1. T u r n o v e r compared to 201
Chief Executive
Statement
Results &Performance
LFC is pleased to report a profit for 2012 of USD 8,084,177
which represents a 23% increase over 2011of USD
6,572,433. This impressive increase in profitability is due to
a combination of a 17% increase in trading income,
notwithstanding a 30% increase in financing costs and
also to no significant increase in administrative expenses.
In addition to these results, it is noteworthy that during 2012,
LFC was the recipient of three forfaiting accolades awarded
by the leading trade finance industry publications. The
awards were “Best Forfaiting Institution” from both Trade and
Forfaiting Review magazine and Trade Finance magazine
and “Best Forfaiting House” in the Global Trade Review.
Operating Environment
During 2011 we saw the global economy continue to falter
and financial markets deleverage, reflecting ongoing
uncertainties in a number of countries, characterised by political
unrest within North Africa and continuing concerns around
certain Eurozone countries. However, 2012 saw a return of
risk appetite and significant liquidity in the trade finance
markets, although generally the volume of banking business
was depressed by a continuing downturn in world trade. This
downturn was not only from the developed countries in Europe
and USA, but was also exacerbated by a slowing of demand
from the developing economies in China and India. Therefore
against the background of increased liquidity and reduced
lending opportunities, there was downward pressure on margi ns
for new loans in the banking markets.
Turnover and trading income
LFC’s turnover (defined as the total value of forfaiting assets sold/matured) increased 28% from
USD 316,720,563 in 2011 to USD 404,617,582 in 2012, reflecting the improved liquidity wit hin the financial
sector. This increase in turnover was a contributory factor in LFC’s forfaiting assets held for trading only
growing by 6% to USD 245,061,077 in 2012 (2011: USD 230,286,337), a lower level than achieved last
year. Notwithstanding this lower portfolio growth, LFC’s market leading position and diverse
geographical risk appetite allowed it to maximise on business opportunities and considerably increase
profitability despite decreasing margins in the general banking environment. Consequently, forfaiting yield
increased by 25% in 2012 to USD 9,710,958 (2011: 7,777,498). Furthermore, our income from net fees
and gains increased 26% during the year under review. In 2012 fair valuation movements made a lower
contribution to profits of USD 1,297,776 , (2011: USD 1,962,029). However, the cumulative result was that
our overall trading income increased by an impressive 17%.

2. Funding
Whilst LFC obtains a significant portion of its funding from an overdraft facility provided by its parent,
FIMBank plc, it also generates funding for its portfolio of forfaiting assets from external borrowings and
retained earnings, both of which increased significantly during the year under review. Consequently, the
overdraft balance reduced 18% from USD 163,169,845 as at the end of 2011 to USD 133,716,768 at the
close of 2012. Notwithstanding the reduction in the overdraft amount, interest payable to the parent
increased 30% to USD 3,487,095 (2011: USD 2,681,139) largely as a result of the higher all -in cost of the
overdraft facility which increased on 1st May, 2011. Consequently, LFC absorbed this higher interest cost
for the whole of 2012, rather than just eight months during 2011.
It is noteworthy that LFC’s external borrowings increased more than fourfold during the yea r, from USD
8,208,394 to USD 42,952,408. It is an encouraging sign, that a growing number of external lenders are
providing funding to LFC, as this allows us to diversify our funding sources and to demonstrate a reduced
reliance on funding from our parent. As a consequence of LFC’s larger external funding lines, our financing
costs payable to third parties rose 31% from USD 555,315 to USD 727,775.
Administrative expenses
LFC continually monitors its administrative expenses. Positively these were only 2% hi gher for the year at USD
5,131,634 (2011: USD 5,036,663). Therefore, with a very low cost income ratio of only 39% (2011: 43%); LFC is
well placed to benefit from additional economies of scale as the portfolio grows further.
Deferred Tax Asset
It should be noted that LFC recognises a deferred tax asset (“DTA”) of approximately USD 6.6m in its statement
of financial position. LFC has approximately USD 58.3m available to offset future tax liabilities on future profits.
As a result, LFC’s profit for 2012 again will be attributable in full to our shareholders, without deduction for tax.
Directors and Staff
During the year, Najeeb H.M. Al-Saleh resigned as a director of the Company and as Chairman of the Board of
Directors with effect from 20 May 12. Margrith Lutschg-Emmenneger was appointed as Chairman of the Board of
Directors on 31 July 12.
Results and dividends
The Directors are pleased to report a 23% improvement in LFC’s profit after tax for 2012, to record USD
8,084,177 (2011: USD 6,572,433) for the year.
The Directors do not recommend any proposed dividend. (2011: nil)
Simon Lay
Chief Executive
19 February 2013