Half-yearly Report
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 plc
Gerhard 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 PR
Graham Herring/Alex White
+44 (0)20 7936 9605
CHAIRMAN'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 HUBER
Chairman
Executive Director
23 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 2,600 738 589
income
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 1,375 431 431
beginning of period
Net cash outflow from all activities (76) 665 881
Non-cash movement arising on foreign (231) (82) 63
currency translation
--------------- -------------- ---------------
Cash and cash equivalents at end of 1,068 1,014 1,375
period
======= ====== ======
Cash and cash equivalents comprise
Cash (excluding overdrafts) and cash 1,068 1,014 1,375
equivalents
======= ====== ======
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 Total
2007:
£'000 £'000 £'000 £'000
Revenue
External sales 973 44 - 1,017
======= ====== ====== =======
(Loss)/profit
Segment operating (loss)/ (196) (350) 907 361
profit
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 Total
2007:
£'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) 167
income and expense
Shares issued in the 96 1,472 - - - 1,568
period
----------- ----------- ----------- ----------- ----------- -----------
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 - 738
income
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 that
should be made to the financial information as presented for the six months
ended 30 September 2007.
haysmacintyre Fairfax House
Chartered Accountants 15 Fulwood Place
Registered Auditors London
WC1V 6AY
23 November 2007
Friday, 22nd November 2024
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