2009
Majedie Investments PLC
Annual Report
30 September 2009
Majedie Investments PLC is a self-managed investment
trust with total portfolio assets under management of over
£157 million as at 30 September 2009.
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
10
11
11
12
14
15
18
23
26
29
30
32
33
34
36
38
39
40
41
42
67
68
72
74
75
loose
Investment Objective and Policy Statement
Highlights for 2009
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 Statement
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 – Explanatory Notes of Principal Changes
to the Company’s 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 2009
1
Highlights for 2009
Total shareholder return:
Net asset value total return:
Benchmark total return:
Final dividend (per share):
Total dividends (per share):
Directors’ valuation of investment
in Majedie Asset Management Limited:
(18.3%)
(14.9%)
11.3%
6.3p
10.5p
£30.0m
2
MAJEDIE INVESTMENTS PLC
Group Summary
Total assets*
Shareholders’ funds
Market capitalisation
£157.9m
£124.2m
£98.7m
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 if aged under 50 or £10,200 if over 50 in 2009/10 tax year.
* Represents total assets less current liabilities as at 30 September 2009.
Recent Trends
491
384
343
297
239
4.50
2.25
10.50
10.50
10.00
9.50
9.05
413
338
304
250
190
05
06
07
08
09
05
06
07
08
09
05
06
07
08
09
Net asset value per share
(pence) decreased by 19.5%
in the year.
Core dividends (pence) have
remained at 10.50 pence. No
special dividend has been declared
this year.
Share price (pence) has
decreased by 24.1% during
the year.
REPORT & ACCOUNTS 2009
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
2009
2008
£157.9m
£124.2m
238.7p
189.75p
20.5%
17.5%
£4.3m
8.1p
10.5p
10.5p
£2.9m
2.1%
1.7%
27.2%
£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%
%
(15.7)
(19.1)
(19.5)
(24.1)
(33.8)
(35.2)
* 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.
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
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
2009
256.0p
135.0p
304.2p
177.1p
35.2%
8.8%
30.1%
4.2%
2008
425.0p
247.0p
490.7p
296.5p
22.6%
7.3%
19.8%
2.1%
2009
2008
(7.9%)
(14.9%)
(18.3%)
11.3%
(31.1%)
(36.2%)
(36.9%)
(19.9%)
4
MAJEDIE INVESTMENTS PLC
Chairman’s Statement
The Chairman’s Statement forms part of the Director’s Report
In the year to 30 September 2009 the Company’s Net Asset Value and Share Price, both on
a total return basis fell by 14.9% and 18.3% respectively, which compares to an increase in
the benchmark total return of 11.3%.
This result is of course disappointing with the
Consideration was given to a range of factors and was
Company continuing to suffer from its exposure at last
given impetus by the current year’s substantial decrease
year end to small cap equities and sterling assets over
in dividend income due to the economic environment.
what has been a most unusual and volatile period in
The Board is mindful of the importance of the
world equity markets. The Board however has acted
Company’s dividends to its shareholders and has
promptly to restructure the portfolio so that it is
concluded that the dividend policy should remain
properly positioned for the long term in the current
unchanged.
economic environment.
On a much more positive note we have been making
dividend of 6.3p per share, which when combined with
substantial progress on the launch of a new asset
the interim dividend of 4.2p per share, results in a total
management business which we believe will have the
dividend of 10.5p per share which is the same as 2008,
potential to bring significant benefits to the Company in
excluding the 2.25p per share special dividend paid last
The Board has therefore decided to recommend a final
the future.
Results and Dividends
The Group’s net profit before tax for the year was
£4.3m which is a decrease of £2.2m or 33.8%
compared to the prior year of £6.5m. This is primarily
the result of a fall in Group income of £2.4m to £6.5m
this year reflecting reductions in both dividend and
interest income. Group income includes £1.9m in
dividend income from Majedie Asset Management
(MAM) compared to £2.5m in 2008. Group total costs
for the year were £2.9m, falling £0.4m or 12.1% from
the £3.3m in 2008. The considerable reduction in
costs in 2009, while expected, was adversely impacted
by non-recurring costs associated with the office
relocation and the departure of the former Investment
Director.
As I indicated in my previous statements we have
undertaken a review of the Company’s dividend policy to
determine if it remains appropriate.
year. This is above the rate of inflation for the year with
the Retail Prices Index (RPI) at -1.4% reflecting the weak
economy. The diagram on page 6 illustrates the Majedie
dividend history over the last ten years in comparison
with the RPI. This shows that Majedie dividends have
been increasing by more than the rate of inflation.
TOTAL SHAREHOLDER RETURN V BENCHMARK
YEAR TO 30 SEPTEMBER 2009 (REBASED)
1.20
1.10
1.00
0.90
0.80
0.70
0.60
0.50
9/08
10/08
11/08
12/08
1/09
2/09
3/09
4/09
5/09
6/09
7/09
8/09
9/09
Benchmar k
REPORT & ACCOUNTS 2009
5
Chairman’s Statement
Investment Portfolio and Performance
There were two main factors that negatively impacted
The year began in the immediate aftermath of the
the investment performance during the period. Firstly,
Lehman Brothers bankruptcy which resulted in the
the Company entered the year with large exposure to
liquidity crisis turning into a full global economic
certain early stage small cap positions that had
recession. Developed World GDP fell at the fastest rate
previously contributed positively to performance, but
since the Great Depression of the 1930s, consumer
which significantly underperformed during the first half
and business confidence evaporated and
of the year. Secondly, the portfolio was heavily
unemployment rates soared. Not surprisingly values
weighted in favour of sterling denominated assets
across all major asset classes fell, including equities,
whilst sterling severely weakened against all major
corporate bonds, property and commodities. Equity
currencies during the period.
investors shunned any company considered to be
risky, particularly those with significant borrowings,
These issues were addressed following the change in
unproven management or business models dependent
the management of the portfolio that took place on
on the economic cycle. Global equity markets
1 January 2009. The revised strategy focused on
collapsed, with our benchmark down by over 27% at
enhancing the quality of securities. This was facilitated
its lowest point in early March.
by the cash held at the end of 2008 and by switching
out of lower quality smaller companies as deemed
The remainder of the year was a period of economic
appropriate. The illiquidity of many of these investments
stabilisation. Evidence began to show that the pace of
made this exercise difficult, although it was largely
GDP declines was abating and that signs of growth
complete by the year end.
were beginning to emerge, albeit from highly
depressed levels. This was strongly influenced by
The underweight position in overseas stocks has been
government stimulus spending packages, tax cuts,
dealt with through the construction of a portfolio of
record low interest rates and continued economic
assets in the major markets of USA, Europe and
strength from China and India. Equity markets have
Japan. These are predominantly highly regarded
experienced a sharp and swift bounce, pricing in an
companies that fit within the overall investment strategy
expectation of continued economic recovery rather
now being adopted.
than reflecting continuing high levels of unemployment
and low consumer spending. From the trough levels of
mid-March, our benchmark rebounded by over 50% to
close the year up 10.4% in capital terms.
CONSOLIDATED NET RETURN BEFORE TAXATION
£m
GROWTH IN CORE MAJEDIE DIVIDENDS COMPARED WITH
INCREASE IN RETAIL PRICES INDEX BOTH REBASED TO 1999
(PENCE PER SHARE)
10
9
8
7
6
5
4
3
2
1
0
11
10
9
8
7
2005
2006
2007
2008
2009
99
00
01
02
03
04
05
06
07
08
09
Majedie dividend
RPI
6
MAJEDIE INVESTMENTS PLC
Implementing these changes has been far from
Board & Management Changes
painless, although the Board believes that the action
There have been a number of changes to the Board
taken to enhance the quality of investments is in the
which aim to position the Company for the future.
long term interests of the Company. The majority of the
Firstly, Mr Paul Gadd has been appointed as a non-
listed equity positions now held are in well financed,
executive director from 1 October 2009. Paul has
large cap companies with proven track records of
spent 20 years as a solicitor in the City of London
delivering profit and dividend growth. Investment risk
working in corporate finance. He retired as a partner of
and volatility relative to the benchmark have been
Ashurst in April 2009, prior to which he was head of
materially reduced. Importantly, a base level of
Ashurst’s investment company practice. I am confident
investment income has been secured that should
that the Company will benefit from Paul’s experience
provide solid foundations for the business over the
and that he will make a valuable contribution to our
longer term.
deliberations. Secondly due to the development of our
new asset management business Mr Gerry Aherne
The Board is required to review the valuation of all
became an executive director from 24 November 2009
unlisted investments and during the year we have felt it
and stood down as Chairman of the Remuneration
prudent to reduce the holding value of certain positions
Committee with effect from 1 October 2009. He was
where the situation has deteriorated. In contrast the
replaced by Mr Hubert Reid. Thirdly, Chris Arnheim will
performance of MAM continues to exceed
join the Board from 1 January 2010. He has spent 25
expectations both financially by again increasing
years working as a solicitor in private practice, and for
profitability year on year, and reputationally where a
over 10 years was the Company's primary external
number of high profile industry awards have been
corporate legal adviser, for example advising on the
deservedly received. The Board has considered it
establishment and development of MAM. He stepped
appropriate to increase our valuation to £30m which it
down from this role following last year's AGM. The
believes more accurately reflects the fair value of our
Board will benefit greatly from his general experience
stake in this business.
and his personal knowledge of the Company and its
affairs.
NAV TOTAL RETURN V BENCHMARK
3 YEARS TO 30 SEPTEMBER 2009
TOTAL SHAREHOLDER RETURN V BENCHMARK
3 YEARS TO 30 SEPTEMBER 2009
1.40
1.30
1.20
1.10
1.00
0.90
0.80
0.70
0.60
0.50
0.40
1.50
1.40
1.30
1.20
1.10
1.00
0.90
0.80
0.70
0.60
0.50
0.40
0.30
9/06 12/06 3/07
6/07
9/07 12/07
3/08
6/08
9/08
12/08
3/09
6/09
9/09
9/06
12/07
3/07
6/07
9/07
12/07
3/08
6/08
9/08 12/08 3/09
6/09
9/09
Majedie
Benchmar
k
Benchmark
REPORT & ACCOUNTS 2009
7
Chairman’s Statement
Finally after 10 years as Chairman and in light of the
The Company will initially hold 70% of the equity of
increased demands which will be made of this role,
Javelin Capital LLP and under the partnership
I have decided to retire with effect from the 2010 AGM.
agreement this will fall to 51% provided certain profit
The Board has invited Mr Andrew Adcock to succeed
related benchmarks are successfully met. Gerry Aherne
me who will work closely with Gerry Aherne on the
will become Managing Partner of the enterprise but will
development of the Group. Andrew will stand down as
remain a member of the Board.
Chairman of the Audit Committee at that time and be
replaced by Mr Hubert Reid.
This venture is intended to be a genuine partnership
between the operational team of Javelin and the Board
The development of a new asset management business
of Majedie. It is to be hoped that it will be as highly
which will, inter alia, manage the Company’s investment
successful as our previous investment in MAM.
portfolio led to the departure of Mr Bill Baker by mutual
agreement. I would like to thank Bill for his stewardship
Annual General Meeting
and restructuring of the portfolio in what were very
turbulent times. Mr Nick Rundle has been appointed
Investment Director. Nick is an experienced investment
manager with an excellent track record, who has
worked in the City of London for over 20 years in a
The AGM will be held on 20 January 2010 at 11:30am
at the Fishmongers Company, Fishmongers Hall
London Bridge. Details are set out on page 68. As in
prior years there will be presentations and an
opportunity to ask questions. I do hope you will be
variety of institutions and positions including Barclays,
able to attend.
Companies Act 2006 and New Articles of
Association
The implementation of the final provisions of the
Companies Act 2006 came into force on 1 October
2009. At this year's AGM and as included in the notice
of meeting on page 68, the Company proposes to
adopt new Articles which reflect these changes,
including the abolition of authorised share capital, the
deletion of the enabling provision of authority to
purchase our own shares and reduce share capital and
notice periods of general meetings.
Morley Fund Management, Gerrard and National and
recently Taylor Young Investment Management.
Business Development
As outlined at last year’s AGM the Company has been
seeking an expansion of its activities. We have made
good progress and anticipate being able to launch a
substantial new venture, Javelin Capital LLP, with a
group of highly experienced and talented individuals.
Last year Gerry Aherne explained that we would focus
on an investment management business which would
concentrate on offering investment management
expertise in Global Equities and Global Emerging
Markets. We have been fortunate to recruit senior
investment individuals as well as marketing and
operational staff who are experienced in growing
investment management companies and handling the
associated operational risks. We have applied to the
FSA and other regulatory authorities and are hopeful
that we shall commence trading early in 2010, subject
to the necessary consents.
8
MAJEDIE INVESTMENTS PLC
Strategy & Outlook
As the growth in equity markets slows, dividend
Markets have experienced a sharp and swift recovery
income should become an important source of total
from the lows suffered in March 2009 and now appear
return. In this context, the positioning of the investment
to be pricing in an economic recovery into 2010 which
portfolio to give exposure to high quality companies
is by no means certain. The global economy has
with dividend growth potential is likely to be
clearly passed its worst, but the strength and speed of
increasingly attractive over the medium term.
the continued rebound may be more prolonged and
drawn out than envisaged. Economic recoveries are
In what has been another challenging and demanding
typically punctuated with negative surprises, so an
year I would like to express my appreciation of the hard
important indicator of equity market sustainability is
work and commitment shown by the Company’s staff
whether setbacks are seen as investment opportunities
and fellow directors which has certainly eased the
or triggers that precipitate sell-offs. Longer term there
burden. In my final year as Chairman and indeed with
continues to be upside to equity markets as record low
the Company’s 100 year anniversary falling in April
interest rates have reduced credible alternatives for the
2010 I am excited by the opportunities ahead and
generation of meaningful investment returns from bank
confident that the Company is in good hands.
deposits and government securities.
Entering the new financial year, the portfolio is
positioned to be underweight in stocks that are reliant
Henry S Barlow Chairman
on the overstretched consumers and governments of
24 November 2009
the developed world. It is overweight in companies that
are exposed to the faster growing emerging markets
and overweight in oil and mining companies that
supply industries that are fundamentally undersupplied
on a long term basis. My over-riding message is that
the portfolio is more appropriately balanced and
invested in higher quality stocks than twelve months
ago, and so the relative investment risk and volatility
has been significantly reduced.
REPORT & ACCOUNTS 2009
9
Asset Distribution
at 30 September 2009
0.0
0.0
0.0
0.3
0.4
0.4
0.4
0.3
0.5
0.0
0.8
0.5
2.0
0.2
0.6
0.9
0.5
2.0
1.2
10.3
0.0
0.8
1.0
0.9
8.2
Pacific
Basin
%
4.2
4.6
0.9
4.1
0.9
America
%
0.5
0.6
1.1
United
Kingdom
%
10.7
0.4
11.1
0.4
North Continental
Europe
%
0.8
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
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 Metals & Mining
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
Leisure Goods
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
Debt Investment Instruments
Financials
Software & Computer Services
Technology & Hardware Equipment
Technology
Unlisted/Fixed Interest
Total Equities
Total Non-current Assets
Cash
% Total at 30 September 2009
The Fund analysed on pages 12 and 13 comprises the fixed asset investments of £147,291,000 and cash (as adjusted for amounts due to/from brokers for settlement)
of £10,844,000.
Total
2009
%
12.0
1.0
13.0
0.9
0.0
4.2
5.1
0.9
4.4
0.9
0.0
0.4
0.4
1.0
0.9
8.9
0.8
0.6
2.9
0.2
0.5
5.0
0.2
5.0
5.2
0.3
0.6
0.5
1.8
1.2
4.4
1.7
4.0
5.7
2.5
1.4
3.9
8.9
0.0
2.8
1.0
1.2
0.5
1.0
15.4
1.3
2.5
3.8
22.8
93.2
93.2
6.8
100.0
2.8
0.7
1.2
0.5
1.0
12.5
0.2
0.7
0.9
22.4
73.9
73.9
6.8
80.7
19.1
4.1
0.6
4.7
16.3
95.6
95.6
4.4
100.0
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
0.9
0.6
1.2
2.7
0.7
2.5
3.2
1.1
0.3
1.3
0.7
0.6
1.3
0.2
8.9
8.9
3.5
3.5
2.1
1.4
3.5
6.3
2.2
0.2
2.7
2.9
0.0
0.2
5.4
5.4
1.6
0.4
1.2
1.6
1.3
0.8
2.1
1.1
1.1
0.3
0.4
1.0
0.5
1.2
1.2
0.5
0.5
5.0
5.0
1.2
0.4
0.0
1.3
0.0
1.3
0.8
1.2
0.5
0.0
5.4
5.0
0.5
0.3
0.6
0.5
0.4
0.0
8.9
0.0
0.8
0.5
Unlisted/Fixed Interest investments comprise an amount of £30,000,000 in respect of the investment in Majedie Asset Management, £569,000 in unlisted fixed interest
investments and £5,465,000 in respect of equity investments in various companies. Suspended stocks have been analysed in their listed sectors.
10
MAJEDIE INVESTMENTS PLC
Twenty Largest UK Investments
at 30 September 2009
Company
Majedie Asset Management
HSBC
BP
Royal Dutch Shell 'B'
Vodafone
GlaxoSmithKline
BHP Billiton
Vostok Energy
Rio Tinto
Rolls Royce
Unilever*
Aviva
BG Group
Prudential
BAE Systems
Majedie Asset Management Tortoise Fund 'B'*
Capital Lease Aviation
Hydrodec
KSK Power Venture
Accsys Technologies
2009
2008
Market Value
£000
30,000
% of
Fund
19.0
Market Value
£000
22,500
% of
Fund
12.0
8,926
7,189
5,208
4,557
4,303
3,775
2,863
2,645
2,505
2,400
2,241
2,163
2,015
1,851
1,645
1,500
1,440
1,406
1,367
5.6
4.5
3.3
2.9
2.7
2.4
1.8
1.7
1.6
1.5
1.4
1.4
1.3
1.2
1.0
0.9
0.9
0.9
0.9
7,929
2,431
2,905
6,272
2,537
2,682
2,569
3,232
1,790
1,070
1,481
1,700
2,413
2,344
3,477
1,355
5,348
4.2
1.3
1.6
3.3
1.4
1.4
1.4
1.7
1.0
0.6
0.8
0.9
1.3
1.3
1.9
0.7
2.9
*There is no comparative for the investments listed as they represent new holdings.
89,999
56.9
74,035
39.7
Ten Largest Overseas Investments
at 30 September 2009
Company
Wells Fargo (USA)*
Telefonica (Spain)*
China Construction Bank (China)*
ENI (Italy)*
Toyota (Japan)*
Microsoft Corp (USA)*
Roche (Switzerland)*
Coca-Cola Co (USA)*
Johnson & Johnson (USA)*
Schlumberger (USA)*
2009
Market Value
£000
% of
Fund
1,318
1,292
1,248
1,244
1,240
1,049
1,009
1,006
951
931
11,288
0.8
0.8
0.8
0.8
0.8
0.7
0.6
0.6
0.6
0.6
7.1
*There is no comparative for the investments listed as they all represent new holdings.
REPORT & ACCOUNTS 2009 11
Valuation of Investments
Holdings valued over £100,000 at 30 September 2009
Company
Market Value % of
Fund
£000
Company
Market Value % of
Fund
£000
Company
Market Value % of
Fund
£000
Oil & Gas
Oil & Gas Producers
BG Group
BP
ENI (Italy)
Exxon Mobil (USA)
Great Eastern
Hydrodec Group
Royal Dutch Shell 'B'
2,163 1.4%
7,189 4.5%
1,244 0.8%
857 0.5%
864 0.5%
1,440 0.9%
5,208 3.3%
Oil Equipment, Services &
Distribution
Hunting
Schlumberger (USA)
674 0.4%
931 0.6%
Automobiles
Automobiles & Parts
Toyota (Japan)
1,240 0.8%
Basic Materials
Chemicals
Bayer (Germany)
Croda
865 0.5%
558 0.4%
Industrial Metals & Mining
Arcelormittal (Netherlands) 700 0.4%
Mining
BHP Billiton
Metals Exploration
Rio Tinto
3,775 2.4%
195 0.1%
2,645 1.7%
Industrial Goods & Services
Construction & Materials
Ashley House
Balfour Beatty
727 0.5%
644 0.4%
Aerospace & Defence
BAE Systems
Lockheed Martin (USA)
Meggitt
Rolls Royce
VT Group
1,851 1.2%
585 0.4%
816 0.5%
2,505 1.6%
1,269 0.8%
General Industrials
Accsys Technologies
1,367 0.9%
Industrial Engineering
Zenergy
656 0.4%
Industrial Transportation
Capital Lease Aviation 1,500 0.9%
Support Services
Babcock
Healthcare Locums
Consumer Goods
Beverages
Coca-Cola (USA)
Food Producers
Heinz (USA)
Monsanto (USA)
Purecircle
Unilever
Household Goods
Bovis Homes
Leisure Goods
Nintendo (Japan)
625 0.4%
794 0.5%
1,006 0.6%
744 0.5%
725 0.5%
729 0.5%
2,400 1.5%
350 0.2%
695 0.4%
Health Care
Health Care, Equipment &
Services
AOI Medical
317 0.2%
Pharmaceuticals & Biotechnology
Bristol-Myers Squib (USA) 914 0.6%
GlaxoSmithKline
4,303 2.7%
Johnson & Johnson (USA) 951 0.6%
1,009 0.6%
Roche (Switzerland)
687 0.4%
Sanofi (France)
Consumer Services
Food & Drug Retailers
Casino Guich-Perr (France) 495 0.3%
General Retailers
Best Buy Co (USA)
Home Depot (USA)
Media
Daily Mail Group
Pearson
Vivendi (France)
Tobacco
Altria Group (USA)
469 0.3%
499 0.3%
689 0.4%
1,272 0.8%
773 0.5%
779 0.5%
Travel & Leisure
Enterprise Inns
McDonalds Corp (USA)
Whitbread
311 0.2%
624 0.4%
1,034 0.7%
Telecommunications
Fixed Line Telecommunications
843 0.5%
AT&T (USA)
Swiss Com (Switzerland) 614 0.4%
1,292 0.8%
Telefonica (Spain)
12
MAJEDIE INVESTMENTS PLC
Company
Market Value % of
Fund
£000
Company
Market Value % of
Fund
£000
Company
Market Value % of
Fund
£000
Mobile Telecommunications
2 Ergo
China Mobile (Asia)
Vodafone
975 0.6%
761 0.5%
4,557 2.9%
Utilities
Electricity
International Power
KSK Power Venture
Red Electrica (Spain)
Scottish & Southern
Energy
1,012 0.6%
1,406 0.9%
671 0.4%
903 0.6%
Gas, Water & Multi Utilities
National Grid
Northumbrian Water
1,208 0.8%
912 0.6%
Financials
Banks
Barclays
China Construction
Bank (Asia)
DBS Group
Holdings (Asia)
HSBC
JPMorgan Chase (USA)
Wells Fargo (USA)
Life Insurance
Aviva
Prudential
Sagicor Financial
1,110 0.7%
1,248 0.8%
735 0.5%
8,926 5.6%
684 0.4%
1,318 0.8%
2,241 1.4%
2,015 1.3%
201 0.1%
Real Estate
1,069 0.7%
British Land
Westfield Group (Australia) 498 0.3%
General Financial
Cenkos Securities
ICAP
London Capital
106 0.1%
845 0.5%
934 0.6%
Equity Investment Instruments
Brookwell
Juridica Investments
242 0.2%
526 0.3%
Non-Equity Investment Instruments
Majedie Asset Management
Tortoise Fund 'B'
1,645 1.0%
Technology
Software & Computer Services
Invensys
Microsoft Corp (USA)
Oracle Corp (Japan)
364 0.2%
1,049 0.7%
581 0.4%
Technology & Hardware Equipment
581 0.4%
Acer (Asia)
880 0.6%
Canon Inc (Japan)
884 0.6%
Hewlett Packard (USA)
398 0.3%
HTC Corp (Asia)
1,171 0.7%
Toumaz
Unlisted Investments
Buried Hill Energy (USA) 425 0.3%
175 0.1%
Celadon Mining
540 0.3%
Continental Petroleum
Diamond Wood China
487 0.3%
Majedie Asset
Management
Microsaic Systems
Mitra Energy
TSI
Vostok Energy
30,000 19.0%
390 0.2%
245 0.2%
213 0.1%
2,863 1.8%
Unlisted Fixed Interest
Investments
Providence Resources
(Ireland)
Stratic Energy (USA)
274 0.2%
234 0.1%
REPORT & ACCOUNTS 2009 13
Board of Directors
Henry S Barlow OBE MA FCA (65) 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 and is a member of the
Nomination Committee. 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 and audit committee of HSBC
Bank (Malaysia) Berhad. He is a member of the board
and audit committee of Sime Darby Berhad which
absorbed the businesses and assets of Golden Hope
Plantations Berhad and Guthrie Ropel Berhad. He was
non-executive Chairman of Majedie Asset Management
Limited from 2002 until May 2006.
Hubert V Reid (69) 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 and Remuneration
Committees and a member of the Audit Committee.
Andrew J Adcock (56)*
Andrew Adcock, was Vice Chairman of Citi Corporate
Finance until his retirement earlier this year. 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 (45)*
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 Newedge
Group (UK Branch), which is a Prime Broker that is 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 (63)
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 LLP and a non-executive
director of Henderson Group plc, where he is
Chairman of the Remuneration Committee, Electric &
General Investment Trust plc and Mecom Group plc.
He was a founding director of PRI Group plc from
2002 until 2003, when it was acquired by BRIT. He
was appointed a non-executive director of Majedie in
May 2006 but became an executive director from
November 2009.
Paul D Gadd (44)*
Paul Gadd was appointed as a director of Majedie
Investments plc on 1 October 2009. He is a solicitor
and has spent 17 years with Ashurst, retiring in 2009
after 10 years as a partner, latterly as head of Ashurst’s
investment company practice. He is currently a
consultant to Ashurst. He is a member of the Audit,
Nomination and Remuneration Committees.
* Non-executive.
14
MAJEDIE INVESTMENTS PLC
Directors’ Report
The directors submit their report and the accounts
for the year ended 30 September 2009.
Introduction
A review of developments during the year and of future
prospects is contained in the Chairman’s Statement on
pages 5 to 9. This along with the Business Review, on
pages 18 to 22, the Corporate Governance Statement
on pages 23 to 25 and the Report on Directors’
Remuneration on pages 26 to 28 form part of this
report. The audited financial statements are presented
on pages 33 to 66. An analysis of the portfolio is given
on pages 12 and 13. 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 18 to 22.
Results and Dividend
Consolidated net revenue return before taxation
amounted to £4,325,000 (2008: £6,462,000). The
directors recommend a final ordinary dividend of 6.3p
per ordinary share, payable on 27 January 2010 to
shareholders on the register at the close of business on
8 January 2010. Together with the interim dividend of
4.2p per share paid on 30 June 2009, this makes a total
distribution of 10.5p per share in respect of the financial
year (2008: 12.75p per share).
Directors
The present directors of the Company are listed on
page 14.
PD Gadd was appointed a director of the Company on
1 October 2009 and in accordance with the Articles of
Association will offer himself for election at the Annual
General Meeting. All of the directors, with the
exception of Mr Gadd, served throughout the whole of
the year ended 30 September 2009.
CJ Arnheim will be appointed a director of the
Company on 1 January 2010. In accordance with the
Articles of Association Mr Arnheim will offer himself for
election at the Annual General Meeting. Mr Arnheim
has worked as a solicitor in private practice for 25
years, and during the period 1998-2009 was the
Company’s primary external corporate legal adviser.
From 1996, his law firm became associated with
Pricewaterhouse (now PricewaterhouseCoopers
(“PwC”)), and grew rapidly as part of its global legal
network. In 2003, after serving as senior and managing
partner of the PwC UK law firm, as well as in various
global management positions, he left to establish a
new practice, specialising in corporate finance for
financial services businesses.
The director retiring by rotation and seeking re-election
at the forthcoming Annual General Meeting in accordance
with the Articles of Association will be GP Aherne. In
accordance with the principles of the Combined Code,
HV Reid and JWM Barlow have agreed to submit
themselves for annual re-election having served on the
Board for over nine years. The Board has considered
and reviewed their appointment prior to submission for
recommendation. The Board believes that the
performance of Mr Aherne, Mr Reid and Mr JWM
Barlow 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 Mr Reid and Mr JWM
Barlow will have served on the Board for over nine
years, their fellow directors consider that they continue
to make a valuable contribution and to exercise their
judgement and express their opinions in an
independent manner.
The continuing directors recommend that shareholders
vote in favour of the re-election of Mr Aherne, Mr Reid
and Mr JWM Barlow and the election of Mr Gadd and
Mr Arnheim.
In accordance with the Company’s Articles of
Association, HS Barlow, having last been re-appointed
at the Annual General Meeting held in 2007, will retire at
the forthcoming Annual General Meeting but will not
seek re-election. The Board wishes to convey its
gratitude for Mr HS Barlow’s contribution to the Board
of which he has been a member for 32 years. Mr
Adcock will succeed Mr HS Barlow as Chairman at the
conclusion of the forthcoming Annual General Meeting.
Directors’ Interests
Beneficial interests in ordinary shares as at:
H S Barlow
H V Reid
J W M Barlow
A J Adcock
G P Aherne
30 September
2009
1 October
2008
15,017,619 15,017,619
33,214
1,520,137
33,214
1,520,137
20,000
9,335
P D Gadd has no beneficial interest 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.
REPORT & ACCOUNTS 2009 15
Directors’ Report
Non-beneficial interests in ordinary shares as trustees
for various settlements as at:
H S Barlow
J W M Barlow
30 September
2009
1 October
2008
613,084
2,166,990
613,084
2,171,190
Some of the directors’ holdings are duplicated, the
total after elimination of duplicated holdings being
19,080,379 shares at 30 September 2009 (2008:
19,055,244).
There have been no changes to any of the above
holdings between 30 September 2009 and the date of
this report.
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.
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 – beneficial
613,084
H S Barlow – non-beneficial
7,124,940
The AXA Group
2,714,078
M H D Barlow – beneficial
M H D Barlow – non-beneficial 1,367,750
2,499,642
Sir J K Barlow – beneficial
869,086
Sir J K Barlow – non-beneficial
1,860,270
G B Barlow
1,784,948
Miss A E Barlow
1,520,137
J W M Barlow – beneficial
– non-beneficial 2,166,990
28.59%
1.17%
13.56%
5.17%
2.60%
4.76%
1.65%
3.54%
3.40%
2.89%
4.13%
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 19.
(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 23.
(cid:129) Amendment of the Company’s Articles of Association
and the giving of power to buy back the Company’s
shares require special resolutions to be passed by
shareholders. The Board’s current power to buy
back shares and a proposal for its renewal is
detailed on page 17.
(cid:129) There are: no restrictions on voting rights; 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 2009 the Company had four days of
suppliers’ invoices outstanding in respect of trade
creditors (2008: three 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 2008.
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.
16
MAJEDIE INVESTMENTS PLC
Annual General Meeting
At the Annual General Meeting of the Company held
on 20 January 2009, 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 2009 the Company did not
make any purchases of its own shares for cancellation
(2008: nil).
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,
(including minimum and maximum prices), will be
cancelled. The restrictions on such purchases are
outlined in the Notice of Meeting on page 68.
The authority will be used where the Directors consider
it to be in the best interest of shareholders.
New Articles of Association
At this year’s Annual General Meeting, the Company
proposes to adopt new Articles of Association which
reflect the implementation of the final provisions of the
Companies Act 2006 which came into force on
1 October 2009. The Board considers that it is prudent
to replace the Company’s existing Articles of Association
with new Articles of Association (the “New Articles”)
which take account of those developments.
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 Annual General Meeting during normal
business hours on any weekday at the registered office
of the Company. The proposed New Articles will be also
available for inspection at any time until the conclusion
of the Annual General Meeting on the Company’s
website at www.majedie.co.uk and at the venue of the
Annual General Meeting 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 re-appointed as Auditors on
20 January 2009. Ernst & Young LLP have indicated
their willingness to continue in office and a resolution
will be proposed at the Annual General Meeting to
re-appoint them as Auditors.
A summary of the material changes brought about by
the proposed adoption of the New Articles is set out in
the Appendix on pages 72 and 73 of this document.
Other changes which are of a minor, technical or
clarifying nature have not been noted in the Appendix.
By Order of the Board
Capita Sinclair Henderson Limited
Company Secretary
24 November 2009
REPORT & ACCOUNTS 2009 17
Business Review
The Business Review forms part of the Directors’ Report.
Introduction
The purpose of the Business Review is to provide a
review of the business of the Company by:
(cid:129) analysing development and performance using
appropriate Key Performance Indicators (“KPIs”);
(cid:129) outlining the principal risks and uncertainties
affecting the Company;
(cid:129) setting out the Company’s environmental, social and
ethical policy;
(cid:129) providing information about persons with whom the
Company has contractual or other arrangements
which are essential to the business of the Company;
(cid:129) outlining the main trends and factors likely to affect
the future development, performance and position
of the Company’s business;
(cid:129) describing how the Company manages these risks;
and
(cid:129) explaining the future business plans of the Company.
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 and
Transparency 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 32, 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) issued in January 2009. The
principal accounting policies of the Company are set
out in note 1 to the accounts on pages 42 to 46. The
Auditors’ opinion on the financial statements, which is
unqualified, appears on pages 30 and 31.
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 information
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
shareholders’ meeting, being the Annual General
Meeting, scheduled for 20 January 2010 is set out on
page 68.
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.
18
MAJEDIE INVESTMENTS PLC
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 2008,
since when the Company has continued to comply
with these rules.
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 six members of
the Board, of which five are non-executive, as set out
on page 14 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 Statement on pages 23 to
25 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 2009 the Company had an issued
share capital of £5,252,800, comprising 52,528,000
ordinary shares of 10p each, carrying one vote each.
The Board seeks each year to renew the 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 below
and 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 level and effect of gearing;
REPORT & ACCOUNTS 2009 19
Business Review
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 external annual
audit. The financial risks are set out in more detail in
note 25 on pages 60 to 65; and
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 25.
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 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; and
(cid:129) total shareholder return;
both measured against the benchmark total return.
The above KPIs are commented on and displayed in
graphical form within the Chairman’s Statement on
pages 5 to 9. The following KPIs are commented on in
this Business Review:
(cid:129) investment portfolio return (total assets): see
Investment Performance on page 21.
(cid:129) share price discount: the level of the discount at the
end of the financial year calculated with debt at par
was 20.5% and was higher than at the start of the
year.
(cid:129) total expense ratio: see Costs on pages 4 and 22.
(cid:129) annual dividend growth: See Total Return
Philosophy & Dividend Policy on page 22.
20
MAJEDIE INVESTMENTS PLC
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
(7.87%)
(21.80%)
17.30%
14.48%
11.27%
0.27%
41.19%
29.45%
Arithmetic
Outperformance/
(Underperformance)
(19.14%)
(22.07%)
(23.89%)
(14.97%)
The Company’s investment in Majedie Asset
Management Limited (MAM) is included in the
investment performance table on the basis that it is
treated the same as the Company’s other unlisted
investments being held at fair value with gains or
losses included in the income statement. As at
30 September 2009 the Total Assets portfolio totalled
£157.9m and included investments of £147.3m
(inclusive of MAM at £30.0m) and cash balances of
£12.4m.
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 2009.
The investment portfolio relative performance shown,
as calculated by The WM Company and excluding
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 dividend income received). Total
shareholder return for the year was -18.3%. The level
of net gearing during the year ranged between 13.0%
and 28.6%.
ATTRIBUTION ANALYSIS
NA V
Total Return
(14.9%)
Return from
Benchmark
11.3%
Source: The WM Company, Majedie
(26.2%)
Stock
Selection
–25.1%
Asset
Allocation
0.1%
Costs
–2.5%
Debenture
Interest
–2.4%
Net
Gearing
–4.5%
MAM
8.2%
REPORT & ACCOUNTS 2009 21
Business Review
Costs
The Company’s expense ratio over net assets is 2.1%
which compares with the investment trust sector
average of 1.7%. The ratio for the year has been
negatively impacted by the sharp fall in the Company’s
assets. 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.
During the year the Board reviewed the Company’s
dividend policy and has decided to retain the current
progressive dividend policy. This aims to increase the
dividend each year by more than the rate of inflation
and this has been achieved in each of the last nineteen
years. At £26.7m, the revenue reserves represent more
than four times the current annual core dividend
distribution. Over the last ten years the average annual
growth of the dividend has been 4%.
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 7 and further referred
to in note 12 on pages 52 and 53.
Business Development
The Company has made significant progress in respect
of business development and is now in a position to
launch a substantial new venture being Javelin Capital
LLP. Javelin is an asset management entity focusing on
equity markets both in the UK and overseas. It is also
proposed that Javelin Capital LLP will become the
investment manager for the Company’s investment
portfolio assuming responsibility for the existing staff
and relevant fixed assets. We have applied to the FSA
and other regulatory authorities and subject to
permissions should be able to commence trading in
early 2010.
22
MAJEDIE INVESTMENTS PLC
Corporate Governance Statement
The Corporate Governance Statement forms part of the Directors’ Report.
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). A copy of the Combined Code on
Corporate Governance can be found at
www.frc.org.uk. The Board considers that the
Company has complied with the provisions of the
Combined Code throughout the year ended
30 September 2009 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
The Board consist of six Directors, five of whom are
non-executive. Mr Aherne was appointed to the role of
an executive director with effect from 24 November
2009. Biographical details of the directors are shown
on page 14.
Messrs Adcock, Gadd 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 and Remuneration Committees.
He is a member of the Audit Committee. Mr Reid
replaced Mr Aherne as Chairman of the Remuneration
Committee on 1 October 2009.
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 2009 seven
Board meetings were held and additionally two Audit
Committee meetings, four Nomination Committee
meetings and five Remuneration Committee meetings.
Attendance at these 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
7
7
7
7
7
n/a
2
2
2
n/a
4
4
4
4
3
n/a
5
5
4
n/a
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 and its
Committees continue 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 non-
executive directors, Mr Aherne having stood down on
his appointment as an executive director on 24
November 2009. 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.
The Company’s Articles of Association require a
director appointed during the year to retire and seek
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 Reid and Mr J W M Barlow have served on the
Board since January 1999 and July 1999, respectively,
and submit themselves for annual re-election as
directors 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 four times during the
year to consider the appointments of Mr Gadd and
Mr Arnheim, the Board’s succession and subsequently,
in Mr Reid’s absence, to consider his re-appointment
for a further year. It decided to recommend the
re-appointment of Mr Reid, Mr Aherne and Mr J W M
Barlow on the basis that they continue to make
REPORT & ACCOUNTS 2009 23
Corporate Governance Statement
valuable contributions and to exercise their judgement
and express their opinions in an independent manner.
During the course of the year, following an evaluation
of its balance of skills, knowledge and experience, the
Board identified a need for additional input and
determined that Mr Gadd and Mr Arnheim would make
substantial contributions to the Board. As the Board
agreed unanimously that they were outstanding
candidates, it was not considered necessary to go to
the expense of engaging the services of external
recruitment consultants.
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. There are no
qualifying third party indemnity provisions in force.
Conflicts of Interest
On 1 October 2008 it became a statutory requirement
that a director must avoid a situation in which he has,
or can have, a direct or indirect interest that conflicts,
or possibly may conflict, with the Company’s interests
(a situational conflict). The Company’s Articles of
Association were amended at the last Annual General
Meeting to give the directors authority to approve such
situations, where appropriate.
It is the responsibility of each individual director to
avoid an unauthorised conflict situation arising. He
must request authorisation from the Board as soon as
he becomes aware of the possibility of a situational
conflict arising.
The Board is responsible for considering directors’
requests for authorisation of situational conflicts and for
deciding whether or not the situational conflict should
be authorised. The factors to be considered will include
whether the situational conflict could prevent the
director from properly performing his duties, whether it
has, or could have, any impact on the Company and
whether it could be regarded as likely to affect the
judgment and/or actions of the director in question.
When the Board is deciding whether to authorise a
conflict or potential conflict, only directors who have no
interest in the matter being considered are able to take
the relevant decision, and 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 are able to impose limits or
conditions when giving authorisation if they think this is
appropriate in the circumstances.
A register of conflicts is maintained by the Secretary
and is reviewed at each Board meeting, to ensure that
any authorised conflicts remain appropriate. Directors
are required to confirm at these meetings whether
there has been any change to their position.
The directors must also comply with the statutory rules
requiring company directors to declare any interest in
an actual or proposed transaction or arrangement with
the Company.
Directors’ Remuneration
The Remuneration Committee comprises: Hubert Reid
(Chairman), Andrew Adcock and Paul Gadd. Gerry
Aherne, 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 and 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
As an investment trust, the Company has limited direct
impact upon the environment.
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 18 to 22 provides additional
further information.
The Audit Committee comprises: Andrew Adcock
(Chairman), Paul Gadd and Hubert Reid. Gerry Aherne,
Henry Barlow and William Barlow and representatives
of the Auditors are invited to attend meetings of the
Committee. Mr Aherne stood down from the
Committee on 15 October 2009. The Board has agreed
the terms of reference for the Audit Committee which
meets at least twice a year. In particular during the year
24
MAJEDIE INVESTMENTS PLC
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 all members of the Audit
Committee were present at those meetings.
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 terms of reference of the Audit Committee are
available on request or from the Company’s website.
The Audit Committee has considered the independence
and objectivity of the Auditors. 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.
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 trading as Capita Financial Group – Specialist
Fund Services. Custody is outsourced to RBC Dexia
Investor Services Trust.
In accordance with the guidance of the Financial
Reporting Council: “Internal Control: Revised Guidance
for Directors on the Combined Code”, 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.
REPORT & ACCOUNTS 2009 25
Report on Directors’ Remuneration
This report has been prepared in accordance with Schedule 8 of The Large and Medium-sized Companies and
Groups (Accounts and Reports) Regulations 2008 as required under the Companies Act 2006. 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 2006. The report has therefore been divided into separate sections for
audited and unaudited information.
UNAUDITED SECTION
Remuneration Committee
The Remuneration Committee is chaired by Hubert Reid. During the year to 30 September 2009, the Committee
comprised solely non-executive directors – being Hubert Reid, Gerry Aherne and Andrew Adcock. Gerry Aherne
stood down from the Committee on 15 October 2009 and was replaced as Chairman by Hubert Reid on 1 October
2009. Paul Gadd was appointed to the Committee on 15 October 2009.
Henry Barlow (Chairman of the Board) was invited to attend meetings, but did not participate in decisions on his
own remuneration. William Barlow is also invited to attend meetings. The Company Secretary, Capita Sinclair
Henderson Limited, acted as Secretary to the Committee. The terms of reference of the Remuneration Committee
are available on request or may be obtained from the Company 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, each director and employees. 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 employees of the right calibre. In setting both the policy related
to, and levels of, remuneration and benefits for directors and employees, 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
individuals. The Committee also sets directors’ fees in part after reviewing employee remuneration levels and
responsibilities within the Company and, where applicable, after allowance for the non-executive nature of directors.
Remuneration Policy
The Board’s policy is that the remuneration of non-executive directors should reflect the responsibilities and time
commitment of individual directors, and is determined with reference to comparable organisations and appointments.
The Committee reviewed directors’ remuneration in October 2009 and agreed to retain basic non-executive
directors’ fees at £27,000 per annum with additional fees of £3,000 per annum applying to each of the Chairman of
the Audit and Remuneration Committees and the Senior Independent Director. As recognition of the increased time
commitments required from the Chairman of the Board, the Committee agreed to increase the Chairman’s fee to
£75,000 per annum with effect from the conclusion of the Annual General Meeting to be held on 20 January 2010.
During the year the Committee awarded Mr Gerry Aherne additional special duties fees of £117,000 in respect of his
business development and supervisory duties undertaken. From 1 October 2009 the Committee agreed to increase
Mr G Aherne’s total emolument to £160,000 per annum, including his non-executive director’s fees.
Gerry Aherne was appointed to an executive role from 24 November 2009 and his basic emoluments will remain
unaltered. The basic salaries of executive directors are determined by the Committee after taking into account
market data, individual performance and the nature of an individual’s responsibilities.
26
MAJEDIE INVESTMENTS PLC
Non-executive directors are entitled to claim out of pocket expenses, if any, incurred in carrying out their duties but are
not eligible for bonuses, pension benefits, share options or long term incentive schemes. Directors’ fees (excluding any
special duties fees) are, under the Company’s articles of association, subject to a limit of £250,000 per annum. No
director has a service contract with the Company with all non-executive directors having a memoranda of terms.
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.
Javelin Capital LLP (“Javelin”)
Javelin, a limited liability partnership of which the Company is a member, was incorporated on 12 October 2009. As
a member of Javelin, Gerry Aherne will be eligible to receive additional remuneration based upon the performance of
Javelin. The determination and allocation of performance related remuneration will be undertaken by the
remuneration committee of Javelin.
As a member, the Board can appoint representatives to attend the monthly Javelin management board meetings.
Directors attending the management board meetings, with the exception of the Chairman of the Board, will be paid
an additional £6,000 per annum, based upon a fee of £500 per meeting.
Performance
The graph below 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 has a comparator for the purpose of this graph since it is
the Company’s formal benchmark.
TOTAL SHAREHOLDER RETURN V BENCHMARK
5 YEARS TO 30 SEPTEMBER 2009 (REBASED)
2.40
2.20
2.00
1.80
1.60
1.40
1.20
1.00
0.80
0.60
9/04
3/05
9/05
3/06
9/06
3/07
9/07
3/08
9/08
3/09
9/09
Benchmark
REPORT & ACCOUNTS 2009 27
Report on Directors’ Remuneration
AUDITED SECTION
Directors’ Remuneration
The remuneration of the directors for the year ended 30 September 2009 was as follows:
Non-executive directors
H S Barlow
H V Reid
J W M Barlow
G P Aherne
A J Adcock
Executive directors
R E Clarke (resigned 31.03.08)
G M Leates (resigned 31.03.08)
Basic
fees
£’000
Additional
Special
fees Duties fees
£000
£000
48
27
27
27
27
3
3
3
117
Total
2009
£000
48
30
27
147
30
Note: Paul Gadd not shown as appointed to the Board on 1 October 2009.
Approval
The Report on Directors’ Remuneration on pages 26 to 28 was approved by the Board on 24 November 2009.
156
9
117
282
On behalf of the Board
H V Reid Chairman of the Remuneration Committee
24 November 2009
Total
2008
£000
44
32
25
26
13
514
295
949
28
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
24 November 2009
– select suitable accounting policies and then apply
them consistently;
– make judgements 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 2006 and Article 4 of the IAS
Regulation. 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 2009 29
Report of the Independent Auditors
Independent Auditors’ Report to the Members of Majedie Investments PLC
We have audited the financial statements of Majedie
Investments PLC for the year ended 30 September
2009 which comprise the Consolidated and Company
Income Statements, the Consolidated and Company
Statement of Changes in Equity, the Consolidated and
Company Balance Sheets, the Consolidated and
Company Cash Flow Statements and the related notes
1 to 27. The financial reporting framework that has
been applied in their preparation is applicable law and
International Financial Reporting Standards (IFRSs) as
adopted by the European Union.
This report is made solely to the company’s members,
as a body, in accordance with Sections 495, 496 and
497 of the Companies Act 2006. 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 auditor’s 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
As explained more fully in the Statement of Directors’
Responsibilities set out on page 29, the directors are
responsible for the preparation of the financial
statements and for being satisfied that they give a true
and fair view. Our responsibility is to audit the financial
statements in accordance with applicable law and
International Standards on Auditing (UK and Ireland).
Those standards require us to comply with the Auditing
Practices Board’s (APB’s) Ethical Standards for
Auditors.
Scope of the audit of the financial statements
An audit involves obtaining evidence about the
amounts and disclosures in the financial statements
sufficient to give reasonable assurance that the
financial statements are free from material
misstatement, whether caused by fraud or error. This
includes an assessment of: whether the accounting
policies are appropriate to the group’s and the parent
company’s circumstances and have been consistently
applied and adequately disclosed; the reasonableness
of significant accounting estimates made by the
directors; and the overall presentation of the financial
statements.
Opinion on financial statements
In our opinion:
(cid:129) the financial statements give a true and fair view of
the state of the group’s and of the parent
company’s affairs as at 30 September 2009 and of
the group’s and the parent company’s net return for
the year then ended;
(cid:129) the financial statements have been properly
prepared in accordance with IFRSs as adopted by
the European Union; and
(cid:129) the financial statements have been prepared in
accordance with the requirements of the Companies
Act 2006 and, as regards the group financial
statements, Article 4 of the IAS Regulation.
Opinion on other matters prescribed by the
Companies Act 2006
In our opinion:
(cid:129) the part of the Directors’ Remuneration Report to
be audited has been properly prepared in
accordance with the Companies Act 2006; and
(cid:129) the information given in the Directors’ Report for the
financial year for which the financial statements are
prepared is consistent with the financial statements.
Matters on which we are required to report by
exception
We have nothing to report in respect of the following:
Under the Companies Act 2006 we are required to
report to you if, in our opinion:
(cid:129) adequate accounting records have not been kept
by the parent company, or returns adequate for our
audit have not been received from branches not
visited by us; or
(cid:129) the parent company financial statements and the
part of the Directors’ Remuneration Report to be
audited are not in agreement with the accounting
records and returns; or
(cid:129) certain disclosures of directors’ remuneration
specified by law are not made; or
(cid:129) we have not received all the information and
explanations we require for our audit.
30
MAJEDIE INVESTMENTS PLC
Under the Listing Rules we are required to review:
(cid:129) the directors’ statement, set out on page 25, in
relation to going concern; and
(cid:129) the part of the Corporate Governance Statement
relating to the company’s compliance with the nine
provisions of the June 2008 Combined Code
specified for our review.
Ratan Engineer (Senior statutory auditor)
for and on behalf of Ernst & Young LLP,
Statutory Auditor
London
24 November 2009
REPORT & ACCOUNTS 2009 31
Consolidated Income Statement
for the year ended 30 September 2009
Revenue
return
£000
2009
Capital
return
£000
Total
£000
Revenue
return
£000
2008
Capital
return
£000
Total
£000
Notes
Investments
Losses on investments at
fair value through profit or loss
12
(23,723)
(23,723)
(95,341)
(95,341)
Net investment result
Income
Dividends and interest
MAM dividend income
MAM special dividend income
Other income
Total income
Expenses
(23,723)
(23,723)
(95,341)
(95,341)
2
4,594
1,906
34
6,534
4,594
1,906
34
6,534
6,306
2,484
75
8,865
6,306
2,484
75
8,865
Administration expenses
3
(1,507)
(1,359)
(2,866)
(1,702)
(1,571)
(3,273)
Return/(deficit) before finance
costs and taxation
Finance costs
Net return/(deficit) before taxation
Taxation
Net return/(deficit) after taxation
6
7
5,027
(25,082)
(20,055)
7,163
(96,912)
(89,749)
(702)
(2,100)
(2,802)
(701)
(2,099)
(2,800)
4,325
(27,182)
(22,857)
6,462
(99,011)
(92,549)
(92)
(92)
(51)
(51)
for the year
4,233
(27,182)
(22,949)
6,411
(99,011)
(92,600)
Return/(deficit) per ordinary share:
pence
pence
pence
pence
pence
pence
Basic and diluted
10
8.1
(52.3)
(44.2)
12.5
(192.3)
(179.8)
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 42 to 66 form part of these accounts.
These accounts have been prepared in compliance with the recognition and measurement criteria of IFRS.
32
MAJEDIE INVESTMENTS PLC
Company Income Statement
for the year ended 30 September 2009
Revenue
return
£000
2009
Capital
return
£000
Total
£000
Revenue
return
£000
2008
Capital
return
£000
Total
£000
Notes
Investments
Losses on investments at
fair value through profit or loss
12
(23,723)
(23,723)
(95,341)
(95,341)
Net investment result
Income
Dividends and interest
MAM dividend income
MAM special dividend income
Other income
Total income
Expenses
(23,723)
(23,723)
(95,341)
(95,341)
2
4,594
1,906
34
6,534
4,594
1,906
34
6,534
6,306
2,484
75
8,865
6,306
2,484
75
8,865
Administration expenses
3
(1,507)
(1,359)
(2,866)
(1,702)
(1,571)
(3,273)
Return/(deficit) before finance
costs and taxation
Finance costs
Net return/(deficit) before taxation
Taxation
Net return/(deficit) after taxation
6
7
5,027
(25,082)
(20,055)
7,163
(96,912)
(89,749)
(702)
(2,100)
(2,802)
(701)
(2,099)
(2,800)
4,325
(27,182)
(22,857)
6,462
(99,011)
(92,549)
(92)
(92)
(51)
(51)
for the year
4,233
(27,182)
(22,949)
6,411
(99,011)
(92,600)
Return/(deficit) per ordinary share:
pence
pence
pence
pence
pence
pence
Basic and diluted
10
8.1
(52.3)
(44.2)
12.5
(192.3)
(179.8)
The total column of this statement is the Profit and Loss Account of the Company prepared under 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 42 to 66 form part of these accounts.
These accounts have been prepared in compliance with the recognition and measurement criteria of IFRS.
REPORT & ACCOUNTS 2009 33
Consolidated Statement of Changes in Equity
for the year ended 30 September 2009
Share
capital
£000
Share
premium
£000
Notes
Capital
redemption
reserve
£000
Share
options
reserve
£000
5,253
785
56
291
Year ended 30 September 2009
As at 30 September 2008
Net return after tax for the year
Investments at fair value through profit or loss
(cid:129) Increase in investment holding gains
(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
56
56
As at 30 September 2009
5,253
785
5,253
785
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 investment holding gains
(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
56
The notes on pages 42 to 66 form part of these accounts.
These accounts have been prepared in compliance with the recognition and measurement criteria of IFRS.
34
MAJEDIE INVESTMENTS PLC
251
(826)
(284)
262
516
(487)
291
Revenue
reserve
£000
29,047
4,233
Own shares
reserve
£000
(2,573)
Capital
reserve
£000
120,606
30,345
(54,068)
(3,459)
(27,182)
4,233
(6,631)
Total
£000
153,465
4,233
30,345
(54,068)
(3,459)
(22,949)
251
(6,631)
93,424
26,649
(1,702)
124,181
871
45
219,617
30,296
6,411
(3,053)
(87,499)
(7,842)
(3,670)
(99,011)
6,411
(7,660)
253,216
6,411
(87,499)
(7,842)
(3,670)
(92,600)
516
(7,660)
120,606
29,047
(2,573)
153,465
480
(7)
REPORT & ACCOUNTS 2009 35
Company Statement of Changes in Equity
for the year ended 30 September 2009
Notes
Share
capital
£000
Share
premium
£000
Capital
redemption
reserve
£000
5,253
785
56
Year ended 30 September 2009
As at 30 September 2008
Net return after tax for the year
Investments at fair value through profit or loss
(cid:129) Decrease in investment holding gains
(cid:129) Dormant subsidiaries now struck off
(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 2009
5,253
785
5,253
785
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 investment holding gains
(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
56
56
As at 30 September 2008
5,253
785
56
The notes on pages 42 to 66 form part of these accounts.
These accounts have been prepared in compliance with the recognition and measurement criteria of IFRS.
36
MAJEDIE INVESTMENTS PLC
Share
options
reserve
£000
Capital
reserve
£000
Revenue
reserve
£000
Own shares
reserve
£000
Total
£000
291
120,884
28,767
(2,573)
153,463
4,233
22,815
30
(54,068)
7,500
(3,459)
(27,182)
4,233
(6,631)
4,233
22,815
30
(54,068)
7,500
(3,459)
(22,949)
251
(6,631)
93,702
26,369
(1,702)
124,179
871
45
251
(826)
(284)
262
219,895
30,016
(3,053)
253,214
6,411
(93,814)
(7,842)
6,315
(3,670)
(99,011)
6,411
(7,660)
6,411
(93,814)
(7,842)
6,315
(3,670)
(92,600)
516
(7,660)
480
(7)
516
(487)
291
120,884
28,767
(2,573)
153,463
REPORT & ACCOUNTS 2009 37
Consolidated Balance Sheet
as at 30 September 2009
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
2009
£000
224
147,291
147,515
1,897
12,384
14,281
161,796
2008
£000
48
178,981
179,029
2,340
8,135
10,475
189,504
(3,853)
(2,295)
157,943
187,209
(33,762)
(37,615)
(33,744)
(36,039)
124,181
153,465
5,253
785
56
(284)
93,424
26,649
(1,702)
124,181
pence
238.7
5,253
785
56
291
120,606
29,047
(2,573)
153,465
pence
296.5
Approved by the Board of Majedie Investments PLC and authorised for issue on 24 November 2009.
Henry S Barlow
Andrew J Adcock
Directors
The notes on pages 42 to 66 form part of these accounts.
These accounts have been prepared in compliance with the recognition and measurement criteria of IFRS.
38
MAJEDIE INVESTMENTS PLC
Company Balance Sheet
as at 30 September 2009
Non-current assets
Property and equipment
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
11
12
13
14
15
16
16
17
18
2009
£000
224
147,291
161
147,676
1,986
12,131
14,117
2008
£000
178,981
194
179,175
2,413
7,718
10,131
161,793
189,306
(3,852)
(2,099)
157,941
187,207
(33,762)
(37,614)
(33,744)
(35,843)
124,179
153,463
5,253
785
56
(284)
93,702
26,369
(1,702)
5,253
785
56
291
120,884
28,767
(2,573)
Equity Shareholders’ Funds
124,179
153,463
Approved by the Board of Majedie Investments PLC and authorised for issue on 24 November 2009.
Henry S Barlow
Andrew J Adcock
Directors
The notes on pages 42 to 66 form part of these accounts.
These accounts have been prepared in compliance with the recognition and measurement criteria of IFRS.
REPORT & ACCOUNTS 2009 39
Consolidated Cash Flow Statement
for the year ended 30 September 2009
Net cash flow from operating activities
Consolidated net return before taxation
Adjustments for:
Losses on investments
Dividends reinvested
Share based remuneration
Depreciation
Purchases of investments
Sales of investments
Finance costs
Operating cashflows before movements in working capital
Increase/(decrease) in trade and other payables
Decrease in trade and other receivables
Net cash inflow from operating activities before tax
Tax recovered
Tax on unfranked income
Notes
2009
£000
2008
£000
(22,857)
(92,549)
12
23,723
95,341
(132)
251
58
(57,427)
67,202
10,818
2,802
13,620
241
96
13,957
2
(106)
(171)
516
25
(51,830)
56,133
7,465
2,800
10,265
(454)
2,071
11,882
(56)
Net cash inflow from operating activities
13,853
11,826
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
(234)
(234)
(2,783)
(6,631)
44
(4)
(4)
(2,784)
(7,660)
(914)
907
Net cash outflow from financing activities
(9,370)
(10,451)
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
4,249
8,135
12,384
1,371
6,764
8,135
The notes on pages 42 to 66 form part of these accounts.
These accounts have been prepared in compliance with the recognition and measurement criteria of IFRS.
40
MAJEDIE INVESTMENTS PLC
Company Cash Flow Statement
for the year ended 30 September 2009
Net cash flow from operating activities
Company net return before taxation
(22,857)
(92,549)
Notes
2009
£000
2008
£000
Adjustments for:
Losses on investments
Dividends reinvested
Share based remuneration
Depreciation
Purchases of investments
Sales of investments
Finance costs
Operating cashflows before movements in working capital
Increase in trade and other payables
Decrease/(increase) in trade and other receivables
Net cash inflow from operating activities before tax
Tax recovered
Tax on unfranked income
12
23,723
(132)
251
58
(57,427)
67,202
10,818
2,802
13,620
437
112
14,169
2
(106)
95,341
(171)
516
(51,830)
56,133
7,440
2,800
10,240
1,869
(318)
11,791
(56)
Net cash inflow from operating activities
14,065
11,735
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
(282)
(282)
(2,783)
(6,631)
44
(2,784)
(7,660)
(914)
907
Net cash outflow from financing activities
(9,370)
(10,451)
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
4,413
7,718
12,131
1,284
6,434
7,718
The notes on pages 42 to 66 form part of these accounts.
These accounts have been prepared in compliance with the recognition and measurement criteria of IFRS.
REPORT & ACCOUNTS 2009 41
Notes to the Accounts
General Information
Majedie Investments PLC is a company incorporated in England under the Companies (Consolidation) Act 1908. The
Company is registered as a public limited company and is an investment company as defined by Section 833 of the
Companies Act 2006. The address of the registered office is given on page 75. The nature of the Group’s operations
and its principal activities are set out in the Business Review on pages 18 to 22 and in note 8 on page 49.
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
IFRS 9
IAS 1
IAS 23
IAS 27
IAS 32
IAS 39
Amendment to IFRS 2 – Vesting Conditions and Cancellations
Business Combinations (revised January 2008)
Operating Segments
Financial Instruments
Presentation of Financial Statements (revised September 2007)
Borrowing Costs (revised March 2007)
Consolidated and Separate Financial Statements (revised January 2008)
Amendment – Puttable Financial instruments and obligations existing on liquidation
Amendment – Eligible hedged items
International Financial Reporting Interpretations Committee (IFRIC)
IFRIC 16 Hedges of a Net Investment in a Foreign Operation
IFRIC 17 Distribution of non-cash assets to owners
IFRIC 18 Transfer of Assets from Customers
Effective date
1 January 2009
1 July 2009
1 January 2009
1 January 2013
1 January 2009
1 January 2009
1 July 2009
1 January 2009
1 July 2009
Effective date
1 October 2008
1 July 2009
1 July 2009
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 32 to 66 comprise the audited results of the Company and its subsidiaries for the year
ended 30 September 2009, 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) regarding the Financial
Statements of Investment Trust Companies and Venture Capital Trusts issued by the Association of Investment
Companies in January 2009 and adopted early 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 early
adoption of this SORP had no effect on the financial statements of the Company other than the recommendation to
separately disclose capital reserves that relate to the revaluation of investments held at the balance sheet date. This
new requirement replaces the requirement to disclose the value of the capital reserve that is unrealised. All the
companies’ activities are continuing.
42
MAJEDIE INVESTMENTS PLC
1 Accounting Policies continued
The principal accounting policies adopted are set out as follows:
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 2009 43
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 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.
44
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 reviewed on a semi-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 2009 45
Notes to the Accounts
1 Accounting Policies continued
Debentures
All debentures are recorded at proceeds received, net of direct issue costs and held at amortised cost.
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 may have a significant effect on the financial statements of the Company. Note 12 on pages 52
and 53 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
Interest on deposits
Exchange differences on income
Group
2009
£000
3,633
811
59
95
(4)
Group
2008
£000
5,438
457
98
315
(2)
Company
2009
£000
Company
2008
£000
3,633
811
59
95
(4)
5,438
457
98
315
(2)
4,594
6,306
4,594
6,306
46
MAJEDIE INVESTMENTS PLC
3 Administration Expenses
Staff costs – note 5
Other staff costs and directors’ fees
Advisers’ costs
Relocation costs
Information costs
Establishment costs
Operating lease rentals – premises
Depreciation on tangible assets
Auditors’ remuneration
(see below)
Restructuring costs
Other expenses
Group
2009
£000
1,165
314
410
128
146
113
139
58
59
334
Group
2008
£000
1,923
155
399
127
130
146
25
63
121
184
Company
2009
£000
1,165
314
410
128
146
113
139
58
56
337
Company
2008
£000
1,923
155
399
127
130
146
55
121
217
2,866
3,273
2,866
3,273
A charge of £1,359,000 (2008: £1,571,000) 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:
Audit services
– statutory audit
Other non-audit services
– relating to Employee Share
Option Scheme
Group
2009
£000
59
Group
2008
£000
62
1
Company
2009
£000
Company
2008
£000
56
54
1
59
63
56
55
4 Directors’ Emoluments – Company
Salaries and fees
Bonuses
Pension contributions
Other benefits
2009
£000
282
2008
£000
607
200
82
60
282
949
The Report on Directors’ Remuneration on pages 26 to 28 explains the Company’s policy on remuneration for
non-executive directors for the year. It also provides further details of directors’ remuneration.
REPORT & ACCOUNTS 2009 47
Notes to the Accounts
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
2009
£000
724
126
64
251
2009
Number
2008
£000
1,100
180
127
516
1,165
1,923
2008
Number
5
7
2009
Revenue Capital
return
return
Total
£000
£000
£000
321
962 1,283
375 1,126 1,501
18
12
6
2008
Revenue Capital
return
return
Total
£000
£000
£000
321
962 1,283
375 1,126 1,501
16
11
5
702 2,100 2,802
701 2,099 2,800
Further details of the debenture stocks in issue are provided in note 16.
7 Taxation
Analysis of tax charge – Group and Company
Tax on overseas dividends
Group
2009
£000
92
Group
2008
£000
51
Company
2009
£000
Company
2008
£000
92
51
48
MAJEDIE INVESTMENTS PLC
7 Taxation continued
Reconciliation of tax charge:
The current taxation for the year is higher than the standard rate of corporation tax in the UK (28%), (2008: 29%).
The differences are explained below:
Net return before taxation
(22,857)
(92,549)
(22,857)
(92,549)
Group
2009
£000
Group
2008
£000
Company
2009
£000
Company
2008
£000
Taxation at UK Corporation Tax
rate of 28% (2008: 29%)
Effects of:
– UK dividends which are
not taxable
– other income which is
not taxable
– losses on investments
which are not taxable
– expenses charged to
capital reserve
– expenses not deductible for
tax purposes
– excess expenses for
current year
– group relief surrendered
– overseas taxation which is
not recoverable
– offset relief for foreign WHT
(6,400)
(26,839)
(6,400)
(26,839)
(1,551)
(2,297)
(1,551)
(2,297)
(102)
6,643
(231)
107
1,550
92
(16)
(4)
27,649
52
1,439
51
(102)
6,643
(231)
1,550
107
92
(16)
(4)
27,649
1,439
52
51
Actual current tax charge
92
51
92
51
Group
After claiming relief against accrued income taxable on receipt, the Group has unrelieved excess expenses of
£48,200,000 (2008: £43,400,000). 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
£48,200,000 (2008: £43,400,000). 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 10 to 13 and exposure to
different currencies is disclosed in note 25 on pages 60 and 61.
REPORT & ACCOUNTS 2009 49
Notes to the Accounts
9 Dividends – Group and Company
The following table summarises the amounts recognised as distributions to equity shareholders in the period:
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
2008 Special dividend of 2.25p paid on 28 January 2009
2008 Final dividend of 6.30p paid on 28 January 2009
2009 Interim dividend of 4.20p paid on 30 June 2009
Proposed final dividend for the year ended
30 September 2009 of 6.30p (2008: final dividend
of 6.30p) per ordinary share
Proposed special dividend for the year ended
30 September 2009 of Nil (2008: 2.25p) per
ordinary share
2009
£000
1,170
3,276
2,185
2009
£000
3,277
2008
£000
2,315
3,189
2,156
6,631
7,660
2008
£000
3,261
1,165
The proposed final dividend has not 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.
3,277
4,426
Interim dividend for the year ended 30 September 2009
of 4.20p (2008: 4.20p) per ordinary share
Proposed final dividend for the year ended 30 September
2009 of 6.30p (2008: 6.30p) per ordinary share
Proposed special dividend for the year ended 30 September
2009 of £nil (2008: 2.25p) per ordinary share
2009
£000
2,185
3,277
2008
£000
2,156
3,261
1,165
5,462
6,582
50
MAJEDIE INVESTMENTS PLC
10 Return per Ordinary Share – Group and Company
Basic return per ordinary share is based on 51,973,767 (2008: 51,478,751) 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 2009 and 2008
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 and Company
Leasehold
Improvements
£000
355
171
(355)
319
42
(355)
Cost:
At 1 October 2008
Additions
Disposals
At 30 September 2009
Depreciation:
At 1 October 2008
Charge for year
Disposals
At 30 September 2009
Net book value:
At 30 September 2009
At 30 September 2008
2009
£000
2008
£000
4,233
(27,182)
(22,949)
Office
Equipment
£000
266
63
6,411
(99,011)
(92,600)
Total
£000
621
234
(355)
171
329
500
254
16
573
58
(355)
6
165
36
270
59
12
276
224
48
REPORT & ACCOUNTS 2009 51
Notes to the Accounts
12 Investments at Fair Value Through Profit or Loss – Group and Company
Listed
£000
2009
Unlisted
£000
Total
£000
Listed
£000
2008
Unlisted
£000
Total
£000
Opening cost at beginning of year
(Losses)/gains at beginning 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
Opening fair value at beginning of year
148,337
30,644 178,981
249,813
28,525 278,338
Purchases at cost
Sales – proceeds
(Losses)/gains on sales
Increase/(decrease) in investment
holding gains
Adjustments for listing/delisting during
financial year
58,826
(66,843)
(54,068)
50
58,876
(66,843)
(54,068)
51,910
(52,734)
(9,415)
1,394
(4,584)
1,571
53,304
(57,318)
(7,844)
28,434
1,911
30,345
(92,088)
4,589
(87,499)
(3,429)
3,429
851
(851)
Closing fair value at end of year
111,257
36,034 147,291
148,337
30,644 178,981
Closing cost at end of year
Gains/(losses) at end of year
104,461
6,796
13,450 117,911
29,380
22,584
169,975
(21,638)
9,971 179,946
(965)
20,673
Closing fair value at end of year
111,257
36,034 147,291
148,337
30,644 178,981
Unlisted investments include an amount of £5,465,000 in 10 various companies, £30,000,000 for our investment in
MAM as detailed on page 53 and £569,000 (2008: £972,000) of loan or convertible notes that pay a fixed rate of
interest. The valuation of investments on pages 12 and 13 includes 11 unlisted investments of over £100,000
(including MAM).
During the year the Company incurred transaction costs amounting to £374,000 (2008: £345,000) of which
£243,000 (2008: £238,000) related to the purchases of investments and £131,000 (2008: £107,000) related to the
sales of investments. These amounts are included in losses 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 on investments
Exchange gains on settlement
Increase/(decrease) in holding gains on investments
2009
£000
(54,068)
30,345
2008
£000
(7,844)
2
(87,499)
(23,723)
(95,341)
52
MAJEDIE INVESTMENTS PLC
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:
Hydrodec
Capital Lease Aviation
Fair
Value
£000
1,440
1,500
% of
Class Held
4.064
3.195
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 carrying value of the Company’s investment in MAM is included in the consolidated balance sheet as part of
investments at fair value through profit or loss:
Deemed cost of investment
Holding gains
Fair value at 30 September
2009
£000
1,207
28,793
2008
£000
1,207
21,293
30,000
22,500
The carrying value of MAM in the 30 September 2009 Consolidated Financial Statements is its fair value as assessed
at 30 September 2009. 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 2009 and the 2010 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 2009 show a net profit after taxation of £14,222,000 (2008:
£8,101,000) and shareholders’ funds of £25,945,000 (2008: £16,180,000). 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.
REPORT & ACCOUNTS 2009 53
Notes to the Accounts
13 Investment in Subsidiaries – Company
The Company’s subsidiaries at 30 September 2009 are as follows:
Barlow Service Company Limited
Majedie Portfolio Management Limited
– non trading
– manager of the Majedie Share Plan, authorised and
regulated by the Financial Services Authority
All the subsidiaries are incorporated in Great Britain and are wholly owned.
During the year Majedie Investment Trust Management Limited; Barlow Investments Limited; Majedie Properties
Limited; and Majedie Securities Limited were struck off the Register of Companies. Additionally on 8 September
2009, a further application was made to the Register of Companies to voluntarily strike off Barlow Service
Company Limited.
Company
Cost:
At beginning of year
Disposals
At end of year
Depreciation:
At beginning of year
Depreciation in year
At end of year
Valuation at end of year
2009
£000
1,002
(2)
(808)
(31)
2008
£000
1,002
1,000
1,002
(808)
(839)
161
(808)
194
14 Trade and Other Receivables
Sales for future settlement
Payments in advance
Dividends receivable
Other amounts due from MAM
Accrued income
Taxation recoverable
Amounts due from subsidiary
undertakings
Group
2009
£000
1,078
435
343
18
23
Group
2008
£000
1,437
225
647
6
14
11
Company
2009
£000
1,078
434
343
18
23
90
Company
2008
£000
1,437
647
6
14
11
298
1,897
2,340
1,986
2,413
54
MAJEDIE INVESTMENTS PLC
15 Cash and Cash Equivalents
Deposits
Other balances
Group
2009
£000
11,830
554
Group
2008
£000
7,484
651
Company
2009
£000
11,856
275
Company
2008
£000
7,484
234
12,384
8,135
12,131
7,718
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
2009
£000
2,618
590
645
Group
2008
£000
1,301
377
617
Company
2009
£000
2,618
589
645
Company
2008
£000
1,301
4
617
177
3,853
2,295
3,852
2,099
Amounts falling due after more than one year:
£13.5m (2008: £13.5m) 9.5%
debenture stock 2020
£20.7m (2008: £20.7m) 7.25%
debenture stock 2025
Group
2009
£000
13,376
20,386
Group
2008
£000
13,369
20,375
Company
2009
£000
Company
2008
£000
13,376
20,386
13,369
20,375
33,762
33,744
33,762
33,744
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.
REPORT & ACCOUNTS 2009 55
Notes to the Accounts
17 Called Up Share Capital
Allotted and fully paid at 30 September:
52,528,000 (2008: 52,528,000) ordinary shares of 10p each
Authorised at 30 September:
70,000,000 (2008: 70,000,000) ordinary shares of 10p each
2009
£000
5,253
7,000
2008
£000
5,253
7,000
There are 505,490 (2008: 763,852) ordinary shares of 10p each held by the Employee Incentive Trust. See note 18.
Ordinary shares carry one vote each on a poll.
18 Own Shares – Group and Company
Following the exercise of share options under the Long Term Incentive Plan (LTIP) during the year 258,362 shares
were sold by the Majedie Investments PLC Employee Incentive Trust (EIT) at a value of £44,000 resulting in a loss of
£826,000. The total number of options outstanding at the date of this report is 106,656 under the Discretionary Share
Option Scheme 2000 and nil under the LTIP and the total shareholding of the Trust is 505,490 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.
As at 30 September 2008
Net disposals
As at 30 September 2009
19 Net Asset Value
Number of
Shares
763,852
(258,362)
Own Shares
Reserve
£000
(2,573)
871
505,490
(1,702)
The consolidated net asset value per share has been calculated based on equity shareholders’ funds of £124,181,000
(2008: £153,465,000) and on 52,022,510 (2008: 51,764,148) 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
2009
£000
4,249
(18)
2008
£000
1,371
(16)
4,231
(25,609)
(21,378)
1,355
(26,964)
(25,609)
56
MAJEDIE INVESTMENTS PLC
20 Reconciliation of Net Cash Flow to Movement in Net Debt continued
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
21 Analysis of Changes in Net Debt
Group
Cash at bank
Debt due after one year
At 30
September
2008
£000
8,135
(33,744)
Cash
Flows
£000
4,249
2009
£000
4,413
(18)
2008
£000
1,284
(16)
1,268
(27,294)
(26,026)
At 30
September
2009
£000
12,384
(33,762)
4,395
(26,026)
(21,631)
Non
Cash
Items
£000
(18)
(25,609)
4,249
(18)
(21,378)
Company
Cash at bank
Debt due after one year
At 30
September
2008
£000
7,718
(33,744)
Cash
Flows
£000
4,413
Non
Cash
Items
£000
(18)
At 30
September
2009
£000
12,131
(33,762)
(26,026)
4,413
(18)
(21,631)
22 Operating Lease Commitments
During the year the Company entered into a new 10 year non-cancellable operating lease (with a break clause in 5
years) in respect of premises, which included a rent free period. The rent free element has been apportioned over
the lease up to the date of the break clause. The Company has an annual commitment at 30 September 2009
under the new lease of £145,000 (2008: £146,000 under the prior lease). 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
2009
new lease
£000
121
145
145
145
35
589
2008
prior lease
£000
70
70
At 30 September 2009 the Group had no financial commitments which had not been accrued for (2008: none).
REPORT & ACCOUNTS 2009 57
Notes to the Accounts
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.
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.
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
2009
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
0.0 213,085
0.0
0.0
0.0
0.0
0.0
(197,272)
1,258
17,071
0.0
0.0
0.0
Outstanding at 1 October 2008
During the year:
Awarded
Forfeited
Exercised
Expired
Increase in awards due to dividends paid
255,803 330.09 369,394
106,207
(149,147) 330.14
(30,925)
(290,498)
12,249
Outstanding at 30 September 2009
106,656 330.03 166,427
Exercisable at 30 September 2009
58
MAJEDIE INVESTMENTS PLC
24 Share-based Payments continued
Discretionary
Share Option
Scheme 2000
2008
TSR-based
Awards
Matching
Awards
Outstanding at 1 October 2007
During the year:
Awarded
Forfeited
Exercised
Expired
Increase in awards due to dividends paid
Weighted
No. Average
of Exercise
Price (p)
Weighted
No. Average
of Exercise
Price (p)
Options
Options
655,265 260.80 207,344
Options
0.0 122,424
Weighted
No. Average
of Exercise
Price (p)
0.0
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
The aggregate estimated fair value of the 106,207 TSR-based awards on 4 December 2008, being the date on
which the awards were granted was £51,000 (2008: £213,000 relating to the aggregate estimated fair value of
147,072 options granted on 3 December 2007).
There were no matching awards granted in 2009. 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.
On 5 December 2008, 101,982 share options were exercised at a share price of 155.5p giving a gain to the
employee of £159,000. Similary on 12 December 2008, 126,215 share options were exercised at a share price of
148p with a gain to the employee of £187,000 (2008: 230,784 share options were exercised at a share price of
304p and a resultant gain to the employee of £202,000, and 168,678 share options were exercised at a share price
of 296.5p and resultant gain to the employee of £136,000).
During the year 290,498 share options lapsed in accordance with the leaving agreements for two former directors.
The options and awards outstanding at 30 September 2009 had a weighted average remaining contractual life of
0.2 years, 3.9 years and 2.1 years in respect of the Discretionary Share Options Scheme 2000, TSR-based Awards
and Matching Awards respectively (2008: 2.7 years, 3.3 years and 1.9 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
2009
TSR-based
Awards
162.5p
0.0p
33.0%
5yrs
3.0%
6.5%
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%
REPORT & ACCOUNTS 2009 59
Notes to the Accounts
24 Share-based Payments continued
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 an employee leaving the Company on 28 November 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 £191,000 (2008: £246,000) being included as part of the total expense of £251,000
(2008: £516,000) relating to share-based payment transactions in the year ended 30 September 2009.
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.
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 2009 was £37,026,000
(2008: £22,400,000).
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.
60
MAJEDIE INVESTMENTS PLC
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
Japanese yen
Canadian dollar
Australian dollar
UK sterling
Total assets
Liabilities
Monetary exposures
UK sterling
Non-monetary exposures
UK sterling
Total net assets
2009
£000
2008
£000
12,131
7,718
18,804
8,940
2,021
1,623
735
4,376
526
112,637
9,121
8,341
855
113
207
476
670
2,617
159,188
149,662
161,793
181,588
189,306
(33,762)
(3,852)
(33,744)
(2,099)
(37,614)
124,179
(35,843)
153,463
Sensitivity analysis
A 5% increase in sterling at 30 September 2009 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 £1,851,000 (2008:
£1,067,000). A 5% 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.
REPORT & ACCOUNTS 2009 61
Notes to the Accounts
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
2009
£000
12,131
569
149,093
2008
£000
7,718
972
180,616
161,793
189,306
(33,762)
(3,852)
(33,744)
(2,099)
(37,614)
(35,843)
124,179
153,463
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 52. 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 2009 would have increased total assets and total return
by £5,563,000 (2008: £7,417,000). A 5% decrease in listed equity valuations would have had the equal but
opposite effect.
62
MAJEDIE INVESTMENTS PLC
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 it 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 by
Management and reported to the Board;
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 2009, cash balances total £12,131,000 (2008: £7,718,000), debtors and prepayments total
£1,986,000 (2008: £2,413,000). 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 £569,000 (2008: £972,000). One loan
note with a cost of £422,000 is currently impaired and has been written down to £nil. The minimum exposure to credit
risk during the year was £20,069,000 and the maximum exposure was £10,404,000.
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:
Undiscounted cash flows
2009
9.5% debenture stock 2020
7.25% debenture stock 2025
Interest on financial liabilities
Trade payable and other liabilities
(excluding social security and sundry taxes)
At 30 September 2009
2,783
3,852
6,635
Due within
1 year
£'000
Due between
1 and 2 years
£'000
Due between Due 3 years
and beyond
2 and 3 years
£'000
£'000
13,500
20,700
29,216
2,783
Total
£'000
13,500
20,700
37,565
3,852
2,783
2,783
2,783
63,416
75,617
REPORT & ACCOUNTS 2009 63
Notes to the Accounts
25 Financial Instruments and Risk Profile continued
Due within
1 year
£'000
Due between
1 and 2 years
£'000
Undiscounted cash flows
2008
9.5% debenture stock 2020
7.25% debenture stock 2025
Interest on financial liabilities
Trade payable and other liabilities
(excluding social security and sundry taxes)
At 30 September 2008
2,783
2,099
4,882
Due between Due 3 years
and beyond
2 and 3 years
£'000
£'000
13,500
20,700
31,999
2,783
Total
£'000
13,500
20,700
40,348
2,099
2,783
2,783
2,783
66,199
76,647
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 (2008: £13.5m) 9.5%
debenture stock 2020
£20.7m (2008: £20.7m) 7.25%
debenture stock 2025
Book Value
2009
£’000
147,291
12,131
13,376
20,386
Book Value
2008
£’000
178,981
7,718
13,369
20,375
Fair Value
2009
£’000
147,291
12,131
16,462
21,870
Fair Value
2008
£’000
178,981
7,718
17,016
22,257
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 a combination of
information provided by FT Interactive Data and Discounted cash flow analysis 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
64
MAJEDIE INVESTMENTS PLC
2009
£000
(12,131)
33,762
2008
£000
(7,718)
33,744
21,631
26,026
5,253
118,926
5,253
148,210
124,179
17.4%
153,463
17.0%
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; and
(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; and
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 2009, the fair value of the Company’s warrants, both listed
and unlisted was £nil (2008: £18,000).
Changes in the fair value of warrants amounting to £18,000 (2008: £3,000) have been debited to the income
statement in the year ended 30 September 2009.
REPORT & ACCOUNTS 2009 65
Notes to the Accounts
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 (MAM) is a related party. It is accounted for as an investment in the portfolio
valued at fair value through profit or loss.
Majedie Asset Management Limited
Ordinary dividend due to Group
Special dividend due to Group
Amounts Owed
by Related
Parties
2009
£000
2008
£000
Amounts Owed
to Related
Parties
2009
£000
2008
£000
Details of
Transactions
2009
£000
2008
£000
1,906
2,484
At 30 September 2009 the Company held investments in funds managed by MAM representing 1.0% (2008: 1.5%)
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 Tortoise Fund ‘B’
2009
Market Value
£000
1,645
2008
Market Value
£000
2,447
248
246
1,645
2,941
Distributions totalling £23,000 (2008: £78,000) from these investments were received by the Company during the year.
The investment in the Tortoise fund has incurred direct fees of £81,000 (2008: £nil) during the year.
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 26 to 28.
Short-term employee benefits
Share-based payments
2009
£000
282
2008
£000
949
492
282
1,441
66
MAJEDIE INVESTMENTS PLC
Ten Year Record
to 30 September 2009
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
%
%
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
157,943 124,181
238.7*
189.8
20.51
8.14
10.50*** 17.22
27.19
0.95
0.96
1.56
1.67
1.36
1.19
1.28
1.24
1.61
2.06
Year
End
2000
2001
2002
2003
2004
2005
2006**
2007**
2008
2009
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 56.
** 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.
REPORT & ACCOUNTS 2009 67
Notice of Meeting
Notice is hereby given that the ninety ninth Annual General Meeting of Majedie Investments PLC will be held on
20 January 2010 at Fishmongers’ Hall, London Bridge, London EC4R 9EL 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 2009.
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 2009.
4. To elect P D Gadd as a director.
5. To elect C J Arnheim as a director.
6. To re-elect H V Reid as a director.
7. To re-elect J W M Barlow as a director.
8. To re-elect G P Aherne as a director.
9. 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:
10. THAT the Company be and is hereby generally and unconditionally authorised in accordance with Section 701
of the Companies Act 2006 (the “Act”) to make market purchases (within the meaning of Section 693 of the
Act) of ordinary shares of 10p each in the capital of the Company (“Ordinary Shares”), provided that:
(a) the maximum number of Ordinary Shares hereby authorised to be purchased shall be 7,873,947, or if less,
14.99% of the number of shares in circulation immediately following the passing of this resolution;
(b) the minimum price which may be paid for each Ordinary Share is 10p;
(c) the maximum price payable by the Company for each Ordinary Share is the higher of:
(i)
105% of the average of the middle market quotations of the Ordinary Shares in the Company for the five
business days prior to the date of the market purchase; and
(ii) the higher of the price of the last independent trade and the highest current independent bid as stipulated
by Article 5(1) of Commission Regulation (EC) 22 December 2003 implementing the Market Abuse
Directive as regards exemptions for buyback programmes and stabilisation of financial instruments
(No.2233/2003);
(d) the authority hereby conferred shall expire at the conclusion of the next Annual General Meeting of the
Company in 2011 or, if earlier, on the expiry of 18 months from the passing of this Resolution, unless such
authority is renewed prior to such time; and
(e) the Company may make a contract to purchase Ordinary Shares under the authority hereby conferred prior
to the expiry of such authority which will or may be executed wholly or partly after the expiration of such
authority and may make a purchase of Ordinary Shares pursuant to any such contract.
11. The Articles of Association of the Company be amended by deleting all the provisions of the Company's
Memorandum of Association which, by virtue of section 28 of the Act, are to be treated as provisions of the
Company's Articles of Association and the Articles of Association produced to the meeting and initialled by the
chairman of the meeting for the purpose 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
24 November 2009
68
MAJEDIE INVESTMENTS PLC
Note 1
To be entitled to attend and vote at the meeting (and for the purpose of the determination by the Company of the
number of votes they may cast) members must be entered on the Company’s register of members at 6.00 pm on
18 January 2010 (or, in the event of any adjournment, 6.00 pm on the date which is two days (excluding weekends
and bank holidays) before the time of the adjourned meeting). Changes to the register of members after the relevant
deadline shall be disregarded in determining the rights of any person to attend and vote at the meeting.
Note 2
A member entitled to attend and vote at this meeting may appoint one or more persons as his/her proxy to attend,
speak and vote on his/her behalf at the meeting. A proxy need not be a member of the Company. If multiple proxies
are appointed they must not be appointed in respect of the same shares. To be effective, a copy of the enclosed
personalised form of proxy, together with any power of attorney or other authority under which it is signed or a
certified copy thereof, should be lodged at the office of the Company’s Registrar, not later than 48 hours before
(excluding weekends and bank holidays) the time of the meeting or any adjustment thereof. The appointment of a
proxy will not prevent a member from attending the meeting and voting in person if he/she so wishes. A member
present in person or by proxy shall have one vote on a show of hands. On a vote by poll every member present in
person or by proxy shall have one vote for every ordinary share of which he/she is the holder. The termination of the
authority of a person to act as proxy must be notified to the Company in writing.
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 3
In the case of joint holders, where more than one of the joint holders purports to appoint a proxy, only the
appointment submitted by the most senior holder will be accepted. Seniority is determined by the order in which the
names of the joint holders appear in the register of members in respect of the joint holding (the first-named being
the most senior).
Note 4
Any 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 member 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 member as to the exercise of
voting rights. The statements of the rights of members in relation to the appointment of proxies in Note 2 above
does not apply to a Nominated Person. The rights described in that Note can only be exercised by registered
members of the Company.
Note 5
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 6.00 pm on 18 January 2010 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 6.00 pm on 18 January 2010 (“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
REPORT & ACCOUNTS 2009 69
Notice of Meeting
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 6
CREST members who wish to appoint a proxy or proxies through the CREST electronic proxy appointment service
may do so for this meeting and any adjournment(s) thereof by using the procedures described in the CREST
Manual, which is available to download from the Euroclear website (www.euroclear.com/CREST). 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 using the CREST service 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,
regardless of whether it constitutes the appointment of a proxy or to an amendment to the instruction given to a
previously appointed proxy must, in order to be valid, be transmitted so as to be received by the issuer’s agent (ID
3RA50) by the latest time(s) for receipt of proxy appointments specified in the notice of meeting. 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 issuer’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.
Note 7
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.
Note 8
In accordance with Section 319A of the Companies Act 2006, the Company must cause any question relating to
the business being dealt with at the meeting put by a member attending the meeting to be answered. No such
answer need be given if:
a) to do so would:
(ii) interfere unduly with the preparation for the meeting, or
(ii) involve the disclosure of confidential information;
b) the answer has already been given on a website in the form of an answer to a question; or
c) it is undesirable in the interests of the company or the good order of the meeting that the question be answered.
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MAJEDIE INVESTMENTS PLC
Note 9
A person authorised by a corporation is entitled to exercise (on behalf of the corporation) the same powers as the
corporation could exercise if it were an individual member of the Company. On a vote on a resolution on a show of
hands, each authorised person has the same voting rights as the corporation would be entitled to. On a vote on a
resolution on a poll, if more than one authorised person purports to exercise a power in respect of the same shares:
a) if they purport to exercise the power in the same way as each other, the power is treated as exercised in that way;
b) if they do not purport to exercise the power in the same way as each other, the power is treated as not exercised.
Note 10
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 Auditors’ 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 11
Members satisfying the thresholds in section 338 of the Companies Act 2006 may require the Company to give, to
members of the Company entitled to receive notice of the AGM, notice of a resolution which those members intend
to move (and which may properly be moved) at the AGM. A resolution may properly be moved at the AGM unless (i)
it would, if passed, be ineffective (whether by reason of any inconsistency with any enactment or the Company’s
constitution or otherwise); (ii) it is defamatory of any person; or (iii) it is frivolous or vexatious. The business which
may be dealt with at the AGM includes a resolution circulated pursuant to this right. A request made pursuant to this
right may be in hard copy or electronic form, must identify the resolution of which notice is to be given, must be
authenticated by the person(s) making it and must be received by the Company not later than 6 weeks before the
date of the AGM.
Note 12
Members satisfying the thresholds in section 338A of the Companies Act 2006 may request the Company to include
in the business to be dealt with at the AGM any matter (other than a proposed resolution) which may properly be
included in the business at the AGM. A matter may properly be included in the business at the AGM unless (i) it is
defamatory of any person or (ii) it is frivolous or vexatious. A request made pursuant to this right may be in hard
copy or electronic form, must identify the matter to be included in the business, must be accompanied by a
statement setting out the grounds for the request, must be authenticated by the person(s) making it and must be
received by the Company not later than 6 weeks before the date of the AGM.
Note 13
A copy of this notice of Annual General Meeting is available on the Company’s website: www.majedie.co.uk
Note 14
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 Current Articles of Association and the proposed New Articles of Association.
None of the Directors has a contract of service with the Company.
REPORT & ACCOUNTS 2009 71
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 the new legislation and take account of other changes in practice since the existing Articles
were adopted.
This summary has been designed to highlight the more important changes.
2. The Company’s objects
The provisions regulating the operations of the Company are currently set out in the Company’s memorandum and
articles of association. The Company’s memorandum contains, among other things, the objects clause which sets
out the scope of the activities the Company is authorised to undertake. This is drafted to give a wide scope.
The Act significantly reduces the constitutional significance of a company’s memorandum. The Act provides that,
with effect from 1 October 2009, a memorandum will record only the names of subscribers and the number of
shares each subscriber has agreed to take in a company. Under the Act, the objects clause and all other provisions
which are contained in a company’s memorandum, for existing companies at 1 October 2009, are deemed to be
contained in a company’s articles of association but the company can remove these provisions by special resolution.
Further the Act states that, unless a company’s articles provide otherwise, a company’s objects are unrestricted.
This abolishes the need for companies to have objects clauses. For this reason the Company is proposing to
remove its objects clause together with all other provisions of its memorandum which, by virtue of the Act, are
treated as forming part of the Company’s articles of association as of 1 October 2009. Resolution 11 confirms the
removal of these provisions for the Company. As the effect of this resolution will be to remove the statement
currently in the Company’s memorandum of association regarding limited liability, the New Articles also contain an
express statement regarding the limited liability of shareholders.
3. Articles which duplicate statutory provisions
Provisions in the Current Articles which replicate provisions contained in the Act are in the main amended to bring
them into line with the Act.
4. Authorised share capital
The Act abolishes the requirement for a company to have an authorised share capital and the New Articles reflect
this by removing the Company’s authorised share capital. Directors will still be limited as to the number of shares
they can at any time allot because allotment authority continues to be required under the Act, save in respect of
employee share schemes.
Articles relating to increase in authorised share capital and cancellation of unissued share capital have also been
removed from the New Articles as a result of the removal of the Company’s authorised share capital.
5. Share purchase and reduction of share capital
With effect from 1 October 2009, specific authorisations in a company’s articles of association for share buy-backs
and reduction of shares are no longer required and will be permitted, unless there are specific restrictions on such
transactions in the articles of association. Such authorisations have been removed from the New Articles as they are
no longer necessary.
6. Redeemable shares
Until 1 October 2009, if a company wished to issue redeemable shares, it had to include in its articles of association
the terms and manner of redemption. The Act, from 1 October 2009, enables directors to determine such matters
instead provided they are so authorised by the articles of association. The New Articles contain such an
authorisation. The Company has no plans to issue redeemable shares but if it did so the directors would need
shareholders’ authority to issue new shares in the usual way.
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MAJEDIE INVESTMENTS PLC
7. Shareholder Rights Directive
The Companies (Shareholders’ Rights) Regulations 2009 came into force on 3 August 2009 and implemented the
EU Shareholder Rights Directive in the UK by way of amendments to the Act. Certain changes are introduced in the
New Articles to reflect the new rules.
The chairman’s casting vote has been removed, as traded companies can no longer include such a provision in their
articles of association.
The Act now provides that each proxy appointed by a member has one vote on a show of hands unless the proxy is
appointed by more than one member in which case the proxy has one vote for and one vote against if the proxy has
been instructed by one or more members to vote for the resolution and by one or more members to vote against
the resolution. The New Articles reflect these changes and clarify how the provisions of the Act giving a proxy a
second vote on a show of hands would apply to discretionary instructions.
A provision has been included in the New Articles to clarify that there is no obligation on the Company to check that
a proxy or corporate representative is voting in accordance with instructions. This follows the introduction of a new
section in the Act which requires a proxy to vote in accordance with instructions.
The New Articles contain amended provisions in relation to service of notice during curtailment of postal services.
Section 308 of the Act only allows a notice to be in hard copy, in electronic form or by website, and section 308 is
not subject to the articles of association. This brings into doubt whether a notice may be given by way of a
newspaper advert. However, under section 310, to whom a notice is sent can be subject to the articles of
association, and therefore the updated provisions try to offer maximum flexibility by defining those people to whom a
notice may be sent.
The Act has also been amended to require the Company to give at least 21 clear days’ notice of general meetings
unless, in the case of general meetings that are not AGMs, the Company offers members an electronic voting facility
and a special resolution reducing the period of notice to not less than 14 clear days has been passed. AGMs must
continue to be held on at least 21 clear days’ notice. The New Articles reflect these new requirements.
General meetings adjourned for lack of quorum must now be held at least 10 clear days after the original meeting.
The New Articles reflect this requirement.
REPORT & ACCOUNTS 2009 73
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*, Tower 42, 25 Old Broad Street, London, EC2N 1HQ (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
2009/10 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).
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MAJEDIE INVESTMENTS PLC
Shareholder Information
Registered Office
Tower 42
25 Old Broad Street
London EC2N 1HQ
Telephone: 020 7626 1243
Fax: 020 7374 4854
E-mail: majedie@majedie.co.uk
Registered Number: 109305 England
Company Secretary
Capita Sinclair Henderson Limited
Trading as Capita Financial Group –
Specialist Fund Services
Beaufort House
51 New North Road
Exeter EX4 4EP
Telephone: 01392 412122
Fax: 01392 253282
Registrars
Stockbrokers
Cenkos Securities plc
6.7.8 Tokenhouse Yard
London EC2R 7AS
Key Dates in 2010
Ex-dividend date
Record date
6 January 2010
8 January 2010
Annual General Meeting
20 January 2010
2008/09 final dividend paid
27 January 2010
Interim results announcement
May
2009/10 interim dividend paid
30 June 2010
Financial year end
30 September
Final results announcement
November
Annual report mailed to
shareholders
December
Website
www.majedie.co.uk
Computershare Investor Services PLC
Share Price
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
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 74). You may
transfer an existing PEP to the Majedie General PEP
(page 74). 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 2009 75
WARNING TO SHAREHOLDERS - BOILER ROOM SCAMS
Over the last year, many companies have become aware that their shareholders have received unsolicited phone calls or correspondence concerning
investment matters. These are typically from overseas based ‘brokers’ who target UK shareholders, offering to sell them what often turn out to be worthless
or high risk shares in US or UK investments. These operations are commonly known as ‘boiler rooms’. These ‘brokers’ can be very persistent and extremely
persuasive, and a 2006 survey by the Financial Services Authority (FSA) has reported that the average amount lost by investors is around £20,000.
It is not just the novice investor that has been duped in this way; many of the victims had been successfully investing for several years. Shareholders are advised
to be very wary of any unsolicited advice, offers to buy shares at a discount or offers of free company reports. If you receive any unsolicited investment advice:
Make sure you get the correct name of the person and organisation
Check that they are properly authorised by the FSA before getting involved by visiting www.fsa.gov.uk/register
Report the matter to the FSA either by calling 0845 606 1234 or visiting www.moneymadeclear.fsa.gov.uk
If the calls persist, hang up.
If you deal with an unauthorised firm, you will not be eligible to receive payment under the Financial Services Compensation Scheme. The FSA can be
contacted by completing an online form at www.fsa.gov.uk/pages/doing/regulated/law/alerts/overseas.shtml
Details of any share dealing facilities that the company endorses will be included in company mailings.
More detailed information on this or similar activity can be found on the FSA website www.moneymadeclear.fsa.gov.uk
July 2008
Majedie Investments PLC
Tower 42
25 Old Broad Street
London EC2N 1HQ
Telephone 020 7626 1243
Facsimile 020 7374 4854
E-mail majedie@majedie.co.uk
www.majedie.co.uk