RNS No 6683a
LONDON FORFAITING COMPANY PLC
9th September 1998
London Forfaiting Company PLC
Interim Announcement
1998 Half-year Results
INTERIM STATEMENT
In the six month period to 30th June 1998, the Company operated profitably.
After downward asset valuations, however, the loss before taxation was #2.6
million and after taxation was #3.6 million. These downward valuations amount
to #20 million, reflecting mainly a continuing deterioration in the economic
environment in Asia and recent events in Russia up to the date of this
announcement. In the light of the Company's current liquidity, strong market
position and operating profitability the directors have decided to maintain
the interim dividend at 6p per share.
Non-performing assets, defined as those transactions where any amount of
interest or principal is overdue, represented some seven per cent of the value
of the forfaiting book as at the end of August 1998.
Turnover for the first six months of this year was #883 million, 74% of the
#1,192 million turnover for the same period last year as a result of the
turbulence in international financial markets. The decline in turnover
impacted all geographical markets, as can be seen from the table below,
although turnover in the Americas was higher in the first half of 1998
compared with the second half of 1997.
1st Half 1998 2nd Half 1997 1st Half 1997
# million # million # million
Europe 492 704 637
Asia 186 196 265
Americas 191 163 275
Other 14 13 15
Total 883 1,076 1,192
While the lower turnover was more or less evenly spread between forfaiting and
our syndicated loans business, profitability showed divergent trends. Our
London based forfaiting operations contributed a profit before taxation of
#4.0 million while our overseas syndicated loans operations made losses. The
profitability of the London based operations contributed to the tax charge.
The Group's business is the provision of trade finance and the arrangement of
syndicated loans. In the context of current regulations in Russia, payments
relating to trade finance continue to be permitted as are payments of interest
on syndicated loans. It should be noted that we have no rouble denominated
assets nor any Russian bonds, equities or derivatives contracts.
Market conditions where, as now, margins over cost of funds are higher for
most borrowers tend to increase the profitability of new transactions. Even
though turnover for July and August has remained at reduced levels, the
Company has operated profitably.
A positive aspect of the Asian crisis is the improved prospect for the
financing of Chinese, Korean and Japanese exports to the rest of the world
through the forfaiting method of finance, where your Company is the world
leader.
Your Board believes that forfaiting, as a means of financing world trade will
continue to grow in importance to the benefit of the Company's shareholders.
Progress continues to be made in developing our network for the benefit of
future profitability.
The Board of Directors
8th September, 1998
London Forfaiting Company PLC
CONSOLIDATED PROFIT AND LOSS ACCOUNT
(Unaudited) (Unaudited) (Audited)
6 months to 6 months to Year ended
30th June, 30th June, 31st December,
1998 1997 1997
#'000 #'000 #'000
Sales of forfaiting assets 882,513 1,191,660 2,267,759
Trading income 23,756 43,967 86,659
Bank interest receivable 569 572 1,083
Bank interest payable (13,881) (8,240) (20,822)
Net income before administrative
expenses 10,444 36,299 66,920
Administrative expenses (13,015) (15,076) (28,441)
Profit (loss)on ordinary activities
before taxation (2,571) 21,223 38,479
Taxation (1,056) (5,513) (7,443)
Profit (loss) on ordinary activities
after taxation (3,627) 15,710 31,036
Dividends (Note 1) (6,287) (6,198) (12,795)
Retained profit (loss) for the period (9,914) 9,512 18,241
Retained profit brought forward 71,573 53,332 53,332
Retained profit carried forward 61,659 62,844 71,573
Earnings (loss) per share (Note 2) (3.46)p 15.22p 29.95p
Notes
(1) An interim dividend of 6.0p per share has been declared payable on
28th October, 1998 to shareholders registered on 25th September,
1998 (1997 - interim dividend of 6.0p per share paid on 9th June,
1997 and final dividend of 6.3p per share paid on 23rd April, 1998).
(2) Earnings (loss) per share are calculated on the profit after
taxation and on the weighted average number of 104,739,000
(103,187,000 at 30th June, 1997; 103,619,000 at 31st December, 1997)
ordinary shares in issue.
(3) Financial information for the year ended 31st December, 1997 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 31st December,1997 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.
CONSOLIDATED BALANCE SHEET
(Unaudited) (Unaudited) (Audited)
30th June, 30th June, 31st December,
1998 1997 1997
#'000 #'000 #'000
Fixed assets
Tangible assets 3,462 3,567 3,797
Current assets
Forfaiting assets 625,987 473,176 608,085
Cash at bank and in hand 54,696 47,542 56,707
Prepayments and accrued income 37,738 28,846 26,537
718,421 549,564 691,329
Current liabilities
Bank loans (Note 1) 339,161 175,542 333,450
Other creditors 103,601 83,270 58,662
Proposed dividend 6,287 - 6,597
449,049 258,812 398,709
Net current assets 269,372 290,752 292,620
Total assets less current
liabilities 272,834 294,319 296,417
Creditors: amounts falling due
after more than one year (Note 2) 110,415 130,901 123,973
Provisions for liabilities and
charges 513 2,776 691
Net assets 161,906 160,642 171,753
Capital and reserves
Called up share capital (Note 3) 41,912 41,318 41,888
Share premium account (Note 3) 33,335 31,480 33,292
Other reserves 25,000 25,000 25,000
Profit and loss account 61,659 62,844 71,573
Equity shareholders' funds 161,906 160,642 171,753
Notes
(1) Included in #339 million are #186 million of drawings under
revolving facilities from banks with maturities of between two and
five years.
(2) These creditors are bank loans due as follows:
Between one and two years - #65,252,000
Between two and five years - #45,163,000
(3) During 1998, 60,000 ordinary shares were allotted for #67,000
following the exercise of options under the Company's executive
share option schemes.
END
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