TIDMFKL
RNS Number : 0661B
Falkland Islands Holdings PLC
14 June 2016
14(th) June 2016
Falkland Islands Holdings plc
("FIH" or the "Group")
Final results for the year ended 31 March 2016
A copy of the Group's results is 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 2016.
Group Financial Highlights
-- Group revenue increased 1.1% to GBP39.0 million (2015: GBP38.56 million)
-- Underlying pre-tax profits in line with the Board's
expectations at GBP3.1 million (2015: GBP3.56 million)
-- Reported diluted earnings per share 19.2p (2015: 22p)
-- Net cash flow from operating activities, before capital
expenditure and after tax payment at GBP4.8 million (2015: GBP6.4
million)
-- Cash balances increased to GBP14.0 million (2015: GBP7.4 million)
-- Bank borrowings of GBP3.3 million (2015: GBP0.7 million)
-- The Board is not recommending the payment of a final
dividend, in line with the strategy to reinvest earnings and cash
to accelerate the Group's growth
Operating Highlights
Falkland Islands Company ("FIC") - Strong profit performance,
benefiting from oil exploration activities and record squid
catch
-- Record GBP1.94 million pre-tax profits, with FIC's property
rental, vehicle hire and agency services attracting high demand
from oil-support workers with the 2015-2016 oil exploration
drilling campaign
-- FIC's broader business portfolio benefited from strong
consumer confidence as a result of a record squid catch, an
increase in cruise ship tourists, and significant levels of
Falkland Island government expenditure
Momart - Good revenue performance, with strategic investment in
sales, marketing and management systems, amidst a highly
competitive art market
-- Increase in overall revenue to GBP16.3 million (2015: GBP15.8 million)
-- Ongoing strategic investment into sales and marketing and the
strengthening of finance and management systems, in addition to
increased margin pressure, reduced underlying operating profit to
GBP0.46 million (2015: GBP1.24 million)
-- Slow H1 followed by recovery from Autumn 2015, with
involvement in installation of high-profile exhibitions including:
Jackson Pollock at Tate Liverpool; World Goes Pop and Alexander
Calder at Tate Modern; Fabric of India at the V&A; Ai WeiWei
and Painting the Modern Garden at the Royal Academy; and Audrey
Hepburn at the National Portrait Gallery.
Portsmouth Harbour Ferry Company ("PHFC") - Steady performance
with modest decline in passenger numbers offset by increases in
ferry fares
-- Revenues slightly down by 1.3% at GBP4.2 million with 3%
fewer passengers due to competition from a subsidised Park &
Ride service, low petrol prices, and interim disruption of the
Portsmouth Harbour interchange redevelopment
-- Several successful initiatives to promote ferry usage,
including a "Bikes Go Free" promotion which paid back its cost
within 12 months
-- New modern ferry vessel: "Harbour Spirit" in service from
July 2015; no further significant vessel expenditure expected for
over 15 years
Outlook - Quieter trading in the Falklands, offset by growth
potential from Momart and steady performance from PHFC
-- For the year ahead, we anticipate a quieter period in the
Falklands, with less oil exploration activity and much weaker illex
squid catch in Spring 2016
-- At PHFC, the emphasis in the coming year will be on tight
cost control, in the face of short term pressures on passenger
numbers caused by cheap petrol and physical disruption caused by
the reconfiguration of the passenger interchange at the Portsmouth
ferry terminal
-- At Momart, we anticipate a stabilising of the core trading
position as we see the benefit of investment feed through,
underpinning margins and continued sales growth
-- Continuing to seek out acquisition opportunities, using
strong balance sheet and cash position to leverage earnings and
increase critical mass
Non-Trading Items
-- Successful sale of residual 5 million Falkland Oil & Gas
shares at a profit of GBP0.4m offset by one-off restructuring costs
and asset write downs in SAtCO
Edmund Rowland, Chairman of FIH, said:
"At Falkland Islands Holdings, our diverse trading subsidiaries
have contributed to these satisfactory results overall.
"2015-16 was a good year for the Group and an exceptional one
for our Falklands business, boosted by the offshore exploration
drilling campaign in the Islands. This makes us optimistic about
the potential growth during any future drilling campaigns, albeit
we anticipate a return to 'pre-oil' trading levels at FIC in the
interim.
"The performance of Momart was satisfactory in a highly
competitive market; we have continued to invest in the business to
ensure the company retains its market-leading position.
"At PHFC, careful cost management was successful in largely
off-setting the headwinds of lower petrol prices and subsidised
travel options. This prudent approach will remain vital to our
ongoing success in the near-term, and looking ahead we are positive
about the longer-term benefits of the redeveloped passenger
interchange and the expanded naval base.
"Overall, despite specific challenges across the business, we
are in a strong position, trading in line with the Board's
expectations, with a healthy cash balance and significant borrowing
capacity to facilitate investment and acquisition led growth when a
suitable opportunity is identified."
- End -
Enquiries:
Falkland Islands Holdings plc
Edmund Rowland, Chairman Tel: 0207 087 7970
John Foster, Managing Director Tel: 01279 461630
----------------------------------- ---------------------
WH Ireland Ltd. - NOMAD and Broker
to FIH Tel: 0207 220 1666
Adrian Hadden / Mark Leonard
----------------------------------- ---------------------
FTI Consulting
Edward Westropp / Eleanor Purdon Tel: 020 3727 1000
----------------------------------- ---------------------
Chairman's Statement
I am pleased to report that the Group achieved a satisfactory
trading result for the year to 31 March 2016, with all 3 trading
subsidiaries contributing positively to the overall result. Group
revenues were ahead by GBP0.4 million at GBP39.0 million, an
increase of 1.1% on the prior year (2015: GBP38.6 million).
Underlying pre-tax profits for the Group (before amortisation
and non-trading items) for the year to 31 March 2016 were in line
with the Board's expectations, at GBP3.1 million, GBP0.5 million
lower than in the prior year. After non-trading items
(restructuring costs, and asset write downs in the Falklands, net
of profits on the sale of shares in Falkland Oil & Gas) of
GBP0.3 million, compared to non-trading profits of GBP0.3 million
in the prior year, reported Profit Before Tax was GBP2.8 million
(2015: GBP3.9 million).
Diluted earnings per share based upon underlying profits were
19.2p (2015: 22.0p). Reported earnings per share which reflect the
impact of non-trading items were lower at 17.9p (2015: 25.3p).
In line with our policy of reinvesting earnings and cash to
facilitate investment and acquisition led growth, the Board is not
recommending the payment of a final dividend.
At 31 March 2016, the Group's financial position was strong.
Cash balances at the end of the year had increased to GBP14.0
million (2015: GBP7.4 million) with bank borrowings of GBP3.3
million (2015: GBP0.7 million). In addition to its strong liquidity
position, the Group's healthy operating cash flow (2016: GBP4.6
million) leaves FIH with significant additional borrowing capacity
to enable expansion through selective earnings enhancing
acquisitions without recourse to funding from shareholders.
Operations
Performance from the Group's 3 trading subsidiaries was
satisfactory, with record trading in the Falklands being offset by
weaker trading in the UK at Momart and Portsmouth Harbour Ferry
Company.
In the Falklands, the offshore exploration drilling programme
continued almost to the end of the Group's financial year and this,
together with a record squid catch in early 2015 and further growth
in cruise ship passengers over the Austral summer, created buoyant
trading conditions which helped the Falkland Islands Company to
deliver a record trading performance. Revenue in the Falklands was
flat at GBP18.5 million and Operating Profits, before non-trading
items, boosted by buoyant property and vehicle rental income,
increased from GBP1.3 million to GBP1.6 million.
At Momart, the Group's Fine Art handling business, profits were
depressed by the costs of further investment to develop the
company's sales and marketing infrastructure and financial
reporting systems, coupled with a fiercely competitive art market
which saw a squeeze on margins. Overall revenue increased by 3% to
GBP16.3 million (2015: GBP15.8 million) but Operating Profits,
before non-trading items, fell back to GBP0.5 million (2015: GBP1.2
million).
At PHFC, a decrease in passenger numbers of 3.3% was largely
offset by a tight control of costs and modest fare increases in
June 2015. However, increased interest costs from the 10 year boat
loan taken out to finance the company's latest ferry, "Harbour
Spirit" saw pre-tax profits from the Ferry fall from GBP0.8 million
to GBP0.7 million.
Non Trading Items
In May 2015, the Group's residual holding of 5 million FOGL
shares was sold at a profit of GBP0.4 million.
In the Falklands, falling oil prices saw the prospects of an
early move towards oil production recede and with much quieter
trading conditions in prospect for the foreseeable future,
restructuring costs were incurred to reduce the company's ongoing
cost base. The Group's total restructuring costs, including GBP0.1
million at Momart, amounted to GBP0.3 million (2015: GBP0.2
million). At the same time the carrying values of specialist plant
and machinery owned by the Group's construction Joint Venture
"SAtCO" were reviewed, resulting in write downs to the Group's
investment of GBP0.3 million.
Outlook
The current suspension of exploration drilling in Falklands'
waters and the continued uncertainty over oil prices means that the
outlook for FIC in the near term is much quieter with a return to
the more modest trading levels seen prior to the start of oil
exploration activity over 10 years ago. However, following recent
modernisation, our Falklands' business is well invested and no
further significant capital expenditure is anticipated in the
foreseeable future.
Increased tourism in the Falklands will be a long term positive
factor in the growth of the Islands' economy but the development of
oil production in the Falklands is the key to unlocking dramatic
returns and this in turn will depend on a sustained recovery in the
oil price and an appetite by the oil & gas industry to take
advantage of the lowering cost environment for offshore
developments. Although the timing of any oil development remains
uncertain, in the interim FIC will remain a profitable and cash
generative business.
At Momart, the expansion of commercial art storage facilities at
Leyton is now imminent with opening expected in summer 2016. The
33% increase in storage space, with enhanced climate control and
client viewing facilities, will be a key driver of long term
growth. In the short term, this will lead to an increase in the
company's fixed cost base, but all efforts will be made to ensure
the new storage facility achieves breakeven within the first year
with subsequent growth seeing an immediate contribution to bottom
line profitability.
Development of a more proactive sales and marketing approach
continues, aimed at creating a platform from which to leverage
Momart's established reputation into the commercial and private
client market. This should see a steady recovery in profitability
in what remains a highly competitive market.
For PHFC, cheap petrol prices and disruption caused by the
redevelopment of the public transport hub at Portsmouth Harbour
will continue to make journeys by car an attractive alternative to
crossing by ferry. In the near term therefore, tight cost control
will be essential in defending profitability but the expansion of
the Naval Dockyard to support the arrival of the Royal Navy's Queen
Elizabeth class aircraft carriers from 2017 and plans for
redeveloping the waterfront in Gosport should create more benign
trading conditions in the medium term.
With the return to "pre-oil" trading levels in the Falklands
next year and broadly stable albeit challenging trading conditions
for the Group's UK businesses, overall profitability is expected to
be subdued in the near term.
Future Group Strategy
The low price of oil means that the development of proven oil
reserves in the Falklands will now be delayed and although the
board of FIH remains confident that oil production and dramatic
economic growth will ensue in the Falklands in due course, the
timing of this remains uncertain. However, following the
substantial capital and human investment in FIC seen in the past
few years, the company is well placed to take full advantage of the
growth that will ultimately emerge.
With further growth in the Falklands now delayed, the Group's
focus in the near term has shifted to developing its UK operations
through further investment in its existing businesses and through
the pursuit of high quality acquisitions. This will be facilitated
by the Group's record cash reserves of GBP14 million (GBP1.13 per
share) and solid existing earnings base which provides untapped
borrowing capacity. This strategy, to create a platform for
sustainable long term growth, is aimed at creating a larger quoted
entity with a wider appeal to investors that will in turn enhance
shareholder liquidity and the Group's rating. A number of
opportunities were reviewed during the year and none were
progressed to completion as the Board has been prudent in
evaluating asking prices and in targeting only high quality, low
risk prospects. The Board's focus in the coming year will be to
continue to develop its existing businesses whilst seeking a high
quality acquisition that will significantly enhance the long term
prospects for a sustained growth in shareholder value.
Edmund Rowland
June 14 2016
Managing Director's Strategic Review
Group Overview
I am pleased to report on another satisfactory year of trading
for the Group, with revenues ahead by GBP0.4 million at GBP39.0
million (2015: GBP38.6 million) and underlying pre-tax profits, as
expected, a little lower at GBP3.1 million (2015: GBP3.6 million).
Reported profits before tax after non trading items (net expenses
of GBP0.28 million) were GBP2.80 million (2015: GBP3.89 million).
Operating cash flow was strong and the Group ended the year with
record levels of cash of GBP14.0 million (2015: GBP7.4
million).
In the Falklands, FIC had a record year, taking full advantage
of the boost to the Falklands' economy from the exploration
drilling programme which ran throughout the year, and another
exceptional squid catch in early 2015. In contrast, Momart, the
Group's fine art handling and logistics company, experienced
challenging market conditions and further strategic investment in
sales and marketing and management information systems saw a
reduction in profitability. At PHFC despite reduced passenger
volumes, revenues remained broadly stable but increased operating
and finance costs, linked to the company's new ferry Harbour
Spirit, also saw profits lower than the prior year.
Review of operations
Group revenue and Underlying Pre-Tax profits* are analysed
below:
Group revenue
Year ended 31 March 2016 2015 Change
GBPm GBPm %
---------------------------------- ----- ----- ------
Falkland Islands Company 18.50 18.51 -0.1
Portsmouth Harbour Ferry 4.24 4.30 -1.3
Momart 16.26 15.75 3.2
Total Revenue 39.00 38.56 1.1
Group Underlying Pre Tax profit*
Year ended 31 March 2016 2015 Change
GBPm GBPm %
---------------------------------- ----- ----- ------
Falkland Islands Company 1.94 1.56 24.5
Portsmouth Harbour Ferry 0.68 0.79 -14.1
Momart 0.46 1.21 -62.1
Total Underlying Pre Tax Profit * 3.08 3.56 -13.5
---------------------------------- ----- ----- ------
Non trading items (see notes below) -0.28 0.33
Reported Profit Before Tax 2.80 3.89 -28.1
--------------------------- ---- ---- -----
* 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.
Non trading items include profits on the sale of the FOGL
shares, restructuring costs, write downs on assets in SAtCO, profit
on the sale of a vessel and amortisation of intangibles acquired on
the purchase of Momart in 2008.
Falkland Islands Company
In the year to 31 March 2016, the Falklands benefited from the
stimulus to the local economy from the offshore drilling campaign
which commenced in early 2015 and ran on until February 2016 when
the planned 6 well programme was curtailed after the drilling of 4
wells due to operational issues and the sharp fall in the price of
oil. Trading profitability in FIC had already increased by 39% in
the prior year and ratcheted up by a further 25% to a record
GBP1.94 million in the year to 31 March 2016 as demand for the
company's local services was stimulated by the presence onshore of
oil support workers for the whole of the financial year. FIC
benefited in particular from increased corporate demand for rented
houses, hire vehicles and agency services for oil exploration. In
the wider economy, confidence was boosted by another record squid
catch in Spring 2015 and a further increase in cruise ship activity
over the austral summer (November 2015 to March 2016). With a
strong fiscal revenue base, Falkland Island government expenditure
was maintained at record levels and this benign backdrop saw
consumer demand continue at the high levels seen in the prior year,
benefiting FIC's broad spread of retail and support service
businesses. As a result, the pre-tax contribution of the Group's
Falklands' business moved to record levels, with pre-tax profits
increasing by GBP0.38 million (+24.5%) to GBP1.94 million (2015:
GBP1.56 million).
Oil developments
During the year, oil companies led by Premier Oil ("PMO") and
Noble Energy commenced the long-awaited third phase of exploration
drilling, with 3 wells drilled in the Northern Basin and a 4(th)
deep water well ("Humpback") in the geologically separate basin to
the South East of the Islands.
Results from the 3 Northern wells were particularly encouraging,
leading to increased resource estimates for Premier's Sea Lion
field (increased to 520 mbbls) and the nearby independent Isobel
complex. In the South East basin, results from drilling the large
Humpback prospect by Noble Energy and Falkland Oil & Gas in
August 2015, were less encouraging with no indication of
commercially exploitable hydrocarbons discovered. Following on from
this there was a further consolidation of the smaller oil
exploration companies in the Falklands with the absorption of
Falkland Oil and Gas (which had in turn recently merged with Desire
Petroleum) by Rockhopper Exploration plc. In February 2016
"Operational issues" with the Eirik Raude rig, led to the
curtailment of the planned drilling programme with only 4 wells
completed; a further 2 wells had been originally planned. Continued
weakness in the oil price, saw Noble Energy withdraw its
operational team from the Falklands in March 2016 and in May
Premier Oil reported it was "progressing cautiously" with detailed
plans to develop its Sea Lion and Isobel fields.
Although the very positive results from the Northern wells have
made the prospect of commercial oil production in the Falklands
ultimately more attractive and hence more likely, the continued
weakness of the oil price remains a major stumbling block to moving
towards commercial oil production in the near term. On a positive
note, related downward pressure on the oil industry supply chain
has seen a continuing fall in field development costs and in May
2016, Premier Oil reported it was targeting further savings in
order to make a development of the Sea Lion field viable at $55 per
barrel, (In May 2016, PMO estimate project viability at $65 bbl).
With a recovery in oil prices since the sub-$30 lows in January
2016, the "project viability gap" for Sea Lion has narrowed
considerably but further increases in the price of oil and the
reliable prospect of a sustained recovery in such prices will be
essential before commercial development of oil proceeds in the
Falklands.
Despite the uncertainty over oil, with a further GBP1.2 million
invested in FIC in 2015-16 (and over GBP9 million invested by the
Group in the Falklands in the last 6 years) the business
infrastructure of FIC has been fully modernised and the company is
now well placed to take full advantage of an eventual move to oil
production in the medium term.
Trading
Overall revenue in FIC was unchanged at GBP18.5 million (2015:
GBP18.5 million).
FIC Operating results
Year ended 31 March 2016 2015 Change
GBPm GBPm %
--------------------------------------- ----- ----- ------
Revenues
Retail 9.66 9.54 1.3
Falklands 4x4 3.93 3.07 28.1
Freight & Port Services 0.90 1.24 -27.6
Support services 1.63 1.66 -1.8
FBS (property and construction) 1.81 2.64 -31.5
Property rental 0.57 0.36 59.2
Total FIC revenue 18.50 18.51 -0.1
FIC underlying operating profit 1.62 1.31 22.9
Share of results of SAtCO JV 0.20 0.18 11.1
Net interest income 0.12 0.07 93.8
--------------------------------------- ----- ----- ------
FIC underlying Profit Before Tax 1.94 1.56 24.5
--------------------------------------- ----- ----- ------
FIC underlying operating profit margin 8.7% 7.1% 23.0
--------------------------------------- ----- ----- ------
Total retail sales in FIC increased by 1.3% to a record GBP9.66
million (2015: GBP9.54 million).
FIC Retail sales achieved record levels with a particularly
encouraging 4.5% increase at the company's flagship West Store
which accounts for over 60% of total retail sales and has grown
over 10% in the past 2 years. This was achieved despite staff
retention problems caused by the availability of short term oil
contracts for unskilled workers. Clothing and Electrical sales were
broadly flat but Grocery / Household sales in the Foodhall
increased by 6% as customers responded to continuing improvements
in the fresh food and delicatessen offers.
Warehouse sales to local retailers and pubs (10% of West Store
sales) continued to come under pressure as direct sourcing from the
UK increased and sales declined by 8% albeit much less than the 22%
decline seen in 2014-15.
Sales at the Capstan gift shop increased by 8% as cruise ship
numbers rose to near pre-Crash levels of c.56,500 (2015: 50,000)
and spend from transiting oil workers continued to boost revenue.
After a slow start to the year, sales at FIC's general store at the
Mount Pleasant military base ("West Store MPA") picked up as
refurbishment activity at the military base commenced in late 2015
supported by an increased establishment of civilian workers from
the UK; annual revenues at West Store MPA grew by 3.2%.
At Home Living, timing differences in government housing
completions saw demand for home furnishings decline and sales fall
back 31% to 2014 levels of GBP0.5 million. At FIC's Builder's
Merchant "Home Builder", muted demand and further disruption caused
by the completion of a new customer car park at the Crozier Place
site, which prevented vehicular access for 3 weeks, saw revenue
decline by 4.1%. The new car park at Crozier Place, offering much
improved access and off street parking for both Home Living and
Home Builder customers, was completed in February 2016. The
attractions of the site were further enhanced by construction of a
new in-store family café in Home Living in November 2015.
With a quieter year at Home Living and Home Builder largely
offsetting growth at the West Store, overall retail performance was
satisfactory with a similar contribution to the prior year. Retail
remains FIC's most important business unit accounting for 50% of
revenue, 40% of the total workforce and around a third of FIC's
overall contribution.
In FIC's automotive business, Falklands 4x4, strong growth in
vehicle sales saw revenues increase by 28.1% to GBP3.93 million,
eclipsing the former record set last year. Despite the absence in
recent years of sales to MoD which had previously supported c 50
units pa, sales to local consumers picked up strongly and in
2015-16, FIC's vehicle sales increased from 76 units in the prior
year to 110, as revenue from used vehicles increased and "new"
sales were bolstered by demand for the outgoing Defender for which
FIC secured its final factory delivery stock from Land Rover late
in the year. Strong corporate demand linked to oil exploration saw
the contribution from vehicle hire more than triple income in the
year, to record levels.
Revenues from third party freight and port services dropped by
27.6% to GBP0.9 million (2015: GBP1.24 million) as the exceptional
volumes shipped in prior years to help prepare the infrastructure
for oil exploration reverted to more normal levels.
Support Services income held up well at GBP1.63 million (2015:
GBP1.66 million) with revenues from Penguin Travel rising strongly
to over GBP0.5 million linked to the increase in cruise ship
visitors. Penguin Travel's performance helped offset lower revenues
from the Fishing Agency where better weather conditions on the high
seas enabled foreign squid fishing fleets to operate without
calling on onshore Agency support from Stanley. As in previous
years there was steady progress at FIC's insurance agency.
The level of corporate demand for rental property, which had
risen sharply in late 2014 continued throughout 2015-16 as the
exploration drilling programme commenced and total property rental
revenue increased to a record level of GBP0.57 million (2015:
GBP0.36 million) across FIC's estate of 50 rental properties (which
include 10 mobile homes rented to staff).
Revenue from Falkland Building Services (FBS), which focuses on
building kit homes and small local construction projects, fell back
by 31.5% to GBP1.81 million (2015: GBP2.64 million) as the number
of new houses completed for local residents reduced from 16 last
year to 12. There was also a decrease in oil related construction
activity with preparatory infrastructure works being completed
prior to the start of drilling in Spring 2015. With the completion
of the Temporary Dock Facility for Noble Energy in the prior year,
the level of subcontracted labour provided by FIC reduced.
FBS also completed FIC's new retail warehouse at Airport road on
the outskirts of Stanley. The project involved the construction of
5,000sq ft of new chiller/freezer facilities and a new ambient
warehouse of 8,000sq ft; 6 metres in height to the eaves. The
facility was completed in November 2015 and will reduce ongoing
operating costs, improve stock control and free up the old
warehouse and transit shed sites in central Stanley for future
redevelopment.
In its third year of operation, FIC's joint venture, the South
Atlantic Construction Company, ("SAtCO") saw construction activity
reduce sharply with the completion of the Temporary Dock Facility
(TDF) in December 2014. Despite the lower level of construction
activity, SAtCO's trading profitability improved with income from
the renting out of its 250 tonne crawler crane to Premier Oil which
facilitated the loading of rig support vessels operating from the
TDF. Crane rental produced income for SAtCO of GBP0.58 million in
the year and a further GBP0.03 million of income was generated from
maintenance work for FIG. In the year to 31 March 2016 total SAtCO
revenues were comparable to the prior year at GBP0.61 million and
its profit before tax increased by 5% to GBP0.51 million (2015:
GBP0.49 million). The Group's share of the after tax profits of
SAtCO was GBP0.2 million (2015: GBP0.18 million).
At the end of the financial year, the premature cessation of
drilling and the completion of the current phase of oil activity in
the Falklands has necessitated a review of, and provision against
the carrying value of SAtCO's operating assets which comprise large
construction machinery. With the completion of exploration drilling
and uncertainty over the move towards oil production these large
items of plant and machinery are considered to have limited
commercial value in their current location in the Falklands and
options for transporting these assets back to the UK for early sale
are currently being explored. With the downturn in the global oil
industry the realisable value of these assets has fallen sharply
and accordingly a provision of GBP0.6 million has been made in
SAtCO's accounts against the carrying value of these assets. The
Group's share of the after tax cost of this exceptional write down
is GBP0.3 million.
FIC Key Performance Indicators and Operational Drivers
Year ended 31 March 2016 2015 2014 2013 2012
-------------------------- ------ ------ ------ ------ ------
Staff Numbers (FTE 31
March) 172 184 165 129 119
-------------------------- ------ ------ ------ ------ ------
Capital Expenditure
GBP'000 1,229 2,598 2,715 1,594 632
-------------------------- ------ ------ ------ ------ ------
Retail Sales growth
% 1.3% 3.0% -4.8% 3.0% -2.8%
-------------------------- ------ ------ ------ ------ ------
Number of FIC rental
properties 50* 50* 36 32 33
-------------------------- ------ ------ ------ ------ ------
Average occupancy during
the year 93% 93% 82% 88% 83%
-------------------------- ------ ------ ------ ------ ------
Number of vehicles sold 110 76 79 48 50
-------------------------- ------ ------ ------ ------ ------
Number of 3(rd) party
houses sold 12 16 8 3 0
-------------------------- ------ ------ ------ ------ ------
iIlex squid catch in
tonnes (000's) 235.2 364.0 188.0 58.2 67.3
-------------------------- ------ ------ ------ ------ ------
Cruise ship passengers
(000's) 56.5 50.0 39.5 29.6 35.2
-------------------------- ------ ------ ------ ------ ------
*Includes ten mobile homes rented to staff.
FIC ended the year with a headcount of 172, 12 lower than in
March 2015. FIC's total establishment has grown by 53 since March
2012 due to a significant expansion in FBS (+25), an increase in
Falklands 4x4's garage services repairs team (+10), a further 10
staff in Retail to provide additional in-store services and the
balance of 8 in administration.
While the timing of oil development remains uncertain, the
Falklands' economy will be sustained (albeit at lower levels) by
the traditional areas of squid fishing and tourism ensuring a
healthy base level of profitability is maintained at FIC.
Portsmouth Harbour Ferry Company ("PHFC")
2015-16 saw another steady performance from PHFC with total
revenue decreasing by 1.3% reflecting a modest decline in passenger
numbers which more than offset increases in ferry fares. Profit
Before Tax after pontoon lease and boat loan interest charges from
the new ferry vessel Harbour Spirit, was 14.1% lower at GBP0.68
million (2015: GBP0.79 million).
PHFC Operating results
Year ended 31 March 2016 2015 Change
GBPm GBPm %
------------------------------ -------------------- ------------ ---------------
Revenues
Ferry fares 4.09 4.13 -0.8
Cruising and Other revenue 0.15 0.17 -13.1
Total PHFC revenue 4.24 4.30 -1.3
PHFC underlying operating
profit 1.03 1.03 -0.4
Boat loan & Pontoon finance
lease interest -0.35 -0.24 45.8
PHFC underlying Profit Before
Tax 0.68 0.79 -14.1
------------------------------ -------------------- ------------ ---------------
PHFC underlying operating
profit margin 24.2% 24.0% 1.0
Passengers carried (000s) 2,826 2,923 -3.3
------------------------------ -------------------- ------------ ---------------
There was a continued decline in ferry passenger numbers, which
reduced 3.3% over the year to 2.826 million (an average of 7,800
passengers per day), from 2.923 million in the prior year. After
the effects of normal volatility caused by weather there was a
broad consistency in the rate of decline between the first and
second half of the year at -3.3%, albeit the reduction was a little
higher than in the previous 2 years. (2015: 2.1%, 2014: 1.6%).
Ferry fares were increased by an average of 3% in June 2015,
bringing the total cost of an adult return to GBP3.30, although the
price of Adult 10 Trip tickets for regular customers was maintained
(GBP1.45 per ferry journey), and lower tariffs were also left
unchanged for seniors and children (GBP2.20/GBP2.10 return).
During the summer months a special "Bikes Go Free" promotion
(normal tariff GBP1.20 return) was run from 1st June to 1st
September to encourage long term cycle use and this saw a welcome
2.5% increase in ferry travel by cyclists in the 7 months after the
promotion period ended, paying-back the cost of the promotion in
under 12 months. Cyclists now account for over 10% of all ferry
users.
Take up of the unlimited monthly ferry and car parking joint
ticket "Park & Float" ticket at GBP89 remained modest at less
than 1% of passenger traffic, whereas the discounted ticket for
military personnel was more popular accounting for 3.6% of
passenger journeys in the year, a similar level to 2014-15. Demand
for the "new" Solent Go electronic travel card increased following
its introduction in August 2014 with this "Oyster card" for South
Hampshire now accounting for 2.4% of passenger journeys, up 7 fold
on the prior year.
In overall terms at under GBP1.50 per crossing for adults, (83p
for seniors and children) the ferry service still represents
excellent value compared to any alternative mode of transport other
than for groups travelling by car with free or subsidised
parking.
In travelling to and from Gosport to Portsmouth, the car
continues to be the only serious transport alternative to the
ferry. Car travel to Portsmouth, utilising the subsidised Park
& Ride scheme operated by Portsmouth City Council, with
dedicated buses departing every 10 minutes to Portsmouth town
centre, the Naval Dockyard and the Gunwharf Quays shopping centre,
continued to present a competitive challenge during the year. With
low prices being bolstered by the introduction of GBP2.60 per
vehicle tariff for regular users and low petrol prices enhancing
the economics of car travel, the scheme was particularly attractive
to families in school holidays and at weekends and this had a
direct, adverse impact on ferry passenger volumes. Although lower
diesel prices saw a reduction in ferry fuel costs, the savings were
modest at less than 0.6% of revenue and did not offset the negative
effects of cheaper petrol/diesel for cars.
In addition to the increased relative attraction of car travel,
the convenience of the ferry service was disrupted in the year by
commencement of the redevelopment of the passenger interchange at
Portsmouth Harbour (the "Hard"). This will ultimately lead to
improved connectivity between ferry, bus, rail and taxi services at
the interchange, however, in the interim the relocation of bus
stops and pedestrian walkways during construction work (which
commenced in autumn 2015 and is scheduled to finish by the end of
2016), had an undoubted adverse effect on the overall convenience
and appeal of ferry travel.
In the year to 31 March 2016, weekday traffic was affected more
noticeably than at the weekends with an overall decline of -3.6%
compared to -2.5% at weekends. Core commuter traffic held up well
with a reduction of only -2.2%, whereas weekday off peak passenger
traffic, which tends to be more discretionary in nature, declined
by 5.7%.
Cruising income from corporate vessel hire was boosted by the
Americas Cup event in Portsmouth in July 2015 and in February 2016
PHFC benefited from the sale of one of its two older vessels,
Portsmouth Queen which was sold to a Thames river cruise operator
for a nominal sum.
During the year PHFC's third modern ferry vessel "Harbour
Spirit" with its improved passenger seating, increased space for
cycles and better facilities for the disabled, was fully
commissioned and came into service in July 2015. With Harbour
Spirit now in operation, PHFC has 3 modern vessels and retains a
fourth boat, the 1966 vintage, Gosport Queen, as a back- up. With
three new ferry vessels built since 2001 and an estimated service
life of over 30 years, no further significant vessel expenditure is
anticipated for over 15 years.
Key Operating Metrics
Average fares per passenger journey increased by 2.8% to GBP1.45
(2015 GBP1.41).
Ferry reliability was again outstanding with on-time departures
running at 99.8% (2015: 99.8%).
Looking ahead the outlook for passenger growth is more positive
with arrival of the Royal Navy's new aircraft carriers and
expansion of the Naval Base expected to commence in 2017. In
addition in Spring 2016, Gosport Council announced plans to
redevelop the bus station complex at the waterfront adjacent to the
ferry terminal. The Council has invited private sector tenders to
bid for a mixed use development with increased retail and leisure
facilities which increase the appeal of the Gosport waterfront /
ferry terminal area as a destination and thus enhance the medium
term outlook for passenger numbers.
PHFC Key Performance Indicators and Operational Drivers
Year ended 31 March 2016 2015 2014 2013 2012
------------------------------- -------- -------- -------- -------- --------
Staff Numbers ( FTE at
31 March) 38 39 37 35 35
------------------------------- -------- -------- -------- -------- --------
Capital Expenditure GBP'000's 223 1,483 1,958 223 5,080
------------------------------- -------- -------- -------- -------- --------
Ferry Reliability (on
time departures) 99.8% 99.8% 99.7% 99.5% 99.9%
------------------------------- -------- -------- -------- -------- --------
Number of weekday passengers
'000 2,046 2,123 2,169 2,230 2,497
------------------------------- -------- -------- -------- -------- --------
% change on prior year -3.6% -2.1% -2.7% -10.7% -1.6%
------------------------------- -------- -------- -------- -------- --------
Number of weekend passengers
'000 780 800 817 803 831
------------------------------- -------- -------- -------- -------- --------
% change on prior year -2.5% -2.1% 1.8% -3.4% -4.1%
------------------------------- -------- -------- -------- -------- --------
Total number of passengers
'000's 2,826 2,923 2,986 3,033 3,328
------------------------------- -------- -------- -------- -------- --------
% change on prior year -3.3% -2.1% -1.6% -8.9% -2.1%
------------------------------- -------- -------- -------- -------- --------
Revenue growth % -1.3% 4.3% 1.2% -1.9% 11.5%
------------------------------- -------- -------- -------- -------- --------
Average yield per passenger GBP1.45
journey GBP1.41 GBP1.32 GBP1.28 GBP1.19
------------------------------- -------- -------- -------- -------- --------
Momart
Momart, the Group's art handling and logistics business, had a
challenging year and despite overall revenue increasing by 3.2% to
GBP16.3 million (2015: GBP15.8 million), increased overheads linked
to investment in sales and marketing and strengthening of finance
and management information systems, coupled with increased pressure
on margins saw underlying operating profit reduce by 62.9% to
GBP0.46 million from GBP1.24 million in 2015.
Net finance costs in the year were negligible as borrowings were
repaid.
Underlying Profit Before Tax before amortisation of intangibles
was GBP0.46 million (2015: GBP1.21 million)
Momart Operating results
Year ended 31 March 2016 2015 Change
GBPm GBPm %
------------------------------------------ ------------ ----------------- -------
Revenues
Museums and public
Exhibitions 8.39 8.68 -3.4
Galleries & Private Clients 5.82 5.21 11.8
Storage 2.05 1.86 10.1
Total Momart revenue 16.26 15.75 3.2
Momart underlying operating profit 0.46 1.24 -62.9
Net Interest expense - -0.03
Momart underlying Profit Before Tax 0.46 1.21 -62.1.0
------------------------------------------ ------------ ----------------- -------
Momart underlying operating profit margin 2.8% 7.9% -64.0
------------------------------------------ ------------ ----------------- -------
Museum Exhibitions
After a slow start with Q1 sales down 19% on the prior year,
Exhibitions activity recovered strongly throughout the remainder of
the year. Revenue from large UK museum exhibitions, which form the
bedrock of Momart's market-leading reputation, accounted for more
than half of total Exhibition activity, and increased by 22%
compared to the prior year. During 2015-16 in the UK, Momart was
involved in the installation of a number of prestigious and popular
exhibitions including Jackson Pollock at Tate Liverpool, World Goes
Pop and Alexander Calder at Tate Modern, Delacroix and Modernity at
the National Gallery, Fabric of India at the V&A, Egypt: Faith
After the Pharaohs at the British Museum, Ai WeiWei and Painting
the Modern Garden at the Royal Academy and Audrey Hepburn at the
National Portrait Gallery.
Activity linked to smaller private and regional exhibitions was
less buoyant with sales flat year on year but UK margins overall
held up well compared to 2014-15. In contrast, overseas contracts
(revenue from overseas clients) which typically involve high added
value / high margin work (specialist packing etc.) fell back from
the high levels seen in the previous 2 years, declining by 23%
(GBP1.7 million) from GBP7.5 million to GBP5.8 million (see KPI
table below). This reduction in the level of overseas contracts was
a key factor in the overall decline in Momart's profitability
during the year.
By 31 March 2016, Momart's order-bank of large UK Exhibitions
had increased to GBP4.47 million, an increase of 37% compared to
the prior year (2015: GBP3.26 million), (see KPI table below). This
healthy order book provides a stronger platform for the coming year
albeit the headline revenue figure for Museum contracts provides
only a general guide to added value and margins with Museum work
vary considerably depending on the mix of jobs and in particular
the level of services that need to be outsourced to overseas
agents.
Galleries & Private Client Services
Gallery Services revenues, which include revenues from private
and corporate clients, increased by an encouraging 11.8% to GBP5.82
million (2015: GBP5.21 million), reflecting an increased emphasis
on proactive sales and marketing and on business development.
Revenue from galleries remained the largest element and increased
by 25% compared to 2014-15 as new relationships were developed with
leading international galleries especially those expanding their
presence in the growing London market. Activity with private and
corporate clients also increased although once again, as with
Exhibitions, the level of lucrative work from overseas clients
reduced. The mix of sales was also less profitable with more work
outsourced to overseas agents and contractors compared to the
previous year and this together with competitive pressure on
margins meant that despite the 11.8% increase in revenue, overall
gross profitability from Galleries and Private Clients was
essentially unchanged compared to the prior year.
During the year, significant additional resources were invested
in sales and marketing and business development, increasing
overheads by GBP0.5 million compared to the prior year. The
benefits of this increased investment and focus will flow through
more fully in the coming year but in the year ended 31 March 2016
this increase in costs, together with the fall in income from
overseas contracts noted above, were the prime factors responsible
for the GBP0.8 million decrease in Operating Profits.
Storage
Storage revenues increased by 10.1% to GBP2.05 million (2015:
GBP1.86 million), as 450 cubic metres of additional space was taken
on in response to market demand. The buoyancy of demand for secure
art storage is the key driver of the decision to progress the
expansion of Momart's core storage facilities at Leyton where a 33%
increase in space will be completed by August 2016. The additional
space will offer improved client visitor facilities, discrete
dedicated space for specific collections and enhanced viewing
areas. The facility will be rented from the current landlord on a
long lease coterminous with existing units on the Leyton site. Fit
out costs for racking, air conditioning and lifts totalling c
GBP1.5 million of capital expenditure will be incurred in the year
to March 2017. The new facility will add c GBP0.5 million to annual
operating costs and is targeted to reach break-even within 8 months
of opening.
Although the decline in profitability seen in the year to 31
March 2016 is disappointing, the increased focus and structured
approach to the market now being undertaken has laid the
foundations for a more sustainable platform for long term growth in
profitability which will enable the company to take full advantage
of its market leading reputation and unmatched level of technical
skill and customer service.
Momart Key Performance Indicators and Operational Drivers
Year ended 31 March 2016 2015 2014 2013 2012
-------------------------- --------- --------- ---------- --------- ---------
Staff Numbers (FTE
31 March) 130.2 128.6 124.6 119.0 115.9
-------------------------- --------- --------- ---------- --------- ---------
Capital Expenditure
GBP'000's 402 648 260 598 524
-------------------------- --------- --------- ---------- --------- ---------
Warehouse % fill vs
capacity 90.6% 91.2% 92.9% 94.2% 95.1%
-------------------------- --------- --------- ---------- --------- ---------
Exhibition Order Book GBP4.47m
31 March GBP3.26m GBP3.89m GBP3.83m GBP4.16m
-------------------------- --------- --------- ---------- --------- ---------
Own labour charged GBP9.18m GBP9.07m GBP11.67m GBP9.02m GBP8.58m
out
-------------------------- --------- --------- ---------- --------- ---------
Revenues from overseas GBP5.8m GBP7.5m GBP8.3m GBP4.6m GBP5.7m
clients
-------------------------- --------- --------- ---------- --------- ---------
Exhibitions sales growth -3.4% -20.0% 20.4% 27.8% 5.7%
-------------------------- --------- --------- ---------- --------- ---------
Gallery Services sales
growth 11.8% -6.5% 1.3% -12.7% 26%
-------------------------- --------- --------- ---------- --------- ---------
Storage sales growth 10.1% 1.3% 2.6% 10.5% 6.6%
-------------------------- --------- --------- ---------- --------- ---------
Total Sales growth 3.2% -13.7% 12.0% 8.9% 13.5%
-------------------------- --------- --------- ---------- --------- ---------
Non Trading Items -Total Cost GBP0.28 million (2015: Profit
GBP0.33 million)
-- Profit on sale of FOGL shares - GBP0.39 million (2015: GBP0.7 million)
In April 2015, the Group disposed of its remaining 5 million
shares in Falkland Oil and Gas for GBP1.40 million, an average
share price of 28 pence generating a profit on disposal of GBP0.39
million.
-- Write Down of SATCO assets - GBP0.33 million (2015: nil)
With the early conclusion of exploration activity in the
Falklands and the uncertainty over the future demand for heavy duty
construction plant and machinery in the Islands, the carrying value
of the assets owned by SAtCO has been reviewed and options for
disposal explored. FIH's after tax share of the provision against
these assets amounts to GBP0.3 million. The level of contribution
from SAtCO over the past 3 years and the amount of ancillary work
secured as a result of the Group's investment in this construction
joint venture far outweighs the costs of these write downs.
-- Restructuring Costs - GBP0.26 million (2015: GBP0.23 million)
During the year the Group incurred GBP0.26 million of
restructuring costs in relation to slimming down the senior
management teams in FIC and at Momart. These changes will reduce
ongoing costs without any adverse effect on operational
efficiency.
-- Amortisation of Intangibles GBP0.14 million (2015: GBP0.14 million)
Trading outlook
For the year ahead, we anticipate a quieter period in the
Falklands. The squid catch in Spring 2016 dropped back from the
exceptional levels seen in the previous two years and in retailing,
FIC's principal competitor has pushed ahead with a 33% expansion of
its own supermarket which will open in July 2016. Given these
factors and the conclusion of exploration drilling with a lack of
any indication of when oil activities will resume, FIC will face
significant headwinds in the coming year and profits at FIC are
expected to revert to the more normal "pre-oil" levels seen in
prior years.
At PHFC, in the coming year the emphasis will be on tight cost
control, in the face of short term pressures on passenger numbers
caused by cheap petrol and physical disruption caused by the
reconfiguration of the passenger interchange at the Portsmouth
ferry terminal. In the longer term, plans to expand the Portsmouth
naval base and new proposals to redevelop the harbour at Gosport
should help to reverse the decline seen in recent years.
At Momart, we anticipate a stabilising of the core trading
position as we see the benefit of the recent investment in sales
and marketing feed through to underpin continued sales growth and
shore up margins. Initially though, the warehouse expansion will be
a drag on profits, with an increase in fixed costs not fully
covered by new storage revenue in the first year. Over the medium
term however, as Momart's new facilities reach capacity, prospects
for a steady and sustained recovery in profitability are good.
John Foster
Managing Director
14 June 2016
Managing Director's Strategic Report (continued)
Financial Review
Revenue and underlying operating profit
Group revenue rose 1.1% to GBP39.0 million, however underlying
operating profit decreased 12.3% to GBP3.30 million in the year
ended 31 March 2016 as the benefits of the oil activity in the
Falkland Islands was offset by a reduction in profit at Momart.
These variances are discussed in more detail above in the Review of
Operations.
Non-trading items
Non-trading items amounted to a net cost of GBP0.28 million
(2015: profit of GBP0.33 million), and comprise a GBP0.39 million
gain on the sale of 5,000,000 Falkland Oil and Gas shares (2015:
GBP0.71 million), and a GBP0.06 million profit on the sale of
"Portsmouth Queen", which had been purchased by Portsmouth Harbour
Ferry Company in 1966. These non-trading gains have been offset
against:
-- A GBP0.33 million impairment to the carrying value of plant & machinery owned by SAtCO;
-- GBP0.26 million of restructuring costs in relation to
slimming down the senior management teams in FIC and Momart;
and
-- GBP0.14 million amortisation charge of intangible assets, in
relation to the net book value of Customer relationships acquired
within Momart in March 2008.
Net financing costs
The Group's net financing costs remain relatively little changed
to the prior year at GBP0.2 million, with an increase in bank
interest payable from the bank loans drawn down by the Ferry
business following the acquisition of the GBP3.3 million vessel
"Harbour Spirit" offset against the reduction in the interest
expense on the unfunded defined benefit scheme in the Falklands and
as the interest and amortised loan fees ceased on the loan to
acquire Momart, which was fully repaid in the year to 31 March
2015.
Underlying pre-tax profit
As expected, the Group reported underlying pre-tax profits of
GBP3.08 million, 13.5% down on the prior year, (2015: GBP3.56
million).
Reported pre-tax profit
After the non- trading items noted above, reported Profit Before
Tax for the Group decreased by 28.1% to GBP2.80 million (2015:
GBP3.89 million).
Taxation
The Group pays corporation tax on its UK earnings at 20% and on
earnings in the Falkland Islands at 26%. The Falkland Islands
Company Limited, which is resident in both jurisdictions, has been
granted a foreign branch exemption, and as a result no longer pays
UK corporation tax. As a result FIC enjoys the full benefit of the
tax deductibility in the Falkland Islands of expenditure on
commercial and industrial buildings. The effective blended tax rate
on underlying profits is 22.7% (2015: 23.2%).
Managing Director's Strategic Report (continued)
Earnings per share
Year ended 31 March 2016 2015
------
Change
GBPm GBPm %
------------------------------------------ ------ ------ ------
Underlying profit before tax 3.08 3.56 -13.5
Taxation on underlying profit (0.70) (0.83) -15.3
Underlying profit after tax 2.38 2.73 -13.0
Diluted average number of shares in issue
(thousands) 12,384 12,446 -0.5
Effective underlying tax rate 22.7% 23.2% -2.0
Diluted EPS on underlying profit 19.2p 22.0p -12.7
------------------------------------------ ------ ------ ------
Diluted EPS on reported profit 17.9p 25.3p -29.2
------------------------------------------ ------ ------ ------
Fully diluted Earnings per Share ("EPS") derived from underlying
profits, fell to 19.2 pence (2015: 22.0 pence), due to the fall in
the underlying profit before tax.
Balance sheet
The Group's Balance Sheet remains strong. Total net assets
increased to GBP38.6 million from GBP36.7 million in the prior
year.
Retained earnings, after corporation tax, increased by GBP2.5
million to GBP18.8 million (2015: GBP16.3 million). Bank borrowings
increased to GBP3.3 million (2015: GBP0.7 million), due to the
drawdowns of loans in the Ferry business to cover the cost of new
vessel, which had been purchased in the prior year, but because of
the strong underlying cash flows, the Group's cash balances
increased by GBP6.6 million to GBP14.0 million (2015: GBP7.4
million).
The carrying value of intangible assets at GBP12.0 million has
reduced from the GBP12.2 million at 31 March 2015, due to the
amortisation charge.
The net book value of property, plant and equipment increased by
GBP0.3 million to GBP19.9 million (2015: GBP19.6 million) after
capital investment of GBP1.8 million, including GBP1.2 million in
the Falkland Islands. This has been offset against a GBP1.3 million
depreciation charge in the year, a GBP0.1 million disposal of a JCB
in the Falklands, and GBP0.1 million of the hire fleet transferred
to stock and sold through Falklands 4x4.
The Group owns investment properties, comprising commercial and
residential properties in the Falkland Islands held for rental,
together with approximately 400 acres of land in and around
Stanley. This includes 18 acres for industrial development and 25
acres of prime mixed-use land. The Group owns 50 properties for
rental, including 40 investment properties, which are mainly
houses, in Stanley and ten mobile homes, which are rented to staff.
The number of properties, which all are held at depreciated cost,
is unchanged from the prior year. The net book value of the
investment properties and undeveloped land of GBP3.6 million (2015:
GBP3.7 million) has been reviewed by the Directors resident in the
Falkland Islands and at 31 March 2016 the fair value of this
property portfolio was estimated at GBP7.0 million (2015: GBP7.3
million), an uplift of GBP3.4 million on net book value.
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.
Deferred tax assets relating to future pension liabilities
decreased to GBP0.7 million (2015: GBP0.8 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 represent stock held for resale in
the Falkland Islands, increased by GBP0.8 million to GBP6.2 million
at 31 March 2016 (2015: GBP5.4 million). The increase largely
relates to stock held in the Falkland Islands.
Managing Director's Strategic Report (continued)
Trade and Other Receivables decreased by GBP0.5 million to
GBP4.9 million at 31 March 2016, due to the decreased activity and
improved debtor collection at Momart. Average debtor days
outstanding were 33.0 (2015: 36.0).
The Group's cash balances increased to GBP14.0 million (2015:
GBP7.4 million).
Bank borrowings increased from GBP0.7 million to GBP3.3 million
as long term loans were drawn down to fund the acquisition of
Harbour Spirit.
Outstanding finance lease liabilities totalled GBP5.1 million
(2015: GBP5.1 million). GBP4.9 million (2015: GBP4.9 million) of
the finance lease 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
GBP0.2 million (2015: GBP0.03 million).
Trade and other payables increased to GBP11.2 million from
GBP10.2 million at 31 March 2015, reflecting increased trading
activity.
At 31 March 2016, the liability due in respect of the Group's
defined benefit pension scheme in the Falkland Islands was GBP2.6
million (2015: GBP2.9 million). The decreased liability is due
principally to lower medium term interest rates used to discount
the scheme's future liabilities. The pension scheme in the
Falklands, 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 Group's deferred tax liabilities, excluding the pension
asset at 31 March 2016, were GBP2.1 million and increased by GBP0.1
million from the prior year (2015: GBP2.0 million). GBP1.9 million
of this balance arises on property, plant and equipment, and is
principally due to accelerated capital allowances on the new vessel
in PHFC 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
temporary difference arises, on which deferred tax is provided.
Net assets per share were 310 pence at 31 March 2016 (2015: 295
pence).
Managing Director's Strategic Report (continued)
Cash flows
Operating cash flow
Net cash flow from operating activities was GBP4.8 million
(2015: GBP6.4 million); a small decrease due to the lower level of
reductions in working capital in the current year.
The Group's Operating Cash Flow can be summarised as
follows:
Year ended 31 March 2016 2015 Change
GBPm GBPm GBPm
----------------------------------------------- ------ ------ -------
Underlying profit before tax 3.1 3.6 (0.5)
Depreciation 1.4 1.4 -
Amortisation of computer software 0.1 - 0.1
Net Interest payable 0.2 0.2 -
----------------------------------------------- ------ ------ -------
EBITDA 4.8 5.2 (0.4)
Share based payments 0.1 0.1 -
Decrease in working capital 0.5 2.1 (1.6)
Tax paid (0.3) (0.8) 0.5
Other (0.3) (0.2) (0.1)
----------------------------------------------- ------ ------ -------
Net cash inflow from operating activities 4.8 6.4 (1.6)
Financing and Investing Activities
Sale of FOGL shares 1.4 2.3 (0.9)
Less:
Dividends paid - (1.4) 1.4
Capital expenditure (1.9) (4.9) 3.0
Net bank interest paid (0.1) - (0.1)
Proceeds on sale of fixed assets 0.1 - 0.1
Net cash in from Treasury share movements 0.1 - 0.1
Loan repayments from joint venture 0.4 0.2 0.2
Bank and other loan repayments (0.8) (1.4) 0.6
Bank and Hire purchase loan draw down 3.1 0.8 2.3
Increase in hire purchase debtors (0.5) (0.3) (0.2)
----------------------------------------------- ------ ------ -------
Net cash outflow from financing and investing
activities 1.8 (4.7) 6.5
----------------------------------------------- ------ ------ -------
Net cash inflow 6.6 1.7 4.9
Cash balance b/fwd. 7.4 5.7 1.7
Cash balance c/fwd. 14.0 7.4 6.6
----------------------------------------------- ------ ------ -------
Managing Director's Strategic Report (continued)
Financing outflows
During the year the Group incurred GBP1.9 million of capital
expenditure (2015: GBP4.9 million); GBP1.2 million was invested in
Stanley, including GBP0.5 million on racking and general
preparation of the new warehouse and freezer facilities at Airport
Road, GBP0.3 million spend on tarmacking the new car park at
Crozier Place, which includes FIC's newly expanded Builders
Merchant, Home Builder, and GBP0.1 million spend on a new café,
with a soft play area within Home Living. In addition, GBP0.1
million was spent on replacement vehicles for the hire vehicle
fleet. At PHFC, GBP0.1 million was spent on the Portsea pontoon,
and GBP0.1 million was incurred to complete and commission Harbour
Spirit. At Momart, GBP0.2 million was spent on expanding the
storage areas, including the initial spend on the Unit 14 expansion
at Leyton, and GBP0.2 million was spent on the vehicle fleet.
Two further loans totalling GBP2.9 million, repayable over 10
years, were drawn down by PHFC to finance Harbour Spirit, which had
been purchased in the prior year. Scheduled loan repayments of
GBP0.8 million (2015: GBP1.4 million) were made during the year,
including GBP0.3 million of repayments to Gosport Council on the 50
year pontoon finance lease, GBP0.1 million of repayments on hire
purchase leases for trucks at Momart and GBP0.5 million of
repayments on the three PHFC loans.
John Foster
Managing Director
14 June 2016
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, and he sits on the board of Banque Havilland (Monaco)
SAM.
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 2016.
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
GBP2,222,000 (2015: GBP3,144,000). Basic earnings per share on
underlying profits were 19.2 pence (2015: 22.1 pence).
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 greater
appeal for existing and prospective investors and will
significantly increase 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, in line with the increased focus of
investment and long term growth, dividend payments have been
suspended and no dividend payments were made during the year.
During the prior year, to 31 March 2015, an interim dividend of
4.0p per share was paid in January 2015.
Principal activities
The business of the Group during the year ended 31 March 2016
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 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
2016.
Number of shares Percentage of shares
in issue
-------------------------------- ----------------- ---------------------
Blackfish Capital Management 2,815,180 22.6
-------------------------------- ----------------- ---------------------
Fidelity investments 1,099,114 8.8
-------------------------------- ----------------- ---------------------
Argos Argonaut Fund 499,636 4.0
-------------------------------- ----------------- ---------------------
Jerry Zucker Revocable Trust 465,000 3.7
-------------------------------- ----------------- ---------------------
Hargreaves Lansdown (Nominees) 411,226 3.3
-------------------------------- ----------------- ---------------------
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 2016 or 31 March 2015.
Charitable and political donations
Charitable donations made by the Group during the year amounted
to GBP19,229 (2015: GBP28,030), largely to local community
charities in Gosport and the Falkland Islands. There were no
political donations in the year (2015: 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.
Directors' Report (continued)
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 1 September 2016. 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.
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 2016 and in the preceding year
is as follows:
Salary Bonuses 2016 2015
GBP'000 GBP'000 Total Total
GBP'000 GBP'000
----------------- --------- --------- --------- ---------
David Hudd - - - 307
----------------- --------- --------- --------- ---------
John Foster 203 *35 238 263
----------------- --------- --------- --------- ---------
Mike Killingley 1 - 1 **35
----------------- --------- --------- --------- ---------
Jeremy Brade 30 - 30 30
----------------- --------- --------- --------- ---------
Edmund Rowland 65 - 65 28
----------------- --------- --------- --------- ---------
Total 299 35 334 663
----------------- --------- --------- --------- ---------
*The Managing Director's bonus for the year is split 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.
For the year ended 31 March 2016, John Foster has been awarded a
cash bonus of GBP35,000 and a further GBP35,000 of deferred shares,
to be issued on 17 June 2016. These deferred shares will be
provided at no cost to him in three equal tranches over the next
three years.
**Until date of resignation
None of the Directors of the Company receive any pension
contributions or benefit from any Group pension scheme.
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 2016, the share options of executive Directors
may be summarised as follows:
Date of grant Number of Exercise Exercisable Expiry date
options price from
J L Foster
--------------- ------------ --------- ------------ ------------
7 Aug 2007 27,517 GBP3.30 7 Aug 2010 6 Aug 2017
--------------- ------------ --------- ------------ ------------
15 Jul 2009 44,550 GBP2.90 15 Jul 2012 14 Jul 2019
--------------- ------------ --------- ------------ ------------
13 Aug 2012 76,700 GBP4.04 13 Aug 2015 12 Aug 2022
--------------- ------------ --------- ------------ ------------
10 June 2015 7,548 GBP0.00 10 Jun 2016 10 Jun 2019
--------------- ------------ --------- ------------ ------------
10 June 2015 7,547 GBP0.00 10 Jun 2017 10 Jun 2019
--------------- ------------ --------- ------------ ------------
10 June 2015 7,547 GBP0.00 10 Jun 2018 10 Jun 2019
--------------- ------------ --------- ------------ ------------
Total 171,409
--------------- ------------ --------- ------------ ------------
The mid-market price of the Company's shares on 31 March 2016
was 201.00 pence and the range in the year was 201.00 pence to
282.50 pence.
Directors' Report (continued)
The Directors' options extant at 31 March 2016 totalled 171,409
and represented 1.4% of the Company's issued share capital. The
351,848 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.
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 as at Ordinary shares
31 March 2016 as at
31 March 2015
---------------- ---------------------- ----------------
John Foster* *72,830 *61,867
---------------- ---------------------- ----------------
Jeremy Brade 15,000 15,000
---------------- ---------------------- ----------------
Edmund Rowland **2,815,180 **2,500,000
---------------- ---------------------- ----------------
*John Foster's shareholding above includes all Shares held in
the Company's share incentive plan in which he has 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 2,815.180 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 year ended 31 March
2016 the Company purchased GBP600 of matching shares 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,
Strategic Report, Directors' 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. Under that
law they have elected to prepare both the group and the parent
company financial statements in accordance with IFRSs as adopted by
the EU and applicable law. 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 Parent Company and of
their profit or loss for that period. In preparing each of the
Group and Parent 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 Parent
Company's transactions and disclose with reasonable accuracy at any
time the financial position of the Parent 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
14 June 2016
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 2016 set out on pages 27
to 74. 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 set out on page 25, 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 2016 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 matters 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.
Based solely on the work required to be undertaken in the course
of the audit of the financial statements and from reading the
Strategic report and the Directors' report:
-- we have not identified material misstatements in those reports; and.
-- in our opinion, those reports have been prepared in accordance with the Companies Act 2006.
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.
Craig Parkin (Senior Statutory Auditor)
For and on behalf of KPMG LLP, Statutory Auditor
Chartered Accountants
St Nicholas House
Park Row
Nottingham
NG1 6FQ
14 June 2016
Consolidated Income Statement
FOR THE YEARED 31 MARCH 2016
Notes Before Before
amortisation Amortisation amortisation Amortisation
& non-trading & non-trading & non-trading & non-trading
items items Total items items Total
2016 2016 2016 2015 2015 2015
GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000
------------------ --------------- --------------- --------- --------------- --------------- ---------
4 Revenue 38,996 - 38,996 38,560 - 38,560
Cost of sales (23,497) - (23,497) (22,927) - (22,927)
------------------ --------------- --------------- --------- --------------- --------------- ---------
Gross profit 15,499 - 15,499 15,633 - 15,633
Other
administrative
expenses (12,398) - (12,398) (12,050) - (12,050)
Restructuring
costs - (261) (261) - (234) (234)
Gain on sale of
FOGL
15 shares - 388 388 - 711 711
Gain on sale of
vessel - 60 60 - - -
Amortisation of
intangible
11 assets - (136) (136) - (142) (142)
Operating
expenses (12,398) 51 (12,347) (12,050) 335 (11,715)
Operating profit 3,101 51 3,152 3,583 335 3,918
Share of results
of
Joint Venture 200 (330) (130) 180 - 180
------------------ --------------- --------------- --------- --------------- --------------- ---------
Profit before net
financing costs 3,301 (279) 3,022 3,763 335 4,098
Finance income 233 - 233 187 - 187
Finance expense (456) - (456) (391) - (391)
------------------ --------------- --------------- --------- --------------- --------------- ---------
Net financing
8 costs (223) - (223) (204) - (204)
Profit / (loss)
before
tax from
continuing
operations 3,078 (279) 2,799 3,559 335 3,894
9 Taxation (699) 122 (577) (825) 75 (750)
Profit / (loss)
for
the year
attributable to
equity
holders of the
company 2,379 (157) 2,222 2,734 410 3,144
------------------ --------------- --------------- --------- --------------- --------------- ---------
Earnings per
10 share
Basic 19.2p 18.0p 22.1p 25.4p
Diluted 19.2p 17.9p 22.0p 25.3p
--------- ---------
Consolidated Statement of Comprehensive Income
FOR THE YEARED 31 MARCH 2016
2016 2015
GBP'000 GBP'000
------------------------------------------------------ -------- --------
Cash flow hedges - effective portion of changes
in fair value (82) -
Unrealised profit on the revaluation of shares
in Falkland Oil and Gas - 225
Reclassification to profit or loss on sale of shares
in Falkland Oil and Gas (492) (419)
------------------------------------------------------ -------- --------
Items that are or may be reclassified subsequently
to profit or loss (574) (194)
Decrease / (Increase) in the FIC defined benefit
pension liability 215 (412)
Movement on deferred tax asset relating to pension
schemes (56) 107
Items which will not ultimately be recycled to
the income statement 159 (305)
Other comprehensive expense (415) (499)
Profit for the year 2,222 3,144
------------------------------------------------------ -------- --------
Total comprehensive income 1,807 2,645
------------------------------------------------------ -------- --------
Consolidated Balance Sheet
AT 31 MARCH 2016
2016 2015
Notes GBP'000 GBP'000
-------------------------------------------- --------- ---------
Non-current assets
11 Intangible assets 12,037 12,226
12 Property, plant and equipment 19,930 19,621
13 Investment properties 3,632 3,693
15 Shares held in Falkland Oil and Gas Limited - 1,500
16 Investment in Joint venture 136 266
Loan to Joint venture - 378
17 Finance leases receivable 755 458
18 Deferred tax assets 687 750
Total non-current assets 37,177 38,892
Current assets
19 Inventories 6,241 5,391
20 Trade and other receivables 4,853 5,308
17 Finance leases receivable 810 647
21 Cash and cash equivalents 14,037 7,435
Total current assets 25,941 18,781
TOTAL ASSETS 63,118 57,673
Current liabilities
22 Interest-bearing loans and borrowings (546) (293)
Income tax payable (191) (27)
23 Trade and other payables (11,244) (10,214)
Total current liabilities (11,981) (10,534)
Non-current liabilities
22 Interest-bearing loans and borrowings (7,855) (5,580)
24 Employee benefits (2,644) (2,884)
18 Deferred tax liabilities (2,069) (1,987)
Total non-current liabilities (12,568) (10,451)
TOTAL LIABILITIES (24,549) (20,985)
Net assets 38,569 36,688
-------------------------------------------- --------- ---------
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 18,799 16,344
Hedging reserve (82) -
Financial assets fair value reserve - 492
Total equity 38,569 36,688
-------------------------------------------- --------- ---------
These financial statements were approved by the Board of
Directors on 14 June 2016 and were signed on its behalf by:
J L Foster
Director
Company Balance Sheet
AT 31 MARCH 2016
2016 2015
Notes GBP'000 GBP'000
---------------------------- -------- --------
Non-current assets
14 Investment in subsidiaries 28,164 28,249
20 Loans to subsidiaries 3,465 1,813
18 Deferred tax 9 6
Total non-current assets 31,638 30,068
Current assets
20 Trade and other receivables 15 12
Corporation tax receivable 46 27
21 Cash and cash equivalents 11,761 9,379
Total current assets 11,822 9,418
TOTAL ASSETS 43,460 39,486
Current liabilities
23 Trade and other payables (3,188) (562)
Total current liabilities (3,188) (562)
Net assets 40,272 38,924
---------------------------- -------- --------
26 Capital and reserves
Equity share capital 1,243 1,243
Share premium account 17,447 17,447
Other reserves 6,910 6,910
Hedging reserve (82) -
Retained earnings 14,754 13,324
Total equity 40,272 38,924
---------------------------- -------- --------
These financial statements were approved by the Board of
Directors on 14 June 2016 and were signed on its behalf by:
J L Foster
Director
Registered company number: 03416346
Consolidated Cash Flow Statement
FOR THE YEARED 31 MARCH 2016
2016 2015
GBP'000 GBP'000
--------------------------------------------------- -------- --------
Cash flows from operating activities
Profit for the year 2,222 3,144
Adjusted for:
(i) Non-cash items:
Depreciation 1,406 1,387
Depreciation of computer software 53 39
Amortisation 136 142
Gain on disposal of fixed assets (49) -
Share of Joint Venture loss, after impairment
provision 130 (180)
Amortisation of loan fees - 15
Interest cost on pension scheme liabilities 90 107
Equity-settled share-based payment expenses 61 90
--------------------------------------------------- -------- --------
Non-cash items adjustment 1,827 1,600
(ii) Other items:
Bank interest receivable (27) (15)
Bank interest payable 117 17
Finance lease interest payable 240 246
Gain on disposal of FOGL shares (388) (711)
Corporation and deferred tax expense 577 750
--------------------------------------------------- -------- --------
Other adjustments 519 287
Operating cash flow before changes in working
capital and provisions 4,568 5,031
Decrease in trade and other receivables 455 1,733
(Increase) / decrease in inventories (742) 1,406
Increase / (decrease) in trade and other payables 909 (879)
Decrease in provisions and employee benefits (115) (115)
--------------------------------------------------- -------- --------
Changes in working capital and provisions 507 2,145
Cash generated from operations 5,075 7,176
Corporation taxes paid (324) (792)
--------------------------------------------------- -------- --------
Net cash flow from operating activities 4,751 6,384
Cash flows from investing activities
Purchase of property, plant and equipment (1,854) (4,597)
Purchase of computer software - (132)
Proceeds from the disposal of property, plant
& equipment 141 86
Proceeds received from the sale of FOGL shares 1,396 2,287
Acquisition of a business - (215)
Loans to Joint Venture 378 151
Interest received 27 15
--------------------------------------------------- -------- --------
Net cash flow from investing activities 88 (2,405)
Consolidated Cash Flow Statement (continued)
FOR THE YEARED 31 MARCH 2016
2016 2015
GBP'000 GBP'000
-------- --------
Cash flow from financing activities
Increase in finance leases receivable (460) (260)
Repayment of secured loan (760) (1,391)
Bank loan drawn down 2,890 701
Interest paid (117) (17)
Hire purchase loan drawn down 158 132
Cash outflow on purchase of Treasury shares (681) -
Proceeds from sale of Treasury shares 733 -
Dividends paid - (1,424)
--------------------------------------------- ------- --------
Net cash flow from financing activities 1,763 (2,259)
Net increase in cash and cash equivalents 6,602 1,720
Cash and cash equivalents at start of year 7,435 5,715
Cash and cash equivalents at end of year 14,037 7,435
--------------------------------------------- ------- --------
Company Cash Flow Statement
FOR THE YEARED 31 MARCH 2016
2016 2015
GBP'000 GBP'000
----------------------------------------------------- -------- --------
Notes Cash flows from operating activities
Profit for the year 1,356 1,410
Adjusted for:
Bank interest receivable (25) (12)
Bank interest payable 5 10
Amortisation of loan fees - 15
Equity-settled share-based payment expenses 44 55
14 Impairment of investment in Erebus 102 790
Reversal of loan impairment due to loan repayment
in the year by Erebus - (1,309)
Corporation and deferred tax expense 41 (1)
----------------------------------------------------- -------- --------
Operating cash flow before changes in working
capital and provisions 1,523 958
(Increase) / decrease in trade and other receivables (3) 7
Decrease in trade and other payables (4) (16)
----------------------------------------------------- -------- --------
Changes in working capital and provisions (7) (9)
Cash generated from operations 1,516 949
Corporation taxes paid (59) (76)
----------------------------------------------------- -------- --------
Net cash flow from operating activities 1,457 873
Cash flow from financing activities
Repayment of inter-company borrowing 848 1,448
Repayment of secured loan - (800)
Interest received 25 12
Interest paid - (10)
Cash outflow on purchase of Treasury shares (681) -
Proceeds from sale of Treasury shares 733 -
Dividends paid - (1,424)
----------------------------------------------------- -------- --------
Net cash flow from financing activities 925 (774)
Net increase in cash and cash equivalents 2,382 99
Cash and cash equivalents at start of year 9,379 9,280
Cash and cash equivalents at end of year 11,761 9,379
----------------------------------------------------- -------- --------
Consolidated Statement of Changes in Shareholders' Equity
FOR THE YEARED 31 MARCH 2016
Financial
assets
Equity Share fair
share premium Other Retained value Hedge Total
capital account reserves earnings reserve reserve equity
GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000
Balance at 1 April 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 FOGL - - - - (419) - (419)
Change in fair value
of shares in FOGL - - - - 225 - 225
Re-measurement 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
Profit for the year - - - 2,222 - - 2,222
Share based payments - - - 61 - - 61
Cash flow hedges - effective
portion of changes in
fair value - - - - - (82) (82)
Transfer to the income
statement on sale of
shares in FOGL - - - - (492) - (492)
Re-measurement of the
defined benefit pension
liability, net of tax - - - 159 - - 159
Purchase of Treasury
shares - - - (720) - - (720)
Sale of Treasury shares - - - 733 - - 733
Balance at 31 March
2016 1,243 17,447 1,162 18,799 - (82) 38,569
------------------------------ --------- --------- ---------- ---------- ---------- --------- ---------
Company Statement of Changes in Shareholders' Equity
FOR THE YEARED 31 MARCH 2016
Equity Share
share premium Other Hedge Retained Total
capital account reserves Reserve earnings equity
GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000
Balance at 1 April 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
Profit for the year - - - - 1,356 1,356
Share based payments - - - - 61 61
Cash flow hedges - effective
portion of changes in
fair value - - - (82) - (82)
Purchase of Treasury shares - - - - (720) (720)
Sale of Treasury shares - - - - 733 733
Balance at 31 March 2016 1,243 17,447 6,910 (82) 14,754 40,272
---------------------------------- ---------- ---------- ---------- --------- ---------- ---------
A profit of GBP1,356,000 (2015: GBP1,410,000) 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 31.
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 was 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.
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 Falkland
Islands Holdings plc's 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.
1. Accounting policies (continued)
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 impaired 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 2016 comprise:
-- The impairment provision made against certain plant and machinery owned by SAtCO
-- Restructuring costs
-- The GBP60,000 gain on the sale of the Portsmouth Queen ferry
-- The gain on the sale of 5,000,000 Falkland Oil and Gas Limited shares; and
-- the amortisation of intangible assets
In 2015 these comprised:
-- Restructuring costs
-- The gain on the sale of 7,825,000 Falkland Oil and Gas Limited shares; 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. The estimated useful lives are as follows:
Freehold buildings 20 - 50 years
Long leasehold land and buildings 50 years
Vehicles, plant and equipment 4 - 10 years
Ships 15 - 30 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 joint venture partners' 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 2013.
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 was stated at
fair value, with any resultant gain or loss recognised in other
comprehensive income and presented in the fair value reserve in
equity, except for impairment losses. When these items were
derecognised, the cumulative gain or loss previously recognised
directly in equity was 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. This is applied only to significant long term projects
spanning the year end, however there were no such contracts at the
current or prior year end. 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. Re-measurements 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
Rental 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.
Rental income is received from investment property rentals in
the Falklands. This income from operating leases is 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. None of these lease agreements exceed a twelve
month period.
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.
Cash-flow hedges
The effective portions of changes in the fair values of
derivatives that are designated and qualify as cash-flow hedges are
recognised in equity. The gain or loss to any ineffective portion
is recognised immediately in the income statement. Amounts
accumulated in the hedging reserve are recycled to the income
statement in the periods when the hedged items will affect profit
or less.
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 2016
did not have any material impact on the consolidated financial
statements:
Amendments and revisions to IFRSs Effective date
Periods beginning
on or after:
Clarification of Acceptable Methods of Depreciation
and Amortisation - Amendments to IAS 16 and IAS 38 1 January 2016
Equity Method in Separate Financial Statements - Amendments
to IAS 1 January 2016
Recognition of Deferred Tax Assets for Unrealised Losses
- Amendments to IAS 12 1 January 2017
IFRS 9 Financial Instruments and additions to IFRS
9 (issued October 2010) Not yet endorsed
Accounting for Acquisitions of Interests in Joint Operations
- Amendments to IFRS 11 1 January 2016
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
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)
2016
General Ferry Art logistics
trading Services and storage
(Falklands) (Portsmouth) (UK) Unallocated Total
GBP'000 GBP'000 GBP'000 GBP'000 GBP'000
Revenue 18,495 4,244 16,257 - 38,996
------------------------------- ------------ ------------- -------------- ------------ ---------
Segment operating profit
before tax, amortisation
& non-trading items 1,613 1,028 460 - 3,101
Restructuring costs (178) - (83) - (261)
Gain on sale of vessel - 60 - - 60
Gain on the sale of 5,000,000
FOGL shares - - - 388 388
Amortisation - - (136) - (136)
------------------------------- ------------ ------------- -------------- ------------ ---------
Segment operating profit 1,435 1,088 241 388 3,152
Share of result of joint
venture 200 - - - 200
Impairment of Joint Venture
fixed assets (330) - - - (330)
Profit before net financing
costs 1,305 1,088 241 388 3,022
Interest income 223 3 7 - 233
Interest expense (99) (347) (10) - (456)
Segment profit before
tax 1,429 744 238 388 2,799
------------------------------- ------------ ------------- -------------- ------------ ---------
Assets and liabilities
Segment assets 33,150 16,323 13,630 15 63,118
Segment liabilities (10,821) (9,632) (3,463) (633) (24,549)
Segment net assets 22,329 6,691 10,167 (618) 38,569
------------------------------- ------------ ------------- -------------- ------------ ---------
Other segment information
Capital expenditure:
Property, plant and
equipment 1,213 223 402 - 1,838
Investment properties 16 - - - 16
Total Capital Expenditure 1,229 226 402 - 1,854
------------------------------- ------------ ------------- -------------- ------------ ---------
Depreciation:
Property, plant and
equipment 581 440 314 - 1,335
Investment properties 71 - - - 71
Computer software - - 53 - 53
Total Depreciation 652 440 367 - 1,459
------------------------------- ------------ ------------- -------------- ------------ ---------
Amortisation of intangible
assets on acquisition
of Momart - - 136 - 136
------------------------------- ------------ ------------- -------------- ------------ ---------
Underlying profit before
tax
Segment operating profit 1,613 1,028 460 - 3,101
Share of results of joint
venture 200 - - - 200
Underlying profit before
net financing costs 1,813 1,028 460 - 3,301
Interest income 223 3 7 - 233
Interest expense (99) (347) (10) - (456)
Underlying profit before
tax 1,937 684 457 - 3,078
------------------------------- ------------ ------------- -------------- ------------ ---------
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)
The GBP15,000 (2015: GBP1,512,000) unallocated assets above
include GBP15,000 (2015: GBP12,000) of prepayments held in Falkland
Islands Holdings plc. At 31 March 2015, the unallocated assets also
included the Group's investment in Falkland Oil and Gas of
GBP1,500,000.
The GBP633,000 (2015: GBP519,000) 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:
2016
United Falkland
Kingdom Islands Total
GBP'000 GBP'000 GBP'000
Revenue (by source) 20,501 18,495 38,996
------------------------------------------------ --------- --------- --------
Assets and Liabilities
Non-current segment assets, excluding deferred
tax 24,374 12,116 36,490
------------------------------------------------ --------- --------- --------
Capital expenditure 625 1,229 1,854
------------------------------------------------ --------- --------- --------
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
------------------------------------------------ --------- --------- --------
4. Revenue
2016 2015
GBP'000 GBP'000
Sale of goods 12,653 12,584
Rendering of services 26,343 25,976
------------------------ -------- --------
Total revenue 38,996 38,560
------------------------ -------- --------
5. Non-trading items and amortisation of intangible assets
acquired on purchase of Momart
2016 2015
GBP'000 GBP'000
Profit before tax as reported 2,799 3,894
Reverse non-trading items:
Restructuring costs 261 234
Proceeds on the sale of Portsmouth Queen (60) -
Impairment of the joint venture fixed assets 330 -
Gain on the sale of 5,000,000 FOGL shares (388) (711)
Amortisation charge on Momart intangible
assets acquired 136 142
----------------------------------------------- -------- --------
Total non-trading items and amortisation 279 (335)
----------------------------------------------- -------- --------
Underlying profit before tax 3,078 3,559
----------------------------------------------- -------- --------
Tax on non-trading items
In the year ended 31 March 2016, a GBP122,000 tax credit has
been included in the Group's income statement in respect of the
GBP279,000 non-trading items, which includes a GBP71,000 deferred
tax credit on the intangible assets purchased in Momart in 2008,
and the GBP63,000 income tax deductible on the GBP261,000
restructuring costs, offset against the GBP12,000 income tax
payable on the profit arising on the sale of Portsmouth Queen. No
tax charge has arisen on the GBP388,000 (2015: GBP711,000) gain on
the sale of shares in Falkland Oil and Gas Limited. In the year
ended 31 March 2015 the GBP75,000 tax credit arose on the GBP28,000
credit on the amortisation of the intangible assets acquired on the
purchase of Momart in 2008, and the tax deductibility Board
restructuring costs.
6. Expenses and auditor's remuneration
The following expenses / (incomes)
have been included in the profit
and loss Group Company
2016 2015 2016 2015
GBP'000 GBP'000 GBP'000 GBP'000
Direct operating expenses of rental
properties 142 142 - -
Depreciation 1,406 1,387 - -
Depreciation of computer software 53 39 - -
Amortisation of intangible assets 136 142 - -
Foreign currency differences (2) (60) - -
Impairment loss on trade and other
receivables 36 16 - -
Cost of inventories recognised
as an expense 9,884 9,853 - -
Operating lease payments 921 864 - -
------------------------------------- -------- -------- -------- --------
Auditor's remuneration 2016 2015
GBP'000 GBP'000
Audit of these financial statements 30 30
Other taxation services 4 4
Audit of subsidiaries' financial statements pursuant
to legislation 62 62
Other assurance services 20 -
------------------------------------------------------ -------- --------
Total auditor's remuneration 116 96
------------------------------------------------------ -------- --------
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
2016 2015 2016 2015
GBP'000 GBP'000 GBP'000 GBP'000
Ferry services 38 40 - -
Falkland Islands; in Stanley 172 180 - -
in UK 5 5 - -
Art logistics & storage 129 131 - -
Head office 4 6 4 6
Total average staff numbers 348 362 4 6
---------------------------------- ---------- ---------- ---------- ----------
The aggregate payroll cost of these persons was as follows:
Group Company
2016 2015 2016 2015
GBP'000 GBP'000 GBP'000 GBP'000
Wages and salaries 10,804 11,307 460 761
Share-based payments (see note
25) 61 90 44 55
Social security costs 916 901 49 72
Contributions to defined contribution
plans 301 274 9 9
Total employment costs 12,082 12,572 562 897
--------------------------------------- -------- -------- -------- --------
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
2016 2015
GBP'000 GBP'000
Bank interest receivable 27 15
Finance lease interest receivable 206 172
Total financial income 233 187
------------------------------------- -------- --------
2016 2015
GBP'000 GBP'000
Interest payable on bank loans (117) (17)
Net interest cost on the FIC defined benefit pension
scheme liability (90) (107)
Amortisation of loan fees - (15)
Finance lease interest payable (240) (246)
Unwinding of deferred consideration payable (9) (6)
Total finance expense (456) (391)
-------------------------------------------------------- -------- --------
9. Taxation
Recognised in the income statement
2016 2015
GBP'000 GBP'000
Current tax expense
Current year 370 323
Adjustments for prior years 118 77
----------------------------------------- -------- --------
Current tax expense 488 400
Deferred tax expense
Origination and reversal of temporary
differences 230 412
Reduction in tax rate (119) -
Adjustments for prior years (22) (62)
Deferred tax expense 89 350
----------------------------------------- -------- --------
Total tax expense 577 750
----------------------------------------- -------- --------
Reconciliation of the effective tax rate
2016 2015
GBP'000 GBP'000
Profit on ordinary activities before tax 2,799 3,894
-------------------------------------------- -------- --------
Tax using the UK corporation tax rate of
20% (2015: 21%) 560 818
Expenses not deductible for tax purposes 58 124
Gain on disposal of investment (78) (149)
Marginal relief - (1)
Effect of higher tax rate overseas 23 13
Difference in the rate of deferred tax (108) (32)
Income from joint ventures 26 (38)
Adjustments to tax charge in respect of
previous periods 96 15
Total tax expense 577 750
-------------------------------------------- -------- --------
Tax recognised directly in other comprehensive income
2016 2015
GBP'000 GBP'000
Deferred tax (expense) / credit recognised directly
in other comprehensive income (56) 107
------------------------------------------------------- -------- --------
Reductions in the UK corporation tax rate from 23% to 21%
(effective from 1 April 2014) and to 20% (effective from 1 April
2015) were substantively enacted on 2 July 2013. Further reductions
to 19% (effective from 1 April 2017) and to 18% (effective 1 April
2020) were substantively enacted on 26 October 2015. These planned
changes in the future rates of UK corporation tax will reduce the
company's future current tax charge accordingly. The deferred tax
assets and liabilities in the United Kingdom at 31 March 2016 have
been calculated based on the rates substantively enacted at the
balance sheet date.
An additional reduction to 17% (effective from 1 April 2020),
was announced in the Budget on 16 March 2016. It has not yet been
possible to quantify the full anticipated effect of the announced
reductions, although this will further reduce the Group's deferred
tax liabilities and the Company's deferred tax asset
accordingly.
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.
2016 2015
GBP'000 GBP'000
Profit on ordinary activities after taxation 2,222 3,144
---------------------------------------------- -------- --------
2016 2015
Number Number
Weighted average number of shares in issue 12,431,623 12,431,623
Less: shares held in Treasury (31,725) (18,381)
Less: shares held under the ESOP (28,016) (28,016)
------------------------------------------------------ ----------- -----------
Average number of shares in issue excluding the ESOP
and shares held in Treasury 12,371,882 12,385,226
Maximum dilution with regards to share options 11,830 60,871
Diluted weighted average number of shares 12,383,712 12,446,097
------------------------------------------------------ ----------- -----------
2016 2015
Basic earnings per share 18.0p 25.4p
Diluted earnings per share 17.9p 25.3p
---------------------------- ------ ------
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 2016 2015
GBP'000 GBP'000
Underlying profit before tax (see note 5) 3,078 3,559
Taxation (699) (825)
-------------------------------------------------------- ----------- -----------
Underlying profit after tax 2,379 2,734
Effective tax rate 22.7% 23.2%
Weighted average number of shares in issue excluding
Treasury shares and the ESOP (from above) 12,371,882 12,385,226
Diluted weighted average number of shares (from above) 12,383,712 12,446,097
Basic earnings per share on underlying profit 19.2p 22.1p
Diluted earnings per share on underlying profit 19.2p 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 2014 347 1,882 2,823 72 11,539 16,663
Goodwill arising on
acquisition of a business - - - - 37 37
Additions 132 - - - - 132
Disposals - (608) - (72) - (680)
---------------------------- ---------- ---------------- -------- ------------ --------- --------
At 31 March 2015 and
2016 479 1,274 2,823 - 11,576 16,152
Accumulated amortisation:
At 1 April 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
Depreciation of computer
software 53 - - - - 53
Amortisation of other
intangibles for the
year - 136 - - - 136
At 31 March 2016 209 1,138 785 - 1,983 4,115
Net book value:
At 1 April 2014 230 414 2,038 - 9,556 12,238
---------------------------- ---------- ---------------- -------- ------------ --------- --------
At 31 March 2015 323 272 2,038 - 9,593 12,226
---------------------------- ---------- ---------------- -------- ------------ --------- --------
At 31 March 2016 270 136 2,038 - 9,593 12,037
---------------------------- ---------- ---------------- -------- ------------ --------- --------
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.
The Momart brand is considered to be of future economic value to
the Group with an estimated indefinite useful economic 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:
Ferry
Art logistics Services Falkland
and storage (Ports-mouth) Islands Total
GBP'000 GBP'000 GBP'000 GBP'000
At 1 April 2014 5,577 3,979 - 9,556
-------------------- -------------- --------------- --------- --------
At 31 March 2015 5,577 3,979 37 9,593
-------------------- -------------- --------------- --------- --------
At 31 March 2016 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 (2015: 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.
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 13.5% (2015: 13.7%), and the cash flows of the
Ferry Services have been discounted using a pre-tax discount rate
of 12.4% (2015: 12.4%). 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 (2015:
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 (2015: nil). The key
assumptions made in the estimation of future cash flows are in
relation to revenue. Sensitivity analysis as at 31 March 2016 has
indicated that should the discount rate move by 0.3% this would
result in an impairment charge being recognised in the financial
statements in respect of the investment in Momart International
Limited.
12. Property, plant and equipment
Group
Freehold Long leasehold Vehicles,
Land & Land and plant and
buildings buildings Ships equipment Total
GBP'000 GBP'000 GBP'000 GBP'000 GBP'000
Cost:
At 1 April 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 170 - - 15 185
Disposals (9) - - (585) (594)
--------------------------- ----------- --------------- -------- ----------- --------
At 31 March 2015 6,944 7,095 6,702 8,613 29,354
Additions in year 948 161 109 620 1,838
Transfer to stock - - - (202) (202)
Disposals (50) (19) - (1,225) (1,294)
At 31 March 2016 7,842 7,237 6,811 7,806 29,696
--------------------------- ----------- --------------- -------- ----------- --------
Accumulated depreciation:
At 1 April 2014 1,719 865 1,232 5,249 9,065
Charge for the year 119 202 146 709 1,176
Disposals (9) - - (499) (508)
--------------------------- ----------- --------------- -------- ----------- --------
At 1 April 2015 1,829 1,067 1,378 5,459 9,733
Charge for the year 152 231 229 723 1,335
Transfer to stock - - - (94) (94)
Disposals (50) (16) - (1,142) (1,208)
--------------------------- ----------- --------------- -------- ----------- --------
At 31 March 2016 1,931 1,282 1,607 4,946 9,766
Net book value:
At 1 April 2014 3,821 5,750 4,126 2,912 16,609
--------------------------- ----------- --------------- -------- ----------- --------
At 31 March 2015 5,115 6,028 5,324 3,154 19,621
--------------------------- ----------- --------------- -------- ----------- --------
At 31 March 2016 5,911 5,955 5,204 2,860 19,930
--------------------------- ----------- --------------- -------- ----------- --------
The Company has no tangible fixed assets.
At 31 March 2016 the net carrying amount of leased long
leasehold land and buildings and vehicles, plant and equipment was
GBP4,481,000 and GBP532,000 for the Gosport Pontoon and trucks at
Momart respectively, (2015: GBP4,584,000 and GBP328,000). During
the year ending 31 March 2016, Momart acquired two sprinter vans
and a truck on hire purchase, which cost GBP177,000 and were funded
by GBP158,000 of finance leases. During the year ending 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.
At 31 March 2016, the group had entered into contractual
commitments of GBP412,000, including GBP345,000 for the Momart
Storage facility expansion, GBP32,000 for a truck at Momart and
GBP35,000 for the pontoon refurbishment at Portsea. At 31 March
2015, the Group had capital commitments totalling GBP141,000 for
trucks at Momart.
At 31 March 2016, GBP79,000 has been included within long
leasehold properties in respect of the construction of the storage
facilities for Momart. At 31 March 2015, GBP1,273,000 was included
within Freehold properties above in respect of the new warehouse
under construction in the Falklands, and GBP79,000 was included
within plant and machinery of assets under construction for ticket
vending machines for the Ferry.
13. Investment properties
Group
Residential
and commercial Freehold
property land Total
GBP'000 GBP'000 GBP'000
Cost:
At 1 April 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
Additions in year 16 - 16
Disposals (9) - (9)
-------------------------------------- ---------------- --------- --------
At 31 March 2016 3,467 723 4,190
-------------------------------------- ---------------- --------- --------
Accumulated depreciation:
At 1 April 2014 279 - 279
Charge for the year 211 - 211
-------------------------------------- ---------------- --------- --------
At 31 March 2015 490 - 490
Disposals (3) (3)
Charge for the year 71 - 71
At 31 March 2016 558 - 558
-------------------------------------- ---------------- --------- --------
Net book value:
At 1 April 2014 2,623 773 3,396
-------------------------------------- ---------------- --------- --------
At 31 March 2015 2,970 723 3,693
-------------------------------------- ---------------- --------- --------
At 31 March 2016 2,909 723 3,632
-------------------------------------- ---------------- --------- --------
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. 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 2016 the fair value of this property portfolio was estimated
at GBP7.0 million (31 March 2015: GBP7.3 million) including
development land valued at GBP2.2 million (2015: GBP2.2
million).
During the year to 31 March 2016, the Group received rental
income of GBP565,000 (2015: GBP355,000) on these properties and
from the ten mobile homes rented to staff, which are held in long
leasehold property.
At 31 March 2016 and 2015 no investment properties were under
construction.
The Company does not own any investment properties.
14. Investment in subsidiaries
Country of Class of shares Ownership Ownership
incorporation held at at
31 March 31 March
2016 2015
The Falkland Islands Company Ordinary shares
Limited UK of GBP1 100% 100%
Preference shares
of GBP10 100% 100%
The Falkland Islands Trading Ordinary shares
Company Limited UK of GBP1 100% 100%
Falkland Islands Shipping Falkland Ordinary shares
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%
Ordinary shares
Momart International 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
2016 2015
GBP'000 GBP'000
At 1 April 2015 28,249 29,004
Impairment of investment in Erebus (102) (790)
Cost of share based payments capitalised
into subsidiaries 17 35
At 31 March 2016 28,164 28,249
--------------------------------------------- -------- --------
The Company's investment in Erebus Limited comprised 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 2016, this investment has been impaired by
GBP102,000 (2015: GBP790,000) due to the disposal of the 5,000,000
shares in Falkland Oil and Gas, and the resulting fall in the
investment.
15. Shares held in Falkland Oil and Gas Limited
In April 2015, the Group's residual holding of 5,000,000 FOGL
shares was sold for proceeds of GBP1.4 million, generating a profit
of GBP0.4 million for the Group.
2015
Fair value of shares held in Falkland Oil
and Gas Limited GBP'000 1,500
Falkland Oil and Gas Limited share price
at 31 March 30.0p
Shareholding at 31 March (number of shares) 5,000,000
Group interest in Falkland Oil and Gas Limited 0.9%
Historic cost of shareholding to the Group
(GBP'000) 1,008
16. Investment in Joint Venture
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 were 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. During the year ended 31 March 2016, an
impairment provision has been made against certain plant and
machinery owned by SAtCO as noted in the Managing Director's
Strategic Report. The net assets of SAtCO following the impairment
are shown below:
Joint Venture's balance sheet 2016 2015
GBP'000 GBP'000
Fixed assets - 962
Current assets 1,269 1,020
Liabilities due in less than one year (470) (390)
Liabilities due in greater than one year (527) (1,060)
--------------------------------------------- -------- --------
Net assets of SAtCO 272 532
--------------------------------------------- -------- --------
Group share of net assets 136 266
--------------------------------------------- -------- --------
2016 Before 2016 2016 After
Joint Venture's results Impairment Impairment Impairment 2015
GBP'000 GBP'000 GBP'000 GBP'000
Revenue 616 - 616 591
Cost of sales (95) - (95) (95)
Administrative expenses (11) - (11) (10)
-------------------------------- ------------ ------------ ------------ --------
Operating profit for the year 510 - 510 486
Impairment - (866) (866) -
-------------------------------- ------------ ------------ ------------ --------
Profit before taxation 510 (866) (356) 486
Taxation (110) 206 96 (126)
-------------------------------- ------------ ------------ ------------ --------
Joint Venture retained profit
/ (loss) for the year 400 (660) (260) 360
-------------------------------- ------------ ------------ ------------ --------
Group share of retained profit
/ (loss) for the year 200 (330) (130) 180
-------------------------------- ------------ ------------ ------------ --------
There were no recognised gains or losses, other than the profits
disclosed above for the year ended 31 March 2016 (2015: none).
GBP95,000 of depreciation was charged in the year ended 31 March
2016 (2015: GBP95.000).
The current assets balances above include GBP512,000 of cash
(2015: GBP425,000). 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 GBP527,000 (2015:
GBP907,000).
SAtCO had no contingent liabilities or capital commitments as at
31 March 2016 or 31 March 2015 and the Group had no contingent
liabilities or commitments in respect of its joint venture at 31
March 2016 or 31 March 2015.
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
2016 2015
GBP'000 GBP'000
Non-Current : Finance Lease debtors due after
more than one year 755 458
Current : Finance lease debtors due within
one year 810 647
Total Finance Lease debtors 1,565 1,105
-------------------------------------------------- -------- --------
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 GBP133,000 (2015:
GBP110,000).
The cost of assets acquired for the purpose of letting under
hire purchase agreements by the Group during the year amounted to
GBP1,316,000 (2015: GBP881,000).
The aggregate rentals receivable during the year in respect of
hire purchase agreements were GBP1,029,000 (2015: GBP793,000).
Group
2016 2015
GBP'000 GBP'000
Gross investment in hire purchase leases 1,698 1,215
------------------------------------------------- -------- --------
Present value of future lease payments due:
Within one year 810 647
Within two to five years 755 458
Total present value of future lease payments 1,565 1,105
------------------------------------------------- -------- --------
18. Deferred tax assets and liabilities
Recognised deferred tax assets and (liabilities) Group
2016 2015
GBP'000 GBP'000
Property, plant & equipment (1,865) (1,669)
Intangible assets (391) (462)
Inventories 28 15
Other financial liabilities 39 50
Share-based payments - 10
Tax losses 120 69
----------------------------------------------------- -------- --------
Total net deferred tax liabilities (2,069) (1,987)
Deferred tax asset arising on the defined
benefit pension liabilities 687 750
----------------------------------------------------- -------- --------
Net tax liabilities (1,382) (1,237)
----------------------------------------------------- -------- --------
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
2016 2015
GBP'000 GBP'000
Other temporary differences 9 6
-------------------------------- -------- --------
Net tax asset 9 6
-------------------------------- -------- --------
Movement in deferred tax assets /
(liabilities) in the year: Group
1 April Recognised Recognised 31 March
2015 in income in equity 2016
GBP'000 GBP'000 GBP'000 GBP'000
Property, plant & equipment (1,669) (196) - (1,865)
Intangible assets (462) 71 - (391)
Inventories 15 13 - 28
Other financial liabilities 50 (11) - 39
Share-based payments 10 (10) - -
Tax losses 69 51 120
Pension 750 (7) (56) 687
Deferred tax movements (1,237) (89) (56) (1,382)
----------------------------------- -------- ----------- ----------- ---------
Unrecognised deferred tax assets
Deferred tax assets of GBP113,000 (2015: 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 asset in
the year: Company
1 April Recognised Recognised 31 March
2015 in income in equity 2016
GBP'000 GBP'000 GBP'000 GBP'000
Other temporary difference 6 3 - 9
Deferred tax asset movements 6 3 - 9
----------------------------------- -------- ----------- ----------- ---------
Movement in deferred tax assets /
(liabilities) in the prior 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)
----------------------------------- -------- ----------- ----------- ---------
18. Deferred tax assets and liabilities (continued)
Movement in deferred tax asset in
the prior 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
----------------------------------- -------- ----------- ----------- ---------
19. Inventories
Group
2016 2015
GBP'000 GBP'000
Work in progress 912 715
Goods in transit 606 556
Goods for resale 4,723 4,120
-------- --------
Total Inventories 6,241 5,391
---------------------- -------- --------
Goods in transit are retail goods in transit to the Falkland
Islands.
The Company has no inventories.
20. Trade and other receivables
Company
2016 2015
GBP'000 GBP'000
Non-current
Amount owed by subsidiary undertakings 3,465 1,813
------------------------------------------- -------- --------
Group Company
2016 2015 2016 2015
GBP'000 GBP'000 GBP'000 GBP'000
Current
Trade and other receivables 3,920 4,512 - -
Prepayments and accrued income 933 796 15 12
Total trade and other receivables 4,853 5,308 15 12
------------------------------------- -------- -------- -------- --------
21. Cash and cash equivalents
Group Company
2016 2015 2016 2015
GBP'000 GBP'000 GBP'000 GBP'000
Cash and other cash equivalents in
the balance sheet 14,037 7,435 11,761 9,379
-------------------------------------- -------- -------- -------- --------
22. Interest-bearing loans and borrowings
This note provides information about the contractual terms of
the Group's interest bearing loans and borrowings, which are stated
at amortised cost. For more information regarding the maturity of
the interest-bearing loans and lease liabilities and about the
Group and Company's exposure to interest rate and foreign currency
risk, see note 27.
Group
2016 2015
GBP'000 GBP'000
Non-current liabilities
Secured bank loans 2,863 598
Lease liabilities 4,992 4,982
Total non-current interest bearing
loans and lease liabilities 7,855 5,580
------------------------------------------------ -------- --------
Current liabilities
Secured bank loans 401 137
Lease liabilities 145 156
------------------------------------------------ -------- --------
Total current interest bearing loans
and lease liabilities 546 293
------------------------------------------------ -------- --------
Total liabilities
Secured bank loans 3,264 735
Lease liabilities *5,137 5,138
Total interest bearing loans and lease
liabilities 8,401 5,873
------------------------------------------------ -------- --------
Lease liabilities
Future minimum Interest Present value of
lease payments minimum lease payments
2016 2015 2016 2015 2016 2015
GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000
Less than one year 384 395 239 239 145 156
Between one and two
years 333 350 233 233 100 117
Between two and five
years 914 852 678 680 236 172
More than five years 10,465 10,725 5,809 6,032 4,656 4,693
---------------------- -------- -------- -------- -------- ------------ ------------
Total 12,096 12,322 6,959 7,184 *5,137 5,138
---------------------- -------- -------- -------- -------- ------------ ------------
Net cash
Group Company
2016 2015 2016 2015
GBP'000 GBP'000 GBP'000 GBP'000
Cash balances (see note 21) 14,037 7,435 11,761 9,379
less: Total interest-bearing loans
and borrowings *(8,401) (5,873) - -
Net cash 5,636 1,562 11,761 9,379
-------------------------------------- --------- -------- -------- --------
*Included within lease liabilities is GBP4,828,000 (2015:
GBP4,858,000) in respect of the long term lease liability for the
Gosport pontoon, with quarterly payments of GBP65,000 payable to
Gosport Borough Council over the next forty-five years until
2061.
23. Trade and other payables
Group Company
2016 2015 2016 2015
GBP'000 GBP'000 GBP'000 GBP'000
Current
Trade payables 6,612 5,398 - -
Amounts owed to subsidiary undertakings - - 2,500 -
Other creditors, including taxation
and social security 1,482 1,368 134 109
Interest rate swap liability 87 - 87 -
Accruals and deferred income 3,063 3,448 467 453
Total trade and other payables 11,244 10,214 3,188 562
------------------------------------------- -------- -------- -------- --------
24. Employee benefits: pension plans
The Group operates three defined contribution pension schemes.
In addition, it also operates one unfunded defined benefit pension
scheme in the Falkland Islands, which has been closed to new
members and to future accrual. During the year ended 31 March 2016,
18 pensioners (2015: 19) received benefits from this scheme, and
there are three deferred members at 31 March 2016 (2015: three).
The weighted average duration of the expected benefit payments from
the Scheme is around 16 years (2015: 16 years).
Defined contribution schemes
The pension cost charge for the year represents contributions
payable by the Group to the schemes and amounted to GBP301,000
(2015: GBP274,000). The Group anticipates paying contributions
amounting to GBP284,000 during the year ending 31 March 2016. There
were outstanding contributions of GBP33,000 (2015: GBP75,000) due
to pension schemes at 31 March 2016.
Defined benefit pension schemes
A summary of the fair value of the net pension scheme deficit is
set out below:
Group
2016 2015
GBP'000 GBP'000
Pension scheme deficit:
The Falkland Islands Company Limited Scheme (2,644) (2,884)
Deferred tax asset 687 750
-------- --------
Net pension scheme deficit (1,957) (2,134)
------------------------------------------------ -------- --------
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 2016, 2015,
2014, 2013, and 2012 were prepared by a qualified independent
actuary, Lane Clark and Peacock LLP. The major assumptions used in
the valuation were:
2016 2015
Rate of increase in salaries 2.3% 2.3%
Rate of increase in pensions in payment and
deferred pensions 3.0% 3.0%
Discount rate applied to scheme liabilities 3.4% 3.2%
Inflation assumption 3.1% 3.0%
Average longevity at age 65 for male current
and deferred pensioners (years) at accounting
date 22.4 22.6
Average longevity at age 65 for male current
and deferred pensioners (years) 20 years
after accounting date 24.6 24.7
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 2016 would
have increased / (decreased) as a result of a change in the
respective assumptions by 0.1%
Effect on obligation
2016 2015
GBP'000 GBP'000
Discount rate +/- 0.1% 41 46
Inflation assumption +/- 0.1% (17) (9)
Life expectancy +/- one year (111) (126)
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
2016 2015 2014 2013 2012
GBP'000 GBP'000 GBP'000 GBP'000 GBP'000
Present value of scheme
liabilities (2,644) (2,884) (2,480) (2,584) (2,411)
Related deferred tax assets 687 750 645 671 579
----------------------------- -------- -------- -------- -------- --------
Net pension liability (1,957) (2,134) (1,835) (1,913) (1,832)
----------------------------- -------- -------- -------- -------- --------
Movement in deficit during the year:
2016 2015
GBP'000 GBP'000
Deficit in scheme at beginning of the year (2,884) (2,480)
Pensions paid 115 115
Other finance cost (90) (107)
Re-measurement of the defined benefit pension
liability 215 (412)
-------------------------------------------------- -------- --------
Deficit in scheme at the end of the year (2,644) (2,884)
-------------------------------------------------- -------- --------
Analysis of amounts included in other finance
costs 2016 2015
GBP'000 GBP'000
Interest on pension scheme liabilities (90) (107)
-------------------------------------------------- -------- --------
24. Employee benefits: pension plans (continued)
Analysis of amounts recognised in statement of comprehensive
income: 2016 2015
GBP'000 GBP'000
Experience gains arising on scheme liabilities 26 76
Changes in assumptions underlying the present value
of scheme liabilities 189 (488)
-------------------------------------------------------------- -------- --------
Re-measurement of the defined benefit pension liability 215 (412)
-------------------------------------------------------------- -------- --------
History of experience gains and losses:
2016 2015 2014 2013 2012
Experience gains / (losses) arising on
scheme liabilities:
Amount (GBP'000) 26 76 20 (34) (30)
Percentage of year end present value of
scheme liabilities (1.0%) (2.6%) (0.8%) 1.3% 1.2%
Total amount recognised in statement of
comprehensive income:
Amount (GBP'000) 215 (412) 135 (173) (289)
Percentage of year end present value of
scheme liabilities (8.1%) 14.3% (5.4%) 6.7% 12.0%
Payment to pensioners 115 115 122 111 98
25. Employee benefits: share based payments
The following options were outstanding at 31 March 2016:
Share price Total
Date of Number Exercise at grant Fair value fair Earliest Latest
Issue Price date per share value Exercise Exercise
pence pence pence GBP date date
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 14 Jul
09 44,550 290.0 290.0 72.0 32,076 12 19
15 Jul 15 Jul 31 Jan
09 10,000 290.0 290.0 72.0 7,200 12 17
9 Dec 9 Dec 8 Dec
09 15,500 390.0 397.5 145.0 22,475 12 19
21 Dec 21 Dec 20 Dec
10 33,500 342.5 337.5 124.0 41,540 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 30 Apr
11 10,017 302.5 303.5 94.0 9,416 14 16
27 Jun 27 Jun 26 Jun
11 8,264 302.5 303.5 94.0 7,768 14 21
16 Dec 16 Dec 15 Dec
11 125,363 267.5 261.5 68.0 85,247 14 21
16 Dec 16 Dec 30 Apr
11 11,327 267.5 261.5 68.0 7,702 14 16
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
02 Dec 31 Jan 31 Jul
13 9,523 367.5 367.5 109.0 10,380 16 16
03 Sep 03 Sep 02 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
500,615 422,176
----------- --------- ----------- ------------ ----------- -------- ---------- ----------
The total number of options outstanding at 31 March 2016,
excluding nil cost options, was 500,615 (2015: 727,198). 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
years ending 31 March 2016 and 31 March 2015 no options 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 of price Number
(GBP) options (GBP) of options
2016 2016 2015 2015
Outstanding at the beginning of
the year 3.35 727,198 3.49 774,896
Forfeited during the year 3.82 (25,000) 3.66 (8,160)
Granted during the year - - 3.31 18,154
Lapsed during the year 3.89 (201,583) 5.20 (57,692)
-------------------------------------- ---------- ---------- ---------- ------------
Outstanding at the year end 3.35 500,615 3.35 727,198
-------------------------------------- ---------- ---------- ---------- ------------
Vested options exercisable at the
year end 3.06 452,651 3.24 593,011
-------------------------------------- ---------- ---------- ---------- ------------
Weighted average life of outstanding
options (years) 4.6 4.3
-------------------------------------- ---------- ---------- ---------- ------------
The range of exercise prices of outstanding options at 31 March
2016 is from GBP2.075 (2015: GBP2.075) to GBP4.040 (2015:
GBP4.250).
In addition to the options above, 22,642 nil cost options were
granted to John Foster on 10 June 2015. These outstanding options
are noted below:
Share price Total
Date of Number Exercise at grant Fair value fair Earliest Latest
Issue Price date per share value Exercise Exercise
pence pence pence GBP date Date
10 Jun 10 Jun 10 Jun
15 7,548 - 265.0 265.0 20,002 16 19
10 Jun 10 Jun 10 Jun
15 7,547 - 265.0 265.0 20,000 17 19
10 Jun 10 Jun 10 Jun
15 7,547 - 265.0 265.0 20,000 18 19
22,642 60,002
----------- --------- ----------- ------------ ----------- ------- ---------- ----------
2016 2015
GBP'000 GBP'000
Total share based payment expense recognised
in the year 61 90
------------------------------------------------- -------- --------
26. Capital and reserves
Share capital Ordinary Shares
2016 2015
In issue at the start and end of the year 12,431,623 12,431,623
------------------------------------------------ ----------- -----------
2016 2015
GBP'000 GBP'000
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 2016 the plan held 28,016 (2015: 28,016)
ordinary shares at a cost of GBP55,005 (2015: GBP55,005). The
market value of the shares at 31 March 2016 was GBP56,312 (2015:
GBP77,464). Shares held in the ESOP are entitled to receive a
nominal 0.01p per share in each dividend payment.
Treasury shares
Following shareholder approval, received on 12 January 2016, the
Company's share capital underwent a reorganisation, as a result of
which the number of shareholders was reduced from 2,136 to 758. The
existing ordinary shares were consolidated into ordinary shares of
GBP100 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
13 January 2016. The 297,505 new ordinary shares representing the
fractional entitlements purchased by the Company were taken into
Treasury.
On 2 February 2016, these 297,505 shares held in Treasury along
with the 18,381 shares held in Treasury since August 2013, were
sold for 231.95 pence each. 315,180 shares were sold to Blackfish
Capital Management Limited, who now holds 2,815,180 shares in the
Company. Edmund Rowland, the Chairman of the Company, is also a
director of Blackfish Capital Management Limited. Following this
sale, there are now no shares held in Treasury.
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 2016 2015
GBP'000 GBP'000
Final: None (2015: 7.5p) per qualifying ordinary
share - 929
Interim: None (2015: 4.0p) per qualifying
ordinary share - 495
----------------------------------------------------- ------ --------
- 1,424
------------------------------------------------------------ --------
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
was 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
2016 2015 2016 2015
GBP'000 GBP'000 GBP'000 GBP'000
Investment in Falkland Oil and Gas
Limited - 1,500 - -
------------------------------------------ --------- --------- -------- --------
Cash and cash equivalents 14,037 7,435 11,761 9,379
Hire purchase debtors 1,565 1,105 - -
Trade and other receivables 3,920 4,512 15 12
-------------------------------------------- --------- --------- -------- --------
Total assets exposed to credit risk 19,522 13,052 11,776 9,391
-------------------------------------------- --------- --------- -------- --------
Interest rate swap liability (87) - (87) -
Financial liabilities at amortised
cost (11,157) (10,214) (3,188) (562)
Interest-bearing borrowings at amortised
cost (8,401) (5,873) - -
-------------------------------------------- --------- --------- -------- --------
Available for sale financial assets are valued using a level 1
methodology. The interest rate swap has been valued using a level 2
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.
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 GBP19,522,000 (2015: GBP13,052,000) being the total trade
receivables, hire purchase debtors and cash and cash equivalents in
the balance sheet. The credit risk on cash balances and the
interest rate swap 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
2016 2015
GBP'000 GBP'000
Falkland Islands 980 1,488
Europe 401 414
North America 345 433
United Kingdom 1,687 1,696
Other 507 481
---------------------------- -------- --------
Total trade receivables 3,920 4,512
---------------------------- -------- --------
The Company has no trade debtors
Credit quality of financial assets and impairment losses
Group Gross Impairment Net Gross Impairment Net
2016 2016 2016 2015 2015 2015
GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000
Not past due 2,932 - 2,932 3,473 - 3,473
Past due 0-30 days 619 - 619 633 - 633
Past due 31-120 days 133 - 133 228 - 228
More than 120 days 445 (209) 236 399 (221) 178
-------- ----------- -------- -------- ----------- --------
4,129 (209) 3,920 4,733 (221) 4,512
-------- ----------- -------- -------- ----------- --------
27. Financial instruments (continued)
The movement in the allowances for impairment in respect of
trade receivables during the year was:
Group
2016 2015
GBP'000 GBP'000
Balance at 1 April 2015 221 257
Impairment loss recognised 69 44
Impairment loss reversed (33) (28)
Cash received (30) (14)
Utilisation of provision (debts written off) (18) (38)
------------------------------------------------- -------- --------
Balance at 31 March 2016 209 221
------------------------------------------------- -------- --------
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 GBP0.7 million. In April 2015, a further loan of GBP2.4
million was drawn down, to be repaid over ten years, which has been
secured against Harbour Spirit, the new vessel. In June 2015, the
Group drew down a further GBP0.5 million to be repaid over ten
years, which has been secured against the net assets of Falkland
Islands Holdings plc and the net assets of all its UK subsidiaries.
All payments due during the year with respect to these agreements
were met as they fell due.
The Company had no bank loans at the start or end of the
year.
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:
2016 Carrying Contract-ual
amount cash 1 year 1 to 2 to 5 years
flows or less 2 years 5 years and over
GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000
Non-derivative financial
liabilities
Secured bank loans 3,264 3,684 494 494 2,696 -
Finance leases 5,137 12,096 384 333 914 10,465
Interest rate swap liability 87 146 43 37 66 -
Trade and other payables 11,157 11,157 11,157 - - -
--------- ------------- --------- --------- --------- ----------
Trade and other payables 19,645 27,083 12,078 864 3,676 10,465
--------- ------------- --------- --------- --------- ----------
27. Financial instruments (continued)
2015 Carrying Contract-ual
amount cash 1 year 1 to 2 to 5 years
flows or less 2 years 5 years and over
GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000
Non-derivative financial
liabilities
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
--------- ------------- --------- --------- --------- ----------
The contractual cash flows for finance leases in the years ended
31 March 2016 and 31 March 2015 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 2061.
Liquidity risk - Company
The following are the contractual maturities of financial
liabilities, including estimated interest payments and excluding
the effects of netting agreements:
2016 Carrying Contract-ual
amount cash 1 year 1 to 2 to 5 years
flows or less 2 years 5 years and over
GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000
Non-derivative financial
liabilities
Interest rate swap liability 87 146 43 37 66 -
Trade and other payables 601 601 601 - - -
--------- ------------- --------- --------- --------- ----------
688 747 644 37 66 -
--------- ------------- --------- --------- --------- ----------
2015 Carrying Contract-ual
amount cash 1 year 1 to 2 to 5 years
flows or less 2 years 5 years and over
GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000
Non-derivative financial
liabilities
Trade and other payables 562 562 562 - - -
--------- ------------- --------- --------- --------- ----------
562 562 562 - - -
--------- ------------- --------- --------- --------- ----------
(iv) Market Risk
Financial risk management
Market risk is the risk that changes in market prices, such as
foreign exchange rates, 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 2016 Total Balance
EUR USD Other sheet exposure GBP Total
GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000
Cash and cash equivalents 74 204 4 282 13,755 14,037
Trade and other receivables - - - - 4,853 4,853
Trade payables and other
payables (173) (62) (69) (304) (10,940) (11,244)
----------------------------- -------- -------- -------- ---------------- --------- ---------
Balance sheet exposure (99) 142 (65) (22) 7,668 7,646
----------------------------- -------- -------- -------- ---------------- --------- ---------
31 March 2015 Total Balance
EUR USD Other sheet 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)
----------------------------- -------- -------- -------- ---------------- -------- ---------
Balance sheet exposure (300) (57) (44) (401) 2,930 2,529
----------------------------- -------- -------- -------- ---------------- -------- ---------
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 2015.
Equity Profit or Loss
2016 2015 2016 2015
GBP'000 GBP'000 GBP'000 GBP'000
EUR 10 30 10 30
USD (14) 6 (14) 6
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
2016 2015 2016 2015
GBP'000 GBP'000 GBP'000 GBP'000
Fixed rate financial instruments
Finance lease receivable 1,565 1,105 - -
Lease liabilities (5,137) (5,138) - -
------------------------------------------ -------- -------- -------- --------
(3,572) (4,033) - -
---------------------------------------- -------- -------- -------- --------
Variable rate financial instruments
Effect of Interest rate swap liability (87) - (87) -
Financial liabilities (3,264) (735) - -
------------------------------------------ -------- -------- -------- --------
(3,351) (735) (87) -
---------------------------------------- -------- -------- -------- --------
27. Financial instruments (continued)
At 31 March 2016, the group had three bank loans:
(i) GBP0.6 million repayable over five years, which has been
secured against two vessels in Portsmouth. Interest is payable on
this loan at 2.8% over the Bank of England base rate;
(ii) GBP2.2 million repayable over ten years, with interest
charged at 2.6% above the bank of England base rate; and
(iii) GBP0.5 million repayable over ten years, with interest
charged at 1.75% above the Bank of England base rate.
The interest payable on these loans has been hedged by one
interest swap, taken out in October 2015 with a notional value of
GBP3.6 million, with interest payable at the difference between
1.325% and the Bank of England Base rate. This interest rate swap
notional value will decrease at GBP36,250 per month over five years
until September 2020 when it will expire.
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 2015.
Group Company
2016 2015 2016 2015
GBP'000 GBP'000 GBP'000 GBP'000
Equity
Interest rate swap liability 34 - 34 -
Variable rate financial liabilities (33) (7) - -
Profit or Loss
Interest rate swap liability 34 - 34 -
Variable rate financial liabilities (33) (7) - -
Market risk - equity price risk
The Group no longer has an exposure to equity price risk since
the sale of the shares in Falkland Oil and Gas Limited in April
2015 (see note 15).
(v) Capital Management
The Group's objectives when managing capital, which comprises
equity and reserves at 31 March 2016 of GBP38,569,000 (2015:
GBP36,688,000) 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
2016 2015
GBP'000 GBP'000
Less than one year 910 841
Between one and five years 3,785 3,104
More than five years 8,895 7,402
13,590 11,347
---------------------------- -------- --------
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 GBP921,000 was recognised as an expense in the
income statement of operating leases (2015: GBP864,000).
The Company had no operating lease commitments.
29. Capital commitments
At 31 March 2016, the group had entered into contractual
commitments of GBP412,000, including GBP345,000 for the Momart
Storage facility expansion at Unit 14 in Leyton, GBP32,000 for a
truck at Momart and GBP35,000 for the pontoon refurbishment at
Portsea. At 31 March 2015, the Group had capital commitments of
GBP141,000 for trucks 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 23.4% (2015: 21.0%) of the voting shares of the Company
at 31 March 2016.
The compensation of key management personnel (including
Directors) is as follows:
Group Company
2016 2015 2016 2015
GBP'000 GBP'000 GBP'000 GBP'000
Key management emoluments including social
security costs 1,194 1,504 382 480
Termination payments, including social
security costs 146 217 - 217
Company contributions to defined contribution
pension plans 82 81 - -
Share-related awards 52 69 39 52
----------------------------------------------- -------- -------- -------- --------
Total key management personnel compensation 1,474 1,871 421 749
----------------------------------------------- -------- -------- -------- --------
In the year ended 31 March 2016, the GBP378,000 loan due from
the Group's joint venture, SAtCO, was repaid. This loan had arisen
in December 2013, when the Group made a loan of GBP529,000 to 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.
GBP151,000 of this loan had already been repaid in the year ended
31 March 2015.
All staff involved in construction activities were contracted
directly from parent companies FIC and Trant Construction and at 31
March 2016 and 2015 SAtCO had no permanent employees.
31. 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 liability (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.
Directors and Corporate Information
Directors Registered Office
Edmund Rowland, Chairman Kenburgh Court,
John Foster, Managing Director 133-137 South Street,
Jeremy Brade, Non-executive Director Bishop's Stortford,
Hertfordshire CM23 3HX
Company Secretary T: 01279 461630
Carol Bishop F: 01279 461631
E: admin@fihplc.com
W: www.fihplc.com
Registered number 03416346
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 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 Harbour Momart Limited
Company Ferry Company Kenneth Burgon Director
Kevin Ironside: Director Jeremy Clarke Director Peter Brayshaw: Commercial
Telephone: 00 500 27600 and General Manager and Financial Director
Email: fic@horizon.co.fk Telephone: 02392 524551 Telephone: 020 7426
Website: www.the-falkland-islands-co.com Email: admin@gosportferry.co.uk 3000
Website: www.gosportferry.co.uk Email: enquiries@momart.co.uk
Website: www.momart.com
------------------------------------------ --------------------------------- -------------------------------
This information is provided by RNS
The company news service from the London Stock Exchange
END
FR SFDFWDFMSEDM
(END) Dow Jones Newswires
June 14, 2016 02:00 ET (06:00 GMT)
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