Final Results

Falkland Islands Holdings PLC
23 June 2004


Falkland Islands Holdings Plc

Preliminary Results for the year ended 31 March 2004

Falkland Islands Holdings ('FIH'), an AIM listed company operating in The
Falkland Islands where it is involved in a range of businesses, announces
preliminary results for the year ended 31 March 2004 and significant
developments in its oil and minerals exploration activities.

•         Financial Performance

          Turnover of £11.1m (2003: £11.4m)
          Pre-tax profits of £0.847m (2003: £1.025m)
          Dividend per share increased 4.5% to 5.75p  (2003: 5.50p)



•         Trading

          Falkland Islands operations generally stable but impacted by increased
          shipping costs and poor fishing season



•         Exploration

-         Significant exploration programmes funded (US$6 million) and under way 
          for Oil and Minerals, with new companies created to hold FIH 
          interests. Funds managed by hedge fund manager RAB Capital have 
          committed to subscribe US$3.2 million



-         FIH retaining effective 22.5% interest in both licences for further
          investment of $1.4 million in 2004/5



-         AIM listing under consideration for Oil and Minerals companies



-      Minerals:

       •         Initial aeromagnetic survey completed with encouraging results

       •         Drilling  potentially to start this year



       Oil:

       •         New oil exploration company created (see accompanying release)

       •         Interpretation of purchased seismic has identified a number of 
                 leads comprising targets with potential to contain 200 million 
                 to 2.5 billion barrels of oil

       •         2D  seismic of 3,500 km scheduled for 2004/5



       Investment

       Acquisition of 21.6% of Portsmouth Harbour Ferry Company for £759,000



       Brokers

                FIH also announces the appointment of Evolution Beeson Gregory 
                as the Company's broker



David Hudd, Chairman of Falkland Island Holdings plc, commented:



'The Group has made progress during the year in developing our Falkland Island
operations and in investing outside the Falklands.  The potential from our oil
and mineral licenses in the Falklands is real and we have significant  mineral
and oil exploration programmes currently under way.  These developments give the
board confidence for the future.'

                                                                    23 June 2004



Enquiries:

Falkland Islands Holdings
    David Hudd, Chairman                      Tel: [phone]

College Hill
    James Henderson                           020 7457 2020
    Nick Elwes                                020 7457 2020



                 Chairman's Statement and Review of Operations

I am delighted to be able to report a year of real progress for your Group, as
we look to extend the range of the Group's activities in order to increase
shareholder value. Significant participations have been secured in major
exploration programmes in the Falklands for minerals and oil and subsequent to
the year end we have made our first corporate investment outside the Islands.



The creation of a new oil exploration vehicle, to which funds managed by RAB
Capital have subscribed, is a particularly exciting development and follows the
encouraging initial interpretation of seismic over our Falkland Island licences.
More detailed work will proceed. The increased activity that we expect to see in
both the oil and minerals sectors is beneficial to the local economy and,
consequently, to our Falkland Islands activities in general.



Despite challenging trading conditions in the Falklands we have produced a
satisfactory result and for the sixth year in succession your Board are
recommending an increased dividend.



Financial summary

Turnover was little changed at £11.1m (2003: £11.4m). However due to increased
shipping costs and a poor 2004 fishing season, operating profit fell to £860,000
from £1,052,000 and, after a reduced interest charge, profit before tax declined
17.4% to £847,000 compared with £1,025,000 in 2003.



Basic earnings per share were 18% lower at 9.7p (2003: 11.8p). However, as an
indication of their confidence in the future, the Directors are recommending a
4.5% increase in the dividend for the year to 5.75p (2003: 5.5p) payable on 4
November 2004 to shareholders on the register on 8 October 2004.



The financial position of the Group remained strong with net cash balances
increasing to £933,000 (2003: £457,000) despite capital expenditure of £503,000,
principally on the West Store. A new £1.5 million, 5-year term loan facility has
been arranged to fund the additional investments being made in the current
financial year.



Review of activities

The retail division benefited from the increased selling area within the West
Store but some of the other outlets did not achieve historic profit levels. The
Capstan gift shop also had a quiet year as the strength of sterling against the
US$ led to cruise ship passengers reducing their expenditure.



Shipping profits, where five voyages were completed in the year (2003: five),
were impacted by a combination of factors, including adverse exchange rates,
increased fuel prices and low levels of freight, the latter resulting from
reduced levels of public and private capital spending.



The Upland Goose had a poor year with lower occupancy levels. However a new
management approach is being adopted in order to improve performance.



The automotive business did well again with good Land Rover sales and maintained
its profits in line with 2003.



Management services had a good year with the insurance agency performing
particularly well as a result of the new agency agreement with Caribbean
Alliance Insurance Company who have made a significant commitment to the
Falklands.



Our thanks are due to our staff in the Falklands and the UK for their continued
enthusiasm and commitment.



Exploration activities

Your Board continues to take an active role in oil and mineral exploration in
the Falklands. The policy being followed is to facilitate initial exploration by
investing to secure a meaningful stake. However the board is cognisant of the
fact that such investments are by their nature speculative and has limited the
Group's exposure whilst maintaining a material share of the potential upside.
The total exploration expenditure for this year is currently estimated to amount
to US$6 million, of which the Group is contributing US$1.4 million.



Minerals

In February the onshore minerals exploration licence in which The Falkland
Islands Company Limited (FIC) had earned a one third interest was transferred
into a new Company, Falkland Minerals Limited (FML), in exchange for shares in
that Company. FML is now carrying out an extensive programme to investigate the
minerals potential of the Falklands.



The initial funding for FML's programme amounts to US$1.535 million. Funds
managed by RAB Capital plc (RAB), agreed to subscribe US$1.2 million to secure a
51% shareholding in FML and FIC agreed to subscribe US$241,000 to secure a 22.5%
shareholding and the balance will be funded by the other shareholders, Cambridge
Mineral Resources plc (11.5%) and Global Petroleum Limited (15%).



The work programme comprises an aeromagnetic survey over the Falkland Islands
which was

completed at the end of May. This survey covered about 90% of the land area of
12,000 sq km mostly at 500m spacing but with spacing down to between 250 m to
100 m on areas of interest. Additional stream sampling, field work and assaying
has also been carried out.



The preliminary results are encouraging and nine magnetic features have been
identified which merit further investigation. Interpretation and modelling which
is underway will focus on these areas, some of which are coincident with the
areas where previous stream sediment samples and assays for gold have been
positive.



It is expected that the interpretation will be completed by late July at which
time an assessment of the project will be undertaken. If suitable targets are
identified drilling could start as early as the end of the fourth quarter this
year. The Board of FML will be considering a number of options to fund this next
stage including a possible admission to AIM.



Oil

The Falklands Hydrocarbon Consortium in which FIC had a 20% interest has made
good progress with the analysis and reprocessing of the  4,340 km of 2D seismic
data which was purchased in 2002. The result of that work has been that a number
of large leads have been identified, several of which have been selected for
further work. The work programme  includes the design, processing  and
interpretation of some 3,500 km of  2D seismic, which it is planned to shoot
over the Austral Summer in 2004/5. The current Joint Venture budget for the
work, which is expected to continue until June 2005, amounts to US$4.5 million.



The targets identified are located in water depths between 400 m and 1,850 m and
are 1,100 m to 2,700 m below sea floor. Current estimates of the potential sizes
of the leads range from 200  million barrels to 2.5 billion barrels of oil.


Following the model of the minerals venture of using a corporate structure which
is capable of being listed, Global Petroleum, the operator with 50% and FIC
(20%), have transferred their interests in the licence to a newly formed
company, Falklands Oil and Gas Limited (FOGL). Funds managed by Aim listed hedge
fund manager RAB Capital plc have agreed to subscribe US$2.2 million, FIC will
subscribe US$1.1 million and Global US$0.5 million. As a result of these
transactions FOGL will own 77.5% of the licence and Hardman Resources Limited,
who are investing US$0.9 million, 22.5%. The effective interest of FIC in the
licence, which covers 33,700 sq km to the south and east of the Falkland
Islands, will be 22.4%. An AIM listing for FOGL will be considered following the
completion of the seismic programme.



Portsmouth Harbour Ferry Company

On 18 May 2004 the Group purchased, as a long term investment, 21.6% of the
issued share capital of this public unlisted company for £759,000 satisfied by
£596,000 in cash with the balance in newly issued shares in the Company. PHFC is
a long established company operating the passenger ferry across the mouth of
Portsmouth harbour. For the year ended 31 December 2003 the pre tax profit was
£775,000 and its net assets were £2.9 million. Earnings per share were 223p and
a total dividend of 50p per share was paid in respect of 2003.



Outlook

Our strategy is to continue to develop our operations in the Falklands and to
generate potential upside from our exploration interests whilst utilising our
operational experience  to diversify into related areas outside the Islands.



The benefits of the significant investment in our retail facilities and the new
insurance agency

will continue to provide the potential for real growth for those operations this
year. However, the economic background in the Falklands is likely to be subdued
until fishing catches recover to normal levels or exploration activity becomes
significant to the economy.



Over the next financial year, both the offshore seismic survey and the onshore
drilling are scheduled to take place and the corporate structures in place mean
that the Group is well placed to benefit from any exploration success. The
Group's range of activities in the Falklands is expected to mitigate the impact
of any further slowdown in the economy.



Your Board will continue to work to increase shareholder value.









David Hudd
Chairman
23 June 2004



Group Profit and Loss Account
For the year ended 31 March 2004

                                                                            2004                 2003
                                                                           £'000                £'000

    Turnover                                                             11,082               11,447
    Cost of sales                                                        (7,762)              (7,871)

    Gross profit                                                          3,320                3,576

    Administrative expenses                                              (2,743)              (2,789)
    Other operating income                                                  283                  265

    Operating profit                                                        860                1,052

    Net interest expense                                                    (13)                 (27)

    Profit on ordinary activities before taxation                           847                1,025

    Taxation                                                               (255)                (308)

    Profit for the year after taxation                                      592                  717

    Dividend                                                               (351)                (336)

    Retained profit                                                         241                  381

    Earnings per share
    Basic                                                                   9.7p                11.8p
    Diluted                                                                 9.4p                11.2p

    Dividend per ordinary 10p share                                        5.75p                 5.5p


All results are derived from continuing operations in the current and prior
year.



There were no recognised gains or losses in either the current or preceeding
years other than those disclosed in the profit and loss account.


Group Balance Sheet
At 31 March 2004


                                                                     2004                    2003
                                                                  £'000       £'000       £'000       £'000

     Fixed assets
     Intangible assets                                                          89                      63
     Tangible assets                                                         3,552                   3,275
     Investment in joint venture
     share of gross assets                                                     189                       -
     share of gross liabilities                                                  -                       -
                                                                             3,830                   3,338

     Current assets
     Stocks                                                      3,079                   2,858
     Debtors due within one year                                   1336                    1677
     Debtors due after one year                                      42                      38
     Debtors                                                     1,378                   1,715
     Cash at bank and in hand                                    1,183                     957
                                                                 5,640                   5,530

     Creditors: amounts falling due within one year             (4,798)                 (4,214)

     Net current assets                                                        842                   1,316

     Total assets less current liabilities                                   4,672                   4,654
     Creditors: amounts falling due
     after more than one year                                                    -                    (250)
     Provisions for liabilities and charges                                 (1,157)                 (1,130)

     Net assets                                                              3,515                   3,274

     Capital and reserves
     Called up share capital                                                   617                     617
     Share premium account                                                      54                      54
     Other reserves                                                            703                     703
     Reserve for own shares                                                   (112)                   (112)
     Profit and loss account                                                 2,253                   2,012

     Equity shareholders' funds                                              3,515                   3,274




Group Cash Flow Statement
For the year ended 31 March 2004

Reconciliation of operating profit to net cash inflow from operating activities

                                                                               2004              2003
                                                                              £'000             £'000

Operating profit                                                               860             1,052
Depreciation charges                                                           226               207
(Increase)/decrease in stocks                                                 (221)              298
Decrease/(increase) in debtors                                                 337              (156)
Increase in creditors and provisions                                           542               199
Net cash inflow from operating activities                                    1,744             1,600


Cash flow statement                                              2004                     2003
                                                              £'000        £'000        £'000      £'000

Cash flow from operating activities                                       1,744                   1,600
Returns on investments and servicing
of finance
Interest received                                               12                        14
Interest paid                                                  (25)                      (40)
                                                                            (13)                    (26)
Issue of shares                                                               -                      25

Taxation
UK Corporation tax paid                                       (101)                      (30)
Overseas taxation paid                                        (207)                     (343)
                                                                           (308)                   (373)
Capital expenditure
Purchase of tangible fixed assets                             (503)                     (396)
Purchase of intangible fixed assets                            (26)                      (63)
                                                                           (529)                   (459)
Acquisitions
Investment in Joint Venture                                                 (83)                      -
Equity dividends paid                                                      (335)                   (304)
Cash inflow before financing                                                476                     463

Financing
Repayment of secured loan                                                  (250)                   (250)
Increase in cash                                                            226                     213




Group Cash Flow Statement continued

For the year ended 31 March 2004



Reconciliation of net cash flow to movement in net funds


                                                                           2004          2003
                                                                          £'000         £'000

Increase in cash in the year                                                226          213
Cash outflow from decrease in debt                                          250          250
Movement in net debt in year                                                476          463
Net cash/(debt) at start of year                                            457           (6)
Net cash at end of year                                                     933          457



Analysis of changes in net funds


                                                       As at 31  Cash flows     Other non      As at 31
                                                     March 2003              cash changes    March 2004
                                                          £'000       £'000         £'000         £'000

Cash at bank and in hand                                    957         226             -         1,183
Debt due within one year                                  (250)         250         (250)         (250)
Debt due after one year                                   (250)           -           250             -
Total                                                       457         476             -           933




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:

                                                         2004             2003
                                                        £'000            £'000

  U.K. corporation tax at 30%                            227              245
  Less Double tax relief                                (106)            (142)
                                                         121              103

  Overseas tax                                           158              231
  Adjustments in respest of prior years                  (24)            (126)
  Deferred Taxation                                        -              100
                                                         255              308


3.   The Directors recommend a dividend of 5.75 pence per share (2003: 5.5 
     pence) payable 4 November 2004 to shareholders on the register at close of 
     business on 8 October 2004.



4.   Earnings per share has been calculated on profit after tax of £592,000 
     (2003: 717,000) the weighted average number of shares in issue, excluding 
     share held in the Employee Ownership Plan of 6,095,037 (2003: 6,077,024).  
     The fully diluted earnings have been adjusted by the dilutive outstanding 
     share options resulting in a weighted average number of shares of 6,322,547 
     (2003: 6,388,233).



5.   The financial information set out above does not constitute the Company's 
     statutory accounts for the years ended 31 March 2004 or 2003 but is derived 
     from those accounts.  Statutory accounts for 2003 have been delivered to 
     the Registrar of Companies, and those for 2004 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.



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