Falkland Islands Holdings Interim Results for 6 Months Ended 30 September 2015
FKL reported its interim results for the 6 months ending 30th September 2015. Overall, the company showed a mixed performance with reported PBT up by 14.7%, driven by strong trading in the Falklands drilling program. However, there was a decrease in underlying operating profit and pre-tax profits. The company's new reinvestment policy led to no dividend declaration. Cash balances improved significantly from the previous year. Detailed segmental analysis highlighted varying performances across FIC, PHFC, and Momart divisions.
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Click to edit Master title style FALKLAND ISLANDS HOLDINGS Interim Results 6 months ended 30 September 2015 1
FKL : 6 Months ended 30 September 2015 Interim Results Overview Reported PBT 1.4m (2014: 1.2m ) + 14.7% FIC : Strong trading boosted by 2015 Falklands drilling programme Momart : Down 0.4m to break even - 0.3m investment in Marketing & Sales PHFC : Satisfactory trading lower cost - profits modestly ahead Profit on sale of 5m FOGL shares 388k @ 28p - all shares now sold Group Underlying Operating profit 1.22m (2014: 1.41m) lower by 13.5% Underlying pre tax profits -15.9% at 1.10m (2014: 1.30m) Interim EPS on underlying profits 6.8p (2014: 8.0p) No dividend declared in line with new reinvestment policy Cash balances 10.8m (2014: 4.1m) 2
FKL Interim Results Sept 2015 Trading Overview FIC: Stronger Trading Profits + 0.18m to 0.73m Increased property rental and car hire during the 2015 drilling campaign absence of prior year stock provisions & project cost write down. Momart: Revenues flat - profits lower as expected break even Nil contribution - down 0.40m vs H1 2014. 0.3m of the shortfall due to planned investment in Marketing and Business development , IT and Finance improvement expected in H2 PHFC: Revenues down by 1.5%. PBT + 10% at 0.39m - due to lower costs . Group : Underlying profit before tax down 0.2m - to 1.1m 3
FKL : Summary P&L -6 months ended 30 September 2015 6 months ended 30 September 2015 000 2014 000 Change +/- Turnover 17,727 18,242 -2.8% Operating profit Group share of the Joint Venture profit 1,114 106 1,334 77 Trading Profit -13.5% 1,220 1,411 FIC Pension scheme financing costs (60) (60) Pontoon lease interest Net Bank / HP interest received/(paid) (115) (116) 52 69 Net financing costs (123) (107) Underlying Pre Tax Profit (PBTae)** 1,097 1,304 -15.9% Amortisation of Intangibles (72) (72) - Gain on sale of FOGL shares 388 - - Profit Before Tax Diluted EPS (PBTae basis) 1,413 6.8p 1,232 8.0p +14.7% -15.0% **PBTae profit before taxation , amortisation and non trading items 4
FKL : Segmental Analysis - 6 months ended 30 September 2015 6 Months ended 30 September 2015 000 2014 000 Change +/- Turnover FIC 7,891 8,478 -6.9% PHFC 2,261 2,295 -1.5% Momart 7,575 7,469 +1.4% Total Turnover 17,727 18,242 -2.8% Pre Tax Profit FIC 728 555 +31.2% PHFC 385 349 +10.3% Momart (16) 400 -104.0% Underlying Pre-Tax Profit (PBTa) 1,097 1,304 -15.9% 5
FIC Year ended 31 March 1 FIC : 6 months ended 30 September 2015 Strong uplift from Property rental and car hire due to the presence of the oil rig FIC Revenue down 6.9% to 7.9m from record H1 2014 ( 8.5m) lifted by oil construction PBTa increased by 0.18m to 0.73m ( 2014: 0.55m ) - lower stock provisions & no write off of site survey / preparation costs (2014: 0.15m). Overall retail sales down -1.2% at 4.3m West Store sales + 2.4%. Gift Shop + 4.5% Home-Care sales - 0.2m ( -27% ) phasing of house completions and site redevelopment 4x4 Auto Revenue down 16% to 1.25m (2014: 1.49m) timing differences in FIG orders. Vehicle sales ( 34 vs 43 ) but Service and Parts sales ahead by 10.4%. Car Hire + 95% Support Services revenue reduced by 17.7% - reduction in the illex squid revenues 8 new kit homes sold (2014: 5). Property rental - Occupancy and yields strong from oil activity income + 90% 7
FIC Year ended 31 March 2012 FIC : 6 months ended 30 September 2015 Modernisation -capital investment virtually complete Expansion & Modernisation of Home Builder ( 600m2) opened December 1st 2014 Redevelopment of Crozier Place as new retail destination DIY + Builders Merchant / Lifestyle / Garden / Leisure / HomeCare & Caf Refurbished Crozier Place HQ now complete Expanded 4x4 facilities enhanced Service and Maintenance facilities Relocation of retail warehouse to edge of town New 1,300 sq m warehouse / freezer chiller facilities 5,600 sq m container yard 2 acre waterfront site at East Jetty , Central Stanley ready for future development 9
Falklands Oil Development Timeline : Updated View November 2015 Revised Sea Lion Timeline Nov-15 2015 2016 2017 2018 2019 2020 2021 Exploration Drilling Eirik Raude Rig 3 more wells Complete Feb 2016 FEED Preparation / Tendering FEED detail planning ( $90m ) complete ? Late 2016 - 2017 PMO Project Sanction / FDP Approval Field Development Revised view Nov 2015 Phase 1 using lower cost FPSO Develop Construct Construct First Oil Subject to recovery in Oil Price & Farm In partner FIRST OIL Now estimated 2020 -2021 ( 3-4 yrs following Project Sanction ) Construction costs falling but field viability thought to be > $65-70 bbl Construction costs falling but field viability thought to be > $65-70 bbl 13
FIC Strategy Summary FIC Summary Falkland Islands economy buoyed the 2015 drilling program similar level to 2014 which pre drilling construction Outlook for H2 positive with drilling extended to Feb 2016 . 3 remaining wells in Northern Basin could add to existing discoveries & improve project economics Hiatus in 2016-17 post rig departure slow down in activity until go ahead on oil But FIC modernisation complete business solidly profitable prepared for growth PMO starting FEED but sanction decision likely to be delayed pending oil price recovery . First Oil late 2019 2020 at the earliest 14
Momart 15
Momart : 6 months ended 30 September 2015 Revenue up 1.4 % to 7.58million ( 2014: 7.47m ) Break even / loss of 0.02million down 0.4m on H1 2014 0.2m investment in business development / marketing + 0.1m in IT / Finance . Exhibitions revenue down 2.6% to 3.90m (2014: 4.01m) . Low b/fw order book & slow start in Q1 recovery in Q2 but margins squeezed by intense competition . Order book for H2 + 11% Gallery Services revenue up 5.6% to 2.70m (2014: 2.55m) Margins holding up well momentum of contract wins increasing vs prior year Storage revenue + 7.5% - Royal Academy dedicated storage space at Leyton Additional 4,500 sq. ft. space taken at Edmonton July 2015 Construction of new Leyton warehouse ( +33% ) started ready mid 2016 Notable exhibitions H1 : Ai Weiwei at the Royal Academy. The World goes Pop & Agnes Martin at Tate Modern, Jackson Pollock at Tate Liverpool, Australia at the British Museum and What is Luxury at the V&A. 17
Momart : Increased focus on commercial market 18
PHFC : 6 months ended 30 September 2015 P Ferry revenues flat at 2.26m ( 2014: 2.29m) PBT ( after overhead allocation ) ahead by 0.2m at 0.39m in H1 (2014: 0.35m) Fare rises limited in June 2015 Adult Return fares 3.30 (2014: 3.10) Other fares held Summer promotional discounts to boost demand ( Bikes Go Free / Family Saver tickets ) Passenger numbers down by 3.3% vs H1 2014 Impacted by heavily subsidised Park & Ride scheme , & BAE job losses summer 2014 + lower petrol costs decline from the prior year is slowing New vessel Harbour Spirit operational July 2015 no major fleet capex for >10 yrs 10 year boat loans drawn down to finance 70% of 3.2m cost New promotional fares and Solent e ticketing ( Oyster) in place Positive medium term outlook -expanding Portsmouth Naval Base & Haslar Hospital redevelopment 20
Falkland Oil and Gas (FOGL) Residual holding of 5 million FOGL shares sold for 1.4m in May 2015, generating a profit of 0.4m. Since FOGL s flotation, FIH has generated over 8m in cash proceeds and 5.0 m in profits from the FOGL investment. 22
FKL: Strategy FKL: Strategy Focus on sustainable long term growth Maintain & develop existing business platform FIC : Modernisation complete - readied for oil led growth when oil price recovers Momart : Build on brand reputation increase focus on private clients investment in storage facilities complementary acquisitions PHFC : Maintain profitability and strong cash flow Dividend payments suspended - cash flow reinvested for growth Increase scale & critical mass through selective acquisitions - using cash and prudent bank borrowings 23 23
FKL : Outlook FIC Falklands economy set to remain buoyant in H2 Drilling campaign extended to Feb 2016 . Retail, construction, property rental & 4x4 all set to benefit Positive outlook for cruise ship volumes PHFC Stable revenue outlook strong cash flow Cyclical recovery & Dockyard expansion gives positive medium term view Momart H2 order book healthy - recovery expected in H2 but competition fierce Challenge to match H2 2014 in current conditions Overall Stronger H2 continuing search for acquisitions 24
Appendices 25
FKL : Cash flow 6 months ended 30 September 2015 2015 2014 All figs 000 s Profit before net financing costs 1,565 1,339 Depreciation 720 592 Amortisation of Intangibles 72 72 Provision for share based payments 34 50 Gain on sale of FOGL shares (388) - Less share of joint venture profit (106) (77) Increase in working capital & Other (1,082) 120 Net Cash Flow from Operations 815 2,096 Proceeds received from sale of FOGL shares 1,396 - Tax paid (169) (389) Dividends paid - (929) Capital expenditure (1,083) (1,860) Cash inflows on loan with joint venture - 151 Other (172) 6 Increase/(decrease) in Cash net of Bank debt & HP 787 (925) Increase / (decrease) in Bank Borrowings and HP 2,528 (693) Total increase/(decrease) in Cash 3,315 (1,618) 26
FKL : Balance Sheet All figs 000 s 30 Sept 2015 31 March 2015 30 Sept 2014 19,907 19,621 17,759 Tangible Fixed Assets 3,666 3,693 3,366 Investment properties at net book value 12,128 12,226 12,243 Goodwill & Intangibles - 1,500 3,623 FOGL shares at market value 2,053 1,852 1,582 Deferred Tax & other assets 37,754 38,892 38,573 Total non current assets 2,390 1,132 3,302 Working Capital - Net 10,750 7,435 4,097 Cash (94) (27) (327) Corporation tax payable (533) (293) (679) Bank Loans etc due within 1 year 12,513 8,247 6,393 Net Current Assets (3,177) (752) (218) Bank Loans etc due after 1 year (4,812) (4,828) (4,843) Finance Lease re Pontoon due after 1yr (4,871) (4,871) (4,119) Pension Provisions & Def. Tax 37,407 36,688 35,786 Equity Shareholders funds Net Assets per share 3.01 2.95 2.88 27
FKL: Net borrowings and liquidity 30 Sept 2015 31 March 2015 30 Sept 2014 000 000 000 Bank Loans & HP due within 1 year (502) (263) (650) Bank loans & HP due after 1 year (3,177) (752) (218) Total Bank Borrowings & HP (3,679) (1,015) (868) Cash 10,750 7,435 4,097 Total net cash / (debt) excl long term Pontoon lease 7,071 6,420 3,229 Long term finance lease re Pontoon (4,843) (4,858) (4,872) Total Net Cash /(Borrowings) 2,228 1,562 (1,643) Net Tangible Assets 25,279 24,462 23,543 28
FIC: Sites for development FIC: Sites for development Site Location & size Development Potential 1 Fitzroy Road 2 acres , Central Stanley 26 x 2 bed apartments. 2 Dairy Paddock Western Stanley 36 acres Planning for 350 houses / Work camp 3 YPF site Central Stanley, 2.25 acres Offices , high quality residential 4 East Jetty Waterfront Stanley , 3.0 acres FIC warehousing prime site for re- development Coastel Road 5 FIPASS area, 7.5 acres Warehousing & lay down areas with planning 6 Airport Road/FIPASS FIPASS ,11.0 acres Warehousing & lay down areas with planning 7 Fairy Cove North side of Stanley Harbour, 301 acres Adjoins site for proposed new deep water port at Navy Point 29
Map of FIC Development Sites Map of FIC Development Sites 30
Map of FIC Development Sites Map of FIC Development Sites 31
FIC: Development sites in Stanley FIC: Development sites in Stanley Dairy Paddock 36 acre site in central Stanley YPF site on Stanley Harbour 2.25 acres Fairy Cove : 300 acre site next to Navy Point harbour site Prestige site for high quality residential homes Planning permission for workers camp and 350 houses Prime central site for offices , hotel / leisure Site 2 Site 3 Crozier Place and East Jetty, 3.0 acres Coastel Rd site on Stanley Harbour 7.5 acres Warehousing, lay down areas and storage Prime central site for Offices, Hotel or Leisure. Site 5 Site 4 32
