27 Sep 2010 16:15
Announcement 27 September 2010
CUBUS LUX plc
("Cubus Lux" or the "Company")
Final Results for the Year Ended 31 March 2010
Cubus Lux plc, the operator and developer of premier tourism and leisure facilities in Croatia, announces its results for the year ended 31 March 2010.
HIGHLIGHTS
·; Continued progress with strategy of creating value in leisure-related and general real estate projects in Croatia and neighbouring regions
·; Discussions on financing options available for specific projects at an advanced stage
·; Seven locations in Croatia and Montenegro for marina developments identified and expansion of Olive Island Marina a priority
·; Our small and medium scale real estate developments continue to progress. The 'Molatska' site in Zadar now scheduled for completion in June 2011.
·; Other high quality leisure developments are also available, subject to financing
·; Gaming operations in forward strategy of Group under review
·; Revenues of £1.48 million (2009 - £1.54 million)
·; Pre-tax loss of £3.6 million (2009 - pre-tax loss £2.1 million)
·; Net loss per share of 18.99p (2009 - loss per share of 14.2p)
·; £268,875 additional equity raised during the year.
Commenting on the results, executive chairman Dr. Gerhard Huber said:
"Opportunities for Cubus Lux continue to emerge, and despite the slower pace of our development - which reflects the slower pace of financial and credit market activity - your Board remains confident of a healthy future for real estate and tourist-related development in this region of Europe, and for Cubus Lux in particular. Our vision remains intact, financing discussions continue and, we believe, becoming very much closer to fruition".
A copy of the report and accounts, together with the notice convening the Annual General Meeting to be held on 28 October 2010, has today been posted to shareholders and is available on the Company's website, www.cubuslux.com.
For further information please see www.cubuslux.com or contact:
Steve McCann
Cubus Lux plc
+44 (0) 7787 183184
Luke Cairns/ Rod Venables
Nominated Adviser, Astaire Securities plc
+44 (0)20 7492 4750
Claire Louise Noyce
Broker, Hybridan LLP
+44 (0)20 7947 4350
Pam Spooner
City Road Communications
+44 (0) 207 248 8010 / +44 (0)7858 477 747
CHAIRMAN'S STATEMENT
FOR THE YEAR ENDED 31 MARCH 2010
I am pleased to present the results for the year to 31 March 2010.
Overview
We continue to progress our strategy of creating value in leisure-related and general real estate projects in Croatia and the neighbouring regions, despite the ongoing effects of the economic slowdown. There has been only a gradual easing of credit markets in the course of the past year, with progress being slower than anticipated a year ago. However, the Board is currently reviewing a variety of financing options potentially available for specific projects.
We continue to see high quality development opportunities arising along the Adriatic coast, and your Board's confidence in the long-term attractions and potential of this part of southern Europe remains intact. The Company has identified, for example, seven locations in Croatia and Montenegro for marina developments and is working with local administrations and finance sources to achieve our vision of a 'String of Pearls' across the Adriatic.
Other high quality leisure developments are also available to us, and subject to financing, the Directors believe the Company has substantial opportunities in the year ahead. Economies in this part of Europe have proved more resilient than elsewhere, and your Board believes it right to start looking beyond the recession and to create a strategy for the recovery.
Cubus Lux d.o.o. - the gaming company
Despite visitor numbers in Croatia generally holding up well in the main holiday season and hotel occupancy averages being stable, the casino business in Croatia has been impacted by a number of factors this last year.
The Italian government's decision to offer families €1,000 per family to take their holiday in Italy necessarily reduced the proportion of Italian tourists abroad. Previously, our casino locations had been very popular with Italians due to its close proximity to the Italian border.
In addition, the hotel in Pula, where our all-year casino is located, implemented a refurbishment programme which resulted in a reduction in capacity and amenities over the course of the year. The introduction of a smoking ban in Croatia also hurt the casino business, as it has in other countries.
Taken together, these factors resulted in a small operating loss for the casino division before exchange rate losses and provisions compared to break even in 2009.
The Board, therefore, is reviewing the role of gaming in the forward strategy of the group and actively considering a number of approaches it has received in regard to the casino at Pula and the Company's licences elsewhere.
Plava Vala d.o.o. - the marina company
In contrast, tourist activity for marinas - where high quality facilities remain in short supply - continued to grow, and we again experienced heavy demand for berths at our Olive Island location. Our planned extension of the marina there - by an extra 100 berths which would take the total to 300 - is now a priority for us during the next financial year.
We have also made significant progress in identifying new investments for this division. A total of seven prospective locations have now been identified, and negotiations with the relevant local authorities are well advanced. Discussions in regard to financing options are also at an advanced stage.
Real estate
Our small and medium scale developments continue to progress. 'Topping out' of the 'Molatska' site in Zadar (a mix of residential and commercial space) occurred in July 2010 and the project is now scheduled to complete in June 2011. Pre-selling of the 74 apartments and ground floor retail/office space is not possible before obtaining a usage certification which is expected by July 2011. There are, however, many enquiries being recorded.
Credit market conditions for our large-scale projects remained restrictive in the first half of the year. However, financial conditions thereafter improved and our negotiations in regard to the Olive Island Resort have made substantial progress. The Company has made stage payments but so far, insufficient to take the land title. A purchase contract extension to Q1 2011 has been negotiated and we expect a full financing package to secure the full construction costs to be imminent.
Our 3.4 million sq metre project in Montenegro - 'Valdanos' - has also made significant progress. The Directors understand final contracts are close to agreement with the Government of Montenegro, with construction expected to begin in Q4-11/Q1-12. Detailed planning for the site is already underway.
Two other major opportunities have arisen in the course of the year, and are currently being reviewed by the Board. We expect to make further announcements in regard to enlargement of the Board's vision for the Group and financing in the coming months; these will be consistent with our confidence in the future of tourism-related development in the region.
Whilst this has been another difficult and somewhat frustrating year for the Company, your Board believes there is light at the end of the economic tunnel and remains confident of fulfilling its vision for the future of Cubus Lux as a leader in tourism and real estate in the region.
Financial
For the year to 31 March 2010 total operating loss was £2,161,000 (2009: £578,000 loss) after an impairment to goodwill of £837,000 (2009: £Nil).
An external net interest charge of £479,000 (2009: £458,000), loan note interest charge of £923,000 (2009: £1,062,000) and tax of £2,000 (2009: £Nil) give an overall loss for the year of £3,565,000 (2009: £2,098,000).
Loss per share amounted to 18.99p (2009: 14.2p loss per share).
The Company issued a further 1,060,000 shares at 20p and 325,000 shares at 17.5p during the year.
Since the year end, the Company has issued a further 2,321,429 shares at 14p in June 2010 and 2,298,890 shares in August 2010 at 14p per share.
Conclusion
Overall we have several pressing issues and my fellow Directors and I are both fully focussed on these and optimistic of our eventual success in resolving these.
At the year end, Plava Vala d.o.o was in breach of the loan covenants on the Erste bank loan, due to a delay in the payment of principal and interest. As such the loan has been disclosed as a current liability. There has been no indication to date from the bank that the loan will be called in due to the breach of covenants. However the Directors are in the process of finalising further funding that will enable them to pay off the loan and any arrears due. This will present the opportunity to use the Company income for the expansion of the numbers of berths. This in turn would make the marina profitable throughout the year rather than just in the summer season creating the returns to meet bank liabilities.
The Directors are in the process of re-negotiating the term of the Euro loan notes issued for the acquisition of the Olive Island Project to be repayable by 31 December 2011.
The Directors are close to finalising a re-negotiation of the Hypo Alpe Adria loan in Cubus Lux Projektiranje so that the loan will be repayable on 31 December 2011.
We are close to finalising one of the financing options available to us in order to close the Olive Island Resort purchase contract and commence construction.
We need to fund the final stages of the Molatska residential/commercial real estate development in Zadar in order to realise the planned profits. The Directors are currently negotiating a loan to fund the development. If the Directors are unsuccessful in securing the loan, there is an option to sell the Group's share to the construction partner, who has expressed an interest.
We believe we are very close to obtaining significant finance that will not only resolve the above concerns but enable a fast track through the Valdanos development and allow us to bring forward other pipeline projects currently being developed.
GERHARD HUBER
Chairman
Executive Director
PRINCIPAL ACTIVITIES AND REVIEW OF BUSINESS
Our market
During the latter part of our 'high season' we did experience some impact of the global economic and financial down turn. This is obviously going to impact on our industry sector, leisure and tourism. We have subsequently seen further effects during the calendar year 2010. We are fortunate in that our recently opened marina business is on an upward growth trend as its reputation increases and our income is partially secured through annual contracts for housing of boats. Our casino business is probably a little more susceptible to tourism and we have to make strenuous efforts to bring in guests during the quiet months.
In addition, we have a pipeline of projects lined up ready and will introduce these as our financial and management resources allow. The completion of any of these projects should put us in a good position to grow. In order to take advantage of our position we need to continue to secure financing opportunities.
Olive Island Resort
The Company has a signed Purchase Contract with Ugljan Island Municipality for an overall price of €8.4 million. This includes an initial payment of €4.2 million to register the land in the Company. The first payment of €1 million has been made with the remainder due by January 2011. If the Company has insufficient funds to make this payment the Directors are confident of negotiating an extension.
Following that, the Company will pay a further €4.2 million, as agreed in the tender, in four instalments over 3 years, as each stage of the construction is completed. Financing is being sought for these payment commitments. In the current financial environment it is proving difficult, however the Company is encouraged by four factors: Firstly, the Municipality has developed a strong working relationship with the Company, as evidenced through the marina at Sutomiscica; Secondly, the resort project has been confirmed to be in the Croatian National Interest; Thirdly, the Company has secured a Bank Guarantee and is now seeking only a lender. Fourthly, financing had previously been agreed with a significant Austrian Bank, prior to the conclusion of the land issue. This came after extensive reviews of the project and a satisfactory valuation. Unfortunately, after the start of the 'credit-crunch' this bank was no longer able to support new projects. This status will be reviewed by this particular bank as the economic situation develops. In the meantime, the Company continues to explore other financing options.
Marina Sutomiscica
We have now completed three years of operation of the marina. Through marketing at European boat shows we have gained some International interest and have managed to increase our long term berth contracts to more than 90% occupancy. In addition, a major German motoring organisation recently declared it as a 'top' European marina destination. This has helped to increase both the restaurant and boat transit businesses.
This activity has improved the financial performance with the marina producing an annualised operational profit of €300,000 in the latter part of the season ending September 2009. In order, to consolidate on this it is necessary to increase the number of available berths from the current 200. We have an option in the original tender, won in 2005, to build a further 100 berths. The cost of the construction will be approximately €800,000 and limited to the jetties and accompanying services and installations, as all other marina facilities are sufficient to cater for the extended number of guests. We are currently trying to secure finance for this expansion. We believe that expansion is essential and if this is secured the marina will be profitable all year round.
Casinos
Since 2008 we have closed the casino in Medulin and moved the gaming equipment to our Pula casino, at the same time taking on additional floor space. In addition, we have closed the Rabac casino and moved the equipment to a new seasonal casino at Selce, south of Rijeka. Medulin was closed as it was in close proximity to Pula using the same customer base; Medulin had been opened by the Company's former owner but was now considered uneconomical and created a duplicated use of our resources. The Rabac casino was located in a holiday resort which had changed its status to a seasonal holiday location. As a result, the number of guests reduced significantly.
Despite now occupying a greater floor space at our Pula casino we have not performed as well as the previous year. The main reason for the adverse performance in the year to 31 March 2010 is the condition of the hotel in which the casino is located and the space is leased.
We had successfully grown our business but the hotel was one of several in Istria that were sold during the year. It is now part of a significant refurbishment programme which has unfortunately reduced the number of guests to both the hotel and our casino. The refurbishment is expected to continue throughout 2011.
As we anticipate disruptions at the Pula Hotel to continue we have explored options to expand in other locations. We are in negotiations to open a casino in a new hotel close to Split, in Dalmatia, under a Joint Venture arrangement. We have a licence to open unlimited casinos in Croatia and are currently waiting for the hotel in Split to be completed before concluding negotiations.
Valdanos
After having won the tender to develop the Valdanos land, near Ulcinj in Montenegro, we have started negotiations of the purchase contract with the Montenegro Government. The next step will be to complete a detailed business plan before the project commences. We will need to secure financing to fund the development project and hope to be able to obtain this from local banks in Montenegro.
IAS 36 Impairment of Assets Review
Typically, for a project-rich company, which has obtained some projects through acquisition, the Company, having identified undeveloped projects, has bought goodwill. This goodwill has been separately identified in the consolidated balance sheet of Cubus Lux plc as potential revenue earning intangible assets in accordance with International Financial Reporting Standard 3 ('IFRS 3') Business Combinations, following the acquisitions of Plava Vala d.o.o. ("PV") on 6 March 2006, Duboko Plavetnilo - Ugljan Projektant d.o.o. (DPUP) and Duboko Plavetnilo - Hoteli d.o.o. ("DPH") on 22 February 2008 and Tiha Uvala d.o.o. ("TU") on 30 September 2008.
We have again engaged Brand Finance plc to conduct an impairment review of the intangible assets of Cubus Lux plc at 31 March 2010 for the purposes of compliance with IAS 36 Impairment of Assets.
In accordance with the standard, we have to assess at each reporting date whether there is any indication that an asset may be impaired. If any such indication exists, the entity shall estimate the recoverable amount of the asset.
Irrespective of whether there is any indication of impairment, we are also required to:
i) Test an intangible asset with an indefinite useful life or an intangible asset not yet available for use for impairment annually by comparing its carrying amount with its recoverable amount; and
ii) Test goodwill acquired in a business combination for impairment annually.
For the purposes of this review, Brand Finance has considered the assets identified through the purchase price allocations ('PPA') for compliance with IFRS 3 Business Combinations in respect of the intangible assets acquired by Cubus Lux plc.
The assets acquired are summarised in the table below:
| IFRS 3 CATEGORY | ASSET | USEFUL ECONOMIC LIFE |
|
|
|
|
| Marketing-related | Brand (DPH) | 20 years |
| Marketing-related | Brand (DPUP) | 3 years |
| Contract-related | Hotel management contract (DPH) | 10 years |
| Contract-related | Marina operating licence (PV) | Indefinite |
| Contract-related | Resort development rights (DPUP) | 3 years |
| Contract-related | Hotel development rights (DPH) | 20 years |
| Contract-related | Hotel development rights (TU) | 20 years |
During the past year we had experienced significant difficulty in raising sufficient loan finance or equity capital in order to finance the acquisition of the land at the Olive Island Resort, the development of the villas, apartments, hotel and facilities within the resort and the development of the Hotel Sutomišćica adjacent to the Olive Island marina. Also, the delays in construction could have possibly led to the withdrawal of Sol Mélia from the Olive Island Hotel in accordance with the conditions included in the Memorandum of Understanding.
Furthermore the land price has been increased following the protracted negotiations between the Croatian Forestry Commission, the Croatian Central Government and the Municipality of Preko. This could lead to a diminution of the profitability, and hence a reduction of the resulting free-cash flows, of the developments.
Each impairment review comprised a comparison of the carrying amount of the asset with its recoverable amount, where the recoverable amount is the higher of fair value less costs to sell and value in use.
To the extent that the carrying amount exceeds the recoverable amount, the asset is impaired. If either fair value less costs to sell or value in use is higher than the carrying amount, the goodwill is not impaired.
The largest intangible asset in the balance sheet is the Development Rights of the Olive Island Resort. With the delay in start of construction there was the possibility that the present value of the project would have left the Company with an impairment. In the final event there was no impairment but it is essential that we meet the following targets:
·; The Company attracts sufficient funding to complete the resort development within the time frame forecast of 2010-2012;
·; The development costs do not exceed the forecast cost of €135.4 million (including the land cost of €9.4 million), of which €30.5 million is attributable to the building of the hotel;
·; The villas and apartments realise an average price of at least €364,000 after deduction of sales commissions;
The Directors believe that the aforementioned assumptions are achievable.
The impairment review calculations indicated that for all identified intangible assets the valuation exceeded the carrying value and there were no impairments at 31 March 2010.
LOAN COVENANTS
During the year the loan covenants within Erste bank loan of Plava Vala d.o.o were breached. As such under the requirements of IFRS 7 the loan has been fully disclosed within one year. The breach was due to delays in paying the interest and principals in accordance with the loan term. In addition as a consequence the company's bank account was blocked. The carrying amount of the loan at the year end was £3,542,000.
POST BALANCE SHEET EVENTS
Since the year end the Company placed 2,321,419 ordinary shares of £0.10p each at £0.14p per share on 14 June 2010 and 2,298,890 ordinary shares of £0.10p each at £0.14p per share on 31 August 2010.
On 7 May 2010 the Company re-priced the existing 867,500 share options from the original exercise prices of £1.00 and £1.625 to the mid market price at close, on the day of 15p. Of these, 767,500 expire on 26 April 2011 and 100,000 expire on 26 April 2012.
On 2 July 2010 the Company granted options to Directors and employees over 4,780,000 new ordinary shares, in aggregate, at an exercise price of 14p per share and an expiry date of 21 June 2015. The options granted to Directors were: G Huber 2,000,000; S McCann 1,000,000; C Kaiser 500,000; E Abramovich 260,000; F Molina-Alvarez 260,000; L Nahon 260,000. In addition, 500,000 options were granted to employees.
The Directors are in the process of re-negotiating the term of the Euro loan notes issued for the acquisition of the Olive Island Project to be repayable by 31 December 2011.
The Directors are close to finalising a re-negotiation of the Hypo Alpe Adria loan in Cubus Lux Projektiranje so that the loan will be repayable on 31 December 2011.
At the year end Plava Vala d.o.o was in breach of the loan covenants on the Erste bank loan, due to a delay in the payment of principal and interest. As such the loan has been disclosed as a current liability. There has been no indication to date from the bank that the loan will be called in due to the breach of covenants. However the Directors are in the process of finalising further funding that will enable them to pay off the loan and any arrears due. This will present the opportunity to use the Company income towards the expansion of the numbers of berths. This in turn would make the marina profitable throughout the year rather than just in the summer season creating the returns to meet bank liabilities.
GOING CONCERN
Since the year end, the Company has improved the cash position. The summer season was profitable although the continuing recession did have an impact on numbers of tourists. The Company has in addition issued equity in June and August to raise funds to keep existing and new projects running. A total of 4,620,319 shares were issued at 14p per share. Despite this there are still concerns over meeting future liabilities.
The Executive Directors are working continually to obtain the necessary loan finance for the larger projects, in particular for Olive Island Resort. The Municipality of Preko, as existing land owner are very encouraged by the progress being made by the Company and the State of Croatia are aware of our efforts and are very encouraging also. The Municipality, with State support has agreed to extend the payment terms until January 2011. The Directors believe that the conclusion of a financing package is very close and are expecting to receive the Olive Island project loans within the aforementioned payment terms. The loans being negotiated would finance fully the Olive Island project and allow all other liabilities to be paid.
Despite the progress being made, contingency plans are however prepared and include negotiations to sell the Olive Island marina if necessary. In addition, we are reviewing a possible sale of our casino at Pula and our partner in Cubus Lux Projektiranje d.o.o. has offered to buy our 50% share. Furthermore the majority of loan note holders of the €13,000,000 loan notes have indicated that they will not seek repayment from the Company in December 2010 unless the Group has sufficient funds to do so and continue trading and the Directors are in the process of negotiating an extension to 31 December 2011 with the remaining loan note holders.
The Directors are in the process of re-negotiating the term of the Euro loan notes issued for the acquisition of the Olive Island Project to be repayable by 31 December 2011.
The Directors are close to finalising a re-negotiation of the Hypo Alpe Adria loan in Cubus Lux Projektiranje so that the loan will be repayable on 31 December 2011.
At the year end Plava Vala d.o.o was in breach of the loan covenants on the Erste bank loan, due to a delay in the payment of principal and interest. As such the loan has been disclosed as a current liability. There has been no indication to date from the bank that the loan will be called in due to the breach of covenants. However the Directors are in the process of finalising further funding that will enable them to pay off the loan and any arrears due. This will present the opportunity to use the Company income towards the expansion of the numbers of berths. This in turn would make the marina profitable throughout the year rather than just in the summer season creating the returns to meet bank liabilities.
CONSOLIDATED INCOME STATEMENT
FOR THE YEAR ENDED 31 MARCH 2010
|
|
|
|
| 2010 |
2009 | |
|
|
|
| | £'000 | £'000 | |
|
|
|
|
|
|
| |
| REVENUE |
| 1,480 | 1,535 | |||
|
|
|
|
| |||
| Cost of sales |
| (160) | (181) | |||
|
|
|
|
| ------------- | ------------- | |
| GROSS PROFIT |
|
|
| 1,320 | 1,354 | |
|
|
|
|
|
|
| |
| Administrative expenses |
|
|
| (2,644) | (2,758) | |
| Negative goodwill |
|
|
| - | 2,721 | |
| Exceptional charges |
|
|
| (837) | (1,895) | |
|
|
|
|
| ------------- | ------------- | |
| OPERATING LOSS |
|
|
| (2,161) | (578) | |
|
|
|
|
|
|
| |
| Net finance expenditure |
|
| (1,402) | (1,520) | ||
|
|
|
| ------------- | ------------- | ||
| LOSS ON ORDINARY |
|
|
|
| ||
| ACTIVITIES BEFORE TAXATION |
|
| (3,563) | (2,098) | ||
|
|
|
|
|
| ||
| Tax on ordinary activities |
|
| (2) | - | ||
|
|
|
| ------------- | ------------- | ||
| LOSS FOR THE YEAR |
|
| (3,565) | (2,098) | ||
|
|
|
|
|
| ||
| Exchange differences on translation of overseas operations |
|
|
(25) |
(319) | ||
|
|
|
| ------------- | ------------- | ||
| TOTAL COMPRHENSIVE LOSS FOR THE YEAR |
|
|
(3,590) |
(2,417) | ||
|
|
|
| ====== | ====== | ||
|
|
|
|
|
| ||
| Attributable to: |
|
|
|
| ||
| Equity holders of the company |
|
| (3,569) | (2,098) | ||
| Minority interest |
|
| 4 | - | ||
|
|
|
| ------------- | ------------- | ||
|
|
|
| (3,565) | (2,098) | ||
|
|
|
| ====== | ====== | ||
|
|
|
|
|
| ||
| LOSS PER SHARE |
|
|
| |||
|
|
|
|
| |||
| Basic |
| (18.99)p | (14.2)p | |||
|
|
| ====== | ====== | |||
| Diluted |
| (18.99)p | (14.2)p | |||
|
|
| ====== | ====== | |||
All activities arose from continuing activities.
CONSOLIDATED BALANCE SHEET
AT 31 MARCH 2010
|
|
|
| Restated |
| ASSETS | 2010 | 2009 | |
|
|
| £'000 | £'000 |
| Non-current assets |
|
|
|
| Intangible assets |
| 39,093 | 39,093 |
| Goodwill |
| 738 | 1,575 |
| Property, plant and equipment |
| 4,780 | 5,147 |
|
|
| -------------- | -------------- |
|
|
| 44,611 | 45,815 |
|
|
| -------------- | -------------- |
| Current assets |
|
|
|
| Inventories |
| 8,252 | 6,365 |
| Trade and other receivables |
| 660 | 710 |
| Cash at bank |
| 2,675 | 3,365 |
|
|
| -------------- | -------------- |
|
|
| 11,587 | 10,440 |
|
|
| -------------- | -------------- |
| TOTAL ASSETS |
| 56,198 | 56,255 |
|
| ======= | ======= | |
| EQUITY |
|
|
|
| Capital and reserves attributable to |
|
|
|
| the Company's equity shareholders |
|
|
|
| Called up share capital |
| 1,928 | 1,790 |
| Share premium account |
| 17,135 | 17,005 |
| Merger reserve |
| 347 | 347 |
| Profit and loss account |
| (2,345) | 973 |
|
|
| --------------- | --------------- |
| TOTAL EQUITY | 17,065 | 20,115 | |
|
|
| -------------- | -------------- |
| MINORITY INTEREST IN EQUITY |
| 237 | 233 |
|
|
| -------------- | -------------- |
| LIABILITIES |
|
|
|
| Non-current liabilities |
|
|
|
| Deferred consideration |
| 416 | 416 |
| Deferred tax liabilities |
| 7,818 | 7,818 |
| Loans |
| 2,615 | 7,711 |
| Amounts due under finance leases |
| - | 14 |
|
|
| --------------- | ------------- |
|
| 10,849 | 15,959 | |
|
|
| -------------- | -------------- |
| Current liabilities |
|
|
|
| Trade and other payables |
| 6,216 | 5,195 |
| Loans |
| 21,831 | 14,745 |
| Amounts due under finance leases |
| - | 8 |
|
|
| --------------- | ------------- |
|
| 28,047 | 19,948 | |
|
|
| -------------- | -------------- |
| TOTAL LIABILITIES |
| 38,896 | 35,907 |
|
|
| ======= | ======= |
| TOTAL EQUITY AND LIABILITIES |
| 56,198 | 56,255 |
======= =======
|
|
|
|
|
|
CONSOLIDATED CASH FLOW STATEMENT
FOR THE YEAR ENDED 31 MARCH 2010
|
| 2010 | 2009 |
|
| £'000 | £'000 |
| Cash flows from operating activities |
|
|
| Loss before taxation | (3,563) | (2,098) |
| Adjustments for: |
|
|
| Net finance expense | 1,402 | 1,520 |
| Profit on disposal of fixed assets | 60 | - |
| Exchange rate differences | (242) | 1,077 |
| Share based payments | 276 | 220 |
| Depreciation | 359 | 349 |
| Negative goodwill written back to income statement | - | (2,721) |
| Impairment of goodwill | 837 | - |
| Movement in trade and other receivables | 50 | 84 |
| Movement in inventories | (1,887) | 1,696 |
| Movement in trade and other payables | 1,101 | (1,019) |
|
| -------------- | -------------- |
| Cash outflow from operating activities | (1,607) | (892) |
| Interest paid - net | (434) | (459) |
| Taxation paid | - | - |
|
| -------------- | -------------- |
| Net cash outflow from operating activities | (2,041) | (1,351) |
|
| -------------- | --------------- |
| Cash flow from investing activities |
|
|
| Purchase of property, plant and equipment and intangibles |
(122) |
(190) |
| Proceeds from sale of property | - | 34 |
|
| -------------- | -------------- |
| Net cash outflow from investing activities | (122) | (156) |
|
| -------------- | -------------- |
| Cash flows from financing activities |
|
|
| Issue of shares | 268 | 1,304 |
| Capital element of finance lease repaid | (22) | (21) |
| Net loans undertaken less repayments | 1,328 | 706 |
|
| -------------- | -------------- |
| Cash inflow from financing activities | 1,574 | 1,989 |
|
| -------------- | -------------- |
| Net cash (outflow)/inflow from all activities | (589) | 482 |
| Cash and cash equivalents at beginning of period | 3,365 | 2,372 |
| Non-cash movement arising on foreign currency translation |
(101) |
511 |
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| -------------- | -------------- |
| Cash and cash equivalents at end of period | 2,675 | 3,365 |
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| ====== | ====== |
| Cash and cash equivalents comprise |
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| Cash and cash equivalents | 2,675 | 3,365 |
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| ====== | ====== |
CONSOLIDATED STATEMENT OF CHANGES IN EQUITY
FOR THE YEAR ENDED 31 MARCH 2010
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| Total |
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| attributable |
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| to equity |
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| Share | Share | Merger | Retained | Translation | holders of | Minority |
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|
| capital | premium | reserve | earnings | reserve | the Company | Interests | Total |
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| £'000 | £'000 | £'000 | £'000 | £'000 | £'000 | £'000 | £'000 |
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| At 1 April 2008 | 1,463 | 16,028 | 347 | 3,519 | (399) | 20,958 | 233 | 21,191 |
| Share based payments |
- |
- |
- |
220 |
- |
220 |
- |
220 |
| Total comprehensive |
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| loss for the year | - | - | - | (2,098) | (319) | (2,417) | - | (2,417) |
| Issue of shares (net of |
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|
| costs) | 327 | 977 | - | - | - | 1,304 | - | 1,304 |
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| ----------- | ------------ | ----------- | ------------ | ----------- | --------------- | --------------- | ---------------- |
| At 31 March 2009 | 1,790 | 17,005 | 347 | 1,641 | (718) | 20,065 | 233 | 20,298 |
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| Prior year adjustment |
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| (note 1) | - | - | - | 50 | - | 50 | - | 50 |
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| ----------- | ------------ | ----------- | ------------ | ----------- | --------------- | -------------- | ----------------- |
| At 31 March 2009 - |
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| as restated | 1,790 | 17,005 | 347 | 1,691 | (718) | 20,115 | 233 | 20,348 |
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| Share based payments | - | - | - | 276 | - | 276 | - | 276 |
| Total comprehensive |
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| loss for the year | - | - | - | (3,569) | (25) | (3,594) | 4 | (3,590) |
| Issue of shares |
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|
|
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|
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| (net of costs) | 138 | 130 | - | - | - | 268 | - | 268 |
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| ------------ | -------------- | ----------- | ------------ | ---------- | --------------- | --------------- | --------------- |
| At 31 March 2010 | 1,928 | 17,135 | 347 | (1,602) | (743) | 17,065 | 237 | 17,302 |
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| ------------ | -------------- | ----------- | ------------ | ---------- | --------------- | -------------- | --------------- |
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The financial information in this announcement, which was approved by the Board on 24 September 2010, does not comprise statutory accounts for the purpose of Section 435 of the Companies Act 2006 for the years ended 31 March 2009 and 2010. It has been extracted from the Company's consolidated accounts for the period to 31 March 2010.
The statutory accounts for the year ended 31 March 2009 have been delivered to the Registrar of Companies and included an audit report which was unqualified and did not contain statements under Sections 237(2) or (3) of the Companies Act 1985. The statutory accounts for the year ended 31 March 2010 will be delivered to the Registrar of Companies in due course.
The auditors' report on the financial statements, whilst unqualified, contains the following emphasis of matter in relation to 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 and Company's ability to continue as a going concern. The Group incurred a net loss of £3,590,000 during the year ended 31 March 2010 and at the year end the Group's current liabilities exceed its current assets by £16,460,000. This, along with the other matters explained within the accounting policies, indicates the existence of a material uncertainty which may cast significant doubt about the Group's ability to continue as a going concern. The financial statements do not include the adjustments that would result if the Group was unable to continue as a going concern."
The disclosures made within accounting policies in the financial statements are included under "Going Concern" in the extracts from the directors' report included within this announcement.
Whilst the information in this announcement has been prepared in accordance with recognition and measurement criteria of International Financial Reporting Standards (IFRSs) this announcement in itself does not give sufficient information to comply with IFRSs.
EXTRACT FROM THE NOTES TO THE FINANCIAL STATEMENTS
ACCOUNTING POLICIES
Basis of Preparation
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 (September 2010). The policies set out below have been consistently applied to all the years presented.
The preparation of financial statements in conformity with generally accepted accounting principles requires the use of estimates and assumptions that affect the reported amounts of revenues and expenses during the period. Although these estimates are based on management's best knowledge of the amount, event or actions, actual results ultimately may differ from those estimates.
This year the Group adopted IFRS 8 "Operating Segments", which replaces IAS 14 Segment Reporting. The standard is applied retrospectively. The accounting policy for identifying segments is now based on internal management reporting information that is regularly reviewed by the Executive Directors. In contract, IAS 14 required the Group to identify one set of segments (business) based on risks and rewards of the operating segments. Segmental reporting is produced on a business basis by type. The Group adopted IAS 1 Revised 'Presentation of Financial Statements' and IAS 23 'Borrowing costs' during the year, which has been applied prospectively. The effect of IAS 23 was to decrease the loss for the period by £176,000 and increase inventory by the same amount.
These consolidated financial statements have been prepared under the historical cost convention. No separate income statement is presented for the parent company as provided by Section 408, Companies Act 2006.
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. Merger accounting was adopted as the basis of consolidation.
On 6 March 2006, 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. The results of the companies have been consolidated using the purchase method.
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. The results have been consolidated using the purchase method.
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. The results have been consolidated using the purchase method.
On 30 May 2008, the Company purchased 100% of the issued share capital of Deep Blue Developments Liegenschaftserschliessungs GmbH, a company registered in Austria. The results have been consolidated using the purchase method.
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 results have been consolidated using the purchase method.
On 1 March 2009, the Company acquired 50% of the issued share capital of Cubus Lux Projektiranje d.o.o., a company registered in Croatia. The Company has the power to exercise control over the entity's financial operating policies and as such it has been treated as a subsidiary and consolidated using the purchase method.
Group accounts consolidate the accounts of the Company and its subsidiary undertakings made up to 31 March 2010. 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.
Prior year adjustment - Property development income
With respect to the recognition of revenue and costs of the Olive Island Resort development and other real estate projects, the Company has now adopted (International Accounting Standard) IAS18 paragraph 14, agreements for the sale of goods. This replaces treatment previously recognised under IAS11, construction contracts. As a consequence the Company has chosen to apply IAS18 retrospectively and restated the Group's 2008 results.
The Company interprets the agreements with buyers as not being 'construction contracts' as defined by IAS11 but more appropriately as agreements for 'the sale of goods' as defined under IAS18. Under IAS18 the Company transfers to the buyer control and the risks and rewards of ownership of the real estate in its entirety at a single time (i.e. at completion and upon delivery). In this case, revenue is recognised only when the completed unit is delivered to the buyer.
The main argument for the treatment under IAS18 rather than IAS 11 is that the buyer is not
specifying the main elements of the structural design, as required by IAS11, but is simply choosing elements from a range of options specified by the Company.
The Company has reversed the recognition of income in respect of deposits taken resulting in £1,755,000 which are now being shown in Short term creditors, as advances, rather than revenue. In addition, the Company has reversed the £1,805,000 costs expensed in two of our wholly owned subsidiary companies, Duboko Plavetnilo Ugljan Projektant d.o.o. (£1,495,000) and Worldwide Leisure Housing LLC (£310,000) prior to acquisition by Cubus Lux Plc and thus accounted for as part of the fair value adjustment and negative goodwill calculation on consolidation. These are now carried forward in inventories.
|
| 2009 | 2009 | 2009 |
|
| As reported | Revised | Adjustment |
|
| £'000 | £'000 | £'000 |
| Balance sheet |
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| Current assets: |
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| Inventories - land held for redevelopment | 4,529 | 6,334 | 1,805 |
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| Current liabilities: |
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|
|
| Trade and other payables - advance | - | 1,755 | 1,755 |
| Profit and loss account - brought forward reserves |
923 |
973 |
50 |
EARNINGS PER SHARE
The loss per share of 18.99p (2009: loss 14.2p) has been calculated on the weighted average number of shares in issue during the year namely 18,773,207 (year ended 31 March 2009: 14,785,356) and losses of £3,565,000 (year ended 31 March 2009: loss £2,098,000).
The calculation of diluted losses per share of 18.99p (year ended 31 March 2009: loss 14.2p) is based on the loss on ordinary activities after taxation and the weighted average of 18,773,207 (2009: average of 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.
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 at Sutomišćica, on the island of Ugljan (more commonly referred to as Olive Island). Its hotel and resort development on Olive Island will see the commencement of construction in Q4 2010/11. These projects involve a 500-bed 4-star hotel and the provision of 431 villas and apartments, with accompanying shops, restaurants and bars.
Cubus Lux is currently awaiting the outcome of its tenders to develop other tourist facilities in this region of Croatia -involving two more marinas, golf courses and hotels.