TIDMFKL
RNS Number : 4316P
Falkland Islands Holdings PLC
08 June 2015
8(th) June 2015
Falkland Islands Holdings plc
("FIH" or the "Group")
Final results for the year ended 31 March 2015
A copy of the Group's results are also available on the
Company's website.
FIH, the AIM quoted international services group that owns
essential services businesses in the Falkland Islands and the UK,
is pleased to announce its final results for the year ended 31
March 2015.
Group Financial Highlights
-- Group revenue increased 0.8% to GBP38.56 million (2014: GBP38.26 million)
-- Profit before tax increased 14.4% to GBP3.89 million (2014: GBP3.40 million)
-- Underlying pre-tax profits flat as expected (-2.4%), at
GBP3.56 million (2014: GBP3.65 million)
-- Reported diluted earnings per share increased by 20% to 25.3p (2014: 21.1p)
-- Cash balances increased to GBP7.4 million (2014: GBP5.7 million)
-- Bank borrowings reduced to GBP0.7 million (2014: GBP1.0 million)
-- Net cash flow from operating activities, before capital
expenditure and after tax payment, increased to a record GBP6.4
million (2014: GBP2.8 million)
-- The Board is not recommending the payment of a final
dividend, in line with strategy to reinvest earnings and cash to
accelerate the Group's growth.
Operating Highlights
Falkland Islands Company (FIC)
-- Strong performance with pre-tax profits increasing by 39.4%
to GBP1.56 million (2014: GBP1.12 million)
-- Increased activity due to the Spring 2015 drilling programme
-- Uplift in demand for corporate rented houses, hire vehicles,
agency services and construction work
-- Record squid catch improved confidence and boosted government finances
Momart
-- Return to more normal levels of activity, following
exceptional levels of activity in the prior year
-- Total revenue decreased 16.5% to GBP15.8 million (2014: GBP18.3 million)
-- Underlying operating profit before tax and before
amortisation of intangibles was GBP1.21 million (2014: GBP1.76
million)
-- Agreement reached with the Company's landlord to construct
new facilities on the East London site to increase storage capacity
by 33% (Subject to receipt of final planning permission this is due
to come into effect in early 2016)
-- Market leader in the UK exhibitions market, involved in
installation of prestigious exhibitions such as: Anselm Keifer and
Rubens at the Royal Academy; Matisse at Tate Modern; Virginia Woolf
at the National Portrait Gallery; and Ming at the British
Museum
Portsmouth Harbour Ferry Company
-- Revenues increased 4.3% to GBP4.3 million (2014: GBP4.12 million)
-- Delivery of third modern ferry vessel, "Harbour Spirit" to
provide improved passenger experience
-- Increase in average ferry fares, to cover increased operating
costs of the new ferry, coupled with new fare offerings to
stimulate ferry usage
Falkland Oil & Gas Limited ('FOGL')
-- Gradual divestment of shares in FOGL with sale of 7.8 million
shares in March 2015 at a profit of GBP0.7 million
-- Following the year end, in April 2015, the Group's residual
holding of 5 million FOGL shares was sold at a profit of GBP0.4
million.
-- The Group's decision to liquidate its stake in FOGL reflects
the Board's decision to re-align the portfolio
Edmund Rowland, Chairman of FIH, said:
"This has been a year of significant progress across the Group,
and I am pleased to be reporting an encouraging set of results.
"Momart has continued to handle a number of high-profile
exhibitions in the UK and internationally in the past year, and is
expected to produce renewed progress with planned strategic
improvements across the business over the next financial year.
"The Portsmouth Harbour Ferry Company saw increased revenue
despite reduced passenger numbers in a challenging market place. We
are delighted to have taken delivery of our third modern ferry
vessel, Harbour Spirit, and we anticipate that the business will
benefit from the UK's forecast general economic recovery as well as
the Navy's planned investment in infrastructure.
"This has been a busy year for the Falkland Islands, and we
anticipate further increases in activity in the Falkland Islands
Company businesses, linked to the ongoing drilling campaign and
further infrastructure investment by the Falkland Islands
Government.
"I am also pleased to note the two oil discoveries offshore the
islands, which goes further to prove up the area as a commercial
oil province.
"Overall, Falkland Islands Holdings is in a strong financial
position and we are in a favourable position to accelerate the
Group's growth through further investment in our existing
businesses and strategic acquisitions, in line with our ongoing
growth strategy.
"In the year to date, the Group's trading performance is in line
with our expectations and we anticipate another year of
progress".
- End -
Enquiries:
Falkland Islands Holdings
plc Tel: 0207 087 7970
Edmund Rowland, Chairman Tel: 01279 461630
John Foster, Managing
Director
------------------------------ ---------------------
WH Ireland Ltd. - NOMAD
and Broker to FIH Tel: 0207 220 1666
Adrian Hadden / Mark Leonard
------------------------------ ---------------------
FTI Consulting
Edward Westropp / Eleanor Tel: 020 3727 1000
Purdon
------------------------------ ---------------------
Chairman's Statement
In my first annual report as Chairman I am pleased to report
that the Group achieved an encouraging trading result for the year
in line with the Board's expectations. Reported pre-tax profits
were ahead of the prior year by GBP0.5 million at GBP3.9 million
and underlying pre-tax profits (before amortisation and non-trading
items) were lower by 2.4% at GBP3.6 million (2014: GBP3.7 million).
Diluted earnings per share based upon underlying profits were
unchanged at 22.0p. Reported diluted earnings per share increased
by 20% to 25.3p (2014: 21.1p).
As previously announced, in line with our new policy of
reinvesting earnings and cash to accelerate the growth of the
Group, the Board is not recommending the payment of a final
dividend.
On 9 February 2015, David Hudd retired as Chairman after 13
years' service, during which the Group saw significant growth. On
behalf of the Board and our shareholders, I would like to express
our grateful thanks to David for his enormous contribution and wish
him a happy retirement. I would also like to thank Mike Killingley
who retired on 13 April 2015 after 10 years' service as a Non
Executive Director.
The Group's financial position is strong and after capital
expenditure of GBP4.7 million, cash balances at the end of the year
were GBP7.4 million and bank borrowings GBP0.7 million. Net cash
flow from operating activities before capital expenditure, and
after the payment of tax, increased by GBP3.6 million to a record
GBP6.4 million. This strong operating cash flow and healthy
liquidity position (with net cash balances of GBP6.7 million) gives
the Group significant untapped borrowing potential and the Board
intends to make use of this to accelerate the Group's growth
through further investment in its existing businesses and through
strategic acquisitions.
Operations
A strong recovery in the Group's Falkland's business, including
encouraging growth from its South Atlantic Construction Company
(SAtCO) Joint Venture, meant that despite the anticipated return to
more normal trading levels at Momart, following the string of
exceptional overseas exhibitions which boosted results in the prior
year, the Group achieved strong levels of operating profits overall
at GBP3.8 million, which is broadly equivalent to the record levels
achieved in the prior year (2014: GBP3.9 million).
In the Falklands, activity was boosted by a record illex squid
catch and preparations for the resumption of exploration drilling
in Falkland's waters which recommenced in spring 2015 with a
further discoveries at the Zebedee and Isobel Deep wells, a
potential southern extension to the 2010 Sea Lion discovery. On the
back of these positive developments the Falklands Islands Company
("FIC") saw a welcome return to growth with revenue ahead by 16.5%
to a record GBP18.5 million (2014: GBP15.9 million) and operating
profits increasing by 34% to GBP1.3 million (2014: GBP1.0
million).
Momart, the Group's Fine Art handling business, saw activity
return to more normal levels of trading. Revenue was lower by 14%
at GBP15.8 million (2014: GBP18.3 million) and operating profit,
before amortisation of the intangible assets, fell back, as
expected, to GBP1.2 million from the record levels seen in the
prior year (2014: GBP1.8 million).
The Portsmouth Harbour Ferry Company ("PHFC") saw operating
profits unchanged at just over GBP1.0 million, with fare increases
in June 2014 offsetting a small (2%) decrease in the number of
passengers using the ferry.
Falkland Oil and Gas (FOGL)
During the year the Group gradually divested its shares in FOGL
with the sale of 7.8 million shares in March 2015 at a profit of
GBP0.7 million and, following the year end, in April 2015, the
Group's residual holding of 5 million FOGL shares was sold at a
profit of GBP0.4 million. Over the course of the 11 years since
FOGL's flotation in 2004, the Group generated over GBP8 million in
cash proceeds and over GBP5 million in profit from its investment.
The sale of shares in FOGL was implemented to augment the Group's
cash resources for further investment in its future growth.
Chairman's Statement (continued)
Outlook
A continuing uplift in economic activity is anticipated in the
Falklands in the first half of the new financial year, linked to
the ongoing drilling campaign and further infrastructure investment
by the Falkland Islands Government. Longer term sustainable growth
will depend on a recovery in the oil price to a level at which oil
companies can see reliable commercial returns. Although there is no
guarantee that such a price recovery will occur in the near term,
over a longer horizon your Board remains confident that oil
development in the Islands will take place and that this will
transform the prospects both for the Falklands and for FIC.
At Momart, the planned expansion of commercial storage
facilities will support growth, and this together with focussed
investment in sales and marketing and further strengthening of the
management team, is expected to produce renewed progress. At the
same time Momart will seek to develop its existing international
partnerships in order to increase its global reach and reputation.
Targeted acquisitions to widen both the range of art related
services and increase the geographical reach of the business are
also being pursued.
For PHFC, the successful delivery of its new vessel, "Harbour
Spirit" will underpin its ferry service to local passengers over
the long term. General economic recovery in the UK and the positive
local impact of the Navy's planned investment in infrastructure to
support its expanding carrier fleet should also begin to drive
steady growth at the ferry over the medium term.
In the year to date, the Group's trading performance is in line
with our expectations and we anticipate a satisfactory year.
In line with the strategy outlined in the Group's pre-close
trading update in April 2015, the Board is also seeking to
accelerate growth and increase the scale of the Group by means of
strategic acquisitions using available cash resources and borrowing
capacity.
Edmund Rowland
Chairman
8 June 2015
Managing Director's Strategic Report
Group Overview
I am pleased to report another good year of trading for the
Group, with revenues ahead by 0.8% at GBP38.6 million (2014:
GBP38.3 million) and a small but expected reduction in underlying
pre-tax profits to GBP3.56 million (2014: GBP3.65 million), which
remained ahead of underlying pre-tax profits in 2012-13 of GBP3.29
million.
In the Falklands, FIC recovered strongly buoyed by a record
squid catch and increased economic activity linked to the
exploration drilling programme. At Momart, trading returned to more
normal levels following a bumper performance in the prior year and
at PHFC revenues and profits remained stable.
Review of Operations
Group revenue and underlying pre-tax profits are analysed
below:
Group revenue
Year ended 31 March 2015 2014 Change
GBPm GBPm %
---------------------------- ----- ----- ------
Falkland Islands Company 18.51 15.88 16.5
Portsmouth Harbour Ferry 4.30 4.12 4.3
Momart 15.75 18.26 -13.7
Total 38.56 38.26 0.8
Group underlying pre-tax profit*
Year ended 31 March 2015 2014 Change
GBPm GBPm %
---------------------------- ----- ----- ------
Falkland Islands Company 1.56 1.12 39.4
Portsmouth Harbour Ferry 0.79 0.77 3.4
Momart 1.21 1.76 -31.5
Total 3.56 3.65 -2.4
---------------------------- ----- ----- ------
* Pre-tax profit before amortisation of intangibles and
non-trading items but including the Group's share of the
contribution from SAtCO, the Group's Joint Venture with Trant
Construction in the Falkland Islands.
Falkland Islands Company ("FIC")
The Falklands had a particularly busy year. Preparations for the
2015 offshore drilling campaign saw increased corporate demand for
rented houses, hire vehicles and agency services and construction
work related to the new temporary dock facility, which led to a
welcome recovery in revenues. The record squid catch in the early
part of the year also improved confidence and boosted government
finances. At the same time, general retail activity picked up and
demand for new kit homes boosted house building. As a result the
pre-tax contribution of the Group's Falklands business recovered
strongly, with pre-tax profits increasing by GBP0.44 million
(+39.4%) to GBP1.56 million (2014: GBP1.12 million).
Managing Director's Strategic Report (continued)
Oil developments
During the year, oil companies led by Premier Oil ("Premier")
and Noble Energy progressed detailed preparations for the new round
of exploration drilling, and in June 2014 the harsh environment
rig, Eirik Raude, was contracted to drill six wells in Falklands'
waters. The distance from the UK supply base has meant resources
have been introduced into Stanley to support the rig: 75 oil
workers are based onshore to co-ordinate supplies and maintenance
for the rig in addition to a 25 strong helicopter support team,
which air lifts the circa 120 rig workers to the platform and
provides Air Sea Rescue back-up. Offshore, rig workers operate in
four week shifts with 50% rotating back to the UK every two weeks
on a dedicated charter aircraft. The rig is supplied by Platform
Support Vessels (PSVs) in addition to a number of Emergency Rescue
and Response Vessels (ERRVs) operating from the new temporary
floating dock facility commissioned by Noble Energy and Premier
which was completed in late 2014 by FIC's Joint Venture SAtCO. The
fleet of support vessels has added a further 35 workers to oil
exploration establishment.
The overall economic impact of this activity is a key driver
behind the growth in FIC in the year under review and is relatively
modest in comparison to the much more extensive impact that any
future oil production in the Islands would have.
In strategic terms the 2015 exploration drilling programme will
help establish the "ultimate resource potential" of the North
Falklands basin and, in the Southern and Eastern basin, the initial
well planned at Humpback will give a strong indication of this
geologically separate basin's potential. In the context of
determining "resource potential" the early positive results from
the Zebedee and Isobel deep wells announced by Premier in April and
May 2015 were encouraging but the outcome of drilling on the
remaining four wells over the course of the next four to five
months remains critical in determining the extent of oil resources
in Falkland's waters.
In parallel with the 2015 drilling programme, Premier has
progressed its detailed planning for the development of the Sea
Lion field in the North Falklands basin. The sharp fall in crude
oil prices in late 2014 caused Premier to revisit its planning
assumptions and since late 2014 Premier has been "engaging with its
supply chain to capture lower costs" in order to offset the fall in
oil prices. Premier is still progressing its Front End Engineering
Design (FEED) plans for a phased development of Sea Lion and is
planning to use a leased floating production storage and offloading
unit ("FPSO") which will reduce its planned capital expenditure
compared to the previous Tension Leg Platform solution. Premier
estimates that capital expenditure prior to first oil has now
reduced to $1.8 billion and further savings are being sought.
Premier has also announced that cost savings are expected in the
areas of drilling, subsea and fabrication. Depending on its success
in driving down production costs and its expectations on the
trajectory of future oil prices, the Premier Board has announced
that any decision to commit to the development of Sea Lion will not
take place before mid-2016 at the earliest.
Despite the current uncertainty on timing we remain optimistic
that Sea Lion and other commercially significant oil reserves will
be developed in Falkland's waters in due course. The FIH Group has
made capital investments of over GBP8 million in the Falklands in
the last five years and FIC remains exceptionally well placed with
a broadly based, modernised business infrastructure, strong
property portfolio and an experienced team to takeadvantage of the
exploitation of the Falkland's oil reserves.
Managing Director's Strategic Report (continued)
Trading
Overall revenue in FIC increased by GBP2.63 million (+16.5%) to
GBP18.51 million (2014: GBP15.88 million).
FIC Operating results
Year ended 31 March 2015 2014 Change
GBPm GBPm %
---------------------------------------- ----- ----- ------
Revenues
Retail 9.54 9.26 3.0
Falklands 4x4 3.07 2.66 15.6
Freight & Port Services 1.24 1.26 -1.7
Support services 1.66 1.30 28.1
FBS (property and construction) 3.00 1.40 113.5
Total FIC revenue 18.51 15.88 16.5
FIC operating profit 1.31 0.98 34.3
Underlying operating profit margin 7.1% 6.2% 15.2
Share of results of SAtCO Joint venture 0.18 0.04 400.0
Net interest income 0.07 0.10 -37.9
======================================== ===== ===== ======
FIC Profit Before Tax 1.56 1.12 39.4
======================================== ===== ===== ======
Total retail sales in FIC increased by 3.0% to GBP9.54 million
(2014: GBP9.26 million).
Despite this modest overall increase, retail sales in FIC's
flagship West Store, which accounts for 60% of FIC's retail
activity, increased by an encouraging 6.6% helped by a sharp
increase in sales of BHS sourced clothing and an improved fresh
food and delicatessen offer. The Capstan gift shop on Stanley's
waterfront also performed well with sales ahead by 7.5% compared to
the prior year. In contrast lower margin Warehouse sales to local
retailers and pubs declined by 22% as some larger operators
switched to purchasing direct from the UK.
Sales at Home Living, FIC's home furnishing store, increased by
36.5% helped by continued growth in new house building however Home
Builder had a quieter year, with sales restrained by preparations
for a substantial expansion in the store with the conversion of
warehousing into retail space to deliver a better presented and
widened customer offer, including work and leisure wear, garden
products and guns and ammunition as well as tools and building
materials. The full benefits of this expansion will not be seen
until 2015-16 with the completion of the Crozier Place
redevelopment which will provide both operations with improved
customer access, parking and café amenities.
Retail performance was also improved by the recruitment of an
experienced retail executive from the UK, Kevin Ironside, who was
instrumental in driving through improvement in gross margins and
reductions in stockholding of GBP0.5 million.
In the automotive business, Falklands 4x4, revenues grew by
15.6% to a record GBP3.07 million, with strong growth in
maintenance and service revenues following the acquisition of local
operator "Turbo Tim". Total vehicle sales fell slightly from the
prior year to 76 from 79 units (-4%).
Managing Director's Strategic Report (continued)
Revenues from third party freight and port services dropped
marginally by 1.7% to GBP1.24 million (2014: GBP1.26 million) as
price competition eroded increased volumes. However, Support
Services revenues increased by 28.1% helped by another strong illex
squid catch which boosted revenues at the Fishing Agency, a healthy
increase in cruise ship passenger numbers which saw Penguin Travel
income rise by 32% and further progress at the insurance
agency.
Revenue from Falkland Building Services ("FBS") more than
doubled to GBP3.0 million (2014: GBP1.4 million) as housing
completions doubled from eight to sixteen. FBS also saw a sharp
increase in the level of subcontracted labour it provided for work
on the construction of the Temporary Dock Facility for Noble Energy
and Premier and a Government contract to upgrade Moody Brook Road.
Corporate demand for rental property rose sharply and total
property rental revenue included within FBS increased to a record
level of GBP0.36 million (2014: GBP0.22 million).
FBS was also engaged on internal capital projects and
expenditure of GBP2.1 million was incurred in the year to further
modernise FIC's business infrastructure to prepare it for the
expected growth from oil development.
Key projects included:
-- The construction of new warehouse/freezer facilities at
Airport Road, East Stanley which will replace FIC's aging retail
warehouse facilities and make available a prime 2 acre site on the
waterfront in central Stanley;
-- Refurbishment of the Company's Head Office at Crozier place,
with new office space for external tenants and car parking
facilities for visitors to adjacent retail stores;
-- Completion of an enlarged Home Builder store, which includes
a new mezzanine floor and garden centre department; and
-- GBP0.4 million spent on the purchase and installation of 10
mobile homes for staff rental, of which nine were occupied by 31
March 2015.
In addition GBP0.5 million was invested in the investment
property portfolio:
-- GBP0.3 million on the purchase of a four bed-roomed detached
house for rental to corporate tenants; and
-- GBP0.2 million spent on finishing three houses in central Stanley, held for external rental
FIC's property rental portfolio now comprises 40 properties in
central Stanley, which are available to let to corporate clients,
private individuals and staff.
With the construction of a Temporary Dock Facility capable of
supporting both oil exploration and the more limited phased
approach to the proposed development of Sea Lion, plans for a new
deep water port at Port William in Stanley's outer harbour have
been put on hold. A revival of interest in these plans will depend
upon further oil discoveries and a recovery in the oil price.
In its second year of operation, FIC's construction joint
venture, the South Atlantic Construction Company, ("SAtCO") made
further progress winning additional infrastructure contracts from
FIG and completing the construction of a new floating dock (TDF) in
Stanley Harbour to support the 2015 exploration drilling programme.
In addition SAtCO has leased its heavy lift crane to Premier and
its associates for the duration of the current drilling programme.
In the year to 31 March 2015 SAtCO increased its revenues from
GBP0.1 million to GBP0.6 million and its profit before tax to
GBP0.49 million (2014: GBP0.10 million). All staff involved in
construction activities were contracted directly from parent
companies FIC and Trant Construction and at 31 March 2015 SAtCO had
no permanent employees.
Managing Director's Strategic Report (continued)
FIC Key Performance Indicators and Operational Drivers
Year ended 31 March 2015 2014 2013 2012
-------------------------- ------ ------ ------ ------
Staff Numbers (FTE
31 March ) 184 165 129 119
-------------------------- ------ ------ ------ ------
Capital Expenditure
GBP'000 2,598 2,715 1,594 632
-------------------------- ------ ------ ------ ------
Retail Sales growth
% 3.0% -4.8% 3.0% -2.8%
-------------------------- ------ ------ ------ ------
Number of FIC rental
properties 40 36 32 33
-------------------------- ------ ------ ------ ------
Average occupancy
during the year 93% 82% 88% 83%
-------------------------- ------ ------ ------ ------
Number of vehicles
sold 76 79 48 50
-------------------------- ------ ------ ------ ------
Number of 3(rd)
party houses sold 16 8 3 0
-------------------------- ------ ------ ------ ------
iIlex squid catch
in tonnes (000's) 364.0 188.0 58.2 67.3
-------------------------- ------ ------ ------ ------
Cruise ship passengers
(000's) 50.0 39.5 29.6 35.2
-------------------------- ------ ------ ------ ------
Portsmouth Harbour Ferry Company ("PHFC")
2014-15 saw another steady performance from PHFC with revenues
increasing by 4.3% despite a 2.1% decline in passenger numbers.
Profit before tax, after pontoon lease interest charges, was
unchanged at GBP0.8 million.
PHFC Operating results
Year ended 31 March 2015 2014 Change
GBPm GBPm %
--------------------------- -------------------- ----------- ------------------
Revenues
Ferry fares 4.13 3.95 4.5%
Cruising and Other revenue 0.17 0.17 0.6%
Total PHFC revenue 4.30 4.12 4.3%
PHFC operating profit 1.03 1.01 1.9%
Pontoon finance lease
interest (0.24) (0.24) -2.9%
PHFC Profit Before Tax 0.79 0.77 3.4%
=========================== ==================== =========== ==================
Underlying operating
profit margin 24.0% 24.6% -2.3%
Passengers carried (000s) 2,923 2,986 -2.1%
=========================== ==================== =========== ==================
After increases in like for like passenger numbers in the first
quarter, passenger volumes slipped into decline with the closure in
summer 2014 of the BAE Systems shipyard in Portsmouth, which
involved the loss of 1,000 jobs. A further adverse effect on
passenger volumes came from the introduction of a heavily
subsidised Park & Ride scheme by Portsmouth City Council in
August 2014 which, coupled with cheaper fuel, encouraged increased
car usage.
Managing Director's Strategic Report (continued)
Ferry fares increased by an average of 6% in June 2014, bringing
the total cost of an adult return to GBP3.10. This above
inflationary rise was introduced to cover the increased operating
costs linked to the arrival of the new ferry. Discounted fares for
regular customers were maintained (GBP1.45 per ferry journey for
adults), and lower tariffs for seniors and children (GBP2.10
return), which reinforce the value for money and convenience
offered by the ferry service compared to bus and car travel.
Both weekend and weekday traffic declined by 2.1% compared to
the prior year.
To stimulate ferry usage a number of new fare offerings were
introduced during the year, including discounted family fares over
the Christmas holiday period with return fares for a family of 5
for GBP5. Additionally, in association with Gosport Borough
Council, a joint ferry and car parking ticket was introduced in
November 2014 offering return ferry travel and all day car-parking
for regular users for less than GBP3 per day. From August 2014 a
discounted ticket was also introduced for all military personnel in
the Dockyard and at the same time PHFC joined the newly launched
Solent Go electronic travel card scheme, which offers discounted
travel across bus and ferry services throughout the Solent
region.
In March 2015 PHFC took delivery of a third modern ferry vessel
"Harbour Spirit" which was built in Croatia at a cost of GBP3.2
million. The cost of the new vessel has been substantially financed
by a 10 year bank loan, drawn down in April 2015. With improved
passenger seating, increased space for cycles and better facilities
for the disabled, Harbour Spirit will underpin PHFC's service to
passengers well into the middle of this century. Once fully
commissioned, Harbour Spirit will replace one of PHFC's 1966
vintage vessels, Portsmouth Queen and her sister ship Gosport Queen
will be retained as a back-up. With three new ferry vessels built
since 2002 and an estimated service life of over 30 years, no
further significant vessel expenditure is anticipated for over 15
years.
Average fares per passenger journey increased by 6.8% to GBP1.41
(2014: GBP1.32).
Ferry reliability was again outstanding with on time departures
running at 99.8% (2014: 99.7%).
Looking ahead, the outlook for passenger growth is positive as
the Naval Base expands to support the Royal Navy's new aircraft
carriers. The first of these, Queen Elizabeth II, is expected to
arrive in Portsmouth in 2017.
PHFC Key Performance Indicators and Operational Drivers
Year ended 31 March 2015 2014 2013 2012
---------------------------- -------- -------- -------- --------
Staff Numbers ( FTE
at 31 March ) 39 37 35 35
---------------------------- -------- -------- -------- --------
Capital Expenditure
GBP'000 1,483 1,958 223 5,080
---------------------------- -------- -------- -------- --------
Ferry Reliability(
on time departures) 99.8% 99.7% 99.5% 99.9%
---------------------------- -------- -------- -------- --------
Number of weekday
passengers ('000s) 2,123 2,169 2,230 2,497
---------------------------- -------- -------- -------- --------
% change on prior
year -2.1% -2.7% -10.7% -1.6%
---------------------------- -------- -------- -------- --------
Number of weekend
passengers ('000s) 800 817 803 831
---------------------------- -------- -------- -------- --------
% change on prior
year -2.1% 1.8% -3.4% -4.1%
---------------------------- -------- -------- -------- --------
Total number of passengers
('000's) 2,923 2,986 3,033 3,328
---------------------------- -------- -------- -------- --------
% change on prior
year -2.1% -1.6% -8.9% -2.1%
---------------------------- -------- -------- -------- --------
Revenue growth % 4.3% 1.2% -1.9% 11.5%
---------------------------- -------- -------- -------- --------
Average yield per
passenger journey GBP1.41 GBP1.32 GBP1.28 GBP1.19
---------------------------- -------- -------- -------- --------
Managing Director's Strategic Report (continued)
Momart
Momart, the Group's art handling and logistics business, saw a
return to more normal levels of activity following the string of
exceptional overseas exhibitions which boosted results in the prior
year. Total revenue for the year decreased by 13.7% to GBP15.8
million (2014: GBP18.3 million) while underlying operating profit
reduced by 32.1% to GBP1.24 million (2014: GBP1.83 million).
Finance costs were reduced in the year as borrowings were
repaid. Underlying profit before tax before amortisation of
intangibles was GBP1.21 million (2014: GBP1.76 million).
Momart Operating results
Year ended 31 March 2015 2014 Change
GBPm GBPm %
------------------------------- ------------ ---------------- --------------
Revenues
Museums and public exhibitions 8.68 10.86 -20.0
Commercial gallery services 5.21 5.57 -6.5
Storage 1.86 1.83 1.3
Total Momart revenue 15.75 18.26 -13.7
Underlying Momart operating
profit 1.24 1.83 -32.1
Net Interest expense (0.03) (0.07) -50.8%
Underlying Pre Tax Profit 1.21 1.76 -31.5%
------------------------------- ------------ ---------------- --------------
Underlying operating profit
margin 7.9% 10.0% -21.4
------------------------------- ------------ ---------------- --------------
Exhibitions
After an exceptional year in 2013-14 which included an unusual
sales mix of high added value contracts for overseas clients,
Momart's museum exhibition activity fell back to more normal levels
and Exhibitions revenue of GBP8.7 million was comparable to the
level seen in 2012-13 of GBP9.0 million. This decline is not
unusual, given the fragmented and irregular nature of client
projects which vary significantly in both technical content and
added value between years. There was also an adverse mix effect
seen in the increase in work subcontracted to overseas agents from
mainstream UK clients and at the same time a much lower level of
specialist overseas work handled directly by Momart. Both changes
contributed to lower margins and a decline in Exhibition
profitability.
Although the order book of large exhibition contracts was lower
at 31 March 2015, (down GBP0.6 million at GBP3.26 million) an
inflow of contracts early in the new financial year saw this
deficit eliminated.
Despite the modest decline in underlying activity, Momart
continued to be a market leader in the UK, and was involved in the
installation of a number of prestigious and high profile
exhibitions including Anselm Keifer and Rubens at the Royal
Academy, Matisse at Tate Modern, Virginia Woolf at the National
Portrait Gallery and Ming at the British Museum.
Managing Director's Strategic Report (continued)
Gallery Services
Gallery Services revenues were 6.5% lower in 2014-15 at GBP5.21
million (2014: GBP5.57 million). Competition in the core UK market
increased and the level of low added value work from smaller
galleries reduced. At the same time there was good progress with
prestigious blue chip clients such as Christies, White Cube,
Gagosian and Sadie Coles, and Momart continued to win healthy
levels of work from world renowned UK artists, Damien Hirst and
Antony Gormley.
Storage
Storage revenues increased by 1.3% to GBP1.86 million (2014:
GBP1.83 million) despite work to create a dedicated new storage
area for the Royal Academy which necessitated closure of a
significant section of the warehouse during the last quarter of the
financial year. Adjusting for this, Momart's storage facilities
once again operated at full capacity. The lack of storage space to
offer to new commercial clients has proved an effective barrier to
growth and accordingly detailed plans have been agreed with the
company's landlord to construct new facilities on the company's
existing East London site to increase capacity by 33% and to offer
improved client reception and viewing facilities. Subject to the
receipt of final planning permission this increased capacity is due
to come on stream in early 2016.
Momart Key Performance Indicators and Operational Drivers
Year ended 31 March 2015 2014 2013 2012
------------------------ --------- ---------- --------- ---------
Staff Numbers (
FTE 31 March ) 128.6 124.6 119.0 115.9
------------------------ --------- ---------- --------- ---------
Capital Expenditure
GBP'000 648 260 598 524
------------------------ --------- ---------- --------- ---------
Warehouse % fill
vs capacity 91.2% 92.9% 94.2% 95.1%
------------------------ --------- ---------- --------- ---------
Exhibition Order
Book 31 March GBP3.26m GBP3.89m GBP3.83m GBP4.16m
------------------------ --------- ---------- --------- ---------
Own labour charged GBP9.07m GBP11.67m GBP9.02m GBP8.58m
out
------------------------ --------- ---------- --------- ---------
Revenues from overseas GBP7.5m GBP8.3m GBP4.6m GBP5.7m
clients
------------------------ --------- ---------- --------- ---------
Exhibitions sales
growth (20.0%) 20.4% 27.8% 5.7%
------------------------ --------- ---------- --------- ---------
Gallery Services
sales growth (6.5%) 1.3% (12.7)% 26%
------------------------ --------- ---------- --------- ---------
Storage sales growth 1.3% 2.6% 10.5% 6.6%
------------------------ --------- ---------- --------- ---------
Total Sales growth
% (13.7%) 12.0% 8.9% 13.5%
------------------------ --------- ---------- --------- ---------
Managing Director's Strategic Report (continued)
FOGL investment
Details of the Group's shareholding in FOGL at 31 March 2015 are
set out below:
31 March
2015
Number of shares held 5,000,000
FOGL share price (bid price) 30.0p
Market value of holding GBP1.5m
Cost GBP1.0m
Book cost per share 20.0p
----------------------------- ---------
In April 2015, the Group disposed of its remaining 5 million
shares in Falkland Oil and Gas for GBP1.4 million, an average share
price of 28 pence, generating a profit on disposal of GBP0.4
million.
Trading outlook
The medium term outlook for the Group remains positive and in
the near term increased activity in the Falkland Islands linked to
the 2015 drilling programme should ensure another strong trading
performance in the new financial year.
In the Falklands, we look forward to another year of progress.
The remaining four exploration wells will be drilled in the first
half of the new financial year and any further discoveries will add
to business confidence. Falkland Government finances have been
bolstered by the record squid catches of recent years and the
increased taxation inflows linked to oil company operations. This
incremental government income should allow increased spending on
capital and infrastructure projects which in turn will further
stimulate the economy. Despite the currently weakened oil price,
the Board believes the longer term prospects for the development of
oil production in the Falkland Islands remain very good and that
FIC is well placed to fully benefit from the dramatic growth in the
economy that would result.
At PHFC, the recent arrival of a new modern ferry provides a
solid foundation for the long term future of the business although
in the near term the increased operating costs linked to the new
vessel will place a drag on profits.
At Momart, despite the quieter year seen in 2014-15, improved
management information systems, further investment in increased
storage space, a strengthened management team and more focussed
marketing provide a strong platform from which to develop the
business. In addition growth will be accelerated by selective
acquisitions. Underlying growth prospects in this high quality
business remain sound.
With bank borrowings reduced to GBP0.7 million (2014: GBP1.0
million) and cash on hand of GBP7.4 million (2014: GBP5.7 million),
together with significant further borrowing capacity, the Group has
significant capacity to exploit opportunities over the medium term,
in line with its growth strategy.
Managing Director's Strategic Report (continued)
Financial Review
Summary income statement
Year ended 31 March 2015 2014 Change
GBPm GBPm %
Group revenue 38.56 38.26 0.8
Underlying Operating profit* 3.76 3.85 -2.3
Net financing costs (0.20) (0.20) -0.5
Underlying profit before tax 3.56 3.65 -2.4
------------------------------ ------ ------ ------
Amortisation and Non-trading
items
Gain on sale of FOGL shares 0.71 - -
Termination payments (0.24) - -
Gain on transfer of the PHFC
pension scheme - 0.06 -
Amortisation of intangibles (0.14) (0.31) -53.7
Profit before tax as reported 3.89 3.40 14.4
------------------------------ ------ ------ ------
*Underlying operating profit excludes amortisation and
non-trading items but includes GBP0.18 million (2014: GBP0.04
million) of the Group's share of the results of the SAtCO joint
venture.
Revenue and underlying operating profit
Group revenue rose 0.8% to GBP38.56 million, however underlying
operating profit decreased 2.3% to GBP3.76 million in the year
ended 31 March 2015. These variances are discussed in more detail
above in the Review of Operations.
Non-trading items
Non-trading items comprise a GBP0.71 million gain on the sale of
7,825,000 Falkland Oil and Gas shares, offset against a GBP0.24
million termination payment due to the retiring Chairman, David
Hudd, and a fall in the amortisation charge to GBP0.14 million on
the intangible assets (2014: GBP0.31 million) due to certain
customer relationships, together with the five year Director
service contracts, having been fully amortised in April 2014.
Following a review of the useful life of the Momart brand name,
which is now expected to have an indefinite useful life,
amortisation ceased on 30 September 2013, therefore the prior year
included a six month charge of GBP0.07 million, but no charge has
been included in the current year.
The prior year included a further gain of GBP0.06 million on the
transfer of the Portsmouth Harbour Ferry pension scheme, which was
transferred to Legal and General on 7 March 2013.
Net financing costs
The Group's net financing costs remain relatively little changed
to the prior year at GBP0.2 million, with the fall in interest
income on reduced bank deposits being offset by a decrease in bank
interest payable as GBP1.0 million of bank loans were repaid. In
March 2015, a GBP0.7 million loan was drawn down secured against
vessels in Portsmouth.
Underlying pre-tax profit
The Group's reported underlying pre-tax profits of GBP3.56
million, slightly down on the prior year, (2014: GBP3.65
million).
Managing Director's Strategic Report (continued)
Reported pre-tax profit
After the GBP0.7 million gain on the sale of 7,825,000 shares in
Falkland Oil and Gas, and charges of GBP0.1 million for the
amortisation of intangible assets (2014: GBP0.3 million), and the
GBP0.2 million payment on the retirement of the former Chairman,
reported Profit Before Tax for the Group increased by 14.4% to
GBP3.89 million (2014: GBP3.40 million).
Taxation
The Group pays corporation tax on its UK earnings at 21% and on
earnings in the Falkland Islands at 26%. The Falklands Islands
Company Limited has been granted a foreign branch exemption, and as
a result no longer pays UK corporation tax in respect of FIC and
will gain the full benefit of the tax deductibility in the Falkland
Islands of expenditure on commercial and industrial buildings. The
effective tax rate on underlying profits is 23.2% (2014:
24.7%).
Earnings per share
Year ended 31 March 2015 2014
------
Change
GBPm GBPm %
--------------------------------- ------ ------ ------
Underlying profit before tax 3.56 3.65 -2.4
Taxation on underlying profit (0.83) (0.90) -8.4
Underlying profit after tax 2.73 2.75 -0.4
Diluted average number of shares
in issue (thousands) 12,446 12,461 -0.1
Effective underlying tax rate 23.2% 24.7% -6.2
Diluted EPS on underlying profit 22.0p 22.0p -
--------------------------------- ------ ------ ------
Fully diluted Earnings per Share ("EPS") derived from underlying
profits, remained at 22.0 pence (2014: 22.0p), as the fall in the
underlying profit before tax has been offset by a fall in the
taxation on underlying profit, due to the tax rates on profits
earned in the UK falling to 21% from 23% in the prior year.
Balance sheet
The Group's Balance Sheet remains strong. Total net assets
increased to GBP36.7 million from GBP35.4 million in the prior
year.
Retained earnings after the payment of tax and dividends
increased by GBP1.5 million to GBP16.3 million (2014: GBP14.8
million). Bank borrowings were reduced to GBP0.7 million (2014:
GBP1.0 million), due to repayment in the year of all liabilities at
31 March 2014, together with the drawdown of a GBP0.7 million loan
in the Ferry business in March 2015, and the Group had cash
balances of GBP7.4 million (2014: GBP5.7 million).
The carrying value of intangible assets at GBP12.2 million has
not fallen from the GBP12.2 million at 31 March 2014, due to
investment in computer software offsetting the amortisation
charge.
The net book value of property, plant and equipment increased by
GBP3.0 million to GBP19.6 million (2014: GBP16.6 million) after
capital investment of GBP4.1 million, including GBP2.1 million in
the Falkland Islands. This has been offset against a GBP1.1 million
depreciation charge in the year.
The Group owns investment properties comprising commercial and
residential properties in the Falkland Islands held for rental,
together with approximately 400 acres in and around Stanley. This
includes 18 acres for industrial development, 25 acres of prime
mixed-use land and 300 acres which is adjacent to the site proposed
for a new port.
Managing Director's Strategic Report (continued)
During the year, the net book value of investment property
increased GBP0.3 million to GBP3.7 million (2014: GBP3.4 million)
due to GBP0.5m of additions, offset against GBP0.2 million of
depreciation. These properties are all situated in the Falkland
Islands, and the GBP0.5 million additions include GBP0.3 million
for the purchase of a four bedroomed property on Biggs Road,
Stanley and further development of residential properties to
increase the Group's portfolio.
The Group owns 40 investment properties, which are mainly
houses, in Stanley. These are all held at depreciated cost. The net
book value of these properties and undeveloped land of GBP3.7
million (2014: GBP3.4 million) has been reviewed by the Directors
resident in the Falkland Islands and at 31 March 2015 the fair
value of this property portfolio was estimated at GBP7.3 million
(2014: GBP6.3 million). If oil development proceeds, the value of
all these properties is expected to increase significantly.
The Group's residual 1.0% shareholding in FOGL was sold in April
2015 for proceeds of GBP1.4 million, resulting in a profit of
GBP0.4 million. This transaction will be reported in the results
for the year ending 31 March 2016.
Deferred tax assets relating to future pension liabilities
increased to GBP0.8 million (2014: GBP0.6 million). These assets
now only include the deferred tax on the FIC unfunded scheme
calculated by applying the 26% Falklands tax rate to the pension
liability.
Inventories, which largely represents stock held for resale in
the Falkland Islands, decreased by GBP1.3 million to GBP5.4 million
at 31 March 2015 (2014: GBP6.7 million). The decrease largely
relates to stock held in the Falkland Islands, where better stock
controls have been implemented during the year.
Trade and Other Receivables decreased by GBP1.7 million to
GBP5.3 million at 31 March 2015, due to the decreased activity and
improved debtor collection at Momart. Average debtor days
outstanding fell to 36.0 (2014: 47.0) due to new procedures
introduced at Momart to speed up the collection of debtors.
Outstanding finance lease liabilities totalled GBP5.1 million
(2014: GBP5.2 million). GBP4.9 million (2014: GBP4.9 million) of
the finance leases balance is in respect of the 50 year lease from
Gosport Borough Council for the Gosport Pontoon.
Corporation tax due for payment within the next 12 months is
GBP0.03 million (2014: GBP0.4 million). This is lower than the
GBP0.8 million total charge for taxation on underlying profit, as
GBP0.4 million of this charge relates to deferred tax. The GBP0.4
million current tax charge includes GBP0.1 million, which relates
to adjustments to prior years, and has already been paid by 31
March 2015, and in addition GBP0.3 million of the 2015 tax charge
had already been paid in instalments by 31 March 2015. The
effective tax rate on underlying profits was 23.2% (2014:
24.7%).
Trade and other payables decreased from GBP11.0 million to
GBP10.2 million at 31 March 2015 as the prior year reflected
increased trading activity at Momart at the year end, which has not
been repeated in the March 2015 year.
At 31 March 2015 the liability due in respect of the Group's
defined benefit pension schemes was GBP2.9 million (2014: GBP2.5
million). The increased liability is due principally to lower
medium term interest rates used to discount the schemes future
liabilities. The pension scheme in the Falkland Islands, which was
closed to new entrants in 1988 and to further accrual in 2007, is
unfunded and liabilities are met from operating cash flow.
The net deferred tax liabilities, excluding the pension asset at
31 March 2015, were GBP2.0 million and increased GBP0.4 million
from the prior year (2014: GBP1.6 million), largely due to the
delivery of the new vessel for Portsmouth Harbour Ferry. GBP1.7
million of this balance arises on property, plant and equipment,
and is principally due to the new vessel and also to properties in
the Falklands, where capital allowances of 10% are available on the
majority of the FIC properties. With such assets depreciated over
20-50 years a timing difference arises on which deferred tax is
provided.
Net assets per share were 295p at 31 March 2015 (2014:
285p).
Managing Director's Strategic Report (continued)
Cash flows
Operating cash flow
Net cash flow from operating activities increased from GBP2.8
million last year to GBP6.4 million, due to continued strong cash
flow from trading and an increased focus on reducing working
capital across the group.
The Group's Operating Cash Flow can be summarised as
follows:
Year ended 31 March 2015 2014 Change
GBPm GBPm GBPm
------------------------------------- ------ ------ -------
Underlying profit before tax 3.6 3.6 -
Depreciation 1.4 1.1 0.3
Amortisation of computer software - 0.1 (0.1)
Net Interest payable 0.2 0.2 -
------------------------------------- ------ ------ -------
EBITDA 5.2 5.0 0.2
Share based payments 0.1 - 0.1
Decrease / (increase) in working
capital 2.1 (1.7) 3.8
Tax paid (0.8) (0.8) -
Other (0.2) 0.3 (0.5)
------------------------------------- ------ ------ -------
Net cash inflow from operating
activities 6.4 2.8 3.6
Financing and Investing Activities
Sale of 7.825 million FOGL shares 2.3 - 2.3
Less:
Dividends paid (1.4) (1.4) -
Capital expenditure (4.9) (5.0) 0.1
Net bank interest received - 0.1 (0.1)
Loan repayments from / (loan
to) joint venture 0.2 (0.5) 0.7
Net cash outflow on sale & purchase
of treasury shares - (0.1) 0.1
Bank and other loan repayments (1.4) (1.4) -
Bank and Hire purchase loan draw
down 0.8 - 0.8
Increase in hire purchase debtors (0.3) (0.2) (0.1)
------------------------------------- ------ ------ -------
Net cash outflow from financing
and investing activities (4.7) (8.5) 3.8
------------------------------------- ------ ------ -------
Net cash inflow / (outflow) 1.7 (5.7) 7.4
Cash balance b/fwd 5.7 11.4 (5.7)
Cash balance c/fwd 7.4 5.7 1.7
------------------------------------- ------ ------ -------
Managing Director's Strategic Report (continued)
Financing outflows
During the year the Group paid dividends of GBP1.4 million
(2014: GBP1.4 million) and made fixed asset investments of GBP4.7
million of expenditure to strengthen the Group's operating base,
including final payments of GBP1.3 million (2014: GBP1.8 million)
in respect of the new vessel for Gosport ferry; GBP2.6 million was
invested in Stanley with GBP0.5 million of expenditure on
investment land and buildings, GBP0.7 million on plant and
machinery, GBP0.3 million spend on the new Homebuilder/Garden
Centre store, GBP0.4 million spent on the purchase of ten mobile
homes for rental to staff, GBP0.1 million spend on finalising the
refurbishment of the Stanley head office and GBP0.6 million
building on the new retail warehouse and freezer facilities at
Airport Road.
Scheduled loan repayments of GBP1.4 million (2014: GBP1.4
million) were made, including GBP0.3 million of payments to Gosport
Council on the 50 year pontoon finance lease, GBP0.1 million of
repayments on hire purchase leases for trucks at Momart and GBP1.0
million of bank loan repayments which repaid all the bank loans
outstanding at 31 March 2014. In March 2015, the Group drew down a
further GBP0.7 million bank loan secured against the Spirit of
Gosport and the Spirit of Portsmouth, which were delivered to PHFC
in 2002 and 2005 respectively.
John Foster
Managing Director
8 June 2015
Board of Directors and Company Secretary
Edmund Rowland Chairman
Edmund was appointed to the Board on 16 April 2013, and became
Chairman on 9 February 2015. He currently serves as a Director of
Blackfish Capital Management, a specialist asset manager based in
London and as Chief Executive Officer of Banque Havilland S.A
(London Branch), previously having gained experience in London and
Hong Kong, as an analyst and investment manager with BNP Paribas
S.A and Blackfish. He has broad experience of principal investing
in both equity and credit capital markets, with a focus on special
situations. He sits on the board of Banque Havilland (Monaco) SAM
and Certus Trust Limited.
Edmund is a member of the Remuneration Committee.
John Foster Managing Director
John joined the Board in 2005. He is a Chartered Accountant and
previously served as Finance Director for software company Macro 4
plc and toy retailer, Hamleys plc. Prior to joining Hamleys, he
spent three years in charge of acquisitions and disposals at FTSE
250 company Ascot plc and before that worked for nine years as a
venture capitalist with a leading investment bank in the City.
Jeremy Brade Non-executive Director
Jeremy joined the Board in 2009. He is a Director of Harwood
Capital Management where he is the senior private equity partner.
Jeremy has served on the boards of several private and publicly
listed international companies. Formerly Jeremy was a diplomat in
the Foreign and Commonwealth Office, and before that an Army
officer. He is Chairman of the Remuneration Committee.
Carol Bishop Company Secretary
Carol Bishop joined the Company in December 2011. She is a
Chartered Accountant and has previously worked for London Mining
plc, an AIM listed company as Group Reporting manager. Prior to
this she spent three years at Hanson plc and six years at the
Peninsular and Oriental Steam Navigation Company.
Directors' Report
The Directors present their annual report and the financial
statements for the Company and for the Group for the year ended 31
March 2015.
Results and dividend
The Group's result for the year is set out in the Group Income
Statement. The Group profit for the year after taxation amounted to
GBP3,144,000 (2014: GBP2,633,000). Basic earnings per share on
underlying profits were 22.1p (2014: 22.2p).
It is the Board's considered view that the Group can best take
full advantage of existing and emerging opportunities by maximising
the reinvestment of profits and suspending dividend payments in
order to accumulate resources to build a much more substantial
group with greater critical mass in its respective markets. We
believe this more focused long term approach will have more appeal
for existing and prospective investors and offer much greater
shareholder liquidity. The Board is confident that this new
approach and focus will lead to more certain capital growth and
greater overall returns for shareholders in the long term.
Therefore dividend payments have been suspended in line with the
increased focus of investment and long term growth.
Dividends paid during the year comprise a dividend of 7.5p per
share in respect of the previous year ended 31 March 2014 and an
interim dividend of 4.0p per share in respect of the current
year.
Principal activities
The business of the Group during the year ended 31 March 2015
was general trading in the Falkland Islands, the operation of a
ferry across Portsmouth Harbour and the provision of international
arts logistics and storage services. The principal activities of
the Group are discussed in more detail in the Managing Director's
Strategic Report and should be considered as part of the Directors'
Report for the purposes of the requirements of the enhanced
Directors' Report guidance.
The principal activity of the Company is that of a holding
company.
Directors
On 9 February 2015, the Chairman, David Hudd resigned from the
Board and was succeeded on the same day by Edmund Rowland, the
Non-Executive Deputy Chairman.
On 13 April 2015, Mike Killingley, the Senior Non-Executive
retired from the Board after ten years' service.
Directors' interests
The interests of the Directors in the issued shares and share
options over the shares of the Company are set out below under the
heading 'Directors' interests in shares'. During the year no
Director had an interest in any significant contract relating to
the business of the Company or its subsidiaries other than his own
service contract.
Health and safety
The Group is committed to the health, safety and welfare of its
employees and third parties who may be affected by the Group's
operations. The focus of the Group's effort is to prevent accidents
and incidents occurring by identifying risks and employing
appropriate control strategies. This is supplemented by a policy of
investigating and recording all incidents.
Employees
The Board is aware of the importance of good relationships and
communication with employees. Where appropriate, employees are
consulted about matters which affect the progress of the Group and
which are of interest and concern to them as employees. Within this
framework, emphasis is placed on developing greater awareness of
the financial and economic factors which affect the performance of
the Group. Employment policy and practices in the Group are based
on non-discrimination and equal opportunity irrespective of age,
race, religion, sex, colour and marital status. In particular, the
Group recognises its responsibilities towards disabled persons and
does not discriminate against them in terms of job offers, training
or career development and prospects. If an existing employee were
to become disabled during the course of employment, every practical
effort would be made to retain the employee's services with
whatever retraining is appropriate. The Group's pension
arrangements for employees are summarised in note 24.
Directors' Report (continued)
Corporate Governance
As an AIM company, Falkland Islands Holdings plc is not required
to comply with the UK Corporate Governance Code (the 'Code') which
applies only to fully listed UK companies and adherence to which
requires the commitment of significant resources and cost. However
high standards of Corporate Governance are a key priority of the
Board and details of how the Company addresses key governance
issues are set out in the Corporate Governance section of its
website by reference to the 12 principles of Corporate Governance
developed by the Quoted Companies Alliance.
The Board has established Audit, Remuneration, Nominations, and
AIM Rules Compliance Committees and the Company receives regular
feedback from its external auditors on the state of its internal
controls. The Board attaches great importance to providing
shareholders with clear and transparent information on the Group's
activities, strategy and financial position. Details of all
shareholder communications are provided on the Group's website. The
Board holds regular meetings with larger shareholders and regards
the annual general meeting as a good opportunity to communicate
directly with shareholders via an open question and answer
session.
Share capital and substantial interests in shares
During the year no share capital was issued. Further information
about the Company's share capital is given in note 26. Details of
the Company's executive share option scheme and employee ownership
plan can be found in note 25.
The Company has been notified of the following interests in 3%
or more of the issued ordinary shares of the Company as at 31 March
2015.
Number of Percentage of
shares shares in issue
net of shares
held in Treasury
------------------------------ ---------- ------------------
Blackfish Capital Management 2,500,000 20.1
------------------------------ ---------- ------------------
Fidelity investments 892,114 7.2
------------------------------ ---------- ------------------
L S Licht 535,000 4.3
------------------------------ ---------- ------------------
Argos Argonaut Fund 460,000 3.7
------------------------------ ---------- ------------------
Payments to suppliers
The policy of the Company and each of its trading subsidiaries,
in relation to all its suppliers, is to settle the terms of payment
when agreeing the terms of the transaction and to abide by those
terms, provided that it is satisfied that the supplier has provided
the goods or services in accordance with agreed terms and
conditions. The Group does not follow any code or standard payment
practice. As a holding company, the Company had no trade creditors
at either 31 March 2015 or 31 March 2014.
Charitable and political donations
Charitable donations made by the Group during the year amounted
to GBP28,030 (2014: GBP23,709), largely to local community
charities in Gosport and the Falkland Islands. There were no
political donations in the year (2014: nil).
Disclosure of information to auditor
The Directors who held office at the date of this Directors'
Report confirm that, so far as they are each aware, there is no
relevant audit information of which the Company's auditor is
unaware; and each Director has taken all the steps that they ought
to have taken as a Director to make themselves aware of any
relevant audit information and to establish that the Company's
auditor is aware of that information.
Auditor
A resolution proposing the re-appointment of KPMG LLP will be
put to shareholders at the Annual General Meeting.
Annual General Meeting
The Company's Annual General Meeting will be held at the London
offices of FTI Consulting, 200 Aldersgate, London, EC1A 4HD at
10.00 a.m. on 8 September 2015. The Notice of the Annual General
Meeting and a description of the special business to be put to the
meeting are considered in a separate Circular to Shareholders which
accompanies this document.
Directors' Report (continued)
Details of Directors' remuneration and emoluments
The remuneration of non-executive Directors consists only of
annual fees for their services both as members of the Board and of
Committees on which they serve.
An analysis of the remuneration and taxable benefits in kind
(excluding share options) provided for and received by each
Director during the year to 31 March 2015 and in the preceding year
is as follows:
Salary Termination Bonuses 2015 2014
GBP'000 payment GBP'000 Total Total
GBP'000 GBP'000 GBP'000
----------------- --------- ------------ --------- --------- ---------
David Hudd 107 200 - 307 177
----------------- --------- ------------ --------- --------- ---------
John Foster 203 - *60 263 280
----------------- --------- ------------ --------- --------- ---------
Mike Killingley 35 - - 35 35
----------------- --------- ------------ --------- --------- ---------
Jeremy Brade 30 - - 30 30
----------------- --------- ------------ --------- --------- ---------
Edmund Rowland 28 - - 28 23
----------------- --------- ------------ --------- --------- ---------
Total 403 200 60 663 545
----------------- --------- ------------ --------- --------- ---------
None of the Directors of the Company receive any pension
contributions or benefit from any Group pension scheme.
*The Remuneration Committee has decided to split the Managing
Director's bonus for the year into an equal split of deferred
shares and cash, with the shares requiring a service condition to
remain in employment for up to three years. Therefore for the year
ended 31 March 2015, John Foster has been awarded a cash bonus of
GBP60,000 and a further GBP60,000 of deferred shares, to be issued
at the share price at the close of business on 9 June 2015. These
deferred shares will be provided at no cost to him in three equal
tranches over the next three years.
The Executive Directors participate in annual performance
related bonus arrangements. The Managing Director had the potential
during the year of earning up to 100% of his salary. The bonuses
are subject to the achievements of specified corporate and personal
objectives.
Directors' interests in shares
As at 31 March 2015, the share options of executive Directors
may be summarised as follows:
Date of grant Number Exercise Exercisable Expiry
of options price from date
J L Foster
--------------- ------------ --------- ------------ -----------
14 Jun 2005 14,117 GBP4.25 14 Jun 13 Jun
2008 2015
--------------- ------------ --------- ------------ -----------
7 Aug 2007 27,517 GBP3.30 7 Aug 2010 6 Aug 2017
--------------- ------------ --------- ------------ -----------
15 Jul 2009 44,550 GBP2.90 15 Jul 14 Jul
2012 2019
--------------- ------------ --------- ------------ -----------
13 Aug 2012 76,700 GBP4.04 13 Aug 12 Aug
2015 2022
--------------- ------------ --------- ------------ -----------
Total 162,884
--------------- ------------ --------- ------------ -----------
The mid-market price of the Company's shares on 31 March 2015
was 276.5 pence and the range in the year was 264.8 pence to 366.3
pence.
The Directors' options extant at 31 March 2015 totalled 162,884
and represented 1.3% of the Company's issued share capital, in
addition David Hudd has been granted a six month period from his
retirement date in which to exercise his 154,966 options. The
409,348 remaining options are held by 48 other employees of the
Group including subsidiary directors and senior management. Under
the Company's executive share option scheme, executive Directors
and senior executives have been granted options to acquire ordinary
shares in the Company after a period of three years from the date
of the grant. All outstanding options have been granted at an
option price of not less than market value at the date of the
grant. The exercise of options is subject to various performance
conditions, which have been determined by the remuneration
committee after discussion with the Company's advisors.
Directors' Report (continued)
In addition to the share options set out above, the interests of
the Directors, their immediate families and related trusts in the
shares of the Company according to the register kept pursuant to
the Companies Act 2006 were as shown below:
Ordinary shares Ordinary shares
as at as at
31 March 2015 31 March 2014
----------------- ---------------- ----------------
David Hudd* n/a 116,199
----------------- ---------------- ----------------
John Foster* 61,867 61,153
----------------- ---------------- ----------------
Mike Killingley 30,000 30,000
----------------- ---------------- ----------------
Jeremy Brade 15,000 15,000
----------------- ---------------- ----------------
Edmund Rowland **2,500,000 **2,500,000
----------------- ---------------- ----------------
*The shareholdings above include all Shares held in the
Company's share incentive plan in which the Directors have a
beneficial interest.
**Edmund Rowland is a Director of Blackfish Capital Management
Limited, the fund manager of Blackfish Capital Alpha Fund SPC -
Blackfish Talisman Fund which holds 2,500,000 shares. He does not
hold any shares directly in the Company.
Share Incentive Plan
In November 2012, the Company implemented an HMRC approved Share
Incentive Plan (SIP) available to employees of the Group, which
enables UK and Falklands staff to acquire shares in the Company
through monthly purchases of up to GBP150 per month or 10% of
salary, whichever is lower. For every three shares purchased by the
employee, the Company contributes one free matching share. These
shares are placed in trust and if they are left in trust for at
least five years, they can be removed free of UK income tax and
national insurance contributions. During the years ended 31 March
2015 the Company purchased GBP600 of matching shares (2014: GBP500)
for Mr D Hudd and GBP600 of matching shares (2014: GBP500) for Mr J
Foster.
Statement of Directors' responsibilities in respect of the
Annual Report, Directors' Report, Strategic Report and the
Financial Statements
The Directors are responsible for preparing the Annual Report,
Directors' Report, Strategic Report and the financial statements in
accordance with applicable law and regulations.
Company law requires the Directors to prepare Group and Parent
Company financial statements for each financial year. As required
by the AIM Rules of the London Stock Exchange, they are required to
prepare the Group financial statements in accordance with IFRSs as
adopted by the EU and applicable law and have elected to prepare
the Parent Company financial statements on the same basis.
Under company law the Directors must not approve the financial
statements unless they are satisfied that they give a true and fair
view of the state of affairs of the Group and Company and of their
profit or loss for that period. In preparing each of the Group and
Company financial statements, the Directors are required to:
-- select suitable accounting policies and then apply them consistently;
-- make judgements and estimates that are reasonable and prudent;
-- state whether they have been prepared in accordance with IFRSs as adopted by the EU; and
-- prepare the financial statements on the going concern basis
unless it is inappropriate to presume that the Group and the Parent
Company will continue in business.
The Directors are responsible for keeping adequate accounting
records that are sufficient to show and explain the Company's
transactions and disclose with reasonable accuracy at any time the
financial position of the Company and enable them to ensure that
its financial statements comply with the Companies Act 2006. They
have general responsibility for taking such steps as are reasonably
open to them to safeguard the assets of the Group and to prevent
and detect fraud and other irregularities.
The Directors are responsible for the maintenance and integrity
of the corporate and financial information included on the
Company's website. Legislation in the UK governing the preparation
and dissemination of financial statements may differ from
legislation in other jurisdictions.
The Directors confirm, to the best of their knowledge that:
-- these financial statements, prepared in accordance with IFRS,
as adopted by the European Union, give a true and fair view of the
assets, liabilities, financial position and profit of the Company
and the undertakings included in the consolidation as a whole;
and
-- the management report, which comprises the Chairman's
Statement and the Managing Director's Strategic Report, includes a
fair review of the development and performance of the business and
of the position of the Company and the undertakings included in the
consolidation taken as a whole, together with a description of the
principal risks and uncertainties that they face.
Approved by the Board and signed on its behalf by:
Carol Bishop
Company Secretary
8 June 2015
Kenburgh Court
133-137 South Street
Bishop's Stortford
Hertfordshire
CM23 3HX
Independent Auditor's Report To The Members Of Falkland Islands
Holdings Plc
We have audited the financial statements of Falkland Islands
Holdings plc for the year ended 31 March 2015 which comprise the
Group Income Statement, the Group Statement of Comprehensive
Income, the Group and Parent Company Balance Sheets, the Group and
Parent Company Cash Flow Statements, the Group and Parent Company
Statements of Changes in Equity and the related notes.
The financial reporting framework that has been applied in their
preparation is applicable law and International Financial Reporting
Standards (IFRSs) as adopted by the EU and, as regards the parent
company financial statements, as applied in accordance with the
provisions of the Companies Act 2006.
This report is made solely to the company's members, as a body,
in accordance with Chapter 3 of Part 16 of the Companies Act 2006.
Our audit work has been undertaken so that we might state to the
company's members those matters we are required to state to them in
an auditor's report and for no other purpose. To the fullest extent
permitted by law, we do not accept or assume responsibility to
anyone other than the company and the company's members, as a body,
for our audit work, for this report, or for the opinions we have
formed.
Respective responsibilities of directors and auditor
As explained more fully in the Directors' Responsibilities
Statement the directors are responsible for the preparation of the
financial statements and for being satisfied that they give a true
and fair view. Our responsibility is to audit, and express an
opinion on, the financial statements in accordance with applicable
law and International Standards on Auditing (UK and Ireland). Those
standards require us to comply with the Auditing Practices Board's
Ethical Standards for Auditors.
Scope of the audit of the financial statements
A description of the scope of an audit of financial statements
is provided on the Financial Reporting Council's website at
www.frc.org.uk/auditscopeukprivate.
Opinion on financial statements
In our opinion:
-- the financial statements give a true and fair view of the
state of the group's and of the parent company's affairs as at 31
March 2015 and of the group's profit for the year then ended;
-- the group financial statements have been properly prepared in
accordance with IFRSs as adopted by the EU;
-- the parent company financial statements have been properly
prepared in accordance with IFRSs as adopted by the EU and as
applied in accordance with the provisions of the Companies Act
2006; and
-- the financial statements have been prepared in accordance
with the requirements of the Companies Act 2006.
Opinion on other matter prescribed by the Companies Act 2006
In our opinion the information given in the Strategic Report and
the Directors' Report for the financial year for which the
financial statements are prepared is consistent with the financial
statements.
Matters on which we are required to report by exception
We have nothing to report in respect of the following matters
where the Companies Act 2006 requires us to report to you if, in
our opinion:
-- adequate accounting records have not been kept by the parent
company, or returns adequate for our audit have not been received
from branches not visited by us; or
-- the parent company financial statements are not in agreement
with the accounting records and returns; or
-- certain disclosures of directors' remuneration specified by law are not made; or
-- we have not received all the information and explanations we require for our audit.
Wayne Cox
Senior Statutory Auditor
8 June 2015
For and on behalf of KPMG LLP, Statutory Auditor
Chartered Accountants
St Nicholas House
Park Row
Nottingham
NG1 6FQ
Consolidated Income Statement
FOR THE YEAR ENDED 31 MARCH 2015
Notes Before Before
amortisation Amortisation amortisation Amortisation
& non-trading & non-trading & non-trading & non-trading
items items Total items items Total
2015 2015 2015 2014 2014 2014
GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000
------------------ --------------- --------------- --------- --------------- --------------- ---------
4 Revenue 38,560 - 38,560 38,263 - 38,263
Cost of sales (22,927) - (22,927) (22,212) - (22,212)
------------------ --------------- --------------- --------- --------------- --------------- ---------
Gross profit 15,633 - 15,633 16,051 - 16,051
Other
administrative
expenses (12,050) - (12,050) (12,235) - (12,235)
Board
restructuring
costs - (234) (234) - - -
Gain on sale of
15 FOGL shares - 711 711 - - -
Pension
settlement
profit - - - - 64 64
Amortisation of
11 intangible assets - (142) (142) - (307) (307)
Operating
expenses (12,050) 335 (11,715) (12,235) (243) (12,478)
Operating profit 3,583 335 3,918 3,816 (243) 3,573
Share of results
of Joint Venture 180 - 180 36 - 36
------------------ --------------- --------------- --------- --------------- --------------- ---------
Profit before
net financing
costs 3,763 335 4,098 3,852 (243) 3,609
Finance income 187 - 187 220 - 220
Finance expense (391) (391) (425) (425)
------------------ --------------- --------------- --------- --------------- --------------- ---------
Net financing
8 costs (204) - (204) (205) - (205)
Profit / (loss)
before tax from
continuing
operations 3,559 335 3,894 3,647 (243) 3,404
9 Taxation (825) 75 (750) (901) 130 (771)
Profit / (loss)
for the year
attributable to
equity holders
of the company 2,734 410 3,144 2,746 (113) 2,633
------------------ --------------- --------------- --------- --------------- --------------- ---------
Earnings per
10 share
Basic 22.1p 25.4p 22.2p 21.3p
Diluted 22.0p 25.3p 22.0p 21.1p
--------- ---------
Consolidated Statement of Comprehensive Income
FOR THE YEAR ENDED 31 MARCH 2015
2015 2014
GBP'000 GBP'000
----------------------------------------------- -------- --------
Unrealised profit / (loss) on the revaluation
of shares in Falkland Oil and Gas 225 (129)
Transfer to the income statement on
sale of shares in Falkland Oil and
Gas (419) -
----------------------------------------------- -------- --------
Items which will ultimately be recycled
to the income statement (194) (129)
(Increase) / decrease in the FIC defined
benefit pension liability (412) 135
Movement on deferred tax asset relating
to pension schemes 107 (35)
Items which will not ultimately be
recycled to the income statement (305) 100
Other comprehensive expense (499) (29)
Profit for the year 3,144 2,633
----------------------------------------------- -------- --------
Total comprehensive income 2,645 2,604
----------------------------------------------- -------- --------
Consolidated Balance Sheet
AT 31 MARCH 2015
2015 2014
Notes GBP'000 GBP'000
-------------------------------------- --------- ---------
Non-current assets
11 Intangible assets 12,226 12,238
12 Property, plant and equipment 19,621 16,609
13 Investment properties 3,693 3,396
Shares held in Falkland Oil and
15 Gas Limited 1,500 3,270
16 Investment in Joint venture 266 86
Loan to Joint venture 378 529
17 Finance leases receivable 458 342
18 Deferred tax assets 750 645
Total non-current assets 38,892 37,115
Current assets
-------------------------------------- --------- ---------
19 Inventories 5,391 6,692
20 Trade and other receivables 5,308 7,041
17 Finance leases receivable 647 503
21 Cash and cash equivalents 7,435 5,715
Total current assets 18,781 19,951
TOTAL ASSETS 57,673 57,066
Current liabilities
22 Interest-bearing loans and borrowings (293) (1,109)
Income tax payable (27) (419)
23 Trade and other payables (10,214) (10,981)
Total current liabilities (10,534) (12,509)
Non-current liabilities
22 Interest-bearing loans and borrowings (5,580) (5,061)
24 Employee benefits (2,884) (2,480)
18 Deferred tax liabilities (1,987) (1,639)
Total non-current liabilities (10,451) (9,180)
TOTAL LIABILITIES (20,985) (21,689)
Net assets 36,688 35,377
-------------------------------------- --------- ---------
26 Capital and reserves
Equity share capital 1,243 1,243
Share premium account 17,447 17,447
Other reserves 1,162 1,162
Retained earnings 16,344 14,839
Financial assets fair value reserve 492 686
Total equity 36,688 35,377
-------------------------------------- --------- ---------
These financial statements were approved by the Board of
Directors on 8 June 2015 and were signed on its behalf by:
J L Foster
Director
Company Balance Sheet
AT 31 MARCH 2015
2015 2014
Notes GBP'000 GBP'000
-------------------------------------- -------- --------
Non-current assets
14 Investment in subsidiaries 28,249 29,004
20 Loans to subsidiaries 1,813 1,952
18 Deferred tax 6 4
Total non-current assets 30,068 30,960
Current assets
-------------------------------------- -------- --------
20 Trade and other receivables 12 19
Corporation tax receivable 27 -
21 Cash and cash equivalents 9,379 9,280
Total current assets 9,418 9,299
TOTAL ASSETS 39,486 40,259
Current liabilities
22 Interest-bearing loans and borrowings - (785)
Corporation tax payable - (48)
23 Trade and other payables (562) (578)
Total current liabilities (562) (1,411)
Net assets 38,924 38,848
-------------------------------------- -------- --------
26 Capital and reserves
Equity share capital 1,243 1,243
Share premium account 17,447 17,447
Other reserves 6,910 6,910
Retained earnings 13,324 13,248
Total equity 38,924 38,848
-------------------------------------- -------- --------
These financial statements were approved by the Board of
Directors on 8 June 2015 and were signed on its behalf by:
J L Foster
Director
Registered company number: 03416346
Consolidated Cash Flow Statement
FOR THE YEAR ENDED 31 MARCH 2015
2015 2014
GBP'000 GBP'000
--------------------------------------------- -------- --------
Cash flows from operating activities
Profit for the year 3,144 2,633
Adjusted for:
(i) Non-cash items:
Depreciation 1,387 1,116
Depreciation of computer software 39 117
Amortisation 142 307
Profit on disposal of fixed assets - (4)
Share of Joint Venture profit (180) (36)
Amortisation of loan fees 15 16
Past service cost of pension scheme - 45
Interest cost on pension scheme liabilities 107 108
Equity-settled share-based payment
expenses 90 43
--------------------------------------------- -------- --------
Non-cash items adjustment 1,600 1,712
(ii) Other items:
Bank interest receivable (15) (99)
Bank interest payable 17 39
Finance lease interest payable 246 262
Gain on disposal of FOGL shares (711) -
Pension settlement profit - (64)
Corporation and deferred tax expense 750 771
--------------------------------------------- -------- --------
Other adjustments 287 909
Operating cash flow before changes
in working capital and provisions 5,031 5,254
Decrease / (increase) in trade and
other receivables 1,733 (888)
Decrease / (increase) in inventories 1,406 (1,593)
(Decrease) / increase in trade and
other payables (879) 927
Decrease in provisions and employee
benefits (115) (122)
--------------------------------------------- -------- --------
Changes in working capital and provisions 2,145 (1,676)
Cash generated from operations 7,176 3,578
Corporation taxes paid (792) (780)
--------------------------------------------- -------- --------
Net cash flow from operating activities 6,384 2,798
Cash flows from investing activities
Purchase of property, plant and equipment (4,597) (4,933)
Purchase of computer software (132) (41)
Proceeds from the disposal of property,
plant & equipment 86 21
Proceeds received from the sale of
FOGL shares 2,287 -
Cash received on transfer of pension
scheme - 46
Acquisition of a business (215) -
Loans to Joint Venture 151 (529)
Interest received 15 99
--------------------------------------------- -------- --------
Net cash flow from investing activities (2,405) (5,337)
Consolidated Cash Flow Statement (continued)
FOR THE YEAR ENDED 31 MARCH 2015
2015 2014
GBP'000 GBP'000
-------- --------
Cash flow from financing activities
Increase in finance leases receivable (260) (238)
Repayment of secured loan (1,391) (1,396)
Bank loan drawn down 701 -
Interest paid (17) (39)
Hire purchase loan drawn down 132 -
Net cash flows from sale and purchase
of Treasury shares - (66)
Dividends paid (1,424) (1,423)
----------------------------------------- -------- --------
Net cash flow from financing activities (2,259) (3,162)
Net increase / (decrease) in cash
and cash equivalents 1,720 (5,701)
Cash and cash equivalents at start
of year 5,715 11,416
Cash and cash equivalents at end
of year 7,435 5,715
----------------------------------------- -------- --------
Company Cash Flow Statement
FOR THE YEAR ENDED 31 MARCH 2015
2015 2014
GBP'000 GBP'000
------------------------------------------ -------- --------
Notes Cash flows from operating activities
Profit for the year 1,410 1,632
Adjusted for:
Bank interest receivable (12) (95)
Bank interest payable 10 26
Amortisation of loan fees 15 16
Equity-settled share-based payment
expenses 55 7
8 Impairment of investment in Erebus 790 129
Reversal of loan impairment due to
8 loan repayment in the year by Erebus (1,309) -
Corporation and deferred tax expense (1) 72
------------------------------------------ -------- --------
Operating cash flow before changes
in working capital and provisions 958 1,787
Decrease in trade and other receivables 7 2
(Decrease) / increase in trade and
other payables (16) 57
------------------------------------------ -------- --------
Changes in working capital and provisions (9) 59
Cash generated from operations 949 1,846
Corporation taxes paid (76) (75)
------------------------------------------ -------- --------
Net cash flow from operating activities 873 1,771
Cash flow from financing activities
Repayment of inter-company borrowing 1,448 (825)
Repayment of secured loan (800) (800)
Interest received 12 95
Interest paid (10) (26)
Net cash flows from sale and purchase
of Treasury shares - (66)
Dividends paid (1,424) (1,423)
------------------------------------------ -------- --------
Net cash flow from financing activities (774) (3,045)
Net increase / (decrease) in cash
and cash equivalents 99 (1,274)
Cash and cash equivalents at start
of year 9,280 10,554
Cash and cash equivalents at end of
year 9,379 9,280
------------------------------------------ -------- --------
Consolidated Statement of Changes in Shareholders' Equity
FOR THE YEAR ENDED 31 MARCH 2015
Financial
assets
Equity Share fair
share premium Other Retained value Total
capital account reserves earnings reserve equity
GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000
Balance at 1 April
2013 1,243 17,447 1,162 13,612 815 34,279
Profit for the
year - - - 2,633 - 2,633
Share-based payments - - - 43 - 43
Net Treasury share
movements (126) (126)
Dividends - - - (1,423) - (1,423)
Change in fair
value of shares
in Falkland Oil
and Gas Limited - - - - (129) (129)
Remeasurement of
the defined benefit
pension liability,
net of tax - - - 100 - 100
---------------------- --------- --------- ---------- ---------- ---------- ---------
Balance at 31 March
2014 1,243 17,447 1,162 14,839 686 35,377
Profit for the
year - - - 3,144 - 3,144
Share based payments - - - 90 - 90
Dividends - - - (1,424) - (1,424)
Transfer to the
income statement
on sale of shares
in Falkland Oil
and Gas Limited - - - - (419) (419)
Change in fair
value of shares
in Falkland Oil
and Gas Limited - - - - 225 225
Remeasurement of
the defined benefit
pension liability,
net of tax - - - (305) - (305)
---------------------- --------- --------- ---------- ---------- ---------- ---------
Balance at 31 March
2015 1,243 17,447 1,162 16,344 492 36,688
---------------------- --------- --------- ---------- ---------- ---------- ---------
Company Statement of Changes in Shareholders'
Equity
FOR THE YEAR ENDED 31 MARCH 2015
Equity Share
share premium Other Retained Total
capital account reserves earnings equity
GBP'000 GBP'000 GBP'000 GBP'000 GBP'000
Balance at 1 April
2013 1,243 17,447 6,910 13,122 38,722
Profit for the year - - - 1,632 1,632
Share-based payments - - - 43 43
Net Treasury share
movements (126) (126)
Dividends - - - (1,423) (1,423)
Balance at 31 March
2014 1,243 17,447 6,910 13,248 38,848
Profit for the year - - - 1,410 1,410
Share based payments - - - 90 90
Dividends - - - (1,424) (1,424)
Balance at 31 March
2015 1,243 17,447 6,910 13,324 38,924
---------------------- --------- --------- ---------- ---------- ---------
A profit of GBP1,410,000 (2014: profit: GBP1,632,000) has been
dealt with in the accounts of the Parent Company. As permitted by
Section 408 of the Companies Act 2006, the Company has not
presented its own profit and loss account.
Notes to the Financial Statements
1. Accounting policies
General information
Falkland Islands Holdings plc (the "Company") is a company
incorporated and domiciled in the UK.
Reporting entity
The group financial statements consolidate those of the Company
and its subsidiaries (together referred to as the "Group"). The
Parent Company financial statements present information about the
Company as a separate entity and not about its group.
Basis of preparation
Both the Parent Company financial statements and the Group
financial statements have been prepared and approved by the
Directors in accordance with International Financial Reporting
Standards as adopted by the EU ("Adopted IFRS"). On publishing the
Parent Company financial statements here together with the Group
financial statements, the Company is taking advantage of the
exemption in s408 of the Companies Act 2006 not to present its
individual income statement and related notes that form a part of
these approved financial statements.
The accounting policies set out below have, unless otherwise
stated, been applied consistently to all periods presented in these
consolidated financial statements.
Judgements made by the Directors in the application of these
accounting policies that have a significant effect on the financial
statements and estimates with a significant risk of material
adjustment next year are discussed in note 32.
The financial statements are presented in pounds sterling,
rounded to the nearest thousand. They are prepared on the
historical cost basis, except for the investment in Falkland Oil
and Gas limited, which is stated at fair value.
The Directors are responsible for ensuring that the Group has
adequate financial resources to meet its projected liquidity
requirements and also for ensuring forecast earnings are sufficient
to meet the covenants associated with the Group's banking
facilities.
As in prior years the Directors have reviewed the Group's medium
term forecasts and considered a number of possible trading
scenarios and are satisfied the Group's existing resources
(including committed banking facilities) are sufficient to meet its
needs. As a consequence the Directors believe the Group is well
placed to manage its business risk.
The Group's business activities, together with the factors
likely to affect its future development, performance and position
are set out in the Managing Director's Strategic Report. The
financial position of the Group, its cash flows, liquidity position
and borrowing facilities are also described in the Managing
Director's Strategic Report. In addition, note 27 to the financial
statements includes the Group's objectives, policies and processes
for managing its capital; its financial risk management objectives;
details of its financial instruments and hedging activities; and
its exposures to credit risk and liquidity risk.
The Group has considerable financial resources. As a
consequence, the Directors believe that the Group is well placed to
manage its business risks successfully. After making enquiries the
Directors have a reasonable expectation that the Company and Group
have adequate facilities to continue in operational existence for
the foreseeable future, and have continued to adopt the going
concern basis in preparing the financial statements.
1. Accounting policies (continued)
Basis of consolidation
The consolidated financial statements comprise the financial
statements of Falkland Islands Holdings plc and its subsidiaries
(the "Group"). A subsidiary is any entity Falkland Islands Holdings
plc has the power to control. Control is determined by Falklands
Islands Holdings exposure or rights, to variable returns from its
involvement with the subsidiary and the ability to affect those
returns. The financial statements of subsidiaries are prepared for
the same reporting period as the Parent Company. The accounting
policies of subsidiaries have been changed when necessary to align
them with the policies adopted by the Group.
Subsidiaries are consolidated from the date on which control is
transferred to the Group and cease to be consolidated from the date
on which control is transferred out of the Group.
All intra-company balances and transactions, including
unrealised profits arising from intra-group transactions, are
eliminated in full in preparing the consolidated financial
statements. Investments in subsidiaries within the Company balance
sheet are stated at cost.
Presentation of income statement
Due to the non-prescriptive nature under IFRS as to the format
of the income statement, the format used by the Group is explained
below.
Operating profit is the pre-finance profit of continuing
activities and acquisitions of the Group, and in order to achieve
consistency and comparability, is analysed to show separately the
results of normal trading performance ("underlying profit"),
individually significant charges and credits, changes in the fair
value of financial instruments and amortisation of intangible
assets on acquisition. Such items arise because of their size or
nature, and in 2015 comprise:
-- Restructuring costs:
-- The gain on the sale of 7,825,000 Falkland Oil and Gas Limited; and
-- the amortisation of intangible assets
In 2014 these comprised:
-- The net settlement profit on the disposal of the liabilities
in the PHFC pension scheme; and
-- the amortisation of intangible assets
Foreign currencies
Transactions in foreign currencies are translated to the
functional currencies of Group entities at exchange rates ruling at
the dates of the transactions. Monetary assets and liabilities
denominated in foreign currencies are retranslated to the
functional currency using the relevant rates of exchange ruling at
the balance sheet date and the gains or losses thereon are included
in the income statement.
Non-monetary assets and liabilities are translated using the
exchange rate at the date of the initial transaction.
Property, plant and equipment
Property, plant and equipment are measured at cost less
accumulated depreciation and impairment losses. Cost comprises
purchase price and directly attributable expenses. Depreciation is
charged to the income statement on a straight-line basis over the
estimated useful lives of each part of an item of property, plant
and equipment, except for trucks owned by Momart, which are
depreciated on a 33.3% reducing balance basis. The estimated useful
lives are as follows:
20 - 50
Freehold buildings years
Long leasehold land and buildings 50 years
Vehicles, plant and equipment 4 - 10 years
15 - 30
Ships years
The carrying value of assets and their useful lives are
reviewed, and adjusted if appropriate, at each balance sheet date.
If an indication of impairment exists, the assets are written down
to their recoverable amount and the impairment is charged to the
income statement in the period in which it arises. Freehold land
and assets under construction are not depreciated.
1. Accounting policies (continued)
Investment properties
Investment properties are properties held either to earn rental
income or for capital appreciation or for both. Investment
properties are stated at cost less any accumulated depreciation
(calculated on useful economic lives in line with accounting
policy, as stated under property, plant and equipment above) and
any impairment losses.
Joint Ventures
Jointly controlled entities are those entities over whose
activities the Group has joint control, established by contractual
agreement and requiring the venturers' unanimous consent for
strategic financial and operating decisions. Falkland Islands
Holdings plc has joint control over an investee when it has
exposure or rights to variable returns from its involvement with
the joint venture and has the ability to affect those returns
through its joint power over the entity.
Jointly controlled entities are accounted for using the equity
method (equity accounted investees) and are initially recognised at
cost. The consolidated financial statements include the Group's
share of the total comprehensive income and equity movements of
equity accounted investees, from the date that significant
influence or joint control commences until the date that
significant influence or joint control ceases. When the Group's
share of losses exceeds its interest in an equity accounted
investee, the Group's carrying amount is reduced to nil and
recognition of further losses is discontinued except to the extent
that the Group has incurred legal or constructive obligations or
made payments on behalf of an investee.
Intangible assets
Goodwill
Goodwill arises on the acquisition of subsidiaries and
businesses.
Acquisitions prior to 1 April 2006
In respect to acquisitions prior to transition to IFRS, goodwill
is recorded on the basis of deemed cost, which represents the
amount recorded under previous Generally Accepted Accounting
Principles ("GAAP") as at the date of transition. The
classification and accounting treatment of business combinations
which occurred prior to transition has not been reconsidered in
preparing the Group's opening IFRS balance sheet at 1 April 2006.
Goodwill is not amortised but reviewed for impairment annually, or
more frequently, if events or changes in circumstances indicate
that the carrying value may be impaired.
Acquisitions on or after 1 April 2006
Goodwill on acquisition is initially measured at cost, being the
excess of the cost of the business combination over the acquirer's
interest in the fair value of the identifiable assets, liabilities
and contingent liabilities of the acquired business. Following
initial recognition, goodwill is measured at cost less any
accumulated impairment losses. Goodwill is not amortised but
reviewed for impairment annually or more frequently if events or
changes in circumstances indicate that the carrying value may be
impaired.
Amortisation is charged to the income statement on a
straight-line basis over the estimated useful lives of intangible
assets unless such lives are indefinite. Other intangible assets
are amortised from the date they are available for use. The
estimated useful lives are as follows:
Trade name indefinite life
Customer relationships 6 - 10 years
Non-compete agreements 5 years
In the year ended 31 March 2014, the Directors reviewed the life
of the brand name at Momart and after considerations of its strong
reputation in a niche market and its history of stable earnings and
cash flow, which is expected to continue into the foreseeable
future, determined that its useful life is indefinite, and
amortisation ceased from 1 October 2014.
1. Accounting policies (continued)
Computer software
Acquired computer software is capitalised as an intangible asset
on the basis of the cost incurred to acquire and bring the specific
software into use. Amortisation is charged to the income statement
on a straight-line basis over the estimated useful lives of
intangible assets from the date that they are available for use.
The estimated useful life of computer software is seven years.
Impairment of non-financial assets
At each reporting date the Group assesses whether there is any
indication that an asset may be impaired. Goodwill and intangible
assets with indefinite lives are tested for impairment, at least
annually. Where an indicator of impairment exists or the asset
requires annual impairment testing, the Group makes a formal
estimate of the recoverable amount. Where the carrying amount of an
asset exceeds its recoverable amount, the asset is considered
impaired and is written down to its recoverable amount. Impairment
losses are recognised in the income statement.
Recoverable amount is the greater of an asset's or
cash-generating unit's fair value less cost to sell or value in
use. It is determined for an individual asset, unless the asset's
value in use cannot be estimated and it does not generate cash
inflows that are largely independent of those from other assets or
groups of assets, in which case the recoverable amount is
determined for the cash-generating unit to which the asset belongs.
In assessing value in use, the estimated future cash flows are
discounted to their present value using a discount rate that
reflects current market assessments of the time value of money and
risks specific to the asset.
An impairment loss in respect of goodwill is not reversed. In
respect of other assets, impairment losses are reversed if there
has been a change in the estimates used to determine the
recoverable amount. An impairment loss is reversed only to the
extent that the asset's carrying amount does not exceed the
carrying amount that would have been determined, net of
depreciation or amortisation, if no impairment loss had been
recognised.
Finance income and expense
Net financing costs comprise interest payable and interest
receivable which are recognised in the income statement. Interest
income and interest payable are recognised as a profit or loss as
they accrue, using the effective interest method.
Financial instruments classified as available-for-sale
The investment in Falkland Oil and Gas Limited is stated at fair
value, with any resultant gain or loss being recognised in other
comprehensive income and presented in the fair value reserve in
equity, except for impairment losses. When these items are
derecognised, the cumulative gain or loss previously recognised
directly in equity is recycled to the profit and loss. Financial
instruments classified as available-for-sale are initially
recognised at fair value less directly attributable transaction
costs.
Employee share awards
The Group provides benefits to certain employees (including
Directors) in the form of share-based payment transactions, whereby
the recipient renders service in return for shares or rights over
future shares ("equity settled transactions"). The cost of these
equity settled transactions with employees is measured by reference
to an estimate of their fair value at the date on which they were
granted using an option input pricing model taking into account the
terms and conditions upon which the options were granted. The
amount recognised as an expense is adjusted to reflect the actual
number of share options for which the related service and
non-market performance conditions are expected to be met, such that
the amount ultimately recognised as an expense is based on the
number of share options that meet the related service and
non-market performance conditions at the vesting date. For
share-based payment awards with market performance vesting
conditions, the grant date fair value of the share-based payments
is measured to reflect such conditions and there is no true up for
differences between expected and actual outcomes.
The cost of equity settled transactions is recognised, together
with a corresponding increase in reserves, over the period in which
the performance conditions are fulfilled, ending on the date that
the option vests. Where the Company grants options over its own
shares to the employees of subsidiaries, it recognises, in its
individual financial statements, an increase in the cost of
investment in its subsidiaries equal to the equity settled
share-based payment charge recognised in its consolidated financial
statements with the corresponding credit being recognised directly
in equity.
1. Accounting policies (continued)
Inventories
Inventories are stated at the lower of cost and net realisable
value. Cost includes all costs incurred in bringing each product to
its present location and condition, as follows:
The cost of raw materials, consumables and goods for resale
comprises purchase cost, on a weighted average basis and where
applicable includes expenditure incurred in transportation to the
Falkland Islands.
Work-in-progress and finished goods cost includes direct
materials and labour plus attributable overheads based on a normal
level of activity.
Construction-in-progress is stated at the lower of cost and net
realisable value.
Net realisable value is estimated at selling price in the
ordinary course of business less costs of disposal.
Revenue
Revenue is measured at the fair value of the consideration
received or receivable and represents the amount receivable by the
Group for goods supplied and services rendered in the normal course
of business, net of discounts and excluding VAT. Revenue
principally arises from retail sales, the provision of ferry
services and the provision of storage and transportation services
for fine art works. In the Falkland Islands revenue also includes
proceeds from property sales, property rental income, insurance
commissions, revenues billed for shipping and agency activities and
port services. Revenue from sale of goods is recognised at the
point of sale or dispatch, which approximates to the point when
significant risks and rewards are transferred to the buyer, whilst
that of the ferry, fine art logistics and other services is
recognised when the service is provided. Revenue from property
sales is recognised on completion.
For fine art exhibition logistical work undertaken, where the
costs incurred and the costs to complete the transaction can be
measured reliably, the amount of profit attributable to the stage
of completion of a contract is recognised on the basis of the
incurred percentage of anticipated cost, which in the opinion of
the Directors, is the most appropriate proxy for the stage of
completion. Provision is made for losses as soon as they are
foreseeable.
Pensions
Defined contribution pension schemes
The Group operates three defined contribution schemes. The
assets of the schemes are held separately from those of the Group
in independently administered funds. The amount charged to the
income statement represents the contributions payable to the
schemes in respect to the accounting period.
Defined benefit pension schemes
The Group has one pension scheme providing benefits based on
final pensionable pay, which is unfunded and closed to further
accrual. The Group's net obligation in respect of the defined
benefit pension plan is calculated by estimating the amount of
future benefit that employees have earned in return for their
service in the current and prior periods; that benefit is
discounted to its present value; and any unrecognised past service
costs are deducted.
The liability discount rate is the yield at the balance sheet
date on AA credit-rated bonds that have maturity dates
approximating the terms of the Group's obligations. The calculation
is performed by a qualified actuary using the projected unit credit
method. When the calculation results in a benefit to the Group, the
benefit recognised is limited to the present value of any
reductions in future contributions to the plan.
The current service cost and costs from settlements and
curtailments are charged against operating profit. Past service
costs are recognised immediately within profit and loss. The net
interest cost on the defined benefit liability for the period is
determined by applying the discount rate used to measure the
defined benefit obligation at the end of the period to the net
defined benefit liability at the beginning of the period. It takes
into account any changes in the net defined benefit liability
during the period as a result of contributions and benefit
payments. Remeasurements of the defined benefit pension liability
are recognised in full in the period in which they arise in the
statement of comprehensive income.
1. Accounting policies (continued)
Trade and other receivables
Trade receivables are carried at amortised cost, less provision
for impairment. Any change in their value through impairment or
reversal of impairment is recognised in the income statement.
Trade and other payables
Trade and other payables are stated at their cost less payments
made.
Dividends
Dividends unpaid at the balance sheet date are only recognised
as liabilities at that date to the extent that they are
appropriately authorised and are no longer at the discretion of the
Company.
Cash and cash equivalents
Cash and cash equivalents in the balance sheet comprise cash
balances and call deposits with an original maturity of three
months or less. Bank overdrafts that are repayable on demand and
form an integral part of the Group's cash management are included
as a component of cash and cash equivalents for the purpose of the
statement of cash flows.
Interest-bearing borrowings
Interest-bearing borrowings are recognised initially at fair
value less directly attributable transaction costs. Subsequent to
initial recognition, interest-bearing borrowings are stated at
amortised cost with any difference between cost and redemption
value being recognised in the income statement over the period of
the borrowings on an effective interest basis.
Income tax
Income tax on the profit or loss for the year comprises current
and deferred tax. Income tax is recognised in the income statement,
except to the extent that it relates to items recognised directly
in equity, in which case it is recognised directly in equity or in
other comprehensive income.
Current tax is the expected tax payable on the taxable income
for the year, using tax rates enacted, or substantively enacted at
the balance sheet date, and any adjustment to tax payable in
respect of previous years.
Deferred tax is provided using the balance sheet method,
providing for temporary differences between the carrying amounts of
assets and liabilities for financial reporting purposes and the
amounts used for taxation purposes. The following temporary timing
differences are not recognised:
-- Goodwill not deductible for tax purposes; and
-- Initial recognition of assets or liabilities in a transaction
that is not a business combination and that affects neither
accounting nor taxable profits.
-- Temporary differences related to investments in subsidiaries,
to the extent that it is probable that they will not reverse in the
foreseeable future.
A deferred tax asset is recognised to the extent that it is
probable that future taxable profits will be available against
which the temporary differences can be utilised. Deferred tax
assets are reviewed at each reporting date and are reduced to the
extent that it is no longer probable that the related tax benefit
will be realised.
Deferred tax is recognised at the tax rates that are expected to
be applied to the temporary differences when they reverse, based on
rates that have been enacted or substantially enacted by the
reporting date.
1. Accounting policies (continued)
Leased assets
Leases in which the Group assumes substantially all the risks
and rewards of ownership are classified as finance leases. All
other leases are classified as operating leases.
As lessee
Rentals in respect of all operating leases are charged to the
income statement on a straight-line basis over the lease term.
Lease incentives granted are recognised as an integral part of the
total rental income.
As lessor
Assets under hire purchase agreements are shown in the balance
sheet under current assets to the extent they are due within one
year, and under non-current assets to the extent that they are due
after more than one year, and are stated at the value of the net
investment in the agreements. The income from such agreements is
credited to the income statement each year so as to give a constant
rate of return on the funds invested.
Assets held for leasing out under operating leases are included
in investment property (where they constitute land and buildings)
or in property, plant and equipment (where they do not constitute
land and buildings) at cost less accumulated depreciation and
impairment losses. Rental income is recognised on a straight-line
basis.
Finance lease payments
Minimum lease payments are apportioned between the finance
charge and reduction of the outstanding liability. The finance
charge is allocated to each period of the lease term so as to
produce a constant periodic rate of interest on the remaining
balance of the liability.
New, amended and revised IFRSs and International Financial
Reporting Interpretations Committee pronouncements ("IFRICs")
The following IFRSs and amendments and revisions to IFRSs which
were effective for the first time in the year ended 31 March 2015
did not have any material impact on the consolidated financial
statements:
New IFRSs Effective date
Periods beginning on
or after:
IFRS 10 Consolidated Financial
Statements 1 January 2014
IFRS 11 Joint Arrangements 1 January 2014
IFRS 12 Disclosure of Interests
in Other Entities 1 January 2014
IAS 27 Separate Financial Statements 1 January 2014
IAS 28 Investments in Associates
and Joint Ventures 1 January 2014
Amendments and revisions to IFRSs Effective date
Periods beginning on
or after:
IAS 32 Financial Instruments:
Presentation 1 January 2014
The following amendments and revisions to IFRSs, have been
adopted by the EU, and were available for early adoption but have
not yet been applied in the preparation of the consolidated
financial statements:
Amendments and revisions to IFRSs Effective date
Periods beginning on
or after:
IAS 19 Defined Benefit Plans:
Employee Contributions 1 February 2015
Various Improvements to IFRSs
- minor amendments various
The Directors do not anticipate that the adoption of these new
IFRSs and amendments and revisions to IFRSs will have a material
impact on the consolidated financial statements in the period of
initial application.
2. Segmental Information Analysis
The Group is organised into three operating segments, and
information on these segments is reported to the chief operating
decision maker ('CODM') for the purposes of resource allocation and
assessment of performance. The CODM has been identified as the
Board of Directors.
The operating segments offer different products and services and
are determined by business type: goods and essential services in
the Falkland Islands, the provision of ferry services and art
logistics and storage.
Segment results, assets and liabilities include items directly
attributable to a segment as well as those that can be allocated on
a reasonable basis. Segment capital expenditure is the total cost
incurred during the period to acquire property, plant and equipment
and intangible assets other than goodwill and any other assets
purchased through the acquisition of a business.
2. Segmental Information Analysis (continued)
2015
General Ferry Art logistics
trading Services and storage
(Falklands) (Portsmouth) (UK) Unallocated Total
GBP'000 GBP'000 GBP'000 GBP'000 GBP'000
Revenue 18,506 4,301 15,753 - 38,560
--------------------------- ------------ ------------- -------------- ------------ ---------
Segment operating
profit before tax,
amortisation &
non-trading items 1,312 1,032 1,239 - 3,583
Board restructuring
costs - - - (234) (234)
Gain on the sale
of 7,825,000 FOGL
shares - - - 711 711
Amortisation - - (142) - (142)
--------------------------- ------------ ------------- -------------- ------------ ---------
Segment operating
profit 1,312 1,032 1,097 477 3,918
Share of result
of joint venture 180 - - - 180
Profit before net
financing costs 1,492 1,032 1,097 477 4,098
Interest income 177 3 7 - 187
Interest expense (113) (239) (39) - (391)
Segment profit
before tax 1,556 796 1,065 477 3,894
--------------------------- ------------ ------------- -------------- ------------ ---------
Assets and liabilities
Segment assets 26,439 15,937 13,785 1,512 57,673
Segment liabilities (9,737) (7,277) (3,452) (519) (20,985)
Segment net assets 16,702 8,660 10,333 993 36,688
--------------------------- ------------ ------------- -------------- ------------ ---------
Other segment information
Capital expenditure:
Property, plant
and equipment 2,090 1,483 516 - 4,089
Investment properties 508 - - - 508
Computer software - - 132 - 132
Total Capital Expenditure 2,598 1,483 648 - 4,729
--------------------------- ------------ ------------- -------------- ------------ ---------
Depreciation:
Property, plant
and equipment 541 349 286 - 1,176
Investment properties 211 - - - 211
Computer software - - 39 - 39
Total Depreciation 752 349 325 - 1,426
--------------------------- ------------ ------------- -------------- ------------ ---------
Amortisation of
intangible assets
on acquisition
of Momart - - 142 - 142
--------------------------- ------------ ------------- -------------- ------------ ---------
Underlying profit
before tax
Segment operating
profit 1,312 1,032 1,239 - 3,583
Share of results
of joint venture 180 - - - 180
Underlying profit
before net financing
costs 1,492 1,032 1,239 - 3,763
Interest income 177 3 7 - 187
Interest expense (113) (239) (39) - (391)
Underlying profit
before tax 1,556 796 1,207 - 3,559
--------------------------- ------------ ------------- -------------- ------------ ---------
2. Segmental Information Analysis (continued)
2014
General Ferry Art logistics
trading Services and storage
(Falklands) (Portsmouth) (UK) Unallocated Total
GBP'000 GBP'000 GBP'000 GBP'000 GBP'000
Revenue 15,881 4,124 18,258 - 38,263
--------------------------- ------------ ------------- -------------- ------------ ---------
Segment operating
profit before tax,
amortisation &
non-trading items 977 1,013 1,826 - 3,816
Pension settlement
profit - - - 64 64
Amortisation - - (307) - (307)
--------------------------- ------------ ------------- -------------- ------------ ---------
Segment operating
profit 977 1,013 1,519 64 3,573
Share of result
of joint venture 36 - - - 36
Profit before net
financing costs 1,013 1,013 1,519 64 3,609
Interest income 211 3 6 - 220
Interest expense (108) (246) (71) - (425)
Segment profit
before tax 1,116 770 1,454 64 3,404
--------------------------- ------------ ------------- -------------- ------------ ---------
Assets and liabilities
Segment assets 24,432 14,809 14,532 3,293 57,066
Segment liabilities (8,950) (6,541) (5,603) (595) (21,689)
Segment net assets 15,482 8,268 8,929 2,698 35,377
--------------------------- ------------ ------------- -------------- ------------ ---------
Other segment information
Capital expenditure:
Property, plant
and equipment 2,057 1,958 260 - 4,275
Investment properties 658 - - 658
Computer software - - 41 - 41
--------------------------- ------------ ------------- -------------- ------------ ---------
Total Capital Expenditure 2,715 1,958 301 - 4,974
--------------------------- ------------ ------------- -------------- ------------ ---------
Depreciation:
Property, plant
and equipment 429 332 307 - 1,068
Investment properties 48 - - - 48
Computer software - - 117 - 117
Total Depreciation 477 332 424 - 1,233
--------------------------- ------------ ------------- -------------- ------------ ---------
Amortisation of
intangible assets
on acquisition
of Momart - - 307 - 307
--------------------------- ------------ ------------- -------------- ------------ ---------
Underlying profit
before tax
Segment operating
profit 977 1,013 1,826 - 3,816
Share of results
of joint venture 36 - - - 36
Underlying profit
before net financing
costs 1,013 1,013 1,826 - 3,852
Interest income 211 3 6 - 220
Interest expense (108) (246) (71) - (425)
Underlying profit
before tax 1,116 770 1,761 - 3,647
--------------------------- ------------ ------------- -------------- ------------ ---------
2. Segmental Information Analysis (continued)
The GBP1,512,000 (2014: GBP3,293,000) unallocated assets above
include the Group's investments in Falkland Oil and Gas of
GBP1,500,000 (2014: GBP3,270,000), together with GBP12,000 (2014:
GBP23,000) of prepayments held in Falkland Islands Holdings
plc.
The GBP519,000 (2014: GBP595,000) unallocated liabilities above
consist of accruals and tax balances held in Falkland Islands
Holdings plc.
3. Geographical analysis
The tables below analyse revenue and other information by
geography:
2015
United Falkland
Kingdom Islands Total
GBP'000 GBP'000 GBP'000
Revenue (by source) 20,054 18,506 38,560
--------------------------------------- --------- --------- --------
Assets and Liabilities
Non-current segment assets, excluding
deferred tax and the investment
in Falkland Oil and Gas Limited 24,692 11,950 36,642
--------------------------------------- --------- --------- --------
Capital expenditure 2,131 2,598 4,729
--------------------------------------- --------- --------- --------
2014
United Falkland
Kingdom Islands Total
GBP'000 GBP'000 GBP'000
Revenue (by source) 22,382 15,881 38,263
--------------------------------------- --------- --------- --------
Assets and Liabilities
Non-current segment assets, excluding
deferred tax and the investment
in Falkland Oil and Gas Limited 23,377 9,823 33,200
--------------------------------------- --------- --------- --------
Capital expenditure 2,259 2,715 4,974
--------------------------------------- --------- --------- --------
4. Revenue
2015 2014
GBP'000 GBP'000
Sale of goods 12,584 11,701
Rendering of services 25,976 26,562
------------------------ -------- --------
Total revenue 38,560 38,263
------------------------ -------- --------
5. Amortisation of intangible assets acquired on purchase of
Momart, and non-trading items
2015 2014
GBP'000 GBP'000
Amortisation charge on Momart
intangible assets acquired (142) (307)
---------------------------------------- -------- --------
Profit before tax as reported 3,894 3,404
Board restructuring costs 234 -
Gain on the sale of 7,825,000
FOGL shares (711) -
Amortisation 142 307
Net settlement profit on the transfer
of the PHFC pension scheme - (64)
Total amortisation and non-trading
items (335) 243
---------------------------------------- -------- --------
Underlying profit before tax 3,559 3,647
---------------------------------------- -------- --------
A GBP75,000 tax credit has been included in the Group's income
statement in respect of the GBP335,000 non-trading items for the
year ending 31 March 2015. This has been calculated as the
GBP28,000 credit on the amortisation of the non-trading intangible
assets, and the tax deductibility at 21% of the GBP234,000 Board
restructuring costs, excluding the accelerated charge for share
options, which the Remuneration Committee deemed to vest on the
date of retirement. No tax charge has arisen on the GBP711,000 gain
on the sale of the 7,825,000 shares in Falkland Oil and Gas
Limited.
6. Expenses and auditor's remuneration
The following expenses
/ (incomes) have been included
in the profit and loss Group Company
2015 2014 2015 2014
GBP'000 GBP'000 GBP'000 GBP'000
Direct operating expenses
of rental properties 142 131 - -
Depreciation 1,237 1,116 - -
Depreciation of computer
software 39 117 - -
Amortisation of intangible
assets 142 307 - -
Foreign currency differences (60) (50) - -
Impairment loss on trade
and other receivables 16 (44) - -
Cost of inventories recognised
as an expense 9,853 9,025 - -
Operating lease payments 864 822 - -
--------------------------------- -------- -------- -------- --------
Auditor's remuneration 2015 2014
GBP'000 GBP'000
Audit of these financial statements 30 25
Other taxation services 4 4
Audit of subsidiaries' financial statements
pursuant to legislation 62 61
--------------------------------------------- -------- --------
Total auditor's remuneration 96 90
--------------------------------------------- -------- --------
Amounts paid to the Company's auditors and their associates in
respect of services to the Company, other than the audit of the
Company's financial statements, have not been disclosed as the
information is required instead to be disclosed on a consolidated
basis.
7. Staff numbers and cost
The average number of persons employed by the Group (including
Directors) during the year, analysed by category, was as
follows:
Number of employees Number of employees
Group Company
2015 2014 2015 2014
GBP'000 GBP'000 GBP'000 GBP'000
Ferry services 40 38 - -
Falkland Islands; in Stanley 180 142 - -
in UK 5 5 - -
Art logistics & storage 131 121 - -
Head office 6 5 6 5
Total average staff numbers 362 311 6 5
---------------------------------- ---------- ---------- ---------- ----------
The aggregate payroll cost of these persons was as follows:
Group Company
2015 2014 2015 2014
GBP'000 GBP'000 GBP'000 GBP'000
Wages and salaries 11,307 10,490 761 638
Share-based payments (see
note 25) 90 43 55 7
Social security costs 901 910 72 80
Contributions to defined
contribution plans 274 243 9 8
Total employment costs 12,572 11,686 897 733
--------------------------- -------- -------- -------- --------
Details of audited Directors' remuneration are provided in the
Directors' Report, under the heading 'Details of Directors'
Remuneration and Emoluments and Directors' interests in
shares'.
8. Finance income and expense
2015 2014
GBP'000 GBP'000
Bank interest receivable 15 99
Finance lease interest
receivable 172 121
Total financial income 187 220
---------------------------- -------- --------
2015 2014
GBP'000 GBP'000
Interest payable on bank loans (17) (39)
Net interest cost on the FIC defined
benefit pension scheme liabilities (107) (108)
Amortisation of loan fees (15) (16)
Finance lease interest payable (246) (262)
Unwinding of deferred consideration
payable (6) -
Total finance expense (391) (425)
---------------------------------------- -------- --------
9. Taxation
Recognised in the income statement
2015 2014
GBP'000 GBP'000
Current tax expense
Current year 323 801
Adjustments for prior years 77 34
------------------------------- -------- --------
Current tax expense 400 835
Deferred tax expense
Origination and reversal
of temporary differences 412 47
Reduction in tax rate - (136)
Adjustments for prior years (62) 25
Deferred tax expense /
(credit) 350 (64)
------------------------------- -------- --------
Total tax expense 750 771
------------------------------- -------- --------
Reconciliation of the effective tax rate
2015 2014
GBP'000 GBP'000
Profit on ordinary activities
before tax 3,894 3,404
-------------------------------------- -------- --------
Tax using the UK corporation
tax rate of 21% (2014: 23%) 818 783
Expenses not deductible for tax
purposes 124 78
Gain on disposal of investment (149) -
Marginal relief (1) -
Effect of higher tax rate overseas 13 (5)
Difference in the rate of deferred
tax (32) (136)
Income from joint ventures (38) (8)
Adjustments to tax charge in
respect of previous periods 15 59
Total tax expense 750 771
-------------------------------------- -------- --------
Tax recognised directly in other comprehensive income
2015 2014
GBP'000 GBP'000
Deferred tax credit / (expense)
recognised directly in
other comprehensive income 107 (35)
----------------------------------- -------- --------
Reductions in the UK corporation tax rate from 23% to 21%
(effective 1 April 2014) and to 20% (effective from 1 April 2015)
were substantively enacted on 2 July 2013. This will reduce the
company's future current tax charge accordingly. The deferred tax
assets and liabilities in the United Kingdom at 31 March 2015 have
been calculated based on the rate of 20% substantively enacted at
the balance sheet date. The deferred tax assets and liabilities in
the Falkland Islands have been calculated at the Falklands tax rate
of 26%.
10. Earnings per share
The calculation of basic earnings per share is based on profits
on ordinary activities after taxation, and the weighted average
number of shares in issue in the period, excluding shares held in
Treasury and under the Employee Share Ownership Plan ('ESOP') (see
note 26).
The calculation of diluted earnings per share is based on
profits on ordinary activities after taxation and the weighted
average number of shares in issue in the period, excluding shares
held under the ESOP, adjusted to assume the full issue of share
options outstanding, to the extent that they are dilutive.
2015 2014
GBP'000 GBP'000
Profit on ordinary activities after taxation 3,144 2,633
---------------------------------------------- ----------- -----------
2015 2014
Number Number
Weighted average number of shares in
issue 12,431,623 12,431,623
Less: shares held in Treasury (18,381) (12,764)
Less: shares held under the ESOP (28,016) (37,785)
---------------------------------------------- ----------- -----------
Average number of shares in issue excluding
the ESOP and shares held in Treasury 12,385,226 12,381,074
Maximum dilution with regards to share
options 60,871 79,911
Diluted weighted average number of shares 12,446,097 12,460,985
---------------------------------------------- ----------- -----------
2015 2014
Basic earnings per share 25.4p 21.3p
Diluted earnings per share 25.3p 21.1p
---------------------------- ------ ------
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.
Earnings per share on underlying profit 2015 2014
GBP'000 GBP'000
Underlying profit before tax (see note
5) 3,559 3,647
Taxation (825) (901)
------------------------------------------- ----------- -----------
Underlying profit after tax 2,734 2,746
Effective tax rate 23.2% 24.7%
Weighted average number of shares in
issue excluding Treasury share and the
ESOP (from above) 12,385,226 12,381,074
Diluted weighted average number of shares
(from above) 12,446,097 12,460,985
Basic earnings per share on underlying
profit 22.1p 22.2p
Diluted earnings per share on underlying
profit 22.0p 22.0p
------------------------------------------- ----------- -----------
11. Intangible assets
Computer Customer Brand Non-compete
Software relation-ships names agreements Goodwill Total
GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000
Cost:
At 1 April 2013 - 1,882 2,823 72 11,539 16,316
Additions 41 - - - - 41
Transfer from plant
and machinery 306 - - - - 306
--------------------------- ---------- ---------------- -------- ------------ --------- --------
At 31 March 2014 347 1,882 2,823 72 11,539 16,663
--------------------------- ---------- ---------------- -------- ------------ --------- --------
Goodwill arising
on acquisition
of a business (note
31) - - - - 37 37
Additions 132 - - - - 132
Disposals - (608) - (72) - (680)
--------------------------- ---------- ---------------- -------- ------------ --------- --------
At 31 March 2015 479 1,274 2,823 - 11,576 16,152
--------------------------- ---------- ---------------- -------- ------------ --------- --------
Accumulated amortisation:
At 1 April 2013 - 1,232 715 71 1,983 4,001
Depreciation of
computer software 117 - - - - 117
Amortisation for
the year 236 70 1 - 307
--------------------------- ---------- ---------------- -------- ------------ --------- --------
At 31 March 2014 117 1,468 785 72 1,983 4,425
--------------------------- ---------- ---------------- -------- ------------ --------- --------
Depreciation of
computer software 39 - - - - 39
Amortisation of
other intangibles
for the year - 142 - - - 142
Disposals - (608) - (72) - (680)
--------------------------- ---------- ---------------- -------- ------------ --------- --------
At 31 March 2015 156 1,002 785 - 1,983 3,926
--------------------------- ---------- ---------------- -------- ------------ --------- --------
Net book value:
At 1 April 2013 - 650 2,108 1 9,556 12,315
--------------------------- ---------- ---------------- -------- ------------ --------- --------
At 31 March 2014 230 414 2,038 - 9,556 12,238
--------------------------- ---------- ---------------- -------- ------------ --------- --------
At 31 March 2015 323 272 2,038 - 9,593 12,226
--------------------------- ---------- ---------------- -------- ------------ --------- --------
Amortisation and impairment charges are recognised in operating
expenses in the income statement.
Customer relationships are ongoing relationships, both
contractual and otherwise with customers considered to be of future
economic benefit to the Group with estimated economic lives of 6 -
10 years.
Prior to 1 October 2013, the Momart brand name was amortised
over 20 years, however following a review of the economic life, the
brand name has been determined to have an indefinite life. It is
reviewed annually for impairment as part of the art logistics and
storage review.
Non-compete agreements are contractual binding agreements with
senior Momart personnel not to compete with the Group for five
years in the event of their leaving the Group's service.
11. Intangible assets (continued)
Goodwill
Goodwill is allocated to the Group's cash generating units
(CGUs) which principally comprise its business segments. A segment
level summary of goodwill is shown below:
Art
logistics Ferry
and Services Falklands
storage (Ports-mouth) Islands Total
GBP'000 GBP'000 GBP'000 GBP'000
At 1 April 2013 5,577 3,979 - 9,556
-------------------- ----------- --------------- ---------- --------
At 31 March 2014 5,577 3,979 - 9,556
-------------------- ----------- --------------- ---------- --------
At 31 March 2015 5,577 3,979 37 9,593
-------------------- ----------- --------------- ---------- --------
Impairment
The Group tests material goodwill annually for impairment or
more frequently if there are indications that goodwill and / or
indefinite life assets might be impaired. An impairment test is a
comparison of the carrying value of the assets of a CGU, based on a
value-in-use calculation, to their recoverable amounts. Where the
recoverable amount is less than the carrying value an impairment
results. During the year the goodwill and indefinite life
intangibles for each CGU was separately assessed and tested for
impairment, with no impairment charges resulting (2014: nil). As
part of testing goodwill and indefinite life intangibles for
impairment, forecasts of operating cash flows for the next five
years are used, which are based on approved budgets and plans by
the Board of Falkland Islands Holdings plc. These forecasts
represent the best estimate of future performance of the CGUs based
on past performance and expectations for the market development of
the CGU.
A number of key assumptions are used as part of impairment
testing. These key assumptions are made by management reflecting
past experience combined with their knowledge as to future
performance and relevant external sources of information.
Sensitivity analysis as at 31 March 2015 has indicated that no
reasonably foreseeable change in the key assumptions used in the
impairment model would result in a significant impairment charge
being recorded in the financial statements.
Discount rates
Within impairment testing models, the cash flows of the Art
Logistics and Storage CGU have been discounted using a pre-tax
discount rate of 13.7% (2014: 13.7%), and the cash flows of the
Ferry Services have been discounted using a pre-tax discount rate
of 12.4% (2014: 12.5%). Management have determined that each rate
is appropriate as the risk adjustment applied within the discount
rate reflects the risks and rewards inherent to each CGU, based on
the industry and geographical location it is based within.
Long term growth rates
Long term growth rates of 2% over up to fifty years have been
used for all CGUs as part of the impairment testing models. This
growth rate does not exceed the long term average growth rate for
the UK, in which the CGUs operate. For both Ferry Services and Art
Logistics and Storage, the future cash flows are based on the
latest budgets and business plans, which take account of known
business conditions, and are therefore consistent with past
experience.
Other assumptions
Other assumptions used within impairment testing models include
an estimation of long term effective tax rate for the CGUs. The
long-term effective rate of tax assumption is consistent with
current tax rates. The terminal value is calculated based on the
Gordon Growth model.
11. Intangible assets (continued)
Sensitivity to changes in assumptions
Using a discounted cash flow methodology necessarily involves
making numerous estimates and assumptions regarding growth,
operating margins, tax rates, appropriate discount rates, capital
expenditure levels and working capital requirements. These
estimates will likely differ from future actual results of
operations and cash flows, and it is possible that these
differences could be material. In addition, judgements are applied
by the Directors in determining the level of cash generating units
and the criteria used to determine which assets should be
aggregated. A difference in testing levels could further affect
whether an impairment is recorded and the extent of impairment
loss.
Assumptions specific to ferry services (Portsmouth)
Value in use was determined by discounting future cash flows in
line with the other assumptions discussed above. Management have
forecast consistent growth in cash flows of 2% in both the short
and long term. The value in use was determined to exceed the
carrying amount and no impairment has been recognised (2014:
GBPnil). It is not considered that a reasonably possible change in
any of these assumptions would generate a different impairment test
outcome to the one included in this annual report. The key
assumptions made in the estimation of future cash flows are the
passenger numbers and the average revenue per passenger.
Assumptions specific to arts logistics and storage (UK)
Value in use was determined by discounting future cash flows in
line with the other assumptions as discussed above. Cash flows were
projected based on approved budgets and plans over the forecast
period, with a long term growth rate of 2%. The carrying value of
the unit was determined to not be higher than its recoverable
amount and no impairment was recognised (2014: nil). It is not
considered that a reasonably possible change in any of these
assumptions would generate a different impairment test outcome to
the one included in this annual report. The key assumptions made in
the estimation of future cash flows are in relation to revenue.
12. Property, plant and equipment
Group
Long
Freehold leasehold Vehicles,
Land Land plant
& buildings and buildings Ships and equipment Total
GBP'000 GBP'000 GBP'000 GBP'000 GBP'000
Cost:
At 1 April 2013 4,344 6,449 3,533 7,674 22,000
Additions in year 1,336 166 1,825 948 4,275
Transfer to computer
software - - - (306) (306)
Disposals (140) - - (155) (295)
--------------------------- ------------- --------------- -------- --------------- --------
At 31 March 2014 5,540 6,615 5,358 8,161 25,674
--------------------------- ------------- --------------- -------- --------------- --------
Additions in year 1,243 480 1,344 1,022 4,089
Acquired on purchase
of a business (note
31) 170 - - 15 185
Disposals (9) - - (585) (594)
--------------------------- ------------- --------------- -------- --------------- --------
At 31 March 2015 6,944 7,095 6,702 8,613 29,354
--------------------------- ------------- --------------- -------- --------------- --------
Accumulated depreciation:
At 1 April 2013 1,762 669 1,092 4,752 8,275
Charge for the
year 95 196 140 637 1,068
Disposals (138) - - (140) (278)
--------------------------- ------------- --------------- -------- --------------- --------
At 31 March 2014 1,719 865 1,232 5,249 9,065
--------------------------- ------------- --------------- -------- --------------- --------
Charge for the
year 119 202 - 855 1,176
Disposals (9) - - (499) (508)
--------------------------- ------------- --------------- -------- --------------- --------
At 31 March 2015 1,829 1,067 1,232 5,605 9,733
--------------------------- ------------- --------------- -------- --------------- --------
Net book value:
At 1 April 2013 2,582 5,780 2,441 2,922 13,725
--------------------------- ------------- --------------- -------- --------------- --------
At 31 March 2014 3,821 5,750 4,126 2,912 16,609
--------------------------- ------------- --------------- -------- --------------- --------
At 31 March 2015 5,115 6,028 5,470 3,008 19,621
--------------------------- ------------- --------------- -------- --------------- --------
The Company has no tangible fixed assets.
At 31 March 2015 the net carrying amount of leased long
leasehold land and buildings and vehicles, plant and equipment was
GBP4,584,000 and GBP328,000 for the Gosport Pontoon and trucks at
Momart respectively, (2014: GBP4,683,000 and GBP302,000). During
the year to 31 March 2015 the Group acquired one truck for Momart,
which was purchased for GBP175,000, and financed with a GBP132,000
finance lease, and ten mobile homes for staff rentals were
purchased by FIC at a total cost of GBP366,000 and installed on
land leased from the Falkland Islands government. During the year
to 31 March 2014 the Group acquired no leased assets
At 31 March 2015, the group had entered into contractual
commitments of GBP141,000 for trucks at Momart. At 31 March 2014
the Group had a capital commitment of GBP130,000 to purchase a
truck at Momart and a commitment of GBP837,000 for the acquisition
of the new vessel for Portsmouth.
GBP1,273,000 has been included within Freehold properties above
in respect of the new warehouse under construction in the
Falklands, and GBP79,000 has been included within plant and
machinery of assets under construction for ticket vending machines
for the Ferry. At March 2014 GBP1,873,000 of assets under
construction was included in the cost of ships in respect of the
new vessel, which was delivered in 31 March 2015.
13. Investment properties
Group
Residential
and commercial Freehold
property land Total
GBP'000 GBP'000 GBP'000
Cost:
At 1 April 2013 2,244 773 3,017
Additions in year 658 - 658
At 31 March 2014 2,902 773 3,675
------------------------------ ---------------- --------- --------
Additions in year 508 - 508
Transferred on development
of land 50 (50) -
------------------------------ ---------------- --------- --------
At 31 March 2015 3,460 723 4,183
------------------------------ ---------------- --------- --------
Accumulated depreciation:
At 1 April 2013 231 - 231
Charge for the year 48 - 48
------------------------------ ---------------- --------- --------
At 31 March 2014 279 - 279
------------------------------ ---------------- --------- --------
Charge for the year 211 - 211
At 31 March 2015 490 - 490
------------------------------ ---------------- --------- --------
Net book value:
At 1 April 2013 2,013 773 2,786
------------------------------ ---------------- --------- --------
At 31 March 2014 2,623 773 3,396
------------------------------ ---------------- --------- --------
At 31 March 2015 2,970 723 3,693
------------------------------ ---------------- --------- --------
The investment properties comprise residential and commercial
property held for rental in the Falkland Islands. Investment
properties include 400 acres, including 70 acres of land in
Stanley, 58 acres of which have planning permission. In addition,
the Group has 300 acres of land at Fairy Cove, adjacent to the site
of the possible deep water port at Port William. These investment
properties held by FIC have been reviewed by a Director of FIC who
is resident in the Falkland Islands and is considered to have the
relevant knowledge and experience to undertake the valuation. At 31
March 2015 the fair value of this property portfolio was estimated
at GBP7.3 million (31 March 2014: GBP6.3 million) including
development land valued at GBP2.2 million (2014: GBP2.2 million).
As oil development proceeds, the value of these properties is
expected to increase significantly.
During the year to 31 March 2015, the Group received rental
income of GBP355,000 (2014: GBP221,000) on these properties.
At 31 March 2015 no investment properties were under
construction (2014: GBP199,000).
The Company does not own any investment properties.
14. Investment in subsidiaries
Country Class of shares Ownership Ownership
of held at at
incorporation 31 March 31 March
2015 2014
The Falkland Islands Ordinary shares
Company Limited UK of GBP1 100% 100%
Preference
shares of GBP10 100% 100%
The Falkland Islands Ordinary shares
Trading Company Limited UK of GBP1 100% 100%
Falkland Islands Falkland Ordinary shares
Shipping Limited* Islands of GBP1 100% 100%
Falkland Ordinary shares
Erebus Limited* Islands of GBP1 100% 100%
Preference
shares of GBP1 100% 100%
Falkland Ordinary shares
Paget Limited* Islands of GBP1 100% 100%
The Portsmouth Harbour Ordinary shares
Ferry Company Limited UK of GBP1 100% 100%
Portsea Harbour Company Ordinary shares
Limited* UK of GBP1 100% 100%
Clarence Marine Engineering Ordinary shares
Limited* UK of GBP1 100% 100%
Ordinary shares
Gosport Ferry Limited* UK of GBP1 100% 100%
Momart International Ordinary shares
Limited UK of GBP1 100% 100%
Ordinary shares
Momart Limited* UK of GBP1 100% 100%
Ordinary shares
Dadart Limited* UK of GBP1 100% 100%
*These investments are not held by the Company but are indirect
investments held through a subsidiary of the Company.
Company
2015 2014
GBP'000 GBP'000
At 1 April 2014 29,004 29,097
Impairment of investment in
Erebus (790) (129)
Cost of share based payments
capitalised into subsidiaries 35 36
At 31 March 2015 28,249 29,004
----------------------------------- -------- --------
The Company's investment in Erebus Limited comprises the Group's
shareholding in Falkland Oil and Gas Limited (see Note 15). The
Company's investment in Erebus is held at impaired cost, and in the
year to 31 March 2015, this investment has been impaired by
GBP790,000 due to the disposal of the 7,825,000 shares in Falkland
Oil and Gas, and the resulting fall in the investment, however this
loss has been offset by the GBP1,309,000 reversal of an impairment
of a loan due from Erebus to Falkland Islands Holdings plc, as this
was repaid in the year from the proceeds received on the
disposal.
15. Shares held in Falkland Oil and Gas Limited
2015 2014
Fair value of shares held in Falkland
Oil and Gas Limited GBP'000 1,500 3,270
Falkland Oil and Gas Limited share
price at 31 March 30.0p 25.5p
Shareholding at 31 March (number
of shares) 5,000,000 12,825,000
Group interest in Falkland Oil
and Gas Limited 0.9% 2.4%
Historic cost of shareholding to
the Group (GBP'000) 1,008 2,586
Historic cost per share to the
Group 20p 20p
16. Investment in Joint Ventures
The Group has one joint venture (South Atlantic Construction
Company Limited, "SAtCO"), which was set up in June 2012, with
Trant Construction to bid for the larger infrastructure contracts
which are expected to be generated by oil activity. Both Trant
Construction and the Falkland Islands Company contributed GBP50,000
of ordinary share capital. SAtCO is registered and operates in the
Falkland Islands.
Joint Venture's balance sheet 2015 2014
GBP'000 GBP'000
Fixed assets 962 1,056
Current assets 1,020 586
Liabilities due in less than one
year (390) (384)
Liabilities due in greater than
one year (1,060) (1,086)
------------------------------------- -------- --------
Net assets of SAtCO 532 172
------------------------------------- -------- --------
Group share of net assets 266 86
------------------------------------- -------- --------
Joint Venture's results 2015 2014
GBP'000 GBP'000
Revenue 591 108
Cost of sales (95) -
Administrative expenses (10) (8)
-------------------------------------- -------- --------
Operating profit for the year 486 100
Taxation (126) (28)
-------------------------------------- -------- --------
Joint Venture retained profit for
the year 360 72
Group share of retained profit
for the year 180 36
-------------------------------------- -------- --------
There were no recognised gains or losses, other than the profits
disclosed above for the year ended 31 March 2015 (2014: none).
GBP95,000 of depreciation was charged in the year ended 31 March
2015 (2014: none).
The current assets balances above include GBP425,000 of cash
(2014: GBP241,000). The liabilities due in less than one year are
all trade payables. The liabilities due in greater than one year
include loans to the parent companies of GBP907,000 (2014:
GBP1,058,000).
SAtCO had no contingent liabilities or capital commitments as at
31 March 2015 or 31 March 2014 and the Group had no contingent
liabilities or commitments in respect of its joint venture at 31
March 2015 or 31 March 2014.
17. Finance leases receivable
Finance lease receivables relate to finance leases on the sale
of vehicles and customer goods. No allowances for uncollectable
minimum lease payments have been deemed necessary. No contingent
rents have been recognised as income in the period. No residual
values accrue to the benefit of the lessor.
Group
2015 2014
GBP'000 GBP'000
Non-Current
Finance Lease debtors due after
more than one year 458 342
Current
Finance lease debtors due within
one year 647 503
Total other financial assets 1,105 845
------------------------------------- -------- --------
The difference between the gross investment in the hire purchase
leases and the present value of future lease payments due
represents unearned finance income of GBP110,000 (2014:
GBP84,000).
The cost of assets acquired for the purpose of letting under
hire purchase agreements by the Group during the year amounted to
GBP881,000 (2014: GBP868,000).
The aggregate rentals receivable during the year in respect of
hire purchase agreements were GBP793,000 (2014: GBP700,000).
Group
2015 2014
GBP'000 GBP'000
Gross investment in hire purchase
leases 1,215 930
------------------------------------------- -------- --------
Present value of future lease payments
due:
Within one year 647 503
Within two to five years 458 342
1,105 845
---------------------------------------- -------- --------
18. Deferred tax assets and liabilities
Recognised deferred tax assets
and (liabilities) Group
2015 2014
GBP'000 GBP'000
Property, plant & equipment (1,669) (1,373)
Intangible assets (462) (490)
Inventories 15 62
Other financial liabilities 50 75
Share-based payments 10 27
Tax losses 69 60
----------------------------------------- -------- --------
Total net deferred tax liabilities (1,987) (1,639)
Deferred tax asset arising on the
defined benefit pension liabilities 750 645
----------------------------------------- -------- --------
Net tax liabilities (1,237) (994)
----------------------------------------- -------- --------
18. Deferred tax assets and liabilities (continued)
The deferred tax asset on the defined benefit pension scheme
(see note 24) arises under the Falkland Islands tax regime and has
been presented on the face of the consolidated balance sheet as a
non-current asset as it is expected to be realised over a
relatively long period of time. All other deferred tax assets are
shown net against the non-current deferred tax liability shown in
the balance sheet.
Company
2015 2014
GBP'000 GBP'000
Other temporary differences 6 4
-------------------------------- -------- --------
Net tax asset 6 4
-------------------------------- -------- --------
Movement in deferred tax
in the year Group
1 April Recognised Recognised 31 March
2014 in income in equity 2015
GBP'000 GBP'000 GBP'000 GBP'000
Property, plant & equipment (1,373) (296) - (1,669)
Intangible assets (490) 28 - (462)
Inventories 62 (47) - 15
Other financial liabilities 75 (25) - 50
Share-based payments 27 (17) - 10
Tax losses 60 9 - 69
Pension 645 (2) 107 750
Deferred tax movements (994) (350) 107 (1,237)
----------------------------- -------- ----------- ----------- ---------
Unrecognised deferred tax assets
Deferred tax assets of GBP113,000 (2014: GBP113,000) in respect
of capital losses have not been recognised as it is not considered
probable that there will be suitable chargeable gains in the
foreseeable future from which the underlying capital losses will
reverse.
Movement in deferred tax
in the year Company
1 April Recognised Recognised 31 March
2014 in income in equity 2015
GBP'000 GBP'000 GBP'000 GBP'000
Other temporary difference 4 2 - 6
Deferred tax asset movements 4 2 - 6
------------------------------ -------- ----------- ----------- ---------
Movement in deferred tax
in the prior year Group
1 April Recognised Recognised 31 March
2013 in income in equity 2014
GBP'000 GBP'000 GBP'000 GBP'000
Property, plant & equipment (1,254) (119) - (1,373)
Intangible assets (635) 145 - (490)
Inventories 96 (34) - 62
Other financial liabilities 54 21 - 75
Share-based payments 45 (18) - 27
Tax losses - 60 - 60
Pension 671 9 (35) 645
Deferred tax movements (1,023) 64 (35) (994)
----------------------------- -------- ----------- ----------- ---------
18. Deferred tax assets and liabilities (continued)
Movement in deferred tax
in the prior year Company
1 April Recognised Recognised 31 March
2013 in income in equity 2014
GBP'000 GBP'000 GBP'000 GBP'000
Other temporary difference 4 - - 4
Deferred tax asset movements 4 - - 4
------------------------------ -------- ----------- ----------- ---------
19. Inventories
Group
2015 2014
GBP'000 GBP'000
Work in progress 715 852
Goods in transit 556 1,492
Goods for resale 4,120 4,348
-------- --------
Total Inventories 5,391 6,692
---------------------- -------- --------
Goods in transit are retail goods in transit to the Falkland
Islands.
The Company has no inventories.
20. Trade and other receivables
Company
2015 2014
GBP'000 GBP'000
Non-current
Amount owed by subsidiary undertakings 1,813 1,952
------------------------------------------- -------- --------
Group Company
2015 2014 2015 2014
GBP'000 GBP'000 GBP'000 GBP'000
Current
Trade and other receivables 4,512 5,601 - -
Prepayments and accrued income 796 1,440 12 19
Total trade and other receivables 5,308 7,041 12 19
------------------------------------- -------- -------- -------- --------
21. Cash and cash equivalents
Group Company
2015 2014 2015 2014
GBP'000 GBP'000 GBP'000 GBP'000
Cash and other cash equivalents
in the balance sheet 7,435 5,715 9,379 9,280
-------- -------- -------- --------
22. Interest-bearing loans and borrowings
This note provides information about the contractual terms of
the Group and the Company's interest bearing loans and borrowings,
which are stated at amortised cost. For more information regarding
the maturity of the Group and Company's interest-bearing loans and
borrowings and about the Group and Company's exposure to interest
rate and foreign currency risk, see note 27.
Group Company
2015 2014 2015 2014
GBP'000 GBP'000 GBP'000 GBP'000
Non-current liabilities
Secured bank loans 598 34 - -
Finance lease liabilities 4,982 5,027 - -
Total non-current interest
bearing loans and borrowings 5,580 5,061 - -
---------------------------------- -------- -------- -------- --------
Current liabilities
Secured bank loans 137 985 - 785
Finance lease liabilities 156 124 - -
---------------------------------- -------- -------- -------- --------
Total current interest bearing
loans and borrowings 293 1,109 - 785
---------------------------------- -------- -------- -------- --------
Total liabilities
Secured bank loans 735 1,019 - 785
Finance lease liabilities 5,138 5,151 - -
Total interest bearing loans
and borrowings 5,873 6,170 - 785
---------------------------------- -------- -------- -------- --------
Finance lease liabilities
Future minimum Interest Present value
lease payments of minimum
lease payments
2015 2014 2015 2014 2015 2014
GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000
Less than one
year 395 366 239 242 156 124
Between one and
two years 350 366 233 235 117 131
Between two and
five years 852 850 680 684 172 166
More than five
years 10,725 10,985 6,032 6,255 4,693 4,730
----------------- -------- -------- -------- -------- -------- --------
Total 12,322 12,567 7,184 7,416 5,138 5,151
----------------- -------- -------- -------- -------- -------- --------
Net debt
Group Company
2015 2014 2015 2014
GBP'000 GBP'000 GBP'000 GBP'000
Total interest-bearing loans
and borrowings 5,873 6,170 - 785
less: cash balances (see note
21) (7,435) (5,715) (9,379) (9,280)
Net (cash) / debt (1,562) 455 (9,379) (8,495)
--------------------------------- -------- -------- -------- --------
23. Trade and other payables
Group Company
2015 2014 2015 2014
GBP'000 GBP'000 GBP'000 GBP'000
Current
Trade payables 5,398 6,817 - -
Other creditors, including
taxation and social security 1,368 756 109 172
Accruals and deferred income 3,448 3,408 453 406
Total trade and other payables 10,214 10,981 562 578
---------------------------------- -------- -------- -------- --------
24. Employee benefits: pension plans
The Group operates three defined contribution pension schemes.
In addition it also operated two defined benefit pension schemes,
both of which have been closed to new members and to future
accrual. In March 2013 the Group transferred all liabilities in
respect of the Portsmouth Harbour defined benefit scheme to Legal
and General. The FIC unfunded defined benefit pension scheme had 19
pensioners (2014: 20) receiving benefits from this scheme, and
three deferred members (2014: three). The weighted average duration
of the expected benefit payments from the Scheme is around 16 years
(2014: 15).
Defined contribution schemes
The pension cost charge for the year represents contributions
payable by the Group to the schemes and amounted to GBP274,000
(2014: GBP243,000). The Group anticipates paying contributions
amounting to GBP290,000 during the year ending 31 March 2015. There
were GBP75,000 outstanding contributions due to pension schemes at
31 March 2015.
Defined benefit pension schemes
A summary of the fair value of the net pension scheme deficit is
set out below:
Group
2015 2014
GBP'000 GBP'000
Pension scheme deficit:
The Falkland Islands Company Limited
Scheme (2,884) (2,480)
Deferred tax asset 750 645
-------- --------
Net pension scheme deficit (2,134) (1,835)
----------------------------------------- -------- --------
The Falkland Islands Company Limited Scheme
The Falkland Islands Company Limited operates a defined benefit
pension scheme for certain employees which is unfunded and was
closed to new members in 1988. This scheme was closed to further
accrual on 31 March 2007. Benefits are payable on retirement at the
normal retirement age.
Actuarial reports for IAS 19 purposes as at 31 March 2015, 2014,
2013, 2012 and 2011 were prepared by a qualified independent
actuary, Lane Clark and Peacock LLP. The major assumptions used in
the valuation were:
2015 2014
Rate of increase in salaries 2.3% 2.6%
Rate of increase in pensions in
payment and deferred pensions 3.0% 3.0%
Discount rate applied to scheme
liabilities 3.2% 4.3%
Inflation assumption 3.0% 3.4%
Average longevity at age 65 for
male current and deferred pensioners
(years) at accounting date 22.6 22.4
Average longevity at age 65 for
male current and deferred pensioners
(years) 20 years after accounting
date 24.7 24.6
24. Employee benefits: pension plans(continued)
The assumptions used by the actuary are chosen from a range of
possible actuarial assumptions which, due to the timescale covered,
may not necessarily be borne out in practice.
Sensitivity Analysis
The calculation of the defined benefit liability is sensitive to
the assumptions set out above. The following table summarises how
the impact of the defined benefit liability at 31 March 2015 would
have increased / (decreased) as a result of a change in the
respective assumptions by 0.1%
Effect on obligation
2015 2014
GBP000 GBP000
Discount rate +/- 0.1% 46 38
Inflation assumption +/- 0.1% (9) (8)
Life expectancy +/- one year (126) (100)
These sensitivities have been calculated to show the movement in
the defined benefit obligation in isolation, and assume no other
changes in market conditions at the accounting date.
Scheme liabilities
The present values of the scheme's liabilities, which are
derived from cash flow projections over long periods and thus
inherently uncertain, were:
Value at
2015 2014 2013 2012 2011
GBP'000 GBP'000 GBP'000 GBP'000 GBP'000
Present value of
scheme liabilities (2,884) (2,480) (2,584) (2,411) (2,107)
Related deferred
tax assets 750 645 671 579 548
----------------------- -------- -------- -------- -------- --------
Net pension liability (2,134) (1,835) (1,913) (1,832) (1,559)
----------------------- -------- -------- -------- -------- --------
Movement in deficit during the year:
2015 2014
GBP000 GBP000
Deficit in scheme at beginning
of the year (2,480) (2,584)
Pensions paid 115 122
Past service cost - (45)
Other finance cost (107) (108)
Remeasurement of the defined benefit
pension liability (412) 135
----------------------------------------- -------- --------
Deficit in scheme at the end of
the year (2,884) (2,480)
----------------------------------------- -------- --------
Analysis of amounts included in
other finance costs 2015 2014
GBP000 GBP000
Interest on pension scheme liabilities (107) (108)
------------------------------------------- ------- -------
24. Employee benefits: pension plans(continued)
Analysis of amounts recognised in statement
of comprehensive income: 2015 2014
GBP000 GBP000
Experience gains arising on scheme liabilities 76 20
Changes in assumptions underlying the present
value of scheme liabilities (488) 115
------------------------------------------------ ------- -------
Remeasurement of the defined benefit pension
liability (412) 135
------------------------------------------------ ------- -------
History of experience gains and losses:
2015 2014 2013 2012 2011
Experience gains / (losses)
arising on scheme liabilities:
Amount (GBP'000) 76 20 (34) (30) (7)
Percentage of year end present
value of scheme liabilities (2.6%) (0.8%) 1.3% 1.2% 0.3%
Total amount recognised in statement
of comprehensive income
Amount (GBP'000) (412) 135 (173) (289) (82)
Percentage of year end present
value of scheme liabilities 14.3% (5.4%) 6.7% 12.0% 3.9%
Payment to pensioners 115 122 111 98 98
25. Employee benefits: share based payments
The following options were outstanding at 31 March 2015
Share Fair
Exercise price value Total
Price at grant per fair Earliest Latest
date share value Exercise Exercise
Date Number
of Issue pence pence pence GBP date date
14 June 14 Jun 13 Jun
05 42,500 425.0 425.0 166.0 70,550 08 15
14 June 14 Jun 13 Jun
05 14,117 425.0 425.0 214.0 30,210 08 15
14 June 14 Jun 13 Jun
05 49,411 425.0 425.0 214.0 105,740 08 15
7 Aug 7 Aug 6 Aug
07 27,517 330.0 332.5 73.0 20,087 10 17
4 Dec 4 Dec 3 Dec
07 12,500 319.0 340.0 119.0 14,875 10 17
3 Apr 3 Apr 2 Apr
08 3,781 365.0 375.0 131.0 4,953 11 18
8 Apr 8 Apr 7 Apr
09 57,719 207.5 207.5 56.0 32,323 12 19
15 Jul 15 Jul 4 Aug
09 43,674 290.0 290.0 72.0 31,445 12 15
15 Jul 15 Jul 14 Jul
09 54,550 290.0 290.0 72.0 39,276 12 19
9 Dec 9 Dec 8 Dec
09 21,500 390.0 397.5 145.0 31,175 12 19
21 Dec 21 Dec 20 Dec
10 41,000 342.5 337.5 124.0 50,840 13 20
28 Apr 28 Apr 27 Apr
11 6,390 313.0 313.0 106.0 6,773 14 21
27 Jun 27 Jun 26 Jun
11 18,281 302.5 303.5 94.0 17,184 14 21
16 Dec 16 Dec 15 Dec
11 138,190 267.5 261.5 68.0 93,969 14 21
13 Aug 9 Feb 4 Aug
12 61,881 404.0 404.0 92.0 56,931 15 15
13 Aug 13 Aug 12 Aug
12 76,700 404.0 404.0 92.0 70,564 15 22
27 Nov 27 Nov 26 Nov
13 29,810 369.0 369.0 109.0 32,493 16 23
2 Dec 02 Dec 1 Dec
13 9,523 367.5 367.5 109.0 10,380 16 23
3 Sep 3 Sep 2 Sep
14 13,154 353.5 353.5 100.0 13,154 17 24
19 Jan 19 Jan 18 Jan
15 5,000 272.5 272.5 63.0 3,150 18 25
727,198 736,072
----------- -------- ----------- ---------- ------- -------- ---------- ----------
The total number of options outstanding at 31 March 2015 was
727,198 (2014: 774,896). A reconciliation of the movement in
options is shown below. The fair values of the options are
estimated at the date of grant using appropriate option pricing
models and are charged to the profit and loss account over the
expected life of the options. The following table gives the
assumptions made in determining the fair value of the unvested
options.
25. Employee benefits: share based payments (continued)
Expected volatility is determined by reference to past
performance of the Company's share price. All options are granted
with the condition that the employee remains in employment for
three years. Certain option grants also have conditions attached in
that increases in earnings per share on underlying profits over the
vesting period must exceed the UK Retail price index increase, and
options granted to directors of the Company have a condition that
the Group's total shareholder return increase must exceed that of
the FTSE AIM All-Share Index over the three year period.
27 Nov 2 Dec 3 Sep 19 Jan
13 13 14 15
--------------------- ------- ------ ------ -------
Expected Volatility
(%) 39 39 38 37
Risk free interest
rate (%) 2.09 2.19 2.07 1.23
Expected life
of options (years) 6.5 6.5 6.5 6.5
Dividend yield
(%) 3.12 3.13 3.25 4.22
Share price at
grant date (pence) 369.0 367.5 353.5 272.5
--------------------- ------- ------ ------ -------
All share options are equity settled. Share options issued
without share price conditions attached have been valued using the
Black-Scholes model. Share price options issued with share price
conditions attached have been valued using a Monte Carlo simulation
model making explicit allowance for share price targets. During the
year end 31 March 2015 no options (2014: 28,915) were exercised
over ordinary shares. The number and weighted average exercise
prices of share options are as follows:
Weighted Weighted
average average
exercise exercise
price Number price Number
(GBP) of options (GBP) of options
2015 2015 2014 2014
Outstanding at the beginning
of the year 3.49 774,896 3.43 861,344
Forfeited during the year 3.66 (8,160) 3.45 (96,866)
Exercised during the year - - 2.08 (28,915)
Granted during the year 3.31 18,154 3.69 39,333
Lapsed during the year 5.20 (57,692) - -
------------------------------ ---------- ------------ ---------- ------------
Outstanding at the year
end 3.35 727,198 3.49 774,896
------------------------------ ---------- ------------ ---------- ------------
Vested options exercisable
at the year end 3.24 593,011 3.59 431,621
------------------------------ ---------- ------------ ---------- ------------
Weighted average life of
outstanding options (years) 4.3 5.6
------------------------------ ---------- ------------ ---------- ------------
The range of exercise prices of outstanding options at 31 March
2015 is from GBP2.075 (2014: GBP2.075) to GBP4.250 (2014:
GBP5.25).
2015 2014
GBP000 GBP000
Total share based payment expense
recognised in the year 90 43
-------------------------------------- ------- -------
26. Capital and reserves
Share capital Ordinary Shares
2015 2014
In issue at the start and end of
the year 12,431,623 12,431,623
--------------------------------------- ----------- -----------
2015 2014
GBP000 GBP000
Allotted, called up and fully paid
Ordinary shares of 10p each 1,243 1,243
--------------------------------------- ----------- -----------
By special resolution at an Annual General Meeting on 9
September 2010 the Company adopted new articles of association
principally to take account of the various changes in company law
brought in by the Companies Act 2006. As a consequence the Company
no longer has an authorised share capital. The holders of ordinary
shares are entitled to receive dividends as declared from time to
time and are entitled to one vote per share at meetings of the
Company.
On 31 March 2000, an Employee Share Ownership Plan was
established. At 31 March 2015 the plan held 28,016 (2014: 28,016)
ordinary shares at a cost of GBP55,005 (2014: GBP55,005). The
market value of the shares at 31 March 2015 was GBP77,464 (2014:
GBP87,970). Shares held in the ESOP receive a nominal 0.01p per
share in each dividend payment, as in prior years.
Treasury shares
Following shareholder approval, received at the Company's Annual
General Meeting on 20 August 2013, the Company's share capital
underwent a reorganisation, as a result of which the number of
shareholders was reduced from 6,324 to 2,294. The existing ordinary
shares were consolidated into ordinary shares of GBP10 each
("Consolidated Shares"), and the Company purchased the fractional
entitlements of Small Shareholders (being those with less than 1
Consolidated Share) created by this consolidation. Following this
purchase by the Company, the Consolidated Shares (including those
purchased by the Company) were sub-divided into new ordinary shares
of 10p each which were admitted to trading on 21 August 2013. The
88,381 new ordinary shares representing the fractional entitlements
purchased by the Company were taken into Treasury.
On 27 August 2013, 70,000 of the shares held in Treasury were
sold for 372.5 pence each. Following this sale, the Company holds
18,381 shares in Treasury. There have been no further movements in
the Treasury shares since this date.
For more information on share options please see note 25.
The other reserves in the Group comprise largely of merger
relief arising in connection with the acquisition of Momart
International Limited. These have been offset by a recognised
impairment of Momart in the year ended 31 March 2009.
Dividends
The following dividends were recognised
in the period 2015 2014
GBP000 GBP000
Final: 7.5p (2014: Final: 7.5p)
per qualifying ordinary share 929 928
Interim: 4.0p (2014: Final: 4.0p)
per qualifying ordinary share 495 495
-------------------------------------------- ------- -------
1,424 1,423
----------------------------------------- ------- -------
27. Financial instruments
(i) Fair values of financial instruments
Investments in equity securities
The fair value of the investment in Falkland Oil and Gas Limited
is determined by reference to its quoted bid price at the balance
sheet date.
Trade and other receivables
The fair value of trade and other receivables is estimated as
the present value of future cash flows, discounted at the market
rate of interest at the balance sheet date if the effect is
material.
Trade and other payables
The fair value of trade and other payables is estimated as the
present value of future cash flows, discounted at the market rate
of interest at the balance sheet date if the effect is
material.
Cash and cash equivalents
The fair value of cash and cash equivalents is estimated as its
carrying amount where the cash is repayable on demand. Where it is
not repayable on demand then the fair value is estimated at the
present value of future cash flows, discounted at the market rate
of interest at the balance sheet date.
Interest- bearing borrowings
The fair value of interest-bearing borrowings, which after
initial recognition is determined for disclosure purposes only, is
calculated based on the present value of future principal and
interest cash flows, discounted at the market rate of interest at
the balance sheet date.
IAS 39 categories and fair values
The fair values of financial assets and financial liabilities
are not materially different to the carrying values shown in the
consolidated balance sheet and Company balance sheet.
The following table shows the carrying value, which is equal to
fair value for each category of financial instrument:
Group Company
2015 2014 2015 2014
GBP'000 GBP'000 GBP'000 GBP'000
Investment in Falkland Oil
and Gas Limited 1,500 3,270 - -
-------------------------------------- --------- --------- -------- --------
Cash and cash equivalents 7,435 5,715 9,379 9,280
Hire purchase debtors 1,105 845 - -
Trade and other receivables 4,512 5,601 12 19
-------------------------------------- --------- --------- -------- --------
Total assets exposed to credit
risk 13,052 12,161 9,391 9,299
-------------------------------------- --------- --------- -------- --------
Financial liabilities at amortised
cost (10,214) (10,981) (562) (578)
Interest-bearing borrowings
at amortised cost (5,873) (6,170) - (785)
-------------------------------------- --------- --------- -------- --------
Available for sale financial assets are valued using a level 1
methodology. All other financial instruments are based on level 3
methodology.
27. Financial instruments (continued)
(ii) Credit Risk
Financial risk management
Credit risk is the risk of financial loss to the Group if a
customer or counterparty to a financial instrument fails to meet
its contractual obligations, and arises principally from the
Group's receivables from customers and investment securities.
Group
The Group's credit risk is primarily attributable to its trade
receivables. The maximum credit exposure of the Group comprises the
amounts presented in the balance sheet, which are stated net of
provisions for doubtful debt. A provision is made where there is an
identified loss event which, based on previous experience, is
evidence of a reduction in the recoverability of future cash flows.
Management has credit policies in place to manage risk on an
on-going basis. These include the use of customer specific credit
limits.
Company
The majority of the Company's receivables are with subsidiaries.
The Company does not consider these counter-parties to be a
significant credit risk.
Exposure to credit risk
The carrying amount of financial assets, other than available
for sale financial assets represents the maximum credit exposure.
Therefore, the maximum exposure to credit risk at the balance sheet
date was GBP13,052,000 (2014: GBP12,161,000) being the total trade
receivables, hire purchase debtors and cash and cash equivalents in
the balance sheet. The credit risk on cash balances is limited
because the counterparties are banks with high credit ratings
assigned by international credit-rating agencies.
The maximum exposure to credit risk for trade receivables at the
balance sheet date by geographic region was:
Group
2015 2014
GBP000 GBP000
Falkland Islands 1,488 1,540
Europe 414 1,254
North America 433 383
United Kingdom 1,696 1,966
Other 481 458
---------------------- ------- -------
Trade receivables 4,512 5,601
---------------------- ------- -------
The Company has no trade debtors
Credit quality of financial assets and impairment losses
Group Gross Impairment Net Gross Impairment Net
2015 2015 2015 2014 2014 2014
GBP000 GBP000 GBP000 GBP000 GBP000 GBP000
Not past due 3,473 3,473 3,751 3,751
Past due 0-30
days 633 633 1,237 1,237
Past due 31-120
days 228 228 385 385
More than 120
days 399 (221) 178 485 (257) 228
------- ----------- ------- ------- ----------- -------
4,733 (221) 4,512 5,858 (257) 5,601
------- ----------- ------- ------- ----------- -------
27. Financial instruments (continued)
The movement in the allowances for impairment in respect of
trade receivables during the year was:
Group
2015 2014
GBP000 GBP000
Balance at 1 April 2014 257 402
Impairment loss recognised 44 85
Impairment loss reverse (28) (100)
Cash received (14) -
Utilisation of provision (debts
written off) (38) (130)
------------------------------------ ------- -------
Balance at 31 March 2015 221 257
------------------------------------ ------- -------
The allowance account for trade receivables is used to record
impairment losses unless the Group is satisfied that no recovery of
the amount owing is possible: at that point the amounts considered
irrecoverable are written off against the trade receivables
directly.
No further analysis has been provided for cash and cash
equivalents, trade receivables from Group companies, other
receivables and other financial assets as there is limited exposure
to credit risk and no provisions for impairment have been
recognised.
(iii) Liquidity risk
Financial risk management
Liquidity risk is the risk that the Group will not be able to
meet its financial obligations as they fall due.
At the beginning of the period the Group had outstanding bank
loans of GBP1.0 million. All payments during the year with respect
to these agreements were met as they fell due, and these facilities
were repaid in full in the year to 31 March 2015. In March 2015, a
further bank loan of GBP0.7 million was drawn down.
The Group manages its cash balances centrally at head office and
prepares rolling cash flow forecasts to ensure funds are available
to meet its secured and unsecured commitments as and when they fall
due.
Liquidity risk - Group
The following are the contractual maturities of financial
liabilities, including estimated interest payments and excluding
the effects of netting agreements:
2015 Carrying Contract-ual 5 years
amount cash 1 year 1 to 2 to and
flows or less 2 years 5 years over
GBP000 GBP000 GBP000 GBP000 GBP000 GBP000
Non-derivative financial
instruments
Secured bank loans 735 799 160 160 479 -
Finance leases 5,138 12,322 395 350 852 10,725
Trade and other payables 10,214 10,214 10,214 - - -
--------- ------------- --------- --------- --------- --------
16,087 23,335 10,769 510 1,331 10,725
--------- ------------- --------- --------- --------- --------
27. Financial instruments (continued)
2014 Carrying Contract-ual 5 years
amount cash 1 year 1 to 2 to and
flows or less 2 years 5 years over
GBP000 GBP000 GBP000 GBP000 GBP000 GBP000
Non-derivative financial
instruments
Secured bank loans 1,019 1,045 1,010 35 - -
Finance leases 5,151 12,567 366 366 850 10,985
Trade and other payables 10,981 10,981 10,981 - - -
--------- ------------- --------- --------- --------- --------
17,151 24,593 12,357 401 850 10,985
--------- ------------- --------- --------- --------- --------
The contractual cash flows for finance leases in the years ended
31 March 2015 and 31 March 2014 are significantly higher than the
liability at the year end, as the finance lease for the Gosport
pontoon with Gosport Borough Council is a 50 year finance lease
with quarterly payments of GBP65,000 until June 2061.
Liquidity risk - Company
The following are the contractual maturities of financial
liabilities, including estimated interest payments and excluding
the effects of netting agreements:
2015 Carrying Contract-ual 5 years
amount cash 1 year 1 to 2 to and
flows or less 2 years 5 years over
GBP000 GBP000 GBP000 GBP000 GBP000 GBP000
Non-derivative financial
instruments
Trade and other payables 562 562 562 - - -
--------- ------------- --------- --------- --------- --------
562 562 562 - - -
--------- ------------- --------- --------- --------- --------
2014 Carrying Contract-ual 5 years
amount cash 1 year 1 to 2 to and
flows or less 2 years 5 years over
GBP000 GBP000 GBP000 GBP000 GBP000 GBP000
Non-derivative financial
instruments
Secured bank loans 785 810 810 - - -
Trade and other payables 578 578 578 - - -
--------- ------------- --------- --------- --------- --------
1,363 1,388 1,388 - - -
--------- ------------- --------- --------- --------- --------
(iv) Market Risk
Financial risk management
Market risk is the risk that changes in market prices, such as
foreign exchange, interest rates and equity prices will affect the
Group's income or the value of its holdings of financial
instruments.
Market risk - Foreign currency risk
The Group has exposure to foreign currency risk arising from
trade and other payables which are denominated in foreign
currencies. The Group is not, however, exposed to any significant
transactional foreign currency risk. The Group's exposure to
foreign currency risk is as follows and is based on carrying
amounts for monetary financial instruments.
27. Financial instruments (continued)
Group
31 March 2015 Total
Balance
sheet
EUR USD Other exposure GBP Total
GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000
Cash and cash equivalents 15 102 4 121 7,314 7,435
Trade and other
receivables - 38 - 38 5,270 5,308
Trade payables and
other payables (315) (197) (48) (560) (9,654) (10,214)
--------------------------- -------- -------- -------- ---------- -------- ---------
31 March 2014 Total
Balance
sheet
EUR USD Other exposure GBP Total
GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000
Cash and cash equivalents 15 211 1 227 5,488 5,715
Trade payables and
other payables (414) (344) (193) (951) (10,030) (10,981)
--------------------------- -------- -------- -------- ---------- --------- ---------
The Company has no exposure to foreign currency risk.
Sensitivity analysis
Group
A 10% weakening of the following currencies against pound
sterling at 31 March would have increased / (decreased) equity and
profit or loss by the amounts shown below. This calculation assumes
that the change occurred at the balance sheet date and had been
applied to risk exposures existing at that date. This analysis
assumes that all other variables, in particular other exchange
rates and interest rates, remain constant, and is performed on the
same basis for year ended 31 March 2014.
Profit or
Equity Loss
2015 2014 2015 2014
GBP'000 GBP'000 GBP'000 GBP'000
EUR 30 40 30 40
USD 6 13 6 13
A 10% strengthening of the above currencies against pound
sterling at 31 March would have the equal but opposite effect on
the above currencies to the amounts shown above, on the basis that
all other variables remain constant.
Market risk - interest rate risk
At the balance sheet date the interest rate profile for the
Group's interest-bearing financial instruments was:
Group Company
2015 2014 2015 2014
GBP'000 GBP'000 GBP'000 GBP'000
Fixed rate financial instruments
Finance lease receivable 1,105 845 - -
Finance lease payable (5,138) (5,151) - -
--------------------------------------- -------- -------- -------- --------
(4,033) (4,306) - -
------------------------------------- -------- -------- -------- --------
Variable rate financial instruments
Financial liabilities (735) (1,019) - (785)
--------------------------------------- -------- -------- -------- --------
(735) (1,019) - (785)
------------------------------------- -------- -------- -------- --------
27. Financial instruments (continued)
The Group has drawn down a loan of GBP0.7 million in March 2015
secured against the two ferries delivered in 2005 and 2002. This
loan is repayable over 5 years at a rate of 2.8% above the Bank of
England base rate. On draw down of this loan, the remaining
GBP34,000 of the GBP0.4 million loan against the Spirit of
Portsmouth at 31 March 2014 was extinguished.
The Group also had a loan of GBP0.8 million at 31 March 2014 in
respect of the acquisition of Momart International Limited, which
was repayable over five years from June 2008 bearing interest at
1.5% above the Bank of England base rate. This loan has been fully
repaid in the year ended 31 March 2015.
Sensitivity analysis
An increase of 100 basis points in interest rates at the balance
sheet date would have increased / (decreased) equity and profit or
loss by the amounts shown below. This calculation assumes that the
change occurred at the balance sheet date and has been applied to
risk exposures existing at that date.
This analysis assumes that all other variables, in particular
foreign currency rates, remain constant and considers the effect of
financial instruments with variable interest rates and financial
instruments at fair value through profit or loss or
available-for-sale with fixed interest rates. The analysis is
performed on the same basis for 31 March 2014.
Group Company
2015 2014 2015 2014
GBP'000 GBP'000 GBP'000 GBP'000
Equity
Decrease (7) (10) - (8)
Profit or Loss
Decrease (7) (10) - (8)
Market risk - equity price risk
The Group's and Company's exposure to equity price risk arises
from its investments in equity securities which are classified in
the balance sheet as shares held in Falkland Oil and Gas Limited
(see note 15).
Sensitivity analysis
The Group's available-for-sale financial asset comprises its
investment in FOGL. During the year ended 31 March 2015 FOGL shares
traded on the AIM market of the London Stock Exchange at an average
price of 26.25p with a high of 36.5p and a low of 17.25p. Based
upon this share price history the value of the 5 million shares
(2014: 12,825,000 shares) held at the balance sheet date could have
varied between a low of GBP863,000 (2014: GBP3,046,000) and a high
of GBP1,825,000 (2014: GBP4,008,000).
(v) Capital Management
The Group's objectives when managing capital, which comprises
equity and reserves at 31 March 2015 of GBP36,688,000 (2014:
GBP35,377,000) are to safeguard its ability to continue as a going
concern, so that it can continue to provide returns to shareholders
and benefits to our other stakeholders.
28. Operating leases
Non-cancellable operating lease rentals are payable as
follows:
Group
2015 2014
GBP000 GBP000
Less than one year 841 720
Between one and five years 3,104 3,107
More than five years 7,402 7,984
11,347 11,811
---------------------------- ------- -------
The Group leases three office premises and a number of storage
warehouses under operating leases. Office leases typically run for
a period of 3-10 years, with an option to renew the lease after
that date. Warehouse leases typically run for a period of 25 years,
with an option to renew the lease after that date.
During the year GBP864,000 was recognised as an expense in the
income statement of operating leases (2014: GBP822,000).
29. Capital commitments
At the end of the year the Group had capital commitments of
GBP141,000, in respect of trucks at Momart which have not been
provided for in these financial statements. At 31 March 2014, the
Group had capital commitments of GBP967,000: GBP837,000 due to the
Boatyard for Gosport Ferry, and GBP130,000 for a new truck at
Momart.
30. Related parties
The Group has a related party relationship with its subsidiaries
(see note 14) and with its directors and executive officers.
Directors of the Company and their immediate relatives
controlled 21.0% (2014: 21.9%) of the voting shares of the Company
at 31 March 2015.
The compensation of key management personnel (including
Directors) is as follows:
Group Company
2015 2014 2015 2014
GBP'000 GBP'000 GBP'000 GBP'000
Key management emoluments including
social security costs 1,504 1,627 480 575
Termination payments, including
social security costs 217 - 217 -
Company contributions to defined
contribution pension plans 81 82 - -
Share-related awards 69 58 52 4
------------------------------------- -------- -------- -------- --------
Total key management personnel
compensation 1,871 1,767 749 579
------------------------------------- -------- -------- -------- --------
In December 2013, the Group made a loan of GBP529,000 to its
joint venture, SAtCO for the purchase of a 250 tonne crawler crane
and heavy duty forklift to service the needs of the oil industry in
the Falklands. In the year ended 31 March 2015, GBP151,000 of this
loan was repaid.
All staff involved in construction activities were contracted
directly from parent companies FIC and Trant Construction and at 31
March 2015 and 2014 SAtCO had no permanent employees.
31. Acquisition of a business
On 1 August 2014, the Group acquired the trade and assets of
Turbo Tim a small automotive servicing and repairs company in the
Falkland Islands, with assets acquired, as presented below:
Pre-acquisition Fair Recognised
carrying value value
amounts adjustments on acquisition
GBP000 GBP000 GBP000
Property, plant and equipment 185 - 185
Stock 105 - 105
---------------- ------------- ----------------
Net identifiable assets 290 - 290
Goodwill on acquisition 37
---------------- ------------- ----------------
Total consideration 327
Less deferred consideration (112)
----------------
Initial cash out flow on
acquisition 215
----------------
The goodwill arising represents the synergies with FIC's own
automotive business.
32. Accounting estimates and judgements
The preparation of financial statements in conformity with
adopted IFRS requires management to make judgements, estimates and
assumptions that effect the application of policies and reported
amounts of assets and liabilities, income and expenses. The
estimates and associated assumptions are based upon historical
experience and various other factors that are believed to be
reasonable under the circumstances, the results of which form the
basis of the judgements as to asset and liability carrying values
which are not readily apparent from other sources. Actual results
may vary from these estimates, and are taken into account in
periodic reviews of the application of such estimates and
assumptions.
Revisions to accounting estimates are recognised in the period
in which the estimate is revised if the revision affects only that
period, or in the period of revision and future periods if the
revision affects both current and future periods.
Actuarial assumptions have been used to value the defined
benefit pension liabilities (see note 24). Management have selected
these assumptions from a range of possible options following
consultations with independent actuarial advisors.
Impairment tests have been undertaken with respect to intangible
assets (see note 11 for further details) using commercial judgement
and a number of assumptions and estimates have been made to support
their carrying amounts. In determining the fair value of intangible
assets recognised on the acquisition of Momart International
Limited management acted after consultation with independent
intangible asset valuation advisors.
33. Post balance sheet events
In April 2015, the Group's residual holding of 5 million FOGL
shares was sold for proceeds of GBP1.4 million, generating a profit
of GBP0.4 million for the Group.
In April 2015, the Group drew down a loan of GBP2,390,000
against Harbour Spirit, the new vessel delivered in March 2015, to
be repaid in monthly instalments over ten years at a margin of 2.6%
over the Bank of England base rate.
Directors and Corporate Information
Directors Registered Office
Edmund Rowland Chairman Kenburgh Court,
John Foster Managing 133-137 South Street,
Director Bishop's Stortford,
Hertfordshire CM23 3HX
Jeremy Brade* T: 01279 461630
F: 01279 461631
E: admin@fihplc.com
*Non-executive Director W: www.fihplc.com
Company Secretary Registered number 03416346
Carol Bishop
Corporate Information
Stockbroker and Nominated
Adviser
W.H. Ireland Limited
24 Martin Lane,
London EC4R 0DR
Solicitors
Bircham Bell and Dyson
LLP
50 Broadway,
Westminster,
London SW1H 0BL
Auditor
KPMG Audit LLP
St. Nicholas House, 31
Park Row,
Nottingham NG1 6FQ
Registrar
Capita Asset Services
The Registry, 34 Beckenham
Road,
Beckenham,
Kent BR3 4TU
Financial PR
FTI Consulting
200 Aldersgate
London EC1A 4HD
The Falkland Islands The Portsmouth Momart Limited
Company Harbour Ferry Kenneth Burgon
Roger Spink: Director Company Director
and General Manager Keith Edwards Peter Brayshaw:
Telephone: 00 Director and General Commercial and
500 27600 Manager Financial Director
Email: fic@horizon.co.fk Telephone: 02392 Telephone: 020
Website: www.the-falkland-islands-co.com 524551 7426 3000
Email: admin@gosportferry.co.uk Email: enquiries@momart.co.uk
Website: www.gosportferry.co.uk Website: www.momart.co.uk
------------------------------------------ --------------------------------- -------------------------------
This information is provided by RNS
The company news service from the London Stock Exchange
END
FR BUGDLIXGBGUU
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