FALKLAND ISLANDS HOLDINGS Results Year ended 31 March 2013 Positioned - - PowerPoint PPT Presentation

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FALKLAND ISLANDS HOLDINGS

Results Year ended 31 March 2013 Positioned for growth

FIC: Positioned for oil led growth in Falklands Momart: Building further momentum PHFC: Modernising the fleet FKL: Delivering superior growth over the next 5 years : EPS target :Average annual growth+10%

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Strategic Overview

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FKL : Year ended 31 March 2013 Trading Overview

• Revenue up by 4.4% to £35.6m (2012: £34.1m)

— Momart : Strong growth – profits up 24% — FIC : Revenue investment – profits down £0.2m — PHFC – 9% decline in passenger numbers – profits down 10%

• Operating profit £3.5m (2012: £3.6m) down ‐1.8%
• Underlying pre tax profits +1.8% to a record £3.3m (2012: £3.2m)
• Earnings per share on underlying profits 21.3p (2012: 26.2p) Share Capital +33% in July 2012
• Proposed full year dividend 11.5p per share up 4.5% (2012: 11.0p )
• Cash £11.4m ( 2012 £2.8m )
• Bank borrowings £2.0m ( 2012: £3.0m)
• 12.8m FOGL shares owned : 1 for every FKL share in issue

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FKL Group profit & loss account

Year ended 31 March 2013 £000 2012 £000 Change +/- Turnover – continuing operations 35,596 34,109 +4.4% Underlying operating profit 3,502 3,568

• 1.8%

Interest (net) incl. pensions costs (211) (334)

• 36.8%

Underlying pre tax profit 3,291

3,234 +1.8%

Gain on sale of FOGL shares 768

• Share subscription costs

( 682 )

• Net settlement loss on pension

scheme (182) (96)

• Amortisation of Intangibles

(398) (398)

• Reported Profit Before Tax

2,797 2,836

• 1.4%

Diluted EPS on taxed underlying PBT* 21.3p 26.2p

• 18.7%

Weighted shares in issue 11,703862 9,239,057 +26.7%

FKL : Year ended 31 March 2013 Trading Overview

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FKL Group net borrowings and liquidity

31 March 2013 £000

31 March 2012 £000 Change £000

Bank Loans

(2,003)

(2,987) 984

Pontoon Finance Lease

(4,913)

(4,938) 25

Hire Purchase & Other borrowings

(372)

(360) (12)

Total borrowings

(7,288)

(8,285) 997

Cash

11,416

2,751 8,665 Net Cash /(Borrowings)

4,128

(5,534) 9,662

Margin on bank loans 1.5% +libor

FKL : Cash & Liquidity

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FIC : Preparing for First Oil

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FIC – Year ended 31 March 2012

• Sales flat at £15.2million ( +1.6% )
• Falklands economy – exploration stimulus limited – Leiv Eiriksson rig departed December 2012
• Cruise ship visitors down 15% ‐ impact on disposable income
• FIC profits £0.2m lower at £1.3m ( 2012 £1.5m )

— Revenue investment for growth — Expansion of property and construction team – new property director — Investment in motor dealership – Falklands 4x4 ( www.falklands4x4.com )

• Retail: sales up 3.0% at £9.73m ( 2012 £9.45m )
• Motor: sales up 19% following investment in new Land Rover showroom
• Support Services : Revenue down slightly at £1.2m
• Freight income : Absence of North bound oil returns seen in 2011
• Property & Construction : Revenue up 13% , commission building of kit homes
• FOUNDATIONS BEING LAID TO PARTICIPATE IN OIL LED GROWTH

FIC : Trading ‐ Year ended 31 March 2013

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– FIC : Year ended 31 March 2013

Revenue 2013 £ million 2012 £ million Change % Retail 9.73 9.45 +3.0% Falklands 4x4 1.87 1.57 +19.1% Freight and port services 1.65 2.01 ‐17.9% Support services 1.21 1.28 ‐5.5% Property and construction 0.76 0.67 +13.4% Total Revenue 15.22 14.98 +1.6% Operating profit 1.33 1.52 ‐12.5% Operating profit margin 8.7% 10.1% ‐13.9%

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Timeline for Oil

Sea Lion Timeline

2014 2015 2016 2017 2018 Further Exploration 2 rigs 2 rigs Field Development Lay down & Spool areas Develop Develop Flow Line Assembly Build Assemble Assemble Sub sea network FIRST OIL FPSO FPSO Infrastructure Temp Harbour Start Finish New Deep Water Port Start Build Finish Utilities Develop Develop Develop Accommodation Build Build

Source FIG & Regeneris

Drill & Construct

Falklands : Timeline for Oil

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Base Case: Premier Oil, Sea Lion Development only

• Building: Infrastructure commencing late 2013 , field construction mid 2014
• Jobs: 400 plus new onshore jobs (+20%) from 2014 onwards for field development
• Housing: 190 new units + temporary worker accommodation
• Economy: Falklands GDP set to increase from £140m to £1bn by 2018 ($100 bbl)

‐ 7 fold increase in 5 years

• Tax Revenues: FI Govt revenues to increase from £50m pa to £400m pa by 2020
• Further oil field developments would magnify these effects
• Borders & Southern‐ Darwin

gas condensate discovery 190mmbbls (estim. development cost $3.8bn)

• FOGL /Noble/ Edison – Exploration drilling in 2014

(Source: Regeneris Social & Economic Effects of Oil & Gas in the Falklands 2013)

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Falklands set for dramatic growth

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FIC: Positioned for Growth

Key Falklands Data 2012 2018 2020 2022

Falklands Population ( excl MPA ) 2,471 2,811 2,771 2,771 Employed ‐ Base 1,575 1,575 1,575 1,575 Oil related Note 1 340 300 300 Total Employed 1,575 1,915 1,875 1,875 GDP ( £m ) £140 £1,000 £1,000 £800 FIG Income ( £m pa ) £50 Note 2 £50 £50 £50 Oil royalties & tax £0 £150 £400 £325 Total FIG income £50 £200 £450 £375 Note 1 Peak of 470 new jobs estimated in 2015 Note 2‐ FIG income excludes PAYE tax on jobs Source 2012 Census & Regeneris 2013 Report : Projections based on Sea Lion only

FIC: Positioned for Growth

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Sea Lion Impact on Jobs

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Projected Onshore Jobs

Temp construction workers 100 Onshore O&G jobs 90 Private Services 90 Flow line Construction 50 Public Services 80 Port logistics & transport 70 Total at peak ( Sea Lion only ) 480 ( Source Regeneris esimates ) + 20% increase

Sea Lion Impact on Jobs

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FIC : Business Opportunities from Oil

All specialist oil support services will be sourced externally largely from Aberdeen . Requirements :

• Residential & Office accommodation

— Further expansion of rental portfolio .

— 26 x2 bed serviced apartments under construction . — Sites for modern HSE compliant offices — 200 man Workers Camp planning approval secured at Dairy Paddock

• Infrastructure – SATCO JV with Trant to focus on roads , utilities and ports
• Warehouses & storage ‐ 18 acres of land with planning permission
• Food & supplies ‐ West Store market leader – established UK supply chain
• Vehicles & transport – Investment in 4x4 Land rover dealership & hire fleet
• Freight & Logistics to/from UK – Experienced UK / Stanley team
• Leisure & travel services– Penguin Travel and Agency leading FI providers

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FIC: Fitzroy Road Apartments

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Site work commences July 2013

• n 26 x 2 bed, serviced units with

amenity blocks Site 1

FIC: Fitzroy Road Apartments

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FIC: Development sites in Stanley

YPF site on Stanley Harbour 2.25 acres Coastel Rd site on Stanley Harbour 7.5 acres

Fairy Cove : 300 acre site next to Navy Point harbour site

Crozier Place and East Jetty, 3.0 acres

Prestige site for offices and high quality residential homes

Warehousing, lay down areas and storage Prime central site for

• ffices , hotel / leisure

Dairy Paddock 36 acre site in central Stanley Planning for workers camp and 350 houses

Site 2 Site 3 Site 4 Site 5

Prime central site for Offices, Hotel, Leisure.

FIC: Development sites in Stanley

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FIC Construction

SATCO: South Atlantic Trading Company

• Large (+£1m) infrastructure contracts
• 50:50 JV with Trant Construction
• Trant is a privately owned engineering &

construction group, 700 employees & turnover £100m

• Worked in Falklands for > 10 years – built

new radar stations for MoD

• Main contractor for Gosport Council for

new pontoon in Gosport

Falkland Building Services (FBS)

• House building (kit homes) smaller

projects and support for SATCO

• Subsidiary of FIC
• Small local business acquired in 2012

merged with FIC’s own construction team

• Expanding quickly – now employs 30 staff

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FIC Construction

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New Deep Water Port

• Site of Deep Water Port now

agreed by FIG

• FIC owns 300 acres of land at

Fairy Cove adjacent to port site

• Road surveys now complete
• Construction of road & port

facilities could commence as early as late 2013

• Project cost c £100m incl. road
• Scalable to cope with further

discoveries

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New Deep Water Port

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FIC Strategy Summary

• Falkland Islands economy set for dramatic growth
• FIC in a unique position with its platform of service businesses and freehold land for

development

• Key projects

2013 ‐14 £m

• 26x 2 bed serviced apartments

3.0

• Falklands 4x4

0.3

• Builders Merchant & Garden Centre

0.5

• In fill residential

0.5

• Crozier Place Offices

0.2

• Total 4.5
• Warehousing , Offices and workers camp to follow in 2014‐15
• Infrastructure projects – Roads , Utilities , Port could start by late 2013
• £10m equity raised provides sufficient funds for 2 years
• Bank facilities to support further development in 2015 onwards
• Preparatory work and investment through 2014
• Returns from 2015 onwards.

FIC Strategy Summary

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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.
• 115 staff at Canary Wharf .
• Fleet of 17 specialist art transport vehicles
• Experienced and committed workforce ‐ Royal Warrant holder

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Momart : Building on its reputation

Momart : Strong Momentum now Established Y/e 31 March 2011 2012 2013 Revenue 13,186 14,970 16,298 Operating Profit 532 964 1,193 Margin 4.0% 6.4% 7.3% Growth in Profit 81.2% 23.8%

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Momart: Trading year ended 31 March 2013

Revenues 2013 £ million 2012 £ million Change % Museums & Public Exhibitions 9.01 7.05 +27.8% Gallery Services 5.50 6.30 ‐12.7% Storage 1.79 1.62 +10.5% Total 16.30 14.97 +8.9% Operating profit 1.19 0.96 +24.0% Operating profit margin 7.3% 6.4% +14.1%

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Momart: Trading year ended 31 March 2013

• Strong growth delivered record sales and profits
• – Revenue up 9% to £16.3m ( 2012 £15.0m )
• – Profits up 24% to £1.2m ( 2012 £0.96m )
• Record Exhibitions revenues + 28% to £9.0m
• Gallery Services – No bluebird contract as in prior year – Revenue £5.5m ( ‐13% )

‐ Underlying growth + 2%

‐ Commercial art market still buoyant

• Storage revenues up 10% to £1.8m : facilities full
• Streamlined management structure in place
• Bespoke ERP system now in final testing ‐set to improve tendering, contract management and

reporting

• Notable exhibitions 2012‐13 : Bronze , Hirst Retrospective , Manet , Pompeii , Schwitters , Ice

Age

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Continued strength of global art market provides positive backdrop

– Art Prices 2007‐12 + 92%; since 2001 + 199% – Auction records continue –eg Christies’ New York – Modern & Contemporary May 2013‐ – $495m ( 70 units )

Art Museums expanding

– Museum attendances British Museum , Tate Modern , and National Gallery all over 5 million in 2012 Paid exhibition attendances Hockney ‐ 600,000 , Da Vinci 324,000 , Hirst 463,000 In London > £500m in capital projects underway to accommodate growing attendances and interest – Tate Modern , British Museum V& and & Royal Academy

Momart: Building on its reputation

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mart: 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 – ( Game changer )

Momart: Building on its reputation

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Portsmouth Harbour Ferry Company (PHFC) 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 £2.80 (adult) and £1.80 (Child/Senior)
• Operates 364 days a year, 5.30am – Midnight: Reliability

99.9%

• 4 purpose built vessels (2 fully depreciated)
• 3.0 million passenger journeys p.a.
• Unregulated, with dominant local position
• Strong predictable cash flow
• New Vessel being commissioned – delivery summer

2014 will complete fleet modernisation

Portsmouth Harbour Ferry Company Overview

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PHFC ‐ Year ended 31 March 2013

Revenues 2013 £ million

2012 £ million Change %

Ferry fares 3.89

3.97 ‐2.0%

Other revenue 0.19

0.19 ‐

Total 4.08

4.16 ‐1.9%

Operating Profit 0.98

1.09 ‐10.1%

Operating profit margin (%) 24.0%

26.2% ‐8.4%

Passenger journeys (000s) 3,033

3,328 ‐8.9%

PHFC : Trading year ended 31 March 2013

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P

• Passenger journeys down 8.8% to c.3.0 million ( 2012 – 2.1% )
• Affected by change in MoD expenses policy
• Fares increased 3‐4 % following large rises(17.5%) in prior year to fund pontoon rent

— Adult Return fares £2.70 > £2.80, Child / OAP unchanged at £1.80 — 10 Trip Ticket £12.50 > £13.00

• Ferry reliability maintained at >99%
• PBIT £1.0m ( 2012 £ 1.1m )
• New vessel being commissioned from Croatian yard , £3million , delivery Q3 2014
• No further vessel investment for 15‐20 years
• Significant growth planned for Portsmouth Naval Base

– £0.5bn investment by 2020 – Fleet doubling in tonnage by 2020 (aircraft carriers)

PHFC : Trading year ended 31 March 2013

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FO

FOGL Licences: Location Map

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• FKL owns 12.8m FOGL shares (4.0%) ‐1FOGL share for each FIH share in issue
• Book cost 20p per share
• FOGL Interest Northern licences 40% :Southern 52.5%
• Partners : Noble Energy ( Mkt cap c $20bn) Edison International (Mkt cap EDF c $40bn )
• 6,200 sq km 3D seismic programme finished June 2013 –Diomedia /Southern fault blocks
• FOGL fully funded for its share o planned exploration ‐ $220m available Jan 2013
• $400‐500m further expenditure currently planned for licences
• Further 3D seismic Austral Summer 2013‐14
• Exploration wells (2/3) drill ready from July 2014

Falkland Oil and Gas (FOGL)

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FKL: Strategy

• FIC : Leverage property assets and support services to maximise long term

returns

• Momart : Expand storage capacity and exploit international opportunities
• PHFC : Modernise fleet
• FOGL : Maintain shareholding through next drilling campaign
• Group :Maintain progressive dividend policy and maximise shareholder returns

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FKL: Strategy

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Appendices

Additional Information on Falkland Islands Holdings

FKLFKL : Year ended 31 March 2013 Divisional Analysis by company

Year ended 31 March 2013 £000 2012 £000 Change +/- FIC 15,222 14,979 +1.6% PHFC 4,076 4,160

• 2.0%

Momart 16,298 14,970 +8.9% Turnover - continuing operations 35,596 34,109 +4.4% FIC 1,325 1,510

• 12.3%

PHFC 984 1,094

• 10.1%

Momart 1,193 964 +23.8% Operating profit 3,502 3,568

• 1.8%

Net bank Interest 79

(110)

• 171.8%

Net pension financing costs & Other (290)

(224)

+29.5% Net financing costs (211)

(334)

• 36.8%

Underlying pre tax profit (PBT) 3,291

3,234

+1.8% Basic EPS on taxed underlying profit 21.3p

26.2p

• 18.7% 33

FKL Group balance sheet

31 March 2013 £000 31 March 2012 £000 Change £000 Property, plant and equipment 13,725 12,911 814 Investment properties 2,786 1,452 1,334 Intangibles & goodwill 12,315 12,713 (398) Deferred tax assets & sundry other 862 763 99 Investment in FOGL at market value @ 26.5p (2012 64.5p ) 3,399 9,030 (5,631) Total fixed assets and investments 33,087 36,869 (3,782) Working capital - Net 1,706 2,253 (547) Cash 11,416 2,751 8,665 Net operating assets 46,209 41,873 4,336 Income tax payable (364) (508) 144 Bank loans, Finance Leases & HP (7,288) (8,285) 997 Pension provisions & Deferred tax (4,278) (3,592) (686) Equity shareholders funds 34,279 29,488 4,971 Net assets per share £2.76 £3.17 (£0.41)

FKL : Balance Sheet

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FKL Group cash flow

Year ended 31 March

2013 £000

2012 £000 Underlying operating profit

3,502

3,568 Depreciation

1,204

1,069 Tax paid

(735)

(862) Decrease / (Increase) in working capital

(529)

831 Other

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Net cash flow from operating activities

3,467

4,606 Capital expenditure

(2,415)

(1,277) Dividends paid

(1,362)

(872) Loan repayments & Interest

(1,220)

(1,225) FOGL shares sold /(purchased)

1,005

(860) Net Proceeds from the issue of shares

9,269

261 Other

(79)

56 Net Cash Flow

8,665

689

FKL : Cash Flow

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Plan

• July 2012 Premier Oil acquired 60%

interest from Rockhopper Exploration

• Consideration was cash $231m + $770m

carry

• 300mm bbls net discovered 2C resources
• $3bn spend to first oil in Q3 2017
• ( FPSO leased )
• 22 producing wells +13 injectors
• Insulated flow lines
• Tanker offloading from FPSO
• Plateau rate of production 80‐85k bpd

Source: Premier Oil website

SeaLion Development Plan

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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 re‐ development 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

FIC: Sites for development

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Map of FIC Development Sites

Map of FIC Development Sites

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Map of FIC Development Sites

Map of FIC Development Sites

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FKL – 8 Year Track Record

1,490 1,654 2,010 2,316 2,688 2,728 3,234 3,291

• 500

1,000 1,500 2,000 2,500 3,000 3,500 2006 2007 2008 2009 2010 2010 2011 2013

Growth in Underlying Pre Tax Profit ( PBTae )

Cagr 12.0%

15,209 15,618 17,200 32,251 29,224 31,841 34,109 35,596 5,000 10,000 15,000 20,000 25,000 30,000 35,000 40,000 2006 2007 2008 2009 2010 2010 2011 2013

Growth in Turnover 2006 -2013

Cagr 13.0%

9.0 12.0 17.1 19.0 22.0 22.0 26.3 21.6 0.0 5.0 10.0 15.0 20.0 25.0 30.0 2006 2007 2008 2009 2010 2010 2011 2013

EPS Growth 2006- 2013

Cagr 8.8%

6.5 7.0 8.0 8.0 9.0 9.5 11.0 11.5 5 6 7 8 9 10 11 12 2006 2007 2008 2009 2010 2010 2011 2013

Growth in Dividends per share 2006- 2013

Cagr 8.5%

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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

non‐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.

Management Team

Management Team

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