RNS Number:0685J
Commoditrade Inc.
18 September 2006
18 September 2006
Commoditrade Inc.
("Commoditrade" or "the Company")
Interim results for the six months ended 30 June 2006
Commoditrade the AIM-listed commodities investment company announces its
unaudited interim results for the six months ended 30 June 2006. Commoditrade
joined AIM in March 2005 with the primary objective of building, through
investment and acquisition, a group specialising in the commodities sector.
Summary of Interim Results
6 months ended Period from 6 January 2005
30 June 2006 to 31 December 2005
Unaudited Unaudited
#'000 #'000
Gross revenue 8,869 -
Net revenue 4,621 -
Profit/(loss) for period before tax (*note) 4,474 (180)
Profit/(loss) per ordinary share 2.22p (0.20p)
*Note: The results for the half year represent overheads for the full six month period but income only
since the 24th April following the acquisition of the Tambelan Interest.
Current Trading - Outlook
* The acquisition of the Tambelan Interest immediately transformed the
Company bringing with it a profitable income stream and the Board is delighted
that the first two months contribution from the LME Trading Team has exceeded
expectations.
* Since the Company's trading update announced on 13 July Commoditrade
has continued to see a strong operating performance from the LME Trading Team
and in less than five months since completing the Acquisition, Commoditrade can
report that it has already exceeded the current broker estimate of pre-tax
profit of #9.1 million for the current year ending 31 December 2006.
Acquisition of Tambelan Interest
* On 25 April 2006 Commoditrade completed its first acquisition in the
commodities sector acquiring Tambelan Company Limited's interest ("Tambelan
Interest") in its contract with Sucden (UK) Limited ("Sucden"), a UK based
commodities trading firm, in respect of metals trading by the Sucden's LME
Trading Team ("LME Trading Team") on the London Metal Exchange ("LME").
* The LME Trading Team is the largest team trading on the LME, which has
generated a growth in gross profits over the last three years to #7.1 million in
the year ended 31 December 2005
* The initial aggregate consideration for the acquisition was #24.4
million, satisfied by the payment of #14 million in cash and by the issue of
83.4 million new ordinary shares of 0.1p each ("Ordinary Shares") at a price of
12.5p each. A further 6 million deferred consideration shares may be issued on
the achievement of certain performance criteria.
* The Company raised #18 million gross by way of a placing of
144,000,000 new Ordinary Shares with institutional investors at a price of 12.5
pence per share to satisfy the cash consideration in respect of the Acquisition,
and to provide working capital for the enlarged group.
* On completion of the Acquisition Christopher Adams who is the head LME
trader of the LME Trading Team and Geoffrey Conway-Henderson who has over 35
years' experience in the finance industry, dealing primarily in derivatives,
interest rate swaps and options joined the Board of Commoditrade as
non-executive directors.
Enquiries:
John Bick t: +44 (0) 20 7451 9800 m: +44 (0)7917 649362
www.commoditrade.net
Commoditrade Inc.
("Commoditrade" or "the Company")
Interim Statement
The Board is pleased to report the company's unaudited interim results for the
six months ended 30 June 2006 which includes the first two months contribution
from the LME Trading Team since the completion by the Company of the acquisition
of the Tambelan Interest.
Gross revenues for the period were #8.87 million and following direct costs of
#4.25 million and administration expenses of #151,000 the operating profit
achieved by Commoditrade was #4.47 million. Net profit for the period was #4.47
million producing basic earnings per ordinary share of 2.22 pence (2005: 0.20
pence).
Acquisition of Tambelan Interest
The Board was pleased to announce on 6 April 2006 that it had exercised its
option to acquire the Tambelan Interest for an initial aggregate consideration
of #24.4 million, which was satisfied as to the payment of #14 million in cash
and by the issue of 83.4 million new Ordinary Shares at a price of 12.5p pence
per share. In addition, 6 million deferred consideration shares may be issued on
the achievement of certain performance criteria.
The Acquisition represented a substantial investment opportunity allowing
Commoditrade to receive the benefit of 75 per cent of the revenue stream
generated by the LME Trading Team. The LME Trading Team is well established and
successful, with an in-depth knowledge of the markets on which it is represented
and has developed strong client and market relationships. This has resulted in
the achievement of strong growth in the level of profits achieved by the LME
Trading Team over recent years.
In order to satisfy the cash consideration in respect of the acquisition, and to
provide working capital for the enlarged group, 144,000,000 new Ordinary Shares
were placed with institutional investors at a price of 12.5 pence per share
raising #18 million gross (approximately #15.2 million net of expenses).
There are 11 category one members of the LME and the LME Trading Team is the
largest on the LME. It makes markets in base metals in the ring as well as via
telephone trading. It also trades on the LME's electronic trading platform. The
LME Trading Team generates income by acting as a market-maker, buying and
selling the metals traded on the exchange and also dealing as principal trader
taking positions subject to pre-set "caps and collars". Metals traded by the LME
Trading Team on the LME are copper, aluminium, nickel, zinc, lead and tin; with
copper, gold and silver also being traded on New York's Commodity Exchange Inc.
Immediately following the Acquisition we were delighted to welcome Christopher
Adams and Geoffrey Conway-Henderson to the board who were appointed as
non-executive directors. Chris is the head LME trader of the LME Trading Team
and has spent the last 19 years in the commodities industry, having held
numerous positions at commodity trading houses including Billiton Enthoven
Metals Limited. As well as trading for 15 years, he has held managerial
positions for 10 years. Prior to rejoining the Brokerage, Chris held positions
at Credit Lyonnais Rouse and AIG International. Geoffrey David Conway-Henderson
has over 35 years experience in the finance industry, having worked in the money
markets as a broker, dealing primarily in derivatives, interest rate swaps and
options. From 1973 until 1987 he was Managing Director at Harlow Meyer & Co.
Following this he left to become a director of Intercapital Brokers Limited, a
subsidiary of Intercapital PLC (ICAP), one of the world's largest interdealer
brokers, until his retirement in October 2003. Geoffrey is currently a director
of Corvus.
AMCO Acquisition
Since the period end we are pleased to have completed our second acquisition On
4 August 2006 Commoditrade acquired a 75 per cent interest in the net profits
of commodities investment management company, AMCO Commodities LLP ("AMCO") for
a total consideration of #1.4 million which was satisfied as to #0.5 million in
cash and the issue of 5,000,000 new Ordinary Shares at a price of 17.75p per
share.
AMCO, which was established in 2005 and is regulated by the FSA, manages the
AMCO Commodities Fund Limited ("Fund") whose investment strategy is based on a
research driven approach of seeking out fundamental trading opportunities across
a range of base metals. Portfolio construction reflects a combination of
individual discretionary trade ideas together with a disciplined approach to
overall portfolio construction and risk management. The Fund was launched in May
2006 and plans to raise up to USD500 million in the next 3 years.
AMCO seeks to identify potential trades from a range of opportunities including:
seeking to take advantage of opportunities in the changes in the directional
price of the underlying commodities; relative value trades in calendar spreads;
location arbitrage; and changes in the volatility of the underlying futures
markets.
Appointment of Strategic Adviser
The Board has received a number of approaches expressing interest in the
commodities sector. With this in mind the Company announced in July the
appointment of Jefferies International Limited as strategic adviser to the
Company. Jefferies International Limited is wholly owned by Jefferies &
Company, Inc, the global investment bank and institutional securities firm,
headquartered in New York.
Current Trading and Outlook
On 13 July 2006 the Company announced that it was seeing a strong operational
performance from the LME trading team in its first two months of contribution to
the Company's revenues. This is demonstrated by the interim results reported
today. The Board is pleased to report that since this announcement was made the
Company has continued to see a strong operating performance from the LME Trading
Team and in less than five months since completing the Acquisition, Commoditrade
can report that it has already exceeded the current broker estimate of pre-tax
profit of #9.1 million for the current year ending 31 December 2006.
The Board is highly encouraged by the sustained interest it has seen in the
market for metals trading and futures contracts. High volumes and volatility in
trading across all base metals traded on the LME have continued and in the year
to date market volumes in copper contracts have increased by 9 per cent,
aluminium 20 per cent, zinc 25 per cent, nickel 40 per cent and lead by 25 per
cent.
World economic conditions continue to provide solid support for robust metal
prices and in the sustained interest for metals futures where both liquidity and
volatility contribute to the level of activity in the sector. In addition, the
overall demand for metals is expected to remain strong buoyed by strong consumer
demand led by the Asia markets, in particular Greater China, and from a growing
appetite from the international financial community for metals futures as an
asset class.
Graham Butt
Chairman
18 September 2006
www.commoditrade.net
COMMODITRADE INC.
INCOME STATEMENT
For the six months ended 30 June 2006
6 months Period from
ended 30 6 January
June 2005 to 31
2006 December 2005
Note Unaudited Unaudited
Continuing operations #'000 #'000
Gross revenue 8,869 -
Direct costs (4,248) -
Net revenue 4,621 -
Administrative expenses (151) (180)
Operating profit/(loss) 4,470 (180)
Finance income 5 4 -
Profit/(loss) for the period before taxation 4,474 (180)
Tax income 7 - -
Net profit/(loss) for the period 4,474 (180)
Profit/(loss) per ordinary share
- Basic 8 2.22p (0.20p)
- Diluted 8 2.18p (0.20p)
COMMODITRADE INC.
STATEMENT OF CHANGES IN EQUITY
Six months ended 30 June 2006
Share
based Profit and
Share Share Shares to payment loss
capital premium be issued reserve account Total
#'000 #'000 #'000 #'000 #'000 #'000
At 6 January 2005 - - - - - -
Issue of new shares 103 524 - - - 627
Cost of issue of new shares - (165) - - - (165)
Net loss for the period - - - - (180) (180)
Share based payment - (20) - 20 - -
At 31 December 2005 103 339 - 20 (180) 282
Issue of new shares 268 33,241 1,200 - - 34,709
Cost of issue of new shares - (1,010) - - - (1,010)
Net profit for the period - - - - 4,474 4,474
At 30 June 2006 371 32,570 1,200 20 4,294 38,455
COMMODITRADE INC.
BALANCE SHEET
At 30 June 2006
At 30 June At 31 December
2006 2005
Unaudited Unaudited
Note #'000 #'000
Assets
Non-current assets
Available for sale financial assets 9 33,125 -
Current
Trade and other receivables 10 5,518 1,087
Cash and cash equivalents 216 179
Total current assets 5,734 1,266
Total assets 38,859 1,266
Liabilities
Current
Trade and other payables 11 404 984
Total liabilities 404 984
Equity
Share capital 13 371 103
Share premium 32,570 339
Shares to be issued 1,200 -
Share based payment reserve 20 20
Profit and loss account 4,294 (180)
Total equity 38,455 282
Total equity and liabilities 38,859 1,266
COMMODITRADE INC.
CASH FLOW STATEMENT
For the six months ended 30 June 2006
6 months Period from
ended 30 6 January
June 2005 to 31
2006 December 2005
Unaudited Unaudited
Continuing operations #'000 #'000
Operating activities
Operating profit 4,470 (180)
Interest received 4 -
Change in trade and other receivables (4,431) (1087)
Change in trade and other payables (580) 984
Net cash outflow from operating activities (537) (283)
Investing activities
Purchase of available for sale financial assets (16,425) -
Financing activities
Issue of shares 18,009 607
Share issue costs (1,010) (145)
Net cash inflow from financing activities 16,999 462
Net increase in cash and cash equivalents 37 179
Cash and cash equivalents at beginning of 179 -
period
Cash and cash equivalents at end of period 216 179
COMMODITRADE INC.
Notes to the interim report
For the six months ended June 2006
1 GENERAL INFORMATION
The information for the period ended 30 June 2006 does not constitute statutory
accounts as defined in Section 240 of the Companies Act 1985. The figures for
the period ended 31 December 2005 have been extracted from the 2005 statutory
financial statements prepared under UK GAAP and adjusted where necessary in
order to comply with International Financial Reporting Standards (IFRS) as shown
in note 3. 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
had previously resolved that the Company would follow UK Accounting Standards
and apply the Companies Act 1985 when preparing its annual financial statements.
The Board have now resolved that Commoditrade Inc. will adopt IFRS for the first
time in its financial statements for the year ending 31 December 2006. This
interim financial report has therefore been prepared under the historical cost
convention and in accordance with International Accounting Standard 34 "Interim
Financial Reporting" and the requirements of International Financial Reporting
Standard 1 "First Time Adoption of International Reporting Standards" relevant
to interim reports.
The transition to IFRS reporting has resulted in a number of changes in the
reported financial statements, notes thereto and accounting principals compared
to the previous annual report. Note 3 provides further details on the transition
from UK GAAP to IFRS.
The principal accounting policies of the Company are set out below.
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 consolidated financial statements with their respective tax
bases. In addition, tax losses available to be carried forward as well as other
income tax credits to the Company 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.
Financial assets
The Company's financial assets include available for sale financial assets, cash
and trade and other receivables.
All financial assets are recognised on their settlement date. All financial
assets are initially recognised at fair value, plus transaction costs.
Non-compounding interest and other cash flows resulting from holding financial
assets are recognised in profit or loss when received, regardless of how the
related carrying amount of financial assets is measured.
Trade and other receivables are provided against when objective evidence is
received that the Company 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.
Cash and cash equivalents
Cash and cash equivalents comprise cash at bank and in hand.
Equity
Share capital is determined using the nominal value of shares that have been
issued.
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.
Retained earnings include all current and prior period results as disclosed in
the income statement.
Share based payments
All share-based payment arrangements are recognised in the financial statements.
The Company does not currently operate equity-settled share-based remuneration
plans for remuneration of its employees but 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 profit or loss
or included as part of the cost of share issues with a corresponding credit to
the share based payment reserve, 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
The Company's financial liabilities include trade and other payables.
Financial liabilities are recognised when the Company becomes a party to the
contractual agreements of the instrument. All interest related charges are
recognised as an expense in "finance cost" in the income statement.
Trade payables are recognised initially at their nominal value and subsequently
measured at amortised cost less settlement payments.
Dividend distributions to shareholders are included in 'other short term
financial liabilities' when the dividends are approved by the shareholders'
meeting.
Other provisions, contingent liabilities and contingent assets
Other provisions are recognised when present obligations will probably lead to
an outflow of economic resources from the Company 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 Company that do not yet meet the
recognition criteria of an asset are considered contingent assets.
3 TRANSITION TO INTERNATIONAL FINANCIAL REPORTING STANDARDS
The transition from previous UK GAAP to IFRS has been made in accordance with
IFRS 1, "First-time Adoption of International Financial Reporting Standards".
The Company's financial statements for the six months ended 30 June 2006 and the
comparatives presented for the period ended 31 December 2005 comply with all
presentation recognition and measurement requirements of IFRS applicable for
accounting periods commencing on or after 1 January 2005.
The following reconciliations and explanatory notes thereto describe the effects
of the transition for the financial period 2005. All explanations should be read
in conjunction with the IFRS accounting policies of Commoditrade Inc..
TRANSITION TO INTERNATIONAL FINANCIAL REPORTING STANDARDS (CONTINUED)
Since Commoditrade Inc. was incorporated on 6 January 2005 that is the
transition date to IFRS. As that was the date of incorporation of the Company
no reconciliation of equity is required at that date.
The re-measurement of balance sheet items as at 31 December 2005 may be
summarised as follows:
Reconciliation as at 31 December 2005 Effect of
UK GAAP transition IFRS
#'000 #'000 #'000
Share premium 359 (20) 339
Share based payment reserve - 20 20
Total adjustment to assets and equity 359 - 359
There is no difference between the profit and loss reported under UK GAAP for
the period ended 31 December 2005 and the profit and loss as reported under
IFRS.
The Company has modified its former balance sheet and income statement structure
on transition to IFRS. The only change is to recognise the share based payment
in connection with the warrants issued to the Company's Nominated Advisor as
part of their fee for services provided in connection with the Admission of the
Company to the AIM market in March 2005.
4 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.
5 FINANCE INCOME
6 months
ended 30 Period from
June 6.1.2005 to
2006 31.12.2005
Unaudited Unaudited
Continuing operations #'000 #'000
Interest on bank deposits 4 -
6 EMPLOYEES REMUNERATION
Employee benefits expense
Expense recognised for employee benefits is analysed below:
6 months
ended 30 Period from
June 6.1.2005 to
2006 31.12.2005
Unaudited Unaudited
Continuing operations #'000 #'000
Directors fees 20 29
The average number of persons (including directors)
employed by the Company during the period was: 3 3
7 TAX
There is no tax charge/income for either period. The Company does not operate
in the United Kingdom and there is no tax arising on its operations. The
relationship between the expected tax expense/income at 30% and the tax expense/
income actually recognised in the income statement can be reconciled as follows:
6 months
ended 30 Period from
June 6.1.2005 to
2006 31.12.2005
Unaudited Unaudited
Continuing operations #'000 #'000
Profit/(loss) for the period before taxation 4,474 (180)
Tax rate 30% 30%
Expected tax expense 1,342 (54)
Income not subject to tax (1,342) -
Losses not recognised as deferred tax asset - 54
Actual tax income - -
8 PROFIT/(LOSS) PER SHARE
The calculation of the basic profit/(loss) per share is based on the net profit
for the period of #4,474,000 (period ended 31 December 2005 : loss #180,000)
divided by the weighted average number of shares in issue during the period of
201,493,475 (period ended 31 December 2005 : 89,529,528).
The diluted profit per share for the period ended 30 June 2006 is based on a
weighted average number of shares in issue on a fully diluted basis of
205,206,206. The impact of the warrants on the loss per share for the period
ended 31 December 2005 is anti-dilutive.
9 AVAILABLE FOR SALE FINANCIAL ASSETS
The available for sale financial asset represents the cost of acquiring the
Tambelan agreement including transaction expenses. In the opinion of the
directors the fair value of this financial asset at 30 June 2006 is not
materially different to its original cost given it was only acquired on 25 April
2006 and therefore they consider it reasonable to continue to carry the asset at
this value as at 30 June 2006.
10 TRADE AND OTHER RECEIVABLES
30 June 31 December
2006 2005
#'000 #'000
unaudited unaudited
Trade receivables 4,386 -
Other debtors 1,121 -
Prepayments and accrued income 11 1,087
Trade and other receivables, net 5,518 1,087
Trade and other receivables are usually due within 30 - 60 days and do not bear
any effective interest rate.
The fair value of these short term financial assets is not individually
determined as the carrying amount is a reasonable approximation of fair value.
11 TRADE AND OTHER PAYABLES
30 June 31 December
2006 2005
#'000 #'000
unaudited unaudited
Trade and other payables 290 152
Other creditors 95 -
Accruals and deferred income 19 832
Trade and other payables, net 404 984
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.
12 DEFERRED TAX ASSETS AND LIABILITIES
There are no deferred taxes arising from temporary differences at 30 June 2006
or 31 December 2005.
13 SHARE CAPITAL
30 June 31 December
2006 2005
#'000 #'000
unaudited unaudited
Authorised
1,000,000,000 ordinary shares of 0.1p 1,000 1,000
Allotted, issued and fully paid
371,273,114 (2005: 103,200,000) ordinary shares of 0.1p 371 103
Allotments during the period
On 25 April 2006 144,000,000 new ordinary shares of 0.1p were issued at 12.5p
per share by way of a placing. On the same day 124,037,114 new ordinary shares
were issued at 12.5p per share to satisfy part of the consideration for the
acquisition of the Tambelan interest and to satisfy certain of the costs of the
acquisition and share placing
SHARE CAPITAL (CONTINUED)
Warrants
On 21 February 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 10p 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 warrants granted was determined using the Black-Scholes
valuation model. Significant inputs into the calculations were:
* share price of 5p per share at date of grant of warrant
* exercise price of 10p per warrant as detailed above
* 50% volatility based on expected share price
* a risk free interest rate of 5.0%.
In total #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 share based payment
reserve. No liabilities were recognised due to share based payment
transactions.
14 RELATED PARTY TRANSACTIONS
In the period ended 30 June 2006 CVS Management Limited, a subsidiary of Corvus
Capital Inc., a shareholder in the Company, charged fees amounting to #207,611
for accounting and administrative services to the Company (period ended 31
December 2005 : #126,648).
15 RISK MANAGEMENT OBJECTIVES AND POLICIES
The Company is exposed to a variety of financial risks which result from both
its operating and investing activities. The Company's risk management is
closely monitored by the board of directors, and focuses on actively securing
the Company's short to medium term cash flows by minimising the exposure to
financial markets.
Other than the trading of metals and metal futures on the LME, Commoditrade Inc.
does not actively engage in the trading of financial assets for speculative
purposes nor does it write options. The most significant financial risks to
which the Company is exposed to are described below:
Credit risk
Generally, the maximum credit risk exposure of financial assets is the carrying
amount of the financial assets as shown on the face of the balance sheet (or in
the detailed analysis provided in the notes to the financial statements).
Credit risk, therefore, is only disclosed in circumstances where the maximum
potential loss differs significantly from the financial asset's carrying amount.
The Company's trade and other receivables are actively monitored to avoid
significant concentrations of credit risk.
Cash flow risk
The Company seeks to manage financial risks to ensure sufficient liquidity is
available to meet foreseeable needs and to invest cash assets safely and
profitably. Short term flexibility is achieved by the raising of equity and the
use of current accounts.
--------------------------
This information is provided by RNS
The company news service from the London Stock Exchange
END
IR AKOKNDBKBACD
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