Cubus Lux plc ("Cubus Lux" or the "Company")
Preliminary Announcement for results for the 12 months to 31 March 2008
Cubus Lux plc, the operator and developer of premier tourism and leisure
facilities in Croatia, announces its results for the year ended March 31 2008.
Key highlights:
* Turnover: 2008 �3.1 million (2007, 15 months - �1.0 million), up 203%
* Pre-tax profit of �4.9 million* (2007, 15 months - �160,000)
* Earnings per share of 4.78p** (2007, 15 months - loss of 0.19p per share)
* �2.3 million additional equity raised
* 31 March 2008 listing on the Frankfurt Stock Exchange (dual-listed with
London Stock Exchange AIM market)
* Acquisition of the Olive Island Resort and Hotel - reverse takeover and
consequent readmission to AIM
* Advanced sales in Olive Island Resort of Euro15.2 million, net of VAT
* Europe-wide focus on Croatia as a target for sustainable tourism and
leisure development accelerates demand and continues to present Cubus Lux
with new opportunities
* Pre-tax profit before negative goodwill arising from Olive Island acquisition
was �357,000 (2007: loss before negative goodwill �1,291,000)
** Earnings per share before negative goodwill arising from Olive Island
acquisition was 0.34p
Commenting on the results, executive chairman Dr. Gerhard Huber said:
"After a period of reconstruction our operations are now starting to mature and
reach targets on our investments. Furthermore, the `Olive Island' transactions
and projects have transformed our balance sheet and provide a strong foundation
for the Company's future development. We continue to focus on creating
sustainable shareholder value and remain committed to our strategy of
introducing new projects with strong potential to fulfil that aim."
For further information please see www.cubuslux.com or contact:
Steve McCann
Cubus Lux plc
+385 (0)99 214 9636
Simon Sacerdoti/Liam Murray, Nominated Adviser
Dowgate Capital Advisers Limited
+44 (0)20 7492 4777
Kealan Doyle, Broker
Lewis Charles Securities Limited
+44 (0)20 7456 9100
Pam Spooner
CityRoad Communications
+44 (0) 207 248 8010 / +44 (0)7858 477 747
CHAIRMAN'S STATEMENT
I am pleased to submit results for the year ended 31 March 2008.
After a period of reconstruction, our operations are now starting to mature and
reach targets on our investments. The Group's two principle operations are the
Istrian based casinos and Olive Island Marina.
Both of these businesses have developed strategic plans for continued
improvement as we move with enthusiasm into the third leg of our group
strategy, that of real estate development and sales.
Cubus Lux d.o.o. - the gaming company:
Currently, our main casino is located in Pula, Croatia. The casino is situated
in the Hotel Histria, a hotel which was known to be `on the market' and
consequently received limited refurbishment; as a result, we believe potential
clients were deterred. Investment by Park Plaza into this hotel will ensure a
new hotel management and significant efforts to attract new clientele. We
believe that the planned multi million pound improvement of the complex will
benefit our business, and, consequently, we have increased our floor space in
Hotel Histria by approximately 600 square metres, with the further addition of
a bistro and outside terrace. We have further improved our offering by bringing
in gaming equipment from our former Medulin location and believe Pula now to be
one of the largest casinos in Croatia.
Our casino operations had a strong year, turning around the operating loss �
196,000 for 2007 into a profit of �65,000 for 2008. We are now starting the
main season in the casino and expect a very buoyant summer.
We have a number of target locations for additional casinos, both seasonal and
all year round. Our first new casino will commence operations in Selce, close
to the city of Rijeka, Croatia, on 25 June 2008. Our experienced and
strengthened management team are very excited with this development and we
expect it to be immediately profitable. This location was considered to be
superior to that of our Rabac casino which was closed at the year end and we
were able to relocate both our equipment and some of our staff to this new
operation, thereby keeping investment low and commence operations with an
experienced team.
Plava Vala d.o.o. - the marina company:
Our marina in Sutomiscica, near Zadar continues to advance in popularity as a
venue in Adriatic sailing, with a growing reputation for both our facilities
and restaurant. Rather earlier than expected, we have already reached our
target of 180 berths contracted. This is a tremendous achievement considering
that construction of the marina was delayed and that it was not officially
opened and fully operational until May 2007, with the restaurant opening
several weeks later in July 2007. Despite recovering very well, we did suffer
from the constructors' delays and consequently fell short of our initial
targets for overnight transit business. These delays resulted in a loss in this
start up period. However, we are now seeing continuous trading improvement and
have started the new season positively.
We are working towards phase two for this marina which will involve further
facilities and additional berths. In addition, we are actively tendering to
construct further marinas in locations extending down the Adriatic coast and
its islands. We believe we have the right management team in place - one that
has very quickly transformed this business into a significant destination for
Mediterranean seafarers. Already this season, management has organised thirty
regattas for our marina, with participants coming from Hungary, Czech Republic,
Slovenia, Poland, Belgium, Germany, Austria, Italy and indeed, Croatia.
Cubus Lux Projektiranje d.o.o. - residential/commercial development:
In the half year report, I talked about the start of our new business venture
into real estate development. In 2007 we purchased a 6,000 sq metre plot of
land in Zadar, close to the City centre, for development. We created the
project and obtained all necessary permissions for building 72 apartments and
attracted an international bank to buy the ground floor commercial space. We
were pleased to announce that this project has proved successful, and, as
previously reported, we have sold the project at a profit. . This was an
excellent opportunity for us and will enable our teams to focus more fully on
new projects, in particular the Olive Island Resort and Hotel.
Financial:
For the year ended 31 March 2008, the Company reports revenues of �3,078,000
and a pre-tax profit of �4,880,000. Earnings per share amounted to 4.78p. �
4,523,000 of the profit is attributable to negative goodwill from the
acquisition of the Olive Island companies which arose as a result of the
Company adopting IFRS accounting conventions. Excluding this adjustment profits
(on a like for like basis) amounted to �357,000 (2007 - loss �1,291,000).
During this period, the Company carried out two equity fundraisings of
9,570,000 shares at 16.275p per share and 4,547,148 shares at 17p, enabling
further expansion and development of other projects.
With effect from 31 March 2008 the Company's shares were listed on the
Frankfurt Stock Exchange in addition to AIM. It has long been our objective to
make our shares accessible to buyers in both sterling and euro and we are
pleased to report high interest from our Euro based investors.
Olive Island Resort:
Our main focus in the last year, away from the current operating businesses,
was the acquisition of the `Olive Island Resort' on the Dalmatian coast of
Croatia. We successfully completed this transaction, resulting in a `reverse
take-over' and subsequent readmission of our shares to AIM on 22 February 2008.
We immediately started to implement realisation of the project, which will
include 126 villas, 305 apartments, as well as accompanying facilities, such as
restaurants, shops, a marina and four star hotel with 500 beds. We expect to
begin construction in the coming months. The villas and apartments will be sold
and the hotel operated by the Company in association with our partner Sol
Melia.
Plans for the future:
The `Olive Island' transaction and projects have already transformed our
balance sheet, to provide a strong foundation for the Company's future
development. We continue to focus on creating sustainable shareholder value and
remain committed to our strategy of introducing new projects with strong
potential to fulfil that aim. We are well placed in Croatia and its
neighbouring countries, to be able to compete effectively for a wide variety of
prospective projects. Indeed, we are pleased to report that we now have a
pipeline of such projects and are actively engaged in tendering for several
developments. As a result, we look forward to the Company's future with
optimism.
GERHARD HUBER
Chairman
Executive Director
24 June 2008
CONSOLIDATED INCOME STATEMENT
FOR THE YEAR ENDED 31 MARCH 2008
Year ended 15 months
ended
31 March 2008 31 March 2007
�'000 �'000
REVENUE 3,078 1,017
Cost of sales (202) (150)
------------- -------------
GROSS PROFIT 2,876 867
Administrative expenses (2,399) (1,957)
Other income 4,693 1,451
------------- -------------
OPERATING PROFIT 5,170 361
Finance expenditure (290) (201)
------------- -------------
PROFIT ON ORDINARY
ACTIVITIES BEFORE TAXATION 4,880 160
Tax on ordinary activities (9) (290)
------------- -------------
PROFIT/(LOSS) FOR THE PERIOD 4,871 (130)
====== ======
EARNINGS/(LOSS) PER SHARE
Basic (see note below) 4.78p (0.19)p
====== ======
Diluted (see note below) 4.54p (0.18)p
====== ======
CONSOLIDATED BALANCE SHEET
AT 31 MARCH 2008
31 March 2008 31 March 2007
�'000 �'000
ASSETS
Non-current assets
Intangible assets 35,902 5,372
Goodwill 940 -
Property, plant and equipment 4,702 3,315
-------------- --------------
41,544 8,687
-------------- --------------
Current assets
Inventories 3,172 41
Trade and other receivables 2,384 950
Cash at bank 2,372 1,375
-------------- --------------
7,928 2,366
-------------- --------------
49,472 11,053
======= ======
EQUITY
Capital and reserves attributable to
the Company's
equity shareholders
Called up share capital 1,463 881
Share premium account 16,028 7,239
Merger reserve 347 347
Profit and loss account 3,120 (1,565)
-------------- -------------
TOTAL EQUITY 20,958 6,902
======= ======
LIABILITIES
Non-current liabilities
Deferred tax liabilities 7,180 290
Loans 5,053 3,138
Amounts due under finance leases 38 7
--------------- -------------
12,271 3,435
======= ======
Current liabilities
Trade and other payables 5,433 589
Loans 10,805 122
Amounts due under finance leases 5 5
--------------- -------------
16,243 716
======= ======
TOTAL LIABILITIES 28,514 4,151
======= =======
TOTAL EQUITY AND LIABILITIES 49,472 11,053
======= ======
CONSOLIDATED CASH FLOW STATEMENT
FOR THE YEAR ENDED 31 MARCH 2008
Year ended 15 months ended
31 March 2008 31 March 2007
�'000 �'000
Cash flows from operating activities
Profit before taxation 4,880 160
Adjustments for:
Net finance expense (290) 201
Net interest paid 290 (201)
Loss on disposal of fixed assets 26 45
Exchange rate difference 578 -
Share based payments 222 178
Depreciation and amortisation 256 148
Negative goodwill written back to income (3,739) (1,451)
statement
Movement in trade and other receivables 373 (559)
Movement in inventories (2,571) (31)
Movement in trade and other payables 957 14
-------------- ---------------
Cash outflow from operating activities 982 (1,496)
Taxation paid (9) -
-------------- ---------------
Net cash outflow from operating activities 973 (1,496)
-------------- ---------------
Cash flow from investing activities
Purchase of property, plant and equipment (982) (2,472)
and intangibles
Proceeds from sale of property 66 -
Purchase of subsidiaries (795) -
Cash acquired with subsidiary 18 114
-------------- ---------------
Net cash outflow from investing activities (1,693) (2,358)
-------------- ---------------
Cash flows from financing activities
Issue of shares 2,341 3,050
Capital element of finance lease repaid - (5)
Net loans undertaken less repayments 499 1,690
-------------- ---------------
Cash inflow from financing activities 2,840 4,735
-------------- ---------------
Cash and cash equivalents at beginning of 1,375 431
period
Net cash inflow from all activities 2,120 881
Non-cash movement arising on foreign (1,123) 63
currency translation
-------------- ---------------
Cash and cash equivalents at end of period 2,372 1,375
====== ======
Cash and cash equivalents comprise
Cash (excluding overdrafts) and cash 2,372 1,375
equivalents
====== ======
RECONCILIATION OF NET CASH FLOW TO NET DEBT
Increase in cash in the period 2,120 881
Exchange rate differences (1,701) 63
Cash inflow from movement in debt (499) (1,690)
New finance leases (29) 5
Loan notes issued on purchase of (9,796) -
subsidiaries
Debt acquired on acquisition of subsidiary (1,725) (988)
-------------- -------------
Movement in net funds in the period (11,630) (1,729)
Net debt at beginning of period (1,899) (170)
------------- -------------
Net debt at end of period (13,529) (1,899)
====== ======
NOTES TO THE CONSOLIDATED CASH FLOW STATEMENT
FOR THE YEAR ENDED 31 MARCH 2008
ANALYSIS OF At 31 March Cash Other Exchange At 31 March
CHANGES 2007 movements
flows differences 2008
IN NET DEBT
�'000 �'000 �'000 �'000 �'000
Cash at bank and 1,375 2,120 - (1,123) 2,372
in hand
------------ ------------ ------------ ------------ ------------
1,375 2,120 - (1,123) 2,372
Debt due in less
than one year
Finance leases (6) - 1 - (5)
Loans (122) (309) - - (431)
Loan notes - - (9,796) (578) (10,374)
------------ ------------ ------------- ------------ --------------
1,247 1,811 (9,795) (1,701) (8,438)
Debt due in more
than one year
Finance leases (8) - (30) - (38)
Loans (3,138) (190) (1,725) - (5,053)
------------ ------------ ------------ ------------ --------------
(1,899) 1,621 (11,550) (1,701) (13,529)
====== ====== ====== ====== ======
CONSOLIDATED STATEMENT OF CHANGES IN EQUITY
FOR THE YEAR ENDED 31 MARCH 2008
Share Share Merger Retained Translation
Capital Premium Reserve Earnings Reserve Total
�'000 �'000 �'000 �'000 �'000 �'000
At 1 January 2006 249 1,321 347 (1,622) (28) 267
Share based - - - 178 - 178
payments
Total recognised
income
and expenses - - - (130) 37 (93)
Issue of shares
(net of
costs) 282 2,819 - - - 3,101
Acquisition of
subsidiaries (net 350 3,099 - - - 3,449
of costs)
----------- ------------ ----------- --------- ---------- ------------
At 31 March 2007 881 7,239 347 (1,574) 9 6,902
Share based - - - 222 - 222
payments
Total recognised
income
and expenses - - - 4,871 (408) 4,463
Issue of shares
(net of costs) 141 2,199 - - - 2,340
Acquisition of
subsidiaries
(net of costs) 441 6,590 - - - 7,031
----------- ------------ ----------- ------------ ---------- --------------
At 31 March 2008 1,463 16,028 347 3,519 (399) 20,958
----------- ------------ ----------- ------------ ---------- --------------
1. BASIS OF PREPARATION
The financial information set out above does not constitute the Group's
statutory accounts within the meaning of section 240 of the Companies Act 1985.
The balance sheet at 31 March 2008 and the income statement and cash flow
statement for the year then ended have been extracted from the Group's
unaudited financial statements.
These financial statements have been prepared in accordance with those IFRS
standards and IFRIC interpretations issued and effective or issued and early
adopted as at the time of preparing these statements.
These consolidated financial statements have been prepared under the historical
cost convention.
2. ACCOUNTING POLICIES
Basis of Consolidation
On 20 May 2004, the company purchased 100% of the issued share capital of Cubus
Lux d.o.o., a company registered in the Commercial Court in Rijeka, Croatia, by
way of a share for share exchange. Under Financial Reporting Standard 6, merger
accounting has been adopted as the basis of consolidation.
On 6 March 2007, the company purchased 100% of the issued share capital of
Plava Vala d.o.o., a company registered in Croatia, by way of a share for share
exchange. Under Financial Reporting Standard 6, acquisition accounting has been
accepted as the basis of consolidation for the transaction.
On 22 February 2008, the company purchased 100% of the issued share capital of
Duboko Plavetnilo Ugljan Projektant d.o.o. and Duboko Plavetnilo Hoteli d.o.o.,
two companies registered in Croatia, by way of a share for share exchange and
the issue of Cubus Lux Plc loan notes. Under Financial Reporting Standard 6,
acquisition accounting has been accepted as the basis of consolidation for the
transaction.
On 17 March 2008, the company purchased 100% of the issued share capital of
Adriatic Development LLC and Worldwide Leisure Holding LLC, two companies
registered in the U.S. Under Financial Reporting Standard 6, acquisition
accounting has been accepted as the basis of consolidation for the transaction.
Group accounts consolidate the accounts of the company and its subsidiary
undertakings made up to 31 March 2008. As provided by section 230 of the
Companies Act 1985, a separate income statement for the parent company has not
been presented.
All intercompany balances and transactions have been eliminated in full.
Subsidiary undertakings are accounted for from the effective date of
acquisition until the effective date of disposal.
Segment reporting
The Group has the separately identifiable business segments of the Casino,
Marina, Property, Resorts and Central Overheads for which an analysis of the
activity and associated assets are shown within these financial statements.
Revenue recognition
Revenue comprises the fair value of the sale of goods and services, net of
value added tax, rebates and discounts.
Property, plant and equipment
Property, plant and equipment are stated at cost less depreciation.
Depreciation is calculated to write down the cost of all tangible fixed assets
by equal monthly instalments over their estimated useful lives at the following
rates:-
Motor vehicles - 25% per annum
Furniture, fittings, casino equipment and marina assets - 10 - 25% per annum
Casino, marina and resort leasehold premises - over the life of the lease
During the 15 months to 31 March 2007 the marina was under construction and
therefore no depreciation was charged.
Goodwill and business combination
Business combinations on or after 1 January 2005 are accounted for under IFRS 3
using the purchase method. Any excess of the cost of business combinations over
the Group's interest in the net fair value of the identifiable assets,
liabilities and contingent liabilities is recognised in the balance sheet as
goodwill and is not amortised.
After initial recognition, goodwill is not amortised but is stated at cost less
any accumulated impairment loss, with the carrying value being reviewed for
impairment, at least annually and whenever events or changes in circumstances
indicate that the carrying value may be impaired.
For the purpose of impairment testing, goodwill is allocated to the related
cash generating units monitored by management. Where the recoverable amount of
the cash generating unit is less than its carrying amount, including goodwill,
an impairment loss is recognised in the income statement.
Intangible assets are tested annually for impairment and other non-current
assets are tested where an indication of impairment arises. The assessment of
impairment is made by comparing the carrying amount of cash generating units
(including any associated goodwill) to the higher of their value in use and
their fair value.
Value in use represents the net present value of future discounted cash flows.
Any impairment of non-current assets are recognised in the income statement.
Intangible assets include the licence of the Marina. The Marina licence has an
indefinite useful economic life as the Marina Licence is expected to be
automatically renewed after the initial 32 year concession expires.
No amortisation is charged on intangible assets relating to the Olive Island
Resort.
Amortisation will commence and the charge will be in proportion to the sales of
the properties.
Assets that have an indefinite useful life are not subject to amortisation and
are tested for impairment.
Assets that are subject to amortisation are reviewed for impairment whenever
events or changes in circumstances indicate that the carrying amount may not be
recoverable. An impairment loss is recognised for the amount by which the
asset's carrying amount exceeds it recoverable amount. The recoverable amount
is the higher of an asset's fair value and value in use.
When amortisation commences it will be charged to Administrative expenses in
the Income Statement.
Foreign currencies
Transactions in foreign currencies are recorded at the rate ruling at the date
of the transaction. Monetary assets and liabilities denominated in foreign
currencies are retranslated at the rate of exchange ruling at the balance sheet
date. The factual currency of the Group is Euro, however, Sterling is currently
used as the presentational currency to give comparability on AIM.
The exchange rates used at 31 March 2008 was �1 = Euro 1.25946, �1 = HRK
9.1711.
Operating lease agreements
Rentals applicable to operating leases where substantially all of the benefits
and risks of ownership remain with the lessor are charged to the income
statement as incurred.
Deferred taxation
Deferred tax is provided in full, using the liability method, on temporary
differences arising between the tax bases of assets and liabilities and their
carrying values in the financial statements. The deferred tax is not accounted
for if it arises from initial recognition of an asset or liability in a
transaction, other than a business combination, that at the time of the
transaction affects neither accounting nor taxable profit or loss. Deferred tax
is determined using tax rates (and laws) that have been enacted or
substantially enacted by the balance sheet date and are expected to apply when
the related deferred tax asset is realised or the deferred tax liability is
settled.
Deferred tax assets are recognised to the extent that it is probable that
future taxable profit will be available against which temporary differences can
be utilised.
Trade and other receivables
Trade and other receivables are recognised and carried at original invoice
value less an allowance for any uncollectible amounts. An estimate for doubtful
debts is made when collection of the full amount is no longer probable. Bad
debts are written off when identified.
Share based payments
IFRS 2 ("Share based payments") requires the Group to recognise an expense in
respect of the granting over shares to employees and directors. This expense,
which is calculated by reference to the fair value of the options granted, is
recognised on a straight line basis over the vesting year based on the Group's
estimate of options that will eventually vest. The Directors have used the
Black Scholes model to estimate the value of options granted in the current and
prior years.
Investments
Investments in subsidiary undertakings are stated at cost less provisions for
impairment.
Cash and cash equivalents
Cash and cash equivalents includes cash in hand, deposit held at call with
banks, other short-term highly liquid investments with original maturities of
three months or less, and bank overdrafts. Bank overdrafts are shown within
borrowings in current liabilities on the balance sheet.
Inventories
Inventories represent work in progress and goods for resale and is stated at
the lower of cost and net realisable value.
EARNINGS/(LOSS) PER SHARE
The profit per share of 4.78p (31 March 2007: loss 0.19p) has been calculated
on the weighted average number of shares in issue during the year namely
101,810,025 (31 March 2007: 68,681,402) and profits of �4,871,401 (2007: losses
�130,013).
The calculation of diluted losses per share of 4.54p (2007: loss 0.18p) is
based on the losses on ordinary activities after taxation and the diluted
weighted average of 107,248,167 (2007: 73,896,786) shares.
End
NOTES FOR EDITORS
CUBUS LUX plc - AIM ticker: CBX; Frankfurt ticker: FWK
Originally a casino operator in Croatia, Cubus Lux has changed its strategic
focus to a more broad-based leisure and tourist operation since a new
management team joined the Company in 2005. It is now actively involved in the
development and operation of marinas, tourist resorts and hotels.
The Company aims to become the leading provider of leisure and tourism
facilities in Croatia and to participate fully in the inevitable development of
the north western Mediterranean region. Croatia has agreed prospective member
status with the EU.
Currently, Cubus Lux operates two all-year round casinos on the southern tip of
the Istrian peninsula, and a 200+berth marina on the island of Ugljan (more
commonly referred to as Olive Island) at Sutomi**ica. Its hotel and resort
development on Olive Island will see the commencement of construction in Q3
2008. These projects involve a 500-bed 4-star hotel and the provision of 431
villas and apartments, with accompanying shops, restaurants and bars and a 150
berth marina.
Corporate chronology:
2000: `Cubus Lux d.o.o.' granted licences to operate casinos in Croatia
(licences valid for an initial 10 years, with 8-year renewal option).
August 2004: Shares of Cubus Lux plc admitted to AIM
July 2005: Dr Gerhard Huber appointed executive chairman
February 2006: Acquisition of `Playa Vala d.o.o.' (Olive Island Marina) -
effective reverse takeover requiring re-admission of shares to AIM
May 2007: opening of marina on Olive Island at Sutomi**ica
February 2008: Acquisition of DPUP and DPH, The Olive Island Companies, (Olive
Island Resort and Olive Island Hotel, respectively) - effective reverse
takeover requiring readmission of shares to AIM
March 2008: Company's shares admitted to trading in Frankfurt
End
END
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