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 2022
Chairman’s Statement 2022
Chief Executive’s Strategic 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 2022
Consolidated Statement of Comprehensive Income For The Year Ended 31 March 2022
Consolidated Balance Sheet At 31 March 2022
Company Balance Sheet At 31 March 2022
Consolidated Cash Flow Statement For The Year Ended 31 March 2022
Company Cash Flow Statement For The Year Ended 31 March 2022
Consolidated Statement of Changes in Shareholders’ Equity For The Year Ended 31 March 2022
Company Statement of Changes in Shareholders’ Equity For The Year Ended 31 March 2022
Notes to the Financial Statements
Directors and Corporate Information
1
2
3
15
17
20
22
31
38
39
40
41
42
44
45
46
47
95
1
Financial Highlights
FOR THE YEAR ENDED 31 MARCH 2022
Turnover from continuing operations
Profit before tax
Underlying profit before tax*
Cash flow from operations
Diluted earnings per share before non-trading items
Diluted earnings per share
* Defined as profit before tax and non-trading items
2022
£’m
40.3
2.0
2.3
5.1
9.5p
7.6p
Change
£’m
7.7
1.8
2.2
1.4
2021
£’m
32.6
0.2
0.1
3.7
0.0p
0.1p
Turnover (£’m)
Underlying profit before tax* (£’m)
43.8
42.5
44.6
40.3
3.9
3.7
32.6
3.2
2.3
0.1
2018
2019
2020
2021
2022
2018
2019
2020
2021
2022
Diluted earnings per share* (pence)
before non-trading items
Dividends per share (pence)
5.0
4.5
24.1
21.7
19.7
9.5
0.0
3.0
1.8
0.0
2018
2019
2020
2021
2022
2018
2019
2020
2021
2022
Profit before tax was as follows: 2022: £2m, 2021: £0.2m, 2020: £3.8m loss, 2019: £3.9m, 2018: £3.3m
Diluted EPS was as follows: 2022: 7.6p, 2021: 0.1p, 2020: (37.8p), 2019: 24.1p, 2018: 20.1p
ANNUAL REPORT 2022 Chairman’s Statement 2022
2
The last two years have been
extremely challenging for the Group.
It is therefore gratifying to see that the
decisive action taken to address the
impact of the pandemic, the hard work
of our employees and a significant
move towards pre-pandemic levels of
trading, have resulted in an underlying
pre-tax trading profit of £2.3 million,
compared to a broadly break-even
result in the prior year.
I would like to take this opportunity to thank each of the
Group’s employees for their part in delivering such a
substantial improvement.
The Falkland Islands Company (“FIC”) continued to trade
consistently and both Momart and The Portsmouth
Harbour Ferry Company (“PHFC”) delivered considerable
improvements over the prior year, with Momart returning
an overall underlying pre-tax profit of £0.6 million (2021:
£0.5 million loss) and PHFC delivering an underlying loss of
£0.1 million (2021: £1.2 million loss).
The balance sheet remains strong, with cash of £9.6 million
at 31 March 2022 remaining in line with the balance at
the prior year end after adjusting for the repayment of
£5.0 million of CBILS
loans, net bank borrowings
reducing to £4.6 million (2021: £5.5 million) and net debt
including lease liabilities improving to £11.7 million (2021:
£13.6 million).
Dividend
Following the payment of an interim dividend of 1.0 pence
per share paid in January 2022 and reflecting the continued
improvement in trading since the half year, I am pleased to
announce that a final dividend of 2.0 pence per share will
be proposed at our forthcoming Annual General Meeting.
This will take the total dividend paid for the year ended
31 March 2022 to 3.0 pence per share (2021: nil).
Board and Governance
As part of the Board’s succession planning and in line with
his wishes, John Foster stepped down from his position
as CEO on 14 April 2022 and was succeeded by Stuart
Munro, who joined as CFO in April 2021. I would like to take
this opportunity to thank John for his significant contribution
to the business over the past seventeen years and to wish
him well in his future endeavours. Jeremy Brade steps
down at the AGM purely as a result of his long service
which has been of great benefit to the Group, particularly
when serving as interim Chair to handle the offers made in
2017 to acquire FIC. We thank him for his contribution
and will look to appoint a replacement in due course.
Additionally, progress is well advanced towards securing a
CFO for the Group.
Outlook and Strategy
Group trading continues to improve as the effects of the
pandemic recede. Equally importantly, FIH is in a strong
financial position and has a clear plan going forward to
accelerate the recovery of the businesses and generate
additional value through a series of initiatives outlined in our
CEO’s Strategic Review.
Robin Williams
Chairman
5 July 2022
ANNUAL REPORT 2022 3
Chief Executive’s Strategic Review
BUSINESS REVIEW
Overview
trading activity continuing
With
towards
pre-pandemic levels, it is pleasing to report that the progress
demonstrated in the Group’s first half results continued in
the traditionally stronger second half of the year.
to head
Group Trading Results for the Year Ended
31 March 2022
A summary of the trading performance of the Group is
given in the table below:
Revenue of £40.3 million for the year ended 31 March
2022, an increase of 24%, resulted in a pre-tax profit of
£2.0 million and an underlying pre-tax profit of £2.3 million,
compared to a broadly break-even result for the year ended
31 March 2021. This included £0.5 million of COVID-related
support from UK and local government, which was £1.3
million less than the prior year.
Group revenue
Year ended 31 March
Falkland Islands Company
Momart
Portsmouth Harbour Ferry
2022
£m
21.6
15.6
3.1
2021
£m
Change
%
20.9
10.3
3.3
51.5
1.4
121.4
Total revenue
40.3
32.6
23.6
FIC, the division least affected by the pandemic, delivered
an underlying pre-tax profit of £1.8 million, which was
consistent with the prior year. Momart and PHFC each
improved their underlying pre-tax results by £1.1 million,
with Momart delivering a profit of £0.6 million and PHFC a
loss of £0.1 million.
The Group results were underpinned by a net cash flow
from operating activities of £5.1 million, with working
capital remaining broadly in line with the prior year, despite
a significant increase in trading activity. The closing cash
balance of £9.6 million was in line with the balance at the
prior year end, after adjusting for the repayment of £5.0
million of CBILS loans in June 2021. It also reflected £2.7
million of capital investment, some £1.2 million ahead of the
prior year.
As noted previously, 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.
Indications are that the value of this property has risen
substantially since acquisition.
Group underlying pre-tax profit*
Falkland Islands Company**
Momart**
Portsmouth Harbour Ferry**
Total underlying pre-tax profit *
Non-trading items
(see notes below)***
Reported profit before tax
1.8
0.6
(0.1)
2.3
(0.3)
2.0
1.8
(0.5)
(1.2)
0.1
0.1
0.2
-
1.1
1.1
2.2
(0.4)
1.8
* 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 comprised £0.3 million
of people-related costs including employee redundancies and
compensation payable to the former Chief Executive. The net
non-trading profit of £0.1 million in the prior year included
£0.4 million of restructuring costs, which were offset by £0.5
million of income relating to the release of accruals where it
is now probable that no future economic outflow will arise.
Management consider that separate presentation of these
items is appropriate to facilitate year on year comparison of
performance of the Group.
ANNUAL REPORT 2022
Group Revenue 2022
Group Revenue 2021
4
Momart
39%
FIC
54%
Momart
32%
FIC
64%
PHFC
7%
PHFC
4%
Group Operating Company
Performance
Falkland Islands Company
Total revenue of £21.6 million was £0.7 million ahead of
the year ended 31 March 2021, with the majority of the
improvement arising in Falkland Building Services (“FBS”)
and Support services. These improvements were offset
by a reduction in Retail contribution arising from a change
in sales mix and increased overheads, resulting in an
underlying pre-tax profit of £1.8 million, which was in line
with the prior year.
The previous year’s ban on tourists visiting the Falkland
Islands continued, although these restrictions were lifted
on 4 May 2022, which should facilitate their return in the
southern hemisphere tourist season.
FIC Operating results
Year ended 31 March
2022
£m
2021
£m
Change
%
Revenues
Retail
Falklands 4x4
FBS (housing and construction)
Support services
Property rental
9.7
2.8
5.8
2.5
0.8
9.7
2.8
5.3
2.3
0.8
Total FIC revenue
21.6
20.9
FIC underlying operating profit
1.9
1.9
Net interest expense
(0.1)
(0.1)
FIC underlying profit before tax
1.8
1.8
-
-
9.4
8.7
-
3.3
-
-
-
FIC underlying operating
profit margin
8.7% 9.1%
(4.4)
FIC Divisional Activity
Year on year Retail sales were broadly flat. A continued lack
of tourist-related earnings for Falkland Islands residents,
the relaxation of international restrictions allowing islanders
to travel overseas, and shortages of certain products,
resulted in a reduction in discretionary expenditure on home
improvement and electrical items. However, this was offset
by increased sales elsewhere, particularly from retail outlets
that had been partially closed in the prior year.
At Falklands 4x4, vehicle sales and rental income both
improved over the prior year, although this was offset by a
reduction in servicing and spares revenues, leaving overall
income largely unchanged. FIC has now been confirmed as
the representative for Ineos for the sale of their Grenadier
4x4 vehicle in the Falkland Islands with first deliveries
targeted for late 2022.
FBS revenue increased by 9.4% driven mainly by civils
contracts for the Falkland Islands Government (“FIG”),
including culvert and road capping works on West Falkland,
together with road preparation works, drainage and paving
at a mobile home park in Port Stanley. The order book
remains strong and includes the £17.3 million contract to
build a total of 70 houses for FIG and the UK Ministry of
Defence (“MOD”) over four years secured in November
2021 and a three-year road capping contract for roads on
East Falkland for £1.1 million secured in May 2022.
Support Services income increased by £0.2 million to £2.5
million (2021: £2.3 million) due predominantly to increased
shipping agency revenues, following the reopening of
Stanley Harbour to fishing vessels.
ANNUAL REPORT 2022
5
Chief Executive’s Strategic Review
BUSINESS REVIEW
Rental Properties. Further additions at a cost of £1.2
million (2021: £0.7 million) were made during the year to
FIC’s portfolio of domestic rental properties taking the total
number of rented properties at 31 March 2022 to 83 (2021:
75) with a further 2 under construction. Average occupancy
rates reduced during the year, due mainly to properties
being held vacant for overseas employees and service
providers ahead of their arrival in the Falkland Islands in line
with immigration procedures. Notwithstanding this, revenue
remained broadly in line with the prior year at £0.8 million.
At 31 March 2022, the total net book value of the portfolio
excluding assets under construction (with buildings being
fully depreciated over 50 years) was £7.2 million (2021: £5.8
million). The estimated market value of FIC’s rental portfolio
at 31 March 2022 was £10.1 million (2021: £8.5 million) an
uplift of £3.0 million on book value giving an average value
per property of £122,000 (2021: £113,000).
FIC Key Performance Indicators and
Operational Drivers
Year ended 31 March
2018
2019
2020
2021
2022
Staff Numbers
(FTE 31 March)*
Capital Expenditure
£’000
152
175
214
206
232
389
2,348
2,685
1,060
2,434
Retail Sales growth %
+0.6
+5.7
+3.1
-3.0
-0.1
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)
49
54
65
75
89
77
22
84
76
6
89
71
22
93
71
15
83
86
81
11
75.5
57.4
57.6
106.1
123.8
59.3
62.5
72.1
Nil
Nil
* Restated to include FIC staff in the UK.
**Includes ten mobile homes rented to staff.
***Relates to kit home sales to third parties and excludes
houses built under contract for FIG.
FIC revenues 2022
FIC revenues 2021
Support
Services
12%
Property
Rental
4%
Support
Services
11%
Property
Rental
4%
FBS
27%
Retail
44%
FBS
26%
Retail
46%
4x4
13%
4x4
13%
ANNUAL REPORT 2022 6
Momart
Momart Operating results
Revenue of £15.6 million for the year ended 31 March 2022,
whilst not yet back to pre-pandemic levels, was £5.3 million
(52%) ahead of the prior year, with improvements in both
Museum Exhibitions and Gallery Services and a consistent
level of storage income. Combined with £0.4 million of
pandemic-related support from UK and local government
(2021: £1.4 million), this resulted in an underlying pre-tax
profit of £0.6 million (2021: £0.5 million loss).
Year ended 31 March
Revenues
Museum Exhibitions
Gallery Services
Storage
2022
£m
2021
£m
Change
%
7.4
5.8
2.4
4.5
3.4
2.4
64.4
70.6
-
Total Momart revenue
15.6
10.3
51.5%
Momart underlying operating profit
1.0
-
-
Net Interest expense
(0.4)
(0.5)
20.0
Momart underlying profit/(loss)
before tax
Momart underlying operating
profit margin
0.6
(0.5)
220.0
6.4%
-
-
Museum Exhibitions activity benefitted from the relaxation
of COVID restrictions during the year which allowed
institutions to plan a programme of events. Whilst activity
levels in terms of the number of exhibitions has now returned
to near pre-pandemic levels, the overall investment in
exhibitions remains suppressed as institutions rely on more
of their own collections, rather than extensive loans.
Commercial galleries, auction houses and private client
activity also benefited from the lifting of COVID restrictions,
driven mainly by the return of art fairs, which historically
have been a significant part of Momart’s Gallery Services
business. The return of Art Basel in September (traditionally
taking place in June) and Frieze London in October,
contributed to a strong start to the second half of the
year and both delivered record revenues as pent-up
demand unwound.
Storage revenues remained broadly consistent with the
prior year at £2.4 million with an 84% utilisation of storage
capacity (2021: 83%).
Momart revenues 2022
Momart revenues 2021
Storage
15%
Commercial
Gallery
Services
37%
Museums
and Public
Exhibitions
48%
Storage
23%
Commercial
Gallery
Services
33%
Museums
and Public
Exhibitions
44%
ANNUAL REPORT 2022 7
Chief Executive’s Strategic Review
BUSINESS REVIEW
Momart Key Performance Indicators
and Operational Drivers
PHFC Operating results
Year ended 31 March
2018
2019
2020
2021
2022
Year ended 31 March
2022
£m
2021
£m
Change
%
Staff Numbers
(FTE at 31 March)
Capital Expenditure
£’000’s
Warehouse % fill vs
capacity
Exhibition order book
31 March
Momart services
charged out
Revenues from
overseas clients
136
140
133
107
99
Revenues
Ferry fares
228
20,034
638
540
258
Total PHFC revenue
72.8% 81.1% 86.9% 82.9% 84.0%
£4.2m £4.6m Note*
Note*
£4.3m
£10.9m £11.5m £10.8m £6.5m £9.1m
£7.1m £7.5m £6.2m £2.7m £5.5m
PHFC underlying operating
profit/(loss)
Pontoon lease liability & Boat loan
finance expense
PHFC underlying loss
before tax
3.1
3.1
0.2
1.4
1.4
121.4
121.4
(0.9)
122.2
(0.3)
(0.3)
-
(0.1)
(1.2)
91.7
Exhibitions sales growth
17.0% -6.5% -2.1% -58.3% 64.4%
Gallery Services
sales growth
15.2% 4.0% -22.4% -41.4% 70.6%
Storage sales growth
8.5% -6.3% 5.8% 9.1% 0.0%
PHFC Key Performance Indicators and
Operational Drivers
Total sales growth
15.5% -2.9% -8.7% -45.5% 51.5%
Year ended 31 March
2018
2019
2020
2021
2022
Note*: Due to the impact of COVID-19, meaningful data for
secure forward orders was not available.
Portsmouth Harbour Ferry Company
levels over
the autumn, but dipped
Passenger numbers at PHFC returned to circa 80% of
in
pre-COVID
December following Government guidance to work from
home. Recovery resumed following the lifting of guidance
at the end of January, and volumes were at circa 76% of
pre-pandemic levels for the month ended 31 March 2022,
compared to 60% for the same period last year.
Overall passenger numbers for the year ended 31 March
2022 of 1.7 million were broadly double those of the prior
year, resulting in a £1.7 million increase in revenue, an
underlying operating profit of £0.2 million (2021: £0.9 million
loss) and an underlying pre-tax loss of £0.1 million (2021:
£1.2 million loss) after financing expense. Price increases
introduced in April 2022, should further improve revenue in
the current year, although this is also heavily dependent on
continued recovery in passenger numbers.
As noted at the half year, a “Park & Float” scheme was
introduced as a six-month trial in late June, offering a
combined parking and ferry fare in order to provide people not
living within walking distance of the ferry with an alternative
to driving around the harbour to get to Portsmouth. This
received a low level of customer uptake, which is likely to have
been influenced by the operation of Portsmouth Council’s
own subsidised park and ride scheme on the outskirts of
the city, and was discontinued in December. Investigations
are ongoing as to how PHFC can work in partnership with
Hampshire Council as part of the development of a fully
integrated transport plan for the region.
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
186
37
50
36
65
25
-
26
52
99.8
99.8
99.8
99.9
99.9
1,878
1,834
1,706
613
1,188
-4.5
-2.3
-7.0
-64.1
93.8
734
722
659
195
500
-1.3
-1.6
-8.7
-70.4
156.4
2,612
2,556
2,365
808
1,688
-3.6
-2.1
-7.5
-65.8
108.9
Revenue growth %
1.5
0.4
-5.5
-65.9
114.2
Average yield per
passenger journey*
£1.58
£1.62
£1.69
£1.76
£1.76
*Total ferry fares divided by the total number of passengers.
Trading Outlook
The overall trading outlook for the Group remains positive.
In FIC, the expected return of tourism to the Falkland Islands,
along with a strong order book and potential opportunities
for further work with FIG and the MOD, all bode well for the
future. Further progress is expected at Momart and PHFC,
although the pace of recovery remains dependent on the
rate of return of customer activity as the impact of COVID
hopefully continues to recede. As trading levels continue to
ANNUAL REPORT 2022
8
recover, the challenge for the Group will inevitably move to
satisfying the growing demand. Decisive action was taken
to reduce staff numbers and costs during the pandemic
and their growth must continue to be carefully managed
as activity increases, particularly given the high levels of
inflation currently being experienced.
Group Strategy
The aim of the Board is to build a Group of greater scale
providing consistent earnings growth and cash generation
that will provide shareholders with both predictable capital
growth and regular dividend income. To deliver this, the
Group strategy has three key strands:
Build the profits of the existing businesses back to
and beyond the pre-COVID position. Good progress
was made in the year ended 31 March 2022, but more
remains to be done. As noted above, a key challenge will be
to manage costs in line with the ongoing trading recovery.
in developing
the existing businesses.
Invest
The Board are particularly focussed on capitalising on
potential opportunities for further work for FIG and the MOD,
building on the £17.3 million housing contract awarded
in November 2021, as well as on maximising returns
from existing FIC land assets. The potential for additional
opportunities arising from the development of the Sea Lion
oil field will also be monitored closely. However, the Board
does not rely in its planning on any such development due
to the uncertain and lengthy timescales involved and the
undefined nature of any benefit which might accrue to FIC.
Explore the potential for strategic acquisitions.
This could provide a step change in the scale of FIH,
but acquisitions will only be considered if they either add
to existing activities or bring growth potential from other
attractive sectors, can be secured at an appropriate price
and are within the capacity of the senior executive team
to integrate and optimise without negatively impacting the
performance of the existing businesses.
Financial Review
Revenue
Underlying Operating Profit
Underlying operating profit before net finance costs
increased by £2.1 million (210%) to £3.1 million (2021:
£1.0 million). This was despite grant income received under
furlough schemes and other government support reducing
by £1.3 million to £0.5 million (2021: £1.8 million) and
reflected the revenue increases noted above.
Net Financing Costs
The Group’s net financing costs of £0.8 million were broadly
in line with the prior year. Two UK Government-backed
CBILS loans totalling £5.0 million were repaid in June 2021,
but interest payments on these loans had been covered by
the UK Government and therefore this 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
2022 was a profit of £2.0 million (2021: £0.2 million).
Non-trading items in the current year included £0.3 million
of people related costs including employee redundancies
and compensation payable to the former Chief Executive.
The Group’s underlying profit before tax before these
non-trading items was £2.3 million (2021: £0.1 million).
Non-trading items in the prior 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.
Taxation
Tax on current year profits has increased by £0.8 million.
This is mainly due to increased profitability (£0.3 million) and
the increase in UK deferred tax (£0.5 million) due to the
increase in the UK corporation tax rate from 19% to 25%
from 1 April 2023.
Earnings per Share
Basic and Diluted Earnings per Share (“EPS”) derived
from reported profits was 7.6 pence (2021: 0.1 pence).
Basic and Diluted EPS derived from underlying profits was
9.5 pence (2021: 0.0 pence).
to pre-pandemic
trading headed back
increased by £7.7 million
levels,
As
Group revenue
(24%) to
£40.3 million. The majority of the improvement arose in
Momart and PHFC, where the effects of COVID-19 had
previously been felt most severely, with revenue improving
by £5.3 million and £1.7 million respectively. FIC revenue
improved by £0.7 million, despite the previous year’s
COVID-related ban on tourists visiting the Falkland Islands
continuing during the year.
One of the three ferries at work
ANNUAL REPORT 2022 9
Chief Executive’s Strategic Review
BUSINESS REVIEW
Balance Sheet
The Group’s balance sheet remained strong, with total
net assets growing to £40.7 million (2021: £38.9 million).
Retained earnings increased by £1.1 million to £20.7 million
(2021: £19.6 million) and the hedging reserve improved by
£0.7 million, 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
2022
£m
2021
£m
Change
£m
Bank loans
(14.2)
(20.1)
5.9
Cash and cash equivalents
9.6
14.6
(5.0)
Bank loans net of cash and
cash equivalents
Lease liabilities
Net debt
(4.6)
(5.5)
0.9
(7.1)
(8.1)
(11.7)
(13.6)
1.0
1.9
Bank loans reduced to £14.2 million (2021: £20.1 million)
as a result of the £5.0 million CBILS loans repayment in
June 2021 and scheduled loan repayments of £0.9 million.
The Group’s cash balances reduced by £5.0 million to
£9.6 million (2021: £14.6 million) reflecting the repayment of
the £5.0 million CBILS loans. Overall net debt improved by
£1.9 million to £11.7 million (2021: £13.6 million).
The Group’s outstanding lease liabilities totalled £7.1
million (2021: £8.1 million) with £5.2 million of the balance
(2021: £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 an annual
impairment review which indicated that no impairment was
required at Momart.
The net book value of property, plant and equipment
(2021:
decreased by £1.3 million
£40.4 million) with additions of £1.4 million being offset by
depreciation charges of £2.2 million and a net reduction
of £0.4 million on right of use assets following a lease
modification relating to the Gosport pontoon ground rent.
to £39.1 million
At 31 March 2022, the Group had 83 (2021: 75) completed
investment properties, comprising commercial and
residential properties in the Falkland Islands, which are
held for rental. Two properties were under construction at
31 March 2022 (2021: 7). 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 £8.2 million (2021: £7.1 million)
has been reviewed by the directors of FIC resident in
the Falkland Islands. At 31 March 2022 the fair value
of this property portfolio, including undeveloped land,
was estimated at £12.5 million (2021: £11.1 million), an
uplift of £4.3 million on net book value. FIC’s 83 houses
and flats had an estimated fair value of £10.1 million
(2021: £8.5 million). The value of FIC’s 700 acres of
land was estimated at £2.2 million (2021: £2.2 million).
The properties under construction at 31 March 2022 were
valued at cost of £0.2 million (2021: £0.5 million).
Deferred tax assets relating to future pension liabilities stood
at £0.7 million (2021: £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 increased by £0.8 million to
£6.7 million at 31 March 2022 (2021: £5.9 million). This was
mainly due to an increase in housebuilding related stock
and work in progress at FIC as a result of the timing of
deliveries and the phasing of the related works.
Trade and other receivables increased by £2.0 million to
£7.9 million at 31 March 2022 (2021: £5.9 million) due
mainly to increased sales activity in Momart towards the
end of the year.
Trade and other payables increased by £3.2 million to £10.0
million at 31 March 2022 (2021: £6.8 million) reflecting
increased trading activity in Momart before year end and an
increase in amounts received in advance of service delivery
in FIC.
At 31 March 2022, the liability due in respect of the
Group’s only defined benefit pension scheme, in FIC, was
£2.6 million (2021: £2.8 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. A decrease in the liability largely
arose as a result of an increase in interest rates on relevant
corporate bonds and has been fed through reserves in
accordance with IAS 19. Eleven former employees receive
a pension from the scheme at 31 March 2022 and there are
three deferred members.
liabilities, excluding
The Group’s deferred
the
tax
pension asset at 31 March 2022, were £3.9 million
(2021: £3.1 million) with the increase due largely to the
change in the UK Corporation tax rate from 19% to 25%
effective 1st April 2023.
ANNUAL REPORT 2022 10
Cash Flows
Financing and Investing Activities
Net cash inflow from operating activities of £5.1 million was
£1.4 million more than the prior year inflow of £3.7 million.
The increase was principally due to a £2.2 million increase in
underlying EBITDA, which was partly offset by the working
capital improvement in the prior year not being repeated in
the year ended 31 March 2022. Overall, working capital
remained in line with the prior year, despite the increase in
trading activity.
The Group’s operating cash flow can be summarised
as follows:
During the year, the Group invested £2.7 million of capital
expenditure, comprising £1.2 million of investment property,
£1.4 million on fixed asset property, plant and equipment
and £0.1 million on computer software.
The £6.6 million of bank and lease liabilities repayments
in the year included the £5.0 million CBILS loans repaid
in June 2021. The £5.4 million of bank and lease liabilities
drawn down in the prior year included £5.0 million CBILS
drawn down in June 2020 and the funding of vehicles in
Momart of £0.4 million.
Year ended 31 March
Underlying profit before tax
Depreciation & amortisation
Net interest payable
Underlying EBITDA
2022
£m
2021
£m
Change
£m
2.3
2.4
0.8
5.5
0.1
2.3
0.9
3.3
2.2
0.1
(0.1)
2.2
0.4
Non-trading, cash items
-
(0.4)
Increase in hire purchase debtors
(0.1)
-
(0.1)
Decrease / (increase) in working
capital
-
1.0
(1.0)
Tax paid and other
(0.3)
(0.2)
(0.1)
Net cash inflow from operating
activities
Financing and investing activities
Capital expenditure
Disposal of fixed assets
Net bank and lease liabilities interest
paid
Bank and lease liability repayments
Dividends paid
Bank and lease liabilities draw down
Net cash (outflow) / inflow from
financing and investing activities
5.1
3.7
1.4
(2.7)
(1.5)
0.1
-
(1.2)
0.1
(0.8)
(0.8)
-
(6.6)
(0.1)
-
(1.3)
-
5.4
(5.3)
(0.1)
(5.4)
(10.1)
1.8
(11.9)
Net cash (outflow) / inflow
Cash balance b/fwd.
(5.0)
14.6
5.5
9.1
(10.5)
5.5
Cash balance c/fwd.
9.6
14.6
(5.0)
Museum art cases in storage
ANNUAL REPORT 2022 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 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.
At PHFC, the initial lockdown in 2020 saw ferry
customers cease their normal daily travel to work and
leisure activities, causing a 90% fall in ferry traffic.
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 remained closed to overseas visitors
in the year, which removed an important source of
income for the economy.
Comment
The impact was immediate and severe but activity is
reviving since the cessation of lockdown measures.
The economic costs were mitigated in both businesses
by the use of the UK Government’s furlough grant
scheme.
Activity is increasing following the cessation of
lockdown measures.
Impact
Moderate (decreased
from very high) and
continuing to decrease
Moderate (decreased
from very high) - and
continuing to decrease
Safe working practices were reviewed and updated in
great detail with reference to UK Government guidance
and in consultation with staff.
Low - decreased as
lockdown restrictions
removed.
Wherever possible, the additional costs of operating
have been passed on to clients. (All competitors face a
similar challenge).
Passenger numbers increased as lock down measures
were relaxed during the year. Government guidance to
work from home, issued in December 2021, resulted in
a dip in numbers, but recovery continued once this was
lifted at the end of January 2022.
Leisure traffic has recovered more quickly than
commuter traffic, where a significant number of people
are working from home for at least part of their working
week. Current high costs of vehicle fuel may push
people towards using public transport.
Moderate - decreased
Low - unchanged
Restrictions on tourists visiting were lifted in May 2022,
which should facilitate their return.
Low - decreased
ANNUAL REPORT 2022 12
POLITICAL RISKS
Risk
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.
Comment
Relations between the UK and Argentina have become
more strained in recent years. However, the security
afforded by the UK Government’s commitment to
the Islands upholds the freedom and livelihood of the
people of the Falkland Islands and thereby of FIC.
Provided UK Government support is maintained the
security of the people of the Falkland Islands is judged
to at low risk.
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 - unchanged
ECONOMIC CONDITIONS
Risk
Comment
Although the impact of COVID-19 was unprecedented,
it has been matched by equally unprecedented
government interventions on a global scale which has
sustained economic confidence and activity.
International travel continued to be badly affected by
COVID-19.
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 continued to maintain its revenue
and profitability in 2022. Restrictions on travel to the
Falkland Islands were lifted in May 2022 which should
facilitate the return of tourists.
Potential Impact
High but steadily
reducing impact on UK
operations
Low - reduced
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 - unchanged
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.
Inflationary pressures across all Group businesses
impact the cost of wages, services and products.
Activity is increasing following the cessation of
lockdown measures. Impact has been mitigated by a
reduction in Momart’s cost base and careful cost control
as activity returns.
Moderate - unchanged
but reducing as public
confidence returns.
Continued focus on cost efficiency as activity returns to
pre-pandemic levels. Customer and supplier contracts
structured to limit or pass on inflation risk. Cost inflation
monitored closely and passed on to customers via price
increases wherever possible.
High - new
CREDIT RISK
Risk
Comment
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.
Potential Impact
Low - unchanged
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.
Large capital infrastructure investment projects may
entice larger overseas businesses to look at the
opportunities available and reduce the ability of FIC to
undertake the work.
FIC has been successful in winning work against
overseas competitors and has built up strong links with
FIG and MOD.
Being located in the Falkland Islands gives FIC a
competitive advantage against overseas companies.
Moderate - unchanged
Moderate - new risk.
ANNUAL REPORT 2022 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.
All Group companies are experiencing a shortage of
skilled employees as the businesses grow and recover
from the pandemic. In the UK, Momart has suffered
from shortages in drivers and art technicians.
Comment
Reviews of old and slow-moving stock in Stanley
are regularly undertaken by senior management and
appropriate action taken.
Potential Impact
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
This has driven wages costs up and constrained the
growth of the businesses.
Moderate - new
ANNUAL REPORT 2022 14
Potential Impact
Low - unchanged
Low - unchanged
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.
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.
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.
Stuart Munro
Chief Executive
5 July 2022
ANNUAL REPORT 2022 15
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. 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 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.
Stuart Munro, Chief Executive
Stuart joined the Board on 28 April 2021 as Chief Financial Officer before taking over as Chief Executive on 14 April
2022. He qualified as a chartered accountant with Ernst & Young and 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 FIH group, 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., Swiss Water Decaffeinated Coffee Inc and RGC Resources Inc. Robert is a member of
the Nominations and Audit Committees and is Chairman of the Remuneration Committee.
ANNUAL REPORT 2022 16
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 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 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 2022 17
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 complied with as set out 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 circa 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 offers 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 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.
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
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.
ANNUAL REPORT 2022 18
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 circa 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. In view
of his long service, Jeremy will step down from the Board at the AGM in 2022. 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 are subject to annual re-election.
Time Commitment of Directors
Stuart Munro, Chief Executive of the company, is the only full-time executive director. 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, 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 6 July 2021 there have been eight Board meetings. Robin Williams, Stuart Munro, Robert Johnston and Dominic
Lavelle have attended all meetings. Jeremy Brade has attended eight meetings. John Foster attended six out of the seven
meetings held prior to him ceasing to be a director on 14 April 2022.
The Remuneration committee has met twice since 6 July 2021 to review executive base pay and bonus structure,
as well as the issue of grants under the Long Term Incentive Plan and all members of the committee were in attendance.
There have also been two Audit Committee meetings since 6 July 2021, 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 met a number of times during the year to consider the succession of the Chief Executive role and the future shape of
the Board.
ANNUAL REPORT 2022 19
Corporate Governance Statement
CONTINUED
Board Directors
The Board comprises Robin Williams, the non-executive Chairman, Stuart Munro, the full time Chief Executive, 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 Executive 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 Executive has frequent communication with 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 2022 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 wherever possible, 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 2022, 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 2022 and discussed at
the April 2022 Board meeting, with useful conclusions in the areas of major shareholder representation on the Board, the
content of briefings to the Board prior to meetings, the development of strategy and the presentation of recommendations
to the Board. The frequency of meetings was reviewed as the recovery from the pandemic became more visible and the
Board has put in place a more structured programme of interaction with operating management.
Robin Williams
Chairman
5 July 2022
ANNUAL REPORT 2022 20
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 year ended 31 March 2021 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 2022, there were no
non-audit fees paid to KPMG LLP (2021: £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 2022 21
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 testing of the tangible assets of PHFC and the goodwill and intangible assets of Momart have been carried
out in the current year with no impairment charge being deemed necessary and there being adequate headroom in the
impairment assessments.
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
5 July 2022
ANNUAL REPORT 2022 22
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 2022.
Results and Dividend
As set out in the Group Income Statement, the Group profit for the year after taxation amounted to £947,000
(2021: £9,000). Basic earnings per share on underlying profits were 9.5 pence (2021: 0.0 pence).
With the Group’s recovery further underpinned by the continued profit improvement in the second half of the year, the
Board is pleased to announce that a final dividend of 2.0 pence per share will be recommended for approval at the Annual
General Meeting. Together with the interim dividend of 1.0 pence paid on 14 January 2022, the proposed dividend will
take the total dividend for the year ended 31 March 2022 to 3.0 pence per share (2021: nil).
Principal Activities
The business of the Group during the year ended 31 March 2022 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
Stuart Munro was appointed as a director on 28 April 2021 and John Foster resigned as a director on 14 April 2022.
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, gender identity, sexual orientation,
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.
ANNUAL REPORT 2022 23
Directors’ Report
CONTINUED
Payments to suppliers
The policy of the Company and each of its trading subsidiaries, in relation to all its suppliers, is to settle the terms of
payment when agreeing the terms of the transaction and to abide by those terms, provided that it is satisfied that the
supplier has provided the goods or services in accordance with agreed terms and conditions. The Group does not follow
any code or standard payment practice. As a holding company, the Company had £29,000 of trade creditors at 31 March
2022 (2021: nil).
Share Capital and Substantial Interests in Shares
During the year 4,915 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 5 July 2022:
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
Bonafide Investment Fund –
Opportunities I
Christian Struck
3,596,553
1,057,158
897,324
797,214
680,001
380,000
28.73
8.44
7.17
6.37
5.43
3.04
Charitable and Political Donations
Charitable donations made by the Group during the year amounted to £16,214 (2021: £7,654), these were largely paid to
local community charities in the Falkland Islands. There were no political donations in the year (2021: 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 2022
24
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
2022, 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:
PHFC maintains close contact with its customer base via social media and regularly tweets and posts information on
Facebook about local pantomimes, football matches, and local events of interest to the local community and visiting
tourists. PHFC are also involved in marking the 40th anniversary of the Falkland Islands conflict in 2022 and maintaining
its close links to the Navy based in Portsmouth.
Momart engage with industry working groups to propose and implement sustainability improvements in delivering fine art
logistics services.
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.
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 also work closely with local government to ensure representation in local transport developments.
ANNUAL REPORT 2022 25
Directors’ Report
CONTINUED
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 cafés 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 sources wherever possible.
• Wood waste repurposed or burnt for energy rather than going to landfill.
Installation of new exhaust cleaners on the vessels reducing NOx and Co2 emissions.
PHFC
•
• Smart LED lighting across the estate.
• Provision of coffee cup recycling.
•
Investigation of smart apps to promote environmentally friendly journey planning.
Governments and Regulatory Authorities
Our work brings us into regular contact with the MOD, 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 those Freight Transport
Association, discussing difficulties faced by the industry with the forum and any attending HMRC officers. The Momart
Security Manager liaises with the Civil Aviation Authority to ensure that Momart’s security procedures and staff training
remain compliant.
Media
All businesses are active on social media, using Twitter, Instagram, LinkedIn and Facebook.
ANNUAL REPORT 2022 26
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 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 and the Chairman offer to meet with all significant shareholders
after the release of the half year and full year results. The Chief Executive 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.
Debt Providers:
The Group has several debt facilities provided by HSBC, who are kept fully informed on all relevant areas of the business,
through regular meetings and presentations. The relationship with HSBC dates back to the Company’s incorporation
in 1997.
Annual General Meeting
The Company’s Annual General Meeting will be held on 19 September 2022. 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 2022 27
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 2022 and in the preceding year is as follows:
Salary / Fees
£’000
Health
insurance £’000
Compensation
payment £’000
Bonus
£’000
2022 Total
£’000
2021 Total
£’000
John Foster
Stuart Munro*
Robin Williams
Jeremy Brade
Robert Johnston
Dominic Lavelle
Total
222
202
60
30
30
30
574
1
1
-
-
-
-
2
259
-
-
-
-
-
40
68
-
-
-
-
259
108
522
271
60
30
30
30
943
197
-
51
26
26
26
326
* Appointed 28 April 2021
The Chief Executive, Stuart Munro, participates in an annual performance related bonus arrangement, with the potential
during the year to earn up to 60% of his salary. The bonuses are subject to the achievement of specified corporate and
personal objectives and are payable in cash.
John Foster participated in an annual performance related bonus arrangement, with the potential during the year of earning
up to 100% of his salary. Any bonus is subject to the achievement of specified corporate and personal objectives and
is 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. The bonus for the year ended 31 March 2022 is payable wholly in cash.
Given the impact of COVID-19 on the Group’s finances, no bonus was paid for the year ended 31 March 2021.
None of the directors of the Company receive any pension contributions or benefit from any Group pension scheme.
ANNUAL REPORT 2022
28
Directors’ Interests in Shares
Full details of historic awards of deferred shares to John Foster are provided in note 24 Employee benefits: share based
payments. During the year ending 31 March 2022, 9,273 nil cost options (2021: 12,488) were exercised by him and the
remaining 3,591 nil cost share options were forfeited on his resignation on 14 April 2022.
During the year, Stuart Munro was granted 55,814 LTIP share options in December 2021 at an exercise price of 10 pence.
The exercise of the LTIP awards is subject to achieving share price performance and earnings targets which have been
determined by the remuneration committee, after discussion with the Company’s advisers.
The directors’ options extant at 31 March 2021 related to John Foster and totalled 12,864 nil cost options.
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:
In addition to the share options set out above, the interests of the directors, their immediate families and related trusts in
Ordinary shares as at 31 March 2021
the shares of the Company according to the register kept pursuant to the Companies Act 2006 were as shown below:
5,625
Ordinary shares as at 31 March 2022
Robin Williams
5,625
Stuart Munro
John Foster
Jeremy Brade
Robert Johnston*
Dominic Lavelle
4,400
118,542
15,022
*3,654,053
2,000
-
113,627
15,022
*3,647,853
2,000
* Robert Johnston holds 57,500 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 3,654,053 Shares in total, representing
29.2 per cent. of the Company’s 12,519,900 total voting rights.
Approved by the Board and signed on its behalf by:
Iain Harrison
Company Secretary
5 July 2022
Kenburgh Court
133-137 South Street
Bishop’s Stortford
Hertfordshire
CM23 3HX
ANNUAL REPORT 2022 29
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 the AIM Rules of the London Stock Exchange, they are required to prepare the Group financial statements in
accordance with UK-adopted international accounting standards and applicable law and they have elected to prepare the
parent Company financial statements on the same basis.
Under company law the directors must not approve the financial statements unless they are satisfied that they give a
true and fair view of the state of affairs of the Group and parent Company and of the Group’s 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 UK-adopted international accounting standards;
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 2022
30
FIC vessels supporting the squid fishing fleets
FIC start 70 House contract with FIG & MOD
ANNUAL REPORT 2022 Independent
auditor’s report
Overview
Materiality:
group financial
statements as a
whole
£140,000 (2021:£140,000)
5.2% of average profit before tax
before non-trading items (2021: 4.5%
of group profit before tax before
goodwill impairment)
Coverage
100% (2022:100%) of group profit
before tax
Key audit matters
vs 2021
Recurring risks
New risks
Recoverability of parent
Company’s investment
in subsidiaries
Accuracy of revenue in
FIC due to complexity of
the business
▼
◄►
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 2022
which comprise the Consolidated Income Statement,
Consolidated Statement of Comprehensive Income,
Consolidated Balance Sheet, Company Balance Sheet,
Consolidated Cash Flow Statements, Company Cash
Flow Statements, 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 2022 and of the
Group’s profit for the year then ended;
— the Group financial statements have been properly
prepared in accordance with UK-adopted
international accounting standards;
— the parent Company financial statements have been
properly prepared in accordance with UK-adopted
international accounting standards 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.
30
2. Key audit matters: our assessment of risks of material misstatement
The risk
Our response
32
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:
(£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)
Accuracy of revenue in FIC due to
complexity of the business
(£21.7 million; 2021: £20.9 million)
Refer to page 56
(accounting policy) and page 82-83
(financial disclosures).
Refer to page 52 (accounting
Refer to page 53 (accounting
policy) and page 60 (financial
policy) and page 61 (financial
disclosures).
disclosures).
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
Complexity of the FIC business:
They are significant and at risk of
irrecoverability due to weak demand in the
Art Logistics and Ferry Services businesses
FIC is a diverse business with a large number
as a result of the Covid-19 pandemic. The
of revenue streams, some of which are
Group has recognised an impairment loss of
recognised at a point in time and some of
£3,700,000 on the investment in the Art
which are recognised over time. In certain
Logistics subsidiary as a result of changes in
revenue streams there are large volumes of
the market resulting in significant changes
transactions where in others there is a
in forecast cash flows. The estimated
degree of complexity which requires
recoverable amount of the remaining
management to forecast total contract costs
balances is subjective due to the inherent
in order to recognise revenue over time on
uncertainty involved in forecasting and
an input basis.
discounting future cash flows.
The accounting relies on a significant
The effect of these matters is that, as part
degree of manual intervention which adds
of our risk assessment, we determined that
to the complexity and increases the risk of
the recoverable amount of the cost of
error.
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.
assumptions used in the relevant cash flow
forecasts, in particular those relating to
forecast revenue growth and profit margins,
through enquiries with the divisional
Our response
managers and those responsible for preparing
and delivering the forecasts;
Our procedures included:
— Historical comparison: we evaluated the
— Benchmarking assumptions: we compared the
Process understanding: We obtained an
group’s assumptions in relation to key inputs
understanding of the revenue processes by
such as, projected economic growth and, with
observing transactions from customer initiation to
the assistance of specialist valuation tools,
cash received for material revenue streams.
compared the discount rate to historical
information and externally derived data;
Test of details: We assessed the appropriateness of
revenue recognised by:
adequacy of the budgets and forecasts used in
the value in use calculation by assessing the
• For revenue recognised at a point in time we
historical accuracy of the Group’s previous
compared a sample of revenue transactions,
budgets;
including credit notes, to supporting evidence
e.g. invoices, orders, proof of delivery/service
— Sensitivity analysis: we performed a sensitivity
and cash received (all where applicable), and
analysis on the key assumptions noted above;
assessed whether it was appropriate to
recognise revenue at a point in time.
— Comparing valuations: we compared the
carrying value of the parent Company’s
investments in subsidiaries and receivables
whether performance obligations had been met
due from group entities to value in use
and challenged the forecast used to determine
calculations for the relevant CGUs and to the
percentage of completion by: assessing the
market capitalisation of the Group;
historical accuracy of previous forecasts;
comparing the level of cost contingency to
adequacy of the parent Company’s disclosures
industry benchmarks; and, comparing the
in respect of investments in subsidiaries and
overall forecast margin to achieved on similar
group debtor balances.
contracts. Where revenue is recognised on an
input basis we selected a sample of cost items
and compared to supporting evidence, such as
invoices and timesheet records, to verify that
costs had been appropriately allocated to the
contract.
• For revenue recognised over time we assessed
— Assessing transparency: we assessed the
We performed the detailed tests above rather than
seeking to rely on controls because our knowledge
of the design of these controls indicated that we
would be unlikely to obtain the required evidence to
support reliance on controls.
31
ANNUAL REPORT 2022
33
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).
Refer to page 21 (Audit Committee
Report), page 50 (accounting
policy) and page 72 (financial
disclosures).
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.
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.
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 2022
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34
3. Our application of materiality and an overview of the
Our application of materiality and an overview of
3. Our application of materiality and an overview of
the scope of our audit
the scope of our audit
scope of our audit
Materiality for the Group financial statements as a
Materiality for the Group financial statements as a
whole was set at £150,000 (2019: £150,000),
whole was set at £140,000 (2021: £140,000),
determined with reference to a benchmark of Group
determined with reference to a benchmark of
profit before tax before goodwill impairment of which
Group profit before tax (PBT), of which it
it represents 4.0% (2019: 3.9% of group profit before
represents 5.2% (2021: 4.5%). In 2022, we
tax).
normalised PBT to exclude the non-trading items
disclosed in note 5 and by averaging over the last
Materiality for the parent company financial
five years due to the continuing impact of the
statements as a whole, as communicated by the group
COVID-19 pandemic on the Group’s financial
audit team, was set at £80,000 (2019:
results. In the prior year we also took the same
£100,000). This is lower than the materiality we would
approach to determine the benchmark value.
otherwise have determined with reference to a
benchmark of the Company’s net assets, of which it
Materiality for the parent company financial
represents 0.36% (2019: 0.24%).
statements as a whole, as communicated by the
group audit team, was set at £80,000 (2021:
£60,000). 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% (2021: 0.20%).
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.
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.
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.
The components within the scope of our work
accounted for the percentages illustrated opposite.
Performance materiality was set at 75% (2021:
75%) of materiality for the financial statements as
a whole, which equates to £105,000 (2021:
£105,000) for the group and £60,000 (2021:
£45,000) 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.
We agreed to report to the Audit Committee any
corrected or uncorrected identified misstatements
exceeding £7,000 (2021: £7,000), in addition to
other identified misstatements that warranted
reporting on qualitative grounds.
Of the Group’s four (2021: four) components, we
subjected all (2021: all) to full scope audits for
group purposes. The group team performed the
audits of each of the components and this
included a visit by the group team to the Falkland
Islands. 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.
The scope of the audit work performed was fully
substantive as we did not rely upon the Group’s
internal control over financial reporting.
Profit before tax before
goodwill impairment
Normalised group profit
before tax
£2.7m (2021: £3.1m)
£3.7 million (2019: £3.9
million profit before tax)
Group Materiality
Group materiality
£150,000 (2019: £150,000)
£140,000 (2021: £140,000)
£150,000
Whole financial
statements materiality
(2019: £150,000)
£140,000
Whole financial
statements materiality (2021:
£140,000)
£100,000
£105,000
Range of materiality at 4
Whole financial
components (£80,000 -
statements performance
£100,000)
materiality (2021: £105,000)
(2019: £100,000)
£110,000
Range of materiality at 4
components (£80,000-£110,000)
(2021: £60,000 to £100,000)
£7,500
Misstatements reported to the audit
committee (2019: £7,500)
£7,000
Misstatements reported to the
audit committee (2021: £7,000)
Normalised PBT
Group materiality
Profit before tax before
goodwill impairment
Group materiality
Group revenue
Group revenue
Group profit before tax
Group profit before tax
100%
100%
(2021 100%)
100%
(2021 100%)
100
Group total assets
Group total assets
100%
100%
(2021 100%)
100
Full scope for group audit purposes 2022
Full scope for group audit purposes 2020
Full scope for group audit purposes 2021
Full scope for group audit purposes 2019
Residual components
33
ANNUAL REPORT 2022
35
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
Materiality for the Group financial statements as a
going concern basis as they do not intend to liquidate the Group
whole was set at £150,000 (2019: £150,000),
or the Company or to cease their operations, and as they have
determined with reference to a benchmark of Group
concluded that the Group and the Company’s financial position
means that this is realistic. They have also concluded that there
profit before tax before goodwill impairment of which
are no material uncertainties that could have cast significant
it represents 4.0% (2019: 3.9% of group profit before
doubt over their ability to continue as a going concern for at least
tax).
a year from 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
We used our knowledge of the Group, its industry, and the
audit team, was set at £80,000 (2019:
general economic environment to identify the inherent risks to
£100,000). This is lower than the materiality we would
its business model and analysed how those risks might affect the
otherwise have determined with reference to a
Group’s and Company’s financial resources or ability to continue
benchmark of the Company’s net assets, of which it
operations over the going concern period. The risks that we
represents 0.36% (2019: 0.24%).
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
• A delay in the recovery of the business as a result of the
exceeding £7,500 (2019: £7,500), in addition to other
current economic uncertainty.
identified misstatements that warranted reporting on
We considered whether these risks could plausibly affect the
qualitative grounds.
liquidity in the going concern period by comparing severe, but
plausible downside scenarios that could arise from these risks
Of the group’s four (2019: four) components, we
individually and collectively against the level of available financial
subjected all (2019: all) to full scope audits for group
resources indicated by the Group’s financial forecasts.
purposes. The group team performed the audits of
each of the components. The audit was performed
We considered whether the going concern disclosure in note 1 to
using the materiality levels set out opposite, having
the financial statements gives a full and accurate description of
regard to the mix of size and risk profile of the Group
the Directors’ assessment of going concern, including the
across the components.
identified risks and, dependencies, and related sensitivities.
Our conclusions based on this work:
The components within the scope of our work
accounted for the percentages illustrated opposite.
— 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, may 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
5. Fraud and breaches of laws and regulations – ability to detect
goodwill impairment
£150,000 (2019: £150,000)
Group Materiality
£3.7 million (2019: £3.9
million profit before tax)
Identifying and responding to risks of material misstatement due
to fraud
£150,000
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)
Considering remuneration incentive schemes and
performance targets for directors and how these are
impacted by separately disclosed items; and
Profit before tax before
goodwill impairment
Group materiality
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 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.
Group profit before tax
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 streams and the limited opportunity for
management to manipulate the revenue recognised. In addition
to this, there was limited activity on contracts recognised with
reference to percentage of completion, with there being few
large contracts spanning year end and for those that were in
progress the contracts were in the very early stages or almost
complete. Because of this we determined that there was not a
significant risk of bias in accounting estimates driving revenue
and profit recognition.
100
Group total assets
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 to entry
to cash; and, unusual journals in seldom used pairings.
100%
Evaluated the business purpose of significant unusual
transactions.
Assessing significant accounting estimates for bias.
100
We did not identify any additional fraud risks.
Full scope for group audit purposes 2020
Full scope for group audit purposes 2019
Residual components
34
ANNUAL REPORT 2022
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
36
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 cover the other
— Our sector experience: we evaluated
information and, accordingly, we do not express an audit opinion
assumptions used in the relevant cash flow
or, except as explicitly stated below, any form of assurance
forecasts, in particular those relating to
conclusion thereon.
forecast revenue growth and profit margins,
Our responsibility is to read the other information and, in doing
through enquiries with the divisional
so, consider whether, based on our financial statements audit
managers and those responsible for preparing
work, the information therein is materially misstated or
and delivering the forecasts;
inconsistent with the financial statements or our audit
— Benchmarking assumptions: we compared the
knowledge. Based solely on that work we have not identified
group’s assumptions in relation to key inputs
material misstatements in the other information.
such as, projected economic growth and, with
Strategic report and directors’ report
the assistance of specialist valuation tools,
compared the discount rate to historical
information and externally derived data;
— we have not identified material misstatements in the
Based solely on our work on the other information:
strategic report and the directors’ report;
— Historical comparison: we evaluated the
— in our opinion the information given in those reports for the
adequacy of the budgets and forecasts used in
financial year is consistent with the financial statements; and
the value in use calculation by assessing the
historical accuracy of the Group’s previous
budgets;
— in our opinion those reports have been prepared in
accordance with the Companies Act 2006.
— Sensitivity analysis: we performed a sensitivity
7. We have nothing to report on the other matters on which
analysis on the key assumptions noted above;
we are required to report by exception
Under the Companies Act 2006, we are required to report to
you if, in our opinion:
— Comparing valuations: we compared the
carrying value of the parent Company’s
investments in subsidiaries and receivables
— adequate accounting records have not been kept by the
due from group entities to value in use
parent Company, or returns adequate for our audit have
calculations for the relevant CGUs and to the
not been received from branches not visited by us; or
market capitalisation of the Group;
— the parent Company financial statements are not in
— Assessing transparency: we assessed the
agreement with the accounting records and returns; or
adequacy of the parent Company’s disclosures
— certain disclosures of directors’ remuneration specified by
in respect of investments in subsidiaries and
group debtor balances.
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 29,
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 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.
We identified areas of laws and regulations that could reasonably
Recoverability of Parent
Forecast-based valuation
be expected to have a material effect on the financial statements
Company’s investment in, and
from our general commercial and sector experience and through
debt due from, subsidiaries
discussion with the directors and other management (as required
by auditing standards), and discussed with the directors and other
(£23.9 million investment in, and
management the policies and procedures regarding compliance
£10.2 million debt due from,
with laws and regulations.
subsidiaries; 2019: £27.6 million
investment in and £8.7 million debt
We communicated identified laws and regulations throughout
due from subsidiaries)
our team and remained alert to any indications of non-
compliance throughout the audit. The potential effect of these
Refer to page 56
laws and regulations on the financial statements varies
(accounting policy) and page 82-83
considerably.
(financial disclosures).
Firstly, the Group is subject to laws and regulations that directly
affect the financial statements including financial reporting
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 following areas as those most likely to have such an
effect: health and safety, anti-bribery, employment law. Auditing
standards limit the required audit procedures to identify non-
compliance with these laws and regulations to enquiry of the
Directors and other management and inspection of regulatory
and legal correspondence, if any. Therefore, if a breach of
operational regulations is not disclosed to us or evident from
relevant correspondence, an audit will not detect that breach.
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.
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.
35
ANNUAL REPORT 2022
37
Auditor’s responsibilities
3. Our application of materiality and an overview of the
scope of our audit
Our objectives are to obtain reasonable
assurance about whether the financial
Materiality for the Group financial statements as a
statements as a whole are free from material
whole was set at £150,000 (2019: £150,000),
misstatement, whether due to fraud or error,
determined with reference to a benchmark of Group
and to issue our opinion in an auditor’s report.
profit before tax before goodwill impairment of which
Reasonable assurance is a high level of
it represents 4.0% (2019: 3.9% of group profit before
assurance, but does not guarantee that an audit
tax).
conducted in accordance with ISAs (UK) will
always detect a material misstatement when it
Materiality for the parent company financial
exists. Misstatements can arise from fraud or
statements as a whole, as communicated by the group
error and are considered material if, individually
audit team, was set at £80,000 (2019:
or in aggregate, they could reasonably be
£100,000). This is lower than the materiality we would
expected to influence the economic decisions of
otherwise have determined with reference to a
users taken on the basis of the financial
benchmark of the Company’s net assets, of which it
statements.
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.
We agreed to report to the Audit Committee any
corrected or uncorrected identified misstatements
exceeding £7,500 (2019: £7,500), in addition to other
9. The purpose of our audit work and to whom we owe our
identified misstatements that warranted reporting on
responsibilities
qualitative grounds.
This report is made solely to the Company’s
Of the group’s four (2019: four) components, we
members, as a body, in accordance with Chapter
subjected all (2019: all) to full scope audits for group
3 of Part 16 of the Companies Act 2006. Our
purposes. The group team performed the audits of
audit work has been undertaken so that we
each of the components. The audit was performed
might state to the Company’s members those
using the materiality levels set out opposite, having
matters we are required to state to them in an
regard to the mix of size and risk profile of the Group
auditor’s report and for no other purpose. To
across the components.
the fullest extent permitted by law, we do not
accept or assume responsibility to anyone other
The components within the scope of our work
than the Company and the Company’s members,
accounted for the percentages illustrated opposite.
as a body, for our audit work, for this report, or
for the opinions we have formed.
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
5 July 2022
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
36
ANNUAL REPORT 2022
38
Non-trading
Items
(Note 5)
2021
£’000
-
-
-
57
57
-
57
Total
2021
£’000
32,578
(19,437)
13,141
(12,058)
1,083
(881)
202
Consolidated Income Statement
FOR THE YEAR ENDED 31 MARCH 2022
Notes
4
Revenue
Underlying
2022
£’000
40,319
Cost of sales
(23,405)
Gross profit
16,914
Non-trading
Items
(Note 5)
2022
£’000
-
-
-
Total
2022
£’000
Underlying
2021
£’000
40,319
32,578
(23,405)
(19,437)
16,914
13,141
Operating expenses
(13,834)
(300)
(14,134)
(12,115)
Operating
profit / (loss)
3,080
(300)
2,780
1,026
Finance expense
(796)
-
(796)
(881)
2,284
(300)
1,984
145
6
8
9
Profit / (loss) before
tax
Taxation
Profit / (loss) for the
year attributable to
equity holders of
the company
(1,094)
57
(1,037)
(147)
(46)
(193)
1,190
(243)
947
(2)
11
9
10
Earnings per share
Basic
Diluted
9.5p
9.5p
7.6p
7.6p
0.0p
0.0p
0.1p
0.1p
The accompanying notes form part of these Financial Statements.
ANNUAL REPORT 2022
39
Consolidated Statement of Comprehensive Income
FOR THE YEAR ENDED 31 MARCH 2022
Notes
Profit for the year
17
17
23
17
Cash flow hedges: effective portion of changes in fair value
Deferred tax on share options and 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
Total other comprehensive income
Total comprehensive income
The accompanying notes form part of these Financial Statements.
2022
£’000
947
878
58
(205)
731
237
(62)
175
906
1,853
2021
£’000
9
303
30
(58)
275
(272)
71
(201)
74
83
ANNUAL REPORT 2022 Consolidated Balance Sheet
AT 31 MARCH 2022
40
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
Derivative financial instruments
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
Corporation tax payable
Total current liabilities
Non-current liabilities
2022
£'000
4,229
39,080
8,164
259
44
725
666
644
2021
£'000
4,183
40,361
7,123
259
88
590
739
-
53,811
53,343
6,740
7,947
511
9,572
24,770
78,581
(9,970)
(1,536)
(229)
5,871
5,868
558
14,556
26,853
80,196
(6,775)
(3,424)
(113)
(11,735)
(10,312)
21
Interest-bearing loans and borrowings
(19,713)
(24,799)
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
-
(2,562)
(3,914)
(26,189)
(37,924)
40,657
1,251
17,590
703
20,672
441
40,657
(234)
(2,842)
(3,113)
(30,988)
(41,300)
38,896
1,251
17,590
703
19,584
(232)
38,896
These financial statements, of which the accompanying notes form part, were approved by the Board of directors on 5 July
2022 and were signed on its behalf by:
S I Munro
Director
ANNUAL REPORT 2022
41
Company Balance Sheet
AT 31 MARCH 2022
Notes
13
14
19
17
Non-current assets
Investment properties
Investment in subsidiaries
Loans to subsidiaries
Deferred tax
Derivative financial instruments
Total non-current assets
Current assets
19
Trade and other receivables
Corporation tax receivable
20
Cash and cash equivalents
Total current assets
TOTAL ASSETS
Current liabilities
Trade and other payables
Interest-bearing loans and borrowings
Total current liabilities
Non-current liabilities
22
21
21
Interest-bearing loans and borrowings
Derivative financial instruments
17
Deferred tax
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
2022
£'000
18,956
23,995
10,057
-
644
2021
£'000
19,164
23,970
10,207
44
-
53,652
53,385
45
84
4,376
4,505
118
54
5,462
5,634
58,157
59,019
(5,849)
(529)
(6,391)
(520)
(6,378)
(6,911)
(12,139)
(12,668)
-
(146)
(234)
-
(12,285)
(12,902)
(18,663)
(19,813)
39,494
39,206
1,251
17,590
5,389
14,823
441
1,251
17,590
5,389
15,208
(232)
39,494
39,206
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 loss for the financial year is £293,000 (2021: Profit £500,000).
These financial statements, of which the accompanying notes form part, were approved by the Board of directors on 5 July
2022 and were signed on its behalf by:
S I Munro
Director
Registered company number: 03416346
ANNUAL REPORT 2022
Consolidated Cash Flow Statement
FOR THE YEAR ENDED 31 MARCH 2022
42
Notes
11
12
13
23
24
Cash flows from operating activities
Profit for the year after taxation
Adjusted for:
(i) Non-cash items:
Amortisation
Depreciation: Property, plant and equipment
Depreciation: Investment properties
(Gain) / 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
Bank interest payable
Lease liability finance expense
Increase in hire purchase leases receivable
Corporation and deferred tax expense
Other adjustments
Operating cash flow before changes in working capital
(Increase) / decrease in trade and other receivables
Increase in inventories
Increase / (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 intangibles
Purchase of investment properties
Proceeds from sale of property, plant and equipment
2022
£'000
2021
£'000
947
9
21
2,216
197
(9)
56
45
63
2,193
37
53
64
1
2,526
2,411
13
436
304
(88)
1,037
1,702
5,175
(2,035)
(869)
3,195
291
5,466
(99)
(256)
5,111
(1,333)
(67)
(1,238)
76
3
469
348
(33)
193
980
3,400
2,828
(497)
(1,836)
495
3,895
(98)
(64)
3,733
(898)
-
(702)
-
Net cash flow from investing activities
(2,562)
(1,600)
Continued on next page.
ANNUAL REPORT 2022
43
Consolidated Cash Flow Statement
FOR THE YEAR ENDED 31 MARCH 2022
Notes
Net cash flow from investing activities
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 (decrease) / increase in cash and cash equivalents
Cash and cash equivalents at start of year
Exchange losses on cash balances
Cash and cash equivalents at end of year
The accompanying notes form part of these Financial Statements.
2022
£'000
(2,562)
2021
£'000
(1,600)
-
5,000
(5,927)
(436)
-
(716)
(304)
-
(12)
(125)
(7,520)
(4,971)
14,556
(13)
9,572
(624)
(469)
389
(649)
(348)
19
-
-
3,318
5,451
9,108
(3)
14,556
ANNUAL REPORT 2022
Company Cash Flow Statement
FOR THE YEAR ENDED 31 MARCH 2022
44
Notes
Cash flows from operating activities
Holding Company (loss) / profit for the year
Adjusted for:
Bank interest payable
Equity-settled share-based payment expenses
13
Depreciation: Investment properties
Corporation and deferred tax (income) / expense
Non-cash and other items adjustment
Operating cash flow before changes in working capital
Decrease / (increase) in trade and other receivables
Increase / (decrease) 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 flow from investing activities
Cash outflows in inter-company borrowing
Cash inflows in inter-company borrowing
Net cash flow from investing activities
Cash flow from financing activities
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 flow from financing activities
Net decrease 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.
2022
£’000
(293)
387
20
208
(31)
584
291
73
333
406
697
(14)
683
(150)
850
700
(520)
(387)
(1,875)
450
-
(12)
(125)
(2,469)
(1,086)
5,462
4,376
2021
£’000
500
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
ANNUAL REPORT 2022
45
Consolidated Statement of Changes in
Shareholders’ Equity
FOR THE YEAR ENDED 31 MARCH 2022
Equity share
capital
£’000
Share premium
account
£’000
Other
reserves
£’000
Retained
earnings
£’000
Balance 1 April 2020
1,250
17,590
703
19,784
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 loss
Transactions with owners in
their capacity as owners:
Share option exercise
Share based payments
Dividends paid
Total transactions with
owners
-
-
-
-
-
-
1
-
-
1
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
Hedge
reserve
£’000
(535)
-
303
-
-
-
9
-
(58)
30
(201)
(220)
303
19
1
-
20
-
-
-
-
Total
equity
£’000
38,792
9
303
(58)
30
(201)
83
20
1
-
21
Balance at 31 March 2021
1,251
17,590
703
19,584
(232)
38,896
Profit for the year
Cash flow hedges:
effective portion
of changes in fair value
Deferred tax on
cash flow hedges
Deferred tax on share
options and 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
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
947
-
-
58
175
-
878
947
878
(205)
(205)
-
-
58
175
1,180
673
1,853
(12)
45
(125)
(92)
-
-
-
-
(12)
45
(125)
(92)
Balance at 31 March 2022
1,251
17,590
703
20,672
441
40,657
The accompanying notes form part of these Financial Statements.
ANNUAL REPORT 2022 46
Company Statement of Changes in
Shareholders’ Equity
FOR THE YEAR ENDED 31 MARCH 2022
Equity share
capital
£’000
Share premium
account
£’000
Other
reserves
£’000
Retained
earnings
£’000
Balance at 1 April 2020
1,250
17,590
5,389
14,765
Hedge
reserve
£’000
(535)
Total
equity
£’000
38,459
Profit for the year
Cash flow hedges:
effective portion of
changes in fair value
Deferred tax on
cash flow hedges
Total comprehensive loss
Transactions with owners in
their capacity as owners:
Share option exercise
Share based payments
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
Loss 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
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
(293)
-
-
-
878
(293)
878
(205)
(205)
(293)
673
380
(12)
45
(125)
(92)
-
-
-
-
(12)
45
(125)
(92)
Balance at 31 March 2022
1,251
17,590
5,389
14,823
441
39,494
The accompanying notes form part of these Financial Statements.
ANNUAL REPORT 2022 47
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. The consolidated financial statements of the Group for the year ended 31 March 2022 were authorised for issue in
accordance with a resolution of the directors on 30 June 2022.
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 and in accordance with UK-adopted International Accounting Standards (“Adopted IFRS”). On publishing the
Parent Company financial statements 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 the 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.
In the current year, cash flows between the parent Company and its subsidiaries have been classified as either financing or
investing activities, depending on whether they relate to subsidiaries in a net payable or net receivable position respectively.
In the prior year, this distinction between cash flows with subsidiaries was not made and all amounts were classified as
financing activities. Had the cashflows been analysed separately, this would have resulted in payments of £1,700,000
and receipts of £1,600,000 being presented in investing activities, with a corresponding reduction in amounts presented
as financing cash flows. The directors consider that the key cash flow metrics for the users of the Company financial
statements are net cash from operating activities and the total net movement in cash and cash equivalents and as this
change has no impact on either of these metrics, and no impact on the Company’s reported profit or loan covenants,
the directors have concluded that the impact on the financial statements is not material and therefore the prior year
presentation has not been restated.
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 2022 the Group had net current assets of £13.0 million, cash balances of £9.6 million and net debt of
approximately £11.7 million.
Cash flow forecasts for the Group have been prepared covering the going concern period and the directors have considered
downside scenarios to the base case forecasts to reflect emerging risks and uncertainties as a result of global economic
conditions. The base case and sensitised forecasts indicate that the business will be cash generative over this period and
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.
ANNUAL REPORT 2022 48
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.
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 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 2022, non-trading items were made up of £300,000 of people-related restructuring costs
including employee redundancies and compensation payable to the former Chief Executive. In the year ended 31 March
2021, non-trading items were made up of £443,000 of restructuring costs which were offset by £500,000 of income from
the release of historic liabilities included in accruals.
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 2022
49
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 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 2022, 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.
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.
ANNUAL REPORT 2022 50
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.
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.
ANNUAL REPORT 2022 51
Notes to the Financial Statements
CONTINUED
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.
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.
ANNUAL REPORT 2022 52
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.
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 identified, 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.
ANNUAL REPORT 2022 53
Notes to the Financial Statements
CONTINUED
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.
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 Museum 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, 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 on
the basis that the nature of the construction contracts which the Group typically enters into is such that work performed
creates or enhances an asset from which the customer benefits over time as the goods and services are provided.
Construction contract revenue is measured using the direct measurement of the goods or services provided to date,
including materials and labour. Un-invoiced amounts are presented as contract assets and amounts invoiced in advance
of delivery are presented as contract liabilities.
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.
ANNUAL REPORT 2022 54
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.
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 relationship at 31 March 2022, which has two elements; an interest rate swap and an
embedded 0% interest rate floor. This contract commenced on 9th December 2021, as a result of the banking industry
moving from LIBOR to SONIA as the basis for determining interest rates. This contract replaced the previous 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 up until December 2021 when the LIBOR reference
rate was replaced with a SONIA based equivalent. 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 2022 was £12,500,000
(2021: £13,000,000). The asset held in respect of this swap at the year-end was £644,000 (2021: liability £234,000).
The movement in the year reflects anticipated interest rate rises over the remaining period of the swap.
ANNUAL REPORT 2022
55
Notes to the Financial Statements
CONTINUED
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, SONIA 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;
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.
ANNUAL REPORT 2022
56
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 is included in investment property
(where it constitutes land and buildings) or in property, plant and equipment (where it 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 2022
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 2022 57
Notes to the Financial Statements
CONTINUED
2. Segmental information analysis CONTINUED
Ferry
Services
(Portsmouth)
£’000
Art Logistics
and Storage
(UK)
£’000
Unallocated
£’000
2022
Revenue
Segment operating profit before tax &
non-trading items
Non-trading items
Profit / (loss) before net financing costs
Finance expense
Segment profit / (loss) before tax
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
General
Trading
(Falkland
Islands)
£’000
21,655
1,835
-
1,835
(56)
1,779
31,401
(9,582)
21,819
1,129
1,238
67
2,434
2,434
-
2,434
834
197
-
8
Total Depreciation and Amortisation
1,039
3,066
155
-
155
(276)
(121)
15,598
1,090
(41)
1,049
(464)
585
9,840
32,275
(8,318)
(19,045)
1,522
13,230
52
-
-
52
52
-
52
316
-
-
130
446
258
-
-
258
152
106
258
423
-
21
505
949
Underlying profit / (loss)
Segment operating profit before
non-trading items
Interest expense
Underlying profit / (loss) before tax
1,835
(56)
1,779
155
1,090
(276)
(121)
(464)
626
Total
£’000
40,319
3,080
(300)
2,780
(796)
1,984
78,581
(37,924)
40,657
1,439
1,238
67
2,744
2,638
106
2,744
1,573
197
21
643
2,434
3,080
(796)
2,284
-
-
(259)
(259)
-
(259)
5,065
(979)
4,086
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
ANNUAL REPORT 2022 2021
Revenue
Segment operating profit / (loss) before
non-trading items
Non-trading items
Profit / (loss) before net financing costs
Finance expense
Segment profit / (loss) before tax
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)
General
Trading
(Falkland
Islands)
£’000
20,874
1,852
500
2,352
(68)
2,284
29,498
(8,687)
20,811
358
702
-
1,060
1,060
-
1,060
787
37
-
29
853
Ferry
Services
(Portsmouth)
£’000
Art Logistics
and Storage
(UK)
£’000
Unallocated
£’000
1,445
(856)
(140)
(996)
(329)
(1,325)
10,259
30
(221)
(191)
(484)
(675)
11,411
33,648
(10,266)
(22,062)
1,145
11,586
-
-
-
-
-
-
-
327
-
-
124
451
540
-
-
540
151
389
540
461
-
63
465
989
30
(484)
(454)
-
-
(82)
(82)
-
(82)
5,639
(285)
5,354
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
Segment operating profit / (loss) before
non-trading items
Interest expense
Underlying profit / (loss) before tax
1,852
(856)
(68)
1,784
(329)
(1,185)
58
Total
£’000
32,578
1,026
57
1,083
(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
ANNUAL REPORT 2022 59
Notes to the Financial Statements
CONTINUED
2. Segmental information analysis CONTINUED
The £5,065,000 (2021: £5,639,000) unallocated assets above include £4,376,000 (2021: £5,462,000) of cash and
£644,000 (2021: £177,000) of prepayments and £45,000 (2021: £nil) of trade and other receivables held in FIH group plc.
The £979,000 (2021: £285,000) 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:
2022
Revenue (by source)
Assets and Liabilities:
United
Kingdom
£’000
Falkland
Islands
£’000
Total
£’000
18,664
21,655
40,319
Non-current segment assets, excluding deferred tax
36,071
17,074
53,145
Capital expenditure: cash
204
2,434
2,638
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
ANNUAL REPORT 2022
60
Total
Revenue
£’000
9,666
2,770
5,797
2,545
877
Sale of goods,
recognised
immediately
on sale
£’000
Rendering
of services:
recognised
immediately
£’000
Rendering
of services,
provided over
a period of
time
£’000
9,666
2,034
1,499
-
-
13,199
-
-
-
372
-
1,677
-
2,049
3,066
-
13,199
5,115
9,701
2,016
2,069
-
-
13,786
-
-
-
419
-
1,414
-
1,833
1,445
-
13,786
3,278
-
364
4,298
868
877
-
321
3,276
839
819
6,407
21,655
-
15,598
22,005
3,066
15,598
40,319
Total
Revenue
£’000
9,701
2,756
5,345
2,253
819
5,255
20,874
-
10,259
15,514
1,445
10,259
32,578
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
2022
Falkland Islands
Retail sales
Automotive sales
Housebuilding and construction
Support Services
Rental property income
FIC (Falkland Islands)
PHFC (Portsmouth)
Art logistics and storage
Total Revenue
2021
Falkland Islands
Retail sales
Automotive sales
Housebuilding and construction
Support Services
Rental property income
FIC (Falkland Islands)
PHFC (Portsmouth)
Art logistics and storage
Total Revenue
ANNUAL REPORT 2022 61
Notes to the Financial Statements
CONTINUED
5. Non-trading items
Profit before tax as reported
Non-trading items:
Restructuring costs
Other credits
Underlying profit before tax
2022
£’000
1,984
300
-
2,284
2021
£’000
202
443
(500)
145
Restructuring costs comprise people-related costs including employee redundancies and compensation payable to the
former Chief Executive. Other credits in 2021, relate to derecognition of historic liabilities, which were previously included
within accruals, on the basis that the amounts are no longer enforceable.
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
Expected credit loss on trade and other receivables
Cost of inventories recognised as an expense
COVID-19 and other 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
2022
£’000
465
2,413
21
13
114
9,868
(500)
2022
£’000
66
179
-
5
250
2021
£’000
393
2,230
63
3
39
10,226
(1,760)
2021
£’000
41
129
-
5
175
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 2022
62
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
2022
27
208
6
102
7
350
2021
31
189
7
99
7
333
2022
2021
-
-
-
-
7
7
-
-
-
-
7
7
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
2022
£’000
2021
£’000
12,472
11,752
45
821
505
1
821
498
2022
£’000
769
45
90
5
2021
£’000
471
1
59
10
Total employment costs
13,843
13,072
909
541
During the year, the Group made use of support schemes from the UK Government 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, provided grants to cover the cost of employees who were furloughed. Amounts received
under this scheme are classified as government grants and are accounted for in accordance with IAS 20 Government
Grants. Such grants totalling £210,000 for the year ended 31 March 2022 (2021: £1,760,000), 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 2022
63
Notes to the Financial Statements
CONTINUED
8. Finance expense
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 expense / (credit)
Current year
Adjustments for prior years
Current tax expense / (credit)
Deferred tax expense
Origination and reversal of temporary differences
Change in UK tax rate to 25%
Adjustments for prior years
Deferred tax expense (see note 17)
Total tax expense
Reconciliation of the effective tax rate
Profit on ordinary activities before tax
Tax using the UK corporation tax rate of 19% (2021: 19%)
Expenses not deductible for tax purposes
Additional capital allowances – super deduction
Effect of increase in rate of deferred tax
Effect of higher tax rate overseas
Adjustments to tax charge in respect of previous periods
2022
£’000
(436)
(56)
(304)
(796)
2021
£’000
(469)
(64)
(348)
(881)
2022
£’000
2021
£’000
397
(25)
372
92
523
50
665
1,037
2022
£’000
1,984
377
84
(7)
523
35
25
(52)
-
(52)
258
(12)
(1)
245
193
2021
£’000
202
39
56
-
-
99
(1)
Total tax expense
1,037
193
ANNUAL REPORT 2022 64
Tax recognised directly 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 share options and other financial liabilities
Deferred tax expense / (credit) recognised directly in other comprehensive income
In the UK, deferred tax has been calculated at 25% (2021: 19%).
2022
£’000
205
62
(58)
209
2021
£’000
58
(71)
(30)
(43)
The deferred tax assets and liabilities in FIC have been calculated at the Falkland Islands’ tax rate of 26% (2021:26%).
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.
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, adjusted to assume the full issue of share options outstanding, to the
extent that they are dilutive.
Profit on ordinary activities after taxation
Average number of shares in issue
Maximum dilution with regards to share options
Diluted weighted average number of shares
Basic earnings per share
Diluted earnings per share
2022
£’000
947
2021
£’000
9
2022
Number
2021
Number
12,518,567
12,470,827
-
281,490
12,518,567
12,752,317
2022
7.6p
7.6p
2021
0.1p
0.1p
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 2022 65
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 profit / (loss) after tax
Effective tax rate
Weighted average number of shares in issue (from above)
Diluted weighted average number of shares (from above)
Basic earnings per share on underlying profit
Diluted earnings per share on underlying profit
11. Intangible assets
Cost:
At 1 Apr 2020 and 31 March 2021
Additions
At 31 March 2022
Accumulated amortisation and impairment:
At 1 Apr 2020
Amortisation
At 31 March 2021
Amortisation
At 31 March 2022
Net book value:
At 1 April 2020
At 31 March 2021
At 31 March 2022
2022
£’000
2,284
(1,094)
1,190
47.9%
2021
£’000
145
(147)
(2)
-101.4%
12,518,567
12,470,827
12,518,567
12,752,317
9.5p
9.5p
0.0p
0.0p
Computer
Software
£’000
Brand name
£’000
Goodwill
£’000
Total
£’000
564
67
631
470
63
533
21
554
94
31
77
2,823
11,576
14,963
-
-
67
2,823
11,576
15,030
785
-
785
-
785
2,038
2,038
2,038
9,462
10,717
-
63
9,462
10,780
-
21
9,462
10,801
2,114
2,114
2,114
4,246
4,183
4,229
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 2022 66
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 2020
Goodwill at 31 March 2021
Goodwill at 31 March 2022
Impairment
Art Logistics and
Storage
£’000
2,077
2,077
2,077
Falkland
Islands
£’000
37
37
37
Total
£’000
2,114
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 the higher of a value-in-use calculation and fair value less costs to sell, 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 2020, the only material goodwill and
indefinite life assets remaining at 31 March 2022 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 2022.
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 of 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.
For the Ferry Services CGU, the recoverable amount was determined by reference to value-in-use, but for the Art Logistics
and Storage CGU, the recoverable amount was determined by fair value less costs to sell, after having performed value-in-
use calculations using the assumptions described below. Fair value less costs to sell for the Art Logistics and Storage CGU
is underpinned by an independent valuation of the art storage warehouses in East London which indicates a fair value well
in excess of the £24.7 million carrying value of the Art Logistics and Storage CGU.
As part of testing goodwill and indefinite life intangibles for impairment, forecast operating cash flows for the five years ending
31 March 2023-2027 and then to perpetuity have been used to assess the value-in-use of the Art Logistics and Storage
CGU. For testing right of use assets and ships associated with the Ferry Services CGU, a thirty-nine year model has been
used, including forecast operating cash flows for the five years ending 31 March 2023-2027, with high level assumptions
applied after the fifth 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 thirty-nine 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 of 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 15.2% (2021: 14.2%), and the cash flows of the Ferry Services CGU have been discounted using
a pre-tax discount rate of 9.9% (2021: 9.7%). 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 2022 67
Notes to the Financial Statements
CONTINUED
11. Intangible assets CONTINUED
Long term growth rates
Long term growth rates of 2% (2021: 2%) have been used for the Art Logistics and Storage CGU as part of the impairment
testing model. As noted above, a thirty-nine 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 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 cashflows. However, for both the Ferry Services CGU and the
Momart CGU, the directors do not consider that there are different reasonably possible outcomes that would lead to a
material impairment.
ANNUAL REPORT 2022 68
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
10,415
27,698
2,711
6,877
10,111
57,812
389
(28)
-
(50)
204
-
-
-
10,776
27,648
2,915
6,877
106
(82)
489
(1,144)
109
-
-
-
53
(3)
-
-
3
-
-
-
305
(830)
9,586
1,168
(396)
-
-
898
(908)
57,802
1,439
(481)
489
(1,144)
Cost:
At 1 April 2020
Additions in year
Disposals
At 31 March 2021
Additions in year
Disposals
Additions (non-cash)
Disposals (non-cash)
At 31 March 2022
10,145
27,757
2,965
6,880
10,358
58,105
Accumulated depreciation:
At 1 April 2020
Charge for the year
Disposals
At 31 March 2021
Charge for the year
Disposals
Disposals (non-cash)
At 31 March 2022
Net book value:
At 1 April 2020
At 31 March 2021
At 31 March 2022
2,832
3,332
817
236
-
1,053
160
(3)
-
2,548
6,571
16,100
242
-
2,790
243
-
-
709
(830)
2,193
(852)
6,450
17,441
799
(336)
-
2,216
(414)
(218)
388
-
3,720
371
-
-
4,091
1,210
3,033
6,913
19,025
24,366
23,928
23,666
1,894
1,862
1,755
4,329
4,087
3,847
3,540
3,136
3,445
41,712
40,361
39,080
618
(22)
3,428
643
(75)
(218)
3,778
7,583
7,348
6,367
ANNUAL REPORT 2022 69
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
Cost:
At 1 April 2020
Additions in year
Disposals
At 31 March 2021
Additions in year
Disposals
Additions (non-cash)
Disposals (non-cash)
At 31 March 2022
Accumulated depreciation:
At 1 April 2020
Charge for the year
Disposals
At 31 March 2021
Charge for the year
Disposals
Disposals (non-cash)
At 31 March 2022
Net book value:
At 1 April 2020
At 31 March 2021
At 31 March 2022
3,136
6,233
1,028
-
-
389
(28)
6,233
1,389
-
-
3,136
105
-
-
-
3,241
-
-
489
(1,144)
5,578
1,366
1,191
303
-
1,669
303
-
-
1,972
1,770
1,467
1,269
124
-
1,315
130
-
(218)
1,227
5,042
4,918
4,351
1
(82)
-
-
1,308
269
182
(22)
429
209
(75)
-
563
759
960
745
Total
£’000
10,415
389
(28)
10,776
106
(82)
489
(1,144)
10,145
2,832
618
(22)
3,428
643
(75)
(218)
3,778
7,583
7,348
6,367
18
-
-
18
-
-
-
-
18
6
9
-
15
1
-
-
16
12
3
2
No property, plant or equipment was financed by hire purchase loans in the year to 31 March 2022. 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 2022 70
Residential and
commercial
property
£’000
Group
Freehold land
£’000
6,675
653
7,328
1,238
8,566
999
37
1,036
197
1,233
5,676
6,292
7,333
782
49
831
-
831
-
-
-
-
-
782
831
831
Total
£’000
7,457
702
8,159
1,238
9,397
999
37
1,036
197
1,233
6,458
7,123
8,164
13. Investment properties
Cost:
At 1 April 2020
Additions in year
At 31 March 2021
Additions in year
At 31 March 2022
Accumulated depreciation:
At 1 April 2020
Charge for the year
At 31 March 2021
Charge for the year
At 31 March 2022
Net book value:
At 1 April 2020
At 31 March 2021
At 31 March 2022
The investment properties, held at cost, comprise land, plus residential and commercial property held for rental in the
Falkland Islands.
ANNUAL REPORT 2022 71
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
2022
£’000
2,177
10,139
173
12,489
1,346
2,979
-
4,325
83
2
700
2021
£’000
2,177
8,470
472
11,119
1,346
2,650
-
3,996
75
7
700
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 2022, the Group received rental income of £877,000 (2021: £819,000) from its investment
properties.
Assets under construction
At 31 March 2022, 2 investment properties were under construction (2021: 7) with a total cost to date of £173,000
(2021: £472,000).
Company
Cost:
At 1 April 2020, 31 March 2021 and 31 March 2022
Accumulated depreciation:
At 1 April 2020
Charge for the year
At 31 March 2021
Charge for the year
At 31 March 2022
Net book value:
At 1 April 2020
At 31 March 2021
At 31 March 2022
Commercial property
£’000
19,642
269
209
478
208
686
19,373
19,164
18,956
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.
ANNUAL REPORT 2022 72
The directors have reviewed the market value of the Leyton warehouses and have used valuation reports prepared
by Colliers International Property Consultants Limited. The directors consider that the market value of the property is
significantly higher than book value. Further detail is given in note 11.
14. Investment in subsidiaries
Country of
incorporation
Class of shares held
Ownership at
31 March 2022
Ownership at
31 March 2021
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)
Portsmouth Harbour Waterbus Company Limited (4) (6) (7)
Momart International Limited (5) (7)
Momart Limited (5) (6)
Dadart Limited (5) (6) (7)
UK
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
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%
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
Share based payments charge capitalised into subsidiaries
At 31 March
Company
2022
£’000
23,970
25
23,995
2021
£’000
23,989
(19)
23,970
The directors note that the net assets of the Company balance sheet of £39.5 million exceed the market capitalisation
of the Group which was circa £29.4 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 2022 using
assumptions consistent with those used for testing impairment of goodwill, indefinite life assets, right of 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 2023-2024 and then to perpetuity with a growth rate of 2%, discounted at a pre-tax rate of 16.8%.
No scenarios have been identified 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 2022.
ANNUAL REPORT 2022 73
Notes to the Financial Statements
CONTINUED
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
2022
£’000
519
(1)
518
259
2021
£’000
519
(1)
518
259
There were no recognised gains or losses for the years ended 31 March 2022 (2021: none).
The current assets balances above include £16,000 of cash (2021: £17,000), £5,000 of other debtors (2021: £5,000) and
£498,000 (2021: £498,000) of loans due from SatCO’s parent companies.
SatCO had no contingent liabilities or capital commitments as at 31 March 2022 or 31 March 2021 and the Group had no
contingent liabilities or commitments in respect of its joint venture at 31 March 2022 or 31 March 2021.
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
2022
£’000
725
511
1,236
2021
£’000
590
558
1,148
ANNUAL REPORT 2022 74
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 £310,000 (2021: £147,000). The cost of assets acquired for the purpose of
renting out under hire purchase agreements by the Group during the year amounted to £960,000 (2021: £825,000).
The total cash received during the year in respect of hire purchase agreements was £985,000 (2021: £1,163,000).
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
2022
£’000
1,571
(310)
(25)
1,236
511
725
2021
£’000
1,319
(147)
(24)
1,148
558
590
Present value of future lease receipts
1,236
1,148
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 instruments
Share-based payments
Total net deferred tax liabilities
Deferred tax asset arising on the defined benefit pension liabilities
Net tax liabilities
Group
2022
£’000
(3,537)
(509)
81
104
(161)
108
(3,914)
666
(3,248)
2021
£’000
(2,938)
(387)
62
66
44
40
(3,113)
739
(2,374)
ANNUAL REPORT 2022 75
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 (liability) / asset
Movement in deferred tax assets / (liabilities) in the year:
Property, plant & equipment
Intangible assets
Inventories (unrealised intragroup profits)
Other financial liabilities
Derivative financial instruments
Share-based payments
Pension
Deferred tax movements
Unrecognised deferred tax assets
1 April 2021
£’000
(2,938)
(387)
62
66
44
40
739
(2,374)
Company
2022
£’000
(146)
(146)
2021
£’000
44
44
Group
Recognised in
income
£’000
Recognised in
equity
£’000
31 March 2022
£’000
(3,537)
(509)
81
104
(161)
108
666
-
-
-
7
(205)
51
(62)
(209)
(3,248)
(599)
(122)
19
31
-
17
(11)
(665)
Deferred tax assets of £44,000 (2021: £44,000) 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 assets / (liabilities) in the year:
Derivative financial liabilities instruments
Other temporary differences
Deferred tax asset movements
Company
1 April 2021
£’000
Recognised in
income
£’000
Recognised in
equity
£’000
31 March 2022
£’000
44
-
44
-
15
15
(205)
-
(205)
(161)
15
(146)
ANNUAL REPORT 2022 76
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)
Movement in deferred tax assets / (liabilities) in the prior year:
Property, plant & equipment
Intangible assets
Inventories
Other financial liabilities
Derivative financial instruments
Share-based payments
Tax losses
Pension
1 April 2020
£’000
(2,713)
(387)
32
48
102
41
28
677
Deferred tax movements
(2,172)
(245)
Movement in deferred tax asset in the prior year:
Derivative financial instruments
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
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. It has been assumed that all material UK
deferred tax elements will reverse in 2023 or later and hence all elements are calculated at 25%. Deferred tax assets and
liabilities relating to the Falkland Islands have been recognised at a rate of 26%.
18. Inventories
Work in progress
Goods in transit
Goods held for resale
Total Inventories
Goods in transit are retail goods in transit to the Falkland Islands.
The Company has no inventories.
Group
2022
£’000
1,033
284
5,423
6,740
2021
£’000
691
972
4,208
5,871
ANNUAL REPORT 2022 77
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
Rental deposits
Prepayments
Accrued income
Total trade and other receivables
Group
Company
2022
£’000
2021
£’000
2022
£’000
2021
£’000
44
-
44
88
-
88
-
10,057
10,057
-
10,207
10,207
Group
Company
2022
£’000
5,362
88
1,515
982
7,947
2021
£’000
3,472
-
1,087
1,309
5,868
2022
£’000
2021
£’000
-
-
45
-
45
-
-
118
-
118
Amounts owed by subsidiary undertakings to the Company are interest free with no fixed repayment date.
The accrued income primarily relates to contracts where the work has been completed but had not been billed at the
balance sheet date. 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
2022
£’000
9,572
2021
£’000
14,556
2022
£’000
4,376
2021
£’000
5,462
ANNUAL REPORT 2022 78
Year ended 31 March
Net (decrease) / increase in cash and cash equivalents
Exchange losses
Net (decrease) / increase in cash and cash equivalents after exchange gains
Bank loan draw downs
Bank loan repayments
Lease modifications: non-cash
Lease liabilities drawdown: cash
Lease liabilities repayments
Decrease / (increase) in interesting bearing loans and borrowings
Net decrease / (increase) in debt
Net debt brought forward
Net debt at 31 March
Net debt
Cash balances
Group
Company
2022
£’000
(4,971)
(13)
(4,984)
-
5,927
331
-
716
6,974
1,990
(13,667)
(11,677)
2021
£’000
5,451
(3)
5,448
(5,000)
624
-
(389)
649
(4,116)
1,332
(14,999)
(13,667)
2022
£’000
(1,086)
-
(1,086)
-
520
-
-
-
520
(566)
(7,726)
(8,292)
2021
£’000
(304)
-
(304)
-
262
-
-
-
262
(42)
(7,684)
(7,726)
Group
Company
2022
£’000
9,572
2021
£’000
14,556
2022
£’000
4,376
2021
£’000
5,462
less: Total interest-bearing loans and borrowings
(21,249)
(28,223)
(12,668)
(13,188)
Net debt
(11,677)
(13,667)
(8,292)
(7,726)
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
2022
£’000
2021
£’000
2022
£’000
2021
£’000
13,235
17,313
12,139
12,668
6,478
19,713
7,486
24,799
-
-
12,139
12,668
948
588
1,536
2,797
627
3,424
529
-
529
520
-
520
14,183
20,110
12,668
13,188
7,066
21,249
8,113
28,223
-
-
12,668
13,188
ANNUAL REPORT 2022 79
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
2022
£’000
874
709
2021
£’000
955
853
1,616
1,952
10,094
11,727
13,293
15,487
2022
£’000
287
269
733
4,938
6,227
2021
£’000
337
317
869
5,851
7,374
2022
£’000
588
439
883
5,156
7,066
2021
£’000
618
536
1,083
5,876
8,113
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
Contract liability
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
2022
£’000
2021
£’000
2022
£’000
2021
£’000
4,111
3,025
254
-
249
2,080
2,962
314
9,970
-
-
249
1,435
1,843
223
6,775
29
-
-
-
5,085
5,960
-
120
615
-
-
231
200
-
5,849
6,391
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 £505,000 (2021: £498,000). The Group anticipates paying contributions amounting to £525,000 during the year
ending 31 March 2023. There were outstanding contributions of £11,000 (2021: £39,000) due to pension schemes at
31 March 2022.
ANNUAL REPORT 2022 80
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 2023 are £100,000. During the year ended
31 March 2022, 11 pensioners (2021: 11) received benefits from this scheme, and there are three deferred members at
31 March 2022 (2021: 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 14 years (2021: 15 years).
An actuarial report for IAS 19 purposes as at 31 March 2022 was 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
2022
2.7%
2.8%
3.9%
22.0
23.4
2021
2.5%
2.0%
3.4%
21.9
23.3
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 Falkland Islands.
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 2022 would have increased / (decreased) as a result of a change
in the respective assumptions by 1.0%.
Discount rate
Inflation assumption
Life expectancy
Effect on obligation 2022
-1% pa
£’000
380
(30)
+1% pa
£’000
(310)
15
Effect on obligation 2022
-1 year
£’000
(120)
+1 year
£’000
125
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 2022 81
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
2018
£’000
2019
£’000
2020
£’000
2021
£’000
2022
£’000
Present value of scheme liabilities
(2,839)
(2,772)
(2,604)
(2,842)
(2,562)
Related deferred tax assets
738
721
677
677
666
Net pension liability
(2,101)
(2,051)
(1,927)
(2,165)
(1,896)
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
2022
£’000
(2,842)
99
(56)
237
2021
£’000
(2,604)
98
(64)
(272)
Deficit in scheme at the end of the year
(2,562)
(2,842)
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
2022
£’000
56
2022
£’000
(43)
280
237
2021
£’000
64
2021
£’000
(21)
(251)
(272)
The total number of options outstanding at 31 March 2022 is 439,834 including (i) 3,591 nil cost options (2021: 12,864),
(ii) 431,243 options (2021: 210,474) granted under the Long Term Incentive Plan and (iii) 5,000 (2021: 58,152)
Share options granted with an exercise price equal to the market price on the date of grant.
ANNUAL REPORT 2022 82
(i)
Nil cost options granted to John Foster:
Date of
Issue
17 Jun 19
Total
Number
3,591
3,591
Share price at
grant date
pence
Fair value
per share
pence
Total fair
value
£
Earliest Exercise
Date
Latest Exercise
date
316.0
301.0
10,809
17 Jun 22
17 Jun 23
10,809
Reconciliation of nil cost options:
Outstanding at the beginning of the year
Options exercised during the year
Outstanding at the year end
Vested options exercisable at the year end
Weighted average life of outstanding options (years)
Number of options
2022
Number of options
2021
12,864
(9,273)
3,591
-
-
25,352
(12,488)
12,864
-
1.8
(ii)
Long term Incentive Plan grants at an exercise price of ten pence to local directors
and executives:
255,304 Long term Incentive Plan grants were issued on 3 December 2021 at an exercise price of ten pence to local
directors and executives, and expire in five years on 3 December 2026. During the year, 34,535 of these options were
forfeited and all of the balance of these options remain outstanding at 31 March 2022. None of these grants are exercisable
at 31 March 2022.
133,052 Long term Incentive Plan grants were issued on 14 July 2020 at an exercise price of ten pence to local
directors and executives, and expire in five years on 14 July 2025. During the year, none of these options were forfeited
(2021:10,000) and 123,052 of these options remain outstanding at 31 March 2022. None of these grants are exercisable
at 31 March 2022.
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, none of these options were forfeited (2021:48,113)
and 87,422 options remain outstanding at 31 March 2022. None of these grants are exercisable at 31 March 2022.
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
3 Dec 21
220,769
Total
431,243
Exercise Price
pence
Share price at
grant date
Pence
Fair value per
share
Pence
Total fair value
£
Earliest
Exercise
Date
Latest
Exercise
date
10.0
10.0
10.0
314.0
315.0
215.0
96.8
75.0
88.0
84,612
4 Jul 22
3 Jul 24
92,289
15 Jul 23
13 Jul 25
194,277
3 Dec 24
2 Dec 26
371,178
ANNUAL REPORT 2022 83
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
2022
210,474
255,304
(34,535)
-
431,243
-
4.4
2021
234,734
133,052
(102,651)
(54,661)
210,474
-
3.9
(iii)
Share options with an exercise price equal to the market price on the date of grant
Date of
Issue
19 Jan 15
Total
Number
5,000
5,000
Exercise
Share price at
Price
pence
272.5
grant date
pence
272.5
Fair value
per share
pence
63.0
Total fair
Earliest
Exercise
Latest Exercise
Date
date
19 Jan 18
18 Jan 25
value
£
3,150
3,150
The exercise price of outstanding options at 31 March 2022 is £2.725.
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:
Weighted average
exercise price (£)
2022
Number of
options
2022
Weighted average
exercise price (£)
2021
Number of
options
2021
Outstanding at the beginning of the year
2.68
58,152
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)
-
-
2.68
2.73
2.73
2.8
-
-
(53,152)
5,000
5,000
2.85
2.68
3.09
3.43
2.68
2.68
1.0
96,914
(3,848)
(27,172)
(7,742)
58,152
58,152
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 John Foster, 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 the estimated time
to maturity, the risk-free rate, expected volatility, and dividend yield. During the year ending 31 March 2022, 9,273 nil cost
options (2021: 12,488) were exercised over ordinary shares by John Foster at a gain of £23,183 (2021: £40,586).
ANNUAL REPORT 2022 84
In the year to 31 March 2021, employees around the Group exercised 3,848 other share options at a gain of £2,375.
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
2022
£’000
45
2021
£’000
1
Ordinary Shares
2022
2021
12,514,985
12,504,519
4,915
10,466
12,519,900
12,514,985
2022
£’000
1,251
2021
£’000
1,251
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.
During the year 4,915 shares (2021: 10,466) were issued following the exercise of share options.
On 8 July 2021, John Foster exercised 9,273 nil cost options, 4,358 options were cancelled to settle the employee tax
liabilities and 4,915 shares were issued as new share capital for which the nominal value was paid in full. A total cash
outflow of £10,896 was paid on the exercise of these options to settle the tax obligations arising.
For more information on share options see note 24.
Other reserves
The other reserves in the Group of £703,000 at 31 March 2022 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 the merger relief.
ANNUAL REPORT 2022 85
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 (2021: nil pence) per qualifying ordinary share
Interim: 1 pence (2021: nil pence) per qualifying ordinary share
Total dividends recognised in the period
26. Financial instruments
(i)
Fair values of financial instruments
Trade and other receivables
2022
£’000
-
125
125
2021
£’000
-
-
-
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 2022 86
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
Interest rate swap asset
Trade and other receivables
Rental deposits
Group
Company
2022
£’000
9,572
1,236
644
2021
£’000
14,556
1,148
-
5,362
3,472
132
-
2022
£’000
4,376
-
644
-
-
Total assets exposed to credit risk
16,946
19,176
5,020
2021
£’000
5,462
-
-
60
-
5,522
(234)
Interest rate swap liability
Total trade and other payables
-
(234)
-
(9,119)
(6,775)
(5,849)
(6,391)
Interest-bearing borrowings at amortised cost
(21,249)
(28,223)
(12,668)
(13,188)
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 £16,946,000 (2021: £19,176,000) being the total trade receivables, hire purchase
debtors, interest swap, rental deposits 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 2022 87
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
2022
£’000
1,773
775
254
2,365
195
5,362
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
2022
£’000
3,736
1,020
491
328
5,575
1,261
Impairment
2022
£’000
-
(2)
(58)
(153)
(213)
(25)
Net
2022
£’000
3,736
1,018
433
175
5,362
1,236
Gross
2021
£’000
2,880
447
184
64
3,575
1,172
Impairment
2021
£’000
(6)
(8)
(36)
(53)
(103)
(24)
2021
£’000
712
237
166
2,184
173
3,472
Net
2021
£’000
2,874
439
148
11
3,472
1,148
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
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
2022
£’000
127
114
(3)
238
25
213
238
2021
£’000
183
39
(95)
127
24
103
127
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 2022 88
(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 £20.1 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 £13.2 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 availability
of funds.
Liquidity risk – Group
The following are the contractual maturities of financial liabilities, including estimated interest:
2022
Financial liabilities
Secured bank loans
Lease liabilities
Trade payables
Other creditors
Loan from Joint Venture
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
14,183
16,410
1,346
1,332
7,066
4,111
1,797
249
13,293
4,111
1,797
249
874
4,111
1,797
249
3,486
1,616
10,246
10,094
-
-
-
-
-
-
-
-
709
-
-
-
-
Accruals
2,962
2,962
2,962
Total financial liabilities
30,368
38,822
11,339
2,041
5,102
20,340
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
20,110
23,141
8,113
3,025
234
1,076
1,843
15,487
3,025
1,044
1,076
1,843
3,355
955
3,025
147
1,076
1,843
1 to 2
years
£’000
3,926
853
-
141
-
-
2 to 5
years
£’000
5 years
and over
£’000
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
ANNUAL REPORT 2022 89
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:
2022
Financial liabilities
Secured bank loans
Trade payables
2021
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
12,668
14,825
29
29
893
29
Amounts owed to subsidiary undertakings
5,085
5,085
5,085
Other creditors
Accruals
89
615
89
615
89
615
879
2,807
10,246
-
-
-
-
-
-
-
-
-
-
-
-
Total financial liabilities
18,486
20,643
6,711
879
2,807
10,246
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
13,188
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
(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 2022 90
Group
2022
Cash and cash equivalents
Trade payables and other payables
Balance sheet exposure
Group
2021
Cash and cash equivalents
Trade payables and other payables
Balance sheet exposure
Total
Balance
sheet
exposure
£’000
283
GBP
£’000
9,289
Total
£’000
9,572
(1,426)
(8,544)
(9,970)
(1,143)
745
(398)
Total
Balance
sheet
exposure
£’000
GBP
£’000
Total
£’000
109
14,447
14,556
(455)
(346)
(6,320)
(6,775)
8,127
7,781
Other
£’000
40
(312)
(272)
Other
£’000
10
(31)
(21)
EUR
£’000
126
(635)
(509)
EUR
£’000
59
(280)
(221)
USD
£’000
117
(479)
(362)
USD
£’000
40
(144)
(104)
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 2022 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 2021.
EUR
USD
Equity
Profit or Loss
2022
£’000
51
36
2021
£’000
22
10
2022
£’000
51
36
2021
£’000
22
10
A 10% strengthening of the above currencies against pound sterling at 31 March 2022 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 2022 91
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
Bank loans
Group
Company
2022
£’000
2021
£’000
2022
£’000
2021
£’000
1,236
(508)
(7,066)
(6,338)
1,148
(607)
(8,113)
(7,572)
-
(234)
-
-
-
-
-
-
-
-
-
(234)
(13,675)
(19,503)
(12,668)
(13,188)
Total Variable rate financial instruments
(13,675)
(19,737)
(12,668)
(13,422)
At 31 March 2022, the Group had four bank loans:
(i)
£12.7 million (2021: £13.2 million) ten-year loan, which was drawn down on 28 June 2019, with interest
charged at the compounded daily SONIA rate plus 1.8693% (2021: LIBOR plus 1.75%);
(ii) £0.8 million (2021: £1.1 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;
(iii) £0.2 million (2021: £0.2 million) repayable over ten years until May 2025, secured against freehold property held in
(iv)
PHFC, with interest charged at 1.75% above the Bank of England base rate;
£0.5 million (2021: £0.6 million) drawn down by Momart, interest has been fixed on this loan at 2.73% for the full ten
years until December 2026.
The interest payable on the £12.7 million ten-year loan has been hedged by one interest swap, taken out on 30 December
2021 with an initial notional value of £12.625 million, with interest payable at the difference between 1.1766% and the
compounded daily SONIA rate plus 0.1193%.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 2022 is
£12.5 million (2021: £13.0 million). As both the ten-year loan and the interest swap were moved to SONIA at the same point
in time and are economically equivalent, there has been no material in-year accounting impact as a result of the change.
Lease liabilities
At 31 March 2022, the Group had the following lease liabilities:
(i)
£5.2 million lease liabilities payable to Gosport Borough Council; £4.5 million for the Gosport pontoon and £0.7
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 weighted average rate of 4.51%.
(ii) £1.2 million of property rental leases, including two warehouses rented by Momart, and the Momart and Bishop’s
Stortford head offices, which run for between 3 to 6 years as at 31 March 2022. The weighted average interest rate
of these rental liabilities is 3.25%.
(iii) £0.7 million of lease liabilities taken out to finance trucks by hire purchase leases at Momart, £0.3 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 3.08%.
The total blended average interest rate on the Group’s lease liabilities is 4.2 % per annum.
ANNUAL REPORT 2022
92
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 2021.
Equity
Interest rate swap liability
Variable rate financial liabilities
Profit or Loss
Interest rate swap liability
Variable rate financial liabilities
(v) Capital Management
Group
Company
2022
£’000
2021
£’000
2022
£’000
2021
£’000
127
(137)
127
(137)
130
(195)
130
(195)
127
(127)
127
(127)
130
(132)
130
(132)
The Group’s objectives when managing capital, which comprises equity and reserves at 31 March 2022 of £40,657,000
(2021: £38,896,000) 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 73 houses and flats and ten mobile homes in the Falkland
Islands, these 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
2022
£’000
974
3,897
16,805
21,676
2021
£’000
919
3,675
16,753
21,347
ANNUAL REPORT 2022 93
Notes to the Financial Statements
CONTINUED
28. Capital commitments
At 31 March 2022, the Group had entered into the following contractual commitments:
•
•
£385,000 in Momart comprising £272,000 for two new vehicles, £79,000 for an HGV trailer and other enhancements
to existing vehicles and £34,000 for climate control systems.
£270,000 in FIC comprising £190,000 for a new retail sales system and £80,000 for a warehouse office.
At 31 March 2021, the Group had entered into contractual commitments of £21,000 for a spray booth and vehicle exhaust
systems 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 30.3% (2021: 30.2%) of the voting shares of the
Company at 31 March 2022.
The compensation of key management personnel, which includes the FIH group plc directors and the directors of the
subsidiaries, is as follows:
Group
Company
Key management emoluments including social security costs
Company contributions to defined contribution pension plans
Share-related awards
2022
£’000
2,092
83
45
2021
£’000
1,610
74
1
Total key management personnel compensation
2,220
1,685
2022
£’000
795
-
20
815
2021
£’000
366
-
20
386
At 31 March 2022, the Group’s joint venture, SatCO, has debtors of £498,000 due from 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 entered into a contract with Pat Clunie, the FIC Finance director to build him a house on normal
commercial arm’s length terms. The house is due to be completed in the year ended 31 March 2023, at which point it
will be sold to Mr Clunie. The property is currently being constructed on FIC land and on completion of the build, FIC will
provide a loan of £30,000 to Mr Clunie 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 Clunie 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. £300 of interest is payable each year by Mr Clunie to FIC in respect of this loan.
During the year, FIC paid £4,160 (2021: £104,430) to JK Contracting in respect of work performed at arm’s length for
company. The proprietor of JK Contracting is the son-in-law of R Smith who was a director of FIC.
ANNUAL REPORT 2022
94
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 2022, 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 £125,000 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, 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 or prior year.
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.
During the year ended 31 March 2022, inventory provisions increased to £1,089,000 (2021: £999,000). Inventory greater
than 12 months old and with no sales in the twelve months before 31 March 2022 is provided against in full. If this provision
was reduced to 50% of the gross inventory value, the provision would reduce by circa £169,000 (2021: £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 2022, the provision would increase by £94,000 (2021: £74,000).
ANNUAL REPORT 2022 95
Stuart Munro
Chief Executive Officer
Jeremy Brade
Non-executive Director
Robert Johnston
Non-executive Director
Dominic Lavelle
Non-executive Director
Company Secretary
Iain Harrison
Directors and Company Information
Directors
Robin Williams,
Non-executive Chairman
Stockbroker and
Nominated Adviser
W.H. Ireland Limited
24 Martin Lane,
London EC4R 0DR
Registrar
Link Group
10th Floor Central Square,
29 Wellington Street,
Leeds LS1 4DL
Solicitors
BDB Pitmans LLP
50 Broadway,
Westminster,
London SW1H 0BL
Auditor
KPMG LLP
St. Nicholas House,
Park Row,
Nottingham NG1 6FQ
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 2022 F I H G R O U P P L C
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