Annual Report and Accounts
Crescent Hydropolis Resorts PLC
30 June 2006
For immediate release
Stock Exchange Announcement
30th June 2006
CRESCENT HYDROPOLIS RESORTS PLC
FINANCIAL STATEMENTS FOR THE PERIOD ENDED 31 DECEMBER 2005
COMPANY AND INVESTOR INFORMATION
Directors Mr Joachim Hauser Executive Chairman
Mr Mansoor Ijaz Chief Executive
Mr Joachim Kundt Non-Executive Director
Mr David Harris Non-Executive Director
Mr Richard Armstrong Non-Executive Director
Company Number 113151C
Registered Office 15-19 Athol Street
Douglas IM1 1LB
Isle of Man
Nominated Adviser and Broker Nabarro Wells & Co. Limited
Saddlers House
Gutter Lane
London EC2V 6HS
Auditors Chantrey Vellacott DFK LLP
Russell Square House
10-12 Russell Square
London WC1B 5LF
Bankers HSBC Bank PLC
70 Pall Mall
London SW1Y 5EZ
Solicitors McClure Naismith
Pountney Hill House
6 Laurence Pountney Hill
London EC4R 0BL
Registrars Neville Registrars
18 Laurel Lane
Halesowen
West Midlands BD6 3DA
ANNUAL REPORT
Chairman's Statement
Crescent Hydropolis Resorts PLC (CHR), the world's leading developer of
ultra-luxury underwater resort hotels and casinos under the Hydropolis design
concept first conceived and developed by the German architect and CHR's
executive chairman, Joachim Hauser, announces its annual results for the period
ended 31 December 2005. The Company had €2.639.556 in cash as at 31 December.
The main items of expenditure in the annual accounts relate to development costs
associated with the architectural, design, engineering and feasibility studies
of CHR's proposed Hydropolis projects at Qingdao, China and Dubai, United Arab
Emirates, as well as early stage development costs for a proposed Hydropolis
casino/resort project in Monaco. Other items of expenditure included the costs
of admission and the reimbursement of certain expenses incurred prior to
admission. Since admission, additional funds have been raised through private
placings and deployed to fund the aforementioned working capital costs.
I am pleased to report that your Company succeeded in obtaining the first
government approvals for a deepwater Hydropolis project in Qingdao, China, on
China's Yellow Sea coastline, in April 2006. Planning for this important
project began in September 2005, shortly after admission. The world's first
Hydropolis deepwater project is expected to have two phases - the construction
of the HydroTower(R) landstation, planned for completion prior to the start of
the 2008 Beijing Olympic Games, and the underwater Hydropalace(R), planned for
completion in 2009.
Detailed marine studies, surveys of steel manufacturing and shipbuilding yards
and site surveys of the land on the Yellow Sea Coast have been conducted. A
local project development company that will undertake the construction effort is
presently being formed and your Company's executive management team is in
negotiations with financing partners to complete the equity fundraising
necessary for the Hydropolis Qingdao project to proceed.
I am also pleased to report that CHR remains in active negotiations with the
government of Dubai for the world's first shallow water Hydropolis hotel, as
well as with official entities in two other potential locations to bring
additional Hydropolis franchises on the world map.
CHR maintains strong relations with its industrial partners, including Siemens
AG, Hydropolis' engineering and technical adviser, SIBC Industrial Building
Consultants GmbH, the proposed project manager for each of the proposed
Hydropolis properties, Duik Combinatie Nederland BV (DCN), underwater tunnel and
concrete experts for Hydropolis' shallow water designs and Ostsee-Kontor, marine
and naval consultants on structural design for Hydropolis' deep water
Hydro-Palaces.
..............................................................................
Joachim Hauser, Executive Chairman
MUNICH, 30 June 2006
DIRECTORS' REPORT FOR THE PERIOD ENDED 31 DECEMBER 2005
The Directors are pleased to present their report on the principal activities of
the Company, a review of business and future developments together with the
audited financial statements for the period.
The Company was incorporated on 31 March 2005.
The Directors focused much of their attention the half year that comprised the
first full fiscal year of operations on two principal activities: first, the
complete development of the Company's premier Hydropolis deepwater project for
Qingdao, China, including the necessary architectural, design, engineering and
financing plans; and second, to continue sourcing appropriate construction, debt
and equity financing for the Company's projects as determined appropriate by the
Board.
In September, the Directors made certain strategic changes in the project
proposal for Dubai to insure that proposal remains central to the Company's
development of shallow water Hydropolis projects. Project proposals were also
developed for Monaco and Las Vegas, as twin casino resort Hydropolis properties,
and presented for review to government officials in Monaco as well as investor
groups in Las Vegas.
The Company's results are presented in the pages following and reflect the
venture capital nature of your Company. CHR lost 6.2c per share, fully diluted,
during the period ended 31 December 2005.
Directors who served during the year, Messrs Hauser, Ijaz, Keenan and Armstrong
of whom were appointed on 23 June 2005, Mr Kundt on 6 July 2005 and Mr Harris on
24 September 2005 on which date Mr Keenan resigned as Director, and their
interests in the share capital of the Company were:
Note 31 December 2005
Ordinary Shares
Mr Joachim Hauser, Executive Chairman (1) 34,300,149
Mr Mansoor Ijaz, Chief Executive 2,625,149
Mr Joachim Kundt -
Mr David Harris
Mr Richard Armstrong 437,500
Mr Laurence Keenan -
Note
(1) Mr Klaus Foerster holds shares in trust for the benefit of Poseidon,
Neptune and Apollo investors, of which the shares listed above accrue for the
benefit of Mr Hauser, his children and certain of his close associates.
Substantial Shareholdings
The Company has been notified, as at 27 June 2006, of the following interests of
3% or more in its issued share capital:
Number of Percentage of total
Ordinary Shares Issued Share Capital
Klaus Foerster as 56,300,149 69.94
Trustee for 'Poseidon, Neptune, Apollo Investors'
Suhail Al Dhaheri 3,525,000 4.35
Mansoor Ijaz 2,625,149 3.24
Going Concern
After making enquiries, the Directors consider that the Company has adequate
resources to continue in operational existence for the foreseeable future and
are satisfied that the Company is a going concern. For this reason they
continue to adopt the going concern basis in preparing the financial statements.
Directors' Responsibilities
Company law requires the directors to prepare financial statements for each
financial year which give a true and fair view of the state of affairs of the
Company as at the end of the financial year and of the profit or loss of the
Company for that year. In preparing these financial statements, the directors
are required to:
• select suitable accounting policies and apply them consistently;
• make judgements and estimates that are reasonable and prudent;
• state whether applicable accounting standards have been
followed; and
The directors are responsible for keeping proper accounting records which
disclose with reasonable accuracy at any time the financial position of the
Company and to enable them to ensure that the financial statements comply with
the Companies Act 1985. They are also responsible for safeguarding the assets
of the Company and hence for taking reasonable steps for the prevention and
detection of fraud and other irregularities.
Auditors
A resolution for the re-appointment of Chantrey Vellacott DFK LLP as auditors to
the company is to be proposed at the forthcoming Annual General Meeting.
Approved by the Board of Directors on 30 June 2006
and signed on its behalf by
........................................................................
Musawer Mansoor Ijaz, Chief Executive
INDEPENDENT AUDITORS' REPORT TO THE SHAREHOLDERS OF
CRESCENT HYDROPOLIS RESORTS PLC
We have audited the financial statements of Crescent Hydropolis Resorts Plc for
the period ended 31 December 2005, comprising the income statement, the balance
sheet, the cash flow statement and related notes. These financial statements
have been prepared under the accounting policies set out therein.
This report is made solely to the Company's members, as a body, in accordance
with section 235 of the Companies Act 1985. Our audit work has been undertaken
so that we might state to the Company's members those matters we are required to
state to them in an auditors' report and for no other purpose. To the fullest
extent permitted by law, we do not accept or assume responsibility to anyone
other than the Company and the Company's members as a body, for our audit work,
for this report, or for the opinions we have formed.
Respective responsibilities of Directors and Auditors
The directors' responsibilities for preparing the annual report and the
financial statements in accordance with applicable law and United Kingdom
Accounting Standards (United Kingdom Generally Accepted Accounting Practice) are
set out in the statement of directors' responsibilities.
Our responsibility is to audit the financial statements in accordance with
relevant legal and regulatory requirements and International Standards on
Auditing (UK and Ireland). We report to you our opinion as to whether the
financial statements give a true and fair view and whether the financial
statements have been properly prepared in accordance with the Companies Act
1985.
We report to you whether in our opinion the information given in the directors'
report is consistent with the financial statements. We also report to you if,
in our opinion, the Company has not kept proper accounting records, if we have
not received all the information and explanations we require for our audit, or
if information specified by law regarding directors' remuneration and other
transactions is not disclosed.
We read other information contained in the annual report, and consider whether
it is consistent with the audited financial statements. This other information
comprises only the directors' report and the chairman's report. We consider the
implications for our report if we become aware of any apparent misstatements or
material inconsistencies with the financial statements. Our responsibilities do
not extend to any other information.
Basis of audit opinion
We conducted our audit in accordance with International Standards on Auditing
(UK and Ireland) issued by the Auditing Practices Board. An audit includes
examination, on a test basis, of evidence relevant to the amounts and
disclosures in the financial statements. It also includes an assessment of the
significant estimates and judgements made by the directors in the preparation of
the financial statements, and of whether the accounting policies are appropriate
to the Company's circumstances, consistently applied and adequately disclosed.
We planned and performed our audit so as to obtain all the information and
explanations which we considered necessary in order to provide us with
sufficient evidence to give reasonable assurance that the financial statements
are free from material misstatement, whether caused by fraud or other
irregularity or error. In forming our opinion we also evaluated the overall
adequacy of the presentation of information in the financial statements.
Opinion
In our opinion:
• the financial statements give a true and fair view, in accordance
with United Kingdom Generally Accepted Accounting Practice, of the state of the
Company's affairs as at 31 December, and of its results for the period then
ended; and
• the financial statements have been properly prepared in accordance
with the Companies Act 1985.
CHANTREY VELLACOTT DFK LLP
Chartered Accountants
London
30 June 2006
INCOME STATEMENT FOR THE PERIOD ENDED 31 DECEMBER 2005
Note Period Ended
31 December 2005
€
Management and Project Development Costs 2,294,282
Administrative Expenses 410,907
Loss on ordinary activities before interest 2 2,705,189
Interest receivable 5 13,339
Loss on ordinary activities before taxation 2,691,850
Tax 6 -
RETAINED LOSS 2,691,850
Loss per share
Basic and diluted 7 6.2c
All of the above amounts relate to continuing activities.
There were no recognised gains and losses other than the results
shown above.
The notes on pages 12 to 14 form part of these financial
statements.
BALANCE SHEET AS AT 31 DECEMBER 2005
ASSETS Note 31 December
2005
€
Non-current assets
Intangible assets 8 40,750,000
Current assets
Trade and other receivables 9 1,711
Cash and cash equivalents 2,639,566
TOTAL ASSETS 43,391,267
EQUITY AND LIABILITIES
Shareholders' equity
Share capital 11 810,286
Capital reserves 34,368,282
Accumulated losses (2,691,850)
Non-current liabilities 32,486,718
Long-term liabilities 12 10,750,000
Total non-current liabilities 10,750,000
Current liabilities
Trade and other payables 10 154,549
Total current liabilities 154,549
Total liabilities 10,904,549
TOTAL EQUITY & LIABILITIES 43,391,267
Approved by the Board of Directors on 30 June 2006
Signed on behalf of the Board of Directors:
..............................................................................
Mansoor Ijaz
Chief Executive and Director
The notes on pages 12 to 14 form part of these financial statements
STATEMENT OF CHANGES IN EQUITY FOR THE PERIOD ENDED 31 DECEMBER 2005
Share Capital Accumulated Total
capital reserves losses €
€ € €
Balance at incorporation - - - -
Loss for the period - - (2,691,850) (261,850)
Total recognised expense for the period - - (2,691,850) (2,691,850)
Issue of share capital 810,826 34,737,714 - 35,548,000
Cost of issue of share capital - (369,432) - (369,432)
Balance at 31 December 2005 810,826 34,368,282 (2,691,850) 32,486,718
CASH FLOW STATEMENT FOR THE PERIOD ENDED 31 DECEMBER 2005
Period ended
31 December
2005
€
Cash flow from operating activities
Loss from operations (2,705,189)
Operating cash flows before movement in working capital (2,705,189)
Change in receivables (1,711)
Change in payables 154,549
Net cash used in operating activities (2,552,351)
Cash flows from returns on investments and servicing of finance
Interest received 13,339
Net cash from returns on investments and servicing of finance 13,339
Cash flows from financing activities
Share capital issued (net of costs) 5,178,568
Net cash from financing activities 5,178,568
Net increase in cash and cash equivalents 2,639,556
The notes on pages 12 to 14 form part of these financial statements
NOTES TO THE FINANCIAL STATEMENTS FOR THE PERIOD ENDED 31 DECEMBER 2005
1. Accounting Policies
The following accounting policies have been applied consistently in dealing with
items which are considered material in relation to the Company's financial
statements.
(a) Basis of preparation
The financial statements have been prepared in accordance with International
Financial Reporting and Accounting Standards adopted by the EU and therefore
comply with Article 4 of the EU IAS Regulation.
(b) Foreign currencies
Assets and liabilities in foreign currencies are translated into
euros at rates of exchange ruling at the balance sheet date. Transactions
during the period are translated at the rate of exchange ruling at the date of
the transaction. Differences arising on exchange are dealt with through the
income statement.
(c) Intangible assets
Intangible assets are stated at cost less accumulated amortisation and any
impairment losses. Amortisation is charged so as to write off the cost of the
asset over its estimated useful economic life.
The useful lives of assets are reviewed annually.
(d) Financial Instruments
The company does not hold or issue derivative financial
instruments for trading purposes.
Short-term receivables and payables are not treated as financial
instruments.
2. Loss on ordinary activities
2005
€
Loss on operations is stated after the following
Auditors' remuneration - audit services 8,759
- non-audit services 23,435
Exchange gains/losses 9,706
3. Employees
The weekly average number of employees during the period, including executive
directors, was two.
4. Directors' emoluments
No directors' were paid remuneration during the period.
5. Interest receivable
2005
€
Bank interest 13,339
6. Taxation
No provision has been made for taxation as no taxable profits have been
generated in the period.
7. Earnings per share
The calculation of basic and diluted earnings per share are
based on the following data:
2005
€
Loss for the purpose of basic earnings per share 2,906,733
There were no dilutive instruments over the period.
Number of shares
Weighted average number of ordinary shares in issue during the
year 43,585,444
8. Intangible fixed assets
2005
€
Cost
Additions 40,750,000
At 31 December 2005 40,750,000
As discussed in note 11, on 15 June 2005, CHR acquired the Hydropolis Project
concept and all the associated know how from Crescent Hydropolis Holdings LLC
for a consideration of 60,000,000 ordinary shares issued as fully paid at €0.50
per share (such shares being issued on 17 June 2005) and payment of €10,750,000
in cash in instalments with the final payment due in December 2009.
The directors believe that the know how has an indefinite useful economic life.
9. Trade and other receivables
2005
€
Other receivables 1,711
10. Trade and other payables
2005
€
Accruals 154,549
11. Share Capital
31 December
2005
€
Authorised:
2,000,000,298 ordinary shares of €0.01 each 10,000,000
Called up, allotted and fully paid:
81,028,631 ordinary shares of €0.01 each 810,286
The Company was incorporated on 31 March with an authorised share capital of
£2,000 comprising 2,000 ordinary shares of £1 each.
On incorporation, the Company issued two ordinary shares of £1 each.
On 9 June 2005, 1,998 existing authorised but unissued ordinary shares of £1
each were cancelled.
On the same day the authorised share capital was increased to £2 and €10,000,000
by the creation of 1,000,000,000 Ordinary Shares of €0.01 each.
On the same day, each of the existing issued ordinary shares of £1 each were
converted into stock and reconverted into ordinary shares.
On 15 June 2005, 12,500,000 ordinary shares were issued fully paid for cash at
€0.01 per share.
On 15 June 2005, CHR acquired the Hydropolis Project concept and all the
associated know how from Crescent Hydropolis Holdings LLC for a consideration of
60,000,000 ordinary shares issued as fully paid at €0.50 per share (such shares
being issued on 17 June 2005) and payment of €10,750,000 in cash in instalments
with the final payment due in December 2009.
On 23 June 2005, CHR raised €4,125,000 by way of placing, conditional on
Admission, 6,875,000 ordinary shares at €0.60 per share. Issue costs of €253,000
have been set against the share premium account.
On 1 July 2005, 1,333,333 ordinary shares were issued fully paid
for cash at €0.75 per share.
On 28 July 2005, 155,000 ordinary shares were issued fully paid
for cash at €0.97 per share.
On 2 September 2005, 165,000 ordinary shares were issued fully
paid for cash at €0.91 per share.
12. Non-current liabilities
2005
€
Deferred consideration 10,750,000
On 15 June 2005, CHR acquired the Hydropolis Project concept and all the
associated know how from Crescent Hydropolis Holdings LLC for a consideration of
60,000,000 ordinary shares issued as fully paid at €0.50 per share (such shares
being issued on 17 June 2005) and payment of €10,750,000 in cash in instalments
with the final payment due in December 2009.
The payments fall due as follows:
€2,750,000 to be paid upon completion of financing for the first Hydropolis
Project.
€2,000,000 to be paid 60 days following publication of the annual accounts for
the period to 31 December 2006.
€2,000,000 to be paid 60 days following publication of the annual accounts for
the period to 31 December 2007.
€2,000,000 to be paid 60 days following publication of the annual accounts for
the period to 31 December 2008.
€2,000,000 to be paid 60 days following publication of the annual accounts for
the period to 31 December 2009.
In the event that on any instalment payment date CHR has insufficient working
capital then the instalment is accrued until the following year without
interest. Any unpaid consideration following the publication of the annual
accounts for the period to 31 December 2009 will become due 60 days following
publication of the annual accounts for each successive year until CHR is able to
make payment and does so in full.
13. Related party transactions
During the year Crescent Investment Management LLC (CIM), a Delaware corporation
with its registered office at 100 United Nations Plaza, 44th Floor, New York, NY
and a company in which Mr Ijaz and Mr Hauser are interested, made payments on
behalf of the Company in relation to the creation of the Company and various
listing costs. These have now been repaid in full at the year-end date.
14. Financial Instruments
(a) Interest rate risk
The Company holds no fixed rate financial assets or liabilities.
Cash balances attract a floating rate of interest.
(b) Liquidity risk
The Company's policy has been to finance its operations through the issue of
equity share capital.
(c) Currency risk
All material monetary assets and liabilities are denominated in the functional
currency of the Company.
15. Publication of the accounts
A copy of the report and accounts have been posted to shareholders and can be obtained free of charge from the offices
of Nabarro Wells & Co Limited, Saddlers House, Gutter Lane London EC2V 6HS.
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