Final Results
Monteagle Holdings Société Anonyme
(Incorporated in Luxembourg - RC Luxembourg No. B 19600)
Registered office
6 rue Adolphe
Fischer,
27th December 2002 L-1520, Luxembourg
Results for the year ended 30thSeptember 2002
(subject to audit)
INTRODUCTION
Monteagle's objective is to achieve capital growth 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 property in the United States. The
group's import, export and distribution businesses operate internationally, and
in Southern Africa we have investment and property portfolios, and interests in
agriculture and mining.
PRESENTATION OF ACCOUNTS
In view of the lack of clarity in respect of exchange rates pertaining in
Zimbabwe exacerbated by the recently announced foreign exchange regulations,
the directors of our subsidiary, Conafex Holdings S.A. ('Conafex'), and our
associated company, Falcon Investment Holdings S.A. ('Falcon'), have decided
not to consolidate earnings emanating from Zimbabwe or the assets utilised to
generate those earnings. Instead their unaudited financial results include the
income from Zimbabwe received in United States dollars. During the year the
official exchange rate has remained constant at Z$55:US$1 despite inflation in
excess of 100%. However, there is an unofficial parallel market on which
exchange rates have moved from Z$360:US$1 at the start of the year to Z$720:
US$1 at the end of the year. We have restated last years Group results to give
a meaningful comparison.
RESULTS
The unaudited profits before exceptional items and tax, excluding Zimbabwe
operations but including income received from Zimbabwe, show an increase of 17%
from US$994,000 to US$1,166,000. Headline earnings, however, have decreased
from US 7 c per share to US 5 c per share, because of increased tax charges
incurred in South Africa. The exceptional profit for this year arises on the
sale of one of our investment properties in California, and from realised
profits on our investment portfolio, reduced by our share of a provision made
by Falcon against the carrying value of its investment in Zimbabwe gold mines.
DISTRIBUTION
Our South African tool and machinery business had a most successful year with
volumes increasing by approximately 35%. The division continues to secure a
greater share of the market through aggressive sourcing and innovative
marketing. The joint venture with our Italian suppliers of air compressors also
prospered, achieving approximately 50% growth in turnover. Both these
businesses enjoyed record profits. Our Australian subsidiary, operating mainly
in the hand tool industry, earned record profits on turnover which increased by
approximately 10%. Our international production and trading operations, in
private label food products, experienced an extremely good year, reflecting
solid growth in volumes, an increased market share on existing product lines,
and a broader base of products handled. A marketing company, specialising in
fast moving consumer goods, was acquired during the year to complement our
existing business, and a wine division has been formed to market and export
private label wines from South Africa. We are staffed by a young yet
experienced and very energetic team.
PROPERTY
The Group's commercial properties in San Diego, California, produced an
increased return this year. With US interest rates at a historic low, a
replacement long-term loan was negotiated on one of our properties at
advantageous terms. In August 2002, our other property, an office building, was
sold for US$3,260,000, generating a profit of US$389,000. The sale proceeds
will be re-invested in a property when a suitable opportunity occurs. The South
African property portfolio generated a small profit in the year and property
values remained constant over the year in hard currency terms.
INVESTMENT PORTFOLIOS
Throughout the year the climate in the listed investment world remained
subdued. The group has gradually added to its diverse list of quality equities
in the major first world markets; approximately US$1.5 million remains
uninvested at the year-end. We are entering our fourth year of falling indices
and it would appear that current market prices are looking conservative on a
long-term view.
FARMING (Conafex)
The agriculture businesses in Zimbabwe suffered relatively little disruption in
the year and produced reasonable crop yields. However profitability and cash
generation has been severely restricted by continuing exchange controls and
high inflation. As a result of the change in accounting policy for our
interests in Zimbabwe we have made exceptional provisions in the unaudited
accounts. By obtaining independent local valuations of our estates and assets
and converting the nil at parallel exchange rates we have effectively written
down the carrying value of our investment in agriculture.
MINING (Falcon)
The gold mines in Zimbabwe suffer from both exchange controls and price
controls. In spite of this, the mining companies have been able to continue
operating, but are not able to generate sufficient cash to permit the
exploration necessary to identify further reserves. In order to generate
sufficient cash to cover current costs, higher grade areas are being mined and,
under present circumstances, this has the effect of shortening the effective
life of the mines. Development work is continuing on the iodine deposit in
Chile. An environmental impact assessment has been submitted and negotiations
are in progress with potential joint venture partners who could assist with the
marketing of the iodine and nitrate by-products and who would provide a share
of the funding required to develop the project. The carrying value in the
unaudited accounts of the investment in our associated mining company has been
adjusted to reflect our share of its assets in Zimbabwe and the cost of its
investment in Chile.
GROUP PERSONELL
Your directors wish to record the amazing dedication of all our management and
staff during a challenging year. Whilst in certain areas the economic climate
has been far from helpful and in other areas the political influence has made
business conditions extremely trying, our teams of people have steadfastly
remained enthusiastic.
DIVIDEND
As feared, the current situation in Southern Africa has affected the income
stream to Luxembourg and as indicated the directors recommend a dividend for
the year of 5 US cents per share. Our net assets held in hard currencies have
also been affected by the weakness in world stock markets and now stand at
US$16,265,000 against US$17,211,000 last year (restated). This equates to
US$2.58 per share (2001 - US$2.73 - restated).
Shareholders will appreciate it is impossible to make a meaningful forecast for
our operations in Zimbabwe. Your Directors are optimistic about our other
divisions and trade for the first quarter has been extremely buoyant. Values of
properties and listed investments during the year ahead are likely to be
affected by the strained political tensions worldwide. The conservative nature
of our international listed holdings and the liquidity in our balance sheet has
been maintained.
J. M. Robotham D. C. Marshall
Chairman Chief Executive
Notice of Meeting and Declaration of Dividend
NOTICE OF MEETING
The Annual General Meeting will be held on Friday 28th March 2003 at 4.00 p.m.
at the registered office of the Company, 6 rue Adolphe Fischer L-1520
Luxembourg.
A dividend of 5.0 US cents per share is proposed to be paid on 2nd May 2003 to
those shareholders registered at the close of business on 28th March 2003.
Copies of the annual report and accounts will be posted to shareholders in
February 2003.
Consolidated Profit and Loss Account
FOR THE YEAR ENDED 30th SEPTEMBER 2002 2001 2001
Restated
US$000 US$000 US$000
Group revenue including share of 21,655 19,108 41,799
associated companies
Less share of revenue of associated (422) (342) (15,861)
companies
---------- --------- ----------
Group revenue 21,233 18,766 25,938
Operating costs (20,190) (18,106) (24,155)
---------- ---------- ----------
Operating profit 1,043 660 1,783
Share of associated companies results (72) (99) 2,052
Income from Zimbabwean investments - 541 688 -
dividends
Income from other investments - dividends 140 316 317
- interest 172 246 294
Interest paid and similar charges (658) (817) (1,494)
---------- ---------- ----------
Profit on ordinary activities before 1,166 994 2,952
exceptional items and tax
Exceptional items 467 5,917 6,450
---------- ---------- ----------
Profit before tax and minority interests 1,633 6,911 9,402
Tax (514) (364) (691)
---------- ---------- ----------
Profit after tax before minority interests 1,119 6,547 8,711
Minority interests (371) (165) (1,127)
---------- ---------- ----------
Profit attributable to shareholders of the 748 6,382 7,584
Group
---------- ---------- ----------
Basic and fully diluted earnings per share 12c 101c 120c
US cents
Headline earnings per share US cents 5c 7c 24c
Proposed dividend - US cents 5.0c 8.5c 8.5c
Consolidated Statement of Changes in Equity
Exchange differences on translation of 246 (227) (316)
the financial statements of foreign
entities
Change in interest in subsidiaries -- - (217)
Group share of deficit on revaluation of (5,012) - -
fixed assets
---------- ---------- ----------
Net loss not recognised in the income (4,766) (227) (533)
statement
Dividend paid for the previous year (536) (536) (536)
Net profit for the period 748 6,382 7,584
---------- ---------- ----------
Total recognised profits and increase in (4,554) 5,619 6,515
shareholders' funds
Shareholders' funds brought forward 30,727 25,108 25,136
---------- ---------- ----------
Shareholders' funds carried forward 26,173 30,727 31,651
---------- ---------- ----------
Consolidated Balance Sheet
AT 30th SEPTEMBER 2002 2001 2001
Restated
US$000 US$000 US$000
Assets
Non current assets
Property, plant and equipment 9,245 11,143 20,233
Investments 16,943 20,434 14,645
---------- ---------- ----------
26,188 31,577 34,878
Current assets ---------- ---------- ----------
Inventories 4,299 4,197 7,066
Accounts receivable 5,715 4,636 4,944
Cash and bank balances 5,022 7,935 8,083
---------- ---------- ----------
15,036 16,768 20,093
Current liabilities
Accounts payable (falling due within one (6,177) (6,525) (8,618)
year)
---------- ---------- ----------
Net current assets 8,859 10,243 11,475
---------- ---------- ----------
Total assets less current liabilities 35,047 41,820 46,353
Non current liabilities
Accounts payable (falling due after more (3,487) (3,485) (3,485)
than one year)
Deferred taxation 117 (27) (2,636)
---------- ---------- ----------
31,677 38,308 40,232
====== ====== ======
Capital and reserves
Called up share capital 9,450 9,450 9,450
Other reserves 6,268 9,675 6,133
Retained earnings 10,455 11,602 16,068
---------- ---------- ----------
Shareholders' funds 26,173 30,727 31,651
Minority interests 5,504 7,581 8,581
---------- ---------- ----------
31,677 38,308 40,232
====== ====== ======
Consolidated Cash Flow Statement
FOR THE YEAR ENDED 30th SEPTEMBER 2002 2001 2001
Restated
US$000 US$000 US$000
Operating activities
Cash (absorbed by)/ generated from (741) 2,331 1,802
operations
Interest paid (658) (817) (890)
Taxation paid (451) (598) (604)
---------- ---------- ----------
Net cash (outflow)/inflow from operating (1,850) 916 308
activities
---------- ---------- ----------
Investment activities
Purchase of tangible fixed assets (285) (354) (458)
Disposal of tangible fixed assets 3,287 - 19
Acquisition of investments (7,290) (3,703) (3,405)
Disposal of investments 2,966 12,814 13,946
Interest received and other investment 312 562 611
income
Dividends received from Zimbabwean 541 688 297
subsidiaries and associated companies
---------- ---------- ----------
Net cash (outflow)/inflow from investment (469) 10,007 11,010
activities
---------- ---------- ----------
Net cash (outflow)/inflow before (2,319) 10,923 11,318
financing
---------- ---------- ----------
Financing activities
Net increase/(decrease) in long term debt 3 (245) (245)
Foreign exchange cost of subsidiary's - - (610)
dividend
Dividend paid - group (536) (536) (536)
- minority shareholders (112) (170) (170)
---------- ---------- ----------
Net cash outflow from financing (645) (951) (1,561)
activities
---------- ---------- ----------
Net (decrease)/increase in debt (2,964) 9,972 9,757
Net funds at 1st October 7,495 (2,836) (2,750)
Effect of foreign exchange rate changes - 359 381
---------- ---------- ----------
Net funds at 30th September 4,531 7,495 7,388
---------- ---------- ----------
Notes:
1. As described in the Chairman's Review, the earnings, assets and
liabilities of Zimbabwe subsidiaries and associated companies have not
been consolidated. Investments have been reflected in accordance with IAS
39. 2001 comparatives have been restated. These preliminary results for
the year ended 30th September 2002 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 2001. The
2001 comparatives prior to restatement do not comply with the requirements
of IAS 29 (Financial reporting in Hyperinflationary Economies), otherwise
the financial statements comply with International Accounting Standards
and Luxembourg law in all material respects. The results are unaudited.
2. Group capital expenditure in the year was US$285,000 (2001 - US$458,000).
There were no capital expenditure commitments at 30th September 2002 (2001
- US$ nil).
3. Bank loans and overdrafts of US$491,000 (2001 - US$75,000) 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 distribution businesses in South
Africa and Australia, and a non-perishable food import business internationally
and in South Africa.
Property- investment properties in California and South Africa.
Farming - commercial agriculture and horticulture interests in Zimbabwe held
through Conafex and our associated company, Ariston.
Gold and iodine 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. An iodine development has been established in Chile.
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.
2002 2001
Restated
Segmental analysis of results US$000 US$000
Revenue Result Revenue Result
Import and distribution 19,342 2,221 16,874 1,064
Property 1,519 191 1,499 (22)
Farming 192 (26) 143 210
Gold mining - 57 - 74
Other, including investments 180 * (443) 250 * 6,433
---------- ---------- ---------- ----------
21,233 2,000 18,766 7,759
Share of revenue and income from
associated companies
Farming 422 229 342 101
Gold mining - (389) - (132)
---------- ----------
21,655 19,108
---------- ----------
Interest paid and other charges (674) (817)
---------- ----------
Profit before tax 1,166 6,911
---------- ----------
2001
Segmental analysis of results US$000
Revenue Result
Import and distribution 16,874 1,064
Property 1,499 (22)
Farming 5,100 309
Gold mining 2,215 432
Other 250 * 7,061
---------- ----------
25,938 8,844
Share of revenue and results of associated companies
Farming 10,027 2,482
Goldmining 5,834 (430)
----------
41,799
----------
Interest paid and other charges (1,494)
----------
Profit before tax 9,402
----------
* Other revenue excludes dividend income and the proceeds of sales of
investments, the profits of which are included in the result of this segment.
Segmental analysis of net assets
30thSeptember 2002 Assets Liabilities Net assets/ Capital Depreciation
(liabilities) Expenditure charge
US$000 US$000 US$000 US$000 US$000
Import and 8,470 5,271 3,199 171 54
distribution
Property 11,208 327 10,881 114 34
Farming - Group 8,570 432 8,138 - -
- Associates 2,339 - 2,339 - -
Gold mining - Group - - - - -
- Associates 125 - 125 - -
Other 3,286 1 3,285 - 8
Unallocated * 7,282 3,572 3,710 - -
---------- ---------- ---------- ---------- ----------
Consolidated total 41,280 9,603 31,677 285 96
---------- ---------- ---------- ---------- ----------
Segmental analysis of net assets
30thSeptember 2001 - Assets Liabilities Net assets/ Capital Depreciation
Restated (liabilities) Expenditure charge
US$000 US$000 US$000 US$000 US$000
Import/distribution 8,168 4,809 3,359 29 59
Property 11,645 266 11,379 215 -
Farming - Group 10,859 427 10,432 - -
- Associated companies 5,502 - 5,502 - -
Gold mining - Group - - - - -
- Associated company 514 - 514 - -
Other 3,772 658 3,114 53 28
Unallocated * 7,885 3,877 4,008 - -
---------- ---------- ---------- ---------- ----------
Consolidated total 48,345 10,037 38,308 297 87
---------- ---------- ---------- ---------- ----------
Segmental analysis of net assets
30thSeptember 2001 Assets Liabilities Net assets/ Capital Depreciation
(liabilities) Expenditure charge
US$000 US$000 US$000 US$000 US$000
Import and 8,168 4,809 3,359 29 59
distribution
Property 11,645 266 11,379 215 -
Farming - Group 12,180 1,793 10,387 124 137
- Associated companies 10,989 - 10,989 - -
Gold mining - Group 316 366 (50) 37 73
- Associated company 296 - 296 - -
Other 3,327 658 2,669 53 28
Unallocated * 8,050 6,847 1,203 - -
---------- ---------- ---------- ---------- ----------
Consolidated total 54,971 14,739 40,232 458 297
---------- ---------- ---------- ---------- ----------
* Unallocated assets and liabilities are cash balances, taxation and borrowings
2002 2001
Restated
US$000 US$000
Group Total Capital Group Total Capital
Revenue Net assets Expenditure Revenue Net assets Expenditure
US$000 US$000 US$000 US$000 US$000 US$000
South Africa 17,769 4,925 118 15,689 3,908 159
Zimbabwe - 10,487 - - 17,189 -
Australia 1,890 775 53 1.660 623 29
United States 1,334 7,313 114 1,274 7,428 56
Jersey - 4,635 - - 5,545 -
Luxembourg 240 3,542 - 143 3,615 53
---------- ---------- ---------- ---------- ---------- ----------
21,233 31,677 285 18,766 38,308 297
---------- ---------- ---------- ---------- ---------- ----------
2001
Group Total Capital
Revenue Net assets Expenditure
US$000 US$000 US$000
South Africa 15,689 3,908 159
Zimbabwe 7,315 19,113 161
Australia 1,660 623 29
United States 1,274 7,428 56
Jersey - 5,545 -
Luxembourg - 3,615 53
---------- ---------- ----------
25,938 40,232 458
---------- ---------- ----------
7
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