Offer Update-Portsmouth Ferry

Falkland Islands Holdings PLC
11 October 2004


                                  Offer update

                          Falkland Islands Holdings plc

                                   offer for
                    The Portsmouth Harbour Ferry Company PLC

For immediate release

                                                                 11 October 2004

On 6 October 2004 the board of Falkland Islands Holdings plc ('FIH') announced 
an offer to be made by Dawnay, Day Corporate Finance Limited on behalf of FIH 
for the whole of the issued share capital of The Portsmouth Harbour Ferry 
Company public limited company ('PHFC') not already owned by FIH ('the Offer').

The original Offer consideration comprised 7 new FIH shares for each PHFC share
('the Share Offer') or a Part Cash Alternative of £25 in cash and £8.50 in Loan
Notes (ie £33.50) each PHFC share. The Loan Notes were to be redeemed in
instalments over four years.

Since the Offer was announced, discussions have taken place between FIH and its
advisers and Grant Thornton Corporate Finance, the independent financial adviser
to the board of PHFC which led to FIH agreeing to improve the terms of the Part
Cash Alternative and to Grant Thornton Corporate Finance agreeing to advise the
PHFC board to recommend PHFC shareholders to accept the revised Part Cash
Alternative.

The Board of FIH announces that the consideration payable for each PHFC Share
under the Part Cash Alternative will be £25 in cash and £10 in Loan Notes (an
increase of £1.50 in Loan Notes). The Loan Notes will be redeemed in instalments
over three years. The Share Offer is unchanged.

Grant Thornton Corporate Finance has advised the PHFC Board that it considers
the terms of the revised Part Cash Alternative under the Offer to be reasonable
so far as PHFC shareholders are concerned and that it advises the board of PHFC
to recommend PHFC shareholders to accept it. Grant Thornton Corporate Finance
understands that whilst the directors of PHFC have taken its advice into
account, they are unable to recommend acceptance of the Offer because, amongst
other things, they consider that it falls short of a price that fully reflects
the future potential of the Company in the light of recent transactions in the
domestic ferry sector.

David Hudd, Chairman of FIH said: 'The uncertainty inherent in any bid situation
distracts management and staff from the operations of the business. I said in
last thursday's BBC South interview that there was some uncertainty as to the
ownership of the ferry company and that we were looking to resolve that
uncertainty by making a bid for it. What I meant by this was that I believe that
now that FIH has announced its formal Offer, this period of uncertainty as to
the future ownership of The Portsmouth Harbour Ferry Company will soon be over.
If the Offer succeeds, the company will become a subsidiary of FIH, and if it
should fail the Takeover Code will limit FIH's ability to make another offer for
12 months.

I believe that the Offer is a generous one and am pleased that Grant Thornton
Corporate Finance considers the £35 per share Part Cash Alternative to be
reasonable and that it has advised the board of PHFC to recommend that PHFC
shareholders accept it. The value of the Share Offer fluctuates with the FIH
share price and today values each PHFC Share at over £40.'

Enquiries:

Falkland Islands Holdings PLC - David Hudd                 07771 893267
Dawnay Day - David Floyd                                   020 7509 4570
Evolution Securities Limited - Tom Price
Henry Turcan                                               020 7071 4300
College Hill - Ben Brewerton                               020 7457 2020
Tony Friend

Grant Thornton Corporate Finance Brian Stockbridge 0870 991 2553

The Offer Document containing the full terms of the Offer will be posted to PHFC
Shareholders as soon as practicable.

The persons responsible for this announcement are the directors of FIH.

Dawnay, Day Corporate Finance Limited ('Dawnay Day'), which is authorised and
regulated in the United Kingdom by the FSA, is acting exclusively for FIH and
for no one else in connection with the Offer and will not be responsible to
anyone other than FIH for providing the protections afforded to its customers or
for providing advice in relation to the Offer.

Dawnay Day has approved the contents of this announcement for the purposes of
s21 of the Financial Services and Markets Act 2000 and has given its consent to
the publication of this announcement containing references to its name in the
form and context in which they appear.

Grant Thornton Corporate Finance has given its consent to the publication of
this announcement containing references to its name in the form and context in
which they appear. Grant Thornton Corporate Finance, division of Grant Thornton
UK LLP, which is authorised and regulated in the United Kingdom by the FSA, is
acting exclusively for PHFC and for no one else in connection with the Offer and
will not be responsible to anyone other than PHFC for providing the protections
afforded to its clients or for providing advice in relation to the Offer.

THIS ANNOUNCEMENT IS NOT FOR RELEASE, PUBLICATION OR DISTRIBUTION IN WHOLE OR IN
PART IN, INTO OR FROM THE UNITED STATES, AUSTRALIA, CANADA, SOUTH AFRICA OR
JAPAN



                      This information is provided by RNS
            The company news service from the London Stock Exchange