MARSHALL MONTEAGLE PLC - Interim results and dividend declaration

Release Date: 22/06/2018 08:11
Code(s): MMP
 
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Interim results 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 31 March 2018 and a dividend declaration

Dear Shareholder,

The Directors report the results for the six months to 31 March 2018 and a dividend declaration.

Results
- Group revenue increased by 21% to US$194,637,000 compared with the same period last year. In
    constant currency terms revenue increased by 14% to US$184,417,000.
- Profit before tax increased by 27% to US$6,646,000, and in constant currency terms increased by 20% to
    US$6,303,000.
- Headline earnings of US$5.9 cents per share were 2% higher when compared with US$5.8 cents per share
    in the same period last year.
- Basic earnings per share of US$6.4 cents per share were 10% higher when compared with US$5.8 cents
    per share in the same period last year.
- An interim dividend of US1.9 cents per share will be paid in July 2018 (2017 – US1.8 cents).
- Net assets per share are US$2.17 (2017 – US$1.92). Net assets per share have increased from the 30
    September 2017 figure of US$2.04 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. The
investments in property and equities have performed well and all of the import and distribution businesses
showed improved overall performance. These are reported on separately below.

As Easter fell at the end of March, 2018 Easter peak trade, debtors and creditors also falls into the first half
Group results and capital requirements.

The high tax charge for the period reflects withholding tax on dividends from South African subsidiaries and
the write off of deferred tax assets which may not be recoverable.

Import and Distribution
Our import and distribution businesses in food and household consumer products continue to perform well in
a changing environment; we are constantly reviewing our supply-chain to ensure that we remain the most
cost-effective solution from factory to shelf. Currency and raw material markets have been extremely volatile
and we expect similar market conditions in the second half of the year. We are well positioned to navigate
these external 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 2016-2017 we
witnessed a major global rebalancing of supply and demand covering most metals and minerals and during the
first six months of the current financial year the market has come back into balance. 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 ex mine through to delivery to end users on
an international basis.
Our state of the art coffee manufacturing plant has successfully implemented British Retail Consortium quality
and food safety certification. The volatile currency and coffee prices internationally continue to put pressure
on margins.

Our Tool & Machinery import and distribution business continues to show an improvement over last year and
is expected to end the year with a much improved profit. Consumer spending continues to decline, making it
very difficult to grow sales organically. However, value is being extracted by reducing debt through stronger
stock and debtor management

Property Portfolio
Rental income from our large multi-tenanted industrial property in San Diego was higher than the second half
of 2017 and the property is fully let. Although at present, the commercial and industrial property market in
Southern California remains highly competitive, we continue to seek to invest further in similar property in the
region.

The Group’s South African commercial and light industrial property portfolio has achieved a steady return in
adverse conditions. The Group is increasing its focus on operating efficiencies and raising rental income from
the existing estate.

Investment Portfolio
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
Our total net assets amount to US$2.17 per share, which compares with US$2.04 per share at 30 September
2017. Assets outside Africa, net of non-controlling interests and proposed dividends, stand at US$61,111,000,
equal to US$1.70 per share (30 September 2017: US$1.65); the balance of US$16,854,000, equal to US$0.47
per share, is held in South Africa.

Interim Dividend
We are pleased to announce that the Company is to pay an interim dividend of US1.9 cents per share. The
dividend is payable on 20 July 2018 to shareholders on the register at the close of business on 13 July 2018.

Prospects
Our trading businesses have had a 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

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 Monday 18 June 2018. 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 13.6813. 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 18 June 2018.

In respect of the normal gross cash dividend of US1.9 cents (25.99447 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 13 July 2018. All other shareholders are
exempt. The gross dividend is for the six-month period ended 31 March 2018 and will be paid on Friday 20 July
2018.

-   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 US1.52 cents (20.79558 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 10 July 2018
Shares trade ex-dividend                                                            Wednesday 11 July 2018
Record date (date shareholders recorded in books)                                        Friday 13 July 2018
Pay date                                                                                 Friday 20 July 2018



No dematerialisation or rematerialisation of share certificates, nor transfer of shares between the registers in
Jersey and South Africa will take place between Wednesday 11 July 2018 and Friday 13 July 2018, both dates
inclusive.

Contacts and Addresses

Registered Office
 rd
3 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
   Consolidated Statement of Total Comprehensive Income

                                                                          Half years ended            Year Ended
                                                                              31 March             30 September
                                                                           2018            2017             2017
                                                               Notes   Unaudited      Unaudited          Audited
                                                                         US$000         US$000           US$000
Continuing operations
Group revenue                                                   2        194,637       161,092          340,052
Other income                                                    3a         1,611)        1,137)           3,269)
                                                                         196,248       162,229          343,321
Change in inventories of finished goods and work in progress              (2,436)       (3,400)           4,938
Finished goods, raw materials and consumables                           (151,849)     (124,995)        (283,940)
Employee benefit expense                                                  (8,967)       (7,626)         (16,221)
Depreciation and amortisation expense                                       (558)         (452)            (927)
Other expenses                                                  3b       (24,694)      (20,005)         (34,490)

Share of associated companies and joint venture’s results                     40            33               36

Finance Expense                                                            (1,138)        (532)           (2,316)

Profit before taxation on continuing operations                 2           6,646         5,252          10,401
Taxation                                                                   (2,745)       (1,894)         (2,902)
Profit after taxation                                                       3,901)        3,358)          7,499)

Profit attributable to owners of the parent                                2,298         2,067            4,985
Profit attributable to non-controlling interests                           1,603         1,291            2,514

Basic and fully diluted earnings per share (US cents)           4            6.4c          5.8c            13.9c
Basic and fully diluted earnings per share (US cents) –
continuing operations                                                        6.4c          5.8c            13.9c
   Consolidated Statement of Total Comprehensive Income (continued)

                                                                            Half years ended           Year ended
                                                                               31 March              30 September
                                                                             2018            2017            2017
                                                                 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                                     4,461           784              453
Unrealised (loss)/gain on revaluation of available for sale
investments                                                                    151           (72)           2,093
    Less applicable tax                                                         14           (81)            (223)
Reclassification of previously recognised profits on disposal
of available for sale investments                                             (203)          (11)             (89)
Total of items that may be reclassified                                      4,423           620            2,234
Items that will not be reclassified subsequently to profit and
loss:
Commercial property fair value adjustments                                        -             -             510
  Less applicable tax                                                             -             -             (85)
                                                                                  -)            -)            425)
Total Other Comprehensive Income                                             4,423)          620)           2,659)

Total Comprehensive Income                                                   8,324         3,978           10,158

Total Comprehensive Income attributable to owners of the
parent                                                                       5,389         2,466            7,388
Total Comprehensive Income attributable to non-
controlling interests                                                        2,935         1,512            2,770

Interim dividend per share (US cents)                                          1.9c          1.8c             1.8c
Final dividend per share (US cents)                                               -             -             1.9c
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 31 March 2017                  US$000      US$000     US$000      US$000         US$000        US$000     US$000
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)

Balances at start of period

Transfer – release of fair value                 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)

Half year ended 31 March 2018

Profit after taxation                                 -          -         -)      2,298           2,298         1,603     3,901

Other Comprehensive Income                            -          -     1,743)      1,348)          3,091)        1,332)    4,423)

Total Comprehensive Income                                             1,743)      3,646)          5,389)        2,935)    8,324)

Transfer – release of fair value

Balances at start of period                      8,964     23,606       (773)     41,460          73,257         9,040    82,297

Transactions with shareholders                        -          -          -)         -               -             -          -
Dividends paid                                        -          -          -)      (681)           (681)       (1,008)    (1,689)

Balances at end of period                        8,964     23,606        970)     44,425)         77,965)       10,967)   88,932)


                                                                                                                                    6
   Consolidated Statement of Financial Position
                                                          31 March           30 September
                                                      2018           2017            2017
                                                  Unaudited     Unaudited          Audited
                                                    US$000         US$000          US$000
Non-current assets
Investment property                                  22,268        20,705          20,923
Property, plant and equipment                        12,557         9,477          10,397
Goodwill                                                209           185             183
Intangible assets                                       817           537             717
Deferred taxation                                     2,173         1,415           2,293
Associates                                              236           186             187
General portfolio – (note 5)                         31,258)       25,387)         27,994)
                                                     69,518)       57,892)         62,694)
Current assets
Inventories                                          30,505        20,915          29,162
Trade and other receivables                          73,580        53,319          57,152
Cash                                                 19,932)       31,666)         21,177)
                                                    124,017)      105,900)        107,491)
Total assets                                        193,135)      163,792)        170,185)
Current liabilities
Trade and other payables                            (82,760)      (66,788)         (68,096)
Financial liabilities on assets held for sale             -)            -)               -)
Total current liabilities                           (82,760)      (66,788)         (62,422)
Net current assets                                   41,257)       39,112)          39,395)

Total assets less current liabilities               110,775)       97,004)        102,089)
Non-current liabilities
Accounts payable                                    (15,312)      (14,338)         (13,571)
Deferred taxation                                    (6,531)       (5,925)          (6,221)
Total non-current liabilities                       (21,843)      (20,263)         (19,792)
                                                     88,932)       76,741)         82,297)

Capital and reserves
Called up share capital                               8,964         8,964           8,964
Share premium account                                23,606        23,606          23,606
Other reserves                                          970        (2,827)           (773)
Retained earnings                                    44,425)       39,237)         41,460)
Equity attributable to owners of the parent          77,965        68,980          73,257
Non-controlling interests                            10,967)        7,761)          9,040)
                                                     88,932)       76,741)         82,297)


Net assets per share US$ (note 6)                      2.17          1.92               2.04

   Consolidated Statement of Cash Flow

                                                       31 March              30 September
                                                      2018          2017             2017

                                                                                    7
                                                                            31 March                   30 September
                                                                      Unaudited     Unaudited                Audited
                                                                        US$000        US$000                 US$000
Profit for the period                                                     3,901         3,358                  7,499
Adjusted for:
Taxation                                                                   2,745            1,894               2,902
Depreciation                                                                 558              452                 927
Share of associates                                                          (40)             (33)                (36)
Finance expense                                                            1,138              532               2,316
Other income                                                              (1,611)          (1,137)             (3,269)
Other expense –fair value adjustments and losses on disposal                 504               15                 893
Changes in working capital:
Decrease in inventories                                                    2,699           3,741               (4,675)
(Increase) in debtors                                                    (10,021)         (4,673)             (11,492)
Increase in creditors                                                        894)          7,167)               8,171)
                                                                             767          11,316                  236
Interest paid                                                             (1,138)           (532)              (2,316)
Taxation paid                                                             (1,202)         (3,518)              (2,943)
Net cash (outflow)/inflow from operating activities                       (1,573)          7,266)              (5,023)

Investment activities
Purchase of, and improvements to, tangible non-current assets             (1,350)           (273)              (1,626)
Proceeds of disposal of tangible assets                                        6              24                1,452
Purchase of software                                                           -               -                 (190)
Acquisition of investments                                                (3,853)           (318)                (839)
Proceeds on disposal of investments                                          759             574                  280
Dividends received                                                           271             182                  693
Interest received                                                            416)            302)                 869)
Net cash (outflow)/inflow from investment activities                      (3,751)            491)                 639)
Cash (outflow)/inflow before financing                                    (5,324)          7,757)              (4,384)

Financing activities
Drawdown of long-term loans                                                1,428            1,491               1,238
Repayment of long term loans                                                 (63)          (2,425)                (56)
Dividends paid – Group shareholders                                         (681)            (681)             (1,326)
Dividends paid – non-controlling interests of subsidiaries                (1,008)          (1,753)             (1,732)
Cash (outflow) from financing activities                                    (324)          (3,368)             (1,876)

Net (decrease) increase in funds                                          (5,648)          4,389               (6,260)
Net funds at start of period                                              14,337          20,544               20,544
Effect of foreign exchange rates                                          (1,021)            140)                  53)
Net cash and cash equivalents at end of period                             7,668)         25,073)              14,337)



   Notes to the interim statement

   1.   The results and the cash flow statement for the half-year ended 31 March 2018 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

                                                                                                                8
     for the year ended 30 September 2017. They comply with International Financial Reporting Standards and
     JSE listing requirements. The results for the year to 30 September 2017 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 Group’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 31 March                      Year ended 30
                                          2018                     2017                   September 2017
                                         US$000                   US$000                      US$000
                                    Revenue       Result     Revenue     Result          Revenue       Result
Analysed by activity: -
Import/distribution                  193,053         6,867       159,702       4,761      337,256       11,022
Property                               1,584           496         1,390         334        2,796          421
Share of associated companies
and joint venture results                  -            40)            -          33)           -           36)
                                     194,637         7,403       161,092       5,128      340,052       11,479

Unallocated expense                                  (1,230)                    (481)                   (2,031)
Other Income                                          1,611                    1,137                     3,269
Interest paid                                        (1,138)                    (532)                   (2,316)

Profit before tax                                     6,646                    5,252                    10,401
Taxation                                             (2,745)                  (1,894)                   (2,902)
Profit for the period                                 3,901)                   3,358)                    7,499)




3.   The other income and expense on continuing operations arises from the following:
                                                                         31 March               30 September
                                                                      2018            2017               2017
                                                                   US$000           US$000             US$000
a. Other income
Investment property revaluations                                         -                -               494
Gain on disposal of investment property                                  -               10                 -
Gain on disposal of non-current tangible assets                          -               29                25
Recovery of impairment on commercial property                            -                -                37
Fair value adjustments on foreign exchange contracts                     -                -                64
Dividend income                                                        251              182               657
Interest and other income                                              467              302             1,341
Exchange gains                                                         665              222               255
Profit on disposal of investments                                      227              392               396
                                                                     1,611            1,137             3,269




Notes to the interim statement (continued)

                                                                   31 March        31 March     30 September
                                                                       2018            2017             2017
                                                                     US$000         US$000            US$000
                                                                                                           9
b. Other expense
Investment property revaluations                                             -               -            (221)
Loss on disposal on non-current tangible assets                            (19)            (15)            (18)
Exchange losses                                                           (485)           (107)           (654)
Administration and other expenses                                      (24,190)        (19,883)        (33,597)
                                                                       (24,694)        (20,005)        (34,490)

4. Basic earnings per share are based on results attributable to members and on 35,857,512 shares in issue
   (2017 – 35,857,512). A reconciliation of basic and headline earnings is shown below.
                                                                  31 March          31 March    30 September
                                                                       2018              2017             2017
                                                                    US$000           US$000             US$000
Reconciliation between basic and headline earnings
Basic earnings                                                        2,298             2,067            4,985
Adjusted for:
Investment property gain on disposal/revaluations                           -               -               (88)
Investment property revaluation                                             -               -              (229)
Impairment of non-current asset                                             -               -               (37)
Reclassification of previously recognised gains on
disposal of available for sale investments                             (203)              (11)              (89)
Loss/(profit) on disposal of non-current tangible assets                 19)                5)               (7)
Headline earnings                                                    2,113)             2,061)           4,535)

Earnings per share
Basic earnings per share (US cents)                                        6.4             5.8            13.9
Headline earnings per share (US cents)                                     5.9             5.8            12.6

5.   A geographical analysis of the General Portfolio of investments is as follows:
                                                                    31 March           31 March   30 September
                                                                          2018             2017           2017
                                                                      US$000            US$000          US$000

United States of America                                               10,513             9,556          9,951
United Kingdom                                                          8,401             5,047          5,911
Europe, excluding the U.K.                                              5,201             4,778          5,422
Switzerland                                                             2,486             2,428          2,650
Japan                                                                   1,686             1,365          1,435
                                                                       28,287            23,174         25,369
Unlisted – UK                                                           2,971             2,213          2,625
                                                                       31,258            25,387         27,994


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

7.   There was capital expenditure of US$1,350,000 during the period (2017 – US$668,000). 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

                                                                                                           10
22 June 2018

Sponsor: Sasfin Capital (a member of the Sasfin group)




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