Share-based payments” above, a compensation expense is recorded in the
Group’s statement of comprehensive income over the period from the grant date to the vesting date of the
relevant options. As there is a temporary difference between the accounting and tax bases a deferred tax asset
is recorded. The deferred tax asset arising is calculated by comparing the estimated amount of tax deduction to
be obtained in the future (based on the Company’s share price at the balance sheet date) with the cumulative
amount of the compensation expense recorded in the statement of comprehensive income. If the amount of
estimated future tax deduction exceeds the cumulative amount of the remuneration expense at the statutory
rate, the excess is recorded directly in equity against retained earnings.
24
Minoan Group Plc
Notes to the Financial Statements (continued)
Year ended 31 October 2015
2 Information regarding directors and employees
Directors’ and key management remuneration
Year ended 31 October 2015
Fees
Sums charged by third parties for
directors’ services
Share-based payments (note 17)
Year ended 31 October 2014
Fees
Sums charged by third parties for
directors’ services
Share-based payments (note 17)
Salaries waived in lieu of grant of options -
net of share based payment charge (see
below)
Costs taken to
the consolidated
statement of
comprehensive
income
Costs taken to
inventories
£’000
£’000
229
294
-
523
297
345
-
-
642
423
45
57
525
353
36
108
(24)
473
Total
£’000
652
339
57
1,048
650
381
108
(24)
1,115
During the year ended 31 October 2014 outstanding fees of £236,000 due to the suppliers of directors’
services, were settled by the issue of Ordinary Shares of 1p each in the Company issued at a price of 10 pence
per share. The outstanding fees settled in shares include £194,000 in respect of the services of the chairman.
These amounts are in addition to the charge in respect of share-based payments.
In addition, during the year ended 31 October 2014 certain directors within the Group waived a total of
£463,000 of outstanding fees due in exchange for the granting of options to purchase shares in the Company.
The effect of this has been to reduce the remuneration appearing in the consolidated statement of
comprehensive income for the year by £24,000 after adjusting for the share based payments charge in respect
of these options.
25
Minoan Group Plc
Notes to the Financial Statements (continued)
Year ended 31 October 2015
2 Information regarding directors and employees (continued)
Directors’ and key management remuneration (continued)
The total directors’ and key management remuneration shown above includes the following amounts in respect
of the directors of the Company, adjusted for remuneration waived in exchange for the granting of options as
referred to above:
2015
2014
Fees/Sums charged
by third parties
Share-based
payments
Fees/Sums
charged by third
parties
Share-based
payments
£’000
£’000
£’000
£’000
264
250
25
25
31
595
29
20
3
-
3
55
296
250
37
25
99
707
60
31
5
-
6
102
C W Egleton (Chairman)
D C Wilson
B D Bartman
G D Cook
T R C Hill
Directors’ interests in the Company’s LTIP and share options are shown in note 17.
26
Minoan Group Plc
Notes to the Financial Statements (continued)
Year ended 31 October 2015
2 Information regarding directors and employees (continued)
Staff costs during the period (including directors and key management)
Costs taken to
the consolidated
statement of
comprehensive
income
Total
Costs taken to
inventories
£’000 £’000 £’000
Year ended 31 October 2015
Salaries and fees
Social security cost
Share-based payments (note 17)
Year ended 31 October 2014
Salaries and fees
Salaries waived in lieu of grant of options -
net of share-based payment charge
Social security cost
Share-based payments (note 17)
349
37
-
386
343
-
75
-
418
3,784
324
57
4,165
3,109
(24)
305
108
3,498
4,133
361
57
4,551
3,452
(24)
380
108
3,916
Note: Staff costs exclude sums charged by third parties for directors’ services.
Monthly average number of persons employed
Directors
Sales and administration
2015
2014
No.
No.
5
191
5
170
27
Minoan Group Plc
Notes to the Financial Statements (continued)
Year ended 31 October 2015
3 Loss before taxation
The loss before taxation is stated after charging:
Depreciation
Amortisation
Operating leases
Auditor’s remuneration:
Audit fees
Tax services
2015
£’000
2014
£’000
103
208
59
73
5
102
130
49
58
5
Audit fees in respect of the Company were £21,250 (31 October 2014: £17,000). Tax services fees in respect of
the Company were £750 (31 October 2014: £1,250).
4
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 Travel and Leisure division (UK), being the operation and management of the travel businesses;
and
the corporate development division (UK) as described above.
28
Minoan Group Plc
Notes to the Financial Statements (continued)
Year ended 31 October 2015
4 Segmented 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.
Total transaction value
Revenue
Cost of sales
Gross profit
Operating expenses
Charge in respect of share-based payments
Operating (loss)/profit
Contribution to central costs
Finance costs
(Loss)/profit before taxation
Taxation
(Loss)/profit after taxation
Operating expenses include:
Depreciation and amortisation
Operating leases - plant and equipment
Assets/liabilities
Goodwill
Other non-current assets
Current assets
Total assets
2015
Luxury
Resorts
Travel and
Leisure
£’000 £’000
Corporate
Development
£’000
-
60,964
-
Total
£’000
60,964
-
-
-
6,816
(323)
6,493
-
-
-
6,816
(323)
6,493
(417) (6,106)
(417)
(57)
(474) 387
387
-
(511)
(511)
-
(511)
100
(968)
(100)
(54)
-
-
(1,342) 233
(511)
-
(1,342)
- -
233
(511)
(7,034)
(541)
(57)
(598)
-
(1,022)
(1,620)
-
(1,620)
-
-
311
59
-
-
311
59
6,127
134
42,082
48,343
-
2,511
-
1,774
1,500
-
5,785 -
8,638
1,908
43,582
54,128
Total and current liabilities
7,181
3,115
-
10,296
29
Minoan Group Plc
Notes to the Financial Statements (continued)
Year ended 31 October 2015
4 Segmented information (continued)
Total transaction value
Revenue
Cost of sales
Gross profit
Operating expenses
Charge in respect of share-based
payments
Operating (loss)/profit
Contribution to central costs
Finance costs
(Loss)/profit before taxation
Taxation
(Loss)/profit after taxation
2014
Luxury
Resorts
Travel and
Leisure
£’000 £’000
-
50,757
Corporate
Development
£’000
-
Total
£’000
50,757
-
-
5,932
(252)
5,680
5,932
-
-
(252)
5,680
(428)
(428)
(4,878)
802
(501)
(501)
(5,807)
(127)
(326)
(754) 802
-
300
(535)
(989)
-
(300)
(48)
454
-
-
(501)
-
-
(501)
-
(326)
(453)
-
(583)
(1,036)
-
(989) 454
(501) (1,036)
Operating expenses include:
Depreciation and amortisation
Operating leases - plant and equipment
1
-
231
49
-
-
232
49
Assets/liabilities
Goodwill
Other non-current assets
Current assets
Total assets
Non-current liabilities
Current liabilities
Total liabilities
6,127
146
40,457
46,730
2,451
-
1,407
-
-
1,304
5,162 -
8,578
1,553
41,761
51,892
3,500
4,862
8,362
-
1,032
1,032
-
-
-
3,500
5,894
9,394
30
Minoan Group Plc
Notes to the Financial Statements (continued)
Year ended 31 October 2015
5 Taxation
Consolidated
(a) Analysis of taxation for the year
UK corporation tax
(b) Factors affecting taxation for the year
Loss before taxation
2015
£’000
-
2015
£’000
(1,620)
2014
£’000
-
2014
£’000
(1,036)
Tax on ordinary activities multiplied by the UK corporation tax
rate of 20.41% (2014: 21.83%)
(331)
(226)
Effects of:
Expenses not deductible for tax purposes
Other timing differences
Increase in tax losses
Taxation (credit)/charge for the year
Taxation losses carried forward appear in note 13.
6 Loss per share
159
(7)
179
-
143
(61)
144
-
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 potential dilutive ordinary
shares. As the Group is loss making, there are no dilutive instruments in issue, and 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 2015 was 182,214,717 (31 October 2014:
168,636,782).
31
Minoan Group Plc
Notes to the Financial Statements (continued)
Year ended 31 October 2015
7 Intangible assets
Consolidated
2015
2014
Goodwill
IT Projects
£’000
£’000
Total
£’000
Goodwill
IT Projects
£’000
£’000
Cost
At beginning of year
Additions
At end of year
8,578
60
8,638
1,011
9,589
569
629
1,580
10,218
8,175
403
8,578
548
463
1,011
Accumulated amortisation
At beginning of year
- 175
-
-
208
383
175
208
383
-
45
- 130
- 175
Total
£’000
8,723
866
9,589
45
130
175
8,578
8,638
836
1,197
9,414
9,835
8,175
8,578
503
836
8,678
9,414
The Group conducts an annual impairment test on the carrying value of goodwill based on the recoverable
amount of two cash generating units: the Project and the Travel and Leisure business.
The Project is assessed using fair value less costs to sell. The directors have assessed the recoverable amount of
the Project as being greater than the combined carrying value of the goodwill and inventories of £47,393,000 at
31 October 2015 on the basis of valuations previously carried out and the positive progress made in the period
since (see also note 10).
The goodwill allocated to the Travel and Leisure business is £2,511,000. The recoverable amount of the Travel
and Leisure business has been assessed using a value in use model. The net present value of projected cash
flows is compared with the carrying value of the CGU’s assets and goodwill. Cashflow forecasts are based
upon management approved budgets for a period of one year and a revenue growth rate of 5% for a further
four years, this being consistent with recent historical performance. Thereafter growth rates are reduced to
zero. Cashflows are discounted using a pre-tax discount rate of 11%.
32
Provided in year
At end of year
Net book value
At beginning of year
At end of year
Minoan Group Plc
Notes to the Financial Statements (continued)
Year ended 31 October 2015
8 Property, plant and equipment
Year ended 31 October 2015
Consolidated
Freehold land
Furniture,
fittings, plant
and
equipment
Leasehold
improvements
£’000
£’000
£’000
Total
£’000
Cost
At 1 November 2014
Exchange adjustments
Additions
At 31 October 2015
Accumulated depreciation
At 1 November 2014
Provided in year
At 31 October 2015
Net book value
180
(14)
-
166
47
(3)
44
1,067
227
1,474
(5)
78
1,140
695
81
776
-
38
265
15
25
40
(19)
116
1,571
757
103
860
At 31 October 2015
122
364
225
711
33
Furniture,
fittings, plant
and
equipment
Motor
vehicles
Leasehold
improvements
£’000
£’000
£’000
Freehold
land
£’000
Total
£’000
Minoan Group Plc
Notes to the Financial Statements (continued)
Year ended 31 October 2015
8 Property, plant and equipment (continued)
Year ended 31 October 2014
Consolidated
Cost
At 1 November 2013
Exchange adjustments
Disposals
Additions
At 31 October 2014
Accumulated depreciation
At 1 November 2013
Disposals
Provided in year
At 31 October 2014
Net book value
196
1,040
(16)
-
-
180
49
-
(2)
47
(5)
(6)
38
1,067
611
(5)
89
695
At 31 October 2014
133
372
16
(1)
(15)
-
-
16
(16)
-
-
-
143
1,395
-
-
84
227
-
-
15
15
(22)
(21)
122
1,474
676
(21)
102
757
212
717
34
Minoan Group Plc
Notes to the Financial Statements (continued)
Year ended 31 October 2015
9 Investments
Company
Year ended 31 October 2015
Cost
At 1 November 2014
Additions
At 31 October 2015
Impairment
At 31 October 2015
Shares in
subsidiaries
£’000
27,366
920
28,286
-
-
Net book value at 31 October 2015
28,286
Year ended 31 October 2014
Cost
At 1 November 2013
Additions
At 31 October 2014
Impairment
At 31 October 2014
Shares in
subsidiaries
£’000
26,436
930
27,366
-
-
Net book value at 31 October 2014
27,366
Interests in subsidiaries
(Note: The percentages shown in respect of all investments relate to ordinary share capital)
Loyalward Limited (100%) - A company incorporated in England involved in resort design, creation, services
and management.
Loyalward Leisure Plc (100%) - A non-trading company incorporated in England.
Loyalward Hellas S.A. (5.61% owned by Minoan Group Plc and 94.39% owned by Loyalward Limited) - A
company incorporated in Greece engaged in corporate, resort and renewable energy business management in
Greece.
35
Minoan Group Plc
Notes to the Financial Statements (continued)
Year ended 31 October 2015
9 Investments (continued)
Interests in subsidiaries (continued)
Stewart Travel Limited - A company incorporated in Scotland operating as a multi-faceted travel distributor.
During the year ended 31 October 2015, the interests of King World Travel Limited and John Semple Travel
Limited in the share capital of Stewart Travel Limited were acquired by Minoan Group Plc at net book value of
£920,000. King World Travel Limited and John Semple Travel Limited did not trade in the year ended 31
October 2015.
As a consequence the ownership of Stewart Travel Limited is as follows:
Minoan Group Plc
King World Travel Limited
John Semple Travel Limited
10 Inventories
2015
%
100.0
-
-
100.0
2014
%
84.5
6.4
9.1
100.0
Consolidated
Inventories at 31 October 2015 amounted to £41,266,000 (31 October 2014: £40,042,000), comprising costs
associated with acquiring and developing the site in Crete, planning and other design costs.
The development site of the Project is to be leased from the Public Welfare Ecclesiastical Foundation Panagia
Akrotiriani (“the Foundation”) for an initial 40 year period following contract activation which will follow the
relevant authorities approving the land planning and land uses for the Project. The Group has an option over a
further 40 years. An amount of £3.9 million is payable to the Foundation on contract activation, plus ongoing
royalties earned on revenue generated by the development (see also note 20).
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
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.
36
Minoan Group Plc
Notes to the Financial Statements (continued)
Year ended 31 October 2015
11 Receivables
Consolidated
Trade receivables
Other receivables and prepayments
Value added tax recoverable
2015
£’000
805
1,296
70
2,171
2014
£’000
420
1,106
66
1,592
Trade receivables are due in 30 days. Of the above £91,000 (31 October 2014: £71,000) was outstanding for
more than 30 days. No provision is considered necessary in respect of irrecoverable amounts.
Company
Amounts owed by subsidiary companies (see note 16)
Other receivables and prepayments
Value added tax recoverable
Amounts owed by subsidiary companies are repayable on demand.
12 Liabilities
Non-current liabilities (see note 15)
Consolidated
Loans repayable after one year
Non-current liabilities
Company
Loans repayable after one year
2015
£’000
28,341
400
15
28,756
2015
£’000
-
2015
£’000
-
2014
£’000
26,749
-
14
26,763
2014
£’000
3,500
2014
£’000
3,500
37
Minoan Group Plc
Notes to the Financial Statements (continued)
Year ended 31 October 2015
12 Liabilities (continued)
Current liabilities
Consolidated
Trade and other payables
Deferred revenue
Social security and other taxes
Loans (see note 15)
Hire purchase
Accruals and deferred charges
2015
£’000
1,804
1,000
601
4,241
-
2,650
10,296
2014
£’000
1,564
1,000
687
269
59
2,315
5,894
The deferred revenue arises from amounts received under the terms of financial joint venture agreements
between the Company and certain third parties by which these third parties will receive an initial 5% economic
interest in the Project for a total consideration of £1 million.
Current liabilities
Company
Trade and other payables
Amounts owed to subsidiary companies (see note 16)
Loans (see note 15)
Accruals and deferred charges
2015
£’000
399
38
4,241
305
4,983
2014
£’000
431
1,840
269
309
2,849
Amounts owed to subsidiary companies are interest free and repayable on demand.
£5,000,000 has been drawn down under the terms of the loan facility agreement with Hillside International
Holdings Limited (“Hillside”) (31 October 2014: £3,500,000). The loan is repayable on or before 16 October
2016 and is subject to interest at 8% per annum. Hillside has also received Warrants to subscribe for ordinary
shares in Minoan Group Plc as the facility has been drawn down as stated in note 17. The fair value of the
Warrants has been recognised as a finance cost spread over the life of the loan, and the loans are stated in the
balance sheet at amortised cost to reflect this.
Under the terms of the loan facility agreement Hillside has a fixed and floating charge on the Company’s assets
and a floating charge on the assets of Stewart Travel Limited, John Semple Travel Limited and King World
Travel Limited.
38
Minoan Group Plc
Notes to the Financial Statements (continued)
Year ended 31 October 2015
13 Deferred taxation
Consolidated
No deferred taxation asset has been recognised in the financial statements. The total potential asset is as
follows:
Tax effect of timing differences
because of:
Accelerated capital allowances
Other short term timing differences
Losses
Total potential asset
Amount recognised
2015
£’000
2014
£’000
2015
£’000
2014
£’000
(66)
474
2,144
2,552
(45)
604
2,018
2,577
-
-
-
-
-
-
-
-
The above potential deferred tax asset is based on a corporation tax rate of 19% (2014: 20%).
Company
No deferred taxation asset has been recognised in the financial statements. The total potential asset is as
follows:
Tax effect of timing differences
because of:
Other short term timing differences
Losses
Total potential asset
Amount recognised
2015
£’000
2014
£’000
2015
£’000
2014
£’000
262
410
672
393
328
721
-
-
-
-
-
-
The above potential deferred tax asset is based on a corporation tax rate of 19% (2014: 20%).
Following due consideration of the availability of tax losses in relation to future anticipated taxable profits, and
in accordance with IAS 12, the deferred tax asset has not been recognised. The deferred tax asset not
recognised will be recoverable should there be appropriate future taxable profits.
39
Minoan Group Plc
Notes to the Financial Statements (continued)
Year ended 31 October 2015
14 Share capital
Called up, allotted and fully paid
31 October 2015 - 187,671,524 Ordinary Shares of 1p each
54,148,031 Deferred Shares of 24p each
31 October 2014 - 174,994,836 Ordinary Shares of 1p each
54,148,031 Deferred Shares of 24p each
Debt to be settled by the issue of shares (see note 15)
10,271,329 Ordinary Shares of 1p each (2014: 9,785,580
Ordinary Shares of 1p each)
2015
£’000
1,876
12,996
-
-
14,872
103
14,975
2014
£’000
-
-
1,749
12,996
14,745
98
14,843
Holders of Ordinary Shares have the right to vote and the right to receive dividends. Holders of Deferred
Shares have no right to vote and no right to receive dividends.
During the year, 201,550 Ordinary Shares of 1p each were issued at 5.5 pence per share and 741,875 Ordinary
Shares of 1p each were issued at 8 pence per share re the exercise of Options. Also during the year, 11,011,765
Ordinary Shares of 1p each were issued at 8.5 pence per share under the terms of loan agreements. In addition,
101,053 Ordinary Shares of 1p each were issued at 14.25 pence per share and 620,445 Ordinary Shares of 1p
each were issued at 9 pence per share to settle liabilities.
15 Financial instruments and risk management
The Group’s financial instruments comprise borrowings, cash and liquid resources and various items such as
trade receivables and trade payables that arise directly from its operations. The main purpose of these financial
instruments is to finance the Group’s operations.
It is, and has been throughout the year under review, the Group’s policy that no trading in financial instruments
shall be undertaken.
The main risks arising from the Group’s financial instruments are interest rate risk, liquidity risk and foreign
currency risk. The Board reviews and agrees policies for managing each of these risks and they are
summarised below.
40
Minoan Group Plc
Notes to the Financial Statements (continued)
Year ended 31 October 2015
15 Financial instruments and risk management (continued)
Liquidity risk
The Group maintains sufficient funds in local currency for operational liquidity. The Board considers liquidity
risk at Board meetings through the monitoring of cash levels and detailed cash forecasts. Funding to date has
been obtained principally through the issue of equity shares as required, either for cash or in settlement of
liabilities. The Group has also issued loan agreements which may be settled by the issue of shares. See note 1
for further information relating to current liquidity and funding risk.
In order to complete the development of the Project, the Group will require substantial additional financing. It
is the directors’ current intention to develop the Project in such a way as to minimise or eliminate the need for
further equity financing. It is intended that this will be achieved through utilising joint venture arrangements
and debt project finance.
Foreign currency risk
The Group has one overseas trading subsidiary, Loyalward Hellas S.A., which operates in Greece and whose
revenues and expenses are denominated almost exclusively in Euros. The Group finances Loyalward Hellas
S.A. via Euro transfers from Loyalward Limited as required. The amount transferred ensures that the Euro
balance held by Loyalward Hellas S.A. at each period end is not material. No Group company holds cash in
currencies other than their functional currency. The Sterling and Euro cash balances attract interest at floating
rates.
Short-term receivables and payables
Short-term receivables and payables have been excluded from the following disclosures.
Interest rate risk
The Group finances its operations through a mixture of equity and borrowings. The Group has historically
borrowed in Sterling only. At 31 October 2015 the Group had non-current liabilities of £Nil (31 October 2014:
£3,500,000).
The Group’s liabilities, which are all denominated in sterling, are as follows:
Loans to be settled by the
issue of shares
Loans repayable in less than
one year
Loans repayable after one
year
2015
2014
£’000
£’000
1,630
1,035
4,241
269
-
3,500
The loans to be settled by the issue of shares, of which £50,000 are to be settled by the issue of shares at 9
pence per share, £80,000 are to be settled by the issue of shares at 10 pence per share, £650,000 are to be
settled by the issue of shares at 15.5 pence per share and £850,000 are to be settled by the issue of shares at 18
pence per share, have been classified as equity in accordance with IAS 32 (note 14).
During the year a total of £585,000 of loans was settled by the issue of shares at 8.5 pence per share (31
October 2014: £207,000 at 8.5 pence per share) (note 14).
41
Minoan Group Plc
Notes to the Financial Statements (continued)
Year ended 31 October 2015
15 Financial instruments and risk management (continued)
The Group has no derivatives or financial instruments other than those disclosed above. There is no material
difference between the book value and the fair value of the Group’s financial assets and liabilities at 31
October 2015 and at 31 October 2014.
16 Related party transactions
The following are related parties and provided services to the Group:
Simmons International Limited, a company in which C W Egleton is a minority shareholder.
Bizwatch Limited, a company in which J C Watts, a director of Loyalward Limited, owns 50% of the issued
share capital and M A Fitch, a director of Loyalward Hellas S.A. owns 50% of the issued share capital.
I.H.M. Industry & Hotel Management Limited, a company in which C Valassakis, a director of Loyalward
Limited, is a controlling shareholder.
B D Bartman & Co, a firm in which B D Bartman is a partner.
Keith Day & Partners Ltd, a company in which N J Day, a director of Loyalward Limited, is a director and
shareholder.
Transactions undertaken with these related parties in relation to directors’ services, all of which were effected
on an arm’s length basis, are shown below.
Services of the above persons
supplied in year ended
Payable as at
31.10.15
£’000
264
17
31.10.14
£’000
296
36
31.10.15
£’000
186
81
31.10.14
£’000
98
64
14
25
20
13
37
-
101
87
20
92
60
-
Simmons International Limited
Bizwatch Limited
I.H.M. Industry & Hotel
Management Limited
B D Bartman & Co
Keith Day & Partners Ltd
During the year Morgan Rossiter Limited, a company of which G D Cook is a director, supplied public
relations services to the Company in the amount of £36,000 (31 October 2014: £36,000). The amount payable
to Morgan Rossiter Limited as at 31 October 2015 is £14,400 (31 October 2014: £14,000).
There have been no purchases or sales with companies within the Group. The Company’s balances outstanding
with other Group companies arising from financing transactions are shown below.
Receivable/(Payable) as at 31.10.15
£’000
Receivable/(Payable) as at 31.10.14
£’000
Loyalward Limited
Stewart Travel Limited
Loyalward Leisure Plc
27,304
1,037
(38)
26,749
(1,802)
(38)
42
Minoan Group Plc
Notes to the Financial Statements (continued)
Year ended 31 October 2015
17 Long term incentive plan, share options and warrants
Share-based payments charge
Year ended 31 October 2015
Share-based payments - directors
Share-based payments - warrants finance
charges(see below)
Year ended 31 October 2014
Share-based payments - directors
Share-based payments - other
Share-based payments - warrants finance
charges (see below)
£’000
57
628
685
108
218
313
639
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 Consolidated Statement of Comprehensive Income (see note
12).
Note:
Under the terms of the Long Term Incentive Plan (“LTIP”) 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 performance conditions are as follows:
Performance condition A
Fulfilled during year ended 31 October 2012
Performance condition B
Performance condition C
The Group achieves a consolidated profit at EBITDA
level (ignoring any charge in respect of share-based
payments) for a six month accounting period.
The price of an ordinary share of Minoan Group Plc
remains at an average price of 50 pence or above for
ten consecutive trading days on AIM or a recognised
stock exchange
43
Minoan Group Plc
Notes to the Financial Statements (continued)
Year ended 31 October 2015
17 Long term incentive plan, share options and warrants (continued)
Share-based payments charge (continued)
The following awards have been granted with an expiry date of 26 April 2017:
Performance condition A
Performance condition B
Performance condition C
Maximum number of
Ordinary Shares
exercisable at 9 pence
Maximum number of
Ordinary Shares
exercisable at 9pence
Maximum number of
Ordinary Shares
exercisable at 9pence
1,400,000
1,000,000
130,000
150,000
120,000
2,800,000
1,400,000
1,000,000
130,000
150,000
120,000
2,800,000
1,400,000
1,000,000
130,000
150,000
120,000
2,800,000
C W Egleton
D C Wilson
B D Bartman
T R C Hill
W C Cole (director
Loyalward Limited)
The charge made for the value of the LTIP and options has been calculated using the Black-Scholes and Monte
Carlo pricing models as appropriate. As stated previously, the charge does not involve any cash payment.
The inputs into the pricing model are as follows:
Grant date
Share price at grant date
Exercise price
LTIP
4 November 2013
Options/Warrants
17 October 2013 to 7 August
2014
7.38p
9p
6.25p to 12.25p
8p to 13p
Vesting periods
In accordance with performance conditions
Immediately
Expected volatility
LTIP/Option/Warrant life
Expected life
Risk free rate
Expected dividends expressed as
dividend yield
Fair value of options
46.30%
3.5 years
2.5 years
0.81%
nil
1.87p
42.67 to 46.30%
1.5 to 4 years
n/a
0.46% to 1.19%
nil
1.82p to 4.26p
44
Minoan Group Plc
Notes to the Financial Statements (continued)
Year ended 31 October 2015
17 Long term incentive plan, share options and warrants (continued)
Share-based payments charge (continued)
Expected volatility for the LTIP and the Options is determined by calculating the historic volatility of the
Group’s share price over the previous 2 years. The expected life of the LTIP is the average expected period to
exercise. The risk free rate is the yield on zero coupon UK government bonds of a term consistent with the
assumed option life.
Directors’ interests in share options
31 October 2015
31 October 2014
Exercise
price
Ordinary
Shares
Expiry
date
Exercise
price
Ordinary
Shares
Expiry
date
Options
B D Bartman
B D Bartman (see note
2 below)
B D Bartman (see note
2 below)
W C Cole (director
Loyalward Limited)
W C Cole (director
Loyalward Limited)
W C Cole (director
Loyalward Limited)
(see note 2 below)
W C Cole (director
Loyalward Limited)
(see note 2 below)
G D Cook
G D Cook (see note 2
below)
G D Cook (see note 2
below)
Simmons International
Limited
Simmons International
Limited
Carried forward
7p
1p
1p
7p
7p
1p
1p
7p
1p
1p
7p
7p
200,000
31/12/16
1,000,000
31/12/16
850,000
31/12/16
500,000
31/12/16
100,000
31/12/16
7p
1p
1p
7p
7p
200,000 31/12/16
1,000,000
31/12/15
850,000
31/12/16
500,000
31/12/16
100,000
31/12/16
1,000,000
31/12/16
1p
1,000,000
31/12/15
1,711,111
31/12/16
250,000
31/12/16
384,615
31/12/16
377,778
31/12/16
500,000
31/12/16
400,000
31/12/16
1p
7p
1p
1p
7p
7p
1,711,111
31/12/16
250,000
31/12/16
384,615
31/12/15
377,778
31/12/16
500,000
31/12/16
400,000
31/12/16
7,273,504
7,273,504
45
Minoan Group Plc
Notes to the Financial Statements (continued)
Year ended 31 October 2015
17 Long term incentive plan, share options and warrants (continued)
Directors’ interests in share options (continued)
31 October 2015
31 October 2014
Exercise
price
Ordinary
Shares
Expiry
date
Exercise
price
Ordinary
Shares
Expiry
date
Options
Brought forward
T R C Hill
T R C Hill (see note 2
below)
D C Wilson (see note 2
below)
D C Wilson (see note 2
below)
D C Wilson (see note 2
below)
B Cassidy (director of
John Semple Travel
Limited) (see note 2
below)
Other share options
7p
1p
1p
1p
1p
1p
7,273,504
300,000
31/12/16
1,233,333
31/12/16
1,000,000
31/12/16
2,500,000
31/12/16
850,000
31/12/16
7p
1p
1p
1p
1p
7,273,504
300,000
31/12/16
1,233,333
31/12/16
1,000,000
31/12/15
2,500,000
31/12/16
850,000
31/12/16
122,222
31/12/16
1p
122,222
31/12/16
13,279,059
13,279,059
The following additional options to purchase ordinary shares in the Company have been granted:
Exercisable at 60 pence per share
Exercisable at 5.5 pence per share (see note 5 below)
Exercisable at 15 pence per share (see note 3 below)
Exercisable at 8 pence per share
Exercisable at 1 pence per share (see note 2 below)
Exercisable at 7 pence per share
Exercisable at 8 pence per share
Exercisable at 10 pence per share
Exercisable at 8 pence per share (see note 4 below)
Ordinary Shares
31.10.15
3,318,000
-
-
-
223,077
325,000
2,500,000
250,000
-
6,616,077
31.10.14
3,318,000
201,550
1,000,000
741,875
223,077
325,000
2,500,000
250,000
4,000,000
12,559,502
Expiry date
See note 1
16/02/15
30/06/15
17/08/15
31/12/16
31/12/16
31/12/16
31/12/16
30/09/15
46
Minoan Group Plc
Notes to the Financial Statements (continued)
Year ended 31 October 2015
17 Long term incentive plan, share options and warrants (continued)
Notes re share options:
1. The expiry date of these options is 90 days after certain valid building licences and permits have been
granted.
2. Granted in exchange for the waiver of fees etc. by current directors and a former director see also note 20).
3. Granted as part of the consideration for the acquisition of the assets and business of Stewart Travel Centre.
4. Granted to The Candia Investment Corporation, and third parties syndicated to it, in respect of the financial
joint venture agreements to acquire an economic interest in the Project (see note 12 above).
5. See also note 20.
Warrants
The following warrants to subscribe for ordinary shares in the Company have been issued in accordance with
the terms of the loan facility agreement with Hillside International Holdings Limited:
Exercisable at 8 pence per share
Exercisable at 8 pence per share
Exercisable at 8 pence per share
Exercisable at 13 pence per share
Exercisable at 8 pence per share
Exercisable at 8 pence per share
Exercisable at 8 pence per share
Ordinary Shares
31.10.15
10,000,000
5,000,000
10,000,000
10,000,000
5,000,000
5,000,000
5,000,000
50,000,000
31.10.14
10,000,000
5,000,000
10,000,000
10,000,000
-
-
-
35,000,000
Expiry date
17/10/17
27/11/17
05/02/18
07/08/18
30/04/19
28/05/19
23/10/19
18 Contingent liabilities and commitments
Other than as stated in notes 10 and 19, the Group has no other capital or operating commitments.
47
Minoan Group Plc
Notes to the Financial Statements (continued)
Year ended 31 October 2015
19 Operating lease commitments
The Group has the following total lease commitments in respect of non-cancellable operating leases:
Year ended 31 October 2015
Leasehold property
Equipment
Motor vehicles
Up to 1 year
£’000
7
-
4
11
Year ended 31 October 2014
Leasehold property
Equipment
Motor vehicles
Up to 1 year
£’000
9
4
4
17
Leases expiring in
2 to 5 years
£’000
364
155
23
542
Leases expiring in
2 to 5 years
£’000
208
77
10
295
Over 5 years
£’000
1,332
-
-
1,332
Over 5 years
£’000
788
-
-
788
20 Events after the balance sheet date
Total
£’000
1,703
155
27
1,885
Total
£’000
1,005
81
14
1,100
1. On 18 November 2015 the Company announced the issue of 1,160,000 ordinary Shares of 1p each at 9
pence per share to settle certain existing liabilities.
2. On 30 December 2015 the Company announced that the expiry date on Options granted to certain directors,
and a former director, to purchase up to 3,607,692 Ordinary Shares in the Company at 1p per share in
exchange for the waiver of outstanding salaries of £469,000, had been extended from 31 December 2015 to
31 December 2016.
3. On 11 March 2016 the Company announced that the Presidential Decree granting land use approval for the
Project had been issued and published in the Greek Government Gazette.
48