RNS Number:7576K
London Forfaiting Company PLC
27 September 2001
London Forfaiting Company PLC
Interim Announcement
2001 Half-year Results
Immediate release: 27 September 2001
INTERIM STATEMENT
In the first six month period to 30 June, 2001 the Company made a loss before
and after tax of #13.96 million, compared with a before and after tax profit
of #0.2 million in the same period last year. As last year, there will be no
interim dividend.
The Company made a pre-tax profit of #1.66 million before a reappraisal of
asset values, against the background of the gathering world economic recession
and political uncertainties. A reduction of #15.62 million in the value of
risk assets is considered necessary to reflect the deterioration in the value
of both distressed and performing assets. In respect of our non-performing
assets and in the context of a prudent and comprehensive reappraisal which we
have just completed, we simply note that our balance sheet is unlikely to be
further adversely affected in the future by those assets, and in respect of
our performing assets we have also reflected conservative valuations.
It is sensible in the current economic environment to continue to reduce our
administrative expenses. Staff numbers are now below 80, compared with an
average of 108 over last year as a whole. As a result of redundancies that we
made yesterday in our London headquarters, there will be a further 9%
reduction in our total staff and we expect to sublet part of our London office
space.
There will be no reduction, however, in the staffing or number of our
marketing offices, located in 11 capital goods exporting countries, as the
main emphasis and drive for profit in our business is in the servicing of
exporters worldwide. We will continue to give full support to our exporting
clients wherever and whenever the markets are open and the risks remain
acceptable.
Forfaiting assets, including emerging market bonds, have been reduced from #
126.45 million at the end of 2000 to #76.09 million as at the end of June this
year. Since 30 June, the portfolio has been further reduced to #46 million by
additional net sales of approximately #30 million of risk assets, reflecting a
decision in the summer to reduce further our risk profile in the current
markets.
The portfolio of forfaiting assets at 30 June, 2001 excluding #15.01 million
of Eurobonds was as follows.
30 June 2001 31 December 2000 30 June 2000
# million # million # million
EUROPE 25.12 46.91 66.54
Central & East Europe 8.04 22.32 53.50
Croatia 0.49 3.12 4.47
Czech Republic 0.00 5.31 11.28
Macedonia 0.38 0.00 0.04
Romania 4.76 1.36 6.44
Russia 2.41 8.50 20.37
Slovakia 0.00 0.19 6.09
Slovenia 0.00 0.35 0.38
Ukraine 0.00 3.49 4.43
Baltics 0.15 0.95 2.02
Estonia 0.15 0.83 1.05
Lithuania 0.00 0.12 0.97
Other Europe 16.93 23.64 11.02
Cyprus 1.74 0.00 0.00
France 1.72 1.83 0.40
Germany 1.07 1.00 0.99
Greece 0.00 3.38 3.29
Netherlands 0.04 0.07 0.00
Portugal 0.00 0.15 0.00
Switzerland 0.00 0.00 1.80
Turkey 10.84 14.50 2.23
UK 1.52 2.71 2.31
AMERICAS 15.58 26.58 21.36
South America 8.94 25.88 18.39
Argentina 0.07 8.45 0.39
Brazil 0.12 0.37 2.11
Chile 0.25 5.84 5.47
Colombia 1.34 3.43 4.62
Ecuador 7.16 7.73 5.79
Peru 0.00 0.06 0.01
Central America & the Caribbean 1.33 0.24 0.00
Cayman Islands 1.33 0.00 0.00
Costa Rica 0.00 0.24 0.00
North America 5.31 0.46 2.97
Mexico 0.17 0.32 1.75
USA 5.14 0.14 1.22
ASIA 14.96 24.73 28.77
Bangladesh 0.00 0.00 0.19
China 0.96 0.67 0.35
Hong Kong 2.44 3.71 3.06
India 0.00 0.21 1.94
Indonesia 0.33 4.42 5.38
Japan 0.00 4.35 0.00
Kazakstan 3.46 0.00 0.00
Malaysia 1.23 4.14 5.04
Philippines 3.82 3.69 4.24
South Korea 2.12 2.98 6.34
Thailand 0.08 0.56 2.09
Vietnam 0.52 0.00 0.14
NORTH AFRICA / MIDDLE EAST 5.42 1.73 2.66
Bahrain 0.32 0.31 0.13
Egypt 3.94 1.19 2.50
Lebanon 0.00 0.00 0.03
Oman 0.00 0.23 0.00
Saudi Arabia 0.47 0.00 0.00
UAE 0.69 0.00 0.00
TOTAL 61.08 99.95 119.33
The Company's liquidity remains strong. At today's date we are borrowing only
US$ 55 million of a US$ 150 million facility which does not mature until
October 2002. We are within our borrowing covenants and, indeed, we would
remain so at the current date were we to draw down the full amount of the
borrowing facility.
With the recent downsizing of the Group, we have decided to redefine the
duties of three of our Executive Directors. Stathis Papoutes, Chief Executive,
will take direct control of forfaiting trading in London and will relocate
from his office to the trading floor. David Lilley, Director, will focus
exclusively for the time being on the recovery of monies from provisioned
assets. Simon Lay, Director, will focus on new forfaiting business worldwide.
The Group will continue to trade its portfolio actively and in addition to
selling through its existing extensive distribution network, will seek
co-operation agreements with partners who will be in a position to absorb
substantial volumes of assets, sourced by our international network of
marketing offices.
I would like to reassure all our shareholders that the Board is determined to
increase shareholder value from the current low ebb.
Jack A.G. Wilson
Chairman
27 September, 2001
REVIEW REPORT OF THE AUDITORS
Independent Review Report to London Forfaiting Company PLC
Introduction
We have been instructed by the Company to review the financial information for
the six months ended 30 June, 2001 which comprises the profit and loss
account, the balance sheet, the cash flow statement and related notes 1 to 8.
We have read the other information contained in the interim report and
considered whether it contains any apparent misstatements or material
inconsistencies with the financial information.
Directors' Responsibilities
The interim report, including the financial information contained therein, is
the responsibility of, and has been approved by the directors. The directors
are responsible for preparing the interim report in accordance with the
Listing Rules of the Financial Services Authority which require that the
accounting policies and presentation applied to the interim figures should be
consistent with those applied in the preceding annual accounts except where
any changes, and the reasons for them, are disclosed.
Review Work Performed
We conducted our review in accordance with the guidance contained in Bulletin
1999/4 issued by the Auditing Practices Board for use in the United Kingdom. A
review consists principally of making enquiries of Group management and
applying analytical procedures to the financial information and underlying
financial data and, based thereon, assessing whether the accounting policies
and presentation have been consistently applied unless otherwise disclosed. A
review excludes audit procedures such as tests of controls and verification of
assets, liabilities and transactions. It is substantially less in scope than
an audit performed in accordance with United Kingdom Auditing Standards and
therefore provides a lower level of assurance than an audit. Accordingly, we
do not express an audit opinion on the financial information.
Review Conclusion
On the basis of our review we are not aware of any material modifications that
should be made to the financial information as presented for the six months
ended 30 June, 2001.
Deloitte & Touche Stonecutter Court
Chartered Accountants 1 Stonecutter Street
27 September, 2001 London EC4A 4TR
CONSOLIDATED PROFIT AND LOSS ACCOUNT
(Unaudited) (Unaudited) (Audited)
6 months to 6 months to Year ended
30 June, 30 June, 31 December,
2001 2000 2000
#'000 #'000 #'000
Total sales (Note 1) 262,902 159,096 313,277
Trading income 7,756 8,506 20,931
Bank and other interest 608 766 1,541
receivable
Bank interest payable (2,779) (4,657) (8,557)
5,585 4,615 13,915
Administrative expenses (5,682) (6,870) (12,802)
Operating profit/(loss) before (97) (2,255) 1,113
recoveries and revaluations
Recoveries of past downward 1,759 2,253 2,593
revaluation
Operating profit/(loss) before 1,662 (2) 3,706
revaluations
Revaluations for the period (15,622) 209 (2,638)
Profit (loss) on ordinary (13,960) 207 1,068
activities before taxation
Tax on profit/(loss) on ordinary - - -
activities
Profit/(loss) on ordinary (13,960) 207 1,068
activities after taxation
Dividends - - -
Retained profit/(loss) for the (13,960) 207 1,068
period
Retained loss brought forward (57,266) (58,334) (58,334)
Retained loss carried forward (71,226) (58,127) (57,266)
Earnings/(loss) per share (Note 2) (13.32) p 0.20 p 1.02 p
Notes
1. Total sales include sales of emerging market bonds as follows:
#'000
6 months ended 30 June, 2001: 138,446
6 months ended 30 June, 2000: Nil
Year ended 31 December, 2000: 20,539
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 periods
other than as stated in the profit and loss account.
4. Group tax losses of approximately #100 million (approximately #45 million
in the United Kingdom) are available for offset against future profits.
5. Financial information for the year ended 31 December, 2000 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, 2000 was unqualified. The financial information
contained in this Interim Report does not constitute the Group's statutory
accounts within the meaning of section 240 of the Companies Act 1985.
6. It is intended that the Interim Report will be posted to shareholders on 1
October, 2001 and will be available to members of the public at the
Registered Office of the Company from that date.
CONSOLIDATED BALANCE SHEET
(Unaudited) (Unaudited) (Audited)
30 June, 30 June, 31 December,
2001 2000 2000
#'000 #'000 #'000
Fixed assets
Tangible assets 1,391 1,302 1,561
Current assets
Forfaiting assets (Note 7) 76,095 119,334 126,453
Prepayments and accrued income 14,053 23,761 19,882
Cash at bank and in hand 28,987 42,648 17,059
119,135 185,743 163,394
Current liabilities
Bank loans (Note 8) 81,924 131,559 112,169
Other creditors 9,581 13,366 9,805
91,505 144,925 121,974
Net current assets 27,630 40,818 41,420
Net assets 29,021 42,120 42,981
Capital and reserves
Called up share capital 41,912 41,912 41,912
Share premium account 33,335 33,335 33,335
Other reserves 25,000 25,000 25,000
Profit and loss account (71,226) (58,127) (57,266)
Equity shareholders' funds 29,021 42,120 42,981
Notes
7. Forfaiting assets at 30 June, 2001 include emerging market bonds amounting
to #15.01 million, (30 June, 2000: Nil; 31 December, 2000: #26.5 million)
8. The syndicated facility from banks maturing in October 2002 amounts to #
106,655,000 of which #81,769,000 was drawn at 30 June, 2001.
CONSOLIDATED CASH FLOW STATEMENT
6 months 6 months Year
to to ended
30 June, 30 June, 31 December,
2001 2000 2000
#'000 #'000 #'000
Net cash inflow from 18,407 87,533 62,793
operating activities
(Note a)
Servicing of
finance
Interest paid on - (1,648) (1,652)
medium term loans
Taxation
UK 6 1,452 1,452
corporation
tax recovered
UK corporation
tax paid
Overseas tax 6 - -
recovered
Overseas tax (4) (14) (17)
paid
8 1,438 1,435
Capital expenditure
Purchase of (22) (25) (675)
tangible
assets
Sale of 14 54 230
tangible
assets
(8) 29 (445)
Net cash inflow 18,407 87,352 62,131
before financing
Financing
Medium term - (75,539) (75,539)
bank loans
repaid
Increase (decrease) 18,407 11,813 (13,408)
in cash
NOTES TO THE CONSOLIDATED CASH FLOW STATEMENT
a. Reconciliation of profit (loss) on ordinary activities before taxation to
net cash inflow from operating activities
30 June,2001 30 June,2000 31 December,2000
#'000 #'000 #'000
Profit (loss) on (13,960) 207 1,068
ordinary activities
before taxation
Interest on medium term - 1,108 1,214
loans
Depreciation charges 140 319 642
Profit on sale of (9) (25) (137)
tangible assets
Decrease in forfaiting 50,358 32,781 25,663
assets
Decrease in prepayments 5,824 5,290 9,065
and accrued income
Decrease (increase) in 6,373 (1,935) (1,428)
bank deposits
Decrease in creditors (227) (595) (4,151)
Exchange rate 57 (488) (556)
adjustments
(Decrease) increase in (30,149) 50,871 31,413
bank loans
Net cash inflow from 18,407 87,533 62,793
b. Analysis of the balances of cash as shown in the consolidated balance sheet
30 June, 2001 30 June, 2000 31 December, 2000
#'000 #'000 #'000
Cash at bank and in
hand per consolidated
balance sheet 28,987 42,648 17,058
Less bank deposits (6,153) (13,034) (12,526)
22,834 29,614 4,532
Bank overdrafts - (28) (96)
22,834 29,586 4,436
c. Analysis of changes in cash during the period
30 June, 2001 30 June, 2000 31 December, 2000
#'000 #'000 #'000
At 1 January 4,436 17,302 17,302
Exchange rate (9) 471 542
movements
Net cash inflow 18,407 11,813 (13,408)
(outflow)
At period end 22,834 29,586 4,436
end
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