201 1
Majedie Investments PLC
Annual Report
30 September 201 1
Majedie Investments PLC is an investment trust with total
portfolio assets of over £156 million as at 30 September 2011.
The Company’s investment objective is to maximise total
shareholder return whilst increasing dividends by more
than the rate of inflation over the long term.
Contents
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loose
Investment Objective
Investment Policy
Highlights for 2011
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 Statement
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
Cautionary statement regarding forward-looking statements
This Annual Report has been prepared for the members of Majedie
Investments PLC (“the Company”) and no one else. The Company, its
Directors or agents do not accept or assume responsibility to any other
person in connection with this document and any such responsibility
or liability is expressly disclaimed.
This Annual Report contains certain forward-looking statements with
respect to the principal risks and uncertainties facing the Company. By
their nature, these statements and forecasts involve risk and uncertainty
because they relate to events and depend on circumstances that may
or may not occur in the future. There are a number of factors that
could cause actual results or developments to differ materially from
those expressed or implied by these forward-looking statements and
forecasts. The forward looking statements reflect the knowledge and
information available at the date of preparation of this Annual Report
and will not be updated during the year. Nothing in this Annual Report
should be construed as a profit forecast.
Investment Objective
The Company’s investment objective is to maximise total shareholder return whilst increasing dividends by more
than the rate of inflation over the long term.
Investment Policy
General
The Company invests principally in securities of publicly quoted companies worldwide and in funds managed by
Javelin Capital LLP, though it may invest in unquoted securities up to levels set periodically by the Board, including
its investment in Majedie Asset Management Limited. Investments in unquoted securities, other than those managed
by Javelin Capital LLP, (measured by reference to the Company’s cost of investment) will not exceed 10 per cent. of
the Company’s gross assets.
Risk diversification
Whilst the Company will at all times invest and manage its assets in a manner that is consistent with spreading
investment risk, there will be no rigid industry, sector, region or country restrictions.
The overall approach is based on an analysis of global economies sector trends with a focus on companies and
sectors judged likely to deliver strong growth over the long term. The number of investments held, together with the
geographic and sector diversity of the portfolio, enable the Company to spread its risks with regard to liquidity,
market volatility, currency movements and revenue streams.
The Company will not invest in any holding that would, at the time of investment, represent more than 15 per cent.
of the value of its gross assets.
The Company may utilise derivative instruments including index-linked notes, contracts for difference, covered
options and other equity-related derivative instruments for efficient portfolio management and investment purposes.
Any use of derivatives for investment purposes will be made on the basis of the same principles of risk spreading
and diversification that apply to the Company’s direct investments, as described above.
Asset allocation
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 Limited and Javelin Capital LLP.
Benchmark
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 per cent FTSE All-Share Index and 30 per
cent FTSE World ex-UK Index (Sterling) on a total return basis. Any investments made into Javelin Capital LLP
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 from time to time,
which remain subject to the investment restrictions set out in this section.
Gearing
The Company uses gearing currently via long term debentures. The Board has the ability to borrow up to 100 per
cent 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 per cent , and any additional indebtedness is not to exceed 20 per cent , of adjusted
capital and reserves.
REPORT & ACCOUNTS 2011
1
Highlights for 2011
Total shareholder return:
Net asset value total return:
Final dividend (per share):
Total dividends (per share):
Directors’ valuation of investment
in Majedie Asset Management Limited:
Investment in Javelin Capital LLP of:
–23.2%
–0.4%
6.3p
10.5p
£ 39m
£ 7m
2
MAJEDIE INVESTMENTS PLC
Group Summary
Total assets*
Shareholders’ funds
Market capitalisation
£ 14 5. 7m
£ 11 1. 6m
£ 73.3m
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
* Represents total assets less current liabilities as at 30 September 2011.
Up to £ 10,680 for 2011/12 tax year.
Recent Trends
491
297
239
225
214
4.50
2.25
2.50
10.50
10.50
10.50
10.50
10.00
413
250
190
192
139
07
08
09
10
11
07
08
09
10
11
07
08
09
10
11
Net asset value per share
(pence) decreased by 4.8%
in the year.
Core dividends (pence) have
remained at 10.50 pence.
Share price (pence) has
decreased by 27.2% during
the year.
REPORT & ACCOUNTS 2011
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
2011
2010
%
£145.7m
£111.6m
214.5p
139.5p
35.0%
29.8%
£2.6m
4.6p
10.5p
10.5p
£4.8m
1.7%
1.3%
30.3%
£150.9m
£117.2m
225.2p
191.5p
15.0%
9.4%
£6.3m
11.8p
10.5p
13.0p
£5.1m
2.4%
1.8%
28.8%
(3.4)
(4. 8)
(4. 8)
(27.2)
(58.7)
(61.0)
(5.9)
* 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)
Discount (debt at fair value)
high
low
high
low
high
low
high
low
2011
203.5p
133.8p
214.8p
196.3p
32.3%
13.1%
26.3%
8.8%
2010
214.7p
167.5p
256.6p
210.4p
24.7%
15.0%
20.6%
9.9%
4
MAJEDIE INVESTMENTS PLC
Chairman’s Statement
The Chairman’s Statement forms part of the Director’s Report
In what has been a turbulent and volatile year in world equity markets the Company’s Net
Asset Value (NAV) has fared relatively well which reflects the restructuring of the investment
portfolio undertaken last year and in particular a much reduced volatility.
During the year to 30 September 2011 the NAV and
share price, both on a total return basis, returned
–0.4% and –23.2% respectively. I highlight various
aspects of performance for the year below which is
further detailed and explained in the Investment
Manager’s report on pages 8 to 11.
Results and Dividends
The Group results for the year ended 30 September
2011 include the consolidation of the investment made
in the Javelin Capital Global Equity Strategies Fund
(QIF) in accordance with IFRS. This requirement, due
to the Company’s controlling interest in the QIF, results
in various large presentational and disclosure impacts,
including the recognition of a non-controlling interest,
but has had no material effect on the results for the year.
The Group’s net revenue return before tax for the year to
30 September 2011 was £2. 6m compared to £6. 3m for
the prior year period. Group income for the period was
£5. 5m which is £4. 6m lower than the prior year period
primarily reflecting the fall in total revenue from Majedie
Asset Management Limited (MAM). Total revenue from
MAM was £1.9m compared to £6.2m in the prior year
period which included a special dividend of £5.4m.
Underlying dividend income for the period from MAM,
in accordance with the new shareholder’s agreement,
increased from £0.8m to £1.9m. Group income for the
period was enhanced by improved dividend receipts
from investee companies which offset the anticipated
lower level of income from our £20m investment into
the absolute return QIF . Finally essentially all income
from Javelin Capital for the year is in fact derived from
within the Group and is eliminated on consolidation.
Total group costs were £4.8m for the period compared
to £5.1m in the prior year period. This decrease
reflects the one off nature of some setup costs written
off last year and the inclusion of Javelin Capital LLP
and QIF operating costs over the year. Additionally core
Company costs continued to reduce to just under £2m
for the year as compared to £2.2m for the prior period.
Cost control remains a key focus of the Board.
The Board has decided that the final dividend is to be
maintained at 6.3 pence per share which is consistent
with previous years. The final dividend will be paid on
25 January 2012 to shareholders on the register on
6 January 2012.
The investment in MAM is held at fair value in both the
Company and Group accounts and its valuation is
reviewed by the Board regularly. The Board ha s
determined that the carrying value of our holding will be
increased from £30m to £39m as at 30 September 2011
as I explain in the investment portfolio section below.
In contrast the investment in Javelin Capital is
consolidated in the Group accounts at net asset value
as required under IFRS but is held in the Company
accounts as an investment at cost in accordance with
our policy for subsidiaries. The Board has reviewed the
valuation of Javelin Capital following the restructuring
and recapitalisation that was completed during the
year and has determined that as at 30 September
2011 the valuation of Javelin Capital will be kept at
cost, being £7m, in the Company accounts.
Investment Portfolio
The Investment Manager’s report on pages 8 to 11
provides the detailed commentary on the Company’s
investment activity and performance.
However, I would like to provide an overview of the key
issues affecting the outturn for the year.
Firstly , the Core Portfolio, which has performed slightly
below its benchmark. The primary cause of this
underperformance has related to stock selection in
the Asia Pacific portfolio as discussed in the
Investment Manager’s report.
REPORT & ACCOUNTS 2011
5
Chairman’s Statement
Secondly, I would highlight the performance of MAM
which has had another successful year, not only
producing strong relative performance for its clients but
also commencing the development of a global product
to augment the existing UK products. The global team
have got off to a good start and we wish them and the
whole MAM team every success in the year ahead. As
a result of the progress at MAM, the Board of MI has
increased the valuation of the investment from £30m to
£39m on a basis consistent with prior years.
Thirdly, I would like to turn to funds managed by
Javelin Capital LLP. This comprises, to date, the QIF ,
which aims to produce an absolute return irrespective
of underlying stock market performance from a highly
liquid and diverse portfolio. In the first 12 months the
QIF produced a small positive return. This was
commendable given the conservative constraints
placed on the fund, by the manager, during the start
up phase and its relative showing in comparison to the
peer group. Overall the fund was in the top decile of all
hedge funds for the period. Moreover the Board feels
that the decision to invest part of the Company’s
investment portfolio in an absolute return product has
been confirmed by providing a more diverse risk and
return profile for its assets, particularly so during a
period of weak global stock markets as was the case
in the quarter to 30 September 2011. Suffice to say
that in this quarter a “benchmark return”, as in the
Core Portfolio, would have produced a diminution in
value of some 13.5% as compared to the positive QIF
return of 5% resulting in a benefit to the Company of
over £3m.
Javelin Capital
I would like to comment on developments at Javelin
Capital in addition to the performance of its flagship
fund, mentioned above. Following the General Meeting
and successful shareholder vote to invest further
capital into Javelin in order to secure its long term
funding until profitability is reached, considerable
progress has been made. The cost base of Javelin has
been reduced substantially, by approximately 37% on
an annual run rate basis. This has been achieved whilst
retaining all the key partners and staff. Overall this cost
saving has reduced the breakeven level in terms of
assets under management from over £300m to
approximately £100m. The task of raising external
funds remains paramount but the performance of the
flagship fund over the first 12 months will, hopefully,
make this task more realistic in what remains a very
difficult environment for all asset management ventures.
I would like to take this opportunity to thank all the
Javelin employees for their contribution both to
performance and the reorganisation process.
Board Composition
There have been a number of changes on the Board
during the year. Firstly in conjunction with the
restructuring of Javelin Capital LLP, Mr Gerry Aherne
resigned from the Board and retired as a partner of
Javelin Capital on 21 April 2011. Secondly and also in
conjunction with changes at Javelin Capital LLP,
Mr William Barlow became Chief Operating Officer of
Javelin Capital LLP on 27 June 2011 and became an
executive director of the Company from that date.
Thirdly, Mr Chris Arnheim resigned from the Board on
21 September 2011. Finally following a thorough
search, Mr David Henderson was appointed to the
Board on 22 September 2011. I am delighted to
welcome David to the Board, where I believe the range
and breadth of his skills will prove very beneficial.
6
MAJEDIE INVESTMENTS PLC
Annual General Meeting
The AGM will be held on 18 January 2012 at 12:30pm
at the Pewterers’ Hall, Oat Lane, London EC2V 7DE.
Details are set out on page 85. As in prior years there
will be presentations and an opportunity to ask
questions. I do hope you will be able to attend.
Outlook
The uncertainty surrounding the euro area which has
received much publicity, does not appear closer to a
positive resolution. This is destabilising capital markets
and arguably producing a negative effect in terms of
economic growth not only in the euro region but
elsewhere. Combined with other uncertainties such as
the lack of political stability in the Middle East, it is difficult
to generate much enthusiasm for the short term
performance of capital markets. Fortunately the
corporate sector is in reasonable financial shape and
not expensively rated. However this alone is insufficient
reason to generate much optimism in the short to
medium term. Until the outlook improves we will continue
with our conservative asset allocation strategies.
Andrew J Adcock Chairman
24 November 2011
REPORT & ACCOUNTS 2011
7
Investment Manager’s Report
The Company’s assets are managed in four separate
major groups which the Board continues to believe
provide the correct balance in order to achieve the
Investment Objective of maximising shareholder return
whilst looking to increase dividends by more than the
rate of inflation over the long term.
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 page s 12 to
15 are based on the aggregate total value of the total
assets of the Group.
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 portfolio is
benchmarked to perform against an index of 70% in
UK listed companies and 30% overseas. During the
early summer of 2011, a decision was taken to raise
cash levels substantially in anticipation of future
problems within the Eurozone. In the circumstances,
this proved to be a timely decision as events unfolded.
Companies such as Alstom and ArcelorMittal were
disposed of in their entirety, both companies which
were thought to be particularly susceptible to faltering
global growth. In the United States both Hewlett-
Packard and BMC Software were sold before sharp
price falls and in the Far East both Acer, the computer
manufacturer and China Railway were sold particularly
advantageously. Nevertheless, as a result of some poor
trading news from both Toyota and Nintendo in
particular the portfolio underperformed its benchmark
by some margin in Japan and the Far East. This had a
decidedly negative impact on overall portfolio
performance. As a result, a new investment approach
for this area of the market is to be implemented which
will hopefully neutralise this negative influence on the
overall portfolio.
During the last quarter of 2010 and the spring and
early summer of 2011 markets tended to gain ground
as hopes grew of a solidly built rebound in global
growth after the traumas of 2008 and 2009. However,
the investment mood began to change in July as data
indicated a slowing in the economic recovery and
increased debt stress in peripheral parts of the
Eurozone, most notably in Greece. Markets fell sharply
in the early part of August and for the next two months
became range-bound as fears continued to grow
concerning the viability of the euro. Politicians in
Europe staged a number of summit meetings to try
and relieve the upward pressure on sovereign debt
yields in Greece, Portugal, Spain and Italy and although
the ECB began to buy bonds in the latter two countries
relatively aggressively, markets remained unconvinced
that sufficient funding was being made available to
cope with the overall problem.
Elsewhere in the world, unemployment in the USA
stayed at historically high levels and fears about a
stuttering in the economic recovery emerged over the
summer; China, too, saw growth subside a little as
efforts were made to cope with rising levels of inflation
in the domestic economy. Emerging markets were not
immune from these factors and failed to decouple from
the developed world, falling sharply in the late summer
as investors repatriated funds from these hitherto
popular markets. Absence of liquidity became a key
factor in markets as banks became increasingly
unwilling to lend to each other, fearing potential
defaults from their counterparties. The plight of Dexia,
the Belgium based banking group which had to be
rescued by its government, was a particularly graphic
demonstration of the problems faced by the sector as
liquidity dried up.
During the year, the Core Portfolio Total Return was
–4.9%, an underperformance of its investment
benchmark of 0.7% . The Core Portfolio lost ground
relatively against the market as risk appetite returned
for investors but outperformed in the last two quarters
as sentiment became increasingly risk averse. This
change in investor sentiment towards more defensive,
income producing stocks favoured the investment style
of the portfolio, but even these stocks were not
immune to the downward pressure on equity markets
during the third quarter of 2011. In fact, markets
globally and the stocks within them have tended
recently to show a greater propensity to rise and fall in
tandem as investors’ appetite for risk changes. Over
time, this will provide stock pickers with greater
opportunities to trade stocks caught up in the current
general market volatility.
8
MAJEDIE INVESTMENTS PLC
The portfolio remains orientated towards sound income
generating stocks which should be well placed to
participate in an equity market rally when investors
become somewhat more risk seeking. During the year,
new positions were taken in stocks such as Centrica,
IG Group and Jardine Lloyd Thompson in the UK,
DuPont and Carnival in the USA, Siemens and Telenor
in Europe and Axiata, one of the largest Asian
telecommunications companies in the Far East, all
companies with resilient business models and judged
capable of withstanding the high levels of volatility
currently being seen in the world economy.
The portfolio remains underexposed to financial stocks
and to domestic consumers who it is felt will continue
to struggle for some considerable time. Major oil
stocks such as Royal Dutch Shell, pharmaceutical
companies such as GlaxoSmithKline and Roche and
utility companies such as Scottish and Southern
Energy, all held in the Core Portfolio, have proved
notably resistant during recent market falls. Mining
companies, star performers during the early part of
2011 were very hard hit by the switch in investor risk
appetite in the late summer; the fund had, however,
been realising profits in this area and is currently
underweight in the sector.
At current levels, equity markets appear to be modestly
rated and pricing in a dip in economic activity for the
coming year but history has shown before that a
recovery from a financial and credit crisis can take
substantially longer to resolve than a periodic trade
recession. In particular, there seems to be no great
imperative actively to redeploy the cash raised in the
early summer back into the market until there is a clear
and credible path forward to resolving the problems of
Greece, Spain and Italy. A substantial proportion of this
cash is likely to be used to seed the new Javelin
UCITS fund.
Finally, we continue to manage a small non-core
realisation portfolio, consisting of small-cap and early
stage investments that were initiated between 2005
and 2008. The objective is to maximise the return
available by exiting from these stocks wherever
possible, although by their very nature all of them tend
to be illiquid and hard to sell. However, a number of
realisations were made during the year and at
30 September 2011 the value of the non-core
realisation portfolio was £3.5m, representing less than
2.5% of the Company’s Total Assets. Further
realisations are expected over time but at the moment
markets are very unreceptive to the flotation of new
issues and investors have become increasingly wary
following the disappointing performance of high profile
issues such as Glencore last June.
Javelin Capital Global Equity Strategies Fund
In late September 2010 an investment was made as
seed capital into the first flagship product to be
launched by Javelin Capital LLP. The fund has been
managed by an investment team of experienced
portfolio managers and has utilised a range of long-
short equity strategies. Using proprietary models, the
team has analysed and implemented the strategies
most appropriate for different regions and sectors. The
strategies are uncorrelated to each other and hence the
combination within the fund has resulted in lower
volatility and reduced risk. By seeding this fund, the
Company has benefitted from adopting a risk averse
strategy in the form of an allocation of resources to an
absolute return strategy that has returned 1.65% during
the year in sterling terms. This strategy was particularly
important during the third quarter of 2011 when the All -
Share Index fell by 13.5% whilst the Global Equity
Strategies fund rose in sterling terms by 5%.
As at 30 September 2011, the value of this holding
was £20.1m representing 13.8% of the Company’s
Total Assets.
Majedie Asset Management (MAM)
MAM was launched in 2002 using finance provided by
the Company, which retains a 29.9% interest. The
business has grown to approximately £5.6bn in assets
under management, predominantly long-only equity
mandates for institutional clients.
Its market leading investment performance has been
recognised by the industry through the Financial News
award of UK Asset Management Firm of the Year in
October 2011. It remains well financed and highly
profitable and during the year, £1.9m was received in
dividend income from MAM.
Taking account of, inter alia, MAM’s current and
forecasted financial performance the Board has
decided to increase its valuation of the Company’s
holding from £30m to £39m, representing 26.8% of
the Company’s Total Assets.
REPORT & ACCOUNTS 2011
9
Investment Manager’s Report
Javelin Capital LLP
The Company launched Javelin Capital LLP on 1 September 2010. An initial £4.5m was invested by the Company
to finance the start-up, initial operating costs and regulatory capital. However, in the difficult market environment of
2011, it became apparent that it would take appreciably longer to gain traction within third party and outsourced
funds for its initial investment product and thus further investment would be necessary to grow the investment
proposition. A restructuring of the business was completed and further funding was secured of up to £3.5m, of
which £2.5m was provided in June 2011.
Javelin Capital is now focus ed on gaining assets under management in accordance with its revised business plan.
The Company holds an equity participation of 75% whilst the remaining 25% is held by partners. Further details of
this new agreement are provided in the Business Review section on page s 22 to 24.
The performance of the Javelin Capital Global Equity Strategies Fund has been encouraging over its first year and
considerable efforts will now be put in place to market its achievement against similar funds over what has been a
very volatile year.
A further fund launch of a UCITS long-short product in Emerging Markets is anticipated in the near future.
As at 30 September 2011, the net assets in Javelin Capital LLP have been included in the Consolidated Report &
Accounts at £1.9m, representing 1.3% of the Company’s Total Assets. This represents the original investment less
start-up costs and losses incurred to date and is accordance with consolidation accounting rules.
In the Company accounts the value of the investment in Javelin Capital LLP has been valued at cost, being £7m.
Development of Net Asset Value
The chart below demonstrates the Net Asset Value of the Company during the year to 30 September 2011. In
aggregate, the NAV has decreased by £ 5.6m, having incurred administration and finance costs of £ 6.8m, which
include Javelin Capital LLP, and having paid out £5. 5m in dividends.
The core portfolio lost £3.5m after allowance for receipt of dividends, whilst MAM provided a contribution of £1 0.9m,
being dividends of £ 1.9m and an increase in the valuation of our investment by £9m. The JCGESF contributed £0.3m.
+£10.9m (£1.0m) +£0.3m (£4.0m)
£117.2m
(£3.5m)
(£2.8m)
(£5.5m)
£111.6m
NAV
30.09.10
Core
Portfolio
MAM
Non-Core
Realisation
Portfolio
JCGESF
Admin
Costs
Finance
Costs
Dividends
Paid
NAV
30.09.11
10
MAJEDIE INVESTMENTS PLC
Outlook
The outlook for capital markets is very unclear and the
debt problems within the Eurozone seem likely to be
dragged out into 2012 despite the recent changes in
government in both Greece and Italy. Growth remains
particularly subdued throughout the West and levels of
unemployment, particularly amongst the young and
unskilled are high and show little sign of falling in the short
term. On the other hand, the corporate sector in the
developed world is far better capitalised than was the
case in 2008 and there has been some evidence,
particularly in the United States of a small pick-up in
merger and acquisition activity. Equity markets are unlikely
to make substantial progress until a clear path forward
for the Eurozone can be envisaged so we continue to
maintain a cautious and defensive overall stance.
Nick Rundle Investment Director
Javelin Capital LLP
2 4 November 2011
REPORT & ACCOUNTS 2011 11
Asset Distribution
at 30 September 2011
Classification of Assets
Oil & Gas Producers
Oil Equipment & Services
Oil & Gas
Chemicals
Forestry & Paper
Industrial Metals
Mining
Basic Materials
Aerospace & Defence
Construction & Materials
Electronic & Electrical Equipment
General Industrials
Industrial Engineering
Industrial Metals & Mining
Industrial Transportation
Support Services
Industrials
Automobiles & Parts
Beverages
Food Producers
Household Goods
Leisure Goods
Personal 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
Equity Investment Instruments
General Financial
Life Insurance/Assurance
Non-equity Investment Instruments
Non Life Insurance/Assurance
Real Estate Investment Trusts
Financials
Software & Computer Services
Technology & Hardware Equipment
Technology
Unlisted/Fixed Interest
Total Equities
Total Funds
Cash And Cash Equivalents
% Total at 30 September 2011
Continental
Europe
%
0.2
Pacific
Basin
%
Rest of the
world
%
0.2
0.2
0.2
0.2
0.1
0.5
0.1
0.1
0.8
0.1
0.1
0.2
1.1
1.1
0.3
0.3
0.4
0.5
0.9
North
America
%
0.5
0.4
0.9
0.6
0.6
0.5
0.4
0.9
0.4
0.5
0.9
0.5
0.5
0.5
1.0
1.5
0.5
0.5
1.0
United
Kingdom
%
6.5
6.5
3.4
3.4
0.7
0.6
0.7
1.8
3.8
0.4
0.7
0.5
1.6
2.2
2.2
0.7
0.4
0.7
1.2
3.0
2.5
2.5
0.6
0.8
1.4
3.2
0.2
0.5
1.7
0.7
0.6
6.9
(0.1)
(0.5)
0.2
0.9
(0.5)
28.9
60.2
60.2
24.7
84.9
0.1
6.8
6.8
6.8
0.2
3.4
3.4
3.4
Total
2011
%
7.4
0.4
7.8
0.8
0.2
3.6
4.6
1.2
0.8
0.6
0.1
1.1
0.1
2.2
6.1
0.5
0.9
0.7
0.1
0.1
1.0
3.3
3.8
3.8
0.7
0.9
1.2
2.3
5.1
0.9
4.1
5.0
0.6
0.9
1.5
4.8
0.2
0.5
1.7
(0.4)
0.7
0.6
8.1
0.1
0.7
0.8
29.2
75.3
75.3
24.7
100.0
Total
2010
%
9.1
0.6
9.7
0.5
5.2
5.7
1.4
1.2
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
5.7
0.6
4.3
4.9
1.2
0.9
2.1
6.7
13.8
0.3
2.2
0.3
0.8
24.1
1.0
2.1
3.1
23.2
96.4
96.4
3.6
100.0
0.2
0.2
0.2
0.4
0.1
0.1
0.1
0.3
0.1
0.3
0.3
0.5
0.5
0.1
0.2
0.1
0.3
0.1
0.1
0.3
0.3
0.1
0.1
1.8
1.8
1.8
1.0
1.0
0.1
0.1
0.3
0.5
0.7
0.7
3.1
3.1
3.1
Unlisted/Fixed Interest investments comprise an amount of £39,000,000 in respect of the investment of Majedie Asset Management, £258,000 in unlisted fixed interest
investments and £3,186,000 in respect of equity investments in various companies. Suspended stocks have been analysed in their listed sectors.
The Fund as used in the analysis above and on pages 13 and 15 totals £145,419,000 (being investments held at fair value of £112,822,000, derivatives held at fair value of
£136,000 financial liabilities held at fair value of (£3,311,000), derivatives held at fair value of (£99,000), cash of £37,553,000 plus amounts due (to)/from brokers (£1,682,000)).
12
MAJEDIE INVESTMENTS PLC
Twenty Largest UK Investments
at 30 September 2011
Company
Majedie Asset Management1
Royal Dutch Shell 'B'
HSBC
Vodafone
BP
GlaxoSmithKline
Vostok Energy1
BHP Billiton
Rio Tinto
Legal & General
Centrica2
Antofagasta
Aviva
BG Group
Barclays
Unilever
UBM (formerly United Business Media)
BAE Systems
Babcock
Sainsbury (J)
2011
2010
Market Value
£000
39,000
% of
Fund
26.8
Market Value
£000
30,000
% of
Fund
19.9
4,426
3,727
3,533
3,302
3,199
1,926
1,912
1,878
1,256
1,191
1,158
1,145
1,117
1,049
1,011
1,010
989
988
962
3.0
2.6
2.4
2.3
2.2
1.3
1.3
1.3
0.9
0.8
0.8
0.8
0.8
0.7
0.7
0.7
0.7
0.7
0.7
5,385
5,644
4,006
3,850
4,014
2,906
2,835
3,163
1,501
1,792
1,855
1,846
1,648
1,657
944
1,095
826
1,172
3.6
3.7
2.7
2.6
2.7
1.9
1.9
2.1
1.0
1.2
1.2
1.2
1.1
1.1
0.6
0.7
0.5
0.8
74,779
51.5
76,139
51.5
Ten Largest Overseas Investments
at 30 September 2011
Company
Canon Inc. (Japan)
Roche (Switzerland)
McDonalds (USA)2
Johnson & Johnson (USA)
Altria (USA)
Wells Fargo (USA)
Phillipine Long Distance (Asia)
AT&T (USA)
Sanofi (formerly Sanofi-Aventis) (France)
Toyota (Japan)
2011
2010
Market Value
£000
% of
Fund
Market Value
£000
927
831
817
777
774
774
773
769
765
736
7,943
0.6
0.6
0.6
0.5
0.5
0.5
0.5
0.5
0.5
0.5
5.3
929
828
884
800
796
491
907
1,006
932
7,573
% of
Fund
0.6
0.5
0.6
0.5
0.5
0.3
0.6
0.7
0.6
4.9
1 Unlisted
2 There is no comparative for the investments listed as they represent new holdings.
REPORT & ACCOUNTS 2011 13
Valuation of Investments
Holdings valued over £100,000 at 30 September 2011 – including derivative instruments
Company
Market Value % of
Fund
£000
Company
Market Value % of
Fund
£000
Company
Market Value % of
Fund
£000
3,199 2.2%
Health Care
Pharmaceuticals & Biotechnology
GlaxoSmithKline
Johnson & Johnson
(USA)
Roche (Switzerland)
Sanofi (formerly
Sanofi-Aventis) (France) 765 0.5%
777 0.5%
831 0.6%
Consumer Services
Food & Drug Retailers
Sainsbury (J)
General Retailers
Home Depot (USA)
Inchcape
Media
Grupo Televisa (USA)*
UBM (formerly United
Business Media)
Vivendi (France)
Travel & Leisure
Carnival (USA)
Compass
McDonalds (USA)
Tam Sa (USA)*
Thomas Cook
Whitbread
962 0.7%
675 0.5%
559 0.4%
204 0.1%
1,010 0.7%
449 0.3%
584 0.4%
782 0.5%
817 0.6%
200 0.1%
219 0.1%
713 0.5%
Telecommunications
Fixed Line Telecommunications
AT&T (USA)
Telefonica (Spain)
768 0.5%
620 0.4%
148 0.1%
Mobile Telecommunications
2 Ergo
Phillipine Long Distance
(Asia)
PT XL Axiata (Asia)
SK Telecom (USA)*
Telenor (Norway)
Vimplecom (USA)*
Vodafone
773 0.5%
631 0.4%
101 0.1%
498 0.3%
201 0.1%
3,533 2.4%
Utilities
Electricity
Scottish & Southern Energy 842 0.6%
Oil & Gas
Oil & Gas Producers
BG Group
BP
Cnooc Ltd (USA) *
ENI (Italy)
Exxon Mobil (USA)
Great Eastern Energy
Royal Dutch Shell ‘B’
1,117 0.8%
3,302 2.3%
196 0.1%
497 0.3%
700 0.5%
555 0.4%
4,426 3.0%
Oil Equipment, Services &
Distribution
Schlumberger (USA)
575 0.4%
Automobiles
Automobiles & Parts
Toyota (Japan)
Industrial Goods & Services
Aerospace & Defence
BAE Systems
Lockheed Martin (USA)
989 0.7%
699 0.5%
Construction & Materials
Balfour Beatty
Cemex Sab (USA)*
Heidelbergcement
(Germany)*
Sandvik (Sweden)*
– Short
895 0.6%
200 0.1%
151 0.1%
(142) (0.1%)
Electronic & Electrical Equipment
Byd Co (Asia)*
Siemens (Germany)
112 0.1%
697 0.5%
736 0.5%
General Industrials
Thyssenkrupp (Germany)* 139 0.1%
Basic Materials
Chemicals
Basf (Germany)*
Bayer (Germany)
Dow Chemical Co/
The (USA)*
Du Pont De Nemours
(USA)
Koninkliijke (Netherlands)*
– Short
194 0.1%
496 0.3%
177 0.1%
641 0.4%
(216) (0.1%)
Forestry & Paper
Nine Dragons Paper
Holdings (Asia)*
132 0.1%
Industrial Metals & Mining
Arcelormittal (Netherlands)* 133 0.1%
147 0.1%
Norsk Hydro (Norway)*
Mining
Acerinox (Spain)* – Short (143) (0.1%)
1,158 0.8%
Antofagasta
BHP Billiton
1,912 1.3%
Cia De Minas
Buenaventura (USA)*
Rio Tinto
Salzgitter (Germany)*
– Short
Yamana Gold (USA)*
– Short
Yanzhou Coal Mining
(USA)*
111 0.1%
1,878 1.3%
(114) (0.1%)
(152) (0.1%)
196 0.1%
Industrial Engineering
Abb Ltd (Switzerland)*
Charter International
Illinois Tools (USA)
IMI
Support Services
Babcock
Bunzl
G4S
Mitsui (Japan)
Consumer Goods
Beverages
Britvic
Coca-Cola (USA)
Food Producers
Unilever
148 0.1%
694 0.5%
668 0.5%
319 0.2%
988 0.7%
846 0.6%
801 0. 6%
471 0.3%
630 0.4%
651 0.4%
1,011 0.7%
Household Goods & Home
Construction
Gafisa (USA)*
192 0.1%
Tobacco
Altria (USA)
Imperial Tobacco
774 0.5%
761 0.5%
*Represents those investments held through Javelin Capital Strategies Fund.
Based on country of listing and operation.
14
MAJEDIE INVESTMENTS PLC
Company
Market Value % of
Fund
£000
Company
Market Value % of
Fund
£000
Company
Market Value % of
Fund
£000
Technology
Software & Computer Services
Baidu (USA)*
213 0.1%
Technology & Hardware Equipment
927 0.6%
Canon Inc. (Japan)
Unlisted Investments
AOI Medical
152 0.1%
Buried Hill Energy (USA) 218 0.1%
175 0.1%
Celadon Mining
Diamond Wood China
230 0.2%
Majedie Asset
Management
Mitra Energy
Vostok Energy
39,000 26. 8%
404 0.3%
1,926 1.3%
Unlisted Fixed Interest
Investments
Providence Resources 12%
(Ireland)
258 0.2%
Gas, Water & Multi Utilities
Centrica
Transaction Solutions
(Australia)
1,191 0.8%
130 0.1%
Financials
Banks
Banco Bradesco (USA)* 200 0.1%
Barclays
1,049 0.7%
DBS Group Holdings
495 0.3%
(Asia)
3,727 2. 6%
HSBC
Icici Bank (USA)*
198 0.1%
JP Morgan Chase (USA) 629 0.4%
KB Financial Group (USA)* 101 0.1%
774 0.5%
Wells Fargo (USA)
Non Life Insurance
Beazley
583 0.4%
Jardine Lloyd Thompson 506 0.3%
Life Insurance
Aviva
Legal & General
General Financial
IG Group
1,145 0.8%
1,256 0.9%
671 0.5%
(614) (0.4%)
Equity Investment Instruments
Ishares MSCI Brazil (USA)*
– Short
Ishares MSCI Emerging
Markets (USA)* – Short (603) (0.4%)
Juridica Investments
246 0.2%
Proshares Ultrashort FTSE
China 25 (USA)*
370 0.3%
Non Equity Investment Instruments
Ishares Asia Trust ETF
(Asia)
345 0.2%
Real Estate Investment Trusts
British Land
833 0.6%
*Represents those investments held through Javelin Capital Strategies Fund.
Based on country of listing and operation.
REPORT & ACCOUNTS 2011 15
Paul D Gadd *
Paul Gadd was appointed as a director of Majedie 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 a member of the Audit,
Nomination, Remuneration and Management
Engagement Committees.
R David C Henderson* FCA
David Henderson, who is a Chartered Accountant, is
currently Senior Adviser to Kleinwort Benson Limited
and a non-executive Director of Cenkos Securities PLC,
Novae Group PLC, Healthcare Locums plc, Oak Trust
(Guernsey) Limited, Price Forbes & Partners Limited,
MM&K Limited and also Chairman of the COIF Charity
Funds. Previously he was Chairman at Kleinwort
Benson Private Bank from 2004 to 2008 having held
various senior roles in the Kleinwort Benson Group
since 1995. Prior to that David spent 11 years at
Russell Reynolds Associates which followed 10 years
at Morgan Grenfell & Co and 6 years at what is now
Baker Tilly. He was appointed as a director of Majedie
on 22 September 2011 and is a member of the Audit,
Remuneration, Nomination and Management
Engagement Committees.
* Non-executive.
Board of Directors
Andrew J Adcock * MA Chairman
Mr Adcock was a managing partner of Brompton Asset
Management LLP, however he retired as a partner in
July of this year. He is a director of Majedie Portfolio
Management Limited and is a non-executive director of
F&C Global Smaller Companies PLC and was
appointed as a non-executive director of Kleinwort
Benson Holdings Limited in February 2011. He is also
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 * 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
In 1991 he joined Skandia Asset Management Limited
as an equity portfolio manager and was made
Managing Director of DnB Asset Management (UK)
Limited in 2002. Mr Barlow was appointed Chief
Operating Officer of Javelin Capital LLP, on 27 June
2011 and prior to joining Javelin Capital LLP he was
employed by Newedge Group, which is a Prime Broker
for Hedge Funds. Mr Barlow was appointed to the
Board in July 1999 and is a director of Majedie Portfolio
Management Limited. He is also a non-executive
director of Aintree Racecourse Company Limited.
16
MAJEDIE INVESTMENTS PLC
Directors’ Report
The directors submit their report and the accounts
for the year ended 30 September 2011.
Introduction
The Directors’ Report includes the Business Review and
Corporate Governance Statement, which can be found
on pages 19 to 24 and pages 25 to 29 respectively and
the Report on Directors’ Remuneration on pages 30 to
32. A review of the developments during the year 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 Sections
1158/9 of the Corporation Tax Act 2010 in respect of
the year ended 30 September 201 0.
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 £ 2, 624,000 (2010: £6,287,000). The
directors recommend a final ordinary dividend of 6.3p
per ordinary share, payable on 25 January 2012 to
shareholders on the register at the close of business
on 6 January 2012. Together with the interim dividend
of 4.2p per share paid on 29 June 2011, this makes a
total distribution of 10.5 p per share in respect of the
financial year (2010: 13.0p per share).
Directors
The directors in office at the date of this report are
listed on page 16.
Mr RDC Henderson was appointed on 22 September
2011. Mr GP Aherne and Mr C Arnheim resigned on
21 April 2011 and 2 1 September 2011 respectively.
Directors’ retirement by rotation and appointment is
subject to the Articles of Association and the UK
Corporate Governance Code.
The Articles of Association require that at every Annual
General Meeting any director who has not retired from
office at the preceding two Annual General Meetings
shall stand for re-appoint ment by the Company.
In accordance with the Company’s Articles of
Association Mr AJ Adcock having been last
re-appointed at the Annual General Meeting in 2008,
will retire at the forthcoming Annual General Meeting
and, being eligible, offer himself for re-appointment.
Mr RDC Henderson having been appointed on
22 September 2011, will in accordance with the
Articles of Association offer himself for appointment.
In accordance with Listing Rule 15.2.13.A, Mr JWM
Barlow, being Chief Operating Officer of Javelin Capital
LLP, the Investment Manager, must submit himself for
annual re-appointment. Further Mr HV Reid together with
Mr JWM Barlow, have served on the Board for over nine
years. In accordance with the UK Corporate Governance
Code, they will stand for annual re-appointment at the
forthcoming Annual General Meeting.
The Board has considered the continued appointments
of Mr HV Reid and Mr JWM Barlow who have served
for over 12 years. The Board’s view is that length of
tenure does not compromise independence and that
experience and continuity can add strength to a Board.
The Board is conscious of the need to maintain
continuity on the Board and believes retaining directors
with sufficient experience of both the Company and the
markets is of great benefit to the shareholders. The
Board believes that the performance of 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.
The Board, having considered the retiring directors’
performance within the annual Board performance
evaluation, hereby recommends that shareholders vote
in favour of each director’s proposed appointment and
re-appointment (as applicable).
Directors’ Interests
Beneficial interests in ordinary shares as at:
Mr A J Adcock
Mr J W M Barlow
Mr H V Reid
Mr P D Gadd
30 September
2011
20,000
676,083
33,214
10,000
1 October
2010
20,000
676,083
33,214
–
Mr RDC Henderson has no beneficial interest in the
shares of the Company.
Non-beneficial interests in ordinary shares as trustees
for various settlements as at:
Mr J W M Barlow
2,160,779
1,897,165
30 September
2011
1 October
2010
REPORT & ACCOUNTS 2011 17
Directors’ Report
There have been no changes to any of the above
holdings between 30 September 2011 and the date of
this report.
Substantial Shareholdings
At 30 September 2011 the Company has been notified
of the following substantial holdings in shares carrying
voting rights:
Mr HS Barlow
Beneficial
Non-beneficial
15,017,619 28.59%
1.17%
613,084
The AXA Group
7,103,119 13.52%
Mr MHD Barlow Beneficial
1,776,241
Non-beneficial 1,360,750
Sir JK Barlow
Beneficial
Non-beneficial
1,561,805
18,348
3.38%
2.59%
2.97%
0.03%
Mr GB Barlow
Miss AE Barlow
862,433
1.64%
1,784,948
3.40%
Mr JWM Barlow Beneficial
665,456
Non-beneficial 2,160,779
1.27%
4.11%
The substantial voting rights disclosed above include
the total holdings of shares within certain trusts where
there are other beneficiaries.
There have been no changes to any of the above
holdings between 30 September 2011 and the date of
this report.
Annual General Meeting
The Annual General Meeting will be held at Pewterers’
Hall, Oat Lane, London, EC2V 7DE on 18 January
2012 at 1 2:30 pm. The notice convening the Annual
General Meeting is set out on pages 85 to 89.
Purchase of own shares
Since 1 October 2011, and up to the date of this
report, the Company has made no market purchases
for cancellation of Ordinary shares. At the Annual
General Meeting in 2011 the directors were given
power to buy back 7,873,947 Ordinary shares. Since
the Annual General Meeting the directors have not
bought any shares under this authority. This authority
will expire at the 2011 Annual General Meeting.
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 85.
The authority will be used where the directors consider
it to be in the best interest of shareholders.
Notice period for general meetings
The Board believes that it is in the best interests of
shareholders of the Company to have the ability to call
meetings on 14 days’ clear notice should a matter
require urgency. The Board will therefore, as last year,
propose a resolution at the AGM to approve the
reduction in the minimum notice period from 21 clear
days to 14 clear days for all general meetings other
than annual general meetings. The directors do not
intend to use fewer than 21 clear days’ notice unless
immediate action is required.
Donations
The Company made no political or charitable donations
during the year (2010: nil).
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
19 January 201 1. 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 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 2011
18
MAJEDIE INVESTMENTS PLC
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.
Regulatory and Competitive Environment
The Company is an investment trust and has a
premium list ing 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 36, report on these profits,
the changes in equity, the balance sheet position and
the cash flows in the current and prior financial period.
This is in compliance with current International Financial
Reporting Standards, supplemented by the Revised
Statement of Recommended Practice for Investment
Trust Companies 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 46 to 51. The Auditors’ opinion on
the financial statements, which is unqualified, appears
on pages 34 and 35.
In addition to the annual and half-yearly results and
Interim Management Statements, the Company makes
weekly net asset value (NAV) announcements via an
authorised Stock Exchange regulatory 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 18 January 2012 is set out on
page 85.
A General Meeting was held on 29 June 2011 at which
proposals for the provision of further contributions to
Javelin Capital LLP and proposed modifications to
the Company’s investment objective and policy
were approved.
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 . 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;
REPORT & ACCOUNTS 2011 19
Business Review
(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 2010,
since when the Company has continued to comply
with these rules.
The government ha s completed a review of these rules
resulting in changes which it is anticipated will come into
force for accounting periods commencing from
1 January 2012. The review seeks to modernise tax
rules for investment trusts in-line with other collective
investment schemes. Changes include a new spread of
risk test, an approved transactions white list, advance
approval process for investment trust status and a reform
of the income requirements to allow income from a wider
range of sources. The Board welcomes these changes
which will have a positive impact on the Company.
Capital Structure
As part of its corporate governance the Board keeps
under review the capital structure of the Company. At
30 September 2011 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.
Net gearing as at 30 September is negative reflecting the
substantial cash balances held, partially due to impending
seeding monies for the new Javelin in UCITS fund.
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 26 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, however it is
recognised that the investments in the two unlisted
asset management businesses, and in particular the
investment in Majedie Asset Management, represent a
degree of concentration risk for the Company.
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.
20
MAJEDIE INVESTMENTS PLC
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; and
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 26 on pages 71 to 81 .
The systems in place to manage the Company’s
internal controls are described further in the Corporate
Governance Statement on page 29.
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 believes 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 (an Irish listed Qualifying
Investment Fund (QIF)) 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 (MAM) 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 strategy and financial performance.
The Board reviews the investment performance of the
Company against a range of measures relevant to
each investment group.
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
within the Chairman’s Statement on pages 5 to 7 and
Investment Manager’s Report on pages 8 to 11.
REPORT & ACCOUNTS 2011 21
Business Review
(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 35. 0% and was higher than at the start of
the year. This partially reflects revisions to the
Company’s unlisted investments, primarily MAM,
contained in this Annual Report, which were not
reflected in the share price at the year end.
(cid:129) Net Asset Value performance
The Company’s Net Asset Value has decreased by
4.8% in the year to 30 September 2011, compared
with a decrease of 5.7% over the same period last
year. The net assets decreased by £ 5. 6 m to
£ 11 1.6 m. The performance of the Net Asset Value
is discussed within the Chairman’s statement.
(cid:129) Total expense ratio
The total expense ratio of the Company for the year
ended 30 September 2011 was 1.7% (201 0: 2.4%).
(cid:129) Dividend growth
Dividend growth over the long term ( as recognised
for this purpose as from 1985 when the Company
became an investment trust), has been at 5%, 5.7%
including special dividends, which is ahead of
inflation over the same period. 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 £ 2 5.8m, 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 aim is to increase dividends by more than
the rate of inflation over the long term. This objective
was approved by shareholders at a General Meeting
held on 29 June 2011.
Corporate Social Responsibility
In common with many investment trust companies, the
Group 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 1.7%
which compares with the investment trust sector
average of 1.6% . The Company core operating costs
have decreased from £ 2.2m to £ 2.0m 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, which was
subsequently amended and restated on 29 June
2011. The revised terms include:
(cid:129) The Company will provide £4.5 m initial capital and
a further capital contribution of £2.5 m. Both 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, and at the
General Meeting held on 29 June 2011
shareholder approval was obtained for a further
£1 m contribution upon Board approval.
(cid:129) The Company has a 7 5% interest in Javelin
Capital LLP with the other partners holding the
remaining 25%. On achieving certain pre-set
financial targets, which were revised in conjunction
with the restructure in June 2011, the Company
will reduce its interest to ultimately 5 5%.
22
MAJEDIE INVESTMENTS PLC
(cid:129) The agreement provides for various types of
profit share including performance fee, bonus
and residual profit share. Under the agreement
the Company is to receive an entitlement to
profits equal to its capital contribution plus
accumulated interest first before other partners
are entitled to bonus or residual profit shares.
(cid:129) The Board has representation on the Javelin
Capital Management Board (Javelin governance
is outlined in the Corporate Governance
Statement on page 28), including the appointment
of the Chairman. This includes various 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
Core Portfolio***
Treasury Account
MAM
Javelin Capital Global
Equity Strategies Fund# 1.25% p.a.
0.70% p.a.
0.70% p.a.
NIL
Fee
Management* Performance
Fee
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 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 (QIF) 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 QIF . 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 portfolio attracts a management fee of 0.70% p.a. and no
performance fee.
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. 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.
REPORT & ACCOUNTS 2011 23
The Company initially provided £4.5m in operational
and regulatory capital for Javelin Capital LLP. At a
General Meeting on 29 June 2011, the shareholders
approved a further investment of up to £3.5m in
Javelin Capital LLP to provide additional operational
and regulatory capital, of which £2.5 million was paid
on 29 June 2011.
The Company has an initial 7 5% ownership. This will
fall to 5 5% if the partnership achieves certain preset
financial targets. The Chairman’s Statement on page 6
and additionally the notes to the accounts on page 65
provide further information on developments.
Continued Appointment of the Manager
The Board ha s concluded that it is in shareholders
interests that Javelin Capital LLP should continue as
Manager of the Company on the existing terms. The
Board considers the arrangements for the provision of
investment management and other services to the
Company on an annual basis.
The principal terms of the agreement with the
Investment Manager have been set out on pages 22
and 23.
Business Review
(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 2011 the Group and the Company
had fourteen and twenty-one days respectively of
suppliers’ invoices outstanding in respect of trade
creditors (2010: Group and Company four days).
Majedie Asset Management Limited
Majedie Asset Management is an investment
management boutique specialising in UK and Global
equities which launched in 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 page 65.
Javelin Capital LLP
Javelin Capital LLP commenced operations on
1 September 2010. On that date Javelin Capital LLP
assumed responsibility for managing the Company’s
investments and the provision of general administration
services. All previous Majedie employees transferred to
Javelin Capital LLP under the new arrangements.
On 20 September 2010 the Company invested £20m
into the Javelin Capital Global Equity Strategies Fund
(QIF), the first fund launch by Javelin Capital LLP. The
characteristics of this investment are detailed in the
Investment Manager’s Report section.
24
MAJEDIE INVESTMENTS PLC
Corporate Governance Statement
The Corporate Governance Statement forms part of the Directors’ Report.
This section of the annual report describes the
Company 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 2011 except as set out below.
Provision A.2.1 – Due to the nature and structure of
the Company the Board does not feel it is necessary to
appoint a Chief Executive.
Provision C.3.5 – The Company does not have an
internal audit function due its accounting, administration,
company secretarial and custody arrangements being
outsourced to the parties detailed on page 29.
The Company
The Company has historically been self managed but
following the launch of Javelin Capital, the Company’s
investments and administration have been managed by
Javelin Capital LLP since September 2010. 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, three non-executive directors
and Mr JWM Barlow who became an executive
director on 27 June 2011. Biographical details of the
directors are shown on page 16.
Messrs AJ Adcock, PD Gadd, HV Reid and
RDC Henderson are considered to be independent as
defined by the Code but the Board considers that all
directors exercise their judgements in an independent
manner. The Chairman’s other commitments are
determined in his biography on page 16.
Mr HV 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 2011, nine Board
meetings were held and additionally two Audit Committee
meetings, two Nomination Committee meetings and
one Remuneration Committee meeting. Attendance at
these Board and Committee meetings were as follows:
Directors
AJ Adcock
GP Aherne
CJ Arnheim
PD Gadd
HV Reid
JWM Barlow
Number of meetings
Board
Audit Nomination Remuneration
9
9
4
8
9
9
8
2
2
n/a
–
2
2
n/a
2
2
n/a
1
2
2
1*
1
1
n/a
n/a
1
1
n/a
* JWM Barlow resigned from the Nomination Committee on 27 June 2011.
Since the Company’s financial year end the Company
has held two Board meetings, a Management
Engagement Committee meeting and a Remuneration
Committee meeting. All Board members and Committee
members attended their respective meetings.
The Board has undertaken a formal and rigorous
evaluation of its own performance and of its Committees
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.
REPORT & ACCOUNTS 2011 25
Corporate Governance Statement
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.
Directors’ and Officers’ Liability Insurance and
Indemnities
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.
Committees
The Board has established the following Committees:
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.
The Board recommends the appointment of Ernst
and Young LLP as Auditors at the forthcoming
Annual General Meeting.
(cid:129) The Nomination Committee comprises:
Mr AJ Adcock (Chairman) and the non-executive
directors. Mr JWM Barlow resigned from the
Nomination Committee on 27 June 2011 but may
attend future meetings at the request of the
Committee. 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
made use of an external search consultant to assist
with the recruitment of Mr RDC Henderson.
The Committee recommended the appointment of
Mr RDC Henderson to the Board and he was
appointed on 22 September 2011.
(cid:129) The Audit Committee comprises:
The Company’s Articles of Association require a
director appointed during the year to retire and seek
appointment by shareholders at the next Annual
General Meeting and all directors must seek re -
appointment at least every three years. All directors are
appointed for a term of three years after appointment
or re- appointment by shareholders at a general
meeting. A director’s appointment may be terminated
by the Company on the director by providing one
month’s notice. Towards the end of each fixed term
the Nomination Committee and the Board will
consider whether to renew a particular appointment.
No director has a contract of employment with the
Company. Directors’ terms and conditions for
appointment are set out in letters of appointment
which are available for inspection at the Registered
Office of the Company and will be available at the
Annual General Meeting.
Mr HV Reid (Chairman), Mr PD Gadd, Mr RDC
Henderson and Mr AJ Adcock. Mr JWM Barlow and
representatives of the Auditors are invited to attend
meetings of the Committee. It is intended that
Mr HV Reid retire as Chairman of the Audit
Committee from 30 November 2011 to be replaced
by Mr RDC Henderson . 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 reviewed the Group’s half-yearly
and annual reports 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.
26
MAJEDIE INVESTMENTS PLC
The Nomination Committee met twice during the
year to consider the re - appointment of directors at
the Company’s Annual General Meeting and the
appointment of Mr RDC Henderson as a non
executive director. It decided to recommend the
re-appointment of Messrs AJ Adcock, JWM Barlow
and HV Reid on the basis that they continued to
make valuable contributions and to exercise their
judgement and express their opinions in an
independent manner.
(cid:129) The Remuneration Committee comprises:
Mr HV Reid (Chairman), Mr AJ Adcock, Mr RDC
Henderson and Mr PD Gadd. Mr JWM Barlow and
Mr GP Aherne w ere invited to attend and participate
in the relevant meetings. It is also intended that
Mr HV Reid retire as Chairman of the Remuneration
Committee from 30 November 2011 and be
replaced by Mr PD Gadd. Further details on the
work of the Remuneration Committee is included in
the Report on Directors’ Remuneration on pages 30
to 32.
(cid:129) Management Engagement Committee (“MEC”).
The Management Engagement Committee was
established on 14 October 2010 and comprises;
Mr AJ Adcock (Chairman), and the non-executive
directors. Mr JWM Barlow resigned from the
Management Engagement Committee on 27 June
2011 but may attend future meetings at the request
of the Committee. The Board has agreed terms of
reference for the Committee which meets at least
once a year to consider the performance of the
Investment Manager, the terms of the Investment
Manager’s engagement and to consider the
continued appointment of the Investment Manager.
The MEC met on 18 October 2011 and
recommended that Javelin Capital LLP be retained
as Investment Manager.
The Board has concluded that it is in the best
interests of shareholders that Javelin Capital LLP
should continue to be the Investment Manager of
the Company on under its existing terms.
In addition to the Investment Management role, the
Board has delegated to external third parties the
custodial services, the day to day accounting,
company secretarial services, administration and
registration services. The MEC annually reviews their
performance and their contracts.
The terms of reference of the Company’s Committees
are available on request from the Company Secretary
or from the Company’s website.
Conflicts of Interest
The Directors have declared any conflicts or potential
conflict of interest to the Board of directors which has
the authority to approve such situations. The Company
Secretary maintains the Register of directors’ Conflicts
of Interests which is reviewed quarterly by the Board
and when changes are notified. The directors advise
the Company Secretary and Board as soon as they
become aware of any conflicts of interest. Directors
who have conflicts of interest do not take part in
discussions which relate to any of their conflicts.
It is the responsibility of each individual director to avoid
an unauthorised conflict situation arising. He must request
authorisation from the Board as soon as he becomes
aware of the possibility of a situational conflict arising.
The Board is responsible for considering directors’
requests for authorisation of situational conflicts and for
deciding whether or not the situational conflict should
be authorised. The factors to be considered will include
whether the situational conflict could prevent the director
from properly performing his duties, whether it has, or
could have, any impact on the Company and whether it
could be regarded as likely to affect the 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.
REPORT & ACCOUNTS 2011 27
Corporate Governance Statement
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 19 to 24 provides additional
further information.
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.
Voting policy
The exercise of voting rights attached to the Company’s
portfolio has been delegated to Javelin Capital LLP in
the absence of explicit instructions from the Board.
Javelin Capital LLP are empowered to exercise
discretion in the use of the Company’s voting rights.
Javelin Capital LLP are required to include on their
website a disclosure about the nature of their
commitment to the FRC’s Stewardship Code and
details may be found at www.javelincapital.com/
Governance/FRC -Stewardship-Code.
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
The Board has representation on the Management
Board of Javelin Capital LLP 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.
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.
28
MAJEDIE INVESTMENTS PLC
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 provision C.2.1 of the UK
Corporate Governance 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 2011 29
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 2011, the Committee comprised independent non-executive directors – being
H V Reid (Chairman), A J Adcock , PD Gadd and RDC Henderson (appointed to the Committee on 22 September
2011). C J Arnheim and JWM Barlow were also 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.
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 seeks independent professional advice when required.
Directors’ fees (excluding any special duties fees) are, under the Company’s articles of association, subject to a limit
of £250,000 per annum. 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.
Remuneration Policy
Non-Executive Directors
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 by reference to other organisations and appointments.
The Committee reviewed directors’ remuneration in October 2011 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 up to £ 5,500 per annum, as detailed in the Javelin Capital section is payable to
non-executive directors who represent the Company on the Javelin Capital Management Board.
Non-executive directors are entitled to claim out of pocket expenses incurred in carrying out their duties but are not
eligible for bonuses, pension benefits, share options or long term incentive schemes. No non-executive director has
a service contract, rather a letter of appointment with the Company. The terms include an initial three year duration
period, a one month notice period by either party and no termination or loss of office payments.
Executive Director
Mr J W M Barlow was appointed Chief Operating Officer of Javelin Capital LLP on 27 June 2011 and remains a
director of the Company. Due to his appointment he is considered to be an executive director from that date.
30
MAJEDIE INVESTMENTS PLC
His remuneration in respect of his Javelin Capital appointment was approved by the Javelin Capital Management
Board (including Majedie representatives) and is comprised of a base salary of £135,000 per annum, a discretionary
bonus (see below), plus healthcare, life benefits and eligibility for the Javelin Capital pension scheme. Additionally he
continues to receive his previous basic fees of £27,000 per annum as a director of the Company.
At the time of his appointment it was decided that given the nature of his role and responsibilities he would be
eligible for a discretionary bonus to be paid for by the Company or Javelin Capital as appropriate. Any such bonus
will be based on the achievement of pre-agreed objectives which have yet to be developed and will be subject to
appropriate retention and/or claw back mechanisms.
He remains subject to his existing terms of appointment as a director of the Company and also has an employment
contract with Javelin Capital Services Limited in respect of his Javelin Capital position. The terms of that contract
include providing for three months’ notice of termination by either party, annual salary reviews and various post
employment obligations and restrictions considered to be appropriate for a role of this type within the financial
services sector.
Javelin Capital LLP (“Javelin Capital”)
Javelin Capital, a UK Limited Liability Partnership of which the Company is a partner has been in operation since
1 September 2010. As a partner, the Board can appoint representatives to attend the monthly Javelin Capital
Management Board meetings. The directors with the exception of the Chairman of the Board receive an additional fee
of up to £5,500 per annum, based upon a fee of £500 per meeting, in recognition of their attendance and contribution
at the monthly management board meetings. Mr JWM Barlow is also a member of the Management Board but in his
capacity as Chief Operating Officer of Javelin Capital LLP and does not receive this supplement.
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.
Performance
The graph below compares the total shareholder return to a hypothetical portfolio constructed according to a
benchmark equity index, calculated as 70% FTSE All-Share Index and 30% FTSE World ex UK Index (Sterling).
Although the Company abandoned this as an overall benchmark in 2010 it remains as the comparator for the
purpose of this graph since it is the formal benchmark adopted in respect of the Core Portfolio element of the
Company’s investments.
1.30
1.20
1.10
1.00
0.90
0.80
0.70
0.60
0.50
9/06
9/07
9/08
9/09
9/10
9/11
Majedie
k
Benchmar
TOTAL SHAREHOLDER RETURN V BENCHMARK
5 YEARS TO 30 SEPTEMBER 2011 (REBASED)
REPORT & ACCOUNTS 2011 31
Report on Directors’ Remuneration
AUDITED SECTION
Directors’ Remuneration
The remuneration of the directors for the year ended 30 September 2011 was as follows:
Non-executive directors
A J Adcock
H V Reid
J W M Barlow
P D Gadd
H S Barlow
C J Arnheim*
G P Aherne#
RDC Henderson†
Executive directors
J W M Barlow
G P Aherne#
Salary
£000
Other
Benefits
£000
Basic
fees
£000
Additional
fees
£000
Total
201 1
£000
Total
20 10
£000
–
–
–
–
–
–
–
–
36
–
36
–
–
–
–
–
–
–
–
1
–
1
75
27
20
27
–
27
–
1
7
–
–
14
4
5
–
–
–
–
–
–
75
41
24
32
–
27
–
1
44
–
184
23
2 44
61
35
27
27
15
20
24
–
–
123
332
# Mr G P Aherne resigned from the Board and retired from Javelin Capital LLP on 21 April 2011. In addition to the amounts shown in the above
table his gross drawing entitlement from Javelin Capital LLP for the year, including his notice provision, was £179,000 with other benefits of
£6,000. No compensation for loss of office was paid by the Company or Javelin Capital LLP.
* Mr C J Arnheim resigned from the Board on 21 September 2011.
† Mr R D C Henderson was appointed to the Board on 22 September 2011.
Approval
The Report on Directors’ Remuneration on pages 30 to 32 was approved by the Board on 24 November 2011.
On behalf of the Board
H V Reid Chairman of the Remuneration Committee
32
MAJEDIE INVESTMENTS PLC
Statement of Directors’ Responsibilities
The directors are responsible for preparing the Annual
Report and the Group financial statements in
accordance with applicable United Kingdom law and
those International Financial Reporting Standards as
adopted by the European Union. Under Company Law
the directors must not approve the Group financial
statements unless they are satisfied that they present
fairly the financial position, financial performance and
cash flows of the Group for that period. In preparing
the Group financial statements the directors are
required to:
(cid:129) select suitable accounting policies in accordance
with IAS 8: Accounting Policies, Changes in
Accounting Estimates and Errors and then apply
them consistently;
(cid:129) present information, including accounting policies, in
a manner that provides relevant, reliable,
comparable and understandable information;
(cid:129) provide additional disclosures when compliance with
the specific requirements in IFRSs is insufficient to
enable users to understand the impact of particular
transactions, other events and conditions on the
Group’s financial position and financial performance;
(cid:129) state that the Group has complied with IFRSs,
subject to any material departures disclosed and
explained in the financial statements; and
(cid:129) make judgements and estimates that are reasonable
and prudent.
The directors are responsible for keeping adequate
accounting records that are sufficient to show and
explain the Group’s transactions and disclose with
reasonable accuracy at any time the financial position
of the Group and enable them to ensure that the
Group 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
Group and hence for taking reasonable steps for the
prevention and detection of fraud and other
irregularities.
By order of the Board
Andrew J Adcock Chairman
2 4 November 2011
REPORT & ACCOUNTS 2011 33
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
2011 which comprise the Consolidated and Company
Statement of Comprehensive Income, the
Consolidated and Company Statements 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 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 auditor
As explained more fully in the Statement of Directors’
Responsibilities on page 33, 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 and express
an opinion on 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 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. In addition, we read all the financial and
non-financial information in the Annual Report to
identify material inconsistencies with the audited
financial statements. If we become aware of any
apparent material misstatements or inconsistencies we
consider the implications for our report.
Opinion on financial statements
In our opinion:
(cid:129) the financial statements give a true and fair view of
the state of the group’s and of the parent
company’s affairs as at 30 September 2011 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; and
(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 directors’ Remuneration Report to be
audited has been properly prepared in accordance
with the Companies Act 2006; and
(cid:129) the information given in the Directors’ Report for the
financial year for which the financial statements are
prepared is consistent with the financial statements.
Matters on which we are required to report by
exception
We have nothing to report in respect of the following:
Under the Companies Act 2006 we are required to
report to you if, in our opinion:
(cid:129) adequate accounting records have not been kept
by the parent company, or returns adequate for our
audit have not been received from branches not
visited by us; or
(cid:129) the parent company financial statements and the
part of the Directors’ Remuneration Report to be
audited are not in agreement with the accounting
records and returns; or
34
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, on page 18, in relation to
going concern;
(cid:129) the part of the Corporate Governance Statement
relating to the Company’s compliance with the nine
provisions of the UK Corporate Governance Code
specified for our review; and
(cid:129) certain elements of the report to shareholders by
the Board on directors’ remuneration.
Ratan Engineer (Senior statutory auditor)
for and on behalf of Ernst & Young LLP,
Statutory Auditor
London
2 4 November 2011
REPORT & ACCOUNTS 2011 35
Consolidated Statement of Comprehensive Income
for the year ended 30 September 2011
Revenue
return
£000
2011
Capital
return
£000
Total
£000
Revenue
return
£000
2010
Capital
return
£000
Total
£000
Notes
Investments
Gains/(losses) on investments at
fair value through profit or loss
13
2,233
2,233
(2,361)
(2,361)
Net investment result
Income
Income from investments
Other income
Total income
Expenses
2,233
2,233
(2,361)
(2,361)
3
3
5, 434
1 06
5, 540
5, 434
1 06
10,011
82
5, 540
10,093
10,011
82
10,093
Administrati ve expenses
5
(2, 1 95)
(2, 633)
(4, 828)
(3,105)
(2,017)
(5,122)
Return/loss before finance
costs and taxation
Finance costs
Net return/loss before taxation
Taxation
Net return/loss after taxation
3, 345
( 400)
2,94 5
6,988
(4,378)
2,610
(7 2 1)
(2, 165)
(2, 88 6)
(701)
(2,101)
(2,802)
2, 624
( 2, 565)
(20 0)
5 9
(20 0 )
6,287
(6,479)
(131)
(192)
(131)
8
9
for the year
2, 424
( 2, 565)
(14 1)
6,156
(6,479)
(323)
Other comprehensive income –
exchange differences on
translation of foreign operations
(3 7)
(3 7)
Total comprehensive income for
the year
2, 424
( 2, 602)
(1 78)
6,156
(6,479)
(323)
Net return/loss after taxation attributable to:
Equity holders of the Company
2, 427
( 2, 568)
(1 41)
6,156
(6,479)
(323)
Non-controlling interest
(3)
3
2, 424
( 2, 565)
(14 1)
6,156
(6,479)
(323)
Return/loss per ordinary share:
pence
pence
pence
pence
pence
pence
Basic and diluted
11
4.6
( 4.9)
(0.3)
11.8
(12.4)
(0.6)
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 48 to 83 form part of these accounts.
36
MAJEDIE INVESTMENTS PLC
Company Statement of Comprehensive Income
for the year ended 30 September 2011
Revenue
return
£000
2011
Capital
return
£000
Total
£000
Revenue
return
£000
2010
Capital
return
£000
Total
£000
Notes
Investments
Gains/(losses) on investments at
fair value through profit or loss
13
1,5 47
1,5 47
(2,361)
(2,361)
Net investment result
Income
Income from investments
Other income
Total income
Expenses
Investment Management fees
Administrati ve expenses
Return/loss before finance
costs and taxation
Finance costs
Net return/loss before taxation
Taxation
Net return/loss after taxation
1,5 47
1,5 47
(2,361)
(2,361)
3
3
4
5
8
9
5,382
19
5,401
(418)
(730)
5,382
10,011
19
130
5,401
10,141
10,011
130
10,141
(519)
(937)
(34)
(44)
(78)
(3 20)
(1,0 50)
(1,038)
(1,735)
(2,773)
4,253
70 8
4,9 6 1
9,069
(4,140)
4,929
( 701)
(2,10 2)
(2,80 3)
(701)
(2,101)
(2,802)
3,552
(1, 394)
2,1 58
8,368
(6,241)
2,127
(121)
(121)
(131)
(131)
for the year
3,431
( 1,394)
2,037
8,237
(6,241)
1,996
Return/loss per ordinary share:
pence
pence
pence
pence
pence
pence
Basic and diluted
11
6. 5
( 2. 6)
3.9
15.8
(12.0)
3.8
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 48 to 83 form part of these accounts.
REPORT & ACCOUNTS 2011 37
116
(74)
(178)
(284)
64
Consolidated Statement of Changes in Equity
for the year ended 30 September 2011
Share
capital
£000
Share
premium
£000
Notes
Capital
redemption
reserve
£000
Share
options
reserve
£000
5,253
785
56
(220)
Year ended 30 September 2011
As at 1 October 2010
Net loss for the year
Other comprehensive income – exchange
differences on translation of foreign subsidiary
Share options expense
Dividends declared and paid in year
Consolidation of subsidiary
Own shares (sold)/purchased by Employee
Incentive Trust (EIT)
25
10
As at 30 September 2011
5,253
785
Year ended 30 September 2010
As at 1 October 2009
Net loss for the year
Share options expense
Dividends declared and paid in year
25
10
5,253
785
56
56
As at 30 September 2010
5,253
785
56
(220)
The notes on pages 48 to 83 form part of these accounts.
38
MAJEDIE INVESTMENTS PLC
Capital
reserve
£000
86,945
( 2, 568)
Revenue
reserve
£000
26,042
2, 427
(5,463)
Currency
Own shares
reserve
£000
translation Non-controlling
interest
£000
reserve
£000
(1,702)
74
(3 7)
2 48
Total
£000
117,159
(14 1)
(3 7)
116
(5,463)
24 8
8 4, 377
23, 006
(1,628)
(37 )
2 48
11 1,8 82
93,424
(6,479)
26,649
6,156
(6,763)
(1,702)
86,945
26,042
(1,702)
124,181
(323)
64
(6,763)
117,159
REPORT & ACCOUNTS 2011 39
Company Statement of Changes in Equity
for the year ended 30 September 2011
Year ended 30 September 2011
As at 1 October 2010
Net profit for the year
Share options expense
Dividends declared and paid in year
Own shares (sold)/purchased by Employee
Incentive Trust (EIT)
As at 30 September 2011
Year ended 30 September 2010
As at 1 October 2009
Net profit for the year
Share options expense
Dividends declared and paid in year
Notes
Share
capital
£000
Share
premium
£000
Capital
redemption
reserve
£000
5,253
785
56
25
10
25
10
5,253
785
5,253
785
56
56
As at 30 September 2010
5,253
785
56
The notes on pages 48 to 83 form part of these accounts.
40
MAJEDIE INVESTMENTS PLC
Share
options
reserve
£000
Capital
reserve
£000
Revenue
reserve
£000
Own shares
reserve
£000
Total
£000
(220)
87,461
27,843
(1,702)
119,476
116
(74)
( 1,394)
3,431
(5,463)
2,037
1 16
(5,463)
74
(178)
8 6,0 67
25,811
(1,628)
11 6,1 66
(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
REPORT & ACCOUNTS 2011 41
Consolidated Balance Sheet
as at 30 September 2011
Non-current assets
Property and equipment
Investments held at fair value through profit or loss
Current assets
Derivative instruments held at fair value through
profit or loss
Trade and other receivables
Cash and cash equivalents
Notes
12
13
14
16
17
2011
£000
410
11 2,822
11 3, 232
136
5, 81 7
37, 553
43, 50 6
2010
£000
531
145,423
145,954
1,691
5,538
7,229
Total assets
15 6,73 8
153,183
Current liabilities
Financial liabilities held at fair value through profit or loss 12
Derivative instruments held at fair value through
profit or loss
Trade and other payables
14
18
(3, 311)
(99)
(7,6 4 5)
(1 1,05 5)
(2,243)
(2,243)
Total assets less current liabilities
14 5,6 83
150,940
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
Currency translation reserve
Equity Shareholders’ Funds
Non-controlling interest
Total equity
Net asset value per share
Basic and fully diluted
18
19
20
21
(33,801)
(4 4, 8 56)
(33,781)
(36,024)
11 1,8 82
117,159
5,253
785
56
(178)
8 4, 377
23, 006
(1,628)
( 37)
5,253
785
56
(220)
86,945
26,042
(1,702)
11 1,6 34
117,159
2 48
11 1,8 82
117,159
pence
21 4.5
pence
225.2
Approved by the Board of Majedie Investments PLC (Company no. 109305) and authorised for issue on 24 November 2011.
Andrew J Adcock
Hubert V Reid
Directors
The notes on pages 48 to 83 form part of these accounts.
42
MAJEDIE INVESTMENTS PLC
Company Balance Sheet
as at 30 September 2011
Non-current assets
Property and equipment
Investments held at fair value through profit or loss
Investments in subsidiaries held at cost
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
13
16
17
18
18
19
20
2011
£000
17 8
1 27,176
7,171
13 4, 525
1,180
15,245
16,425
2010
£000
221
1 45,423
4,671
150,315
1,676
3,057
4,733
15 0,9 50
155,048
(983)
(1,791)
1 49,9 67
153,257
(33,801)
(34,784)
(33,781)
(35,572)
11 6,1 66
119,476
5,253
785
56
(178)
8 6,0 67
25,811
(1,628)
5,253
785
56
(220)
87,461
27,843
(1,702)
Equity Shareholders’ Funds
11 6,1 66
119,476
Approved by the Board of Majedie Investments PLC (Company no. 109305) and authorised for issue on 24 November 2011.
Andrew J Adcock
Hubert V Reid
Directors
The notes on pages 48 to 83 form part of these accounts.
REPORT & ACCOUNTS 2011 43
Consolidated Cash Flow Statement
for the year ended 30 September 2011
Net cash flow from operating activities
Consolidated net return before taxation
Adjustments for:
( Gains)/ losses on investments
Dividends reinvested
Share based remuneration
Depreciation
Purchases of investments*
Sales of investments*
Adjustment to non-current asset investments on consolidation
Proceeds from derivative contracts
Exchange gains on translation of foreign investments
Increase in non-controlling interest
Finance costs
Operating cashflows before movements in working capital
Increase in trade and other payables
Increase in trade and other receivables
Net cash inflow from operating activities before tax
Tax recovered
Tax on unfranked income
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
Notes
2011
£000
5 9
2010
£000
(192)
13
( 2,233)
2,361
(5)
11 6
208
(1 , 300,1 22)
1,3 19,73 5
20,000
48 3
( 109)
2 48
38, 380
2, 88 6
41, 266
1 3 9
( 7 58)
40, 647
29
(24 5)
40, 431
(8 7)
(8 7)
(2, 866)
(5,463)
(8, 329)
32,015
5,538
3 7,553
(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
5,538
Net cash outflow from financing activities
I ncrease/(decrease) in cash and cash equivalents for year
22
Cash and cash equivalents at start of year
Cash and cash equivalents at end of year
* The large increase in investment transactions in the year to 30 September 2011 reflects the high volume trading activity in the QIF in line with its
investment approach and industry peers.
The notes on pages 48 to 83 form part of these accounts.
44
MAJEDIE INVESTMENTS PLC
Company Cash Flow Statement
for the year ended 30 September 2011
Net cash flow from operating activities
Company net return before taxation
Adjustments for:
(Gains)/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
Purchases of subsidiaries
Net cash outflow from investing activities
Financing activities
Interest paid
Dividends paid
Net cash outflow from financing activities
I ncrease/(decrease) in cash and cash equivalents for year
22
Cash and cash equivalents at start of year
Cash and cash equivalents at end of year
The notes on pages 48 to 83 form part of these accounts.
Notes
2011
£000
2010
£000
2,1 58
2,127
13
( 1,5 47)
2,361
(5)
11 6
47
(15,6 92)
35,546
20,62 3
2,80 3
23,4 26
(21 0)
(14 1)
23,07 5
29
(16 6)
22,93 8
( 4)
(2,500)
(2,50 4)
(2,78 3)
(5,463)
(8,24 6)
12,188
3,057
15,245
(45)
64
64
(57,963)
55,741
2,349
2,802
5,151
(41)
86
5,196
10
(163)
5,043
(90)
29
(4,510)
(4,571)
(2,783)
(6,763)
(9,546)
(9,074)
12,131
3,057
REPORT & ACCOUNTS 2011 45
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 91. The nature of the Group’s operations and its
principal activities are set out in the Business Review on pages 20 to 24 and in note 2 on page 51.
Use of estimates and judgements
The preparation of financial statements requires the Group to make estimates and assumptions that affect items
reported in the Balance Sheets and Statements 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 s 49 and 50. At the year end, unquoted investments
represent 38.0% of shareholders funds.
1 Significant Accounting Policies
The principal accounting policies adopted are set out as follows:
The accounts on pages 36 to 83 comprise the audited results of the Company and its subsidiaries for the year
ended 30 September 2011, 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.
Going Concern
The Directors have a reasonable expectation that the Company has sufficient resources to continue operational existence
for the foreseeable future. Accordingly the Financial Statements have been prepared on a going concern basis.
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.
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.
Non-controlling interests in the net assets of consolidated subsidiaries are identified separately from the Group’s
equity therein. Non-controlling interests consist of the amount of those interests at the date of the original business
combination and the non-controlling’s share of changes in equity since the date of combination. Losses applicable
to the non-controlling interest in excess of the non-controlling’s interest in the subsidiary’s equity are allocated
against the interest of the Group except to the extent that the non-controlling interest has a binding obligation and is
able to make an additional investment to cover losses.
46
MAJEDIE INVESTMENTS PLC
1 Significant 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.
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:
Financial Instruments: Classification & Measurement
International Accounting Standards (IAS/IFRSs)
IFRS 9
IFRS 10 Consolidated Financial Statements
IFRS 12 Disclosure of Interests in Other Entities
IFRS 13
IAS 24
Fair Value Measurement
Related Party Disclosures (revised)
Effective date
1 January 2013
1 January 2013
1 January 2013
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, with the exception of additional disclosure requirements.
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 , 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 as other comprehensive income. For such non-
monetary items, any exchange component of that gain or loss is also recognised as other comprehensive income.
The assets and .liabilities of foreign operations are translated into sterling at the rates of exchange ruling at the
balance sheet date. Income and expenses are translated at weighted average exchange rates for the year. The
resulting exchange differences are recognised in other comprehensive income.
REPORT & ACCOUNTS 2011 47
Notes to the Accounts
1 Significant Accounting Policies continued
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.
Special dividends are taken to the revenue or capital account depending on their nature.
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 13).
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 Group’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. In addition, other interest payable is
allocated 75% to capital and 25% to the revenue account.
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.
48
MAJEDIE INVESTMENTS PLC
1 Significant Accounting Policies continued
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.
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 classified as 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 earnings, multiples, 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.
REPORT & ACCOUNTS 2011 49
Notes to the Accounts
1 Significant Accounting Policies continued
Changes in the fair value of investments and gains on the sale of investments are recognised as they arise in the
Statement of Comprehensive Income.
Investment in Subsidiaries
In its separate financial statements the Company recognises its investment in subsidiaries at cost, less any
impairment 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
Derivatives financial instruments are initially recognised on trade date and are measured at fair value. After initial
recognition, derivative financial instruments are measured at fair value.
Contracts for Difference (CFDs) represent agreements that obligate two parties to exchange cash flows at specified
intervals based upon or calculated by reference to changes in specified prices or rates for a specified amount of an
underlying asset or otherwise deemed notional amount. The ultimate gain or loss depends upon the prices at which
the underlying financial instruments of the CFD is valued at the CFDs settlement date. Realised and movements in
unrealised gains and losses are included in the Consolidated Statement of Comprehensive Income.
Short sales are those in which a borrowed security is sold in anticipation of a decline in the market value of that
security, or for various arbitrage transactions. Short sales are classified as financial liabilities at fair value through
profit and loss.
Futures are contractual obligations to buy or sell financial instruments on a future date at a specified price
established in an organised market. The futures contracts are collateralised by cash and marketable securities;
changes in the futures contracts’ value are settled daily with the exchange. Interest rate futures are contractual
obligations to receive or pay a net amount based on changes in interest rates at a future date at a specified price,
established in an organised financial market. Futures are settled on a net basis.
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 carrying value which equates to their fair value as
reduced by appropriate allowances for estimated irrecoverable amounts.
Cash and Cash Equivalents
Cash and cash equivalents comprise cash deposited with banks, cash balances at brokers and short-term highly
liquid investments with maturities of three months or less from the date of acquisition. Prime broker cash balances
are held with Goldman Sachs International and Morgan Stanley & Co International. Short and long cash positions
held with these brokers can be netted off as per the prime broker agreements.
Collateral Cash held at brokers
Collateral cash consists of margin cash held as collateral for open derivative positions with the prime brokers,
Goldman Sachs International and Morgan Stanley & Co International. Short and long cash positions held with these
brokers can be netted off as per the prime broker agreements.
50
MAJEDIE INVESTMENTS PLC
1 Significant Accounting Policies continued
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.
Financial liabilities are classified as financial liabilities at fair value through profit or loss and are recognised initially at
fair value. Financial liabilities are subsequently measured at fair value and changes in fair value are recognised in the
statement of comprehensive income.
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 carrying value which equates to 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. The trans lation reserve is used to record exchange differences arising from the translation of the
financial statements of the Group’s foreign subsidiary.
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.
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 total shareholder return whilst increasing dividends by more
than the rate of inflation over the long term.
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 12 to 15 and exposure to
different currencies is disclosed in note 2 6 on pages 72 and 73.
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.
REPORT & ACCOUNTS 2011 51
Notes to the Accounts
2 Business Segments continued
Group
2011
Group
2010
Investment
management
Investing and advisory
activities
£000
services Eliminations
£000
£000
Investment
management
Investing and advisory
activities
£000
services Eliminations
£000
£000
Total
£000
Total
£000
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
1,318
(1,318)
5,537
(25)
3
5,540
10,091
50
25
5,512
1,321
(1,293)
5,540
10,141
2
92
94
10,093
(142)
(142)
10,093
(11 6)
(1,304)
(1,318)
13
(2,979)
(442)
1,318
(11 6)
(4,283)
(429)
(64)
(2,054)
(85)
(648)
(2,356)
(25)
110
(64)
(4,410)
(648)
(2,725)
(3,421)
1,318
(4,828)
(2,851)
(2,381)
110
(5,122)
Operating profit/(loss)
Finance costs
Intra-group finance costs
Gains/(losses) on fair value
through profit and loss
2,787
(2,886)
2,233
(2,100)
25
712
(2,886)
7,290
(2,802)
(2,287)
(32)
25
(25)
(25)
25
2,233
(2,361)
4,971
(2,802)
(2,361)
Profit/(loss) before tax
2,134
(2,075)
59
2,127
(2,312)
(7)
(192)
Dividends
( 5,463)
( 5,463)
(6,763)
(6,763)
Total assets
Total liabilities
Intra-group assets/(liabilities)
1 52,949
(4 4,131)
7,419
3,789
(725)
(419)
15 6,738 150,241
(35,571)
4,801
(4 4,856)
(7,000)
2,942
(453)
(301)
153,183
(36,024)
(4,500)
Net assets
116,237
2,645
(7,000) 111,882 119,471
2,188
(4,500) 117,159
3 Income
Income from investments
Franked investment income†
UK unfranked investment income
Overseas dividends
Fixed interest and convertible
bonds
Group
2011
£000
4, 153
138
1, 105
38
Group
2010
£000
8,778
21
1,156
56
Company
2011
£000
Company
2010
£000
4, 153
138
1,053
38
8,778
21
1,156
56
† Includes MAM special dividend income of £ nil (2010: £5,400,000).
5, 434
10,011
5,382
10,011
52
MAJEDIE INVESTMENTS PLC
3 Income continued
Other income
Deposit interest
Other interest
Sundry income
Total income
Total income comprises:
Dividends
Interest
Other income
Income from investments
Listed UK
Listed overseas
Unlisted
4 Management Fees
Investment management
Administration
Group
2011
£000
68
19
19
5, 396
125
19
2,377
1, 143
1,9 14
Group
2010
£000
44
38
Company
2011
£000
Company
2010
£000
6
19
(6)
43
25
62
1 06
5, 540
82
10,093
19
5,401
130
10,141
9,955
100
38
5,344
63
(6)
9,955
124
62
5, 540
10,093
5,401
10,141
2,618
1,156
6,237
2,377
1,091
1,914
2,618
1,156
6,237
5, 434
10,011
5,382
10,011
Company
2011
Capital
return
£000
519
519
Revenue
return
£000
173
245
418
Total
£000
692
245
937
Revenue
return
£000
14
20
34
Company
2010
Capital
return
£000
44
44
Total
£000
58
20
78
A summary of the terms of the Management Agreement for the Company with Javelin Capital LLP is given in the
Business Review on pages 22 and 23. At 30 September 2011, an amount of £ 49,000 was outstanding for payment
of investment management fees when due (2010: £58,000) and outstanding administration fees of £ 22,000 (2010:
£20,000).
The Manager is also entitled to a performance fee from the Company in accordance with the provisions of the
Management Agreement, the calculation of which is also described in the Business Review on page 23. No
performance fee is due in respect of the year ended 30 September 2011 (2010: £nil).
REPORT & ACCOUNTS 2011 53
Notes to the Accounts
5 Administrati ve Expenses
Staff costs – note 7
Other staff costs and directors’ fees
Advisers’ costs
Re structuring costs
Information costs
Establishment costs
Operating lease rentals – premises
Depreciation on tangible assets
Auditors’ remuneration
(see below)
Pre start-up costs
Other expenses
Group
2011
£000
1, 385
3 54
715
265
7 38
119
123
208
103
195
6 23
Group
2010
£000
851
232
498
129
132
132
84
66
2,516
482
Company
2011
£000
1 22
239
379
139
52
47
5 5
17
Company
2010
£000
768
232
444
82
113
132
64
52
627
259
4, 828
5,122
1,0 50
2,773
A charge of £ 2, 633,000 (2010: £ 2,017,000 inclusive of £627,000 pre-start-up costs) to capital and an equivalent
credit to revenue has been made in the Group and a charge of £ 319,000 (2010: £1,167,000) 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
6 Directors’ Emoluments
Salaries and fees
Other benefits
Group
2011
£000
96
7
Group
2010
£000
60
6
Company
2011
£000
Company
2010
£000
4 8
7
46
6
103
66
5 5
52
Company
2011
£000
243
1
Company
2010
£000
332
244
332
The Report on Directors’ Remuneration on pages 30 to 32 explains the Company’s policy on remuneration for
directors for the year. It also provides further details of directors’ remuneration.
54
MAJEDIE INVESTMENTS PLC
7 Staff Costs including Executive Directors
Group
2011
£000
1, 089
1 29
5 1
Salaries and other payments
Social security costs
Pension contributions
Share based remuneration
– note 2 5
11 6
Group
2010
£000
684
73
30
64
Company
2011
£000
6
11 6
Company
2010
£000
607
67
30
64
1, 385
851
1 22
768
Group
2011
Number
Group
2010
Number
Company
2011
Number
Company
2010
Number
11
17
7
Average number of employees:
Management and office staff
8 Finance Costs
Interest on 9.5% debenture stock 2020
Interest on 7.25% debenture stock 2025
Amortisation of expenses associated with debenture issue
Other interest payable
Interest on 9.5% debenture stock 2020
Interest on 7.25% debenture stock 2025
Amortisation of expenses associated with debenture issue
Group
2011
Group
2010
Revenue Capital
return
return
Total
£000
£000
£000
962 1,283
321
375 1,125 1,500
2 0
1 5
83
6 3
5
2 0
Revenue Capital
return
Total
return
£000
£000
£000
321
962 1,283
375 1,125 1,500
19
14
5
7 2 1 2, 165 2, 88 6
701 2,101 2,802
Company
2011
Company
2010
Revenue Capital
return
return
Total
£000
£000
£000
962 1,283
321
375 1,125 1,500
2 0
1 5
5
Revenue Capital
return
Total
return
£000
£000
£000
962 1,283
321
375 1,125 1,500
19
14
5
701 2,10 2 2,80 3
701 2,101 2,802
Further details of the debenture stocks in issue are provided in note 1 8.
9 Taxation
Analysis of tax charge
Tax on overseas dividends
Group
2011
£000
20 0
Group
2010
£000
131
Company
2011
£000
Company
2010
£000
12 1
131
REPORT & ACCOUNTS 2011 55
Notes to the Accounts
9 Taxation continued
Reconciliation of tax charge:
The current taxation for the year is higher than the standard rate of corporation tax in the UK of 2 7% , (2010: 28%).
The differences are explained below:
Net return before taxation
Taxation at UK Corporation Tax
rate of 27% (2010: 28%)
Group
2011
£000
5 9
Group
2010
£000
(192)
Company
2011
£000
2,1 58
Company
2010
£000
2,127
1 6
(54)
583
595
Effects of:
– UK dividends which are
not taxable
– foreign dividends which are
not taxable
– (losses)/gains on investments
which are not taxable
– expenses not deductible for
tax purposes
– excess expenses for
current year
– overseas taxation which is
not recoverable
Group
2011
£000
Group
2010
£000
Company
2011
£000
Company
2010
£000
(1,158)
(2,455)
(1,158)
(2,455)
(278)
( 603)
53
1,9 70
20 0
(302)
661
221
1,929
131
(278)
(417)
57
1,213
121
(302)
661
227
1,274
131
Actual current tax charge
20 0
131
121
131
Group
After claiming relief against accrued income taxable on receipt, the Group has unrelieved excess expenses of
£ 61, 728,000 (2010: £54,432,000). 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
£ 56,597,000 (2010: £52,093,000). 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.
56
MAJEDIE INVESTMENTS PLC
10 Dividends
The following table summarises the amounts recognised as distributions to equity shareholders in the period:
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 Final dividend of 6.30p paid on 26 January 2011
2011 Interim dividend of 4.20p paid on 29 June 2011
Proposed final dividend for the year ended
30 September 2011 of 6.30p (2010: final dividend
of 6.30p) per ordinary share
Group and
Company
2011
£000
3,277
2,186
2011
£000
3,279
Group and
Company
20 10
£000
3,277
1,301
2,185
5,463
6, 763
2010
£000
3,277
3,279
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 2011
of 4.20p (2010: 4.20p) per ordinary share
Proposed final dividend for the year ended 30 September
2011 of 6.30p (2010: 6.30p) per ordinary share
Special dividend for the year ended 30 September
2011 of nil (2010: 2.50p) per ordinary share
11 Return/(Loss) per Ordinary Share
2011
£000
2,18 6
3,27 9
2010
£000
2,185
3,277
1,301
5,46 5
6,763
Basic return/(loss) per ordinary share is based on 52,029,833 (2010: 52,022,510) 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 20. 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/(loss) per ordinary share shown for the years ended
30 September 2011 and 2010 since the share options referred to in note 20 would, if exercised, be satisfied by the
shares already held by the Employee Incentive Trust.
Basic and diluted revenue returns are based on net
revenue after taxation of:
Basic and diluted capital returns are based on net
capital loss of:
Group
2011
£000
2, 427
( 2, 568)
Group
2010
£000
6,156
(6,479)
Basic and diluted total returns are based on loss of:
(14 1)
(323)
REPORT & ACCOUNTS 2011 57
Notes to the Accounts
11 Return/(Loss) per Ordinary Share continued
Basic and diluted revenue returns are based on net
revenue after taxation of:
Basic and diluted capital returns are based on net
capital loss of:
Company
2011
£000
3,431
( 1,394)
Company
2010
£000
8,237
(6,241)
Basic and diluted total returns are based on return of:
2,037
1,996
12 Property and Equipment
Group
Leasehold
Improvements
£000
171
Group
Office
Equipment
£000
494
87
Group
Total
£000
665
87
171
581
752
23
17
111
191
134
208
40
131
148
302
279
383
342
410
531
Company
Leasehold
Improvements
£000
171
Company
Office
Equipment
£000
164
4
Company
Total
£000
335
4
171
168
339
23
17
91
30
114
47
40
131
148
121
47
73
161
178
221
Cost:
At 1 October 2010
Additions
Disposals
At 30 September 2011
Depreciation:
At 1 October 2010
Charge for year
Disposals
At 30 September 2011
Net book value:
At 30 September 2011
At 30 September 2010
Cost:
At 1 October 2010
Additions
Disposals
At 30 September 2011
Depreciation:
At 1 October 2010
Charge for year
Disposals
At 30 September 2011
Net book value:
At 30 September 2011
At 30 September 2010
58
MAJEDIE INVESTMENTS PLC
13 Investments at Fair Value Through Profit or Loss
Opening cost at beginning of year
Gains/(losses) at beginning of year
Group
2011
Unlisted
£000
14,034
20,854
Listed
£000
110,166
369
Group
2010
Total
£000
124,200
21,223
Listed
£000
104,461
6,796
Unlisted
£000
13,450
22,584
Total
£000
117,911
29,380
Opening fair value at beginning of year
110,535
34,888
145,423
111,257
36,034
147,291
Transfer on consolidation of QIF
Purchases at cost*
Sales – proceeds*
(Losses)/gains on sales
(Decrease)/increase in investment
(20,000)
1,305,385
(1,322,570)
(3,791)
(20,000)
1,305,385
(1,323,082)
(4,451)
(512)
(660)
55,988
(55,401)
5,903
(94)
(107)
55,988
(55,495)
5,796
holding gains
(2,564)
8,728
6,164
(6,427)
(1,730)
(8,157)
Adjustments for listing/delisting during
financial year
Foreign exchange gains on retranslation
(785)
785
of Foreign investment
72
72
Closing fair value at end of year
67,067
42,444
109,511
110,535
34,888
145,423
Closing cost at end of year
(Losses)/gains at end of year
69,262
(2,195)
12,862
29,582
82,124
27,387
110,166
369
14,034
20,854
124,200
21,223
Closing fair value at end of year
67,067
42,444
109,511
110,535
34,888
145,423
* The large increase in investment transactions in the year to 30 September 2011 reflects the high volume trading activity in the QIF in line with its
investment approach and industry peers.
Investments are disclosed as investments held at fair value of £112,822,000 less financial liabilities held at fair value
of £3,311,000.
Opening cost at beginning of year
Gains/(losses) at beginning of year
Opening fair value at beginning of year
Purchases at cost
Sales – proceeds
Losses on sales
(Decrease)/increase in investment holding gains
Adjustments for listing/delisting during financial year
Closing fair value at end of year
Closing cost at end of year
(Losses)/gains at end of year
Closing fair value at end of year
Company
2011
Related and
subsidiary
companies
£000
Total
£000
5,510
(839)
129,962
20,432
4,671
150,094
2,500
17,594
(34,888)
(4,714)
6,261
7,171
134,347
8,010
(839)
107,654
26,693
7,171
134,347
Unlisted
£000
13,986
20,902
34,888
(512)
(660)
8,728
42,444
12,814
29,630
42,444
Listed
£000
110,166
369
110,535
15,094
(34,376)
(4,054)
(2,467)
84,732
86,830
(2,098)
84,732
REPORT & ACCOUNTS 2011 59
Notes to the Accounts
13 Investments at Fair Value Through Profit or Loss continued
Opening cost at beginning of year
Gains/(losses) at beginning of year
Company
2010
Listed
£000
104,461
6,796
Unlisted
£000
13,450
22,584
Related and
subsidiary
companies
£000
Total
£000
1,000
(839)
118,911
28,541
Opening fair value at beginning of year
111,257
36,034
161
147,452
Purchases at cost
Sales – proceeds
Gains/(losses) on sales
(Decrease)/increase in investment holding gains
Adjustments for listing/delisting during financial year
Closing fair value at end of year
Closing cost at end of year
Gains/(losses) at end of year
Closing fair value at end of year
55,988
(55,401)
5,903
(6,427)
(785)
(94)
(107)
(1,730)
785
4,510
60,498
(55,495)
5,796
(8,157)
110,535
34,888
4,671
150,094
110,166
369
14,034
20,854
5,510
(839)
129,710
20,384
110,535
34,888
4,671
150,094
All operating subsidiaries are held at cost, less any impairment, unless considered to be an investment fund and
then held at fair value.
Unlisted investments include an amount of £ 3, 186,000 in 2 0 various companies, £ 39,000,000 for our investment in
MAM as detailed on page 65 and £ 258,000 (2010: £558,000) of loan or convertible notes that pay a fixed rate of
interest. The valuation of investments on pages 14 and 15 includes 8 unlisted investments of over £100,000
(including MAM).
During the year the Company incurred transaction costs amounting to £ 151,000 (2010: £296,000) of which
£ 74,000 (2010: £186,000) related to the purchases of investments and £ 77,000 (2010: £110,000) related to the
sales of investments. These amounts are included in gains/(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 (losses)/gains on sales
of equity investments
Increase/(decrease) in holding gains
on equity investments
Proceeds on sale of
derivative contracts
Unrealised gains on
derivative contracts (note 14)
Group
2011
£000
(4,451)
6,164
483
37
Group
2010
£000
5,796
(8,157)
Company
2011
£000
(4,714)
6,261
Company
2010
£000
5,796
(8,157)
Net return on investments
2,233
(2,361)
1,547
(2,361)
60
MAJEDIE INVESTMENTS PLC
13 Investments at Fair Value Through Profit or Loss continued
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.
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.
REPORT & ACCOUNTS 2011 61
Notes to the Accounts
13 Investments at Fair Value Through Profit or Loss continued
The table below sets out fair value measurements of financial assets in accordance with the IFRS fair value
hierarchy system:
Financial assets
Financial assets designated at
fair value through profit or loss
Equities and managed funds
Listed equity securities
Unlisted equity securities
Unlisted preference shares
Exchange traded funds
Interest bearing securities
Unlisted convertible bonds
Derivatives financial assets
Contracts for difference
Financial liabilities
Financial liabilities designated at
fair value through profit or loss
Listed equities
Exchange traded funds
Derivatives
Contracts for difference
Index futures
Financial liabilities measured
at amortised cost
9.5% Debenture stock 2020
7.25% Debenture stock 2025
Group
2011
Group
2010
Level 1
£000
Level 2
£000
Level 3
£000
Total
£000
Level 1
£000
Level 2
£000
Level 3
£000
Total
£000
70,009
70,009
2,093
1,218
3
369
136
505
96
13,392
20,409
3,314
33,897
42,182
4
258
70,009
42,182
4
369
258
136
110,464
71
34,325
5
110,464
34,325
76
558
558
42,444 112,958
110,535
34,888 145,423
2,093
1,218
96
3
13,392
20,409
37,211
13,384
20,397
33,781
13,384
20,397
33,781
62
MAJEDIE INVESTMENTS PLC
13 Investments at Fair Value Through Profit or Loss continued
Financial assets
Financial assets designated at
fair value through profit or loss
Equities and managed funds
Listed equity securities
Unlisted equity securities
Unlisted preference shares
Interest bearing securities
Unlisted convertible bonds
Financial liabilities
Financial liabilities measured
at amortised cost
9.5% Debenture stock 2020
7.25% Debenture stock 2025
Company
2011
Company
2010
Level 1
£000
Level 2
£000
Level 3
£000
Total
£000
Level 1
£000
Level 2
£000
Level 3
£000
Total
£000
84,732
49,353
4
84,732
49,353
4
110,464
71
38,996
5
110,464
38,996
76
258
258
558
558
84,732
49,615 134,347
110,535
39,559 150,094
13,392
20,409
33,801
13,392
20,409
33,801
13,384
20,397
33,781
13,384
20,397
33,781
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 2011 63
Notes to the Accounts
13 Investments at Fair Value Through Profit or Loss continued
The following table presents the movement in level 3 instruments for the year ended 30 September 2011:
Group
2011
Total
£000
34,888
Equity
investments
£000
34,325
Convertible
bonds
£000
260
Convertible Preference
shares
loan notes
£000
£000
5
298
(512)
(217)
8, 068
42,444
8, 074
42,182
(2)
258
(295)
(3)
(1)
4
36,034
35,465
274
294
1
Group
2010
785
(94)
785
(94)
(1,837)
(1,831)
34,888
34,325
(14)
260
4
298
4
5
Company
2011
Convertible
bonds
£000
260
Convertible Preference
shares
loan notes
£000
£000
5
298
Total
£000
39,559
2,500
Equity
investments
£000
38,996
2,500
(512)
(217)
8, 068
49,615
8, 074
49,353
(2)
258
(295)
(3)
(1)
4
Company
2010
274
294
1
36,195
4,510
785
(94)
35,626
4,510
785
(94)
(1,837)
(1,831)
39,559
38,996
(14)
260
4
298
4
5
Opening balance
Purchases
Transfers from Level 1
Sales – proceeds
Total gains/(losses) for the year included in
the income statement
Opening balance
Purchases
Transfers from Level 1
Sales – proceeds
Total (losses)/gains for the year included in
the income statement
Opening balance
Purchases
Transfers from Level 1
Sales – proceeds
Total gains/(losses) for the year included in
the income statement
Opening balance
Purchases
Transfers from Level 1
Sales – proceeds
Total (losses)/gains for the year included in
the income statement
64
MAJEDIE INVESTMENTS PLC
13 Investments at Fair Value Through Profit or Loss continued
Substantial Share Interests
The Group 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 and the QIF which are disclosed
separately below) in the context of these accounts are shown below:
AOI Medical
Sutherland Health
Fair
Value
£000
152
39
% of
Class Held
4.76
4.30
The Group does not exercise significant influence over the operating and financial policies of the above companies
which are therefore not considered to be associated companies.
Javelin Capital Global Equity Strategies Fund (QIF)
The Company has invested £20m of seed capital to the QIF and currently has a 98.77% interest in the QIF. As such
and in accordance with IFRS, the QIF is consolidated into the group accounts for the year to 30 September 2011.
The QIF is being actively marketed to potential external investors and it is forecast that the Company’s interest will
reduce significantly in the future which will result in the QIF being deconsolidated. The results of the QIF for the period
ended 30 September 2011 are shown in note 15 on page 66.
Majedie Asset Management (MAM)
MAM is a UK based asset management firm, 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
2011
£000
1,207
3 7,793
2010
£000
1,207
28,793
39,000
30,000
The carrying value of MAM in the 30 September 2011 Consolidated Financial Statements is its fair value as assessed
at 30 September 2011. 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 2011 and the 2012 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 marketability discount.
The results of MAM for the year ended 30 September 2011 show a net profit after taxation of £ 10,630,000 (2010:
£14, 633,000) and shareholders’ funds of £ 25,134,000 (2010: £18, 892,000). As the Company does not exercise
significant influence over the operating and financial policies of MAM it is not considered to be an associate, and
the ir 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.
During the year ended 30 September 2011 the Company had a 30% equity shareholding in MAM. MAM has
established on an Employee Benefit Trust and in accordance with the revised shareholders’ agreement, the founding
shareholders will sell a certain number of shares to the EBT, usually annually and at the prescribed price (calculated
in accordance with the shareholder agreement).
On 26 October 2011, the Company sold 590 ordinary 0.1p shares to the EBT for a consideration of £166,000 and a
realised gain of £160,000. Following this transaction the Company holds 127,981 ordinary 0.1p shares representing a
29.9% equity shareholding.
REPORT & ACCOUNTS 2011 65
Notes to the Accounts
14 Derivative financial instruments
Introduction
The company and its subsidiaries may invest in both exchange traded and OTC financial derivative instruments.
There were no investments held by the Company in derivative instruments at the reporting date. However, through
the Company’s investment in Javelin Capital Global Equity Strategies Fund ( QIF ) the Fund has invested in the
following financial derivative instruments at the reporting date:
a) Contracts for differences (“CFDs”)
Details of how the QIF uses CFDs are disclosed in the accounting policies note on page 50. Also, as at
30 September 2011, the fair value of CFDs is disclosed below and on the Balance Sheet.
b) Futures
Details of how the QIF uses futures are disclosed in the accounting policies note on page 50. Also, as at
30 September 2011, the fair value of open futures positions is disclosed below and on the Balance Sheet.
Assets
£000
136
Group
2011
Liabilities
£000
(96)
(3)
Net
£000
40
(3)
136
(99)
37
Derivatives instruments
Contracts for difference
Index futures
1 5 Investment in Subsidiaries
a) Subsidiary undertakings at 30 September 2011
Company
Country of
Registration
Incorporation
and Operation
Number and
class of shares
held by group
Group
Holding
Capital
Reserves at
30.09.11
£000
Profit after
tax for the
year ended
30.09.11
£000
UK
UK
UK
UK
Ireland
Ireland
1,000,000
Ordinary
shares
10,000
Units
7 5%
interest
100
Ordinary
shares
125,000
Ordinary
shares
310,840
Redeemable
Participating
shares
100%
162
100%
(1,605)
(1,615)
7 5%
1,8 97
( 1,8 48)
7 5%
7 5%
1 25
7
98.7%
20,166
(46)
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, authorised and
regulated by the FSA
Javelin Capital Services Limited
– Administration Services
Javelin Capital Fund Management Limited
– Asset Management
Javelin Capital Strategies Plc
(subfund: Javelin Capital Global
Equity Strategies Fund)
– Qualifying Investment Fund (QIF), supervised
by the Central Bank in Ireland
66
MAJEDIE INVESTMENTS PLC
1 5 Investment in Subsidiaries – Company
Javelin Capital Services Limited and Javelin Capital Fund Management Limited are all wholly owned subsidiaries of
Javelin Capital LLP.
Following a review of the Javelin group the Javelin Capital E BT was wound up and it ceased to be a partner in
Javelin Capital LLP on 30 September 2011.
b) Non-Controlling Interest
The non-controlling interest reflected in the Consolidated Statement of Comprehensive Income and Balance Sheet
represents the other investors in the QIF as recognised in accordance with IFRS.
In respect of the consolidation of the Javelin Capital entities into the Group accounts, 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 Non-Controlling interest to be recognised in the Consolidated
Statement of Comprehensive Income or Balance Sheet.
1 6 Trade and Other Receivables
Sales for future settlement
Payments in advance
Dividends receivable
Accrued income
Taxation recoverable
Amounts due from subsidiary
undertakings
Group
2011
£000
4, 179
1, 25 6
298
18
6 6
Group
2010
£000
832
451
346
17
45
Company
2011
£000
174
193
298
8
66
Company
2010
£000
832
36
346
17
45
5, 81 7
1,691
1,180
1,676
441
400
The directors consider that the carrying amounts of trade and other receivables approximates to their fair value.
1 7 Cash and Cash Equivalents
Group
2011
£000
17, 051
Deposits at banks
Collateral cash held with brokers
2,115
Non collateral cash held with brokers 1 7,575
812
Other balances
Cash used for collateral is restricted.
Group
2010
£000
4,903
Company
2011
£000
1 4,809
Company
2010
£000
2,686
635
436
371
37, 55 3
5,538
15,245
3,057
REPORT & ACCOUNTS 2011 67
Notes to the Accounts
1 8 Trade and Other Payables
Amounts falling due within one year:
Purchases for future settlement
Accrued expenses
Other creditors
Group
2011
£000
5,86 1
2 85
1, 499
Group
2010
£000
598
449
1,196
Company
2011
£000
276
707
Company
2010
£000
598
522
671
7,6 4 5
2,243
983
1,791
The Directors consider that the carrying amounts of trade and other receivables approximates to their fair value.
Amounts falling due after more than one year:
£ 13.5m (2010: £13.5m) 9.5%
debenture stock 2020
£ 20.7m (2010: £20.7m) 7.25%
debenture stock 2025
Group
2011
£000
13,392
20,409
Group
2010
£000
13,384
20,397
Company
2011
£000
Company
2010
£000
13,392
20,409
13,384
20,397
33,801
33,781
33,801
33,781
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.
1 9 Called Up Share Capital
Allotted and fully paid at 30 September:
52,528,000 (2010: 52,528,000) ordinary shares of 10p each
Company
2011
£000
5,253
Company
2010
£000
5,253
There are 483,387 (2010: 505,490) ordinary shares of 10p each held by the Employee Incentive Trust. See note 20.
Ordinary shares carry one vote each on a poll.
20 Own Shares
The total number of options outstanding at the date of this report is 188,756 under the LTIP and the total
shareholding of the Employee Incentive Trust is 483,387 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 1 October 2010
Options exercised
As at 30 September 2011
Number of
Shares
505,490
(22,103)
Group and
Company
Own Shares
Reserve
£000
(1,702)
74
483,387
(1,628)
68
MAJEDIE INVESTMENTS PLC
2 1 Net Asset Value
The consolidated net asset value per share has been calculated based on equity shareholders’ funds of £ 11 1, 6 34,000
(2010: £117,159,000) and on 52,044,613 (2010: 52,022,510) ordinary shares, being the shares in issue at the year
end having deducted the number of shares held by the EIT.
2 2 Analysis of Changes in Net Funds/(Debt)
Group
At 30
September
2010
£000
Cash at bank and with brokers
5,538
Debt due after one year
(33,781)
Cash
Flows
£000
32,015
Non
Cash
Items
£000
(20)
At 30
September
2011
£000
3 7,553
(33,801)
(28,243)
32,015
( 20)
3,752
Company
Cash at bank
Debt due after one year
At 30
September
2010
£000
3,057
(33,781)
Cash
Flows
£000
12,188
Non
Cash
Items
£000
(20)
At 30
September
2011
£000
15,245
(33,801)
(30,724)
12,188
(20)
(18,556)
2 3 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 2011 under the lease of £ 145,000 (2010:
£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
2 4 Financial Commitments
Group
2011
£000
145
145
32
Group
2010
£000
145
145
145
35
322
470
At 30 September 2011 the Group had no financial commitments which had not been accrued for (2010: none).
2 5 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. 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.
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.
REPORT & ACCOUNTS 2011 69
Notes to the Accounts
2 5 Share-based Payments continued
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.
Group
2011
TSR-based
Awards
Matching
Awards
Weighted
No. Average
of Exercise
Options Price (p)
0.0
291,268
Weighted
No. Average
of Exercise
Options Price (p)
0.0
17,812
(13,430)
(122,965)
23,446
178,319
0.0
0.0
0.0
0.0
(8,673)
1,298
10,437
10,437
0.0
0.0
0.0
Discretionary
Share Option
Scheme 2000
Group
2010
TSR-based
Awards
Weighted
No. Average
of Exercise
Price (p)
Options
Options
106,656 330.03 166,427
Weighted
No. Average
of Exercise
Price (p)
0.0
Matching
Awards
Weighted
No. Average
of Exercise
Price (p)
0.0
Options
17,071
112,721
0.0
(106,656) 330.03
12,120
291,268
0.0
0.0
741
17,812
0.0
0.0
Outstanding at 1 October 2010
During the year:
Awarded
Forfeited
Exercised
Expired
Increase in awards due to dividends paid
Outstanding at 30 September 2011
Exercisable at 30 September 2011
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
The re were no awards made during the year (2010: £154,000 relating to the aggregate estimated fair value of
112,721 TSR-based options granted on 4 December 2008).
On 31 March 2011, 5,701 share options were exercised at a share price of 180p with a resultant gain to the former
employee of £10,000. Additionally on 24 June 2011, 16,402 share options were exercised at a share price of
172.50p giving a gain to the former employee of £28,000.
During the year 1 22, 965 share options lapsed in accordance with the leaving agreement for a former employee.
70
MAJEDIE INVESTMENTS PLC
2 5 Share-based Payments continued
The awards outstanding at 30 September 2011 had a weighted average remaining contractual life of 3.4 years and
0.1 years in respect of the TSR-based Awards and Matching Awards respectively (2010: 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
2011
TSR-based
Awards
n/a
n/a
n/a
n/a
n/a
n/a
2010
TSR-based
Awards
200.0p
0.0p
34.0%
5 yrs
2.5%
5.25%
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 2011, the Company recognised a total share options expense of £ 11 6,000
(2010: £64,000 including a one-off vesting charge of £ 59,000 (2010: nil)) relating to share-based payment
transactions in the year ended 30 September 2011.
2 6 Financial Instruments and Risk Profile
As an investment trust, the Company invests in securities for the long term in order to achieve its investment
objective as stated on page 1. Accordingly it is the Board’s policy that no trading in investments or other financial
instruments be undertaken. The Company’s financial instruments comprise its investment portfolio – see note 13 –
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 it s net assets and which could result in both or either a reduction in it s net assets or a reduction in the profits
available for distribution by way of dividend. The main risk exposures for the Company from its financial instruments
are market risk (including currency risk, interest rate risk and other price risk), liquidity risk and credit risk.
The Board sets the overall investment strategy and has in place various controls and limits and receives various
reports in order to monitor the Company’s and Group’s exposure to these risks. The risk management policies
identified in this note have not changed materially from the previous accounting period in respect of the Company.
REPORT & ACCOUNTS 2011 71
Notes to the Accounts
2 6 Financial Instruments and Risk Profile continued
In respect of the Javelin Capital Global Equity Strategies Fund (QIF), the QIF invests in order to meet its objectives
utilising the Investment Manager’s strategy by investing primarily in global equity markets, including both developed
and emerging markets. The portfolio it holds is expected to be well diversified across countries and sectors, with no
specific, or permanent, regional or sector focus. In order to achieve its objectives, the QIF takes both long and short
positions. Such long exposure is attained through investing in equity and equity- related securities. The QIF
maintains flexibility and may invest in the following financial instruments without limitation:
(cid:129) a full range of financial instruments in both developed and emerging markets including equities, equity-related
securities, futures, options, warrants and other access products;
(cid:129) other financial instruments may be used, including, but not limited to, index futures, structured products, swaps
and contracts for difference (“CFDs”);
(cid:129) commodity futures and commodity-related exchange traded funds (“ETFs”);
(cid:129) spot and forward foreign currency exchange contracts, options and related instruments; and
(cid:129) cash on deposit or cash equivalents may be held; these deposits may, or may not, be held through the
Prime Brokers and its Custodian.
The QIF Board ensures that the QIF is operating in accordance with its prospectus and Irish QIF regulations.
The QIF Board receives regular reports from its various service providers so that it can monitor the QIF’s exposure to
these risks. Similar to the Company the QIF, is also exposed to various risks as it pursues its investment objective
which are the same as those for the Company.
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 and Company are denominated in currencies other than sterling, with the
effect that the balance sheet and total return can be materially affected by currency movements. The Group and
Company’s exposure to foreign currencies through its investments in overseas securities as at 30 September 2011
was £ 24,640,000 and £22,210,000 respect ively (2010: £51, 648,000 Group and Company).
In respect of the Company, the Investment Manager monitors the Company’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
Company’s Core Portfolio benchmark allocation to foreign currencies but takes independent positions based on a
long term view on the relative strengths and weaknesses of currencies. Additionally the currency of investment is not
the only relevant factor considered as many portfolio investment companies are global in scope and nature. The
Company does not normally hedge against foreign currency movements.
In respect of the QIF its functional currency is the US dollar and in addition to its investments in securities it has
large cash balances in US dollars. The investment manager manages all foreign currency risk from a US dollar
perspective utilising various strategies and diversification of investments held. The Company does not currently
hedge its QIF investment in pounds sterling.
72
MAJEDIE INVESTMENTS PLC
2 6 Financial Instruments and Risk Profile continued
The currency risk of the Group and Company’s non- sterling monetary financial assets and liabilities at the Balance Sheet
date was:
Currency exposure
US Dollar
Euro
Yen
Other non-sterling
Currency exposure
US Dollar
Euro
Yen
Other non-sterling
Group
2010
Net
monetary
assets
£000
Company
2010
Net
monetary
assets
£000
Group
2011
Net
monetary
assets
£000
19,417
285
(12)
Total
currency
exposure
£000
31,722
4,190
2,134
6,285
Overseas
investments
£000
12,304
3,905
2,134
6,297
24,640
19,690
44,330
Company
2011
Net
monetary
assets
£000
Total
currency
exposure
£000
12,361
4,013
2,134
3,702
22,210
Overseas
investments
£000
12,361
4,013
2,134
3,702
22,210
Overseas
investments
£'000
37,124
6,573
2,462
5,489
51,648
Overseas
investments
£'000
37,124
6,573
2,462
5,489
51,648
Total
currency
exposure
£000
37,124
6,573
2,462
5,489
51,648
Total
currency
exposure
£000
37,124
6,573
2,462
5,489
51,648
Sensitivity analysis
If sterling had strengthened by 5% relative to all currencies on the reporting date, with all the other variables held
constant, the income and the net assets attributable to equity holders of the parent would have decreased by the
amounts shown below. The analysis is performed on the same basis for 2010. The revenue impact is an estimated
figure for 12 months based on the relevant cash balances at the reporting date.
Income Statement
Revenue return
Capital return
Net assets
Group
2011
£000
(1)
(1,232)
Group
2010
£000
Company
2011
£000
Company
2010
£000
(2,582)
(1,110)
(2,582)
(1,233)
(2,582)
(1,110)
(2,582)
A 5% weakening of sterling against the above currencies would have resulted in an equal and opposite effect on the
above amounts, on the basis that all other variables remain constant.
Interest Rate Risk
The Company’s direct interest rate risk exposure affects the interest received on cash balances and the fair value of
its fixed rate portfolio investments and debentures. Indirect exposure to interest rate risk arises through the effect of
interest rate changes on the valuation of the investment portfolio. The vast majority of the financial assets held by the
Company are equity shares, which pay dividends, not interest. The Company may however from time to time hold
small investments which pay a fixed rate of interest.
REPORT & ACCOUNTS 2011 73
Notes to the Accounts
2 6 Financial Instruments and Risk Profile continued
The Board sets limits for cash balances and receives regular reports on the cash balances of the Company. The
Company’s fixed rate debentures introduce an element of gearing to the Company which is monitored within limits
and reported to the Board. Cash balances are used to manage the level of gearing within a range set by the Board.
The Board sets an overall investment strategy and also has various limits on the investment portfolio which aim to
spread the portfolio investments to reduce the impact of interest rate risk on company valuations. Regular reports
are received by the Board in respect of the Company’s investment portfolio and the respective limits.
In respect of the QIF , it has substantial cash balances at its Prime Brokers and uses leverage as part of its
investment activities that expose the Fund to interest rate risk. The Fund sets limits on gearing employed and
monitors cash and borrowings daily. Additionally both cash balances held and borrowings are short term in nature.
Cash held at brokers earns a return similar to the overnight money market less client protection charges and whilst
substantial gives rise to limited interest rate risk.
The interest rate risk profile of the financial assets and liabilities at the Balance Sheet date was:
Floating rate financial assets
UK sterling
US dollars
Fixed rate financial assets Euros
As referred to in note 13
Financial assets not carrying
interest
Group
2011
£000
17,746
19,807
258
Group
2010
£000
5,538
Company
2011
£000
Company
2010
£000
22,245
7,557
558
258
558
118,92 7
147,087
128,447
146,933
Total assets
156,73 8
153,183
150,950
155,048
Fixed rate financial liabilities
UK sterling
Financial liabilities not
carrying interest
Total liabilities
Net assets
(33,801)
(33,781)
(33,801)
(33,781)
( 11,055)
(2,243)
(983)
(1,791)
(44,8 56)
(36,024)
(34,784)
(35,572)
111,8 82
117,159
116,166
119,476
Floating rate financial assets usually comprise collateral cash and also cash on deposit with banks and prime
brokers 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 £ 7.0m (2010: £4.5m) 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).
74
MAJEDIE INVESTMENTS PLC
2 6 Financial Instruments and Risk Profile continued
Sensitivity analysis
Based on closing cash balances held on deposits with banks and with Prime Brokers, a 0.50% decrease (0.50%) in
base interest rates would have the following effect on net assets of the Group and Company:
Income Statement
Revenue return
Net assets
Group
2011
£000
(184)
Group
2010
£000
(25)
Company
2011
£000
(74)
Company
2010
£000
(13)
(184)
(25)
(74)
(13)
A 0.5% increase (0.5%) in interest rates would have resulted in a proportionate equal and opposite effect on the
above amounts on the basis that all other variables remain constant. The above analysis is based on closing
balances only and is not representative of the year as a whole.
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 59. The Company also has
unlisted investments which are indirectly impacted by movements in listed equity prices and related variables. The
Board sets an overall investment strategy to achieve a spread of investments across sectors and regions in order to
reduce risk. 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.
In respect of the QIF it has equity securities and related derivative instruments that are also susceptible to other
price risk arising from uncertainties about the future prices of the instruments. With regards to the changes in actual
market prices, the QIF is managed on an absolute return basis and does not have a benchmark as such.
The Investment Manager’s policy is to manage risk through a combination of monitoring the exposure to individual
securities, industry and geographic sectors, whilst maintaining a constant awareness in real time of the portfolio
exposures in accordance with the investment strategy. The QIF Board receive quarterly reports from the Investment
Manager detailing portfolio composition. The closing fair value of equities and related derivatives exposed to price
risk is shown as part of note 1 3. Individual significant positions are disclosed in the portfolio of investments on page s
14 and 15. Furthermore, the QIF typically invests in highly liquid securities for which price discovery is easily
undertaken.
REPORT & ACCOUNTS 2011 75
Notes to the Accounts
2 6 Financial Instruments and Risk Profile continued
Concentration of exposure to other price risks
An analysis of the Group's investment portfolio is shown on page 12. This shows that the largest amount of equity
investments by value is in UK companies (31.3%), with 14.8% of total investments listed or exposed to overseas
countries. It also shows the concentration of investments in various sectors.
The following table details the exposure to market price risk on its quoted and unquoted equity investments:
Fixed Asset Investments at
Fair Value through Profit and Loss
Listed equity investments
Unlisted
Related and Subsidiary Companies
Unsettled derivatives contracts
Financial Liabilities at
Fair Value through Profit and Loss
Listed equity investments
– sold short
Unsettled derivatives contracts
Group
2011
£000
70,378
42,444
136
Group
2010
£000
110,535
34,888
Company
2011
£000
84,732
42,444
7,171
Company
2010
£000
110,535
34,888
4,671
112,958
145,423
134,347
150,094
(3,311)
(99)
(3,410)
Sensitivity analysis
If share prices on listed equity investments had decreased by 10% at the reporting date with all other variables
remaining constant, the income and the net assets attributable to the equity holders of the Group would have
decreased by the amounts shown below. The analysis for last year assumed a share price decrease of 5%.
Group
2011
£000
Group
2010
£000
Company
2011
£000
Company
2010
£000
Income Statement
Capital return
Net assets
(6,706)
(11,054)
(4,237)
(5,527)
(6,706)
(11,054)
(4,237)
(5,527)
A 10% increase (5% increase) in share prices would have resulted in a proportionate equal and opposite effect on
the above amounts on the basis that all other variables remain constant.
76
MAJEDIE INVESTMENTS PLC
2 6 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)
(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 .
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.
The QIF is exposed to credit risk, through its exposure in respect of assets it holds at Prime Brokers and its
Custodian. Certain liens exist over the assets of the QIF that arise from time to time in the normal course of
business and the Prime Brokers and Custodian have at all times a floating charge over the assets of the QIF. The
QIF will rank as one of the Prime Brokers’ unsecured creditors in relation to assets which the Prime Brokers use
for their own account, or that of any other customer. In the event of insolvency of a Prime Broker or its
Custodian, the QIF may not be able to recover equivalent assets from that Prime Broker or Custodian in full.
Derivatives used by the QIF may be exchange traded or OTC. The risk of default is considered minimal as the
vast majority of securities are dematerialised and thus the book entry is made for cash settlement at the same
time as the book entry for the transfer of the security. Exchange traded derivatives transactions are also
considered to create minor risk of default, as the exchange involved will generally guarantee trade effected on
the exchange. The QIF is also exposed to counterparty credit risk on trading equity securities, cash and cash
equivalents, and other receivable balances. All transactions in equity securities are settled/paid for upon delivery
using approved brokers. The risk of default is considered minimal, as delivery of securities sold is only made
once the broker has received payment.
REPORT & ACCOUNTS 2011 77
Notes to the Accounts
2 6 Financial Instruments and Risk Profile continued
Credit Risk Exposure
At the reporting date, the financial assets exposed to credit risk amounted to the following:
Investments in debt instruments
Cash on deposit and at banks
Collateral cash held with brokers
Non-collateral cash held with brokers
Sales for future settlement
Unsettled derivatives contracts
Interest, dividends and
other receivables
Group
2011
£000
258
17,863
2,115
17,575
4,179
136
1,638
Group
2010
£000
558
5,538
832
859
Company
2011
£000
258
15,245
174
1,006
Company
2010
£000
558
3,057
832
844
43,764
7,787
16,683
5,291
Maximum exposure during the year
6,552
Minimum exposure during the year
50,099
7,787
16,373
2,815
16,683
5,290
16,210
All amounts included in the analysis above are based on their carrying values.
None of the financial assets were past due or impaired at the reporting date.
Liquidity Risk
Liquidity risk is the risk that the Group or Company will encounter difficulties meeting its obligations as they fall due.
Liquidity risk is not significant as the majority of the Group’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 Group’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 does have exposure to concentration risk due to its two investments in
MAM and Javelin Capital, primarily in relation to MAM at 26.8% of the Company’s investment portfolio. The Company
closely monitors these investments and received regular financial reports and believes that the current concentration
risk is in-line with the Company’s objective of diversifying its investment portfolio into four major groups.
The Group maintains an appropriate level of cash balances in order to finance its operations and the Investment
Manager regularly monitors the Group’s cash balances to ensure all known or forecasted liabilities can be met. The
Board receives regular reports on the level of the Group’s cash balances. The Group does not have any overdraft or
other borrowing facilities to provide liquidity.
In respect of the QIF, it manages its liquidity risk by investing predominantly in securities it expects to liquidate within
3 days, without substantial market impact, and by financing its trading activities through the use of margin loans with
its Prime Brokers. Additionally, trading limits are in place to limit the extent to which liabilities may be extended to
the QIF.
78
MAJEDIE INVESTMENTS PLC
2 6 Financial Instruments and Risk Profile continued
A maturity analysis of financial liabilities showing the remaining contractual maturities is detailed below:
Group
2011
Undiscounted cash flows
9.5% debenture stock 2020
7.25% debenture stock 2025
Interest on financial liabilities
Listed investments sold short
Derivative instruments
Trade payable and other liabilities
(excluding social security and sundry taxes)
Due within
1 year
£000
2,783
3,311
99
7,64 5
13,8 38
Due between Due between Due 3 years
and beyond
2 and 3 years
1 and 2 years
£000
£000
£000
13,500
20,700
23,650
2,783
2,783
Total
£000
13,500
20,700
31,999
3,311
99
7,64 5
2,783
2,783
57,850
77,25 4
Undiscounted cash flows
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
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
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
Due between
1 and 2 years
£000
Group
2010
Due between Due 3 years
and beyond
2 and 3 years
£000
£000
13,500
20,700
26,433
2,783
Total
£000
13,500
20,700
34,782
2,243
2,783
2,783
2,783
60,633
71,225
Company
2011
Due between Due between Due 3 years
and beyond
2 and 3 years
1 and 2 years
£000
£000
£000
13,500
20,700
23,650
2,783
2,783
Total
£000
13,500
20,700
31,999
983
2,783
2,783
57,850
67,182
2,783
2,243
5,026
Due within
1 year
£000
2,783
983
3,766
Company
2010
Due between Due 3 years
and beyond
2 and 3 years
£000
£000
13,500
20,700
26,433
2,783
Total
£000
13,500
20,700
34,782
1,791
Due within
1 year
£000
Due between
1 and 2 years
£000
2,783
2,783
1,791
4,574
2,783
2,783
60,633
70,773
REPORT & ACCOUNTS 2011 79
Notes to the Accounts
2 6 Financial Instruments and Risk Profile continued
Categories of financial assets and liabilities
The following table analyses the carrying amounts of the financial assets and liabilities by categories as defined in
IAS 39:
Financial assets
Financial assets at fair value
through profit or loss
Equity and debt securities
Derivatives Contracts
Group
2011
£000
112,822
136
Group
2010
£000
Company
2011
£000
Company
2010
£000
145,423
134,347
150,094
112,958
145,423
134,347
150,094
Other financial assets1
43,370
7,229
16,425
4,733
156,328
152,652
150,772
154,827
Financial liabilities
Financial liabilities at fair value
through profit or loss
Equities
Derivatives contracts
Financial liabilities measured at
amortised cost2
3,311
99
3,410
41,446
36,024
34,784
35,572
44,856
36,024
34,784
35,572
1 Other financial assets include: cash and cash equivalents, due from brokers, cash collateral on securities borrowed, dividend and interest
receivables, other receivables and prepayments.
2 Financial liabilities measured at amortised cost include: debenture stock issued, due to brokers, fees and other payables and
accrued expenses.
The investment portfolio has been valued in accordance with the accounting policy in note 1 to the accounts , i.e. at
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 compan ies’ debt instrument, with an appropriate margin spread added.
Group and Company
Financial liabilities
£13.5m (2010: £13.5m) 9.5%
debenture stock 2020
£20.7m (2010: £20.7m) 7.25%
debenture stock 2025
Book
Value
2011
£000
13,392
20,409
Book
Value
2010
£000
13,384
20,397
Fair
Value
2011
£000
17,168
24,790
Fair
Value
2010
£000
17,532
23,473
33,801
33,781
41,958
41,005
80
MAJEDIE INVESTMENTS PLC
2 6 Financial Instruments and Risk Profile continued
Capital Management Policies and Procedures
The Company’s capital management objectives are:
(cid:129)
(cid:129)
to ensure that it is able to continue as a going concern; and
to maximise the revenue and capital returns to its equity shareholders through an appropriate mix of equity
capital and debt. The Board sets a range for the Company’s net debt (comprised of debentures less cash) at
any one time which is maintained by management of the Company’s cash balances.
Capital at 30 September comprises:
Group
2011
£000
Net (funds)/debt
Cash and cash equivalents
Debentures
(37,553)
33,801
Sub total
Equity
Equity share capital
Retained earnings and
other reserves
Group
2010
£000
(5,538)
33,781
Company
2011
£000
(15,245)
33,801
Company
2010
£000
(3,057)
33,781
(3,752)
28,243
18,556
30,724
5,253
5,253
5,253
5,253
106,381
111,906
110,913
114,223
Sub total
111,634
117,159
116,166
119,476
Net debt as a percentage of
net assets
(3.4%)
24.1%
16.0%
25.7%
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.
REPORT & ACCOUNTS 2011 81
Notes to the Accounts
2 7 Related Party Transactions
Javelin Capital LLP
Javelin Capital LLP (Javelin Capital) is the investment manager and general administrator to the Company and is
also the parent entity of Javelin Capital Fund Management Limited (JCFM) and Javelin Capital Services Limited (JCS)
all of which are consolidated in the Group accounts.
Javelin Capital Strategies Plc is an Irish Stock Exchange listed Qualifying Investment Fund ( QIF ). It currently has one
sub-fund called the Javelin Capital Global Equity Strategies Fund, which due to the relative size of the Company’s
investment in the sub-fund is also consolidated into the Group accounts. Javelin Capital and JCFM act as
investment manager and manager for the QIF respectively and are entitled to receive management and performance
fees.
In addition to any fees received from the QIF, Javelin Capital is also entitled to receive management, performance
and administration fees from the Company itself in accordance with the relevant agreements. These agreements
take account of any fees charged in the QIF so that no double charging occurs.
JCS provides administrative services to the Group. In performing these services it incurs expenses which are
recovered by way of recharges and management fees. The Company allows the Javelin Capital entities use of
various assets to perform their respective functions for which it receives a lease fee, however this can be waived by
the Company at its discretion.
Following approval by shareholders at a General Meeting of the Company held on 29 June 2011, the Company
provided additional capital to Javelin Capital of £2.5m.
The Company has a £20m investment in the Javelin Capital Global Equity Strategies Fund. This investment is
subject to management and performance fees in accordance with the fund’s prospectus and supplement.
Javelin Capital as investment manager is required to, or chooses to do so, under certain circumstances make
payments to the QIF in order to reimburse the fund for expense rebates or compensation payments.
The Company pays certain costs on behalf of Majedie Portfolio Management Limited (MPM) in connection with the
Majedie Investments PLC Share Plan and additionally is charged a management fee by MPM. Any such costs paid
by the Company are recharged to MPM net of any management fees due.
82
MAJEDIE INVESTMENTS PLC
2 7 Related Party Transactions continued
The table below discloses the transactions and balances between those entities:
Transactions during the period:
QIF fee revenue due to Javelin Capital
QIF fee revenue due to JCFM
Company management fee revenue due to Javelin Capital
Company administration fee revenue due to Javelin Capital
Company lease charge to JCS
JCS management fee income from Javelin Capital
Javelin Capital payments to the QIF
MPM costs recharged by the Company
MPM management fees charged to the Company
Balances outstanding at the end of the period:
Between JCS and the Company
Between JCS and Javelin Capital
Between JCS and JCFM
Between the Company and MPM
Between JCFM and Javelin Capital
Between the QIF and Javelin Capital
Between JCFM and the QIF
2011
£000
284
206
692
265
3,033
5
34
33
348
133
10
93
55
5
48
2010
£000
7
58
25
4
2,356
35
34
283
37
92
7
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 £1,914,000 of which none was
outstanding at year end (20 10: £6,181,000 and nil). The Company has no 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 30 to 32.
Short term employee benefits
2011
£000
244
2010
£000
332
244
332
REPORT & ACCOUNTS 2011 83
Ten Year Record
to 30 September 2011
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
%
%
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
150,940 117,159
225.2*
191.5
15.00
11.83
13.00***
23. 63
28.83
14 5,6 83 11 1,6 34
21 4.5*
139.5
3 4.96
4.66
10.50***
–3.59
30. 28
1.56
1.67
1.36
1.19
1.28
1.24
1.61
2.06
2.36#
1.74
Year
End
2002
2003
2004
2005
2006**
2007**
2008
2009
2010
2011
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 2 1 on page 6 9.
** 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.
84
MAJEDIE INVESTMENTS PLC
Notice of Meeting
Notice is hereby given that the one hundred and first Annual General Meeting of Majedie Investments PLC will be
held at Pewterers’ Hall, Oat Lane, London EC2V 7DE on Wednesday, 18 January 201 2 at 1 2. 30 pm for the purpose
of transacting the following:
To consider and, if thought fit, pass the following Resolutions of which Resolutions 1 to 8 will be proposed as
Ordinary Resolutions and Resolutions 9 and 10 shall be proposed as Special Resolutions.
Ordinary Business
1. To receive and adopt the Directors’ Report and Accounts for the year ended 30 September 201 1.
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 201 1.
4. To appoint RDC Henderson as a director.
5. To re-appoint AJ Adcock as a director.
6. To re- appoint H V Reid as a director.
7. To re- appoint J W M Barlow as a director.
8. To appoint Ernst & Young LLP as auditors and to authorise the directors to fix their remuneration.
Special Business
9. 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 201 3 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.
10. THAT the Company be and is hereby generally and unconditionally authorised to hold general meetings (other
than annual general meetings) on 14 clear days’ notice.
Registered Office
Tower 42
25 Old Broad Street
London EC2N 1HQ
By order of the Board
Capita Sinclair Henderson Limited
Company Secretary
24 November 2011
Registered in England Number: 109305
REPORT & ACCOUNTS 2011 85
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 6.0 0 pm on
16 January 2012 (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 1 2. 30 pm on Monday
16 January 2012.
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.
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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 16 January 2012 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 16 January 2012 (“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 2011 87
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.
Note 9
A person authorised by a corporation is entitled to exercise (on behalf of the corporation) the same powers as the
corporation could exercise if it were an individual member of the Company. On a vote on a resolution on a show of
hands, each authorised person has the same voting rights as the corporation would be entitled to. On a vote on a
resolution on a poll, if more than one authorised person purports to exercise a power in respect of the same shares:
a) if they purport to exercise the power in the same way as each other, the power is treated as exercised in that way;
b) if they do not purport to exercise the power in the same way as each other, the power is treated as not exercised.
Note 10
Shareholders should note that it is possible that, pursuant to requests made by shareholders of the Company under
section 527 of the Companies Act 2006, the Company may be required to publish on a website a statement setting
out any matter relating to: (i) the audit of the Company’s accounts (including the Auditors’ Report and the conduct of
the audit) that are to be laid before the Annual General Meeting; or (ii) any circumstance connected with an auditor of
the Company ceasing to hold office since the previous meeting at which annual accounts and reports were laid in
accordance with section 437 of the Companies Act 2006. The Company may not require the shareholders requesting
any such website publication to pay its expenses in complying with sections 527 or 528 of the Companies Act 2006.
Where the Company is required to place a statement on a website under section 527 of the Companies Act 2006, it
must forward the statement to the Company’s auditor not later than the time when it makes the statement available
on the website. The business which may be dealt with at the Annual General Meeting includes any statement that
the Company has been required under section 527 of the Companies Act 2006 to publish on a website.
Note 11
Members satisfying the thresholds in section 338 of the Companies Act 2006 may require the Company to give, to
members of the Company entitled to receive notice of the AGM, notice of a resolution which those members intend
to move (and which may properly be moved) at the AGM. A resolution may properly be moved at the AGM unless (i)
it would, if passed, be ineffective (whether by reason of any inconsistency with any enactment or the Company’s
constitution or otherwise); (ii) it is defamatory of any person; or (iii) it is frivolous or vexatious. The business which
may be dealt with at the AGM includes a resolution circulated pursuant to this right. A request made pursuant to this
right may be in hard copy or electronic form, must identify the resolution of which notice is to be given, must be
authenticated by the person(s) making it and must be received by the Company not later than 6 weeks before the
date of the AGM.
88
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 and any subsequent notices in respect of section 388A of the Companies Act 2011 will be
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 2011 89
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, 680 for the
2011/12 tax year. Investments can be split between a cash ISA (up to a limit of £5, 340) and a stocks and shares ISA (up to a limit
of £10, 680).
The Majedie Corporate ISA is provided in conjunction with Halifax Share Dealing (HSDL) who act as an HM Revenue & Customs
Approved ISA Manager. For more information, an ISA booklet and/or an application form please contact the Majedie Corporate ISA
Manager, Halifax Share Dealing Limited, Lovell Park Road, Leeds, West Yorkshire, LS1 1NS (telephone: 08 45 850 0181).
Majedie General ISA (formerly a 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 ISA.
Further details may be obtained from the Company’s ISA Manager, The Share Centre, PO BOX 2000, Aylesbury,
Buckinghamshire HP21 8ZB (telephone: 0800 800 008).
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MAJEDIE INVESTMENTS PLC
Shareholder Information
Registered Office
Tower 42
25 Old Broad Street
London EC2N 1HQ
Telephone: 020 7626 1243
Fax: 020 7374 4854
E-mail: majedie@majedie.co.uk
Registered Number: 109305 England
Company Secretary
Capita Sinclair Henderson Limited
Trading as Capita Financial Group –
Specialist Fund Services
Beaufort House
51 New North Road
Exeter EX4 4EP
Telephone: 01392 412122
Fax: 01392 253282
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
Shareholders should notify all changes of name and
address in writing to the Registrars. Shareholders may
check details of their holdings, historical dividends,
graphs and other data by accessing
www.computershare.com.
Shareholders wishing to receive communications from
the Registrars by email (including notification of the
publication of the annual and interim reports) should
register on-line at http://www-uk.computershare.com/
investor. Shareholders will need their shareholder
number, shown on their share certificate and dividend
vouchers, in order to access both of the above services.
Auditors
Ernst & Young LLP
1 More London Place
London SE1 2AF
Stockbrokers
Cenkos Securities plc
6.7.8 Tokenhouse Yard
London EC2R 7AS
Key Dates in 201 2
Ex-dividend date
Record date
Annual General Meeting
2010/11 final dividend paid
Interim results announcement
2011/12 interim dividend paid
Financial year end
Final results announcement
Annual report mailed to
shareholders
Website
www.majedie.co.uk
4 January 2012
6 January 2012
18 January 2012
25 January 2012
May
27 June 2012
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 8 9). You may
transfer an existing PEP or ISA to the Majedie General
ISA (page 8 9). You may also purchase shares through an
on-line dealing facility or via your stockbroker or bank.
Net Asset Value
The Company announces its net asset value weekly
through the London Stock Exchange and on its
website. The Financial Times publishes daily estimates
of the net asset value and discount.
Capital Gains Tax
For capital gains tax purposes the adjusted market
price of the Company’s shares at 31 March 1982 was
35.875p per 10p share. Former shareholders of Barlow
Holdings PLC are recommended to consult their
professional advisers in this regard.
REPORT & ACCOUNTS 2011 91
Notes
92
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:
•
•
•
•
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