Profits rise at Falkland Islands but growth expected to slow

Falkland Islands, an international services group, offset news of a rise in both revenue and profits with warnings of a slowdown in growth.

Underlying pre-tax profits for the year rose 18.7% from £2.73m to £3.24m, slightly higher than expectations of £3.0m, despite higher financing costs this time round. Revenues were up 7.1% from £31.84m to £34.11m, ahead of expectations of £32.0m. Diluted earnings per share increased from 20.6p to 26.2p.

The company believes that weakened consumer demand in the UK, the full utilisation of capacity, and increases to costs will all have an impact on the company's growth this year.

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However, the company was keen to emphasise that the medium term outlook remains positive and its financial position continues to be strong, with bank borrowings reduced to £3.0m at March 31st, while cash balances were £2.8m.

Divisionally, Falkland Island Company had a satisfactory year with a small decline in profits from £1.61m to £1.52m on revenues 0.4% higher at £14.98m, continuing record levels seen the previous year.

Portsmouth Harbour Ferry Company (PHFC) delivered another robust performance with revenues rising by 11.5%, reflecting the increase in fares and mild winter weather, which more than offset the substantial increase in operating costs following the June 2011 installation of the new pontoon at Gosport.

Momart, the group's art handling and logistics business, continued the recovery seen in the first half and produced a much improved performance for the year. Helped by the strength of the commercial art market, total revenue increased by 13.5% to £15.0m (2011: £13.2m) and underlying operating profit rose by £0.43m (81%) to £0.96m (2011: £0.53m).

Chairman David Hudd said: "Our market leading businesses continued to prove resilient and delivered good results in difficult economic conditions.

"For the current year, trading has been satisfactory and in line with our expectations. Whilst we do not expect the rate of growth achieved across the group in the year ended March 2012 to be repeated in the coming year, in the medium term we are confident of further growth at Momart, steady progression at PHFC and in the Falklands our assets and businesses are well placed to take advantage of the transformational change which seems increasingly likely.

"In the Falkland Islands, the Sea Lion discovery in the North Falkland Basin has confirmed the existence of commercially exploitable hydrocarbons. To the south, the Darwin well recently drilled by Borders & Southern Petroleum has proved the existence of a working hydrocarbon system and supports the prospectivity of the South Falkland Basin. Both outcomes make further exploration work certain."

The share price rose 0.7% to 357.50p by 12:58.

NR