Fih Group Regulatory News (FIH)

24 November 2023

FIH group plc

("FIH" or the "Group")

Results for the Six Months Ended 30 September 2023

FIH, the AIM quoted international specialist services group with businesses in the Falkland Islands and the UK, is pleased to announce its unaudited results for the six months ended 30 September 2023 ("the period"). Comparisons shown below are for the same period in 2022 unless otherwise stated.

Consistent Performance and a Strong Foundation for the Second Half of the Year

Highlights

· Revenue up 17% to £26.7 million (2022: £22.9 million) with improvement in all three businesses.

· Underlying pre-tax profit of £0.6 million (2022: £0.6 million) reflecting inflationary pressures across all businesses and investment in key people to drive future growth in Momart.

· Strong cash position of £9.2 million as at 30 September 2023 (2022: £7.6 million).

· An interim dividend to be paid of 1.25 pence per share (2022: 1.2 pence per share).

Outlook

· Momart and Portsmouth Harbour Ferry Company ("PHFC") performing in line with expectations.

· Falkland Islands Company ("FIC") performance in the second half should benefit from the Falkland Islands tourist season and increased construction activity in the more productive spring and summer months.

Stuart Munro Chief Executive, said:

"Despite the inflationary pressures experienced in all areas of the business, the Group delivered an underlying pre-tax profit of £0.6 million, which was consistent with the prior year. The UK businesses are delivering as expected, with Momart on track to deliver a much stronger second half. In FIC, the second half of the year should benefit from increased construction activity in the traditionally more productive austral spring and summer months. This is also the start of the tourist season, which should boost both direct and indirect revenues in a number of FIC business sectors, including Retail and Penguin Travel in Support Services."

Enquiries:

Market Abuse Regulation (MAR) Disclosure

This announcement contains inside information for the purposes of Article 7 of the UK version of Regulation (EU) No 596/2014 which is part of UK law by virtue of the European Union (Withdrawal) Act 2018, as amended ("MAR"). Upon the publication of this announcement via a Regulatory Information Service, this inside information is now considered to be in the public domain.

The person responsible for arranging the release of this announcement on behalf of the Company is Stuart Munro Chief Executive of the Company.

Chairman's Statement

Revenue growth in all three businesses and an underlying pre-tax profit of £0.6 million, which was consistent with the prior year despite continuing global economic pressures, demonstrate the Group's resilience and provide a solid base for the traditionally stronger second half of the year.

Our people are crucial to the Group's success and I would like to thank each and every one of them for their skill, dedication and hard work, which is evident across the businesses and very much appreciated.

Dividend

I am pleased to announce an interim dividend of 1.25 pence per share (2022: 1.25 pence per share) which will be paid on 12 January 2024 to shareholders on the register at the close of business on 1 December 2023.

The Group has a Dividend Reinvestment Plan ("the Plan") that allows shareholders to reinvest dividends to purchase additional shares in the Group. For shareholders to apply the proceeds of this and future dividends to the Plan, application forms must be received by the Group's Registrars by no later than 15 December 2023*.

Board and Governance

On 1 June 2023, Holger Schröder was appointed as a non-executive director of the Group.

As announced on 24 February 2023, Robin Williams stepped down from the Board at the AGM on 28 September 2023 and I was appointed the non-executive Chairman of the Group. On behalf of the Board, I would like to thank Robin for his extensive contribution to the Group in his six years as Chairman and look forward to working with the rest of the Board to drive the Group forward.

Nick Henry

Chairman

24 November 2023

* Existing participants in the Plan will automatically have the interim dividend reinvested. Details on the Plan can be obtained from Link Group on 0371 664 0381 or at www.signalshares.com. Calls are charged at the standard geographic rate and will vary by provider. If you are outside the United Kingdom, please call +44 371 664 0381. Calls outside the United Kingdom will be charged at the applicable international rate. The lines are open from 9.00am to 5.30pm, Monday to Friday excluding public holidays in England and Wales.

Chief Executive's Review

Overview

Revenue of £26.7 million for the six months ended 30 September 2023 was £3.8 million ahead of the same period last year, with improvements in all three businesses and in the majority of their constituent business sectors.

Group underlying pre-tax profit of £0.6 million remained in line with the same period last year due to a number of factors, including inflationary pressures which impacted all businesses and FIC Retail in particular, and investment in staff in Momart to deliver future growth.

Group Trading Results for the Six Months Ended 30 September 2023

* Underlying pre-tax profit is defined as, profit before tax, before non-trading items.

** As in prior years the profits reported for each operating company are stated after the allocation of head office

management and plc costs which have been applied to each subsidiary on a consistent basis.

*** As described in the basis of preparation, the comparative numbers were restated to correct the accounting treatment of hedge accounting.

Dividend

An interim dividend of 1.25 pence per share (2022: 1.2 pence per share) will be paid on 12 January 2024 to shareholders on the register at the close of business on 1 December 2023.

Group Operating Company Performance

Falkland Islands Company

Total revenue of £15.2 million was £2.9 million ahead of the same period last year, largely driven by growth in Falkland Building Services ("FBS"), due mainly to the £17.3 million contract to build a total of 70 Houses for the Falkland Islands Government ("FIG") and the Ministry of Defence ("MOD"). Revenue recognised on this contract also included circa £0.5 million from variation orders. Retail revenue also improved, although the level of inflation put pressure on the resultant margin. These increases were partly offset by revenue reductions in Falkland 4x4, which experienced difficulties with sourcing both used and new vehicles, and Support Services, where a short-term arrangement to run a nursery service ended in the second half of the prior year.

The underlying operating profit of £0.2 million was £0.1 million below the same period last year. This was mainly due to reduced margins in Retail due to high energy costs and other inflationary pressures, together with reduced vehicle sales in Falkland 4x4 and less activity in Support Services.

Momart

Revenue of £9.3 million for the six months to 30 September 2023 was £0.7 million ahead of the prior year, with improvements across all sectors of the business.

The majority of the growth arose in Gallery Services, driven by a strong commercial market in both the gallery and art fair sectors and increased trading with both existing and new clients. The growth in Exhibitions was less pronounced, but the strength of its order book is expected to result in a stronger second half performance.

The underlying operating profit of £0.1 million was £0.1 million ahead of the same period last year, although this was suppressed slightly by investment in additional headcount and associated recruitment costs necessary to deliver future growth.

Portsmouth Harbour Ferry Company

Passenger numbers for the first half of the year were broadly in line with the same period last year, with inflationary fare rises in April 2023 being largely responsible for revenue increasing by £0.2 million to £2.2 million.

Underlying operating profit of £0.5 million was in line with the prior year, despite the latter including £0.1 million of non-recurring support from Gosport Council.

Trading Outlook

The trading outlook for the Group remains positive. PHFC continues to perform as expected and in Momart, the strong order book in Exhibitions, continued growth in the Gallery Services business and a trading cycle which is skewed towards the latter half of the year, should result in a stronger second half performance. In FIC, activity in FBS is expected to accelerate in the second half of the year, which includes the traditionally more productive austral spring and summer months. The second half of the year also benefits from the tourist season, which should boost both direct and indirect revenues in a number of FIC business sectors, including Retail and Penguin Travel in Support Services.

Stuart Munro

Chief Executive

24 November 2023

Chief Financial Officer's Review

Financial Review

Restatements

As detailed in the basis of preparation, the comparative numbers were restated to correct the accounting treatment of some right of use assets and the application of hedge accounting.

Revenue

Group revenue increased by £3.8 million (17%) to £26.7 million (2022: £22.9 million) with improvements of £2.9 million in FIC, £0.7 million in Momart and £0.2 million in PHFC.

Operating Profit

Operating profit of £0.9 million was £0.1 million below the prior year, with improvements from revenue growth offset by a number of factors, as described in the Chief Executive's review.

Net Financing Costs

The Group's net financing costs of £0.1 million were £1.3 million lower than the prior year due mainly to the movement in the fair value of the derivative instrument. The net underlying finance expense of £0.3 million was £0.1 million lower than the previous year because of higher interest rates on cash on deposit.

Reported Pre-tax Profit

The reported pre-tax result for the six months ended 30 September 2026 was a profit of £0.8 million (2022: £2.3 million as restated per note 1). Underlying pre-tax profit was £0.6 million (2022: £0.6 million).

Taxation

Taxation charges on the period results for both the six months ended 30 September 2023 and 30 September 2022 have been estimated on the basis of 25% and 26% of profits arising in the UK and the Falkland Islands respectively, resulting in a current tax charge of £0.1 million for each period.

Earnings per Share

Diluted Earnings per Share ("EPS") derived from reported profits was 4.9 pence (2022: 13.8 pence). The movement is explained by the movement in the fair value of the derivative instrument. Underlying diluted EPS was 3.5p (2022: 3.7p).

Balance Sheet and Cash Flow

The Group's balance sheet remained strong with total net assets of £44.8 million, reflecting an improvement on the balances at 31 March 2023 of £44.0 million and 30 September 2022 of £43.1 million (as restated per note 1) of £0.8 million and £1.7 million respectively. This was largely driven by the revaluation of the Group's interest rate swap.

*Includes a mortgage of £11.9 million on the Group's freehold premises in Leyton (31 March 2023: £12.1 million).

**As detailed in the basis of preparation, the comparative numbers were restated to correct the accounting treatment of some right of use assets.

Bank loans reduced to £12.8 million (31 March 2023: £13.3 million) following scheduled loan repayments of £0.5 million.

The Group's cash balance reduced by £3.6 million to £9.2 million (31 March 2023: £12.8 million) reflecting scheduled interest, loan and lease repayments of £1.1 million, capital expenditure of £1.2 million and a £1.3 million net cash outflow from operating activities. The usual seasonality of activity in FIC and Momart resulted in an increase in working capital in the first six months, which should improve in the busier second half of the year. In addition to this, a small number of large creditor balances were settled after 31 March 2023.

The Group's outstanding lease liabilities totalled £6.2 million (31 March 2023: £6.5 million) with £4.5 million of the balance (31 March 2023: £4.6 million) relating to the leases from Gosport Borough Council to PHFC for the Gosport Pontoon and associated ground rent, which run until June 2061.

Overall, net debt increased to £3.6 million (31 March 2023: £0.5 million).

Reuben Shamu

Chief Financial Officer

24 November 2023

Consolidated Income Statement

For the Six Months Ended 30 September 2023

See note 6 for an analysis of earnings per share on underlying profit (defined as profit after tax before non-trading items).

Consolidated Balance Sheet

At 30 September 2023

Consolidated Cash Flow Statement

For the Six Months Ended 30 September 2023

Continued on next page.

Consolidated Statement of Comprehensive Income

For the Six Months Ended 30 September 2023

Condensed Consolidated Statement of Changes in Shareholders' Equity

For the Six Months Ended 30 September 2023

Notes to the Unaudited Interim Statements

1. Basis of Preparation

This interim financial statement comprises the condensed consolidated balance sheets at 30 September 2023, 30 September 2022 and 31 March 2023 and condensed consolidated statements of income, comprehensive income, cash flows and changes in shareholders' equity for the periods then ended and related notes of FIH group plc (hereinafter 'the interim financial information').

Cash flow forecasts for the Group have been prepared covering the going concern period and the directors have considered downside scenarios to the base case forecasts to reflect emerging risks and uncertainties as a result of global economic conditions. The base case and sensitised forecasts indicate that the business will be cash generative over this period and that the Group will comply with its covenants and have sufficient funds to meet its liabilities as they fall due throughout the going concern period.

Consequently, the directors are confident that the Group and Company will have sufficient funds to continue to meet its liabilities as they fall due for at least 12 months from the date of issue of these interim financial statements and the interim financial statements have therefore been prepared on a going concern basis.

The interim financial information has been prepared in accordance with the accounting policies set out in the Group's 2023 annual financial statements. As permitted, these interim financial statements have been prepared in accordance with AIM rules and not in accordance with IAS34 'Interim Financial Reporting'.

Restatements

The prior period financial information for the following areas was restated as set out below.

Right of use assets

The seabed lease in PHFC contains variable rental payments which are reset every five years based on the revenue of the ferry business. This lease was previously incorrectly accounted for as one 50-year lease with all future expected payments over the period of the lease reflected in the measurement of the liability. The liability has been restated as an element of the future lease payments varies with the revenue of PHFC and should not have been reflected in the measurement of the liability. The lease liability will be remeasured in the future when variable payments become fixed. The impact at 30 September 2022 was an increase in retained earnings of £0.2 million and reductions in property, plant and equipment and interest-bearing loans and borrowings of £0.4 million and £0.6 million respectively. There was no impact on profit for the period ended 30 September 2022.

Hedge accounting

Following a reassessment of the criteria for applying hedge accounting after the benchmark change from LIBOR to SONIA, it was concluded that the hedging criteria were no longer met. Hedge accounting was therefore discontinued from 1 January 2022. The impacts of this change were as follows:

· An increase in retained earnings of £0.5 million and reduction in the hedging reserve in equity of £0.5 million as at 31 March 2022.

· A credit to the consolidated income statement of £1.3 million in the period ending 30 September 2022 (comprising a £1.7 million credit to net finance income and a £0.4 million charge to tax expense), which was previously incorrectly accounted for in the hedging reserve. The impact on both basic and diluted EPS in the period to 30 September 2022 was an increase of 10.1p.

Section 245 Statement

The comparative figures for the financial year ended 31 March 2023 are not the Company's full statutory accounts for that financial year. Those accounts have been reported on by the Company's auditors and delivered to the Registrar of Companies. The report of the auditor was unqualified, did not include a reference to any matters to which the auditor drew attention by way of emphasis without qualifying their report and did not contain a statement under section 498 (2) or 498 (3) of the Companies Act 2006.

2. Segmental Revenue and Profit Analysis

Unaudited - Six Months Ended 30 September 2023

2. Segmental Revenue and Profit Analysis (Continued)

Unaudited - Six Months Ended 30 September 2022

2. Segmental Revenue and Profit Analysis (Continued)

Year Ended 31 March 2023

3. Non-trading Items

Restructuring costs relate to employee redundancies.

4. Finance Income and Expense

5. Taxation

The current tax charge has been estimated on the basis of 25% and 26% of profits arising in the UK and the Falkland Islands respectively (September 2022: 19% and 26% of profits arising in the UK and the Falkland Islands respectively).

6. Earnings Per Share on Underlying Profit

To provide a comparison of earnings per share on underlying performance, the calculation below sets out basic and diluted earnings per share based on underlying profits.

To provide a comparison of earnings per share on underlying performance, the calculation below sets out basic and diluted earnings per share based on underlying profits.