Fih Group Regulatory News (FIH)

5 Dec 2007 07:00

Falkland Islands Holdings PLC05 December 2007 Falkland Island Holdings Interim results for the six months ended 30 September 2007 Falkland Islands Holdings ("FIH"), an AIM quoted company operating a range ofbusinesses in the Falkland Islands and the Portsmouth Harbour Ferry Company ("PHFC") in the UK, announces its interim results for the six months ended 30September 2007. Financial Highlights: - Turnover from continuing activities up 3% to £7.5 million (2006: £7.3 million)- Profits before taxation rose 25% to £794,000 (2006: £634,000)- Earnings per share increased 28% to 6.4p (2006: 5p)- Equity shareholders funds at 30 September 2007, reported under IFRS for the first time were £36.9 million up from £24.7 million as at 31 March 2007- Group's cash balances remain healthy at £4.9 million- No interim dividend proposed Operating Highlights: - Encouraging results achieved from Falklands businesses: - Better illex squid catches resulted in good growth from fishing agency and support services - Retailing operations only marginally ahead of last year; good progress made with refurbishment and reorganisation of DIY operations - General trading activity aided by increase in visitor numbers due to 25th Falklands War Commemoration - Good results from PHFC: - Revenues increased 4.8% to £1.88 million - passenger numbers up by 1.5%; the first time since 2004 that a real increase in passenger numbers has been experienced - Shareholding in Falkland Oil & Gas ("FOGL") 15 million shares (16.2%) - FOGL completed CSEM and infill 2D seismic surveys; initial results are encouraging - FOGL has concluded a farm - out agreement with BHP Billiton ("BHPB") by which BHPB will gain a 51% interest in its licences, pay 68% of costs through 2 wells and reimbursed FOGL $12.75 million in respect of previously incurred costsOutlook: - Good start to the year provides confidence for continued growth for the year to March 2008- Increases in exploration activity and the future drilling campaign are expected to provide opportunities in the Falkland Islands- Continuing to seek suitable acquisition which will enhance shareholder value David Hudd, Chairman of Falkland Islands Holdings plc: "The group has continued to make good progress during the period. Particularlyencouraging were the improved results from the fishing agency, whilst there-organisation of the retailing and DIY businesses should strengthen customerappeal. FOGL has continued to move forward with the completion of a successfulexploration programme and the introduction of BHP Billiton as a partner. Thefarm-out secures the drilling of two wells on the acreage and FOGL is now fundedthrough a significant proportion of the near term exploration programme. YourGroup has a substantial stake in FOGL and will also benefit from the demand forsupport services in the Falklands from the exploration contractors. The Board remains confident that the Group will continue to deliver solid growthwhilst also looking to identify suitable acquisitions to deliver further valuefor our shareholders." 5 December 2007 Enquiries: Falkland Islands Holdings Tel: 01279 461 630David Hudd, Chairman Tel: 07771 893 267John Foster, Managing Director Tel 07710 764 556 Dawnay Day (NOMAD)David Floyd Tel: 020 7509 4570 College HillNick Elwes, Paddy Blewer Tel: 020 7457 2020 Chairman's and Managing Director's Review Overview We are pleased to report an encouraging set of interim results for your Companyfor the half year to 30 September 2007. Profits before taxation rose 25% to£794,000 (2006: £634,000) and turnover increased by 3% to £7.5 million (2006:£7.3 million). Earnings per share were 6.4p per share (2006: 5p) an increase of28% compared to the first half of 2006/7. As in previous years no interimdividend is proposed. Equity shareholders' funds at 30 September 2007, reported for the first timeunder International Financial Reporting Standards (IFRS), were £36.9 million up£12.1 million from 31 March 2007 representing net assets per share of 436p(2006: 290p per share) Operations Falkland Islands The current period started encouragingly in the Falklands with revenues fromfishing agency support services showing good growth on the previous year as aresult of better illex squid catches. General trading activity was helped by anincrease in the number of visitors to the Islands for the commemoration of theFalklands War. However, revenue from the Group's retailing operations were onlymarginally ahead as subdued local demand and competition restricted growth. Inthe first half, progress was made with the reorganisation and refurbishment ofDIY operations into two discrete profit centres: Homebuilder for buildingmaterials and supplies and Home Living for soft furnishings and household goods.In September the Gallery clothing store was also successfully re-branded as "Basics" to offer a simpler more attractive range of clothing. Theserefurbishments and further planned improvements to the main West Storesupermarket will strengthen customer appeal and competitiveness. Insurancebroking, property rental and financial services continued to show growth on2006. Revenue from Falklands trading operations grew by 2.9% in the first half to£5.65 million (2006: £5.49 million). Profit before tax boosted by higher marginsearned by fishing agency activities increased by 59% from £259,000 to £411,000in the 6 months to 30 September 2007. United Kingdom Results for the half year at the Portsmouth Harbour passenger ferry (PHFC) werealso pleasing with steady progress being made. Despite the wet summer, overallpassenger numbers were ahead by 1.5% and revenues increased by 4.8% to £1.88million (2006: £1.80 million) in the 6 months to 30 September 2007. This wasthe first time since late 2004 that a real increase in total passenger numbershas been experienced over a 6 month period, reflecting increased awareness ofthe attractiveness of the ferry compared to alternative methods of transport.During the Summer the refurbishment of PHFC's pontoon landing stage atPortsmouth was carried out and discussions have continued with Gosport Councilto finalise the design of a replacement pontoon in Gosport. The new pontoon isexpected to be installed early in 2009. The continued commitment of PHFC'sstaff enabled the ferry to maintain its enviable reputation for reliability,achieving a remarkable 99.6% on time service in the period. In the 6 months to30 September 2007 profits before tax at PHFC were marginally ahead at £383,000compared to £375,000 in the comparable period. Investments & Financial Assets The Group continues to hold its strategic 16.2% shareholding (15 million shares)in the AIM listed oil exploration company, Falkland Oil and Gas (FOGL). Duringthe period FOGL completed its Controlled Source Electro Magnetic (CSEM) Surveyand also concluded its programme of 2D seismic work, with initially encouragingresults. Most significantly for the future, in October FOGL concluded a farm -out agreement with the largest resources company in the world BHP Billiton(BHPB) who will become the operator of the licences from January 2008. BHPB hasextensive deep sea exploration and development experience in the Gulf of Mexico,Australia and West Africa. The terms of the farm-out provide that the revised licence commitment of 2 wellswill be drilled in FOGL's acreage before the expiry of the initial licenceperiod on 31 December 2010. This will be the first drilling activity in theFalklands since the North Falklands campaign of 1998. BHPB has acquired a 51% interest in the licences and has agreed to reimburseFOGL with $12.75 million in respect of previously incurred expenditure and pay68% of the costs of the exploration programme including two wells. As a resultFOGL is now funded through a significant proportion of the near term explorationprogramme. After the farm-out, FIH's 16.2% shareholding now represents a 7.9%indirect interest in the licences. The market value of the Group's 15 million ordinary shares in FOGL (16.2%) at 30September 2007 was £24.3 million (162p per share) compared to cost of £2.4million. Balance Sheet and Cash Flow During the period the Group spent £0.5 million refurbishing and upgrading itskey operating assets both in the Falklands and the UK with expenditure incurredon new in-fill housing developments in Stanley and the upgrading of the Group'sretail outlets. Working capital investment increased as inventories in theGroup's retail operations rose from £2.7 million to £3.2 million in the run upto Christmas. The group's pension liabilities under defined benefit schemes, shown grossbefore the deduction of deferred tax, fell from £2.5 million as at 31 March 2007to £2.2 million at 30 September 2007. Interest bearing loans and liabilitieswere £2.6 million (31 March 2007: £2.7 million) and the Group's cash balancesremained healthy at £4.9 million (£5.0 million as at 31 March 2007). Outlook In the second half of the year economic conditions in the Falklands are expectedto be more subdued with continued pressure on retail margins, while in the UKferry passenger numbers and revenues are expected to remain at a broadly similarlevel to last year. However, the good start seen in the first half gives usconfidence that the Group will continue to make progress and will return a solidresult for the year to 31 March 2008. Looking further ahead, increases in exploration activity and future drillingprovide opportunities for many of our business units in the Falklands. Inaddition, the agreement recently reached with the Falkland Islands Government toexchange the racecourse, which has been in Company ownership for over 100 years,for other land including 15 acres with potential for housing development offersexciting possibilities as demand for housing increases. With Shareholders funds of over £36 million and net cash balances of £2.3million your Company is in a strong financial position going forward. We areseeking to capitalise on our financial strength and continue to look at suitableacquisitions in order to enhance shareholder value further. David Hudd John FosterChairman Managing Director Falkland Island Holdings plcInterim Report 2007 Unaudited Interim Consolidated Income StatementFOR THE 6 MONTHS ENDED 30 SEPTEMBER 2007 Notes 6 months to 6 months to Year ended 30 September 30 September 31 March 2007 2006 2007 £'000 £'000 £'000 Revenue 3 7,530 7,285 15,618 Cost of sales (4,438) (4,521) (9,531)Gross profit 3,092 2,764 6,087 Pension scheme restructuring costs (105)Other administrative expenses (2,412) (2,184) (4,623) Administrative expenses (2,412) (2,184) (4,728) Other operating income 148 124 338 Operating profit 828 704 1,697 Finance income 129 103 205Finance expense (95) (121) (236)Net bank interest 34 (18) (31) Profit on disposal of financial investment 485Pension scheme net financing cost (68) (52) (124) Net financing (costs) / income (34) (70) 330 Profit before tax 794 634 2,027 Taxation 4 (258) (208) (394) Profit attributable to equity holders of 536 426 1,633the parent Earnings per share 5 Basic 6.4p 5.0p 19.4p Diluted 6.0p 5.0p 19.2p Falkland Island Holdings plcInterim Report 2007 Unaudited Consolidated Balance SheetAT 30 SEPTEMBER 2007 Notes 30 September 30 September 31 March 2007 2006 2007 £'000 £'000 £'000Non-current assetsIntangible assets 3,979 3,979 3,979Property, plant and equipment 6,539 6,325 6,268Investment properties 1,562 1,604 1,588Financial assets - investments in quoted 6 24,300 13,650 12,900companiesOther financial assets 30 46 45Deferred tax assets 576 671 648 Total non-current assets 36,986 26,275 25,428Current assetsInventories 3,160 2,751 2,678Trade and other receivables 2,253 1,328 2,384Other financial assets 139 92 133Cash and cash equivalents 4,890 4,160 4,959 Total current assets 10,442 8,331 10,154 TOTAL ASSETS 47,428 34,606 35,582Current liabilitiesInterest bearing loans and borrowings (542) (499) (542)Income tax payable (847) (520) (570)Trade and other payables (4,041) (2,473) (4,247) Total current liabilities (5,430) (3,492) (5,359)Non-current liabilitiesInterest bearing loans and liabilities (2,074) (3,193) (2,191)Pension liabilities (2,246) (2,589) (2,517)Deferred tax liabilities (744) (855) (744) Total non-current liabilities (5,064) (6,637) (5,452)TOTAL LIABILITIES (10,494) (10,129) (10,811) Net assets 36,934 24,477 24,771Capital and reservesCalled up share capital 847 847 847Share premium account 7,206 7,206 7,206Other reserves 703 703 703Retained earnings 6,332 4,681 5,535Financial assets revaluation reserve 21,846 11,040 10,480Equity shareholders' funds 7 36,934 24,477 24,771 Falkland Island Holdings plcInterim Report 2007 Unaudited Consolidated Cash FlowFOR THE 6 MONTHS ENDED 30 SEPTEMBER 2007 Cash Flow Statement 6 months to 6 months to Year ended 30 September 30 September 31 March 2007 2006 2007 £'000 £'000 £'000Profit for the period 536 426 1,633Adjusted for:Depreciation 239 234 468Net financing costs 34 70 (330)Gain on sale of investment properties (10) - -Equity-settled share-based payment 68 45 101expensesIncome tax expense 258 208 394Operating profit before changes in working 1,125 983 2,266capital and provisions(Increase) / decrease in trade and other 140 371 (725)receivables(Increase) / decrease in inventories (482) 356 429Increase / (decrease) in trade and other (272) (1,004) 316payablesIncreasein provisions and employee 11 17 17benefitsCash generated from operations 522 723 2,303Interest paid (95) (51) (236)Income taxes paid (53) (338)Net cash from operating activities 427 619 1,729 Cash flows from investing activitiesAcquisition of property, plant and (494) (116) (282)equipmentCosts incurred in restructuring investment (34)holdingsProceeds from sale of investment 20propertiesProceeds from sale of investments - 675Interest received 129 21 205Net cash from investing activities (379) (95) 598 Cash flow from financing activitiesRepayment of secured loan (117) (116) (532)Repayment of loan notes - (43)Issue of ordinary share capital 151 151Dividends paid - (545)Net cash from financing activities (117) 35 (969) Net increase in cash and cash equivalents (69) 559 1,358Cash and cash equivalents at start of 4,959 3,601 3,601periodCash and cash equivalents at end of period 10 4,890 4,160 4,959 Falkland Island Holdings plcInterim Report 2007 Unaudited Consolidated Statement of Recognised Income and ExpenseFOR THE 6 MONTHS ENDED 30 SEPTEMBER 2007 6 months to 6 months to Year ended 30 September 30 September 31 March 2007 2006 2007 £'000 £'000 £'000 Change in fair value of equity securities 11,366 (9,619) (10,179)available for sale PHFC pension scheme gain 48 (7) 43FIC pension scheme gain 145 2 88Actuarial gain / (loss) on pension schemes 193 (5) 131 Net income / (expense) recognised directly 11,559 (9,624) (10,048)in equity Profit for the period 536 426 1,633 Total recognised income and expense for 12,095 (9,198) (8,415)the period Falkland Island Holdings plcInterim Report 2007 Notes to the Unaudited Interim Statements 1. Basis of preparation To date Falkland Islands Holdings plc has prepared its primary financialstatements under UK Generally Accepted Accounting Principles ('UK GAAP'). Foraccounting periods starting from 1 April 2007 onwards, in accordance with AIMrules, the Group is required to prepare its consolidated financial statements inaccordance with International Accounting Standards ('IAS') and InternationalFinancial Reporting Standards as adopted by the European Union ('adopted IFRS').These interim financial statements are the first published results underadopted IFRS. The Group's first Annual Report under adopted IFRS will be forthe year ending 31 March 2008. The date for the transition to IFRS was 1 April2006, being the start of the period of comparative information. On 31 October 2007 the Group published an analysis of the impact of adoptingIFRS from 1 April 2006. This news release is available from the Group's websiteat www.fihplc.com. This included income statement, balance sheet and openingbalance sheet reconciliations, as well as details of the accounting policiesapplied in restating its financial statements for the year ended 31 March 2007and the six months ended 30 September 2006. The financial statements have beenprepared in accordance with accounting policies the Group expects to follow whenthe first annual IFRS financial statements are prepared for the year ending 31March 2008. This interim financial information has been prepared on the basisof the recognition and measurement requirements of IFRS in issue that areendorsed by the EU and effective (or available for early adoption) at 31 March2008 or are expected to be endorsed and effective (or available for earlyadoption) at 31 March 2008. As permitted, these interim financial statementshave been prepared in accordance with AIM Rules and not in accordance with IAS34'Interim Financial Reporting'. The adopted IFRS that will be effective (or available for early adoption) in theannual financial statements for the year ending 31 March 2008 are still subjectto change and to additional interpretations and therefore cannot be determinedwith certainty. Accordingly, the accounting policies for that annual period willbe determined finally only when the annual financial statements are prepared forthe year ending 31 March 2008. The Interim Report was approved by the Board on 4 December 2007. Section 240 Statement The comparative figures for the financial year ended 31 March 2007 are not theCompany's statutory accounts for that financial year. Those accounts, whichwere prepared under UK GAAP, have been reported on by the Company's auditors anddelivered to the Registrar of Companies. The report of the auditor wasunqualified, did not include a reference to any matters to which the auditordrew attention by way of emphasis without qualifying their report and did notcontain a statement under section 237(2) or (3) of the Companies Act 1985. Falkland Island Holdings plcInterim Report 2007 Notes to the Unaudited Interim Statements 2. Adoption of International Financial Reporting Standards ('IFRS') The Board has adopted IFRS for the first time. A document entitled 'Restatementof primary financial information for 2006/7 under International FinancialReporting Standards', detailing the impact of adoption on the Company'sfinancial statements, is available on the Company's website. The impact on theincome statement is as follows: 6 months to Year ended 30 September 31 March 2006 2007 £'000 £'000 Profit after tax previously reported under UK GAAP 341 1,446Add: write-back of goodwill amortization 102 204Less: accrual for holiday pay (17) (17) Profit after tax restated under adopted IFRS 426 1,633 3. Revenue and profit analysis 6 months to 30 September Year ended 31 March 2007 2006 2007 Falklands Ferry Total Falklands Ferry Total Falkland Ferry Total £'000 £'000 £'000 £'000 £'000 £'000 £'000 £'000 £'000 Turnover 5,646 1,884 7,530 5,487 1,798 7,285 12,256 3,362 15,618 Segment net assets 4,448 8,186 12,634 3,039 7,789 10,828 4,012 7,859 11,871 Investments 24,300 24,300 13,650 13,650 12,900 12,900Group net assets 28,748 8,186 36,934 16,689 7,789 24,477 16,912 7,859 24,771 Segment operatingprofit 416 412 828 334 370 704 1,105 592 1,697 Net interest income/ (expense) (5) (29) (34) (75) 5 (70) (115) (40) (155)Segment profitbefore tax 411 383 794 259 375 634 990 552 1,542 Profiton sale of fixedasset investments 0 0 485 485 Group profitbefore tax 411 383 794 259 375 634 1,475 552 2,027 Falkland Island Holdings plcInterim Report 2007 Notes to the Unaudited Interim Statements 4. Taxation The taxation charge has been estimated to be 32% (2006: 32%) 5. Earnings per share Earnings per share has been calculated on profit after tax of £536,000 (2006:£426,000) based on the weighted average number of shares in issue, excludingshares held in the Employee Share Ownership Plan of 8,433,998 (2006: 8,417,143).The diluted earnings have been further adjusted to assume the full exercise ofshare options in issue, to the extent that they are dilutive. 6. Financial assets - investments in quoted companies (a) At fair value The Group has an investment in the AIM quoted company Falklands Oil and GasLimited ('FOGL'). 30 September 30 September 31 March 2007 2006 2007 £'000 £'000 £'000FOGL share price 162p 85p 86p Investments stated at fair value:Falkland Oil and Gas Limited 24,300 12,750 12,900Falkland Gold and Minerals Limited - 900 -Investments at fair value: 24,300 13,650 12,900 An unrealized gain of £11,366,000 has been recognized in the period andtransferred to the Revaluation Reserve as a component of shareholders' funds. (b) At cost On 7 September 2007 Falkland Islands Holdings plc transferred its entireinterest in FOGL to Erebus Limited, a fully-owned subsidiary incorporated in theFalkland Islands. £'000 £'000 £'000Prior to adoption of IFRS the Group carriedinvestments at cost:Falkland Oil and Gas Limited 2,454 2,420 2,420Falkland Gold and Minerals Limited - 190 -Investments at historic cost 2,454 2,610 2,420 7. Reconciliation of movement in shareholders' funds 30 September 30 September 31 March 2007 2006 2007 £'000 £'000 £'000 Opening shareholders' funds previously 24,771 33,479 33,479reported(1) Profit for the period 536 426 1,633Dividends paid - - (545)Issue of shares - 9 9Share-based payments 68 45 101Unrealized gain / (loss) on fixed asset 11,366 (9,619) (10,179)investmentsPremium on shares issued in the year net - 142 142of expensesOther recognised gains and losses 193 (5) 131 Net addition to / (reduction in) 12,163 (9,002) (8,708)shareholders' funds Closing shareholders' funds 36,934 24,477 24,771 (1) As restated for reporting under IFRS in the 'Restatement of primaryfinancial information for 2006/7 under International Financial ReportingStandards' available on the Company's website. 8. The interim report has been prepared on the basis of the accountingpolicies set out in the Group's 'Restatement of primary financial informationunder International Financial Reporting Standards' available on the Company'swebsite. Falkland Island Holdings plcInterim Report 2007 Notes to the Unaudited Interim Statements 9. Analysis of change in debt As at As at 1 April Cash 30 September 2007 flows 2007 £'000 £'000 £'000 Cash at bank and in hand 4,959 (69) 4,890 Debt due within one year (542) (542)Debt due after one year (2,191) 117 (2,074) Net funds / (debt) at end of period 2,226 48 2,274 Falkland Island Holdings plcInterim Report 2007 Company Information Directors Registered OfficeDavid Hudd Kenburgh CourtChairman 133 - 137 South Street Bishop's StortfordJohn Foster Hertfordshire CM23 3HXManaging Director T: 01279 461630 F: 01279 461631Leonard Licht E: admin@fihplc.comSenior Independent Non-Executive Director Registered number 03416346 Sir Harry SolomonNon-Executive DirectorChairman of the Remuneration Committee Mike KillingleyNon-Executive DirectorChairman of the Audit Committee Company SecretaryJames Ivins Senior Staff in the Falkland Islands Senior Staff at the Portsmouth Harbour Ferry CompanyRoger Spink, Director and General Manager Paul Fuller, Director and General ManagerDavid Castle, Retailing Director Rhett Gibson, Senior SkipperAna Crowie, Financial Controller Christine Waters, Financial ControllerT: +500 27600 T: 02392 524551E: fic@horizon.co.fk E: admin@gosportferry.co.ukW: www.the-falkland-islands-co.com W: www.gosportferry.co.uk This information is provided by RNS The company news service from the London Stock Exchange