Final Results

Falkland Islands Holdings PLC 16 July 2002 FALKLAND ISLANDS HOLDINGS PLC PRELIMINARY RESULTS FOR THE YEAR ENDED 31 MARCH 2002 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 2002. â€¢ Strong financial performance: - Turnover increased 18% to Â£11.8 million (2001: Â£10m) - Operating profit before exceptional items rose 8% to Â£1.046m (2001: Â£.967m) - Pre-tax profits before exceptional items of Â£1 million (2001: Â£.93m) - Basic earnings per share increased five fold to 10.9p (2001: 2.1p) - 9% increase in dividend for the year to 5p per share (2001: 4.6p) â€¢ Improving Operations: - Company benefited from continued growth of Falklands economy â€¢ Increased exploration activity: - Oil - 20% interest in Falkland Islands Hydrocarbon Consortium which has been awarded an offshore exploration licence over 57,700sq km South of Falklands - Minerals - onshore search for minerals continued with 18.3% interest earned to date in Falkland Islands Mineral Consortium â€¢ Appointment of David Hudd as Chairman David Hudd, Chairman of Falkland Islands Holdings plc commented: 'These results reflect the Group's improved financial and operational performance. Our strategy to focus on the mineral and oil potential within the Falklands as well as our infrastructure projects offers shareholders continued potential upside for the future.' 16 July 2002 Enquiries: Falkland Islands Holdings Tel: 07771 893 267 David Hudd, Chairman College Hill Tel: 020 7457 2020 James Henderson Falkland Islands Holdings Plc Preliminary Results For The Year Ended 31 March 2002 CHAIRMAN'S STATEMENT As your new Chairman I am pleased to report that the year ended 31st March 2002, the 150th year since the grant of the Royal Charter to The Falkland Islands Company, has been a successful year with a significant improvement in the Group's financial performance over last year. The Group's results are determined to a large extent by the level of economic activity in the Falkland Islands and this year's results reflect the continued strength of that economy. Financial Summary Turnover increased by 18% to Â£11.8m (2001: Â£10m) reflecting increased levels of business across the Group. Operating profit before exceptional items rose by 8% to Â£1,046,000 compared with Â£967,000 in 2001. This was a good result as it was arrived at after charging reorganisation costs of Â£72,000 and mineral exploration expenditure of Â£29,000. Exceptional costs in 2001 reduced profit before interest and tax to Â£392,000 compared with Â£1,046,000 achieved this year. The after tax profit attributable to shareholders was Â£658,000 compared to Â£125,000 last year. Basic earnings per share were 10.9p compared with 2.1p in 2001. The Directors are recommending an increase of 8.7% in the dividend for the year to 5p per share (2001: 4.6p) payable on 7 November 2002 to shareholders on the register on 11 October 2002. The financial position of the Group remains strong and positive cash flow of Â£348,000 was generated (2001 outflow Â£707,000). Review of Activities The Retailing Division achieved a significant improvement over last year, benefiting from the first year of trading of the new Capstan gift shop on the waterfront. It has proved popular both with visitors to the Islands and local residents and has set new standards for retailing within Stanley. The Homecare and Building supplies operation continued to grow, satisfying the demand generated by infrastructure projects and domestic housing completions. The Automotive and Engineering division enjoyed continued growth from the sale of vehicles, general service work on marine, transport and mechanical handling equipment. Demand for new Land Rover models remained steady. The Shipping Agency which provides logistics, services and support to the international fishing fleet and other vessels in Falkland waters, was directly affected by the severe down turn in squid catches during the first half of the fishing season (January - March 2002). An increase in services provided to visiting cruise vessels helped to maintain turnover levels but overall, profits declined. Darwin Shipping, undertook six voyages between the UK and the Islands (2001 - 5) with good levels of freight for each sailing. The Upland Goose Hotel and the crew accommodation business increased turnover and achieved a modest increase in contribution mainly as a result of the increase in tourism to the Islands. The Group's other operations which include property rental, port operations, insurance and financial services improved their performance reflecting increased levels of activity. Exploration Activities Your Board believes that the Group should, if possible, be involved in the identification and development of the natural resources of the Falklands and its environs. However expenditure on such activity will not be allowed to prevent the maintenance of a progressive dividend policy .The exploration activities are still at a very early stage as far as the Group is concerned but they do offer exciting potential. In the search for onshore minerals the Group has invested a total of Â£153,000 over the last four years, and an 18.33% interest has been earned to date in the Falkland Islands Mineral Consortium. There have been some encouraging results and we are in discussion with our partners on an increased programme of onshore exploration which will result in an increased interest being earned. As has recently been announced the Group has a 20% interest in the newly formed Falkland Islands Hydrocarbon Consortium which has been awarded an exploration licence over a very large offshore area (57,700sq km) from the East to the South of the Falklands. Initially a three year work programme is planned covering seismic work on this previously under explored area which contains some interesting structures. People After 4 years as Chairman, John Gainham stood down in March and we are grateful to him for his leadership in returning the Company to the Stock Exchange as an independent listed entity. Michael Orsborn will be stepping down as a non executive director at the Annual General Meeting and we thank him for his wise counsel. Terry Spruce MBE the Senior Director of FIC in the Islands, retired from the Company in August 2001 after 39 years service. We should like to record our thanks and gratitude to him for all his efforts, particularly in the difficult times of 1982, and wish him a long and happy retirement. He has been succeeded in this position by Roger Spink who has been with the Group in the Islands for 16 years. Our thanks are also due to all our staff for their continuing effort and commitment during the year. We intend to propose to shareholders the introduction of an SAYE scheme to encourage all staff to participate directly in the success of the Company through share ownership. Outlook Since 1982 the Falklands economy has been transformed and Gross National Product is estimated to have increased some eightfold, your Company has benefited from this growth and we will continue to pursue opportunities to expand operations in the Islands and the South Atlantic region, or in other areas where the Group's expertise may be utilised. Opportunities have included the privatisation by The Falkland Islands Government of a number of services over the last few years and we have been successful in obtaining several contracts this year. The Falkland Islands are a convenient access point for Antarctica and South Georgia and this is reflected both in an increasing number of tourist ships visiting Stanley and in increasing opportunities to provide services both to the British Antarctic Survey and other organisations operating in the region. The current financial year has begun in line with our expectations with the downturn in fishing agency income being counterbalanced by strong performances from our other activities. I have every confidence that your company will continue to produce good returns to shareholders. David Hudd Chairman 16 July 2002 Falkland Islands Holdings plc Group Profit and Loss Account 2002 2001 Exceptional Exceptional items Total Items as restated as restated Â£'000 Â£'000 Â£'000 Â£'000 Turnover 11,814 9,984 9,984 Cost of sales (8,052) (6,861) (6,861) Gross profit 3,762 3,123 3,123 Administrative expenses (2,964) (2,496) (575) (3,071) Other operating income 248 340 340 Operating profit 1,046 967 (575) 392 Net interest expense (43) (37) (37) Profit on ordinary activities before taxation 1,003 930 (575) 355 Taxation (345) (230) (230) Profit on ordinary activities after taxation 658 700 (575) 125 Dividend (303) (279) (279) Balance transferred to/(from) reserves 355 421 (575) (154) Earnings per share Basic 10.9p 2.1p Diluted 10.7p 2.1p Dividend per ordinary 10p share 5p 4.6p Falkland Islands Holdings plc Group Balance Sheet At 31 March 2002 2002 2001 As restated As restated Â£'000 Â£'000 Â£'000 Â£'000 Fixed assets Tangible assets 3,086 3,125 Investments 112 112 3,198 3,237 Current assets Stocks 3,156 2,629 Debtors 1,560 1,454 Cash at bank and in hand 744 646 5,460 4,729 Creditors: amounts falling due within one year (4,171) (3,664) Net current assets 1,289 1,065 Total assets less current Liabilities 4,487 4,302 Creditors: amounts falling due after more than one year (500) (750) Provisions for liabilities and Charges (1,007) (962) Net assets 2,980 2,590 Capital and reserves Called up share capital 615 611 Other reserves 734 703 Profit and loss account 1,631 1,276 Equity shareholders' funds 2,980 2,590 Falkland Islands Holdings plc Cash flow statement For the year ended 31 March 2002 As restated 2002 2002 2001 2001 Â£'000 Â£'000 Â£'000 Â£'000 Cash flow from operating activities 1,308 516 Returns on investments and servicing of finance Interest received 15 60 Interest paid (63) (107) (48) (47) Issue of shares 35 - Taxation UK Corporation tax paid - (43) Overseas taxation paid (489) (362) (489) (405) Capital expenditure Purchase of tangible fixed assets (188) (393) Disposal of fixed assets 8 64 (180) (329) Acquisitions Acquisitions in unincorporated joint venture - (64) Investment in own shares - (112) - (176) Equity dividends paid (278) (266) Cash inflow/(outflow) before 348 (707) financing Financing Repayment of secured loan (250) (250) Increase/(decrease) in cash 98 (957) - Falkland Islands Holdings plc Cash flow statement For the year ended 31 March 2002 Reconciliation of operating profit to net cash inflow from operating activities As restated 2002 2001 Â£'000 Â£'000 Operating profit on ordinary activities 1,046 392 Depreciation charges 219 214 (Increase) in stocks (527) (188) (Increase)/decrease in debtors (104) 332 Increase/(decrease) in creditors and provisions 674 (360) Investment in mineral exploration written off - 126 Net cash inflow from operating activities 1,308 516 Cash outflow of Â£44,000 (2001: Â£64,000) related to costs of the mineral exploration venture, the investment in which was written off as an exceptional item in the year ended 31 March 2001. 2002 2001 Â£'000 Â£'000 Reconciliation of net cash flow to movement in net debt Increase/(decrease) in cash in the period 98 (957) Cash outflow from decrease in debt 250 250 Movement in net debt in period 348 (707) Net (debt)/cash at start of period (354) 353 Net (debt) at 31 March (6) (354) Analysis of change in net debt As at Cash Other As at 31 March flows non-cash 31 March 2001 changes 2002 Â£'000 Â£'000 Â£'000 Â£'000 Cash at bank and in hand 646 98 - 744 Debt due within one year (250) 250 (250) (250) Debt due after one year (750) - 250 (500) Total (354) 348 - (6) 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: 2002 2001 Â£'000 Â£'000 UK corporation tax at 30% 207 187 Less double tax relief (167) (128) 40 59 Overseas tax at 321/2% 305 178 Adjustment in respect of prior years - (7) 345 230 3. The Directors recommend a dividend of 5.0 pence per share (2001: 4.6 pence) payable on 7 November 2002 to shareholders on the register at close of business on 11 October 2002. 4. The calculation of basic earnings per ordinary share is based on the weighted average number of ordinary shares in issue during the year less the shares held in the employee share ownership plan 6,044,982 (2001: 6,035,037) on profit after tax of Â£658,000 (2001: Â£125,000). The calculation of diluted earnings per ordinary share is based on the weighted average number of ordinary shares in issue during the year less the shares held in the employee share ownership plan plus the maximum dilution of share options in issue 6,122,957 (2001: 6,079,030) and on profit after tax of Â£658,000 (2001: Â£125,000). 5. The financial information set out above does not constitute the Company's statutory accounts for the years ended 31 March 2002 or 2001. The financial information for 2001 is derived from the statutory accounts for 2001, which have been delivered to the Registrar of Companies. The auditors have reported on the 2001 accounts; their report was unqualified and did not contain a statement under section 237(2) of the Companies Act 1985. The 2002 results contained in the preliminary announcement are unaudited, the statutory accounts for 2002 will be finalised on the basis of the financial information presented by the Directors in this preliminary announcement and will be delivered to the Registrar of Companies following the Company's Annual General Meeting. 6. Copies of Falkland Islands Holdings plc annual report and financial statements will be sent to shareholders in the middle of August. 7. Restatement of prior year balances: The format of the profit and loss account for the prior year has been restated. The result for the prior year has not changed. Following the guidance issued in UITF 32 Employee Benefit Trusts and other intermediate payment arrangements, the Employee Benefits Trust as been consolidated as part of the Group accounts. This has been effected via a prior year adjustment, which has lead to reclassifications within the balance sheet and cashflow statement. The result for the prior year has not changed. This information is provided by RNS The company news service from the London Stock Exchange

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