19 Nov 2008 07:00
Cubus Lux plc ("Cubus Lux" or the "Company") Half- yearly Report
Cubus Lux plc, the Croatia-based leisure and tourism company, announces its half year results for the six months ended 30 September 2008.
Highlights:
- Turnover up 9% to ‚£963,000 (six months to 30 September 2007: ‚£886,000)
- Operating profit of ‚£967,000 (six months to 30 September 2007: ‚£341,000)
which includes negative goodwill of ‚£1,686,000 arising from the Tiha Uvala
acquisition. Excluding this negative goodwill, operating loss of ‚£719,000
- Earnings per share 1.6p, including the negative goodwill on the Tiha Uvala
acquisition. Loss per share of 10.0p excluding negative goodwill
- Acquisition of Hotel Sutomiscica project
- Annual contracts for more than 90% of marina berths
In September 2008 we purchased a hotel project on land adjoining our marina atSutomiscica. Our total purchase price will be HRK 9 million (approximately ‚£1million) which includes the project plus the leasehold on approximately 11,000square metres of coastal land for a period of 40 years. This project includesa 100 bed Hotel, a small apartment house, and conferencing and leisurefacilities. In addition we will receive a sea concession for moorings. Thisfacility will complement both the existing marina operation and the OliveIsland Resort, and we believe it will support a stand-alone business includingconferencing and training.
Commenting on the results, executive chairman Gerhard Huber said:
"The `Olive Island' project continues to be our main focus. This is the first of our large real estate developments and the realisation of the planned resort will provide a strong foundation for the Company's future development. In addition, we are pursuing opportunities in all our divisions.
We continue to focus on creating sustainable shareholder value, through a firm strategy of introducing profitable new projects with strong potential to fulfil that aim. We are well known and well positioned in both Croatia and its neighbouring countries and are able to compete effectively for a wide variety of projects. As a result, we look forward to the Company's future with excitement."
For further information please see www.cubuslux.com or contact:-
Steve McCannCubus Lux plc+385 (0)99 214 9636Simon Sacerdoti/Liam Murray, Nominated AdviserDowgate Capital Advisers Limited+44 (0)20 7492 4777Kealan Doyle/Nicholas Nicolaides, BrokerLewis Charles Securities Limited+44 (0)20 7456 9100Pam SpoonerCity Road Communications+44 (0) 20 7248 8010+44 (0)7858 477 747CHAIRMAN'S STATEMENT
I am pleased to present the results for the six months ended 30 September 2008.
Operations
The Group's three principle operating divisions are the casinos,the marina and the newly established resort management division. In addition,we have a general real estate business where we take up opportunities toinitiate commercial and residential developments. Our established divisions,the casinos and the Olive Island Marina have now matured and are both poisedto move into periods of expansion.Our new division, including the Olive Island Resort, is progressingon plan in terms of valuation and financial projections. There has been someslippage in timing as a direct result of the slowdown in the pipeline of bankfunding for construction - a factor beyond your Company's control however, webelieve the difficulties within the banking sector are easing, so that theimpact will be only to push the start of our construction into the firstquarter of 2009 from the planned last quarter of 2008.
Cubus Lux d.o.o. - the gaming company
As reported in the 2008 Report and Accounts we have added to ourPula casino operation in Istria with a seasonal casino in Selce, south ofRijeka. Both of the casinos are located in hotels. For the first time we didnot achieve budget at Pula as the hotel experienced a reduced number ofvisitors, partly as the result of a refurbishment programme and partly becauseof economic factors. As a consequence we have shifted our emphasis andinvestment from holiday makers towards promoting the casino locally and fromearly September have started to see improvements which we will pursue over thecoming months. Selce started well but, due to only three months operation andstart up costs, the division as a whole returned a small loss of ¢â€š¬30,000.
We will continue to explore opportunities during the continued redevelopment of Hotel Histria and in addition, we are close to finalising negotiations to open a further casino in Split.
Plava Vala d.o.o. - the marina company
The marina in Sutomiscica, Ugljan, near Zadar, has now completedits first full year in its phase 1 status. During this last 12 monthsmanagement was able to return an operating profit, and towards the end of thehalf year period achieved a better than expected annual contracted occupancylevel of more than 90%. The benefits of this will continue to be seen over thecurrent financial period. The next phase of expansion will include a 50%increase in berths, leisure facilities and a repair area with travel lift.These additions will consolidate the profitability of the division. We havehad a successful year with regattas and are establishing our marina as arenowned location for charter boats.
The marina management continues to look for expansion opportunities and is exploring possible acquisitions of existing marinas as well as tendering for new projects.
Olive Island Resort companies
After the acquisition of the resort project on Ugljan we areprogressing well with the development. We have agreed the land purchase, arein the final stages of securing the necessary bank finance and expect to breakground by the end of the first quarter of 2009. This project includes a fourstar hotel with 500 beds to be operated by Sol Melia, a marina, 126 villas and305 apartments. We believe that this project will be one of the first greenfield coastal resorts to open in Croatia.
Tiha Uvala d.o.o. - Hotel Sutomiscica
On 30 September 2008, the Company acquired Tiha Uvala d.o.o. (translated as "Acquired Bay Ltd") for a consideration of HRK 9 million payable in two instalments in cash (approximately ‚£1,000,000). The vendor is Heres d.o.o. who will also be retained as constructor for the project.
The consideration is payable in two tranches. The first tranche ofthe consideration comprises 50 per cent of the purchase price and is payableon receipt of building permits, which is expected to take place in the firstquarter of 2009. The second tranche is payable on completion of construction.Tiha Uvala d.o.o. holds (1) a long term lease on 4,416 squaremetres of coastal land at Sutomiscica, Ugljan, Croatia, (2) a concession overapproximately 6,000 square metres of adjoining coastal land and (3) a 15 metresea concession along 250 metres of sea shore for moorings.Approvals have been granted from the local council to build a 3storey, 40 room, 4+ stars hotel with restaurant, shops, conferencing facilityand underground parking. In addition, approval has been granted for thebuilding of an adjoining luxury apartment block of 9 apartments. Heres d.o.o.will undertake the construction.
The concession land will be used for a cafe-bar with outside seating, tennis courts and a park.
The whole site adjoins the Groups current Olive Island Marina in the bay of Sutomiscica. Construction is anticipated to commence in January 2009 and is envisaged to be completed in approximately 18-24 months. Heres doo will be the constructor and remain a partner for up to three years.
Financial:
For the six months ended 30 September 2008 the Company reports revenues of ‚£963,000 and a pre-tax profit of ‚£229,000.
Earnings per share amounted to 1.6p.
Plans for the future:
The `Olive Island' project continues to be our main focus. This is the first of our large real estate developments and the realisation of the planned resort will provide a strong foundation for the Company's future development. In addition, we are pursuing opportunities in all our divisions.
We continue to focus on creating sustainable shareholder value,through a firm strategy of introducing profitable new projects with strongpotential to fulfil that aim. We are well known and well positioned in bothCroatia and its neighbouring countries and are able to compete effectively fora wide variety of projects. As a result, we look forward to the Company'sfuture with excitement.GERHARD HUBERChairmanExecutive DirectorGROUP INCOME STATEMENT Six months to Six months to Year ended 30 September 30 September 31 March 2008 2007 2008 Unaudited Unaudited Audited Note ‚£'000 ‚£'000 ‚£'000 REVENUE 2 963 886 3,078 Cost of sales (106) (113) (202) ------------- ------------- -------------GROSS PROFIT 857 773 2,876 Administrative expenses (1,576) (1,206) (2,399)Other income 4 1,686 774 4,693 ------------- ------------- -------------OPERATING PROFIT 967 341 5,170 Net finance expense (738) (97) (290) -------------- -------------- -------------PROFIT ON ORDINARYACTIVITIES BEFORE TAXATION 229 244 4,880 Tax on ordinary activities 3 (3) (4) (9) ------------- ------------- -------------PROFIT FOR THE PERIOD 226 240 4,871 ====== ====== ====== EARNINGS PER SHARE Basic 7 1.6p 2.5p 47.8p ====== ====== ======Diluted 7 1.5p 2.3p 45.4p ====== ====== ======GROUP BALANCE SHEET As at 30 As at 30 As at 31 March September 2008 September 2008 2007 Unaudited Unaudited Audited Note ‚£'000 ‚£'000 ‚£'000FIXED ASSETSNon-current assetsIntangible assets 5 39,093 5,372 35,902Goodwill 689 - 940Property, plant and equipment 6 4,748 4,236 4,702 ------------- ------------- -------------- 44,530 9,608 41,544 ------------- ------------- --------------CURRENT ASSETSInventories 3,310 2,187 3,172Trade and other receivables 2,098 1,929 2,384Cash at bank 2,251 1,068 2,372 ------------- ------------- ------------ 7,659 5,184 7,928 ------------- ------------- --------------TOTAL ASSETS 52,189 14,792 49,472 ====== ====== =======EQUITYCapital and reserves attributableto the Company's equityshareholdersCalled up share capital 1,463 977 1,463Share premium account 16,028 8,711 16,028Merger reserve 347 347 347
Retained earnings and translation 3,377 (1,296)
3,120reserves ------------- ------------- --------------TOTAL EQUITY 21,215 8,739 20,958 -------------- -------------- --------------LIABILITIESNon-current liabilitiesDeferred tax liabilities 7,819 290 7,180Loans 16,161 2,999 5,053
Amounts due under finance leases 24 3
38 ------------- ------------- ------------- 24,004 3,292 12,271 -------------- -------------- -------------Current liabilitiesTrade and other payables and 6,228 2,600 5,433deferred incomeLoans 737 156 10,805
Amounts due under finance leases 5 5
5 ------------- ------------- -------------- 6,970 2,761 16,243 -------------- -------------- --------------TOTAL LIABILITIES 30,974 6,053 28,514 -------------- -------------- --------------TOTAL EQUITY AND LIABILITIES 52,189 14,792 49,472 ======= ====== =======GROUP CASH FLOW STATEMENT Six months to Six months to Year ended 31 30 September 30 September March 2008 2007 2008 Unaudited Unaudited Audited ‚£'000 ‚£'000 ‚£'000 Cash flows from operating activitiesProfit before taxation 229 240 4,880Adjustments for:Net finance expense (738) 97 (290)Net interest paid 738 (97) 290
Profit on disposal of fixed assets - -
26Exchange rate difference 8 - 578Share based payments 110 102 222
Depreciation and amortisation 167 74 256Negative goodwill written back to income (1,686) -
(3,739)
statement
Movement in trade and other receivables 289 (979) 373Movement in inventories (138) (2,146)
(2,571)
Movement in trade and other payables 163 2,011 957 -------------- --------------
---------------
Cash flow from operating activities (858) (698)
982Taxation paid (3) - (9) -------------- -------------- ---------------
Net cash outflow from operating activities (861) (698) 973 -------------- --------------
---------------
Cash flow from investing activitiesPurchase of property, plant and equipment (111) (836)
(982)
and intangiblesProceeds from sale of property 16 - 66Purchase of subsidiaries - -
(795)
Cash acquired with subsidiary - - 18 -------------- --------------
---------------
Net cash outflow from investing activities (95) (836)
(1,693)
-------------- --------------
---------------
Cash flows from financing activitiesIssue of shares - 1,568
2,341
Capital element of finance lease repaid - (5) -Net loans undertaken less repayments 1,018 (105) 499 -------------- --------------
---------------
Cash inflow from financing activities 1,018 1,458
2,840
-------------- --------------
---------------
Cash and cash equivalents at beginning of 2,372 1,375
1,375
period
Net cash inflow/(outflow) from all 62 (76)
2,120
activities
Non-cash movement arising on foreign (183) (231)
(1,123)
currency translation
--------------- --------------
---------------
Cash and cash equivalents at end of period 2,251 1,068
2,372
======= ======
======
Cash and cash equivalents compriseCash (excluding overdrafts) and cash 2,251 1,068
2,372equivalents ======= ====== ======
NOTES TO THE GROUP CASH FLOW STATEMENT
1. ACQUISITION OF SUBSIDIARIES
a) On 30 May 2008 the company purchased 100% of the issued share capital of Deep Blue Development Liegenschaftserschliessungs GmbH.
The shares in Deep Blue Development Liegenschaftserschliessungs GmbH. were acquired for ‚£Nil consideration.
‚£'000Net assets acquired:At book value:Tangible fixed assets 14Creditors (3)Loans (14) --------- (3)Goodwill 3 ---------Consideration - =====b) On 30 September 2008, the company purchased 100% of the issued sharecapital of Tiha Uvala d.o.o. a company registered in Croatia. The purchaseprice includes an initial payment of HRK 4.5 million payable on receipt of allbuilding permits and a further HRK 4.5 million payable on completion of theconstruction of a Hotel. The respective timings of the payments are 6 monthsand 2 years.Net assets acquired: ‚£'000 At fair value:Intangible fixed assets (note 5) 3,191Deferred tax provision (638) ------------- 2,553 -------------Debtors 2 ------------- 2 -------------Total 2,555
Negative goodwill-written back to the income statement (1,686) in `other income'
------------- 869 -------------The negative goodwill has arisen as the Group receiveda bargain purchase. Satisfied by:Deferred consideration 869 ======
GROUP STATEMENT OF CHANGES IN EQUITY
Merger Retained Translation Share Capital Share Premium Reserve Earnings Reserve Total ‚£'000 ‚£'000 ‚£'000 ‚£'000 ‚£'000 ‚£'000 At 31 March 2007 881 7,239 347 (1,574) 9 6,902Share based payments - - - 222 - 222Total recognised incomeandexpenses - - - 4,871 (408) 4,463Issue of shares (net of - -costs) 141 2,199 - 2,340Acquisition ofsubsidiaries(net of costs) 441 6,590 - - - 7,031 ------------- -------------- ------------- -------------- ---------- --------------At 31 March 2008 1,463 16,028 347 3,519 (399) 20,958 Share based payments - - - 110 - 110Total recognised incomeandexpenses - - - 226 (79) 147 ------------- -------------- ------------- -------------- ---------- --------------At 30 September 2008 1,463 16,028 347 3,855 (478) 21,215 ====== ======= ====== ====== ====== =======NOTES1. ACCOUNTING POLICIES
The accounting policies, applied on a consistent basis in the preparation of the financial information, are as follows:
(a) Basis of Preparation
These half year 2008 interim consolidated financial statements of Cubus Lux Plc are for the six months ended 30 September 2008. The information included within this document has been prepared on the basis of the recognition and measurement requirements of IFRS standards, IAS standards and IFRIC interpretations in issue that are endorsed by the European Commission and effective at 19 November 2008.
The Group accounting policies are as set out in the March 2008 report and financial statements.
2. Business segment analysis
Period ended 30 September Property Resort2007: Casino Marina Central Total ‚£'000 ‚£'000 ‚£'000 ‚£'000 ‚£'000 ‚£'000RevenueExternal sales 689 197 - - - 886 ====== ====== ===== ======= ==== ======Profit/(loss)Segment operating 18 -profit/(loss) 147 (177) 353 341Net finance costs (97) -------------Profit before taxation 244 ======Assets and liabilitiesSegment assets 1,468 3,553 2,257 - 7,514 14,792Segment liabilities (271) (3,675) (1,700) - (407) (6,053) ------------ ------------- -------------- --------------- ------------- -------------Net assets/(liabilities) 1,197 (122) 557 - 7,107 8,739 ====== ====== ====== ======== ====== ======Year ended 31 March 2008: RevenueExternal sales 962 361 - 1,755 - 3,078 ======= ====== ====== ====== ====== =======Profit/(loss)Segment operating profit/(loss) 65 (229) 31 1,725 3,578 5,170Net finance costs (290) ------------Profit before taxation 4,880 ======Assets and liabilitiesSegment assets 1,461 3,904 2,616 2,449 39,042 49,472Segment liabilities (344) (4,147) (1,996) (1,993) (20,034) (28,514) -------------- ------------- -------------- ------------- --------------- -------------Net assets/(liabilities) 1,117 (243) 620 456 19,008 20,958 ======= ====== ====== ====== ======= ====== Casino Marina Property Resort Central Total ‚£'000 ‚£'000 ‚£'000 ‚£'000 ‚£'000 ‚£'000Period ended 30 September2008: RevenueExternal sales 533 387 - 43 - 963 ====== ====== ===== ======= ==== ======Profit/(loss)Segment operating (loss)/profit (30) 2 12 (67) 1,050 967Net finance costs (738) -------------Profit before taxation 229 ======Assets and liabilitiesSegment assets 1,421 4,012 2,666 2,566 41,524 52,189Segment liabilities (304) (4,421) (2,039) (2,093) (22,117) (30,974) ------------ ------------- -------------- --------------- ------------- -------------Net assets/(liabilities) 1,117 (409) 627 473 19,407 21,215 ====== ====== ====== ======== ====== ======3. TaxationThe Company is controlled and managed by its Board in Croatia. Accordingly,the interaction of UK domestic tax rules and the taxation agreement enteredinto between the U.K. and Croatia operate so as to treat the Company as solelyresident for tax purposes in Croatia. The Company undertakes no businessactivity in the UK such as might result in a Permanent Establishment for taxpurposes and accordingly has no liability to UK corporation tax.
4. Other income
Other income of ‚£1,686,000 in the period ended 30 September 2008, relates to negative goodwill arising from the acquisition of Tiha Uvala d.o.o. and subsequent valuation of the intangible fixed assets acquired.
In compliance with the IFRS, the company obtained an external valuation by Brand Finance plc and the intangible assets which were valued at ‚£3,191,000 (see note 1b to the group cash flow).
5. Intangible fixed assets
Marina Licence Olive Olive Olive Olive Olive Olive Olive Sutomiscica: Island Island Island Island Island Island Island Right to resort: resort: resort: hotel: hotel: hotel hotel: Develop Right to Brand Total Right Brand Management Develop to Contract Total Total Develop ‚£'000 ‚£'000 ‚£'000 ‚£'000 ‚£'000 ‚£'000 ‚£'000 ‚£'000 ‚£'000 ‚£'000
Cost or valuation At 31 March 5,372 - - - - - - - - 5,3722007Acquired on - 26,382 121 26,503 2,187 110 1,730 4,027 - 30,530acquisition ---- ---- ---- ---- ---- ---- ---- ---- ---- ----At 31 March 5,372 26,382 121 26,503 2,187 110 1,730 4,027 - 35,9022008 Acquired on - - - - - - - - 3,191 3,191acquisition ---- ---- ---- ---- ---- ---- ---- ---- ---- ----At 30 5,372 26,382 121 26,503 2,187 110 1,730 4,027 3,191 39,093September2008 === === === === === === === === === ===6. Tangible fixed assets Casino Marina Resort Casino Marina Central Resort Total leasehold leasehold leasehold assets assets assets premises premises assets ‚£'000 ‚£'000 ‚£'000 ‚£'000 ‚£'000 ‚£'000 ‚£'000 ‚£'000Cost or valuationAt 31 March 2007 59 2,516 - 1,002 146 - - 3,723Additions 26 586 - 251 149 1 - 1,013Acquired on - - 3 - - - 10 13acquisitionDisposals - (44) - (47) (42) - - (133)Exchange rate movements 14 549 - 218 41 - - 822 ---- ---- ---- ---- ---- ---- ---- ----At 31 March 2008 99 3,607 3 1,424 294 1 10 5,438 ---- ---- ---- ---- ---- ---- ---- ---- Additions 8 91 - 21 5 - - 125Acquired on - - - - - - 17 17acquisitionDisposals - - - (23) - - - (23)Exchange rate movements 2 74 - 29 6 - (3) 108 ---- ---- ---- ---- ---- ---- ---- ----At 30 September 109 3,772 3 1,451 305 1 24 5,6652008 ---- ---- ---- ---- ---- ---- ---- ---- DepreciationAt 31 March 2007 35 2 - 349 22 - - 408Acquired on - - 2 - - - 4 6acquisitionCharge for the year 16 86 - 98 56 - - 256Disposals - - - (27) (14) - - (41)Exchange rate 9 12 - 76 10 - - 107movements ---- ---- ---- ---- ---- ---- ---- ----At 31 March 2008 60 100 2 496 74 - 4 736 ---- ---- ---- ---- ---- ---- ---- ---- Charge for the 8 59 - 70 32 - 1 170periodDisposals - - - (7) - - - (7)Exchange rate 1 4 - 11 2 - - 18movements ---- ---- ---- ---- ---- ---- ---- ----At 30 September 69 163 2 570 108 - 5 9172008 ---- ---- ---- ---- ---- ---- ---- ---- Net Book ValueAt 31 March 2008 39 3,507 1 928 220 1 6 4,702 ==== ==== ==== ==== ==== ==== ==== ====At 30 September 40 3,609 1 881 197 1 19 4,7482008 ==== ==== ==== ==== ==== ==== ==== ====7. Earnings per shareThe earnings per share of 1.6p (Year ended 31 March 2008:earnings 47.8p; six months ended 30 September 2007: earnings 2.5p) has beencalculated on the weighted average number of shares in issue during the yearnamely 14,614,365 (year ended 31 March 2008: 10,181,002; six months ended 30September 2007: 9,549,284) and profits of ‚£226,450 (year ended 31 March 2008:profit ‚£4,871,401; six months ended 30 September 2007: profit ‚£240,431).The calculation of diluted earnings per share of 1.5p (yearended 31 March 2008: earnings 45.4p; six months ended 30 June 2007: earnings2.3p) is based on the loss on ordinary activities after taxation and thediluted weighted average of 15,481,865 (year ended 31 March 2008: 10,724,816;six months ended 30 June 2007: 10,249,284) shares.
At the Annual General Meeting of 6th August 2008 the company's ordinary shares of ‚£0.01 each were consolidated by the factor 10:1 into ordinary shares of ‚£0.1 each.
The previously reported comparative earnings per share of 30 September 2007 (Basic 0.25p, diluted 0.23p) and 31 March 2008 (Basic 4.78p, diluted 4.54p) have been restated.
INDEPENDENT REVIEW REPORT TO CUBUS LUX PLC
Introduction
We have been engaged by the company to review the group financial statementsin the interim report for the six months ended 30 September 2008 whichcomprises the Group Income Statement, the Group Balance Sheet, the Group CashFlow Statement, the Group Statement of Changes in Equity and relatedexplanatory notes.
We have read the other information contained in the interim report and considered whether it contains any apparent misstatements or material inconsistencies with the information in the group financial statements.
Directors' responsibilities
The interim report, including the financial information contained therein, isthe responsibility of and has been approved by the directors. The directorsare responsible for preparing the interim report in accordance with the rulesof the London Stock Exchange for companies trading securities on theAlternative Investment Market which require that the interim report bepresented and prepared in a form consistent with that which will be adopted inthe company's annual accounts having regard to the accounting standardsapplicable to such annual accounts.
Our responsibility
Our responsibility is to express to the Group a conclusion on the group financial statements in the interim report based on our review.
Our report has been prepared in accordance with the terms of our engagementand for no other purpose. No person is entitled to rely on this report unlesssuch a person is a person entitled to rely upon this report by virtue of andfor the purpose of our terms of engagement or has been expressly authorised todo so by our prior written consent. Save as above, we do not acceptresponsibility for this report to any other person or for any other purposeand we hereby expressly disclaim any and all such liability.
Scope of review
We conducted our review in accordance with International Standard on ReviewEngagements (UK and Ireland) 2410, "Review of Interim Financial InformationPerformed by the Independent Auditor of the Entity", issued by the AuditingPractices Board for use in the United Kingdom. A review of interim financialinformation consists of making enquiries, primarily of persons responsible forfinancial and accounting matters, and applying analytical and other reviewprocedures. A review is substantially less in scope than an audit conducted inaccordance with International Standards on Auditing (UK and Ireland) andconsequently does not enable us to obtain assurance that we would become awareof all significant matters that might be identified in an audit. Accordingly,we do not express an audit opinion.
Conclusion
Based on our review, nothing has come to our attention that causes us tobelieve that the group financial statements in the interim report for the sixmonths ended 30 September 2008 are not prepared, in all material respects, inaccordance with International Accounting Standard 34, as adopted by theEuropean Union, and the Disclosure and Transparency Rules of the UnitedKingdom's Financial Services Authority.haysmacintyreChartered AccountantsRegistered AuditorsFairfax House15 Fulwood PlaceLondon WC1V 6AY18 November 2008
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