Half-yearly Report

MARSHALL MONTEAGLE HOLDINGS SOCIETE ANONYME (Incorporated in Luxembourg. RC Number B19600) Registered Office: 58 rue Charles Martel, L-2134, Luxembourg 4th June 2010 Unaudited interim results for the six months to 31st March 2010 and dividend declaration We report strong results for the six months to 31st March 2010 despite a background of continued economic uncertainty and volatility in equity and currency markets. Results * Group revenue is up 61% to US$93,570,000 for the six months to 31st March 2010, compared to US$58,105,000. In constant currency sales increased by US$18,247,000 (31%). * Operating profit of US$4,943,000 (2009 - US$2,450,000). In constant currency operating profit increased by US$1,311,000 (54%) * Headline earnings per share increased from US 4.9 cents to US 10.4 cents (full year to September 2009 - US 11.8 cents). * Interim dividend increased to US 3.00 cents (2009 - US 2.00 cents). * Net assets increased 13% from US$2.89 per share (31st March 2009) to US$3.26 per share. Net assets at 30th September 2009 were US$3.17 per share. Marshall Monteagle shares traded on 31st March 2010 at US$1.52 per share, a discount in excess of 50 % to net asset value. Import and Distribution Our shipping and distribution business in food and household consumer products achieved further growth during the six month period under review. This division continues to provide procurement, supply chain and risk management services to multiple retailers, wholesalers and manufacturers in Southern and Central Africa, Indian Ocean Islands and Australia. It brings the benefits of dedicated producers of quality raw materials, skilled technologists and first world production facilities to our customers. The division continues to operate in an extremely challenging environment with volatile raw material and currency movements compounded by inconsistent demand. It would appear that these conditions will remain over the next six months and probably well into the 2011 financial year. This division is well positioned to operate in these market conditions and continually strives to anticipate our clients' needs and exceed their expectations. Our tool and machinery distribution business in South Africa continues to be affected by the consumer slowdown which has continued into 2010, but the business posted a small increase in sales during the period. Further working capital improvements have been made with a reduction in stock levels and average debtor days. Management have introduced new products with the view of being able to offer customers a larger range of goods. Expenses are being managed within budget and profitability has improved during the period. Our Australian tool and machinery operations have been adversely affected by the contracting local economy, but with cash reserves we are well positioned to benefit when business starts to pick up again. Property Portfolio Our large multi-tenanted industrial property in San Diego still has a vacancy rate of 16% and the property market in Southern California remains very challenging. As mentioned in the 2009 annual report, the property is situated in one of the most sought after industrial areas in San Diego and the company is a long term holder of this quality asset. Despite the continuing slow-down of the local economy, the group's portfolio of commercial and light industrial properties in South Africa has continued to produce healthy returns due to increased efficiencies and vacancy levels staying well below acceptable norms. Investment Portfolio The recovery in global equity markets that started in the first half of calendar year 2009 continued into 2010, and the Company's portfolio's posted healthy gains during the six months. However, the months of April and May 2010 have been characterised by extreme volatility driven in the most part by the situation in Greece, other debt-laden countries in the Euro-zone and in the U.K. Our policy of holding a diverse portfolio of the world's finest companies is unchanged and we have substantial liquidity to capitalise on future buying opportunities. Merchant & Industrial Properties ("Merchant") The offer of 33 Marshall shares for every 100 Merchant shares made on 13th March 2009, closed on 29th January 2010. Acceptances were received in respect of 4,218,294 Merchant shares and Marshall accordingly now owns 94% of the issued share capital of Merchant. Conafex Holdings S.A. (unlisted associate) Conafex Holdings is a South African group that takes strategic stakes in businesses focused in the value-added agri-resource sector. Current holdings include stakes in a JSE listed fruit and vegetable trading and logistics business; a health products business; an herbal tea exporter and a coffee roasting business. Negotiations between the Company and Conafex, amongst others, for the disposal by the Company of its shares in Conafex in exchange for the coffee companies, have reached an advanced stage and agreement has been reached in principle subject to final due diligence. Halogen Holdings P.L.C. (unlisted associate) Halogen Holdings owns 78% of the total issued share capital of Heartstone Inns, a developing UK group of country pubs specialising in quality food. Heartstone currently owns five pubs, which it manages, and it is looking to acquire additional pubs through an associated cost efficient investment company which has already acquired a pub in Guildford, Surrey. Net Assets Assets outside Africa, net of minority interests and proposed dividends, stand at US$30,504,000, equal to US$1.70 per share, the balance of US$27,975,000, US$1.56 per share, were held in South Africa. Our total net assets amount to US$3.26 per share, which compares with a market price on 31st March 2010 of US$1.52 per share. Interim dividend We are pleased to announce that the Company has increased the interim dividend to US 3.0 cents per share from US 2.0 cents, to equalise the interim and final, based on those paid for 2009. The dividend is payable on 16th July 2010 to shareholders on the register at the close of business on 25th June 2010. Group Staff Once again we would like to thank all our employees for their hard work and we appreciate their efforts and the contribution that they have made during the period. Prospects The Board are pleased with the results for the first half of the financial year and despite recent volatility in equity markets and certain currencies, our conservative policies and diversity within the group give us confidence that we can continue to enhance shareholder value in the long term. J.M. Robotham D.C. Marshall Chairman Chief Executive Consolidated group income statement Half years ended Year ended 31st March 30th September 2010 2009 2009 Notes Unaudited Unaudited Audited US$000 US$000 US$000 Group revenue 2 93,570 58,105 117,262 Operating costs (88,627) (55,655) (110,392) ------------ ------------ ------------ Operating profit 4,943 2,450 6,870 Share of associated companies' (284) (266) (271) results Income from investments - dividends 159 156 350 - interest 131 71 596 Interest paid and similar charges (903) (675) (2,259) Realised exchange gains/(losses) 10 (296) (680) ------------ ------------ ------------ Profit on ordinary activities before 4,056 1,440 4,606 exceptional items and taxation Exceptional items 3 (290) (897) (3,455) ------------ ------------ ------------ Profit before taxation 2 3,766 543 1,151 Taxation (1,023) (436) (1,423) ------------ ------------ ------------ Profit after taxation 2,743 107 (272) Attributable to outside shareholders (1,183) (453) (1,169) ------------ ------------ ------------ Profit/(Loss) attributable to 1,560 (346) (1,441) shareholders ======= ======= ======= Interim dividend per share (US cents) 3.00c 2.00c 2.00c Recommended final dividend (US cents) n/a n/a 3.00c Reconciliation of headline earnings per share Basic earnings/(loss) per share (US 4 8.8c (2.1)c (8.3)c cents) Less exceptional items, net of tax 1.6c 7.0c 20.1c and minority interests (US cents) ------------ ------------ ------------ Headline earnings per share (US 4 10.4c 4.9c 11.8c cents) ======= ======= ======= Statement of changes in equity Exchange differences (118) (1,391) 2,432 Commercial property revaluations - (87) 57 Group share of fair value adjustments on 1,288 (3,701) (1,142) investments ------------ ------------ ------------ Net gains not recognised in the income 1,170 (5,179) 1,347 statement ======= ======= ======= New shares issued 414 - 3,171 Profit/(Loss) attributable to shareholders 1,560 (346) (1,441) Prior year dividends forfeit - - 89 Final dividend approved for the prior year (533) (496) (496) Interim dividend declared (537) (331) (353) ------------ ------------ ------------ 2,074 (6,352) 2,317 Shareholders' funds at start of period 56,405 54,088 54,088 ------------ ------------ ------------ Shareholders' funds at end of period 58,479 47,736 56,405 ======= ======= ======= Consolidated group balance sheet 31st March 30th September 2010 2009 2009 Unaudited Unaudited Audited US$000 US$000 US$000 Non-current assets Property, plant and equipment 39,363 34,961 38,740 Investments Associates 3,390 3,012 3,672 General portfolio - other listed investments 15,070 9,990 13,510 (note 5) Other unlisted 286 309 298 ------------ ------------ ------------ 58,109 48,272 56,220 ======= ======= ======= Current assets Inventories 20,715 17,675 22,837 Accounts receivable 28,059 18,529 22,633 Cash 11,516 10,451 11,347 ------------ ------------ ------------ 60,290 46,655 56,817 Current liabilities Accounts payable (falling due within one (35,148) (23,482) (32,222) year) ------------ ------------ ------------ Net current assets 25,142 23,173 24,595 ------------ ------------ ------------ Total assets less current liabilities 83,251 71,445 80,815 Accounts payable (falling due after more than (11,280) (11,166) (11,566) one year) Provisions for liabilities and deferred (2,642) (1,941) (2,632) taxation ------------ ------------ ------------ 69,329 58,338 66,617 Capital and reserves Share capital 26,893 24,805 26,673 Share premium account 4,905 3,407 4,710 Other reserves 8,152 5,744 7,332 Retained earnings 18,529 13,780 17,690 ------------ ------------ ------------ Shareholders' funds 58,479 47,736 56,405 Minority interests 10,850 10,602 10,212 ------------ ------------ ------------ 69,329 58,338 66,617 ======= ======= ======= Net assets per share US$ (note 6) 3.26 2.89 3.17 Consolidated cash flow statement Half years ended Year ended 31st March 30th September 2010 2009 2009 Unaudited Unaudited Audited US$000 US$000 US$000 Operating activities Cash generated from operating activities 509 2,244 3,338 Interest paid (903) (675) (2,259) Taxation paid (704) (1,008) (807) ------------ ------------ ------------ Net cash (outflow)/inflow from operating (1,098) 561 272 activities ------------ ------------ ------------ Investment activities Purchase of property, plant and equipment (389) (530) (1,108) (note 7) Purchase of investments (1,689) (198) (444) Disposal of tangible non-current assets - 24 329 Disposal of investments 1,235 2,715 3,108 Interest received and other investment 243 228 946 income ------------ ------------ ------------ Net cash (outflow)/inflow from investment (600) 2,239 2,831 activities ------------ ------------ ------------ Net cash (outflow)/inflow before financing (1,698) 2,800 3,103 ------------ ------------ ------------ Financing activities Net (decrease)/increase in long term debt (286) 89 489 New shares issued 414 - 3,022 Non-controlling interests acquired (425) - (3,172) Dividends paid - group - (496) (849) Dividends paid - outside shareholders (364) (39) (593) ------------ ------------ ------------ Net cash (outflow)/inflow from financing (661) (446) (1,103) activities ------------ ------------ ------------ Net increase in funds (2,359) 2,354 2,000 Net funds at start of period 9,445 7,094 7,094 Effect of foreign exchange rates 83 (403) 351 ------------ ------------ ------------ Net funds at end of period 7,169 9,045 9,445 ======= ======= ======= Notes to the interim statement 1. The results and the cash flow statement for the half-year ended 31st March 2010 are unaudited and comply with IAS 34 - Interim Financial Reporting. They have been prepared on the basis of accounting policies adopted in the accounts for the year ended 30th September 2009, which comply with International Financial Reporting Standards and Luxembourg law. The results for the year to 30th September 2009 are an abridged version of the Group's full accounts for that year, which have been filed with the relevant authorities. 2. The segmental analysis of revenue and operating profit is as follows: - Half years ended 31st March Year ended 30th September 2010 2009 2009 US$000 US$000 US$000 Revenue Result Revenue Result Revenue Result Analysed by activity:- Import/distribution 91,329 4,577 56,422 2,317 113,426 6,631 Property 2,204 798 1,646 623 3,779 1,305 Other 37 (142) 37 (263) 57 (120) ----------- ----------- ----------- ----------- ----------- ----------- 93,570 5,233 58,105 2,677 117,262 7,816 ----------- ----------- ----------- Share of associated (284) (266) (271) companies results:- Exchange gains/(losses) 10 (296) (680) Interest paid (903) (675) (2,259) ----------- ----------- ----------- 4,056 1,440 4,606 Exceptional items (290) (897) (3,455) ----------- ----------- ----------- Profit before tax 3,766 543 1,151 ----------- ----------- ----------- 3. The exceptional items arise from the following. 31st March 30th September 2010 2009 2009 US$000 US$000 US$000 Loss on disposal of listed and unlisted (61) (256) (244) investments Fair value adjustments of financial assets (24) - (161) Property revaluations - - (2,986) Loss on disposals of tangible fixed assets - - (3) (Charge)/Release of investment provisions re (149) (576) 89 associates Costs of share issue re acquisition of minority (56) (65) (150) interests Net exceptional items (290) (897) (3,455) 4. Earnings/(Loss) per share are based on results attributable to members and on the average of 17,782,325 shares in issue during the period (2009: March - 16,536,717; September - 17,320,428). Headline earnings per share exclude extraordinary items after tax net of minority interests. 5. A geographical analysis of the General Portfolio of investments is as follows:- United Kingdom 3,607 3,105 4,326 United States of America 4,219 2,716 3,467 Europe, excluding the U.K. 3,351 2,025 3,212 Switzerland 2,991 1,475 1,629 Japan 902 669 876 15,070 9,990 13,510 6. Net assets per share are based on Shareholders' funds after allowance for proposed dividends, divided by the number of shares in issue of 17,928,756 at the period end (2009: March - 16,536,717; September - 17,782,235). 7. There was capital expenditure of US$389,000 during the period (2009 - US$530,000). There was no contracted or outstanding authorised capital expenditure at the balance sheet date.

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