UK and Falklands essential services company FIH Group (AIM:FIH) announced on Tuesday that it had booked reduced trading activity due to the impacts of Coronavirus.
The company as a whole posted an encouraging 4,9% increase in revenue, up to £44.6 million. However, its underlying pre-tax profits dipped from £3.9 million to £3.7 million year-on-year.
The upside in FIH revenues was led by its Falkland Islands Company operations, which boasted an impressive 23% rise in revenues, with the island’s housebuilding and rental income largely unaffected by COVID. In turn, it was able to book a pre-tax profit bounce of 37%, up to £2.1 million.
Meanwhile, the trading of its Momart business reflected ‘a weaker global commercial art market’, and in turn reduced income from galleries, auction houses and collectors. This saw the business’s pre-tax profits slide from £1.6 million to £1.0 million year-on-year.
Similarly, its Portsmouth Harbour Ferry Company operations had to bear a significant decrease in passenger numbers in March, which offset the benefits of annual fare rises in June 2019. As a result, PHFC pre-tax profits dipped from £0.8 million to £0.6 million.
FIH said that its Falkland Islands business had not been effected, however its Momart and PHFC operations had fallen to below 10% of normal trading. This in turn, saw the company book a loss during the first quarter of FY21.
FIH response to weak Coronavirus trading
Responding to recent trading, the company has furloughed 78% of its staff at Momart and those based in Gosport. It has also cut pay for Board members and cancelled all short-term capital expenditure.
The situation is equally bleak for the company’s shareholders, with underlying EPS dipping from 24.1p to 21.7p year-on-year and diluted EPS of 24.1 in 2019 switching to a 37.8p loss during 2020. Further, the company said that it would implement a short-term cancellation on planned dividend payments.
Commenting on today’s results, FIH Chief Executive John Foster said:
“We were on track to announce another strong trading performance for the year and while COVID-19 prevented us from doing so, we still recorded a good overall result. Like most businesses our focus is now on ensuring a smooth return to profitability whilst avoiding unnecessary damage to the long-term prospects of the business. Fortunately, FIH is well placed to do so backed by a strong balance sheet with good additional liquidity should it be required.”
“We believe we took the necessary cost reducing actions sufficiently early and that we have the resources to support the return to normal trading levels. This is of course subject to a reasonable time period for the recovery in passenger numbers in Portsmouth and a return in confidence and activity levels in the global commercial art market.”
“Given the environment, FIH is reasonably well positioned and I believe the fundamentals of the Group remain strong. We are therefore confident with regard to the medium to long term prospects for the business whilst also being mindful that the current crisis might bring M&A opportunities that would not normally arise.”
Investor insights
In light of the news, FIH shares dipped 4.14% or 12.00p to 278.00p per share. The company has a p/e ratio of 11.89 and a dividend yield of 1.69%.