2010
Majedie Investments PLC
Annual Report
30 September 2010
Majedie Investments PLC is an investment trust with total
portfolio assets of over £150 million as at 30 September 2010.
Our Objective is to maximise total shareholder return over
the long term whilst increasing dividends by more than the
rate of inflation.
Contents
1
2
3
3
4
5
8
11
12
12
13
15
16
18
24
28
31
32
34
35
36
38
40
41
42
43
44
74
75
80
81
loose
Investment Objective and Policy Statement
Highlights for 2010
Group Summary
Recent Trends
Year’s Summary
Chairman’s Statement
Investment Manager’s Report
Asset Distribution
Twenty Largest UK Investments
Ten Largest Overseas Investments
Valuation of Investments
Board of Directors
Directors’ Report
Business Review
Corporate Governance
Report on Directors’ Remuneration
Statement of Directors’ Responsibilities
Report of the Independent Auditors
Consolidated Statement of Comprehensive Income
Company Statement of Comprehensive Income
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
Majedie Savings Plans
Shareholder Information
Form of Proxy
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. This can include products managed by Javelin
Capital, its investment manager.
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 assets of the Company are split into four major groups. These are the Core Portfolio, funds managed by Javelin
Capital LLP, and the Company’s investments in Majedie Asset Management (MAM) and Javelin Capital LLP. An
analysis and description of these groups is contained in the Investment Managers’ Report.
The Company does not have one overall benchmark, rather each distinct group of assets is viewed independently.
For the actively managed Core Portfolio the benchmark comprises 70% FTSE All-Share Index and 30% FTSE World
ex UK Index (Sterling) on a total return basis. Any investments made into Javelin Capital products are measured
against the relevant fund benchmark as contained in the fund’s prospectus. It is important to note that in all cases
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 by the Company, 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 , currently via longer term debentures. 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 2010
1
Highlights for 2010
Total shareholder return:
Net asset value total return:
Final dividend (per share):
Special dividend (per share):
Total dividends (per share):
Directors’ valuation of investment
in Majedie Asset Management Limited:
Investment in Javelin Capital LLP of:
7.9%
(0.6%)
6.3p
2.5p
13.0p
£30.0m
£4.5m
2
MAJEDIE INVESTMENTS PLC
Group Summary
Total assets*
Shareholders’ funds
Market capitalisation
£150.9m
£117.2m
£99.6m
Capital structure
10p ordinary shares
52,528,000
Debt
£13.5m 9.5% debenture stock 2020
£20.7m 7.25% debenture stock 2025
ISA status
Up to £10,200 2010/11 tax year.
* Represents total assets less current liabilities as at 30 September 2010.
Recent Trends
491
384
297
239
225
4.50
2.25
2.50
10.50
10.50
10.50
10.00
9.50
413
338
250
190
192
06
07
08
09
10
06
07
08
09
10
06
07
08
09
10
Net asset value per share
(pence) decreased by 5.7%
in the year.
Core dividends (pence) have
remained at 10.50 pence.
Additionally a special dividend of
2.5 pence was paid during the year.
Share price (pence) has
increased by 0.9% during
the year.
REPORT & ACCOUNTS 2010
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
2010
2009
£150.9m
£117.2m
225.2p
191.50p
15.0%
9.4%
£6.3m
11.8p
10.5p
13.0p
£5.1m
2.4%
1.8%
28.8%
£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%
%
(4.4)
(5.7)
(5.7)
0.9
4 5.3
45. 7
* 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
2010
214.7p
167.5p
256.6p
210.4p
24.7%
15.0%
20.6%
9.9%
2009
256.0p
135.0p
304.2p
177.1p
35.2%
8.8%
30.1%
4.2%
4
MAJEDIE INVESTMENTS PLC
Chairman’s Statement
The Chairman’s Statement forms part of the Director’s Report
The current year has been one of change for the Company. It included the launch of Javelin
Capital LLP, its appointment as Investment Manager and the reorganisation of the management
of the Company’s assets. For the year to 30 September 2010 the Company’s Net Asset Value
and Share Price, both on a total return basis fell by 0.6% and increased by 7.9% respectively.
Results and Dividends
Group costs of £5.1m include £2.4m of Javelin Capital
The results for the year ended 30 September 2010
expenses reflecting the extensive start-up phase of the
include Javelin Capital LLP in the Group, whose results
business and is in-line with the financial plan.
are consolidated as required by accounting rules.
Additionally £0.6m in set up costs incurred by the
Company have been expensed to capital in
The Group’s net profit before tax for the year was
accordance with IFRS. Offsetting this has been a
£6.3m which is an increase of £2m or 4 5.3%
reduction in Company costs of £0.5m primarily
compared to the prior year of £4.3m. This reflects an
reflecting the non-recurring costs in FY2009 in respect
increase of £3.6m in Group income being partially
of the office relocation and the departure of a former
offset by an increase of £1.6m in Group costs.
Investment Director. The Company is in a transitional
phase and as noted above has incurred additional
Group income of £10.1m includes total dividend
costs this year which have negatively impacted the
income received from Majedie Asset Management
Company’s Total Expense Ratio. However, the Board
(MAM) of £6.2m, including a special dividend of £5.4m,
believes that underlying ongoing operating costs
which is an increase of £4.3m from the prior year.
should be expected to reduce in the future.
Portfolio dividend and interest income for the year was
impacted by market conditions and totalled £3.8m, a
A final dividend for the year of 6.3p per share is
decrease of £0.7m from FY2009. All Javelin Capital
recommended by the Board which is considered
income is within the Group for the current year and is
appropriate after taking into account the future needs
eliminated on consolidation.
CONSOLIDATED REVENUE RETURN BEFORE TAXATION
£m
of the wider Group and forecasted investment outturn
over the forthcoming year. This when combined with
the interim and special dividends paid during the year
of 4.2p and 2.5p per share results in total dividends of
13.0p per share (10.5p per share excluding the special)
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
2006
2007
2008
2009
2010
00
01
02
03
04
05
06
07
08
09
10
Majedie dividend
RPI
REPORT & ACCOUNTS 2010
5
Chairman’s Statement
which compares to total dividends of 10.5p for last
Javelin Capital
year. This meets our objective of growing dividends
After a longer than anticipated period of development,
over the longer term by more than the rate of inflation.
primarily due to the provision of a sophisticated trading
The Diagram on page 5 shows the Company dividend
platform, the various Javelin Capital agreements and
history over the last ten years as compared to the RPI.
regulatory approvals were completed and the business
Investment Portfolio
This year for the first time following the appointment of
Javelin Capital LLP as the Company’s investment
manager, we have a separate Investment Manager’s
Report which is on page s 8 to 10.
However, I do wish to provide an overview on changes
relating to how we manage the Company’s assets now
and in the future. The Company has changed
significantly over the last few years and our approach
to the management of our assets needed to be
revised. This does not though change our investment
objective to maximise total shareholder return over the
long term which remains a prime focus of the Board.
In the past the return on the Company’s investment
portfolio, which was comprised of quoted and some
unquoted equities, under the direct control of the
commenced operations on 1 September 2010. On this
date Javelin Capital assumed responsibility for the
investment management and general administration of
the Company, along with all employees and use of the
premises and other relevant fixed assets. Further details
in respect of Javelin Capital are included in the Business
Review and Report on Directors’ Remuneration
sections starting on pages 21 and 2 8 respectively.
On 20 September, after receipt of the regulatory
approvals, Javelin Capital’s first fund, the Javelin Capital
Global Equity Strategies Fund, was launched with a
£20 million seed investment from the Company. The
fund’s objective is to deliver superior absolute returns
with low volatility. The Investment Manager’s report on
page 9 provides further information and the Board is of
the view that this investment should be the start of a
new stream of investment returns to the Company.
Investment Director, determined the NAV performance .
Review of Investment Trust tax Rules
Today the Company’s assets are managed in four
In June of this year a review of the current rules for
distinct major groups, namely:
taxation of Investment Trusts was announced. The
1. The Core portfolio which is currently managed by
proposals’ intent is to modernise the tax treatment
reference to its benchmark;
which has remained unchanged since 1965 and are to
2. Majedie Asset Management, an asset management
be welcomed. However they also include changes that
business in which the Company has a significant
if implemented could have adverse consequences for
shareholding;
the Company. These are the specific proposals in
3. Javelin Capital LLP which is a newly formed asset
respect of the close company and income retention
management partnership;
rules, the former of which exposes the Company to loss
4. Funds managed by Javelin Capital. Currently the
of investment trust status by changes to its shareholder
Company has an investment in the Javelin Capital
base and the latter which reduces the flexibility of the
Global Equity Strategies Fund.
Company in applying its dividend policy. These issues
are of course not unique to the Company and the
industry has made various submissions to HMRC. We
have also made a submission and I hope that the views
of the industry and common sense will prevail but I will
report further on this as developments arise.
6
MAJEDIE INVESTMENTS PLC
Annual Report
This year’s Annual Report is different from prior years
and reflects the appointment of an investment
manager, the introduction of Javelin Capital and the
new approach to how we view our assets. For the
most part these changes are required by regulation but
we have also reviewed our disclosures to ensure they
are appropriate.
Annual General Meeting
The AGM will be held on 19 January 2011 at 11:30am
at the Pewterers’ Hall, Oat Lane, London EC2V 7DE.
Details are set out on page 75. As in prior years there
will be presentations and an opportunity to ask
questions. I do hope you will be able to attend.
Outlook
Although at current levels equity markets are relatively
inexpensive the current economic climate is such that the
investment outlook is uncertain. The Board is confident
that our range of investment assets with their different risk
and return characteristics in conjunction with the
performance of the Investment Manager will provide a
suitable investment return in these uncertain times.
It has been a challenging first year as Chairman and I
wish to thank my fellow directors for their help and
support during this time. I also would like to thank the
former staff of the Company and wish them well in
their new roles within Javelin Capital. I am delighted
that Javelin Capital is now operational and I am hopeful
it will be a successful investment for the Company.
Andrew J Adcock Chairman
2 4 November 2010
REPORT & ACCOUNTS 2010
7
Investment Manager’s Report
The Company’s assets are managed in four separate
major groups which the Board now believes provides
the correct balance in order to achieve the Investment
Objective of maximising shareholder return in the long
term whilst increasing dividends by more than the rate
of inflation. Each investment group has distinct
characteristics and drivers of performance that in
combination determine the direction and value of the
Company’s net assets.
The chart on page 10 demonstrates the impact that
each investment group and other characteristics of the
Company has made on the Net Assets Performance
during the year. Note that the reports on pages 11 to
14 are based on the aggregate value of the total
assets of the Company.
Core Portfolio
The Core Portfolio comprises holdings in large-cap UK
and international stocks and a small number of carefully
selected mid-cap companies, managed under an equity
income investment mandate. The majority of positions
are held in well financed, high quality companies with a
proven track record of delivering profit and dividend
growth. The portfolio is invested approximately 70% in
UK listed companies, and 30% overseas in line with
the Core Portfolio investment benchmark.
As at 30 September 2010, the value of the Core Portfolio,
including cash available for investment, was £90.2m,
representing 60% of the Company’s Total Assets.
The past eighteen months has been a period of
economic stabilisation after the depths that global
economies reached, or threatened to reach, in early
2009. In autumn 2009 and spring 2010, evidence
continued to emerge that the worst of the recession
had passed, global trade had been re-established and
GDP growth was appearing to be sustainable. This
was no doubt influenced by the magnitude of
government stimulus packages throughout the world
and further economic strength from China and India,
both of which continue to gain in economic influence
as power shifts from the traditional base in the West to
the East. Equity markets were reasonably buoyant as
ample liquidity and record low interest rates
encouraged investors to increase exposures in riskier
assets. The Core Portfolio benchmark returned
+12.7% in the first six months of the year.
The second half of the year has been particularly
volatile. From mid April to early July, stock markets
globally declined by over 15% as investors lost their
appetite for riskier asset classes such as equities. There
was no individual reason for this but signals of a faltering
USA recovery, policy tightening in China, sovereign debt
default fears in Europe and political change in the UK
all contributed. The FTSE All -Share was further
impacted by the experience of BP, one of the largest
constituents of the index, in the Gulf of Mexico.
In July risk appetite suddenly returned and in the three
months to September, markets recovered much of the
value lost since the April peak. The Core Portfolio
benchmark was down 1% in the six month period to
end the full year up 11.6% on a total return basis. Once
again there was no individual catalyst but markets were
driven by confidence taken from macro economic
releases that demonstrated global recovery being
sustained, and the acknowledgement that corporate
profits and balance sheets remained strong.
During the year the Core Portfolio Total Return was
+5.9%, a credible performance compared with the
wider UK and Global equity income peer groups. The
equity income asset class has not performed as
strongly as the wider benchmark as investors have
shunned more mature, dividend paying companies in
preference for higher risk positions.
The portfolio remains biased towards income stocks
that are, in our judgement, best placed to benefit from
the faster growing areas of the global economy,
particularly those exposed directly or indirectly to the
Far East. Investments in the mining sector, such as
Antofagasta, have been increased. New positions have
been taken in engineering companies such as Alstom,
Illinois Tool Works and IMI, and support service
providers Bunzl, Compass and G4S. These companies
all earn significant proportions of their revenues in high
growth overseas markets. The portfolio remains under
exposed to developed market consumers and
governments as these areas are likely to remain tough
for the foreseeable future.
At current levels, equity markets remain relatively
inexpensive, especially in comparison to the returns
available from other asset classes and against historic
profit multiples and dividend growth.
Corporate balance sheets are generally strong which
should lead to a combination of higher levels of capital
spending, M&A activity, share buy backs and increased
dividend payouts. In the long term, fundamentals drive
the direction of markets but the short term is determined
by the on-off nature of risk appetite. This continues to
cause significant and rapid shifts in share prices. Volatility
8
MAJEDIE INVESTMENTS PLC
in markets is likely to remain a key factor for some time
as global economic recovery continues to be sporadic.
Investing under an income mandate requires natural
patience, as positions are retained in order to collect
the dividend. It is important to retain valid convictions
in the knowledge that high quality companies may be
subject to market volatility temporarily, but will
ultimately be correctly valued on fundamentals.
Finally, we also manage a small non-core realisation
portfolio. This portfolio consists of small-cap and early
stage investments that were initiated between 2005 and
2008. The objective is to maximise the amount and
speed of capital return by seeking to exit these
positions, although by nature the positions are illiquid.
A number of partial or full realisations were made
during the year.
Its market leading investment performance record has
been recognised by the loyalty of its clients and the
number of high profile industry accolades that it
continues to receive. It remains well financed and
highly profitable. During the year, £6.2m was received
in dividend income from M AM, including a £5.4m
special dividend in December 2009.
In addition, the Company entered into positive and
constructive discussions with MAM, which resulted in a
new shareholders agreement which more appropriately
reflects the business that MAM has become. Changes
include an increase in the minimum dividend payout
ratio and a provision for all current shareholders, on a
pari passu basis, to provide an incentive for MAM staff
to share in the success of that company through an
Employee Benefit Trust.
As at 30 September 2010 the value of the non-core
realisation portfolio was £7.5m. This represents less
than 5% of the Company’s Total Assets and is expected
to reduce over time as further liquidations are achieved.
Notwithstanding the £5.4m special dividend income
received during the year, the Board has decided to
retain its valuation of the Company’s holding at £30m,
representing almost 20% of the Company’s Total Assets.
Javelin Capital Global Equity Strategies Fund
In late September 2010 a $31m (£20m) investment was
made as seed capital into the first flagship product to be
launched by Javelin Capital LLP. The fund is managed
by an investment team of experienced portfolio
managers and will have a range of long-short equity
strategies which include Fundamental, Systematic and
Tactical approaches. Using proprietary models, the team
will analyse and judge which strategy is most
appropriate for different regions and sectors. The
strategies are expected to be uncorrelated or negatively
correlated to each other and hence the combination
within the fund should result in lower volatility and
reduced risk. By seeding this fund, the Company is not
only assisting its new asset management business in
gaining traction in a competitive market, but also
expects to benefit from lower risk capital growth in
otherwise volatile equity markets.
As at 30 September 2010, the value of this holding
was $31m (£19.7m) representing 13% of the
Company’s Total Assets.
Majedie Asset Management
Majedie Asset Management (MAM) was launched in
2002 using finance provided by the Company, which
retains a 30% equity interest. The business has grown
to approximately £5bn in assets under management,
predominantly long – only UK equity mandates for
institutional clients.
Javelin Capital LLP
The Company launched Javelin Capital LLP, a long-
short and long-only equity boutique, on 1 September
2010. £4.5m has been invested by the Company to
finance the start-up, initial operating costs and
regulatory capital. The business plan envisages that
this will be substantially repaid over three years. Javelin
Capital is now focussed on gaining assets under
management upon which Javelin Capital’s business
plan is predicated. The Company holds an initial equity
participation of 70% whilst a 30% interest is held by
partners and staff. Full details were disclosed in the
announcement made on 1 September 2010 that can
be read on the Company’s website.
Launching Javelin Capital LLP should enable the
Company’s annual cost base to reduce as all staff have
transferred to Javelin Capital LLP. The assets of the
Company continue to be managed by the same team,
albeit as members of Javelin Capital LLP under an
arms-length management agreement. As Javelin
Capital LLP attracts external assets, an additional
source of return should be generated for Majedie.
As mentioned previously the first product, the Javelin
Capital Global Equity Strategies Fund, was launched in
September 2010 and seed capital was invested by the
Company. We are encouraged by the initial performance
of the fund which is a key requirement for success.
Further long-short and long-only products are planned
to be launched in due course.
REPORT & ACCOUNTS 2010
9
Investment Manager’s Report
As at 30 September 2010 the net assets in Javelin Capital LLP ha ve been included in the Consolidated Report &
Accounts at £2.1m, representing 2% of the Company’s Total Assets. This represents the original investment less
start-up costs and losses incurred to date and is in accordance with consolidation accounting rules.
In the Company accounts the value of the investment in Javelin Capital LLP has been valued by the Board at cost,
being £4.5m.
Development of Net Asset Value
The chart below demonstrates the Net Asset Value development of the Company during the year to 30 September
2010. In aggregate, the NAV has fallen by £7.0m having generated an investment return of £7.6m, incurred total
expenses of £7.9m and distributed £6.7m in dividends.
The Core Portfolio contributed £5.8m through a combination of dividend income and capital appreciation, dividends
worth £6.2m were received from our holding in Majedie Asset Management, whilst the Non-Core Realisation Portfolio
lost £4.2m in value. The Javelin Capital Global Equity Strategies Fund (JCGESF) retained its value in its base currency
but was impacted by £0.2m due to the translation effect of adverse currency movements. Total expenses during the
period were £7.9m of which Administration Costs were £5.1m and Finance Costs were £2.8m. Administration Costs
include the recognition of £2.4m incurred by Javelin Capital LLP during its start-up phase. Total dividends of £6. 7m
(13.00p per share) were paid during the year including a special dividend of 2.50p that was paid in March 2010.
+£6.2m (£4.2m)
+£5.8m
(£0.2m)
(£5.1m)
£124.2m
(£2.8m)
(£6.7m)
£117.2m
NAV
30.09.09
Core
Portfolio
MAM
Non-Core
Portfolio
JCGESF
Admin
Costs
Finance
Costs
Dividends
NAV
30.09.10
Nick Rundle Investment Director
Javelin Capital LLP
24 November 2010
10
MAJEDIE INVESTMENTS PLC
Asset Distribution
at 30 September 2010
Pacific
Basin
%
United
Kingdom
%
8.1
America
%
0.4
0.6
1.0
North Continental
Europe
%
0.6
Total
2010
%
9.1
0.6
9.7
0.5
5.2
5.7
1.2
1.4
0.5
2.5
0.3
0.3
2.3
8.5
0.6
1.1
1.4
0.4
0.9
4.4
0.1
4.9
5.0
0.8
2.0
1.1
1.8
Total
2009
%
12.0
1.0
13.0
0.9
4.2
5.1
0.9
4.4
0.9
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
0.6
0.4
1.3
1.0
8.1
1.3
0.5
0.6
0.5
0.4
0.6
0.3
0.4
0.5
1.1
0.7
0.3
0.5
1.1
1.0
1.0
0.4
0.3
0.6
0.3
2.3
5.8
5.2
5.2
0.8
1.0
0.2
1.2
0.4
2.0
0.1
2.7
2.8
0.8
1.1
0.7
1.8
Classification of Assets
Oil & Gas Producers
Oil Equipment & Services
Oil & Gas
Chemicals
Mining
Basic Materials
Construction & Materials
Aerospace & Defence
General Industrials
Industrial Engineering
Industrial Metals & Mining
Industrial Transportation
Support Services
Industrials
Automobiles & Parts
Beverages
Food Producers
Leisure 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/Assurance
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 2010
The fund analys is on pages 13 and 14 comprises the fixed asset investments of £145,423,000 and cash (as adjusted for amounts due to/from brokers for settlement)
of £234,000.
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
5.7
0.6
4.3
4.9
1.2
0.9
2.1
6.7
0.3
2.2
0.8
0.3
13.8
24.1
1.0
2.1
3.1
23.2
96.4
96.4
3.6
100.0
2.9
2.9
1.2
0.5
1.7
4.8
0.3
2.2
0.8
0.3
0.4
0.9
0.9
22.7
65.3
65.3
3.6
68.9
1.0
1.0
0.6
1.6
0.3
8.8
8.8
0.2
17.6
17.6
0.4
0.4
0.9
0.6
0.6
0.8
0.8
0.6
0.6
1.2
1.2
4.7
4.7
0.9
0.6
13.1
17.6
13.1
4.4
8.8
0.4
1.2
0.9
0.4
8.8
0.6
1.0
0.3
4.7
Unlisted/Fixed Interest investments comprise an amount of £30,000,000 in respect of the investment in Majedie Asset Management, £558,000 in unlisted fixed interest
investments and £4,330,000 in respect of equity investments in various companies. Suspended stocks have been analysed in their listed sectors.
REPORT & ACCOUNTS 2010 11
Twenty Largest UK Investments
at 30 September 2010
Company
Majedie Asset Management
HSBC
Royal Dutch Shell ‘B’
GlaxoSmithKline
Vodafone
BP
Rio Tinto
Vostok Energy
BHP Billiton
Aviva
BG Group
Antofagasta*
Unilever
Barclays
Legal & General *
British Land
Charter International*
Inchcape*
Sainsbury (J)*
BAE Systems
2010
2009
Market Value
£000
30,000
% of
Fund
19.9
Market Value
£000
30,000
% of
Fund
19.0
5,644
5,385
4,014
4,006
3,850
3,163
2,906
2,835
1,855
1,846
1,792
1,657
1,648
1,501
1,279
1,249
1,247
1,172
1,095
3.7
3.6
2.7
2.7
2.6
2.1
1.9
1.9
1.2
1.2
1.2
1.1
1.1
1.0
0.8
0.8
0.8
0.8
0.7
8,926
5,208
4,303
4,557
7,189
2,645
2,863
3,775
2,241
2,163
2,400
1,110
1,069
5.6
3.3
2.7
2.9
4.5
1.7
1.8
2.4
1.4
1.4
1.5
0.7
0.7
1,851
80, 300
1.2
50.8
*There is no comparative for the investments listed as they represent new holdings.
78,144
51.8
Ten Largest Overseas Investments
at 30 September 2010
Company
Javelin Global Equity Strategies (Ireland)*
Sanofi-Aventis (France)
Telefonica (Spain)
Alstom (France)*
Toyota (Japan)
Canon Inc. (Japan)
AT&T (USA)
Illinois Tools (USA)*
Johnson & Johnson (USA)
Schlumberger (USA)
2010
2009
Market Value
£000
19,738
1,006
975
972
932
929
907
895
884
860
% of
Fund
13.1
0.7
0.6
0.6
0.6
0.6
0.6
0.6
0.6
0.6
28,098
18.6
Market Value
£000
% of
Fund
687
1,292
1,240
880
843
951
931
6,824
0.4
0.8
0.8
0.6
0.5
0.6
0.6
4.3
*There is no comparative for the investments listed as they represent new holdings.
12
MAJEDIE INVESTMENTS PLC
Valuation of Investments
Holdings valued over £100,000 at 30 September 2010
Company
Market Value % of
Fund
£000
Company
Market Value % of
Fund
£000
Company
Market Value % of
Fund
£000
932 0.6%
Industrial Transportation
Capital Lease Aviation
422 0.3%
Oil & Gas
Oil & Gas Producers
BG Group
BP
ENI (Italy)
Exxon Mobil (USA)
Great Eastern
Hydrodec Group
Royal Dutch Shell ‘B’
1,846 1.2%
3,850 2.6%
850 0.6%
588 0.4%
652 0.4%
516 0.3%
5,385 3.6%
Oil Equipment, Services &
Distribution
Schlumberger (USA)
860 0.6%
Automobiles
Automobiles & Parts
Toyota (Japan)
Basic Materials
Chemicals
Bayer (Germany)
795 0.5%
Industrial Metals & Mining
Arcelormittal (Netherlands) 523 0.3%
Mining
Antofagasta
BHP Billiton
Rio Tinto
1,792 1.2%
2,835 1.9%
3,163 2.1%
Industrial Goods & Services
Construction & Materials
Ashley House
Balfour Beatty
China Railway
Construction (Asia)
143 0.1%
1,070 0.7%
555 0.4%
Aerospace & Defence
1,095 0.7%
BAE Systems
Lockheed Martin (USA)
678 0.4%
QED Occtech (Australia) 425 0.3%
453 0.3%
Rolls Royce
General Industrials
Accsys Technologies
Packaging Corporation
(USA)
370 0.2%
470 0.3%
Industrial Engineering
Alstom (France)
Charter International
Illinois Tools (USA)
IMI
972 0.6%
1,249 0.8%
895 0.6%
576 0.4%
Support Services
Babcock
Bunzl
De La Rue
G4S
Healthcare Locums
Consumer Goods
Beverages
Britvic
Coca-Cola (USA)
Food Producers
Chaoda Modern
Agriculture (Asia)
Unilever
826 0.5%
759 0.5%
528 0.3%
891 0.6%
512 0.3%
728 0.5%
836 0.6%
394 0.3%
1,657 1.1%
Real Estate Investment Trusts
British Land
1,279 0.8%
Leisure Goods
Nintendo (Japan)
Tobacco
Altria (USA)
Imperial Tobacco
600 0.4%
800 0.5%
664 0.4%
Health Care
Pharmaceuticals & Biotechnology
Bristol-Myers Squib
(USA)
GlaxoSmithKline
Johnson & Johnson
884 0.6%
(USA)
Roche (Switzerland)
828 0.5%
Sanofi-Aventis (France) 1,006 0.7%
688 0.5%
4,014 2.7%
Consumer Services
Food & Drug Retailers
Sainsbury (J)
General Retailers
Best Buy Co (USA)
HMV
Home Depot (USA)
Inchcape
Media
United Business Media
Vivendi (France)
Travel & Leisure
Compass
Enterprise Inns
Thomas Cook
Whitbread
1,172 0.8%
700 0.5%
384 0.3%
643 0.4%
1,247 0.8%
944 0.6%
590 0.4%
928 0.6%
268 0.2%
773 0.5%
731 0.5%
Telecommunications
Fixed Line Telecommunications
AT&T (USA)
Telefonica (Spain)
907 0.6%
975 0.6%
REPORT & ACCOUNTS 2010 13
Valuation of Investments
Company
Market Value % of
Fund
£000
Company
Market Value % of
Fund
£000
Company
Market Value % of
Fund
£000
Equity Investment Instruments
Javelin Global Equity
Strategies (Ireland)
Juridica Investments
19,738 13.1%
469 0.3%
Non-Equity Investment Instruments
412 0.3%
Ishares Asia Trust (Asia)
Technology
Software & Computer Services
BMC Software (USA)
Microsoft Corp (USA)
745 0.5%
815 0.5%
Technology & Hardware Equipment
662 0.4%
Acer
929 0.6%
Canon Inc (Japan)
801 0.5%
Hewlett Packard (USA)
522 0.3%
Pace
244 0.2%
Toumaz
Unlisted Investments
AOI Medical
152 0.1%
Buried Hill Energy (USA) 216 0.1%
175 0.1%
Celadon Mining
231 0.2%
Diamond Wood China
Majedie Asset
Management
Microsaic Systems
Mitra Energy
Vostok Energy
30,000 19.9%
122 0.1%
400 0.3%
2,906 1.9%
Unlisted Fixed Interest
Investments
Providence Resources
12% (Ireland)
Stratic Energy
8.75% (USA)
260 0.2%
238 0.2%
Mobile Telecommunications
2 Ergo
China Mobile (Asia)
Phillipine Long Distance
(Asia)
Vodafone
327 0.2%
688 0.5%
491 0.3%
4,006 2.7%
Utilities
Electricity
International Power
KSK Power Venture
Scottish & Southern
Energy
582 0.4%
530 0.4%
749 0.5%
Gas, Water & Multi Utilities
Guangdong Investments
(Asia)
National Grid
395 0.3%
594 0.4%
1,648 1.1%
Financials
Banks
Barclays
China Construction
Bank (Asia)
DBS Group Holdings
577 0.4%
(Asia)
HSBC
5,644 3.7%
JP Morgan Chase (USA) 785 0.5%
796 0.5%
Wells Fargo (USA)
723 0.5%
Non Life Insurance
Beazley
520 0.3%
Life Insurance
Aviva
Legal & General
General Financial
London Capital
1,855 1.2%
1,501 1.0%
390 0.3%
14
MAJEDIE INVESTMENTS PLC
Board of Directors
Andrew J Adcock (57)* MA Chairman
Mr Adcock is managing partner of Brompton Asset
Management LLP and is also a non-executive director of
F&C Global Smaller Companies PLC and a Trustee of
the Samuel Courtauld Trust. He was Vice Chairman,
Citigroup Corporate Finance until his retirement in 2009.
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 was appointed
a director of Majedie on 1 April 2008 and is the
Chairman of the PLC Board, Management Engagement
Committee and Nomination Committee, and a member
of the Remuneration and Audit Committees.
Hubert V Reid (70)* Deputy Chairman
Senior Independent Director
Mr Reid is Chairman of Enterprise Inns plc and of Midas
Income & Growth Trust PLC and senior independent
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 Royal London Insurance Group. He was
appointed a director of Majedie in January 1999 and is
Chairman of the Remuneration and Audit Committees
and a member of the Nomination and Management
Engagement Committees.
J William M Barlow BA (46)*
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 for Hedge
Funds that is a 50/50 joint venture between Societe
Generale and Credit Agricole. 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 and Management
Engagement Committees.
Gerry P Aherne (64)
Gerry Aherne spent 16 years with Schroder Investment
Management, as Investment Director up to 2002. He is
currently Chief Executive of Javelin Capital LLP and a
non-executive director of Henderson Global Investors
plc, where he is Chairman of the Remuneration
Committee. He is also a non-executive director of
Electric & General Investment Trust plc and Mecom
Group plc. He was appointed a non executive director
of Majedie in May 2006 and became an executive
director from November 2009. He is also a director of
Majedie Portfolio Management Limited.
Paul D Gadd (45)*
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, Remuneration and Management
Engagement Committees.
Chris Arnheim (50)*
CJ Arnheim was appointed as a director of the
Company on 1 January 2010. 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. He is a member of the Nomination and
Management Engagement Committees.
* Non-executive.
REPORT & ACCOUNTS 2010 15
Directors’ Report
The directors submit their report and the accounts
for the year ended 30 September 2010.
Introduction
The Directors’ Report includes the Business Review
and Corporate Governance Statement, which can be
found on pages 18 to 23 and pages 24 to 27
respectively and the Report on Directors’
Remuneration on pages 28 to 30. A review of the
developments during the year and of the changing
nature of the Company is contained in the Chairman’s
statement and should be read in conjunction with the
Directors’ Report.
Principal Activity and Status
The Company is a public limited company and an
investment company under Section 833 of the
Companies Act 2006. It operates as an investment
trust and is not a close company.
The Company has received written confirmation from
HM Revenue & Customs that it was an approved
investment trust for taxation purposes under Section
1158/9 of the Corporation Tax Act 2010 (formerly Section
842 of the Income and Corporation Taxes Act 1988) in
respect of the year ended 30 September 2009.
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.
Results and Dividend
Consolidated net revenue return before taxation
amounted to £6,287,000 (2009: £4,325,000). The
directors recommend a final ordinary dividend of 6.3p
per ordinary share, payable on 26 January 2011 to
shareholders on the register at the close of business on
7 January 2011. Together with the interim dividend of
4.2p per share paid on 30 June 2010, and the special
interim dividend of 2.5p per share paid on 8 March
2010, this makes a total distribution of 13.0p per share
in respect of the financial year (2009: 10.5p per share).
Directors
The present directors of the Company are listed on
page 15.
The Combined Code on Corporate Governance
requires Directors who are directors/partners of the
Company’s Investment Manager to stand for annual
re-election. Accordingly Mr GP Aherne, the Chief
Executive and a partner of Javelin Capital LLP, will
stand for re-election at the forthcoming Annual General
Meeting. In accordance with the principles of the UK
Corporate Governance Code, Mr HV Reid and Mr
JWM Barlow have agreed to submit themselves for
annual re-election having served on the Board for over
nine years. 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 Board believes that the performance of
Mr GP Aherne, Mr HV 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 HV 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 GP Aherne,
Mr HV Reid and Mr JWM Barlow.
Directors’ Interests
Beneficial interests in ordinary shares as at:
A J Adcock
G P Aherne
J W M Barlow
H V Reid
30 September
2010
20,000
22,825
676,083
33,214
1 October
2009
20,000
9,335
1,520,137
33,214
P D Gadd and C J Arnheim have no beneficial interest
in the shares of the Company.
Non-beneficial interests in ordinary shares as trustees
for various settlements as at:
30 September
2010
1 October
2009
HS Barlow retired as a director at the conclusion of the
Annual General Meeting held on 20 January 2010. P D
Gadd and C J Arnheim were appointed directors of the
Company on 1 October 2009 and 1 January 2010,
respectively.
J W M Barlow
1,897,165
2,166,990
There have been no changes to any of the above
holdings between 30 September 2010 and the date of
this report.
16
MAJEDIE INVESTMENTS PLC
The authority will be used where the Directors consider
it to be in the best interest of shareholders.
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 20 10. 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.
Going Concern
The directors believe, after review and due consideration
of future forecast and cashflow projections, that the
Company has adequate financial resources to continue
in operational existence for the foreseeable future. For
this reason and taking account of the Company’s low
expense ratio and the large number of readily realisable
investments held within its portfolio, the Board continues
to adopt the going concern basis in preparing the
financial statements.
By Order of the Board
Capita Sinclair Henderson Limited
Company Secretary
2 4 November 2010
With the exception of Mr GP Aherne, Chief Executive
and a partner of Javelin Capital LLP, which provides
services under the Management and Administration
Services agreements, 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
The AXA Group
7,103,119
M H D Barlow – beneficial
2,714,078
M H D Barlow – non-beneficial 1,367,750
Sir J K Barlow – beneficial
2,499,642
869,086
Sir J K Barlow – non-beneficial
1,860,270
G B Barlow
1,784,948
Miss A E Barlow
676,083
J W M Barlow – beneficial
– non-beneficial 1,897,165
28.59%
1.17%
13.5 2%
5.17%
2.60%
4.76%
1.65%
3.54%
3.40%
1.29%
3.61%
The substantial voting rights disclosed above include
the total holdings of shares within certain trusts where
there are other beneficiaries.
Annual General Meeting
The Annual General Meeting will be held on 19 January
2011 at 11.30am. The notice convening the Annual
General Meeting is set out on pages 75 to 7 9.
Purchase of own shares
During the year ended 30 September 2010 the
Company did not make any purchases of its own
shares for cancellation (2009: nil).
However, the directors consider it desirable that the
Company be authorised to make such purchases and
accordingly 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 maximum number of shares which may be
purchased under this authority is 7,873,947 being
14.99% of the issued share capital. Any shares so
purchased will be cancelled. The restrictions on such
purchases, (including minimum and maximum prices),
are outlined in the Notice of Meeting on page 75.
REPORT & ACCOUNTS 2010 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) describing how the Company manages these risks;
(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; and
(cid:129) explaining the future business plans of the Company.
The current year has seen the Company change from a
self managed investment trust to an externally managed
trust with the appointment of a manager, in common
with most other investment trusts. This occurred on
31 August 2010 when Javelin Capital LLP, a related
party, was appointed as investment manager and
general administrator. The Board has elected to treat
Javelin Capital on an arms length basis, even though it
is a subsidiary, for reporting and disclosure purposes.
Regulatory and Competitive Environment
The Company is an investment trust and is listed on the
London Stock Exchange. It is subject to United
Kingdom and European legislation and regulations
including 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
directors are charged with ensuring that the Company
complies with its objectives as well as these regulations.
Under the Companies Act 2006, Section 833, the
Company is defined as an investment company. As
such, it analyses its Statement of Comprehensive
Income between profits available for distribution by way
of dividends and capital profits. The financial
statements, starting on page 34, 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 and Venture Capital Trusts (SORP)
issued in January 2009. The principal accounting
policies of the Company are set out in note 1 to the
accounts on pages 44 to 48. The Auditors’ opinion on
the financial statements, which is unqualified, appears
on pages 32 and 33.
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.
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.
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 19 January 2011 is set out on
page 75.
18
MAJEDIE INVESTMENTS PLC
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
Sections 1158 to 1162 of the Corporation Tax Act
2010 (previously, Section 842 of the Income and
Corporation Taxes Act 1988). These sections broadly
require that:
(cid:129) the Company’s revenue (including dividend and
interest receipts but excluding profits on the 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; and
(cid:129) realised profits on the sale of shares and securities
may not be distributed by way of dividend.
Compliance with these rules is proved annually in
retrospect to HM Revenue and Customs (HMRC).
HMRC approval of the Company as an investment trust
is granted ‘subject to there being no subsequent enquiry
under corporation tax self-assessment’. Such approval
has been received in respect of all relevant years up to
and including the year ended 30 September 2009,
since when the Company has continued to comply
with these rules.
Capital Structure
As part of its corporate governance the Board keeps
under review the capital structure of the Company.
At 30 September 2010 the Company had a nominal
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 Manager may operate.
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.
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 has a range of equity investments
including substantial investments in two unlisted asset
management businesses, large cap global equities and
a new investment in a global equities absolute return
fund. The major risk for the Company remains,
investment risk, primarily market risk.
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.
Under the terms of the Management Agreement the
Investment Manager manages the Company’s assets.
The core portfolio is managed with various specific
limits for individual stocks and market sectors which
are employed to restrict risk levels. The level of portfolio
risk in the core portfolio is assessed in relation to the
benchmark utilising various portfolio risk management
tools. It should be noted that whilst we have a
benchmark in the core portfolio, the portfolio is
constructed independently and can be significantly
different. Therefore the core 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.
REPORT & ACCOUNTS 2010 19
Business Review
Other risks faced by the Company include the following:
i. Strategy Risk:
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 with the
Investment Manager in relation to a range of issues
including the allocation of assets between
geographic regions and industrial sectors, level and
effect of gearing and currency exposure;
ii. Business Risk:
inappropriate management or controls in either
Majedie Asset Management and/or Javelin Capital
LLP could result in financial loss, reputational risk
and regulatory censure. The Group has representation
on both entities’ governing boards to monitor
business, financial performance and operations;
iii. Compliance Risk:
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 Sections 1158 to
1162 of the Corporation Tax Act 2010;
iv. Operational Risk:
Inadequate financial controls and failure by an
outsourced supplier to perform to the required
standard 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 Board has representation on the
governing board of Javelin Capital LLP who will also
monitor the performance of other outsourced
service providers. The financial risks are set out in
more detail in note 25 on pages 63 to 70; and
The systems in place to manage the Company’s
internal controls are described further in the Corporate
Governance Statement on page 24.
Management of Assets and Shareholder Value
The Company invests around the world in markets,
sectors and companies that the Board and Investment
Manager believe will generate long term growth in
capital and income for shareholders. The Company
now manages its assets by allocating resources to the
following major groups:
(cid:129) Core portfolio;
(cid:129) Funds managed by Javelin Capital LLP;
(cid:129) MAM; and
(cid:129) Javelin Capital LLP.
The Board believe that the groups will enable a spread
of risk and deliver a higher quality of earnings. The
Investment Manager manages the core portfolio by
analysing potential and current investments against a
range of parameters. Many potential investments are
considered each year. Investment risks are spread
through holding a range of securities across a range of
sectors and countries.
In respect of funds managed by Javelin Capital LLP,
the Company currently invests in the Javelin Capital
Global Equity Strategies Fund which employs an
approach that involves a range of strategies, analysis
and algorithms. Investment risks are managed by
having a spread of investments, a range of strategies
and sophisticated risk management techniques.
Finally the Company has significant investments in
Majedie Asset Management Limited and Javelin Capital
LLP, both asset management businesses. The Board
believes that these investments provide or will provide
a valuable source of future return. The Board has
representation on both entities’ governing boards in order
to monitor and control strategy and financial performance.
The Board reviews the investment performance of the
Company against a range of measures relevant to each
group.
20
MAJEDIE INVESTMENTS PLC
Performance Highlights
The Board uses the following Key Performance
Indicators (KPIs) to help assess progress against the
Company’s objectives. The KPIs are commented on
and displayed in graphical form within the Chairman’s
Statement on pages 5 to 7 and Investment Manager’s
Report on pages 8 to 10.
(cid:129) NAV total return and total shareholder return.
(cid:129) Investment group portfolio return: see the chart on
page 10.
(cid:129) Share price discount: The level of the discount at
the end of the financial year calculated with debt at
par was 15.0% and was lower than at the start of
the year.
(cid:129) Net Asset Value performance
The Company’s Net Asset Value has decreased by
5.7% in the year to 30 September 2010, compared
with a decrease of 1 9.5% over the same period to
30 September 2009. The net assets decreased by
£7 million to £117.2 million. The performance of the
Net Asset Value is expanded within the Chairman’s
statement.
(cid:129) Total expense ratio
The total expense ratio of the Company for the year
ended 30 September 2010 was 2.4% (2009: 2.1%).
(cid:129) Annual dividend growth
Annual dividend growth has seen an increase in the
total distribution of 23.8% in respect of the financial
year ended 30 September 2010 (2009: Nil%) .
Further details regarding the results and dividends
can be found 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 Manager pursues the best
opportunities. The Company has a comparatively high
level of revenue reserves for the investment trust
sector. At £26m, the revenue reserves represent more
than four times the current annual core dividend
distribution. The strength of these reserves will from
time to time assist in underpinning our progressive
dividend policy in years when the income from the
portfolio is insufficient to cover completely the annual
distribution.
The policy aims to increase the dividend over the longer
term by more than the rate of inflation and this has
been achieved over the last nineteen years. Over the
last ten years the average annual growth of the core
dividend (excluding special dividends) has been 3.2%.
Corporate Social Responsibility
In common with many investment trust companies, the
Company has no direct impact on the environment.
When considering its day-to-day operations, the
Company aims to conduct itself responsibly, ethically
and fairly.
The Company has appointed Javelin Capital LLP to
manage its portfolio of investments. Javelin has been
tasked with managing the portfolio, and its operations,
with a view to achieving the Company’s investment
objective and in doing so takes account of social,
environmental and ethical factors, where appropriate.
Costs
The Company’s expense ratio over net assets is 2.4%
which compares with the investment trust sector
average of 1.6% The Company operating costs have
decreased from £2.9m to £2.2m (excluding £ 0.6m of
Javelin Capital setup costs) this year but the ratio has
been negatively impacted by the lower average asset
base in the current period. The Board pays close
attention to cost control and the current situation is
referred to further in the Chairman’s Statement on page
5.
Material Contracts
(cid:129) Javelin Capital LLP
i. LLP Agreement
The investment in Javelin Capital LLP is in accordance
with the terms of a Limited Liability Partnership
Agreement dated 31 August 2010. The terms include:
(cid:129) The Company will provide up to a £4.5 million
partners’ capital contribution. This will attract
interest at a commercial rate, until it is repaid
from future Javelin Capital LLP profits. This
repayment has priority over other distributions
from residual profits. Further capital can be
provided at the Company’s discretion.
(cid:129) The Company initially has a 70% interest in
Javelin Capital LLP with the other partners and
employees holding the remaining 30%. On
achieving certain pre-set financial targets the
Company will reduce its interest to ultimately 51%.
REPORT & ACCOUNTS 2010 21
Business Review
(cid:129) The agreement provides for bonuses which are
determined in a formulaic manner. Performance
fees are shared between the Company, partners
and employees on a time dependent sliding scale
based on the fund. Annual bonuses depend on
Javelin Capital profitability but the bonus pool will
be determined on the basis that total staff costs
equal 55% of revenues.
(cid:129) The agreement is not for a fixed term and can be
terminated by members resolution.
(cid:129) The Board has representation on the Javelin
Capital Management Board (Javelin governance
is outlined in the Corporate Governance
Statement on page 26), including the
appointment of the Chairman. This includes
certain control, meeting and voting rights. The
agreement also provides for the requirement to
obtain Majedie approval in a variety of areas
including anything considered a restricted matter.
The Board can appoint or remove the Managing
Partner/Chief Executive who has day to day
operational control and also must approve his
remuneration.
(cid:129) In the event of a sale proposed by the Company
the agreement includes drag along provisions
including certain pre-emption rights to the
other partners.
There are also two side letters that relate to the LLP
Agreement which provide for a possible change in
control rights and provide for the liability of partners in
respect of their capital and current account balances.
ii. Management and Administration Services
Agreements
The Board has appointed Javelin Capital LLP as its
investment manager and general administrator. The
terms of the appointment are defined under a
Management Agreement and Administration
Services Agreement dated 31 August 2010. The
agreement divides the Company’s investments into
distinct portfolios which are the core portfolio, non-
core portfolio, MAM, Javelin Capital Funds and the
Treasury account. The fees payable under the
Management Agreement are detailed below:
Fund/Portfolio
Management* Performance†
Fee
Fee
Core Portfolio***
Treasury Account
MAM
Javelin Capital Global
Equity Strategies Fund# 1.25% p.a.
0.70% p.a.
0.70% p.a.
NIL
10%
NIL
NIL**
20%‡
* The management fee is on a sliding scale ranging
from 0.7% p.a. to 0.4% p.a. based on the
combined value of the core and non-core
realisation portfolios.
† The performance fee is based on outperformance
against the benchmark on a rolling three year basis.
# The Javelin Capital Global Equity Strategies Fund
is a sub-fund of Javelin Capital Strategies plc,
which is an Irish Qualifying Investment Fund listed
on the Irish Stock Exchange. This is the first fund
managed by Javelin Capital LLP and further sub-
funds can be launched in due course.
** The agreements provide for a fee of £60,000 per
annum in respect of MAM duties.
‡ The fees are as set in the supplement to the fund
prospectus for the Javelin Capital Global Equity
Strategies Fund. The performance fee entitlement
only occurs once the hurdle has been exceeded
and is calculated on a high water mark basis
using an equalisation method.
*** The non-core realisation portfolio attracts a
management fee of 0.70% p.a. and no
performance fee.
22
MAJEDIE INVESTMENTS PLC
Majedie Asset Management Limited
In 2002 the Company established a new fund
management subsidiary specialising in UK equities:
Majedie Asset Management, which was launched in
March 2003. Having started with a 70% shareholding,
the Company now retains a 30% interest. The relevant
developments during the year are referred to in the
Investment Manager’s Report on page 9 and further
referred to in note 13 on pages 56 and 57.
Javelin Capital LLP
After a substantial start-up process to ensure that the
appropriate systems, processes and controls were in
place and following regulatory approval and the
completion of the relevant legal agreements, Javelin
Capital LLP commenced operations on 1 September
2010. On that date Javelin Capital assumed
responsibility for managing the Company’s investments
and provide general administration services. All
previous Majedie employees transferred to Javelin
Capital under the new arrangements.
On 20 September 2010 the Company also invested
£20m into the Javelin Capital Global Equity Strategies
fund, the first fund launch by Javelin Capital LLP. The
characteristics of this investment are detailed in the
Investment Manager’s Report section.
The Company has provided £4.5m in operational and
regulatory capital for Javelin Capital LLP and has an
initial 70% ownership. This will fall to 51% if the
partnership achieves certain preset financial targets.
The Chairman’s Statement on page 6 and additionally
note 14 to the accounts on page 58 provides further
information.
The Management Agreement entitles either party to
terminate the arrangement with six months’ notice
after an initial period of three years. Additionally the
Company can terminate the Manager’s appointment
in respect of a distinct portfolio if the performance of
that portfolio falls below a nominated benchmark.
The Administration Services Agreement delegated,
to Javelin Capital LLP, various rights to enable it to
act as general administrator. Fees payable under the
Administration Services Agreement are capped at
£265,000 per annum with fees agreed on a cost
only basis. The Administration Services Agreement
may be terminated on three months’ notice.
iii. Contribution and Transfer Agreement
Under this agreement the Company agreed to
transfer to Javelin Capital LLP the majority of its
business and the use of certain assets. However
some assets will remain with the Company.
iv. Intra Group Asset Lease Agreement
The asset lease agreement with Javelin Capital
Services Limited identifies certain assets to be
leased to and used by Javelin. Javelin will pay a
lease charge equal to the depreciation suffered by
the Company on those assets. The agreement
provides for these assets to be transferred to Javelin
at a future date at net book value.
(cid:129) Capita Sinclair Henderson Ltd
The Board has appointed Capita Sinclair Henderson
Ltd (trading as Capita Financial Group – Specialist
Fund Services) to act as Company Secretary and
undertake certain administration services. The terms
of Capita Sinclair Henderson Ltd’s appointment are
defined under a secretarial and administration
services agreement dated 17 November 2000. The
agreement entitles either party to terminate the
arrangement with twelve months’ notice.
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 2010 the Company had four days of
suppliers’ invoices outstanding in respect of trade
creditors (2009: four days).
REPORT & ACCOUNTS 2010 23
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 UK Corporate Governance Code (the “Code”), as
required by the Financial Services Authority (FSA). A
copy of the Code can be found at www.frc.org.uk. The
Board considers that the Company has complied with
the provisions of the Code throughout the year ended
30 September 2010 except as set out below.
The Company
It is first relevant to consider the special nature of Majedie
Investments compared with other listed investment
trust companies in relation to matters of corporate
governance. The Company has until 31 August 2010
been self managed. From that date it has appointed
Javelin Capital LLP to manage its investments and
administration. In complying with the more detailed
aspects of best corporate governance practice, the
Board takes into account that the Company is a listed
investment trust 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.
Board and Directors
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. Its composition satisfies
the requirements of the Code and is composed of an
independent Chairman, four non-executive directors
and Mr G P Aherne who became an executive director
on 24 November 2009. Biographical details of the
directors are shown on page 15.
Messrs Adcock, Gadd and Reid are considered to be
independent as defined by the Code but the Board
considers that all directors exercise their judgements in
an independent manner.
Mr H V Reid is the Senior Independent Director and
chairs the Audit and Remuneration Committees.
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 2010 seven
Board meetings were held and additionally two Audit
Committee meetings, one Nomination Committee
meeting and three Remuneration Committee meetings.
Attendance at these Board and Committee meetings
was as follows:
Director
Board
Audit Nomination Remuneration
A J Adcock
G P Aherne
C J Arnheim
J W M Barlow
P D Gadd
H V Reid
H S Barlow
7
7
5
7
6
7
3
2
n/a
n/a
n/a
2
2
n/a
1
1
n/a
1
n/a
1
1
3
n/a
n/a
n/a
2
3
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’s and directors’ other commitments are such
that all directors are capable of devoting sufficient time
to the Company.
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. The Company’s
Articles of Association take advantage of statutory
provisions to indemnify the Directors against certain
liabilities owed to third parties even where such liability
arises from conduct amounting to negligence or
breach of duty or of trust. In addition, under the terms
of appointment of each Director, the Company has
agreed, subject to the restrictions and limitations
imposed by statute and by the Company’s Articles of
Association, to indemnify each Director against all
costs, expenses, losses and liabilities incurred in
execution of his office as Director or otherwise in
relation to such office. Save for such indemnity
provisions in the Company’s Articles of Association and
in the Directors’ terms of appointment, there are no
qualifying third party indemnity provisions in force.
24
MAJEDIE INVESTMENTS PLC
Committees
The Board has established the following Committees:
(cid:129) The Audit Committee comprises: Hubert Reid
(Chairman), Paul Gadd and Andrew Adcock. Gerry
Aherne, Chris Arnheim and William Barlow and
representatives of the Auditors are invited to attend
meetings of the Committee. The Board has agreed
the terms of reference for the Audit Committee
which meets at least twice a year. In particular
during the year the Committee has reviewed the
Group’s financial statements to ensure they are
prepared to a high standard and comply with all the
relevant legislation and guidelines where
appropriate.
The Audit Committee is responsible for monitoring
the integrity of the financial statements of the
Company, reviewing the Company’s internal financial
controls and risk management systems, making
recommendations to the Board, for it to put to the
shareholders for their approval in general meeting, in
relation to the appointment and terms of
engagement of the external auditor, monitoring the
external auditor’s independence and developing and
implementing a policy on the engagement of the
external auditor to supply non-audit services.
The Audit Committee has considered the
independence and objectivity of the Auditors. It has
informed 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.
(cid:129) The Nomination Committee comprises Andrew
Adcock (Chairman) and the non-executive directors.
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 Nomination
Committee and the Board will consider whether to
renew a particular appointment.
The Nomination Committee met three times during
the year to consider the appointment of Mr Chris
Arnheim, the Board’s succession plan and the
reappointment of Directors due to stand for
re-election at the Company’s Annual General
Meeting. It decided to recommend the
re-appointment of Messrs Aherne, Barlow and Reid
on the basis that they continue to make valuable
contributions and to exercise their judgement and
express their opinions in an independent manner.
Having considered the Board’s succession plan and
the balance of skills, knowledge and experience of
existing Directors the Committee has engaged an
external consultant to identify potential external
candidates one of whom will join the Board in a
non-executive capacity. At the date of this
Statement, no appointment to the Board had been
agreed.
(cid:129) The Remuneration Committee comprises: Hubert
Reid (Chairman), Andrew Adcock and Paul Gadd.
Gerry Aherne, Chris Arnheim and William Barlow are
invited to attend and participate in the relevant
meetings. Further details on the work of the
Remuneration Committee is included in the Report
on Directors’ Remuneration on pages 28 to 30.
(cid:129) Management Engagement Committee. The
Management Engagement Committee was
established on 14 October 2010 and comprises;
Andrew Adcock (Chairman), Chris Arnheim, William
Barlow, Paul Gadd and Hubert Reid. The Board has
agreed terms of reference of the Committee which
will meet at least once a year to consider the
performance of the Investment Manager, the terms
of the Investment Manager’s engagement and to
consider annually the continued appointment of the
Investment Manager. As Javelin Capital LLP was
only appointed on 31 August 2010, the Board
believe it is too early for the Committee to meet to
consider its performance.
The terms of reference of the Company’s Committees are
available on request or from the Company’s website.
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.
REPORT & ACCOUNTS 2010 25
Corporate Governance Statement
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 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.
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
judgement 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.
Relations with Shareholders
Members of the Board and the Investment Manager
hold meetings with the Company’s principal
shareholders and prospective investors to develop an
understanding of the views of shareholders and to
discuss the Company’s strategy and financial and
investment performance. Any issues raised by
shareholders are reported to the full Board.
Shareholders are encouraged to attend the Annual
General Meeting and to participate in proceedings.
Shareholders wishing to contact the directors to raise
specific issues can do so directly or by writing to the
Company Secretary.
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 23 provides additional
further information.
Institutional Voting – Use of Voting Rights
The Investment Manager, in the absence of explicit
instructions from the Board, is empowered to exercise
discretion in the use of the Company’s voting rights.
Policy for non-audit services
The Board monitors the Company’s relationship with its
external auditor with a view to ensuring that the
external auditor does not provide non-audit services
that have the potential to impair or appear to impair the
independence of their audit role. The Board has agreed
that, from time to time it may be appropriate and cost
effective for the external auditor to provide services
relating to tax compliance and tax planning but other
services should only be provided where alternative
providers do not exist or where it is cost effective or in
the Group’s interest for the external auditors to provide
such services.
The Management Board of Javelin Capital LLP, upon
which the Company has representation, provides a
similar oversight in respect of non-audit services
provided by the external auditor to the Javelin Group.
Any areas of concern are raised with the Board of the
Company.
Controls of third party providers
The Board regularly reviews the performance of the
companies providing services to the Company and
considers regular reports providing assurances from
those companies that appropriate controls are in place
to mitigate risks relating to services undertaken on
behalf of the Company. The Board also seeks
assurances that service providers have ‘whistle
blowing’ procedures in place to enable their staff to
raise concerns about possible improprieties in a
confidential manner.
Javelin Capital LLP
In respect of the arrangements involving Javelin Capital
LLP, as detailed on pages 6, 9, 21 to 23, 27 and 29,
Mr GP Aherne, who by virtue of being a director of the
Company and a partner of Javelin Capital LLP, is
considered to be a related party under the UKLA’s
Listing Rules.
The Board has representation on the Manag ement
Board of Javelin Capital and under the terms of the
LLP Agreement is able to require amendments to
systems and controls if required , and the ability to
change the Managing Partner/Chief Executive and also
must approve his remuneration.
26
MAJEDIE INVESTMENTS PLC
Javelin Capital LLP governance is comprised of:
(cid:129) Management Board
The Management Board meets monthly and is
comprised of Company representatives and other
partners. Other employees and partners are invited
to attend meetings as required.
(cid:129) Risk Committee
The Risk Committee will meet at least twice a year
under terms of reference agreed by the Management
Board. The Committee will control risk guidelines,
product approval and the firms’ control environment,
and undertake audit committee responsibilities.
(cid:129) Investment Committee
The investment Committee will provide an
independent review to investment processes and
products in light of the external environment. It will
include external investment professionals and will
meet on an ad-hoc basis.
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
– the Investment Manager’s ability to reduce the
incidence and impact of risk on performance and
the relevant controls.
Given the nature of the activities of the Company and
the fact that certain key functions are sub-contracted
to third party service provider organisations, the directors
have reviewed the controls operating and have
obtained information from key third party suppliers
regarding the relevant controls operated by them.
The Company does not have an internal audit function,
as required under provision C.3.5. of the UK Corporate
Governance Code. 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
Investment Management and certain administrative
functions are undertaken by Javelin Capital LLP. Fund
administration, accounting and company secretarial
functions of the Company 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.
REPORT & ACCOUNTS 2010 27
Report on Directors’ Remuneration
This report has been prepared in accordance with 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
During the year to 30 September 2010, the Committee comprised solely non-executive directors – being Hubert
Reid, Andrew Adcock and Paul Gadd. 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 and William Barlow and Chris Arnheim are invited to attend meetings.
The Company Secretary, Capita Sinclair Henderson Limited, act as Secretary to the Committee and its terms of
reference 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 appointment and the remuneration of
the Chairman and each director.
Additionally during the year before the launch of Javelin Capital LLP, the Committee was responsible for the terms of
employment including remuneration packages for employees. The process and procedures adopted are aligned with
those followed for the directors.
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 of the right
calibre. In setting both the policy related to, and levels of, remuneration and benefits for directors, the Committee
takes account of market data and independent professional advice.
Following the launch of Javelin Capital LLP and in accordance with the terms of the LLP agreement the Committee
has certain responsibilities in respect of the remuneration of Javelin Capital Chief Executive, Mr GP Aherne. These
are outlined in the separate section for Javelin Capital LLP.
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 other organisations and appointments.
The Committee reviewed directors’ remuneration in November 2010 and agreed to retain the Chairman’s fee at
£75,000 per annum, 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. A further supplement of £6,000 per annum, as detailed in the Javelin Capital section is payable to directors
who represent the Company on the Javelin Capital Management Board. Mr GP Aherne was appointed to an
executive role from 24 November 2009 with his remuneration unchanged at £160,000 per annum.
On 31 August 2010, upon execution of the Javelin Capital LLP agreement, Mr GP Aherne became Chief Executive
and a partner of Javelin Capital LLP. The Committee agreed to award Mr GP Aherne a one-off payment of £100,000
upon the launch of Javelin Capital LLP, which was to be paid by Javelin Capital LLP. As a partner of Javelin Capital
LLP, Mr GP Aherne received no fees as Executive Director of the Company but receives remuneration as detailed in
the separate section on Javelin Capital.
28
MAJEDIE INVESTMENTS PLC
Directors’ fees (excluding any special duties fees) are, under the Company’s articles of association, subject to a limit
of £250,000 per annum. 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. No director has a service contract, rather there is a memoranda of terms, with Mr GP Aherne being
subject to the terms of the Javelin Capital LLP agreement. The terms of the directors appointment include an initial 3
year duration period, a one month notice period by either party and no termination or loss of office payments.
The Committee has given full consideration to the principles of good governance of the UK Corporate Governance
Code and the Board has accepted the Committee’s recommendations without amendment.
Javelin Capital LLP (“Javelin Capital”)
Javelin Capital , a Limited Liability Partnership of which the Company is a partner, was incorporated on 12 October
2009 and after regulatory and legal aspects were finalised commenced operations on 1 September 2010.
As a partner, the Board can appoint representatives to attend the monthly Javelin Capital 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. The Limited Liability Partnership
(‘LLP’) Agreement provides for up to three directors to represent the Company on the Management Board and
requires at least one director to be present at each meeting. Additionally the Chairman of the Management Board shall
be a Company representative.
As a partner of Javelin, Mr GP Aherne is eligible to receive remuneration in accordance with the terms of the LLP
Agreement. This comprises a monthly drawing entitlement, currently £160,000 per annum, and performance related
remuneration dependent on the future profitability and performance of Javelin Capital. The LLP Agreement provides
that certain aspects of the remuneration of the Javelin Capital partners is subject to the approval of the Company
representatives on the Management Board. The LLP agreement also provides that Mr GP Aherne’s remuneration is
subject to approval of the Committee.
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.
1.50
1.40
1.30
1.20
1.10
1.00
0.90
0.80
0.70
0.60
0.50
9/05
9/06
9/07
9/08
9/09
9/10
Majedie
k
Benchmar
TOTAL SHAREHOLDER RETURN V BENCHMARK
5 YEARS TO 30 SEPTEMBER 2010 (REBASED)
REPORT & ACCOUNTS 2010 29
Report on Directors’ Remuneration
AUDITED SECTION
Directors’ Remuneration
The remuneration of the directors for the year ended 30 September 2010 was as follows:
Non-executive directors
H S Barlow†
A J Adcock
H V Reid
J W M Barlow
P D Gadd
C J Arnheim*
G P Aherne#
Executive director
G P Aherne#
Salary
£000
Basic
fees
£000
Additional
Special
fees Duties fees
£000
£000
Total
2010
£000
–
–
–
–
–
–
–
123
123
15
60
27
27
27
20
–
–
176
–
1
8
–
–
–
–
–
9
–
–
–
–
–
–
24
–
24
15
61
35
27
27
20
24
123
332
Total
2009
£000
48
30
30
27
–
–
147
–
282
† Mr H S Barlow retired as Chairman on 20 January 2010 and was succeeded by Mr A J Adcock .
* Mr C J Arnheim was appointed to the Board on 1 January 2010.
# Mr G P Aherne was appointed Executive Director on 24 November 2009. In addition to the amounts shown above, as a partner of Javelin
Capital LLP he receives a drawing entitlement of £1 60,000 per annum, paid monthly, which commenced from 1 September 2010 and received
a one-off payment of £100,000 upon the launch of Javelin Capital LLP. From 1 September 2010 he remains an executive director of the
Company but receives no remuneration for this role.
Approval
The Report on Directors’ Remuneration on pages 28 to 30 was approved by the Board on 2 4 November 2010.
On behalf of the Board
H V Reid Chairman of the Remuneration Committee
30
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
Andrew J Adcock Chairman
24 November 2010
– 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 2010 31
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
2010 which comprise the Consolidated and Company
Statements of Comprehensive Income, 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 and, as regards the parent company
financial statements, as applied in accordance with the
provisions of the Companies Act 2006.
This report is made solely to the company’s members,
as a body, in accordance with Chapter 3 of Part 16 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 31, 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 Company’s
affairs as at 30 September 2010 and of the Group’s
loss for the year then ended;
(cid:129) the Group financial statements have been properly
prepared in accordance with IFRSs as adopted by
the European Union;
(cid:129) the Parent Company financial statements have been
properly prepared in accordance with IFRSs as
adopted by the European Union and as applied in
accordance with the provisions of the Companies
Act 2006; 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 Report on Directors’ Remuneration
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 Report on Directors’ Remuneration to be
audited are not in agreement with the accounting
records and returns; or
32
MAJEDIE INVESTMENTS PLC
(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.
Under the Listing Rules we are required to review:
(cid:129) the directors’ statement, set out on page 17, 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
2 4 November 2010
Notes:
1. The maintenance and integrity of the Majedie Investments PLC
web site is the responsibility of the directors; the work carried out
by the auditors does not involve consideration of these matters
and, accordingly, the auditors accept no responsibility for any
changes that may have occurred to the financial statements since
they were initially presented on the web site.
2. Legislation in the United Kingdom governing the preparation and
dissemination of financial statements may differ from legislation
in other jurisdictions.
REPORT & ACCOUNTS 2010 33
Consolidated Statement of Comprehensive Income
for the year ended 30 September 2010
Revenue
return
£000
2010
Capital
return
£000
Total
£000
Revenue
return
£000
2009
Capital
return
£000
Total
£000
Notes
Investments
Losses on investments at
fair value through profit or loss
13
(2,361)
(2,361)
(23,723)
(23,723)
Net investment result
Income
Income from investments
Other income
Total income
Expenses
(2,361)
(2,361)
(23,723)
(23,723)
3
3
10,011
82
10,093
10,011
82
10,093
6, 409
125
6,534
6, 409
125
6,534
Administration expenses
5
(3,105)
(2,017)
(5,122)
(1,507)
(1,359)
(2,866)
Return before finance
costs and taxation
Finance costs
Net return before taxation
Taxation
Net return after taxation
for the year
6,988
(4,378)
2,610
5,027
(25,082)
(20,055)
(701)
(2,101)
(2,802)
(702)
(2,100)
(2,802)
6,287
(6,479)
(131)
(192)
(131)
4,325
(27,182)
(22,857)
(92)
(92)
8
9
6,156
(6,479)
(323)
4,233
(27,182)
(22,949)
Return per ordinary share:
pence
pence
pence
pence
pence
pence
Basic and diluted
11
11.8
(12.4)
(0.6)
8.1
(52.3)
(44.2)
The total column of this statement is the Consolidated Statement of Comprehensive Income of the Group prepared in accordance with International
Financial Reporting Standards (IFRS). The supplementary revenue return and capital return columns are prepared under guidance published by the
Association of Investment Companies (AIC).
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 44 to 73 form part of these accounts.
34
MAJEDIE INVESTMENTS PLC
Company Statement of Comprehensive Income
for the year ended 30 September 2010
Revenue
return
£000
2010
Capital
return
£000
Total
£000
Revenue
return
£000
2009
Capital
return
£000
Total
£000
Notes
Investments
Losses on investments at
fair value through profit or loss
13
(2,361)
(2,361)
(23,723)
(23,723)
Net investment result
Income
Income from investments
Other income
Total income
Expenses
Investment Management fees
Administration expenses
Return before finance
costs and taxation
Finance costs
Net return before taxation
Taxation
Net return after taxation
for the year
3
3
4
5
8
9
(2,361)
(2,361)
(23,723)
(23,723)
10,011
130
10,141
10,011
130
10,141
6,409
125
6,534
6,409
125
6,534
(34)
(44)
(78)
(1,038)
(1,735)
(2,773)
(1,507)
(1,359)
(2,866)
9,069
(4,140)
4,929
5,027
(25,082)
(20,055)
(701)
(2,101)
(2,802)
(702)
(2,100)
(2,802)
8,368
(6,241)
2,127
4,325
(27,182)
(22,857)
(131)
(131)
(92)
(92)
8,237
(6,241)
1,996
4,233
(27,182)
(22,949)
Return per ordinary share:
pence
pence
pence
pence
pence
pence
Basic and diluted
11
15.8
(12.0)
3.8
8.1
(52.3)
(44.2)
The total column of this statement is the Statement of Comprehensive Income of the Company prepared under IFRS. The supplementary revenue
return and capital return columns are prepared under guidance published by the AIC.
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 44 to 73 form part of these accounts.
REPORT & ACCOUNTS 2010 35
Consolidated Statement of Changes in Equity
for the year ended 30 September 2010
Year ended 30 September 2010
As at 30 September 2009
Net loss for the year
Share options expense
Dividends declared and paid in year
As at 30 September 2010
Year ended 30 September 2009
As at 30 September 2008
Net loss for the year
Share options expense
Dividends declared and paid in year
Own shares (sold)/purchased by Employee
Incentive Trust (EIT)
Share
capital
£000
Share
premium
£000
Notes
Capital
redemption
reserve
£000
Share
options
reserve
£000
5,253
785
56
(284)
24
10
24
10
5,253
785
5,253
785
56
56
64
(220)
291
251
(826)
(284)
As at 30 September 2009
5,253
785
56
The notes on pages 44 to 73 form part of these accounts.
36
MAJEDIE INVESTMENTS PLC
Capital
reserve
£000
93,424
(6,479)
Own shares
reserve
£000
(1,702)
Revenue
reserve
£000
26,649
6,156
(6,763)
Total
£000
124,181
(323)
64
(6,763)
86,945
26,042
(1,702)
117,159
120,606
(27,182)
29,047
4,233
(6,631)
(2,573)
153,465
(22,949)
251
(6,631)
871
45
93,424
26,649
(1,702)
124,181
REPORT & ACCOUNTS 2010 37
Company Statement of Changes in Equity
for the year ended 30 September 2010
Year ended 30 September 2010
As at 30 September 2009
Net profit for the year
Share options expense
Dividends declared and paid in year
As at 30 September 2010
Year ended 30 September 2009
As at 30 September 2008
Net loss for the year
Share options expense
Dividends declared and paid in year
Own shares (sold)/purchased by
Employee Incentive Trust (EIT)
Notes
Share
capital
£000
Share
premium
£000
Capital
redemption
reserve
£000
5,253
785
56
24
10
24
10
5,253
785
5,253
785
56
56
As at 30 September 2009
5,253
785
56
The notes on pages 44 to 73 form part of these accounts.
38
MAJEDIE INVESTMENTS PLC
Share
options
reserve
£000
Capital
reserve
£000
Revenue
reserve
£000
Own shares
reserve
£000
Total
£000
(284)
93,702
26,369
(1,702)
124,179
(6,241)
8,237
64
(6,763)
1,996
64
(6,763)
(220)
87,461
27,843
(1,702)
119,476
291
120,884
28,767
(2,573)
153,463
251
(826)
(284)
(27,182)
4,233
(6,631)
(22,949)
251
(6,631)
871
45
93,702
26,369
(1,702)
124,179
REPORT & ACCOUNTS 2010 39
Consolidated Balance Sheet
as at 30 September 2010
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
12
13
15
16
17
17
18
19
20
2010
£000
531
145,423
145,954
1,691
5,538
7,229
2009
£000
224
147,291
147,515
1,897
12,384
14,281
153,183
161,796
(2,243)
(3,853)
150,940
157,943
(33,781)
(36,024)
(33,762)
(37,615)
117,159
124,181
5,253
785
56
(220)
86,945
26,042
(1,702)
5,253
785
56
(284)
93,424
26,649
(1,702)
117,159
124,181
pence
225.2
pence
238.7
Approved by the Board of Majedie Investments PLC and authorised for issue on 24 November 2010.
Andrew J Adcock
Hubert V Reid
Directors
The notes on pages 44 to 73 form part of these accounts.
40
MAJEDIE INVESTMENTS PLC
Company Balance Sheet
as at 30 September 2010
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
12
13
14
15
16
17
17
18
19
2010
£000
221
145,423
4,671
150,315
1,676
3,057
4,733
2009
£000
224
147,291
161
147,676
1,986
12,131
14,117
155,048
161,793
(1,791)
(3,852)
153,257
157,941
(33,781)
(35,572)
(33,762)
(37,614)
119,476
124,179
5,253
785
56
(220)
87,461
27,843
(1,702)
5,253
785
56
(284)
93,702
26,369
(1,702)
Equity Shareholders’ Funds
119,476
124,179
Approved by the Board of Majedie Investments PLC and authorised for issue on 24 November 2010.
Andrew J Adcock
Hubert V Reid
Directors
The notes on pages 44 to 73 form part of these accounts.
REPORT & ACCOUNTS 2010 41
Consolidated Cash Flow Statement
for the year ended 30 September 2010
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 in trade and other payables
(Increase)/decrease in trade and other receivables
Net cash inflow from operating activities before tax
Tax recovered
Tax on unfranked income
Net cash inflow from operating activities
Investing activities
Purchases of tangible assets
Disposals of tangible assets
Net cash outflow from investing activities
Financing activities
Interest paid
Dividends paid
Exercise of options on own shares
Net cash outflow from financing activities
Notes
2010
£000
2009
£000
(192)
(22,857)
13
2,361
23,723
(45)
64
84
(57,963)
55,741
50
2,802
2,852
410
(18)
3,244
10
(163)
3,091
(420)
29
(391)
(2,783)
(6,763)
(9,546)
(6,846)
12,384
(132)
251
58
(57,427)
67,202
10,818
2,802
13,620
241
96
13,957
2
(106)
13,853
(234)
(234)
(2,783)
(6,631)
44
(9,370)
4,249
8,135
(Decrease)/increase in cash and cash equivalents for year
21
Cash and cash equivalents at start of year
Cash and cash equivalents at end of year
5,538
12,384
The notes on pages 44 to 73 form part of these accounts.
42
MAJEDIE INVESTMENTS PLC
Company Cash Flow Statement
for the year ended 30 September 2010
Net cash flow from operating activities
Company 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
(Decrease)/increase 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
Net cash inflow from operating activities
Investing activities
Purchases of tangible assets
Disposals of tangible assets
Purchases of subsidiaries
Net cash outflow from investing activities
Financing activities
Interest paid
Dividends paid
Exercise of options on own shares
Net cash outflow from financing activities
Notes
2010
£000
2009
£000
2,127
(22,857)
13
2,361
23,723
(45)
64
64
(57,963)
55,74 1
2,34 9
2,802
5,15 1
(41)
8 6
5,19 6
10
(163)
5,04 3
(9 0)
29
(4,510)
(4,57 1)
(2,783)
(6,763)
(9,546)
(9,074)
12,131
(132)
251
58
(57,427)
67,202
10,818
2,802
13,620
437
112
14,169
2
(106)
14,065
(282)
(282)
(2,783)
(6,631)
44
(9,370)
4,413
7,718
(Decrease)/increase in cash and cash equivalents for year
21
Cash and cash equivalents at start of year
Cash and cash equivalents at end of year
3,057
12,131
The notes on pages 44 to 73 form part of these accounts.
REPORT & ACCOUNTS 2010 43
Notes to the Accounts
General Information
Majedie Investments PLC is a company incorporated in England under the Companies Act 2006. 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 8 1. The nature of the Group’s operations and its
principal activities are set out in the Business Review on pages 18 to 23 and in note 2 on page 48.
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 1
IFRS 1
IFRS 2
IFRS 9
IAS 24
Amendments to IFRS 1 – Additional Exemptions for First-time Adopters
Amendments to IFRS 1 – Limited Exemption from Comparative IFRS 7 disclosures
Amendments to IFRS 2 – Group Cash settled Share-based Payment Transactions
Financial Instruments: Classification & Measurement
Related Party Disclosures (revised)
Effective date
1 January 2010
1 July 2010
1 January 2010
1 January 2013
1 January 2011
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 34 to 73 comprise the audited results of the Company and its subsidiaries for the year
ended 30 September 2010, and are presented in pounds sterling rounded to the nearest thousand, as this is the
functional 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, 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 is not inconsistent with the requirements of IFRSs, the directors have sought to prepare
the financial statements on a basis compliant with the recommendations of the SORP. All the companies’ activities
are continuing.
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.
The results of subsidiaries acquired or disposed of during this year are included in the Consolidated Statement of
Comprehensive Income from the effective date of acquisition or disposal as appropriate. All Group entities have the
same year end date.
Minority interests in the net assets of consolidated subsidiaries are identified separately from the Group’s equity
therein. Minority interests consist of the amount of those interests at the date of the original business combination
and the minority’s share of changes in equity since the date of combination. Losses applicable to the minority in
excess of the minority’s interest in the subsidiary’s equity are allocated against the interest of the Group except to
the extent that the minority has a binding obligation and is able to make an additional investment to cover losses.
44
MAJEDIE INVESTMENTS PLC
1 Accounting Policies continued
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.
Presentation of Statement of Comprehensive Income
In order to reflect better the activities of an investment trust company and in accordance with guidance issued by
the AIC, supplementary information which analyses the Statement of Comprehensive Income between items of a
revenue and capital nature has been presented alongside the Statement of Comprehensive Income. In accordance
with the Company’s status as a UK investment company under section 833 of the Companies Act 2006, net capital
returns may not be distributed by way of dividend. Additionally the net revenue is the measure that the directors
believe to be appropriate in assessing the Company’s compliance with certain requirements set out in section 1158
of the Corporation Tax Act 2010.
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 in business activities from which it may
earn revenues and incur expenses (including intra-group revenues and expenses), for which discrete financial
information is available and whose operating results are regularly renewed by the entity’s chief decision maker who
can make decisions on resource allocation and performance assessment. An operating segment could engage in
business activities for what it has yet to earn revenues.
Income
Dividend income from investments is taken to the revenue account on an ex-dividend basis . UK dividends are
included net of tax credits. Overseas dividends are included gross of any withholding tax. Where the Company has
elected to receive scrip dividends in the form of additional shares rather than in cash, the amount of the cash
dividend foregone is recognised as income. Any excess in the value of the shares received over the amount of the
cash dividend is recognised in the capital column.
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 and other interest receivable is included on an accruals basis.
REPORT & ACCOUNTS 2010 45
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 Statement of Comprehensive Income, 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 1 3).
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.
(cid:129)
The investment management performance fee, which is based on capital out-performance, is charged wholly
to capital.
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 the number 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
Statement of Comprehensive Income 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 Statement of Comprehensive Income 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 Statement of Comprehensive Income, 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.
46
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.
Fair values for unquoted investments, or investments for which the market is inactive, are established by using
various valuation techniques in accordance with the International Private Equity and Venture Capital Valuation
Guidelines. These may include recent arm’s length market transactions, the current fair value of another instrument
which is substantially the same, discounted cash flow analysis and option pricing models. Where there is a valuation
technique commonly used by market participants to price the instrument and that technique has been demonstrated
to provide reliable estimates of prices obtained in actual market transactions, that technique is utilised.
Where no reliable fair value can be estimated for such instruments, they are carried at cost subject to any provision
for impairment.
Investment in Subsidiaries
In its separate financial statements the Company recognises its investment in subsidiaries at cost, less any
permanent diminution or if they are investment vehicles they are valued at fair value.
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 Statement of
Comprehensive Income.
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.
REPORT & ACCOUNTS 2010 47
Notes to the Accounts
1 Accounting Policies continued
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.
Debentures
All debentures are recorded at proceeds received, net of direct issue costs and held at amortised cost with the
interest expense being recognised on an effective yield basis.
Trade Payables
Trade payables are not interest bearing and are stated at their fair value.
Reserves
Gains and losses on the sale of investments and investment holding gains and losses 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.
Use of estimates
The preparation of financial statements requires the Group to make estimates and assumptions that affect items
reported in the Balance Sheets and Statement of Comprehensive Income and the disclosure of contingent assets
and liabilities at the date of the financial statements. Although these estimates are based on management’s best
knowledge of current facts, circumstances and to, some extent, future events and actions, actual results ultimately
may differ from those estimates, possibly significantly. The only estimates and assumptions that may cause material
adjustment to the carrying value of assets and liabilities relate to the valuation of unquoted investments. These are
valued in accordance with the policies as set out on page 47. At the year end, unquoted investments represent
29.8% of net assets.
2 Business segments
For management purposes, the Group is currently organised into the following two principal activities:
Investing activities
The Company’s investment objective is to maximise shareholder return over the long term whilst increasing
dividends by more than the rate of inflation.
The Company operates as an investment trust company and its portfolio contains investments in companies listed in
a number of countries. Geographical information about the portfolio is provided on pages 11 to 14 and exposure to
different currencies is disclosed in note 25 on pages 63 and 64.
Investment management services
To complement this investment objective and create income and capital for the Group, Javelin Capital LLP has been
launched to market a range of funds to third party investors and provide investment management and advisory services.
48
MAJEDIE INVESTMENTS PLC
2 Business Segments continued
For the year ended 30 September 2010
For the year ended 30 September 2009
Group
Income from investment
management services
Other operating and
investment income
Intra-group income
Performance shares and
options fair value charge
Other administrative costs
Intra-group expenses
Other operating expenses
Investment
management
Investing and advisory
activities
£000
services Eliminations
£000
£000
Total
£000
Investment
management
Investing and advisory
activities
£000
services Eliminations
£000
£000
10,091
50
10,141
(64)
(2,054)
(85)
(648)
2
92
94
10,093
6,534
(142)
(142)
10,093
6,534
(2,356)
(25)
110
(64)
(4,410)
(251)
(2,538)
(648)
(77)
(2,851)
(2,381)
110
(5,122)
(2,866)
Operating profit/(loss)
Finance costs
Intra-group finance costs
Gains/(losses) on fair value
through profit and loss
7,290
(2,802)
(2,361)
(2,287)
(32)
4,971
(2,802)
3,668
(2,802)
(25)
25
(2,361)
(23,723)
Profit/(loss) before tax
2,127
(2,312)
(7)
(192)
(22,857)
Dividends
(6,763)
(6,763)
(5,462)
Total
£000
6,534
6,534
(251)
(2,538)
(77)
(2,866)
3,668
(2,802)
(23,723)
(22,857)
(5,462)
Total assets
Total liabilities
Intra-group assets/(liabilities)
150,241
(35,571)
4,801
2,942
(453)
(4,801)
153,183 161,796
(37,615)
(36,024)
161,796
(37,615)
Net assets
119,471
(2,312)
117,159 124,181
124,181
3 Income
Income from investments
Franked investment income†
UK unfranked investment income
Overseas dividends
Fixed interest and convertible
bonds
Group
2010
£000
8,778
21
1,156
56
Group
2009
£000
5,539
11
800
59
Company
2010
£000
Company
2009
£000
8,778
21
1,156
56
5,539
11
800
59
† Includes MAM special dividend income of £5,400,000 (2009: £1,359,000).
1,011
6,409
10,011
6,409
REPORT & ACCOUNTS 2010 49
Notes to the Accounts
3 Income continued
Other income
Deposit interest
Other interest
Sundry income
Group
2010
£000
44
38
82
Group
2009
£000
95
30
125
Company
2010
£000
Company
2009
£000
43
25
62
130
95
30
125
Total income
10,093
6,534
10,141
6,534
Total income comprises:
Dividends
Fixed interest
Interest
Other income
Income from investments
Listed UK
Listed overseas
Unlisted
4 Management Fees – Company
Investment management
Administration
9,955
56
44
38
6,350
59
95
30
9,955
56
68
62
6,350
59
95
30
10,093
6,534
10,141
6,534
2,618
1,156
6,237
3,644
800
1,965
2,618
1,156
6,237
3,644
800
1,965
10,011
6,409
10,011
6,409
Revenue
return
£000
14
20
34
2010
Capital
return
£000
44
44
Total
£000
58
20
78
A summary of the terms of the management agreement with Javelin Capital LLP is given in the Directors’ Report on
pages 21 and 22. At 30 September 2010, an amount of £58,000 was outstanding for payment of investment
management fees when due (2009: £nil) and outstanding administration fees of £20,000 (2009: £nil).
The Manager is also entitled to a performance fee in accordance with the provisions of the management agreement,
the calculation of which is also described in the Directors’ Report on page 22 . No performance fee is due in respect
of the year ended 30 September 2010 (2009: £nil).
50
MAJEDIE INVESTMENTS PLC
5 Administration Expenses
Staff costs – note 7
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)
Pre start-up costs
Other expenses
Group
2010
£000
851
232
498
129
132
132
84
66
2,516
482
Group
2009
£000
1,165
314
410
128
146
113
139
58
59
334
Company
2010
£000
768
232
444
82
113
132
64
52
627
259
Company
2009
£000
1,165
314
410
128
146
113
139
58
56
337
5,122
2,866
2,773
2,866
Pre start-up costs of £2,516,000 relate to costs incurred by Javelin Capital LLP prior to 1 September 2010. These costs
comprise staff costs of £1,085,000; IT costs of £320,000; Advisors costs of £400,000, other costs of £ 84,000 and
set up costs of £627,000.
A charge of £1,390,000 (2009: £nil) to capital and an equivalent credit to revenue has been made in the Group and
a charge of £1,167,000 (2009: £1,359,000) in the Company has been made to recognise the accounting policy of
charging 75% of direct 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
Group
2010
£000
60
6
Group
2009
£000
53
6
Company
2010
£000
Company
2009
£000
46
6
50
6
66
59
52
56
6 Directors’ Emoluments – Company
Salaries and fees
Bonuses
Pension contributions
Other benefits
2010
£000
332
2009
£000
282
The Report on Directors’ Remuneration on pages 28 to 30 explains the Company’s policy on remuneration for
directors for the year. It also provides further details of directors’ remuneration.
332
282
REPORT & ACCOUNTS 2010 51
Notes to the Accoun ts
7 Staff Costs including Executive Directors
Salaries and other payments
Social security costs
Pension contributions
Share based remuneration
– note 24
Group
2010
£000
684
73
30
64
Group
2009
£000
724
126
64
251
Company
2010
£000
607
67
30
Company
2009
£000
724
126
64
64
251
851
1,165
768
1,165
Group
2010
Number
Group
2009
N umber
Company
2010
Number
Company
2009
N umber
Average number of employees:
Management and office staff
8 Finance Costs – Group and Company
17
5
7
5
Interest on 9.5% debenture stock 2020
Interest on 7.25% debenture stock 2025
Amortisation of expenses associated with debenture issue
2010
Revenue Capital
return
return
Total
£000
£000
£000
962 1,283
321
3 75 1,12 5 1,50 0
1 9
1 4
5
2009
Revenue Capital
return
return
Total
£000
£000
£000
321
962 1,283
375 1,126 1,501
18
12
6
701 2,101 2,802
702 2,100 2,802
Further details of the debenture stocks in issue are provided in note 17.
9 Taxation
Analysis of tax charge – Group and Company
Tax on overseas dividends
Group
2010
£000
131
Group
2009
£000
92
Company
2010
£000
Company
2009
£000
131
92
Reconciliation of tax charge:
The current taxation for the year is higher than the standard rate of corporation tax in the UK (28%), (2009: 28%).
The differences are explained below:
Net return before taxation
Taxation at UK Corporation Tax
rate of 28% (2009: 28%)
Group
2010
£000
(192)
Group
2009
£000
(22,857)
Company
2010
£000
2,127
Company
2009
£000
(22,857)
(54)
(6,400)
595
(6,400)
52
MAJEDIE INVESTMENTS PLC
9 Taxation continued
Effects of:
– UK dividends which are
not taxable
– foreign dividends which are
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
Group
2010
£000
(2,455)
(302)
661
221
1,929
131
Group
2009
£000
Company
2010
£000
Company
2009
£000
(1,551)
(102)
6,643
(231)
107
1,550
92
(16)
(2,455)
(1,551)
(302)
661
227
1,274
131
(102)
6,643
(231)
1,550
107
92
(16)
Actual current tax charge
131
92
131
92
Group
After claiming relief against accrued income taxable on receipt, the Group has unrelieved excess expenses of
£54,432,000 (2009: £47,543,000). It is not yet certain 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
£52,093,000 (2009: £47,543,000). It is not yet certain 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.
10 Dividends – Group and Company
The following table summarises the amounts recognised as distributions to equity shareholders in the period:
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
2009 Final dividend of 6.30p paid on 27 January 2010
2010 Special dividend of 2.50p paid on 8 March 2010
2010 Interim dividend of 4.20p paid on 30 June 2010
2010
£000
3,277
1,301
2,185
2009
£000
1,170
3,276
2,185
6,763
6,631
REPORT & ACCOUNTS 2010 53
Notes to the Accounts
10 Dividends – Group and Company continued
Proposed final dividend for the year ended
30 September 2010 of 6.30p (2009: final dividend
of 6.30p) per ordinary share
2010
£000
3,277
2009
£000
3,277
3,277
3,277
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 1158 of the Corporation Tax Act 2010 are considered.
Interim dividend for the year ended 30 September 2010
of 4.20p (2009: 4.20p) per ordinary share
Proposed final dividend for the year ended 30 September
2010 of 6.30p (2009: 6.30p) per ordinary share
Special dividend for the year ended 30 September
2010 of 2.50p (2009: nil p) per ordinary share
11 Return per Ordinary Share – Group and Company
2010
£000
2,185
3,277
1,301
2009
£000
2,185
3,277
6,763
5,462
Basic return per ordinary share is based on 52,022,510 (2009: 51,973,767) 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 19. 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 2010 and 2009
since the share options referred to in note 19 would, if exercised, be satisfied by the shares already held by the
Employee Incentive Trust.
Group
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:
Company
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:
2010
£000
6,156
(6,479)
2010
£000
8,237
(6,241)
2009
£000
4,233
(27,182)
(323)
(22,949)
2009
£000
4,233
(27,182)
1,996
(22,949)
54
MAJEDIE INVESTMENTS PLC
12 Property and Equipment – Group
Cost:
At 30 September 2009
Additions
Disposals
At 30 September 2010
Depreciation:
At 30 September 2009
Charge for year
Disposals
At 30 September 2010
Net book value:
At 30 September 2010
At 30 September 2009
12 Property and Equipment continued – Company
Cost:
At 30 September 2009
Additions
Disposals
At 30 September 2010
Depreciation:
At 30 September 2009
Charge for year
Disposals
At 30 September 2010
Net book value:
At 30 September 2010
At 30 September 2009
Leasehold
Improvements
£000
171
Office
Equipment
£000
329
420
(255)
Total
£000
500
420
(255)
171
494
665
6
17
270
67
(226)
276
84
(226)
23
148
165
111
383
59
134
531
224
Leasehold
Improvements
£000
171
Office
Equipment
£000
329
90
(255)
Total
£000
500
90
(255)
171
164
335
6
17
270
47
(226)
276
64
(226)
23
148
165
91
73
59
114
221
224
REPORT & ACCOUNTS 2010 55
Notes to the Accounts
13 Investments at Fair Value Through Profit or Loss – Group and Company
Listed
£000
2010
Unlisted
£000
Total
£000
Listed
£000
2009
Unlisted
£000
Total
£000
Opening cost at beginning of year
Gains/(losses) at beginning 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
Opening fair value at beginning of year
111,257
36,034 147,291
148,337
30,644 178,981
Purchases at cost
Sales – proceeds
Gains/(losses) on sales
(Decrease)/increase in investment
holding gains
Adjustments for listing/delisting during
financial year
55,988
(55,401)
5,903
55,988
(55,495)
5,796
(94)
(107)
58,826
(66,843)
(54,068)
50
58,876
(66,843)
(54,068)
(6,427)
(1,730)
(8,157)
28,434
1,911
30,345
(785)
785
(3,429)
3,429
Closing fair value at end of year
110,535
34,888 145,423
111,257
36,034 147,291
Closing cost at end of year
Gains at end of year
110,166
369
14,03 4 124,20 0
21,22 3
20,85 4
104,461
6,796
13,450 117,911
29,380
22,584
Closing fair value at end of year
110,535
34,888 145,423
111,257
36,034 147,291
Unlisted investments include an amount of £4,330,000 in 22 various companies, £30,000,000 for our investment in
MAM as detailed on page 57 and £558,000 (2009: £569,000) of loan or convertible notes that pay a fixed rate of
interest. The valuation of investments on pages 13 and 14 includes 10 unlisted investments of over £100,000
(including MAM).
During the year the Company incurred transaction costs amounting to £296,000 (2009: £374,000) of which
£186,000 (2009: £243,000) related to the purchases of investments and £110,000 (2009: £131,000) 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 Statement of Comprehensive Income.
The composition of the investment return is analysed below:
Net gains/(loss) on investments
(Decrease)/increase in holding gains on investments
2010
£000
5,796
(8,157)
2009
£000
(54,068)
30,345
(2,361)
(23,723)
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:
Javelin Global Equity Strategies Fund
Capital Lease Aviation
Fair
Value
£000
19,738
422
% of
Class Held
100.000
3.195
56
MAJEDIE INVESTMENTS PLC
13 Investments at Fair Value Through Profit or Loss – Group and Company continued
The Company has provided seed capital to the Javelin Capital Global Equity Strategies Fund. The fund is being
actively marketed to potential external investors and it is forecast that the Company’s interest will reduce significantly
in the future. The Company does not exercise significant influence over the operating and financial policies of the
above companies which are therefore not considered to be associated companies.
Majedie Asset Management
The Company has maintained 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
2010
£000
1,207
28,793
2009
£000
1,207
28,793
30,000
30,000
The carrying value of MAM in the 30 September 2010 Consolidated Financial Statements is its fair value as assessed
at 30 September 2010. 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 2010 and the 2011 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 2010 show a net profit after taxation of £14,399,000 (2009:
£14,222,000) and shareholders’ funds of £18,192,000 (2009: £25,945,000). 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.
14 Investment in Subsidiaries – Company
Company
Cost:
At beginning of year
Additions
Disposals
At end of year
Impairment:
At beginning of year
Impairment in year
At end of year
Valuation at end of year
2010
£000
1,000
4,510
(839)
2009
£000
1,002
(2)
5,510
1,000
(808)
(31)
(839)
4,671
(839)
161
All operating subsidiaries are held at cost, less any permanent diminution, unless considered to be an investment
and then held at fair value.
REPORT & ACCOUNTS 2010 57
Notes to the Accounts
14 Investment in Subsidiaries – Company
a) Subsidiary undertakings at
30 September 2010
Company and business
Majedie Portfolio Management Limited
– Majedie share plan manager,
authorised and regulated by
the FSA
Majedie Unit Trust
– Unauthorised unit trust to receive
Javelin Capital income
Javelin Capital LLP
– Asset Management
Javelin Capital Services Limited
– Administration Services
Javelin Capital Fund Management Limited
– Asset Management
Ireland
Javelin Capital EBT
– E mployee Benefit Trust
Guernsey
Country of
Registration
Incorporation
and Operation
Number and
class of shares
held by group
Group
Holding
Capital
Reserves at
30.09.10
£000
Profit after
tax for the
year ended
30.09.10
£000
UK
UK
UK
UK
100%
162
100%
10
70%
2,120
(2,308)
70%
70%
118
( 7)
70%
1,000,000
Ordinary
shares
10,000
Units
70%
interest
100
Ordinary
shares
125,000
Ordinary
shares
£200
Trust
capital
Javelin Capital Services Limited, Javelin Capital Fund Management Limited and the Javelin Capital EBT are all wholly
owned subsidiaries of Javelin Capital LLP.
b) Minority Interest
In accordance with the Company’s accounting policies and the income and loss recognition provisions of the Limited
Liability Partner Agreement for Javelin Capital LLP there is no minority interest to be recognised in the Consolidated
Statement of Comprehensive Income or Balance Sheet.
15 Trade and Other Receivables
Sales for future settlement
Payments in advance
Dividends receivable
Accrued income
Taxation recoverable
Amounts due from subsidiary
undertakings
Group
2010
£000
832
451
346
17
45
Group
2009
£000
1,078
435
343
18
23
Company
2010
£000
832
36
346
17
45
Company
2009
£000
1,078
43 4
343
18
23
1,691
1,897
1,676
1,986
400
90
58
MAJEDIE INVESTMENTS PLC
16 Cash and Cash Equivalents
Deposits
Other balances
Group
2010
£000
4,903
635
Group
2009
£000
11,830
554
Company
2010
£000
2,686
371
Company
2009
£000
11,856
275
5,538
12,384
3,057
12,131
17 Trade and Other Payables
Amounts falling due within one year:
Purchases for future settlement
Accrued expenses
Other creditors
Group
2010
£000
598
449
1,196
Group
2009
£000
2,618
590
645
Company
2010
£000
598
522
671
Company
2009
£000
2,618
589
645
2,243
3,853
1,791
3,852
Amounts falling due after more than one year:
£13.5m (2009: £13.5m) 9.5%
debenture stock 2020
£20.7m (2009: £20.7m) 7.25%
debenture stock 2025
Group
2010
£000
13,384
20,397
Group
2009
£000
13,376
20,386
Company
2010
£000
Company
2009
£000
13,384
20,397
13,376
20,386
33,781
33,762
33,781
33,762
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 8.
18 Called Up Share Capital
Allotted and fully paid at 30 September:
52,528,000 (2009: 52,528,000) ordinary shares of 10p each
2010
£000
5,253
2009
£000
5,253
There are 505,490 (2009: 505,490) ordinary shares of 10p each held by the Employee Incentive Trust. See note 19.
Ordinary shares carry one vote each on a poll.
REPORT & ACCOUNTS 2010 59
Notes to the Accounts
19 Own Shares – Group and Company
The total number of options outstanding at the date of this report is 309,080 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 2009
Net movements
As at 30 September 2010
20 Net Asset Value
Number of
Shares
505,490
Own Shares
Reserve
£000
(1,702)
505,490
(1,702)
The consolidated net asset value per share has been calculated based on equity shareholders’ funds of £117,159,000
(2009: £124,181,000) and on 52,022,510 (2009: 52,022,510) ordinary shares, being the shares in issue at the year
end having deducted the number of shares held by the EIT.
21 Analysis of Changes in Net Debt
Group
Cash at bank
Debt due after one year
At 30
September
2009
£000
12,384
(33,762)
Cash
Flows
£000
(6,846)
Non
Cash
Items
£000
(19)
At 30
September
2010
£000
5,538
(33,781)
(21,378)
(6,846)
(19)
(28,243)
Company
Cash at bank
Debt due after one year
At 30
September
2009
£000
12,131
(33,762)
Cash
Flows
£000
(9,074)
Non
Cash
Items
£000
(19)
At 30
September
2010
£000
3,057
(33,781)
(21,631)
(9,074)
(19)
(30,724)
22 Operating Lease Commitments
The Group has a 10 year non-cancellable operating lease (with a break clause in 5 years) in respect of premises,
including a rent free period. The rent free element has been apportioned over the lease up to the date of the break
clause. The Group has an annual commitment at 30 September 2010 under the new lease of £145,000 (2009:
£145,000). 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
2010
£000
145
145
145
35
470
2009
£000
121
145
145
145
35
591
60
MAJEDIE INVESTMENTS PLC
23 Financial Commitments
At 30 September 2010 the Group had no financial commitments which had not been accrued for (2009: none).
24 Share-based Payments
The Group currently operates one share-based payment scheme being the 2006 Long Term Incentive Plan (LTIP)
which in turn has two sections relating to TSR-based Awards and Matching Awards. The previous scheme, the
Discretionary Share Option Scheme 2000, closed during the year . With the introduction of Javelin Capital LLP and
resultant employee transfers from the Company no further awards will be made under the LTIP. Javelin Capital LLP
does not operate any share-based payment schemes.
Discretionary Share Option Scheme 2000
The remaining options under the scheme lapsed during the year and the scheme was closed.
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.
Outstanding at 1 October 2009
During the year:
Awarded
Forfeited
Exercised
Expired
Increase in awards due to dividends paid
Outstanding at 30 September 2010
Exercisable at 30 September 2010
Discretionary
Share Option
Scheme 2000
Weighted
No. Average
of Exercise
Options Price (p)
2010
TSR-based
Awards
Weighted
No. Average
of Exercise
Options Price (p)
0.0
Matching
Awards
Weighted
No. Average
of Exercise
Options Price (p)
0.0
17,071
106,656 330.03 166,427
112,721
0.0
(106,656) 330.03
12,120
291,268
0.0
0.0
741
17,812
0.0
0.0
REPORT & ACCOUNTS 2010 61
Notes to the Accounts
24 Share-based Payments continued
Discretionary
Share Option
Scheme 2000
2009
TSR-based
Awards
Matching
Awards
Outstanding at 1 October 2008
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
255,803 330.09 369,394
Options
0.0 213,085
Weighted
No. Average
of Exercise
Price (p)
0.0
106,207
(149,147) 330.14
(30,925)
(290,498)
12,249
0.0
0.0
0.0
0.0
0.0
(197,272)
1,258
17,071
0.0
0.0
0.0
Outstanding at 30 September 2009
106,656 330.03 166,427
Exercisable at 30 September 2009
The aggregate estimated fair value of the 112,721 TSR-based awards on 8 December 2009, being the date on
which the awards were granted was £154,000 (2009: £51,000 relating to the aggregate estimated fair value of
106,207 options granted on 4 December 2008).
There were no matching awards granted in 2010 or in 2009.
During the year 106,656 share options lapsed in accordance with the leaving agreement for a former director.
The awards outstanding at 30 September 2010 had a weighted average remaining contractual life of 3.4 years and
0.13 years in respect of the TSR-based Awards and Matching Awards respectively (200 9: 0.2 years for the
Discretionary Share Options Scheme 2000 and then 3. 9 years and 2.1 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
2010
TSR-based
Awards
200.0p
0.0p
34.0%
5 yrs
2.5%
5.25%
2009
TSR-based
Awards
162.5p
0.0p
33.0%
5 yrs
3.0%
6.5%
Expected volatility was determined by calculating the historical volatility of the Company’s share price over the last
three years. The expected life used in the model had been adjusted, based on the management’s best estimate, for
the effects of non-transferability, exercise restrictions and behavioural considerations.
For the year ended 30 September 2010, the Company recognised a total share options expense of £64,000 (2009:
£251,000 including a one-off vesting charge of £191,000) relating to share-based payment transactions in the year
ended 30 September 2010.
62
MAJEDIE INVESTMENTS PLC
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 Group’s financial instruments comprise its investment portfolio – see note 1 3, 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 Group’s net assets and which could result in both or either a reduction in the Group’s net assets or a
reduction in the profits available for distribution by way of dividend. The main risk exposures for the Group 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 Group’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 Group 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 Group’s exposure to foreign
currencies through its investments in overseas securities as at 30 September 2010 was £51,717,000
(2009: £37,02 6,000).
The Investment Manager monitors the Group’s exposure to foreign currencies and the Board receives reports on a
regular basis. In making investment decisions the Investment Manager is mindful of the Group’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 Group does not normally hedge against
foreign currency movements.
REPORT & ACCOUNTS 2010 63
Notes to the Accounts
25 Financial Instruments and Risk Profile continued
The currency risk of the Group and 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
Swiss franc
Singapore dollar
Phillipine peso
Japanese yen
Australian dollar
UK sterling
Group
2010
£000
37,173
6,579
3,167
828
578
491
2,476
425
95,928
Group
2009
£000
Company
2010
£000
Company
2009
£000
5,538
12,384
3,057
12,131
18,804
8,940
2,021
1,623
735
4,376
526
112,387
37,173
6,579
3,167
828
578
491
2,476
425
100,274
18,804
8,940
2,021
1,623
735
4,376
526
112,637
Total assets
153,183
161,796
155,048
161,793
147,645
149,412
151,991
149,662
Liabilities
Monetary exposures
UK sterling
Non-monetary exposures
UK sterling
(33,781)
(33,762)
(33,781)
(33,762)
(2,243)
(3,853)
(1,791)
(3,852)
(36,024)
(37,615)
(35,572)
(37,614)
Net assets
117,159
124,181
119,476
124,179
Sensitivity analysis
A 5% increase in sterling at 30 September 2010 against the relevant foreign currencies, with all other variables held
constant, would have had the effect of reducing the Group and Company’s net assets and total return by
£2,586,000 (2009: £1,851,000). A 5% decrease in sterling would have had the equal and opposite effect.
Interest Rate Risk
The Group’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
Group are equity shares, which pay dividends, not interest. The Group 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 Group. The
Group’s fixed rate debentures introduce an element of gearing to the Group 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 Group’s investment portfolio and the respective limits.
64
MAJEDIE INVESTMENTS PLC
25 Financial Instruments and Risk Profile continued
The interest rate risk profile of the Group’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 13
Financial assets not carrying
interest
Group
2010
£000
5,538
558
Group
2009
£000
12,384
569
Company
2010
£000
Company
2009
£000
7,557
558
12,131
569
147,087
148,843
146,933
149,093
Total assets
153,183
161,796
155,048
161,793
Fixed rate financial liabilities
UK sterling
Financial liabilities not carrying
interest UK sterling
(33,781)
(33,762)
(33,781)
(33,762)
(2,243)
(3,853)
(1,791)
(3,852)
Total liabilities
Net assets
(36,024)
(37,615)
(35,572)
(37,614)
117,159
124,181
119,476
124,179
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. The Company balance includes the £4 .5 m investment in
Javelin Capital LLP which receives a commercial rate of interest from 31 August 2010 until full repayment occurs in
accordance with the terms of the LLP Agreement. Fixed rate financial assets comprise convertible bonds or loan
notes. The fixed rate financial liabilities comprise the Group and Company’s debentures totalling £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 13 on page 56. The Group 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 2010 would have increased total assets and total return
by £5,527,000 (2009: £5,563,000). A 5% decrease in listed equity valuations would have had the equal but
opposite effect.
REPORT & ACCOUNTS 2010 65
Notes to the Accounts
25 Financial Instruments and Risk Profile continued
Credit Risk
Credit risk is the risk of other parties failing to discharge an obligation causing the Group financial loss. The Group’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 by the Investment Manager with a number of approved brokers in the
ordinary course of business. All new brokers are reviewed by the Investment Manager 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; and
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 Manager. The Board
receives regular reports on the composition of the investment portfolio.
Credit Risk Exposure
At 30 September 2010, Group cash balances total £5,538,000 (2009: £12,384,000), Group debtors and prepayments
total £1,691,000 (2009: £1,897,000). Company cash balances total £3,057,000 (2009: £12,131,000), Company
debtors and prepayments total £1,676,000 (2009: £1,986,000). Also included within the Company’s investment
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 £558,000 (2009: £569,000). 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 £16,373,000 (Company:
£16,210,000) and the maximum exposure was £7,787,000 (Company: £5,290,000).
Liquidity Risk
Liquidity risk is the risk that the Group 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 Company maintains an appropriate level of cash balances in order to finance its operations and the Investment
Manager 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
Group
2010
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)
Due within
1 year
£000
2,783
2,243
5,026
66
MAJEDIE INVESTMENTS PLC
Due between Due between Due 3 years
and beyond
2 and 3 years
1 and 2 years
£000
£000
£000
13,500
20,700
26,433
2,783
2,783
Total
£000
13,500
20,700
34,782
2,243
2,783
2,783
60,633
71,225
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
3,853
2,783
2,783
2,783
63,416
75,618
Due between Due between Due 3 years
and beyond
2 and 3 years
1 and 2 years
£000
£000
£000
13,500
20,700
26,433
2,783
2,783
Total
£000
13,500
20,700
34,782
1,791
2,783
2,783
60,633
70,773
25 Financial Instruments and Risk Profile continued
Due within
1 year
£000
Due between
1 and 2 years
£000
Undiscounted cash flows
Group
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)
Undiscounted cash flows
Company
2010
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)
Undiscounted cash flows
Company
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)
2,783
3,853
6,636
Due within
1 year
£000
2,783
1,791
4,574
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
Fair value of financial assets and liabilities
The Group’s financial instruments at 30 September comprised the following:
Group
Financial assets
Investment portfolio
Cash
Financial liabilities
£13.5m (2009: £13.5m) 9.5%
debenture stock 2020
£20.7m (2009: £20.7m) 7.25%
debenture stock 2025
Book Value
2010
£000
145,423
5,538
13,384
20,397
Book Value
2009
£000
147,291
12,384
13,376
20,386
Fair Value
2010
£000
145,423
5,538
17,532
23,473
Fair Value
2009
£000
147,291
12,384
16,462
21,870
REPORT & ACCOUNTS 2010 67
Notes to the Accounts
25 Financial Instruments and Risk Profile continued
Company
Financial assets
Investment portfolio
Cash
Financial liabilities
£13.5m (2009: £13.5m) 9.5%
debenture stock 2020
£20.7m (2009: £20.7m) 7.25%
debenture stock 2025
Book Value
2010
£000
145,423
3,057
13,384
20,397
Book Value
2009
£000
147,291
12,131
13,376
20,386
Fair Value
2010
£000
145,423
3,057
17,532
23,473
Fair Value
2009
£000
147,291
12,131
16,462
21,870
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 calculated using Discounted
Cash Flow analysis and by reference to the redemption yields of a similar company’s debt instrument, with an
appropriate margin spread added.
Fair value hierarchy disclosures
The Group has adopted the amendment to IFRS 7, effective 1 January 2009. This requires the Group to classify fair
value measurements using a fair value hierarchy that reflects the significance of the inputs used in making the
measurements. The fair value hierarchy consists of the following three levels:
(cid:129) Level 1 – Quoted prices (unadjusted) in active markets for identical assets or liabilities.
An active market is a market in which transactions for the asset or liability occur with sufficient frequency and volume
on an ongoing basis such that quoted prices reflect prices at which an orderly transaction would take place between
market participants at the measurement date. Quoted prices provided by external pricing services, brokers and vendors
are included in Level 1, if they reflect actual and regularly occurring market transactions on an arms length basis.
(cid:129)
Level 2 – Inputs other than quoted prices included within level 1 that are observable for the asset or liability, either
directly (that is, as prices) or indirectly (that is, derived from prices).
Level 2 inputs include the following:
(cid:129) quoted prices for similar (ie not identical) assets in active markets.
(cid:129) quoted prices for identical or similar assets or liabilities in markets that are not active. Characteristics of an
inactive market include a significant decline in the volume and level of trading activity, the available prices vary
significantly over time or among market participants or the prices are not current.
(cid:129) inputs other than quoted prices that are observable for the asset (for example, interest rates and yield curves
observable at commonly quoted intervals).
(cid:129) inputs that are derived principally from, or corroborated by, observable market data by correlation or other
means (market-corroborated inputs).
(cid:129) Level 3 – Inputs for the asset or liability that are not based on observable market data (unobservable inputs).
The level in the fair value hierarchy within which the fair value measurement is categorised in its entirety is determined
on the basis of the lowest level input that is significant to the fair value measurement in its entirety. For this purpose,
the significance of an input is assessed against the fair value measurement in its entirety. If a fair value measurement
uses observable inputs that require significant adjustment based on unobservable inputs, that measurement is a
level 3 measurement. Assessing the significance of a particular input to the fair value measurement in its entirety
requires judgement, considering factors specific to the asset or liability.
68
MAJEDIE INVESTMENTS PLC
25 Financial Instruments and Risk Profile continued
The determination of what constitutes ‘observable’ requires significant judgement by the Group. The Group
considers observable data to investments actively traded in organised financial markets, fair value is generally
determined by reference to Stock Exchange quoted market bid prices at the close of business on the Balance sheet
date, without adjustment for transaction costs necessary to realise the asset.
The table below sets out fair value measurements of financial assets in accordance with the IFRS fair value
hierarchy system:
Financial Assets at fair value through
profit or loss at 30 September 2010
Group
Equity investments
Convertible bonds
Convertible loan notes
Preference shares
Financial Assets at fair value through
profit or loss at 30 September 2010
Company
Equity investments
Convertible bonds
Convertible loan notes
Preference shares
Total
£000
144,789
260
298
76
145,423
Total
£000
149,46 0
260
298
76
150,09 4
Level 1
£000
110,464
71
110,535
Level 1
£000
110,464
71
110,535
Level 2
£000
Level 2
£000
Level 3
£000
34,325
260
298
5
34,888
Level 3
£000
38,99 6
260
298
5
39,5 59
Investments whose values are based on quoted market prices in active markets, and therefore classified within level 1,
include active listed equities. The Group does not adjust the quoted price for these instruments.
Financial instruments that trade in markets that are not considered to be active but are valued based on quoted
market prices, dealer quotations or alternative pricing sources supported by observable inputs are classified within
level 2. As level 2 investments include positions that are not traded in active markets and/or are subject to transfer
restrictions, valuations may be adjusted to reflect illiquidity and/or non-transferability, which are generally based on
available market information.
Investments classified within level 3 have significant unobservable inputs. Level 3 instruments include private equity and
corporate debt securities. As observable prices are not available for these securities, the Group has used valuation
techniques to derive the fair value. In respect of unquoted instruments, or where the market for a financial instrument
is not active, fair value is established by using recognised valuation methodologies, in accordance with International
Private Equity and Venture Capital (“IPEVC”) Valuation Guidelines. New investments are initially carried at cost, for a
limited period, being the price of the most recent investment in the investee. This is in accordance with IPEVC
Guidelines as the cost of recent investments will generally provide a good indication of fair value. Fair value is the
amount for which an asset could be exchanged between knowledgeable, willing parties in an arm’s length transaction.
REPORT & ACCOUNTS 2010 69
Notes to the Accounts
25 Financial Instruments and Risk Profile continued
The following table presents the movement in level 3 instruments for the period ended 30 September 2010:
Group
Opening balance
Purchases
Transfers from Level 1
Sales – proceeds
Total (losses)/gains for the year included in
the income statement
Company
Opening balance
Purchases
Transfers from Level 1
Sales – proceeds
Total (losses)/gains for the year included in
the income statement
Capital Management Policies and Procedures
The Group’s capital management objectives are:
Total
£000
36,034
785
(94)
Equity
investments
£000
35,465
Convertible
bonds
£000
274
Convertible
loan notes
£000
294
Preference
shares
£000
1
785
(94)
(1,837)
(1,831)
34,888
34,325
(14)
260
4
298
4
5
Total
£000
36,19 5
4,510
785
(94)
Equity
investments
£000
35,62 6
4,510
785
(94)
Convertible
bonds
£000
274
Convertible
loan notes
£000
294
Preference
shares
£000
1
(1,837)
(1,831)
39,5 59
38,99 6
(14)
260
4
298
4
5
(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
2010
£000
(3,057)
33,781
2009
£000
(12,131)
33,762
30,724
21,631
5,253
114,223
5,253
118,926
119,476
25.7%
124,179
17.4%
70
MAJEDIE INVESTMENTS PLC
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 Manager’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 2010, the fair value of the Company’s warrants, both listed
and unlisted was £nil (2009: £nil).
Changes in the fair value of warrants amounting to £nil (2009: £18,000) have been debited to the Statement of
Comprehensive Income in the year ended 30 September 2010.
27 Related Party Transactions
Javelin Capital
Javelin Capital LLP is a subsidiary of the Company and is consolidated into the Group accounts. On 31 August
2010 various agreements were signed in relation to the introduction of Javelin Capital LLP. Additionally and not on
the same date certain other agreements were signed to give effect to the operational structure of the Javelin Capital
group. The table below provides a summary of each respective agreement:
Agreement
LLP Agreement
Management Agreement
Administration Services
Agreement
Contribution and transfer
Agreement
Signatories/Parties
Majedie Investment PLC;
Majedie Unit Trust;
Javelin Capital UK Limited;
Javelin Capital EBT;
Mr GP Aherne;
Mr V Pina;
Mr CJ Edge;
Mr RJ Mace;
Mr SP Asprey;
Mr NR Rundle
Majedie Investments PLC;
Javelin Capital LLP
Majedie Investments PLC;
Javelin Capital LLP
Majedie Investments PLC;
Javelin Capital LLP
Nature of Agreement
As described in the
directors’ report
As described in the
directors’ report
As described in the
directors’ report
As described in the
directors’ report
REPORT & ACCOUNTS 2010 71
Notes to the Accounts
27 Related Party Transactions continued
Agreement
Intra Group Asset Lease
Agreement
International Prime Brokerage
Agreement
Signatories/Parties
Majedie Investments PLC;
Javelin Capital Services Limited
Javelin Capital Strategies plc;
Morgan Stanley & Co International plc;
BNP Paribas Securities Services,
Dublin Branch
Prime Brokerage Agreement
Javelin Capital Strategies plc;
Goldman Sachs International;
Javelin Capital LLP;
BNP Paribas Securities Services,
Dublin Branch
Administration Agreement
Management Agreement
Investment Management and
Distribution Agreement
Javelin Capital Strategies plc;
Javelin Capital Fund Management Limited;
BNP Paribas Fund Services Dublin Limited
Javelin Capital Strategies plc;
Javelin Capital Fund Management Limited
Javelin Capital LLP;
Javelin Capital Fund Management Limited
Nature of Agreement
As described in the
directors’ report
Appointment of Prime
Broker to Javelin Capital
Strategies plc “the fund
company” (which is the
Irish listed fund vehicle for
the current fund managed
by Javelin Capital LLP)
Appointment of Prime
Broker to Javelin Capital
Strategies plc “the fund
company” (which is the
Irish listed fund vehicle for
the current fund managed
by Javelin Capital LLP)
Appointment of
administrator to the
fund company
Appointment of manager
to the fund company
Appointment of
investment manager
and distributor to the
fund company
Javelin Capital Strategies plc is an Irish Stock Exchange listed Qualifying Investment Fund “the fund company”. It
currently has one sub-fund called the Javelin Capital Global Equity Strategies Fund whose investment manager is
Javelin Capital LLP. Javelin Capital Fund Management Limited (JCFM), a wholly owned subsidiary of Javelin Capital
LLP, acts as manager for the fund company.
For the year ended 30 September 2010 management and performance fees due to the manager amounted to
£7,000 of which all was outstanding at year end (2009: £nil).
On 23 September 2010 the Company made an investment of £20m into the Javelin Capital Global Equity Strategies
Fund for an initial period of two years, subject to performance. This investment is subject to management and
performance fees which totalled £7,000 and nil respectively for the period to 30 September 2010. At that time the
full balance was outstanding (2009: £nil).
Before Javelin Capital LLP was operational the Company paid certain expenses or assets on its behalf. These were
charged to JCS and amounted to £1,889,000 and as at year end £283,000 was outstanding (2009: £nil).
As investment manager and general administrator for the Company, Javelin Capital LLP receives fees in accordance
with the relevant agreements. As these only came into effect from 1 September when the agreements took effect,
the total income accrued by Javelin Capital was £58,000 and £25,000 respectively, all of which was outstanding at
year end (2009: £nil).
The Company receives interest at a commercial rate on its investment in Javelin Capital LLP. Under the terms of the
LLP Agreement this starts from 31 August 2010 and continues until it is fully repaid. During the period this was
accrued as £25,000 all of which was outstanding at the year end (2009: £nil).
72
MAJEDIE INVESTMENTS PLC
27 Related Party Transactions continued
Mr Aherne is a partner in Javelin Capital LLP and a director of Javelin Capital Strategies plc and Javelin Capital
Investments plc, which are both Irish listed fund companies (although Javelin Capital Investments plc is not yet
trading) for funds that are or would be managed by Javelin Capital LLP. His only source of remuneration from the
Group, as from 31 August 2010 is as a partner of Javelin Capital LLP, details of which are provided in the Report on
Directors’ Remuneration .
Mr Aherne has also made an investment of £50,000 in the Javelin Capital Global Equity Strategies Fund on terms
available to staff, which are no more favourable than those received by the Company.
In addition to the LLP Agreement detailed above there are two side letters that relate to Javelin Capital LLP between
the Company and the individual partners. The first relates to the potential ability to make changes to the relevant
control rights under the LLP Agreement if the business is successful. The second is in respect of circumstances in
which individual partner capital and current account balances are repaid.
The Company has paid certain start-up costs on behalf of the individual partners and as such the LLP Agreement
provides for an additional profit share element of £385,000 to be awarded to the Company to recoup such costs in full.
The Company incurs certain costs on behalf of Majedie Portfolio Management Limited (MPM) for operating the
Majedie Investments PLC Share Plan. These costs, net of any income in MPM, are recharged to MPM and for the
year ended 30 September 2010 these totalled £35,000 (2009: £35,000) and as at year end a balance of £92,000
was outstanding at year end (2009: £91,000).
Transactions between group companies during the year were made on terms equivalent to those that occur in arm’s
length transactions.
Majedie Asset Management (MAM)
MAM is accounted for as an investment in both the Company and Group accounts and is valued at fair value
through profit or loss. During the year the Company received dividends from MAM of £6,181,000 of which none was
outstanding at year end (2009: £1,906,000 and £nil).
On 4 February 2010 the Company redeemed in full its B share investment in the Majedie Asset Management
Tortoise Fund for proceeds totalling £1,646,000 and a gain over cost of £375,000. During the year no distributions
were received and fees of £2,800 were incurred (2009: £23,000 and £81,000 respectively). There were no balances
outstanding at year end (2009: £nil). The Company has no other investments in any MAM funds.
Remuneration
The remuneration of the directors, who are the key management personnel of the Company, is set out below in
aggregate for each of the categories specified in IAS24: 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 28 to 30.
Short term employee benefits
Share-based payments
2010
£000
332
2009
£000
282
332
282
REPORT & ACCOUNTS 2010 73
Ten Year Record
to 30 September 2010
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
%
%
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
0.96
1.56
1.67
1.36
1.19
1.28
1.24
1.61
2.06
150,940 117,159
225.2*
191.5
15.00
11.83
13.00*** 18.26
28.83
2.36#
Year
End
2001
2002
2003
2004
2005
2006**
2007**
2008
2009
2010
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 20 on page 60.
** 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.
# Excludes non-operating setup costs expensed in relation to Javelin Capital LLP.
74
MAJEDIE INVESTMENTS PLC
Notice of Meeting
Notice is hereby given that the one hundredth Annual General Meeting of Majedie Investments PLC will be held at
Pewterers ’ Hall, Oat Lane, London EC 2V 7DE on Wednesday, 1 9 January 2011 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 2010.
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 2010.
4. To re-elect H V Reid as a director.
5. To re-elect J W M Barlow as a director.
6. To re-elect G P Aherne as a director.
7. 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 resolution which will be proposed as a special resolution:
8. 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 2012 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.
By order of the Board
Capita Sinclair Henderson Limited
Company Secretary
24 November 2010
REPORT & ACCOUNTS 2010 75
Notice of Meeting
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
17 January 201 1 (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.
Shareholders may cast a vote electronically rather than completing a hard copy proxy form. To do so, go to
Computershare’s URL: www.eproxyappointment.com where the following details, which can be found on your proxy
card or in an email received from Computershare, will be required:
(cid:129)
the meeting control number;
(cid:129) your shareholder reference number; and
(cid:129) your unique pin code.
For the electronic proxy to be valid it must be received by Computershare no later than 11.30am on 17 January
2011.
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.
76
MAJEDIE INVESTMENTS PLC
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 17 January 201 1 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 17 January 201 1 (“the specified time”) shall be
disregarded in determining the rights of any person to attend or vote at the meeting. If the meeting is adjourned to a
time not more than 48 hours after the specified time applicable to the original meeting, that time will also apply for
the purpose of determining the entitlement of members to attend and vote (and for the purpose of determining the
number of votes they may cast) at the adjourned Meeting. If, however, the Meeting is adjourned for a longer period
then, to be so entitled, members must be entered on the Company’s register of members at the time which is 48
hours before the time fixed for the adjourned Meeting or, if the Company gives notice of the adjourned Meeting, at the
time specified in that notice.
Note 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.
REPORT & ACCOUNTS 2010 77
Notice of Meeting
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.
Not e 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.
78
MAJEDIE INVESTMENTS PLC
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 terms and conditions of appointment of Directors 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 . None of the
Directors has a contract of service with the Company.
Note 15
You may not use any electronic address provided either in this Notice of Meeting or any related documents
(including the form of proxy) to communicate with the Company for any purposes other than these expressly stated.
REPORT & ACCOUNTS 2010 79
Majedie Savings Plans
Majedie Share Plan
The Majedie Share Plan is a straightforward and low cost way to invest or save in the shares of Majedie Investments PLC.
Charges are kept low and the Plan is very flexible.
Lump sum investments are dealt with on a weekly or daily basis whereas the monthly savings facility is an affordable and effective
way of building a substantial shareholding over the longer term. The minimum lump sum investment is £250, while the minimum
monthly amount is £25. There are no maximum limits.
There are no dealing charges and there is no annual management fee. Your lump sum or monthly payments will be used to buy as
many shares as possible after deducting Government Stamp Duty, currently at the rate of 0.5%. On the sale of shares a fixed
charge of £15 + VAT is levied.
Dividends may either be paid in cash or reinvested in the Plan. Existing Majedie shareholdings may be transferred into the Plan.
You may close your plan by selling all your shares at any time.
For more information, a Majedie Share Plan booklet and/or an application form please contact the Majedie Share Plan Manager,
Majedie Portfolio Management Limited*, 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 £ 10,200 for the
20 10/1 1 tax year. Investments can be split between a cash ISA (up to a limit of £ 5, 100) and a stocks and shares ISA (up to a limit
of £ 10,200).
The Majedie Corporate ISA is provided in conjunction with Halifax Share Dealing (HSDL) who act as an HM Revenue & Customs
Approved PEP and ISA Manager. For more information, an ISA booklet and/or an application form please contact the Majedie
Corporate ISA Manager, Halifax Share Dealing Limited, Trinity Road, Halifax HX1 2RG (telephone: 0870 600 9966).
Majedie General PEP
Although you are no longer able to put new money into a PEP, your existing PEP investments remain sheltered from tax and
can continue to grow. You may transfer an existing PEP from another manager to the Majedie General PEP.
Further details may be obtained from the Company’s PEP Manager, The Share Centre, PO BOX 2000, Aylesbury,
Buckinghamshire HP21 8ZB (telephone: 0800 800 008).
80
MAJEDIE INVESTMENTS PLC
Shareholder Information
Registered Office
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
Investment Manager
Javelin Capital LLP
Tower 42
25 Old Broad Street
London EC2N 1HQ
Telephone: 020 7382 8170
Fax: 020 7374 4854
Email: info@javelincapital.com
Registrars
Computershare Investor Services PLC
The Pavilions
Bridgwater Road
Bristol BS99 6ZZ
Telephone: 0870 707 1159
Auditors
Ernst & Young LLP
1 More London Place
London SE1 2AF
Stockbrokers
Cenkos Securities plc
6.7.8 Tokenhouse Yard
London EC2R 7AS
Key Dates in 2011
Ex-dividend date
Record date
Annual General Meeting
2009/10 final dividend paid
Interim results announcement
2010/11 interim dividend paid
Financial year end
Final results announcement
Annual report mailed to
shareholders
Website
www.majedie.co.uk
5 January 2011
7 January 2011
1 9 January 2011
26 January 2011
May
29 June 2011
30 September
November
December
Share Price
The share price is quoted daily in The Times, Financial
Times, The Daily Telegraph, The Independent and
London Evening Standard. Shares may be bought
through the Majedie Share Plan or Majedie Corporate
ISA (details of which are set out on page 80). You may
transfer an existing PEP to the Majedie General PEP
(page 80). You may also purchase shares through an
on-line dealing facility or via your stockbroker or bank.
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.
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.
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.
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 2010 81
Notes
82
MAJEDIE INVESTMENTS PLC
Notes
REPORT & ACCOUNTS 2010 83
Notes
84
MAJEDIE INVESTMENTS PLC
WARNING TO SHAREHOLDERS - BOILER ROOM SCAMS
In recent years, 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:
(cid:129)
(cid:129)
(cid:129)
(cid:129)
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
and contacting the firm using the details on the register
Report the matter to the FSA either by calling
If the calls persist, hang up.
0845 606 1234 or visiting www.moneymadeclear.fsa.gov.uk
www.fsa.gov.uk/register/
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 CFEB website www.moneymadeclear.fsa.gov.uk
May 2010
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