Offer for Portsmouth Harbour

Falkland Islands Holdings PLC
06 October 2004



  NOT FOR RELEASE, PUBLICATION OR DISTRIBUTION IN WHOLE OR IN PART IN, INTO OR
        FROM THE UNITED STATES, AUSTRALIA, CANADA, SOUTH AFRICA OR JAPAN

FOR IMMEDIATE RELEASE 6 October 2004


                                    Offer by
                     Dawnay, Day Corporate Finance Limited
                                  on behalf of
                         Falkland Islands Holdings plc
                                      for
          The Portsmouth Harbour Ferry Company Public Limited Company
                                      and
            Placing of 1,492,537 Falkland Islands Holdings plc Shares

Summary

• The Board of Falkland Islands Holdings plc ('FIH') announces the
  terms of an offer, to be made by Dawnay Day on behalf of FIH, for the entire
  issued and to be issued share capital of The Portsmouth Harbour Ferry Company
  PLC ('PHFC') not already owned by FIH.

• PHFC was established in 1883 and operates a ferry service across
  Portsmouth Harbour between Portsea and Gosport and also owns a travel agency.
  FIH's main trading subsidiary, The Falkland Islands Company, has provided
  services to the Falkland Islands since its establishment by Royal Charter in
  1851.

• The Offer will be 7 New FIH Shares for every 1 PHFC Share, with
  a Part Cash Alternative of £25 cash plus £8.50 in 5% Unsecured Loan Notes 2008
  for every PHFC Share.

• The Offer values each PHFC Share at £44.275 and the entire
  existing issued share capital of PHFC at £10.18 million (based on yesterday's
  closing price of an FIH Share of 632.5p) .

• The FIH Share price has been volatile in recent days, increasing
  by 21% since 30 September 2004 when it was announced that the Falkland Oil and
  Gas Ltd AIM flotation was proceeding. This volatility may continue. The 
  average FIH share price since the announcement of details of FOGL's proposed 
  AIM flotation on 20 August 2004, is 492.69p.

• The Offer represents a premium of 121% over the highest price
  paid by FIH for a PHFC Share to date.

• FIH already holds 61,149 PHFC Shares representing 26.6% of
  PHFC's issued share capital.

• The Offer is conditional on FIH receiving acceptances which,
  when added to its existing holding, amount to more than 50% of PHFC's issued
  share capital.

• FIH has entered into a placing agreement with Evolution whereby
  Evolution will subscribe or procure subscribers for 1,492,537 new FIH Shares
  raising approximately £4.73 million net of expenses subject, inter alia, to 
  the admission of the Placing Shares to trading to AIM. The placing price per 
  FIH Share is 335p.

Commenting on the Offer, David Hudd, Chairman of FIH, said:

'I believe the Offer provides PHFC Shareholders with the opportunity to realise
their investment in PHFC on generous terms. FIH has been looking to expand its
activities outside the Falkland Islands and this acquisition will improve the
spread of FIH's assets, risk profile and scope for future growth.'

'FIH's advisers have approached PHFC's advisers to seek a recommendation of the
Offer. We hope that this will be forthcoming.'

Enquiries:

Falkland Islands Holdings PLC - David Hudd                 07771 893267

Dawnay Day - David Floyd                                   020 7509 4570

Evolution Securities Limited - Tom Price                   020 7071 4300
                               Henry Turcan

College Hill - Ben Brewerton                               020 7457 2020

Tony Friend

This summary should be read in conjunction with the full text of the following
announcement.

The Offer will not be extended to citizens of, or persons resident in, certain
overseas jurisdictions.

This announcement does not constitute or form part of an offer or an invitation
to purchase securities.

The attention of PHFC Shareholders is drawn to the fact that under the Takeover
Code, there are certain UK dealing disclosure requirements in respect of
relevant securities during an offer period.

  
NOT FOR RELEASE, PUBLICATION OR DISTRIBUTION IN WHOLE OR IN PART IN, INTO OR
        FROM THE UNITED STATES, AUSTRALIA, CANADA, SOUTH AFRICA OR JAPAN

FOR IMMEDIATE RELEASE                                          6 October 2004

                                    Offer by
                     Dawnay, Day Corporate Finance Limited
                                  on behalf of
                         Falkland Islands Holdings plc
                                      for
           The Portsmouth Harbour Ferry Company Public Limited Company
                                      and
           Placing of 1,492,537 Falkland Islands Holdings plc Shares

1. Introduction

The Board of FIH announces the terms of an Offer to be made by Dawnay Day on
behalf of FIH for the entire issued and to be issued share capital of PHFC not
already owned by FIH. In addition, the Board of FIH is pleased to announce the
placing of 1,492,537 new FIH Shares for cash.

2. The Placing

FIH has entered into a placing agreement with Evolution whereby Evolution will
subscribe or procure subscribers for 1,492,537 new FIH Shares raising
approximately £4.73 million net of expenses subject, inter alia, to the
admission of the Placing Shares to trading to AIM. The placing price per FIH
Share is 335p. Application for admission to AIM has been made and dealings are
expected to commence on 12 October 2004. The Placing Shares will not rank for
the dividend payable on 4 November 2004 to FIH Shareholders on the register of
members at the close of business on 8 October 2004.

3. The Offer

The Offer, which will be made on the terms and subject to conditions set out in
Appendix I to this announcement and, together with those further terms to be
contained in the Offer Document and Form of Acceptance, will be to acquire all
of the PHFC Shares not already owned by FIH, together with any to be issued PHFC
Shares, on the following basis:

The Share Offer:

                      For every PHFC Share 7 New FIH Shares
                                        
                                       or
The Part Cash Alternative:

            For every PHFC Share £25 in cash and £8.50 in Loan Notes

The Share Offer values each PHFC Share at £44.275 and values the entire existing
issued share capital of PHFC at £10.18 million (based on the closing price of an
FIH Share on 5 October 2004 of 632.5p). The Part Cash Alternative values the
entire issued share capital of PHFC at £7.7 million.

The FIH Share price has been volatile in recent days, increasing by 21% since 30
September 2004, when it was announced that the Falkland Oil and Gas Limited AIM
flotation was proceeding. This volatility may continue. The average FIH share
price since the announcement of details of FOGL's proposed AIM flotation on 20
August 2004, is 492.69p.

PHFC Shareholders who would like to receive a combination of FIH Shares and cash
will be able to accept the Share Offer in respect of part of their holding in
PHFC and elect to receive the Part Cash Alternative in respect of the balance of
their holding in PHFC.

The PHFC Shares which are the subject of the Offer will be acquired by FIH fully
paid and free from all liens, charges, equitable interests, encumbrances and
other interests, together with all rights now or hereafter attaching thereto,
including the right to receive and retain all dividends and other distributions
declared, paid or made after the date of this announcement, save that the New
FIH Shares will not rank for the dividend payable on 4 November 2004 to FIH
Shareholders on the register at the close of business on 8 October 2004.

The Offer will extend to all PHFC Shares unconditionally allotted or issued on
the date on which the Offer is made and any further PHFC Shares unconditionally
allotted or issued while the Offer remains open for acceptance (or such earlier
date as FIH may, subject to the Takeover Code, decide).

4. Loan Notes

The Loan Notes will bear interest at 5% per annum payable on 30 April and 31
October in each year. The Loan Notes will be redeemed in four equal annual
instalments on 31 October 2005, 31 October 2006, 31 October 2007 and 31 October
2008. This is likely to give rise to a more favourable tax treatment for PHFC
Shareholders who elect to receive the Part Cash Alternative. The Loan Notes will
be unsecured and will be freely transferable, but no application will be made
for them to be traded on any stock exchange.

5. Background to, and reasons for, the Offer

At present, FIH's earnings and assets are almost exclusively related to its
activities in the Falkland Islands and surrounding waters.
As part of its stated strategy FIH has been looking to expand its activities
outside the Falkland Islands. PHFC offers a long term investment opportunity in
a sector which has a number of comparable features to FIH's business. As a
result the acquisition will improve the spread of FIH's assets, risk profile and
scope for future growth.

6. Intentions for PHFC

As part of the enlarged FIH Group, PHFC will continue to operate with a local
board including members of the management, FIH recognises the importance of the
ferry service provided by PHFC to the people of Portsmouth and Gosport and is
fully committed to continuing and developing this service. Peter Viggers (MP for
Gosport) has agreed to serve on the PHFC board as a non-executive director if
the Offer is successful.

7. Information on FIH

The FIH Group provides a wide range of services to the Falkland Islands' economy
including retailing, wholesale and distribution, financial services, motor
vehicle distribution, shipping agency, port services and accommodation. The FIH
Group is also involved, through its associated companies, Falkland Oil and Gas
Limited ('FOGL') and Falkland Minerals Limited ('FML') in exploration activities
in the Falklands and surrounding waters, offshore for oil and gas and onshore
for minerals.

8. Information on PHFC

PHFC was established in 1883 and operates a ferry service across Portsmouth
Harbour between Portsea and Gosport. It also operates a summer cruising
operation and owns a single retail travel agency.
PHFC's audited consolidated accounts for the year ended 31 December 2003 showed
the following:

                                                      2003               2002
                                                     £'000              £'000
Turnover                                             4,571              4,693
Pre-tax profit                                         775                915
Net assets                                           2,918              2,520
Earnings per share                                  222.87p            323.49p
Dividends per share                                     50p                33p
Net assets per share                                £12.69             £10.95

9. Shareholding in PHFC

FIH already holds 61,149 PHFC Shares representing 26.6% of PHFC's issued share
capital.

Neither FIH, nor any Director of FIH, nor so far as the Directors of FIH are
aware, any person acting in concert with FIH for the purposes of the Offer, owns
or controls or holds an option to purchase, or has any arrangement in relation
to PHFC Shares or any securities convertible or exchangeable into PHFC Shares or
options (included traded options) in respect of, or has entered into any
derivative referenced to, any such shares. For these purposes, 'arrangement'
includes any indemnity or option arrangement, any agreement or understanding,
formal or informal, of whatever nature, relating to PHFC Shares which may be an
inducement to deal or to refrain from dealing in such shares.

10. Compulsory acquisition

If the Offer is declared unconditional in all respects and subject to the
acquisition of 90% of the PHFC Shares to which the Offer relates, FIH intends to
apply the provisions of sections 428 to 430F (inclusive) of the Companies Act
1985 to acquire compulsorily any remaining PHFC Shares.

11. Placing and the Financing of the Part Cash Alternative

The maximum amount payable in cash if all PHFC Shareholders accept the Offer and
elect for the Part Cash Alternative is £4,221,275. FIH has entered into a
placing agreement with Evolution whereby Evolution will subscribe or procure
subscribers for 1,492,537 new FIH Shares raising approximately £4.73 million net
of expenses, subject to the admission of the Placing Shares to trading to AIM.

The placing price per FIH Share is 335p.

Dawnay, Day Corporate Finance Limited is satisfied that FIH has the financial
resources to satisfy full acceptance of the Offer and election for the Part Cash
Alternative.

Any proceeds of the Placing in excess of the amount required to satisfy
elections for the Part Cash Alternative will be applied to cover the costs of
the Offer, give FIH additional working capital and contribute to the funding of
investments by the FIH Group. The chairman of FIH, David Hudd has agreed to
subscribe for 18,400 FIH Shares in the Placing on the same terms as other
placees. The other directors who have been so advised by Dawnay, Day Corporate
Finance Limited, as Nominated Adviser to FIH, consider that the terms of this
related party transaction are fair and reasonable insofar as FIH Shareholders
are concerned.

12. General

The Offer Document containing the full terms of the Offer will be posted to PHFC
Shareholders as soon as practicable. The conditions to the Offer are set out in
Appendix I and, together with certain further terms of the Offer, will be set
out in full in the Offer Document and Form of Acceptance.

The availability of the Offer to persons not resident in the United Kingdom may
be affected by the laws of the relevant jurisdictions in which they are located.
Persons who are not resident in the United Kingdom should inform themselves
about, and observe, any applicable requirements. In particular, the Offer will
not be made, directly or indirectly, in, into or from or by the use of the mails
or any means of instrumentality (including without limitation, facsimile
transmission, telex, telephone or internet) the United States, or in, into or
from Canada, Australia, South Africa or Japan or any other jurisdiction if to do
so would constitute a violation of the relevant laws of such jurisdiction.
Accordingly, copies of this announcement are not being, and must not be, mailed
or otherwise distributed or sent in or into or from the United States, Canada,
Australia, South Africa or Japan. Persons receiving this announcement (including
without limitation custodians, nominees and trustees) must not distribute or
send it in, or into or from the United States, Australia, South Africa, Canada
or Japan.

Any persons who are subject to the laws of any jurisdiction other than the
United Kingdom should inform themselves about, and observe, any applicable legal
or regulatory requirements. Further information in relation to overseas
shareholders will be contained in the Offer Document.
This announcement does not constitute an offer to sell or an invitation to
purchase any securities or the solicitation of an offer to buy any securities,
pursuant to the Offer or otherwise. The Offer will be made by the Offer Document
and Form of Acceptance.

The full terms and conditions of the Offer (including details of how the Offer
may be accepted) will be set out in the Offer Document and Form of Acceptance.
PHFC Shareholders who accept the Offer may only rely on the Offer Document and
Form of Acceptance for all the terms and conditions of the Offer. In deciding
whether or not to accept the Offer in relation to their PHFC Shares, PHFC
Shareholders should rely only on the information contained, and procedures
described, in the Offer Document and Form of Acceptance. PHFC Shareholders are
strongly advised to read the Offer Document when it is available because it will
contain important information.

Dawnay Day, which is authorised and regulated in the United Kingdom by the FSA,
is acting exclusively for FIH and for no one else in connection with the Offer
and will not be responsible to anyone other than FIH for providing the
protections afforded to its customers or for providing advice in relation to the
Offer.

Evolution, which is authorised and regulated in the United Kingdom by the FSA,
is acting exclusively for FIH and for no one else in connection with the Offer
and will not be responsible to anyone other than FIH for providing the
protections afforded to its customers or for providing advice in relation to the
Offer.

The attention of PHFC Shareholders and FIH Shareholders is drawn to the fact
that under the Takeover Code, there are certain UK dealing disclosure
requirements in respect of relevant securities during an offer period. An offer
period was deemed to have commenced on 1 October 2004 when FIH announced that it
was considering the possibility of making the Offer.

The disclosure requirements referred to below are set out in more detail in Rule
8 of the Takeover Code. In particular, Rule 8.3 of the Takeover Code requires
public disclosure of dealings during an offer period by persons who own or
control or would as a result of a transaction, own or control 1 per cent. or
more of any class of the relevant securities.
Note 5 to Rule 8 of the Takeover Code specifies the details that are to be
included in a disclosure and makes reference to the Dealing Disclosure Form
required to be submitted, copies of which may be obtained from the Panel at the
address specified below or from the Panel's website, www.thetakeoverpanel.org.uk
. A copy of the entire Takeover Code may also be found at the Panel's website,
for further information.

The obligation for disclosure during the Offer Period that commenced on 1
October 2004 in relation to dealings in FIH Shares and/or PHFC Shares will
conclude on the date on which the Offer becomes or is declared unconditional in
all respects, or on the date on which the Offer lapses. Disclosure should be
made on a Dealing Disclosure Form by no later than 12 noon on the business day
following the date of the dealing transaction. These disclosures should be made
via a regulatory information service such as the Regulatory News Service of the
London Stock Exchange, by fax (fax number: [phone]) or by electronic
delivery on the appropriate form with a copy sent to the Panel (fax number: +44
(0)20 7256 9386, e-mail: [e-mail]). If you are in any doubt
as to the action that you should take with regard to Rule 8 of the Takeover Code
you are requested to contact the Panel on [phone] for further
information.

                                   Appendix I

              Conditions to and certain further terms of the Offer

1. The Offer, which will be made by Dawnay Day on behalf of FIH, will comply
with all applicable rules and regulations of the FSA, the London Stock Exchange
and the Takeover Code and will be subject to the terms and conditions to be set
out in full in the Offer Document and Form of Acceptance, including the
following conditions:

(a) valid acceptances being received (and not, where permitted, withdrawn) by
not later than 3.00 p.m. on the date falling 21 days after the date on which the
Offer Document is posted (the 'First Closing Date') (or such later time(s) and/
or date(s) as FIH may, with the consent of the Panel or in accordance with the
Takeover Code, decide) in respect of such number of PHFC Shares which, together
with PHFC Shares already held by FIH and/or acquired by FIH during the Offer
period, will result in FIH holding PHFC Shares which carry in aggregate more
than 50 per cent. of the voting rights then normally exercisable at general
meetings of PHFC, including, for this purpose (to the extent, if any, required
by the Panel), any such voting rights attaching to any PHFC Shares that are
unconditionally allotted or issued before the Offer becomes or is declared
unconditional as to acceptances, whether pursuant to the exercise of any
outstanding subscription or conversion rights or otherwise, and for this purpose
(i) the expression 'PHFC Shares to which the Offer relates' shall be construed
in accordance with Sections 428-430F of the Companies Act 1985, (as amended) and
(ii) shares which have been unconditionally allotted shall be deemed to carry
the voting rights which they will carry on issue;

(b) the London Stock Exchange agreeing to admit the New FIH Shares to be issued
pursuant to the Offer to trading on AIM;

(c) no government or governmental, or quasi-governmental authority (whether
supra-national, national, regional, local or otherwise), statutory or regulatory
body, or any court, trade agency, association, institution or professional or
environmental body or (without prejudice to the generality of the foregoing) any
other body or person whatsoever in any jurisdiction (including any foreign
jurisdiction) ('Authorities') having taken, instituted, implemented or
threatened any action, proceeding, suit, investigation or enquiry, or enacted,
made or proposed any statute, regulation or order or taken any other steps which
would or would be likely to (to an extent which is material in the context of
the PHFC Group or the FIH Group, as defined below, each taken as a whole):
(i) make the Offer, its implementation or the acquisition or proposed
acquisition by FIH or any member of the Wider FIH Group of any shares or other
securities in, or control of PHFC or any member of the Wider PHFC Group, void,
illegal, prohibited and/or unenforceable in or under the laws of any relevant
jurisdiction, or otherwise directly or indirectly restrain, prevent, prohibit,
restrict or delay or otherwise interfere with the Offer or such acquisition or
impose additional conditions or obligations with respect to the Offer or such
acquisition, or otherwise impede, challenge or interfere with the Offer or such
acquisition, or require amendment to the terms of the Offer or the proposed
acquisition of any PHFC Shares or the acquisition of control of PHFC or any
member of the Wider PHFC Group by FIH;
(ii) require, prevent or delay the divestiture (or alter the terms envisaged for
any proposed divestiture) by any member of the Wider FIH Group of any shares or
other securities (or the equivalent) in PHFC;
(iii) require, prevent or delay the divestiture (or alter the terms envisaged
for any proposed divestiture) by any member of the Wider FIH Group or by any
member of the Wider PHFC Group, in any such case of all or any portion of their
respective businesses, assets or properties or impose any limitation on the
ability of any of them to conduct any of their respective businesses (or any of
them) or to own or dispose of any of their respective assets or properties or
any part thereof;
(iv) impose any limitation on, or result in a delay in, the ability
of any member of the Wider FIH Group or any member of the Wider PHFC Group to
acquire or to hold or to exercise effectively, directly or indirectly, all or
any rights of ownership in respect of shares or loans or securities convertible
into shares or other securities (or the equivalent) in, or to exercise
management control over, any member of the Wider PHFC Group or any member of the
Wider FIH Group;
(v)  without limitation to the foregoing, require any member of
the Wider FIH Group or the Wider PHFC Group to acquire, or to offer to acquire,
any shares or other securities (or their equivalent) in any member of the Wider
FIH Group or any member of the Wider PHFC Group or any asset owned by any third
party (other than in implementation of the Offer or pursuant to Part XIII A of
the Act or pursuant to Rule 9 of the Takeover Code) or to sell, or to offer to
sell, any shares or other securities (or their equivalent) or any interest in
any asset owned by any member of the Wider FIH Group or the Wider PHFC Group;
(vi)   impose any limitation on the ability of any member of the
Wider FIH Group or any member of the Wider PHFC Group to integrate or
co-ordinate its business, or any part of it, with all or any part of the
businesses of any other member of the Wider FIH Group or the Wider PHFC Group;
(vii)   result in any member of the Wider PHFC Group or the Wider FIH
Group ceasing to be able to carry on business under any name under which it
presently does so or ceasing to be able to use in its business any name,
trademark or other intellectual property right which it at present uses in and
uses on the same basis and terms as at present apply; or
(viii)   otherwise adversely affect any or all of the business, assets,
financial or trading position, profits or prospects of any member of the Wider
PHFC Group or any member of the Wider FIH Group;

(d) all applicable waiting and other time periods during which any Authority
could intervene in such a way under the laws of any relevant jurisdiction having
expired, lapsed or been terminated;

(e) there being no provision of any arrangement, agreement, licence, permit,
franchise, facility, lease or other instrument to which any member of the Wider
PHFC Group is a party or by or to which any such member or any of its assets is
or are or may be bound, entitled or subject or any circumstance which, in each
case as a consequence of the Offer or the acquisition or proposed acquisition of
any shares or other securities in, or control of, PHFC or any other member of
the Wider PHFC Group by any member of the Wider FIH Group or any part thereof or
any matter arising therefrom or relating thereto or otherwise, could or might
reasonably be expected to result in:
(i)     any monies borrowed by or any other indebtedness or
liabilities, actual or contingent, of, or grant made or available to, any member
of the Wider PHFC Group being or becoming repayable or being capable of being
declared repayable immediately or prior to its stated maturity or repayment date
or the ability of any member of the Wider PHFC Group to borrow monies or incur
any indebtedness being withdrawn or inhibited or becoming capable of being
withdrawn or inhibited;
(ii)      the creation of any mortgage, charge or other security
interest over the whole or any part of the business, property, assets or
interests of any member of the Wider PHFC Group or any such mortgage, charge or
other security interest (whenever arising or having arisen) becoming enforceable
or being capable of being enforced;
(iii)     any such arrangement, agreement, licence, permit, franchise,
facility, lease or other instrument, or the rights, liabilities, obligations or
interests of any member of the Wider PHFC Group thereunder, being, or becoming
capable of being, terminated or adversely modified or affected or any action
being taken or any onerous obligation or liability arising thereunder;
(iv)      any interest, assets or property of any member of the Wider
PHFC Group being or falling to be disposed of or charged or any right rising
under which any such interest assets or property could be required to be
disposed of or charged otherwise than in the ordinary course of business;
(v)       without limitation to the foregoing, any member of the Wider
FIH Group or the Wider PHFC Group being required to acquire, or to offer to
acquire, any shares or other securities (or the equivalent) in any member of the
Wider FIH Group or the Wider PHFC Group or any asset owned by any third party or
to sell, or to offer to sell, any shares or other securities (or the equivalent)
in or any asset owned by any member of the Wider FIH Group or the Wider PHFC
Group;
(vi)    any member of the Wider PHFC Group ceasing to be able to carry
on business under any name under which it presently does so or ceasing to be
able to use in its business any name, trademark or other intellectual property
right which it at present uses, in each case on the same basis and terms as at
present apply;
(vii)   the creation of any liability actual or contingent by any such member;
(viii)  the rights, liabilities, obligations or interests of any member
of the Wider PHFC Group under any such arrangement, agreement, licence, permit,
franchise, facility, lease or other instrument or the interests or business of
any such member in or with any other person, firm, company or body (or any
arrangement or arrangements relating to any such interests or business) being
terminated, modified or affected or any obligation or liability arising or any
action being taken or arising thereunder; or
(ix)     the financial or trading position profits or prospects or
value or, business or assets of any member of the Wider PHFC Group being
prejudiced or adversely affected;
and no event having occurred which, under any provision of any such arrangement,
agreement, licence, permit, franchise, facility, lease or other instrument,
could result in any of the events or circumstances which are referred to in
paragraphs (i) to (ix) of this condition (e);

(f) all necessary filings having been made, all appropriate waiting periods
under any applicable legislation or regulations of any jurisdiction having
expired, lapsed or terminated in each case in respect of the Offer and the
acquisition of any shares in or control of PHFC by FIH and all authorisations,
orders, recognitions, grants, consents, licences, confirmations, clearances,
permissions and approvals necessary or appropriate in any jurisdiction for or in
respect of the Offer or proposed acquisition of any shares in, or control of,
PHFC by FIH having been obtained in terms and in a form reasonably satisfactory
to FIH from all appropriate Authorities or (without prejudice to the generality
of the foregoing) from any persons or bodies with whom any member of the PHFC
Group has entered into contractual arrangements and such authorisations, orders,
recognitions, grants, consents, licences, confirmations, clearances, permissions
and approvals together with all authorisations, orders, recognitions, grants,
consents, licences, confirmations, clearances, permissions and approvals
necessary or appropriate for any member of the PHFC Group to carry on its
business remaining in full force and effect at the time when the Offer becomes
or is declared unconditional and all filings necessary for such purpose having
been made and there being no notice or intimation of any intention to revoke or
not to renew any of the same and all necessary statutory or regulatory
obligations in all relevant jurisdictions having been complied with;

(g) except as disclosed in PHFC's annual report and accounts for the year ended
31 December 2003 (the 'Report and Accounts') or as otherwise publicly announced
by PHFC (by the delivery of an announcement to the Company Announcements Office
of the London Stock Exchange or an appropriate regulatory information service)
prior to the date of this announcement (such information being 'publicly
announced') no member of the Wider PHFC Group having:
(i)       (save as between PHFC and wholly-owned subsidiaries of
PHFC) issued or agreed to issue or authorised or proposed the issue of
additional shares of any class, or securities convertible into or exchangeable
for, or rights, warrants or options to subscribe for or acquire, any such shares
or convertible;
(ii)                recommended, declared, paid or made, or proposed the
recommendation, declaration or payment or making of, any bonus, dividend or
other distribution whether in cash or otherwise other than to wholly owned
members of the Wider PHFC Group;
(iii)               made or committed to make or authorised or proposed or
announced an intention to propose any change in its loan capital;
(iv)              merged with or demerged or acquired any body corporate or
acquired or disposed of or (save in the ordinary course of business)
transferred, mortgaged or charged or created any security interest over any
assets or any right, title or interest in any assets (including shares and trade
investments) or authorised, proposed or announced its intention so to do;
(v)                issued, authorised or proposed or announced an intention to
propose the issue of any debentures or (save in the ordinary course of business)
become subject to any contingent liability or incurred or increased any
indebtedness or contingent liability;
(vi)              purchased, redeemed or repaid or announced any proposal for
the purchase, redemption or repayment of any of its own shares or other
securities or reduced or made, or proposed the reduction or making of, any other
change to any part of its share capital;
(vii)             entered into or varied or authorised or become bound by or
proposed the entry into or variation of, or announced its intention to enter
into or vary, any contract, transaction, arrangement or commitment (whether in
respect of capital expenditure or otherwise) which:

(A)              is of a long term, onerous or unusual nature or magnitude; or
(B)              could be restrictive to the businesses of any member of the

Wider PHFC Group or any member of the Wider FIH Group; or
(C)              involves or would involve an obligation of a long term, onerous
or unusual nature or magnitude or which could be restrictive to the businesses
of any member of the Wider PHFC Group or any member of the Wider FIH Group; or

(D)              is other than in the ordinary course of business;
(viii)           entered into, implemented, effected, authorised or proposed or
announced its intention to enter into, implement, effect, authorise or propose
any contract, reconstruction, amalgamation, scheme, commitment or other
transaction or arrangement;
(ix)              entered into or varied or made any offer (which remains open
for acceptance) to enter into or vary the terms of any agreement, commitment,
arrangement or contract with any of the directors or senior executives of any
member of the Wider PHFC Group;
(x)                taken or proposed any corporate action or had any order made
or legal proceedings instituted or threatened against it or petition presented
for its winding-up (voluntarily or otherwise), dissolution or reorganisation or
for the appointment of a receiver, administrator, administrative receiver,
trustee or similar officer of all or any of its assets and revenues or for any
analogous proceedings or steps having occurred in any jurisdiction or for the
appointment of any analogous person in any jurisdiction;
(xi)              made or agreed or consented to any change to the terms of the
trust deeds constituting the pension schemes established for its directors and/
or employees and/or their dependants or to the benefits which accrue, or to the
pensions which are payable, thereunder, or to the basis on which qualification
for, or accrual of or entitlement to, such benefit or pensions are calculated or
determined or to the basis upon which the liabilities (including pensions) or
such pension schemes are funded or made, or agreed or consented to any change to
the trustees involving the appointment of a trust corporation or allowed any
deficit (actual or contingent) to arise or persist in relation to the funding of
any such scheme;
(xii)             been unable or admitted in writing that it is unable to pay
its debts or having stopped or suspended (or threatened to stop or suspend)
payment of its debts generally or ceased or threatened to cease carrying on all
or a substantial part of its business;
(xiii)           waived or compromised or settled any claim;
(xiv)           made any alteration to its memorandum or articles of
association, or any other incorporation document; or
(xv)            entered into any agreement, contract, commitment or arrangement
or passed any resolution or made any offer (which remains open for acceptance)
or proposed with respect to any of the transactions, matters or events referred
to in this condition (g);
(h) except as disclosed in the Report and Accounts, or save as publicly
announced prior to the date of this announcement:
(i)                  there having been no adverse change or deterioration in the
business, assets, financial or trading position or profits, assets or prospects
of any member of the Wider PHFC Group;
(ii)                no litigation, arbitration proceedings, prosecution or other
legal proceedings to which any member of the Wider PHFC Group is or may become a
party (whether as claimant or defendant or otherwise) and no enquiry or
investigation (save as a result of the Offer) by or against or complaint or
reference to any third party having been threatened, announced or instituted by
or remaining outstanding against or in respect of any member of the Wider PHFC
Group;
(iii)               no contingent or other liability having arisen or become
apparent or increased which has or might be likely to have an adverse effect on
any member of the Wider PHFC Group;
(iv)              there having been no inquiry or investigation (save as a
result of the Offer) by, or complaint or reference to, any third party of a
material nature to PHFC in respect of any member of the Wider PHFC Group and no
such inquiry, investigation, complaint or reference having been threatened,
announced, implemented, instituted or remaining outstanding; and
(v)                no steps having been taken which are likely to result in the
withdrawal, cancellation, termination or modification of any licence held by any
member of the Wider PHFC Group;
(i) FIH not having discovered that any:
(i)                  financial or business or other information concerning the
Wider PHFC Group disclosed at any time by or on behalf of any member of the
Wider PHFC Group, whether publicly, to any member of the Wider FIH Group or
otherwise, is misleading or contains a misrepresentation of fact or omits to
state a fact necessary to make any information contained therein not misleading;
or
(ii)                member of the Wider PHFC Group or partnership, company or
other entity in which any member of the Wider PHFC Group has an interest and
which is not a subsidiary undertaking of PHFC is subject to any liability
(contingent or otherwise) which is not fairly disclosed in the Report and
Accounts;

(j) FIH not having discovered:
(i)                  that any past or present member of the Wider PHFC Group has
not complied with all applicable legislation or regulations of any jurisdiction
with regard to the use, presence, treatment, handling, transport, storage,
disposal, discharge, spillage, leak or emission of any waste or hazardous
substance or any substance likely capable of causing harm or damage to the
environment or human health, or otherwise relating to environmental matters, or
that there has otherwise been any such use, presence, treatment, handling,
transport, storage, disposal, discharge, spillage, leak or emission (whether or
not the same constituted a non-compliance by any person with any such
legislation, directions, common laws, notices, orders, circulars, guidance or
regulations and wherever the same may have taken place) which, in any such case,
would be likely to give rise to any liability (whether actual or contingent) on
the part of any member of the Wider PHFC Group;
(ii)                that there is, or is likely to be, any liability, whether
actual or contingent, to make good, repair, reinstate or clean up any property
or land now or previously owned, occupied or made use of by any past or present
member of the Wider PHFC Group or any controlled waters under any past, present
or future environmental legislation, directives, common laws, notices, orders,
circulars, guidance, regulation or other lawful requirement of any relevant
authority or third party or otherwise or to contribute to the cost thereof or
associated therewith or indemnify any person in relation thereto;
(iii)               that circumstances exist which are likely to result in any
actual or contingent liability of any member of the Wider PHFC Group under any
of the applicable legislation referred to in sub-paragraph (i) above to improve,
or modify existing or install new plant, machinery or equipment or to carry out
any changes in the processes currently carried out;
(iv)              that circumstances exist whereby a person or class of persons
would be likely to have any claim or claims in respect of any product,
by-product or process of manufacture or service or materials used therein now or
previously manufactured, supplied, sold or in any way dealt with or handled by
any past or present member of the Wider PHFC Group; or
(v)                any circumstances which indicate that any of the
sub-paragraphs (i)-(iv) above may not be satisfied.

(k) The Office of Fair Trading not having indicated to FIH that it is the
intention of the Secretary of State for Trade and Industry to refer the proposed
acquisition of PHFC by FIH, or any matters arising therefrom, to the Competition
Commission.

2. FIH reserves the right to waive all or any of conditions (c) to (k) inclusive
above, in whole or in part. The Offer will lapse unless all the above conditions
are fulfilled or (if capable of waived, waived or where appropriate determined
by FIH to have been or to remain satisfied by midnight on the day which is 21
days after the date on which the Offer becomes or is declared unconditional as
to acceptances or such later date as FIH may wish the consent of the final
decide. Conditions (d) to (k) will be waived forthwith upon the Offer being
declared unconditional as to acceptances, save in the case of any prior breach
of such conditions. Condition (b) and (k) must be fulfilled or satisfied within
21 days after the later of the first closing date and the date on which
condition (a) is fulfilled (or in each case such later date as the Panel may
agree) provided that, save as aforesaid, FIH shall be under no obligation to
waive or treat as satisfied any condition by a date earlier than the latest date
specified above for the satisfaction thereof notwithstanding that the other
conditions of the Offer may at such earlier date have been waived or fulfilled
and that there are at such earlier date no circumstances indicating that any of
such conditions may not be capable of fulfilment.

3. The Offer will lapse if it is referred to the Competition Commission or if
the European Commission either initiates proceedings under Article 6(1)(c) of
Council Regulation (EEC) 4064/89 or makes a referral to a competent authority of
the United Kingdom under Article 9(1) before (in any such case) the first
closing date of the Offer or the date on which the Offer becomes or is declared
unconditional as to acceptances, whichever is the later.

4. If FIH is required by the Panel to make an offer for PHFC Shares under the
provisions of Rule 9 of the Takeover Code, FIH may make such alterations to the
terms and conditions of the Offer as are necessary to comply with the provisions
of that Rule.


                                  Appendix II
                               BASES AND SOURCES

In this announcement, unless otherwise stated or the context requires, the
following bases and sources have been used:

1 General

Financial information relating to PHFC has been extracted from the relevant
published Annual Report and Accounts of PHFC and/or public statements made by
PHFC and financial information relating to FIH has been extracted from the
relevant published Annual Report and Accounts of FIH and/or public statements
made by FIH.

2  Value of Share Offer

The Share Offer values PHFC at approximately £10.18 million, based on the middle
market price of an FIH Share of 632.5pence on 5 October 2004, the Offer
consideration comprising 7 New FIH Shares for every PHFC Share and on there
being 230,000 PHFC Shares in issue.
FIH is not aware of any options to subscribe for new PHFC Shares.

3  Share prices

The prices of shares on a particular date are derived from the Closing Prices
for those shares for that date.

4  Time

All the times referred to in this announcement are London times.

                                  Appendix III
DEFINITIONS

In this announcement, the following definitions apply, unless the context
requires otherwise:

'Act' or the 'Companies  the Companies Act 1985, as amended
Act'

'AIM'                   The Alternative Investment Market of the London Stock
                        Exchange;

'Australia'             the Commonwealth of Australia, its states, territories
                        or possessions

'Board' or              the board directors of FIH
'Directors'

'Canada'                Canada, its possessions and territories and all areas
                        subject to its jurisdiction or any political
                        sub-division thereof

'Closing Price'         closing middle market quotation derived from the AIM
                        Appendix to the SEDOL

'Dawnay Day'            Dawnay, Day Corporate Finance Limited, financial adviser
                        to FIH

'dealing day'           a day on which dealings in domestic securities takes
                        place on and with the authority of the London Stock
                        Exchange

'Evolution'             Evolution Securities Limited, Nominated Broker to FIH

'FIH' or the            Falkland Islands Holdings PLC
'Offeror'

'FIH Group'             FIH and its subsidiary undertakings and, where the
                        context permits, each of them

'FIH Shares'            ordinary shares of 10p each in FIH

'FML'                   Falkland Mineral Limited

'FOGL'                  Falkland Oil and Gas Limited

'Form of Acceptance'    the form of acceptance and authority for use in
                        connection with the Offer

'FSA'                   the Financial Services Authority

'Japan'                 Japan, its cities, prefectures, territories and
                        possessions

'Loan Notes'            5% Unsecured Loan Notes 2008 to be issued by FIH
                        pursuant to the Part Cash Alternative

'London Stock           the London Stock Exchange plc
Exchange'

'New FIH Shares'        the new FIH Shares to be issued, credited as fully paid,
                        as consideration pursuant to the Offer

'Offer'                 the offer to be made by Dawnay Day on behalf of FIH to
                        acquire all of the issued and to be issued PHFC Shares
                        not already owned by FIH on the terms and subject to the
                        conditions to be set out in the Offer Document and Form
                        of Acceptance, including, where the context requires,
                        the Cash Alternative and any subsequent revision,
                        variation, extension or renewal of such Offer

'Offer Document'        the formal document to be sent to PHFC Shareholders
                        making the Offer

'Official List'         the Official List of the UKLA

'Part Cash              the part cash alternative of £25 in cash and £8.50
Alternative'            nominal of Loan Notes for each PHFC Share as set out in
                        the Offer Document

'PHFC'                  The Portsmouth Harbour Ferry Company Plc

'PHFC Group'            PHFC and its subsidiary undertakings and, where the
                        context permits, each of them

'PHFC Shareholders'     the holders of PHFC Shares

'PHFC Shares'           ordinary shares of £1 each in the capital of PHFC

'Panel'                 the Panel on Takeovers and Mergers

'Placing'               the placing of 1,492,537 FIH Shares by Evolution as
                        described in paragraph 1

'Placing Shares'        the new FIH Shares to be issued pursuant to the
                        Placing

'pounds' or '£'         denotes the lawful currency of Great Britain and
                        Northern Ireland

'Regulatory Information any of the services set out in Schedule 12 of the
Service'                Listing Rules of the UKLA

'SEDOL'                 the London Stock Exchange Daily Official List

'South Africa'          Republic of South Africa, its possessions and
                        territories and all areas subject to its jurisdiction or
                        any political sub-division thereof

'Takeover Code'         the City Code on Takeovers and Mergers as amended from
                        time to time

'subsidiary',           shall be construed in accordance with the Act (but for
'subsidiary             this purpose ignoring paragraph 20(i)(b) of Schedule 4A
undertaking',           of the Act)
'associated
undertaking' and
'undertaking'

'UKLA'                  FSA in its capacity as the United Kingdom Listing
                        Authority

'United Kingdom' or     the United Kingdom of Great Britain and Northern
'UK'                    Ireland

'United States', 'US'   the United States of America, its territories and
or 'USA'                possessions, any State of the United States of America,
                        the District of Columbia and all other areas subject to
                        its jurisdiction

'Wider FIH Group'       FIH and its subsidiary undertakings and other
                        undertaking (including any joint venture, partnership,
                        firm or company in which any member of the FIH Group is
                        interested or any undertaking in which FIH and such
                        undertakings (aggregating their interests) have a
                        substantial interest

'Wider PHFC Group'      PHFC and its subsidiary undertakings and other
                        undertaking (including any joint venture, partnership,
                        firm or company in which any member of the PHFC Group is
                        interested or any undertaking in which PHFC and such
                        undertakings (aggregating their interests) have a
                        substantial interest


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