Croatian leisure developer Cubus Lux is raising £10.8 million for its OIive Island project and pitching for another – Muzin, twice as big.

Run by its Austrian chairman and 14.7 per cent shareholder, banker Gerhard Huber, London-based Cubus made £244,000 pre-tax in the first half-year on turnover up 171 per cent to £886,000. These results reflect a £744,000 profit on the resale of a development project and compare with a £413,000 interim loss in 2006, a figure that the new Americanised IFRS accounting system converted into a £1.1 million profit because of a one-off licence revaluation.

The company entered into contracts for 125 berths at its Sutomiscica marina, with the capacity for 214 berths, let for one to three years at an average pre-paid £3,100 a year, with a target of 160, allowing 40 for short-notice, short-stay bookings. Cubus has expanded and upgraded its Casino Las Vegas at Pula, but Huber is focusing most attention on Olive Island, where the company intends to exercise an option to acquire and develop a coastal resort, with 126 villas, 305 flats, restaurants, shops, a marina and a 500-bed four-star hotel.

Cubus, which projects returns on equity ranging from 23 to 29 per cent on marinas and sees returns on its hotel rising from 18 per cent in the first year to 45 per cent in year five, is setting in train a funding for Olive Island to raise between €15 million and €25 million through a convertible bond. Handled by broker Lewis Charles, the bond will pay 8.5 per cent (four per cent above EUROBOR), with an 11.03 per cent redemption yield and will convert into Cubus shares at around 18p, against today's 13p.

If all goes well, Huber foresees multi-million pound profits and says the company is tendering for six more projects, notably Muzin on the Istrian peninsular, where he envisages a hotel, convention centre and two 18-hole golf courses. Floated at 10p three years ago under different management, the shares soon hit 27.5p before collapsing to 8.5p in 2005. Now at 13p, they represent a long-term punt.

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