23rd Mar 2009 07:00
23 March 2009
Commoditrade Inc.
("Commoditrade" or "the Company")
Final Results for the year ended 31 December 2008
Commoditrade (ticker: CMM.L), the commodities investment group, is pleased to announce its audited results for the year ended 31 December 2008.
Summary Financials
|
Revenue H1 2008 |
Revenue H2 2008 |
Total Revenue 2008 |
Profit from on-going operations prior to non-cash items |
|
£7,750,000 |
£9,956,000 |
£17,706,000 |
£2,548,000 |
Gross Revenue £17.7 million (2007: £33.9 million)
Profit from operations prior to non-cash and sign-on bonus items £2.6 million (2007: £16.1 million)
Total of £8.9 million in cash back to shareholders during the period via a £5.0 million dividend and £3.9 million share buy back balance
No debt at year end with net cash at bank of £5.7 million
Translation reserve increased to £3.1 million due to foreign exchange gains
After including non-cash items totalling £24.5 million (*note below) and sign-on bonus payments of £0.5 million the Company incurred a loss for the year of £22.4 million (2007: Loss £6.3 million)
Strategic and Operational highlights
Management changes made during the year including the appointment of David Phipps as Chief Executive on 3 September 2008
Formation of Commoditrade Asset Management Limited ("CMMAM") and reorganisation of operational platform ahead of the Group's future product diversification
Strong LME base metals franchise was further enhanced with additional market professionals during the year
Acquisition announced on 1 December 2008 of AMCO Management Services Limited, the controlling partner of AMCO Commodities LLP, a commodities fund manager ("AMCO") and following receipt of approval to the transaction from the FSA on 18 February 2009, completion of the acquisition, took place on 20 February 2009.
*Note: Non-cash items include £11.8 million in respect of amortisation of intangible asset (2007: £12.1 million) the carrying value of which has been reduced to £3.9 million from £26.22 million at the beginning of 2007. Accordingly, amortisation of this intangible will have a significantly less material impact on future results. In addition, non-cash items include £11.2 million in respect of share based payments (2007: £5.5 million) of which £3 million related to the exercise of options by Graham Butt during the year and so will not recur in future years and £1.5 million in relation to the permanent diminution in the available for sale assets.
Commenting on the Group's outlook, David Phipps, Chief Executive, said:
"Our core LME base metals franchise remains strong and although we anticipate that total LME volumes are likely to be lower in 2009 than last year we believe the changes we have made will enhance and increase revenue flows during the year.
"The acquisition of AMCO will add to our current revenue flows and provide cost savings as well as additional revenue growth as we add additional commodity asset classes to the product portfolio.
"Diversification into other commodity areas will be activated as soon as possible following the creation of the Group's UK regulated entity and initial revenue flows from this area are expected to commence during the final quarter of 2009"
www.commoditrade.net
|
Enquiries:
|
|
|
Commoditrade Inc
David Phipps, Chief Executive
|
tel: +44(0)20 7245 1100 (on 23 March 2009)
|
|
Nomad
James Harris/Angela Peace
Strand Partners
|
tel: +44(0)20 7409 3494
|
|
Media/IR
John Bick, Hansard Group
|
tel: +44(0) 7872 061007
|
Commoditrade Inc.
Preliminary Statement for the year ended 31 December 2008
Results
Gross revenue for the period was £17.7 million before deduction of clearing and administration fees (2007: £33.9 million). Net cash flow from operating activities was £5.2 million (2007: £10.7 million). As at 31 December 2008 the Group had no debt and its cash balances stood at £5.7 million after £3.9 million of cash was used in the final part of the Company's share buy-back programme and a final dividend was paid utilising a further £5.0 million of cash.
Operational clearing and related administration costs were lower at £6.2 million (2007 £8.5 million). Net income for the period after direct trading costs and bonuses but before amortisation of intangible assets, impairment of available for sale assets, costs associated with the issue of share options and sign-on bonus payments to the trading team, was £2.5 million (2007: £16.7 million).
Total non-cash charges during the period amounted to £25.0 million consisting of amortisation of intangible assets of £11.8 million, costs associated with the issue of share options of £11.2 million, sign-on bonus payments of £0.5 million and £1.5 million in respect of the diminution in the value of an "available for sale" asset, resulting in a loss before and after tax of £22.4 million (2007: loss £6.3 million).
The Group announced that it completed its share buy-back programme on 25 February 2008. During the last period of the programme the Group completed the purchase of 14,755,000 shares representing 3.8 per cent of the Group's issued share capital immediately prior to the buy-back, at a total cost of £3.9 million. Since the commencement of the programme on 26 November 2007, the Group purchased 45,505,000 shares representing 11.9 per cent. of the Group's issued share capital immediately prior to the buy-back, at a total cost of £11.26 million. No final dividend is proposed.
Reporting currency
Historically the Group has reported results in GBP. The board proposes changing this to US dollars for future reporting periods. The reasoning for this is that the vast majority of commodity trading is effected and the Company's resultant revenue is generated in US dollars. Changing the reporting currency to US dollars will more accurately reflect the trading activities of the Group.
Strategy and Developments
Even in these most turbulent financial conditions the Group has continued to benefit from the revenues generated by a very strong trading and broking team in the base metals market. Our base metals revenues form a robust foundation from which to build-out the business and last year we embarked on a strategy that would enable the Group to diversify into other commodities. In order to achieve this, the Group had to embark upon a period of change and this has been a year of restructuring our current core operations and developing the platform to diversify our revenue stream in to other commodity areas and products.
Whilst this work is ongoing, considerable progress has been made in terms of the Risk Management Platforms and Operational System areas to effectively support this strategy which we expect to be completed by the end of the first half of 2009.
Our recent acquisition of the interest in AMCO Management Services Limited provides us with the first step in our product diversification and we are excited by the opportunities this acquisition will bring. We have initiated a strategy of widening the commodity coverage in the AMCO business, initially maintaining the Relative Value Strategy but with the aim of adding additional products in due course.
Core to our strategy of diversification into other commodity areas is the creation of a UK FSA regulated entity and our ownership of FSA regulated AMCO will help reduce the time and effort involved in this process.
Risk management and control remains an area of core focus and is key to the success of the business. Management reacted to changes in the levels of activity in the base metals market and associated continuance of very high levels of volatility by significantly reducing the level of risk taken on in the last four months of 2008. Whilst this may have reduced the Group's revenue opportunities it was management's belief that the risk inherent in the market outweighed the potential revenue opportunities.
As we commence operations in additional commodity asset classes we intend to roll out our strict risk control policies across these areas. Counterparty risk remains an ongoing concern for all businesses and in order to mitigate this for the foreseeable future we have taken the decision to limit our trading activities to exchange cleared products with a central counterparty cleared model.
Outlook
Our core LME base metals franchise remains strong and has been enhanced with addition of experienced market professionals during the year as part of the restructuring process. Although we anticipate that total LME volumes are likely to be lower in 2009 we believe the changes we have made will enhance and increase revenue flows during the year.
The acquisition of AMCO will add to our current revenue flows and provide cost savings as well as providing additional revenue growth as we add additional commodity asset classes to our product portfolio.
Diversification into other commodity areas will be activated as soon as possible following the creation of the Group's UK regulated entity and initial revenue flows from this area are expected to start during the final quarter of 2009.
David Phipps Chief Executive
23 March 2009
Consolidated income statement
for the year ended 31 December 2008
|
|
Note
|
2008
Prior to
non cash
and sign on
bonus costs
|
2008
Non cash
and sign on
bonus costs
|
2008
Total
|
2007
Prior to
non cash and sign on
bonus costs
|
2007
Non cash and sign on
bonus costs
|
2007
Total
|
|
|
|
£'000
|
£'000
|
£'000
|
£'000
|
£'000
|
£'000
|
|
|
|
|
|
|
|
|
|
|
LME trading revenues
|
|
17,706
|
-
|
17,706
|
33,880
|
-
|
33,880
|
|
Clearing and related costs
|
|
(6,150)
|
-
|
(6,150)
|
(8,470)
|
-
|
(8,470)
|
|
Direct costs, financing charges and trader bonuses
|
|
(6,983)
|
-
|
(6,983)
|
(7,834)
|
-
|
(7,834)
|
|
Amortisation of intangible asset
|
|
-
|
(11,740)
|
(11,740)
|
-
|
(12,063)
|
(12,063)
|
|
|
|
------
|
-------
|
-------
|
-------
|
-------
|
-------
|
|
Net income from associated business
|
5
|
4,573
|
(11,740)
|
(7,167)
|
17,576
|
(12,063)
|
5,513
|
|
Revenue
|
|
514
|
-
|
514
|
-
|
-
|
-
|
|
Other income
|
|
80
|
-
|
80
|
416
|
-
|
416
|
|
|
|
-------
|
-------
|
-------
|
-------
|
-------
|
-------
|
|
Total income
|
|
5,167
|
(11,740)
|
(6,573)
|
17,992
|
(12,063)
|
5,929
|
|
Administrative expenses
-share based payment
|
|
-
|
(11,188)
|
(11,188)
|
-
|
(5,459)
|
(5,459)
|
|
-sign-on bonus payments
|
|
-
|
(519)
|
(519)
|
-
|
(5,487)
|
(5,487)
|
|
-permanent diminution of available for sale asset
|
|
-
|
(1,531)
|
(1,531)
|
-
|
-
|
-
|
|
-other
|
|
(2,595)
|
-
|
(2,595)
|
(1,888)
|
-
|
(1,888)
|
|
Total administrative expenses
|
|
(2,595)
|
(13,238)
|
(15,833)
|
(1,888)
|
(10,946)
|
(12,834)
|
|
|
|
-------
|
-------
|
-------
|
-------
|
-------
|
-------
|
|
Profit/(loss) from operations
|
|
2,572
|
(24,978)
|
(22,406)
|
16,104
|
(23,009)
|
(6,905)
|
|
|
|
|
|
|
|
|
|
|
Finance income
|
|
165
|
-
|
165
|
644
|
-
|
644
|
|
Finance costs
|
|
(189)
|
-
|
(189)
|
-
|
-
|
-
|
|
|
|
-------
|
-------
|
-------
|
-------
|
-------
|
-------
|
|
Profit/(loss) for the year before tax
|
2,548
|
(24,978)
|
(22,430)
|
16,748
|
(23,009)
|
(6,261)
|
|
|
|
|
|
|
|
|
|
|
|
Tax charge
|
3
|
-
|
-
|
-
|
-
|
-
|
-
|
|
|
|
-------
|
-------
|
-------
|
-------
|
-------
|
-------
|
|
Net profit/(loss) for the year
|
2,548
|
(24,978)
|
(22,430)
|
16,748
|
(23,009)
|
(6,261)
|
|
|
|
|
-------
|
-------
|
-------
|
-------
|
-------
|
-------
|
|
|
|
|
|
|
|
|
|
|
Basic and diluted (loss) per share (pence)
|
4
|
|
|
(6.51)p
|
|
|
(1.66)p
|
|
|
|
|
|
-------
|
|
|
-------
|
Consolidated statement of changes in equity
for the year ended 31 December 2008
|
|
Share
capital
|
Capital
redemption
reserve
|
Share
premium
|
Shares to
be issued
|
Translation
reserve
|
Retained
earnings
|
Total
equity
|
|
|
£'000
|
£'000
|
£'000
|
£'000
|
£'000
|
£'000
|
£'000
|
|
|
|
|
|
|
|
|
|
|
At 31 December 2006
|
376
|
-
|
33,452
|
1,800
|
(459)
|
5,756
|
40,925
|
|
Currency translation
|
-
|
-
|
-
|
-
|
(470)
|
-
|
(470)
|
|
Available for sale assets
|
-
|
-
|
-
|
-
|
-
|
(119)
|
(119)
|
|
Net expense recognised in equity
|
-
|
-
|
-
|
-
|
(470)
|
(119)
|
(589)
|
|
Net loss for the year
|
-
|
-
|
-
|
-
|
-
|
(6,261)
|
(6,261)
|
|
Total recognised income and expenses for year
|
-
|
-
|
-
|
-
|
(470)
|
(6,380)
|
(6,850)
|
|
Issue of new shares
|
6
|
-
|
3,279
|
(1,800)
|
-
|
-
|
1,485
|
|
Shares cancelled
|
(40)
|
40
|
-
|
-
|
-
|
(10,225)
|
(10,225)
|
|
Share based payment
|
-
|
-
|
-
|
-
|
-
|
5,459
|
5,459
|
|
At 31 December 2007
|
342
|
40
|
36,731
|
-
|
(929)
|
(5,390)
|
30,794
|
|
Currency translation
|
-
|
-
|
-
|
-
|
4,076
|
-
|
4,076
|
|
Revaluation of available for sale assets
|
-
|
-
|
-
|
-
|
-
|
(50)
|
(50)
|
|
Loss recycled through income statement on available for sale asset
|
-
|
-
|
-
|
-
|
-
|
461
|
461
|
|
Net income recognised in equity
|
-
|
-
|
-
|
-
|
4,076
|
411
|
4,487
|
|
Net loss for the year
|
-
|
-
|
-
|
-
|
-
|
(22,430)
|
(22,430)
|
|
Total recognised income and expenses for year
|
-
|
-
|
-
|
-
|
4,076
|
(22,019)
|
(17,943)
|
|
Dividends paid
|
-
|
-
|
-
|
-
|
-
|
(5,051)
|
(5,051)
|
|
Issue of new shares
|
12
|
-
|
-
|
-
|
-
|
-
|
12
|
|
Shares cancelled
|
(5)
|
5
|
-
|
-
|
-
|
(1,039)
|
(1,039)
|
|
Share based payment
|
-
|
-
|
-
|
-
|
-
|
11,188
|
11,188
|
|
At 31 December 2008
|
349
|
45
|
36,731
|
-
|
3,147
|
(22,311)
|
17,961
|
|
Consolidated balance sheet for the year ended 31 December 2008 |
|||
|
|
2008 |
2007 |
|
|
|
Note |
£'000 |
£'000 |
|
|
|
|
|
|
Assets |
|
|
|
|
|
|
|
|
|
Non-current |
|
|
|
|
Investment in associated business |
5 |
3,913 |
15,653 |
|
Other receivable |
|
1,368 |
1,022 |
|
|
|
5,281 |
16,675 |
|
|
|
|
|
|
Current |
|
|
|
|
Available for sale financial assets |
|
1,825 |
3,503 |
|
Trade and other receivables |
|
5,342 |
4,934 |
|
Cash and cash equivalents |
|
5,659 |
8,636 |
|
Total current assets |
|
12,826 |
17,073 |
|
|
|
|
|
|
Total assets |
|
18,107 |
33,748 |
|
|
|
|
|
|
|
|
|
|
|
Liabilities |
|
|
|
|
Current |
|
|
|
|
Trade and other payables |
|
146 |
2,954 |
|
Total liabilities |
|
146 |
2,954 |
|
|
|
|
|
|
|
|
|
|
|
Equity |
|
|
|
|
Share capital |
|
349 |
342 |
|
Capital redemption reserve |
|
45 |
40 |
|
Share premium |
|
36,731 |
36,731 |
|
Translation reserve |
|
3,147 |
(929) |
|
Retained earnings |
|
(22,311) |
(5,390) |
|
Total equity |
|
17,961 |
30,794 |
|
|
|
|
|
|
Total equity and liabilities |
|
18,107 |
33,748 |
|
Consolidated cash flow statement for the year ended 31 December 2008 |
|||
|
|
2008 |
2007 |
|
|
|
|
£'000 |
£'000 |
|
|
|
|
|
|
Operating activities |
|
|
|
|
(Loss) after tax |
|
(22,430) |
(6,261) |
|
Permanent diminution of available for sale asset |
|
1,531 |
- |
|
Amortisation of intangible asset in associated business |
|
11,740 |
12,063 |
|
Share based payment |
|
11,188 |
5,459 |
|
Change in trade and other receivables |
|
(754) |
(132) |
|
Change in trade and other payables |
|
(1) |
25 |
|
Foreign exchange |
|
3,917 |
(451) |
|
Net cash inflow from operating activities |
|
5,191 |
10,703 |
|
|
|
|
|
|
Investing activities |
|
|
|
|
Sale of available for sale financial assets |
|
717 |
- |
|
Purchase of available for sale financial assets |
|
- |
(1,577) |
|
|
|
717 |
(1,577) |
|
|
|
|
|
|
Financing activities |
|
|
|
|
Purchase of own shares |
|
(3,846) |
(7,418) |
|
Issue of shares |
|
12 |
- |
|
Dividend paid |
|
(5,051) |
- |
|
Net cash outflow from financing activities |
|
(8,885) |
(7,418) |
|
|
|
|
|
|
|
|
|
|
|
Net (reduction)/increase in cash and cash equivalents |
|
(2,977) |
1,708 |
|
Cash and cash equivalents at beginning of year |
|
8,636 |
6,928 |
|
Cash and cash equivalents at end of year |
|
5,659 |
8,636 |
1. ACCOUNTING POLICIES
Basis of preparation
The Group was incorporated as a Corporation in the Cayman Islands which does not prescribe the adoption of any particular accounting framework. The Board has therefore adopted and complied with International Financial Reporting Standards as adopted by the European Union (IFRS).
The Group's shares are listed on the AIM market of the London Stock Exchange.
The principal accounting policies of the Group, which have been applied consistently are detailed in the Group's annual report and financial statements.
2. SEGMENTAL REPORTING
(a) By business segment (primary segment):
As defined under International Accounting Standard 14 (IAS 14), the only material business segment the Group has is that of an investment company specialising in investments in the commodities trading sector.
(b) By geographical segment (secondary segment):
Under the definitions contained in IAS 14, the only material geographic segment that the Group operates in is currently Switzerland.
3. TAX
There is no tax charge/income for either year. The Group does not operate in any taxable jurisdiction and there is no tax arising on its operations. The relationship between the expected tax expense/income at 30% and the tax expense/income actually recognised in the income statement can be reconciled as follows:
|
|
2008 |
2007 |
||
|
|
£'000 |
% |
£'000 |
% |
|
|
|
|
|
|
|
(Loss) for the period before taxation |
(22,430) |
- |
(6,261) |
- |
|
|
|
|
|
|
|
Expected tax (credit) |
(6,729) |
(30) |
(1,878) |
(30) |
|
Loss not subject to tax |
6,729 |
- |
1,878 |
- |
|
Actual tax income |
- |
- |
- |
- |
4. (LOSS) PER SHARE
The calculation of the basic (loss)/earnings per share is based on the net loss for the year of £22,430,000 (2007: loss £6,261,000) divided by the weighted average number of shares in issue during the year of 344,465,505 (2007: 377,118,251).
The impact of the warrant and share options is anti-dilutive on the basic loss per share in 2008 and 2007.
An adjusted earnings per share has also been calculated based on the profit for the year before amortisation of the intangible asset within the associated business, sign-on bonus payments, the permanent diminution of available for sale asset and the share based payment charge amounting to a total of £24.978 million. (2007: £23.009 million) The adjusted earnings per share is therefore based on the adjusted net profit for the year of £2.548 million (2007: £16.748 million) divided by the weighted average number of shares in issue during the year of 344,465,505 (2007: 377,118,251) which results in an adjusted profit per share of 0.74 pence (2007: 4.44 pence).
The diluted adjusted profit per share is based on a weighted average number of shares in issue on a fully diluted basis of 381,288,186 (2007: 426,038,732) which results in an adjusted diluted profit per share of 0.67 pence (2007: 3.93 pence).
The diluted profit per share calculations for 2008 and 2007 are based on a weighted average number of shares in issue on a fully diluted basis calculated as follows:
|
|
2008 |
2007 |
|
|
|
|
|
Weighted average shares in issue |
344,465,505 |
377,118,251 |
|
Dilutive impact of warrant |
3,822,681 |
3,420,481 |
|
Dilutive impact of share options |
33,000,000 |
45,500,000 |
|
Weighted average diluted shares in issue |
381,288,186 |
426,038,732 |
5. INVESTMENT IN ASSOCIATED BUSINESS
The investment in associated business included in the balance sheet is analysed as follows:
|
|
2008 |
2007 |
|
|
£'000 |
£'000 |
|
|
|
|
|
Additions in the year at cost |
- |
1,485 |
|
Profit for the financial year |
4,573 |
17,576 |
|
Foreign exchange |
2,516 |
(303) |
|
Amortisation |
(11,740) |
(12,063) |
|
|
(4,651) |
6,695 |
|
Increase/ (reduction) in amounts included in trade and other receivables |
288 |
(25) |
|
Bonuses beyond contractual amounts treated as administrative expenses |
(392) |
(4,737) |
|
Cash received from associated business |
(6,985) |
(12,511) |
|
Net movement in year |
(11,740) |
(10,578) |
|
Net book value brought forward |
15,653 |
26,231 |
|
Net book value carried forward |
3,913 |
15,653 |
6. POST BALANCE SHEET EVENT
Acquisition of AMCO Management Services Limited
On 20 February 2009 Commoditrade Inc acquired the entire share capital of AMCO Management Services Limited, a business regulated by the financial services authority based in the United Kingdom. The principal activity of AMCO Management Services Limited is asset management.
The estimated total consideration of £4 million consists of an initial payment at completion of £2 million of cash plus additional deferred consideration of a further £2 million, contingent on performance, which will be settled in cash.
The book values under IFRS and the provisional fair values of the assets and liabilities acquired as at the date of acquisition were as follows:
|
|
Book value before acquisition under IFRS |
Fair value adjustments |
Fair value to Commoditrade Inc |
|
|
£'000 |
£'000 |
£'000 |
|
Non-current assets |
|
|
|
|
Property, plant & equipment |
10 |
- |
10 |
|
Current assets |
|
|
|
|
Trade and other receivables |
186 |
- |
186 |
|
Cash |
256 |
- |
256 |
|
Total assets |
452 |
- |
452 |
|
Current liabilities |
|
|
|
|
Trade and other payables |
220 |
- |
220 |
|
|
|
|
|
|
Total liabilities |
220 |
- |
220 |
|
|
|
|
|
|
Net assets |
232 |
- |
232 |
|
Goodwill arising on acquisition |
3,768 |
- |
3,768 |
|
Consideration |
4,000 |
- |
4,000 |
The directors expect that the deferred consideration will be payable in full two years from the date of the acquisition. The deferred consideration has not been discounted as the discounted amount would not be materially different from the full consideration. The intangible assets of AMCO Management Services Limited will be independently valued and any remaining difference between the fair value of net assets acquired and the fair value of the consideration will be treated as goodwill.
Chris Adams, a director of the Company, is also a director of AMCO Management Services Limited.
7. PUBLICATION OF NON STATUTORY ACCOUNTS
The financial information set out in this preliminary announcement does not constitute statutory accounts as defined in Section 240 of the Companies Act 1985.
The balance sheet at 31 December 2008 and the income statement, statement of changes in equity, cash flow statement and associated notes for the year ended 31 December 2008 have been extracted from the Company's 2008 financial statements upon which the auditors opinion is unqualified and does not include any statement under Section 237 of the Companies Act 1985.
The accounts for the year ended 31 December 2008 will be posted to shareholders and laid before the Company at the Annual General Meeting on 30 April 2009. Copies will also be available from 30 Quai Gustave-Ador, 1207 Geneva 3, Switzerland and via the website (www.commoditrade.net) in accordance with AIM Rule 26.
Related Shares:
FOR.L