ZOL.L Regulatory News (ZOL)

RNS Number : 1734J

Crosby Asset Management Inc

25 March 2010

 

25 March 2010

 

Crosby Asset Management Inc.

(the "Company" and together with its subsidiaries the "Group" or "CAM")

 

Preliminary Results - Year Ended 31 December 2009

 

Highlights 2009 

 

·; Turnover - US$3.5 million (2008: US$22.9 million) for continuing operations

·; Loss attributable to shareholders - US$10.9 million (2008: US$56.5 million)

·; Shareholders' capital deficiency - US$1.0million (2008: Shareholders' equity - US$8.2 million)

·; Total equity - US$0.04 million (2008: US$9.83 million)

·; Loss per share (basic) 2009: US$0.04 (2008: US$0.23)

·; Assets under management - US$0.5 billion (2008: US$0.5billion)

 

Chairman's Report

 

2009 was another year of losses for Crosby Asset Management, albeit less severe than those of 2008. The Company has continued to suffer from the consequences of our unfortunate and ill-timed acquisition of Forsyth Partners in 2007 and from the after-effects of the global market turndown of 2008/9.

 

Much of the management effort in 2009 was devoted to addressing the last issues associated with the Crosby Forsyth funds. This task having been largely completed, there was insufficient UK-based activity to justify the retention of Simon Fry as our Chief Executive. He therefore offered to resign and his offer was accepted by the board of CAM (the "Board") with effect from 31 January 2010. I would like to thank him for his service to the Company. The remaining businesses of the Company are largely in Asia, where they are managed by Johnny Chan, who has therefore taken over as our CEO and rejoined the Board of CAM.

 

Various other steps have also been taken to reduce costs, to match the reduced scale of the Company's operations including halving of the remuneration of Johnny Chan and outsourcing a number of functions to our 86.45 per cent. parent company, Crosby Capital Limited ("CCL"), which is listed in Hong Kong. Costs are now much better aligned with the Company's significantly reduced revenues.

 

The future strategy of CAM, which is currently under active consideration by the Board, is likely to be significantly influenced by decisions to be taken by the board of CCL, the Company's parent. The Boards intention is to investigate a Group restructuring, with the support of CCL, such that CAM can develop a revitalised business model and, as soon as that review has been completed, the Board will communicate its decisions to shareholders.

 

I would like to thank the remaining staff of CAM for their loyalty and continued hard work during a challenging period in the Group's history.

 

 

Robert Owen

Chairman

Chief Executive Officer's Report

 

2009 was a year of consolidation for Crosby Asset Management, in which we have been working on the closure of the Crosby Forsyth range of funds and the removal of the associated liabilities and costs of operating these funds. I can now report that CAM has now either closed the majority of the remaining Crosby Forsyth Funds or has transferred the management of the funds to Apollo Multi Asset Management LLP ("Apollo"), including the Forsyth Managed and Institutional Property Funds, in an effort to rid ourselves of the uneconomic costs in managing these funds.

 

During the year, CAM also took the decision to discontinue its joint venture with Apollo and, as a result, withdrew as a partner with effect from 31 August 2009. At that time it was agreed that the regulatory capital that had been provided by CAM and a loan that had been provided to Apollo for working capital purposes would be repaid.

 

Our asset management interests now revolve around our long established Asian based businesses.

 

Our Wealth Management business in Hong Kong continued to stabilise during 2009 and saw modest growth in Assets Under Management ("AUM") which now stands at over US$400 million, an uptick from the previous quarter, as we witness a modest rebound in the Asian stock markets. We have also added a new custodian relationship with the Development Bank of Singapore in the last quarter, principally to attract clients from China. Crosby Wealth Management is proceeding with its defence of legal proceedings brought by one client in Hong Kong concerning a trade execution error.

 

Our Active Opportunities Fund, which has been severely hurt during the small cap retrenchment in Asia and from a lack of critical mass, is being gradually reduced to return cash to our investors. We are progressively monetising the remaining positions and aim to complete a capital return to investors as soon as possible.

Crosby Asset Management (Hong Kong) Limited continues to act as manager of the HKSAR Government Applied Research Fund and the China Chip Fund, as well as the joint manager with JAIC on the JAIC Crosby Private Equity Fund.

 

At Orchard Petroleum ("Orchard") production has remained stable, although its drilling operations have been funded by taking on debt. Orchard is currently in negotiations with its key creditor regarding the repayment of the debt, and as a result, its outlook is unclear. Crosby is a small minority shareholder in Orchard and therefore not directly able to influence these negotiations. As a result, it is not possible to determine what the potential outcome or value of the investment might be in the future. We will provide updates as soon as they become available.

 

Throughout 2009 we have been successful in reducing the cost base of Crosby Asset Management by both contracting back the operational functions required by us from CCL and by aggressively reducing our fixed overheads. Accordingly, operating costs were reduced to US$11.2 million in 2009, compared to US$47.6 million in 2008.

 

Going forward, we will continue to seek savings in order to reduce the cost base further and will continue our efforts to rebuild AUM and profitability at Crosby Wealth Management.

 

At the end of January 2010, Simon Fry resigned as Chief Executive Officer of CAM, a role he had held since CAM joined AIM in 2004, due to the discontinuance of the great majority of the Company's UK-based activities. As from February 2010, I assumed the role of CEO and rejoined the board of CAM Inc.

 

Whilst disappointing not to be able to report any significant progress in the rebuilding of CAM's business model, we have been able to reduce costs and operating losses and we will continue to reduce costs and liabilities wherever possible. I trust that the resurgence of the markets in Asia, principally China, will continue to allow the rebuilding of our businesses in Asia at a faster pace than in the UK.

 

Johnny Chan

Chief Executive Officer

Consolidated Income Statement

For the year ended 31 December 2009

 

		2009	2008
	Notes	US$'000	US$'000
Continuing Operations
Revenue		3,505	22,853
Cost of sales		(451)	(6,502)
Gross profit		3,054	16,351
Loss on financial assets at fair value through profit or loss		(2,003)	(2,219)
Other income		617	1,299
Administrative expenses
Restructuring expenses	3	(2,622)	(6,968)
Amortisation of intangible assets		-	(314)
Impairment of intangible assets		-	(8,930)
Write off of intangible assets		-	(468)
Other administrative expenses		(6,999)	(24,403)
		(9,621)	(41,083)
Distribution expenses		(3)	(46)
Impairment of available-for-sale investments		(1,536)	-
Impairment of associates		(389)	-
Impairment of a jointly controlled entity		(128)	-
Other operating expenses		(1,612)	(6,508)
Loss from operations		(11,621)	(32,206)
Finance costs		(112)	(201)
Share of (losses)/profits of associates		(42)	24
Share of profits/(losses) of jointly controlled entities		128	(10)
Loss before taxation		(11,647)	(32,393)
Taxation	4	59	127
Loss for the year from continuing operations		(11,588)	(32,266)
Discontinued Operations
Loss for the year from discontinued operations	5	-	(25,207)
Loss for the year		(11,588)	(57,473)

 

 

 

		2009	2008
	Note	US$'000	US$'000
Attributable to:
Owners of the Company
Loss for the year from continuing operations		(10,941)	(31,278)
Loss for the year from discontinued operations		-	(25,207)
		(10,941)	(56,485)
Minority interests
Loss for the year from continuing operations		(647)	(988)
Loss for the year from discontinued operations		-	-
		(647)	(988)
Loss for the year		(11,588)	(57,473)
Dividend		-	-
Loss per share for loss attributable to owners of the Company during the year	6	US cents	US cents
Basic
Continuing operations		(4.49)	(12.85)
Discontinued operations		-	(10.35)
		(4.49)	(23.20)
Diluted
Continuing operations		(4.49)	(12.85)
Discontinued operations		-	(10.35)
		(4.49)	(23.20)

 

 

 

Consolidated Statement of Comprehensive Income

For the year ended 31 December 2009

 

 

		2009		2008
		US$'000		US$'000
Loss for the year		(11,588)		(57,473)
Other comprehensive income:
Exchange differences on translating foreign operations		46		47
Available-for-sale investments   Deficit on revaluation Recycle to income statement: Provision for impairment Upon disposal		(810)   1,536 362		(1,398)   - 155
Share of other comprehensive income of associates		(52)		(187)
Share of other comprehensive income of jointly controlled entities		11		(5)
Other comprehensive income for the year, before and net of tax		1,093		(1,388)
Total comprehensive income for the year, before and net of tax		(10,495)		(58,861)
Attributable to:
Owners of the Company		(9,848)		(57,873)
Minority interests		(647)		(988)
Total comprehensive income for the year, before and net of tax		(10,495)		(58,861)

 

 

 

Consolidated Statement of Financial Position

As at 31 December 2009

 

		2009	2008
		US$'000	US$'000
ASSETS
Non-current assets
Property, plant and equipment		373	387
Interests in associates		-	153
Interests in jointly controlled entities		16	307
Available-for-sale investments		291	1,625
Note receivable		508	485
Intangible assets		21	21
		1,209	2,978
Current assets
Amounts due from parent and related companies		4	214
Trade and other receivables		1,121	3,424
Tax recoverable		74	82
Financial assets at fair value through profit or loss		115	2,696
Cash and cash equivalents		6,723	15,526
		8,037	21,942
Total assets		9,246	24,920
LIABILITIES
Current liabilities
Amounts due to parent and related companies		(2)	-
Trade and other payables		(2,425)	(7,711)
Deferred income		(26)	(34)
Provision for taxation		-	(2,261)
Obligations under finance leases		(348)	(298)
Provision for liabilities		(6,209)	(4,219)
		(9,010)	(14,523)
Non-current liabilities
Loan payable		(54)	(52)
Obligations under finance leases		(144)	(513)
		(198)	(565)
Total liabilities		(9,208)	(15,088)
EQUITY
Share capital		2,435	2,435
Reserves		(3,427)	5,749
(Capital deficiency)/Equity attributable to owners of the Company		(992)	8,184
Minority interests		1,030	1,648
Total equity		38	9,832
Total equity and liabilities		9,246	24,920

Consolidated Statement of Changes in Equity

For the year ended 31 December 2009

 

	Equity attributable to owners of the Company								Minority interests	Total equity
	Share capital	Share premium	Capital reserve	Employee share-based compensation reserve	Foreign exchange reserve	Investment revaluation reserve	Profit and loss account	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
Issue of new shares upon exercise of share options	2	108	-	(26)	-	-	-	84	-	84
Employee share-based compensation	-	-	-	1,768	-	-	-	1,768	25	1,793
Lapse of share options	-	-	-	(1,072)	-	-	1,072	-	-	-
Dividend paid to minority shareholders	-	-	-	-	-	-	-	-	(5,658)	(5,658)
Transactions with owners	2	108	-	670	-	-	1,072	1,852	(5,633)	(3,781)
Loss for the year	-	-	-	-	-	-	(56,485)	(56,485)	(988)	(57,473)
Other comprehensive income:
Exchange difference on translating foreign exchange operations	-	-	-	-	47	-	-	47	-	47
Available-for-sale investments
Deficit on revaluation	-	-	-	-	-	(1,398)	-	(1,398)	-	(1,398)
Recycle to income statement:
Upon disposal	-	-	-	-	-	155	-	155	-	155
Share of other comprehensive income of associates	-	-	-	-	(187)	-	-	(187)	-	(187)
Share of other comprehensive income of jointly controlled entities	-	-	-	-	(5)	-	-	(5)	-	(5)
Total comprehensive income for the year	-	-	-	-	(145)	(1,243)	(56,485)	(57,873)	(988)	(58,861)
At 31 December 2008	2,435	6,344	23,455	3,597	20	(1,088)	(26,579)	8,184	1,648	9,832

 

	Equity attributable to owners of the Company								Minority interests	Total equity
	Share capital	Share premium	Capital reserve	Employee share-based compensation reserve	Foreign exchange reserve	Investment revaluation reserve	Profit and loss account	Total
	US$'000	US$'000	US$'000	US$'000	US$'000	US$'000	US$'000	US$'000	US$'000	US$'000
At 1 January 2009	2,435	6,344	23,455	3,597	20	(1,088)	(26,579)	8,184	1,648	9,832
Employee share-based compensation	-	-	-	672	-	-	-	672	29	701
Lapse of share options	-	-	-	(1,015)	-	-	1,015	-	-	-
Transactions with owners	-	-	-	(343)	-	-	1,015	672	29	701
Loss for the year	-	-	-	-	-	-	(10,941)	(10,941)	(647)	(11,588)
Other comprehensive income:
Exchange difference on translating foreign exchange operations	-	-	-	-	46	-	-	46	-	46
Available-for-sale investments Deficit on revaluation	-	-	-	-	-	(810)	-	(810)	-	(810)
Recycle to income statement: Provision for impairment Upon disposal	- -	- -	- -	- -	- -	1,536 362	- -	1,536 362	- -	1,536 362
Share of other comprehensive income of associates	-	-	-	-	(52)	-	-	(52)	-	(52)
Share of other comprehensive income of jointly controlled entities	-	-	-	-	11	-	-	11	-	11
Total comprehensive income for the year	-	-	-	-	5	1,088	(10,941)	(9,848)	(647)	(10,495)
At 31 December 2009	2,435	6,344	23,455	3,254	25	-	(36,505)	(992)	1,030	38

Consolidated Statement of Cash Flow

For the year ended 31 December 2009

		2009	2008
		US$'000	US$'000
Operating activities
Continuing operations
Loss before taxation		(11,647)	(32,393)
Adjustments for:
Share of (profits)/losses of jointly controlled entities		(128)	10
Impairment of a jointly controlled entity		128	-
Share of losses/(profits) of associates		42	(24)
Impairment of associates		389	-
Interest income		(54)	(402)
Finance costs		112	201
Loss on financial assets at fair value through profit or loss		2,003	2,219
Employee share-based compensation		701	1,701
Depreciation of property, plant and equipment		223	809
Write off of property, plant and equipment		16	83
Profit on disposal of property, plant and equipment		(18)	(9)
Amortisation of intangible assets		-	314
Impairment of intangible assets		-	8,930
Write off of intangible assets		-	468
Loss on disposal of available-for-sale investments		362	155
Impairment of available-for-sale investments		1,536	-
Bad debts recovery		(2)	(2)
Impairment of trade and other receivables		71	769
Foreign exchange (gains)/losses, net		(30)	17
Operating cash flow before working capital changes		(6,296)	(17,154)
Acquisition of financial assets at fair value through profit or loss		(153)	(238)
Proceeds from disposal of financial assets at fair value through profit or loss		881	2,093
Decrease in trade and other receivables		2,205	4,730
Decrease in trade and other payables		(5,033)	(2,828)
Increase in provision for liabilities		1,990	4,219
Decrease in amounts due from parent company and related company		210	11,635
Increase in amounts due to parent company and related company		2	-
Decrease/(Increase) in amounts due from jointly controlled entities		294	(237)
Decrease in amounts due from associates		14	48
Cash generated from operations		(5,886)	2,268
Tax paid		(2,318)	(46)
Tax refund		124	3
Interest paid		(109)	(132)
Net cash (outflow)/inflow from operating activities from continuing operations		(8,189)	2,093
Discontinued operations
Net cash outflow used in operating activities from discontinued operations		-	(500)
Net cash (outflow)/inflow from operating activities		(8,189)	1,593

Consolidated Statement of Cash Flows (Continued)

For the year ended 31 December 2009

 

		2009	2008
		US$'000	US$'000
Investing activities
Continuing operations
Interest received		20	755
Purchases of property, plant and equipment		(309)	(5,146)
Investment in a jointly controlled entity		-	(4)
Acquisition of additional interests in subsidiaries		(232)	(741)
Acquisition of subsidiaries, net of cash acquired		-	111
Acquisition of the Forsyth Business		-	(355)
Proceeds from sale of property, plant and equipment		94	1,755
Proceeds from sale of available-for-sale investments		524	2,500
Loan to an associate		(375)	-
Disposals of subsidiaries, net of cash disposed of		-	(35)
Net advance to related companies		-	(598)
Net advance to staff		(33)	(253)
Net cash outflow used in investing activities from continuing operations		(311)	(2,011)
Discontinued operations
Net cash outflow used in investing activities from discontinued operations		-	(7)
Net cash outflow used in investing activities		(311)	(2,018)
Financing activities
Continuing operations
Dividend paid to minority shareholders		-	(5,658)
Issue of shares		-	84
Drawdown of loan receivable		-	11,410
Inception of finance lease obligations		-	1,313
Repayment of loan receivable		-	(11,410)
Repayment of finance lease obligations		(319)	(569)
Net cash outflow used in financing activities from continuing operations		(319)	(4,830)
Discontinued operations
Net cash outflow used in financing activities from discontinued operations		-	-
Net cash outflow used in financing activities		(319)	(4,830)
Net decrease in cash and cash equivalents		(8,819)	(5,255)
Cash and cash equivalents as at 1 January		15,526	20,766
Effect of exchange rate fluctuations		16	15
Cash and cash equivalents as at 31 December		6,723	15,526
Analysed into:
- Continuing operations		6,723	15,526
- Discontinued operations		-	-
Total		6,723	15,526

 

Notes to the Consolidated Financial Information

 

1. Basis of preparation

 

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 ("IFRSs") issued by the International Accounting Standards Board. The Company's shares are listed on the AIM of London Stock Exchange.

 

The financial statements are prepared under historical cost convention except for financial instruments classified as available-for-sale and at fair value through profit or loss, which are measured at fair value. The measurement bases are fully described in the accounting policies detailed in the Group's 2009 annual report and financial statements.

 

In preparing the financial statements, the Directors have considered the operations of the Group as a going concern notwithstanding that the Group's current liabilities exceed its current assets by approximately US$973,000 as at 31 December 2009 (2008: Net current assets of US$7,419,000), the Group incurred a loss attributable to owners of the Company of approximately US$10,941,000 (2008: US$56,485,000) and the ability of Crosby Capital Limited ("Crosby"), its parent company to provide funding to the Group is dependent on Crosby deferring the payment of a US$20 million convertible bond, which is due for repayment in March 2011. The Directors have prepared the financial statements based on the assumption that the Group can continue as a going concern and are of the view that the Group will have sufficient working capital to finance its operations for twelve months from the date of signing these financial statements, after taking into consideration the followings:

 

i. Crosby has been approached by certain convertible bond holders on a possible restructuring of the convertible bond, which may include a change in the terms of the convertible bond and an extension of the maturity date; and

 

ii. the Group continues to implement measures to tighten cost controls over various administrative expenses and to attain positive cash flow operations with the funding from Crosby.

 

The Directors of the Company believe that the aforementioned restructuring of Crosby's convertible bond and cost control measures will be successful. Having regard to the cash flow projection of the Group, which has been prepared assuming that these measures are successful, the Directors of the Company are of the opinion that, in the light of the measures taken to date, together with the expected results of other measures in progress, the Group will have sufficient cash resources to satisfy its future working capital requirement.

 

Should the Group be unable to generate sufficient cash flows and/or Crosby be unable to secure the support of convertible bond holders, the Group might not be able to continue in business as a going concern. Accordingly, adjustments would have to be made in the financial statements to restate the values of the assets to their recoverable amounts, to provide for any further liabilities which might arise, and to reclassify non-current assets and non-current liabilities as current assets and current liabilities respectively. The effect of these adjustments has not been reflected in the financial statements.

 

It should be noted that accounting estimates and assumptions are used in preparation of the financial statements. 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 financial statements, are set out in the Group's 2009 annual report and financial statements.

 

 

The consolidated financial statements incorporate the financial statements of the Company and its subsidiaries (together referred to as "the Group")made up to 31 December each year. Material intra-group balances and transactions, and any unrealised gains arising from intra-group transactions, are eliminated on consolidation. Unrealised losses are also eliminated unless the transaction provides evidence of an impairment of the asset transferred.

 

The principal accounting policies are detailed in the Group's 2009 annual report and financial statements.

 

2. Segmental Information

 

In identifying the Group's operating segments, the management generally follows the Group's service lines which represent the main service lines provided by the Group.

 

The Group has identified the following reportable operating segments:

 

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. This business was discontinued during the year ended 31 December 2008 and therefore has been shown as a discontinued operation.

ii) Asset Management - provision of fund management, asset management and wealth management services.

iii) Direct Investment - the remaining investments held which arose from the merchant banking segment and are now managed on a passive basis.

 

The comparative figures are restated to include those items primarily related to corporate offices costs directly allocated to the merchant banking or asset management segment, instead of disclosing them under "unallocated" in the consolidated financial statements for the year ended 31 December 2008.

 

The revenues generated, losses incurred from operations and total assets by each of the Group's operating segments are summarised as follows:

 

	Merchant Banking		Direct Investment		Asset Management		Total
		(Restated)		(Restated)		(Restated)		(Restated)
	2009	2008	2009	2008	2009	2008	2009	2008
	US$'000	US$'000	US$'000	US$'000	US$'000	US$'000	US$'000	US$'000
Continuing operations
Revenue from external customers	-	-	-	2,573	3,505	20,280	3,505	22,853
Inter-segment revenues	-	-	57	513	1,139	5,985	1,196	6,498
Total revenue	-	-	57	3,086	4,644	26,265	4,701	29,351
Segment (loss)/profit from operations	-	-	(2,085)	419	(5,785)	(10,282)	(7,870)	(9,863)
Discontinued operations
Revenue from external customers	-	2,612	-	-	-	-	-	2,612
Inter-segment revenues	-	-	-	-	-		-	-
Total revenue	-	2,612	-	-	-	-	-	2,612
Segment loss from discontinued operations	-	(25,207)	-	-	-	-	-	(25,207)
Continuing operations
Segment total assets	-	-	645	4,904	8,567	19,836	9,212	24,740
Discontinued operations
Segment total assets	-	-	-	-	-	-	-	-

 

Segment loss from operations can be reconciled to consolidated loss from operations as follows:

 

								2009	2008
								US$'000	US$'000
Continuing operations
Segment loss from operations								(7,870)	(9,863)
Reconciling items:
Other income not allocated								19	126
Restructuring expenses								(2,622)	(6,968)
Amortisation of intangible assets								-	(314)
Impairment of intangible assets								-	(8,930)
Write off of intangible assets								-	(468)
Other expenses not allocated								(1,160)	(7,086)
Elimination of inter-segment revenue/ expenses								12	1,297
Loss from operations								(11,621)	(32,206)
Finance costs								(112)	(201)
Share of (losses)/profits of associates								(42)	24
Share of profits/(losses) of jointly controlled entities								128	(10)
Loss before taxation								(11,647)	(32,393)

 

Segment total assets can be reconciled to consolidated total assets as follows:

 

						2009	2008
						US$'000	US$'000
Continuing operations
Segment total assets						9,212	24,740
Other assets not allocated						34	180
Total assets						9,246	24,920

 

 

 

	Merchant banking		Direct investment		Asset Management		Other		Total
		(Restated)		(Restated)		(Restated)		(Restated)		(Restated)
	2009	2008	2009	2008	2009	2008	2009	2008	2009	2008
	US$'000	US$'000	US$'000	US$'000	US$'000	US$'000	US$'000	US$'000	US$'000	US$'000
Other information

 

Continuing operations
Interest income	-	-	(23)	(24)	(31)	(378)	-	-	(54)	(402)
Depreciation	-	-	-	-	223	809	-	-	223	809
Amortisation of intangible assets	-	-	-	-	-	-	-	314	-	314
Impairment of intangible assets	-	-	-	-	-	-	-	8,930	-	8,930
Write off of intangible assets	-	-	-	-	-	-	-	468	-	468
Impairment of available-for-sale investments	-	-	-	-	1,536	-	-	-	1,536	-
Impairment of associates	-	-	-	-	389	-	-	-	389	-
Impairment of a jointly controlled entity	-	-	-	-	128	-	-	-	128	-
Impairment of other receivable	-	-	-	-	71	769	-	-	71	769
Share-based compensation	-	-	4	149	421	1,035	276	517	701	1,701
Discontinued operations
Interest income	-	(375)	-	-	-	-	-	-	-	(375)
Depreciation	-	7	-	-	-	-	-	-	-	7
Share-based compensation	-	92	-	-	-	-	-	-	-	92

 

3. Restructuring expenses - continuing operations

 

	2009	2008
	US$'000	US$'000
Write off of property, plant and equipment	-	3,153
Provision for onerous contract in respect of operating lease	2,685	973
Others	(63)	2,842
Total	2,622	6,968

 

 

During the year ended 31 December 2009, the Group has increased, by US$2,685,000 (2008: US$973,000), the provision for the discounted net present value of the future property operating lease rental payments under the operating lease, on the basis that no sublet of the property is achieved for the remaining term of the lease.

 

 

4. Taxation - continuing operations

 

	2009	2008
	US$'000	US$'000
Current tax credit / (charge)
- United Kingdom	32	(35)
- Overseas	27	162
Total	59	127

 

United Kingdom and overseas income tax for the year have been calculated at the rates prevailing in the relevant jurisdictions.

 

A reconciliation of the tax credit applicable to the lossbefore taxation using the statutory rates for the countries in which the Company and its subsidiaries are domiciled to the tax credit at the effective tax rates, and a reconciliation of the statutory tax rates to the effective tax rates, are as follows :

 

	2009		2008
	US$'000	%	US$'000	%
Loss before taxation
Continuing operations	(11,647)		(32,393)
Discontinued operations	-		(25,207)
	(11,647)		(57,600)
Less: Adjustments
Share of (profits)/losses of jointly controlled entities	(128)		10
Share of losses/(profits) of associates	42		(24)
	(11,733)		(57,614)
Tax at the domestic income tax rates	(1,936)	16.50	(9,506)	16.50
Tax effect of prior year's tax losses utilised this year	(136)	1.16	(202)	0.35
Income not subject to tax	(1,213)	10.34	(1,137)	1.97
Expenses not deductible for tax	2,457	(20.94)	6,182	(10.73)
Tax effect of unrecognised temporary differences	(108)	0.92	1,237	(2.15)
Tax effect of unrecognised tax losses	936	(7.98)	3,426	(5.94)
Over provision in prior years	(59)	0.51	(127)	0.22
Tax credit for the year	(59)	0.51	(127)	0.22

 

No recognition of potential deferred tax assets of the Group has been made as the recoverability of the potential assets is uncertain.

 

 

 

 

 

 

5. Discontinued operations

 

	2009	2008
	US$'000	US$'000
Revenue	-	2,612
Cost of sales	-	(1,527)
Gross profit	-	1,085
Loss on financial assets at fair value through profit or loss	-	(20,613)
Other income	-	384
Administrative expenses	-	(5,432)
Other operating expenses	-	(631)
Loss before and after taxation for the period	-	(25,207)

 

 

During the year ended 31 December 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 transferred their employment on a continuous basis to a subsidiary 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 wholly owned subsidiary, Crosby Special Situations Fund Limited ("CSSF") during the year ended 31 December 2008. CSSF has entered into a standard performance-linked advisory agreement with Crosby Capital Limited to manage the optimal realisation of these investments but will not enter into any new merchant banking transactions through the Group. The Group has retained a number of assets which form part of the Merchant Banking operation, that are managed by CSSF with a view to realisation. These assets are held by the Group on a passive basis and are included within continuing operations from 1 July 2008. The majority of these assets had either been realised or written off by 31 December 2009.

 

 

6. Loss per Share

 

(a) Basic

 

Basic loss per share is calculated by dividing consolidated loss attributable to owners of the Company by the weighted average number of ordinary shares in issue during the year.

 

	2009	2008
	US$'000	US$'000
Loss attributable to owners of the Company
- Continuing operations	(10,941)	(31,278)
- Discontinued operations	-	(25,207)
	(10,941)	(56,485)

 

 

	2009	2008
Weighted average number of shares for calculating basic loss per share	243,475,000	243,432,377

 

 

	2009	2008
	US cents	US cents
Basic loss per share
- Continuing operations	(4.49)	(12.85)
- Discontinued operations	-	(10.35)
	(4.49)	(23.20)

 

 

(b) Diluted

 

The diluted loss per share for 2009 and 2008 is the same as the basic loss per share as the outstanding share options were anti-dilutive.

 

7. Publication

 

The financial information set out in this preliminary announcement does not constitute statutory accounts.

 

The consolidated statement of financial position at 31 December 2009 and the consolidated income statement, consolidated statement of comprehensive income, consolidated statement of changes in equity, consolidated statement of cash flows and enclosed notes for the year then ended have been extracted from the Group's 2009 statutory financial statements upon which the auditors opinion is unqualified, although readers should note that an emphasis of matter was raised by the auditors as follows;

 

Emphasis of matter - Going concern

In forming our opinion on the financial statements, which is not qualified, we have considered the adequacy of the disclosure made in note 3(a) of the Group financial statements concerning the Group's ability to continue as a going concern.

 

As explained in note 3(a) of the Group financial statements the Group's current liabilities exceeded its current assets by US$973,000 as at 31 December 2009 and the Group incurred a loss attributable to owners of the Company of US$10,941,000. Crosby Asset Management Inc is dependent on its parent, Crosby Capital Limited ("Crosby") for financial support. The ability of Crosby to provide funding to the Group is dependent on Crosby deferring the payment of a US$20 million convertible bond, due for repayment in March 2011. Crosby has been approached by certain convertible bond holders.

 

These matters, explained in note 3(a) of the Group financial statements, indicate the existence of a material uncertainty which may cast significant doubt about the Group's ability to continue as a going concern. The financial statements do not include the adjustments that would result if the Group was unable to continue as a going concern.

 

 

8. Copies of This Announcement

 

Copies of this announcement are available for collection from the Company's offices at 4 Old Park Lane, London W1K 1QW.