FALKLAND ISLANDS HOLDINGS PLC
Interim Results for the six months ended 30 September 2003
HIGHLIGHTS
Falkland Islands Holdings PLC, a UK quoted company operating in the Falkland Islands in general trading activities, announces interim results for the six months ended 30 September 2003.
- First half financial performance impacted by reduced shipping profits:
- Turnover of £4.9m (2002: £5.3m)
- Pre-tax profits of £300,000(2002: £421,000)
- Basic earnings per share of 3.2p(2002:4.6p)
- Stronger start and outlook for second half:
- Shipping revenues restored to normal levels
- Retailing benefiting from redevelopment and food hall extension
- Agreement to act as sole agents for Caribbean Alliance Insurance Company
- Plans under consideration for use of Group land for housing development (subject to relevant planning and other permissions)
- Continued exploration activity:
- Oil: Several large leads identified; talks underway with potential joint partners
- Minerals – Future work programme being drawn up
David Hudd, Chairman of Falkland Islands Holdings plc commented:
"Whilst the first half of the year was disappointing due to the poor shipping result, the fishing season activities in 2002/3 have restored confidence and trading conditions overall have improved and we believe the Group will generate a positive result for the year.
The Group is also investing in a number of new developments, which have the potential to generate significant growth in the longer term."
10 December 2003
Enquiries:
| Falkland Islands Holdings PLC | Tel: 07771 893 267 |
| David Hudd, Chairman | |
| College Hill | Tel: 020 7457 2020 |
| James Henderson |
Chairman’s Interim Statement
For the six months ended 30 September 2003
Review of results
As we anticipated, the first half of the year produced lower profits than last year. Profit before tax fell to £300,000 (2002: £421,000) on turnover 7% lower at £4.9m (2002: £5.3m).Earnings per share were 3.2p (2002: 4.6p) .
The fall in profit was attributable to reduced shipping revenues, in the aftermath of the poor fishing season in 2001/2 which we referred to at the time of the announcement of our year end results. However, activity levels have now been restored and a satisfactory result is anticipated for the year.
The directors are not recommending payment of an interim dividend but, in the absence of unforeseen events, they would anticipate paying a final dividend of not less than 5.5p in respect of the year ended 31 March 2004.
Cash generation remains strong and the Group maintained net cash balances of £452,000, the same level as at 31 March 2003. Capital expenditure of approximately £389,000, primarily relating to the West Store redevelopment, was financed from cash flow.
Operations
Operating profits declined to £304,000 from £435,000. Retailing profits were maintained despite the disruption resulting from the extensive building work at the West Store. Management services, the fishing agency and the automotive operations, produced results comparable to last year.
The shortfall in profits was largely attributable to the decline in shipping activities and a disappointing result from the Upland Goose Hotel. Three voyages were completed in the period (2002:3). However, bulk freight cargoes were at low levels reflecting the reduction in infrastructure and capital spending by the Islanders which followed the 2001/2 fishing results. Shipping costs were significantly higher as a result of increased bunkering costs and the decline of sterling against the euro.
Occupancy levels at the Upland Goose were lower this year ; the hotel benefited last year from increased visitor numbers linked to the 20th anniversary of the 1982 conflict.
Developments
The West Store extension and fit out was completed in July at an overall cost of £550,000. The extension provides a 65% increase in the food hall floor area. The introduction of the Waitrose own label range, which was one of the key drivers in the decision to carry out the development, has proved popular with customers. For the first time the Falklands has a store offering a comprehensive range of products in surroundings comparable to retail food outlets in the UK.
The Group has successfully concluded an agreement to act as agents for Caribbean Alliance Insurance Company (CAIC) which is replacing Royal & Sun Alliance (RSA) as the main provider of insurance cover for the Islands.CAIC is a former subsidiary of RSA and the approval of the Falklands Government has been secured for the change. CAIC specialises in providing insurance cover for island communities. We believe that their appointment will lead to a significant increase in the range of insurance products for our clients.
Given the forecast shortage of available housing in Stanley, the Group is in the process of drawing up plans to utilise some of its landbank for housing development. Any such developments will be subject to planning and other necessary approvals.
Exploration Activities
Both the oil and gas and the mineral exploration licences have been the subject of much activity over the last 6 months and your directors remain committed to ensuring that the Company participates in future exploration activity.
The Hydrocarbon oil and gas consortium, in which the Group has a 20% interest, has completed the reprocessing and analysis of some 1,000km of the 4,460 km of seismic data which was purchased last year. Several large leads have been identified which the consortium believes warrant further investigation and it is likely that additional seismic will be shot in 2004/5. The Group intends to limit its capital expenditure on this oil and gas exploration activity through the introduction of a farm-in partner and is in discussion with a number of potential partners.
The Onshore mineral Joint venture, in which the Group holds a 33% interest, has a prospecting licence covering the whole of the Falkland Islands. Discussions are continuing on the future work programme with potential joint venture partners.
Outlook
The Falklands economy has recovered from the uncertainty earlier in the year and the trading performance of the Group has improved since the end of the first half. The Group is pursuing a number of new developments which your Board believes will generate long term growth. The board is confident that the Group will achieve a satisfactory result for the year.
| UNAUDITED INTERIM CONSOLIDATED PROFIT AND LOSS ACCOUNT | ||||||
| Notes | Unaudited | Unaudited | Audited | |||
| 6 Months to | 6 Months to | Year ended | ||||
| 30 September | 30 September | 31 March | ||||
| 2003 | 2002 | 2003 | ||||
| £'000 | £'000 | £'000 | ||||
| Turnover | 4905 | 5284 | 11447 | |||
| Cost of sales | (3338) |
| (3608) | (7871) | ||
| Gross Profit | 1567 | 1676 | 3576 | |||
| Administrative expenses | (1363) | (1338) | (2789) | |||
| Other Operating Income | 100 | 97 | 265 | |||
|
|
|
| ||||
| Operating profit | 1 | 304 | 435 | 1052 | ||
| Net Interest | (4) | (14) | (27) | |||
| Profit on ordinary activities before taxation | 300 | 421 | 1025 | |||
| Taxation on profit on ordinary | (102) | (139) | (308) | |||
| activities | 2 | |||||
|
|
|
| ||||
| Profit on ordinary activities after taxation | 2 | 198 | 282 | 717 | ||
| Dividends | - | - | (336) | |||
| Retained profit for the financial period | 198 | 282 | 381 | |||
|
|
|
| ||||
| Earnings per share | 3 | |||||
| - basic | 3.2p | 4.6p | 11.8p | |||
| - fully diluted | 3.2p | 4.6p | 11.2p | |||
| UNAUDITED CONSOLIDATED BALANCE SHEET | |||||
| Unaudited | Unaudited | Audited | |||
| 30 September | 30 September | 31 March | |||
| 2003 | 2002 | 2003 | |||
| £'000 | £'000 | £'000 | |||
| Fixed assets | |||||
| Intangible assets | 81 | 22 | 63 | ||
| Tangible assets | 3555 | 3127 | 3275 | ||
| Investments | 112 | 112 | 112 | ||
| 3748 | 3261 | 3450 | |||
|
|
|
| |||
| Current assets | |||||
| Stocks | 2793 | 3355 | 2858 | ||
| Debtors | 1222 | 1249 | 1715 | ||
| Cash at bank and in hand | 952 | 615 | 957 | ||
| 4967 | 5219 | 5530 | |||
| Creditors: amounts falling due within | |||||
| one year | (3643) | (3568) | (4214) | ||
| Net current assets | 1324 | 1651 | 1316 | ||
|
|
|
| |||
| Total assets less current liabilities | 5072 | 4912 | 4766 | ||
| Creditors: amount falling due after | |||||
| more than one year | (352) | (639) | (250) | ||
| Provision for liabilities and charges | (1136) | (1011) | (1130) | ||
| Net Assets | 3584 | 3262 | 3386 | ||
|
|
|
| |||
| Capital and reserves | |||||
| Called up share capital | 617 | 615 | 617 | ||
| Share Premium account | 54 | 31 | 54 | ||
| Other Reserves | 703 | 703 | 703 | ||
| Profit and loss account | 2210 | 1913 | 2012 | ||
| 3584 | 3262 | 3386 | |||
|
|
|
| |||
| UNAUDITED CONSOLIDATED CASH FLOW for the six months ended 30 September 2003 | ||||||||||
| Unaudited 6 months to 30 September 2003 | Unaudited 6 months to 30 September 2002 | Audited Year to '31 March 2003 | ||||||||
| Notes | £'000 | £'000 | £'000 | £'000 | £'000 | £'000 | ||||
| Cash flow from operating activities | 403 | 137 | 1600 | |||||||
| Returns on investment and | ||||||||||
| sevicing of finance | ||||||||||
| Interest received | 9 | 7 | 14 | |||||||
| Interest paid | (13) | (21) | (40) | |||||||
|
| (4) |
| (14) |
| (26) | |||||
| Taxation | ||||||||||
| UK Corporation tax | - | - | (30) | |||||||
| Overseas taxation paid | - | (91) | (343) | |||||||
| 0 |
| (91) |
| (373) | ||||||
| Capital Expenditure | ||||||||||
| Purchase of tangible fixed assets | (389) | (139) | (396) | |||||||
| Purchase of intangible fixed assets | (18) | (22) | (63) | |||||||
| disposal of fixed assets | 3 | - | | |||||||
|
| (404) |
| (161) | (459) | ||||||
| Equity dividends paid | - | - | (304) | |||||||
| Cash inflow/(outflow) before | (5) | (129) | 438 | |||||||
| financing | ||||||||||
| Financing | ||||||||||
| Shares issued | - | - | 25 | |||||||
| Repayment of secured loan | ||||||||||
