Annual Financial Report

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

Consolidated Statement of Comprehensive Income

For the year ended 31 December 2009

Consolidated Statement of Financial Position

As at 31 December 2009

Consolidated Statement of Changes in Equity

For the year ended 31 December 2009

Consolidated Statement of Cash Flow

For the year ended 31 December 2009

Consolidated Statement of Cash Flows (Continued)

For the year ended 31 December 2009

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:

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