TIDMFIH
RNS Number : 4263I
FIH Group PLC
07 August 2023
FIH group plc
("FIH" or the "Group")
Final Results
FIH, the AIM quoted international specialist services group with
businesses in the Falkland Islands and the UK, is pleased to
announce the Group's audited results for the year ended 31 March
2023 ("the period").
Highlights
-- Revenue up 31% to GBP52.7 million (2022: GBP40.3 million) and
underlying pre-tax profit up 39% to GBP3.2 million (2022: GBP2.3
million), with improvements in all divisions.
-- Pre-tax profit of GBP4.0 million (2022: GBP2.7 million as
restated*) including non-trading items.
-- Net cash flow from operating activities up 47% to GBP7.5 million (2022: GBP5.1 million).
-- Underlying earnings per share of 20.1p (2022: 9.5p).
-- Strong balance sheet at 31 March 2023 with cash up GBP3.2
million to GBP12.8 million (2022: GBP9.6 million) and net debt
(cash and cash equivalents less bank loans) improving by GBP4.1
million to GBP0.5 million (2022: GBP4.6 million).
-- A final dividend of 5.3 pence per share will be proposed at
the Annual General Meeting, taking the total dividend for the year
to 6.5 pence per share (2022: 3.0 pence per share).
* As detailed in note 1 to the financial statements.
Board and Governance
-- Reuben Shamu appointed as Chief Financial Officer on 12 September 2022.
-- Jeremey Brade stepped down as a non-executive director on 21 September 2022.
-- Holger Schröder appointed as a non-executive director on 1 June 2023.
-- Robin Williams to step down as Chairman at the Company's AGM in September 2023.
Stuart Munro, Chief Executive, said:
"I'm delighted to be able to present a strong set of results
which are underpinned by an equally strong cash performance,
signalling a good recovery from the pandemic and resilience to the
cost of living pressures which have impacted all sectors of the
business."
Enquiries:
FIH group plc
Stuart Munro, Chief Executive Tel: 01279 461630
Reuben Shamu, Chief Financial Officer
WH Ireland Ltd - NOMAD and Broker
to FIH Tel: 0207 220 1666
Chris Fielding / James Bavister
-------------------------
Novella Communications
Tim Robertson / Chris Marsh Tel: 020 3151 7008
-------------------------
Market Abuse Regulation (MAR) Disclosure
This announcement contains inside information for the purposes
of Article 7 of the UK version of Regulation (EU) No 596/2014 which
is part of UK law by virtue of the European Union (Withdrawal) Act
2018, as amended ("MAR"). Upon the publication of this announcement
via a Regulatory Information Service, this inside information is
now considered to be in the public domain.
The person responsible for arranging the release of this
announcement on behalf of the Company is Stuart Munro Chief
Executive Officer of the Company.
Chairman's Statement
I am pleased to report a year of solid performance with record
revenues for the Group and earnings growth in all three divisions,
delivering an underlying pre-tax profit of GBP3.2 million.
This is due in no small part to the Group's employees and I
would like to take this opportunity to thank each of them for their
contribution to such a strong improvement in performance.
The balance sheet remains strong, with cash of GBP12.8 million
at 31 March 2023 (2022 GBP9.6 million) and net debt (cash and cash
equivalents less bank loans) improving by GBP4.1 million to GBP0.5
million (2022: GBP4.6 million).
Dividend
Following the payment of an interim dividend of 1.2 pence per
share paid in January 2023 and reflecting the continued improvement
in trading since the half year, I am pleased to announce that a
final dividend of 5.3 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 2023 to 6.5 pence per
share (2022: 3.0 pence per share).
Board and Governance
On 12 September 2022, Reuben Shamu was appointed as Chief
Financial Officer and on 21 September 2022, Jeremy Brade stepped
down from his position as non-executive director of the Group.
Holger Schröder was appointed as a non-executive director of the
Group on 1 June 2023. Holger has over 28 years' experience gained
in a variety of predominantly Swiss companies, most recently as the
CFO and a board member of Janser Group which controls 12.6% of the
Company's equity. His experience and business knowledge will be of
great benefit and the strengthening of shareholder representation
on the Board should add further support to the Group's strategic
direction.
As announced on 24 February 2023, I will not be seeking
re-election to the Board at the Company's AGM in September. The
Board is considering options for its constituent members, including
the recruitment of an additional independent non-executive
director, and will make an announcement in due course.
Outlook and Strategy
Despite difficult trading conditions, performance has continued
to progress, giving confidence that the Group strategy, as detailed
in the CEO's Strategic Review, is on course. Increased focus can
now be brought to bear on opportunities to invest in further
developing the Group's existing businesses and on potential
complementary strategic acquisitions that either strengthen
existing operations or provide improved growth opportunities.
Robin Williams
Chairman
4 August 2023
Chief Executive's Strategic Review
Overview
The progress demonstrated in the Group's first half results
continued in the traditionally stronger second half of the
year.
Total revenue of GBP52.7million was a record for the Group and
31% ahead of the prior year. Trading in all three divisions and
across all their business sectors continued to improve, resulting
in an overall underlying profit before tax of GBP3.2 million, circa
39% ahead of the prior year and an underlying earnings per share of
20.1p (2022: 9.5p). Pre-tax profit was GBP4.0 million (2022: GBP2.7
million following restatement as detailed in note 1 to the
financial statements).
The Group results were underpinned by a net cash flow from
operating activities of GBP7.5 million, which included a GBP1.4
million improvement in working capital.
Group Trading Results for the Year Ended 31 March 2023
A summary of the trading performance of the Group is given in
the table below.
Group revenue 2023 2022 Change
Year ended 31 March GBPm GBPm %
--------------------------------------- ---- ----- ------
Falkland Islands Company 29.4 21.6 36.6%
Momart 19.5 15.6 25.0%
Portsmouth Harbour Ferry 3.8 3.1 22.6%
Total revenue 52.7 40.3 31.0%
--------------------------------------- ---- ----- ------
Group underlying pre-tax profit* GBPm GBPm %
Falkland Islands Company** 1.9 1.8 5.6%
Momart** 1.0 0.6 66.7%
Portsmouth Harbour Ferry** 0.3 (0.1) 400%
Total underlying pre-tax profit * 3.2 2.3 39.1%
Non-trading items (see notes below)*** 0.8 0.4 100.0%
--------------------------------------- ---- ----- ------
Reported profit before tax 4.0 2.7 48.1%
--------------------------------------- ---- ----- ------
* 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.
*** Non-trading items were comprised of:
(i) Favourable fair value movements on the non-effective portion
of derivative financial instruments used to hedge interest rate
fluctuations of GBP0.9 million (2022: GBP0.7 million).
(ii) GBP0.1 million of employee redundancy costs in the current
year and GBP0.3 million of people-related costs in the prior year,
including employee redundancies and compensation payable to the
former Chief Executive. Management consider that separate
presentation of these items is appropriate to facilitate year on
year comparison of performance of the Group.
Group Operating Company Performance
Falkland Islands Company ("FIC")
Total revenue increased by 36.6% to GBP29.4 million, with
improvements across all sectors of the division. Falkland Business
Services ("FBS") was the predominant growth area, driven by the
GBP17.3 million housing contract to construct seventy houses for
the Falkland Islands Government ("FIG") and the UK Ministry of
Defence ("MOD") secured in November 2021.
The ban on tourists entering the Falkland Islands was lifted in
May 2022 and Stanley once again welcomed visitors arriving on
cruise ships in the austral summer season. Over 59,000 tourists
visited (2022: nil), despite some vessels cancelling their visits
at short notice due to changeable weather conditions.
Whilst the retail environment continued to be challenging, the
strong tourist season, combined with targeted price increases,
resulted in a recovery in retail revenue compared to the year on
year revenue reduction experienced in the first half of the
year.
The overall underlying pre-tax profit for FIC of GBP1.9 million
was 5.6% ahead of the prior year, albeit at a reduced level of
profit margin, due largely to the mix and proportion of FBS
activity.
FIC Operating Results
Year ended 31 March 2023 2022 Change
GBPm GBPm %
--------------------------------------- ----- ----- ------
Revenues
FBS (housing and construction) 12.1 5.8 112.1
Retail 9.9 9.7 2.1
Falklands 4x4 3.1 2.8 10.7
Support services 3.3 2.5 32.0
Property rental 1.0 0.8 25.0
Total FIC revenue 29.4 21.6 36.6
FIC underlying operating profit 2.0 1.9 5.3
Net interest expense (0.1) (0.1) -
--------------------------------------- ----- ----- ------
FIC underlying profit before tax 1.9 1.8 5.6
--------------------------------------- ----- ----- ------
FIC underlying operating profit margin 6.4% 8.3% (23.0)
--------------------------------------- ----- ----- ------
FIC Divisional Activity
FBS revenue increased by 112.1% driven mainly by the GBP17.3
million contract to build a total of 70 houses for FIG and the MOD.
The first 10 houses were handed over at Bennetts Paddock in Stanley
for FIG and 5 at Mount Pleasant Camp for the MOD. Circa GBP1.9
million of variation orders have been received on this contract,
including the construction of a road providing easier access to the
housing units under construction. Other orders included the
construction of a wool storage warehouse for the Falkland Islands
Development Corporation, which is due to be completed by the end of
2023. GBP1.4 million of the orders were received after the balance
sheet date.
Retail was impacted by global inflationary pressures which drove
increases in both product prices and freight costs, as well as
having an adverse impact on the disposable income of Falklands
Islands residents. A strong performance from tourist sales driven
by an increase in visitors, offset shortfalls in locally-derived
business, resulting in a small increase in revenue.
At Falklands 4x4, the sale of new and used vehicles remained
stable, albeit with a change in mix with a greater proportion of
quad and motor bike sales. The increase in revenue came from an
increase in vehicles rentals and the sale of spare parts. Falklands
4x4 has become an authorised distributor of the new Ineos Grenadier
4x4 vehicle and first deliveries are expected in 2023.
In Support Services, the revenue increase arose mainly in
Penguin Travel, FIC's tourism business, where the arrival of
tourists saw revenue increasing three-fold on the prior year.
Cruise ship capacity for next summer season shows further potential
growth opportunities, with circa 100,000 tourists expected between
late September and mid-March 2024.
In Rental Properties, improving occupancy and a small increase
in the number of units in the property portfolio resulted in
revenue of GBP1 million, which was GBP0.2 million above the
previous year. The market place remains buoyant, with potential new
tenants waiting for units to become available.
FIC Key Performance Indicators and Operational Drivers
Year ended 31 March 2019 2020 2021 2022 2023
Staff numbers (FTE 31 March)* 175 214 206 232 242
----- ----- ------ ----- -----
Capital expenditure GBP'000 2,348 2,685 1,060 2,434 1,206
----- ----- ------ ----- -----
Retail sales growth % +5.7 +3.1 -3.0 -0.1 +2.1
----- ----- ------ ----- -----
Number of FIC rental properties** 54 65 75 83 85
----- ----- ------ ----- -----
Average occupancy during
the year % 84 89 93 86 90
----- ----- ------ ----- -----
Number of vehicles sold 76 71 71 81 82
----- ----- ------ ----- -----
Number of 3(rd) party houses
sold*** 6 22 15 11 14
----- ----- ------ ----- -----
Illex squid catch in tonnes
(000's) 57.4 57.6 106.1 123.8 66.8
----- ----- ------ ----- -----
Cruise ship passengers (000's) 62.5 72.1 Nil Nil 73.4
----- ----- ------ ----- -----
* 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.
Momart
Revenue of GBP19.5 million was GBP3.9 million (25%) ahead of the
prior year with improvements across all sectors of the business
.
The strong growth in Museum Exhibitions was pleasing given that
the sector is still recovering from the impact of Covid-19, both in
terms of exhibition funding and visitor numbers. It reflects a
steady pattern of project winning and an increasing number of
smaller un-tendered one-off projects.
Gallery Services also showed significant progress, assisted by a
broadening and deepening of existing client relationships and new
client wins.
The improvement in Storage revenue was driven by a combination
of an improvement in fill rate and price increases. Encouragingly,
a number of long-standing clients have indicated their intention to
continue and expand their use of Momart's storage facilities.
The improvements across all sectors resulted in an underlying
pre-tax profit of GBP1.0 million (2022: GBP0.6 million) with margin
improvements from a higher volume of work relative to the fixed
cost base, combined with better utilisation of staff.
Momart Operating Results
Year ended 31 March 2023 2022 Change
GBPm GBPm %
----------------------------------------- ----- ----- ------
Revenues
Museum Exhibitions 9.5 7.4 28.4
Gallery Services 7.3 5.8 25.9
Storage 2.7 2.4 12.5
Total Momart revenue 19.5 15.6 25.0
Momart underlying operating profit 1.4 1.0 40.0
Net Interest expense (0.4) (0.4) -
----------------------------------------- ----- ----- ------
Momart underlying profit / (loss) before
tax 1.0 0.6 66.7
----------------------------------------- ----- ----- ------
Momart underlying operating profit
margin 5.1% 3.8% 33.3
----------------------------------------- ----- ----- ------
Momart Key Performance Indicators
Year ended 31 March 2019 2020 2021 2022 2023
Staff numbers (FTE
31 March) 140 133 107 99 110
--------- --------- -------- -------- ---------
Capital expenditure
GBP'000's 20,034 638 540 258 1,087
--------- --------- -------- -------- ---------
Warehouse % fill vs
capacity 81.1% 86.9% 82.9% 84.0% 86.4%
--------- --------- -------- -------- ---------
Momart services charged GBP11.5m GBP10.8m GBP6.5m GBP9.1m GBP10.8m
out
--------- --------- -------- -------- ---------
Revenues from overseas GBP7.5m GBP6.2m GBP2.7m GBP5.5m GBP6.7m
clients
--------- --------- -------- -------- ---------
Exhibitions sales growth -6.5% -2.1% -58.3% 64.4% 28.4%
--------- --------- -------- -------- ---------
Gallery Services sales
growth 4.0% -22.4% -41.4% 70.6% 25.9%
--------- --------- -------- -------- ---------
Storage sales growth -6.3% 5.8% 9.1% 0.0% 12.5%
--------- --------- -------- -------- ---------
Total sales growth -2.9% -8.7% -45.5% 51.5% 25.0%
--------- --------- -------- -------- ---------
Portsmouth Harbour Ferry Company ("PHFC")
Passenger numbers at PHFC continued to recover, resulting in an
overall passenger volume for the year of 80% of pre-COVID levels
compared to 70% in the prior year. Along with careful management of
costs and inflation-mitigating fare rises, this resulted in an
underlying pre-tax profit for the first time since the
pandemic.
PHFC Operating Results
Year ended 31 March 2023 2022 Change
GBPm GBPm %
------------------------------------------------ --------- --------- -------
Revenues
Ferry fares & other revenue 3.8 3.1 22.6
Total PHFC revenue 3.8 3.1 22.6
------------------------------------------------ --------- --------- -------
PHFC underlying operating profit / (loss) 0.6 0.2 200
Pontoon lease liability & Boat loan
finance expense (0.3) (0.3) -
------------------------------------------------ --------- --------- -------
PHFC underlying profit / (loss) before
tax 0.3 (0.1) 400
------------------------------------------------ --------- --------- -------
PHFC Key Performance Indicators and Operational Drivers
Year ended 31 March 2019 2020 2021 2022 2023
Staff numbers (FTE at 31
March) 37 36 25 26 26
-------- -------- -------- -------- --------
Capital expenditure GBP'000's 50 65 - 52 218
-------- -------- -------- -------- --------
Ferry reliability (on time
departures) 99.8 99.8 99.9 99.9 99.8
-------- -------- -------- -------- --------
Number of weekday passengers
'000's 1,834 1,706 613 1,188 1,372
-------- -------- -------- -------- --------
% change on prior year -2.3 -7.0 -64.1 93.8 15.4
-------- -------- -------- -------- --------
Number of weekend passengers
'000's 722 659 195 500 576
-------- -------- -------- -------- --------
% change on prior year -1.6 -8.7 -70.4 156.4 15.2
-------- -------- -------- -------- --------
Total number of passengers
'000's 2,556 2,365 808 1,688 1,948
-------- -------- -------- -------- --------
% change on prior year -2.1 -7.5 -65.8 108.9 15.4
-------- -------- -------- -------- --------
Revenue growth % 0.4 -5.5 -65.9 114.2 19%
-------- -------- -------- -------- --------
Average yield per passenger GBP1.62 GBP1.69 GBP1.76 GBP1.76 GBP1.91
journey*
-------- -------- -------- -------- --------
*Total ferry fares divided by the total number of passengers
Trading Outlook
The overall trading outlook for the Group remains positive.
In FIC, the return of tourism to the Falkland Islands should
continue to boost both direct and indirect revenues across a number
of business sectors, which should help to mitigate the challenges
of the current global economic crisis. This, combined with a
continued strong order book in FBS and the potential for new
contracts with the MOD and FIG, bodes well for the future.
At Momart, the market, continues to recover and a renewed focus
on actively developing business with both existing and prospective
clients should continue to yield growth opportunities for the
business.
PHFC returned to profit, albeit passenger numbers are not yet
back to pre-COVID levels, which is consistent with other analogous
UK transport providers. Available capacity means that future
passenger growth can be accommodated without a commensurate
increase in cost, which would further improve profitability.
However, costs and fare pricing will continue to be carefully
managed.
The challenge of the global economic crisis remains, but the
progress delivered to date, an ongoing focus on pricing and cost
control and the strength that the Group's geographical breadth and
diversity of operations brings, gives confidence for the
future.
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. As evidenced by the improved results
delivered across all divisions, good progress was made during the
year, but more remains to be done.
Invest in developing the existing businesses. The Board
continues to be focussed on capitalising on potential opportunities
for further work for FIG and the MOD, building on the GBP17.3
million housing contract awarded in November 2021. During the year,
additional work was awarded under this contract, including the
construction of a road adjacent to the houses being constructed at
the Mount Pleasant Camp. In addition, potential opportunities to
maximise returns from existing FIC land assets are being explored.
The potential for additional opportunities arising from the
development of the Sea Lion oil field continues to 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. A number of
opportunities were reviewed during the year, but none met the
required criteria.
Risk Management, 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:
OPERATIONAL RISKS
Risk Comment Overall Impact
-------------------------------------- ----------------
PANDEMIC Whilst the prevalence and Low - decreased
Failure to respond in time severity of the impact of
to the impact of a future COVID continues to diminish,
pandemic may result in disruption other similar future virus
to the Group's operations outbreaks cannot be discounted.
through staff absenteeism,
disruption to supply chains A watching brief will be
and the logistics the Group's maintained, utilising previous
businesses rely on to deliver learning to assess the impact
products and services to customers. of potential virus outbreaks
on operations should they
arise, and to determine appropriate
mitigating actions.
-------------------------------------- ----------------
CYBER RISK There is a growing level Moderate
A cyber security breach can of sophistication, scale - new
result in unauthorised access and volume of targeted cyber
to company information, potential incidents which could impact
misuse of information systems, on group trading and potential
technology or data. loss of assets.
A full review of the IT
security environment has
been commissioned to modernise
prevention measures across
the Group.
-------------------------------------- ----------------
DATA PRIVACY Governance and oversight Low - new
Failure to comply with legal protocols are regularly reviewed
or regulatory requirements to maintain vigilance in
relating to data privacy in protection of the Group's
the course of business activities customer and staff data.
potentially leading to adverse
consequences, penalties or
consequential litigation.
-------------------------------------- ----------------
HEALTH AND SAFETY Health & Safety ("HSE") Low - unchanged
The Group is required to matters are considered a
comply with laws and regulation key priority for the Board
governing occupational health of FIH and all its operating
and safety matters. Furthermore, companies.
accidents could happen which
might result in injury to All staff receive relevant
an individual, claims against HSE training when joining
the Group and damage to our the Group and receive refresher
reputation. 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
-------------------------------------- ----------------
COMPLIANCE The regulatory environment Low - unchanged
Failure to comply with the continues to become increasingly
frequently changing regulatory complex.
environment could result in
reputational damage or financial The Group uses specialist
penalty. 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.
-------------------------------------- ----------------
Risk Management, Principal Risks and Impact
----------------------------------------------------------------------------------------------------
Risk Comment Potential Impact
---------------------------------- ----------------------
POLITICAL RISKS
---------------------------------- ----------------------
Historically, Argentina has Relations between the Low - unchanged
maintained a claim to the UK and Argentina continue
Falkland Islands and this to be strained.
dispute has never been officially
resolved. 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.
---------------------------------- ----------------------
ECONOMIC CONDITIONS
---------------------------------- ----------------------
Inflationary pressures across Continued focus on cost High - unchanged
all Group businesses impact efficiency. Customer and
the cost of wages, services supplier contracts structured
and products. to limit or pass on inflation
risk. Cost inflation monitored
closely and passed on
to customers via price
increases wherever possible.
---------------------------------- ----------------------
CREDIT RISK
---------------------------------- ----------------------
Credit risk is the risk of Effective processes are Low - unchanged
financial loss if a customer in place to monitor and
fails to meet its contractual recover amounts due from
obligations. customers.
---------------------------------- ----------------------
COMPETITION
---------------------------------- ----------------------
FIC is considered by the Local competition is Low - unchanged
senior management to be a healthy for FIC and stimulates
market leader in a number continuing business improvement.
of business activities, but
faces competition from local
entrepreneurs in many of the
sectors in which it operates. Largely unchanged. Moderate - unchanged
Momart sits in a highly competitive
market, with both UK and International
competitors investing for
growth.
---------------------------------- ----------------------
Large capital infrastructure FIC has been successful Moderate - unchanged
investment projects may entice in winning work against
larger overseas businesses overseas competitors and
to look at the opportunities has built up strong links
available and reduce the ability with FIG and MOD.
of FIC to undertake the work.
Being located in the
Falkland Islands gives
FIC a competitive advantage
against overseas companies.
---------------------------------- ----------------------
FOREIGN CURRENCY AND INTEREST
RATE RISK
---------------------------------- ----------------------
Momart is exposed to foreign Forward exchange contracts Low - unchanged
currency risk arising from are used to mitigate this
trading and other payables risk, with the exchange
denominated in foreign currencies. 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
FIC retail outlets accept by the use of interest
foreign currency and are exposed rate swaps.
to fluctuations in the value
of the dollar and euro.
---------------------------------- ----------------------
Risk Management, Principal Risks and Impact
Risk Comment Potential
Impact
INVENTORY
---------------------------------- ----------------
Inventory risk relates to Reviews of old and slow-moving Moderate-
losses on realising the carrying stock in Stanley are regularly unchanged
value on ultimate sale. Losses undertaken by senior management
include obsolescence, shrinkage and appropriate action taken.
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 faces this risk in the
Falkland Islands, where it
is very expensive to return
excess or obsolete stock back
to the UK.
---------------------------------- ----------------
PEOPLE
---------------------------------- ----------------
Loss of one or more key members None of the Group's businesses Low - unchanged
of the senior management team is reliant on the skills
or failure to attract and of any one person. The wide
retain experienced and skilled spread of the Group's operations
people at all levels across further dilutes the risk.
the business could have an
adverse impact on the business.
---------------------------------- ----------------
FIC has a reliance on being The development of tourism Low - decreased
able to attract staff from on St Helena has been slow
overseas including many from and the Falkland Islands
St Helena. Development of remain an attractive location
those locations might reduce for St Helenian people to
the pool of available staff. work.
---------------------------------- ----------------
All Group companies are experiencing This has driven wages costs Moderate
a shortage of skilled employees up. - unchanged
as the businesses grow and
recover from the pandemic.
In the UK, Momart has suffered
from shortages in drivers
and art technicians.
---------------------------------- ----------------
The Covid-19 related risks have been summarised into a more
general pandemic risk in the current financial year due the
Statement by the Directors in Performance of their Statutory
Duties in Accordance with s172(1) Companies Act 2006
The statement by the directors in performance of their statutory
duties in accordance with s172(1) Companies Act 2006 is included in
the Directors' Report.
Chief Financial Officer's Review
Financial Review
Restatements
As detailed in note 1 to the financial statements, comparative
numbers were restated to correct the accounting treatment of some
right of use assets, the carrying value of certain investments in
the Company and the application of hedge accounting.
Revenue
Group revenue increased by GBP12.4 million (31%) to GBP52.7
million with double digit growth in all three divisions.
Operating Profit
Operating profit at GBP3.9 million was GBP1.1 million ahead of
prior year. Underlying operating profit increased by GBP0.9 million
(30%) to GBP4.0 million (2022: GBP3.1 million).
Net Financing Income
The Group's net financing income of GBP0.1 million was GBP0.2
million ahead of the prior year net financing expense due primarily
to an increased movement in the fair value of the derivative
financial instrument.
Reported Pre-tax Profit
The reported pre-tax profit for the year ended 31 March 2023 was
GBP4.0 million (2022: GBP2.7 million - restated). Non-trading items
in the current year included a favourable fair value movement of
GBP0.9 million on a derivative financial instrument and GBP0.1
million of employee redundancy costs. The Group's underlying profit
before tax before these non-trading items was GBP3.2 million (2022:
GBP2.3 million). Non-trading items in the prior year included a
favourable fair value movement of GBP0.7 million on a derivative
financial instrument following a restatement of results as detailed
in note 1 to the financial statements and GBP0.3 million of people
related costs including employee redundancies and compensation
payable to the former Chief Executive.
Taxation
Tax on current year profits has decreased by GBP0.3 million.
This is mainly due to the prior year tax charge including a GBP0.5
million increase in deferred tax relating to the change in tax
rates from 19% to 25% from 1 April 2023, which was partly offset by
an increase in profits (GBP0.2 million).
Earnings per Share
Basic and Diluted Earnings per Share ("EPS") derived from
reported profits was 24.9 pence (2022: 11.9 pence - restated).
Basic and Diluted EPS derived from underlying profits was 20.1
pence (2022: 9.5 pence).
Balance Sheet
The Group's balance sheet remained strong, with total net assets
growing to GBP 44.0 million (2022: GBP 40.8 million - restated) and
retained earnings increasing by GBP3.2 million to GBP 24.5 million
(2022: GBP 21.4 million - restated).
Net Debt
Year ended 31 March 2023 2022 Change
GBPm GBPm GBPm
---------------------------------- ------- ------- -------
Bank loans (13.3) (14.2) 0.9
Cash and cash equivalents 12.8 9.6 3.2
---------------------------------- ------- ------- -------
Net debt (0.5) (4.6) 4.1
Lease liabilities* (6.4) (6.5) 0.1
Net debt after lease liabilities (6.9) (11.1) 4.2
---------------------------------- ------- ------- -------
* As detailed in note 1 to the financial statements, lease
liabilities have been restated, resulting in a reduction of GBP0.6
million at 31 March 2022.
Bank loans reduced to GBP13.3 million (2022: GBP14.2 million) as
a result of scheduled loan repayments of GBP0.9 million. The
Group's cash balances increased by GBP3.2 million to GBP12.8
million (2022: GBP9.6 million) reflecting improved trading and
working capital position. Overall net debt improved by GBP4.1
million to GBP0.5 million (2022: GBP4.6 million).
The Group's outstanding lease liabilities totalled GBP6.4
million (2022: GBP6.5 million - restated) with GBP4.6 million of
the balance (2022: GBP4.7 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 increased to GBP4.4
million (2022 GBP4.2 million) with additional investment in the
retail system in FIC.
The net book value of property, plant and equipment remained
materially the same at GBP38.7 million (2022: GBP38.7 million -
restated) with additions of GBP2.4 million being offset by
depreciation charges of GBP2.4 million.
At 31 March 2023, the Group had 85 (2022: 83) completed
investment properties, comprising commercial and residential
properties in the Falkland Islands, which are held for rental. In
addition, FIC held land in and around Stanley, including areas
zoned for industrial development and prime mixed-use land. FIC also
held undeveloped land outside Stanley.
The net book value of the investment properties and undeveloped
land of GBP7.9 million (2022: GBP8.2 million) had a fair value of
GBP12.6 million (2022: GBP12.5 million).
Deferred tax assets relating to future pension liabilities stood
at GBP0.5 million (2022: GBP0.7 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
raw materials increased by GBP0.2 million to GBP6.9 million at 31
March 2023 (2022: GBP6.7 million). A 12% increase in stock held for
resale in FIC was partially offset by a decrease in work in
progress with less private house building activity.
Trade and other receivables increased by GBP2.3 million to
GBP10.2 million at 31 March 2023 (2022: GBP7.9 million) with
increased construction business in the Falkland Islands and a high
volume of exhibition sales activity in Momart.
Trade and other payables increased by GBP3.7 million to GBP13.7
million at 31 March 2022 (2022: GBP10.0 million) reflecting
increased trading activity as detailed above and an increase in
amounts received in advance of service delivery in FIC.
At 31 March 2023, the liability due in respect of the Group's
only defined benefit pension scheme, in FIC, was GBP2.0 million
(2022: GBP2.6 million). This pension scheme, which was closed to
new entrants in 1988 and to further accrual in 2007, is unfunded
and liabilities are met from operating cash flow. 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 2023 and there are three
deferred members.
The Group's deferred tax liabilities, excluding the pension
asset at 31 March 2023, were GBP4.2 million (2022: GBP3.8 million -
restated) with the increase due largely to temporary differences on
property, plant and equipment.
Cash Flows
Net cash inflow from operating activities of GBP7.5 million was
GBP2.4 million more than the prior year. The increase was due to a
combination of a GBP0.8 million increase in underlying EBITDA* and
a GBP1.4 million improvement in working capital.
The Group's operating cash flow can be summarised as
follows:
Year ended 31 March 2023 2022 Change
GBPm GBPm GBPm
------------------------------------------- ------- ------- -------
Underlying profit before tax 3.2 2.3 0.9
Depreciation & amortisation 2.6 2.4 0.2
Gain on disposal of fixed asset (0.3) - (0.3)
Net interest payable 0.8 0.8 -
------------------------------------------- ------- ------- -------
Underlying EBITDA* 6.3 5.5 0.8
Non-trading, cash items (0.1) - (0.1)
Decrease / (Increase) in finance lease
receivables 0.2 (0.1) 0.3
Decrease / (increase) in working capital 1.4 - 1.4
Tax paid and other (0.3) (0.3) -
Net cash inflow from operating activities 7.5 5.1 2.4
Financing and investing activities
Capital expenditure (2. 0) (2.7) 0.7
Disposal of fixed assets 0.4 0.1 0.3
Net bank and lease liabilities interest
paid (0.8) (0.8) -
Bank and lease liability repayments (1.5) (6.6) 5.1
Dividends paid (0.4) (0.1) (0.3)
Net cash outflow from financing and
investing activities (4.3) (10.1) 5.8
------------------------------------------- ------- ------- -------
Net cash inflow / (outflow) 3.2 (5.0) 8.2
Cash balance b/fwd. 9.6 14.6 (5.0)
------------------------------------------- ------- ------- -------
Cash balance c/fwd. 12.8 9.6 3.2
------------------------------------------- ------- ------- -------
*EBITDA is defined as earnings before interest and tax after
adding being depreciation and amortisation costs
Financing and Investing Activities
During the year, the Group invested GBP2.0 million of capital
expenditure, comprising GBP1.9 million of fixed asset property,
plant and equipment and GBP0.1 million of computer software.
The bank and lease repayments of GBP6.6 million in the prior
year included GBP5.0 million CBILS loans repaid in June 2021.
The Strategic Report comprises the Chief Executive's Strategic
Review and the Chief Financial Officer's Review.
Approved by the Board of Directors and signed on behalf of the
Board
Stuart Munro
Chief Executive
4 August 2023
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 Chairman at Keystone Law Group plc and at Churchill
China plc, and is also a non-executive director at Headlam plc and
the Manufacturing Technology Centre Limited. Robin qualified as an
accountant in 1982 after graduating in engineering science from the
University of Oxford. He worked in corporate finance for ten years
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.
Reuben Shamu, Chief Finance Officer
Reuben joined the Board on 12 September 2022 as Chief Financial
Officer. He qualified as a chartered accountant with KPMG and
worked in professional practice for 12 years before moving into
industry in 2008. For the last 4 years he has been Commercial
Director for the UK operations of privately-owned CP Holdings
Group, which has interests in hotels and leisure, commercial office
real estate, engineering and construction. His previous roles
include Finance Director at Sturrock and Robson Group, Financial
Planning and Analysis Director at Smiths Detection Group and Group
Financial Controller at Veolia Water UK.
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, Supremex
Inc. (where he is Chairman), 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.
Dominic Lavelle, Non-executive Director
Dominic joined the Board on 1 December 2019. He 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.
Holger Schröder, Non-executive Director
Holger joined the Board on 1 June 2023. He has over 28 years'
experience gained in a variety of predominantly Swiss companies,
most recently as the CFO and a board member of Janser Group, a
family-owned real estate and investment business based in
Switzerland, where he has been for the last six years. Janser Group
controls 12.6% of the ordinary share capital of FIH (which
comprises 1,451,998 shares in FIH held by Janser Group and a
further 125,327 held personally by Martin Janser). Holger is a
member of the Audit, Nominations and Remuneration Committees.
Company Secretary
AMBA Secretaries Limited
400 Thames Valley Park Drive
Reading
Berkshire
RG6 1PT
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 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 and the
Chief Financial Officer offer to meet with all significant
shareholders after the release of the half year and full year
results and the Chairman is available throughout the year. The
Chief Executive, Chief Financial Officer and the Chairman are the
primary points of contact for the shareholders and are available to
answer queries over the phone or via email from shareholders
throughout the year.
Business Model and Strategy
The Group's strategy is to continue to develop the potential of
its existing companies: to fill storage capacity and make further
progress at Momart, to maintain the strong cash flow from PHFC and
to invest in FIC to take full advantage of the longer-term growth
opportunities in the Falkland Islands. While doing this, management
are also alert to the benefits of a well-judged complementary
acquisition that would give increased scale and growth potential
for the Group and enhance the liquidity of FIH shares.
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 considers that Mr Williams, Mr
Schröder, 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. 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.
The Board also acknowledges that Holger Schröder, who joined the
Board on 1 June 2023, represents one of the Company's major
shareholders, the Janser Group which controls 12.6% of the
Company's equity. The Board has considered Mr Schröder's
independence, given his representation of this shareholding and all
Board members have satisfied themselves that they consider Mr
Schröder to be independent. This is as a consequence of (i) Mr
Schröder being employed by the operational side of the Janser Group
and (ii) Janser Group having a division involved in the
investor-side decision making process which is separate from its
operational activities, where Mr Schröder is employed.
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 and Reuben Shamu,
Chief Financial Officer are the only executive directors. Robin
Williams, Robert Johnston, Dominic Lavelle and Holger Schröder 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 5 July
2022 there have been six Board meetings. Robin Williams, Stuart
Munro, Reuben Shamu, Robert Johnston and Dominic Lavelle have
attended all meetings. Jeremy Brade ceased to be a director prior
to the six meetings and Holger Schröder attended every meeting
after his appointment.
The Remuneration committee has met once since 5 July 2022 to
review executive base pay and bonus structure and all members of
the committee were in attendance. There have also been two Audit
Committee meetings since 5 July 2022, 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 replacement of the
Chairman, who is stepping down, and appointment of a non-executive
director.
Board Directors
The Board comprises Robin Williams, the non-executive Chairman,
Stuart Munro, the full time Chief Executive, Reuben Shamu, the full
time Chief Financial Officer and three other non-executive
directors, Robert Johnston, Dominic Lavelle and Holger Schröder
.
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, Grant Thornton, 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 and the Chief Financial Officer help keep
the Board up to date on areas of new governance and liaise 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. They also liaise 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 Evaluation
In view of the change in Chairman at the forthcoming AGM, no
review of the effectiveness of the Board was carried out in the
period. It is intended that one will be carried out in the first
twelve months of the tenure of the new Chairman, once
appointed.
Robin Williams
Chairman
4 August 2023
Audit Committee Report
The Audit Committee comprises the four non-executive directors:
Robert Johnston, Dominic Lavelle, Holger Schröder 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 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 June 2023.
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 suf cient 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 rm partner.
External Auditor
The external audit service was put out to tender during the year
and Grant Thornton UK LLP was appointed as the Company's external
auditor during the year. It is therefore the audit engagement
partner's first year on the assignment. 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 2023, there were no non-audit fees paid to either
the outgoing auditors KPMG LLP or incoming auditors Grant Thornton
UK LLP (2022: GBPnil).
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 signi cance to the business. Risks are identi ed
and monitored through risk registers at the Group level and
discussed at each Board meeting to consider new threats.
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:
Long term construction contracts
Significant estimation is involved in determining the revenue
and profit to be recognised on long term contracts. This includes
determining percentage completion at the balance sheet date by
estimating the total expected costs to complete each contract along
with their future profitability. These estimates directly influence
the revenue and profit that can be recognised on such
contracts.
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
4 August 2023
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 2023.
Results and Dividend
As set out in the Consolidated Income Statement, the Group
profit for the year after taxation amounted to GBP3,122,000 (2022:
GBP1,485,000). Basic earnings per share were 24.9 pence (2022: 11.9
pence).
With the Group's increase in profitability, the Board is pleased
to announce that a final dividend of 5.3 pence per share will be
recommended for approval at the Annual General Meeting. Together
with the interim dividend of 1.2 pence paid on 31 January 2023, the
proposed dividend will take the total dividend for the year ended
31 March 2023 to 6.5 pence per share (2022: 3.0 pence).
Principal Activities
The business of the Group during the year ended 31 March 2023
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.
Qualifying Indemnity Provisions
Qualifying indemnity provisions are detailed in the Corporate
Governance Statement on page 17.
Future Developments
Details of future developments are presented within the
Strategic Report on page 3 to 14.
Directors
Reuben Shamu was appointed as a director on 12 September 2022
and Holger Schröder was appointed as a director on 1 June 2023.
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.
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 GBP6,000 of trade
creditors at 31 March 2023 (2022: GBP29,000).
Share Capital and Substantial Interests in Shares
During the year no shares were issued. 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 4 August
2023:
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 3,596,553 28.73
----------------- ---------------------
Janser Group 1,577,325 12.61
----------------- ---------------------
Quaero Capital Funds (Lux) - Argonaut 1,057,158 8.44
----------------- ---------------------
J.F.C. Watts 797,214 6.37
----------------- ---------------------
Christian Struck 380,000 3.04
----------------- ---------------------
Charitable and Political Donations
Charitable donations made by the Group during the year amounted
to GBP15,802 (2022: GBP16,214), these were largely paid to local
community charities in the Falkland Islands. There were no
political donations in the year (2022: 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 to approve the appointment of Grant Thornton UK 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.
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 2023, 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.
Stakeholder Engagement
The directors engage with the Group's stakeholders on material
issues relating to their business, taking into consideration
current and future events and principal decisions. The engagement
supports the directors to understand the impact of their decisions
and identify any material issues. This aligns with the Group's
purpose and strategy. The details of the Group's interaction with
its wider stakeholders is as follows:
Customers:
FIC demonstrates its customer focus through surveys and regular
meetings with key customers to understand their requirements and
to build long-term relationships. During the financial year ended
31 March 2023, Board members met with the Governor of the Falkland
Islands and Chief Executive of FIG. They also met with the MoD.
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 also maintains 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 and away days.
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.
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
* Use of ground heat source systems on new housing
developments and fitting solar panels.
* Elimination of plastic bags from all retail outlets
and use of paper cups, straws, and other recyclable
packaging in the FIC cafes wherever possible.
* LED lighting in offices, warehouses and retail
outlets.
* Utilisation of best practice insulation methods for
building construction and renovation.
Momart
* Member of the Gallery Climate Coalition, an industry
wide body working on all impacts across the industry.
* Conversion of vehicles to meet the Euro 6 emissions
standard.
* LED lighting and movement sensors across all
warehouse units.
* 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.
PHFC
* Installation of new exhaust cleaners on the vessels
reducing NOx and Co2 emissions.
* 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 local government members and Gosport
Borough Council.
The Momart Business Process and Compliance Manager attends industry
forums, such as Logistics UK, discussing developments in 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.
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, Momart has held a Royal Warrant for work with
the Royal Collection since 1993.
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 providing a forum for the exchange of ideas
and expertise between registrars, collection managers and other
museum professionals in the United Kingdom, Europe and worldwide.
Shareowners and Analysts:
Beyond the Annual General Meeting, the Chief Executive, Chief Financial
Officer and the Chairman offer to meet with all significant shareholders
after the release of the half year and full year results. The Chief
Executive, Chief Financial Officer and the Chairman are the primary
points of contact for the shareholders and are available to answer
queries over the phone or via email from shareholders throughout
the year.
The Annual General Meeting provides a chance for 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 28
September 2023. 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.
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 2023 and in the preceding year
is as follows:
Health Pension 2023 2022
Salary insurance Contributions Bonus Total Total
/ Fees GBP'000 GBP'000 GBP'000 GBP'000 GBP'000
GBP'000
John Foster* 8 - - - 8 522
Stuart Munro 258 1 - 100 359 271
Reuben Shamu** 89 1 9 17 116 -
Robin Williams 60 - - - 60 60
Jeremy Brade*** 14 - - - 14 30
Robert Johnston 30 - - - 30 30
Dominic Lavelle 30 - - - 30 30
Holger Schröder**** - - - - - -
Total 489 2 9 117 617 943
========== =========== =============== ========== ========= =========
* Resigned 14 April 2022
** Appointed 12 September 2022
*** Resigned 20 September 2022
**** Appointed 1 June 2023
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 Chief Finance
Officer, Reuben Shamu, participates in an annual performance
related bonus arrangement, with the potential during the year to
earn up to 30% of his salary. The bonuses are subject to the
achievement of specified corporate and personal objectives and are
payable in cash.
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 ended 31 March 2023, no options were
exercised by him and the remaining 3,591 nil cost share options
have an expiry date of 17 June 2023.
At 31 March 2023, Stuart Munro had 55,814 LTIP share options
with an exercise price of 10 pence, a 3-year vesting period and an
expiry date of 3 December 2026. No other directors have any share
options.
The exercise of 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. No LTIP share options were granted during the year.
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:
Ordinary shares as at Ordinary shares
31 March 2023 as at
31 March 2022
Robin Williams 5,625 5,625
---------------------- ----------------
Stuart Munro 4,400 4,400
---------------------- ----------------
John Foster 118,542 118,542
---------------------- ----------------
Jeremy Brade 15,022 15,022
---------------------- ----------------
Robert Johnston* *3,656,553 *3,654,053
---------------------- ----------------
Dominic Lavelle 2,000 2,000
---------------------- ----------------
* Robert Johnston holds 60,000 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 3,656,553 Shares
in total, representing 29.2 percent of the Company's 12,519,900
total voting rights.
Additional information and disclosures required in this
Directors' Report by the Companies Act 2006 and AIM rules and
regulations can be located as follows:
Disclosure Location
Financial risk management Note 26 of the financial
statements
----------------------------
Matters of Strategic importance Chief Executive's Strategic
Review
----------------------------
Approved by the Board and signed on its behalf by:
AMBA Secretaries Limited
4 August 2023
Kenburgh Court
133-137 South Street
Bishop's Stortford
Hertfordshire
CM23 3HX
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.
Consolidated Income Statement
FOR THE YEARED 31 MARCH 2023
Notes Non-trading Non-trading
Items Items
(Note (Note Restated
Underlying 5) Total Underlying 5) Total
2023 2023 2023 2022 2022 2022
GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000
----------------------- -------------- ------------- ----------- ------------
4 Revenue 52,712 - 52,712 40,319 - 40,319
Cost of sales (31,588) - (31,588) (23,405) - (23,405)
Gross profit 21,124 - 21,124 16,914 - 16,914
Operating expenses (17,111) (79) (17,190) (13,834) (300) (14,134)
Operating profit /
6 (loss) 4,013 (79) 3,934 3,080 (300) 2,780
Net Finance income /
8 (expense) (795) 907 112 (796) 704 (92)
Profit before tax 3,218 828 4,046 2,284 404 2,688
9 Taxation (705) (219) (924) (1,094) (109) (1,203)
Profit for the year
attributable
to equity holders of
the
company 2,513 609 3,122 1,190 295 1,485
----------------------- -------------- ------------- ---------- ----------- ------------ ---------
10 Earnings per share
Basic 24.9p 11.9p
Diluted 24.9p 11.9p
---------- ---------
The accompanying notes form part of these Financial
Statements.
Consolidated Statement of Comprehensive Income
FOR THE YEARED 31 MARCH 2023
Restated
2023 2022
GBP'000 GBP'000
---------------------------------------------------- -------- ---------
Profit for the year 3,122 1,485
Cash flow hedges: effective portion of changes
in fair value - 172
Amortisation of hedge reserve 13 3
Deferred tax on share options and other financial
17 liabilities (3) 58
Deferred tax on effective portion of changes in
17 fair value - (40)
---------------------------------------------------- -------- ---------
Items that are or may be reclassified subsequently
to profit or loss 10 193
--------------------------------------------------------- -------- ---------
Re-measurement of the FIC defined benefit pension
23 scheme 553 237
Movement on deferred tax asset relating to the
17 pension scheme (176) (62)
---------------------------------------------------- -------- ---------
Items which will not ultimately be recycled to
the income statement 377 175
--------------------------------------------------------- -------- ---------
Total other comprehensive income 387 368
Total comprehensive income 3,509 1,853
--------------------------------------------------------- -------- ---------
The accompanying notes form part of these Financial
Statements.
Consolidated Balance Sheet
AT 31 MARCH 2023
Restated
Restated 1 April
2023 2022 2021
Notes GBP'000 GBP'000 GBP'000
---------------------------------------- ----------- --------- ---------
Non-current assets
11 Intangible assets 4,376 4,229 4,183
12 Property, plant and equipment 38,677 38,718 39,562
13 Investment properties 7,922 8,164 7,123
15 Investment in Joint venture 259 259 259
Trade and other receivables due in more
19 than one year - 44 88
16 Finance lease receivable 681 725 590
17 Deferred tax assets 482 666 739
26 Derivative financial instruments 1,559 644 -
Total non-current assets 53,956 53,449 52,544
Current assets
18 Inventories 6,876 6,740 5,871
19 Trade and other receivables 10,189 7,947 5,868
16 Finance lease receivable 397 511 558
20 Cash and cash equivalents 12,800 9,572 14.556
Total current assets 30,262 24,770 26,853
TOTAL ASSETS 84,243 78,219 79,397
Current liabilities
22 Trade and other payables (13,718) (9,970) (6,775)
21 Interest-bearing loans and borrowings (1,520) (1,536) (3,424)
Corporation tax payable (599) (363) (113)
Total current liabilities (15,837) (11,869) (10,312)
Non-current liabilities
21 Interest-bearing loans and borrowings (18,214) (19,183) (23,832)
26 Derivative financial instruments - - (234)
23 Employee benefits (1,978) (2,562) (2,842)
17 Deferred tax liabilities (4,215) (3,780) (3,113)
Total non-current liabilities (24,407) (25,525) (30,021)
TOTAL LIABILITIES (40,269) (37,394) (40,333)
Net assets 43,974 40,825 39,064
---------------------------------------- ----------- --------- ---------
25 Capital and reserves
Equity share capital 1,251 1,251 1,251
Share premium account 17,590 17,590 17,590
Other reserves 703 703 703
Retained earnings 24,514 21,378 19,752
Hedging reserve (84) (97) (232)
Total equity 43,974 40,825 39,064
---------------------------------------- ----------- --------- ---------
These financial statements, of which the accompanying notes form
part, were a pproved by the Board of directors on 4 August 2023 and
were signed on its behalf by:
S I Munro R Shamu
Director Director
Company Balance Sheet
AT 31 MARCH 2023
Restated
Restated 1 April
2023 2022 2022
Notes GBP'000 GBP'000 GBP'000
--------------------------------------- --------- ----------- -----------
Non-current assets
13 Investment properties 18,751 18,956 19,164
14 Investment in subsidiaries 26,757 26,762 26,737
19 Loans to subsidiaries 10,257 10,057 10,207
26 Derivative financial instruments 1,559 644 -
17 Deferred tax - - 44
--------------------------------------- --------- ----------- -----------
Total non-current assets 57,324 56,419 56,152
Current assets
19 Trade and other receivables 11 45 118
Corporation tax receivable 189 84 54
20 Cash and cash equivalents 3,307 4,376 5,462
Total current assets 3,507 4,505 5,634
TOTAL ASSETS 60,831 60,924 61,786
Current liabilities
22 Trade and other payables (5,939) (5,849) (6,391)
21 Interest-bearing loans and borrowings (529) (529) (520)
Total current liabilities (6,468) (6,378) (6,911)
Non-current liabilities
21 Interest-bearing loans and borrowings (11,617) (12,139) (12,668)
17 Deferred tax (391) (146) -
Derivative financial instruments - - (234)
--------------------------------------- --------- ----------- -----------
Total non-current liabilities (12,008) (12,285) (12,902)
--------------------------------------- --------- ----------- -----------
TOTAL LIABILITIES (18,476) (18,663) (19,813)
--------------------------------------- --------- ----------- -----------
Net assets 42,355 42,261 41,973
--------------------------------------- --------- ----------- -----------
25 Capital and reserves
Equity share capital 1,251 1,251 1,251
Share premium account 17,590 17,590 17,590
Other reserves 5,389 5,389 5,389
Retained earnings 18,209 18,128 17,975
Hedging reserve (84) (97) (232)
Total equity 42,355 42,261 41,973
--------------------------------------- --------- ----------- -----------
As permitted by Section 408 of the Companies Act 2006, a
separate profit and loss account of the Parent Company has not been
presented. The Parent Company's profit for the financial year is
GBP440,000 (2022: GBP245,000).
These financial statements, of which the accompanying notes form
part, were a pproved by the Board of directors on 4 August 2023 and
were signed on its behalf by:
S I Munro R Shamu
Director Director
Registered company number: 03416346
Consolidated Cash Flow Statement
FOR THE YEARED 31 MARCH 2023
Restated
2023 2022
GBP'000 GBP'000
---------------------------------------------- -------------- --------------
Note Cash flows from operating activities
Profit for the year after taxation 3,122 1,485
Adjusted for:
Non-cash items:
11 Amortisation 10 21
12 Depreciation: Property, plant and equipment 2,420 2,216
13 Depreciation: Investment properties 210 197
23 Interest cost on pension scheme liabilities 70 56
24 Equity-settled share-based payment expenses 41 45
Fair value movement in derivative financial
instrument (907) (704)
Gain on disposal of fixed assets (337) (9)
Exchange losses 26 13
Bank interest payable 424 436
Lease liability finance expense 304 304
Decrease / (increase) in finance lease
receivable 158 (88)
Corporation and deferred tax expense 924 1,203
---------------------------------------------- -------------- --------------
Non-cash items 3,343 3,690
Operating cash flow before changes
in working capital 6,465 5,175
Increase in trade and other receivables (2,198) (2,035)
Increase in inventories (136) (869)
Increase in trade and other payables 3,748 3,195
---------------------------------------------- -------------- --------------
Changes in working capital 1,414 291
Cash generated from operations 7,879 5,466
Payments to pensioners (101) (99)
Corporation taxes paid (243) (256)
---------------------------------------------- -------------- --------------
Net cash flow from operating activities 7,535 5,111
Cash flows from investing activities
12 Purchase of property, plant and equipment (1,859) (1,333)
11 Purchase of Intangibles (115) (67)
11 Purchase of investment properties (10) (1,238)
Proceeds from sale of property, plant
and equipment 378 76
---------------------------------------------- -------------- --------------
Net cash flow from investing activities (1,606) (2,562)
Cash flow from financing activities
Repayment of bank loans (928) (5,927)
Bank interest paid (424) (436)
Repayment of lease liabilities principal (618) (716)
Lease liabilities interest paid (304) (304)
Cash outflow on nil cost option exercise - (12)
Dividends paid (401) (125)
---------------------------------------------- -------------- --------
Net cash flow from financing activities (2,675) (7,520)
---------------------------------------------- -------------- --------
Net increase / (decrease) in cash and
cash equivalents 3,254 (4,971)
Cash and cash equivalents at start of
year 9,572 14,556
Exchange losses on cash balances (26) (13)
---------------------------------------------- -------------- --------
Cash and cash equivalents at end of
year 12,800 9,572
---------------------------------------------- -------------- --------
The accompanying notes form part of these Financial
Statements.
Company Cash Flow Statement
FOR THE YEARED 31 MARCH 2023
Restated
2023 2022
GBP'000 GBP'000
-------------------------------------------- -------- ---------
Note Cash flows from operating activities
Holding Company profit for the year 440 245
Adjusted for:
Bank interest payable 368 387
Fair value movement in financial instrument (907) (704)
Equity-settled share-based payment expenses 47 20
13 Depreciation : Investment properties 210 208
Corporation and deferred tax expense
/ (income) 250 135
-------------------------------------------- -------- ---------
Non-cash adjustment (32) 46
Operating cash flow before changes
in working capital 408 291
Decrease in trade and other receivables 34 73
(Decrease) / increase in trade and other
payables (95) 333
-------------------------------------------- -------- ---------
Changes in working capital and provisions (61) 406
Cash generated from operations 347 697
Corporation taxes paid (105) (14)
-------------------------------------------- -------- ---------
Net cash flow from operating activities 242 683
Cash flow from investing activities
Purchase of property, plant and equipment (5) -
Cash outflows in inter-company borrowing - (150)
Cash inflows in inter-company borrowing - 850
-------------------------------------------- -------- ---------
Net cash flow from investing activities (5) 700
Cash flow from financing activities
Bank loan repaid (522) (520)
Interest paid (368) (387)
Cash inflows / (outflows) in inter-company
borrowing 185 (1,875)
Cash (outflows) / inflows in inter-company
borrowing (200) 450
Cash outflow on nil cost option exercise - (12)
Dividends paid (401) (125)
Net cash flow from financing activities (1,306) (2,469)
Net decrease in cash and cash equivalents (1,069) (1,086)
Cash and cash equivalents at start of
year 4,376 5,462
Cash and cash equivalents at end of
year 3,307 4,376
-------------------------------------------- -------- ---------
The accompanying notes form part of these Financial
Statements.
Consolidated Statement of Changes in Shareholders' Equity
FOR THE YEARED 31 MARCH 2023
Equity Share
share premium Other Retained Hedge Total
capital account reserves earnings reserve equity
GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000
Balance 1 April 2021
- restated 1,251 17,590 703 19,752 (232) 39,064
Profit for the year - - - 1,485 - 1,485
Cash flow hedges: effective
portion - - - - 172 172
of changes in fair value
Amortisation of hedge
reserve - - - - 3 3
Deferred tax on cash
flow hedges - - - - (40) (40)
Deferred tax on other
financial - - - 58 - 58
liabilities
Re-measurement of the
defined - - - 175 - 175
benefit pension liability,
net of tax
--------------------------------- --------- --------- ---------- ----------- --------- ---------
Total comprehensive income - - - 1,718 135 1,853
--------------------------------- --------- --------- ---------- ----------- --------- ---------
Transactions with owners in their
capacity as owners:
Share option exercise - - - (12) - (12)
Share based payments - - - 45 - 45
Dividends paid - - - (125) - (125)
Total transactions with
owners - - - (92) - (92)
--------------------------------- --------- --------- ---------- ----------- --------- ---------
Balance at 31 March
2022-restated 1,251 17,590 703 21,378 (97) 40,825
--------------------------------- --------- --------- ---------- ----------- --------- ---------
Profit for the year - - - 3,122 - 3,122
Amortisation of hedge
reserve - - - - 13 13
Deferred tax on share
options - - - (3) - (3)
and other financial liabilities
Re-measurement of the
defined - - - 377 - 377
benefit pension liability,
net of tax
Total comprehensive income - - - 3,496 13 3,509
--------------------------------- --------- --------- ---------- ----------- --------- ---------
Transactions with owners
in their capacity as
owners:
Share based payments - - - 41 - 41
Dividends paid - - - (401) - (401)
Total transactions with
owners - - - (360) - (360)
--------------------------------- --------- --------- ---------- ----------- --------- ---------
Balance at 31 March
2023 1,251 17,590 703 24,514 (84) 43,974
--------------------------------- --------- --------- ---------- ----------- --------- ---------
The accompanying notes form part of these Financial
Statements.
Company Statement of Changes in Shareholders'
Equity
FOR THE YEARED 31 MARCH
2023
Equity Share
share premium Other Retained Hedge Total
capital account reserves earnings Reserve equity
GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000
Balance at 1 April 2021-restated 1,251 17,590 5,389 17,975 (232) 41,973
Profit for the year - - - 245 - 245
Cash flow hedges: effective
portion - - - - 172 172
of changes in fair value
Amortisation of hedge
reserve - - - - 3 3
Deferred tax on cash
flow hedges - - - - (40) (40)
Total comprehensive loss - - - 245 135 380
---------------------------------- --------- ----------- ---------- ----------- --------- --------------
Transactions with owners
in their capacity as
owners:
Share option exercise - - - (12) - (12)
Share based payments - - - 45 - 45
Dividends paid - - - (125) - (125)
Total transactions with
owners - - - (92) - (92)
---------------------------------- --------- ----------- ---------- ----------- --------- --------------
Balance at 31 March
2022-restated 1,251 17,590 5,389 18,128 (97) 42,261
---------------------------------- --------- ----------- ---------- ----------- --------- --------------
Profit for the year - - - 440 - 440
Amortisation of hedge
reserve - - - - 13 13
Total comprehensive income - - - 440 13 453
---------------------------------- --------- ----------- ---------- ----------- --------- --------------
Transactions with owners
in their capacity as
owners:
Share based payments - - - 42 42
Dividends paid - - - (401) - (401)
Total transactions with
owners - - - (359) - (359)
---------------------------------- --------- ----------- ---------- ----------- --------- --------------
Balance at 31 March
2023 1,251 17,590 5,389 18,209 (84) 42,355
---------------------------------- --------- ----------- ---------- ----------- --------- --------------
The accompanying notes form part of these Financial
Statements.
Notes to the Financial Statements
1. Accounting policies
General information
FIH group plc (the "Company") is a public 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 2023 were authorised for issue in accordance with a
resolution of the directors on 3 August 2023.
Basis of preparation
T he financial information set out above does not constitute the
Group's statutory accounts for the years ended 31 March 2023 or
2022 but is derived from those accounts. Statutory accounts for the
year ended 31 March 2022 have been delivered to the registrar of
companies, and those for the year ended 31 March 2023 will be
delivered in due course. The auditor has reported on those
accounts; their reports were (i) unqualified, (ii) did not include
a reference to any matters to which the auditor drew attention by
way of emphasis without qualifying their report, and (iii) did not
contain a statement under section 498 (2) or (3) of the Companies
Act 2006. These condensed preliminary financial statements have
been prepared in accordance with the recognition and measurement
requirements of UK-adopted international financial reporting
standards in conformity with the requirements of the Companies Act
2006, in line with the Group's statutory accounts.
Both the Parent Company financial statements and the Group
financial statements have been prepared 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, as modified by the revaluation of certain financial
instruments held at fair value.
The 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.
Going concern
The directors are responsible for preparing a going concern
assessment covering a period of at least 12 months with the
directors having assessed the period to 31st of March 2025 (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 2023 the Group had net current assets of GBP14.8
million, cash balances of GBP12.8 million and net debt of
approximately GBP7.5 million.
1. Accounting policies (continued)
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.
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.
Restatement
The prior year financial information for the following areas was
restated as set out below.
Right of use assets
The seabed lease in PHFC contains variable rental payments which
are reset every five years based on the revenue of the ferry
business. This lease was previously incorrectly accounted for as
one 50-year lease with all future expected payments over the period
of the lease reflected in the measurement of the liability. The
liability has been restated as an element of the future lease
payments varies with the revenue of PHFC and should not have been
reflected in the measurement of the liability. The lease liability
will be remeasured in the future when variable payments become
fixed. The impact of this was an increase in opening retained
earnings at 1 April 2021 of GBP0.2 million and reductions in
property, plant and equipment, and interest-bearing loans and
borrowings of GBP0.8 million and GBP1.0 million respectively. The
impact at 31 March 2022 was an increase in retained earnings of
GBP0.2 million and reductions in property, plant and equipment and
interest-bearing loans and borrowings of GBP0.4 million and GBP0.6
million respectively. There was no impact on profit for the year
ended 31 March 2022.
Impairment of investment in Company
During the year, it was identified that the parent company's
investment in Momart had been incorrectly impaired in the year
ended 31 March 2020. As a result, the previously recorded
impairment charge of GBP5.1m has been reversed at 31 March 2021. It
was also noted that the parent Company's investment in Erebus
Limited should have been fully impaired in a year prior to 1 April
2021. Consequently, an impairment of GBP2.4 million was recorded at
1 April 2021. The net impact of these adjustments was to increase
investments and retained earnings by GBP2.7m at both 31 March 2021
and 31 March 2022. There was no impact on profit for the year ended
31 March 2022.
Hedge accounting
Following a reassessment of the criteria for applying hedge
accounting after the benchmark change from LIBOR to SONIA, it was
concluded that the hedging criteria were no longer met. Hedge
accounting was therefore discontinued from 1 January 2022,
resulting in a credit of GBP0.5 million to the prior year profit
and loss (comprising a GBP0.7m credit to net finance income and a
GBP0.2m charge to tax expense) which was previously incorrectly
accounted for in the hedging reserve. The impact on both basic and
diluted EPS in the year to 31 March 2022 was an increase of
4.3p.
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 through its power over the
subsidiary. 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.
1. Accounting policies (continued)
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 2023, non-trading items were made up
of GBP79,000 redundancy costs. In the year ended 31 March 2022,
non-trading items were made up of GBP300,000 of people-related
restructuring costs including employee redundancies and
compensation payable to the former Chief Executive. Fair value
movements on hedging items are included as a non-trading finance
income/cost.
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 of use assets 5 - 50 years
Freehold buildings 20 - 50 years
Long leasehold land and buildings 50 years
Vehicles, plant and equipment 4 - 10 years
Ships 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.
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.
1. Accounting policies (continued)
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 an estimated useful
life of 40 years, 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 of 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 2023, 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.
1. Accounting policies (continued)
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.
1. Accounting policies (continued)
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.
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 initially recorded at transaction price
and are subsequently 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.
1. Accounting policies (continued)
Taxation
Taxation on the profit or loss for the year comprises current
and deferred tax. Current tax is recognised in the income
statement, except to the extent that it relates to items recognised
directly in equity, in which case it is recognised directly in
equity or in other comprehensive income. Current tax is the
expected tax payable on the taxable income for the year, using tax
rates enacted, or substantively enacted at the balance sheet date,
and any adjustment to tax payable in respect of previous years.
Deferred tax is provided using the balance sheet method,
providing for temporary differences between the carrying amounts of
assets and liabilities for financial reporting purposes and the
amounts used for taxation purposes. The following temporary timing
differences are not recognised:
-- Goodwill not deductible for tax purposes; and
-- Initial recognition of assets or liabilities in a transaction
that is not a business combination and that affects neither
accounting nor taxable profits.
-- Temporary differences related to investments in subsidiaries,
to the extent that it is probable that they will not reverse in the
foreseeable future.
A deferred tax asset is recognised to the extent that it is
probable that future taxable profits will be available against
which the temporary differences can be utilised. Deferred tax
assets are reviewed at each reporting date and are reduced to the
extent that it is no longer probable that the related tax benefit
will be realised. Deferred tax is recognised at the tax rates that
are expected to be applied to the temporary differences when they
reverse, based on rates that have been enacted or substantially
enacted by the reporting date.
Cash-flow hedges
The effective portions of changes in the fair values of
derivatives that are designated and qualify as cash-flow hedges are
recognised in equity. The gain or loss to any ineffective portion
is recognised immediately in the income statement. Amounts
accumulated in the hedging reserve are recycled to the income
statement in the periods when the hedged items will affect profit
or loss.
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.
1. Accounting policies (continued)
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.
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.
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. A finance lease receivable arises on the sale of
goods when the Group provides finance for the purchases as the
Group is considered under IFRS 16, to be a dealer lessor.
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 contracts such
as the construction of houses for FIG are treated as long term
construction contracts as detailed below.
Transportation of art
In the UK, Momart earns revenue from fine art logistical
services (transport, installations or de-installations) and storage
services. Revenue is recognised for logistical services completed.
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. Inbound and outbound
installations are treated as separate obligations. Revenue is
recognised when the service is completed.
Revenues arising from the rendering of services and recognised
over a period of time
Storage of art
Storage revenue is recognised according to the time in storage,
as reflected in storage agreements.
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 which the customer controls. 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.
1. Accounting policies (continued)
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.
The majority of revenues recognised immediately from the
rendering of services arise from the PHFC 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;
-- I nsurance 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
Financial assets, which include trade debtors and finance lease
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.
IFRS 9 Financial instruments
Hedging
The Group has one open hedging relationship at 31 March 2023,
which has two elements; an interest rate swap and an embedded 0%
interest rate floor. This contract commenced on 9(th) 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 GBP13,875,000 mortgage. This swap had an initial notional value
of GBP13,875,000, 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 GBP125,000 per
quarter over ten years until June 2029 when it will expire. The
notional value of the swap at 31 March 2023 was GBP12,000,000
(2022: GBP12,500,000). The asset held in respect of this swap at
the year-end was GBP1,559,000 (2022: GBP644,000). The movement in
the year reflects anticipated interest rate rises over the
remaining period of the swap.
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.
1. Accounting policies (continued)
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.
When goods are purchased on finance, a finance lease receivable
is recorded in FIC and 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
vehicle, or other goods, such as furniture, white goods or other
electrical items, are deemed to have passed to the customer at that
point.
Finance lease receivables 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 at cost less accumulated
depreciation and impairment losses.
Standards and revisions not yet adopted in the year to 31 March
2023
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
executive directors.
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.
2023
General Ferry Art Logistics Unallocated Total
Trading Services and Storage
(Falkland
Islands) (Portsmouth) (UK)
GBP'000 GBP'000 GBP'000 GBP'000 GBP'000
Revenue 29,383 3,817 19,512 - 52,712
---------------------------------- ---------- ------------- -------------- ------------ ---------
Segment operating profit
before non-trading items 1,955 608 1,450 - 4,013
Non-trading items - - (79) - (79)
Profit before net financing
costs 1,955 608 1,371 - 3,934
Finance income - - 3 907 910
Finance expense (70) (287) (441) - (798)
---------------------------------- ---------- ------------- -------------- ------------ ---------
Segment profit before
tax 1,885 321 933 907 4,046
---------------------------------- ---------- ------------- -------------- ------------ ---------
Assets and liabilities
Segment assets 35,933 9,519 33,889 4,877 84,218
Segment liabilities (12,954) (7,341) (19,364) (585) (40,244)
Segment net assets 22,979 2,178 14,525 4,292 43,974
---------------------------------- ---------- ------------- -------------- ------------ ---------
Other segment information
Capital expenditure:
Property, plant and
equipment 1,115 205 539 - 1,859
Investment properties 10 - - - 10
Computer software 81 - 34 - 115
---------------------------------- ---------- ------------- -------------- ------------ ---------
Total Capital expenditure 1,206 205 573 - 1,984
---------------------------------- ---------- ------------- -------------- ------------ ---------
Depreciation and amortisation:
Property, plant and
equipment 1,192 317 256 - 1,765
Investment properties 210 - - - 210
Computer software - - 10 - 10
Right of use assets 39 101 515 - 655
Total Depreciation and
Amortisation 1,441 418 781 - 2,640
---------------------------------- ---------- ------------- -------------- ------------ ---------
Underlying profit
Segment operating profit
before non-trading items 1,955 608 1,450 - 4,013
Interest income - - 3 - 3
Interest expense (70) (287) (441) - (798)
Underlying profit before
tax 1,885 321 1,012 - 3,218
---------- ------------- -------------- ------------
2. Segmental Information Analysis (continued)
2022
General Ferry Art Logistics Unallocated Total
Trading Services and Storage
(Falkland
Islands) (Portsmouth) (UK)
GBP'000 GBP'000 GBP'000 GBP'000 GBP'000
Revenue 21,655 3,066 15,598 - 40,319
---------------------------------- ---------- ------------- -------------- ------------ ---------
Segment operating profit
before non-trading items 1,835 155 1,090 - 3,080
Non-trading items - - (41) (259) (300)
Profit / (loss) before
net financing costs 1,835 155 1,049 (259) 2,780
Finance expense (56) (276) (464) 704 (92)
---------------------------------- ---------- ------------- -------------- ------------ ---------
Segment profit / (loss)
before tax 1,779 (121) 585 445 1,984
---------------------------------- ---------- ------------- -------------- ------------ ---------
Assets and liabilities
Segment assets 31,401 9,478 32,275 5,065 78,219
Segment liabilities (9,582) (7,788) (19,045) (979) (37,394)
Segment net assets 21,819 1,690 13,230 4,086 40,825
---------------------------------- ---------- ------------- -------------- ------------ ---------
Other segment information
Capital expenditure:
Property, plant and
equipment 1,129 52 258 - 1,439
Investment properties 1,238 - - - 1,238
Computer software 67 - - - 67
---------------------------------- ---------- ------------- -------------- ------------ ---------
Total Capital expenditure 2,434 52 258 - 2,744
---------------------------------- ---------- ------------- -------------- ------------ ---------
Capital expenditure:
cash 2,434 52 152 - 2,638
Capital expenditure:
non-cash - - 106 - 106
---------------------------------- ---------- ------------- -------------- ------------ ---------
Total Capital expenditure 2,434 52 258 - 2,744
---------------------------------- ---------- ------------- -------------- ------------ ---------
Depreciation and amortisation:
Property, plant and
equipment 834 316 423 - 1,573
Investment properties 197 - - - 197
Computer software - - 21 - 21
Right of use assets 8 256 505 - 769
---------------------------------- ---------- ------------- -------------- ------------ ---------
Total Depreciation and
Amortisation 1,039 572 949 - 2,560
---------------------------------- ---------- ------------- -------------- ------------ ---------
Underlying profit /
(loss )
---------------------------------- ---------- ------------- -------------- ------------ ---------
Segment operating profit
before non-trading items 1,835 155 1,090 - 3,080
Interest expense (56) (276) (464) - (796)
Underlying profit /
(loss) before tax 1,779 (121) 626 - 2,284
---------- ------------- -------------- ------------
2. Segmental Information Analysis (continued)
The GBP4,877,000 (2022: GBP5,065,000) unallocated assets above
include GBP3,307,000 (2022: GBP4,376,000) of cash and GBP1,559,000
(2022: GBP644,000) of derivative financial instruments and
GBP11,000 (2022: GBP45,000) of trade and other receivables held in
FIH group plc. (Note 19)
The GBP585,000 (2022: GBP979,000) 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:
2023
United Falkland
Kingdom Islands Total
GBP'000 GBP'000 GBP'000
Revenue (by source) 23,329 29,383 52,712
------------------------------------------------ --------- --------- --------
Assets and Liabilities:
Non-current segment assets, excluding deferred
tax 36,518 16,956 53,474
------------------------------------------------ --------- --------- --------
Capital expenditure: cash 778 1,206 1,984
------------------------------------------------ --------- --------- --------
2022
United Falkland
Kingdom Islands Total
GBP'000 GBP'000 GBP'000
Revenue (by source) 18,664 21,655 40,319
------------------------------------------------ --------- --------- --------
Assets and Liabilities:
Non-current segment assets, excluding deferred
tax* 35,709 17,074 52,783
------------------------------------------------ --------- --------- --------
Capital expenditure: cash 204 2,434 2,638
------------------------------------------------ --------- --------- --------
* The amounts disclosed in relation to segment assets have been
restated as detailed in note 1 to the financial statements,
resulting in a reduction of GBP0.4 million in carrying values.
4. Revenue
2023
Sale of Rendering of Rendering of
goods recognised services recognised services provided
at a point at a point over a period Total
in time in time of time Revenue
GBP'000 GBP'000 GBP'000 GBP'000
Falkland Islands
Retail sales 9,937 - - 9,937
Falklands 4x4 sales 2,275 294 485 3,054
FBS (housing and construction) 1,943 - 10,204 12,147
Support Services - 2,423 827 3,250
Rental property income - - 995 995
-------------------------------- ------------------ --------------------- ------------------- -----------------
FIC (Falkland Islands) 14,155 2,717 12,511 29,383
PHFC (Portsmouth) - 3,817 - 3,817
Art logistics and storage - 16,794 2,718 19,512
-------------------------------- ------------------ --------------------- ------------------- -----------------
Total Revenue 14,155 23,328 15,229 52,712
-------------------------------- ------------------ --------------------- ------------------- -----------------
2022
Sale of Rendering of Rendering of
goods recognised services recognised services provided
at a point at a point over a period Total
in time in time of time Revenue
GBP'000 GBP'000 GBP'000 GBP'000
Falkland Islands
Retail sales 9,666 - - 9,666
Falklands 4x4 sales 2,034 372 364 2,770
FBS (housing and construction) 1,499 - 4,298 5,797
Support Services - 1,677 868 2,545
Rental property income - - 877 877
-------------------------------- ------------------ --------------------- ------------------- ------------------
FIC (Falkland Islands) 13,199 2,049 6,407 21,655
PHFC (Portsmouth) - 3,066 - 3,066
Art logistics and storage* - 13,225 2,373 15,598
-------------------------------- ------------------ --------------------- ------------------- ------------------
Total Revenue 13,199 18,340 8,780 40,319
-------------------------------- ------------------ --------------------- ------------------- ------------------
* The amount disclosed for rendering of services recognised over
a period of time relating to the prior year for the Art and
Logistics Business has been restated to exclude GBP13.2 million
which should have been included within rendering of services
recognised at a point in time. The total recognised for the year
has not changed.
5. Non-trading items
2023 2022
GBP'000 GBP'000
Profit before tax as reported 4,046 2,688
Non-trading items:
Restructuring costs 79 300
Movement in fair value of non-effective portion of derivative
financial instruments (907) (704)
Underlying profit before tax 3,218 2,284
--------------------------------------------------------------------- -------- --------
Restructuring costs comprise employee redundancy costs in the
current year and people-related costs, including employee
redundancies and compensation payable to the former Chief
Executive, in the prior year.
6. Expenses and auditor's remuneration
The following expenses / (income)
have been included in the profit
and loss
2023 2022
GBP'000 GBP'000
Direct operating expenses of rental
properties 463 465
Depreciation 2,627 2,413
Amortisation of computer software 10 21
Foreign currency loss 26 13
Expected credit loss on trade and
other receivables 13 114
Cost of inventories recognised
as an expense 14,392 9,868
COVID-19 and other government funding - (500)
-------------------------------------------- -------- --------
Auditor's remuneration 2023 2022
GBP'000 GBP'000
Audit of these financial statements 195 66
Audit of subsidiaries' financial statements pursuant
to legislation 102 179
Other assurance services - 5
------------------------------------------------------ -------- --------
Total auditor's remuneration 297 250
------------------------------------------------------ -------- --------
Additional items of expenditure not covered above or within
staff costs (note 7) which are recognised within operating profit
for the year include legal and professional fees, insurance and
recruitment costs.
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:
Number of employees Number of employees
Group Company
2023 2022 2023 2022
PHFC 27 27 - -
Falkland Islands: in Stanley 227 208 - -
in UK 6 6 - -
Art logistics & storage 114 102 -
Head office 6 7 8 7
----------------------------------------------- --------- ----------- --------- -----------
Total average staff numbers 380 350 8 7
----------------------------------------------- --------- ----------- --------- -----------
The aggregate payroll cost of these persons was as follows:
Group Company
2023 2022 2023 2022
GBP'000 GBP'000 GBP'000 GBP'000
Wages and salaries 13,929 12,682 780 769
Share-based payments (see note 24) 41 45 46 45
Social security costs 986 821 86 90
Contributions to defined contribution
plans (see note 23) 535 505 14 5
Furlough income - (210) - -
--------------------------------------- --------- -------- -------- --------
Total employment costs 15,491 13,843 926 909
--------------------------------------- --------- -------- -------- --------
In the previous 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. There were no grants in the year ended 31 March
2023. Such grants totalling GBP210,000 for the year ended 31 March
2022 were recognised in the Income Statement in the period in which
the associated costs for which the grants are intended to
compensate were 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'.
8. Finance income and expense
2023 2022
GBP'000 GBP'000
Movement in non-effective portion of fair value of
derivative financial instruments 907 704
Bank interest receivable 3 -
------------------------------------------------------ -------- --------
Total finance income 910 704
-------------------------------------------------------- -------- --------
Interest payable on bank loans (424) (436)
Net interest cost on the FIC defined benefit pension
scheme liability (70) (56)
Lease liabilities finance charge (304) (304)
Total finance expense (798) (796)
-------------------------------------------------------- -------- --------
Net finance income / (expense) 112 (92)
-------------------------------------------------------- -------- --------
9. Taxation
Recognised in the income statement
2023 2022
GBP'000 GBP'000
Current tax expense
Current year 579 532
Adjustments for prior years (99) (25)
----------------------------------------- -------- --------
Current tax expense* 480 507
Deferred tax expense
Origination and reversal of temporary
differences* 413 123
Change in UK tax rate to 25% - 523
Adjustments for prior years 31 50
Deferred tax expense (see note
17)* 444 696
----------------------------------------- -------- --------
Total tax expense* 924 1,203
----------------------------------------- -------- --------
Reconciliation of the effective tax rate
2023 2022
GBP'000 GBP'000
Profit on ordinary activities before tax 4,046 2,688
--------------------------------------------------- -------- --------
Tax using the UK corporation tax rate of
19% (2021: 19%) 769 511
Expenses not deductible for tax purposes 85 84
Additional capital allowances - super deduction (37) (7)
Effect of increase in rate of deferred
tax 155 555
Effect of higher tax rate overseas 20 35
Adjustments to tax charge in respect of
previous periods (68) 25
Total tax expense* 924 1,203
--------------------------------------------------- -------- --------
* Prior year amounts relating to deferred tax have been restated
to align the tax impact with the changes made to fair value
movements of the derivative financial instrument as detailed in
note 1 to the financial statements.
Tax recognised directly in other comprehensive income
2023 2022
GBP'000 GBP'000
Deferred tax on effective portion of changes
in fair value - 40
Movement on deferred tax asset relating
to the pension scheme 176 62
Deferred tax on share options and other
financial liabilities 3 (58)
------------------------------------------------- --------------- --------- --------
Deferred tax expense recognised directly in other
comprehensive income 179 44
------------------------------------------------------------------- --------- --------
In the UK, deferred tax has been calculated at 25% (2022:
25%).
The deferred tax assets and liabilities in FIC have been
calculated at the Falkland Islands' tax rate of 26% (2022:
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.
2023 2022
GBP'000 GBP'000
Profit on ordinary activities after taxation 3,122 1,485
---------------------------------------------- -------- --------
2023 2022
Number Number
Average number of shares in issue 12,519,900 12,519,900
Effect of share options - -
------------------------------------------- ----------- -----------
Diluted weighted average number of shares 12,519,900 12,519,900
------------------------------------------- ----------- -----------
2023 2022
Basic earnings per share 24.9p 11.9p
Diluted earnings per share 24.9p 11.9p
------------------------------------------- ----------- -----------
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.
Earnings per share on underlying profit 2023 2022
GBP'000 GBP'000
Underlying profit before tax (see note 5) 3,218 2,284
Underlying taxation (705) (1,094)
--------------------------------------------------------- ----------- -----------
Underlying profit 2,513 1,190
Effective tax rate 21.9% 47.9%
Weighted average number of shares in issue (from above) 12,519,900 12,519,900
Diluted weighted average number of shares (from above) 12,519,900 12,519,900
Basic earnings per share on underlying profit 20.1p 9.5p
Diluted earnings per share on underlying profit 20.1p 9.5p
--------------------------------------------------------- ----------- -----------
11. Intangible assets
Computer Brand
Software name Goodwill Total
GBP'000 GBP'000 GBP'000 GBP'000
Cost:
At 1 Apr 2021 and 31 March
2022 631 2,823 11,576 15,030
Additions 115 - - 115
Transfer from investment property 42 - - 42
------------------------------------- ---------- -------- --------- --------
At 31 March 2023 788 2,823 11,576 15,187
------------------------------------- ---------- -------- --------- --------
Accumulated amortisation and
impairment:
At 1 Apr 2021 533 785 9,462 10,780
Amortisation 21 - - 21
At 31 March 2022 554 785 9,462 10,801
Amortisation 10 - - 10
At 31 March 2023 564 785 9,462 10,811
------------------------------------- ---------- -------- --------- --------
Net book value:
At 1 April 2021 31 2,038 2,114 4,183
------------------------------------- ---------- -------- --------- --------
At 31 March 2022 77 2,038 2,114 4,229
------------------------------------- ---------- -------- --------- --------
At 31 March 2023 224 2,038 2,114 4,376
------------------------------------- ---------- -------- --------- --------
Amortisation and impairment charges are recognised in operating
expenses in the income statement. The Momart brand name has a
carrying value of GBP2,038,000 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.
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:
Art Logistics Falkland
and Storage Islands Total
GBP'000 GBP'000 GBP'000
Goodwill at 1 April 2021 2,077 37 2,114
------------------------------- -------------- --------- --------
Goodwill at 31 March 2022 2,077 37 2,114
------------------------------- -------------- --------- --------
Goodwill at 31 March 2023 2,077 37 2,114
------------------------------- -------------- --------- --------
Impairment
The Group tests material goodwill and indefinite lived
intangible assets 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 to their recoverable amounts
based on the higher of a value-in-use calculation and fair value
less costs to sell. Goodwill is impaired when the recoverable
amount is less than the carrying value.
11. Intangible assets (continued)
The Art Logistics and Storage CGU is tested for impairment
annually because the only material goodwill and indefinite life
assets relate to this CGU. An impairment review of the Art
Logistics and Storage CGU was performed and no impairment charge
was deemed necessary. The recoverable amount for this assessment
was determined using the fair value less costs to sell for the Art
Logistics and Storage CGU. This was underpinned by an independent
valuation of the art storage warehouses in East London, which
indicates a fair value well in excess of the GBP24.7 million
carrying value of the Art Logistics and Storage CGU.
12. Property, plant and equipment
Group
Right Long leasehold Vehicles,
of use Freehold land and plant and
assets land & buildings buildings Ships equipment Total
GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000
Cost:
At 1 April 2021 9,633 29,554 1,009 6,877 9,586 56,659
Additions in
year 232 109 53 3 1,168 1,565
Disposals (82) - (3) - (396) (481)
At 31 March
2022* 9,783 29,663 1,059 6,880 10,358 57,743
Additions in
year - 113 57 150 1,539 1,859
Additions (non-cash) 561 - - - - 561
Disposals - (54) (49) - (585) (688)
Disposals (non-cash) (120) - - - - (120)
At 31 March
2023 10,224 29,722 1,067 7,030 11,312 59,355
--------------------------- ----------- ------------------ --------------- -------- ----------- ------------
Accumulated depreciation:
At 1 April
2021 3,084 4,403 370 2,790 6,450 17,097
Charge for the
year 769 371 160 243 799 2,342
Disposals (75) - (3) - (336) (414)
At 31 March
2022 3,778 4,774 527 3,033 6,913 19,025
Charge for the
year 655 512 24 246 983 2,420
Disposals - (43) (49) (570) (662)
Disposals(non-cash) (105) - - - - (105)
At 31 March
2023 4,328 5,243 502 3,279 7,326 20,678
--------------------------- ----------- ------------------ --------------- -------- ----------- ------------
Net book value:
At 1 April 2021 6,549 23,928 1,862 4,087 3,136 39,562
--------------------------- ----------- ------------------ --------------- -------- ----------- ------------
At 31 March
2022* 6,005 24,889 532 3,847 3,445 38,718
--------------------------- ----------- ------------------ --------------- -------- ----------- ------------
At 31 March
2023 5,896 24,479 565 3,751 3,986 38,677
--------------------------- ----------- ------------------ --------------- -------- ----------- ------------
* As detailed in note 1 to the financial statements, comparative
numbers for right of use assets have been restated, resulting in a
reduction in net book value of GBP0.4 million at 31 March 2022.
Certain assets previously disclosed within long leasehold land and
buildings have been reclassified to freehold land and buildings to
more accurately reflect the nature of the assets. As a result, the
cost and accumulated depreciation of freehold land and buildings at
31 March 2022 increased by 1.9 million and GBP0.7 million
respectively, with a corresponding reduction in long leasehold land
and buildings. There was no impact on total cost, cumulative
depreciation or net book value.
12. Property, plant and equipment (continued)
Right of use assets
Group
Long
Short leasehold
leasehold Pontoon Office
lease lease Momart Trucks Equipment Total
GBP'000 GBP'000 GBP'000 GBP'000 GBP'000
Cost:
At 1 April
2021* 3,136 5,090 1,389 18 9,633
Additions in
year 105 126 1 - 232
Disposals - - (82) - (82)
At 31 March
2022* 3,241 5,216 1,308 18 9,783
Additions in
year 548 13 - - 561
Disposals (non-cash) - (120) - - (120)
At 31 March
2023 3,789 5,109 1,308 18 10,224
Accumulated depreciation:
At 1 April 2021 1,669 971 429 15 3,084
Charge for the
year 303 256 209 1 769
Disposals - - (75) - (75)
At 31 March
2022* 1,972 1,227 563 16 3,778
Charge for the
year 60 75 519 1 655
Disposals (non-cash) (40) (65) - - (105)
At 31 March
2023 1,992 1,237 519 17 4,328
Net book
value:
At 1 April
2021 1,467 4,119 960 3 6,549
At 31 March
2022* 1,269 3,989 745 2 6,005
At 31 March 2023 1,797 3,872 226 1 5,896
* As detailed in note 1 to the financial statements, comparative
numbers for right of use assets have been restated, resulting in a
reduction in net book value of GBP0.4 million at 31 March 2022.
No property, plant or equipment was financed by hire purchase
loans in the year to 31 March 2023.
The Company has no tangible fixed assets, other than the
investment property purchased in December 2018, which is included
within Investment Property (note 13).
13. Investment properties
Group
Residential
and commercial Freehold
property land Total
GBP'000 GBP'000 GBP'000
Cost:
At 1 April 2021 7,328 831 8,159
Additions in year 1,238 - 1,238
At 31 March 2022 8,566 831 9,397
Additions in year 10 - 10
Transfer to intangibles (42) - (42)
At 31 March 2023 8,534 831 9,365
Accumulated depreciation:
At 1 April 2021 1,036 - 1,036
Charge for the year 197 - 197
At 31 March 2022 1,233 - 1,233
Charge for the year 210 - 210
At 31 March 2023 1,443 - 1,443
Net book value:
At 1 April 2021 6,292 831 7,123
At 31 March 2022 7,333 831 8,164
At 31 March 2023 7,091 831 7,922
The investment properties, held at cost, comprise land, plus
residential and commercial property held for rental in the Falkland
Islands.
Estimated Fair Value
Group
2023 2022
GBP'000 GBP'000
Estimated fair value:
Freehold land 2,177 2,177
Properties available for rent 10,420 10,139
Properties under construction 43 173
At 31 March 12,640 12,489
Uplift on net book value:
Freehold land 1,346 1,346
Properties available for rent 3,286 2,979
At 31 March 4,632 4,325
Number of rental properties
Available for rent 85 83
Under construction - 2
13. Investment properties (continued)
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 by the directors.
Assets under construction
At 31 March 2023, improvements to the FIC jetty in Stanley were
included in investment property assets under construction (2022: 2
housing units) with a total cost to date of GBP43,000 (2022:
GBP173,000).
Company Commercial
property
GBP'000
Cost:
31 March 2021, 31 March 2022 and 1
April 2023 19,642
Accumulated depreciation:
At 31 March 2021 478
Charge for the year 208
At 31 March 2022 686
Charge for the year 205
At 31 March 2023 891
Net book value:
At 1 April 2021 19,164
At 31 March 2022 18,956
At 31 March 2023 18,751
The investment property in the Company consists of the five
warehouses leased to Momart, the Group's art handling subsidiary,
which were purchased in December 2018.
The directors have reviewed the market value of the Leyton
warehouses 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 Class of shares Ownership Ownership
of held at at
incorporation 31 March 31 March
2022 2021
The Falkland Islands Company Ordinary shares
Limited (1) UK of GBP1 100% 100%
Preference shares
of GBP10 100% 100%
The Falkland Islands Trading Ordinary shares
Company Limited (1) UK of GBP1 100% 100%
Falkland Islands Shipping Limited Falkland Ordinary shares
(2) (6) Islands of GBP1 100% 100%
Falkland Ordinary shares
Erebus Limited(2) (6) (7) Islands of GBP1 100% 100%
Preference shares
of GBP1 100% 100%
South Atlantic Support Services Falkland Ordinary shares
Limited(3) (6) (7) Islands of GBP1 100% 100%
Falkland Ordinary shares
Paget Limited(2) (6) (7) Islands of GBP1 100% 100%
The Portsmouth Harbour Ferry Ordinary shares
Company Limited(4) UK of GBP1 100% 100%
Portsea Harbour Company Limited(4) Ordinary shares
(6) UK of GBP1 100% 100%
Clarence Marine Engineering Ordinary shares
Limited(4) (6) UK of GBP1 100% 100%
Ordinary shares
Gosport Ferry Limited(4) (6) UK of GBP1 100% 100%
Portsmouth Harbour Waterbus Ordinary shares
Company Limited(4) (6) (7) UK of GBP1 100% 100%
Momart International Limited(5) Ordinary shares
(7) UK of GBP1 100% 100%
Ordinary shares
Momart Limited(5) (6) UK of GBP1 100% 100%
Ordinary shares
Dadart Limited(5) (6) (7) UK of GBP1 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,
6(th) 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.
14. Investment in subsidiaries (continued)
Company
2023 2022
GBP'000 GBP'000
At 1 April 26,762 26,737
Share based payments charge capitalised
into subsidiaries (5) 25
At 31 March* 26,757 26,762
* As detailed in note 1 to the financial statements, the
carrying value of investments have been restated, resulting in an
increase of GBP2.7 million at 31 March 2022.
The amounts disclosed are net of a provision for impairment of
GBP18 million (2022: GBP18 million).
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 GBP50,000
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 2023 2022
GBP'000 GBP'000
Current assets 519 519
Liabilities due in less than one year (1) (1)
Net assets of SAtCO 518 518
Group share of net assets 259 259
There were no recognised gains or losses for the years ended 31
March 2023 (2022: none).
The current assets balances above include GBP16,000 of cash
(2022: GBP16,000), GBP5,000 of other debtors (2022: GBP5,000) and
GBP498,000 (2022: GBP498,000) of loans due from SAtCO's parent
companies.
SAtCO had no contingent liabilities or capital commitments as at
31 March 2023 or 31 March 2022 and the Group had no contingent
liabilities or commitments in respect of its joint venture at 31
March 2023 or 31 March 2022.
SATCO's registered office is 56 John Street, Stanley, Falkland
Islands FIQQ 1ZZ
16. Finance leases receivable
As lessor, FIC has sold assets to customers on finance lease
agreements. 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 revenue 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 consumer
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.
16. Finance leases receivable (continued)
Group
2023 2022
GBP'000 GBP'000
Lease debtors due after more
Non-Current: than one year 681 725
Lease debtors due within one
Current: year 397 511
Total lease
debtors 1,078 1,236
The difference between the gross investment in the finance lease
receivables and the present value of future lease payments due
represents unearned lease income of GBP375,000 (2022: GBP310,000).
The cost of assets acquired for the purpose of renting out under
hire purchase agreements by the Group during the year amounted to
GBP629,000 (2022: GBP960,000).
The total cash received during the year in respect of hire
purchase agreements was GBP 923,000 (2022: GBP985,000).
Group
2023 2022
GBP'000 GBP'000
Gross investment in finance lease receivables 1,484 1,571
Unearned lease income (375) (310)
Bad debt provision against hire purchase
leases (31) (25)
Present value of future lease receipts 1,078 1,236
17. Deferred tax assets and liabilities
Recognised deferred tax assets and (liabilities) Group
2023 2022
GBP'000 GBP'000
Property, plant & equipment (3,874) (3,537)
Intangible assets (509) (509)
Inventories (unrealised intragroup profits) 90 81
Other financial liabilities 54 104
Derivative financial instruments (44) (27)
Share-based payments 68 108
Total net deferred tax liabilities (4,215) (3,780)
Deferred tax asset arising on the defined
benefit pension liabilities 482 666
Net tax liabilities (3,733) (3,114)
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.
Company
2023 2022
GBP'000 GBP'000
Derivative financial liabilities (44) (27)
Other temporary differences (41) 15
Net tax asset / (liability) (85) (12)
17. Deferred tax assets and liabilities
(continued)
Movement in deferred tax assets / (liabilities)
in the year:
Group
1 April Recognised Recognised
2022 in income in equity 31 March 2023
GBP'000 GBP'000 GBP'000 GBP'000
Property, plant & equipment (3,537) (337) - (3,874)
Intangible assets (509) - (509)
Inventories (unrealised intragroup
profits) 81 9 - 90
Other financial liabilities 104 (47) (3) 54
Derivative financial instruments (27) (61) 44 (44)
Share-based payments 108 - (40) 68
Pension 666 (8) (176) 482
Deferred tax movements (3,114) (444) (175) (3,733)
Unrecognised deferred tax assets
Deferred tax assets of GBP141,000 (2022: GBP44,000) 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: Company
1 April Recognised Recognised 31 March
2022 in income in equity 2023
GBP'000 GBP'000 GBP'000 GBP'000
Derivative financial liabilities
instruments (27) (61) 44 (44)
Other temporary differences 15 (16) (40) (41)
Deferred tax asset movements (12) (77) (4) (85)
Movement in deferred tax assets / (liabilities)
in the prior year:
Group
Recognised Recognised 31 March
1 April 2021 in income in equity 2022
GBP'000 GBP'000 GBP'000 GBP'000
Property, plant & equipment (2,938) (599) - (3,537)
Intangible assets (387) (122) - (509)
Inventories 62 19 - 81
Other financial liabilities 66 31 7 104
Derivative financial instruments 44 (31) (40) (27)
Share-based payments 40 17 51 108
Pension 739 (11) (62) 666
Deferred tax movements (2,374) (696) (44) (3,114)
Movement in deferred tax asset in
the prior year: Company
1 April Recognised Recognised 31 March
2021 in income in equity 2022
GBP'000 GBP'000 GBP'000 GBP'000
Derivative financial instruments 44 (31) (40) (27)
Other temporary differences - 15 - 15
Deferred tax asset movements 44 (16) (40) (12)
17. Deferred tax assets and liabilities (continued)
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
Group
2023 2022
GBP'000 GBP'000
Work in progress 225 1,033
Goods in transit 605 284
Goods held for resale and raw materials 6,046 5,423
Total Inventories 6,876 6,740
The Company has no inventories.
19. Trade and other receivables
Group Company
2023 2022 2023 2022
GBP'000 GBP'000 GBP'000 GBP'000
Non-Current
Rental deposits - 44 - -
Amount owed by subsidiary undertakings - - 10,257 10,057
Total trade and other receivables - 44 10,257 10,057
Group Company
2023 2022 2023 2022
GBP'000 GBP'000 GBP'000 GBP'000
Current
Trade and other receivables 7,203 5,362 - -
Rental deposits 116 88 - -
Prepayments 1,533 1,515 11 45
Accrued income 433 982 - -
Contract asset 904 - - -
Total trade and other receivables 10,189 7,947 11 45
Amounts owed by subsidiary undertakings to the Company are not
secured and interest free with no fixed repayment date.
The accrued income 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
Group
Interest Other
2022 Cash non-cash 2023
GBP'000 Flows Changes GBP'000
Cash and cash equivalents 9,572 3,254 - (26) 12,800
Bank loans (14,183) 1,352 (424) - (13,255)
Net debt (4,611) 4,606 (424) (26) (455)
Interest rate swap 644 - 915 1,559
Lease liabilities* (6,536) 922 (304) (561) (6,479)
Derivatives and lease
liabilities (5,892) 922 (304) 354 (4,920)
Net debt after derivatives
and lease liabilities
at 31 March (10,503) 5,528 (728) 328 (5,375)
Movement in financial liabilities* above
Financing liabilities** (20,075) 2,274 (728) 354 (18,175)
.
Company Other
2022 Cash non-cash 2023
GBP'000 Flows Interest Changes GBP'000
Cash and cash equivalents 4,376 (1,069) - 3,307
Bank loans (12,668) 890 (368) - (12,146)
Net debt (8,292) (179) (368) - (8,839)
Interest rate swap 644 - - 915 1,559
Net debt after derivatives
at 31 March (7,648) (179) (368) 915 (7,280)
Movement in financial
liabilities above
Financing liabilities** (12,024) 890 (368) 915 (10,587)
* As detailed in note 1 to the financial statements, lease
liabilities have been restated, resulting in a reduction of GBP0.6
million at 31 March 2022.
**The total for financing liabilities was not presented in the
2022 annual report and accounts as required by IAS 7 and the
derivative instrument was also omitted from the disclosure. This
has been corrected by disclosing the total for financing
liabilities and including the opening balance of the derivative of
GBP644,000, being the interest rate swap as at 31 March 2022. Other
non-cash changes comprise, foreign exchange movements, fair value
movements and new lease liabilities.
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. Information on the maturity of
interest-bearing loans and lease liabilities and exposure to
interest rate and foreign currency risk is disclosed in note
26.
Group Company
2023 2022 2023 2022
GBP'000 GBP'000 GBP'000 GBP'000
Non-current liabilities
Secured bank loans 12,316 13,235 11,617 12,139
Lease liabilities* 5,898 5,948 - -
Total non-current interest-bearing
loans and lease liabilities 18,214 19,183 11,617 12,139
Current liabilities
Secured bank loans 939 948 529 529
Lease liabilities* 581 588 - -
Total current interest-bearing loans
and lease liabilities 1,520 1,536 529 529
Total liabilities
Secured bank loans 13,255 14,183 12,146 12,668
Lease liabilities* 6,479 6,536 - -
Total interest-bearing loans and lease
liabilities 19,734 20,719 12,146 12,668
Lease liabilities
Future minimum lease payments Interest Present value of
minimum lease payments
2023 2022 2023 2022 2023 2022
GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000
Less than one
year 868 874 (287) (287) 581 587
Between one and
two years 779 709 (269) (269) 510 440
Between two and
five years 1,689 1,616 (725) (733) 964 883
More than five
years 9,053 9,564 (4,629) (4,938) 4,424 4,626
----------
Total* 12,389 12,763 (5,910) (6,227) 6,479 6,536
* As detailed in note 1 to the financial statements, lease
liabilities have been restated, resulting in a reduction of GBP0.6
million at 31 March 2022.
22. Trade and other payables
Group Company
2023 2022 2023 2022
GBP'000 GBP'000 GBP'000 GBP'000
Current
Trade payables 6,322 4,111 6 29
Contract liability - 254 - -
Amounts owed to subsidiary undertakings - - 5,269 5,085
Loan from joint venture 249 249 - -
Other creditors, including taxation
and social security 2,835 2,080 116 120
Accruals 3,950 2,962 548 615
Deferred income 362 314 - -
Total trade and other payables 13,718 9,970 5,939 5,849
Amounts owed to subsidiary undertakings by the company are not
secured, interest free and repayable on demand.
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 GBP535,000
(2022: GBP505,000). The Group anticipates paying contributions
amounting to GBP567,000 during the year ending 31 March 2024. There
were outstanding contributions of GBP44,000 (2022: GBP11,000) due
to pension schemes at 31 March 2023.
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 2024 are
GBP102,010. During the year ended 31 March 2023, 10 pensioners
(2022: 11) received benefits from this scheme, and there are three
deferred members at 31 March 2023 (2022: 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 12 years (2022: 14 years).
An actuarial report for IAS 19 purposes as at 31 March 2023 was
prepared by a qualified independent actuary, Lane Clark and Peacock
LLP. The major assumptions used in the valuation were:
2023 2022
Rate of increase in pensions in payment and deferred
pensions 2.5% 2.7%
Discount rate applied to scheme liabilities 4.8% 2.8%
Inflation assumption 3.9%
Average longevity at age 65 for male current and
deferred pensioners 22.0 22.0
(years) at accounting date
Average longevity at age 65 for male current and
deferred pensioners 24.4 23.4
(years) 20 years after accounting date
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 2023 would
have increased / (decreased) as a result of a change in the
respective assumptions by 1.0%.
Effect on Obligation
2023
-1%
pa +1% pa
GBP'000 GBP'000
Discount rate 240 (200)
Inflation assumption (10) 10
-1 year +1 year
GBP'000 GBP'000
Life expectancy (80) 80
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.
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
2019 2020 2021 2022 2023
GBP'000 GBP'000 GBP'000 GBP'000 GBP'000
Present value of scheme
liabilities (2,772) (2,604) (2,842) (2,562) (1,978)
Related deferred tax
assets 721 677 677 666 482
Net pension liability (2,051) (1,927) (2,165) (1,896) (1,496)
Movement in deficit during the year: 2023 2022
GBP'000 GBP'000
Deficit in scheme at beginning of the year (2,562) (2,842)
Pensions paid 101 99
Other finance cost (70) (56)
Re-measurement of the defined benefit pension
liability 553 237
Deficit in scheme at the end of the year (1,978) (2,562)
Analysis of amounts included in other finance
costs: 2023 2022
GBP'000 GBP'000
Interest on pension scheme liabilities 70 56
Analysis of amounts recognised in statement of comprehensive
income: 2023 2022
GBP'000 GBP'000
Experience gains arising on scheme liabilities (1) (43)
Changes in assumptions underlying the present value
of scheme liabilities 554 280
--------
Re-measurement of the defined benefit pension liability 553 237
--------
24. Employee benefits: share based payments
The total number of options outstanding at 31 March 2023 is
310,654 comprising (i) 3,591 nil cost options (2022: 3,591), (ii)
302,063 options (2022: 431,243) granted under the Long-Term
Incentive Plan and (iii) 5,000 (2022: 5,000) share options granted
with an exercise price equal to the market price on the date of
grant.
(i) Nil cost options granted to John Foster:
Share price
Date of Issue Number at grant Fair value Total Earliest Latest
date per share fair value Exercise Exercise
pence pence GBP Date date
17 Jun 17 Jun
17 Jun 19 3,591 316.0 301.0 10,809 22 23
Total 3,591 10,809
24. Employee benefits: share based payments (continued)
Number of
Reconciliation of nil cost options: options Number of options
2023 2022
Outstanding at the beginning of the year 3,591 12,864
Options exercised during the year - (9,273)
Outstanding at the year end 3,591 3,591
(ii) Incentive Plan grants at an exercise price of ten pence to
directors of subsidiaries and executives:
255,304 Long-term Incentive Plan grants were issued on 3
December 2021 at an exercise price of ten pence to directors of
subsidiaries and executives, and expire in five years on 3 December
2026. During the year, 52,953 of these options were forfeited
(2022: 34,535) and 167,816 of these options remain outstanding at
31 March 2023. None of these grants are exercisable at 31 March
2023.
133,052 Long-term Incentive Plan grants were issued on 14 July
2020 at an exercise price of ten pence to directors of subsidiaries
and executives, and expire in five years on 14 July 2025. During
the year, 51,434 of these options were forfeited (2022: nil) and
71,618 of these options remain outstanding at 31 March 2023. None
of these grants are exercisable at 31 March 2023.
135,535 Long-term Incentive Plan grants were issued on 4 July
2019 at an exercise price of ten pence to directors of subsidiaries
and executives, and expire in five years on 4 July 2024. During the
year, 24,793 of these options were forfeited (2022: nil) and 62,629
options remain outstanding at 31 March 2023. None of these grants
are exercisable at 31 March 2023.
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. All the options have a
three-year vesting period.
Share price
Date of Number Exercise at grant Fair value Total Earliest
Issue Price date per share fair value Exercise Latest Exercise
pence Pence pence GBP Date date
4 Jul 4 Jul
19 62,629 10.0 314.0 96.8 60,616 22 3 Jul 24
14 Jul 15 Jul
20 71,618 10.0 315.0 75.0 53,714 23 13 Jul 25
3 Dec 3 Dec
21 167,816 10.0 215.0 88.0 147,678 24 2 Dec 26
Total 302,063 262,008
----------- ------------ ----------- ----------
Reconciliation of LTIPs: Number of options Number of options
2023 2022
Outstanding at the beginning of the
year 431,243 210,474
Options granted during the year - 255,304
Options forfeited during the year (129,180) (34,535)
Outstanding at the year end 302,063 431,243
- -
Vested options exercisable at the year end
Weighted average life of outstanding options
(years) 3.4 4.4
24. Employee benefits: share based payments (continued)
(iii) Share options with an exercise price equal to the market
price on the date of grant
Share price Total
Date of Number Exercise at grant Fair value fair Earliest Latest
Issue Price date per share value Exercise Exercise
pence Pence pence GBP Date date
19 Jan 19 Jan 18 Jan
15 5,000 272.5 272.5 63.0 3,150 18 25
Total 5,000 3,150
------------ ----------- ------- ---------- ----------
The exercise price of outstanding options at 31 March 2023 is
GBP2.725.
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 Weighted
average average
exercise exercise
price Number of price Number
(GBP) options (GBP) of options
2023 2023 2022 2022
Outstanding at the beginning of
the year 2.73 5,000 2.68 58,152
Lapsed during the year - - 2.68 (53,152)
----------
Outstanding at the year end 2.73 5,000 2.73 5,000
----------
Vested options exercisable at the
year end 2.73 5,000 2.73 5,000
----------
Weighted average life of outstanding
options (years) 1.8 2.8
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, 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 2023 no nil cost options were exercised
over ordinary shares (2022: 9,273 at a gain of GBP23,183).
2023 2022
GBP'000 GBP'000
Total share-based payment expense recognised
in the year 41 45
25. Capital and reserves
Share capital Ordinary Shares
2023 2022
In issue at the start of the year 12,519,900 12,514,985
Share capital issued during the year - 4,915
In issue at the end of the year 12,519,900 12,519,900
2023 2022
GBP'000 GBP'000
Allotted, called up and fully paid Ordinary
shares of 10p each 1,251 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 no shares (2022: 4,915) were issued following
the exercise of share options.
Other reserves
The other reserves in the Group of GBP703,000 at 31 March 2023
comprise GBP5,389,000 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 GBP8.0 million and
the GBP4,686,000 of goodwill on this acquisition was written off
against the merger relief.
Share premium
Hedging reserve
Dividends
The following dividends were recognised and paid in the
period:
2023 2022
GBP'000 GBP'000
Interim 2022: 1.0 pence per qualifying ordinary
share - 125
Final 2022: 2.0 pence per qualifying ordinary
share 251 -
Interim 2023: 1.2 pence per qualifying ordinary
share 150 -
Total dividends recognised in the period 401 125
26. Financial instruments
(i) Fair values of financial instruments
Trade and other receivables
The fair value of trade and other receivables is estimated as
the present value of future cash flows, discounted at the market
rate of interest at the balance sheet date if the effect is
material.
Trade and other payables
The fair value of trade and other payables is estimated as the
present value of future cash flows, discounted at the market rate
of interest at the balance sheet date if the effect is
material.
Cash and cash equivalents
The fair value of cash and cash equivalents is estimated as its
carrying amount where the cash is repayable on demand. Where it is
not repayable on demand then the fair value is estimated at the
present value of future cash flows, discounted at the market rate
of interest at the balance sheet date.
Interest-bearing borrowings
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.
The following table shows the carrying value, which management
consider to be materially equal to fair value for each category of
financial instrument:
Group Company
2023 2022 2023 2022
GBP'000 GBP'000 GBP'000 GBP'000
Cash and cash equivalents 12,800 9,572 3,307 4,376
Finance lease debtors 1,078 1,236 - -
Interest rate swap asset 1,559 644 1,559 644
Trade and other receivables 7,203 5,362 - -
Rental deposits 116 132 - -
Total assets exposed to credit
risk 22,756 16,946 4,866 5,020
Interest rate swap liability - - - -
Total trade and other payables (12,508) (9,119) (5,939) (5,849)
Interest-bearing borrowings at amortised
cost (19,734) (21,249) (12,146) (12,668)
The interest rate swaps have been valued using a level 2
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-
26. Financial instruments (continued)
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 GBP22,085,000 (2022: GBP16,946,000)
being the total trade receivables, finance lease 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.
The maximum exposure to credit risk for trade receivables at the
balance sheet date by geographic region was:
Group
2023 2022
GBP'000 GBP'000
Falkland Islands 3,167 1,773
Europe 617 775
North America 526 254
United Kingdom 2,492 2,365
Other 401 195
Total trade receivables 7,203 5,362
The Company has no trade debtors.
Credit quality of financial assets and expected credit
losses
Group Gross Impairment Net Gross Impairment Net
2023 2023 2023 2022 2022 2022
GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000
Not past due 5,722 - 5,747 3,736 - 3,736
Past due 0-30 days 1,013 (7) 1,006 1,020 (2) 1,018
Past due 31-120 days 204 (10) 194 491 (58) 433
More than 120 days 429 (148) 281 328 (153) 175
Total trade receivables 7,368 (165) 7,203 5,575 (213) 5,362
Finance lease debtors 1,078 (31) 1,047 1,261 (25) 1,236
The amount of finance lease receivable that is past due is
immaterial and secured on asset financed.
26. Financial instruments (continued)
The movement in the allowances for impairment in respect of
trade receivables and finance lease receivables during the year
was:
Group
2023 2022
GBP'000 GBP'000
Balance at 1 April 238 127
Impairment loss recognised 27 114
Utilisation of provision (debts written
off) (69) (3)
Balance at 31 March 196 238
Provided against finance lease receivables 31 25
Provided against trade and other receivables 165 213
Balance at 31 March 196 238
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.
(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 year the Group had outstanding bank loans of GBP14.2 million
(2022 GBP20.1 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
GBP12.7 million (2022 GBP13.2 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:
Contractual cash flows
2023 Carrying 1 year 1 to 2 to 5 years
amount Total or less 2 years 5 years and over
GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000
Financial liabilities
Secured bank loans 13,255 15,274 1,348 1,404 3,047 9,475
Lease liabilities 6,479 12,977 839 779 1,688 9,671
Trade payables 6,322 6,322 6,322 - - -
Other creditors 1,696 1,696 1,696 - - -
Loan from Joint Venture 249 249 249 - - -
Accruals 3,950 3,950 3,950 - - -
Total financial liabilities 31,951 40,468 14,404 2,183 4,735 19,146
26. Financial instruments (continued)
Contractual cash flows
2022 Carrying 1 year 1 to 2 to 5 years
amount Total or less 2 years 5 years and over
GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000
Financial liabilities
Secured bank loans 14,183 16,410 1,346 1,332 3,486 10,246
Lease liabilities 7,066 13,293 874 709 1,616 10,094
Trade payables 4,111 4,111 4,111 - - -
Other creditors 1,797 1,797 1,797 - - -
Loan from joint venture 249 249 249 - - -
Accruals 2,962 2,962 2,962 - - -
Total financial liabilities 30,368 38,822 11,339 2,041 5,102 20,340
Liquidity risk - Company
The following are the contractual maturities of financial
liabilities, including estimated interest payments and excluding
the effects of netting agreements:
Contractual cash flows
2023 Carrying 1 year 1 to 2 to 5 years
amount Total or less 2 years 5 years and over
GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000
Financial liabilities
Secured bank loans 12,146 14,098 891 947 2,785 9,475
Trade payables 6 6 6 - - -
Amounts owed to subsidiary
undertakings 5,269 5,269 5,269 - - -
Other creditors 89 89 89 - - -
Accruals 548 548 548 - - -
Total financial liabilities 18,058 20,010 6,803 947 2,785 9,475
Contractual cash flows
2022 Carrying 1 year 1 to 2 to 5 years
amount Total or less 2 years 5 years and over
GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000
Financial liabilities
Secured bank loans 12,668 14,825 893 879 2,807 10,246
Amounts owed to subsidiary
undertakings 29 29 29 - - -
Interest rate swap liability 5,085 5,085 5,085 - - -
Other creditors 89 89 89 - - -
Accruals 615 615 615 - - -
Total financial liabilities 18,486 20,643 6,711 879 2,807 10,246
26. Financial instruments (continued)
(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.
Group
2023 Total Balance
EUR USD Other sheet exposure GBP Total
GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000
Cash and cash equivalents 107 219 15 341 12,459 12,800
Trade payables and other
payables (485) (645) (661) (1,791) (11,927) (13,718)
------- -------
Balance sheet exposure (378) (426) (646) (1,450) 532 (918)
------- -------
2022 Total Balance
EUR USD Other sheet exposure GBP Total
GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000
Cash and cash equivalents 126 117 40 283 9,289 9,572
Trade payables and other
payables (635) (479) (312) (1,426) (8,544) (9,970)
------- -------
Balance sheet exposure (509) (362) (272) (1,143) 745 (398)
------- -------
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 2023 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 2022.
Equity Profit or Loss
2023 2022 2023 2022
GBP'000 GBP'000 GBP'000 GBP'000
EUR 38 51 38 51
USD 43 36 43 36
A 10% strengthening of the above currencies against pound
sterling at 31 March 2023 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.
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:
Group Company
2023 2022 2023 2022
GBP'000 GBP'000 GBP'000 GBP'000
Fixed rate financial
instruments
Leases receivable 1,078 1,236 - -
Bank loans (407) (508) - -
Lease liabilities (6,479) (7,066) - -
---------
Total fixed rate financial
instruments (5,808) (6,338) - -
---------
Variable rate financial
instruments
Effect of Interest rate
swap 1,559 - - -
Bank loans (12,848) (13,675) (12,146) (12,668)
---------
Total variable rate financial
instruments (11,289) (13,675) (12,146) (12,668)
---------
At 31 March 2023, the Group had four bank loans:
(i) GBP12.1 million (2022: GBP12.7 million) ten-year loan, which
was drawn down on 28 June 2019, with interest charged at the
compounded daily SONIA rate plus 1.8693%;
(ii) GBP0.6 million (2022: GBP0.8 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) GBP0.1 million (2022: GBP0.2 million) repayable over ten
years until May 2025, secured against freehold property held in
PHFC, with interest charged at 1.75% above the Bank of England base
rate;
(iv) GBP0.4 million (2022: GBP0.5 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 GBP12.1 million ten-year loan has
been hedged by one interest swap, taken out on 30 December 2021
with an initial notional value of GBP12.625 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 GBP125,000 per quarter over five years until June
2024, and then at GBP150,000 per quarter for a further five years
until June 2029 when the outstanding bullet payment of GBP8,525,000
is likely to be refinanced. The notional value of the swap at 31
March 2023 is GBP12.0 million (2022: GBP12.5 million).
Lease liabilities
At 31 March 2023, the Group had the following lease
liabilities:
(i) GBP5.1 million lease liabilities payable to Gosport Borough
Council; GBP4.5 million for the Gosport pontoon and GBP0.6 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) GBP1.4 million of property rental leases, including two
warehouses rented by Momart and the Momart and Bishops Stortford
head offices, which run for between 3 to 6 years as at 31 March
2023. The weighted average interest rate of these rental
liabilities is 3.25%.
(iii) GBP0.5 million of lease liabilities taken out to finance
trucks by hire purchase leases at Momart. 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.
26. Financial instruments (continued)
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 2022.
Group Company
2023 2022 2023 2022
GBP'000 GBP'000 GBP'000 GBP'000
Equity
Interest rate swap liability 121 127 121 127
Variable rate financial liabilities (128) (137) (121) (127)
Profit or Loss
Interest rate swap liability 121 127 121 127
Variable rate financial liabilities (128) (137) (121) (127)
(v) Capital Management
The Group's objectives when managing capital, which comprises
equity and reserves at 31 March 2023 of GBP43,806,000 (2022:
GBP40,657,000) 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
75 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
2023 2022
GBP'000 GBP'000
Less than one year 1,097 974
Between one and five years 4,389 3,897
More than five years 17,831 16,805
23,317 21,676
28. Capital commitments
At 31 March 2023, the Group had entered into the following
contractual commitments:
- GBP427,000 in Momart comprising GBP292,000 for enhancements to
existing vehicles, GBP111,000 for two new vehicles, and GBP23,000
for IT upgrades.
- GBP92,000 in PHFC for infrastructure replacement.
- GBP42,000 in FIC for the new retail sales system.
At 31 March 2022, the Group had entered into the following
contractual commitments:
- GBP385,000 at Momart comprising GBP272,000 for two new
vehicles, GBP79,000 for an HGV trailer and other enhancements to
existing vehicles and GBP34,000 for climate control systems.
- GBP270,000 in FIC comprising GBP190,000 for a new retail sales
system and GBP80,000 for a warehouse office.
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% (2022: 30.3%) of the voting shares of the Company
at 31 March 2023.
The compensation of key management personnel, which includes the
FIH group plc directors and the managing directors of the
subsidiaries, is as follows:
Group Company
2023 2022 2023 2022
GBP'000 GBP'000 GBP'000 GBP'000
Key management emoluments including
social security costs 1,010 1,317 600 943
Company contributions to defined contribution
pension plans 47 41 9 -
Share-related awards 41 45 46 20
Total key management personnel compensation 1,098 1,403 655 963
At 31 March 2023, the Group's joint venture, SAtCO, has debtors
of GBP498,000 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
GBP65,000 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. GBP650 of
interest is payable each year by Mr Ironside to FIC in respect of
this loan.
FIH group plc key transactions with subsidiary entities:
2023 2022
GBP'000 GBP'000
FIC
Loan from subsidiary 10,257 10,057
Management fees charged annually 635 635
Momart
Loan to subsidiary (1,815) (1,630)
Management fees charged annually 120 120
PHFC
Loan to subsidiary (2,555) (2,555)
Management fees charged annually 240 240
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 2023, 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 GBP80,000 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.
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 2023, inventory provisions increased to
GBP1,100,000 (2022: GBP1,089,000). Inventory greater than 12 months
old and with no sales in the twelve months before 31 March 2023 is
provided against in full. If this provision was reduced to 50% of
the gross inventory value, the provision would reduce by circa
GBP174,000 2022: GBP169,000). If this provision was extended to
cover all inventory greater than six months old with no sales in
the twelve months before 31 March 2023, the provision would
increase by GBP117,000 (2022: GBP94,000).
Long term construction contracts
Significant estimation is involved in determining the revenue
and profit to be recognised on long term contracts. This includes
determining percentage of completion at the balance sheet date by
estimating the total expected costs to complete each contract along
with their future profitability. These estimates directly influence
the revenue and profit that can be recognised on such
contracts.
Company Information
Directors Registered Office
Robin Williams Non-executive Chairman Kenburgh Court
Stuart Munro Chief Executive Officer 133-137 South Street
Reuben Shamu Chief Financial Officer Bishop's Stortford
Robert Johnston Non-executive Director Hertfordshire CM23
3HX
Dominic Lavelle Non-executive Director T: 01279 461630
Holger Schröder Non-executive Director E: admin@fihplc.com
W: www.fihplc.com
Registered number 03416346
Company Secretary
AMBA Secretaries
Limited
Stockbroker and Nominated
Adviser
W.H. Ireland Limited
24 Martin Lane,
London EC4R 0DR
Solicitors
Shoosmiths LLP
1 Bow Churchyard
London EC4M 9DQ
Auditor
Grant Thornton UK LLP
103 Colmore Row,
Birmingham B3 3AG
Registrar
Link Group
10(th) Floor Central Square,
29 Wellington Street,
Leeds LS1 4DL
Financial PR
Novella Communications,
South Wing, Somerset House,
London WC2R 1LA
The Falkland Islands Company The Portsmouth Harbour Momart Limited
Ferry Company
Kevin Ironside, Director Adam Brown, Director Alison Jordan, Director
T: 00 500 27600 T: 02392 524551 T: 020 7426 3000
E: info@fic.co.fk E: admin@gosportferry.co.uk E: enquiries@momart.com
W: www.falklandislandscompany.com W: www.gosportferry.co.uk W: www.momart.com
www.fihplc.com
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END
FR BBGDIXDGDGXU
(END) Dow Jones Newswires
August 07, 2023 02:00 ET (06:00 GMT)
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