Interim Results

Falkland Islands Holdings PLC
15 December 2004

Falkland Islands Holdings Plc
Interim Results for the six months ended 30 September 2004


Falkland Islands Holdings ('FIH'), the AIM listed company operating in The
Falkland Islands and the UK, announces interim results for the six months ended
30 September 2004


•    Financial Highlights
-    Turnover rose 10.2% to £5.4m (2003: £4.9m)
-    Operating profit increased 5% to £319,000 (2003: £304,000)
-    Pre-tax profits of £294,000 (2003: £300,000)
-    Group intends to pursue a progressive dividend policy

•    Operational highlights
-    Recovery in shipping profits
-    Strong performance in management services and vehicle sales
-    New management contract at Upland Goose Hotel to improve performance

•    Post Balance Sheet Events
-    Successful AIM Admissions for associated companies FOGL and FGML
-    £22m raised by associated companies to fund exploration activities over
     next three years
-    Portsmouth Harbour Ferry Company acquisition reduces dependence on
     Falklands' economy and will enhance earnings

•    The Board continues to seek further acquisitions of a similar nature in the 
     UK

•    Brokers
-    FIH also announces the appointment of KBC Peel Hunt as the Company's sole
     broker


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

'2004 has seen a period of intense corporate activity for the company, which has
transformed its prospects and valuation.  The Falklands' economy remains
sensitive to fishing activity, but we believe that the Group's result for the
year will be satisfactory following the Board's acquisition in the UK.

'Longer-term, the exploration activity to be undertaken by FOGL and FGML will
stimulate the economy, benefiting the Group's wide range of activities.  The
Group remains a significant long-term investor in both these companies.'


                                                                15 December 2004

Enquiries:

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

College Hill                                  Tel: [phone]
    Ben Brewerton
    Jim Joseph



Chairman's Statement and Review of Operations

Since I reported to shareholders in June your Group has instigated a period of
intense corporate activity which has transformed the Group's prospects and
valuation.


We have been active in promoting the opportunity for minerals and oil
exploration in the Falklands and I am pleased to report that these efforts, and
those of our partners, have been instrumental in attracting £22 million of
investment both from institutions and the Public. This will fund significant
exploration activity for our two associated companies over the next 3 years.  In
the United Kingdom our acquisition of The Portsmouth Harbour Ferry Company
(PHFC) gives us a solid foundation for the future expansion of the Group.



The flotations of our associated companies, Falkland Oil and Gas Limited (FOGL)
and Falkland Gold and Minerals Limited (FGML), were both well received by the
market and oversubscribed.  The impact of any commercial discoveries on the
Group's businesses and assets in the Falklands and the value of our retained
shareholdings in FOGL and FGML would be substantial.



We launched our bid for PHFC on 6 October, valuing PHFC at £8 million; at that
stage we already owned 27% of the equity.  The cash and shares bid was financed
by the placing of 1.49 million FIH shares, which raised £4.7 million after
expenses, and a new bank facility.  The bid was hotly contested but I am pleased
to report that it was recommended by the PHFC Board on 8 December and declared
unconditional two days later.  PHFC achieved a profit before exceptional items
and taxation of over £950,000 in 2003 and as part of the Group it will reduce
our dependence on the Falklands' economy and give us a solid base for further
expansion in the UK.



Review of Results

The results for the first half of the year do not reflect any of the activity
referred to above, all of which took place after the end of the half-year.  The
results for the six months ended     30 September 2004 showed little change from
last year with profit before tax of £294,000 compared with £300,000 for the
comparable period.  This was after accounting for £22,000 being our share of
FGML's loss for the period.



Turnover was up 10.2% at £5.4 million (2003: £4.9 million), this represented a
return to normal levels of trading after a disappointing performance from the
shipping business in 2003.  Operating profit at £319,000 was up 5% (2003:
£304,000).  This was a good result in the circumstances and reflected
substantial growth from management services and vehicle sales.



Conversely, the fishing agency experienced another year of difficult trading
with continued low levels of catches.  Furthermore, The Upland Goose Hotel
produced a significant loss; in order to improve performance and standards
Sodexho has been running the hotel under a management contract since 1 October.



Corporate costs increased as planned as the scale and complexity of the Group's
activities increased.  A new corporate website is being developed to ensure that
we provide shareholders with ongoing investor information and the latest news.
Shareholders can register to be notified via email alert when new information is
published.  The new website address will be www.fihplc.com.



Finances

Cash flow from operations remained strong at £445,000 (2003: £410,000).
Completion last year of the major expansion of the West Store meant that capital
expenditure was significantly lower at £36,000 (2003: £389,000).





Your Board has followed a conservative approach to financing the Group's
expansion.  A total of £935,000 was invested in acquiring shares in PHFC and
further investments of £679,000 was made in financing FOGL and FGML prior to 30
September.  These investments were funded by a share placing in June which
raised £747,000 after expenses and from existing bank facilities.  Subsequently,
the further share placing in October raised £4.7 million.  These placings have
led to a significant broadening in the institutional shareholder base which
augurs well for the future expansion of the Group.



Falkland Oil and Gas Limited

Although shareholders in the Group were offered the opportunity to invest in the
public offer it was not possible to offer any priority in the allocation of
shares; the Board of FOGL having been advised that all subscribers should be
treated equally. The Group did not sell any shares in the flotation and has
retained 14,450,000 shares, an 18.1% shareholding.  That investment will be
accounted for as an associated company.  The book value of the holding is
£714,000 and the market value based on the closing price on 14 December was
£10.2 million.



We have undertaken to retain the shareholding in FOGL for at least one year,
however the Board believes that shareholders' best interests will be served by
the retention of the entire shareholding whilst exploration continues.  FOGL is
a single purpose company and has no plans to become involved in exploration
outside of the Falklands.



The £12 million raised in the flotation will finance a substantial exploration
programme over the licence area.  The original licence area amounted to 33,000
sq km, in which Hardman Resources has a 22.5% interest; however, on 7 December
it was announced that an exploration licence for a further 50,000 sq km had been
awarded solely to FOGL.  That area which is to the North and East of the
original licence award is on trend with the 8 leads in the original area which
remain the initial focus of the survey.



The result of the additional award is that FOGL has been able to extend the
planned 2D seismic programme covering 5,500 km to encompass a further 5,000 km
of initial work on the new acreage.  This will be financed from the cash already
raised in the flotation.  The results of the survey should be available midway
through 2005.



Falkland Gold and Minerals Limited

The flotation of FGML was successfully completed on 8 December and £10 million
was raised from new shareholders to finance a drilling programme to investigate
the 23 targets revealed by the aero magnetic survey completed in May this year.
The programme funded by the share issue is expected to be substantially
completed during 2007.



The Group now owns 11,250,000 shares in FGML equivalent to 14.4% of the issued
share capital.  The book value of that investment is £177,000 and the market
value based on the closing price on 14 December was £5.0 million.  FGML is also
a single purpose company and again your Board proposes to retain this investment
for the long term.



The Portsmouth Harbour Ferry Company PLC

PHFC has operated a ferry service across the mouth of the harbour linking
Gosport to Portsmouth since 1875.  The service utilises purpose built ferries
and carried some 3.5 million passengers in 2003 on over 67,000 crossings.
Crossings take approximately 7 minutes at a return fare of £1.60. The ferry is a
vital part of the transport infrastructure of the area and it enjoys an enviable
reputation for reliability and service which will be further enhanced when its
new ferry 'Spirit of Portsmouth' joins the fleet in the first half of 2005.



In the year ended 31 December 2003, PHFC had a turnover of £4.6 million and a
profit before tax of £775,000.  The net assets at that date were £2.9 million.



This is an exciting development for the group and we are looking forward to
working with the PHFC team.  It is a company that shares many of the
characteristics and values of our businesses in the Falklands and the Board of
FIH will be looking for further opportunities to expand in this sector.




Outlook

The Falklands' economy remains sensitive to the level of fishing activity and
current indications are not promising.  However, exploration activity,
particularly the onshore minerals programme, will stimulate the economy,
benefiting the Group's wide range of activities.  The PHFC acquisition gives us
a stream of dependable UK earnings and we believe that the result for the year
will be satisfactory.  The Group intends to continue to follow a progressive
dividend policy.



For the longer term we are pursuing a number of interesting opportunities both
in the Islands and in the UK.  We plan to make further acquisitions of cash
generative businesses with the objective of enhancing shareholder value.





UNAUDITED INTERIM CONSOLIDATED PROFIT AND LOSS ACCOUNT

                                                          Unaudited 6         Unaudited 6          Audited Year
                                                         Months to 30        Months to 30                 ended
                                                       September 2004      September 2003         31 March 2004
                                                                £'000               £'000                 £'000

Turnover                                                       5,415               4,905                11,082
Cost of sales                                                 (3,779)             (3,338)               (7,762)

Gross Profit                                                   1,636               1,567                 3,320

Administrative expenses                                       (1,417)             (1,363)               (2,743)
Other Operating Income                                           100                 100                   283

Group Operating profit (note 1)                                  319                 304                   860

Share of results of associated undertakings
(note2)                                                          (22)                  -                     -

Total Operating profit                                           297                 304                   860

Net Interest                                                      (3)                 (4)                  (13)

Profit on ordinary activities before taxation                    294                 300                   847

Taxation on profit on ordinary activities
(note 3)                                                        (103)               (102)                 (255)

Profit on ordinary activities after taxation                     191                 198                   592

Dividends                                                        (18)                  -                  (351)

Retained profit for the financial period                         173                 198                   241

Earnings per share (note 4)
- basic                                                          3.0p                3.2p                  9.7p
- fully diluted                                                  2.9p                3.2p                  9.4p



Notes:

 1. All significant turnover, profits and net assets are generated from general
    trading in the Falkland Islands.
 2. The associated company is Falkland Gold and Minerals Limited and the result
    is the group's share of their administrative costs for the period
 3. The taxation charge has been estimated at 32.5%.
 4. Earnings per share has been calculated on profit after tax of £191,000 (2003:
    £198,000) based on the weighted average number of shares in issue, excluding
    shares held in the Employee Share Ownership Plan of 6,300,702 (2003:
    6,095.037). The fully diluted earnings have been further adjusted by the
    dilutive outstanding share options resulting in a weighted average number of
    shares of 6,537,103   (2003: 6,154,493)
 5. The interim report has been prepared on the basis of the accounting policies
    set out in the group's 2004 Annual Report.
 6. The results for the year ended 31 March 2004 as shown in the statement do not
    constitute statutory accounts but are an abridged version of the Company's
    2004 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 13 December 2004.



UNAUDITED CONSOLIDATED BALANCE SHEET

                                                    Unaudited 30        Unaudited 30             Audited
                                                  September 2004      September 2003       31 March 2004
                                                           £'000               £'000               £'000
Fixed assets
Intangile assets                                              -                  81                  89
Tangible assets                                           3,461               3,555               3,552
Investments                                               1,828                                     189
                                                          5,289               3,636               3,830

Current assets
Stocks                                                    2,947               2,793               3,079
Debtors                                                   1,430               1,222               1,378
Cash at bank and in hand                                    181                 952               1,183
                                                          4,558               4,967               5,640
Creditors: amounts falling due within
one year                                                 (3,470)             (3,643)             (4,798)
Net current assets                                        1,088               1,324                 842


Total assets less current liabilities                     6,377               4,960               4,672


Creditors: amount falling due after
more than one year                                         (603)               (352)                  -
Provision for liabilities and charges                    (1,176)             (1,136)             (1,157)

Net Assets                                                4,598               3,472               3,515


Capital and reserves
Called up share capital                                     654                 617                 617
Share Premium account                                       927                  54                  54
Other Reserves                                              703                 703                 703
Reserve for own shares                                     (112)               (112)               (112)
Profit and loss account                                   2,426               2,210               2,253

Equity shareholders funds                                 4,598               3,472               3,515



UNAUDITED CONSOLIDATED CASH FLOW
for the six months ended 30 September 2004
                                           Unaudited 6 months      Unaudited 6 months      Audited Year to 31
                                             to 30 September         to 30 September           March 2004
                                                  2004                    2003
                                               £'000     £'000     £'000     £'000         £'000     £'000

Cash flow from operating
activities                                               (763)                     403                  1,744

Returns on investment and
sevicing of finance
Interest received                                 8                       9                      12
Interest paid                                    (8)                    (13)                    (25)
                                                            0                      (4)                    (13)

Taxation
UK Corporation tax                             -                       -                       (101)
Oversea taxation paid                          -                       -                       (207)
                                                            0                       0                    (308)

Capital Expenditure
Purchase of tangible fixed assets               (36)                   (389)                   (503)
Purchase of intangible fixed assets            -                        (18)                    (26)
Disposal of fixed assets                          1                       3                     -
                                                          (35)                   (404)                   (529)

Acquisitions
Investment in Joint Venture                              (679)                                            (83)
Purchase of investments                                  (935)                      -                       -
Equity dividends paid                                     -                       -                      (335)

Cash inflow/(outflow) before
financing                                              (2,412)                     (5)                    476

Financing
Shares issued                                             910                       -                       -
Repayment of secured loan                                 -                       -                      (250)
New secured loan                                          500                       -                       -
(Decrease)/ increase in cash                           (1,002)                     (5)                    226




NOTES TO THE UNAUDITED CONSOLIDATED CASH FLOW
for the six months ended 30 September 2004

                                               Unaudited 6        Unaudited 6         Audited Year
                                              Months to 30       Months to 30             ended 31 
                                            September 2004     September 2003           March 2004      
                                                     £'000              £'000                £'000
Reconciliation of net cash flow to movement in net debt


(Decrease)increase in cash in the
period                                             (1,002)                (5)                 226
Cash outflow from decrease in debt                    -                  -                    250
Cash inflow from increase in debt                    (500)                 -                    -

Movement in net debt in period                     (1,502)                (5)                 476
Net cash at start of period                           933                457                  457
Net (debt)cash at 30 September                       (569)               452                  933


Reconciliation of operating profit
to operating cash flows
Group operating profit                                319                304                  860
Depreciation charges                                  126                106                  226
Decrease/(increase) in stocks                         132                 65                 (221)
(increase)/(decrease) in debtors                      (52)               493                  337
(Decrease)/increase in creditors and
provisions                                         (1,288)              (565)                 542

Net cash inflow from operating
activities                                           (763)               403                1,744



Analysis of change in net debt

                                         As at 31 March                Cash            As at 30
                                                   2004               Flows      September 2004
                                                  £'000               £'000               £'000
Cash at bank and in hand                         1,183              (1,002)                181
Debt due within one year                          (250)                                   (250)
Debt due after one year                            -                  (500)               (500)
Total                                              933              (1,502)               (569)






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