Wrap Text
Reviewed results for the year ended 30 September 2013
MARSHALL MONTEAGLE PLC
(Incorporated in Jersey Registration No. 102785)
(SA Registration No: 2010/024031/10)
JSE CODE: MMP ISIN: JE00B5N88T08
(“Marshall Monteagle” or “the Group”)
PROVISIONAL ANNOUNCEMENT OF REVIEWED RESULTS FOR THE YEAR ENDED 30TH
SEPTEMBER 2013
Introduction
The Directors report results for the year ended 30th September 2013, a year characterised by significant
currency movements and a challenging consumer environment in the countries in which the Group operates.
Marshall Monteagle’s objective is to achieve capital growth internationally and pay a steadily progressive
dividend over the long term from a diversified range of investments. The Group holds portfolios of leading
investments in the U.K., Europe, U.S.A. and the Far East as well as commercial properties in the U.S.A and
South Africa. The Group’s import and distribution businesses operate internationally and in South Africa it
has interests in food processing and logistics.
Results
- Group revenue for the twelve months to 30th September 2013 declined marginally to US$209,767,000
compared to US$210,183,000. Had currencies remained constant sales would have increased by 13%.
Operating profit is lower at US$8,315,000 from US$8,650,000, a decrease of 4%.
- Group profit before tax increased by 17% to US$10,792,000 from US$9,263,000. The directors are
proposing a final dividend of 1.8 US cents, (2012 – 1.70 US cents) making a total of 3.50 US cents (2012 –
3.30 US cents) for the year. Details and salient dates of the dividend will be published in due course.
- Net assets attributable to shareholders increased by 1% to US$1.82 per share from US$1.81 at 30th
September 2012. US$0.97 of net assets per share – 53% (2012 – 46%) are held in Europe and U.S.A. The
remaining assets, equivalent to US$0.85 per share – 47% (2012 – 54%) are held predominantly in South
Africa.
Import and Distribution
Profits from our import and distribution business in food and household consumer products were broadly in
line with the prior year. Consumer confidence remains very low by historical standards and multiple retailers
continue to apply pressure on their supplier base. These resilient results were achieved despite volatile raw
material pricing, inconsistent availability of certain product lines and significant currency movements during
the year. This division continues to provide procurement, supply chain and risk management services to
multiple retailers, wholesalers and manufacturers in Southern and Central Africa, Indian Ocean Islands and
Australia. We remain committed to working with suppliers of quality raw materials, skilled technologists and
first world production facilities. Despite the challenging economic environment, the business has made a
promising start to the new financial year and is well positioned for the future.
Our coffee business had a far more challenging year and volumes were down on the prior year. The business
continues to market its products to multiple retailers and the hospitality sector in South Africa. We have taken
a strategic decision to invest further in the business so that we can capitalise on opportunities in the local
market place.
Our tool and machinery import and distribution businesses had another challenging year, but managed to
secure a few large tenders resulting in increased sales and a much improved contribution to the Group.
Discretionary spending and consumer sentiment remains weak and management anticipate that trading will
continue to be subdued during 2014.
Property Portfolio
Our large multi-tenanted industrial property in San Diego was fully let most of the year resulting in an
increase in rental income. The commercial and industrial property market in Southern California is showing
signs of stabilising after a period of declining rents and higher than usual vacancy rates. We remain a long
term holder of this quality asset.
The Group’s South African commercial and light industrial property portfolio had a satisfactory year.
Vacancy levels continued to remain below national averages and consequently the value of the portfolio
appreciated during the year.
Investment Portfolio
Investors continue to obsess about Federal Reserve policy and when the central bank will start to scale back
its quantitative easing program. While we pay little attention to this issue, we are strongly of the view that
monetary stimulus in the world’s largest economy is only in its infancy and will more than likely be increased
in the medium term. We continue to hold a concentrated list of quality international equities. Most of these
companies we have held for a very long time and we believe they will outperform their peers in the long term.
Volatility during the month of June 2013 provided an opportunity to add to many of our holdings with funds
from the equity portfolio that was disposed of during the prior year by a South African subsidiary. The
remainder of these funds are to be invested in the near term.
Halogen Holdings P.L.C. (unlisted associate)
Halogen Holdings continues to hold a substantial stake in Heartstone Inns, a developing UK group of country
pubs specialising in quality food. Heartstone currently owns and manages nine rural pubs. Management
recently disposed of a non-core unit at a healthy gain and also purchased a new unit which is more in fitting
with the strategy of the company. The Heartstone board are looking at raising further capital to acquire
additional units.
Post Balance Sheet Events
During October 2013 one of the Group’s properties in the Cape, South Africa, was disposed of for an amount
of $1,291,000. The property was not on the market, however following an attractive offer by a party, the
Board decided it would be in the best interest of the Group to dispose of the asset. Most of the proceeds have
been applied against the bond of another Group property in South Africa.
Our coffee company has historically traded on a very low capital base, however during the month of
December 2013 the Board took the decision to invest a further $1,700,000 in the business. The funding will
provide additional working capital to the business and also allow management to look at other opportunities
in the sector.
Group Personnel
These results could not have been achieved without the hard work of all our employees and the Board thank
them most sincerely for their efforts and contribution during the year.
During the year the Board was further strengthened by the appointment of Ben Newman. Mr Newman is
Client Services Director of First Names Group based in Jersey and brings a wealth of experience in
international finance. He is a member of the audit committee and the remuneration committee.
Prospects
The Board are cautious about the year ahead. Despite substantial stimulus measures taken by the world’s
largest economies, global growth continues to disappoint. We also concern ourselves that extended periods of
artificially low interest rates will increase volatility and have further unintended consequences. However, our
conservative policies and strong balance sheet give us confidence that we can continue to enhance
shareholder value in the long term.
E. J. Beale
Chairman
D.C. Marshall
Chief Executive
Condensed Consolidated Statement of Comprehensive Income
for the year ended 30th September 2013 2012
Reviewed Audited
US$000 US$000
Profit and Loss:-
Group revenue 209,767 210,183
Operating costs (201,452) (201,533)
Operating profit 8,315 8,650
Share of associated company’s and joint venture’s results (32) (196)
Income from other investments – dividends 460 518
- interest 467 835
Interest paid (2,986) (2,533)
Exchange losses (350) (276)
Other income 4,918 2,265
Profit before tax 10,792 9,263
Taxation on ordinary activities (4,137) (2,671)
Profit after tax 6,655 6,592
Profit attributable to members 5,505 5,055
Profit attributable to non-controlling interests 1,150 1,537
Other Comprehensive Income/(Expense):
Exchange differences on translation into US dollars of the financial
statements of foreign entities (7,372) (1,363)
Unrealised gain on revaluation of available for sale investments 1,913 2,502
Reclassification of previously recognised gains on disposal of available for
sale investments (213) (721)
Commercial property fair value adjustments (129) 394
Total Other Comprehensive Income (5,801) 812
Total Comprehensive Income 854 7,404
Total Comprehensive Income attributable to members 1,697 5,908
Total Comprehensive Income attributable to non-controlling interests (843) 1,496
Basic and fully diluted earnings per share (US cents) 15.4c 14.1c
Condensed Consolidated Statement of Changes in Equity
Ordinary Non-
share Share Other Retained Total Controlling Group
capital Premium reserves earnings shareholders Interests total
US$000 US$000 US$000 US$000 US$000 US$000 US$000
Year ended 30th September 2012
Balances at start of year 8,964 23,606 1,102 26,422 61,385 10,285 71,670
Transactions with shareholders
Dividends paid - - - (1,148) (1,148) (923) (2,071)
Total comprehensive income - - 2,323 3,585 5,908 1,496 7,404
Balances at end of period 8,964 23,606 3,425 28,859 64,854 10,858 75,712
Year ended 30th September 2013
Balances at start of period 8,964 23,606 3,425 28,859 64,854 10,858 75,712
Transactions with shareholders
Dividends paid - - - (1,219) (1,219) (816) (2,035)
Total comprehensive (expense)/income - - (613) 2,310 1,697 (843) 854
Balances at end of period 8,964 23,606 2,812 29,950 65,332 9,199 74,531
Condensed Consolidated Statement of Financial Position
at 30th September 2013 2012
Reviewed Audited
US$000 US$000
Assets
Non current assets
Investment property 29,483 29,925
Property, plant and equipment 8,223 9,926
Goodwill 234 286
Deferred taxation 383 920
Investment in associated company 1,501 1,679
Investment in joint venture 278 173
Investments 18,104 14,653
58,206 57,562
Current assets
Inventories 26,383 28,249
Accounts receivable 30,039 40,838
Other financial assets 404 121
Tax recoverable 98 484
Cash and bank balances 14,329 15,859
71,253 85,551
Non-current assets held for resale 1,291 -
Total Assets 130,750 143,113
Current liabilities
Accounts payable (falling due within one year) (36,392) (47,519)
Other financial liabilities - (85)
Tax payable (1,366) (225)
Total current liabilities (37,758) (47,829)
Net current assets 34,786 37,722
Total assets less current liabilities 92,992 95,284
Non current liabilities
Accounts payable (falling due after more than one year) (12,589) (13,811)
Deferred taxation (5,872) (5,761)
Net assets 74,531 75,712
Capital and reserves
Called up share capital 8,964 8,964
Share premium account 23,606 23,606
Other reserves 2,227 3,425
Other reserves – applicable to non-current asset held for sale 585 -
Retained earnings 29,950 28,859
Shareholders' funds 65,332 64,854
Non-controlling interests 9,199 10,858
74,531 75,712
Condensed Consolidated Statement of Cash Flow
for the year ended 30th September 2013 2012
Reviewed Audited
US$000 US$000
Revenue 209,767 210,183
Operating costs (201,452) (201,533)
Operating profit 8,315 8,650
Adjustment
Depreciation 652 887
Movements in working capital
Increase in inventories (3,092) (3,026)
Decrease/(Increase) in debtors 4,141 (9,345)
(Decrease)/Increase in creditors (2,864) 3,923
Cash generated by operations 7,152 1,089
Interest paid (2,986) (2,533)
Taxation paid (1,566) (2,503)
Cash inflow/(outflow) from operating activities 2,600 (3,947)
Investment activities
Purchase of and improvement to tangible non-current assets (1,193) (797)
Proceeds of disposal of tangible assets 754 117
Acquisition of investments (3,624) (877)
Investment in associate - (365)
Investment in joint venture - (173)
Proceeds of disposal of investments 2,352 5,230
Dividends received 460 518
Interest received 467 835
Cash (outflow)/inflow from investment activities (784) 4,488
Cash inflow before financing 1,816 541
Financing activities
(Decrease)/Increase in long term debt (249) 2,281
Cost of delisting subsidiary - (14)
Dividends paid – Group shareholders (1,219) (1,148)
Dividends paid – non-controlling interests of subsidiaries (120) (923)
Cash (outflow)/inflow from financing activities (1,588) 196
Increase in cash and cash equivalents 228 737
Cash and cash equivalents at 1st October 12,173 11,538
Effect of foreign exchange rate changes (399) (102)
Cash and cash equivalents at end of year 12,002 12,173
SEGMENTAL REPORTING
For management purposes the Group is organised on a worldwide basis into the following main business segments:
Import and distribution Trade in tools, food and household consumer products primarily imports to, and
exports from, South Africa.
Property Investment properties in U.S.A. and South Africa.
Other activities Mainly transactions relating to the share portfolios, profits on disposals of tangible
and intangible non-current assets and local head office costs.
There are no sales between business segments. Segment assets consist of property, plant and equipment, inventories and
receivables and exclude cash balances. Segment liabilities are operating liabilities and exclude items such as taxation and
borrowings. Unallocated assets and liabilities are cash balances, taxation and borrowings. Capital expenditure comprises
additions to property, plant and equipment.
2013 2012
Segmental analysis of results US$000 US$000
Revenue Result Revenue Result
Import and distribution 205,490 7,636 205,641 7,913
Property 4,265 1,966 4,526 1,664
Other activities * 12 (710) 16 150
209,767 8,892 210,183 9,727
Share of company’s and joint venture’s results (32) (196)
Interest paid and similar charges (2,986) (2,533)
5,874 6,998
Other income 4,918 2,265
Profit before tax 10,792 9,263
*Revenue of “Other activities” excludes dividend income and the proceeds of sales of investments and tangible assets, the
profits of which are included in other income/expense.
Assets Liabilities Net assets/ Capital Depreciation
(liabilities) expenditure charge
US$000 US$000 US$000 US$000 US$000
th
Segmental analysis of net assets 30 September 2013
Import and distribution 63,297 (30,910) 32,387 1,058 593
Property 32,924 (1,120) 31,803 135 46
Associate – Other 1,501 - 1,501 - -
Other activities (including investments) 18,218 (611) 17,608 - -
Unallocated (including cash, tax and debt) 14,810 (23,578) (8,768) - 13
Consolidated total 130,750 (56,219) 74,531 1,193 652
Segmental analysis of net assets 30th September 2012
Import and distribution 76,589 (46,143) 30,446 673 679
Property 33,685 (1,240) 32,445 124 194
Associate - Other 1,679 - 1,679 - -
Other activities (including investments) 15,275 (223) 15,052 - -
Unallocated (including cash, tax and debt) 15,885 (19,795) (3,910) - 14
Consolidated total 143,113 (67,401) 75,712 797 887
The Group operates in the following geographic areas.
Europe
Location of part of the Group’s import and distribution business, the non-trading parent company and most of the Group's
investment portfolio.
Australia
Location for part of the Group's import and distribution business.
United States Part of the Group's property portfolio and some of the Group’s investment portfolio are located here.
South Africa Location of the bulk of the Group's import and distribution business and part of the Group’s property
portfolio.
2013 2012
Group Total Capital Group Total Capital
revenue Net assets expenditure Revenue net assets expenditure
US$000 US$000 US$000 US$000 US$000 US$000
Europe 30,510 24,084 - 37,099 24,137 -
Australia 1,815 3,069 8 2,353 3,790 29
United States 1,032 8,973 129 951 6,384 -
Total outside South Africa 33,357 36,126 137 40,403 34,311 29
South Africa 176,410 38,405 1,056 169,780 41,401 768
209,767 74,531 1,193 210,183 75,712 797
Total assets (before non-controlling interests) and capital expenditure are shown by the geographical area in which the
assets are located.
The categories of financial instruments used by the Company are:
2013 2012
US$000 US$000
Financial assets
Available for sale
Investments * 18,104 14,653
At fair value through profit & loss
Other financial assets - deferred finance lease income 281 121
- derivative foreign exchange financial instrument 123 -
Loans and accounts receivable
Trade and other receivables 30,039 40,838
Cash at bank 14,329 15,859
Financial liabilities
Loans and accounts payable
Trade and other payables - due within one year 33,368 43,833
borrowings due after more than one year 12,570 13,760
- derivative financial instruments due after more
than one year 19 51
Bank overdrafts 2,328 3,686
At fair value through profit & loss
Other financial liabilities - 85
* Listed investments, other financial assets and other financial liabilities
are Classified as Level 1 in terms of the fair value hierarchy in IFRS 7.
Notes:
1. This provisional report has been prepared in accordance with the framework, concepts and the measurement and
recognition requirements of International Financial Reporting Standards, applicable legal and regulatory requirements
of The Companies (Jersey) Law, 1991, the AC 500 Standards, the Listing Requirements of the JSE Limited and
contains the information required by IAS34 Interim Financial Reporting. The accounting policies applied in this
provisional report are consistent with those adopted and disclosed in the Group's annual report for the year ended 30
September 2012.
2. Group capital expenditure in the year was US$1,193,000 (2012 – US$797,000). There were no capital expenditure
commitments at 30th September 2013 (2012 – nil).
3. Overdrafts of US$2,328,000 (2012 - US$3,686,000) are included in current liabilities. Group long-term finance is
secured on various properties and bears interest at commercial rates.
4. Earnings per share and headline earnings per share are based on the result attributable to shareholders of the Company
and on the weighted average of shares in issue 35,857,512 (2012 – 35,857,512).
Reconciliation between basic and headline earnings per share 2013 2012
US$000 US$000
Basic earnings per share 5,505 5,055
Adjusted for, net of applicable tax:
Investment property revaluations (3,359) (1,214)
Reclassification of previously recognised gains on disposal of available for sale
investments 213 721
Profit on disposal of non-current tangible assets (53) -
Headline earnings 2,306 4,562
Headline earnings per share (US cents) 6.4c 12.7c
Responsibility Statement
The directors take full responsibility for the preparation of the provisional report and the financial information has been
correctly extracted from the underling annual financial statements.
Review Report
This provisional report has been reviewed by the Company's auditor, Saffery Champness. This summarised report is
extracted from audited information, but is not of itself audited. The review opinion is available for inspection at the
registered office of the Company. The review opinion confirms that nothing has come to the auditor's attention that
might cause them to believe that the provisional financial statements in the provisional report were not prepared, in all
material respects, in accordance with the framework, concepts and the measurement and recognition requirements of
International Financial Reporting Standards, the Companies (Jersey) Law, 1991, the listing requirements of the JSE
Limited and contains the information required by IAS34 Interim Financial Reporting. The audited annual report will be
mailed to shareholders in early 2014.
20 December 2013
Johannesburg
Sponsor
Sasfin Capital (a division of Sasfin Ban Limited)
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