RNS Number:7465Z
London Forfaiting Company PLC
1 March 2001
London Forfaiting Company PLC
Preliminary Announcement
2000 Year End Results
Immediate release: 1 March 2001
PRELIMINARY STATEMENT
REPORT OF THE CHAIRMAN AND THE CHIEF EXECUTIVE
Results
The profit before taxation for the year ended 31 December, 2000 was #1.1
million compared to a loss of #73.3 million for the previous year. The profit
after tax was #1.1 million compared to a loss of #72.5 million in 1999.
Earnings per share were 1.02p compared to a loss of 69.22p per share in the
previous year. As in 1999, no dividend payment is recommended in respect of
the financial year ended 31 December, 2000.
Business Environment
The business environment in which the Company operates remained difficult in
the year under review. The crises in emerging markets of 1997-9 were still
fresh in the minds of exporters, importers, emerging market banks (who
normally guarantee the payment obligations of the importers) and investing
institutions, whether banks or other financial institutions. Uncertainty over
economic and financial developments in Argentina and Turkey and political
instability in the Middle East, the Philippines and Indonesia, led to quiet
trading in our market in the second half of the year. This was reflected in
our turnover figures for the second half, which were broadly similar to the
first half of the year. However, the order book (of new forfaiting
transactions) which stood at #36 million on 30 June, 2000 and #68 million on
22 August, 2000 and which we reported on at the interim stage, has increased
further to #82 million on 31 December, 2000 and to #88 million on 23 February,
2001.
Downward Valuations
Downward valuations of our forfaiting assets of some #4.3 million after the
year end were offset by upward valuations of a similar amount as a result of a
credit review of our assets made in the light of recent trading experience
which was completed in February 2001. The total of downward valuations in the
balance sheet as at 31 December, 2000 stood at #75 million, less than half the
#157 million as at 31 December, 1999. This reduction was achieved largely
through the active trading of assets the Company had previously written down.
While there is a subjective element involved in the valuation of the
forfaiting assets the Directors believe that their overall assessment, which
takes into account the specifics of the underlying transaction, the current
market, possible time lags and country and currency risks (among other
factors) is appropriate.
Balance Sheet
Our portfolio of forfaiting assets as at 31 December, 2000 was #126.5 million
compared to #152.1 million as at 31 December, 1999. However, included in the #
126.5 million were emerging market bonds amounting to #26.5 million, whereas
we had no such bonds in 1999. By trading emerging market bonds, the Company is
applying its emerging market expertise in a wider market. These bonds are
either sovereign or bank issues and we have been actively trading them, with
the portfolio of such bonds ranging between approximately #7 million and #30
million in 2001 so far. The main activities are still the arrangement and
trading of trade finance assets and syndicated loans.
The portfolio of forfaiting assets excluding the emerging market bonds
amounted to #99.95 million as at 31 December, 2000 compared to #152.12 million
as at 31 December, 1999 and the table below analyses the breakdown by country.
31 December 2000 31 December 1999
# million # million
EUROPE 46.91 93.60
Central & East Europe 22.32 80.68
Croatia 3.12 8.42
Czech Republic 5.31 10.96
Macedonia 0.00 0.09
Romania 1.36 22.48
Russia 8.50 17.05
Slovakia 0.19 17.36
Slovenia 0.35 0.46
Ukraine 3.49 3.86
Baltics 0.95 1.47
Estonia 0.83 1.32
Lithuania 0.12 0.15
Other Europe 23.64 11.45
France 1.83 0.00
Germany 1.00 0.93
Greece 3.38 0.00
Italy 0.00 0.08
Luxembourg 0.00 0.02
Netherlands 0.07 0.00
Portugal 0.15 0.06
Switzerland 0.00 0.03
Turkey 14.50 10.32
UK 2.71 0.01
AMERICAS 26.58 21.48
South America 25.88 20.28
Argentina 8.45 0.48
Brazil 0.37 1.97
Chile 5.84 4.99
Colombia 3.43 7.17
Ecuador 7.73 5.26
Peru 0.06 0.40
Uruguay 0.00 0.01
Central America 0.24 0.00
Costa Rica 0.24 0.00
North America 0.46 1.20
Mexico 0.32 1.20
USA 0.14 0.00
ASIA 24.73 36.66
China 0.67 0.45
Hong Kong 3.71 3.04
India 0.21 4.97
Indonesia 4.42 5.70
Japan 4.35 0.00
Malaysia 4.14 5.17
Philippines 3.69 4.65
South Korea 2.98 9.95
Sri Lanka 0.00 0.13
Thailand 0.56 1.98
Vietnam 0.00 0.62
NORTH AFRICA / MIDDLE EAST 1.73 0.38
Algeria 0.00 0.02
Bahrain 0.31 0.12
Egypt 1.19 0.02
Lebanon 0.00 0.04
Oman 0.23 0.18
TOTAL 99.95 152.12
Funding and Liquidity
Bank borrowings at 31 December, 2000 of #112.2 million decreased from #156.2
million as at 31 December, 1999 and as at 28 February, 2001 were #102.9
million. 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, 2000 such gearing was 2.61 compared to
3.73 as at 31 December, 1999. Net gearing, i.e. after offsetting cash
holdings, fell to 2.21 as at 31 December, 2000 from 3.05 as at 31 December,
1999.
The Company has only one syndicated banking facility maturing within the next
twelve months. Partial prepayment of the US$ 135 million facility has already
been made to the extent of US$ 105 million and the balance of US$ 30 million
will be prepaid in two weeks time on 14 March, 2001. Similarly, we expect to
satisfy our obligations under the one remaining syndicated facility of US$ 150
million, which will mature in October 2002.
Overheads
Administrative expenses for 2000 were #12.8 million compared to #18.8 million
for the previous year, a reduction of approximately one third. In 1998,
overheads were #26 million, more than double the level in 2000.
e-commerce
The Company continues to develop its website www.londonforfaiting.com which is
steadily becoming a more important tool in our marketing strategy.
Staff
The Directors would like to thank the staff for their loyalty and hard work
during the year. It is the Board's intention to propose the establishment of a
new share option scheme. Since the flotation of the Company in February 1988,
there has only been one option scheme, which was for 5% of the issued ordinary
share capital and which has now expired. Under the proposed scheme, all full
time members of staff other than the Chairman and the Chief Executive will be
potentially eligible.
Outlook
The Board is confident about the Company's market position and within the
context of the inherent uncertainties in the international financial markets
is endeavouring to build on the recovery of last year.
Jack A.G. Wilson - Chairman
Stathis A. Papoutes - Chief Executive
28 February, 2001
CONSOLIDATED PROFIT AND LOSS ACCOUNT
(Unaudited) (Audited)
Year ended Year ended
31 December, 31 December,
2000 1999
#'000 #'000
Sales of forfaiting assets 313,277 583,925
Trading income 20,886 32,193
Bank and other interest receivable 1,541 1,630
Bank interest payable (8,557) (15,507)
13,870 18,316
Administrative expenses (12,802) (18,793)
Restructuring costs - (2,159)
Operating profit (loss) before 1,068 (2,636)
revaluations
Revaluation of forfaiting assets - (70,651)
Profit (loss) on ordinary activities 1,068 (73,287)
before taxation
Tax on profit (loss) on ordinary (Note 1) - 753
activities
Profit (loss) on ordinary activities 1,068 (72,534)
after taxation
Dividends - -
Retained profit (loss) for the year 1,068 (72,534)
Retained profit (loss) brought forward (58,334) 14,200
Retained loss carried forward (57,266) (58,334)
Earnings (loss) per share (Note 2) 1.02 p (69.22) p
Notes
1. Group tax losses of approximately #100 million (approximately #40 million
in London) are available for offset against future profits.
2. The calculation of the profit (loss) per share is based on the profit
(loss) after taxation and on the weighted average number of 104,780,000
ordinary shares in issue.
3. There are no recognised gains or losses for the current or previous year
other than as stated in the profit and loss account.
4. Financial information for the year ended 31 December, 1999 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, 1999 was unqualified. 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.
5. It is intended that the Annual Report will be posted to shareholders on 22
March, 2001 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 December, 2000 31 December, 1999
#'000 #'000
Fixed assets
Tangible assets 1,561 1,608
Current assets
Forfaiting assets (Note 1) 126,453 152,115
Prepayments and accrued income 19,882 30,728
Cash at bank and in hand 17,059 28,401
163,394 211,244
Current liabilities
Bank loans (Note 2) 112,169 156,199
Other creditors 9,805 14,740
121,974 170,939
Net current assets 41,420 40,305
Net assets 42,981 41,913
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 (57,266) (58,334)
Equity shareholders' funds 42,981 41,913
Notes
1. Forfaiting assets include #26.5 million of emerging market bonds.
2. The table below shows the breakdown between drawn and undrawn bank
facilities at 31 December, 2000.
Drawn Undrawn
#'000 #'000
Facilities maturing within one year 35,088 56,947
Facilities maturing between one and two years 76,985 23,430
112,073 80,377
At 31 December, 2000 Bank loans included #96,000 in respect of bank
overdrafts.
CONSOLIDATED CASH FLOW STATEMENT
(Unaudited) (Audited)
Year ended Year
ended
31 31
December, December,
2000 1999
#'000 #'000
Net cash inflow from operating activities (note a) 62,793 76,256
Servicing of finance
Interest paid on medium term loans (1,652) (5,861)
Taxation
UK corporation tax recovered 1,452 887
UK corporation tax paid - (1,580)
Overseas tax recovered - 363
Overseas tax paid (17) (333)
1,435 (663)
Capital expenditure
Purchase of tangible assets (675) (268)
Sale of tangible assets 230 641
(445) 373
Net cash inflow before financing 62,131 70,105
Financing
Medium term bank loans repaid (75,539) (72,566)
Decrease in cash (note b) (13,408) (2,461)
NOTES TO THE CONSOLIDATED CASH FLOW STATEMENT
a. Reconciliation of profit (loss) on ordinary activities before taxation to
net cash inflow from operating activities
31 December, 31 December,
2000 1999
#'000 #'000
Profit (loss) on ordinary activities before 1,068 (73,287)
taxation
Interest on medium term loans 1,214 5,611
Depreciation charges 642 1,048
(Profit) loss on sale of tangible assets (137) 137
Decrease in forfaiting assets 25,663 311,670
Decrease in prepayments and accrued income 9,065 5,082
(Increase) decrease in bank deposits (1,428) 10,983
Decrease in creditors (4,151) (20,010)
Exchange rate adjustments (556) 1,149
Increase (decrease) in bank loans 31,413 (166,127)
Net cash inflow from operating activities 62,793 76,256
b. Analysis of changes in cash during the year
31 December, 2000 31 December, 1999
#'000 #'000
At 1 January 17,302 20,784
Exchange rate movements 542 (1,021)
Net cash outflow (13,408) (2,461)
At 31 December 4,436 17,302
c. Analysis of the balances of cash as shown in the consolidated balance sheet
31 December, 31 December,
2000 1999
#'000 #'000
Cash at bank and in hand per consolidated 17,059 28,401
balance sheet
Less bank deposits (12,527) (11,099)
4,532 17,302
Bank overdrafts (96) -
4,436 17,302
d. Analysis of changes in financing during the year
Share capital (including share premium) Medium term loans
#'000 #'000
At 1 January, 2000 75,247 75,539
Cash outflow - (75,539)
At 31 December, 2000 75,247 -
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