Cubus Lux plc
("Cubus Lux" or the "Company")
Half- yearly Report
Cubus Lux plc, the Croatia-based leisure and tourism company,
announces its half year results for the six months ended 30 September 2008.
Highlights:
- Turnover up 9% to �963,000 (six months to 30 September 2007: �886,000)
- Operating profit of �967,000 (six months to 30 September 2007: �341,000)
which includes negative goodwill of �1,686,000 arising from the Tiha Uvala
acquisition. Excluding this negative goodwill, operating loss of �719,000
- Earnings per share 1.6p, including the negative goodwill on the Tiha Uvala
acquisition. Loss per share of 10.0p excluding negative goodwill
- Acquisition of Hotel Sutomiscica project
- Annual contracts for more than 90% of marina berths
In September 2008 we purchased a hotel project on land adjoining our marina at
Sutomiscica. Our total purchase price will be HRK 9 million (approximately �1
million) which includes the project plus the leasehold on approximately 11,000
square metres of coastal land for a period of 40 years. This project includes
a 100 bed Hotel, a small apartment house, and conferencing and leisure
facilities. In addition we will receive a sea concession for moorings. This
facility will complement both the existing marina operation and the Olive
Island Resort, and we believe it will support a stand-alone business including
conferencing and training.
Commenting on the results, executive chairman Gerhard Huber said:
"The `Olive Island' project continues to be our main focus. This is
the first of our large real estate developments and the realisation of the
planned resort will provide a strong foundation for the Company's future
development. In addition, we are pursuing opportunities in all our divisions.
We continue to focus on creating sustainable shareholder value,
through a firm strategy of introducing profitable new projects with strong
potential to fulfil that aim. We are well known and well positioned in both
Croatia and its neighbouring countries and are able to compete effectively for
a wide variety of projects. As a result, we look forward to the Company's
future with excitement."
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/Nicholas Nicolaides, Broker
Lewis Charles Securities Limited
+44 (0)20 7456 9100
Pam Spooner
City Road Communications
+44 (0) 20 7248 8010
+44 (0)7858 477 747
CHAIRMAN'S STATEMENT
I am pleased to present the results for the six months ended 30
September 2008.
Operations
The Group's three principle operating divisions are the casinos,
the marina and the newly established resort management division. In addition,
we have a general real estate business where we take up opportunities to
initiate commercial and residential developments. Our established divisions,
the casinos and the Olive Island Marina have now matured and are both poised
to move into periods of expansion.
Our new division, including the Olive Island Resort, is progressing
on plan in terms of valuation and financial projections. There has been some
slippage in timing as a direct result of the slowdown in the pipeline of bank
funding for construction - a factor beyond your Company's control however, we
believe the difficulties within the banking sector are easing, so that the
impact will be only to push the start of our construction into the first
quarter of 2009 from the planned last quarter of 2008.
Cubus Lux d.o.o. - the gaming company
As reported in the 2008 Report and Accounts we have added to our
Pula casino operation in Istria with a seasonal casino in Selce, south of
Rijeka. Both of the casinos are located in hotels. For the first time we did
not achieve budget at Pula as the hotel experienced a reduced number of
visitors, partly as the result of a refurbishment programme and partly because
of economic factors. As a consequence we have shifted our emphasis and
investment from holiday makers towards promoting the casino locally and from
early September have started to see improvements which we will pursue over the
coming months. Selce started well but, due to only three months operation and
start up costs, the division as a whole returned a small loss of Euro30,000.
We will continue to explore opportunities during the continued
redevelopment of Hotel Histria and in addition, we are close to finalising
negotiations to open a further casino in Split.
Plava Vala d.o.o. - the marina company
The marina in Sutomiscica, Ugljan, near Zadar, has now completed
its first full year in its phase 1 status. During this last 12 months
management was able to return an operating profit, and towards the end of the
half year period achieved a better than expected annual contracted occupancy
level of more than 90%. The benefits of this will continue to be seen over the
current financial period. The next phase of expansion will include a 50%
increase in berths, leisure facilities and a repair area with travel lift.
These additions will consolidate the profitability of the division. We have
had a successful year with regattas and are establishing our marina as a
renowned location for charter boats.
The marina management continues to look for expansion opportunities
and is exploring possible acquisitions of existing marinas as well as
tendering for new projects.
Olive Island Resort companies
After the acquisition of the resort project on Ugljan we are
progressing well with the development. We have agreed the land purchase, are
in the final stages of securing the necessary bank finance and expect to break
ground by the end of the first quarter of 2009. This project includes a four
star hotel with 500 beds to be operated by Sol Melia, a marina, 126 villas and
305 apartments. We believe that this project will be one of the first green
field coastal resorts to open in Croatia.
Tiha Uvala d.o.o. - Hotel Sutomiscica
On 30 September 2008, the Company acquired Tiha Uvala d.o.o.
(translated as "Acquired Bay Ltd") for a consideration of HRK 9 million
payable in two instalments in cash (approximately �1,000,000). The vendor is
Heres d.o.o. who will also be retained as constructor for the project.
The consideration is payable in two tranches. The first tranche of
the consideration comprises 50 per cent of the purchase price and is payable
on receipt of building permits, which is expected to take place in the first
quarter of 2009. The second tranche is payable on completion of construction.
Tiha Uvala d.o.o. holds (1) a long term lease on 4,416 square
metres of coastal land at Sutomiscica, Ugljan, Croatia, (2) a concession over
approximately 6,000 square metres of adjoining coastal land and (3) a 15 metre
sea concession along 250 metres of sea shore for moorings.
Approvals have been granted from the local council to build a 3
storey, 40 room, 4+ stars hotel with restaurant, shops, conferencing facility
and underground parking. In addition, approval has been granted for the
building of an adjoining luxury apartment block of 9 apartments. Heres d.o.o.
will undertake the construction.
The concession land will be used for a cafe-bar with outside
seating, tennis courts and a park.
The whole site adjoins the Groups current Olive Island Marina in
the bay of Sutomiscica. Construction is anticipated to commence in January
2009 and is envisaged to be completed in approximately 18-24 months. Heres doo
will be the constructor and remain a partner for up to three years.
Financial:
For the six months ended 30 September 2008 the Company reports
revenues of �963,000 and a pre-tax profit of �229,000.
Earnings per share amounted to 1.6p.
Plans for the future:
The `Olive Island' project continues to be our main focus. This is
the first of our large real estate developments and the realisation of the
planned resort will provide a strong foundation for the Company's future
development. In addition, we are pursuing opportunities in all our divisions.
We continue to focus on creating sustainable shareholder value,
through a firm strategy of introducing profitable new projects with strong
potential to fulfil that aim. We are well known and well positioned in both
Croatia and its neighbouring countries and are able to compete effectively for
a wide variety of projects. As a result, we look forward to the Company's
future with excitement.
GERHARD HUBER
Chairman
Executive Director
GROUP INCOME STATEMENT
Six months to Six months to Year ended
30 September 30 September 31 March
2008
2007 2008
Unaudited Unaudited Audited
Note �'000 �'000 �'000
REVENUE 2 963 886 3,078
Cost of sales (106) (113) (202)
------------- ------------- -------------
GROSS PROFIT 857 773 2,876
Administrative expenses (1,576) (1,206) (2,399)
Other income 4 1,686 774 4,693
------------- ------------- -------------
OPERATING PROFIT 967 341 5,170
Net finance expense (738) (97) (290)
-------------- -------------- -------------
PROFIT ON ORDINARY
ACTIVITIES BEFORE TAXATION 229 244 4,880
Tax on ordinary activities 3 (3) (4) (9)
------------- ------------- -------------
PROFIT FOR THE PERIOD 226 240 4,871
====== ====== ======
EARNINGS PER SHARE
Basic 7 1.6p 2.5p 47.8p
====== ====== ======
Diluted 7 1.5p 2.3p 45.4p
====== ====== ======
GROUP BALANCE SHEET
As at 30 As at 30 As at 31 March
September 2008 September
2008
2007
Unaudited Unaudited Audited
Note �'000 �'000 �'000
FIXED ASSETS
Non-current assets
Intangible assets 5 39,093 5,372 35,902
Goodwill 689 - 940
Property, plant and equipment 6 4,748 4,236 4,702
------------- ------------- --------------
44,530 9,608 41,544
------------- ------------- --------------
CURRENT ASSETS
Inventories 3,310 2,187 3,172
Trade and other receivables 2,098 1,929 2,384
Cash at bank 2,251 1,068 2,372
------------- ------------- ------------
7,659 5,184 7,928
------------- ------------- --------------
TOTAL ASSETS 52,189 14,792 49,472
====== ====== =======
EQUITY
Capital and reserves attributable
to the Company's equity
shareholders
Called up share capital 1,463 977 1,463
Share premium account 16,028 8,711 16,028
Merger reserve 347 347 347
Retained earnings and translation 3,377 (1,296) 3,120
reserves
------------- ------------- --------------
TOTAL EQUITY 21,215 8,739 20,958
-------------- -------------- --------------
LIABILITIES
Non-current liabilities
Deferred tax liabilities 7,819 290 7,180
Loans 16,161 2,999 5,053
Amounts due under finance leases 24 3 38
------------- ------------- -------------
24,004 3,292 12,271
-------------- -------------- -------------
Current liabilities
Trade and other payables and 6,228 2,600 5,433
deferred income
Loans 737 156 10,805
Amounts due under finance leases 5 5 5
------------- ------------- --------------
6,970 2,761 16,243
-------------- -------------- --------------
TOTAL LIABILITIES 30,974 6,053 28,514
-------------- -------------- --------------
TOTAL EQUITY AND LIABILITIES 52,189 14,792 49,472
======= ====== =======
GROUP CASH FLOW STATEMENT
Six months to Six months to Year ended 31
30 September 30 September March
2008
2007 2008
Unaudited Unaudited Audited
�'000 �'000 �'000
Cash flows from operating activities
Profit before taxation 229 240 4,880
Adjustments for:
Net finance expense (738) 97 (290)
Net interest paid 738 (97) 290
Profit on disposal of fixed assets - - 26
Exchange rate difference 8 - 578
Share based payments 110 102 222
Depreciation and amortisation 167 74 256
Negative goodwill written back to income (1,686) - (3,739)
statement
Movement in trade and other receivables 289 (979) 373
Movement in inventories (138) (2,146) (2,571)
Movement in trade and other payables 163 2,011 957
-------------- -------------- ---------------
Cash flow from operating activities (858) (698) 982
Taxation paid (3) - (9)
-------------- -------------- ---------------
Net cash outflow from operating activities (861) (698) 973
-------------- -------------- ---------------
Cash flow from investing activities
Purchase of property, plant and equipment (111) (836) (982)
and intangibles
Proceeds from sale of property 16 - 66
Purchase of subsidiaries - - (795)
Cash acquired with subsidiary - - 18
-------------- -------------- ---------------
Net cash outflow from investing activities (95) (836) (1,693)
-------------- -------------- ---------------
Cash flows from financing activities
Issue of shares - 1,568 2,341
Capital element of finance lease repaid - (5) -
Net loans undertaken less repayments 1,018 (105) 499
-------------- -------------- ---------------
Cash inflow from financing activities 1,018 1,458 2,840
-------------- -------------- ---------------
Cash and cash equivalents at beginning of 2,372 1,375 1,375
period
Net cash inflow/(outflow) from all 62 (76) 2,120
activities
Non-cash movement arising on foreign (183) (231) (1,123)
currency translation
--------------- -------------- ---------------
Cash and cash equivalents at end of period 2,251 1,068 2,372
======= ====== ======
Cash and cash equivalents comprise
Cash (excluding overdrafts) and cash 2,251 1,068 2,372
equivalents
======= ====== ======
NOTES TO THE GROUP CASH FLOW STATEMENT
1. ACQUISITION OF SUBSIDIARIES
a) On 30 May 2008 the company purchased 100% of the issued share capital of
Deep Blue Development Liegenschaftserschliessungs GmbH.
The shares in Deep Blue Development Liegenschaftserschliessungs GmbH. were
acquired for �Nil consideration.
�'000
Net assets acquired:
At book value:
Tangible fixed assets 14
Creditors (3)
Loans (14)
---------
(3)
Goodwill 3
---------
Consideration -
=====
b) On 30 September 2008, the company purchased 100% of the issued share
capital of Tiha Uvala d.o.o. a company registered in Croatia. The purchase
price includes an initial payment of HRK 4.5 million payable on receipt of all
building permits and a further HRK 4.5 million payable on completion of the
construction of a Hotel. The respective timings of the payments are 6 months
and 2 years.
Net assets acquired: �'000
At fair value:
Intangible fixed assets (note 5) 3,191
Deferred tax provision (638)
-------------
2,553
-------------
Debtors 2
-------------
2
-------------
Total 2,555
Negative goodwill-written back to the income statement (1,686)
in `other income'
-------------
869
-------------
The negative goodwill has arisen as the Group received
a bargain purchase.
Satisfied by:
Deferred consideration 869
======
GROUP STATEMENT OF CHANGES IN EQUITY
Merger Retained Translation
Share Capital Share Premium Reserve Earnings Reserve Total
�'000 �'000 �'000 �'000 �'000 �'000
At 31 March 2007 881 7,239 347 (1,574) 9 6,902
Share based payments - - - 222 - 222
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
Share based payments - - - 110 - 110
Total recognised income
and
expenses - - - 226 (79) 147
------------- -------------- ------------- -------------- ---------- --------------
At 30 September 2008 1,463 16,028 347 3,855 (478) 21,215
====== ======= ====== ====== ====== =======
NOTES
1. ACCOUNTING POLICIES
The accounting policies, applied on a consistent basis in the preparation of
the financial information, are as follows:
(a) Basis of Preparation
These half year 2008 interim consolidated financial statements of Cubus Lux
Plc are for the six months ended 30 September 2008. The information included
within this document has been prepared on the basis of the recognition and
measurement requirements of IFRS standards, IAS standards and IFRIC
interpretations in issue that are endorsed by the European Commission and
effective at 19 November 2008.
The Group accounting policies are as set out in the March 2008 report and
financial statements.
2. Business segment analysis
Period ended 30 September Property Resort
2007: Casino Marina Central Total
�'000 �'000 �'000 �'000 �'000 �'000
Revenue
External sales 689 197 - - - 886
====== ====== ===== ======= ==== ======
Profit/(loss)
Segment operating 18 -
profit/(loss) 147 (177) 353 341
Net finance costs (97)
-------------
Profit before taxation 244
======
Assets and liabilities
Segment assets 1,468 3,553 2,257 - 7,514 14,792
Segment liabilities (271) (3,675) (1,700) - (407) (6,053)
------------ ------------- -------------- --------------- ------------- -------------
Net assets/(liabilities) 1,197 (122) 557 - 7,107 8,739
====== ====== ====== ======== ====== ======
Year ended 31 March 2008:
Revenue
External sales 962 361 - 1,755 - 3,078
======= ====== ====== ====== ====== =======
Profit/(loss)
Segment operating
profit/(loss) 65 (229) 31 1,725 3,578 5,170
Net finance costs (290)
------------
Profit before taxation 4,880
======
Assets and liabilities
Segment assets 1,461 3,904 2,616 2,449 39,042 49,472
Segment liabilities (344) (4,147) (1,996) (1,993) (20,034) (28,514)
-------------- ------------- -------------- ------------- --------------- -------------
Net assets/(liabilities) 1,117 (243) 620 456 19,008 20,958
======= ====== ====== ====== ======= ======
Casino Marina Property Resort Central Total
�'000 �'000 �'000 �'000 �'000 �'000
Period ended 30 September
2008:
Revenue
External sales 533 387 - 43 - 963
====== ====== ===== ======= ==== ======
Profit/(loss)
Segment operating
(loss)/profit (30) 2 12 (67) 1,050 967
Net finance costs (738)
-------------
Profit before taxation 229
======
Assets and liabilities
Segment assets 1,421 4,012 2,666 2,566 41,524 52,189
Segment liabilities (304) (4,421) (2,039) (2,093) (22,117) (30,974)
------------ ------------- -------------- --------------- ------------- -------------
Net assets/(liabilities) 1,117 (409) 627 473 19,407 21,215
====== ====== ====== ======== ====== ======
3. Taxation
The Company is controlled and managed by its Board in Croatia. Accordingly,
the interaction of UK domestic tax rules and the taxation agreement entered
into between the U.K. and Croatia operate so as to treat the Company as solely
resident for tax purposes in Croatia. The Company undertakes no business
activity in the UK such as might result in a Permanent Establishment for tax
purposes and accordingly has no liability to UK corporation tax.
4. Other income
Other income of �1,686,000 in the period ended 30 September 2008, relates to
negative goodwill arising from the acquisition of Tiha Uvala d.o.o. and
subsequent valuation of the intangible fixed assets acquired.
In compliance with the IFRS, the company obtained an external valuation by
Brand Finance plc and the intangible assets which were valued at �3,191,000
(see note 1b to the group cash flow).
5. Intangible fixed assets
Marina Licence Olive Olive Olive Olive Olive Olive Olive Sutomiscica:
Island Island Island Island Island Island Island Right to
resort: resort: resort: hotel: hotel: hotel hotel: Develop
Right to Brand Total Right Brand Management
Develop to Contract Total Total
Develop
�'000 �'000 �'000 �'000 �'000 �'000 �'000 �'000 �'000 �'000
Cost or valuation
At 31 March 5,372 - - - - - - - - 5,372
2007
Acquired on - 26,382 121 26,503 2,187 110 1,730 4,027 - 30,530
acquisition
---- ---- ---- ---- ---- ---- ---- ---- ---- ----
At 31 March 5,372 26,382 121 26,503 2,187 110 1,730 4,027 - 35,902
2008
Acquired on - - - - - - - - 3,191 3,191
acquisition
---- ---- ---- ---- ---- ---- ---- ---- ---- ----
At 30 5,372 26,382 121 26,503 2,187 110 1,730 4,027 3,191 39,093
September
2008
=== === === === === === === === === ===
6. Tangible fixed assets
Casino Marina Resort Casino Marina Central Resort Total
leasehold leasehold leasehold assets assets assets
premises premises assets
�'000 �'000 �'000 �'000 �'000 �'000 �'000 �'000
Cost or valuation
At 31 March 2007 59 2,516 - 1,002 146 - - 3,723
Additions 26 586 - 251 149 1 - 1,013
Acquired on - - 3 - - - 10 13
acquisition
Disposals - (44) - (47) (42) - - (133)
Exchange rate movements 14 549 - 218 41 - - 822
---- ---- ---- ---- ---- ---- ---- ----
At 31 March 2008 99 3,607 3 1,424 294 1 10 5,438
---- ---- ---- ---- ---- ---- ---- ----
Additions 8 91 - 21 5 - - 125
Acquired on - - - - - - 17 17
acquisition
Disposals - - - (23) - - - (23)
Exchange rate movements 2 74 - 29 6 - (3) 108
---- ---- ---- ---- ---- ---- ---- ----
At 30 September 109 3,772 3 1,451 305 1 24 5,665
2008
---- ---- ---- ---- ---- ---- ---- ----
Depreciation
At 31 March 2007 35 2 - 349 22 - - 408
Acquired on - - 2 - - - 4 6
acquisition
Charge for the year 16 86 - 98 56 - - 256
Disposals - - - (27) (14) - - (41)
Exchange rate 9 12 - 76 10 - - 107
movements
---- ---- ---- ---- ---- ---- ---- ----
At 31 March 2008 60 100 2 496 74 - 4 736
---- ---- ---- ---- ---- ---- ---- ----
Charge for the 8 59 - 70 32 - 1 170
period
Disposals - - - (7) - - - (7)
Exchange rate 1 4 - 11 2 - - 18
movements
---- ---- ---- ---- ---- ---- ---- ----
At 30 September 69 163 2 570 108 - 5 917
2008
---- ---- ---- ---- ---- ---- ---- ----
Net Book Value
At 31 March 2008 39 3,507 1 928 220 1 6 4,702
==== ==== ==== ==== ==== ==== ==== ====
At 30 September 40 3,609 1 881 197 1 19 4,748
2008
==== ==== ==== ==== ==== ==== ==== ====
7. Earnings per share
The earnings per share of 1.6p (Year ended 31 March 2008:
earnings 47.8p; six months ended 30 September 2007: earnings 2.5p) has been
calculated on the weighted average number of shares in issue during the year
namely 14,614,365 (year ended 31 March 2008: 10,181,002; six months ended 30
September 2007: 9,549,284) and profits of �226,450 (year ended 31 March 2008:
profit �4,871,401; six months ended 30 September 2007: profit �240,431).
The calculation of diluted earnings per share of 1.5p (year
ended 31 March 2008: earnings 45.4p; six months ended 30 June 2007: earnings
2.3p) is based on the loss on ordinary activities after taxation and the
diluted weighted average of 15,481,865 (year ended 31 March 2008: 10,724,816;
six months ended 30 June 2007: 10,249,284) shares.
At the Annual General Meeting of 6th August 2008 the
company's ordinary shares of �0.01 each were consolidated by the factor 10:1
into ordinary shares of �0.1 each.
The previously reported comparative earnings per share of 30
September 2007 (Basic 0.25p, diluted 0.23p) and 31 March 2008 (Basic 4.78p,
diluted 4.54p) have been restated.
INDEPENDENT REVIEW REPORT TO CUBUS LUX PLC
Introduction
We have been engaged by the company to review the group financial statements
in the interim report for the six months ended 30 September 2008 which
comprises the Group Income Statement, the Group Balance Sheet, the Group Cash
Flow Statement, the Group Statement of Changes in Equity and related
explanatory notes.
We have read the other information contained in the interim report and
considered whether it contains any apparent misstatements or material
inconsistencies with the information in the group financial statements.
Directors' responsibilities
The interim report, including the financial information contained therein, is
the responsibility of and has been approved by the directors. The directors
are responsible for preparing the interim report in accordance with the rules
of the London Stock Exchange for companies trading securities on the
Alternative Investment Market which require that the interim report be
presented and prepared in a form consistent with that which will be adopted in
the company's annual accounts having regard to the accounting standards
applicable to such annual accounts.
Our responsibility
Our responsibility is to express to the Group a conclusion on the group
financial statements in the interim report based on our review.
Our report has been prepared in accordance with the terms of our engagement
and for no other purpose. No person is entitled to rely on this report unless
such a person is a person entitled to rely upon this report by virtue of and
for the purpose of our terms of engagement or has been expressly authorised to
do so by our prior written consent. Save as above, we do not accept
responsibility for this report to any other person or for any other purpose
and we hereby expressly disclaim any and all such liability.
Scope of review
We conducted our review in accordance with International Standard on Review
Engagements (UK and Ireland) 2410, "Review of Interim Financial Information
Performed by the Independent Auditor of the Entity", issued by the Auditing
Practices Board for use in the United Kingdom. A review of interim financial
information consists of making enquiries, primarily of persons responsible for
financial and accounting matters, and applying analytical and other review
procedures. A review is substantially less in scope than an audit conducted in
accordance with International Standards on Auditing (UK and Ireland) and
consequently does not enable us to obtain assurance that we would become aware
of all significant matters that might be identified in an audit. Accordingly,
we do not express an audit opinion.
Conclusion
Based on our review, nothing has come to our attention that causes us to
believe that the group financial statements in the interim report for the six
months ended 30 September 2008 are not prepared, in all material respects, in
accordance with International Accounting Standard 34, as adopted by the
European Union, and the Disclosure and Transparency Rules of the United
Kingdom's Financial Services Authority.
haysmacintyre
Chartered Accountants
Registered Auditors
Fairfax House
15 Fulwood Place
London WC1V 6AY
18 November 2008
END
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