ZOL.L Regulatory News (ZOL)

9 Mar 2007 07:01

Crosby Capital Partners Inc09 March 2007 CROSBY CAPITAL PARTNERS INC. London, 9 March 2007 - Crosby Capital Partners Inc. ("Crosby") notes the revisedfinancial forecasts announced today by IB Daiwa Corporation ("IB Daiwa" - JASDAQ3587). Crosby owns, through two wholly owned subsidiaries, 102,425,000 shares,representing 24.02% of its issued share capital. The holdings have remainedunchanged from the 2006 Interim 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. ________________________________________________________________________________ Crosby's CEO, Simon Fry, commented: 'Whilst I am obviously disappointed by IBDaiwa's downwards revision to its forecasts, I am encouraged by the fact thatthe revisions largely reflect one-off items that affect neither the quality norquantity of the audited oil and gas reserves that are held within IB Daiwa'ssubsidiaries, Lodore Resources Inc and Darcy Petroleum Ltd. It is alsoencouraging to note the recent capital raising at Darcy, as this will help Darcyto develop the Grand Isle acquisition and will allow them to pursue furthergrowth opportunities.' ________________________________________________________________________________ A summary of the JASDAQ announcement can be found below. The complete version isavailable on IB Daiwa's website: www.ibdaiwa.co.jp ________________________________________________________________________________ IB Daiwa Corporation (the "Company") announces the following revisions to itsconsolidated and non-consolidated financial forecasts for the fiscal year endingMarch 2007, which were respectively announced in its "FY2006 Q3 ConsolidatedFinancial Results" and "FY2006 Q3 Non-consolidated Financial Results" dated 13February 2007. 1. Revisions to Consolidated Forecasts (Unit: JPY in millions)+-----------------------+-----------------+-----------------+-----------------+| | Sales Revenue | Ordinary Profit | Net Profit |+-----------------------+-----------------+-----------------+-----------------+|Previous Forecast (A) | 3,922| - 1,216| 169|+-----------------------+-----------------+-----------------+-----------------+|Revised Forecast (B) | 2,923| - 3,246| - 1,710|+-----------------------+-----------------+-----------------+-----------------+|Variance (B-A) | - 999| - 2,030| - 1,879|+-----------------------+-----------------+-----------------+-----------------+|Variance (%) | - 25.5%| - 166.9%| -|+-----------------------+-----------------+-----------------+-----------------+|Reference: Actual | 2,433| - 165| - 239||Results for Previous | | | ||Period | | | || | | | ||(1 Apr 05 - 31 Mar 06) | | | |+-----------------------+-----------------+-----------------+-----------------+ 2. Reasons for Revisions to Forecast for Consolidated Financials (1) Sales Revenue The revised forecast for the consolidated sales revenue for the full year is JPY2,923 million, which is JPY 999 million less than the previous forecast. Themain reasons for the fall in sales revenue between the previous and revisedforecasts are described as follows. (i) Price The average gas price for the current fiscal year is expected to be lower thanpreviously forecasted, which is one of the major factors for the decrease in theconsolidated sales revenue. (ii) Production volume The actual gas production volume is expected to be lower than originallyprojected, which is attributable to the following reasons: The Kami well of Lodore, a wholly owned subsidiary of IB Daiwa, has beenundergoing repair work since December last year, as noted in the announcement ofthe Q3 results. Although the repair work has been substantially completed andthe well has returned to production, the daily production volume has not beenincreased to the original level yet. The production downtime as a result of therepair work is longer than we originally anticipated, and the revenuecontribution from Lodore in the second half of the fiscal year will likely besubstantially below its original expectation. Darcy's production volume for the current fiscal year is also expected to belower than previously projected. At East Cameron, the commencement of productionfrom the B3 well was delayed from the previous projected schedule. Although theB4 well, from which production was not included in the previous forecast,successfully started production in mid February, the Company is of the view thatit is difficult for Darcy to achieve the previously projected production volume. The crude oil production at the Kami Field has also been lower than theprojected level. Hence, the crude oil sales for the current year will also belower than previously projected. At the time of the announcement of the Q3 results on February 13, the Companyanticipated that the gas price would continue to stay at a relatively highlevel, and that the increase in daily production volume from the B3 well(production commenced in December 2006) and the new production from the B4 well(production commenced in February 2007) would minimise the variance from thepreviously projected revenue. However, the gas price, which was at the time around $8 - $9 per MCF and wasanticipated to stay at a relatively high level and help compensate thelower-than-projected production volume, has since declined to around $7 per MCFlevel. The increase in daily production volume anticipated at the time of the Q3results announcement has also not been fully materialized yet. At East Cameron,the B4 well commenced production on February 15, as expected at the time of theannouncement. The operator of the Field has worked to increase and stabilise thedaily production rates for the B3 and B4 wells, which are connected with thesame platform. The daily production report from Darcy's management to IB Daiwa'smanagement indicated that the daily production rates were in accordance withexpectation in late February, but it dropped to about half of that level inearly March due to compressor and other technical problems encountered at theplatform. Under these situations, combined with the fact that the Kamiproduction has not returned to its original level yet, the Company has concludedthat it is difficult to maintain the previously forecasted revenue for thisfiscal year. (2) Ordinary Loss The revised forecast for the consolidated ordinary loss for the full year is JPY3,246 million, which is JPY 2,030 million more than the previous forecast. The main factors in the variance in the operating loss are the fall in salesrevenue outlined above and the increase in oil & gas business operationexpenses. Increase in certain operating expense items also contribute to thevariance in the operating loss, which include one-off repair expenses of theKami well, other one-off expenses incurred both at the IB Daiwa level and thesubsidiaries' level to grow the group for a medium to long term (professionalfees arising from restructuring of Darcy and its subsequent equity fund raising,expenses incurred during discussions with potential strategic partners, expensesarising from the field work carried out by the new auditor and the shukanji inthe process of their engagement, and etc.), and larger interest expenses due tothe increase in Darcy's facility in December 2006. (3) Net Profit / Loss The Company has revised its forecast for the consolidated net profit/loss forthe full year from its original forecast of JPY 169 million profit to JPY 1,710million loss. The main factors in the variance in the net profit/loss are the increase inordinary loss outlined above. In addition, the parent has decided to take aprudent approach in making provision for doubtful accounts of JPY 223 millionarising from the legacy food business. ________________________________________________________________________________ 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 This information is provided by RNS The company news service from the London Stock Exchange