Falkland Islands Holdings plc
Annual Report 2010
Contents
1 Financial Highlights
2 Chairman’s Statement
4 Managing Director’s Business Review
14 Board of Directors and Secretary
15 Directors’ Report
20 Independent Auditor’s Report
21 Consolidated Income Statement
22 Consolidated Statement of Comprehensive Income
23 Consolidated Balance Sheet
24 Company Balance Sheet
25 Consolidated Cash Flow Statement
26 Company Cash Flow Statement
27 Consolidated Statement of Changes in Shareholders’ Equity
27 Company Statement of Changes in Shareholders’ Equity
28 Notes to the Financial Statements
72 Directors and Corporate Information
FALKLAND ISLANDS HOLDINGS PLC
1
Financial Highlights
FOR THE YEAR ENDED 31 MARCH 2010
Turnover from continuing operations
Profit / (loss) before tax
Underlying profit before tax*
Diluted earnings per share before amortisation and non-trading items
Dividend per share
Cash flow from operations
Net asset value per share
*Defined as profit before tax, amortisation and non-trading items.
2010
£m
29.22
5.67
2.69
21.7p
9.0p
2.35
376p
2009
£m
Change
%
32.25
(0.63)
2.31
18.8p
8.0p
4.10
276p
(9.4)
–
16.5
15.4
12.5
(42.7)
36.2
Turnover (£m)
from continuing operations
32.25
29.22
15.21
15.62
17.21
Underlying profit before tax* (£m)
2.69
2.31
2.01
1.65
1.49
2006
2007
2008
2009
2010
2006
2007
2008
2009
2010
Diluted earnings per share (pence)
before amortisation and non-trading items
21.7
18.8
17.1
13.9
12.0
Dividend per share (pence)
9.00
8.00
8.00
7.00
6.50
2006
2007
2008
2009
2010
2006
2007
2008
2009
2010
2
ANNUAL REPORT 2010
Chairman’s Statement
FOGL stake
In November 2009, in order to strengthen the Group’s
financial position and to reduce its risk profile, 3 million
shares in FOGL were sold, (20% of the holding) generating
proceeds of £3.6 million and a profit after tax of £3.1
million. The Group now holds 12 million FOGL shares,
which represents 8.2% of the issued share capital. As at
31 March 2010, the market value of this shareholding was
£15.5 million (129.5p per FOGL share) compared with
£10.9 million as at 31 March 2009 (15 million FOGL shares
at 73p per share).
The Board have publicly stated that no further FOGL shares
will be sold in advance of the drilling of FOGL’s Toroa
prospect, which was spudded on 31 May 2010 and is
expected to take 35 days to complete.
A further commitment well will be drilled on one of FOGL’s
other three surveyed prospects. These are all in water
depths of more than 1,000 metres and efforts are
continuing to secure a rig which is capable of drilling at
such depths. It is your Board’s intention to retain a very
substantial holding in FOGL while the exploration
programme continues.
Net assets
Following the FOGL share sale and after capital expenditure
of £1.4 million (2009: £1.0 million), the Groups borrowings
have been reduced to £5.3 million (2009: £7.2 million).
Cash balances at the year end amounted to £3.8 million
(2009: £3.0 million) resulting in net borrowings at the end
of £1.5 million (2009: £4.2 million). Thus we now have
scope for further investment in our businesses. Net assets
per share including intangibles were 376p at 31 March
2010 (2009: 276p).
Outlook
Current economic conditions do not allow much forward
visibility. However in the year to date, the Group’s overall
trading performance is in line with our expectations.
In the Falklands, oil exploration will continue to boost
local demand. However, another
confidence and
disappointing illex squid catch (which impacts the first
quarter’s trading), increases in freight costs and reduced
numbers of cruise passengers will negatively impact
performance.
David Hudd
Chairman
I am pleased to report that the year ended 31 March 2010
has been a successful year for the Group with significant
growth in underlying profits, earnings per share and a
substantial increase in the proposed dividend. The sale of
20% of the Group’s shareholding in Falkland Oil and Gas
(“FOGL”) greatly strengthened its financial position such
that whatever the results of oil exploration in the Falklands,
the Group should be able to deliver strong cash flow,
earnings and dividends.
Results
Underlying profits before tax, (excluding amortisation /
impairment of intangibles and non trading items), increased
by 17% to £2.7 million (2009: £2.3 million). After non-
recurring credits of £3.3 million largely representing the
profit on the sale of FOGL shares, the Group achieved pre
tax profit of £5.7 million (2009: loss of £0.6 million).
Underlying earnings per share increased by 16% to 22.0p
(2009: 19.0p). Reported earnings per share were 57.5p
(2009: loss of 12.8p).
Dividends
The Board is pleased to recommend a final dividend of 5p
per share which, together with the Group’s inaugural
interim dividend of 4p per share, makes a total dividend
for the year of 9p per share, an increase of 12.5% (2009:
8p per share).
Overview of operations
The Group’s three trading businesses performed well in
difficult market conditions with operating profits from the
Falklands and Momart both increasing by some 10% and
the Portsmouth Harbour Ferry (“PHFC”) just ahead of the
prior year. Trading in the Falklands improved in the second
half of the year with the benefit of the expanded West
Store and business generated by the oil exploration
programme. Momart’s performance improved in the
second half as the commercial art market showed signs of
recovery while at PHFC profits were maintained on
reduced passenger numbers.
FALKLAND ISLANDS HOLDINGS PLC
3
At Momart, although the commercial gallery market is
improving, spending cuts are reducing the number of
exhibitions staged by State funded institutions. Whilst we
do not expect to see significant improvements in trading
conditions in the coming year, Momart remains the market
leader and is well placed for any upturn in the art market.
At PHFC, we continue to make progress with the Borough
Council towards a new pontoon in Gosport and are in
the process of agreeing a long term lease for its use, with
planned installation towards the end of our financial year.
The economic background in Gosport is such that it is
difficult to envisage any improvement in PHFC’s passenger
numbers.
The Group’s diversity continues to provide a strong
foundation and whilst trading conditions remain
challenging, all of the businesses are financially and
operationally stable, with solid, market leading positions.
Despite our caution for the coming year, we anticipate
continued robust cash flow and are confident of our ability
to maintain dividends.
It is likely that the current trading performance of the
Group will continue to be overshadowed by news of the
oil exploration being undertaken in the Falklands, the main
economic benefits of which have yet to be felt. However,
we are currently examining the development opportunities
in the Islands which will result from a successful oil
outcome.
In service businesses such as ours, staff are our biggest
asset and the Board would like to thank all our colleagues
for their continued hard work and commitment.
David Hudd
Chairman
23 June 2010
4
ANNUAL REPORT 2010
Managing Director’s Business Review
John Foster
Managing Director
Overview
I am pleased to report that, despite the challenging
economic environment, the Group performed well in the
year to 31 March 2010. Trading in the second half was
generally stronger than in the first half, particularly in the
Falkland Islands as a result of the oil exploration activity,
and this, together with the substantial profit from the sale
of three million FOGL shares in November 2009, helped lift
the Group’s profitability for the year.
Group trading summary
All of the Group’s operating businesses were impacted by
the recession and, as a result, Group turnover decreased by
9.4% to £29.2 million (2009: £32.2 million).
However, due to effective cost control, underlying operating
profits (before amortisation / impairment of intangibles
and non-trading items) rose by 7% to £3.1 million
(2009: £2.9 million). With interest costs reduced at £0.40
million (2009: £0.91 million), underlying profits before
tax (before amortisation / impairment of intangibles and
non-trading items) increased by 17% to £2.7 million
(2009: £2.3 million). All three of the Group’s operating
businesses maintained or increased their profitability
during the year.
In addition, the Group benefited from significant non-
trading income which added a further £3.3 million to
overall profitability. The most significant element of this
was the £3.1 million profit from the sale of FOGL shares,
but there was also a £0.2 million receipt in respect of the
agreed early surrender of a leasehold property. Reported
profit before tax was £5.7 million (2009: loss £0.6 million).
The Group pays corporation tax on its UK earnings at the
standard rate of 28%, except for certain of its subsidiaries
which qualify for the smaller companies rate of 21%. On
its Falklands earnings, the Group pays tax at the rate
26%. There is no Capital Gains Tax on sales of shares,
property or other qualifying assets in the Falkland Islands.
For the year ended 31 March 2010 the Group’s effective
tax rate on its underlying trading activities was 26%
(2009: 26%).
Fully diluted earnings per share derived from underlying
profits, increased by 15.4% to 21.7p (2009: 18.8p).
Strong cash flow allowed the Group to reduce its
borrowings at 31 March 2010 to £5.3 million (31 March
2009: £7.2 million) even after total capital expenditure
of £1.4 million (2009: £1.0 million). Cash balances at
31 March 2010 were £3.8 million (31 March 2009:
£3.0 million) resulting in net borrowings at the year end
of £1.5 million (2009: £4.2 million). Net assets per share
increased sharply during the year to 376p per share at
31 March 2010 (2009: 276p per share) reflecting both
the increase in realised profits and the uplift in the value
of the Group’s holding in FOGL.
Underlying pre-tax profit
The Group’s underlying pre-tax profits (“PBTa”) showed
steady growth with a £0.4 million increase over the prior
year as shown below, rising 17% to a record level of
£2.69 million.
Underlying profit
Year ended 31 March
2010
£m
2009
£m
Underlying pre-tax profit
2.69
2.31
Add / (deduct) non-trading and
exceptional Items
Profit on the sale of FOGL shares
Profit on the surrender of lease
Revaluation of interest rate collar
3.09
0.25
0.04
–
–
(0.33)
Amortisation of intangibles
(0.40)
(0.40)
Impairment of goodwill
Restructuring costs
Profit / (loss) before tax
as reported
–
–
(1.98)
(0.23)
5.67
(0.63)
Note: Underlying profit before tax excludes the amortisation of intangible
assets, any impairment of goodwill and non-trading items (profit on sale of
shares, profits from the early surrender of a lease, restructuring costs and
fair value movements on derivative financial instruments).
Further details of these non-trading items are given below:
Non-trading items
Profit on sale of shares in Falkland Oil and Gas
Limited – £3.09 million (2009: nil). On 30 November
2009 the Group reduced its stake in Falkland Oil and
Gas Limited selling three million shares producing
cash proceeds of £3.6 million and realising a profit of
£3.1 million.
FALKLAND ISLANDS HOLDINGS PLC
5
Profit on the early surrender of a property lease –
£0.25 million (2009: nil). During the year the Group
received compensation for the early vacation of leasehold
premises by Momart, which had been the subject of
litigation with the landlords.
Revaluation of interest rate collar £0.04 million
(2009: loss £0.33 million). In previous years the Group
entered into two interest rate collars as a hedge against
possible increases in interest rates. These instruments
produced an effective floor on the bank base rate payable
by the Group of 4.25% and led to increased interest rate
costs in the first half of the year. In January 2010 these
instruments were liquidated eliminating what had become
onerous interest costs. This resulted in a small accounting
gain of £0.04 million (2009: loss £0.33 million) and from
January 2010 the Group has been able to take full
advantage of current low rates.
Finance costs
The Group’s net financing costs fell sharply to £0.40
million (2009: £0.91 million). Excluding the non-cash
impact of the collar revaluation which saw savings of
£380,000, total finance costs fell by £132,000.
Year ended 31 March
Net financing costs
as shown in Income
Statement
Made up of:
2010
£m
2009
(Increase)
£m
decrease
(401)
(912)
511
Pension finance costs net
(132)
(130)
-2
Interest collar
revaluation
Notional interest on
deferred consideration
Amortisation of
bank fees
45
(334)
379
(48)
(104)
56
(30)
(30)
–
Total non-cash items
(165)
(598)
433
Lease interest income
78
74
Net bank interest paid
(314)
(388)
4
74
Total net financing
costs
(401)
(912)
511
As shown above, of the net financing costs of £0.4 million
(2009: £0.9 million), net bank interest payable amounted
to £314,000 (2009: £388,000) (see note 8 on page 40 for
more details).
Bank interest cover
Year ended 31 March
Underlying operating profit as above
Net bank interest (payable)
Bank interest cover
2010
£m
3.13
0.31
10.1x
2009
£m
2.89
0.39
7.4x
Since the liquidation of the interest collar in January 2010
interest costs have fallen sharply. In the current financial
year if bank Base Rates remain unchanged at 0.5% with
total borrowings of £5.3 million the Group’s pro-forma
bank interest charge with average rates of c. 3.5% for the
year would be c. £0.19 million.
Earnings per share
Year ended 31 March
Underlying profit
as above
2010
£m
2009
£m
Change
%
2.69
2.31
16.4
Tax thereon
(0.71)
(0.60)
-18.3
Underlying profit after tax
1.98
1.71
15.8
Diluted average number
of shares in issue (’000s)
9,147
9,121
0.29
Diluted EPS
21.7p
18.8p
15.4
Review of operations
A summary of Group revenue and operating profit by
business is shown below:
Revenue
Year ended 31 March
2010
£m
2009
£m
Change
%
Falklands
12.43
12.99
-4.3
Portsmouth Harbour Ferry
3.72
3.72
–
Momart
Total
13.07
15.54
-15.9
29.22
32.25
-9.4
Underlying operating profit
Year ended 31 March
Falklands
Portsmouth Harbour Ferry
Momart
Total
2010
£m
1.38
0.79
0.96
3.13
2009
£m
Change
%
1.26
0.78
0.86
2.89
9.5
1.3
11.6
8.3
6
ANNUAL REPORT 2010
Managing Director’s Business Review
CONTINUED
Group revenue
2010
Momart
44%
FIC
43%
PHFC
13%
2009
2009
Momart
48%
FIC
40%
PHFC
12%
Underlying operating profit
2010
Momart
31%
FIC
43%
PHFC
26%
Momart
30%
FIC
43%
PHFC
27%
Each of the Group’s businesses is reviewed in detail below:
Falkland Islands Company (FIC)
FIC reported a satisfactory out turn for the year with
underlying operating profits for the year increasing by
9.5% to £1.38 million (2009: £1.26 million) despite a
4.3% fall in revenue.
Year ended 31 March
Revenues
Retail
Automotive
Freight
Property sales
Other services
2010
£m
2009
£m
Change
%
8.08
1.43
0.99
0.36
1.57
8.01
1.95
0.80
0.27
1.96
0.1
-26.7
23.7
33.3
-19.4
Total FIC revenue
12.43
12.99
-4.3
Underlying FIC
operating profit
1.38
1.26
9.5
Underlying operating profit
margin (%)
11.1
9.7
14.4
The year started with a poor illex squid catch. This not
only saw dramatic reductions in the level of support
services required by the much reduced number of fishing
boats and reefers, but it also resulted in significant
reductions in government license revenues. This in turn
had an impact on local spending and general confidence.
In addition in April, FIC saw its principal retail competitor
very substantially expand its supermarket on the outskirts
of Stanley putting downward pressure on sales in the
West Store. Automotive vehicle sales, particularly to fleet
buyers, also fell sharply as organisational budgets were
cut in response to the recession.
However, in the second half there was a notable
improvement in confidence in the Islands, due to a
good loligo squid catch and the commencement of oil
exploration activity. As anticipated, this stimulated
demand across our retail activities and is likely to continue
to have a further positive impact on the Falkland Islands
economy. This positive momentum was further assisted by
the start of a de-mining programme for which FIC was
able to provide a range of services.
FALKLAND ISLANDS HOLDINGS PLC
7
FIC revenues
2010
Property sales
3%
Other
Services
21%
Automotive
12%
Retail
64%
2009
Property sales
2%
Other
Services
21%
Automotive
15%
Retail
62%
FIC’s automotive business saw a sharp fall in demand
particularly for fleet vehicles for the military and their
contractors. Total vehicle sales fell from 76 to 41, but
vehicle rental income increased substantially as a result of
the requirements of de-mining contractors BACTEC and
the oil exploration companies. However, overall automotive
revenues fell by 27% to £1.43 million. With the global
recession continuing we do not anticipate any early
recovery in military or corporate spending on vehicles.
At Darwin Shipping, revenues from third party freight
increased by 24% to just under £1 million as the business
benefited from the delivery of a second shipment of wind
turbines and also from increased freight linked to oil
exploration activity.
FIC’s Fishing Agency revenues fell by 43% as a result of
the failure of the illex squid catch in April and May 2009.
Penguin Travel, which has established itself as the on
shore agent of cruise line operator Holland & America
Lines, also had a more difficult year as unusually windy
Rear entrance to the extended West Store.
Whilst the competitive landscape for retailing in Stanley
changed substantially in the year our new West Store
extension has bolstered the performance of our core
retailing activity and has confirmed the West Store’s
position as the premier retailer in Stanley.
Sales and margins came under pressure in the early
months of the year due to the increased competition, but
the team in Stanley led by new retail manager, Paul Lewis,
responded well emphasising FIC’s offer to the customer of
“Quality, Choice and Value”. At the half year, West Store
sales were down by only 1% and in the second half with
the November opening of the West Store extension and
car park, sales increased by over 8% giving an overall
increase for the year of 4.3%. The new extension
increases retail selling space by 50% to over 15,000 sq ft
which
includes a new store providing household
electrical goods.
In FIC’s DIY businesses, Home Care and Home Living,
demand was affected by the sluggish economy and
continued pressure from local competitors. Overall sales in
this segment which accounts for c. 15% of FIC’s retail
revenues, decreased by 11% during the year.
The Marmont Row development in Stanley.
8
ANNUAL REPORT 2010
Managing Director’s Business Review
CONTINUED
summer weather and the effects of the global recession
led to a decline in passenger landings of 16%. This was
the first decline in a decade.
FIC’s Insurance broking operation increased both its
revenues and its contribution in the year as did FIC’s Port
Services (stevedoring) activities. The net return from FIC’s
portfolio of 30 rental properties also saw a further steady
increase as demand strengthened in the second half of
the year.
Further investment in our shops is planned for the
forthcoming year, but margins will be negatively impacted
by the recent increase in the cost of freight services,
where costs saw sharp double digit increases with effect
from 1 April 2010.
During the year, work on Phase 1 of the conversion of the
former Upland Goose Hotel into a terrace of nine
residential properties was completed, now reverting to
their former name of Marmont Row. With their location
on the waterfront in central Stanley they represent a
prime asset, which can be readily sold or rented depending
on market conditions. Phase 2 involving the conversion of
the final three units in the terrace is expected to be
complete before the end of the calendar year.
In the year, two older residential properties were sold
realising a profit of over £350,000. This compares to the
£240,000 generated from the sale of three similar
properties in 2008/9. Our policy has been to dispose of
older properties which require substantial modernisation
and maintenance and reinvest the proceeds in new
developments. The building, letting and selling of
residential properties is one of FIC’s core activities and is
expected to continue in the future particularly with the
completion of Marmont Row which will increase FIC’s
residential estate to over 40 units.
Despite the reduction in revenues, FIC performed well
helped by opportunities brought about by oil exploration
and increased efficiency. For the year to 31 March 2010,
underlying operating profits in the Falklands increased by
over 9% to £1.38 million.
Portsmouth Harbour Ferry Company (PHFC )
PHFC performed satisfactorily during the year posting a
small increase in underlying operating profits despite flat
revenues.
Operating results
Year ended 31 March
Revenues
Ferry fares
Other revenue
Total PHFC revenue
Underlying PHFC
operating profit
Underlying operating
profit margin (%)
2010
£m
2009
£m
Change
%
3.50
0.22
3.72
3.46
0.26
3.72
1.2
-15.4
–
0.79
0.78
1.3
21.0
21.0
–
Passenger journeys (000s)
3,516
3,672
-4.2
Some 40% of ferry customers use the service for
essential daily commuting. However, the service is not
immune to the effects of recession and a significant
reduction in discretionary journeys resulted in total
passenger journeys declining by 4.2% compared to the
previous year.
As in the prior year, fares were increased on 1 June. The
standard daily adult return fare rose by 4.5% to £2.30
and the price for a book of 10-trip tickets rose 5.5% to
£9.50. These fare increases effectively offset the impact of
the decline in passenger numbers and resulted in revenues
from ferry fares rising 1.2% to £3.5 million.
The core passenger ferry service accounted for 94% of
revenue (2009: 93%). Other revenue is earned from
PHFC’s programme of summer leisure cruises in the Solent
area, which increased by £13,000 compared to the prior
year and produced a small positive contribution. A small
contract to provide water taxi services ended, as expected,
in August 2009 after three years.
Overheads were maintained at prior year levels despite
increased hourly wage rates, and a steady rise in the price
of fuel, due to tight cost control and a reduction in the
level of overtime. After the allocation of head office costs,
PHFC’s underlying operating profit increased by 1.3% to
£0.79 million (2009: £0.78 million).
FALKLAND ISLANDS HOLDINGS PLC
9
Momart
Momart, increased profitability in the year despite the
pressure on revenues in all areas of its business.
Operating results
Year ended 31 March
Revenues
Museums and Public
Exhibitions
Commercial Galleries
Storage
2010
£m
2009
£m
Change
%
7.73
3.86
1.48
9.66
4.36
1.52
-20.0
-11.5
-2.6
Total Momart revenue
13.07
15.54
-15.9
Underlying Momart
operating profit
Underlying operating profit
margin (%)
0.96
0.86
11.6
7.3
5.5
–
Momart reacted quickly to a sharp contraction in the art
market in the first quarter of the calendar year 2009,
aligning its cost base with the reduced level of available
business. Whilst first half revenue was significantly down
on the record levels seen in the first half of 2008/9, much
of the decline in sales came from a reduction in low margin
work with overseas agents. Therefore, with lower
overheads and increased efficiencies flowing from internal
reorganisation, the Company remained consistently
profitable throughout the year. Confidence in the
commercial art market quickly recovered as world markets
stabilised.
Gallery Services
We have seen a recovery in the commercial art market
during the year, confirmed by the success of the Basel art
fair in June and the Frieze fair in London in October.
In the commercial Gallery Services (GS) division the
Company was actively involved in a number of high profile
overseas exhibitions of Damien Hirst’s work. Increased
efforts were also made to win smaller contracts from
commercial clients and streamlining its customs clearance
procedures gave it an important competitive edge in
winning international business.
GS revenues also saw some recovery as confidence
increased throughout the year and activity levels rose by
16% in the second half, compared to the first half. Overall
revenues in GS were down 11.5% compared to 2008/9
and the division accounted for 30% of Momart’s total
revenues (2008/9: 28%).
Spirit of Gosport with the Spinnaker Tower in the background.
Negotiations with Gosport Borough Council to replace
the existing pontoon at Gosport are nearing completion
with a modern replacement scheduled to be delivered in
late 2010. The Council has agreed in principle to finance
the new pontoon but its economic cost will be borne by
PHFC and, ultimately, by passengers as fares will have to
be increased to offset this increase in annual rent. Even
after the necessary fare increases, the Board believes that
the absolute cost for ferry users will remain modest and
will still offer excellent value for money compared to
alternative modes of transport.
In 2009/10 the ferry service was able to improve on its
exceptional record of reliability and over 99.9% of all
72,000 ferry trips (operating 364 days per annum)
departed on time with only 76 sailings delayed or
cancelled compared to 132 in the prior year and of these
22 were due to incidents beyond the Company’s control.
Both the safety record and the reliability of this essential
service rest upon the exceptional commitment and
expertise of ferry staff who are proud to be a part of the
community they serve.
For the forthcoming year, we anticipate tough trading
in annual
conditions with further small declines
passenger numbers and increased pressure on costs as
fuel prices increase.
10
ANNUAL REPORT 2010
Managing Director’s Business Review
CONTINUED
Momart revenues
2010
Storage
11%
Commercial
Galleries
30%
Museums and
Public Galleries
59%
2009
Storage
10%
Commercial
Galleries
28%
Museums and
Public Galleries
62%
Exhibitions
In the Exhibitions division that serves leading museums in
the UK and overseas, activity reduced sharply in the early
part of the year (again compared to the record levels seen
Momart was the contracted transport and logistics agency for The Real
Van Gogh exhibition at the Royal Academy.
in 2008/9) with notably less work coming from overseas
institutions as their reduced budgets saw spending cut
back on more expensive internationally sourced shows. In
the UK Momart remained very active and maintained
its market share. Notable installations included: the
Baroque exhibition at the Victoria and Albert Museum,
Anish Kapoor at the Royal Academy and the highly
successful The Real Van Gogh exhibition in January 2010.
Exhibition revenues remained 20% below the prior year
albeit absolute revenues in creased marginally in H2 helped
by the blockbusting Van Gogh exhibition at the Royal
Academy.
Overall revenues from Exhibitions fell in the year to £7.73
million (2009: £9.66 million) and the division accounted
for 59% of Momart’s total revenues (2009: 62%).
Storage
Storage revenue was also affected by the downturn and
prices came under pressure as storage customers sought to
reduce costs and competition increased. Nonetheless
Storage revenue remained the most stable income stream
with a small decline of just 2.6% year on year to £1.48
million. Storage accounted for 11% of revenue in the year
(2009: 10%).
With less currency volatility, Momart also saw reduced
exchange losses during the year. We believe that the
recovery seen in the commercial art market is likely to track
wider economic trends as reflected in the performance of
global equity markets, but in Momart’s main market we
see continued pressure on budgets for museum exhibitions
both in the UK and overseas.
FOGL stake
Details of the FOGL stake are set out below:
Year ended 31 March
2010
2009
Number of shares held
12,000,000 15,000,000
FOGL share price
129.5p
72.6p
Market value of holding
£15.5m
£10.9m
Cost
£2.0m
£2.5m
In the year ended 31 March 2010 the share price of FOGL
varied between a high of 177p and low of 63p. The sale
of 3 million shares took place on 30 November 2009 at a
price of 120p per share which produced a profit on sale
of £3.1 million. Following the sale, the Group shareholding
FALKLAND ISLANDS HOLDINGS PLC
11
represented 8.2% of FOGL’s enlarged share capital. Under
IFRS, the investment is shown at market value.
Balance sheet
The Group’s Balance Sheet remains strong and as at
31 March 2010 had net assets of £34.2 million (2009: £24.9
million), borrowings of £5.3 million (2009: £7.2 million)
and cash balances of £3.8 million (2009: £3.0 million).
The carrying value of intangible assets was reduced by
normal annual amortisation charges of £0.4 million to
£13.5 million as at 31 March 2010 (2009: £13.9 million)
(see note 11 page 43).
The net book value of property, plant and equipment
increased by £0.5 million to £7.5 million in the year to
31 March 2010. Fixed asset additions totalled £1.4 million
while the depreciation charge for the year amounted to
£0.9 million (see note 12 page 45).
The Group’s investment properties comprise land and
commercial and residential properties in the Falkland
Islands held for rental. The net book value of these
properties at 31 March 2010 was unchanged at £1.8
million. The Directors estimate that the fair value of this
property portfolio at 31 March 2010 was £2.5 million
compared to a book value of £1.8 million (see note 13
page 46). Deferred tax assets relating to future pension
liabilities increased by £0.1 million to £0.6 million.
Non-property related inventories increased from £2.6
million to £3.5 million at 31 March 2010. £0.4 million of
the £3.5 million relates to work in progress at Momart
(2009: £0.3 million) and the balance of £3.1 million
represent stock held for resale in the Group’s retail
operations in the Falklands, which increased by £0.9
million from the exceptionally low levels seen in the prior
year (see note 19 page 51).
Property related inventories are shown at cost and
represent expenditure incurred to 31 March 2010 on the
conversion of the former Upland Goose Hotel back into a
terrace of residential properties at Marmont Row on the
waterfront in Stanley. The total cost of completed
properties and ongoing work in progress at 31 March
2010 was £1.2 million (2009: £0.6 million) (see note 19
page 51).
Trade and other receivables balances increased from £4.4
million to £4.5 million as at 31 March 2010.
At 31 March 2010 the Group retained cash balances on
deposit with UK banks of £3.8 million (2009: £3.0
million).
During the year the Group paid a final instalment of
£1.6 million in deferred consideration to the former
owners of Momart and bank loan repayments of a further
£0.8 million. Following these scheduled repayments the
Group’s loans and bank borrowings were reduced from
£7.2 million at the start of the year to £5.3 million as at
31 March 2010. £1.2 million of these loans are due for
repayment in the coming year and are shown under
current liabilities (see note 22 page 52).
Income tax payable within the next 12 months increased
to £0.7 million (2009: £0.5 million) reflecting the increase
in the Group’s taxable profits.
As noted above the Group took the decision to liquidate
its interest rate hedges in January 2010 and at 31 March
2010 had no interest in derivative financial instruments
(see note 23 page 53).
Trade and other payables increased from £8.0 million to
£8.2 million at 31 March 2010 (see note 24 page 54).
As at 31 March 2010 the liability due in respect of the
Group’s defined benefit pension schemes increased to
£2.2 million (2009: £2.0 million) as interest rates used to
discount the schemes’ future liabilities decreased in line
with market trends. The scheme in the Falklands is
unfunded and liabilities are met as they fall due from
operating cash flow. At PHFC a structured programme of
regular annual payments has been agreed with the UK
Pensions Regulator to eliminate the deficit of £0.2 million
over the medium term (see note 25 page 54).
The net deferred tax liabilities at 31 March 2010 were
essentially unchanged from the prior year at £2.2 million.
Cash flows
Cash flow from operating activities
With the improved trading performance of the Group
companies underlying earnings before interest, tax,
depreciation and amortisation (EBITDA) increased by 14%
to £4.0 million (2009: £3.5 million).
Working capital levels increased by £1.0 million in the
current year as the Group invested an additional £0.5
million in the conversion of Marmont Row, retail inventory
levels in Stanley recovered to more optimal levels and
prepayments and deferred income on Momart commercial
contracts increased by £0.5 million.
Tax paid of £1.0 million reduced to more normal levels
(2009: £1.4 million) following the switch to quarterly
payments in advance at Momart in the prior year.
12
ANNUAL REPORT 2010
Managing Director’s Business Review
CONTINUED
The Group’s Operating Cash Flow can be summarised as
follows:
Year ended 31 March
Underlying PBT
Depreciation
Interest payable
Restructuring costs
EBITDA
Share based payments
(Increase) / decrease in
working capital
Tax paid
Other
Net cash flow from
operating activities
2010
£m
2009
£m
2.7
0.9
0.4
2.3
0.8
0.6
–
(0.2)
4.0
0.2
3.5
0.3
(1.0)
1.6
(1.0)
(1.4)
0.2
0.1
2.4
4.1
Cash flow from investing and financing activities
In addition to cash flows from its operating activities the
Group received £3.6 million from the FOGL share sale and
drew down an additional £0.2 million in leasing loans to
finance vehicle purchases. Gross cash flow in the year
ended 31 March 2010 was £6.4 million (2009: £4.3
million).
Year ended 31 March
Net cash flow from
operating activities
Proceeds from sale of shares in FOGL
Draw down of loan
Gross cash flow
Less:
Dividends paid
Capital expenditure
Net bank interest paid
Liquidation of financial derivative
Deferred consideration re Momart
Loan repayments
Other
Total outflows
Net cash flow
Cash balance b/fwd
Cash balance c/fwd
2010
£m
2009
£m
2.4
3.6
0.4
6.4
(1.1)
(1.4)
(0.3)
(0.4)
(1.6)
(0.8)
–
4.1
–
0.2
4.3
(0.7)
(1.1)
(0.4)
–
(1.7)
(0.6)
0.2
(5.6)
(4.3)
0.8
3.0
3.8
–
3.0
3.0
During the year the Group paid a final dividend of
£0.7 million and in February 2010 an interim dividend
of £0.4 million. To continue to strengthen its operating
base, £1.4 million was invested in fixed assets across the
Group (2009: £1.0 million); £0.8 million was committed
to complete the extension and car park at the West Store
in Stanley and £0.2 million was invested in new vehicles
and office equipment at Momart. With strong cash
generation leading to lower borrowings, interest paid over
the year decreased to £0.3 million (2009: £0.4 million).
In January 2010 the Group liquidated its outstanding
interest rate collars at a cash cost of £0.4 million, made
scheduled repayments of bank loans of £0.8 million
(2009: £0.6 million) and paid £1.6 million in deferred
consideration in connection with the acquisition of
Momart (2009: £1.7 million). After making these payments
totalling £5.6 million the Group’s enjoyed a cash surplus
of £0.8 million taking its cash deposits to £3.8 million
(2009: £3.0 million).
Business drivers, risk factors and key
performance indicators
Business drivers
All the Group’s businesses are consumer oriented and
their success is linked to general economic conditions in
their markets. Inflation, employment levels, interest rates
and government spending programmes all have an effect
on disposable income and consumer confidence.
The Group’s businesses in the Falklands and Gosport have
strong ties to the local communities they serve and activity
is linked in turn to the local demand for their goods and
services. In addition demand is boosted by tourist activity
and both locations have benefited from increasing tourist
numbers in recent years. In the Falklands the strength of
the economy is closely linked to the fortunes of the fishing
industry and in particular the success of the unpredictable
illex squid season which runs from February to May. In the
year ended 31 March 2010 the commencement of the oil
exploration had a positive impact and this is also expected
to have to benefit the local economy in the current and
future years. If the programme was to cease this stimulus
would end. The commercialisation of discoveries is likely
to be of significant long term benefit to the economy of
the Falkland Islands.
At Momart activity in the art market is closely correlated
with the performance the global economy albeit with a
time lag. In the commercial art market, levels of disposable
income among high net worth individuals are a key driver
and in the museums sector government and corporate
sponsorship are important sources of funding in addition
to admissions revenue which is increasing. However
pressures on Government spending will have a negative
FALKLAND ISLANDS HOLDINGS PLC
13
impact on institutional budgets and the number of
exhibitions; in the longer term this should lead to more
out-sourcing of specialist services by museums and
institutions but in the near term a further reduction in the
level of government subsidised exhibitions seems likely.
Major international exhibitions which are displayed in a
number of global locations as part of cultural diplomacy
initiatives are an important source of revenue for museums
and galleries and the London Olympics should be an
opportunity for such activity. In addition, the art market is
still continuing to develop globally with the emergence of
new buyers, patrons and artists in the Middle East, Far
East and Russia.
Risk factors
PHFC and FIC are both sensitive to changes in local
economic conditions. The level of local competition also
affects performance. In the Falklands, FIC faces competition
in most of its operations but due to the Company’s long
history and accumulated expertise FIC has a leading
market position in most sectors in which it operates. The
situation is fluid and maintaining leadership depends on
continued innovation, investment and a commitment to
excellence in customer service.
Argentina continues to make a claim against the UK’s
sovereignty of the Falkland Islands and in recent months
has sought to impose restrictions on vessels transiting
Argentinian waters en route to the Falklands. However
the UK government has re-affirmed its sovereignty in
unequivocal terms and key trade and logistic links to the
UK are unaffected. However Argentina’s continuing
protests are likely to delay the development of further
commercial links to the Falklands’ South American
neighbours.
Although there is no other directly competing service, in
Portsmouth customers do have a choice and are able to
travel by car or public transport round the harbour.
Maintaining and promoting the relative attractions of
using the ferry whether for commuting to work, shopping
or for tourism is a key focus of PHFC’s strategy and we will
continue to work closely with local authorities and other
public transport providers to reinforce the ferry’s position
as a, faster more cost effective, and environmentally
friendly alternative to travelling by car.
For Momart the physical security of artworks is of
paramount importance and the Company goes to great
lengths to guard against the risk of theft or damage to the
works in its care. Beyond physical security and the
resulting risk to the Company’s reputation, the risks faced
by Momart tend to be those factors which could impact
the global art market. In particular the reduction in the
personal wealth of collectors and investors will be likely to
result in a contraction of personal or institutional budgets
which in turn would lead to a reduction in the movement
and display of art. The emergence of new competitors
could also impact the business adversely. In addition
because much of Momart’s business involves working
with overseas partners, volatility in the Sterling/Dollar and
Sterling/Euro exchange rates has a direct effect on
Momart’s cost base and profitability.
Key performance indicators
At Group level management attention is focussed on
revenue, costs and the contribution generated by each
sub group of businesses. In the Falklands businesses like
for like revenue growth is a key measure of performance,
especially for the retail outlets which account for two-
thirds of revenues. In addition to sales trends gross
margins by product and general costs are also kept under
close review.
At PHFC, passenger numbers and the average fare yield
are monitored on a weekly basis, and other key concerns
are ferry reliability and passenger safety as well as a focus
on costs and net profitability.
In Momart, forward sales projections are monitored and
updated and these are an important predictive indicator
which facilitates forward planning. In addition, order
intake and the conversion rate in bidding for contracts are
reviewed on a regular basis. Direct costs and the gross
contribution of individual contracts are monitored closely
as are the level of indirect costs and the overall amount of
overtime being worked.
Trading outlook
The economic backdrop remains uncertain and the Board
does not foresee a substantial improvement in trading
conditions during the current year.
However, with substantially reduced borrowings and the
inherent strength of each operating company, the Group
is well placed to weather the current difficult trading
environment and benefit in the upturn.
Whilst the Board remains remain cautious about prospects
for growth in the current year ahead, it remains confident
about the long-term future of the Group.
John Foster
Managing Director
23 June 2010
14
ANNUAL REPORT 2010
Board of Directors and Secretary
David Hudd (65) Chairman
David joined the Board on 4 March 2002 and is Chairman of the Nominations Committee. He is a Chartered Accountant
and was a partner in Price Waterhouse until 1982. Since then, he has been Chairman or Chief Executive of a number
of listed companies. He was, until April 1998, Executive Chairman of Vardon plc (now Cannons Group Limited), a
Company he founded. He is non-executive Deputy Chairman of Falklands Oil and Gas Limited.
John Foster (52) Managing Director
John joined the Board on 26 January 2005. He is a Chartered Accountant and previously served as Finance Director for
international software company Macro 4 plc and world famous 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.
Mike Killingley (59) Non-executive Director
Mike was appointed to the Board on 26 July 2005, having previously been appointed non-executive Chairman of the
Portsmouth Harbour Ferry Company Limited, following the Company’s successful bid. He is a Chartered Accountant
and was a partner of KPMG (and predecessor firms) from 1984 to 1998. He is currently non-executive Chairman of
Beale plc, a listed Company. He was previously non-executive Chairman of Southern Vectis plc and Conder Environmental
plc, both listed on AIM. He is Chairman of the Audit Committee and a member of the Remuneration Committee.
Jeremy Brade (48) Non-executive Director
Jeremy joined the Board on September 2009. He is a Director and Private Equity Partner at J O Hambro Capital
Management Limited, where he has worked since 2001. Jeremy had previously been with the Foreign and
Commonwealth Office (FCO) where he served at the British High Commission in New Delhi and as the representative
of Cyrus Vance and Lord Owen at the International Conference on the Former Yugoslavia. Prior to joining the
Diplomatic Service, Jeremy was an Army Officer.
James Ivins (45) Company Secretary
James joined the Group as Company Secretary on 26 February 2007. He is a Fellow of the Chartered Association of
Certified Accountants.
Directors’ Report
FALKLAND ISLANDS HOLDINGS PLC
15
The Directors present their Annual Report and the financial statements for the Company and for the Group for the year ended
31 March 2010.
Results and dividend
The Group’s result for the year is set out in the Consolidated Income Statement on page 21. The Group profit for the year after taxation
amounted to £5,256,000 (2009: loss £1,153,000). Basic earnings per share were 58.2p (2009: -12.8p). The Directors recommend a
dividend of 5.0p per share which, in addition to the interim dividend already announced, takes the total dividend proposed for the year
to 9.0p (2009: 8.0p) which, if approved by shareholders at the forthcoming Annual General Meeting will be paid on 29 October 2010
to shareholders on the register at close of business on 17 September 2010. This has not been included in creditors as it was not
approved before the year end. Dividends paid during the year comprise a dividend of 8.0p per share in respect of the previous year
ended 31 March 2009 and an interim dividend of 4.0p per share in respect of the current year.
Principal activities and business review
The business of the Group during the year ended 31 March 2010 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 Business Review on pages 4 to 13 which 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
Sir Harry Solomon resigned from the Board on 31 December 2009. The Board wishes to record its appreciation for his contribution and
long service to the Company.
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” on pages 17 and 18. 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 25 on pages 54 to 59.
Share capital and substantial interests in shares
During the year 91,300 share options were exercised (2009: nil). There have been no changes to the authorised share capital which
remains 12,500,000 shares.
Further information about the Company’s share capital is given in note 27 on page 63. Details of the Company’s executive share option
scheme and employee ownership plan can be found on pages 17 and 18 and in note 26 on pages 59 and 60.
16
ANNUAL REPORT 2010
Directors’ Report
CONTINUED
The Company has been notified of the following substantial interests in the issued ordinary shares of the Company as at
31 March 2010.
L S Licht
Artemis Investment Management
Sir Harry Solomon
Dolphin Fund plc
Number of shares
Percentage of shares in issue
750,000
424,419
333,677
387,109
8.24
4.67
3.67
4.26
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 2010 or 31 March 2009.
Charitable and political donations
Charitable donations made by the Group during the year amounted to £28,737 (2009: £15,401), largely to local community charities
in Gosport and the Falkland Islands. In the Falkland Islands donations amounted to £16,120, of which the largest was £7,922 to the
Falkland Islands Overseas Games Association. There were no political donations.
Disclosure of information to auditors
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 auditors are 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 auditors are aware of that
information.
Auditors
A resolution proposing the re-appointment of KPMG Audit plc will be put to shareholders at the Annual General Meeting.
Annual General Meeting
The Company’s Annual General Meeting will be held at the London offices of Financial Dynamics, Holborn Gate, 26 Southampton
Buildings, London WC2A 1PB at 2.30 pm on 9 September 2010. 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.
FALKLAND ISLANDS HOLDINGS PLC
17
Details of Directors’ remuneration and emoluments (audited information)
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 2010 and in the preceding year follows:
Bonuses
£’000
Benefits
£’000
David Hudd
John Foster
Mike Killingley
Leonard Licht
Sir Harry Solomon
Jeremy Brade
Salary
£’000
100
158
35
–
15
14
80
85
–
–
–
–
322
165
Gains in
respect of
Pensions
share options
£’000
–
25
–
–
–
–
25
£’000
183
–
–
–
–
–
–
2010
Total
£’000
363
268
35
–
15
14
2009
Total
£’000
100
205
30
15
20
–
695
370
–
–
–
–
–
–
–
Directors’ interests in shares
As at 31 March 2010, the share options of executive Directors may be summarised as follows:
Opening balance
Date of
grant
Number
of shares
D L Hudd
Number
of shares
J L Foster
Exercise
price
Exercisable
from
Expiry
date
15 Aug
2002
10 Feb
2005
14 June
2005
13 July
2006
5 July
2007
7 Aug
2007
81,300
–
£1.841/2
–
57,692
£5.20
49,411
14,117
£4.25
59,843
28,346
£3.171/2
3,780
3,780
£2.50
–
27,517
£3.30
15 Aug
2005
10 Feb
2008
14 June
2008
13 July
2009
1 Aug
2010
7 Aug
2010
14 Aug
2012
9 Feb
2015
13 June
2015
12 July
2016
31 July
2017
6 Aug
2017
Total at 31 March 2009
194,334
129,452
Lapsed in year
Issued in year
Exercised in year
13 July
2009
15 July
2009
9 March
2010
(59,843)
(28,346)
£3.171/2
44,550
44,550
£2.90
15 July
2012
14 July
2019
(81,300)
–
£1.841/2
Total at 31 March 2010
97,741
145,656
18
ANNUAL REPORT 2010
Directors’ Report
CONTINUED
The mid-market price of the Company’s shares on 31 March 2010 was 335 pence and the range in the year was 185 pence to
473 pence.
The Directors’ options extant at 31 March 2010 totalled 243,397 and represented 2.7% of the Company’s issued share capital.
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 conditional upon the growth in earnings
per share over a period of three consecutive financial years, (starting no earlier than the year in which the option is granted), being
greater than the increase in the retail price index over that period plus 6%.
The options granted to Mr Foster in August 2007 may normally only be exercised if the compound annual growth (“CAGR”) of the
share price of the Company is at least 10% over three years from the date of the grant. If CAGR is 10% the option may only be
exercised as to half the shares comprised in it. The option may only be exercised in full if CAGR is at least 20%. For CAGR between
10% and 20%, the option may be exercised in respect of a rising proportion of the shares, calculated on a straight line basis.
The options granted to Mr Hudd and Mr Foster in July 2009 may normally only be exercised subject to the satisfaction of performance
criteria relating to the growth in the Company’s total shareholder return (“TSR”) over the three year period commencing 19 July 2009
(the “performance period”) relative to the TSR growth of all companies in the FTSE AIM All-Share Index (the “Index”) over the same
period (the “TSR Condition”).
The TSR Condition provides for the options to become exercisable as follows:
Percentage by which the Company’s TSR growth exceeds the
Index’s TSR growth during the Performance Period
Percentage of Option shares which become exercisable
20% or more
10%
Less than 10%
100%
10%
0%
More than 10% but less than 20%
Between 10% and 100% on a straight line basis
In addition to the share options set out above, as at 31 March 2010 the interests of the Directors, their immediate families and related
trusts in the shares of the Company were as shown below:
David Hudd
John Foster
Mike Killingley
Jeremy Brade
Ordinary shares
Ordinary shares
as at 31 March 2010
as at 31 March 2009
82,382
10,000
10,000
2,000
56,000
10,000
10,000
–
FALKLAND ISLANDS HOLDINGS PLC
19
Statement of Directors’ responsibilities in respect of the Directors’ Report and financial statements
The Directors are responsible for preparing the Annual Report and the Group and Company financial statements in accordance with
applicable law and regulations.
Company law requires the Directors to prepare Group and Company financial statements for each financial year. As required by the
AIM Rules of the London Stock Exchange they are required to prepare the Group financial statements in accordance with IFRSs as
adopted by the EU and applicable law and have elected to prepare the Parent Company financial statements on the same basis.
Under company law the Directors must not approve the financial statements unless they are satisfied that they give a true and fair view
of the state of affairs of the Group and Company and of their profit or loss for that period.
In preparing each of the Group and Company financial statements, the Directors are required to:
•
•
•
•
select suitable accounting policies and then apply them consistently;
make judgments 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 Company
will continue in business.
The Directors are responsible for keeping adequate accounting records that are sufficient to show and explain the Company’s
transactions and disclose with reasonable accuracy at any time the financial position of the Company and enable them to ensure that
its financial statements comply with the Companies Act 2006. They have a 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.
Approved by the Board and signed on its behalf by:
James Ivins
Secretary
23 June 2010
Kenburgh Court
133-137 South Street
Bishop’s Stortford
Hertfordshire
CM23 3HX
20
ANNUAL REPORT 2010
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 2010. 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 auditors
As explained more fully in the Directors’ Responsibilities Statement set out on Directors’ Responsibilities, 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
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 (“APB’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 APB’s website at www.frc.org.uk/apb/scope/UKNP.
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
2010 and of the Group’s profit for the year then ended;
•
•
the Group financial statements have been properly prepared in accordance with IFRSs as adopted by the EU;
the Parent Company financial statements have been properly prepared in accordance with IFRSs as adopted by the EU and as
applied in accordance with the provisions of the Companies Act 2006; and
•
the financial statements have been prepared in accordance with the requirements of the Companies Act 2006.
Opinion on other matter prescribed by the Companies Act 2006
In our opinion:
•
the details of the Directors’ Remuneration and emoluments which we were engaged to audit has been properly prepared in
accordance with schedule 8 to the Companies Act 2006 The Large and Medium-sized companies and Groups (Accounts and
Reports) Regulations 2008, as if those requirements were to apply to the Company; and
•
the information given in the Directors’ Report for the financial year for which the financial statements are prepared is consistent
with the financial statements.
Matters on which we are required to report by exception
We have nothing to report in respect of the following matters where the Companies Act 2006 requires us to report to you if, in our
opinion:
•
adequate accounting records have not been kept by the Parent Company, or returns adequate for our audit have not been received
from branches not visited by us; or
•
the Parent Company financial statements and the details of the Directors’ remuneration and emoluments which we were engaged
to audit 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.
Tim Widdas (Senior Statutory Auditor)
For and on behalf of KPMG Audit Plc, Statutory Auditor
Chartered Accountants
St Nicholas House
31 Park Row
Nottingham NG1 6FQ
23 June 2010
Consolidated Income Statement
FOR THE YEAR ENDED 31 MARCH 2010
Before
Amortisation
amortisation
& non-trading
FALKLAND ISLANDS HOLDINGS PLC
21
Before
Amortisation
amortisation
& non-trading
& non-trading
items
items
(note 5)
Total
As restated
As restated
As restated
Notes
3
Revenue
Cost of sales
Gross profit
& non-trading
items
2010
£’000
29,224
(17,237)
11,987
Other administrative expenses
(8,868)
items
(note 5)
2010
£’000
Total
2010
£’000
2009
£’000
2009
£’000
–
–
–
–
29,224
32,251
(17,237)
(20,158)
11,987
12,093
(8,868)
(9,214)
–
–
–
–
2009
£’000
32,251
(20,158)
12,093
(9,214)
Amortisation of intangible
assets
Goodwill impairment
Restructuring costs
–
–
–
(398)
(398)
–
–
–
–
–
–
–
(398)
(398)
(1,983)
(1,983)
(228)
(228)
Operating expenses
(8,868)
(398)
(9,266)
(9,214)
(2,609)
(11,823)
Gain on disposal of
available-for-sale equity
securities
Compensation for early
vacation of leasehold premises
Other income
4
Other operating income
–
–
15
15
3,089
3,089
245
–
245
15
3,334
3,349
–
–
15
15
–
–
–
–
Operating profit
3,134
2,936
6,070
2,894
(2,609)
–
–
15
15
285
172
Finance income
Finance expense
8
Net financing costs
111
(557)
(446)
45
–
45
156
(557)
172
(750)
–
(334)
(1,084)
(401)
(578)
(334)
(912)
Profit / (loss) before tax
from continuing operations
2,688
2,981
5,669
2,316
(2,943)
9
Taxation
(705)
292
(413)
(605)
79
(627)
(526)
Profit / (loss) for the year
attributable to equity
holders of the Company
1,983
3,273
5,256
1,711
(2,864)
(1,153)
10
Earnings per share
Basic
Diluted
22.0p
21.7p
58.2p
57.5p
19.0p
18.8p
(12.8)p
(12.8)p
22
ANNUAL REPORT 2010
Consolidated Statement of Comprehensive Income
FOR THE YEAR ENDED 31 MARCH 2010
Gain / (loss) on valuation of available-for-sale equity securities
6,828
(7,560)
2010
£’000
2009
£’000
Transfer to the income statement on sale of available-for-sale equity securities
(1,683)
Share-based payments
Repurchase of equity interest
PHFC actuarial loss on pension scheme
FIC actuarial (loss) / gain on pension scheme
Movement on deferred tax asset relating to pension schemes
Other comprehensive income / (expense)
Profit / (loss) for the year
Total comprehensive income / (expense)
–
297
–
(86)
50
13
240
(75)
(55)
(195)
124
5,184
(7,286)
5,256
(1,153)
10,440
(8,439)
Consolidated Balance Sheet
AT 31 MARCH 2010
Notes
11
12
13
15
Non-current assets
Intangible assets
Property, plant and equipment
Investment properties
Financial assets – available for sale equity securities
16 Non-current assets held for sale
17 Other financial assets
18 Deferred tax assets
Total non-current assets
Current assets
Trading inventories
Property inventories
Inventories
Trade and other receivables
19
20
17 Other financial assets
21 Cash and cash equivalents
Total current assets
TOTAL ASSETS
Current liabilities
22
Interest bearing loans and borrowings
Income tax payable
23 Derivative financial instruments
24
Trade and other payables
Total current liabilities
Non-current liabilities
22
25
Interest bearing loans and borrowings
Employee benefits
18 Deferred tax liabilities
Total non-current liabilities
TOTAL LIABILITIES
Net assets
27 Capital and reserves
Equity share capital
Share premium account
Other reserves
Retained earnings
Financial assets fair value reserve
Total equity
FALKLAND ISLANDS HOLDINGS PLC
23
2010
£’000
As restated
2009
£’000
13,509
13,907
7,483
1,777
7,033
1,769
15,542
10,890
20
52
621
20
58
516
39,004
34,193
3,489
1,220
4,709
4,535
206
3,810
2,570
639
3,209
4,424
159
3,004
13,260
10,796
52,264
44,989
(1,218)
(683)
–
(2,142)
(518)
(406)
(8,219)
(7,913)
(10,120)
(10,979)
(4,055)
(2,237)
(1,615)
(7,907)
(5,053)
(2,036)
(2,054)
(9,143)
(18,027)
(20,122)
34,237
24,867
910
7,324
1,162
11,260
13,581
34,237
906
7,206
1,162
7,157
8,436
24,867
These financial statements were approved by the Board of Directors on 23 June 2010 and were signed on its behalf by:
J L Foster
Director
24
ANNUAL REPORT 2010
Company Balance Sheet
AT 31 MARCH 2010
Notes
Non-current assets
14
20
18
20
21
Financial assets – investments in subsidiaries
Other receivables
Deferred tax
Total non-current assets
Current assets
Trade and other receivables
Cash and cash equivalents
Total current assets
TOTAL ASSETS
Current liabilities
22
Interest bearing loans and borrowings
Income tax payable
23
24
Other financial liabilities
Trade and other payables
Total current liabilities
Non-current liabilities
22
Interest bearing loans and borrowings
Other liabilities
Total non-current liabilities
TOTAL LIABILITIES
Net assets
27
Capital and reserves
Called up share capital
Share premium account
Other reserves
Retained earnings
Total equity
2010
£’000
2009
£’000
31,297
31,103
2,916
6,325
–
122
34,213
37,550
15
360
375
19
289
308
34,588
37,858
(928)
(1,873)
70
–
(413)
(38)
(406)
(413)
(1,271)
(2,730)
(3,140)
(3,955)
(871)
(632)
(4,011)
(4,587)
(5,282)
(7,317)
29,306
30,541
910
7,324
6,910
906
7,206
6,910
14,162
15,519
29,306
30,541
These financial statements were approved by the Board of Directors on 23 June 2010 and were signed on its behalf by:
J L Foster
Director
Registered company number: 03416346
Consolidated Cash Flow Statement
FOR THE YEAR ENDED 31 MARCH 2010
Notes
Cash flows from operating activities
Profit / (loss) for the year
Adjusted for:
(i) Non-cash items:
Depreciation
Fixed asset impairment
Amortisation
Goodwill impairment
Amortisation of loan fees
Notional interest charge on deferred consideration
Expected return on pension scheme assets
Interest cost on pension scheme liabilities
(Gain) / loss on remeasurement of derivative financial instruments
Settlement of equity interest
Equity-settled share-based payment expenses
Non-cash items adjustment
(ii) Other items:
Bank interest receivable
Bank interest payable
Gain on disposal of available for sale equity securities
Loss on disposal of fixed assets
Income tax expense
Other adjustments
Operating cash flow before changes in working capital and provisions
(Increase) / decrease in trade and other receivables
Increase in property inventories
(Increase) / decrease in other inventories
Increase in trade and other payables
Decrease in provisions and employee benefits
Changes in working capital and provisions
Cash generated from operations
Income taxes paid
Net cash flow from operating activities
Cash flows from investing activities
Purchase of property, plant and equipment
Purchase of investment properties
Proceeds from the disposal of property, plant and equipment
Acquisition of subsidiary, net of cash acquired
Proceeds from sale of assets held for sale
Proceeds from the sale of available for sale equity securities
Interest received
Net cash flow from investing activities
Cash flow from financing activities
Increase in other financial assets
Repayment of secured loan
Proceeds from new loan
Interest paid
Liquidation of financial derivative contracts
Proceeds from the issue of ordinary share capital
Dividends paid
Net cash flow from financing activities
Net increase in cash and cash equivalents
Cash and cash equivalents at start of year
21
Cash and cash equivalents at end of year
FALKLAND ISLANDS HOLDINGS PLC
25
2010
£’000
As restated
2009
£’000
5,256
(1,153)
907
(30)
398
–
30
48
(17)
149
(45)
(75)
240
1,605
(16)
330
(3,089)
–
413
(2,362)
4,499
(111)
(581)
(919)
306
(137)
(1,442)
3,057
(708)
2,349
(1,358)
(55)
72
(1,621)
–
3,584
16
638
(41)
(755)
376
(330)
(361)
14
(1,084)
(2,181)
806
3,004
3,810
840
40
398
1,983
30
104
(22)
152
334
–
297
4,156
(76)
464
–
3
526
917
3,920
929
(363)
770
318
(47)
1,607
5,527
(1,427)
4,100
(954)
(100)
1
(1,697)
186
–
76
(2,488)
(5)
(608)
166
(434)
–
–
(722)
(1,603)
9
2,995
3,004
26
ANNUAL REPORT 2010
Company Cash Flow Statement
FOR THE YEAR ENDED 31 MARCH 2010
Notes
Cash flows from operating activities
Loss for the year
Adjusted for:
Net financing costs
Amortisation of loan fees
Notional interest charge on deferred consideration
Loss on remeasurement of financial instruments
Impairment charges on investments in subsidiaries
Equity-settled share-based payment expenses
Settlement of equity interest
Income tax expense
2010
£’000
2009
£’000
(330)
(10,625)
286
30
48
(45)
–
46
(75)
(84)
393
30
104
334
13,014
151
–
(54)
Operating profit before changes in working capital and provisions
(124)
3,347
Decrease in trade and other receivables
Decrease in trade and other payables
Increase in provisions
Cash generated from operations
Income taxes paid
Net cash flow from operating activities
Cash flows from investing activities
Acquisition of subsidiary
Net cash flow from investing activities
Cash flow from financing activities
Proceeds from new loan
Proceeds from inter-company borrowing
Repayment of inter-company borrowing
Repayment of secured loan
Interest paid
Liquidation of financial derivative contracts
Proceeds from the issue of ordinary share capital
Dividends paid
Net cash flow from financing activities
Net increase / (decrease) in cash and cash equivalents
Cash and cash equivalents at start of year
21
Cash and cash equivalents at end of year
4
–
168
48
(70)
(22)
12
(658)
–
2,701
–
2,701
(1,621)
(1,621)
(1,553)
(1,553)
242
3,648
–
(459)
(286)
(361)
14
–
–
(514)
(332)
(393)
–
–
(1,084)
(722)
1,714
(1,961)
71
289
360
(813)
1,102
289
Consolidated Statement of Changes in Shareholders’ Equity
FOR THE YEAR ENDED 31 MARCH 2010
FALKLAND ISLANDS HOLDINGS PLC
27
Shareholders’ funds at the beginning of the year
Profit / (loss) for the year
Share-based payments
Change in fair value of available-for-sale financial assets
Transfer to the income statement on sale of available-for-sale equity securities
Actuarial loss on pension net of tax
Repurchase of equity interest
Total comprehensive income / (expense) for the year
Dividends paid
Proceeds from the issue of share capital
Shareholders’ funds at the end of the year
2010
£’000
2009
£’000
24,867
34,028
5,256
(1,153)
240
297
6,828
(7,560)
(1,683)
(126)
(75)
–
(23)
–
10,440
(8,439)
(1,084)
(722)
14
–
34,237
24,867
Company Statement of Changes in Shareholders’ Equity
FOR THE YEAR ENDED 31 MARCH 2010
Shareholders’ funds at the beginning of the year
Profit / (loss) for the year
Share-based payments
Repurchase of equity interest
Total comprehensive expense for the year
Dividends paid
Proceeds from the issue of share capital
Shareholders’ funds at the end of the year
2010
£’000
2009
£’000
30,541
41,591
(330)
(10,625)
240
(75)
297
–
(165)
(10,328)
(1,084)
(722)
14
–
29,306
30,541
28
ANNUAL REPORT 2010
Notes to the Financial Statements
FOR THE YEAR ENDED 31 MARCH 2010
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.
The management and development of the Group’s property portfolio in the Falkland Islands is now a significant part of the Group’s
trading activity. Accordingly, the Board has decided to report receipts from the disposal of investment property and property
developments and rents received from its portfolio of residential and commercial properties as a trading activity within turnover.
Associated gains and losses on the disposal of rental properties and property developments are accordingly recognised within gross
profit. Prior year comparatives have been amended accordingly.
Judgements made by the Directors in the application of these accounting policies that have a significant effect on the financial
statements and estimates with a significant risk of material adjustment next year are discussed in note 32.
The financial statements are presented in pounds sterling, rounded to the nearest thousand. They are prepared on the historical cost
basis except that available-for-sale financial instruments and derivative financial instruments are stated at their 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 Business Review on pages 4 to 13. The financial position of the Group, its cash flows, liquidity position and
borrowing facilities are also described in the Managing Director’s Business Review. In addition note 28 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.
After making enquiries the Directors have a reasonable expectation that the Company and Group have adequate reserves 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 the financial and operating policies of so as
to obtain benefits from its activities. 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.
FALKLAND ISLANDS HOLDINGS PLC
29
1 Accounting policies CONTINUED
Subsidiaries are consolidated from the date on which control is transferred to the Group and cease to be consolidated from the date
on which control is transferred out of the Group.
All intra-company balances and transactions, including unrealised profits arising from intra-group transactions, are eliminated in full in
preparing the consolidated financial statements. Unrealised losses are eliminated but only to the extent that there is no evidence of
impairment.
Investments in subsidiaries not classified as held-for-sale within the Company balance sheet are stated at cost.
Presentation of income statement
Due to the non-prescriptive nature under IFRS as to the format of the income statement, the format used by the Group is explained
below.
Operating profit is the pre-finance profit of continuing activities and acquisitions of the Group, and in order to achieve consistency and
comparability, is analysed to show separately the results of normal trading performance (“underlying profit”), individually significant
charges and credits, changes in the fair value of derivative financial instruments and amortisation of intangible assets on acquisition.
Such items arise because of their size or nature, and in 2010 comprise:
• Gain on disposal of equity securities
•
Compensation for early vacation of leasehold premises
• Gain on liquidation of derivative financial instrument contracts
•
Amortisation of intangible assets.
In 2009 such items comprised:
•
•
•
•
Charges relating to asset impairments which are significant to any reportable segment
Charges relating to the Group’s restructuring programme
Changes in the fair value of derivative financial instruments
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
Long leasehold land and buildings
Vehicles, plant and equipment
Ships
20 – 50 years
50 years
4 – 10 years
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-in-construction are not depreciated.
30
ANNUAL REPORT 2010
Notes to the Financial Statements
CONTINUED
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, property, plant and
equipment above) and any impairment losses.
Intangible assets
Goodwill
Goodwill arises on the acquisition of subsidiaries.
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.
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
Customer relationships
Non-compete agreements
Computer software
20 years
6 – 10 years
5 years
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 five years.
Impairment of non-financial assets
At each reporting date the Group assesses whether there is any indication that an asset may be impaired. 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 to be close to its fair value less costs to sell 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 pre-tax 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
FALKLAND ISLANDS HOLDINGS PLC
31
1 Accounting policies CONTINUED
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, interest receivable, and foreign exchange gains and losses that 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
Certain financial instruments held by the Group are classified as being available-for-sale and are stated at fair value, with any resultant
gain or loss being recognised directly in equity, except for impairment losses. When these items are derecognised, the cumulative gain
or loss previously recognised directly in equity is recognised in profit and loss.
Financial instruments classified as available-for-sale are initially recognised at fair value less directly attributable transaction costs.
The Group does not use derivative financial instruments for speculative purposes. Derivative financial instruments are initially measured
at fair value. Changes in the fair value of derivative financial instruments are recognised in the income statement as they arise. The
Group has not applied hedge accounting to its derivative financial instruments.
Employee share awards
The Group provides benefits to certain employees (including Directors) in the form of share-based payment transactions, whereby the
employee 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 that vest except where forfeiture is only due to share
prices not achieving the threshold for vesting.
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.
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 first-in, first-out 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 and properties held-for-sale relating to the Group’s property trading portfolio in the Falkland Islands are 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
32
ANNUAL REPORT 2010
Notes to the Financial Statements
CONTINUED
1 Accounting policies CONTINUED
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, 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 the amount of profit attributable to the stage of completion of a contract is recognised
when the outcome of the contract can be seen with reasonable certainty, typically upon successful opening. Turnover for such contracts
is stated at the cost appropriate to their stage of completion plus attributable profit, less amounts already recognised. 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 also operates two pension schemes providing benefits based on final pensionable pay, one of which is unfunded. The assets
of the funded scheme are held separately from those of the Group.
The Group’s net obligation in respect of each 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 and the fair value of the plan assets (at bid price) 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 asset recognised is limited to the net total of any unrecognised past service costs and the present value of any future
refunds from the plan or 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 spread over the period until the benefit increases vest. Interest charged on the scheme liabilities and the expected
return on scheme assets are included in other finance costs.
Actuarial gains and losses are recognised in full in the period in which they arise in the statement of recognised income and expense.
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 on funds presented within shareholders’ funds
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.
FALKLAND ISLANDS HOLDINGS PLC
33
1 Accounting policies CONTINUED
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.
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.
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.
Leased assets
Leases in which the Group assumes substantially all the risks and rewards of ownership are classified as finance leases. All other leases
are classified as operating leases.
As lessee
Rentals in respect of all operating leases are charged to the income statement on a straight line basis over the lease term.
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. Lease incentives granted are recognised as an integral part of the total rental
income.
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.
Non-current assets held for sale and discontinued operations
Non-current assets and discontinued operations are classified as held for sale when their carrying values will be recovered principally
through sale. They are generally measured at the lower of carrying amount and fair value less costs to sell.
34
ANNUAL REPORT 2010
Notes to the Financial Statements
CONTINUED
1 Accounting policies CONTINUED
Provisions
Provisions are recognised in the balance sheet when the Group has a present legal or constructive obligation as a result of a past event,
and it is probable that an outflow of economic benefits will be required to settle the obligation and a reliable estimate can be made of
the amount of the obligation. If the effect is material, provisions are determined by discounting the expected cash flows at an
appropriate pre-tax risk free rate.
New accounting standards and interpretations applied
During the year the Group has adopted the following standards:
Amendments to IAS 1: Presentation of financial statements.
IFRS 8: Operating Segments. The Standard introduces a management approach to segment reporting and segment information is
consistent with internal management reporting.
Amendments to IAS 23: Borrowing costs. No borrowing costs were incurred in relation to construction projects.
New accounting standards and interpretations not applied
During the year, the International Accounting Standards Board (“IASB”) and International Financial Reporting Interpretations Committee
(“IFRIC”) have issued the following standards and interpretations with an effective date after the end of these financial statements,
which have not been applied:
International Accounting Standards (IAS/IFRS)
(accounting periods commencing on or after):
Effective date
Endorsed
IFRS 3 (Revised): Business combinations (2008)
Amendments to IAS 39 Financial instruments: Recognition and Measurement: Eligible Hedged Items
Amendments to IAS 27 Consolidated and Separate Financial Statements (2008)
Amendments to IFRS 2 Group Cash Settled Share-based Payment Transactions
Amendments to IAS 32 Classification of Rights Issues
Unendorsed
IAS 24 Related Party Disclosures
IFRS 9 Financial Instruments
International Financial Reporting Interpretations Committee (IFRIC)
Unendorsed
Amendments to IFRIC 14 Extinguishing Financial Liabilities with Equity Instruments
Amendments to IFRIC 9 Financial Instruments
1 July 2009
1 July 2009
1 July 2009
1 January 2010
1 February 2010
1 January 2011
1 January 2013
1 July 2010
1 January 2013
The Directors do not anticipate that the adoption of the standards and interpretations listed above will have a material impact on the
Group’s or Company’s financial statements in the period of initial application, however additional disclosures will be required.
FALKLAND ISLANDS HOLDINGS PLC
35
2 Segmental information
Segment information is presented in respect of the Group’s business and geographical segments. The primary reporting format is
determined to be by business type: the provision of ferry services; arts logistics and storage; and general trading in the Falkland Islands.
The secondary reporting format is determined to be geographical.
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.
Primary reporting format – business
2010
Revenue
Segment operating profit before tax, amortisation
and non-trading items
Amortisation of intangible assets
Compensation for early vacation of leasehold premises
Unallocated gain on disposal of available-for-sale equity securities
Amortisation and non-trading items
Segment operating profit
Gain on liquidation of financial derivative
Interest income
Interest expense
Segment profit before tax
Taxation
Segment profit after tax
Assets and liabilities
Segment assets
Segment liabilities
Unallocated assets and liabilities
Segment net assets
Other segmental information
Capital expenditure:
Property, plant, equipment
Investment properties
Depreciation – property, plant and equipment
Depreciation – investment properties
Amortisation
General
trading
Ferry
services
Art logistics
and storage
(Falklands)
(Portsmouth)
£’000
£’000
(UK)
£’000
To tal
£’000
12,434
3,718
13,072
29,224
1,377
800
–
–
–
800
8
21
(85)
744
(245)
498
957
(398)
245
(153)
804
37
12
(334)
519
(201)
318
–
–
–
1,377
–
78
(138)
1,317
34
1,351
11,590
(8,084)
–
8,231
(2,583)
–
13,045
(5,270)
–
3,506
5,648
7,775
1,087
55
324
40
–
37
–
222
–
–
234
–
321
–
398
3,134
(398)
245
3,089
2,936
6,070
45
111
(557)
5,669
(413)
5,256
32,866
(15,937)
17,308
34,237
1,358
55
867
40
398
2010
Underlying profit before tax
Segment operating profit before tax, amortisation and
non-trading items (as above)
Interest expense
Interest income
Underlying profit before tax
General
trading
Ferry
services
Art logistics
and storage
(Falklands)
(Portsmouth)
£’000
£’000
(UK)
£’000
To tal
£’000
1,377
(138)
78
1,317
800
(85)
21
736
957
(334)
12
635
3,134
(557)
111
2,688
36
ANNUAL REPORT 2010
Notes to the Financial Statements
CONTINUED
2 Segmental information CONTINUED
2009
Revenue
General
trading
Ferry
services
Art logistics
and storage
(Falklands)
(Portsmouth)
£’000
£’000
(UK)
£’000
To tal
£’000
12,991
3,716
15,544
32,251
Segment operating profit before tax, amortisation
and non-trading items
1,256
782
Amortisation of intangible assets
Goodwill impairment
Restructuring costs
Amortisation and non-trading items
Segment operating profit
Loss on revaluation of financial derivative
Finance expense
Finance income
Segment profit before tax
Taxation
Segment profit after tax
Assets and liabilities
Segment assets
Segment liabilities
Unallocated assets and liabilities
Segment net assets
Other segmental information
Capital expenditure:
Property, plant, equipment
Investment properties
Depreciation – property, plant and equipment
Depreciation – investment properties
Impairment – ships
Amortisation and goodwill impairment
–
–
(124)
(124)
1,132
–
(119)
84
1,097
(131)
966
9,363
(7,081)
–
2,282
335
100
305
36
–
–
–
–
–
–
782
(57)
(220)
80
585
(209)
376
8,487
(2,834)
–
5,653
51
–
215
–
40
–
856
(398)
(1,983)
(104)
(2,485)
(1,629)
(277)
(411)
8
(2,309)
(186)
(2,495)
14,024
(4,870)
–
9,154
611
–
284
–
–
2,894
(398)
(1,983)
(228)
(2,609)
285
(334)
(750)
172
(627)
(526)
(1,153)
31,874
(14,785)
7,778
24,867
997
100
804
36
40
2,381
2,381
2009
Underlying profit before tax
Segment operating profit before tax, amortisation and
non-trading items (as above)
Interest expense
Interest income
Underlying profit before tax
General
trading
Ferry
services
Art logistics
and storage
(Falklands)
(Portsmouth)
£’000
£’000
(UK)
£’000
To tal
£’000
1,256
(119)
84
1,221
782
(220)
80
642
856
(411)
8
453
2,894
(750)
172
2,316
2 Segmental information CONTINUED
Secondary reporting format – geographic
2010
Revenue
Assets and liabilities
Segment assets
Other segment information
Capital expenditure
2009
Revenue
Assets and liabilities
Segment assets
Other segment information
Capital expenditure
3 Revenue
Sale of goods
Rendering of services
Property sales in the Falkland Islands
Total revenue
4 Other operating income
Gain on disposal of available-for-sale equity securities
Compensation for early vacation of leasehold premises
Foreign exchange commission receivable
Net loss on disposal of property, plant and equipment
Total other operating income
FALKLAND ISLANDS HOLDINGS PLC
37
United
Kingdom
£’000
Falkland
Islands
£’000
Total
£’000
16,790
12,434
29,224
21,276
11,590
32,866
271
1,142
1,413
United
Kingdom
£’000
Falkland
Islands
£’000
Total
£’000
19,260
12,991
32,251
22,511
9,363
31,874
662
435
1,097
2010
£’000
14,214
14,651
359
2009
£’000
14,476
17,501
274
29,224
32,251
2010
£’000
3,089
245
15
–
3,349
2009
£’000
–
–
18
(3)
15
38
ANNUAL REPORT 2010
Notes to the Financial Statements
CONTINUED
5 Amortisation, non-trading items and underlying profit
Gain on disposal of available-for-sale equity securities 1
Compensation for early vacation of leasehold premises 2
Gain on liquidation of derivative financial instrument 3
Amortisation charge on Momart intangible assets acquired
Goodwill impairment charge recognised in the year 4
Restructuring charges incurred 5
Loss on revaluation of derivative financial instruments 6
Amortisation and non-trading items gain / (charge)
Profit / (loss) before tax as reported
adjusted for: amortisation and non-trading (gains) / charges
Underlying profit
2010
2010
£’000
3,089
245
45
(398)
–
–
–
2009
£’000
–
–
–
(398)
(1,983)
(228)
(334)
2,981
(2,943)
5,669
(2,981)
2,688
(627)
2,701
2,074
1 Gain on disposal of available-for-sale equity securities
On 30 November the Group sold 3,000,000 Falkland Oil and Gas Limited shares, representing 20% of its holding at that date.
The sale generated proceeds of £3.6 million and a gain on disposal of £3.1 million.
2 Compensation for early vacation of leasehold premises
An agreement for the payment of compensation to Momart Limited for the early vacation of leasehold premises in April 2008 was
settled during the year with total compensation received of £245,000.
3 Gain on liquidation of financial instrument
In January 2010 the Group elected to liquidate its base rate cap and floor contracts in respect to loans taken out in relation to a
ferry delivered in 2005 and the Momart acquisition in March 2008 at a cost of £352,000. IAS 39 had required these derivative
financial instruments to be recognised in the balance sheet at fair value as an asset or liability. At 31 March 2009 this gave rise to a
liability of £406,000. On liquidation after expensing arrangement fees the Group recognised a gain of £45,000 on termination of
the contracts.
2009
4 Impairment charges
During the year the Group in accordance with IAS 36 “Impairment of assets” undertook a review of the carrying value of goodwill.
As a consequence of this review, after taking account of a reduction in activity across the world art markets, an impairment charge
of £1,983,000 was recognised in connection with the goodwill relating to the acquisition of Momart International Limited in March
2008.
5 Restructuring charges
Charges of £228,000 incurred within operating profit related primarily to employment termination costs.
6 Loss on revaluation of derivative financial instruments
IAS 39 requires derivative financial instruments to be valued at the balance sheet date and any difference between that value and
the intrinsic value of the instrument to be reflected in the balance sheet as an asset or liability. Any subsequent change in value is
reflected in the Income Statement until hedge accounting is achieved. At the year end the derivatives the Group held resulted in
a loss or revaluation of £334,000.
FALKLAND ISLANDS HOLDINGS PLC
39
6 Expenses and auditors’ remuneration
Included in profit / loss are the following expenses / (income):
Group
Company
Direct operating expenses arising from investment properties
which generated rental income in the period
Depreciation
Impairment charge – ships
Amortisation of intangible assets
Foreign currency differences
Impairment (gain) / loss on trade and other receivables
Cost of inventories recognised as an expense
Operating lease payments
Auditors’ remuneration
Audit of these financial statements
and amounts receivable by auditors and their associates in respect of:
Audit of subsidiaries’ financial statements pursuant to legislation
Other services relating to taxation
All other services
Total auditors’ remuneration
2010
£’000
65
867
–
398
(38)
(48)
2009
£’000
99
804
40
398
(89)
91
7,597
649
7,393
594
2010
£’000
2009
£’000
–
–
–
–
–
–
–
–
2010
£’000
25
60
13
–
98
–
–
–
–
–
–
–
–
2009
£’000
25
60
–
–
85
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:
At Gosport Ferry
At Falklands Islands Company, in Stanley
At Falklands Islands Support, in UK
At Momart Limited
At Head Office
Total average staff numbers
Number of employees
Number of employees
Group
Company
2010
£’000
41
83
4
104
3
235
2009
£’000
41
88
4
118
3
254
2010
£’000
2009
£’000
–
–
–
–
3
3
–
–
–
–
3
3
40
ANNUAL REPORT 2010
Notes to the Financial Statements
CONTINUED
7 Staff numbers and cost CONTINUED
The aggregate payroll cost of these persons were as follows:
Wages and salaries
Share-based payments (see note 26)
Social security costs
Contributions to defined contribution plans
Total employment costs
Group
Company
2010
£’000
2009
£’000
7,471
7,958
240
650
357
297
665
403
8,718
9,323
2010
£’000
546
46
71
25
688
2009
£’000
529
151
58
25
763
Details of Directors’ remuneration are provided in the Directors’ Report, under the heading “Details of Directors’ Remuneration and
Emoluments” on page 17.
8 Finance income and expense
Bank interest receivable
Finance lease interest receivable
Expected return on pension scheme assets
Gain on liquidation of derivative financial instrument
Total financial income
Interest payable on bank loans
Interest cost on pension scheme liabilities
Amortisation of loan fees
Interest attributable to deferred consideration payable
(Loss) on remeasurement of derivative financial instrument
Total financial expense
Net financing cost
Bank interest receivable
Interest payable on bank loans
Net bank interest
Other financing charges (from above)
Net financing cost
2010
£’000
16
78
17
45
156
(330)
(149)
(30)
(48)
–
(557)
(401)
2010
£’000
16
(330)
(314)
(87)
(401)
2009
£’000
76
74
22
–
172
(464)
(152)
(30)
(104)
(334)
(1,084)
(912)
2009
£’000
76
(464)
(388)
(524)
(912)
9 Taxation
Recognised in the income statement
Current tax expense
Current year
Adjustments for prior years
Current tax expense
Deferred tax expense
Origination and reversal of temporary differences
Reduction in tax rate
Adjustments for prior years
Deferred tax (credit) / expense
Total tax expense
Reconciliation of tax charge
Profit / (loss) on ordinary activities before tax
Tax using the UK corporation tax rate of 28% (2009: 28%)
Expenses not deductible for tax purposes
Other timing differences
Non taxable income on disposals
Schedule 23 deduction
Excess foreign tax
Marginal relief
Lower tax charges overseas
Reduction in deferred tax rate
Adjustments to tax charge in respect of previous periods
Deferred tax asset not recognised
Total tax expense
Tax recognised directly in equity
Current tax recognised directly in equity
Deferred tax recognised directly in equity
Total tax credit recognised directly in equity
FALKLAND ISLANDS HOLDINGS PLC
41
2010
£’000
852
(15)
837
(174)
(2)
(248)
(424)
413
2010
£’000
5,669
1,587
142
(57)
(915)
(60)
–
(6)
(15)
–
(263)
–
413
2010
£’000
–
(124)
(124)
2009
£’000
718
(130)
588
(158)
–
96
(62)
526
2009
£’000
(627)
(176)
697
–
–
–
(39)
(4)
(1)
(34)
83
–
526
2009
£’000
–
(13)
(13)
42
ANNUAL REPORT 2010
Notes to the Financial Statements
CONTINUED
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 under the Employee Share Ownership Plan (“ESOP”) (see note 27).
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.
Profit / (loss) on ordinary activities after taxation (see page 21)
Weighted average number of shares in issue
Less: shares held under the ESOP
Average number of shares in issue excluding the ESOP
Maximum dilution with regards to share options1
Diluted weighted average number of shares
1 Potential ordinary shares are not considered dilutive where their conversion would reduce loss per share.
Basic earnings per share
Diluted earnings per share
2010
£’000
2009
£’000
5,256
(1,153)
2010
Number
2009
Number
9,068,770
9,060,796
(36,499)
(36,499)
9,032,271
9,024,297
114,328
–
9,146,599
9,024,297
2010
2009
58.2p
57.5p
(12.8)p
(12.8)p
To provide a comparison of earnings per share on underlying performance, the calculation below sets out basic and diluted earnings
per share based on profits before amortisation and non-trading items.
Earnings per share on underlying profit
Profit after tax before non-trading items and amortisation (see note 5)
Weighted average number of shares in issue excluding ESOP (from above)
Diluted weighted average number of shares (from above)
Basic earnings per share on underlying profit
Diluted earnings per share on underlying profit
2010
£’000
As restated
2009
£’000
1,983
1,711
9,032,271
9,024,297
9,146,599
9,120,506
22.0p
21.7p
19.0p
18.8p
FALKLAND ISLANDS HOLDINGS PLC
43
11 Intangible assets
Cost:
As at 1 April 2008
Adjustments to fair value
At 31 March 2009
Adjustments to fair value
As at 31 March 2010
Accumulated amortisation:
As at 1 April 2008
Amortisation for the year
Impairment charged in the year
As at 31 March 2009
Amortisation for the year
At 31 March 2010
Net book value:
As at 31 March 2008
As at 31 March 2009
As at 31 March 2010
Customer
relationships
£’000
Group
Non-compete
Agreements
£’000
Brand
names
£’000
1,882
2,823
–
–
1,882
2,823
–
–
1,882
2,823
(17)
(243)
–
(260)
(243)
(503)
1,865
1,622
1,379
(10)
(141)
–
(151)
(141)
(292)
2,813
2,672
2,531
72
–
72
–
72
(1)
(14)
–
(15)
(14)
(29)
71
57
43
Goodwill
£’000
Total
£’000
11,586
16,363
(47)
(47)
11,539
16,316
–
–
11,539
16,316
–
–
(1,983)
(1,983)
–
(28)
(398)
(1,983)
(2,409)
(398)
(1,983)
(2,807)
11,586
9,556
9,556
16,335
13,907
13,509
Amortisation and impairment charges are recognised in other administrative expense in the income statement.
Customer relationships – are on-going 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.
Brand names – is the Momart brand considered to be of future economic value to the Group with an estimated useful economic life
of 20 years.
Non-compete agreements – are contractually 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.
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:
Brought forward at 1 April 2008
Impairment loss recognised in year
Adjustment to fair value
Carried forward at 31 March 2009
Balance at 31 March 2010
Art logistics
and storage
£’000
Ferry
services
(Portsmouth)
£’000
7,607
(1,983)
(47)
5,577
5,577
3,979
–
–
3,979
3,979
Total
£’000
11,586
(1,983)
(47)
9,556
9,556
44
ANNUAL REPORT 2010
Notes to the Financial Statements
CONTINUED
11 Intangible assets CONTINUED
Impairment
The Group tests goodwill annually for impairment or more frequently if there are indications that goodwill 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 for each
CGU was separately assessed and tested for impairment, with no impairment charges resulting (2009: £1,983,000).
As part of testing goodwill for impairment detailed 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 of as to future performance and relevant external sources of information. Sensitivity analysis
as at 31 March 2010 has indicated that no reasonably foreseeable change in the key assumptions used in the impairment model would
result in a significant impairment charge being recorded in the financial statements.
Discount rates
Within impairment testing models cash flows of all CGUs are discounted using a pre tax discount rate of 14.1% (2009: 13.3%).
Management have determined that this 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. Both Ferry Services and Art Logistics
and Storage have stable core revenue streams and are considered to have a similar risk profile.
Long term growth rates
Long term growth rates of 2% 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.
Other assumptions
Other assumptions used within impairment testing models include an estimation of long term effective tax rate for the CGUs and the
terminal values of the CGUs.
The long-term effective rate of tax is 28%, consistent with the current UK tax rate.
The terminal value is calculated based on the Gordon Growth model.
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 term and the long term. The value in use was
determined to exceed the carrying amount and no impairment has been recognised. 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.
Assumptions specific to arts logistics and storage (UK)
Value in use was determined by discounting future cash flows in line with the other assumptions discussed above. Cash flows were
projected based on actual operating results and the five-year business plan. No growth was projected in the next two years, and 10.5%
growth in the following three years, this is considered to be a prudent estimate given uncertainty in the economy. The long term growth
rate is projected to be 2% thereafter. The carrying value of the unit was determined to not be higher than its recoverable amount and
no impairment was recognised (2009: loss £1,983,000).
FALKLAND ISLANDS HOLDINGS PLC
45
12 Property, plant and equipment
Cost:
At 1 April 2008
Reclassified
Additions in year
Recognised as investment property
Disposals
At 31 March 2009
Additions in year
Transferred to freehold land
and buildings
Disposals
At 31 March 2010
Accumulated depreciation:
At 1 April 2008
Charge for the year
Impairment
Disposals
At 31 March 2009
Charge for the year
Disposals
At 31 March 2010
Net book value:
At 1 April 2008
At 31 March 2009
At 31 March 2010
The Company has no tangible fixed assets.
Group
Long
leasehold
land and
buildings
£’000
693
–
249
–
–
942
22
–
–
Freehold
land and
buildings
£’000
3,766
(319)
34
(180)
–
3,301
652
43
–
Vehicles,
plant and
equipment
£’000
Ships
£’000
Total
£’000
3,363
3,768
11,590
–
21
–
–
3,384
24
–
(99)
–
650
–
(26)
4,392
660
–
–
(319)
997
(180)
(26)
12,062
1,358
–
(99)
3,996
964
3,309
5,052
13,321
1,517
73
–
–
1,590
76
–
1,666
2,249
1,711
2,330
75
18
–
–
93
122
–
215
618
849
749
415
138
40
–
593
143
(58)
678
2,200
4,207
575
–
(22)
804
40
(22)
2,753
5,029
526
–
867
(58)
3,279
5,838
2,948
2,791
2,631
1,568
1,639
1,773
7,383
7,033
7,483
Assets in
construction
£’000
–
–
43
–
–
43
–
(43)
–
–
–
–
–
–
–
–
–
–
–
43
–
46
ANNUAL REPORT 2010
Notes to the Financial Statements
CONTINUED
13 Investment property
At 1 April 2008
Transferred from fixed assets on completion
Acquisitions
Disposals
At 31 March 2009
Transferred from fixed assets on completion
Acquisitions
Disposals
At 1 March 2010
Accumulated depreciation:
At 1 April 2008
Charge for the year
Disposals
At 31 March 2009
Charge for the year
Disposals
At 1 March 2010
Net book value at 1 April 2008
Net book value at 31 March 2009
Net book value at 31 March 2010
Residential and
commercial
property
£’000
Group
Freehold
land
£’000
Total
£’000
901
180
100
(50)
720
1,621
–
–
–
180
100
(50)
1,131
720
1,851
–
55
(20)
–
–
–
–
55
(20)
1,166
720
1,886
64
36
(18)
82
40
(13)
109
837
1,049
1,057
–
–
–
–
–
–
–
720
720
720
64
36
(18)
82
40
(13)
109
1,557
1,769
1,777
Investment properties comprise residential and commercial property held for rental in the Falklands with a fair value of approximately
£2.5 million at 31 March 2010. This valuation was undertaken by a director of a subsidiary company who is resident in the Falkland
Islands and is considered to have the relevant knowledge and experience to undertake the valuation. The Group also holds several
hundreds of acres of land for which it is not possible to determine fair value, due to the restricted and limited market for freehold land
in the Falkland Islands. Nonetheless the carrying value of land held at historic cost remains sufficiently low to enable directors to satisfy
themselves that no impairment exists at the balance sheet date.
The Company holds no investment properties.
FALKLAND ISLANDS HOLDINGS PLC
47
14 Investments in subsidiaries
The Group and Company have the following direct and indirect investments in subsidiaries:
Country of
incorporation
Class of
shares held
Ownership %
2010
2009
The Falkland Islands Company Limited
The Falkland Islands Trading Company Limited
UK
UK
Ordinary shares of £1
Preference shares of £10
Ordinary shares of £1
Darwin Shipping Limited*
Falkland Islands
Ordinary shares of £1
The Portsmouth Harbour Ferry Company Limited
Portsea Harbour Company Limited*
Clarence Marine Engineering Limited*
Gosport Ferry Limited*
Momart International Limited
Momart Limited*
Dadart Limited
Erebus Limited*
UK
UK
UK
UK
UK
UK
UK
Ordinary shares of £1
Ordinary shares of £1
Ordinary shares of £1
Ordinary shares of £1
Ordinary shares of £1
Ordinary shares of £1
Ordinary shares of £1
Falkland Islands
Ordinary shares of £1
Preference shares of £1
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
* These investments are not held by the Company but are indirect investments held through a subsidiary of the Company.
Company investments in Group undertakings
Balance brought forward
Cost of share-based payments recognised in subsidiaries
Acquisition of Momart International Limited
Impairment of investment in Erebus Limited
Impairment of investment in Momart International Limited
Total investment in Group undertakings
Company
2010
£’000
2009
£’000
31,103
43,970
194
–
–
–
146
2
(12,094)
(921)
31,297
31,103
The Company’s investment in Erebus Limited comprises the Group’s shareholding in Falkland Oil and Gas Limited (see note 15) and a
£921,000 impairment charge was recognised to reflect the fair value of the shareholding as at 31 March 2009. The Company has
elected not to reverse any element of this impairment in the current year.
In the prior year the Company recognised an impairment charge to its investment in Momart International Limited such that its carrying
value is reduced to value-in-use (see note 11).
48
ANNUAL REPORT 2010
Notes to the Financial Statements
CONTINUED
15 Financial assets – available-for-sale equity securities
Non-current
Available-for-sale equity securities
15,542
10,890
Falkland Oil and Gas Limited share price at 31 March
129.5p
72.6p
–
–
–
–
Group
Company
2010
£’000
2009
£’000
2010
£’000
2009
£’000
Available-for-sale financial assets comprise the Group’s holding of 12,000,000 ordinary shares in Falkland Oil and Gas Limited (“FOGL”)
representing a 8.2% interest (2009: 15 million shares; 16.25%).
The historic cost of the Group’s investment in FOGL is £1,963,000 (2009: £2,450,000).
16 Non-current assets held-for-sale
Non-current assets held-for-sale
Group
Company
2010
£’000
20
2009
£’000
20
2010
£’000
–
2009
£’000
–
Non-current assets held-for-sale comprise certain items of artwork accumulated by Momart International Limited prior to acquisition.
The assets were recognised at estimated fair value on acquisition and as a result no gain or loss arose on their being classified as held
for sale.
17 Other financial assets
Rents receivable relate to finance leases on the sale of vehicles and customer goods. No allowances for uncollectible 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.
Non-current
Finance lease debtors due after more than one year
Current
Finance lease debtors due within one year
Total other financial assets
Group
2010
£’000
52
206
258
2009
£’000
58
159
217
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 £52,000 (2009: £58,000).
The cost of assets acquired for the purpose of letting under hire purchase agreements by the Group during the period amounted to
£309,000 (2009: £210,000).
The aggregate rentals receivable during the year in respect of hire purchase agreements were £316,472 (2009: £244,000).
FALKLAND ISLANDS HOLDINGS PLC
49
Group
2010
£’000
310
206
52
258
2009
£’000
275
159
58
217
Group
Assets
Liabilities
2010
£’000
43
–
70
105
–
57
621
896
–
–
2009
£’000
49
–
52
31
114
–
516
762
–
–
2010
£’000
780
1,106
–
–
–
–
–
2009
£’000
1,083
1,217
–
–
–
–
–
1,886
(896)
990
2,300
(762)
1,538
17 Other financial assets CONTINUED
Gross investment in hire purchase leases
Present value of future lease payments due:
within 1 year
after more than 1 year within 5 years
18 Deferred tax assets and liabilities
Recognised deferred tax assets and liabilities
Property, plant and equipment
Intangible assets
Inventories
Other financial liabilities
Interest bearing loans and borrowings
Share-based payments
Pension
Tax assets / liabilities
Net of tax assets
Net tax liabilities
The deferred tax asset shown as a non-current asset in the balance sheet relates to the Group’s pension scheme liabilities (see note 25).
All other deferred tax assets are shown net against the non-current deferred tax liability shown in the balance sheet.
Other financial liabilities
Share-based payments
Net tax asset
Company
Assets
Liabilities
2010
£’000
–
–
–
2009
£’000
122
–
122
2010
£’000
2009
£’000
–
–
–
–
–
–
50
ANNUAL REPORT 2010
Notes to the Financial Statements
CONTINUED
18 Deferred tax assets and liabilities CONTINUED
Movement in deferred tax in the year
1 April
2009
£’000
1,034
1,217
(52)
(145)
–
(516)
Recognised
in income
£’000
(297)
(111)
(18)
40
(57)
19
1,538
(424)
Group
Recognised
Acquired in
business
in equity
combinations
£’000
£’000
–
–
–
–
–
(124)
(124)
–
–
–
–
–
–
–
31 March
2010
£’000
737
1,106
(70)
(105)
(57)
(621)
990
Property, plant and equipment
Intangible assets
Inventories
Other financial liabilities
Share-based payments
Pension
Deferred tax movements
Unrecognised deferred tax assets
A deferred tax asset of £158,000 (2009: £158,000) in respect of capital losses has not been recognised as it is not considered more
likely than not that there will be suitable taxable profits in the foreseeable future from which the underlying capital losses will reverse.
Other financial liabilities
Share-based payments
Deferred tax movements
Movement in deferred tax in the prior year
Property, plant and equipment
Intangible assets
Inventories
Other financial liabilities
Share-based payments
Pension
Deferred tax movements
Company
Recognised
in income
£’000
Recognised
31 March
in equity
£’000
2010
£’000
(122)
–
(122)
–
–
–
–
–
–
1 April
2009
£’000
122
–
122
Group
Recognised
Acquired in
business
in equity
combinations
£’000
£’000
Recognised
in income
£’000
120
(121)
24
(125)
22
16
(64)
–
–
–
–
–
(13)
(13)
–
–
–
–
–
–
–
1 April
2008
£’000
914
1,338
(76)
(20)
(22)
(519)
1,615
31 March
2009
£’000
1,034
1,217
(52)
(145)
–
(516)
1,538
FALKLAND ISLANDS HOLDINGS PLC
51
Company
Recognised
in income
£’000
102
(10)
92
1 April
2008
£’000
20
10
30
Recognised
31 March
in equity
£’000
–
–
–
2009
£’000
122
–
122
Group
As restated
2010
£’000
403
614
2,472
3,489
91
1,129
1,220
2009
£’000
344
–
2,226
2,570
639
–
639
4,709
3,209
18 Deferred tax assets and liabilities CONTINUED
Other financial liabilities
Share-based payments
Deferred tax movements
19 Inventories
Work-in-progress
Goods-in-transit
Goods for resale
Trading inventories
Construction-in-progress
Property held-for-sale
Property inventories
Total inventories
Goods-in-transit are retail provisions in transit to the Falkland Islands, a much lower amount was recognised in the prior year within
prepayments.
During the year £25,000 (2009: £79,000) of inventory write-downs has been recognised as an expense in the income statement.
The Company has no inventories.
20 Trade and other receivables
Non-current:
Amount owed by subsidiary undertaking
–
–
2,916
6,325
Group
Company
2010
£’000
2009
£’000
2010
£’000
2009
£’000
52
ANNUAL REPORT 2010
Notes to the Financial Statements
CONTINUED
20 Trade and other receivables CONTINUED
Current:
Trade and other receivables
Corporation tax
Prepayments and accrued income
Trade and other receivables
21 Cash and cash equivalents / bank overdrafts
Cash and cash equivalents in the balance sheet
Cash and cash equivalents in the cash flow statements
Group
Company
2010
£’000
2009
£’000
2010
£’000
2009
£’000
3,265
3,599
–
1,270
4,535
17
808
4,424
–
–
15
15
Group
Company
2010
£’000
3,810
3,810
2009
£’000
3,004
3,004
2010
£’000
360
360
19
–
–
19
2009
£’000
289
289
22 Interest-bearing loans and borrowings
This note provides information about the contractual terms of the Group and Company’s interest-bearing loans and borrowings, which
are measured at amortised cost. For more information about the Group and Company’s exposure to interest rate and foreign currency
risk, see note 28.
Non-current liabilities
Secured bank loans
Finance lease liabilities
Total non-current interest bearing loans and borrowings
Current liabilities
Current portion of secured bank loans
Finance lease liabilities
Current portion of contingent consideration on acquisition
Total current interest-bearing loans and borrowings
Group
Company
2010
£’000
2009
£’000
2010
£’000
2009
£’000
3,974
81
4,055
1,128
90
–
1,218
4,988
65
5,053
500
69
1,573
2,142
3,140
3,955
–
–
3,140
3,955
928
–
–
928
300
–
1,573
1,873
FALKLAND ISLANDS HOLDINGS PLC
53
22 Interest-bearing loans and borrowings CONTINUED
Net debt
Total interest bearing loans and borrowings
less: cash balances (see note 21)
Net debt
Finance lease liabilities
Future minimum lease payments due:
within one year
after more than one year but within five years
Total minimum lease payments due
Group
Company
2010
£’000
5,273
(3,810)
1,463
2009
£’000
7,195
(3,004)
4,191
2010
£’000
4,068
(360)
3,708
2009
£’000
5,828
(289)
5,539
Group
Company
2010
£’000
90
81
171
2009
£’000
69
65
134
2010
£’000
2009
£’000
–
–
–
–
–
–
For more information regarding the maturity of the Group and Company’s interest bearing loans and borrowings see note 28.
23 Derivative financial instruments
Fair value liability of derivative financial instruments
Group
Company
2010
£’000
–
2009
£’000
406
2010
£’000
–
2009
£’000
406
This amount represented the fair value of interest rate hedging instruments on certain of the Group’s secured bank loans prior to the
liquidation of the contracts in January 2010, for more information see note 28.
24 Trade and other payables
Non-current:
Amount owed to subsidiary undertaking
–
–
871
632
Group
Company
2010
£’000
2009
£’000
2010
£’000
2009
£’000
54
ANNUAL REPORT 2010
Notes to the Financial Statements
CONTINUED
24 Trade and other payables CONTINUED
Current:
Trade payables
Other creditors, including taxation and social security
Accruals and deferred income
Total trade and other payables
Group
Company
2010
£’000
2009
£’000
5,437
1,068
1,714
8,219
5,050
932
1,931
7,913
2010
£’000
–
57
356
413
2009
£’000
–
24
389
413
25 Employee benefits: pension plans
The Group operates three defined contribution pension schemes. In addition it also operates two defined benefit pension schemes,
both of which have been closed to new members and to future accrual.
Defined contribution schemes
The Group operates three defined contribution pension schemes. The pension cost charge for the year represents contributions payable
by the Group to the schemes and amounted to £357,000 (2009: £403,000). The Group anticipates paying contributions amounting to
£327,000 during the year ending 31 March 2011.
There were no outstanding or prepaid contributions at either the beginning or end of the financial year.
Defined benefit pension schemes
A summary of the fair value of the net pension schemes deficit is set out below:
Pension scheme deficit:
Falkland Islands Company Limited Scheme
Portsmouth Harbour Ferry Company Limited Scheme
Deferred tax
Net pension scheme deficit
2010
£’000
2009
£’000
(2,013)
(224)
(2,237)
621
(1,797)
(239)
(2,036)
516
(1,616)
(1,520)
FALKLAND ISLANDS HOLDINGS PLC
55
25 Employee benefits: pension plans CONTINUED
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.
The latest full actuarial valuation was carried out at 31 March 2005 and was updated for IAS 19 purposes to 31 March 2010 by a
qualified independent actuary, Lane Clark & Peacock LLP. The major assumptions used in this valuation were:
Rate of increase in salaries
Rate of increase in pensions in payment and deferred pensions
Discount rate applied to scheme liabilities
Inflation assumption
2010
2009
2.7%
3.0%
5.6%
3.7%
2.5%
3.0%
6.8%
3.1%
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.
Scheme liabilities
The present value of the scheme’s liabilities, which are derived from cash flow projections over long periods and thus inherently
uncertain, were:
Value at
2010
£’000
Value at
2009
£’000
Value at
2008
£’000
Value at
2007
£’000
Value at
2006
£’000
Present value of scheme liabilities
(2,013)
(1,797)
(1,863)
(2,136)
(2,107)
Related deferred tax asset
Net pension liability
558
449
465
534
527
(1,455)
(1,348)
(1,398)
(1,602)
(1,580)
Movement in deficit during the year:
Deficit in scheme at beginning of the year
Past service cost
Pensions paid
Other finance cost
Actuarial (loss) / gain
Deficit in scheme at end of the year
2010
£’000
2009
£’000
(1,797)
(1,863)
–
98
(119)
(195)
–
135
(119)
50
(2,013)
(1,797)
56
ANNUAL REPORT 2010
Notes to the Financial Statements
CONTINUED
25 Employee benefits: pension plans CONTINUED
Analysis of amounts included in other finance costs:
Interest on pension scheme liabilities
Analysis of amount recognised in statement of other comprehensive income:
Experience gains / (losses) arising on scheme liabilities
Changes in assumptions underlying the present value of scheme liabilities
Actuarial (loss) / gain recognised in statement of comprehensive income
History of experience gains and losses:
2010
£’000
(119)
2010
£’000
89
(284)
(195)
2009
£’000
(119)
2009
£’000
(2)
52
50
2010
2009
2008
2007
2006
Experience gains / (losses) on scheme liabilities:
Amount (£’000)
89
(2)
(18)
(3)
80
Percentage of year end present value of
scheme liabilities
4.4%
0.10%
1.00%
0.1%
3.8%
Total amount recognised in statement of
total recognised gains and losses:
Amount (£’000)
(195)
50
301
118
57
Percentage of year end present value of
scheme liabilities
9.7%
(2.8)%
(16.2)%
(5.5)%
(2.7)%
FALKLAND ISLANDS HOLDINGS PLC
57
25 Employee benefits: pension plans CONTINUED
Portsmouth Harbour Ferry Company Plc (1975) Retirement Fund
This Company operated a defined benefit scheme. The scheme has been closed for many years and none of the current employees are
earning benefits under the scheme. Actuarial reports for IAS 19 purposes as at 31 March 2006 to 31 March 2010 were prepared by a
qualified independent actuary, Alexander Forbes Limited.
The major assumptions used in this valuation were:
Rate of increase in pensions in payment and
deferred pensions
Discount rate applied to scheme liabilities
Inflation assumption
2010
2009
2008
2007
2006
3.7%
5.6%
3.7%
2.7%
6.4%
2.7%
3.7%
6.9%
3.7%
3.2%
5.4%
3.2%
3.0%
4.9%
3.0%
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.
Scheme assets
The fair value of the scheme’s assets, which are not intended to be realised in the short term and may be subject to significant change
before they are realised, and the present value of the scheme’s liabilities, which are derived from cash flow projections over long periods
and thus inherently uncertain, were:
Equities
Fixed interest
Other
Total market value of assets
Present value of scheme liabilities
Deficit in the scheme – Pension liability
Related deferred tax asset
Net pension liability
The expected rates of return on the assets in the scheme were:
Value at
2010
£’000
Value at
2009
£’000
Value at
2008
£’000
Value at
2007
£’000
Value at
2006
£’000
328
64
18
410
(634)
(224)
63
(161)
185
50
18
253
(492)
(239)
67
(172)
207
37
36
280
(477)
(197)
54
(143)
156
20
34
210
(591)
(381)
114
(267)
133
17
6
156
(627)
(471)
142
(329)
Equities
Fixed interest
Other
Long term
Long term
rate of return
rate of return
2010
2009
7.40%
5.60%
4.20%
6.75%
6.35%
0.50%
58
ANNUAL REPORT 2010
Notes to the Financial Statements
CONTINUED
25 Employee benefits: pension plans CONTINUED
Movement in deficit during the year:
Projected benefit obligations
Opening projected benefit obligations
Interest thereon
Distributions
Experience (loss) / gain
Projected benefit obligations at 31 March
Plan assets
Opening plan assets
Distributions
Contributions
Return on assets
Actuarial gain / (loss)
Plan assets at 31 March
Deficit in scheme at 31 March
Analysis of amounts included in other finance costs:
Expected return on pension scheme assets
Interest on pension scheme liabilities
Included in other finance costs
Analysis of amount recognised in statement of other comprehensive income:
Actual return less expected return on scheme assets
Experience gains and losses arising on scheme liabilities
Changes in assumptions underlying the present value of scheme liabilities
Actuarial loss recognised in statement of comprehensive income
2010
£’000
(493)
(30)
30
(141)
(634)
254
(30)
83
17
86
410
(224)
2010
£’000
17
(30)
(13)
2010
£’000
86
–
(141)
(55)
2009
£’000
(477)
(33)
4
13
(493)
280
(3)
54
22
(99)
254
(239)
2009
£’000
22
(33)
(11)
2009
£’000
(99)
(1)
14
(86)
FALKLAND ISLANDS HOLDINGS PLC
59
25 Employee benefits: pension plans CONTINUED
History of experience gains and losses
Difference between the expected and actual return
on scheme assets:
Amount (£’000)
86
(99)
3
21.0%
(39.0)%
15.8%
(4)
1.0%
19
12.2%
2010
2009
2008
2007
2006
Percentage of year end scheme assets
Experience gains and losses on scheme liabilities:
Amount (£’000)
Percentage of year end present value of
scheme liabilities
Total amount recognised in statement of total
recognised gains and losses:
Amount (£’000)
Percentage of year end present value of
–
–
(1)
0.2%
–
–
–
–
(72)
(15.2)%
(55)
(86)
147
61
(88)
scheme liabilities
8.7%
17.4%
773.7%
(17.1)%
(18.7)%
26 Employee benefits: share-based payments
Retained earnings is used to record the costs arising under IFRS2 for options issued to Directors and employees, and similar costs
associated with share-based payments.
The following options were outstanding at 31 March 2010:
Date of issue
27 Jul 01
10 Feb 05
14 Jun 05
14 Jun 05
18 Jun 07
5 Jul 07
7 Aug 07
4 Dec 07
3 Apr 08
30 Jul 08
8 Apr 09
15 Jul 09
9 Dec 09
Exercise
price
£
1.40
5.20
4.25
4.25
3.09
2.50
3.30
3.19
3.65
3.231/4
2.071/2
2.90
3.90
Share
price at
grant date
£
Fair
value per
share
£
Total fair
value
£
Earliest
exercise
date
Latest
exercise
date
Not valued for IFRS2 purposes
27 Jul 04
26 Jul 11
5.20
4.25
4.25
2.83
3.021/2
3.321/2
3.40
3.75
4.00
2.071/2
2.90
3.971/2
2.47
1.66
2.14
0.82
1.08
0.73
1.19
1.31
1.35
0.56
0.72
1.45
142,499
10 Feb 08
9 Feb 15
103,750
14 Jun 08
13 Jun 15
135,950
14 Jun 08
13 Jun 15
14,350
18 Jun 10
17 Jun 17
127,289
1 Aug 10
31 Jul 17
20,087
77,350
9,906
7 Aug 10
6 Aug 17
4 Dec 10
3 Dec 17
3 Apr 11
2 Apr 18
214,948
30 Jul 11
29 Jul 18
52,278
74,952
46,400
1,019,760
8 Apr 12
7 Apr 19
15 Jul 12
14 Jul 19
9 Dec 12
8 Dec 19
Number
20,000
57,692
62,500
63,528
17,500
117,860
27,517
65,000
7,562
159,221
93,353
104,100
32,000
827,833
60
ANNUAL REPORT 2010
Notes to the Financial Statements
CONTINUED
26 Employee benefits: share-based payments CONTINUED
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 options subject to the provisions of IFRS2 currently in issue. Expected volatility is determined by reference to past performance
of the Company’s share price.
Expected volatility (%)
Risk-free interest rate (%)
Expected life of options (years)
Dividend yield (%)
Share price at grant date (£)
Expected volatility (%)
Risk-free interest rate (%)
Expected life of options (years)
Dividend yield (%)
Share price at grant date (£)
13 Jul 06
18 Jun 07
05 Jul 07
7 Aug 07
4 Dec 07
31
4.70
6.5
2.10
3.18
31
5.60
6.5
2.50
2.83
40
5.70
3.0
2.30
33
5.30
6.5
2.10
3.025
3.325
33
4.50
6.5
2.10
3.40
3 Apr 08
30 Jul 08
8 Apr 09
15 Jul 09
9 Dec 09
34
4.20
6.5
2.10
3.75
35
4.80
3.0
2.00
4.00
37
2.90
6.5
3.90
2.075
38
3.40
6.5
2.80
2.90
40
3.14
6.5
2.00
3.975
Share options issued without share price conditions attached have been valued using the Black-Scholes model. Share price options
issued with share price conditions attached have been valued using a Monte Carlo simulation model making explicit allowance for share
price targets.
During the year ended 31 March 2010, 91,300 options (2009: nil) were exercised over ordinary shares. Options issued prior to
6 November 2002 are not subject to the provisions of IFRS2.
The number and weighted average exercise prices of share options are as follows:
Outstanding at the beginning of the year
Forfeited during the year
Exercised during the year
Granted during the year
Lapsed during the year
Outstanding at the year end
Vested options exerciseable at the year end
Weighted
average
exercise
price (£)
2010
3.16
3.65
1.80
2.70
3.00
3.24
4.24
Number of
options
2010
890,943
(64,438)
(91,300)
229,453
(136,825)
827,833
Weighted
average
exercise
price (£)
2009
Number of
options
2009
3.16
659,722
–
–
3.38
3.65
3.16
–
–
243,221
(12,000)
890,943
203,720
3.48
295,020
27 Capital and reserves
Reconciliation of movement in capital and reserves – Group
Financial
assets fair
value
revaluation
reserve
£’000
Called up
share
capital
£’000
Share
premium
account
£’000
Other
reserves
£’000
906
15,996
7,206
3,145
–
–
–
–
–
–
–
–
–
–
(7,560)
–
–
–
–
–
–
–
–
–
(1,983)
–
–
–
Balance at 1 April 2008
Profit for the year
Share-based payments
Reserve transfer re. impairment 1
Dividends
Change in fair value of available-for-
sale financial assets
Actuarial gain on pension, net of tax
Balance at 31 March 2009
906
8,436
7,206
1,162
Profit for the year
Share-based payments
Deferred tax on share-based payments
Dividends
Issue of shares
Premium on shares issued in the year,
net of expenses
Transfer to profit and loss on disposal
of available-for-sale financial assets
Change in fair value of available-for-
sale financial assets
Actuarial loss on pension, net of tax
Repurchase of equity interest
–
–
–
–
4
–
–
–
–
–
–
–
–
–
–
–
(1,683)
6,828
–
–
Balance at 31 March 2010
910
13,581
–
–
–
–
–
10
–
–
–
108
7,324
–
–
–
–
–
–
–
–
–
–
FALKLAND ISLANDS HOLDINGS PLC
61
Retained
earnings
£’000
6,775
(1,153)
297
1,983
(722)
–
(23)
7,157
5,256
240
–
Total
equity
£’000
34,028
(1,153)
297
–
(722)
(7,560)
(23)
24,867
5,256
240
–
(1,084)
(1,084)
–
–
–
–
(126)
(183)
4
10
(1,683)
6,828
(126)
(75)
1,162
11,260
34,237
1 The premium on shares issues in March 2008 in connection with the acquisition of Momart Limited was credited to other reserves.
In 2009 the Group recognised an impairment charge of £1,983,000 in relation to goodwill arising on the Momart acquisition. As a
result the Group has made a transfer from other reserves to retained earnings of an amount equal to the impairment recognised. The
transfer neutralises the impact of the impairment charge recognised on retained earnings reserves.
62
ANNUAL REPORT 2010
Notes to the Financial Statements
CONTINUED
27 Capital and reserves CONTINUED
Reconciliation of movement in capital and reserves – Company
Balance at 1 April 2008
Loss for the year
Reserve transfer re. impairment
Share-based payments
Dividends
Balance at 31 March 2009
Loss for the year
Reserve transfer re. impairment
Share-based payments
Deferred tax on share-based payments
Dividends
Issue of shares
Premium on shares issued in the year,
net of expenses
Repurchase of equity interest
Balance at 31 March 2010
Called up
share
capital
£’000
906
–
–
–
–
Share
premium
account
£’000
Other
reserves
£’000
Retained
earnings
£’000
Total
equity
£’000
7,206
7,831
25,648
41,591
–
–
–
–
–
(10,625)
(10,625)
(921)
–
–
921
297
(722)
–
297
(722)
906
7,206
6,910
15,519
30,541
–
–
–
–
–
4
–
–
–
–
–
–
–
–
10
108
–
–
–
–
–
–
–
–
(330)
(330)
–
240
–
–
240
–
(1,084)
(1,084)
–
–
(183)
4
10
(75)
910
7,324
6,910
14,162
29,306
A loss of £330,000 (2009: loss £10,625,000) 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.
Of the loss of £10,625,000 dealt with in the accounts of the Company in the prior year, £921,000 arose on recognition of an
impairment in the Company’s investment in Momart International Limited. The premium on shares issues in March 2008 in connection
with the acquisition of Momart International Limited was credited to other reserves. As a result the Company has made a transfer from
other reserves to retained earnings of an amount equal to the impairment recognised.
The transfer neutralises the impact of the impairment charge on retained earnings reserves.
27 Capital and reserves CONTINUED
Share capital
On issue at 1 April
Issued for cash
On issue at 31 March – fully paid
Authorised
Ordinary shares of 10p each
Allotted, called up and fully paid
Ordinary shares of 10p each
FALKLAND ISLANDS HOLDINGS PLC
63
Ordinary shares
2010
2009
9,060,796
9,060,796
36,382
–
9,097,178
9,060,796
2010
£’000
2009
£’000
1,250
1,250
910
910
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 2010 the plan held 36,499 (2009: 36,499)
ordinary shares at a cost of £68,542 (2009: £68,542). The market value of the shares at 31 March 2010 was £122,418 (2008: £77,013).
Shares held in the ESOP have had their rights to dividends waived, as in prior years.
There were 227,081 (2009: 313,217) share options outstanding under the Company’s Saving Related Share Option Scheme (“Save As
You Earn”) at 31 March 2010.
For more information on share options please see note 26.
Dividends
The following dividends were recognised in the period:
Final: 8.0p (2009 Final: 8.0p) per qualifying ordinary share
Interim: 4.0p (2009 Interim: nil) per qualifying ordinary share
2010
£’000
723
361
1,084
2009
£’000
722
–
722
After the balance sheet date a final dividends of 5.0p (£451,000) per qualifying ordinary share (2009: 8.0p) (£722,000) were proposed
by the Directors. The dividends have not been provided for.
64
ANNUAL REPORT 2010
Notes to the Financial Statements
CONTINUED
28 Financial instruments
(i) Fair values of financial instruments
Investments in equity securities
The fair value of available-for-sale financial assets is determined by reference to their 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
Fair value, 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.
Derivative financial instruments
The fair value of derivative financial instruments is determined by their market value at the reporting 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 for each category of financial instrument:
Group
Company
2010
£’000
2009
£’000
Available-for-sale financial assets at fair value
15,542
10,890
Financial liabilities at amortised cost
Interest bearing borrowings at amortised cost
Derivative financial instruments
Trade and other receivables
(8,219)
(5,273)
–
4,535
(7,913)
(7,195)
(406)
4,424
2010
£’000
–
(414)
(4,068)
–
15
2009
£’000
–
(412)
(5,828)
(406)
19
(ii) Credit risk
Financial risk management
Credit risk is the risk of financial loss to the Group if a customer or counterparty to a financial instrument fails to meet its contractual
obligations, and arises principally from the Group’s receivables from customers and investment securities.
Group
The Group’s credit risk is primarily attributable to its trade receivables. The maximum credit risk 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 ongoing basis. These include the use of customer specific credit limits.
FALKLAND ISLANDS HOLDINGS PLC
65
28 Financial instruments CONTINUED
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 represents the maximum credit exposure. Therefore, the maximum exposure to credit risk at the
balance sheet date was £8,828,000 (2009: £7,645,000) being the total trade receivables, other financial assets and cash and cash
equivalents in the balance sheet.
The maximum exposure to credit risk for trade receivables at the balance sheet date by geographic region was:
Falkland Islands
Europe
North America
United Kingdom
Other
Trade receivables
The Company has no trade debtors.
Credit quality of financial assets and impairment losses
Group
Not past due
Past due 0 – 30 days
Past due 31 – 120 days
More than 120 days
Gross
2010
£’000
Impairment
2010
£’000
1,735
1,194
263
198
3,390
–
–
–
125
125
Group
Company
2010
£’000
2009
£’000
2010
£’000
2009
£’000
1,413
1,413
187
261
1,232
172
3,265
Net
2010
£’000
1,735
1,194
263
73
466
247
1,418
55
3,599
Gross
2009
£’000
1,988
832
444
508
3,265
3,772
–
–
–
–
–
–
Impairment
2009
£’000
–
–
–
173
173
–
–
–
–
–
–
Net
2009
£’000
1,988
832
444
335
3,599
The movement in the allowances for impairment in respect of trade receivables during the year was:
Balance at 1 April 2009
Impairment loss recognised
Impairment loss reversed
Balance at 31 March 2010
Group
Company
2010
£’000
173
–
(48)
125
2009
£’000
82
136
(45)
173
2010
£’000
2009
£’000
–
–
–
–
–
–
–
–
66
ANNUAL REPORT 2010
Notes to the Financial Statements
CONTINUED
28 Financial instruments CONTINUED
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.
Group and Company
At the beginning of the period the Group had outstanding bank loans of £5.5 million and unsecured loan note commitments of
£1.6 million. All payments due during the year with respect to these agreements were met as they fell due. The Group continues to
maintain a £2.0 million Revolving Credit facility to fund working capital requirements which was undrawn at the year end.
The Group manages its cash balances centrally at head office and prepares rolling cash flow forecasts to ensure funds are available to
meets 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:
2010
Non-derivative financial instruments
Secured bank loans
Finance leases
Trade and other payables
Carrying
amount
£’000
5,102
171
8,219
Contractual
cash flows
1 year or less
1 to 2 years
2 to 5 years
£’000
£’000
£’000
£’000
5,596
171
8,219
1,347
1,147
2,192
–
8,219
9,566
–
–
–
–
1,147
2,192
13,492
13,986
2009
Non-derivative financial instruments
Secured bank loans
Finance leases
Contingent consideration
Trade and other payables
Carrying
amount
£’000
5,488
134
1,573
7,913
Contractual
cash flows
1 year or less
1 to 2 years
2 to 5 years
£’000
£’000
£’000
£’000
6,304
134
1,615
7,913
773
69
1,615
7,913
1,236
3,377
918
65
–
–
–
–
–
–
–
–
15,108
15,966
10,370
1,301
3,377
918
5 years
and over
£’000
910
–
–
910
5 years
and over
£’000
FALKLAND ISLANDS HOLDINGS PLC
67
28 Financial instruments CONTINUED
Liquidity risk – Company
The following are the contractual maturities of financial liabilities, including estimated interest payments and excluding the effects of
netting agreements:
Carrying
amount
£’000
4,068
413
4,481
Carrying
amount
£’000
4,255
1,573
413
6,241
Contractual
cash flows
1 year or less
1 to 2 years
2 to 5 years
£’000
£’000
£’000
£’000
4,591
413
5,004
1,119
413
1,532
919
–
919
1,736
–
1,736
Contractual
cash flows
1 year or less
1 to 2 years
2 to 5 years
£’000
£’000
£’000
£’000
4,986
1,615
413
7,014
524
1,615
413
2,552
991
2,655
–
–
–
–
991
2,655
5 years
and over
£’000
817
–
817
5 years
and over
£’000
816
–
–
816
2010
Non-derivative financial instruments
Secured bank loans
Trade and other payables
2009
Non-derivative financial instruments
Secured bank loans
Contingent consideration
Trade and other payables
(iv) Market risk
Financial risk management
Market risk is the risk that changes in market prices, such as foreign exchange, interest rates and equity prices will affect the Group’s
income or the value of its holdings of financial instruments.
68
ANNUAL REPORT 2010
Notes to the Financial Statements
CONTINUED
28 Financial instruments CONTINUED
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. This is based on carrying amounts for monetary financial instruments.
Group
31 March 2010
Cash and cash equivalents
Trade payables and other payables
Balance sheet exposure
Group
31 March 2009
Cash and cash equivalents
Trade payables and other payables
Balance sheet exposure
EUR
£’000
179
(385)
(206)
EUR
£’000
30
(980)
(950)
USD
£’000
204
(336)
(132)
USD
£’000
201
(309)
(108)
Other
£’000
1
(161)
(160)
Other
£’000
–
(144)
(144)
Total
£’000
384
(882)
(498)
Total
£’000
231
(1,433)
(1,202)
The Company has no exposure to foreign currency risk.
Sensitivity analysis
Group
A 10% weakening of the following currencies against the 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 the year ended 31 March 2009.
EUR
USD
Equity
Profit or loss
2010
£’000
56
54
2009
£’000
101
51
2010
£’000
56
54
2009
£’000
101
51
A 10% strengthening of the above currencies against the pound sterling at 31 March would have had the equal but opposite effect
on the above currencies to the amounts shown above, on the basis that all other variables remain constant.
FALKLAND ISLANDS HOLDINGS PLC
69
28 Financial instruments CONTINUED
Market risk – interest rate risk
Profile
At the balance sheet date the interest rate profile for the Group’s interest-bearing financial instruments was:
Fixed rate financial instruments:
Finance leases receivable
Finance leases payable
Contingent consideration
Variable rate financial instruments:
Derivative financial instruments
Financial liabilities
Group
Company
2010
£’000
2009
£’000
2010
£’000
2009
£’000
258
(171)
–
87
–
(5,102)
(5,102)
217
(134)
(1,573)
(1,490)
(406)
(5,488)
(5,894)
–
–
–
–
–
(4,068)
(4,068)
–
–
(1,573)
(1,573)
(406)
(5,828)
(6,234)
The Group has a loan of £1.0 million (2009: £1.2 million) in respect of the ferry delivered in 2005. The loan is repayable over a 10 year
period from June 2005 and bears interest at 1.4% above the base rate. The loan was previously hedged with an base rate cap of 6.5%
and a base rate floor of 4.25%. On 13 January 2010 the Group liquidated this base rate cap and floor at a cost of £68,000.
At 31 March 2009 the fair value of both these contracts was a liability of £65,000.
The Group has a further loan of £4 million in respect of the acquisition of Momart International Limited. The loan is repayable over five
years commencing in June 2010 and bears interest at 2% above the base rate. The loan was previously hedged with a base rate cap
of 6.25% and a base rate floor of 4.25%. On 13 January 2010 the Group liquidated this base rate cap and base rate floor at a cost of
£284,000. At 31 March 2009 the fair value of both these instruments was a liability of £342,000.
Sensitivity analysis
A change 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 had been applied to risk
exposures existing at that date.
70
ANNUAL REPORT 2010
Notes to the Financial Statements
CONTINUED
28 Financial instruments CONTINUED
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, financial instrument at fair value through profit or loss or available for sale with fixed interest
rates and the fixed rate element of interest rate swaps. The analysis is performed on the same basis for 31 March 2009.
Equity:
Increase
Decrease
Profit or loss:
Increase
Decrease
Market risk – equity price risk
Group
Company
2010
£’000
2009
£’000
2010
£’000
2009
£’000
–
(51)
–
(51)
–
(14)
–
(14)
–
(41)
–
(41)
–
(4)
–
(4)
The Group’s and Company’s exposure to equity price risk arises from its investments in equity securities which are classified as available-
for-sale financial assets and are shown in the balance sheet as other financial assets (see note 15).
Sensitivity analysis
The Group’s available-for-sale financial assets comprise its investment in Falklands Oil and Gas Limited. During the year ended 31 March
2010 Falklands Oil and Gas Limited shares traded on the AIM market of the London Stock Exchange at an average price of 115.9p
with a high of 177.25p and a low of 63.35p. Based upon this share price history the value of available-for-sale financial assets held
at the balance sheet date could have varied between a low of £7,602,000 (2009: £7,995,000) and a high of £21,270,000
(2009: £24,750,000).
(v) Capital Management
The Group’s objectives when managing capital is to safeguard its ability to continue as a going concern, so that it can continue to
provide returns to shareholders and benefits to other stakeholders.
29 Operating leases
Non-cancellable operating lease rentals are payable as follows:
Less than one year
Between one and five years
More than five years
Group
2010
£’000
664
2,512
4,038
7,214
2009
£’000
662
2,516
4,661
7,839
The Group leases three office premises and a number of storage warehouses under operating leases. Office leases typically run for a
period of 3 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.
FALKLAND ISLANDS HOLDINGS PLC
71
29 Operating leases CONTINUED
Group
During the year £649,000 was recognised as an expense in the income statement in respect of operating leases (2009: £594,000).
The Company had no operating lease commitments.
30 Capital commitments
At the end of the year the Group had no capital commitments not provided for in these financial statements.
31 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 control 1.1% per cent of the voting shares of the Company.
The compensation of key management personnel (including directors) is as follows:
Group
Company
Key management emoluments including social security costs
Company contributions to money purchase pension plans
Other post employment benefits
Share-related awards
2010
£’000
1,282
209
–
79
2009
£’000
1,043
219
–
154
Total key management personnel compensation
1,570
1,416
2010
£’000
573
25
–
49
647
2009
£’000
445
25
–
143
613
32 Accounting estimates and judgements
The preparation of financial statements in conformity with adopted IFRS requires management to make judgements, estimates and
assumptions that effect the application of policies and reported amounts of assets and liabilities, income and expenses. The estimates
and associated assumptions are based upon historical experience and various other factors that are believed to be reasonable under the
circumstances, the results of which form the basis of the judgements as to asset and liability carrying values which are not readily
apparent from other sources. Actual results may vary from these estimates, and 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. 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 judgment
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.
72
ANNUAL REPORT 2010
Directors and Corporate Information
Directors
David Hudd Chairman
Registered Office
Kenburgh Court,
John Foster Managing Director
133-137 South Street,
Bishop’s Stortford,
Hertfordshire CM23 3HX
Telephone: 01279 461630
Fax: 01279 461631
Email: admin@fihplc.com
Registered number 03416346
Website: www.fihplc.com
Auditor
KPMG Audit Plc
St. Nicholas House, Park Row,
Nottingham NG1 6FQ
Financial PR
Financial Dynamics
Holborn Gate,
26 Southampton Buildings,
London WC2A 1PB
Mike Killingley*
Jeremy Brade*
*Non-executive Directors
Company Secretary
James Ivins
Corporate Information
Stockbroker and Nominated Adviser
Altium
30 St. James’s Square,
London SW1Y 4AZ
Solicitors
Bircham Bell and Dyson LLP
50 Broadway,
Westminster,
London SW1H 0BL
Banker
HSBC Bank plc
18 North Street, Bishop’s Stortford,
Hertfordshire CM23 2LP
Registrar
Capita Registrars
Northern House, Woodsome Park,
Fenay Bridge, Huddersfield HD8 0GA
Senior Staff
Senior Staff
Senior Staff
in the Falkland Islands
at Portsmouth Harbour Ferry Company
at Momart Limited
Roger Spink Director and General Manager
Paul Fuller Director and General Manager
Eugene Boyle Managing Director
Telephone: 00 500 27600
Email: fic@horizon.co.uk
Telephone: 023 9252 4551
Telephone: 020 7426 3000
Email: admin@gosportferry.co.uk
Email: enquiries@momart.co.uk
Website: www.the-falkland-islands-co.com
Website: www.gosportferry.co.uk
Website: www.momart.co.uk
www.fihplc.com