TIDMCBX
Cubus Lux plc
("the Company" or "the Group")
Half-yearly Report for the Six Months to 30 September 2009
Cubus Lux plc, the operator and developer of premier tourism and leisure
facilities in Croatia, announces its results for the half year ended 30th
September 2009.
KEY HIGHLIGHTS
Revenues: GBP965,000 versus GBP963,000 in 2008
Operating Profit/(Loss): (GBP602,000) versus loss of GBP719,000* in 2008
Marinas: Olive Island Marina contributes GBP46,000 trading profit (GBP2,000 2008),
has full waiting list and plans to extend number of berths by 50%. Six other
potential Marina investment opportunities identified.
Commercial/Residential Real Estate property developments: Zadar `Milk Factory'
site under construction to provide 74 apartments and five levels of commercial
space; excavation to provide two levels of underground parking completed, and
on schedule for project to complete in early 2011.
Casinos: profit from operations reduced to GBP9,000 at trading level as a result
of low hotel occupancy and impact on tourist spending from economic downturn -
signs of improvement post period end.
Major Leisure/ Tourism Projects in Croatia and Montenegro continue progress:
1) Olive Island Resort, Croatia, construction financing plans close to
resolution;
2) Valdanos, Montenegro, final contract negotiations expected to complete in
January 2010, when detailed planning can commence.
*excluding GBP1.686 million of negative goodwill
The full report, and further information, is available from the Company's
website, www.cubuslux.com.
Steve McCann
Cubus Lux plc
+44 (0)7787 183184
Luke Cairns / Jo Turner, Nominated Adviser
Astaire Securities plc
+44 (0)20 7448 4400
Claire Louise Noyce/Stephen Austin, Broker
Hybridan LLP
+44 (0)20 3159 5085
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 2009.
Operations
We continue to pursue our strategy of creating value in leisure-related and
general real estate projects in Croatia and neighbouring countries. High
quality development opportunities exist along the Adriatic coast, and the Board
retains confidence in the long-term attractions and potential of this part of
southern Europe.
Nevertheless, the effects of the wider economic slowdown have been apparent
throughout the six months to the end of September, and indeed throughout 2009.
Cubus Lux d.o.o. - Casinos
Although visitor numbers in Croatia held up well in the main holiday season,
the proportion of `short breaks' rose, leaving hotel occupancy averages lower
for the year, and spending by visitors appears also to have fallen. Trading at
our casinos was impacted by these symptoms of the recession, resulting in
significantly reduced profits in the six months. However, we have already begun
to see signs of an improvement in economic conditions and remain confident that
the casinos will bounce back as tourism recovers.
Plava Vala d.o.o. - Marina
In contrast, tourist activity for marinas - where high quality facilities are
in short supply - has remained robust, and we are experiencing heavy demand for
berths at our Olive Island location. As a result, we plan to extend our marina
there by 50% - an extra 100 berths - and are actively looking for new
investments for this segment of the Group. A total of six prospective
opportunities have so far been identified.
Real estate
Our small and medium scale commercial and residential property developments
continue to progress, with our `Molatska' site in Zadar on schedule to complete
in early 2011. Having removed 25,000 cubic metres of rock and earth to allow
for two levels of underground parking, foundations for the complex are
currently being put in place. Pre-selling of the 74 apartments and ground floor
retail/office space is expected to get underway in Q1 2010.
Credit market conditions for our large-scale projects continue to be
restrictive. However, financial conditions are improving and our own
negotiations in regard to the Olive Island Resort are making significant
progress. Sufficient financing was arranged in time to meet all stage payments
so far and we are in the process of finalising a full package to secure the
full financing of the construction costs.
Our 3.4 million sq metre project in Montenegro - `Valdanos' - is also
progressing satisfactorily. Final contracts are expected to be agreed in early
2010, at which point detailed planning for the site can commence.
In addition to the above major projects other opportunities are being reviewed
to further strengthen the Group. Further information will be provided as we
progress.
Whilst the first half of our year has not been easy, the Board remains
confident of fulfilling its vision for the future and the Group's leading role
in developing tourism and leisure in the region.
Financial:
For the six months ended 30 September 2009 the Company reports revenues of GBP
965,000 and a pre-tax loss of GBP599,000.
Loss per share amounted to 3.2p.
The Company further issued 1,060,000 shares at 20p during the half year.
Plans for the future:
As the first of our `resort' projects, the `Olive Island' project continues to
be our main focus. This resort along with the extensive accompanying real
estate development is providing a strong foundation for the Group's future
development. In addition, we are strongly pursuing other projects in all
divisions of the Group.
The Board continues to focus on creating sustainable shareholder value, through
a firm strategy of introducing and developing profitable new projects. The
Group is well known and well positioned in both Croatia and now in Montenegro
and is able to compete effectively for a wide variety of projects. As a result,
we look forward to the Group's future with excitement.
GERHARD HUBER
Chairman
Executive Director
22 December 2009
INDEPENDENT REVIEW REPORT TO CUBUS LUX PLC
We have been engaged by the Company to review the condensed set of financial
statements in the interim report for the six months ended 30 September 2009
which comprises the consolidated income statement, consolidated interim balance
sheet, consolidated interim statement of changes in shareholders' equity,
consolidated interim cash flow statement, and related 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 condensed set of financial statements.
Directors' Responsibilities
The interim report is the responsibility of, and has been approved by, the
directors. The directors are responsible for preparing the interim report in
accordance with the AIM Rules. The condensed set of financial statements
included in this interim report has been prepared in accordance with
International Accounting Standard 34, "Interim Financial Reporting," as
adopted by the European Union.
Our Responsibility
Our responsibility is to express to the Company a conclusion on the condensed
set of financial statements in the interim report based on our review.
Our report has been prepared in accordance with the terms of our engagement to
assist the company in meeting the requirements of the rules of the London Stock
Exchange for companies trading securities on AIM and for no other purpose. No
person is entitled to rely on this report unless such a person is a person
entitled to rely on 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 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 condensed set of financial statements in the interim report
for the six months ended 30 September 2009 is not prepared, in all material
respects, in accordance with International Accounting Standard 34 as adopted by
the European Union.
Going Concern
In forming our opinion, which is not qualified, we have considered the adequacy
of the disclosures made within the accounting policies concerning the Group's
ability to continue as a going concern. The Group incurred a net loss of GBP
602,000 during the period ended 30 September 2009 at the period end the Group's
current liabilities exceed its current assets by GBP10,631,000. This along with
the other matters explained in note 1 to the condensed consolidated interim
financial statements, indicates the existence of a material uncertainty which
may cast significant doubt about the Group's ability to continue as a going
concern. The directors are expecting to receive the Olive Island project loans
currently being negotiated. The directors also have contingency plans in place
which include negotiations to bring in a major investor on the Olive Island
project level and a partner for the marina company. The condensed consolidated
interim financial statements do not include the adjustments that would result
if the Group was unable to continue as a going concern.
haysmacintyre
Chartered Accountants Fairfax House
Registered Auditors 15 Fulwood Place
London
22 December 2009 WC1V 6AY
GROUP INCOME STATEMENT
FOR THE SIX MONTHS ENDED 30 SEPTEMBER 2009
Six months to Six months to Year ended
30 September 30 September 31 March
2009 2008 2009
Unaudited Unaudited Audited
Note GBP'000 GBP'000 GBP'000
REVENUE 2 965 963 1,535
Cost of sales (106) (106) (181)
------------- ------------- -------------
GROSS PROFIT 859 857 1,354
Administrative expenses (827) (1,576) (2,758)
Other income 4 190 1,686 826
------------- ------------- -------------
OPERATING PROFIT/(LOSS) 222 967 (578)
Net finance expense (821) (738) (1,520)
-------------- -------------- -------------
(LOSS)/PROFIT ON ORDINARY
ACTIVITIES BEFORE TAXATION (599) 229 (2,098)
Tax on ordinary activities 3 (3) (3) -
------------- ------------- -------------
(LOSS)/PROFIT FOR THE PERIOD (602) 226 (2,098)
====== ====== ======
ATTRIBUTABLE TO:
Equity holders of the company (585) 226 (2,098)
Minority interest (17) - -
------------- ------------- -------------
(602) 226 (2,098)
====== ====== ======
EARNINGS PER SHARE
Basic 5 (3.2)p 1.6p (14.2)p
====== ====== ======
Diluted 5 (3.2)p 1.5p (14.2)p
====== ====== ======
GROUP BALANCE SHEET
AT 30 SEPTEMBER 2009
As at 30 As at 30 As at 31
September 2009 September 2008 March 2009
Unaudited Unaudited Audited
GBP'000 GBP'000 GBP'000
Non-current assets
Intangible assets 39,093 39,093 39,093
Goodwill 1,576 689 1,575
Property, plant and equipment 5,077 4,748 5,147
-------------- -------------- --------------
45,746 44,530 45,815
-------------- ------------- --------------
Current Assets
Inventories 5,725 3,310 4,560
Trade and other receivables 974 2,098 710
Cash at bank 2,782 2,251 3,365
------------- ------------- ------------
9,481 7,659 8,635
------------- --------------- ---------------
TOTAL ASSETS 55,227 52,189 54,450
====== ======= =======
EQUITY
Capital and reserves attributable to
the Company's
equity shareholders
Called up share capital 1,892 1,463 1,790
Share premium account 17,114 16,028 17,005
Merger reserve 347 347 347
Retained earnings and translation 265 3,377 923
reserves
------------- ------------- --------------
TOTAL EQUITY 19,618 21,215 20,065
-------------- -------------- --------------
MINORITY INTEREST IN EQUITY 216 - 233
-------------- -------------- --------------
LIABILITIES
Non-current liabilities
Deferred tax liabilities 7,818 7,819 7,818
Loans 7,463 16,161 8,127
Amounts due under finance leases - 24 14
-------------- ------------- -------------
15,281 24,004 15,959
--------------- -------------- -------------
Current liabilities
Trade and other payables and deferred 3,712 6,228 3,440
income
Loans 16,396 737 14,745
Amounts due under finance leases 4 5 8
------------- ------------- --------------
20,112 6,970 18,193
-------------- -------------- --------------
TOTAL LIABILITIES 35,393 30,974 34,152
-------------- --------------- ----------------
TOTAL EQUITY AND LIABILITIES 55,227 52,189 54,450
======= ======= ========
GROUP CASH FLOW STATEMENT
FOR THE SIX MONTHS ENDED 30 SEPTEMBER 2009
Six months to Six months to Year ended
30 September 30 September 31 March
2009 2008 2009
Unaudited Unaudited Audited
GBP'000 GBP'000 GBP'000
Cash flows from operating activities
(Loss)/profit before taxation (599) 229 (2,098)
Adjustments for:
Net finance expense/(income) 821 (738) 1,520
Exchange rate difference (202) 8 1,077
Share based payments 28 110 220
Depreciation and amortisation 178 167 349
Negative goodwill written back to (190) (1,686) (2,721)
income statement
Movement in trade and other (265) 289 84
receivables
Movement in inventories (1,165) (138) 1,696
Movement in trade and other payables 46 163 (1,019)
-------------- -------------- ---------------
Cash flow from operating activities (1,348) (1,596) (892)
Interest (paid)/received - net (456) 738 (459)
Taxation paid (3) (3) -
-------------- -------------- ---------------
Net cash outflow from operating (1,807) (861) (1,351)
activities
-------------- -------------- ---------------
Cash flow from investing activities
Purchase of property, plant and (67) (111) (190)
equipment and intangibles
Proceeds from sale of property 20 16 34
-------------- -------------- ---------------
Net cash outflow from investing (47) (95) (156)
activities
-------------- -------------- ---------------
Cash flows from financing activities
Issue of shares 211 - 1,304
Capital element of finance lease (18) - (21)
repaid
Net loans undertaken less repayments 1,090 1,018 706
-------------- -------------- ---------------
Cash inflow from financing activities 1,283 1,018 1,989
-------------- -------------- ---------------
Cash and cash equivalents at 3,365 2,372 2,372
beginning of period
Net cash (outflow)/inflow from all (571) 62 482
activities
Non-cash movement arising on foreign (12) (183) 511
currency translation
--------------- -------------- ---------------
Cash and cash equivalents at end of 2,782 2,251 3,365
period
======= ======= ======
Cash and cash equivalents comprise
Cash and cash equivalents 2,782 2,251 3,365
======= ====== ======
GROUP STATEMENT OF CHANGES IN EQUITY
FOR THE SIX MONTHS ENDED 30 SEPTEMBER 2009
Share Share Merger Retained Translation
Capital Premium Reserve Earnings Reserve Total
GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000
At 1 April 2008 1,463 16,028 347 3,519 (399) 20,958
Profit/(loss) for the - - - 226 (79) 147
period
Share based payments - - - 110 - 110
------------- ------------- ------------- ------------- ------------- -------------
At 30 September 2008 1,403 16,028 347 3,855 (478) 21,215
Loss for the period - - - (2,324) (240) (2,564)
Issue of shares 327 977 - - - 1,304
Share based payments - - - 110 - 110
------------- -------------- ------------- -------------- ---------- --------------
At 31 March 2009 1,790 17,005 347 1,641 (718) 20,065
Loss for the period - - - (585) (101) (686)
Issue of shares 102 109 - - - 211
Share based payments - - - 28 - 28
------------- -------------- ------------- -------------- ---------- --------------
1,892 17,114 347 1,084 (819) 19,618
====== ======= ====== ====== ====== =======
NOTES TO THE REPORT AND FINANCIAL STATEMENTS
FOR THE SIX MONTHS ENDED 30 SEPTEMBER 2009
1. BASIS OF PREPARATION
These interim consolidated financial statements are for the six months ended 30
September 2009. They have been prepared in accordance with IAS 34, Interim
Financial Reporting. These interim 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 (December 2009). The IFRS standards and IFRIC interpretations that
will be applicable at 31 March 2010, including those that will be applicable on
an optional basis, are not known with certainty at the time of preparing these
interim financial statements. The policies set out below have been consistently
applied to all the years presented.
These consolidated interim financial statements have been prepared under the
historical cost convention.
The information set out in this interim report for the six months ended 30
September 2009 does not constitute statutory accounts as defined by section 434
of the Companies Act 2006. The statutory accounts for the year ended 31 March
2009, incorporating an unqualified auditors' report, have been filed with the
Registrar of Companies.
Going concern
The Group has continued to make losses since the year end and cashflow has
required careful management.
The directors are fully expecting to receive the Olive Island project loans
currently being negotiated which would include a payment directly into the
parent company. The value of the loan would also allow all liabilities to be
paid.
Contingency plans are however prepared and include negotiations to bring in a
major investor on the Olive Island project level and a partner for the marina
company.
Since the period end the Group has renegotiated the repayment terms of the EUR13
million loan notes, extending the repayment date to 30 April 2011.
In light of the above, subject to the successful completion of the
aforementioned events, and on this basis, the directors consider that it is
appropriate to prepare the condensed consolidated interim financial statements
on the going concern basis.
.
2. BUSINESS SEGMENT ANALYSIS
Period ended 30 September Casino Marina Property Resort Central Total
2008:
GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000
Revenue
External sales 533 387 - 43 - 963
====== ====== ===== ======= ==== ======
Profit/(loss)
Segment operating profit/ (30) 2 12 (67) 1,050 967
(loss)
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
====== ====== ====== ======== ====== =======
Casino Marina Property Resort Central Total
GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000
Year ended 31 March 2009:
Revenue
External sales 864 660 - - 11 1,535
====== ====== ====== ====== ====== =======
Profit/(loss)
Segment operating profit/ (10) (158) 1,544 799 (2,753) (578)
(loss)
Net finance costs (1,520)
-------------
Profit before taxation (2,098)
=======
Assets and liabilities
Segment assets 1,273 10,690 8,405 33,746 336 54,450
Segment liabilities (296) (6,269) (4,344) (22,098) (1,145) (34,152)
------------ ------------ ------------- --------------- ------------- ------------
Net assets/(liabilities) 977 4,421 4,061 11,648 (809) 20,298
====== ====== ====== ======== ====== =======
Period ended 30 September
2009:
Revenue
External sales 500 447 - - 18 965
====== ====== ===== ======= ==== ======
Profit/(loss)
Segment operating (loss)/ 9 46 73 301 (207) 222
profit
Net finance costs (821)
-------------
Loss before taxation (599)
======
Assets and liabilities
Segment assets 1,320 10,236 8,471 34,814 386 55,227
Segment liabilities (371) (6,037) (4,364) (22,852) (1,769) (35,393)
------------ ------------- -------------- --------------- ------------- ---------------
Net assets/(liabilities) 949 4,199 4,107 11,962 (1,383) 19,834
====== ====== ====== ======== ====== =======
The group currently operates in one geographical market, Croatia and therefore
no secondary segmentation is provided.
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 GBP190,000 in the period ended 30 September 2009, arise
in respect of the reduction of deferred consideration payable for
Duboko Plavetnilo Hotels d.o.o. and as such this adjustment of negative
goodwill has been recognised in the consolidated income statement.
5. EARNINGS PER SHARE
The loss per share of 3.2p (year ended 31 March 2009: loss 14.2p; six
months ended 30 September 2008: earnings 1.6p) has been calculated on the
weighted average number of shares in issue during the year namely
18,449,564 (year ended 31 March 2009: 14,785,356; six months ended 30
September 2008: 14,614,365) and losses of GBP585,000 (year ended 31 March
2009: loss GBP2,098,000; six months ended 30 September 2008: profit GBP
226,000).
The calculation of diluted loss per share of 3.2p (year ended 31 March
2009: loss 14.2p) is based on the loss on ordinary activities after
taxation and the weighted average of 18,449,564 (year ended 31 March
2009: 14,785,356) shares. For a loss making group with outstanding share
options, net loss per share would only be increased by the exercise of
out-of-the money options. Since it is inappropriate to assume that option
holders would act irrationally no adjustment has been made to diluted EPS
for out-of-the-money share options. Diluted earnings per share for six
months ended 30 September 2008 of 1.5p is calculated on profit of GBP
226,450 and the diluted weighted average of 15,481,865 shares.
END
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