Interim Results
Cubus Lux plc
25 September 2006
Cubus Lux plc
Interim Results
Cubus Lux plc, the Croatia-based leisure and tourism company, announces interim
results for the 6 months ended 30 June 2006.
Cubus Lux plc is the second largest casino company in Croatia, where it operates
at three venues. In March 2006, the company acquired Plava Vala, which holds a
licence to build and operate a marina under the brand name Olive Island Marina,
on the island of Uglijan, Croatia.
Highlights in the period:
• Acquired the entire issued share capital of Plava Vala d.o.o. for £3.5
million
• HI revenue increased to £327,000 (H1 2005: £191,000)
• Casinos started to attract junkets following extensive marketing
programme, with significant interest in second quarter
• Construction of the marina in Sutomiscica commenced in February 2006
Since the period end:
• Excellent month of August with almost 12,500 visitors to the three casinos
• High levels of bookings for junkets in September
Gerhard Huber, Executive Chairman of Cubus Lux, commented:
'Our progress towards becoming the pre-eminent tourist and leisure business in
Croatia is well under way. The strong interest seen in the months of May and
June are further vindication of our marketing strategy to attract junkets to our
casinos. After an excellent August and high bookings for September we are
confident of further improvement in the second half of the year.
'Construction of the marina in Sutomiscica is expected to be almost completed by
the key booking season of autumn, and we are confident of attracting significant
interest for next year.'
For further information please contact:
Cubus Lux Plc
Gerhard Huber, Chairman: 07900 683 683
Corporate Synergy
Oliver Cairns/Katie Ratner, Corporate Finance: 020 7448 4400
Threadneedle Communications
Graham Herring/Josh Royston, Financial PR: 020 7936 9606/07789 003223
CHAIRMAN'S STATEMENT
I am pleased to report results for the six months ended 30 June 2006.
In March 2006, the company acquired the entire issued share capital of Plava
Vala d.o.o.for £3.5 million, satisfied by the issue of 35,000,000 shares..
Operations
Cubus Lux d.o.o. - the gaming company:
The first half of 2006 saw the first fruits of our efforts to attract junkets to
our casinos. We were able to create significant business in the second quarter
with May and June being our best months. Since the period end, August proved to
be excellent in trading terms as we attracted almost 12,500 visitors to our
three casinos, and there is a high level of junket bookings for the month of
September.
Plava Vala d.o.o. - the marina company:
Because of a delay in obtaining the building permit, the construction of the
Sutomiscica marina only started in February 2006. Nevertheless, construction
will be almost completed in autumn, and Plava Vala d.o.o. has already started to
take bookings. Autumn is traditionally the booking season and we are confident
of attracting many boats for next season.
Financial
For the six months ending 30 June 2006, the company generated revenues of
£327,000 (H1 2005: £191,000) and a net operating loss of £397,000 (H1 2005:
£147,000). The results were below our expectations but we are confident that the
second half will show an improvement in our operating performance.
In the first six months of the year the Company raised more than £1m through the
issue of new shares in order to finance further expansion.
Our plans for the future
We are in the process of transition from a casino operator into a leading
tourism company in Croatia, with operations that are complementary to gaming. We
continue to evaluate a number of opportunities to further this strategy.
GERHARD HUBER
Chairman
Executive Director
GROUP PROFIT AND LOSS ACCOUNT
Six months to Six months to Year to 31
30 June 2006 30 June 2005 December 2005
Unaudited Unaudited Audited
Note £'000 £'000 £'000
TURNOVER 1,2 327 191 571
Cost of sales (41) (24) (70)
------------- ------------- -------------
GROSS PROFIT 286 167 501
Administrative expenses (683) (314) (981)
------------- ------------- -------------
OPERATING LOSS (397) (147) (480)
Interest receivable 26 - 1
Interest payable (42) (21) (18)
-------------- -------------- -------------
LOSS ON ORDINARY
ACTIVITIES BEFORE TAXATION (413) (168) (497)
Tax on loss on ordinary activities 3 - - -
------------- ------------- -------------
RETAINED LOSS (413) (168) (497)
====== ====== ======
LOSS PER SHARE
Basic 8 0.75p 0.76p 2.15p
====== ====== ======
Diluted 8 0.72p 0.72p 2.14p
====== ====== ======
GROUP STATEMENT OF TOTAL RECOGNISED GAINS AND LOSSES
Six months to Six months to Year to 31
30 June 2006 30 June 2005 December 2005
Unaudited Unaudited Audited
£'000 £'000 £'000
Loss for the financial period (413) (168) (497)
Share based payments 30 - -
Exchange rate movements 4 17 (20)
------------- ------------- -------------
Total recognised losses relating to the period (379) (151) (517)
====== ====== ======
GROUP BALANCE SHEET
Notes As at 30 June As at 30 June As at 31
2006 2005 December 2005
Unaudited Unaudited Audited
£'000 £'000 £'000
FIXED ASSETS
Intangible fixed assets 4 3,856 - -
Tangible assets 5 2,210 632 590
------------- ------------- ------------
6,066 632 590
CURRENT ASSETS
Stock 10 35 10
Debtors 546 218 301
Cash at bank 1,014 357 431
------------- ------------- ------------
1,570 610 742
CREDITORS: amounts falling
due within one year (1,222) (626) (740)
------------- ------------- ------------
NET CURRENT ASSETS/(LIABILITIES) 348 (16) 2
-------------- -------------- ------------
TOTAL ASSETS LESS CURRENT LIABILITIES 6,414 616 592
CREDITORS: amounts falling
due after one year (2,183) (229) (325)
-------------- -------------- ------------
4,231 387 267
====== ====== =====
CAPITAL AND RESERVES
Called up share capital 6 711 223 249
Share premium 7 5,202 1,101 1,321
Other reserve 7 30 - -
Merger reserve 7 347 347 347
Profit and loss account 7 (2,059) (1,284) (1,650)
------------- ------------- -------------
EQUITY SHAREHOLDERS' FUNDS 4,231 387 267
======= ====== ======
GROUP CASH FLOW STATEMENT
Six months to Six months to Year to 31
30 June 2006 30 June 2005 December 2005
Unaudited Unaudited Audited
£'000 £'000 £'000
Operating loss (397) (147) (480)
Loss on disposal of fixed assets - - (4)
Share based payments 30 - -
Depreciation 74 50 113
Amortisation 65 - -
Increase in debtors (154) (164) (247)
Increase in stock - (29) (4)
Increase in creditors 167 354 111
-------------- -------------- ---------------
CASH (OUTFLOW)/INFLOW FROM OPERATING ACTIVITIES (215) 64 (511)
RETURN ON INVESTMENT AND SERVICING OF FINANCE (16) (21) (17)
CAPITAL EXPENDITURE AND FINANCIAL INVESTMENT (1,133) (88) (105)
ACQUISITIONS AND DISPOSALS
Cash acquired with subsidiary 115 - -
-------------- -------------- ---------------
CASH OUTFLOW BEFORE FINANCING (1,249) (45) (633)
FINANCING
Issue of shares (net of issue costs) 843 - 246
Capital element of finance leases repaid (4) - -
Net loans received 1,075 - 453
--------------- --------------- --------------
INCREASE/(DECREASE) IN CASH IN THE PERIOD 665 (45) 66
======= ====== ======
RECONCILIATION OF NET CASH FLOW TO NET (DEBT)/FUNDS
Six months to Six months to Year to 31
30 June 2006 30 June 2005 December 2005
Unaudited Unaudited Audited
£'000 £'000 £'000
Increase/(decrease) in cash in the period 665 (45) 66
Cash inflow from movement in debt (1,075) - (448)
Capital element of finance leases repaid 4 - -
Exchange differences (82) 17 (20)
Debt acquired on acquisition of subsidiary (995) - -
------------- ------------- -------------
Movement in net debt in the period (1,483) (28) (402)
Net (debt)/funds at beginning of period (170) 232 232
------------- ------------- -------------
Net (debt)/funds at end of period (1,653) 204 (170)
====== ====== ======
RECONCILIATION OF MOVEMENTS IN GROUP SHAREHOLDERS' FUNDS
Six months to Six months to Year ended
30 June 30 June 31 December
2006 2005 2005
Unaudited Unaudited Audited
£'000 £'000 £'000
Loss for the financial period (413) (168) (497)
--------------- --------------- ---------------
(413) (168) (497)
Exchange rate differences 4 17 (20)
Share based payments 30 - -
New shares issued in Cubus Lux Plc (net of issue costs) 4,343 - 246
--------------- --------------- ---------------
Net movement in shareholders'funds 3,964 (151) (271)
Opening shareholders' funds 267 538 538
--------------- --------------- ---------------
Closing shareholders' funds 4,231 387 267
======= ======= =======
NOTES TO THE REPORT AND FINANCIAL STATEMENTS
1. ACCOUNTING POLICIES
(a) Basis of Preparation
The financial information is prepared on the historical cost basis in accordance
with the applicable accounting standards.
It comprises the consolidated financial information of Cubus Lux Plc and its
subsidiaries.
(b) Basis of Consolidation
On 20 May 2004, the company purchased 100% of the issued share
capital of Cubus Lux d.o.o., a company registered in the Commercial Court in
Rijeka, Croatia, by way of a share for share exchange. Under Financial
Reporting Standard 6, merger accounting has been adopted as the basis of
consolidation for this transaction.
On 6 March 2006, the company purchased 100% of the issued share
capital of Plava Vala d.o.o., a company registered in Croatia, by way of a share
for share exchange. Under Financial Reporting Standard 6, acquisition
accounting has been adopted as the basis of consolidation for this transaction.
(c) Depreciation
Depreciation is provided at rates calculated to write off the
cost less estimated residual value of each asset by equal monthly instalments
over its expected useful life as follows:-
Motor Vehicles 25% per annum
Office furniture, computers and casino equipment 10-25% per annum
During the period ended 30 June 2006, the marina was under
construction and therefore no depreciation has been charged.
(d) Goodwill and amortisation
Goodwill arising on consolidation, representing the excess of the fair value of
the consideration given over the fair values of the identifiable net assets
acquired and is capitalised and amortised on a straight line basis over its
estimated useful economic life of 20 years.
(e) Stocks
Stocks are valued at the lower of cost and net realisable value.
(f) Foreign Currencies
Transactions in foreign currencies are recorded at the rate of
exchange at the date of the transaction. The results and balance sheets of
overseas operations are translated at the rate of exchange rating at the balance
sheet date. The rate of exchange used at 30 June 2006 was 10.4366 HRK to £1 (30
June 2005: 10.9449 HRK to £1).
(g) Turnover
Turnover represents the invoiced amount of goods sold and
services provided in the year, net of value added tax.
(h) Share based payments
The Group is required to adopt FRS 20 'Share Based Payments' for the first time
for accounting periods commencing on or after 1st January 2006. FRS 20 requires
the Group to recognise an expense in respect of the granting over shares to
employees and directors. This expense, which is calculated by reference to the
fair value of the options granted, is recognised on a straight line basis over
the vesting period based on the Group's estimate of options that will eventually
vest. The Directors have used the Black Scholes model to estimate the value of
options granted in the current and prior periods.
NOTES TO THE REPORT AND FINANCIAL STATEMENTS (continued)
2. BUSINESS SEGMENT ANALYSIS
The Group is currently organised into two operating divisions - the casinos and the marina. This is the
basis on which the Group reports its primary segment information. Segmental information is presented
below:
Period ended 30 June 2005: Casino Marina Central Total
£'000 £'000 £'000 £'000
Revenue
External sales 191 - - 191
====== ====== ==== ======
Loss
Segment operating loss (54) - (93) (147)
Net finance costs (21)
-------------
Loss before taxation (168)
======
Assets and liabilities
Segment assets 1,242 - 319 1,242
Segment liabilities (1,061) - (113) (855)
------------ ------------- ------------- -------------
Net assets 181 - 206 387
======= ====== ====== ======
Year ended 31st December 2005:
Revenue
External sales 571 - - 571
======= ====== ====== =======
Loss
Segment operating loss (240) - (240) (480)
Net finance costs (17)
------------
Loss before taxation (497)
======
Assets and liabilities
Segment assets 997 - 335 1,332
Segment liabilities (982) - (83) (1,065)
-------------- ------------ ------------- -------------
Net assets 15 - 252 267
======= ====== ====== ======
Period ended 30 June 2006:
Revenue
External sales 315 12 - 327
====== ====== ==== ======
Loss
Segment operating loss (108) (30) (259) (397)
Net finance costs (16)
-------------
Loss before taxation (413)
======
Assets and liabilities
Segment assets 759 1,872 5,005 7,636
Segment liabilities (919) (2,314) (172) (3,405)
--------------- ------------ ------------- -------------
Net assets (160) (442) 4,833 4,231
======= ====== ====== ======
NOTES TO THE REPORT AND FINANCIAL STATEMENTS (continued)
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. INTANGIBLE FIXED ASSETS Goodwill
£'000
Cost
At 1st January 2006 -
Additions 3,921
----------------
At 30th June 2006 3,921
---------------
Amortisation
At 1st January 2006 -
Charge for the period 65
--------------
At 30th June 2006 65
--------------
Net Book Value
At 30th June 2006 3,856
=======
At 31st December 2005 -
======
At 30th June 2005 -
======
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, Plava Vala d.o.o. had net liabilities of £421,000 creating goodwill of
£3,921,000.
5. TANGIBLE FIXED ASSETS Leasehold Casino Marina
premises assets assets Total
£'000 £'000 £'000 £'000
Cost or valuation
At 1st January 2006 51 801 - 852
Additions - 18 1,115 1,133
Acquired on acquisition - - 475 475
Exchange rate movements 3 48 31 82
-------------- ------------ ------------ ----------------
At 30th June 2006 54 867 1,621 2,542
--------------- ------------ ------------ ---------------
Depreciation
At 1st January 2006 16 246 - 262
Charge for the period 3 68 3 74
Exchange rate movements (1) (3) - (4)
-------------- ------------ ------------ --------------
At 30th June 2006 18 311 3 332
-------------- ------------ ------------ --------------
Net Book Value
At 30th June 2006 36 556 1,618 2,210
======= ===== ===== =======
At 31st December 2005 35 555 - 590
======= ===== ===== ======
At 30th June 2005 40 592 - 632
======= ===== ===== ======
NOTES TO THE REPORT AND FINANCIAL STATEMENTS (continued)
6. CALLED UP SHARE CAPITAL 30 June 2006
£'000
Authorised:
100,000,000 ordinary shares of £0.01 each 1,000
2,000,000 deferred ordinary shares of £0.001 each 2
------------
1,002
======
Allotted, called up and fully paid:
70,852,004 ordinary shares of £0.01 each 709
1,555,554 deferred ordinary shares of £0.001 each 2
------------
711
======
On 6 March 2006, the company acquired 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.
On 6 March 2006, the company placed 10,250,000 ordinary shares of £0.01 each at
£0.10 per share.
On 6 March 2006, the company issued 3 ordinary shares of £0.01 each at £0.10 per
share.
On 7 March 2006, the company placed 500,000 ordinary shares of £0.01 each at
£0.10 per share.
On 13 March 2006, the company placed 400,000 ordinary shares of £0.01 each at
£0.10 per share.
On 27 April 2006 the Company granted options to Directors as follows:
G Huber 2,000,000
M Janssen 1,000,000
L Nahon 1,000,000
H Ravid 1,000,000
E Abramovich 1,000,000
C Kaiser 1,000,000
All the above options are over £0.01 ordinary shares at the exercise price of
10p and expire on 26 April 2011.
7. RESERVES Profit and
Share Premium Other reserve Merger reserve Loss account
Total
£'000 £'000 £'000 £'000 £'000
As at 1 January 2006 1,321 - 347 (1,650) 18
Exchange rate - - - 4 4
Issue of shares (net of costs) 867 - - - 867
Share based payments - 30 - - -
Retained loss for the period - - - (413) (413)
Acquisition of subsidiary (net 3,014 - - - 3,014
of costs)
----------------- ----------------- ----------------- ------------------ ----------------
At 30 June 2006 5,202 30 347 (2,059) 3,520
======== ======== ======== ========= ========
NOTES TO THE REPORT AND FINANCIAL STATEMENTS (continued)
8. LOSS PER SHARE
The loss per share of 0.75p (31 December 2005: loss 2.15p; 30 June 2005: loss
0.76p) has been calculated on the weighted average number of shares in issue
during the year namely 54,515,537 (31 December 2005: 23,120,334; 30 June 2005:
22,102,001) and losses of £413,045 (31 December 2005: loss £496,852; 30 June
2005: loss £167,985).
The calculation of diluted loss per share of 0.72p (31 December 2005: loss
2.14p; 30 June 2005: loss 0.72p) is based on the loss on ordinary activities
after taxation and the diluted weighted average of 56,977,075 (31 December 2005:
23,190,334; 30 June 2005: 23,190,334) shares.
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 June 2006, which comprise the Consolidated Profit and
Loss Account, the Consolidated Statement of Total Recognised Gains and Losses,
the Consolidated Balance Sheet, the Consolidated 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 June 2006.
haysmacintyre Fairfax House
Chartered Accountants 15 Fulwood Place
Registered Auditors London
WC1V 6AY
20 September 2006
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