RNS Number:2020G
London Forfaiting Company PLC
25 February 2000
London Forfaiting Company PLC
Preliminary Announcement
1999 Year End Results
PRELIMINARY STATEMENT
REPORT OF THE CHAIRMAN AND THE CHIEF EXECUTIVE
Results and Dividends
The loss before taxation for the year ended 31 December, 1999 was #73.3
million compared to #56.6 million for the previous year. The loss after tax
was #72.5 million compared to #51.1 million in 1998. The loss per share was
69.22p compared to a loss of 48.76p per share in the previous year. No
dividend payment is recommended in respect of the financial year ended 31
December, 1999. (Last year an interim dividend payment of 6p per share was
announced in July 1998: there was no final dividend payment).
Business Environment
The two and a half years since problems arose in the Thai economy, in July
1997, have been the worst period for international trade finance with
developing countries in fifty years. Thailand's problems were quickly
followed by turbulence in the economies of South Korea, Indonesia and
Malaysia. In 1998, payment difficulties in these economies worsened and at
the same time problems developed in Russia and China. In 1999, the credit
worthiness of entities in many developing countries deteriorated
significantly, with for example the collapse of the Daewoo group of South
Korea and requests for rescheduling of Ukrainian debt. During the year, the
continued uncertainty surrounding the banking system in Russia resulted in
bankruptcies, withdrawal of banking licenses and considerable delays in
rescheduling and restructuring discussions. At the same time, after the
Brazilian devaluation, new problems appeared in South America, notably
Ecuador.
In addition, some central banks or governments in emerging markets - on
occasions with the apparent encouragement of the IMF and/or other official
creditors - have failed, despite earlier promises or indications, to support
banks and major corporations within their economies. These factors culminated
in the most difficult trading period in the Company's history.
Downward Valuations
In July 1999, we announced net downward valuations of #49.1 million,
principally in respect of Russian and Chinese assets, but also reflecting a
reappraisal of forfaiting assets worldwide. In February 2000, a further
review of our assets in the light of current circumstances has resulted in an
additional downward valuation of #21.5 million, a little over half of that
figure reflecting the deterioration of the situation in the Ukraine, Ecuador
and the Daewoo group and the balance reflecting more pessimistic opinions
which have developed in relation to the countries in which some of our older
non-performing assets are situated. Total downward valuations at 31 December,
1999 amounted to #157.5 million.
Balance Sheet
The Company has progressively reduced the overall size of its portfolio of
assets over the last year. At the end of December 1999, the portfolio stood
at #152 million after downward valuations compared to #464 million on the
same basis at the end of December 1998.
Portfolio
We detail below a breakdown of our portfolio of forfaiting assets as at 31
December, 1999 by geographical region showing the further reduction of the
portfolio in the second half of the year.
PORTFOLIO OF FORFAITING ASSETS
June 1999 December 1999
# million # million
EUROPE 139.8 93.5
Russia 24.8 17.0
Baltics 5.3 1.5
Czech Republic 13.9 10.9
Slovakia 19.1 17.4
Romania 28.0 22.5
Other Central & Eastern Europe 18.5 12.8
Other Europe 30.2 11.4
AMERICAS 51.8 21.5
North America 2.1 1.2
South America 49.7 20.3
ASIA 59.4 36.7
China & Hong Kong 4.6 3.5
East Asia 25.5 14.6
South East Asia 22.8 13.5
South Asia 5.5 5.1
Central Asia 1.0 0.0
NORTH AFRICA / MIDDLE EAST 1.5 0.4
TOTAL 252.5 152.1
Funding and Liquidity
Bank borrowings at #156 million decreased from #395 million at the end of the
previous year. The Company continues to comply with all the covenants which
have been given to its bankers. In particular, under our syndicated borrowing
loan agreements, we have a maximum permitted gross gearing covenant of four
times shareholders' funds. As at 31 December such gearing was 3.7 and at the
date of this statement, the ratio would come to 3.3. Year-end cash balances
were #28 million and #177 million of committed syndicated facilities remained
undrawn. As at the date of this report, bank borrowings were #138 million,
undrawn facilities after the repayment of two committed facilities were #163
million and cash balances were in excess of #20 million. The Company's
liquidity is such that it does not need to renew any of its borrowing
facilities maturing in the next twelve months.
In the light of the reduced portfolio size, the Company will be trading its
forfaiting assets actively. The Company will keep the future funding of its
trading activity under review, although it has always traded its portfolio
actively when the portfolio has been lower.
Overheads
Administrative expenses before restructuring costs for 1999 at #18.8 million
were 27.7% lower than the 1998 figure of #26.0 million. In the second half of
the year, they fell to #7.8 million or #1.3 million per month and in the last
quarter of 1999, they averaged #1.2 million per month as the summer
reorganisation took effect. As a result of the cost saving programme, which
we introduced to respond to the changing circumstances of our markets, the
number of staff at the year-end was reduced from 230 at end 1998 to 123 at
the end of 1999. The year 2000 will show a full year's benefit from the
summer reorganisation.
Turnover
1997 1998 1999
# million # million # million
Europe 1,341 779 220
Asia 461 419 259
Americas 438 300 88
Other 28 30 17
Total 2,268 1,528 584
This difficult period for international trade finance impacted not only asset
values as described above, but also the volume of transactions of capital
goods exports from the developed countries to the developing countries.
Generally manufacturers in the developing countries preferred to operate
existing capital equipment more intensively and to refrain from new
investments in plant and machinery, especially in situations where their
balance sheets were adversely affected by currency devaluations due to their
holding of unhedged obligations in foreign currencies. Moreover, where such
exports did take place, credit was not always possible due to the
unwillingness of banks in developing countries to take on additional risk on
their corporate clients by guaranteeing their obligations. Consequently, some
transactions were completed on a cash basis.
Exporters in the developed economies, where we have most of our marketing
offices, have tended to place less emphasis on supplier credit sales to
emerging markets, either because they considered the refinancing was not
possible in the forfaiting market; because they considered their time better
spent in the developed world; or because they anticipated delays in contract
completion because of Y2K.
The other major reason for the lower turnover over the past two years has
been the reduced appetite of the international investing community for medium
term trade transactions. This is hardly surprising as all participants in our
markets suffered credit losses to a greater or lesser extent. Attention has
also been diverted in the market to some extent from new transactions to the
recovery or rescheduling of overdue amounts.
It is only now, with Y2K behind us, and the credit losses of the past two and
a half years absorbed by the balance sheets of the investing institutions and
a perception of improved credit worthiness in many emerging markets, that
liquidity in this market has improved providing the Company with better
opportunities for the distribution of assets.
e-commerce
The Company is currently constructing a new improved website in order to
enhance its services with exporters online. Emphasis is placed on creating an
export finance portal. This will enable the Company to become more effective
in its global marketing efforts in this new era of instant communications.
Staff
The Directors would like to thank the staff for their loyalty and hard work
during a difficult year.
Outlook
In their December 1999 Economic Outlook, the OECD is forecasting growth in
world trade of 7.1% in 2000 as against an estimate of 4.9% for 1999. It is
now generally acknowledged that most emerging markets are recovering and are
showing increasing economic growth rates. Leading the way are the Asian
economies such as South Korea and Thailand, but developments in South America
and Central and Eastern Europe are also better than previously expected. In
addition to buoyant demand from industrialised countries, some developing
countries are also benefiting from a rebound in raw material prices. As the
recovery in the developing countries continues in the years 2000 and 2001, so
expenditure in these countries on capital goods investment - which normally
lags initial economic recovery - should expand and increase the volumes
transacted with our exporting clients. Activity for them translates into
activity for our business.
Conditions in the forfaiting market are a changing scenario. Having carefully
considered the Company's response to these conditions; the valuation of the
Company's assets; the funding and liquidity issues referred to above; and
budgets for 2000 and 2001, the Directors believe that prospects for
profitable trading over the year as a whole and subsequently are good.
Jack A.G. Wilson Stathis A. Papoutes
Chairman Chief Executive
24 February, 2000
CONSOLIDATED PROFIT AND LOSS ACCOUNT
(Unaudited) (Audited)
Year Year
ended ended
31 31
December, December,
1999 1998
#'000 #'000
Sales of forfaiting assets 583,925 1,527,674
Trading income 32,193 74,515
Bank interest receivable 1,630 1,245
Bank interest payable (15,507) (26,706)
18,316 49,054
Administrative expenses (18,793) (25,972)
Restructuring costs (2,159) -
Operating result before revaluations (2,636) 23,082
Revaluation of forfaiting assets (70,651) (79,695)
Loss on ordinary activities (73,287) (56,613)
before taxation
Tax on loss on ordinary (Note 1) 753 5,527
activities
Loss on ordinary activities (72,534) (51,086)
after taxation
Dividends - (6,287)
Retained loss for the period (72,534) (57,373)
Retained profit brought forward 14,200 71,573
Retained profit (loss) (58,334) 14,200
carried forward
Loss per share (Note 2) (69.22) p (48.76) p
Notes
1. The tax credit reflects the release of the deferred taxation balance.
In addition, group tax losses of approximately #100 million (approximately
#40 million in London) are available for offset against future profits.
2. The calculation of the loss per share is based on the loss after
taxation and on the weighted average number of 104,780,000 (104,760,000 at 31
December, 1998) ordinary shares in issue.
3. There are no recognised gains or losses for the current or previous
periods other than as stated in the profit and loss account.
4. The financial information contained in this Preliminary Announcement
does not constitute the Group's statutory accounts within the meaning of
section 240 of the Companies Act 1985. Financial information for the year
ended 31 December, 1998 has been extracted from the Group's statutory
accounts which have been delivered to the Registrar of Companies. The audit
report on the accounts for the year ended 31 December, 1998 was unqualified.
5. It is intended that the financial statements will be posted to
shareholders on 17 March, 2000 and will be available to members of the public
at the Registered Office of the Company from that date.
CONSOLIDATED BALANCE SHEET
(Unaudited) (Audited)
31 31
December, December,
1999 1998
#'000 #'000
Fixed assets
Tangible assets 1,608 3,294
Current assets
Forfaiting assets 152,115 463,785
Prepayments and accrued income 30,728 36,664
Cash at bank and in hand 28,401 42,866
211,244 543,315
Current liabilities
Bank loans (Note 1) 156,199 314,318
Other creditors 14,740 37,013
Proposed dividend - -
170,939 351,331
Net current assets 40,305 191,984
Total assets less 41,913 195,278
current liabilities
Creditors: amounts falling due
after more than one year - 80,573
Provisions for liabilities - 258
and charges
Net assets 41,913 114,447
Capital and reserves
Called up share capital 41,912 41,912
Share premium account 33,335 33,335
Other reserves 25,000 25,000
Profit and loss account (58,334) 14,200
Equity shareholders' funds 41,913 114,447
Note
1. The table below shows the breakdown between drawn and undrawn bank
facilities at 31 December, 1999 as follows:
Drawn Undrawn
#'000 #'000
Facilities maturing within one year 87,950 68,251
Facilities maturing between one and two years 12,409 71,353
Facilities maturing between two and five years 55,840 37,228
156,199 176,832
The total committed bank facilities at 31 December, 1999 were #333,031,000.
CONSOLIDATED CASH FLOW STATEMENT
Year Year
ended ended
31 31
December December
1999 1998
#'000 #'000
Net cash inflow from operating 76,256 36,331
activities
Servicing of finance
Interest paid on medium term loans (5,861) (8,739)
Taxation
UK corporation tax recovered 887 -
UK corporation tax paid (1,580) (7,556)
Overseas tax recovered 363 -
Overseas tax paid (333) (66)
(663) (7,622)
Capital expenditure
Purchase of tangible assets (267) (1,271)
Sale of tangible assets 640 95
373 (1,176)
Equity dividends paid - (12,884)
Net cash inflow before financing 70,105 5,910
Financing
Medium term loans repaid (72,566) (41,943)
Issue of ordinary shares
(including share premiums)
- 67
(72,566) (41,876)
Decrease in cash (2,461) (35,966)
NOTES TO THE CONSOLIDATED CASH FLOW STATEMENT
a) Reconciliation of loss on ordinary activities before taxation to net
cash inflow from operating activities
31 31
December, December,
1999 1998
#'000 #'000
Loss on ordinary activities before (73,287) (56,613)
taxation
Interest on medium term loans 5,611 9,697
Depreciation charges 1,048 1,727
Loss on sale of tangible assets 137 13
Decrease in forfaiting assets 311,670 144,300
Decrease (increase) in prepayments
and accrued income 5,082 (4,139)
Decrease (increase) in bank deposits 10,983 (22,077)
Decrease in creditors (20,010) (15,879)
Exchange rate adjustments 1,149 (110)
Decrease in bank loans (166,127) (20,588)
Net cash inflow from operating 76,256 36,331
activities
b) Analysis of the balances of cash as shown in the consolidated balance
sheet
31 31
December, December,
1999 1998
#'000 #'000
Cash at bank and in hand per
consolidated balance sheet 28,401 42,866
Less bank deposits (11,099) (22,082)
17,302 20,784
Bank overdrafts - -
17,302 20,784
c) Analysis of changes in cash during the year
31 31
December, December,
1999 1998
#'000 #'000
At 1 January 20,784 56,701
Exchange rate movements (1,021) 49
Net cash outflow (2,461) (35,966)
At 31 December 17,302 20,784
d) Analysis of changes in financing during the period
Share
capital Medium
(including term
share premium) loans
#'000 #'000
At 1 January, 1999 75,247 148,104
Cash outflow - (72,566)
At 31 December, 1999 75,247 75,538
END
FR SESEDLSSSESE
Lon.Forfaiting (LSE:LFC)
과거 데이터 주식 차트
부터 6월(6) 2024 으로 7월(7) 2024
Lon.Forfaiting (LSE:LFC)
과거 데이터 주식 차트
부터 7월(7) 2023 으로 7월(7) 2024
