Overseas boost for London Forfaiting

THE gloom in the economy did not prevent London Forfaiting, the specialist trade financing company, raising its half-year profit from pounds 6.6m to pounds 8.4m before tax, mainly as a result of overseas expansion and careful cash management.

The firm has strengthened its operations in Hong Kong, Italy, Germany and the US over the past six months at a time when business in the UK has been flat.

Business has also been helped by diminishing competition from banks. 'The banks have been less aggressive because of their other problems,' Jack Wilson, chief executive, said.

The firm has remained a net depositor with banks, so interest income exceeded payments by pounds 1.6m during the six months.

London Forfaiting has taken a cautious view of the size of its portfolio of trade paper. This fluctuates daily but has tended to approximate in size to the firm's capital and reserves of pounds 111m. The firm could operate at up to five times capital and reserves.

Mr Wilson said there was no sign of a respite for exporters in the UK. 'I'm rather depressed that at a time of severe recession we should have a trading deficit, with exporters having problems with their prices.'

He added: 'Whether a devaluation is appropriate or not at this point I don't know, but I don't think the current exchange rate is helpful for exporters.'

Trading income rose pounds 2m to pounds 10.9m compared with a year earlier, and after-tax profit was up from pounds 5m to pounds 6.4m, with the dividend up 10.5 per cent. Mr Wilson said that trading would continue satisfactorily in the second half. The shares, on the Unlisted Securities Market, rose 1p to 121p.