Preliminary Results

Falkland Islands Holdings PLC 11 September 2000 Falkland Islands Holdings plc Preliminary Results for the year ended 31 March 2000 Chairman's Statement Financial Summary The financial performance for the year was in line with expectations with earnings per share increasing to 15.4 pence (1999: 14.1 pence). Turnover at £10.4 million (1999: £10.9 million) produced an operating profit of £1.33 million (1999: £1.35 million). Profit before taxation was £1.29 million compared with £1.25 million last year. The Directors are recommending an increase in the final dividend to 4.4 pence per share (1999: 4.0 pence) payable on 8 November 2000 to shareholders on the register on 13 October 2000. The dividend will absorb £0.27 million leaving £0.67 million to be added to reserves. Review of Activities During the 1999 fishing season a high level of catches was achieved of Illex squid species resulting in encouraging levels of activity for our fishing agency support operation. The Company expanded the number of Far Eastern clients who were operating in the Falkland waters during this season. Development of infrastructure projects and house building activity continued and contributions from retailing of goods, services and vehicles were all ahead of the previous year. Following the completion of the first phase of the oil exploration activities, Darwin Shipping completed five voyages from the UK to the Islands during the year, compared with seven in the previous year. The Company's port, hotel and accommodation services also suffered a slight downturn for the same reason. The current situation regarding oil exploration is covered in more detail below. Current Trading and Prospects Overall performance in the current year to date is somewhat lower than that of the previous year. Activity in the fishing agency so far is not matching the exceptional levels achieved last season and hotel occupancy is also lower. However, all other areas of activity are trading satisfactorily. The Company's shipping agency business is seeking to expand its representation of cruise vessels and the range of services it can offer passengers on these visits through its other activities. The ever-increasing number of cruise vessel visits will enable the Company to develop this area of the business significantly. Tourist numbers from cruise vessels are expected to grow by more than 10% per annum. To take full advantage of this and other tourist traffic the Company is planning a new dedicated retail outlet. This development will strengthen and add value to the Group's existing retail site and hotel as the town's central attraction to visitors. It will provide the Company with a prime water frontage property, enhanced parking facilities and improved access for the main store. The commencement of the second phase of housing development in Stanley will release a further 50 housing plots onto the market over the coming year. The Government currently has building projects amounting to almost £6 million as compared with only some £400,000 in its last financial year. These include an abattoir, new defence force buildings, school extensions and modifications to the Town Hall which will generate continuing requirements for the Company's shipping and support activities and will give added impetus to the retail activities. Export opportunities are being explored and now that the Falkland Islands Government has commissioned the erection of an abattoir to EEC standards, the commencement of a meat export trade should emerge within the next two years. The Falkland Islands Government is committed to reducing the public sector by the privatisation of certain activities and this could provide the Company with opportunities in the coming year. Discussions with HR Holdings Limited ('HRH') have now restarted after delays caused by major changes to the HRH Board of Directors and are now focused on its shipping and associated operations. We hope to report progress on this matter at the Annual General Meeting. The Company's mineral development joint venture has to date identified the presence of gold, Ti-Leucoxene (high grade Titanium Ore), mineral sands (rutile, zircon, garnet) and potential kimberlite indicator materials (kimberlites can host diamonds). All of these minerals have been discovered on both the East and West Falklands. However, the nature of this operation makes it a long term investment. With the recent increases in world oil prices, oil companies continue to demonstrate interest in the waters around the Falklands. Results of exploration activity to date indicate that a rich organic source rock is present in the North Falkland Basin which is a necessary component for any oil to be formed. The Falkland Islands Government will be assisting oil companies with their future drilling plans by encouraging new companies to farm in to existing licences. The prospects continue to look encouraging for future wells to be drilled in the next few years. The Falkland Islands economy remains buoyant with an estimated expenditure by the Government in the coming year of £45 million against a budgeted income of £44 million. In November 1999 Leonard Licht and Sir Harry Solomon were appointed non-executive directors. A further non-executive director, Charles Michael Orsborn, Deputy Chairman, Charterhouse Securities Limited, was appointed recently. We welcome them to the Board and feel sure that they will make a positive contribution to the future development of the Company. Alan Brooks resigned in January 2000 and the Board would like to express its gratitude for his conscientious and valuable efforts during his tenure as non-executive director. On behalf of the Directors I would also like to thank our employees for the continued hard work and dedication shown during the year. Enquiries Falkland Islands Holdings plc 01279 461630 John Gainham, Chairman Square Mile Communications 0207 601 1000 Kevin Smith Falkland Islands Holdings plc Consolidated Profit and Loss Account for the year ended 31 March 2000 2000 1999 Notes £000 £000 Turnover 10,443 10,941 Cost of sales (7,038) (7,589) ------- ------- Gross profit 3,405 3,352 Administrative expenses (2,428) (2,348) Other operating income 349 352 ------- ------- Operating profit 1,326 1,356 Interest payable and similar charges (33) (105) ------- ------- Profit on ordinary activities before taxation 1,293 1,251 Taxation on profit on ordinary activities 2 (355) (388) ------- ------- Profit on ordinary activities after taxation 938 863 Dividend 3 (269) (244) ------- ------- Retained profit for the financial year 669 619 ------- ------- Earnings per share 4 15.4p 14.1p All the above figures relate to continuing operations. Falkland Islands Holdings plc Consolidated Balance Sheet As at 31 March 2000 2000 1999 £000 £000 Fixed assets Tangible assets 3,010 2,948 Investments 62 - ------- ------- 3,072 2,948 Current assets Stock 2,441 2,663 Debtors 1,789 1,655 Cash at bank and in hand 1,603 1,703 ------- ------- 5,833 6,021 Creditor: amounts falling due within one year (3,953) (4,153) ------- ------- Net current assets 1,880 1,868 ------- ------- Total assets less current liabilities 4,952 4,816 Creditor: amounts falling due after more than one year (1,289) (1,857) Provisions for liabilities and charges (919) (884) ------- ------- Net assets 2,744 2,075 ------- ------- Capital and reserves Called up share capital 611 611 Other reserves 703 703 Profit and loss account 1,430 761 ------- ------- Equity shareholders' funds 2,744 2,075 ------- ------- Notes: 1 All significant turnover, profits and net assets are generated from general trading in the Falkland Islands. 2 The taxation charge based on the profit for the year comprises: 2000 1999 £000 £000 UK corporation tax at 21.3% (1999: 22.7%) 275 284 Less double tax relief (212) (253) ------- ------- 63 31 Overseas tax 298 357 Prior year adjustment (6) - ------- ------- 355 388 ------- ------- 3 The Directors recommend a dividend of 4.4 pence per share (1999: 4.0 pence) payable on 8 November 2000 to shareholders on the register at close of business on 13 October 2000. 4 The calculation of earnings per ordinary share is based on the profit after taxation of £938,000 (1999: £863,000) and ordinary shares of 6,110,037 (1999: 6,110,037) being the weighted average number of shares in issue during the year. The share options do not have a dilutive effect. 5 The profit and loss account and balance sheet do not constitute statutory accounts. The audited accounts, which will be delivered to the Registrar of Companies after approval at the Annual General Meeting, contain an unqualified audit report. 6 Copies of Falkland Islands Holdings plc annual report and financial statements will be sent to shareholders shortly.

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