24 Jun 2008 07:00
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 * Acquisition of the Olive Island Resort and Hotel - reverse takeover and consequent readmission to AIM * Advanced sales in Olive Island Resort of ¢â€š¬15.2 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 andreach targets on our investments. Furthermore, the `Olive Island' transactionsand projects have transformed our balance sheet and provide a strong foundationfor the Company's future development. We continue to focus on creatingsustainable shareholder value and remain committed to our strategy ofintroducing new projects with strong potential to fulfil that aim."
For further information please see www.cubuslux.com or contact:
Steve McCannCubus Lux plc+385 (0)99 214 9636Simon Sacerdoti/Liam Murray, Nominated AdviserDowgate Capital Advisers Limited+44 (0)20 7492 4777Kealan Doyle, BrokerLewis Charles Securities Limited+44 (0)20 7456 9100Pam SpoonerCityRoad 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 andreach targets on our investments. The Group's two principle operations are theIstrian 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 situatedin the Hotel Histria, a hotel which was known to be `on the market' andconsequently received limited refurbishment; as a result, we believe potentialclients were deterred. Investment by Park Plaza into this hotel will ensure anew hotel management and significant efforts to attract new clientele. Webelieve that the planned multi million pound improvement of the complex willbenefit our business, and, consequently, we have increased our floor space inHotel Histria by approximately 600 square metres, with the further addition ofa bistro and outside terrace. We have further improved our offering by bringingin gaming equipment from our former Medulin location and believe Pula now to beone 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 themain season in the casino and expect a very buoyant summer.We have a number of target locations for additional casinos, both seasonal andall year round. Our first new casino will commence operations in Selce, closeto the city of Rijeka, Croatia, on 25 June 2008. Our experienced andstrengthened management team are very excited with this development and weexpect it to be immediately profitable. This location was considered to besuperior to that of our Rabac casino which was closed at the year end and wewere able to relocate both our equipment and some of our staff to this newoperation, thereby keeping investment low and commence operations with anexperienced team.
Plava Vala d.o.o. - the marina company:
Our marina in Sutomiscica, near Zadar continues to advance in popularity as avenue in Adriatic sailing, with a growing reputation for both our facilitiesand restaurant. Rather earlier than expected, we have already reached ourtarget of 180 berths contracted. This is a tremendous achievement consideringthat construction of the marina was delayed and that it was not officiallyopened and fully operational until May 2007, with the restaurant openingseveral weeks later in July 2007. Despite recovering very well, we did sufferfrom the constructors' delays and consequently fell short of our initialtargets for overnight transit business. These delays resulted in a loss in thisstart up period. However, we are now seeing continuous trading improvement andhave started the new season positively.We are working towards phase two for this marina which will involve furtherfacilities and additional berths. In addition, we are actively tendering toconstruct further marinas in locations extending down the Adriatic coast andits islands. We believe we have the right management team in place - one thathas very quickly transformed this business into a significant destination forMediterranean seafarers. Already this season, management has organised thirtyregattas 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 ventureinto real estate development. In 2007 we purchased a 6,000 sq metre plot ofland in Zadar, close to the City centre, for development. We created theproject and obtained all necessary permissions for building 72 apartments andattracted an international bank to buy the ground floor commercial space. Wewere pleased to announce that this project has proved successful, and, aspreviously reported, we have sold the project at a profit. . This was anexcellent opportunity for us and will enable our teams to focus more fully onnew projects, in particular the Olive Island Resort and Hotel.
Financial:
For the year ended 31 March 2008, the Company reports revenues of ‚£3,078,000and 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 theacquisition of the Olive Island companies which arose as a result of theCompany 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 ofCroatia. We successfully completed this transaction, resulting in a `reversetake-over' and subsequent readmission of our shares to AIM on 22 February 2008.We immediately started to implement realisation of the project, which willinclude 126 villas, 305 apartments, as well as accompanying facilities, such asrestaurants, shops, a marina and four star hotel with 500 beds. We expect tobegin construction in the coming months. The villas and apartments will be soldand the hotel operated by the Company in association with our partner SolMelia.
Plans for the future:
The `Olive Island' transaction and projects have already transformed ourbalance sheet, to provide a strong foundation for the Company's futuredevelopment. We continue to focus on creating sustainable shareholder value andremain committed to our strategy of introducing new projects with strongpotential to fulfil that aim. We are well placed in Croatia and itsneighbouring countries, to be able to compete effectively for a wide variety ofprospective projects. Indeed, we are pleased to report that we now have apipeline of such projects and are actively engaged in tendering for severaldevelopments. As a result, we look forward to the Company's future withoptimism.GERHARD HUBERChairmanExecutive Director24 June 2008CONSOLIDATED INCOME STATEMENTFOR 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 SHEETAT 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 431period Net cash inflow from all activities 2,120 881 Non-cash movement arising on foreign (1,123) 63currency 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 1,375equivalents ====== ======
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 STATEMENTFOR 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 - 178payments 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 - - - 3,449of costs) ----------- ------------ ----------- --------- ---------- ------------ At 31 March 2007 881 7,239 347 (1,574) 9 6,902 Share based - - - 222 - 222payments 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 POLICIESBasis of ConsolidationOn 20 May 2004, the company purchased 100% of the issued share capital of CubusLux d.o.o., a company registered in the Commercial Court in Rijeka, Croatia, byway of a share for share exchange. Under Financial Reporting Standard 6, mergeraccounting has been adopted as the basis of consolidation.On 6 March 2007, the company purchased 100% of the issued share capital ofPlava Vala d.o.o., a company registered in Croatia, by way of a share for shareexchange. Under Financial Reporting Standard 6, acquisition accounting has beenaccepted as the basis of consolidation for the transaction.On 22 February 2008, the company purchased 100% of the issued share capital ofDuboko 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 andthe issue of Cubus Lux Plc loan notes. Under Financial Reporting Standard 6,acquisition accounting has been accepted as the basis of consolidation for thetransaction.
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 assetsby equal monthly instalments over their estimated useful lives at the followingrates:-
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 3using the purchase method. Any excess of the cost of business combinations overthe Group's interest in the net fair value of the identifiable assets,liabilities and contingent liabilities is recognised in the balance sheet asgoodwill and is not amortised.After initial recognition, goodwill is not amortised but is stated at cost lessany accumulated impairment loss, with the carrying value being reviewed forimpairment, at least annually and whenever events or changes in circumstancesindicate that the carrying value may be impaired.For the purpose of impairment testing, goodwill is allocated to the relatedcash generating units monitored by management. Where the recoverable amount ofthe 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-currentassets are tested where an indication of impairment arises. The assessment ofimpairment is made by comparing the carrying amount of cash generating units(including any associated goodwill) to the higher of their value in use andtheir 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 wheneverevents or changes in circumstances indicate that the carrying amount may not berecoverable. An impairment loss is recognised for the amount by which theasset's carrying amount exceeds it recoverable amount. The recoverable amountis 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 currenciesTransactions in foreign currencies are recorded at the rate ruling at the dateof the transaction. Monetary assets and liabilities denominated in foreigncurrencies are retranslated at the rate of exchange ruling at the balance sheetdate. The factual currency of the Group is Euro, however, Sterling is currentlyused 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 temporarydifferences arising between the tax bases of assets and liabilities and theircarrying values in the financial statements. The deferred tax is not accountedfor if it arises from initial recognition of an asset or liability in atransaction, other than a business combination, that at the time of thetransaction affects neither accounting nor taxable profit or loss. Deferred taxis determined using tax rates (and laws) that have been enacted orsubstantially enacted by the balance sheet date and are expected to apply whenthe related deferred tax asset is realised or the deferred tax liability issettled.
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 inrespect of the granting over shares to employees and directors. This expense,which is calculated by reference to the fair value of the options granted, isrecognised on a straight line basis over the vesting year based on the Group'sestimate of options that will eventually vest. The Directors have used theBlack Scholes model to estimate the value of options granted in the current
andprior 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 calculatedon the weighted average number of shares in issue during the year namely101,810,025 (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 strategicfocus to a more broad-based leisure and tourist operation since a newmanagement team joined the Company in 2005. It is now actively involved in thedevelopment and operation of marinas, tourist resorts and hotels.The Company aims to become the leading provider of leisure and tourismfacilities in Croatia and to participate fully in the inevitable development ofthe north western Mediterranean region. Croatia has agreed prospective memberstatus with the EU.Currently, Cubus Lux operates two all-year round casinos on the southern tip ofthe Istrian peninsula, and a 200+berth marina on the island of Ugljan (morecommonly referred to as Olive Island) at Sutomi...¡„‡ica. Its hotel and resortdevelopment on Olive Island will see the commencement of construction in Q32008. These projects involve a 500-bed 4-star hotel and the provision of 431villas and apartments, with accompanying shops, restaurants and bars and a
150berth 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
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