LONDON (ShareCast) - An impairment charge of £2m linked to its art logistics business has sent Falkland Islands Holdings into the red.
The group, which owns businesses in the South Atlantic territory, reported a loss before tax of
£600,000 for the year to 31 March 2009 versus a £1.9m profit last time. Turnover rose 84% to £31.7m.
A downturn in the commercial art market in the second half of the year forced the firm to reassess the carrying value of the goodwill linked to the purchase of Momart in March 2008.
But underlying profit (before tax, amortisation and non-trading items) was up 3% to £2.1m from £2m in 2008. Retail and fishing activity in the Falklands fell, but profits at the Portsmouth ferry business were maintained.
The company still has high hopes for Falkland Oil and Gas Limited (FOGL), in which it has a 14.6% stake, worth £10.9m at the year end, down from £18.5m in 2008.
“Drilling for hydrocarbons in the South Atlantic by FOGL and others gets ever closer and remains a potentially transformational event for the Falkland Islands and your company,” it said.
Targets have been identified and drilling is expected to take place in 2009/10.
“Given the challenging environment we are satisfied with the results for the year. Our three operating businesses traded profitably,” said chairman David Hudd.
“We do not expect any improvement in the trading performance of the group this year. We continue to generate cash, which coupled with our strong balance sheet and control over costs, gives the group resilience going forward.”
Broker KBC Peel Hunt is revising down estimates, given little sign of economic recovery.
But it says cash flow remains robust and, with the potential from the strategic investment in FOGL, remains positive with a ‘buy’ recommendation.
The dividend stays at 8p a share.
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