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.
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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