ZOL.L Regulatory News (ZOL)

15 May 2007 09:28

Crosby Capital Partners Inc15 May 2007 Crosby Capital Partners Inc. 15 May 2007 IB Daiwa Issues 2006 Financial Results and Forecasts for 2007 Financial Year Shareholders should be aware that IB Daiwa Corporation ("IB Daiwa" - Jasdaq3587) has today announced its Consolidated Results for FY2006 (1 April 2006through to 31 March 2007) and its Forecast for FY 2007 (ending 31 March 2008).An English translation of the full announcement is available on IB Daiwa'swebsite, www.ibdaiwa.co.jp, a summary of the results and forecast is providedbelow. Crosby owns, through two wholly owned subsidiaries, 102,425,000 shares,representing 24.02% of IB Daiwa's issued share capital. The holdings haveremained unchanged from the 2006 Annual Report of Crosby and are classified as'financial assets at fair value through profit and loss' and are, thereforemarked to market with gains and losses being recognised in the income statement. SUMMARY OF IB DAIWA'S FY2006 RESULTS AND FY2007 FORECASTS Consolidated Financial Results for FY2006 Sales revenue Operating income Ordinary incomeFY06 Million yen % Million yen % Million yen %FY05 2,947 (21.1) (2,046) (-) (2,557) (-) 2,433 (58) (-) (165) (-) (-30.3) Net income Net income per share (non- Net income per share (fully- diluted) diluted)FY06 Million yen % yen yenFY05 (23,455) (-) -55.03 - (239) (-) -0.98 - • The sales revenue for FY2006 of JPY 2,947 million was mainly derived from the natural resources development and investment business segment. Gas and oil production volumes were lower than originally expected due to delays, resource shortages and technical problems encountered at production sites and bad weather. • In FY2006, IB Daiwa wrote down certain sunk well and lease costs capitalised on the balance sheet of Lodore, a consolidated subsidiary of the Company, and also certain loans related to the Company's legacy businesses. The Company also wrote down Lodore-related goodwill on the Company's consolidated balance sheet, and as a result booked JPY 23,004 million of extraordinary losses. The written-off costs are sunk and therefore have no cash impact. Forecast for FY2007 FY2007E FY2006 Actual yoy changeSales Revenue JPY 3,925 mil JPY 2,947 mil 33.2%EBITDA (1) JPY 1,120 mil JPY (288) mil -Operating Profit JPY (570) mil JPY (2,046) mil -Ordinary Profit JPY (1,337) mil JPY (2,557) mil -Net Profit (2) Base case: JPY JPY (23,455) - (1,278) mil mil Low case: JPY (3,922) mil (Note) 1. Earnings before interest, taxes, depreciation and amortization(EBITDA) is operating profits plus goodwill amortization expenses and other DD&Aexpenses and a key management performance indicator of the Company. 2. The base case net loss of JPY 1,278 million assumes that theexploration projects expected to be completed in FY2007 will not lead to anywrite-off of capitalised exploration costs or affiliated goodwill,. The low casenet loss of JPY 3,922 million includes a total write-off of approximately JPY2.6 billion which is the sum of the estimated exploration costs and affiliatedgoodwill related to the Endeavor AMI. IB Daiwa's actual financial performance may deviate significantly from theforecast as it depends on various factors beyond IB Daiwa's control, includingweather conditions, technical problems encountered at production sites, andresource shortages, which have an impact on the oil and gas production volume,oil and gas prices, and exchange rates. It may also be affected positively ornegatively by the costs and drilling results of its exploration projects, anyacquisitions, disposals and other transactions carried out by the IB DaiwaGroup, and any impairment of the fair value of the assets of the IB Daiwa Group. (Sales Revenue by Business Segment) Business Segment FY2007E FY2006 Actual yoy changeNatural Resources JPY 3,349 mil JPY 1,809 mil 85.1%Textile JPY 204 mil JPY 211 mil (3.3)%Foods JPY 372 mil JPY 927 mil (59.9)% Total JPY 3,925 mil JPY 2,947 mil 33.2% (Natural Resources Development and Investment Business Segment) The key assumptions the Company used for the above forecast for FY2007 are asfollows: Product Sales Revenue Sales Revenue Sales Volume Average Unit Sales Price (JPY mil) (US$000)Gas 1,428 12,359 1,732 mmcf US$7.14/mcfCrude Oil 1,791 15,545 264 mbls US$59.0/bblNGL 130 1,125 - - TOTAL 3,349 29,029 - - (Note) Exchange rate used: $1 = 115.38) NGL is a bi-product. A. Sales Volume The forecast assumes production from the wells which are in production at thetime of forecast (ie. the wells at Kami, East Cameron, and Main Pass) and fromthe new fields of Darcy. It is assumed that the production level at the time ofthe forecast will at least be maintained throughout the fiscal year, and willimprove in the second half of the fiscal year at certain fields throughimplementation of new development wells, improvement in production efficiencyand upgrade of production equipment. In both the base case and the low case, it is assumed that production from anysuccessful exploration projects will not commence and contribute revenues beforethe end of FY2007. As such, failure of Endeavor or any other explorationprojects would not have any negative impact on the projected sales revenue. B. Unit Sales Price It is assumed that the unit sale price overriding at the time of forecast willbe maintained throughout the fiscal year. C. Yen/US Dollar Exchange Rate The exchange rate of 115.38 yen per US dollar is a weighted average of theactual historical rates from the beginning of the period until the date of theannouncement of this report and estimated rates thereafter. ABOUT CROSBY CAPITAL PARTNERS Crosby Capital Partners Inc. is a leading independent deal-focused Asia-orientedmerchant banking and asset management group. Crosby is quoted on the AIM marketof the London Stock Exchange. Further details can be found on the Company'swebsite www.crosby.com. For further information on Crosby please contact: Steve Fletcher, Chief Operating Officer on +44 20 7590 2800 Ends This information is provided by RNS The company news service from the London Stock Exchange