RNS Number : 9490A
Crosby Asset Management Inc
08 August 2008
8 August 2008
Crosby Asset Management Inc.
(the 'Company' or 'CAM' and together with its subsidiaries the 'Group')
Interim Results - Six months ended 30 June 2008
Summary Financials
* Turnover 2008: US$17.6 million, of which US$15.0 million was from continuing operations (2007: US$12.4 million)
* Loss Attributable to Shareholders 2008: US$46.4 million, of which US$20.7 million was from continuing operations (2007: US$26.3
million)
* Shareholder Equity 2008: US$18.8 million (2007: US$71.2 million)
* Loss Per Share (basic) 2008: US$0.19 (2007: US$0.11)
* Assets Under Management 2008: US$2.2 billion (2007:US$1.5 billion)
CAM has received notice from a single intermediary that it intends to redeem investments amounting to approximately 30% of the assets
under management in the Forsyth fund of funds product range. In the main, the redemptions relate to funds within the Forsyth Funds plc
structure listed in Dublin. The redemptions, whilst significant, do not materially affect the Firm's Cayman and Bermuda listed funds and
relate to funds that have historically had a minimal impact on CAM's profitability.
Financial Highlights
* The 21% increase in turnover from continuing operations is driven by a US$8.9 million contribution from the Forsyth range of
multi-manager funds (this business was acquired in September 2007) partially offset by a US$6.0 million decrease at Crosby Wealth Management
("CWM").
* The loss attributable to shareholders is largely due to a combination of losses on the Company's equity holding in IB Daiwa
Corporation ("IBD") and restructuring costs related to the Forsyth multi-manager fund range (including the write-off of goodwill-related
costs). These two factors together account for US$29.6 million of the losses.
* However, both of these factors are expected to be of reduced influence in future. The restructuring of the Forsyth-related
business is almost complete and, during the first six months of the year the Firm substantially reduced it's position in IBD.
* At the close of the period, CAM held US$15.2 million of cash and minimal debt.
* The US$700 million year-on-year increase in assets under management ("AUM") is mainly due to the Forsyth acquisition and a 20%
year-on-year growth in AUM at CWM. However, in early August, after the period under review, the Forsyth Funds plc fund range saw a
significant redemption from a single intermediary.
Business Highlights
* The change of name from Crosby Capital Partners Inc. to Crosby Asset Management Inc. ("CAM') and the restructuring of the business
to position CAM as a 'pure-play' asset management company were successfully completed during the second quarter.
* Over the six months ended 30 June 2008, CAM sold 61,550,000 shares of IBD realizing proceeds of US$11,468,065. As at the date of
this report, CAM owns 20,850,000 IBD shares representing 4.96% of its issued share capital.
* CAM's distribution and investment management teams were significantly enhanced by the appointment of four experienced sales people
and three investment managers, all with proven track records of building multi-manager fund businesses.
* During the first half of 2008, AUM within the Forsyth multi-manager fund range has declined by 35% to US$603 million. As stated
above, in early August, after the period under review, the Forsyth Funds plc fund range saw a significant redemption from a single
intermediary. This redemption has accelerated the plans to complete the re-engineering of the cost base and the refocus, relaunch and
rebrand of the multi-manager business.
* At Crosby Wealth Management ("CWM"), AUM showed a small increase in the first six months of the year and the business remained
profitable, despite a sharp reversal of market conditions in Asia.
* Orchard Petroleum completed a US$240 million long-term financing package. As a result of the completion of this fund raising, the
company now owns 100% of the South Belridge Field as opposed to the 50% that was owned through the initial acquisition of Orchard Petroleum.
The fund raising also includes a US$110 million facility to enable Orchard to undertake an accelerated drilling programme.
About CAM
CAM is a global asset management group with offices in London, Hong Kong and Singapore. CAM has a diversified portfolio of multi-asset,
hedge fund and wealth management businesses. Growth at CAM will be derived from joint-ventures and acquisitions and the organic expansion of
existing business lines. CAM is quoted on the AIM market of the London Stock Exchange.
Chairman's Report
I am pleased to report that the change of name from Crosby Capital Partners Inc. to Crosby Asset Management Inc. ("CAM') was approved at
the Annual General Meeting in May and that we have successfully completed the restructuring of the business, as outlined in the 2007 annual
report, to position CAM as a 'pure-play' asset management company. In the first six months of the year, CAM posted a loss attributable to
shareholders of US$45.9 million, driven mainly by a combination of continued weakness in the share price of IB Daiwa Corporation ("IBD") and
restructuring costs and intangible assets-related write-offs linked to the Forsyth multi-manager fund range. Although it is disappointing to
be once again reporting a financial loss, I am encouraged by the strength of the Group's balance sheet in the face of very negative market
conditions, and by the continued focus of the executive management team on building a business with a long-term future.
In this respect, I would highlight three developments in particular:
---We significantly enhanced our distribution and investment management teams with the appointment of four experienced sales people and
three investment managers, all with proven track records of building fund-of-funds businesses.
---At Crosby Wealth Management ("CWM"), assets under management showed a small increase in the first six months of the year and the
business remained profitable, despite a sharp reversal of market conditions in Asia.
---In July, after the end of the reporting period, Orchard Petroleum completed a US$240 million financing programme that enables the
company to increase its production base and reserves through a multi-well drilling programme.
During the first half of the year, we significantly reduced our shareholding in IBD. As at the time of writing, our stake had fallen
below 5%--the level at which an equity holding is discloseable in Japan. In line with our reduced interest in IBD, Simon Fry and I stepped
down from its board of directors. Johnny Chan remains a director. Although, our holding in IBD introduced an unfortunate level of volatility
into (and adversely affected) our stock price, overall it was a profitable transaction for the Company.
The first half of the year saw a fall in assets under management within the Forsyth range of funds, due to both client redemptions and
declines in fund net asset values. In early August, after the period under review, the Forsyth UCITS III fund range suffered a significant
redemption from a single intermediary. The decline in assets under management within certain funds has resulted in those funds becoming
uneconomic in their current form. Whilst it is always disappointing to lose assets, these developments have accelerated the implementation
of existing plans to complete the re-engineering of the cost base and the refocusing of the product range. These plans will effect a shift
from a relatively inflexible, research-led business model with a high fixed cost base to a more responsive, forward-looking distribution-led
business model focused on two products: a multi-manager, multi-asset long-only fund and a multi-strategy fund of hedge funds
The poor performance of CAM's stock price during the first half of 2008 is, of course, partly attributable to the general fall in the
share prices of banks and asset management companies. It has nevertheless been very disappointing. However, while the current challenging
financial market conditions look set to continue for some time, opportunities have increased within asset management to grow our business
through a combination of joint-ventures, acquisition and the organic development of existing product lines.
Robert Owen
Chairman
Chief Executive Officer's Report
Whilst I'm pleased to be writing my first report as CEO of Crosby Asset Management ("CAM"), I am disappointed to be reporting a loss
attributable to shareholders for the six months ended 30 June 2008 of US$45.9 million. This loss can largely be attributed to a US$16.4
million mark to market loss on our IB Daiwa Corporation ("IB Daiwa") position, IBD's share price fell from �41 at 31 December 2007 to �16 at
30 June 2008, and US$13.2 million of restructuring costs, including a write-off of the intangible assets, related to the Forsyth
fund-of-fund range.
However, both of these factors are likely to be of reduced influence in future. The restructuring of the Forsyth-related business is
almost complete and, during the six months ended 30 June 2008, CAM sold 61,550,000 shares of IBD realizing proceeds of US$11,468,065. As at
the date of this report, CAM owns 20,850,000 IBD shares representing less than 4.96% of its issued share capital.
In contrast, on a more positive, forward-looking, note: turnover increased to US$17.6 million for the six months ended 30 June 2008 (of
which US$15.0 million was from continuing operations), compared with US$12.4 million for the same period last year, and assets under
management were approximately US$2.2 billion as at 30 June 2008, compared to US$1.5 billion at 30 June 2007. These increases are driven by
the growth in the Crosby Wealth Management ("CWM") and the purchase of the Forsyth range of fund-of-fund products in September 2007, and
represent an important part of our strategy to build CAM as an asset management company with a diversified portfolio of multi-manager,
single-manager and wealth management businesses.
As mentioned in the Chairman's report, over the last six months we undertook an extensive reorganisation of the Techpacific/Crosby group
to create a more efficient corporate structure. As part of this, the asset management businesses were separated from the merchant banking
activities. CAM is now a focused on asset management, with all the assets, such as the IBD shares, our interest in Orchard Petroleum and the
Fermiscan licenses, that have been accumulated at CAM as a direct result of our Merchant Banking activities being repackaged as the Crosby
Special Situations Fund, in which CAM is the sole shareholder. These assets will be monetized over time to provide CAM the capital to expand
its activities. I will continue to report to our shareholders any significant changes and developments within this portfolio.
Although IBD has been a rocky, time consuming and volatile deal for CAM the transaction overall has been very profitable. The businesses
that were acquired by IBD, primarily Lodore Resources and Darcy Energy, which was renamed Leed Petroleum PLC and listed on the London AIM
market in August 2007, have had mixed fortunes. After many false starts, Lodore did not discover any substantial oil and gas reserves but
conversely, Darcy did develop and expand production and reserves quite substantially. With the changes in the markets generally and the
length of time it took us to finally obtain IBD's release from the Kanri post we believe that we can reinvest the proceeds from the upside
in the IBD shares more productively in building the asset management business.
As a direct result, both our Chairman, Robert Owen, and I have resigned from the IBD board and Johnny Chan, our Group Managing Director,
based in Hong Kong, although still an IBD board member, has substantially reduced his time commitment to the company. I believe this change
will free us all up to focus on building the core asset management businesses.
Just after this reporting period, Orchard Petroleum completed a US$240 million long-term financing package. As a result of the
completion of this fund raising, ESK Limited (the corporate entity that made the original acquisition of Orchard Petroleum) now owns 100% of
the South Belridge Field as opposed to the 50% that was owned through the initial acquisition of Orchard Petroleum. The fund raising also
includes a US$110 million facility that enables Orchard to undertake an accelerated drilling programme.
The programme commenced in June. It is anticipated that between 30 and 50 new wells will be drilled and bought into production over the
next 12 months in the South Belridge Field alone. The total number of wells drilled and the length of time to achieve this objective
depends upon the number of rigs that can be contracted. At present two rigs are working full time in South Belridge and the management
team's objective is to increase this to four rigs by the end of October. In addition, seven wells have been drilled or completed in the past
few months, making a total of 13 wells drilled and either completed or awaiting testing since the end of 2007. Of these wells, at least five
are being tied in, and are expected to be bought into production in the coming weeks bringing the total number of producing wells in Orchard
to 37. The balance of the wells already drilled will be tested during Q3 and should be tied into production shortly thereafter. A production
update will be provided to shareholders after this completion programme.
Apart from the drilling programme noted above in the South Belridge field, a number of development and exploration wells will be drilled
in other leased areas that are held by Orchard in the next 12 months.
Part of the financing package was used to buy out (and cancel) a 4.25% royalty interest in South Belridge thus increasing net cash flow from
the increasing number of producing wells in this field.
The sole investor in the US$240million financing of debt and equity is an affiliate of Mercuria Energy Group Ltd, who were part of the
original CAM-led consortium that acquired Orchard Petroleum. Following the completion of the financing, CAM's direct shareholding in ESK has
been consolidated on a fully diluted basis at 5%. However, this will rise to an effective economic interest of between 9% and 10% after the
repayment of principal to preference shareholders. Separately the Crosby Active Opportunities Fund, managed by CAM has a shareholding of
approximately 9%. As at June 30, CAM's interest in Orchard was marked at cost. Consequently, with the price of oil and natural gas near
their all time highs, CAM's stake in Orchard provides the potential for significant gains which have yet to be reflected in CAM's financial
statements.
After the exceptional performance seen in 2007, activity at Crosby Wealth Management ("CWM") slowed markedly during the six months under
review as the turbulence and downward trend in the markets adversely impacted both turnover and margins. Nevertheless, CWM maintained its
assets under management and remained profitable during the six months ended 30 June 2008. The ability of CWM to operate profitably in such
adverse conditions is particularly encouraging for the long-term future of the business and reflects its flexible cost base.
In the first half of the year, through a combination of declines in net asset values broadly in line with the markets and client
redemptions, assets under management within the Forsyth range of fund-of-fund products fell by approximately 35% to US$603 million. After
the close of the reporting period, the Dublin-listed UCITS III range of traditional long-only funds received a large redemption from a
single intermediary. From both an investment manager and shareholder perspective, this latter development has resulted in the AUM within
certain funds falling below the level at which the funds are economic. However, during the first six months of 2008, despite the
disappointing fall in AUM and a slower pace of change than originally planned, considerable progress was made in restructuring of the
business and the recent withdrawal from the Forsyth Funds plc fund range will now act as the catalyst to accelerate our plans to complete
the restructuring, the relaunch and the rebranding of the product range.
Since the beginning of the year, the cost structure has been re-engineered to lower the fixed cost base and increase the proportion of
variable costs and we have begun to re-focus the product range onto two key funds:
* a multi-asset long-only fund and,
* a multi-strategy fund of hedge funds.
The new Multi-Asset long-only fund initiative will be led by the recently appointed, award-winning team of investment managers and be
supported by a dedicated distribution team, all of whom have an excellent track record of building and managing businesses within the
multi-asset space.
The Multi-strategy fund of hedge funds is managed by the original Forsyth team and is now in the final phase of a radical restructuring.
The core funds have performed very well this year and provided positive returns despite the turbulent markets. Following the restructuring
and rebranding of the funds over the coming months, we will be in a position to begin pro-actively marketing the funds.
Although some work remains to be done to secure the long-term profitability of the business, the completion of these initiatives will
leave CAM well placed to participate in the long-term changes now occurring in the asset management industry.
Through the first half of 2008, developments within Crosby Active Opportunities Fund's ("CAOF") core portfolio remained very positive
and the long-term value of the Fund's investments continues to be supported by robust business models, strong management teams and a
favourable market outlook for the underlying value drivers of food, oil and gas, and precious and base metals. The fund has, however, not
been immune from the broad factors impacting capital markets. These factors have been somewhat mitigated however, by a hedging strategy that
has sought protection from volatility in the underlying value drivers and general market movements. CAOF continues to actively engage with
management and other shareholders with the objective of releasing the intrinsic value in these companies. The net NAV of the fund as at June
2008 was US$1,128.57 per share, down 5.85% year to date. The majority of the decline in NAV is on a mark to market basis and not on a
realized basis. CAOF has a total net return of 12.86% since its launch in December 2006.
In February, we announced the set-up of SW1 Capital LP ("SW1"). SW1 was established as a flexible corporate shell to enable us to
actively pursue a number of opportunities to build an alternative asset management company that would complement the existing CAM
businesses. With the continued deterioration in the financial markets during the second quarter, we were unable to exploit these
opportunities as planned. Consequently, SW1 is now effectively dormant. It is always disappointing to report the failure of an initiative to
gain sufficient traction to move from an opportunity to a profitable business. However, this is in the very nature of an entrepreneurial
enterprise such as CAM where we are constantly looking for new ideas and new opportunities to build our business. In this respect, although
I envisage continued turbulence in the financial markets for some time to come, I believe that CAM has the resources and expertise to profit
from the inevitable opportunities that such volatility provides.
Simon Fry
Chief Executive Officer
Enquiries:
Steve Fletcher
Crosby Asset Management Inc.
020 7858 6161
INDEPENDENT REVIEW REPORT TO CROSBY ASSET MANAGEMENT INC.
Introduction
We have been engaged by the Company to review the condensed set of financial statements in the half-yearly financial report for the six
months ended 30 June 2008 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 22. We have read the other information contained in the
half yearly financial report which comprises only the Highlights, the Chairman's Report, the Chief Executive Officer's Report and considered
whether it contains any apparent misstatements or material inconsistencies with the information in the condensed set of financial
statements.
This report is made solely to the Company in accordance with guidance contained in ISRE (UK and Ireland) 2410, 'Review of Interim
Financial Information performed by the Independent Auditor of the Entity'. 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 conclusion we
have formed.
Directors' responsibilities
The half-yearly financial report is the responsibility of, and has been approved by, the directors.
As disclosed in Note 1, the annual financial statements of the Group are prepared in accordance with IFRSs. The condensed set of
financial statements included in this half-yearly financial report has been prepared in accordance with International Accounting Standard
34, 'Interim Financial Reporting,' as adopted by the European Union.
Our responsibility
Our responsibility is to express to the Company a conclusion on the condensed set of financial statements in the half-yearly financial
report based on our review.
Scope of review
We conducted our review in accordance with International Standard on Review Engagements (UK and Ireland) 2410, 'Review of Interim
Financial Information Performed by the Independent Auditor of the Entity' issued by the Auditing Practices Board for use in the United
Kingdom. A review of interim financial information consists of making enquiries, primarily of persons responsible for financial and
accounting matters, and applying analytical and other review procedures. A review is substantially less in scope than an audit conducted in
accordance with International Standards on Auditing (UK and Ireland) and consequently does not enable us to obtain assurance that we would
become aware of all significant matters that might be identified in an audit. Accordingly, we do not express an audit opinion.
Conclusion
Based on our review, nothing has come to our attention that causes us to believe that the condensed set of financial statements in the
half-yearly financial report for the six months ended 30 June 2008 is not prepared, in all material respects, in accordance with
International Accounting Standard 34.
GRANT THORNTON UK LLP
CHARTERED ACCOUNTANTS
BIRMINGHAM
8 August 2008
Consolidated Income Statement
Unaudited Unaudited Audited
six six year
months months ended
ended ended 31
30 June 30 June December
2008 2007 2007
Notes US$'000 US$'000 US$'000
Continuing operations
Turnover/Revenue 5 14,975 12,224 39,295
Cost of sales (3,537) (205) (2,608)
Gross profit 11,438 12,019 36,687
Profit on financial assets at fair value through profit or loss
18 27 - -
Loss on financial liabilities at fair value through profit or loss
- - -
Other income 6 300 2,566 865
Administrative expenses (17,498) (11,817) (27,875)
Distribution expenses (3) (87) (219)
Restructuring expenses 7 (4,233) - -
Other operating expenses (1,115) (493) (847)
Amortisation of intangible assets 15 (314) - (123)
Impairment of intangible assets 15 (8,979) - -
(Loss)/Profit from operations 8 (20,377) 2,188 8,488
Finance costs (133) - (37)
Excess of fair value over cost of acquired subsidiary
- - 409
Share of profits/(losses) of associates 69 (80) (119)
Share of profit of a jointly controlled entity 66 30 -
Loss before taxation (20,375) 2,138 8,741
Taxation expense 10 (293) (937) (2,439)
Loss for the period from continuing operations
(20,668) 1,201 6,302
Discontinued operations
Loss for the period from discontinued operations 11 (25,207) (18,314) (26,917)
Loss for the period (45,875) (17,113) (20,615)
Attributable to:
Equity holders of the Company
Loss for the period from continuing operations
(21,162) (7,995) (6,994)
Loss for the period from discontinued operations
(25,207) (18,314) (26,917)
(46,369) (26,309) (33,911)
Minority interests
Loss for the period from continuing operations
494 9,196 13,296
Loss for the period from discontinued operations
- - -
494 9,196 13,296
Loss for the period (45,875) (17,113) (20,615)
Dividend - - -
Loss per share for loss attributable to equity holders of the
Company during the period 12
US cents US cents US cents
(19.05) (10.82) (13.94)
- Basic
- Diluted (19.05) (10.82) (13.94)
Consolidated Balance Sheet
Unaudited Unaudited Audited
30 June 30 June 31
December
2008 2007 2007
Notes US$'000 US$'000 US$'000
ASSETS
Non-current assets
Property, plant and equipment 13 2,208 606 1,009
Interests in associates 325 578 314
Interest in a jointly controlled entity 72 45 81
Available-for-sale investments 14 5,222 5,228 5,523
Loan receivable - - 463
Intangible assets 15 489 488 8,718
8,316 6,945 16,108
Current assets
Amounts due from parent and 114 89
related companies 16 169
Trade and other receivables 17 7,648 4,827 8,120
Tax recoverable 75 - 75
Financial assets at fair value
through profit or loss 18 183 59,159 43,638
Cash and cash equivalents 15,171 14,249 20,766
23,191 78,324 72,768
Assets classified as discontinued 11 11,360 - -
operations
34,551 78,324 72,768
Total assets 42,867 85,269 88,876
LIABILITIES
Current liabilities
Amounts due to parent and
related companies 16 (908) (100) -
Trade and other payables 19 (10,129) (7,515) (13,977)
Deferred income (79) - -
Provision for taxation (2,717) (999) (2,425)
Current portion of obligations under (361) - -
finance leases
(14,194) (8,614) (16,402)
Non-current liabilities
Loan payable (50) - -
Other payable (838) - -
Obligations under finance leases (822) - -
(1,710) - -
Liabilities directly associated with
assets classified as discontinued 11 (5,067) - -
operations
Total liabilities (20,971) (8,614) (16,402)
EQUITY
Share capital 20 2,435 2,433 2,433
Reserves 16,346 68,797 61,772
Equity attributable to equity holders of 18,781 71,230 64,205
the Company
Minority interests 3,115 5,425 8,269
Total equity 21,896 76,655 72,474
Total equity and liabilities 42,867 85,269 88,876
Consolidated Statement of Changes in Equity
Equity attributable to equity holders of the Company
Employee
share-based Foreign Investment Profit and loss
compensation exchang revaluation account
Share Share Capital reserve e reserve
Minority interests Total
capital premium reserve reserve
equity
Total
US$'000 US$'000 US$'000 US$'000 US$'000 US$'000 US$'000 US$'000
US$'000 US$'000
At 1 January 2008 2,433 6,236 23,455 2,927 165 155 28,834 64,205
8,269 72,474
Exchange difference on
consolidation
- - - - 96 - - 96
- 96
Deficit on revaluation - - - - - (301) - (301)
- (301)
Net income/(loss)
recognised directly in
equity
- - - - 96 (301) - (205)
- (205)
(Loss)/Profit for the - - - - - - (46,369) (46,369)
494 (45,875)
period
Total recognised income
and expenses for the
period - - - - 96 (301) (46,369) (46,574)
494 (46,080)
Issue of new shares upon
exercise of share options
2 108 - (26) - - - 84
- 84
Employee share-based
compensation - - - 1,066 - - - 1,066
10 1,076
Lapse of share options - - - (299) - - 299 -
- -
Dividend paid to minority
shareholders - - - - - - - -
(5,658) (5,658)
At 30 June 2008 2,435 6,344 23,455 3,668 261 (146) (17,236) 18,781
3,115 21,896
Consolidated Statement of Changes in Equity
Equity attributable to equity holders of the Company
Employee
share-based Foreign Investment Profit and loss
compensation exchang revaluation account
Share Share Capital reserve e reserve
Minority interests Total
capital premium reserve reserve
equity
Total
US$'000 US$'000 US$'000 US$'000 US$'000 US$'000 US$'000 US$'000
US$'000
US$'000
At 1 January 2007 2,427 5,915 23,455 1,976 72 (2) 62,745 96,588
28,152 124,740
Exchange
difference on
consolidation - - - - 218 - - 218
- 218
Surplus on
revaluation
- - - - - 31 - 31
- 31
Net income
Recognised
directly in equity
- - - - 218 31 - 249
- 249
(Loss)/Profit for
the period
- - - - - - (26,309) (26,309)
9,196 (17,113)
Total recognised
income and
expenses for the
period
- - - - 218 31 (26,309) (26,060)
9,196 (16,864)
Issue of new
shares upon
exercise of
share options
6 321 - (77) - - - 250
- 250
Employee
share-based
compensation
- - - 452 - - - 452
2 454
Dividend paid to
Minority
shareholders
- - - - - - - -
(19,339) (19,339)
Disposal of a
Subsidiary
undertaking
- - - - - - - -
(12,586) (12,586)
At 30 June 2007 2,433 6,236 23,455 2,351 290 29 36,436 71,230
5,425 76,655
Condensed Consolidated Cash Flow Statement
Unaudited Unaudited Audited
six six Year
months months ended
ended ended 31
30 June 30 June December
2008 2007 2007
Note US$'000 US$'000 US$'000
Net cash inflow from operating activities
- Continuing operations 2,444 35,021 49,349
- Discontinued operations 918 - -
3,362 35,021 49,349
Net cash outflow from investing
activities
- Continuing operations (3,347) (17,204) (25,004)
- Discontinued operations (776) - -
(4,123) (17,204) (25,004)
Net cash outflow from financing
activities
- Continuing operations (4,390) (13,564) (13,582)
- Discontinued operations - - -
(4,390) (13,564) (13,582)
Net (decrease)/ increase in cash and cash
equivalents (5,151) 4,253 10,763
Cash and cash equivalents as at
start of period 20,766 9,987 9,987
Effect of exchange rate fluctuations (11) 9 16
Cash and cash equivalents as at end of
period 15,604 14,249 20,766
Analyzed into:
- Continuing operations 15,171 14,249 20,766
- Discontinued operations 11 433 - -
Total 15,604 14,249 20,766
Notes to the interim financial information
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 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) issued 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
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 2007 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 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 2007 annual report published by the Company on 13 March 2008 except for the following additional accounting policy
only applicable to the six months ended 30 June 2008:
Asset acquired under finance leases
Where the Group acquires the use of assets under finance leases, the amounts representing the fair value of the leased asset, or, if
lower, the present value of the minimum lease payments, of such assets are included in fixed assets and the corresponding liabilities, net
of finance charges, are recorded as obligation under finance leases.
Subsequent accounting for assets held under finance lease agreements corresponds to those applied to comparable acquired assets. The
corresponding finance lease liability is reduced by lease payments less finance charges.
Finance charges implicit in the lease payments are charged to profit or loss over the period of the leases so as to produce an
approximately constant periodic rate of charge on the remaining balance of the obligations for each accounting period. Contingent rentals
are charged to profit or loss in the accounting period in which they are incurred.
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 available-for-sale investments and financial assets at fair value through profit or loss 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 techniques to estimate the fair value. The use of methodologies, models and
assumptions in pricing and valuing these financial assets 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 available-for-sale investments and financial assets at fair value
through profit or loss are detailed in Notes 14 and 18 to the interim financial information respectively, are those that have the most
significant risk of causing a material adjustment to the carrying amounts of assets 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$1.2 million), which is valued based on a recent transaction.
* Investments in ESK Limited (US$1.875 million) which is valued based on the subscription price of the 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. Details of the events
and circumstances giving rise to the impairment provision against the value of the intangible assets of US$8.3 million relating to the
Forsyth fund-of-funds customer base during the six months ended 30 June 2008 is provided in Note 15 to the interim financial information.
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.
Provision for onerous contracts
Provisions are made for onerous contracts where the unavoidable costs of meeting the obligations under the contracts exceed the economic
benefits expected to be received under it. Significant judgement is required in determining the amount of the provision where the economic
benefits are uncertain as to timing or amount. Where the final outcome is different from the amounts that were initially recorded, such
differences will impact the income statement and provisions in the periods in which such determination are made. Details of the
circumstances used to determine the provision for the onerous contracts in respect of leases of office premises that are no longer in use by
the Group, due to restructuring of its Forsyth Fund-of-Funds business, are detailed in Note 7 to the interim financial information. The
present value of the total rentals and management charges under the operating leases amount to US$3.8 million but these are expected to be
offset by sub-letting the office premises. The Directors have provided US$1.4 million at 30 June 2008 after estimating the time it would take to sub-let the premises and the rent that may be
received from a prospective tenant.
Determining the residual values and remaining useful lives of property, plant and equipment
The residual values and remaining useful lives of property, plant and equipment are reviewed by management at each balance sheet date
and adjusted if appropriate. A considerable amount of judgement is required in assessing the residual values and remaining useful lives. If
the residual value or remaining useful life changes then additional impairment may be required. Details of the events and circumstances
giving rise to the reduction of the residual values and the remaining useful lives of certain property, plant and equipment due to the
restructuring of the Forsyth fund-of-funds business resulting in an additional depreciation and impairment charge of US$1.9 million during
the six months ended 30 June 2008 is provided in Note 7 to the interim financial information.
(ii) Critical judgements in applying the Group's accounting policies
Management in applying the accounting policies do not consider that they have had to make any significant judgements.
4. Segment Information
* Primary reporting format - business segment:
Merchant banking Asset management Unallocated
Consolidated
Unaudited Unaudited Audited Unaudited Unaudited Audited Unaudited Unaudited Audited Unaudited
Unaudited Audited
six six year six six year six six year six
six year
months months ended months months ended months months ended months
months ended
ended ended 31 ended ended 31 ended ended 31 ended
ended 31
30 June 30 June December 30 June 30 June December 30 June 30 June December 30 June
30 June December
2008 2007 2007 2008 2007 2007 2008 2007 2007 2008
2007 2007
US$'000 US$'000 US$'000 US$'000 US$'000 US$'000 US$'000 US$'000 US$'000 US$'000
US$'000 US$'000
Continuing operations
Turnover/Revenue - - - 14,975 12,224 39,295 - - - 14,975
12,224 39,295
Segment results - - - 210 4,489 14,445 - - 210
4,489 14,445
Restructuring expenses - - - (4,233) - - - - - (4,233)
- -
Amortisation of intangible
assets - - - (314) - - - - - (314)
- (123)
Impairment of intangible
assets - - - (8,979) - - - - - (8,979)
- -
Impairment of receivables
- - - (1,221) - - - - - (1,221)
- -
Unallocated loss from
operations - - - - - - (5,840) (2,301) (5,834) (5,840)
(2,301) (5,834)
(Loss)/profit from operations (20,377)
2,188 8,488
Finance costs (133)
- (37)
Excess of fair value over cost
of acquired subsidiary -
- 409
Share of profits/(losses) of
associates 69
(80) (119)
Share of profit of a jointly
controlled entity 66
30 -
Loss before taxation (20,375)
2,138 8,741
Taxation expense (293)
(937) (2,439)
Loss for the period from
continuing operations
(20,668)
1,201 6,302
Discontinued operation
Loss for the period from
discontinued operations
(25,207) (18,314) (26,917) - - - - - - (25,207)
(18,314) (26,917)
Loss for the period (45,875)
(17,113) (20,615)
4. Segment Information (Cont'd)
Primary reporting format - business segment (Cont'd):
Continuing operations
Segment assets - 68,136 50,574 24,225 11,390 29,698 - - - 24,225 79,526 80,272
Unallocated assets - - - - - - 7,282 5,743 8,604 7,282 5,743 8,604
- 68,136 50,574 24,225 11,390 29,698 7,282 5,743 8,604 31,507 85,269 88,876
Discontinued operations
Segment assets 11,360 - - - - - - - - 11,360 - -
Unallocated assets - - - - - - - - - - - -
11,360 - - - - - - - - 11,360 - -
Total assets 11,360 68,136 50,574 24,225 11,390 29,698 7,282 5,743 8,604 42,867 85,269 88,876
Continuing operations
Segment liabilities - 3,864 4,589 8,709 2,182 8,102 - - - 8,709 6,046 12,691
Unallocated liabilities - - - - - - 7,195 2,568 3,711 7,195 2,568 3,711
- 3,864 4,589 8,709 2,182 8,102 7,195 2,568 3,711 15,904 8,614 16,402
Discontinued operations
Segment liabilities 5,067 - - - - - - - - 5,067 - -
Unallocated liabilities - - - - - - - - - - - -
5,067 - - - - - - - - 5,067 - -
Total liabilities 5,067 3,864 4,589 8,709 2,182 8,102 7,195 2,568 3,711 20,971 8,614 16,402
Other information
Continuing operations
Capital expenditure - 14 39 3,375 13 124 1,600 258 652 4,975 285 815
Depreciation - - - 167 30 69 318 107 297 485 137 366
Impairment of receivables
- - - 1,221 - - - - - 1,221 - -
Discontinued operations
Capital expenditure 7 - - - - - - - - 7 - -
Depreciation 7 34 73 - - - - - - 7 34 73
Impairment of receivables
186 - - - - - - - - 186 - -
Notes:
Discontinued operations:
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.
Continuing operations:
i. Asset Management - provision of fund management, asset management and wealth management services
ii. Unallocated - primarily items related to corporate offices
b. Secondary reporting format -geographical segment:
With regard to the asset management business acquired in September 2007, mainly operated through the Group's key operating subsidiary in
the United Kingdom, the Group defines geographical segment with reference to those revenue-producing assets and transactions that arise from
customers domiciled worldwide. Due to the nature of the business, precise segregation of geographical activities would be arbitrary and
therefore considered not appropriate. The Group's continuing activities during the six months ended 30 June 2008 and 30 June 2007, and the
year ended 31 December 2007 are mainly operated or carried out in Asia.
5. Turnover/Revenue - continuing operations
Unaudited Unaudited Audited
six six year
months months ended
ended ended 31
30 June 30 June December
2008 2007 2007
US$'000 US$'000 US$'000
Fund management fee income 9,705 942 10,391
Wealth management services fee 5,270 11,282 28,904
Total 14,975 12,224 39,295
6. Other income - continuing operations
Unaudited Unaudited Audited
six six year
months months ended
ended ended 31
30 June 30 June December
2008 2007 2007
US$'000 US$'000 US$'000
Bad debts recovery 1 1 2
Bank interest income 218 183 503
Gain on disposal of an associate - - 236
Management and consultancy fee income 64 2,376 24
Other interest income 4 - 5
Others 13 6 95
Total 300 2,566 865
7. Restructuring expenses - continuing operations
Unaudited Unaudited Audited
six six year
months months ended
ended ended 31
30 June 30 June December
2008 2007 2007
US$'000 US$'000 US$'000
Impairment of fixed assets 1,904 - -
Provision for onerous contracts in respect of 1,364 - -
operating leases
Others 965 - -
Total 4,233 - -
The Group has reduced staff numbers as part of the restructuring of its Forsyth fund-of-funds business and relocated the remaining staff
to its head office, leaving office premises rented under operating leases vacant and available to sub-let. At 30 June 2008, the Group has
provided in full against the net carrying value of the furniture and fixtures in those office premises amounting to US$1.0 million. The
Group has also made provision for the discounted net present value of the future operating lease rental payments under the operating leases,
in so far as they are expected to exceed future anticipated rentals if the premises is sub-let, in the amount of US$1.4 million as this
represents an onerous contract.
As part of the same restructuring, the Group has provided against website, software and system and related development costs in the
amount of US$0.9 million given that its main functionality will not be utilised by the Group following the restructuring.
The other costs of US$1.0 million relate to the other costs of restructuring the Forsyth fund-of-funds business.
8. Loss from operations - continuing operations
Unaudited Unaudited Audited
six six year
months months ended
ended ended 31
30 June 30 June December
2008 2007 2007
US$'000 US$'000 US$'000
Loss from operations is
arrived at after charging:
Auditors' remuneration:
- fee payable to the Company's auditors for
the audit of the Company's financial
statements
57 50 95
- fee payable to the Company's auditors for
the other services:
audit of the Company's subsidiaries pursuant
to legislation 75 22 39
taxation services 3 3 4
regulatory assistance 23 22 22
Amortisation of intangible assets 314 - 123
Depreciation
- owned assets 465 137 366
- assets under finance leases 20 - -
Impairment of intangible assets 8,979 - -
Impairment of receivables 1,221 - -
Operating lease charges in respect of rental
premises 1,184 415 903
9. Employee remuneration (including directors' remuneration) - continuing operations
Unaudited Unaudited Audited
six six year
months months ended
ended ended 31
30 June 30 June December
2008 2007 2007
US$'000 US$'000 US$'000
Fees 108 50 100
Salaries, allowances and benefits in kind 6,778 3,230 7,207
Commissions paid and payable 1,888 4,276 11,006
Bonus paid and payable 2,743 2,347 4,363
Share-based compensation 983 216 620
Pensions - defined contribution scheme 124 35 474
Social security costs 841 106 412
Total 13,465 10,260 24,182
10. Taxation expense - continuing operations
Unaudited Unaudited Audited
six six year
months months ended
ended ended 31
30 June 30 June December
2008 2007 2007
US$'000 US$'000 US$'000
Current tax
- United Kingdom - 19 -
- Overseas 293 918 2,439
Total 293 937 2,439
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 2007 and 31 December 2007: US$Nil).
11. Discontinued operations
Unaudited Unaudited Audited
six six year
months months ended
ended ended 31
30 June 30 June December
2008 2007 2007
US$'000 US$'000 US$'000
Turnover/Revenue 2,612 133 2,046
Cost of sales (1,527) - -
Gross profit 1,085 133 2,046
Loss on financial assets at fair value through
profit or loss (Note 18) (20,613) (6,028) (13,727)
Loss on financial liabilities at fair value
through profit or loss - (443) -
Other income 384 - -
Administrative expenses (5,432) (5,852) (10,620)
Other operating expenses (631) (6,124) (4,616)
Loss for the period (25,207) (18,314) (26,917)
Unaudited
30 June
2008
US$
Non-current assets
Property, plant and equipment 15
Interest in associates 31
Loan receivable 474
520
Current assets
Amounts due from parent company and related companies 986
Trade and other receivables 2,500
Financial assets at fair value through profit or loss 6,921
Cash and cash equivalents 433
10,840
Total assets 11,360
Current liabilities
Amount due to parent company (376)
Trade and other payables (4,690)
Provision for taxation (1)
Total liabilities (5,067)
During the six months ended 30 June 2008, the Group undertook a restructuring to create a more efficient corporate structure by
separating its asset management and merchant banking operations. The staff employed in the Group's merchant banking subsidiaries have
transferred their employment on a continuous basis to a subsidiaries of the Group's parent company, Crosby Capital Limited, with effect from
30 June 2008. The financial assets of the Group that were derived from its merchant banking operations were transferred into a 100%
subsidiary, Crosby Special Situations Fund Limited ("CSSF") during the quarter ended 30 June 2008. CSSF has entered into a standard
performance-linked advisory agreement with Crosby Capital Limited to manage the optimal realization of these investments but will not enter
into any new merchant banking transactions.
12. Loss per share
(a) Basic
Unaudited Unaudited Audited
six six year
months months ended
ended ended 31
30 June 30 June December
2008 2007 2007
US$'000 US$'000 US$'000
Loss attributable to equity holders of the
Company (46,369) (26,309) (33,911)
Number of shares Number of shares Number of shares
Weighted average number of
shares for calculating basic 243,389,286 243,195,442 243,235,548
loss per share
Unaudited Unaudited Audited
six six year
months months ended
ended ended 31
30 June 30 June Decembe
2008 2007 r
2007
US cent US cent US cent
Basic loss per share (19.05) (10.82) (13.94)
(b) Diluted
No diluted loss per share is shown for the six month ended 30 June 2008 (30 June 2007: US$Nil; 31 December 2007: US$Nil), as the
outstanding share options were anti-dilutive.
13. Property, plant and equipment
Unaudited Unaudited Audited
30 June 30 June 31
Decembe
r
2008 2007 2007
US$'000 US$'000 US$'000
Net carrying amount at 1 January 1,009 493 493
Acquisition of the Forsyth Business - - 139
Additions 4,982 285 815
Disposals (1,376) (1) (2)
Impairment (Note 7) (1,904) - -
Depreciation for the period/year (492) (171) (439)
Exchange differences 4 - 3
Net carrying amount at 30 June / 31 December
2,223 606 1,009
Analyzed into:
- Continuing operations 2,208 606 1,009
- Discontinued operations 15 - -
Total 2,223 606 1,009
Included in the net carrying amount of US$2,223,000 (30 June 2007: US$606,000; 31 December 2007: US$1,009,000) is an amount of
US$1,112,000 (30 June 2007 and 31 December 2007: Nil) representing the net carrying value of assets held under finance leases.
14. Available-for-sale investments - continuing operations
Unaudited Unaudited Audited
30 June 30 June 31
Decembe
r
2008 2007 2007
US$'000 US$'000 US$'000
Fair value, unlisted investments 5,222 5,228 5,523
The movement in available-for-sale investments is as follows:
Unaudited Unaudited Audited
30 June 30 June 31
Decembe
r
2008 2007 2007
US$'000 US$'000 US$'000
At 1 January 5,523 198 198
Additions - 4,999 5,175
Disposals - - (7)
Change in fair value recognised directly in (301) 31 157
equity
At 30 June / 31 December 5,222 5,228 5,523
The investments included above represent investments in funds managed by the Group that offer the Group the opportunities for return
through dividend income and fair value gains. The fair values of the investments are based on Group's share of the underlying net assets of
the fund which are valued at fair value, which is a quoted market price. Subsequent to 30 June 2008, the Group redeemed US$2.5 million from
these available-for-sale investments for cash.
15. Intangible assets - continuing operations
Unaudited Unaudited Audited
30 June 30 June 31
Decembe
r
2008 2007 2007
US$'000 US$'000 US$'000
Net carrying amount at 1 January 8,718 488 488
Acquisition of trademark - - 1
Goodwill arising from additional investment in 600 - -
a subsidiary
Acquisition of customer base of the Forsyth 464 - 8,352
Business
Amortisation for the period/year (314) - (123)
Impairment for the period/year (8,979) - -
Net carrying amount at 30 June / 31 December
489 488 8,718
The customer base relating to the Forsyth fund-of-funds has been fully provided during the six months ended 30 June 2008 due to faster
declines in the total assets under management by the Group relating to the Forsyth fund-of-funds than originally estimated, from
approximately US$1 billion at the date of taking on the investment management contracts to approximately US$0.6 billion at 30 June 2008.
The decline in the total assets under management relating to the existing customer base arose from a combination of redemptions and the
negative performance of certain funds broadly in line with markets. Using the same approach to value the customer base as disclosed in the
Company's 2007 Annual Report, with all other assumptions (other than the decline in assets under management) constant, resulted in full
provision for impairment being necessary.
16. Amounts due from/(to) parent and related companies - continuing operations
As at 30 June 2008, details of the amounts due from/(to) parent and related companies are set out below:
Unaudited Unaudited Audited
30 June 30 June 31
Decembe
r
2008 2007 2007
US$'000 US$'000 US$'000
Amounts due from investee companies 109 50 112
Amount due from a subsidiary of an investee
company - - 33
Amounts due from fellow subsidiaries 5 39 9
Amount due from parent company - - 15
Total 114 89 169
Unaudited Unaudited Audited
30 June 30 June 31
Decembe
r
2008 2007 2007
US$'000 US$'000 US$'000
Amount due to an investee company (791) - -
Amount due to a subsidiary of an investee
company (91) - -
Amount due to a fellow subsidiary - (79) -
Amount due to parent company (26) (21) -
Total (908) (100) -
17. Trade and other receivables - continuing operations
Unaudited Unaudited Audited
30 June 30 June 31
Decembe
r
2008 2007 2007
US$'000 US$'000 US$'000
Trade receivables -gross 3,790 3,408 3,575
Less: impairment losses (176) (157) (166)
Trade receivables - net 3,614 3,251 3,409
Other receivables - gross 763 555 913
Less: impairment losses - - (613)
Other receivables - net 763 555 300
Deposits and prepayments 3,271 1,021 4,411
Total 7,648 4,827 8,120
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 2008, included in trade and other receivables are trade receivables of US$3,614,000 (30 June 2007: US$3,251,000; 31 December
2007: US$3,409,000) aged as follows:
Unaudited Unaudited Audited
30 June 30 June 31
Decembe
r
2008 2007 2007
US$'000 US$'000 US$'000
0 - 30 days 2,787 2,829 3,064
31 - 60 days 538 422 345
61 - 90 days 289 - -
Total 3,614 3,251 3,409
18. Financial assets at fair value through profit or loss
Unaudited Unaudited Audited
30 June 30 June 31
2008 2007 Decembe
r
2007
Notes US$'000 US$'000 US$'000
Held for trading
Listed securities:
- Equity securities - (1) 19 5,528 3,520
Australia
- Equity securities - Japan (2) 3,795 41,533 31,672
- Equity securities - United (3) 183 6,891 330
Kingdom
Fair value of listed 3,997 53,952 35,522
securities
Unlisted securities:
- Equity securities - (4) 35 - 1,134
Australia
- Equity securities - (5)& (6) 3,072 5,107 6,982
British Virgin Islands
Fair value of unlisted 3,107 5,107 8,116
securities
Sub-total 7,104 59,059 43,638
Designated as financial assets at fair value through profit or loss on initial
recognition
Unlisted securities:
- Equity securities - United - 100 -
Kingdom
Total 7,104 59,159 43,638
Analyzed into:
- Continuing operations 183 59,159 43,638
- Discontinued operations 6,921 - -
Total 7,104 59,159 43,638
The movement in financial assets at fair value through profit or loss is as follows:-
Unaudited Unaudited Audited
six six year
months months ended
ended ended 31 Dec
30 June 30 June
2008 2007 2007
US$'000 US$'000 US$'000
At 1 January 43,638 127,542 127,542
Additions 165 252 3,787
Transfer from disposal of a subsidiary
undertaking - 320 320
Disposal of a subsidiary undertaking - (15,540) (15,539)
Other disposals (16,112) (5,347) (16,591)
Dividend received (1) (42,040) (42,154)
Gain/(Loss) on financial assets at fair value
through profit or loss
* Continuing operations
- Discontinued operations (Note 11) 27 (6,028) (13,727)
(20,613) - -
At 30 June/ 31 December 7,104 59,159 43,638
Notes:
1. At 30 June 2008, the Group held 357,143 shares of Adavale Resources Limited ("Adavale"), a company listed on the Australian
Stock Exchange and representing 0.19% of its issued share capital, through a 100% subsidiary, Crosby Special Situations Fund Limited
("CSSF"). The shares of Adavale held by the Group were valued at US$19,000 arrived at on the basis of their quoted market price at 30 June
2008 of A$0.055 per share.
2. At 30 June 2008, the Group held a total of 25,150,000 shares of IB Daiwa Corporation ("IB Daiwa"), a JASDAQ listed Japanese
company and representing 5.89% of its issued share capital, of which 25,050,000 shares were held through its 100% owned subsidiary, Crosby
Capital Partners Limited and 100,000 shares were held through its 100% owned subsidiary, Sunov Crosby (Holdings) Limited ("SCH"), which are
valued in total at US$3,795,000, arrived at on the basis of their quoted market price at 30 June 2008 of �16 per share.
3. At 30 June 2008, the Group held 1,110,000 shares of Absolute Capital Management Holdings Limited ("ACMH"), a company listed on
the AIM market of the London Stock Exchange representing 0.59% of its issued share capital, through a 100% subsidiary Crosby Asset
Management (Holdings) Limited. The shares of ACMH held by the Group are valued at US$183,000 arrived at on the basis of their quoted market
price at 30 June 2008 of �0.08 per share.
4. At 30 June 2008, the Group, held a total of 2,976,190 options to subscribe for shares in Adavale of with an exercise price of
A$0.21 per share, which once exercised would represent 1.52% of its enlarged share capital, through a 100% owned subsidiary, CSSF. The
options to subscribe for shares in Adavale were valued in the consolidated balance sheet at a total valuation of US$35,000 by an independent
valuer using the binomial option pricing model. The key assumptions used were a risk free interest rate of 6.68%, volatility of 97.37%,
dividend yield of zero and the market price at 30 June 2008 of A$0.055 per share. The shares of Adavale were consolidated on a 3 to 1 basis
during the six months ended 30 June 2008.
5. At 30 June 2008, the Group owns 38.98% of Sunov Petroleum (Pakistan) Limited ("SPP"), through a 100% owned subsidiary SCH. SPP
owns 100% of Eastern Petroleum Limited ("EP"), a company incorporated in Mauritius, which 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, a 7.9% interest in
the Badar Mining Lease and 13.5% interest in Guddu, all gas fields located onshore in Pakistan. At 30 June 2008, the investment in SPP is
valued at $1,197,000 based on a recent transaction. On conversion of US$2,500,000 convertible note issued by SPP, the shareholding of SCH in
SPP will be reduced to 32.7%.
6. At 30 June 2008, the Group owns both ordinary and preference shares of ESK Limited ("ESK"), a company incorporated in the British
Virgin Islands, through its 100% owned subsidiary, CSSF. ESK, through its wholly owned subsidiaries, Crosby Orchard Fund Pty Limited and
Eskdale Petroleum Pty Limited, owns 100% of Orchard Petroleum Pty Limited, an oil and gas company with a portfolio of interests in
California that was listed on the Australian Stock Exchange. The interest via the ordinary shares of ESK is valued at US$Nil at 30 June 2008
given the uncertainty of receiving any remaining fair value in ESK once debt has been repaid and the preference shares have been redeemed,
given the current stage of developement of the underlying oil and gas properties. During 2007, the Group purchased, together with a number
of other subscribers, redeemable preference shares in ESK for an amount of US$1,875,000. The preference shares at 30 June 2008 are valued at
US$1,875,000 based on the subscription price of the preference shares.
19. Trade and other payables - continuing operations
Unaudited Unaudited Audited
30 June 30 June 31 December
2008 2007 2007
US$'000 US$'000 US$'000
Trade payables 1,043 21 2,330
Other payables 541 99 842
Accrued charges 8,545 7,395 10,805
Total 10,129 7,515 13,977
The fair value of trade and other payables is considered by the directors not to be materially different from carrying amounts.
At 30 June 2008, included in trade and other payables are trade payables of US$1,043,000 (30 June 2007: US$21,000; 31 December 2007:
US$2,330,000) aged as follows:
Unaudited Unaudited Audited
30 June 30 June 31 December
2008 2007 2007
US$'000 US$'000 US$'000
0 - 30 days 1,041 19 1,746
31 - 60 days - - 264
61 - 90 days - 2 320
Over 90 days 2 - -
Total 1,043 21 2,330
20. Share capital
Number of ordinary shares Value
US$'
000
Authorised
(par value of US$0.01 each) 5,000,000,000 50,000
Issued and fully paid
(par value of US$0.01 each)
At 30 June 2007 and 31 December 2007 243,275,000 2,433
Issue of shares on exercise of share 200,000 2
options
At 30 June 2008 243,475,000 2,435
21. Material related party transactions
(a) During the period, the Group had the following material related party transactions:
Unaudited Unaudited Audited
six six year
months months ended
ended ended 31
30 June 30 June December
2008 2007 2007
US$'000 US$'000 US$'000
Corporate finance and other advisory fees
from investee companies - - 1,905
Management services fee received from a
subsidiary of an investee company 90 90 180
Management services fee paid to a fellow
subsidiary (26) (89) (156)
Payment to an investee company in respect of
exercise of warrants - (17) -
Loan to an investee company 1,219 - -
Fee paid to a fellow subsidiary (377) - -
Proceeds received from a fellow subsidiary
in respect of disposal of financial assets
at fair value through profit or loss
4,321 - 4,013
Consideration paid in respect of acquisition
of subsidiaries from a fellow subsidiary (60) - -
(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 six year
months months ended
ended ended 31
30 June 30 June December
2008 2007 2007
US$'000 US$'000 US$'000
Amounts due from investee companies 1,020 50 112
Amount due from a subsidiary of an investee
company - - 33
Amounts due from fellow subsidiaries 16 39 9
Amount due from parent company 40 - 15
Total 1,076 89 169
Unaudited Unaudited Audited
six six year
months months ended
ended ended 31
30 June 30 June December
2008 2007 2007
US$'000 US$'000 US$'000
Amount due to investee companies 882 - -
Amounts due to a fellow subsidiary 377 79 -
Amount due from parent company - 21 -
Total 1,259 100 -
22. Contingencies
The Group had no material contingent liabilities at 30 June 2008.
This information is provided by RNS
The company news service from the London Stock Exchange
END
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