Expanding Scottish travel and leisure company Minoan Group saw increased pre-tax winter losses of £903,000.
Results for the six months to April 30 show the losses deepen from £780,000 in the same period last year. This came despite revenues up by 60% to £19.8 million from £12.5 million.
Net pre-tax profit for the group’s travel and leisure division, which includes agencies such as Stewart Travel, rose from £10,000 to £117,000.
The company disclosed that an unnamed investor has agreed to take a 20% stake in the division for an initial £770,000, which could rise to £2 million depending on future performance.
The investor subscribing in new shares is described as “a company the backers of which include individuals who have a long association with the group”.
The group admitted that an experiment in locating computerised travel kiosks in sub-Post Offices has “not matched expectations”.
However, all the main sections of Minoan’s travel and leisure division have shown increased turnover and profitability.
Minoan chairman Christopher Egleton said: “Since the first half of the year is traditionally the less profitable, this is a very good performance.”
The group transferred the settlement system of its travel and leisure business to the Hays Independence Group following changes in the Civil Aviation Authority’s approach to the industry, which now means that only the commission received on holiday bookings is recognised.
“This change, plus a number of other factors, also referred to previously, while not changing how we report the division's results, had an impact on the group's short term cash flow,” said Egleton.
Additional cash costs were incurred in relation to new branches and other rationalisation measures.
For example, two existing old branches in Ayr were merged into a new branch, which is now trading at a higher level than the two previous branches combined.
Non-operational cash costs of rationalisation were around £150,000, while the impact of one-off charges on the division's profits has been approximately £100,000.
Operating costs of the division have been higher than originally budgeted in order to prepare for the future, added Egleton.
“Nevertheless, I expect the full-year results of the division to be well in excess of those of the previous year,” he said.
“The change in the CAA's approach, plus the rationalisation and other costs, has resulted in the group's prudent cash management causing a temporary slow-down in its expansion programme.
“However, the travel and leisure division has performed strongly and is well positioned to further enhance its contribution.
“We have continued to review acquisitions and other opportunities in both of the group's businesses with a view to creating value for shareholders and I expect to announce the crystallisation of a number of these opportunities in the not too distant future.”
He predicted that the coming year promises to be “the most significant and transformational” in the group's history.
The group’s plans to develop a new resort in Crete will result in a strategic environmental assessment to be submitted within weeks.
The group hopes to be operating commercially in the area for the first time from January through a 20 year lease on an adjacent site consisting of traditionally designed buildings and a restaurant, probably with local partners.
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