RNS Number:5998R
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 to
announce 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 the
following Board and operational changes and new appointments are announced
today:
* 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, Commoditrade
has achieved strong levels of profits and cash generation for the year. Although
difficult trading conditions continued into the current year, we are now
beginning to see a return to more active trading with improved liquidity in the
markets.
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 that
are now clearly delineated into brokerage and strategic trading, which will be
headed by Christian Saunders and Dean Carr respectively. Concurrently, the
Board changes will support the Company's strategic and operational requirements
as it continues to move into the next growth phase".
Enquiries:
Graham Butt, Chief Executive
Commoditrade 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 ended
31 December 2007.
The trading team produced a strong trading performance over the prior year
generating gross revenue of �33.9 million for Commoditrade. This gross revenue
is reduced by the deduction of fees paid to Sucden (UK) Limited for clearing
services, which are currently charged at 25% of revenues generated by the
trading team.
After direct trading costs and trader bonuses and normal overheads, net trading
profit for the Company was �16.7 million. After deduction of amortisation of
intangible assets of �12.1 million and costs associated with the issue of share
options and sign-on bonus payments to the trading team of �10.9 million, there
was a loss for the period of �6.3 million.
The Company's adjusted profit per ordinary share, adjusted for amortisation of
intangible assets and the costs associated with the share option issue and the
cost of sign-on bonuses, was 4.44 pence. There was an unadjusted basic loss per
ordinary share for the period of 1.66 pence.
The Company had cash and cash equivalents at 31 December 2007 of �8.6 million
representing 2.52p per share.
The board is recommending a final dividend of 1.5p per share be paid to
shareholders on the register as at 2 May 2008.
Operational Review
The LME team experienced high volume of base metal trading on the LME over the
first three quarters of the year with strong volumes and volatility, driven by
trade and financial buyers. The key markets for the trading team are copper,
aluminium, nickel and zinc, all of which enjoyed a strong performance during the
first half, with aluminium and nickel in particular showing strong growth
compared to the prior period.
During July and August the team experienced lower market activity, with a more
active market returning in the third quarter. As international financial
markets became more difficult in the final quarter, the team experienced lower
levels of liquidity as financial buyers took more cautious approach to trading
international markets, including base metals. The final two months of the year
saw overall trading volumes become progressively thinner.
Earlier in the year the Company secured the services of the key traders in the
trading team for a minimum period of three years. These traders have been
further incentivised through granting of options in Commoditrade, which will
vest over a three year period.
Commoditrade has renegotiated its contract with Sucden (UK) Limited, securing
this agreement in future for a fixed net annual fee of �7.5m. The Board
believes this represents an effective restructuring of the current fee
arrangement, which is currently calculated as a percentage of revenues generated
by the trading team. The new contract will be effective from 1 May 2008 and
based on the group's current run-rate is expected to yield significant cost
savings for Commoditrade going forward.
Additionally, during the period, Commoditrade acquired sufficient shares in the
LME to bring its total holding to 25,000 shares, which now entitles the Company
to a Category 1 membership of the LME.
On 26 November 2007 the Board announced that it had decided to exercise its
authority to buy back its own shares, on an opportunistic basis and subject to
market conditions. Since that date the Company has purchased 45,505,000 shares
representing 11.9 per cent. of the Company's issued share capital immediately
prior to the buy-back at a total cost of �11.22 million. The Company announced
the 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 to
announce a number of Board and senior management changes, all of which become
effective today. Adrian Collins has joined the Board as Non-executive Chairman.
Adrian has worked in the fund management sector for over thirty years, a large
part of which was spent at Gartmore Investment Management, where latterly he was
Managing Director. Adrian was one of the founders of Trustnet.com, a leading
provider of Fund performance information on the Internet. He is currently on the
board of a number of public and private companies in the United Kingdom and
overseas. These include New City High Yield Trust plc, Hiscox Investment
Management Limited and City Natural Resources High Yield Trust plc.
Graham Porter joins the Board as a Non-executive Director. He has over 26
years' experience in the metal exchange markets. Graham worked as a metal broker
in the City for 13 years, spending eight of these years with Billiton Enthoven
Metal Brokers, before leaving the City in 1991 and moving overseas where he has
been based ever since.
Heading up all investment operations is Chris Adams who is appointed Group
Investment Director responsible for all group investment operations on an
international basis.
Andy Dobie is appointed Operations Director, an executive role where he will be
responsible for day-to-day operations relating to the LME Team. Andy was
previously Non-Executive Director.
Senior operational management appointments are also made today 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.
Jo Barrett and Geoffrey Conway Henderson both step down from the board as today
and we would like to thank them both for their contribution to the Board and the
Company and we wish them both well.
CMM Asset Management
The Company has incorporated CMM Asset Management ("CMMAM"), a wholly owned
subsidiary of Commoditrade. CMMAM has been formed to focus specifically on
strategic trading in base metals futures. The development of the new operation
will be overseen by Chris Adams, Group Investment Director and Dean Carr, Head
of Strategic Trading.
Current Trading and Outlook
Despite more challenging conditions in the latter part of 2007, Commoditrade has
achieved strong levels of profits and cash generation over the prior year. More
testing trading conditions continued into the current year, although we are now
seeing a return to more active levels of trading with improved liquidity levels.
The Board continues to remain alert to opportunities for developing the
Commoditrade business in line with its stated strategy of creating a group that
combines commodities expertise with complementary trading areas.
Graham Butt, Chief Executive Adrian Collins, Chairman
www.commoditrade.net
Income statement
FOR 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 - 30,900
Clearing 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 bonuses
Amortisation 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 payment
Administrative expenses - - (5,487) (5,487) - (1,795) (1,795)
sign-on bonus payments
Administrative expenses - (1,888) - (1,888) (663) - (663)
other
Total 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 2.05p
share (pence)
------- -------
Diluted (loss)/profit per 4 (1.66)p 2.02p
share (pence)
------- -------
All operations are continuing.
The 2006 income statement has been restated to present separately the sign-on
bonus payments, to move bonuses beyond the contractual amounts to administrative
expenses, amounting to �1,795,000, and also to show a detailed analysis of the
net income from associate on the face of the income statement.
Statement of changes in Equity
for 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) 282
Currency translation - - - - (459) - (459)
Net expense recognised - - - - (459) - (459)
in equity
Net profit for the year - - - - - 5,916 5,916
Total recognised income - - - - (459) 5,916 5,457
and expenses for year
Issue of new shares 273 - 34,123 1,800 - - 36,196
Share 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)
assets
Net expense recognised - - - - (470) (119) (589)
in equity
Net loss for the year - - - - - (6,261) (6,261)
Total recognised income - - - - (470) (6,380) (6,850)
and expenses for year
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
The shares to be issued related to the estimated value of shares to be issued in
respect of the acquisition of the associated undertaking which have now been
issued.
Balance Sheet
AS AT 31 DECEMBER 2007
2007 2006
Note �'000 �'000
Assets
Non-current
Investment in associate 5 15,653 26,231
Other receivable 1,022 1,052
16,675 27,283
Current
Available for sale 3,503 2,064
financial assets
Trade and other 4,934 4,772
receivables
Cash and cash 8,636 6,928
equivalents
Total current assets 17,073 13,764
Total assets 33,748 41,047
Liabilities
Current
Trade and other payables 2,954 122
Total liabilities 2,954 122
Equity
Share capital 342 376
Capital redemption 40 -
reserve
Share premium 36,731 33,452
Shares to be issued - 1,800
Translation reserve (929) (459)
Retained earnings (5,390) 5,756
Total equity 30,794 40,925
Total equity and 33,748 41,047
liabilities
Cash flow statement
FOR THE YEAR ENDED 31 DECEMBER 2007
2007 2006
�'000 �'000
Operating activities
(Loss)/profit after tax (6,261) 5,916
Amortisation of intangible asset in associate 12,063 7,494
Share 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 activities
Purchase of associate - (16,416)
Purchase of available for sale financial assets (1,577) (1,177)
(1,577) (17,593)
Financing activities
Purchase of own shares (7,418) -
Issue of shares - 18,000
Share issue costs - (1,010)
Net cash inflow from financing activities (7,418) 16,990
Net increase in cash and cash equivalents 1,708 6,749
Cash and cash equivalents at beginning of year 6,928 179
Cash and cash equivalents at end of year 8,636 6,928
1 ACCOUNTING POLICIES
Basis of preparation
The Company 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 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 set
out 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 material
business segment the Company 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 Company operates in is currently Switzerland.
3 TAX
There is no tax charge/income for either year. The Company does not operate in
the United Kingdom and there is no tax arising on its operations. The profit of
the associate is not taxable as profits are remitted to Switzerland to a non
Swiss company and are therefore not taxable. 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:
2007 2006
�'000 % �'000 %
(Loss)/profit (6,261) - 5,916 -
for the period
before taxation
Expected tax (1,878) (30) 1,775 30
(credit)/
expense
(Loss)/profit 1,878 - (1,775) (30)
not subject to
tax
Actual tax - - - -
income
4 (LOSS)/EARNINGS PER SHARE
The calculation of the basic (loss)/earnings per share is based on the net loss
for the year of �6,261,000 (2006 : profit �5,916,000) divided by the weighted
average 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 loss
per share in 2007. The diluted profit for share for 2006 is based on the net
profit for the year of �5,916,000 divided by the weighted average number of
shares in issue on a fully diluted basis of 292,478,563.
An adjusted earnings per share has also been calculated based on the profit for
the year before amortisation of the intangible asset within the associate,
sign-on bonus payments and the share based payment charge amounting to a total
of �23.009 million. (2006:�9.289 million) The adjusted earnings per share is
therefore 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 in
issue during the year of 377,118,251 (2006: 288,715,832) which results is an
adjusted earnings per share of 4.44 pence (2006: 5.27 pence).
The diluted adjusted profit per share is based on a weighted average number of
shares 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 a
weighted average number of shares in issue on a fully diluted basis calculated
as follows:
2007 2006
Weighted average shares in issue 377,118,251 288,715,832
Dilutive impact of warrant 3,420,481 3,762,731
Dilutive 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 33,725
at cost
Profit for the 17,576 15,774
financial year
Foreign exchange (303) (239)
Amortisation (12,063) (7,494)
6,695 41,766
Increase in amounts (25) (4,473)
included in trade and
other receivables
Bonuses beyond (4,737) (1,795)
contractual amounts
treated as
administrative expenses
Cash received from (12,511) (9,267)
associate
Net movement in year (10,578) 26,231
Net book value brought 26,231 -
forward
Net book value carried 15,653 26,231
forward
6 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 2007 and the income statement, statement of
changes in equity, cash flow statement and associated notes for the year ended
31 December 2007 have been extracted from the Company's 2007 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 2007 will be posted to shareholders
and 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 AIM
Rule 26.
--------------------------
This information is provided by RNS
The company news service from the London Stock Exchange
END
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