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Monteagle - Unaudited preliminary results for the year ended 30th September 2003
Monteagle Holdings Societe Anonyme
("Monteagle")
(Incorporated in Luxembourg - RC Luxembourg No. B 19600)
Share Code: MTE
ISIN Code: LU0035797272
Unaudited preliminary results for the year ended 30th September 2003
Dear Shareholder
INTRODUCTION
Monteagle"s objective is to achieve capital growth and a steadily progressive
dividend over the long term through a diversified range of investments. The
Company holds portfolios of leading investments in the U.S.A. and Europe and a
property in the United States. The Group"s import, export and distribution
businesses operate internationally, and in Southern Africa we have a property
portfolio and interests in agriculture and mining.
RESULTS
I am pleased to report on a very successful year in which a number of long-term
development projects have started to have a significant impact. The highlights
of the results are:
Group revenue up 74% to US$37 million (R327 million)
Operating profit up 23% to US$1.3 million (R11.5 million)
Dividend income from Zimbabwean investments down 90% to US$53,000 (R469,050)
Exceptional profits realised of US$2.4 million (R21.2 million) before tax,
US$1.3 million (R11.5 million) after tax and minorities
Basic and fully diluted earnings per share up 108% to 25 US cents (221 SA cents)
Net assets per share up 13% to US$4.70 (R33.61) of which US$3.21 (R22.95) are
held in Europe, the U.S.A. and Australia
The factors behind these movements are commented on below.
EXCEPTIONAL ITEMS
The exceptional profit for this year arises mainly from profits realised by a
subsidiary on the sale of a significant part of our investment in a Zimbabwean
associated company (US$1.2 million) (R10.6 million), the sale by our mining
associate, Falcon, of its iodine project in Chile (US$2.8 million) (R24.8
million), less a provision to reduce the equity accounted carrying value of our
investment in Falcon and its subsidiaries to market value (US$1.3 million) (R9.3
million).
NET ASSETS
Net assets per share, taking investments at market value, have increased by 13%
to US$4.70 (R33.61) (2002: US$4.15 (R43.74)). Net assets held in hard
currencies have increased, mainly because of retained operating profits and
profits on the exceptional sales referred to above, and now stand at
US$20,241,000 (R144,723,150) compared to US$16,265,000 (R171,433,100) last year.
US$$3.21 (R22.95) (2002 - US$2.58 (R27.19)) of total net assets are US$4.70
(R33.61) per share relate to assets owned in Europe, the U.S.A. and
Australia.Our policy is not to hedge our net asset position against fluctuations
in exchange rates and therefore our net asset position will fluctuate as
exchange rates move compared to the US dollar, which is our accounting currency.
IMPORT & DISTRIBUTION
Turnover at our shipping and distribution businesses has increased considerably
through organic growth achieved in existing markets, namely South Africa, Japan
and Australia. Additional growth has also been achieved from the acquisition of
a marketing business in South Africa that trades in related products. The
consolidation of a full year"s results reflects lower operating margins caused
mainly by volatile international currency markets experienced over the period,
particularly the strengthening of the South African rand against the US dollar.
Our tool import and distribution businesses in South Africa and Australia have
achieved solid growth during the year and continue to increase their market
share in both countries. The year under review has presented these businesses
with tremendous opportunities because of significant price deflation caused by
the weakening United States dollar. During the year a company operating in
overlapping markets was acquired and this has assisted in increasing market
penetration with an expanded product range. Consistent operating margins have
been maintained throughout the period.
PROPERTY
The profit contribution from this division is significantly less than last year,
due to the sale of our California office property in August 2002. As reported
at the interim stage we continue to look for a suitable multi-tenanted
commercial property in California to reinvest the funds realised. In the
meantime part of the sale proceeds have been returned to Europe and US$3 million
(R26.6 million) has been invested in US Treasury bills.
INVESTMENT PORTFOLIOS
The climate in the investment world has improved during the year, particularly
during the second six months when it became clear that the global economy was
recovering. The Group has continued to add to its diverse list of quality
equities in the major first world markets.
FARMING (Conafex)
The strategy to reduce the dependence on Zimbabwe and broaden the base through
greater regional diversity resulted in the disposal of a significant part of
Conafex"s investment in a Zimbabwe horticulture business for US$3 million (R26.5
million) and Conafex is in the process of reinvesting these proceeds, mainly in
Southern Africa. This sale generated an exceptional profit of US$1.2 million
(R10.6 million).
Conafex acquired a 50% stake in the Coffee Tea and Chocolate Company ("CTC"),
based in Cape Town, at the end of August 2003 for US$871,000 (R6.8 million).
CTC brings a new dimension to Conafex"s planned strategy of adding value to raw
agricultural products, mainly black and herbal teas and coffee, through
packaging, branding and marketing to all the leading supermarket chains in South
Africa. In November 2003 Conafex acquired a 17.5% shareholding in Intertrading
for US$754,000 (R5.4 million) with an option to acquire a further 15.6% (for
US$713,000 (R5.1 million)) prior to the end of November 2004. Intertrading is a
Johannesburg listed trader of South African produced fresh fruit, vegetables and
macadamia nuts, marketing this produce internationally via sea and air freight.
There will be substantial synergies arising with Conafex and its European
associates, who simultaneously acquired 17.5% of Intertrading.
The results, for a shortened eleven month accounting period to 31st August 2003,
reported for our farming operations are significantly worse than last year due
to the lack of dividend income from Zimbabwe, the timing of receipt of
commission income and the inherent delays in re-investing the proceeds from the
sale of Zimbabwean investments in income producing investments outside Zimbabwe.
MINING (Falcon)
Our mining associate Falcon has sold its iodine project in Chile and expects to
receive net proceeds of at least US$4 million (R35.4 million). This has
generated an exceptional profit, our share of which is US$1.2 million (R10.6
million) after tax and minorities. Falcon is looking to reinvest these proceeds
in a well-established and profitable business in a hard currency area.
The three remaining gold mines produced 847kg of gold in the year, a
considerable decrease (23%) from the 1,093kg produced in the previous year.
However, the rise in the price of gold by US$62 (R549) (19%) over the year,
combined with (i) an improvement in the exchange rate used in converting part of
the gold sales into Zimbabwe dollars and (ii) an increase in the proportion of
the proceeds paid in US dollars has meant that profits have increased
considerably in Zimbabwe dollar terms.
ZIMBABWE
Our agricultural and mining interests in Zimbabwe have again not been
consolidated as the ability of these businesses to remit earnings continues to
be very uncertain. Our objective for these operations is to preserve their
management infrastructure.
GROUP PERSONNEL
None of the above achievements would have been accomplished without the
continuing efforts of all our management and staff during another challenging
year. Most of our employees are based in Southern Africa where the significant
strengthening of the South African rand and the uncertain economic climate in
Zimbabwe have added extra challenges.
DIVIDEND
The Directors recommend an increased dividend for the year of 6.0 US cents per
share (2002: 5 US cents).
PROSPECTS
We expect that the diversification by Conafex will enhance earnings and Falcon
intends to complete an investment in a well-established, profitable operating
business in the ensuing year. However, the situation in Zimbabwe makes it
impossible to forecast the future for our operations in that country.
Our import and distribution businesses continue to grow and expand their range
of products. The decline in value of the US dollar will, if sustained, increase
the US dollar value of our properties and listed investments outside the United
States. Our international investment portfolio remains in "blue chip" stocks
and our balance sheet continues to be liquid. We continue to be optimistic for
the year ahead.
J. M. Robotham
Chairman
D. C. Marshall
Chief Executive
NOTICE OF MEETING AND DECLARATION OF DIVIDEND
The Annual General Meeting will be held on Friday 26th March 2004 at 4.00 p.m.
at the registered office of the Company, 6 rue Adolphe Fischer L-1520
Luxembourg.
A dividend of 6.0 US cents per share is proposed to be paid on 23rd April 2004
to those shareholders registered at the close of business on 26th March 2004.
2004
Last day to trade cum div Thursday, 18 March
Shares trade ex dividend on the JSE Securities
Exchange South Africa Friday, 19 March
Shares trade ex dividend on the Luxembourg
stock exchange Friday 19 March
Record date Friday 26 March
Pay Date Friday 23 April
Currency conversion date, noon on Wednesday 10 March
No dematerialisation or rematerialisation of share certificates on the South
African Register, nor may transfer of shares between the registers in Luxembourg
and South Africa take place between Friday 19 March 2004 and Friday 26 March
2004, both days inclusive.
Copies of the annual report and accounts will be posted to shareholders in early
2004.
Unaudited Consolidated Profit and Loss Account
2002 2003 For the year ended 2003 2002
30th September
US$000 R000 US$000 US$000
226,344 327,857 Group revenue 37,046 21,233
(215,224) (316,493) Operating costs (35,762) (20,190)
11,120 11,364 Operating profit 1,284 1,043
(768) (71) Share of associated (8) (72)
companies results
5,767 469 Income from 53 541
Zimbabwean
investments -
dividends
1,492 2,266 Income from other 256 140
investments -
dividends
1,834 1,416 - interest 160 172
(5,565) (4,726) Interest paid and (534) (522)
similar charges
(1,450) (195) Exchange (22) (136)
12,430 10,523 Profit on ordinary 1,189 1,166
activities before
exceptional items
and tax
4,978 21,691 Exceptional items 2,451 467
17,408 32,214 Profit before tax 3,640 1,633
and minority
interests
(5,479) (11,647) Tax (1,316) (514)
11,929 20,567 Profit after tax 2,324 1,119
before minority
interests
(3,955) (6,575) Minority interests (743) (371)
7,974 13,992 Profit attributable 1,581 748
to shareholders of
the Group
Reconciliation of
headline earnings
per share
SA cents SA cents
128 c 221 c Basic and fully 25 c 12
diluted earnings per
share (US cents)
(75) c (177) c Less exceptional (20) c (7)
item, net of tax and
minority interests
(US cents)
53 c 44 c Headline earnings 5 c 5
per share (US cents)
53 c 53 c Proposed dividend 6 c 5
Unaudited Consolidated Statement of Recognised Gains and Losses
Exchange differences
on translation of
the financial
statements of
foreign entities
(586) 10,744 1,214 (55)
(50,220) 8,762 Group share of fair 990 (4,711)
value adjustments
(50,806) 19,506 Net gain/(loss) not 2,204 (4,766)
recognised in the
income statement
(5,714) (2,788) Dividend paid for (315) (536)
the previous year
7,974 13,992 Net profit for the 1,581 748
period
(48,546) 30,710 Total recognised 3,470 (4,554)
profit/(loss) and
(decrease)/increase
in shareholders"
funds
47,866 (94,626) Effect of foreign
exchange rate
changes
276,543 275,863 Shareholders" funds 26,173 30,727
brought forward
275,863 211,947 Shareholders" funds 29,643 26,173
carried forward
Unaudited Consolidated Balance Sheet
2002 2003 AT 30th SEPTEMBER 2003 2002
R000 R000 US$000 US$000
Assets
Non current assets
97,442 77,206 Property, plant and 10,798 9,245
equipment
178,579 125,225 Investments 17,514 16,943
- 1,923 Intangibles 269 -
276,021 204,354 28,581 26,188
Current assets
45,312 51,938 Inventories 7,264 4,299
60,236 77,499 Accounts receivable 10,839 5,715
52,932 55,127 Cash and bank 7,710 5,022
balances
158,480 184,564 25,813 15,036
Current liabilities
(65,105) (92,564) Accounts payable (12,946) (6,177)
(falling due within
one year)
93,375 92,000 Net current assets 12,867 8,859
369,396 296,354 Total assets less 41,448 35,047
current liabilities
Non current
liabilities
(36,753) (34,964) Accounts payable (4,890) (3,487)
(falling due after
more than one year)
1,233 729 Deferred taxation 102 117
333,876 262,119 36,660 31,677
Capital and reserves
99,603 67,567 Called up share 9,450 9,450
capital
66,065 57,600 Other reserves 8,056 6,268
110,196 86,780 Retained earnings 12,137 10,455
275,864 211,947 Shareholders" funds 29,643 26,173
58,012 50,172 Minority interests 7,017 5,504
333,876 262,119 36,660 31,677
Unaudited Consolidated Cash Flow Statement
FOR THE YEAR ENDED 30th SEPTEMBER
2002 2003 2003 2002
R000 R000 US$000 US$000
Operating activities
(7,899) 2,124 Cash generated 240 (741)
/(absorbed) by
operations
(7,014) (4,726) Interest paid (534) (658)
(4,808) (6,142) Taxation paid (694) (451)
(19,721) (8,744) Net cash outflow (988) (1,850)
from operating
activities
Investment
activities
(3,004) (2,774) Purchase of tangible (388) (285)
fixed assets
(54,365) (13,300) Acquisition of (2,323) (5,158)
investments
34,645 86 Disposal of tangible 12 3,287
fixed assets
8,790 24,868 Disposal of 3,478 834
investments
3,288 2,974 Interest received 416 312
and other investment
income
5,702 379 Dividends received 53 541
from Zimbabwean
investments
(4,944) 12,233 Net cash inflow 1,711 (469)
/(outflow)/ from
investment
activities
(24,665) 3,489 Net cash 723 (2,319)
inflow/(outflow)
before financing
Financing activities
32 10,031 Net increase in long 1,403 3
term debt
(5,649) (2,252) Dividend paid - (315) (536)
group
(1,180) (200) - minority (28) (112)
shareholders
(6,797) 7,579 Net cash 1,060 (645)
inflow/(outflow)
from financing
activities
(31,462) 11,068 Net 1,783 (2,964)
increase/(decrease)
in funds
67,455 47,757 Net funds at 1st 4,531 7,495
October
11,764 (13,680) Effect of foreign -
exchange rate
changes
47,757 45,145 Net funds at 30th 6,314 4,531
September
Notes:
1.
As described in the Chairman"s Review, the earnings, assets and liabilities of
Zimbabwean subsidiaries and associated companies have not been consolidated.
Investments have been reflected in accordance with IAS 39.
These preliminary results for the year ended 30th September 2003 and the
balance sheet at that date, which are unaudited, have otherwise been prepared on
the basis of accounting policies adopted for the period ended 30th September
2002. The results are unaudited.
2.
Group capital expenditure in the year was US$388,000 (R2,774,200) (2002 -
US$285,000 (R3,003,900). There were no capital expenditure commitments at 30th
September 2003 (2002 - nil).
3.
Bank loans and overdrafts of US$1,396,000 (R9,981,400) (2002 - US$491,000
(R5,175,140)) are included in current liabilities.
Group long-term finance is secured on various local properties and bears
interest at local commercial rates.
SEGMENTAL REPORTING
Primary reporting format - business segments
The Group is organised on a worldwide basis into four main business segments:
Import and distribution
Tool import and non-perishable food exports in South Africa and exports to Japan
and Australia.
Farming
Commercial agriculture and horticulture interests in Zimbabwe held through
Conafex.
Gold mining
Three gold mines in Zimbabwe. One is owned 33.33% by the Group and 66.67% by
our associated company, Falcon, and two are owned by Falcon through its 57.1%
subsidiary, Falcon Gold Zimbabwe Limited.
Property
Investment properties in California and South Africa.
Other operations of the Group mainly comprise transactions relating to the share
portfolios, profits on disposals of tangible and intangible fixed assets and
local head office costs.
There are no sales or other transactions between business segments. Segment
assets consist of property, plant and equipment, inventories and receivables and
exclude cash balances. Segment liabilities are operating liabilities and
exclude items such as taxation and borrowings. Capital expenditure comprises
additions to property, plant and equipment.
Unallocated assets and liabilities are cash balances, taxation and borrowings
US$.
2,003 2,002
Segmental US$000 US$000
analysis of
results
Revenue Result Revenue Result
Import and 34,962 2,065 19,342 1,628
distribution
Property 1,107 181 1,519 508
Farming 738 (356) 192 13
Gold mining - 53 - 57
Other 239 * 1,337 180 * 109
operations
37,046 3,280 21,233 2,315
Share of
revenue of
associates and
dividend
income
Farming 500 11 422 229
Gold mining - 883 - (389)
37,546 21,655
Interest paid (534) (522)
and similar
charges
Profit before 3,640 1,633
tax
Unallocated assets and liabilities are cash balances, taxation and borrowings
ZAR
2,002 2,003
R000 R000 Segmental
analysis of
results
Revenue Result Revenue Result
206,186 17,354 309,414 18,275 Import and
distribution
16,192 5,415 9,797 1,602 Property
2,047 139 6,531 (3,151) Farming
- 608 - 469 Gold mining
1,919 1,162 2,115 11,833 Other
operations
226,344 24,678 327,857 29,028
Share of
revenue of
associates and
dividend
income
4,498 2,441 4,425 97 Farming
- (4,147) - 7,815 Gold mining
230,842 332,282
(5,564) (4,726) Interest paid
and similar
charges
17,408 32,214 Profit before
tax
* Other revenue excludes dividend income and the proceeds of sales of
investments and tangible assets, the profits of which are included in the result
of this segment.
The analysis for the year ended 30th September 2002 has been restated to re-
allocate property sale profits and sundry income items previously reported under
Property into Other operations.
Assets Liabi- Net Capital Deprecia-
lities assets/ Expendi- tion
(liabi- ture charge
lities)
US$000 US$000 US$000 US$000 US$000
Segmental analysis of net assets 30th September 2003
Segmental
analysis
of net
assets at
30th
September
2003
Import and 16,690 8,877 7,813 309 113
distributi
on
Property 10,016 424 9,592 56 12
Farming - 10,581 1,540 9,041 23 31
Group
- 360 - 360 - -
Associates
Gold 1,338 - 1,338 - -
mining -
Associates
Other 7,654 330 7,324 - 8
Unallocate 7,857 6,665 1,192 - -
d *
Consolidat 54,496 17,836 36,660 388 164
ed total
R000 R000 R000 R000 R000
Import and 119,334 63,471 55,863 2,209 1,000
distributi
on
Property 71,614 3,032 68,583 400 106
Farming - 75,654 11,011 64,643 165 274
Group
- 2,574 - 2,574 - -
Associates
Gold 9,567 - 9,567 - -
mining -
Associates
Other 54,726 2,359 52,366 - 71
Unallocate 56,178 47,655 8,523 - -
d *
Consolidat 389,647 127,528 262,119 2,774 1,451
ed total
Segmental analysis of net assets 30th September 2002
Assets Liabil Net Capital Deprecia
ities assets/ Expendit tion
(liabili ure charge
ties)
Segmental US$000 US$000 US$000 US$000 US$000
analysis
of net
assets
30th
September
2002
Import/dis 8,868 4,565 4,303 170 54
tribution
Property 8,923 314 8,609 115 34
Farming - 8,570 432 8,138 - -
Group
- 2,339 - 2,339 - -
Associates
Gold 565 - 565 - -
mining -
Associates
Other 6,973 331 6,642 - 8
Unallocate 5,103 4,022 1,081 - -
d *
Consolidat 41,341 9,664 31,677 285 96
ed total
R000 R000 R000 R000 R000
Import/dis 93,469 48,115 45,354 1,792 576
tribution
Property 94,048 3,309 90,739 1,212 362
Farming - 90,328 4,553 85,774 - -
Group
- 24,653 - 24,653 - -
Associates
Gold 5,955 - 5,955 - -
mining -
Associates
Other 73,495 3,489 70,007 - 85
Unallocate 53,786 42,392 11,394 - -
d *
Consolidat 435,734 101,85 333,876 3,004 1,023
ed total 8
2,003
US$000
Group Total Capital
Revenue Net Expenditure
Assets
US$000 US$000 US$000
South 23,197 7,958 309
Africa
Zimbabwe - 8,460 -
Australia 2,241 1,197 -
United 884 7,430 56
States
Jersey 9,986 4,190 -
Other 738 7,425 23
European
countries
37,046 36,660 388
R000 R000 R000
South 205,294 56,899 2,209
Africa
Zimbabwe - 60,489 -
Australia 19,833 8,558 -
United 7,823 53,125 400
States
Jersey 88,376 29,959 -
Other 6,531 53,089 165
European
countries
327,857 262,119 2,774
2,002
US$000
Group Total Capital
Revenue Net Expenditure
Assets
US$000 US$000 US$000
South 13,018 4,925 118
Africa
Zimbabwe - 10,487 -
Australia 1,890 775 53
United 1,334 7,313 114
States
Jersey 4,751 4,635 -
Other 240 3,542 -
European
countries
21,233 31,677 285
R000 R000 R000
South 138,772 51,909 1,244
Africa
Zimbabwe - 110,533 -
Australia 20,147 8,169 559
United 14,221 77,079 1,201
States
Jersey 50,646 48,853 -
Other 2,558 37,333 -
European
countries
226,344 333,876 3,004
2,003
US$000
Group Total Capital
Revenue Net Expenditure
Assets
US$000 US$000 US$000
South 23,197 7,958 309
Africa
Zimbabwe - 8,460 -
Australia 2,241 1,197 -
United 884 7,430 56
States
Jersey 9,986 4,190 -
Other 738 7,425 23
European
countries
37,046 36,660 388
R000 R000 R000
South 205,294 56,899 2,209
Africa
Zimbabwe - 60,489 -
Australia 19,833 8,558 -
United 7,823 53,125 400
States
Jersey 88,376 29,959 -
Other 6,531 53,089 165
European
countries
327,857 262,119 2,774
2,002
US$000
Group Total Capital
Revenue Net Expenditure
Assets
US$000 US$000 US$000
South 13,018 4,925 118
Africa
Zimbabwe - 10,487 -
Australia 1,890 775 53
United 1,334 7,313 114
States
Jersey 4,751 4,635 -
Other 240 3,542 -
European
countries
21,233 31,677 285
R000 R000 R000
South 138,772 51,909 1,244
Africa
Zimbabwe - 110,533 -
Australia 20,147 8,169 559
United 14,221 77,079 1,201
States
Jersey 50,646 48,853 -
Other 2,558 37,333 -
European
countries
226,344 333,876 3,004
* Unallocated assets and liabilities are cash balances taxation and
borrowings
The segmental analyses for 2002 have been restated following a re-assessment of
allocations between sectors for 2003
Date: 24/12/2003 11:15:58 AM
Produced by the JSE SENS Department
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