Acquisition & Final Results

EmdexTrade PLC 15 April 2005 15 April 2005 EmdexTrade Plc Acquisition of CCH Europe GmbH and Announcement of Results Acquisition of CCH Europe GmbH ('CCH Europe') The Board of Emdex today announces that Emdex has conditionally agreed to acquire CCH Europe GmbH, a company which specialises in the purchase of short term trade receivables on a fully secured credit insured basis. Eren Nil, an executive director of the Company, is also interested in CCH Europe. The transaction is classified under the AIM rules as a related party transaction and requires approval of shareholders under the Companies Act 1985 because it involves the acquisition of an asset of the requisite value from a Director. A circular is being despatched to shareholders today containing details of the acquisition. Copies of the Circular will be available free of charge during normal business hours on weekdays (excluding public holidays) from the date of this announcement until 15 May 2005 from the offices of Nabarro Wells & Co Limited, Saddlers House, Gutter Lane, Cheapside, London EC2V 6HS Information on CCH Europe and the Acquisition CCH Europe, which is based in Germany, was formed in 2001 with the intention of focussing on a perceived need for financing short term receivables originating from Turkish exporters into international markets. The shares in CCH Europe are held by Mr Eren Nil and his brother, Mr Emir Nil. The audited accounts of CCH Europe for the year ended 31 December 2003 show a turnover of €1,190,450 (£815,377) and a loss for the financial year of €421,711 (£288,843). Net assets were €453,684 ( £310,742) at 31 December 2003.(£1.00 = € 1.46) The business of CCH Europe complements that of Emdex and the acquisition is viewed by the Board of Emdex as an excellent opportunity to substantially grow the enlarged business of Emdex. The consideration for the Acquisition will be satisfied by the issue of 39,682,539 new Ordinary Shares (the 'Consideration Shares'), which at the closing mid-market price as at 14 April 2005 (being the latest practicable date prior to the publication of this announcement) of 3.0 p per Ordinary Shares values the acquisition at £1,190,476. As Eren Nil, a director and substantial shareholder in Emdex, is also a shareholder in CCH Europe, the Acquisition is conditional upon the approval of Shareholders and is also conditional upon admission of the Consideration Shares to trading on AIM. Eren Nil and Emir Nil own all of the issued share capital of CCH Europe and they will receive as consideration 26,455,026 Consideration Shares and 13,227,513 Consideration Shares, respectively. Following the acquisition, Eren Nil will own 63,859,470 Ordinary Shares, representing 75.9 per cent of Emdex's issued ordinary share capital as enlarged by the Acquisition. Following the Acquisition, Emir Nil will own 13,227,513 Ordinary Shares, representing 15.72 per cent of Emdex's issued ordinary share capital as enlarged by the Acquisition. The Consideration Shares represent 47 per cent. of the enlarged share capital, and the Directors believe that the business of CCH compliments that of Emdex and provides an excellent opportunity to substantially grow the enlarged business. There are no new directors joining the board and CCH will continue for the time being to be run from Dusseldorf. As Eren Nil is a director of the Company the AIM Rules deem the acquisition of CCH Europe to be a related party transaction. The independent directors of Emdex, having consulted with their nominated adviser, Nabarro Wells, consider the terms of the acquisition to be fair and reasonable insofar as the shareholders of Emdex are concerned. Change of name In line with the Group's new direction, the Company is proposing to change its name from EmdexTrade plc to CCH International plc. Admission to AIM Application will be made, conditional on the passing of the Resolutions at the EGM referred to below, for the Consideration Shares to be admitted to trading on AIM with effect from 11 May 2005. Extraordinary General Meeting An Extraordinary General Meeting of the Company to approve, inter alia, the acquisition and the change of name will be held at 10.15 a.m. (or immediately following the conclusion of the Annual General Meeting whichever is the later) on 10 May 2005. Announcement of Results for the year ended 31 October 2004 Annual General Meeting The Annual General Meeting of the Company will be held at 10.00 a.m. on 10 May 2005 at the offices of Field Fisher Waterhouse, 35 Vine Street, London EC3N 2AA. An extract from the report and accounts to 31 October 2004 follows: Chairman's Report This has been a significant year for EmdexTrade PLC, in that we have posted a profit for the first time since incorporation. The modest profit for the year of £37,116 marks, I believe, a turning point for the company and is the outcome of a rationalisation of the group and a determined cost reduction programme. The profit for the year compares with a loss of £392,030 for the previous year. Underlying this turnaround is the beginning of a transformation process and your Board is dedicated to seeing this process through. Much needs to be done and I am grateful to our investors who have supported us over a difficult period. Last summer I reported that your Board was determined to exploit opportunities to enhance shareholder value and I am now pleased to announce that we have agreed, subject to shareholder approval, to acquire a 100% interest in CCH Europe GmbH, a Dusseldorf based company controlled by Eren Nil, which specialises in financing trade receivables on a fully secured credit insured basis. That company offers synergies that will compliment your company's plans to move forward with a strategy of controlled profitable growth. I believe that the year ending 31 October 2005 offers promising opportunities and I expect that our strategy will deliver shareholder value in the near term. Ian Salter Chairman 15 April 2005 Managing Director's report Trading performance This year has been one of substantial progress and development following a review of the company's strategy. Although there was a 41% decline in turnover to £992,193, the gross profit from this increased by 22% to £451,495, reflecting the improved quality of the trading activity. As a result of our cost reduction programme, the company posted a profit for the year of £37,116 compared with a loss for the previous year of £392,030. As the Chairman has mentioned, we believe that this turnaround marks a trend of improved results which will come from controlled profitable growth going forward. Priorities The Company's priority remains delivering shareholder value by growing sales in the trade finance market at a sustainable cost level. We have developed a strong alliance with CCH Europe GmbH, and believe that the acquisition of this company will help develop our business and improve performance. Summary We believe that we have now created a platform for future growth and profitability which we are confident will help us restore shareholder value. Eren Nil Managing Director 15 April 2005 EMDEXTRADE PLC PROFIT AND LOSS ACCOUNT YEAR ENDED 31 OCTOBER 2004 2004 2003 Note £ £ TURNOVER 2 992,193 1,679,238 Cost of sales (540,698) (1,308,778) ----------- ----------- GROSS PROFIT 451,495 370,460 Administrative expenses (412,698) (747,072) ----------- ----------- OPERATING PROFIT/(LOSS) 3 38,797 (376,612) Loss on disposal of fixed assets 6 - (9,162) ----------- ----------- 38,797 (385,774) Interest receivable 145 165 Interest payable and similar charges 7 (1,826) (6,358) ----------- ----------- PROFIT/(LOSS) ON ORDINARY ACTIVITIES 37,116 (391,967) BEFORE TAXATION Tax on profit/(loss) on ordinary activities 8 - (63) ----------- ----------- RETAINED PROFIT/(LOSS) FOR THE FINANCIAL YEAR 37,116 (392,030) Balance brought forward (925,730) (533,700) ----------- ----------- Balance carried forward (888,614) (925,730) =========== =========== Earnings per share (pence) 9 0.08 (0.97) =========== =========== All of the activities of the company are classed as continuing. The company has no recognised gains or losses other than the results for the year as set out above. EMDEXTRADE PLC BALANCE SHEET 31 OCTOBER 2004 2004 2003 Note £ £ £ £ FIXED ASSETS Tangible assets 10 228,913 344,084 CURRENT ASSETS Debtors 11 310,346 321,173 Cash at bank 119,320 30,742 ----------- ----------- 429,666 351,915 CREDITORS: Amounts falling due 12 85,134 159,670 within one year ----------- ----------- NET CURRENT ASSETS 344,532 192,245 ----------- ----------- TOTAL ASSETS LESS CURRENT LIABILITIES 573,445 536,329 =========== =========== CAPITAL AND RESERVES Called-up share capital 15 1,044,444 1,044,444 Share premium account 417,615 417,615 Profit and loss account (888,614) (925,730) ----------- ----------- 573,445 536,329 =========== =========== SHAREHOLDERS' FUNDS: 16 Equity (26,555) (63,671) Non-equity 600,000 600,000 ----------- ----------- 573,445 536,329 =========== =========== EMDEXTRADE PLC CASH FLOW STATEMENT YEAR ENDED 31 OCTOBER 2004 2004 2003 Note £ £ £ £ NET CASH INFLOW/(OUTFLOW) FROM 90,259 (358,412) OPERATING ACTIVITIES RETURNS ON INVESTMENTS AND SERVICING OF FINANCE Interest received 145 165 Interest paid (1,826) (6,358) ----------- ----------- NET CASH OUTFLOW FROM RETURNS ON (1,681) (6,193) INVESTMENTS AND SERVICING OF FINANCE TAXATION - (63) CAPITAL EXPENDITURE AND FINANCIAL INVESTMENT Payments to acquire tangible fixed assets - (56,142) Receipts from sale of investment - 101,578 ----------- ----------- NET CASH INFLOW FOR CAPITAL EXPENDITURE AND FINANCIAL INVESTMENT - 45,436 ----------- ----------- CASH INFLOW/(OUTFLOW) BEFORE 88,578 (319,232) FINANCING FINANCING Tax refund in respect of cost of share - 6,052 issued Loan subsequently converted to shares - 300,000 ----------- ----------- NET CASH INFLOW FROM FINANCING - 306,052 ----------- ----------- INCREASE/(DECREASE) IN CASH 18 88,578 (13,180) =========== =========== RECONCILIATION OF OPERATING PROFIT/(LOSS) TO NET CASH INFLOW/(OUTFLOW) FROM OPERATING ACTIVITIES 2004 2003 £ £ Operating profit/(loss) 38,797 (376,612) Depreciation 115,171 114,094 Decrease/(increase) in debtors 10,827 (210,518) (Decrease)/increase in creditors (74,536) 114,624 ----------- ----------- Net cash inflow/(outflow) from operating activities 90,259 (358,412) =========== =========== EMDEXTRADE PLC NOTES TO THE FINANCIAL STATEMENTS YEAR ENDED 31 OCTOBER 2004 1. ACCOUNTING POLICIES (i) Basis of accounting The financial statements have been prepared under the historical cost convention, and in accordance with applicable accounting standards. (ii) Turnover The turnover shown in the profit and loss account represents amounts invoiced during the year, exclusive of Value Added Tax. (iii)Fixed assets All fixed assets are initially recorded at cost. (iv) Depreciation Depreciation is calculated so as to write off the cost of an asset, less its estimated residual value, over the useful economic life of that asset as follows: Computer Equipment - 33% straight line method As detailed in Financial Reporting Standard 11 'Impairment of fixed assets', adjustments are made to asset values if events indicate that the carrying value of the fixed assets may not be recoverable and that impairment may have occurred. The accounting policy in respect of the website development is detailed in 'Website development costs'. (v) Foreign currencies Monetary assets and liabilities denominated in foreign currencies are translated into sterling at the rates of exchange ruling at the balance sheet date. Transactions in foreign currencies are recorded at the rate ruling at the date of the transaction. All differences are taken to profit and loss account. (vi) Website development costs The company capitalises all external costs and those internal costs, which otherwise would not have been incurred, directly attributable to developing its website. The directors estimate that the period over which development costs will be amortised will be 4 years from the date of the completion. The company has adopted the accounting policy detailed in Urgent Issues Task Force 29 'Website development costs' for the treatment of costs associated with the development of the website. All development and design costs have been capitalised. All other costs associated with the website have been charged to the profit and loss accounts as incurred. 2. TURNOVER All the company's turnover and profit/loss before taxation arose from the company's principal activities, namely the arranging and brokering of trade obligations. Certain of the transactions entered into by the company involved other companies over which certain directors had significant influence (see note 13). The company operates in the following geographical segments: Turnover by origin: 2004 2003 £ £ United Kingdom 992,193 1,679,238 ============ ============ Turnover by destination: 2004 2003 £ £ South America 269,429 496,740 Middle East 722,764 1,182,498 ------------ ------------ 992,193 1,679,238 ============ ============ Profit/Loss on ordinary activities after taxation: 2004 2003 £ £ United Kingdom 37,116 (392,030) ============ ============ Net assets 2004 2003 £ £ United Kingdom 573,445 536,329 ============ ============ 3. OPERATING PROFIT/(LOSS) Operating profit/(loss) is stated after charging: 2004 2003 £ £ Depreciation of owned fixed assets 115,171 114,094 Auditors' remuneration - as auditors 17,700 23,553 - for other services - 2,105 Net loss on foreign currency translation 49,242 10,586 ============ ============ 4. PARTICULARS OF EMPLOYEES The aggregate payroll costs of the above were: 2004 2003 £ £ Wages and salaries 41,242 227,622 Social security costs 2,593 2,505 ------------ ------------ 43,835 230,127 ============ ============ £16,243 of the wages and salaries costs relates to filter staff costs. Number of employees There were no employees during the year apart from the 6 (2003 - 6) directors. 5. DIRECTORS' EMOLUMENTS The directors' aggregate emoluments in respect of qualifying services were: 2004 2003 £ £ Emoluments receivable 24,999 116,057 ============ ============ None of the 6 (2003 - 6) directors are accruing retirement benefits under pension schemes in respect of qualifying services. 6. LOSS ON DISPOSAL OF FIXED ASSETS 2004 2003 £ £ Loss on disposal of fixed assets - (9,162) ============ ============ 7. INTEREST PAYABLE AND SIMILAR CHARGES 2004 2003 £ £ Interest payable on bank borrowing - 4,181 Other similar charges payable 1,826 2,177 ------------ ------------ 1,826 6,358 ============ ============ 8. TAXATION ON ORDINARY ACTIVITIES (a) Analysis of charge in the year 2004 2003 £ £ Current tax: UK Corporation tax based on the results for the year at 30% (2003 - 30%) - 63 ------------ ------------ Total current tax - 63 ============ ============ The company has trading losses of £ 1,072,324 (2003 - £1,214,935) that are available to offset future taxable profits. The company also has fixed asset timing differences of £ 227,805 (2003 - £57,873). A deferred tax asset has not been recognised in respect of these amounts as they will be recoverable only to the extent that the company has sufficient future taxable profits. (b) Factors affecting current tax charge The tax assessed on the profit/(loss) on ordinary activities for the year is lower than the standard rate of corporation tax in the UK of 30% (2003 - 30%). 2004 2003 £ £ Profit/(loss) on ordinary activities before taxation 37,116 (391,967) ============ ============ Profit/(loss)on ordinary activities by rate of tax 11,135 (117,590) Expenses not deductible for tax purposes - 4,081 Capital allowances for period in excess of depreciation 34,440 16,638 Utilisation of tax losses (45,532) - Tax chargeable at lower rates (43) - Expenses in excess of taxable income - 96,934 ------------ ------------ Total current tax (note 8(a)) - 63 ============ ============ 9. EARNINGS PER SHARE 2004 2003 pence pence Earnings per ordinary share 0.08 (0.97) ============ ============ The calculation of basic earning per ordinary share is based on a profit after tax of £37,116 (2003 - loss £392,030) and 44,444,444 (2003 - 40,109,589) ordinary shares, being the weighted average number of shares in issue during the year ended 31 October 2004. Basic and diluted shares are the same because the share option on 800,000 ordinary shares of 1p each was exercisable at the price per share in excess of the average fair value of the ordinary shares for the period ended 31 October 2004. The option lapsed on 31 December 2004. 10. TANGIBLE FIXED ASSETS Computer Website equipment development Total £ £ £ COST At 1 November 2003 and 31 October 2004 5,546 453,815 459,361 ============ ============ ============ DEPRECIATION At 1 November 2003 2,920 112,357 115,277 Charge for the year 1,688 113,483 115,171 ------------ ------------ ------------ At 31 October 2004 4,608 225,840 230,448 ============ ============ ============ NET BOOK VALUE At 31 October 2004 938 227,975 228,913 ============ ============ ============ At 31 October 2003 2,626 341,458 344,084 ============ ============ ============ 11. DEBTORS 2004 2003 £ £ Trade debtors 180,277 - Other debtors 105,649 305,492 Prepayments and accrued income 24,420 15,681 ------------ ------------ 310,346 321,173 ============ ============ The debtors above include the following amounts falling due after more than one year: 2004 2003 £ £ Trade debtors 180,277 - Other debtors 100,423 98,983 ------------ ------------ 280,700 98,983 ============ ============ Other debtors represent an amount due from CCH Europe GmbH, a company controlled by Eren Nil. 12. CREDITORS: Amounts falling due within one year 2004 2003 £ £ Trade creditors 28,531 67,351 Other taxation and social security 1,329 1,329 Other creditors 7,673 40,615 Accruals and deferred income 47,601 50,375 ------------ ------------ 85,134 159,670 ============ ============ 13. RELATED PARTY TRANSACTIONS The following related party transactions occurred during the period: (i) Patrick Kennedy During the period the company purchased accountancy services of £30,425 (2003- £8,090) and other services of £50,965 (2003 - £16,388) from PK Partners LLP. No monies were outstanding as at 31 October 2004. Patrick Kennedy, a director of EmdexTrade PLC, is a member in PK Partners LLP. (ii) Eren Nil During the period the company paid £nil (2003 - £692,036) in commissions to Erem International. The company also paid £462,127 (2003 - £508,688) in commissions to Erem Finance & Investment Consultants E.C. These commissions relate to gross fee income of £832,758 (2003 - £778,167). No monies were outstanding as at 31 October 2004. As at 31 October 2004, an amount of £100,423 (2003 - £296,948) was due from CCH Europe GmbH. Erem International, Erem Finance & Investment Consultants E.C. and CCH Europe GmbH are companies controlled by Eren Nil. (iii)CCH Europe GmbH The company has agreed on 13 April 2005 to acquire CCH Europe GmbH, a company specialising in the purchase of short term trade receivables on a fully secured credit insured basis. The acquisition of the entire capital of CCH Europe GmbH will be effected by the issue to the vendors of 39,682,539 new ordinary shares. Eren Nil and his brother Emir Nil own all of the issued share capital of CCH Europe GmbH and the acquisition is conditional upon shareholder approval at an EGM scheduled to take place on 10 May 2005. (iv) Nabucca (London) Limited During the period the company paid £5,464 (2003 - £nil) in commissions to Nabucca (London) Limited. No monies were outstanding as at 31 October 2004. Stephen Wiggans is a director of both EmdexTrade Plc and Nabucca (London) Limited. 14. CONTROL The company considers Eren Nil to be the Ultimate controlling party of EmdexTrade PLC. As at 31 October 2004, he owned 84.16% (2003 - 84.16%) of the issued share capital and is a director of the company. 15. SHARE CAPITAL Authorised share capital: 2004 2003 £ £ 1,000,000,000 Ordinary shares of £0.01 each 10,000,000 10,000,000 40,000,000 Deferred 'A' shares of £0.01 each 400,000 400,000 20,000,000 Deferred 'B' shares of £0.01 each 200,000 200,000 ------------ ------------ 10,600,000 10,600,000 ============ ============ Allotted, called up and fully paid: 2004 2003 Number £ Number £ Ordinary shares of £0.01 each 44,444,444 444,444 44,444,444 444,444 Deferred 'A' shares of £0.01 each 40,000,000 400,000 40,000,000 400,000 Deferred 'B' shares of £0.01 each 20,000,000 200,000 20,000,000 200,000 ------------ ------------ ------------ ------------ 104,444,444 1,044,444 104,444,444 1,044,444 ============ ============ ============ ============ Deferred 'A' shares and Deferred 'B' shares are no longer convertible. The deferred 'A' and 'B' shares have no voting rights or entitlement to dividends. On distribution of assets on a winding up or return of other capital, the deferred shareholders, after repayment of the ordinary shares at par and the payment of £100 on each ordinary share, are entitled to receive a sum equal to the capital paid up on the deferred shares held by them. The company had issued a share option on 800,000 ordinary shares of 1p each to its nominated advisors Nabarro Wells & Co Limited. The option was exercisable at any time up to and including 31 December 2004 at a subscription price of 10p. No accounting entries have been made for this option as it had no intrinsic value at the grant date. The option was not exercised and has lapsed since the year end. 16. RECONCILIATION OF MOVEMENTS IN SHAREHOLDERS' FUNDS EQUITY SHAREHOLDERS' FUNDS 2004 2003 £ £ £ £ Profit/(Loss) for the financial year 37,116 (392,030) New equity share capital subscribed - 44,444 Net premium on new share capital - 261,608 subscribed ------------ ------------ - 306,052 ------------ ------------ Net addition/(reduction) to 37,116 (85,978) shareholders' equity (deficit)/ funds Opening shareholders' equity (deficit)/funds (63,671) 22,307 ------------ ------------ Closing shareholders' equity deficit (26,555) (63,671) ============ ============ NON-EQUITY SHAREHOLDERS' FUNDS Opening and closing shareholders' non-equity funds 600,000 600,000 ============ ============ TOTAL SHAREHOLDERS' FUNDS 573,445 536,329 ============ ============ 17. Financial instruments The company's financial instruments comprise cash, its deferred share capital and various items such as debtors and creditors that arise directly from its operations. The company has not entered into derivative transactions nor does it trade in financial instruments as a matter of policy. The main risks arising from the company's financial instruments are interest rate risk and foreign currency risk. At the year end the company did not have any borrowings and the deferred shares have no repayment terms. Accordingly, the company does not have a liquidity risk. The company is financed by share capital, and its assets consist of debtors and cash balances held as a mixture of current and deposit accounts and currency accounts, as appropriate to the company's operational needs. The company has transactional currency exposures as its income is expected to arise in US Dollars, while its expenses are expected to be payable in US Dollars and £ Sterling. It is not the company's policy to protect the company's sterling balance sheet or transactional exposures from movements in exchange rates. With the exception of the analysis of currency exposures, the disclosure below excludes short-term debtors and creditors. Financial assets The interest rate risk and currency profile of the financial assets of the company as at 31 October 2004 is as follows: 2004 US Dollar £ Sterling Total £ £ £ Cash at bank and in hand -Fixed interest rate - - - -Floating interest rate - 14,466 14,466 -Non-interest bearing 104,854 - 104,854 Amount falling due after more than one year and included in the debtors 100,423 - 100,423 ------------ ------------ ------------ 205,277 14,466 219,743 ============ ============ ============ 2003 US Dollar £ Sterling Total £ £ £ Cash at bank and in hand -Fixed interest rate - - - -Floating interest rate - 2,681 2,681 -Non-interest bearing 28,061 - 28,061 Amount falling due after more than one year and included in the debtors 98,983 - 98,983 ------------ ------------ ------------ 127,044 2,681 129,725 ============ ============ ============ Financial liabilities The company's only financial liability as at 31 October 2004 and as at 31 October 2003 is its non equity financial share capital, details of which are in note 15. Fair value of financial assets and liabilities With the exception of the deferred share capital, for all of the financial assets and financial liabilities above, fair value equates to book value. In respect of the deferred share capital, with a book value of £600,000, the fair value is nil. Currency exposure The company's net foreign currency monetary assets exposure is £262,454 (2003 - £144,513) in respect of US dollars assets and liabilities (functional currency sterling.) 18. NOTES TO THE STATEMENT OF CASH FLOWS RECONCILIATION OF NET CASH FLOW TO MOVEMENT IN NET FUNDS 2004 2003 £ £ Increase/(Decrease) in cash in the period 88,578 (13,180) ------------ ------------ Movement in net funds in the period 88,578 (13,180) ============ ============ Net funds at 1 November 2003 30,742 43,922 ------------ ------------ Net funds at 31 October 2004 119,320 30,742 ============ ============ ANALYSIS OF CHANGES IN NET FUNDS At At 1 Nov 2003 Cash flows 31 Oct 2004 £ £ £ Net cash: Cash in hand and at bank 30,742 88,578 119,320 ------------ ------------ ------------ Net funds 30,742 88,578 119,320 ============ ============ ============ Further information:- Company Finance Director - Patrick Kennedy Tel:- 020 8334 9953 This information is provided by RNS The company news service from the London Stock Exchange AR
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