MARSHALL MONTEAGLE PLC - Interim results for period ended 31 March 2017 and dividend declaration

Release Date: 14/06/2017 15:59
Code(s): MMP
 
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Interim results for period ended 31 March 2017 and dividend declaration

Marshall Monteagle PLC
(Incorporated in Jersey)
(Registration number: 102785)
(External registration number: 2010/024031/10)
JSE Code: MMP ISIN: JE00B5N88T08
(“the Company”” or “the Group”)


Interim results for the six months to 31st March 2017 and a dividend declaration

Dear Shareholder,

The Directors report the results for the six months to 31st March 2017 and a dividend declaration.

Results

- Group revenue increased by 39% to US$161,092,000 compared with the same period last year. In
constant currency terms sales increased by 28% to US$148,534,000.

- Profit before tax increased by 1% to US$5,252,000, and in constant currency terms decreased by
6% to US$4,919,000.

- Headline earnings of US$5.8 cents per share compare with US$0.6 cents per share in the same
period last year, and US$5.9 cents in the half year ending 31st March 2015. The significant decline in
headline earnings in 2016 was attributed to adverse currency conditions. Basic earnings per share,
also US$5.8 cents for the period to 31 March 2017 were 15% lower than in the equivalent period last
year largely because that period included a gain of US$2,239,000 on disposal of six South African
investment properties.

- An interim dividend of US1.8 cents per share will be paid in July 2017 (2016 – US1.8 cents).

- Net assets per share are US$1.92 (2016 – US$1.80). Net assets per share have increased from the
30th September 2016 figure of US$1.87 per share; reflecting favourable exchange rate movements
and increases in operating profits.

The Group has investments in import and distribution businesses, investment properties, and equities;
these are reported on separately below.

Import and Distribution
Our import and distribution businesses in food and household consumer products continue to perform
well in a constantly changing environment; we are constantly reviewing our supply-chain to ensure
that we remain the most cost-effective solution from factory to shelf. During the six-month’s period
under review we achieved a pleasing increase in turnover and product volumes shipped. Currency
and raw material markets have been extremely volatile. It is to be expected that these market
conditions will continue into the second half of the year. However the division is well positioned to
deal with such volatility, which is often caused by market factors beyond our control.

This division continues to provide procurement, supply chain and risk management services to
multiple retailers, wholesalers and manufacturers in Southern and Central Africa, South America, the
Middle East and China. We remain committed to working with suppliers of quality raw materials,
skilled technologists and first world production facilities.

Our Metals and Minerals business continues to make extremely good progress and we are
developing new partnerships with miners in Southern Africa and end users on an international basis.
During 2016 we witnessed a major global rebalancing of supply and demand covering most metals
and minerals with consistent price rises throughout the year until December. Demand has softened
during the first three months of 2017 as the market has come back into balance and ore prices have
moved down over this period. This division provides fully integrated logistics, marketing, finance and
shipping services to the Southern African mining industry and is placing significant focus on chrome
and manganese. We are committed to partnering with producers who require a professional all-
encompassing solution from collection at mine through to delivery to end users on an international
basis.

Our coffee business continues to develop and has expanded into the supply of capsules.

Our tool and machinery import and distribution business made a small loss in the period mainly due to
reorganisation costs as it adapted to a shrinking market in South Africa.

Property Portfolio
Rental income from our large multi-tenanted industrial property in San Diego was higher than the first
half of 2016; the property currently has a nil vacancy rate. The commercial and industrial property
market in Southern California remains strong; we continue to seek to invest further in a similar
property in the region.

The Group’s South African commercial and light industrial property portfolio had a satisfactory six
months despite an ailing local economy. During 2016 we completed the sale of a number of
properties in South Africa, for the gross amount of US$8,848,000, substantially reducing the size of
our portfolio and exposure. This is reflected in the reduction in contribution from this division.

Investment Portfolio
During the period we sold the Group’s investment in Novartis and acquired a holding in
Schlumberger. The value of our investments has remained substantially unchanged as generally
increasing share prices have been offset by adverse currency movements on stocks not quoted in US
dollars

Net Assets
Assets outside Africa, net of non-controlling interests and proposed dividends, stand at
US$49,847,000, equal to US$1.39 per share (30th September 2016: US$1.32); the balance of
US$19,134,000, equal to US$0.53 per share, is held in South Africa. Our total net assets amount to
US$1.92 per share, which compares with US$1.87 per share at 30th September 2016.

Interim Dividend
We are pleased to announce that the Company is to pay an interim dividend of US1.8 cents per
share. The dividend is payable on 14th July 2017 to shareholders on the register at the close of
business on 7th July 2017.

Group Staff
Once again, we would like to thank all our employees for their hard work; we appreciate their efforts
and the contribution that they have made during the period.

Board Changes
On 11 April 2017 Mr Edward Beale stepped down as Non-Executive Chairman and was appointed
Executive Group Financial Director; Mr Alastair Barclay was appointed as a Director and as Non-
executive Chairman.

Prospects
Our trading businesses have had a very strong start to the year. However we do expect activity levels
to ease off through the second half. Our strong balance sheet gives us confidence that we can
continue to enhance shareholder value in the long term.



A.R.C. Barclay
Chairman

D.C. Marshall
Chief Executive




                                                   2
Shareholders on the South African register will receive their dividend in South African Rand converted
from US dollars at the closing rate of exchange on 12th June 2017. In order to comply with the
requirements of Strate the relevant details are as follows:

Shareholders are hereby advised that the exchange rate to be used will be USD 1 = ZAR 12.7969.
This has been calculated as the average of the bid/ask spread at 16.00 (United Kingdom time) being
the close of business on Monday, 12th June 2017.

In respect of the normal gross cash dividend of US1.8 cents (23.03442 South African cents), and in
terms of the new South African Tax Act, the following dividend tax ruling only applies to those
shareholders who are registered on the South African register at close of business on Friday 7th July
2017. All other shareholders are exempt. The gross dividend is for the six-month period ended 31
March 2017 and will be paid on Friday 14th July 2017.

- The dividend has been declared from income reserves, which funds are sourced from the Jersey
holding company’s main bank account in Luxembourg.
- The dividend withholding tax rate is 20% resulting in a net dividend of US1.44 cents (18.42754
South African cents) per share to those shareholders who are not exempt from the dividend
withholding tax.

The issued number of shares at the declaration date is 35,857,512. The company’s Jersey tax
number is CH4513.

Salient dates for dividend
Last day to trade                                                          Tuesday 4th July 2017
Shares trade ex-dividend                                                 Wednesday 5th July 2017
Record date (date shareholders recorded in books)                            Friday 7th July 2017
Pay date                                                                    Friday 14th July 2017



No dematerialisation or rematerialisation of share certificates, nor transfer of shares between the
registers in Jersey and South Africa will take place between Wednesday 5th July and Friday 7th July
2017, both dates inclusive.

Contacts and Addresses

Registered Office
3rd Floor, 37 Esplanade,
St Helier,
Jersey,
JE2 3QA

South Africa
11 Sunbury Park, La Lucia Ridge Office Estate,
La Lucia, 4051
(PO Box 4126, The Square 4021)
Tel: +27 31 566 7600

Company Secretary
City Group P.L.C.
6 Middle Street,
London, EC1A 7JA
Tel: +44 20 7796 9060
E-mail: monteagle@city-group.com




                                                  3
   Consolidated Statement of Total Comprehensive Income

                                                                       Half years ended            Year Ended
                                                                          31st March           30th September
                                                                         2017         2016               2016
                                                            Notes   Unaudited     Unaudited            Audited
                                                                      US$000        US$000            US$000
Continuing operations
Group revenue                                                2        161,092      115,728            241,933
Other income                                                 3          1,137        2,968              5,588
                                                                      162,229      118,696            247,521
Change in inventories of finished goods and work in                    (3,400)      (3,483)            (4,220)
progress
Finished goods, raw materials and consumables                        (124,995)     (92,909)          (187,762)
Employee benefit expense                                               (7,626)      (6,361)           (14,259)
Depreciation and amortisation expense                                    (452)        (395)              (744)
Other expenses                                               3        (20,005)      (9,831)           (29,789)

Share of associated companies and joint venture’s                          33           19                  31
results

Finance expense                                                          (532)        (526)            (2,502)

Profit before taxation on continuing operations              2          5,252        5,210              8,276

Taxation                                                                (1,894)      (1,944)           (2,992)
Profit after taxation                                                    3,358        3,266             5,284
Loss after tax on discontinued operations                                     -        (304)             (304)
Loss on disposal of discontinued operations                                   -            -             (474)
Profit for the period                                                    3,358        2,962             4,506

Profit attributable to owners of the parent                             2,067        2,433              3,153
Profit attributable to non-controlling interests                        1,291          529              1,353

Basic and fully diluted earnings per share (US cents)        4            5.8c         6.8c               8.8c
Basic and fully diluted earnings per share (US cents)
–continuing operations                                                    5.8c         7.6c              10.5c



   Consolidated Statement of Total Comprehensive Income (continued)

                                                                       Half years ended             Year ended
                                                                          31st March            30th September
                                                                         2017         2016                2016
                                                            Notes   Unaudited     Unaudited             Audited
                                                                      US$000        US$000             US$000
Other Comprehensive (Expense)/Income:
Items that may be reclassified subsequently to profit
and loss:
Exchange differences on translation into US dollars of
the financial statements of foreign entities                              784        (2,179)               (369)
Reclassification of previously recognised exchange
losses on disposal of Australian operations                                  -            -                157
Unrealised (loss)/gain on revaluation of available for
sale investments                                                           (72)      1,764                3,185


                                                        4
    Less applicable tax                                        (81)       -   (365)
Reclassification of previously recognised profits on
disposal of available for sale investments                    (11)      19      (40)
Total of items that may be reclassified                       620     (396)   2,568
Items that will not be reclassified subsequently to profit
and loss:
Commercial property fair value adjustments                       -        -    236
   Less applicable tax                                           -        -   (114)
                                                                 -        -    122
Total Other Comprehensive Income                              620     (396)   2,690

Total Comprehensive Income                                   3,978    2,566   7,196


Total Comprehensive Income attributable to
                                                             2,466    2,469   5,618
owners of the parent
Total Comprehensive Income attributable to non-              1,512      97    1,578
controlling interests

Interim dividend per share (US cents)                         1.8c     1.8c    1.8c
Final dividend per share (US cents)                              -        -    1.9c




                                                        5
Consolidated Statement of Changes in Equity
                                              Ordinary                                                 Total        Non-
                                                Share       Share          Other    Retained   Shareholders’   Controlling    Group
                                               Capital   Premium        Reserves    Earnings       Interests    Interests      Total
Half year ended 31st March 2016               US$000      US$000         US$000      US$000         US$000       US$000      US$000
Profit after taxation                                -          -              -       2,433          2,433           529      2,962

Other Comprehensive Income                           -          -           667        (631)             36          (432)      (396)

Total Comprehensive Income                           -          -           667        1,802          2,469            97      2,566

Balances at start of period                     8,964     23,606            (861)    31,155          62,864         8,576     71,440

Transfer – release of fair value                     -          -         (3,079)      3,079               -             -         -

Transactions with shareholders
Dividends paid                                       -          -              -       (643)           (643)          (68)      (711)

Balances at end of period                       8,964     23,606          (3,273)    35,393          64,690         8,605     73,295

Half year ended 31st March 2017

Profit after taxation                                -          -              -       2,067          2,067         1,291      3,358

Other Comprehensive Income                           -          -           (108)      507              399          221        620

Total Comprehensive Income                           -          -           (108)      2,574          2,466         1,512      3,978

Transfer – release of fair value

Balances at start of period                     8,964     23,606          (2,719)    37,344          67,195         8,002     74,897

Transactions with shareholders
Dividends paid                                       -          -              -       (681)           (681)       (1,753)    (2,434)

Balances at end of period                       8,954     23,606          (2,827)    39,237          68,980         7,761     76,741


                                                                    6
   Consolidated Statement of Financial Position
                                                         31st March          30th September
                                                      2017          2016               2016
                                                  Unaudited     Unaudited            Audited
                                                    US$000        US$000            US$000
Non-current assets
Investment property                                  20,705       22,131             20,460
Property, plant and equipment                         9,477        8,189              9,237
Goodwill                                                185          169                180
Intangible assets                                       537          490                523
Deferred taxation                                     1,415        1,119              1,559
Investments
Associates                                              186          181                185
General portfolio – (note 5)                         25,387       24,065             25,382
                                                     57,892       56,344             57,526
Current assets
Inventories                                          20,915       22,386             24,051
Trade and other receivables                          53,319       45,619             42,382
Cash                                                 31,666       21,384             30,916
                                                    105,900       89,389             97,349
Assets held for sale
Investment property                                       -            -              1,189
Australian operations                                     -        2,462                  -
Total assets                                        163,792      148,195            156,064
Current liabilities
Trade and other payables                            (66,788)      (55,862)          (62,171)
Financial liabilities on assets held for sale             -        (1,196)             (251)
Total current liabilities                           (66,788)      (57,058)          (62,422)
Net current assets                                   39,112        34,793            36,116
Total assets less current liabilities                97,004       91,137             93,642
Non-current liabilities
Accounts payable                                    (14,338)      (12,396)          (12,351)
Deferred taxation                                    (5,925)       (5,446)           (6,094)
Total non-current assets                            (20,263)      (17,842)          (18,445)
                                                     76,741       73,295             75,197
Capital and reserves
Called up share capital                               8,964        8,964              8,964
Share premium account                                23,606       23,606             23,606
Other reserves                                       (2,827)      (3,273)            (2,719)
Retained earnings                                    39,237       35,393             37,344
Equity attributable to owners of the parent          68,980       64,690             67,195
Non-controlling interests                             7,761        8,605              8,002
                                                     76,741       73,295             75,197


Net assets per share US$ (note 6)                      1.92          1.80              1.87
       Consolidated Statement of Cash Flow

                                                                           31st March           30th September
                                                                        2017          2016                 2016
                                                                   Unaudited     Unaudited              Audited
                                                                     US$000       US$000               US$000
Profit for the period                                                  3,358         2,962                4,506
Adjusted for:
Taxation                                                                1,894          1,935             2,992
Loss on disposal of discontinued operations                                  -              -              474
Depreciation                                                              452            404               753
Share of associates                                                       (33)           (19)              (31)
Finance expense                                                           532            526             2,502
Other income                                                           (1,137)        (2,970)           (5,588)
Other expense –fair value adjustments and losses on disposal               15               -              343
Changes in working capital:
Decrease in inventories                                                 3,741          3,918             3,770
(Increase)/Decrease in debtors                                         (4,673)        (6,450)            3,612
(Decrease)in creditors                                                  7,167           (820)           (3,688)
                                                                       11,316           (514)            9,645
Interest paid                                                            (532)          (526)           (2,502)
Taxation paid                                                          (3,518)           264            (3,904)
Net cash (outflow)/inflow from operating activities                     7,266           (776)            3,239

Investment activities
Purchase of, and improvements to, tangible non-current assets            (273)        (1,076)           (2,241)
Proceeds of disposal of tangible assets                                    24          6,465             9,737
Acquisition of investments                                               (318)          (599)             (613)
Proceeds on disposal of investments                                       574            421               446
Cashflow on disposal of discontinued operations                              -              -               (62)
Dividends received                                                        182            215               556
Interest received                                                         302            273             1,004
Net cash inflow/(outflow) from investment activities                      491          5,699              8,827
Cash inflow before financing                                            7,757          4,923            12,066

Financing activities
Drawdown of new long term loans                                         1,491          6,300             6,300
Repayment of long term loans                                           (2,425)        (5,136)           (5,098)
Dividends paid – Group shareholders                                      (681)          (643)           (1,287)
Dividends paid – non-controlling interests of subsidiaries             (1,753)           (68)           (1,518)
Cash inflow/(outflow) from financing activities                        (3,368)           453            (1,603)

Net increase in funds                                                   4,389          5,376            10,463
Net funds at start of period                                           20,544         10,068            10,068
Effect of foreign exchange rates                                          140            653                13
Net cash and cash equivalents at end of period                         25,073         16,097            20,544

       Notes to the interim statement

       1.   The results and the cash flow statement for the half-year ended 31st March 2017 are unaudited
            and comply with IAS 34 – Interim Financial Reporting as well as the SAICA Financial Reporting
        Guides as issued by the Accounting Practices Committee and Financial Pronouncements as
        issued by Financial Reporting Standards Council. They have been prepared on the basis of
        accounting policies adopted in the accounts for the year ended 30th September 2016. They
        comply with International Financial Reporting Standards and JSE listing requirements. The
        results for the year to 30th September 2016 are an abridged version of the Group’s full accounts
        for that year, which have been filed with the relevant authorities.

        These results were prepared under the supervision of Edward Beale, The Company’s finance
        director.

        Any reference to the future financial performance of the Group has not been reviewed or reported
        on by the Group’s auditors.

   2.   The segmental analysis of revenue and operating profit is as follows:

                                               Half years ended 31st March                 Year ended 30th
                                               2017                   2016                 September 2016
                                              US$000                US$000                     US$000
                                         Revenue      Result Revenue       Result         Revenue     Result
Analysed by activity: -
Import/distribution                       159,702        4,761    114,159       2,691     238,869      5,858
Property                                    1,390          334      1,569         705       3,064        871
Share of associated companies and
joint venture results                           -           33          -          19           -         31
                                          161,092        5,128    115,728       3,415     241,933      6,760
Discontinued operations – Australia

Import and distribution                         -             -       526        (308)        526       (308)
Property                                        -             -         -          (5)          -         (5)
                                          161,092        5,128    116,254       3,102     242,459      6,447
Loss on disposal of operations                                -                      -                  (474)
Unallocated expense                                       (481)                  (649)                (1,572)
Other Income                                             1,137                  2,970                  5,590
Interest paid                                             (532)                  (526)                (2,502)

Profit before tax                                        5,252                  4,897                  7,489
Taxation
- continuing operations                                 (1,894)                 (1,944)               (2,992)
- discontinued operations                                     -                      9                     9
Profit for the period                                    3,358                   2,962                 4,506



   3.  The other expense and income on continuing operations arises from the following:
                                                                     31st March               30th September
                                                                  2017             2016                  2016
                                                              US$000           US$000                 US$000
   Other income
   Investment property revaluations                                   -                -                   1,002
   Gain on disposal of investment property                          10            2,239                    2,300
   Other
   Gain on disposal of non-current tangible assets                  29                 -                     24
   Recovery of impairment on commercial property                      -                -                     20
   Fair value adjustments on foreign exchange                         -                -                      1
   contracts
   Dividend income                                                 182              215                      556
   Interest income                                                 302              271                    1,072
   Exchange gains                                                  222              229                      590
   Profit on disposal of investments                               392               14                       23
                                                                 1,137            2,968                    5,588
     Other expense
     Investment property revaluations                                      -                -                (84)
     Loss on disposal of investments                                       -                -                (18)
     Fair value adjustment on unlisted investment                          -                -                   -
     Fair value adjustments on tangible assets and listed                                                   (200)
     investments                                                           -                -                (36)

     Loss on disposal on non-current tangible assets                    (15)             (18)                    (5)
     Exchange losses                                                   (107)               -                     (5)
     Administration and other expenses                              (19,883)         (9,813)             (29,441)
                                                                    (20,005)         (9,831)             (29,789)


     4. Basic earnings per share are based on results attributable to members and on 35,857,512 shares
        in issue (2016 – 35,857,512). A reconciliation of basic and headline earnings is shown below.
                                                                             31st March                   30th
                                                                                                   September
                                                                           2017          2016            2016
                                                                       US$000        US$000           US$000
Reconciliation between basic and headline earnings
   Basic earnings                                                         2,067         2,433           3,153
   Adjusted for:
   Investment property gain on disposal/revaluations                           -       (2,265)         (2,346)
   Investment property revaluation                                             -             -           (722)
   Loss on disposal of Australian operations                                   -             -            474
   Impairment of non-current asset                                             -             -             (20)
   Effect of change in rate of tax                                             -             -            185
   Reclassification of previously recognised gains on
   disposal of available for sale investments                               (11)           19              (40)
   Loss/(profit) on disposal of non-current tangible                          5            18              (19)
   assets
   Headline earnings                                                      2,061           205             665

Earnings per share
   Basic earnings per share (US cents)                                         5.8          6.8            8.8
   Headline earnings per share (US cents)                                      5.8          0.6            1.9


     5.   A geographical analysis of the General Portfolio of investments is as follows:
                                                                31st March           31st March 30th September
                                                                      2017                 2016           2016
                                                                   US$000              US$000          US$000

     United States of America                                      9,556              8,505             8,882
     United Kingdom                                                5,047              5,019             5,097
     Europe, excluding the U.K.                                    4,778              4,597             4,947
     Switzerland                                                   2,428              2,513             2,756
     Japan                                                         1,365              1,394             1,487
                                                                  23,174             22,028            23,169
     Unlisted – UK                                                 2,213              2,037             2,213
                                                                  25,387             24,065            25,382


     6.   Net assets per share are based on equity attributable to owners of the Company.

     7.   There was capital expenditure of US$668,000 during the period (2016 – US$1,185,000). There
          was no contracted or outstanding authorised capital expenditure at the reporting date.
Registered Office:
3rd Floor, 37 Esplanade,
St. Helier, Jersey, JE2 3QA
Channel Islands

United Kingdom
14 June 2017

Sponsor: Sasfin Capital (a division of Sasfin Bank Limited)

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