26 Nov 2007 07:00
Cubus Lux plc (the "Company") Half-yearly Report
Cubus Lux plc, the Croatia-based leisure and tourism company, announces its half year results for the six months ended 30 September 2007.
Highlights:
* Turnover up 171% to ‚£886,000 (six months to 30 June 2006: ‚£327,000)
* Pre-Tax Profit of ‚£244,000 (six months to 30 June 2006: reported loss ‚£
413,000*)
* Earnings per share 0.25p
* Proposed acquisition of Olive Island Resort
* 600 sq m expansion and upgrade for Casino Las Vegas, Pula
* Contracts for initial 125 berths at Sutomiscica marina
* ‚£774,000 profit earned on resale of apartment development project in Zadar
* the loss of ‚£413,000 reported for the six months to 30 June 2006 under UK GAAP, has been adjusted in these results to a ‚£1,103,000 profit due to a one-off licence revaluation necessitated by the conversion to IFRS
Gerhard Huber, Executive Chairman of Cubus Lux, commented:
"The initial step towards transforming our business into a leisure and development company is through the acquisition of the `Olive Island Resort' on the Dalmatian coast of Croatia. If successful, Cubus Lux will take itself to the next level of achieving its goal of becoming the pre-eminent tourist and leisure business in Croatia.
"In addition, we are pleased to report that we have an exciting pipeline of such projects and we are actively engaged in tendering for several additional developments. As a result, I view the company's future with optimism."
For further information please contact:
Cubus Lux plcGerhard Huber, Chairman+44 (0)7900 683 683
City Financial Associates Limited, Nominated Adviser Liam Murray/Simon Sacerdoti +44 (0)20 7492 4777
Threadneedle Communications, Financial PRGraham Herring/Alex White+44 (0)20 7936 9605CHAIRMAN'S STATEMENT
I am pleased to present the results for the six months ended 30 September 2007.
Operations
Our two principle operations, the Istrian based casinos and Olive Island Marina, are both showing healthy improvements after an initial slow start to the year, partly caused by external factors which have now been resolved.
Cubus Lux d.o.o. - the gaming company:
Our main casino in Pula, Casino Las Vegas, is located in a hotel which was on the market and consequently received limited refurbishment and as a result, potential clients were deterred. This hotel has now been sold and the new owner has advised the Company of plans to improve the complex and raise the standards of accommodation. We have increased our floor space in Hotel Histria by approximately 600 square metres and have further improved our offering by bringing in gaming equipment from our former Medulin location.
Our casino operations had a strong half year having turned around the results of 2006 and reported a profit of ‚£147,000.
The second half of the year, which is generally quieter presents significant opportunities for us to expand our Junket business. We have a strong management team and expect to see continuing high numbers of visitors.
Plava Vala d.o.o. - the marina company:
Our marina in Sutomiscica, near Zadar is becoming a popular venue in Adriatic sailing, with a growing reputation for both our facilities and restaurant. We have already gained contracts for around 125 berths. This is in line with our expectations despite the fact that the marina was not officially opened and fully operational until May 2007 and the restaurant some weeks later in July 2007. This delay, caused primarily by the progress of the constructor, has resulted in us falling short of our targets for overnight transit business which resulted in a loss in this start up period. However, we are seeing continuous trading improvement and look forward to next year when we will report a full year of operation.
As an indication of our future prospects we have already organised 15 regattas at the marina in only a few months, from as far as Hungary, Czech Republic, Slovenia, Poland, Belgium and Italy. This compares very favourably with neighbouring marinas.
Cubus Lux Projektiranje d.o.o. - residential/commercial development:
Earlier in the year we purchased a land plot in Zadar close to the City centre. We developed a project to build 72 apartments and attracted an international bank to buy the commercial space. An offer arose to resell this project at a significant profit which we have now realised. The sale contributed to the ‚£ 353,000 profit of our Central division and in addition, under the terms of the sale, we will receive a further payment of a percentage of any profit arising on a sale of this property in the next two years. This was an excellent opportunity for us as we have several other projects due to commence and should enable our team to operate with greater focus.
Financial:
For the six months ended 30 September 2007, the Company reports revenues of ‚£ 886,000 and a pre-tax profit of ‚£244,000. In addition, Earnings per Share was 0.25p.
During this period the Company placed 9,570,000 shares at 16.275p per share in order to finance further expansion.
Plans for the future:
The initial step towards transforming our business into a leisure and development company is through the acquisition of the `Olive Island Resort' on the Dalmatian coast of Croatia. We have two option agreements which expire on 25 December 2007 and if successful we will develop a resort comprising 126 villas, 305 apartments as well as accompanying facilities, such as restaurants, shops, a marina and four star hotel with 500 beds.
The villas and apartments will be sold and the hotel operated by the Company in association with our partner Sol Melia.
Due diligence is close to completion and we will make an announcement in due course. We are now concentrating on raising the requisite financing.
We are focussed on creating sustainable shareholder value and are aware of our requirement to continually introduce new profitable projects. We are pleased to report that we have an exciting pipeline of such projects and we are actively engaged in tendering for several additional developments. As a result, I view the company's future with optimism.
GERHARD HUBERChairmanExecutive Director23 November 2007
GROUP INCOME STATEMENT FOR THE SIX MONTHS ENDED 30 SEPTEMBER 2007
Six months to Six months to 15 months to 30 September 30 June 2006 31 March 2007 2007 Unaudited Unaudited Audited Note ‚£'000 ‚£'000 ‚£'000 TURNOVER 2 886 327 1,017 Cost of sales (113) (41) (150) ------------- ------------- ------------- GROSS PROFIT 773 286 867 Administrative expenses (1,206) (618) (1,957) Other income 4 774 1,451 1,451 ------------- ------------- ------------- OPERATING PROFIT 341 1,119 361 Net finance expense (97) (16) (201) -------------- -------------- ------------- PROFIT ON ORDINARY ACTIVITIES BEFORE TAXATION 244 1,103 160 Tax on profit on ordinary 3,4 (4) (290) (290)activities ------------- ------------- ------------- RETAINED PROFIT/(LOSS) 240 813 (130) ====== ====== ====== EARNINGS/(LOSS) PER SHARE Basic 6 0.25p 1.49p (0.19)p ====== ====== ====== Diluted 6 0.23p 1.42p (0.18)p ====== ====== ======
GROUP BALANCE SHEET AT 30 SEPTEMBER 2007
As at 30 As at 30 June As at 31 September 2007 2006 March 2007 Unaudited Unaudited Audited ‚£'000 ‚£'000 ‚£'000 FIXED ASSETS Non-current assets Intangible assets 5,372 5,372 5,372 Property, plant and equipment 4,236 2,210 3,315 ------------- ------------- ------------ 9,608 7,582 8,687 ------------- ------------- ------------ CURRENT ASSETS Inventories 2,187 10 41 Trade and other receivables 1,929 546 950 Cash at bank 1,068 1,014 1,375 ------------- ------------- ------------ 5,184 1,570 2,366 ------------- ------------- ------------ TOTAL ASSETS 14,792 9,152 11,053 ====== ====== ====== EQUITY Capital and reserves attributable to the Company's equity shareholders Called up share capital 977 711 881 Share premium account 8,711 5,202 7,239 Merger reserve 347 347 347 Retained earnings and translation (1,296) (803) (1,565)reserves ------------- ------------- ------------ TOTAL EQUITY 8,739 5,457 6,902 -------------- -------------- ------------ LIABILITIES Non-current liabilities Deferred tax liabilities 290 290 290 Loans 2,999 2,172 3,138 Amounts due under finance leases 3 11 7 ------------- ------------- ------------ 3,292 2,473 3,435 -------------- -------------- ------------ Current liabilities Trade and other payables and deferred 2,600 738 589income Loans 156 480 122 Amounts due under finance leases 5 4 5 ------------- ------------- ------------ 2,761 1,222 716 -------------- -------------- ------------ TOTAL LIABILITIES 6,053 3,695 4,151 -------------- -------------- ------------ TOTAL EQUITY AND LIABILITIES 14,792 9,152 11,053 ======= ====== ======
GROUP CASH FLOW STATEMENT FOR THE SIX MONTHS ENDED 30 SEPTEMBER 2007
Six months to Six months to 15 months to 31 30 September 30 June 2006 March 2007 2007 Unaudited Unaudited Audited ‚£'000 ‚£'000 ‚£'000 Cash flows from operating activities Profit before taxation 240 1,103 160 Adjustments for: Net finance expense 97 16 201 Net interest paid (97) (16) (201) Profit on disposal of fixed assets - - 45 Share based payments 102 30 178 Depreciation and amortisation 74 74 148 Negative goodwill written back to - (1,451) (1,451)income statement Movement in trade and other (979) (154) (559)receivables Movement in inventories (2,146) - (31) Movement in trade and other payables 2,011 167 14 -------------- -------------- --------------- Net cash outflow from operating (698) (231) (1,496)activities Cash flow from investing activities Purchase of property, plant and (836) (1,132) (2,472)equipment and intangibles Cash acquired with subsidiary - 114 114 -------------- -------------- --------------- Net cash outflow from investing (836) (1,018) (2,358)activities Cash flows from financing activities Issue of shares 1,568 843 3,050 Capital element of finance lease (5) (4) (5)repaid Net loans received (105) 1,075 1,690 -------------- -------------- --------------- Cash inflow from financing activities 1,458 1,914 4,735 Cash and cash equivalents at 1,375 431 431beginning of period Net cash outflow from all activities (76) 665 881 Non-cash movement arising on foreign (231) (82) 63currency translation --------------- -------------- --------------- Cash and cash equivalents at end of 1,068 1,014 1,375period ======= ====== ====== Cash and cash equivalents comprise Cash (excluding overdrafts) and cash 1,068 1,014 1,375equivalents ======= ====== ======
NOTES TO THE REPORT AND FINANCIAL STATEMENTS FOR THE SIX MONTHS ENDED 30 SEPTEMBER 2007
1. ACCOUNTING POLICIES
The accounting policies, applied on a consistent basis in the preparation of the financial information, are as follows:
(a) Basis of Preparation
These half year 2007 interim consolidated financial statements of Cubus Lux Plc are for the six months ended 30 September 2007. The information included within this document has been prepared on the basis of the recognition and measurement requirements of IFRS standards, IAS standards and IFRIC interpretations in issue that are endorsed by the European Commission and effective at 23 November 2007.
In preparing these consolidated interim financial statements, management has amended certain accounting and valuation methods applied in the interim financial statements for the six months ended 30 June 2006 to comply with IFRS. The comparative figures in respect of the six months ended 30 June 2006 and the balance sheet at that date have been restated to reflect these adjustments. Reconciliations and descriptions of the effect of the transition of UK GAAP to IFRS are provided in note 7.
The Group accounting policies are as set out in the March 2007 report and financial statements.
2. BUSINESS SEGMENT ANALYSIS
The Group is currently organised into three operating divisions - the casinos, the marina and property. This is the basis on which the Group reports its primary segment information. Segmental information is presented below:
Period ended 30 June 2006: Casino Marina Central Total ‚£'000 ‚£'000 ‚£'000 ‚£'000 Revenue External sales 315 12 - 327 ====== ====== ==== ====== (Loss)/profit Segment operating loss (108) (30) 1,257 1,119 Net finance costs (16) ------------ Profit before taxation 1,103 ====== Assets and liabilities Segment assets 759 3,388 5,005 9,152 Segment liabilities (919) (2,604) (172) (3,695) ------------ ------------- ------------- ------------- Net (liabilities)/assets (160) 784 4,833 5,457 ======= ====== ====== ====== 15 months ended 31 March Casino Marina Central Total2007: ‚£'000 ‚£'000 ‚£'000 ‚£'000 Revenue External sales 973 44 - 1,017 ======= ====== ====== ======= (Loss)/profit Segment operating (loss)/ (196) (350) 907 361profit Net finance costs (201) ------------ Profit before taxation 160 ====== Assets and liabilities Segment assets 1,306 3,060 6,687 11,053 Segment liabilities (420) (3,286) (445) (4,151) -------------- ------------ ------------- ------------- Net assets/(liabilities) 886 (226) 6,242 6,902 ======= ====== ====== ======Period ended 30 September Casino Marina Property Central Total2007: ‚£'000 ‚£'000 ‚£'000 ‚£'000 ‚£'000 Revenue External sales 689 197 - - 886 ====== ====== ====== ====== ====== Profit/(loss) Segment operating profit/ 147 (177) 18 353 341(loss) Net finance costs (97) ------------- Profit before taxation 244 ====== Assets and liabilities Segment assets 1,468 3,553 2,257 7,514 14,792 Segment liabilities (271) (3,675) (1,700) (407) (6,053) --------------- ------------ ------------ ------------- ------------- Net assets/(liabilities) 1,197 (122) 557 7,107 8,739 ======= ====== ====== ====== ======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 ‚£774,000 in the period ended 30 September 2007, relates to the profit on sale on a plot of land purchased earlier in the year which was further developed by the Group and resold.
On 6 March 2006, the company purchased the entire issued share capital of Plava Vala d.o.o., a company registered in Croatia for a consideration of 35,000,000 ordinary shares of ‚£0.01 each valued at ‚£0.10 each. In accordance with IFRS 3, the company obtained an external valuation by Brand Finance Plc of the marina licences (not capitalised in the balance sheet) acquired with Plava Vala d.o.o. which were valued at ‚£5,372,000 and hence the fair value of Plava Vala d.o.o.'s assets was ‚£4,951,000 creating negative goodwill of ‚£1,451,000 which was been credited to the income statement in the comparative numbers. A deferred tax liability of ‚£290,000 against this profit has been provided for.
5. RECONCILIATION OF CLOSING EQUITY
Share Share Merger Retained Translation Total capital premium reserve earnings reserve ‚£'000 ‚£'000 ‚£'000 ‚£'000 ‚£'000 ‚£'000 As at 1 April 2007 881 7,239 347 (1,574) 9 6,902 Share based payment - - - 102 - 102 Total recognised - - - 240 (73) 167income and expense Shares issued in the 96 1,472 - - - 1,568period ----------- ----------- ----------- ----------- ----------- ----------- At 30 September 2007 977 8,711 347 (1,232) (64) 8,739 ======== ======== ======== ========= ========= ========
6. EARNINGS/(LOSS) PER SHARE
The earnings per share of 0.25p (15 months ended 31 March 2007: loss 0.19p; six months ended 30 June 2006: earnings 1.49p) has been calculated on the weighted average number of shares in issue during the year namely 95,492,846 (15 months ended 31 March 2007: 68,681,402; six months ended 30 June 2006: 54,515,537) and losses of ‚£240,431 (15 months ended 31 March 2007: losses ‚£130,013; six months ended 30 June 2006: profit ‚£813,045).
The calculation of diluted earnings per share of 0.23p (15 months ended 31 March 2007: loss 0.18p; six months ended 30 June 2006: earnings 1.42p) is based on the loss on ordinary activities after taxation and the diluted weighted average of 102,492,846 (15 months ended 31 March 2007: 73,896,786; six months ended 30 June 2006: 56,977,075) shares.
7. COMPARATIVE DATA RESTATED IN ACCORDANCE WITH THE TRANSITION TO IFRS
To comply with the requirements of reporting the first set of interim results following transition to IFRS, a reconciliation of the loss under UK GAAP for the six months to June 2006 to the expenses under IFRS for the six months to 30 June 2006 is set out on pages 9 to 10. A detailed analysis of these adjustments and a summary of the differences between UK GAAP and IFRS that led to the adjustments are given on pages 9 to 10 of this report.
As the report and financial statements for the 15 months ended 31 March 2007 were reported under IFRS, further reconciliation are not required and the remaining requirements of IFRS 1 "First time adoption of International Financial Reporting Standards" can be seen in that report.
Group income statement for the six months ended 30 June 2006
UK GAAP Total IFRS IFRS Adjustments ‚£'000 ‚£'000 ‚£'000 TURNOVER 327 - 327 Cost of sales (41) - (41) ------------- ------------- ------------- GROSS PROFIT 286 - 286 Administrative expenses (683) 65 (618) Other income - 1,451 1,451 ------------- ------------- ------------- OPERATING (LOSS)/PROFIT (397) 1,516 1,119 Net finance expense (16) - (16) -------------- -------------- ------------- (LOSS)/PROFIT ON ORDINARY ACTIVITIES BEFORE TAXATION (413) 1,516 1,103 Tax on loss on ordinary activities - (290) (290) ------------- ------------- ------------- (LOSS)/PROFIT FOR THE YEAR (413) 1,226 813 ====== ====== ====== (Loss)/earnings per share Basic (0.75)p 2.24p 1.49p ====== ====== ====== Diluted (0.72)p 2.14p 1.42p ====== ====== ======
A summary of the principal differences between UK GAAP and IFRS as applicable to Cubus Lux Plc is as follows:-
a) Purchase of Plava Vala d.o.o.
On 6 March 2006, the company purchased the entire issued share capital of Plava Vala d.o.o., a company registered in Croatia for a consideration of 35,000,000 ordinary shares of ‚£0.01 each valued at ‚£0.10 each. Under UK GAAP, the difference between the net liabilities of ‚£421,000 and the cost of acquisition of ‚£3,500,000 was capitalised as goodwill of ‚£3,921,000 and amortised over 20 years.
In accordance with IFRS 3, the company obtained an external valuation by Brand Finance Plc of the marina licences (not capitalised in the balance sheet) acquired with Plava Vala d.o.o. which were valued at ‚£5,372,000 and hence the fair value of Plava Vala d.o.o.'s assets was ‚£4,951,000 creating negative goodwill of ‚£1,451,000 which has been credited to the profit in the period. A deferred tax liability of ‚£290,000 against this profit has been provided for.
Amortisation of ‚£65,000 previously charged to the profit and loss account, under UK GAAP, has been reversed in accordance with IFRS.
Group balance sheet as at 30 June 2006
UK GAAP Total IFRS IFRS adjustments ‚£'000 ‚£'000 ‚£'000 ASSETS Non-current assets Intangible assets 3,856 1,516 5,372 Property, plant and equipment 2,210 - 2,210 ------------- ------------- ------------ 6,066 1,516 7,582 Current assets Inventories 10 - 10 Trade and other receivables 546 - 546 Cash and cash equivalents 1,014 - 1,014 ------------- ------------- ------------ 1,570 - 1,570 ------------- ------------- ------------ Total assets 7,636 1,516 9,152 ====== ====== ====== EQUITY Capital and reserves attributable to the Company's equity shareholders Called up share capital 711 - 711 Share premium account 5,202 - 5,202 Merger reserve 347 - 347 Retained earnings and translation (2,029) 1,226 (803)reserves ------------- ------------- ------------ Total equity 4,231 1,226 5,457 ------------- ------------- ------------ LIABILITIES Non-current liabilities Deferred tax liabilities - 290 290 Loans 2,172 - 2,172 Amounts due under finance leases 11 - 11 ------------- ------------- ------------ 2,183 290 2,473 -------------- --------------- ------------ Current liabilities Trade and other payables and deferred 738 - 738income Loans 480 - 480 Amounts due under finance leases 4 - 4 ------------- ------------- ------------ 1,222 - 1,222 -------------- --------------- ------------ TOTAL LIABILITIES 3,405 290 3,695 -------------- --------------- ------------ TOTAL EQUITY AND LIABILITIES 7,636 1,516 9,152 ====== ======= ======
INDEPENDENT REVIEW REPORT TO CUBUS LUX PLC
We have been instructed by the Company to review the financial information for the six months ended 30 September 2007, which comprise the Group Income Statement, the Group Balance Sheet, the Group Cash Flow statement and the 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 financial information.
This report is made solely to the company in accordance with guidance contained in Bulletin 1999/4 `Review of interim financial information' issued by the Auditing Practices Board. To the fullest extent permitted by law, we do not accept or assume responsibility to anyone other than the company, for our work, for this report, or for the conclusions we have formed.
Respective responsibilities of directors
The interim report, including the financial statements contained therein, is the responsibility of, and has been approved by the directors. The directors are responsible for preparing the interim report in accordance with the AIM Rules of the London Stock Exchange which require that the accounting policies and presentation applied to the interim figures should be consistent with those applied in preparing the preceding annual accounts except where any changes, and the reasons for them are disclosed.
Review work performed
We conducted our review in accordance with guidance contained in Bulletin 1999/ 4 issued by the Auditing Practices Board. A review consists principally of making enquiries of management and applying analytical procedures to the financial information and underlying financial data and based thereon, assessing whether the accounting policies and presentation have been consistently applied and adequately disclosed. A review excludes audit procedures such as tests of controls and verification of assets, liabilities and transactions. It is substantially less in scope than an audit performed in accordance with Auditing Standards and therefore provides a lower level of assurance than an audit. Accordingly we do not express an audit opinion on the financial information.
Review conclusion
On the basis of our review we are not aware of any material modifications thatshould be made to the financial information as presented for the six monthsended 30 September 2007.haysmacintyre Fairfax House Chartered Accountants 15 Fulwood Place Registered Auditors London WC1V 6AY 23 November 2007
CUBUS LUX PLC