TIDMFIH
RNS Number : 2445E
FIH Group PLC
06 July 2021
FIH group plc
("FIH" or the "Group")
Final Results
FIH, the AIM quoted Group that owns essential services
businesses in the UK and Falkland Islands, is pleased to announce
its final results for the year ended 31 March 2021 ("the
period").
Remained Profitable and Maintained Strong Cash Position despite
COVID -19
Highlights
-- COVID-19 substantially reduced Group revenue to GBP32.6
million (2020: GBP44.6 million) with the fall in sales relating
primarily to UK operations reflecting the impact on trading from
seven months of lockdowns during the period
-- Despite this, the Group still managed to record a profit
before non-trading items at the pre-tax level of GBP0.1 million
(2020: GBP3.7 million) with profits from the Falkland Islands
Company ("FIC") offsetting losses incurred in the UK
-- FIC maintained healthy profit levels helped by less
disruption from the pandemic and despite the absence of tourist
revenue
-- In the UK, the fixed costs of the Portsmouth Harbour Ferry
Company ("PHFC") resulted in this business being the hardest hit
whilst Momart, which retained revenues from art storage, was able
to mitigate some of the impact from COVID-19
-- To manage the impact of the pandemic and accelerate the
ability of the Group to recover, restructuring plans were completed
which are expected to generate ongoing annual cost savings of
GBP1.6 million
-- The Group maintained a strong underlying cash position of
GBP9.6 million as at 31 March 2021, which excludes GBP5.0 million
of cash from UK Government loans which have now been repaid (31
March 2020: GBP9.1 million)
-- Given the sacrifices made by staff, the use of UK Government
assistance and the continuing challenges for UK trading as a result
of the pandemic, no dividend is being recommended for the period;
the position is being kept under review and the Group will resume
the payment of dividends when profitability has been clearly
re-established
Post Year-End
-- UK businesses recovering and in time, expected to return to
pre-pandemic trading levels and growth
-- Falkland Islands remain COVID-19 free and FIC well placed for future growth
-- Lowered cost base is expected to aid speed of recovery
-- Executive management team strengthened with appointment of CFO, Stuart Munro, in April 2021
John Foster, Chief Executive, said:
"Given the cessation of trading imposed by COVID-19 during the
period, the Group has performed resiliently and come through the
pandemic so far in good shape. All three businesses are
fundamentally sound and are either steadily recovering or in the
case of FIC well placed to grow. Underpinning the Group is a sound
financial base with high levels of cash which is further supported
by the value of Momart's freehold property. There are opportunities
to expand organically which are being pursued by the respective
management teams at each division and there are also opportunities
to accelerate scale and growth through acquisition. We are
therefore optimistic about the future as markets steadily reopen
and eventually return to pre-COVID levels. The board looks to the
future with confidence."
Enquiries:
FIH group plc
John Foster, Chief Executive Tel: 01279 461630
Stuart Munro, Chief Financial Officer
WH Ireland Ltd. - NOMAD and Broker
to FIH Tel: 0207 220 1666
Adrian Hadden / Jessica Cave / Lydia
Zychowska
-------------------------
Novella Communications
Tim Robertson / Chris Marsh Tel: 020 3151 7008
-------------------------
Market Abuse Regulation (MAR) Disclosure
The information contained within this announcement is deemed by
the Company to constitute inside information. Upon the publication
of this announcement via a Regulatory Information Service, this
inside information is now considered to be in the public
domain.
Chairman's Statement
Dear Shareholder,
This has been an extraordinary trading period, especially given
our financial year to 31 March 2021 encompassed seven months of
lockdowns where trading in the UK was severely restricted or
halted. Nevertheless, despite some extreme challenges to the UK
businesses, the Falkland Islands Company ("FIC") traded well,
resulting in the Group being able to report a small underlying
profit at the pre-tax level of GBP0.1 million (2020: GBP3.7
million) as well as a strong cash position. This was therefore a
resilient performance by the Group, benefiting from the diversity
of its operations, and showing that when trading was periodically
allowed in the UK, the businesses responded positively, boding well
for the future.
The adverse effects of COVID-19 on Group operations can be most
clearly seen in the turnover, with Group revenue falling from
GBP44.6 million in 2019-20 to GBP32.6 million in the year to 31
March 2021. The effects were most severe in the UK with activity
reduced by over 90% at the height of the first lockdown in Spring
2020. However, the Group was fortunate that, in the Falkland
Islands, business activity suffered only minor disruption from the
pandemic and the continuing profitability of FIC provided an
effective balance to the losses incurred in the UK.
At Momart, after losses in the first half of the year, trading
improved in the traditionally stronger autumn and winter periods
with the business recording a small operating contribution before
restructuring costs for the full year. At the Portsmouth Harbour
Ferry Company ("PHFC") however, the effects of the second and third
lockdowns saw passenger movements severely restricted, resulting in
continuing losses in the second half of the year.
Despite these significant adverse effects, I am pleased to
report that the solid profits generated by FIC, early action to
control costs, and the full utilisation of the grants available
under the UK Government's furlough scheme, enabled the Group
successfully to mitigate the worst financial effects of COVID-19
and return a pre-tax profit of GBP0.2 million after non-trading
items in the year (2020: pre-tax loss of GBP3.8 million as a result
of the GBP7.5 million charge to write-down intangible assets). No
further write-downs of intangible assets have arisen in the current
year.
As for many pandemic-affected businesses, the year was a
difficult one for the Group's employees and I would like to express
my appreciation for the sacrifices made by staff in accepting pay
cuts as we navigated the darkest days of the first lockdown in the
spring and early summer of last year. We are very fortunate to have
such committed colleagues.
The Board has shared in these sacrifices and monitored
developments closely, seeking to protect the underlying strength
and capacity of the Group's businesses, whilst ensuring initial
losses were kept within manageable limits. However, as reported in
our Interim Statement in November, with the tapering down of the UK
Government's furlough scheme in the autumn of 2020, the difficult
decision was taken to reduce staff levels in the Group's UK
businesses. This painful but necessary restructuring yielded annual
savings of GBP1.6 million and will ease the path to financial
recovery in the current year.
The balance sheet remains strong with underlying cash at GBP9.6
million (2020: GBP9.1 million) and we drew down two UK Government
backed loans totalling some GBP5 million, which took year end cash
to GBP14.6 million. We repaid these loans subsequent to the year
end, so the underlying cash figure better represents our short-term
available funds.
The Chief Executive's Strategic Review provides a more detailed
review of developments across the Group in the past year.
Given the severe effect of the pandemic on the Group's profits,
the sacrifices made by staff, the use of UK Government assistance
and the still challenging trading conditions, after careful
consideration the Board has decided not to recommend the payment of
a dividend in respect of the year ended 31 March 2021. However, the
Board is hopeful that if the conditions that have dislocated the
Group's performance continue to be eased in both the UK and
overseas, the Group will be able to resume the payment of dividends
when profitability is once again clearly established.
Board and Governance
To further strengthen the executive Board and to provide
additional impetus to the Group's strategic development, we were
delighted to appoint Stuart Munro as Chief Financial Officer on 28
April 2021. Stuart will work closely with CEO John Foster to add
value to the Group's existing companies and to provide focus in the
search for strategic acquisitions to enhance returns to
shareholders.
Outlook
As the UK's vaccination programme progresses, we are seeing
signs of a slow return to normality and we are hopeful that absent
any further setbacks, the underlying strengths of the Group's
diverse and well positioned businesses will reassert themselves as
the economic recovery gathers pace.
Robin Williams
Chairman
6 July 2021
Chief Executive's Strategic Review
Overview
In a year of unprecedented challenge, where at times the impact
of COVID-19 saw revenues in the Group's UK businesses shrink to
less than 10% of normal levels, I am pleased to report that the
Group produced an underlying pre-tax profit of GBP0.1 million
(2020: GBP3.7 million). After taking account of non-trading items,
the reported profit before tax was GBP0.2 million. This compares to
a GBP3.7 million loss before tax in the prior year following a
GBP7.5 million write down in intangible assets.
The consistent profitability of the Group's Falkland Islands
operations was a source of strength and was a key factor in helping
to offset trading losses suffered by our businesses in the UK.
This, together with an improving position at Momart in the second
half of the year, saw the Group move from the small pre-tax loss
reported at the half year to a modest pre-tax profit for the year
as a whole.
Despite the sharp reduction in underlying profitability compared
to pre-Covid trading, the Group's liquidity position was
strengthened over the year with positive cash generation of GBP1.1
million before the draw-down of CBILS loans and repayment of bank
loans.
At 31 March 2021, cash balances amounted to GBP14.6 million
(2020: GBP9.1 million). This year-end balance was reached after
making scheduled bank loan repayments of GBP0.6 million and
includes GBP5.0 million allocated to the repayment of the CBILS
loans which were settled in June 2021, effectively leaving GBP9.6
million of unencumbered "free" cash (2020: GBP9.1 million) an
increase of GBP0.5 million over the year.
The Group owns the freehold of Momart's art storage warehouses
in East London which was acquired in December 2018 at a cost of
GBP19.6 million. It is pleasing to note that with recently
increased investor interest in properties of this type, its value
is now higher.
Group Trading Results for the Year Ended 31 March 2021
A summary of the trading performance of the Group is given in
the table below.
Group revenue 2021 2020 Change
Year ended 31 March GBPm GBPm %
--------------------------------------- ----- ----- ------
Falkland Islands Company ("FIC") 20.9 21.7 -3.7%
Portsmouth Harbour Ferry ("PHFC") 1.4 4.1 -65.9
Momart 10.3 18.8 -45.2
--------------------------------------- ----- ----- ------
Total revenue 32.6 44.6 -26.9
--------------------------------------- ----- ----- ------
Group underlying pre-tax profit*
Falkland Islands Company** 1.8 2.1 -14.3
Portsmouth Harbour Ferry** (1.2) 0.6 -300.0
Momart** (0.5) 1.0 -150.0
Total underlying pre-tax profit * 0.1 3.7 -97.3
Non-trading items (see notes below)*** 0.1 (7.5) 101.3
--------------------------------------- ----- ----- ------
Reported profit before tax 0.2 (3.8) 105.3
--------------------------------------- ----- ----- ------
* Underlying pre-tax profit is defined as, profit before tax,
before non-trading items.
** As in prior years the profits reported for each operating
company are stated after the allocation of head office management
and plc costs which have been applied to each subsidiary on a
consistent basis.
*** In the current year, non-trading items include GBP0.4
million of restructuring costs and GBP0.5 million of income
relating to the release of accruals where it is now probable that
no future economic outflow will arise. The net position produced a
non-trading profit of GBP0.1 million. In the prior year there were
impairment charges of GBP7.5 million. Management consider that
separate presentation of these items is appropriate to facilitate
year on year comparison of performance of the Group.
Trading results were significantly affected by COVID-19 and
government restrictions on movement which effectively saw a full
lockdown for 7 months of the financial year. The effects were felt
hardest at the Group's ferry operations where UK Government "stay
at home" instructions saw revenue for the 12 months to 31 March
2021 fall to only 35% of prior year levels. At Momart, helped by
resilient storage revenues, the decrease in overall turnover was
less severe at 45% and in the Falkland Islands where domestic
activity was much less heavily affected, revenue declined by only
4% compared to the prior year.
At PHFC with its essentially fixed cost base and limited UK
Government support, despite a restructuring of the workforce and
headcount reduction of 26% in the autumn, the extension of UK
Government travel restrictions for four months in the second half
saw losses worsen, producing a full year underlying pre-tax loss of
GBP1.2 million. At Momart, a partial recovery of the commercial art
market saw a return to profitability in the second half to deliver
an underlying break-even operating profit for the full year. FIC
saw the least disruption and was able to maintain healthy levels of
profit, despite the absence of tourist revenue.
As noted in the Chairman's report, after careful reflection the
Board has decided not to recommend a dividend in respect of the
year but we will reassess this as the Group returns to consistent
profitability.
Group Operating Company Performance
Falkland Islands Company
In the year to 31 March 2021 trading at FIC was largely
unaffected by the impact of COVID-19 and substantial profitability
was maintained, despite an inevitable impact from the loss of
tourist-related income as the Islands protected themselves by
maintaining an embargo on foreign visitors.
The resulting decline in visitor revenues saw a small reduction
in FIC's operating profit to GBP1.9m (2020: GBP2.1 million), a 9.5%
drop from the record levels seen in the prior year.
With net interest costs of GBP0.1m in respect of an historic
pension scheme closed to further accrual in 2007, FIC returned an
underlying profit before tax of GBP1.8 million (2020: GBP2.1
million).
See details below:
FIC Operating Results
Year ended 31 March 2021 2020 Change
GBPm GBPm %
--------------------------------------- ----- ---- ------
Revenues
Retail 9.7 10.0 -3.0
Falklands 4x4 2.8 3.2 -12.5
FBS (housing and construction) 5.3 5.0 6.0
Support services 2.3 2.8 -17.9
Property rental 0.8 0.7 14.3
Total FIC revenue 20.9 21.7 -3.7
FIC underlying operating profit 1.9 2.1 -9.5
Net interest expense (0.1) - -
--------------------------------------- ----- ---- ------
FIC underlying profit before tax 1.8 2.1 -14.3
--------------------------------------- ----- ---- ------
FIC underlying operating profit margin 9.1% 9.7% -6.2
--------------------------------------- ----- ---- ------
Despite the loss of tourist related income due to COVID-19, the
Group's core operations in the Falkland Islands performed well in
the period with encouraging growth seen at FBS and additional
income from FIC's expanded property rental portfolio.
FIC Divisional Activity
Retail sales held up well in the first half of the year but were
adversely affected in the second due to the absence of
tourist-related spend and dropped back by 3.0% for the year as
whole to GBP9.7 million. Despite some progress at Home Builder and
Home Living, tighter margins and higher levels of stock provisions
saw the overall contribution from Retail fall back from the record
levels seen in the prior year.
At Falklands 4x4, new car sales and servicing revenues declined
reflecting cautious domestic spending patterns, and this together
with reduced tourist and corporate hire income, saw 4x4's overall
revenues drop back with a commensurate reduction in
contribution.
FBS was successful in securing an additional 8 flats in its
first FIG housing contract, taking the total contract to 26 units,
and good progress was made towards completing this contract by the
end of the financial year. With more focus on the FIG housing
contract, kit home completions reduced to 15 units from 22 in the
prior year, but helped by a new income stream from a FIG road
maintenance contract, FBS's overall revenue increased by 6% to
GBP5.3 million (2020: GBP5.0 million) producing an increased
contribution from this increasingly important division.
Rental Properties . Further additions at a cost of GBP0.7
million were made during the year to FIC's portfolio of domestic
rental properties taking the total number of rented properties to
75 (2020: 65) with a further 7 under construction. With strong
demand and a continuing shortage of housing supply in Stanley,
overall occupancy was very high at 93% with double-digit gross
rental yields being achieved. As a result, FIC's property rental
income increased 14% in the year to GBP0.8 million (2020: GBP0.7
million).
At 31 March 2021 the total net book value of the portfolio
excluding assets under construction (with buildings being fully
depreciated over 50 years) was GBP5.8 million (2020: GBP5.1
million). The estimated market value of FIC's rental portfolio at
31 March 2021 was GBP8.5 million (2020: GBP7.3 million) an uplift
of GBP2.7 million on book value giving an average value per
property of GBP113,000 (2020: GBP112,000)
Support Services income decreased by 17.9% to GBP2.3 million
(2020: GBP2.8 million) principally due to the absence of tourists,
which produced a sharp fall in income at Penguin Travel. In
addition, less activity from Asian fishing fleets during the
initial stages of COVID-19 in the spring of 2020 saw a reduction in
Agency revenues.
FIC Key Performance Indicators and Operational Drivers
Year ended 31 March 2017 2018 2019 2020 2021
Staff numbers (FTE
31 March) 151 146 169 208 198
---- ---- ------ ----- -----
Capital expenditure
GBP'000 578 389 2,348 2,685 1,060
---- ---- ------ ----- -----
Retail sales growth
% -5.4 +0.6 +5.7 +3.1 -3.0
---- ---- ------ ----- -----
Number of FIC rental
properties 51* 49* 54* 65 * 75*
---- ---- ------ ----- -----
Average occupancy during
the year % 81 89 84 89 93
---- ---- ------ ----- -----
Number of vehicles
sold 77 77 76 71 71
---- ---- ------ ----- -----
Number of 3(rd) party
houses sold 17 22 6 22 15**
---- ---- ------ ----- -----
Illex squid catch in
tonnes (000's) 30.1 75.5 57.4 57.6 106.1
---- ---- ------ ----- -----
Cruise ship passengers
(000's) 55.6 59.3 62.5 72.1 Nil
---- ---- ------ ----- -----
*Includes ten mobile homes rented to staff.
** The 15 houses sold in the year ended 31 March 2021 relate to
kit home sales to third parties and excludes houses built under
contract for FIG.
FIC ended the year with a headcount of 198 staff, 10 less than
in March 2020. Of the 198 headcount Retail accounted for 74 (2020:
74), Falklands 4x4 accounted for 14 (2020: 17) and FBS 57 (2020:
52), with 53 (2020: 65) in Support Services and administration.
Portsmouth Harbour Ferry Company
Of all the Group's businesses, PHFC was the most badly affected
by the impact of COVID-19 and total revenues fell by GBP2.7 million
(66%) to GBP1.4 million in the year to 31 March 2021 (2020: GBP4.1
million). This fall in revenue was a direct result of the UK
Government restrictions on travel, with passenger numbers for the
year as whole 66% down on the prior year at only 808,000. In
addition, all summer leisure cruising was cancelled. As a result,
the company suffered an underlying pre-tax loss of GBP1.2m in the
current year compared to the pre-tax profits of GBP0.6 million seen
in 2019-20.
PHFC Operating Results
Year ended 31 March 2021 2020 Change
GBPm GBPm %
----------------------------------------- ------ ----- ------
Revenues
Ferry fares 1.4 3.9 -64.1
Cruising and other revenue - 0.2 -100.0
Total PHFC revenue 1.4 4.1 -65.9
----------------------------------------- ------ ----- ------
PHFC underlying operating loss/ profit (0.9) 1.0 -190.0
Pontoon lease liability & Boat loan
finance expense (0.3) (0.4) 25.0
----------------------------------------- ------ ----- ------
PHFC underlying (loss)/profit before
tax (1.2) 0.6 -300.0
----------------------------------------- ------ ----- ------
Passengers carried (000s) 808 2,365 -65.8
----------------------------------------- ------ ----- ------
Since the commencement of the initial lockdown in Spring 2020, a
regular 15 minute ferry service has been maintained with operating
hours reduced by one hour to provide a 17 1/2 hour per day service
(5.30am to 11.00pm). However, due to lack of demand and to save
costs, the two vessel, peak hours service has been discontinued
until volumes recover. Faced with these unprecedented
circumstances, all ferry staff including directors voluntarily
accepted a 20% cut in pay for a period of 5 months and this
sacrifice was instrumental in helping the company weather the
storm.
At the height of the lockdown in April 2020, passenger volumes
fell to less than 10% of the prior year as the number of passenger
journeys reduced to below 2,000 per week. Numbers recovered
steadily as lockdown measures were reduced over the summer of 2020
and passengers returned to using the ferry for travelling to work
and leisure activities. By September 2020, passenger numbers had
risen to 64% of pre-Covid levels and with support from the furlough
scheme, the ferry operation was returning to profitability.
However, with the arrival of subsequent lockdowns in November
and January through March, passenger numbers fell back once again
and despite a restructuring programme which reduced headcount by 9
staff (26%) and full use of the UK Government's furlough scheme,
trading losses increased. By March 2021, passenger volumes had
recovered a little but were still over 60% below pre-Covid levels.
As a result of these further lockdowns, ferry losses in the second
half increased well beyond the GBP0.4 million incurred in the first
half and for the year as whole, PHFC saw underlying losses before
tax of GBP1.2 million (2020: GBP0.6 million profit) before
restructuring costs of GBP0.1 million (2020: GBPnil).
With the phased relaxation of travel restrictions and the
re-opening of non-essential UK shops in April 2021, some
improvement is being seen in passenger numbers and we are hopeful
that as more normal working leisure and travel patterns are
re-established, the ferry will return to profitability over the
course of the year. In the meantime, initiatives have been
progressed with local councils and major local employers to
encourage the use of the ferry as a "green" public transport
solution in the battle against climate change and local air
pollution. We are particularly encouraged that following extensive
engagement with Gosport, Portsmouth and Hampshire Councils, an
exciting new Park & Float scheme was launched in June 2021
utilising Gosport Council car parks, to encourage commuters to
travel to Gosport, park their vehicles and use the ferry to
complete their journey rather than make the longer car journey
around Portsmouth harbour on already heavily congested roads.
Key Operating Metrics
Average fare yield per passenger journey (including cycle fares)
increased by 4.1% to GBP1.76 (2020: GBP1.69).
Despite the pandemic, ferry reliability was maintained at
exemplary levels with on-time departures running at 99.9% (2020:
99.8%).
PHFC Key Performance Indicators and Operational Drivers
Year ended 31 March 2017 2018 2019 2020 2021
Staff numbers (FTE at
31 March) 38 38 37 36 25
-------- -------- -------- -------- --------
Capital expenditure GBP'000's 241 186 50 65 -
-------- -------- -------- -------- --------
Ferry reliability (on
time departures) 99.9 99.8 99.8 99.8 99.9
-------- -------- -------- -------- --------
Number of weekday passengers
'000 1,967 1,878 1,834 1,706 613
-------- -------- -------- -------- --------
% change on prior year -3.9 -4.5 -2.3 -7.0 -64.1
-------- -------- -------- -------- --------
Number of weekend passengers
'000 744 734 722 659 195
-------- -------- -------- -------- --------
% change on prior year -4.6 -1.3 -1.6 -8.7 -70.4
-------- -------- -------- -------- --------
Total number of passengers
'000's 2,710 2,612 2,556 2,365 808
-------- -------- -------- -------- --------
% change on prior year -4.1 -3.6 -2.1 -7.5 -65.8
-------- -------- -------- -------- --------
Revenue growth % 1.0 1.5 0.4 -5.5 -65.9
-------- -------- -------- -------- --------
Average yield per passenger GBP1.52 GBP1.58 GBP1.62 GBP1.69 GBP1.76
journey*
-------- -------- -------- -------- --------
*Total ferry fares divided by the total number of passengers
Momart
As noted in my Interim Report on the half year results issued in
November 2020, Momart was initially hit hard by COVID-19. 108 of
Momart's staff were placed on furlough and all staff, including
those working, accepted a voluntary 20% reduction in pay.
The situation improved over the summer of 2020 as confidence
returned and art galleries and museums reopened and by the early
autumn, Momart had returned to profitability. However, further
setbacks arose, particularly with the closure of museums following
the unexpected announcement of a national lockdown in November and
subsequent national restrictions in January through March 2021.
Despite this, overall activity in the traditionally stronger second
half of the year did improve and this together with the cost
savings from the restructuring actioned in October and furlough
grants received from the UK Government of GBP1.4 million over the
full year, enabled Momart to return a small operating profit in the
second half.
Notwithstanding the improvement in activity in the second half
of the year, Momart's revenue for the year to 31 March 2021 fell by
45% from GBP18.8 million to GBP10.3 million, with operating profits
declining by GBP1.5 million to produce an underlying operating
break-even result, before restructuring costs of GBP0.2
million.
Momart Operating Results
Year ended 31 March 2021 2020 Change
GBPm GBPm %
------------------------------------------ ----- ----- -------
Revenues
Museum Exhibitions 4.5 10.8 -58.3
Gallery Services 3.4 5.8 -41.4
Storage 2.4 2.2 9.1
Total Momart revenue 10.3 18.8 -45.2%
Momart underlying operating profit - 1.5 -100.0
Net Interest expense (0.5) (0.5) -
------------------------------------------ ----- ----- -------
Momart underlying (loss)/profit before
tax (0.5) 1.0 -150.0
------------------------------------------ ----- ----- -------
Momart underlying operating profit margin - 7.8% - 100.0
------------------------------------------ ----- ----- -------
Museum Exhibitions activity was hardest hit by the crisis due to
the longer lead times involved in planning and installing new shows
and the greater dependence on the physical presence of visiting
patrons. However, Momart was successful in installing a number of
high-profile exhibitions during the short periods of calm between
lockdowns, including "Rodin" at Tate Modern, "Arctic" at the
British Museum, " Lynette Yiadom-Boakye" at Tate Britain, " David
Hockney" at the National Portrait Gallery, and "Jean Dubuffet" at
the Barbican. With the benefit of income from these successful
installations Momart's overall revenue from Museum Exhibitions
avoided complete collapse but was still 58% below the level seen in
the prior year at GBP4.5 million (2020: GBP10.8 million).
Revenue from commercial galleries, auction houses and private
clients was less dramatically affected as more use was made by
clients of online technology for the buying and selling of art,
although the sector did suffer with all major art fairs being
cancelled during the year. As a result, Gallery Services revenue
fell by 41% to GBP3.4 million (2020: GBP5.8 million).
On a positive note, art storage income rose 9.1% to GBP2.4
million (2020: GBP2.2 million) as Momart secured important new
corporate storage contracts during the year which gave a welcome
boost to storage revenue. However, the movement back out of
temporary storage of other client artworks later in 2020, saw a
small overall decline in volumes in storage by the year-end. At 31
March 2021, the company's storage facilities at Leyton were at 83%
of capacity (2020: 87%).
With this welcome increase in storage and despite the sharp
falls seen in Museum Exhibitions and Gallery Services activity,
Momart was able to record an underlying operating break-even result
for the year (2020: GBP1.5 million profit).
Finance costs linked to vehicle leases, office rental and
long-term mortgage finance were at similar levels to the prior
year.
After finance charges and an allocation of central costs Momart
recorded an underlying loss before tax of GBP0.5 million (2020:
profit GBP1.0 million), In addition, Momart incurred restructuring
costs of GBP0.2 million in the year (2020: nil).
During the year, Momart's Managing Director, Alan Sloan retired
and was succeeded on 1 January 2021 by Steve Lane who was recruited
in April 2020 to take on this role. The Board would like to thank
both Alan and his Momart board colleague, Kenneth Burgon, who also
stepped down in 2020, for their commitment over the years and for
their valuable contribution towards securing the company's future
during the coronavirus pandemic.
Momart Key Performance Indicators and Operational Drivers
Year ended 31 March 2017 2018 2019 2020 2021
Staff numbers (FTE
31 March) 131 136 140 133 107
-------- --------- --------- --------- --------
Capital expenditure
GBP'000's 971 228 20,034 638 471
-------- --------- --------- --------- --------
Warehouse % fill vs
capacity 90.4% 72.8% 81.1% 86.9% 82.9%
-------- --------- --------- --------- --------
Exhibition order book GBP4.8m GBP4.2m GBP4.6m Note* Note*
31 March
-------- --------- --------- --------- --------
Momart services charged GBP9.8m GBP10.9m GBP11.5m GBP10.8m GBP6.5m
out
-------- --------- --------- --------- --------
Revenues from overseas GBP6.1m GBP7.1m GBP7.5m GBP6.2m GBP2.7m
clients
-------- --------- --------- --------- --------
Exhibitions sales growth 19.9% 17.0% -6.5% -2.1% -58.3%
-------- --------- --------- --------- --------
Gallery Services sales
growth 8.1% 15.2% 4.0% -22.4% -41.4%
-------- --------- --------- --------- --------
Storage sales growth -0.8% 8.5% -6.3% 5.8% 9.1%
-------- --------- --------- --------- --------
Total sales growth 13.0% 15.5% -2.9% -8.7% -45.5%
-------- --------- --------- --------- --------
Note*: Due to the impact of COVID-19 meaningful data for secure
forward orders are not currently available.
Impact of Brexit
In late December 2020, the UK's successful negotiation of tariff
free access to the EU prevented the serious potential disruption to
trade that might otherwise have resulted as the transition period
following the UK's departure from the EU came to an end.
Accordingly, the Group has experienced little in the way of direct
adverse effects from Brexit to date, although the new and evolving
documentation for exports and imports has seen a modest increase in
costs and small delays at channel crossings for Momart.
In the Falkland Islands, tariff free access to the EU markets
has removed any threat of disruption to the export of squid which
had been of concern for the wider Falkland Islands' economy and at
PHFC the new trading arrangements with the EU have seen a
continuation of the smooth pre-Brexit supply of EU sourced, ferry
components.
In summary, to date there has been little direct impact on the
Group's businesses arising from Brexit and although the position
has been heavily clouded by the effects of the coronavirus
pandemic, it seems unlikely that any material adverse effects will
subsequently emerge.
Trading Outlook
The outlook for the current year remains inevitably uncertain
but provided no serious reversals are experienced linked to the
pandemic, we are cautiously optimistic that we will see a slow but
steady recovery over the remainder of the year as confidence slowly
returns and more normal patterns of business activity are
re-established. Progress is expected to be slow in the first half
with momentum gradually increasing as we progress through the
year.
FIC
Although the Falkland Islands vaccination programme has
progressed well, there is great caution over the timing of
re-opening tourist links and the resumption of cruise ship visits
and commercial flights for non- residents is not expected in the
current calendar year. However, robust local demand should ensure
the continuation of solid, profitable trading and we are hopeful of
seeing further growth in FIC's construction activity linked to a
planned increase in FIG capital programmes.
In addition, in the past year, the steady recovery in oil prices
to over $70 per barrel and the merger of Premier Oil with Chrysaor
to create the much larger Harbour Energy creates a more positive
outlook for the much-delayed development of the Sea Lion oil field,
although the Board does not anticipate any imminent FIC activity
around this potential. More tangibly, as tourist activity resumes
and full economic activity is re-established, the prospects for
steady growth in FIC's core business, will be enhanced by the
potential for the development of land-based tourism and the
continued expansion of FIC's construction and infrastructure
capabilities.
PHFC
At PHFC, where COVID-19 related losses have been most acute,
encouraging increases have been seen in passenger numbers following
the phased relaxation of lockdown measures in April and May 2021.
If this momentum continues as expected, a return to consistent
profitability is anticipated by the end of the year. This recovery
should be aided by the launch in June 2021 of the new Park &
Float scheme in Gosport which it is hoped will provide a real boost
to ferry patronage. This initiative together with an increased
focus by both central and local government on supporting "green"
public transport solutions to help address air pollution and
climate change concerns, should provide an effective counterweight
to the increase in hybrid / home working that may result from
changes in work patterns linked to COVID-19. However, a return to
pre-Covid levels of activity at PHFC is not anticipated before 2022
at the earliest.
Momart
At Momart the re-opening of museums and art galleries in April
and May 2021 has been a welcome positive step but the postponement
of major European art fairs until later in the year and the slow
recovery in tourist footfall in London and other major cities means
that the art market is still some distance from returning to
pre-Covid levels. Museum activity in particular is expected to be
muted and with visitor revenues reduced, the number of new
exhibitions is likely to remain paired back until full confidence
is restored. Momart's naturally stronger seasonality in the second
half should help to re-establish consistently profitable trading
but the achievement of pre-Covid levels of activity is not
anticipated until well into 2022.
Summary
Although uncertainty exists as to the rate of recovery, the
fundamental strengths of the Group's three business units remain
and this coupled with the Group's financial resources in the form
of cash, marketable freehold property and supportive shareholders,
gives the Group an enviable platform for sustainable growth when
the significant disruption caused by COVID-19 has been consigned to
history.
Group Strategy
As we cautiously move through a year of material recovery, the
Group's focus will increasingly shift from reactive protective
measures to a more expansive growth-oriented strategy built around
further investment in our core activities and a search for
strategic acquisitions. Our ultimate objective is to build a Group
of greater scale, able to sustain the consistent earnings growth
and cash generation that will provide shareholders with both
predictable capital growth and regular income. To assist with the
execution of this strategy, in April 2021 the Board was further
strengthened by the recruitment of Stuart Munro, an experienced
CFO. With Stuart's help we will seek to add a new business stream
with embedded potential for sustainable growth, leveraging the
Group's existing skills, experience and financial strength.
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:
COVID-19
Issue Comment Impact
----------------------------------- -----------------
The lockdown measures introduced The impact was immediate Very high
by the UK Government to suppress and severe but with the but reducing
COVID-19 have had an unprecedented gradual relaxation of the as the lockdown
impact on the fundamental lockdown activity is reviving. is relaxed
conditions of supply and demand The economic costs were
in the Group's UK businesses. mitigated in both businesses
by the use of the UK Government's
furlough grant scheme.
----------------------------------- -----------------
At Momart, demand from the Activity is reviving as Very high
company's museum and gallery lockdown measures are relaxed. but reducing
clients fell away as the prohibition as lockdown
on public gatherings effectively measures are
closed client operations completely, relaxed
with the consequent cessation
of Momart's art handling activities.
----------------------------------- -----------------
Revised staff safety protocols Safe working practices Low and reducing
and the need to use PPE for were reviewed and updated as lockdown
staff slowed down installations in great detail with reference restrictions
at Momart and increased the to UK Government guidance ease.
cost of operations. The impact and in consultation with
on FIC and PHFC was minimal. staff.
Wherever possible, the
additional costs of operating
have been passed on to
clients. (All competitors
face a similar challenge).
----------------------------------- -----------------
At PHFC, the lockdown saw The impact was immediate Very high
ferry customers cease their and severe but with the but reducing
normal daily travel to work gradual relaxation of the in intensity
and leisure activities, causing lockdown activity at PHFC as the lockdown
a 90% fall in ferry traffic. is slowly reviving. is eased.
----------------------------------- -----------------
Social distancing requirements PHFC is better placed than Low
set limits on the full utilisation many public transport businesses
of ferry capacity. and can maintain 40% capacity
while enforcing social
distancing. As passenger
volumes recover the use
of the second vessel to
cover peak demand at rush
hour will help limit any
effective constraints on
effective carrying capacity.
----------------------------------- -----------------
PHFC's programme of Solent PHFC's programme of summer Low
leisure cruises was affected cruises for 2020 was cancelled.
by lockdown restrictions and However, with the success
concerns over social distancing of the vaccine roll-out,
on cruises where passenger a scaled back programme
volumes need to be higher of cruises has been re-introduced
to generate a return for Summer 2021.
----------------------------------- -----------------
Longer term changes in customer Council initiatives to Low
behaviour may result from encourage green public
the pandemic: an increased transport and discourage
reluctance to use public transport car use will help mitigate
and more hybrid/working from the potential reduction
home. in passenger numbers.
----------------------------------- -----------------
Despite a successful vaccination As global vaccination proceeds, Moderate impact
programme, the Falkland Islands the Falkland Islands are on tourism income
remain closed to overseas expected to re-open their but not expected
visitors which removes an borders. to extend beyond
important source of income the current
for the economy. financial year
POLITICAL RISKS
-------------------------------------- -------------------
Risk Comment Potential
Impact
-------------------------------------- -------------------
Historically, Argentina has Relations with Argentina Low - Unchanged
maintained a claim to the have become more strained
Falkland Islands, and this in recent years. However,
dispute has never been officially the security afforded by
resolved. the UK Government's commitment
to the Islands provides a
guarantee of the freedom
and livelihood of the people
of the Falkland Islands and
thereby to FIC.
Provided UK Government support
is maintained the security
of the people of the Falkland
Islands is not in doubt.
-------------------------------------- -------------------
Uncertainty caused by the To date, there has been little Low - Decreased
UK's decision to leave the direct impact on the Group's
European Union. businesses arising from Brexit
and although the position
has been heavily clouded
by the effects of the coronavirus
pandemic it seems unlikely
that any material adverse
effects will subsequently
emerge.
-------------------------------------- -------------------
ECONOMIC CONDITIONS
-------------------------------------- -------------------
Risk Comment Potential
Impact
-------------------------------------- -------------------
Although the impact of COVID-19 The trading performance of High but steadily
has been unprecedented, this both the Group's UK companies reducing impact
has been matched by equally has been severely affected on UK operations
unprecedented government interventions by the effects of COVID-19
on a global scale which has but UK Government economic
sustained economic confidence support and the success of
and activity. the vaccination programme
mean that the adverse effects
are being steadily reduced
as the Group's businesses
return to more normal levels
of activity.
-------------------------------------- -------------------
International travel continues Despite this, FIC saw its Moderate but
to be badly affected by COVID-19, revenue and profitability reducing
with no overseas visitors largely maintained in 2021.
expected in the Falkland Islands In any event, travel restrictions
in the current financial year. are unlikely to extend beyond
the current financial year.
-------------------------------------- -------------------
Economic activity in the Falkland Oil-related activity in recent Low impact
Islands has been subject to years has been minimal and
fluctuation, dependent upon the success of the Falkland
Oil sector activity. Islands' economy is not predicated
on the development of oil
reserves.
-------------------------------------- -------------------
Budgets available to museums Reduced museum budgets and Moderate but
for exhibitions can fluctuate visitor footfall are likely reducing as
with government spending and to lead to a reduction in public confidence
the commercial art market the number of exhibitions returns. Impact
exhibits cyclicality; both with a consequent reduction mitigated
have a direct impact on Momart. in demand for Momart's services by reduction
Both these effects have been until government finances in Momart's
exacerbated by COVID-19 . and public confidence recovers. cost base
-------------------------------------- -------------------
CREDIT RISK
Risk Comment Potential
Impact
-------------------------------------- ----------------
Credit risk is the risk of Effective processes are in Low
financial loss if a customer place to monitor and recover
fails to meet its contractual amounts due from customers.
obligations. Even with COVID-19, bad debt
experience has been minimal.
-------------------------------------- ----------------
COMPETITION
-------------------------------------- ----------------
Risk Comment Potential
Impact
-------------------------------------- ----------------
FIC is considered by the senior Local competition is healthy Low - Unchanged
management to be a market for FIC and stimulates continuing
leader in a number of business business improvement in FIC
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.
-------------------------------------- ----------------
FOREIGN CURRENCY AND INTEREST
RATE RISK
-------------------------------------- ----------------
Risk Comment Potential
Impact
-------------------------------------- ----------------
Momart is exposed to foreign Forward exchange contracts Low -
currency risk arising from are used to mitigate this Unchanged
trading and other payables risk, with the exchange rate
denominated in foreign currencies. fixed for all significant
The Group is exposed to interest contracts.
rate risks on large loans.
Interest rate risk on large
FIC retail outlets accept loans is mitigated by the
foreign currency and are exposed use of interest rate swaps.
to fluctuations in the value
of the dollar and euro.
-------------------------------------- ----------------
INVENTORY
-------------------------------------- ----------------
Risk Comment Potential
Impact
-------------------------------------- ----------------
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 does face such risk in
the Falkland Islands, where
it is very expensive to return
excess or obsolete stock back
to the UK.
-------------------------------------- ----------------
PEOPLE
-------------------------------------- ----------------
Risk Comment Potential
Impact
-------------------------------------- ----------------
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 - Unchanged
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.
-------------------------------------- ----------------
FIC has a reliance on being Immigration procedures in Moderate -
able to attract staff from the Falkland Islands are Unchanged
overseas generally. bureaucratic and slow, although
FIG is aware and seeking
to streamline the process.
-------------------------------------- ----------------
LAWS AND REGULATION
-------------------------------------- ----------------
Risk Comment Potential
Impact
-------------------------------------- ----------------
Failure to comply with the The regulatory environment Low - Unchanged
frequently changing regulatory continues to become increasingly
environment could result in complex.
reputational damage or financial
penalty. The Group uses specialist
advisers to help evolve appropriate
policies and practices. Close
monitoring of regulatory
and legislation changes is
maintained to ensure our
policies and practices continue
to comply with relevant legislation.
Staff training is provided
where required.
-------------------------------------- ----------------
GENERAL HEALTH AND SAFETY
Health & Safety ("HSE") matters Low
The Group is required to comply are considered a key priority
with laws and regulation governing for the Board of FIH and
occupational health and safety all its operating companies.
matters. Furthermore, accidents Particular attention has
could happen which might result been paid to updating risk
in injury to an individual, assessments and safe working
claims against the Group and practices in the light of
damage to our reputation. COVID-19.
All staff receive relevant
HSE training when joining
the Group and receive refresher
and additional training as
is necessary. Training courses
cover maritime safety, lifting
and manual handling, asbestos
awareness and fire extinguisher
training. External HSE audits
are conducted on a regular
basis
-------------------------------------- ----------------
John Foster
Chief Executive
6 July 2021
Chief Financial Officers' Review
Financial Review
Revenue
Group revenue decreased by GBP12 million (26.9%) to GBP32.6
million due mainly to the effects of COVID-19. This was felt most
severely at Momart and PHFC, where revenues fell by GBP8.5 million
and GBP2.7 million respectively. FIC suffered more minor disruption
and an overall GBP0.8 million reduction in revenue.
Underlying Operating Profit
Underlying operating profit before non-trading items and net
finance costs decreased by 78.2% to GBP1.0 million (2020: GBP4.6
million) reflecting the revenue reductions noted above, which were
partially mitigated by actions taken to control cost and the
utilisation of GBP1.8 million of grants available under the UK
Government and FIG furlough schemes.
Net Financing Costs
The Group's net financing costs remained flat at GBP0.9 million.
Two UK Government-backed CBILS loans totalling GBP5.0 million were
drawn down in June 2020 but as the first 12 months of interest
payments are covered by the UK Government, these loans had no
impact on net financing costs in the year.
Reported Pre-tax Profit
The reported pre-tax result for the year ended 31 March 2021 was
a profit of GBP0.2 million (2020: GBP3.8 million loss). Non-trading
items in the current year included GBP0.4 million of restructuring
costs and GBP0.5 million income from the derecognition of historic
liabilities, which were previously included within accruals but are
no longer enforceable. The prior year result included a non-trading
impairment charge of GBP7.5 million to write down goodwill which
had previously arisen on the acquisition of PHFC and Momart. The
Group's underlying profit before tax before these non-trading items
was GBP0.1 million (2020: GBP3.7 million).
Taxation
The Group pays corporation tax on its UK earnings at 19% and on
earnings in the Falkland Islands at 26%. FIC, which is resident in
both jurisdictions, has been granted a foreign branch exemption,
and now pays all its corporation tax in the Falkland Islands and no
longer pays UK corporation tax. As a result, FIC enjoys the full
benefit of the tax deductibility in the Falkland Islands of
expenditure on commercial and industrial buildings.
Tax on current year profits in the Falkland Islands was broadly
offset by recoverable tax on current year losses in the UK with the
overall tax charge for the year of GBP0.2m relating mainly to
deferred tax in respect of capital allowances in advance of
depreciation in FIC.
Earnings per Share
Diluted Earnings per Share ("EPS") derived from reported profits
was 0.1 pence (2021: -37.8 pence). As noted above, the current year
was impacted by reduced activity due to COVID-19 and the prior year
by a GBP 7.5 million impairment of goodwill . Diluted EPS derived
from underlying profits was 0.0 pence (2020: 21.7 pence).
Balance Sheet
The Group's balance sheet remained strong, with total net assets
remaining broadly in line with last year at GBP 38.9 million (2020:
GBP38.8 million) . Retained earnings decreased by GBP0.2m to GBP
19.6 million (2020: GBP19.8 million) which was offset by a GBP0.3
million improvement in the hedging reserve, reflecting an increase
in the fair value of hedges taken through other comprehensive
income in accordance with IFRS 9.
Net Debt
Year ended 31 March 2021 2020 Change
GBPm GBPm GBPm
--------------------------------- ------- ------- -------
Bank loans (20.1) (15.7) (4.4)
Cash and cash equivalents 14.6 9.1 5.5
--------------------------------- ------- ------- -------
Bank loans net of cash and cash
equivalents (5.5) (6.6) 1.1
Lease liabilities (8.1) (8.4) 0.3
Net debt (13.6) (15.0) 1.4
--------------------------------- ------- ------- -------
Bank loans increased to GBP20.1 million (2020: GBP15.7 million),
as a result of the GBP5.0 million CBILS loans drawn down in June
2020, which were partially offset by scheduled loan repayments of
GBP0.6 million. The Group's cash balances increased to GBP14.6
million (2020: GBP9.1 million) reflecting a GBP0.5 million
improvement in the underlying cash balance of GBP9.6 million and
the proceeds of the GBP5.0 million CBILS loans. Overall, net debt
improved to GBP13.6 million (2019: GBP15.0 million).
The Group's outstanding lease liabilities totalled GBP8.1
million (2020: GBP8.4 million) with GBP5.7 million of the balance
(2020: GBP5.8 million) relating to the 50-year leases from Gosport
Borough Council for the Gosport Pontoon and associated ground rent,
which run until June 2061.
The carrying value of intangible assets remains unchanged from
the prior year at GBP4.2 million following annual impairment
reviews which indicated that no further impairment was required at
Momart or PHFC (2020: GBP7.5 million).
The net book value of property, plant and equipment decreased by
GBP1.3 million to GBP40.4 million (2020: GBP41.7 million) with
additions of GBP0.9 million being offset by depreciation charges of
GBP2.2 million. The additions include two trucks purchased by
Momart for GBP0.4 million funded by hire purchase agreements.
At 31 March 2021, the Group had 75 (2020: 65) completed
investment properties, comprising commercial and residential
properties in the Falkland Islands, which are held for rental.
Seven properties were under construction at 31 March 2021 (2020:
10). In addition, FIC held 400 acres of land in and around Stanley,
including 18 acres zoned for industrial development and 25 acres of
prime mixed-use land, and a further 300 acres of undeveloped land
outside Stanley.
The net book value of the investment properties and undeveloped
land of GBP7.1 million (2020: GBP6.5 million) has been reviewed by
the directors of FIC resident in the Falkland Islands. At 31 March
2021 the fair value of this property portfolio, including
undeveloped land, was estimated at GBP11.1 million (2020: GBP10.0
million), an uplift of GBP4 million on net book value.
FIC's 75 houses and flats had an estimated fair value of GBP8.5
million (2020: GBP7.3 million), the seven properties under
construction were valued at cost of GBP0.5 million (2020: GBP0.6
million) and the value of FIC's 700 acres of land was estimated at
GBP2.1 million (2020: GBP2.1 million).
Deferred tax assets relating to future pension liabilities stood
at GBP0.7 million (2020: 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
work in progress at FIC and Momart respectively increased by GBP0.5
million to GBP5.9 million at 31 March 2021 (2020: GBP5.4 million),
due to a GBP0.5 million increase in housebuilding stocks at FIC
mainly as a result of the timing of deliveries and the phasing of
the related works.
Trade and other receivables decreased GBP2.8 million to GBP5.9
million at 31 March 2021 (2020: GBP8.7 million) due mainly to
reduced sales activity in Momart and FIC.
Trade and other payables decreased by GBP1.8 million to GBP6.8
million at 31 March 2021 (2020: GBP8.6 million).
At 31 March 2021, the liability due in respect of the Group's
only defined benefit pension scheme, in FIC, was GBP2.8 million
(2020: 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. An increase in
the liability arose as a result of a fall in medium term interest
rates and has been fed through reserves in accordance with IAS 19.
Eleven former employees receive a pension from the scheme at 31
March 2021 and there are three deferred members.
The Group's deferred tax liabilities, excluding the pension
asset at 31 March 2021, were GBP3.1 million (2020: GBP2.8
million).
Cash Flows
Net cash inflow from operating activities of GBP3.7 million was
GBP1.0 million less than the prior year inflow of GBP4.7 million.
The reduction was principally due to a GBP3.3 million reduction in
underlying EBITDA which was partly offset by a GBP2.4 million
improvement in working capital movement in the current year.
The Group's operating cash flow can be summarised as
follows:
Year ended 31 March 2021 2020 Change
GBPm GBPm GBPm
------------------------------------------- ------ ------- -------
Underlying profit before tax 0.1 3.7 (3.6)
Depreciation & amortisation 2.3 2.1 0.2
Net interest payable 0.9 0.8 0.1
------------------------------------------- ------ ------- -------
Underlying EBITDA 3.3 6.6 (3.3)
Non-trading, cash items (0.4) - (0.4)
Decrease in hire purchase debtors - 0.1 (0.1)
Decrease/(increase) in working capital 1.0 (1.4) 2.4
Tax paid and other (0.2) (0.6) 0.4
Net cash inflow from operating activities 3.7 4.7 (1.0)
Financing and investing activities
Capital expenditure (1.5) (3.4) 1.9
Net bank and lease liabilities interest
paid (0.8) (0.8) -
Bank and lease liability repayments (1.3) (11.4) 10.1
Dividends paid - (0.6) 0.6
Bank and lease liabilities draw down 5.4 14.4 (9.0)
------------------------------------------- ------ ------- -------
Net cash inflow/ (outflow) from financing
and investing activities 1.8 (1.8) 3.6
------------------------------------------- ------ ------- -------
Net cash inflow 5.5 2.9 2.6
Cash balance b/fwd. 9.1 6.2 2.9
------------------------------------------- ------ ------- -------
Cash balance c/fwd. 14.6 9.1 5.5
------------------------------------------- ------ ------- -------
Financing and Investing Activities
During the year, the Group invested GBP1.5 million of capital
expenditure, comprising GBP0.7 million of investment property and
GBP0.8 million on property, plant and equipment.
The GBP5.4 million of bank and lease liabilities draw down in
the year included the GBP5 million CBILS loans drawn down in June
2020 and the funding of vehicles in Momart of GBP0.4 million.
Stuart Munro
Chief Financial Officer
6 July 2021
Board of Directors and Secretary
Robin Williams, Non-executive Chairman
Robin joined the Board in September 2017. He has a wide breadth
of corporate experience, gained at a range of quoted and private
businesses as well as from an early career in investment banking.
He is currently also Chairman at Keystone Law Group plc and a
non-executive director at Xeinadin Group Limited. Robin qualified
as an accountant in 1982 after graduating in engineering science
from the University of Oxford. He worked in corporate finance for
ten years at investment banks including Salomon Brothers and UBS
before leaving the City in 1992 to co-found the packaging business,
Britton Group plc. In 1998, he moved to Hepworth plc, the building
materials group, and since 2004 he has focused on non-executive
work in public, private and private equity backed businesses. His
financial background provides the experience required as Chairman
of the Group to review and challenge decisions and opportunities.
Robin is a member of the Audit and Remuneration Committees and is
Chairman of the Nominations Committee.
John Foster, Chief Executive
John joined the Board in 2005. He is a Chartered Accountant and
previously served as Group Finance Director for Macro 4 plc (2000 -
2003) and Hamleys plc (1998 - 2000). Prior to joining Hamleys, he
spent three years as Corporate Finance Director of Ascot plc, an
industrial holding company with a turnover of GBP300 million and
over 1,600 employees. Before becoming a plc director, John spent 11
years working in Private Equity for a leading UK investment bank
following training and CA qualification with Arthur Andersen in
1983. John's finance background, together with his strong
analytical skills developed during his nine years working as a
venture capitalist with a leading investment bank is well fitted to
his commitment to perform the Chief Executive role at FIH group
plc.
Stuart Munro, Chief Financial Officer
Stuart joined the Board on 28 April 2021. He qualified as a
chartered accountant with Ernst & Young and since 2000, has
worked as a divisional finance director in number of UK companies
including Balfour Beatty, Alfred McAlpine Infrastructure Services
and FirstGroup, as well as Transport for London. From 2015 until
joining the Board, Stuart provided strategic, financial and
operational consultancy to a number of medium sized private equity
backed services companies across a variety of sectors.
Jeremy Brade, Non-executive Director
Jeremy joined the Board in 2009, he is a Director of Harwood
Capital Management where he is the senior private equity partner
and has worked in UK private equity for over 20 years. He has led
several successful acquisitions and public-to-private transactions.
Previously, Jeremy was with the Foreign and Commonwealth Office
(FCO) and prior to that, he was an army officer. Using his
experience of acquisitions and various corporate transactions,
Jeremy brings a wealth of knowledge and expertise on restructuring,
funding and transforming companies. Jeremy is a member of the
Nominations, Audit and Remuneration Committees and holds a number
of other non-executive directorships including one at Fulcrum
Utility Services Limited.
Robert Johnston, Non-executive Director
Robert joined the Board on 13 June 2017; he is an experienced
non-executive director and investment professional and has served
on the boards of several quoted companies in both North America and
in UK, including Fyffes PLC and Supremex Inc. Robert has been the
Chief Strategy Officer and Executive Vice President at The
InterTech Group, Inc. and has over 20 years of experience in
various financial and strategic roles. He is the principal
representative of the Jerry Zucker Revocable Trust. Robert brings
experience on many transactions at both the corporate and asset
level, including debt and equity, and his experience in the banking
sector will prove invaluable to developing the Group. Robert
represents the Company's largest shareholder, "The Article 6
Marital Trust, created under the First Amended and Restated Jerry
Zucker Revocable Trust dated 4-2-07", which has a beneficial
holding of 3,596,553 ordinary Shares, representing 28.7% of the
Company's issued share capital.
He is currently on the boards of Colabor Group Inc, Corning
Natural Gas Holding Corp, Supremex Inc. (where he is Chairman),
Circa Enterprises Inc. and Swiss Water Decaffeinated Coffee Inc.
Robert is a member of the Nominations and Audit Committees and is
Chairman of the Remuneration Committee.
Dominic Lavelle, Non-executive Director
Dominic joined the Board on 1 December 2019; Dominic brings to
FIH a wide breadth of corporate experience. Most recently, Dominic
was Chief Financial Officer of SDL plc from 2013 to 2018. He has
over 15 years' experience as a UK plc Main Board Director and has
been Finance Director/Chief Financial Officer of seven UK publicly
traded companies including Mothercare plc, Alfred McAlpine plc,
Allders plc and Oasis plc. His experience, in both permanent roles
and turnaround and restructuring projects across several business
sectors including technology and services, retail, building,
construction, support services, property (agency, management,
valuation, investment, development), leisure, care home and
insurance is a great benefit to the Group, particularly with the
various business streams operated by FIC.
After graduating in Civil and Structural Engineering from the
University of Sheffield in 1984, Dominic trained with Arthur
Andersen and qualified as a chartered accountant in 1989. He is
currently a non-executive director and Chair of the Audit &
Risk Committee of McColls Retail Group plc, senior independent
non-executive director and Chair of the Audit Committee of the AIM
quoted Fulcrum Utility Services Limited and a director of Steenbok
Newco 10 SARL, a wholly owned subsidiary of the Steinhoff Group.
Dominic is a member of the Nominations and Remuneration Committees
and is Chair of the Audit Committee.
Iain Harrison, Company Secretary
Iain Harrison joined the Company in April 2019. Iain has a BSc
in Mathematics from Edinburgh University and qualified as a
Chartered Accountant in Scotland in 1993. He has previously worked
at RBS group and Heriot Watt University and was Company Secretary
at Dawson International plc from 2003-2004.
Corporate Governance Statement
Dear Shareholder,
As Chairman of the Company, I am responsible for leading the
Board in applying good corporate governance and the Board is
committed to appropriate governance across the business, both at an
executive level and throughout its operations. The Board strives to
ensure that the objectives of the business, the principles and
risks are underpinned by values of good governance throughout the
organisation.
The FIH group plc Board values include embedding a culture of
ethics and integrity, and the adoption of higher governance
standards, to maintain its reputation by fostering good
relationships with employees, shareholders and other stakeholders
to deliver long term business success.
In 2018 the AIM Rules for Companies were updated to acknowledge
a change in investor expectations toward corporate governance for
companies admitted to trading on AIM, and the Board, took the
decision to adopt the revised Quoted Companies Alliance Corporate
Governance Code 2018 (the "QCA Code") which they believe is the
most appropriate recognised governance code for the Company.
The QCA Code has ten principles of corporate governance that the
Company has committed to apply within the foundations of the
business, which are discussed in detail on the Company's website
www.fihplc.com in the Corporate Governance section.
The Board is aware of the need to protect the interests of
minority shareholders, and balancing those interests with those of
any more substantial shareholders, including those interests of the
Jerry Zucker Revocable Trust, a major shareholder holding nearly
29% of the issued share capital and voting rights, which are
represented on the Board by the non-executive director, Robert
Johnston.
Beyond the Annual General Meeting, the Chief Executive and the
Chief Financial Officer offer to meet with all significant
shareholders after the release of the half year and full year
results and the Chairman is available throughout. The Chief
Executive, Chief Financial Officer and the Chairman are the primary
points of contact for the shareholders and are available to answer
queries over the phone or via email from shareholders throughout
the year.
Business Model and Strategy
The Group's strategy is to continue to develop the potential of
its existing companies: to fill storage capacity and make further
progress at Momart, to maintain the strong cash flow from PHFC and
to invest in FIC to take full advantage of the longer-term growth
opportunities in the Falkland Islands. While doing this management
are also alert to the benefits of a well-judged complementary
acquisition that would give increased scale and growth potential
for the Group and enhance the liquidity of FIH shares. As set out
in the Chief Executive's Strategic Report, this established
strategy has been affected by the impact of COVID-19 which has
necessitated a temporary focus on cost saving, husbanding cash
resources and restricting investment whilst the damaging short-term
effects of the virus are dealt with in a way which ensures
maximisation of the long-term value of the Group's businesses
Risk Management
The Board has overall responsibility for the systems of risk
management and internal control and for reviewing their
effectiveness. The internal controls are designed to manage rather
than eliminate risk and provide reasonable but not absolute
assurance against material misstatement or loss. The key risks of
the Group are presented in the Chief Executive's Strategic
Report.
The Board has determined that an internal audit function is not
justified due to the small size of the Group and its administrative
function and the high level of director review and authorisation of
transactions.
A Directors' and Officers' Liability Insurance policy is
maintained for all directors and each director has the benefit of a
Deed of Indemnity.
Director Independence
The Board considers itself sufficiently independent. The QCA
Code suggests that a board should have at least two independent
non-executive directors. The Board has considered each
non-executive director's length of service and interests in the
share capital of the Group and consider that Mr Williams, Mr Brade,
Mr Johnston and Mr Lavelle are independent of the executive
management and free from any undue extraneous influences which
might otherwise affect their judgement. All Board members are fully
aware of their fiduciary duty under company law and consequently
seek at all times to act in the best interests of the Company as a
whole.
Whilst the Company is guided by the provisions of the QCA Code
in respect of the independence of directors, it gives regard to the
overall effectiveness and independence of the contribution made by
directors to the Board in considering their independence, and does
not consider a director's period of service in isolation to
determine this independence. The Board acknowledges that Robert
Johnston, who joined the Board on 13 June 2017, represents the
Company's largest shareholder, "The Article 6 Marital Trust,
created under the First Amended and Restated Jerry Zucker Revocable
Trust dated 4-2-07", (the "Zucker Trust"), which has a beneficial
holding of 3,596,553 ordinary Shares, representing nearly 29% of
the Company's issued share capital. The Board has considered Mr
Johnston's independence, given his representation of this
shareholding and all Board members have satisfied themselves that
they consider Mr Johnston to be independent. This is as a
consequence of (i) the fact that Mr Johnston has considerable
international investment expertise, and (ii) that the shareholding
of his employer in FIH represents only a small part of its wider
portfolio, but nonetheless aligns him with the interests of FIH
shareholders generally.
Jeremy Brade's tenure, at over the suggested nine years for PLC
directors, is not the determining factor in his independence, which
the Board judges in relation to his contribution and depth of
knowledge of the Group's operations and history. The Board has
asked Jeremy to stand for re-election at the AGM this year and
Jeremy has indicated that he is likely to step down from the Board
at the AGM in 2022 in view of his long service. All directors
retire by rotation and are subject to election by shareholders at
least once every three years. Any non-executive directors who have
served on the Board for at least nine years will be subject to
annual re-election.
Time Commitment of Directors
John Foster, Chief Executive of the company and Stuart Munro,
Chief Financial Officer, are the only full-time executive
directors. Robin Williams, Jeremy Brade, Robert Johnston and
Dominic Lavelle have all been appointed on service contracts for an
initial term of three years. Overall, it is anticipated that
non-executive directors spend 10-15 days a year on the Group's
business after the initial induction, which includes a trip to the
Group's subsidiary in the Falkland Islands. However, the
non-executive directors and the Chairman in particular spend
significantly more time than this on the business of the group.
All directors are expected to attend all Board meetings, the
Annual General Meeting and any extraordinary general meetings.
Non-executive directors are expected to devote additional time in
respect of any ad hoc matters, such as significant investment
opportunities, responding to market changes, such as the COVID-19
pandemic, consideration of any business acquisitions, and any
significant recruitment or corporate governance changes.
Skills and Qualities of Each Director
The Board recognised the importance of having directors with a
diverse range of skills, experience and attributes, which we have
across our current Board. Each Board member contributes a different
skill set based on their own experience, which is discussed in
detail in the "Board of Directors and Secretary".
Board Meetings
The Board meets frequently throughout the year to consider
strategy, corporate governance matters, and performance. Prior to
each meeting, all directors receive appropriate and timely
information. Since the last annual report was published on 23 June
2020 there have been eleven Board meetings, Robin Williams, John
Foster, Jeremy Brade, Robert Johnston and Dominic Lavelle have
attended all meetings. Stuart Munro has attended all meetings since
his appointment to the Board.
There have been no Remuneration Committee meetings since 23 June
2020. Instead, given the impact of the COVID-19 pandemic on Group
trading and the need to take significant action to control costs,
the Board as a whole deliberated on compensation decisions. There
have been two Audit Committee meetings since 23 June 2020 which
were attended by all members of the committee. The Nominations
Committee meets on an ad hoc basis to consider Board composition
and succession and was active during the year in the search for and
recruitment of Stuart Munro, the Group's new Chief Financial
Officer. An external recruitment company provided assistance to the
Committee in the search and conducted a wide-ranging search for
candidates.
Board Directors
The Board comprises Robin Williams, the non-executive Chairman,
John Foster, the full time Chief Executive, Stuart Munro, the full
time Chief Financial Officer and three other non-executive
directors, Jeremy Brade, Robert Johnston and Dominic Lavelle.
Details of How Each Director Keeps Their Skill Set Up to
Date
The Board as a whole is kept abreast by the Company's lawyers
with developments of governance, and by WH Ireland, the Company's
Nominated Adviser, of updates to AIM regulations. The Group's
auditors, KPMG, meet with the Board as a whole twice a year and
keep the Board updated with any regulatory changes in finance and
accounting.
Any External Advice Sought by the Board
RSM Tenon, the Group's tax advisors ensure compliance with
taxation law and transfer pricing and the Company's lawyers advised
on a number of areas.
Internal Advisory Responsibilities
The Chief Financial Officer helps keep the Board up to date on
areas of new governance and liaises with the Nominated Adviser on
areas of AIM requirements, and with the Company's lawyers on areas
such as Modern Slavery, Data Protection and other legal matters. He
also liaises with the Company's tax advisers with regards to tax
matters and with the Group's auditors with respect to the
application of current and new accounting standards, and on the
status on compliance generally around the Group. The Chief
Financial Officer has frequent communication with the Chief
Executive as well as access to the Chairman, and is available to
other members of the Board as and when required.
Board Performance Effectiveness
The directors have considered the effectiveness of the Board,
committees and individual performance, and this was discussed by
the Board in the April 2021 meeting. The Board meets formally five
times a year with update Board meetings held in between these
meetings as required. There is a strong flow of communication
between the directors, in particular the relationship between the
Chief Executive and Chairman, who have regular additional calls or
meetings. The agenda for the formal meetings are set with the
consultation of both the Chief Executive and Chairman, and papers
are circulated a week in advance of the meetings, giving directors
ample time to review the documentation and enabling an effective
meeting. Resulting actions are tracked as matters arising and
followed up at subsequent Board meetings to ensure that they have
been addressed.
Board Performance Evaluation
In 2021, the Chairman conducted an effectiveness review by means
of a questionnaire, with comment on the Chairman passed to Jeremy
Brade as the Senior Independent Director at that time. The outcome
of the appraisal is that the Board has been effective in
discharging its duties during the year. The review was conducted in
March 2021 and discussed at the April 2021 Board meeting, with
useful conclusions in the areas of major shareholder representation
on the Board, how the non-executive directors interact with only
one executive on the Board, the development of strategy and the
presentation of recommendations to the Board. In addition, the
frequency of meetings will be reviewed once the recovery from the
pandemic is more visible and the Board will put in place a more
structured programme of interaction with operating management
Robin Williams
Chairman
6 July 2021
Audit Committee Report
The Audit Committee comprises the four non-executive directors:
Jeremy Brade, Robert Johnston, Dominic Lavelle and Robin Williams,
and is chaired by Dominic Lavelle. The Audit Committee reviews the
external audit activities, monitors compliance with statutory
requirements for financial reporting and reviews the half year and
annual financial statements before they are presented to the Board
for approval. The Audit Committee also keeps under review the scope
and results of the audit and its cost effectiveness and the
independence and objectivity of the Auditor and the effectiveness
of the Group's internal control systems.
The Committee meets twice a year to review both the year end and
half year results and KPMG, the Company's auditors, attend both of
these meetings in person. It is the Audit Committee's role to
provide formal and transparent arrangements, to consider how to
apply financial reporting under IFRS, the Companies Act 2006, and
the requirements of the QCA Code and also to maintain an
appropriate relationship with the independent auditor of the
Group.
The current terms of reference of the Audit Committee were
reviewed and updated in January 2018.
Effectiveness of the External Audit Process
The Audit Committee is committed to ensuring that the external
audit process remains effective on a continuing basis as set out
below:
-- Reviewing the independence of the incumbent auditor;
-- Considering if the audit engagement planning, including the
team quality and numbers is 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 auditor (KPMG LLP) was appointed in 1997. The
current audit engagement partner has been in place since the audit
for the current year and will step down after the audit for the
year ended 31 March 2025. The analysis of the auditor's
remuneration is shown in note 6. Tax advisory services are provided
by RSM UK Tax and Accounting Limited.
Non-audit Services Provided by the External Auditor
The Audit Committee keeps the appointment of external auditors
to perform non-audit services for the Group under continual review,
receiving a report at each Audit Committee meeting. In the year
ended 31 March 2021, there were no non-audit fees paid to KPMG LLP
(2020: 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:
Impairment Testing
The Group tests material goodwill annually for impairment, or
more frequently if there are indications that goodwill and/or
indefinite life assets might be impaired. An impairment test is a
comparison of the carrying value of the assets of a CGU, based on a
value-in-use calculation, to their recoverable amounts. Impairment
is necessary when the recoverable amount is less than the carrying
value.
Impairment tests have been undertaken with respect to intangible
assets using commercial judgement and a number of assumptions and
estimates have been made to support the carrying values.
In the prior year, all goodwill in relation to PHFC was written
off. Impairment testing of the remaining tangible assets of PHFC
has been carried out in the current year and no further impairment
is considered necessary.
With respect to Momart, following an impairment charge of GBP3.5
million in the prior year, remaining intangible assets including
goodwill and Momart's brand name amounted to GBP4.1million at 31
March 2020. Impairment testing has been performed in the current
year but no further impairment is considered necessary and the
carrying value of intangible assets at 31 March 2021 in respect of
Momart remain unchanged at GBP4.1million.
Further details of the impairment testing undertaken for PHFC
and Momart are provided in note 11.
Inventory Provisions
An inventory provision is booked when the realisable value from
sale of the inventory is estimated to be lower than the inventory
carrying value, or where the stock is slow-moving, obsolete or
damaged, and is therefore unlikely to be sold. The quantification
of the inventory provision requires the use of estimates and
judgements and if actual future demand were to be lower or higher
than estimated, the potential amendments to the provisions could
have a material effect on the results of the Group.
Defined Benefit Pension Liabilities
A significant degree of estimation is involved in predicting the
ultimate benefit payments to pensioners in the FIC defined benefit
pension scheme. Actuarial assumptions have been used to value the
defined benefit pension liability (see note 23). Management have
selected these assumptions from a range of possible options
following consultations with independent actuarial advisers. The
actuarial valuation includes estimates about discount rates and
mortality rates, and the long-term nature of these plans, make the
estimates subject to significant uncertainties.
There are eleven pensioners currently receiving a monthly
pension under the scheme and three deferred members.
Dominic Lavelle
Independent Non-executive Director
6 July 2021
Directors' Report
The directors present their annual report and the financial
statements for the Company and for the Group for the year ended 31
March 2021.
Results and Dividend
As set out in the Group Income Statement and the Group profit
for the year after taxation amounted to GBP9,000 (2020: Loss
GBP4,728,000). Basic earnings per share on underlying profits were
0.0 pence (2020: 22.0 pence).
Given the impact of COVID-19 on the Group's profits and the
continuing challenges for UK trading, after careful consideration,
the Board has decided not to recommend the payment of a dividend in
respect of the year ended 31 March 2021
The suspension of dividends will be kept under close review and
dividend payments will be resumed as soon as the directors consider
it prudent to do so.
Principal Activities
The business of the Group during the year ended 31 March 2021
was general trading in the Falkland Islands, the operation of a
passenger ferry across Portsmouth Harbour and the provision of
international arts logistics and storage services. The principal
activities of the Group are discussed in more detail in the Chief
Executive's Strategic Report and should be considered as part of
the Directors' Report for the purposes of the requirements of the
enhanced Directors' Report guidance.
The principal activity of the Company is that of a holding
company.
Directors
On 28 April 2021, an additional executive director, Stuart
Munro, was appointed to the Board.
Directors' Interests
The interests of the directors in the issued shares and share
options over the shares of the Company are set out below under the
heading 'Directors' interests in shares'. During the year no
director had an interest in any significant contract relating to
the business of the Company or its subsidiaries other than their
own service contract.
Health and Safety
The Group is committed to the health, safety and welfare of its
employees and third parties who may be affected by the Group's
operations. The focus of the Group's effort is to prevent accidents
and incidents occurring by identifying risks and employing
appropriate control strategies. This is supplemented by a policy of
investigating and recording all incidents.
Employees
The Board is aware of the importance of good relationships and
communication with employees. Where appropriate, employees are
consulted about matters which affect the progress of the Group and
which are of interest and concern to them as employees. Within this
framework, emphasis is placed on developing greater awareness of
the financial and economic factors which affect the performance of
the Group. Employment policy and practices in the Group are based
on non-discrimination and equal opportunity irrespective of age,
race, religion, sex, colour and marital status. In particular, the
Group recognises its responsibilities towards disabled persons and
does not discriminate against them in terms of job offers, training
or career development and prospects. If an existing employee were
to become disabled during the course of employment, every practical
effort would be made to retain the employee's services with
whatever retraining is appropriate. The Group's pension
arrangements for employees are summarised in note 23.
Payments to Suppliers
The policy of the Company and each of its trading subsidiaries,
in relation to all its suppliers, is to settle the terms of payment
when agreeing the terms of the transaction and to abide by those
terms, provided that it is satisfied that the supplier has provided
the goods or services in accordance with agreed terms and
conditions. The Group does not follow any code or standard payment
practice. As a holding company, the Company had no trade creditors
at either 31 March 2021 or 31 March 2020.
Share Capital and Substantial Interests in Shares
During the year, 10,466 shares were issued following the
exercise of options. Further information about the Company's share
capital is given in note 25. Details of the Company's executive
share option scheme can be found in note 24.
The Company has been notified of the following interests in 3%
or more of the issued ordinary shares of the Company as at 6 July
2021:
Number of shares Percentage of shares
in issue
The Article 6 Marital Trust created
under the First Amended and Restated
Jerry Zucker Revocable Trust dated
2 April 2007 3,596,553 28.74
----------------- ---------------------
Quaero Capital Funds (Lux) - Argonaut 1,057,158 8.45
----------------- ---------------------
Martin Janser 897,324 7.17
----------------- ---------------------
J.F.C. Watts 797,214 6.37
----------------- ---------------------
Deep Blue Ventures Holdings SPC DBVF
IV Segregated Portfolio 680,001 5.43
----------------- ---------------------
Christian Struck 380,000 3.04
----------------- ---------------------
Charitable and Political Donations
Charitable donations made by the Group during the year amounted
to GBP7,654 (2020: GBP19,312), these were largely paid to local
community charities the Falkland Islands. There were no political
donations in the year (2020: nil).
Disclosure of Information to the External Auditor
The directors who held office at the date of this Directors'
Report confirm that, so far as they are each aware, there is no
relevant audit information of which the Company's external auditor
is unaware; and each director has taken all the steps that they
ought to have taken as a director to make themselves aware of any
relevant audit information and to establish that the Company's
external auditor is aware of that information.
External Auditor
A resolution proposing the re-appointment of KPMG LLP will be
put to shareholders at the Annual General Meeting.
Greenhouse Gas Emissions
The 2018 Regulations introduced requirements under Part 15 of
the Companies Act 2006 for large unquoted companies to disclose
their annual energy use and greenhouse gas emissions, and related
information. However, the Group has applied the option permitted to
exclude any energy and carbon information relating to its
subsidiary which the subsidiary would not itself be obliged to
include if reporting on its own account. This applies to all
subsidiaries within the Group. FIH group plc itself consumes less
than 40MWh and, as a low energy user, is not required to make the
detailed disclosures of energy and carbon information but is
required to state, in its relevant report, that its energy and
carbon information is not disclosed for that reason. FIH group
plc's annual energy use and greenhouse gas emissions, and related
information has not been disclosed in this annual report as it is a
low energy user.
Statement by the Directors in Performance of their Statutory
Duties in Accordance with s172(1) Companies Act 2006
As an experienced Board, our intention is to behave responsibly
and we consider that we, both as individuals and as a collective
Board, as representatives of FIH group plc and the Group as a
whole, during the year ended 31 March 2021, have acted in good
faith, to promote the success of the Company for the benefit of its
members as a whole, having regard to the wider stakeholders as set
out in s172 of the Companies Act. In the Falkland Islands and in
Gosport/Portsmouth (where PHFC provide the ferry service), the
subsidiaries of the Group work closely with local government and
local communities and Momart, is an active and founding member of
several art communities and its employees give talks at
conferences, sharing their experiences on the import and export of
art work. The details of the Group's interaction with its wider
stakeholders is as follows:
Customers:
Despite the collapse in passenger volumes brought on by COVID-19
which resulted in heavy losses throughout the year, the Group maintained
the ferry service at PHFC which continued to operate between 5.30
and 11:00pm on every day except Christmas Day in recognition of
the vital social importance of the service to the local community
and keyworkers.
PHFC maintains close contact with its customer base via social media
and regularly tweets and posts information on Facebook about local
pantomimes, football matches, special events offered by local restaurants
and other events of interest to the local community and visiting
tourists.
The crews and customers are encouraged to post their own photos
of the ferries, and sightings of any HMS warships in the harbour.
The Environmental and Sustainability workgroup at Momart is planning
to work with clients to share environmentally conscious ideas.
Colleagues:
We have an experienced, diverse and dedicated workforce which we
recognise as a key asset of our businesses. Therefore, it is important
that we continue to create the right environment to encourage and
create opportunities for individuals and teams to realise their
full potential.
We have an open, collaborative and inclusive management structure
and engage regularly with our employees. We do this through an appraisal
process, structured career conversations, employee surveys, company
presentations, away days and our well-being programme.
Suppliers:
Across the Group, we aim to build long-term relationships with our
suppliers that help ensure the continued delivery of the high-quality
services the Group provides. We are clear about our payment practices.
We expect our suppliers to adopt similar practices throughout their
supply chains to ensure fair and prompt treatment of all creditors.
All suppliers are vetted to ensure compliance with the Group's zero
tolerance approach to modern slavery.
Communities:
We are committed to supporting the communities in which we operate,
including local businesses, residents and the wider public.
We engage with the local communities in Gosport/Portsmouth and in
the Falkland Islands through our community donations, and providing
employment and work experience opportunities. Apprentices have been
taken on at both Momart and PHFC, in areas including Customs and
Excise and Engineering.
PHFC donates cruise tickets to charities and makes various donations
and gifts to local charities as well as public organisations such
as the Fire Service. PHFC staff conduct organised collections on
the pontoons, for example for the Poppy Appeal, and permits local
school children to collect charitable donations on board the vessels.
The business has also been successful in lobbying local government
to include a bike hub at Gosport in its development plans.
Environment:
The Group is committed to doing its part to protect the local and
global environment, minimising the environmental impacts of its
activities, products and services, and to the continual improvement
of its environmental performance.
Steps already taken include:
FIC
* Elimination of plastic bags from all retail outlets
and use of paper cups, straws, and other recyclable
packaging in the FIC cafes wherever possible.
* LED lighting in offices, warehouses and retail
outlets.
* Utilisation of best practice insulation methods for
building construction and renovation.
* Incorporation of ground heat source systems into new
build structures.
Momart
* Conversion of vehicles to meet the Euro 6 emissions
standard.
* LED lighting and movement sensors across all
warehouse units and offices.
* Renewable energy from solar panels installed at the
Leyton warehouse unit 14.
* Sourcing of materials for packing cases from
sustainable European sources.
* Wood waste burnt for energy rather than going to
landfill.
PHFC
* Installation of new exhaust cleaners on the vessels
reducing NOx and CO2 emissions.
* Use of solar panels on the pontoons.
* LED lighting across the estate as well as movement
sensors.
* Provision of coffee cup recycling on the ferries and
the pontoons.
Governments and Regulatory Authorities
Our work brings us into regular contact with FIG, and local authorities,
as we deliver construction projects, repairs and other work. We
strive to be proactive and transparent, consulting with them to
ensure that our planning reflects local sensitivities.
PHFC staff attend meetings with the local government members and
Gosport Borough Council.
The Momart Business Process and Compliance Manager attends quarterly
industry forums, such as those Freight Transport Association, discussing
difficulties faced by the industry with the forum and any attending
HMRC officers.
Media
All businesses are active on social media, using Twitter, Instagram,
LinkedIn and Facebook.
Non-governmental Organisations:
PHFC is a Heritage Committee member
Momart representatives attend the UK Registrars' Group conference
and the European Registrars' Group conference and speak on issues
such as customs procedures, Brexit, or specialised Export licences,
such as the "Convention on International Trade in Endangered Species
of Wild Fauna and Flora", which requires permits for the export
of ivory, rosewood and mahogany.
With over 40 years of experience and expertise in handling, transportation
and storage of art, since 1993 Momart has held a Royal Warrant from
Her Majesty The Queen for our work with the Royal Collection.
Momart is a founding member of ARTIM, "the Art Transporter International
Meeting" and attends the annual conference to discuss the best practices
and the key business issues concerning the packing, transportation
and movement of works of art.
Momart is also a member of the UK Registrars' Group, which is a
non-profit association, which provides a forum for exchanging ideas
and expertise between registrars, collection managers and other
museum professionals in the United Kingdom, Europe and worldwide.
Shareowners and Analysts:
Beyond the Annual General Meeting, the Chief Executive, Chief Financial
Officer and the Chairman offer to meet with all significant shareholders
after the release of the half year and full year results. The Chief
Executive, Chief Financial Officer and the Chairman are the primary
points of contact for the shareholders and are available to answer
queries over the phone or via email from shareholders throughout
the year.
The Annual General Meeting provides a chance with investors and
analysts to meet the Board face-to-face each year.
Debt Providers :
We have several debt facilities provided by HSBC, with whom we engage
through regular meetings and presentations to ensure that they remain
fully informed on all relevant areas of our business. This high-level
engagement helps to support our significant lines of credit available
to us.
The relationship with HSBC dates back to the Company's incorporation
in 1997.
Capital Allocation and Dividend Policy:
This year's budget was approved by the Board following a comprehensive
review of our strategic priorities, risks to and potential opportunities
arising in, our three businesses. We considered the input from our
locally based directors about expected changes in their markets
and anticipated customer needs.
Due to the impact of the COVIC-19 pandemic, the dividend payment
will be suspended and will be kept under close review, dividend
payments will be resumed as soon as the directors consider it prudent
to do so.
The capital allocation priorities are to support continued investment
in organic business growth, funded by a strong balance sheet, with
the focus on long-term decisions to position the Group for success.
Annual General Meeting
The Company's Annual General Meeting will be held on 9 September
2021. The Notice of the Annual General Meeting and a description of
the special business to be put to the meeting are considered in a
separate circular to Shareholders.
Details of Directors' Remuneration and Emoluments
The remuneration of non-executive directors consists only of
annual fees for their services both as members of the Board and of
Committees on which they serve.
An analysis of the remuneration and taxable benefits in kind
(excluding share options) provided for and received by each
director during the year to 31 March 2021 and in the preceding year
is as follows:
Salary / Health insurance 2021 2020
Fees GBP'000 Total Total
GBP'000 GBP'000 GBP'000
John Foster 196 1 197 224
--------- ----------------- --------- ---------
Robin Williams 51 - 51 60
--------- ----------------- --------- ---------
Jeremy Brade 26 - 26 30
--------- ----------------- --------- ---------
Robert Johnston 26 - 26 30
--------- ----------------- --------- ---------
Dominic Lavelle 26 - 26 *10
--------- ----------------- --------- ---------
Stuart Munro** - - - -
--------- ----------------- --------- ---------
Total 325 1 326 354
--------- ----------------- --------- ---------
* From date of appointment
** Appointed 28 April 2021
The Chief Executive participates in an annual performance
related bonus arrangement, with the potential during the year of
earning up to 100% of his salary. The bonuses are subject to the
achievements of specified corporate and personal objectives and are
normally split into equal parts of deferred shares and cash, with
the shares requiring a service condition to remain in employment
for up to three years. Given the impact of COVID-19 on the Group's
finances, no bonus will be payable for the year ended 31 March 2021
(2020: GBPnil).
Full details of historic awards of deferred shares to John
Foster and other options issued to senior staff, including all
grants and exercises are provided in note 24 Employee Benefits:
share based payments. During the year ending 31 March 2021, 12,488
nil cost options (2020: 15,171) were exercised by the Chief
Executive.
None of the directors of the Company receive any pension
contributions or benefit from any Group pension scheme.
Share Incentive Plan
In November 2012, the Company implemented an HMRC approved Share
Incentive Plan available to employees of the Group, which enables
UK and FIC staff to acquire shares in the Company through monthly
purchases of up to GBP150 per month or 10% of salary, whichever is
lower. For every three shares purchased by the employee, the
Company contributes one free matching share. These shares are
placed in trust and if they are left in trust for at least five
years, they can be removed free of UK income tax and national
insurance contributions. During the year ended 31 March 2020 the
Company purchased GBP600 of matching shares for John Foster. No
matching shares were purchased for Directors in the year ended 31
March 2021 and the scheme is now closed to further issue.
Directors' Interests in Shares
As at 31 March 2021, the nil cost share options issued to the
executive director which remained outstanding were as follows:
Date of grant Number of Exercisable Expiry date
options from
J L Foster
15 Jun 2018 5,682 15 Jun 2021 15 Jun 2022
------------ ------------ ------------
17 Jun 2019 3,591 17 Jun 2021 17 Jun 2023
------------ ------------ ------------
17 Jun 2019 3,591 17 Jun 2022 17 Jun 2023
------------ ------------ ------------
Total 12,864
------------ ------------ ------------
The mid-market price of the Company's shares on 31 March 2021
was 205 pence and the range in the year was 194 pence to 350
pence.
The directors' options extant at 31 March 2021 totalled 12,864
nil cost options. In total these options represented 0.1% of the
Company's issued share capital.
There are also 268,626 options outstanding at 31 March 2021
which were granted to 15 other employees of the Group including
subsidiary directors and senior management. These include 123,052
LTIP options granted in July 2020 and 87,422 LTIP options granted
in July 2019 all at a 10 pence exercise price and 58,152 options
granted under the Company's executive share option scheme between
December 2010 and January 2015, with exercise prices of GBP2.675 to
GBP2.725.
The 58,152 options granted under the Company's executive share
option scheme, are options to acquire ordinary shares in the
Company after a period of three years from the date of the grant
and have been granted at an option price of not less than market
value at the date of the grant. The 210,474 LTIP awards have been
granted at an exercise price of 10 pence. The exercise of the LTIP
awards is subject to various performance conditions, which have
been determined by the remuneration committee after discussion with
the Company's advisers. The 12,864 nil cost options granted to the
Chief Executive are exercisable at no cost to him, and will vest
provided he remains in employment for the required service
periods.
In addition to the share options set out above, the interests of
the directors, their immediate families and related trusts in the
shares of the Company according to the register kept pursuant to
the Companies Act 2006 were as shown below:
Ordinary shares as at Ordinary shares
31 March 2021 as at
31 March 2020
Robin Williams 5,625 1,935
---------------------- ----------------
John Foster* *113,627 *107,009
---------------------- ----------------
Jeremy Brade 15,022 15,022
---------------------- ----------------
Robert Johnston **3,647,853 **3,647,853
---------------------- ----------------
Dominic Lavelle 2,000 -
---------------------- ----------------
*John Foster's shareholding above includes all Shares held in
the Company's share incentive plan in which he has a beneficial
interest.
** Robert Johnston holds 51,300 shares in his own name, and as
he is also the representative of the Company's largest shareholder,
"The Article 6 Marital Trust, created under the First Amended and
Restated Jerry Zucker Revocable Trust dated 4-2-07", which holds
3,596,553 Shares, Robert Johnston is interested in 3,647,853 Shares
in total, representing 29.1 per cent. of the Company's 12,514,985
total voting rights.
Approved by the Board and signed on its behalf by:
Iain Harrison
Company Secretary
6 July 2021
Kenburgh Court
133-137 South Street
Bishop's Stortford
Hertfordshire
CM23 3HX
Statement of Directors' Responsibilities in Respect of the
Annual Report and the Financial Statements
The directors are responsible for preparing the Annual Report,
Strategic Report, Directors' Report, and the Group and Company
financial statements in accordance with applicable law and
regulations.
Company law requires the directors to prepare Group and Parent
Company financial statements for each financial year. Under that
law, they have elected to prepare both the Group and the Parent
Company financial statements in accordance with International
Accounting Standards in conformity with the requirements of the
Companies Act 2006 and applicable law.
Under company law the directors must not approve the financial
statements unless they are satisfied that they give a true and fair
view of the state of affairs of the Group and Parent Company and of
their profit or loss for that period. In preparing each of the
Group and Parent Company financial statements, the directors are
required to:
-- select suitable accounting policies and then apply them consistently;
-- make judgements and estimates that are reasonable, relevant and reliable;
-- state whether they have been prepared in accordance with
international accounting standards in conformity with the
requirements of the Companies Act 2006;
-- assess the Group and Parent Company's ability to continue as
a going concern, disclosing, as applicable, matters related to
going concern; and
-- use the going concern basis of accounting unless they either
intend to liquidate the Group or the Parent Company or to cease
operations, or have no realistic alternative but to do so.
The directors are responsible for keeping adequate accounting
records that are sufficient to show and explain the Parent
Company's transactions and disclose with reasonable accuracy at any
time the financial position of the Parent Company and enable them
to ensure that its financial statements comply with the Companies
Act 2006. They are responsible for such internal control as they
determine is necessary to enable the preparation of financial
statements that are free from material misstatement, whether due to
fraud or error, and have general responsibility for taking such
steps as are reasonably open to them to safeguard the assets of the
Group and to prevent and detect fraud and other irregularities.
Under applicable law and regulations, the directors are also
responsible for preparing a Strategic Report and a Directors'
Report that complies with that law and those regulations.
The directors are responsible for the maintenance and integrity
of the corporate and financial information included on the
Company's website. Legislation in the UK governing the preparation
and dissemination of financial statements may differ from
legislation in other jurisdictions.
KPMG Independent Auditor's Report to the members o f FIH group
plc
1. Our opinion is unmodified
We have audited the financial statements of FIH Group plc ("the
Company") for the year ended 31 March 2021 which comprise the
Consolidated Income Statement, Consolidated Statement of
Comprehensive Income, Consolidated Balance Sheet, Company Balance
Sheet, Consolidated Cash Flow Statement, Company Cash Flow
Statement, Consolidated Statement of Changes in Shareholders'
Equity, Company Statement of Changes in Shareholders' Equity, and
the related notes, including the accounting policies in note 1.
In our opinion:
-- the financial statements give a true and fair view of the
state of the Group's and of the parent Company's affairs as at 31
March 2021 and of the Group's profit for the year then ended;
-- the Group financial statements have been properly prepared in
accordance with [international accounting standards in conformity
with the requirements of the Companies Act 2006;
-- the parent Company financial statements have been properly
prepared in accordance with [international accounting standards in
conformity with the requirements of, and as applied in accordance
with the provisions of, the Companies Act 2006; and
-- the financial statements have been prepared in accordance
with the requirements of the Companies Act 2006.
Basis for opinion
We conducted our audit in accordance with International
Standards on Auditing (UK) ("ISAs (UK)") and applicable law. Our
responsibilities are described below. We have fulfilled our ethical
responsibilities under, and are independent of the Group in
accordance with, UK ethical requirements including the FRC Ethical
Standard as applied to listed entities. We believe that the audit
evidence we have obtained is a sufficient and appropriate basis for
our opinion.
Overview
Materiality: GBP140,000 (2020: GBP150,000)
(Group financial statements 4.5% of normalised average profit before tax
as a whole) (2020: 4.0% of group profit before tax before
goodwill impairment)
---------------------------------------------------
Coverage 100% (2020:100%) of group profit before tax
---------------------------------------------------
Key audit matters vs 2020
Recurring risks Recoverability of Art logistics and
Storage Brand Name and Goodwill and
Recoverability of Ferry Services Property,
Plant and Equipment and Right of Use
assets
Recoverability of parent Company's
investment in subsidiaries
-------------------------------------------------
2. Key audit matters: our assessment of risks of material misstatement
Key audit matters are those matters that, in our professional
judgement, were of most significance in the audit of the financial
statements and include the most significant assessed risks of
material misstatement (whether or not due to fraud) identified by
us, including those which had the greatest effect on: the overall
audit strategy; the allocation of resources in the audit; and
directing the efforts of the engagement team . These matters were
addressed in the context of our audit of the financial statements
as a whole, and in forming our opinion thereon, and we do not
provide a separate opinion on these matters. In arriving at our
audit opinion above, the key audit matters, in decreasing order of
audit significance, were as follows:
Recoverability of Art logistics
and Storage Brand Name (GBP2.0million; Refer to page 25 (Audit Committee
2020: GBP2.0million) and Goodwill Report), page 53 (accounting policy)
(GBP2.1million; 2020: GBP2.1m) and and page 69 (financial disclosures).
Recoverability of Ferry Services
Property, Plant and Equipment and
Right of Use assets (included within
Segment Assets of GBP11.4million;
2020: GBP11.0million).
The risk Our response
-------------------------------------------------------------------
Forecast Based Valuation: Our procedures included:
The carrying amount of the Art Logistics * Control re-performance: We tested the controls over
and Storage CGU is significant and the forecasts prepared for the subsidiaries,
the recoverable amount of that CGU including approval and challenge of those forecasts
is at risk of fluctuation due primarily by the directors;
the fluctuating future demand in
the art logistics and storage markets
along with the inherent uncertainty * Our sector experience: we evaluated and challenged
involved in forecasting and discounting assumptions used in the forecasts, in particular
future cash flows. In the prior those relating to revenue trends and profit margins,
year the Group has recognised an through enquiries with the divisional managers and
impairment loss of GBP3,500,000 those responsible for preparing and delivering the
on the goodwill on the Art Logistics forecasts;
CGU as a result of changes in the
market resulting in significant
changes in forecast cash flows. * Benchmarking assumptions: we compared the group's
The remaining carrying amount of assumptions in relation to key inputs such as,
goodwill and intangible assets associated projected economic growth and, with the assistance of
with the Art Logistics CGU is particularly specialist valuation tools, the discount rate to
sensitive to changes in key assumptions. historical information and externally derived data;
The effect of these matters is that,
as part of our risk assessment for * Historical comparison: we evaluated the adequacy of
audit planning purposes, we determined the budgets and forecasts used in the value in use
that the value in use of the Art calculations by assessing the historical accuracy of
Logistics and Storage CGU had a the Group's previous budgets;
high degree of estimation uncertainty,
with a potential range of reasonable
outcomes greater than our materiality * Sensitivity analysis: we performed a sensitivity
for the financial statements as analysis on the key assumptions noted above;
a whole. The financial statements
(note 11) disclose the sensitivity
estimated by the Group. * Comparing valuations: we compared the net asset value
of the Group with the market capitalisation of the
The carrying amount of the Ferry Group and assessed whether any difference was an
Services CGU is significant and indicator of impairment with reference to why that
the recoverable amount is at risk difference has arisen;
due primarily to reductions in passenger
numbers which has been exacerbated
by the Covid-19 pandemic. The estimated * Assessing transparency: we assessed whether the
recoverable amount is subjective group's disclosure about sensitivity of the outcome
due to the inherent uncertainty of the impairment assessment to changes in key
involved in forecasting and discounting assumptions reflected the risks inherent in the
future cash flows. In the prior recoverable amounts of the Art Logistics and Storage
year the Group has recognised an CGU and Ferry Services CGU.
impairment loss of GBP3,979,000
on the goodwill on the Ferry Services
CGU as a result of changes in the
market resulting in significant
changes in forecast cash flows.
In the prior period goodwill was
fully written down so this is no
longer considered a risk. As a result,
in the current year the carrying
amount property, plant and equipment
and right of use assets associated
with the Ferry Services CGU is particularly
sensitive to changes in key assumptions.
The effect of these matters is that,
as part of our risk assessment for
audit planning purposes, we determined
that the value in use of the Ferry
Services CGU had a high degree of
estimation uncertainty, with a potential
range of reasonable outcomes greater
than our materiality for the financial
statements as a whole. In conducting
our final audit work, we concluded
that reasonably possible changes
to the value in use of the Ferry
Services CGU would not be expected
to result in material impairment.
-------------------------------------------------------------------
Parent: Recoverability of Parent (GBP24m investment in subsidiaries;
Company's investment in, and debt 2020: GBP23.9m)
due from, subsidiaries
Refer to page page 53 (accounting
policy) and page 76 (financial
disclosures).
The risk Our response
--------------------------------------------------------------------
Forecast-based assessment Our procedures included:
The carrying amount of the parent * Control re-performance: We tested the controls over
company's investment in subsidiaries the forecasts prepared for the subsidiaries,
represents 40.6% (2020: 40.3%) including approval and challenge of those forecasts
of the parent company's total assets. by the directors;
They are significant and at risk
of irrecoverability due to weak * Our sector experience: we evaluated assumptions used
demand in the Art Logistics and in the relevant cash flow forecasts, in particular
Ferry Services businesses as a those relating to forecast revenue growth and profit
result of the Covid-19 pandemic margins, through enquiries with the divisional
and uncertainty in future profitability managers and those responsible for preparing and
of the related CGUs. In the prior delivering the forecasts;
year the Group has recognised an
impairment loss of GBP3,700,000
on the investment in the Art Logistics * Benchmarking assumptions: we compared the group's
subsidiary as a result of changes assumptions in relation to key inputs such as,
in the market resulting in significant projected economic growth and, with the assistance of
changes in forecast cash flows. specialist valuation tools, compared the discount
The estimated recoverable amount rate to historical information and externally derived
of the remaining balance is subjective data;
due to the inherent uncertainty
involved in forecasting and discounting
future cash flows. * Historical comparison: we evaluated the adequacy of
the budgets and forecasts used in the value in use
The effect of these matters is calculation by assessing the historical accuracy of
that, as part of our risk assessment the Group's previous budgets;
for audit planning purposes, we
determined that the value in use
of the Company's investment in * Sensitivity analysis: we performed a sensitivity
subsidiaries had a high degree analysis on the key assumptions noted above;
of estimation uncertainty, with
a potential range of reasonable
outcomes greater than our materiality * Comparing valuations: we compared the carrying value
for the financial statements as of the parent Company's investments in subsidiaries
a whole. In conducting our final and receivables due from group entities to value in
audit work, we concluded that reasonably use calculations for the relevant CGUs and to the
possible changes to the value in market capitalisation of the Group;
use of the Company's investment
in subsidiaries would not be expected
to result in material impairment. * Assessing transparency: we assessed the adequacy of
the parent Company's disclosures in respect of
investments in subsidiaries.
--------------------------------------------------------------------
We continue to perform procedures over going concern. However,
following an increased level of certainty over the resilience of
the business, in particular in the Falkland Islands, we have not
assessed this as one of the most significant risks in our current
year audit and, therefore, it is not separately identified in our
report this year.
3. Our application of materiality and an overview of the scope of our audit
Materiality for the Group financial statements as a whole was
set at GBP140,000 (2020: GBP150,000), determined with reference to
a benchmark of Group profit before tax (PBT), of which it
represents 4.5% (2020: 2.0%). In 2021, we normalised PBT to exclude
the non-trading items disclosed in note 5 and by averaging over the
last five years due to the impact of the COVID-19 pandemic on the
Group's financial results. In the prior year, we normalised PBT to
exclude that year's goodwill impairment charge as disclosed in note
5.
Materiality for the parent company financial statements as a
whole, as communicated by the group audit team, was set at
GBP60,000 (2020: GBP80,000). This is lower than the materiality we
would otherwise have determined with reference to a benchmark of
the Company's net assets, of which it represents 0.20% (2020:
0.36%).
In line with our audit methodology, our procedures on individual
account balances and disclosures were performed to a lower
threshold, performance materiality, so as to reduce to an
acceptable level the risk that individually immaterial
misstatements in individual account balances add up to a material
amount across the financial statements as a whole.
Performance materiality was set at 75% (2020: 75%) of
materiality for the financial statements as a whole, which equates
to GBP105,000 (2020: GBP112,500) for the group and GBP45,000 (2020:
GBP60,000) for the parent company. We applied this percentage in
our determination of performance materiality because we did not
identify any factors indicating an elevated level of risk.
We agreed to report to the Audit Committee any corrected or
uncorrected identified misstatements exceeding GBP7,000 (2020:
GBP7,500), in addition to other identified misstatements that
warranted reporting on qualitative grounds.
Of the Group's four (2020: four) components, we subjected all
(2020: all) to full scope audits for group purposes. The group team
perform ed the audits of each of the components. The audit was
performed using the materiality levels set out opposite, having
regard to the mix of size and risk profile of the Group across the
components.
The components within the scope of our work accounted for the
percentages illustrated as follows:
Component 2021 2020
Group revenue 100% 100%
----------------------- -----------------------
Group profit before tax 100% 100%
----------------------- -----------------------
Group total assets 100% 100%
----------------------- -----------------------
Normalised Average Group profit GBP3.1 million GBP3.9 million
before tax ( 2020: GBP3.9m profit
before tax before goodwill impairment)
----------------------- -----------------------
Group materiality GBP140,000 GBP150,000
----------------------- -----------------------
Whole financial statements materiality GBP140,000 GBP150,000
----------------------- -----------------------
Whole financial statements performance GBP105,000 GBP113,000
materiality
----------------------- -----------------------
Range of materiality at 4 components GBP60,000 - GBP100,000 GBP80,000 - GBP100,000
----------------------- -----------------------
Threshold for misstatements reported GBP7,000 GBP7,500
to the audit committee
----------------------- -----------------------
4. Going concern
The Directors have prepared the financial statements on the
going concern basis as they do not intend to liquidate the Group or
the Company or to cease their operations, and as they have
concluded that the Group and the Company's financial position means
that this is realistic. They have also concluded that there are no
material uncertainties that could have cast significant doubt over
their ability to continue as a going concern for at least a year
from the date of approval of the financial statements ("the going
concern period").
We used our knowledge of the Group, its industry, and the
general economic environment to identify the inherent risks to its
business model and analysed how those risks might affect the
Group's and Company's financial resources or ability to continue
operations over the going concern period. The risks that we
considered most likely to adversely affect the Group's and
Company's available financial resources over this period were:
-- additional UK lockdowns and restrictions on international
travel will impact the business in FY22 in a similar way to that
experienced in FY21 and in particular that there will be
significant disruption to the Ferry Services and Art Logistics and
Storage businesses.
We considered whether these risks could plausibly affect the
liquidity in the going concern period by comparing severe, but
plausible downside scenarios that could arise from these risks
individually and collectively against the level of available
financial resources indicated by the Group's financial
forecasts.
We considered whether the going concern disclosure in note 1 to
the financial statements gives a full and accurate description of
the Directors' assessment of going concern, including the
identified risks and, dependencies, and related sensitivities.
Our conclusions based on this work:
-- we consider that the directors' use of the going concern
basis of accounting in the preparation of the financial statements
is appropriate;
-- we have not identified, and concur with the directors'
assessment that there is not, a material uncertainty related to
events or conditions that, individually or collectively, may cast
significant doubt on the Group's or Company's ability to continue
as a going concern for the going concern period; and
-- we found the going concern disclosure in note 1 to be acceptable
However, as we cannot predict all future events or conditions
and as subsequent events may result in outcomes that are
inconsistent with judgements that were reasonable at the time they
were made, the above conclusions are not a guarantee that the Group
or the Company will continue in operation.
5. Fraud and breaches of laws and regulations - ability to detect
Identifying and responding to risks of material misstatement due
to fraud
To identify risks of material misstatement due to fraud ("fraud
risks") we assessed events or conditions that could indicate an
incentive or pressure to commit fraud or provide an opportunity to
commit fraud. Our risk assessment procedures included:
-- Enquiring of directors, and inspection of policy
documentation as to the Group's high-level policies and procedures
to prevent and detect fraud including the Group's channel for
"whistleblowing", as well as whether they have knowledge of any
actual, suspected or alleged fraud;
-- Reading Board, audit committee and remuneration committee minutes.
-- Considering remuneration incentive schemes and performance
targets for directors and how these are impacted by separately
disclosed items; and
-- Using analytical procedures to identify any unusual or unexpected relationships.
We communicated identified fraud risks throughout the audit team
and remained alert to any indications of fraud throughout the
audit.
As required by auditing standards, and taking into account
possible pressures to meet profit targets, we perform procedures to
address the risk of management override of controls, in particular
that management may be in a position to make inappropriate
accounting entries, and the risk of bias in accounting estimates
and judgements.
On this audit we do not believe there is a fraud risk related to
revenue recognition due to the simple recognition criteria for the
majority of revenue streams which are recognised at the point of
sale and the limited opportunity for management to manipulate the
revenue recognised. In additions to this, there was a significant
reduction in transportation and storage of art and long-term
construction contracts around the year end which are recognised
with reference to percentage of completion.
We also performed procedures including:
-- Identifying journal entries and other adjustments to test for
all full scope components based on risk criteria and comparing the
identified entries to supporting documentation. These included:
unusual revenue pairings; unusual journals with a credit or debit
to entry to cash; and, unusual journals in seldom used
pairings.
-- Evaluated the business purpose of significant unusual transactions.
-- Assessing significant accounting estimates for bias.
We did not identify any additional fraud risks.
Identifying and responding to risks of material misstatement due
to non-compliance with laws and regulations
We identified areas of laws and regulations that could
reasonably be expected to have a material effect on the financial
statements from our general commercial and sector experience and
through discussion with the directors and other management (as
required by auditing standards), and discussed with the directors
and other management the policies and procedures regarding
compliance with laws and regulations.
We communicated identified laws and regulations throughout our
team and remained alert to any indications of non-compliance
throughout the audit. The potential effect of these laws and
regulations on the financial statements varies considerably.
Firstly, the Group is subject to laws and regulations that
directly affect the financial statements including financial
reporting legislation (including related companies legislation),
distributable profits legislation, taxation legislation and
pensions legislation and we assessed the extent of compliance with
these laws and regulations as part of our procedures on the related
financial statement items.
Secondly, the Group is subject to many other laws and
regulations where the consequences of non-compliance could have a
material effect on amounts or disclosures in the Financial
Statements, for instance through the imposition of fines or
litigation. We identified the following areas as those most likely
to have such an effect: health and safety, anti-bribery, employment
law. Auditing standards limit the required audit procedures to
identify non-compliance with these laws and regulations to enquiry
of the Directors and other management and inspection of regulatory
and legal correspondence, if any. Therefore, if a breach of
operational regulations is not disclosed to us or evident from
relevant correspondence, an audit will not detect that breach.
Context of the ability of the audit to detect fraud or breaches
of law or regulation
Owing to the inherent limitations of an audit, there is an
unavoidable risk that we may not have detected some material
misstatements in the financial statements, even though we have
properly planned and performed our audit in accordance with
auditing standards. For example, the further removed non-compliance
with laws and regulations is from the events and transactions
reflected in the financial statements, the less likely the
inherently limited procedures required by auditing standards would
identify it.
In addition, as with any audit, there remained a higher risk of
non-detection of fraud, as these may involve collusion, forgery,
intentional omissions, misrepresentations, or the override of
internal controls. Our audit procedures are designed to detect
material misstatement. We are not responsible for preventing
non-compliance or fraud and cannot be expected to detect
non-compliance with all laws and regulations.
6. We have nothing to report on the other information in the Annual Report
The directors are responsible for the other information
presented in the Annual Report together with the financial
statements. Our opinion on the financial statements does not cover
the other information and, accordingly, we do not express an audit
opinion or, except as explicitly stated below, any form of
assurance conclusion thereon.
Our responsibility is to read the other information and, in
doing so, consider whether, based on our financial statements audit
work, the information therein is materially misstated or
inconsistent with the financial statements or our audit knowledge.
Based solely on that work we have not identified material
misstatements in the other information .
Strategic report and directors' report
Based solely on our work on the other information:
-- we have not identified material misstatements in the
strategic report and the directors' report;
-- in our opinion the information given in those reports for the
financial year is consistent with the financial statements; and
-- in our opinion those reports have been prepared in accordance with the Companies Act 2006.
7. We have nothing to report on the other matters on which we are required to report by exception
Under the Companies Act 2006, we are required to report to you
if, in our opinion:
-- adequate accounting records have not been kept by the parent
Company, or returns adequate for our audit have not been received
from branches not visited by us; or
-- the parent Company financial statements are not in agreement
with the accounting records and returns; or
-- certain disclosures of directors' remuneration specified by law are not made; or
-- we have not received all the information and explanations we require for our audit.
We have nothing to report in these respects.
8. Respective responsibilities
Directors' responsibilities
As explained more fully in their statement set out on page 34,
the directors are responsible for: the preparation of the financial
statements including being satisfied that they give a true and fair
view; such internal control as they determine is necessary to
enable the preparation of financial statements that are free from
material misstatement, whether due to fraud or error; assessing the
Group and parent Company's ability to continue as a going concern,
disclosing, as applicable, matters related to going concern; and
using the going concern basis of accounting unless they either
intend to liquidate the Group or the parent Company or to cease
operations, or have no realistic alternative but to do so.
Auditor's responsibilities
Our objectives are to obtain reasonable assurance about whether
the financial statements as a whole are free from material
misstatement, whether due to fraud or error, and to issue our
opinion in an auditor's report. Reasonable assurance is a high
level of assurance, but does not guarantee that an audit conducted
in accordance with ISAs (UK) will always detect a material
misstatement when it exists. Misstatements can arise from fraud or
error and are considered material if, individually or in aggregate,
they could reasonably be expected to influence the economic
decisions of users taken on the basis of the financial statements.
A fuller description of our responsibilities is provided on the
FRC's website at www.frc.org.uk/auditorsresponsibilities .
9. The purpose of our audit work and to whom we owe our responsibilities
This report is made solely to the Company's members, as a body,
in accordance with Chapter 3 of Part 16 of the
Companies Act 2006. Our audit work has been undertaken so that
we might state to the Company's members those matters we are
required to state to them in an auditor's report, and for no other
purpose. To the fullest extent permitted by law, we do not accept
or assume responsibility to anyone other than the Company and the
Company's members, as a body, for our audit work, for this report,
or for the opinions we have formed.
Mark Flanagan
(Senior Statutory Auditor)
For and on behalf of KPMG LLP, Statutory Auditor
Chartered Accountants
St Nicholas House, Park Row
Nottingham NG1 6FQ
6 July 2021
Consolidated Income Statement
FOR THE YEARED 31 MARCH 2021
Notes Before Non-trading Before Non-trading
non-trading Items non-trading Items
(Note (Note
items 5) Total items 5) Total
2021 2021 2021 2020 2020 2020
GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000
-------------------------- ------------- ------------ ------------- ------------
4 Revenue 32,578 - 32,578 44,600 - 44,600
Cost of sales (19,437) - (19,437) (26,521) - (26,521)
Gross profit 13,141 - 13,141 18,079 - 18,079
Other administrative
expenses (12,307) 57 (12,250) (13,745) - (13,745)
Consumer Finance interest
income 192 - 192 231 - 231
Goodwill impairment - - - - (7,479) (7,479)
-------------------------- ------------- ------------ --------- ------------- ------------ ---------
6 Operating expenses (12,115) 57 (12,058) (13,514) (7,479) (20,993)
Operating profit /
(loss) 1,026 57 1,083 4,565 (7,479) (2,914)
Finance income - - - 13 - 13
Finance expense (881) - (881) (869) - (869)
-------------------------- ------------- ------------ --------- ------------- ------------ ---------
8 Net financing costs (881) - (881) (856) - (856)
Profit / (loss) before
tax 145 57 202 3,709 (7,479) (3,770)
9 Taxation (147) (46) (193) (958) - (958)
Profit / (loss) for
the year
attributable to equity
holders of the company (2) 11 9 2,751 (7,479) (4,728)
-------------------------- ------------- ------------ --------- ------------- ------------ ---------
10 Earnings per share
Basic 0.0p 0.1p 22.0p -37.8p
Diluted 0.0p 0.1p 21.7p -37.8p
--------- ---------
The accompanying notes form part of these Financial
Statements.
Consolidated Statement of Comprehensive Income
FOR THE YEARED 31 MARCH 2021
2021 2020
GBP'000 GBP'000
---------------------------------------------------- -------- --------
Profit / (loss) for the year 9 (4,728)
Cash flow hedges: effective portion of changes
in fair value 303 (521)
17 Deferred tax on other financial liabilities 30 -
Deferred tax on effective portion of changes in
17 fair value (58) 102
---------------------------------------------------- -------- --------
Items that are or may be reclassified subsequently
to profit or loss 275 (419)
--------------------------------------------------------- -------- --------
Re-measurement of the FIC defined benefit pension
23 scheme (272) 136
Movement on deferred tax asset relating to the
17 pension scheme 71 (35)
---------------------------------------------------- -------- --------
Items which will not ultimately be recycled to
the income statement (201) 101
--------------------------------------------------------- -------- --------
Total other comprehensive income / (loss) 74 (318)
Total comprehensive income / (loss) 83 (5,046)
--------------------------------------------------------- -------- --------
The accompanying notes form part of these Financial
Statements.
Consolidated Balance Sheet
AT 31 MARCH 2021
2021 2020
Notes GBP'000 GBP'000
-------------------------------------- --------- ---------
Non-current assets
11 Intangible assets 4,183 4,246
12 Property, plant and equipment 40,361 41,712
13 Investment properties 7,123 6,458
15 Investment in Joint venture 259 259
19 Debtors due in more than one year 88 88
16 Hire purchase lease receivables 590 519
17 Deferred tax assets 739 677
Total non-current assets 53,343 53,959
Current assets
18 Inventories 5,871 5,374
19 Trade and other receivables 5,868 8,696
16 Hire purchase lease receivables 558 596
20 Cash and cash equivalents 14,556 9,108
Total current assets 26,853 23,774
TOTAL ASSETS 80,196 77,733
Current liabilities
22 Trade and other payables (6,775) (8,611)
21 Interest-bearing loans and borrowings (3,424) (1,165)
Derivative financial instruments - (537)
Corporation tax payable (113) (233)
Total current liabilities (10,312) (10,546)
Non-current liabilities
21 Interest-bearing loans and borrowings (24,799) (22,942)
Derivative financial instruments (234) -
23 Employee benefits (2,842) (2,604)
17 Deferred tax liabilities (3,113) (2,849)
Total non-current liabilities (30,988) (28,395)
TOTAL LIABILITIES (41,300) (38,941)
Net assets 38,896 38,792
-------------------------------------- --------- ---------
25 Capital and reserves
Equity share capital 1,251 1,250
Share premium account 17,590 17,590
Other reserves 703 703
Retained earnings 19,584 19,784
Hedging reserve (232) (535)
Total equity 38,896 38,792
-------------------------------------- --------- ---------
These financial statements, of which the accompanying notes form
part, were a pproved by the Board of directors on 6 July 2021 and
were signed on its behalf by:
J L Foster
Director
S I Munro
Director
Company Balance Sheet
AT 31 MARCH 2021
2021 2020
Notes GBP'000 GBP'000
-------------------------------------- --------- -----------
Non-current assets
13 Investment properties 19,164 19,373
14 Investment in subsidiaries 23,970 23,989
19 Loans to subsidiaries 10,207 10,207
17 Deferred tax 44 121
-------------------------------------- --------- -----------
Total non-current assets 53,385 53,690
Current assets
19 Trade and other receivables 118 30
Corporation tax receivable 54 -
20 Cash and cash equivalents 5,462 5,766
Total current assets 5,634 5,796
TOTAL ASSETS 59,019 59,486
Current liabilities
22 Trade and other payables (6,391) (7,019)
21 Interest-bearing loans and borrowings (520) (243)
Derivative financial instruments - (537)
Corporation tax payable - (21)
Total current liabilities (6,911) (7,820)
Non-current liabilities
21 Interest-bearing loans and borrowings (12,668) (13,207)
Derivative financial instruments (234) -
-------------------------------------- --------- -----------
Total non-current liabilities (12,902) (13,207)
-------------------------------------- --------- -----------
TOTAL LIABILITIES (19,813) (21,027)
-------------------------------------- --------- -----------
Net assets 39,206 38,459
-------------------------------------- --------- -----------
25 Capital and reserves
Equity share capital 1,251 1,250
Share premium account 17,590 17,590
Other reserves 5,389 5,389
Retained earnings 15,208 14,765
Hedging reserve (232) (535)
Total equity 39,206 38,459
-------------------------------------- --------- -----------
As permitted by Section 408 of the Companies Act 2006, a
separate profit and loss account of the Parent Company has not been
presented. The Parent Company's profit for the financial year is
GBP500,000 (2020: GBP2,592,000 loss).
These financial statements, of which the accompanying notes form
part, were a pproved by the Board of directors on 6 July 2021 and
were signed on its behalf by:
J L Foster
Director
S I Munro
Director
Registered company number: 03416346
Consolidated Cash Flow Statement
FOR THE YEARED 31 MARCH 2021
2021 2020
GBP'000 GBP'000
-------------------------------------------- -------- ---------
Note Cash flows from operating activities
Profit/ (loss) for the year after
taxation 9 (4,728)
Adjusted for:
(i) Non-cash items:
11 Amortisation 63 68
Depreciation: Property, plant and
12 equipment 2,193 1,863
13 Depreciation: Investment properties 37 132
11 Goodwill impairment - 7,479
Loss on disposal of fixed assets 53 78
23 Interest cost on pension scheme liabilities 64 65
Equity-settled share-based payment
24 expenses 1 97
-------------------------------------------- -------- ---------
Non-cash items adjustment 2,411 9,782
(ii) Other items:
Exchange losses / (gains) 3 (54)
Bank interest receivable - (13)
Bank interest payable 469 464
Lease liability finance expense 348 340
(Increase)/ decrease in hire purchase
leases receivable (33) 128
Corporation and deferred tax expense 193 958
-------------------------------------------- -------- ---------
Other adjustments 980 1,823
Operating cash flow before changes
in working capital 3,400 6,877
Decrease/(increase) in trade and other
receivables 2,828 (935)
(Increase)/decrease in inventories (497) 471
Decrease in trade and other payables (1,836) (980)
-------------------------------------------- -------- ---------
Changes in working capital 495 (1,444)
Cash generated from operations 3,895 5,433
Payments to pensioners (98) (97)
Corporation taxes paid (64) (659)
-------------------------------------------- -------- ---------
Net cash flow from operating activities 3,733 4,677
Cash flows from investing activities
Purchase of property, plant and equipment (898) (2,010)
Purchase of investment properties (702) (1,351)
Purchase of software - (27)
Interest received - 13
-------------------------------------------- -------- ---------
Net cash flow from investing activities (1,600) (3,375)
Cash flow from financing activities
Bank loan drawn down 5,000 13,875
Repayment of bank loans (624) (10,955)
Bank interest paid (469) (478)
Hire purchase loan drawn down 389 534
Repayment of lease liabilities principal (649) (395)
Lease liabilities interest paid (348) (340)
Cash inflow on option exercises 19 -
Cash outflow on nil cost option exercise - (29)
Dividends paid - (644)
-------------------------------------------- -------- ---------
Net cash flow from financing activities 3,318 1,568
-------------------------------------------- -------- ---------
Net increase in cash and cash equivalents 5,451 2,870
Cash and cash equivalents at start
of year 9,108 6,184
Exchange (losses) / gains on cash
balances (3) 54
-------------------------------------------- -------- ---------
Cash and cash equivalents at end of
year 14,556 9,108
-------------------------------------------- -------- ---------
The accompanying notes form part of these Financial
Statements.
Company Cash Flow Statement
FOR THE YEARED 31 MARCH 2021
2021 2020
GBP'000 GBP'000
-------------------------------------------------- -------- ---------
Notes Cash flows from operating activities
Holding Company profit / (loss) for the
year 500 (2,592)
Adjusted for:
Bank interest receivable - (13)
Bank interest payable 395 372
Equity-settled share-based payment expenses 2 48
14 Impairment of subsidiary - 3,713
13 Depreciation 209 209
Corporation and deferred tax expense 8 72
-------------------------------------------------- -------- ---------
Non-cash and other items adjustment 614 4,401
Operating cash flow before changes in working
capital 1,114 1,809
Increase in trade and other receivables (88) -
Decrease in trade and other payables (292) 9
-------------------------------------------------- -------- ---------
Changes in working capital and provisions (380) 9
Cash generated from operations 734 1,818
Corporation taxes paid (64) (17)
-------------------------------------------------- -------- ---------
Net cash flow from operating activities 670 1,801
Cash generated from investing activities
Interest received - 13
Purchase of property, plant and equipment - -
-------------------------------------------------- -------- ---------
Net cash flow from investing activities - 13
Cash flow from financing activities
Bank loan drawn down - 13,875
Bank loan repaid (262) (10,425)
Interest paid (381) (358)
Cash outflows in inter-company borrowing (2,569) (1,515)
Cash inflows in inter-company borrowing 2,219 1,280
Cash inflow on option exercise 19 -
Cash outflow on nil cost option exercise - (29)
Dividends paid - (644)
Net cash (out)/ in flow from financing activities (974) 2,184
Net (decrease)/ increase in cash and cash
equivalents (304) 3,998
Cash and cash equivalents at start of year 5,766 1,768
Cash and cash equivalents at end of year 5,462 5,766
-------------------------------------------------- -------- ---------
The accompanying notes form part of these Financial
Statements.
Consolidated Statement of Changes in Shareholders' Equity
FOR THE YEARED 31 MARCH 2021
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 2019 1,250 17,590 1,162 24,426 (14) 44,414
Loss for the year - - - (4,728) - (4,728)
Reserves transfer - - (459) 459 - -
Cash flow hedges: effective
portion of changes in
fair value - - - 102 (521) (419)
Re-measurement of the
defined benefit pension
liability, net of tax - - - 101 - 101
----------------------------- --------- --------- ---------- ---------- --------- ---------
Total comprehensive loss - - (459) (4,066) (521) (5,046)
----------------------------- --------- --------- ---------- ---------- --------- ---------
Transactions with owners in their
capacity as owners:
Share option exercise - - - (29) - (29)
Share based payments - - - 97 - 97
Dividends paid - - - (644) - (644)
Total transactions with
owners - - - (576) - (576)
----------------------------- --------- --------- ---------- ---------- --------- ---------
Balance at 31 March 2020 1,250 17,590 703 19,784 (535) 38,792
Profit for the year - - - 9 - 9
Cash flow hedges: effective
portion of changes in
fair value - - - - 303 303
Deferred tax on cash
flow hedges - - - (58) - (58)
Deferred tax on other
financial liabilities - - - 30 - 30
Re-measurement of the
defined benefit pension
liability, net of tax - - - (201) - (201)
Total comprehensive income - - - (220) 303 83
----------------------------- --------- --------- ---------- ---------- --------- ---------
Transactions with owners
in their capacity as
owners:
Share option exercise: 1 - - 19 - 20
Share based payments - - - 1 - 1
Dividends paid - - - - - -
Total transactions with
owners 1 - - 20 - 21
----------------------------- --------- --------- ---------- ---------- --------- ---------
Balance at 31 March 2021 1,251 17,590 703 19,584 (232) 38,896
----------------------------- --------- --------- ---------- ---------- --------- ---------
The accompanying notes form part of these Financial
Statements.
Company Statement of Changes in Shareholders'
Equity
FOR THE YEARED 31 MARCH 2021
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 2019 1,250 17,590 6,910 16,310 (14) 42,046
Loss for the year - - - (2,592) - (2,592)
Reserves transfer (1,521) 1,521 - -
Cash flow hedges: effective
portion of changes in
fair value - - - 102 (521) (419)
Total comprehensive loss - - (1,521) (969) (521) (3,011)
----------------------------- --------- --------- ---------- ---------- --------- ---------
Transactions with owners
in their capacity as
owners:
Share option exercise - - - (29) - (29)
Share based payments - - - 97 - 97
Dividends paid - - - (644) - (644)
----------------------------- --------- --------- ---------- ---------- --------- ---------
Total transactions with
owners - - - (576) - (576)
----------------------------- --------- --------- ---------- ---------- --------- ---------
Balance at 31 March 2020 1,250 17,590 5,389 14,765 (535) 38,459
Profit for the year - - - 500 - 500
Cash flow hedges: effective
portion of changes in
fair value - - - - 303 303
Deferred tax on cash
flow hedges - - - (58) - (58)
Total comprehensive income - - - 442 303 745
----------------------------- --------- --------- ---------- ---------- --------- ---------
Transactions with owners
in their capacity as
owners:
Share option exercise 1 - - - - 1
Share based payments - - - 1 - 1
Dividends paid - - - - - -
Total transactions with
owners 1 - - 1 - 2
----------------------------- --------- --------- ---------- ---------- --------- ---------
Balance at 31 March 2021 1,251 17,590 5,389 15,208 (232) 39,206
----------------------------- --------- --------- ---------- ---------- --------- ---------
The accompanying notes form part of these Financial
Statements.
Notes to the Financial Statements
1. Accounting policies
General information
FIH group plc (the "Company") is a company limited by shares
incorporated and domiciled in the UK.
Reporting entity
The Group financial statements consolidate those of the Company
and its subsidiaries (together referred to as the "Group"). The
Parent Company financial statements present information about the
Company as a separate entity and not about its Group.
Basis of preparation
Both the Parent Company financial statements and the Group
financial statements have been prepared and approved by the
directors in accordance with International Accounting Standards in
conformity with the requirements of the Companies Act 2006
("Adopted IFRSs"). On publishing the Parent Company financial
statements here together with the Group financial statements, the
Company is taking advantage of the exemption in s408 of the
Companies Act 2006 not to present its individual income statement
and related notes that form a part of these approved financial
statements.
The accounting policies set out below have, unless otherwise
stated, been applied consistently to all periods presented in these
consolidated financial statements.
Judgements made by the directors in the application of these
accounting policies that have a significant effect on the financial
statements and estimates with a significant risk of material
adjustment next year are discussed in note 30.
The financial statements are presented in pounds sterling,
rounded to the nearest thousand and are prepared on the historical
cost basis.
Going concern
The directors are responsible for preparing a going concern
assessment covering a period of at least 12 months from the date of
approval of these financial statements (the going concern period).
The financial statements have been prepared on a going concern
basis which the Directors consider to be appropriate for the
following reasons.
As at 31 March 2021 the Group had net current assets of GBP16.5
million and cash balances of GBP14.6 million. Following the
repayment of the CBILS loans in June 2021 the Group had cash
balances of approximately GBP9.7 million as at 30 June 2021 and net
debt of approximately GBP13.3 million.
Base case and sensitised cash flow forecasts have been prepared
covering the going concern period. The base case forecasts for the
Group indicate that the business will be cash generative over this
period. The sensitised forecasts reflect a severe but plausible
downside that may emerge as a result of the ongoing Covid-19
pandemic. This severe but plausible scenario assumes that
additional UK lockdowns and restrictions on international travel
will impact the business in FY22 in a similar way to that
experienced in FY21 and in particular that there will be
significant disruption to the Ferry Services and Art Logistics and
Storage businesses. This scenario indicates that the Group will
comply with its covenants and have sufficient funds to meet its
liabilities as they fall due throughout the going concern
period.
Consequently, the directors are confident that the Group and
Company will have sufficient funds to continue to meet its
liabilities as they fall due for at least 12 months from the date
of approval of the financial statements and the financial
statements have therefore been prepared on a going concern
basis.
Basis of consolidation
The consolidated financial statements comprise the financial
statements of FIH group plc and its subsidiaries (the "Group"). A
subsidiary is any entity FIH group plc has the power to control.
Control is determined by FIH group plc's exposure or rights, to
variable returns from its involvement with the subsidiary and the
ability to affect those returns. The financial statements of
subsidiaries are prepared for the same reporting period as the
Parent Company. The accounting policies of subsidiaries have been
changed when necessary, to align them with the policies adopted by
the Group.
Subsidiaries are consolidated from the date on which control is
transferred to the Group and cease to be consolidated from the date
on which control is transferred out of the Group.
All intra-company balances and transactions, including
unrealised profits arising from intra-group transactions, are
eliminated in full in preparing the consolidated financial
statements. Investments in subsidiaries within the Company balance
sheet are stated at impaired cost.
Presentation of income statement
Due to the non-prescriptive nature under IFRS as to the format
of the income statement, the format used by the Group is explained
below.
Operating profit is the pre-finance profit of continuing
activities and acquisitions of the Group, and in order to achieve
consistency and comparability, is analysed to show separately the
results of normal trading performance ("underlying profit"),
individually significant charges and credits, changes in the fair
value of financial instruments and non-trading items. Such items
arise because of their size or nature.
In the year ended 31 March 2021, non-trading items were made up
of GBP433,000 of restructuring costs which were offset by
GBP500,0000 of income from the release of provisions from prior
years. In the year ended 31 March 2020, there were two non-trading
items, the impairment of the GBP3,979,000 which arose on the 2005
PHFC acquisition and the impairment of GBP3,500,000 of the goodwill
which arose on the 2008 acquisition of Momart.
Foreign currencies
Transactions in foreign currencies are translated to the
functional currencies of Group entities at exchange rates ruling at
the dates of the transactions. Monetary assets and liabilities
denominated in foreign currencies are retranslated to the
functional currency using the relevant rates of exchange ruling at
the balance sheet date and the gains or losses thereon are included
in the income statement.
Non-monetary assets and liabilities are translated using the
exchange rate at the date of the initial transaction.
Property, plant and equipment
Property, plant and equipment are measured at cost less
accumulated depreciation and impairment losses. Cost comprises
purchase price and directly attributable expenses. Depreciation is
charged to the income statement on a straight-line basis over the
estimated useful lives of each part of an item of property, plant
and equipment. The estimated useful lives are as follows:
Right to use assets 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 few properties purchased are depreciated over an estimated
useful life of 50 years.
Investment properties - Company
The investment property in the Company consists of the Leyton
site purchased in December 2018, with five warehouses which are
rented to Momart. The purchase price allocated to land has not been
depreciated, and the purchase price allocated to each property has
been depreciated on a straight-line basis over the expected useful
life, after consideration of the age and condition of each
property, down to an estimated residual value of nil.
The carrying value of assets and their useful lives are
reviewed, and adjusted if appropriate, at each balance sheet date.
If an indication of impairment exists, the assets are written down
to their recoverable amount and the impairment is charged to the
income statement in the period in which it arises. Freehold land is
not depreciated.
Joint Ventures
Jointly controlled entities are those entities over whose
activities the Group has joint control, established by contractual
agreement and requiring the joint venture partners' unanimous
consent for strategic financial and operating decisions. FIH group
plc has joint control over an investee when it has exposure or
rights to variable returns from its involvement with the joint
venture and has the ability to affect those returns through its
joint power over the entity.
Jointly controlled entities are accounted for using the equity
method (equity accounted investees) and are initially recognised at
cost. The consolidated financial statements include the Group's
share of the total comprehensive income and equity movements of
equity accounted investees, from the date that significant
influence or joint control commences until the date that
significant influence or joint control ceases. When the Group's
share of losses exceeds its interest in an equity accounted
investee, the Group's carrying amount is reduced to nil and
recognition of further losses is discontinued except to the extent
that the Group has incurred legal or constructive obligations or
made payments on behalf of an investee.
Intangible assets
Goodwill
Goodwill arises on the acquisition of subsidiaries and
businesses.
Acquisitions prior to 1 April 2006
In respect to acquisitions prior to transition to IFRS, goodwill
is recorded on the basis of deemed cost, which represents the
amount recorded under previous Generally Accepted Accounting
Principles ("GAAP") as at the date of transition. Goodwill is not
amortised but reviewed for impairment annually, or more frequently,
if events or changes in circumstances indicate that the carrying
value may be impaired. At 31 March 2021, all goodwill arising on
acquisitions prior to 1 April 2006 has either been offset against
other reserves on acquisition, or written off through the income
statement as an impairment in prior years.
Acquisitions on or after 1 April 2006
Goodwill on acquisition is initially measured at cost, being the
excess of the cost of the business combination over the acquirer's
interest in the fair value of the identifiable assets, liabilities
and contingent liabilities of the acquired business. Following
initial recognition, goodwill is measured at cost less any
accumulated impairment losses. Goodwill is not amortised but
reviewed for impairment annually or more frequently if events or
changes in circumstances indicate that the carrying value may be
impaired. Amortisation is charged to the income statement on a
straight-line basis over the estimated useful lives of intangible
assets unless such lives are indefinite. Other intangible assets
are amortised from the date they are available for use. In the year
ended 31 March 2014, the directors reviewed the life of the brand
name at Momart and after considerations of its strong reputation in
a niche market and its history of stable earnings and cash flow,
which is expected to continue into the foreseeable future,
determined that its useful life is indefinite, and amortisation
ceased from 1 October 2013.
Computer software
Acquired computer software is capitalised as an intangible asset
on the basis of the cost incurred to acquire and bring the specific
software into use. Amortisation is charged to the income statement
on a straight-line basis over the estimated useful lives of
intangible assets from the date that they are available for use.
The estimated useful life of computer software is seven years.
Impairment of non-financial assets
At each reporting date the Group assesses whether there is any
indication that an asset may be impaired. Goodwill and intangible
assets with indefinite lives are tested for impairment, at least
annually. Where an indicator of impairment exists or the asset
requires annual impairment testing, the Group makes a formal
estimate of the recoverable amount. Where the carrying amount of an
asset exceeds its recoverable amount, the asset is considered
impaired and is written down to its recoverable amount. Impairment
losses are recognised in the income statement.
Recoverable amount is the greater of an asset's or
cash-generating unit's fair value, less cost to sell or value in
use. It is determined for an individual asset, unless the asset's
value in use cannot be estimated and it does not generate cash
inflows that are largely independent of those from other assets or
groups of assets, in which case the recoverable amount is
determined for the cash-generating unit to which the asset belongs.
In assessing value in use, the estimated future cash flows are
discounted to their present value using a discount rate that
reflects current market assessments of the time value of money and
risks specific to the asset.
An impairment loss in respect of goodwill is not reversed. In
respect of other assets, impairment losses are reversed if there
has been a change in the estimates used to determine the
recoverable amount. An impairment loss is reversed only to the
extent that the asset's carrying amount does not exceed the
carrying amount that would have been determined, net of
depreciation or amortisation, if no impairment loss had been
recognised.
Finance income and expense
Net financing costs comprise interest payable and interest
receivable which are recognised in the income statement. Interest
income and interest payable are recognised as a profit or loss as
they accrue, using the effective interest method.
Employee share awards
The Group provides benefits to certain employees (including
directors) in the form of share-based payment transactions, whereby
the recipient renders service in return for shares or rights over
future shares ("equity settled transactions"). The cost of these
equity settled transactions with employees is measured by reference
to an estimate of their fair value at the date on which they were
granted using an option input pricing model taking into account the
terms and conditions upon which the options were granted. The
amount recognised as an expense is adjusted to reflect the actual
number of share options for which the related service and
non-market performance conditions are expected to be met, such that
the amount ultimately recognised as an expense is based on the
number of share options that meet the related service and
non-market performance conditions at the vesting date. For
share-based payment awards with market performance vesting
conditions, the grant date fair value of the share-based payments
is measured to reflect such conditions and there is no true up for
differences between expected and actual outcomes.
The cost of equity settled transactions is recognised, together
with a corresponding increase in reserves, over the period in which
the performance conditions are fulfilled, ending on the date that
the option vests. Where the Company grants options over its own
shares to the employees of subsidiaries, it recognises, in its
individual financial statements, an increase in the cost of
investment in its subsidiaries equal to the equity settled
share-based payment charge recognised in its consolidated financial
statements with the corresponding credit being recognised directly
in equity.
Inventories
Inventories are stated at the lower of cost and net realisable
value. Cost includes all costs incurred in bringing each product to
its present location and condition. The cost of raw materials,
consumables and goods for resale comprises purchase cost, on a
weighted average basis and where applicable includes expenditure
incurred in transportation to the Falkland Islands.
Work-in-progress and finished goods cost includes direct materials
and labour plus attributable overheads based on a normal level of
activity. Construction-in-progress is stated at the lower of cost
and net realisable value. Net realisable value is estimated at
selling price in the ordinary course of business less costs of
disposal.
Consumer Finance interest income
Consumer Finance interest income consists of interest receivable
on the hire purchase debtors, which is calculated on a sum of
digits basis, which allocates more interest on the earlier periods,
when the debt is higher, and interest receivable from charge cards,
which are FIC credit cards issued to customers including staff.
Pensions
Defined contribution pension schemes
The Group operates defined contribution schemes at PHFC and
Momart, and at FIC, employees are enrolled in the Falkland Islands
Pension Scheme ("FIPS"). The assets of all these schemes are held
separately from those of the Group in independently administered
funds. The amount charged to the income statement represents the
contributions payable to the schemes in respect to the accounting
period.
Defined benefit pension schemes
The Group has one pension scheme providing benefits based on
final pensionable pay, which is unfunded and closed to further
accrual. The Group's net obligation in respect of the defined
benefit pension plan is calculated by estimating the amount of
future benefit that employees have earned in return for their
service in the current and prior periods; that benefit is
discounted to its present value. The liability discount rate is the
yield at the balance sheet date on AA credit-rated bonds that have
maturity dates approximating the terms of the Group's obligations.
The calculation is performed by a qualified actuary using the
projected unit credit method.
The current service cost and costs from settlements and
curtailments are charged against operating profit. Past service
costs are recognised immediately within profit and loss. The net
interest cost on the defined benefit liability for the period is
determined by applying the discount rate used to measure the
defined benefit obligation at the end of the period to the net
defined benefit liability at the beginning of the period. It takes
into account any changes in the net defined benefit liability
during the period. Re-measurements of the defined benefit pension
liability are recognised in full in the period in which they arise
in the statement of comprehensive income.
Trade and other receivables
Trade receivables are carried at amortised cost, less provision
for impairment. Any change in their value through impairment or
reversal of impairment is recognised in the income statement.
Trade and other payables
Trade and other payables are stated at their cost less payments
made.
Dividends
Dividends unpaid at the balance sheet date are only recognised
as liabilities at that date to the extent that they are
appropriately authorised and are no longer at the discretion of the
Company.
Cash and cash equivalents
Cash and cash equivalents in the balance sheet comprise cash
balances and call deposits with an original maturity of three
months or less.
Interest-bearing borrowings
Interest-bearing borrowings are recognised initially at fair
value less directly attributable transaction costs. Subsequent to
initial recognition, interest-bearing borrowings are stated at
amortised cost with any difference between cost and redemption
value being recognised in the income statement over the period of
the borrowings on an effective interest basis.
Taxation
Taxation on the profit or loss for the year comprises current
and deferred tax. Current tax is recognised in the income
statement, except to the extent that it relates to items recognised
directly in equity, in which case it is recognised directly in
equity or in other comprehensive income. Current tax is the
expected tax payable on the taxable income for the year, using tax
rates enacted, or substantively enacted at the balance sheet date,
and any adjustment to tax payable in respect of previous years.
Deferred tax is provided using the balance sheet method,
providing for temporary differences between the carrying amounts of
assets and liabilities for financial reporting purposes and the
amounts used for taxation purposes. The following temporary timing
differences are not recognised:
-- Goodwill not deductible for tax purposes; and
-- Initial recognition of assets or liabilities in a transaction
that is not a business combination and that affects neither
accounting nor taxable profits.
-- Temporary differences related to investments in subsidiaries,
to the extent that it is probable that they will not reverse in the
foreseeable future.
A deferred tax asset is recognised to the extent that it is
probable that future taxable profits will be available against
which the temporary differences can be utilised. Deferred tax
assets are reviewed at each reporting date and are reduced to the
extent that it is no longer probable that the related tax benefit
will be realised.
Deferred tax is recognised at the tax rates that are expected to
be applied to the temporary differences when they reverse, based on
rates that have been enacted or substantially enacted by the
reporting date.
Cash-flow hedges
The effective portions of changes in the fair values of
derivatives that are designated and qualify as cash-flow hedges are
recognised in equity. The gain or loss to any ineffective portion
is recognised immediately in the income statement. Amounts
accumulated in the hedging reserve are recycled to the income
statement in the periods when the hedged items will affect profit
or loss.
Revenue recognition
IFRS 15 Revenue, requires revenue to be recognised under a
'five-step' approach when a customer obtains control of goods or
services in line with the performance obligations identified on the
contract. Under IFRS 15, revenue recognition must reflect the
standard's five-step approach which requires the following:
-- Identification of the contract with the customer;
-- Identification of the performance obligations in the contract;
-- Determination of the transaction price;
-- Allocation of the transaction price to the performance obligations;
-- Recognition of the revenue when (or as) each performance obligation is satisfied.
In accordance with the standard, revenue is recognised, net of
discounts, VAT, Insurance Premium Tax and other sales related
taxes, either at the point in time a performance obligation has
been satisfied or over time as control of the asset associated with
the performance obligation is transferred to the customer.
For all contracts identified, the Group determines if the
arrangement with the customer creates enforceable rights and
obligations. For contracts with multiple components to be
delivered, such as the inbound and outbound leg of moving art
exhibitions as well as delivering, handling and administration
services, management applies judgement to consider whether those
promised goods and services are:
-- distinct - to be accounted for as separate performance obligations;
-- not distinct - to be combined with other promised goods or
services until a bundle is identified that is distinct; or
-- part of a series of distinct goods and services that are
substantially the same and have the same pattern of transfer to the
customer.
At contract inception the total transaction price is estimated,
being the amount to which the Group expects to be entitled and to
which it has present enforceable rights under the contract. Once
the total transaction price is determined, the Group allocates this
to the identified performance obligations in proportion to their
relative standalone selling prices and revenue is then recognised
when (or as) those performance obligations are satisfied.
Discounts are allocated proportionally across all performance
obligations in the contract unless directly observable evidence
exists that the discount relates to one or more, but not all,
performance obligations.
For each performance obligation, the Group determines if revenue
will be recognised over time or at a point in time. For each
performance obligation to be recognised over time, the Group
applies a revenue recognition method that faithfully depicts the
Group's performance in transferring control of the goods or
services to the customer. This decision requires assessment of the
nature of the goods or services that the Group has promised to
transfer to the customer. The Group applies an appropriate
methodology, typically based on the expected profile of the
deferral event (for example claims cost through the policy term or
time elapsed).
Revenue streams of the Group
The revenues streams of the Group have been analysed and
considered in turn.
Retail revenues arising from the sale of goods and recognised at
the point of sale
The retail revenues in the Falkland Islands arise from the sale
of goods in the retail outlets and the sale of vehicles and parts
at Falklands 4x4, are recognised at the point of sale, which is
usually at the till, when the goods are paid for by cash or credit
or debit card.
Housing revenue is generally recognised on completion of the
single performance obligation of supplying a house, once the keys
are handed over on legal completion. However, larger, multi-house
contracts such as the construction of houses for FIG are treated as
long term construction contracts as detailed below.
Revenue from cars sold is recognised in full when the asset is
physically transferred and the benefits and risks of ownership pass
to the customer.
Revenues arising from the rendering of services and recognised
over a period of time
Transportation and storage of art
In the UK, Momart earns revenue from moving or installations or
de-installations of artwork. The revenue is invoiced when the
installation or de-installation is complete, however at each month
end accrued revenue is recognised f or fine art exhibition
logistical work undertaken, where the costs incurred and the costs
to complete the transaction can be measured reliably, and the
amount of revenue attributable to the stage of completion of a
performance obligation is recognised on the basis of the incurred
percentage of anticipated cost. This, in the opinion of the
directors, is the most appropriate proxy for the stage of
completion. Momart classifies this income into either Exhibitions
revenue, which includes the income from UK and International
museums, or Gallery Services revenue, which includes revenue earned
from art galleries and auction houses such as Sothebys, where the
inbound and outbound exhibitions installations and dispersal are
provided as one quote to customers, but are fulfilled up to several
months apart. The allocation of revenue in the inbound
installations and outbound dispersals has been reviewed. Momart
operates a very transparent method of setting out prices in both
quotes and invoices, allocating revenues per trips, as these are
considered separate obligations.
Storage income in Momart is charged based on the actual volume
occupied, at an agreed weekly rate per cubic metre. Clients can be
invoiced weekly, monthly or quarterly, and income is recognised as
it is accrued, on a monthly or weekly basis.
Long term construction contracts
Revenue from long term construction contracts is recognised
under IFRS 15 by the application of the input method using the
direct measurement of the goods or services provided to date,
including materials and labour. Un-invoiced amounts are presented
as contract assets.
Where a modification is required, the Group assesses the nature
of the modification and whether it represents a separate
performance obligation required to be satisfied by the Group or
whether it is a modification to the existing performance
obligation. No margin is recognised until the outcome of the
contract can be estimated with reasonable certainty. Revenue in
respect of variations to contracts and incentive payments is
recognised when there is an enforceable right to payment and it is
highly probable it will be agreed by the customer. Variation
orders, claims and liquidated damages, are re-assessed at each
reporting period using the expected outcome approach. If it were
considered probable that total contract costs would exceed total
contract revenue, the expected loss would be recognised as an
expense immediately.
Other revenues recognised over time
Other revenues recognised over time, include rental income from
the rental property portfolio at FIC, which is recognised monthly
as the properties are occupied, and car hire income, which is
recognised over the hire period.
Revenues arising from the rendering of services and recognised
immediately
The majority of revenues recognised immediately from the
rendering of services arise from the ferry fare income, which is
taken on a daily basis for daily tickets. Season tickets are
available, however the revenue earned from these is negligible as
most passengers purchase daily tickets. Quarterly and monthly
season tickets are recognised over the life of the ticket with a
balance held in deferred income.
Other revenues arising from the rendering of services and
recognised immediately include:
-- Agency services provided to cruise or fishing vessels for
supplying provisions, trips to and from the airport and medical
evacuations;
-- Third party port services;
-- Car maintenance revenue, which generally arises on short term jobs;
-- Penguin travel income earned from tourist tours and airport
trips, which is recognised on the day of the tour or airport
trip;
-- Third party freight revenue, which is recognised when the
ship arrives in the Falkland Islands;
-- 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
Loans and receivables, which include trade debtors and hire
purchase receivables, are held initially at cost. IFRS 9 mandates
the use of an expected credit loss model to calculate impairment
losses rather than an incurred loss model, and therefore it is not
necessary for a credit event to have occurred before credit losses
are recognised. The Group has elected to measure loss allowances
utilising probability-weighted estimates of credit losses for trade
receivables at an amount equal to lifetime expected credit losses.
A detailed review has been conducted of the five year history of
impairment of the Group's financial assets, which primarily
comprise its portfolio of current trade receivables at Momart and
FIC, and the hire purchase debtors in FIC, these assets all have a
consistent history of low levels of impairment, the inclusion of
specific expected credit loss considerations did not have a
material impact on transition.
Hedging
The Group has one open hedging relationships at 31 March 2021,
an interest swap taken out in July 2019 to hedge the 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. 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 2021 was
GBP13,000,000 (2020: GBP13,500,000). The accrual held in respect of
this swap at the year-end was GBP234,000 (2020: GBP526,000). A
second swap was taken out in October 2015 to hedge the bank loans
drawn down to fund the Harbour Spirit ferry purchase. The swap had
an initial notional value of GBP3.6 million, with interest payable
at the difference between 1.325% and the Bank of England Base rate.
This interest rate swap notional value decreased at GBP36,250 per
month over five years until September 2020 when it expired.
IFRS 9 introduces three hedge effectiveness requirements:
IFRS 9 requires the existence of an economic relationship
between the hedged item and the hedging instrument. There must be
an expectation that the value of the hedging instrument and the
value of the hedged item would move in the opposite direction as a
result of the common underlying or hedged risk. As the LIBOR and
base rates increase, the interest payable on the loans will
increase, and the interest payable on the swaps will fall.
The hedge accounting model is based on a general notion of there
being an offset between the changes of the swap as the hedging
instrument and those of the hedged bank loan, both of these
balances will be affected by the base rate movements, so it has
been concluded the offset is justifiable. The size of the hedging
instrument and the hedged items must be similar for the hedge to be
effective.
IFRS 16 Leases
The Group has applied IFRS 16 in accounting for leases as
follows.
At inception of a contract, the Group assesses whether it is, or
contains, a lease. A contract is, or contains, a lease if the
contract conveys the right to control the use of an identified
asset for a period of time in exchange for consideration. To assess
whether a contract conveys the right to control the use of an
identified asset, the Group uses the definition of a lease in IFRS
16.
IFRS 16 determines whether a contract contains a lease on the
basis of whether the customer has the right to control the use of
an identified asset for a period of time in exchange for
consideration. This is in contrast to the focus on 'risks and
rewards' in IAS 17. The Group applies the definition of a lease and
related guidance set out in IFRS 16 to all lease contracts entered
into or changed on or after 1 January 2019 (whether it is a lessor
or a lessee in the lease contract).
(a) As a lessee
The Group:
a) Recognises right-of-use assets and lease liabilities in the
consolidated statement of financial position, initially measured at
the present value of the future lease payments;
b) Recognises depreciation of right-of-use assets and interest
on lease liabilities in the consolidated statement of profit or
loss;
c) Separates the total amount of cash paid into a principal
portion (presented within financing activities) and interest
(presented within financing activities) in the consolidated
statement of cash flows.
Lease incentives (e.g. rent-free periods) are recognised as part
of the measurement of the right-of-use assets and lease
liabilities.
For short-term leases (lease term of 12 months or less) and
leases of low-value assets (which includes tablets and personal
computers, small items of office furniture and telephones), the
Group has opted to recognise a lease expense on a straight-line
basis as permitted by IFRS 16. This expense is presented within
'other expenses' in profit or loss.
Right-of-use assets are tested for impairment in accordance with
IAS 36 as specified by IFRS16.
(b) As a lessor
In accordance with IFRS 16, leases where the Group is a lessor
continue to be classified as either finance leases or operating
leases and are accounted for differently.
The hire purchase receivables in FIC are reported as
receivables, the goods are removed from the balance sheet when the
finance lease agreements are signed and instead a receivable due
from the customer is recorded, as the title of the vehicles, or
other goods, such as furniture, white goods or other electrical
items, are deemed to have passed to the customer at that point.
Hire purchase debtors are shown in the balance sheet under
current assets to the extent they are due within one year, and
under non-current assets to the extent that they are due after more
than one year, and are stated at the value of the net investment in
the agreements. Finance lease income is allocated to accounting
periods so as to reflect a constant periodic rate of return on the
Group's net investment outstanding in respect of the leases.
The FIC rental property agreements which are only ever for a maximum
of 12 months, and with titles that will never pass to the customer,
continue to be classified as operating leases. Rental income from
operating leases is recognised on a straight-line basis over the term
of the relevant lease. Initial direct costs incurred in negotiating
and arranging an operating lease are added to the carrying amount
of the leased asset and recognised on a straight-line basis over the
lease term. The rental property portfolio, which is held for leasing
out under operating leases are included in investment property (where
they constitute land and buildings) or in property, plant and equipment
(where they do not constitute land and buildings) at cost less accumulated
depreciation and impairment losses.
Standards and revisions not yet adopted in the year to 31 March 2021
No standards not yet adopted are expected to have any significant
impact on the financial statements of the Group or Company.
2. Segmental Information Analysis
The Group is organised into three operating segments, and information
on these segments is reported to the chief operating decision maker
('CODM') for the purposes of resource allocation and assessment of
performance. The CODM has been identified as the Board.
The operating segments offer different products and services and are
determined by business type: goods and essential services in the Falkland
Islands, the provision of ferry services and art logistics and storage.
Segment results, assets and liabilities include items directly attributable
to a segment as well as those that can be allocated on a reasonable
basis. Segment capital expenditure is the total cost incurred during
the period to acquire property, plant and equipment and intangible
assets other than goodwill and any other assets purchased through
the acquisition of a business.
2021
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 20,874 1,445 10,259 - 32,578
---------------------------------- ---------- ------------- -------------- ------------ ---------
Segment operating profit
/ (loss) before non-trading
items 1,852 (856) 30 - 1,026
Non-trading items 500 (140) (221) (82) 57
Profit / (loss) before
net financing costs 2,352 (996) (191) (82) 1,083
Finance income - - - - -
Finance expense (68) (329) (484) - (881)
---------------------------------- ---------- ------------- -------------- ------------ ---------
Net finance expense (68) (329) (484) - (881)
---------------------------------- ---------- ------------- -------------- ------------ ---------
Segment profit / (loss)
before tax 2,284 (1,325) (675) (82) 202
---------------------------------- ---------- ------------- -------------- ------------ ---------
Assets and liabilities
Segment assets 29,498 11,411 33,648 5,639 80,196
Segment liabilities (8,687) (10,266) (22,062) (285) (41,300)
Segment net assets 20,811 1,145 11,586 5,354 38,896
---------------------------------- ---------- ------------- -------------- ------------ ---------
Other segment information
Capital expenditure:
Property, plant and
equipment 358 - 540 - 898
Investment properties 702 - - - 702
Computer software - - - - -
---------------------------------- ---------- ------------- -------------- ------------ ---------
Total Capital expenditure 1,060 - 540 - 1,600
---------------------------------- ---------- ------------- -------------- ------------ ---------
Capital expenditure:
cash 1,060 - 151 - 1,211
Capital expenditure:
non-cash - - 389 - 389
---------------------------------- ---------- ------------- -------------- ------------ ---------
Total Capital expenditure 1,060 - 540 - 1,600
---------------------------------- ---------- ------------- -------------- ------------ ---------
Depreciation and amortisation:
Property, plant and
equipment 787 327 461 - 1,575
Investment properties 37 - - - 37
Computer software - - 63 - 63
Right of use assets 29 124 465 - 618
---------------------------------- ---------- ------------- -------------- ------------ ---------
Total Depreciation and
Amortisation 853 451 989 - 2,293
---------------------------------- ---------- ------------- -------------- ------------ ---------
Underlying profit /
(loss )
---------------------------------- ---------- ------------- -------------- ------------ ---------
Segment operating profit
/ (loss) before non-trading
items 1,852 (856) 30 - 1,026
Interest income - - - - -
Interest expense (68) (329) (484) - (881)
Underlying profit / (loss)
before tax 1,784 (1,185) (454) - 145
---------- ------------- -------------- ------------
2020
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 21,671 4,125 18,804 - 44,600
---------------------------------- ---------- ------------- -------------- ------------ ---------
Segment operating profit
before non-trading items 2,121 975 1,469 - 4,565
Non-trading items - (3,979) (3,500) - (7,479)
Profit / (loss) before
net financing costs 2,121 (3,004) (2,031) - (2,914)
Finance income 5 4 4 - 13
Finance expense (69) (344) (456) - (869)
---------------------------------- ---------- ------------- -------------- ------------ ---------
Net finance expense (64) (340) (452) - (856)
---------------------------------- ---------- ------------- -------------- ------------ ---------
Segment profit / (loss)
before tax 2,057 (3,344) (2,483) - (3,770)
---------------------------------- ---------- ------------- -------------- ------------ ---------
Assets and liabilities
Segment assets 28,492 10,983 32,462 5,796 77,733
Segment liabilities (9,208) (8,834) (20,331) (568) (38,941)
Segment net assets 19,284 2,149 12,131 5,228 38,792
---------------------------------- ---------- ------------- -------------- ------------ ---------
Other segment information
Capital expenditure:
Property, plant and
equipment 1,343 65 1,363 - 2,771
Investment properties 1,351 - - - 1,351
Computer software - - 27 - 27
---------------------------------- ---------- ------------- -------------- ------------ ---------
Total Capital expenditure 2,694 65 1,390 - 4,149
---------------------------------- ---------- ------------- -------------- ------------ ---------
Capital expenditure:
cash 2,685 65 638 - 3,388
Capital expenditure:
non-cash 9 - 752 - 761
---------------------------------- ---------- ------------- -------------- ------------ ---------
Total Capital expenditure 2,694 65 1,390 - 4,149
---------------------------------- ---------- ------------- -------------- ------------ ---------
Depreciation and amortisation:
Property, plant and
equipment 564 459 840 - 1,863
Investment properties 132 - - - 132
Computer software - - 68 - 68
Total Depreciation and
Amortisation 696 459 908 - 2,063
Impairment of goodwill - 3,979 3,500 - 7,479
Total Depreciation &
impairment 696 4,438 4,408 - 9,542
---------------------------------- ---------- ------------- -------------- ------------ ---------
Underlying profit
Segment operating profit
before non-trading items 2,121 975 1,469 - 4,565
Interest income 5 4 4 - 13
Interest expense (69) (344) (456) - (869)
Underlying profit before
tax 2,057 635 1,017 - 3,709
---------- ------------- -------------- ------------
The GBP5,639,000 (2020: GBP5,796,000) unallocated assets above
include GBP5,462,000 (2020: GBP5,766,000) of cash and GBP177,000
(2020: GBP30,000) of prepayments and other debtors held in FIH
group plc.
The GBP285,000 (2020: GBP568,000) unallocated liabilities above
consist of accruals and tax balances held within FIH group plc.
3. Geographical analysis
The tables below analyse revenue and other information by
geography:
2021
United Falkland
Kingdom Islands Total
GBP'000 GBP'000 GBP'000
Revenue (by source) 11,704 20,874 32,578
------------------------------------------------ --------- --------- --------
Assets and Liabilities:
Non-current segment assets, excluding deferred
tax 36,852 15,752 52,604
------------------------------------------------ --------- --------- --------
Capital expenditure: cash 151 1,060 1,211
------------------------------------------------ --------- --------- --------
2020
United Falkland
Kingdom Islands Total
GBP'000 GBP'000 GBP'000
Revenue (by source) 22,929 21,671 44,600
------------------------------------------------ --------- --------- --------
Assets and Liabilities:
Non-current segment assets, excluding deferred
tax 37,826 15,456 53,282
------------------------------------------------ --------- --------- --------
Capital expenditure: cash 703 2,685 3,388
------------------------------------------------ --------- --------- --------
4. Revenue
2021
Sale of goods, Rendering of
recognised Rendering of services, provided
immediately services: recognised over a period Total
on sale immediately of time Revenue
GBP'000 GBP'000 GBP'000 GBP'000
Falkland Islands
Retail sales 9,701 - - 9,701
Automotive sales 2,016 419 321 2,756
Construction 2,069 - 3,276 5,345
Support Services - 1,414 839 2,253
Rental property income - - 819 819
------------------------- --------------- ---------------------- -------------------- ---------
FIC (Falkland Islands) 13,786 1,833 5,255 20,874
PHFC (Portsmouth) - 1,445 - 1,445
Art logistics and
storage - - 10,259 10,259
------------------------- --------------- ---------------------- -------------------- ---------
Total Revenue 13,786 3,278 15,514 32,578
------------------------- --------------- ---------------------- -------------------- ---------
2020
Sale of goods, Rendering of
recognised Rendering of services, provided
immediately services: recognised over a period Total
on sale immediately of time Revenue
GBP'000 GBP'000 GBP'000 GBP'000
Falkland Islands
Retail sales 10,014 - - 10,014
Automotive sales 2,187 631 369 3,187
Construction 3,141 - 1,874 5,015
Support Services - 2,755 31 2,786
Rental property income - - 669 669
------------------------- --------------- ---------------------- -------------------- ---------
FIC (Falkland Islands) 15,342 3,386 2,943 21,671
PHFC (Portsmouth) - 4,125 - 4,125
Art logistics and
storage - - 18,804 18,804
------------------------- --------------- ---------------------- -------------------- ---------
Total Revenue 15,342 7,511 21,747 44,600
------------------------- --------------- ---------------------- -------------------- ---------
5. Non-trading items
2021 2020
GBP'000 GBP'000
Profit/ (loss) before tax as reported 202 (3,770)
Non-trading items:
Restructuring costs 443 -
Other credits (500) -
Impairment of goodwill - 7,479
---------------------------------------- -------- --------
Underlying profit before tax 145 3,709
---------------------------------------- -------- --------
Restructuring costs comprise people related costs including
redundancy.
Other credits relate to derecognition of historic liabilities,
which were previously included within accruals, on the basis that
the amounts are no longer enforceable.
Tax on non-trading items
There has not been any tax impact from the impairment of
goodwill in the prior year.
6. Expenses and auditor's remuneration
The following expenses/ (income)
have been included in the profit
and loss Group Company
2021 2020 2021 2020
GBP'000 GBP'000 GBP'000 GBP'000
Direct operating expenses of rental
properties 393 380 - -
Depreciation 2,230 1,995 204 204
Amortisation of computer software 63 68 - -
Foreign currency loss / (gain) 3 (5) - -
Impairment of goodwill - 7,479 - -
Expected credit loss on trade and
other receivables 39 31 - -
Cost of inventories recognised
as an expense 10,226 12,608 - -
COVID-19 government funding (1,760) - - -
------------------------------------- -------- -------- -------- --------
Auditor's remuneration 2021 2020
GBP'000 GBP'000
Audit of these financial statements 41 40
Audit of subsidiaries' financial statements pursuant
to legislation 129 110
Tax advisory services - -
Other assurance services 5 -
------------------------------------------------------ -------- --------
Total auditor's remuneration 175 150
------------------------------------------------------ -------- --------
Amounts paid to the Company's auditors and their associates in
respect of services to the Company, other than the audit of the
Company's financial statements, have not been disclosed as the
information is required instead to be disclosed on a consolidated
basis.
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
2021 2020 2021 2020
PHFC 31 35 - -
Falkland Islands: in Stanley 189 180 - -
in UK 7 7 - -
Art logistics & storage 99 140 - -
Head office 7 6 7 6
-------------------------------------------- ---------- ---------- ---------- ----------
Total average staff numbers 333 368 7 6
-------------------------------------------- ---------- ---------- ---------- ----------
The aggregate payroll cost of these persons was as follows:
Group Company
2021 2020 2021 2020
GBP'000 GBP'000 GBP'000 GBP'000
Wages and salaries 11,752 12,771 471 571
Share-based payments (see note 24) 1 97 1 48
Social security costs 821 939 59 76
Contributions to defined contribution
plans (see note 23) 498 527 10 19
--------------------------------------- -------- -------- -------- --------
Total employment costs 13,072 14,334 541 714
--------------------------------------- -------- -------- -------- --------
During the year, the Group made use of support schemes from the
UK Government and FIG to partially mitigate the loss of profit
caused by the impact of COVID-19. The Coronavirus Job Retention
Scheme ("CJRS"), the UK Government's support measure relating to
employment, and FIG's equivalent, the Job Retention (Furlough)
Scheme ("JRFS") provided grants to cover the cost of employees who
were furloughed, with payments available of up to 80% of wages,
subject to a maximum of GBP2,500 per employee per month. Amounts
received under these schemes are classified as government grants
and are accounted for in accordance with IAS 20 Government Grants.
Such grants totalling GBP1,760,000 for the year ended 31 March 2021
(2020: GBPnil), are recognised in the Income Statement in the
period in which the associated costs for which the grants are
intended to compensate are incurred, and are presented as an offset
against those associated costs.
Details of audited directors' remuneration are provided in the
Directors' Report, which forms part of these audited financial
statements, under the heading 'Details of Directors' Remuneration
and Emoluments'.
8. Finance income and expense
2021 2020
GBP'000 GBP'000
Bank interest receivable - 13
Total financial income - 13
---------------------------- ------- --------
2021 2020
GBP'000 GBP'000
Interest payable on bank loans (469) (464)
Net interest cost on the FIC defined benefit pension
scheme liability (64) (65)
Lease liabilities finance charge (348) (340)
Total finance expense (881) (869)
-------------------------------------------------------- -------- --------
9. Taxation
Recognised in the income statement
2021 2020
GBP'000 GBP'000
Current tax (credit)/expense
Current year (52) 480
Adjustments for prior years - 13
----------------------------------------- -------- --------
Current tax (credit)/expense (52) 493
Deferred tax expense
Origination and reversal of temporary
differences 258 376
Change in UK tax rate to 19% (12) 144
Adjustments for prior years (1) (55)
Deferred tax expense (see note
17) 245 465
----------------------------------------- -------- --------
Total tax expense 193 958
----------------------------------------- -------- --------
Reconciliation of the effective tax rate
2021 2020
GBP'000 GBP'000
Profit / (loss) on ordinary activities
before tax 202 (3,770)
--------------------------------------------- -------- --------
Tax using the UK corporation tax rate of
19% (2020: 19%) 39 (716)
Expenses not deductible for tax purposes 56 85
Impairment of goodwill not deductible for
tax purposes - 1,421
Effect of increase in rate of deferred
tax - 199
Effect of higher tax rate overseas 99 11
Adjustments to tax charge in respect of
previous periods (1) (42)
Total tax expense 193 958
--------------------------------------------- -------- --------
Tax recognised directly in equity and other comprehensive
income
2021 2020
GBP'000 GBP'000
Deferred tax on effective portion of changes
in fair value 58 102
Movement on deferred tax asset relating
to the pension scheme (71) (35)
Deferred tax on other financial liabilities (30) -
Deferred tax (credit) / expense recognised directly
in other comprehensive income (43) 67
Deferred tax on IFRS 16 transitional adjustment - 34
------------------------------------------------------ -------- --------
Deferred tax (credit) / expense recognised directly
in equity (43) 101
-------------------------------------------------------- -------- --------
In the UK, deferred tax has been calculated at 19% (2020:
19%).
The deferred tax assets and liabilities in FIC have been
calculated at the Falkland Islands' tax rate of 26%.
10. Earnings per share
The calculation of basic earnings per share is based on profits
on ordinary activities after taxation, and the weighted average
number of shares in issue in the period, excluding shares held
under the Employee Share Ownership Plan ('ESOP') (see note 25).
The calculation of diluted earnings per share is based on
profits on ordinary activities after taxation and the weighted
average number of shares in issue in the period, excluding shares
held under the ESOP, adjusted to assume the full issue of share
options outstanding, to the extent that they are dilutive.
2021 2020
GBP'000 GBP'000
Profit/ (loss) on ordinary activities after taxation 9 (4,728)
------------------------------------------------------ -------- --------
2021 2020
Number Number
Weighted average number of shares in issue 12,470,827 12,504,000
Less: shares held under the ESOP - (1,633)
------------------------------------------------------ ----------- -----------
Average number of shares in issue excluding the ESOP 12,470,827 12,502,367
Maximum dilution with regards to share options 281,490 181,663
------------------------------------------------------ ----------- -----------
Diluted weighted average number of shares 12,752,317 12,684,030
------------------------------------------------------ ----------- -----------
2021 2020
Basic earnings per share 0.1p -37.8p
Diluted earnings per share 0.1p -37.8p
------------------------------------------------------ ----------- -----------
The diluted earnings per share for the prior year are the same
as the basic earnings, as IAS 33 states that potential shares shall
only be treated as dilutive when, and only when, their conversion
to ordinary shares would decrease earnings per share or increase
loss per share from continuing operations.
To provide a comparison of earnings per share on underlying
performance, the calculation below sets out basic and diluted
earnings per share based on underlying profits.
Earnings per share on underlying profit 2021 2020
GBP'000 GBP'000
Underlying profit before tax (see note 5) 145 3,709
Underlying taxation (147) (958)
-------------------------------------------------------- ----------- -----------
Underlying (loss)/profit after tax (2) 2,751
Effective tax rate -101.4% 25.8%
Weighted average number of shares in issue excluding
the ESOP (from above) 12,470,827 12,502,367
Diluted weighted average number of shares (from above) 12,752,317 12,684,030
Basic earnings per share on underlying profit 0.0p 22.0p
Diluted earnings per share on underlying profit 0.0p 21.7p
-------------------------------------------------------- ----------- -----------
11. Intangible assets
Computer Brand
Software name Goodwill Total
GBP'000 GBP'000 GBP'000 GBP'000
Cost :
At 1 Apr 2019 537 2,823 11,576 14,936
Additions 27 - - 27
At 31 March 2020 564 2,823 11,576 14,963
Additions - - - -
--------------------------- ---------- -------- --------- --------
At 31 March 2021 564 2,823 11,576 14,963
----------------------------- ---------- -------- --------- --------
Accumulated amortisation:
At 1 Apr 2019 402 785 1,983 3,170
Amortisation 68 - - 68
Impairment - - 7,479 7,479
At 31 March 2020 470 785 9,462 10,717
Amortisation 63 - - 63
Impairment - - - -
At 31 March 2021 533 785 9,462 10,780
----------------------------- ---------- -------- --------- --------
Net book value:
At 1 April 2019 135 2,038 9,593 11,766
----------------------------- ---------- -------- --------- --------
At 31 March 2020 94 2,038 2,114 4,246
----------------------------- ---------- -------- --------- --------
At 31 March 2021 31 2,038 2,114 4,183
----------------------------- ---------- -------- --------- --------
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 Ferry Falkland
and Storage Services Islands Total
GBP'000 GBP'000 GBP'000 GBP'000
Goodwill at 1 April 2019 5,577 3,979 37 9,593
------------------------------- -------------- ---------- --------- --------
Goodwill at 31 March 2020 2,077 - 37 2,114
------------------------------- -------------- ---------- --------- --------
Goodwill at 31 March 2021 2,077 - 37 2,114
------------------------------- -------------- ---------- --------- --------
Impairment
The Group tests material goodwill annually for impairment or
more frequently if there are indications that goodwill and/or
indefinite life assets might be impaired. An impairment test is a
comparison of the carrying value of the assets of a CGU, based on a
value-in-use calculation, to their recoverable amounts. Goodwill is
impaired when the recoverable amount is less than the carrying
value.
During the year ended 31 March 2020, following the review for
impairment, the goodwill of the Ferry Services CGU was deemed to be
fully impaired as passenger numbers had fallen significantly due to
COVID-19 and working practices, and therefore commuter transport
services, were likely to be affected beyond the short term. The Art
Logistics and Storage CGU also impaired its goodwill by GBP3.5
million as revenue had fallen significantly due to COVID-19 and art
logistics services were likely to be affected beyond the short
term. Following these impairments in the prior year, the only
material goodwill and indefinite life assets remaining at 31 March
2021 relate to the Art Logistics and Storage CGU. No further
impairment charge was deemed necessary following the review for
impairment in the year ended 31 March 2021.
Given the continued uncertainty as a result of COVID-19 and the
possible longer-term impact on passenger numbers impacting the
Ferry Services CGU, the directors consider that there is a
potential indicator of impairment of right to use assets and ships
associated with this CGU (see note 12). An impairment review has
therefore been performed for the Ferry Services CGU in addition to
the Art Logistics and Storage CGU and no impairment charge was
deemed necessary.
As part of testing goodwill and indefinite life intangibles for
impairment, forecast operating cash flows for the five years ending
31 March 2022-2026 and then to perpetuity have been used to assess
the value-in-use of the Art Logistics and Storage CGU. For testing
right to use assets and ships associated with the Ferry Services
CGU, a forty-year model has been used, including forecast operating
cash flows for the four years ending 31 March 2022-2025, with high
level assumptions applied after the fourth year. These forecasts
represent the best estimate of future performance of the CGUs based
on past performance and expectations for the market development of
the CGU. A forty-year model has been considered to be appropriate
for the Ferry Services CGU, as this is the life of the lease
associated with the right to use asset.
A number of key assumptions are used for impairment testing.
These key assumptions are made by management reflecting past
experience combined with their knowledge as to future performance
and relevant external sources of information.
Discount rates
Within impairment testing models, the cash flows of the Art
Logistics and Storage CGU have been discounted using a pre-tax
discount rate of 14.2% (2020: 12.9%), and the cash flows of the
Ferry Services CGU have been discounted using a pre-tax discount
rate of 9.7% (2020: 8.5%). Management have determined that each
rate is appropriate as the risk adjustment applied within the
discount rate reflects the risks inherent to each CGU, based on the
industry and geographical location it is based within.
Long term growth rates
Long term growth rates of 2% (2020: 2%) have been used for the
Art Logistics and Storage CGU as part of the impairment testing
model. As noted above, a forty-year model has been used to assess
the Ferry Services CGU. For the period following the five year
forecast, high level assumptions based on historic experience have
been applied, including a gradual decline in passenger numbers
which is mitigated by fare increases.
Sensitivity to changes in assumptions
Using a discounted cash flow methodology necessarily involves
making numerous estimates and assumptions regarding growth,
operating margins, tax rates, appropriate discount rates, capital
expenditure levels and working capital requirements. These
estimates will likely differ from future actual results of
operations and cash flows, and it is possible that these
differences could materially impact the forecast cashflows.
However, for the Ferry Services CGU, the directors do not consider
that there are different reasonably possible outcomes that would
lead to a material impairment.
Assumptions specific to Ferry Services CGU
As a result of the expected impact on commuter services arising
from the current COVID-19 pandemic, in the medium to long term, a
slight decrease has been forecast in cash flows year on year
compared to pre-pandemic levels, in line with expected declines in
passenger numbers. A slow recovery is expected in the medium term,
but the impact of COVID-19 is likely to continue in the long-term,
with increased numbers of employees working from home, reducing the
number of commuters using the ferry which is the most significant
factor affecting future cash flows.
While the directors believe in the assumptions used in this
impairment test, there remains some uncertainty around the
timescale of recovery from the current COVID-19 pandemic, and
accordingly a scenario was performed which assessed a 10% reduction
in business cashflows as a result of supressed passenger numbers in
years 3 to 5 as there is a risk that the impact of COVID-19 may
continue in the medium to long-term, with higher than expected
numbers of employees working from home, reducing the number of
commuters using the ferry. This scenario has been combined with a
reduction in forecast fare increases of 1.5% per annum. Should
these circumstances materialise, no impairment would be required.
An additional scenario was performed which increased the pre-tax
discount rate by 1.0% and should this materialise, no further
impairment would be required.
The key assumptions made in the estimation of future cash flows
of the Ferry Services CGU relate to passenger numbers, the average
fare yield per passenger and operating costs.
Assumptions specific to Arts Logistics and Storage CGU
Cash flows were projected based on approved budgets and plans
over the forecast period, with a long-term growth rate of 2%. The
key assumptions made in the estimation of future cashflows are in
relation to future revenue and the extent to which income will
recover from the effects of the pandemic, and the timing of that
recovery. The base case forecasts assume that the business will
recover to pre-pandemic levels within two years.
While the directors believe in the assumptions used in this
impairment test, there remains some uncertainty around the
timescale of recovery from the current COVID-19 pandemic, and
accordingly a scenario was performed which assessed a 10% reduction
in profits in years 3 to 5 as it is possible that revenues of the
CGU could be impacted into the medium-term by higher than
anticipated cuts in government spending, resulting in less
frequent, less complex exhibitions. Should this materialise, no
impairment would be required. An additional scenario was performed
which increased the pre-tax discount rate by 0.5% and should this
materialise, no impairment would be required. A sensitivity has
also been modelled which assumes a reduction in profits over the
five year forecast period to reflect the scenario that the business
does not return to pre-pandemic levels of trading until the end of
this period and have combined this with a reduction in forecast
margins by 1% to reflect the fact that cost savings currently
achieved may not be sustainable. Whilst the directors consider this
combined sensitivity to be unlikely, in the event of this scenario
an impairment of goodwill of GBP300,000 would result.
12. Property, plant and equipment
Group
Right Freehold Long leasehold Vehicles,
to use Land & Land and plant and
assets buildings buildings Ships equipment Total
GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000
Cost:
At 1 April
2019 - 27,574 7,831 6,859 9,654 51,918
IFRS 16 transition 3,537 - - - - 3,537
Additions in
year 1,217 124 81 18 1,331 2,771
Transfer to
stock - - - - (196) (196)
Reclassification
of leased assets 5,661 - (5,089) - (572) -
Disposals - - (112) - (106) (218)
At 31 March
2020 10,415 27,698 2,711 6,877 10,111 57,812
Additions in
year 389 - 204 - 305 898
Disposals (28) (50) - - (830) (908)
At 31 March
2021 10,776 27,648 2,915 6,877 9,586 57,802
--------------------- -------------- ----------- --------------- -------- ----------- --------
Accumulated depreciation:
At 1 April
2019 - 2,826 1,703 2,304 6,421 13,254
IFRS 16 transition 1,230 - - - - 1,230
Charge for
the year 527 506 71 244 515 1,863
Transfer to
stock - - - - (107) (107)
Reclassification
of leased assets 1,075 - (906) - (169) -
Disposals - - (51) - (89) (140)
--------------------- -------------- ----------- --------------- -------- ----------- --------
At 31 March
2020 2,832 3,332 817 2,548 6,571 16,100
Charge for
the year 618 388 236 242 709 2,193
Disposals (22) - - - (830) (852)
--------------------- -------------- ----------- --------------- -------- ----------- --------
At 31 March
2021 3,428 3,720 1,053 2,790 6,450 17,441
--------------------- -------------- ----------- --------------- -------- ----------- --------
Net book value:
At 1 April
2019 - 24,748 6,128 4,555 3,233 38,664
--------------------- -------------- ----------- --------------- -------- ----------- --------
At 31 March
2020 7,583 24,366 1,894 4,329 3,540 41,712
--------------------- -------------- ----------- --------------- -------- ----------- --------
At 31 March
2021 7,348 23,928 1,862 4,087 3,136 40,361
--------------------- -------------- ----------- --------------- -------- ----------- --------
Right to use assets
Group
Long leasehold
Short leasehold Pontoon Momart Office
lease lease Trucks Equipment Total
GBP'000 GBP'000 GBP'000 GBP'000 GBP'000
Cost:
At 1 April 2019 - - - - -
IFRS 16 transition 2,384 1,144 - 9 3,537
Additions in year 752 - 456 9 1,217
Reclassification from
property, plant and
equipment - 5,089 572 - 5,661
At 31 March 2020 3,136 6,233 1,028 18 10,415
Additions in
year - - 389 - 389
Disposals - - (28) - (28)
At 31 March
2021 3,136 6,233 1,389 18 10,776
-------------------- ---------- ---------------- --------------- -------- ----------- --------
Accumulated
depreciation:
At 1 April 2019 - - - - -
IFRS 16 transition 1,067 161 - 2 1,230
Charge for the year 299 124 100 4 527
Reclassification from
property, plant and
equipment - 906 169 - 1,075
----------------------- ------- ---------------- --------------- -------- ----------- --------
At 31 March 2020 1,366 1,191 269 6 2,832
Charge for
the year 303 124 182 9 618
Disposals - - (22) - (22)
--------------------- ----- -------------------- --------------- -------- ----------- --------
At 31 March
2021 1,669 1,315 429 15 3,428
--------------------- ----- -------------------- --------------- -------- ----------- --------
Net book value:
At 31 March 2020 1,770 5,042 759 12 7,583
At 31 March 2021 1,467 4,918 960 3 7,348
----------------------- ------- ---------------- --------------- -------- ----------- --------
During the year to 31 March 2021, Momart acquired two trucks
financed by two hire purchase loans totalling GBP389,000.
The Company has no tangible fixed assets, other than the
investment property purchased in December 2018, which is included
within Investment Property (note 13).
13. Investment properties
Group
Residential
and commercial Freehold
property land Total
GBP'000 GBP'000 GBP'000
Cost:
At 1 April 2019 5,345 761 6,106
Additions in year 1,330 21 1,351
At 31 March 2020 6,675 782 7,457
Additions in year 653 49 702
----------------------------- ---------------- --------- --------
At 31 March 2021 7,328 831 8,159
----------------------------- ---------------- --------- --------
Accumulated depreciation:
At 1 April 2019 867 - 867
Charge for the year 132 - 132
At 31 March 2020 999 - 999
Charge for the year 37 - 37
At 31 March 2021 1,036 - 1,036
----------------------------- ---------------- --------- --------
Net book value:
At 1 April 2019 4,478 761 5,239
----------------------------- ---------------- --------- --------
At 31 March 2020 5,676 782 6,458
At 31 March 2021 6,292 831 7,123
----------------------------- ---------------- --------- --------
The investment properties, held at cost, comprise land, plus
residential and commercial property held for rental in the Falkland
Islands.
Estimated Fair Value
Group
2021 2020
GBP'000 GBP'000
Estimated fair value:
Freehold land 2,177 2,128
Properties available for rent 8,470 7,251
Properties under construction 472 624
At 31 March 11,119 10,003
-------------------------------------- -------- --------
Uplift on net book value:
Freehold land 1,346 1,346
Properties available for rent 2,650 2,199
Properties under construction - -
----------------------------------- -------- --------
At 31 March 3,996 3,545
-------------------------------------- -------- --------
Number of rental properties
Available for rent 75 65
Under construction 7 10
Undeveloped freehold land (acres) 700 700
-------------------------------------- -------- --------
At 31 March 2021, the fair value of this property portfolio was
estimated at GBP11.1 million (2020: GBP10.0 million) and included
GBP2.2 million of land, GBP8.5 million of properties available for
rent and GBP0.5 million of properties under construction.
A level 3 valuation technique has been applied, using a market
approach to value these properties; the properties have been valued
based on their expected market value after review by the directors
of FIC who are resident in the Falkland Islands and who are
considered to have the relevant knowledge and experience to
undertake the valuation after consideration of current market
prices in the Falkland Islands.
Rental income.
During the year to 31 March 2021, the Group received rental
income of GBP819,000 (2020: GBP669,000) from its investment
properties.
Assets under construction
At 31 March 2021, 7 investment properties were under
construction (2020: 10) with a total cost to date of GBP472,000
(2020: GBP624,000).
Company Commercial
property
GBP'000
Cost:
At 1 April 2019 and 31 March
20 19,642
Additions in year -
At 31 March 2020 and 31 March
2021 19,642
Accumulated depreciation:
At 1 April 2019 60
Charge for the year 209
At 31 March 2020 269
Charge for the year 209
At 31 March 2021 478
Net book value:
At 1 April 2019 19,582
At 31 March 2020 19,373
At 31 March 2021 19,164
The investment property in the Company consists of the five
warehouses leased to Momart, the Group's art handling subsidiary
which were purchased in December 2018.
The directors have reviewed the market value of the Leyton
warehouses. Recent approaches from potential acquirors indicate
that the market value of the site has increased and the directors
are therefore satisfied that there is no indication of
impairment.
14. Investment in subsidiaries
Country of Class of shares Ownership Ownership
incorporation held at at
31 March 31 March
2020 2019
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%
Ordinary shares
Momart International Limited(5) 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.
Company
2021 2020
GBP'000 GBP'000
At 1 April 23,989 27,653
Impairment - (3,713)
Share based payments charge capitalised
into subsidiaries (19) 49
At 31 March 23,970 23,989
--------
The directors note that the net assets of the Company balance
sheet of GBP39.3 million exceed the market capitalisation of the
Group which was circa GBP25.7 million at the balance sheet date and
that this is a potential indicator of impairment of the investments
in subsidiaries. An impairment review has therefore been performed
as at 31 March 2021 using assumptions consistent with those used
for testing impairment of goodwill, indefinite life assets, right
to use assets and ships as described in note 11. In making their
assessment of impairment of investments in subsidiaries, the
directors have also considered the cash flows associated with the
Falkland Islands CGU, using forecast operating cash flows for the
two years ending 31 March 2022-2024 and then to perpetuity with a
growth rate of 2%. No scenarios have been identified in the current
year leading to reasonably possible changes in estimates that would
lead to a material impairment of the Company's investments in
subsidiaries at 31 March 2021. In the prior year, the Company's
investment in Momart was impaired by GBP3,713,000.
15. Investment in Joint Ventures
The Group has one joint venture (South Atlantic Construction
Company Limited, "SAtCO"), which was set up in June 2012 in the
Falkland Islands, with Trant Construction to bid for the larger
infrastructure contracts which were expected to be generated by oil
activity. Both Trant Construction and the FIC contributed 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 2021 2020
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 2021 (2020: none).
The current assets balances above include GBP17,000 of cash
(2020: GBP17,000), GBP4,000 of other debtors (2020: GBP4,000) and
GBP498,000 (2020: GBP498,000) of loans due from SAtCO's parent
companies.
SAtCO had no contingent liabilities or capital commitments as at
31 March 2021 or 31 March 2020 and the Group had no contingent
liabilities or commitments in respect of its joint venture at 31
March 2021 or 31 March 2020.
SATCO's registered office is 56 John Street, Stanley, Falkland
Islands FIQQ 1ZZ
16. Leases receivable
As lessor, FIC has sold assets to customers as hire purchase
leases, the present value of the lease payments, together with any
unguaranteed residual value, is recognised as a receivable, net of
allowances for expected bad debt losses.
The difference between the gross receivable and the present
value of future lease payments, is recognised as unearned lease
income. Lease income is recognised in interest income over the term
of the lease using the sum of digits method so as to give a
constant rate of return on the net investment in the leases. Lease
receivables are reviewed regularly to identify any impairment.
Lease receivables arise on the sale of vehicles and customer
goods, such as furniture and electrical items, by FIC. No
contingent rents have been recognised as income in the period. No
residual values accrue to the benefit of the lessor.
Group
2021 2020
GBP'000 GBP'000
Lease debtors due after more
Non-Current: than one year 590 519
Lease debtors due within one
Current: year 558 596
Total lease
debtors 1,148 1,115
The difference between the gross investment in the hire purchase
leases and the present value of future lease payments due
represents unearned lease income of GBP147,000 (2020: GBP176,000).
The cost of assets acquired for the purpose of renting out under
hire purchase agreements by the Group during the year amounted to
GBP825,000 (2020: GBP786,000).
The total cash received during the year in respect of hire
purchase agreements was GBP 1,163,000 (2020: GBP1,115,000).
Group
2021 2020
GBP'000 GBP'000
Gross investment in hire purchase leases 1,319 1,318
Unearned lease income (147) (176)
Bad debt provision against hire purchase
leases (24) (27)
Present value of future lease receipts 1,148 1,115
Present value of future lease payments due:
Within one year 558 596
Within two to five years 590 519
Present value of future lease receipts 1,148 1,115
17. Deferred tax assets and liabilities
Recognised deferred tax assets and (liabilities) Group
2021 2020
GBP'000 GBP'000
Property, plant & equipment (2,938) (2,713)
Intangible assets (387) (387)
Inventories (unrealised intragroup profits) 62 32
Other financial liabilities 66 48
Derivative financial liabilities 44 102
Share-based payments 40 41
Tax losses - 28
Total net deferred tax liabilities (3,113) (2,849)
Deferred tax asset arising on the defined
benefit pension liabilities 739 677
Net tax liabilities (2,374) (2,172)
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
2021 2020
GBP'000 GBP'000
Other temporary differences 44 121
-------
Net tax asset 44 121
Movement in deferred tax assets / (liabilities)
in the year:
Group
1 April Recognised Recognised 31 March
2020 in income in equity 2021
GBP'000 GBP'000 GBP'000 GBP'000
Property, plant & equipment (2,713) (225) - (2,938)
Intangible assets (387) - - (387)
Inventories (unrealised intragroup
profits) 32 30 - 62
Other financial liabilities 48 (12) 30 66
Derivative financial liabilities 102 - (58) 44
Share-based payments 41 (1) - 40
Tax losses 28 (28) - -
Pension 677 (9) 71 739
Deferred tax movements (2,172) (245) 43 (2,374)
Unrecognised deferred tax assets
Deferred tax assets of GBP44,000 (2020: GBP121,000) in respect
of capital losses have not been recognised as it is not considered
probable that there will be suitable chargeable gains in the
foreseeable future from which the underlying capital losses will
reverse.
Movement in deferred tax asset
in the year: Company
1 April Recognised Recognised 31 March
2020 in income in equity 2021
GBP'000 GBP'000 GBP'000 GBP'000
Derivative financial liabilities 102 - (58) 44
Other temporary differences 19 (19) - -
Deferred tax asset movements 121 (19) (58) 44
Movement in deferred tax assets / (liabilities)
in the prior year:
Group
Recognised Recognised 31 March
1 April 2019 in income in equity 2020
GBP'000 GBP'000 GBP'000 GBP'000
Property, plant & equipment (2,396) (351) 34 (2,713)
Intangible assets (346) (41) - (387)
Inventories 43 (11) - 32
Other financial liabilities 26 22 - 48
Derivative financial liabilities - - 102 102
Share-based payments 26 15 - 41
Tax losses 118 (90) - 28
Pension 721 (9) (35) 677
Deferred tax movements (1,808) (465) 101 (2,172)
Movement in deferred tax asset in
the prior year: Company
1 April Recognised Recognised 31 March
2019 in income in equity 2020
GBP'000 GBP'000 GBP'000 GBP'000
Other temporary differences 4 15 102 121
Deferred tax asset movements 4 15 102 121
A reduction in the UK corporation tax rate from 19% to 17%
(effective 1 April 2020) was substantively enacted on 6 September
2016. The March 2020 Budget announced that a rate of 19% would
continue to apply with effect from 1 April 2020, and this change
was substantively enacted on 17 March 2020. The UK deferred tax
liability as at 31 March 2021 was calculated at 19%.
An increase in the UK corporation rate from 19% to 25%
(effective 1 April 2023) was substantively enacted on 24 May 2021.
This will increase the future current tax charge for the Group and
the Company accordingly and increase the deferred tax liability of
the Group by GBP983,000 and the deferred tax asset of the Company
by GBP14,000.
18. Inventories
Group
2021 2020
GBP'000 GBP'000
Work in progress 691 697
Goods in transit 972 1,228
Goods held for resale 4,208 3,449
--------
Total Inventories 5,871 5,374
Goods in transit are retail goods in transit to the Falkland
Islands.
The Company has no inventories.
19. Trade and other receivables
Group Company
2021 2020 2021 2020
GBP'000 GBP'000 GBP'000 GBP'000
Non-Current
Rental deposits 88 88 - -
Amount owed by subsidiary undertakings - - 10,207 10,207
Total trade and other receivables 88 88 10,207 10,207
Group Company
2021 2020 2021 2020
GBP'000 GBP'000 GBP'000 GBP'000
Current
Trade and other receivables 3,472 6,284 - 3
Contract asset, long term housing
project - 73 - -
Prepayments 1,087 1,123 118 27
Accrued income 1,309 1,216 - -
Total trade and other receivables 5,868 8,696 118 30
Amounts owed by subsidiary undertakings to the company are
interest free with no fixed repayment date.
The accrued income primarily relates to construction contracts
where the work has been completed but had not been billed at the
balance sheet date. The accrued income is transferred to
receivables when the right to consideration becomes unconditional.
This usually occurs when final customer acceptance is received and
the amounts are invoiced by the Group. No allowance for expected
credit losses was recognised in respect of accrued income as the
impact was assessed as being immaterial. The only significant
changes in the accrued income balance during the year related to
the recognition of revenue for work performed and the transfer of
billed amounts to trade receivables.
20. Cash and cash equivalents
Group Company
2021 2020 2021 2020
GBP'000 GBP'000 GBP'000 GBP'000
Cash and other cash equivalents
in the balance sheet 14,556 9,108 5,462 5,766
Group Company
Year ended 31 March 2021 2020 2021 2020
GBP'000 GBP'000 GBP'000 GBP'000
Net increase / (decrease) in cash
and cash equivalents 5,451 2,870 (304) 3,998
Exchange (losses) / gains (3) 54 - -
Net increase / (decrease) in cash
and cash equivalents after exchange
gains 5,448 2,924 (304) 3,998
Bank loan draw downs (5,000) (13,875) - (13,875)
Bank loan repayments 624 10,955 262 10,425
1 April 2019: lease liabilities on
IFRS16 application - (2,494) - -
Lease liabilities drawdown: non-cash - (761) - -
Lease liabilities drawdown: cash (389) (534) - -
Lease liabilities repayments 649 395 - -
Increase in interesting bearing loans
and borrowings (4,116) (6,314) 262 (3,450)
Net increase / (decrease) in debt 1,332 (3,390) (42) 548
Net debt brought forward (14,999) (11,609) (7,684) (8,232)
Net debt at 31 March (13,667) (14,999) (7,726) (7,684)
Net debt
Group Company
2021 2020 2021 2020
GBP'000 GBP'000 GBP'000 GBP'000
Cash balances 14,556 9,108 5,462 5,766
less: Total interest-bearing loans
and borrowings (28,223) (24,107) (13,188) (13,450)
Net debt (13,667) (14,999) (7,726) (7,684)
21. Interest-bearing loans and borrowings
This note provides information about the contractual terms of
the interest-bearing loans and borrowings owed by the Group, which
are stated at amortised cost. For more information regarding the
maturity of the interest-bearing loans and lease liabilities and
about the Group's and the Company's exposure to interest rate and
foreign currency risk, see note 26.
Group Company
2021 2020 2021 2020
GBP'000 GBP'000 GBP'000 GBP'000
Non-current liabilities
Secured bank loans 17,313 15,127 12,668 13,207
Lease liabilities 7,486 7,815 - -
Total non-current interest-bearing loans
and lease liabilities 24,799 22,942 12,668 13,207
Current liabilities
Secured bank loans 2,797 607 520 243
Lease liabilities 627 558 - -
Total current interest-bearing loans
and lease liabilities 3,424 1,165 520 243
Total liabilities
Secured bank loans 20,110 15,734 13,188 13,450
Lease liabilities 8,113 8,373 - -
Total interest-bearing loans and lease
liabilities 28,223 24,107 13,188 13,450
Lease liabilities
Future minimum lease Interest Present value
payments of minimum lease
payments
2021 2020 2021 2020 2021 2020
GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000
Less than one year 955 902 337 344 618 558
Between one and two
years 853 871 317 329 536 542
Between two and five
years 1,952 2,057 869 854 1,083 1,203
More than five years 11,727 12,246 5,851 6,176 5,876 6,070
Total 15,487 16,076 7,374 7,703 8,113 8,373
22. Trade and other payables
Group Company
2021 2020 2021 2020
GBP'000 GBP'000 GBP'000 GBP'000
Current
Trade payables 3,025 4,304 - -
Amounts owed to subsidiary undertakings - - 5,960 6,310
Loan from joint venture 249 249 - -
Other creditors, including taxation
and social security 1,435 1,364 231 184
Accruals 1,843 2,544 200 525
Deferred income 223 150 - -
Total trade and other payables 6,775 8,611 6,391 7,019
Amounts owed to subsidiary undertakings by the company are
interest free with no fixed repayment date.
23. Employee benefits: pension plans
Defined contribution schemes
The Group operates defined contribution schemes at PHFC and
Momart and current FIC employees are enrolled in the Falkland
Islands Pension Scheme ("FIPS"). The assets of all these schemes
are held separately from those of the Group in independently
administered funds.
The pension cost charge for the year represents contributions
payable by the Group to the schemes and amounted to GBP498,000
(2020: GBP527,000). The Group anticipates paying contributions
amounting to GBP513,000 during the year ending 31 March 2022. There
were outstanding contributions of GBP39,000 (2020: GBP34,000) due
to pension schemes at 31 March 2021.
The Falkland Islands Company Limited Scheme
FIC operates a defined benefit pension scheme for certain former
employees. This scheme was closed to new members in 1988 and to
further accrual on 31 March 2007. The scheme has no assets and
payments to pensioners are made out of operating cash flows. The
expected contributions for the year ended 31 March 2022 are
GBP120,000. During the year ended 31 March 2021, 11 pensioners
(2020: 11) received benefits from this scheme, and there are three
deferred members at 31 March 2021 (2020: three). Benefits are
payable on retirement at the normal retirement age. The weighted
average duration of the expected benefit payments from the Scheme
is around 15 years (2020: 15 years).
Actuarial reports for IAS 19 purposes as at 31 March 2021, 2020,
2019, 2018, 2017 and 2016 were prepared by a qualified independent
actuary, Lane Clark and Peacock LLP. The major assumptions used in
the valuation were:
2021 2020
Rate of increase in pensions in payment and
deferred pensions 2.5% 2.2%
Discount rate applied to scheme liabilities 2.0% 2.5%
Inflation assumption 3.4% 2.8%
Average longevity at age 65 for male current
and deferred pensioners (years) at accounting
date 21.9 21.7
Average longevity at age 65 for male current
and deferred pensioners (years) 20 years
after accounting date 23.3 23.6
The assumptions used by the actuary are chosen from a range of
possible actuarial assumptions which, due to the timescale covered,
may not necessarily be borne out in practice. Assumptions relating
to life expectancy have been based on UK mortality data on the
basis that this is the best available data for the Falklands.
Sensitivity Analysis
The calculation of the defined benefit liability is sensitive to
the assumptions set out above. The following table summarises how
the impact of the defined benefit liability at 31 March 2021 would
have increased / (decreased) as a result of a change in the
respective assumptions by 0.1%
Effect on obligation
2021 2020
GBP'000 GBP'000
Discount rate +/- 0.1% 42 40
Inflation assumption +/- 0.1% (11) (10)
Life expectancy +/- one year (140) (120)
These sensitivities have been calculated to show the movement in
the defined benefit obligation in isolation, and assume no other
changes in market conditions at the accounting date.
Scheme liabilities
The present values of the scheme's liabilities, which are
derived from cash flow projections over long periods and thus
inherently uncertain, were:
Value at
2017 2018 2019 2020 2021
GBP'000 GBP'000 GBP'000 GBP'000 GBP'000
Present value of scheme
liabilities (2,985) (2,839) (2,772) (2,604) (2,842)
Related deferred tax
assets 776 738 721 677 677
Net pension liability (2,209) (2,101) (2,051) (1,927) (2,165)
Movement in deficit during the year: 2021 2020
GBP'000 GBP'000
Deficit in scheme at beginning of the year (2,604) (2,772)
Pensions paid 98 97
Other finance cost (64) (65)
Re-measurement of the defined benefit pension
liability (272) 136
Deficit in scheme at the end of the year (2,842) (2,604)
Analysis of amounts included in other finance
costs: 2021 2020
GBP'000 GBP'000
Interest on pension scheme liabilities 64 65
Analysis of amounts recognised in statement of comprehensive
income: 2021 2020
GBP'000 GBP'000
Experience gains arising on scheme liabilities (21) (23)
Changes in assumptions underlying the present value
of scheme liabilities (251) 159
Re-measurement of the defined benefit pension liability (272) 136
24. Employee benefits: share based payments
The total number of options outstanding at 31 March 2021 is
281,490 including (i) 12,864 nil cost options (2020: 25,352), (ii)
210,474 options (2020: 234,734) granted under the Long Term
Incentive Plan and (iii) 58,152 (2020: 96,914) Share options
granted with an exercise price equal to the market price on the
date of grant.
(i) Nil cost options granted to the Chief Executive:
Share price Total
Date of Number at grant Fair value fair Earliest Latest
Issue date per share value Exercise Exercise
pence pence GBP Date date
15 Jun 15 Jun 15 Jun
18 5,682 352.0 338.5 19,234 21 22
17 Jun 17 Jun 17 Jun
19 3,591 316.0 306.0 10,988 21 23
17 Jun 17 Jun 17 Jun
19 3,591 316.0 301.0 10,809 22 23
Total 12,864 41,031
Reconciliation of nil cost options: Number Number of
of options options
2021 2020
Outstanding at the beginning of the year 25,352 29,751
Options exercised during the year (12,488) (15,171)
Options granted during the year - 10,772
Outstanding at the year end 12,864 25,352
Vested options exercisable at the year end - -
Weighted average life of outstanding options
(years) 1.8 2.5
(ii) Long term Incentive Plan grants at an exercise price of ten
pence to local directors and executives:
133,052 Long term Incentive Plan grants were issued on 15 July
2020 at an exercise price of ten pence to local directors and
executives, and expire in five years on 4 July 2025. During the
year 10,000 of these options were forfeited and 123,052 options
remain outstanding at 31 March 2021. None of these grants are
exercisable at 31 March 2021.
135,535 Long term Incentive Plan grants were issued on 4 July
2019 at an exercise price of ten pence to local directors and
executives, and expire in five years on 4 July 2024. During the
year 48,113 of these options were forfeited and 87,422 options
remain outstanding at 31 March 2021. None of these grants are
exercisable at 31 March 2021.
There are various performance conditions attached to the Long
term Incentive Plan grants. All have a primary performance
condition of the Group share price exceeding a target threshold at
the vesting date, and secondary financial performance conditions
specific to the relevant operating segment.
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
4 Jul 4 Jul 3 Jul
19 87,422 10.0 314.0 96.8 84,624 22 23
14 Jul 15 Jul 14 Jul
20 123,052 10.0 350.0 75.0 92,289 23 24
Total 210,474 176,913
Reconciliation of LTIPs: Number Number of
of options options
2021 2020
Outstanding at the beginning of the year 234,734 104,689
Options granted during the year 133,052 135,535
Options forfeited during the year (102,651) (5,490)
Options lapsed in year (54,661) -
Outstanding at the year end 210,474 234,734
Vested options exercisable at the year end - -
Weighted average life of outstanding options
(years) 3.9 3.7
(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
16 Dec 16 Dec 15 Dec
11 53,152 267.5 261.5 68.0 36,143 14 21
19 Jan 19 Jan 18 Jan
15 5,000 272.5 272.5 63.0 3,150 18 25
Total 58,152 39,293
The range of exercise prices of outstanding options at 31 March
2021 is from GBP2.675 (2020: GBP2.675) to GBP2.725 (2020:
GBP3.535).
Reconciliation of options with an exercise price equal to the
market price on the date of grant, including the number and
weighted average exercise price:
Weighted Weighted
average average
exercise exercise
price Number of price Number
(GBP) options (GBP) of options
2021 2021 2020 2020
Outstanding at the beginning of
the year 2.85 96,914 2.94 163,254
Options exercised during the year 2.68 (3,848) 2.90 (44,550)
Forfeited during the year 3.09 (27,172) 2.84 (10,790)
Lapsed during the year 3.43 (7,742) 3.90 (11,000)
----------
Outstanding at the year end 2.68 58,152 2.85 96,914
----------
Vested options exercisable at the
year end 2.68 58,152 2.85 96,914
----------
Weighted average life of outstanding
options (years) 1.0 2.2
The fair values of the options are estimated at the date of
grant using appropriate option pricing models and are charged to
the profit and loss account over the vesting period of the options.
All options, other than certain nil cost options granted to the
Chief Executive, are granted with the condition that the employee
remains in employment for three years.
All share options are equity settled. Share options issued
without share price conditions attached have been valued using the
Black-Scholes model. Share price options issued with share price
conditions attached have been valued using a Monte Carlo simulation
model making explicit allowance for share price targets. Inputs
into the valuation models include the estimated time to maturity,
the risk-free rate, expected volatility, and dividend yield. During
the year ending 31 March 2021, 12,488 nil cost options were
exercised over ordinary shares by the Chief Executive at a gain of
GBP40,586. In the prior year, 15,171 nil cost options and 44,550
other share options were exercised by the Chief Executive at a gain
of GBP59,523. Employees around the Group exercised 3,848 other
share options in the year (2020: nil) at a gain of GBP2,375 (2020:
GBPnil).
2021 2020
GBP'000 GBP'000
Total share-based payment expense recognised
in the year 1 97
25. Capital and reserves
Share capital Ordinary Shares
2021 2020
In issue at the start of the year 12,504,519 12,502,137
Share capital issued during the year 10,466 2,382
In issue at the end of the year 12,514,985 12,504,519
2021 2020
GBP'000 GBP'000
Allotted, called up and fully paid Ordinary
shares of 10p each 1,251 1,250
By special resolution at an Annual General Meeting on 9
September 2010 the Company adopted new articles of association,
principally to take account of the various changes in company law
brought in by the Companies Act 2006. As a consequence, the Company
no longer has an authorised share capital. The holders of ordinary
shares are entitled to receive dividends as declared from time to
time and are entitled to one vote per share at meetings of the
Company.
On 9 August 2019, the Employee Share Ownership Plan was
terminated. At 31 March 2019 the plan held 7,664 ordinary shares at
a cost of GBP15,047. In June 2019, the ESOP issued these 7,664
shares in respect of the exercise of nil cost options which vested
in June 2019. The market value of the shares at 31 March 2019 was
GBP21,076.
During the year 10,466 shares were issued following the exercise
of share options.
On 1 July 2021, the Chief Executive exercised 12,488 nil cost
options, 5,870 options were cancelled to settle the employee tax
liabilities and 6,618 shares were issued as new share capital for
which the nominal value was paid in full. A total cash outflow of
GBP19,000 was paid on the exercise of these options to settle the
tax obligations arising.
Also, during the year 3,848 share options issued on 16 December
2011 were exercised by an employee.
For more information on share options see note 24.
Other reserves
The other reserves in the Group of GBP703,000 at 31 March 2021
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 this merger relief in other reserves. In the prior year
GBP459,000 and GBP1,521,000 was transferred from this reserve to
retained earnings as a result of the impairments booked against
goodwill and investments.
Dividends
The following dividends were recognised and paid in the
period:
2021 2020
GBP'000 GBP'000
Final: nil pence (2020: 3.35 pence) per qualifying
ordinary share - 419
Interim: nil pence (2020: 1.80 pence) per
qualifying ordinary share - 225
Total dividends recognised in the period - 644
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
2021 2020 2021 2020
GBP'000 GBP'000 GBP'000 GBP'000
Cash and cash equivalents 14,556 9,108 5,462 5,766
Hire purchase debtors 1,148 1,115 - -
Trade and other receivables 3,472 6,284 60 3
Total assets exposed to credit risk 19,176 16,507 5,522 5,769
Interest rate swap liability (234) (537) (234) (537)
Total trade and other payables (6,775) (8,611) (6,391) (7,019)
Interest-bearing borrowings at amortised
cost (28,223) (24,107) (13,188) (13,450)
The interest rate swaps have been valued using a level 2
methodology. All other financial instruments are based on level 3
methodology.
(ii) Credit Risk
Financial risk management
Credit risk is the risk of financial loss to the Group if a
customer or counterparty to a financial instrument fails to meet
its contractual obligations, and arises principally from the
Group's receivables from customers.
Group
The Group's credit risk is primarily attributable to its trade
receivables. The maximum credit exposure of the Group comprises the
amounts presented in the balance sheet, which are stated net of
provisions for expected credit losses. Expected credit loss
provisions are based on previous experience and other evidence,
including forward-looking macroeconomic information, indicative of
the recoverability of future cash flows. There have been no
significant changes in the estimation techniques or significant
assumptions made during the reporting period. Management has credit
policies in place to manage risk on an on-going basis. These
include the use of customer specific credit limits.
Company
The majority of the Company's receivables are with subsidiaries.
The Company does not consider these counter-parties to be a
significant credit risk.
Exposure to credit risk
The carrying amount of financial assets represents the maximum
credit exposure. Therefore, the maximum exposure to credit risk at
the balance sheet date was GBP19,176,000 (2020: GBP16,507,000)
being the total trade receivables, hire purchase debtors and cash
and cash equivalents in the balance sheet. The credit risk on cash
balances and the interest rate swap is limited because the
counterparties are banks with high credit ratings assigned by
international credit-rating agencies.
The maximum exposure to credit risk for trade receivables at the
balance sheet date by geographic region was:
Group
2021 2020
GBP'000 GBP'000
Falkland Islands 712 1,824
Europe 237 786
North America 166 952
United Kingdom 2,184 2,472
Other 173 250
--------
Total trade receivables 3,472 6,284
--------
The Company has no trade debtors.
Credit quality of financial assets and expected credit
losses
Group Gross Impairment Net Gross Impairment Net
2021 2021 2021 2020 2020 2020
GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000
Not past due 2,880 (6) 2,874 4,946 - 4,946
Past due 0-30 days 447 (8) 439 922 - 922
Past due 31-120 days 184 (36) 148 406 (58) 348
More than 120 days 64 (53) 11 166 (98) 68
Total trade receivables 3,575 (103) 3,472 6,440 (156) 6,284
Hire purchase debtors 1,172 (24) 1,148 1,142 (27) 1,115
The amount of hire purchase debt that is past due is
immaterial.
The movement in the allowances for impairment in respect of
trade receivables and hire purchase debtors during the year
was:
Group
2021 2020
GBP'000 GBP'000
Balance at 1 April 183 196
Impairment loss recognised 39 31
Cash received - -
Utilisation of provision (debts written
off) (95) (44)
Balance at 31 March 127 183
Provided against hire purchase debtors 24 27
Provided against trade and other receivables 103 156
Balance at 31 March 127 183
The allowance account for trade receivables is used to record
impairment losses unless the Group is satisfied that no recovery of
the amount owing is possible: at that point the amounts considered
irrecoverable are written off against the trade receivables
directly.
No further analysis has been provided for cash and cash
equivalents, trade receivables from Group companies, other
receivables and other financial assets, as there is limited
exposure to credit risk and expected credit losses are assessed as
immaterial.
(iii) Liquidity risk
Financial risk management
Liquidity risk is the risk that the Group will not be able to
meet its financial obligations as they fall due. At the beginning
of the period the Group had outstanding bank loans of GBP15.7
million. All payments due during the year with respect to these
agreements were met as they fell due.
At the start of the year, the Company had one bank loan of
GBP13.4 million. All payments due during the year with respect to
these agreements were met as they fell due.
The Group manages its cash balances centrally at head office and
prepares rolling cash flow forecasts to ensure funds.
Liquidity risk - Group
The following are the contractual maturities of financial
liabilities, including estimated interest payments and excluding
the effects of netting agreements:
Contractual cash flows
2021 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 20,110 23,141 3,355 3,926 4,430 11,430
Lease liabilities 8,113 15,487 955 853 1,952 11,727
Trade payables 3,025 3,025 3,025 - - -
Interest rate swap liability 234 1,044 147 141 391 365
Other creditors 1,076 1,076 1,076 - - -
Accruals 1,843 1,843 1,843 - - -
Total financial liabilities 34,401 45,616 10,401 4,920 6,773 23,522
Contractual cash flows
2020 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 15,734 18,363 1,021 1,322 3,913 12,107
Lease liabilities 8,373 16,076 902 871 2,057 12,246
Trade payables 4,304 4,304 4,304 - - -
Interest rate swap liability 537 612 89 76 207 240
Other creditors, including
taxation 1,364 1,364 1,364 - - -
Accruals 2,544 2,544 2,544 - - -
Deferred income 150 150 150 - - -
--------
Total financial liabilities 33,006 43,413 10,374 2,269 6,177 24,593
--------
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
2021 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 13,188 15,934 914 899 2,777 11,344
Amounts owed to subsidiary
undertakings 5,960 5,960 5,960 - - -
Interest rate swap liability 234 1,044 147 141 391 365
Other creditors 207 207 207 - - -
Accruals 200 200 200 - - -
Total financial liabilities 19,789 23,345 7,428 1,040 3,168 11,709
Contractual cash flows
2020 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 13,450 15,901 595 869 2,552 11,885
Amounts owed to subsidiary
undertakings 6,310 6,310 6,310 - - -
Interest rate swap liability 537 612 89 76 207 240
Other creditors, including
taxation 184 184 184 - - -
Accruals 525 525 525 - - -
Total financial liabilities 21,006 23,532 7,703 945 2,759 12,125
The 2020 comparative information has been restated to include
amounts owed to subsidiary undertakings.
(iv) Market Risk
Financial risk management
Market risk is the risk that changes in market prices, such as
foreign exchange rates, interest rates and equity prices will
affect the Group's income or the value of its holdings of financial
instruments.
Market risk - Foreign currency risk
The Group has exposure to foreign currency risk arising from
trade and other payables which are denominated in foreign
currencies. The Group is not, however, exposed to any significant
transactional foreign currency risk. The Group's exposure to
foreign currency risk is as follows and is based on carrying
amounts for monetary financial instruments.
Group
2021 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 59 40 10 109 14,447 14,556
Trade payables and other
payables (280) (144) (31) (455) (6,320) (6,775)
-------
Balance sheet exposure (221) (104) (21) (346) 8,127 7,781
-------
2020 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 142 197 38 377 8,731 9,108
Trade payables and other
payables (316) (205) (78) (599) (8,012) (8,611)
-------
Balance sheet exposure (174) (8) (40) (222) 719 497
-------
The Company has no exposure to foreign currency risk.
Sensitivity analysis
Group
A 10% weakening of the following currencies against pound
sterling at 31 March would have increased/(decreased) equity and
profit or loss by the amounts shown below. This calculation assumes
that the change occurred at the balance sheet date and had been
applied to risk exposures existing at that date. This analysis
assumes that all other variables, in particular other exchange
rates and interest rates remain constant and is performed on the
same basis for year ended 31 March 2020.
Equity Profit or Loss
2021 2020 2021 2020
GBP'000 GBP'000 GBP'000 GBP'000
EUR 22 17 22 17
USD 10 1 10 1
A 10% strengthening of the above currencies against pound
sterling at 31 March would have the equal but opposite effect on
the above currencies to the amounts shown above, on the basis that
all other variables remain constant.
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
2021 2020 2021 2020
GBP'000 GBP'000 GBP'000 GBP'000
Fixed rate financial instruments
Leases receivable 1,148 1,115 - -
Bank loans (607) (701) - -
Lease liabilities (8,113) (8,373) - -
Total Fixed rate financial instruments (7,572) (7,959) - -
Variable rate financial instruments
Effect of Interest rate swap liability (234) (537) (234) (537)
Bank loans (19,503) (15,032) (13,188) (13,450)
Total Variable rate financial instruments (19,737) (15,569) (13,422) (13,987)
At 31 March 2021, the Group had six bank loans:
(i) GBP13.2 million (2020: GBP13.4 million) ten-year loan, which
was drawn down on 28 June 2019, with interest charged at LIBOR plus
1.75%;
(ii) GBP1.1 million (2020: GBP1.3 million) repayable over ten
years until May 2025, secured against the newest vessel in PHFC,
with interest charged at 2.6% above the bank of England base
rate;
(iii) GBP0.2 million (2020: GBP0.3 million) repayable over ten
years until May 2025, secured against freehold property held in
PHFC, with interest charged at 1.75% above the Bank of England base
rate;
(iv) GBP0.6 million (2020: GBP0.7 million) drawn down by Momart,
interest has been fixed on this loan at 2.73% for the full ten
years until December 2026.
(v) GBP3.5 million three-year CBILS loan, which was drawn down
by Momart on 29 June 2020, with interest charged at the Bank of
England base rate plus 3.49%.
(vi) GBP1.5 million three-year CBILS loan, which was drawn down
by PHFC 29 June 2020, with interest charged at the Bank of England
base rate plus 3.49%.
The interest payable on the GBP13.2 million ten-year loan has
been hedged by one interest swap, taken out on 4 July 2019 with an
initial notional value of GBP13.875 million, with interest payable
at the difference between 1.1766% and the three-month LIBOR rate.
This interest rate swap notional value decreases at 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 2021 is
GBP13.0 million (2020: GBP13.5 million)
The interest payable on the loans regarding the vessel and the
freehold property in PHFC noted above was hedged by one interest
swap, taken out in October 2015 with an initial notional value of
GBP3.6 million, with interest payable at the difference between
1.325% and the Bank of England Base rate. This interest rate swap
notional value decreased at GBP36,250 per month over five years
until September 2020 when it expired. The notional value of the
swap at 31 March 2021 is GBPnil (2020: GBP1.7 million). Including
the swaps, the blended average interest rates on the Group's bank
borrowings is 2.28% (2020: 3.0%) per annum. During the year, an
amount of GBP76,000 has been reclassified to the profit and loss
account from the hedging reserve in relation to the interest swap
(2020: GBP17,000).
The directors consider the CBILS loan to be a financial
instrument in scope of IFRS 9. The UK Government guarantees a
portion of the loan and makes a payment to cover the first 12
months of interest payments. The directors consider these elements
to be government grants. However, the Group has elected to present
these government grant elements as an integral part of the
financial liability such that the government grant elements are not
shown separately either on the balance sheet or in the income
statement.
Lease liabilities
At 31 March 2021, the Group had the following lease
liabilities:
(i) GBP5.8 million lease liabilities payable to Gosport Borough
Council; GBP4.7 million for the Gosport pontoon and GBP1.1 million
for the ground rent on the pontoon. Both of these leases run until
June 2061 and finance charges accrue on these liabilities at a
fixed 4.75%.
(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 four to seven years as at 31
March 2021. The weighted average interest rate of these rental
liabilities is 3.25%.
(iii) GBP0.9 million of lease liabilities taken out to finance
trucks by hire purchase leases at Momart, GBP0.4 million of this
balance arises on two leases drawn down towards the end of the year
ended 31 March 2021. The weighted average interest rate of these
truck liabilities is 3.0%.
The total blended average interest rate on the Group's lease
liabilities is 4.3% per annum.
Sensitivity analysis
An increase of 100 basis points in interest rates at the balance
sheet date would have increased / (decreased) equity and profit or
loss by the amounts shown below. This calculation assumes that the
change occurred at the balance sheet date and has been applied to
risk exposures existing at that date.
This analysis assumes that all other variables, in particular
foreign currency rates, remain constant and considers the effect of
financial instruments with variable interest rates and financial
instruments at fair value through profit or loss or
available-for-sale with fixed interest rates. The analysis is
performed on the same basis for 31 March 2020.
Interest rate sensitivity analysis Group Company
2021 2020 2021 2020
GBP'000 GBP'000 GBP'000 GBP'000
Equity
Interest rate swap liability 130 152 130 152
Variable rate financial liabilities (195) (150) (132) (135)
Profit or Loss
Interest rate swap liability 130 152 130 152
Variable rate financial liabilities (195) (150) (132) (135)
IBOR reform
A fundamental reform of major interest rate benchmarks is being
undertaken globally, including the replacement of some interbank
offered rates (IBORs) with alternative nearly risk-free rates
(referred to as "IBOR reform"). The Group has exposures to IBORs on
its interest rate swap and LIBOR based loan (as outlined above) and
these will be replaced or reformed as part of these market-wide
initiatives. There is uncertainty over the timing and the methods
of transition and the Group anticipates that IBOR reform could
impact its risk management and hedge accounting.
The Group's sterling LIBOR cash flow hedging relationships
extend beyond the anticipated cessation date for sterling LIBOR.
The Group expects that sterling LIBOR will be discontinued before
the end of 2021. The preferred alternative reference rate is the
Sterling Overnight Index Average (SONIA). However, there is
uncertainty about when and how replacement may occur with respect
to both the interest rate swap (notional amount: GBP13.0 million)
and LIBOR based loan (carrying amount: GBP13.2 million). Such
uncertainty may impact the hedging relationship. The Group applies
the amendments to IFRS9 issued in September 2019 to those hedging
relationships directly affected by IBOR reform.
Hedging relationships impacted by IBOR reform may experience
ineffectiveness attributable to market participants' expectations
of when the shift from the existing IBOR benchmark rate to an
alternative benchmark rate will occur. This transition may occur at
different times for the hedged item and the hedging instrument,
which may lead to hedge ineffectiveness. The directors do not
currently expect this transition process to have a material impact
on the financial statements. The Group has not yet adopted the
Phase 2 amendments, which address issues (such as the modification
of loan contracts) that may arise at the point of transition. The
adoption of these amendments is not expected to have a material
impact.
(v) Capital Management
The Group's objectives when managing capital, which comprises
equity and reserves at 31 March 2021 of GBP38,896,000 (2020:
GBP38,792,000) are to safeguard its ability to continue as a going
concern, so that it can continue to provide returns to shareholders
and benefits to our other stakeholders.
27. Operating leases
Leases as lessor
The Group leases out its investment properties, which consist of
65 houses and flats and ten mobile homes in the Falkland Islands,
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
2021 2020
GBP'000 GBP'000
Less than one year 919 918
Between one and five years 3,675 3,672
More than five years 16,753 17,672
21,347 22,262
28. Capital commitments
At 31 March 2021, the Group had entered into contractual
commitments of GBP21,000 for a spray booth and vehicle exhaust
systems at Momart.
At 31 March 2020, the Group had entered into contractual
commitments of GBP389,000 for one 18 tonne truck and one 26 tonne
truck at Momart.
29. Related parties
The Group has a related party relationship with its subsidiaries
(see note 14) and with its directors and executive officers.
Directors of the Company and their immediate relatives
controlled 30.2% (2020: 30.2%) of the voting shares of the Company
at 31 March 2021.
The compensation of key management personnel, which includes the
FIH group plc directors and the directors of the subsidiaries, is
as follows:
Group Company
2021 2020 2021 2020
GBP'000 GBP'000 GBP'000 GBP'000
Key management emoluments including social
security costs 1,610 1,325 366 401
Company contributions to defined contribution
pension plans 74 74 - -
Share-related awards 1 85 20 41
Total key management personnel compensation 1,685 1,484 386 442
At 31 March 2021, the Group's joint venture, SAtCO, has debtors
of GBP249,000 due from each of its parent companies.
On 2 May 2017, KJ Ironside, the Managing Director of FIC,
purchased a property which had been built on approximately 510
square metres of land owned by FIC. FIC provided a loan of
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.
During the year FIC paid GBP104,430 (2020: GBP6,005) to JK
Contracting in respect of work performed at arm's length for
company. The proprietor of JK Contracting is the son-in-law of R
Smith who is a Director of FIC.
30. Accounting estimates
The preparation of financial statements in conformity with
adopted IFRS requires management to make judgements, estimates and
assumptions that effect the application of policies and reported
amounts of assets and liabilities, income and expenses. The
estimates and associated assumptions are based upon historical
experience and various other factors that are believed to be
reasonable under the circumstances, the results of which form the
basis of the judgements as to asset and liability carrying values
which are not readily apparent from other sources. Actual results
may vary from these estimates, and are taken into account in
periodic reviews of the application of such estimates and
assumptions. Revisions to accounting estimates are recognised in
the period in which the estimate is revised if the revision affects
only that period or in the period of revision and future periods if
the revision affects both current and future periods.
Defined benefit pension liabilities
At 31 March 2021, 11 pensioners were receiving payments from the
FIC defined benefit pension scheme, and there are three deferred
members. A significant degree of estimation is involved in
predicting the ultimate benefits payment to these pensioners using
actuarial assumptions to value the defined benefit pension
liability (see note 23). Management have selected these assumptions
from a range of possible options following consultations with
independent actuarial advisers. There is a range of assumptions
that may be appropriate, particularly when considering the
projection of life expectancy post-retirement, which is a key
demographic assumption, and has been based on UK mortality data, if
the life expectancy assumption was one more year than the
assumptions used, this would result in an increase of GBP143,000 in
the liability. Selecting a different assumption could significantly
increase or decrease the IAS19 value of the Scheme's liabilities.
The projections of life expectancy make no explicit allowance for
specific individual risks, such as the possible impact of climate
change or a major medical breakthrough, the projections used
reflect the aggregate impact of the many possible factors driving
changes in future mortality rates.
The figures are prepared on the basis that both the FIC pension
scheme and FIC are ongoing. If the scheme were to be wound up, the
position would differ, and would almost certainly indicate a much
larger deficit.
Impairment testing
Impairment tests have been undertaken with respect to intangible
assets (see note 11 for further details), with detailed reviews of
probable medium to long-term detailed forecasts of each of the
businesses in the Group. No impairment of goodwill was deemed
necessary in the current year. In the prior year, goodwill at
Momart was written down by GBP3.5 million to GBP2.1 million and the
goodwill held in respect of PHFC was reduced by GBP4.0 million,
eliminating all the previously recorded balance in relation to the
ferry company.
Inventory provisions
The Group makes provisions in relation to inventory value, where
the net realisable value of an item is expected to be lower than
its cost, due to obsolescence. Historically, the calculation of
inventory provisions has entailed the use of estimates and
judgements combined with mechanistic calculations and
extrapolations reflecting inventory ageing and stock turn. Due to
the effects of the COVID-19 pandemic, the element of
judgement/estimation applied in the calculation of the provisions
for the year ended 31 March 2021 has increased and inventory
provisions have increased to GBP999,000 (2020: GBP778,000).
Inventory greater than 12 months old and with no sales in the
twelve months before 31 March 2021 is provided against in full. If
this provision was reduced to 50% of the gross inventory value, the
provision would reduce by circa GBP150,000. If this provision was
extended to cover all inventory greater than six months old with no
sales in the twelve months before 31 March 2021, the provision
would increase by GBP74,000.
Company Information
Directors Registered Office
Robin Williams Non-executive Chairman Kenburgh Court
John Foster Chief Executive 133-137 South Street
Stuart Munro Chief Financial Officer Bishop's Stortford
Jeremy Brade Non-executive Director Hertfordshire CM23 3HX
Robert Johnston Non-executive Director T: 01279 461630
Dominic Lavelle Non-executive Director E: admin@fihplc.com
W: www.fihplc.com
Registered number 03416346
Company Secretary
Iain Harrison
Stockbroker and Nominated Adviser
W.H. Ireland Limited
24 Martin Lane,
London EC4R 0DR
Solicitors
BDB Pitmans LLP
50 Broadway,
Westminster,
London SW1H 0BL
Auditor
KPMG LLP
St. Nicholas House,
Park Row,
Nottingham NG1 6FQ
Registrar
Link Asset Services
The Registry, 34 Beckenham Road,
Beckenham,
Kent BR3 4TU
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 Clive Lane, Director Steve Lane, 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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