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2023 ReportMinoan Group Plc Report and Financial Statements Year ended 31 October 2019 Company registration no: 03770602 Minoan Group Plc (Registered number: 03770602) Report and Financial Statements Year ended 31 October 2019 Contents Directors and Advisers Chairman’s Statement Strategic Report Directors’ Report Independent Auditor’s Report Consolidated Statement of Profit and Loss and Other Comprehensive Income Consolidated Statement of Changes in Equity Company Statement of Changes in Equity Consolidated Statement of Financial Position Company Statement of Financial Position 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 2-3 4-5 6-7 8-12 13 14 15 16 17 18 19 20 21 22-51 Minoan Group Plc (Registered number: 03770602) Directors and Advisers Directors C W Egleton (Chairman) B D Bartman BSc (Econ), FCA G D Cook MA, ACA T R C Hill B.Arch Company secretary W C Cole Registered office 30 Crown Place London EC2A 4ES Administration office 3rd Floor AMP House Dingwall Road Croydon Surrey CR0 2LX Bankers HSBC Bank plc, London Legal advisers Pinsent Masons LLP, London Nominated adviser and broker WH Ireland Limited, London Broker Pello Capital Limited, London Registrars Neville Registrars Limited, Halesowen, West Midlands Independent auditor Anstey Bond LLP Statutory Auditors & Chartered Accountants 1-2 Charterhouse Mews London EC1M 6BB 1 Minoan Group Plc (Registered number: 03770602) Chairman’s Statement Introduction The year under review marked the first full year following the sale of Stewart Travel Limited in October 2018. During the year, the Group has devoted its efforts to the reorganisation of its finances, the reduction of its cost base and, most importantly, its Project in Crete. I am pleased to inform shareholders that the steps taken both during the year and in subsequent months will lead to a further improvement in the results before the expected anchor joint ventures are agreed. Meanwhile, although the unpredictable impact of Covid-19 has affected the current year and will affect the future in a number of ways, it should be remembered that the Project is a long term development and, as such, does not rely on short term factors to generate value. Financial Review The results for the year show an improvement over the previous year despite the impact of largely “one off” finance charges related to the Placing and Open Offer in May 2019, as well as to some residual effects of the sale of Stewart Travel Limited. Finance charges amounted to £1,278,000 compared to £648,000 in 2018 whilst the overall loss was reduced to £2,077,000 from £3,022,000. Operating expenses in the year increased to £799,000 from £602,000. The increase of £197,000 was as result of a change in the accounting treatment of management salaries and related charges, with certain duties being more corporate than Project related, which increased Operating expenses by £264,000 but was then offset by a reduction of £67,000 in other costs. The increase in Total equity of £1,661,000 during the year to £42,257,000 from £40,596,000 arose largely through the Placing and Open Offer, which included the conversion by directors of £640,000 of debt into shares issued at 3 pence per share. The Project and Greece The trends I mentioned last year in the increasing activity and interest in the Greek property market, aided by the new Governments' focus on tourism and development has led to a new dynamic in inward investment into Greece and, in particular, toward Crete, the largest of the Greek islands. Crete was recently voted 3rd best destination worldwide in the Trip Advisor travellers’ choice awards 2020. These trends continued throughout 2019 and into 2020 until the impact of Covid-19 and “Lockdown” in Greece, where the rules have been particularly strict. At present, however, it appears that these rules are being eased considerably. Although Covid-19 has stopped the 2020 season in its tracks the Greek tourist industry is expecting 2021 to represent a major step towards a new normality. One of the changes that Covid-19 has led to is a perceived change at the top end of the market, at which the Project is focused. Indeed there is a suggestion that going forward, space and the option and ability to maintain social distancing are attracting enhanced values and the Project is ideally suited to these changing requirements. We have made significant progress during the year on a number of fronts. As I wrote last year, the Company, together with its architectural and design team, has continued to progress the Project, which has led to a number of new initiatives. As discussions and negotiations with potential partners progress, the Company has tried to ensure that its aims and ambitions are matched, as far as possible, by those of these potential partners. 2 Minoan Group Plc (Registered number: 03770602) Chairman’s Statement (continued) The Project and Greece (continued) As I have stated in my Updates, the impact of Covid-19 has been to slow down the rate of progress in a number of the discussions but I believe this to be temporary. The Public Welfare Ecclesiastical Foundation Panagia Akrotiriani (“the Foundation”) is a key partner and I am delighted with the ongoing positive dialogue that has taken place during the year, to ensure we remain aligned in achieving our shared vision of a sustainable development that is sympathetic to the beauty and history of the Cavo Sidero peninsular and delivers long term certainty to all parties. It is again worth reminding investors of the scope and scale of the Project: It has an un-appealable Presidential Decree granting outline planning consent It has been granted “strategic investment” status by the Greek government It is the largest private estate in the Eastern Mediterranean It is in a UNESCO designated geopark - an area of outstanding natural beauty and spectacular unending sea view Post Balance Sheet Events Since the year end, the Company, along with most others, has suffered from the effects of Covid-19 and the Lockdown. I have endeavoured to keep shareholders informed of progress through recent Updates and I am pleased to say that we have now reached “in principle” agreements with both existing and new lenders/investors to replace the current finance arrangements. I will keep shareholders informed thereon as we move forward. Outlook With the impending easing of Lockdown restrictions I expect to provide further updates in the next few months as all our efforts are focused on ensuring that the Group and its stakeholders reap the benefit of the years of hard work that have gone before. Christopher W Egleton Chairman 14 May 2020 3 Minoan Group Plc (Registered number: 03770602) Strategic Report The directors present their Strategic Report and the audited consolidated financial statements for the year ended 31 October 2019. Review of business A review of the Group’s business is given in the Chairman’s Statement on page 2. The sale of the travel business was completed on 9 October 2018 and the results for the year ended were presented in accordance with IFRS 5. The net profit of the travel business for the year ended 31 October 2018 was of £942,458, which was shown as profit from discontinued operations. Total equity as at 31 October 2019 was £42,257,000 (2018: £40,596,000). Since a major part of the Company’s expenditure is in Euros the outcome of the ongoing negotiations regarding Brexit may have an effect on future foreign expenditure (see also note 1). Although not having used key performance indicators for the Project in the past, the Board is of the opinion that the granting of un-appealable outline planning consent, as referred to in the Chairman’s Statement may be regarded as an indicator in understanding the development, performance or position of that operation. Principal risks and uncertainties The Group’s key risks currently remain centred around 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 and provide a return to shareholders (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. 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 further in note 1). The Group has, in principle, agreed terms with current lenders to replace the current finance arrangements to support the Group moving forward. The directors envisage that any joint venture or partnership arrangements will preserve the nature of the Group’s long term commitment to the Project. 4 Minoan Group Plc (Registered number: 03770602) Strategic Report (continued) Corporate Governance As an Alternative Investment Market (“AIM”) company Minoan Group Plc is not required to comply with the UK Corporate Governance Code, which applies only to premium listed UK companies and adherence to which requires commitment of significant resources and cost. However, the Board of Minoan Group Plc has chosen to commit to the adoption of the Quoted Companies Alliance Corporate Governance Code. 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 business the Group ensured that it was compliant with all appropriate regulations, including those applicable to the protection of clients’ funds. Approved by the Board of Directors and signed on behalf of the Board. C W Egleton Director 14 May 2020 5 Minoan Group Plc (Registered number: 03770602) Directors’ Report The directors present their annual report for the year ended 31 October 2019. Directors The directors shown below have held office during the whole of the period from 1 November 2018 to the date of this report: C W Egleton (Chairman) B D Bartman BSc (Econ), FCA G D Cook MA, ACA T R C Hill B.Arch 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. Results and dividends The financial statements are prepared in accordance with European Union adopted International Financial Reporting Standards (“IFRS”) and the Companies Act 2006. The Group made a loss for the year, after taxation, of £2,077,000 (31 October 2018: £3,022,000). The loss includes a charge in respect of share-based payments of £Nil (2018: £63,000) and non-cash finance cost in respect of warrants issued in association with the Hillside loan in the amount of £264,000 (31 October 2018: £500,000) (see note 17). These charges do not involve any cash payment. The loss also includes a non-cash charge in relation to assets held for re-sale in the amount of £Nil (31 October 2018: £2,560,000). The Group’s loss per share was 0.61p (2018: 1.36p). No dividend is proposed for the year (31 October 2018: 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 European Union. 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 accounting estimates that are reasonable and prudent; state the financial statements comply with IFRS as adopted by the European Union; 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. 6 Minoan Group Plc (Registered number: 03770602) Directors’ Report (continued) Statement of directors’ responsibilities (continued) 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. 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 European Union, 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 statement of financial position date The directors draw attention to the events disclosed in note 21. 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. A resolution to appoint Anstey Bond LLP as the auditor for the ensuing year will be proposed at the Annual General Meeting. Approved by the Board of Directors and signed on behalf of the Board by: C W Egleton Director 14 May 2020 7 Minoan Group Plc (Registered number: 03770602) Independent Auditor’s Report to the members of Minoan Group Plc Our opinion We have audited the financial statements of Minoan Group PLC ("the Group") for the year ended 31 October 2019 which comprise; the consolidated statement of profit or loss and other comprehensive income, the consolidated and parent company’s statement of financial position, the consolidated and parent company’s statement of changes in equity, the consolidated and company’s statement of cash flows and notes to the consolidated financial statements, including a summary of significant accounting policies. The financial reporting framework that has been applied in their preparation is applicable law and International Financial Reporting Standards (IFRSs) as adopted by the European Union. In our opinion: The financial statements give a true and fair view of the state of the group’s and the parent company’s affairs as at 31 October 2019 and of the group’s loss for the year then ended; 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. Basis for opinion We conducted our audit in accordance with International Standards on Auditing (UK) (ISAs (UK)) and applicable law. Our responsibilities under those standards are further described in the Auditor’s responsibilities for the audit of the financial statements section of our report below. We are independent of the group in accordance with the ethical requirements that are relevant to our audit of the financial statements in the UK, including the FRC’s Ethical Standard as applied to listed entities, and we have fulfilled our other ethical responsibilities in accordance with these requirements. We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our opinion. 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. Material uncertainty relating to going concern We draw attention to the disclosures made in the Strategic Report and in note 1 to the financial statements concerning the uncertainty regarding the group’s need to secure project finance in order to bring its Crete project to fruition and to continue as a going concern. As stated in these disclosures, these events and conditions indicate that a material uncertainty exists that may cast doubt on the company’s ability to continue as a going concern. Our opinion is not modified in respect of this matter. Emphasis of matter We draw attention to note 21 of the financial statements, which describes the material uncertainties surrounding the going concern for the group, due to the impact of post balance sheet events. Our opinion is not modified in respect of this matter. 8 Minoan Group Plc (Registered number: 03770602) Independent Auditor’s Report to the members of Minoan Group Plc (continued) Overview of our audit approach Key audit matters Capitalisation and valuation of inventories, being the Crete project costs. Going concern. Materiality Overall materiality is £400,000 (2018: £397,500) being the average of 10% of the result before tax and 1% of gross assets. Overall materiality in the prior year was based on the average of 10% of the result before tax and 1% of gross assets. An overview of the scope of our audit The group consists of the parent company and its subsidiaries. It largely operates through two trading subsidiary undertakings which were considered to be significant components for the purposes of the group financial statements. The financial statements consolidate these entities together with other non-trading subsidiary undertakings. As part of designing our group audit, we determined materiality and assessed the risks of material misstatement in the financial statements. In establishing our overall approach to the group audit, we determined the type of work that needed to be performed in respect of each subsidiary or entity. This consisted of us carrying out a full audit of all significant components of the group. 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 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. We have designed our audit approach to identify possible fraud in relation to the associated fraud risk of the group. We consider the most likely areas where fraud might arise to be within the valuation of the project costs and in relation to incorrect revenue recognition. Our approach to these areas has been addressed within the Key audit matters section. Key audit matters Key audit matters are those matters that, in the auditors' professional judgement, were of most significance in the audit of the financial statements of the current period and include the most significant assessed risks of material misstatement (whether or not due to fraud) that we identified, including those which had the greatest effect on: the overall audit strategy; the allocation of resources in the audit; and directing the efforts of the engagement team. These matters were addressed in the context of our audit of the financial statements as a whole, and in forming our opinion thereon, and we do not provide a separate opinion on these matters. In arriving at our opinion, the key audit matters considered were as follows 9 Minoan Group Plc (Registered number: 03770602) Independent Auditor’s Report to the members of Minoan Group Plc (continued) Risk 1: Capitalisation and valuation of Crete Project costs The group inventories, held in respect of the Crete project, represent the most significant asset on the statement of financial position totalling £45.8 million as at 31 October 2019 (2018: £45.4 million). There is a risk that inappropriate expenditure may be capitalised that is not in accordance with IAS 2. Furthermore, given that the Presidential Decree has been issued granting planning consent and that the Directors appear to be actively marketing the property, any lack of buyer interest in the property would be an indication of impairment. Therefore, there is a significant risk over the valuation of these inventories. In this area, our audit procedures included: Testing a sample of capitalised costs in the year to ensure accuracy and appropriateness for capitalisation as project costs under IAS 2; Reviewing correspondence and other third party documentation in relation to the project to confirm that the expected value of the project is in excess of the costs to date; Reviewing and assessing the marketing activities for the site post grant of the Presidential Decree; From the work performed, we did not identify any transactions which indicated that capitalised costs were incorrectly stated. Risk 2 – Going concern of the Group Several risks were identified surrounding the company’s ability to continue as a going concern. Attention has been drawn to these matters in notes 1 and 21 of the financial statements. In this area, our audit procedures included: We obtained post year end cash-flow forecasts, bank statements, and statutory documentation; We assessed the level of equity financing received during the six months after the balance sheet date, and whether this was sufficient to ensure the group’s liquidity; We reviewed the Group’s refinancing of debt taking place post year end We obtained the Board of Directors’ assessment of the groups’ going concern; We reviewed the disclosures included within these statements and confirmed that they were in line with regulatory reporting standards. From the work performed, we did not identify any instances from which to conclude that the disclosure or accounting treatment was incorrectly stated. 10 Minoan Group Plc (Registered number: 03770602) Independent Auditor’s Report to the members of Minoan Group Plc (continued) Our application of materiality We set certain thresholds for materiality. These help us to establish transactions and misstatements that are significant to the financial statements as a whole, to determine the nature, timing and extent of our audit procedures and to evaluate the effect of misstatements, both individually on balances and on the financial statements as a whole. We determined the materiality for the group financial statements as a whole to be £400,000 (2018: £397,500), calculated with reference to a benchmark of the Crete project costs (£45.8 million) included within the gross assets, the overall materiality calculation was the average of 10% of the result before tax and 1% of gross assets. This is the threshold above which missing or incorrect information in the financial statements is considered to have an impact on the decision making of users. We determined the materiality for the company as a whole to be £200,000 (2018: £171,000), calculated with reference to a benchmark of total company expenses. Other information The Directors are responsible for the other information. The other information comprises the information included in the annual report other than the financial statements and our auditor’s report thereon. Our opinion on the financial statements does not cover the other information and, except to the extent otherwise explicitly stated in this report, we do not express any form of assurance conclusion thereon. In connection with our audit of the financial statements, our responsibility is to read the other information and, in doing so, consider whether the other information is materially inconsistent with the financial statements or our knowledge obtained in the audit or otherwise appears to be materially misstated. If we identify such material inconsistencies or apparent material misstatements, we are required to determine whether there is a material misstatement in the financial statements or a material misstatement of the other information. If, based on the work we have performed, we conclude that there is a material misstatement of the other information, we are required to report that fact. We have nothing to report in this regard. Opinion on other matters prescribed by the Companies Act 2006 In our opinion, based on the work undertaken in the course of the audit: 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; and the Strategic Report and the Directors’ Report have been prepared in accordance with applicable legal requirements. Matters on which we are required to report by exception In the light of the knowledge and understanding of the company and its environment obtained in the course of the audit, we have not identified material misstatements in the Strategic Report or the Directors’ Report. We have nothing to report in respect of the following matters in relation to which the Companies Act 2006 requires us to report to you if, in our opinion: adequate accounting records have not been kept, or returns adequate for our audit have not been received from branches not visited by us; or the 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. 11 Minoan Group Plc (Registered number: 03770602) Independent Auditor’s Report to the members of Minoan Group Plc (continued) Responsibilities of Directors As explained more fully in the Directors’ responsibilities statement, set out on pages 6 and 7, the Directors are responsible for the preparation of the financial statements and for being satisfied that they give a true and fair view, and for such internal control as the Directors determine is necessary to enable the preparation of financial statements that are free from material misstatement, whether due to fraud or error. In preparing the financial statements, the Directors are responsible for assessing the group’s ability to continue as a going concern, disclosing, as applicable, matters related to going concern and using the going concern basis of accounting unless the directors either intend to liquidate the company or to cease operations, or have no realistic alternative but to do so. Auditor’s responsibilities for the audit of the financial statements Our objectives are to obtain reasonable assurance about whether the consolidated financial statements as a whole are free from material misstatement, whether due to fraud or error, and to issue an auditor’s report that includes our opinion. Reasonable assurance is a high level of assurance, but is not a guarantee that an audit conducted it exists. Misstatements can arise from fraud or error and are considered material if, individually or in the aggregate, they could reasonably be expected to influence the economic decisions of users taken on the basis of these financial statements. in accordance with ISAs (UK) will always detect a material misstatement when A further description of our responsibilities for the audit of the financial statements is located on the Financial Reporting Council’s website at: www.frc.org.uk/auditorsresponsibilities. This description forms part of our auditor’s report. Colin Ellis FCCA CF (Senior Statutory Auditor) For and on behalf of ANSTEY BOND LLP, Statutory Auditors & Chartered Accountants 1-2 Charterhouse Mews London EC1M 6BB 14th May 2020 12 Minoan Group Plc (Registered number: 03770602) Consolidated Statement of Profit and Loss and Other Comprehensive Income Year ended 31 October 2019 Revenue Cost of sales Gross profit Notes to the Financial Statements 3 2019 2018 £’000 £’000 - - - - - - Operating expenses (799) (602) Other operating expenses: Corporate development costs Charge related to assets held for sale Charge in respect of share-based payments Operating loss Finance costs Profit from discontinued operations Loss before taxation Taxation Loss after taxation Other Comprehensive Income for the year Total Comprehensive Income for the year Loss for year attributable to equity holders of the Company Loss per share attributable to equity holders of 17 17 3 4 5 - - - (799) (92) (2,560) (63) (3,317) (1,278) (648) - 943 (2,077) (3,022) - (2,077) - (2,077) - (3,022) - (3,022) (2,077) (3,022) the Company: Basic and diluted 6 (0.61)p (1.36)p The notes on pages 22 to 51 form part of these financial statements. 13 Minoan Group Plc (Registered number: 03770602) Consolidated Statement of Changes in Equity Year ended 31 October 2019 Year ended 31 October 2019 Share capital £’000 Share premium £’000 Merger reserve Warrant Reserve £’000 £’000 Retained earnings Total equity £’000 £’000 Balance at 1 November 2018 15,460 34,373 9,349 2,830 (21,416) 40,596 Loss for the year - - Issue of ordinary shares at a premium Share based payments Extension of warrant expiry date (see note 17) 1,728 1,746 - - - - - - - - - (2,077) (2,077) - - - - 3,474 - 264 - 264 Balance at 31 October 2019 17,188 36,119 9,349 3,094 (23,493) 42,257 Year ended 31 October 2018 Share capital £’000 Share premium £’000 Merger reserve Warrant Reserve £’000 £’000 Retained earnings Total equity £’000 £’000 Balance at 1 November 2017 15,297 33,659 9,349 2,441 (18,457) 42,289 Loss for the year - - Issue of ordinary shares at a premium Share based payments Extension of warrant expiry date (see note 17) 163 714 - - - - - - - - - (3,022) (3,022) - - 63 - 877 63 389 - 389 Balance at 31 October 2018 15,460 34,373 9,349 2,830 (21,416) 40,596 14 Minoan Group Plc (Registered number: 03770602) Company Statement of Changes in Equity Year ended 31 October 2019 Year ended 31 October 2019 Share capital £’000 Share premium £’000 Warrant Reserve £’000 Retained earnings Total equity £’000 £’000 Balance at 1 November 2018 Loss for the year Issue of ordinary shares at a premium Share-based payments Extension of warrant expiry date (see note 17) 15,460 34,373 - - 2,830 - (3,233) 49,430 (1,748) (1,748) 1,728 - 1,746 - - - - - 3,474 - - - 264 - 264 Balance at 31 October 2019 17,188 36,119 3,094 (4,981) 51,420 Year ended 31 October 2018 Share capital £’000 Share premium £’000 Warrant Reserve £’000 Retained earnings Total equity £’000 £’000 Balance at 1 November 2017 Loss for the year Issue of ordinary shares at a premium Share-based payments Extension of warrant expiry date (see note 17) 15,297 33,659 - - 2,441 - 134 51,531 (3,430) (3,430) 163 - - 714 - - - - 63 - 877 63 389 - 389 Balance at 31 October 2018 15,460 34,373 2,830 (3,233) 49,430 15 Minoan Group Plc (Registered number: 03770602) Consolidated Statement of Financial Position as at 31 October 2019 Notes to the Financial Statements 2019 £’000 2018 £’000 Assets Non-current assets Intangible assets Property, plant and equipment Non-current assets held for sale 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 Current liabilities 7 8 3 10 11 14 3,583 157 - 3,740 45,848 211 24 46,083 3,583 161 - 3,744 45,381 215 20 45,616 49,823 49,360 17,188 36,119 9,349 3,094 (23,493) 42,257 15,460 34,373 9,349 2,830 (21,416) 40,596 12 7,566 8,764 Total equity and liabilities 49,823 49,360 The financial statements on pages 13 to 51 were approved by the Board of Directors and authorised for issue on 14 May 2020. Signed on behalf of the Board of Directors C W Egleton Director 16 Minoan Group Plc (Registered number: 03770602) Company Statement of Financial Position as at 31 October 2019 Note to the Financial Statements 2019 £’000 2018 £’000 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 Current liabilities 9 11 14 21,736 21,736 32,475 1 32,476 21,736 21,736 30,934 1 30,935 54,212 52,671 17,188 36,119 3,094 (4,981) 51,420 15,460 34,373 2,830 (3,233) 49,430 12 2,792 3,241 Total equity and liabilities 54,212 52,671 Company registration number: 3770602 As permitted by Section 408 of the Companies act 2006, the income statement is not presented as part of these financial statements, The Company’s loss for the year ended 31 October 2019 was £1,748,000 (2018: £3,430,000). The financial statements on pages 13 to 51 were approved by the Board of Directors and authorised for issue on 14 May 2020. Signed on behalf of the Board of Directors C W Egleton Director 17 Minoan Group Plc (Registered number: 03770602) Consolidated Cash Flow Statement Year ended 31 October 2019 Note to the Consolidated Cash Flow Statement 2019 £’000 2018 £’000 Cash flows from operating activities Net cash (outflow) from continuing operations 1 Net cash inflow from discontinued operations Finance costs for continuing operations Finance costs for discontinued operations Net cash generated from/(used) in operating activities Cash flows from (investing) / divesting activities in discontinued operations Purchase of property, plant and equipment Purchase of intangible assets: Goodwill consideration IT project Proceeds from sale of discontinued business Net cash used in investing activities in discontinued operations Cash flows from financing activities in continuing operations Net proceeds from the issue of ordinary shares Loans (repaid) / received Net cash generated from financing activities in continuing operations Net increase/(decrease) in cash Cash transferred to non-current assets held for sale Cash at beginning of year Cash at end of year (1,909) - (1,278) - (2,175) 901 (1,508) - (3,187) (2,782) - - - - - - - - 6,075 6,075 3,738 (547) 550 (3,844) 3,191 (3,294) 4 - 4 20 24 (1) - (1) 21 20 18 Minoan Group Plc (Registered number: 03770602) Note to the Consolidated Cash Flow Statement Year ended 31 October 2019 1 Cash flows from operating activities in continuing operations Loss before taxation Finance costs Depreciation Exchange gain relevant to property, plant and equipment Increase in inventories Share-based payments Decrease/(Increase) in receivables Increase in current liabilities Liabilities settled by the issue of ordinary shares Net cash (outflow) from continuing operations 2019 £’000 2018 £’000 (2,077) 1,278 - 4 (467) - 4 (651) - (1,909) (3,022) 1,148 1 - (1,218) 63 111 415 327 (2,175) 19 Minoan Group Plc (Registered number: 03770602) Company Cash Flow Statement Year ended 31 October 2019 Cash flows from operating activities Net cash inflow/(outflow) from continuing operations Net cash inflow in relation to discontinued operations Finance costs Net cash used in operating activities Cash flows from divesting activities Proceeds from disposal of discontinued business Net cash generated in divesting activities Cash flows from financing activities Net proceeds from the issue of ordinary shares Loans (repaid) / received Net cash generated from financing activities Net (decrease)/increase in cash Cash at beginning of year Cash at end of year Note to the Company Cash Flow Statement 2019 £’000 2018 £’000 1 (1,912) (2,343) - (1,278) (3,190) - - 3,738 (548) 3,190 - 1 1 943 (1,381) (2,781) 6,075 6,075 550 (3,844) (3,294) (1) 1 1 20 Minoan Group Plc (Registered number: 03770602) Note to the Company Cash Flow Statement Year ended 31 October 2019 1 Cash flows from operating activities Loss before taxation Finance costs Exchange gain relevant to property, plant and equipment Share-based payments charge Decrease / (Increase) in receivables (Decrease) / Increase in current liabilities Liabilities settled by the issue of ordinary shares 2019 £’000 2018 £’000 (1,748) 1,278 4 - (1,541) 95 - (3,430) 648 - 63 289 (240) 327 Net cash inflow/(outflow) from continuing operations (1,912) (2,343) 21 Minoan Group Plc (Registered number: 03770602) Notes to the Financial Statements Year ended 31 October 2019 1 Accounting policies These consolidated financial statements have been prepared in accordance with International Financial Reporting Standards, International Accounting Standards, IFRIC interpretations (collectively IFRS), and with those parts of the Companies Act 2006 applicable to companies reporting under IFRS, as adopted by the European Union. The financial statements have been prepared under the historical cost convention. The financial statements are prepared in sterling, which is the functional currency of the group. Monetary amounts in these financial statements are rounded to the nearest thousand, unless stated otherwise. Basis of preparation The financial statements are prepared under the historical cost convention except for where financial instruments are stated at fair value. 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 been endorsed and issued by the European Union at 31 October 2019: Standard IFRS 3 Business Combinations Clarification that when an entity obtains control of a Details of amendment Effective date 1 January business that is a joint operation, it is required to remeasure previously held interests in that business. 2019 IFRS 3 Business Combinations Amendments to clarify the definition of a business. IAS 12 Income Taxes IAS 19 Employee Benefits Clarification that all income tax consequences of dividends should be recognised in profit or loss, regardless how the tax arises. If a plan amendment, curtailment or settlement occurs, it is now mandatory that the current service cost and the net interest for the period after the remeasurement are determined using the assumptions used for the remeasurement. 1 January 2020 1 January 2019 1 January 2019 IFRIC 23 Uncertainty over Income Tax Treatments The interpretation specifies how an entity should reflect the 1 January effects of uncertainties in accounting for income taxes. 2019 The directors anticipate that the adoption of these standards in future periods will have no material impact on the financial statements of the Company. Going concern The directors have considered the financial and commercial position of the Group in relation to its project in Crete (the “Project”). 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 was published in the Government Gazette. The planning rules for the Project are now enshrined in law. The appeals lodged against the Presidential Decree have been rejected by the Greek Supreme Court. 22 Minoan Group Plc (Registered number: 03770602) Notes to the Financial Statements (continued) Year ended 31 October 2019 1 Accounting policies (continued) Going concern (continued) Accordingly, the directors consider that 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 need to raise capital in order to meet its existing finance and working capital requirements. While the directors consider that any necessary funds will be raised as required, the ability of the Company to raise these funds is, by its nature, uncertain. 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 2019 using uniform accounting policies. The Group’s policy is to consolidate the result of subsidiaries acquired in the year from the date of acquisition to the Group’s next accounting reference date. 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 by 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; and as set out above, the directors have exercised judgement in concluding that the company and group is a going concern. 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. 23 Minoan Group Plc (Registered number: 03770602) Notes to the Financial Statements (continued) Year ended 31 October 2019 1 Accounting policies (continued) 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: Plant and equipment: Fixtures and fittings: 3 to 5 years 3 years Where the carrying amount of an asset is greater than its estimated recoverable amount, it is written down immediately to its recoverable amount. Investments Investments in subsidiaries are stated at cost less any impairment deemed necessary. Inventories Inventories represent the actual 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. 24 Minoan Group Plc (Registered number: 03770602) Notes to the Financial Statements (continued) Year ended 31 October 2019 1 Accounting policies (continued) Foreign currency A foreign currency transaction is recorded, on initial recognition in Sterling, by applying to the foreign currency amount the spot exchange rate between the functional currency and the foreign currency at the date of the transaction. At the end of the reporting period: - foreign currency monetary items are translated using the closing rate; - non-monetary items that are measured in terms of historical cost in a foreign currency are translated using the exchange rate at the date of the transaction; and - non-monetary items that are measured at fair value in a foreign currency are translated using the exchange rates at the date when the fair value was determined. Exchange differences arising on the settlement of monetary items or on translating monetary items at rates different from those at which they were translated on initial recognition during the period or in previous annual financial statements are recognised in profit or loss in the period in which they arise. When a gain or loss on a non-monetary item is recognised to other comprehensive income and accumulated in equity, any exchange component of that gain or loss is recognised to other comprehensive income and accumulated in equity. When a gain or loss on a non-monetary item is recognised in profit or loss, any exchange component of that gain or loss is recognised in profit or loss. Cash flows arising from transactions in a foreign currency are recorded in Sterling, by applying to the foreign currency amount to the exchange rate between the Sterling and the foreign currency at the date of the cash flow. Cash and cash equivalents Cash and cash equivalents include cash in hand and short-term deposits, with a maturity of less than three months, held with banks. Trade and other receivables Trade and other receivables are recognised initially at fair value and shown less any provision for amounts considered irrecoverable. They are subsequently measured at an amortised cost using the effective interest rate method, less irrecoverable provision for receivables. Trade and other payables Trade and other payables are recognised initially at fair value and subsequently measured at amortised cost using the effective interest rate method. 25 Minoan Group Plc (Registered number: 03770602) Notes to the Financial Statements (continued) Year ended 31 October 2019 1 Accounting policies (continued) Loans Loan borrowings are recognised initially at fair value net of transaction costs incurred. Borrowings are subsequently stated at amortised cost and any difference between the proceeds (net of transaction costs) and the redemption value is recognised as a borrowing cost over the period of the borrowings using the effective interest method. Non-current assets held for sale and discontinued operations Where an asset, or disposal group (an asset together with related liabilities), is to be recovered principally through a sale transaction and not through continuing use, and an active plan has been entered into to dispose of the asset or disposal group, it is reclassified as held for sale. On reclassification, the asset is measured at the lower of its carrying amount or fair value less costs to sell. Any losses on re-measurement are recognised in profit or loss. 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 LTIP expired on 31 December 2019. The Company has also granted options and warrants to purchase Ordinary Shares. The fair values of the LTIP awards, options and warrants are calculated using the Black-Scholes and Binomial option pricing models as appropriate at the grant date. The fair value of LTIP awards and options are charged to profit or loss over their vesting periods, with a corresponding entry recognised in equity. This charge does not involve any cash payment by the Group. Where warrants are issued in conjunction with a loan instrument, the fair value of the warrants forms part of the total finance cost associated with that instrument and is released to profit or loss through finance costs over the term of that instrument using the effective interest method. Pensions Loyalward Limited operates a stakeholder pension scheme for its employees. Contributions payable to the pension scheme are charged to profit or loss in the period to which they relate. 26 Minoan Group Plc (Registered number: 03770602) Notes to the Financial Statements (continued) Year ended 31 October 2019 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 statement of financial position 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 statement of financial position 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. 27 Minoan Group Plc (Registered number: 03770602) Notes to the Financial Statements (continued) Year ended 31 October 2019 2 Information regarding directors and employees Directors’ and key management remuneration Year ended 31 October 2019 Fees Sums charged by third parties for directors’ and key management services Share-based payments (note 17) Year ended 31 October 2018 Fees Sums charged by third parties for directors’ and key management services Share-based payments (note 17) Costs taken to inventories Costs taken to profit or loss £’000 £’000 (85) 111 - 26 93 331 - 424 274 70 - 344 280 70 63 413 Total £’000 189 181 - 370 373 401 63 837 The total directors’ and key management remuneration shown above includes the following amounts in respect of the directors of the Company. 2019 2018 Fees/Sums charged by third parties Share-based payments Fees/Sums charged by third parties £’000 162 - 35 35 48 280 £’000 - - - - - - £’000 297 - 35 35 53 420 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. Share-based payments £’000 32 23 3 2 3 63 28 Minoan Group Plc (Registered number: 03770602) Notes to the Financial Statements (continued) Year ended 31 October 2019 2 Information regarding directors and employees (continued) Staff costs during the period (including directors and key management) Year ended 31 October 2019 Salaries and fees Social security cost Share-based payments (note 17) Year ended 31 October 2018 Salaries and fees Social security cost Share-based payments (note 17) Costs taken to inventories £’000 Costs taken to profit or loss £’000 - - - - 347 53 - 400 250 30 - 280 124 33 63 220 Total £’000 250 30 - 280 471 86 63 620 Note: Staff costs exclude sums charged by third parties for directors’ services. Group monthly average number of persons employed Directors Management, administration and sales 2019 No. 7 2 2018 No. 8 4 29 Minoan Group Plc (Registered number: 03770602) Notes to the Financial Statements (continued) Year ended 31 October 2019 3. Segmental 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 two divisions (2018: 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 and which is a continuing operation; the corporate development division (UK) as described above, which is a continuing operation. 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. Operating expenses Charge in respect of share-based payments Charge related to assets held for sale Operating (loss)/profit Finance costs (Loss)/profit before taxation Taxation (Loss)/profit after taxation Operating expenses include: Depreciation and amortisation Assets/liabilities Goodwill Other non-current assets Current assets Total assets Luxury Resorts £’000 (799) (799) - - (799) (1,278) (2,077) - (2,077) 2019 Corporate Development £’000 - - - - - - - - - Total £’000 (799) (799) - - (799) (1,278) (2,077) - (2,077) - - - 3,583 157 46,083 49,823 - - - - 3,583 157 46,083 49,823 Total and current liabilities 7,566 - 7,566 30 Minoan Group Plc (Registered number: 03770602) Notes to the Financial Statements (continued) Year ended 31 October 2019 3 Segmental information (continued) Total transaction value Revenue Cost of sales Gross profit Operating expenses Charge in respect of share-based payments Charge related to assets held for sale Operating (loss)/profit Finance costs (Loss)/Profit from Discontinued Operation (Loss)/profit before taxation Taxation (Loss)/profit after taxation Operating expenses include: Depreciation and amortisation Assets/liabilities Goodwill Other non-current assets Current assets Total assets 2018 Luxury Resorts £’000 - Travel and Leisure £’000 - Corporate Development £’000 - Total £’000 - - - - - - (602) (602) (63) (2,560) (3,225) (648) - (3,873) - (3,873) - - - - - - - - - - (92) (92) - - - (92) - - 943 (92) - - (92) - 943 (694) (694) (63) (2,560) (3,317) (648) 943 (3,022) - (3,022) 943 1 - - 1 3,583 161 45,616 49,360 - - - - - - - 3,583 161 45,616 49,360 Total and current liabilities 8,764 - - 8,764 The Group completed the sale of its travel business on 9 October 2018 and the results for the year ended 31 October 2018 have been presented in accordance with IFRS 5. As a consequence, the Profit after taxation of the Travel and Leisure business in the amount of £943,000, and appears in the Consolidated Statement of Comprehensive Income for the year ended 31 October 2018 as Profit from discontinued operation. 31 Minoan Group Plc (Registered number: 03770602) Notes to the Financial Statements (continued) Year ended 31 October 2019 4 Loss before taxation The loss before taxation is stated after charging: Depreciation Operating leases Auditor’s remuneration 5 Taxation Consolidated (a) Analysis of taxation for the year UK corporation tax (b) Factors affecting taxation for the year Loss before taxation 2019 £’000 2018 £’000 - - 21 1 - 20 2019 £’000 - 2019 £’000 (2,077) 2018 £’000 - 2018 £’000 (3,022) Tax on ordinary activities multiplied by the UK corporation tax rate of 19% (2018: 19%) (395) (574) 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. - - 395 - 73 14 487 - 32 Minoan Group Plc (Registered number: 03770602) Notes to the Financial Statements (continued) Year ended 31 October 2019 6 Loss per share 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 2019 was 338,627,016 (31 October 2018: 222,467,332). Basic EPS Earnings attributable to ordinary shareholders Effect of dilutive securities Diluted EPS Adjusted earnings Earnings 2019 Weighted average number of shares Per-share amount (pence) (2,076,902) - (2,076,902) (2,076,902) 338,627,016 - 338,627,016 338,627,016 (0.61) - (0.61) (0.61) Earnings 2018 Weighted average number of shares Per-share amount (pence) Basic EPS Earnings attributable to ordinary shareholders Effect of dilutive securities Diluted EPS Adjusted earnings (3,022,331) - (3,022,331) (3,022,331) 222,467,332 - 222,467,332 222,467,332 (1.36) - (1.36) (1.36) 33 Minoan Group Plc (Registered number: 03770602) Notes to the Financial Statements (continued) Year ended 31 October 2019 7 Intangible assets Consolidated 2019 2018 Goodwill IT Projects Total Goodwill IT Projects £’000 £’000 £’000 £’000 £’000 Total £’000 Cost At beginning of year Additions Transfer to held for sale asset At end of year Accumulated amortisation At beginning of year Provided in year Transfer to held for sale asset At end of year Net book value At beginning of year At end of year 3,583 - - 3,583 - - - - 3,583 3,583 1,720 5,303 - - - - 4 4 (1,724) (1,724) 3,583 3,583 - 3,583 - - - - - - - - - - - - - 717 - 345 717 345 - - (1,062) (1,062) - - 3,583 - 3,583 - 3,583 3,583 3,583 3,583 1,720 - 5,303 3,583 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 £49,431,000 at 31 October 2019 (31 October 2018: £48,964,000) on the basis of valuations previously carried out and the positive progress made in the period since (see also note 10). 34 Minoan Group Plc (Registered number: 03770602) Notes to the Financial Statements (continued) Year ended 31 October 2019 8 Property, plant and equipment Year ended 31 October 2019 Consolidated Freehold land Furniture, fittings, plant and equipment Leasehold improvements £’000 £’000 £’000 Cost At 1 November 2018 Exchange adjustments Additions Disposals At 31 October 2019 Accumulated depreciation At 1 November 2018 Exchange Adjustments Provided in year At 31 October 2019 Net book value 202 1 - - 203 53 - - 53 92 - - - 92 80 4 1 85 At 31 October 2019 150 7 - - - - - - - - - - Total £’000 294 1 - - 295 133 4 1 138 157 35 Minoan Group Plc (Registered number: 03770602) Notes to the Financial Statements (continued) Year ended 31 October 2019 8 Property, plant and equipment (continued) Year ended 31 October 2018 Consolidated Freehold land Furniture, fittings, plant and equipment Leasehold improvements £’000 £’000 £’000 Cost At 1 November 2017 Exchange adjustments Additions Disposals At 31 October 2018 Accumulated depreciation At 1 November 2017 Adjustment re disposals Provided in year At 31 October 2018 Net book value At 31 October 2018 201 1 - - 202 53 - - 53 92 - - - 92 79 - 1 80 149 12 - - - - - - - - - - Total £’000 293 1 - - 294 132 - 1 133 161 As stated previously the Group sold the Travel and Leisure business prior to 31 October 2018 and the results for the year ended 31 October 2018 have been presented in accordance with IFRS 5. 36 Minoan Group Plc (Registered number: 03770602) Notes to the Financial Statements (continued) Year ended 31 October 2019 9 Investments Company Year ended 31 October 2019 Cost At 1 November 2018 Disposals At 31 October 2019 Impairment At 31 October 2019 Shares in subsidiaries £’000 21,736 - 21,736 - - Net book value at 31 October 2019 21,736 Year ended 31 October 2018 Cost At 1 November 2017 Disposals At 31 October 2018 Impairment At 31 October 2018 Shares in subsidiaries £’000 28,286 6,550 21,736 - - Net book value at 31 October 2018 21,736 37 Minoan Group Plc (Registered number: 03770602) Notes to the Financial Statements (continued) Year ended 31 October 2019 9 Investments (continued) Interests in subsidiaries Name Country of incorporation and principal place of business Proportion of ownership interest at 31 October 2019 Loyalward Limiited United Kingdom 100% Loyalward Leisure PLC United Kingdom 100% Loyalward Hellas S.A. Greece 100% 10 Inventories Consolidated Inventories at 31 October 2019 amounted to £45,848,000 (31 October 2018: £45,381,000), 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 18). 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. 38 Minoan Group Plc (Registered number: 03770602) Notes to the Financial Statements (continued) Year ended 31 October 2019 11 Receivables Consolidated Other receivables and prepayments Value added tax recoverable 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 2019 £’000 124 87 211 2019 £’000 29,929 2,538 8 32,475 2018 £’000 126 89 215 2018 £’000 30,874 50 10 30,934 Amounts owed by subsidiary companies are repayable on demand, but are not expected to be received until the realisation of the project. 12 Liabilities Current liabilities Consolidated Trade and other payables Other creditor (see below) Social security and other taxes Loans (see note 15) Accruals and deferred charges 2019 £’000 965 1,000 45 1,838 3,718 7,566 2018 £’000 1,065 1,000 66 2,385 4,248 8,764 The other creditor 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. 39 Minoan Group Plc (Registered number: 03770602) Notes to the Financial Statements (continued) Year ended 31 October 2019 12 Liabilities (continued) Current liabilities Company Trade and other payables Amounts owed to subsidiary companies (see note 16) Loans (see note 15) Accruals and deferred charges 2019 £’000 481 38 1,837 436 2,792 2018 £’000 497 38 2,385 321 3,241 Amounts owed to subsidiary companies are interest free and repayable on demand. Loans include £942,000 (2018: £942,000) in respect of the balance of the revised loan facility agreement with Hillside International Holdings Limited (“Hillside”) originally drawn down as £5,000,000. The loan is subject to interest at 10% per annum. Hillside has also received Warrants to subscribe for ordinary shares in Minoan Group Plc. The total finance cost of the loan is comprised of the cash interest at 10% per annum and the fair value of the Warrants issued in association with loan and has been recognised as a finance cost spread over the life of the loan using the effective interest method. All other remaining loans are repayable on demand. Under the terms of the loan facility agreement Hillside has a fixed and floating charge on the Company’s assets. 13 Deferred taxation Consolidated No deferred taxation asset has been recognised in the financial statements due to the uncertainty of its recoverability. The total potential asset is as follows: Total potential asset Amount recognised Tax effect of timing differences because of: Accelerated capital allowances Other short term timing differences Losses 2019 £’000 - (189) 3,624 3,453 2018 £’000 - 215 3,014 3,229 - - - - 2019 £’000 2018 £’000 The above potential deferred tax asset is based on a corporation tax rate of 19% (2018: 19%). - - - - 40 Minoan Group Plc (Registered number: 03770602) Notes to the Financial Statements (continued) Year ended 31 October 2019 13 Deferred taxation (continued) 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 2019 £’000 (92) 1,505 1,413 2018 £’000 - 1,173 1,173 2019 £’000 2018 £’000 - - - - - - The above potential deferred tax asset is based on a corporation tax rate of 19% (2018: 19%). 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 profit. 14 Share capital Called up, allotted and fully paid 31 October 2019 - 419,280,447 Ordinary Shares of 1p each 54,148,031 Deferred Shares of 24p each 31 October 2018 - 228,903,442 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) Nil Ordinary Shares of 1p each (2018: 17,493,201 Ordinary Shares of 1p each) 2019 £’000 4,192 12,996 - - 17,188 - 17,188 2018 £’000 - - 2,289 12,996 15,285 175 15,460 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 21,000,000 Ordinary Shares of 1p each were subscribed for at 2.50 pence per share and 71,524,314 Ordinary Shares of 1p each were subscribed for at 2.75p per share. In addition, and to settle certain existing liabilities, the following numbers of Ordinary Shares of 1p each were issued: 22,756,000 at 2.50 pence per share, 47,036,358 at 2.75p per share, 21,333,333 at 3p per share and 6,727,000 at 9p per share. 41 Minoan Group Plc (Registered number: 03770602) Notes to the Financial Statements (continued) Year ended 31 October 2019 15 Financial instruments and risk management The Group’s financial instruments comprise borrowings, cash and various items such as trade receivables and trade payables that arise directly from its operations. It is, and has been throughout the year under review, the Group’s policy that no trading in financial instruments shall be undertaken. There have been no substantive changes in the group exposure to financial instrument risks, its objectives, policies and processes for managing those risks or the methods used to measure from previous periods. 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. Liquidity risk Liquidity risk arises from the Group’s management of working capital and the financial charges and principal repayments on its debt instruments. It is the risks that the Group will encounter difficulty in meeting its financial obligations as they fall due. 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. All financial liabilities are non-derivative and fall due within one year (see note 12). 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 Foreign currency risks arise when individual Group entities enter into transactions denominated in a currency other than their functional currency. The Group’s policy is, where possible, to allow group entities to settle liabilities denominated in their functional currency with the cash generated from their own operations in that currency. Where group entities have liabilities denominated in a currency other than their functional currency, cash already denominated in that currency will, where possible, be transferred from elsewhere within the Group. 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. All UK companies hold cash in UK pounds Sterling only. The Sterling and Euro cash balances attract interest at floating rates. Of the Group’s current assets, excluding the project costs capitalised, less than 1% is held in Euros, the remainder being held in Sterling. Of the Group’s current liabilities, less than 2% is held in Euros, with the remainder held in Sterling. 42 Minoan Group Plc (Registered number: 03770602) Notes to the Financial Statements (continued) Year ended 31 October 2019 15 Financial instruments and risk management (continued) 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. The Group’s liabilities, which are all denominated in sterling, are as follows: 2019 2018 £’000 £’000 Loans to be settled by the issue of shares (see note 14) Loans repayable in less than one year Loans repayable in more than one year - 1,838 - 2,125 1,443 942 The Board has determined that realistic fluctuations in interest rates will not have a significant impact on financial liabilities. 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 2019 and at 31 October 2018. 43 Minoan Group Plc (Registered number: 03770602) Notes to the Financial Statements (continued) Year ended 31 October 2019 16 Related party transactions During the year the Group companies entered into the following transactions with related parties who are not members of the Group: Services of the above persons supplied in year ended Payable as at 31.10.19 £’000 31.10.18 £’000 31.10.19 £’000 31.10.18 £’000 162 8 - 35 35 297 16 18 35 35 47 11 70 29 60 328 118 129 194 125 Simmons International Limited Bizwatch Limited I.H.M. Industry & Hotel Management Limited B D Bartman & Co Keith Day & Partners Ltd The nature of the related parties is as follows: 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. There have been no purchases or sales between companies within the Group. The Company’s balances outstanding with other Group companies arising from financing transactions are shown below. Receivable/(Payable) as at 31.10.19 £’000 Receivable/(Payable) as at 31.10.18 £’000 Loyalward Limited Loyalward Leisure Plc 29,929 (38) 28,386 (38) 44 Minoan Group Plc (Registered number: 03770602) Notes to the Financial Statements (continued) Year ended 31 October 2019 17 Long term incentive plan, share options and warrants Share-based payments charge Year ended 31 October 2019 Share-based payments - directors Share-based payments - other Year ended 31 October 2018 Share-based payments - directors Share-based payments - other £’000 - - - 40 23 63 Long term incentive plan 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 certain level of 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. 45 Minoan Group Plc (Registered number: 03770602) Notes to the Financial Statements (continued) Year ended 31 October 2018 17 Long term incentive plan, share options and warrants (continued) Share-based payments charge (continued) 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 9 pence Maximum number of Ordinary Shares exercisable at 9 pence C W Egleton D C Wilson (left 9 October 2018) B D Bartman T R C Hill W C Cole (director Loyalward Limited) 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 The charge made for the value of the LTIP and options has been calculated using the Black-Scholes and Binomial option pricing models as appropriate. As stated previously, the charge does not involve any cash payment. The average weighted price of LTIP share options outstanding at the beginning and end of the period is 9 pence. The Long Term Incentive Plan expired on 31 December 2019. 46 Minoan Group Plc (Registered number: 03770602) Notes to the Financial Statements (continued) Year ended 31 October 2019 17 Long term incentive plan, share options and warrants (continued) Share-based payments charge (continued) Directors’ and former directors’ interests in share options 31 October 2019 31 October 2018 Exercise price Ordinary Shares Expiry date Exercise price Ordinary Shares Expiry date - 1p 1p - - 1p 1p - 1p 1p 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 - - 1,000,000 31/12/19 850,000 31/12/19 - - - - 7p 1p 1p 7p 7p 200,000 31/12/18 1,000,000 31/12/18 850,000 31/12/18 500,000 31/12/18 100,000 31/12/18 1,000,000 31/12/19 1p 1,000,000 31/12/18 1,711,111 31/12/19 - - 384,615 31/12/19 377,778 31/12/19 - - - - 1p 7p 1p 1p 7p 7p 1,711,111 31/12/18 250,000 31/12/18 384,615 31/12/18 377,778 31/12/18 500,000 31/12/18 400,000 31/12/18 5,323,504 7,273,504 47 Minoan Group Plc (Registered number: 03770602) Notes to the Financial Statements (continued) Year ended 31 October 2019 17 Long term incentive plan, share options and warrants (continued) Directors’ and former directors’ interests in share options (continued) 31 October 2019 31 October 2018 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 (see note 2) B Cassidy - 1p - - - - - 5,323,504 - - 1,233,333 31/12/19 - - - - - - - - - - 7p 1p 1p 1p 1p 1p 8p 7,273,504 300,000 31/12/18 1,233,333 31/12/18 1,000,000 31/12/18 2,500,000 31/12/18 850,000 31/12/18 122,222 31/12/18 1,000,000 9/01/20 6,556,837 14,279,059 During the year the expiry date of the above was extended to 31 December 2019. Other share options The following additional options to purchase ordinary shares in the Company have been granted: Exercisable at 60 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 8 pence per share Exercisable at 8 pence per share Exercisable at 10 pence per share Exercisable at 10 pence per share Ordinary Shares 31.10.19 3,318,000 4,695,299 - - 2,500,000 1,000,000 - - 11,513,299 31.10.18 3,318,000 223,077 325,000 2,500,000 2,500,000 - 250,000 - 9,116,077 Expiry date See note 1 31/12/19 31/12/18 31/12/18 5/06/20 9/01/20 31/12/18 9/07/18 The weighted average exercise price of the other share options outstanding at the beginning of the period is 27 pence and outstanding at the end of the period is 20 pence. 48 Minoan Group Plc (Registered number: 03770602) Notes to the Financial Statements (continued) Year ended 31 October 2019 17 Long term incentive plan, share options and warrants (continued) Notes re share options: 1. These options were granted between 24 June 2005 and 31 December 2013. The expiry dates of these options are 90 days after certain valid building licences and permits have been granted. These building licences and permits have not yet been granted. 2. Options granted in exchange for the waiver of fees etc. by current directors and former directors. The expiry date was extended to 31 December 2019. See also Note 20 for events after the statement of financial position date. 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: During the year the expiry date of the existing warrants was extended to 9 October 2023 and the exercise price of these warrants was amended from 8 pence per share to 3.5 pence per share following a Broker Offer. During the year following a Placing, Open Offer and shares issued to satisfy liabilities, the following warrants were issued: 7,438,520 with an exercise price of 2.5 pence per share and an expiry date of 9 October 2023, 2,522,182 with an exercise price of 2.75p per share and an expiry date of 9 October 2023, 17,633,132 with an exercise price of 2.75p per share and an expiry date of 12 October 2023, 3,636,667, 1,143,590 with an exercise price of 9p per share and an expiry date of 12 October 2023. These modifications etc. resulted in an increase of £264,000 in the fair value of the warrants. This has been spread, along with the existing fair value, across the life of the loan on an amortised cost basis. The modification was valued using Black-Scholes method. Exercisable at 2.5 pence per share Exercisable at 2.75 pence per share Exercisable at 2.75 pence per share Exercisable at 3.0 pence per share Exercisable at 3.5 pence per share Exercisable at 3.5 pence per share Exercisable at 6.0 pence per share Exercisable at 9.0 pence per share Ordinary Shares 31.10.19 7,438,520 2,522,182 17,633,132 3,626,667 50,000,000 1,765,733 458,333 1,143,590 84,588,157 31.10.18 - - - - 50,000,000 1,765,733 458,333 - 52,224,066 Expiry date 9/10/23 9/10/23 12/10/23 12/10/23 9/10/23 9/10/23 26/04/21 12/10/23 See also Note 20 for events after the statement of financial position date. 49 Minoan Group Plc (Registered number: 03770602) Notes to the Financial Statements (continued) Year ended 31 October 2019 17 Long term incentive plan, share options and warrants (continued) Finance costs Year ended 31 October 2019 Fair value of warrants issued Loan interest Other interest/fees Year ended 31 October 2018 Fair value of warrants issued Loan interest Other interest £’000 264 874 370 1,508 500 103 45 648 18 Contingent liabilities and commitments Other than as stated in note 10, the Group has no other capital or operating commitments. 19 Operating lease commitments The Group has no future minimum lease commitments in respect of non-cancellable operating leases. 20 Shareholder Loyalty Scheme The land on which the Group's Project in Crete will be constructed is held on a long lease and, as a result, any properties offered to purchasers will be on an equivalent title. Since inception, as part of the Group’s financing arrangements and as a potential reward for loyalty for staff and others, notably through the Shareholder Loyalty Scheme which was placed under review in 2011, the Group offered discounts to potential purchasers of properties in the Project. The properties range from apartments with fractional/shared ownership and apartments and villas, which may or may not be part of a “serviced offering”. The potential sums involved are not material in the context of the Project as a whole. 21 Events after the reporting date Following share issues of 15,767,331 ordinary shares at 2.75p per share on 10 December 2019 and 2,745,455 ordinary shares at 2.75p on 3 April 2020, a total of 6,825,002 warrants were issued with an exercise price of 2.75p per share and an expiry date of 12 October 2023. Post balance sheet, the Covid-19 pandemic has impacted the Group’s operations. This may affect the timeline for the completion of the Cretan Project but the Project is, in any event, a long term development. The Group’s ability to secure equity financing has also been affected in recent months, due to the global economy being largely impacted by the pandemic. But, as the pandemic abates, the Board of Directors is confident that the Group can continue on its path to the monetisation of its investment in Crete. 50 Minoan Group Plc (Registered number: 03770602) Notes to the Financial Statements (continued) Year ended 31 October 2019 21 Events after the reporting date (continued The Group has, in principle, agreed terms with current lenders and investors to replace and amend finance arrangements to support the Group moving forward. 51
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