Half-yearly Report

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 other potential Marina investment opportunities identified. Commercial/Residential Real Estate property developments: Zadar `Milk Factory' site under construction to provide 74 apartments and five levels of commercial space; excavation to provide two levels of underground parking completed, and on schedule for project to complete in early 2011. Casinos: profit from operations reduced to £9,000 at trading level as a result of 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 McCann Cubus Lux plc +44 (0)7787 183184 Luke Cairns / Jo Turner, Nominated Adviser Astaire Securities plc +44 (0)20 7448 4400 Claire Louise Noyce/Stephen Austin, Broker Hybridan LLP +44 (0)20 3159 5085 Pam Spooner City Road Communications +44 (0) 20 7248 8010 +44 (0)7858 477 747 CHAIRMAN'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 and general real estate projects in Croatia and neighbouring countries. High quality development opportunities exist along the Adriatic coast, and the Board retains confidence in the long-term attractions and potential of this part of southern 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 lower for the year, and spending by visitors appears also to have fallen. Trading at our casinos was impacted by these symptoms of the recession, resulting in significantly reduced profits in the six months. However, we have already begun to see signs of an improvement in economic conditions and remain confident that the casinos will bounce back as tourism recovers. Plava Vala d.o.o. - Marina In contrast, tourist activity for marinas - where high quality facilities are in short supply - has remained robust, and we are experiencing heavy demand for berths at our Olive Island location. As a result, we plan to extend our marina there by 50% - an extra 100 berths - and are actively looking for new investments for this segment of the Group. A total of six prospective opportunities have so far been identified. Real estate Our small and medium scale commercial and residential property developments continue to progress, with our `Molatska' site in Zadar on schedule to complete in early 2011. Having removed 25,000 cubic metres of rock and earth to allow for two levels of underground parking, foundations for the complex are currently being put in place. Pre-selling of the 74 apartments and ground floor retail/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, through a firm strategy of introducing and developing profitable new projects. The Group is well known and well positioned in both Croatia and now in Montenegro and 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 HUBER Chairman Executive Director 22 December 2009 INDEPENDENT REVIEW REPORT TO CUBUS LUX PLC We have been engaged by the Company to review the condensed set of financial statements in the interim report for the six months ended 30 September 2009 which comprises the consolidated income statement, consolidated interim balance sheet, consolidated interim statement of changes in shareholders' equity, consolidated interim cash flow statement, and 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 information 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 to assist the company in meeting the requirements of the rules of the London Stock Exchange for companies trading securities on AIM and for no other purpose. No person is entitled to rely on this report unless such a person is a person entitled to rely on this report by virtue of and for the purpose of our terms of 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 other person or for any other purpose and we hereby expressly disclaim any and all such liability. Scope of Review We conducted our review in accordance with International Standard on Review Engagements (UK and Ireland) 2410, ``Review of Interim Financial Information Performed by the Independent Auditor of the Entity'' issued by the Auditing Practices Board for use in the United Kingdom. A review of interim financial information consists of making enquiries, primarily of persons responsible for financial and accounting matters, and applying analytical and other review procedures. A review is substantially less in scope than an audit conducted in accordance with International Standards on Auditing (UK and Ireland) and consequently does not enable us to obtain assurance that we would become aware of 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 to believe that the condensed set of financial statements in the interim report for the six months ended 30 September 2009 is not prepared, in all material respects, in accordance with International Accounting Standard 34 as adopted by the European Union. Going Concern In forming our opinion, which is not qualified, we have considered the adequacy of the disclosures made within the accounting policies concerning the Group's ability 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's current liabilities exceed its current assets by £10,631,000. This along with the other matters explained in note 1 to the condensed consolidated interim financial statements, indicates the existence of a material uncertainty which may cast significant doubt about the Group's ability to continue as a going concern. The directors are expecting to receive the Olive Island project loans currently being negotiated. The directors also have contingency plans in place which include negotiations to bring in a major investor on the Olive Island project level and a partner for the marina company. The condensed consolidated interim financial statements do not include the adjustments that would result if the Group was unable to continue as a going concern. haysmacintyre Chartered Accountants Fairfax House Registered Auditors 15 Fulwood Place London 22 December 2009 WC1V 6AY GROUP 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 £'000 £'000 £'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 SHEET AT 30 SEPTEMBER 2009 As at 30 As at 30 As at 31 September 2009 September 2008 March 2009 Unaudited Unaudited Audited £'000 £'000 £'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 3,377 923 reserves ------------- ------------- -------------- 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 3,440 income 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 £'000 £'000 £'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 84 receivables 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 2,372 beginning of period Net cash (outflow)/inflow from all (571) 62 482 activities Non-cash movement arising on foreign (12) (183) 511 currency translation --------------- -------------- --------------- Cash and cash equivalents at end of 2,782 2,251 3,365 period ======= ======= ====== 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 £'000 £'000 £'000 £'000 £'000 £'000 At 1 April 2008 1,463 16,028 347 3,519 (399) 20,958 Profit/(loss) for the - - - 226 (79) 147 period 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 30 September 2009. They have been prepared in accordance with IAS 34, Interim Financial Reporting. These interim financial statements have been prepared in accordance with those IFRS standards and IFRIC interpretations issued and effective or issued and early adopted as at the time of preparing these statements (December 2009). The IFRS standards and IFRIC interpretations that will be applicable at 31 March 2010, including those that will be applicable on an optional basis, are not known with certainty at the time of preparing these interim financial statements. The policies set out below have been consistently applied 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 30 September 2009 does not constitute statutory accounts as defined by section 434 of the Companies Act 2006. The statutory accounts for the year ended 31 March 2009, incorporating an unqualified auditors' report, have been filed with the Registrar 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 a major investor on the Olive Island project level and a partner for the marina company. Since the period end the Group has renegotiated the repayment terms of the €13 million loan notes, extending the repayment date to 30 April 2011. In light of the above, subject to the successful completion of the aforementioned events, and on this basis, the directors consider that it is appropriate to prepare the condensed consolidated interim financial statements on the going concern basis. . 2. BUSINESS SEGMENT ANALYSIS Period ended 30 September Casino Marina Property Resort Central Total 2008: £'000 £'000 £'000 £'000 £'000 £'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 £'000 £'000 £'000 £'000 £'000 £'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) 222 profit 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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