Offer Update

Falkland Islands Holdings PLC
08 December 2004



                         Falkland Islands Holdings plc
                             Recommended Offer for
                    The Portsmouth Harbour Ferry Company PLC

For immediate release                                          8 December 2004

       Third party proposal withdrawn, Offer extended and Recommendation

Key points

• The Portsmouth Harbour Ferry Company PLC ('PHFC') announced on 
  25 November 2004 that it had received a proposal from a potential purchaser
  of its business and assets

• The Board of PHFC has announced that it has considered and rejected the 
  above proposal

• The PHFC Board announced today that it recommends PHFC Shareholders to accept
  the Offer and elect to receive either the Full Cash Alternative or the Part 
  Cash Alternative

• By mutual agreement between PHFC and Falkland Islands   Holdings plc ('FIH') 
  and with the consent of the Takeover Panel, the Offer by FIH for PHFC has 
  been extended to 1.00pm on 23 December 2004


FIH made its Offer for PHFC on 11 October 2004. FIH subsequently improved the
terms of its Offer. The revised terms of the Offer give PHFC Shareholders a
choice of: -

The Share Offer                    7 New FIH Shares for
                                   every PHFC Share
                                   Currently worth £46.55*

The Part Cash Alternative          £25 in cash and £10 in Loan Notes

The Full Cash Alternative          £35 in cash

 (*based on the mid-market price of 665p per FIH Share at the close of business
                              on 7 December 2004)


On 11 October 2004, the date of the announcement of the Offer, FIH was the
beneficial holder of 61,149 PHFC Shares representing approximately 26.59% of
PHFC's issued share capital.

Between 11 October 2004 and 3.00pm on 7 December 2004, FIH purchased 22,908 PHFC
Shares representing approximately 9.96% of PHFC's issued share capital and is
now the beneficial holder of 84,057 PHFC Shares representing approximately
36.55% of its issued share capital.

As at 3.00pm 7 December 2004 acceptances of the Offer had been received (and not
withdrawn) in respect of 15,293 PHFC Shares (6.64% of PHFC's issued share
capital). As stated above FIH already holds 36.55% of PHFC's issued share
capital. Thus the total percentage of acceptances received (and not withdrawn)
and PHFC Shares held is currently 43.19% of PHFC's issued share capital.

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

Dawnay, Day Corporate Finance Ltd
David Floyd, Director                           Tel: [phone]

The issue of this announcement has been approved by the board of FIH. The
Directors of FIH are the persons responsible for the information contained in
this announcement save that the only responsibility accepted by them for the
information given in relation to PHFC, which has been compiled from published
sources, has been to ensure that such information has been correctly and fairly
reproduced and presented. To the best of their knowledge and belief (having
taken all reasonable care to ensure that such is the case) the information for
which they are responsible contained in this letter is in accordance with the
facts and does not omit anything likely to affect the import of such
information. Each of the directors of FIH accepts responsibility accordingly.

This announcement has been approved for the purposes of section 21 of the
Financial Services and Markets Act 2000 by Dawnay, Day Corporate Finance Limited
('Dawnay Day'). Dawnay Day, which is regulated by the Financial Services
Authority, is acting for FIH and no one else and will not be responsible to
anyone other than FIH for providing the protections afforded to customers of
Dawnay Day or for providing advice in relation to the Offer.

This announcement is not for distribution in the United States



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