FIH Preliminary Results for the Year Ended 31 March 2003

FALKLAND ISLANDS HOLDINGS PLC

PRELIMINARY RESULTS FOR THE YEAR ENDED 31 MARCH 2003

 

HIGHLIGHTS

Falkland Islands Holdings, a UK listed company operating in The Falkland Islands where it is involved in general trading, announces preliminary results for the year ended 31 March 2003.

• Satisfactory financial performance:

• Turnover of £11.4m (2002: £11.8m)
• Operating profit slightly up at £1.052m (2002:£1.046m)
• Pre-tax profits before exceptional items of £1.025 million (2002: £1.003m)
• Basic earnings per share increased 8% to 11.8p (2002: 10.9p)
• 10% increase in dividend for the year to 5.5p per share (2002: 5.0p)

• Solid performance from broad range of businesses offset poor fishing season:

• Good profits achieved from automotive and engineering division
• Increased earnings from agency and Hotel businesses
• Difficult trading conditions within retail

• Continued exploration activity:

- Oil: Seismic data being processed

- Minerals – Several prospects identified for further evaluation

• Appointment of Tony Knightley as Finance Director

David Hudd, Chairman of Falkland Islands Holdings plc commented:

Overall last year the Group performed satisfactorily. The recent upturn in fishing has improved confidence in the Islands which will have a beneficial impact on operations this year. We continue to expand our businesses within the Islands and a farm-in partner is being sought for the onshore minerals interest.

With a stable Falkland Islands business and the financial flexibility for corporate activity, the Group is well set for future organic and acquisitive growth.

25 June 2003

 

Enquiries:

 

Falkland Islands Holdings	Tel: 07771 893 267
David Hudd, Chairman
College Hill	Tel: 020 7457 2020
James Henderson

 

CHAIRMAN’S STATEMENT

I am pleased to report that the year ended 31 March 2003 was a successful year for your Company. Despite challenging economic conditions in the Falklands which followed from last year’s poor fishing season, our broad spread of earnings enabled us to achieve a satisfactory increase in profits and earnings.

Financial Summary

Turnover declined by 3% to £11.4m (2002: £11.8m) reflecting marginally lower economic activity in the Islands.

Operating profit of £1,052,000 was in line with the previous year (2002: £1,046,000). Net interest payable fell to £27,000 from £43,000 reflecting the reduction in the term loan. Profit after tax increased by 9% to £717,000 (2002: £658,000).

Basic earnings per share increased by 8 % to 11.8p from 10.9p in 2002.

The directors are recommending a 10% increase in the dividend for the year to 5.5p per share (2002 -5p) payable on 6^th November to shareholders on the register on 10^th October 2003.

The Group’s financial position remains strong as a result of excellent working capital management. The Group moved into surplus with cash balances of £957,000 and term debt of £500,000. (2002 net debt of £6,000). Net cash generation amounted to £438,000 in the year after capital expenditure of £396,000, oil exploration expenditure of £63,000 and before financing.

 

Review of Activities

The Retailing Division experienced difficult trading conditions. Last year’s poor fishing season generated lower consumer confidence within the Islands leading to reduced levels of public and private capital expenditure. As a result, sales and profits from the Homecare and Building Supplies operation declined sharply, although the other retailing areas maintained their profitability.

The Automotive and Engineering Division achieved good profits growth despite strong competition from second hand imports of Japanese vehicles.

For the Fishing Agency, the poor finish to the 2002 fishing season adversely affected the first half but a good start to the 2003 season enabled the agency to increase profit over 2002.

The Upland Goose Hotel experienced increased levels of activity as a result of the Falklands War Commemoration of 1982 and produced improved results although the crew accommodation facilities had a quieter year with lower levels of occupancy.

Darwin Shipping organised 5 voyages (2002 – 6) and produced a satisfactory result on lower levels of freight than in 2002 reflecting general economic conditions with lower levels of bulk cargo.

The Group’s other activities which include financial services and insurance, property rental and port operations had a satisfactory year and the absence of reorganisation costs resulted in reduced overheads.

Exploration

Oil and Gas

The Falkland Islands Hydrocarbon Consortium, in which the Group holds a 20% interest, has been evaluating the licensed area with a view to identifying promising structures. The first stage of this work has included the acquisition of seismic data and its reprocessing is currently in progress. We anticipate that our share of total expenditure for the current financial year will amount to approximately £45,000, which is being capitalised under the successful efforts method.

Minerals

Exploration continued in the year on the Onshore Prospecting licence covering the Falkland Islands in which we will have earned a 1/3^rd interest later this year. Particle gold has been recovered from a number of locations in the Falklands and the field work carried out included the collection of samples from one of the prospective areas. The subsequent analysis of the samples did not confirm the existence of commercially attractive grades.

However, the Joint Venture has identified several other prospects that require additional work. With our partners, Cambridge Mineral Resources plc and Global Petroleum Limited we are considering options to undertake this work including introducing a new partner.

People

Tony Knightley, our Company Secretary and Financial Controller joined the Board as Finance Director in September replacing Roger Wallace who retired.

The SAYE scheme which shareholders approved at our last AGM has proved popular with employees and 40 of them are participating in the scheme. I would like to express my thanks for the continued hard work of all our staff both in the Falklands and the UK.

Outlook

The move to the Alternative Investment Market took place in January. This gives the Group more financial flexibility to make acquisitions, reduces fixed costs and at the same time brings some significant potential tax advantages for shareholders.

We remain optimistic over the outlook for onshore minerals and oil exploration in the Falklands and South Atlantic although any direct economic benefit to the Group is not anticipated in the short term.

We continue to seek to improve the quality of our businesses within the Islands. The major extension to the West Store, our principal retail outlet, is on schedule and should be completed by the end of July. We are also currently discussing important changes to our insurance agency arrangements which if concluded would enhance the level of service and expand the range of products we are able to offer to our clients.

The current year has started quietly but the recent recovery in fishing catches has improved confidence in the Islands and this will have a beneficial effect on the Group’s activities. Current proposals for the alteration of the fisheries licensing legislation should be in place for the next financial year, and this development will enable the Islands economy to receive a larger share of the proceeds of fishing. The outlook for the Company remains positive and your Board continues to examine opportunities for acquisitions which will enhance shareholder value.

David Hudd

Chairman

25 June 2003

Falkland Islands Holdings plc

Group Profit and Loss Account for the year ended 31 March 2003

		2003		2002
		£'000		£'000
Turnover		11,447		11,814
Cost of sales		(7,871)		(8,146)
Gross profit		3,576		3,668
Administrative expenses		(2,789)		(2,870)
Other operating income		265		248
Operating profit		1,052		1,046
Net interest expense		(27)		(43)
Profit on ordinary activities before taxation		1,025		1,003
Taxation		(308)		(345)
Profit for the year after taxation		717		658
Proposed dividend		(336)		(303)
Balance transferred to reserves		381		355
Earnings per share
Basic		11.8p		10.9p
Diluted		11.2p		10.7p
Dividend per ordinary 10p share		5.5p		5.0p

 

Falkland Islands Holdings plc

Group Balance Sheet as at 31 March 2003

		2003		2002
		£'000	£'000	£'000	£'000
Fixed assets
Intangible assets			63		-
Tangible assets			3,275		3,086
Investments			112		112
			3,450		3,198
Current assets
Stocks		2,858		3,156
Debtors		1,715		1,560
Cash at bank and in hand		957		744
		5,530		5,460
Creditors:
amounts falling due within one year		(4,214)		(4,171)
Net current assets			1,316		1,289
Total assets less current liabilities			4,766		4,487
Creditors:
amounts falling due after more than one year			(250)		(500)
Provisions for liabilities and charges			(1,130)		(1,007)
Net assets			3,386		2,980
Capital and reserves
Called up share capital			617		615
Share premium account			54		31
Other Reserves			703		703
Profit and loss account			2,012		1,631
Equity shareholders funds			3,386		2,980

 

Falkland Islands Holdings plc

Cash flow statement for the year ended 31 March 2003

	2003		2002
	£'000	£'000	£'000	£'000
Cash flow from operating activities		1,600		1,308
Returns on investments and servicing of finance
Interest received	14		15
Interest paid	(40)		(63)
		(26)		(48)
Taxation
UK corpoation tax paid	(30)		-
Overseas taxation paid	(343)		(489)
		(373)		(489)
Capital expenditure
Purchase of tangible fixed assets	(396)		(188)
Purchase of intangible fixed assets	(63)		-
Disposal of fixed assets	-		8
		(459)		(180)
Equity dividend paid		(304)		(278)
Cash inflow before financing		438		313
Financing
Issue of shares		25		35
Repayment of secured loan		(250)		(250)
Increase in cash		213		98

 

Reconciliation of operating profit to net cash inflow from operating activities

	2003		2002
	£'000		£'000
Operating profit on ordinary activities	1,052		1,046
Depreciation charges	207		219
Decrease/(increase) in stocks	298		(527)
(increase) in debtors	(156)		(104)
Increase in creditors and provisions	199		674
Net cash inflow from operating activities	1,600		1,308

Reconciliation of net cash flow to movement in net debt

	2003		2002
	£'000		£'000
Increase in cash in the period	213		98
Cash outflow from decrease in debt	250		250
Movement in net debt in period	463		348
Net debt at start of period	(6)		(354)
Net cash/(debt) at 31 March	457		(6)

Analysis of change in net debt

	As at				Other		As at
	31 March		Cash		non-cash		31 March
	2002		Flows		changes		2003
	£'000		£'000		£'000		£'000
Cash at bank and in hand	744		213				957
Debt due within one year	(250)		250		(250)		(250)
debt due after one year	(500)				250		(250)
Total	(6)		463		0		457

 

Notes:

1. All significant turnover, profits and net assets have been generated from general trading in the Falkland Islands, from continuing activities
2. The taxation charge based on profit for the period comprises:

	2003		2002
	£'000		£'000
U.K. corporation tax at 30%	245		207
Less Double tax relief	(142)		(167)
	103		40
Overseas tax	231		305
Adjustments in respest of prior years	(126)		-
Deferred Taxation	100		-
	308		345

 

3. The Directors recommend a dividend of 5.5p per share (2002: 5.0 pence) payable 6 November 2003 to shareholders on the register at close of business on 10 October 2003.
4. Earnings per share has been calculated on profit after tax of £717,000 (2002: 658,000) t