3rd Quarter Results
13 November 2008 - 8:59PM
UK Regulatory
RNS Number : 0875I
Crosby Asset Management Inc
13 November 2008
Crosby ASSET MANAGEMENT Inc. ("CAM" or the "Group")
Trading Update - Nine Months to 30 September 2008
13 November 2008
CAM announces its trading figures for the nine months ended 30 September 2008.
Summary Financials
* Turnover for the year to date of US$21.70 million (YTD Q3 2007: US$21.63 million), of which US$18.85 million (YTD Q3 2007:
US$21.21 million) was from continuing operations
* Loss Attributable to Shareholders for the year to date of US$58.27 million (YTD Q3 2007: US$41.41 million), of which US$32.84
million (YTD Q3 2007: US$10.17 million) was from continuing operations
* Loss Per Share (basic) for the year to date: US$0.24 (YTD Q3 2007: US$0.17)
* Assets Under Management Q3 2008: US$1.0 billion (Q3 2007:US$2.5 billion)
* CAM has no material debt and has adequate capital to continue to support its operations and meet its obligations as they fall due
TRADING UPDATE
CWM
As announced by the Company on 22 October 2008, at 30 September 2008 the unaudited provisional and estimated assets under management
("AUM") of Crosby Wealth Management ("CWM") was approximately US$500 million, a decline of approximately 64% from US$1.4 billion as of 30
June 2008. In view of the continued and heightened volatility of the financial markets and the related changes in investors' sentiment,
shareholders should be aware that the board of CAM anticipates that there will be further declines in the assets under management and
margins at CWM over the fourth quarter. At 31 October 2008, assets under management stood at US$222 million, a decline of 56% from the
figure as of 30 September 2008. The decline has largely been caused by certain clients restructuring the custody of their portfolios to
minimise the counterparty risk they had with other institutions and the diminution in value of certain structured investment products in
today's extreme market conditions.
The decrease in assets under management at CWM and contraction in margins (largely due to a decline in trading volume) will have an adverse
impact on the ongoing revenue and profitability (or losses) of the Group going forward. During the third quarter, CWM's flexible cost base
has partially mitigated the financial impact to date; however, going forward, the profitability of this business will depend on the
investment appetite of its existing client base and the ability to gain new clients in challenging market conditions that are likely to
continue for the medium term.
CROSBY FORSYTH
During the third quarter, driven mainly by a single large redemption order that led the Group to decide to close the long and hybrid
fund ranges, AUM declined by US$323 million to US$280 million. The CAM Board anticipates that the next quarter will see a further fall in
AUM - the completion of the fund closure programme will result in a further US$123 million of redemptions and there is a backlog of
approximately US$45 million of redemption orders for the Alternative Income Hedge Fund of Funds due to redemptions being suspended whilst
the fund was restructured.
In September 2008, as part of the restructuring and refocusing of the product range and cost base, the fund research and ratings service
was sold to Old Broad Street Research ("OBSR") and Crosby Forsyth exited the fund advisory business. In both cases, the businesses were
operating at close to break-even and there were no exit costs. Consequently, the moves did not have a material impact on the financial
position of CAM.
The fund research and ratings business was sold for a nominal initial consideration with a three year earn-out mechanism. Any cash
received under the earn-out will be applied to general working capital for the development of CAM. As part of the deal, CAM will receive
privileged access to OBSR's research database for three years.
The restructuring and refocusing of the Crosby Forsyth business around a multi-asset class fund of funds and a multi-strategy fund of
hedge funds is scheduled for completion during the fourth quarter of 2008.
APOLLO LLP
During the quarter CAM entered into a joint-venture with a team of award-winning investment managers and sales professionals to launch a
pure multi-asset management company - Apollo LLP. The joint-venture is scheduled to launch two products - a cautious growth fund and a
balanced growth fund - both in late November 2008.
CROSBY ACTIVE OPPORTUNITIES FUND
The Crosby Active Opportunities Fund ("CAOF") saw a net return to the end of the third quarter of approximately -11.5%, a net return of
+8% since inception. Assets under Management have declined to approx $55 million due to both small redemptions and the reduction in NAV. The
Active Opportunities Fund remains focussed on unlocking embedded intrinsic value in predominantly mid to small cap companies in Asia.
ORCHARD PETROLEUM
Despite some mechanical problems and a delay in securing suitable drilling rigs, progress at Orchard Petroleum continues to be
positive.
As of the end of October 2008, Orchard Petroleum was producing from approximately 40 wells. A further ten wells have been drilled and
are due on stream within a few weeks time. We believe that it is therefore likely that there will be 50 wells in production by the end of
the year and that between 60 to 75 wells will be on production on the South Belridge Field by 30 June 2009.
A full reserve audit will be commissioned once the current drilling programme has been completed. Since all the wells that have been
drilled this year have been successful and have come on stream, we continue to expect a substantial upgrade in reserves from the previously
announced figures as at November 2007 (proven and probable reserves of 16 million barrels of oil equivalent and possible reserves of 68
million barrels of oil equivalent).
On a consolidated, fully diluted basis, CAM's direct shareholding in ESK (the corporate entity that made the original acquisition of
Orchard Petroleum) is 5%. However, after the repayment of principal to preference shareholders, this will rise to an effective economic
interest of between 9% and 10%. Separately, the Crosby Active Opportunities Fund, managed by Crosby Asset Management, has a shareholding of
approximately 9%.
ABOUT CAM
CAM is an 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 our
existing business lines. CAM is quoted on the AIM market of the London Stock Exchange.
For further information on Crosby please contact:
Simon Fry, Chief Executive Officer on +44 20 7590 2800
Stephen Fletcher, Chief Operating Officer on +44 20 7590 2800
Trading Summary
Consolidated Income Statement
Unauditedninemonths Unauditedninemonths Unauditedthreemonths Unauditedthreemonths
ended30September ended30September ended30September ended30September
2008 2007 2008 2007
US$'000 US$'000 US$'000 US$'000
Continuing operations
Turnover/Revenue 18,848 21,209 3,873 8,985
Cost of sales (4,682) (307) (1,145) (102)
Gross profit 14,166 20,902 2,728 8,883
Losson financial assets at (1,959) - (1,986) -
fair value through profit or
loss
Other income 728 382 428 166
Administrative expenses (25,290) (15,418) (7,792) (5,951)
Distribution expenses (13) (96) (10) (9)
Restructuring expenses (7,437) - (3,204) -
Other operating expenses (4,582) (2,676) (3,467) (2,183)
Amortisation of intangible (314) - - -
assets
Impairment of intangible (8,979) - - -
assets
(Loss)/Profitfrom operations (33,680) 3,094 (13,303) 906
Finance costs (165) - (32) -
Share ofprofits/(losses)of 42 (177) (27) (97)
associates
Share of profit of a jointly 98 47 32 17
controlled entity
(Loss)/Profitbefore taxation (33,705) 2,964 (13,330) 826
Taxation (70) (1,626) 223 (689)
(Loss)/Profitfor the (33,775) 1,338 (13,107) 137
periodfrom continuing
operations
Discontinuedoperations
Lossfor the periodfrom (25,427) (31,238) (220) (12,924)
discontinued operations
Loss for the period (59,202) (29,900) (13,327) (12,787)
Attributable to:
Equity holders of the Company
Lossfor the periodfrom (32,838) (10,174) (11,676) (2,179)
continuing operations
Loss for the period from (25,427) (31,238) (220) (12,924)
discontinued operations
(58,265) (41,412) (11,896) (15,103)
Minority interests
(Loss)/Profit for the (937) 11,512 (1,431) 2,316
periodfrom continuing
operations
(Loss)/Profitfor the - - - -
periodfrom discontinued
operations
(937) 11,512 (1,431) 2,316
Loss for the period (59,202) (29,900) (13,327) (12,787)
Dividend - - - -
Lossper share for loss US cents US cents US cents US cents
attributable to equity holders
of the Company during the
period
- Basic (23.94) (17.03) (4.89) (6.21)
- Diluted N/A N/A N/A N/A
This information is provided by RNS
The company news service from the London Stock Exchange
END
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