Results for the Six Months Ended 30 September 2024

This announcement contains inside information for the purposes of Article 7 of the UK version of Regulation (EU) No 596/2014 which is part of UK law by virtue of the European Union (Withdrawal) Act 2018, as amended ("MAR"). Upon the publication of this announcement via a Regulatory Information Service, this inside information is now considered to be in the public domain.

19 December 2024

FIH group plc

("FIH" or the "Group")

Results for the Six Months Ended 30 September 2024

FIH, the AIM quoted international specialist services group with businesses in the Falkland Islands and the UK, announces its unaudited results for the six months ended 30 September 2024 ("the period"). Comparisons shown below are for the respective six months in 2023 unless otherwise stated.

Challenges in FIC Construction Division and Consistent Performance Elsewhere

Headlines

·     Revenue down 32% to £18.2 million (2023: £26.7 million) due mainly to a combination of factors which have severely impacted the trading performance of Falkland Building Services ("FBS"), the construction division of Falkland Islands Company ("FIC").

·      Underlying pre-tax loss of £5.9 million (2023: £0.6 million profit) for largely the same reason.

·      Momart and Portsmouth Harbour Ferry Company ("PHFC") performance in line with or slightly above prior year.

·    Cash position of £8.5 million as at 30 September 2024 (2023: £9.2 million) within net debt before lease liabilities of £3.3 million (2023: £3.6 million).

·    Interim dividend maintained at 1.25 pence per share (2023: 1.25 pence per share) reflecting confidence in the longer-term trading outlook.

Outlook

·    Action plans are being progressed in FIC to address the challenges in FBS but these challenges are expected to continue to significantly impact the performance of the division for the remainder of the year, albeit within the Group's existing resources.

·     The market continues to be challenging for Momart, but the strong order book in Museum Exhibitions, coupled with a series of proactive business development initiatives, should improve the position over the remainder of the year.

·    In PHFC, opportunities to maximise secondary revenues continue to be targeted and costs and fare pricing will continue to be carefully managed.

·      Whilst the Group is currently navigating a challenging period, the longer-term trading outlook remains positive.

Stuart Munro Chief Executive, said:

"The last six months has been a challenging period for the Group and whilst most of our businesses have performed in line with or ahead of last year, the difficulties experienced in the construction division of FIC have had a significant adverse impact on our results.  There is more work ahead of us to address these issues, however demand for accommodation in the Falklands Islands remains strong and the longer-term trading outlook for the Group remains positive."

Enquiries:

The person responsible for arranging the release of this announcement on behalf of the Company is Stuart Munro Chief Executive of the Company.

Chairman's Statement

Despite the majority of the businesses in the Group performing consistently with prior year, the significant challenges experienced in the construction division of FIC have resulted in a disappointing overall Group result for the first half of the year.

We are firmly focused on the work ahead of us to address these issues, but the fundamentals of all of our businesses remain strong and the longer-term trading outlook for the Group remains positive.

Dividend

The interim dividend is maintained at 1.25 pence per share (2023: 1.25 pence per share) reflecting confidence in the longer-term trading outlook. This will be paid on 14 February 2025 to shareholders on the register at the close of business on 3 January 2025.

The Group has a Dividend Reinvestment Plan ("the Plan") that allows shareholders to reinvest dividends to purchase additional shares in the Group. For shareholders to apply the proceeds of this and future dividends to the Plan, application forms must be received by the Group's Registrars by no later than 17 January 2025*

Nick Henry

Chairman

19 December 2024

* Existing participants in the Plan will automatically have the interim dividend reinvested. Details on the Plan can be obtained from Link Group on 0371 664 0381 or at www.signalshares.com. Calls are charged at the standard geographic rate and will vary by provider. If you are outside the United Kingdom, please call +44 371 664 0381. Calls outside the United Kingdom will be charged at the applicable international rate. The lines are open from 9.00am to 5.30pm, Monday to Friday excluding public holidays in England and Wales.

Chief Executive's Review

Overview

Revenue of £18.2 million for the six months ended 30 September 2024 was £8.5 million behind the same period last year. Progress in Momart and PHFC was overshadowed by a significant reduction in FIC, with most of the reduction in FBS, FIC's housing and construction division.

The Group underlying pre-tax loss of £5.9 million was below the £0.6 million profit for the same period last year, predominantly due to challenges in FBS.

Group Trading Results for the Six Months Ended 30 September 2024

* Underlying pre-tax (loss) / 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.

Dividend

An interim dividend of 1.25 pence per share (2023: 1.25 pence per share) will be paid on 14 February 2025 to shareholders on the register at the close of business on 3 January 2025.

Group Operating Company Performance

Falkland Islands Company

Total revenue of £6.2 million was £9.0 million below the same period last year, due mainly to a £9.1 million reduction in FBS.

The majority of this variance related to the contract to build a total of 70 houses for the Falkland Islands Government ("FIG") and the Ministry of Defence ("MOD"). The programme of works was changed to address the disruption caused by the lack of power on the MOD Mount Pleasant Complex ("MPC"). As a consequence, the assessment of percentage of completion of the project was amended, resulting in a reduction to revenue recognised in previous periods. In addition, there was an increase in the forecast contract completion costs due to a combination of adverse weather conditions and the departure of FBS management and the challenges in replacing them.  

Other shortfalls in revenue in FBS were from a lack of work due to delayed and unsuccessful tenders.

The underlying operating loss of £6.4 million was £6.6 million below the same period last year. This was due mainly to the issues in FBS noted above, recognition of onerous contract provisions and other related costs of sourcing labour, circa £4.6 million of which is not expected to recur. The other divisions taken together, were broadly in line with the prior year.

Momart

Revenue of £9.7 million for the six months to 30 September 2024 was £0.4 million ahead of the prior year, with an improvement in Museum Exhibitions compensating for small reductions in Gallery Services and Storage.

The underlying operating profit of £0.3 million was £0.1 million ahead of the same period last year, although the current year result was suppressed slightly by recruitment costs.

Portsmouth Harbour Ferry Company

Passenger numbers for the first half of the year were 2% down against the same period last year. However, a combination of inflationary fare rises last year and other income of £0.1m meant overall revenue increased by £0.1 million to £2.3 million.

Underlying operating profit of £0.5 million was in line with prior year.

Trading Outlook

PHFC and Momart are performing in line with or slightly above the prior year. 

Whilst the market continues to be challenging for Momart, given the global economic situation, the strong order book in Museum Exhibitions, coupled with a series of proactive business development initiatives, should improve the position over the remainder of the year, albeit within the Group's existing  resources.

In PHFC, opportunities to maximise secondary revenues continue to be targeted and costs and fare pricing will continue to be carefully managed.

In FIC, action plans are being progressed to address the challenges in FBS, but these challenges are expected to continue to significantly impact the performance of the division for the remainder of the year. In contrast, the second half of the year benefits from the tourist season, which should boost both direct and indirect revenues in a number of FIC business sectors, including Retail and Penguin Travel in Support Services.

Demand for accommodation in the Falkland Islands continues to be strong, with a shortage of suitable housing units for both local residents and contractors on upcoming projects and potential new business ventures. These provide FIC with opportunities to grow by securing additional infrastructure projects, expanding on retail and travel services to the tourism market and investing further in the rental accommodation portfolio. In addition, the breadth and depth of capabilities within FIC puts the business in prime position to offer its services to those seeking to develop or enhance both existing and new activities (including the potential development of oil reserves) in the Falkland Islands.

Whilst the Group is currently navigating a challenging period, particularly in the Falkland Islands, where discussions with the client on the resolution of the power issue at MPC are still ongoing, the longer-term trading outlook remains positive.

Group Strategy

The Group is also evaluating strategic options to maximise shareholder value for all divisions.

Stuart Munro

Chief Executive

19 December 2024

Chief Financial Officer's Review

Financial Review

Revenue

Group revenue decreased by £8.5 million (32%) to £18.2 million (2023: £26.7 million) with a reduction of £9.0 million in FIC, partially offset by improvements of £0.4 million in Momart and £0.1 million in PHFC.  

Operating Loss

An operating loss of £5.6 million was £6.5 million below the prior year profit of £0.9 million, with small improvements from revenue growth in Momart and PHFC offset by the results of FBS in FIC.

Net Financing Costs

The Group's net financing costs of £0.5 million were £0.4 million higher than the prior year due mainly to the movement in the fair value of the derivative instrument. The net underlying finance expense of £0.3 million was in line with prior year.

Reported Pre-tax Result

The reported pre-tax result for the six months ended 30 September 2024 was a loss of £6.1 million (2023: £0.8 million profit). The underlying pre-tax loss was £5.9 million (2023: £0.6 million profit).

Taxation

Taxation charges on the period results for both the six months ended 30 September 2024 and 30 September 2023 have been estimated on the basis of 25% and 26% of profits arising in the UK and the Falkland Islands respectively, resulting in a tax credit of £1.7 million (2023: charge of £0.2 million).

Earnings per Share

Diluted Earnings per Share ("EPS") derived from reported losses was negative 34.9 pence (2023: positive +4.9 pence).

Balance Sheet and Cash Flow

The Group's balance sheet remained strong with total net assets of £40.8 million, down on the balances at 31 March 2024 of £45.1 million and 30 September 2023 of £44.8 million.

*Includes a mortgage of £11.3 million on the Group's freehold premises in Leyton (31 March 2024: £11.6 million).

Bank loans reduced to £11.8 million (31 March 2024: £12.3 million) following scheduled loan repayments of £0.5 million.

The Group's cash balance reduced by £1.2 million to £8.5 million (31 March 2024: £9.7 million) reflecting scheduled interest, loan and lease repayments of £1.1 million, capital expenditure of £0.9 million and a £0.8 million net cash inflow from operating activities.

Working capital for the Group reduced with most of that in FIC from decreased activity in the islands, with FBS in particular accounting for significant reduction in contract balances.

The Group's outstanding lease liabilities totalled £5.9 million (31 March 2024: £6.1 million) with £4.5 million of the balance (31 March 2024: £4.6 million) relating to the leases from Gosport Borough Council to PHFC for the Gosport Pontoon and associated ground rent, which run until June 2061.

Overall, net debt before lease liabilities increased to £3.3 million (31 March 2024: £2.6 million).

Reuben Shamu

Chief Financial Officer

19 December 2024

Consolidated Income Statement

For the Six Months Ended 30 September 2024

See note 6 for an analysis of earnings per share on underlying profit (defined as profit after tax before non-trading items).

Consolidated Balance Sheet                                                     

At 30 September 2024

Consolidated Cash Flow Statement

For the Six Months Ended 30 September 2024

Continued on next page.

Consolidated Statement of Comprehensive Income

For the Six Months Ended 30 September 2024

Condensed Consolidated Statement of Changes in Shareholders' Equity

For the Six Months Ended 30 September 2024

Notes to the Unaudited Interim Statements

1. Basis of Preparation

This interim financial statement comprises the condensed consolidated balance sheets at 30 September 2024, 30 September 2023 and 31 March 2024 and condensed consolidated statements of income, comprehensive income, cash flows and changes in shareholders' equity for the periods then ended and related notes of FIH group plc (hereinafter 'the interim financial information').

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 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 will have sufficient funds to continue to meet its liabilities as they fall due for at least 12 months from the date of issue of these interim financial statements and the interim financial statements have therefore been prepared on a going concern basis.

The interim financial information has been prepared in accordance with the accounting policies set out in the Group's 2024 annual financial statements. As permitted, these interim financial statements have been prepared in accordance with AIM rules and not in accordance with IAS34 'Interim Financial Reporting'.

Section 245 Statement

The comparative figures for the financial year ended 31 March 2024 are not the Company's full statutory accounts for that financial year. Those accounts have been reported on by the Company's auditors and delivered to the Registrar of Companies. The report of the auditor was unqualified, did not include a reference to any matters to which the auditor drew attention by way of emphasis without qualifying their report and did not contain a statement under section 498 (2) or 498 (3) of the Companies Act 2006.

2. Segmental Revenue and Profit Analysis

Unaudited - Six Months Ended 30 September 2024

2. Segmental Revenue and Profit Analysis (Continued)

Unaudited - Six Months Ended 30 September 2023

2. Segmental Revenue and Profit Analysis (Continued)

Year Ended 31 March 2024

3. Non-trading Items

Restructuring costs relate to employee redundancies.

4. Finance Income and Expense

5. Taxation