D i r e c t o r s of the Company · Marylebone Warwick Balfour Group Plc and Northbridge Industrial...

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† Member of the Audit Committee* Member of the Remuneration Committee

J.M. ROBOTHAM, OBE, FCA, MSI,

Non-executive Chairman, age 73 † *

Michael Robotham has been aD i rector of the Companysince 1982. He was appointednon-executive Chairman in1996 and resides in the UnitedKingdom. He is a CharteredAccountant, a member of theSecurities Institute and associated with J.M. Finn &Co., a firm of London stockbrokers. He is a non-executive director of HalogenHoldings S.A., LondonFinance & Investment GroupP.L.C. and Western SelectionP.L.C.

D.C. MARSHALL, Chief executive,

age 62

David Marshall has been aD i rector of the Companysince 1982 and was appointedChief Executive in 1996. Heresides in South Africa, wherehe has extensive interests inlisted trading, financial andproperty companies. In recentyears, he has taken a leadingrole in the re-organisation anddevelopment of medium sizedlisted companies in the U.K.and overseas. He is the c h a i rman of the board ofHalogen Holdings S.A. and anon-executive director ofConafex Holdings S.A. andexecutive c h a i rman ofMarshalls Limited. He is alsochairman of a number of listedEnglish companies, includingCreston plc, London Finance& Investment Group P. L . C .and Western Selection P.L.C.He is a non-executive directorof Finsbury Food Group plc,Marylebone Warwick BalfourGroup Plc and NorthbridgeIndustrial Services PLC.

A.R.C. BARCLAY, FCA,Non-executive,

age 67 *

Alastair Barclay joined theb o a rd in 2000. He is aChartered Accountant and adirector of Halogen HoldingsS.A. and We s t e rn SelectionP.L.C. Between 1980 and 1999he was chief executive of CityG roup P.L.C., Monteagle'sadministrative and corporatesecretary.

R.C. KERR, Non-executive,

age 57 †

Rory Kerr has been a Directorof the Company since 1982.He resides in Dublin and is qualified as a South African attorney, notary and c o n v e y a n c e r, as well as anEnglish solicitor. He is a p a rtner of Webber We n t z e lBowens and a Group Directorof Maitland International. Healso serves on the boards of anumber of publicly listed companies and investmentfunds. In addition, he acts ast rustee of Employee ShareIncentive Plans of a number ofpublicly listed companies(including the MonteagleEmployee Benefit Trust) and asa protector or member of advisory boards in relation to anumber of selected familytrusts.

D i r e c t o r s of the Company

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Shareholders I n f o r m a t i o n

FINANCIAL CALENDARFinancial year-end 30th September 2006Preliminary announcement of results 21st December 2006Annual General Meeting 30th March 2007

Interim dividend for 2006 Paid on 6th October 2006 to holders registered on 14th July 2006.

Final dividend for 2006 Payable on 20th April 2007 to holders registered on 23rd March 2007.

Half year 31st March 2007Half-year results announced June 2007

SHARE INFORMATIONThe Company has 13,440,000 shares in issue which are listed on the following stock exchanges and the respective shareprices at 20th February 2007, the latest practical date, were:

Luxembourg US$2.45Johannesburg ZAR16.00London £1.15

GROUP OFFICESLUXEMBOURG (REGISTERED OFFICE) UNITED KINGDOM6 rue Adolphe Fischer, 30 City Road,L-1520 Luxembourg London, EC1Y 2AG(PO Box 1361, L-1013 Luxembourg) Tel: + 44 20 7448 8950Tel.: + 352 40 25 05 1 E-mail: [email protected]

SOUTH AFRICA11 Sunbury Park, La Lucia Ridge Office Estate,La Lucia, 4051,(PO Box 4126, The Square 4021)Tel.: + 27 31 566 7600

REGISTRARS LISTING AND PAYING AGENTSMaitland Luxembourg S.A. Dexia-Banque Internationale à Luxembourg6 rue Adolphe Fischer, 69 route d'Esch,L-1520 Luxembourg, L-1470 Luxembourg(P.O. Box 1361, L-1013 Luxembourg)

TRANSFER AGENTSEUROPE SOUTH AFRICACapita Registrars Computershare Investor Services 2004 (Pty.) LimitedThe Registry, 34 Beckenham Road, 70 Marshall Street,Beckenham, Kent, Johannesburg 2001BR3 4TU, U.K. (P.O. Box 61051, Marshalltown 2107)Tel: 0870 162 3131 Tel: +27 11 370 5000

BANKERS INDEPENDENT AUDITORS ANDCredit Suisse (Luxembourg) S.A. STATUTORY AUDITORS56 Grand Rue AGN Horsburgh & Co.L-1660 Luxembourg Réviseur d'entreprises

15-17 avenue Gaston DiderichHSBC Investments (International) Limited L-1420 LuxembourgHSBC House, EsplanadeSt Helier, Jersey, JE4 8WP

First National Bank LimitedSmith/Field StreetDurbanSouth Africa


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Results in Brief, Analysis of Net Assets and Analysis of Shareholders

RESULTS IN BRIEF Group2006 2005

US$000 US$000

Revenue 78,859 70,243

Operating profit 4,838 4,323

Profit before tax and minority interests 4,461 5,531

Profit after exceptional items, tax and minority interests 1,747 2,690

Group share of revaluations and fair value adjustment 3,154 2,362

US cents US cents

Earnings per share 13.6 21.5

Headline earnings per share 11.3 12.0

Interim dividend declared 1.75 –Recommended dividend (2005 adjusted for bonus issue of shares) 2.50 4.00

4.25 4.00

Net assets per share attributable to shareholders US$3.02 US$2.96

2005 comparatives have been adjusted for the bonus issue of shares

2006US$m

South Africa 18.5

Australia 2.7

Europe 16.3

United States 13.8

51.3

Zimbabwe

South Africa

Australia

Europe

United States

55

50

45

40

35

30

25

20

15

10

5

0

ANALYSIS OF ASSETS, NET OF CURRENT LIABILITIESbefore long-term finance and minority interests

2002 2003 2004 2005 2006US$000 US$000 US$000 US$000 US$000

Financed by:Shareholders' equity 26.1 29.6 32.2 37.3 40.6Minorities 5.5 7.0 4.8 6.3 5.3Long-term finance 3.5 4.9 5.1 5.3 5.4

35.1 41.5 42.1 48.9 51.3

ANALYSIS OF SHAREHOLDERSNumber % Total %

Shareholding

1 – 999 501 69.4 165,480 1.21,000 – 9,999 125 17.3 365,790 2.7

10,000 – 49,999 71 9.8 1,591,259 11.950,000 – 99,999 8 1.1 527,792 3.9

100,000 – 249,999 9 1.3 1,475,165 11.0250,000 – 499,999 4 0.6 1,655,662 12.3500,000 – 999,999 3 0.4 2,031,064 15.1

Over 1,000,000 1 0.1 5,627,788 41.9722 100.0 13,440,000 100.0


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C h a i r m a n ’s R e v i e wfor the year ended 30th September 2006

INTRODUCTION

Monteagle's objective is to achieve capital growth and pay a steadily progressive dividend over the long term from a diversified range of investments. The Company holds portfolios of leading investments in the U.S.A., U.K., Europe and theFar East as well as commercial properties in the U.S.A. and South Africa. The Group's import, export and distribution businesses operate internationally and in South Africa we have interests in food production and processing.

RESULTS

Results for the year have been impressive with all divisions performing well. The highlights are:• Group revenues up 12% to US$78 million• Operating profit up 12% to US$4.8 million.• Net assets up 9% to US$40.7 million.• Total dividend for the year up 6% to US 4.25 cents.

IMPORT AND DISTRIBUTION

Our shipping and distribution businesses saw another year of growth in turnover and volumes of private label food and non-food products, credited mainly to organic growth and new product lines introduced in existing markets, namely South Africaand Australia. Our buying offices in South America and China, which were established in 2005, have assisted greatly inachieving additional economies of scale with international producers and suppliers in these key regions that we are activelydeveloping. We have recently established a new Industrial Division that is focused on the sourcing, pro c u rement and supply of products to the food service industry and will also supply raw materials and ingredients to food manufacturers andprocessors. Our operating structure continues to enable this division to achieve our goal of being the private label supplierof choice through the establishment of long-term strategic customer focused partnerships with retailers and wholesalersfocussing on effective delivery and customer service.

We import and distribute hand tools, compressors and other DIY household products into South Africa and Australia. Thesebusinesses produced satisfactory results during the year and the market for DIY and hardware in South Africa and Australiaremains buoyant. The consolidation of the hardware retail market in South Africa has presented our business with certainchallenges and margin pressure; however we strive to be the supplier of choice to the hardware market.

PROPERTY

Our multi-tenanted industrial property in California is fully let and continues to produce satisfactory returns. During the yearwe decided to take advantage of the competitive borrowing environment in the U.S. and refinanced our San Diego property on better terms. The liquidity raised from the loan, which was received after the year-end, has been added to our portfolio of U.S. equities and Treasury Bills but is earmarked for further property in the San Diego region when a suitableopportunity arises. Our investment properties in South Africa also continue to perform well.

INVESTMENT PORTFOLIOS

Our diverse portfolio of equities showed some healthy appreciation during the year, particularly Europe and Switzerland,which again outperformed the U.S. and other first world markets. We remain invested in quality companies in the U.S., U.K.,Europe and the Far East. We are cautiously optimistic about the outlook for equities in 2007.

CONAFEX HOLDINGS

Conafex Holdings Société Anonyme (‘Conafex’) is an African focussed agri-resource group listed in Luxembourg and SouthAfrica. Conafex takes strategic stakes in businesses focused on horticulture and niche and value-added agriculture. Duringthe year Conafex ceased to be a subsidiary following the raising of funds by means of a share placing, reducing our interestfrom 60.4% to 43.7%. We now value our investment in this associate at market value and have therefore made an exceptional provision against the cost of this investment of US$467,000 (2005: not applicable).


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HALOGEN HOLDINGS

Halogen Holdings Société Anonyme continues to seek an established profitable business in the United Kingdom in whichit can re-invest its US$3.6 million cash balances. We value our investment in Halogen at market value and have thereforemade an exceptional provision against the cost of this investment of US$252,000 (2005: provision of US$460,000).

OTHER INTERESTS

Our interests in Zimbabwe have again not been consolidated as the ability of these businesses to remit earnings remainsuncertain. The value of our investment in these businesses has been fully provided against in previous years and thereforedoes not appear in our accounts.

GROUP PERSONNEL

The continued improvement in our results would not be possible without the hard work of our employees. We would like tothank all our staff for their contribution to the satisfactory results for the year. An employee benefit trust has been createdand holds 840,000 to incentivise key personnel.

NET ASSETS

Net assets in hard currencies have increased 7% to US$28,601,000 and other assets, all in South Africa, have increased 15%to US$12,051,000. These increases are due to property revaluations, increased investment values and retained profits.

DIVIDEND

We declared an interim dividend of 1.75 US cents per share which was paid in October. We are pleased to recommend afinal dividend of 2.50 US cents, to give an increased dividend of 4.25 US cents per share for the year (2005: 4 US cents,adjusted for the bonus issue).

PROSPECTS

Our diverse mix of businesses and investments gives us confidence that in 2007 we will again be able to enhance shareholder value. This is despite evidence that growth has slowed in certain first world markets, together with concernsabout the U.S. housing market and continued currency volatility around the world.

J. M. RobothamChairman

31st Janauary 2007


2006 2005Notes US$000 US$000

Group revenue 3 78,859 70,243 Operating costs (74,021) (65,920)

Operating profit 4 4,838 4,323 Share of associated companies' results 156 129 Income from Zimbabwean investments – dividends 5 7Income from other investments – dividends 375 343

– interest 189 296 Interest paid and similar charges (1,316) (1,036)Realised exchange (losses)/gains (123) 124

Profit on ordinary activities before exceptional items and tax 4,124 4,186 Exceptional items 5 337 1,345

Profit before tax and minority interests 3 4,461 5,531 Taxation 6 (1,591) (1,560)

Profit after tax before minority interests 2,870 3,971 Minority interests (1,123) (1,281)

Profit attributable to shareholders of the Group 1,747 2,690

Basic and fully diluted earnings per share (US cents) 7 13.6c *21.5cHeadline earnings per share (US cents) 7 11.3c *12.0c

Interim dividend paid (US cents) 8 1.75c –Recommended dividend (US cents) 8 2.50c *4.00cTotal 4.25c 4.00c

*Adjusted for the bonus issue of shares.

Exchange differences on translation of the financial statements of foreign entities (1,432) 442

Group share of fair value adjustments 1,278 1,173 Group share of revaluations 1,876 1,189 Net gains not recognised in the income statement 1,722 2,804 Dividend paid for the previous year (504) (441)Shares issued 630 –Interim dividend declared (235) –Prior years' unclaimed dividends forfeited 10 63 Net profit for the period 1,747 2,690 Total recognised gains and increase in shareholders' funds 3,370 5,116

Shareholders' funds brought forward 37,282 32,166

Shareholders' funds carried forward 40,652 37,282

The notes on pages 9 to 22 form part of these financial statements.

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Consolidated Profit and Loss A c c o u n tfor the year ended 30th September 2006

Consolidated Statement of Recognised Gains and Losses


7

Consolidated Balance Sheetat 30th September 2006

2006 2005Notes US$000 US$000

AssetsNon current assetsProperty, plant and equipment 9 18,314 15,994 Investments 10 22,471 16,494

40,785 32,488 Current assetsInventories 11 13,111 13,255 Accounts receivable 12 13,732 12,987 Cash and bank balances 1,979 8,009

28,822 34,251 Current liabilitiesAccounts payable (falling due within one year) 13(a) (18,286) (17,747)

Net current assets 10,536 16,504

Total assets less current liabilities 51,321 48,992

Non current liabilitiesAccounts payable (falling due after more than one year) 13(b) (5,248) (5,366)

Deferred taxation 14 (129) (73)

45,944 43,553

Capital and reservesCalled up share capital (note (d) page 25) 20,160 9,450 Other reserves 15 11,141 14,317 Retained earnings 16 9,351 13,515 Shareholders' funds 40,652 37,282

Minority interests 5,292 6,271 45,944 43,553

Approved by the Board on 31st January 2007

J.M. ROBOTHAMChairman

D.C. MARSHALLChief Executive

The notes on pages 9 to 22 and note (d) on page 25 form part of these financial statements.


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Consolidated Cash Flow Statementfor the year ended 30th September 2006

2006 2005Notes US$000 US$000

Operating activitiesCash generated/(absorbed) by operations 17(a) 3,069 (650)Interest paid (1,316) (1,036)Taxation paid (1,702) (1,199)

Net cash inflow/(outflow) from operating activities 51 (2,885)

Investment activitiesPurchase of tangible fixed assets (1,345) (604)Acquisition of investments (7,827) (4,323)Disposal of investment in joint venture – 1,820 Disposal of tangible fixed assets 50 101 Disposal of investments 3,537 4,959 Interest received and other investment income 564 727 Dividends received from Zimbabwean investments 5 7

Net cash (outflow)/inflow from investment activities (5,016) 2,687

Net cash outflow before financing (4,965) (198)

Financing activitiesNet (decrease)/increase in long term debt 17(e) (83) 250 Dividend paid – group (504) (441)

– minority shareholders – (2)

Net cash outflow from financing activities (587) (193)

Net decrease in funds 17(c) (5,552) (391)

Net funds at 1st October 4,431 4,957 Effect of foreign exchange rate changes 76 (135)

Net funds at 30th September 17(c) (1,045) 4,431



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Notes to Consolidated Financial Statementsfor the year ended 30th September 2006

1. GENERAL

The Company is incorporated as a société anonyme with financial holding company status under the Law of 31st July1929, as amended, in the Grand Duchy of Luxembourg. In view of the international nature of the Group's operations,and as permitted by Luxembourg law, the amounts shown in these consolidated financial statements are presented inUnited States dollars (‘US$’).

2. ACCOUNTING POLICIES

GeneralThe principal accounting policies of the Group, which are set out below, comply with International Financial ReportingStandards in all respects and with Luxembourg legal requirements. These policies have been consistently applied. Noadjustments have been made to comparative amounts as a consequence of the issue of new or updated standards asnone have had a material effect on those amounts previously reported.

(a) Basis of preparationThe consolidated financial statements are prepared under the historical cost convention, with the exception of investments and certain fixed assets which have been included at revalued amounts in accordance with IAS 16 and IAS 39 and on the going concern basis.

(b) Basis of ConsolidationThe consolidated accounts incorporate the financial statements of the Company and its subsidiary undertakings (all of which are companies), being those companies in which the Group, directly or indirectly, has an interest of more than one-half of the voting rights and is able to exercise control over the operations. Separate disclosure is made of minority interests.

The results of subsidiaries acquired during the year are included from the date of acquisition and for those subsidiaries disposed of during the year up to the date of disposal. On acquisition, the purchase consideration is allocated over the fair values of net tangible assets. All inter-group transactions and balances are eliminated on consolidation.

Dividends are accounted for when received. Dividends declared but not yet received have not been accrued.

The carrying amounts of the Group's and Company's assets are reviewed at each balance sheet date to determinewhether there is any indication of impairment. If there is any indication that an asset may be impaired, its recoverable amount is estimated. The recoverable amount is the higher of its net selling price and its value in use.

Trade and other receivables originated by the Group are stated at cost less provision for doubtful debts.

(c) Associated CompaniesAn associated company is one in which the Group's interest is considered to be long-term, is substantial and which the Group does not control but over which it is able to exercise a significant influence, having due regardto the disposition of the other shareholdings.

The Consolidated Profit and Loss Account includes the Group's share of the results of associates (equity accounting). The results of associates acquired during the year are included from the date of acquisition. The results of associates disposed of during the year are included up to the date of disposal. The carrying value of associates in the Consolidated Balance Sheet is fair value, which, in the case of listed associates, is market value.

(d) Revenue and Operating CostsRevenue comprises the value receivable for the sale of goods, services and property income. Revenue is stated aftereliminating sales within the Group. Operating costs include cost of sales, administration and delivery expenses.


10

2. ACCOUNTING POLICIES (continued)

(e) Depreciation and RevaluationDepreciation has been calculated on a straight line basis to write off the cost, less any expected residual value, offixed assets over their useful lives. The rates of depreciation are shown in note 9. Depre c i a t i o nis not provided on freehold land and buildings held as investment properties which are stated at valuation. All investment property maintenance and running costs are charged against revenue in the year that they occur.These properties are revalued annually. Any surplus on revaluation in excess of any deficit previously written offin respect of that property is taken to revaluation reserve, any excess of deficits arising over existing related revaluation reserves are expensed. On disposal of revalued assets, amounts in revaluation and other reserves relating to that asset are transferred to retained earnings.

(f) InvestmentsListed investments are stated at market value. Unlisted investments are stated at cost less amounts written offwhere, in the opinion of the Directors, a permanent decline in value has arisen.

Gains and losses on disposal of investments are included as exceptional items in the Consolidated Profit and LossAccount, unrealised gains and losses are included in the Consolidated Statement of Recognised Gains and Losses.

Negative goodwill arising from acquisitions is written off on consolidation.

(g) InventoriesInventories are stated at the lower of cost and net realisable value. Cost is determined on the first-in, first-out method or the average cost for raw materials. Net realisable value is the estimated selling price in the ordinarycourse of business, less completion and selling costs. Obsolete, redundant and slow moving inventories areidentified on a regular basis and are written down to their estimated realiseable values.

(h) TaxationTax payable on distributions to the Company from the retained earnings of subsidiaries or associates is provided for where there is a current intention to remit such earnings.

Deferred taxation is provided at current rates using the balance sheet liability method. Full provision is made for all temporary differences between the taxation base of assets and the liabilities and their balance sheet carrying values. Assets are not raised in respect of deferred taxation on assessed losses unless it is probable that futuretaxable income will be available against which the deferred tax asset can be realised in the foreseeable future.

(i) LeasesWhere the substance of a lease is a financing arrangement, the asset and related obligation are respectively accounted for as a fixed asset and as a current or long-term liability. The asset is depreciated in accordance with the group policy and finance costs are charged to income in relation to the outstanding liability throughout the lease period.

The costs of leasing other assets are charged to income as they occur.

(j) Pension ObligationsThe policy of the Group is to provide retirement benefits for all its employees through defined contribution anddefined benefit schemes. Current contributions to pension funds are charged against income as incurred. The cost of improved defined benefits or any deficits arising from time to time on defined benefit funds are funded byGroup companies through lump sum payments or through increased future contributions. The costs to the Group are charged against income in the year to which they relate.

Notes to Consolidated Financial Statements ( c o n t i n u e d )for the year ended 30th September 2006


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2. ACCOUNTING POLICIES (continued)

(k) Foreign CurrenciesAll exchange gains and losses on settlement of foreign currency transactions or the translation of monetaryassets and liabilities at year-end exchange rates are included in the Profit and Loss Account of the relevant Group company.

On consolidation, Profit and Loss Accounts of companies expressed in a currency other than US$ are translatedat average rates of exchange for the year. Balance Sheets are translated at the rates of exchange at the end of the year.

Differences on translation arising in changes in the US$ value of overseas net assets held at the beginning of theaccounting period to that at the end of the period are shown as a movement on reserves. The exchange loss or profit arising from the difference in rates used for Profit and Loss and Balance Sheet purposes is also taken to reserves.

The rates used are:

(l) FundsFor the purposes of the Cash Flow Statement, funds comprise cash in hand, deposits held at call with banks and investments in money market instruments net of bank overdrafts. In the Balance Sheet, bank overdrafts areincluded in accounts payable.

(m) Financial instrumentsFinancial AssetsThe principal financial assets are the portfolio investments and the investments in associates, cash and bank balances and the accounts receivable. The portfolio investments are stated at market values; investments in associates are stated in accordance with accounting policy note 2(c) and the other assets are stated at their nominal values.

Financial LiabilitiesFinancial liabilities are classified according to the substance of the contractual agreements entered into. The principal financial liabilities are bank loans and accounts payable.

(n) Comparative figuresWhere necessary, comparative figures have been reclassified.

Profit & Loss Account Balance Sheet2006 2005 2006 2005US$ US$ US$ US$

Australia Aus$1 = 0.746 0.767 0.746 0.764South Africa ZAR1 = 0.151 0.161 0.129 0.157Euro 1 = 1.234 1.271 1.267 1.206United Kingdom £1 = 1.803 1.850 1.868 1.769


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3. SEGMENTAL REPORTING

Primary reporting format – business segmentsThe Group is organised on a worldwide basis into the following main business segments:

Import and distribution Tool imports and non-perishable food imports to, and exports from, South Africa. Non-perishable food exports to Japan and Australia.

Food production and processing Horticulture, niche and value-added agriculture in South Africa through an associated company, Conafex.

Property Investment properties in California and South Africa.

Other operations Mainly transactions relating to the share portfolios, profits on disposals of tangible and intangible fixed assets and local head office costs.

There are no sales between business segments. Segment assets consist of property, plant and equipment, inventoriesand 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.

2006 2005Segmental analysis of results US$000 US$000

Revenue Result Revenue Result

Import and distribution 73,963 5,681 66,342 5,450 Property 1,435 375 1,389 301 Food production and processing 3,461 174 2,274 122 Other activities – 1,030 * 238 1,018

78,859 7,260 70,243 6,891

Income from Zimbabwean investment 5 7Share of associates and dividend income:

Food production and processing 223 212Other (67) (83)

Interest paid and similar charges (1,316) (1,036)6,105 5,991

Costs of bonus issue, capital increase and Employee Benefit Trust (925) –Provisions against associates (719) (460)Profit before tax 4,461 5,531

* Revenue of Other activities 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.



3. SEGMENTAL REPORTING (continued)

Assets Liabilities Net assets/ Capital Depreciation (liabilities) expenditure charge

US$000 US$000 US$000 US$000 US$000

Segmental analysis of net assets 30th September 2006Import and distribution 27,722 13,678 14,044 821 158Property 14,814 585 14,229 306 16Listed associate – Food production 1,253 – 1,253 – –Listed associate – Other 1,286 – 1,286 – –Other activities (including

investments) 20,145 643 19,502 218 8Unallocated (including cash, tax

and debt) 4,387 8,757 (4,370) – –Consolidated total 69,607 23,663 45,944 1,345 182

Segmental analysis of net assets 30th September 2005Import and distribution 26,647 12,602 14,045 479 235Property 13,594 177 13,417 123 55Food production and processing

– Group 1,685 458 1,227 2 39– Associates 974 – 974 – –

Listed associate 1,610 – 1,610 – –Other activities (including

investments) 12,178 1,046 11,132 – 8Unallocated (including cash, tax

and debt) 10,051 8,903 1,148 – –Consolidated total 66,739 23,186 43,553 604 337

Secondary reporting format – geographical segmentsThe Group operates in the following countries and states.Luxembourg The non-trading location of the parent company, including part of the Group investment portfolio.South Africa Location of the bulk of the Group's import and distribution business and part of the Group's

property portfolio.Australia Location for part of the Group's import and distribution business.United States Part of the Group's property portfolio is located there.Jersey Location of part of the Group's import and distribution business and part of the Group's

investment portfolio.

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2006 2005Group Total Capital Group Total Capital

revenue net assets expenditure revenue net assets expenditureUS$000 US$000 US$000 US$000 US$000 US$000

Australia 2,992 2,568 239 3,085 2,321 133United States 1,089 10,983 94 1,048 9,301 70Jersey 20,189 8,370 – 17,290 7,008 –Other countries 458 7,934 – 1,072 10,358 2Total outside Africa 24,728 29,855 333 22,495 28,988 205South Africa 54,131 16,089 1,012 47,748 14,565 399Total 78,859 45,944 1,345 70,243 43,553 604

Total assets and capital expenditure are shown by the geographical area in which the assets are located.


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5. EXCEPTIONAL ITEMS

2006 2005US$000 US$000

IncomeSurplus on disposal of investments 1,405 1,805 Release of investment provisions 136 –Property devaluation provision now recovered 449 –Total income 1,990 1,805

ChargesProvision against associates (719) (460)Costs relating to share bonus issue and Employee Benefit Trust (925) –Loss on disposal of tangible fixed assets (9) –Exceptional items – net income 337 1,345

4. OPERATING PROFIT AND EMPLOYEES

2006 2005US$000 US$000

Operating profit of US$4,838,000 (2005 – US$4,323,000) is stated after deducting

Depreciation 182 337 Operating lease costs

Premises 208 177 Plant, equipment and vehicles 37 33

Staff costs:Salaries and wages 5,411 4,672 Social security costs 214 140 Pension costs 390 274

Independent auditors’ fees of the Company and its subsidiariesAudit related (2005 – including Conafex) 126 185Other 25 2

Related party fees 273 226

The key management team, excluding non-executive directors, of D.C. Marshall, W.H. Marshall, A.A. Dumas, B.K. Hughes, G.K. Vacy-Lyle and A.C. Vacy-Lyle received total remuneration of US$796,000 (2005 – US$782,000)in the year.

Related party fees arise from the provision of consultancy and administration services to Group companies by Europeancompanies, which, through board representation and/or shareholdings, are classified as related parties.

The average number of employees of the Group was:

2006 2005

Production, warehousing and manual 152 100 Administration 52 53 Management, including Directors 30 31

234 184



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6. TAXATION

2006 2005US$000 US$000

Capital tax 44 37 Corporate tax – current year 1,442 1,337 Withholding tax 46 30 Deferred taxation (40) 98

1,492 1,502 Share of associated companies 99 58

1,591 1,560

Reconciliation of the expected tax charge of Group companies to the actual tax charge is as follows:

Expected tax charge at statutory rates 1,328 1,329 Withholding taxes 46 30 Capital taxes 44 37 Losses unrelieved 1 72 Permanent differences 73 34

1,492 1,502 Share of associated companies 99 58

1,591 1,560

7. EARNINGS PER SHARE

Based on the result attributable to shareholders of the Company and on the average of 12,845,000 shares in issue (2005 – restated to allow for bonus issue) 13.6c 21.5c

Headline earnings per share, based on the result attributable to shareholders, excluding exceptional items, net of minority interest and tax, and the average number of shares in issue 11.3c 12.0c

8. DIVIDENDS

Interim dividend1.75c US cents per share (2005 – nil) paid on 6th October 2006 235 –

Recommended dividend2.50 US cents per share (2005 – 4.0 US cents, adjusted to allow for bonus issue) 336 504 Total dividends 4.25 US cents (2005 4.0 US cents, adjusted to allow for bonus issue) 571 504

The recommended dividend is subject to approval at the Annual General Meeting on 30th March 2007.



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9. PROPERTY, PLANT AND EQUIPMENT

Plant andequipment, Freehold

Investment vehicles, land and 2006 2005properties furniture buildings Total Total

US$000 US$000 US$000 US$000 US$000

At cost or valuationBrought forward 1st October:

At cost – 2,160 – 2,160 1,865 At valuation 11,700 – 3,230 14,930 13,220 Translation adjustment (144) (292) (762) (1,198) 142

11,556 1,868 2,468 15,892 15,227 Reclassification (1,886) (344) 1,886 (344) –Revaluations 1,715 – 685 2,400 1,482 Additions 94 444 807 1,345 604 Disposals – (358) – (358) (223)

Balances carried forward30th SeptemberAt cost – 1,610 – 1,610 2,160 At valuation 11,479 – 5,846 17,325 14,930

11,479 1,610 5,846 18,935 17,090 DepreciationBrought forward 1st October – 1,008 88 1,096 841 Translation adjustment – (237) (2) (239) 19

– 771 86 857 860 Charge for the year – 173 9 182 337 Translation adjustment – (23) (1) (24) 44 Written back on revaluation – – (94) (94) –Disposals – (300) – (300) (145)Balances carried forward

30th September – 621 – 621 1,096

Net book value 30th September 2006 11,479 989 5,846 18,314

Net book value 30th September 2005 11,700 1,152 3,142 15,994

Analysis of net book value:United States 10,725 9,020 South Africa 6,279 5,798 Australia & other 1,310 1,176

18,314 15,994

The investment properties, which are located in the United States and South Africa, are valued at current market values, on an open market basis. The US property was valued at US$10,725,000 and the South African properties atUS$754,000. The cost of the US property is US$4,844,000 and that of the South African property US$451,000.

The book value of assets acquired under finance leases amounting to US$86,000 (2005 – $130,000) is included aboveand they have been depreciated in accordance with group accounting policies.

Investment and other freehold pro p e rties in South Africa, with a total value of US$4,629,000, and the pro p e rties in the USAwith a value of US$10,725,000 were mortgaged at 30th September 2006 to secure long term finance. (see note 13 (b)).

Plant and equipment, vehicles and furniture are carried at cost less depreciation calculated at the following annual rates:

Rates of depreciationStraight-line method:

Plant and equipment and furniture 9% – 40%Vehicles 20% – 30%Freehold buildings 2% – 5%


17

10. INVESTMENTS

Unconsolidated General portfolio Associated companies 2006 2005subsidiary Listed Unlisted Listed Unlisted Total Total

US$000 US$000 US$000 US$000 US$000 US$000 US$000

CostBalance brought forward

1st October 11,134 8,517 737 3,616 974 24,978 23,635 Translation adjustment – – (9) – 9 – 3

11,134 8,517 728 3,616 983 24,978 23,638 Additions – 7,585 33 – 209 7,827 4,323 Adjustments arising from

Conafex reclassification – (655) (214) 1,599 (1,200) (470)Disposals (11,134) (2,132) – – – (13,266) (3,055)Share of retained result

for the year – – – 49 8 57 72 Balance carried forward

30th September – 13,315 547 5,264 – 19,126 24,978

Fair value adjustmentsBalance brought forward

1st October (11,134) 4,656 – (2,006) – (8,484) (9,520)Disposal 11,134 – – – – 11,134 –Fair value adjustment – 1,278 – – – 1,278 1,173 Provisions released/(increased)

during year – 136 – (719) – (583) (137)Balance carried forward

30th September – 6,070 – (2,725) – 3,345 (8,484)Net book value

30th September 2006 – 19,385 547 2,539 – 22,471Net book value

30th September 2005 – 13,173 737 1,610 974 16,494

Listed portfolio investments and listed associated companies are carried at market value.

Geographical analysis:

a) Associated listed companies:Southern Africa – Conafex 1,253 –Europe – Halogen 1,286 1,610

2,539 1,610 b) General portfolio

ListedUK 6,193 5,067 USA 4,936 2,242 Europe (excluding UK and Switzerland) 3,727 1,344 Switerland 2,931 1,245 Japan 910 518 South Africa 448 2,518 Hong Kong 240 239

19,385 13,173

c) Unlisted – Europe and other 547 737

d) Unlisted associates – South Africa – 974 22,471 16,494



18

10. INVESTMENTS

Percentage of equity held2006 2005

The following investments, which re p resent more than twenty per cent of the issued equity capital of the company concerned, are included in the above Group figure s .

Equity accounted:ListedHeld by MonteagleHalogen Holdings S.A. 49.95% 49.95%

Incorporated in Luxembourg and operating internationallyActivity – Holding companyConsolidated loss for year ended 30th September 2006 – £80,000

(2005 – loss £94,000)Consolidated reserves: 30th September 2006 £875,000 (2005 – £952,000)

Conafex Holdings S.A. 43.73% n/aIncorporated in Luxembourg and operating internationallyActivity – Holding companyConsolidated loss for thirteen months ended 30th September 2006 –

ZAR2,907,000 (2005 – loss ZAR12,229,000)Consolidated reserves: 30th September 2006 ZAR23,813,000 (2005 –

ZAR21,022,000)

During the year Conafex raised funds by means of a share placing, reducing the Group interest from 60.4% to 43.7%.Conafex has therefore been reclassified from a subsidiary to an associate. Conafex also distributed its interests in investments in Zimbabwe to its shareholders by way of a dividend in specie.

11. INVENTORIES

2006 2005US$000 US$000

Finished goods 13,111 13,255

12. ACCOUNTS RECEIVABLE

Trade debtors 12,654 12,194Amounts due from associated companies 132 –Taxation recoverable 15 47Other debtors 574 480

13,375 12,721Prepayments 357 266

13,732 12,98713. ACCOUNTS PAYABLE

a) Amounts falling due within one year:Bank loans and overdrafts 3,024 3,578Creditors – Trade creditors, including bills payable and acceptance credits 12,477 11,419

– Other creditors and short term portions of secured loans 1,123 1,023Amounts due to associated companies 18 –Taxation 355 675Interim dividend declared 235 –Accruals 1,054 1,052

18,286 17,747

The holding company has drawn US$2,038,000 under a facility secured on the general investment portfolio.


19

13. ACCOUNTS PAYABLE (continued)

A Rand bank overdraft equivalent to US$276,000 and letters of credit are secured by charges over the accounts receivable and inventories of a South African subsidiary.

Trade creditors equivalent to US$323,000 (2005 – US$334,000) are secured over the trade debtors and inventory of an Australian subsidiary of US$1,925,000 (2005 – US$2,108,000) and a bank overdraft equivalent toUS$194,000 is secured over the Australian property valued at US$996,000.

The Directors have recommended a final dividend of 2.50 US cents per share, which is subject to approval by shareholders at the Annual General Meeting. In accordance with IAS 10, this liability is not recognised at the BalanceSheet date.

2006 2005US$000 US$000

b) Amounts falling due after more than one year:Secured loans – South Africa – banks (South African Rand) 1,902 1,791

– United States – mortgage corporations (US dollar) 2,791 2,859– Capitalised lease obligations – (Australian dollar) 51 61

– (South African Rand) 32 53Finance from financial institutions 4,776 4,764

Unsecured, local currency, trade creditor loans – South Africa 382 510– Australia 90 92

472 6025,248 5,366

Long-term finance in the United States and South Africa is secured by mortgages on certain local investment properties (see note 9).

The principal rates of interest on loans are commercial rates – United States 6.56%, South Africa between 13.1% andprime less 1% (average prime rate for the year was 10.5%).

Loans are repayable over the following periods:

Secured Unsecured2006 2005 2006 2005

US$000 US$000 US$000 US$000

Between one and two years 923 324 – –Between two and five years 954 955 – –Over five years - by instalments 2,899 3,485 – –No fixed repayment date – – 472 602

4,776 4,764 472 602

14. DEFERRED TAXATION

The provision for deferred tax comprises the following effects of temporary timing differences:Deferred tax liabilities

Tangible fixed assets (151) (278)Other (96) (20)

(247) (298)Deferred tax assets

Tangible fixed assets 35 225 Other 83 –

118 225 Total net deferred tax liabilities (129) (73)



20

14. DEFERRED TAXATION (continued)

2006 2005US$000 US$000

The following are the major deferred tax liabilities and assets recognised by the Group and the movements thereon during the period:

Accelerated tax depreciationLiabilitiesBalance brought forward 1st October (298) (120)Exchange differences 63 (12)Revaluation reserve 110 (122)Charge to income during year (122) (44)Balance carried forward 30th September (247) (298)

LossesAssetsBalance brought forward 1st October 225 275 Exchange (62) 4Revaluation reserve (207) -Credit/(Charge) to income during year 162 (54)Balance carried forward 30th September 118 225

15. OTHER RESERVES

(a) Legal reserveBalance brought forward and carried forward 945 945

Luxembourg law requires that an appropriation of at least 5% of the Company's own annual distributable profit bemade to legal reserve until such time as the reserve attains 10% of the issued share capital. Consequently the Directorspropose to transfer US$25,400 from retained earnings to legal reserve. A resolution to approve the transfer will be proposed at the Annual General Meeting. Distribution of this reserve is restricted.

(b) Revaluation reserveBalance brought forward 1st October 6,825 5,758 Exchange (165) –Transfer to retained earnings on reclassification (971) –Deferred taxation (note14) (97) (122)Group share of revaluations in year 1,876 1,189 Balance carried forward 30th September 7,468 6,825

(c) Exchange reserveBrought forward 1st October 385 158 Arising during the year (919) 227 Balance carried forward 30th September (534) 385

(d) Other reservesBalance brought forward 1st October 5,944 4,488 Transfer to/from retained earnings on reclassification (3,960) 2Fair value adjustments (note 10) 1,278 1,173 Effect of exchange rate movement in year – 281 Balance carried forward 30th September 3,262 5,944

(e) Options reserveBalance brought forward 218 218 Released during the year (218) –Restated balance carried forward – 30th September – 218

Total Other Reserves 11,141 14,317


21

16. RETAINED EARNINGS

2006 2005US$000 US$000

Balance brought forward 1st October 13,515 11,149 Bonus issue of shares (10,080) –Dividend for prior year (504) (441)Interim dividend - current year (235) –Transfer from revaluation reserve 971 –Transfer from/(to) other reserves 3,960 (2)Option reserve released 218 –Profit for the year 1,747 2,690 Dividends unclaimed now forfeit 10 63 Effect of exchange rate changes (251) 56 Balance carried forward 30th September 9,351 13,515

17. NOTES TO CASH FLOW STATEMENT

(a) Reconciliation of profit before taxation to net inflow from operating activitiesProfit before taxation 4,461 5,531 Adjustments

Exceptional items (337) (1,249)Share of associated companies results (156) (129)Income from investments and loans (569) (734)Interest paid and similar charges 1,316 1,036 Depreciation 182 337

Cash generated before working capital changes 4,897 4,792 Net increase in working capital (note 17b) (1,828) (5,442)Cash generated/(absorbed) by operations 3,069 (650)

(b) Net increase in working capitalIncrease in inventories (675) (3,851)Increase in debtors (2,665) (554) Increase/(Decrease)in creditors 1,512 (1,037)

(1,828) (5,442)

(c) Analysis of net funds/(debt) 2006 2005 Exchange Cash flowmovements movement

US$000 US$000 US$000 US$000

Cash at bank and in hand 1,979 8,009 69 (6,099)Bank overdrafts (note 13a) (3,024) (3,578) 7 547

(1,045) 4,431 76 (5,552)

(d) Analysis of funds by currencyUnited States dollars (2,138) 3,281 – (5,419)Australian dollars 41 (23) 3 61 South African rands 902 (108) 22 988 Euros – 440 47 (487)Pounds sterling 150 841 4 (695)

(1,045) 4,431 76 (5,552)

(e) Analysis of changes in long-term debt Creditors due after more than one year

US$000Balance 1st October 2005 5,366 Exchange difference (35)Net cash outflow from financing (83)Balance 30th September 2006 5,248


22


17. NOTES TO CASH FLOW STATEMENT (continued)

(f) Credit riskCash and cash equivalents include all cash balances and highly liquid deposits with a maturity of three months or lessand are maintained with recognised financial institutions. Surplus cash balances are placed on deposit at market rates.An analysis by currency is set out in note 17(d).

18. GROUP COMMITMENTS AND CONTINGENT LIABILITIES

At 30th September 2006 the Group had commitments of US$108,000 under non-cancellable operating leases (2005 – nil).

The Group had no material commitments for authorised capital expenditure contracted (2005 – nil).

Full provision has been made for potential liabilities at the balance sheet date under forward exchange contracts.

The Company has given a guarantee in favour of its associated company, Conafex Holdings SA, to a maximum ofUS$600,000. No drawdown had been made under the facility at 30th September 2006.

19. PENSIONS

All contributions are charged to profit and loss account in the year to which they relate.

2006 2005US$000 US$000

Net expense of benefitsCurrent service costs – defined benefit scheme 33 13

– defined contribution scheme 353 261386 274

Actuarial valuations are performed every three years. The last valuation, in January 2006, showed the defined benefitscheme overfunded. The surplus has not been included in the Group balance sheet because the Trustees have submitted an application for the conversion of the scheme to a defined contribution fund and they will distribute anysurplus to the members.

20. FINANCIAL RISK MANAGEMENT

Credit risk managementConcentrations of credit risk consist principally of investments in leading companies in the U.K., Europe and SouthAfrica and in temporary cash investments. Associates are accounted for in accordance with accounting policy note 2(c).All of the portfolio investments are in highly liquid stocks and there is no concentration of investment in any one company. At the year-end the Directors do not consider there to be any significant concentration of credit risk forwhich adequate provision has not been made.

Interest rate riskExposure to interest rate risk arises in the normal course of the Group's business and applies mainly to cash depositsand financing. The Group's objective is to achieve the best rates available, adopting a policy of ensuring that its exposure to changes in interest rates on surplus funds are short-term. The principal rates on short-term borrowings forthe year were between 9.75% and 13.1% in South Africa and 6.56% in the United States.

The Group secures longer term finance at fixed rates on the best commercial terms, as set out in note 13(b).

Currency riskThe group currency risk arising on the portion of purchases transacted in foreign currencies is monitored on an ongoing basis with forward cover being arranged for significant transactions.

Fair value of financial instrumentsThe carrying amounts of the accounts receivable and liabilities reported in the balance sheet approximate their fair values at the year-end.

21. POST BALANCE SHEET EVENTS

U . S . M o rt g a g e . T h e C o m p a n y ’s w h o l l y o w n e d U . S . s u b s i d i a ry, M o n t e a g l e I n c . , re f i n a n c e d i t s b o rro w i n g s o n16th November 2006 with a mortgage of US$6,300,000 from John Hancock Life Insurance Company. The mortgageis at a fixed rate of 6.07%, matures on 1st December 2016 and the monthly repayments are US$38,055.68.

ZRC Limited (‘ZRC’). The Company owns approximately 54.1% of ZRC which held farming, property and investment related assets in Zimbabwe. With effect from 19th January 2007, ZRC sold those assets for US$1,578,000.


23

Financial Statements of the Parent Company

PROFIT AND LOSS ACCOUNT for the year ended 30th September 2006

2006 2005US$000 US$000

IncomeIncome from fixed assets 4,132 1,295Income from current assets 22 7

Loss for the year – 724,154 1,374

ExpensesInterest and similar charges 121 53Administration and other charges 337 272Group charges 584 842Exceptional provisions against investments in associates 1,848 207Exceptional costs of establishing the Monteagle Employee Benefit Trust 676 –Exceptional fees in connection with the bonus issue of shares 80 –

Profit for the year 508 –4,154 1,374

BALANCE SHEET at 30th September 2006

NotesNon-current assets

Investments (c) 23,189 24,513

Current assetsAmount due from group companies 2,022 296Accounts receivable 13 20Cash and bank balances 322 84

Loss for the year – 72

25,546 24,985

LiabilitiesCapital and reserves

Called up share capital (d) 20,160 9,450Other reserves (e) 945 2,320Retained earnings (f) 113 9,619

Accounts payable (falling due within one year) (g) 3,820 3,596

Profit for the year 508 –25,546 24,985



Notes to the Financial Statements of the Parent Companyfor the year ended 30th September 2006

24

(a) GENERAL

The Company is incorporated as a société anonyme, with financial holding company status under the Law of 31st July1929, as amended, in the Grand Duchy of Luxembourg. As permitted by Luxembourg law, the amounts shown in thesefinancial statements are presented in United States dollars.

(b) ACCOUNTING POLICIES

The principal accounting policies of the Company, which are set out below, comply with Luxembourg law,regulations and generally accepted accounting practices and have been consistently followed.

(i) InvestmentsListed and unlisted investments are stated at cost less amounts written off where, in the opinion of theDirectors, a permanent decline in value has arisen.

(ii) DividendsDividends are accounted for when received, other than dividends from subsidiaries, which are accounted for in the same year as that for which they are declared. Dividends from certain subsidiaries are subject to exchange control.

(iii) Associated companiesThose companies in which the Company holds an interest of between 20% and 50% are included in the Company's balance sheet at cost, less provision for any permanent decline in value as determined by the Directors.

(iv) Foreign currenciesF o reign exchange losses and realised gains on settlement of foreign currency transactions or on the translation ofmonetary assets and liabilities at year-end exchange rates are accounted for through the profit and loss account.

(c) NON-CURRENT ASSETS

Movements in investments

Subsidiaries Associated 2006 2005see note(h) Listed Unlisted companies Total Total

US$000 US$000 US$000 US$000 US$000 US$000

Book costBalance brought forward 1st October 17,523 5,220 474 3,800 27,017 26,441 Additions – 1,665 – – 1,665 2,099 Disposals, reclassifications and exchange (2,804) (1,245) – 2,776 (1,273) (1,523)Balance carried forward30th September 14,719 5,640 474 6,576 27,409 27,017

Fair value adjustmentsBalance brought forw a rd 1st October (178) (136) – (2,190) (2,504) (2,297)Movement (4) 136 – (1,848) (1,716) (207)Balance carried forward30th September (182) – – (4,038) (4,220) (2,504)

Net book value 30th September 2006 14,537 5,640 474 2,538 23,189

Net book value 30th September 2005 17,345 5,084 474 1,610 24,513

The market value of the listed investments at 30th September 2006 was US$8,100,000 (2005 – US$7,400,000).


25

(d) SHARE CAPITAL

2006 2005US$000 US$000

Number

AuthorisedShares of US$1.50 each 20,000,000 30,000 11,250

Issued and fully paidAt 1st October 2005 6,300,000 9,450 9,450 Shares issued to the Monteagle Employee Benefit Trust 420,000 630 –Capitalisation issue 6,720,000 10,080 –At 30th September 2006 13,440,000 20,160 9,450

The Directors are authorised, until 17th August 2010, to issue the balance of the unissued authorised share capital of6,560,000 shares.

(e) OTHER RESERVES

Legal ReserveBalance brought and carried forward 945 945 Other reservesBalance brought forward 1,375 1,375 Released to retained earnings (1,375) –Balance carried forward – 1,375Total other reserves 945 2,320

Luxembourg law requires that an appropriation of at least 5% of the Company's own annual distributable profit bemade to legal re s e rve until such time as the re s e rve attains 10% of the issued share capital. Consequently theDirectors propose to transfer US$25,400 from retained earnings to legal reserve. A resolution to approve the transferwill be proposed at the Annual General Meeting. Distribution of this reserve is restricted.

(f) RETAINED EARNINGS

Balance brought forward 1st October 9,619 6,242 (Loss)/Profit of the preceding year (72) 3,765 Prior years' unclaimed dividends forfeited 10 53 Transfer from other reserves 1,375 –Bonus issue of shares (10,080) –Dividend paid in respect of the preceding year (504) (441)Interim dividend declared (235) –Balance carried forward 30th September 113 9,619

(g) ACCOUNTS PAYABLE

Group companies 1,222 1,925 Other creditors 2,598 1,671

3,820 3,596

The Company has drawn US$2,038,000 under a facility secured on the general investment portfolio.


26

Notes to the Financial Statements of the Parent Company( c o n t i n u e d )for the year ended 30th September 2006

(h) SUBSIDIARIES

The following companies, which are the principal active subsidiaries of Marshall Monteagle Holdings SociétéAnonyme, have been included in the consolidated financial statements of the Group and have year ends coterminouswith that of the Company, unless otherwise stated.

(a) Wholly-owned Principal Activities

(i) Incorporated and operating in England:Monteagle Consumer Group (UK) Limited ImporterMonteagle Properties (UK) Limited Investment holdingThe following company is a wholly owned subsidiary of Monteagle Properties (UK) Limited

Incorporated and operating in San Diego, United States of America:Monteagle Inc Property

(ii) Incorporated in British Virgin Islands and operating internationally:Monteagle International Finance Limited Consultancy and management

(iii) Incorporated in Jersey, Channel Islands and operating internationally:Monteagle Merchant Group Limited Investment holdingThe following companies are active subsidiaries of Monteagle Merchant Group Limited:

Wholly-owned:Monteagle Property Holdings Limited Investment holdingMonteagle Investments (Proprietary) Limited Investment holdingMonteagle International Limited ImporterMonteagle Merchant Group Southern Holdings Limited Investment holdingMonteagle Subscriptions Limited Investment holding

Owned 50.1%L & G Tool and Machinery Distributors Limited Importer and distributor of hand

tools and machinery

(b) Other subsidiaries of Marshall Monteagle Holding Société Anonyme

(i) Incorporated and operating in AustraliaQueensland Tool and Machinery Distributors Pty Ltd (owned 50.1%) Importers and distributors of

hand tools and machineryQTM Property Holdings Ltd (owned 50.1%) Property


27

Report of the D i r e c t o r sfor the year ended 30th September 2006

The Directors submit their report and the audited financial statements for the year ended 30th September 2006.

PRINCIPAL ACTIVITIES

The Company is incorporated as a société anonyme in the Grand Duchy of Luxembourg with financial holding companystatus. Its activities in Luxembourg comprise the central supervision and control of the Group's investments in its operatingsubsidiaries and the administration of a general investment portfolio. The Company's shares are listed on the Luxembourg,Johannesburg and London stock exchanges.

The Group owns a commercial property in the United States of America, and in Australia it operates as a specialist importerand distributor of hand tools and machinery.

In South Africa the Group owns and manages multi-tenanted rent producing properties and operates trading businessesinvolved in the importation and distribution of hand tools, machinery and non-perishable food products.

A listed associate holds the Group's food production and processing interests in southern Africa. These interests include aproducer of aromatic and medicinal plants indigenous to South Africa; a herbal tea processor, a producer of breakfast c e reals and health food, an agri-service and marketing company and an international trader in soluble coffee with a re c e n t l yestablished coffee roasting plant.

OPERATING REVIEW

The Group profit, after tax and minority interests, was US$1,747,000, compared to US$2,690,000 for the previous year,giving earnings per share of 13.6 US cents (2005 – adjusted for share bonus issue – 21.5 US cents). A detailed review ofthe Group's operations is made in the Chairman's Review. A detailed analysis of the Group's operations is set out in note3 on pages 12 and 13.

EXCEPTIONAL ITEMS

Exceptional items include surpluses on the disposal of tangible fixed assets and investments, provisions against investmentsand the costs of creating the Employee Benefit Trust. Details are set out in Note 5 on page 14.

DIVIDENDS

An interim dividend of 2.50 cents was declared payable on 6th October 2006 (2005 – nil).

A final dividend of 1.75 US cents per share for the year ended 30th September 2006 (2005 – final only 4.0 US cents) isrecommended to be paid on 20th April 2007 to those shareholders on the register at the close of business on 23rd March 2007.

DIRECTORS

A list of the present Directors of the Company is shown on page 1.

In accordance with the Articles of Incorporation, all of the Directors retire at the forthcoming Annual General Meetingand stand for re-election.

The share interests of the Directors who held office during the year were as follows:

* These non-beneficial holdings arise, wholly or partly, because the individuals concerned were also directors or trusteesof entities that hold shares in Monteagle.

30th September 2006 30th September 2005Beneficial Non-beneficial Beneficial Non-beneficial

J.M. Robotham 76,000 6,189,600* 8,000 3,094,800*D.C. Marshall – 6,189,600* – 3,094,800*R.C. Kerr 10,000 5,000 5,000 2,500A.R.C. Barclay – – – –


28

Report of the Directors ( c o n t i n u e d )for the year ended 30th September 2006

2006 2005Parent Company

Directors’ fees Other fees Total TotalUS$000 US$000 US$000 US$000

J.M. Robotham Non-executive 3 24 27 27A.R.C. Barclay Non-executive 3 26 29 29R C Kerr Non-executive 3 17 20 20D.C. Marshall † Executive 3 106 109 108Total 12 173 185 184

There are no contracts of service with any of the Directors.

The remuneration paid to, or receivable by, the Directors for the year and the previous year, is as follows:

† Mr. D.C. Marshall ceded US$18,000 of his fees for the year (2005 – US$18,000) to an overseas company which sup-plies his services and in which none of the Directors is interested.

No other payments or benefits were paid to, or receivable by, the Directors except for benefits of US$23,000 (2005 – US$24,000) for Mr. Robotham.

SUBSTANTIAL INTERESTS

At the date of this report, the following holdings represented 5% and over of the issued share capital of the Company:

Shares %HSBC Global Custody Nominee Limited 5,585,648 41.60Monteagle Employee Benefit Trust 840,000 6.25

This holding is included in Mr. Robotham and Mr. Marshall's non-beneficial interests shown on page 27.

The Company has not been notified as required by Luxembourg law of any other shareholdings that exceeded or fell belowthe thresholds of 10%, 20%, 33.33%, 50% or 66.66% in the capital of the Company.

SHARE CAPITAL

During the year there were two changes to the share capital of the Company:

1. Monteagle Employee Benefit Trust. At the Annual General Meeting held on 31st March 2006, shareholders approveda resolution to authorise the directors to issue shares or options over shares representing up to a maximum of 7% ofthe issued share capital of the company to employees of the company and its subsidiaries or to any trust empoweredto hold shares on their behalf. Subsequently, on 12th May 2006, the Monteagle Employee Benefit Trust was establishedand 420,000 shares (representing 6.66% of the issued share capital) were issued to that trust increasing the issued sharecapital of the Company to 6,720,000 shares.

2 . Capitalisation Issue. Following approval by shareholders at the Extraord i n a ry General Meeting held on 7th September 2006, the Company made a capitalisation issue of shares on the basis that shareholders received onenew share for every share held at that date. As a result the issued share capital of the Company increased to 13,440,000 shares.

CHANGE OF NAME

At the Extraordinary General Meeting held on 7th September 2006, shareholders approved a resolution to change thename of the Company to Marshall Monteagle Holdings Société Anonyme. Certificates issued in respect of the above mentioned capitalisation issue were issued in the new name of the Company. Certificates in the former name (MonteagleHoldings Société Anonyme) remain valid and are good for delivery.


PROPOSED ACQUISITION OF MARSHALLS LIMITED

On the 10th January 2007 the Company issued a Cautionary Statement to shareholders regarding negotiations enteredinto with Marshalls Limited, a company registered in South Africa, to acquire 93.9% of its equity in addition to the 6.1%presently held by the group. The proposed transaction would be financed by a share issue.

INDEPENDENT AUDITORS AND STATUTORY AUDITORS

AGN Horsburgh & Co are willing to continue as the Independent Auditors and Statutory Auditors of the Company and a resolution will be proposed at the Annual General Meeting for their re-appointment as such.

AUTHORITY TO ISSUE SHARES

Your Board proposes that in terms of the Law of 10 August 1915 on commercial companies, as amended, and the ListingsRequirements of the JSE Limited, the shareholders of the Company renew the general authority given to the Board ofDirectors to issue ordinary shares of US$1.50 for cash as and when suitable situations arise, subject to the limitations asset out in resolution 7 on the Notice of Meeting on page 33.

The Board believes that the renewal of these authorities will give it flexibility for any share issues that may be required inthe future.

By order of the Board,

CITY GROUP P.L.C.31st January 2007 Group Secretaries

29


Corporate Governance, Internal Financial Control and Directors' Responsibilities

30

CORPORATE GOVERNANCE

The Directors have reviewed the Company's compliance with the requirements of the King Report on CorporateGovernance, which applies to all companies listed on the JSE Limited in South Africa.

The Directors have adopted procedures within the context of the Group and the financial and human resources currentlyavailable to the Group.

The Board comprises Mr J.M. Robotham, the non-executive Chairman, Mr R.C. Kerr and Mr A.R.C. Barclay, who are bothnon-executive Directors, and Mr D.C. Marshall, the Chief Executive Officer of the Group. The roles of Chairman andChief Executive are separated. The Audit Committee comprises Mr Robotham and Mr Kerr and their report on internalfinancial control is set out below. Mr Robotham and Mr Barclay form the Remuneration Committee, which meets asrequired and is responsible for decisions on remuneration for Directors and senior executives of the Group. Details of theDirectors' interests in the Company and their remuneration are given in the Report of the Directors on page 27 to 29.

The Board meets regularly and through an executive committee retains full and effective control over the Group. The nomination of Directors is a matter for the entire Board and there is therefore no nomination committee. Each Director isrequired to retire every year in accordance with the Articles of Incorporation and re-appointment is not automatic.

INTERNAL FINANCIAL CONTROL

The Group's system of internal financial control is established to provide for the safeguarding of the Group's assets, themaintenance of proper accounting records and the reliability of financial information. Such a system of control can provide only reasonable and not absolute assurance against material misstatement or loss. Procedures are established whichare designed to provide an effective system of internal financial control including the segregation of duties and management authorisation and review. In addition the Company safeguards its interests in the Group by appointing directors to the boards of the subsidiary and associated companies.

The Audit Committee meets periodically to review accounting, auditing, internal control and related matters of the Group.Nothing has come to the attention of the Directors to indicate that any material breakdown in the functioning of the controls, procedures and systems has occurred during the year under review.

STATEMENT OF DIRECTORS' RESPONSIBILITIES IN RESPECT OF THE ACCOUNTS

The Directors of the Company are responsible for the preparation, integrity and objectivity of the financial statements foreach financial period which give a true and fair view of the state of affairs of the Company and of the Group at the end ofthe financial period and of the respective results for that period. The Directors consider that appropriate accounting policies have been used and applied consistently, reasonable and prudent judgements been made and accounting standardsapplicable to the operations of the Company and of the Group have been followed.

The Directors are responsible for maintaining accounting records in accordance with International Financial ReportingStandards and Luxembourg law and have general responsibility for taking such steps as are reasonably open to them tosafeguard the assets of the Company, and detect and prevent fraud and other irregularities.


31

Following our appointment at the Annual General Meeting of shareholders held on 31st March 2006 we have audited theaccompanying consolidated balance sheet of Marshall Monteagle Holdings Société Anonyme as of 30th September 2006,and the related consolidated statements of income, and cash flows for the year then ended as set out on pages 6 to 22 andhave read the Report of the Directors on pages 27 to 29. These consolidated financial statements and the Report of theD i rectors are the responsibility of the Board of Directors. Our responsibility is to express an opinion on these consolidatedfinancial statements based on our audit and to confirm the consistency of the Report of the Directors with the consolidatedfinancial statements.

We conducted our audit in accordance with International Standards on Auditing. Those Standards require that we plan andperform the audit to obtain reasonable assurance about whether the consolidated financial statements are free of materialmisstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the consolidated financial statements. An audit also includes assessing the accounting principles used and significant estimatesmade by management, as well as evaluating the overall financial statements' presentation. We believe that our audit provides a reasonable basis for our opinion, which is presented below.

OpinionIn our opinion, the consolidated financial statements present fairly, in all material respects, the consolidated financial position of the Group as of 30th September 2006, and of the results of its operations and its cash flows for the year thenended in accordance with International Financial Reporting Standards.

The report of the Directors is in agreement with these consolidated financial statements.

AGN HORSBURGH & CO.Réviseur d'entreprises15-17 avenue Gaston Diderich, L-1420 Luxembourg

K. HorsburghPartner

31st January 2007

Report of the Independent Au d i t o r sTO THE SHAREHOLDERS OF MARSHALL MONTEAGLE HOLDINGS SOCIETE ANONYME


32

Following our appointment at the Annual General Meeting of shareholders on 31st March 2006 we have audited the financial statements of Marshall Monteagle Holdings Société Anonyme for the year ended 30th September 2006 as set outon pages 23 to 26. The contents of these financial statements are the responsibility of the Board of Directors. Our responsibility is, on the basis of our audit, to express an opinion on these financial statements.

We conducted our audit in accordance with International Standards on Auditing which require that we plan and performthe audit to obtain a reasonable assurance that the financial statements are free from material misstatement. An auditincludes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements, the assessment of the accounting principles used and significant estimates made by management, and the evaluation of theoverall financial statements' presentation. We consider that our procedures form a reasonable basis to express our opinionpresented below.

In our opinion the financial statements give, in conformity with legal and regulatory requirements in Luxembourg, a trueand fair view of the assets, liabilities and financial position of the Company at 30th September 2006 and the results of itsoperations for the year then ended.

AGN HORSBURGH & CO.Réviseur d'entreprises15-17 avenue Gaston Diderich, L-1420 Luxembourg

K. HorsburghPartner

31st January 2007

Report of the Statutory Au d i t o r sTO THE SHAREHOLDERS OF MARSHALL MONTEAGLE HOLDINGS SOCIETE ANONYME


33

NOTICE is hereby given that the twenty-fourth ANNUAL GENERAL MEETING of Marshall Monteagle HoldingsSociété Anonyme will be held at the offices of Maitland Luxembourg S.A., 6 rue Adolphe Fischer, L-1520 Luxembourg onFriday 30th March 2007 at 4.00 p.m. for the following purposes:-

1. To receive and adopt the reports of the Directors, Independent Auditors and Statutory Auditors for the year ended 30th September 2006.

2. To receive and adopt the Balance Sheet of the Company at 30th September 2006 and the Profit and Loss Account forthe year ended on that date.

3. To receive and adopt the Consolidated Balance Sheet of the Group at 30th September 2006 and the Consolidated Profit and Loss Account for the year ended on that date.

4. To consider and approve the transfer to Legal Reserve and appropriation of profits.

5. To grant discharge to the Directors and Statutory Auditors, in respect of the execution of their mandates to 30th September 2006.

6. To receive and act on the statutory nomination of the Directors, Independent Auditors and Statutory Auditors for anew term of one year.

Special Business7. To give, in terms of the Law of 10 August 1915 on commercial companies, as amended, and the Listings Requirements

of the JSE Limited, the Board of Directors of the Company general authority to issue ordinary shares of US$1.50 eachfor cash as and when suitable situations arise, subject to the following limitations:

– that this authority shall not extend beyond 15 (fifteen) months from the date of this annual general meeting and is renewable at the next annual general meeting;

– that issues in the aggregate in any one year may not exceed 15% of the number of shares of that class of the Company's issued share capital, including instruments which are compulsorily convertible into shares of that class; and

– that in determining the price at which an issue of shares will be made in terms of this authority, the maximum discount permitted will be 10% of the weighted average traded price of the shares in question, as determined over the 30 days prior to the date that the price of the issue is determined or agreed by the Directors.

By order of the Board,CITY GROUP P.L.C.

Group Secretaries6 rue Adolphe Fischer,Luxembourg.23rd February 2007

Notes:( i ) A proxy form is enclosed with this document. You are requested to complete and re t u rn the form whether or not you intend to attend the

Annual General Meeting.(ii) In terms of Article 24.4 of the Company's Articles of Incorporation a shareholder may appoint a proxy who need not be a shareholder of the

Company. Any company being a shareholder of the Company may execute a form of proxy under the hand of a duly authorised officer.(iii) To be effective, the form of proxy, duly completed, must arrive at the registered office of the Company not less than forty-eight hours before the

time fixed for the meeting. Proxies sent to the office of a transfer agent for forwarding to the Company at shareholders' risk must be received by thetransfer agent not less than seven days before the meeting.

CHANGE OF ADDRESS

S h a reholders are requested to advise the European transfer agents, Capita Registrars, or the South African transfer agents, Computershare InvestorS e rvices 2004 (Pty.) Limited of any change of address. The addresses of the Transfer Agents can be found on page 2.

Notice of Annual General MeetingR.C. Luxembourg No. B19600


34

D i r e c t o r s of Group Subsidiaries

Warwick Marshall (37) joined the group in 1993. He is a director of a number of listed and unlisted companies in South Africa and has extensive experience in international trade marketing, shipping and trade finance related operations. He is theManaging Director of Monteagle's fast moving consumer goods division and isresponsible for the further development and growth of regional and international business.

Lloyd Marshall (35) is a director of City Group P.L.C., Monteagle's secretaries. He is responsible for banking and investment portfolio administration within the Groupand is a director of various Group subsidiary companies in Europe, U.S.A. and South Africa.

Edward Beale (46) is the chief executive of City Group P.L.C., Monteagle's secretaries. He is a chartered accountant and is a director of various of the Group'sEuropean subsidiaries and associated companies. He is a non-executive director ofFinsbury Food Group plc and Chairman of the Corporate Governance Committee ofthe Quoted Companies Alliance (a U.K. pressure group acting on behalf of smallerquoted companies) and a member of the QCA's Accounting Standards Committee.

Christopher Jousse (58) has been a Group director since 1980. He is the chief executive of the Conafex group and was largely responsible for the reorganisation ofthat group's agricultural interests. He resides in South Africa and is a non-executivedirector of Halogen Holdings S.A. and chairman of Intertrading Limited.

David Greer (49) has been a director of Group subsidiaries since 1995 having joined the Group in 1989. He is responsible for the South African group secretariat, financial reporting and co-ordination of information technology and accounting.


35

Oliver Marshall (32) was educated in South Africa and joined the group in 1998. Heis the managing director of Global Coffee Exports Limited and commercial director ofConafex’s South African subsidiary. He has eight years experience in the coffee industry and is responsible for the growth of the Group's coffee manufacturing plantincluding the export and importation of all coffee related products.

Theresa Schmidt (37) was educated in South Africa and joined the group in 1999.She has an extensive knowledge of the international coffee market and handles exportshipping and logistics. In certain markets, Theresa also acts as the key accounts director

Andrew Beattie (63) has been managing director of the Group's gold mining divisionsince 1992. He resides in Zimbabwe and has had over 40 years' experience with themining industry, including seven years as General Manager for the Lonrho WestMining Division. He also acts as a consulting engineer to a number of mines, including all those operated by Falcon and Olympus.

Grant Vacy-Lyle (45) joined the Group in 1985 and is managing director of L & GTool and Machinery Distributors. The company is an importer and wholesale distributor of motor accessories, hand tools, hardware and air compressors throughoutSouth Africa and neighbouring territories. He has extensive product knowledge andvisits many countries in Europe and the Far East on a regular basis to source merchandise from international suppliers.

Trevor Maarschalk (40) joined the Group in 1990 and is managing director of AbacAir Compressors SA. He has established and is responsible for developing the Group'sjoint venture in South Africa with Abac Aria, Italy's largest manufacturer of air compressors. The company imports, sells and maintains industrial compressed airequipment from various sources in Europe.


36

D i r e c t o r s of Group Subsidiaries

Alan Vacy-Lyle (49) joined and was appointed a director of the Group's Australiansubsidiary in 1988. He is responsible for the development of the Group's tool andmachinery importing division in Queensland.

Anthony Dumas (34) joined the group in 1997 and was appointed as marketing director of Monteagle's fast moving consumer goods division in 2002. He has hadeleven years experience in international trade marketing and logistics. Within thegroup he is responsible for marketing the group's own primary production as well asdeveloping the marketing department both regionally and internationally.

Bruce Hughes (29) joined he group in 2003 and was appointed as managing directorof Marshall Monteagle Africa, our South African fast moving consumer goods division.He has seven years experience in private label trade marketing and logistics. Withinthe Group he is responsible for the further development and growth of regional private label business.

Russell Bradshaw (45) joined the group in 2003 and was appointed as marketingdirector of Monteagle's Australian and Asia Pacific fast moving consumer goods division. He has over 20 years experience in sales, buying and marketing of privatelabel food products in the Asia Pacific region.

Alexander Knapp (53) joined the group in 2004 and was appointed director ofMonteagle's South American fast moving consumer goods supply sources and tradingdivision. He has over 25 years of experience in general management, sales, purchasingand marketing of food products from and into the various South American markets.


MARSHALL MONTEAGLE HOLDINGS SOCIETE ANONYMERegistered Office: 6 rue Adolphe Fischer, L-1520, Luxembourg

(R.C. Luxembourg No. B19600)

P roxy for Annual General Meeting

Form of proxy for the Annual General Meeting of shareholders to be held at the offices of Maitland Luxembourg S.A., 6 rue Adolphe Fischer, L-1520, Luxembourg on Friday 30th March 2007 and at any adjournment thereof.

The undersigned being the holder of ____________________ shares in the Company hereby appoints as his specialattorney at the above mentioned meeting the chairman of the meeting or ___________________________________ to whomhe gives all powers to represent him at the said meeting, to take part in all deliberations and to vote in his name according tothe instructions set out below and to perform all acts necessary to give effect to the resolutions contained in the agenda as follows:

No. Resolution For Against Abstention

1. To receive and adopt the reports of the Directors, Independent Auditors and Statutory Auditors for the year end 30th September 2006.

2. To receive and adopt the Balance Sheet of the Company at 30th September 2006 and the Profit and Loss Account for the year ended on that date.

3. To receive and adopt the Consolidated Balance Sheet of the Group at 30th September 2006 and the Consolidated Profit and Loss Account for the year ended on that date.

4. To consider and approve the appropriation of profits.

5. To grant discharge to the Directors and Statutory Auditors in respect of the execution of their mandates to 30th September 2006.

6. To receive and act on the statutory nomination of the Directors, Independent Auditors and Statutory Auditors for a new term of one year.

Special Business

7. To give the Directors general authority to issue shares for cash, subject to certain limits, to persons other than shareholders.

Notes(i) In terms of Article 24.4 of the Company's Articles of Incorporation a shareholder may appoint a proxy who need not

be a shareholder of the Company Any corporation being a shareholder of the Company may execute a form of proxy under the hand of a duly authorised officer.

(ii) To be effective, the form of proxy, duly completed, must arrive at the registered office of the Company not less than forty-eight hours before the time fixed for the meeting. Proxies sent to the office of a transfer agent for forwarding to the Company at shareholders' risk must be received by the transfer agent not less than seven days before the meeting.

(iii) Shareholders should indicate with a cross (X) in the space provided above how they wish their votes to be cast. In the absence of specific instructions their special attorney may vote as he thinks fit.

(iv) In the case of joint holders the vote of the senior who tenders a vote, whether in person or by proxy, will be accepted to the exclusion of the votes of the other joint holders. For this purpose seniority is determined by the order in which the names stand in the Register of members in respect of joint holdings.

Name of registered shareholder ..................................................................................................................................

Address ..................................................................................................................................................................

Signature ....................................................................................................................................................................

(Please add before your signature, in your own handwriting, the words ‘Good for Proxy’)

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