Final Results
25 June 2003 - 5:00PM
UK Regulatory
RNS Number:7220M
Falkland Islands Holdings PLC
25 June 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 6th November to shareholders on the
register on 10th 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 1/3rd 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) the weighted average number of shares in issue, excluding
share held in the Employee Ownership Plan of 6,077,024 (2002: 6,044,982).
The fully diluted earnings have been adjusted by the dilutive
outstanding share options resulting in a weighted average number of
shares of 6,388,233 (2002: 6,122,030).
5. The financial information set out above does not constitute the
Company's statutory accounts for the years ended 31 March 2003 or 2002
but is derived from those accounts. Statutory accounts for 2002 have
been delivered to the Registrar of Companies, and those for 2003 will be
delivered following the Company's Annual General Meeting. The auditors
have reported on those accounts; their reports were unqualified and did
not contain statements under section 237 (2) or (3) of the Companies Act
1985.
6. Copies of Falkland Islands Holdings plc annual report and financial
statements will be with shareholders in early July.
END
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