ZOL.L Regulatory News (ZOL)

8 Nov 2007 09:36

Crosby Capital Partners Inc08 November 2007 Crosby Capital Partners Inc. ("CROSBY") Trading Update - Nine Months to 30 September 2007 8 November 2007 Crosby announces its trading figures for the nine months ended 30 September2007. HIGHLIGHTS Financial Significant increase in turnover for the year to date toUS$21.6 million (YTD Q3 2006: US$6.4 million). Accompanied by a substantial decrease in operating losses forthe year to date to US$28 million (YTD Q3 2006: US$48.1 million). Leading also to a decrease in the loss attributable toshareholders for the year to date to US$41.4 million (YTD Q3 2006: US$43.0million). Organic and acquisition-led growth in the Asset Managementarea. In the third quarter 2007, assets under management ("AUM") grew toapproximately US$2.5 billion (Q3 2006: US$1 billion) - Crosby Asset Managementis now an identifiably important part of the group with a contribution that willhave a clear impact on both earnings and value. Business Crosby was appointed as the fund manager for the entire rangeof funds previously managed by Forsyth, a London-based internationalfund-of-funds management, and fund rating and research business. IB Daiwa shares continued to trade lower in the 3rd quarter.This factor accounted for US$8.5 million of the US$10 million of non-cashmark-to-market losses during the quarter, which were the major cause of theGroup's negative result. However, with the acquisition of Orchard Petroleum, IB Daiwais now a smaller part of the balance sheet. The successful listing of LeedPetroleum, in which IB Daiwa has an approximately 40% stake, allows for a moresimplified structure and has provided Leed Petroleum with the capital toaccelerate its drilling and development programmes. A significant expansion in deal flow in the merchant bankinggroup which added new deals as well as monetising some existing assets. Orchard Petroleum (in which Crosby has a 22.23% stake)accelerated its drilling programme which will lead to an active 4th quarterduring which an updated reserve report is expected from the producing Belridgefield. Crosby announced a stake in Australian listed Pocketmail - auranium exploration company. Whilst the Group recorded a loss for the third quarter and for the year to date,Crosby's operating performance continues to be positive in areas that are leadindicators of future financial performance, when IB Daiwa's share price hasstabilised. In this context, the transaction that led to Crosby assumingmanagement of the Forsyth fund management contracts, added both breadth anddepth to the strategy of building the Asset Management business. Withapproximately US$1 billion under management, and a well respected and globallyrecognised brand name, Forsyth will become a very important part of Crosby. Welook forward to utilising this platform to further grow our Asset Managementbusiness. We shall be providing shareholders with updates in due course. Business Merchant Banking The third quarter saw the Merchant Banking team actively involved in the theForsyth transaction. In this context the firm's skills have been directlyutilised in a deal that is of strategic importance to Crosby. Separately, the merchant banking team also announced a significant new deal inthe Australian uranium sector with Pocketmail Group Limited ("Pocketmail"),which, through its wholly-owned subsidiary Adavale Minerals Pty Ltd, undertakesuranium exploration activities focussing on sedimentary uranium deposits. Thefocus of exploration activities is currently in the Marree Area, South Australia. On 8 October 2007, after the quarter under review, Pocketmail announced thatit had appointed Crosby as its adviser to assist in its development. Inconsideration, Pocketmail agreed to grant to Crosby 5 million options with anexercise price of A$0.06 per share on or before 30 November 2011 and a further 5million options with an exercise price of A$0.065 per share on or before 1December 2011. During this time the team also focused its efforts on providing corporatefinance and capital raising advice to companies within Crosby's InvestmentPortfolio. For example, working intensively on the previously disclosed listingof Leed Petroleum, and also announcing an increased stake in White EnergyCompany Limited as a result of advising that company on a convertible bondissue. Asset Management During the 3rd quarter, Crosby's AUM increased by approximately 70%, to justover US$2.5 billion. The increase in AUM during this period (which includesForsyth) was matched by substantial improvements in both turnover and profitsover the same period in the previous year. In the first nine months of 2007, turnover rose to US$21.2 million (comparedwith US$4.9 million in the same period during 2006). It is important to notethat the financial results for this period do not include any contributions fromthe new Forsyth businesses. During the third quarter of 2007, the Firm's inhouse single-manager hedge fund, the Crosby Active Opportunities Fund ("CAOF"),continued to perform well with an increase in NAV per share from US$1,166 toUS$1,176, giving a net return of 17.13% for the first nine months of the year. Forsyth In September 2007, Crosby successfully concluded negotiations with theAdministrators of Forsyth Partners Limited and Forsyth Partners (Europe) Limited(together "Forsyth"). As a result, Crosby was appointed as the manager of all ofthe Forsyth funds. Concurrently, Crosby hired Forsyth's UK-based investmentmanagement, research, distribution and administration teams, and, separately,certain of the non-UK distribution staff. As at 30 September 2007, the Forsyth funds had approximately US$1 billion ofassets under management in a broad range of fund-of-fund products coveringequities, bonds and alternative strategies, and over US$300 million in fundadvisory mandates and a market-leading fund ratings and research business. The deal is an important step in the continuing strategic development of theasset management business as a source of stable and recurring earnings. Forsythsignificantly increases Crosby's assets under management whilst providing arobust platform for the strategic growth and diversification of Crosby's assetand wealth management business. Review of Assets held on the balance sheet The third quarter of 2007 saw substantial falls in the share prices of the majorstock exchange listed components of the assets held on Crosby's balance sheet.IB Daiwa remains the largest listed position in the balance sheet, and as suchis the dominant factor in the mark-to-market losses. However, during the courseof the past year, other deals and continuing progress with newly closedtransactions for companies which are not yet listed (such as Orchard Petroleum)mean that the overall importance of IB Daiwa in our balance sheet isdiminishing. During the period under review, Crosby disclosed the sale of 15,725,000 IB Daiwashares. Following this sale, the Group's equity holding in IB Daiwa stood at20.33% and Crosby continues to be its single largest shareholder. IB Daiwa During the three months to 30 September 2007, IB Daiwa successfully raisedcapital to support its exploration and development, and new business activities. In August 2007, IB Daiwa's subsidiary Leed Petroleum PLC ("Leed Petroleum",formerly Darcy Energy Holdings UK, Ltd.) was admitted to AIM having raisedapproximately US$100 million of new capital. At the IPO share price of 47p, LeedPetroleum had a market capitalisation of approximately US$239 million. Followingthe IPO, IB Daiwa's shareholding in Leed Petroleum is 41.7%. At the IPO price,IB Daiwa's initial equity investment of US$10.2 million increased byapproximately 880% to US$100 million. As a consequence of the transaction, IBDaiwa anticipates booking a gain on deemed disposal of about US$30 million. Atthe close of the reporting period Leed Petroleum had a share price of 39.75p. During the third quarter of 2007, Leed Petroleum continued to expand itsproduction and development programme. On 17 September 2007, Leed Petroleumannounced that it had commenced drilling on its Eugene Island Block 183/184property, and on 5 October 2007, the company announced that it had beenconfirmed as the highest bidder on Ship Shoal Block 201 and Main Pass Block 115,two leases in the Central Gulf of Mexico Mineral Management Services ("MMS")Lease Sale. In September 2007, Bayerische Hypo- und Verinsbank AG ("HVB") provided a US$20million loan facility to IB Daiwa to fund Lodore's oil and gas explorationprogramme. At Lodore's Endeavor prospect, drilling continues to encounter challengingconditions. To date, progress has been delayed due to three separate wellcontrol events caused by high pressure kicks which necessitated the drilling ofsidetracks. The costs related to these events were largely covered by insurance.At the time of this report, the Endeavor well has been cased to a depth of18,822 feet, and the operator is preparing to drill ahead. The drilling of thewell at North West Kaplan is scheduled to commence following the completion ofthe drilling at Endeavor. Orchard Petroleum Ahead of an updated reserve audit to facilitate a refinancing of the acquisitiondebt, Orchard Petroleum Limited ("Orchard Petroleum") is continuing its drillingprogramme to migrate existing reserves from 3P to 2P and 1P, and pursuingfurther consolidation of its asset portfolio. The drilling programme at OrchardPetroleum has been particularly pleasing. Since the price of the Crosby leadacquisition of Orchard Petroleum was agreed a total of 18 wells have beendrilled in the Belridge acreage, with a success rate of 100%. Simon Fry, CEO, commented "The third quarter of this year has turned out to be one of the most importantthree months in the short history of Crosby as a listed company. Whilst ourability to identify and rapidly respond to the opportunity to acquire theForsyth businesses clearly demonstrates that deal-making and merchant bankinglie at the heart of Crosby, the real impact of Forsyth's fund-of-funds businessis still to come. Our new fund-of-funds business, together with our growingwealth management business, have generated the critical mass to provide theGroup with both a sizable and stable earnings stream and a robust platform forfuture growth" He added: "Obviously, we are disappointed with the continued poor share priceperformance of IB Daiwa, but given the developments in our asset managementbusiness and our confidence in the long-term prospects for our investmentportfolio, I am confident that this quarter's losses in no way reflect theunderlying health of Crosby's businesses." About Crosby Capital Partners Crosby Capital Partners Inc. is a leading independent Asia-oriented merchantbanking and asset management group with offices in China, Singapore, the UnitedKingdom and representation in other parts of Asia. The Company is quoted on theAIM market of the London Stock Exchange. Including the Forsyth range of funds,Crosby has approximately US$2.5 billion of assets under management. The Group'sactivities are regulated by the UK Financial Services Authority, the Hong KongSecurities and Futures Commission, and the Singapore Monetary Authority. Furtherdetails can be found on Crosby's website, www.crosby.com, and the website ofForsyth Partners, www.forsythpartners.com. For further information on Crosby please contact: Simon Fry, Chief Executive Officer on +44 20 7590 2800 Stephen Fletcher, Chief Operating Officer on +44 20 7590 2800 Trading Summary Unaudited Unaudited nine months three months ended 30 September ended 30 September 2007 2006 2007 2006 US$'000 US$'000 US$'000 US$'000 Restated Restated Turnover/Revenue 21,629 6,429 9,272 2,622Loss on financial assets at fairvalue through profit or loss (16,479) (24,541) (10,451) (105,436)Loss on financial liabilities at fair value through profit or loss (443) (623) - (210)Other income 736 2,022 420 247Administrative expenses (27,911) (26,343) (10,242) (8,674)Distribution expenses (98) (49) (10) (7)Other operating expenses (5,578) (4,386) (1,007) (2,213)Finance costs - (628) - (83) Loss from operations (28,144) (48,119) (12,018) (113,754) Gain recognised from negative goodwill - 959 - - Share of losses of associates / jointly controlled entity (130) (168) (80) (44) Loss before taxation (28,274) (47,328) (12,098) (113,798) Taxation (1,626) (133) (689) (36) Loss after taxation (29,900) (47,461) (12,787) (113,834) Minority interests (11,512) 4,492 (2,316) 606 Loss attributable to (41,412) (42,969) (15,103) (113,228)equity holders of parent company Dividends - 2007: Nil (2006: Nil) - - - - Loss per share - Basic (17.03 cents) (17.72 cents) (6.21 cents) (46.66 cents) - Diluted N/A N/A N/A N/A This information is provided by RNS The company news service from the London Stock Exchange