The 'failure' of the Illex squid catch earlier this year, the first failure since 2004, means that revenues on the Falkland Islands are going to be squeezed in 2009-10, which is bad news for Falkland Islands Holdings (FIH).
That's because the company, established by royal charter in 1852, is a provider of a wide range of island services ranging from retailing to property, to insurance to shipping and fishing agency services. On the other hand, FIH has tightened up cash flow and diversified into the UK initially via the purchase of the Portsmouth Harbour Ferry, which has proved to be a steady and successful investment.
Then, in March 2008, it bought Momart, a UK market leader in moving art works across the world, for £10.30m. Last year, Momart's sales totalled £15.54m and accounted for almost all the dramatic jump in turnover. But a sharp fall in the value of sterling on prices quoted to overseas contractors in local currencies knocked up to £250,000 off profits. Momart also bore restructuring costs totalling £2.49m.
On an underlying pre-tax profit basis, FIH edged pre-tax profits marginally ahead to £2.1m, but company broker Peel Hunt believes that figure will fall to £1.80m this year - previous forecast was £2.30m. That's not disastrous, as FIH still owns 15m shares (worth £14m) in Falkland Oil and Gas (FOGL). FOGL and BHP Billiton may drill its first well in the East Falklands Basin late this year. Unfortunately, the decline in the value of the stake during 2008-10 was mainly responsible for reducing net asset value by almost £10m to £24.87m.
FALKLAND ISLANDS (FKL) | ||||
|---|---|---|---|---|
| ORD PRICE: | 267.5p | MARKET VALUE: | £24.2m | |
| TOUCH: | 260-275p | 12-MONTH HIGH: | 450p | LOW: 187.5p |
| DIVIDEND YIELD: | 3% | PE RATIO: | NA | |
| NET ASSET VALUE: | 274p | NET DEBT: | 17% | |
| Year to 31 Mar | Turnover (£m) | Pre-tax profit (£m) | Earnings per share (p) | Dividend per share (p) |
|---|---|---|---|---|
| 2005 | 12.8 | 0.90 | 8.0 | 6.00 |
| 2006 | 15.7 | 3.09 | 32.6 | 6.50 |
| 2007 | 15.6 | 1.84 | 17.2 | 7.00 |
| 2008 | 17.2 | 1.91 | 16.3 | 8.00 |
| 2009 | 31.7 | -0.63 | -12.8 | 8.00 |
| % change | +84 | -133 | -179 | – |
Ex-div:30 September Payment:02 November Aim: Business support services | ||||
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