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F I H G R O U P P L C
A N N U A L R E P O R T
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Contents
Financial Highlights For The Year Ended 31 March 2021
Chairman’s Statement 2021
Chief Executive’s Strategic Review
Chief Financial Officer’s Review
Board of Directors and Secretary
Corporate Governance Statement
Audit Committee Report
Directors’ Report
KPMG Independent Auditor’s Report
Consolidated Income Statement For The Year Ended 31 March 2021
Consolidated Statement of Comprehensive Income For The Year Ended 31 March 2021
Consolidated Balance Sheet At 31 March 2021
Company Balance Sheet At 31 March 2021
Consolidated Cash Flow Statement For The Year Ended 31 March 2021
Company Cash Flow Statement For The Year Ended 31 March 2021
Consolidated Statement of Changes in Shareholders’ Equity For The Year Ended 31 March 2021
Company Statement of Changes in Shareholders’ Equity For The Year Ended 31 March 2021
Notes to the Financial Statements
Directors and Corporate Information
1
2
3
15
17
19
22
24
33
40
41
42
43
44
46
47
48
49
97
1
Financial Highlights
FOR THE YEAR ENDED 31 MARCH 2021
Turnover from continuing operations
Profit before tax
Underlying profit before tax*
Diluted earnings per share before Non-trading items
Diluted earnings per share
Cash flow from operations
* Defined as profit before tax and non-trading items
2021
£’m
32.6
0.2
0.1
0.0p
0.1
3.7
2020
£’m
44.6
(3.8)
3.7
21.7p
-37.8p
4.7
Change
%
-26.9
105.3
-97.3
-100
100.3
-21.3
Turnover (£’m)
Underlying profit before tax* (£’m)
40.5
43.8
42.5
44.6
32.6
3.2
2.4
3.9
3.7
2017
2018
2019
2020
2021
2017
2018
2019
2020
2021
0.1
Diluted earnings per share* (pence)
before non-trading items
Dividends per share (pence)
24.1
21.7
19.7
15.3
4.0
4.5
5.0
0.0
1.8
0.0
2017
2018
2019
2020
2021
2017
2018
2019
2020
2021
ANNUAL REPORT 2021 2
Chairman’s Statement 2021
This has been an extraordinary trading
period, especially given our financial
year to 31 March 2021 encompassed
seven months of lockdowns where
trading in the UK was severely restricted
or halted.
Nevertheless, despite some extreme challenges to the UK
businesses, the Falkland Islands Company (“FIC”) traded well,
resulting in the Group being able to report a small underlying profit
at the pre-tax level of £0.1 million (2020: £3.7 million) as well as a
strong cash position. This was therefore a resilient performance
by the Group, benefiting from the diversity of its operations, and
showing that when trading was periodically allowed in the UK, the
businesses responded positively, boding well for the future.
The adverse effects of COVID-19 on Group operations can be
most clearly seen in the turnover, with Group revenue falling from
£44.6 million in 2019-20 to £32.6 million in the year to 31 March
2021. The effects were most severe in the UK with activity reduced
by over 90% at the height of the first lockdown in Spring 2020.
However, the Group was fortunate that, in the Falkland Islands,
business activity suffered only minor disruption from the pandemic
and the continuing profitability of FIC provided an effective balance
to the losses incurred in the UK.
At Momart, after losses in the first half of the year, trading
improved in the traditionally stronger autumn and winter periods
with the business recording a small operating contribution before
restructuring costs for the full year. At the Portsmouth Harbour
Ferry Company (“PHFC”) however, the effects of the second and
third lockdowns saw passenger movements severely restricted,
resulting in continuing losses in the second half of the year.
Despite these significant adverse effects, I am pleased to report
that the solid profits generated by FIC, early action to control
costs, and the full utilisation of the grants available under the UK
Government’s furlough scheme, enabled the Group successfully to
mitigate the worst financial effects of COVID-19 and return a pre-
tax profit of £0.2 million after non-trading items in the year (2020:
pre-tax loss of £3.8 million as a result of the £7.5 million charge to
write-down intangible assets). No further write-downs of intangible
assets have arisen in the current year.
losses were kept within manageable limits. However, as reported
in our Interim Statement in November, with the tapering down of
the UK Government’s furlough scheme in the autumn of 2020, the
difficult decision was taken to reduce staff levels in the Group’s UK
businesses. This painful but necessary restructuring yielded annual
savings of £1.6 million and will ease the path to financial recovery
in the current year.
The balance sheet remains strong with underlying cash at £9.6
million (2020: £9.1 million) and we drew down two UK Government
backed loans totalling some £5 million, which took year end cash
to £14.6 million. We repaid these loans subsequent to the year
end, so the underlying cash figure better represents our short-term
available funds.
The Chief Executive’s Strategic Review provides a more detailed
review of developments across the Group in the past year.
Given the severe effect of the pandemic on the Group’s profits, the
sacrifices made by staff, the use of UK Government assistance and
the still challenging trading conditions, after careful consideration
the Board has decided not to recommend the payment of a
dividend in respect of the year ended 31 March 2021. However,
the Board is hopeful that if the conditions that have dislocated
the Group’s performance continue to be eased in both the UK
and overseas, the Group will be able to resume the payment of
dividends when profitability is once again clearly established.
BOARD AND GOVERNANCE
To further strengthen the executive Board and to provide additional
impetus to the Group’s strategic development, we were delighted
to appoint Stuart Munro as Chief Financial Officer on 28 April 2021.
Stuart will work closely with CEO John Foster to add value to the
Group’s existing companies and to provide focus in the search for
strategic acquisitions to enhance returns to shareholders.
As for many pandemic-affected businesses, the year was a difficult
one for the Group’s employees and I would like to express my
appreciation for the sacrifices made by staff in accepting pay cuts
as we navigated the darkest days of the first lockdown in the spring
and early summer of last year. We are very fortunate to have such
committed colleagues.
OUTLOOK
As the UK’s vaccination programme progresses, we are seeing
signs of a slow return to normality and we are hopeful that absent
any further setbacks, the underlying strengths of the Group’s
diverse and well positioned businesses will reassert themselves as
the economic recovery gathers pace.
The Board has shared in these sacrifices and monitored
developments closely, seeking to protect the underlying strength
and capacity of the Group’s businesses, whilst ensuring initial
Robin Williams
Chairman
6 July 2021
ANNUAL REPORT 2021
3
Chief Executive’s Strategic Review
BUSINESS REVIEW
Overview
In a year of unprecedented challenge, where at times the
impact of COVID-19 saw revenues in the Group’s UK
businesses shrink to less than 10% of normal levels, I am
pleased to report that the Group produced an underlying
pre-tax profit of £0.1 million (2020: £3.7 million). After taking
account of non-trading items, the reported profit before
tax was £0.2 million. This compares to a £3.7 million loss
before tax in the prior year following a £7.5 million write
down in intangible assets.
The consistent profitability of the Group’s Falkland Islands
operations was a source of strength and was a key factor in
helping to offset trading losses suffered by our businesses
in the UK. This, together with an improving position at
Momart in the second half of the year, saw the Group move
from the small pre-tax loss reported at the half year to a
modest pre-tax profit for the year as a whole.
Despite the sharp reduction in underlying profitability
compared to pre-Covid trading, the Group’s liquidity
position was strengthened over the year with positive cash
generation of £1.1 million before the draw-down of CBILS
loans and repayment of bank loans.
At 31 March 2021, cash balances amounted to £14.6
million (2020: £9.1 million). This year-end balance was
reached after making scheduled bank loan repayments
of £0.6 million and includes £5.0 million allocated to the
repayment of the CBILS loans which were settled in June
2021, effectively leaving £9.6 million of unencumbered
“free” cash (2020: £9.1 million) an increase of £0.5 million
over the year.
The Group owns the freehold of Momart’s art storage
warehouses in East London which was acquired in
December 2018 at a cost of £19.6 million. It is pleasing
to note that with recently increased investor interest in
properties of this type, its value is now higher.
Group Trading Results for the Year Ended
31 March 2021
A summary of the trading performance of the Group is
given in the table below.
Group revenue
Year ended 31 March
Falkland Islands Company (“FIC”)
Portsmouth Harbour Ferry (“PHFC”)
Momart
Total revenue
Group underlying pre-tax profit*
Falkland Islands Company**
Portsmouth Harbour Ferry**
Momart**
Total underlying pre-tax profit *
Non-trading items
(see notes below)***
Reported profit before tax
2021
£m
20.9
1.4
10.3
32.6
1.8
(1.2)
(0.5)
0.1
0.1
0.2
2020
£ m
Change
%
21.7
-3.7%
4.1
-65.9
18.8
44.6
-45.2
-26.9
2.1
0.6
1.0
3.7
-14.3
-300.0
-150.0
-97.3
(7.5)
101.3
(3.8)
105.3
* Underlying pre-tax profit is defined as, profit before tax, before
non–trading items.
** As in prior years the profits reported for each operating
company are stated after the allocation of head office
management and plc costs which have been applied to each
subsidiary on a consistent basis.
*** In the current year, non-trading items include £0.4 million
of restructuring costs and £0.5 million of income relating to
the release of accruals where it is now probable that no future
economic outflow will arise. The net position produced a
non-trading profit of £0.1 million. In the prior year there were
impairment charges of £7.5 million. Management consider that
separate presentation of these items is appropriate to facilitate
year on year comparison of performance of the Group.
ANNUAL REPORT 2021
Group Revenue 2021
Group Revenue 2020
4
Momart
32%
FIC
64%
Momart
42%
FIC
49%
PHFC
4%
PHFC
9%
Trading results were significantly affected by COVID-19 and
government restrictions on movement which effectively saw a
full lockdown for 7 months of the financial year. The effects
were felt hardest at the Group’s ferry operations where UK
Government “stay at home” instructions saw revenue for the
12 months to 31 March 2021 fall to only 35% of prior year
levels. At Momart, helped by resilient storage revenues, the
decrease in overall turnover was less severe at 45% and in
the Falkland Islands where domestic activity was much less
heavily affected, revenue declined by only 4% compared to the
prior year.
At PHFC with its essentially fixed cost base and limited UK
Government support, despite a restructuring of the workforce
and headcount reduction of 26% in the autumn, the extension
of UK Government travel restrictions for four months in the
second half saw losses worsen, producing a full year underlying
pre-tax loss of £1.2 million. At Momart, a partial recovery
of the commercial art market saw a return to profitability in
the second half to deliver an underlying break-even operating
profit for the full year. FIC saw the least disruption and was
able to maintain healthy levels of profit, despite the absence of
tourist revenue.
As noted in the Chairman’s report, after careful reflection the
Board has decided not to recommend a dividend in respect
of the year but we will reassess this as the Group returns to
consistent profitability.
Group Operating Company
Performance
Falkland Islands Company
In the year to 31 March 2021 trading at FIC was largely
unaffected by the impact of COVID-19 and substantial
profitability was maintained, despite an inevitable impact
from the loss of tourist-related income as the Islands
protected themselves by maintaining an embargo on
foreign visitors.
The resulting decline in visitor revenues saw a small
reduction in FIC’s operating profit to £1.9m (2020:
£2.1 million), a 9.5% drop from the record levels seen in
the prior year.
With net interest costs of £0.1m in respect of an historic
pension scheme closed to further accrual in 2007, FIC
returned an underlying profit before tax of £1.8 million
(2020: £2.1 million).
FIC Operating results
Year ended 31 March
2021
£m
2020
£m
Change
%
Revenues
Retail
Falklands 4x4
FBS (housing and construction)
Support services
Property rental
Total FIC revenue
FIC underlying operating profit
Net interest expense
FIC underlying profit before tax
FIC underlying operating profit
margin
10.0
-3.0
3.2
5.0
2.8
0.7
2.1
-
-12.5
6.0
-17.9
14.3
-3.7
-9.5
-
9.7
2.8
5.3
2.3
0.8
1.9
(0.1)
1.8
20.9
21.7
2.1
-14.3
9.1% 9.7%
-6.2
ANNUAL REPORT 2021
5
Chief Executive’s Strategic Review
BUSINESS REVIEW
Rental Properties Further additions at a cost of £0.7
million were made during the year to FIC’s portfolio of
domestic rental properties taking the total number of
rented properties to 75 (2020: 65) with a further 7 under
construction. With strong demand and a continuing
shortage of housing supply in Stanley, overall occupancy
was very high at 93% with double-digit gross rental
yields being achieved. As a result, FIC’s property rental
income increased 14% in the year to £0.8 million (2020:
£0.7 million).
At 31 March 2021 the total net book value of the portfolio
excluding assets under construction (with buildings being
fully depreciated over 50 years) was £5.8 million (2020: £5.1
million). The estimated market value of FIC’s rental portfolio
at 31 March 2021 was £8.5 million (2020: £7.3 million) an
uplift of £2.7 million on book value giving an average value
per property of £113,000 (2020: £112,000)
Support Services income decreased by 17.9% to £2.3
million (2020: £2.8 million) principally due to the absence of
tourists, which produced a sharp fall in income at Penguin
Travel. In addition, less activity from Asian fishing fleets
during the initial stages of COVID-19 in the spring of 2020
saw a reduction in Agency revenues.
Despite the loss of tourist related income due to COVID-19,
the Group’s core operations in the Falkland Islands
performed well in the period with encouraging growth
seen at FBS and additional income from FIC’s expanded
property rental portfolio.
FIC Divisional Activity
Retail sales held up well in the first half of the year but
were adversely affected in the second due to the absence
of tourist-related spend and dropped back by 3.0% for the
year as whole to £9.7 million. Despite some progress at
Home Builder and Home Living, tighter margins and higher
levels of stock provisions saw the overall contribution from
Retail fall back from the record levels seen in the prior year.
At Falklands 4x4 new car sales and servicing revenues
declined reflecting cautious domestic spending patterns,
and this together with reduced tourist and corporate hire
income, saw 4x4’s overall revenues drop back with a
commensurate reduction in contribution.
FBS was successful in securing an additional 8 flats in its
first FIG housing contract, taking the total contract to 26
units, and good progress was made towards completing
this contract by the end of the financial year. With more
focus on the FIG housing contract, kit home completions
reduced to 15 units from 22 in the prior year, but helped by a
new income stream from a FIG road maintenance contract,
FBS’s overall revenue increased by 6% to £5.3 million
(2020: £5.0 million) producing an increased contribution
from this increasingly important division.
FIC revenues 2021
FIC revenues 2020
Support
Services
11%
Property
Rental
4%
Support
Services
13%
Property
Rental
3%
FBS
26%
Retail
46%
FBS
23%
Retail
46%
4x4
13%
4x4
15%
ANNUAL REPORT 2021
6
FIC Key Performance Indicators and
Operational Drivers
Year ended 31 March
2017
2018
2019
2020
2021
Staff Numbers
(FTE 31 March)
Capital Expenditure
£’000
151
146
169
208
198
578
389 2,348 2,685
1,060
Retail Sales growth %
-5.4
0.6
5.7
3.1
-3.0
Number of FIC rental
properties
Average occupancy
during the year %
Number of vehicles sold
Number of 3rd party
houses sold
illex squid catch in
tonnes (000’s)
Cruise ship passengers
(000’s)
51*
49*
54*
65*
75*
81
77
17
89
77
22
84
76
89
71
93
71
6
22
15**
30.1
75.5
57.4
57.6
106.1
55.6
59.3
62.5
72.1
Nil
*Includes ten mobile homes rented to staff.
**The 15 houses sold in the year ended 31 March 2021
relate to kit home sales to third parties and excludes houses
built under contract for FIG.
FIC ended the year with a headcount of 198 staff, 10 less
than in March 2020. Of the 198 headcount Retail accounted
for 74 (2020: 74), Falklands 4x4 accounted for 14 (2020:
17) and FBS 57 (2020: 52), with 53 (2020: 65) in Support
Services and administration.
Portsmouth Harbour Ferry Company
Of all the Group’s businesses, PHFC was the most badly
affected by the impact of COVID-19 and total revenues
fell by £2.7 million (66%) to £1.4 million in the year to 31
March 2021 (2020: £4.1 million). This fall in revenue was
a direct result of the UK Government restrictions on travel,
with passenger numbers for the year as whole 66% down
on the prior year at only 808,000. In addition, all summer
leisure cruising was cancelled. As a result, the company
suffered an underlying pre-tax loss of £1.2m in the current
year compared to the pre-tax profits of £0.6 million seen in
2019-20.
PHFC Operating results
Year ended 31 March
2021
£m
2020
£m
Change
%
Revenues
Ferry fares
Cruising and other revenue
Total PHFC revenue
PHFC underlying operating
(loss)/profit
Pontoon lease liability & Boat loan
finance expense
PHFC underlying (loss)/profit
before tax
1.4
-
1.4
3.9
0.2
4.1
-64.1
-100.0
-65.9
(0.9)
1.0
-190.0
(0.3)
(0.4)
25.0
(1.2)
0.6
-300.0
Passengers carried (000s)
808
2,365
-65.8
Since the commencement of the initial lockdown in Spring
2020, a regular 15 minute ferry service has been maintained
with operating hours reduced by one hour to provide a
17 ½ hour per day service (5.30am to 11.00pm). However,
due to lack of demand and to save costs, the two vessel,
peak hours service has been discontinued until volumes
recover. Faced with these unprecedented circumstances,
all ferry staff including directors voluntarily accepted a 20%
cut in pay for a period of 5 months and this sacrifice was
instrumental in helping the company weather the storm.
Newly constructed culverts built for the Falklands Islands Government
ANNUAL REPORT 2021 7
Chief Executive’s Strategic Review
BUSINESS REVIEW
PHFC Key Performance Indicators and
Operational Drivers
Year ended 31 March
2017
2018
2019
2020
2021
Staff Numbers
(FTE at 31 March)
Capital Expenditure
£’000’s
Ferry Reliability %
(on time departures)
Number of weekday
passengers ‘000’s
% change on prior
year
Number of weekend
passengers ‘000’s
% change on prior
year
Total number of
passengers ‘000’s
% change on prior
year
38
38
241
186
37
50
36
65
25
-
99.9
99.8
99.8
99.8
99.9
1,967
1,878
1,834
1,706
613
-3.9
-4.5
-2.3
-7.0
-64.1
744
734
722
659
195
-4.6
-1.3
-1.6
-8.7
-70.4
2,710
2,612
2,556
2,365
808
-4.1
-3.6
-2.1
-7.5
-65.8
Revenue growth %
1.0
1.5
0.4
-5.5
-65.9
Average yield per
passenger journey*
£1.52
£1.58
£1.62
£1.69
£1.76
*Total ferry fares divided by the total number of passengers
At the height of the lockdown in April 2020, passenger
volumes fell to less than 10% of the prior year as the
number of passenger journeys reduced to below 2,000 per
week. Numbers recovered steadily as lockdown measures
were reduced over the summer of 2020 and passengers
returned to using the ferry for travelling to work and
leisure activities. By September 2020, passenger numbers
had risen to 64% of pre-Covid levels and with support
from the furlough scheme, the ferry operation was returning
to profitability.
However, with the arrival of subsequent
lockdowns
in November and January through March, passenger
numbers fell back once again and despite a restructuring
programme which reduced headcount by 9 staff (26%) and
full use of the UK Government’s furlough scheme, trading
losses increased. By March 2021, passenger volumes had
recovered a little but were still over 60% below pre-Covid
levels. As a result of these further lockdowns, ferry losses
in the second half increased well beyond the £0.4 million
incurred in the first half and for the year as whole, PHFC
saw underlying losses before tax of £1.2 million (2020:
£0.6 million profit) before restructuring costs of £0.1 million
(2020: £nil).
With the phased relaxation of travel restrictions and the
re-opening of non-essential UK shops in April 2021, some
improvement is being seen in passenger numbers and
we are hopeful that as more normal working leisure and
travel patterns are re-established, the ferry will return to
profitability over the course of the year. In the meantime,
initiatives have been progressed with local councils and
major local employers to encourage the use of the ferry
as a “green” public transport solution in the battle against
climate change and local air pollution. We are particularly
encouraged that following extensive engagement with
Gosport, Portsmouth and Hampshire Councils, an
exciting new Park & Float scheme was launched in June
2021 utilising Gosport Council car parks, to encourage
commuters to travel to Gosport, park their vehicles and
use the ferry to complete their journey rather than make the
longer car journey around Portsmouth harbour on already
heavily congested roads.
Key Operating Metrics
Average fare yield per passenger journey (including cycle
fares) increased by 4.1% to £1.76 (2020: £1.69).
Despite the pandemic, ferry reliability was maintained at
exemplary levels with on-time departures running at 99.9%
(2020: 99.8%).
The Gosport Ferry
ANNUAL REPORT 2021 8
Momart
As noted in my Interim Report on the half year results
issued in November 2020, Momart was initially hit hard by
COVID-19. 108 of Momart’s staff were placed on furlough
and all staff, including those working, accepted a voluntary
20% reduction in pay.
The situation improved over the summer of 2020 as
confidence returned and art galleries and museums
reopened and by the early autumn, Momart had returned
to profitability. However, further setbacks arose, particularly
with the closure of museums following the unexpected
announcement of a national lockdown in November and
subsequent national restrictions in January through March
2021. Despite this, overall activity in the traditionally stronger
second half of the year did improve and this together with
the cost savings from the restructuring actioned in October
and furlough grants received from the UK Government of
£1.4 million over the full year, enabled Momart to return a
small operating profit in the second half.
Momart revenues 2021
Storage
23%
Commercial
Gallery
Services
33%
Museums
and Public
Exhibitions
44%
Momart revenues 2020
Storage
12%
Commercial
Gallery
Services
31%
Museums
and Public
Exhibitions
57%
Notwithstanding the improvement in activity in the second
half of the year, Momart’s revenue for the year to 31 March
2021 fell by 45% from £18.8 million to £10.3 million, with
operating profits declining by £1.5 million to produce an
underlying operating break-even result, before restructuring
costs of £0.2 million.
Momart Operating results
Year ended 31 March
Revenues
Museum Exhibitions
Gallery Services
Storage
2021
£m
2020
£m
Change
%
4.5
3.4
2.4
10.8
-58.3
5.8
2.2
-41.4
9.1
Total Momart revenue
10.3
18.8
-45.2
Momart underlying operating profit
-
1.5
-100.0
Net Interest expense
(0.5)
(0.5)
-
Momart underlying (loss)/profit
before tax
Momart underlying operating
profit margin
(0.5)
1.0
-150.0
-
7.8% -100.0
Museum Exhibitions activity was hardest hit by the crisis
due to the longer lead times involved in planning and
installing new shows and the greater dependence on the
physical presence of visiting patrons. However, Momart
was successful in installing a number of high-profile
exhibitions during the short periods of calm between
lockdowns, including “Rodin” at Tate Modern, “Arctic” at the
British Museum, “Lynette Yiadom-Boakye” at Tate Britain,
“David Hockney” at the National Portrait Gallery, and “Jean
Dubuffet” at the Barbican. With the benefit of income from
these successful installations Momart’s overall revenue
from Museum Exhibitions avoided complete collapse but
was still 58% below the level seen in the prior year at £4.5
million (2020: £10.8 million).
Revenue from commercial galleries, auction houses and
private clients was less dramatically affected as more
use was made by clients of online technology for the buying
and selling of art, although the sector did suffer with all
major art fairs being cancelled during the year. As a result,
Gallery Services revenue fell by 41% to £3.4 million (2020:
£5.8 million).
On a positive note, art storage income rose 9.1% to £2.4
million (2020: £2.2 million) as Momart secured important
new corporate storage contracts during the year which
gave a welcome boost to storage revenue. However, the
movement back out of temporary storage of other client
artworks later in 2020, saw a small overall decline in
volumes in storage by the year-end. At 31 March 2021,
the company’s storage facilities at Leyton were at 83% of
capacity (2020: 87%).
ANNUAL REPORT 2021 9
Chief Executive’s Strategic Review
BUSINESS REVIEW
With this welcome increase in storage and despite the
sharp falls seen in Museum Exhibitions and Gallery Services
activity, Momart was able to record an underlying operating
break-even result for the year (2020: £1.5 million profit).
Finance costs linked to vehicle leases, office rental and
long-term mortgage finance were at similar levels to the
prior year.
After finance charges and an allocation of central costs
Momart recorded an underlying loss before tax of £0.5
million (2020: profit £1.0 million). In addition, Momart
incurred restructuring costs of £0.2 million in the year
(2020: nil).
During the year, Momart’s Managing Director, Alan Sloan
retired and was succeeded on 1 January 2021 by Steve
Lane who was recruited in April 2020 to take on this role.
The Board would like to thank both Alan and his Momart
board colleague, Kenneth Burgon, who also stepped down
in 2020, for their commitment over the years and for their
valuable contribution towards securing the company’s
future during the coronavirus pandemic.
Impact of Brexit
In late December 2020, the UK’s successful negotiation of
tariff free access to the EU prevented the serious potential
disruption to trade that might otherwise have resulted as the
transition period following the UK’s departure from the EU
came to an end. Accordingly, the Group has experienced
little in the way of direct adverse effects from Brexit to date,
although the new and evolving documentation for exports
and imports has seen a modest increase in costs and small
delays at channel crossings for Momart.
In the Falkland Islands, tariff free access to the EU markets
has removed any threat of disruption to the export of squid
which had been of concern for the wider Falkland Islands’
economy and at PHFC the new trading arrangements with
the EU have seen a continuation of the smooth pre-Brexit
supply of EU sourced, ferry components.
In summary, to date there has been little direct impact on
the Group’s businesses arising from Brexit and although
the position has been heavily clouded by the effects of the
coronavirus pandemic, it seems unlikely that any material
adverse effects will subsequently emerge.
Momart Key Performance Indicators
and Operational Drivers
Trading Outlook
The outlook for the current year remains inevitably uncertain
but provided no serious reversals are experienced linked to
the pandemic, we are cautiously optimistic that we will see
a slow but steady recovery over the remainder of the year
as confidence slowly returns and more normal patterns of
business activity are re-established. Progress is expected to
be slow in the first half with momentum gradually increasing
as we progress through the year.
Year ended 31 March
2017
2018
2019
2020
2021
Staff Numbers
(FTE 31 March)
Capital Expenditure
£’000’s
Warehouse % fill vs
capacity
Exhibition Order Book
31 March
Momart services
charged out
Revenues from
overseas clients
Exhibitions sales
growth
131
136
140
133
107
971
228
20,034
638
471
90.4% 72.8% 81.1% 86.9% 82.9%
£4.8m £4.2m £4.6m Note*
Note*
£9.8m £10.9m £11.5m £10.8m £6.5m
£6.1m £7.1m £7.5m £6.2m £2.7m
19.9% 17.0% -6.5% -2.1% -58.3%
Gallery Services sales
growth
8.1% 15.2% 4.0% -22.4% -41.4%
Storage sales growth
-0.8% 8.5% -6.3% 5.8% 9.1%
Total Sales growth
13.0% 15.5% -2.9% -8.7% -45.5%
Note*: Due to the impact of COVID-19 meaningful data for
secure forward orders are not currently available.
Momart installing artworks
ANNUAL REPORT 2021 10
FIC
Momart
Although the Falkland Islands vaccination programme has
progressed well, there is great caution over the timing of re-
opening tourist links and the resumption of cruise ship visits
and commercial flights for non-residents is not expected in
the current calendar year. However, robust local demand
should ensure the continuation of solid, profitable trading
and we are hopeful of seeing further growth in FIC’s
construction activity linked to a planned increase in FIG
capital programmes.
In addition, in the past year, the steady recovery in oil
prices to over $70 per barrel and the merger of Premier Oil
with Chrysaor to create the much larger Harbour Energy
creates a more positive outlook for the much-delayed
development of the Sea Lion oil field, although the Board
does not anticipate any imminent FIC activity around this
potential. More tangibly, as tourist activity resumes and
full economic activity is re-established, the prospects for
steady growth in FIC’s core business, will be enhanced by
the potential for the development of land-based tourism
and the continued expansion of FIC’s construction and
infrastructure capabilities.
PHFC
At PHFC, where COVID-19 related losses have been most
acute, encouraging increases have been seen in passenger
numbers following the phased relaxation of lockdown
measures in April and May 2021. If this momentum
continues as expected, a return to consistent profitability
is anticipated by the end of the year. This recovery should
be aided by the launch in June 2021 of the new Park &
Float scheme in Gosport which it is hoped will provide a
real boost to ferry patronage. This initiative together with
an increased focus by both central and local government
on supporting “green” public transport solutions to help
address air pollution and climate change concerns,
should provide an effective counterweight to the increase
in hybrid / home working that may result from changes in
work patterns linked to COVID-19. However, a return to
pre-Covid levels of activity at PHFC is not anticipated before
2022 at the earliest.
At Momart the re-opening of museums and art galleries in
April and May 2021 has been a welcome positive step but
the postponement of major European art fairs until later in
the year and the slow recovery in tourist footfall in London
and other major cities means that the art market is still
some distance from returning to pre-Covid levels. Museum
activity in particular is expected to be muted and with
visitor revenues reduced, the number of new exhibitions is
likely to remain pared back until full confidence is restored.
Momart’s naturally stronger seasonality in the second half
should help to re-establish consistently profitable trading
but the achievement of pre-Covid levels of activity is not
anticipated until well into 2022.
Summary
Although uncertainty exists as to the rate of recovery,
the fundamental strengths of the Group’s three business
units remain and this coupled with the Group’s financial
resources in the form of cash, marketable freehold
property and supportive shareholders, gives the Group
an enviable platform for sustainable growth when the
significant disruption caused by COVID-19 has been
consigned to history.
Group Strategy
As we cautiously move through a year of material recovery,
the Group’s focus will increasingly shift from reactive
protective measures to a more expansive growth-oriented
strategy built around further investment in our core activities
and a search for strategic acquisitions. Our ultimate
objective is to build a Group of greater scale, able to sustain
the consistent earnings growth and cash generation that will
provide shareholders with both predictable capital growth
and regular income. To assist with the execution of this
strategy, in April 2021 the Board was further strengthened
by the recruitment of Stuart Munro, an experienced CFO.
With Stuart’s help we will seek to add a new business
stream with embedded potential for sustainable growth,
leveraging the Group’s existing skills, experience and
financial strength.
ANNUAL REPORT 2021 11
Chief Executive’s Strategic Review
RISK MANAGEMENT
Risk Management and Principal risks and impact
The Board is ultimately responsible for setting the Group’s risk appetite and for overseeing the effective management
of risk. The Group faces a diverse range of risks and uncertainties which could have an adverse effect on results if not
managed. The principal risks facing the Group have been identified by the Board and the mitigating actions agreed with
senior management and are discussed in the following table:
COVID-19
Issue
The lockdown measures introduced by the UK
Government to suppress COVID-19 have had an
unprecedented impact on the fundamental conditions
of supply and demand in the Group’s UK businesses.
At Momart, demand from the company’s museum
and gallery clients fell away as the prohibition on
public gatherings effectively closed client operations
completely, with the consequent cessation of
Momart’s art handling activities.
Revised staff safety protocols and the need to use
PPE for staff slowed down installations at Momart and
increased the cost of operations. The impact on FIC
and PHFC was minimal.
Comment
Impact
The impact was immediate and severe but with the
gradual relaxation of the lockdown activity is reviving.
The economic costs were mitigated in both
businesses by the use of the UK Government’s
furlough grant scheme.
Activity is reviving as lockdown measures are relaxed.
Very high but reducing
as the lockdown is
relaxed.
Very high but reducing
as lockdown measures
are relaxed.
Safe working practices were reviewed and updated in
great detail with reference to UK Government guidance
and in consultation with staff.
Low and reducing as
lockdown restrictions
ease.
Wherever possible, the additional costs of operating
have been passed on to clients. (All competitors face a
similar challenge).
At PHFC, the lockdown saw ferry customers cease
their normal daily travel to work and leisure activities,
causing a 90% fall in ferry traffic.
The impact was immediate and severe but with the
gradual relaxation of the lockdown activity at PHFC is
slowly reviving.
Very high but reducing
in intensity as the
lockdown is eased.
Social distancing requirements set limits on the full
utilisation of ferry capacity.
PHFC is better placed than many public transport
businesses and can maintain 40% capacity while
enforcing social distancing. As passenger volumes
recover the use of the second vessel to cover peak
demand at rush hour will help limit any effective
constraints on effective carrying capacity.
PHFC’s programme of Solent leisure cruises was
affected by lockdown restrictions and concerns over
social distancing on cruises where passenger volumes
need to be higher to generate a return.
PHFC’s programme of summer cruises for 2020 was
cancelled. However, with the success of the vaccine
roll-out, a scaled back programme of cruises has been
re-introduced for Summer 2021.
Longer term changes in customer behaviour may
result from the pandemic: an increased reluctance
to use public transport and more hybrid/working
from home.
Despite a successful vaccination programme, the
Falkland Islands remain closed to overseas visitors
which removes an important source of income for
the economy.
Council initiatives to encourage green public transport
and discourage car use will help mitigate the potential
reduction in passenger numbers.
As global vaccination proceeds, the Falkland Islands are
expected to re-open their borders.
Low
Low
Low
Moderate impact
on tourism income
but not expected to
extend beyond the
current financial year.
ANNUAL REPORT 2021 12
POLITICAL RISKS
Risk
Comment
Historically, Argentina has maintained a claim to the
Falkland Islands, and this dispute has never been
officially resolved.
Uncertainty caused by the UK’s decision to leave the
European Union.
Relations with Argentina have become more strained in
recent years. However, the security afforded by the UK
Government’s commitment to the Islands provides a
guarantee of the freedom and livelihood of the people of
the Falkland Islands and thereby to FIC.
Provided UK Government support is maintained the
security of the people of the Falkland Islands is not
in doubt.
To date, there has been little direct impact on the
Group’s businesses arising from Brexit and although
the position has been heavily clouded by the effects
of the coronavirus pandemic it seems unlikely that
any material adverse effects will subsequently
emerge.
Potential Impact
Low – Unchanged
Low – Decreased
ECONOMIC CONDITIONS
Risk
Comment
Although the impact of COVID-19 has been
unprecedented, this has been matched by equally
unprecedented government interventions on a
global scale which has sustained economic
confidence and activity.
International travel continues to be badly affected by
COVID-19, with no overseas visitors expected in the
Falkland Islands in the current financial year.
The trading performance of both the Group’s UK
companies has been severely affected by the effects
of COVID-19 but UK Government economic support
and the success of the vaccination programme mean
that the adverse effects are being steadily reduced
as the Group’s businesses return to more normal
levels of activity.
Despite this, FIC saw its revenue and profitability
largely maintained in 2021. In any event, travel
restrictions are unlikely to extend beyond the
current financial year.
Potential Impact
High but steadily
reducing impact on UK
operations.
Moderate but
reducing.
Economic activity in the Falkland Islands has
been subject to fluctuation, dependent upon Oil
sector activity.
Oil-related activity in recent years has been minimal and
the success of the Falkland Islands’ economy is not
predicated on the development of oil reserves.
Low impact
Budgets available to museums for exhibitions
can fluctuate with government spending and the
commercial art market exhibits cyclicality; both have
a direct impact on Momart. Both these effects have
been exacerbated by COVID-19.
Reduced museum budgets and visitor footfall are likely
to lead to a reduction in the number of exhibitions with
a consequent reduction in demand for Momart’s
services until government finances and public
confidence recovers.
Moderate but reducing
as public confidence
returns. Impact
mitigated by reduction
in Momart’s cost base.
CREDIT RISK
Risk
Comment
Potential Impact
Credit risk is the risk of financial loss if a customer fails
to meet its contractual obligations.
Effective processes are in place to monitor and recover
amounts due from customers. Even with COVID-19, bad
debt experience has been minimal.
Low
COMPETITION
Risk
FIC is considered by the senior management to be a
market leader in a number of business activities but
faces competition from local entrepreneurs in many of
the sectors in which it operates.
Comment
Local competition is healthy for FIC and stimulates
continuing business improvement in FIC .
Potential Impact
Low - Unchanged
Momart sits in a highly competitive market with both
UK and International competitors investing for growth.
Largely unchanged.
Moderate -
Unchanged
ANNUAL REPORT 2021 13
Chief Executive’s Strategic Review
RISK MANAGEMENT
FOREIGN CURRENCY AND INTEREST RATE RISK
Risk
Comment
Momart is exposed to foreign currency risk arising
from trading and other payables denominated in
foreign currencies.
Forward exchange contracts are used to mitigate
this risk, with the exchange rate fixed for all
significant contracts.
The Group is exposed to interest rate risks on
large loans.
Interest rate risk on large loans is mitigated by the use of
interest rate swaps.
Potential Impact
Low -
Unchanged
FIC retail outlets accept foreign currency and are
exposed to fluctuations in the value of the dollar
and euro.
INVENTORY
Risk
Inventory risk relates to losses on realising the
carrying value on ultimate sale. Losses include
obsolescence, shrinkage or changes in market
demand such that products are only saleable at
prices that produce a loss.
FIC is the only Group business that holds significant
inventories and does face such risk in the Falkland
Islands, where it is very expensive to return excess or
obsolete stock back to the UK.
PEOPLE
Risk
Loss of one or more key members of the senior
management team or failure to attract and retain
experienced and skilled people at all levels across
the business could have an adverse impact on
the business.
FIC has a reliance on being able to attract staff
from overseas including many from St Helena.
Development of those locations might reduce the pool
of available staff.
FIC has a reliance on being able to attract staff from
overseas generally.
Comment
Potential Impact
Reviews of old and slow-moving stock in Stanley
are regularly undertaken by senior management and
appropriate action taken.
Moderate -
Unchanged
Comment
None of the Group’s businesses is reliant on the skills
of any one person. The wide spread of the Group’s
operations further dilutes the risk.
Potential Impact
Low - Unchanged
The development of tourism on St Helena has been
slow and the Falkland Islands remain an attractive
location for St Helenian people to work.
Low - Unchanged
Immigration procedures in the Falkland Islands are
bureaucratic and slow, although FIG is aware and
seeking to streamline the process.
Moderate -
Unchanged
ANNUAL REPORT 2021 14
LAWS AND REGULATION
Risk
Comment
Failure to comply with the frequently changing
regulatory environment could result in reputational
damage or financial penalty.
The regulatory environment continues to become
increasingly complex.
Potential Impact
Low - Unchanged
The Group uses specialist advisers to help evolve
appropriate policies and practices. Close monitoring
of regulatory and legislation changes is maintained to
ensure our policies and practices continue to comply
with relevant legislation.
Staff training is provided where required.
Health & Safety (“HSE”) matters are considered a
key priority for the Board of FIH and all its operating
companies. Particular attention has been paid to
updating risk assessments and safe working practices
in the light of COVID-19.
Low
All staff receive relevant HSE training when joining the
Group and receive refresher and additional training as is
necessary. Training courses cover maritime safety, lifting
and manual handling, asbestos awareness and fire
extinguisher training. External HSE audits are conducted
on a regular basis.
GENERAL HEALTH AND SAFETY
The Group is required to comply with laws and
regulation governing occupational health and safety
matters. Furthermore, accidents could happen which
might result in injury to an individual, claims against
the Group and damage to our reputation.
John Foster
Chief Executive
6 July 2021
ANNUAL REPORT 2021 15
Chief Financial Officer’s Review
Financial Review
Revenue
Group revenue decreased by £12 million (26.9%) to £32.6
million due mainly to the effects of COVID-19. This was felt
most severely at Momart and PHFC, where revenues fell
by £8.5 million and £2.7 million respectively. FIC suffered
more minor disruption and an overall £0.8 million reduction
in revenue.
Underlying Operating Profit
Underlying operating profit before non-trading items and net
finance costs decreased by 78.2% to £1.0 million (2020:
£4.6 million) reflecting the revenue reductions noted above,
which were partially mitigated by actions taken to control
cost and the utilisation of £1.8 million of grants available
under the UK Government and FIG furlough schemes.
Net Financing Costs
The Group’s net financing costs remained flat at £0.9
million. Two UK Government-backed CBILS loans totalling
£5.0 million were drawn down in June 2020 but as the first
12 months of interest payments are covered by the UK
Government, these loans had no impact on net financing
costs in the year.
Reported Pre-tax Profit
The reported pre-tax result for the year ended 31 March
2021 was a profit of £0.2 million (2020: £3.8 million loss).
Non-trading items in the current year included £0.4 million
of restructuring costs and £0.5 million income from the
derecognition of historic liabilities, which were previously
included within accruals but are no longer enforceable. The
prior year result included a non-trading impairment charge
of £7.5 million to write down goodwill which had previously
arisen on the acquisition of PHFC and Momart. The Group’s
underlying profit before tax before these non-trading items
was £0.1 million (2020: £3.7 million).
Taxation
The Group pays corporation tax on its UK earnings at 19%
and on earnings in the Falkland Islands at 26%. FIC, which
is resident in both jurisdictions, has been granted a foreign
branch exemption, and now pays all its corporation tax in
the Falkland Islands and no longer pays UK corporation tax.
As a result, FIC enjoys the full benefit of the tax deductibility
in the Falkland Islands of expenditure on commercial and
industrial buildings.
Tax on current year profits in the Falkland Islands was broadly
offset by recoverable tax on current year losses in the UK
with the overall tax charge for the year of £0.2m relating
mainly to deferred tax in respect of capital allowances in
advance of depreciation in FIC.
Earnings per Share
Diluted Earnings per Share (“EPS”) derived from reported
profits was 0.1 pence (2021: -37.8 pence). As noted above,
the current year was impacted by reduced activity due to
COVID-19 and the prior year by a £7.5 million impairment
of goodwill. Diluted EPS derived from underlying profits was
0.0 pence (2020: 21.7 pence).
Balance Sheet
The Group’s balance sheet remained strong, with total
net assets remaining broadly in line with last year at £38.9
million (2020: £38.8 million). Retained earnings decreased
by £0.2m to £19.6 million (2020: £19.8 million) which was
offset by a £0.3 million improvement in the hedging reserve,
reflecting an increase in the fair value of hedges taken
through other comprehensive income in accordance with
IFRS 9.
Net Debt
Year ended 31 March
2021
£m
2020
£m
Change
£m
Bank loans
(20.1)
(15.7)
(4.4)
Cash and cash equivalents
14.6
9.1
5.5
Bank loans net of cash
and cash equivalents
Lease liabilities
Net debt
(5.5)
(6.6)
(8.1)
(8.4)
(13.6)
(15.0)
1.1
0.3
1.4
Bank loans increased to £20.1 million (2020: £15.7 million),
as a result of the £5.0 million CBILS loans drawn down in
June 2020, which were partially offset by scheduled loan
repayments of £0.6 million. The Group’s cash balances
increased to £14.6 million (2020: £9.1 million) reflecting a
£0.5 million improvement in the underlying cash balance
of £9.6 million and the proceeds of the £5.0 million CBILS
loans. Overall, net debt improved to £13.6 million (2020:
£15.0 million).
The Group’s outstanding lease liabilities totalled £8.1 million
(2020: £8.4 million) with £5.7 million of the balance (2020:
£5.8 million) relating to the 50-year leases from Gosport
Borough Council for the Gosport Pontoon and associated
ground rent, which run until June 2061.
The carrying value of intangible assets remains unchanged
from the prior year at £4.2 million following annual impairment
reviews which indicated that no further impairment was
required at Momart or PHFC (2020: £7.5 million).
The net book value of property, plant and equipment
decreased by £1.3 million to £40.4 million (2020: £41.7
ANNUAL REPORT 2021
16
million) with additions of £0.9 million being offset by
depreciation charges of £2.2 million. The additions include
two trucks purchased by Momart for £0.4 million funded by
hire purchase agreements.
The Group’s deferred
the
tax
pension asset at 31 March 2021, were £3.1 million (2020:
£2.8 million).
liabilities, excluding
At 31 March 2021, the Group had 75 (2020: 65) completed
investment properties, comprising commercial and
residential properties in the Falkland Islands, which are held
for rental. Seven properties were under construction at
31 March 2021 (2020: 10). In addition, FIC held 400 acres
of land in and around Stanley, including 18 acres zoned
for
industrial development and 25 acres of prime
mixed-use land, and a further 300 acres of undeveloped
land outside Stanley.
The net book value of the investment properties and
undeveloped land of £7.1 million (2020: £6.5 million)
has been reviewed by the directors of FIC resident in
the Falkland Islands. At 31 March 2021 the fair value of
this property portfolio, including undeveloped land, was
estimated at £11.1 million (2020: £10.0 million), an uplift of
£4 million on net book value.
FIC’s 75 houses and flats had an estimated fair value of
£8.5 million (2020: £7.3 million), the seven properties under
construction were valued at cost of £0.5 million (2020:
£0.6 million) and the value of FIC’s 700 acres of land was
estimated at £2.1 million (2020: £2.1 million).
Deferred tax assets relating to future pension liabilities stood
at £0.7 million (2020: £0.7 million). This balance relates to the
deferred tax benefit of expected future pension payments in
the FIC unfunded scheme calculated by applying the 26%
Falkland Islands’ tax rate to the pension liability.
Inventories, which largely represent stock held for resale and
work in progress at FIC and Momart respectively increased
by £0.5 million to £5.9 million at 31 March 2021 (2020:
£5.4 million), due to a £0.5 million increase in housebuilding
stocks at FIC mainly as a result of the timing of deliveries
and the phasing of the related works.
Cash Flows
Net cash inflow from operating activities of £3.7 million
was £1.0 million less than the prior year inflow of £4.7
million. The reduction was principally due to a £3.3 million
reduction in underlying EBITDA which was partly offset by
a £2.4 million improvement in working capital movement in
the current year.
The Group’s operating cash flow can be summarised as
follows:
Year ended 31 March
Underlying profit before tax
Depreciation & amortisation
Net interest payable
Underlying EBITDA
Non-trading, cash items
Decrease in hire purchase debtors
Decrease/(increase) in
working capital
2021
£m
2020
£m
Change
£m
0.1
2.3
0.9
3.3
(0.4)
-
3.7
2.1
0.8
6.6
-
0.1
1.0
(1.4)
Tax paid and other
(0.2)
(0.6)
Net cash inflow from operating
activities
Financing and investing activities
3.7
4.7
(1.0)
Capital expenditure
(1.5)
(3.4)
1.9
Net bank and lease liabilities
interest paid
(0.8)
(0.8)
-
Bank and lease liability repayments
(1.3)
(11.4)
Dividends paid
Bank and lease liabilities draw down
Net cash inflow/ (outflow) from
financing and investing activities
(3.6)
0.2
0.1
(3.3)
(0.4)
(0.1)
2.4
0.4
10.1
0.6
(9.0)
3.6
2.6
2.9
5.5
-
5.4
1.8
5.5
9.1
14.6
(0.6)
14.4
(1.8)
2.9
6.2
9.1
Trade and other receivables decreased £2.8 million to £5.9
million at 31 March 2021 (2020: £8.7 million) due mainly to
reduced sales activity in Momart and FIC.
Net cash inflow
Cash balance b/fwd.
Cash balance c/fwd.
Trade and other payables decreased by £1.8 million to £6.8
million at 31 March 2021 (2020: £8.6 million).
Financing and Investing Activities
At 31 March 2021, the liability due in respect of the Group’s
only defined benefit pension scheme, in FIC, was £2.8
million (2020: £2.6 million). This pension scheme, which
was closed to new entrants in 1988 and to further accrual
in 2007, is unfunded and liabilities are met from operating
cash flow. An increase in the liability arose as a result
of a fall in medium term interest rates and has been fed
through reserves in accordance with IAS 19. Eleven former
employees receive a pension from the scheme at 31 March
2021 and there are three deferred members.
During the year, the Group invested £1.5 million of capital
expenditure, comprising £0.7 million of investment property
and £0.8 million on property, plant and equipment.
The £5.4 million of bank and lease liabilities draw down in the
year included the £5 million CBILS loans drawn down in June
2020 and the funding of vehicles in Momart of £0.4 million.
Stuart Munro
Chief Financial Officer
6 July 2021
ANNUAL REPORT 2021 17
Board of Directors and Secretary
Robin Williams, Non-executive Chairman
Robin joined the Board in September 2017. He has a wide breadth of corporate experience, gained at a range of quoted
and private businesses as well as from an early career in investment banking. He is currently also Chairman at Keystone
Law Group plc and a non-executive director at Xeinadin Group Limited. Robin qualified as an accountant in 1982 after
graduating in engineering science from the University of Oxford. He worked in corporate finance for ten years at investment
banks including Salomon Brothers and UBS before leaving the City in 1992 to co-found the packaging business, Britton
Group plc. In 1998, he moved to Hepworth plc, the building materials group, and since 2004 he has focused on non-
executive work in public, private and private equity backed businesses. His financial background provides the experience
required as Chairman of the Group to review and challenge decisions and opportunities. Robin is a member of the Audit
and Remuneration Committees and is Chairman of the Nominations Committee.
John Foster, Chief Executive
John joined the Board in 2005. He is a Chartered Accountant and previously served as Group Finance Director for
Macro 4 plc (2000 - 2003) and Hamleys plc (1998 - 2000). Prior to joining Hamleys, he spent three years as Corporate
Finance Director of Ascot plc, an industrial holding company with a turnover of £300 million and over 1,600 employees.
Before becoming a plc director, John spent 11 years working in Private Equity for a leading UK investment bank following
training and CA qualification with Arthur Andersen in 1983. John’s finance background, together with his strong analytical
skills developed during his nine years working as a venture capitalist with a leading investment bank is well fitted to his
commitment to perform the Chief Executive role at FIH group plc.
Stuart Munro, Chief Financial Officer
Stuart joined the Board on 28 April 2021. He qualified as a chartered accountant with Ernst & Young and since 2000, has
worked as a divisional finance director in number of UK companies including Balfour Beatty, Alfred McAlpine Infrastructure
Services and FirstGroup, as well as Transport for London. From 2015 until joining the Board, Stuart provided strategic,
financial and operational consultancy to a number of medium sized private equity backed services companies across a
variety of sectors.
Jeremy Brade, Non-executive Director
Jeremy joined the Board in 2009, he is a Director of Harwood Capital Management where he is the senior private equity
partner and has worked in UK private equity for over 20 years. He has led several successful acquisitions and public-
to-private transactions. Previously, Jeremy was with the Foreign and Commonwealth Office (FCO) and prior to that, he
was an army officer. Using his experience of acquisitions and various corporate transactions, Jeremy brings a wealth of
knowledge and expertise on restructuring, funding and transforming companies. Jeremy is a member of the Nominations,
Audit and Remuneration Committees and holds a number of other non-executive directorships including one at Fulcrum
Utility Services Limited.
Robert Johnston, Non-executive Director
Robert joined the Board on 13 June 2017. He is an experienced non-executive director and investment professional
and has served on the boards of several quoted companies in both North America and in UK, including Fyffes PLC and
Supremex Inc. Robert has been the Chief Strategy Officer and Executive Vice President at The InterTech Group, Inc. and
has over 20 years of experience in various financial and strategic roles. He is the principal representative of the Jerry Zucker
Revocable Trust. Robert brings experience on many transactions at both the corporate and asset level, including debt
and equity, and his experience in the banking sector will prove invaluable to developing the Group. Robert represents the
Company’s largest shareholder, “The Article 6 Marital Trust, created under the First Amended and Restated Jerry Zucker
Revocable Trust dated 4-2-07”, which has a beneficial holding of 3,596,553 ordinary Shares, representing 28.7% of the
Company’s issued share capital.
He is currently on the boards of Colabor Group Inc., Corning Natural Gas Holding Corp, Supremex Inc. (where he is
Chairman), Circa Enterprises Inc. and Swiss Water Decaffeinated Coffee Inc. Robert is a member of the Nominations and
Audit Committees and is Chairman of the Remuneration Committee.
ANNUAL REPORT 2021 18
Dominic Lavelle, Non-executive Director
Dominic joined the Board on 1 December 2019; Dominic brings to FIH a wide breadth of corporate experience. Most
recently, Dominic was Chief Financial Officer of SDL plc from 2013 to 2018. He has over 15 years’ experience as a UK plc
Main Board Director and has been Finance Director/Chief Financial Officer of seven UK publicly traded companies including
Mothercare plc, Alfred McAlpine plc, Allders plc and Oasis plc. His experience, in both permanent roles and turnaround
and restructuring projects across several business sectors including technology and services, retail, building, construction,
support services, property (agency, management, valuation, investment, development), leisure, care home and insurance
is a great benefit to the Group, particularly with the various business streams operated by FIC.
After graduating in Civil and Structural Engineering from the University of Sheffield in 1984, Dominic trained with
Arthur Andersen and qualified as a chartered accountant in 1989. He is currently a non-executive director and Chair of
the Audit & Risk Committee of McColls Retail Group plc, senior independent non-executive director and Chair of the Audit
Committee of the AIM quoted Fulcrum Utility Services Limited and a director of Steenbok Newco 10 SARL, a wholly owned
subsidiary of the Steinhoff Group. Dominic is a member of the Nominations and Remuneration Committees and is Chair
of the Audit Committee.
Iain Harrison, Company Secretary
Iain Harrison joined the Company in April 2019. Iain has a BSc in Mathematics from Edinburgh University and qualified as
a Chartered Accountant in Scotland in 1993. He has previously worked at RBS group and Heriot Watt University and was
Company Secretary at Dawson International plc from 2003-2004.
ANNUAL REPORT 2021 19
Corporate Governance Statement
Dear Shareholder,
As Chairman of the Company, I am responsible for leading the Board in applying good corporate governance and the Board
is committed to appropriate governance across the business, both at an executive level and throughout its operations.
The Board strives to ensure that the objectives of the business, the principles and risks are underpinned by values of good
governance throughout the organisation.
The FIH group plc Board values include embedding a culture of ethics and integrity, and the adoption of higher governance
standards, to maintain its reputation by fostering good relationships with employees, shareholders and other stakeholders
to deliver long term business success.
In 2018 the AIM Rules for Companies were updated to acknowledge a change in investor expectations toward corporate
governance for companies admitted to trading on AIM, and the Board, took the decision to adopt the revised Quoted
Companies Alliance Corporate Governance Code 2018 (the “QCA Code”) which they believe is the most appropriate
recognised governance code for the Company.
The QCA Code has ten principles of corporate governance that the Company has committed to apply within the
foundations of the business, which are discussed in detail on the Company’s website www.fihplc.com in the Corporate
Governance section.
The Board is aware of the need to protect the interests of minority shareholders, and balancing those interests with those
of any more substantial shareholders, including those interests of the Jerry Zucker Revocable Trust, a major shareholder
holding nearly 29% of the issued share capital and voting rights, which are represented on the Board by the non-executive
director, Robert Johnston.
Beyond the Annual General Meeting, the Chief Executive and the Chief Financial Officer offer to meet with all significant
shareholders after the release of the half year and full year results and the Chairman is available throughout. The Chief
Executive, Chief Financial Officer and the Chairman are the primary points of contact for the shareholders and are available
to answer queries over the phone or via email from shareholders throughout the year.
Business Model and Strategy
The Group’s strategy is to continue to develop the potential of its existing companies: to fill storage capacity and make
further progress at Momart, to maintain the strong cash flow from PHFC and to invest in FIC to take full advantage of the
longer-term growth opportunities in the Falkland Islands. While doing this management are also alert to the benefits of a
well-judged complementary acquisition that would give increased scale and growth potential for the Group and enhance
the liquidity of FIH shares. As set out in the Chief Executive’s Strategic Report, this established strategy has been affected
by the impact of COVID-19 which has necessitated a temporary focus on cost saving, husbanding cash resources and
restricting investment whilst the damaging short-term effects of the virus are dealt with in a way which ensures maximisation
of the long-term value of the Group’s businesses.
Risk Management
The Board has overall responsibility for the systems of risk management and internal control and for reviewing their
effectiveness. The internal controls are designed to manage rather than eliminate risk and provide reasonable but not
absolute assurance against material misstatement or loss. The key risks of the Group are presented in the Chief Executive’s
Strategic Report.
The Board has determined that an internal audit function is not justified due to the small size of the Group and its
administrative function and the high level of director review and authorisation of transactions.
A Directors’ and Officers’ Liability Insurance policy is maintained for all directors and each director has the benefit of a Deed
of Indemnity.
Director Independence
The Board considers itself sufficiently independent. The QCA Code suggests that a board should have at least two
independent non-executive directors. The Board has considered each non-executive director’s length of service and
interests in the share capital of the Group and consider that Mr Williams, Mr Brade, Mr Johnston and Mr Lavelle are
ANNUAL REPORT 2021 20
independent of the executive management and free from any undue extraneous influences which might otherwise affect
their judgement. All Board members are fully aware of their fiduciary duty under company law and consequently seek at
all times to act in the best interests of the Company as a whole.
Whilst the Company is guided by the provisions of the QCA Code in respect of the independence of directors, it gives
regard to the overall effectiveness and independence of the contribution made by directors to the Board in considering
their independence, and does not consider a director’s period of service in isolation to determine this independence. The
Board acknowledges that Robert Johnston, who joined the Board on 13 June 2017, represents the Company’s largest
shareholder, “The Article 6 Marital Trust, created under the First Amended and Restated Jerry Zucker Revocable Trust
dated 4-2-07”, (the “Zucker Trust”), which has a beneficial holding of 3,596,553 ordinary Shares, representing nearly 29%
of the Company’s issued share capital. The Board has considered Mr Johnston’s independence, given his representation
of this shareholding and all Board members have satisfied themselves that they consider Mr Johnston to be independent.
This is as a consequence of (i) the fact that Mr Johnston has considerable international investment expertise, and (ii) that
the shareholding of his employer in FIH represents only a small part of its wider portfolio, but nonetheless aligns him with
the interests of FIH shareholders generally.
Jeremy Brade’s tenure, at over the suggested nine years for PLC directors, is not the determining factor in his independence,
which the Board judges in relation to his contribution and depth of knowledge of the Group’s operations and history. The
Board has asked Jeremy to stand for re-election at the AGM this year and Jeremy has indicated that he is likely to step
down from the Board at the AGM in 2022 in view of his long service. All directors retire by rotation and are subject to
election by shareholders at least once every three years. Any non-executive directors who have served on the Board for at
least nine years will be subject to annual re-election.
Time Commitment of Directors
John Foster, Chief Executive of the company and Stuart Munro, Chief Financial Officer, are the only full-time executive
directors. Robin Williams, Jeremy Brade, Robert Johnston and Dominic Lavelle have all been appointed on service
contracts for an initial term of three years. Overall, it is anticipated that non-executive directors spend 10-15 days a
year on the Group’s business after the initial induction, which includes a trip to the Group’s subsidiary in the Falkland
Islands. However, the non-executive directors and the Chairman in particular spend significantly more time than this on the
business of the group.
All directors are expected to attend all Board meetings, the Annual General Meeting and any extraordinary general meetings.
Non-executive directors are expected to devote additional time in respect of any ad hoc matters, such as significant
investment opportunities, responding to market changes, such as the COVID-19 pandemic, consideration of any business
acquisitions, and any significant recruitment or corporate governance changes.
Skills and Qualities of Each Director
The Board recognised the importance of having directors with a diverse range of skills, experience and attributes, which we
have across our current Board. Each Board member contributes a different skill set based on their own experience, which
is discussed in detail in the “Board of Directors and Secretary”.
Board Meetings
The Board meets frequently throughout the year to consider strategy, corporate governance matters, and performance.
Prior to each meeting, all directors receive appropriate and timely information. Since the last annual report was
published on 23 June 2020 there have been eleven Board meetings, Robin Williams, John Foster, Jeremy Brade, Robert
Johnston and Dominic Lavelle have attended all meetings. Stuart Munro has attended all meetings since his appointment
to the Board.
There have been no Remuneration Committee meetings since 23 June 2020. Instead, given the impact of the COVID-19
pandemic on Group trading and the need to take significant action to control costs, the Board as a whole deliberated on
compensation decisions. There have been two Audit Committee meetings since 23 June 2020 which were attended by
all members of the committee. The Nominations Committee meets on an ad hoc basis to consider Board composition
and succession and was active during the year in the search for and recruitment of Stuart Munro, the Group’s new Chief
Financial Officer. An external recruitment company provided assistance to the Committee in the search and conducted a
wide-ranging search for candidates.
ANNUAL REPORT 2021 21
Corporate Governance Statement
CONTINUED
Board Directors
The Board comprises Robin Williams, the non-executive Chairman, John Foster, the full time Chief Executive, Stuart
Munro, the full time Chief Financial Officer and three other non-executive directors, Jeremy Brade, Robert Johnston and
Dominic Lavelle.
Details of How Each Director Keeps Their Skill Set Up to Date
The Board as a whole is kept abreast by the Company’s lawyers with developments of governance, and by WH Ireland,
the Company’s Nominated Adviser, of updates to AIM regulations. The Group’s auditors, KPMG, meet with the Board as a
whole twice a year and keep the Board updated with any regulatory changes in finance and accounting.
Any External Advice Sought by the Board
RSM Tenon, the Group’s tax advisors ensure compliance with taxation law and transfer pricing and the Company’s lawyers
advised on a number of areas.
Internal Advisory Responsibilities
The Chief Financial Officer helps keep the Board up to date on areas of new governance and liaises with the Nominated
Adviser on areas of AIM requirements, and with the Company’s lawyers on areas such as Modern Slavery, Data Protection
and other legal matters. He also liaises with the Company’s tax advisers with regards to tax matters and with the Group’s
auditors with respect to the application of current and new accounting standards, and on the status on compliance
generally around the Group. The Chief Financial Officer has frequent communication with the Chief Executive as well as
access to the Chairman, and is available to other members of the Board as and when required.
Board Performance Effectiveness
The directors have considered the effectiveness of the Board, committees and individual performance, and this was
discussed by the Board in the April 2021 meeting. The Board meets formally five times a year with update Board meetings
held in between these meetings as required. There is a strong flow of communication between the directors, in particular
the relationship between the Chief Executive and Chairman, who have regular additional calls or meetings. The agenda
for the formal meetings are set with the consultation of both the Chief Executive and Chairman, and papers are circulated
a week in advance of the meetings, giving directors ample time to review the documentation and enabling an effective
meeting. Resulting actions are tracked as matters arising and followed up at subsequent Board meetings to ensure that
they have been addressed.
Board Performance Evaluation
In 2021, the Chairman conducted an effectiveness review by means of a questionnaire, with comment on the
Chairman passed to Jeremy Brade as the Senior Independent Director at that time. The outcome of the appraisal is that
the Board has been effective in discharging its duties during the year. The review was conducted in March 2021 and
discussed at the April 2021 Board meeting, with useful conclusions in the areas of major shareholder representation on
the Board, how the non-executive directors interact with only one executive on the Board, the development of strategy
and the presentation of recommendations to the Board. In addition, the frequency of meetings will be reviewed once the
recovery from the pandemic is more visible and the Board will put in place a more structured programme of interaction with
operating management.
Robin Williams
Chairman
6 July 2021
ANNUAL REPORT 2021 22
Audit Committee Report
The Audit Committee comprises the four non-executive directors: Jeremy Brade, Robert Johnston, Dominic Lavelle and
Robin Williams, and is chaired by Dominic Lavelle. The Audit Committee reviews the external audit activities, monitors
compliance with statutory requirements for financial reporting and reviews the half year and annual financial statements
before they are presented to the Board for approval. The Audit Committee also keeps under review the scope and results
of the audit and its cost effectiveness and the independence and objectivity of the Auditor and the effectiveness of the
Group’s internal control systems.
The Committee meets twice a year to review both the year end and half year results and KPMG, the Company’s auditors,
attend both of these meetings in person. It is the Audit Committee’s role to provide formal and transparent arrangements,
to consider how to apply financial reporting under IFRS, the Companies Act 2006, and the requirements of the QCA Code
and also to maintain an appropriate relationship with the independent auditor of the Group.
The current terms of reference of the Audit Committee were reviewed and updated in January 2018.
Effectiveness of the External Audit Process
The Audit Committee is committed to ensuring that the external audit process remains effective on a continuing basis as
set out below:
• Reviewing the independence of the incumbent auditor;
• Considering if the audit engagement planning, including the team quality and numbers is sufficient and appropriate;
•
•
•
Ensuring that the quality and transparency of communications with the external auditors are timely, clear, concise and
relevant and that any suggestions for improvements or changes are constructive;
Exercising professional scepticism, including but not limited to, looking at contrary evidence, the reliability of evidence,
the appropriateness and accuracy of management responses to queries, considering potential fraud and the need for
additional procedures and the willingness of the auditor to challenge management assumptions; and
Feedback is provided by the external auditor twice a year to the Audit Committee, after the full year audit and half
year review, with one-to-one discussions held beforehand between the Chair of the Audit Committee and the audit
firm partner.
External Auditor
The external auditor (KPMG LLP) was appointed in 1997. The current audit engagement partner has been in place since
the audit for the current year and will step down after the audit for the year ended 31 March 2025. The analysis of the
auditor’s remuneration is shown in note 6. Tax advisory services are provided by RSM UK Tax and Accounting Limited.
Non-audit Services Provided by the External Auditor
The Audit Committee keeps the appointment of external auditors to perform non-audit services for the Group under
continual review, receiving a report at each Audit Committee meeting. In the year ended 31 March 2021, there were no
non-audit fees paid to KPMG LLP (2020: £nil).
Emerging Risks
The risk management approach is subject to continuous review and updates in order to reflect new and developing issues
which might impact business strategy. Emerging or topical risks are examined to understand their significance to the
business. Risks are identified and monitored through risk registers at the Group level and discussed at each Board meeting
to consider new threats.
ANNUAL REPORT 2021 23
Audit Committee Report
CONTINUED
Areas of Judgement and Estimation
In making its recommendation that the financial statements be approved by the Board, the Audit Committee has taken
account of the following significant issues and judgements involving estimation:
Impairment Testing
The Group tests material goodwill annually for impairment, or more frequently if there are indications that goodwill and/or
indefinite life assets might be impaired. An impairment test is a comparison of the carrying value of the assets of a CGU,
based on a value-in-use calculation, to their recoverable amounts. Impairment is necessary when the recoverable amount
is less than the carrying value.
Impairment tests have been undertaken with respect to intangible assets using commercial judgement and a number of
assumptions and estimates have been made to support the carrying values.
In the prior year, all goodwill in relation to PHFC was written off. Impairment testing of the remaining tangible assets of PHFC
has been carried out in the current year and no further impairment is considered necessary.
With respect to Momart, following an impairment charge of £3.5 million in the prior year, remaining intangible assets
including goodwill and Momart’s brand name amounted to £4.1 million at 31 March 2020. Impairment testing has been
performed in the current year but no further impairment is considered necessary and the carrying value of intangible assets
at 31 March 2021 in respect of Momart remain unchanged at £4.1 million.
Further details of the impairment testing undertaken for PHFC and Momart are provided in note 11.
Inventory Provisions
An inventory provision is booked when the realisable value from sale of the inventory is estimated to be lower than the
inventory carrying value, or where the stock is slow-moving, obsolete or damaged, and is therefore unlikely to be sold. The
quantification of the inventory provision requires the use of estimates and judgements and if actual future demand were to
be lower or higher than estimated, the potential amendments to the provisions could have a material effect on the results
of the Group.
Defined Benefit Pension Liabilities
A significant degree of estimation is involved in predicting the ultimate benefit payments to pensioners in the FIC defined
benefit pension scheme. Actuarial assumptions have been used to value the defined benefit pension liability (see note 23).
Management have selected these assumptions from a range of possible options following consultations with independent
actuarial advisers. The actuarial valuation includes estimates about discount rates and mortality rates, and the long-term
nature of these plans, make the estimates subject to significant uncertainties.
There are eleven pensioners currently receiving a monthly pension under the scheme and three deferred members.
Dominic Lavelle
Independent Non-executive Director
6 July 2021
ANNUAL REPORT 2021 24
Directors’ Report
The directors present their annual report and the financial statements for the Company and for the Group for the year
ended 31 March 2021.
Results and Dividend
As set out in the Group Income Statement, the Group profit for the year after taxation amounted to £9,000 (2020: Loss
£4,728,000). Basic earnings per share on underlying profits were 0.0 pence (2020: 22.0 pence).
Given the impact of COVID-19 on the Group’s profits and the continuing challenges for UK trading, after careful consideration,
the Board has decided not to recommend the payment of a dividend in respect of the year ended 31 March 2021.
The suspension of dividends will be kept under close review and dividend payments will be resumed as soon as the
directors consider it prudent to do so.
Principal Activities
The business of the Group during the year ended 31 March 2021 was general trading in the Falkland Islands, the
operation of a passenger 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 Chief Executive’s Strategic Report and
should be considered as part of the Directors’ Report for the purposes of the requirements of the enhanced Directors’
Report guidance.
The principal activity of the Company is that of a holding company.
Directors
On 28 April 2021, an additional executive director, Stuart Munro, was appointed to the Board.
Directors’ Interests
The interests of the directors in the issued shares and share options over the shares of the Company are set out below
under the heading ‘Directors’ interests in shares’. During the year no director had an interest in any significant contract
relating to the business of the Company or its subsidiaries other than their 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 23.
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
ANNUAL REPORT 2021 25
Directors’ Report
CONTINUED
any code or standard payment practice. As a holding company, the Company had no trade creditors at either 31 March
2021 or 31 March 2020.
Share Capital and Substantial Interests in Shares
During the year, 10,466 shares were issued following the exercise of options. Further information about the Company’s
share capital is given in note 25. Details of the Company’s executive share option scheme can be found in note 24.
The Company has been notified of the following interests in 3% or more of the issued ordinary shares of the Company as
at 6 July 2021:
Number of shares
Percentage of shares in issue
The Article 6 Marital Trust created under
the First Amended and Restated Jerry
Zucker Revocable Trust dated 2 April 2007
Quaero Capital Funds (Lux) – Argonaut
Martin Janser
J.F.C. Watts
Deep Blue Ventures Holdings
SPC DBVF IV Segregated Portfolio
Christian Struck
3,596,553
1,057,158
897,324
797,214
680,001
380,000
28.74
8.45
7.17
6.37
5.43
3.04
Charitable and Political Donations
Charitable donations made by the Group during the year amounted to £7,654 (2020: £19,312), these were largely paid to
local community charities in the Falkland Islands. There were no political donations in the year (2020: nil).
Disclosure of Information to the External Auditor
The directors who held office at the date of this Directors’ Report confirm that, so far as they are each aware, there is no
relevant audit information of which the Company’s external auditor is unaware; and each director has taken all the steps
that they ought to have taken as a director to make themselves aware of any relevant audit information and to establish
that the Company’s external auditor is aware of that information.
External Auditor
A resolution proposing the re-appointment of KPMG LLP will be put to shareholders at the Annual General Meeting.
Greenhouse Gas Emissions
The 2018 Regulations introduced requirements under Part 15 of the Companies Act 2006 for large unquoted companies to
disclose their annual energy use and greenhouse gas emissions, and related information. However, the Group has applied
the option permitted to exclude any energy and carbon information relating to its subsidiary which the subsidiary would
not itself be obliged to include if reporting on its own account. This applies to all subsidiaries within the Group. FIH group
plc itself consumes less than 40MWh and, as a low energy user, is not required to make the detailed disclosures of energy
and carbon information but is required to state, in its relevant report, that its energy and carbon information is not disclosed
for that reason. FIH group plc’s annual energy use and greenhouse gas emissions, and related information has not been
disclosed in this annual report as it is a low energy user.
ANNUAL REPORT 2021
26
Statement by the Directors in Performance of their Statutory Duties in Accordance with
s172(1) Companies Act 2006
As an experienced Board, our intention is to behave responsibly and we consider that we, both as individuals and as
a collective Board, as representatives of FIH group plc and the Group as a whole, during the year ended 31 March
2021, have acted in good faith, to promote the success of the Company for the benefit of its members as a whole,
having regard to the wider stakeholders as set out in s172 of the Companies Act. In the Falkland Islands and in Gosport/
Portsmouth (where PHFC provide the ferry service), the subsidiaries of the Group work closely with local government and
local communities and Momart, is an active and founding member of several art communities and its employees give talks
at conferences, sharing their experiences on the import and export of art work. The details of the Group’s interaction with
its wider stakeholders is as follows:
Customers:
Despite the collapse in passenger volumes brought on by COVID-19 which resulted in heavy losses throughout the year,
the Group maintained the ferry service at PHFC which continued to operate between 5:30am and 11:00pm on every day
except Christmas Day in recognition of the vital social importance of the service to the local community and keyworkers.
PHFC maintains close contact with its customer base via social media and regularly tweets and posts information on
Facebook about local pantomimes, football matches, special events offered by local restaurants and other events of
interest to the local community and visiting tourists. The crews and customers are encouraged to post their own photos of
the ferries, and sightings of any HMS warships in the harbour.
The Environmental and Sustainability workgroup at Momart is planning to work with clients to share environmentally
conscious ideas.
Colleagues:
We have an experienced, diverse and dedicated workforce which we recognise as a key asset of our businesses. Therefore,
it is important that we continue to create the right environment to encourage and create opportunities for individuals and
teams to realise their full potential.
We have an open, collaborative and inclusive management structure and engage regularly with our employees. We do this
through an appraisal process, structured career conversations, employee surveys, company presentations, away days and
our well-being programme.
Suppliers:
Across the Group, we aim to build long-term relationships with our suppliers that help ensure the continued delivery of the
high-quality services the Group provides. We are clear about our payment practices. We expect our suppliers to adopt
similar practices throughout their supply chains to ensure fair and prompt treatment of all creditors. All suppliers are vetted
to ensure compliance with the Group’s zero tolerance approach to modern slavery.
ANNUAL REPORT 2021 27
Directors’ Report
CONTINUED
Communities:
We are committed to supporting the communities in which we operate, including local businesses, residents and the
wider public.
We engage with the local communities in Gosport/Portsmouth and in the Falkland Islands through our community
donations, and providing employment and work experience opportunities. Apprentices have been taken on at both Momart
and PHFC, in areas including Customs and Excise and Engineering.
PHFC donates cruise tickets to charities and makes various donations and gifts to local charities as well as public
organisations such as the Fire Service. PHFC staff conduct organised collections on the pontoons, for example for the
Poppy Appeal, and permits local school children to collect charitable donations on board the vessels. The business has
also been successful in lobbying local government to include a bike hub at Gosport in its development plans.
Environment:
The Group is committed to doing its part to protect the local and global environment, minimising the environmental impacts
of its activities, products and services, and to the continual improvement of its environmental performance.
Steps already taken include:
FIC
•
Elimination of plastic bags from all retail outlets and use of paper cups, straws, and other recyclable packaging in
the FIC cafes wherever possible.
LED lighting in offices, warehouses and retail outlets.
•
• Utilisation of best practice insulation methods for building construction and renovation.
•
Incorporation of ground heat source systems into new build structures.
Momart
• Conversion of vehicles to meet the Euro 6 emissions standard.
LED lighting and movement sensors across all warehouse units and offices.
•
• Renewable energy from solar panels installed at the Leyton warehouse unit 14.
• Sourcing of materials for packing cases from sustainable European sources.
• Wood waste burnt for energy rather than going to landfill.
Installation of new exhaust cleaners on the vessels reducing NOx and CO2 emissions.
PHFC
•
• Use of solar panels on the pontoons.
LED lighting across the estate as well as movement sensors.
•
• Provision of coffee cup recycling on the ferries and the pontoons.
Governments and Regulatory Authorities
Our work brings us into regular contact with FIG, and local authorities, as we deliver construction projects, repairs and other
work. We strive to be proactive and transparent, consulting with them to ensure that our planning reflects local sensitivities.
PHFC staff attend meetings with the local government members and Gosport Borough Council.
The Momart Business Process and Compliance Manager attends quarterly industry forums, such as the Freight Transport
Association, discussing difficulties faced by the industry with the forum and any attending HMRC officers.
Media
All businesses are active on social media, using Twitter, Instagram, LinkedIn and Facebook.
ANNUAL REPORT 2021 28
Non-governmental Organisations:
PHFC is a Heritage Committee member.
Momart representatives attend the UK Registrars’ Group conference and the European Registrars’ Group conference
and speak on issues such as customs procedures, Brexit, or specialised Export licences, such as the “Convention
on International Trade in Endangered Species of Wild Fauna and Flora”, which requires permits for the export of ivory,
rosewood and mahogany.
With over 40 years of experience and expertise in handling, transportation and storage of art, since 1993 Momart has held
a Royal Warrant from Her Majesty The Queen for our work with the Royal Collection.
Momart is a founding member of ARTIM, “the Art Transporter International Meeting” and attends the annual conference to
discuss the best practices and the key business issues concerning the packing, transportation and movement of works
of art.
Momart is also a member of the UK Registrars’ Group, which is a non-profit association, which provides a forum for
exchanging ideas and expertise between registrars, collection managers and other museum professionals in the United
Kingdom, Europe and worldwide.
Shareowners and Analysts:
Beyond the Annual General Meeting, the Chief Executive, Chief Financial Officer and the Chairman offer to meet with all
significant shareholders after the release of the half year and full year results. The Chief Executive, Chief Financial Officer
and the Chairman are the primary points of contact for the shareholders and are available to answer queries over the phone
or via email from shareholders throughout the year.
The Annual General Meeting provides a chance with investors and analysts to meet the Board face-to-face each year.
Debt Providers:
We have several debt facilities provided by HSBC, with whom we engage through regular meetings and presentations to
ensure that they remain fully informed on all relevant areas of our business. This high-level engagement helps to support
our significant lines of credit available to us.
The relationship with HSBC dates back to the Company’s incorporation in 1997.
Capital Allocation and Dividend Policy:
This year’s budget was approved by the Board following a comprehensive review of our strategic priorities, risks to and
potential opportunities arising in, our three businesses. We considered the input from our locally based directors about
expected changes in their markets and anticipated customer needs.
Due to the impact of the COVID-19 pandemic, the dividend payment will be suspended and will be kept under close review,
dividend payments will be resumed as soon as the directors consider it prudent to do so.
The capital allocation priorities are to support continued investment in organic business growth, funded by a strong balance
sheet, with the focus on long-term decisions to position the Group for success.
Annual General Meeting
The Company’s Annual General Meeting will be held on 9 September 2021. 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.
ANNUAL REPORT 2021 29
Directors’ Report
CONTINUED
Details of Directors’ Remuneration and Emoluments
The remuneration of non-executive directors consists only of annual fees for their services both as members of the Board
and of Committees on which they serve.
An analysis of the remuneration and taxable benefits in kind (excluding share options) provided for and received by each
director during the year to 31 March 2021 and in the preceding year is as follows:
John Foster
Robin Williams
Jeremy Brade
Robert Johnston
Dominic Lavelle
Stuart Munro**
Total
Salary / Fees
£’000
Health insurance
£’000
2021 Total
£’000
2020 Total
£’000
196
51
26
26
26
-
325
1
-
-
-
-
-
1
197
51
26
26
26
-
326
224
60
30
30
*10
-
354
* From date of appointment
** Appointed 28 April 2021
The Chief Executive participates in an annual performance related bonus arrangement, with the potential during the year
of earning up to 100% of his salary. The bonuses are subject to the achievements of specified corporate and personal
objectives and are normally split into equal parts of deferred shares and cash, with the shares requiring a service condition
to remain in employment for up to three years. Given the impact of COVID-19 on the Group’s finances, no bonus will be
payable for the year ended 31 March 2021 (2020: £nil).
Full details of historic awards of deferred shares to John Foster and other options issued to senior staff, including all grants
and exercises are provided in note 24 Employee Benefits: share based payments. During the year ended 31 March 2021,
12,488 nil cost options (2020: 15,171) were exercised by the Chief Executive.
None of the directors of the Company receive any pension contributions or benefit from any Group pension scheme.
Share Incentive Plan
In November 2012, the Company implemented an HMRC approved Share Incentive Plan available to employees of the
Group, which enables UK and FIC staff to acquire shares in the Company through monthly purchases of up to £150 per
month or 10% of salary, whichever is lower. For every three shares purchased by the employee, the Company contributes
one free matching share. These shares are placed in trust and if they are left in trust for at least five years, they can be
removed free of UK income tax and national insurance contributions. During the year ended 31 March 2020 the Company
purchased £600 of matching shares for John Foster. No matching shares were purchased for Directors in the year ended
31 March 2021 and the scheme is now closed to further issue.
Directors’ Interests in Shares
As at 31 March 2021, the nil cost share options issued to the executive director which remained outstanding were as
follows:
Date of grant
Number of options J L Foster
Exercisable from
15 Jun 2018
17 Jun 2019
17 Jun 2019
Total
5,682
3,591
3,591
12,864
15 Jun 2021
17 Jun 2021
17 Jun 2022
Expiry date
15 Jun 2022
17 Jun 2023
17 Jun 2023
ANNUAL REPORT 2021
30
The mid-market price of the Company’s shares on 31 March 2021 was 205 pence and the range in the year was 194
pence to 350 pence.
The directors’ options extant at 31 March 2021 totalled 12,864 nil cost options. In total these options represented 0.1%
of the Company’s issued share capital.
There are also 268,626 options outstanding at 31 March 2021 which were granted to 15 other employees of the Group
including subsidiary directors and senior management. These include 123,052 LTIP options granted in July 2020 and
87,422 LTIP options granted in July 2019 all at a 10 pence exercise price and 58,152 options granted under the Company’s
executive share option scheme between December 2010 and January 2015, with exercise prices of £2.675 to £2.725.
The 58,152 options granted under the Company’s executive share option scheme, are options to acquire ordinary shares
in the Company after a period of three years from the date of the grant and have been granted at an option price of not
less than market value at the date of the grant. The 210,474 LTIP awards have been granted at an exercise price of
10 pence. The exercise of the LTIP awards is subject to various performance conditions, which have been determined
by the remuneration committee after discussion with the Company’s advisers. The 12,864 nil cost options granted to
the Chief Executive are exercisable at no cost to him, and will vest provided he remains in employment for the required
service periods.
In addition to the share options set out above, the interests of the directors, their immediate families and related trusts in
the shares of the Company according to the register kept pursuant to the Companies Act 2006 were as shown below:
Robin Williams
John Foster*
Jeremy Brade
Robert Johnston
Dominic Lavelle
Ordinary shares as at 31 March 2021
Ordinary shares as at 31 March 2020
5,625
*113,627
15,022
**3,647,853
2,000
1,935
*107,009
15,022
**3,647,853
-
*John Foster’s shareholding above includes all Shares held in the Company’s share incentive plan in which he has a
beneficial interest.
** Robert Johnston holds 51,300 shares in his own name, and as he is also the representative of the Company’s largest
shareholder, “The Article 6 Marital Trust, created under the First Amended and Restated Jerry Zucker Revocable Trust
dated 4-2-07”, which holds 3,596,553 Shares, Robert Johnston is interested in 3,647,853 Shares in total, representing
29.1 per cent of the Company’s 12,514,985 total voting rights.
Approved by the Board and signed on its behalf by:
Iain Harrison
Company Secretary
6 July 2021
Kenburgh Court
133-137 South Street
Bishop’s Stortford
Hertfordshire
CM23 3HX
ANNUAL REPORT 2021 31
Directors’ Report
CONTINUED
Statement of Directors’ Responsibilities in Respect of the Annual Report and the
Financial Statements
The directors are responsible for preparing the Annual Report, Strategic Report, Directors’ Report, and the Group and
Company financial statements in accordance with applicable law and regulations.
Company law requires the directors to prepare Group and Parent Company financial statements for each financial
year. Under that law, they have elected to prepare both the Group and the Parent Company financial statements in
accordance with International Accounting Standards in conformity with the requirements of the Companies Act 2006 and
applicable law.
Under company law the directors must not approve the financial statements unless they are satisfied that they give a true
and fair view of the state of affairs of the Group and Parent Company and of their profit or loss for that period. In preparing
each of the Group and Parent Company financial statements, the directors are required to:
•
select suitable accounting policies and then apply them consistently;
• make judgements and estimates that are reasonable, relevant and reliable;
•
state whether they have been prepared in accordance with international accounting standards in conformity with the
requirements of the Companies Act 2006;
assess the Group and Parent Company’s ability to continue as a going concern, disclosing, as applicable, matters
related to going concern; and
use the going concern basis of accounting unless they either intend to liquidate the Group or the Parent Company or
to cease operations, or have no realistic alternative but to do so.
•
•
The directors are responsible for keeping adequate accounting records that are sufficient to show and explain the Parent
Company’s transactions and disclose with reasonable accuracy at any time the financial position of the Parent Company
and enable them to ensure that its financial statements comply with the Companies Act 2006. They are responsible for such
internal control as they determine is necessary to enable the preparation of financial statements that are free from material
misstatement, whether due to fraud or error, and have general responsibility for taking such steps as are reasonably open
to them to safeguard the assets of the Group and to prevent and detect fraud and other irregularities.
Under applicable law and regulations, the directors are also responsible for preparing a Strategic Report and a Directors’
Report that complies with that law and those regulations.
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.
ANNUAL REPORT 2021 32
Housing built by Falklands Building Services
Stanley waterfront – Falkland Islands
ANNUAL REPORT 2021 Independent
auditor’s report
Overview
Materiality:
(Group financial
statements as a
whole)
£140,000 (2020: £15 0,000 )
4.5% of normalised average
profit before tax (2020: 4.0% of
group profit before tax before
goodwill impairment)
Coverage
100% (2020: 100%) of group
profit before tax
Key audit matters
Recurring risks
vs 2020
▼
▼
Recoverability of Art
Logistics and Storage
Brand Name and
Goodwill and
Recoverability of Ferry
Services Property, Plant
and Equipment and
Right of Use
assets
Recoverability of
Parent Company’s
investment in
subsidiaries
to the members of FIH Group plc
1. Our opinion is unmodified
We have audited the financial statements of FIH Group
plc (“the Company”) for the year ended 31 March 2021
which comprise the Consolidated Income Statement,
Consolidated Statement of Comprehensive Income,
Consolidated Balance Sheet, Company Balance Sheet,
Consolidated Cash Flow Statement, Company Cash Flow
Statement, Consolidated Statement of Changes in
Shareholders’ Equity, Company Statement of Changes in
Shareholders’ Equity, and the related notes, including the
accounting policies in note 1.
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 2021 and of the
Group’s profit for the year then ended;
— the Group financial statements have been
properly prepared in accordance with international
accounting standards in conformity with the
requirements of the Companies Act 2006;
— the parent Company financial statements have
been properly prepared in accordance with
international accounting standards in
conformity with the requirements of, 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.
Basis for opinion
We conducted our audit in accordance with
International Standards on Auditing (UK) (“ISAs (UK)”)
and applicable law. Our responsibilities are described
below. We have fulfilled our ethical responsibilities
under, and are independent of the Group in accordance
with, UK ethical requirements including the FRC Ethical
Standard as applied to listed entities. We believe that
the audit evidence we have obtained is a sufficient and
appropriate basis for our opinion.
2. Key audit matters: our assessment of risks of material misstatement
The risk
Our response
34
Recoverability of Parent
Company’s investment in, and
debt due from, subsidiaries
Key audit matters are those matters that, in our professional judgement, were of most significance in the audit of the financial statements
and include the most significant assessed risks of material misstatement (whether or not due to fraud) identified by us, including those which
had the greatest effect on: the overall audit strategy; the allocation of resources in the audit; and directing the efforts of the engagement
team. These matters were addressed in the context of our audit of the financial statements as a whole, and in forming our opinion thereon,
and we do not provide a separate opinion on these matters. In arriving at our audit opinion above, the key audit matters, in decreasing order
of audit significance, were as follows:
— Our sector experience: we evaluated
Forecast-based valuation
Our procedures included:
assumptions used in the relevant cash flow
forecasts, in particular those relating to
forecast revenue growth and profit margins,
through enquiries with the divisional
managers and those responsible for preparing
and delivering the forecasts;
Our response
Our procedures included:
— Benchmarking assumptions: we compared the
group’s assumptions in relation to key inputs
— Control re-performance: We tested the controls
such as, projected economic growth and, with
over the forecasts prepared for the subsidiaries,
the assistance of specialist valuation tools,
including approval and challenge of those forecasts
by the directors;
compared the discount rate to historical
information and externally derived data;
— Our sector experience: we evaluated and
— Historical comparison: we evaluated the
challenged assumptions used in the forecasts,
in particular those relating to revenue trends and
adequacy of the budgets and forecasts used in
profit margins, through enquiries with the divisional
the value in use calculation by assessing the
managers and those responsible for preparing and
historical accuracy of the Group’s previous
delivering the forecasts;
budgets;
— Benchmarking assumptions: we compared
— Sensitivity analysis: we performed a sensitivity
the group’s assumptions in relation to key
inputs such as, projected economic growth
analysis on the key assumptions noted above;
and, with the assistance of specialist valuation
— Comparing valuations: we compared the
tools, the discount rate to historical
information and externally derived data;
carrying value of the parent Company’s
investments in subsidiaries and receivables
— Historical comparison: we evaluated the adequacy of
due from group entities to value in use
the budgets and forecasts used in the value in use
calculations for the relevant CGUs and to the
calculations by assessing the historical accuracy of the
market capitalisation of the Group;
Group’s previous budgets;
— Assessing transparency: we assessed the
— Sensitivity analysis: we perform ed a sensitivity
analysis on the key assumptions noted above;
adequacy of the parent Company’s disclosures
in respect of investments in subsidiaries and
— Comparing valuations: we compared the net asset
group debtor balances.
value of the Group with the market capitalisation of
the Group and assessed whether any difference was
an indicator of impairment with reference to why
that difference has arisen;
— Assessing transparency: we assessed whether the
group’s disclosure about sensitivity of the outcome of
the impairment assessment to changes in key
r, following [explain why risk is less significant ur
assumptions reflected the risks inherent in the
current year audit and, therefore, it is not
recoverable amounts of the Art Logistics and Storage
CGU and Ferry Services CGU.
(£23.9 million investment in, and
£10.2 million debt due from,
subsidiaries; 2019: £27.6 million
investment in and £8.7 million debt
due from subsidiaries)
Recoverability of Art logistics and
Storage Brand Name (£2.0 million;
Refer to page 56
2020: £2.0 million) and Goodwill
(accounting policy) and page 82-83
(£2.1 million; 2020: £2.1 million) and
(financial disclosures).
Recoverability of Ferry Services
Property, Plant and Equipment and
Right of Use assets (included within
Segment Assets of £11.4 million;
2020: £11.0 million).
Refer to page 23 (Audit Committee
Report), page 52 (accounting policy) and
page 68 (financial disclosures)
[We continue to perform procedur
this year], we have not assessed
separately identified in our report
The carrying amount of the parent
company’s investment in subsidiaries and
intra-group debtor balance represents
60.1% (2019: 46.7%) of the parent
company’s total assets.
The risk
Forecast-based assessment:
They are significant and at risk of
irrecoverability due to weak demand in the
Art Logistics and Ferry Services businesses
The carrying amount of the Art Logistics and
as a result of the Covid-19 pandemic. The
Storage CGU is significant and the recoverable
Group has recognised an impairment loss of
amount of that CGU is at risk of fluctuation due
£3,700,000 on the investment in the Art
primarily to the fluctuating future demand in the
Logistics subsidiary as a result of changes in
art logistics and storage markets along with the
the market resulting in significant changes
inherent uncertainty involved in forecasting and
discounting future cash flows. In the prior year the
in forecast cash flows. The estimated
Group has recognised an impairment loss of
recoverable amount of the remaining
£3,500,000 on the goodwill on the Art Logistics
balances is subjective due to the inherent
CGU as a result of changes in the market
uncertainty involved in forecasting and
resulting in significant changes in forecast cash
discounting future cash flows.
flows. The remaining carrying amount of
goodwill and intangible assets associated with
The effect of these matters is that, as part
the Art Logistics CGU is particularly sensitive to
of our risk assessment, we determined that
changes in key assumptions.
the recoverable amount of the cost of
The effect of these matters is that, as part of our
investment in subsidiaries has a high degree
risk assessment for audit planning purposes, we
of estimation uncertainty, with a potential
determined that the value in use of the Art
range of reasonable outcomes greater than
Logistics and Storage CGU had a high degree of
our materiality for the financial statements
estimation uncertainty, with a potential range of
as a whole.
reasonable outcomes greater than our
materiality for the financial statements as a
whole. The financial statements (note 11)
disclose the sensitivity estimated by the Group.
The carrying amount of the Ferry Services CGU
is significant and the recoverable amount is at
risk due primarily to reductions in passenger
numbers which has been exacerbated by the
Covid-19 pandemic. The estimated recoverable
amount is subjective due to the inherent
uncertainty involved in forecasting and
discounting future cash flows. In the prior year
the Group has recognised an impairment loss of
es over [identify key audit matter]. Howeve this
£3,979,000 on the goodwill on the Ferry Services
as one of the m ost significant risks in o this year.]
CGU as a result of changes in the market resulting
in significant changes in forecast cash flows. In the
prior period goodwill was fully written down so
this is no longer considered a risk. As a result, in
the current year the carrying amount property,
plant and equipment and right of use assets
associated with the Ferry Services CGU is
particularly sensitive to changes in key
assumptions.
The effect of these matters is that, as part of our
risk assessment for audit planning purposes, we
determined that the value in use of the Ferry
Services CGU had a high degree of estimation
uncertainty, with a potential range of reasonable
outcomes greater than our materiality for the
financial statements as a whole. In conducting our
final audit work, we concluded that reasonably
possible changes to the value in use of the Ferry
Services CGU would not be expected to result in
material impairment.
ANNUAL REPORT 2021
35
3. Our application of materiality and an overview of the
The risk
scope of our audit
Profit before tax before
goodwill impairment
Our response
Group Materiality
£150,000 (2019: £150,000)
£3.7 million (2019: £3.9
million profit before tax)
Forecast-based assessment:
Recoverability of Parent
Company’s investment in subsidiaries
(£24 million investment in subsidiaries;
2020: £23.9 million)
Materiality for the Group financial statements as a
whole was set at £150,000 (2019: £150,000),
determined with reference to a benchmark of Group
profit before tax before goodwill impairment of which
it represents 4.0% (2019: 3.9% of group profit before
tax).
Refer to page 52 (accounting policy) and
page 74 (financial disclosures).
The carrying amount of the parent company’s
investment in subsidiaries represents 40.6%
(2020: 40.3%) of the parent company’s total
assets.
Materiality for the parent company financial
statements as a whole, as communicated by the group
audit team, was set at £80,000 (2019:
£100,000). This is lower than the materiality we would
otherwise have determined with reference to a
benchmark of the Company’s net assets, of which it
represents 0.36% (2019: 0.24%).
We agreed to report to the Audit Committee any
corrected or uncorrected identified misstatements
exceeding £7,500 (2019: £7,500), in addition to other
identified misstatements that warranted reporting on
qualitative grounds.
They are significant and at risk of
irrecoverability due to weak demand in the Art
Logistics and Ferry Services businesses as a
result of the Covid-19 pandemic and uncertainty
in future profitability of the related CGUs. In the
prior year the Group has recognised an
impairment loss of £3,700,000 on the
investment in the Art Logistics subsidiary as a
result of changes in the market resulting in
significant changes in forecast cash flows. The
estimated recoverable amount of the remaining
balance is subjective due to the inherent
uncertainty involved in forecasting and
discounting future cash flows.
Profit before tax before
goodwill impairment
Group materiality
Of the group’s four (2019: four) components, we
subjected all (2019: all) to full scope audits for group
purposes. The group team performed the audits of
each of the components. The audit was performed
using the materiality levels set out opposite, having
regard to the mix of size and risk profile of the Group
across the components.
The effect of these matters is that, as part of our
risk assessment for audit planning purposes, we
determined that the value in use of the Company’s
investment in subsidiaries had a high degree of
estimation uncertainty, with a potential range of
reasonable outcomes greater than our materiality
for the financial statements as a whole. In
conducting our final audit work, we concluded that
reasonably possible changes to the value in use of
the Company’s investment in subsidiaries would not
be expected to result in material impairment.
The components within the scope of our work
accounted for the percentages illustrated opposite.
Group revenue
Our procedures included:
£150,000
Whole financial
— Control re-performance: We tested the controls
statements materiality
over the forecasts prepared for the subsidiaries,
(2019: £150,000)
including approval and challenge of those forecasts
by the directors;
— Our sector experience: we evaluated assumptions
£100,000
Range of materiality at 4
components (£80,000 -
£100,000)
(2019: £100,000)
used in the relevant cash flow forecasts, in particular
those relating to forecast revenue growth and profit
margins, through enquiries with the divisional
managers and those responsible for preparing and
delivering the forecasts;
— Benchmarking assumptions: we compared
the group’s assumptions in relation to key inputs such
as, projected economic growth and, with the
£7,500
assistance of specialist valuation tools, compared the
Misstatements reported to the audit
discount rate to historical information and externally
committee (2019: £7,500)
derived data;
— Historical comparison: we evaluated the adequacy of
the budgets and forecasts used in the value in use
calculation by assessing the historical accuracy of the
Group’s previous budgets;
— Sensitivity analysis: we perform ed a sensitivity
analysis on the key assumptions noted above;
— Comparing valuations: we compared the carrying
Group profit before tax
value of the parent Company’s investments in
subsidiaries and receivables due from group entities
to value in use calculations for the relevant CGUs and
to the market capitalisation of the Group;
— Assessing transparency: we assessed the adequacy of
the parent Company’s disclosures in respect of
investments in subsidiaries.
[We continue to perform procedur
this year], we have not assessed
separately identified in our report
es over [identify key audit matter]. Howeve this
as one of the m ost significant risks in o this year.]
r, following [explain why risk is less significant ur
current year audit and, therefore, it is not
100%
We continue to perform procedures over going concern. However, following an increased level of certainty over the resilience of the
business, in particular in the Falkland Islands, we have not assessed this as one of the most significant risks in our current year audit
and, therefore, it is not separately identified in our report this year.
100
Group total assets
100%
100
Full scope for group audit purposes 2020
Full scope for group audit purposes 2019
Residual components
ANNUAL REPORT 2021
36
Group materiality
£140,000 (2020: £150,000)
3. Our application of materiality and an
overview of the scope of our audit
The risk
Our response
Normalised Average Group
profit before tax
£3.1 million (2020:
£3.9 million profit before tax
before goodwill impairment)
Our procedures included:
Recoverability of Parent
Company’s investment in, and
debt due from, subsidiaries
Materiality for the Group financial statements as a
whole was set at £140,000 (2020: £150,000),
determined with reference to a benchmark of Group
profit before tax (PBT), of which it represents 4.5%
(2020: 2.0%). In 2021, we normalised PBT to exclude
the non-trading items disclosed in note 5 and by
averaging over the last five years due to the impact of
the COVID-19 pandemic on the Group’s financial
results. In the prior year, we normalised PBT to
exclude that year's goodwill impairment charge as
disclosed in note 5.
(£23.9 million investment in, and
£10.2 million debt due from,
subsidiaries; 2019: £27.6 million
investment in and £8.7 million debt
due from subsidiaries)
Refer to page 56
(accounting policy) and page 82-83
(financial disclosures).
Materiality for the parent company financial
statements as a whole, as communicated by the
group audit team, was set at £6 0,000 (2020:
£80,000). This is lower than the materiality we would
otherwise have determined with reference to a
benchmark of the Company’s net assets, of which it
represents 0.20% (2020: 0.36%).
Forecast-based valuation
The carrying amount of the parent
company’s investment in subsidiaries and
intra-group debtor balance represents
60.1% (2019: 46.7%) of the parent
company’s total assets.
They are significant and at risk of
irrecoverability due to weak demand in the
Art Logistics and Ferry Services businesses
as a result of the Covid-19 pandemic. The
Group has recognised an impairment loss of
£3,700,000 on the investment in the Art
Logistics subsidiary as a result of changes in
the market resulting in significant changes
in forecast cash flows. The estimated
recoverable amount of the remaining
balances is subjective due to the inherent
uncertainty involved in forecasting and
discounting future cash flows.
The effect of these matters is that, as part
of our risk assessment, we determined that
the recoverable amount of the cost of
investment in subsidiaries has a high degree
of estimation uncertainty, with a potential
range of reasonable outcomes greater than
our materiality for the financial statements
as a whole.
In line with our audit methodology, our procedures
on individual account balances and disclosures were
performed to a lower threshold, performance
materiality, so as to reduce to an acceptable level
the risk that individually immaterial misstatements
in individual account balances add up to a material
amount across the financial statements as a whole.
Performance materiality was set at 75% (2020: 75%)
of materiality for the financial statements as a
whole, which equates to £105,000 (2020: £112,500)
for the group and £45,000 (2020: £60,000) for the
parent company. We applied this percentage in our
determination of performance materiality because
we did not identify any factors indicating an
elevated level of risk.
— Our sector experience: we evaluated
£140,000
Whole financial
statements materiality (2020:
£150,000)
assumptions used in the relevant cash flow
forecasts, in particular those relating to
£105,000
forecast revenue growth and profit margins,
Whole financial
through enquiries with the divisional
statements performance
managers and those responsible for preparing
materiality (2020: £113,000)
and delivering the forecasts;
£100,000
— Benchmarking assumptions: we compared the
Range of materiality at 4
group’s assumptions in relation to key inputs
components (£60,000-
such as, projected economic growth and, with
£100,000)
the assistance of specialist valuation tools,
(2020: £80,000 to £100,000)
compared the discount rate to historical
information and externally derived data;
— Historical comparison: we evaluated the
£7,000
adequacy of the budgets and forecasts used in
Misstatements reported to the
the value in use calculation by assessing the
audit committee (2020: £7,500)
historical accuracy of the Group’s previous
budgets;
— Sensitivity analysis: we performed a sensitivity
analysis on the key assumptions noted above;
— Comparing valuations: we compared the
carrying value of the parent Company’s
investments in subsidiaries and receivables
due from group entities to value in use
calculations for the relevant CGUs and to the
market capitalisation of the Group;
— Assessing transparency: we assessed the
adequacy of the parent Company’s disclosures
in respect of investments in subsidiaries and
group debtor balances.
Normalised PBT
Group materiality
We agreed to report to the Audit Committee any
corrected or uncorrected identified
misstatements exceeding £7,000 (2020: £7,500),
in addition to other identified misstatements that
warranted reporting on qualitative grounds.
Of the Group’s four (2020: four) com ponents, we
subjected all (2020: all) to full scope audits for group
purposes. The group team performed the audits of
each of the com ponents. The audit was performed
using the materiality levels set out opposite, having
regard to the mix of size and risk profile of the Group
across the com ponents.
The com ponents within the scope of our work
accounted for the percentages illustrated
opposite.
Full scope for group audit purposes 2021
Specified risk-focused audit procedures 2021 Residual
components
ANNUAL REPORT 2021
37
4. Going concern
3. Our application of materiality and an overview of the
scope of our audit
The Directors have prepared the financial statements on the going
concern basis as they do not intend to liquidate the Group or the
Materiality for the Group financial statements as a
Company or to cease their operations, and as they have concluded
whole was set at £150,000 (2019: £150,000),
that the Group and the Company’s financial position means that
determined with reference to a benchmark of Group
this is realistic. They have also concluded that there are no
profit before tax before goodwill impairment of which
material uncertainties that could have cast significant doubt over
it represents 4.0% (2019: 3.9% of group profit before
their ability to continue as a going concern for at least a year from
tax).
the date of approval of the financial statements (“the going
concern period”).
Materiality for the parent company financial
statements as a whole, as communicated by the group
audit team, was set at £80,000 (2019:
£100,000). This is lower than the materiality we would
otherwise have determined with reference to a
benchmark of the Company’s net assets, of which it
represents 0.36% (2019: 0.24%).
We used our knowledge of the Group, its industry, and the general
economic environment to identify the inherent risks to its business
model and analysed how those risks might affect the Group’s and
Company’s financial resources or ability to continue operations
over the going concern period. The risks that we considered most
likely to adversely affect the Group’s and Company’s available
financial resources over this period were:
We agreed to report to the Audit Committee any
corrected or uncorrected identified misstatements
exceeding £7,500 (2019: £7,500), in addition to other
identified misstatements that warranted reporting on
qualitative grounds.
additional UK lockdowns and restrictions on
international travel will impact the business in FY22 in a
similar way to that experienced in FY21 and in particular
that there will be significant disruption to the Ferry
Services and Art Logistics and Storage businesses.
Of the group’s four (2019: four) components, we
subjected all (2019: all) to full scope audits for group
purposes. The group team performed the audits of
each of the components. The audit was performed
using the materiality levels set out opposite, having
regard to the mix of size and risk profile of the Group
across the components.
We considered whether these risks could plausibly affect the
liquidity in the going concern period by comparing severe, but
plausible downside scenarios that could arise from these risks
individually and collectively against the level of available financial
resources indicated by the Group’s financial forecasts.
The components within the scope of our work
accounted for the percentages illustrated opposite.
We considered whether the going concern disclosure in note 1 to
the financial statements gives a full and accurate description of
the Directors’ assessment of going concern, including the
identified risks and, dependencies, and related sensitivities.
•
Our conclusions based on this work:
— we consider that the directors’ use of the going concern basis
of accounting in the preparation of the financial statements is
appropriate;
— we have not identified, and concur with the directors’
assessment that there is not, a material uncertainty related
to events or conditions that, individually or collectively, m ay
cast significant doubt on the Group’s or Company's ability to
continue as a going concern for the going concern period; and
— we found the going concern disclosure in note 1 to be
acceptable.
However, as we cannot predict all future events or conditions
and as subsequent events may result in
outcomes that are inconsistent with judgements that were
reasonable at the time they were made, the above conclusions
are not a guarantee that the Group or the Company will
continue in operation.
Profit before tax before
goodwill impairment
5. Fraud and breaches of laws and regulations – ability to
£150,000 (2019: £150,000)
Group Materiality
detect
£3.7 million (2019: £3.9
million profit before tax)
Identifying and responding to risks of material
£150,000
misstatement due to fraud
Whole financial
statements materiality
(2019: £150,000)
To identify risks of material misstatement due to fraud
(“fraud risks”) we assessed events or conditions that could
indicate an incentive or pressure to commit fraud or provide
an opportunity to commit fraud. Our risk assessment
procedures included:
£100,000
Range of materiality at 4
components (£80,000 -
£100,000)
(2019: £100,000)
•
Enquiring of directors, and inspection of policy
documentation as to the Group’s high-level policies
and procedures to prevent and detect fraud including
the Group’s channel for “whistleblowing”, as well as
whether they have knowledge of any actual, suspected
or alleged fraud;
• Reading Board, audit committee and remuneration
committee minutes.
£7,500
Misstatements reported to the audit
committee (2019: £7,500)
Profit before tax before
• Considering remuneration incentive schemes and
goodwill impairment
Group materiality
performance targets for directors and how these are
impacted by separately disclosed items; and
• Using analytical procedures to identify any unusual or
unexpected relationships.
We communicated identified fraud risks throughout the audit
team and remained alert to any indications of fraud
throughout the audit.
Group profit before tax
Group revenue
As required by auditing standards, and taking into account
possible pressures to meet profit targets, we perform procedures
to address the risk of management override of controls, in
particular that management may be in a position to make
inappropriate accounting entries, and the risk of bias in
accounting estimates and judgements.
100%
On this audit we do not believe there is a fraud risk related to
revenue recognition due to the simple recognition criteria for the
majority of revenue steams which are recognised at the point of
sale and the limited opportunity for management to manipulate
the revenue recognised. In additions to this, there was a
significant reduction in transportation and storage of art and
long term construction contracts around the year end which are
recognised with reference to percentage of completion.
• We also performed procedures including:
100
Group total assets
•
Identifying journal entries and other adjustments
to test for all full scope components based on risk
criteria and comparing the identified entries to
supporting documentation. These included:
unusual revenue pairings; unusual journals with a
credit or debit entry to cash; and, unusual journals
in seldom used pairings.
Evaluated the business purpose of significant
unusual transactions.
100%
•
•
Assessing significant accounting estimates for bias.
We did not identify any additional fraud risks.
100
Full scope for group audit purposes 2020
Full scope for group audit purposes 2019
Residual components
ANNUAL REPORT 2021
4. Going concern
5. Fraud and breaches of laws and regulations – ability to
detect
Identifying and responding to risks of material misstatement due to
non-compliance with laws and regulations
The risk
6. We have nothing to report on the other information in the
Annual Report
Our response
38
We identified areas of laws and regulations that could reasonably be
expected to have a material effect on the financial statements from
Recoverability of Parent
Forecast-based valuation
our general commercial and sector experience and through
Company’s investment in, and
discussion with the directors and other management (as required by
The carrying amount of the parent
debt due from, subsidiaries
auditing standards), and discussed with the directors and other
company’s investment in subsidiaries and
(£23.9 million investment in, and
management the policies and procedures regarding compliance with
intra-group debtor balance represents
£10.2 million debt due from,
laws and regulations.
60.1% (2019: 46.7%) of the parent
subsidiaries; 2019: £27.6 million
company’s total assets.
We communicated identified laws and regulations throughout our
investment in and £8.7 million debt
team and remained alert to any indications of non-compliance
due from subsidiaries)
throughout the audit. The potential effect of these laws and
regulations on the financial statements varies considerably.
Refer to page 56
Firstly, the Group is subject to laws and regulations that directly
(accounting policy) and page 82-83
affect the financial statements including financial reporting
(financial disclosures).
legislation (including related companies legislation), distributable
profits legislation, taxation legislation and pensions legislation and
we assessed the extent of compliance with these laws and
regulations as part of our procedures on the related financial
statement items.
They are significant and at risk of
irrecoverability due to weak demand in the
Art Logistics and Ferry Services businesses
as a result of the Covid-19 pandemic. The
Group has recognised an impairment loss of
£3,700,000 on the investment in the Art
Logistics subsidiary as a result of changes in
the market resulting in significant changes
in forecast cash flows. The estimated
recoverable amount of the remaining
balances is subjective due to the inherent
uncertainty involved in forecasting and
discounting future cash flows.
Secondly, the Group is subject to many other laws and regulations
where the consequences of non-compliance could have a material
effect on amounts or disclosures in the Financial Statements, for
instance through the imposition of fines or litigation. We identified
The effect of these matters is that, as part
the following areas as those most likely to have such an effect:
of our risk assessment, we determined that
health and safety, anti-bribery, employment law. Auditing standards
the recoverable amount of the cost of
limit the required audit procedures to identify non-compliance with
investment in subsidiaries has a high degree
these laws and regulations to enquiry of the Directors and other
of estimation uncertainty, with a potential
management and inspection of regulatory and legal
range of reasonable outcomes greater than
correspondence, if any. Therefore, if a breach of operational
our materiality for the financial statements
regulations is not disclosed to us or evident from relevant
as a whole.
correspondence, an audit will not detect that breach.
Our procedures included:
The directors are responsible for the other information
presented in the Annual Report together with the financial
statements. Our opinion on the financial statements does not
— Our sector experience: we evaluated
cover the other information and, accordingly, we do not
assumptions used in the relevant cash flow
express an audit opinion or, except as explicitly stated below,
forecasts, in particular those relating to
any form of assurance conclusion thereon.
forecast revenue growth and profit margins,
Our responsibility is to read the other information and, in
through enquiries with the divisional
doing so, consider whether, based on our financial
managers and those responsible for preparing
statements audit work, the information therein is materially
and delivering the forecasts;
misstated or inconsistent with the financial statements or our
— Benchmarking assumptions: we compared the
audit knowledge. Based solely on that work we have not
group’s assumptions in relation to key inputs
identified material misstatements in the other
such as, projected economic growth and, with
information.
the assistance of specialist valuation tools,
compared the discount rate to historical
information and externally derived data;
Based solely on our work on the other information:
Strategic report and directors’ report
strategic report and the directors’ report;
— we have not identified material misstatements in the
— Historical comparison: we evaluated the
adequacy of the budgets and forecasts used in
the value in use calculation by assessing the
historical accuracy of the Group’s previous
the financial year is consistent with the financial
budgets;
statements; and
— in our opinion the information given in those reports for
— in our opinion those reports have been prepared in
— Sensitivity analysis: we performed a sensitivity
analysis on the key assumptions noted above;
accordance with the Companies Act 2006.
7. We have nothing to report on the other matters on
which we are required to rep ort by exception
— Comparing valuations: we compared the
carrying value of the parent Company’s
investments in subsidiaries and receivables
due from group entities to value in use
Under the Companies Act 2006, we are required to report to
calculations for the relevant CGUs and to the
you if, in our opinion:
market capitalisation of the Group;
Context of the ability of the audit to detect fraud or breaches of law or
regulation
Owing to the inherent limitations of an audit, there is an
unavoidable risk that we may not have detected some material
misstatements in the financial statements, even though we have
properly planned and performed our audit in accordance with
auditing standards. For example, the further removed non-
compliance with laws and regulations is from the events and
transactions reflected in the financial statements, the less likely the
inherently limited procedures required by auditing standards would
identify it.
In addition, as with any audit, there remained a higher risk of
non-detection of fraud, as these may involve collusion, forgery,
intentional omissions, misrepresentations, or the override of
internal controls. Our audit procedures are designed to detect
material misstatement. We are not responsible for preventing
non-compliance or fraud and cannot be expected to detect non-
compliance with all laws and regulations.
— Assessing transparency: we assessed the
— adequate accounting records have not been kept by the
parent Company, or returns adequate for our audit have
adequacy of the parent Company’s disclosures
not been received from branches not visited by us; or
in respect of investments in subsidiaries and
group debtor balances.
— the parent Company financial statements are not in
agreement with the accounting records and returns; or
— certain disclosures of directors’ remuneration specified by
law are not made; or
— we have not received all the information and
explanations we require for our audit.
We have nothing to report in these respects.
8. Respective responsibilities
Directors’ responsibilities
As explained more fully in their statement set out on page 31,
the directors are responsible for: the preparation of the
financial statements including being satisfied that they give a
true and fair view; such internal control as they determine is
necessary to enable the preparation of financial statements
that are free from material misstatement, whether due to
fraud or error; assessing the Group and parent Company’s
ability to continue as a going concern, disclosing, as
applicable, matters related to going concern; and using the
going concern basis of accounting unless they either intend to
liquidate the Group or the parent Company or to cease
operations, or have no realistic alternative but to do so.
The Directors have prepared the financial statements on the going
concern basis as they do not intend to liquidate the Group or the
Company or to cease their operations, and as they have concluded
that the Group and the Company’s financial position means that
this is realistic. They have also concluded that there are no
material uncertainties that could have cast significant doubt over
their ability to continue as a going concern for at least a year from
the date of approval of the financial statements (“the going
concern period”).
We used our knowledge of the Group, its industry, and the general
economic environment to identify the inherent risks to its business
model and analysed how those risks might affect the Group’s and
Company’s financial resources or ability to continue operations
over the going concern period. The risks that we considered most
likely to adversely affect the Group’s and Company’s available
financial resources over this period were:
•
additional UK lockdowns and restrictions on
international travel will impact the business in FY22 in a
similar way to that experienced in FY21 and in particular
that there will be significant disruption to the Ferry
Services and Art Logistics and Storage businesses.
We considered whether these risks could plausibly affect the
liquidity in the going concern period by comparing severe, but
plausible downside scenarios that could arise from these risks
individually and collectively against the level of available financial
resources indicated by the Group’s financial forecasts.
We considered whether the going concern disclosure in note 1 to
the financial statements gives a full and accurate description of
the Directors’ assessment of going concern, including the
identified risks and, dependencies, and related sensitivities.
Our conclusions based on this work:
— we consider that the directors’ use of the going concern basis
of accounting in the preparation of the financial statements is
appropriate;
— we have not identified, and concur with the directors’
assessment that there is not, a material uncertainty related
to events or conditions that, individually or collectively, m ay
cast significant doubt on the Group’s or Company's ability to
continue as a going concern for the going concern period; and
— we found the going concern disclosure in note 1 to be
acceptable.
However, as we cannot predict all future events or conditions
and as subsequent events may result in
outcomes that are inconsistent with judgements that were
reasonable at the time they were made, the above conclusions
are not a guarantee that the Group or the Company will
continue in operation.
Identifying and responding to risks of material
misstatement due to fraud
To identify risks of material misstatement due to fraud
(“fraud risks”) we assessed events or conditions that could
indicate an incentive or pressure to commit fraud or provide
an opportunity to commit fraud. Our risk assessment
procedures included:
•
Enquiring of directors, and inspection of policy
documentation as to the Group’s high-level policies
and procedures to prevent and detect fraud including
the Group’s channel for “whistleblowing”, as well as
whether they have knowledge of any actual, suspected
• Reading Board, audit committee and remuneration
or alleged fraud;
committee minutes.
• Considering remuneration incentive schemes and
performance targets for directors and how these are
impacted by separately disclosed items; and
• Using analytical procedures to identify any unusual or
unexpected relationships.
We communicated identified fraud risks throughout the audit
team and remained alert to any indications of fraud
throughout the audit.
As required by auditing standards, and taking into account
possible pressures to meet profit targets, we perform procedures
to address the risk of management override of controls, in
particular that management may be in a position to make
inappropriate accounting entries, and the risk of bias in
accounting estimates and judgements.
On this audit we do not believe there is a fraud risk related to
revenue recognition due to the simple recognition criteria for the
majority of revenue steams which are recognised at the point of
sale and the limited opportunity for management to manipulate
the revenue recognised. In additions to this, there was a
significant reduction in transportation and storage of art and
long term construction contracts around the year end which are
recognised with reference to percentage of completion.
• We also performed procedures including:
•
Identifying journal entries and other adjustments
to test for all full scope components based on risk
criteria and comparing the identified entries to
supporting documentation. These included:
unusual revenue pairings; unusual journals with a
credit or debit entry to cash; and, unusual journals
in seldom used pairings.
•
•
Evaluated the business purpose of significant
unusual transactions.
Assessing significant accounting estimates for bias.
We did not identify any additional fraud risks.
ANNUAL REPORT 2021
39
Auditor’s responsibilities
3. Our application of materiality and an overview of the
scope of our audit
Materiality for the Group financial statements as a
whole was set at £150,000 (2019: £150,000),
determined with reference to a benchmark of Group
profit before tax before goodwill impairment of which
it represents 4.0% (2019: 3.9% of group profit before
tax).
Our objectives are to obtain reasonable assurance about
whether the financial statements as a whole are free from
material misstatement, whether due to fraud or error, and to
issue our opinion in an auditor’s report. Reasonable assurance
is a high level of assurance, but does not guarantee that an
audit conducted in accordance with ISAs (UK) will always detect
a material misstatement when it exists. Misstatements can arise
from fraud or error and are considered material if, individually
or in aggregate, they could reasonably be expected to influence
the economic decisions of users taken on the basis of the
financial statements.
Materiality for the parent company financial
statements as a whole, as communicated by the group
audit team, was set at £80,000 (2019:
£100,000). This is lower than the materiality we would
otherwise have determined with reference to a
benchmark of the Company’s net assets, of which it
represents 0.36% (2019: 0.24%).
A fuller description of our responsibilities is provided on the FRC’s
website at www.frc.org.uk/auditorsresponsibilities.
responsibilities
9. The purpose of our audit work and to whom we owe our
We agreed to report to the Audit Committee any
corrected or uncorrected identified misstatements
exceeding £7,500 (2019: £7,500), in addition to other
This report is made solely to the Company’s m embers, as a
identified misstatements that warranted reporting on
body, in accordance with Chapter 3 of Part 16 of the
qualitative grounds.
Companies Act 2006. Our audit work has been undertaken
so that we might state to the Company’s m embers 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 form ed.
Of the group’s four (2019: four) components, we
subjected all (2019: all) to full scope audits for group
purposes. The group team performed the audits of
each of the components. The audit was performed
using the materiality levels set out opposite, having
regard to the mix of size and risk profile of the Group
across the components.
The components within the scope of our work
accounted for the percentages illustrated opposite.
Mark Flanagan (Senior Statutory Auditor)
for and on behalf of KPMG LLP, Statutory Auditor
Chartered Accountants
KPMG LLP
St Nicholas House 31
Park Row
Nottingham
NG1 6FQ
6 July 2021
Profit before tax before
goodwill impairment
£3.7 million (2019: £3.9
million profit before tax)
Group Materiality
£150,000 (2019: £150,000)
£150,000
Whole financial
statements materiality
(2019: £150,000)
£100,000
Range of materiality at 4
components (£80,000 -
£100,000)
(2019: £100,000)
£7,500
Misstatements reported to the audit
committee (2019: £7,500)
Profit before tax before
goodwill impairment
Group materiality
Group revenue
Group profit before tax
100%
100
Group total assets
100%
100
Full scope for group audit purposes 2020
Full scope for group audit purposes 2019
Residual components
ANNUAL REPORT 2021
Consolidated Income Statement
FOR THE YEAR ENDED 31 MARCH 2021
Before
Non-trading
Before
Non-trading
40
Notes
4
Revenue
non-trading
items
2021
£’000
32,578
Cost of sales
(19,437)
Gross profit
13,141
Items
(Note 5)
2021
£’000
-
-
-
Total
2021
£’000
non-trading
items
2020
£’000
32,578
44,600
(19,437)
(26,521)
13,141
18,079
(12,307)
57
(12,250)
(13,745)
Items
(Note 5)
2020
£’000
-
-
-
-
-
Total
2020
£’000
44,600
(26,521)
18,079
(13,745)
231
6
Operating expenses
(12,115)
Other administrative
expenses
Consumer Finance
interest income
Goodwill impairment
Operating
profit / (loss)
Finance income
Finance expense
Net financing costs
Profit / (loss) before
tax
Taxation
Profit / (loss) for the
year attributable to
equity holders of
the company
8
9
10
Earnings per share
192
-
1,026
-
(881)
(881)
145
(147)
-
-
57
57
-
-
-
57
(46)
231
192
-
-
(7,479)
(7,479)
(12,058)
(13,514)
(7,479)
(20,993)
1,083
4,565
(7,479)
(2,914)
-
(881)
(881)
13
(869)
(856)
-
-
-
13
(869)
(856)
202
3,709
(7,479)
(3,770)
(193)
(958)
-
(958)
(2)
11
9
2,751
(7,479)
(4,728)
Basic
Diluted
0.0p
0.0p
0.1p
0.1p
22.0p
21.7p
-37.8p
-37.8p
The accompanying notes form part of these Financial Statements.
ANNUAL REPORT 2021
41
Consolidated Statement of Comprehensive Income
FOR THE YEAR ENDED 31 MARCH 2021
Profit / (loss) for the year
Cash flow hedges: effective portion of changes in fair value
Deferred tax on other financial liabilities
Deferred tax on effective portion of changes in fair value
Items that are or may be reclassified subsequently to profit or loss
Re-measurement of the FIC defined benefit pension scheme
Movement on deferred tax asset relating to the pension scheme
Items which will not ultimately be recycled to the income statement
17
17
23
17
Total other comprehensive income / (loss)
Total comprehensive income / (loss)
The accompanying notes form part of these Financial Statements.
2021
£'000
9
303
30
(58)
275
(272)
71
(201)
74
83
2020
£'000
(4,728)
(521)
-
102
(419)
136
(35)
101
(318)
(5,046)
ANNUAL REPORT 2021 Consolidated Balance Sheet
AT 31 MARCH 2021
42
Notes
11
12
13
15
19
16
17
18
19
16
20
22
21
Non-current assets
Intangible assets
Property, plant and equipment
Investment properties
Investment in Joint venture
Debtors due in more than one year
Hire purchase lease receivables
Deferred tax assets
Total non-current assets
Current assets
Inventories
Trade and other receivables
Hire purchase lease receivables
Cash and cash equivalents
Total current assets
TOTAL ASSETS
Current liabilities
Trade and other payables
Interest-bearing loans and borrowings
Derivative financial instruments
Corporation tax payable
Total current liabilities
Non-current liabilities
2021
£'000
4,183
40,361
7,123
259
88
590
739
2020
£'000
4,246
41,712
6,458
259
88
519
677
53,343
53,959
5,871
5,868
558
14,556
26,853
80,196
(6,775)
(3,424)
-
(113)
5,374
8,696
596
9,108
23,774
77,733
(8,611)
(1,165)
(537)
(233)
(10,312)
(10,546)
21
Interest-bearing loans and borrowings
(24,799)
(22,942)
Derivative financial instruments
23
17
Employee benefits
Deferred tax liabilities
Total non-current liabilities
TOTAL LIABILITIES
Net assets
25
Capital and reserves
Equity share capital
Share premium account
Other reserves
Retained earnings
Hedging reserve
Total equity
(234)
(2,842)
(3,113)
(30,988)
(41,300)
38,896
1,251
17,590
703
19,584
(232)
38,896
-
(2,604)
(2,849)
(28,395)
(38,941)
38,792
1,250
17,590
703
19,784
(535)
38,792
These financial statements, of which the accompanying notes form part, were approved by the Board of directors on 6 July
2021 and were signed on its behalf by:
J L Foster
Director
S I Munro
Director
ANNUAL REPORT 2021
43
Company Balance Sheet
AT 31 MARCH 2021
Notes
13
14
19
17
Non-current assets
Investment properties
Investment in subsidiaries
Loans to subsidiaries
Deferred tax
Total non-current assets
Current assets
19
Trade and other receivables
Corporation tax receivable
20
Cash and cash equivalents
22
21
Total current assets
TOTAL ASSETS
Current liabilities
Trade and other payables
Interest-bearing loans and borrowings
Derivative financial instruments
Corporation tax payable
Total current liabilities
Non-current liabilities
21
Interest-bearing loans and borrowings
Derivative financial instruments
Total non-current liabilities
TOTAL LIABILITIES
Net assets
25
Capital and reserves
Equity share capital
Share premium account
Other reserves
Retained earnings
Hedging reserve
Total equity
2021
£'000
19,164
23,970
10,207
44
2020
£'000
19,373
23,989
10,207
121
53,385
53,690
118
54
5,462
5,634
30
-
5,766
5,796
59,019
59,486
(6,391)
(520)
-
-
(7,019)
(243)
(537)
(21)
(6,911)
(7,820)
(12,668)
(13,207)
(234)
(12,902)
(19,813)
-
(13,207)
(21,027)
39,206
38,459
1,251
17,590
5,389
15,208
(232)
39,206
1,250
17,590
5,389
14,765
(535)
38,459
As permitted by Section 408 of the Companies Act 2006, a separate profit and loss account of the Parent Company has
not been presented. The Parent Company’s profit for the financial year is £500,000 (2020: £2,592,000 loss).
These financial statements, of which the accompanying notes form part, were approved by the Board of directors on 6 July
2021 and were signed on its behalf by:
J L Foster
Director
Registered company number: 03416346
S I Munro
Director
ANNUAL REPORT 2021
Consolidated Cash Flow Statement
FOR THE YEAR ENDED 31 MARCH 2021
44
Notes
11
12
13
11
23
24
Cash flows from operating activities
Profit/ (loss) for the year after taxation
Adjusted for:
(i) Non-cash items:
Amortisation
Depreciation: Property, plant and equipment
Depreciation: Investment properties
Goodwill impairment
Loss on disposal of fixed assets
Interest cost on pension scheme liabilities
Equity-settled share-based payment expenses
Non-cash items adjustment
(ii) Other items:
Exchange losses / (gains)
Bank interest receivable
Bank interest payable
Lease liability finance expense
(Increase)/decrease in hire purchase leases receivable
Corporation and deferred tax expense
Other adjustments
Operating cash flow before changes in working capital
Decrease/(increase) in trade and other receivables
(Increase)/decrease in inventories
Decrease in trade and other payables
Changes in working capital
Cash generated from operations
Payments to pensioners
Corporation taxes paid
Net cash flow from operating activities
Cash flows from investing activities
Purchase of property, plant and equipment
Purchase of investment properties
Purchase of software
Interest received
2021
£'000
2020
£'000
9
(4,728)
63
2,193
37
-
53
64
1
68
1,863
132
7,479
78
65
97
2,411
9,782
3
-
469
348
(33)
193
980
3,400
2,828
(497)
(1,836)
495
3,895
(98)
(64)
3,733
(898)
(702)
-
-
(54)
(13)
464
340
128
958
1,823
6,877
(935)
471
(980)
(1,444)
5,433
(97)
(659)
4,677
(2,010)
(1,351)
(27)
13
Net cash flow from investing activities
(1,600)
(3,375)
Continued on next page.
ANNUAL REPORT 2021
45
Consolidated Cash Flow Statement Continued
FOR THE YEAR ENDED 31 MARCH 2021
Notes
Cash flow from financing activities
Bank loan drawn down
Repayment of bank loans
Bank interest paid
Hire purchase loan drawn down
Repayment of lease liabilities principal
Lease liabilities interest paid
Cash inflow on option exercises
Cash outflow on nil cost option exercise
Dividends paid
Net cash flow from financing activities
Net increase in cash and cash equivalents
Cash and cash equivalents at start of year
Exchange (losses) / gains on cash balances
Cash and cash equivalents at end of year
The accompanying notes form part of these Financial Statements.
2021
£'000
5,000
(624)
(469)
389
(649)
(348)
19
-
-
3,318
5,451
9,108
(3)
14,556
2020
£'000
13,875
(10,955)
(478)
534
(395)
(340)
-
(29)
(644)
1,568
2,870
6,184
54
9,108
ANNUAL REPORT 2021
46
Company Cash Flow Statement
FOR THE YEAR ENDED 31 MARCH 2021
Notes
Cash flows from operating activities
2021
£'000
2020
£'000
Holding Company profit / (loss) for the year
500
(2,592)
Adjusted for:
Bank interest receivable
Bank interest payable
Equity-settled share-based payment expenses
14
13
Impairment of subsidiary
Depreciation
Corporation and deferred tax expense
Non-cash and other items adjustment
Operating cash flow before changes in working capital
Increase in trade and other receivables
(Decrease) / increase in trade and other payables
Changes in working capital and provisions
Cash generated from operations
Corporation taxes paid
Net cash flow from operating activities
Cash generated from investing activities
Interest received
Purchase of property, plant and equipment
Net cash flow from investing activities
Cash flow from financing activities
Bank loan drawn down
Bank loan repaid
Interest paid
Cash outflows in inter-company borrowing
Cash inflows in inter-company borrowing
Cash inflow on option exercise
Cash outflow on nil cost option exercise
Dividends paid
Net cash (out)/ in flow from financing activities
Net (decrease)/ increase in cash and cash equivalents
Cash and cash equivalents at start of year
Cash and cash equivalents at end of year
The accompanying notes form part of these Financial Statements.
-
395
2
-
209
8
614
1,114
(88)
(292)
(380)
734
(64)
670
-
-
-
-
(262)
(381)
(2,569)
2,219
19
-
-
(974)
(304)
5,766
5,462
(13)
372
48
3,713
209
72
4,401
1,809
-
9
9
1,818
(17)
1,801
13
-
13
13,875
(10,425)
(358)
(1,515)
1,280
-
(29)
(644)
2,184
3,998
1,768
5,766
ANNUAL REPORT 2021
47
Consolidated Statement of Changes in
Shareholders’ Equity
FOR THE YEAR ENDED 31 MARCH 2021
Equity share
capital
£’000
Share premium
account
£’000
Other
reserves
£’000
Retained
earnings
£’000
Balance 1 April 2019
1,250
17,590
1,162
24,426
Loss for the year
Reserves transfer
Cash flow hedges:
effective portion of
changes in fair value
Re-measurement of the
defined benefit pension
liability, net of tax
Total comprehensive
income
Transactions with owners in
their capacity as owners:
Share option exercise
Share based payments
Dividends paid
Total transactions with
owners
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
Hedge
reserve
£’000
(14)
-
-
(521)
Total
equity
£’000
44,414
(4,728)
-
(419)
-
101
-
(4,728)
(459)
-
-
459
102
101
(459)
(4,066)
(521)
(5,046)
-
-
-
-
(29)
97
(644)
(576)
-
-
-
-
(29)
97
(644)
(576)
Balance at 31 March 2020
1,250
17,590
703
19,784
(535)
38,792
Profit for the year
Cash flow hedges:
effective portion of
changes in fair value
Deferred tax on cash
flow hedges
Deferred tax on other
financial liabilities
Re-measurement of the
defined benefit pension
liability, net of tax
Total comprehensive income
Transactions with owners in
their capacity as owners:
Share option exercise
Share based payments
Dividends paid
Total transactions with
owners
-
-
-
-
-
-
1
-
-
1
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
9
-
(58)
30
(201)
-
303
-
-
-
(220)
303
19
1
-
20
-
-
-
-
9
303
(58)
30
(201)
83
20
1
-
21
Balance at 31 March 2021
1,251
17,590
703
19,584
(232)
38,896
The accompanying notes form part of these Financial Statements.
ANNUAL REPORT 2021 48
Hedge
reserve
£’000
(14)
-
-
(521)
Total
equity
£’000
42,046
(2,592)
-
(419)
Company Statement of Changes in
Shareholders’ Equity
FOR THE YEAR ENDED 31 MARCH 2021
Equity share
capital
£’000
Share premium
account
£’000
Other
reserves
£’000
Retained
earnings
£’000
Balance 1 April 2019
1,250
17,590
6,910
16,310
Loss for the year
Reserves transfer
Cash flow hedges:
effective portion of
changes in fair value
Total comprehensive loss
Transactions with owners in
their capacity as owners:
Share option exercise
Share based payments
Dividends paid
Total transactions with
owners
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
(2,592)
(1,521)
-
1,521
102
(1,521)
(969)
(521)
(3,011)
-
-
-
-
(29)
97
(644)
(576)
-
-
-
-
(29)
97
(644)
(576)
Balance at 31 March 2020
1,250
17,590
5,389
14,765
(535)
38,459
Profit for the year
Cash flow hedges:
effective portion of
changes in fair value
Deferred tax on cash flow
hedges
Total comprehensive
income
Transactions with owners in
their capacity as owners:
Share option exercise
Share based payments
Dividends paid
Total transactions with
owners
-
-
-
-
1
-
-
1
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
500
-
(58)
442
-
1
-
1
-
303
-
303
-
-
-
-
500
303
(58)
745
1
1
-
2
Balance at 31 March 2021
1,251
17,590
5,389
15,208
(232)
39,206
The accompanying notes form part of these Financial Statements.
ANNUAL REPORT 2021 49
Notes to the Financial Statements
1. Accounting policies
General information
FIH group plc (the “Company”) is a company limited by shares 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 Accounting Standards in conformity with the requirements of the Companies
Act 2006 (“Adopted IFRSs”). On publishing the Parent Company financial statements here together with the Group financial
statements, the Company is taking advantage of the exemption in s408 of the Companies Act 2006 not to present its
individual income statement and related notes that form a part of these approved financial statements.
The accounting policies set out below have, unless otherwise stated, been applied consistently to all periods presented in
these consolidated financial statements.
Judgements made by the directors in the application of these accounting policies that have a significant effect on the
financial statements and estimates with a significant risk of material adjustment next year are discussed in note 30.
The financial statements are presented in pounds sterling, rounded to the nearest thousand and are prepared on the
historical cost basis.
Going concern
The directors are responsible for preparing a going concern assessment covering a period of at least 12 months from the
date of approval of these financial statements (the going concern period). The financial statements have been prepared on
a going concern basis which the Directors consider to be appropriate for the following reasons.
As at 31 March 2021 the Group had net current assets of £16.5 million and cash balances of £14.6 million. Following the
repayment of the CBILS loans in June 2021 the Group had cash balances of approximately £9.7 million as at 30 June 2021
and net debt of approximately £13.3 million.
Base case and sensitised cash flow forecasts have been prepared covering the going concern period. The base case
forecasts for the Group indicate that the business will be cash generative over this period. The sensitised forecasts reflect
a severe but plausible downside that may emerge as a result of the ongoing Covid-19 pandemic. This severe but plausible
scenario assumes that additional UK lockdowns and restrictions on international travel will impact the business in FY22
in a similar way to that experienced in FY21 and in particular that there will be significant disruption to the Ferry Services
and Art Logistics and Storage businesses. This scenario indicates that the Group will comply with its covenants and have
sufficient funds to meet its liabilities as they fall due throughout the going concern period.
Consequently, the directors are confident that the Group and Company will have sufficient funds to continue to meet
its liabilities as they fall due for at least 12 months from the date of approval of the financial statements and the financial
statements have therefore been prepared on a going concern basis.
ANNUAL REPORT 2021 50
Basis of consolidation
The consolidated financial statements comprise the financial statements of FIH group plc and its subsidiaries (the “Group”).
A subsidiary is any entity FIH group plc has the power to control. Control is determined by FIH group plc’s exposure or
rights, to variable returns from its involvement with the subsidiary and the ability to affect those returns. The financial
statements of subsidiaries are prepared for the same reporting period as the Parent Company. The accounting policies of
subsidiaries have been changed when necessary, to align them with the policies adopted by the Group.
Subsidiaries are consolidated from the date on which control is transferred to the Group and cease to be consolidated from
the date on which control is transferred out of the Group.
All intra-company balances and transactions, including unrealised profits arising from intra-group transactions, are eliminated
in full in preparing the consolidated financial statements. Investments in subsidiaries within the Company balance sheet are
stated at impaired cost.
Presentation of income statement
Due to the non-prescriptive nature under IFRS as to the format of the income statement, the format used by the Group is
explained below.
Operating profit is the pre-finance profit of continuing activities and acquisitions of the Group, and in order to achieve
consistency and comparability, is analysed to show separately the results of normal trading performance (“underlying
profit”), individually significant charges and credits, changes in the fair value of financial instruments and non-trading items.
Such items arise because of their size or nature.
In the year ended 31 March 2021, non-trading items were made up of £433,000 of restructuring costs which were offset
by £500,0000 of income from the release of provisions from prior years. In the year ended 31 March 2020, there were two
non-trading items, the impairment of the £3,979,000 which arose on the 2005 PHFC acquisition and the impairment of
£3,500,000 of the goodwill which arose on the 2008 acquisition of Momart.
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:
Right to use assets
Freehold buildings
Long leasehold land and buildings
Vehicles, plant and equipment
Ships
5 – 50 years
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 under construction are not depreciated.
ANNUAL REPORT 2021
51
Notes to the Financial Statements
CONTINUED
Investment properties - Group
Investment properties are properties held either to earn rental income or for capital appreciation or for both. Investment
properties 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 property. The investment property portfolio in the Falkland Islands consists mainly of properties built by
FIC, and these and the few properties purchased are depreciated over an estimated useful life of 50 years.
Investment properties - Company
The investment property in the Company consists of the Leyton site purchased in December 2018, with five warehouses
which are rented to Momart. The purchase price allocated to land has not been depreciated, and the purchase price
allocated to each property has been depreciated on a straight-line basis over the expected useful life, after consideration
of the age and condition of each property, down to an estimated residual value of nil.
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 is not depreciated.
Joint Ventures
Jointly controlled entities are those entities over whose activities the Group has joint control, established by contractual
agreement and requiring the joint venture partners’ unanimous consent for strategic financial and operating decisions. FIH
group plc has joint control over an investee when it has exposure or rights to variable returns from its involvement with the
joint venture and has the ability to affect those returns through its joint power over the entity.
Jointly controlled entities are accounted for using the equity method (equity accounted investees) and are initially recognised
at cost. The consolidated financial statements include the Group’s share of the total comprehensive income and equity
movements of equity accounted investees, from the date that significant influence or joint control commences until the
date that significant influence or joint control ceases. When the Group’s share of losses exceeds its interest in an equity
accounted investee, the Group’s carrying amount is reduced to nil and recognition of further losses is discontinued except
to the extent that the Group has incurred legal or constructive obligations or made payments on behalf of an investee.
Intangible assets
Goodwill
Goodwill arises on the acquisition of subsidiaries and businesses.
Acquisitions prior to 1 April 2006
In respect to acquisitions prior to transition to IFRS, goodwill is recorded on the basis of deemed cost, which represents the
amount recorded under previous Generally Accepted Accounting Principles (“GAAP”) as at the date of transition. 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. At 31 March 2021, all goodwill arising on acquisitions prior to 1 April 2006 has
either been offset against other reserves on acquisition, or written off through the income statement as an impairment in
prior years.
ANNUAL REPORT 2021 52
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. In the year ended 31 March 2014, the directors reviewed the life of the brand name
at Momart and after considerations of its strong reputation in a niche market and its history of stable earnings and cash
flow, which is expected to continue into the foreseeable future, determined that its useful life is indefinite, and amortisation
ceased from 1 October 2013.
Computer software
Acquired computer software is capitalised as an intangible asset on the basis of the cost incurred to acquire and bring
the specific software into use. Amortisation is charged to the income statement on a straight-line basis over the estimated
useful lives of intangible assets from the date that they are available for use. The estimated useful life of computer software
is seven years.
Impairment of non-financial assets
At each reporting date the Group assesses whether there is any indication that an asset may be impaired. Goodwill and
intangible assets with indefinite lives are tested for impairment, at least annually. Where an indicator of impairment exists
or the asset requires annual impairment testing, the Group makes a formal estimate of the recoverable amount. Where the
carrying amount of an asset exceeds its recoverable amount, the asset is considered impaired and is written down to its
recoverable amount. Impairment losses are recognised in the income statement.
Recoverable amount is the greater of an asset’s or cash-generating unit’s fair value, less cost to sell or value in use. It is
determined for an individual asset, unless the asset’s value in use cannot be estimated and it does not generate cash
inflows that are largely independent of those from other assets or groups of assets, in which case the recoverable amount
is determined for the cash-generating unit to which the asset belongs. In assessing value in use, the estimated future cash
flows are discounted to their present value using a discount rate that reflects current market assessments of the time value
of money and risks specific to the asset.
An impairment loss in respect of goodwill is not reversed. In respect of other assets, impairment losses are reversed if there
has been a change in the estimates used to determine the recoverable amount. An impairment loss is reversed only to the
extent that the asset’s carrying amount does not exceed the carrying amount that would have been determined, net of
depreciation or amortisation, if no impairment loss had been recognised.
Finance income and expense
Net financing costs comprise interest payable and interest receivable which are recognised in the income statement.
Interest income and interest payable are recognised as a profit or loss as they accrue, using the effective interest method.
ANNUAL REPORT 2021 53
Notes to the Financial Statements
CONTINUED
Employee share awards
The Group provides benefits to certain employees (including directors) in the form of share-based payment transactions,
whereby the recipient renders service in return for shares or rights over future shares (“equity settled transactions”). The
cost of these equity settled transactions with employees is measured by reference to an estimate of their fair value at
the date on which they were granted using an option input pricing model taking into account the terms and conditions
upon which the options were granted. The amount recognised as an expense is adjusted to reflect the actual number of
share options for which the related service and non-market performance conditions are expected to be met, such that
the amount ultimately recognised as an expense is based on the number of share options that meet the related service
and non-market performance conditions at the vesting date. For share-based payment awards with market performance
vesting conditions, the grant date fair value of the share-based payments is measured to reflect such conditions and there
is no true up for differences between expected and actual outcomes.
The cost of equity settled transactions is recognised, together with a corresponding increase in reserves, over the period in
which the performance conditions are fulfilled, ending on the date that the option vests. Where the Company grants options
over its own shares to the employees of subsidiaries, it recognises, in its individual financial statements, an increase in the
cost of investment in its subsidiaries equal to the equity settled share-based payment charge recognised in its consolidated
financial statements with the corresponding credit being recognised directly in equity.
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. The cost of raw materials, consumables and goods for resale comprises purchase
cost, on a weighted average basis and where applicable includes expenditure incurred in transportation to the Falkland
Islands. Work-in-progress and finished goods cost includes direct materials and labour plus attributable overheads based
on a normal level of activity. Construction-in-progress is stated at the lower of cost and net realisable value. Net realisable
value is estimated at selling price in the ordinary course of business less costs of disposal.
Consumer Finance interest income
Consumer Finance interest income consists of interest receivable on the hire purchase debtors, which is calculated on a
sum of digits basis, which allocates more interest on the earlier periods, when the debt is higher, and interest receivable
from charge cards, which are FIC credit cards issued to customers including staff.
Pensions
Defined contribution pension schemes
The Group operates defined contribution schemes at PHFC and Momart, and at FIC, employees are enrolled in the
Falkland Islands Pension Scheme (“FIPS”). The assets of all these schemes are held separately from those of the Group in
independently administered funds. The amount charged to the income statement represents the contributions payable to
the schemes in respect to the accounting period.
Defined benefit pension schemes
The Group has one pension scheme providing benefits based on final pensionable pay, which is unfunded and closed to
further accrual. The Group’s net obligation in respect of the defined benefit pension plan is calculated by estimating the
amount of future benefit that employees have earned in return for their service in the current and prior periods; that benefit
is discounted to its present value. 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.
The current service cost and costs from settlements and curtailments are charged against operating profit. Past service
costs are recognised immediately within profit and loss. The net interest cost on the defined benefit liability for the period is
determined by applying the discount rate used to measure the defined benefit obligation at the end of the period to the net
defined benefit liability at the beginning of the period. It takes into account any changes in the net defined benefit liability
during the period. Re-measurements of the defined benefit pension liability are recognised in full in the period in which they
arise in the statement of comprehensive income.
ANNUAL REPORT 2021 54
Trade and other receivables
Trade receivables are carried at amortised cost, less provision for impairment. Any change in their value through impairment
or reversal of impairment is recognised in the income statement.
Trade and other payables
Trade and other payables are stated at their cost less payments made.
Dividends
Dividends unpaid at the balance sheet date are only recognised as liabilities at that date to the extent that they are
appropriately authorised and are no longer at the discretion of the Company.
Cash and cash equivalents
Cash and cash equivalents in the balance sheet comprise cash balances and call deposits with an original maturity of three
months or less.
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.
Taxation
Taxation on the profit or loss for the year comprises current and deferred tax. Current tax is recognised in the income
statement, except to the extent that it relates to items recognised directly in equity, in which case it is recognised directly
in equity or in other comprehensive income. Current tax is the expected tax payable on the taxable income for the year,
using tax rates enacted, or substantively enacted at the balance sheet date, and any adjustment to tax payable in respect
of previous years.
Deferred tax is provided using the balance sheet method, providing for temporary differences between the carrying
amounts of assets and liabilities for financial reporting purposes and the amounts used for taxation purposes. The following
temporary timing differences are not recognised:
• Goodwill not deductible for tax purposes; and
•
Initial recognition of assets or liabilities in a transaction that is not a business combination and that affects neither
accounting nor taxable profits.
Temporary differences related to investments in subsidiaries, to the extent that it is probable that they will not reverse
in the foreseeable future.
•
A deferred tax asset is recognised to the extent that it is probable that future taxable profits will be available against which
the temporary differences can be utilised. Deferred tax assets are reviewed at each reporting date and are reduced to the
extent that it is no longer probable that the related tax benefit will be realised.
Deferred tax is recognised at the tax rates that are expected to be applied to the temporary differences when they reverse,
based on rates that have been enacted or substantially enacted by the reporting date.
Cash-flow hedges
The effective portions of changes in the fair values of derivatives that are designated and qualify as cash-flow hedges
are recognised in equity. The gain or loss to any ineffective portion is recognised immediately in the income statement.
Amounts accumulated in the hedging reserve are recycled to the income statement in the periods when the hedged items
will affect profit or loss.
ANNUAL REPORT 2021 55
Notes to the Financial Statements
CONTINUED
Revenue recognition
IFRS 15 Revenue, requires revenue to be recognised under a ‘five-step’ approach when a customer obtains control of
goods or services in line with the performance obligations identified on the contract. Under IFRS 15, revenue recognition
must reflect the standard’s five-step approach which requires the following:
Identification of the contract with the customer;
Identification of the performance obligations in the contract;
•
•
• Determination of the transaction price;
• Allocation of the transaction price to the performance obligations;
• Recognition of the revenue when (or as) each performance obligation is satisfied.
In accordance with the standard, revenue is recognised, net of discounts, VAT, Insurance Premium Tax and other sales
related taxes, either at the point in time a performance obligation has been satisfied or over time as control of the asset
associated with the performance obligation is transferred to the customer.
For all contracts identified, the Group determines if the arrangement with the customer creates enforceable rights and
obligations. For contracts with multiple components to be delivered, such as the inbound and outbound leg of moving art
exhibitions as well as delivering, handling and administration services, management applies judgement to consider whether
those promised goods and services are:
•
•
•
distinct – to be accounted for as separate performance obligations;
not distinct – to be combined with other promised goods or services until a bundle is identified that is distinct; or
part of a series of distinct goods and services that are substantially the same and have the same pattern of transfer to
the customer.
At contract inception the total transaction price is estimated, being the amount to which the Group expects to be entitled
and to which it has present enforceable rights under the contract. Once the total transaction price is determined, the Group
allocates this to the identified performance obligations in proportion to their relative standalone selling prices and revenue
is then recognised when (or as) those performance obligations are satisfied.
Discounts are allocated proportionally across all performance obligations in the contract unless directly observable evidence
exists that the discount relates to one or more, but not all, performance obligations.
For each performance obligation, the Group determines if revenue will be recognised over time or at a point in time.
For each performance obligation to be recognised over time, the Group applies a revenue recognition method that faithfully
depicts the Group’s performance in transferring control of the goods or services to the customer. This decision requires
assessment of the nature of the goods or services that the Group has promised to transfer to the customer. The Group
applies an appropriate methodology, typically based on the expected profile of the deferral event (for example claims cost
through the policy term or time elapsed).
Revenue streams of the Group
The revenues streams of the Group have been analysed and considered in turn.
Retail revenues arising from the sale of goods and recognised at the point of sale
The retail revenues in the Falkland Islands arise from the sale of goods in the retail outlets and the sale of vehicles and
parts at Falklands 4x4, are recognised at the point of sale, which is usually at the till, when the goods are paid for by cash
or credit or debit card.
Housing revenue is generally recognised on completion of the single performance obligation of supplying a house, once
the keys are handed over on legal completion. However, larger, multi-house contracts such as the construction of houses
for FIG are treated as long term construction contracts as detailed below.
Revenue from cars sold is recognised in full when the asset is physically transferred and the benefits and risks of ownership
pass to the customer.
ANNUAL REPORT 2021 56
Revenues arising from the rendering of services and recognised over a period of time
Transportation and storage of art
In the UK, Momart earns revenue from moving or installations or de-installations of artwork. The revenue is invoiced when
the installation or de-installation is complete, however at each month end accrued revenue is recognised for fine art
exhibition logistical work undertaken, where the costs incurred and the costs to complete the transaction can be measured
reliably, and the amount of revenue attributable to the stage of completion of a performance obligation is recognised on
the basis of the incurred percentage of anticipated cost. This, in the opinion of the directors, is the most appropriate proxy
for the stage of completion. Momart classifies this income into either Exhibitions revenue, which includes the income from
UK and International museums, or Gallery Services revenue, which includes revenue earned from art galleries and auction
houses such as Sothebys, where the inbound and outbound exhibitions installations and dispersal are provided as one
quote to customers, but are fulfilled up to several months apart. The allocation of revenue in the inbound installations and
outbound dispersals has been reviewed. Momart operates a very transparent method of setting out prices in both quotes
and invoices, allocating revenues per trips, as these are considered separate obligations.
Storage income in Momart is charged based on the actual volume occupied, at an agreed weekly rate per cubic
metre. Clients can be invoiced weekly, monthly or quarterly, and income is recognised as it is accrued, on a monthly or
weekly basis.
Long term construction contracts
Revenue from long term construction contracts is recognised under IFRS 15 by the application of the input method using
the direct measurement of the goods or services provided to date, including materials and labour. Un-invoiced amounts
are presented as contract assets.
Where a modification is required, the Group assesses the nature of the modification and whether it represents a separate
performance obligation required to be satisfied by the Group or whether it is a modification to the existing performance
obligation. No margin is recognised until the outcome of the contract can be estimated with reasonable certainty. Revenue
in respect of variations to contracts and incentive payments is recognised when there is an enforceable right to payment
and it is highly probable it will be agreed by the customer. Variation orders, claims and liquidated damages, are re-assessed
at each reporting period using the expected outcome approach. If it were considered probable that total contract costs
would exceed total contract revenue, the expected loss would be recognised as an expense immediately.
Other revenues recognised over time
Other revenues recognised over time, include rental income from the rental property portfolio at FIC, which is recognised
monthly as the properties are occupied, and car hire income, which is recognised over the hire period.
Revenues arising from the rendering of services and recognised immediately
The majority of revenues recognised immediately from the rendering of services arise from the ferry fare income, which is
taken on a daily basis for daily tickets. Season tickets are available, however the revenue earned from these is negligible
as most passengers purchase daily tickets. Quarterly and monthly season tickets are recognised over the life of the ticket
with a balance held in deferred income.
Other revenues arising from the rendering of services and recognised immediately include:
• Agency services provided to cruise or fishing vessels for supplying provisions, trips to and from the airport and medical
evacuations;
Third party port services;
•
• Car maintenance revenue, which generally arises on short term jobs;
• Penguin travel income earned from tourist tours and airport trips, which is recognised on the day of the tour or
•
•
airport trip;
Third party freight revenue, which is recognised when the ship arrives in the Falkland Islands;
Insurance commission earned by FIC for providing insurance services in the Falkland Islands under the terms of an
agency agreement with Caribbean Alliance. The insurance commission is recognised in full on inception of each policy,
offset by a refund liability held within accruals, for the expected refunds over the next year calculated from a review of
the historic refunded premiums.
ANNUAL REPORT 2021
57
Notes to the Financial Statements
CONTINUED
IFRS 9 Financial instruments
Impairment
Loans and receivables, which include trade debtors and hire purchase receivables, are held initially at cost. IFRS 9 mandates
the use of an expected credit loss model to calculate impairment losses rather than an incurred loss model, and therefore it
is not necessary for a credit event to have occurred before credit losses are recognised. The Group has elected to measure
loss allowances utilising probability-weighted estimates of credit losses for trade receivables at an amount equal to lifetime
expected credit losses. A detailed review has been conducted of the five year history of impairment of the Group’s financial
assets, which primarily comprise its portfolio of current trade receivables at Momart and FIC, and the hire purchase debtors
in FIC, these assets all have a consistent history of low levels of impairment, the inclusion of specific expected credit loss
considerations did not have a material impact on transition.
Hedging
The Group has one open hedging relationships at 31 March 2021, an interest swap taken out in July 2019 to hedge the
£13,875,000 mortgage. This swap had an initial notional value of £13,875,000, with interest payable at the difference
between 1.1766% and the LIBOR rate. This interest rate swap notional value decreases at £125,000 per quarter over
ten years until June 2029 when it will expire. The notional value of the swap at 31 March 2021 was £13,000,000 (2020:
£13,500,000). The accrual held in respect of this swap at the year-end was £234,000 (2020: £526,000). A second swap
was taken out in October 2015 to hedge the bank loans drawn down to fund the Harbour Spirit ferry purchase. The swap
had an initial notional value of £3.6 million, with interest payable at the difference between 1.325% and the Bank of England
Base rate. This interest rate swap notional value decreased at £36,250 per month over five years until September 2020
when it expired.
IFRS 9 introduces three hedge effectiveness requirements:
IFRS 9 requires the existence of an economic relationship between the hedged item and the hedging instrument.
There must be an expectation that the value of the hedging instrument and the value of the hedged item would move in the
opposite direction as a result of the common underlying or hedged risk. As the LIBOR and base rates increase, the interest
payable on the loans will increase, and the interest payable on the swaps will fall.
The hedge accounting model is based on a general notion of there being an offset between the changes of the swap
as the hedging instrument and those of the hedged bank loan, both of these balances will be affected by the base rate
movements, so it has been concluded the offset is justifiable. The size of the hedging instrument and the hedged items
must be similar for the hedge to be effective.
IFRS 16 Leases
The Group has applied IFRS 16 in accounting for leases as follows.
At inception of a contract, the Group assesses whether it is, or contains, a lease. A contract is, or contains, a lease if
the contract conveys the right to control the use of an identified asset for a period of time in exchange for consideration.
To assess whether a contract conveys the right to control the use of an identified asset, the Group uses the definition of a
lease in IFRS 16.
IFRS 16 determines whether a contract contains a lease on the basis of whether the customer has the right to control the
use of an identified asset for a period of time in exchange for consideration. This is in contrast to the focus on ‘risks and
rewards’ in IAS 17. The Group applies the definition of a lease and related guidance set out in IFRS 16 to all lease contracts
entered into or changed on or after 1 January 2019 (whether it is a lessor or a lessee in the lease contract).
(a)
As a lessee
The Group:
a) Recognises right-of-use assets and lease liabilities in the consolidated statement of financial position, initially
measured at the present value of the future lease payments;
ANNUAL REPORT 2021
58
b) Recognises depreciation of right-of-use assets and interest on lease liabilities in the consolidated statement of
profit or loss;
c) Separates the total amount of cash paid into a principal portion (presented within financing activities) and
interest (presented within financing activities) in the consolidated statement of cash flows.
Lease incentives (e.g. rent-free periods) are recognised as part of the measurement of the right-of-use assets and
lease liabilities.
For short-term leases (lease term of 12 months or less) and leases of low-value assets (which includes tablets and personal
computers, small items of office furniture and telephones), the Group has opted to recognise a lease expense on a straight-
line basis as permitted by IFRS 16. This expense is presented within ‘other expenses’ in profit or loss.
Right-of-use assets are tested for impairment in accordance with IAS 36 as specified by IFRS16.
(b)
As a lessor
In accordance with IFRS 16, leases where the Group is a lessor continue to be classified as either finance leases or
operating leases and are accounted for differently.
The hire purchase receivables in FIC are reported as receivables, the goods are removed from the balance sheet when
the finance lease agreements are signed and instead a receivable due from the customer is recorded, as the title of the
vehicles, or other goods, such as furniture, white goods or other electrical items, are deemed to have passed to the
customer at that point.
Hire purchase debtors 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. Finance lease income is allocated to accounting periods so as to reflect a constant periodic
rate of return on the Group’s net investment outstanding in respect of the leases.
The FIC rental property agreements which are only ever for a maximum of 12 months, and with titles that will never pass
to the customer, continue to be classified as operating leases. Rental income from operating leases is recognised on a
straight-line basis over the term of the relevant lease. Initial direct costs incurred in negotiating and arranging an operating
lease are added to the carrying amount of the leased asset and recognised on a straight-line basis over the lease term. The
rental property portfolio, which is 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.
Standards and revisions not yet adopted in the year to 31 March 2021
No standards not yet adopted are expected to have any significant impact on the financial statements of the Group
or Company.
2. Segmental information analysis
The Group is organised into three operating segments, and information on these segments is reported to the chief operating
decision maker (‘CODM’) for the purposes of resource allocation and assessment of performance. The CODM has been
identified as the Board.
The operating segments offer different products and services and are determined by business type: goods and essential
services in the Falkland Islands, the provision of ferry services and art logistics and storage.
Segment results, assets and liabilities include items directly attributable to a segment as well as those that can be
allocated on a reasonable basis. Segment capital expenditure is the total cost incurred during the period to acquire
property, plant and equipment and intangible assets other than goodwill and any other assets purchased through the
acquisition of a business.
ANNUAL REPORT 2021
59
Notes to the Financial Statements
CONTINUED
2. Segmental information analysis CONTINUED
Ferry
Services
(Portsmouth)
£’000
Art Logistics
and Storage
(UK)
£’000
Unallocated
£’000
2021
Revenue
Segment operating profit before tax &
non-trading items
Non-trading items
Profit / (loss) before net financing costs
Finance income
Finance expense
Net finance expense
General
Trading
(Falkland
Islands)
£’000
20,874
1,852
500
2,352
-
(68)
(68)
1,445
(856)
(140)
(996)
-
(329)
(329)
Segment profit / (loss) before tax
2,284
(1,325)
29,498
(8,687)
20,811
11,411
33,648
(10,266)
(22,062)
1,145
11,586
Assets and liabilities
Segment assets
Segment liabilities
Segment net assets
Other segment information
Capital expenditure:
Property, plant and equipment
Investment properties
Computer software
Total Capital expenditure
Capital expenditure: cash
Capital expenditure: non-cash
Total Capital expenditure
Depreciation and amortisation:
Property, plant and equipment
Investment properties
Computer software
Right of use assets
Total Depreciation and Amortisation
Underlying profit / (loss)
Segment operating profit / (loss) before
non-trading items
Interest income
Interest expense
358
702
-
1,060
1,060
-
1,060
787
37
-
29
853
1,852
-
(68)
-
-
-
-
-
-
-
327
-
-
124
451
(856)
-
(329)
Underlying profit / (loss) before tax
1,784
(1,185)
Total
£’000
32,578
1,026
57
1,083
-
(881)
(881)
202
80,196
(41,300)
38,896
898
702
-
1,600
1,211
389
1,600
1,575
37
63
618
2,293
1,026
-
(881)
145
-
-
(82)
(82)
-
-
-
(82)
5,639
(285)
5,354
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
10,259
30
(221)
(191)
-
(484)
(484)
(675)
540
-
-
540
151
389
540
461
-
63
465
989
30
-
(484)
(454)
ANNUAL REPORT 2021 2020
Revenue
Segment operating profit before non-
trading items
Non-trading items
Profit / (loss) before net financing costs
Finance income
Finance expense
Net finance expense
General
Trading
(Falklands)
£’000
21,671
2,121
-
2,121
5
(69)
(64)
Ferry
Services
(Portsmouth)
£’000
Art Logistics
and Storage
(UK)
£’000
Unallocated
£’000
4,125
975
(3,979)
(3,004)
4
(344)
(340)
18,804
1,469
(3,500)
(2,031)
4
(456)
(452)
-
-
-
-
-
-
-
-
Segment profit / (loss) before tax
2,057
(3,344)
(2,483)
Assets and liabilities
Segment assets
Segment liabilities
Segment net assets
Other segment information
Capital expenditure:
Property, plant and equipment
Investment properties
Computer software
Total Capital expenditure
Capital expenditure: cash
Capital expenditure: non-cash
Total Capital expenditure
Depreciation and amortisation:
Property, plant and equipment
Investment properties
Computer software
Total Depreciation and Amortisation
Impairment of goodwill
Total Depreciation & impairment
Underlying profit
Segment operating profit before
non-trading items
Interest income
Interest expense
Underlying profit before tax
28,492
(9,208)
19,284
10,983
(8,834)
2,149
32,462
(20,331)
12,131
5,796
(568)
5,228
1,343
1,351
-
2,694
2,685
9
2,694
564
132
-
696
-
696
65
-
-
65
65
-
65
459
-
-
459
3,979
4,438
1,363
-
27
1,390
638
752
1,390
840
-
68
908
3,500
4,408
2,121
975
1,469
5
(69)
2,057
4
(344)
635
4
(456)
1,017
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
60
Total
£’000
44,600
4,565
(7,479)
(2,914)
13
(869)
(856)
(3,770)
77,733
(38,941)
38,792
2,771
1,351
27
4,149
3,388
761
4,149
1,863
132
68
2,063
7,479
9,542
4,565
13
(869)
3,709
ANNUAL REPORT 2021 61
Notes to the Financial Statements
CONTINUED
2. Segmental information analysis CONTINUED
The £5,639,000 (2020: £5,796,000) unallocated assets above include £5,462,000 (2020: £5,766,000) of cash and
£177,000 (2020: £30,000) of prepayments and other debtors held in FIH group plc.
The £285,000 (2020: £568,000) unallocated liabilities above consist of accruals and tax balances held within FIH group plc.
3. Geographical analysis
The tables below analyse revenue and other information by geography:
2021
Revenue (by source)
Assets and Liabilities:
United
Kingdom
£’000
Falkland
Islands
£’000
Total
£’000
11,704
20,874
32,578
Non-current segment assets, excluding deferred tax
36,852
15,752
52,604
Capital expenditure: cash
151
1,060
1,211
2020
Revenue (by source)
Assets and Liabilities:
United
Kingdom
£’000
Falkland
Islands
£’000
Total
£’000
22,929
21,671
44,600
Non-current segment assets, excluding deferred tax
37,826
15,456
53,282
Capital expenditure: cash
703
2,685
3,388
ANNUAL REPORT 2021 62
Total
Revenue
£’000
9,701
2,756
5,345
2,253
819
Sale of goods,
recognised
immediately
on sale
£’000
Rendering
of services:
recognised
immediately
£’000
Rendering
of services,
provided over
a period of
time
£’000
9,701
2,016
2,069
-
-
13,786
-
-
-
419
-
1,414
-
1,833
1,445
-
13,786
3,278
10,014
2,187
3,141
-
-
15,342
-
-
-
631
-
2,755
-
3,386
4,125
-
15,342
7,511
-
321
3,276
839
819
-
369
1,874
31
669
5,255
20,874
-
10,259
15,514
1,445
10,259
32,578
Total
Revenue
£’000
10,014
3,187
5,015
2,786
669
2,943
21,671
-
18,804
21,747
4,125
18,804
44,600
Sale of goods,
recognised
immediately
on sale
£’000
Rendering
of services:
recognised
immediately
£’000
Rendering
of services,
provided over
a period of
time
£’000
4. Revenue
2021
Falkland Islands
Retail sales
Automotive sales
Construction
Support Services
Rental property income
FIC (Falkland Islands)
PHFC (Portsmouth)
Art logistics and storage
Total Revenue
2020
Falkland Islands
Retail sales
Automotive sales
Construction
Support Services
Rental property income
FIC (Falkland Islands)
PHFC (Portsmouth)
Art logistics and storage
Total Revenue
ANNUAL REPORT 2021 63
Notes to the Financial Statements
CONTINUED
5. Non-trading items
Profit/ (loss) before tax as reported
Non-trading items:
Restructuring costs
Other credits
Impairment of goodwill
Underlying profit before tax
2021
£’000
202
443
(500)
-
145
2020
£’000
(3,770)
-
-
7,479
3,709
Restructuring costs comprise people related costs including redundancy. Other credits relate to derecognition of historic
liabilities, which were previously included within accruals, on the basis that the amounts are no longer enforceable.
Tax on non-trading items
There has not been any tax impact from the impairment of goodwill in the prior year.
6. Expenses and auditor’s remuneration
The following expenses / (income) have been included in the profit and loss.
Direct operating expenses of rental properties
Depreciation
Amortisation of computer software
Foreign currency loss / (gain)
Impairment of goodwill
Expected credit loss on trade and other receivables
Cost of inventories recognised as an expense
COVID-19 government funding
Auditor’s remuneration
Audit of these financial statements
Audit of subsidiaries' financial statements pursuant to legislation
Tax advisory services
Other assurance services
Total auditor's remuneration
Group
Company
2021
£’000
393
2,230
63
3
-
39
10,226
(1,760)
2020
£’000
380
1,995
68
(5)
7,479
31
12,608
-
2021
£’000
-
204
-
-
-
-
-
-
2021
£’000
41
129
-
5
175
2020
£’000
-
204
-
-
-
-
-
-
2020
£’000
40
110
-
-
150
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.
ANNUAL REPORT 2021
64
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:
PHFC
Falkland Islands:
in Stanley
in UK
Art logistics & storage
Head office
Total average staff numbers
Number of employees
Group
Number of employees
Company
2021
31
189
7
99
7
333
2020
2021
2020
35
180
7
140
6
368
-
-
-
-
7
7
-
-
-
-
6
6
The aggregate payroll cost of these persons was as follows:
Wages and salaries
Share-based payments (see note 24)
Social security costs
Contributions to defined contribution plans (see note 23)
Group
Company
2021
2020
11,752
12,771
1
821
498
97
939
527
2021
471
1
59
10
2020
571
48
76
19
Total employment costs
13,072
14,334
541
714
During the year, the Group made use of support schemes from the UK Government and FIG to partially mitigate the loss
of profit caused by the impact of COVID-19. The Coronavirus Job Retention Scheme (“CJRS”), the UK Government’s
support measure relating to employment, and FIG’s equivalent, the Job Retention (Furlough) Scheme (“JRFS”) provided
grants to cover the cost of employees who were furloughed, with payments available of up to 80% of wages, subject to
a maximum of £2,500 per employee per month. Amounts received under these schemes are classified as government
grants and are accounted for in accordance with IAS 20 Government Grants. Such grants totalling £1,760,000 for the year
ended 31 March 2021 (2020: £nil), are recognised in the Income Statement in the period in which the associated costs for
which the grants are intended to compensate are incurred, and are presented as an offset against those associated costs.
Details of audited directors’ remuneration are provided in the Directors’ Report, which forms part of these audited financial
statements, under the heading ‘Details of Directors’ Remuneration and Emoluments’.
ANNUAL REPORT 2021
65
Notes to the Financial Statements
CONTINUED
8. Finance income and expense
Bank interest receivable
Total financial income
Interest payable on bank loans
Net interest cost on the FIC defined benefit pension scheme liability
Lease liabilities finance charge
Total finance expense
9. Taxation
Recognised in the income statement
Current tax (credit)/expense
Current year
Adjustments for prior years
Current (credit)/expense
Deferred tax expense
Origination and reversal of temporary differences
Change in UK tax rate to 19%
Adjustments for prior years
Deferred tax expense (see note 17)
Total tax expense
Reconciliation of the effective tax rate
Profit / (loss) on ordinary activities before tax
Tax using the UK corporation tax rate of 19% (2020: 19%)
Expenses not deductible for tax purposes
Impairment of goodwill not deductible for tax purposes
Effect of increase in rate of deferred tax
Effect of higher tax rate overseas
Adjustments to tax charge in respect of previous periods
Total tax expense
2021
-
-
2021
£’000
(469)
(64)
(348)
(881)
2020
13
13
2020
£’000
(464)
(65)
(340)
(869)
2021
£’000
2020
£’000
(52)
-
(52)
258
(12)
(1)
245
193
2021
£’000
202
39
56
-
-
99
(1)
193
480
13
493
376
144
(55)
465
958
2020
£’000
(3,770)
(716)
85
1,421
199
11
(42)
958
ANNUAL REPORT 2021 66
Tax recognised directly in equity and other comprehensive income
Deferred tax on effective portion of changes in fair value
Movement on deferred tax asset relating to the pension scheme
Deferred tax on other financial liabilities
Deferred tax (credit) / expense recognised directly in other comprehensive income
Deferred tax on IFRS 16 transitional adjustment
Deferred tax (credit) / expense recognised directly in equity
2021
£’000
58
(71)
(30)
(43)
-
(43)
2020
£’000
102
(35)
-
67
34
101
In the UK, deferred tax has been calculated at 19% (2020: 19%). The deferred tax assets and liabilities in FIC have been
calculated at the Falkland Islands’ tax rate of 26%.
10. Earnings per share
The calculation of basic earnings per share is based on profits on ordinary activities after taxation, and the weighted
average number of shares in issue in the period, excluding shares held under the Employee Share Ownership Plan (‘ESOP’)
(see note 25).
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
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 options
Diluted weighted average number of shares
Basic earnings per share
Diluted earnings per share
2021
£’000
9
2020
£’000
(4,728)
2021
Number
2020
Number
12,470,827
12,504,000
-
(1,633)
12,470,827
12,502,367
281,490
181,663
12,752,317
12,684,030
2021
0.1p
0.1p
2020
-37.8p
-37.8p
The diluted earnings per share for the year ended 31 March 2020 are the same as the basic earnings, as IAS 33 states that
potential shares shall only be treated as dilutive when, and only when, their conversion to ordinary shares would decrease
earnings per share or increase loss per share from continuing operations.
To provide a comparison of earnings per share on underlying performance, the calculation below sets out basic and diluted
earnings per share based on underlying profits.
ANNUAL REPORT 2021 67
Notes to the Financial Statements
CONTINUED
10. Earnings per share CONTINUED
Earnings per share on underlying profit
Underlying profit before tax (see note 5)
Underlying taxation
Underlying (loss)/profit after tax
Effective tax rate
2021
£’000
145
(147)
(2)
2020
£’000
3,709
(958)
2,751
-101.4%
25.8%
Weighted average number of shares in issue excluding the ESOP (from above)
12,470,827
12,502,367
Diluted weighted average number of shares (from above)
12,752,317
12,684,030
Basic earnings per share on underlying profit
Diluted earnings per share on underlying profit
0.0p
0.0p
22.0p
21.7p
11. Intangible assets
Cost:
At 1 Apr 2019
Additions
At 31 March 2020
Additions
At 31 March 2021
Accumulated amortisation:
At 1 Apr 2019
Amortisation
Impairment
At 31 March 2020
Amortisation
Impairment
At 31 March 2021
Net book value:
At 1 April 2019
At 31 March 2020
At 31 March 2021
Computer
Software
£’000
Brand name
£’000
Goodwill
£’000
Total
£’000
537
27
564
-
564
402
68
-
470
63
-
533
135
94
31
2,823
-
2,823
-
2,823
785
-
-
785
-
-
11,576
14,936
-
27
11,576
14,963
-
-
11,576
14,963
1,983
-
7,479
9,462
-
-
3,170
68
7,479
10,717
63
-
785
9,462
10,780
2,038
2,038
2,038
9,593
2,114
2,114
11,766
4,246
4,183
Amortisation and impairment charges are recognised in operating expenses in the income statement. The Momart brand
name has a carrying value of £2,038,000 and is considered to be of future economic value to the Group with an estimated
indefinite useful economic life. It is reviewed annually for impairment as part of the art logistics and storage review.
ANNUAL REPORT 2021 68
Goodwill
Goodwill is allocated to the Group’s Cash Generating Units (CGUs) which principally comprise its business segments.
A segment level summary of goodwill for each cash-generating-unit is shown below:
Goodwill at 1 April 2019
Goodwill at 31 March 2020
Goodwill at 31 March 2021
Impairment
Art Logistics
and Storage
£’000
5,577
2,077
2,077
Ferry
Services
£’000
3,979
-
-
Falkland
Islands
£’000
37
37
37
Total
£’000
9,593
2,114
2,114
The Group tests material goodwill annually for impairment or more frequently if there are indications that goodwill and/or
indefinite life assets might be impaired. An impairment test is a comparison of the carrying value of the assets of a CGU,
based on a value-in-use calculation, to their recoverable amounts. Goodwill is impaired when the recoverable amount is
less than the carrying value.
During the year ended 31 March 2020, following the review for impairment, the goodwill of the Ferry Services CGU was
deemed to be fully impaired as passenger numbers had fallen significantly due to COVID-19 and working practices, and
therefore commuter transport services, were likely to be affected beyond the short term. The Art Logistics and Storage
CGU also impaired its goodwill by £3.5 million as revenue had fallen significantly due to COVID-19 and art logistics services
were likely to be affected beyond the short term. Following these impairments in the prior year, the only material goodwill
and indefinite life assets remaining at 31 March 2021 relate to the Art Logistics and Storage CGU. No further impairment
charge was deemed necessary following the review for impairment in the year ended 31 March 2021.
Given the continued uncertainty as a result of COVID-19 and the possible longer-term impact on passenger numbers
impacting the Ferry Services CGU, the directors consider that there is a potential indicator of impairment of right to use
assets and ships associated with this CGU (see note 12). An impairment review has therefore been performed for the
Ferry Services CGU in addition to the Art Logistics and Storage CGU and no impairment charge was deemed necessary.
As part of testing goodwill and indefinite life intangibles for impairment, forecast operating cash flows for the five years
ending 31 March 2022-2026 and then to perpetuity have been used to assess the value-in-use of the Art Logistics and
Storage CGU. For testing right to use assets and ships associated with the Ferry Services CGU, a forty-year model has been
used, including forecast operating cash flows for the four years ending 31 March 2022-2025, with high level assumptions
applied after the fourth year. 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 forty-year model has been considered to be
appropriate for the Ferry Services CGU, as this is the life of the lease associated with the right to use asset.
A number of key assumptions are used for impairment testing. These key assumptions are made by management reflecting
past experience combined with their knowledge as to future performance and relevant external sources of information.
Discount rates
Within impairment testing models, the cash flows of the Art Logistics and Storage CGU have been discounted using a
pre-tax discount rate of 14.2% (2020: 12.9%), and the cash flows of the Ferry Services CGU have been discounted using
a pre-tax discount rate of 9.7% (2020: 8.5%). Management have determined that each rate is appropriate as the risk
adjustment applied within the discount rate reflects the risks inherent to each CGU, based on the industry and geographical
location it is based within.
ANNUAL REPORT 2021 69
Notes to the Financial Statements
CONTINUED
11. Intangible assets CONTINUED
Long term growth rates
Long term growth rates of 2% (2020: 2%) have been used for the Art Logistics and Storage CGU as part of the impairment
testing model. As noted above, a forty-year model has been used to assess the Ferry Services CGU. For the period
following the five year forecast, high level assumptions based on historic experience have been applied, including a gradual
decline in passenger numbers which is mitigated by fare increases.
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 materially impact the forecast cash flows. However, for the Ferry Services CGU, the directors do
not consider that there are different reasonably possible outcomes that would lead to a material impairment.
Assumptions specific to Ferry Services CGU
As a result of the expected impact on commuter services arising from the current COVID-19 pandemic, in the medium to
long term, a slight decrease has been forecast in cash flows year on year compared to pre-pandemic levels, in line with
expected declines in passenger numbers. A slow recovery is expected in the medium term, but the impact of COVID-19
is likely to continue in the long-term, with increased numbers of employees working from home, reducing the number of
commuters using the ferry which is the most significant factor affecting future cash flows.
While the directors believe in the assumptions used in this impairment test, there remains some uncertainty around the
timescale of recovery from the current COVID-19 pandemic, and accordingly a scenario was performed which assessed
a 10% reduction in business cash flows as a result of suppressed passenger numbers in years 3 to 5 as there is a risk
that the impact of COVID-19 may continue in the medium to long-term, with higher than expected numbers of employees
working from home, reducing the number of commuters using the ferry. This scenario has been combined with a reduction
in forecast fare increases of 1.5% per annum. Should these circumstances materialise, no impairment would be required.
An additional scenario was performed which increased the pre-tax discount rate by 1.0% and should this materialise,
no further impairment would be required.
The key assumptions made in the estimation of future cash flows of the Ferry Services CGU relate to passenger numbers,
the average fare yield per passenger and operating costs.
Assumptions specific to Arts Logistics and Storage CGU
Cash flows were projected based on approved budgets and plans over the forecast period, with a long-term growth rate
of 2%. The key assumptions made in the estimation of future cash flows are in relation to future revenue and the extent
to which income will recover from the effects of the pandemic, and the timing of that recovery. The base case forecasts
assume that the business will recover to pre-pandemic levels within two years.
While the directors believe in the assumptions used in this impairment test, there remains some uncertainty around the
timescale of recovery from the current COVID-19 pandemic, and accordingly a scenario was performed which assessed a
10% reduction in profits in years 3 to 5 as it is possible that revenues of the CGU could be impacted into the medium-term
by higher than anticipated cuts in government spending, resulting in less frequent, less complex exhibitions. Should this
materialise, no impairment would be required. An additional scenario was performed which increased the pre-tax discount
rate by 0.5% and should this materialise, no impairment would be required. A sensitivity has also been modelled which
assumes a reduction in profits over the five year forecast period to reflect the scenario that the business does not return to
pre-pandemic levels of trading until the end of this period, combined with a reduction in forecast margins of 1% to reflect
the fact that cost savings currently achieved may not be sustainable. Whilst the directors consider this combined sensitivity
to be unlikely, in the event of this scenario an impairment of goodwill of £300,000 would result.
ANNUAL REPORT 2021 70
12. Property, plant and equipment
Right
to use
assets
£’000
Freehold
Land &
buildings
£’000
Group
Long
leasehold
Land and
buildings
£’000
Vehicles,
plant and
equipment
£’000
Ships
£’000
Total
£’000
-
27,574
7,831
6,859
9,654
51,918
3,537
1,217
-
5,661
-
-
124
-
-
-
10,415
27,698
389
(28)
-
(50)
-
81
-
(5,089)
(112)
2,711
204
-
-
18
-
-
-
-
1,331
(196)
(572)
(106)
3,537
2,771
(196)
-
(218)
6,877
10,111
57,812
-
-
305
(830)
898
(908)
Cost:
At 1 April 2019
IFRS 16 transition
Additions in year
Transfer to stock
Reclassification of leased assets
Disposals
At 31 March 2020
Additions in year
Disposals
At 31 March 2021
10,776
27,648
2,915
6,877
9,586
57,802
Accumulated depreciation:
At 1 April 2019
IFRS 16 transition
Charge for the year
Transfer to stock
Disposals
At 31 March 2020
Charge for the year
Disposals
Reclassification of leased assets
1,075
-
2,826
1,703
2,304
6,421
13,254
1,230
527
-
-
-
506
-
-
-
2,832
3,332
618
(22)
388
-
-
71
-
(906)
(51)
817
236
-
-
244
-
-
-
-
515
(107)
(169)
(89)
1,230
1,863
(107)
-
(140)
2,548
6,571
16,100
242
-
709
(830)
2,193
(852)
At 31 March 2021
3,428
3,720
1,053
2,790
6,450
17,441
Net book value:
At 1 April 2019
At 31 March 2020
At 31 March 2021
-
24,748
7,583
7,348
24,366
23,928
6,128
1,894
1,862
4,555
4,329
4,087
3,233
3,540
3,136
38,664
41,712
40,361
ANNUAL REPORT 2021 71
Notes to the Financial Statements
CONTINUED
12. Property, plant and equipment CONTINUED
Right to use assets
Group
Short leasehold
lease
£’000
Long leasehold
Pontoon lease
£’000
Momart Trucks
£’000
Office
Equipment
£’000
-
2,384
752
-
3,136
-
-
-
1,144
-
5,089
6,233
-
-
3,136
6,233
-
1,067
299
-
-
161
124
906
1,366
1,191
303
-
124
-
1,669
1,315
1,770
1,467
5,042
4,918
-
-
456
572
1,028
389
(28)
1,389
-
-
100
169
269
182
(22)
429
759
960
-
9
9
-
18
-
-
18
-
2
4
-
6
9
-
15
12
3
Total
£’000
-
3,537
1,217
5,661
10,415
389
(28)
10,776
-
1,230
527
1,075
2,832
618
(22)
3,428
7,583
7,348
Cost:
At 1 April 2019
IFRS 16 transition
Additions in year
Reclassification from property,
plant and equipment
At 31 March 2020
Additions in year
Disposals
At 31 March 2021
Accumulated depreciation:
At 1 April 2019
IFRS 16 transition
Charge for the year
Reclassification from property,
plant and equipment
At 31 March 2020
Charge for the year
Disposals
At 31 March 2021
Net book value
At 31 March 2020
At 31 March 2021
During the year to 31 March 2021, Momart acquired two trucks financed by two hire purchase loans totalling £389,000.
The Company has no tangible fixed assets, other than the investment property purchased in December 2018, which is
included within Investment Property (note 13).
ANNUAL REPORT 2021 72
Residential and
commercial
property
£’000
Group
Freehold land
£’000
5,345
1,330
6,675
653
7,328
867
132
999
37
1,036
4,478
5,676
6,292
761
21
782
49
831
-
-
-
-
-
761
782
831
Total
£’000
6,106
1,351
7,457
702
8,159
867
132
999
37
1,036
5,239
6,458
7,123
13. Investment properties
Cost:
At 1 April 2019
Additions in year
At 31 March 2020
Additions in year
At 31 March 2021
Accumulated depreciation:
At 1 April 2019
Charge for the year
At 31 March 2020
Charge for the year
At 31 March 2021
Net book value:
At 1 April 2019
At 31 March 2020
At 31 March 2021
The investment properties, held at cost, comprise land, plus residential and commercial property held for rental in the
Falkland Islands.
ANNUAL REPORT 2021 73
Notes to the Financial Statements
CONTINUED
13. Investment properties CONTINUED
Estimated Fair Value
Estimated fair value:
Freehold land
Properties available for rent
Properties under construction
At 31 March
Uplift on net book value:
Freehold land
Properties available for rent
Properties under construction
At 31 March
Number of rental properties
Available for rent
Under construction
Undeveloped freehold land (acres)
Group
2021
£’000
2,177
8,470
472
11,119
1,346
2,650
-
3,996
75
7
700
2020
£’000
2,128
7,251
624
10,003
1,346
2,199
-
3,545
65
10
700
At 31 March 2021, the fair value of this property portfolio was estimated at £11.1 million (2020: £10.0 million) and included
£2.2 million of land, £8.5 million of properties available for rent and £0.5 million of properties under construction. A level 3
valuation technique has been applied, using a market approach to value these properties; the properties have been valued
based on their expected market value after review by the directors of FIC who are resident in the Falkland Islands and who
are considered to have the relevant knowledge and experience to undertake the valuation after consideration of current
market prices in the Falkland Islands.
Rental income
During the year to 31 March 2021, the Group received rental income of £819,000 (2020: £669,000) from its investment properties.
Assets under construction
At 31 March 2021, 7 investment properties were under construction (2020: 10) with a total cost to date of £472,000
(2020: £624,000).
Company
Cost:
At 1 April 2019 and 31 March 20
Additions in year
At 31 March 2020 and 31 March 2021
Accumulated depreciation:
At 1 April 2019
Charge for the year
At 31 March 2020
Charge for the year
At 31 March 2021
Net book value:
At 1 April 2019
At 31 March 2020
At 31 March 2021
Commercial property
£’000
19,642
-
19,642
60
209
269
209
478
19,582
19,373
19,164
ANNUAL REPORT 2021 74
The investment property in the Company consists of the five warehouses leased to Momart, the Group’s art handling
subsidiary which were purchased in December 2018. The directors have reviewed the market value of the Leyton
warehouses. Recent approaches from potential acquirors indicate that the market value of the site has increased and the
directors are therefore satisfied that there is no indication of impairment.
14. Investment in subsidiaries
Country of
incorporation
Class of shares held
Ownership at
31 March 2021
Ownership at
31 March 2020
The Falkland Islands Company Limited (1)
UK
Ordinary shares of £1
The Falkland Islands Trading Company Limited (1)
UK
Ordinary shares of £1
Falkland Islands Shipping Limited (2) (6)
Falkland Islands
Ordinary shares of £1
Erebus Limited (2)(6)(7)
Falkland Islands
Ordinary shares of £1
Preference shares of £10
South Atlantic Support Services Limited (3) (6) (7)
Falkland Islands
Ordinary shares of £1
Paget Limited (2) (6) (7)
Falkland Islands
Ordinary shares of £1
Preference shares of £1
The Portsmouth Harbour Ferry Company Limited (4)
Portsea Harbour Company Limited (4) (6)
Clarence Marine Engineering Limited (4) (6)
Gosport Ferry Limited (4) (6)
Momart International Limited (5)
Momart Limited (5) (6)
Dadart Limited (5) (6) (7)
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
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%
100%
100%
100%
100%
(1) The registered office for these companies is Kenburgh Court, 133-137 South Street, Bishop’s Stortford,
Hertfordshire CM23 3HX.
(2) The registered office for these companies is 5 Crozier Place, Stanley, Falkland Islands FIQQ 1ZZ.
(3) South Atlantic Support Services Limited’s registered office is 56 John Street, Stanley, Falkland Islands FIQQ 1ZZ
(4) The registered office for these companies is South Street, Gosport, Hampshire, PO12 1EP.
(5) The registered office for these companies is Exchange Tower, 6th Floor, 2 Harbour Exchange Square, London E14 9GE.
(6) These investments are not held by the Company but are indirect investments held through a subsidiary of the Company.
(7) These investments have all been dormant for the current and prior year.
At 1 April
Impairment
Share based payments charge capitalised into subsidiaries
At 31 March
Company
2021
£’000
23,989
-
(19)
23,970
2020
£’000
27,653
(3,713)
49
23,989
The directors note that the net assets of the Company balance sheet of £39.2 million exceed the market capitalisation
of the Group which was circa £25.7 million at the balance sheet date and that this is a potential indicator of impairment
of the investments in subsidiaries. An impairment review has therefore been performed as at 31 March 2021 using
assumptions consistent with those used for testing impairment of goodwill, indefinite life assets, right to use assets and
ships as described in note 11. In making their assessment of impairment of investments in subsidiaries, the directors have
also considered the cash flows associated with the Falkland Islands CGU, using forecast operating cash flows for the two
years ending 31 March 2022-2023 and then to perpetuity with a growth rate of 2%. No scenarios have been identified
ANNUAL REPORT 2021 75
Notes to the Financial Statements
CONTINUED
14. Investment in subsidiaries CONTINUED
in the current year leading to reasonably possible changes in estimates that would lead to a material impairment of the
Company’s investments in subsidiaries at 31 March 2021. In the prior year, the Company’s investment in Momart was
impaired by £3,713,000.
15. Investment in Joint Ventures
The Group has one joint venture (South Atlantic Construction Company Limited, “SAtCO”), which was set up in June
2012 in the Falkland Islands, with Trant Construction to bid for the larger infrastructure contracts which were expected to
be generated by oil activity. Both Trant Construction and the FIC contributed £50,000 of ordinary share capital. SAtCO is
registered and operates in the Falkland Islands. The net assets of SAtCO are shown below:
Joint Venture’s balance sheet
Current assets
Liabilities due in less than one year
Net assets of SAtCO
Group share of net assets
2021
£’000
519
(1)
518
259
2020
£’000
519
(1)
518
259
There were no recognised gains or losses for the year ended 31 March 2021 (2020: none).
The current assets balances above include £17,000 of cash (2020: £17,000), £4,000 of other debtors (2020: £4,000) and
£498,000 (2020: £498,000) of loans due from SAtCO’s parent companies.
SAtCO had no contingent liabilities or capital commitments as at 31 March 2021 or 31 March 2020 and the Group had no
contingent liabilities or commitments in respect of its joint venture at 31 March 2021 or 31 March 2020.
SATCO’s registered office is 56 John Street, Stanley, Falkland Islands FIQQ 1ZZ
16. Leases receivable
As lessor, FIC has sold assets to customers as hire purchase leases, the present value of the lease payments, together with
any unguaranteed residual value, is recognised as a receivable, net of allowances for expected bad debt losses.
The difference between the gross receivable and the present value of future lease payments, is recognised as unearned
lease income. Lease income is recognised in interest income over the term of the lease using the sum of digits method so
as to give a constant rate of return on the net investment in the leases. Lease receivables are reviewed regularly to identify
any impairment.
Lease receivables arise on the sale of vehicles and customer goods, such as furniture and electrical items, by FIC.
No contingent rents have been recognised as income in the period. No residual values accrue to the benefit of the lessor.
Non-Current: Lease debtors due after more than one year
Current: Lease debtors due within one year
Total lease debtors
Group
2021
£’000
590
558
1,148
2020
£’000
519
596
1,115
ANNUAL REPORT 2021 76
The difference between the gross investment in the hire purchase leases and the present value of future lease payments
due represents unearned lease income of £147,000 (2020: £176,000). The cost of assets acquired for the purpose of
renting out under hire purchase agreements by the Group during the year amounted to £825,000 (2020: £786,000).
The total cash received during the year in respect of hire purchase agreements was £1,163,000 (2020: £1,115,000).
Gross investment in hire purchase leases
Unearned lease income
Bad debt provision against hire purchase leases
Present value of future lease receipts
Present value of future lease payments due:
Within one year
Within two to five years
Group
2021
£’000
1,319
(147)
(24)
1,148
558
590
2020
£’000
1,318
(176)
(27)
1,115
596
519
Present value of future lease receipts
1,148
1,115
17. Deferred tax assets and liabilities
Recognised deferred tax assets and (liabilities)
Property, plant & equipment
Intangible assets
Inventories (unrealised intragroup profits)
Other financial liabilities
Derivative financial liabilities
Share-based payments
Tax losses
Total net deferred tax liabilities
Deferred tax asset arising on the defined benefit pension liabilities
Net tax liabilities
Group
2021
£’000
(2,938)
(387)
62
66
44
40
-
(3,113)
739
(2,374)
2020
£’000
(2,713)
(387)
32
48
102
41
28
(2,849)
677
(2,172)
ANNUAL REPORT 2021 77
Notes to the Financial Statements
CONTINUED
17. Deferred tax assets and liabilities CONTINUED
The deferred tax asset on the defined benefit pension scheme (see note 23) arises under the Falkland Islands tax regime
and has been presented on the face of the consolidated balance sheet as a non-current asset as it is expected to be
realised over a relatively long period of time. All other deferred tax assets are shown net against the non-current deferred
tax liability shown in the balance sheet.
Other temporary differences
Net tax asset
Movement in deferred tax assets / (liabilities) in the year:
Property, plant & equipment
Intangible assets
Inventories (unrealised intragroup profits)
Other financial liabilities
Derivative financial liabilities
Share-based payments
Tax losses
Pension
1 April 2020
£’000
(2,713)
(387)
32
48
102
41
28
677
Company
2021
£’000
44
44
2020
£’000
121
121
Group
Recognised in
income
£’000
Recognised in
equity
£’000
31 March 2021
£’000
(225)
-
30
(12)
-
(1)
(28)
(9)
-
-
-
30
(58)
-
-
71
43
(2,938)
(387)
62
66
44
40
-
739
(2,374)
Deferred tax movements
(2,172)
(245)
Unrecognised deferred tax assets
Deferred tax assets of £44,000 (2020: £121,000) in respect of capital losses have not been recognised as it is not
considered probable that there will be suitable chargeable gains in the foreseeable future from which the underlying capital
losses will reverse.
Movement in deferred tax asset in the year:
Derivative financial liabilities
Other temporary differences
Deferred tax asset movements
Company
1 April 2020
£’000
Recognised in
income
£’000
Recognised in
equity
£’000
31 March 2021
£’000
102
19
121
-
(19)
(19)
(58)
-
(58)
44
-
44
ANNUAL REPORT 2021 78
Group
Recognised in
income
£’000
Recognised in
equity
£’000
31 March 2020
£’000
(351)
(41)
(11)
22
-
15
(90)
(9)
34
(2,713)
-
-
-
102
-
-
(35)
101
(387)
32
48
102
41
28
677
(2,172)
Movement in deferred tax assets / (liabilities) in the prior year:
Property, plant & equipment
Intangible assets
Inventories
Other financial liabilities
Derivative financial liabilities
Share-based payments
Tax losses
Pension
1 April 2019
£’000
(2,396)
(346)
43
26
-
26
118
721
Deferred tax movements
(1,808)
(465)
Movement in deferred tax asset in the prior year:
Other temporary differences
Deferred tax asset movements
Company
1 April 2019
£’000
Recognised in
income
£’000
Recognised in
equity
£’000
31 March 2020
£’000
4
4
15
15
102
102
121
121
A reduction in the UK corporation tax rate from 19% to 17% (effective 1 April 2020) was substantively enacted on
6 September 2016. The March 2020 Budget announced that a rate of 19% would continue to apply with effect from 1 April
2020, and this change was substantively enacted on 17 March 2020. The UK deferred tax liability as at 31 March 2021
was calculated at 19%.
An increase in the UK corporation rate from 19% to 25% (effective 1 April 2023) was substantively enacted on 24 May
2021. This will increase the future current tax charge for the Group and the Company accordingly and increase the deferred
tax liability of the Group by £983,000 and the deferred tax asset of the Company by £14,000.
18. Inventories
Work in progress
Goods in transit
Goods held for resale
Total Inventories
Group
2021
£’000
691
972
4,208
5,871
2020
£’000
697
1,228
3,449
5,374
Goods in transit are retail goods in transit to the Falkland Islands. The Company has no inventories.
ANNUAL REPORT 2021 79
Notes to the Financial Statements
CONTINUED
19. Trade and other receivables
Non-Current
Rental deposits
Amount owed by subsidiary undertakings
Total trade and other receivables
Current
Trade and other receivables
Contract asset, long term housing project
Prepayments
Accrued income
Total trade and other receivables
Group
Company
2021
£’000
2020
£’000
88
-
88
88
-
88
2021
£’000
-
10,207
10,207
2020
£’000
-
10,207
10,207
Group
Company
2021
£’000
3,472
-
1,087
1,309
5,868
2020
£’000
6,284
73
1,123
1,216
8,696
2021
£’000
2020
£’000
-
-
118
-
118
3
-
27
-
30
Amounts owed by subsidiary undertakings to the company are interest free with no fixed repayment date.
The accrued income primarily relates to construction contracts where the work has been completed but had not been
billed at the balance sheet date. The accrued income is transferred to receivables when the right to consideration becomes
unconditional. This usually occurs when final customer acceptance is received and the amounts are invoiced by the Group.
No allowance for expected credit losses was recognised in respect of accrued income as the impact was assessed as
being immaterial. The only significant changes in the accrued income balance during the year related to the recognition of
revenue for work performed and the transfer of billed amounts to trade receivables.
20. Cash and cash equivalents
Cash and other cash equivalents in the balance sheet
Group
Company
2021
£’000
14,556
2020
£’000
9,108
2021
£’000
5,462
2020
£’000
5,766
ANNUAL REPORT 2021 80
Year ended 31 March
Net increase / (decrease) in cash and cash equivalents
Exchange (losses) / gains
Net increase / (decrease) in cash and cash equivalents after exchange gains
Bank loan draw downs
Bank loan repayments
1 April 2019: lease liabilities on IFRS16 application
Lease liabilities drawdown: non-cash
Lease liabilities drawdown: cash
Lease liabilities repayments
Increase in interesting bearing loans and borrowings
Net increase / (decrease) in debt
Net debt brought forward
Net debt at 31 March
Net debt
Cash balances
Group
Company
2021
£’000
5,451
(3)
5,448
(5,000)
624
-
-
(389)
649
(4,116)
1,332
2020
£’000
2,870
54
2,924
(13,875)
10,955
(2,494)
(761)
(534)
395
(6,314)
(3,390)
(14,999)
(11,609)
(13,667)
(14,999)
2021
£’000
(304)
-
(304)
-
262
-
-
-
-
262
(42)
(7,684)
(7,726)
2020
£’000
3,998
-
3,998
(13,875)
10,425
-
-
-
-
(3,450)
548
(8,232)
(7,684)
Group
Company
2021
£’000
14,556
2020
£’000
9,108
2021
£’000
5,462
2020
£’000
5,766
less: Total interest-bearing loans and borrowings
(28,223)
(24,107)
(13,188)
(13,450)
Net debt
(13,667)
(14,999)
(7,726)
(7,684)
21. Interest-bearing loans and borrowings
This note provides information about the contractual terms of the interest-bearing loans and borrowings owed by the
Group, which are stated at amortised cost. For more information regarding the maturity of the interest-bearing loans and
lease liabilities and about the Group’s and the Company’s exposure to interest rate and foreign currency risk, see note 26.
Non-current liabilities
Secured bank loans
Lease liabilities
Total non-current interest-bearing loans and lease liabilities
Current liabilities
Secured bank loans
Lease liabilities
Total current interest-bearing loans and lease liabilities
Total liabilities
Secured bank loans
Lease liabilities
Total interest-bearing loans and lease liabilities
Group
Company
2021
£’000
17,313
7,486
24,799
2,797
627
3,424
20,110
8,113
28,223
2020
£’000
15,127
7,815
22,942
607
558
1,165
15,734
8,373
24,107
2021
£’000
2020
£’000
12,668
13,207
-
-
12,668
13,207
520
-
520
243
-
243
13,188
13,450
-
-
13,188
13,450
ANNUAL REPORT 2021 81
Notes to the Financial Statements
CONTINUED
21. Interest-bearing loans and borrowings CONTINUED
Lease liabilities
Future minimum lease
payments
Interest
Present value of minimum
lease payments
2021
£’000
955
853
2020
£’000
902
871
1,952
2,057
11,727
12,246
15,487
16,076
2021
£’000
337
317
869
5,851
7,374
2020
£’000
344
329
854
6,176
7,703
2021
£’000
618
536
1,083
5,876
8,113
2020
£’000
558
542
1,203
6,070
8,373
Less than one year
Between one and two years
Between two and five years
More than five years
Total
22. Trade and other payables
Current:
Trade payables
Amounts owed to subsidiary undertakings
Loan from joint venture
Other creditors, including taxation and social security
Accruals
Deferred income
Total trade and other payables
Group
Company
2021
£’000
2020
£’000
2021
£’000
2020
£’000
3,025
4,304
-
-
-
249
1,435
1,843
223
6,775
-
249
1,364
2,544
150
8,611
5,960
6,310
-
231
200
-
-
184
525
-
6,391
7,019
Amounts owed to subsidiary undertakings by the company are interest free with no fixed repayment date.
23. Employee benefits: pension plans
Defined contribution schemes
The Group operates defined contribution schemes at PHFC and Momart and current FIC employees are enrolled in the
Falkland Islands Pension Scheme (“FIPS”). The assets of all these schemes are held separately from those of the Group in
independently administered funds.
The pension cost charge for the year represents contributions payable by the Group to the schemes and amounted
to £498,000 (2020: £527,000). The Group anticipates paying contributions amounting to £513,000 during the year
ending 31 March 2022. There were outstanding contributions of £39,000 (2020: £34,000) due to pension schemes at
31 March 2021.
ANNUAL REPORT 2021 82
The Falkland Islands Company Limited Scheme
FIC operates a defined benefit pension scheme for certain former employees. This scheme was closed to new members in
1988 and to further accrual on 31 March 2007. The scheme has no assets and payments to pensioners are made out of
operating cash flows. The expected contributions for the year ended 31 March 2022 are £120,000. During the year ended
31 March 2021, 11 pensioners (2020: 11) received benefits from this scheme, and there are three deferred members at
31 March 2021 (2020: three). Benefits are payable on retirement at the normal retirement age. The weighted average
duration of the expected benefit payments from the Scheme is around 15 years (2020: 15 years).
Actuarial reports for IAS 19 purposes as at 31 March 2021, 2020, 2019, 2018, 2017 and 2016 were prepared by a qualified
independent actuary, Lane Clark and Peacock LLP. The major assumptions used in the valuation were:
Rate of increase in pensions in payment and deferred pensions
Discount rate applied to scheme liabilities
Inflation assumption
Average longevity at age 65 for male current and deferred pensioners (years) at accounting date
Average longevity at age 65 for male current and deferred pensioners (years) 20 years after
accounting date
2021
2.5%
2.0%
3.4%
21.9
23.3
2020
2.2%
2.5%
2.8%
21.7
23.6
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. Assumptions relating to life expectancy have been based
on UK mortality data on the basis that this is the best available data for the Falklands.
Sensitivity Analysis
The calculation of the defined benefit liability is sensitive to the assumptions set out above. The following table summarises
how the impact of the defined benefit liability at 31 March 2021 would have increased / (decreased) as a result of a change
in the respective assumptions by 0.1%.
Discount rate +/- 0.1%
Inflation assumption +/- 0.1%
Life expectancy +/- one year
Effect on obligation
2021
£’000
42
(11)
(140)
2020
£’000
40
(10)
(120)
These sensitivities have been calculated to show the movement in the defined benefit obligation in isolation, and assume
no other changes in market conditions at the accounting date.
ANNUAL REPORT 2021 83
Notes to the Financial Statements
CONTINUED
23. Employee benefits: pension plans CONTINUED
Scheme liabilities
The present values of the scheme’s liabilities, which are derived from cash flow projections over long periods and thus
inherently uncertain, were:
Value at
2017
£’000
2018
£’000
2019
£’000
2020
£’000
2021
£’000
Present value of scheme liabilities
(2,985)
(2,839)
(2,772)
(2,604)
(2,842)
Related deferred tax assets
776
738
721
677
677
Net pension liability
(2,209)
(2,101)
(2,051)
(1,927)
(2,165)
Movement in deficit during the year:
Deficit in scheme at beginning of the year
Pensions paid
Other finance cost
Re-measurement of the defined benefit pension liability
2021
£’000
(2,604)
98
(64)
(272)
2020
£’000
(2,772)
97
(65)
136
Deficit in scheme at the end of the year
(2,842)
(2,604)
Analysis of amounts included in other finance costs:
Interest on pension scheme liabilities
Analysis of amounts recognised in statement of comprehensive income:
Experience gains arising on scheme liabilities
Changes in assumptions underlying the present value of scheme liabilities
Re-measurement of the defined benefit pension liability
24. Employee benefits: share based payments
2021
£’000
64
2021
£’000
(21)
(251)
(272)
2020
£’000
65
2020
£’000
(23)
159
136
The total number of options outstanding at 31 March 2021 is 281,490 including (i) 12,864 nil cost options (2020:
25,352), (ii) 210,474 options (2020: 234,734) granted under the Long Term Incentive Plan and (iii) 58,152 (2020: 96,914)
Share options granted with an exercise price equal to the market price on the date of grant.
ANNUAL REPORT 2021 84
(i)
Nil cost options granted to the Chief Executive:
Share price at
grant date
Fair value
per share
Total fair
value
Earliest Exercise
Latest Exercise
Date of
Issue
15 Jun 18
17 Jun 19
17 Jun 19
Number
5,682
3,591
3,591
pence
352.0
316.0
316.0
pence
338.5
306.0
301.0
Total
12,864
Reconciliation of nil cost options:
Outstanding at the beginning of the year
Options exercised during the year
Options granted during the year
Outstanding at the year end
Vested options exercisable at the year end
Weighted average life of outstanding options (years)
£
19,234
10,988
10,809
41,031
Date
date
15 Jun 21
15 Jun 22
17 Jun 21
17 Jun 23
17 Jun 22
17 Jun 23
Number of options
Number of options
2021
25,352
(12,488)
-
12,864
-
1.8
2020
29,751
(15,171)
10,772
25,352
-
2.5
(ii)
Long term Incentive Plan grants at an exercise price of ten pence to local directors
and executives:
133,052 Long term Incentive Plan grants were issued on 15 July 2020 at an exercise price of ten pence to local directors
and executives, and expire in five years on 4 July 2025. During the year 10,000 of these options were forfeited and 123,052
options remain outstanding at 31 March 2021. None of these grants are exercisable at 31 March 2021.
135,535 Long term Incentive Plan grants were issued on 4 July 2019 at an exercise price of ten pence to local directors
and executives, and expire in five years on 4 July 2024. During the year 48,113 of these options were forfeited and 87,422
options remain outstanding at 31 March 2021. None of these grants are exercisable at 31 March 2021.
There are various performance conditions attached to the Long term Incentive Plan grants. All have a primary performance
condition of the Group share price exceeding a target threshold at the vesting date, and secondary financial performance
conditions specific to the relevant operating segment.
Date of
Issue
4 Jul 19
Number
87,422
14 Jul 20
123,052
Total
210,474
Share price at
Fair value per
Earliest
Exercise Price
grant date
share
Total fair value
Exercise
Latest Exercise
pence
10.0
10.0
Pence
314.0
350.0
Pence
96.8
75.0
£
Date
date
84,624
4 Jul 22
3 Jul 23
92,289
15 Jul 23
14 Jul 24
176,913
ANNUAL REPORT 2021 85
Notes to the Financial Statements
CONTINUED
24. Employee benefits: share based payments CONTINUED
Reconciliation of LTIPs:
Outstanding at the beginning of the year
Options granted during the year
Options forfeited during the year
Options lapsed in year
Outstanding at the year end
Vested options exercisable at the year end
Weighted average life of outstanding options (years)
Number of options
Number of options
2021
234,734
133,052
(102,651)
(54,661)
210,474
-
3.9
2020
104,689
135,535
(5,490)
-
234,734
-
3.7
(iii)
Share options with an exercise price equal to the market price on the date of grant
Date of
Issue
16 Dec 11
Number
53,152
19 Jan 15
5,000
Total
58,152
Exercise
Share price at
Price
pence
267.5
272.5
grant date
pence
261.5
272.5
Fair value
per share
pence
68.0
63.0
Total fair
Earliest
value
£
Exercise
Latest Exercise
Date
date
36,143
16 Dec 14
15 Dec 21
3,150
19 Jan 18
18 Jan 25
39,293
The range of exercise prices of outstanding options at 31 March 2021 is from £2.675 (2020: £2.675) to £2.725
(2020: £3.535).
Reconciliation of options with an exercise price equal to the market price on the date of grant,
including the number and weighted average exercise price:
Outstanding at the beginning of the year
Options exercised during the year
Forfeited during the year
Lapsed during the year
Outstanding at the year end
Vested options exercisable at the year end
Weighted average life of outstanding options (years)
Weighted average
Weighted average
exercise price (£)
Number of options
exercise price (£)
Number of options
2021
2.85
2.68
3.09
3.43
2.68
2.68
1.0
2021
96,914
(3,848)
(27,172)
(7,742)
58,152
58,152
2020
2.94
2.90
2.84
3.90
2.85
2.85
2.2
2020
163,254
(44,550)
(10,790)
(11,000)
96,914
96,914
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 vesting period of the options. All options, other than certain nil cost options granted
to the Chief Executive, are granted with the condition that the employee remains in employment for three years.
All share options are equity settled. Share options issued without share price conditions attached have been valued using
the Black-Scholes model. Share price options issued with share price conditions attached have been valued using a
Monte Carlo simulation model making explicit allowance for share price targets. Inputs into the valuation models include
ANNUAL REPORT 2021 86
the estimated time to maturity, the risk-free rate, expected volatility, and dividend yield. During the year ended 31 March
2021, 12,488 nil cost options were exercised over ordinary shares by the Chief Executive at a gain of £40,586. In the prior
year, 15,171 nil cost options and 44,550 other share options were exercised by the Chief Executive at a gain of £59,523.
Employees around the Group exercised 3,848 other share options in the year (2020: nil) at a gain of £2,375 (2020: £nil).
Total share-based payment expense recognised in the year
25. Capital and reserves
Share capital
In issue at the start of the year
Share capital issued during the year
In issue at the end of the year
Allotted, called up and fully paid Ordinary shares of 10p each
2021
£’000
1
2020
£’000
97
Ordinary Shares
2021
2020
12,504,519
12,502,137
10,466
2,382
12,514,985
12,504,519
2021
£’000
1,251
2020
£’000
1,250
By special resolution at an Annual General Meeting on 9 September 2010 the Company adopted new articles of
association, principally to take account of the various changes in company law brought in by the Companies Act 2006.
As a consequence, the Company no longer has an authorised share capital. The holders of ordinary shares are entitled to
receive dividends as declared from time to time and are entitled to one vote per share at meetings of the Company.
On 9 August 2019, the Employee Share Ownership Plan was terminated. At 31 March 2019 the plan held 7,664 ordinary
shares at a cost of £15,047. In June 2019, the ESOP issued these 7,664 shares in respect of the exercise of nil cost
options which vested in June 2019. The market value of the shares at 31 March 2019 was £21,076.
During the year 10,466 shares were issued following the exercise of share options.
On 1 July 2020, the Chief Executive exercised 12,488 nil cost options, 5,870 options were cancelled to settle the employee
tax liabilities and 6,618 shares were issued as new share capital for which the nominal value was paid in full. A total cash
outflow of £19,000 was paid on the exercise of these options to settle the tax obligations arising.
Also, during the year 3,848 share options issued on 16 December 2011 were exercised by an employee.
For more information on share options see note 24.
Other reserves
The other reserves in the Group of £703,000 at 31 March 2021 comprise £5,389,000 of merger relief which arose on the
1998 Scheme of Arrangement, when the Company issued 1 share for every 300 shares that shareholders had previously
held in Anglo United plc. Immediately following this Scheme of Arrangement, the Company acquired the Falkland Islands’
businesses for £8.0 million and the £4,686,000 of goodwill on this acquisition was written off against this merger relief in
other reserves. In the prior year £459,000 and £1,521,000 was transferred from this reserve to retained earnings as a result
of the impairments booked against goodwill and investments.
ANNUAL REPORT 2021 87
Notes to the Financial Statements
CONTINUED
25. Capital and reserves CONTINUED
Dividends
The following dividends were recognised and paid in the period:
Final: nil pence (2020: 3.35 pence) per qualifying ordinary share
Interim: nil pence (2020: 1.80 pence) per qualifying ordinary share
Total dividends recognised in the period
26. Financial instruments
(i)
Fair values of financial instruments
Trade and other receivables
2021
£’000
-
-
-
2020
£’000
419
225
644
The fair value of trade and other receivables is estimated as the present value of future cash flows, discounted at the market
rate of interest at the balance sheet date if the effect is material.
Trade and other payables
The fair value of trade and other payables is estimated as the present value of future cash flows, discounted at the market
rate of interest at the balance sheet date if the effect is material.
Cash and cash equivalents
The fair value of cash and cash equivalents is estimated as its carrying amount where the cash is repayable on demand.
Where it is not repayable on demand then the fair value is estimated at the present value of future cash flows, discounted
at the market rate of interest at the balance sheet date.
Interest-bearing borrowings
The fair value of interest-bearing borrowings, which after initial recognition is determined for disclosure purposes only, is
calculated based on the present value of future principal and interest cash flows, discounted at the market rate of interest
at the balance sheet date.
Financial Instruments 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.
ANNUAL REPORT 2021 88
The following table shows the carrying value, which management consider to be materially equal to
fair value for each category of financial instrument:
Cash and cash equivalents
Hire purchase debtors
Trade and other receivables
Total assets exposed to credit risk
Interest rate swap liability
Total trade and other payables
Group
Company
2021
£’000
14,556
1,148
3,472
2020
£’000
9,108
1,115
6,284
19,176
16,507
(234)
(537)
2021
£’000
5,462
-
60
5,522
(234)
2020
£’000
5,766
-
3
5,769
(537)
(6,775)
(8,611)
(6,391)
(7,019)
Interest-bearing borrowings at amortised cost
(28,223)
(24,107)
(13,188)
(13,450)
The interest rate swaps have been valued using a level 2 methodology. All other financial instruments are based on
level 3 methodology.
(ii)
Credit Risk
Financial risk management
Credit risk is the risk of financial loss to the Group if a customer or counterparty to a financial instrument fails to meet its
contractual obligations, and arises principally from the Group’s receivables from customers.
Group
The Group’s credit risk is primarily attributable to its trade receivables. The maximum credit exposure of the Group comprises
the amounts presented in the balance sheet, which are stated net of provisions for expected credit losses. Expected
credit loss provisions are based on previous experience and other evidence, including forward-looking macroeconomic
information, indicative of the recoverability of future cash flows. There have been no significant changes in the estimation
techniques or significant assumptions made during the reporting period. Management has credit policies in place to
manage risk on an on-going basis. These include the use of customer specific credit limits.
Company
The majority of the Company’s receivables are with subsidiaries. The Company does not consider these counter-parties to
be a significant credit risk.
Exposure to credit risk
The carrying amount of financial assets represents the maximum credit exposure. Therefore, the maximum exposure to
credit risk at the balance sheet date was £19,176,000 (2020: £16,507,000) being the total trade receivables, hire purchase
debtors and cash and cash equivalents in the balance sheet. The credit risk on cash balances and the interest rate swap
is limited because the counterparties are banks with high credit ratings assigned by international credit-rating agencies.
ANNUAL REPORT 2021 89
Notes to the Financial Statements
CONTINUED
26. Financial instruments CONTINUED
The maximum exposure to credit risk for trade receivables at the balance sheet date by geographic region was:
Group
Falkland Islands
Europe
North America
United Kingdom
Other
Total trade receivables
2021
£’000
712
237
166
2,184
173
3,472
The Company has no trade debtors.
Credit quality of financial assets and expected credit losses
Group
Not past due
Past due 0-30 days
Past due 31-120 days
More than 120 days
Total trade receivables
Hire purchase debtors
Gross
2021
£’000
2,880
447
184
64
3,575
1,172
Impairment
2021
£’000
(6)
(8)
(36)
(53)
(103)
(24)
Net
2021
£’000
2,874
439
148
11
3,472
1,148
Gross
2020
£’000
4,946
922
406
166
6,440
1,142
Impairment
2020
£’000
-
-
(58)
(98)
(156)
(27)
2020
£’000
1,824
786
952
2,472
250
6,284
Net
2020
£’000
4,946
922
348
68
6,284
1,115
The amount of hire purchase debt that is past due is immaterial.
The movement in the allowances for impairment in respect of trade receivables and hire purchase
debtors during the year was:
Group
Balance at 1 April
Impairment loss recognised
Cash received
Utilisation of provision (debts written off)
Balance at 31 March
Provided against hire purchase debtors
Provided against trade and other receivables
Balance at 31 March
2021
£’000
2020
£’000
183
39
-
(95)
127
24
103
127
196
31
-
(44)
183
27
156
183
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 expected credit losses are assessed
as immaterial.
ANNUAL REPORT 2021 90
(iii)
Liquidity risk
Financial risk management
Liquidity risk is the risk that the Group will not be able to meet its financial obligations as they fall due. At the beginning of
the period the Group had outstanding bank loans of £15.7 million. All payments due during the year with respect to these
agreements were met as they fell due.
At the start of the year, the Company had one bank loan of £13.5 million. All payments due during the year with respect to
these agreements were met as they fell due.
The Group manages its cash balances centrally at head office and prepares rolling cash flow forecasts to ensure funds are
available to meet its secured and unsecured commitments as and when they fall due.
Liquidity risk – Group
The following are the contractual maturities of financial liabilities, including estimated interest payments and excluding the
effects of netting agreements:
2021
Financial liabilities
Secured bank loans
Lease liabilities
Trade payables
Interest rate swap liability
Other creditors
Accruals
Contractual cash flows
Carrying
amount
£’000
Total
£’000
1 year or
less
£’000
1 to 2
years
£’000
2 to 5
years
£’000
5 years
and over
£’000
20,110
23,141
3,355
3,926
8,113
3,025
234
1,076
1,843
15,487
3,025
1,044
1,076
1,843
955
3,025
147
1,076
1,843
853
-
141
-
-
4,430
1,952
-
391
-
-
11,430
11,727
-
365
-
-
Total financial liabilities
34,401
45,616
10,401
4,920
6,773
23,522
2020
Financial liabilities
Secured bank loans
Lease liabilities
Trade payables
Interest rate swap liability
Other creditors, including taxation
Accruals
Deferred income
Contractual cash flows
Carrying
amount
£’000
Total
£’000
1 year or
less
£’000
15,734
18,363
8,373
4,304
537
1,364
2,544
150
16,076
4,304
612
1,364
2,544
150
1,021
902
4,304
89
1,364
2,544
150
1 to 2
years
£’000
1,322
871
-
76
-
-
-
2 to 5
years
£’000
5 years
and over
£’000
3,913
2,057
-
207
-
-
-
12,107
12,246
-
240
-
-
-
Total financial liabilities
33,006
43,413
10,374
2,269
6,177
24,593
ANNUAL REPORT 2021 91
Notes to the Financial Statements
CONTINUED
26. 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:
Contractual cash flows
Carrying
amount
£’000
Total
£’000
1 year or
less
£’000
1 to 2
years
£’000
2 to 5
years
£’000
5 years
and over
£’000
2021
Financial liabilities
Secured bank loans
13,188
15,934
Amounts owed to subsidiary undertakings
5,960
Interest rate swap liability
Other creditors
Accruals
234
207
200
5,960
1,044
207
200
914
5,960
147
207
200
899
-
141
-
-
2,777
11,344
-
391
-
-
-
365
-
-
Total financial liabilities
19,789
23,345
7,428
1,040
3,168
11,709
2020
Financial liabilities
Secured bank loans
Contractual cash flows
Carrying
amount
£’000
Total
£’000
1 year or
less
£’000
1 to 2
years
£’000
2 to 5
years
£’000
5 years
and over
£’000
13,450
15,901
595
869
2,552
11,885
Amounts owed to subsidiary undertakings
6,310
6,310
6,310
Interest rate swap liability
Other creditors, including taxation
Accruals
537
184
525
612
184
525
89
184
525
-
76
-
-
-
207
-
-
-
240
-
-
Total financial liabilities
21,006
23,532
7,703
945
2,759
12,125
The 2020 comparative information has been restated to include amounts owed to subsidiary undertakings.
(iv) Market Risk
Financial risk management
Market risk is the risk that changes in market prices, such as foreign exchange rates, interest rates and equity prices will
affect the Group’s income or the value of its holdings of financial instruments.
Market risk – Foreign currency risk
The Group has exposure to foreign currency risk arising from trade and other payables which are denominated in foreign
currencies. The Group is not, however, exposed to any significant transactional foreign currency risk. The Group’s exposure
to foreign currency risk is as follows and is based on carrying amounts for monetary financial instruments.
ANNUAL REPORT 2021 92
Group
2021
Cash and cash equivalents
Trade payables and other payables
Balance sheet exposure
Group
2020
Cash and cash equivalents
Trade payables and other payables
Balance sheet exposure
EUR
£’000
59
(280)
(221)
EUR
£’000
142
(316)
(174)
USD
£’000
40
(144)
(104)
USD
£’000
197
(205)
(8)
Total Balance
sheet
exposure
£’000
109
(455)
(346)
Total Balance
sheet
exposure
£’000
377
(599)
(222)
Other
£’000
10
(31)
(21)
Other
£’000
38
(78)
(40)
GBP
£’000
Total
£’000
14,447
14,556
(6,320)
(6,775)
8,127
7,781
GBP
£’000
8,731
Total
£’000
9,108
(8,012)
(8,611)
719
497
The Company has no exposure to foreign currency risk.
Sensitivity analysis
Group
A 10% weakening of the following currencies against pound sterling at 31 March would have increased/(decreased)
equity and profit or loss by the amounts shown below. This calculation assumes that the change occurred at the balance
sheet date and had been applied to risk exposures existing at that date. This analysis assumes that all other variables,
in particular other exchange rates and interest rates remain constant and is performed on the same basis for year ended
31 March 2020.
EUR
USD
Equity
Profit or Loss
2021
£’000
22
10
2020
£’000
17
1
2021
£’000
22
10
2020
£’000
17
1
A 10% strengthening of the above currencies against pound sterling at 31 March would have the equal but opposite effect
on the above currencies to the amounts shown above, on the basis that all other variables remain constant.
ANNUAL REPORT 2021 93
Notes to the Financial Statements
CONTINUED
26. Financial instruments CONTINUED
Market risk – interest rate risk
At the balance sheet date, the interest rate profile for the Group’s interest-bearing financial instruments was:
Fixed rate financial instruments
Leases receivable
Bank loans
Lease liabilities
Total Fixed rate financial instruments
Variable rate financial instruments
Effect of Interest rate swap liability
Bank loans
Group
Company
2021
£’000
1,148
(607)
(8,113)
(7,572)
2020
£’000
1,115
(701)
(8,373)
(7,959)
2021
£’000
2020
£’000
-
-
-
-
-
-
-
-
(234)
(537)
(234)
(537)
(19,503)
(15,032)
(13,188)
(13,450)
Total Variable rate financial instruments
(19,737)
(15,569)
(13,422)
(13,987)
At 31 March 2021, the Group had six bank loans:
(i)
(ii)
(iii)
(iv)
(v)
(vi)
£13.2 million (2020: £13.4 million) ten-year loan, which was drawn down on 28 June 2019, with interest charged at
LIBOR plus 1.75%;
£1.1 million (2020: £1.3 million) repayable over ten years until May 2025, secured against the newest vessel in
PHFC, with interest charged at 2.6% above the bank of England base rate;
£0.2 million (2020: £0.3 million) repayable over ten years until May 2025, secured against freehold property held in
PHFC, with interest charged at 1.75% above the Bank of England base rate;
£0.6 million (2020: £0.7 million) drawn down by Momart, interest has been fixed on this loan at 2.73% for the full ten
years until December 2026.
£3.5 million three-year CBILS loan, which was drawn down by Momart on 29 June 2020, with interest charged at
the Bank of England base rate plus 3.49%.
£1.5 million three-year CBILS loan, which was drawn down by PHFC 29 June 2020, with interest charged at the
Bank of England base rate plus 3.49%.
The interest payable on the £13.2 million ten-year loan has been hedged by one interest swap, taken out on 4 July
2019 with an initial notional value of £13.875 million, with interest payable at the difference between 1.1766% and the
three-month LIBOR rate. This interest rate swap notional value decreases at £125,000 per quarter over five years until June
2024, and then at £150,000 per quarter for a further five years until June 2029 when the outstanding bullet payment of
£8,525,000 is likely to be refinanced. The notional value of the swap at 31 March 2021 is £13.0 million (2020: £13.5 million)
The interest payable on the loans regarding the vessel and the freehold property in PHFC noted above was hedged by one
interest swap, taken out in October 2015 with an initial notional value of £3.6 million, with interest payable at the difference
between 1.325% and the Bank of England Base rate. This interest rate swap notional value decreased at £36,250 per
month over five years until September 2020 when it expired. The notional value of the swap at 31 March 2021 is £nil (2020:
£1.7 million). Including the swaps, the blended average interest rates on the Group’s bank borrowings is 2.28% (2020:
3.0%) per annum. During the year, an amount of £76,000 has been reclassified to the profit and loss account from the
hedging reserve in relation to the interest swap (2020: £17,000).
The directors consider the CBILS loan to be a financial instrument in scope of IFRS 9. The UK Government guarantees a
portion of the loan and makes a payment to cover the first 12 months of interest payments. The directors consider these
elements to be government grants. However, the Group has elected to present these government grant elements as an
integral part of the financial liability such that the government grant elements are not shown separately either on the balance
sheet or in the income statement.
ANNUAL REPORT 2021 94
Lease liabilities
At 31 March 2021, the Group had the following lease liabilities:
(i)
(ii)
(iii)
£5.8 million lease liabilities payable to Gosport Borough Council; £4.7 million for the Gosport pontoon and £1.1
million for the ground rent on the pontoon. Both of these leases run until June 2061 and finance charges accrue on
these liabilities at a fixed 4.75%.
£1.4 million of property rental leases, including two warehouses rented by Momart, and the Momart and Bishops
Stortford head offices, which run for between four to seven years as at 31 March 2021. The weighted average
interest rate of these rental liabilities is 3.25%.
£0.9 million of lease liabilities taken out to finance trucks by hire purchase leases at Momart, £0.4 million of this
balance arises on two leases drawn down towards the end of the year ended 31 March 2021. The weighted
average interest rate of these truck liabilities is 3.0%.
The total blended average interest rate on the Group’s lease liabilities is 4.3% per annum.
Interest rate sensitivity analysis
An increase of 100 basis points in interest rates at the balance sheet date would have increased / (decreased) equity and
profit or loss by the amounts shown below. This calculation assumes that the change occurred at the balance sheet date
and has been applied to risk exposures existing at that date.
This analysis assumes that all other variables, in particular foreign currency rates, remain constant and considers the
effect of financial instruments with variable interest rates and financial instruments at fair value through profit or loss or
available-for-sale with fixed interest rates. The analysis is performed on the same basis for 31 March 2020.
Equity:
Interest rate swap liability
Variable rate financial liabilities
Profit or Loss:
Interest rate swap liability
Variable rate financial liabilities
IBOR reform
Group
Company
2021
£’000
2020
£’000
2021
£’000
2020
£’000
130
(195)
130
(195)
152
(150)
152
(150)
130
(132)
130
(132)
152
(135)
152
(135)
A fundamental reform of major interest rate benchmarks is being undertaken globally, including the replacement of some
interbank offered rates (IBORs) with alternative nearly risk-free rates (referred to as “IBOR reform”). The Group has exposures
to IBORs on its interest rate swap and LIBOR based loan (as outlined above) and these will be replaced or reformed as
part of these market-wide initiatives. There is uncertainty over the timing and the methods of transition and the Group
anticipates that IBOR reform could impact its risk management and hedge accounting.
The Group’s sterling LIBOR cash flow hedging relationships extend beyond the anticipated cessation date for sterling LIBOR.
The Group expects that sterling LIBOR will be discontinued before the end of 2021. The preferred alternative reference
rate is the Sterling Overnight Index Average (SONIA). However, there is uncertainty about when and how replacement may
occur with respect to both the interest rate swap (notional amount: £13.0 million) and LIBOR based loan (carrying amount:
£13.2 million). Such uncertainty may impact the hedging relationship. The Group applies the amendments to IFRS9 issued
in September 2019 to those hedging relationships directly affected by IBOR reform.
Hedging relationships impacted by IBOR reform may experience ineffectiveness attributable to market participants’
expectations of when the shift from the existing IBOR benchmark rate to an alternative benchmark rate will occur.
This transition may occur at different times for the hedged item and the hedging instrument, which may lead to
hedge ineffectiveness. The directors do not currently expect this transition process to have a material impact on the
ANNUAL REPORT 2021 95
Notes to the Financial Statements
CONTINUED
26. Financial instruments CONTINUED
financial statements. The Group has not yet adopted the Phase 2 amendments, which address issues (such as the
modification of loan contracts) that may arise at the point of transition. The adoption of these amendments is not expected
to have a material impact.
(v) Capital Management
The Group’s objectives when managing capital, which comprises equity and reserves at 31 March 2021 of £38,896,000
(2020: £38,792,000) are to safeguard its ability to continue as a going concern, so that it can continue to provide returns
to shareholders and benefits to our other stakeholders.
27. Operating leases
Leases as lessor
The Group leases out its investment properties, which consist of 65 houses and flats and ten mobile homes in the Falkland
Islands, that are leased to staff, fishing agency representatives and other short-term visitors to the Islands. These lease
agreements generally have an initial notice period of six months, and beyond the six months initial tenancy, one month’s
notice can be given by either party. Therefore future minimum lease payments under non-cancellable leases receivable are
not material.
The Company had no operating lease commitments. However, as a result of the purchase of the five warehouses at Leyton,
the Company had the following non-cancellable operating lease rentals receivable:
Company
Less than one year
Between one and five years
More than five years
28. Capital commitments
2021
£’000
919
3,675
16,753
21,347
2020
£’000
918
3,672
17,672
22,262
At 31 March 2021, the Group had entered into contractual commitments of £21,000 for a spray booth and vehicle exhaust
systems at Momart.
At 31 March 2020, the Group had entered into contractual commitments of £389,000 for one 18 tonne truck and one 26
tonne truck at Momart.
29. Related parties
The Group has a related party relationship with its subsidiaries (see note 14) and with its directors and executive officers.
Directors of the Company and their immediate relatives controlled 30.2% (2020: 30.2%) of the voting shares of the
Company at 31 March 2021.
The compensation of key management personnel, which includes the FIH group plc directors and the directors of the
subsidiaries, is as follows:
ANNUAL REPORT 2021 96
Group
Company
Key management emoluments including social security costs
Company contributions to defined contribution pension plans
Share-related awards
2021
£’000
1,610
74
1
2020
£’000
1,325
74
85
Total key management personnel compensation
1,685
1,484
2021
£’000
366
-
20
386
2020
£’000
401
-
41
442
At 31 March 2021, the Group’s joint venture, SAtCO, has debtors of £249,000 due from each of its parent companies.
On 2 May 2017, KJ Ironside, the Managing Director of FIC, purchased a property which had been built on approximately
510 square metres of land owned by FIC. FIC provided a loan of £65,000 to Mr Ironside to purchase the freehold of this
land. The loan is to be repaid in full in the event of the sale of the property, Mr Ironside ceasing to hold any permits or
licenses required by law in respect of his ownership or occupation of the property, him ceasing to be employed by FIC at
any time before his 65th birthday (unless due to ill health) or his death. £650 of interest is payable each year by Mr Ironside
to FIC in respect of this loan.
During the year FIC paid £104,430 (2020: £6,005) to JK Contracting in respect of work performed at arm’s length for
the company. The proprietor of JK Contracting is the son-in-law of R Smith who is a Director of FIC.
30. Accounting estimates
The preparation of financial statements in conformity with adopted IFRS requires management to make judgements,
estimates and assumptions that effect the application of policies and reported amounts of assets and liabilities, income
and expenses. The estimates and associated assumptions are based upon historical experience and various other factors
that are believed to be reasonable under the circumstances, the results of which form the basis of the judgements as to
asset and liability carrying values which are not readily apparent from other sources. Actual results may vary from these
estimates, and are taken into account in periodic reviews of the application of such estimates and assumptions. Revisions
to accounting estimates are recognised in the period in which the estimate is revised if the revision affects only that period
or in the period of revision and future periods if the revision affects both current and future periods.
Defined benefit pension liabilities
At 31 March 2021, 11 pensioners were receiving payments from the FIC defined benefit pension scheme, and there
are three deferred members. A significant degree of estimation is involved in predicting the ultimate benefits payment to
these pensioners using actuarial assumptions to value the defined benefit pension liability (see note 23). Management
have selected these assumptions from a range of possible options following consultations with independent actuarial
advisers. There is a range of assumptions that may be appropriate, particularly when considering the projection of life
expectancy post-retirement, which is a key demographic assumption, and has been based on UK mortality data. If the life
expectancy assumption was one more year than the assumptions used, this would result in an increase of £143,000 in the
liability. Selecting a different assumption could significantly increase or decrease the IAS19 value of the Scheme’s liabilities.
The projections of life expectancy make no explicit allowance for specific individual risks, such as the possible impact
of climate change or a major medical breakthrough and the projections used reflect the aggregate impact of the many
possible factors driving changes in future mortality rates.
The figures are prepared on the basis that both the FIC pension scheme and FIC are ongoing. If the scheme were to be
wound up, the position would differ, and would almost certainly indicate a much larger deficit.
Impairment testing
Impairment tests have been undertaken with respect to intangible assets (see note 11 for further details), with detailed
reviews of probable medium to long-term detailed forecasts of each of the businesses in the Group. No impairment of
goodwill was deemed necessary in the current year. In the prior year, goodwill at Momart was written down by £3.5 million
to £2.1 million and the goodwill held in respect of PHFC was reduced by £4.0 million, eliminating all the previously recorded
balance in relation to the ferry company.
ANNUAL REPORT 2021 97
Notes to the Financial Statements
CONTINUED
30. Accounting estimates CONTINUED
Inventory provisions
The Group makes provisions in relation to inventory value, where the net realisable value of an item is expected to be lower
than its cost, due to obsolescence. Historically, the calculation of inventory provisions has entailed the use of estimates and
judgements combined with mechanistic calculations and extrapolations reflecting inventory ageing and stock turn. Due to
the effects of the COVID-19 pandemic, the element of judgement/estimation applied in the calculation of the provisions
for the year ended 31 March 2021 has increased and inventory provisions have increased to £999,000 (2020: £778,000).
Inventory greater than 12 months old and with no sales in the twelve months before 31 March 2021 is provided against
in full. If this provision was reduced to 50% of the gross inventory value, the provision would reduce by circa £150,000.
If this provision was extended to cover all inventory greater than six months old with no sales in the twelve months before
31 March 2021, the provision would increase by £74,000.
Directors and Corporate Information
Directors
Robin Williams,
Non-executive Chairman
Corporate Information
Stockbroker and
Nominated Adviser
W.H. Ireland Limited, 24 Martin Lane,
London EC4R 0DR
John Foster, Chief Executive
Stuart Munro, Chief Financial Officer
Jeremy Brade,
Non-executive Director
Robert Johnston,
Non-executive Director
Dominic Lavelle,
Non-executive Director
Company Secretary
Iain Harrison
Solicitors
BDB Pitmans LLP
50 Broadway,
Westminster,
London SW1H 0BL
Auditor
KPMG LLP
St. Nicholas House,
Park Row,
Nottingham NG1 6FQ
Registrar
Link Group
The Registry, 34 Beckenham Road,
Beckenham, Kent BR3 4TU
Financial PR
Novella Communications,
South Wing, Somerset House,
London WC2R 1LA
Registered Office
Kenburgh Court
133-137 South Street
Bishop’s Stortford
Hertfordshire CM23 3HX
T: 01279 461630
E: admin@fihplc.com
W: www.fihplc.com
Registered number 03416346
The Falkland Islands
Company
Kevin Ironside, Director
T: 00 500 27600
E: info@fic.co.fk
W: www.falklandislandscompany.com
The Portsmouth Harbour
Ferry Company
Clive Lane, Director
T: 02392 524551
E: admin@gosportferry.co.uk
W: www.gosportferry.co.uk
Momart Limited
Steve Lane, Director
T: 020 7426 3000
E: enquiries@momart.com
W: www.momart.com
www.fihplc.com
ANNUAL REPORT 2021 ai1628509860147_460783_FIH_Group_Annual_Report_Covers_ V1 PR.pdf 1 09/08/2021 12:51
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