London Forfaiting Co - Final Results
12 2월 1999 - 4:30PM
UK Regulatory
RNS No 5414q
LONDON FORFAITING COMPANY PLC
12th February 1999
London Forfaiting Company PLC
Preliminary Announcement
1998 Year End Results
PRELIMINARY STATEMENT
REPORT OF THE CHAIRMAN AND THE CHIEF EXECUTIVE
Results and Dividends
The unprecedented global turbulence in the emerging market economies has led
to a significant downward valuation of the Company's portfolio of assets. The
resultant loss before taxation for the year ended 31st December, 1998 was
#56.6 million compared to #38.5 million profit for the previous year. The
loss after tax amounted to #51.1 million compared with #31.0 million profit
after tax last year. The loss per share was 48.76p compared to 29.95p profit
per share in the previous year.
The Company continued to operate profitably throughout the year and operating
profits for 1998 amounted to approximately #23 million. The overall loss is
attributable to downward valuations of the asset portfolio of some #80
million. Approximately 60% of this is attributable to the portfolio of the
Cyprus subsidiary which consists principally of assets which are syndicated
loan participations held for trading and the balance to the London portfolio
which consists principally of negotiable assets derived from forfaiting
transactions. A large proportion of the revaluations relates to Russian
assets; the balance covers a wide range of emerging market assets.
On the 8th September last year, the Board announced an interim dividend of 6p
per share. In view of the loss for the year and in order to conserve capital
for the development of the Company's operations, the Directors have decided
not to recommend a final dividend in respect of the year ended 31st December,
1998. This will result in the payment of a total dividend of 6p for the year
compared with 12.3p for the previous year.
Turnover
As a result of the turbulence in international financial markets, Group
turnover decreased by almost one third to #1.53 billion from #2.27 billion in
the previous year. Although the decline in turnover in the second half at 40%
was greater than in the first half, nonetheless at #645 million turnover
remained on average at more than #100 million per month. The table below
shows the geographical spread of turnover by region of underlying risk.
1998 1997
# millions # millions
Europe 779 1,341
Asia 419 461
Americas 300 438
Other 30 28
Total 1,528 2,268
In 1998 turnover of European assets declined to the level prevailing in 1996.
The reduction from #1,341 million to #779 million in 1998 came from a
reduction in the turnover of the assets of those East European countries which
were formerly socialist republics. The turnover of such assets declined from
#1,157 million to #578 million. In contrast, the turnover of other European
assets increased from #184 million to #201 million.
Trade Finance
The turnover of the portfolio in London, which consists mainly of trade
finance transactions evidenced by promissory notes or bills of exchange
amounted to #1.08 billion compared to #1.68 billion the previous year.
Largely because of downward valuations of #33 million on assets in the London
portfolio, the loss before tax in London amounted to #17.3 million.
Arrangement, Syndication and Trading of Loans
Turnover of the Company's subsidiary London Forfaiting Cyprus Ltd., whose
portfolio consists mainly of loan assets retained for subsequent distribution
and placing, declined from #587 million in 1997 to #451 million in 1998. The
pre-tax loss in Cyprus for the year was #36.8 million after a downward
valuation of such assets amounting to #47 million.
Balance Sheet
The Company has progressively reduced the overall size of its portfolio of
assets over the last half-year. At the year-end the portfolio stood at #464
million, compared with #625 million in June 1998 and #608 million in December
1997.
This reduction takes into account the effects of the revaluation exercise on
the portfolio as well as the impact of new purchases, sales and collections.
Funding
Bank borrowing at #395 million decreased from #457 million at the end of the
previous year, and total bank borrowings as at today are #377 million. The
Company continues to comply with all the covenants which have been given to
its bankers. Year-end cash balances exceeded #42 million and some committed
syndicated and bilateral facilities remained undrawn.
The large majority of the Company's committed facilities are not due for
repayment until 2000 and beyond. Nevertheless, during the current year, the
Company expects to continue to reduce the size of its portfolio of forfaiting
assets and to reduce gearing back towards its level as at end 1997.
Overheads
Overheads have already been the subject of a measured programme of reduction
in a number of areas whilst maintaining the Group's competitive position.
Directors and Staff
Ooi Boon Aun resigned from the Board on 25th January, 1999. He made an
important contribution to the development of the Company in the field of
syndicated loan arrangement in Asia, and we thank him for his services.
We would also like to thank the other Directors and staff for their
contribution to the continued development of the Company. Their effort and
loyalty to the Company during these difficult times in our market is
appreciated.
Outlook
Turnover may decline somewhat further in the current year, but with higher
margins over cost of funds, there can be highly profitable trading patterns.
In Asia the opportunities for forfaiting are encouraging and the planned new
emphasis of the reorganised Hong Kong office on forfaiting will mean that the
Company is positioned to take advantage of this.
Overall, there are improving prospects in forfaiting, where the Company's
position as world leader remains intact. The Directors believe that the skills
and expertise within the Company will ensure that operations develop at a
satisfactory level during 1999.
Jack A.G. Wilson Stathis A. Papoutes
Chairman Chief Executive
11th February, 1999
CONSOLIDATED PROFIT AND LOSS ACCOUNT
(Unaudited) (Audited)
Year Year
ended 31st ended 31st
December, December,
1998 1997
#'000 #'000
Sales of forfaiting assets 1,527,674 2,267,759
Trading income 74,515 89,140
Bank interest receivable 1,245 1,083
Bank interest payable (26,706) (20,822)
49,054 69,401
Administrative expenses (25,972) (28,441)
Operating profit before revaluations 23,082 40,960
Revaluation of forfaiting assets (Note 1) (79,695) (2,481)
Profit / (loss) on ordinary activities before
taxation (56,613) 38,479
Taxation credit / (charge) (Note 2) 5,527 (7,443)
Profit / (loss) on ordinary activities after
taxation (51,086) 31,036
Dividends (Note 3) (6,287) (12,795)
Retained profit / (loss) for the year (57,373) 18,241
Retained profit brought forward 71,573 53,332
Retained profit carried forward 14,200 71,573
Earnings / (loss) per share (Note 4) (48.76)p 29.95p
Notes
1. The revaluations acknowledge the reduction in the balance sheet value
of certain forfaiting assets.
2. The tax position for the year reflects the lower rate of taxation
credit available on the results of overseas subsidiaries.
3. The directors do not recommend the payment of a final dividend in
respect of the year. An interim dividend of 6.0p per ordinary share
was paid on 28th October, 1998. (1997 - interim dividend of 6.0p
was paid on 9th June, 1997 and a final dividend of 6.3p was paid
on 23rd April, 1998).
4. The calculation of earnings per share is based on the loss on ordinary
activities after taxation of #51,086,000 (1997 profit - #31,036,000)
and on 104,760,000 (1997 - 103,619,000) ordinary shares being the
weighted average number of ordinary shares in issue during the
year.
5. 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 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 statutory accounts for the current
year will be delivered to the Registrar of Companies
following the Annual General Meeting.
6. It is intended that the financial statements will be posted to
shareholders on 26th February, 1999 and will be available to
members of the public at the Registered Office of the Company
from that date.
CONSOLIDATED BALANCE SHEET
(Unaudited) (Audited)
31st 31st
December, December,
1998 1997
#'000 #'000
Fixed assets
Tangible assets 3,294 3,797
Current assets
Forfaiting assets 463,785 608,085
Prepayments and accrued income 36,664 26,537
Cash at bank and in hand 42,866 56,707
543,315 691,329
Current liabilities
Bank loans (Note 1) 314,318 333,450
Other creditors 37,013 58,662
Proposed dividend - 6,597
351,331 398,709
Net current assets 191,984 292,620
Total assets less current liabilities 195,278 296,417
Creditors: amounts falling due after more
than one year (Note 2) 80,573 123,973
Provisions for liabilities and charges 258 691
Net assets 114,447 171,753
Capital and reserves
Called up share capital (Note 3) 41,912 41,888
Share premium account (Note 3) 33,335 33,292
Other reserves 25,000 25,000
Profit and loss account 14,200 71,573
Equity shareholders' funds 114,447 171,753
Notes
1. The maturity profile of the bank facilities is as follows:
#89 million maturing within one year
#78 million of revolving facilities maturing between one and two years
#147 million of revolving facilities maturing between two and five
years
2. These creditors are bank loans maturing between one and two years.
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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