30th Apr 2010 07:00
Commoditrade Inc.
("Commoditrade" or "the Group")
Final results for the year ended 31 December 2009
Commoditrade (ticker: CMM.L) is an international commodities trading and asset management group. The following is a summary of its results for the year ended 31 December 2009.
Financial Summary
·; Revenues improved in H2 with a significant reduction in overall year-on-year loss
·; Total Group revenues, including those of associated business of US$20.1 million (2008: US$31.1 million)US$20.1 million (2008: US$31.1 million)
·; Loss for the year US$(14.7) million (2008: US$(40.9) million)
·; Total of non cash items US$8.2 million (2008: US$43.6 million)
·; As at 31 December 2009 the Group had no debt and its cash balances stood at US$1.3 million (2008: US$8.3 million)
Operations
·; Continued challenging market conditions in base metals markets during the year.
·; Group maintained a tight control on risk during 2009.
·; Revenues negatively impacted by continued price volatility and tight liquidity but LME floor client brokerage revenues remained strong.
Group Restructuring
Commoditrade completed a substantial programme of restructuring during the year as follows:
·; Renegotiation of base metals trading revenue share agreement with Sucden Financial Limited enables Commoditrade to substantially reduce its fixed costs on an ongoing basis.
·; Establishment of energy desk which commenced initial trading late 2009.
·; Build out of London based trading and risk platforms, adoption of new technical and support partners including GL Sungard and opening of new London office.
·; Rebranding of the Group's principal operating companies to the new name of 'Mentum'.
Current trading and outlook
As a result of the significant changes made during the last year, Commoditrade is in a much stronger position to grow revenues in 2010. We expect that the Group will now continue to accrue the benefits of a reduced cost base and a broader range of revenue streams to augment the core LME trading revenues. We are also pleased to report that the trading performance of the LME floor in the first quarter of 2010 has improved as trading conditions in base metals have returned to more normal levels compared to the same period last year. We look forward to reporting further progress during the year as Commoditrade returns to profitable growth.
|
Enquiries: |
www.commoditrade.net
|
|
Commoditrade Inc, David Phipps, Chief Executive
|
tel: +44(0)20 7074 2200 |
|
Strand Hanson, James Harris / Angela Peace
|
tel: +44(0)20 7409 3494 |
|
Liberum Capital, Chris Bowman / Ellen Francis
|
tel: +44(0)20 3100 2000 |
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Hansard Communications, John Bick / Justine James
|
tel: +44(0) 20 7245 1100 tel: +44(0) 7872 061007 |
Operating review
The challenging conditions in base metals markets in the later part of 2008 continued longer than had been anticipated into 2009. Liquidity in the forward base metals market in which we specialise suffered in particular. Difficult global economic conditions resulted in a significant downturn in market activity, exacerbated by a tightening of liquidity and flat price volatility.
The combined impact of these issues materially and detrimentally impacted upon our base metals trading in the first half of the year. As part of the Group's restructuring process we increased our focus on the LME floor client brokerage business and fee based income. Our core base metals brokerage revenues remained strong and at marginally higher levels than the previous year.
During the year as a whole, base metal flat price volatility remained the predominant feature across all markets and therefore a strict policy of risk control and monitoring was maintained throughout the period.
Results
Summary
·; Total Group revenues of US$20.1 million (2008: US$31.1 million)
·; Loss for the year US$(14.7) million (2008: US$(40.9) million)
·; Total of non cash items US$8.2 million (2008: US$43.6 million)
·; As at 31 December 2009 the Group had no debt and its cash balances stood at US$1.3 million
The net deficit from associated business after deducting the amortisation of intangible asset was US$(5.3) million (2008: US$(10.0) million). Revenues from other trading activities were US$0.8 million (2008: US$0.8 million). The net cash outflow from operating activities was US$(3.2) million (2008: inflow of US$6.9 million).
Administrative expenses of US$6.9 million (2008: US$6.1 million) incorporate the costs of Mentum LLP (formerly AMCO Commodities LLP) following the purchase of that entity in February 2009.
The total of non-cash charges for the year amounted to US$8.2 million consisting of amortisation of intangible assets of US$7.1 million, written back costs associated with the issue of share options of US$(1.8) million and impairment of goodwill of US$2.9 million. The net loss before and after tax was US$14.7 million (2008: loss of US$40.9 million).
Reporting currency
The Group has changed its reporting currency to US dollars to more accurately reflect the trading activities, which are almost exclusively in US dollars. The half year results were prepared in accordance with that change.
Strategy and developments
On 20 February 2009, following approval by the FSA, the Group completed the acquisition of the outstanding equity in the asset management business Mentum LLP (formerly AMCO Commodities LLP). The business subsequently underwent a restructuring in order to position it to deliver the first of its new products, Managed Futures Accounts, during the first quarter of 2010.
The Group completed its programme to create a new operational and risk platform which included the adoption of new technical and support partners including GL Sungard, in line with its future strategy to introduce a range of new products under its asset management operations. In addition, the Group opened a new London office. In the latter part of Q3 2009 the first of the Groups new trading desks commenced trading with seed capital provided from Group resources.
As part of the restructuring of the Group the principal operating companies underwent a rebranding to the new name of Mentum and it is the intention that as the final part of this process the Board will also be proposing a change of name from Commoditrade Inc. to Mentum Inc. at the Company's next Annual General Meeting.
In December 2009 the board was delighted to agree a renegotiation of the base metals trading revenue share agreement with Sucden Financial Limited in relation to the LME floor trading operations. As announced on 17 December 2009, the new agreement enables Commoditrade to substantially reduce its fixed costs on an ongoing basis and enables Sucden to participate in a 25% share of net revenues, after the deduction of all costs.
The first of the Group's new products was launched under the Mentum brand at the end of the first quarter of 2010 under Mentum LLP, the Group's asset management company based in London. The company will create a suite of investment products in the form of Managed Futures Accounts (MFA's) across multiple classes, products and strategies. Initially our MFA's will focus on base metals and energy futures and options. Our newly developed infrastructure will be key to deliver the optimum transparency, control and risk management that investors demand.
To allow for maximum flexibility for the investor, each portfolio manager represents an individual investment product and an investor can view each portfolio managers 'product' profile before deciding whether an individual or a combination of multiple managers facilitates their requirements.
Current trading and outlook
2009 was a challenging trading year for the Group, although revenues in the second half of the year improved and overall year-on-year losses were significantly reduced. The management team completed a restructuring of the operational infrastructure of the Group companies in order to position Commoditrade to diversify and grow future revenue streams. As a result we now have a state-of-the-art operational and risk platform which is fully scaleable and enabled us to successfully launch a Managed Futures Account product attracting new client funds, from the first quarter of 2010.
As a result of the significant changes made during the last year, Commoditrade is in a much stronger position to grow revenues in 2010. We expect that the Group will now continue to accrue the benefits of a reduced cost base and a broader range of revenue streams to augment the core LME trading revenues. We are also pleased to report that the trading performance of the LME floor in the first quarter of 2010 has improved as trading conditions in base metals have returned to more normal levels compared to the same period last year. We look forward to reporting further progress during the year as Commoditrade returns to profitable growth.
David Phipps
Chief Executive
30 April 2010
Consolidated Statement of Comprehensive Income
|
|
Notes |
|
2009 |
|
2008 |
|
|
|
|
US$'000 |
|
US$'000 |
|
Continuing operations |
|
|
|
|
|
|
Net deficit from associated business |
|
|
(5,270) |
|
(10,010) |
|
Gains on derivative financial instruments |
|
|
825 |
|
820 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Operating loss |
|
|
(4,445) |
|
(9,190) |
|
|
|
|
|
|
|
|
Administrative expenses |
|
|
(6,917) |
|
(6,055) |
|
Share based payments written back/(charged) |
|
|
1,815 |
|
(22,369) |
|
Permanent diminution of available-for-sale assets |
|
|
- |
|
(2,238) |
|
Impairment of goodwill |
|
|
(2,925) |
|
- |
|
Sign-on bonus costs |
|
|
- |
|
(1,020) |
|
Direct trading costs |
|
|
(1,447) |
|
- |
|
Finance costs |
|
|
(743) |
|
(314) |
|
Finance income |
|
|
2 |
|
305 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Loss before tax |
|
|
(14,660) |
|
(40,881) |
|
Income tax expense |
3 |
|
- |
|
- |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Loss for the year |
|
|
(14,660) |
|
(40,881) |
|
|
|
|
|
|
|
|
Other comprehensive income |
|
|
|
|
|
|
Exchange differences on translating foreign operations |
|
|
(35) |
|
- |
|
Net gain/(loss) on available-for-sale financial assets |
|
|
328 |
|
(354) |
|
|
|
|
|
|
|
|
Other comprehensive income for the year, net of tax |
|
|
293 |
|
(354) |
|
|
|
|
|
|
|
|
Total comprehensive loss for the year, attributable to owners of the company |
|
|
(14,367) |
|
(41,235) |
|
|
|
|
|
|
|
|
Loss per share |
4 |
|
|
|
|
|
|
|
|
|
|
|
|
Basic and diluted (cents per share) |
|
|
(4.2) |
|
(11.9) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Consolidated Statement of Changes in Equity
|
|
Share capital |
Share premium account |
Capital redemption reserve |
Translation reserve |
Retained earnings |
Total equity |
|
|
|
|
|
|
|
|
|
|
US$'000 |
US$'000 |
US$'000 |
US$'000 |
US$'000 |
US$'000 |
|
|
|
|
|
|
|
|
|
Balance at 1 January 2008 |
615 |
66,496 |
81 |
- |
(8,873) |
58,319 |
|
|
|
|
|
|
|
|
|
Payment of dividends |
- |
- |
- |
- |
(9,826) |
(9,826) |
|
Recognition of share-based payments |
- |
- |
- |
- |
22,369 |
22,369 |
|
Cancellation of shares |
(11) |
- |
11 |
- |
- |
- |
|
Issue of share capital |
25 |
- |
- |
- |
(2,042) |
(2,017) |
|
|
|
|
|
|
|
|
|
Transactions with owners |
14 |
- |
11 |
- |
10,501 |
10,526 |
|
|
|
|
|
|
|
|
|
Loss for the year |
- |
- |
- |
- |
(40,881) |
(40,881) |
|
Other comprehensive income for the year |
- |
- |
- |
- |
(354) |
(354) |
|
|
|
|
|
|
|
|
|
Total comprehensive income |
|
|
|
|
|
|
|
for the year |
- |
- |
- |
- |
(41,235) |
(41,235) |
|
|
|
|
|
|
|
|
|
Balance at 31 December 2008 |
629 |
66,496 |
92 |
- |
(39,607) |
27,610 |
|
|
|
|
|
|
|
|
|
Recognition of share-based payments |
- |
- |
- |
- |
(1,815) |
(1,815) |
|
|
|
|
|
|
|
|
|
Transactions with owners |
- |
- |
- |
- |
(1,815) |
(1,815) |
|
|
|
|
|
|
|
|
|
Loss for the year |
- |
- |
- |
- |
(14,660) |
(14,660) |
|
Other comprehensive income for the year |
- |
- |
- |
(35) |
328 |
293 |
|
|
|
|
|
|
|
|
|
Total comprehensive income |
|
|
|
|
|
|
|
for the year |
- |
- |
- |
(35) |
(14,332) |
(14,367) |
|
|
|
|
|
|
|
|
|
Balance at 31 December 2009 |
629 |
66,496 |
92 |
(35) |
(55,754) |
11,428 |
Consolidated Statement of Financial Position
|
|
|
31 December 2009 |
31 December 2008
|
1 January 2008
|
|
|
|
US$'000 |
US$'000 |
US$'000 |
|
Assets |
|
|
|
|
|
|
|
|
|
|
|
Non-current |
|
|
|
|
|
Property, plant and equipment |
|
534 |
- |
- |
|
Investment in associated business |
|
- |
7,070 |
28,282 |
|
Other receivables |
|
2,000 |
2,000 |
2,030 |
|
|
|
2,534 |
9,070 |
30,312 |
|
Current |
|
|
|
|
|
Cash and cash equivalents |
|
1,278 |
8,274 |
17,137 |
|
Balance due from brokers |
|
5,340 |
28 |
- |
|
Other financial assets |
|
3,831 |
3,742 |
6,951 |
|
Trade and other receivables |
|
3,722 |
6,709 |
9,790 |
|
|
|
|
|
|
|
Total current assets |
|
14,171 |
18,753 |
33,878 |
|
|
|
|
|
|
|
Total assets |
|
16,705 |
27,823 |
64,190 |
|
|
|
|
|
|
|
Liabilities |
|
|
|
|
|
|
|
|
|
|
|
Current |
|
|
|
|
|
Trade and other payables |
|
1,848 |
213 |
5,871 |
|
Other financial liabilities |
|
3,429 |
- |
- |
|
|
|
|
|
|
|
Total liabilities |
|
5,277 |
213 |
5,871 |
|
|
|
|
|
|
|
Equity |
|
|
|
|
|
Issued share capital |
|
629 |
629 |
615 |
|
Share premium |
|
66,496 |
66,496 |
66,496 |
|
Other reserves |
|
57 |
92 |
81 |
|
Retained earnings |
|
(55,754) |
(39,607) |
(8,873) |
|
|
|
|
|
|
|
Equity attributable |
|
|
|
|
|
to owners of the company |
|
11,428 |
27,610 |
58,319 |
|
|
|
|
|
|
|
Total equity and liabilities |
|
16,705 |
27,823 |
64,190 |
|
|
|
|
|
|
Consolidated Statement of Cashflows
|
|
|
|
|
US$'000 |
US$'000 |
|
|
|
|
|
|
|
|
|
Operating activities |
|
|
|
|
|
Loss after tax |
|
(14,660) |
(40,881) |
||
|
Permanent diminution of available for sale asset |
|
- |
2,238 |
||
|
Amortisation of investment in associated business |
|
7,070 |
21,211 |
||
|
Impairment of goodwill |
|
2,925 |
- |
||
|
Depreciation of fixed assets |
|
125 |
- |
||
|
Share based payment (written back)/charged |
|
(1,815) |
22,369 |
||
|
Decrease in trade and other receivables |
|
3,174 |
3,110 |
||
|
Increase/(decrease) in trade and other payables |
|
1,232 |
(85) |
||
|
Increase/(decrease) in derivative financial instruments |
|
4,133 |
(1,074) |
||
|
Increase in balance due from broker |
|
(5,312) |
(28) |
||
|
Foreign exchange |
|
(35) |
- |
||
|
|
Net cash (outflow)/inflow from operating activities |
|
|
(3,163) |
6,860 |
|
|
|
|
|
|
|
|
|
Investing activities |
|
|
|
|
|
|
Sale of available for sale financial assets |
|
|
- |
1,090 |
|
|
Purchase of available for sale financial assets |
|
|
(300) |
- |
|
|
Purchase of subsidiary |
|
|
(3,059) |
- |
|
|
Purchase of fixed assets |
|
|
(646) |
- |
|
|
Loans made |
|
|
(165) |
|
|
|
Revaluation of available for sale asset |
|
|
- |
604 |
|
|
Net cash (outflow)/inflow from investing activities |
|
|
(4,170) |
1,694 |
|
|
|
|
|
|
|
|
|
Financing activities |
|
|
|
|
|
|
Purchase of own shares |
|
|
- |
(7,616) |
|
|
Issue of shares |
|
|
- |
25 |
|
|
Dividend paid |
|
|
- |
(9,826) |
|
|
|
|
|
|
|
|
|
Net cash outflow from financing activities |
|
|
- |
(17,417) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net reduction in cash and cash equivalents |
|
|
(7,333) |
(8,863) |
|
|
Cash acquired on acquisition |
|
|
337 |
- |
|
|
Cash and cash equivalents at beginning of year |
|
|
8,274 |
17,137 |
|
|
Cash and cash equivalents at end of year |
|
|
1,278 |
8,274 |
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 are detailed in the Group's 2009 annual report and consolidated financial statements.
2 segmental reporting
IFRS 8 requires an entity to report financial and descriptive information about its reportable segments. Reportable segments are operating segments or aggregations of operating segments that meet specified criteria. Operating segments are components of an entity about which separate financial information is available that is evaluated regularly by the chief operating decision maker in deciding how to allocate resources and in assessing performance. Generally, financial information is required to be reported on the same basis as is used internally for evaluating operating segment performance and deciding how to allocate resources to operating segments.
The chief operating decision maker of the Group is the Chief Executive Officer (CEO). Financial information used internally by the CEO for evaluating performance and deciding how to allocate resources does not identify separable geographical or operating segments but rather presents information for the Group as a whole. For this reason, the Group reports financial information in its financial statements on the basis of the Group as a whole and does not report by operating or geographic segment.
3 tax
There is no tax charge for the year (2008: US$nil). In 2008, the Group did not operate in any taxable jurisdiction and there was no tax arising on its operations. In 2009, the acquisition of Mentum Partners Limited and Mentum LLP has meant that a proportion of the Group's operations are taxable in the UK.
The tax assessed for the period differs from the standard rate of corporation tax in the UK as follows:
|
|
|
2009 |
2009 |
2008 |
2008 |
|
|
|
US$'000 |
% |
US$'000 |
% |
|
|
|
|
|
|
|
|
Loss before taxation |
` |
(14,660) |
|
(40,881) |
|
|
|
|
|
|
|
|
|
Loss multiplied by standard rate of corporation tax in the UK |
|
(4,105) |
28 |
(11,447) |
28 |
|
|
|
|
|
|
|
|
Effect of: |
|
|
|
|
|
|
Loss not assessable for tax |
|
4,105 |
(28) |
11,477 |
(28) |
|
|
|
|
|
|
|
|
Total tax charge for year |
|
- |
|
- |
|
Any tax losses available to carry forward in relation to the UK entities are not significant to the Group.
4 (LOSS) per share
The calculation of the basic loss per share is based on the net loss for the year of $14,660,000 (2008: loss $40,881,000) divided by the weighted average number of shares in issue during the year of 349,268,114 (2008: 344,465,505). This results in a loss per share of $0.042 (2008: $0.119).
The impact of the share options and warrant is anti-dilutive on the basic loss per share in 2009 and 2008.
5 PUBLICATION
The financial information set out in this preliminary announcement does not constitute statutory accounts. The consolidated statement of financial position at 31 December 2009 and the consolidated statement of comprehensive income, consolidated statement of changes in equity, consolidated statement of cash flows and enclosed notes for the year then ended have been extracted from the Group's 2009 statutory financial statements upon which the auditors opinion is unqualified.
The Annual Report for the year ended 31 December 2009 will be posted to shareholders shortly.
The Annual General Meeting of the Group will be held at 30 Quai Gustave-Ador, 1207, Geneva 3, Switzerland on 27 May 2010 at 11:30a.m.
Copies of the report will be available on the company's website, www.commoditrade.net.
Related Shares:
FOR.L