THE effects of the Brexit vote and the unstable situation in Turkey will have an “unclear but significant impact” on full-year results at Minoan, the Glasgow-based travel and leisure group has warned.
The firm said it has been losing about £100,000 per month from the combined effect of a 40 per cent drop in tourism to Turkey and the post-referendum slump in sterling.
Though the board is “encouraged” by forward bookings for 2017 – which show a return to a rate of growth ahead of market indicators at 8 per cent – profits for the current year to the end of October “will not meet market expectations”.
“The Brexit vote, its associated effects and the situation in Turkey will have an as yet unclear but significant impact on the financial results for the current year,” the Aim-quoted company said in a statement. “All the indications are that this effect is temporary in nature and that the outlook for future growth is healthy.”
The group, which owns Stewart Travel, John Semple Travel and King World Travel, said terrorism and a recent coup attempt in Turkey have particularly undermined the market for late holidays. This has been brought about by “reduced availability of less expensive product”.
Minoan, headed by former Direct Holidays chief executive Duncan Wilson, is also awaiting the outcome of a Greek court hearing on a long-awaited resort development on the Cavo Sidero peninsula in Crete. Appeals against the issue of the presidential decree (PD) – the local equivalent of outline planning permission – will be heard on 16 September.
“This is the first date in the new judicial year following the court’s summer recess and our advisors have confirmed that there is no reason to expect a change to this timetable,” Minoan said.
“The board is encouraged by the fact that the court has already reviewed the PD on two occasions when it was judged to lawfully proposed by the unanimous opinion of the Plenum of the Court and, accordingly, is hopeful that a positive decision will be announced quickly.”
In July, Minoan reported an increase in pre-tax losses to £1.1 million for the six months to April, up from £759,000 in the same period a year earlier. Higher revenues of £33.1m were offset by a rise in finance costs and operating expenses.
At that time, the group warned that Brexit could impact both its travel and development businesses. Shares last night closed down 9 per cent at 7.88p.