4th Apr 2008 07:01
Commoditrade Inc.04 April 2008 Commoditrade Inc. ("Commoditrade" or "the Company") Preliminary Results for the year ended 31 December 2007 Commoditrade Inc. (AIM: CMM), the commodities investment company, is pleased toannounce its preliminary results for the year ended 31 December 2007. Results • Gross revenue for the year increased by 9.6 per cent to £33.9 million (before deduction of clearing and administration fees, currently charged at 25% of total revenues generated by the trading team) (2006: £30.9 million). • Net income from the associate, before amortisation of intangible assets, for the period increased by 11.4 per cent to £17.6 million (after direct trading costs and bonuses) (2006 as restated: £15.8m). • Profit before tax (before amortisation of intangible asset, share based payments and sign-on bonuses) increased by 10.1 per cent to £16.7 million (2006 as restated: £15.2 million). • As at 31 December 2007 the Company had no debt and its cash balances stood at £8.6 million (2006: £6.9 million). • Final dividend of 1.5p per share proposed. Operations • During the period Commoditrade secured the services of the key members of the trading team for a minimum period of three years. • Additionally, Commoditrade renegotiated its contract with Sucden (UK) Limited, securing this agreement in future for a fixed net annual fee of £7.5 million. The Board believes this represents an effective restructuring of the current fee arrangement, which is calculated as a percentage of revenues generated by the trading team. • Commoditrade also acquired sufficient shares in the LME to bring its total holdings to 25,000 B shares, which now entitles the Company to apply for a Category 1 membership of the LME. Board and Senior Operational Management As part of the strategy to support the continued growth in the Company thefollowing Board and operational changes and new appointments are announcedtoday: • Adrian Collins joins the Board as Non-executive Chairman. • Graham Porter joins the Board as Non-executive Director. • Chris Adams appointed Group Investment Director responsible for all group investment operations on an international and domestic basis . • Andy Dobie, currently a non-executive director, appointed to an executive director role as Operations Director, responsible for day-to-day operations relating to the LME Team. • Senior operational management appointments with Christian Saunders, a head trader for the Team on the LME, appointed Head of Brokerage in the UK for the LME Team; and Dean Carr appointed Head of Strategic Trading. CMM Asset Management • Launch of CMM Asset Management ("CMMAM"), a wholly owned subsidiary of Commoditrade to focus on strategic trading in base metals futures Current Trading and Outlook Commenting, Graham Butt, Chief Executive of Commoditrade, said: "Despite more challenging conditions in the latter part of 2007, Commoditradehas achieved strong levels of profits and cash generation for the year. Althoughdifficult trading conditions continued into the current year, we are nowbeginning to see a return to more active trading with improved liquidity in themarkets. Chris Adams, commenting on the management changes said: "We are expanding the roles of the management team as we pursue further growth.I will continue to oversee the overall investment activities of the Company thatare now clearly delineated into brokerage and strategic trading, which will beheaded by Christian Saunders and Dean Carr respectively. Concurrently, theBoard changes will support the Company's strategic and operational requirementsas it continues to move into the next growth phase". Enquiries: Graham Butt, Chief ExecutiveCommoditrade Inc tel: +44(0)20 7245 1100 (on 4 April) Simon Raggett, Strand Partners Limited tel: +44(0)20 7409 3494 John Bick, Hansard Group tel: +44(0)20 7245 1100 www.commoditrade.net Results The Board is pleased to report Commoditrade's audited results for the year ended31 December 2007. The trading team produced a strong trading performance over the prior yeargenerating gross revenue of £33.9 million for Commoditrade. This gross revenueis reduced by the deduction of fees paid to Sucden (UK) Limited for clearingservices, which are currently charged at 25% of revenues generated by thetrading team. After direct trading costs and trader bonuses and normal overheads, net tradingprofit for the Company was £16.7 million. After deduction of amortisation ofintangible assets of £12.1 million and costs associated with the issue of shareoptions and sign-on bonus payments to the trading team of £10.9 million, therewas a loss for the period of £6.3 million. The Company's adjusted profit per ordinary share, adjusted for amortisation ofintangible assets and the costs associated with the share option issue and thecost of sign-on bonuses, was 4.44 pence. There was an unadjusted basic loss perordinary share for the period of 1.66 pence. The Company had cash and cash equivalents at 31 December 2007 of £8.6 millionrepresenting 2.52p per share. The board is recommending a final dividend of 1.5p per share be paid toshareholders on the register as at 2 May 2008. Operational Review The LME team experienced high volume of base metal trading on the LME over thefirst three quarters of the year with strong volumes and volatility, driven bytrade and financial buyers. The key markets for the trading team are copper,aluminium, nickel and zinc, all of which enjoyed a strong performance during thefirst half, with aluminium and nickel in particular showing strong growthcompared to the prior period. During July and August the team experienced lower market activity, with a moreactive market returning in the third quarter. As international financialmarkets became more difficult in the final quarter, the team experienced lowerlevels of liquidity as financial buyers took more cautious approach to tradinginternational markets, including base metals. The final two months of the yearsaw overall trading volumes become progressively thinner. Earlier in the year the Company secured the services of the key traders in thetrading team for a minimum period of three years. These traders have beenfurther incentivised through granting of options in Commoditrade, which willvest over a three year period. Commoditrade has renegotiated its contract with Sucden (UK) Limited, securingthis agreement in future for a fixed net annual fee of £7.5m. The Boardbelieves this represents an effective restructuring of the current feearrangement, which is currently calculated as a percentage of revenues generatedby the trading team. The new contract will be effective from 1 May 2008 andbased on the group's current run-rate is expected to yield significant costsavings for Commoditrade going forward. Additionally, during the period, Commoditrade acquired sufficient shares in theLME to bring its total holding to 25,000 shares, which now entitles the Companyto a Category 1 membership of the LME. On 26 November 2007 the Board announced that it had decided to exercise itsauthority to buy back its own shares, on an opportunistic basis and subject tomarket conditions. Since that date the Company has purchased 45,505,000 sharesrepresenting 11.9 per cent. of the Company's issued share capital immediatelyprior to the buy-back at a total cost of £11.22 million. The Company announcedthe cessation of the programme on 25 February 2008. Board and operational management As part of the strategy to support continued growth, the Company is pleased toannounce a number of Board and senior management changes, all of which becomeeffective today. Adrian Collins has joined the Board as Non-executive Chairman.Adrian has worked in the fund management sector for over thirty years, a largepart of which was spent at Gartmore Investment Management, where latterly he wasManaging Director. Adrian was one of the founders of Trustnet.com, a leadingprovider of Fund performance information on the Internet. He is currently on theboard of a number of public and private companies in the United Kingdom andoverseas. These include New City High Yield Trust plc, Hiscox InvestmentManagement Limited and City Natural Resources High Yield Trust plc. Graham Porter joins the Board as a Non-executive Director. He has over 26years' experience in the metal exchange markets. Graham worked as a metal brokerin the City for 13 years, spending eight of these years with Billiton EnthovenMetal Brokers, before leaving the City in 1991 and moving overseas where he hasbeen based ever since. Heading up all investment operations is Chris Adams who is appointed GroupInvestment Director responsible for all group investment operations on aninternational basis. Andy Dobie is appointed Operations Director, an executive role where he will beresponsible for day-to-day operations relating to the LME Team. Andy waspreviously Non-Executive Director. Senior operational management appointments are also made today with ChristianSaunders, a head trader for the Team on the LME, appointed Head of Brokerage inthe UK for the LME Team; and Dean Carr appointed Head of Strategic Trading. Jo Barrett and Geoffrey Conway Henderson both step down from the board as todayand we would like to thank them both for their contribution to the Board and theCompany and we wish them both well. CMM Asset Management The Company has incorporated CMM Asset Management ("CMMAM"), a wholly ownedsubsidiary of Commoditrade. CMMAM has been formed to focus specifically onstrategic trading in base metals futures. The development of the new operationwill be overseen by Chris Adams, Group Investment Director and Dean Carr, Headof Strategic Trading. Current Trading and Outlook Despite more challenging conditions in the latter part of 2007, Commoditrade hasachieved strong levels of profits and cash generation over the prior year. Moretesting trading conditions continued into the current year, although we are nowseeing a return to more active levels of trading with improved liquidity levels. The Board continues to remain alert to opportunities for developing theCommoditrade business in line with its stated strategy of creating a group thatcombines commodities expertise with complementary trading areas. Graham Butt, Chief Executive Adrian Collins, Chairman www.commoditrade.net Income statementFOR THE YEAR ENDED 31 DECEMBER 2007 2007 2007 2007 (As restated) (As restated) (As restated) 2006 2006 2006 Prior to non cash Non cash Prior to Note and sign on and sign on sign on Sign on bonus costs bonus costs Total bonus costs bonus costs Total £'000 £'000 £'000 £'000 £'000 £'000 LME trading revenues 33,880 - 33,880 30,900 - 30,900Clearing and related costs (8,470) - (8,470) (7,700) - (7,700)Direct costs, financing (7,834) - (7,834) (7,426) - (7,426)charges and trader bonusesAmortisation of intangible asset - (12,063) (12,063) - (7,494) (7,494) ------- ------- ------- ------- ------- -------Net income from associate 17,576 (12,063) 5,513 15,774 (7,494) 8,280 Other income 416 - 416 - - -Administrative expenses - (5,459) (5,459) - - --share based paymentAdministrative expenses - - (5,487) (5,487) - (1,795) (1,795)sign-on bonus paymentsAdministrative expenses - (1,888) - (1,888) (663) - (663)otherTotal administrative expenses (1,888) (10,946) (12,834) (663) (1,795) (2,458) ------- ------- ------- ------- ------- -------Operating profit/(loss) 16,104 (23,009) (6,905) 15,111 (9,289) 5,822 Finance income 644 - 644 94 - 94 ------- ------- ------- ------- ------- -------Profit/(loss) for the year before tax 16,748 (23,009) (6,261) 15,205 (9,289) 5,916 Tax charge 3 - - - - - - ------- ------- ------- ------- ------- -------Net profit/(loss) for the year 16,748 (23,009) (6,261) 15,205 (9,289) 5,916 ------- ------- ------- ------- ------- ------- Basic (loss)/profit per 4 (1.66)p 2.05pshare (pence) ------- -------Diluted (loss)/profit per 4 (1.66)p 2.02pshare (pence) ------- ------- All operations are continuing. The 2006 income statement has been restated to present separately the sign-onbonus payments, to move bonuses beyond the contractual amounts to administrativeexpenses, amounting to £1,795,000, and also to show a detailed analysis of thenet income from associate on the face of the income statement. Statement of changes in Equityfor the year ended 31 december 2007 Capital Share redemption Share Shares to Translation Retained Total capital reserve premium be issued reserve earnings equity £'000 £'000 £'000 £'000 £'000 £'000 £'000 At 31 December 2005 103 - 339 - - (160) 282Currency translation - - - - (459) - (459)Net expense recognised - - - - (459) - (459)in equityNet profit for the year - - - - - 5,916 5,916Total recognised income - - - - (459) 5,916 5,457and expenses for yearIssue of new shares 273 - 34,123 1,800 - - 36,196Share issue costs - - (1,010) - - - (1,010)At 31 December 2006 376 - 33,452 1,800 (459) 5,756 40,925 Currency translation - - - - (470) - (470)Available for sale - - - - - (119) (119)assetsNet expense recognised - - - - (470) (119) (589)in equityNet loss for the year - - - - - (6,261) (6,261)Total recognised income - - - - (470) (6,380) (6,850)and expenses for yearIssue of new shares 6 - 3,279 (1,800) - - 1,485Shares cancelled (40) 40 - - - (10,225) (10,225)Share based payment - - - - - 5,459 5,459At 31 December 2007 342 40 36,731 - (929) (5,390) 30,794 The shares to be issued related to the estimated value of shares to be issued inrespect of the acquisition of the associated undertaking which have now beenissued. Balance SheetAS AT 31 DECEMBER 2007 2007 2006 Note £'000 £'000 Assets Non-currentInvestment in associate 5 15,653 26,231Other receivable 1,022 1,052 16,675 27,283 CurrentAvailable for sale 3,503 2,064financial assetsTrade and other 4,934 4,772receivablesCash and cash 8,636 6,928equivalentsTotal current assets 17,073 13,764 Total assets 33,748 41,047 LiabilitiesCurrentTrade and other payables 2,954 122Total liabilities 2,954 122 EquityShare capital 342 376Capital redemption 40 -reserveShare premium 36,731 33,452Shares to be issued - 1,800Translation reserve (929) (459)Retained earnings (5,390) 5,756Total equity 30,794 40,925 Total equity and 33,748 41,047liabilities Cash flow statementFOR THE YEAR ENDED 31 DECEMBER 2007 2007 2006 £'000 £'000 Operating activities(Loss)/profit after tax (6,261) 5,916Amortisation of intangible asset in associate 12,063 7,494Share based payment 5,459 -Change in trade and other receivables (132) (4,737)Change in trade and other payables 25 (862)Foreign exchange (451) (459)Net cash inflow from operating activities 10,703 7,352 Investing activitiesPurchase of associate - (16,416)Purchase of available for sale financial assets (1,577) (1,177) (1,577) (17,593) Financing activitiesPurchase of own shares (7,418) -Issue of shares - 18,000Share issue costs - (1,010)Net cash inflow from financing activities (7,418) 16,990 Net increase in cash and cash equivalents 1,708 6,749Cash and cash equivalents at beginning of year 6,928 179Cash and cash equivalents at end of year 8,636 6,928 1 ACCOUNTING POLICIESBasis of preparation The Company was incorporated as a Corporation in the Cayman Islands which doesnot prescribe the adoption of any particular accounting framework. The Board hastherefore adopted and complied with International Financial Reporting Standardsas adopted by the European Union (IFRS). The Company's shares are listed on the AIM market of the London Stock Exchange. The principal accounting policies of the Company remain unchanged from those setout in the Company's 2006 annual report and financial statements 2 SEGMENTAL REPORTING (a) By business segment (primary segment): As defined under International Accounting Standard 14 (IAS14), the only materialbusiness segment the Company has is that of an investment company specialisingin investments in the commodities trading sector. (b) By geographical segment (secondary segment): Under the definitions contained in IAS 14, the only material geographic segmentthat the Company operates in is currently Switzerland. 3 TAX There is no tax charge/income for either year. The Company does not operate inthe United Kingdom and there is no tax arising on its operations. The profit ofthe associate is not taxable as profits are remitted to Switzerland to a nonSwiss company and are therefore not taxable. The relationship between theexpected tax expense/income at 30% and the tax expense/income actuallyrecognised in the income statement can be reconciled as follows: 2007 2006 £'000 % £'000 % (Loss)/profit (6,261) - 5,916 -for the periodbefore taxation Expected tax (1,878) (30) 1,775 30(credit)/expense (Loss)/profit 1,878 - (1,775) (30)not subject totaxActual tax - - - -income 4 (LOSS)/EARNINGS PER SHARE The calculation of the basic (loss)/earnings per share is based on the net lossfor the year of £6,261,000 (2006 : profit £5,916,000) divided by the weightedaverage number of shares in issue during the year of 377,118,251 (2006 :288,715,832). The impact of the warrant and share options is anti-dilutive on the basic lossper share in 2007. The diluted profit for share for 2006 is based on the netprofit for the year of £5,916,000 divided by the weighted average number ofshares in issue on a fully diluted basis of 292,478,563. An adjusted earnings per share has also been calculated based on the profit forthe year before amortisation of the intangible asset within the associate,sign-on bonus payments and the share based payment charge amounting to a totalof £23.009 million. (2006:£9.289 million) The adjusted earnings per share istherefore based on the adjusted net profit for the year of £16.748 million(2006: £15.205 million) divided by the weighted average number of shares inissue during the year of 377,118,251 (2006: 288,715,832) which results is anadjusted earnings per share of 4.44 pence (2006: 5.27 pence). The diluted adjusted profit per share is based on a weighted average number ofshares in issue on a fully diluted basis of 426,038,732 (2006: 292,478,563)which results in an adjusted diluted earnings per share of 3.93 pence (2006:5.20 pence). The diluted profit per share calculations for 2006 and 2007 are based on aweighted average number of shares in issue on a fully diluted basis calculatedas follows: 2007 2006 Weighted average shares in issue 377,118,251 288,715,832Dilutive impact of warrant 3,420,481 3,762,731Dilutive impact of share options 45,500,000 -Weighted average diluted shares in issue 426,038,732 292,478,563 5 INVESTMENT IN ASSOCIATE UNDERTAKING 2007 (As restated) 2006 £'000 £'000 Additions in the year 1,485 33,725at costProfit for the 17,576 15,774financial yearForeign exchange (303) (239)Amortisation (12,063) (7,494) 6,695 41,766Increase in amounts (25) (4,473)included in trade andother receivablesBonuses beyond (4,737) (1,795)contractual amountstreated asadministrative expensesCash received from (12,511) (9,267)associateNet movement in year (10,578) 26,231Net book value brought 26,231 -forwardNet book value carried 15,653 26,231forward 6 PUBLICATION OF NON STATUTORY ACCOUNTS The financial information set out in this preliminary announcement does notconstitute statutory accounts as defined in Section 240 of the Companies Act1985. The balance sheet at 31 December 2007 and the income statement, statement ofchanges in equity, cash flow statement and associated notes for the year ended31 December 2007 have been extracted from the Company's 2007 financialstatements upon which the auditors opinion is unqualified and does not includeany statement under Section 237 of the Companies Act 1985. The accounts for the year ended 31 December 2007 will be posted to shareholdersand laid before the Company at the Annual General Meeting on 30 April 2008.Copies will also be available from 30 Quai Gustave-Ador, 1207 Geneva 3,Switzerland and via the website (www.commoditrade.net) in accordance with AIMRule 26. -------------------------- This information is provided by RNS The company news service from the London Stock ExchangeRelated Shares:
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