Wrap Text
Provisional reviewed results for the year ended 30th September 2018 and proposed dividend declaration
Marshall Monteagle PLC
(Incorporated in Jersey)
(Registration number: 102785)
(External registration number: 2010/024031/10)
JSE Code: MMP ISIN: JE00B5N88T08
(“Marshall Monteagle” or “the Company” or “the Group")
Provisional reviewed results for the year ended 30th September 2018 and proposed dividend
declaration
Chairman’s Statement
As an Investment Company, Marshall Monteagle has a broad and diversified range of investments in both
listed international companies and in trading and property owning subsidiary companies. Our objective is to
invest for the long term to generate reliable profits, cash flow and dividends for our shareholders and thereby
achieve capital growth for the benefit of all our stakeholders. The Group holds portfolios of leading investments
in the U.S.A., U.K., Europe 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 include interests in
food processing and logistics.
In recent years we have made substantial human investment with the intention of diversifying our international
trading base, enabling us to represent our world-wide suppliers in other countries. A good deal of our trading
profit still comes from South Africa and neighbouring territories.
We believe that our strong cash position and liquid investment portfolios give confidence not only to our
suppliers, tenants and customers, but also importantly, to our staff. The Group’s results could not have been
achieved without the hard work of all our employees and on behalf of the Board, I would like to thank them for
their continued contribution and dedication.
Over the last ten years the Board has been able to recommend increasing dividend payments each year to
shareholders. During this period our investment portfolio and property portfolio have increased in value.
However, the income from these investments in the form of dividends and net rentals have not kept up with
these increased values. Our trading investments during these times have prospered and produced good
results and substantial physical growth. The developed western world has experienced artificially low interest
rates over the last ten years. This seems now to be coming to an end and the US dollar has strengthened
against most currencies in which we trade. I am sure that all stakeholders understand that in uncertain times, it
is necessary that we maintain liquidity with minimal borrowings by retaining a good deal of our annual earnings.
Business Review
The Directors are pleased to report strong results for the year ended 30th September 2018.
Results of operations
• Net assets per share attributable to shareholders are US$2.25 (2017 – US$2.04). Net assets per share
have increased, reflecting increases in operating profits.
• The Directors are proposing a final dividend of 1.9 US cents, (2017 – 1.9 US Cents) making a total of 3.8
US cents (2017 – 3.7 US cents) for the year. Full details of the dividend will be published on 19 December
2018.
• Group revenue increased by 23% to US$417,199,000 compared with the same period last year. In
constant currency terms revenue increased by 20% to US$409,000,000.
• Group profit before tax increased by 56% to US$16,175,000 and in constant currency terms increased by
53% to US$15,895,000.
• Headline earnings of US$20.9 cents per share were 65.9% higher when compared with US$12.6 cents per
share in the same period last year.
• Basic earnings per share of US$27.9 cents per share were 100.7% higher when compared with US$13.9
cents per share in the same period last year.
Import and Distribution
The import and distribution businesses in food and household consumer products continue to perform well in a
constantly changing global environment and we continue to review our supply-chain to ensure that we remain
the most cost effective solution from factory to shelf. During the twelve-month period under review they
achieved a pleasing increase in turnover and product volumes shipped. Currency and raw material markets
have been extremely volatile and we expect these market conditions to continue into the new year. We are
well positioned to navigate these external factors that are beyond our control. This division provides
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.
The Metals and Minerals business continues to make 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 major
global fluctuation of supply and demand covering most metals and minerals and during the current financial
year the market has come back into a reasonable balance. This division provides fully integrated marketing,
logistics, finance and shipping services to the Southern African mining industry. We are committed to
partnering with producers who require a professional all-encompassing solution from collection from mine
through to delivery to end users on an international basis.
Improvements to the manufacturing process in our Coffee business have led to efficiencies and an adaptive
base from which the business is managed daily. We have improved our British Retail Consortium accreditation
to a higher level for the current year. The volatile currency and coffee prices internationally continue to put
pressure on margins.
Our Tool & Machinery import and distribution business trading performance continued to improve over last
year, and ended the year with a much improved profit. Our drive to extract value by better stock and debtor
control has proved very successful. This has freed up cash allowing us to investigate further product
opportunities. We are well positioned to continue growing market share.
The Group continues to fund the additional working capital requirements of these growing trading businesses
from its cash resources.
Investment Portfolio
We have added US$2m of seven-day treasury bills to the investment portfolio and invested a net US$1.5m in
stock market investments. Market movements in the value of share prices and exchange rate changes were
substantially lower at US$135,000 (2017: profit of US$1,681,000).
Property Portfolio
Rental income from our large multi-tenanted industrial property in San Diego has continued to grow and the
property is now fully let. The market for the purchase of commercial and industrial property in Southern
California remains highly competitive, though 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 maintained a steady return
due to tighter cost management and favourable lease renewals. Consequently, there has been an above
average increase in the underlying property values.
Dividend
The Directors are proposing a final dividend of 1.9 US cents, (2017 – 1.9 US cents) making a total of 3.8 US
cents (2017 – 3.7 US cents) for the year. Full details of the dividend will be published on 19 December 2018.
The salient dates are as follows
Last day to trade Tuesday 8 January 2019
Shares trade ex dividend Wednesday 9 January 2019
Record date Friday 11 January 2019
Pay date Friday 18 January 2019
No dematerialisation or rematerialisation of share certificates, nor transfer of shares between the registers in
Jersey and South Africa will take place between Wednesday 9 January 2019 and Friday 11 January 2019, both
dates inclusive.
By order of the Board
City Group P.L.C., Company Secretary
18 December 2018
Condensed Consolidated Statement of Profit or Loss and Other Comprehensive Income
For the year ended 30th September 2018 2017
Notes Reviewed Audited
US$000 US$000
Profit or Loss
Group revenue 1 417,199 340,052
Other income 2 5,813 3,269
423,012 343,321
Increase in inventories of finished goods and work in progress 3,996 4,938
Cost of finished goods, raw materials and consumables (339,121) (283,940)
Employee benefit expenses (20,608) (16,221)
Depreciation expenses (1,147) (927)
Other expenses 3 (47,834) (34,490)
Share of associated companies results 51 36
Finance expense (2,174) (2,316)
Profit before tax 16,175 10,401
Taxation (2,957) (2,902)
Profit for the year 13,218 7,499
Profit attributable to owners of the parent 10,011 4,985
Profit attributable to non-controlling interests 3,207 2,514
Basic and fully diluted earnings per share (US cents) 4 27.9c 13.9c
Other Comprehensive 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 (1,881) 453
Unrealised gain on revaluation of available for sale investments 51 2,093
Less applicable tax (136) (223)
Reclassification of previously recognised profits on disposal of
available for sale investments (203) (89)
Total of items that may be reclassified (2,169) 2,234
Items that will not be reclassified subsequently to profit and loss: -
Commercial property fair value adjustments 395 510
Less applicable tax (104) (85)
291 425
Total Other Comprehensive Income (1,878) 2,659
Total Comprehensive Income 11,340 10,158
Total Comprehensive Income attributable to owners of the parent 8,640 7,388
Total Comprehensive Income attributable to non-controlling
interests 2,700 2,770
Condensed Consolidated Statement of Changes in Equity
Called up Total Non-
share Share Other Retained Shareholders’ controlling Group
capital premium reserves earnings interests interests Total
US$000 US$000 US$000 US$000 US$000 US$000 US$000
Year ended 30th September 2017
(Loss)/Profit after tax - - (457) 5,442 4,985 2,514 7,499
Other Comprehensive Income - - 2,403 - 2,403 256 2,659
Total Comprehensive Income - - 1,946 5,442 7,388 2,770 10,158
Dividends paid - - - (1,326) (1,326) (1,732) (3,058)
Balances at start of year 8,964 23,606 (2,719) 37,344 67,195 8,002 75,197
Balances at end of year 8,964 23,606 (773) 41,460 73,257 9,040 82,297
Year ended 30th September 2018
Profit after tax - - 2,196 7,815 10,011 3,207 13,218
Other Comprehensive Expense - - (1,371) - (1,371) (507) (1,878)
Total Comprehensive Income - - 825 7,815 8,640 2,700 11,340
Dividends paid - - - (1,363) (1,363) (1,321) (2,684)
Balances at start of year 8,964 23,606 (773) 41,460 73,257 9,040 82,297
Balances at end of year 8,964 23,606 52 47,912 80,534 10,419 90,953
Condensed Consolidated Statement of Financial Position
at 30th September 2018 2017
Notes Reviewed Audited
US$000 US$000
Assets
Non-current assets
Investment property 23,565 20,923
Property, plant and equipment 11,524 10,397
Goodwill 175 183
Intangible assets 668 717
Deferred taxation 1,901 2,293
Investment in associated companies 192 187
Investments 5 31,292 27,994
69,317 62,694
Current assets
Inventories 29,409 29,162
Accounts receivable 6 67,589 56,589
Other financial assets 969 495
Tax recoverable 138 68
Cash and cash equivalents 8 18,482 21,177
116,587 107,491
Total assets 185,904 170,185
Current liabilities
Bank overdrafts 6 (12,571) (6,840)
Financial liabilities 6 (59,930) (59,045)
Other financial liabilities (305) (146)
Tax payable (498) (2,065)
Total current liabilities (73,304) (68,096)
Net current assets 43,283 39,395
Total assets less current liabilities 112,600 102,089
Non-current liabilities
Financial liabilities 6 (14,903) (13,571)
Deferred taxation (6,744) (6,221)
Total non-current liabilities (21,647) (19,792)
Net assets 90,953 82,297
Capital and reserves
Called up share capital 8,964 8,964
Share premium account 23,606 23,606
Other reserves 52 (773)
Retained earnings 47,912 41,460
Equity attributable to owners of the parent 80,534 73,257
Non-controlling interests 10,419 9,040
Total equity 90,953 82,297
Condensed Consolidated Statement of Cash Flows
For the year ended 30th September 2018 2017
Reviewed Audited
US$000 US$000
Operating activities
Profit for the year 13,218 7,499
Adjustments
Taxation 2,957 2,902
Depreciation 1,147 927
Share of associated companies’ results (51) (36)
Interest paid 2,174 2,316
Other income (5,434) (3,269)
Other expense – fair value adjustments and losses on disposal 1,633 893
15,644 11,232
Changes in working capital
Increase in inventories (1,575) (4,675)
Increase in receivables (13,054) (14,492)
Increase in payables 2,055 8,171
Cash generated by operations 3,070 236
Interest paid (2,174) (2,316)
Taxation paid (3,670) (2,943)
Cash outflow from operating activities (2,774) (5,023)
Investing activities
Purchase of and improvements to tangible non-current assets (2,311) (1,626)
Proceeds of disposal of tangible assets 87 1,452
Purchase of software (55) (190)
Acquisition of investments (5,686) (839)
Proceeds of disposal of investments 2,145 280
Dividends received 853 693
Interest received 1,067 869
Cash (outflow)/inflow from investing activities (3,900) 639
Cash outflow before financing (6,674) (4,384)
Financing activities
Drawdown of new long-term loans 1,273 1,238
Repayment of long term loans (182) (56)
Dividends paid to Group shareholders (1,363) (1,326)
Dividends paid to non-controlling interests of subsidiaries (1,321) (1,732)
Cash outflow from financing activities (1,593) (1,876)
Decrease in cash and cash equivalents (8,267) (6,260)
Cash and cash equivalents at 1st October 14,337 20,544
Effect of foreign exchange rate changes (159) 53
5
Cash and cash equivalents at 30th September (see note 8) 5,911 14,337
EXPLANATORY NOTES
1. SEGMENTAL REPORTING
For management purposes the Group is organised on a worldwide basis into the following main business
segments grouped by similar businesses and services:
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.
Investments in associated Companies involved in marketing and merchandising.
companies
Excluded from the Mainly transactions relating to the share portfolios, profits on disposals of
segmental analysis are tangible and intangible non-current assets, local head office costs and
Other activities interest.
There are no sales between entities in business segments and businesses carrying out similar trade and
services are grouped in the same segments.
2018 2017
Profit/ Profit/
Revenue (Loss) Revenue (Loss)
Segmental analysis of results US$000 US$000 US$000 US$000
Import and distribution * 414,085 14,693 337,256 11,022
Property 3,114 966 2,796 421
Investments in associated companies - 51 - 36
417,199 15,710 340,052 11,479
Other expenses (3,174) (2,031)
Other income 5,813 3,269
Finance expense (2,174) (2,316)
Profit before tax 16,175 10,401
* Includes sales to the Group’s major customers representing 10% or more of Group revenue:
2018 2017
US$000 US$000
Customer A 246,440 143,623
Customer B 31,198 38,878
1. SEGMENTAL REPORTING (continued)
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 investments, holding company assets and liabilities, cash balances,
taxation and borrowings. Capital expenditure comprises additions to property, plant and equipment.
Assets Liabilities Net assets Capital Depreciation
expenditure charge
US$000 US$000 US$000 US$000 US$000
Segmental analysis of net assets 30th September 2018
Import and distribution 108,875 (58,709) 50,166 2,288 (1,145)
Property 24,397 (669) 23,728 23 (2)
Investment in associated companies 192 - 192 - -
Unallocated (including cash, tax and debt) 52,440 (35,573) 16,867 - -
Consolidated total 185,904 (94,951) 90,953 2,311 (1,147)
Segmental analysis of net assets 30th September 2017
Import and distribution 97,812 (60,690) 37,122 1,583 (921)
Property 21,611 (623) 20,988 2 (6)
Investment in associated companies 187 - 187 - -
Unallocated (including cash, tax and debt) 50,575 (26,575) 24,000 - -
Consolidated total 170,185 (87,888) 82,297 1,585 (927)
Secondary Reporting Format – Geographical Segments
The Group operates in the following geographic areas.
Europe Location for part of the Group’s import and distribution business, the non-trading parent
company and most of the Group's investment portfolio.
Middle East Location for part of the Group’s import and distribution business.
United States Location for part of the Group's property portfolio and some of the Group’s investment
portfolio.
South Africa Location for the bulk of the Group's import and distribution business and part of the Group’s
property portfolio.
Group Non-Current
Segmental analysis at 30th September revenue assets Assets Liabilities
2018 US$000 US$000 US$000 US$000
Europe 79,783 140 58,029 (20,372)
Middle East 4,439 3 1,072 (489)
United States 1,254 12,694 26,525 (10,523)
Total outside South Africa 85,476 12,837 85,626 (31,384)
South Africa 331,723 23,287 100,278 (63,567)
Total 417,199 36,124 185,904 (94,951)
Group Non-Current
Segmental analysis at 30th September revenue assets Assets US$000 Liabilities
2017 US$000 US$000 US$000
Europe 66,246 135 52,526 (21,164)
Middle East 2,857 6 934 (434)
United States 1,176 11,290 26,801 (10,448)
Total outside South Africa 70,279 11,431 80,261 (32,046)
South Africa 269,773 20,976 89,924 (55,842)
Total 340,052 32,407 170,185 (87,888)
Assets and liabilities are shown by the geographical area in which the assets are located. Non-current assets
exclude investments and deferred tax.
2. OTHER INCOME
2018 2017
US$000 US$000
Fair value adjustments on investment property 3,202 494
Gain on disposal of non-current tangible assets 13 25
Recovery of impairment on non-current asset 10 37
Fair value adjustments on forward foreign exchange contracts - 64
Dividend income 819 657
Interest income 1,067 869
Other income 370 472
Exchange gains 100 255
Profit on disposal of investments 232 396
Total income 5,813 3,269
3. OTHER EXPENSES
2018 2017
US$000 US$000
Fair value adjustments on investment property - (221)
Fair value adjustments on foreign exchange contracts (324) -
Loss on disposal of non-current tangible assets (33) (18)
Fair value adjustments and losses on disposal (357) (239)
Exchange losses (1,232) (654)
Administration and other expenses (46,245) (33,597)
(47,834) (34,490)
2018 2017
US$000 US$000
Administration and other expenses include:
Marketing and sales expenses 7,679 9,712
Operating lease costs:
Premises 3,329 2,162
Plant, equipment and vehicles 203 108
Auditors’ fees of the Company and its subsidiaries
Audit related 445 402
Other - 3
4. EARNINGS PER SHARE
2018 2017
Basic and fully dilated earnings per share 27.9c 13.9c
Headline earnings per share 20.9c 12.6c
Earnings per share and headline earnings per share are based on the result attributable to shareholders of the
Group and on the weighted average of shares in issue of 35,857,512 (2017– 35,857,512). There are no
dilutive equity instruments in issue.
2018 2017
Reconciliation between basic and headline earnings per share US$000 US$000
Basic earnings 10,011 4,985
Adjusted for:
Gain on disposal of investment property, net of tax effect of US$Nil (2017 –
US$88,000) - (88)
Fair value adjustments on investment property, net of tax effect of US$879,000
(2017 – US$7,000) (2,323) (229)
Recovery of impairment of non-current assets (10) (37)
Reclassification of previously recognised gains on disposal of available for sale
investments (203) (89)
Net loss/(profit) on disposal of non-current tangible assets 20 (7)
Headline earnings 7,495 4,535
5. INVESTMENTS
Investments include listed investments with a fair value of US$26,481,000 (2017 – US$25,369,000), seven day
treasury bills of US$2,000,000 (2017- Nil) and an unlisted investment in Heartstone Inns Ltd (“Heartstone”)
with a fair value of US2,811,000 (2017 – US$ 2,625,000). The change in fair value for both listed and unlisted
investments in the year has been included in Other Comprehensive Income. Listed investments have
decreased in value by US$135,000 (2017 – increase of US$1,681,000) and the value of the investment in
Heartstone has increased by US$186,000 (2017 -US$412,000).
The unlisted investment in Heartstone is carried at fair value which is calculated based on the net asset value
per share at 30th September 2018 of US$1.90 less a discount of 10% to take into account the illiquidity of this
holding in a private company, based upon management accounts. A change in the net asset value by 16%
would change the fair value by US$449,000.
6. FINANCIAL INSTRUMENTS
The categories of financial instruments used by the Group are:
Level in 2018 2017
Fair Value
hierarchy US$000 US$000
Financial assets
Available for sale carried at fair value though Other
Comprehensive Income
Investments – listed 1 26,481 25,369
Invest – treasury bills 1 2,000 -
Investments – unlisted 3 2,811 2,625
At fair value through Profit or Loss
Forward foreign exchange contracts in Other financial assets 2 695 301
Loans and accounts receivable at amortised cost
Accounts receivable n/a 67,589 56,589
Accrued operating lease income on properties in Other financial
assets n/a 274 194
Cash at bank in Cash and cash equivalents n/a 18,453 20,323
Money market funds in Cash and cash equivalents n/a 29 854
Financial liabilities
At amortised cost
Trade and other payables
- current – in Current financial liabilities n/a 59,930 59,045
- non-current n/a 14,903 13,571
Bank overdrafts in Current financial liabilities n/a 12,571 6,840
Capitalised lease obligations in Other financial liabilities n/a 89 92
At fair value through Profit or Loss
Forward foreign exchange contracts in Other financial liabilities 2 216 54
The fair value of forward foreign exchange contracts is determined by market value quotes received from
independent financial institutions.
Accounts receivable and accounts payable due within one year are carried at amortised cost which
approximates to their fair values at the year-end, as the effect of discounting would be insignificant.
The carrying value of bank loans payable in more than one year approximates to their fair values. This is due
to the loans all attracting market related interest rates, and thus the effect of discounting (using a market rate
interest rate) when applying the effective interest rate method would result in no real difference between the
fair value determined and the carrying value of the bank loans.
7. SECURED LIABILITIES
Overdrafts of US$12,571,000 (2017 - US$6,840,000) are included in current liabilities. Group long-term
financial liabilities are secured on various properties and bear interest at commercial rates.
8. CASH AND CASH EQUIVALENTS
2017 Exchange Cash Flow 2018
movements movement
US$000 US$000 US$000 US$000
Cash at bank and in hand 20,323 (363) (1,507) 18,453
Money market funds 854 (74) (751) 29
21,177 (437) (2,258) 18,482
Bank overdrafts (6,840) 278 (6,009) (12,571)
14,337 (159) (8,267) 5,911
9. BASIS OF PREPARATION
This provisional report has been prepared in accordance with the framework, concepts and the measurement
and recognition requirements of International Financial Reporting Standards, the Financial Reporting
Pronouncements as issued by the Financial Reporting Standards Council, the Listings Requirements of the
JSE Limited, the financial reporting guides issued by the Accounting Practices Committee of the South African
Institute of Chartered Accountants (the “SAICA Financial Reporting Guides”) and contains the information
required by IAS 34 Interim Financial Reporting. The accounting policies applied in this provisional
announcement are consistent with those adopted and disclosed in the Group's annual report for the year
ended 30th September 2017.
Responsibility Statement
The directors take full responsibility for the preparation of the provisional report and the financial information
has been correctly extracted from the underlying annual financial statements.
Review Report
This provisional report for the year ended 30 September 2018 was prepared under the supervision of the
Financial Director, Mr E.J. Beale, and has been reviewed by the Company's auditor, Saffery Champness, who
expressed an unmodified review conclusion thereon. The review opinion is available for inspection at the
registered office of the Company. The audited annual report will be mailed to shareholders in early 2019.
18 December 2018
Johannesburg
Sponsor
Sasfin Capital (a member of the Sasfin Group)
Date: 18/12/2018 01:53:00 Produced by the JSE SENS Department. The SENS service is an information dissemination service administered by the JSE Limited ('JSE').
The JSE does not, whether expressly, tacitly or implicitly, represent, warrant or in any way guarantee the truth, accuracy or completeness of
the information published on SENS. The JSE, their officers, employees and agents accept no liability for (or in respect of) any direct,
indirect, incidental or consequential loss or damage of any kind or nature, howsoever arising, from the use of SENS or the use of, or reliance on,
information disseminated through SENS.