ZOL.L Regulatory News (ZOL)

RNS Number : 9467Q

Crosby Asset Management Inc

12 August 2010

 

12 August 2010

 

Crosby Asset Management Inc.

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

 

Interim Results - Six months ended 30 June 2010

 

Summary Financials

 

·; Turnover 2010: US$1.0 million (2009: US$2.1 million)

·; Profit Attributable to Shareholders 2010: US$1.0 million (Loss Attributable to Shareholders 2009: US$8.6 million)

·; Shareholder Equity 2010: US$0.1 million (2009: US$1.2 million)

·; Profit Per Share (basic) 2010: US$0.004 (Loss Per Share (basic) 2009: US$0.035)

·; Assets Under Management 2010: US$0.5 billion (2009: US$0.6 billion)

 

 

Commentary

 

·; The Company has continued to constrain costs during the period and preserve cash.

 

·; As announced on 24 June 2010 CAM has entered into a conditional sale and purchase agreement with Crosby Capital Limited ("CCL") regarding the potential disposal of its operating businesses (the "Disposal"). The Disposal is subject to shareholder approval at a General Meeting of the Company to be held on 25 August 2010 (the "Approval") and shareholders are reminded that Forms of Instruction relating to the General Meeting should be submitted by 20 August 2010 and Forms of Proxy by 23 August 2010.

 

·; Should the Approval be granted and the Disposal completes, CAM would then become an investing company, as defined by the AIM Rules and the Company's proposed investing strategy will be to acquire holdings in natural resources, minerals, metals and/or oil & gas companies which, the board of directors believes, are undervalued and where one or more such transactions have the potential to create value for shareholders (the "Investing Strategy"). The Company expects to be an active investor, but decisions as to whether to invest will be governed by the terms of each transaction. If the Investing Strategy is approved, there is no limit on the number of projects into which the Company may invest, and the Company will consider possible opportunities anywhere in the world with a particular focus on Africa, South America, Australasia and Central and Eastern Europe. 

 

 

 

 

Consolidated Income Statement
Continuing Operations				Unaudited six months ended 30 June		Unaudited six months ended 30 June		Audited year ended 31 December
				2010		2009		2009
		Notes		US$'000		US$'000		US$'000
Continuing operations
Revenue		5		1,028		2,104		3,505
Cost of sales				(285)		(322)		(451)
Gross profit				743		1,782		3,054
Gain/(Loss) on financial assets at fair value through profit or loss		14		4		(1,964)		(2,003)
Other income		6		3,664		294		617
Administrative expenses
Restructuring credit/(expenses)		7		115		(580)		(2,622)
Impairment of intangible assets				-		(10)		-
Other administrative expenses				(2,639)		(5,617)		(6,999)
				(2,524)		(6,207)		(9,621)
Distribution expenses				-		-		(3)
Impairment of available-for-sale investments				(65)		(1,458)		(1,536)
Impairment of associates				-		-		(389)
Impairment of a jointly controlled entity				-		-		(128)
Other operating expenses				(176)		(1,512)		(1,612)
Profit/(Loss) from operations				1,646		(9,065)		(11,621)
Finance costs				(56)		(62)		(112)
Share of profits/(losses) of associates				-		1		(42)
Share of profits of jointly controlled entities				51		73		128
Profit/(Loss) before taxation		9		1,641		(9,053)		(11,647)
Taxation		10		3		24		59
Profit/(Loss) for the period				1,644		(9,029)		(11,588)
Attributable to:
Owners of the Company				958		(8,576)		(10,941)
Non-controlling interests				686		(453)		(647)
Profit/(Loss) for the period				1,644		(9,029)		(11,588)
Dividend				-		-		-
Profit/(Loss) per share for profit/(loss) attributable to owners of the Company		11		US cents		US cents		US cents
- Basic				0.39		(3.52)		(4.49)
- Diluted				0.39		(3.52)		(4.49)

 

Consolidated Statement of Comprehensive Income
		Unaudited six months ended 30 June		Unaudited six months ended 30 June		Audited year ended 31 December
	Note	2010		2009		2009
		US$'000		US$'000		US$'000
Profit/(Loss) for the period		1,644		(9,029)		(11,588)
Other comprehensive income:
Exchange differences on translating foreign operations		65		(14)		46
Available-for-sale investments   Deficit on revaluation Recycle to income statement: Provision for impairment Loss upon disposal	9	(65)   65 -		(805)   1,458 436		(810)   1,536 362
Share of other comprehensive income of associates		-		(27)		(52)
Share of other comprehensive income of jointly controlled entities		-		16		11
Other comprehensive income for the period, before and net of tax		65		1,064		1,093
Total comprehensive income for the period, before and net of tax		1,709		(7,965)		(10,495)
Attributable to:
Owners of the Company		1,023		(7,512)		(9,848)
Non-controlling interests		686		(453)		(647)
		1,709		(7,965)		(10,495)

 

Consolidated Statement of Financial Position

		Unaudited 30 June	Unaudited 30 June	Audited 31 December
		2010	2009	2009
	Notes	US$'000	US$'000	US$'000
ASSETS
Non-current assets
Property, plant and equipment		273	181	373
Interests in associates		-	488	-
Interests in jointly controlled entities		68	557	16
Available-for-sale investments	12	226	387	291
Note receivable		520	497	508
Intangible assets		21	21	21
		1,108	2,131	1,209
Current assets
Amounts due from related companies	17(b)	6	52	4
Trade and other receivables	13	751	2,344	1,121
Tax recoverable		109	120	74
Financial assets at fair value through profit or loss	14	50	381	115
Cash and cash equivalents		5,637	7,871	6,723
		6,553	10,768	8,037
Total assets		7,661	12,899	9,246
LIABILITIES
Current liabilities
Amounts due to parent and related companies	17(b)	(1,021)	(1)	(2)
Trade and other payables	15(a)	(1,481)	(5,393)	(2,425)
Deferred income		(23)	(30)	(26)
Provision for taxation		(32)	-	-
Current portion of obligations under finance leases		(309)	(277)	(348)
Provision for liabilities	15(b)	(2,825)	(4,339)	(6,209)
		(5,691)	(10,040)	(9,010)
Non-current liabilities
Loan payable		(55)	(53)	(54)
Obligations under finance leases		(37)	(390)	(144)
		(92)	(443)	(198)
Total liabilities		(5,783)	(10,483)	(9,208)
EQUITY
Share capital	16	2,435	2,435	2,435
Reserves		(2,317)	(1,229)	(3,427)
Equity/(Capital deficiency)attributable to owners of the Company		118	1,206	(992)
Non-controlling interests		1,760	1,210	1,030
Total equity		1,878	2,416	38
Total equity and liabilities		7,661	12,899	9,246

 

 

 

Consolidated Statement of Changes in Equity
	Equity attributable to owners of the Company								Non-controlling 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 2010 (Audited)	2,435	6,344	23,455	3,254	25	-	(36,505)	(992)	1,030	38
Employee share-based compensation	-	-	-	119	-	-	-	119	(1)	118
Lapse of share options	-	-	-	(1,378)	-	-	1,378	-	-	-
Effect on exercising share options of a subsidiary	-	-	-	(32)	-	-	-	(32)	45	13
Transactions with owners	-	-	-	(1,291)	-	-	1,378	87	44	131
Profit for the period	-	-	-	-	-	-	958	958	686	1,644
Other comprehensive income:
Exchange difference on translating foreign exchange operations	-	-	-	-	65	-	-	65	-	65
Available-for-sale investments Deficit on revaluation	-	-	-	-	-	(65)	-	(65)	-	(65)
Recycle to income statement: Provision for impairment	-	-	-	-	-	65	-	65	-	65
Total comprehensive income for the period	-	-	-	-	65	-	958	1,023	686	1,709
At 30 June 2010 (Unaudited)	2,435	6,344	23,455	1,963	90	-	(34,169)	118	1,760	1,878

 

 

 

Consolidated Statement of Changes in Equity
	Equity attributable to owners of the Company								Non-controlling 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 (Audited)	2,435	6,344	23,455	3,597	20	(1,088)	(26,579)	8,184	1,648	9,832
Employee share-based compensation	-	-	-	534	-	-	-	534	15	549
Lapse of share options	-	-	-	(190)	-	-	190	-	-	-
Transactions with owners	-	-	-	344	-	-	190	534	15	549
Loss for the period	-	-	-	-	-	-	(8,576)	(8,576)	(453)	(9,029)
Other comprehensive income:
Exchange difference on translating foreign exchange operations	-	-	-	-	(14)	-	-	(14)	-	(14)
Available-for-sale investments Deficit on revaluation	-	-	-	-	-	(805)	-	(805)	-	(805)
Recycle to income statement: Provision for impairment Loss upon disposal	- -	- -	- -	- -	- -	1,458 436	- -	1,458 436	- -	1,458 436
Share of other comprehensive income of associates	-	-	-	-	(27)	-	-	(27)	-	(27)
Share of other comprehensive income of jointly controlled entities	-	-	-	-	16	-	-	16	-	16
Total comprehensive income for the period	-	-	-	-	(25)	1,089	(8,576)	(7,512)	(453)	(7,965)
At 30 June 2009 (Unaudited)	2,435	6,344	23,455	3,941	(5)	1	(34,965)	1,206	1,210	2,416

 

Condensed Consolidated Statement of Cash Flows

		Unaudited six months ended 30 June	Unaudited six months ended 30 June	Audited year ended 31 December
		2010	2009	2009
		US$'000	US$'000	US$'000
Net cash outflow from operating activities		(2,055)	(7,603)	(8,189)
Net cash inflow/(outflow) from investing activities		85	81	(311)
Net cash inflow/(outflow) from financing activities		899	(144)	(319)
Net decrease in cash and cash equivalents		(1,071)	(7,666)	(8,819)
Cash and cash equivalents as at start of period		6,723	15,526	15,526
Effect of exchange rate fluctuations		(15)	11	16
Cash and cash equivalents as at end of period		5,637	7,871	6,723

 

 

 

 

 

 

 

Notes to the unaudited 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 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 (IFRSs) 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 London Stock Exchange.

 

The interim financial information has been prepared on the historical cost basis except for financial instruments classified as available-for-sale and fair value through profit or loss 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 unaudited interim financial information.

 

The Directors have prepared cash flow forecasts through to 31 August 2011 which exclude the impact of the cash flows of Crosby Wealth Management which held cash of US$4,630,000 out of the Group's total cash of US$5,637,000 at 30 June 2010. Crosby Wealth Management has been excluded from the forecasts as it is only 55.86% owned by the Group. The forecasts take into account the reduced cost structure of the Group following the prosposed disposal of the operating businesses as announced on 24 June 2010. These forecasts indicate adequate working capital after the loan drawdown of approximately US$550,000 out of a facility of US$4,000,000 from Crosby Capital Limited, its parent company. For these reasons, they continue to adopt the going concern basis in preparing the interim financial information.

 

The interim financial information contained in this announcement does not constitute statutory accounts within the meaning of the Companies Act 2006. The full accounts for the year ended 31 December 2009 received an unqualified report from the auditors and did not contain a statement under Section 498(2) or (3) of the Companies Act 2006.

 

The interim financial information is unaudited but hasbeen reviewed by the Company's Audit Committee.

 

 

2. Principal accounting policies

The interim financial information has been prepared in accordance with International Accounting Standard 34 "Interim Financial Reporting". These condensed interim financial information should be read in conjunction with the audited annual financial statements of the Group for the year ended 31 December 2009 (the "2009 Annual Report"), which have been prepared in accordance with International Financial Reporting Standards.

 

The principal accounting policies and methods of computation adopted to prepare the interim financial information are consistent with those detailed in the 2009 Annual Report published by the Company on 25 March 2010, except for the adoption of IAS 27.

 

Following the adoption of IAS 27 Consolidated and Separate Financial Statements (Revised 2008) which is effective for the accounting periods beginning on or after 1 July 2009, the effects of all transactions with non-controlling interests are to be recorded in equity if there is change in control that do not result in a loss of control. When there is loss in control, a gain or loss is recognised in profit or loss. Any remaining interest in the entity is to be re-measured to fair value. In addition, total comprehensive income is to be attributed to the non-controlling interests even if this results in the non-controlling interests having a deficit balance. These changes are applied prospectively from 1 January 2010. The adoption of IAS 27 had no impact on the interim financial information.

 

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 12 and 14 to the unaudited interim financial information respectively, have a risk of causing a material adjustment to the carrying amounts of assets within the next accounting period.

 

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, in the opinion of Directors of the Company, 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 of changes in circumstances indicate that their carrying amounts may not be recoverable annually in accordance with the relevant accounting standards. An impairment loss is recognised when the carrying amount of an asset is lower than the greater of its net selling price or the value in use. In determining the value in use, management assesses the present value of the estimated future cash flows expected to arise from the continuing use of the asset and from its disposal at the end of its useful life. Estimates and judgments are applied in determining these future cash flows and the discount rate.

 

Impairment of trade and other receivables

 

Management determines impairment of trade and other 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.

 

Provision for onerous contracts

 

Management estimates provision for the onerous property contracts to reflect the unavoidable costs of meeting the obligations under the contract. The Group uses a number of assumptions in assessing the present value of the estimated future cash flows expected to meet the obligations under the contract and from the possible sub-letting or asignment of contract. Estimates and judgements are applied in determining these future cash flows and the discount rate. Details of the key assumptions in respect of the provision for the onerous property contract are disclosed in Note 7 to the unaudited interim financial information.

 

Provision for claims

 

Management estimates, based on all available evidence and advice from their solicitors, the likelihood of setting claims made against the Group and the potential cost, net of agreed recoveries from insurers, if any, of those claims. The Group fully provides the estimated cost where settlement is likely.

 

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 the final tax outcome is determined.

 

Deferred tax assets relating to certain tax losses will be recognised when management considers it is probable that future taxable profit will be available against which the temporary differences or tax losses can be utilised. Where the expectation is different from the original estimate, such difference will impact, where applicable and appropriate, the recognition of deferred tax assets and taxation in the periods in which such estimate is changed.

 

(ii)  Critical judgements in applying the Group's accounting policies

Management in applying the accounting policies, considers that the most significant judgement they have had to make, on an ongoing basis, is not treating the operating businesses to be sold to Crosby Capital Limited as assets held for sale as the contract for the sale was conditional at 30 June 2010.

4. Segment Information

 

In identifying the Group's operating segments, the management generally follows the Group's service lines which represent the main services provided by the Group. Each of these operating segments is managed separately as each of them requires different resources.

 

The chief operating decision maker, which is the Chief Executive Officer, assesses the performance of the operating segments based on a measure of operating profit. This measurement basis excludes the effects of non-recurring expenditure from the operating segments, such as restructuring credit/expenses and impairment of intangible assets which is the result of an isolated, non-recurring event not directly related to the ongoing operations.

 

The Group has identified the following reportable operating segments:

 

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

ii) Direct Investment -the remaining investments held which arose from the discontinued Merchant Banking business and are now managed on a passive basis.

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

 

			Direct Investment			Asset Management			Total
			Unaudited six months ended 30 June	Unaudited six months ended 30 June	Audited year ended 31 December	Unaudited six months ended 30 June	Unaudited six months ended 30 June	Audited year ended 31 December	Unaudited six months ended 30 June	Unaudited six months ended 30 June	Audited year ended 31 December
			2010	2009	2009	2010	2009	2009	2010	2009	2009
			US$'000	US$'000	US$'000	US$'000	US$'000	US$'000	US$'000	US$'000	US$'000
Revenue from external customers			-	-	-	1,028	2,104	3,505	1,028	2,104	3,505
Inter-segment revenues			-	-	57	-	357	1,139	-	357	1,196
Total revenue			-	-	57	1,028	2,461	4,644	1,028	2,461	4,701
Segment profit/(loss) from operations			(155)	(2,369)	(2,085)	1,957	(5,181)	(5,785)	1,802	(7,550)	(7,870)
			Unaudited 30 June	Unaudited 30 June	Audited 31 December	Unaudited 30 June	Unaudited 30 June	Audited 31 December	Unaudited 30 June	Unaudited 30 June	Audited 31 December
			2010	2009	2009	2010	2009	2009	2010	2009	2009
			US$'000	US$'000	US$'000	US$'000	US$'000	US$'000	US$'000	US$'000	US$'000
Segment total assets			64	935	645	7,397	11,848	8,567	7,461	12,783	9,212

 

			Unaudited six months ended 30 June	Unaudited six months ended 30 June	Audited year ended 31 December
			2010	2009	2009
			US$'000	US$'000	US$'000
Segment profit/(loss) from operations			1,802	(7,550)	(7,870)
Reconciling items:
Other income not allocated			32	36	19
Restructuring credit/(expenses)			115	(580)	(2,622)
Impairment of intangible assets			-	(10)	-
Other expenses not allocated			(303)	(973)	(1,160)
Elimination of inter-segment revenue/ expenses			-	12	12
Profit/(Loss) from operations			1,646	(9,065)	(11,621)
Finance costs			(56)	(62)	(112)
Share of profits/(losses) of associates			-	1	(42)
Share of profits of jointly controlled entities			51	73	128
Profit/(Loss) before taxation			1,641	(9,053)	(11,647)

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

			Unaudited 30 June	Unaudited 30 June	Audited 31 December
			2010	2009	2009
			US$'000	US$'000	US$'000
Segment total assets			7,461	12,783	9,212
Other assets not allocated			200	116	34
Total assets			7,661	12,899	9,246

 

 

	Direct Investment			Asset Management			Other			Total
	Unaudited six months ended 30 June	Unaudited six months ended 30 June	Audited year ended 31 December	Unaudited six months ended 30 June	Unaudited six months ended 30 June	Audited year ended 31 December	Unaudited six months ended 30 June	Unaudited six months ended 30 June	Audited year ended 31 December	Unaudited six months ended 30 June	Unaudited six months ended 30 June	Audited year ended 31 December
	2010	2009	2009	2010	2009	2009	2010	2009	2009	2010	2009	2009
	US$'000	US$'000	US$'000	US$'000	US$'000	US$'000	US$'000	US$'000	US$'000	US$'000	US$'000	US$'000
Other information
Interest income	(9)	(11)	(23)	(8)	(17)	(31)	-	-	-	(17)	(28)	(54)
Depreciation	-	-	-	102	118	223	-	-	-	102	118	223
Impairment of available-for-sale investments	-	-	-	65	1,458	1,536	-	-	-	65	1,458	1,536
Impairment of associates	-	-	-	-	-	389	-	-	-	-	-	389
Impairment of a jointly controlled entity	-	-	-	-	-	128	-	-	-	-	-	128
Impairment of other receivables	-	-	-	3	-	71	-	-	-	3	-	71
Share-based compensation	-	4	4	66	402	421	52	143	276	118	549	701