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Sentiment slips towards Falkland Island Holdings

RESULTS: Sentiment towards Falkland Island Holdings has suffered after disappointing drilling news from Falkland Oil & Gas and a less than sparkling trading performance
December 7, 2012

Support services group Falkland Islands Holdings (FKL) reported a solid enough first-half performance. But sentiment won't be helped by news last month that Falkland Oil & Gas - in which Falkland Islands owns a 4 per cent stake - had failed to find oil at its second exploration well.

IC TIP: Hold at 303p

Despite that, managing director John Foster thinks the future look promising as the first revenue from licenses begins to flow into the Falkland Island government's coffers. Moreover, plans have firmed-up for a new deep water port - to be built next to 300 acres of the company's land. At the trading level, meanwhile, the Falklands Islands Company operation - which offers a range of services including retailing, property and transport, saw pre-tax profit roughly flat at £0.54m, although total retail sales rose 4.7 per cent in the period. While the Portsmouth Harbour Ferry business suffered a 21 per cent profit decline to £0.31m as passenger numbers fell 7.6 per cent following last year's 18 per cent fare increase. Although the Momart art logistics business benefited from more exhibitions, such as the Damien Hirst retrospective at the Tate Modern, and profits there rose £17.2 per cent to £0.34m.

Broker WH Ireland expects adjusted full-year pre-tax profit to £2.9m, giving EPS of 18.3p (2012: £3.2m/26.2p).

FALKLAND ISLANDS HOLDINGS (FKL)

ORD PRICE:303pMARKET VALUE:£37.6m
TOUCH:295-310p12-MONTH HIGH:420pLOW: 260p
DIVIDEND YIELD:3.6%PE RATIO:12
NET ASSET VALUE:314p*NET CASH:£3.1m

Half-year to 30 SepTurnover (£m)Pre-tax profit (£m)Earnings per share (p)Dividend per share (p)
201116.50.996.904.00
201216.51.086.804.00
% change-+9-1-

Ex-div: 12 Dec

Payment: 25 Jan

*Includes intangible assets of £12.5m, 101p per share