Final Results
25 June 2007
Cubus Lux plc
Preliminary Results
Cubus Lux plc, the Croatian leisure and tourism company, announces final
results for the 15 months ended 31 March 2007.
Cubus Lux plc currently has completed the construction of, and now has fully
operational the first Plava Vala marina, a 200 plus berth marina in the bay of
Sutomiscica on the island of Ugljan near Zadar. In addition, the group includes
the second largest casino operator in Croatia, Cubus Lux d.o.o. with casinos in
Pula and Rabac.
Highlights in the period:
- Achievement of pre tax profit of £160,000.
- Strengthening of the management team with the appointment of Christian Kaiser
and Steve McCann as Executive Directors and Francisco Alvarez-Molina as a
Non-Executive Director.
- Completion of a world class marina, Olive Island Marina, which is already
being labeled a `destination place'.
- Further successful development of casino junkets business
- The purchase of two plots of land in Zadar for development of top quality
holiday apartments.
Since the year end:
- Entered into two Option Agreements to acquire companies that own development
land on Ugljan where we will build the Olive Island Resort and Hotel. The
development includes 431 Villas and Apartments, a 500 bed 4 plus star Hotel and
a marina. Exercise of these options would be classified as a reverse takeover
under the AIM Rules.
- Placing raised £1,557,000 for working capital and to fund future strategy
- Consolidated casino operations by the transfer of equipment from Medulin
casino to the enlarged and extended Pula casino to take advantage of the new
air routes introduced by the low fare airlines from the UK and Ireland.
Gerhard Huber, Executive Chairman of Cubus Lux, commented:
"Cubus Lux has continued to see much change over the year transforming from a
pure casino business into a leisure and tourism company. The acquisition of
Plava Vala has created a three pillar strategy of casinos, marinas and other
leisure opportunities such as hotels and golf courses and this sets us on our
way to achieving our goal of becoming the pre-eminent tourist and leisure
business in Croatia"
"The Olive Island marina is now fully operational and we are now starting to
focus on exciting new opportunities such as the Olive Island Resort and Hotel."
For further information please contact:
Cubus Lux Plc
Gerhard Huber, Chairman: 07900 683 683
City Financial Associates Limited
Simon Sacerdoti, Corporate Finance: 020 7090 7800
Threadneedle Communications
Graham Herring, Financial PR: 020 7936 9605/07793 839 024
Chairman's statement
I am pleased to submit results for the 15 months ended 31 March 2007.
Operations
Cubus Lux d.o.o. - the gaming company:
Cubus Lux d.o.o. owns a gaming concession in Croatia. During the period, the
company operated three casinos in Pula, Medulin and Rabac. The operations are
inspected and audited regularly by the Croatian Ministry of Finance, and all
inspections to date have been satisfactorily completed. Management is
continuing its objectives of enhancing profitability and, as a result, as of
the end of the period, the company has expanded its Pula operation and closed
the Medulin casino.
The second half of the year is traditionally our stronger one and this year
shows the same trend. August was a record month for the company with more than
12,500 visitors in our casino in Pula. September and October continued strongly
as the new management has attracted a number of junkets.
Plava Vala d.o.o. - the marina company:
The marina in Sutomiscica, near Zadar is thought by some to be a jewel on the
Adriatic coast. The autumn season of the European boat fairs showed a solid
demand for our berths, and we are looking to our first period of operation in
2007 with confidence.
As part of the requirements of IFRS 3, the management asked Brand Finance Plc
to value the marina concession that is owned by Plava Vala d.o.o.. This has
been separately disclosed in note 8 to the financial statements, and the asset
is shown on the balance sheet as an intangible asset acquired as part of the
acquisition of Plava Vala d.o.o..
Recent expansion:
We have purchased two plots of land in Zadar at a cost of €5.8 million for the
development of top quality apartments. The first project is a 6 storey mixed
commercial/residential building close to the city centre of Zadar. The second
project is a 5 storey residential building that is in close proximity to the
Borik hotel and resort area and the Borik marina. Each of these developments
will have around 80 units. We believe that demand for these will be strong and
that the developments will be successful.
Financial
For the 15 months ended 31 March 2007, the company is reporting revenues of £
1,017,000 and a profit before tax of £160,000. The trading activity within this
result shows the progress made in the last period in turning around our
operations.
In the second six months of 2006, the Company placed more than 2,000,000 shares
at 13.125p per share in order to finance further expansion. The market received
this well and we were able to place a further 9,570,000 shares in May of this
year at 16.275p to meet current expansion plans.
Our plans for the future
We are in the process of transition from a casino operator into a leisure and
development company in Croatia. As a first step in doing this we have entered
into two option agreements to acquire certain development land known as the
"Olive Island Resort" on the Dalmatian coast of Croatia.
The Olive Island Resort development land is set in 400,000sqm of land along
1.5km of beach, and is intended to be developed into:-
(a) a village resort comprising 431 units, namely 126 villas and 305 apartments
as well as the accompanying facilities such as restaurants, shops, offices and
a marina (the "Villas Development"); and
(b) a 4 star hotel containing 500 beds (the "Hotel Development").
I believe that this potential acquisition could be a milestone event for the
company moving forward with our plan to transform the company from being solely
a casino operator to being a company developing and managing leisure facilities
in Croatia.
GERHARD HUBER
Chairman
Executive Director
CONSOLIDATED PROFIT AND LOSS ACCOUNT
FOR THE 15 MONTHS ENDED 31 MARCH 2007
Period ended Year ended 31
31
March 2007 December 2005
Notes £'000 £'000
TURNOVER 1,017 571
Cost of sales (150) (70)
------------- -------------
GROSS PROFIT 867 501
Administrative expenses (1,957) (981)
Other income 1,451 -
------------- -------------
OPERATING PROFIT/(LOSS) 361 (480)
Finance expenditure (201) (17)
------------- -------------
PROFIT/(LOSS) ON ORDINARY
ACTIVITIES BEFORE TAXATION 160 (497)
Tax on loss on ordinary activities 1 (290) -
------------- -------------
LOSS FOR THE PERIOD 2 (130) (497)
====== ======
LOSS PER SHARE
Basic 6 (0.19)p (2.15)p
====== ======
Diluted 6 (0.18)p (2.14p)
====== ======
All activities arose from continuing activities.
CONSOLIDATED BALANCE SHEET
31 March 31 December
2007 2005
Notes £'000 £'000
FIXED ASSETS
Non-current assets
Intangible assets 3 5,372 -
Property, plant and equipment 4 3,315 590
------------- -------------
8,687 590
------------- -------------
CURRENT ASSETS
Stock 41 10
Trade and other receivables 950 301
Cash at bank 5 1,375 431
------------- -------------
2,366 742
------------- -------------
11,053 1,332
====== ======
EQUITY
Capital and reserves attributable to the
Company's
equity shareholders
Called up share capital 881 249
Share premium account 7,239 1,321
Merger reserve 347 347
Profit and loss account (1,565) (1,650)
------------- -------------
TOTAL EQUITY 6,902 267
====== ======
LIABILITIES
Non-current liabilities
Deferred tax liabilities 290 -
Loans 3,138 311
Amounts due under finance leases 7 14
------------- -------------
3,435 325
====== ======
Current liabilities
Trade and other payables and deferred 589 464
income
Loans 122 271
Amounts due under finance leases 5 5
------------- -------------
716 740
====== ======
TOTAL LIABILITIES 4,151 1,065
====== ======
TOTAL EQUITY AND LIABILITIES 11,053 1,332
====== ======
PARENT COMPANY BALANCE SHEET
31 March 31 December
2007 2005
Notes £'000 £'000
FIXED ASSETS
Non-current assets
Investments 3,819 319
CURRENT ASSETS
Trade and other receivables 2,919 703
Cash at bank 5 616 15
------------- -------------
3,535 718
------------- -------------
7,354 1,037
====== ======
EQUITY
Capital and reserves attributable to the
Company's
equity shareholders
Called up share capital 881 249
Share premium account 7,239 1,321
Profit and loss account (920) (616)
------------- -------------
TOTAL EQUITY 7,200 954
====== ======
LIABILITIES
Current liabilities
Trade and other payables 154 83
------------- -------------
TOTAL LIABILITIES 154 83
====== ======
TOTAL EQUITY AND LIABILITIES 7,354 1,037
====== ======
CONSOLIDATED CASH FLOW STATEMENT
Period ended Year ended 31
31
March 2007 December 2005
£'000 £'000
Cash flows from operating activities
Operating profit/(loss) 361 (480)
Profit/(loss) on disposal of fixed assets 45 (4)
Share based payments 178 -
Depreciation 148 113
Negative goodwill written back to profit and loss (1,451) -
account
(Increase) in debtors (559) (247)
(Increase) in stock (31) (4)
Increase in creditors 14 111
------------- -------------
Net cash used in operating activities (1,295) (511)
------------- -------------
Cash flows from investing activities
Interest payable (256) (18)
Interest receivable 55 1
Purchase of fixed assets (2,472) (120)
Proceeds from the sale of fixed assets - 15
Cash acquired with subsidiary 114 -
------------- -------------
Net cash used in investing activities (2,559) (122)
------------- -------------
Cash flows from financing activities
Issue of shares (net of issue costs) 3,050 246
Capital element of finance lease repaid (5) -
New loans undertaken less repayments 1,690 453
------------- -------------
Net cash generated from financing activities 4,735 699
------------- -------------
INCREASE IN CASH IN THE PERIOD 881 66
====== ======
RECONCILIATION OF NET CASH FLOW TO NET DEBT
Period ended Year ended 31
31
March 2007 December 2005
£'000 £'000
Increase in cash in the period 881 66
Exchange differences 63 (20)
Cash inflow from movement in debt (1,690) (448)
Capital element of finance leases repaid 5 -
Debt acquired on acquisition of subsidiary (988) -
------------- -------------
Movement in net funds in the period (1,729) (402)
Net (debt)/funds at beginning of period (170) 232
------------- -------------
Net debt at end of period (1,899) (170)
====== ======
ANALYSIS OF CHANGES IN NET DEBT
At 1 January Cash Other Exchange At 31 March
2006 movements
flows differences 2007
£'000 £'000 £'000 £'000 £'000
Cash at bank and in 431 881 - 63 1,375
hand
------------ ------------ ------------ ------------ ------------
431 881 - 63 1,375
Debt due in less than
one period
Finance leases (5) (1) - - (6)
Loans (271) (149) - - (122)
------------ ------------ ------------ ------------ ------------
155 1,029 - 63 1,247
Debt due in more than
one year
Finance leases (14) 6 - - (8)
Loans (311) (1,839) (988) - (3,138)
------------ ------------ ------------ ------------ ------------
(170) (804) (988) 63 (1,899)
====== ====== ====== ====== ======
RECONCILIATION OF MOVEMENTS IN GROUP SHAREHOLDERS' FUNDS
Period ended 31 Year ended 31
March 2007 December 2005
£'000 £'000
Loss for the period (130) (497)
--------------- ---------------
(130) (497)
Exchange rate differences 37 (20)
Share based payments 178 -
New shares issued in Cubus Lux plc (net of issue 6,550 246
costs)
--------------- ---------------
Net movement in shareholders' funds 6,635 (271)
Opening shareholders' funds 267 538
--------------- ---------------
Closing shareholders' funds 6,902 267
======= =======
NOTES
1. TAXATION
The Company is controlled and managed by its Board in The Republic of Croatia.
Accordingly, the interaction of UK domestic tax rules and the taxation
agreement entered into between the U.K. and The Republic of Croatia operate so
as to treat the Company as solely resident for tax purposes in The Republic of
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
(a) The taxation charge comprises
Period ended 31 Year ended 31
March 2007 December 2005
£'000 £'000
Current corporation tax for the period - -
Deferred tax 290 -
--------------- ---------------
290
======= =======
(b) Factors affecting tax charge for the period
The tax assessed for the period is different than the standard rate of
corporation tax. The differences are explained below:
Period ended 31 Year ended 31
March 2007 December 2005
£'000 £'000
Profit/(loss) on ordinary activities before 160 (497)
taxation
======== ========
Multiplied by the standard rate of 48 (149)
corporation tax of 30%
Effects of:
Utilisation of tax losses brought forward (48) -
Losses carried forward - 149
------------------ ------------------
Current period tax charge - -
======== ========
(c) Factors affecting future tax charges
The directors believe that the future tax charges will be reduced by the use of
tax losses carried forward in Croatia.
2. PROFIT FOR THE FINANCIAL PERIOD
The parent company has taken advantage of section 230 of the Companies Act 1985
and has not included its own profit and loss account in these financial
statements. The group profit for the period includes a loss after taxation of £
482,000 (2005: loss £283,000) which is dealt with in the financial statements
of the company.
3. INTANGIBLE FIXED ASSETS
Marina licence
£'000
Cost or valuation
At 1 January 2006 -
Acquired on acquisition 5,372
------------------
At 31 March 2007 5,372
========
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. At this date. the fair
value of Plava Vala d.o.o.'s assets was £3,921,000 creating negative goodwill
of £1,451,000 which, in accordance with IFRSs, has been credited to the profit
in the period. A deferred tax liability of £290,000 against this profit has
been provided for. In adopting IFRSs, the company obtained an external
valuation by Brand Finance Plc of the marina licences acquired with Plava Vala
d.o.o. which were valued at £5,372,000 and are included in the above net asset
figure.
4. TANGIBLE FIXED ASSETS
Casino Marina Casino assets Marina Total
leasehold leasehold assets
premises premises
£'000 £'000 £'000 £'000 £'000
Cost or valuation
At 1 January 2006 51 - 801 - 852
Additions 7 2,103 217 145 2,472
Acquired on acquisition - 472 - 3 475
Disposals - (26) (24) - (50)
Exchange rate movements 1 (33) 8 (2) (26)
------------ -------------- --------------- ------------ ----------------
At 31 March 2007 59 2,516 1,002 146 3,723
------------- -------------- --------------- ------------ ---------------
Depreciation
At 1 January 2006 16 - 246 - 262
Acquired on acquisition - - - 1 1
Charge for the period 19 2 106 21 148
Disposals - - (5) - (5)
Exchange rate movements - - 2 - 2
------------ -------------- -------------- ------------ --------------
At 31 March 2007 35 2 349 22 408
------------- -------------- -------------- ------------ --------------
Net Book Value
At 31 March 2007 24 2,514 653 124 3,315
====== ======= ======= ======= =======
At 31 December 2005 35 - 555 - 590
====== ======= ======= ======= =======
5. CASH AT BANK
Group Company Group Company
31 March 31 March 31 December 31 December
2007 2007 2005 2005
£'000 £'000 £'000 £'000
Cash at bank 1,375 616 431 15
======= ======= ======= =======
Included within the cash at bank and in hand at 31 March 2007 is £221,000
(2005: £221,000) which is held by the Croatian Ministry of Finance as a bond to
cover any large casinos wins. Cubus Lux d.o.o. is required to keep this bond in
place in order to maintain its gaming licence.
Cubus Lux d.o.o. is also required by law to maintain cash on site of €50,000
and HRK 150,000 at each casino, which is included within the above.
6. LOSS PER SHARE
The loss per share of 0.19p (31 December 2005: loss 2.15p) has been calculated
on the weighted average number of shares in issue during the period namely
68,681,402 (31 December 2005: 23,120,334) and losses of £130,013 (31 December
2005: losses £496,852).
The calculation of diluted losses per share of 0.18p (31 December 2005: loss
2.14p) is based on the losses on ordinary activities after taxation and the
diluted weighted average of 73,896,786 (31 December 2005: 23,190,334) shares.
7. FINANCIAL INFORMATION
The financial information set out in this announcement does not constitute the
Group's statutory accounts within the meaning of Section 240 of the Companies
Act 1985 and has been extracted from the full accounts for the 15 months ended
31 March 2007.
The full report and accounts for the 15 months ended 31 March 2007 have been
sent to shareholders, and a copy will be delivered to the Registrar of
Companies in due course. The auditors' report on the financial statements was
unqualified and did not include a statement under section 237(2) or (3) of the
Companies Act 1985.
The annual report and accounts will be available on the Company's website at
www.cubuslux.com
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