REG - FIH Group PLC - Final Results
05/07/2022 07:00
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RNS Number : 2840R FIH Group PLC 05 July 2022
FIH group plc
("FIH" or the "Group")
Final Results
FIH, the AIM quoted international specialist services group with businesses in
the Falkland Islands and the UK, is pleased to announce the Group's audited
results for the year ended 31 March 2022 ("the period").
Significantly Improved Cash-Backed Profit as Trading Continues to
Move Towards Pre-Pandemic Levels
Highlights
· Revenue increased by £7.7 million (24%) to £40.3 million (2021:
£32.6 million) with trading continuing to head towards pre-pandemic levels.
· Pre-tax profit of £2.0 million (2021: £0.2 million).
· Underlying pre-tax profit of £2.3 million (2021: £0.1 million)
despite COVID-related government support reducing to £0.5 million (2021:
£1.8 million).
· Results underpinned by net cash flow from operating activities of
£5.1 million.
· Underlying pre-tax profit of £1.8 million in the Falkland
Islands Company ("FIC") is consistent with the year ended 31 March 2021,
despite a second year without tourists.
· Momart and the Portsmouth Harbour Ferry Company ("PHFC") both
delivered much improved performances as trading activity continued to
recover.
o Momart delivered an underlying pre-tax profit of £0.6 million (2021:
£0.5 million loss).
o PHFC delivered an underlying pre-tax loss of £0.1 million (2021: £1.2
million loss).
· The Group balance sheet remains strong with underlying cash as at
31 March 2022 in line with prior year at £9.6 million (after adjusting for
the repayment of £5.0 million CBILS loans).
· Good progress on the £17.3 million contract, awarded to FIC in
November 2021, to build 70 houses for the Falkland Islands Government ("FIG")
and the UK Ministry of Defence ("MOD") and further opportunities to work with
FIG and the MOD are being explored.
· The value of Momart's property in Leyton has risen substantially
since acquisition.
· A final dividend of 2.0 pence per share will be proposed at the
Annual General Meeting, taking the total dividend for the year to 3.0 pence
per share (2021: nil).
Post Year-End
· The Falkland Islands re-opened to tourists from 4 May 2022.
· John Foster stepped down as Chief Executive on 14 April 2022 and
was succeeded by Stuart Munro, who was previously the Chief Financial
Officer. Progress is well advanced towards securing a replacement CFO.
Stuart Munro, Chief Executive, said:
"After a challenging two years for the Group, I'm delighted to be able to
report a significant improvement in pre-tax profit. Whilst this has been
driven by a welcome step towards pre-COVID levels of trading activity, it is
also due to the hard work of our employees and the actions taken to reduce our
cost base in the early stages of the pandemic.
The overall trading outlook remains positive. In FIC, the lifting of the ban
on tourists visiting the Falkland Islands on 4 May 2022, together with a
strong order book and potential opportunities for further work, all bode well
for the future. As the impact of COVID hopefully continues to reduce,
further improvement in activity levels is also expected at Momart and PHFC.
The improvements already delivered, together with the potential for further
progress and the continuing financial strength of the Group, give me
confidence for the future."
Enquiries:
FIH group plc
Stuart Munro, Chief Executive Tel: 01279 461630
WH Ireland Ltd. - NOMAD and Broker to FIH
Jessica Cave / Megan Liddell Tel: 0207 220 1666
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
The last two years have been extremely challenging for the Group. It is
therefore gratifying to see that the decisive action taken to address the
impact of the pandemic, the hard work of our employees and a significant move
back towards pre-pandemic levels of trading, have resulted in an underlying
pre-tax trading profit of £2.3 million, compared to a broadly break-even
result in the prior year.
I would like to take this opportunity to thank each of the Group's employees
for their part in delivering such a substantial improvement.
The Falkland Islands Company ("FIC") continued to trade consistently and both
Momart and The Portsmouth Harbour Ferry Company ("PHFC") delivered
considerable improvements over the prior year, with Momart returning an
overall underlying pre-tax profit of £0.6 million (2021: £0.5 million loss)
and PHFC delivering an underlying loss of £0.1 million (2021: £1.2 million
loss).
The balance sheet remains strong, with cash of £9.6 million at 31 March 2022
remaining in line with the balance at the prior year end after adjusting for
the repayment of £5.0 million of CBILS loans, net bank borrowings reducing to
£4.6 million (2021: £5.5 million) and net debt including lease liabilities
improving to £11.7 million (2021: £13.6 million).
Dividend
Following the payment of an interim dividend of 1.0 pence per share paid in
January 2022 and reflecting the continued improvement in trading since the
half year, I am pleased to announce that a final dividend of 2.0 pence per
share will be proposed at our forthcoming Annual General Meeting. This will
take the total dividend paid for the year ended 31 March 2022 to 3.0 pence per
share (2021: nil).
Board and Governance
As part of the Board's succession planning and in line with his wishes, John
Foster stepped down from his position as CEO on 14 April 2022 and was
succeeded by Stuart Munro, who joined as CFO in April 2021. I would like to
take this opportunity to thank John for his significant contribution to the
business over the past seventeen years and to wish him well in his future
endeavours. Jeremy Brade steps down at the AGM purely as a result of his long
service which has been of great benefit to the Group, particularly when
serving as interim Chair to handle the offers made in 2017 to acquire FIC. We
thank him for his contribution and will look to appoint a replacement in due
course. Additionally, progress is well advanced towards securing a CFO for the
Group.
Outlook and Strategy
Group trading continues to improve as the effects of the pandemic recede.
Equally importantly, FIH is in a strong financial position and has a clear
plan going forward to accelerate the recovery of the businesses and generate
additional value through a series of initiatives outlined in our CEO's
Strategic Review.
Robin Williams
Chairman
5 July 2022
Chief Executive's Strategic Review
Overview
With trading activity continuing to head towards pre-pandemic levels, it is
pleasing to report that the progress demonstrated in the Group's first half
results continued in the traditionally stronger second half of the year.
Revenue of £40.3 million for the year ended 31 March 2022, an increase of
24%, resulted in a pre-tax profit of £2.0 million and an underlying pre-tax
profit of £2.3 million, compared to a broadly break-even result for the year
ended 31 March 2021. This included £0.5 million of COVID-related support from
UK and local government, which was £1.3 million less than the prior year.
FIC, the division least affected by the pandemic, delivered an underlying
pre-tax profit of £1.8 million, which was consistent with the prior year.
Momart and PHFC each improved their underlying pre-tax results by £1.1
million, with Momart delivering a profit of £0.6 million and PHFC a loss of
£0.1 million.
The Group results were underpinned by a net cash flow from operating
activities of £5.1 million, with working capital remaining broadly in line
with the prior year, despite a significant increase in trading activity. The
closing cash balance of £9.6 million was in line with the balance at the
prior year end, after adjusting for the repayment of £5.0 million of CBILS
loans in June 2021. It also reflected £2.7 million of capital investment,
some £1.2 million ahead of the prior year.
As noted previously, the Group owns the freehold of Momart's art storage
warehouses in East London, which was acquired in December 2018 at a cost of
£19.6 million. Indications are that the value of this property has risen
substantially since acquisition.
Group Trading Results for the Year Ended 31 March 2022
A summary of the trading performance of the Group is given in the table below.
Group revenue 2022 2021 Change
Year ended 31 March £m £m %
Falkland Islands Company 21.6 20.9 3.3
Momart 15.6 10.3 51.5
Portsmouth Harbour Ferry 3.1 1.4 121.4
Total revenue 40.3 32.6 23.6
Group underlying pre-tax profit* £m £m £m
Falkland Islands Company** 1.8 1.8 -
Momart** 0.6 (0.5) 1.1
Portsmouth Harbour Ferry** (0.1) (1.2) 1.1
Total underlying pre-tax profit * 2.3 0.1 2.2
Non-trading items (see notes below)*** (0.3) 0.1 (0.4)
Reported profit before tax 2.0 0.2 1.8
* Underlying pre-tax profit is defined as profit before tax before non-trading
items.
** As in prior years, the profits reported for each operating company are
stated after the allocation of head office management and plc costs which have
been applied to each subsidiary on a consistent basis.
*** In the current year, non-trading items comprised £0.3 million of
people-related costs including employee redundancies and compensation payable
to the former Chief Executive. The net non-trading profit of £0.1 million in
the prior year included £0.4 million of restructuring costs, which were
offset by £0.5 million of income relating to the release of accruals where it
is now probable that no future economic outflow will arise. Management
consider that separate presentation of these items is appropriate to
facilitate year on year comparison of performance of the Group.
Group Operating Company Performance
Falkland Islands Company
Total revenue of £21.6 million was £0.7 million ahead of the year ended 31
March 2021, with the majority of the improvement arising in Falkland Building
Services ("FBS") and Support services. These improvements were offset by a
reduction in Retail contribution arising from a change in sales mix and
increased overheads, resulting in an underlying pre-tax profit of £1.8
million, which was in line with the prior year.
The previous year's ban on tourists visiting the Falkland Islands continued,
although these restrictions were lifted on 4 May 2022, which should facilitate
their return in the southern hemisphere tourist season.
FIC Operating Results
Year ended 31 March 2022 2021 Change
£m £m %
Revenues
Retail 9.7 9.7 -
Falklands 4x4 2.8 2.8 -
FBS (housing and construction) 5.8 5.3 9.4
Support services 2.5 2.3 8.7
Property rental 0.8 0.8 -
Total FIC revenue 21.6 20.9 3.3
FIC underlying operating profit 1.9 1.9 -
Net interest expense (0.1) (0.1) -
FIC underlying profit before tax 1.8 1.8 -
FIC underlying operating profit margin 8.7% 9.1% (4.4)
FIC Divisional Activity
Year on year Retail sales were broadly flat. A continued lack of
tourist-related earnings for Falkland Islands residents, the relaxation of
international restrictions allowing islanders to travel overseas, and
shortages of certain products, resulted in a reduction in discretionary
expenditure on home improvement and electrical items. However, this was offset
by increased sales elsewhere, particularly from retail outlets that had been
partially closed in the prior year.
At Falklands 4x4, vehicle sales and rental income both improved over the prior
year, although this was offset by a reduction in servicing and spares
revenues, leaving overall income largely unchanged. FIC has now been confirmed
as the representative for Ineos for the sale of their Grenadier 4x4 vehicle in
the Falkland Islands with first deliveries targeted for late 2022.
FBS revenue increased by 9.4% driven mainly by civils contracts for the
Falkland Islands Government ("FIG"), including culvert and road capping works
on West Falkland, together with road preparation works, drainage and paving at
a mobile home park in Port Stanley. The order book remains strong and includes
the £17.3 million contract to build a total of 70 houses for FIG and the UK
Ministry of Defence ("MOD") over four years secured in November 2021 and a
three-year road capping contract for roads on East Falkland for £1.1 million
secured in May 2022.
Support Services income increased by £0.2 million to £2.5 million (2021:
£2.3 million) due predominantly to increased shipping agency revenues,
following the reopening of Stanley Harbour to fishing vessels.
Rental Properties. Further additions at a cost of £1.2 million (2021: £0.7
million) were made during the year to FIC's portfolio of domestic rental
properties taking the total number of rented properties at 31 March 2022 to 83
(2021: 75) with a further 2 under construction. Average occupancy rates
reduced during the year, due mainly to properties being held vacant for
overseas employees and service providers ahead of their arrival in the
Falkland Islands in line with immigration procedures. Notwithstanding this,
revenue remained broadly in line with the prior year at £0.8 million.
At 31 March 2022, the total net book value of the portfolio excluding assets
under construction (with buildings being fully depreciated over 50 years) was
£7.2 million (2021: £5.8 million). The estimated market value of FIC's
rental portfolio at 31 March 2022 was £10.1 million (2021: £8.5 million) an
uplift of £3.0 million on book value giving an average value per property of
£122,000 (2021: £113,000).
FIC Key Performance Indicators and Operational Drivers
Year ended 31 March 2018 2019 2020 2021 2022
Staff numbers (FTE 31 March)* 152 175 214 206 232
Capital expenditure £'000 389 2,348 2,685 1,060 2,434
Retail sales growth % +0.6 +5.7 +3.1 -3.0 -0.1
Number of FIC rental properties** 49 54 65 75 83
Average occupancy during the year % 89 93 86
89 84
Number of vehicles sold 77 76 71 71 81
Number of 3(rd) party houses sold*** 22 6 22 15 11
Illex squid catch in tonnes (000's) 75.5 57.4 57.6 106.1 123.8
59.3 62.5 72.1 Nil Nil
Cruise ship passengers (000's)
* Restated to include FIC staff in the UK.
**Includes ten mobile homes rented to staff.
***Relates to kit home sales to third parties and excludes houses built under
contract for FIG.
Momart
Revenue of £15.6 million for the year ended 31 March 2022, whilst not yet
back to pre-pandemic levels, was £5.3 million (52%) ahead of the prior year,
with improvements in both Museum Exhibitions and Gallery Services and a
consistent level of storage income. Combined with £0.4 million of
pandemic-related support from UK and local government (2021: £1.4 million),
this resulted in an underlying pre-tax profit of £0.6 million (2021: £0.5
million loss).
Museum Exhibitions activity benefitted from the relaxation of COVID
restrictions during the year which allowed institutions to plan a programme of
events. Whilst activity levels in terms of the number of exhibitions has now
returned to near pre-pandemic levels, the overall investment in exhibitions
remains suppressed as institutions rely on more of their own collections,
rather than extensive loans.
Commercial galleries, auction houses and private client activity also
benefited from the lifting of COVID restrictions, driven mainly by the return
of art fairs, which historically have been a significant part of Momart's
Gallery Services business. The return of Art Basel in September (traditionally
taking place in June) and Frieze London in October, contributed to a strong
start to the second half of the year and both delivered record revenues as
pent-up demand unwound.
Storage revenues remained broadly consistent with the prior year at £2.4
million with an 84% utilisation of storage capacity (2021: 83%).
Momart Operating Results
Year ended 31 March 2022 2021 Change
£m £m %
Revenues
Museum Exhibitions 7.4 4.5 64.4
Gallery Services 5.8 3.4 70.6
Storage 2.4 2.4 -
Total Momart revenue 15.6 10.3 51.5%
Momart underlying operating profit 1.0 - -
Net Interest expense (0.4) (0.5) 20.0
Momart underlying profit / (loss) before tax 0.6 (0.5) 220.0
Momart underlying operating profit margin 6.4% - -
Momart Key Performance Indicators and Operational Drivers
Year ended 31 March 2018 2019 2020 2021 2022
Staff numbers (FTE 31 March)
136 140 133 107 99
Capital expenditure £'000's 228 20,034 638 540 258
Warehouse % fill vs capacity 72.8% 81.1% 86.9% 82.9% 84.0%
Exhibition order book 31 March £4.2m £4.6m Note* Note* £4.3m
Momart services charged out £10.9m £11.5m £10.8m £6.5m £9.1m
Revenues from overseas clients £7.1m £7.5m £6.2m £2.7m £5.5m
Exhibitions sales growth 17.0% -6.5% -2.1% -58.3% 64.4%
Gallery Services sales growth 15.2% 4.0% -22.4% -41.4% 70.6%
Storage sales growth 8.5% -6.3% 5.8% 9.1% 0.0%
Total sales growth 15.5% -2.9% -8.7% -45.5% 51.5%
Note*: Due to the impact of COVID-19, meaningful data for secure forward
orders was not available.
Portsmouth Harbour Ferry Company
Passenger numbers at PHFC returned to circa 80% of pre-COVID levels over the
autumn, but dipped in December following Government guidance to work from
home. Recovery resumed following the lifting of guidance at the end of
January, and volumes were at circa 76% of pre-pandemic levels for the month
ended 31 March 2022, compared to 60% for the same period last year.
Overall passenger numbers for the year ended 31 March 2022 of 1.7 million were
broadly double those of the prior year, resulting in a £1.7 million increase
in revenue, an underlying operating profit of £0.2 million (2021: £0.9
million loss) and an underlying pre-tax loss of £0.1 million (2021: £1.2
million loss) after financing expense. Price increases introduced in April
2022, should further improve revenue in the current year, although this is
also heavily dependent on continued recovery in passenger numbers.
As noted at the half year, a "Park & Float" scheme was introduced as a
six-month trial in late June, offering a combined parking and ferry fare in
order to provide people not living within walking distance of the ferry with
an alternative to driving around the harbour to get to Portsmouth. This
received a low level of customer uptake, which is likely to have been
influenced by the operation of Portsmouth Council's own subsidised park and
ride scheme on the outskirts of the city, and was discontinued in December.
Investigations are ongoing as to how PHFC can work in partnership with
Hampshire Council as part of the development of a fully integrated transport
plan for the region.
PHFC Operating Results
Year ended 31 March 2022 2021
Change
£m £m %
Revenues
Ferry fares 3.1 1.4 121.4
Total PHFC revenue 3.1 1.4 121.4
PHFC underlying operating profit / (loss) 0.2 (0.9) 122.2
Pontoon lease liability & Boat loan finance expense (0.3) (0.3) -
PHFC underlying loss before tax (0.1) (1.2) 91.7
PHFC Key Performance Indicators and Operational Drivers
Year ended 31 March 2018 2019 2020 2021 2022
Staff numbers (FTE at 31 March) 38 37 36 25 26
Capital expenditure £'000's 186 50 65 - 52
Ferry reliability (on time departures) 99.8 99.8 99.8 99.9 99.9
Number of weekday passengers '000's 1,878 1,834 1,706 613 1,188
% change on prior year -4.5 -2.3 -7.0 -64.1 93.8
Number of weekend passengers '000's 734 722 659 195 500
% change on prior year -1.3 -1.6 -8.7 -70.4 156.4
Total number of passengers '000's 2,612 2,556 2,365 808 1,688
% change on prior year -3.6 -2.1 -7.5 -65.8 108.9
Revenue growth % 1.5 0.4 -5.5 -65.9 114.2
Average yield per passenger journey* £1.58 £1.62 £1.69 £1.76 £1.76
*Total ferry fares divided by the total number of passengers
Trading Outlook
The overall trading outlook for the Group remains positive. In FIC, the
expected return of tourism to the Falkland Islands, along with a strong order
book and potential opportunities for further work with FIG and the MOD, all
bode well for the future. Further progress is expected at Momart and PHFC,
although the pace of recovery remains dependent on the rate of return of
customer activity as the impact of COVID hopefully continues to recede. As
trading levels continue to recover, the challenge for the Group will
inevitably move to satisfying the growing demand. Decisive action was taken to
reduce staff numbers and costs during the pandemic and their growth must
continue to be carefully managed as activity increases, particularly given the
high levels of inflation currently being experienced.
Group Strategy
The aim of the Board is to build a Group of greater scale providing consistent
earnings growth and cash generation that will provide shareholders with both
predictable capital growth and regular dividend income. To deliver this, the
Group strategy has three key strands:
Build the profits of the existing businesses back to and beyond the pre-COVID
position. Good progress was made in the year ended 31 March 2022, but more
remains to be done. As noted above, a key challenge will be to manage costs in
line with the ongoing trading recovery.
Invest in developing the existing businesses. The Board are particularly
focussed on capitalising on potential opportunities for further work for FIG
and the MOD, building on the £17.3 million housing contract awarded in
November 2021, as well as on maximising returns from existing FIC land assets.
The potential for additional opportunities arising from the development of the
Sea Lion oil field will also be monitored closely. However, the Board does
not rely in its planning on any such development due to the uncertain and
lengthy timescales involved and the undefined nature of any benefit which
might accrue to FIC.
Explore the potential for strategic acquisitions. This could provide a step
change in the scale of FIH, but acquisitions will only be considered if they
either add to existing activities or bring growth potential from other
attractive sectors, can be secured at an appropriate price and are within the
capacity of the senior executive team to integrate and optimise without
negatively impacting the performance of the existing businesses.
Financial Review
Revenue
As trading headed back to pre-pandemic levels, Group revenue increased by
£7.7 million (24%) to £40.3 million. The majority of the improvement arose
in Momart and PHFC, where the effects of COVID-19 had previously been felt
most severely, with revenue improving by £5.3 million and £1.7 million
respectively. FIC revenue improved by £0.7 million, despite the previous
year's COVID-related ban on tourists visiting the Falkland Islands continuing
during the year.
Underlying Operating Profit
Underlying operating profit before net finance costs increased by £2.1
million (210%) to £3.1 million (2021: £1.0 million). This was despite grant
income received under furlough schemes and other government support reducing
by £1.3 million to £0.5 million (2021: £1.8 million) and reflected the
revenue increases noted above.
Net Financing Costs
The Group's net financing costs of £0.8 million were broadly in line with the
prior year. Two UK Government-backed CBILS loans totalling £5.0 million were
repaid in June 2021, but interest payments on these loans had been covered by
the UK Government and therefore this had no impact on net financing costs in
the year.
Reported Pre-tax Profit
The reported pre-tax result for the year ended 31 March 2022 was a profit of
£2.0 million (2021: £0.2 million). Non-trading items in the current year
included £0.3 million of people related costs including employee redundancies
and compensation payable to the former Chief Executive. The Group's underlying
profit before tax before these non-trading items was £2.3 million (2021:
£0.1 million). Non-trading items in the prior year included £0.4 million of
restructuring costs and £0.5 million income from the derecognition of
historic liabilities, which were previously included within accruals, but are
no longer enforceable.
Taxation
Tax on current year profits has increased by £0.8 million. This is mainly
due to increased profitability (£0.3 million) and the increase in UK deferred
tax (£0.5 million) due to the increase in the UK corporation tax rate from
19% to 25% from 1 April 2023.
Earnings per Share
Basic and Diluted Earnings per Share ("EPS") derived from reported profits was
7.6 pence (2021: 0.1 pence). Basic and Diluted EPS derived from underlying
profits was 9.5 pence (2021: 0.0 pence).
Balance Sheet
The Group's balance sheet remained strong, with total net assets growing to
£40.7 million (2021: £38.9 million). Retained earnings increased by £1.1
million to £20.7 million (2021: £19.6 million) and the hedging reserve
improved by £0.7 million, reflecting an increase in the fair value of hedges
taken through other comprehensive income in accordance with IFRS 9.
Net Debt
Year ended 31 March 2022 2021 Change
£m £m £m
Bank loans (14.2) (20.1) 5.9
Cash and cash equivalents 9.6 14.6 (5.0)
Bank loans net of cash and cash equivalents (4.6) (5.5) 0.9
Lease liabilities (7.1) (8.1) 1.0
Net debt (11.7) (13.6) 1.9
Bank loans reduced to £14.2 million (2021: £20.1 million) as a result of the
£5.0 million CBILS loans repayment in June 2021 and scheduled loan repayments
of £0.9 million. The Group's cash balances reduced by £5.0 million to £9.6
million (2021: £14.6 million) reflecting the repayment of the £5.0 million
CBILS loans. Overall net debt improved by £1.9 million to £11.7 million
(2021: £13.6 million).
The Group's outstanding lease liabilities totalled £7.1 million (2021: £8.1
million) with £5.2 million of the balance (2021: £5.8 million) relating to
the 50-year leases from Gosport Borough Council for the Gosport Pontoon and
associated ground rent, which run until June 2061.
The carrying value of intangible assets remains unchanged from the prior year
at £4.2 million following an annual impairment review which indicated that no
impairment was required at Momart.
The net book value of property, plant and equipment decreased by £1.3 million
to £39.1 million (2021: £40.4 million) with additions of £1.4 million being
offset by depreciation charges of £2.2 million and a net reduction of £0.4
million on right of use assets following a lease modification relating to the
Gosport pontoon ground rent.
At 31 March 2022, the Group had 83 (2021: 75) completed investment properties,
comprising commercial and residential properties in the Falkland Islands,
which are held for rental. Two properties were under construction at 31 March
2022 (2021: 7). In addition, FIC held 400 acres of land in and around
Stanley, including 18 acres zoned for industrial development and 25 acres of
prime mixed-use land, and a further 300 acres of undeveloped land outside
Stanley.
The net book value of the investment properties and undeveloped land of £8.2
million (2021: £7.1 million) has been reviewed by the directors of FIC
resident in the Falkland Islands. At 31 March 2022 the fair value of this
property portfolio, including undeveloped land, was estimated at £12.5
million (2021: £11.1 million), an uplift of £4.3 million on net book value.
FIC's 83 houses and flats had an estimated fair value of £10.1 million (2021:
£8.5 million). The value of FIC's 700 acres of land was estimated at £2.2
million (2021: £2.2 million). The properties under construction at 31 March
2022 were valued at cost of £0.2 million (2021: £0.5 million).
Deferred tax assets relating to future pension liabilities stood at £0.7
million (2021: £0.7 million). This balance relates to the deferred tax
benefit of expected future pension payments in the FIC unfunded scheme
calculated by applying the 26% Falkland Islands' tax rate to the pension
liability.
Inventories, which largely represent stock held for resale and work in
progress at FIC increased by £0.8 million to £6.7 million at 31 March 2022
(2021: £5.9 million). This was mainly due to an increase in housebuilding
related stock and work in progress at FIC as a result of the timing of
deliveries and the phasing of the related works.
Trade and other receivables increased by £2.0 million to £7.9 million at 31
March 2022 (2021: £5.9 million) due mainly to increased sales activity in
Momart towards the end of the year.
Trade and other payables increased by £3.2 million to £10.0 million at 31
March 2022 (2021: £6.8 million) reflecting increased trading activity in
Momart before year end and an increase in amounts received in advance of
service delivery in FIC.
At 31 March 2022, the liability due in respect of the Group's only defined
benefit pension scheme, in FIC, was £2.6 million (2021: £2.8 million). This
pension scheme, which was closed to new entrants in 1988 and to further
accrual in 2007, is unfunded and liabilities are met from operating cash flow.
A decrease in the liability largely arose as a result of an increase in
interest rates on relevant corporate bonds and has been fed through reserves
in accordance with IAS 19. Eleven former employees receive a pension from the
scheme at 31 March 2022 and there are three deferred members.
The Group's deferred tax liabilities, excluding the pension asset at 31 March
2022, were £3.9 million (2021: £3.1 million) with the increase due largely
to the change in the UK Corporation tax rate from 19% to 25% effective 1(st)
April 2023.
Cash Flows
Net cash inflow from operating activities of £5.1 million was £1.4 million
more than the prior year inflow of £3.7 million. The increase was principally
due to a £2.2 million increase in underlying EBITDA, which was partly offset
by the working capital improvement in the prior year not being repeated in the
year ended 31 March 2022. Overall, working capital remained in line with the
prior year, despite the increase in trading activity.
The Group's operating cash flow can be summarised as follows:
Year ended 31 March 2022 2021 Change
£m £m £m
Underlying profit before tax 2.3 0.1 2.2
Depreciation & amortisation 2.4 2.3 0.1
Net interest payable 0.8 0.9 (0.1)
Underlying EBITDA 5.5 3.3 2.2
Non-trading, cash items - (0.4) 0.4
Increase in hire purchase debtors (0.1) - (0.1)
Decrease / (increase) in working capital - 1.0 (1.0)
Tax paid and other (0.3) (0.2) (0.1)
Net cash inflow from operating activities 5.1 3.7 1.4
Financing and investing activities
Capital expenditure (2.7) (1.5) (1.2)
Disposal of fixed assets 0.1 - 0.1
Net bank and lease liabilities interest paid (0.8) (0.8) -
Bank and lease liability repayments (6.6) (1.3) (5.3)
Dividends paid (0.1) - (0.1)
Bank and lease liabilities draw down - 5.4 (5.4)
Net cash (outflow) / inflow from financing and investing activities (10.1) 1.8 (11.9)
Net cash (outflow) / inflow (5.0) 5.5 (10.5)
Cash balance b/fwd. 14.6 9.1 5.5
Cash balance c/fwd. 9.6 14.6 (5.0)
Financing and Investing Activities
During the year, the Group invested £2.7 million of capital expenditure,
comprising £1.2 million of investment property, £1.4 million on fixed asset
property, plant and equipment and £0.1 million on computer software.
The £6.6 million of bank and lease liabilities repayments in the year
included the £5.0 million CBILS loans repaid in June 2021. The £5.4 million
of bank and lease liabilities drawn down in the prior year included £5.0
million CBILS drawn down in June 2020 and the funding of vehicles in Momart of
£0.4 million.
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 by the UK Government to suppress COVID-19 had The impact was immediate and severe but activity is reviving since the Moderate (decreased from very high) and continuing to decrease
an unprecedented impact on the fundamental conditions of supply and demand in cessation of lockdown measures.
the Group's UK businesses.
The economic costs were mitigated in both businesses by the use of the UK
Government's furlough grant scheme.
At Momart, demand from the company's museum and gallery clients fell away as Activity is increasing following the cessation of lockdown measures. Moderate (decreased from very high) - and continuing to decrease
the prohibition on public gatherings effectively closed client operations
completely, with the consequent cessation of Momart's art handling activities.
Revised staff safety protocols and the need to use PPE for staff slowed down Safe working practices were reviewed and updated in great detail with Low - decreased as lockdown restrictions removed.
installations at Momart and increased the cost of operations. The impact on reference to UK Government guidance and in consultation with staff.
FIC and PHFC was minimal.
Wherever possible, the additional costs of operating have been passed on to
clients. (All competitors face a similar challenge).
At PHFC, the initial lockdown in 2020 saw ferry customers cease their normal Passenger numbers increased as lock down measures were relaxed during the Moderate - decreased
daily travel to work and leisure activities, causing a 90% fall in ferry year. Government guidance to work from home, issued in December 2021,
traffic. resulted in a dip in numbers, but recovery continued once this was lifted at
the end of January 2022.
Longer term changes in customer behaviour may result from the pandemic: an Leisure traffic has recovered more quickly than commuter traffic, where a Low - unchanged
increased reluctance to use public transport and more hybrid/working from significant number of people are working from home for at least part of their
home. working week. Current high costs of vehicle fuel may push people towards
using public transport.
Despite a successful vaccination programme, the Falkland Islands remained Restrictions on tourists visiting were lifted in May 2022, which should Low - decreased
closed to overseas visitors in the year, which removed an important source of facilitate their return.
income for the economy.
POLITICAL RISKS
Risk Comment Potential Impact
Historically, Argentina has maintained a claim to the Falkland Islands, and Relations between the UK and Argentina have become more strained in recent Low - unchanged
this dispute has never been officially resolved. years. However, the security afforded by the UK Government's commitment to
the Islands upholds the freedom and livelihood of the people of the Falkland
Islands and thereby of FIC.
Provided UK Government support is maintained the security of the people of the
Falkland Islands is judged to at low risk.
Uncertainty caused by the UK's decision to leave the European Union. To date, there has been little direct impact on the Group's businesses arising Low - unchanged
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 was unprecedented, it has been matched by The trading performance of both the Group's UK companies has been severely High but steadily reducing impact on UK operations
equally unprecedented government interventions on a global scale which has affected by the effects of COVID-19 but UK Government economic support and the
sustained economic confidence and activity. success of the vaccination programme mean that the adverse effects are being
steadily reduced as the Group's businesses return to more normal levels of
activity.
International travel continued to be badly affected by COVID-19. Despite this, FIC continued to maintain its revenue and profitability in Low - reduced
2022. Restrictions on travel to the Falkland Islands were lifted in May 2022
which should facilitate the return of tourists.
Economic activity in the Falkland Islands has been subject to fluctuation, Oil-related activity in recent years has been minimal and the success of the Low - unchanged
dependent upon oil sector activity. Falkland Islands' economy is not predicated on the development of oil
reserves.
Budgets available to museums for exhibitions can fluctuate with government Activity is increasing following the cessation of lockdown measures. Impact Moderate - unchanged but reducing as public confidence returns.
spending and the commercial art market exhibits cyclicality; both have a has been mitigated by a reduction in Momart's cost base and careful cost
direct impact on Momart. Both these effects have been exacerbated by COVID-19. control as activity returns.
Inflationary pressures across all Group businesses impact the cost of wages, Continued focus on cost efficiency as activity returns to pre-pandemic High - new
services and products. levels. Customer and supplier contracts structured to limit or pass on
inflation risk. Cost inflation monitored closely and passed on to customers
via price increases wherever possible.
CREDIT RISK
Risk Comment Potential Impact
Credit risk is the risk of financial loss if a customer fails to meet its Effective processes are in place to monitor and recover amounts due from Low - unchanged
contractual obligations. customers. Even with COVID-19, bad debt experience has been minimal.
COMPETITION
Risk Comment Potential Impact
FIC is considered by the senior management to be a market leader in a number Local competition is healthy for FIC and stimulates continuing business Low - unchanged
of business activities, but faces competition from local entrepreneurs in many improvement in FIC
of the sectors in which it operates.
Momart sits in a highly competitive market, with both UK and International
competitors investing for growth.
Largely unchanged.
Moderate - unchanged
Large capital infrastructure investment projects may entice larger overseas FIC has been successful in winning work against overseas competitors and has Moderate - new risk.
businesses to look at the opportunities available and reduce the ability of built up strong links with FIG and MOD.
FIC to undertake the work.
Being located in the Falkland Islands gives FIC a competitive advantage
against overseas companies.
FOREIGN CURRENCY AND INTEREST RATE RISK
Risk Comment Potential Impact
Momart is exposed to foreign currency risk arising from trading and other Forward exchange contracts are used to mitigate this risk, with the exchange Low -
payables denominated in foreign currencies. rate fixed for all significant contracts.
unchanged
The Group is exposed to interest rate risks on large loans. Interest rate risk on large loans is mitigated by the use of interest rate
swaps.
FIC retail outlets accept foreign currency and are exposed to fluctuations in
the value of the dollar and euro.
INVENTORY
Risk Comment Potential Impact
Inventory risk relates to losses on realising the carrying value on ultimate Reviews of old and slow-moving stock in Stanley are regularly undertaken by Moderate- unchanged
sale. Losses include obsolescence, shrinkage or changes in market demand such senior management and appropriate action taken.
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 of the senior management team or failure to None of the Group's businesses is reliant on the skills of any one person. The Low - unchanged
attract and retain experienced and skilled people at all levels across the wide spread of the Group's operations further dilutes the risk.
business could have an adverse impact on the business.
FIC has a reliance on being able to attract staff from overseas including many The development of tourism on St Helena has been slow and the Falkland Islands Low - unchanged
from St Helena. Development of those locations might reduce the pool of remain an attractive location for St Helenian people to work.
available staff.
FIC has a reliance on being able to attract staff from overseas generally. Immigration procedures in the Falkland Islands are bureaucratic and slow, Moderate - unchanged
although FIG is aware and seeking to streamline the process.
All Group companies are experiencing a shortage of skilled employees as the This has driven wages costs up and constrained the growth of the businesses. Moderate - new
businesses grow and recover from the pandemic. In the UK, Momart has suffered
from shortages in drivers and art technicians.
LAWS AND REGULATION
Risk Comment Potential Impact
Failure to comply with the frequently changing regulatory environment could The regulatory environment continues to become increasingly complex. Low - unchanged
result in 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 are considered a key priority for the
Board of FIH and all its operating companies. Particular attention has been
paid to updating risk assessments and safe working practices in the light of Low - unchanged
COVID-19.
The Group is required to comply with laws and regulation governing
occupational health and safety matters. Furthermore, accidents could happen
which might result in injury to an individual, claims against the Group and
damage to our reputation. 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
Stuart Munro
Chief Executive
5 July 2022
Board of Directors and Secretary
Robin Williams, Non-executive Chairman
Robin joined the Board in September 2017. He has a wide breadth of corporate
experience, gained at a range of quoted and private businesses as well as from
an early career in investment banking. He is currently also Chairman at
Keystone Law Group plc. Robin qualified as an accountant in 1982 after
graduating in engineering science from the University of Oxford. He worked in
corporate finance for ten years before leaving the City in 1992 to co-found
the packaging business, Britton Group plc. In 1998, he moved to Hepworth plc,
the building materials group, and since 2004 he has focused on non-executive
work in public, private and private equity backed businesses. His financial
background provides the experience required as Chairman of the Group to review
and challenge decisions and opportunities. Robin is a member of the Audit and
Remuneration Committees and is Chairman of the Nominations Committee.
Stuart Munro, Chief Executive
Stuart joined the Board on 28 April 2021 as Chief Financial Officer before
taking over as Chief Executive on 14 April 2022. He qualified as a chartered
accountant with Ernst & Young and worked as a divisional finance director
in number of UK companies including Balfour Beatty, Alfred McAlpine
Infrastructure Services and FirstGroup as well as Transport for London. From
2015 until joining FIH group, Stuart provided strategic, financial and
operational consultancy to a number of medium sized Private Equity backed
services companies across a variety of sectors.
Jeremy Brade, Non-executive Director
Jeremy joined the Board in 2009, he is a director of Harwood Capital
Management where he is the senior private equity partner and has worked in UK
private equity for over 20 years. He has led several successful acquisitions
and public-to-private transactions. Previously, Jeremy was with the Foreign
and Commonwealth Office (FCO) and prior to that, he was an army officer. Using
his experience of acquisitions and various corporate transactions, Jeremy
brings a wealth of knowledge and expertise on restructuring, funding and
transforming companies. Jeremy is a member of the Nominations, Audit and
Remuneration Committees and holds a number of other non-executive
directorships including one at Fulcrum Utility Services Limited.
Robert Johnston, Non-executive Director
Robert joined the Board on 13 June 2017; he is an experienced non-executive
director and investment professional and has served on the boards of several
quoted companies in both North America and in UK, including Fyffes PLC and
Supremex Inc. Robert has been the Chief Strategy Officer and Executive Vice
President at The InterTech Group, Inc. and has over 20 years of experience in
various financial and strategic roles. He is the principal representative of
the Jerry Zucker Revocable Trust. Robert brings experience on many
transactions at both the corporate and asset level, including debt and equity,
and his experience in the banking sector will prove invaluable to developing
the Group. Robert represents the Company's largest shareholder, "The Article 6
Marital Trust, created under the First Amended and Restated Jerry Zucker
Revocable Trust dated 4-2-07", which has a beneficial holding of 3,596,553
ordinary Shares, representing 28.7% of the Company's issued share capital.
He is currently on the boards of Colabor Group Inc, Corning Natural Gas
Holding Corp, Supremex Inc. (where he is Chairman), Circa Enterprises Inc.,
Swiss Water Decaffeinated Coffee Inc and RGC Resources Inc. Robert is a member
of the Nominations and Audit Committees and is Chairman of the Remuneration
Committee.
Dominic Lavelle, Non-executive Director
Dominic joined the Board on 1 December 2019; Dominic brings to FIH a wide
breadth of corporate experience. Most recently, Dominic was Chief Financial
Officer of SDL plc from 2013 to 2018. He has over 15 years' experience as a UK
plc Main Board Director and has been Finance Director/Chief Financial Officer
of seven UK publicly traded companies including Mothercare plc, Alfred
McAlpine plc, Allders plc and Oasis plc. His experience, in both permanent
roles and turnaround and restructuring projects across several business
sectors is a great benefit to the Group, particularly with the various
business streams operated by FIC.
After graduating in Civil and Structural Engineering from the University of
Sheffield in 1984, Dominic trained with Arthur Andersen and qualified as a
chartered accountant in 1989. He is currently senior independent non-executive
director and Chair of the Audit Committee of the AIM quoted Fulcrum Utility
Services Limited and a director of Steenbok Newco 10 SARL, a wholly owned
subsidiary of the Steinhoff Group. Dominic is a member of the Nominations and
Remuneration Committees and is Chair of the Audit Committee.
Iain Harrison, Company Secretary
Iain Harrison joined the Company in April 2019. Iain has a BSc in Mathematics
from Edinburgh University and qualified as a Chartered Accountant in Scotland
in 1993. He has previously worked at RBS group and Heriot Watt University and
was Company Secretary at Dawson International plc from 2003-2004.
Corporate Governance Statement
Dear Shareholder,
As Chairman of the Company, I am responsible for leading the Board in applying
good corporate governance and the Board is committed to appropriate governance
across the business, both at an executive level and throughout its operations.
The Board strives to ensure that the objectives of the business, the
principles and risks are underpinned by values of good governance throughout
the organisation.
The FIH group plc Board values include embedding a culture of ethics and
integrity, and the adoption of higher governance standards, to maintain its
reputation by fostering good relationships with employees, shareholders and
other stakeholders to deliver long term business success.
In 2018 the AIM Rules for Companies were updated to acknowledge a change in
investor expectations toward corporate governance for companies admitted to
trading on AIM, and the Board, took the decision to adopt the revised Quoted
Companies Alliance Corporate Governance Code 2018 (the "QCA Code") which they
believe is the most appropriate recognised governance code for the Company.
The QCA Code has ten principles of corporate governance that the Company has
complied with as set out on the Company's website www.fihplc.com
(http://www.fihplc.com) in the Corporate Governance section.
The Board is aware of the need to protect the interests of minority
shareholders, and balancing those interests with those of any more substantial
shareholders, including those interests of the Jerry Zucker Revocable Trust, a
major shareholder holding circa 29% of the issued share capital and voting
rights, which are represented on the Board by the non-executive director,
Robert Johnston.
Beyond the Annual General Meeting, the Chief Executive offers to meet with all
significant shareholders after the release of the half year and full year
results and the Chairman is available throughout. The Chief Executive and the
Chairman are the primary points of contact for the shareholders and are
available to answer queries over the phone or via email from shareholders
throughout the year.
Business Model and Strategy
The Group's strategy is to continue to develop the potential of its existing
companies: to fill storage capacity and make further progress at Momart, to
maintain the strong cash flow from PHFC and to invest in FIC to take full
advantage of the longer-term growth opportunities in the Falkland Islands.
While doing this, management are also alert to the benefits of a well-judged
complementary acquisition that would give increased scale and growth potential
for the Group and enhance the liquidity of FIH shares.
Risk Management
The Board has overall responsibility for the systems of risk management and
internal control and for reviewing their effectiveness. The internal controls
are designed to manage rather than eliminate risk and provide reasonable but
not absolute assurance against material misstatement or loss. The key risks of
the Group are presented in the Chief Executive's Strategic Report.
The Board has determined that an internal audit function is not justified due
to the small size of the Group and its administrative function and the high
level of director review and authorisation of transactions.
A Directors' and Officers' Liability Insurance policy is maintained for all
directors and each director has the benefit of a Deed of Indemnity.
Director Independence
The Board considers itself sufficiently independent. The QCA Code suggests
that a board should have at least two independent non-executive directors. The
Board has considered each non-executive director's length of service and
interests in the share capital of the Group and consider that Mr Williams, Mr
Brade, Mr Johnston and Mr Lavelle are independent of the executive management
and free from any undue extraneous influences which might otherwise affect
their judgement. All Board members are fully aware of their fiduciary duty
under company law and consequently seek at all times to act in the best
interests of the Company as a whole.
Whilst the Company is guided by the provisions of the QCA Code in respect of
the independence of directors, it gives regard to the overall effectiveness
and independence of the contribution made by directors to the Board in
considering their independence, and does not consider a director's period of
service in isolation to determine this independence. The Board acknowledges
that Robert Johnston, who joined the Board on 13 June 2017, represents the
Company's largest shareholder, "The Article 6 Marital Trust, created under the
First Amended and Restated Jerry Zucker Revocable Trust dated 4-2-07", (the
"Zucker Trust"), which has a beneficial holding of 3,596,553 ordinary Shares,
representing circa 29% of the Company's issued share capital. The Board has
considered Mr Johnston's independence, given his representation of this
shareholding and all Board members have satisfied themselves that they
consider Mr Johnston to be independent. This is as a consequence of (i) the
fact that Mr Johnston has considerable international investment expertise, and
(ii) that the shareholding of his employer in FIH represents only a small part
of its wider portfolio, but nonetheless aligns him with the interests of FIH
shareholders generally.
Jeremy Brade's tenure, at over the suggested nine years for PLC directors, is
not the determining factor in his independence, which the Board judges in
relation to his contribution and depth of knowledge of the Group's operations
and history. In view of his long service, Jeremy will step down from the Board
at the AGM in 2022. All directors retire by rotation and are subject to
election by shareholders at least once every three years. Any non-executive
directors who have served on the Board for at least nine years are subject to
annual re-election.
Time Commitment of Directors
Stuart Munro, Chief Executive of the company, is the only full-time executive
director. Robin Williams, Jeremy Brade, Robert Johnston and Dominic Lavelle
have all been appointed on service contracts for an initial term of three
years. Overall, it is anticipated that non-executive directors spend 10-15
days a year on the Group's business after the initial induction, which
includes a trip to the Group's subsidiary in the Falkland Islands. However,
the non-executive directors and the Chairman in particular, spend
significantly more time than this on the business of the Group.
All directors are expected to attend all Board meetings, the Annual General
Meeting and any extraordinary general meetings. Non-executive directors are
expected to devote additional time in respect of any ad hoc matters, such as
significant investment opportunities, responding to market changes,
consideration of any business acquisitions, and any significant recruitment or
corporate governance changes.
Skills and Qualities of Each Director
The Board recognised the importance of having directors with a diverse range
of skills, experience and attributes, which we have across our current Board.
Each Board member contributes a different skill set based on their own
experience, which is discussed in detail in the "Board of Directors and
Secretary".
Board Meetings
The Board meets frequently throughout the year to consider strategy, corporate
governance matters, and performance. Prior to each meeting, all directors
receive appropriate and timely information. Since the last annual report was
published on 6 July 2021 there have been eight Board meetings. Robin Williams,
Stuart Munro, Robert Johnston and Dominic Lavelle have attended all meetings.
Jeremy Brade has attended eight meetings. John Foster attended six out of the
seven meetings held up prior to him ceasing to be a director on 14 April 2021.
The Remuneration committee has met twice since 6 July 2021 to review executive
base pay and bonus structure, as well as the issue of grants under the Long
Term Incentive Plan and all members of the committee were in attendance.
There have also been two Audit Committee meetings since 6 July 2021, which
were attended by all members of the committee. The Nominations Committee
meets on an ad hoc basis to consider Board composition and succession and met
a number of times during the year to consider the succession of the Chief
Executive role and the future shape of the Board.
Board Directors
The Board comprises Robin Williams, the non-executive Chairman, Stuart Munro,
the full time Chief Executive, and three other non-executive directors, Jeremy
Brade, Robert Johnston and Dominic Lavelle.
Details of How Each Director Keeps Their Skill Set Up to Date
The Board as a whole is kept abreast by the Company's lawyers with
developments of governance, and by WH Ireland, the Company's Nominated
Adviser, of updates to AIM regulations. The Group's auditors, KPMG, meet with
the Board as a whole twice a year and keep the Board updated with any
regulatory changes in finance and accounting.
Any External Advice Sought by the Board
RSM Tenon, the Group's tax advisors ensure compliance with taxation law and
transfer pricing and the Company's lawyers advised on a number of areas.
Internal Advisory Responsibilities
The Chief Executive helps keep the Board up to date on areas of new governance
and liaises with the Nominated Adviser on areas of AIM requirements, and with
the Company's lawyers on areas such as Modern Slavery, Data Protection and
other legal matters. He also liaises with the Company's tax advisers with
regards to tax matters and with the Group's auditors with respect to the
application of current and new accounting standards, and on the status on
compliance generally around the Group. The Chief Executive has frequent
communication with the Chairman and is available to other members of the Board
as and when required.
Board Performance Effectiveness
The directors have considered the effectiveness of the Board, committees and
individual performance, and this was discussed by the Board in the April 2022
meeting. The Board meets formally five times a year with update Board meetings
held in between these meetings as required. There is a strong flow of
communication between the directors, in particular the relationship between
the Chief Executive and Chairman, who have regular additional calls or
meetings. The agenda for the formal meetings are set with the consultation of
both the Chief Executive and Chairman, and wherever possible, papers are
circulated a week in advance of the meetings, giving directors ample time to
review the documentation and enabling an effective meeting. Resulting actions
are tracked as matters arising and followed up at subsequent Board meetings to
ensure that they have been addressed.
Board Performance Evaluation
In 2022, the Chairman conducted an effectiveness review by means of a
questionnaire, with comment on the Chairman passed to Jeremy Brade as the
Senior Independent Director at that time. The outcome of the appraisal is that
the Board has been effective in discharging its duties during the year. The
review was conducted in March 2022 and discussed at the April 2022 Board
meeting, with useful conclusions in the areas of major shareholder
representation on the Board, the content of briefings to the Board prior to
meetings, the development of strategy and the presentation of recommendations
to the Board. The frequency of meetings was reviewed as the recovery from the
pandemic became more visible and the Board has put in place a more structured
programme of interaction with operating management.
Robin Williams
Chairman
5 July 2022
Audit Committee Report
The Audit Committee comprises the four non-executive directors: Jeremy Brade,
Robert Johnston, Dominic Lavelle and Robin Williams, and is chaired by Dominic
Lavelle. The Audit Committee reviews the external audit activities, monitors
compliance with statutory requirements for financial reporting and reviews the
half year and annual financial statements before they are presented to the
Board for approval. The Audit Committee also keeps under review the scope and
results of the audit and its cost effectiveness and the independence and
objectivity of the Auditor and the effectiveness of the Group's internal
control systems.
The Committee meets twice a year to review both the year end and half year
results and KPMG, the Company's auditors, attend both of these meetings in
person. It is the Audit Committee's role to provide formal and transparent
arrangements, to consider how to apply financial reporting under IFRS, the
Companies Act 2006, and the requirements of the QCA Code and also to maintain
an appropriate relationship with the independent auditor of the Group.
The current terms of reference of the Audit Committee were reviewed and
updated in January 2018.
Effectiveness of the External Audit Process
The Audit Committee is committed to ensuring that the external audit process
remains effective on a continuing basis as set out below:
· Reviewing the independence of the incumbent auditor;
· Considering if the audit engagement planning, including the team
quality and numbers is sufficient and appropriate;
· Ensuring that the quality and transparency of communications with
the external auditors are timely, clear, concise and relevant and that any
suggestions for improvements or changes are constructive;
· Exercising professional scepticism, including but not limited to,
looking at contrary evidence, the reliability of evidence, the appropriateness
and accuracy of management responses to queries, considering potential fraud
and the need for additional procedures and the willingness of the auditor to
challenge management assumptions; and
· Feedback is provided by the external auditor twice a year to the
Audit Committee, after the full year audit and half year review, with
one-to-one discussions held beforehand between the Chair of the Audit
Committee and the audit firm partner.
External Auditor
The external auditor (KPMG LLP) was appointed in 1997. The current audit
engagement partner has been in place since the audit for the year ended 31
March 2021 and will step down after the audit for the year ended 31 March
2025. The analysis of the auditor's remuneration is shown in note 6. Tax
advisory services are provided by RSM UK Tax and Accounting Limited.
Non-audit Services Provided by the External Auditor
The Audit Committee keeps the appointment of external auditors to perform
non-audit services for the Group under continual review, receiving a report at
each Audit Committee meeting. In the year ended 31 March 2022, there were no
non-audit fees paid to KPMG LLP (2021: £nil).
Emerging Risks
The risk management approach is subject to continuous review and updates in
order to reflect new and developing issues which might impact business
strategy. Emerging or topical risks are examined to understand their
significance to the business. Risks are identified and monitored through
risk registers at the Group level and discussed at each Board meeting to
consider new threats.
Areas of Judgement and Estimation
In making its recommendation that the financial statements be approved by the
Board, the Audit Committee has taken account of the following significant
issues and judgements involving estimation:
Impairment Testing
The Group tests material goodwill annually for impairment, or more frequently
if there are indications that goodwill and/or indefinite life assets might be
impaired. An impairment test is a comparison of the carrying value of the
assets of a CGU, based on a value-in-use calculation, to their recoverable
amounts. Impairment is necessary when the recoverable amount is less than the
carrying value.
Impairment testing of the tangible assets of PHFC and the goodwill and
intangible assets of Momart have been carried out in the current year with no
impairment charge being deemed necessary and there being adequate headroom in
the impairment assessments.
Inventory Provisions
An inventory provision is booked when the realisable value from sale of the
inventory is estimated to be lower than the inventory carrying value, or where
the stock is slow-moving, obsolete or damaged, and is therefore unlikely to be
sold. The quantification of the inventory provision requires the use of
estimates and judgements and if actual future demand were to be lower or
higher than estimated, the potential amendments to the provisions could have a
material effect on the results of the Group.
Defined Benefit Pension Liabilities
A significant degree of estimation is involved in predicting the ultimate
benefit payments to pensioners in the FIC defined benefit pension scheme.
Actuarial assumptions have been used to value the defined benefit pension
liability (see note 23). Management have selected these assumptions from a
range of possible options following consultations with independent actuarial
advisers. The actuarial valuation includes estimates about discount rates and
mortality rates, and the long-term nature of these plans, make the estimates
subject to significant uncertainties.
There are eleven pensioners currently receiving a monthly pension under the
scheme and three deferred members.
Dominic Lavelle
Independent Non-executive Director
5 July 2022
Directors' Report
The directors present their annual report and the financial statements for the
Company and for the Group for the year ended 31 March 2022.
Results and Dividend
As set out in the Group Income Statement, the Group profit for the year after
taxation amounted to £947,000 (2021: £9,000). Basic earnings per share on
underlying profits were 9.5 pence (2021: 0.0 pence).
With the Group's recovery further underpinned by the continued profit
improvement in the second half of the year, the Board is pleased to announce
that a final dividend of 2.0 pence per share will be recommended for approval
at the Annual General Meeting. Together with the interim dividend of 1.0
pence paid on 14 January 2022, the proposed dividend will take the total
dividend for the year ended 31 March 2022 to 3.0 pence per share (2021: nil).
Principal Activities
The business of the Group during the year ended 31 March 2022 was general
trading in the Falkland Islands, the operation of a passenger ferry across
Portsmouth Harbour and the provision of international arts logistics and
storage services. The principal activities of the Group are discussed in more
detail in the Chief Executive's Strategic Report and should be considered as
part of the Directors' Report for the purposes of the requirements of the
enhanced Directors' Report guidance.
The principal activity of the Company is that of a holding company.
Directors
Stuart Munro was appointed as a director on 28 April 2021 and John Foster
resigned as a director on 14 April 2022.
Directors' Interests
The interests of the directors in the issued shares and share options over the
shares of the Company are set out below under the heading "Directors'
interests in shares". During the year, no director had an interest in any
significant contract relating to the business of the Company or its
subsidiaries, other than their own service contract.
Health and Safety
The Group is committed to the health, safety and welfare of its employees and
third parties who may be affected by the Group's operations. The focus of the
Group's effort is to prevent accidents and incidents occurring by identifying
risks and employing appropriate control strategies. This is supplemented by a
policy of investigating and recording all incidents.
Employees
The Board is aware of the importance of good relationships and communication
with employees. Where appropriate, employees are consulted about matters which
affect the progress of the Group and which are of interest and concern to them
as employees. Within this framework, emphasis is placed on developing greater
awareness of the financial and economic factors which affect the performance
of the Group. Employment policy and practices in the Group are based on
non-discrimination and equal opportunity irrespective of age, race, religion,
sex, gender identity, sexual orientation, colour and marital status. In
particular, the Group recognises its responsibilities towards disabled persons
and does not discriminate against them in terms of job offers, training or
career development and prospects. If an existing employee were to become
disabled during the course of employment, every practical effort would be made
to retain the employee's services with whatever retraining is appropriate. The
Group's pension arrangements for employees are summarised in note 23.
Payments to Suppliers
The policy of the Company and each of its trading subsidiaries, in relation to
all its suppliers, is to settle the terms of payment when agreeing the terms
of the transaction and to abide by those terms, provided that it is satisfied
that the supplier has provided the goods or services in accordance with agreed
terms and conditions. The Group does not follow any code or standard payment
practice. As a holding company, the Company had £29,000 of trade creditors at
31 March 2022 (2021: nil).
Share Capital and Substantial Interests in Shares
During the year, 4,915 shares were issued following the exercise of options.
Further information about the Company's share capital is given in note 25.
Details of the Company's executive share option scheme can be found in note
24.
The Company has been notified of the following interests in 3% or more of the
issued ordinary shares of the Company as at 5 July 2022:
Number of shares Percentage of shares in issue
The Article 6 Marital Trust created under the First Amended and Restated Jerry 3,596,553 28.73
Zucker Revocable Trust dated 2 April 2007
Quaero Capital Funds (Lux) - Argonaut 1,057,158 8.44
Martin Janser 897,324 7.17
J.F.C. Watts 797,214 6.37
Bonafide Investment Fund - Opportunities I 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 £16,214
(2021: £7,654), these were largely paid to local community charities in the
Falkland Islands. There were no political donations in the year (2021: nil).
Disclosure of Information to the External Auditor
The directors who held office at the date of this Directors' Report confirm
that, so far as they are each aware, there is no relevant audit information of
which the Company's external auditor is unaware; and each director has taken
all the steps that they ought to have taken as a director to make themselves
aware of any relevant audit information and to establish that the Company's
external auditor is aware of that information.
External Auditor
A resolution proposing the re-appointment of KPMG LLP will be put to
shareholders at the Annual General Meeting.
Greenhouse Gas Emissions
The 2018 Regulations introduced requirements under Part 15 of the Companies
Act 2006 for large unquoted companies to disclose their annual energy use and
greenhouse gas emissions, and related information. However, the Group has
applied the option permitted to exclude any energy and carbon information
relating to its subsidiary which the subsidiary would not itself be obliged to
include if reporting on its own account. This applies to all subsidiaries
within the Group. FIH group plc itself consumes less than 40MWh and, as a low
energy user, is not required to make the detailed disclosures of energy and
carbon information but is required to state, in its relevant report, that its
energy and carbon information is not disclosed for that reason. FIH group
plc's annual energy use and greenhouse gas emissions, and related information
has not been disclosed in this annual report as it is a low energy user.
Statement by the Directors in Performance of their Statutory Duties in
Accordance with s172(1) Companies Act 2006
As an experienced Board, our intention is to behave responsibly and we
consider that we, both as individuals and as a collective Board, as
representatives of FIH group plc and the Group as a whole, during the year
ended 31 March 2022, have acted in good faith, to promote the success of the
Company for the benefit of its members as a whole, having regard to the wider
stakeholders as set out in s172 of the Companies Act. In the Falkland Islands
and in Gosport/Portsmouth (where PHFC provide the ferry service), the
subsidiaries of the Group work closely with local government and local
communities and Momart, is an active and founding member of several art
communities and its employees give talks at conferences, sharing their
experiences on the import and export of art work. The details of the Group's
interaction with its wider stakeholders is as follows:
Customers:
PHFC maintains close contact with its customer base via social media and
regularly tweets and posts information on Facebook about local pantomimes,
football matches, and local events of interest to the local community and
visiting tourists. PHFC are also involved in marking the 40(th) anniversary
of the Falkland Islands conflict in 2022 and maintaining its close links to
the Navy based in Portsmouth.
Momart engage with industry working groups to propose and implement
sustainability improvements in delivering fine art logistics services.
Colleagues:
We have an experienced, diverse and dedicated workforce which we recognise as
a key asset of our businesses. Therefore, it is important that we continue to
create the right environment to encourage and create opportunities
for individuals and teams to realise their full potential.
We have an open, collaborative and inclusive management structure and engage
regularly with our employees. We do this through an appraisal process,
structured career conversations, employee surveys, company presentations, away
days and our well-being programme.
Suppliers:
Across the Group, we aim to build long-term relationships with our suppliers
that help ensure the continued delivery of the high-quality services the Group
provides. We are clear about our payment practices. We expect our suppliers to
adopt similar practices throughout their supply chains to ensure fair and
prompt treatment of all creditors. All suppliers are vetted to ensure
compliance with the Group's zero tolerance approach to modern slavery.
Communities:
We are committed to supporting the communities in which we operate, including
local businesses, residents and the wider public.
We engage with the local communities in Gosport/Portsmouth and in the Falkland
Islands through our community donations, and providing employment and work
experience opportunities. Apprentices have been taken on at both Momart and
PHFC, in areas including Customs and Excise and Engineering.
PHFC also work closely with local government to ensure representation in local
transport developments.
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.
· Renewable energy from solar panels installed at the Leyton
warehouse unit 14.
· Sourcing of materials for packing cases from sustainable sources
wherever possible.
· Wood waste repurposed or burnt for energy rather than going to
landfill.
PHFC
· Installation of new exhaust cleaners on the vessels reducing NOx
and Co2 emissions.
· Smart LED lighting across the estate.
· Provision of coffee cup recycling.
· Investigation of smart apps to promote environmentally friendly
journey planning.
Governments and Regulatory Authorities
Our work brings us into regular contact with the MOD, FIG and local
authorities, as we deliver construction projects, repairs and other work. We
strive to be proactive and transparent, consulting with them to ensure that
our planning reflects local sensitivities.
PHFC staff attend meetings with the local government members and Gosport
Borough Council.
The Momart Business Process and Compliance Manager attends quarterly industry
forums, such as those Freight Transport Association, discussing difficulties
faced by the industry with the forum and any attending HMRC officers. The
Momart Security Manager liaises with the Civil Aviation Authority to ensure
that Momart's security procedures and staff training remain compliant.
Media
All businesses are active on social media, using Twitter, Instagram, LinkedIn
and Facebook.
Non-governmental Organisations:
PHFC is a Heritage Committee member.
Momart representatives attend the UK Registrars' Group conference and the
European Registrars' Group conference and speak on issues such as customs
procedures, Brexit, or specialised Export licences, such as the "Convention on
International Trade in Endangered Species of Wild Fauna and Flora", which
requires permits for the export of ivory, rosewood and mahogany.
With over 40 years of experience and expertise in handling, transportation and
storage of art, since 1993 Momart has held a Royal Warrant from Her Majesty
The Queen for work with the Royal Collection.
Momart is a founding member of ARTIM, "the Art Transporter International
Meeting" and attends the annual conference to discuss the best practices and
the key business issues concerning the packing, transportation and movement of
works of art.
Momart is also a member of the UK Registrars' Group, which is a non-profit
association, which provides a forum for exchanging ideas and expertise between
registrars, collection managers and other museum professionals in the United
Kingdom, Europe and worldwide.
Shareowners and Analysts:
Beyond the Annual General Meeting, the Chief Executive and the Chairman offer
to meet with all significant shareholders after the release of the half year
and full year results. The Chief Executive and the Chairman are the primary
points of contact for the shareholders and are available to answer queries
over the phone or via email from shareholders throughout the year.
The Annual General Meeting provides a chance with investors and analysts to
meet the Board face-to-face.
Debt Providers:
The Group has several debt facilities provided by HSBC, who are kept fully
informed on all relevant areas of the business, through regular meetings and
presentations. The relationship with HSBC dates back to the Company's
incorporation in 1997.
Annual General Meeting
The Company's Annual General Meeting will be held on 19 September 2022. The
notice of the Annual General Meeting and a description of the special business
to be put to the meeting are considered in a separate circular to
Shareholders.
Details of Directors' Remuneration and Emoluments
The remuneration of non-executive directors consists only of annual fees for
their services, both as members of the Board, and of Committees on which they
serve.
An analysis of the remuneration and taxable benefits in kind (excluding share
options) provided for and received by each director during the year to 31
March 2022 and in the preceding year is as follows:
Health insurance Compensation payment 2022 2021
Salary / Fees £'000 £'000 Bonus Total Total
£'000 £'000 £'000 £'000
John Foster 222 1 259 40 522 197
Stuart Munro* 202 1 - 68 271 -
Robin Williams 60 - - - 60 51
Jeremy Brade 30 - - - 30 26
Robert Johnston 30 - - - 30 26
Dominic Lavelle 30 - - - 30 26
Total 574 2 259 108 943 326
* Appointed 28 April 2021
The Chief Executive, Stuart Munro, participates in an annual performance
related bonus arrangement, with the potential during the year to earn up to
60% of his salary. The bonuses are subject to the achievement of specified
corporate and personal objectives and are payable in cash.
John Foster participated in an annual performance related bonus arrangement,
with the potential during the year of earning up to 100% of his salary. Any
bonus is subject to the achievement of specified corporate and personal
objectives and is normally split into equal parts of deferred shares and cash,
with the shares requiring a service condition to remain in employment for up
to three years. The bonus for the year ended 31 March 2022 is payable wholly
in cash.
Given the impact of COVID-19 on the Group's finances, no bonus was paid for
the year ended 31 March 2021.
None of the directors of the Company receive any pension contributions or
benefit from any Group pension scheme.
Directors' Interests in Shares
Full details of historic awards of deferred shares to John Foster are provided
in note 24 Employee benefits: share based payments. During the year ending 31
March 2022, 9,273 nil cost options (2021: 12,488) were exercised by him and
the remaining 3,591 nil cost share options were forfeited on his resignation
on 14 April 2022.
During the year, Stuart Munro was granted 55,814 LTIP share options in
December 2021 at an exercise price of 10 pence. The exercise of the LTIP
awards is subject to achieving share price performance and earnings targets
which have been determined by the remuneration committee, after discussion
with the Company's advisers.
The directors' options extant at 31 March 2021 related to John Foster and
totalled 12,864 nil cost options.
In addition to the share options set out above, the interests of the
directors, their immediate families and related trusts in the shares of the
Company according to the register kept pursuant to the Companies Act 2006 were
as shown below:
Ordinary shares as at Ordinary shares as at
31 March 2022 31 March 2021
Robin Williams 5,625 5,625
Stuart Munro 4,400 -
John Foster 118,542 113,627
Jeremy Brade 15,022 15,022
Robert Johnston* *3,654,053 *3,647,853
Dominic Lavelle 2,000 2,000
* Robert Johnston holds 57,500 shares in his own name, and as he is also the
representative of the Company's largest shareholder, "The Article 6 Marital
Trust, created under the First Amended and Restated Jerry Zucker Revocable
Trust dated 4-2-07", which holds 3,596,553 Shares, Robert Johnston is
interested in 3,654,053 Shares in total, representing 29.2 per cent. of the
Company's 12,519,900 total voting rights.
Approved by the Board and signed on its behalf by:
Iain Harrison
Company Secretary
5 July 2022
Kenburgh Court
133-137 South Street
Bishop's Stortford
Hertfordshire
CM23 3HX
Statement of Directors' Responsibilities in Respect of the Annual Report and
the Financial Statements
The directors are responsible for preparing the Annual Report, Strategic
Report, Directors' Report, and the Group and Company financial statements in
accordance with applicable law and regulations.
Company law requires the directors to prepare Group and parent Company
financial statements for each financial year. Under the AIM Rules of the
London Stock Exchange, they are required to prepare the Group financial
statements in accordance with UK-adopted international accounting standards
and applicable law and they have elected to prepare the parent Company
financial statements on the same basis.
Under company law the directors must not approve the financial statements
unless they are satisfied that they give a true and fair view of the state of
affairs of the Group and parent Company and of the Group's profit or loss for
that period. In preparing each of the Group and parent Company financial
statements, the directors are required to:
· select suitable accounting policies and then apply them
consistently;
· make judgements and estimates that are reasonable, relevant and
reliable;
· state whether they have been prepared in accordance with
UK-adopted international accounting standards;
· assess the Group and parent Company's ability to continue as a
going concern, disclosing, as applicable, matters related to going concern;
and
· use the going concern basis of accounting unless they either
intend to liquidate the Group or the parent Company or to cease operations, or
have no realistic alternative but to do so.
The directors are responsible for keeping adequate accounting records that are
sufficient to show and explain the parent Company's transactions and disclose
with reasonable accuracy at any time the financial position of the parent
Company and enable them to ensure that its financial statements comply with
the Companies Act 2006. They are responsible for such internal control as
they determine is necessary to enable the preparation of financial statements
that are free from material misstatement, whether due to fraud or error, and
have general responsibility for taking such steps as are reasonably open to
them to safeguard the assets of the Group and to prevent and detect fraud and
other irregularities.
Under applicable law and regulations, the directors are also responsible for
preparing a Strategic Report and a Directors' Report that complies with that
law and those regulations.
The directors are responsible for the maintenance and integrity of the
corporate and financial information included on the Company's website.
Legislation in the UK governing the preparation and dissemination of financial
statements may differ from legislation in other jurisdictions.
Consolidated Income Statement
FOR THE YEAR ENDED 31 MARCH 2022
Notes Underlying Non-trading Total Underlying Non-trading Total
2022 Items 2022 2021 Items 2021
£'000 (Note 5) £'000 £'000 (Note 5) £'000
2022 2021
£'000 £'000
4 Revenue 40,319 - 40,319 32,578 - 32,578
Cost of sales (23,405) - (23,405) (19,437) - (19,437)
Gross profit 16,914 - 16,914 13,141 - 13,141
6 Operating expenses (13,834) (300) (14,134) (12,115) 57 (12,058)
Operating profit / (loss) 3,080 (300) 2,780 1,026 57 1,083
8 Finance expense (796) - (796) (881) - (881)
Profit / (loss) before tax 2,284 (300) 1,984 145 57 202
9 Taxation (1,094) 57 (1,037) (147) (46) (193)
Profit / (loss) for the year 1,190 (243) 947 (2) 11 9
attributable to equity holders of the company
10 Earnings per share
Basic 9.5p 7.6p 0.0p 0.1p
Diluted 9.5p 7.6p 0.0p 0.1p
The accompanying notes form part of these Financial Statements.
Consolidated Statement of Comprehensive Income
FOR THE YEAR ENDED 31 MARCH 2022
2022 2021
£'000 £'000
Profit for the year 947 9
Cash flow hedges: effective portion of changes in fair value 878 303
17 Deferred tax on share options and other financial liabilities 58 30
17 Deferred tax on effective portion of changes in fair value (205) (58)
Items that are or may be reclassified subsequently to profit or loss 731 275
23 Re-measurement of the FIC defined benefit pension scheme 237 (272)
17 Movement on deferred tax asset relating to the pension scheme (62) 71
Items which will not ultimately be recycled to the income statement 175 (201)
Total other comprehensive income 906 74
Total comprehensive income 1,853 83
The accompanying notes form part of these Financial Statements.
Consolidated Balance Sheet
AT 31 MARCH 2022
2022 2021
Notes £'000 £'000
Non-current assets
11 Intangible assets 4,229 4,183
12 Property, plant and equipment 39,080 40,361
13 Investment properties 8,164 7,123
15 Investment in Joint venture 259 259
19 Debtors due in more than one year 44 88
16 Hire purchase lease receivables 725 590
17 Deferred tax assets 666 739
Derivative financial instruments 644 -
Total non-current assets 53,811 53,343
Current assets
18 Inventories 6,740 5,871
19 Trade and other receivables 7,947 5,868
16 Hire purchase lease receivables 511 558
20 Cash and cash equivalents 9,572 14,556
Total current assets 24,770 26,853
TOTAL ASSETS 78,581 80,196
Current liabilities
22 Trade and other payables (9,970) (6,775)
21 Interest-bearing loans and borrowings (1,536) (3,424)
Corporation tax payable (229) (113)
Total current liabilities (11,735) (10,312)
Non-current liabilities
21 Interest-bearing loans and borrowings (19,713) (24,799)
Derivative financial instruments - (234)
23 Employee benefits (2,562) (2,842)
17 Deferred tax liabilities (3,914) (3,113)
Total non-current liabilities (26,189) (30,988)
TOTAL LIABILITIES (37,924) (41,300)
Net assets 40,657 38,896
25 Capital and reserves
Equity share capital 1,251 1,251
Share premium account 17,590 17,590
Other reserves 703 703
Retained earnings 20,672 19,584
Hedging reserve 441 (232)
Total equity 40,657 38,896
These financial statements, of which the accompanying notes form part, were
approved by the Board of directors on 5 July 2022 and were signed on its
behalf by:
S I Munro
Director
Company Balance Sheet
AT 31 MARCH 2022
2022 2021
Notes £'000 £'000
Non-current assets
13 Investment properties 18,956 19,164
14 Investment in subsidiaries 23,995 23,970
19 Loans to subsidiaries 10,057 10,207
17 Deferred tax - 44
Derivative financial instruments 644 -
Total non-current assets 53,652 53,385
Current assets
19 Trade and other receivables 45 118
Corporation tax receivable 84 54
20 Cash and cash equivalents 4,376 5,462
Total current assets 4,505 5,634
TOTAL ASSETS 58,157 59,019
Current liabilities
22 Trade and other payables (5,849) (6,391)
21 Interest-bearing loans and borrowings (529) (520)
Total current liabilities (6,378) (6,911)
Non-current liabilities
21 Interest-bearing loans and borrowings (12,139) (12,668)
Derivative financial instruments - (234)
17 Deferred tax (146) -
Total non-current liabilities (12,285) (12,902)
TOTAL LIABILITIES (18,663) (19,813)
Net assets 39,494 39,206
25 Capital and reserves
Equity share capital 1,251 1,251
Share premium account 17,590 17,590
Other reserves 5,389 5,389
Retained earnings 14,823 15,208
Hedging reserve 441 (232)
Total equity 39,494 39,206
As permitted by Section 408 of the Companies Act 2006, a separate profit and
loss account of the Parent Company has not been presented. The Parent
Company's loss for the financial year is £293,000 (2021: Profit £500,000).
These financial statements, of which the accompanying notes form part, were
approved by the Board of directors on 5 July 2022 and were signed on its
behalf by:
S I Munro
Director
Registered company number: 03416346
Consolidated Cash Flow Statement
FOR THE YEAR ENDED 31 MARCH 2022
2022 2021
£'000 £'000
Note Cash flows from operating activities
Profit for the year after taxation 947 9
Adjusted for:
(i) Non-cash items:
11 Amortisation 21 63
12 Depreciation: Property, plant and equipment 2,216 2,193
13 Depreciation: Investment properties 197 37
(Gain) / Loss on disposal of fixed assets (9) 53
23 Interest cost on pension scheme liabilities 56 64
24 Equity-settled share-based payment expenses 45 1
Non-cash items adjustment 2,526 2,411
(ii) Other items:
Exchange losses 13 3
Bank interest payable 436 469
Lease liability finance expense 304 348
Increase in hire purchase leases receivable (88) (33)
Corporation and deferred tax expense 1,037 193
Other adjustments 1,702 980
Operating cash flow before changes in working capital 5,175 3,400
(Increase) / decrease in trade and other receivables (2,035) 2,828
Increase in inventories (869) (497)
Increase / (decrease) in trade and other payables 3,195 (1,836)
Changes in working capital 291 495
Cash generated from operations 5,466 3,895
Payments to pensioners (99) (98)
Corporation taxes paid (256) (64)
Net cash flow from operating activities 5,111 3,733
Cash flows from investing activities
Purchase of property, plant and equipment (1,333) (898)
Purchase of Intangibles (67) -
Purchase of investment properties (1,238) (702)
Proceeds from sale of property, plant and equipment 76 -
Net cash flow from investing activities (2,562) (1,600)
Cash flow from financing activities
Bank loan drawn down - 5,000
Repayment of bank loans (5,927) (624)
Bank interest paid (436) (469)
Hire purchase loan drawn down - 389
Repayment of lease liabilities principal (716) (649)
Lease liabilities interest paid (304) (348)
Cash inflow on option exercises - 19
Cash outflow on nil cost option exercise (12) -
Dividends paid (125) -
Net cash flow from financing activities (7,520) 3,318
Net (decrease) / increase in cash and cash equivalents (4,971) 5,451
Cash and cash equivalents at start of year 14,556 9,108
Exchange losses on cash balances (13) (3)
Cash and cash equivalents at end of year 9,572 14,556
The accompanying notes form part of these Financial Statements.
Company Cash Flow Statement
FOR THE YEAR ENDED 31 MARCH 2022
2022 2021
£'000 £'000
Notes Cash flows from operating activities
Holding Company (loss) / profit for the year (293) 500
Adjusted for:
Bank interest payable 387 395
Equity-settled share-based payment expenses 20 2
13 Depreciation: Investment properties 208 209
Corporation and deferred tax (income) / expense (31) 8
Non-cash and other items adjustment 584 614
Operating cash flow before changes in working capital 291 1,114
Decrease / (increase) in trade and other receivables 73 (88)
Increase / (decrease) in trade and other payables 333 (292)
Changes in working capital and provisions 406 (380)
Cash generated from operations 697 734
Corporation taxes paid (14) (64)
Net cash flow from operating activities 683 670
Cash flow from investing activities
Cash outflows in inter-company borrowing (150) -
Cash inflows in inter-company borrowing 850 -
Net cash flow from investing activities 700 -
Cash flow from financing activities
Bank loan repaid (520) (262)
Interest paid (387) (381)
Cash outflows in inter-company borrowing (1,875) (2,569)
Cash inflows in inter-company borrowing 450 2,219
Cash inflow on option exercise - 19
Cash outflow on nil cost option exercise (12) -
Dividends paid (125) -
Net cash flow from financing activities (2,469) (974)
Net decrease in cash and cash equivalents (1,086) (304)
Cash and cash equivalents at start of year 5,462 5,766
Cash and cash equivalents at end of year 4,376 5,462
The accompanying notes form part of these Financial Statements.
Consolidated Statement of Changes in Shareholders' Equity
FOR THE YEAR ENDED 31 MARCH 2022
Equity share Share premium account £'000 Other reserves Retained earnings Hedge reserve Total equity
capital £'000 £'000 £'000 £'000
£'000
Balance 1 April 2020 1,250 17,590 703 19,784 (535) 38,792
Profit for the year - - - 9 - 9
Cash flow hedges: effective portion - - - - 303 303
of changes in fair value
Deferred tax on cash flow hedges - - - (58) - (58)
Deferred tax on other financial - - - 30 - 30
liabilities
Re-measurement of the defined - - - (201) - (201)
benefit pension liability, net of tax
Total comprehensive loss - - - (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
Profit for the year - - - 947 - 947
Cash flow hedges: effective portion - - - - 878 878
of changes in fair value
Deferred tax on cash flow hedges - - - - (205) (205)
Deferred tax on share options - - - 58 - 58
and other financial liabilities
Re-measurement of the defined - - - 175 - 175
benefit pension liability, net of tax
Total comprehensive income - - - 1,180 673 1,853
Transactions with owners in their capacity as owners:
Share option exercise - - - (12) - (12)
Share based payments - - - 45 - 45
Dividends paid - - - (125) - (125)
Total transactions with owners - - - (92) - (92)
Balance at 31 March 2022 1,251 17,590 703 20,672 441 40,657
The accompanying notes form part of these Financial Statements.
Company Statement of Changes in Shareholders' Equity
FOR THE YEAR ENDED 31 MARCH 2022
Equity share Share premium account £'000 Other reserves Retained earnings Hedge Reserve Total equity
capital £'000 £'000 £'000 £'000
£'000
Balance at 1 April 2020 1,250 17,590 5,389 14,765 (535) 38,459
Profit for the year - - - 500 - 500
Cash flow hedges: effective portion - - - - 303 303
of changes in fair value
Deferred tax on cash flow hedges - - - (58) - (58)
Total comprehensive loss - - - 442 303 745
Transactions with owners in their capacity as owners:
Share option exercise 1 - - - - 1
Share based payments - - - 1 - 1
Total transactions with owners 1 - - 1 - 2
Balance at 31 March 2021 1,251 17,590 5,389 15,208 (232) 39,206
Loss for the year - - - (293) - (293)
Cash flow hedges: effective portion - - - - 878 878
of changes in fair value
Deferred tax on cash flow hedges - - - - (205) (205)
Total comprehensive income - - - (293) 673 380
Transactions with owners in their capacity as owners:
Share option exercise - - - (12) - (12)
Share based payments - - - 45 - 45
Dividends paid - - - (125) - (125)
Total transactions with owners - - - (92) - (92)
Balance at 31 March 2022 1,251 17,590 5,389 14,823 441 39,494
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. The consolidated financial statements of the
Group for the year ended 31 March 2022 were authorised for issue in accordance
with a resolution of the directors on 30 June 2022.
Basis of preparation
The financial information set out above does not constitute the Group's
statutory accounts for the years ended 31 March 2022 or 2021 but is derived
from those accounts. Statutory accounts for the year ended 31 March 2021 have
been delivered to the registrar of companies, and those for the year ended 31
March 2022 will be delivered in due course. The auditor has reported on those
accounts; their reports were (i) unqualified, (ii) did not include a reference
to any matters to which the auditor drew attention by way of emphasis without
qualifying their report, and (iii) did not contain a statement under section
498 (2) or (3) of the Companies Act 2006. These condensed preliminary
financial statements have been prepared in accordance with the recognition and
measurement requirements of UK-adopted international financial reporting
standards in conformity with the requirements of the Companies Act 2006, in
line with the Group's statutory accounts.
Both the Parent Company financial statements and the Group financial
statements have been prepared and approved by the directors in accordance with
International Accounting Standards in conformity with the requirements of the
Companies Act 2006 and in accordance with UK-adopted International Accounting
Standards ("Adopted IFRS"). On publishing the Parent Company financial
statements together with the Group financial statements, the Company is taking
advantage of the exemption in s408 of the Companies Act 2006 not to present
its individual income statement and related notes that form a part of the
approved financial statements.
The accounting policies set out below have, unless otherwise stated, been
applied consistently to all periods presented in these consolidated financial
statements.
Judgements made by the directors in the application of these accounting
policies that have a significant effect on the financial statements and
estimates with a significant risk of material adjustment next year are
discussed in note 30.
The financial statements are presented in pounds sterling, rounded to the
nearest thousand and are prepared on the historical cost basis.
In the current year, cash flows between the parent Company and its
subsidiaries have been classified as either financing or investing activities,
depending on whether they relate to subsidiaries in a net payable or net
receivable position respectively. In the prior year, this distinction
between cash flows with subsidiaries was not made and all amounts were
classified as financing activities. Had the cashflows been analysed
separately, this would have resulted in payments of £1,700,000 and receipts
of £1,600,000 being presented in investing activities, with a corresponding
reduction in amounts presented as financing cash flows. The directors
consider that the key cash flow metrics for the users of the Company financial
statements are net cash from operating activities and the total net movement
in cash and cash equivalents and as this change has no impact on either of
these metrics, and no impact on the Company's reported profit or loan
covenants, the directors have concluded that the impact on the financial
statements is not material and therefore the prior year presentation has not
been restated.
Going concern
The directors are responsible for preparing a going concern assessment
covering a period of at least 12 months from the date of approval of these
financial statements (the going concern period). The financial statements have
been prepared on a going concern basis which the Directors consider to be
appropriate for the following reasons.
As at 31 March 2022 the Group had net current assets of £13.0 million, cash
balances of £9.6 million and net debt of approximately £11.7 million.
1. Accounting policies (continued)
Cash flow forecasts for the Group have been prepared covering the going
concern period and the directors have considered downside scenarios to the
base case forecasts to reflect emerging risks and uncertainties as a result of
global economic conditions. The base case and sensitised forecasts indicate
that the business will be cash generative over this period and that the Group
will comply with its covenants and have sufficient funds to meet its
liabilities as they fall due throughout the going concern period.
Consequently, the directors are confident that the Group and Company will have
sufficient funds to continue to meet its liabilities as they fall due for at
least 12 months from the date of approval of the financial statements and the
financial statements have therefore been prepared on a going concern basis.
Basis of consolidation
The consolidated financial statements comprise the financial statements of FIH
group plc and its subsidiaries (the "Group"). A subsidiary is any entity FIH
group plc has the power to control. Control is determined by FIH group plc's
exposure or rights, to variable returns from its involvement with the
subsidiary and the ability to affect those returns. The financial statements
of subsidiaries are prepared for the same reporting period as the Parent
Company. The accounting policies of subsidiaries have been changed when
necessary, to align them with the policies adopted by the Group.
Subsidiaries are consolidated from the date on which control is transferred to
the Group and cease to be consolidated from the date on which control is
transferred out of the Group.
All intra-company balances and transactions, including unrealised profits
arising from intra-group transactions, are eliminated in full in preparing the
consolidated financial statements. Investments in subsidiaries within the
Company balance sheet are stated at impaired cost.
Presentation of income statement
Due to the non-prescriptive nature under IFRS as to the format of the income
statement, the format used by the Group is explained below.
Operating profit is the pre-finance profit of continuing activities and
acquisitions the Group, and in order to achieve consistency and
comparability, is analysed to show separately the results of normal trading
performance ("underlying profit"), individually significant charges and
credits, changes in the fair value of financial instruments and non-trading
items. Such items arise because of their size or nature.
In the year ended 31 March 2022, non-trading items were made up of £300,000
of people-related restructuring costs including employee redundancies and
compensation payable to the former Chief Executive. In the year ended 31 March
2021, non-trading items were made up of £443,000 of restructuring costs which
were offset by £500,000 of income from the release of historic liabilities
included in accruals.
Foreign currencies
Transactions in foreign currencies are translated to the functional currencies
of Group entities at exchange rates ruling at the dates of the transactions.
Monetary assets and liabilities denominated in foreign currencies are
retranslated to the functional currency using the relevant rates of exchange
ruling at the balance sheet date and the gains or losses thereon are included
in the income statement.
Non-monetary assets and liabilities are translated using the exchange rate at
the date of the initial transaction.
1. Accounting policies (continued)
Property, plant and equipment
Property, plant and equipment are measured at cost less accumulated
depreciation and impairment losses. Cost comprises purchase price and directly
attributable expenses. Depreciation is charged to the income statement on a
straight-line basis over the estimated useful lives of each part of an item of
property, plant and equipment. The estimated useful lives are as follows:
Right of use assets 5 - 50 years
20 - 50 years
Freehold buildings
Long leasehold land and buildings 50 years
Vehicles, plant and equipment 4 - 10 years
Ships 15 - 30 years
The carrying value of assets and their useful lives are reviewed, and adjusted
if appropriate, at each balance sheet date. If an indication of impairment
exists, the assets are written down to their recoverable amount and the
impairment is charged to the income statement in the period in which it
arises. Freehold land and assets under construction are not depreciated.
Investment properties - Group
Investment properties are properties held either to earn rental income or for
capital appreciation or for both. Investment properties are measured at cost
less accumulated depreciation and impairment losses. Cost comprises purchase
price and directly attributable expenses. Depreciation is charged to the
income statement on a straight-line basis over the estimated useful lives of
each property. The investment property portfolio in the Falkland Islands
consists mainly of properties built by FIC, and these and the properties
purchased are depreciated over an estimated useful life of 50 years.
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.
1. Accounting policies (continued)
Intangible assets
Goodwill
Goodwill arises on the acquisition of subsidiaries and businesses.
Acquisitions prior to 1 April 2006
In respect to acquisitions prior to transition to IFRS, goodwill is recorded
on the basis of deemed cost, which represents the amount recorded under
previous Generally Accepted Accounting Principles ("GAAP") as at the date of
transition. Goodwill is not amortised but reviewed for impairment annually, or
more frequently, if events or changes in circumstances indicate that the
carrying value may be impaired. At 31 March 2022, all goodwill arising on
acquisitions prior to 1 April 2006 has either been offset against other
reserves on acquisition, or written off through the income statement as an
impairment in prior years.
Acquisitions on or after 1 April 2006
Goodwill on acquisition is initially measured at cost, being the excess of the
cost of the business combination over the acquirer's interest in the fair
value of the identifiable assets, liabilities and contingent liabilities of
the acquired business. Following initial recognition, goodwill is measured at
cost less any accumulated impairment losses. Goodwill is not amortised but
reviewed for impairment annually or more frequently if events or changes in
circumstances indicate that the carrying value may be impaired. Amortisation
is charged to the income statement on a straight-line basis over the estimated
useful lives of intangible assets unless such lives are indefinite. Other
intangible assets are amortised from the date they are available for use. In
the year ended 31 March 2014, the directors reviewed the life of the brand
name at Momart and after considerations of its strong reputation in a niche
market and its history of stable earnings and cash flow, which is expected to
continue into the foreseeable future, determined that its useful life is
indefinite, and amortisation ceased from 1 October 2013.
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.
1. Accounting policies (continued)
Employee share awards
The Group provides benefits to certain employees (including directors) in the
form of share-based payment transactions, whereby the recipient renders
service in return for shares or rights over future shares ("equity settled
transactions"). The cost of these equity settled transactions with employees
is measured by reference to an estimate of their fair value at the date on
which they were granted using an option input pricing model taking into
account the terms and conditions upon which the options were granted. The
amount recognised as an expense is adjusted to reflect the actual number of
share options for which the related service and non-market performance
conditions are expected to be met, such that the amount ultimately recognised
as an expense is based on the number of share options that meet the related
service and non-market performance conditions at the vesting date. For
share-based payment awards with market performance vesting conditions, the
grant date fair value of the share-based payments is measured to reflect such
conditions and there is no true up for differences between expected and actual
outcomes.
The cost of equity settled transactions is recognised, together with a
corresponding increase in reserves, over the period in which the performance
conditions are fulfilled, ending on the date that the option vests. Where the
Company grants options over its own shares to the employees of subsidiaries,
it recognises, in its individual financial statements, an increase in the cost
of investment in its subsidiaries equal to the equity settled share-based
payment charge recognised in its consolidated financial statements with the
corresponding credit being recognised directly in equity.
Inventories
Inventories are stated at the lower of cost and net realisable value. Cost
includes all costs incurred in bringing each product to its present location
and condition. The cost of raw materials, consumables and goods for resale
comprises purchase cost, on a weighted average basis and where applicable
includes expenditure incurred in transportation to the Falkland Islands.
Work-in-progress and finished goods cost includes direct materials and labour
plus attributable overheads based on a normal level of activity.
Construction-in-progress is stated at the lower of cost and net realisable
value. Net realisable value is estimated at selling price in the ordinary
course of business less costs of disposal.
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.
1. Accounting policies (continued)
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.
1. Accounting policies (continued)
Revenue recognition
IFRS 15 Revenue, requires revenue to be recognised under a 'five-step'
approach when a customer obtains control of goods or services in line with the
performance obligations identified on the contract. Under IFRS 15, revenue
recognition must reflect the standard's five-step approach which requires the
following:
· Identification of the contract with the customer;
· Identification of the performance obligations in the contract;
· Determination of the transaction price;
· Allocation of the transaction price to the performance
obligations;
· Recognition of the revenue when (or as) each performance
obligation is satisfied.
In accordance with the standard, revenue is recognised, net of discounts, VAT,
Insurance Premium Tax and other sales related taxes, either at the point in
time a performance obligation has been satisfied or over time as control of
the asset associated with the performance obligation is transferred to the
customer.
For all contracts identified, the Group determines if the arrangement with the
customer creates enforceable rights and obligations. For contracts with
multiple components to be delivered, such as the inbound and outbound leg of
moving art exhibitions as well as delivering, handling and administration
services, management applies judgement to consider whether those promised
goods and services are:
· distinct - to be accounted for as separate performance
obligations;
· not distinct - to be combined with other promised goods or
services until a bundle is identified that is distinct; or
· part of a series of distinct goods and services that are
substantially the same and have the same pattern of transfer to the customer.
At contract inception the total transaction price is identified, being the
amount to which the Group expects to be entitled and to which it has present
enforceable rights under the contract. Once the total transaction price is
determined, the Group allocates this to the identified performance obligations
in proportion to their relative standalone selling prices and revenue is then
recognised when (or as) those performance obligations are satisfied.
Discounts are allocated proportionally across all performance obligations in
the contract unless directly observable evidence exists that the discount
relates to one or more, but not all, performance obligations.
For each performance obligation, the Group determines if revenue will be
recognised over time or at a point in time. For each performance obligation to
be recognised over time, the Group applies a revenue recognition method that
faithfully depicts the Group's performance in transferring control of the
goods or services to the customer. This decision requires assessment of the
nature of the goods or services that the Group has promised to transfer to the
customer. 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.
1. Accounting policies (continued)
Revenues arising from the rendering of services and recognised over a period
of time
Transportation and storage of art
In the UK, Momart earns revenue from moving or installations or
de-installations of artwork. The revenue is invoiced when the installation or
de-installation is complete, however at each month end accrued revenue is
recognised for fine art exhibition logistical work undertaken, where the costs
incurred and the costs to complete the transaction can be measured reliably,
and the amount of revenue attributable to the stage of completion of a
performance obligation is recognised on the basis of the incurred percentage
of anticipated cost. This, in the opinion of the directors, is the most
appropriate proxy for the stage of completion. Momart classifies this income
into either Museum Exhibitions revenue, which includes the income from UK and
International museums, or Gallery Services revenue, which includes revenue
earned from art galleries and auction houses, where the inbound and outbound
exhibitions installations and dispersal are provided as one quote to
customers, but are fulfilled up to several months apart. The allocation of
revenue in the inbound installations and outbound dispersals has been
reviewed. Momart operates a very transparent method of setting out prices in
both quotes and invoices, allocating revenues per trips, as these are
considered separate obligations.
Storage income in Momart is charged based on the actual volume occupied, at an
agreed weekly rate per cubic metre. Clients can be invoiced weekly, monthly or
quarterly, and income is recognised as it is accrued, on a monthly or weekly
basis.
Long term construction contracts
Revenue from long term construction contracts is recognised under IFRS 15 by
the application of the input method on the basis that the nature of the
construction contracts which the Group typically enters into is such that work
performed creates or enhances an asset from which the customer benefits over
time as the goods and services are provided. Construction contract revenue
is measured using the direct measurement of the goods or services provided to
date, including materials and labour. Un-invoiced amounts are presented as
contract assets and amounts invoiced in advance of delivery are presented as
contract liabilities.
Where a modification is required, the Group assesses the nature of the
modification and whether it represents a separate performance obligation
required to be satisfied by the Group or whether it is a modification to the
existing performance obligation. No margin is recognised until the outcome of
the contract can be estimated with reasonable certainty. Revenue in respect
of variations to contracts and incentive payments is recognised when there is
an enforceable right to payment and it is highly probable it will be agreed by
the customer. Variation orders, claims and liquidated damages, are re-assessed
at each reporting period using the expected outcome approach. If it were
considered probable that total contract costs would exceed total contract
revenue, the expected loss would be recognised as an expense immediately.
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.
1. Accounting policies (continued)
Revenues arising from the rendering of services and recognised immediately
The majority of revenues recognised immediately from the rendering of services
arise from the ferry fare income, which is taken on a daily basis for daily
tickets. Season tickets are available, however the revenue earned from these
is negligible as most passengers purchase daily tickets. Quarterly and monthly
season tickets are recognised over the life of the ticket with a balance held
in deferred income.
Other revenues arising from the rendering of services and recognised
immediately include:
· Agency services provided to cruise or fishing vessels for
supplying provisions, trips to and from the airport and medical evacuations;
· Third party port services;
· Car maintenance revenue, which generally arises on short term
jobs;
· Penguin travel income earned from tourist tours and airport
trips, which is recognised on the day of the tour or airport trip;
· Third party freight revenue, which is recognised when the ship
arrives in the Falkland Islands;
· Insurance commission earned by FIC for providing insurance
services in the Falkland Islands under the terms of an agency agreement with
Caribbean Alliance. The insurance commission is recognised in full on
inception of each policy, offset by a refund liability held within accruals,
for the expected refunds over the next year calculated from a review of the
historic refunded premiums.
IFRS 9 Financial instruments
Impairment
Loans and receivables, which include trade debtors and hire purchase
receivables, are held initially at cost. IFRS 9 mandates the use of an
expected credit loss model to calculate impairment losses rather than an
incurred loss model, and therefore it is not necessary for a credit event to
have occurred before credit losses are recognised. The Group has elected to
measure loss allowances utilising probability-weighted estimates of credit
losses for trade receivables at an amount equal to lifetime expected credit
losses. A detailed review has been conducted of the five year history of
impairment of the Group's financial assets, which primarily comprise its
portfolio of current trade receivables at Momart and FIC, and the hire
purchase debtors in FIC, these assets all have a consistent history of low
levels of impairment, the inclusion of specific expected credit loss
considerations did not have a material impact on transition.
Hedging
The Group has one open hedging relationship at 31 March 2022, which has two
elements; an interest rate swap and an embedded 0% interest rate floor. This
contract commenced on 9(th) December 2021, as a result of the banking industry
moving from LIBOR to SONIA as the basis for determining interest rates. This
contract replaced the previous interest swap taken out in July 2019 to hedge
the £13,875,000 mortgage. This swap had an initial notional value of
£13,875,000, with interest payable at the difference between 1.1766% and the
LIBOR rate up until December 2021 when the LIBOR reference rate was replaced
with a SONIA based equivalent. This interest rate swap notional value
decreases at £125,000 per quarter over ten years until June 2029 when it will
expire. The notional value of the swap at 31 March 2022 was £12,500,000
(2020: £13,000,000). The asset held in respect of this swap at the year-end
was £644,000 (2021: liability £234,000). The movement in the year reflects
anticipated interest rate rises over the remaining period of the swap.
IFRS 9 introduces three hedge effectiveness requirements:
IFRS 9 requires the existence of an economic relationship between the hedged
item and the hedging instrument. There must be an expectation that the value
of the hedging instrument and the value of the hedged item would move in the
opposite direction as a result of the common underlying or hedged risk. As the
LIBOR, SONIA and base rates increase, the interest payable on the loans will
increase, and the interest payable on the swaps will fall.
The hedge accounting model is based on a general notion of there being an
offset between the changes of the swap as the hedging instrument and those of
the hedged bank loan, both of these balances will be affected by the base rate
movements, so it has been concluded the offset is justifiable. The size of the
hedging instrument and the hedged items must be similar for the hedge to be
effective.
1. Accounting policies (continued)
IFRS 16 Leases
The Group has applied IFRS 16 in accounting for leases as follows.
At inception of a contract, the Group assesses whether it is, or contains, a
lease. A contract is, or contains, a lease if the contract conveys the right
to control the use of an identified asset for a period of time in exchange for
consideration. To assess whether a contract conveys the right to control the
use of an identified asset, the Group uses the definition of a lease in IFRS
16.
IFRS 16 determines whether a contract contains a lease on the basis of whether
the customer has the right to control the use of an identified asset for a
period of time in exchange for consideration. This is in contrast to the focus
on 'risks and rewards' in IAS 17. The Group applies the definition of a lease
and related guidance set out in IFRS 16 to all lease contracts entered into or
changed on or after 1 January 2019 (whether it is a lessor or a lessee in the
lease contract).
(a) As a lessee
The Group:
a) Recognises right-of-use assets and lease liabilities in the consolidated
statement of financial position, initially measured at the present value of
the future lease payments;
b) Recognises depreciation of right-of-use assets and interest on lease
liabilities in the consolidated statement of profit or loss;
c) Separates the total amount of cash paid into a principal portion
(presented within financing activities) and interest (presented within
financing activities) in the consolidated statement of cash flows.
Lease incentives (e.g. rent-free periods) are recognised as part of the
measurement of the right-of-use assets and lease liabilities.
For short-term leases (lease term of 12 months or less) and leases of
low-value assets (which includes tablets and personal computers, small items
of office furniture and telephones), the Group has opted to recognise a lease
expense on a straight-line basis as permitted by IFRS 16. This expense is
presented within 'other expenses' in profit or loss.
Right-of-use assets are tested for impairment in accordance with IAS 36 as
specified by IFRS16.
(b) As a lessor
In accordance with IFRS 16, leases where the Group is a lessor continue to be
classified as either finance leases or operating leases and are accounted for
differently.
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 is included in investment
property (where it constitutes land and buildings) or in property, plant and
equipment (where it do not constitute land and buildings) at cost less
accumulated depreciation and impairment losses.
1. Accounting policies (continued)
Standards and revisions not yet adopted in the year to 31 March 2022
No standards not yet adopted are expected to have any significant impact on
the financial statements of the Group or Company.
2. Segmental Information Analysis
The Group is organised into three operating segments, and information on these
segments is reported to the chief operating decision maker ('CODM') for the
purposes of resource allocation and assessment of performance. The CODM has
been identified as the Board.
The operating segments offer different products and services and are
determined by business type: goods and essential services in the Falkland
Islands, the provision of ferry services and art logistics and storage.
Segment results, assets and liabilities include items directly attributable to
a segment as well as those that can be allocated on a reasonable basis.
Segment capital expenditure is the total cost incurred during the period to
acquire property, plant and equipment and intangible assets other than
goodwill and any other assets purchased through the acquisition of a business.
2. Segmental Information Analysis (continued)
2022
General Ferry Art Logistics Unallocated Total
Trading Services and Storage
(Falkland Islands) (Portsmouth) (UK)
£'000 £'000 £'000 £'000 £'000
Revenue 21,655 3,066 15,598 - 40,319
Segment operating profit before non-trading items 1,835 155 1,090 - 3,080
- - (41) (259) (300)
Non-trading items
Profit / (loss) before net financing costs 1,835 155 1,049 (259) 2,780
Finance expense (56) (276) (464) - (796)
1,779 (121) 585 (259) 1,984
Segment profit / (loss) before tax
Assets and liabilities
Segment assets 31,401 9,840 32,275 5,065 78,581
Segment liabilities (9,582) (8,318) (19,045) (979) (37,924)
Segment net assets 21,819 1,522 13,230 4,086 40,657
Other segment information
Capital expenditure:
Property, plant and equipment 1,129 52 258 - 1,439
Investment properties 1,238 - - - 1,238
Computer software 67 - - - 67
Total Capital expenditure 2,434 52 258 - 2,744
Capital expenditure: cash 2,434 52 152 - 2,638
Capital expenditure: non-cash - - 106 - 106
Total Capital expenditure 2,434 52 258 - 2,744
Depreciation and amortisation:
Property, plant and equipment 834 316 423 - 1,573
Investment properties 197 - - - 197
Computer software - - 21 - 21
Right of use assets 8 130 505 - 643
Total Depreciation and Amortisation 1,039 446 949 - 2,434
Underlying profit / (loss)
Segment operating profit before non-trading items 1,835 155 1,090 - 3,080
Interest expense (56) (276) (464) - (796)
Underlying profit / (loss) before tax 1,779 (121) 626 - 2,284
2. Segmental Information Analysis (continued)
2021
General Ferry Art Logistics Unallocated Total
Trading Services and Storage
(Falkland Islands) (Portsmouth) (UK)
£'000 £'000 £'000 £'000 £'000
Revenue 20,874 1,445 10,259 - 32,578
Segment operating profit / (loss) before non-trading items 1,852 (856) 30 - 1,026
500 (140) (221) (82) 57
Non-trading items
Profit / (loss) before net financing costs 2,352 (996) (191) (82) 1,083
Finance expense (68) (329) (484) - (881)
2,284 (1,325) (675) (82) 202
Segment profit / (loss) before tax
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 expense (68) (329) (484) - (881)
Underlying profit / (loss) before tax 1,784 (1,185) (454) - 145
2. Segmental Information Analysis (continued)
The £5,065,000 (2021: £5,639,000) unallocated assets above include
£4,376,000 (2021: £5,462,000) of cash and £644,000 (2021: £177,000) of
prepayments and £45,000 (2021: £nil) of trade and other receivables held in
FIH group plc.
The £979,000 (2021: £285,000) unallocated liabilities above consist of
accruals and tax balances held within FIH group plc.
3. Geographical analysis
The tables below analyse revenue and other information by geography:
2022
United Falkland Islands Total
Kingdom
£'000 £'000 £'000
Revenue (by source) 18,664 21,655 40,319
Assets and Liabilities:
Non-current segment assets, excluding deferred tax 36,071 17,074 53,145
Capital expenditure: cash 204 2,434 2,638
2021
United Falkland Islands Total
Kingdom
£'000 £'000 £'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
4. Revenue
2022
Sale of goods, recognised immediately on sale Rendering of services: recognised immediately Rendering of services, provided over a period of time Total
Revenue
£'000 £'000 £'000 £'000
Falkland Islands
Retail sales 9,666 - - 9,666
Automotive sales 2,034 372 364 2,770
Housebuilding and construction 1,499 - 4,298 5,797
Support Services - 1,677 868 2,545
Rental property income - - 877 877
FIC (Falkland Islands) 13,199 2,049 6,407 21,655
PHFC (Portsmouth) - 3,066 - 3,066
Art logistics and storage - - 15,598 15,598
Total Revenue 13,199 5,115 22,005 40,319
2021
Sale of goods, recognised immediately on sale Rendering of services: recognised immediately Rendering of services, provided over a period of time Total
Revenue
£'000 £'000 £'000 £'000
Falkland Islands
Retail sales 9,701 - - 9,701
Automotive sales 2,016 419 321 2,756
Housebuilding and 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
5. Non-trading items
2022 2021
£'000 £'000
Profit before tax as reported 1,984 202
Non-trading items:
Restructuring costs 300 443
Other credits - (500)
Underlying profit before tax 2,284 145
Restructuring costs comprise people-related costs including employee
redundancies and compensation payable to the former Chief Executive. Other
credits in 2021, relate to derecognition of historic liabilities, which were
previously included within accruals, on the basis that the amounts are no
longer enforceable.
6. Expenses and auditor's remuneration
The following expenses/ (income) have been included in the profit and loss
2022 2021
£'000 £'000
Direct operating expenses of rental properties 465 393
Depreciation 2,413 2,230
Amortisation of computer software 21 63
Foreign currency loss 13 3
Expected credit loss on trade and other receivables 114 39
Cost of inventories recognised as an expense 9,868 10,226
COVID-19 and other government funding (500) (1,760)
Auditor's remuneration 2022 2021
£'000 £'000
Audit of these financial statements 66 41
Audit of subsidiaries' financial statements pursuant to legislation 179 129
Tax advisory services - -
Other assurance services 5 5
Total auditor's remuneration 250 175
Amounts paid to the Company's auditors and their associates in respect of
services to the Company, other than the audit of the Company's financial
statements, have not been disclosed as the information is required instead to
be disclosed on a consolidated basis.
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
2022 2021 2022 2021
PHFC 27 31 - -
Falkland Islands: in Stanley 208 189 - -
in UK 6 7 - -
Art logistics & storage 102 99 - -
Head office 7 7 7 7
Total average staff numbers 350 333 7 7
The aggregate payroll cost of these persons was as follows:
Group Company
2022 2021 2022 2021
£'000 £'000 £'000 £'000
Wages and salaries 12,472 11,752 769 471
Share-based payments (see note 24) 45 1 45 1
Social security costs 821 821 90 59
Contributions to defined contribution plans (see note 23) 505 498 5 10
Total employment costs 13,843 13,072 909 541
During the year, the Group made use of support schemes from the UK Government
to partially mitigate the loss of profit caused by the impact of COVID-19.
The Coronavirus Job Retention Scheme ("CJRS"), the UK Government's support
measure relating to employment, provided grants to cover the cost of employees
who were furloughed. Amounts received under this scheme are classified as
government grants and are accounted for in accordance with IAS 20 Government
Grants. Such grants totalling £210,000 for the year ended 31 March 2022
(2021: £1,760,000), are recognised in the Income Statement in the period in
which the associated costs for which the grants are intended to compensate are
incurred, and are presented as an offset against those associated costs.
Details of audited directors' remuneration are provided in the Directors'
Report, which forms part of these audited financial statements, under the
heading 'Details of Directors' Remuneration and Emoluments'.
8. Finance expense
2022 2021
£'000 £'000
Interest payable on bank loans (436) (469)
Net interest cost on the FIC defined benefit pension scheme liability (56) (64)
Lease liabilities finance charge (304) (348)
Total finance expense (796) (881)
9. Taxation
Recognised in the income statement
2022 2021
£'000 £'000
Current tax expense / (credit)
Current year 397 (52)
Adjustments for prior years (25) -
Current tax expense / (credit) 372 (52)
Deferred tax expense
Origination and reversal of temporary differences 92 258
Change in UK tax rate to 25% 523 (12)
Adjustments for prior years 50 (1)
Deferred tax expense (see note 17) 665 245
Total tax expense 1,037 193
Reconciliation of the effective tax rate
2022 2021
£'000 £'000
Profit on ordinary activities before tax 1,984 202
Tax using the UK corporation tax rate of 19% (2021: 19%) 377 39
Expenses not deductible for tax purposes 84 56
Additional capital allowances - super deduction (7) -
Effect of increase in rate of deferred tax 523 -
Effect of higher tax rate overseas 35 99
Adjustments to tax charge in respect of previous periods 25 (1)
Total tax expense 1,037 193
Tax recognised directly and other comprehensive income
2022 2021
£'000 £'000
Deferred tax on effective portion of changes in fair value 205 58
Movement on deferred tax asset relating to the pension scheme 62 (71)
Deferred tax on share options and other financial liabilities (58) (30)
Deferred tax expense / (credit) recognised directly in other comprehensive 209 (43)
income
In the UK, deferred tax has been calculated at 25% (2021: 19%).
The deferred tax assets and liabilities in FIC have been calculated at the
Falkland Islands' tax rate of 26% (2021:26%).
10. Earnings per share
The calculation of basic earnings per share is based on profits on ordinary
activities after taxation, and the weighted average number of shares in issue
in the period.
The calculation of diluted earnings per share is based on profits on ordinary
activities after taxation and the weighted average number of shares in issue
in the period, adjusted to assume the full issue of share options outstanding,
to the extent that they are dilutive.
2022 2021
£'000 £'000
Profit on ordinary activities after taxation 947 9
2022 2021
Number Number
Average number of shares in issue 12,518,567 12,470,827
Maximum dilution with regards to share options - 281,490
Diluted weighted average number of shares 12,518,567 12,752,317
2022 2021
Basic earnings per share 7.6p 0.1p
Diluted earnings per share 7.6p 0.1p
To provide a comparison of earnings per share on underlying performance, the
calculation below sets out basic and diluted earnings per share based on
underlying profits.
Earnings per share on underlying profit 2022 2021
£'000 £'000
Underlying profit before tax (see note 5) 2,284 145
Underlying taxation (1,094) (147)
Underlying profit / (loss) after tax 1,190 (2)
Effective tax rate 47.9% -101.4%
Weighted average number of shares in issue (from above) 12,518,567 12,470,827
Diluted weighted average number of shares (from above) 12,518,567 12,752,317
Basic earnings per share on underlying profit 9.5p 0.0p
Diluted earnings per share on underlying profit 9.5p 0.0p
11. Intangible assets
Computer Brand name Goodwill Total
Software
£'000 £'000 £'000 £'000
Cost: 564 2,823 11,576 14,963
At 1 Apr 2020 and 31 March 2021
Additions 67 - - 67
At 31 March 2022 631 2,823 11,576 15,030
Accumulated amortisation and impairment:
At 1 Apr 2020 470 785 9,462 10,717
Amortisation 63 - - 63
533 785 9,462 10,780
At 31 March 2021
Amortisation 21 - - 21
At 31 March 2022 554 785 9,462 10,801
Net book value:
At 1 April 2020 94 2,038 2,114 4,246
At 31 March 2021 31 2,038 2,114 4,183
At 31 March 2022 77 2,038 2,114 4,229
Amortisation and impairment charges are recognised in operating expenses in
the income statement. The Momart brand name has a carrying value of
£2,038,000 and is considered to be of future economic value to the Group with
an estimated indefinite useful economic life. It is reviewed annually for
impairment as part of the art logistics and storage review.
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 and Storage Falkland Total
Islands
£'000 £'000 £'000
2,077 37 2,114
Goodwill at 1 April 2020
2,077 37 2,114
Goodwill at 31 March 2021
2,077 37 2,114
Goodwill at 31 March 2022
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 the higher of a value-in-use calculation and fair
value less costs to sell, to their recoverable amounts. Goodwill is impaired
when the recoverable amount is less than the carrying value.
During the year ended 31 March 2020, following the review for impairment, the
goodwill of the Ferry Services CGU was deemed to be fully impaired as
passenger numbers had fallen significantly due to COVID-19 and working
practices, and therefore commuter transport services, were likely to be
affected beyond the short term. The Art Logistics and Storage CGU also
impaired its goodwill by £3.5 million as revenue had fallen significantly due
to COVID-19 and art logistics services were likely to be affected beyond the
short term. Following these impairments in 2020, the only material goodwill
and indefinite life assets remaining at 31 March 2022 relate to the Art
Logistics and Storage CGU. No further impairment charge was deemed necessary
following the review for impairment in the year ended 31 March 2022.
11. Intangible assets (continued)
Given the continued uncertainty as a result of COVID-19 and the possible
longer-term impact on passenger numbers impacting the Ferry Services CGU, the
directors consider that there is a potential indicator of impairment of right
of use assets and ships associated with this CGU (see note 12). An impairment
review has therefore been performed for the Ferry Services CGU in addition to
the Art Logistics and Storage CGU and no impairment charge was deemed
necessary.
For the Ferry Services CGU, the recoverable amount was determined by reference
to value-in-use, but for the Art Logistics and Storage CGU, the recoverable
amount was determined by fair value less costs to sell, after having performed
value-in-use calculations using the assumptions described below. Fair value
less costs to sell for the Art Logistics and Storage CGU is underpinned by an
independent valuation of the art storage warehouses in East London which
indicates a fair value well in excess of the £24.7 million carrying value of
the Art Logistics and Storage CGU.
As part of testing goodwill and indefinite life intangibles for impairment,
forecast operating cash flows for the five years ending 31 March 2023-2027 and
then to perpetuity have been used to assess the value-in-use of the Art
Logistics and Storage CGU. For testing right of use assets and ships
associated with the Ferry Services CGU, a thirty-nine year model has been
used, including forecast operating cash flows for the five years ending 31
March 2023-2027, with high level assumptions applied after the fifth year.
These forecasts represent the best estimate of future performance of the CGUs
based on past performance and expectations for the market development of the
CGU. A thirty-nine year model has been considered to be appropriate for the
Ferry Services CGU, as this is the life of the lease associated with the right
of use asset.
A number of key assumptions are used for impairment testing. These key
assumptions are made by management reflecting past experience combined with
their knowledge as to future performance and relevant external sources of
information.
Discount rates
Within impairment testing models, the cash flows of the Art Logistics and
Storage CGU have been discounted using a pre-tax discount rate of 15.2% (2021:
14.2%), and the cash flows of the Ferry Services CGU have been discounted
using a pre-tax discount rate of 9.9% (2021: 9.7%). Management have determined
that each rate is appropriate as the risk adjustment applied within the
discount rate reflects the risks inherent to each CGU, based on the industry
and geographical location it is based within.
Long term growth rates
Long term growth rates of 2% (2021: 2%) have been used for the Art Logistics
and Storage CGU as part of the impairment testing model. As noted above, a
thirty-nine year model has been used to assess the Ferry Services CGU. For
the period following the five year forecast, high level assumptions based on
historic experience have been applied, including a gradual decline in
passenger numbers which is mitigated by fare increases.
Sensitivity to changes in assumptions
Using a discounted cash flow methodology necessarily involves making estimates
and assumptions regarding growth, operating margins, tax rates, appropriate
discount rates, capital expenditure levels and working capital requirements.
These estimates will likely differ from future actual results of operations
and cash flows, and it is possible that these differences could materially
impact the forecast cashflows. However, for both the Ferry Services CGU and
the Momart CGU, the directors do not consider that there are different
reasonably possible outcomes that would lead to a material impairment.
12. Property, plant and equipment
Group
Right Freehold Long leasehold Ships Vehicles, plant and equipment Total
of use Land & buildings Land and buildings
assets
£'000 £'000 £'000 £'000 £'000 £'000
Cost:
At 1 April 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
Additions in year 106 109 53 3 1,168 1,439
Disposals (82) - (3) - (396) (481)
Additions (non-cash) 489 - - - - 489
Disposals (non-cash) (1,144) - - - - (1,144)
At 31 March 2022 10,145 27,757 2,965 6,880 10,358 58,105
Accumulated depreciation:
At 1 April 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
Charge for the year 371 160 243 799 2,216
643
Disposals (75) - (3) - (336) (414)
Disposals (non-cash) (218) - - - - (218)
At 31 March 2022 3,778 4,091 1,210 3,033 6,913 19,025
Net book value:
At 1 April 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
At 31 March 2022 6,367 23,666 1,755 3,847 3,445 39,080
12. Property, plant and equipment (continued)
Right of use assets
Group
Short leasehold Long leasehold Momart Trucks Office Total
lease Pontoon lease Equipment
£'000 £'000 £'000 £'000 £'000
Cost:
At 1 April 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
Additions in year 105 - 1 - 106
Disposals - - (82) - (82)
Additions (non-cash) - 489 - - 489
Disposals (non-cash) - (1,144) - - (1,144)
At 31 March 2022 3,241 5,578 1,308 18 10,145
Accumulated depreciation:
At 1 April 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
Charge for the year 303 130 209 1 643
Disposals - - (75) - (75)
Disposals (non-cash) - (218) - - (218)
At 31 March 2022 1,972 1,227 563 16 3,778
Net book value:
At 1 April 2020 1,770 5,042 759 12 7,583
At 31 March 2021 1,467 4,918 960 3 7,348
At 31 March 2022 1,269 4,351 745 2 6,367
No property, plant or equipment was financed by hire purchase loans in the
year to 31 March 2022. During the year to 31 March 2021, Momart acquired two
trucks financed by two hire purchase loans totalling £389,000.
The Company has no tangible fixed assets, other than the investment property
purchased in December 2018, which is included within Investment Property (note
13).
13. Investment properties
Group
Residential and commercial property Freehold land Total
£'000 £'000 £'000
Cost:
At 1 April 2020 6,675 782 7,457
Additions in year 653 49 702
At 31 March 2021 7,328 831 8,159
Additions in year 1,238 - 1,238
At 31 March 2022 8,566 831 9,397
Accumulated depreciation:
At 1 April 2020 999 - 999
Charge for the year 37 - 37
At 31 March 2021 1,036 - 1,036
Charge for the year 197 - 197
At 31 March 2022 1,233 - 1,233
Net book value:
At 1 April 2020 5,676 782 6,458
At 31 March 2021 6,292 831 7,123
At 31 March 2022 7,333 831 8,164
The investment properties, held at cost, comprise land, plus residential and
commercial property held for rental in the Falkland Islands.
Estimated Fair Value
Group
2022 2021
£'000 £'000
Estimated fair value:
Freehold land 2,177 2,177
Properties available for rent 10,139 8,470
Properties under construction 173 472
At 31 March 12,489 11,119
Uplift on net book value:
Freehold land 1,346 1,346
Properties available for rent 2,979 2,650
Properties under construction - -
At 31 March 4,325 3,996
Number of rental properties
Available for rent 83 75
Under construction 2 7
Undeveloped freehold land (acres) 700 700
13. Investment properties (continued)
A level 3 valuation technique has been applied, using a market approach to
value these properties; the properties have been valued based on their
expected market value after review by the directors of FIC who are resident in
the Falkland Islands and who are considered to have the relevant knowledge and
experience to undertake the valuation after consideration of current market
prices in the Falkland Islands.
Rental income
During the year to 31 March 2022, the Group received rental income of
£877,000 (2021: £819,000) from its investment properties.
Assets under construction
At 31 March 2022, 2 investment properties were under construction (2021: 7)
with a total cost to date of £173,000 (2021: £472,000).
Company Commercial property
£'000
Cost:
At 1 April 2020, 31 March 2021 and 31 March 2022 19,642
Accumulated depreciation:
At 1 April 2020 269
Charge for the year 209
At 31 March 2021 478
Charge for the year 208
At 31 March 2022 686
Net book value:
At 1 April 2020 19,373
At 31 March 2021 19,164
At 31 March 2022 18,956
The investment property in the Company consists of the five warehouses leased
to Momart, the Group's art handling subsidiary, which were purchased in
December 2018.
The directors have reviewed the market value of the Leyton warehouses and have
used valuation reports prepared by Colliers International Property Consultants
Limited. The directors consider that the market value of the property is
significantly higher than book value. Further detail is given in note 11.
14. Investment in subsidiaries
Country of Class of shares held Ownership at Ownership at
incorporation 31 March 2022 31 March 2021
The Falkland Islands Company Limited ((1)) UK Ordinary shares of £1 100% 100%
Preference shares of £10 100% 100%
The Falkland Islands Trading Company Limited ((1)) UK Ordinary shares of £1 100% 100%
Falkland Islands Shipping Limited ((2) (6)) Falkland Islands Ordinary shares of £1 100% 100%
Erebus Limited((2) (6) (7)) Falkland Islands Ordinary shares of £1 100% 100%
Preference shares of £1 100% 100%
South Atlantic Support Services Limited((3) (6) (7)) Falkland Islands Ordinary shares of £1 100% 100%
Falkland Islands Ordinary shares of £1 100% 100%
Paget Limited((2) (6) (7))
The Portsmouth Harbour Ferry Company Limited((4)) UK Ordinary shares of £1 100% 100%
Portsea Harbour Company Limited((4) (6)) UK Ordinary shares of £1 100% 100%
Clarence Marine Engineering Limited((4) (6)) UK Ordinary shares of £1 100% 100%
Gosport Ferry Limited((4) (6)) UK Ordinary shares of £1 100% 100%
Portsmouth Harbour Waterbus Company Limited((4) (6) (7)) UK Ordinary shares of £1 100% 100%
Momart International Limited((5) (7)) UK Ordinary shares of £1 100% 100%
Momart Limited((5) (6)) UK Ordinary shares of £1 100% 100%
Dadart Limited((5) (6) (7)) UK Ordinary shares of £1 100% 100%
((1)) The registered office for these companies is Kenburgh Court, 133-137
South Street, Bishop's Stortford, Hertfordshire CM23 3HX.
((2)) The registered office for these companies is 5 Crozier Place, Stanley,
Falkland Islands FIQQ 1ZZ.
((3)) South Atlantic Support Services Limited's registered office is 56 John
Street, Stanley, Falkland Islands FIQQ 1ZZ
((4)) The registered office for these companies is South Street, Gosport,
Hampshire, PO12 1EP.
((5)) The registered office for these companies is Exchange Tower, 6(th)
Floor, 2 Harbour Exchange Square, London E14 9GE.
((6)) These investments are not held by the Company but are indirect
investments held through a subsidiary of the Company.
((7)) These investments have all been dormant for the current and prior year.
14. Investment in subsidiaries (continued)
Company
2022 2021
£'000 £'000
At 1 April 23,970 23,989
Share based payments charge capitalised into subsidiaries 25 (19)
At 31 March 23,995 23,970
The directors note that the net assets of the Company balance sheet of £39.5
million exceed the market capitalisation of the Group which was circa £29.4
million at the balance sheet date and that this is a potential indicator of
impairment of the investments in subsidiaries. An impairment review has
therefore been performed as at 31 March 2022 using assumptions consistent with
those used for testing impairment of goodwill, indefinite life assets, right
of use assets and ships as described in note 11. In making their assessment of
impairment of investments in subsidiaries, the directors have also considered
the cash flows associated with the Falkland Islands CGU, using forecast
operating cash flows for the two years ending 31 March 2023-2024 and then to
perpetuity with a growth rate of 2%, discounted at a pre-tax rate of 16.8%. No
scenarios have been identified in the current year leading to reasonably
possible changes in estimates that would lead to a material impairment of the
Company's investments in subsidiaries at 31 March 2022.
15. Investment in Joint Ventures
The Group has one joint venture (South Atlantic Construction Company Limited,
"SAtCO"), which was set up in June 2012 in the Falkland Islands, with Trant
Construction to bid for the larger infrastructure contracts which were
expected to be generated by oil activity. Both Trant Construction and the FIC
contributed £50,000 of ordinary share capital. SAtCO is registered and
operates in the Falkland Islands. The net assets of SAtCO are shown below:
Joint Venture's balance sheet 2022 2021
£'000 £'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 2022
(2021: none).
The current assets balances above include £16,000 of cash (2021: £17,000),
£5,000 of other debtors (2021: £5,000) and £498,000 (2021: £498,000) of
loans due from SAtCO's parent companies.
SAtCO had no contingent liabilities or capital commitments as at 31 March 2022
or 31 March 2021 and the Group had no contingent liabilities or commitments in
respect of its joint venture at 31 March 2022 or 31 March 2021.
SATCO's registered office is 56 John Street, Stanley, Falkland Islands FIQQ
1ZZ
16. Leases receivable
As lessor, FIC has sold assets to customers as hire purchase leases. The
present value of the lease payments, together with any unguaranteed residual
value, is recognised as a receivable, net of allowances for expected bad debt
losses.
The difference between the gross receivable and the present value of future
lease payments, is recognised as unearned lease income. Lease income is
recognised in interest income over the term of the lease using the sum of
digits method so as to give a constant rate of return on the net investment in
the leases. Lease receivables are reviewed regularly to identify any
impairment.
Lease receivables arise on the sale of vehicles and customer goods, such as
furniture and electrical items, by FIC. No contingent rents have been
recognised as income in the period. No residual values accrue to the benefit
of the lessor.
16. Leases receivable (continued)
Group
2022 2021
£'000 £'000
Non-Current: Lease debtors due after more than one year 725 590
Current: Lease debtors due within one year 511 558
Total lease debtors 1,236 1,148
The difference between the gross investment in the hire purchase leases and
the present value of future lease payments due represents unearned lease
income of £310,000 (2021: £147,000). The cost of assets acquired for the
purpose of renting out under hire purchase agreements by the Group during the
year amounted to £960,000 (2021: £825,000).
The total cash received during the year in respect of hire purchase agreements
was £985,000 (2021: £1,163,000).
Group
2022 2021
£'000 £'000
Gross investment in hire purchase leases 1,571 1,319
Unearned lease income (310) (147)
Bad debt provision against hire purchase leases (25) (24)
Present value of future lease receipts 1,236 1,148
Present value of future lease payments due:
Within one year 511 558
Within two to five years 725 590
Present value of future lease receipts 1,236 1,148
17. Deferred tax assets and liabilities
Recognised deferred tax assets and (liabilities) Group
2022 2021
£'000 £'000
Property, plant & equipment (3,537) (2,938)
Intangible assets (509) (387)
Inventories (unrealised intragroup profits) 81 62
Other financial liabilities 104 66
Derivative financial instruments (161) 44
Share-based payments 108 40
Total net deferred tax liabilities (3,914) (3,113)
Deferred tax asset arising on the defined benefit pension liabilities 666 739
Net tax liabilities (3,248) (2,374)
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.
17. Deferred tax assets and liabilities (continued)
Company
2022 2021
£'000 £'000
Other temporary differences (146) 44
Net tax (liability) / asset (146) 44
Movement in deferred tax assets / (liabilities) in the year:
Group
1 April 2021 Recognised in income Recognised in equity 31 March 2022
£'000 £'000 £'000 £'000
Property, plant & equipment (2,938) (599) - (3,537)
Intangible assets (387) (122) - (509)
Inventories (unrealised intragroup profits) 62 19 - 81
Other financial liabilities 66 31 7 104
Derivative financial instruments 44 - (205) (161)
Share-based payments 40 17 51 108
Pension 739 (11) (62) 666
Deferred tax movements (2,374) (665) (209) (3,248)
Unrecognised deferred tax assets
Deferred tax assets of £44,000 (2021: £44,000) in respect of capital losses
have not been recognised as it is not considered probable that there will be
suitable chargeable gains in the foreseeable future from which the underlying
capital losses will reverse.
Movement in deferred tax assets / (liabilities) in the year: Company
1 April 2021 Recognised in income Recognised in equity 31 March 2022
£'000 £'000 £'000 £'000
Derivative financial liabilities instruments 44 - (205) (161)
Other temporary differences - 15 - 15
Deferred tax asset movements 44 15 (205) (146)
Movement in deferred tax assets / (liabilities) in the prior year:
Group
1 April 2020 Recognised in income Recognised in equity 31 March 2021
£'000 £'000 £'000 £'000
Property, plant & equipment (2,713) (225) - (2,938)
Intangible assets (387) - - (387)
Inventories 32 30 - 62
Other financial liabilities 48 (12) 30 66
Derivative financial instruments 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)
17. Deferred tax assets and liabilities (continued)
Movement in deferred tax asset in the prior year: Company
1 April 2020 Recognised in income Recognised in equity 31 March 2021
£'000 £'000 £'000 £'000
Derivative financial instruments 102 -- (58) 44
Other temporary differences 19 (19) - -
Deferred tax asset movements 121 (19) (58) 44
The UK deferred tax liability as at 31 March 2021 was calculated at 19%. An
increase in the UK corporation rate from 19% to 25% (effective 1 April 2023)
was substantively enacted on 24 May 2021. It has been assumed that all
material UK deferred tax elements will reverse in 2023 or later and hence all
elements are calculated at 25%. Deferred tax assets and liabilities relating
to the Falkland Islands have been recognised at a rate of 26%.
18. Inventories
Group
2022 2021
£'000 £'000
Work in progress 1,033 691
Goods in transit 284 972
Goods held for resale 5,423 4,208
Total Inventories 6,740 5,871
Goods in transit are retail goods in transit to the Falkland Islands.
The Company has no inventories.
19. Trade and other receivables
Group Company
2022 2021 2022 2021
£'000 £'000 £'000 £'000
Non-Current
Rental deposits 44 88 - -
Amount owed by subsidiary undertakings - - 10,057 10,207
Total trade and other receivables 44 88 10,057 10,207
Group Company
2022 2021 2022 2021
£'000 £'000 £'000 £'000
Current
Trade and other receivables 5,362 3,472 - -
Rental deposits 88 - - -
Prepayments 1,515 1,087 45 118
Accrued income 982 1,309 - -
Total trade and other receivables 7,947 5,868 45 118
Amounts owed by subsidiary undertakings to the Company are interest free with
no fixed repayment date.
19. Trade and other receivables (continued)
The accrued income primarily relates to contracts where the work has been
completed but had not been billed at the balance sheet date. No allowance
for expected credit losses was recognised in respect of accrued income as the
impact was assessed as being immaterial. The only significant changes in the
accrued income balance during the year related to the recognition of revenue
for work performed and the transfer of billed amounts to trade receivables.
20. Cash and cash equivalents
Group Company
2022 2021 2022 2020
£'000 £'000 £'000 £'000
Cash and other cash equivalents in the balance sheet 9,572 14,556 4,376 5,462
Group Company
Year ended 31 March 2022 2021 2022 2021
£'000 £'000 £'000 £'000
Net (decrease) / increase in cash and cash equivalents (4,971) 5,451 (1,086) (304)
Exchange losses (13) (3) - -
Net (decrease) / increase in cash and cash equivalents after exchange gains (4,984) 5,448 (1,086) (304)
Bank loan draw downs - (5,000) - -
Bank loan repayments 5,927 624 520 262
Lease modifications: non-cash 331 - - -
Lease liabilities drawdown: cash - (389) - -
Lease liabilities repayments 716 649 - -
Decrease / (increase) in interesting bearing loans and borrowings 6,974 (4,116) 520 262
Net decrease / (increase) in debt 1,990 1,332 (566) (42)
Net debt brought forward (13,667) (14,999) (7,726) (7,684)
Net debt at 31 March (11,677) (13,667) (8,292) (7,726)
Net debt
Group Company
2022 2021 2022 2021
£'000 £'000 £'000 £'000
Cash balances 9,572 14,556 4,376 5,462
less: Total interest-bearing loans and borrowings (21,249) (28,223) (12,668) (13,188)
Net debt (11,677) (13,667) (8,292) (7,726)
21. Interest-bearing loans and borrowings
This note provides information about the contractual terms of the
interest-bearing loans and borrowings owed by the Group, which are stated at
amortised cost. For more information regarding the maturity of the
interest-bearing loans and lease liabilities and about the Group's and the
Company's exposure to interest rate and foreign currency risk, see note 26.
Group Company
2022 2021 2022 2021
£'000 £'000 £'000 £'000
Non-current liabilities
Secured bank loans 13,235 17,313 12,139 12,668
Lease liabilities 6,478 7,486 - -
Total non-current interest-bearing loans and lease liabilities 19,713 24,799 12,139 12,668
Current liabilities
Secured bank loans 948 2,797 529 520
Lease liabilities 588 627 - -
Total current interest-bearing loans and lease liabilities 1,536 3,424 529 520
Total liabilities
Secured bank loans 14,183 20,110 12,668 13,188
Lease liabilities 7,066 8,113 - -
Total interest-bearing loans and lease liabilities 21,249 28,223 12,668 13,188
Lease liabilities
Future minimum lease Interest Present value of minimum lease payments
payments
2022 2021 2022 2021 2022 2021
£'000 £'000 £'000 £'000 £'000 £'000
Less than one year 874 955 287 337 588 618
Between one and two years 709 853 269 317 439 536
Between two and five years 1,616 1,952 733 869 883 1,083
More than five years 10,094 11,727 4,938 5,851 5,156 5,876
Total 13,293 15,487 6,227 7,374 7,066 8,113
22. Trade and other payables
Group Company
2022 2021 2022 2021
£'000 £'000 £'000 £'000
Current
Trade payables 4,111 3,025 29 -
Contract liability 254 - - -
Amounts owed to subsidiary undertakings - - 5,085 5,960
Loan from joint venture 249 249 - -
Other creditors, including taxation and social security 2,080 1,435 120 231
Accruals 2,962 1,843 615 200
Deferred income 314 223 - -
Total trade and other payables 9,970 6,775 5,849 6,391
Amounts owed to subsidiary undertakings by the company are interest free with
no fixed repayment date.
23. Employee benefits: pension plans
Defined contribution schemes
The Group operates defined contribution schemes at PHFC and Momart and current
FIC employees are enrolled in the Falkland Islands Pension Scheme ("FIPS").
The assets of all these schemes are held separately from those of the Group in
independently administered funds.
The pension cost charge for the year represents contributions payable by the
Group to the schemes and amounted to £505,000 (2021: £498,000). The Group
anticipates paying contributions amounting to £525,000 during the year ending
31 March 2023. There were outstanding contributions of £11,000 (2021:
£39,000) due to pension schemes at 31 March 2022.
The Falkland Islands Company Limited Scheme
FIC operates a defined benefit pension scheme for certain former employees.
This scheme was closed to new members in 1988 and to further accrual on 31
March 2007. The scheme has no assets and payments to pensioners are made out
of operating cash flows. The expected contributions for the year ended 31
March 2023 are £100,000. During the year ended 31 March 2022, 11 pensioners
(2021: 11) received benefits from this scheme, and there are three deferred
members at 31 March 2022 (2021: three). Benefits are payable on retirement at
the normal retirement age. The weighted average duration of the expected
benefit payments from the Scheme is around 14 years (2021: 15 years).
An actuarial report for IAS 19 purposes as at 31 March 2022 was prepared by a
qualified independent actuary, Lane Clark and Peacock LLP. The major
assumptions used in the valuation were:
2022 2021
Rate of increase in pensions in payment and deferred pensions 2.7% 2.5%
Discount rate applied to scheme liabilities 2.8% 2.0%
Inflation assumption 3.9% 3.4%
Average longevity at age 65 for male current and deferred pensioners 22.0 21.9
(years) at accounting date
Average longevity at age 65 for male current and deferred pensioners 23.4 23.3
(years) 20 years after accounting date
The assumptions used by the actuary are chosen from a range of possible
actuarial assumptions which, due to the timescale covered, may not necessarily
be borne out in practice. Assumptions relating to life expectancy have been
based on UK mortality data on the basis that this is the best available data
for the Falkland Islands.
Sensitivity Analysis
The calculation of the defined benefit liability is sensitive to the
assumptions set out above. The following table summarises how the impact of
the defined benefit liability at 31 March 2022 would have increased /
(decreased) as a result of a change in the respective assumptions by 1.0%.
Effect on Obligation
2022
-1% pa +1% pa
£'000 £'000
Discount rate 380 (310)
Inflation assumption (30) 15
-1 year +1 year
£'000 £'000
Life expectancy (120) 125
These sensitivities have been calculated to show the movement in the defined
benefit obligation in isolation, and assume no other changes in market
conditions at the accounting date.
23. Employee benefits: pension plans (continued)
Scheme liabilities
The present values of the scheme's liabilities, which are derived from cash
flow projections over long periods and thus inherently uncertain, were:
Value at
2018 2019 2020 2021 2022
£'000 £'000 £'000 £'000 £'000
Present value of scheme liabilities (2,839) (2,772) (2,604) (2,842) (2,562)
Related deferred tax assets 738 721 677 677 666
Net pension liability (2,101) (2,051) (1,927) (2,165) (1,896)
Movement in deficit during the year: 2022 2021
£'000 £'000
(2,842) (2,604)
Deficit in scheme at beginning of the year
Pensions paid 99 98
Other finance cost (56) (64)
Re-measurement of the defined benefit pension liability 237 (272)
Deficit in scheme at the end of the year (2,562) (2,842)
Analysis of amounts included in other finance costs: 2022 2021
£'000 £'000
Interest on pension scheme liabilities 56 64
Analysis of amounts recognised in statement of comprehensive income: 2022 2021
£'000 £'000
Experience gains arising on scheme liabilities (43) (21)
Changes in assumptions underlying the present value of scheme liabilities 280 (251)
Re-measurement of the defined benefit pension liability 237 (272)
24. Employee benefits: share based payments
The total number of options outstanding at 31 March 2022 is 439,834 including
(i) 3,591 nil cost options (2021: 12,864), (ii) 431,243 options (2021:
210,474) granted under the Long Term Incentive Plan and (iii) 5,000 (2021:
58,152) Share options granted with an exercise price equal to the market price
on the date of grant.
(i) Nil cost options granted to John Foster:
Share price at grant date Fair value per share Total fair value Earliest Exercise Latest Exercise
Date of Issue Number
pence pence £ Date date
17 Jun 19 3,591 316.0 301.0 10,809 17 Jun 22 17 Jun 23
Total 3,591 10,809
24. Employee benefits: share based payments (continued)
Reconciliation of nil cost options: Number of options Number of options
2022 2021
Outstanding at the beginning of the year 12,864 25,352
Options exercised during the year (9,273) (12,488)
Outstanding at the year end 3,591 12,864
Vested options exercisable at the year end - -
Weighted average life of outstanding options (years) - 1.8
(ii) Long term Incentive Plan grants at an exercise price of ten pence to
local directors and executives:
255,304 Long term Incentive Plan grants were issued on 3 December 2021 at an
exercise price of ten pence to local directors and executives, and expire in
five years on 3 December 2026. During the year, 34,535 of these options were
forfeited and all of the balance of these options remain outstanding at 31
March 2022. None of these grants are exercisable at 31 March 2022.
133,052 Long term Incentive Plan grants were issued on 14 July 2020 at an
exercise price of ten pence to local directors and executives, and expire in
five years on 14 July 2025. During the year, none of these options were
forfeited (2021:10,000) and 123,052 of these options remain outstanding at 31
March 2022. None of these grants are exercisable at 31 March 2022.
135,535 Long term Incentive Plan grants were issued on 4 July 2019 at an
exercise price of ten pence to local directors and executives, and expire in
five years on 4 July 2024. During the year, none of these options were
forfeited (2021:48,113) and 87,422 options remain outstanding at 31 March
2022. None of these grants are exercisable at 31 March 2022.
There are various performance conditions attached to the Long term Incentive
Plan grants. All have a primary performance condition of the Group share price
exceeding a target threshold at the vesting date, and secondary financial
performance conditions specific to the relevant operating segment.
Share price at grant date Fair value per share Total fair value Earliest Exercise Latest Exercise
Date of Issue Number Exercise Price
pence Pence pence £ Date date
4 Jul 19 87,422 10.0 314.0 96.8 84,612 4 Jul 22 3 Jul 24
14 Jul 20 123,052 10.0 315.0 75.0 92,289 15 Jul 23 13 Jul 25
3 Dec 21 220,769 10.0 215.0 88.0 194,277 3 Dec 24 2 Dec 26
Total 431,243 371,178
Reconciliation of LTIPs: Number of options Number of options
2022 2021
Outstanding at the beginning of the year 210,474 234,734
Options granted during the year 255,304 133,052
Options forfeited during the year (34,535) (102,651)
Options lapsed in year - (54,661)
Outstanding at the year end 431,243 210,474
Vested options exercisable at the year end - -
Weighted average life of outstanding options (years) 4.4 3.9
24. Employee benefits: share based payments (continued)
(iii) Share options with an exercise price equal to the market
price on the date of grant
Share price at grant date Fair value per share Total fair value Earliest Exercise Latest Exercise
Date of Issue Number Exercise Price
pence Pence pence £ Date date
19 Jan 15 5,000 272.5 272.5 63.0 3,150 19 Jan 18 18 Jan 25
Total 5,000 3,150
The exercise price of outstanding options at 31 March 2022 is £2.725.
Reconciliation of options with an exercise price equal to the market price on
the date of grant, including the number and weighted average exercise price:
Weighted average exercise price (£) Number of options Weighted average exercise price (£) Number of options
2022 2022 2021 2021
Outstanding at the beginning of the year 2.68 58,152 2.85 96,914
Options exercised during the year - - 2.68 (3,848)
Forfeited during the year - - 3.09 (27,172)
Lapsed during the year 2.68 (53,152) 3.43 (7,742)
Outstanding at the year end 2.73 5,000 2.68 58,152
Vested options exercisable at the year end 2.73 5,000 2.68 58,152
Weighted average life of outstanding options (years) 2.8 1.0
The fair values of the options are estimated at the date of grant using
appropriate option pricing models and are charged to the profit and loss
account over the vesting period of the options. All options, other than
certain nil cost options granted to John Foster, are granted with the
condition that the employee remains in employment for three years.
All share options are equity settled. Share options issued without share price
conditions attached have been valued using the Black-Scholes model. Share
price options issued with share price conditions attached have been valued
using a Monte Carlo simulation model making explicit allowance for share price
targets. Inputs into the valuation models include the estimated time to
maturity, the risk-free rate, expected volatility, and dividend yield.
During the year ending 31 March 2022, 9,273 nil cost options (2021: 12,488)
were exercised over ordinary shares by John Foster at a gain of £23,183
(2021: £40,586). In the year to 31 March 2021, employees around the Group
exercised 3,848 other share options at a gain of £2,375.
2022 2021
£'000 £'000
Total share-based payment expense recognised in the year 45 1
25. Capital and reserves
Share capital Ordinary Shares
2022 2021
In issue at the start of the year 12,514,985 12,504,519
Share capital issued during the year 4,915 10,466
In issue at the end of the year 12,519,900 12,514,985
2022 2021
£'000 £'000
Allotted, called up and fully paid Ordinary shares of 10p each 1,251 1,251
By special resolution at an Annual General Meeting on 9 September 2010 the
Company adopted new articles of association, principally to take account of
the various changes in company law brought in by the Companies Act 2006. As a
consequence, the Company no longer has an authorised share capital. The
holders of ordinary shares are entitled to receive dividends as declared from
time to time and are entitled to one vote per share at meetings of the
Company.
During the year 4,915 shares (2021: 10,466) were issued following the exercise
of share options.
On 8 July 2021, John Foster exercised 9,273 nil cost options, 4,358 options
were cancelled to settle the employee tax liabilities and 4,915 shares were
issued as new share capital for which the nominal value was paid in full. A
total cash outflow of £10,896 was paid on the exercise of these options to
settle the tax obligations arising.
For more information on share options see note 24.
Other reserves
The other reserves in the Group of £703,000 at 31 March 2022 comprise
£5,389,000 of merger relief which arose on the 1998 Scheme of Arrangement,
when the Company issued 1 share for every 300 shares that shareholders had
previously held in Anglo United plc. Immediately following this Scheme of
Arrangement, the Company acquired the Falkland Islands' businesses for £8.0
million and the £4,686,000 of goodwill on this acquisition was written off
against the merger relief.
Dividends
The following dividends were recognised and paid in the period:
2022 2021
£'000 £'000
Final: nil pence (2021: nil pence) per qualifying ordinary share - -
Interim: 1 pence (2021: nil pence) per qualifying ordinary share 125 -
Total dividends recognised in the period 125 -
26. Financial instruments
(i) Fair values of financial instruments
Trade and other receivables
The fair value of trade and other receivables is estimated as the present
value of future cash flows, discounted at the market rate of interest at the
balance sheet date if the effect is material.
Trade and other payables
The fair value of trade and other payables is estimated as the present value
of future cash flows, discounted at the market rate of interest at the balance
sheet date if the effect is material.
Cash and cash equivalents
The fair value of cash and cash equivalents is estimated as its carrying
amount where the cash is repayable on demand. Where it is not repayable on
demand then the fair value is estimated at the present value of future cash
flows, discounted at the market rate of interest at the balance sheet date.
Interest-bearing borrowings
The fair value of interest-bearing borrowings, which after initial recognition
is determined for disclosure purposes only, is calculated based on the present
value of future principal and interest cash flows, discounted at the market
rate of interest at the balance sheet date.
Financial Instruments categories and fair values
The fair values of financial assets and financial liabilities are not
materially different to the carrying values shown in the consolidated balance
sheet and Company balance sheet.
The following table shows the carrying value, which management consider to be
materially equal to fair value for each category of financial instrument:
Group Company
2022 2021 2022 2021
£'000 £'000 £'000 £'000
Cash and cash equivalents 9,572 14,556 4,376 5,462
Hire purchase debtors 1,236 1,148 - -
Interest rate swap asset 644 - 644 -
Trade and other receivables 5,362 3,472 - 60
Rental deposits 132 - - -
Total assets exposed to credit risk 16,946 19,176 5,020 5,522
Interest rate swap liability - (234) - (234)
Total trade and other payables (9,119) (6,775) (5,849) (6,391)
Interest-bearing borrowings at amortised cost (21,249) (28,223) (12,668) (13,188)
The interest rate swaps have been valued using a level 2 methodology. All
other financial instruments are based on level 3 methodology.
(ii) Credit Risk
Financial risk management
Credit risk is the risk of financial loss to the Group if a customer or
counterparty to a financial instrument fails to meet its contractual
obligations, and arises principally from the Group's receivables from
customers.
Group
The Group's credit risk is primarily attributable to its trade receivables.
The maximum credit exposure of the Group comprises the amounts presented in
the balance sheet, which are stated net of provisions for expected credit
losses. Expected credit loss provisions are based on previous experience and
other evidence, including forward-
26. Financial instruments (continued)
looking macroeconomic information, indicative of the recoverability of future
cash flows. There have been no significant changes in the estimation
techniques or significant assumptions made during the reporting period.
Management has credit policies in place to manage risk on an on-going basis.
These include the use of customer specific credit limits.
Company
The majority of the Company's receivables are with subsidiaries. The Company
does not consider these counter-parties to be a significant credit risk.
Exposure to credit risk
The carrying amount of financial assets represents the maximum credit
exposure. Therefore, the maximum exposure to credit risk at the balance sheet
date was £16,946,000 (2021: £19,176,000) being the total trade receivables,
hire purchase debtors, interest swap, rental deposits and cash and cash
equivalents in the balance sheet. The credit risk on cash balances and the
interest rate swap is limited because the counterparties are banks with high
credit ratings assigned by international credit-rating agencies.
The maximum exposure to credit risk for trade receivables at the balance sheet
date by geographic region was:
Group
2022 2021
£'000 £'000
Falkland Islands 1,773 712
Europe 775 237
North America 254 166
United Kingdom 2,365 2,184
Other 195 173
Total trade receivables 5,362 3,472
The Company has no trade debtors.
Credit quality of financial assets and expected credit losses
Group Gross Impairment Net Gross Impairment Net
2022 2022 2022 2021 2021 2021
£'000 £'000 £'000 £'000 £'000 £'000
Not past due 3,736 - 3,736 2,880 (6) 2,874
Past due 0-30 days 1,020 (2) 1,018 447 (8) 439
Past due 31-120 days 491 (58) 433 184 (36) 148
More than 120 days 328 (153) 175 64 (53) 11
Total trade receivables 5,575 (213) 5,362 3,575 (103) 3,472
Hire purchase debtors 1,261 (25) 1,236 1,172 (24) 1,148
The amount of hire purchase debt that is past due is immaterial.
26. Financial instruments (continued)
The movement in the allowances for impairment in respect of trade receivables
and hire purchase debtors during the year was:
Group
2022 2021
£'000 £'000
Balance at 1 April 127 183
Impairment loss recognised 114 39
Utilisation of provision (debts written off) (3) (95)
Balance at 31 March 238 127
Provided against hire purchase debtors 25 24
Provided against trade and other receivables 213 103
Balance at 31 March 238 127
The allowance account for trade receivables is used to record impairment
losses unless the Group is satisfied that no recovery of the amount owing is
possible. At that point, the amounts considered irrecoverable are written off
against the trade receivables directly.
No further analysis has been provided for cash and cash equivalents, trade
receivables from Group companies, other receivables and other financial
assets, as there is limited exposure to credit risk and expected credit losses
are assessed as immaterial.
(iii) Liquidity risk
Financial risk management
Liquidity risk is the risk that the Group will not be able to meet its
financial obligations as they fall due. At the beginning of the period the
Group had outstanding bank loans of £20.1 million. All payments due during
the year with respect to these agreements were met as they fell due.
At the start of the year, the Company had one bank loan of £13.2 million. All
payments due during the year with respect to these agreements were met as they
fell due.
The Group manages its cash balances centrally at head office and prepares
rolling cash flow forecasts to ensure availability of funds.
Liquidity risk - Group
The following are the contractual maturities of financial liabilities,
including estimated interest:
Contractual cash flows
2022 Carrying amount Total 1 year or less 1 to 2 years 2 to 5 years 5 years and over
£'000 £'000 £'000 £'000 £'000 £'000
Financial liabilities
Secured bank loans 14,183 16,410 1,346 1,332 3,486 10,246
Lease liabilities 7,066 13,293 874 709 1,616 10,094
Trade payables 4,111 4,111 4,111 - - -
Other creditors 1,797 1,797 1,797 - - -
Loan from Joint Venture 249 249 249 - - -
Accruals 2,962 2,962 2,962 - - -
Total financial liabilities 30,368 38,822 11,339 2,041 5,102 20,340
26. Financial instruments (continued)
Contractual cash flows
2021 Carrying amount Total 1 year or less 1 to 2 years 2 to 5 years 5 years and over
£'000 £'000 £'000 £'000 £'000 £'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
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
2022 Carrying amount Total 1 year or less 1 to 2 years 2 to 5 years 5 years and over
£'000 £'000 £'000 £'000 £'000 £'000
Financial liabilities
Secured bank loans 12,668 14,825 893 879 2,807 10,246
Trade payables 29 29 29 - - -
Amounts owed to subsidiary undertakings 5,085 5,085 5,085 - - -
Other creditors 89 89 89 - - -
Accruals 615 615 615 - - -
Total financial liabilities 18,486 20,643 6,711 879 2,807 10,246
Contractual cash flows
2021 Carrying amount Total 1 year or less 1 to 2 years 2 to 5 years 5 years and over
£'000 £'000 £'000 £'000 £'000 £'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
26. Financial instruments (continued)
(iv) Market Risk
Financial risk management
Market risk is the risk that changes in market prices, such as foreign
exchange rates, interest rates and equity prices will affect the Group's
income or the value of its holdings of financial instruments.
Market risk - Foreign currency risk
The Group has exposure to foreign currency risk arising from trade and other
payables which are denominated in foreign currencies. The Group is not,
however, exposed to any significant transactional foreign currency risk. The
Group's exposure to foreign currency risk is as follows and is based on
carrying amounts for monetary financial instruments.
Group
2022 EUR USD Other Total Balance sheet exposure GBP Total
£'000 £'000 £'000 £'000 £'000 £'000
Cash and cash equivalents 126 117 40 283 9,289 9,572
Trade payables and other payables (635) (479) (312) (1,426) (8,544) (9,970)
Balance sheet exposure (509) (362) (272) (1,143) 745 (398)
2021 EUR USD Other Total Balance sheet exposure GBP Total
£'000 £'000 £'000 £'000 £'000 £'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
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 2021.
Equity Profit or Loss
2022 2021 2022 2021
£'000 £'000 £'000 £'000
EUR 51 22 51 22
USD 36 10 36 10
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.
26. Financial instruments (continued)
Market risk - interest rate risk
At the balance sheet date, the interest rate profile for the Group's
interest-bearing financial instruments was:
Group Company
2022 2021 2022 2021
£'000 £'000 £'000 £'000
Fixed rate financial instruments
Leases receivable 1,236 1,148 - -
Bank loans (508) (607) - -
Lease liabilities (7,066) (8,113) - -
Total Fixed rate financial instruments (6,338) (7,572) - -
Variable rate financial instruments
Effect of Interest rate swap - (234) - (234)
Bank loans (13,675) (19,503) (12,668) (13,188)
Total Variable rate financial instruments (13,675) (19,737) (12,668) (13,422)
At 31 March 2022, the Group had four bank loans:
(i) £12.7 million (2021: £13.2 million) ten-year loan, which
was drawn down on 28 June 2019, with interest charged at the compounded daily
SONIA rate plus 1.8693% (2021: LIBOR plus 1.75%);
(ii) £0.8 million (2021: £1.1 million) repayable over ten
years until May 2025, secured against the newest vessel in PHFC, with interest
charged at 2.6% above the bank of England base rate;
(iii) £0.2 million (2021: £0.2 million) repayable over ten
years until May 2025, secured against freehold property held in PHFC, with
interest charged at 1.75% above the Bank of England base rate;
(iv) £0.5 million (2021: £0.6 million) drawn down by Momart,
interest has been fixed on this loan at 2.73% for the full ten years until
December 2026.
The interest payable on the £12.7 million ten-year loan has been hedged by
one interest swap, taken out on 30 December 2021 with an initial notional
value of £12.625 million, with interest payable at the difference between
1.1766% and the compounded daily SONIA rate plus 0.1193%. This interest rate
swap notional value decreases at £125,000 per quarter over five years until
June 2024, and then at £150,000 per quarter for a further five years until
June 2029 when the outstanding bullet payment of £8,525,000 is likely to be
refinanced. The notional value of the swap at 31 March 2022 is £12.5 million
(2021: £13.0 million). As both the ten-year loan and the interest swap were
moved to SONIA at the same point in time and are economically equivalent,
there has been no material in-year accounting impact as a result of the
change.
Lease liabilities
At 31 March 2022, the Group had the following lease liabilities:
(i) £5.2 million lease liabilities payable to Gosport Borough
Council; £4.5 million for the Gosport pontoon and £0.7 million for the
ground rent on the pontoon. Both of these leases run until June 2061 and
finance charges accrue on these liabilities at a weighted average rate of
4.51%.
(ii) £1.2 million of property rental leases, including two
warehouses rented by Momart, and the Momart and Bishops Stortford head
offices, which run for between 3 to 6 years as at 31 March 2022. The weighted
average interest rate of these rental liabilities is 3.25%.
(iii) £0.7 million of lease liabilities taken out to finance
trucks by hire purchase leases at Momart, £0.3 million of this balance arises
on two leases drawn down towards the end of the year ended 31 March 2021. The
weighted average interest rate of these truck liabilities is 3.08%.
The total blended average interest rate on the Group's lease liabilities is
4.2 % per annum.
26. Financial instruments (continued)
Interest rate sensitivity analysis
An increase of 100 basis points in interest rates at the balance sheet date
would have increased / (decreased) equity and profit or loss by the amounts
shown below. This calculation assumes that the change occurred at the balance
sheet date and has been applied to risk exposures existing at that date.
This analysis assumes that all other variables, in particular foreign currency
rates, remain constant and considers the effect of financial instruments with
variable interest rates and financial instruments at fair value through profit
or loss or available-for-sale with fixed interest rates. The analysis is
performed on the same basis for 31 March 2021.
Group Company
2022 2021 2022 2021
£'000 £'000 £'000 £'000
Equity
Interest rate swap liability 127 130 127 130
Variable rate financial liabilities (137) (195) (127) (132)
Profit or Loss
Interest rate swap liability 127 130 127 130
Variable rate financial liabilities (137) (195) (127) (132)
(v) Capital Management
The Group's objectives when managing capital, which comprises equity and
reserves at 31 March 2022 of £40,657,000 (2021: £38,896,000) are to
safeguard its ability to continue as a going concern, so that it can continue
to provide returns to shareholders and benefits to our other stakeholders.
27. Operating leases
Leases as lessor
The Group leases out its investment properties, which consist of 73 houses and
flats and ten mobile homes in the Falkland Islands, these are leased to staff,
fishing agency representatives and other short-term visitors to the Islands.
These lease agreements generally have an initial notice period of six months,
and beyond the six months initial tenancy, one month's notice can be given by
either party, therefore future minimum lease payments under non-cancellable
leases receivable are not material.
The Company had no operating lease commitments. However, as a result of the
purchase of the five warehouses at Leyton, the Company had the following
non-cancellable operating lease rentals receivable:
Company
2022 2021
£'000 £'000
Less than one year 974 919
Between one and five years 3,897 3,675
More than five years 16,805 16,753
21,676 21,347
28. Capital commitments
At 31 March 2022, the Group had entered into the following contractual
commitments:
- £385,000 in Momart comprising £272,000 for two new vehicles,
£79,000 for an HGV trailer and other enhancements to existing vehicles and
£34,000 for climate control systems.
- £270,000 in FIC comprising £190,000 for a new retail sales system
and £80,000 for a warehouse office.
At 31 March 2021, the Group had entered into contractual commitments of
£21,000 for a spray booth and vehicle exhaust systems at Momart.
29. Related parties
The Group has a related party relationship with its subsidiaries (see note 14)
and with its directors and executive officers.
Directors of the Company and their immediate relatives controlled 30.3% (2021:
30.2%) of the voting shares of the Company at 31 March 2022.
The compensation of key management personnel, which includes the FIH group plc
directors and the directors of the subsidiaries, is as follows:
Group Company
2022 2021 2022 2021
£'000 £'000 £'000 £'000
Key management emoluments including social security costs 2,092 1,610 795 366
Company contributions to defined contribution pension plans 83 74 - -
Share-related awards 45 1 20 20
Total key management personnel compensation 2,220 1,685 815 386
At 31 March 2022, the Group's joint venture, SAtCO, has debtors of £498,000
due from its parent companies.
On 2 May 2017, KJ Ironside, the Managing Director of FIC, purchased a property
which had been built on approximately 510 square metres of land owned by FIC.
FIC provided a loan of £65,000 to Mr Ironside to purchase the freehold of
this land. The loan is to be repaid in full in the event of the sale of the
property, Mr Ironside ceasing to hold any permits or licenses required by law
in respect of his ownership or occupation of the property, him ceasing to be
employed by FIC at any time before his 65th birthday (unless due to ill
health) or his death. £650 of interest is payable each year by Mr Ironside to
FIC in respect of this loan.
During the year, FIC entered into a contract with Pat Clunie, the FIC Finance
director to build him a house on normal commercial arm's length terms. The
house is due to be completed in the year ended 31 March 2023, at which point
it will be sold to Mr Clunie. The property is currently being constructed on
FIC land and on completion of the build, FIC will provide a loan of £30,000
to Mr Clunie to purchase the freehold of this land. The loan is to be repaid
in full in the event of the sale of the property, Mr Clunie ceasing to hold
any permits or licenses required by law in respect of his ownership or
occupation of the property, him ceasing to be employed by FIC at any time
before his 65th birthday (unless due to ill health) or his death. £300 of
interest is payable each year by Mr Clunie to FIC in respect of this loan.
During the year, FIC paid £4,160 (2021: £104,430) to JK Contracting in
respect of work performed at arm's length for company. The proprietor of JK
Contracting is the son-in-law of R Smith who was a director of FIC.
30. Accounting estimates
The preparation of financial statements in conformity with adopted IFRS
requires management to make judgements, estimates and assumptions that effect
the application of policies and reported amounts of assets and liabilities,
income and expenses. The estimates and associated assumptions are based upon
historical experience and various other factors that are believed to be
reasonable under the circumstances, the results of which form the basis of the
judgements as to asset and liability carrying values which are not readily
apparent from other sources. Actual results may vary from these estimates, and
are taken into account in periodic reviews of the application of such
estimates and assumptions. Revisions to accounting estimates are recognised in
the period in which the estimate is revised if the revision affects only that
period or in the period of revision and future periods if the revision affects
both current and future periods.
Defined benefit pension liabilities
At 31 March 2022, 11 pensioners were receiving payments from the FIC defined
benefit pension scheme, and there are three deferred members. A significant
degree of estimation is involved in predicting the ultimate benefits payment
to these pensioners using actuarial assumptions to value the defined benefit
pension liability (see note 23). Management have selected these assumptions
from a range of possible options following consultations with independent
actuarial advisers. There is a range of assumptions that may be appropriate,
particularly when considering the projection of life expectancy
post-retirement, which is a key demographic assumption, and has been based on
UK mortality data, if the life expectancy assumption was one more year than
the assumptions used, this would result in an increase of £125,000 in the
liability. Selecting a different assumption could significantly increase or
decrease the IAS19 value of the Scheme's liabilities. The projections of life
expectancy make no explicit allowance for specific individual risks, such as
the possible impact of climate change or a major medical breakthrough, the
projections used reflect the aggregate impact of the many possible factors
driving changes in future mortality rates.
The figures are prepared on the basis that both the FIC pension scheme and FIC
are ongoing. If the scheme were to be wound up, the position would differ, and
would almost certainly indicate a much larger deficit.
Impairment testing
Impairment tests have been undertaken with respect to intangible assets (see
note 11 for further details), with detailed reviews of probable medium to
long-term detailed forecasts of each of the businesses in the Group. No
impairment of goodwill was deemed necessary in the current or prior year.
Inventory provisions
The Group makes provisions in relation to inventory value, where the net
realisable value of an item is expected to be lower than its cost, due to
obsolescence. Historically, the calculation of inventory provisions has
entailed the use of estimates and judgements combined with mechanistic
calculations and extrapolations reflecting inventory ageing and stock turn.
During the year ended 31 March 2022, inventory provisions increased to
£1,089,000 (2021: £999,000). Inventory greater than 12 months old and with
no sales in the twelve months before 31 March 2022 is provided against in
full. If this provision was reduced to 50% of the gross inventory value, the
provision would reduce by circa £169,000 (2021: £150,000). If this
provision was extended to cover all inventory greater than six months old with
no sales in the twelve months before 31 March 2022, the provision would
increase by £94,000 (2021: £74,000).
Company Information
Directors Registered Office
Robin Williams Non-executive Chairman Kenburgh Court
Stuart Munro Chief Executive Officer 133-137 South Street
Jeremy Brade Non-executive Director Bishop's Stortford
Robert Johnston Non-executive Director Hertfordshire CM23 3HX
Dominic Lavelle Non-executive Director T: 01279 461630
E: admin@fihplc.com (mailto:admin@fihplc.com)
W: www.fihplc.com (http://www.fihplc.com)
Company Secretary Registered number 03416346
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 Group
10(th) Floor Central Square,
29 Wellington Street,
Leeds LS1 4DL
Financial PR
Novella Communications,
South Wing, Somerset House,
London WC2R 1LA
The Falkland Islands Company The Portsmouth Harbour Ferry Company Momart Limited
Clive Lane, Director
Kevin Ironside, Director T: 02392 524551 Steve Lane, Director
T: 00 500 27600 E: admin@gosportferry.co.uk T: 020 7426 3000
E: info@fic.co.fk (mailto:info@fic.co.fk) W: www.gosportferry.co.uk (http://www.gosportferry.co.uk) E: enquiries@momart.com
W:www.falklandislandscompany.com (http://www.falklandislandscompany.com) W: www.momart.com (http://www.momart.com)
www.fihplc.com
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