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| Share Name | Share Symbol | Market | Type | Share ISIN | Share Description |
|---|---|---|---|---|---|
| Commoditrade | LSE:CMM | London | Ordinary Share | KYG174761059 | ORD 0.1P |
| Price Change | % Change | Share Price | Bid Price | Offer Price | High Price | Low Price | Open Price | Shares Traded | Last Trade | |
|---|---|---|---|---|---|---|---|---|---|---|
| 0.00 | 0.00% | 2.875 | 0.00 | 01:00:00 |
| Industry Sector | Turnover | Profit | EPS - Basic | PE Ratio | Market Cap |
|---|---|---|---|---|---|
| 0 | 0 | N/A | 0 |
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RNS Number : 2595E
Commoditrade Inc.
25 September 2008
25 September 2008
Commoditrade Inc.
("Commoditrade" or "the Group")
Interim results for the six months ended 30 June 2008
Commoditrade Inc., the AIM-listed commodities investment group, announces its interim results for the six months ended 30 June 2008.
Results
* Gross revenue for the period was £7.8 million before deduction of clearing and administration fees (2007: H1 revenue: £19.8
million and H2 revenue: £14.1 million).
* Net cash flow from operating activities was broadly in line with the equivalent period in 2007 at £3.7 million (2007: £3.9
million).
* As at 30 June 2008 the Company had no debt and its cash balances stood at £1.4 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 £1.9 million (2007 H1: £4.6 million).
* Net income for the period after direct trading costs and bonuses and before amortisation of intangible assets, costs associated
with the issue of share options and sign-on bonus payments to the trading team, was £2.15 million (2007: £10.5 million).
* Total non-cash charges during the period amounted to £14.1 million consisting of amortisation of intangible assets of £5.9 million
and costs associated with the issue of share options of £8.2 million, resulting in a loss before tax (after amortisation of intangible
asset, share based payments and trading team sign-on bonuses) of £12.7 million (2007: profit £3.5 million).
* The Company announced that it completed its share buy-back programme on 25 February 2008. During the last period of the programme
the Company completed the purchase of 14,755,000 shares representing 3.8 per cent of the Company'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 Company 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.
* David Phipps was appointed as new Chief Executive on 3 September 2008 having joined the Group in May 2008 to advise the Board on
strategy and the development of the business.
Strategy and Outlook
Commenting, David Phipps, New Chief Executive of Commoditrade, said:
"During the second quarter the management team commenced the first phase of a reorganisation of the Company's operational base to
support the delivery of the strategic objectives to grow the business. As part of this restructuring the Company is now clearly delineated
into brokerage and strategic trading and Commoditrade will look to replicate this operating base as it broadens its commodity portfolio to
build a more diversified platform of revenue streams.
"The next phase of the Company's strategy is underway to achieve a scaleable corporate infrastructure that will optimise operational
efficiency and also provide a flexible platform that will not only complement and enhance the existing base metals brokerage and trading
operations but enable the Company to develop capabilities to provide additional products and services with the resultant diversification of
revenue streams.
In addition, the Board is analysing opportunities that can leverage potential strategic partners and additional distribution channels,
initially for the Company's base metals operation.
"The Board is confident that the changes will give Commoditrade the platform it needs to grow the business going forward and early signs
from trading in the third quarter indicate a return to more normalised trading conditions for the Company's core operations. "
Enquiries: www.commoditrade.net
David Phipps, Chief Executive tel: +44(0)20 7245 1100 (on 25 September]
Commoditrade Inc
Simon Raggett, Strand Partners tel: +44(0)20 7409 3494
John Bick, Hansard Group tel: +44(0)20 7245 1100
Commoditrade Inc.
Interim Statement
For the six months ended 30 June 2008
Results
In the six months to 30 June 2008 the Company experienced challenging market conditions at the same time as implementing a significant
reorganisation of the business. Despite this, the LME trading team generated revenue of £7.75 million in the first six months generating a
profit of £2.15 million after operating costs and trader bonuses but before amortisation of intangible assets, costs associated with the
issue of share options and sign-on bonus payments.
After deduction of non-cash items for amortisation of intangible assets of £5.9 million and costs associated with the issue of share
options of £8.2 million and a cash charge relating to sign-on bonus payments to the trading team of £0.8 million, there was a loss for the
period of £12.7 million (2007: profit £3.5 million). There was a loss per ordinary share for the period of 3.4 pence.
Following an agreement reached in November 2007 with Sucden (UK) Limited, with effect from 1 May 2008, the provision of clearing and
administration services were amended to a fix based fee structure from a percentage of trading profits.
Net cash flow from operating activities was broadly in line with the equivalent period in 2007 at £3.7 million (2007: £3.9 million). As
at 30 June 2007 the Company had no debt and its cash balances stood at £1.4 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 utilising a further £5.0 million of cash. In addition, the Company also has £3.0
million of non-current other receivables which are held on deposit with the Company's clearer.
As of 25 February 2008 the Company concluded its share buy-back programme which resulted in a total of £3.9 million being spent in the
first half of 2008. During the programme, which commenced in November 2007, the Company purchased a total of 45,505,000 shares representing
11.9% of the issued share capital of the Company as at 26 November 2008. As announced in the preliminary results statement 31 December 2007
at the board approved a final dividend payment at a cost to the Company of £5.0 million. During the last 12 months the Company has returned
a total of £15 million in cash to shareholders and remains debt free.
During the period the Company's newly incorporated CMM Asset Management ("CMMAM"), a wholly owned subsidiary of Commoditrade, commenced
trading. CMMAM was formed to focus specifically on strategic trading in base metals futures and is overseen by Chris Adams, Group Investment
Director and Dean Carr, Head of Strategic Trading. During the period the new operation has traded satisfactorily and in line with management
expectations at this early stage, having only been operational for two months during the period.
Senior hires have been made during the year to maintain the strength of the core LME trading team.
Board changes
On 3 September the Company announced that David Phipps joined the Board as Chief Executive of the Company. David joined Commoditrade in
May 2008, advising the Board on strategy and the reorganisation of the business. He has a very successful track record in building and
running trading and broking operations in a number of segments in the commodities sector including base metals, energy, natural gas and
power, emissions, soft commodities, agricultural and freight. He was latterly Co-Global Head of Commodities at UBS AG and prior to that was
head of commodities at ABN AMRO Futures having joined from Merrill Lynch in 1996.
Graham Butt stepped down as Chief Executive, becoming Non-Executive Deputy Chairman and Graham Porter, Non-Executive Director, was
appointed Non-Executive Chairman and Adrian Collins moved from Chairman to Non-Executive Director and Chairman of the Audit Committee.
Heading up all investment operations is Chris Adams, Group Investment Director, who is responsible for all group investment operations
on an international basis and heads-up CMMAM. Andy Dobie is Operations Director, an executive role where he is responsible for day-to-day
operations relating to the LME Team.
Strategy and Outlook
During the second quarter the management team commenced the first phase of a reorganisation of the Company's operational base to support
the delivery of the strategic objectives to grow the business. As part of this restructuring the Company is now clearly delineated into
brokerage and strategic trading and Commoditrade will look to replicate this operating base as it broadens its commodity portfolio to build
a more diversified platform of revenue streams.
The next phase of the Company's strategy is underway to achieve a scaleable corporate infrastructure that will optimise operational
efficiency and also provide a flexible platform that will not only complement and enhance the existing base metals brokerage and trading
operations but enable the Company to develop capabilities to provide additional products and services with the resultant diversification of
revenue streams.
In addition, the Board is analysing opportunities that can leverage potential strategic partners and additional distribution channels,
initially for the Company's base metals operation.
The Board is confident that the changes will give Commoditrade the platform it needs to grow the business going forward and early signs
from trading in the third quarter indicate a return to more normalised trading conditions for the Company's core operations.
25 September 2008
Commoditrade Inc.
Consolidated Income Statement
For the six months ended 30 June 2008
Six months ended 30 Six months ended 30 Six months ended 30 Six months ended 30
Six months ended 30 Six months ended 30
June 2008 June 2008 June 2008 June 2007
June 2007 June 2007
Note Prior tonon cashand Non cashand sign Total Prior tonon cashand
Non cashand sign Total
sign onbonus costs onbonus costs sign onbonus costs
onbonus costs
£'000 £'000 £'000 £'000
£'000 £'000
LME trading revenues 7,750 - 7,750 19,799
- 19,799
Clearing and related costs (1,895) - (1,895) (4,615)
- (4,615)
Direct costs, financing (3,006) - (3,006) (4,740)
- (4,740)
charges and trader bonuses
Amortisation of intangible asset - (5,872) (5,872) -
(5,617) (5,617)
******* ******* ******* *******
******* *******
Net income/(loss) from associate 6 2,849 (5,872) (3,023) 10,444
(5,617) 4,827
Other income 134 - 134 200
- 200
Administrative expenses -share based payment - (8,218) (8,218) -
(1,365) (1,365)
Administrative expenses - sign-on bonus - (757) (757) -
- -
payments
Administrative expenses - other (975) - (975) (429)
- (429)
Total administrative expenses (975) (8,975) (9,950) (429)
(1,365) (1,794)
******* ******* ******* *******
******* *******
Operating profit/(loss) 2,008 (14,847) (12,839) 10,215
(6,982) 3,233
Finance income 147 - 147 287
- 287
******* ******* ******* *******
******* *******
Profit/(loss) for the year before tax 2,155 (14,847) (12,692) 10,502
(6,982) 3,520
Tax charge 4 - - - -
- -
******* ******* ******* *******
******* *******
Net profit/(loss) for the year 2,155 (14,847) (12,692) 10,502
(6,982) 3,520
******* ******* ******* *******
******* *******
Basic (loss)/profit per share (pence) 5 (3.40p)
0.93p
*******
*******
Diluted (loss)/profit per share (pence) 5 (3.40p)
0.93p
*******
*******
Commoditrade Inc.Consolidated Income StatementFor the year ended 30 December 2007
Note Prior tonon cashand Non cashand sign Total
sign onbonus costs onbonus costs
£'000 £'000 £'000
LME trading revenues 33,880 - 33,880
Clearing and related costs (8,470) - (8,470)
Direct costs, financing (7,834) - (7,834)
charges and trader bonuses
Amortisation of intangible asset - (12,063) (12,063)
******* ******* *******
Net income/(loss) from 6 17,576 (12,063) 5,513
associate
Other income 416 - 416
Administrative expenses -share - (5,459) (5,459)
based payment
Administrative expenses - - (5,487) (5,487)
sign-on bonus payments
Administrative expenses - (1,888) - (1,888)
other
Total administrative expenses (1,888) (10,946) (12,834)
******* ******* *******
Operating profit/(loss) 16,104 (23,009) (6,905)
Finance income 644 - 644
******* ******* *******
Profit/(loss) for the year before tax 16,748 (23,009) (6,261)
Tax charge 4 - - -
******* ******* *******
Net profit/(loss) for the year 16,748 (23,009) (6,261)
******* ******* *******
Basic loss per share (pence) 5 (1.66)p
*******
Diluted loss per share (pence) 5 (1.66)p
*******
Commoditrade Inc.Consolidated Statement of Changes in EquitySix months ended 30 June 2008
Sharecapital Capital redemption Sharepremium Shares to be Transla-tion
Profit Totalequity
reserve issued reserve
andlossaccount
£'000 £'000 £'000 £'000 £'000
£'000 £'000
At 1 January 2007 376 - 33,452 1,800 (459)
5,756 40,925
Currency translation - - - - (470)
- (470)
Available for sale assets - - - - -
(119) (119)
Net expense recognised in - - - - (470)
(119) (589)
equity
Net loss for the year - - - - -
(6,261) (6,261)
Total recognised income and - - - - (470)
(6,380) (6,850)
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 (audited) 342 40 36,731 - (929)
(5,390) 30,794
Currency translation - - - - 19
- 19
Available for sale assets - - - - -
(259) (259)
Net expense recognised in - - - - 19
(259) (240)
equity
Net loss for the period - - - - -
(12,692) (12,692)
Total recognised income and - - - - 19
(12,951) (12,932)
expenses for period
Issue of new shares 13 - - - -
- 13
Shares cancelled (6) 6 - - -
(1,039) (1,039)
Share based payment - - - - -
8,218 8,218
Dividends - - - - -
(5,060) (5,060)
At 30 June 2008 (unaudited) 349 46 36,731 - (910)
(16,222) 19,994
Commoditrade Inc.
Consolidated Balance Sheet
At 30 June 2008
Note Unaudited Unaudited Audited
Six six year ended
months months 31 December
ended ended 2007
30 June 30 June £'000
2008 2007
£'000 £'000
Assets
Non-current assets
Investment in associate 6 9,781 20,614 15,653
Other receivable 8 3,013 1,027 1,022
12,794 21,641 16,675
Current
Available for sale financial assets 7 3,232 3,237 3,503
Trade and other receivables 8 2,696 11,255 4,934
Cash and cash equivalents 1,357 9,641 8,636
Total current assets 7,285 24,133 17,073
Total assets 20,079 45,774 33,748
Liabilities
Current
Trade and other payables 9 85 67 2,954
Total liabilities 85 67 2,954
Equity
Share capital 10 349 376 342
Capital redemption reserve 46 - 40
Share premium 36,731 33,452 36,731
Shares to be issued - 1,800 -
Translation reserve (910) (597) (929)
Profit and loss account (16,222) 10,676 (5,390)
Total equity 19,994 45,707 30,794
Total equity and liabilities 20,079 45,774 33,748
Commoditrade Inc.
Consolidated Cash Flow Statement
For the six months ended 30 June 2008
Unaudited Unaudited Audited
Six six year ended
months months 31 December
ended ended 2007
30 June 30 June £'000
2008 2007
£'000 £'000
Operating activities
(Loss)/profit after tax (12,692) 3,520 (6,261)
Amortisation of intangible asset in 5,872 5,617 12,063
associate
Share based payment 8,218 1,365 5,459
Change in trade and other receivables 2,238 (6,458) (132)
Change in trade and other payables (62) (55) 25
Foreign exchange 55 (110) (451)
Net cash inflow from operating 3,629 3,879 10,703
activities
Investing activities
Purchase of other receivable (2,009) - -
Purchase of available for sale - (1,166) (1,577)
financial assets
Net cash outflow from investing (2,009) (1,166) (1,577)
activities
Financing activities
Purchase of own shares (3,852) - (7,418)
Issue of shares 13 - -
Dividends paid (5,060) - -
Net cash outflow from financing (8,899) - (7,418)
activities
Net (decrease)/increase in cash and (7,279) 2,713 1,708
cash equivalents
Cash and cash equivalents at beginning 8,636 6,928 6,928
of period
Cash and cash equivalents at end of 1,357 9,641 8,636
period
Commoditrade Inc.
Consolidated Income Statement
For the six months ended 30 June 2008
1. general information
The information for the period ended 30 June 2008 does not constitute statutory accounts as defined in Section 240 of the Companies Act
1985. The figures for the year ended 31 December 2007 have been extracted from the 2007 statutory financial statements. The auditors' report
on those accounts was unqualified and did not contain a statement under section 237(2) of the Companies Act 1985.
2. 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 resolved that the Group will follow International Financial Reporting Standards (IFRS) and apply the Companies Act
1985 when preparing its annual financial statements.
The principal accounting policies of the Group are set out below.
Basis of consolidation
The consolidated financial information incorporate the financial statements of the Company and entities controlled by the Company (its
subsidiaries) made up to the balance sheet date. Control is achieved where the Company has the power to govern the financial and operating
policies of an investee entity so as to obtain benefits from its activities.
Associates
Associates are those entities over which the Group is able to exert significant influence but which are neither subsidiaries nor
interests in a joint venture. Investments in associates are initially recognised at cost and subsequently accounted for using the equity
method.
On initial acquisition of an associate, the investor's share of the net fair value of the associate's identifiable assets, liabilities
and contingent liabilities is accounted for using the purchase method. Any goodwill arising, which represents the excess of the cost of
acquisition over fair value of the identifiable assets and liabilities acquired, is treated in accordance with IFRS 3 and is not amortised
but instead is subject to an annual impairment review. Included in the identifiable assets are intangible assets which meet the relevant
recognition criteria. The underlying intangible assets are thereafter amortised over their useful life.
All subsequent changes to the share of interest in the equity of the associate are recognised in the Group 's carrying amount of the
investment. Changes resulting from the profit or loss generated by the associate are charged against "net income from associate" in the
income statement and therefore affect net results of the Group. These changes include impairment or the fair value adjustments of assets and
liabilities.
However, when the Group 's share of losses in an associate equals or exceeds its interest in the associate, including any other
unsecured receivables, the Group does not recognise further losses, unless it has incurred obligations or made payments on behalf of the
associate. Once the associate then becomes profit making, profits are not recognised until they exceed the share of the loss that had not
previously been recognised.
Unrealised gains on transactions between the Group and its associates are eliminated to the extent of the Group's interest in the
associates. Unrealised losses are also eliminated unless the transaction provides evidence of an impairment of the asset transferred.
Intangible assets
Expenditure on intangible assets, including those in the Group's associates, is capitalised at cost, which represents fair value at the
acquisition date, and amortised over its estimated useful economic life. After initial recognition intangible assets are carried at cost
less accumulated amortisation and accumulated impairment losses.
Dividends
Dividend distributions to shareholders are included in 'other short term financial liabilities' when the dividends are approved by the
shareholders' meeting.
Impairment reviews
The Group's assets are subject to impairment testing.
For the purposes of assessing impairment, assets are grouped at the lowest levels for which there are separately identifiable cash flows
(cash-generating units). As a result, some assets are tested individually for impairment and some are tested at cash-generating unit level.
Individual assets or cash-generating units that include intangible assets with an indefinite useful life or those not yet available for
use are tested for impairment at least annually. All other individual assets or cash-generating units are tested for impairment whenever
events or changes in circumstances indicate that the carrying amount may not be recoverable.
An impairment loss is recognised in the income statement for the amount by which the asset's or cash-generating unit's carrying amount
exceeds its recoverable amount. The recoverable amount is the higher of fair value, reflecting market conditions less costs to sell and
value in use, based on an internal discounted cash flow evaluation. Any impairment loss is charged pro rata to the assets in the cash
generating unit. An impairment loss is reversed if there has been a favourable change in the estimates used to determine the assets
recoverable amount and only to the extent that the asset's carrying amount does not exceed the carrying amount that would have been
determined, net of amortisation, if no impairment loss had been recognised.
Financial assets
The Group's financial assets include available for sale financial assets, cash and cash equivalents, amounts due from associate and
other receivables.
All financial assets are recognised on entering into contractual arrangements. All financial assets are initially recognised at fair
value, plus transaction costs.
Derecognition of financial assets occurs when the rights to receive cash flows from the investments expire or are transferred and
substantially all of the risks and rewards of ownership have been transferred. An assessment for impairment is undertaken at least at each
balance sheet date whether or not there is objective evidence that a financial asset or a group of financial assets is impaired.
Amounts due from associate and other receivables are subsequently measured at amortised cost using the effective interest method. They
are provided against when objective evidence is received that the Group will not be able to collect all amounts due to it in accordance with
the original terms of the receivables. The amount of the write-down is determined as the difference between the asset's carrying amount and
the present value of estimated future cash flows.
Available for sale financial assets include non-derivative financial assets that are either designated to this category or do not
qualify for inclusion in any other categories of financial assets. All financial assets of the category are subsequently measured at fair
value, unless otherwise disclosed, with changes in value recognised in equity, net of any effects arising from income taxes. Gains and
losses arising from securities classified as available for sale financial assets are recognised in the income statement when they are sold
or when the investment is impaired. In the case of impairment any loss previously recognised in equity is transferred to the income
statement. Gains on equity instruments are not then recycled through the income statement as these are dealt with in reserves.
When a decline in the fair value of an available for sale investment has been recognised directly in equity, and there is objective
evidence that the asset is impaired, the cumulative loss that has been recognised directly in equity is removed from equity and recognised
in the income statement even though the financial asset has not been derecognised. Impairment losses previously recognised on equity
instruments will not be reversed to the income statement in subsequent periods. Impairment losses previously recognised in the income
statement on debt securities are subsequently reversed if an increase in the fair value of the investment can be objectively related to an
event occurring after the recognition of the impairment loss.
Available for sale equity investments that do not have a quoted market price in an active market and whose fair value cannot be reliably
measured and derivatives that are linked to and must be settled by delivery of such unquoted equity instruments, are measured at cost less
any identified impairment losses at each balance sheet date subsequent to initial recognition. An impairment loss is recognised in the
income statement when there is objective evidence that the asset is impaired. The amount of the impairment loss is measured as the
difference between the carrying amount of the asset and the present value of the estimated future cash flows discounted at the current
market rate of return for a similar financial asset. Such impairment loss will not reverse in subsequent periods.
Cash and cash equivalents
Cash and cash equivalents comprise cash in hand and amounts repayable on demand with banks and short-term highly liquid investments
which are readily convertible into known amounts of cash without notice, are subject to the insignificant risk of changes in value and which
were within three months of maturity when acquired.
Equity
An equity instrument is any contract that evidences a residual interest in the assets of an entity after deducting all of its
liabilities.
Share capital is determined using the nominal value of shares that have been issued.
The capital redemption reserve represents the nominal value of shares cancelled on the purchase of own shares in order to maintain the
capital base of the Company.
The share premium account represents premiums received on the initial issuing of the share capital. Any transaction costs associated
with the issuing of shares are deducted from share premium, net of any related income tax benefits.
Shares to be issued represent future shares to be issued under arrangements in place at the balance sheet date.
Foreign currency translation differences recognised directly in equity are included in the translation reserve.
Retained earnings includes all current and prior period results as disclosed in the income statement together with the cumulative amount
of share based expenses and movements in available for sale financial assets which are both transferred to equity.
Share based payments
All share based payment arrangements, granted after 7 November 2002 and not vested on 6 January 2005, are recognised in the financial
statements. The Group operates equity settled share based remuneration plans for the remuneration of its employees and has issued a share
warrant.
All services received in exchange for the grant of any share based remuneration are measured at their fair values. These are indirectly
determined by reference to the fair value of the share options/warrants awarded. Their value is appraised at the grant date and excludes the
impact of any non-market vesting conditions (for example, profitability and sales growth targets).
Share based payments are ultimately recognised as an expense in the income statement with a corresponding credit to retained earnings in
equity, net of deferred tax where applicable. If vesting periods or other vesting conditions apply, the expense is allocated over the
vesting period, based on the best available estimate of the number of share options/warrants expected to vest. Non-market vesting conditions
are included in assumptions about the number of options that are expected to become exercisable. Estimates are subsequently revised, if
there is any indication that the number of share options/warrants expected to vest differs from previous estimates. No adjustment is made to
the expense or share issue cost recognised in prior periods if fewer share options/warrants ultimately are exercised than originally
estimated.
Upon exercise of share options/warrants, the proceeds received net of any directly attributable transaction costs up to the nominal
value of the shares issued are allocated to share capital with any excess being recorded as share premium.
Financial liabilities
Financial liabilities represent obligations to deliver cash or another financial asset to another entity. The Group's financial
liabilities include trade and other payables.
Financial liabilities are recognised when the Group becomes a party to the contractual agreements of the instrument. All financial
liabilities are recognised initially at fair value, net of direct issue costs, and are subsequently recorded at amortised cost using the
effective interest method with interest related charges recognised as an expense in the income statement.
Taxation
Current income tax assets and/or liabilities comprise those obligations to, or claims from, fiscal authorities relating to the current
or prior reporting period, that are unpaid at the balance sheet date. They are calculated according to the tax rates and tax laws applicable
to the fiscal periods to which they relate, based on the taxable result for the year. All changes to current tax assets or liabilities are
recognised as a component of tax expense in the income statement.
Deferred income taxes are calculated using the liability method on temporary differences. This involves the comparison of the carrying
amounts of assets and liabilities in the financial statements with their respective tax bases. However, deferred tax is not provided on the
initial recognition of goodwill, nor on the initial recognition of an asset or liability, unless the related transaction is a business
combination or affects tax or accounting profit. Deferred tax on temporary differences associated with shares in associates is not provided
if reversal of the temporary differences can be controlled by the Group and it is probable the reversal will not occur in the foreseeable
future. In addition, tax losses available to be carried forward as well as other income tax credits to the Group are assessed for
recognition as deferred tax assets.
Deferred tax liabilities are always provided for in full. Deferred tax assets are recognised to the extent that it is probable that they
will be able to be offset against future taxable income. Deferred tax assets and liabilities are calculated, without discounting, at tax
rates that are expected to apply to their respective period of realisation, provided they are enacted or substantively enacted at the
balance sheet date.
Most changes in deferred tax assets or liabilities are recognised as a component of tax expense in the income statement. Only changes in
deferred tax assets or liabilities that relate to a change in value of assets or liabilities that is charged directly to equity are charged
or credited directly to equity.
Provisions, contingent liabilities and contingent assets
Provisions are recognised when present obligations will probably lead to an outflow of economic resources from the Group and they can be
estimated reliably. Timing or amount of the outflow may still be uncertain. A present obligation arises from the presence of a legal or
constructive commitment that has resulted from past events, for example, legal disputes or onerous contracts.
Provisions are measured at the estimated expenditure required to settle the present obligation, based on the most reliable evidence
available at the balance sheet date, including the risks and uncertainties associated with the present obligation. Any reimbursement
expected to be received in the course of settlement of the present obligation is recognised, if virtually certain as a separate asset, not
exceeding the amount of the related provision. Where there are a number of similar obligations, the likelihood that an outflow will be
required in settlement is determined by considering the class of obligations as a whole. In addition, long term provisions are discounted to
their present values, where time value of money is material.
All provisions are reviewed at each balance sheet date and adjusted to reflect the current best estimate.
In those cases where the possible outflow of economic resource as a result of present obligations is considered improbable or remote, or
the amount to be provided for cannot be measured reliably, no liability is recognised in the balance sheet. Probable inflows of economic
benefits to the Group that do not yet meet the recognition criteria of an asset are considered contingent assets.
Functional currency
The functional currency of the Group is United States dollars. However, for presentation purposes, the financial statements are prepared
in United Kingdom sterling. The Group has selected a presentation currency that differs from the functional currency as the Company is
listed on AIM.
Transactions in foreign currencies are translated into the functional currency at the exchange rate ruling at the date of the
transaction. Monetary assets and liabilities in foreign currencies are translated at the rates of exchange ruling at the balance sheet date.
Non-monetary items that are measured at historic cost in a foreign currency are translated at the exchange rate at the date of transaction.
Non-monetary assets that are measured at fair value in a foreign currency are translated into the functional currency using the exchange
rates at the date when the fair value was determined
Any exchange differences arising on the settlement of monetary items or on translating monetary items at rates different from those at
which they were initially recorded are recognised in the income statement in the period in which they arise. Exchange differences on
non-monetary items are recognised in the statement of changes in equity to the extent that they relate to a gain or loss on that
non-monetary item taken to the statement of changes in equity, otherwise such gains and losses are recognised in the income statement.
Transactions in foreign currencies are translated into the presentational currency at the approximate rates ruling on the dates of the
transactions. Monetary assets and liabilities denominated in foreign currencies are translated into the presentational currency at the
approximate rates ruling on the balance sheet date. Gains and losses arising on exchange from the functional to the presentational currency
are taken to the currency translation reserve in equity.
Financial instruments
Financial liabilities and equity instruments are classified according to the substance of the contractual arrangements entered into. An
equity instrument is any contract that evidences a residual interest in the assets of the entity after deducting all of its financial
liabilities.
Where the contractual obligations of financial instruments (including share capital) are equivalent to a similar debt instrument, those
financial instruments are classed as financial liabilities. Financial liabilities are presented as such in the balance sheet. Finance costs
and gains or losses relating to financial liabilities are included in the income statement. Finance costs are calculated so as to produce a
constant rate of return on the outstanding liability.
Where the contractual terms of share capital do not have any terms meeting the definition of a financial liability then this is classed
as an equity instrument. Dividends and distributions relating to equity instruments are debited direct to equity.
Critical judgments and key sources of estimation uncertainty
The key sources of estimation uncertainty the Directors have made in preparing this interim report are as follows:
the fair value of the available for sale financial assets, and
the assumptions used to calculate the fair value of share options.
The Directors consider that the critical judgments in applying the accounting policies, as detailed above, in preparing this interim
report are as follows:
the accounting for the Tambalan Interest as an associate on the basis the Group has significant influencebut not control;
the use of the functional currency of United States Dollars as that is the currency in which the majority of the associates transactions
are undertaken;
the existence of the intangible asset in the associate;
the inclusion in the income statement of an analysis of the net income from associate as the Directors consider this is essential to
understand the financial information of the Group and
the categorisation of certain financial assets as available for sale.
3. segmental reporting
(a) By business segment (primary segment):
As defined under International Accounting Standard 14 (IAS14), the only material business segment the Group has is that of an investment
group 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 Europe.
4. tax
There is no tax charge for any period. The Group 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 at 30% and the tax expense/income actually recognised in the income statement can be
reconciled as follows:
Unaudited Unaudited Audited
six six year ended
months months 31 December
ended ended 2007
30 June 30 June £'000
2008 2007
£'000 £'000
(Loss)/profit for the period before (12,692) 3,520 (6,261)
taxation
Tax rate 30% 30% 30%
Expected tax (credit)/expense (3,808) 1,056 (1,878)
Losses/(income) not subject to tax 3,808 (1,056) 1,878
Actual tax expense - - -
5. (LOSS)/EARNINGS per share
The calculation of the basic (loss)/earnings per share is based on the net loss for the period of £12,692,000 (period ended 30 June 2007
: profit £3,520,000, year ended 31 December 2007 : loss £6,261,000) divided by the weighted average number of shares in issue during the
period of 373,439,054 (period ended 30 June 2007 : 379,273,114, year ended 31 December 2007 : 377,118,251).
The diluted profit per share is based on a weighted average number of shares in issue on a fully diluted basis of 376,931,735, (period
ended 30 June 2007 : 380,035,845, year ended 31 December 2007 : 380,538,732).
Profit per share adjusted to exclude the impact of amortisation of intangible assets within the associate and the share options charge
is as follows:
Unaudited Unaudited Audited
six six year ended
months months 31 December
ended ended 2007
30 June 30 June £'000
2008 2007
£'000 £'000
Net (loss)/profit for the period (12,692) 3,520 (6,261)
Amortisation of intangible asset within 5,872 5,617 12,063
associate
Share options charge 8,218 1,365 5,459
Adjusted net profit for the period 1,398 10,502 11,261
Based on the adjusted net profit for the period and the basic and fully diluted weighted average number of shares in issue as detailed
above, the basic and fully diluted adjusted profit per share is as follows:
Unaudited Unaudited Audited
six six year ended
months months 31 December
ended ended 2007
30 June 30 June pence
2008 2006
Pence pence
Basic 0.37 2.77 2.99
Diluted 0.37 2.76 2.96
6. investment in associate
Unaudited Unaudited Audited
six six year
months months ended
ended ended 31
30 June 30 June December
2008 2007 2007
£'000 £'000 £'000
Unaudited Unaudited Audited
six six year
months months ended
ended ended 31
30 June 30 June December
2008 2007 2007
£'000 £'000 £'000
Additions at cost - - 1,485
Profit for the period 2,849 10,444 17,576
Transferred to prepayments and accrued income - (2,366) -
Foreign exchange 110 109 (303)
Amortisation (5,872) (5,617) (12,063)
(2,913) 2,570 6,695
Increase in amounts included in trade and 2,088 (8,187) (25)
other receivables
Bonuses beyond contractual amounts treated as
administrative expenses (394) - (4,737)
Cash received from associate (4,653) - (12,511)
Net movement (5,872) (5,617) (10,578)
Net book value brought forward 15,653 26,231 26,231
Net book value carried forward 9,781 20,614 15,653
7. available for sale financial assets
Unaudited Unaudited Audited
30 June 30 June 31
2008 2007 Decembe
r
2007
£'000 £'000 £'000
Interest in profits of AMCO 811 1,537 1,070
AMCO Commodities Fund Limited 546 534 558
Interest in LME Holdings Limited 1,875 1,166 1,875
3,232 3,237 3,503
8. trade and other receivables
Unaudited Unaudited Audited
30 June 30 June 31
2008 2007 Decembe
r
2007
£'000 £'000 £'000
Non-current
Other receivables 3,013 1,027 1,022
Current
Amounts due from associate 2,410 8,187 4,498
Other receivables 275 342 304
Prepayments and accrued income 11 2,726 132
Trade and other receivables, net 2,696 11,255 4,934
The non-current other receivable represents a deposit held by Sucden (UK) Limited to support any losses which the trading team may
incur. It is repayable on termination of the agreement with Sucden (UK) Limited.
Amounts due from associate and other receivables are usually due within 120 days and do not bear any effective interest rate.
Prepayments and accrued income includes a prepaid bonus of £2.4 million to the trading team at 30 June 2007.
The fair value of these short term financial assets is not individually determined as the carrying amount is a reasonable approximation
of fair value.
9. trade and other payables
Unaudited Unaudited Audited
30 June 30 June 31
2008 2007 Decembe
r
2007
£'000 £'000 £'000
Trade and other payables 71 40 104
Other creditors - - 2,807
Accruals and deferred income 14 27 43
Trade and other payables, net 85 67 2,954
The fair value of trade and other payables has not been disclosed as, due to their short duration, management considers the carrying
amounts recognised in the balance sheet to be a reasonable approximation of their fair value.
10. share capital
Unaudited Unaudited Audited
30 June 30 June 31
2008 2007 Decembe
r
2007
£'000 £'000 £'000
Authorised
1,000,000,000 ordinary shares of 0.1p 1,000 1,000 1,000
Allotted, issued and fully paid
349,268,114 (30 June 2007: 376,172,114, 31 376 342
December 2007: 342,048,114) ordinary shares of 349
0.1p
Allotments during the period
On 29 May 2008, 12,500,000 ordinary shares of 0.1p were issued at par upon exercise of share options.
Share buy back programme
During the period from 1 January 2008 to 30 June 2008, 5,280,000 shares were bought back by the Company and immediately cancelled. The
total cost of the buy back programme in the period was £1,039,000 at an average price of 19.67p per share. The range of prices at which the
shares were bought back was 21.08p per share to 18.59p per share.
Warrants
On 8 March 2005 a warrant was issued to Strand Partners Limited, the Company's Nominated Advisor, in connection with their role in the
admission of the Company to the AIM market. The warrant entitles Strand Partners Limited to subscribe, at a price of 0.1p per share, for
such number of ordinary shares as are equivalent (on a fully diluted basis) to one per cent. of the issued ordinary share capital of the
Company at that time. The issued warrant may be exercised at any time during the period from 8 March 2005 to 8 March 2010.
The fair value of the warrants granted was determined using the Black-Schs valuation model and £20,000 of share based expense has been
included in the share premium account as a cost of the admission to AIM which gave rise to a share based payment reserve. No liabilities
were recognised due to share based payment transactions.
11. SHARE OPTIONS
The Group has adopted an employee Share Option Scheme (the "Employee Share Option Scheme") in order to incentivise key management and
staff. The fair value of options granted was determined using the Black- Schs valuation model. Significant inputs into the calculations were
as follows:
400% volatility based on expected share price (ascertained by reference to historic share prices of both the Company and comparable
listed companies)
a risk free interest rate of 5.25%
At 30 June 2008, the Group had the following options outstanding:
Market price at
date of issue At 30 June Fair value
2008 at 30
Grant Number June
2008
Date of original grant Dates exercisable price
1 May 2007 After 30 April 2010 0.1p 35,000,000 53.992p
subject to any take 54.0p
over of the Company
During the period 12,500,000 share options were exercised.
A share based payment expense of £8,218,000 has been recognised in the income statement for the period ended 30 June 2008 (period ended
30 June 2007 : £1,365,000, year ended 31 December 2007 : £5,459,000).
This information is provided by RNS
The company news service from the London Stock Exchange
END
IR FKQKNOBKDQCB
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