Transcript Falkland Islands Holdings plc

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FALKLAND ISLANDS
HOLDINGS
Results Year ended 31 March 2014
Continued growth
FKL : Overview
Record Pre-Tax profits £3.65m ( 2013: £3.29m )
Benefits of diversified interests demonstrated
FIC: Quieter trading year , continued investment
Momart: Record trading performance
PHFC: Stable trading – new ferry under construction
FOGL :Awaiting 2015 drilling campaign with 5 wells funded
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FKL : Year ended 31 March 2014
Trading Overview
•
Group revenue up by 7.5% to £38.3m (2013: £35.6m)
— Momart : Record result – profits + 53% to £1.8m
— FIC : Quieter trading year – no rig activity – profits down £0.3m to £1.0m – further investment
— PHFC – Reduced decline in passenger numbers ( -1.6% vs -8.8% ) – profits up 8% to £0.8m
•
Operating profit £3.9m (2013: £3.5m) +10%
•
Underlying pre tax profits +11% to new record £3.65m (2013: £3.3m)
•
Earnings per share on underlying profits 22.0p (2013: 21.3p)
•
Proposed maintained full year dividend 11.5p per share (2013: 11.5p )
•
Cash £5.7m ( 2013 : £11.4m )
•
Bank borrowings reduced to £1.0m ( 2013: £2.0m)
•
Holding of 12.8m shares in FOGL maintained : 1 for every FKL share in issue
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FKL : Year ended 31 March 2014
Trading Overview
Year ended 31 March
2014
£000
2013
£000
Change +/-
Turnover – continuing operations
38,263
35,596
+7.5%
Underlying operating profit
3,852
3,502
+10.0%
Interest (net) incl. pensions costs
(205)
(211)
-2.8%
Underlying pre tax profit
3,647
3,291
+10.8%
Non trading items
64
(96)
Amortisation of Intangibles
(307)
(398)
Reported Profit Before Tax
3,404
2,797
+21.7%
Diluted EPS on taxed underlying PBT
22.0p
21.3p
+3.3%
12,460,985
11,703,862
+6.5%
Weighted shares in issue
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FKL : Cash & Liquidity
31 March
2014
31 March
2013
Change
£000
£000
£000
Bank Loans
(1,019)
(2,003)
984
Pontoon Finance Lease
(4,886)
(4,913)
27
(265)
(372)
107
(6,170)
(7,288)
1,118
Cash
5,715
11,416
(5,701)
Net Cash /(Borrowings)
(455)
4,128
(4,583)
Hire Purchase & Other borrowings
Total borrowings
Margin on bank loans 1.5% +libor
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FIC : Further progress to First Oil
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FIC : Background to Oil – June 2014
•
Premier Oil ( PMO ) progressing technical development of Sea Lion
•
Engineering concept selected Jan 2014 - Tension Leg Platform
•
Detailed engineering design being progressed
•
FEED contracts to be awarded by mid 2014
•
PMO seeking farm–in partner before final project sanction – in 2015
•
PMO undertaking further exploration drilling in North Falklands basin – “ A proven but
under explored oil province”
•
•
•
Potentially find Sea Lion extensions and / or identify new prospects in basin
Exploration drilling scheduled Q1/Q2 2015 – minimum 6 wells ( +up to 8 slots )
•
Utilising 3D seismic surveys completed in 2013
•
2 wells in Southern basin ( Noble Energy / FOGL acreage )
•
4 in Northern ( Sea Lion extension )
Temporary dock installed by Noble Energy in Stanley harbour to support offshore drilling.
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Timeline for Oil
Falklands : Timeline for Oil
Sea Lion Timeline
Jun-14
Exploration Drilling
Field Development ( Tension Leg Platform )
2014
2015
1 rig
Prepare
2016
2017
2018
2019
6 wells - 2 in South - 4 Northern basin
Develop
Develop Construct Construct
TLP will mean less onshore activity
FIRST OIL
FIRST OIL Now estimated as Mid 2019 ( 4 yrs following Project Green Light )
Assumes Project Sanction & funding by end 2015 - on shore infrastructure work growing from 2017 onwards
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FIC : Further progress to First Oil
The Noble Energy temporary port facility
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FIC : Trading - Year ended 31 March 2014
•
Revenue ahead at £15.88million ( 2013: 15.22million ) + 4.3%
•
Good growth in auto sales ( Falklands 4x4) + 42%
•
Falkland Building Services – growth in house building ( + £0.64m )
•
Stronger cruise ship visitors numbers up by 34% to 39,500 helped H2 sales .
•
First contribution from SAtCO - Installing Noble Energy temporary dock from March 14
•
BUT : retail , property rental and freight income hit by absence of oil rig
•
•
Retail sales down £0.5m – 4.8% - margins squeezed with increased costs
•
Property rental income -25% -£0.1m
•
Stevedoring and freight income -£0.4m - 23.5%
FIC profits down by £0.3m to £1.0m ( 2013 £1.3m )
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FIC : Further progress to First Oil
•
Airport Road foundations
•
Hebe Street Houses
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FIC : Further progress to First Oil
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– FIC : Year ended 31 March 2014
Revenue
Retail
Falklands 4x4
Freight and port services
Support services
Property and construction
Total Revenue
Operating profit
Net Interest
Pre Tax profit
Operating profit margin
2014
£ million
2013
£ million
Change
%
9.26
2.66
1.26
1.30
1.40
15.88
9.73
1.87
1.65
1.21
0.76
15.22
-4.8%
42.3%
-23.5%
6.7%
85.6%
4.3%
1.01
0.02
1.03
1.33
(0.03)
1.30
-23.5%
8.7%
-26.7%
6.4%
-21.0%
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FIC : Year ended 31 March 2014
•
•
Significant £2.7m capital investment during year.
•
Continued investment in Falklands Building Services – 61 staff now employed
•
Further work done to modernise Falklands 4x4’s Servicing facilities
•
Growing WIP & Order book for commission building of kit homes
•
4 new houses built in central Stanley to add to rental portfolio
•
Modernisation of FIC offices at Crozier Place on track, offering attractive office space
for external rental and improved Head Office facilities for FIC
•
Creation of new “Home Builder” Retail Warehouse in progress
•
New chiller and warehouse / container facilities started at Airport Road
•
New Property and Retail Directors recruited to strengthen local team
•
Fitzroy Road apartments redesigned on more cost effective, flexible basis .
FIG plans for Deep Water Port on hold pending green light on Sea Lion
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Momart : Building on its Reputation
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FIC – Year ended 31
Momart : Overview
•
Specialist Art Logistics company serving fine art market in the UK & overseas
•
Market leading position with reputation for quality - high barriers to entry
•
3 business streams :
•
Museum Exhibitions –planning, case making , packing, transport and installation
•
Commercial Galleries –Logistics services for galleries , artists and auction houses
•
Storage – 70,000 sq ft of secure warehousing for client storage in East London.
•
125 staff – 65 South Quay Canary Wharf , 60 in Leyton .
•
Fleet of 17 specialist art transport vehicles
•
Experienced and committed workforce - Royal Warrant holder
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Momart : Building on its reputation
Momart : Consistent Growth leading to an exceptional year
Y/e 31 March
Revenue
2011
2012
2013
2014
13,186
14,970
16,298
18,258
Operating Profit
532
964
1,193
1,826
Margin
4.0%
6.4%
7.3%
10.0%
81.2%
23.8%
53.1%
Growth in Profit
Momart: Trading year ended 31 March 2014
Revenue
Museums & Public Exhibitions
2014
£ million
2013
£ million
Change
%
Gallery Services
Storage
10.86
5.57
1.83
9.01
5.50
1.79
20.4%
1.3%
2.6%
Total Revenue
18.26
16.30
12.0%
Operating Profit
Interest
1.83
(0.03)
1.19
(0.03)
53.1%
1.80
1.16
54.4%
7.3%
36.6%
Pre Tax Profit *
* Before amortisation of intangibles
Operating profit margin
10.0%
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Momart: Trading year ended 31 March 2014
• Record result in an exceptional year
o
o
•
Record Exhibitions revenues + 20% to £10.9m
o
•
Revenue up 12% to £18.3m ( 2013: £16.3m )
Profits up 53% to £1.83m ( 2013: £1.16m )
Wide range of UK and higher margin international shows
Gallery Services – Revenue + 1.3% growth £5.57m
o
Commercial art market still buoyant
o
Improved asset utilisation and more selective contract selection lead to improved margins
•
Storage revenues up 2.6% to £1.83m : facilities effectively full at +93% capacity.
•
New Finance & Commercial Director recruited September 2013 to strengthen team.
•
New ERP system leading to faster turnaround of estimates and more commercial pricing – more
to come in 2014 with full roll out.
•
Notable exhibitions : Manet : Royal Academy , Ellen Gallagher : Tate Modern ,Reunion ( Walpole
collection from Hermitage ) , David Bowie , Chinese Painting : V&A ,
Vikings : British Museum and Vienna : National Gallery.
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mart: Building on its reputation
Momart: Building on its reputation
•
Closer relationships with major auction houses
•
Technically demanding, complex ,international exhibitions an increasing source of
business
•
Working closely with high quality international partners
•
New offices and introduction of ERP system set to increase productivity
•
Substantial increase in storage capacity planned for 2015
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Portsmouth
Harbour
Ferry Company
(PHFC) Overview
Portsmouth
Harbour
Ferry Company
Overview
•
Ferry service for foot, cycle & motor cycle passengers
•
Operating since 1874
•
Acquired by FIH in Dec. 2004 - £7.5m
•
5 minute journey across mouth of harbour from Gosport
to Portsmouth (1/3 mile)
•
Return fares are £3.10 (adult) and £2.10 (Child/Senior)
•
Operates 364 days a year, 5.30am – Midnight: Reliability
99.7%
•
4 purpose built vessels (2 fully depreciated) 1 under
construction
•
3.0 million passenger journeys p.a.
•
Unregulated, with dominant local position
•
Strong predictable cash flow
•
New Vessel being commissioned – delivery early 2015
will complete fleet modernisation
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PHFC
year 31
ended
312013
March 2014
PHFC: -Trading
Year ended
March
Revenues
Ferry fares
Other revenue
Total Revenue
Operating Profit
Pontoon lease finance interest
Profit before tax
2013
£ million
Change
%
3.95
0.17
4.12
3.89
0.19
4.08
+1.5%
1.01
(0.24)
0.77
0.98
(0.26)
0.72
2.9%
+6.1%
2014
£ million
-5.4%
+1.2%
Net margin on revenue (%)
18.6%
17.7%
+5.1%
Passenger journeys (000s)
2,986
3,033
-1.6%
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PHFC
P : Trading year ended 31 March 2014
•
Passenger journey decline slowed to -1.6% to c.2.99 million ( 2013: 8.9% )
•
Fares increased 3-4 % June 2013 ( and June 2014 )
— Adult Return fares £2.80 > £2.90, Child / OAP unchanged £1.80> £1.90
— 10 Trip Ticket £13.00 > £13.50
•
Ferry reliability maintained at >99%
•
PBT £0.77m ( 2013 £ 0.72m ) + 6.1%
•
New vessel due from Croatia Q1 2015 –cost £3.3million – 30 year life
•
No further vessel investment for 15-20 years
•
MoD agreement May 2014 to reimburse staff ferry expenses should mitigate impact
BAE job losses
•
Medium term outlook for Portsmouth positive – QE2 carriers - 2016-17
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FO
FOGL Licences: Location Map
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Falkland Oil and Gas (FOGL)
•
•
FKL retains 12.8m FOGL shares (2.4%) – 1 FOGL share for each FKL share in issue
–
Book cost 20p per share
–
Partners : Noble Energy ( Mkt cap c $26bn) Edison International (Mkt cap EDF c $67bn )
Combination with Desire gives FOGL exposure to North , East and South Basins including Sea Lion
FOGL Interest
Norther sector
Southern
S&E Falklands Basin
40.00%
52.50%
Northern Basin
PL4b ( Sea Lion )
PL 3-5
40.0%
57- 100%
•
3D seismic programme ( 12,000sq km ) has helped identify target prospects
•
FOGL fully funded for its share of planned exploration through 2015
•
5 well drilling programme starting late Q1 /early Q2 2015
–
2 wells in the South and 3 in the North Falklands Basin
–
High impact targets with > 1 bn bbls of gross prospects
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FKL: Strategy
FKL: Strategy
• FIC : Leverage property assets and support services to maximise long term
returns
• Momart : Expand storage capacity and develop sales & marketing to capitalise on
brand reputation.
• PHFC : Modernise fleet and maintain steady growth in profits
• FOGL : Maintain shareholding through next drilling campaign
• Group :Maintain/ grow dividend and maximise shareholder returns
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FKL : Outlook
•
•
FIC
– Falklands economy still quiet but set to pick up as drilling approaches.
– Key growth trigger will be Farm-In to unlock Sea Lion development .
– House building and new vehicle sales will help offset quieter retail environment
– Continuing investment in property assets in readiness for oil
PHFC
– MoD reversal of ferry expenses embargo will mitigate effect of BAE closure in Portsmouth
– Arrival of Harbour Spirit in Q1 2015 finishes modernisation of ferry fleet
– Cyclical recovery & Dockyard expansion gives positive medium term view
•
Momart
– No immediate repetition of exceptional 2013-14 result
– Commercial art market expected to remain buoyant – importance of London growing
– New ERP system will boost efficiency in 2014-15
– Plans to expand storage business in 2015 to remove block to further growth
•
Overall
– Spread of trading interests underpins Group’s ability to maintain earnings
– 2015 exploration drilling and Sea Lion gives significant upside potential
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Appendices
Additional Information on Falkland Islands Holdings
FKLFKL : Year ended 31 March 2014
Divisional Analysis by company
2014
£000
2013
£000
Change
%+/-
15,881
15,222
4.3%
4,124
4,076
1.2%
Momart
18,258
16,298
12.0%
Turnover - continuing operations
38,263
35,596
7.5%
Year ended 31 March
FIC
PHFC
FIC
1,013
1,325
-23.5%
PHFC
1,013
984
2.9%
Momart
1,826
1,193
53.1%
Operating profit
3,852
3,502
10.0%
60
79
-24.1%
Net pension financing costs & Other
(265)
(290)
-8.6%
Net financing costs
(205)
(211)
-2.8%
Underlying pre tax profit (PBT)
3,647
3,291
9.0%
Diluted EPS on taxed underlying profit
22.0p
21.3p
3.3%
Net bank Interest
29
FKLFKL
Group
balance
sheet
: Balance
Sheet
31 March 2014
£000
31 March 2013
£000
16,609
13,725
2,884
Investment properties
3,396
2,786
610
Intangibles & goodwill
12,238
12,315
-77
Deferred tax assets & sundry other
1,602
862
740
Investment in FOGL at market value @ 25.5p (2013
26.5p )
3,270
3,399
-129
37,115
33,087
4,028
Working capital - Net
3,255
1,706
1,549
Cash
5,715
11,416
-5,701
46,085
46,209
-124
(419)
(364)
-55
Bank loans, Finance Leases & HP
(6,170)
(7,288)
1,118
Pension provisions & Deferred tax
(4,119)
(4,278)
159
Net Assets / Shareholders funds
35,377
34,279
1,098
£2.85
£2.76
Property, plant and equipment
Total fixed assets and investments
Net operating assets
Income tax payable
Net assets per share
Change
£000
£0.11
30
: Cash
FKL FKL
Group
cashFlow
flow
2014
2013
£000
£000
Underlying operating profit
3,852
3,502
Depreciation
1,233
1,204
Tax paid
(780)
(735)
(1,676)
(529)
169
25
2,798
3,467
Capital expenditure
(4,974)
(2,415)
Dividends paid
(1,423)
(1,362)
Loan repayments & Interest
(1,435)
(1,220)
-
1,005
(529)
-
-
9,269
(138)
(79)
(5,701)
8,665
Year ended 31 March
Increase in working capital
Other
Net cash flow from operating activities
FOGL shares sold
Loan to Joint Venture
Net Proceeds from the issue of shares
Other
Net Cash Flow
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Plan
Current Sea Lion Development Plans
•
•
•
•
Phased Development proposed for Sea •
Lion
•
•
Phase 1 recovers 293 mm stb over 25 years from
32 wells
•
Initial development in the north
Phase 2 development plan will incorporate results
•
from exploration
•
$5.2bn project costs for Phase 1
•
Premier seeking farm in partner to
share costs
Source: Premier Oil website May 2014
Tension Leg Platform (TLP) selected
Jan 2014
Minimal subsea infrastructure
Better economics than a new build FPSO
scheme
Greater flexibility for infill drilling
Award of FEED contracts imminent
•
4 year project timeline
•
First Oil targeted for 2019
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FIC : Further progress to First Oil
•
SAtCO Crane in Operation
•
Work starts behind Marmont Row
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FIC: Sites for development
FIC: Sites for development
Site
Location & size
Development Potential
1
Fitzroy Road
2 acres , Central Stanley
26 x 2 bed apartments . Work starts July
2013
2
Dairy Paddock
Western Stanley 36 acres
Planning for 350 houses / Work camp
3
YPF site
Central Stanley, 2.25 acres
Offices , high quality residential
4
East Jetty
Waterfront Stanley , 3.0 acres
FIC warehousing – prime site for redevelopment
5
“Coastel” Road
FIPASS area,
7.5 acres
Warehousing & lay down areas with
planning
6
Airport Road/FIPASS
FIPASS ,11.0 acres
Warehousing & lay down areas with
planning
7
Fairy Cove
North side of Stanley Harbour,
301 acres
Adjoins site for proposed new deep water
port at Navy Point
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Map of FIC Development Sites
Map of FIC Development Sites
35
Map of FIC Development Sites
Map of FIC Development Sites
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Management Team
Management Team
David Hudd, Chairman
David joined the Board in March 2002. He is a Chartered Accountant and was a partner in Price Waterhouse until
1982. Since then, he has been Chairman or Chief Executive of a number of listed companies. He is currently also
anon-executive Director of Falklands Oil and Gas Limited.
John Foster, Managing Director
John joined the Board in January 2005. He is a Chartered Accountant and previously served as a Finance Director
and Corporate Finance Director in a number of public companies and before that worked for nine years as a
venture capitalist with a leading investment bank in the City.
Mike Killingley, Non Executive – Chairman of the Audit Committee
Mike was appointed to the board in July 2005. He is a chartered accountant and was a partner of KPMG (and
predecessor firms) from 1984 to 1998.
Jeremy Brade, Non Executive
Jeremy was appointed to the board in September 2009.He is a Director of Harwood Capital ( formerly J.O. Hambro
Capital Management ) and a non-executive director of a number of quoted and unquoted companies.
Edmund Rowland, Non Executive
Edmund joined the Board in April 2013. He currently serves as a Director of Blackfish Capital Management, having
gained experience in London and Hong Kong, as an analyst and investment manager with BNP Paribas and
Blackfish.
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