RNS No 7306h
LONDON FORFAITING COMPANY PLC
21 July 1999
London Forfaiting Company PLC
Interim Announcement
1999 Half-year Results
INTERIM STATEMENT
In the six month period to 30 June, 1999, the Company operated profitably with
a pre-tax profit (before valuations and planned restructuring costs) of #1.8
million (1998 #16.5 million). However, the ripple effects of the
unprecedented turbulence in emerging markets since July 1997 led to net
additional downward asset valuations (as at the mid-year) of #49.1 million.
After the provision of #2.3 million for planned restructuring costs, the loss
before taxation was #49.7 million (1998 #2.6 million). The loss after
taxation was #48.9 million (1998 #3.6 million). There will be no interim
dividend (1998 6p per share).
Out of the total charge to the profit and loss account in the first half for
downward valuations, #39.8 million was in respect of Russian assets. The
balance of #9.3 million was in respect of assets in other countries with China
accounting for the majority. 58% of downward valuations was in respect of the
London portfolio, which consists principally of negotiable assets derived from
forfaiting transactions, and 42% in respect of the Cyprus portfolio, which
consists principally of assets which are loan participations held for trading.
Russia
Given the continuing difficulties of the Russian economic situation and the
lack of satisfactory progress on some of those Russian assets which are not
fully performing (i.e. where any amount of interest or principal is overdue)
the Board decided as a matter of policy to make total reductions of not less
than 85% of the cost of such assets together with like provisioning on any
outstanding contingent liabilities. This action results in a book value for
not fully performing Russian assets of #15.9 million. Fully performing assets
(i.e. where no amount of interest or principal is overdue), of #8.9 million
where payments have been recently received, make up the total of #24.8 million
of Russian assets shown in the portfolio of forfaiting assets below. These
downward valuations have been made notwithstanding our experience in the
period under review during which we have received approximately #40 million of
repayments to the Company by Russian borrowers and of proceeds of sales of
Russian assets; we simply note that our balance sheet is unlikely to be
further adversely affected by our Russian assets and that a higher rate of
recovery than 15% might be possible. We would also add that the Company has
not taken on additional Russian exposure since the year-end, or indeed, since
August last year.
Portfolio
We detail below a breakdown of our portfolio of forfaiting assets after
downward valuations as of 30 June, 1999 by geographical region, but listing
Russia and China with Hong Kong, separately.
Portfolio of Forfaiting Assets
# million No. of Countries
Europe 139.8
Russia 24.8 1
Baltics 5.3 2
Central & East Europe* 79.5 7
Other Europe 30.2 10
Americas 51.8
North America 2.1 3
South America 49.7 7
Asia 59.4
China & Hong Kong 4.6 1
East Asia 25.5 2
South East Asia 22.8 4
South Asia 5.5 2
Central Asia 1.0 1
North Africa / Middle East 1.5 4
TOTAL 252.5 44
* Central and East European countries (other than Russia and the Baltics),
which were formerly Communist.
The Board had already tightened procedures for credit approval last year and
such procedures have been recently further formalised. Qualitative
improvements have been and will continue to be made to country risk appraisal.
A policy of more specific risk diversification has been implemented and
although no absolute country limits have been set (because the Company
principally buys and sells forfaiting assets as a trader rather than a
lender), country exposures of over #15 million require the unanimous approval
of a credit committee of at least four Executive Directors and over #25
million the unanimous approval of the Executive and non-Executive Directors.
Balance Sheet
The Company has progressively reduced the overall size of its portfolio of
assets over the last half-year. At 30 June, 1999 the portfolio after downward
valuations stood at #252.5 million compared with #463.8 million at the end of
December 1998. The reduced size of the Company's portfolio should not be
misinterpreted: a smaller portfolio does not inhibit the continued active
trading of assets.
Funding and Liquidity
Bank borrowings of #237 million at 30 June, 1999 had decreased from #395
million at the end of 1998 and at the date of this statement are reduced
further to #223 million. Half-year end bank balances were #33.9 million and
committed syndicated and bilateral facilities remained undrawn to the extent
of #146 million, thus maintaining a strong liquidity position for the Company.
The Company continues to comply with all the covenants it has given to its
bankers. In particular, under our syndicated borrowing loan agreements, we
have a maximum gross gearing covenant of four times shareholders' funds. As at
30 June, 1999 such gearing was 3.62 and, at the date of this statement, as a
result of a further reduction in the Company's overall borrowings, the ratio
would come to 3.40. The large majority of the Company's committed facilities
are not due for repayment until 2000 and beyond. Nevertheless, during the
second half of this year, the Company expects, while actively buying and
selling, to continue to reduce the size of its portfolio of forfaiting assets
and to reduce gearing down to 3.0 or below.
Trading in the First Half
In the period under review, we experienced a continuing slowdown in turnover
(although new business purchases, commitments and risk participations, which
are not reflected in turnover, were picking up in the second quarter), in a
climate for trade finance for emerging markets that has proved to be slow to
recover. In particular, the Brazilian devaluation in January 1999 had a severe
negative impact on the placing of South American forfaiting and loan assets
during the period under review. Turnover is shown in the same way as it was
presented in last year's Interim Statement.
1st Half 1999 2nd Half 1998 1st Half 1998
# million # million # million
Europe 155 287 492
Asia 204 232 186
Americas 37 109 191
Other 7 16 14
Total 403 644 883
Overhead Reductions
During the half-year, overheads continued to be the subject of a programme of
reductions. In contrast to the average number of employees for the whole of
last year of 244 and the actual number of 252 on 30 June, 1998, the number of
employees on 30 June, 1999 was 190, a 25% reduction from a year ago. Overheads
(which were running at an average of #2.2 million per month in 1998) had been
reduced to #1.7 million in the months of May and June, a reduction of 23%,
although the impact of cost saving measures already taken is not yet fully
reflected in the monthly figure for administrative expenses.
There are clear signs in recent months of a business pick-up in some emerging
markets, but in the light of the effect on its trading activities of the
reduced capital of the Company, the Board, after a thorough strategic review,
has decided upon further cost saving measures. These are aimed at reducing our
cost base while preserving the important nucleus of skills built up within the
Company. We regret to announce that there will be 15 redundancies in the UK
and 31 abroad and our offices in Bucharest, Warsaw, Bombay and Markgroningen
will be closed with the forfaiting business from those cities being covered by
our London, Dusseldorf and Prague offices. The office in Bangkok was closed in
the spring as part of cost reductions in our syndicated loan activity in Asia.
As part of the cost saving programme, the Executive Directors have unanimously
resolved to forego 20% of their salary entitlement as from 1 September, 1999,
except in the case of one Director, whose salary and benefits remain unaltered
under a two-year contract. The Chief Executive has foregone 25.4% and the
Chairman 30% of their respective salaries. The reductions in individual
Directors' remuneration, including benefits in kind, range from 24% to 30%.
Sub-tenants will be sought for excess office space thrown up by the
reorganisation and other overheads are being reduced. The expected total cost
saving on an annualised basis of the new measures referred to in this
statement is expected to be approximately #5.6 million per annum when fully
implemented.
Year 2000
Progress towards the implementation of a successful Year 2000 compliance
programme has gone well during the period. Aggregate costs are absorbed as
incurred and are not expected to be significant.
Outlook
The Board believes that the steps detailed above will enable the Company to
maintain its market position and to operate on a profitable basis, although
the results for the second half will continue to be affected by the relatively
low cyclical level of capital equipment imports by emerging economies, while
the full benefit of the overhead reductions will not be felt until next year.
The Board of Directors
London Forfaiting Company PLC
20 July, 1999
Independent Review Report to London Forfaiting Company PLC
We have been instructed by the Company to review the interim financial
information for the six months ended 30 June, 1999 and 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 Listing
Rules of the London Stock Exchange 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 guidance contained in Bulletin
1999/4 issued by the Auditing Practices Board. 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 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, 1999.
Deloitte & Touche
Chartered Accountants
20 July, 1999
CONSOLIDATED PROFIT AND LOSS ACCOUNT
(Unaudited) (Unaudited) (Audited)
6 months to 6 months to Year ended
30th June, 30th June, 31stDecember,
1999 1998 1998
#'000 #'000 #' 000
Sales of forfaiting assets 402,755 882,513 1,527,674
Trading income 21,637 42,845 74,515
Bank interest receivable 676 569 1,245
Bank interest payable (9,474) (13,881) (26,706)
12,839 29,533 49,054
Administrative expenses (11,087) (13,015) (25,972)
Restructuring costs (2,307) - -
Operating result before (555) 16,518 23,082
revaluations
Revaluation of forfaiting assets (49,120) (19,089) (79,695)
Loss on ordinary activities before
Taxation (49,675) (2,571) (56,613)
Tax on loss on ordinary activities
(Note 1) 753 (1,056) 5,527
Loss on ordinary activities after
taxation (48,922) (3,627) (51,086)
Dividends - (6,287) (6,287)
Retained loss for the period (48,922) (9,914) (57,373)
Retained profit brought forward 14,200 71,573 71,573
Retained profit (loss) carried
forward (34,722) 61,659 14,200
Loss per share
(Note 2) (46.69)p (3.46)p (48.76)p
Notes
1. The tax credit reflects the release of the deferred taxation balance. In
addition, group tax losses of approximately #75 million (approximately #25
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 (104,739,000 at 30th June,
1998; 104,760,000 at 31st 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. Financial information for the year ended 31st 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 31st December, 1998 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.
5. It is intended that the Interim Report will be posted to shareholders on
23rd July, 1999 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)
30th June, 30th June, 31stDecember,
1999 1998 1998
#'000 #'000 #'000
Fixed assets
Tangible assets 2,643 3,462 3,294
Current assets
Forfaiting assets 252,457 625,987 463,785
Prepayments and accrued income 32,902 37,738 36,664
Cash at bank and in hand 33,873 54,696 42,866
319,232 718,421 543,315
Current liabilities
Bank loans
(Note 1) 193,932 339,161 314,318
Other creditors 18,932 103,601 37,013
Proposed dividend - 6,287 -
212,864 449,049 351,331
Net current assets 106,368 269,372 191,984
Total assets less current
liabilities 109,011 272,834 195,278
Creditors: amounts falling due
after more than one year
(Note 1) 43,486 110,415 80,573
Provisions for liabilities and
charges - 513 258
Net assets 65,525 161,906 114,447
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
(34,722) 61,659 14,200
Equity shareholders' funds 65,525 161,906 114,447
Notes
1. The table below shows the breakdown between drawn and undrawn bank
facilities at 30th June, 1999 as follows:
Drawn Undrawn
#'000 #'000
Facilities maturing within one year 66,785 10,000
Facilities maturing between one
and two years 138,645 72,956
Facilities maturing between two
and five years 31,720 63,440
237,150 146,396
#193,664,000 is included in Bank loans and #43,486,000 of the total of bank
loans drawn in included in Creditors: amounts falling due after more than
one year. The total committed bank facilities were #383,546,000.
At 30th June, 1999 Bank loans included #268,000 in respect of bank
overdrafts.
CONSOLIDATED CASH FLOW STATEMENT
6 months to 6 months to Year ended
30th June, 30th June, 31st December,
1999 1998 1998
#'000 #'000 #'000
Net cash inflow from
operating activities 54,943 19,994 36,331
Servicing of finance
Interest paid on medium term
loans (3,583) (4,546) (8,739)
Taxation
UK corporation tax recovered 887 - -
UK corporation tax paid (1,580) (1,000) (7,556)
Overseas tax recovered 363 - -
Overseas tax paid (327) (32) (66)
(657) (1,032) (7,622)
Capital expenditure
Purchase of tangible assets (176) (452) (1,271)
Sale of tangible assets 135 29 95
(41) (423) (1,176)
Equity dividends paid - (6,597) (12,884)
Net cash inflow before financing 50,662 7,396 5,910
Financing
Medium term loans repaid (37,834) (10,654) (41,943)
Issue of ordinary shares
(including share premiums) - 67 67
(37,834) (10,587) (41,876)
Increase (decrease) in cash 12,828 (3,191) (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
30th June, 30th June, 31st December,
1999 1998 1998
#'000 #'000 #'000
Loss on ordinary activities
before taxation (49,675) (2,571) (56,613)
Interest on medium term loans 3,035 4,889 9,697
Depreciation charges 657 745 1,727
(Profit) loss on sale of
tangible assets (45) (4) 13
Decrease (increase) in forfaiting
assets 211,328 (17,902) 144,300
Decrease (increase) in prepayments
and accrued income 3,161 (10,365) (4,139)
Decrease (increase) in bank
deposits 21,622 (196) (22,077)
(Decrease) increase in creditors (15,780) 43,558 (15,879)
Exchange rate adjustments 548 448 (110)
(Decrease) increase in bank loans (119,908) 1,392 (20,588)
Net cash inflow from operating
activities 54,943 19,994 36,331
b) Analysis of the balances of cash as shown in the consolidated balance sheet
30th June, 30th June, 31st December,
1999 1998 1998
#'000 #'000 #'000
Cash at bank and in hand per
consolidated
balance sheet 33,873 54,696 42,866
Less bank deposits (461) (201) (22,082)
33,412 54,495 20,784
Bank overdrafts (268) (1,416) -
33,144 53,079 20,784
NOTES TO THE CONSOLIDATED CASH FLOW STATEMENT
c) Analysis of changes in cash during the year
30th June, 30th June, 31st December,
1999 1998 1998
#'000 #'000 #'000
At 1st January 20,784 56,701 56,701
Exchange rate movements (468) (431) 49
Net cash inflow (outflow) 12,828 (3,191) (35,966)
At period end 33,144 53,079 20,784
d) Analysis of changes in financing during the period
Share capital
(including share Medium term
premium) loans
#'000 #'000
At 1st January, 1998 75,180 190,048
Cash inflow (outflow) 67 (10,654)
At 30th June, 1998 75,247 179,394
Cash inflow (outflow) - (31,289)
At 31st December, 1998 75,247 148,105
Cash inflow (outflow) - (37,834)
At 30th June, 1999 75,247 110,271
END
IR LFFBLKDKEBKF
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
