RNS Number:8275B
Crosby Capital Partners Inc
09 August 2007
Crosby Capital Partners Inc.
("Crosby" or "the Company")
Interim Results - Six months ended 30 June 2007
London, 9 August 2007: Crosby Capital Partners (AIM: CSB), a leading
independent, deal-focused, Asia-oriented merchant banking and asset management
group, today announces its interim results for the six months ended 30 June
2007.
Financial Highlights
*Turnover - US$12.4 million (2006: US$3.8 million)
*Loss attributable to shareholders - US$26.3 million (2006: Profit of US$
70.3 million)
*Shareholder equity - US$71.2 million (2006: US$223.1 million)
*Loss per share - US$10.82 cents (2006: Earnings per share of US$28.97
cents)
*Assets under management - over US$1.5 billion (At 30 June 2006: US$1
billion)
*Cash flow positive with cash and cash equivalents increasing by US$4.3
million to US$14.2 million during the six months ended 30 June 2007
The results for the six months ended 30 June 2007 were significantly influenced
by a fall during the period in the share price of IB Daiwa Corporation ("IB
Daiwa") from 76 yen to 50 yen, which generated an unrealised mark to market loss
of US$23.9 million.
Operational Highlights
Crosby Wealth Management ("CWM") - revenue and net profits at CWM were
significantly ahead of budget and assets under management grew by approximately
40% over the six months under review.
Crosby Active Opportunities Fund ("CAOF") - CAOF recorded a net return of
approximately 16% for the first six months of the year and succeeded in
attracting further subscriptions. On 1 May 2007, Crosby invested US$5 million
into CAOF.
Leed Petroleum PLC ("Leed") - it is scheduled that on 15 August 2007 (after the
close of the period of review), Leed (formerly Darcy Energy Holdings UK, Ltd.),
part of the IB Daiwa group in which Crosby owns 24.02%, will be admitted to the
AIM market of the London Stock Exchange with a market capitalisation of
approximately US$239 million and raising US$100 million of new capital. At the
offer price, IB Daiwa's initial equity investment of US$10 million is valued at
US$100 million.
Orchard Petroleum Inc, ("Orchard") - During the first quarter, the Merchant
Banking team completed the US$130 million takeover of Orchard. The acquisition
was financed by a combination of senior debt and convertible preference shares
provided by a small group of investors including the Crosby Active Opportunities
Fund. Crosby has earned a significant stake in the privatised company and once
the acquisition finance has been repaid, will own approximately 24% of the
equity of Orchard Petroleum.
Indago Petroleum Limited ("Indago") - on 14 March 2007, Indago announced that,
subject to shareholder approval, it would be disposing of a portfolio of oil and
gas assets and paying a special dividend of 60 pence per share. The special
dividend resulted in a net cash inflow of US$17.4 million to Crosby.
Fermiscan Holdings Limited ("Fermiscan") - on 16 February 2007, the Dragon Fund
Inc., a fund managed by Crosby Asset Management and owned by Techpacific Capital
Limited, subscribed for 8.5 million new ordinary shares in Fermiscan at A$1.50
per share. On 26 April 2007, Crosby announced that it had signed a memorandum of
understanding covering the commercialisation of Fermiscan's test for breast
cancer in the Japanese market.
Contact:
Crosby Capital
Steve Fletcher, Chief Operating Officer +44 20 7590 2800
Dawnay, Day Corporate Finance
David Rae / Edward Gay +44 20 7509 4570
Copies of the interim report are available for collection from Crosby's
London offices at 243 Knightsbridge, London, SW7 1DN and electronic copies
can be obtained from the Company's website www.crosby.com.
Chairman's Report
There was considerable progress during the first half of the year in all areas
of Crosby's business. Despite the financial results being significantly
influenced by a fall in the share price of IB Daiwa ("IBD") from 76 yen to 50
yen, which generated an unrealised loss of US$23.9 million, the underlying
performance of our major business lines was satisfactory. Crosby was cash flow
positive during this period with cash and cash equivalents increasing by US$4.3
million to US$14.2 million. This was largely the result of the partial
monetisation of our investment in Indago Petroleum Limited ("Indago") through
the net receipt of US$17.4 million as a result of a special dividend.
The performance of Crosby Wealth Management ("CWM") was particularly
encouraging. CWM's assets under management increased by 40% and both revenue and
profits were significantly ahead of budget. At IBD, despite share price
weakness, there was continued progress in developing the company as a natural
resource asset trading company. The IPO and deconsolidation of IB Daiwa's
subsidiary Leed Petroleum (formerly Darcy Energy), which occurred after the
close of the reporting period, are important steps towards securing IB Daiwa's
long term development. The transaction will provide Leed with the capital to
fully exploit the potential of its asset portfolio whilst enabling IB Daiwa to
pursue new business opportunities and book a US$30 million gain on its
investment.
The developments at CWM and IB Daiwa provide clear illustrations of Crosby's
long-term approach: at CWM we are successfully building a business from the
start-up phase that contributes to the strategic development of the asset
management business as a source of stable, high quality earnings, and at IB
Daiwa we are working patiently with IB Daiwa's management to restructure the
company and monetise our investment. A more comprehensive business review of the
first six months of 2007 is provided later in the Interim Report.
As usual the progress seen during the first half is a testimony to the
hard-work, skill and creativity of the executives and staff that make up the
Crosby team. I would like to thank them on behalf of Crosby's shareholders for
their efforts.
Robert Owen
Chairman
Chief Executives Officer's Review & Outlook
It has been good to see Crosby's business continue to move forward on several
fronts during the first six months of 2007.
Our involvement with Fermiscan Holdings Limited ("Fermiscan") and the growth in
the Asset Management businesses reflect the continued drive to diversify the
industry sectors in which we're involved and build a high quality, stable income
stream that complements the income derived from the deal-making side of the
business. It also emphasises that the primary skill-set of Crosby's people is
the identification of relative value and pricing anomalies rather than
forecasting market movements or specialisation in a particular sector or
industry.
Overall it is very pleasing however, to see the rewards from some of our
previous work being realised. The special dividend from Indago ensured that
Crosby was cash-flow positive during the first half of the year and takes us a
step closer to the full monetisation of the asset, and the successful takeover
of Orchard has provided us with a 23.75% stake in the profits of the transaction
once certain of the acquisition financing has been repaid.
Our stake in IB Daiwa remains unchanged at 24.02% and as such continues to be an
important investment for the firm. The IPO of IB Daiwa's subsidiary Darcy, now
renamed Leed Petroleum plc, has not only provided the funding to further develop
Leed's asset portfolio but also confirms that there has been a considerable
increase in the value of the Leed business during IB Daiwa's ownership - when IB
Daiwa purchased Leed in December 2005 it had an enterprise value of US$57.5
million and at the IPO offer price Leed has a market capitalisation of US$239
million. At the offer price, this has resulted in an increase in the equity
value of IB Daiwa's investment from US$10 million to approximately US$100
million. As a result, IB Daiwa has booked an extraordinary gain of
approximately US$30 million, and, at the issue price, there remains the
potential for a further US$60 million gain. We continue to work very closely
with the management of IB Daiwa to help them strengthen their balance sheet and
capital markets presence, and, thus, to enable them to fully develop their
existing businesses whilst pursuing new business opportunities. At the same
time, we are supporting their efforts to achieve a return from the Kanri Post to
a normal JASDAQ listing.
Looking forward to the second half of the year, I remain optimistic that we will
continue to monetise our investment portfolio, actively initiate new deals and
continue to build our asset management businesses.
Simon Fry
Chief Executive Officer
BUSINESS REVIEW
Merchant Banking
Orchard
The Crosby led takeover of Orchard by Eskdale Petroleum Pty Limited ("Eskdale")
was completed in March 2007. At the offer price, Orchard had a market
capitalisation of approximately US$130 million. In addition to the US$50 million
bank financing provided by Commonwealth Bank of Australia, Eskdale funded its
acquisition through the issue of preference shares to parties including CAOF.In
return for the initial acquisition work and for structuring, leading and
executing the takeover on behalf of a small group of investors, including the
Crosby Active Opportunities Fund, Crosby will own 23.75% of the bid vehicle
after repayment of the acquisition financing.
On 23 May 2007, Orchard entered into a Property Exchange Agreement with
Livingstone Petroleum Ltd (LPL AU) in respect of certain interests in oil and
gas leases in Sacramento and San Joaquin Basin, California. The agreement
consolidates Orchard's interests on projects with established production and
relatively low risk development prospects, and provides Orchard with critical
mass within its operations in the Sacramento Basin, increasing efficiencies
within this project.
The second half of 2007 will see Orchard continuing its drilling programme to
migrate existing reserves from 3P to 2P and 1P, and pursuing further
consolidation of its asset portfolio.
Fermiscan
Fermiscan has the exclusive worldwide patent to commercialise a breast cancer
test which is based on analysing the molecular structure of a person's hair to
detect cancer. The test is far less invasive than alternative procedures such as
mammograms, ultra sounds and biopsies, and is suitable for women from a wide
range of ages, whilst the mammogram is generally regarded as only being suitable
for women above the age of 40.
Trial results to date have demonstrated that the test has the potential to
become a reliable non-invasive screening alternative in the detection of breast
cancer. Subject to a positive outcome to this trial, Fermiscan will begin
commercialisation in Australia and in licensee countries towards the end of the
year.
On 26 April 2007, Crosby announced that it had signed a memorandum of
understanding covering the commercialisation of Fermiscan's test for breast
cancer in the Japanese market. The completion of the Japan feasibility study is
scheduled for the second half of the year, after which, subject to Crosby and
Fermiscan reaching satisfactory commercial agreement, Crosby will be the
Japanese licensee for a period of 10 years (with an option to extend).
The number of annual screening mammograms in Japan is estimated at 14 million
and Fermiscan and Crosby estimate that the target population of women in Japan
suitable for the test is at least 38 million. With the many benefits that the
test offers over mammograms and other more invasive procedures the market
potential is significant.
Crosby is the fund manager of the Dragon Fund Inc., a fund owned by Techpacific
Capital Limited, which subscribed for 8.5 million new ordinary shares in
Fermiscan at A$1.50 per share in February 2007.
Marathon
In July 2006, Crosby led a cash offer for ASX-listed uranium miner Marathon
Resources Ltd. (Marathon", MTN AU) at A$0.68 per share, a premium of 23.6% to
the previous day's close. On 9 March 2007, the offer was increased to A$3.52 per
share, a 6.7% premium to the previous day's closing price. At A$3.52, Marathon
had a market capitalisation of approximately US$161 million. This revised offer
was allowed to expire on 4 July 2007 at which time the Marathon stock price
closed at A$6.68 per share.
Asset Management
During the first six months of 2007, assets under management ("AuM") increased
by 32% to over US$1.5 billion and turnover rose to US$12.2 million (compared
with US$3.5 million in the same period during the previous year). The continued
growth in the Asset Management business was driven by an exceptional performance
at CWM where AuM grew by 40%, and both turnover and pre-tax profit significantly
outperformed budget.
CAOF returned a net 16.3% in the first half of the year and closed the period
with approximately US$90 million of AuM. Since CAOF's inception in December
2006, it has made five investments and has successfully exited one of these
investments and realized gains from the partial sale of another. The net asset
value of CAOF as at 30 June 2007, after adjusting for all fees and expenses, was
US$1,166.11 per share, up 16.6% since inception.
Investment Portfolio
The Group's investment portfolio largely consists of its equity stakes derived
from Merchant Banking transactions. The group's largest listed positions are a
24.02% equity holding in JASDAQ-listed IB Daiwa (3587 JP), a 6.23% equity
holding in AIM-quoted Indago (IPL LN) and a 1.73% equity holding in ASX-listed
White Energy Company Limited ("White Energy", WEC AU). Further details of the
investment portfolio can be found in Note 14 to the interim financial
information.
IB Daiwa
Darcy
In February 2007, Darcy raised US$18 million by issuing news shares that
represented 13.4% of the then enlarged share capital. This fundraising provided
capital to develop the Grand Isle acquisition and to pursue further growth
opportunities. Also in February 2007, the B4 well at East Cameron Block 318
commenced production following the discovery of commercial quantities of gas.In
April, May and June 2007, Darcy acquired additional production, development and
exploration assets including 100% working interests in certain Sorrento Dome
leases in onshore Louisiana and Eugene Island exploration leases offshore from
Louisiana in the Gulf of Mexico. Following these acquisitions, Darcy's audited
reserves increased to 36 bcfe, 95 bcfe and 320 bcfe on a 1P, 2P and 3P basis
respectively. Since IB Daiwa's acquisition of Darcy in December 2005, the 1P, 2P
and 3P reserves have increased by 175%, 290% and 680% respectively.
These acquisitions provide Darcy with additional acreage for development and
exploration, an increase in producing assets and a base from which to expand its
operational capabilities. To raise capital to fully exploit Darcy's newly
acquired assets and to enable Darcy to further develop its existing portfolio,
whilst pursuing new business opportunities, IB Daiwa announced on 25 June 2007
that Darcy had commenced procedures for an initial public offering of Darcy on
AIM. Following the period under review, to facilitate its initial public
offering, Darcy changed its name to Leed Petroleum ("Leed") on 24 July 2007 and
effected a capital reorganisation on 3 August 2007. Leed (LDP LN) is to be
admitted to AIM on 15 August 2007 having raised approximately US$100 million of
new capital. At the offer price, Leed has a market capitalisation of
approximately US$239 million. Following Leed's admission to AIM, IB Daiwa's
shareholding in Leed will be 41.7%. At the offer price, IB Daiwa's initial
equity investment of US$10.2 million has increased by approximately 880% to
US$100 million. As a consequence of the transaction, IB Daiwa will book a gain
on deemed disposal of about US$30 million.
Lodore
Given the delays in certain exploration projects and cost-over-runs, and
constraints faced by Lodore Delaware Petroleum LLC "(Lodore") raising financing,
Lodore has found it necessary to seek to farm out certain high priority
prospects whilst opting out of certain lower priority projects. Under these
circumstances, Lodore decided to take a prudent approach and provide against the
exploration costs for certain projects and, consistent with this approach IB
Daiwa decided to write down Lodore-related goodwill. This resulted in IB Daiwa
issuing a further revision to its financial forecast for the year ended 31 March
2007.
Lodore continues to make progress in completing its current drilling programme.
At the Endeavor prospect, drilling progress has been delayed due to three
separate well control events caused by high pressure kicks which necessitated
the drilling of sidetracks. The costs related to these events are largely
covered by insurance. IB Daiwa announced on 19 June 2007 that the current plan
was to drill the third sidetrack back to a depth of approximately 18,000 feet
where a further string of expandable liner would be set and then the well
drilled on to beyond the depth where the last high pressure kick was
experienced.
Drilling and testing of the three deepest zones at Plum Deep, the first well at
Padre Island, were completed during the six months under review and it was
determined that the zones were non-commercial. The testing of the shallowest
zone is scheduled for the second half of the year.
Drilling at North West Kaplan is scheduled to commence following the completion
of drilling at Endeavor.
Indago
In March 2007, Indago announced that it had agreed, subject to shareholder
approval, to dispose of 100% of its production and development assets and
approximately 50% of its exploration assets. Following the completion of the
sale, Indago also announced that, subject to shareholder approval, it would
declare a special dividend of 60 pence per share and consolidate its shares on a
5 for 1 basis. The net effect of this is that, net of minority interests and
related financing, Crosby received approximately US$17.4 million of cash in
April 2007, whilst still retaining further upside through owning the still
listed shares of Indago (post share consolidation). Indago still holds the
remaining exploration assets plus sufficient cash to undertake its exploration
programme. At 30 June 2007, the quoted market price of Indago was #1.035 per
share.
White Energy
On 10 May 2007, White Energy announced that BHP Billiton, the world's largest
diversified resources company, plans to use its coal upgrade process for its
vast sub-bituminous reserves. Additionally, BHP agreed to provide US$35 million
in convertible loan financing that will enable White Energy to accelerate the
roll out of its patented coal technology and to act as White Energy's exclusive
global marketing agent for upgraded export coal produced at its coal technology
plants. White Energy owns the worldwide license to a coal briquetting process
that increases the energy efficiency of low quality coal. At 30 June 2007, the
quoted market price of White Energy was A$2.9 per share.
INDEPENDENT REVIEW REPORT TO CROSBY CAPITAL PARTNERS INC.
INTRODUCTION
We have been instructed by the Company to review the financial information for
the six months ended 30 June 2007 which comprises the consolidated income
statement, consolidated balance sheet, consolidated statement of changes in
equity, condensed consolidated cash flow statement and the related notes 1 to 21
. We have read the other information contained in the interim report which
comprises only the Highlights, the Chairman's Report, the Chief Executive
Officer's Review & Outlook, and the Business Review 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 APB Bulletin 1999/4 "Review of Interim Financial Information". Our review
work has been undertaken so that we might state to the Company those matters we
are required to state to them in a review 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 for our review work, for this report, or for
the conclusions we have formed.
DIRECTORS' RESPONSIBILITIES
The interim report, including the financial information contained therein, is
the responsibility of, and has been approved by, the directors. The directors
are responsible for preparing the interim report and ensuring 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.
The interim report has been prepared in accordance with International Accounting
Standard 34 "Interim Financial Reporting".
REVIEW WORK PERFORMED
We conducted our review in accordance with guidance contained in Bulletin 1999/4
"Review of Interim Financial Information" issued by the Auditing Practices Board
for use in the United Kingdom. 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 unless
otherwise 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
International Standards on Auditing (UK and Ireland) 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 2007.
GRANT THORNTON UK LLP
CHARTERED ACCOUNTANTS
BIRMINGHAM
9 August 2007
Consolidated Income Statement
Unaudited Unaudited Audited
six months ended six months ended year ended
30 June 30 June 31 December
2007 2006 2006
Notes US$'000 US$'000 US$'000
Restated
(Note 16)
Continuing operations
Turnover/Revenue 5 12,357 3,807 8,899
(Loss)/gain on
financial assets
at fair value
through profit
or loss 14 (6,028) 80,896 (25,572)
Loss on financial
liabilities at
fair value through
profit or loss 16 (443) (413) (846)
Other income 6 316 1,775 2,570
Administrative expenses (17,669) (17,669) (35,822)
Distribution expenses (88) (42) (14)
Other operating expenses (4,571) (2,174) (4,949)
--------- --------- ---------
(Loss)/profit
from operations 7 (16,126) 66,180 (55,734)
Finance costs - (545) (163)
Excess of fair
value over cost of
acquired subsidiary - 959 959
Share of profit/(loss)
of a jointly
controlled entity 30 5 (25)
Share of (losses)/
profits of associates (80) (129) 59
--------- --------- ---------
(Loss)/profit
before taxation (16,176) 66,470 (54,904)
Taxation expense 9 (937) (97) (176)
--------- --------- ---------
(Loss)/profit
for the period (17,113) 66,373 (55,080)
--------- --------- ---------
Attributable to:
Equity holders
of the Company (26,309) 70,259 (57,207)
Minority interests 9,196 (3,886) 2,127
--------- --------- ---------
(Loss)/profit
for the period (17,113) 66,373 (55,080)
--------- --------- ---------
Dividend - - -
--------- --------- ---------
(Loss)/earnings per share US cents US cents US cents
for (loss)/profit attributable
to equity holders of the
Company during the period
- Basic 10 (10.82) 28.97 (23.58)
-------- --------- ---------
- Diluted 10 N/A 28.06 N/A
-------- --------- ---------
Consolidated Balance Sheet
Unaudited Unaudited Audited
30 June 30 June 31 December
2007 2006 2006
Notes US$'000 US$'000 US$'000
Restated
(Note 16)
ASSETS
Non-current assets
Property, plant and equipment 11 606 582 493
Interests in associates 578 467 654
Interest in a jointly controlled
entity 45 94 135
Available-for-sale investments 5,228 225 198
Intangible assets 12 488 569 488
--------- -------- ---------
6,945 1,937 1,968
Current assets
Amounts due from parent and 89 22 1,217
related companies
Trade and other receivables 13 4,827 2,517 4,234
Financial assets at fair value 14 59,159 239,875 127,542
through profit or loss
Cash and cash equivalents 14,249 18,896 9,987
--------- -------- ---------
78,324 261,310 142,980
--------- -------- ---------
Total assets 85,269 263,247 144,948
--------- -------- ---------
LIABILITIES
Current liabilities
Amounts due to parent and (100) (26) (121)
related companies
Trade and other payables 15 (7,515) (10,188) (10,802)
Deferred income - (12) -
Provision for taxation (999) (96) (99)
Financial liabilities at fair value
through profit or loss 16 - (8,753) (9,186)
Other loans - (5,021) -
--------- -------- ---------
Total liabilities (8,614) (24,096) (20,208)
--------- -------- ---------
EQUITY
Share capital 17 2,433 2,427 2,427
Reserves 68,797 220,713 94,161
--------- -------- ---------
Equity attributable to equity
holders of the Company 71,230 223,140 96,588
Minority interests 5,425 16,011 28,152
--------- -------- ---------
Total equity 76,655 239,151 124,740
--------- -------- ---------
Total equity and liabilities 85,269 263,247 144,948
--------- -------- ---------
Consolidated Statement of Changes in Equity
Equity attributable to equity holders of the Company
Share Share Capital Employee Foreign Investment
capital premium reserve share-based exchange revaluation
compensation reserve reserve
reserve
US$'000 US$'000 US$'000 US$'000 US$'000 US$'000
At 1 January
2007 2,427 5,915 23,455 1,976 72 (2)
Issue of new 6 321 - (77) - -
shares upon
exercise of
share options
Employee - - - 452 - -
share-based
compensation
(Loss)/profit
for the period - - - - - -
Dividend paid
to minority
shareholders - - - - - -
Gain on
revaluation - - - - - 31
Disposal of a
subsidiary
undertaking
(Note 20) - - - - - -
Exchange
difference on
consolidation - - - - 218 -
------ ------ ------- -------- ------ -------
At 30 June 2007 2,433 6,236 23,455 2,351 290 29
------ ------ ------- -------- ------ -------
Equity attributable to equity holders of the Company (cont'd)
Profit Minority Total
and loss Interest Equity
account
US$'000 US$'000 US$'000
At 1 January
2007 62,745 28,152 124,740
Issue of new - - 250
shares upon
exercise of
share options
Employee - 2 454
share-based
compensation
(Loss)/profit
for the period (26,309) 9,196 (17,113)
Dividend paid
to minority
shareholders - (19,339) (19,339)
Gain on
revaluation - - 31
Disposal of a
subsidiary
undertaking
(Note 20) - (12,586) (12,586)
Exchange
difference on
consolidation - - 218
------ ------- --------
At 30 June 2007 36,436 5,425 76,655
------ ------- --------
Consolidated Statement of Changes in Equity
Share Share Capital Employee Foreign Investment
capital premium reserve share-based exchange revaluation
compensation reserve reserve
reserve
US$'000 US$'000 US$'000 US$'000 US$'000 US$'000
At 1 January
2006 2,394 4,321 23,455 918 (193) (2)
Issue of new 33 1,594 - (385) - -
shares upon
exercise of
share options
Employee - - - 681 - -
share-based
compensation
(Loss)/profit
for the period - - - - - -
Effect on share
repurchase of
a subsidiary - - - - - -
Capital
contribution
from minority
shareholders - - - - - -
Exchange
difference on
consolidation - - - - 113 -
------ ------ ------- -------- ------ -------
At 30 June 2006 2,427 5,915 23,455 1,214 (80) (2)
------ ------ ------- -------- ------ -------
Equity attributable to equity holders of the Company (cont'd)
Profit Minority Total
and loss Interest Equity
account
US$'000 US$'000 US$'000
At 1 January
2006 119,952 19,892 170,737
Issue of new - - 1,242
shares upon
exercise of
share
options
Employee - - 681
share-based
compensation
(Loss)/profit
for the period 70,259 (3,886) 66,373
Effect on share
repurchase of
a subsidiary - (125) (125)
Capital
contribution
from minority
shareholders - 130 130
Exchange
difference on
consolidation - - 113
------- ------- --------
At 30 June 2007 190,211 16,011 239,151
------- ------- --------
Condensed Consolidated Cash Flow Statement
Unaudited Unaudited Audited
six months six months year ended
ended ended 31 December
30 June 30 June 2006
2007 2006
Note US$'000 US$'000 US$'000
Net cash inflow/(outflow) from
operating activities 35,021 8,446 (6,687)
Net cash (outflow)/inflow from
investing activities 20 (17,204) (413) 321
Net cash (outflow)/inflow from
financing activities (13,564) 412 5,908
---------- ---------- ---------
Net increase/(decrease) in cash
and 4,253 8,445 (458)
cash equivalents
Cash and cash equivalents as at 9,987 10,443 10,443
start of period
Effect of exchange rate 9 8 2
fluctuations
---------- ---------- ---------
Cash and cash equivalents as at
end of period 14,249 18,896 9,987
---------- ---------- ---------
1. Basis of preparation
The Company acts as the holding company of the Group. The Group is principally
engaged in the business of merchant banking and asset management. The address of
the Company's registered office is Cricket Square, Hutchins Drive, P. O. Box
2681, Grand Cayman, KY1 -1111, Cayman Islands. The Company's shares are listed
on the AIM market of the London Stock Exchange.
The Company was incorporated in the Cayman Islands, which does not prescribe the
adoption of any particular accounting framework. The Board has therefore adopted
International Financial Reporting Standards (IFRS) adopted by the International
Accounting Standards Board. The interim financial information complies with the
applicable disclosure provisions of the Rules Governing the Listing of
Securities on the AIM Market of The London Stock Exchange.
The interim financial information has been prepared on the historical cost basis
except for certain financial instruments which are measured at fair value.
It should be noted that accounting estimates and assumptions are used in
preparation of the interim financial information. Although these estimates are
based on management's best knowledge and judgement of current events and
actions, actual results may ultimately differ from those estimates. The areas
involving a higher degree of judgement or complexity, or areas where assumptions
and estimates are significant to the interim financial information, are set out
in Note 3 to the interim financial information.
The interim financial information contained in this report does not constitute
statutory accounts within the meaning of Section 240 of the Companies Act 1985.
The full accounts for the year ended 31 December 2006 received an unqualified
report from the auditors and did not contain a statement under Section 237(2) or
(3) of the Companies Act 1985.
The interim financial information is unaudited but has been reviewed by the
Company's Auditors. A copy of the Auditor's review report is included within
this interim financial information.
2. Principal accounting policies
The interim report has been prepared in accordance with IFRS, including
International Accounting Standard 34 "Interim Financial Reporting".
The principal accounting policies and methods of computation adopted to prepare
the interim financial information are consistent with those detailed in the 2006
annual report published by the Company on 14 March 2007.
3. Critical accounting estimates and judgements
Estimates and judgements are continually evaluated and are based on historical
experience and other factors, including expectations of future events that are
believed to be reasonable under the circumstances.
(i) Critical accounting estimates and assumptions
The Group makes estimates and assumptions concerning the future. The resulting
accounting estimates will, by definition, seldom equal the related actual
results. The estimates and assumptions that have a significant risk of causing a
material adjustment to the carrying amounts of assets and liabilities within the
next accounting period are discussed below:
Fair values of financial instruments
Financial instruments such as financial assets and liabilities at fair value
through profit or loss and available-for-sale investments are initially measured
at fair value. Certain financial instruments are remeasured at fair value at
subsequent reporting dates. The best evidence of fair value is quoted prices in
an active market, where quoted prices are not available for a particular
financial instrument, the Group uses the market values determined by the
internal or external valuation models to estimate the fair value. The use of
methodologies, models and assumptions in pricing and valuing these financial
assets and liabilities requires varying degrees of judgement by management,
which may result in different fair values and results. The assumptions with
regard to the fair value of financial assets and liabilities at fair value
through profit or loss, detailed in Notes 14 and 16 to the interim financial
information, are those that have the most significant risk of causing a material
adjustment to the carrying amounts of assets and liabilities within the next
accounting period.
The only significant assets at fair value through profit or loss not valued at
quoted market prices are as follows:
*Investments in Sunov Petroleum (Pakistan) Limited (US$5.1 million),
which was valued on the basis of the conversion value of a convertible note
issued by that company;
*Investments in ESK Limited to which no value has yet been ascribed
for accounting purposes on the basis the asset it owns is the entire issued
share capital of Orchard Petroleum Limited, the recent acquisition of which was
fully funded by debt and preference shares.
Valuations of share options granted
The fair value of share options granted was calculated using the Binomial option
pricing model which requires the input of highly subjective assumptions,
including the volatility of share price. Because changes in subjective input
assumptions can materially affect the fair value estimate, it is in the opinion
of directors that the existing model will not always necessarily provide a
reliable single measure of the fair value of the share options.
Impairment of assets
The Group conducts impairment reviews of assets when events or changes in
circumstances indicate that their carrying amounts may not be recoverable
annually in accordance with the relevant accounting standards. An impairment
loss is recognised when the carrying amount of an asset is lower than the
greater of its net selling price or the value in use. In determining the value
in use, management assesses the present value of the estimated future cash flows
expected to arise from the continuing use of the asset and from its disposal at
the end of its useful life. Estimates and judgments are applied in determining
these future cash flows and the discount rate.
Impairment of receivables
Management determines impairment of receivables on a regular basis. A
considerable amount of judgement is required in assessing the ultimate
realisation of these receivables, including the current creditworthiness and the
past collection history of each debtor. If the financial conditions of debtors
of the Group were to deteriorate, resulting in an impairment of their ability to
make payments, additional impairment may be required.
Current taxation and deferred taxation
The Group is subject to income taxes in various jurisdictions. Significant
judgement is required in determining the amount of the provision for taxation
and the timing of payment of the related taxation. Where the final tax outcome
is different from the amounts that were initially recorded, such differences
will impact the income tax and deferred tax provisions in the periods in which
such determination are made.
Deferred tax assets relating to certain tax losses will be recognised when
management considers it is probable that future taxable profit will be available
against which the temporary differences or tax losses can be utilised. Where the
expectation is different from the original estimate, such difference will
impact, where applicable and appropriate, the recognition of deferred tax assets
and taxation in the periods in which such estimate is changed.
(ii) Critical judgements in applying the Group's accounting policies
Management in applying the accounting policies considers that the most
significant judgement they have had to make is the designation of financial
assets and liabilities at fair value through profit or loss which affect the
amount recognised in the financial statements.
4. Segment Information
a) Primary reporting format - business segment:
Merchant banking
-------------------------------------------------
Unaudited Unaudited Audited
six months six months year ended
ended ended 31 December
30 June 30 June 2006
2007 2006
US$'000 US$'000 US$'000
Turnover/
Revenue 133 273 1,545
--------- -------- --------
Segment
results (18,314) 73,473 (45,168)
Unallocated - - -
loss from
operations --------- -------- --------
Asset Management
-------------------------------------------------
Unaudited Unaudited Audited
six months six months year ended
ended ended 31 December
30 June 30 June 2006
2007 2006
US$'000 US$'000 US$'000
Turnover/
Revenue 12,224 3,534 7,354
--------- -------- --------
Segment
results 4,489 (1,804) (1,401)
Unallocated - - -
loss from
operations --------- -------- --------
Unallocated
-------------------------------------------------
Unaudited Unaudited Audited
six months six months year ended
ended ended 31 December
30 June 30 June 2006
2007 2006
US$'000 US$'000 US$'000
Turnover/
Revenue - - -
--------- -------- --------
Segment
results - - -
Unallocated (2,301) (5,489) (9,165)
loss from
operations --------- -------- --------
Consolidated
-------------------------------------------------
Unaudited Unaudited Audited
six months six months year ended
ended ended 31 December
30 June 30 June 2006
2007 2006
US$'000 US$'000 US$'000
Turnover/
Revenue 12,357 3,807 8,899
--------- -------- --------
Segment
results (13,825) 71,669 (46,569)
Unallocated (2,301) (5,489) (9,165)
loss from
operations --------- -------- --------
(Loss)/ profit (16,126) 66,180 (55,734)
from operations
Finance costs - (545) (163)
Excess of fair
value over cost
of acquired
subsidiary - 959 959
Share of
profit/(loss)
of a jointly
controlled 30 5 (25)
entity
Share of
(losses)/
profits of (80) (129) 59
associates
--------- -------- --------
(Loss)/profit
before taxation (16,176) 66,470 (54,904)
Taxation
expense (937) (97) (176)
--------- -------- --------
(Loss)/profit
for the period (17,113) 66,373 (55,080)
--------- -------- --------
4. Segment Information (Cont'd)
Primary reporting format - business segment (Cont'd):
Merchant banking
-------------------------------------------------
Unaudited Unaudited Audited
six months six months year ended
ended ended 31 December
30 June 30 June 2006
2007 2006
US$'000 US$'000 US$'000
Segment assets 68,136 252,381 136,602
Unallocated assets - - -
------- -------- -------
Total assets 68,136 252,381 136,602
------- -------- -------
Segment liabilities 3,864 16,877 16,487
Unallocated liabilities - - -
------- -------- -------
Total liabilities 3,864 16,877 16,487
------- -------- -------
Other information
Capital expenditure 14 16 67
Depreciation 34 33 66
Impairment of goodwill - - -
Impairment of
receivables - - 222
------- -------- -------
Asset Management
-------------------------------------------------
Unaudited Unaudited Audited
six months six months year ended
ended ended 31 December
30 June 30 June 2006
2007 2006
US$'000 US$'000 US$'000
Segment assets 11,390 4,909 4,882
Unallocated assets - - -
------- ------- ------
Total assets 11,390 4,909 4,882
------- ------- ------
Segment liabilities 2,182 1,425 354
Unallocated liabilities - - -
------- ------- ------
Total liabilities 2,182 1,425 354
------- ------- ------
Other information
Capital expenditure 13 9 4
Depreciation 30 36 60
Impairment of goodwill - - 238
Impairment of
receivables - - -
------- ------- ------
Unallocated
-------------------------------------------------
Unaudited Unaudited Audited
six months six months year ended
ended ended 31 December
30 June 30 June 2006
2007 2006
US$'000 US$'000 US$'000
Segment assets - - -
Unallocated assets 5,743 5,957 3,464
------ ------ -------
Total assets 5,743 5,957 3,464
------ ------ -------
Segment liabilities - - -
Unallocated 2,568 5,794 3,367
liabilities
------ ------ -------
Total liabilities 2,568 5,794 3,367
------ ------ -------
Other information
Capital expenditure 258 128 139
Depreciation 107 92 172
Impairment of - - -
goodwill
Impairment of - - -
receivables
------ ------ -------
Consolidated
-------------------------------------------------
Unaudited Unaudited Audited
six months six months year ended
ended ended 31 December
30 June 30 June 2006
2007 2006
US$'000 US$'000 US$'000
Segment assets 79,526 257,290 141,484
Unallocated assets 5,743 5,957 3,464
-------- ------- -------
Total assets 85,269 263,247 144,948
-------- ------- -------
Segment liabilities 6,046 18,302 16,841
Unallocated 2,568 5,794 3,367
liabilities
--------- ------- -------
Total liabilities 8,614 24,096 20,208
---------- ------- -------
Other information
Capital expenditure 285 153 210
Depreciation 171 161 298
Impairment of - - 238
goodwill
Impairment of - - 222
receivables
--------- ------- -------
Notes:
i) Merchant Banking - provision of corporate finance and other advisory
services and the changes in fair value of financial assets and liabilities
through profit or loss arising from the Group's merchant banking activities.
ii) Asset Management - provision of fund management, asset management and
wealth management services
iii) Unallocated - primarily items related to corporate offices
b) Secondary reporting format -geographical segment: The Group's activities
are mainly operated or carried out in Asia.
5. Turnover/Revenue
Unaudited Unaudited Audited
six months six months year ended
ended ended 31 December
30 June 30 June 2006
2007 2006
US$'000 US$'000 US$'000
--------- ---------- -----------
Corporate finance and other 133 273 1,545
advisory fees
Fund management fee income 942 439 916
Wealth management services
fee 11,282 3,095 6,438
--------- ---------- -----------
12,357 3,807 8,899
--------- ---------- -----------
6. Other income
Unaudited Unaudited Audited
six months six months year ended
ended ended 31 December
30 June 30 June 2006
2007 2006
US$'000 US$'000 US$'000
--------- ---------- -----------
Bad debts recovery 66 22 22
Bank interest income 242 190 479
Gain on disposal of
investments - 75 404
Management and consultancy
fee income 1 30 56
Fee on redemption and
arrangement of loans - 1,300 1,300
Other interest income - 144 144
Others 7 14 165
--------- ---------- -----------
316 1,775 2,570
--------- ---------- -----------
7. (Loss)/profit from operations
Unaudited Unaudited Audited
six months six months year ended
ended ended
30 June 30 June 31 December
2006
2007 2006
US$'000 US$'000 US$'000
--------- --------- -----------
(Loss)/profit from operations is
arrived at after charging:
Auditors' remuneration 101 63 123
Depreciation 171 161 298
Operating lease charges in
respect of 514 282 707
rented premises
Foreign exchange losses,
net 182 111 306
--------- --------- -----------
8. Employee remuneration (including directors' remuneration)
Unaudited Unaudited Audited
six months six months year ended
ended ended
30 June 30 June 31 December
2006
2007 2006
US$'000 US$'000 US$'000
--------- ---------- -----------
Fees 50 26 56
Salaries, allowances and
benefits in kind 4,676 4,043 8,364
Commissions paid and
payable 4,276 1,393 2,758
Bonus paid and payable 6,166 9,919 19,491
Share-based compensation 454 681 1,722
Pensions - defined
contribution scheme 50 35 75
Social security costs 106 94 193
--------- ---------- -----------
15,778 16,191 32,659
--------- ---------- -----------
9. Taxation expense
Unaudited Unaudited Audited
six months six months year ended
ended ended
30 June 30 June 31 December
2006
2007 2006
US$'000 US$'000 US$'000
--------- ---------- -----------
Current tax
- United Kingdom 19 97 96
- Overseas 918 - 80
--------- ---------- -----------
937 97 176
--------- ---------- -----------
United Kingdom and overseas income tax for the period have been calculated at
the rates prevailing in the relevant jurisdictions.
The Group has significant unrelieved tax losses, the utilisation of which is
uncertain and consequently no deferred tax asset has been recognised. (30 June
2006: US$Nil; 31 December 2006: US$Nil).
10. (Loss)/earnings per share
Unaudited Unaudited Audited
six months six months year ended
ended ended
30 June 30 June 31 December
2006
2007 2006
Number of Number of Number of
shares shares shares
----------- ----------- ------------
Weighted average
number of shares for
calculating basic
(loss)/earnings per
share 243,195,442 242,491,298 242,583,904
Effect of dilutive
potential ordinary
shares: 4,644,815 7,908,456 5,561,810
Share options
----------- ----------- ------------
Weighted average
number of shares for
calculating diluted
(loss)/earnings per
share 247,840,257 250,399,754 248,145,714
----------- ----------- ------------
The calculation of the basic earnings per share for the six months ended 30 June
2007 is based on the loss attributable to equity holders of the Company of
US$26,309,000 (30 June 2006: profit attributable to equity holders of the
Company of US$70,259,000; 31 December 2006: loss attributable to equity holders
of the Company of US$57,207,000) and the weighted average number of ordinary
shares of 243,195,442 (30 June 2006: 242,491,298; 31 December 2006:
242,583,904).
No diluted earnings per share is shown for the six months ended 30 June 2007 and
for the year ended 31 December 2006, as the outstanding share options were
anti-dilutive.
The calculation of diluted earnings per share for the six months ended 30 June
2006 is based on the profit attributable to equity holders of the Company of
US$70,259,000 and the weighted average number of ordinary shares in issue during
the period after adjusting for the number of dilutive potential ordinary shares
granted under the Company's share option scheme of 250,399,754. None of the
dilutive shares relate to interest or similar expense recognisable in the income
statement for the period.
11. Property, plant and equipment
Unaudited Unaudited Audited
30 June 30 June 31 December
2007 2006 2006
US$'000 US$'000 US$'000
Net book amount at 1 January 493 590 590
Additions 285 153 210
Disposals (1) - (9)
Depreciation for the period/year (171) (161) (298)
---------- ---------- ----------
Net book amount at 30 June / 31 December 606 582 493
---------- ---------- ----------
12. Intangible assets
Unaudited Unaudited Audited
30 June 30 June 31 December
2007 2006 2006
US$'000 US$'000 US$'000
Net book amount at 1 January 488 562 562
Acquisition of trademark - 7 8
Additional investment in a subsidiary - - 156
Impairment - - (238)
---------- ---------- ----------
Net book amount at 30 June / 31 December 488 569 488
---------- ---------- ----------
13. Trade and other receivables
Unaudited Unaudited Audited
30 June 30 June 31 December
2007 2006 2006
US$'000 US$'000 US$'000
Trade receivables -gross 3,408 1,369 931
Less: provision for impairment of
receivables (157) (22) (222)
---------- ---------- ----------
Trade receivables - net 3,251 1,347 709
Other receivables 555 404 2,577
Deposits and prepayments 1,021 766 948
---------- ---------- ----------
Total 4,827 2,517 4,234
---------- ---------- ----------
The fair value of trade and other receivables is considered by the directors not
to be materially different from the carrying amounts.
The Group allows a credit period ranging from 15 to 45 days to its asset
management clients, where applicable.
At 30 June 2007, included in trade and other receivables are trade receivables
of US$3,251,000 (30 June 2006: US$1,347,000; 31 December 2006: US$709,000) aged
as follows:
Unaudited Unaudited Audited
30 June 30 June 31 December
2006 2006 2006
US$'000 US$'000 US$'000
0 - 30 days 2,829 315 630
31 - 60 days 422 759 79
61 - 90 days - 35 -
Over 90 days - 238 -
---------- ----------- ----------
3,251 1,347 709
---------- ----------- ----------
14. Financial assets at fair value through profit or loss
Unaudited Unaudited Audited
30 June 30 June 31 December
2007 2006 2006
Notes US$'000 US$'000 US$'000
Restated
Held for trading
Listed securities:
- Equity securities - (1) 5,528 8,224 15,063
Australia
- Equity securities - Japan (2) 41,533 188,543 65,388
- Equity securities - United (3) 6,891 31,893 39,084
Kingdom
-------- ---------- ----------
Fair value of listed 53,952 228,660 119,535
securities
Unlisted securities:
- Equity securities - - 273 2,800
Australia
- Equity securities - British
Virgin Islands (4)&(5) 5,107 - 5,107
- Equity securities - - 10,842 -
Mauritius
-------- ---------- ----------
Fair value of unlisted 5,107 11,115 7,907
securities
-------- ---------- ----------
Sub-total 59,059 239,775 127,442
-------- ---------- ----------
Designated as financial assets
at fair value through profit
or loss on initial
recognition
Unlisted securities:
- Equity securities - United 100 100 100
Kingdom
-------- ---------- ----------
Total 59,159 239,875 127,542
-------- ---------- ----------
The movement in financial assets at fair value through profit or loss is as
follows:-
Unaudited Unaudited Audited
six months six months year ended
ended ended
30 June 30 June 31 December
2007 2006 2006
US$'000 US$'000 US$'000
Restated
At 1 January 127,542 157,276 157,276
Additions 252 42,253 30,994
Transfer from disposal of a
subsidiary undertaking
(Note 20) 320 - -
Disposal of a subsidiary
undertaking (Note 20) (15,540) - -
Other disposals (5,347) (40,550) (30,015)
Transfer from minority
interests - - (5,141)
Dividend received (42,040) - -
(Loss)/gain on financial
assets at fair value
through profit or loss (6,028) 80,896 (25,572)
------------- ----------- ----------
At 30 June/ 31 December 59,159 239,875 127,542
------------- ----------- ----------
Notes:
1. At 30 June 2007, the Group held a total of 2,136,296 shares in White
Energy Company Limited ("White Energy"), listed on the Australian Stock Exchange
and representing 1.73% of its issued share capital, through its 100% owned
subsidiary, Crosby Investment Holdings Limited, which are valued at US$5,259,000
, arrived at on the basis of their quoted market price at 30 June 2007 of A$2.9
per share. The Group acquired 2,036,296 shares from the exercise of options
during the six months ended 30 June 2007.
2. At 30 June 2007, the Group held a total of 102,425,000 shares of IB Daiwa
Corporation, a JASDAQ listed Japanese company and representing 24.02% of its
issued share capital, through its 100% owned subsidiaries, Crosby Capital
Partners Limited and Sunov Crosby (Holdings) Limited ("SCH"), which are valued
at US$41,533,000, arrived at on the basis of their quoted market price at 30
June 2007 of Y50 per share.
3. At 30 June 2007, the Group held 3,322,374 shares of Indago Petroleum
Limited ("Indago"), a company listed on the AIM market of the London Stock
Exchange and representing 6.23% of its issued share capital, through its 100%
subsidiary SCH. The shares held by the Group are valued at US$6,891,000 arrived
at on the basis of their quoted market price at 30 June 2007 of #1.035 per share
. The holding of shares in Indago were distributed from SCH's 56.6% subsidiary,
Silk Route Petroleum Limited ("Silk Route"), in June 2007. Indago paid a special
dividend of 60 pence per share in April 2007 resulting in a total dividend
received by Silk Route of approximately US$42,040,000. Silk Route used the cash
received from the dividend from Indago to settle its share of the original
financing for the purchase of the underlying assets of Indago in the amount of
US$9,629,000 and then, from the balance of the proceeds, paid its own cash
dividend of which the share of SCH was approximately US$17,471,000. Once Silk
Route had settled its share of the acquisition financing the existing pledge
over its Indago shares was released. Following this release, Silk Route sold
550,000 Indago shares realising proceeds of US$1,157,000 which were also
distributed to its shareholders. As further explained in Note 16, the
consolidated balance sheet as at 30 June 2006 has been restated to separately
present a financial liability at fair value through profit and loss. This
reclassification has no overall impact on the results or cashflows for the six
months ended 30 June 2006 other than presenting the change in the value of the
financial liability separately.
4. At 30 June 2007, the Group, through its 100% owned subsidiary SCH, owns
38.98% of Sunov Petroleum (Pakistan) Limited ("SPP") which is classified as a
financial asset at fair value through profit or loss, which in turn owns 100% of
Eastern Petroleum Limited ("EP"). EP, a company incorporated in Mauritius in
turn owns 100% of the issued share capital of Spud Energy Pty Limited ("Spud"),
a company registered in Australia, which owns a 40% interest in the Bolan
Concession and a 7.9% interest in the Badar Mining Lease, both gas fields
located onshore in Pakistan. At 30 June 2007, the investment in SPP is valued at
US$5,107,000 based on the conversion value of a US$2,500,000 convertible note
issued by SPP on 30 September 2006 which is convertible into equity at its
option. The conversion value is based on a pre-money valuation of Spud of US$13
,100,000. This valuation has been supported by an independent valuation of the
Group's expected discounted cashflows. On conversion of the US$2,500,000
convertible note, the shareholding of SCH in SPP will be further reduced to
32.7%.
5. At 30 June 2007, the Group, through its 100% subsidiary, Crosby
Investment Holdings Limited, owns 12.5% of ESK Limited ("ESK"), a company
incorporated in the British Virgin Islands, which is classified as a financial
asset at fair value through profit and loss. Following the repayment of certain
of the acquisition finance, the Group's direct equity interest in ESK will be
increased from 12.5% to 23.75% on conversion of one class of the preference
shares following their redemption. ESK, through its wholly owned subsidiaries,
Crosby Orchard Fund Inc. and Eskdale Petroleum Pty Limited, owns 100% of Orchard
Petroleum Limited ("Orchard"), an oil and gas company with a portfolio of
interests in California that was listed on the Australian Stock Exchange. At 30
June 2007, the investment in ESK was valued at US$Nil based on the acquisition
cost of Orchard less the third party financing raised to acquire it.
15. Trade and other payables
Unaudited Unaudited Audited
30 June 30 June 31 December
2007 2006 2006
US$'000 US$'000 US$'000
Other payables 99 975 81
Accrued charges 7,416 9,213 10,721
----------- ---------- ----------
Total 7,515 10,188 10,802
----------- ---------- ----------
The Group had no trade payables throughout the periods.
The fair value of trade and other payables is considered by the directors not to
be materially different from carrying amounts.
16. Financial liabilities at fair value through profit or loss
Unaudited Unaudited Audited
six months ended six months ended year ended
30 June 30 June 31 December
2007 2006 2006
US$'000 US$'000 US$'000
Restated
Balance at 1 January 9,186 8,340 8,340
Change in fair value 443 413 846
Repayment (9,629) - -
------------------------ -------- --------- ----------
Balance at 30 June/31
December - 8,753 9,186
------------------------ --------- --------- ----------
This financial liability at fair value through profit or loss represents the
Group's share of a loan payable by the founder shareholders of Indago. It is
deemed a financial liability at fair value through profit or loss as the Group's
share of the loan is limited to the value of the shares it held in Indago and
was therefore a derivative financial liability.
The fair value of this derivative financial liability at 30 June 2006 and 31
December 2006, was in the Directors' opinion, the Group's share of the original
loan plus accrued interest, as the fair value of the equity interest in Indago
at 30 June 2006 and 31 December 2006 was US$31,893,000 and US$39,084,000
respectively, which exceeded the fair value of the loan.
In the Interim Report for the six months ended 30 June 2006, this financial
liability amounted to US$8,753,000 and was treated as part of the discount
against the financial assets at fair value through profit or loss. Accordingly,
the balance sheet at 30 June 2006 has been restated to present this financial
liability separately. This reclassification has no overall impact on the results
and cashflow for the period ended 30 June 2006 other than presenting the change
in the value of the financial liability separately.
17. Share capital
Number of Value
ordinary shares
US$'000
Authorised 5,000,000,000 50,000
(par value of US$0.01 each)
----------- ------------
Issued and fully paid
(par value of US$0.01 each)
At 30 June 2006 and 31 December 2006 242,675,000 2,427
Issue of shares on exercise of share
options 600,000 6
----------- ------------
At 30 June 2007 243,275,000 2,433
----------- ------------
18. Material related party transactions
(a) During the period, the Group had the following material related party
transactions:
Unaudited Unaudited Audited
six months six months year ended
ended ended 31 December
30 June 30 June 2006
2007 2006
US$'000 US$'000 US$'000
--------- ---------- -----------
Management services fee
received from an investee
company 90 90 180
Management services fee
paid to a fellow subsidiary (89) (60) (178)
Payment to an investee
company in respect of
exercise of warrants (17) (17,110) (17,110)
--------- ---------- -----------
(b) At the balance sheet date, the Group had the following amounts due from
related parties. The amounts due from related parties are interest free,
unsecured and have no fixed repayment terms.
Unaudited Unaudited Audited
six months six months year ended
ended ended 31 December
30 June 30 June 2006
2007 2006
US$'000 US$'000 US$'000
--------- ---------- -----------
IB Daiwa - - 866
Sunov Petroleum (Pakistan)
Limited - - 351
Eskdale Petroleum Pty Ltd 50 - -
--------- ---------- -----------
50 - 1,217
--------- ---------- -----------
19. Contingencies
The Group had no material contingent liabilities at 30 June 2007.
20. Disposal of a subsidiary undertaking
The only significant disposal of a subsidiary undertaking during the six months
ended 30 June 2007 was in respect of ESK Limited and its subsidiaries ("ESK
group"). The disposal is a consequence of the Group no longer controlling the
ESK group together with a reduction in the Group's shareholding from 30% to
12.5%. As the underlying investment of ESK group was treated at 31 December 2006
as a financial asset at fair value through profit or loss, this disposal only
results in a redesignation of the equity interest in ESK group to that same
category of assets at 30 June 2007.
Unaudited
30 June
2007
US$'000
Net assets/(liabilities) disposed of:
Trade and other receivables 50,000
Financial assets at fair value
through profit or loss (Note 14) 15,540
Cash and cash equivalents 12,250
Amounts due to parent and
related companies (743)
Trade and other payables (13,692)
Other loans (50,000)
---------
13,355
Less: Minority interests (12,586)
Transfer to financial assets at fair value through profit or loss
(Note 14) (320)
---------
449
Total consideration -
---------
Loss on disposal (449)
---------
An analysis of net outflow of cash and cash equivalents in respect
of the disposal of a subsidiary, which is included under net cash
outflow from investing activities, is as follows:
Cash consideration -
Cash and cash balances disposed of (12,250)
---------
Net cash outflow on disposal (12,250)
---------
21. Risk management objectives and policies
The Group is exposed to a variety of financial risks, as detailed below, which
are managed through its Executive and Operations Committees in close cooperation
with the Board of Directors:
(a) Foreign currency risk
The Group's exposure to foreign currencies is limited to its investments in
foreign subsidiaries which are financed internally and to financial assets at
fair value through profit or loss where the foreign currency risk is managed as
an integral part of the investment return.
(b) Credit risk
Generally, the maximum credit risk exposure of financial assets is the carrying
amount of the financial assets as shown on the face of the balance sheet (or in
the detailed analysis provided in the notes to the financial information).
Credit risk, therefore, is only disclosed in circumstances where the maximum
potential loss differs significantly from the financial assets's carrying
amount.
The Group's trade and other receivables are actively monitored to avoid
significant concentrations of credit risk.
(c) Cash flow and fair value interest rate risks
Cash flow is managed by means of ensuring sufficient cash and cash equivalents
are held to support the trading activities of the Group. The Group does not
enter into any of its major merchant banking transactions unless it has the
necessary funding secured, principally through the realisation of assets held
for trading or external borrowings. The cash and cash equivalents are invested
such that the maximum available interest rate is achieved with nominal risk.
The Group currently has no financial liabilities with floating interest rates.
This information is provided by RNS
The company news service from the London Stock Exchange
END
IR XKLFBDVBBBBK
Crosby Asset. (LSE:CSB)
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Crosby Asset. (LSE:CSB)
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