22 Dec 2009 07:00
Cubus Lux plc ("the Company" or "the Group") Half-yearly Report for the Six Months to 30 September 2009
Cubus Lux plc, the operator and developer of premier tourism and leisure facilities in Croatia, announces its results for the half year ended 30th September 2009.
KEY HIGHLIGHTS
Revenues: 965,000 versus 963,000 in 2008
Operating Profit/(Loss): ( 602,000) versus loss of 719,000* in 2008
Marinas: Olive Island Marina contributes 46,000 trading profit ( 2,000 2008),has full waiting list and plans to extend number of berths by 50%. Six otherpotential Marina investment opportunities identified.Commercial/Residential Real Estate property developments: Zadar `Milk Factory'site under construction to provide 74 apartments and five levels of commercialspace; excavation to provide two levels of underground parking completed, andon schedule for project to complete in early 2011.Casinos: profit from operations reduced to 9,000 at trading level as a resultof low hotel occupancy and impact on tourist spending from economic downturn -signs of improvement post period end.
Major Leisure/ Tourism Projects in Croatia and Montenegro continue progress:
1) Olive Island Resort, Croatia, construction financing plans close to resolution;
2) Valdanos, Montenegro, final contract negotiations expected to complete in January 2010, when detailed planning can commence.
*excluding 1.686 million of negative goodwill
The full report, and further information, is available from the Company's website, www.cubuslux.com.
Steve McCannCubus Lux plc+44 (0)7787 183184Luke Cairns / Jo Turner, Nominated AdviserAstaire Securities plc+44 (0)20 7448 4400Claire Louise Noyce/Stephen Austin, BrokerHybridan LLP+44 (0)20 3159 5085Pam 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 2009.
Operations
We continue to pursue our strategy of creating value in leisure-related andgeneral real estate projects in Croatia and neighbouring countries. Highquality development opportunities exist along the Adriatic coast, and the Boardretains confidence in the long-term attractions and potential of this part ofsouthern Europe.
Nevertheless, the effects of the wider economic slowdown have been apparent throughout the six months to the end of September, and indeed throughout 2009.
Cubus Lux d.o.o. - Casinos
Although visitor numbers in Croatia held up well in the main holiday season,the proportion of `short breaks' rose, leaving hotel occupancy averages lowerfor the year, and spending by visitors appears also to have fallen. Trading atour casinos was impacted by these symptoms of the recession, resulting insignificantly reduced profits in the six months. However, we have already begunto see signs of an improvement in economic conditions and remain confident thatthe casinos will bounce back as tourism recovers.
Plava Vala d.o.o. - Marina
In contrast, tourist activity for marinas - where high quality facilities arein short supply - has remained robust, and we are experiencing heavy demand forberths at our Olive Island location. As a result, we plan to extend our marinathere by 50% - an extra 100 berths - and are actively looking for newinvestments for this segment of the Group. A total of six prospectiveopportunities have so far been identified.
Real estate
Our small and medium scale commercial and residential property developmentscontinue to progress, with our `Molatska' site in Zadar on schedule to completein early 2011. Having removed 25,000 cubic metres of rock and earth to allowfor two levels of underground parking, foundations for the complex arecurrently being put in place. Pre-selling of the 74 apartments and ground floorretail/office space is expected to get underway in Q1 2010.
Credit market conditions for our large-scale projects continue to be restrictive. However, financial conditions are improving and our own negotiations in regard to the Olive Island Resort are making significant progress. Sufficient financing was arranged in time to meet all stage payments so far and we are in the process of finalising a full package to secure the full financing of the construction costs.
Our 3.4 million sq metre project in Montenegro - `Valdanos' - is also progressing satisfactorily. Final contracts are expected to be agreed in early 2010, at which point detailed planning for the site can commence.
In addition to the above major projects other opportunities are being reviewed to further strengthen the Group. Further information will be provided as we progress.
Whilst the first half of our year has not been easy, the Board remains confident of fulfilling its vision for the future and the Group's leading role in developing tourism and leisure in the region.
Financial:
For the six months ended 30 September 2009 the Company reports revenues of 965,000 and a pre-tax loss of 599,000.
Loss per share amounted to 3.2p.
The Company further issued 1,060,000 shares at 20p during the half year.
Plans for the future:
As the first of our `resort' projects, the `Olive Island' project continues to be our main focus. This resort along with the extensive accompanying real estate development is providing a strong foundation for the Group's future development. In addition, we are strongly pursuing other projects in all divisions of the Group.
The Board continues to focus on creating sustainable shareholder value, througha firm strategy of introducing and developing profitable new projects. TheGroup is well known and well positioned in both Croatia and now in Montenegroand is able to compete effectively for a wide variety of projects. As a result,we look forward to the Group's future with excitement.GERHARD HUBERChairmanExecutive Director22 December 2009
INDEPENDENT REVIEW REPORT TO CUBUS LUX PLC
We have been engaged by the Company to review the condensed set of financialstatements in the interim report for the six months ended 30 September 2009which comprises the consolidated income statement, consolidated interim balancesheet, consolidated interim statement of changes in shareholders' equity,consolidated interim cash flow statement, and related notes. We have read theother information contained in the interim report and considered whether itcontains any apparent misstatements or material inconsistencies with theinformation in the condensed set of financial statements.
Directors' Responsibilities
The interim report is the responsibility of, and has been approved by, the directors. The directors are responsible for preparing the interim report in accordance with the AIM Rules. The condensed set of financial statements included in this interim report has been prepared in accordance with International Accounting Standard 34, ``Interim Financial Reporting,'' as adopted by the European Union.
Our Responsibility
Our responsibility is to express to the Company a conclusion on the condensed set of financial statements in the interim report based on our review.
Our report has been prepared in accordance with the terms of our engagement toassist the company in meeting the requirements of the rules of the London StockExchange for companies trading securities on AIM and for no other purpose. Noperson is entitled to rely on this report unless such a person is a personentitled to rely on this report by virtue of and for the purpose of our termsof engagement or has been expressly authorised to do so by our prior consent.Save as above, we do not accept responsibility for this report to any otherperson or for any other purpose and we hereby expressly disclaim any and allsuch 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 condensed set of financial statements in the interim reportfor the six months ended 30 September 2009 is not prepared, in all materialrespects, in accordance with International Accounting Standard 34 as adopted bythe European Union.Going ConcernIn forming our opinion, which is not qualified, we have considered the adequacyof the disclosures made within the accounting policies concerning the Group'sability to continue as a going concern. The Group incurred a net loss of 602,000 during the period ended 30 September 2009 at the period end the Group'scurrent liabilities exceed its current assets by 10,631,000. This along withthe other matters explained in note 1 to the condensed consolidated interimfinancial statements, indicates the existence of a material uncertainty whichmay cast significant doubt about the Group's ability to continue as a goingconcern. The directors are expecting to receive the Olive Island project loanscurrently being negotiated. The directors also have contingency plans in placewhich include negotiations to bring in a major investor on the Olive Islandproject level and a partner for the marina company. The condensed consolidatedinterim financial statements do not include the adjustments that would resultif the Group was unable to continue as a going concern.haysmacintyreChartered Accountants Fairfax HouseRegistered Auditors 15 Fulwood Place London22 December 2009 WC1V 6AYGROUP INCOME STATEMENT
FOR THE SIX MONTHS ENDED 30 SEPTEMBER 2009
Six months to Six months to Year ended 30 September 30 September 31 March 2009 2008 2009 Unaudited Unaudited Audited Note GBP'000 GBP'000 GBP'000 REVENUE 2 965 963 1,535 Cost of sales (106) (106) (181) ------------- ------------- ------------- GROSS PROFIT 859 857 1,354 Administrative expenses (827) (1,576) (2,758) Other income 4 190 1,686 826 ------------- ------------- ------------- OPERATING PROFIT/(LOSS) 222 967 (578) Net finance expense (821) (738) (1,520) -------------- -------------- ------------- (LOSS)/PROFIT ON ORDINARY ACTIVITIES BEFORE TAXATION (599) 229 (2,098) Tax on ordinary activities 3 (3) (3) - ------------- ------------- ------------- (LOSS)/PROFIT FOR THE PERIOD (602) 226 (2,098) ====== ====== ====== ATTRIBUTABLE TO: Equity holders of the company (585) 226 (2,098) Minority interest (17) - - ------------- ------------- ------------- (602) 226 (2,098) ====== ====== ====== EARNINGS PER SHARE Basic 5 (3.2)p 1.6p (14.2)p ====== ====== ====== Diluted 5 (3.2)p 1.5p (14.2)p ====== ====== ======GROUP BALANCE SHEETAT 30 SEPTEMBER 2009 As at 30 As at 30 As at 31 September 2009 September 2008 March 2009 Unaudited Unaudited Audited GBP'000 GBP'000 GBP'000 Non-current assets Intangible assets 39,093 39,093 39,093 Goodwill 1,576 689 1,575 Property, plant and equipment 5,077 4,748 5,147 -------------- -------------- -------------- 45,746 44,530 45,815 -------------- ------------- -------------- Current Assets Inventories 5,725 3,310 4,560 Trade and other receivables 974 2,098 710 Cash at bank 2,782 2,251 3,365 ------------- ------------- ------------ 9,481 7,659 8,635 ------------- --------------- --------------- TOTAL ASSETS 55,227 52,189 54,450 ====== ======= ======= EQUITY
Capital and reserves attributable to
the Company's equity shareholders Called up share capital 1,892 1,463 1,790 Share premium account 17,114 16,028 17,005 Merger reserve 347 347 347
Retained earnings and translation 265 3,377
923reserves ------------- ------------- -------------- TOTAL EQUITY 19,618 21,215 20,065 -------------- -------------- -------------- MINORITY INTEREST IN EQUITY 216 - 233 -------------- -------------- -------------- LIABILITIES Non-current liabilities Deferred tax liabilities 7,818 7,819 7,818 Loans 7,463 16,161 8,127
Amounts due under finance leases - 24
14 -------------- ------------- ------------- 15,281 24,004 15,959 --------------- -------------- ------------- Current liabilities
Trade and other payables and deferred 3,712 6,228
3,440income Loans 16,396 737 14,745
Amounts due under finance leases 4 5
8 ------------- ------------- -------------- 20,112 6,970 18,193 -------------- -------------- -------------- TOTAL LIABILITIES 35,393 30,974 34,152 -------------- --------------- ---------------- TOTAL EQUITY AND LIABILITIES 55,227 52,189 54,450 ======= ======= ======== GROUP CASH FLOW STATEMENT
FOR THE SIX MONTHS ENDED 30 SEPTEMBER 2009
Six months to Six months to Year ended 30 September 30 September 31 March 2009 2008 2009 Unaudited Unaudited Audited GBP'000 GBP'000 GBP'000
Cash flows from operating activities (Loss)/profit before taxation (599) 229
(2,098) Adjustments for:
Net finance expense/(income) 821 (738)
1,520 Exchange rate difference (202) 8 1,077 Share based payments 28 110 220
Depreciation and amortisation 178 167
349
Negative goodwill written back to (190) (1,686)
(2,721)income statement Movement in trade and other (265) 289 84receivables Movement in inventories (1,165) (138) 1,696
Movement in trade and other payables 46 163
(1,019) -------------- -------------- ---------------
Cash flow from operating activities (1,348) (1,596)
(892)
Interest (paid)/received - net (456) 738
(459) Taxation paid (3) (3) - -------------- -------------- ---------------
Net cash outflow from operating (1,807) (861)
(1,351)activities -------------- -------------- ---------------
Cash flow from investing activities Purchase of property, plant and (67) (111)
(190)equipment and intangibles
Proceeds from sale of property 20 16
34 -------------- -------------- ---------------
Net cash outflow from investing (47) (95)
(156)activities -------------- -------------- ---------------
Cash flows from financing activities
Issue of shares 211 - 1,304
Capital element of finance lease (18) -
(21)repaid
Net loans undertaken less repayments 1,090 1,018
706 -------------- -------------- ---------------
Cash inflow from financing activities 1,283 1,018
1,989 -------------- -------------- --------------- Cash and cash equivalents at 3,365 2,372 2,372beginning of period
Net cash (outflow)/inflow from all (571) 62
482activities
Non-cash movement arising on foreign (12) (183)
511currency translation --------------- -------------- ---------------
Cash and cash equivalents at end of 2,782 2,251
3,365period ======= ======= ======
Cash and cash equivalents comprise
Cash and cash equivalents 2,782 2,251 3,365 ======= ====== ======
GROUP STATEMENT OF CHANGES IN EQUITY
FOR THE SIX MONTHS ENDED 30 SEPTEMBER 2009
Share Share Merger Retained Translation Capital Premium Reserve Earnings Reserve Total GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 At 1 April 2008 1,463 16,028 347 3,519 (399) 20,958 Profit/(loss) for the - - - 226 (79) 147period Share based payments - - - 110 - 110 ------------- ------------- -------------
------------- ------------- -------------
At 30 September 2008 1,403 16,028 347 3,855 (478) 21,215 Loss for the period - - - (2,324) (240) (2,564) Issue of shares 327 977 - - - 1,304 Share based payments - - - 110 - 110 ------------- -------------- ------------- -------------- ---------- -------------- At 31 March 2009 1,790 17,005 347 1,641 (718) 20,065 Loss for the period - - - (585) (101) (686) Issue of shares 102 109 - - - 211 Share based payments - - - 28 - 28 ------------- -------------- ------------- -------------- ---------- -------------- 1,892 17,114 347 1,084 (819) 19,618 ====== ======= ====== ====== ====== =======
NOTES TO THE REPORT AND FINANCIAL STATEMENTS
FOR THE SIX MONTHS ENDED 30 SEPTEMBER 2009
1. BASIS OF PREPARATION
These interim consolidated financial statements are for the six months ended 30September 2009. They have been prepared in accordance with IAS 34, InterimFinancial Reporting. These interim financial statements have been prepared inaccordance with those IFRS standards and IFRIC interpretations issued andeffective or issued and early adopted as at the time of preparing thesestatements (December 2009). The IFRS standards and IFRIC interpretations thatwill be applicable at 31 March 2010, including those that will be applicable onan optional basis, are not known with certainty at the time of preparing theseinterim financial statements. The policies set out below have been consistentlyapplied to all the years presented.
These consolidated interim financial statements have been prepared under the historical cost convention.
The information set out in this interim report for the six months ended 30September 2009 does not constitute statutory accounts as defined by section 434of the Companies Act 2006. The statutory accounts for the year ended 31 March2009, incorporating an unqualified auditors' report, have been filed with theRegistrar of Companies.Going concern
The Group has continued to make losses since the year end and cashflow has required careful management.
The directors are fully expecting to receive the Olive Island project loans currently being negotiated which would include a payment directly into the parent company. The value of the loan would also allow all liabilities to be paid.
Contingency plans are however prepared and include negotiations to bring in amajor investor on the Olive Island project level and a partner for the marinacompany.
Since the period end the Group has renegotiated the repayment terms of the EUR13 million loan notes, extending the repayment date to 30 April 2011.
In light of the above, subject to the successful completion of theaforementioned events, and on this basis, the directors consider that it isappropriate to prepare the condensed consolidated interim financial statementson the going concern basis..2. BUSINESS SEGMENT ANALYSIS Period ended 30 September Casino Marina Property Resort Central Total2008: GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 Revenue External sales 533 387 - 43 - 963 ====== ====== ===== ======= ==== ====== Profit/(loss) Segment operating profit/ (30) 2 12 (67) 1,050 967(loss) Net finance costs (738) ------------- Profit before taxation 229 ====== Assets and liabilities Segment assets 1,421 4,012 2,666 2,566 41,524 52,189 Segment liabilities (304) (4,421) (2,039) (2,093) (22,117) (30,974) ------------ ------------- --------------
--------------- ------------- ---------------
Net assets/(liabilities) 1,117 (409) 627 473 19,407 21,215 ====== ====== ====== ======== ====== ======= Casino Marina Property Resort Central Total GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 Year ended 31 March 2009: Revenue External sales 864 660 - - 11 1,535 ====== ====== ====== ====== ====== ======= Profit/(loss) Segment operating profit/ (10) (158) 1,544 799 (2,753) (578)(loss) Net finance costs (1,520) ------------- Profit before taxation (2,098) ======= Assets and liabilities Segment assets 1,273 10,690 8,405 33,746 336 54,450 Segment liabilities (296) (6,269) (4,344) (22,098) (1,145) (34,152) ------------ ------------ -------------
--------------- ------------- ------------ Net assets/(liabilities) 977 4,421 4,061 11,648 (809) 20,298 ====== ====== ====== ======== ====== =======Period ended 30 September 2009: Revenue External sales 500 447 - - 18 965 ====== ====== ===== ======= ==== ====== Profit/(loss) Segment operating (loss)/ 9 46 73 301 (207) 222profit Net finance costs (821) ------------- Loss before taxation (599) ====== Assets and liabilities Segment assets 1,320 10,236 8,471 34,814 386 55,227 Segment liabilities (371) (6,037) (4,364) (22,852) (1,769) (35,393) ------------ ------------- --------------
--------------- ------------- ---------------
Net assets/(liabilities) 949 4,199 4,107 11,962 (1,383) 19,834 ====== ====== ====== ======== ====== =======
The group currently operates in one geographical market, Croatia and therefore
no secondary segmentation is provided.
3. TAXATION
The Company is controlled and managed by its Board in Croatia. Accordingly,
the interaction of UK domestic tax rules and the taxation agreement entered
into between the U.K. and Croatia operate so as to treat the Company as solely resident for tax purposes in Croatia. The Company undertakes no business activity in the UK such as might result in a Permanent Establishment for tax purposes and accordingly has no liability to UK corporation tax. 4. OTHER INCOME
Other income of 190,000 in the period ended 30 September 2009, arise
in respect of the reduction of deferred consideration payable for
Duboko Plavetnilo Hotels d.o.o. and as such this adjustment of negative
goodwill has been recognised in the consolidated income statement. 5. EARNINGS PER SHARE The loss per share of 3.2p (year ended 31 March 2009: loss 14.2p; six months ended 30 September 2008: earnings 1.6p) has been calculated on the weighted average number of shares in issue during the year namely 18,449,564 (year ended 31 March 2009: 14,785,356; six months ended 30
September 2008: 14,614,365) and losses of 585,000 (year ended 31 March
2009: loss 2,098,000; six months ended 30 September 2008: profit 226,000).
The calculation of diluted loss per share of 3.2p (year ended 31 March
2009: loss 14.2p) is based on the loss on ordinary activities after taxation and the weighted average of 18,449,564 (year ended 31 March
2009: 14,785,356) shares. For a loss making group with outstanding share
options, net loss per share would only be increased by the exercise of
out-of-the money options. Since it is inappropriate to assume that option
holders would act irrationally no adjustment has been made to diluted EPS for out-of-the-money share options. Diluted earnings per share for six months ended 30 September 2008 of 1.5p is calculated on profit of 226,450 and the diluted weighted average of 15,481,865 shares.
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