Majedie Investments Plc
Annual Report 2008

Plain-text annual report

2008 Majedie Investments PLC Annual Report 30 September 2008 Majedie Investments PLC is a self-managed investment trust with total portfolio assets under management of over £187 million as at 30 September 2008. Our Objective is to maximise total shareholder return over the long term whilst increasing dividends by more than the rate of inflation. Our Benchmark is 70% FTSE All-Share Index and 30% FTSE World ex UK Index (Sterling) on a total return basis. Contents 1 2 3 3 4 5 11 12 12 13 15 16 19 24 27 33 34 36 37 38 40 42 43 44 45 46 72 73 77 80 81 loose Investment Objective and Policy Statement Highlights for 2008 Group Summary Recent Trends Year’s Summary Chairman’s Statement Asset Distribution Twenty Largest UK Investments Ten Largest Overseas Investments Valuation of Investments Board of Directors Directors’ Report Business Review Corporate Governance Report on Directors’ Remuneration Statement of Directors’ Responsibilities Report of the Independent Auditors Consolidated Income Statement Company Income Statement Consolidated Statement of Changes in Equity Company Statement of Changes in Equity Consolidated Balance Sheet Company Balance Sheet Consolidated Cash Flow Statement Company Cash Flow Statement Notes to the Accounts Ten Year Record Notice of Meeting Appendix – New Articles of Association Majedie Savings Plans Shareholder Information Form of Proxy c MAJEDIE INVESTMENTS PLC Investment Objective and Policy Statement Investment Objective The Company’s objective is to maximise total shareholder return over the long term whilst increasing dividends by more than the rate of inflation. Investment Policy The Company invests principally in securities of publicly quoted companies worldwide, though it may invest in unquoted securities up to levels set periodically by the Board. The overall approach is based on analysis of global economies and sector trends with a focus on companies and sectors judged likely to deliver strong growth over the long term. The number of investments held, together with the geographic and sector diversity of the portfolio, enable the Company to spread its risks with regard to liquidity, market volatility, currency movements and revenue streams. The Company’s benchmark comprises 70% FTSE All-Share Index and 30% FTSE World ex UK Index (Sterling) on a total return basis. It is used to assess the performance and risk of the Company and investment portfolio. Whilst performance is measured against the benchmark, investment decisions and portfolio construction are made on an independent basis. The Board however sets various specific portfolio limits for stocks and sectors in order to restrict risk levels. Although, exceptionally, derivative instruments may be employed, usually for hedging purposes and with specific prior approval of the Board, generally the Company is a long-only investor and would be unlikely to use such instruments. The Company will not invest in any holding that would, at the time of investment, represent more than 15% of the value of its gross assets. The Company uses gearing to enhance the long term returns to shareholders. The Articles of Association give the Board the ability to borrow up to 100% of adjusted capital and reserves. The Board also reviews the level of net gearing (borrowings less cash) on an ongoing basis and sets a range at its discretion as appropriate. The Company’s current debenture borrowings are limited by covenant to 66 2/3%, and any additional indebtedness is not to exceed 20%, of adjusted capital and reserves. REPORT & ACCOUNTS 2007 REPORT & ACCOUNTS 2008 1 1 Highlights for 2008 Total shareholder return: Net asset value total return: Benchmark total return: Special dividend (per share): Final dividend (per share): Total dividends (per share): Directors’ valuation of investment in Majedie Asset Management Limited: (36.9%) (36.2%) (19.9%) 2.25p 6.30p 12.75p £22.5m 2 MAJEDIE INVESTMENTS PLC Group Summary Total assets* Shareholders’ funds Market capitalisation £187.2m £153.5m £129.4m Capital structure 10p ordinary shares 52,528,000 Debt £13.5m 9.5% debenture stock 2020 £20.7m 7.25% debenture stock 2025 Management fee The trust is self-managed and accordingly does not pay a fee to third party fund managers. ISA status Up to £7,200 in 2008/09 tax year. Recent Trends 491 464 384 343 267 297 4.50 2.25 10.50 10.00 8.75 9.05 9.50 413 338 304 228 250 04 05 06 07 08 04 05 06 07 08 04 05 06 07 08 Net asset value per share (pence) decreased by 39.6% in the year* Core dividends (pence) have increased by 5.0% to 10.50 pence. Additionally a special dividend of 2.25 pence was declared, down from 4.50 pence in 2007. Share price (pence) has decreased by 39.5% during the year * Represents total assets less current liabilities as at 30 September 2008. REPORT & ACCOUNTS 2008 3 Year’s Summary Financial* as at 30 September Total assets less current liabilities Shareholders’ funds Net asset value per share Share price Discount to net assets (debt at par value) Discount to net assets (debt at fair value) Revenue return before tax Earnings per share Core dividends per share** Total dividends per share** Group costs (administrative expenses) Company costs/average Company net assets Company costs/average Company total assets Maximum potential gearing 2008 2007 as restated† £187.2m £153.5m 296.5p 250.0p 15.7% 12.5% £6.5m 12.5p 10.5p 12.75p £3.3m 1.6% 1.4% 22.0% £286.9m £253.2m 490.7p 413.3p 15.8% 13.0% £7.1m 13.6p 10.0p 14.5p £2.9m 1.2% 1.1% 13.3% % (34.8) (39.4) (39.6) (39.5) (8.5) (8.1) 5.0 (12.1) 13.8 * Financial information is disclosed in respect of the consolidated accounts unless otherwise stated. ** Both core and total dividends per share represent dividends that relate to the Company’s financial year. However under IFRS dividends are not accrued until paid or approved. † Comparative figures have been restated for the review of the treatment of the investment in Majedie Asset Management Limited (“MAM”) as disclosed in note 12 on pages 58 and 59. Year’s high/low Share price Net asset value Discount (debt at par) high low high low high low Discount (debt at fair value) high low * Premium Performance year ended 30 September Investment portfolio return (total assets)† Net asset value total return Total shareholder return Benchmark total return† † Source: The WM Company 2008 425.0p 247.0p 490.7p 296.5p 22.6% 7.3% 19.8% 2.1% 2007 483.2p 333.0p 502.7p 377.0p 14.7% 2.5% 10.2% (1.3%)* 2008 2007 (31.1%) (36.2%) (36.9%) (19.9%) 23.2% 23.6% 25.2% 12.6% 4 MAJEDIE INVESTMENTS PLC Chairman’s Statement The financial year ended 30 September saw a significant deterioration in the global economic and financial environment and substantial falls in world equity markets, a trend which has been exacerbated since the year end. The Company has not been immune from this turbulence and has fared badly. As such I regret to report that the Company’s Net Asset Previously in the 2008 Half-Yearly Financial Report I Value (NAV) total return and Share Price total return stated that we would be reviewing whether we would have fallen by 36.2% and 36.9% which compares to be paying a second special dividend after taking the benchmark total return which fell by 19.9%. Over account of the final special dividend from MAM. Whilst the longer term the three year NAV total return and this was substantial, in the light of the current Share Price total return were –4.8% and –9.5% which economic environment the Board has decided that it compares to the benchmark total return of 1.8%. would be prudent not to distribute the entire amount, but to retain some of this income within the business. The Board remains focussed on ensuring that the portfolio, whilst it may be subject to severe volatility in The Board has therefore decided to propose that a the short term, is positioned to provide performance special dividend of 2.25p per share be included with over the longer term in-line with our stated objective. this year’s final dividend. Additionally a normal core final To this end the investment strategy and portfolio dividend of 6.3p per share is recommended, which, structure will be subject to a review over the coming when combined with the interim dividend of 4.2p months to ensure that the income and growth needs of results in a total core dividend of 10.5p per share, an shareholders are met over the longer term. increase of 5.0% over last year’s dividend of 10.0p. Results and dividends The group’s net profit before tax for the year was £6.5m compared to £7.1m for the restated prior year. Group income for the year of £8.9m compares with the prior year of £9.1m. This result is a combination of the reduction in special dividend income from Majedie Asset Management (MAM), as there was only one special dividend this year compared to two in 2007, being substantially offset by an increase in dividend income over the year. Consolidated costs for the group have increased to £3.3m from £2.9m primarily due to costs relating to the restructuring during the year. The full effect of this restructuring will be felt from 2009 onwards with an expected reduction in core costs. The diagram on page 6 illustrates the increases over the previous ten years in comparison with the Retail Prices Index. It demonstrates that Majedie dividends have been increasing by more than the rate of inflation in-line with our policy. The Board however will be reviewing this objective in the coming months and will report to shareholders in 2009. TOTAL SHAREHOLDER RETURN V BENCHMARK YEAR TO TO 30 SEPTEMBER 2008 (REBASED) 1.10 1.00 0.90 0.80 0.70 0.60 9/07 10/07 11/07 12/07 1/08 2/08 3/08 4/08 5/08 6/08 7/08 8/08 9/08 Benchmar k REPORT & ACCOUNTS 2008 5 Chairman’s Statement Investment Performance We have felt it prudent to write down the value of 2008 has been a year of huge turmoil in global stock certain of our unlisted investments to reflect the difficult markets as the credit crunch has wrought havoc. circumstances faced by a number of these companies, Against this very difficult background the fund’s which has been a contributor to our poor performance investment performance including MAM has fallen by this year. In contrast, our investment in MAM continues 31.1% compared to a fall in the benchmark of 19.9%, to bring rewards as the company has continued to an underperformance of 11.2%. Over three, five and perform well in difficult markets and has achieved higher ten years investment performance relative to the profitability year on year. However the Board is of the view benchmark was –1.5%, 0.9% and 4.8% respectively. that current market conditions mean that it is not prudent to amend our valuation and as such our 30% investment However whilst the performance this year is in MAM remains at its current value of £22.5m. disappointing, the performance of the portfolio itself has not met the Board’s expectations. This year’s In the final quarter global equities as with many other underperformance has led to the medium and longer asset classes were sold as widespread panic took term performance comparisons which were favourable hold. The effect of this panic has proved difficult even a year ago becoming less favourable as the impact of now to quantify. Share prices have been driven down this year’s performance has had a significant effect on to levels that in many cases do not reflect fundamental the longer term comparisons. valuations. This panic reaction has been accentuated There were two main aspects which negatively impacted quality and most liquid assets to meet their immediate the performance. First, our long term debentures, cash requirements. We expect that more soundly which can benefit the portfolio in rising markets but based fundamental approaches will return at some have a negative effect when markets fall. Second, stage although the timing of this is difficult to predict. by forced sellers, who often have to sell their highest however, the greatest adverse impact came from poor stock selection. In particular, a number of stocks which contributed positively in previous years, performed poorly over the period. The Board will be considering what actions to take with these holdings as part of its review which I refer to later. CONSOLIDATED NET RETURN BEFORE TAXATION £m GROWTH IN CORE MAJEDIE DIVIDENDS COMPARED WITH INCREASE IN RETAIL PRICES INDEX BOTH REBASED TO 1998 (PENCE PER SHARE) 10 9 8 7 6 5 4 3 2 1 0 11 10 9 8 7 2004 2005 2006 2007 2008 98 99 00 01 02 03 04 05 06 07 08 Majedie dividend RPI 6 MAJEDIE INVESTMENTS PLC Despite the poor capital performance of the underlying Additionally we have reviewed the structure of the portfolio I am happy to report that it was able to group and have decided to simplify this by reducing produce an increased income, facilitating a dividend the number of companies within the group. The Board above the rate of inflation. Management Changes will continue to ensure that the group structure is configured appropriately to deal with its operations. As was announced in the 2008 Half-Yearly Financial Strategy Report the Board now comprises solely non-executive During 2008 we had significant exposure to smaller directors with no Chief Executive. Gill Leates stood companies, the relative valuations of which have fallen, down from the Board but continued as Investment especially those that are expected to require additional Director to have full responsibility for the management finance in the future. We have ensured however that of the Company’s portfolio. In the light of recent events the fund is positioned to meet the income expectations in global markets, the Board has decided that the of shareholders. management of the investment portfolio should be changed and in these circumstances Gill Leates has As the global credit crisis deepened, the portfolio’s agreed to step down. I would like to take the exposure to the banking and consumer oriented opportunity of thanking Gill for all her past efforts. Bill sectors was reduced. The funds raised have either Baker has been appointed and has taken over the been retained as an increased cash balance, or supervision of the portfolio. Bill is a highly experienced reinvested in other larger companies with greater investment manager, having built his reputation at both defensive qualities and revenue visibility. There remains Mercury Asset Management and Schroders where he a focus within the portfolio on well capitalised occupied senior positions and had responsibility for a companies with large asset backing, strong wide range of clients and portfolios. Initially he will management and additionally companies with assist the Board with a review of the investment policy, intellectual property relating to new technology in large the portfolio and the fund’s objectives. world markets. NAV TOTAL RETURN V BENCHMARK 3 YEARS TO 30 SEPTEMBER 2008 (REBASED) TOTAL SHAREHOLDER RETURN V BENCHMARK 3 YEARS TO 30 SEPTEMBER 2008 (REBASED) 1.70 1.60 1.50 1.40 1.30 1.20 1.10 1.00 0.90 1.80 1.60 1.40 1.20 1.00 0.80 9/05 12/05 3/06 6/06 9/06 12/06 3/07 6/07 9/07 12/07 3/08 6/08 9/08 9/05 12/05 3/06 6/06 9/06 12/06 3/07 6/07 9/07 12/07 3/08 6/08 9/08 Benchmark Majedie Benchmar k REPORT & ACCOUNTS 2008 7 Chairman’s Statement Geographically the portfolio remains overweight relative Over the course of the next year the Company intends to the benchmark in the UK, largely because of its high to conduct a further review of the New Articles in order dividend. However over 40% of the FTSE All Share to identify any additional amendments that might be Index’s earnings come from overseas giving rise to an necessary following the full implementation of the implicit geographic diversification. This helps reduce Companies Act 2006 in October 2009. It is the currency risk and offsets the underweighting in the US Board's intention that any further amendments will be and Europe since large companies like BP, Royal put to shareholders at the Annual General Meeting in Dutch Shell, RTZ, BHP Billiton and GlaxoSmithKline all 2010. Further information about the changes is shown source the majority of their sales from overseas. The in the Directors’ Report on page 18 and in the portfolio remains market weighted in resources, as the Appendix to the notice of the Annual General Meeting long term demand for oil and other commodities on pages 77 to 79. remains good as the emerging economies of China and India in particular continue to industrialise. E-communication Although the GDP growth rate in these countries has slowed, it remains at healthy levels. Another aspect of the Companies Act 2006 allows for shareholders to elect to receive communications from Business Development the Company in electronic form. This idea has considerable merit and we are looking to take The Board has been committed to searching out and advantage of the savings it provides. As such we have providing capital for new businesses. This commitment enclosed a letter to shareholders in which they may has been intensified and a number of new possibilities elect for e-communications as a method of receiving are being actively considered. With the considerable information from the Company. I urge you to elect to changes that extreme markets provoke, the Board make use of this service, but please note that if you expects to be able to consider a higher number of wish you can still receive information in paper form. possibilities and be able to report progress in 2009. We continue to believe that by pursuing business opportunities we will enhance returns for shareholders. Annual General Meeting The AGM will be held on 20 January 2009 at 11.30am at the Novotel London Tower Bridge. Details are set Companies Act 2006 and New Articles out on page 73. As in prior years there will be of Association presentations and an opportunity to ask questions. I do The Companies Act 2006 is being brought into force in hope you will be able to attend. stages, with full implementation scheduled by October 2009. At this year's Annual General Meeting the Company proposes to adopt new Articles which reflect changes in the law brought into force so far, including, notice periods for meetings, proxy voting, directors' conflicts of interest, and also to adopt other provisions in line with best market practice (the 'New Articles'). 8 MAJEDIE INVESTMENTS PLC Outlook Interest rates have already been cut worldwide with The outlook for investors is uncertain in the short term further major cuts expected as the priority of central and your Board is acutely conscious that we need to banks has shifted from tackling inflation to stimulating produce more consistent returns, reducing volatility as growth. The Bank of England has recently cut interest far as can be possible. At the same time we wish to rates by 1.5% to 3.0%, signalling the importance of continue to produce higher income than our stimulation to the economy. In the USA there are likely competitors in a world where income is in ever to be more fiscal packages to boost consumer decreasing supply. The global factors giving rise to our spending and further measures by the authorities to concern recently have destroyed immense value ring-fence problem assets. already, as we have seen as markets have tumbled. The length and severity of recession in the developed The events of recent months are unprecedented, with world may be influenced by the strength of economies the crisis in the banking sector requiring a coordinated in emerging markets, especially China. There is global response by all major governments. One of the currently concern about whether Chinese growth may results of the severity of the contraction in interbank slow significantly. However, the Chinese government lending is that important basic working capital and has made clear its intentions to raise public spending investment loans to the real economy are being and domestic demand to prevent overall growth falling delayed, letters of credit for shipping are not being below 8%. It has the tools to achieve this through fiscal accepted, and the availability of mortgages continues and monetary policies and enormous wealth held in to decline. national reserves. This lack of finance is having a direct impact on economic activity and is pushing the developed world into recession. As the fourth quarter progresses, the credit freeze should begin to ease as the effect of the stakes taken in banks by governments across the world, the buying of toxic loans by the TARP fund and government guarantees for interbank lending begin to take effect. The first elements of this are beginning to show with interbank lending premiums starting to fall from unprecedented peaks. REPORT & ACCOUNTS 2008 9 Chairman’s Statement In the short term the macro-economic environment is likely to deteriorate further before beginning to improve. Nonetheless, much of this has already been discounted by the steep falls in equities globally. History shows that stock markets generally rise prior to a trough in the cycle, in anticipation of a recovery, albeit economic activity may still be slowing. Although the movement of the markets in the immediate future is impossible to predict, on fundamental valuations, equities appear oversold and should perform positively over time. The fund has been structured to benefit under the scenario of recovery over the medium term and the Board in its forthcoming review of investment objectives will ensure a consistency of policy to reflect the investment climate. In what has been a very difficult year I would like to place on record my appreciation of our office staff and equally pay tribute to the support I have received from my fellow non-executive directors. As a result of the change to a completely non-executive Board, with no Chief Executive, which took place early in 2008, a significantly heavier load has fallen on them. They have shouldered these extra commitments with enthusiasm and goodwill which has rendered a difficult situation significantly easier. Henry S Barlow Chairman 26 November 2008 10 MAJEDIE INVESTMENTS PLC Asset Distribution at 30 September 2008 0.2 0.2 0.7 0.6 0.1 0.1 0.3 0.1 1.2 10.3 1.2 10.0 0.6 0.9 0.1 1.1 0.9 2.0 Pacific Basin % 0.7 America % 0.9 0.1 1.0 0.3 North Continental Europe % 0.3 Total 2008 % 7.8 1.8 9.6 2.7 3.1 7.0 12.8 0.8 3.6 3.9 0.2 0.6 United Kingdom % 5.9 1.7 7.6 2.3 2.0 5.5 9.8 0.7 3.6 3.9 Classification of Assets Oil & Gas Producers Oil Equipment & Services Oil & Gas Chemicals Industrial Metals Mining Basic Materials Construction & Materials Aerospace & Defence General Industrials Electronic & Electrical Equipment Industrial Engineering Industrial Transportation Support Services Industrials Automobiles & Parts Beverages Food Producers Household Goods Tobacco Consumer Goods Health Care, Equipment & Services Pharmaceuticals & Biotechnology Health Care Food & Drug Retailers General Retailers Media Travel & Leisure Consumer Services Fixed Line Telecommunications Mobile Telecommunications Telecommunications Electricity Gas, Water & Multi Utilities Utilities Banks Non Life Insurance/Assurance Life Insurance Real Estate General Financial Equity Investment Instruments Financials Software & Computer Services Technology & Hardware Equipment Technology Unlisted/Fixed Interest Total Equities Total Non-current Assets Cash % Total at 30 September 2008 The Fund analysed on pages 13 and 14 comprises the fixed asset investments of £178,981,000 and cash (as adjusted for amounts due to/from brokers for settlement) of £8,271,000. 0.9 0.6 1.2 2.7 0.7 2.5 3.2 1.1 0.3 1.8 0.9 4.1 2.8 3.8 6.6 2.9 3.3 6.2 9.3 0.2 2.6 1.5 3.3 2.2 19.1 4.1 0.6 4.7 16.3 95.6 95.6 4.4 100.0 0.9 0.6 0.8 2.3 0.2 2.4 2.6 1.1 0.3 0.1 0.9 2.4 2.8 3.6 6.4 1.1 3.3 4.4 8.2 0.2 2.6 1.5 2.0 1.6 16.1 1.4 0.6 2.0 15.2 78.8 78.8 4.4 83.2 Total 2007* % 8.7 1.7 10.4 1.4 7.6 9.3 18.3 0.7 3.3 3.7 0.9 0.7 0.3 1.3 10.9 0.2 0.3 0.1 0.9 0.8 2.3 0.5 2.6 3.1 0.8 0.6 0.4 2.3 4.1 1.5 2.3 3.8 1.3 3.1 4.4 11.5 0.3 1.8 2.1 3.5 3.7 22.9 7.0 0.4 7.4 10.0 97.6 97.6 2.4 100.0 0.4 0.4 0.5 0.1 0.6 1.9 0.8 7.3 7.3 1.3 0.6 2.5 0.8 0.8 0.2 8.0 8.0 0.1 0.1 1.5 0.1 1.5 1.5 0.1 0.1 1.5 0.6 0.3 0.5 1.5 1.9 1.5 7.3 1.5 0.3 0.2 0.5 0.2 8.0 Unlisted/Fixed Interest investments comprise an amount of £22,500,000 in respect of the investment in Majedie Asset Management (MAM), £972,000 in unlisted fixed interest investments and £7,172,000 invested in placings for 14 separate companies which were expected to become listed securities after 30 September 2008. Suspended stocks have been analysed in their listed sectors. * Comparative figures have been restated for the review of the treatment of the investment in MAM as disclosed in note 12 on pages 58 and 59. REPORT & ACCOUNTS 2008 11 Twenty Largest UK Investments at 30 September 2008 Company Majedie Asset Management HSBC Vodafone Barclays Accsys Technologies BT United Utilities First Quantum Hydrodec Rio Tinto Royal Dutch Shell ‘B’ BHP Billiton Vostok Energy GlaxoSmithKline Majedie Asset Management UK Opportunities ‘A’ BP BAE Systems London Capital Standard Chartered 2 Ergo Group 2008 2007 Market Value £000 22,500 % of Fund 12.0 Market Value £000 16,185 7,929 6,272 5,564 5,348 5,187 4,488 3,620 3,477 3,232 2,905 2,682 2,569 2,537 2,447 2,431 2,413 2,277 1,870 1,796 4.2 3.3 3.0 2.9 2.8 2.4 2.0 1.9 1.7 1.6 1.4 1.4 1.4 1.3 1.3 1.3 1.2 1.0 0.9 7,960 4,739 7,557 8,399 4,390 6,875 15,564 1,530 3,687 2,625 1,402 2,717 6,171 2,962 2,891 2,970 2,224 1,872 % of Fund 5.7 2.8 1.7 2.6 2.9 1.5 2.4 5.5 0.5 1.3 0.9 0.5 1.0 2.2 1.0 1.0 1.0 0.8 0.7 91,544 49.0 102,720 36.0 Ten Largest Overseas Investments at 30 September 2008 Company Phorm (USA) HIPCricket (USA) Capital Lease Aviation (Asia) International Ferro Metals (South Africa) Eservglobal (Australia) Oilexco (Canada) KSK Power Venture (Asia) Mantra Resources (Australia) MEO Australia (Australia) L&G Japan Index Trust (Japan) 12 MAJEDIE INVESTMENTS PLC 2008 2007 Market Value £000 % of Fund Market Value £000 3,507 2,748 2,344 1,713 1,544 1,495 1,355 1,139 1,071 877 17,793 1.9 1.5 1.3 0.9 0.8 0.8 0.7 0.6 0.5 0.5 9.5 13,003 750 4,309 1,878 2,573 1,145 1,270 6,199 1,043 % of Fund 4.6 0.3 1.5 0.6 0.9 0.4 0.4 2.2 0.4 32,170 11.3 Valuation of Investments Holdings valued over £100,000 at 30 September 2008 Company Market Value % of £000 Fund Company Market Value % of £000 Fund Company Market Value % of £000 Fund Oil & Gas Oil & Gas Producers 329 0.2 Ascent Resources 1,481 0.7 BG Group 2,431 1.3 BP 104 0.1 Caza Oil & Gas 320 0.2 Concorde Oil & Gas 171 0.1 Enegi Oil 551 0.3 Hardy Oil & Gas 307 0.2 Indus Gas (Asia) 195 0.1 Irvine Energy 669 0.3 JKX Oil & Gas Leed Petroleum 399 0.2 MEO Australia (Australia) 1,071 0.5 724 0.3 Nighthawk Energy Oilexco (Canada) 1,495 0.8 Providence Resources (Ireland) Royal Dutch Shell ‘B’ Sibir Energy Xcite Energy Xtract Energy 631 0.3 2,905 1.6 477 0.3 115 0.1 270 0.1 Oil Equipment & Services Corac Group Hunting Lamprell Schlumberger (USA) 1,323 0.6 1,410 0.8 514 0.3 227 0.1 Basic Materials Chemicals Bayer (Germany) Hydrodec Molectra Monsanto (USA) Plant Health Plant Impact Potash (USA) 270 0.1 3,477 1.9 300 0.1 255 0.1 312 0.2 305 0.1 352 0.2 Industrial Metals Bannerman Resources (Australia) First Quantum International Ferro Metals (South Africa) 335 0.2 3,620 2.0 1,713 0.9 Mining Albidon Aricom BHP Billiton Bumi Resources (Indonesia) China Goldmines Coal of Africa Detour Gold (Canada) Diamondcorp Dwyka Resources (Australia) Gladstone Pacific (Australia) Kalahari Minerals Mantra Resources (Australia) Metals Exploration Mwana Africa Nautilus Minerals (Canada) Pangea Diamondfields Petra Diamonds Polymet Mining (USA) Rio Tinto Talvivaara Mining Toledo Mining Xstrata 470 0.3 412 0.2 2,682 1.4 113 0.1 148 0.1 237 0.1 670 0.3 354 0.2 113 0.1 179 0.1 240 0.1 1,139 0.6 464 0.2 251 0.1 332 0.2 100 0.1 499 0.3 187 0.1 3,232 1.7 371 0.2 225 0.1 463 0.2 Industrials Construction & Materials Ashley House Balfour Beatty 1,121 0.6 300 0.1 Aerospace & Defence Aero Inventory Babcock International BAE Systems Meggitt Rolls Royce VT Group General Industrials Accsys Technologies Cookson Nviro Cleantech 231 0.1 549 0.3 2,413 1.3 395 0.2 1,790 1.0 1,352 0.7 5,348 2.9 1,049 0.6 936 0.4 Electronic & Electrical Equipment Schneider Electric (France) 201 0.2 Industrial Engineering Charter Pursuit Dynamics Support Services Brammer Eruma Experian Group MDM Engineering Serco Group Waterman Group 829 0.5 278 0.1 293 0.2 197 0.1 457 0.2 688 0.4 416 0.2 186 0.1 Consumer Goods Food Producers Purecircle Household Goods Barratt Developments Bovis Homes Persimmon 1,624 0.9 101 0.1 641 0.3 358 0.2 Tobacco Altria Group (USA) 214 0.1 British American Tobacco 661 0.4 899 0.4 Imperial Tobacco 518 0.3 Phillip Morris (USA) Health Care Health Care, Equipment & Services 853 0.5 AOI Medical (USA) 350 0.2 Healthcare Locums Pharmaceuticals & Biotechnology 126 0.1 Alliance Pharma 2,537 1.4 GlaxoSmithKline 1,032 0.5 Medicsight 718 0.4 Toumaz Holdings Consumer Services Food & Drug Retailers Sainsbury (J) Tesco 327 0.2 1,651 0.9 General Retailers Carphone Warehouse 515 0.3 Media DQ Entertainment (Asia) 422 0.2 2,748 1.5 HIPCricket (USA) 264 0.1 Motivcom Travel & Leisure Enterprise Inns Whitbread 918 0.5 723 0.4 REPORT & ACCOUNTS 2008 13 Valuation of Investments Holdings valued over £100,000 at 30 September 2008 Company Market Value % of £000 Fund Company Market Value % of £000 Fund Company Market Value % of £000 Fund Unlisted Investments Altair Financial Services 167 0.1 Buried Hill Energy (USA) 458 0.2 Celadon Mining (Asia) 350 0.2 Continental Petroleum 1,078 0.6 595 0.3 Diamond Wood China Majedie Asset Management Microsaic Systems Mitra Energy MN Speciality Steels Transpac (USA) TSI Vostok Energy Xshares (USA) 22,500 12.0 780 0.4 236 0.1 122 0.1 224 0.1 425 0.2 2,569 1.4 168 0.1 Unlisted Fixed Interest Investments Ionic Water Technologies (USA) Providence Resources (Ireland) Stratic Energy (USA) 465 0.3 236 0.1 210 0.1 Life Insurance Abbey Protection Aviva Legal & General Prudential Sagicor Financial 1,173 0.6 1,070 0.6 397 0.2 1,700 0.9 520 0.3 Real Estate 1,005 0.6 British Land 300 0.2 Grainger Trust 775 0.4 Land Securities Primary Health Properties 641 0.3 General Financial Capital Lease Aviation (Asia) ICAP London Capital MAN Group Plus Markets 2,344 1.3 355 0.2 2,277 1.2 560 0.3 546 0.3 113 0.1 877 0.5 Equity Investment Instruments Equatorial Biofuels L&G Japan Index Trust (Japan) London Asia Chinese (Asia) Majedie Asset Mgmt UK Equity ‘B’ Majedie Asset Mgmt UK Focus Fund ‘B’ Majedie Asset Mgmt UK Opps ‘A’ 180 0.1 246 0.1 248 0.1 2,447 1.3 Technology Software & Computer Services 2 Ergo Group Alterian Dragonwave Eservglobal (Australia) Phorm (USA) 1,796 0.9 276 0.1 560 0.4 1,544 0.8 3,507 1.9 Technology & Hardware Equipment Fidessa Group Software Radio Zenergy Power 249 0.1 313 0.2 514 0.3 Telecommunications Fixed Line Telecommunications BT 5,187 2.8 Mobile Telecommunications 409 0.2 Broca China Mobile (Asia) 278 0.1 ROK Entertainment (USA) 281 0.1 6,272 3.3 Vodafone 151 0.1 Vyke Communications Utilities Electricity Great Eastern Energy (Asia) Greenko Group (Asia) International Power KSK Power Venture (Asia) OPG Power Venture (Asia) Red Electrica (Spain) Scottish & Southern Energy 774 0.4 451 0.3 1,024 0.5 1,355 0.7 179 0.1 593 0.3 1,099 0.6 Gas, Water & Multi Utilities National Grid Northumbrian Water United Utilities 608 0.3 1,058 0.6 4,488 2.4 Financials Banks Bangkok Bank (Thailand) 249 0.2 Bank of Piraeus (Greece) 500 0.3 Barclays 5,564 3.0 Bbva (Bilb-Viz-Arg) (Spain) China Construction Bank (Asia) Credit Suisse (Switzerland) HSBC Industrial & Commercial Bank of China (Asia) 231 0.1 Kasikornbank (Thailand) 226 0.1 1,870 1.0 Standard Chartered 207 0.1 7,929 4.2 208 0.1 346 0.2 Non Life Insurance/Assurance BRIT Insurance 450 0.2 14 MAJEDIE INVESTMENTS PLC Board of Directors Henry S Barlow OBE MA FCA (64) Chairman He has lived in Malaysia since 1970 returning for frequent visits to the UK to pursue a number of business interests, chiefly involving agriculture. A former joint Managing Director of the Highlands Group, a large plantation company, he was appointed a director of Majedie in 1978. He has served on a number of committees, including that of the British-Malaysian Industry and Trade Association, ultimately as Chairman, and sits on the board of HSBC Bank (Malaysia) Berhad. He is a member of the board of Sime Darby Berhad which absorbed the businesses and assets of Golden Hope Plantations Berhad and Guthrie Ropel Berhad. He is a member of the Nomination Committee. He was non- executive Chairman of Majedie Asset Management Limited from 2002 until May 2006. Hubert V Reid (68) Deputy Chairman Senior Independent Director He is Chairman of Enterprise Inns plc and of Midas Income & Growth Trust PLC and a non-executive director of Michael Page International PLC. He was previously Managing Director and then Chairman of the Boddington Group plc and a non-executive director and then Chairman of Ibstock PLC, Bryant Group plc and of the Royal London Insurance Group. He was appointed a director of Majedie in 1999 and is Chairman of the Nomination Committee and a member of the Audit and Remuneration Committees. Andrew J Adcock (54) Mr Adcock has been Vice Chairman, Citigroup Corporate Broking since 2002. Previously he was a Partner for three years at Lazards LLC which followed ten years at BZW as the Managing Director of De Zoete & Bevan Limited. He is also a non-executive director of F&C Global Smaller Companies PLC. He was appointed a director of Majedie on 1 April 2008 and appointed as the Chairman of the Audit Committee on 1 October 2008. He is also a member of the Nomination and Remuneration Committees. J William M Barlow BA (44) In 1991 he joined Skandia Asset Management Limited as an equity portfolio manager and was also Managing Director of DnB Asset Management (UK) Limited from 2002 until 2004. He currently works for New Edge Group (UK Branch), a 50/50 joint venture between Société Générale and Calyon. He is a non-executive director of Aintree Racecourse Company Limited. He was appointed to the Board in July 1999 and is a member of the Nomination Committee. Gerry P Aherne (62) Spent 18 years with Equity & Law in various actuarial and investment management roles up to 1986, then 16 years with Schroder Investment Management, as Investment Director up to 2002. He is currently Managing Partner of Javelin Capital Partners LLP and a non-executive director of Henderson Global Investors plc, where he is Chairman of the Remuneration Committee, and of Electric & General Investment Trust plc. He was a founding director of PRI Group plc from 2002 until 2003, when it was acquired by BRIT. He was appointed a director of Majedie in May 2006 and is Chairman of the Remuneration Committee and a member of the Audit and Nomination Committees. The Board is composed of wholly non-executive Directors. REPORT & ACCOUNTS 2008 15 Directors’ Report The directors submit their report and the accounts for the year ended 30 September 2008. Introduction A review of developments during the year and of future prospects is contained in the Chairman’s Statement on pages 5 to 10. The Business Review, on pages 19 to 23, the section on Corporate Governance on pages 24 to 26 and the Report on Directors’ Remuneration on pages 27 to 32 form part of this report. The audited financial statements are presented on pages 36 to 71. An analysis of the portfolio is given on pages 13 and 14. The subsidiary undertakings principally affecting the profits and net assets of the Group during the year are listed in note 13 to the accounts. Principal Activity The Company operates as an investment trust company engaged primarily in investment in listed securities. See Business Review on pages 19 to 23. Results and Dividend Consolidated net revenue return before taxation amounted to £6,462,000 (2007: £7,095,000). The directors recommend a final ordinary dividend of 6.3p per ordinary share and a special dividend of 2.25p per ordinary share, payable on 28 January 2009 to shareholders on the register at the close of business on 9 January 2009. Together with the interim dividend of 4.2p per share paid on 30 June 2008, this makes a total distribution of 12.75p per share (2007: 14.5p per share). Directors The present directors of the Company are listed on page 15. During the year and following a comprehensive strategic review, various changes were implemented which resulted in the Board being comprised of wholly non-executive directors, as is detailed on page 24 in the section relating to Corporate Governance. The director retiring by rotation and seeking re-election at the forthcoming Annual General Meeting in accordance with the Articles of Association will be J W M Barlow. As explained in last year’s report, in accordance with the principles of the Combined Code, H V Reid has agreed to submit himself for annual re-election having served on the Board for over nine years. Mr A J Adcock was appointed a director on 1 April 2008 and in accordance with the Articles of Association will offer himself for election at the Annual General Meeting. The Board has considered and reviewed their appointment prior to submission for recommendation. The Board believes that the performance of Mr Barlow, Mr Reid and Mr Adcock continues to be effective, that they demonstrate commitment to their roles and have a range of business, financial and asset management skills and experience relevant to the direction and control of the Company. Notwithstanding that Hubert Reid will have served on the Board for over nine years, his fellow directors consider that he continues to make a valuable contribution and to exercise his judgement and express his opinions in an independent manner. The continuing directors recommend that shareholders vote in favour of the re-election of each director retiring and for the election of Mr Adcock. Directors’ Interests Beneficial interests in ordinary shares as at: H S Barlow H V Reid J W M Barlow 30 September 2008 1 October 2007 15,017,619 14,605,619 33,214 1,254,857 33,214 1,520,137 G P Aherne and A J Adcock have no beneficial interests in the shares of the Company. The beneficial interests disclosed above include the total holdings of shares within certain trusts where there are other beneficiaries. Non-beneficial interests in ordinary shares as trustees for various settlements as at 30 September: H S Barlow J W M Barlow 30 September 2008 1 October 2007 613,084 2,235,777 613,084 2,235,777 Some of the directors’ holdings are duplicated, the total after elimination of duplicated holdings being 18,750,058 shares at 30 September 2008 (2007: 18,474,117). There have been no changes to any of the above holdings between 30 September 2008 and the date of this report. 16 MAJEDIE INVESTMENTS PLC (cid:129) There are: no restrictions concerning the transfer of securities in the Company; no special rights with regard to control attached to securities; no agreements between holders of securities regarding their transfer known to the Company; and no agreements which the Company is party to that might affect its control following a takeover bid. (cid:129) There are no agreements between the Company and its Directors concerning compensation for loss of office. Policy on Payment of Suppliers It is the Company’s policy to settle all investment transactions in accordance with the terms and conditions of the relevant market in which it operates. All other expenses are paid on a timely basis in the ordinary course of business. At 30 September 2008 the Company had three days of suppliers’ invoices outstanding in respect of trade creditors (2007: four days). Status The Company has received written confirmation from HM Revenue & Customs that it was an approved investment trust for taxation purposes under Section 842 of the Income and Corporation Taxes Act 1988 in respect of the year ended 30 September 2006. In the opinion of the directors the Company has subsequently directed its affairs so as to enable it to continue to qualify for such approval and the Company will continue to request formally written confirmation of investment trust status each year. The Company is not a close company. The Company is a public limited company and an investment company under Section 833 of the Companies Act 2006. With the exception of employment arrangements in respect of the former executive directors, no director had an interest at any time during the year or since in any material contract, being a contract of significance with the Company or any subsidiary of the Company. Details of the former executive directors’ share options and restricted share awards are provided in the Report on Directors’ Remuneration on pages 31 and 32. Substantial Shareholdings At the date of this report the Company has been notified of the following substantial holdings in shares carrying voting rights: 15,017,619 H S Barlow 7,084,940 The AXA Group 2,499,642 Sir J K Barlow – beneficial 869,086 Sir J K Barlow – non-beneficial M H D Barlow – beneficial 2,714,078 M H D Barlow – non-beneficial 1,378,750 1,784,948 Miss A E Barlow 1,860,270 G B Barlow 28.59% 13.49% 4.76% 1.65% 5.17% 2.62% 3.40% 3.54% The substantial voting rights disclosed above include the total holdings of shares within certain trusts where there are other beneficiaries. Section 992 Companies Act 2006 The following information is disclosed in accordance with Section 992 of the Companies Act 2006. (cid:129) The Company’s capital structure and voting rights are summarised on page 60. (cid:129) Details of the substantial shareholders in the Company are listed above. (cid:129) The rules concerning the appointment and replacement of directors are contained in the Company’s Articles of Association and are discussed on page 25. (cid:129) Amendment of the Company’s Articles of Association and the giving of powers to issue or buy back the Company’s shares require a special resolution to be passed by shareholders. The Board’s current powers to issue or buy back shares and proposals for their renewal are detailed on page 18. REPORT & ACCOUNTS 2008 17 Directors’ Report Annual General Meeting At the Annual General Meeting of the Company held on 16 January 2008, shareholders gave approval for the directors to make market purchases of up to 7,873,947 ordinary shares of 10p each. During the year ended 30 September 2008 the Company did not make any purchases of its own shares for cancellation (2007: nil). Further amendments to the New Articles may be required as a result of the 2006 Act not being fully in force until October 2009. The 2006 Act represents a major reform of the UK companies’ legislation and is being brought into force in stages, with full implementation scheduled during October 2009. It is the Board’s intention that any further amendments will be put to the shareholders at the 2010 AGM. Shareholder approval is sought at the Annual General Meeting to renew the authority of the Company to exercise the power contained in its Articles of Association to make market purchases of its own shares. The directors consider it desirable that the Company be authorised to make such purchases. The maximum number of shares which may be purchased under this authority is 7,873,947 being 14.99% of the issued share capital. Any shares so purchased will be cancelled. Under the proposed authority the maximum price (exclusive of expenses) which may be paid for such shares shall be 5% above the average of the middle market quotations taken from the London Stock Exchange Daily Official List for the five business days before the purchase is made. New Articles of Association Shareholders approval will also be sought at the Annual General Meeting to adopt new Articles of Association. Company law and best practice has undergone a number of changes since the current Articles of Association of the Company were adopted in 2000, particularly since January 2007 when the staged implementation of the Companies Act 2006 (the “2006 Act”) commenced. The Board considers that it is prudent to replace the Company’s existing Articles with new Articles which take account of those developments (the “New Articles”). A summary of the material changes brought about by the proposed adoption of the new Articles is set out in the Appendix on pages 77 to 79 of this document. Other changes which are of a minor, technical or clarifying nature have not been noted in the appendix. Additionally, the limit on aggregate directors’ fees has not been increased since January 1998 and requires revision in order to allow for the increase in non-executive directors following the restructuring and to allow for anticipated increases in fees over a number of years. Therefore the Company proposes to increase the limit to £250,000 per annum. A copy of the proposed new Articles marked up to show the proposed amendments will be available for inspection from the date of this document until the conclusion of the AGM during normal business hours on any weekday at the registered office of the Company. The proposed new Articles will be available for inspection at any time until the conclusion of the AGM on the Company’s website at www.majedie.co.uk and will be available at the venue of the AGM from 15 minutes prior to and until the conclusion of the meeting. Disclosure of Information to Auditors As far as each of the directors are aware: (cid:129) there is no relevant audit information of which the Company’s Auditors are unaware; and (cid:129) they have taken all steps that they ought to have taken as directors in order to make themselves aware of any relevant audit information and to establish that the Company’s Auditors are aware of that information. This confirmation is given and should be interpreted in accordance with the provisions of Section 418 of the Companies Act 2006. Auditors Ernst & Young LLP were appointed by the directors as Auditors on 18 January 2008 to fill a casual vacancy following the resignation of Deloitte & Touche LLP as Auditors. Ernst & Young LLP have indicated their willingness to continue in office and a resolution will be proposed at the Annual General Meeting to appoint them as Auditors. By Order of the Board Capita Sinclair Henderson Limited Company Secretary 26 November 2008 18 MAJEDIE INVESTMENTS PLC Business Review Introduction This Business Review provides shareholders with an insight into the nature and structure of the Company and its operations during the year. In particular, it gives information on: (cid:129) the regulatory and competitive environment within which the Company operates; (cid:129) the internal environment relating to the Company, including the framework of governance implemented by the Board to ensure as far as possible that the Company’s objectives are achieved with minimum risk; (cid:129) the management of the investment portfolio; (cid:129) the Company’s performance in the year measured against Key Performance Indicators (KPIs); and (cid:129) the development of the overall business. Regulatory and Competitive Environment The Company is a self-managed investment trust and is listed on the London Stock Exchange. It is subject to UK company law, International Financial Reporting Standards, Listing, Prospectus and Disclosure Rules, taxation law and the Company’s own Articles of Association. The appointment of the Board is approved by shareholders and the directors are charged with ensuring that the Company complies with its objectives as well as these regulations. The majority of investment trusts outsource the management of their investment portfolios to external fund management companies. Majedie Investments PLC is a self-managed investment trust where the investment portfolio is managed by an internal investment team led by the Investment Director. The directors remain committed to seeking new business development opportunities which can contribute to the strategic objective of generating superior returns for shareholders. Under the Companies Act 2006, Section 833, the Company is defined as an investment company. As such, it analyses its Income Statement between profits available for distribution by way of dividends, revenue profits and capital profits. The financial statements, starting on page 36, report on these profits, the changes in equity, the balance sheet position and the cash flows in the current and prior financial period. This is in compliance with current International Financial Reporting Standards, supplemented by the Revised Statement of Recommended Practice for Investment Trust Companies (SORP). The principal accounting policies of the Company are set out in note 1 to the accounts on pages 46 to 50. The Auditors’ opinion on the Financial Statements, which is unqualified, appears on pages 34 and 35. In addition to the annual and half-yearly results and Interim Management Statements, the Company makes weekly net asset value (NAV) announcements via an authorised Stock Exchange regulatory news service. The Company also reports to shareholders on performance against benchmark, corporate governance and investment activities. At least one shareholders’ meeting is held in each year in January to allow shareholders to vote on the appointment of directors and the Auditors, the payment of dividends, authority for share buybacks and any other special business. The business of the next such Annual General Meeting, scheduled for 20 January 2009 is set out on pages 73 to 76. The Company is subject to corporation tax on its net revenue profits but is exempt from corporation tax on capital gains, provided it complies at all times with Section 842 of the Income and Corporation Taxes Act 1988. Section 842 requires, broadly that: (cid:129) the Company’s revenue (including dividend and interest receipts but excluding profits on sale of shares and securities) should be derived wholly or mainly from shares and securities; (cid:129) the Company must not retain in respect of any accounting period more than 15% of its income from shares and securities; (cid:129) no holding in a company should represent more than 15% by value of the Company’s investments in shares and securities unless the holding was acquired previously and the value has risen to exceed the 15% limit without any action having been taken; and (cid:129) realised profits on sale of shares and securities may not be distributed by way of dividend. Compliance with these rules is proved annually in retrospect to HM Revenue and Customs (HMRC). HMRC approval of the Company as an investment trust is granted ‘subject to there being no subsequent enquiry under corporation tax self-assessment’. Such approval has been received in respect of all relevant years up to and including the year ended 30 September 2006, since when the Company has continued to comply with these rules. REPORT & ACCOUNTS 2008 19 Business Review Governance The Company’s Board of directors is responsible for the overall stewardship of the Company, including corporate strategy, corporate governance, risk and controls assessment, overall investment policy, asset allocation and gearing limits. There are five non executive members of the Board as set out on page 15 of whom three are considered to be independent. This Board structure satisfies the Combined Code recommendations. Nonetheless the Board considers that all its directors exercise their judgement in an independent manner. Please refer to the Corporate Governance section on pages 24 to 26 for further information regarding the Combined Code and the three main committees of the Board: Audit, Remuneration and Nomination. Investment performance is measured primarily against a benchmark comprising 70% FTSE All-Share Index and 30% FTSE World ex UK Index (Sterling) on a total return basis. In the process of its governance of the Company, the Board regularly reviews internally generated reports and reports from other independent sources such as The WM Company to assess the on-going investment performance of the Company. Income and cost forecasts are reviewed to enable costs to be controlled within budget and to ensure that the Company is able to pursue a progressive dividend policy while remaining in compliance with the relevant tax rules. Other regularly reviewed reports include those covering the list of investments, the level of gearing, the discount to net asset value and the shareholder register. The Board’s assessment of the major risks faced by the Company, together with the principal controls in place to mitigate the risks, is set out later in this review. Capital Structure As part of its corporate governance the Board keeps under review the capital structure of the Company. At 30 September 2008 the Company had an issued share capital of £5,252,800, comprising 52,528,000 ordinary shares of 10p each. The Board seeks each year to renew authority of the Company to make market purchases of its own shares. However, the Board is only likely to use such authority in special circumstances. In general the directors believe that the discount to net assets will be reduced sustainably over the long term by the creation of value through the development of the business. In 1994 and 2000 the Company issued two long term debentures: £15m 9.5% debenture stock 2020 and £25m 7.25% debenture stock 2025 respectively. In 2004 the Company redeemed £1.5m of the 2020 issue and £4.3m of the 2025 issue as an opportunity arose to redeem at an attractive price. The Board is responsible for setting the overall gearing range within which the Investment Director may operate. Principal Risks The principal risks and the Company’s policies for managing these risks and the policy and practices with regard to financial instruments are summarised in note 25 to the accounts. The Company’s assets consist mainly of quoted equity securities and its principal risks are therefore market related. The number of investments held, together with the geographic and sector diversity of the portfolio, enables the Company to spread its risks with regard to liquidity, market volatility, currency movements and revenue streams. The portfolio has various specific limits for individual stocks and market sectors which are employed to restrict risk levels. The level of portfolio risk is assessed in relation to the benchmark utilising various portfolio risk management tools. It should be noted that whilst we have a benchmark, the portfolio is constructed independently and can be significantly different. Therefore the portfolio can experience periods of volatility over the short term. Also the level of risk at a net asset value level increases with gearing. In certain circumstances cash balances may be raised to reduce the effective level of gearing. This would result in a lower level of risk in absolute terms. Other risks faced by the Company include the following: i. an inappropriate investment strategy could result in poor returns for shareholders and a widening of the discount of the share price to the NAV per share. The Board regularly reviews strategy in relation to a range of issues including the allocation of assets between geographic regions and industrial sectors; and gearing; 20 MAJEDIE INVESTMENTS PLC ii. failure to comply with regulations could result in the Company losing its listing and/or being subjected to corporation tax on its capital gains. The Board receives and reviews regular reports from the fund administrator on its controls in place to prevent non- compliance of the Company with rules and regulations. The Board also receives regular investment listings and income forecasts as part of its monitoring of compliance with Section 842; iii. inadequate financial controls could result in misappropriation of assets, loss of income and debtor receipts and mis-reporting of NAVs. The Board regularly reviews statements on internal controls and procedures and subjects the books and records of the Company to an annual audit. The financial risks are set out in more detail in note 25 on pages 64 to 70. iv. loss of key staff could affect investment returns. The quality of the management team and contingency planning is a crucial factor in delivering good performance. The Company develops its recruitment and remuneration packages in order to retain key staff and undertakes succession planning. The systems in place to manage the Company’s internal controls are described further on page 26. Management of Assets and Shareholder Value The Company invests around the world in markets, sectors and companies that the Board and Investment Director believe will generate long term growth in capital and income for shareholders. Many potential investments are considered each year. The Investment Director meets a large number of management teams from potential corporate investments. Assessing the quality of management is a key input into the investment process. Extensive work is also done on analysing potential investments for their market positioning/competitive advantage, financial strength and cashflow characteristics. Various valuation parameters are used to provide an indication of the potential attractiveness of the investment opportunity in relation to other potential investments in the area/sector and in relation to similar investments within the portfolio. The Board measures the overall investment performance of the Company against the benchmark. Investment risks are spread through holding a range of securities in different industrial sectors. The directors meet with larger shareholders outside the Annual General Meeting as appropriate. Meetings are also held with investment trust analysts and stockbroking firms. The Company has three investor savings schemes which provide shareholders with cost effective and convenient ways of investing. Communication of up-to-date information is provided through the website at www.majedie.co.uk. Performance Highlights The Board uses the following Key Performance Indicators (KPIs) to help assess progress against the Company’s objectives: (cid:129) NAV total return. (cid:129) total shareholder return. both measured against benchmark total return. The above KPIs are commented on and displayed in graphical form within the Chairman’s Statement on pages 5 to 10. The following KPIs are commented on in this Business Review: (cid:129) investment portfolio return (total assets): see Investment Performance on page 22. (cid:129) share price discount: the level of the discount at the end of the financial year calculated with debt at par was 15.7% and was similar to that at the start of the year. (cid:129) total expense ratio: see Costs on pages 4 and 23. (cid:129) annual dividend growth: See Total Return Philosophy & Dividend Policy on page 23. REPORT & ACCOUNTS 2008 21 Business Review Investment Performance The following table summarises the relative investment performance comparing the returns from total assets with those of the benchmark: Period ended 30 September Return from Total Assets Return from Benchmark 1 year 3 years 5 years 10 years (31.10%) 0.33% 44.64% 53.34% (19.90%) 1.83% 43.76% 48.57% Arithmetic Outperformance/ (Underperformance) (11.20%) (1.50%) 0.88% 4.77% Following the review of the treatment of MAM, which resulted in its inclusion in the group NAV and accounts in line with the other unlisted investments, it is considered appropriate to include it within the investment performance record. Prior period returns have been restated to reflect the change. As at 30 September 2008 the Total Assets portfolio totalled £187.2m and included investments of £179.0m (inclusive of MAM at £22.5m) and cash balances of £8.1m. At the Net Asset Value level, the Attribution Analysis table below shows the composition of difference between the NAV total return and the benchmark (on a total return basis) for the year ended 30 September 2008. The investment portfolio relative performance shown, as calculated by the WM Company and excluding Majedie Asset Management (MAM), is split between asset allocation and stock selection and includes the impact of our change to an income inclusive NAV during the year. The rest of the difference between the NAV total return for the year and the benchmark return arose from the net impact of the gearing effect of the debentures less debenture interest costs, and the total contribution from MAM (being the increase in the value of the investment in the year plus special dividend income received). Total shareholder return for the year was (36.9%). The level of net gearing during the year ranged between 10.7% and 16.7%. ATTRIBUTION ANALYSIS NA V Total Return (36.2%) Return from Benchmark (19.9%) Source: The WM Company, Majedie (16.3%) Stock Selection –15.6% Asset Allocation 3.8% Costs –1.6% Debenture Interest –1.3% Net Gearing –5.7% MAM 4.1% 22 MAJEDIE INVESTMENTS PLC Majedie Asset Management Limited In 2002 the Company established a new fund management subsidiary specialising in UK equities: Majedie Asset Management, which was launched in March 2003. Having started with a 70% shareholding, the Company now retains a 30% interest. The relevant developments during the year are referred to in the Chairman’s Statement on page 6 and further referred to in note 12 on pages 58 and 59. Business Development We continue to seek other business development opportunities in areas of specialisation which have strong prospects of generating superior investment returns – particularly where such opportunities would be complementary to, and would generate synergies with the existing business. Costs The Company’s expense ratio over net assets is 1.6% which compares with the investment trust sector average of 1.6%. The Board pays close attention to cost control and the current situation is referred to further in the Chairman’s Statement on page 5. Total Return Philosophy & Dividend Policy The directors believe that investment returns will be maximised if a total return policy is followed whereby the investment team pursues the best opportunities irrespective of the associated dividend yield. The Company has a comparatively high level of revenue reserves for the investment trust sector. The strength of these reserves will from time to time assist in underpinning our progressive dividend policy in years when the income from the portfolio is insufficient to cover completely the annual distribution. The Board is currently committed to a progressive dividend policy where the dividend is increased each year by more than the rate of inflation and this has been achieved in each of the last eighteen years. However, as mentioned in the Chairman’s Statement the Company’s dividend policy is under review. At £28.8m, the revenue reserves represent more than five times the current annual core dividend distribution. Over the last ten years the average annual growth of the dividend has been 3.8%. REPORT & ACCOUNTS 2008 23 Corporate Governance This section of the annual report describes how Majedie Investments has applied the principles of section 1 of the Combined Code on Corporate Governance, as required by the Financial Services Authority (FSA). The Board considers that the Company has complied with the provisions of the Combined Code throughout the year ended 30 September 2008 except as set out below. The Company It is first relevant to consider the special nature of Majedie Investments compared with other listed companies in relation to matters of corporate governance. In complying with the more detailed aspects of best corporate governance practice, the Board takes into account the following: – Majedie is a listed investment trust; – unlike many investment trusts, the business is self- managed; and – the Barlow family as a whole owns about 55% of the shares in issue. Although the family shareholding in total is significant, there are a number of individual family members and trusts represented by many separate shareholdings. The principal objective of the Board of directors continues to be to maximise total shareholder return for all shareholders. The Company does not have an internal audit function as required under provision C.3.5. of the Combined Code. Board and Directors As announced on 31 March 2008 and following a comprehensive strategic review of the Company’s structure and organisation it was decided that the Board should be comprised of wholly non-executive directors and that the role of Chief Executive should cease to exist. Accordingly Mr Robert Clarke resigned from the Board and as Chief Executive by mutual consent with effect from 31 March and left Majedie’s employment on 30 June 2008 having assisted with the transition process. Mrs Gill Leates, Investment Director, resigned as a director on 31 March 2008 and on 25 November 2008 resigned from the Company. The resulting non-executive Board was strengthened by the appointment of Mr Andrew Adcock as a director from 1 April 2008. Mr Adcock has been Vice Chairman, Citigroup Corporate Banking since 2002. Following these changes the Board now comprises: H S Barlow (Chairman) H V Reid (Deputy Chairman and Senior Independent Director) A J Adcock G P Aherne J W M Barlow Messrs Adcock, Aherne and Reid are considered to be independent as defined by the Combined Code but the Board considers that all directors exercise their judgements in an independent manner. Mr Hubert Reid is the Senior Independent Director and chairs the Nomination Committee. He is now a member of the Remuneration and Audit Committees having handed over the Chairmanship of these committees to Mr Gerry Aherne (Remuneration) and Mr Andrew Adcock (Audit) on 1 April and 1 October 2008 respectively. The Board meets at least six times in each calendar year and its principal focus is the strategic development of the Group, investment policy and the control of the business. Key matters relating to these areas including the monitoring of financial performance are reserved for the Board and set out in a formal statement. During the year ended 30 September 2008 nine Board meetings were held and in addition there were two Audit Committee meetings, two Nomination Committee meetings and two Remuneration Committee meetings. Attendance at Board and Committee meetings was as follows: Director Board Audit Nomination Remuneration H S Barlow H V Reid A J Adcock G P Aherne J W M Barlow 8 9 2 9 9 n/a 2 n/a 2 n/a 2 2 n/a 2 n/a n/a 2 n/a 2 n/a 24 MAJEDIE INVESTMENTS PLC The Board has undertaken a formal and rigorous evaluation of its own performance through the circulation of a comprehensive questionnaire. Having discussed the results it concluded that the Board continues to function effectively and that the Chairman and Directors’ other commitments are such that all Directors are capable of devoting sufficient time to the Company. The Nomination Committee comprises the entire Board. It considers appointments to the Board of directors in the context of the requirements of the business, its need to have a balanced and effective Board and succession planning. The Committee may use external search consultants to assist with recruitment to the Board and did so when Mr Adcock was appointed. The Company’s Articles of Association require a Director appointed during the year to retire and seek re-election by shareholders at the next Annual General Meeting and all directors must seek re-election at least every three years. All directors are appointed for a fixed term of three years after election or re-election by shareholders at a general meeting. Towards the end of each fixed term the Board will consider whether to renew a particular appointment. Mr H V Reid has served on the Board since January 1999 and submits himself for annual re-election as a director in accordance with the principles of the Combined Code. The Board believes that independence is not compromised by length of service and that experience and continuity can add to the strength of the Board. The Nomination Committee met twice during the year to consider the appointment of Mr Adcock and subsequently, in Mr Reid’s absence, to consider his re-appointment for a further year. It decided to recommend his re-appointment on the basis that he continues to make a valuable contribution and to exercise his judgement and express his opinions in an independent manner. The terms of reference of the Nomination Committee are available on request or from the Company’s website. The Board has agreed and established a procedure for directors in furtherance of their duties to take independent professional advice if necessary, at the Company’s expense. The Company has arranged Directors’ and Officers’ Liability Insurance which provides cover for legal expenses under certain circumstances. Directors’ Remuneration The Remuneration Committee comprises: Gerry Aherne (Chairman), Hubert Reid and Andrew Adcock. Henry Barlow and William Barlow are invited to attend and participate in the relevant meetings. Relations with Shareholders Members of the Board and the Investment Director hold meetings with the Company’s principal shareholders and prospective investors to discuss the Company’s strategy, financial and investment performance. The issues discussed with shareholders are reported in detail to the full Board. Shareholders are encouraged to attend the Annual General Meeting and to participate in the proceedings. Separate resolutions are tabled in respect of each substantial issue. Corporate Social Responsibility In carrying out its activities and in relationships with employees, suppliers and the community, the Company aims to conduct itself responsibly, ethically and fairly. Institutional Voting – Use of Voting Rights The Investment Director, in the absence of explicit instructions from the Board, is empowered to exercise discretion in the use of the Company’s voting rights. Accountability and Audit In the annual report each year the directors seek to provide shareholders with information in sufficient detail to allow them to obtain a reasonable understanding of recent developments affecting the business and the prospects for the Company in the year ahead. The Business Review on pages 19 to 23 provides additional further information. The Audit Committee comprises: Andrew Adcock (Chairman), Hubert Reid, and Gerry Aherne. Henry Barlow and William Barlow and representatives of the auditors are invited to attend meetings of the Committee. The Board has agreed the terms of reference for the Audit Committee which meets at least twice a year. In particular during the year the Committee has reviewed the Group’s financial statements to ensure they are prepared to a high standard and comply with all the relevant legislation and guidelines where appropriate. The Audit Committee met twice during the year and Hubert Reid and Gerry Aherne were present at both meetings. The terms of reference of the Audit Committee are available on request or from the Company’s website. REPORT & ACCOUNTS 2008 25 Corporate Governance The Audit Committee has considered the independence and objectivity of the Auditor. It has satisfied the Board that it is satisfied in these respects and considers that Ernst & Young LLP has fulfilled its obligations to the Company and its Shareholders. The Audit Committee has reviewed the “whistleblowing” procedures of the Company to ensure that concerns of staff may be raised in a confidential manner. Internal Control Review The directors acknowledge that they are responsible for the systems of internal control relating to the Company and its subsidiaries and for reviewing the effectiveness of those systems. An ongoing process has been in existence for some time to identify, evaluate and manage risks faced by Group companies. Key procedures are also in place to provide effective financial control over the Group’s operations. The risk management process and systems of internal control are designed to manage rather than eliminate the risk of failure to achieve the Company’s objectives. It should be recognised that such systems can only provide reasonable, not absolute, assurance against material misstatement or loss. Risk assessment and the review of internal controls are undertaken by the Board in the context of the Company’s overall investment objective. The review covers business strategy, investment management, operational, compliance and financial risks facing the Company and its subsidiaries. In arriving at its judgement of the nature of the risks facing Group companies, the Board has considered the Group’s operations in the light of the following factors: – the nature and extent of risks which it regards as acceptable to bear within the overall business objective; – the likelihood of such risks becoming a reality; and – management’s ability to reduce the incidence and impact of risk on performance and the relevant controls. Given the nature of the activities of the Company and the fact that certain key functions are sub-contracted to third party service provider organisations, the directors have reviewed the controls operating and have obtained information from key third party suppliers regarding the relevant controls operated by them. The Company does not have an internal audit function. Having recently considered this matter the directors are of the opinion that there is no need at the present time for the Company to have an internal audit function since there are considered to be adequate checks and balances. In particular the fund administration, accounting and company secretarial functions of the investment trust are performed by Capita Sinclair Henderson Limited. Custody is outsourced to RBC Dexia Investor Services Trust. In accordance with guidance issued to listed companies, (the Turnball Guidance) the directors have carried out a review of the effectiveness of the system of internal control as it has operated over the year and up to the date of approval of the report and accounts. Ernst & Young LLP are the Auditors of the Company, the Group and subsidiary companies. The Board believes that auditor objectivity is safeguarded, for two main reasons. First the extent of non-audit work carried out by Ernst & Young LLP is limited and flows naturally from the firm’s role as Auditor to the group. Capita Sinclair Henderson Limited advises the Company on corporation tax computations and submissions to HM Revenue & Customs. Ernst & Young LLP may provide taxation advice to the Group from time to time on various issues and in particular each year reviews the work carried out by Capita Sinclair Henderson Limited and reviews the relevant taxation issues at the time of the audit of the annual report. Secondly, Ernst & Young LLP has provided information on its independence policy and the safeguards and procedures it has developed to counter perceived threats to its objectivity. It also confirms that it is independent within the meaning of all regulatory and professional requirements and that the objectivity of the audit is not impaired. Going Concern The directors believe that the Company has adequate financial resources to continue in operational existence for the foreseeable future. For this reason, the Board continues to adopt the going concern basis in preparing the financial statements. 26 MAJEDIE INVESTMENTS PLC Report on Directors’ Remuneration This report has been prepared in accordance with Schedule 7A to the Companies Act 1985. The report also meets the relevant requirements of the Listing Rules of the Financial Services Authority and describes how the Board has applied the principles relating to the directors’ remuneration. As required by the Act, a resolution to approve the report will be proposed at the Annual General Meeting of the Company at which the financial statements will be approved. The Act requires the Auditors to report to the Company’s members on certain parts of the report on directors’ remuneration and to state whether in their opinion those parts of the report have been properly prepared in accordance with the Companies Act 1985. The report has therefore been divided into separate sections for audited and unaudited information. UNAUDITED SECTION Remuneration Committee The Remuneration Committee is chaired by Gerry Aherne. During the year to 30 September 2008, the Committee comprised solely independent directors – being Hubert Reid, Gerry Aherne and Andrew Adcock. Gerry Aherne was appointed Chairman and Andrew Adcock joined the Committee on his appointment to the Board, both respectively on 1 April 2008. Henry Barlow (Chairman of the Board), and Robert Clarke, (former Chief Executive who left the Company on 30 June 2008) were invited to attend meetings, but withdrew when their own remuneration was discussed and did not participate in decisions on their own remuneration. William Barlow is also invited to attend meetings. Michael Buckley of Capita Sinclair Henderson Limited acted as Secretary to the Committee. The terms of reference of the Remuneration Committee are available on request or from the Company’s website. The Role of the Committee and Policies on Directors’ Remuneration The role of the Committee is to establish Board policy in respect of terms of employment, including remuneration packages, in detail for the Chairman and non-executive directors and in general for certain senior executives. The Committee seeks to encourage the enhancement of the Company’s performance and to ensure that remuneration packages offered are competitive and designed to attract, retain and motivate directors and senior executives of the right calibre. In setting both the policy related to, and levels of, remuneration and benefits for non-executive directors and senior executives, the Committee takes account of market data and independent professional advice. In particular the Committee is mindful that the Company operates in the financial services sector in the City of London where there is competition among organisations for well-qualified senior executives. Remuneration Policy The Board’s policy is that the remuneration of non-executive directors should reflect the experience of the Board as a whole, and is determined with reference to comparable organisations and appointments. It is intended that this policy will continue for the year ending 30 September 2009 and subsequent years. Following a restructuring of the Board during the year the Committee and the Board also reviewed the level of non- executive directors’ fees having regard to the increased workload and responsibilities that arose. This resulted in the decision to increase fees paid to the Chairman and basic non-executive directors’ fees to £48,000 and £27,000 per annum respectively. It was also decided to provide an additional fee of £3,000 per annum to the Chairman of the Audit and Remuneration Committees and for the Senior Independent Director. These changes which took effect from 1 April 2008 along with the appointment of an additional non-executive director will require that the current aggregate limit on directors’ fees of £150,000 per annum to be raised and a resolution increasing this to £250,000 per annum is included as part of the adoption of new Articles on page 78. The directors’ fees aggregate limit was last increased in January 1998 and directors’ fees themselves in June 2005. Non-executive directors are not eligible for bonuses, pension benefits, share options, long term incentive schemes or other benefits. The Company intends that its remuneration arrangements for senior executives should reward the creation of added value over the long term and specifically incentivise senior executives to achieve a degree of investment outperformance in keeping with a moderate level of risk. The Committee has given full consideration to the principles of good governance of the Combined Code. The Board has accepted the Committee’s recommendations without amendment. REPORT & ACCOUNTS 2008 27 Report on Directors’ Remuneration A significant proportion of the former executive directors’ remuneration was performance-related. The proportion of pay at risk for 2007/08 was as follows. In preparing the table below at ‘target performance’ the bonus is assumed to be half the maximum payout and the LTIP has an expected value of 50% of salary. At ‘maximum performance’ the LTIP has been assumed to have an expected value of 100% of salary. Salary Cash Bonus Deferred Bonus LTIP Total Chief Executive At Target Performance At Maximum Performance Investment Director At Target Performance At Maximum Performance 50% 13% 12% 25% 100% 33% 17% 17% 33% 100% 48% 14% 14% 24% 100% 31% 19% 19% 31% 100% Salary The basic salary of each former executive director was determined by the Committee after taking into account market data provided by independent consultants, individual performance and the extent and the nature of an individual’s responsibilities. Bonus The bonus structure comprised two elements relating to investment performance and business development. Investment performance was assessed over both one year and three year periods. The normal maximum bonus for the Chief Executive was 100% of salary and for the Investment Director was 120% of salary. The normal maximum cash element of the bonus was 50% and 60% of salary respectively. A matching award of shares equal in value to the cash bonus (a ‘Matching Award’) was made under the LTIP. The Matching Award only vests once the executive has completed three years’ further service and therefore has an important retention effect. Payments under the bonus scheme are not pensionable. In January 2007 shareholders approved the award of special additional bonuses to the then two executive directors in relation to the successful receipt of special cash dividends from Majedie Asset Management Limited in 2006/07 and 2007/08 only. The details are set out on pages 30 and 31 of the 2006 annual report. These exceptional bonuses were earned at the rate of 5% of special dividend cash receipts for each director and the cash element (being 50% of the total) was subject to annual maxima in each of the two years of 50% of salary for R E Clarke and 70% of salary for G M Leates. Long Term Total Shareholder Return (TSR) – based Awards As well as the deferred share ‘Matching Awards’ referred to above, the LTIP provides for the award of longer term TSR-based awards with two demanding performance conditions calculated over discrete five year periods. Annual award levels will normally be for shares with a maximum value of 100% of one year’s salary. TSR is the investment return obtained by a shareholder holding the Company’s shares over a specific period. It takes account of the change in share price during the period, any relevant corporate actions and assumes that all dividends are reinvested in the Company’s shares on the relevant ex-dividend date. 28 MAJEDIE INVESTMENTS PLC The two demanding performance conditions relate to: i. TSR v. benchmark return measured over five years; ii. TSR v. a specified absolute investment return measured over five years. For each of the above two measures there is a lower and higher threshold after five years shown in the following table: Threshold Minimum required performance for threshold and vesting Extent of vesting of award at minimum level (% of salary) Maximum Performance level at which maximum vesting is achieved Extent of vesting of award at minimum level (% of salary) TSR v benchmark Benchmark return 12.5% Benchmark return + 15% TSR v absolute return 7.5% p.a. compound (+44%) Extent of vesting of total award 12.5% 25% 10% p.a. compound (+61%) 50% 50% 100% The benchmark is the Company’s stated benchmark of 70% FTSE All-Share Index and 30% FTSE World ex UK Index (Sterling). The lower and higher thresholds are designed to be as stretching as median and upper quartile targets in a typical UK long term incentive plan. In normal circumstances, an award will vest in full only if the Company’s TSR reaches the higher threshold for both the relative performance condition and for the absolute performance condition. An award will not vest at all if the lower threshold is not met for either condition. Between the lower and higher threshold, a TSR-based Award will vest on a sliding scale basis. Pension Contributions The executive directors were eligible for membership of the new Barlow Service Company Limited Group Personal Pension Plan which is a non-contributory money purchase plan administered by Legal and General Assurance Society Limited. They were also members of and contributed to the previous non-contributory scheme in order to maintain certain existing rights within that scheme. The Company made total contributions on behalf of executive directors of 14–16% of salary and matched additional contributions made by members up to an additional 4% of salary. Members are also provided with permanent health insurance and life assurance cover on the basis of a lump sum death in service policy. Other Benefits Executive directors were also eligible for other benefits including a non-pensionable salary supplement in respect of a company car alternative and membership of a private medical scheme. SHARE PRICE TOTAL RETURN V BENCHMARK FOR THE PERIOD 1 OCTOBER 2003 TO 30 SEPTEMBER 2008 2.60 2.40 2.20 2.00 1.80 1.60 1.40 1.20 1.00 9/03 3/04 9/04 3/05 9/05 3/06 9/06 3/07 9/07 3/08 9/08 Majedie Benchmar k REPORT & ACCOUNTS 2008 29 Report on Directors’ Remuneration Performance The graph on page 29 compares the total shareholder return on a hypothetical portfolio constructed according to the following benchmark equity index over the last five years. The benchmark is 70% FTSE All-Share Index and 30% FTSE World ex UK Index (Sterling) and has been chosen as a comparator for the purpose of this graph since it is the Company’s formal benchmark. Service Contracts The Company’s policy with regard to directors’ service contracts is that no special provision is made for compensation in the event of loss of office. A fair but robust principle of mitigation was applied to the payment of compensation in the context of advice received. Robert Clarke had a service contract dated 9 November 1998 requiring twelve months’ notice of termination from either the Company or the individual. Gill Leates had a service contract dated 8 June 2007 requiring six months’ notice of termination from either the Company or the individual. Non-executive directors have memoranda of terms. AUDITED SECTION Directors’ Remuneration The remuneration of the directors for the year ended 30 September 2008 was as follows: Salary & Fees £000 Annual Bonus £000 Special Pension Bonus Contributions £000 £’000 Other Benefits £000 Note 44 32 25 26 13 315 152 607 4 5 2 3 – – – – – – – – – – – – – 99 101 200 – – – – – 55 27 82 – – – – – 45 15 60 Total 2008 £000 44 32 25 26 13 514 295 949 Total 2007 £000 40 30 23 23 – 385 343 844 Non-executive directors H S Barlow H V Reid J W M Barlow G P Aherne A J Adcock Executive directors R E Clarke G M Leates Notes 1. The above bonus amounts are in respect of the cash element of the total bonus awards for the year. The remaining element has been satisfied via matching awards of deferred shares which will normally vest after three years’ further service – see table on page 32 (and notes on page 28). The above bonus amounts are in respect of the cash element being 50% of the total bonus awards for the year. The remaining 50% have been satisfied via matching awards of deferred shares which will vest after three years’ further service – see table on page 32. 2. Left the Company on 30 June 2008. Compensation for leaving office under the terms of his leaving agreement, and included in the table above was that he received 9 months salary of £157,500, a payment of £30,000 and a pension contribution of £15,385. He also received the final special bonus of £46,483 in cash and £77,697 in a matching award of shares. 3. Left the Board on 31 March 2008 but for completeness the remuneration figures are for the year to 30 September 2008. There was no compensation for loss of office as a director. 4. Appointed Chairman of the Remuneration Committee on 1 April 2008. 5. Appointed to the Board on 1 April 2008. 30 MAJEDIE INVESTMENTS PLC Discretionary Share Option Scheme 2000 The last grants under the Discretionary Share Option Scheme 2000 were made in December 2004. The Committee has decided that no further grants will be made under the Scheme. Approved Share Options held by directors The following HM Revenue & Customs approved options were held by directors during the year to 30 September 2008: Date of Grant 14/02/01 14/02/01 Exercise Price Pence 361.5 361.5 Hurdle Rate (p.a.) Earliest Latest Date of Date of Exercise Exercise 8.5% 14/02/04 13/02/11 8.5% 14/02/04 13/02/11 At 1 Oct 2007 8,298 8,298 R E Clarke G M Leates Exercised Transfer out due to cessation of During appointment the Year as a director 8,298 8,298 – – Unapproved Share Options held by directors The following Matching Awards were held by or awarded to directors during the year to 30 September 2008: Date of Grant 14/02/01 14/02/01 23/11/01 23/11/01 22/11/02 22/11/02 18/03/04 18/03/04 21/12/04 21/12/04 Exercise Price Pence 361.5 361.5 283.5 283.5 196.5 196.5 221.5 221.5 231.5 231.5 Hurdle Rate (p.a.) Earliest Latest Date of Date of Exercise Exercise 8.5% 14/02/04 13/02/11 8.5% 14/02/04 13/02/11 8.5% 23/11/04 22/11/11 8.5% 23/11/04 22/11/11 7.5% 22/11/05 21/11/12 7.5% 22/11/05 21/11/12 7.5% 18/03/07 17/03/14 7.5% 18/03/07 17/03/14 7.5% 21/12/07 20/12/14 7.5% 21/12/07 20/12/14 At 1 Oct 2007 80,885 55,325 59,964 43,033 76,930 58,265 76,749 55,079 77,105 55,334 R E Clarke G M Leates R E Clarke G M Leates R E Clarke G M Leates R E Clarke G M Leates R E Clarke G M Leates Exercised Transfer out due to cessation of During appointment the Year as a director 80,885 55,325 59,964 43,033 – – – – – – – – – – 76,930 58,265 76,749 55,079 77,105 55,334 At 30 Sept 2008 – – At 30 Sept 2008 – – – – – – – – – – The performance targets attaching to the share option grants summarised in the table above are that the options are not exercisable unless total shareholder return between the date of grant and the proposed date of exercise exceeds the relevant annualised hurdle rate specified at the time of grant as shown. Under the terms of his leaving agreement R E Clarke’s options will lapse on 30 June 2009 if not exercised by that date. On 11 July 2008 R E Clarke exercised his remaining options that were granted on 22 November 2002, 18 March 2004 and 21 December 2004. The share price on this date was 304p resulting in a gain of £201,919. Additionally on 22 August 2008 G M Leates exercised her remaining options that were granted on 22 November 2002, 18 March 2004 and 21 December 2004. The share price on this date was 296.5p resulting in a gain of £135,541. REPORT & ACCOUNTS 2008 31 Report on Directors’ Remuneration Long Term Incentive Plan: TSR-based Awards The following TSR-based awards were held by directors during the year to 30 September 2008: Increase in Awards Due to Dividends Paid During Year Transfer out due to cessation of appointment as a director Number of Shares Awarded At 30 Sept 2008 R E Clarke G M Leates R E Clarke G M Leates R E Clarke G M Leates Date of Grant 27/01/06 27/01/06 27/11/06 27/11/06 03/12/07 03/12/07 At 1 Oct 2007 59,438 42,681 61,000 44,225 – – 58,577 42,469 2,511 1,804 2,578 1,869 2,476 1,795 61,949 44,485 63,578 46,094 61,053 44,264 – – – – – – Vesting Date Lapse Date 27/01/11 27/01/16 27/01/11 27/01/16 27/11/11 27/11/16 27/11/11 27/11/16 03/12/12 03/12/17 03/12/12 03/12/17 Under the terms of his leaving agreement R E Clarke’s TSR-based awards are eligible for early exercise with the extent of vesting dependant on the relevant performance conditions at exercise date, but will lapse on 31 December 2008 if not exercised by that date. Long Term Incentive Plan: Matching Awards The following Matching Awards were held by or awarded to directors during the year to 30 September 2008: Increase in Awards Due to Dividends Paid During Year Transfer out due to cessation of appointment as a director Number of Shares Awarded At 30 Sept 2008 At 1 Oct 2007 24,994 13,331 10,891 10,891 10,314 10,314 13,673 21,047 R E Clarke G M Leates R E Clarke G M Leates R E Clarke G M Leates R E Clarke G M Leates R E Clarke G M Leates R E Clarke G M Leates Date of Grant 27/11/06 27/11/06 24/01/07 24/01/07 21/05/07 21/05/07 14/11/07 14/11/07 03/12/07 03/12/07 10/06/08 10/06/08 – – – – 14,709 14,709 23,375 22,901 1,057 564 460 460 436 436 578 890 621 621 – – 26,051 13,895 11,351 11,351 10,750 10,750 14,251 21,937 15,330 15,330 23,375 22,901 – – – – – – – – – – – – Vesting Date Lapse Date 27/11/09 27/11/16 27/11/09 27/11/16 24/01/10 24/01/17 24/01/10 24/01/17 21/05/10 21/05/17 21/05/10 21/05/17 14/11/10 14/11/17 14/11/10 14/11/17 03/12/10 03/12/17 03/12/10 03/12/17 10/06/11 10/06/18 10/06/11 10/06/18 – – – – – – – – – – – – Under the terms of his leaving agreement R E Clarke’s matching awards are eligible for early exercise and will vest in full but will lapse on 31 December 2008 if not exercised by that date. During the year ended 30 September 2008 the share price traded within a range of 425.0p to 247.0p. The share price on 30 September 2008 was 250.0p. Approval The Report on Directors’ Remuneration on pages 27 to 32 was approved by the Board on 26 November 2008. On behalf of the Board G P Aherne Chairman of the Remuneration Committee 26 November 2008 32 MAJEDIE INVESTMENTS PLC Statement of Directors’ Responsibilities The Directors are responsible for preparing the Annual Report and the financial statements in accordance with applicable United Kingdom law and those International Financial Reporting Standards adopted by the European Union. Company law requires the Directors to prepare financial statements for each financial year which present fairly the financial position of the Company and of the Group and the financial performance and cash flows of the Company and of the Group for that period. In preparing these financial statements, the Directors are required to: The Directors, to the best of their knowledge, state that: – the financial statements, prepared in accordance with International Financial Reporting Standards as adopted by the European Union, give a true and fair view of the assets, liabilities, financial position and results of the Company and the Group; and – the Chairman’s Statement and Directors’ Report include a fair review of the development and performance of the business and the position of the Company and the Group together with a description of the principal risks and uncertainties that they face. The Directors are responsible for the maintenance and integrity of the corporate and financial information included on the Company’s website. Legislation in the United Kingdom governing the preparation and dissemination of financial statements may differ from legislation in other jurisdictions. On behalf of the Board of Directors Henry S Barlow Chairman 26 November 2008 – select suitable accounting policies and then apply them consistently; – make judgments and estimates that are reasonable and prudent; – present information, including accounting policies, in a manner that provides relevant, reliable, comparable and understandable information; – state whether applicable International Financial Reporting Standards have been followed, subject to any material departures disclosed and explained in the financial statements; and – provide additional disclosures when compliance with the specific requirements in IFRS is insufficient to enable users to understand the impact of particular transactions, other events and conditions on the entity’s financial position and financial performance. The Directors are responsible for keeping proper accounting records that disclose with reasonable accuracy, at any time, the financial position of the Company and of the Group and to enable them to ensure that the financial statements comply with the Companies Act 1985 and Article 4 of the IAS Regulations. They are also responsible for safeguarding the assets of the Company and hence for taking reasonable steps for the prevention and detection of fraud and other irregularities. REPORT & ACCOUNTS 2008 33 Report of the Independent Auditors Independent Auditors’ Report to the Members of Majedie Investments PLC We have audited the group and parent company financial statements (the “financial statements”) of Majedie Investments PLC for the year ended 30 September 2008 which comprise the Consolidated and Company Income Statements, the Consolidated and Company Balance Sheets, the Consolidated and Company Cash Flow Statements, the Consolidated and Company Statements of Changes in Equity, General Information and the related notes 1 to 27. These financial statements have been prepared under the accounting policies set out therein. We have also audited the information in the Report on Directors’ Remuneration that is described as having been audited. This report is made solely to the Company’s members, as a body, in accordance with Section 235 of the Companies Act 1985. Our audit work has been undertaken so that we might state to the Company’s members those matters we are required to state to them in an auditors’ report and for no other purpose. To the fullest extent permitted by law, we do not accept or assume responsibility to anyone other than the Company and the Company’s members as a body, for our audit work, for this report, or for the opinions we have formed. Respective Responsibilities of Directors and Auditors The directors’ responsibilities for preparing the Annual Report, the Report on Directors’ Remuneration and the financial statements in accordance with applicable United Kingdom law and International Financial Reporting Standards (IFRSs) as adopted by the European Union are set out in the Statement of Directors’ Responsibilities. Our responsibility is to audit the financial statements and the part of the Report on Directors’ Remuneration to be audited in accordance with relevant legal and regulatory requirements and International Standards on Auditing (UK and Ireland). We report to you our opinion as to whether the financial statements give a true and fair view and whether the financial statements and the part of the Report on Directors’ Remuneration to be audited have been properly prepared in accordance with the Companies Act 1985 and, as regards the group financial statements, Article 4 of the IAS Regulation. We also report to you whether in our opinion the information given in the Directors’ Report is consistent with the financial statements. The information given in the Directors’ Report includes that specific information presented in the Business Review that is referred to in the Directors’ Report. In addition we report to you if, in our opinion, the Company has not kept proper accounting records, if we have not received all the information and explanations we require for our audit, or if information specified by law regarding directors’ remuneration and other transactions is not disclosed. We review whether the Corporate Governance Statement reflects the Company’s compliance with the nine provisions of the 2006 Combined Code specified for our review by the Listing Rules of the Financial Services Authority, and we report if it does not. We are not required to consider whether the Board’s statements on internal control cover all risks and controls, or form an opinion on the effectiveness of the Group’s corporate governance procedures or its risk and control procedures. We read other information contained in the Annual Report and consider whether it is consistent with the audited financial statements. The other information comprises only the Investment Objective and Policy Statement, Highlights for 2008, Group Summary, Recent Trends, Year’s Summary, Chairman’s Statement, Asset Distribution, Twenty Largest UK Investments, Ten Largest Overseas Investments, Valuation of Investments, Board of Directors, Directors’ Report, Business Review, Corporate Governance, the unaudited part of the Report on Directors’ Remuneration, Ten Year Record, Notice of Meeting and Shareholder Information. We consider the implications for our report if we become aware of any apparent misstatements or material inconsistencies with the financial statements. Our responsibilities do not extend to any other information. Basis of Audit Opinion We conducted our audit in accordance with International Standards on Auditing (UK and Ireland) issued by the Auditing Practices Board. An audit includes examination, on a test basis, of evidence relevant to the amounts and disclosures in the financial statements and the part of the Report on Directors’ Remuneration to be audited. It also includes an assessment of the significant estimates and judgments made by the directors in the preparation of the financial statements, and of whether the accounting policies are appropriate to the Group’s and Company’s circumstances, consistently applied and adequately disclosed. 34 MAJEDIE INVESTMENTS PLC We planned and performed our audit so as to obtain all the information and explanations which we considered necessary in order to provide us with sufficient evidence to give reasonable assurance that the financial statements and the part of the Report on Directors’ Remuneration to be audited are free from material misstatement, whether caused by fraud or other irregularity or error. In forming our opinion we also evaluated the overall adequacy of the presentation of information in the financial statements and the part of the Report on Directors’ Remuneration to be audited. Opinion In our opinion: (cid:129) the financial statements give a true and fair view, in accordance with IFRSs as adopted by the European Union, of the state of the Group’s and the parent company’s affairs as at 30 September 2008 and of the Group’s and the parent company’s return for the year then ended; (cid:129) the financial statements and the part of the Report on Directors’ Remuneration to be audited have been properly prepared in accordance with the Companies Act 1985 and, as regards the Group financial statements, Article 4 of the IAS Regulation; and (cid:129) the information given in the Directors’ Report is consistent with the financial statements. Ernst & Young LLP Registered Auditor London 26 November 2008 REPORT & ACCOUNTS 2008 35 Consolidated Income Statement for the year ended 30 September 2008 Revenue return £000 2008 Capital return £000 Notes Total £000 Revenue return £000 2007 as restated* Capital return £000 Total £000 Investments (Losses)/gains on investments at fair value through profit or loss 12 (95,341) (95,341) 46,748 46,748 Net investment result (95,341) (95,341) 46,748 46,748 Income Dividends and interest 2 8,790 Other income Total operating income Expenses 75 8,865 8,790 75 8,865 8,963 120 9,083 8,963 120 9,083 Administration expenses 3 (1,702) (1,571) (3,273) (1,288) (1,568) (2,856) Return before finance costs and taxation Finance costs Net return before taxation Taxation Net return after taxation for the year 7,163 (96,912) (89,749) 7,795 45,180 52,975 (701) (2,099) (2,800) (700) (2,098) (2,798) 6,462 (99,011) (92,549) 7,095 43,082 50,177 (51) (51) (51) (51) 6 7 6,411 (99,011) (92,600) 7,044 43,082 50,126 Return per ordinary share: pence pence pence pence pence Basic and diluted 10 12.5 (192.3) (179.8) 13.6 83.2 pence 96.8 The total column of this statement is the Consolidated Profit and Loss Account of the Group prepared under International Financial Reporting Standards (IFRS). The supplementary revenue return and capital return columns are prepared under guidance published by the Association of Investment Companies. All revenue and capital items in the above statement derive from continuing operations. No operations were acquired or discontinued in the year. The notes on pages 46 to 71 form part of these accounts. These accounts have been prepared in compliance with the recognition and measurement criteria of IFRS. * Comparative figures have been restated for the review of the treatment of the investment in Majedie Asset Management Limited (MAM) as disclosed in note 12 on pages 58 and 59. 36 MAJEDIE INVESTMENTS PLC Company Income Statement for the year ended 30 September 2008 Revenue return £000 2008 Capital return £000 Total £000 Revenue return £000 2007 Capital return £000 Total £000 Notes Investments (Losses)/gains on investments at fair value through profit or loss 12 (95,341) (95,341) 46,748 46,748 Net investment result (95,341) (95,341) 46,748 46,748 Income Dividends and interest 2 8,790 Other income Total operating income Expenses 75 8,865 8,790 75 8,865 8,963 120 9,083 8,963 120 9,083 Administration expenses 3 (1,702) (1,571) (3,273) (1,288) (1,568) (2,856) Return before finance costs and taxation Finance costs Net return before taxation Taxation Net return after taxation for the year 7,163 (96,912) (89,749) 7,795 45,180 52,975 (701) (2,099) (2,800) (700) (2,098) (2,798) 6,462 (99,011) (92,549) 7,095 43,082 50,177 (51) (51) (51) (51) 6 7 6,411 (99,011) (92,600) 7,044 43,082 50,126 Return per ordinary share: pence pence pence pence pence Basic and diluted 10 12.5 (192.3) (179.8) 13.6 83.2 pence 96.8 The total column of this statement is the Profit and Loss Account of the Company prepared under International Financial Reporting Standards (IFRS). The supplementary revenue return and capital return columns are prepared under guidance published by the Association of Investment Companies. All revenue and capital items in the above statement derive from continuing operations. No operations were acquired or discontinued in the year. The notes on pages 46 to 71 form part of these accounts. These accounts have been prepared in compliance with the recognition and measurement criteria of IFRS. REPORT & ACCOUNTS 2008 37 Consolidated Statement of Changes in Equity for the year ended 30 September 2008 Share capital £000 Share premium £000 Notes Capital redemption reserve £000 Share options reserve £000 5,253 785 56 262 Year ended 30 September 2008 As at 30 September 2007 as restated Net return after tax for the year Investments at fair value through profit or loss (cid:129) Decrease in unrealised appreciation (cid:129) Net loss on realisation of investments Costs charged to capital Total recognised income and expenditure Share options expense Dividends declared and paid in year Own shares (sold)/purchased by Employee Incentive Trust (EIT) 24 9 18 As at 30 September 2008 5,253 785 5,253 5,253 785 785 Year ended 30 September 2007 As at 30 September 2006 as previously stated Prior year adjustment As at 30 September 2006 as restated* Net return after tax for the year Investments at fair value through profit or loss (cid:129) Increase in unrealised appreciation (cid:129) Net gain on realisation of investments Costs charged to capital Total recognised income and expenditure Share options expense Dividends declared and paid in year Own shares purchased by Employee 24 9 Incentive Trust (EIT) 56 56 56 516 (487) 291 85 85 177 As at 30 September 2007 5,253 785 56 262 The notes on pages 46 to 71 form part of these accounts. These accounts have been prepared in compliance with the recognition and measurement criteria of IFRS. * Comparative figures have been restated for the review of the treatment of the investment in Majedie Asset Management Limited (MAM) as disclosed in note 12 on pages 58 and 59. 38 MAJEDIE INVESTMENTS PLC Capital reserve – realised £000 Capital reserve – investment holding gains £000 133,083 86,534 (87,499) (7,842) (3,670) Revenue reserve £000 30,296 6,411 Own shares reserve £000 (3,053) (11,512) (87,499) 6,411 (7,660) Total £000 253,216 6,411 (87,499) (7,842) (3,670) (92,600) 516 (7,660) 121,571 (965) 29,047 (2,573) 153,465 480 (7) 28,723 (340) 28,383 7,044 (1,908) (1,908) 47,502 10,310 57,812 28,722 118,723 118,723 18,026 (3,666) 14,360 28,722 7,044 (5,131) 199,219 9,970 209,189 7,044 28,722 18,026 (3,666) 50,126 177 (5,131) 133,083 86,534 30,296 (3,053) 253,216 (1,145) (1,145) REPORT & ACCOUNTS 2008 39 Company Statement of Changes in Equity for the year ended 30 September 2008 Notes Share capital £000 Share premium £000 Capital redemption reserve £000 5,253 785 56 Year ended 30 September 2008 As at 30 September 2007 Net return after tax for the year Investments at fair value through profit or loss (cid:129) Decrease in unrealised appreciation (cid:129) Net loss on realisation of investments Revaluation of investment in Majedie Asset Management Costs charged to capital Total recognised income and expenditure Share options expense Dividends declared and paid in year Own shares (sold)/purchased by Employee Incentive Trust (EIT) 24 9 18 As at 30 September 2008 5,253 785 5,253 785 Year ended 30 September 2007 As at 30 September 2006 Net return after tax for the year Investments at fair value through profit or loss (cid:129) Increase in unrealised appreciation (cid:129) Movement between reserves (cid:129) Net gain on realisation of investments Revaluation of investment in Majedie Asset Management Costs charged to capital Total recognised income and expenditure Share options expense Dividends declared and paid in year 24 9 Own shares purchased by Employee Incentive Trust (EIT) 56 56 As at 30 September 2007 5,253 785 56 The notes on pages 46 to 71 form part of these accounts. These accounts have been prepared in compliance with the recognition and measurement criteria of IFRS. 40 MAJEDIE INVESTMENTS PLC Share options reserve £000 Capital reserve – realised £000 Capital reserve – investment holding gains £000 Revenue reserve £000 Own Shares reserve £000 Total £000 262 134,121 85,774 30,016 (3,053) 253,214 6,411 (93,814) 6,315 (7,842) (3,670) (11,512) (87,499) 6,411 (7,660) 6,411 (93,814) (7,842) 6,315 (3,670) (92,600) 516 (7,660) 480 (7) 516 (487) 291 122,609 (1,725) 28,767 (2,573) 153,463 85 119,758 57,055 28,103 (1,908) 209,187 7,044 24,054 (3) 4,668 3 18,026 (3,666) 14,363 28,719 7,044 177 (5,131) (1,145) 7,044 24,054 18,026 4,668 (3,666) 50,126 177 (5,131) (1,145) 262 134,121 85,774 30,016 (3,053) 253,214 REPORT & ACCOUNTS 2008 41 Consolidated Balance Sheet as at 30 September 2008 Non-current assets Property and equipment Investments at fair value through profit or loss Current assets Trade and other receivables Cash and cash equivalents Total assets Current liabilities Trade and other payables Total assets less current liabilities Non-current liabilities Debentures Total liabilities Net assets Represented by: Ordinary share capital Share premium Capital redemption reserve Share options reserve Capital reserve Revenue reserve Own shares reserve Equity Shareholders’ Funds Net asset value per share Basic and fully diluted Notes 11 12 14 15 16 16 17 18 19 Approved by the Board and authorised for issue on 26 November 2008. Henry S Barlow Andrew J Adcock Directors 2008 £000 48 178,981 179,029 2,340 8,135 10,475 189,504 2007 as restated* £000 69 278,338 278,407 3,221 6,764 9,985 288,392 (2,295) (1,448) 187,209 286,944 (33,744) (36,039) (33,728) (35,176) 153,465 253,216 5,253 785 56 291 120,606 29,047 (2,573) 153,465 pence 296.5 5,253 785 56 262 219,617 30,296 (3,053) 253,216 pence 490.7 The notes on pages 46 to 71 form part of these accounts. These accounts have been prepared in compliance with the recognition and measurement criteria of IFRS. * Comparative figures have been restated for the review of the treatment of the investment in Majedie Asset Management Limited (MAM) as disclosed in note 12 on pages 58 and 59. 42 MAJEDIE INVESTMENTS PLC Company Balance Sheet as at 30 September 2008 Non-current assets Investments at fair value through profit or loss Investment in subsidiaries Current assets Trade and other receivables Cash and cash equivalents Total assets Current liabilities Trade and other payables Total assets less current liabilities Non-current liabilities Debentures Total liabilities Net assets Represented by: Ordinary share capital Share premium Capital redemption reserve Share options reserve Capital reserve Revenue reserve Own shares reserve Notes 12 13 14 15 16 16 17 18 2008 £000 178,981 194 179,175 2,413 7,718 10,131 2007 £000 278,338 194 278,532 3,092 6,434 9,526 189,306 288,058 (2,099) (1,116) 187,207 286,942 (33,744) (35,843) (33,728) (34,844) 153,463 253,214 5,253 785 56 291 120,884 28,767 (2,573) 5,253 785 56 262 219,895 30,016 (3,053) Equity Shareholders’ Funds 153,463 253,214 Approved by the Board and authorised for issue on 26 November 2008. Henry S Barlow Andrew J Adcock Directors The notes on pages 46 to 71 form part of these accounts. These accounts have been prepared in compliance with the recognition and measurement criteria of IFRS. REPORT & ACCOUNTS 2008 43 Consolidated Cash Flow Statement for the year ended 30 September 2008 Net cash flow from operating activities Consolidated net return before taxation Adjustments for: Losses/(gains) on investments Dividends reinvested Depreciation Share based remuneration Purchases of investments Sales of investments Finance costs Operating cashflows before movements in working capital Increase in trade and other payables Increase in trade and other receivables Net cash inflow from operating activities before tax Tax recovered Tax on unfranked income Notes 2008 £000 2007 as restated* £000 (92,549) 50,177 12 95,341 (46,748) (171) 25 516 (51,830) 56,133 7,465 2,800 10,265 (454) 2,071 11,882 (56) (24) 27 177 (108,693) 113,749 8,665 2,798 11,463 443 (589) 11,317 20 (52) Net cash inflow from operating activities 11,826 11,285 Investing activities Purchases of tangible assets Net cash outflow from investing activities Financing activities Interest paid Dividends paid Purchases of own shares into Employee Incentive Trust Exercise of options on own shares (4) (4) (2,784) (7,660) (914) 907 (7) (7) (2,784) (5,131) (1,145) Net cash outflow from financing activities (10,451) (9,060) Increase in cash and cash equivalents for year 20, 21 Cash and cash equivalents at start of year Cash and cash equivalents at end of year 1,371 6,764 8,135 2,218 4,546 6,764 The notes on pages 46 to 71 form part of these accounts. These accounts have been prepared in compliance with the recognition and measurement criteria of IFRS. * Comparatives figures have been restated for the review of the treatment of the investment in Majedie Asset Management Limited (MAM) as disclosed in note 12 on pages 58 and 59. 44 MAJEDIE INVESTMENTS PLC Company Cash Flow Statement for the year ended 30 September 2008 Net cash flow from operating activities Company net return before taxation Adjustments for: Losses/(gains) on investments Dividends reinvested Share based remuneration Purchases of investments Sales of investments Finance costs Operating cashflows before movements in working capital Increase in trade and other payables Increase in trade and other receivables Net cash inflow from operating activities before tax Tax recovered Tax on unfranked income Notes 2008 £000 2007 £000 (92,549) 50,177 12 95,341 (46,748) (171) 516 (51,830) 56,133 7,440 2,800 10,240 1,869 (318) 11,791 (56) (24) 177 (108,693) 113,749 8,638 2,798 11,436 422 (629) 11,229 20 (52) Net cash inflow from operating activities 11,735 11,197 Financing activities Interest paid Dividends paid Purchases of own shares into Employee Incentive Trust Exercise of options on own shares (2,784) (7,660) (914) 907 (2,784) (5,131) (1,145) Net cash outflow from financing activities (10,451) (9,060) Increase in cash and cash equivalents for year 20, 21 Cash and cash equivalents at start of year Cash and cash equivalents at end of year 1,284 6,434 7,718 2,137 4,297 6,434 The notes on pages 46 to 71 form part of these accounts. These accounts have been prepared in compliance with the recognition and measurement criteria of IFRS. REPORT & ACCOUNTS 2008 45 Notes to the Accounts General Information Majedie Investments PLC is a company incorporated in the United Kingdom under the Companies Act 1985. The address of the registered office is given on page 81. The nature of the Group’s operations and its principal activities are set out in the Business Review on pages 19 to 23 and in note 8 on page 54. At the date of authorisation of these financial statements, the following relevant Standards and Interpretations have not been applied in these financial statements since they were in issue but not yet effective: International Accounting Standards (IAS/IFRSs) IFRS 2 IFRS 3 IFRS 8 IAS 1 IAS 23 IAS 27 Amendment to IFRS 2 – Vesting Conditions and Cancellations Business Combinations (revised January 2008) Operating Segments Presentation of Financial Statements (revised September 2007) Borrowing Costs (revised March 2007) Consolidated and Separate Financial Statements (revised January 2008) International Financial Reporting Interpretations Committee (IFRIC) IFRIC 12 Service Concession Arrangements IFRIC 13 Customer Loyalty Programmes IFRIC 14 The Limit on a Defined Benefit Asset, Minimum Funding requirements and their Interaction IFRIC 15 Agreements for the Construction of Real Estate IFRIC 16 Hedges of a Net Investment in a Foreign Operation Effective date 1 January 2009 1 July 2009 1 January 2009 1 January 2009 1 January 2009 1 July 2009 Effective date 1 January 2008 1 July 2008 1 January 2008 1 January 2009 1 October 2008 The directors anticipate that the adoption of the above Standards and Interpretations in future periods will have no material impact on the financial statements of the Group. 1 Accounting Policies The accounts on pages 36 to 71 comprise the audited results of the Company and its subsidiaries for the year ended 30 September 2008, and are presented in pounds sterling rounded to the nearest thousand, as this is the principal currency in which the Group and Company transactions are undertaken. Accounting Policies under International Financial Reporting Standards Basis of Accounting The accounts of the Group and the Company have been prepared in accordance with International Financial Reporting Standards (IFRS). They comprise standards and interpretations approved by the International Accounting Standards Board, and International Financial Reporting Committee, interpretations approved by the International Accounting Standards Committee that remain in effect, and to the extent they have been adopted by the European Union. Where presentational guidance set out in the Statement of Recommended Practice (SORP) for investment trusts issued by the Association of Investment Companies in January 2003 (as revised in December 2005) is consistent with the requirements of IFRSs, the directors have sought to prepare the financial statements on a basis compliant with the recommendations of the SORP. The principal accounting policies adopted are set out as follows: 46 MAJEDIE INVESTMENTS PLC 1 Accounting Policies continued Basis of Consolidation The Consolidated Accounts incorporate the accounts of the Company and entities controlled by the Company (its subsidiaries) made up to 30 September each year. Control is achieved where the Company has the power to govern the financial and operating policies of an investee entity so as to obtain benefits from its activities. Where necessary, adjustments are made to the financial statements of subsidiaries to bring the accounting policies used into line with those used by the Group. All intra-group transactions, balances, income and expenses are eliminated on consolidation. Foreign Currencies The individual financial statements of each Group company are presented in the currency of the primary economic environment in which it operates (its functional currency). For the purpose of the consolidated financial statements, the results and financial position of each Group company are expressed in pounds sterling, which is the functional currency of the Company, and the presentation currency for the consolidated financial statements. In preparing the financial statements of the individual companies, transactions in currencies other than the entity’s functional currency (foreign currencies) are recorded at the rates of exchange prevailing on the dates of the transactions. At each balance sheet date, monetary assets and liabilities that are denominated in foreign currencies are retranslated at the rates prevailing on the balance sheet date. Non-monetary items carried at fair value that are denominated in foreign currencies are translated at the rates prevailing at the date when the fair value was determined. Non-monetary items that are measured in terms of historical cost in the foreign currency are not retranslated. Exchange differences arising on the settlement of monetary items, and on the retranslation of monetary items, are included in profit or loss for the period. Exchange differences arising on the retranslation of non-monetary items carried at fair value are included in profit or loss for the period except for differences arising on the retranslation of non-monetary items in respect of which gains and losses are recognised directly in equity. For such non-monetary items, any exchange component of that gain or loss is also recognised directly in equity. Segmental Reporting A segment is a distinguishable component of the Group that is engaged either in providing products or services (business segment), or in providing products or services within a particular economic environment (geographical segment), which is subject to risks and rewards that are different from those of other segments. Investment Income Dividend income from investments is taken to the revenue account on an ex-dividend basis and net of any associated tax credit. The fixed return on a debt security is recognised on a time apportionment basis so as to reflect the effective yield on the debt security. Deposit interest is included on an accruals basis. REPORT & ACCOUNTS 2008 47 Notes to the Accounts 1 Accounting Policies continued Expenses All expenses are accounted for on an accruals basis. In respect of the analysis between revenue and capital items presented within the income statement, all expenses have been presented as revenue items except as follows: (cid:129) (cid:129) Expenses which are incidental to the acquisition or disposal of an investment are treated as capital costs and separately identified and disclosed (see note 12). Expenses are split and presented partly as capital items where a connection with the maintenance or enhancement of the value of the investments held can be demonstrated, and accordingly the investment management expenses have been allocated 75% to capital, in order to reflect the directors expected long-term view of the nature of the investment returns of the Company. Pension Costs Payments made to the Company’s defined contribution group personal pension plan and retirement benefit scheme are charged as an expense as they fall due. Finance Costs 75% of finance costs arising from the debenture stocks are allocated to capital at a constant rate on the carrying amount of the debt; 25% of the finance costs are charged on the same basis to the revenue account. Premiums payable on early repurchase of debenture stock are charged 100% to capital. Share Based Payments The Group has applied the requirements of IFRS 2: Share-based Payments. In accordance with the transitional provisions, IFRS 2 has been applied to all grants of equity instruments after 7 November 2002 that were unvested as of 1 October 2004. The Group issues equity-settled share-based payments to certain employees. Equity-settled share-based payments are measured at fair value determined at the date of grant, which is expensed on a straight-line basis over the vesting period, based on the Group’s estimate of shares that will eventually vest. Fair value is measured by use of the Black-Scholes model. The expected life used in the model has been adjusted, based on management’s best estimate, for the effects of non-transferability, exercise restrictions, and behavioural considerations. Taxation The tax charge represents the sum of the tax currently payable and deferred tax. The tax currently payable is based on taxable profit for the year. Taxable profit differs from profit as reported in the income statement because it excludes items of income or expense that are taxable or deductible in other years and it further excludes items that are never taxable or deductible. The Group’s liability for current tax is calculated using tax rates that have been enacted or substantively enacted by the balance sheet date. In line with the recommendations of the SORP, the allocation method used to calculate tax relief on expenses presented against capital returns in the supplementary information in the income statement is the marginal basis. Under this basis, if taxable income is capable of being offset entirely by expenses presented in the revenue return column of the income statement, then no tax relief is transferred to the capital return column. Deferred tax is the tax expected to be payable or recoverable on differences between the carrying amounts of assets and liabilities in the financial statements and the corresponding tax bases used in the computation of taxable profit, and is accounted for using the balance sheet liability method. Deferred tax liabilities are recognised for all taxable temporary differences and deferred tax assets are recognised to the extent that it is probable that taxable profits will be available against which deductible temporary differences can be utilised. No provision is made for tax on capital gains since the Company operates as an investment trust for tax purposes. 48 MAJEDIE INVESTMENTS PLC 1 Accounting Policies continued Property and Equipment Property and equipment are stated at cost less accumulated depreciation and any recognised impairment loss. Leasehold improvements are written off in equal annual instalments over the minimum period of the lease whereas depreciation for other tangible assets is provided for at 25% to 33% per annum using the straight-line method. Leasing Leases are classified as finance leases whenever the terms of the lease transfer substantially all the risks and rewards of ownership to the lessee. All other leases are classified as operating leases. Rentals payable under operating leases are charged to profit or loss on a straight-line basis over the term of the relevant lease. Investments Held at Fair Value Through Profit or Loss When a purchase or sale is made under a contract, the terms of which require delivery within the timeframe of the relevant market, the investments concerned are recognised or derecognised on the trade date. All investments are accounted at fair value through profit or loss as defined by IAS 39. All investments are designated upon initial recognition as held at fair value through profit or loss, and are measured at subsequent reporting dates at fair value, which is either the bid price or the last traded price, depending on the convention of the exchange on which the investment is quoted. Investments in unit trusts or open ended investment companies are valued at the closing price, the bid price or the single price as appropriate, released by the relevant investment manager. Unlisted investments are normally valued on an annual basis by the Board of directors taking into account relevant information as appropriate including market prices, latest dealings, accounting information, professional advice and the guidelines issued by the International Private Equity and Venture Capital Association. Financial Instruments Financial assets and financial liabilities are recognised on the Group’s Balance Sheet when the Group becomes a party to the contractual provisions of the instrument. Derivative Financial Instruments The Group does not enter into derivative contracts for the purpose of hedging risks on its investment portfolio as it is a long term investor. The Group does, however, receive or purchase warrants on shares which are classified as equity instruments under IAS 32. These equity instrument derivatives are recognised at fair value on the date the contract is entered into and are subsequently re-valued at their fair value. Changes in the fair value of derivative financial instruments are recognised as they arise in the Income Statement. Trade Receivables Trade receivables do not carry any interest and are stated at their fair value as reduced by appropriate allowances for estimated irrecoverable amounts. Cash and Cash Equivalents Cash comprises cash in hand and demand deposits. Cash equivalents are short-term, highly liquid investments that are readily convertible to known amounts of cash and that are subject to an insignificant risk of changes in value. Financial Liabilities and Equity Financial liabilities and equity instruments are classified according to the substance of the contractual arrangements entered into. An equity instrument is any contract that evidences a residual interest in the assets of the Group after deducting all of its liabilities. REPORT & ACCOUNTS 2008 49 Notes to the Accounts 1 Accounting Policies continued Debentures All debentures are recorded at proceeds received, net of direct issue costs. Trade Payables Trade payables are not interest bearing and are stated at their fair value. Reserves Gains and losses on the realisation of investments and foreign currency are accounted for in the capital reserve. Increases and decreases in the valuation of investments and currency held at the year end are accounted for in the capital reserve. Own Shares Own shares held under option are accounted for in accordance with IFRS 2: Share-based Payments. This requires that the consideration paid for own shares held be presented as a deduction from shareholders’ funds, and not recognised as an asset. Critical Accounting Judgement In the process of applying the Company’s accounting policies described above, the directors have made critical accounting judgements regarding the fair value of the unlisted investments (including Majedie Asset Management Limited (MAM)) that have the most significant effect on the financial statements of the Company. Note 12 on pages 57 to 59 sets out the relevant details of the MAM valuation including the assumptions on which the valuation is based. 2 Dividends and Interest Listed investments – UK dividend income – unfranked Unlisted investments – unfranked – Special dividend income Interest on deposits Exchange differences on income Group 2008 £000 5,438 457 98 2,484 315 (2) Group 2007 £000 4,458 363 3,808 340 (6) Company 2008 £000 Company 2007 £000 5,438 457 98 2,484 315 (2) 4,458 363 3,808 340 (6) 8,790 8,963 8,790 8,963 50 MAJEDIE INVESTMENTS PLC 3 Administration Expenses Staff costs – note 5 Other staff costs and directors’ fees Advisers’ costs Information costs Establishment costs Operating lease rentals – premises Depreciation on tangible assets Auditors’ remuneration (also see below) for: – audit – other services to the Group Restructuring costs Other expenses Group 2008 £000 1,923 155 399 127 130 146 25 62 1 121 184 Group 2007 £000 1,474 150 461 134 153 146 27 64 10 237 Company 2008 £000 1,923 155 399 127 130 146 Company 2007 £000 1,474 150 461 134 153 146 54 1 121 217 56 6 276 3,273 2,856 3,273 2,856 A charge of £1,571,000 (2007: £1,568,000) to capital and an equivalent credit to revenue has been made in both the Group and Company to recognise the accounting policy of charging 75% of investment management expenses to capital. Total fees charged by the auditors for the year, all of which were charged to revenue, comprised: Group 2008 £000 62 Audit services – statutory audit – audit-related regulatory reporting Tax services – advisory Other non-audit services – relating to Employee Share Option Scheme 1 Group 2007 £000 64 4 6 Company 2008 £000 Company 2007 £000 56 6 54 1 63 74 55 62 REPORT & ACCOUNTS 2008 51 Notes to the Accounts 4 Directors’ Emoluments – Company Salaries and fees Bonuses Pension contributions Other benefits 2008 £000 607 200 82 60 2007 £000 461 292 65 26 949 844 The Report on Directors’ Remuneration on pages 27 to 32 explains the Company’s policy on remuneration for executive directors. It also provides further details of directors’ remuneration and longer term incentives. 5 Staff Costs including Executive Directors – Group Salaries and other payments Social security costs Pension contributions Share based remuneration – note 24 Average number of employees: Management and office staff 6 Finance Costs – Group and Company Interest on 9.5% debenture stock 2020 Interest on 7.25% debenture stock 2025 Amortisation of expenses associated with debenture issue 2008 £000 1,100 180 127 516 2008 Number 2007 £000 1,079 134 84 177 1,923 1,474 2007 Number 7 9 2008 Revenue Capital return return Total £000 £000 £000 962 1,283 321 375 1,126 1,501 16 11 5 2007 Revenue Capital return return Total £000 £000 £000 962 1,283 321 375 1,126 1,501 14 10 4 701 2,099 2,800 700 2,098 2,798 Further details of the debenture stocks in issue are provided in note 16. 52 MAJEDIE INVESTMENTS PLC 7 Taxation Analysis of tax charge – Group and Company Foreign tax UK corporation tax Group 2008 £000 51 Group 2007 £000 51 Company 2008 £000 51 Company 2007 £000 51 51 51 51 51 Reconciliation of tax charge: The current taxation for the year is higher than the standard rate of corporation tax in the UK (29%), (2007: 30%). The differences are explained below: Net return before taxation (92,549) Group 2008 £000 Group 2007 £000 50,177 Company 2008 £000 (92,549) Company 2007 £000 50,177 Taxation at UK Corporation Tax rate of 29% (2007: 30%) Effects of: – UK dividends which are not taxable – other income which is not taxable – (losses)/gains on investments which are not taxable – expenses not deductible for tax purposes – excess expenses for current year – group relief surrendered – overseas taxation which is not recoverable (26,839) 15,053 (26,839) 15,053 (2,297) (2,480) (2,297) (2,480) (4) (10) (4) (10) 27,649 (14,024) 27,649 (14,024) 52 1,439 5 1,456 51 51 1,439 52 51 1,461 51 Actual current tax charge 51 51 51 51 REPORT & ACCOUNTS 2008 53 Notes to the Accounts 7 Taxation continued Group After claiming relief against accrued income taxable on receipt, the Group has unrelieved excess expenses of £43,400,000 (2007: £38,500,000). It is unlikely that the Group will generate sufficient taxable income in the future to utilise these expenses and therefore no deferred tax asset has been recognised. Company After claiming relief against accrued income taxable on receipt, the Company has unrelieved excess expenses of £43,400,000 (2007: £38,500,000). It is unlikely that the Company will generate sufficient taxable income in the future to utilise these expenses and therefore no deferred tax asset has been recognised. The allocation of expenses to capital does not result in any tax effect. Due to the Company’s status as an investment trust, and the intention to continue meeting the conditions required to obtain approval in the foreseeable future, the Company has not provided deferred tax on any capital gains and losses arising on the revaluation or disposal of investments. 8 Segment Reporting The Group comprises the Company and its wholly owned subsidiaries. The Group’s activity as an investment trust represents the sole significant business segment. The Company operates as an investment trust company and its portfolio contains investments in companies listed in a number of countries. Geographical information about the portfolio is provided on pages 11 to 14 and exposure to different currencies is disclosed in note 25 on pages 65 and 66. 54 MAJEDIE INVESTMENTS PLC 9 Dividends – Group and Company The following table summarises the amounts recognised as distributions to equity shareholders in the period: 2006 Final dividend of 6.10p paid on 24 January 2007 2007 Interim dividend of 3.80p paid on 29 June 2007 2007 Special dividend of 4.50p paid on 23 January 2008* 2007 Final dividend of 6.20p paid on 23 January 2008* 2008 Interim dividend of 4.20p paid on 30 June 2008 Proposed final dividend for the year ended 30 September 2008 of 6.30p (2007: final dividend of 6.20p) per ordinary share Proposed special dividend for the year ended 30 September 2008 of 2.25p (2007: 4.50p) per ordinary share 2008 £000 2,315 3,189 2,156 2008 £000 3,261 1,165 2007 £000 3,165 1,966 7,660 5,131 2007 £000 3,200 2,322 Neither the proposed final dividend nor the proposed special dividend have been included as a liability in these accounts in accordance with IAS 10: Events after the Balance Sheet date. Set out below is the total dividend to be paid in respect of the financial year. This is the basis on which the requirements of Section 842 of the Income and Corporation Taxes Act 1988 are considered. 4,426 5,522 Interim dividend for the year ended 30 September 2008 of 4.20p (2007: 3.80p) per ordinary share Proposed final dividend for the year ended 30 September 2008 of 6.30p (2007: 6.20p) per ordinary share Proposed special dividend for the year ended 30 September 2008 of 2.25p (2007: 4.50p) per ordinary share 2008 £000 2,156 3,261 1,165 2007 £000 1,966 3,200 2,322 6,582 7,488 * The payment of the 2007 year end final and special dividend total is £18,000 lower than shown in the 2007 comparatives due to a timing difference on the transfer of shares to the Employee Incentive Trust referred to in note 18. REPORT & ACCOUNTS 2008 55 Notes to the Accounts 10 Return per Ordinary Share – Group and Company Basic return per ordinary share is based on 51,478,751 (2007: 51,791,114) ordinary shares, being the weighted average number of shares in issue having adjusted for the shares held by the Employee Incentive Trust referred to in note 18. Basic returns per ordinary share are based on the net return after taxation attributable to equity shareholders. There is no dilution to the basic return per ordinary share shown for the years ended 30 September 2008 and 2007 since the share options referred to in note 18 would, if exercised, be satisfied by the shares already held by the employee incentive trust. Basic and diluted revenue returns are based on net revenue after taxation of: Basic and diluted capital returns are based on net capital return of: Basic and diluted total returns are based on return of: 11 Property and Equipment – Group Cost: At 1 October 2007 Additions At 30 September 2008 Depreciation: At 1 October 2007 Charge for year At 30 September 2008 Net book value: At 30 September 2008 At 30 September 2007 2008 £000 2007 £000 6,411 (99,011) (92,600) Office Equipment £000 262 4 7,044 43,082 50,126 Total £000 617 4 355 266 621 237 17 548 25 319 254 36 44 12 25 573 48 69 Leasehold Improvements £000 355 311 8 56 MAJEDIE INVESTMENTS PLC 12 Investments at Fair Value Through Profit or Loss – Group and Company 2008 Listed £000 Unlisted £000 Total £000 2007 as restated* Unlisted £000 Listed £000 Total £000 Opening cost at beginning of year Gains at beginning of year 179,363 70,450 12,441 191,804 86,534 16,084 172,194 47,210 8,596 180,790 57,812 10,602 Opening fair value at beginning of year 249,813 28,525 278,338 219,404 19,198 238,602 Purchases at cost Sales – proceeds Sales – realised (losses)/gains on sales (Decrease)/increase in unrealised appreciation Adjustment for listing of prior year unlisted 51,910 (52,734) (9,415) (92,088) 851 1,394 (4,584) 1,571 4,589 (851) 53,304 (57,318) (7,844) (87,499) 71,941 (112,634) 18,046 23,240 29,816 33,681 105,622 (112,634) 18,026 28,722 (20) 5,482 (29,816) Closing fair value at end of year 148,337 30,644 178,981 249,813 28,525 278,338 Closing cost at end of year (Losses)/gains at end of year 169,975 (21,638) 9,971 179,946 (965) 20,673 179,363 70,450 12,441 191,804 86,534 16,084 Closing fair value at end of year 148,337 30,644 178,981 249,813 28,525 278,338 * Comparative figures have been restated for the review of the treatment of the investment in Majedie Asset Management Limited (MAM) as disclosed in this note on pages 58 and 59. Unlisted investments comprise an amount of £7,172,000 invested in placings for 14 separate companies which were expected to become listed securities after 30 September 2008 and £22,500,000 for our investment in MAM as detailed on page 58. The valuation of investments on pages 13 and 14 includes 16 unlisted investments of over £100,000 (including MAM). Investments include £972,000 (2007: £577,000) of loan or convertible notes that pay a fixed rate of interest. During the year the Company incurred transaction costs amounting to £345,000 (2007: £611,000) of which £238,000 (2007: £352,000) related to the purchases of investments and £107,000 (2007: £259,000) related to the sales of investments. These amounts are included in (losses)/gains on investments at fair value through profit or loss, as disclosed in the Consolidated and Company Income Statement. The composition of the investment return is analysed below: Net (loss)/gain on realisation of investments Realised exchange gains on settlement (Decrease)/increase in unrealised appreciation on investments 2008 £000 (7,844) 2 (87,499) 2007 £000 18,026 28,722 (95,341) 46,748 REPORT & ACCOUNTS 2008 57 Notes to the Accounts 12 Investments at Fair Value Through Profit or Loss – Group and Company continued Substantial Share Interests The Company has a number of investee company holdings where its investment is greater than 3% of any class of capital in those companies. Those that are considered material (excluding MAM which is disclosed separately below) in the context of these accounts are shown below: Phorm Hydrodec Value £000 3,507 3,477 % of Class Held 3.875 4.043 Majedie Asset Management Majedie Investments PLC owns a 30% equity shareholding in MAM, which provides investment management and advisory services relating to UK equities. The Board has reviewed how the investment in MAM is accounted for in the consolidated financial statements and as such MAM will be an investment to be valued at fair value with movements taken through profit or loss in accordance with the way in which the Company had designated and accounted for it in the parent company’s accounts at the time it became an associate. Previously the Group had applied the equity accounting method which did not take account of such designation. As an investment company this change results in a more complete view of the Company’s investment in MAM to the Group and aligns MAM with our other unlisted investments. It also brings conformity to the accounting treatment of the MAM investment between the Company and the Group. Special dividends continue to be recognised in income and there are no changes in respect of the Company financial statements. The weekly net asset value, released to The London Stock Exchange, includes MAM at fair value. The carrying value of the Company’s investment in MAM is now included in the consolidated balance sheet as part of investments at fair value through profit and loss: Deemed cost of investment Unrealised gains Fair value at 30 September 2008 £000 1,207 21,293 2007 £000 1,207 14,978 22,500 16,185 The carrying value of MAM in the 30 September 2008 Consolidated Financial Statements is its fair value as assessed at 30 September 2008. The above valuation exercise was carried out by the Board in accordance with the Company’s accounting policy for the valuation of unlisted investments. The approach adopted involved the consideration of earnings for the 2008 and the 2009 financial years, the inclusion of estimated performance fee income on a discounted basis, the application of a relevant market-based multiple to earnings and an overall illiquidity discount. The results of MAM for the year ended 30 September 2008 show a net profit after taxation of £8,101,000 (2007: £3,842,000) and shareholders’ funds of £16,180,000 (2007: £8,000,000). In accordance with the review of the treatment of the investment in MAM these results are not consolidated in the Group’s results but are incorporated into the directors’ valuation of the fair value of MAM as detailed above. The effect of the change in accounting for MAM on the Consolidated Balance Sheet is calculated as follows: Group net assets under previous method Decrease in investment in associate Increase in investments at fair value 2008 £000 136,000 (5,035) 22,500 2007 £000 239,636 (2,605) 16,185 2006 £000 199,219 (1,547) 11,517 Group net assets as restated 153,465 253,216 209,189 58 MAJEDIE INVESTMENTS PLC 12 Investments at Fair Value Through Profit or Loss – Group and Company continued The effect of the change in accounting for MAM on the Consolidated Income Statement is calculated as follows: Group net return under previous method Decrease in revenue for share of net return on associate Increase in capital return for investments at fair value 2008 £000 (96,485) (2,430) 6,315 2007 £000 46,516 (1,058) 4,668 2006 £000 27,182 (340) 9,970 Group net return as restated (92,600) 50,126 36,812 13 Investment in Subsidiaries – Company The Company’s subsidiaries at 30 September 2008 are as follows: Barlow Service Company Limited Majedie Portfolio Management Limited – provides administrative services to Group companies – manager of the Majedie Share Plan, authorised and regulated by the Financial Services Authority Majedie Investment Trust Management Limited* Barlow Investments Limited* Majedie Properties Limited* Majedie Securities Limited* – non trading – non trading – non trading – non trading All the subsidiaries are incorporated in Great Britain and are wholly owned. * Subsequent to 30 September 2008 application has been made to the Registrar of Companies to strike off these subsidiaries. Company Cost: At beginning of year At end of year Unrealised depreciation: At beginning of year At end of year Valuation at end of year 2008 £000 1,002 2007 £000 1,002 1,002 1,002 (808) (808) (808) 194 (808) 194 14 Trade and Other Receivables Sales for future settlement Payments in advance Dividends receivable Special dividend due from MAM Other amounts due from MAM Accrued income Taxation recoverable Amounts due from subsidiary undertakings Group 2008 £000 1,437 225 647 6 14 11 Group 2007 £000 252 186 660 2,110 4 3 6 Company 2008 £000 1,437 Company 2007 £000 252 647 6 14 11 298 660 2,110 4 3 6 57 2,340 3,221 2,413 3,092 REPORT & ACCOUNTS 2008 59 Notes to the Accounts 15 Cash and Cash Equivalents Deposits Other balances Group 2008 £000 7,484 651 Group 2007 £000 5,836 928 Company 2008 £000 7,484 234 Company 2007 £000 5,836 598 8,135 6,764 7,718 6,434 16 Trade and Other Payables Amounts falling due within one year: Purchases for future settlement Accrued expenses Other creditors Amounts owed to subsidiary undertakings Group 2008 £000 1,301 377 617 Group 2007 £000 488 960 Company 2008 £000 1,301 4 617 177 Company 2007 £000 960 156 2,295 1,448 2,099 1,116 Amounts falling due after more than one year: £13.5m (2007: £13.5m) 9.5% debenture stock 2020 £20.7m (2007: £20.7m) 7.25% debenture stock 2025 Group 2008 £000 13,369 20,375 Group 2007 £000 13,363 20,365 Company 2008 £000 Company 2007 £000 13,369 20,375 13,363 20,365 33,744 33,728 33,744 33,728 Both debenture stocks are secured by a floating charge over the Company’s assets. Expenses associated with the issue of debenture stocks were deducted from the gross proceeds and are being accounted for, at a constant rate, the effect of which is immaterially different to applying the effective interest rate method, over the life of the debentures. Further details on interest and the amortisation of issue expenses are provided in note 6. 17 Called Up Share Capital Allotted and fully paid at 30 September: 52,528,000 (2007: 52,528,000) ordinary shares of 10p each Authorised at 30 September: 70,000,000 (2007: 70,000,000) ordinary shares of 10p each 2008 £000 2007 £000 5,253 7,000 5,253 7,000 Details of directors’ share options are set out in the Report on Directors’ Remuneration on pages 31 and 32. There are 763,852 (2007: 927,833) ordinary shares of 10p each held by the Employee Incentive Trust. See note 18 on page 61. Ordinary shares carry one vote each on a poll. 60 MAJEDIE INVESTMENTS PLC 18 Own Shares – Group and Company Following the grant of matching and TSR-based awards to directors and employees under the Long Term Incentive Plan (LTIP), 250,197 own shares costing £914,000 were purchased by the Majedie Investments PLC Employee Incentive Trust (EIT) during the year ended 30 September 2008. Additionally, following the exercise of share options during the year 414,178 shares were sold by the EIT at a value of £907,000 resulting in a loss of £487,000. The total number of options outstanding at the date of this report is 255,803 under the Discretionary Share Option Scheme 2000 and 582,479 under the LTIP and the total shareholding of the Trust is 763,852 ordinary shares. The shares will be held by the Trust until the relevant options are exercised or until they lapse. They are presented on the Balance Sheet as a deduction from shareholders’ funds, in accordance with the policy detailed in note 1. Further details of the LTIP are given in the Report on Directors’ Remuneration on pages 28 and 29. As at 30 September 2007 Net disposals As at 30 September 2008 19 Net Asset Value Number of Shares 927,833 (163,981) Own Shares Reserve £000 (3,053) 480 763,852 (2,573) The consolidated net asset value per share has been calculated based on equity shareholders’ funds of £153,465,000 (2007: £253,216,000) and on 51,764,148 (2007: 51,600,167) ordinary shares, being the shares in issue at the year end having deducted the number of shares held by the EIT. 20 Reconciliation of Net Cash Flow to Movement in Net Debt Group Increase in cash in the year Non cash items Change in net debt Net debt beginning of year Net debt at end of year Company Increase in cash in the year Non cash items Change in net debt Net debt at beginning of year Net debt at end of year 2008 £000 1,371 (16) 2008 £000 1,284 (16) 1,355 (26,964) (25,609) 1,268 (27,294) (26,026) 2007 £000 2,218 (14) 2007 £000 2,137 (14) 2,204 (29,168) (26,964) 2,123 (29,417) (27,294) REPORT & ACCOUNTS 2008 61 Notes to the Accounts 21 Analysis of Changes in Net Debt Group Cash at bank Debt due after one year At 30 September 2007 £000 6,764 (33,728) Cash Flows £000 1,371 Non Cash Items £000 (16) At 30 September 2008 £000 8,135 (33,744) (26,964) 1,371 (16) (25,609) Company Cash at bank Debt due after one year At 30 September 2007 £000 6,434 (33,728) Cash Flows £000 1,284 Non Cash Items £000 (16) At 30 September 2008 £000 7,718 (33,744) (27,294) 1,284 (16) (26,026) 22 Operating Lease Commitments A subsidiary company, Barlow Service Company Limited, had an annual commitment at 30 September 2008 of £146,000 (2007: £146,000) under a non-cancellable operating lease in respect of premises. The Group has exercised its right under a break clause in the lease to leave the premises by 25 March 2009 and is currently ascertaining its future requirements in respect of premises. This operating lease commitment is disclosed in the table below: Expiry Date Within one year Between one and two years Between two and three years Between three and four years Five years and above 23 Financial Commitments 2008 £000 70 70 2007 £000 146 146 146 146 359 943 With the exception of the financial commitment detailed in note 22, at 30 September 2008 the Group had no financial commitments which had not been accrued for (2007: none). 24 Share-based Payments The Group operates two share-based payment schemes: the Discretionary Share Option Scheme 2000 and the 2006 Long Term Incentive Plan (LTIP) which in turn has two sections relating to TSR-based Awards and Matching Awards. The LTIP replaced the Discretionary Share Option Scheme 2000 for executive directors and senior executives, and the first awards were made in January 2006. 62 MAJEDIE INVESTMENTS PLC 24 Share-based Payments continued Discretionary Share Option Scheme 2000 The Scheme involved the granting of share options, with an exercise price equal to the average quoted market price of the Company’s shares on the date of grant, to executives in 2001, 2002, and 2004. Following a review of executive directors’ remuneration in 2005, it was decided that no further awards of options would be made under the Scheme. Share options in the Scheme have a performance condition based on a specified annualised hurdle rate applying between the grant date and the exercise date. If the performance condition has been achieved up to the exercise date the share options may be exercised within a seven year period beginning three years after the date of grant. Long Term Incentive Plan: TSR-based Awards Awards of restricted shares up to a maximum value of one year’s salary have performance conditions based on total shareholder return in relation to two separate performance conditions over a period of five years. The performance conditions contain higher and lower thresholds that determine the extent of the vesting of the award. Please refer to the Report on Directors’ Remuneration on pages 27 to 32 for further information. Long Term Incentive Plan: Matching Awards Executive directors and senior executives receive a certain percentage of their overall bonus for the year in deferred shares. The shares granted according to these matching awards only vest once the executive has completed three years’ further service. There are no other performance conditions. Discretionary Share Option Scheme 2000 2008 TSR-based Awards Weighted No. Average of Exercise Options Price (p) Weighted No. Average of Exercise Options Price (p) Matching Awards Weighted No. Average of Exercise Options Price (p) 0.0 Outstanding at 1 October 2007 During the year: Awarded Forfeited Exercised Increase in awards due to dividends paid 655,265 260.80 207,344 0.0 122,424 147,072 0.0 84,245 0.0 (399,462) 216.35 14,978 6,416 Outstanding at 30 September 2008 255,803 330.09 369,394 0.0 213,085 Exercisable at 30 September 2008 28,270 0.0 101,108 0.0 0.0 Discretionary Share Option Scheme 2000 2007 TSR-based Awards Matching Awards Weighted No. Average of Exercise Price (p) 260.8 Options 655,265 Weighted No. Average of Exercise Price (p) 0.0 Options 99,648 Weighted No. Average of Exercise Price (p) 0.0 Options 37,397 102,679 0.0 83,737 0.0 5,017 1,290 Outstanding at 1 October 2006 During the year: Awarded Forfeited Increase in awards due to dividends paid Outstanding at 30 September 2007 655,265 260.8 207,344 0.0 122,424 0.0 Exercisable at 30 September 2007 370,021 229.6 REPORT & ACCOUNTS 2008 63 Notes to the Accounts 24 Share-based Payments continued The aggregate estimated fair value of the 147,072 TSR-based awards on 3 December 2007, being the date on which the awards were granted was £213,000 (2007: £141,000 relating to the aggregate estimated fair value of 102,679 options granted on 27 November 2006). The 84,245 matching awards granted in 2008 were made on 3 December 2007, 10 June and 19 November 2008 and had an aggregate estimated fair value on those dates of £179,000. The 19 November awards are included here as they relate to an overall bonus award for the 2008 financial year (2007: £224,000 relating to 83,737 matching awards made in the year). The relevant proportion of their estimated fair value has been charged in the income statement. On 11 July 2008, 230,784 share options were exercised at a share price of 304p and a resultant gain to the employee of £202,000. Similarly on 22 August 2008, 168,678 share options were exercised at a share price of 296.5p and resultant gain to the employee of £136,000. The options and awards outstanding at 30 September 2008 had a weighted average remaining contractual life of 2.7 years, 3.3 years and 1.9 years in respect of the Discretionary Share Options Scheme 2000, TSR-based Awards and Matching Awards respectively (2007: 5.3 years, 3.8 years and 2.6 years respectively). Awards and options are usually forfeited if the employee leaves employment before vesting. The following table lists the assumptions and weighted average inputs used in the Black Scholes model for share awards granted in the year: Weighted Average share price Weighted Average exercise price Expected Volatility Expected Life Risk Free rate Expected dividends 2008 TSR-based Awards 350.0p 0.0p 15.0% 5 yrs 4.5% 2.8% 2008 Matching Awards 323.1p 0.0p 19.3% 3 yrs 4.8% 3.2% 2007 TSR-based Awards 337.6p 0.0p 15.0% 5 yrs 4.9% 2.8% 2007 Matching Awards 390.0p 0.0p 15.0% 3 yrs 5.3% 2.5% Expected volatility was determined by calculating the historical volatility of the Company’s share price over the last three years. The expected life used in the model had been adjusted, based on the management’s best estimate, for the effects of non-transferability, exercise restrictions and behavioural considerations. As a consequence of a director leaving the Company on 30 June 2008 future period share option charges have been required to be recognised on that date in accordance with the early vesting provisions of IFRS 2. This results in a one-off charge of £246,000 being included as part of the total expense of £516,000 (2007: £177,000) relating to share-based payment transactions in the year ended 30 September 2008. 25 Financial Instruments and Risk Profile As an investment trust, the Company invests in securities for the long term in order to achieve its investment objective as stated on page 1. Accordingly it is the Board’s policy that no trading in investments or other financial instruments be undertaken. The Company’s financial instruments comprise its investment portfolio – see note 12, cash balances, debtors and creditors that arise directly from its operations such as sales and purchases awaiting settlement and accrued income, and the debenture loans used to finance its operations. The Company is unlikely to use derivatives for hedging purposes and then only in exceptional circumstances with the specific prior approval of the Board. 64 MAJEDIE INVESTMENTS PLC 25 Financial Instruments and Risk Profile continued In pursuing its investment objective the Company is exposed to various risks which could cause short term variation in the Company’s net assets and which could result in both or either a reduction in the Company’s net assets or a reduction in the profits available for distribution by way of dividend. The main risk exposures for the Company from its financial instruments are market risk (including currency risk, interest rate risk and other price risk) liquidity risk and credit risk. The Board sets the overall investment strategy and has in place various controls and limits and receives various reports in order to monitor the Company’s exposure to these risks. The risk management policies identified in this note have not changed materially from the previous accounting period. Market Risk The principal risk in the management of the portfolio is market risk i.e. the risk that values and future cashflows will fluctuate due to changes in market prices. This comprises: (cid:129) (cid:129) (cid:129) foreign currency risk; interest rate risk; and other price risk i.e. movements in the value of investment holdings caused by factors other than interest rate or currency movements These risks are taken into account when setting investment policy and making investment decisions. Foreign Currency Risk Exposure to foreign currency risk arises through investments in securities listed on overseas stock markets. A proportion of the net assets of the Company are denominated in currencies other than sterling, with the effect that the balance sheet and total return can be materially affected by currency movements. The Company’s exposure to foreign currencies through its investments in overseas securities as at 30 September 2008 was £22,400,000 (2007: £38,169,000). The Investment Director monitors the Company’s exposure to foreign currencies and the Board receives reports on a regular basis. In making investment decisions the Investment Director is mindful of the Company’s benchmark allocation to foreign currencies but takes independent positions based on a long term view on the relative strengths and weaknesses of currencies. Additionally the currency of investment is not the only relevant factor considered as many portfolio investment companies are global in scope and nature. The Company does not normally hedge against foreign currency movements. REPORT & ACCOUNTS 2008 65 Notes to the Accounts 25 Financial Instruments and Risk Profile continued The currency risk of the Company’s financial assets and liabilities at the Balance Sheet date was: Monetary exposures UK sterling Non-monetary exposures US dollar Euro Hong Kong dollar Indonesian rupiah Swiss franc Singapore dollar Thai baht Canadian dollar Australian dollar UK sterling Total assets Liabilities Monetary exposures UK sterling Non-monetary exposures UK sterling Total net assets 2008 £000 2007 £000 7,718 6,434 9,121 8,341 855 113 207 476 670 2,617 159,188 6,369 11,578 269 189 1,603 5,457 12,704 243,455 181,588 189,306 281,624 288,058 (33,744) (2,099) (33,728) (1,116) (35,843) 153,463 (34,844) 253,214 Sensitivity analysis A 5 per cent increase in sterling at 30 September 2008 against the relevant foreign currencies, with all other variables held constant, would have had the effect of reducing the Company’s net assets and total return by £1,067,000 (2007: £1,818,000). A 5 per cent decrease in sterling would have had the equal and opposite effect. Interest Rate Risk The Company’s direct interest rate risk exposure affects the interest received on cash balances and the fair value of its fixed rate portfolio investments and debentures. Indirect exposure to interest rate risk arises through the effect of interest rate changes on the valuation of the investment portfolio. The vast majority of the financial assets held by the Company are equity shares, which pay dividends, not interest. The Company may however from time to time hold small investments which pay a fixed rate of interest. The Board sets limits for cash balances and receives regular reports on the cash balances of the Company. The Company’s fixed rate debentures introduce an element of gearing to the Company which is monitored within limits and reported to the Board. Cash balances are used to manage the level of gearing within a range set by the Board. The Board sets an overall investment strategy and also has various limits on the investment portfolio which aim to spread the portfolio investments to reduce the impact of interest rate risk on company valuations. Regular reports are received by the Board in respect of the Company’s investment portfolio and the respective limits. 66 MAJEDIE INVESTMENTS PLC 25 Financial Instruments and Risk Profile continued The interest rate risk profile of the Company’s financial assets and liabilities at the Balance Sheet date was: Floating rate financial assets UK sterling Fixed rate financial assets As referred to in note 12 Financial assets not carrying interest Total assets Fixed rate financial liabilities UK sterling Financial liabilities not carrying interest UK sterling Total liabilities Total net assets 2008 £000 7,718 972 180,616 2007 £000 6,434 577 281,047 189,306 288,058 (33,744) (2,099) (33,728) (1,116) (35,843) (34,844) 153,463 253,214 Floating rate financial assets usually comprise cash on deposit which is repayable on demand and receive a rate of interest based on the base rates in force over the period. Fixed rate financial assets comprise convertible bonds or loan notes. The fixed rate financial liabilities comprise the Company’s debentures totaling £34.2m nominal. They pay a weighted average rate of interest of 8.1% per annum and mature in 2020 (£13.5m) and 2025 (£20.7m). Sensitivity analysis Movements in interest rates would not have had a significant direct impact on net assets or total return but could indirectly, have a material, but unquantifiable impact on the investments held. Other Price Risk Exposure to market price risk is significant and comprises mainly movements in the market prices and hence value of the Company’s listed equity investments which are disclosed in note 12 on page 57. The Company also has unlisted investments which are indirectly impacted by movements in listed equity prices and related variables. The Board sets an overall investment strategy to achieve a spread of investments across sectors and regions in order to reduce risk. Investments are considered independently of the Company’s benchmark which may result in volatility in the short term. The Board receives reports on the investment portfolio, performance and volatility on a regular basis in order to ensure that the investment portfolio is in accordance with current strategy. Sensitivity analysis A 5% increase in listed equity valuations at 30 September 2008 would have increased total assets and total return by £7,417,000 (2007: £12,491,000). A 5% decrease in listed equity valuations would have had the equal but opposite effect. REPORT & ACCOUNTS 2008 67 Notes to the Accounts 25 Financial Instruments and Risk Profile continued Credit Risk Credit risk is the risk of other parties failing to discharge an obligation causing the Company financial loss. The Company’s exposure to credit risk is managed by the following: (cid:129) (cid:129) (cid:129) (cid:129) The Company’s listed investments are held on its behalf by RBC Dexia Investor Services Trust, the Company’s custodian which if became bankrupt or insolvent could cause the Company’s rights with respect to securities held to be delayed. The Company receives regular internal control reports from the Custodian which are reviewed and reported; Investment transactions are undertaken with a number of approved brokers in the ordinary course of business. All new brokers are reviewed by a Board committee for credit worthiness and added to an approved brokers list if not considered to be a credit risk; Cash is held at banks that are considered to be reputable and high quality. Cash balances are spread across a range of banks to reduce concentration risk; Where the Company makes an investment in a loan or other security with credit risk, that credit risk is assessed and considered as part of the investment decision making process by the Investment Director. The Board receives regular reports on the composition of the investment portfolio. Credit Risk Exposure As at 30 September 2008, cash balances total £7,718,000 (2007: £6,434,000), debtors and prepayments total £2,413,000 (2007: £3,092,000). Also included within the portfolio are a number of convertible notes or loan notes designated at fair value through profit or loss. The total value of these notes are £972,000 (2007: £577,000). None of these financial assets are impaired. Liquidity Risk Liquidity risk is the risk that the Company will encounter difficulties meeting its obligations as they fall due. Liquidity risk is not significant as the majority of the Company’s assets are investments in quoted equities and other quoted securities that are readily realisable. The Board has various limits in respect of how much of the Company’s resources can be invested in any one company. The unlisted investments in the portfolio are subject to liquidity risk but such investments are subject to limits set by the Board and liquidity risk is taken into account by the directors when arriving at their valuation. The increase in the value of unlisted investments primarily reflects the increase in the value of MAM during the year. The Company maintains an appropriate level of cash balances in order to finance its operations and the Investment Director regularly monitors the Company’s cash balances to ensure all known or forecasted liabilities can be met. The Board receives regular reports on the level of the Company’s cash balances. The Company does not have any overdraft or other borrowing facilities to provide liquidity. A maturity analysis of financial liabilities showing the remaining contractual maturities is detailed below: Amounts falling due within 10 years: £13.5m 9.5% debenture stock 2020 Amounts falling due after 15 years £20.7m 7.25% debenture stock 2025 2008 £000 2007 £000 13,369 13,363 20,375 20,365 68 MAJEDIE INVESTMENTS PLC 25 Financial Instruments and Risk Profile continued Fair value of financial assets and liabilities The Company’s financial instruments at 30 September comprised the following: Financial assets Investment portfolio Cash Financial liabilities £13.5m (2007: £13.5m) 9.5% debenture stock 2020 £20.7m (2007: £20.7m) 7.25% debenture stock 2025 Book Value 2008 £’000 178,981 7,718 13,369 20,375 Book Value 2007 £’000 278,338 6,434 13,363 20,365 Fair Value 2008 £’000 178,981 7,718 17,016 22,257 Fair Value 2007 £’000 278,338 6,434 17,474 24,383 The investment portfolio has been valued in accordance with the accounting policy in note 1 to the accounts. Accordingly, book value equates to fair value. The fair value of the debenture stock is based on information provided by FT Interactive Data as at 30 September in each year. Capital Management Policies and Procedures The Company’s capital management objectives are: (cid:129) (cid:129) to ensure that it is able to continue as a going concern; and to maximise the revenue and capital returns to its equity shareholders through an appropriate mix of equity capital and debt. The Board sets a range for the Company’s net debt (comprised of debentures less cash) at any one time which is maintained by management of the Company’s cash balances. The Company’s capital at 30 September comprises: Net debt Cash Debentures Sub total Equity Equity share capital Retained earnings and other reserves Sub total Net debt as a percentage of net assets 2008 £000 (7,718) 33,744 2007 £000 (6,434) 33,728 26,026 27,294 5,253 148,210 5,253 247,961 153,463 17.0% 253,214 10.8% REPORT & ACCOUNTS 2008 69 Notes to the Accounts 25 Financial Instruments and Risk Profile continued The Board monitors and reviews the broad structure of the Company’s capital on an ongoing basis. The review includes: (cid:129) (cid:129) the level of net gearing, taking into account the Investment Director’s views on the market; the level of the Company’s free float of shares as the Barlow family owns approximately 55% of the share capital of the Company. (cid:129) the extent to which revenue in excess of that required to be distributed should be retained. These objectives, policies and processes for managing capital are unchanged from the prior period. The Company is subject to various externally imposed capital requirements: (cid:129) (cid:129) the debentures are not to exceed in aggregate 66 2/3% of adjusted share capital and reserves in accordance with the respective Trust Deeds; the Company has to comply with statutory requirements regarding minimum share capital and restriction tests relating to dividend distributions. These requirements are unchanged since last year and the Company has complied with them. 26 Derivative Financial Instruments In the course of its investment activities the Company receives warrants on ordinary shares which provide exposure to companies on favourable terms. At 30 September 2008, the fair value of the Company’s warrants, both listed and unlisted was £18,000 (2007: £21,000). Changes in the fair value of warrants amounting to £3,000 (2007: £62,000) have been debited to the Income Statement in the year ended 30 September 2008. 70 MAJEDIE INVESTMENTS PLC 27 Related Party Transactions Transactions between the Company and its subsidiaries, which are related parties, have been eliminated on consolidation and are not disclosed in this note. Majedie Asset Management Limited is a related party. It is accounted for as an investment in the portfolio valued at fair value through profit or loss. Details of Transactions 2008 £000 2007 £000 Amounts Owed by Related Parties 2008 £000 2007 £000 Amounts Owed to Related Parties 2008 £000 2007 £000 Majedie Asset Management Limited Special dividend due to Group 2,484 3,808 2,110 At 30 September 2008 the Company held investments in funds managed by Majedie Asset Management Limited representing 1.5% (2007: 3.1%) of the Company’s investment portfolio as set out in the table below. Fund Majedie Asset Management UK Opportunities ‘A’ Majedie Asset Management UK Focus ‘B’ Majedie Asset Management UK Equity ‘B’ Majedie Asset Management UK Alpha ‘C’ 2008 Market Value £000 2,447 248 246 2007 Market Value £000 6,171 299 292 1,998 2,941 8,760 Distributions totalling £78,000 (2007: £117,000) from these investments were received by the Company during the year. The Company makes investments from time to time in companies on the boards of which a non-executive director of the Company serves as a director. The Company’s non-executive directors are not involved in any day-to-day investment decisions relating to the investment portfolio. The remuneration of the directors, who are the key management personnel of the Group, is set out below in aggregate for each of the categories specified in IAS 24: Related Party Disclosures. Further information about the remuneration of individual directors is provided in the audited part of the Report on Directors’ Remuneration on pages 30 to 32. Short-term employee benefits Share-based payments 2008 £000 949 492 2007 £000 844 171 1,441 1,015 REPORT & ACCOUNTS 2008 71 Ten Year Record to 30 September 2008 Share- Total† holders’ Assets £000 NAV Funds Per Share Pence £000 Share Price Discount Earnings Dividend Pence Pence Pence % Total Actual Potential Company Costs Ratio % Net Gearing Gearing Ratio Ratio % % 216,519 201,708 383.3 367.0 4.25 8.09 7.40 2.30 7.30 274,620 235,269 446.3 358.5 19.67 7.01 7.65 15.50 16.70 203,067 163,709 310.7* 242.5 21.95 7.73 7.90 19.40 24.10 164,344 124,893 238.1* 187.5 21.25 9.97 8.15 18.30 31.70 168,001 128,810 246.6* 198.0 19.71 7.52 8.45 17.09 30.57 172,144 138,893 266.5* 227.5 14.63 5.25 8.75 14.51 24.25 212,600 178,845 343.0* 303.5 11.52 8.94 9.05*** 16.18 18.65 242,903 209,189 403.2* 338.3 16.09 12.45 9.50*** 13.94 16.12 286,944 253,216 490.7* 413.3 15.77 13.60 14.50*** 10.65 13.32 187,209 153,465 296.5* 250.0 15.68 12.45 12.75*** 16.69 21.99 1.38 0.95 0.96 1.56 1.67 1.36 1.19 1.28 1.24 1.61 Year End 1999 2000 2001 2002 2003 2004 2005 2006** 2007** 2008 The Actual Gearing Ratio is calculated as total assets less cash, fixed interest assets and minority interest divided by shareholders’ funds less own shares held, up to and including 2002. From 2003 onwards the Actual Gearing Ratio is calculated as total assets less cash, fixed interest assets and minority interest divided by shareholders’ funds. The Potential Gearing Ratio is calculated as total assets less minority interest and own shares held divided by shareholders’ funds less own shares held, up to and including 2002. From 2003 onwards the Potential Gearing Ratio is calculated as total assets less minority interest divided by shareholders’ funds. The change in calculation in 2003 for both the Actual Gearing Ratio and the Potential Gearing Ratio is due to UITF Abstract 38: Accounting for ESOP Trusts. * From 2001 onwards NAV Per Share figures have been calculated as described in note 19 on page 61. ** Restated to reflect the review of the treatment of the investment in Majedie Asset Management. *** Net dividends represent dividends that relate to the Company’s financial year. Under IFRS dividends are not accrued until paid or approved. † Represents total assets less current liabilities. 72 MAJEDIE INVESTMENTS PLC Notice of Meeting Notice is hereby given that the ninety eighth Annual General Meeting of Majedie Investments PLC will be held on 20 January 2009 at Novotel London Tower Bridge, 10 Pepys Street, London EC3N 2NR at 11.30am for the purpose of transacting the following: Ordinary Business 1. To receive and adopt the Directors’ Report and Accounts for the year ended 30 September 2008. 2. To receive the Report on Directors’ Remuneration. 3. To declare a final dividend of 6.3p per share in respect of the year ended 30 September 2008. 4. To declare a special dividend of 2.25p per share in respect of the year ended 30 September 2008. 5. To re-elect H V Reid as a director. 6. To re-elect J W M Barlow as a director. 7. To elect A J Adcock as a director. 8. To appoint Ernst & Young LLP as auditors and to authorise the directors to fix their remuneration. Special Business To consider and, if thought fit, pass the following resolutions which will be proposed as special resolutions: 9. THAT the Company generally be and is hereby authorised for the purpose of Section 166 of the Companies Act 1985 to make market purchases (as defined in Section 163 of the said Act) of shares of 10p each in the capital of the Company (shares) provided that: a) the maximum number of shares hereby authorised to be purchased is 7,873,947; being 14.99% of the issued share capital; b) the minimum price which may be paid for such shares is 10p per share; c) the maximum price (exclusive of expenses) which may be paid for such shares shall be 5% above the average of the middle market quotations taken from the London Stock Exchange Daily Official List for the five business days before the purchase is made; d) the authority hereby conferred shall (unless previously renewed or revoked) expire on the earlier of the next Annual General Meeting of the Company and the date which is eighteen months after the date on which this resolution is passed; and e) the Company may make a contract to purchase its own shares under the authority hereby conferred prior to the expiry of such authority which will or may be executed wholly or partly after the expiry of such authority and may make a purchase of its own shares in pursuance of any such contract. 10. That with effect from the end of the meeting, the Articles of Association produced to the meeting and initialled by the Chairman of the meeting for the purposes of identification be adopted as the Articles of Association of the Company in substitution for, and to the exclusion of, the existing Articles of Association. By order of the Board Capita Sinclair Henderson Limited Company Secretary 26 November 2008 REPORT & ACCOUNTS 2008 73 Notice of Meeting Note 1 A member entitled to attend and vote at the Meeting is entitled to appoint one or more proxies to attend and vote instead of him/her, provided that each proxy is appointed to exercise rights attached to different shares. A proxy need not also be a member of the Company. Lodgement of the form of proxy will not preclude a shareholder from attending the Meeting and voting in person. A personalised form of proxy is enclosed for use in connection with the business set out above. To be valid, the form of proxy, should be completed and sent, together with the power of attorney or other authority (if any) under which it is signed (or a notarially certified copy of such power or authority), to reach the Registrars at the address printed on the form of proxy not less than 48 hours before the time of the meeting or any adjournment thereof. A member present in person or by proxy shall have one vote on a show of hands and on a poll shall have one vote for every Ordinary share of which he/she is the holder. To appoint more than one proxy, shareholders will need to complete a separate proxy form in relation to each appointment (you may photocopy the proxy form), stating clearly on each proxy form how many shares the proxy is appointed in relation to. A failure to specify the number of shares each proxy appointment relates to or specifying an aggregate number of shares in excess of those held by the member will result in the proxy appointment being invalid. Please indicate if the proxy instruction is one of multiple instructions being given. All proxy forms must be signed and should be returned together in the same envelope. Note 2 A person to whom this notice is sent who is a person nominated under section 146 of the Companies Act 2006 to enjoy information rights (a “Nominated Person”) may, under an agreement between him/her and the shareholder by whom he/she was nominated, have a right to be appointed (or to have someone else appointed) as a proxy for the Annual General Meeting. If a Nominated Person has no such proxy appointment right or does not wish to exercise it, he/she may, under any such agreement, have a right to give instructions to the shareholder as to the exercise of voting rights. The statements of the rights of members in relation to the appointment of proxies in Note 1 above do not apply to a Nominated Person. The rights described in that Note can only be exercised by registered members of the Company. Note 3 Pursuant to regulation 41(1) of the Uncertificated Securities Regulations 2001, only those shareholders registered in the register of members of the Company as at 6.00pm on 18 January 2009 shall be entitled to attend and vote at the aforesaid Annual General Meeting in respect of the number of shares registered in their name at the that time. Changes to entries on the relevant register of members after 6.00pm on 18 January 2009 (“the specified time”) shall be disregarded in determining the rights of any person to attend or vote at the meeting. If the meeting is adjourned to a time not more than 48 hours after the specified time applicable to the original meeting, that time will also apply for the purpose of determining the entitlement of members to attend and vote (and for the purpose of determining the number of votes they may cast) at the adjourned Meeting. If, however, the Meeting is adjourned for a longer period then, to be so entitled, members must be entered on the Company’s register of members at the time which is 48 hours before the time fixed for the adjourned Meeting or, if the Company gives notice of the adjourned Meeting, at the time specified in that notice. Note 4 As at the date of this Notice, the Company’s issued share capital and total voting rights amounted to 52,528,000 ordinary shares carrying one vote each. 74 MAJEDIE INVESTMENTS PLC Note 5 In order to facilitate voting by corporate representatives at the Annual General Meeting, arrangements will be put in place at the meeting so that: (i) if a corporate shareholder has appointed the Chairman of the Meeting as its corporate representative with instructions to vote on a poll in accordance with the directions of all of the other corporate representatives for that corporate shareholder present at the Meeting then, on a poll, those corporate representatives will give voting directions to the Chairman of the Meeting and the Chairman will vote (or withhold a vote) as corporate representative in accordance with those directions; and (ii) if more than one corporate representative for the same corporate shareholder attends the Meeting but the corporate shareholder has not appointed the Chairman of the Meeting as its corporate representative, a designated corporate representative will be nominated from those corporate representatives in attendance on behalf of the corporate shareholder who will vote on a poll and the other corporate representatives will give voting directions to that designated corporate representative. Corporate shareholders are referred to the guidance issued by the Institute of Chartered Secretaries and Administrators on proxies and corporate representatives – www.icsa.org.uk – for further details of this procedure. The guidance includes a sample form of representation letter if the Chairman is being appointed as described in this paragraph (i) above. Note 6 Shareholders should note that it is possible that, pursuant to requests made by shareholders of the Company under section 527 of the Companies Act 2006, the Company may be required to publish on a website a statement setting out any matter relating to: (i) the audit of the Company’s accounts (including the auditor’s report and the conduct of the audit) that are to be laid before the Annual General Meeting; or (ii) any circumstance connected with an auditor of the Company ceasing to hold office since the previous meeting at which annual accounts and reports were laid in accordance with section 437 of the Companies Act 2006. The Company may not require the shareholders requesting any such website publication to pay its expenses in complying with sections 527 or 528 of the Companies Act 2006. Where the Company is required to place a statement on a website under section 527 of the Companies Act 2006, it must forward the statement to the Company’s Auditor not later than the time when it makes the statement available on the website. The business which may be dealt with at the Annual General Meeting includes any statement that the Company has been required under section 527 of the Companies Act 2006 to publish on a website. Note 7 The following documents will be available for inspection at the registered office of the Company during usual business hours on any weekday (except Saturdays and public holidays) until the date of the Meeting and at the place of the Meeting for a period of fifteen minutes prior to and during the Meeting: a) the terms and conditions of appointment of non-executive Directors; and b) a copy of the existing Articles of Association and the proposed New Articles of Association. None of the Directors has a contract of service with the Company. REPORT & ACCOUNTS 2008 75 Notice of Meeting Note 8 CREST members who wish to appoint a proxy or proxies by utilising the CREST electronic proxy appointment service may do so for this meeting by following the procedures described in the CREST Manual. CREST personal members or other CREST sponsored members, and those CREST members who have appointed a voting service provider(s), should refer to their CREST sponsor or voting service provider(s), who will be able to take the appropriate action on their behalf. In order for a proxy appointment or instruction made by means of CREST to be valid, the appropriate CREST message (a “CREST Proxy Instruction”) must be properly authenticated in accordance with Euroclear’s specifications and must contain the information required for such instructions, as described in the CREST Manual. The message, in order to be valid, must be transmitted so as to be received by the Company’s agent (ID 3RA50) by the latest time for receipt of proxy appointments specified in Note 1 above. For this purpose, the time of receipt will be taken to be the time (as determined by the timestamp applied to the message by the CREST Applications Host) from which the Company’s agent is able to retrieve the message by enquiry to CREST in the manner prescribed by CREST. After this time, any change of instructions to proxies appointed through CREST should be communicated to the appointee through other means. CREST members and, where applicable, their CREST sponsors or voting service providers should note that Euroclear does not make available special procedures in CREST for any particular messages. Normal system timings and limitations will therefore apply in relation to the input of CREST Proxy Instructions. It is the responsibility of the CREST member concerned to take (or, if the CREST member is a CREST personal member or sponsored member or has appointed a voting service provider(s), to procure that his CREST sponsor or voting service provider(s) take(s)) such action as shall be necessary to ensure that a message is transmitted by means of the CREST system by any particular time. In this connection, CREST members and, where applicable, their CREST sponsors or voting service providers are referred, in particular, to those sections of the CREST Manual concerning practical limitations of the CREST system and timings. The Company may treat as invalid a CREST Proxy Instruction in the circumstances set out in Regulation 35(5)(a) of the Uncertificated Securities Regulations 2001. 76 MAJEDIE INVESTMENTS PLC Appendix – Explanatory Notes of Principal changes to the Company’s Articles of Association 1 Summary of proposed changes Generally, the opportunity has been taken to bring clearer language into the Company’s Articles, to update the provisions to reflect changes in law and market practice, and to conform the language to that currently in use by similar companies. The sum of these changes is a wholesale revision of the Company’s Articles. This summary has been designed to highlight the more important changes. References to Articles in the headings below are to the corresponding provisions in the New Articles. 2 Articles which duplicate statutory provisions Provisions in the Existing Articles which replicate provisions contained in the Companies Act 2006 are in the main to be removed in the New Articles in line with the approach advocated by the Government, that statutory provisions should not be duplicated in a company’s constitution. Certain examples of such provisions include provisions as to the form of resolutions, the requirement to keep accounting records and provisions regarding the period of notice required to convene general meetings. 3 Definitions (Article 1.2) Certain definitions in the Existing Articles have been amended to reflect the wording used in the Companies Act 2006 and where appropriate to reflect the permitted use of electronic communications. Other definitions have been removed altogether as they are no longer used. References to extraordinary general meetings and extraordinary resolutions have been removed as these expressions are not used in the Companies Acts 2006. 4 Transfers of uncertificated shares (Article 2.7) The New Articles contain standard provisions relating to the transfer of the Company’s shares provisions in certificated form through the CREST system. 5 Notice of general meetings (Article 17.3) The provisions in the Existing Articles dealing with the convening of general meetings and the length of notice required to convene general meetings are being removed in the New Articles because the relevant matters are provided for in the Companies Act 2006. In particular a general meeting (other than an Annual General Meeting) to consider a special resolution can be convened on 14 days’ notice whereas previously 21 days’ notice was required. Article 17.3 deals with situations where, because of a postal strike or similar situation beyond control of the Company, a notice of meeting is not received by a shareholder and ensures that such failure does not invalidate proceedings at the meeting in question. 6 Quorum at general meetings (Article 18.1) The New Articles provides that three persons who are proxies or corporate representatives for the same member can constitute a quorum. 7 Attending and speaking at general meetings (Article 18.6) Article 18.6 of the New Articles provides that attendees at a general meeting may be searched or required to show evidence of identity and may be excluded if they fail to comply with these security arrangements. Article 18.7 of the New Articles enables the chairman to permit non-members to attend and speak at the meeting. REPORT & ACCOUNTS 2008 77 Appendix 8 Votes of members (Article 21.1.2 & Article 23.5) Under the Companies Act 2006 proxies are entitled to vote on a show of hands whereas under the Existing Articles proxies are only entitled to vote on a poll. The time limits for the appointment or termination of a proxy appointment have been altered by the Companies Act 2006 so that the articles cannot provide that they should be received more than 48 hours before the meeting or in the case of a poll taken more than 48 hours after the meeting, more than 24 hours before the time for the taking of a poll, with weekends and bank holidays being permitted to be excluded for this purpose. Multiple proxies may be appointed provided that each proxy is appointed to exercise the rights attached to a different share held by the shareholder. Article 21.2.2 of the New Articles allows the directors (as well as the chairman or members representing 10% of the voting rights exercisable at the meeting) to demand a poll. Article 23.5 provides that the directors may specify in the notice convening the meeting that in determining the time for delivery of proxies, no account shall be taken of non-working days. 9 Limit on directors’ fees (Article 25) The new Articles provide that the cap on aggregate directors’ fees should be increased from £150,000 to £250,000 per annum, or such additional sum as may be determined by the Company in general meeting. This amendment is proposed to allow for anticipated increases in total directors’ fees over a number of years and to reflect that the Board now comprises only non-executive directors. Executive directors did not previously receive fees. 10 Power to convert shares into Stock The provisions in Article 37–40 of the Existing Articles concerning the conversion of shares into stock have been deleted as such conversion is no longer possible under the Companies Act 2006. 11 Directors’ conflicts of interest (Article 31.3) The Companies Act 2006 sets out directors’ general duties which largely codify the existing law but with some changes. Under the Companies Act, from 1 October 2008 a director must avoid a situation where he has, or can have, a direct or indirect interest that conflicts, or possibly may conflict with the company’s interests. The requirement is very broad and could apply, for example, if a director becomes a director of another company or a trustee of another organisation. The Companies Act 2006 allows directors of public companies to authorise conflicts and potential conflicts, where appropriate, where the articles of association contain a provision to this effect. The Companies Act 2006 also allows the articles of association to contain other provisions for dealing with directors’ conflicts of interest to avoid a breach of duty. The New Articles gives the directors authority to approve such situations and to include other provisions to allow conflicts of interest to be dealt with in a similar way to the current position. There are safeguards which will apply when directors decide whether to authorise a conflict or potential conflict. First, only directors who have no interest in the matter being considered will be able to take the relevant decision, and secondly, in taking the decision the directors must act in a way they consider, in good faith, will be most likely to promote the company’s success. The directors will be able to impose limits or conditions when giving authorisation if they think this is appropriate. It is also proposed that the New Articles should contain provisions relating to confidential information, attendance at board meetings and availability of board papers to protect a director being in breach of duty if a conflict of interest or potential conflict of interest arises. These provisions will only apply where the position giving rise to the potential conflict has previously been authorised by the directors. It is the Board’s intention to report annually on the Company’s procedures for ensuring that the Board’s powers of authorisation of conflicts are operated effectively and that the procedures have been followed. 78 MAJEDIE INVESTMENTS PLC 12 Minutes (Article 34.2) The New Articles contain a new provision to the effect that minutes must be retained for at least 10 years, reflecting the relevant provision of the Companies Act 2006. (No minimum retention time was previously specified.) 13 Notice of board meetings (Article 33.2–3) Under Article 94 of the Existing Articles, when a director is abroad he is not entitled to receive notice while he is away. This provision has been removed, as modern communications mean that there may be no particular obstacle to giving notice to a director who is abroad; in addition flexibility has been added by allowing a director to waive his entitlement to receive notice. 14 The seal (Article 36) The New Articles provide that instruments (other than share certificates) to which the seal is affixed shall be signed by two authorised persons or by a director in the presence of a witness, whereas previously the requirement was for signature by either the director and secretary or two directors. 15 Records to be kept The provision in Article 112 of the Existing Articles requiring the Board to keep accounting records has been removed as this requirement is contained in the Companies Act 2006. 16 Electronic and web communications (Articles 38.2–3) Provisions of the Companies Act 2006 which came into force in January 2007 enable companies to communicate with members by electronic and/or website communications. The New Articles allow communications to members in electronic form and, in addition, they also permit the Company to take advantage of the new provisions relating to website communications. Before the Company can communicate with a member by means of website communication, the relevant member must be asked individually by the Company to agree that the Company may send or supply documents or information to him by means of a website, and the Company must either have received a positive response or have received no response within the period of 28 days beginning with the date on which the request was sent. The Company will notify the member (either in writing, or by other permitted means) when a relevant document or information is placed on the website and a member can always request a hard copy version of the document or information. Subject to the adoption of the New Articles, the Board would like to implement these provisions after the AGM. A separate letter describing the implementation of electronic and web communications is being sent to shareholders with the Annual Report. 17 Directors’ indemnities and loans to fund expenditure (Article 41) The Companies Act 2006 has in some areas widened the scope of the powers of a company to indemnify directors and to fund expenditure incurred in connection with certain actions against directors. In particular, a company that is a trustee of an occupational pension scheme can now indemnify a director against liability incurred in connection with the company’s activities as trustee of the scheme. In addition, the existing exemption allowing a company to provide money for the purpose of funding a director’s defence in court proceedings now expressly covers regulatory proceedings and applies to associated companies. The New Articles reflect these changes. REPORT & ACCOUNTS 2008 79 Majedie Savings Plans Majedie Share Plan The Majedie Share Plan is a straightforward and low cost way to invest or save in the shares of Majedie Investments PLC. Charges are kept low and the Plan is very flexible. Lump sum investments are dealt with on a weekly or daily basis whereas the monthly savings facility is an affordable and effective way of building a substantial shareholding over the longer term. The minimum lump sum investment is £250, while the minimum monthly amount is £25. There are no maximum limits. There are no dealing charges and there is no annual management fee. Your lump sum or monthly payments will be used to buy as many shares as possible after deducting Government Stamp Duty, currently at the rate of 0.5%. On the sale of shares a fixed charge of £15 + VAT is levied. Dividends may either be paid in cash or reinvested in the Plan. Existing Majedie shareholdings may be transferred into the Plan. You may close your plan by selling all your shares at any time. For more information, a Majedie Share Plan booklet and/or an application form please contact the Majedie Share Plan Manager, Majedie Portfolio Management Limited*, 1 Minster Court, Mincing Lane, London EC3R 7AA (telephone: 020 7626 1243). * authorised and regulated by the Financial Services Authority Majedie Corporate ISA The Majedie Corporate ISA (Individual Savings Account) provides individuals with a tax efficient way to invest or save in the shares of Majedie Investments PLC. ISAs provide the following benefits: – no extra income tax payable on income generated within the ISA; – no Capital Gains Tax liability on any profits arising from within the ISA; – no need to include the details of your ISA in reports to HM Revenue & Customs; and – no minimum period of investment. The Majedie Corporate ISA provides the additional benefit of extremely low cost. There are no initial charges and no annual management charges. Furthermore there is no brokerage charge on purchases or sales as part of the weekly bulk dealing for the scheme. However there is Government Stamp Duty on purchases, currently at 0.5%, and there is also an additional charge should you wish to make use of the Real Time Dealing Service. Shares may be purchased either by way of a lump sum payment or through regular monthly payments. The minimum lump sum investment is £500, while the minimum direct debit subscription is £50. The maximum investment permitted is now £7,200 for the 2008/09 tax year. Investments can be split between a cash ISA (up to a limit of £3,600) and a stocks and shares ISA (up to a limit of £7,200). The Majedie Corporate ISA is provided in conjunction with Halifax Share Dealing (HSDL) who act as an HM Revenue & Customs Approved PEP and ISA Manager. For more information, an ISA booklet and/or an application form please contact the Majedie Corporate ISA Manager, Halifax Share Dealing Limited, Trinity Road, Halifax HX1 2RG (telephone: 0870 600 9966). Majedie General PEP Although you are no longer able to put new money into a PEP, your existing PEP investments remain sheltered from tax and can continue to grow. You may transfer an existing PEP from another manager to the Majedie General PEP. Further details may be obtained from the Company’s PEP Manager, The Share Centre, PO BOX 2000, Aylesbury, Buckinghamshire HP21 8ZB (telephone: 0800 800 008). 80 MAJEDIE INVESTMENTS PLC Shareholder Information Registered Office 1 Minster Court Mincing Lane London EC3R 7AA Telephone: 020 7626 1243 Fax: 020 7929 0904 E-mail: majedie@majedie.co.uk Registered Number: 109305 England Company Secretary Stockbrokers Cenkos Securities plc 6.7.8 Tokenhouse Yard London EC2R 7AS Key Dates in 2009 Ex-dividend date Record date 7 January 2009 9 January 2009 Annual General Meeting 20 January 2009 2007/08 final dividend paid 28 January 2009 Capita Sinclair Henderson Limited Interim results announcement May Beaufort House 51 New North Road Exeter EX4 4EP Telephone: 01392 412122 Fax: 01392 253282 Registrars Computershare Investor Services PLC The Pavilions Bridgwater Road Bristol BS99 6ZZ Telephone: 0870 707 1159 Shareholders should notify all changes of name and address in writing to the Registrars. Shareholders may check details of their holdings, historical dividends, graphs and other data by accessing www.computershare.com. Shareholders wishing to receive communications from the Registrars by email (including notification of the publication of the annual and interim reports) should register on-line at http://www-uk.computershare.com/investor. Shareholders will need their shareholder number, shown on their share certificate and dividend vouchers, in order to access both of the above services. Auditors Ernst & Young LLP 1 More London Place London SE1 2AF 2008/09 interim dividend paid 30 June 2009 Financial year end 30 September Final results announcement November Annual report mailed to shareholders December Website www.majedie.co.uk Share Price The share price is quoted daily in The Times, Financial Times, The Daily Telegraph, The Independent and London Evening Standard. Shares may be bought through the Majedie Share Plan or Majedie Corporate ISA (details of which are set out on page 80). You may transfer an existing PEP to the Majedie General PEP (page 80). You may also purchase shares through an on-line dealing facility or via your stockbroker or bank. Net Asset Value The Company announces its net asset value weekly through the London Stock Exchange and on its website. The Financial Times publishes daily estimates of the net asset value and discount. Capital Gains Tax For capital gains tax purposes the adjusted market price of the Company’s shares at 31 March 1982 was 35.875p per 10p share. Former shareholders of Barlow Holdings PLC are recommended to consult their professional advisers in this regard. REPORT & ACCOUNTS 2008 81 Notes 82 MAJEDIE INVESTMENTS PLC Notes REPORT & ACCOUNTS 2008 83 Notes 84 MAJEDIE INVESTMENTS PLC Majedie Investments PLC 1 Minster Court Mincing Lane London EC3R 7AA Telephone 020 7626 1243 Facsimile 020 7929 0904 E-mail majedie@majedie.co.uk www.majedie.co.uk 

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