Final Results

EmdexTrade PLC 30 April 2003 Company Registration No. 4043020 (England and Wales) EMDEXTRADE PLC PRELIMINARY ANNOUNCEMENT FOR THE YEAR ENDED 31 OCTOBER 2002 EMDEXTRADE PLC CONTENTS Page Chairman's Report 1 Managing Director's Report 2 - 3 Notes to the preliminary announcement 4 Consolidated profit and loss account 5 Consolidated balance sheet 6 Consolidated cash flow statement 7 EMDEXTRADE PLC CHAIRMAN'S REPORT FOR THE YEAR ENDED 31 OCTOBER 2002 EmdexTrade PLC was incorporated to provide a web-based trading platform for buyers and sellers of trade receivables. The platform, 'www.emdextrade.com', was established for use by corporates, financial institutions and intermediaries -indeed any entity wishing to borrow, lend or trade debt. We remain committed to maintaining and developing this unique service. The complexities of developing a bespoke trading platform caused operational delays and budget overruns. During this development stage EmdexTrade conducted little trade, which is reflected in the financial results for the year. Group turnover was £780,449 and the results show a loss of £652,861. However, as expected, our major shareholder continued to support the group through this period. I am pleased to report that the first phase of the trading platform went live in December 2002 and we are now moving towards phase 2. As with any web-based platform, it needs continuous updating and development. We have a first class team supporting the trading platform and maintaining it at the forefront of available technology. Whilst the platform was in its final stages of development, the Board established EmdexTrade DE LLC, a New York based wholly owned subsidiary. The purpose was to acquire via an indefinite call option, the total activities of Emerging Markets Securities DE LLC (EMS). EMS specialises in creating and managing alternative investment funds (Funds) which are geared to and funded by major financial institutions. Specifically, EMS's expertise lies in developing Funds whose assets, being trade receivables, are identical to those that the group wishes to trade over the platform. The group will derive revenues from EMS's activities at four levels - through sourcing the trade receivables, closing the sale of the receivables to the Funds over the platform, management of the Funds and subsequently through the sale of the receivables over the platform as trading opportunities arise. We expect, therefore, a multiplier effect on group revenue on closing EMS transactions. The downside of EMS's activities is that we do not anticipate closing more than 2 or 3 Funds each year and setting up costs are significant. This is especially true at present, as no Funds have yet closed through EMS since the group's involvement. However, I am delighted to report that EMS expects to close 2 Funds this year with a total value of US$300 million of trade receivables. Assuming trading opportunities continue to exist in the future, this should provide the group with significant turnover during the life of these Funds and sustainable long-term income. Going forward, we are seeking to move in to profit on a month-by-month basis by the end of December 2003 as a result of the activities highlighted above. The Board and management will focus on attracting third party trading over the platform and acquiring or developing new businesses. The group does not have the immediate need for major capital expenditure (now that the first phase of the development of the platform has been completed) and the Board is committed to paying dividends at the earliest opportunity. I would like to thank the Board, management and employees for their significant contribution over the last year and look forward with increasing confidence to the next 12 months and to my next statement to the shareholders. Ian Salter Chairman 29 April 2003 -1 EMDEXTRADE PLC MANAGING DIRECTOR'S REPORT FOR THE YEAR ENDED 31 OCTOBER 2002 Priorities The year focused primarily on the continuing development of our website. This encompassed intense technical work to create a final web-based trading platform with sufficient functionality to meet the needs of our intended broker base and for the potential institutional users. As part of this process we had to recruit additional support staff and hold training sessions to exhaustively test the site before going live. This process of testing and training resulted in numerous amendments to the original site design ultimately delaying the initial launch of the site to December 2002. Results Turnover in the year increased to £780,449 (2001 (5 months) - £312,865) and the loss for the year was £652,861 (2001 (5 months)- £70,178). The loss reflected costs incurred in funding the development of our New York based subsidiary, EmdexTrade DE LLC and our investment in infrastructure to strengthen the business delivery process. Business delivery process The approach developed by the company is to offer a 'dating service' model that is totally focused on preserving anonymity and additionally blending human experience and value. Registered members have the opportunity to first submit their trade electronically and if appropriate speak to an EmdexTrade trading director. This gives users the best of both worlds and potentially access to a large liquidity pool. Primary access to the website is free with a fee negotiated for each party initiating a transaction. Registered users can make contact with the company from anywhere in the world at any time. The process starts with a user submitting a deal via the site, which is then vetted by a filter manager. The filter manager then submits the deal to an experienced trading director for review and ultimately posting on the site. This only happens if the trading director can verify the authenticity of the deal and the validity of the seller. Once this is completed, a generic description of the deal is posted to the website. Similarly, an expression of interest to fund or purchase an asset is submitted to the site, vetted by the filter manager and sent to a trading director for follow up action. If appropriate, the trading director then contacts the buyer directly, either by e-mail or phone to verify bona fides and start price negotiations and the final documentation process. The site only shows generic deal details, including the country of risk, guarantor bank where appropriate, repayment schedule and face value. As a deal progresses, flags are posted against the transaction showing the various stages of interest. This leaves the way open for other interested parties to express interest until such a time as a commitment on both sides of the transaction is agreed and the sale is ready to settle. The net effect is that EmdexTrade acts as a facilitator of transactions while preserving anonymity throughout the process, thus delivering the best transaction for both buyer and seller. -2- EMDEXTRADE PLC MANAGING DIRECTOR'S REPORT FOR THE YEAR ENDED 31 OCTOBER 2002 New York operations Apart from the work associated with getting the website up and running, our team in New York has been working on the finalisation of a number of specialised trade paper funds that will be managed by our associated broker dealer company, Emerging Markets Securities DE LLC. It is hoped that at least two of these new Funds with a total face value or USD 300 million will be launched during 2003. One of the funds will have a 5-year maturity and the other a 3-year maturity. Each fund will be investing in specific types of trade paper covering many different types of credit risks and maturity patterns. The funds will be actively managed to gain the most efficient use of their cash balances and to reinvest where appropriate. We anticipate that significant synergies will be generated from the need of the funds to initially purchase specific types of trade paper and also to find assets for reinvestment purposes. Furthermore our website will enhance our ability to attract sellers of the necessary paper for the funds. A major priority for 2003 is to bring all these elements together to the ultimate benefit of the company. Ken Mackay Managing Director 29 April 2003 -3- EMDEXTRADE PLC NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 31 OCTOBER 2002 1 Notes to the preliminary announcement Basis of preparation and going concern The financial statements continue to be prepared on a going concern basis on the assumption that the majority shareholder will continue to support the company. In this respect he has arranged for a company he controls to extend continuing financial support to the company in the form of short term working capital under terms to be agreed from time to time, subject, to financial performance, for a period of up to one year from 29 April 2003. In addition, the majority shareholder has committed to using his best endeavours to ensure that sufficient deals are directed through the company to enable it to trade as a going concern. Without the support of the majority shareholder, the company might, not be a going concern. If the company were not to be a going concern then adjustments would be required to reduce the carrying value of assets to their recoverable amounts and to provide for the costs of closure. The company's independent auditors have advised the Board that they expect to state in their audit report that they have been unable to ascertain which company will provide the financial support, and therefore have been unable to make an assessment as to whether the available financial resources in that entity are sufficient to meet the on-going working capital requirement of EmdexTrade PLC. Accordingly they believe that they have not obtained all the information and explanations that they considered necessary for the purpose of their audit and that the report they expect to issue will be a qualified audit opinion arising from the limitation of audit scope. Statement made under Section 240 of the Companies Act 1985 This preliminary statement is not the company's statutory accounts. The statutory accounts for the period ended 31 October 2001 have been delivered to the Registrar of Companies and received an audit report which was unqualified and did not contain statements under sections 237 (2) and (3) of the Companies Act 1985. The statutory accounts for the year ended 31 October 2002 have not yet been approved, audited or filed. -4- CONSOLIDATED PROFIT AND LOSS ACCOUNT FOR THE YEAR ENDED 31 OCTOBER 2002 Year Five months ended ended 31 October 31 October 2002 2001 £ £ Turnover 780,449 312,865 Cost of sales (663,373) (100,617) _______ _______ Gross profit 117,076 212,248 Administrative expenses (795,351) (302,539) _______ _______ Operating loss Continuing operations (630,494) (90,291) Discontinued activities (47,781) - _______ ______ (678,275) (90,291) Other interest receivable and similar income 24,589 20,938 _______ ______ Loss on ordinary activities before taxation (653,686) (69,353) Tax on loss on ordinary activities 825 (825) _______ ______ Loss on ordinary activities after taxation (652,861) (70,178) _______ ______ Basic and Diluted loss per ordinary share (1.63)p (0.49)p _______ ______ The corresponding amounts for 2001 are for the company alone. There are no recognised gains and losses other than those passing through the profit and loss account. -5- CONSOLIDATED BALANCE SHEET AS AT 31 OCTOBER 2002 2002 2001 £ £ Fixed assets Tangible assets 414,457 2,750 Current assets Debtors 60,165 56,222 Cash at bank and in hand 103,100 1,111,558 _______ _________ 163,265 1,167,780 Creditors: amounts falling due within one year (144,754) (83,876) _______ _________ Net current assets 18,511 1,083,904 _________ _________ Total assets less current liabilities 432,968 1,086,654 Provisions for liabilities and charges - (825) _________ _________ 432,968 1,085,829 _________ _________ _________ _________ Capital and reserves Called up share capital 1,000,000 1,000,000 Share premium account 156,007 156,007 Profit and loss account (723,039) (70,178) _________ _________ Shareholders' funds 432,968 1,085,829 _________ _________ _________ _________ Equity interests (167,032) 485,829 Non-equity interests 600,000 600,000 _________ _________ 432,968 1,085,829 _________ _________ _________ _________ The corresponding amounts for 2001 are for the company alone. -6- CONSOLIDATED CASH FLOW STATEMENT FOR THE YEAR ENDED 31 OCTOBER 2002 Year Five months ended ended 31 October 31 October 2002 2001 £ £ £ £ Net cash outflow from operating (619,486) (62,438) activities Returns on investments and servicing of finance Interest received 24,589 20,938 _______ ______ Net cash inflow for returns on investments and servicing of finance 24,589 20,938 Capital expenditure Payments to acquire tangible assets (413,561) (2,949) _______ ______ Net cash outflow for capital expenditure (413,561) (2,949) _________ ______ Net cash outflow before management of liquid resources and financing (1,008,458) (44,449) Management of liquid resources Cash placed on deposit account - (964,891) _______ _______ - (964,891) Financing Issue of ordinary share capital - 1,399,600 Cost of share issue - (243,593) _______ _________ Net cash inflow from financing - 1,156,007 _________ _________ (Decrease)/increase in cash in the year (1,008,458) 146,667 _________ _________ - 7- This information is provided by RNS The company news service from the London Stock Exchange LLDGFZM

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