Interim Results
Falkland Islands Holdings PLC
11 December 2002
FALKLAND ISLANDS HOLDINGS PLC
Interim Results for the six months ended 30 September 2002
Falkland Islands Holdings, a UK listed company operating in The Falkland Islands
where it is involved in general trading and natural resources exploration, today
announces interim results for the six months ended 30 September 2002.
HIGHLIGHTS
• Turnover of £5.3m (2001: £5.3m)
• Profit before tax increased 18% to £421,000 (2001: £356,000)
• Earnings per share up by 18% to 4.6p (2001: 3.9p)
• Work commenced on major extension to West Store, the principal Falkland
Islands retail outlet
• Significant exploration programme scheduled for 2003 on oil and mineral
exploration concessions
• Proposed transfer from Official List to Alternative Investment Market thereby
reducing costs for acquisition programme
David Hudd, Chairman of Falkland Islands Holdings plc commented:
'Our broad spread of activities within the Falkland Islands has enabled us to
generate a satisfactory return in the first half. There are a number of
exciting opportunities within our exploration and retail activities which have
the potential to generate significant future growth.
Our proposed move to the Alternative Investment Market will significantly reduce
corporate overheads and expenses associated with acquisitions which we believe
will be beneficial as we look to further develop the Group.'
11 December 2002
ENQUIRIES:
Falkland Islands Holdings Tel: 07771 893 267
David Hudd, Chairman
College Hill Tel: 020 7457 2020
James Henderson
CHAIRMANS'S STATEMENT & REVIEW OF OPERATIONS
Review of results
The Group made good progress in the first half of 2002/3 achieving strong growth
in profits and earnings per share.
In the six months to 30 September 2002, on sales unchanged at £5.3m, profit
before tax rose by 18% to £421,000 (£356,000), and earnings per share also rose
by 18% to 4.6p (3.9p).
The directors are not recommending payment of an interim dividend but in the
absence of unforeseen events they would anticipate that the final dividend will
be not less than the 5p paid in respect of the year ended 31 March 2002.
Operations
Operating profits increased by 14% from £381,000 to £435,000 this increase was
achieved despite the expected poor finish to the squid fishing season. However,
a good performance from Darwin Shipping which completed three well subscribed
voyages to the Islands (2001-3 voyages) and a better performance from the Upland
Goose Hotel more than offset the shortfall from the fishing agency. Overall,
retail results showed little change from 2001 but sales were depressed by
adverse weather in September.
Board Changes
In September, Roger Wallace who had been the finance director since 1997 stood
down on his retirement from Anglo United, who had seconded him to the Company,
and Michael Orsborn a non-executive director also retired from the Board. We are
grateful to both of them for their contribution. Tony Knightley who has been
with the Group since 1997 has been appointed finance director.
Developments
Work has commenced on a major extension to the principal retail operation in
Stanley, the West Store. This is expected to be completed by June 2003 and will
result in a 65% increase in usable sales space in the food hall. During next
year a range of Waitrose own label products will be introduced into the store
which should prove attractive to customers. These developments will enable the
Group to strengthen its position as the leading retailer in the Falklands.
Exploration
Over the next year significant programmes of work will be carried out on our oil
and mineral exploration concessions and some preliminary results should be
available by July next year.
Technical studies are in progress on the oil concession and the operator is
currently finalising the purchase of some 4,300km of existing seismic data that
is available within the licence area which covers 57,000sqkm in the South
Falklands Basin. The Group holds a 20% interest in this licence with the
remainder held by two Australian listed companies.
The onshore minerals licence covers a substantial part of the Falkland Islands
and the Group will have earned a 33% interest in the licence by 31 October 2003.
Traces of gold, platinum and palladium have been located and the field work to
be carried out over the Austral Summer by the operator involves the excavation
of a number of trenches, to delineate the prospective structure and extract
further mineral samples for offsite analysis and evaluation.
Transfer to The Alternative Investment Market
In order to facilitate possible strategic growth by acquisitions your Directors
have considered the possibility of transferring trading in the Company's
ordinary shares from the Official List of the United Kingdom Listing Authority
(the Official List) to the Alternative Investment Market (AIM) regulated by the
London Stock Exchange. AIM is a market designed primarily for smaller or
emerging companies. Shares listed on AIM are not admitted to the Official List.
A transfer to AIM would result in the simplification of administration and
reporting requirements with a consequential reduction in the cost associated
with being a public company and should help to keep down the costs associated
with any acquisitions the Group might undertake. This flexibility together with
the increasing profile of AIM as a market, have led us to decide to make the
transfer as soon as possible.
It is intended that application will be made as soon as possible for all of the
Company's issued share capital to be admitted to trading on AIM and for the
cancellation (once the AIM listing has become effective) of the Company's
listing on the Official List.
The Company has also appointed Dawnay Day Corporate Finance Limited to act as
its Nominated Adviser in relation to the Company's move to AIM and ongoing
listing on AIM.
Shareholders should be aware that shares held in companies listed on AIM are
treated as unquoted for the purposes of certain tax reliefs and, accordingly,
shareholders may benefit from tax treatment that is more favourable than that in
relation to shares listed on the Official List. However shareholders should
consult their independent financial advisor on this point.
As an AIM listed company, the Company will be subject to the regulatory and
disciplinary controls of the London Stock Exchange in respect of AIM listed
companies.
Prospects
The Group's broad spread of activities in the Falklands should minimise the
impact of a downturn in any one area and your Board believes that the overall
result for the year will be satisfactory. In the longer term, the onshore
minerals and offshore oil exploration concessions have exciting potential, both
directly and indirectly through the impact any discovery would have on the
Falklands economy as a whole.
David Hudd
Chairman
11 December 2002
Unaudited Interim Consolidated Profit And Loss Account
Unaudited Unaudited Audited
6 Months to 6 Months to Year ended
30 September 30 September 31 March
2002 2001 2002
£'000 £'000 £'000
Turnover 5284 5331 11814
Cost of sales (3608) (3759) (8052)
Gross Profit 1676 1572 3762
Administrative expenses (1338) (1294) (2964)
Other Operating Income 97 103 248
Operating profit (note 1) 435 381 1046
Net Interest (14) (25) (43)
Profit on ordinary activities before taxation 421 356 1003
Taxation on profit on ordinary
activities (note 2) (139) (121) (345)
Profit on ordinary activities after taxation
(note 2) 282 235 658
Dividends - - (303)
Retained profit for the financial period 282 235 355
Earnings per share (note 3)
- basic 4.6p 3.9p 10.9p
- fully diluted 4.6p 3.9p 10.7p
Unaudited Consolidated Balance Sheet
Unaudited Unaudited Audited
30 September 30 September 31 March
2002 2001 2002
£'000 £'000 £'000
Fixed assets
Tangible assets 3127 3146 3086
Investments 134 112 112
3261 3258 3198
Current assets
Stocks 3355 2786 3156
Debtors 1249 1328 1560
Cash at bank and in hand 615 930 744
5219 5044 5460
Creditors: amounts falling due within
one year (3568) (3603) (4171)
Net current assets (1651) 1441 1289
Total assets less current liabilities 4912 4699 4487
Creditors: amount falling due after
more than one year (639) (871) (500)
Provision for liabilities and charges (1011) (963) (1007)
Net Assets 3262 2865 2980
Capital and reserves
Called up share capital 615 612 615
Other Reserves 734 712 734
Profit and loss account 1913 1541 1631
Equity shareholders funds 3262 2865 2980
Unaudited Consolidated Cash Flow
for the six months ended 30 September 2002
Unaudited Unaudited Audited
6 months to 6 months to Year to
30 September 2002 30 September 2001 31 March 2002
£'000 £'000 £'000 £'000 £'000 £'000
Cash flow from operating
activities 137 755 1308
Returns on investment and
sevicing of finance
Interest received 7 5 15
Interest paid (21) (34) (63)
(14) (29) (48)
Taxation
UK Corporation tax - -
Oversea taxation paid (91) (314) (489)
(91) (314) (489)
Capital Expenditure
Purchase of tangible fixed
assets (139) (138) (188)
Disposal of fixed assets - - 8
(139) (138) (180)
Acquisitions
Investment in oil
exploration (22) - -
Shares issued - 10 35
Equity dividends paid - - (278)
Cash inflow/(outflow) before
financing (129) 284 348
Repayment of secured loan - - (250)
(Decrease)/ increase in cash (129) 284 98
Notes to the Unaudited Consolidated Cash Flow
for the six months ended 30 September 2002
Unaudited Unaudited Audited
6 Months to 6 Months to Year ended
30 September 30 September 31 March
2002 2001 2002
£'000 £'000 £'000
Reconciliation of net cash flow to
movement in net debt
(Decrease)/increase in cash in the period (129) 284 98
Cash flow from decreasing debt - - 250
Movement in net debt in period (129) 284 348
Net debt at start of period (6) (354) (354)
Net (debt) at 30 September (135) (70) (6)
Reconciliation of operating profit to
operating cash flows
Operating profit 435 381 1046
Depreciation charges 98 117 219
(Increase) in stocks (199) (157) (527)
Decrease)/(increase) in debtors 311 129 (104)
Increase/(decrease) in creditors (508) 285 674
and provisions
Net cash inflow from operating
activities 137 755 1308
Analysis of change in net debt
As at As at
31 March Cash 30 September
2002 Flows 2002
£'000 £'000 £'000
Cash at bank and in hand 744 (129) 615
Debt due within one year (250) (250)
Debt due after one year (500) (500)
Total (6) (129) (135)
Notes
1 All significant turnover, profits and net assets are generated from general
trading in the Falkland Islands.
2 The taxation charge has been estimated at 32.5%.
3 Earnings per share has been calculated on profit after tax of £282,000 (2001:
£235,000) based on the weighted average number of shares in issue, excluding
shares held in the Employee Share Ownership Plan of 6,070,037 (2001:
6,042469). The fully diluted earnings have been further adjusted by the
dilutive outstanding share options resulting in a weighted average number of
shares of 6,170,722 (2001:6,067,715).
4 The interim report has been prepared on the basis of the accounting policies
set out in the group's 2002 Annual Report. The comparative figure for the
period to 30 September 2001 have been adjusted to reflect the adoption of
UITF 32 'Employee Benefits Trusts and other intermediate payment
arrangements'. This adjustment has led to reclassifications within the
Balance Sheet and Cash Flow statements. The result for the prior period has
not changed.
5 The results for the year ended 31 March 2002 as shown in the statement do not
constitute statutory accounts but are an abridged version of the Company's
2002 accounts which have filed with the Registrar of Companies and upon which
the audit report was unqualified. The interim report was approved by the
Board on 11 December 2002.
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