2012
Majedie Investments PLC
Annual Report
30 September 201 2
Majedie Investments PLC is an investment trust with total
portfolio assets of over £ 14 7 million as at 30 September 201 2.
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 2012
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 Auditor
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, (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 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 investment 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 save that the Company may invest up to 25 per cent. of its gross assets in any single
fund managed by Javelin Capital. The Company will only invest in funds managed by Javelin Capital where the
Board believes that the investment policy of such funds is consistent with the Company's objective of spreading
investment risk.
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 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 2012
1
Highlights for 2012
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:
19.6%
5.5%
6.3p
10.5p
£39m
£8m
2
MAJEDIE INVESTMENTS PLC
Group Summary
Total assets*
Shareholders’ funds
Market capitalisation
£14 6.1m
£11 2.2m
£81.8m
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 201 2.
Up to £11,280 for 2012/13 tax year.
Recent Trends
297
2.25
250
250
239
225
214
216
10.50 10.50 10.50 10.50 10.50
190 192
156
139
08
09
10
11
12
08
09
10
11
12
08
09
10
11
12
Net asset value per share
(pence) increased by 0.5% in
the year.
Core dividends (pence) have
remained at 10.50 pence.
Share price (pence) has
increased by 11. 7% during
the year.
REPORT & ACCOUNTS 2012
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**
Group costs (administrative expenses)
Company ongoing charges†
Gearing/(Net cash)
Maximum potential gearing
Company gearing
%
0.3
0.5
0.5
11.7
3.8
6.5
(33.3)
2012
2011
£146.1m
£112.2m
215.6p
155.8p
27.8%
20.0%
£2.7m
4.9p
10.5p
£3.2m
1.8%
9.2%
30.1%
11.1%
£145.7m
£111.6m
214.5p
139.5p
35.0%
29.8%
£2.6m
4.6p
10.5p
£4.8m
1.9%
(1.7%)
30.3%
15.8%
† Excludes performance fees and one off costs, but includes estimated running costs of pooled fund investments.
* Financial information is disclosed in respect of the consolidated accounts unless otherwise stated.
** Core 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
2012
168.5p
139.5p
226.5p
202.7p
29.8%
16.9%
35.0%
20.0%
2011
203.5p
133.8p
214.8p
196.3p
32.3%
13.1%
26.3%
8.8%
4
MAJEDIE INVESTMENTS PLC
Chairman’s Statement
The Chairman’s Statement forms part of the Director s’ Report
Following a strong recovery in world equity markets in the first half of the year volatility
returned in the 3rd quarter as fears about the Eurozone returned before unprecedented action
by Central Banks caused markets to recover and move ahead in the 4th quarter.
During the year to 30 September 2012, the NAV and
share price, both on a total return basis, returned 5.5%
and 19.6% respectively, with the latter reflecting a fall in
the Company’s discount over the year. 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
2012 include the consolidation of the investments
made in the Javelin funds, the Javelin Capital Global
Equity Strategies Fund (QIF) and the Javelin Capital
Emerging Markets Alpha Fund (UCITS), under a new
classification of assets held for sale, both in
accordance with IFRS. This requirement, due to the
Company’s controlling interest in the funds, results in
various large presentational and disclosure impacts, 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 2012 was £2.7m compared to £2.6m
for the prior year period. Group income for the period
was £5.2m which overall is £0.3m less than last year.
However income from Majedie Asset Management
Limited (MAM) was £2.2m compared to £1.9m in the
prior year period, reflecting a change in the allocation
between interim and final dividends. Group income for
the period was reduced by a decrease in dividend
income from the QIF. Additionally, Core Portfolio
dividend income decreased as a result of the £15.0m
of cash raised for investment into the lower income
UCITS fund during the year. Finally, with the
introduction of third party client assets during the year,
Group income was modestly improved by external fee
income from Javelin Capital.
Total group costs were £3.2m for the period compared
to £4.8m in the prior year period. This decrease
reflects cost reductions across the group but primarily
reflects the substantial cost reduction efforts made last
year at Javelin Capital. Additionally, normalised
Company costs continued to reduce during the year
which is reflected in the Company’s ongoing charges
percentage (which replaces previous TER figures as
from May 2012) falling to 1.8% from 1.9%. 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
23 January 2013 to shareholders on the register on 11
January 2013.
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 have
determined that the carrying value of our holding will
remain at £39.0m as at 30 September 2012 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
(and is included at this value in the weekly NAVs
released to the market) as required under IFRS, but is
held in the Company accounts at cost in accordance
with our policy for unquoted investments. The Board
has reviewed the valuation of Javelin Capital, which
includes the additional £1.0m of capital provided in
September 2012, and has determined that as at 30
September 2012 the valuation of Javelin Capital will be
kept at cost, being £8.0m, 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 outperformed its benchmark
by 1.2%. This is especially creditable in a strong year
for equities given the bias of the portfolio towards
defensive income generating stocks. I am pleased to
report this performance following the considerable
restructuring undertaken by the portfolio manager in
the previous two years and in particular the successful
broadening of the company’s exposure to markets
outside the UK, Europe and the United States which
utilised the expertise of the Global Team. Furthermore
the performance of the Core Portfolio compares
favourably not only with the benchmark but also with
other successful managers in the income category.
REPORT & ACCOUNTS 2012
5
Chairman’s Statement
Secondly I would like to turn to the absolute return
Funds managed by Javelin Capital. These are now
concentrated on the UCITS fund following the General
Meeting to which I refer later. The fund aims to
produce an absolute return irrespective of the direction
of the stock market and so in a strong year for equity
markets it would be expected to underperform
equities. Conversely in a poor year for equities, the
fund would be expected to outperform this asset class
as was the case last year. Whilst the Board had taken
the decision by investing part of the portfolio in an
absolute return product, to create a lower overall risk
return profile for its assets, it is nevertheless
disappointing the return was negative. One of the
underlying reasons for the rise in stock markets during
the period was monetary intervention on an
unprecedented scale. This resulted in extreme market
moves that the fund’s particular strategy found difficult
to turn to its advantage. Looking forward, the extreme
policy of recent years should diminish and have less
effect on markets and the Board remains confident the
strategy will perform. In the longer term, exposure to
the Javelin funds should reduce the volatility of the
overall portfolio owing to a lower correlation with stock
markets and therefore improve the risk/return
characteristics of the Company.
Thirdly I would draw attention to MAM which has had a
successful year with solid investment performance and
good financial performance. The Board of MI has
decided to maintain its valuation of the investment at
£39.0m, on a basis consistent with prior years.
Javelin Capital
Following the General Meeting and the consolidation of
the Company’s funds into the UCITS product, Javelin
Capital has been able to simplify its structure and close
its Irish entities. This has beneficial cost implications for
both Javelin Capital and the Company. Also throughout
the year Javelin Capital has made further operational
and staff savings beyond those which I reported on at
the half year stage. The extent of these savings is
approximately 23% on an annualised basis and
compares with a 37% reduction a year ago and it has
been achieved whilst retaining key partners and staff.
Overall it has reduced the breakeven level of external
third party assets under management to circa £70m
from £300m at June 2011 and £100m at the date of
last year’s report. The environment for fund raising
remains difficult and good performance will be a
prerequisite for successful marketing. The UCITS fund
is part of the Goldman Sachs International Serviced
Platform in Luxembourg which has strong credibility
with investors. As performance improves and a track
record is built the Board believes the fund will attract
further assets under management.
Board Composition
Hubert Reid will retire from the Board after the AGM on
16th January 2013. Hubert has served as a non
executive Director for 14 years having been appointed
in 1999. He has been both Deputy Chairman and
Chairman of the Audit Committee and his wise counsel
will be greatly missed. I wish him a long and happy
retirement and along with my co directors would like to
thank him for his contribution to the Company. Looking
forward it has been decided not to appoint a new non
executive director as the Board believes the remaining
directors provide the necessary breadth of skills and
experience to run the Company.
Change in Investment Trust Rules
From the 1st January 2012 the tax rules governing
Investment Trusts changed. The Company has
received approval to operate under the new regime
from 1 October 2012. The main details are that income
can be paid from realised capital gains and that the
Company can invest more than 15% in a single
holding. To this end I wrote to you in September to
seek permission to allow the Company to invest up to
25% in a single investment, specifically in a Javelin
Capital fund. I am pleased to report that this was
supported strongly. At the AGM it is proposed to put a
resolution to shareholders asking for permission to
amend the Company’s Articles of Association so as
enable us to pay dividends from realised capital gains.
As you know the Company currently has substantial
revenue reserves and hence would not need to take
advantage of the change. However shareholder
support for such a resolution would provide flexibility
for the future to manage a greater range of
eventualities. As I have said previously these new rules
represent a good outcome for your Company.
6
MAJEDIE INVESTMENTS PLC
Summary
There are a number of regulatory uncertainties facing
the investment industry at present and I have outlined
the most significant. On the other hand the tax
changes affecting Investment Trusts have been
beneficial as I stated earlier.
Overarching the above has been the lacklustre
recovery in financial markets since 2008. I hope we will
begin to see a steady, if seemingly muted, recovery
from here, which will create a healthier base for the
investment industry.
Andrew J Adcock Chairman
4 December 2012
Regulation
In addition to the changes in tax rules mentioned
above, other regulations are proposed which will have
an impact on investment trust companies. These
include the UK Retail Distribution Review (RDR), the EU
Alternative Investment Fund Managers Directive
(AIFMD) and the US Foreign Account Tax Compliance
Act (FATCA). Whilst the rationale behind the
introduction of each of these new regulations is
different they will potentially increase operational and
regulatory risk for the Company. The RDR is due to
take effect from 31 December 2012 with the aim of
reducing conflicts of interest for advisors, clarity in
terms of cost of advice and providing a more
consistent level of advice across the retail investment
sector. The Company’s savings plan products are
within the scope of RDR however as we are not
advisors the RDR will not apply to those plans. We
continue to monitor these regulations carefully and I will
report on relevant developments as and if they impact
on the Company in my future statements
Annual General Meeting
The AGM will be held on 16 January 2013 at 12.00
noon at the City of London Club, 19 Old Broad Street
London EC2N 1DS. Details are set out on page 88. As
in prior years there will be presentations and an
opportunity to ask questions. I do hope that you will be
able to attend.
REPORT & ACCOUNTS 2012
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 the other characteristics of
the Company ha ve had on the Net Assets Performance
during the year. Note that the reports on page 12 to 15
are based on the aggregate value of the total assets of
the Company.
Core Portfolio
The Core Portfolio comprises holdings in large-cap UK
and international stocks and a small number of
carefully selected mid-cap companies, managed under
an equity income investment mandate. The portfolio is
benchmarked to perform against an index of 70% in
UK listed companies and 30% overseas.
Markets proved volatile during the last quarter of 2011
but rallied strongly during the late winter and early
spring of 2012. The second calendar quarter of 2012
was, however, particularly disappointing for equity
markets as fears of a slowdown in Chinese growth
combined with renewed problems in the peripheral
Eurozone dominated investor sentiment. However,
action by both the Federal Reserve and the European
Central Bank in the summer, in tandem with the election
of a Greek government not set on a path of immediate
withdrawal from the Eurozone reassured global markets
and a substantial rally developed from the end of June.
Some evidence of a pick up in the US housing market
and better employment data were also helpful factors.
One of the key elements of some underperformance
over the past couple of years had been the area of the
portfolio invested outside the UK, Europe and the
United States. Measures were taken in the early
months of 2012 with the help of the Global Team to
broaden and diversify the portfolio. It is pleasing to
report that this exercise has proved successful and
that performance of the portion of the portfolio
allocated to these two areas has been in line with
benchmark over the second half of the financial year.
Given the troubles of countries within the Eurozone, a
decision was taken to reduce some exposure to
companies within the Eurozone and rebalance
European exposure to companies operating in
Switzerland and Norway. In the United States, where
some evidence emerged of renewed growth in the
summer of 2012, new positions were taken in Mosaic
Corp, a major agrochemical company, QualComm, a
key supplier of semiconductors to the
telecommunications industry, Southern Company, a
major supplier of electricity to the growing part of the
sunbelt area, and Kellogg Corp, a well regarded
consumer goods company. Within the existing
portfolio, Home Depot was a star performer, rising by
nearly 75% over the year. Illinois Tool Works and Coca
Cola were also good performers over the twelve month
period and, overall, a policy of gradually increasing the
exposure of the portfolio to America over the year
proved beneficial, as the US was by some margin the
best performing of the major developed markets. In
Europe, Bayer, Sanofi, Nestle and Telenor performed
pleasingly over the year whilst Vivendi rallied strongly
later in the summer after a torrid period in the earlier
part of 2012.
In the UK, economic data was distorted by both the
Jubilee holidays and the Olympic Games in August.
Although it appeared the economy was entering a
secondary recession, unemployment data continued to
improve during the period and inflation continued to
fall. The FTSE 100 index rallied strongly from the
doldrums of the summer and by the early autumn was
again challenging the highs of March. Within the
portfolio, new holdings of WH Smith, ITV and Smiths
Group performed pleasingly whilst financial stocks
such as Aviva and Barclays, which had sold off
particularly sharply over the summer, rallied well in the
third quarter of the year. Existing holdings in the UK
portion of the portfolio such as UBM, the UK media
group, Legal and General, Babcock, the outsourcing
specialist and Beazley, the Lloyds insurer, performed
notably well over the year, whilst mining stocks such as
Rio Tinto and BHP Billiton proved a little disappointing.
The Board took out some portfolio insurance to protect
the portfolio in late 2011 which impacted performance.
During the year, however, the Core Portfolio Total
Return was 18.6%, an outperformance of its
investment benchmark of 1.2%. Outperformance was
particularly noticeable in the UK portion of the portfolio,
but both the European and North American parts of
the portfolio outperformed their respective
benchmarks. The Far East, Japan and other parts of
the world underperformed somewhat, but it was
8
MAJEDIE INVESTMENTS PLC
noticeable that this underperformance occurred in the
first half of the financial year before the portfolio was
restructured and broadened. Thereafter, performance
tended to be in line.
There has been little change in the overall strategy of
the Core Portfolio, which continues to seek out well
financed dividend paying companies throughout the
world. Cash has been invested where possible
throughout the year and on an asset allocation basis
some priority has been given to opportunities outside
the UK where growth prospects seem somewhat
brighter. Nevertheless, it has been pleasing to note the
resilience of world equity markets against a background
of indifferent macroeconomic and political news. Within
the corporate sector, company balance sheets have
continued to strengthen and overall dividend payments
have risen substantially. With the continuing global
policy of particularly loose monetary policy and
historically low interest rates, it appears that bond
markets are remaining remarkably complacent in the
light of prospective inflation in the future. Against this
backdrop, it appears that well financed, solid dividend
paying companies will retain their attraction for investors
and thus the policy of the Core Portfolio to seek out
and invest in such companies will remain unchanged.
Turnover within the portfolio remains at relatively low
levels although there has been some movement
towards consumer orientated stocks after a period of
underexposure to this area. The banking sector still
appears to be mired in problems, particularly in
mainland Europe, and thus the fund has no exposure
in this geographical area , whilst globally the portfolio
remains underexposed to banking stocks, to stocks
orientated towards domestic consumers and also
towards the technology sector where dividend yields
generally tend to be low. Overweight positions continue
to be held in industrial stocks, utilities and the oil and
gas sector.
At current levels, equity markets have rallied well from
the low point of the summer but key uncertainties
remain concerning the future of the Eurozone and the
sluggish levels of economic growth in the developed
world. However, there is some evidence beginning to
emerge of a recovery in the key American housing
market and, in the UK, the end of the ‘double dip’
recessionary pattern that has dogged economic
recovery for the past year. Against this background,
equities may remain relatively well supported into 2013.
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, although by their very
nature all of them tend to be illiquid. The value of the
non-core realisation portfolio was £3.1m, representing
less than 3% of the Group’s total assets.
Javelin Capital Funds
The Funds both follow an identical strategy but with
different domiciles. The Javelin Capital Global Equity
Strategies Fund (JCGES), an Irish QIF, was seeded in
September 2010 and the Javelin Capital Emerging
Markets Alpha Fund (JCEMA), a UCITS Fund on the
Goldman Sachs International Platform, was seeded in
February 2012. Following the General Meeting in
October 2012 the QIF was closed, the Company
having withdrawn its capital in September 2012. The
capital was redeployed into the UCITS Fund in
November 2012. The combination into one fund will
have benefits both in terms of cost savings and
marketability.
The strategy utilises a range of proprietary long/short
models with an emphasis on Emerging Markets. The
objective of the Fund is to deliver absolute returns that
are uncorrelated to the direction of the Core Portfolio and
therefore lessening the overall market risk of the
combined assets of the Company. After a promising
2010/11 against the background of the initial Eurozone
crisis this year has proved more difficult to navigate.
The QIF returned a disappointing -7.9% and the UCITS
-4.9%. The strategies struggled against a backdrop of
unprecedented intervention by Central Banks particularly
the ECB. This caused the market to be volatile over the
short term as pronouncements were made, but trendless
over the medium term. It meant that the strategies found
it difficult to capture market movements, but looking
ahead past experience suggests that market trends will
reassert themselves and the strategies are well placed
to benefit from less random market movements.
At 30 September 2012 the value of the JCEMA was
£14.1 m representing 9. 7% of the Group’s total assets
whilst the proceeds from the closure of JCGES, which
are held in cash awaiting reinvestment, was £18. 2m
representing 12. 5% of the Group’s total assets.
REPORT & ACCOUNTS 2012
9
Investment Manager’s Report
Majedie Asset Management (MAM)
MAM was launched in 2002 using finance provided by
the Company, which retains a near 30% interest. The
business has grown to approximately £6.5bn in assets
under management, predominantly long-only equity
mandates for institutional clients. Its market leading
investment performance has been recognised by the
loyalty of its clients and the outside world having recently
won an award for European Fund Manager of the year.
During the year £2.2m was received in dividend income
from MAM.
Taking account of, inter alia, MAM’s current and
forecasted financial performance the Board has decided
to retain its valuation of the Company’s holding at £39.0m,
representing some 26.8% of the Group’s total assets.
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. A further £1.0m was provided in
September 2012 comprising the total funding allocation.
Javelin Capital is now focussed on gaining assets under
management in accordance with its revised business
plan. The Company holds an equity participation of 75%
with 25% held by the individual partners. The
performance of the two funds has been discussed
earlier.
As at 30 September 2012, the net assets in Javelin
Capital LLP have been included in the Consolidated
Report & Accounts at £2.6m, representing 1.8% of the
Group’s total assets. This represents the original
investment less start-up costs and losses incurred to
date and is in accordance with consolidation accounting
rules.
In the Company accounts the value of the investment in
Javelin Capital LLP has been valued at cost, being £8.0m.
Development of Net Asset Value (NAV)
The chart below demonstrates the NAV of the Company
during the year to 30 September 2012. In aggregate,
the NAV attributable to the Company has increased by
£0.6m, having incurred net administration and finance
costs of £5.4m, and having paid out £5.5m in dividends.
The core portfolio rose by £11.6m including the receipt
of dividends, whilst MAM provided a contribution of
£2. 5m, being dividends of £2.2m and a capital increase
of £0. 3m. JCGES and JCEMA together contributed a
reduction in value of £2.5m.
+£2.5m (£0.3m)
(£1.6m)
+£11.6m
(£0.9m)
(£2.4m)
(£2.8m)
(£5.5m)
£111.6m
£112.2m
NAV
30.09.11
Core
Portfolio
MAM
Non-Core
Realisation
Portfolio
JCGESF
JCEMA
Admin
Costs*
Finance
Costs
Dividends
Paid
NAV
30.09.12
* Admin costs are net of Javelin Capital management fee income as charged to external investors and also in respect of the
Company's investments in JCGESF and JCEMA.
10
MAJEDIE INVESTMENTS PLC
Investment Outlook
The long standing problems within the peripheral parts
of the Eurozone remain relatively intractable despite a
variety of initiatives launched by both domestic and
supra-national financial institutions. Growth in China
has notably slowed during the year and this has
impacted somewhat on the patterns of economic
development of other Far Eastern countries. On a
brighter note, however, there do appear to be some
encouraging signs of life in the American housing and
employment markets, although the looming ‘fiscal cliff’
of automatic tax rises and spending reductions remains
a key problem to be resolved in early 2013.
Nevertheless, the outlook for equity markets remains
reasonable given the very substantial amounts of cash
earning little return in both money market funds and
corporate balance sheets worldwide. At least a part of
this cash may be expected to be deployed in capital
markets over the coming year.
Nick Rundle Investment Director
Javelin Capital LLP
4 December 2012
REPORT & ACCOUNTS 2012 11
Asset Distribution
at 30 September 2012
Classification of Assets
Oil & Gas Producers
Oil Equipment, Services & Distribution
Oil & Gas
Chemicals
Forestry & Paper
Mining
Basic Materials
Aerospace & Defence
Construction & Materials
Electronic & Electrical Equipment
General Industrials
Industrial Engineering
Industrial Metals & Mining
Support Services
Industrials
Automobiles & Parts
Beverages
Food Producers
Household Goods
Personal Goods
Tobacco
Consumer Goods
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
Javelin Funds
Total Equities
Total Non-current Assets
Cash and Cash Equivalents
% Total at 30 September
United
Kingdom
%
5.8
5.8
3.7
3.7
0.8
0.4
0.6
0.6
1.5
3.9
0.4
0.5
0.6
1.5
1.8
1.8
1.0
1.1
0.9
3.0
2.0
2.0
0.8
1.0
1.8
3.0
0.9
1.3
1.0
0.7
6.9
28.6
59.0
59.0
16.0
75.0
North
America
%
0.5
0.6
1.1
0.7
0.7
0.5
0.5
1.0
0.4
0.2
0.6
1.2
0.6
0.6
0.5
0.5
1.0
0.6
0.6
0.5
0.5
0.9
0.1
1.0
0.3
0.3
0.2
8.2
8.2
8.2
Continental
Europe
%
0.5
Pacific
Basin
%
0.5
0.4
0.4
0.5
0.5
0.4
0.4
1.0
1.0
0.4
0.4
0.5
0.5
3.7
3.7
3.7
0.2
0.2
0.5
0.1
0.1
0.1
0.8
0.3
0.1
0.4
0.1
0.1
0.1
0.1
0.7
0.1
0.1
0.9
0.1
0.1
2.6
2.6
2.6
Rest of
World
%
0.3
0.3
0.1
0.1
0.1
0.1
0.1
0.1
0.1
0.1
0.1
0.1
Total
2012
%
7.1
0.6
7.7
1.1
3.9
5.0
0.8
0.4
1.0
1.2
1.2
0.1
1.6
6.3
0.3
0.9
1.1
1.3
3.6
3.5
3.5
1.1
1.6
1.3
0.5
4.5
0.6
2.7
3.3
1.3
1.0
2.3
4.7
1.1
1.4
1.0
0.7
8.9
0.4
0.4
28.8
9.7
84.0
84.0
16.0
100.0
9.7
10.5
10.5
10.5
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
The fund analysed on pages 13 to 15 comprises total listed and unlisted investments of £1 22,361,000 which also includes the investment in the Javelin Capital Emerging
Markets Alpha Fund of £14,144,000 and cash/cash equivalents of £23,287,000.
Unlisted investments comprise an amount of £ 39, 000,000 in respect of the investment of Majedie Asset Management and £2,93 5,000 in respect of equity investments in
various companies. Suspended stocks have been analysed in their listed sectors.
12
MAJEDIE INVESTMENTS PLC
Twenty Largest UK Investments
at 30 September 2012
Company
Majedie Asset Management1
Royal Dutch Shell ‘B’
BP
HSBC
Vodafone
GlaxoSmthKline
Rio Tinto
Vostok Energy1
BHP Billiton
Antofagasta
Centrica
Barclays
BAE Systems
BG Group
SSE
Sainsbury (J)
Aviva
Smiths Group2
Legal & General
British Land
2012
2011
Market Value
£000
39,000
% of
Fund
26.8
Market Value
£000
39,000
% of
Fund
26.8
4,176
3,164
3,010
2,856
2,712
2,020
1,858
1,732
1,578
1,475
1,397
1,203
1,125
1,044
1,042
1,036
933
923
914
2.9
2.2
2.1
2.0
1.9
1.4
1.3
1.2
1.1
1.0
0.9
0.8
0.8
0.7
0.7
0.7
0.6
0.6
0.6
73,198
50.3
4,426
3,302
3,727
3,533
3,199
1,878
1,926
1,912
1,158
1,191
1,049
989
1,117
842
962
1,145
3.0
2.3
2.6
2.4
2.2
1.3
1.3
1.3
0.8
0.8
0.7
0.7
0.8
0.6
0.7
0.7
1,256
833
73,445
0.9
0.6
50.5
Ten Largest Overseas Investments
at 30 September 2012
Company
2012
2011
Market Value
£000
% of
Fund
Market Value
£000
% of
Fund
Javelin Capital Emerging Markets Alpha Fund (Lux)2
14,144
Altria (USA)
McDonalds (USA)
AT&T (USA)
Roche (Switzerland)
Johnson & Johnson (USA)
Schlumberger (USA)
Statoil (Europe)2
Southern Copper (USA)2
Telenor (Norway)
827
824
817
810
810
806
800
799
785
9.7
0.6
0.6
0.6
0.6
0.6
0.5
0.5
0.5
0.5
1 Unlisted
2 There is no comparative information for the investments listed as they represent new holdings.
21,422
14.7
774
817
769
831
777
575
498
5,041
0.5
0.6
0.5
0.6
0.5
0.4
0.3
3.4
REPORT & ACCOUNTS 2012 13
Valuation of Investments
Holdings valued over £100,000 at 30 September 2012 – including derivative instruments
Company
Market Value % of
Fund
£000
Company
Market Value % of
Fund
£000
Company
Market Value % of
Fund
£000
Health Care
Pharmaceuticals & Biotechnology
GlaxoSmithKline
Johnson & Johnson
(USA)
Roche (Switzerland)
Sanofi (France)
810
810
581
2,712
0.6
0.6
0.4
1.9
Consumer Services
Food & Drug Retailers
Greggs
Sainsbury (J)
Woolworths (Aus)
382
1,042
137
0.3
0.7
0.1
0.5
0.6
0.5
0.4
0.5
0.4
673
899
750
575
701
605
824
0.6
General Retailers
Home Depot (USA)
Inchcape
W H Smiths
Media
ITV
UBM
Vivendi (France)
Travel & Leisure
McDonalds (USA)
Telecommunications
Fixed Line Telecommunications
AT&T (USA)
817
Mobile Telecommunications
America Movil ADR
(Mexico)
Telenor (Norway)
Vodafone
134
785
2,856
0.6
0.1
0.5
2.0
Oil & Gas
Oil & Gas Producers
BG Group
BP
Exxon Mobil (USA)
Petrol Brasileiros ADR
260
( Brazil)
Royal Dutch Shell ‘B’
4,176
Sasol ADR ( South Africa) 112
800
Statoil (Norway)
1,125
3,16 4
708
Oil Equipment, Services &
Distribution
Schlumberger (USA)
806
0.8
2.2
0.5
0.2
2.9
0.1
0.5
0.5
Basic Materials
Chemicals
Bayer (Germany)
Du Pont De Nemours
(USA)
Mosaic (USA)
Mining
Antofagasta
BHP Billiton
BHP Billiton (Aus)
Vale SA ADR (Brazil)
Rio Tinto
587
0.4
622
357
1,578
1,73 2
169
162
2,0 20
0.4
0.2
1.1
1.2
0.1
0.1
1.4
Industrial s
Aerospace & Defence
BAE Systems
1,203
0.8
Construction & Materials
Balfour Beatty
607
0.4
Electronic & Electrical Equipment
Hon Hai Precision GDR
(Asia)
Samsung Electronic GDR
(Asia)
441
151
0.1
0.3
General Industrials
3M (USA)
Siemens (Germany)
Smiths Group
Industrial Engineering
Illinois Tools (USA)
IMI
Support Services
Babcock
Bunzl
G4S
Consumer Goods
Automobiles & Parts
Honda (Japan)
Toyota (Japan)
Beverages
Britvic
Coca-Cola (USA)
Food Producers
Kelloggs (USA)
Nestlé (Switzerland)
Unilever
Tobacco
Altria (USA)
Imperial Tobacco
Japan Tobacco (Japan)
772
744
933
736
810
788
665
664
158
113
510
587
320
625
901
827
802
178
0.5
0.5
0.6
0.5
0.6
0.5
0.5
0.5
0.1
0.1
0.4
0.4
0.2
0.4
0.6
0.6
0.6
0.1
Based on country of listing and operation. Depositary Receipts are based on country of origin.
14
MAJEDIE INVESTMENTS PLC
Company
Market Value % of
Fund
£000
Company
Market Value % of
Fund
£000
Company
Market Value % of
Fund
£000
Technology
Technology & Hardware Equipment
0.1
Canon Inc. (Japan)
0.3
Qualcomm Inc. (Japan)
103
387
Unlisted Investments
AOI Medical (USA)
152
Buried Hill Energy (USA) 244
Diamond Wood China
212
Majedie Asset
Management
Mitra Energy
Vostok Energy
39,000 26.8
0.3
1.3
390
1,858
0.1
0.2
0.1
Javelin Funds
Javelin Capital
Emerging Markets
Alpha Fund (Lux)
14,14 4
9.7
Utilities
Electricity
Southern Copper (USA)
SSE
799
1,044
Gas, Water & Multi Utilities
Centrica
1,475
1,397
Financials
Banks
Barclays
Commonwealth Bank
116
of Australia (Aus)
HSBC
3,010
JP Morgan Chase (USA) 576
Mitsubishi (Japan)
163
National Bank of
Australia (Aus)
189
Sumitomo Mitsui (Japan) 107
770
Wells Fargo (USA)
254
Westpac Banking (Aus)
General Financial
IG Group
Investec
Life Insurance
Aviva
Legal & General
780
574
1,036
923
0.5
0.7
1.0
0.9
0.1
2.1
0.4
0.1
0.1
0.1
0.5
0.2
0.5
0.4
0.7
0.6
Non Equity Investment Instruments
Ishares MSCI South Africa
Index ETF (USA)
193
0.1
Non Life Insurance
Beazley
672
Jardine Lloyd Thompson 766
Real Estate Investment Trusts
91 4
British Land
0.5
0.5
0.6
Based on country of listing and operation. Depositary Receipts are based on country of origin.
REPORT & ACCOUNTS 2012 15
Paul D Gadd*
Mr 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 Chairman of the
Remuneration and Management Engagement
Committees and is a member of the Nomination and
Audit Committees.
R David C Henderson* FCA
Mr Henderson, who is a Chartered Accountant, is
currently Special Advisor to Kleinwort Benson Private
Bank and is also a non-executive director of Novae
Group plc, Healthcare Locums plc, Oak Trust
(Guernsey) Limited, Price Forbes & Partners Limited,
MM&K Limited and also has Board involvement of
some 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 the Chairman of
the Audit Committee and is a member of the
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 2011. He is a non-executive director of Majedie
Portfolio Management Limited, F&C Global Smaller
Companies PLC, Kleinwort Benson Holdings Limited
and was appointed as a non-executive director of
Kleinwort Benson Bank Limited in October 2012. 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 Board and Nomination
Committee and a member of the Remuneration,
Management Engagement and Audit Committees.
Hubert V Reid* Deputy Chairman
Senior Independent Director
Mr Reid is Chairman of Midas Income & Growth Trust
PLC and was formerly Chairman of Enterprise Inns 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 the Royal
London Insurance Group. He was appointed a director
of Majedie in 1999 and is a member of the Audit,
Remuneration, Nomination and Management
Engagement Committees.
J William M Barlow BA
Mr Barlow was appointed Chief Operating Officer of
Javelin Capital LLP on 27 June 2011, before which he
was at Newedge Group, which is a Prime Broker for
hedge funds. Previously he was Managing Director of
DnB Asset Management (UK) Limited having been
appointed in 2002. He joined Skandia Asset
Management Limited as an equity portfolio manager in
1991. Mr Barlow was appointed to the Board in July
1999 and is a director of Majedie Portfolio
Management Limited and Javelin Capital Services
L imited, and is also a non-executive director of Majedie
Asset Management Limited
16
MAJEDIE INVESTMENTS PLC
Directors’ Report
The directors submit their report and the accounts
for the year ended 30 September 2012.
Introduction
The Directors’ Report includes the Business Review
and Corporate Governance Statement, which can be
found on pages 20 to 26 and pages 27 to 31
respectively and the Report on Directors’
Remuneration on pages 32 to 34. 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
1158/59 of the Corporation Tax Act 2010 in respect of
the year ended 30 September 2011. 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 for the year ended 30 September 2012 and
will request formal confirmation of this in due course.
Due to the change in the investment trust tax rules for
accounting periods commencing on or after 1 January
2012, the annual retrospective compliance process, as
above, is replaced by an initial single pre-approval upon
joining the new regime. The Company, in July 2012,
received written approval from HM Revenue & Customs
that it will be an approved investment trust under the
new regime commencing from 1 October 2012.
Results and Dividend
Consolidated net revenue return before taxation
amounted to £ 2, 681,000 (2011: £2,624,000). The
directors recommend a final ordinary dividend of 6.3p
per ordinary share, payable on 2 3 January 201 3 to
shareholders on the register at the close of business
on 11 January 201 3. Together with the interim dividend
of 4.2p per share paid on 2 7 June 201 2, this makes a
total distribution of 10.5p per share in respect of the
financial year (2011: 10.5p per share).
Directors
The directors in office at the date of this report are
listed on page 16.
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-appointment by the Company.
In accordance with the Company’s Articles of
Association Mr PD Gadd, having been last
re-appointed at the Annual General Meeting in 200 9,
will retire at the forthcoming Annual General Meeting
and, being eligible, offer himself for re-appointment.
In accordance with Listing Rule 15.2.13 A and in
accordance with the UK Corporate Governance Code
with respect of directors who have served over nine
years, Mr JWM Barlow, being Chief Operating Officer
of Javelin Capital LLP, the Investment Manager, must
submit himself for annual re-appointment.
The Board has considered the continued appointment
of Mr JWM Barlow who ha s 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 JWM Barlow continues to
be effective, that he demonstrates commitment to his
role and ha s 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 re-appointment .
REPORT & ACCOUNTS 2012 17
Directors’ Report
In accordance with the requirements of the UK
Corporate Governance Code, having served on the
Board for over nine years, Mr HV Reid will retire at the
forthcoming Annual General Meeting but will not seek
re-election. The Board wishes to express its gratitude for
Mr HV Reid’s contribution to the Board over a period of
14 years. Looking forward it has been decided not to
appoint a new non executive director as the Board
believes the remaining directors provide the necessary
breadth of skills and experience to run the Company.
Directors’ Interests
Beneficial interests in ordinary shares as at:
Mr AJ Adcock
Mr JWM Barlow
Mr HV Reid
Mr PD Gadd
30 September
2012
20,000
6 58, 779
33,214
10,000
1 October
2011
20,000
6 7 6,083
33,214
10,000
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 JWM Barlow
2,160,779
2,160,779
30 September
2012
1 October
2011
There have been no changes to any of the above
holdings between 30 September 2012 and the date of
this report.
Substantial Shareholdings
At 3 1 October 2012 the Company has been notified of
the following substantial holdings in shares carrying
voting rights:
Mr HS Barlow
Axa Group
Mr MHD Barlow Beneficial
Sir JK Barlow
613,084
Beneficial
Non-beneficial
15,017,619 28.59%
1.17%
7,103,119 13.52%
3.38%
1,776,241
2.59%
Non-beneficial 1,360,750
2.97%
1,561,805
Beneficial
1.65%
869,086
Non-beneficial
1.67%
877,433
3. 40%
1,7 84,948
1.25%
658,779
4.11%
Non-beneficial 2,160,779
Mr GB Barlow
Miss AE Barlow
Mr JWM Barlow Beneficial
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 2012 and the date of
this report.
Annual General Meeting
The Annual General Meeting will be held at City of
London Club, 19 Old Broad Street, London EC2N 1DS
on Wednesday 16 January 2013 at 12: 00 noon. The
notice convening the Annual General Meeting is set out
on pages 88 to 92.
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 201 2 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 201 3 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 88.
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 Annual General Meeting 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.
18
MAJEDIE INVESTMENTS PLC
Amendment to the Articles
Article 127 of the Articles of Association of the
Company provides for the creation of a capital reserve
and sets out how that reserve may be applied by the
Directors. As currently drafted, Article 127 prohibits the
application of the Capital Reserve or any other moneys
in the nature of accretion to capital in paying dividends
or any other distribution (otherwise than by way of
redemption or purchase of the Company's own
shares). As currently drafted, Articles 130.2 and 130.3
set out restrictions on the payment of dividends and
application of capital profits for distribution.
Such provisions mirrored the requirements under the
Companies Act 2006 and the Corporation Tax Act
2010 which have since been relaxed. While the
prohibition has been removed from the Companies Act
2006 and the Corporation Act 2010, the Company is
restricted from making such distributions until the
prohibition is also removed from the Articles.
Shareholders are therefore being asked to approve the
amendment of Articles 127, 130.2 and 130.3 to
remove the prohibition on the Company from
distributing its capital profits. Resolution 9 will be
proposed as a special resolution.
Copies of the proposed new Articles of the Company,
including in a version showing by tracked changes the
alterations from the existing Articles, will be available
for inspection during usual business hours or on any
weekday (Saturdays, Sundays and public holidays
excepted) at the registered office of the Company and
at the offices of Ashurst LLP, Broadwalk House,
5 Appold Street, London EC2A 2HA up to and
including the date of the AGM.
Donations
The Company made no political or charitable donations
during the year (2011: 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
18 January 201 2. 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
4 December 2012
REPORT & ACCOUNTS 2012 19
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 listing 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 38, 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 48 to 55. The Auditor’s opinion on
the financial statements, which is unqualified, appears
on pages 36 and 37.
20
MAJEDIE INVESTMENTS PLC
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 16 January 2013 is set out on
page 88.
A General Meeting was held on 9 October 2012 at
which proposed modifications to the Company’s
investment 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. For the year ended 30 September 2012 these
sections broadly required that:
(cid:129) the Company’s revenue (including dividend and
interest receipts but excluding profits on the sale of
shares and securities) should be derived wholly or
mainly from shares and securities;
(cid:129) the Company must not retain in respect of any
accounting period more than 15% of its income
from shares and securities;
(cid:129) no holding in a company should represent more
than 15% by value of the Company’s investments in
shares and securities unless the holding was
acquired previously and the value has risen to
exceed the 15% limit; and
(cid:129) realised profits on the sale of shares and securities
may not be distributed by way of dividend.
Amendments to the Investment Trust regulations were
approved by Parliament on 6 December 2011 and
adopted for accounting periods beginning on or after
1 January 2012. This will amend the existing
requirements to gain approval annually under S1158/59
of the Corporation Taxes Act 2010. Additionally in
order to align company law with tax legislation, Section
833 of the Companies Act 2006 was amended with
effect for accounting periods beginning on or after
6 April 2012. These amendments will be adopted for
the year ending 30 September 2013 and include:
(cid:129) The previous requirement to derive a minimum of
70% of income from shares and securities has been
replaced by a more general requirement that the
business must consist of “investing in shares, land
or other assets with the aim of spreading investment
risk and giving members of the Company the benefit
of the results.”
(cid:129) The 15% distribution requirement has been
maintained but now incorporates all income not just
income from shares and securities.
(cid:129) The previous 15% holding test has been omitted
from the new regulations. Instead a similar spread of
risk test is incorporated within the new definition of
an investment trust: the “aim of spreading
investment risk and giving members the benefit of
the results.” The Company has submitted its original
and revised investment policy to HMRC as required
under the new regime.
(cid:129) The requirement for the Articles to prohibit the
distribution of realised gains on the sale of
investments has now been removed.
Capital Structure
As part of its corporate governance the Board keeps
under review the capital structure of the Company. At
30 September 2012 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.
As noted above gearing is via two long term
debentures. The limits on the ability to borrow are
described in the investment policy on page 1. The
Board is responsible for setting the overall gearing
range in which the Investment Manager may operate.
Group gearing (borrowings less cash and equivalents)
as at 30 September 2012 was 9.2% (2011: net cash
of 1.2%) which reflects the cash held, primarily due to
proceeds held from the redemption of the Company’s
holding in the QIF held pending reinvestment in the
Javelin UCITS fund (2011: cash held for initial
investment into the UCITS fund plus large cash
balances held in the QIF fund). At the Company level,
gearing as at 30 September 2012 was 11.1% (2011:
gearing of 15.8%). This also reflects the cash held from
the QIF held pending reinvestment in the UCITS fund
(2011: cash held last year for the initial investment into
the 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.
REPORT & ACCOUNTS 2012 21
Business Review
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 on pages 75 to 84.
The Company has a range of equity investments
including substantial investments in two unlisted asset
management businesses, large cap global equities and
a n investment in an emerging market 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.
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 Board 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 systems in place to manage the Company’s
internal controls are described further in the Corporate
Governance Statement on page 31.
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
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.
22
MAJEDIE INVESTMENTS PLC
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.
The Company has invested seed capital in two funds
managed by Javelin Capital LLP. In September 2010,
the Company invested £20 million in the Javelin Capital
Global Equity Strategies Fund, an Irish QIF. In February
2012, the Company invested £15 million in the Javelin
Capital Emerging Markets Alpha Fund, a sub-fund of
the Serviced Platform SICAV (UCITS). Both Javelin
Capital Funds were emerging market equity funds with
an absolute return objective which they aim to achieve
through a market -neutral investment strategy.
At the time Javelin Capital launched the Javelin Capital
Global Equity Strategies Fund, it considered an Irish QIF
to be the best structure to adopt for the fund. Since
then and foll owing a review by Javelin Capital, it has
become apparent that UCITS-compliant funds have
become increasingly attractive to investors . As at
30 September 2012 the Company had redeemed the
vast majority of its investment in the QIF which will be
held in cash pending re-investment in the UCITS. The
QIF will be wound down and de-registered with the Irish
Central Bank and be placed into voluntary liquidation.
This is expected to be complete in early 2013.
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.
(cid:129) NAV total return and total shareholder return: as
shown on page 5.
(cid:129) Investment group portfolio return: see the chart on
page 10. Both of these are discussed in detail in the
Chairman's Statement and the Investment
Manager's Report.
(cid:129) Share price discount: The level of the discount at
the end of the financial year calculated with debt at
par was 27.8%, as compared to 35.0% in 2011.
The prior year discount was distorted due to
revisions to investments, primarily MAM, which were
not reflected i n the share price at year end.
(cid:129) Ongoing Charges: From May 2012 a new measure
of investment trust operating costs was introduced
to the sector called ongoing charges, which
replaced the previous Total Expense Ratio. Ongoing
charges shows the annual normal or ongoing costs
of an Investment Trust exclud ing performance fees,
one off expenses and investment dealing costs as a
percentage of average shareholder's funds. Where
investments have been made into pooled funds
estimated ongoing fund costs have been included in
the Company’s ongoing charges percentage.
The ongoing charges of the Company for the year
ended 30 September 2012 was 1.8% (2011: 1.9%).
(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 4.9%, 5. 5% 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 pages
5 to 7.
REPORT & ACCOUNTS 2012 23
Business Review
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 3.7m, 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
inflation over the long term.
Employees, Social, Environmental and Ethical policy
The Company has no employees and the Board consists
entirely of non-executive Directors and as a result the
Group has limited 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 ongoing charges percentage over net
assets is 1. 8% . Company operating costs continued to
decrease this year, even excluding the impact of the
increased investment made into the Javelin Capital
pooled funds, but the ratio reflects the lower average
asset base and the allocation to emerg ing markets via
the Javelin Funds. The Board pays close attention to
cost control and the current situation is referred to
further in the Chairman’s Statement on pages 5 to 7.
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 £4.5m initial capital
and a further capital contribution of up to £ 3.5m.
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. On 29 June
2011 £2.5m was provided with the remainder at
the Board’s discretion . This was obtained and the
remaining £1.0m was provided on 25 September
2012 .
(cid:129) The Company has a 75% 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 55%.
(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 30), 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.
24
MAJEDIE INVESTMENTS PLC
(cid:129) In the event of a sale proposed by the Company
the agreement includes drag along provisions
including certain pre-emption rights to the
other partners.
There are also two side letters that relate to the LLP
Agreement which provide for a possible change in
control rights and provide for the liability of partners in
respect of their capital and current account balances.
ii. Management and Administration
Services Agreements
The Board has appointed Javelin Capital LLP as
its investment manager and general administrator.
The terms of the appointment are defined under a
Management Agreement and Administration
Services Agreement dated 31 August 2010. The
agreement divides the Company’s investments
into distinct portfolios which are the Core
Portfolio, non-core portfolio, MAM, Javelin Capital
Funds and the Treasury account. The fees
payable under the Management Agreement are
detailed below:
Fund/Portfolio
Management
Fee
0.70% p.a.*
0.70% p.a.
Core Portfolio***
Treasury Account
MAM
Javelin Capital Global
Equity Strategies Fund# 1.25% p.a.
Javelin Capital Emerging
Markets Alpha Fund^ 1-1.25% p.a.
NIL**
Performance
Fee
10%†
NIL
NIL**
20%‡
10-20%#
* 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. The QIF closed and the holding redeemed in
September 2012.
** The agreements provide for a fee of £60,000 per annum in respect of
MAM duties.
‡ The fees are as set in the funds documentation. 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 in respect of the QIF).
*** The non-core portfolio attracts a management fee as per the Core Portfolio but
has no performance fee.
^ The Javelin Capital Emerging Markets Alpha Fund is a sub-fund of the Serviced
Platform SICAV, which is a Luxembourg based UCITS.
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.
(cid:129) Capita Sinclair Henderson Ltd
The Board has appointed Capita Sinclair Henderson
Ltd (trading as Capita Financial Group – Specialist
Fund Services) in November 2000 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 6 February
20 12. 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 201 2 the Group and the Company
had nine and eight days respectively of suppliers’
invoices outstanding in respect of trade creditors (201 1:
Group and Company four days ).
REPORT & ACCOUNTS 2012 25
Business Review
Majedie Asset Management Limited
Majedie Asset Management is an investment
management boutique specialising in UK equities
which launched in 2003. Having started with a 70%
shareholding the Company now retains a 29.8%
interest. The relevant developments during the year are
referred to in the Investment Manager’s report on page
10 and further referred to in note 13 on pages 68
and 69.
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.
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 m was paid on 29 June 2011
and the remainder on 25 September 2012.
The Company has an initial 75% ownership. This will
fall to 55% if the partnership achieves certain preset
financial targets. The Chairman’s Statement on page 6
and additionally the notes to the accounts on page 68
provide further information on developments.
On 20 September 2010 the Company invested £20m
into the Javelin Capital Global Equity Strategies Fund
(QIF) which was followed on 16 February 2012 by
£15m being invested into the second Javelin Capital
fund, the Javelin Capital Emerging Markets Alpha Fund
(UCITS). Following a review by Javelin Capital in 2012 ,
it became apparent that the UCITS fund was more
attractive to investors, the QIF was closed with all
remaining investor funds being redeemed in September
2012. It was proposed that the Company’s investment
in the QIF would be redeployed into the UCITS fund.
After the Company’s shareholders approved a change
to the Company’s investment policy on 9 October
2012 to permit this the funds were invested in
November 2012. The characteristics and performance
of these two fund investments are detailed in the
Investment Manager’s Report section.
Continued Appointment of the Manager
The Board has concluded that it is in the 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 24
and 25.
26
MAJEDIE INVESTMENTS PLC
Corporate Governance Statement
The Corporate Governance Statement forms part of the Directors’ Report.
This section of the annual report describes how 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 201 2 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 to its accounting,
administration, company secretarial and custody
arrangements being outsourced to the parties detailed
on page 31.
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 is an executive director.
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 currently the Senior Independent
Director . However, following his retirement in 2013 and
after due consideration with the size of the Company, it
has been determined that no Senior Independent
Director is required.
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 2012, six Board
meetings were held, two Audit Committee meetings,
one Management Engagement Committee meeting
and one Remuneration Committee meeting.
Attendance at these Board and Committee meetings
are detailed below.
Number of meetings
Board
Audit
Management
Engagement
Remuneration
Directors
A J Adcock
J W M Barlow
RDC Henderson
P D Gadd
H V Reid
6
6
6
6
6
6
2
2
n/a
2
2
2
1
1
n/a
1
1
1
1
1
n/a
1
1
1
Since the Company’s financial year end the Company
held two Board meetings, one Audit Committee, one
Management Engagement, one Nomination Committee
and one Remuneration Committee meeting. All Board
and Committee members attended their respective
meetings.
REPORT & ACCOUNTS 2012 27
Corporate Governance Statement
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.
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 is responsible for monitoring
the integrity of the financial statements of the
Company, reviewing the Company’s internal financial
controls and risk management systems, making
recommendations to the Board, for it to put to the
shareholders for their approval in general meeting, in
relation to the appointment and terms of
engagement of the external auditor, monitoring the
external auditor’s independence and developing and
implementing a policy on the engagement of the
external auditor to supply non-audit services.
The Audit Committee has considered the
independence and objectivity of the Auditors.
It has informed the Board that it is satisfied in
these respects and considers that Ernst & Young
LLP has fulfilled its obligations to the Company
and its Shareholders.
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 attends meetings at the
request of the Committee, from time to time. 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. All appointments to the Board
are made on merit. However, gender and diversity
generally are taken into account when evaluating
the skills, knowledge and experience desireable to
fill each vacancy.
(cid:129) The Audit Committee comprises:
The Company’s Articles of Association require a
Mr RDC Henderson (Chairman), Mr HV Reid ,
Mr PD Gadd and Mr AJ Adcock. Mr JWM Barlow and
representatives of the Auditors are invited to attend
meetings of the Committee. The Board has agreed
the terms of reference for the Audit Committee which
meets at least twice a year. In particular during the
year the Committee 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.
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 o r
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.
28
MAJEDIE INVESTMENTS PLC
Mr JWM Barlow has a contract of employment with
Javelin Capital Services Limited. 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.
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 Nomination Committee met on 16 October
2012 to consider the re-appointment of directors at
the Company’s Annual General Meeting . It decided
to recommend the re-appointment of Messrs
PD Gadd and JWM Barlow on the basis that they
continued to make valuable contributions and
exercise their judgement and express their opinions
in an independent manner. As noted previously
Mr HV Reid will not be seeking re-election and it has
been decided not to appoint a new non executive
director as the Committee believes the remaining
directors provide the necessary breadth of skills and
experience to run the Company.
(cid:129) The Remuneration Committee comprises:
Mr PD Gadd (Chairman), Mr HV Reid ,
Mr AJ Adcock and Mr RDC Henderson .
Mr JWM Barlow was invited to attend and
participate as appropriate . Further details on the
work of the Remuneration Committee is included in
the Report on Directors’ Remuneration on pages 32
to 34.
(cid:129) The Management Engagement Committee
(“MEC”). The M E C was established on 14 October
2010 and comprises : Mr PD Gadd (Chairman), and
the non-executive directors. Mr JWM Barlow
attends meetings at the request of the Committee,
from time to time. 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 1 6 October 201 2 and
recommended that Javelin Capital LLP be retained
as Investment Manager.
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.
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 under its existing terms.
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 2012 29
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 at
the Annual General Meeting 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 20 to 26 provides 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 and also must approve
his remuneration.
Javelin Capital LLP governance is comprised of:
(cid:129) Management Board
The Management Board is the Javelin Capital LLP
governing body. It meets regularly, usually monthly
and is comprises of Company representatives and
partners, although other parties may be invited to
meetings as required. It also fulfils audit and
remuneration committee functions and currently
now also undertakes any investment committee
responsibilities.
(cid:129) Risk Committee
The Risk Committee operates under terms of
reference as approved by the Management Board
which include monitoring and controlling risk
guidelines, product approval and Javelin Capital
LLP’s overall control environment. The Risk
Committee meets regularly, usually twice a year.
(cid:129) Investment Committee
The Investment Committee terms of reference was to
provide independent review of investment processes
and products in light of the external environment.
Given the changes at Javelin Capital LLP it was
agreed that a separate Investment Committee was
not required at this time and that its functions would
be undertaken by the Management Board.
30
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 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.
Firstly 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 2012 31
Report on Directors’ Remuneration
This report has been prepared in accordance with the requirements of Schedule 8 of the Large and Medium Sized
Companies and Groups (Accounts and Reports) Regulations 2008 as required by 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 2012, the Committee comprised independent non-executive directors – being
Paul Gadd (Chairman from 1 December 2011), Andrew Adcock, Hubert Reid (Chairman until 30 November 2011)
and David Henderson. William Barlow was 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 also recommends and monitors the level and structure of
remuneration for senior management.
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 2012 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 £6,000 per annum, as detailed in the Javelin Capital section, is payable to
non-executive directors who represent the Company on the Javelin Capital LLP 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 3 year duration
period, a one month notice period by either party and no termination or loss of office payments.
32
MAJEDIE INVESTMENTS PLC
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.
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.
During the year the Committee met to agree the terms of any potential bonus and agreed that due to his
responsibilities Mr Barlow would be eligible to receive a bonus in respect of two broad areas.
Firstly, following Javelin Capital LLP becoming profitable on an on-going basis, he would be eligible to receive a
bonus on his performance in relation to certain operational and/or business development targets which would be set
by the Board. Any such appropriate terms will be developed in the future when that milestone is reached.
Secondly, in respect of his marketing responsibilities, it has been agreed that Mr Barlow will receive a bonus, to be
paid by Javelin Capital, of an annual amount equal to 0.1% of any new monies raised and under management by
Javelin Capital LLP that were agreed to be attributable to him. Any such bonus would be paid in cash in respect of
such monies whilst they continue to be managed by Javelin Capital and would be paid quarterly in arrears. Any
entitlement to such bonus would terminate in the event of Mr Barlow ceasing to be an employee of Javelin Capital.
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. Directors attending the management board meetings, with the exception of the
Chairman of the Board, will be paid an additional fee supplement of up to £6,000 per annum, based upon a fee of
£500 per monthly meeting. Mr 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. The LLP Agreement provides that the remuneration
of Javelin Capital Managing Partner, and certain aspects of the remuneration of the other partners', are subject to
the approval of the Company representatives on the Management Board.
REPORT & ACCOUNTS 2012 33
Report on Directors’ Remuneration
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.
1.20
1.10
1.00
0.90
0.80
0.70
0.60
0.50
0.40
9/07
9/08
9/09
9/10
9/11
9/12
Majedie
k
Benchmar
TOTAL SHAREHOLDER RETURN V BENCHMARK
5 YEARS TO 30 SEPTEMBER 2012 (REBASED)
AUDITED SECTION
Directors’ Remuneration
The remuneration of the directors for the year ended 30 September 2012 was as follows:
Salary
£000
Other
Benefits
£000
Basic
fees
£000
Additional
fees
£000
Non-executive directors
A J Adcock
H V Reid
P D Gadd
J W M Barlow
C J Arnheim
R D C Henderson
Executive director
J W M Barlow
75
27
27
27
27
183
135
135
4
4
Total
2012
£000
75
37
35
10
8
8
35
166
348
26
Total
2011
£000
75
41
32
24
27
1
44
244
Mr R D C Henderson and Mr P D Gadd were appointed Chairman of the Audit and Remuneration Committees respectively on 1 December 2011.
Mr J W M Barlow’s other benefits relate to healthcare costs. He received no bonus during the year.
Approval
The Report on Directors’ Remuneration on pages 32 to 34 was approved by the Board on 4 December 2012.
On behalf of the Board
P D Gadd Chairman of the Remuneration Committee
34
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
4 December 2012
REPORT & ACCOUNTS 2012 35
Report of the Independent Auditor
Independent Auditor’s Report to the Members of Majedie Investments PLC
We have audited the financial statements of Majedie
Investments PLC for the year ended 30 September
2012 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 35, 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 2012 and of
the group and the parent company’s profit 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
36
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 19, 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
4 December 2012
REPORT & ACCOUNTS 2012 37
Consolidated Statement of Comprehensive Income
for the year ended 30 September 2012
Investments
Gains on investments at fair
value through profit or loss
Exchange loss on disposal of
foreign subsidiary
Net investment result
Income
Income from investments
Other income
Total income
Expenses
Administrative expenses
Return/(loss) before finance
costs and taxation
Finance costs
Net return/(loss) before taxation
Taxation
Net return/(loss) after taxation
for the year
Other comprehensive income –
exchange differences on
translation of foreign operations
Attributable to:
Equity holders of the company
Non-controlling interest
Revenue
return
£000
2012
Capital
return
£000
Total
£000
Revenue
return
£000
2011
Capital
return
£000
Total
£000
Notes
13
7, 832
7, 832
2,233
2,233
(840)
(840)
6,992
6,992
2,233
2,233
3
3
5, 100
63
5, 163
5, 100
63
5, 163
5,434
106
5,540
5,434
106
5,540
5
(1,7 77)
(1,4 42)
(3,2 19)
(2,195)
(2,633)
(4,828)
3, 386
(70 5)
2, 681
(132)
5,550
(2,11 5)
3, 435
8,936
(2,8 20)
6, 116
(132)
3,345
(721)
2,624
(200)
(400)
(2,165)
(2,565)
2,945
(2,886)
59
(200)
8
9
2, 549
3, 435
5,984
2,424
(2,565)
(141)
37
37
37
37
37
37
(37)
(37)
(37)
(37)
(37)
(37)
Total comprehensive income for
the year
Net return/(loss) after taxation attributable to:
Equity holders of the Company
Non-controlling interest
2, 549
3, 4 72
6, 021
2,424
(2,602)
(178)
2, 552
(3)
3, 445
(1 0)
5,997
(13)
2,427
(3)
(2,568)
(141)
3
2, 549
3, 435
5,984
2,424
(2,565)
(141)
Return/(loss) per ordinary share:
Basic and diluted
11
pence
4.9
pence
6.6
pence
1 1.5
pence
4.6
pence
(4.9)
pence
(0.3)
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 86 form part of these accounts.
38
MAJEDIE INVESTMENTS PLC
Company Statement of Comprehensive Income
for the year ended 30 September 2012
Revenue
return
£000
2012
Capital
return
£000
Total
£000
Revenue
return
£000
2011
Capital
return
£000
Total
£000
Notes
Investments
Gains on investments at fair
value through profit or loss
13
Net investment result
Income
Income from investments
Other income
Total income
Expenses
Management fees
Administrative expenses
Return before finance costs
and taxation
Finance costs
Net return/(loss) before taxation
Taxation
Net return/(loss) after taxation
6,258
6,258
6,258
6,258
1,547
1,547
1,547
1,547
3
3
4
5
8
9
5,132
34
5,166
5,132
34
5,166
5,382
19
5,401
5,382
19
5,401
(382)
(568)
(412)
(237)
(794)
(805)
(418)
(730)
(519)
(937)
(320)
(1,050)
4,216
5,609
9,825
4,253
708
4,961
(701)
(2,104)
(2,805)
(701)
(2,102)
(2,803)
3,515
3,505
7,020
3,552
(1,394)
2,158
(113)
(113)
(121)
(121)
for the year
3,402
3,505
6,907
3,431
(1,394)
2,037
Return/(loss) per ordinary share:
pence
pence
pence
pence
pence
pence
Basic and diluted
11
6.6
6.7
13.3
6.5
(2.6)
3.9
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 86 form part of these accounts.
REPORT & ACCOUNTS 2012 39
Consolidated Statement of Changes in Equity
for the year ended 30 September 2012
Share
capital
£000
Share
premium
£000
Notes
Capital
redemption
reserve
£000
Share
options
reserve
£000
5,253
785
56
(178)
Year ended 30 September 2012
As at 1 October 2011
Net gain for the year
Other comprehensive income – exchange
differences on translation of foreign subsidiary
Share options expense
Dividends declared and paid in year
Cessation of Non controlling interest
25
10
15
31
(147)
(220)
116
(74)
(178)
As at 30 September 2012
5,253
785
5,253
785
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
25
10
15
Incentive Trust (EIT)
56
56
As at 30 September 2011
5,253
785
56
The notes on pages 48 to 86 form part of these accounts.
40
MAJEDIE INVESTMENTS PLC
Capital
reserve
£000
84,377
3, 445
Revenue
reserve
£000
23,006
2, 552
(5,465)
8 7,822
20, 093
(1,628)
86,945
(2,568)
26,042
2,427
(1,702)
(5,463)
74
Currency
Own shares
reserve
£000
translation Non-controlling
interest
£000
reserve
£000
Total
£000
(1,628)
(37)
248
(13)
111,882
5,984
37
(37)
37
31
(5,465)
(2 35)
112,23 4
117,159
(141)
(37)
116
(5,463)
248
(2 35)
248
84,377
23,006
(1,628)
(37)
248
111,882
REPORT & ACCOUNTS 2012 41
Company Statement of Changes in Equity
for the year ended 30 September 2012
Year ended 30 September 2012
As at 1 October 2011
Net profit for the year
Share options expense
Dividends declared and paid in year
As at 30 September 2012
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
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
5,253
785
56
The notes on pages 48 to 86 form part of these accounts.
42
MAJEDIE INVESTMENTS PLC
Share
options
reserve
£000
Capital
reserve
£000
Revenue
reserve
£000
Own shares
reserve
£000
Total
£000
(178)
86,067
25,811
(1,628)
116,166
3,505
3,402
31
(5,465)
6,907
31
(5,465)
(147)
89,572
23,748
(1,628)
117,639
(220)
87,461
27,843
(1,702)
119,476
116
(74)
(1,394)
3,431
(5,463)
2,037
116
(5,463)
74
(178)
86,067
25,811
(1,628)
116,166
REPORT & ACCOUNTS 2012 43
Consolidated Balance Sheet
as at 30 September 2012
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
Asset classified as held for sale
Total current assets
Total assets
Notes
12
13
14
16
17
13
Current liabilities
Financial liabilities held at fair value through profit or loss 1 3
Derivative instruments held at fair value through
profit or loss
Trade and other payables
14
18
Liabilities directly associated with the assets
classified as held for sale
Total current liabilities
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
Currency translation reserve
Equity Shareholders’ Funds
Non-controlling interest
Total equity
Net asset value per share
Basic and fully diluted
13
18
19
20
15
21
2012
£000
247
108,217
108,464
1,41 8
23,287
24,70 5
14,199
38,90 4
147,36 8
(1,256)
(1,256)
(55)
(1,311)
146,05 7
(33,823)
(35,134)
112,23 4
5,253
785
56
(147)
8 7,822
20, 093
(1,628)
2011
£000
410
112,822
113,232
136
5,817
37,553
43,506
43,506
156,738
(3,311)
(99)
(7,645)
(11,055)
(11,055)
145,683
(33,801)
(44,856)
111,882
5,253
785
56
(178)
84,377
23,006
(1,628)
(37)
112,23 4
111,634
248
112,23 4
111,882
pence
215.6
pence
214.5
Approved by the Board of Majedie Investments PLC (Company no. 109305) and authorised for issue on 4 December 2012.
Andrew J Adcock
J William M Barlow
Directors
The notes on pages 48 to 86 form part of these accounts.
44
MAJEDIE INVESTMENTS PLC
Company Balance Sheet
as at 30 September 2012
Non-current assets
Property and equipment
Investments held at fair value through profit or loss
Investments in subsidiaries 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
13
16
17
18
18
19
20
2012
£000
133
1 22, 361
8,0 2 1
171
2011
£000
178
127,176
7,000
171
1 30, 686
134,525
855
20,922
21,777
1,180
15,245
16,425
152, 463
150,950
(1,001)
(983)
151,462
149,967
(33,823)
(34,8 24)
(33,801)
(34,784)
117,639
116,166
5,253
785
56
(147)
89,572
23,748
(1,628)
5,253
785
56
(178)
86,067
25,811
(1,628)
Equity Shareholders’ Funds
117,639
116,166
Approved by the Board of Majedie Investments PLC (Company no. 109305) and authorised for issue on 4 December 2012.
Andrew J Adcock
J William M Barlow
Directors
The notes on pages 48 to 86 form part of these accounts.
REPORT & ACCOUNTS 2012 45
Consolidated Cash Flow Statement
for the year ended 30 September 2012
Net cash flow from operating activities
Consolidated net return before taxation
Adjustments for:
Gains 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
(Decrease) /increase in trade and other payables
Decrease /(increase) in trade and other receivables
Net cash inflow from operating activities before tax
Tax recovered
Tax on unfranked income
Net cash inflow from operating activities
Investing activities
Purchases of tangible assets
Investment in Javelin UCITS Fund classified as
asset held for sale
Net cash outflow from investing activities
Financing activities
Interest paid
Dividends paid
Notes
2012
£000
6,116
2011
£000
59
13
(7,832)
(2,233)
31
16 6
(11 6, 131)
12 5, 175
(911)
6,6 14
2,820
9,4 34
(528)
204
9,1 10
37
(15 8)
8,9 89
(5)
116
208
(1,300,122)
1,319,735
20,000
483
(109)
248
38,380
2,886
41,266
139
(758)
40,647
29
(245)
40,431
(3)
(87)
(1 4, 990)
(1 4, 993)
(2,797)
(5,465)
( 8,262)
(14,266)
37,553
23,287
(87)
(2,866)
(5,463)
(8,329)
32,015
5,538
37,553
Net cash outflow from financing activities
(Decrease)/increase 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 86 form part of these accounts.
46
MAJEDIE INVESTMENTS PLC
Company Cash Flow Statement
for the year ended 30 September 2012
Net cash flow from operating activities
Company net return before taxation
Adjustments for:
Gains on investments
Dividends reinvested
Share based remuneration
Depreciation
Purchases of investments
Sales of investments
Proceeds from derivative contracts
Finance costs
Operating cashflows before movements in working capital
Increase/(decrease) in trade and other payables
Decrease/( increase) in trade and other receivables
Net cash inflow from operating activities before tax
Tax recovered
Tax on unfranked income
Net cash inflow from operating activities
Investing activities
Purchases of tangible assets
Investment in subsidiaries
Net cash outflow from investing activities
Financing activities
Interest paid
Dividends paid
Net cash outflow from financing activities
Increase 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 86 form part of these accounts.
Notes
2012
£000
2011
£000
7,020
2,158
13
(6,258)
(1,547)
31
4 5
( 32, 901)
43, 944
18 3
12,06 4
2,805
14,8 69
18
13 5
15,02 2
37
(13 4)
14,925
(1,000)
(1 ,000)
(2,783)
(5,465)
(8,248)
5,677
15,245
20,922
(5)
116
47
(15,692)
35,546
20,623
2,803
23,426
(210)
(141)
23,075
29
(166)
22,938
(4)
(2,500)
(2,504)
(2,783)
(5,463)
(8,246)
12,188
3,057
15,245
REPORT & ACCOUNTS 2012 47
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 94. The nature of the Group’s operations and its
principal activities are set out in the Business Review on pages 20 to 26 and in note 2 on page 55.
Critical Accounting Assumptions and Judgements
The preparation of financial statements in conformity with IFRS requires the use of certain critical accounting
assumptions. It also requires management to exercise its judgement in the process of applying the Group’s
accounting policies. The areas requiring a higher degree of judgement or complexity, or areas where assumptions
and estimates are significant to the consolidated financial statements are set out below.
Unquoted Investments
Unquoted investments are valued at management’s best estimate of fair value in accordance with IFRS having
regard to International Private Equity and Venture Capital Valuation Guidelines as recommended by the British
Venture Capital Association. The principles which the Group applies are set out on pages 5 2 and 5 3. The inputs into
the valuation methodologies adopted include observable historical data such as earnings or cash flow as well as
more subjective data such as earnings forecasts or discount rates. As a result of this, the determination of fair value
requires significant management judgement. At the year end, unquoted investments (including MAM) represent
37.4% of consolidated shareholders’ funds.
Share-based payments
The Group measures the cost of equity-settled transactions with employees by reference to the fair value of the
equity instruments at the date at which they are granted. Estimating fair value for share-based payment transactions
requires determination of the most appropriate valuation model, which is dependent on the terms and conditions of
the grant. This estimate also requires determination of the most appropriate inputs to the valuation model including
the expected life of the share option, volatility and dividend yield and making assumptions about them. The
assumptions and models used for estimating fair value for share-based payment transactions are disclosed in
note 25 and on page 5 1.
1 Significant Accounting Policies
The principal accounting policies adopted are set out as follows:
The accounts on pages 38 to 86 comprise the audited results of the Company and its subsidiaries for the year
ended 30 September 2012, 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 Group’s activities are
continuing, except as indicated in note 15. It is considered that the relevant sections of IFRS 5 in respect of
discontinued operations do not apply.
48
MAJEDIE INVESTMENTS PLC
1 Significant Accounting Policies continued
Basis of Consolidation
The Consolidated Accounts incorporate the accounts of the Company and entities controlled by the Company (its
subsidiaries) made up to 30 September each year. Control is achieved where the Company has the power to govern
the financial and operating policies of an investee entity so as to obtain benefits from its activities.
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. When the Group ceases to
have control any retained interest in the entity is re-measured to its fair value at the date when control is lost, with
the change in carrying amount recognised in profit or loss. The fair value is the initial carrying amount for the
purposes of subsequently accounting for the retained interest as an associate, joint venture or financial asset. In
addition, any amounts previously recognised in other comprehensive income in respect of that entity are accounted
for as if the group had directly disposed of the related assets or liabilities. This may mean that amounts previously
recognised in other comprehensive income are reclassified to profit or loss. All Group entities have the same year
end date, except for the Javelin Capital Emerging Markets Alpha Fund which has a 31 December year end.
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 interest’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.
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:
Standards Issued 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
Fair Value Measurement
Investment Entities (Amendments to IFRS 10, IFRS 12 and IAS 27)
Effective date
1 January 2013
1 January 2013
1 January 2013
1 January 2013
1 January 2014
Management anticipates that all of the relevant pronouncements will be adopted in the next accounting period
subject to the results of the detailed review as outlined below. Information on new standards, amendments and
interpretations that are expected to be relevant to the Group’s financial statements is provided below. Certain other
new standards and interpretations have been issued but are not expected to have a material impact on the Group’s
financial statements.
The Directors do not anticipate that the adoption of these standards and interpretations will have a material impact
on the financial statements in the period of initial application, except for IFRS 10. A detailed review will be performed
by the Board to quantify any potential impact on the subsequent application of IFRS 10.
REPORT & ACCOUNTS 2012 49
Notes to the Accounts
1 Significant Accounting Policies continued
IFRS 10 supersedes IAS 27 ‘Consolidated and Separate Financial Statements’ (IAS 27) and SIC 12 ‘Consolidation –
Special Purpose Entities’. IFRS 10 revises the definition of control and provides extensive new guidance on its
application. These new requirements have the potential to affect which of the Group’s investees are considered to
be subsidiaries and therefore change the scope of consolidation. On 31 October 2012 the IASB issued Investment
Entities (Amendments to IFRS 10, IFRS 12 and IAS 27). The amendment gives entities that meet the criteria of an
investment entity the ability to measure particular subsidiaries at fair value through profit or loss, rather than
consolidate them. However, the requirements on consolidation procedures, accounting for changes in non-
controlling interests and accounting for loss of control of a subsidiary remain the same. Management’s provisional
analysis is that IFRS 10 and the Investment Entities amendment, which can be early adopted, will change the
classification (as subsidiar y or otherwise) of the JCEMA investee entity as at 1 October 2012. This change will have
no material effect on the Group's overall results, but will provide a much simpler view of its activities.
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. Up until 6 April
2012, 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 entity are presented in the currency of the primary economic
environment in which the entity operates, i.e. its functional currency. For the purpose of the consolidated financial
statements, the results and financial position of each entity are expressed in Pounds Sterling (Sterling) which is the
functional currency of the Company, and the presentational currency of the Group. Transactions in currencies other
than Sterling are recorded at the rate of exchange prevailing on the dates of the transactions. At each balance sheet
date, monetary items and non-monetary assets and liabilities that are fair valued and are denominated in foreign
currencies are re-translated at the rates prevailing on the balance sheet date. Gains and losses arising on
retranslation are included in net profit or loss for the year in respect of those investments which are classified as fair
value through profit or loss. All foreign exchange gains and losses, except those arising from the translation of
foreign subsidiaries, are recognised in the Consolidated Statement of Comprehensive Income. In accordance with
IAS 21, a foreign currency translation reserve has been established in respect of the exchange movements arising
on consolidation since 30 September 2011. On disposal of a foreign operation, the component of other
comprehensive income relating to that particular foreign operation is recognised in profit or loss.
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 in order to earn potential future revenues.
Income
Dividend income from investments is taken to the revenue account on an ex-dividend basis. Divided expense
relating to equity securities sold short is recognised whe n the Shareholders' right to receive payment is established.
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.
50
MAJEDIE INVESTMENTS PLC
1 Significant Accounting Policies continued
Expenses
All expenses are accounted for on an accruals basis. In respect of the analysis between revenue and capital items
presented within the Statement of Comprehensive Income, all expenses have been presented as revenue items
except as follows:
(cid:129)
(cid:129)
Expenses which are incidental to the acquisition or disposal of an investment are treated as capital costs and
separately identified and disclosed (see note 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 on an acc ruals basis.
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. Finance costs are debited on an acc ruals basis using the
effective interest method.
Share Based Payments
The Group issues equity-settled share-based payments to certain employees. Equity-settled share-based payments
are measured at fair value determined at the date of grant, which is expensed on a straight-line basis over the vesting
period, based on the Group’s estimate of the number of shares that will eventually vest. Fair value is measured by use
of the Black-Scholes model. The expected life used in the model has been adjusted, based on management’s best
estimate, for the effects of non-transferability, exercise restrictions and behavioural considerations.
Taxation
The tax charge represents the sum of the tax currently payable and deferred tax.
The tax currently payable is based on taxable profit for the year. Taxable profit differs from profit as reported in the
Statement of Comprehensive Income because it excludes items of income or expense that are taxable or deductible
in other years and it further excludes items that are never taxable or deductible. The Group’s liability for current tax is
calculated using tax rates that have been enacted or substantively enacted by the balance sheet date.
In line with the recommendations of the SORP, the allocation method used to calculate tax relief on expenses presented
against capital returns in the supplementary information in the Statement of Comprehensive Income is the marginal basis.
Under this basis, if taxable income is capable of being offset entirely by expenses presented in the revenue return column
of the Statement of Comprehensive Income, then no tax relief is transferred to the capital return column.
Deferred tax is the tax expected to be payable or recoverable on differences between the carrying amounts of
assets and liabilities in the financial statements and the corresponding tax bases used in the computation of taxable
profit, and is accounted for using the balance sheet liability method. Deferred tax liabilities are recognised for all
taxable temporary differences and deferred tax assets are recognised to the extent that it is probable that taxable
profits will be available against which deductible temporary differences can be utilised.
No provision is made for tax on capital gains since the Company operates as an investment trust for tax purposes.
REPORT & ACCOUNTS 2012 51
Notes to the Accounts
1 Significant Accounting Policies continued
Property and Equipment
Property and equipment are stated at cost less accumulated depreciation and any recognised impairment loss.
Leasehold improvements are written off in equal annual instalments over the minimum period of the lease whereas
depreciation for other tangible assets is provided for at 25% to 33% per annum using the straight-line method.
Leasing
Leases are classified as finance leases whenever the terms of the lease transfer substantially all the risks and
rewards of ownership to the lessee. All other leases are classified as operating leases.
Rentals payable under operating leases are charged to profit or loss on a straight-line basis over the term of the
relevant lease.
Investments Held at Fair Value Through Profit or Loss
The Group classifies its investments in debt and equity securities, and derivatives, as financial assets or financial
liabilities at fair value through profit or loss.
This category has two sub-categories: financial assets or financial liabilities held for trading; and those designated at
fair value through profit or loss at inception.
(i) Financial assets and liabilities held for trading
A financial asset or financial liability is classified as held for trading if it is acquired or incurred principally for the
purpose of selling or repurchasing in the near term or if on initial recognition is part of a portfolio of identifiable
financial investments that are managed together and for which there is evidence of a recent actual pattern of short-
term profit taking. Derivatives are also categorised as held for trading. The Group does not currently classify any
derivatives as hedges in a hedging relationship.
(ii) Financial assets and liabilities designated at fair value through profit or loss at inception
Financial assets and financial liabilities designated at fair value through profit or loss at inception are financial
instruments that are not classified as held for trading but are managed, and their performance is evaluated on a fair
value basis in accordance with the Group’s documented investment strategy.
The Group’s policy requires the Investment Manager and the Board to evaluate the information about these financial
assets and liabilities on a fair value basis together with other related financial information. These financial assets and
liabilities are expected to be realised within 12 months of the statement of financial position date.
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 for listed securities,
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.
52
MAJEDIE INVESTMENTS PLC
1 Significant Accounting Policies continued
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.
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.
Non-current assets (or disposal groups) held-for-sale
Non-current assets (or disposal groups) are classified as assets held for sale when their carrying amount is to be
recovered principally through a sale transaction and a sale is considered highly probable. They are stated at the
lower of carrying amount and fair value less costs to sell if their carrying amount is to be recovered principally
through a sale transaction rather than through continuing use.
Investment in Subsidiaries
In its separate financial statements the Company recognises its investment in subsidiaries at cost, less any
impairment or if they are held and managed as investment s 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. Financial assets and financial liabilities are initially measured at
fair value.
Derivative Financial Instruments
Derivative 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 through profit and loss. Derivatives are carried
as financial assets when the fair value is positive and as financial liabilities when the fair value is negative.
The Group’s activities expose it primarily to the financial risks of changes in market prices, foreign currency
exchange rates and interest rates. Derivative transactions which the Company may enter into comprise forward
foreign exchange contracts (the purpose of which is to manage currency risks arising from the Company’s investing
activities), quoted options or Contracts For Difference (CFDs) on shares held within the portfolio, or on indices
appropriate to sections of the portfolio (the purpose of which is to provide protection against falls in the capital
values of the holdings) and futures contracts on indices appropriate to sections of the portfolio (one purpose for
which may be to provide protection against falls in the capital values of the holdings). The Group does not use
derivative financial instruments for speculative purposes.
The use of financial derivatives is governed by the Group’s policies as approved by the Board, which has set written
principles for the use of financial derivatives.
Changes in the fair value of derivative financial instruments that do not qualify for hedge accounting are recognised
in the Statement of Comprehensive Income as they arise. If capital in nature, the associated change in value is
presented as a capital item in the Statement of Comprehensive Income.
REPORT & ACCOUNTS 2012 53
Notes to the Accounts
1 Significant Accounting Policies continued
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.
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.
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 either classified as financial liabilities at fair value through profit or loss and are recognised
initially at fair value or 'other financial liabilities' (including borrowings and trade and other payables that are classified
and subsequently measured at amortised cost ). Financial liabilities are subsequently measured at fair value and
changes in fair value are recognised in the Statement of Comprehensive Income.
Non current liabilities
The debentures are initially recognised at cost, being the fair value of the consideration received less issue costs
where applicable. After initial recognition, all interest-bearing loans and borrowings are subsequently measured at
amortised cost using the effective interest method, with the interest expense recognised on an effective yield basis.
The effective interest method is a method of calculating the amortised cost of a financial liability and of allocating
interest expense over the relevant period. The effective interest rate is the rate that exactly discounts estimated
future payments over the expected life of the financial liabilities, or, where appropriate, a shorter period, to the net
carrying amount on initial recognition.
54
MAJEDIE INVESTMENTS PLC
1 Significant Accounting Policies continued
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
Statement of Comprehensive Income and subsequently in the capital reserve. The translation reserve is used to
record exchange differences arising from the translation of the financial statements of the Group’s foreign subsidiary.
Share options reserve represents the expense of share based payments. The fair value of share options is measured
at grant date and spread over the vesting period. The deemed expense is transferred to the share options reserve.
Share premium account represents the excess over nominal value of consideration received for equity shares, net of
expenses of the share issue.
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.
Dividends payable to shareholders
Dividends to shareholders are accounted for in the period in which they are paid or approved in general meetings.
Dividends payable to shareholders are recognised in the Statement of Changes in Equity when they are paid, or
have been approved by shareholders in the case of a final dividend and become a liability of the Company.
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 26 on pages 77 and 78.
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 2012 55
Notes to the Accounts
2 Business Segments continued
Group
2012
Group
2011
Investment
management
Investing and advisory
activities
£000
services Eliminations
£000
£000
18
1,241
(1,241)
Total
£000
18
Investment
management
Investing and advisory
activities
£000
services Eliminations
£000
£000
Total
£000
1,318
(1,318)
5, 142
3
5, 145
5,537
(25)
3
5,540
25
5, 142
1,262
(1,24 1)
5, 163
5,512
1,321
(1,293)
5,540
(31)
( 1,194)
(1, 716)
(31)
(2, 910)
(116)
(1,304)
(2,979)
(116)
(4,283)
(1, 181)
(78)
(60)
(2 00)
1, 241
(2 78)
(1,318)
13
1,318
(442)
(429)
(2, 484)
(1,976)
1, 241
( 3,219)
(2,725)
(3,421)
1,318
(4,828)
2,658
(2,8 20)
(714)
1,944
(2,8 20)
2,787
(2,886)
(2,100)
25
25
(25)
7, 832
(840)
7, 832
2,233
(840)
712
(2,886)
2,233
External income
from investment
management services
Intra-group income
from investment
management services
Other operating and
investment income
Intra-group finance income
Performance shares and
options fair value charge
Other administrative costs
Intra-group investment
management services
expenses
Other operating expenses
Operating profit/(loss)
Finance costs
Intra-group finance costs
Gains on fair value through
profit and loss
Foreign exchange loss
on disposal of subsidiary
Profit/(loss) before tax
6,83 0
(714)
6,116
2,134
(2,075)
59
Total assets
14 4,094
3,274
1 47,368 152,949
3,789
156,738
Total liabilities
Intra-group assets/(liabilities)
(3 4,911)
8,426
(223)
(426)
(8,000)
(3 5,134)
(44,131)
7,419
(725)
(419)
(7,000)
(44,856)
Net assets
117,6 09
2,625
(8,000)
112,23 4 116,237
2,645
(7,000) 111,882
3 Income
Income from investments
Franked investment income†
UK unfranked investment income
Overseas dividends
Fixed interest and convertible
bonds
Group
2012
£000
4, 113
135
835
17
Group
2011
£000
4,153
138
1,105
38
Company
2012
£000
Company
2011
£000
4, 113
135
867
17
4,153
138
1,053
38
† Includes MAM ordinary dividend income of £ 2,215,000 (2011: £ 1,914,000).
5, 100
5,434
5,132
5,382
56
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
2012
£000
32
31
5, 083
49
31
2,033
852
2,215
Group
2011
£000
68
19
19
Company
2012
£000
Company
2011
£000
21
13
6
19
(6)
63
5, 163
106
5,540
34
5,166
19
5,401
5,396
125
19
5,115
38
13
5,344
63
(6)
5, 163
5,540
5,166
5,401
2,377
1,143
1,914
2,033
884
2,215
2,377
1,091
1,914
5, 100
5,434
5,132
5,382
Company
2012
Capital
return
£000
412
412
Revenue
return
£000
137
245
382
Total
£000
549
245
794
Revenue
return
£000
173
245
418
Company
2011
Capital
return
£000
519
519
Total
£000
692
245
937
A summary of the terms of the Management Agreement for the Company with Javelin Capital LLP is given in the
Business Review on pages 24 and 25. At 30 September 2012, an amount of £52,000 was outstanding for payment
of investment management fees when due (2011: £49,000) and outstanding administration fees of £22,000 (2011:
£22,000).
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 25. No
performance fee is due in respect of the year ended 30 September 2012 (2011: £nil).
REPORT & ACCOUNTS 2012 57
Notes to the Accounts
5 Administrative Expenses
Staff costs – note 7
Other staff costs and directors’ fees
Advisers’ costs
Restructuring costs
Information costs
Establishment costs
Operating lease rentals – premises
Depreciation on tangible assets
Auditor’s remuneration
(see below)
Pre start-up costs
Other expenses
Group
2012
£000
720
304
5 69
454
121
124
16 6
73
68 8
Group
2011
£000
1,385
354
715
265
738
119
123
208
1 10
195
6 16
Company
2012
£000
31
233
322
44
4 5
55
7 5
Company
2011
£000
122
239
379
139
52
47
55
17
3,2 19
4,828
805
1,050
A charge of £ 1,4 42,000 (2011: £2,633,000 ) to capital and an equivalent credit to revenue has been made in the
Group and a charge of £ 237,000 (2011: £3 20,000) 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 Auditor for the year, all of which were charged to revenue, comprised:
Audit services
– statutory audit
Other non-audit services
Group
2012
£000
6 6
7
Group
2011
£000
103
7
Company
2012
£000
Company
2011
£000
48
7
48
7
73
1 10
55
55
All fees incurred during the year were to Ernst & Young LLP (2011: All Ernst & Young LLP except for £18,2 00 to
PricewaterhouseCoopers LLP in respect of the QIF).
6 Directors’ Emoluments
Fees
Company
2012
£000
209
Company
2011
£000
2 07
209
2 07
The Report on Directors’ Remuneration on pages 32 to 34 explains the Company’s policy on remuneration for
directors for the year. It also provides further details of directors’ remuneration.
58
MAJEDIE INVESTMENTS PLC
7 Staff Costs including Executive Directors
Group
2012
£000
591
69
29
Salaries and other payments
Social security costs
Pension contributions
Share based remuneration
– note 25
31
Group
2011
£000
1,089
129
51
116
Company
2012
£000
Company
2011
£000
6
116
31
720
1,385
31
122
Group
2012
Number
Group
2011
Number
Company
2012
Number
Company
2011
Number
Average number of employees:
Management and office staff
8
11
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
2012
Group
2011
Revenue Capital
return
return
Total
£000
£000
£000
962 1,283
321
375 1,125 1,500
22
17
1 5
11
5
4
Revenue Capital
return
Total
return
£000
£000
£000
321
962 1,283
375 1,125 1,500
20
15
83
63
5
20
70 5 2,11 5 2,8 20
721 2,165 2,886
Company
2012
Company
2011
Revenue Capital
return
return
Total
£000
£000
£000
962 1,283
321
375 1,125 1,500
22
17
5
Revenue Capital
return
Total
return
£000
£000
£000
962 1,283
321
375 1,125 1,500
20
15
5
701 2,104 2,805
701 2,102 2,803
Further details of the debenture stocks in issue are provided in note 18.
9 Taxation
Analysis of tax charge
Tax on overseas dividends
Group
2012
£000
132
Group
2011
£000
200
Company
2012
£000
Company
2011
£000
113
121
REPORT & ACCOUNTS 2012 59
Notes to the Accounts
9 Taxation continued
Reconciliation of tax charge:
The current taxation for the year is lower (2011: higher) than the standard rate of corporation tax in the UK of 2 4%,
(2011: 2 6%). The differences are explained below:
Net return before taxation
Taxation at UK Corporation Tax
rate of 2 5% (2011: 27%)
Effects of:
– UK dividends which are
not taxable
– foreign dividends which are
not taxable
– 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
2012
£000
6, 116
1,529
Group
2012
£000
(1,054)
(213)
(1, 748)
28
1, 458
132
Group
2011
£000
59
Company
2012
£000
7,020
Company
2011
£000
2,158
16
1,755
583
Group
2011
£000
Company
2012
£000
Company
2011
£000
(1,158)
(278)
(603)
53
1,970
200
(1,054)
(213)
(1,564)
33
1,043
113
(1,158)
(278)
(417)
57
1,213
121
Actual current tax charge
132
200
113
121
Group
After claiming relief against accrued income taxable on receipt, the Group has unrelieved excess expenses of
£ 67, 564,000 (2011: £61,728,000). 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
£ 60,681,000 (2011: £56,597,000). 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.
60
MAJEDIE INVESTMENTS PLC
10 Dividends
The following table summarises the amounts recognised as distributions to equity shareholders in the period:
2010 Final dividend of 6.30p paid on 26 January 2011
2011 Interim dividend of 4.20p paid on 29 June 2011
2011 Final dividend of 6.30p paid on 25 January 2012
2012 Interim dividend of 4.20p paid on 27 June 2012
Proposed final dividend for the year ended
30 September 2012 of 6.30p (2011: final dividend
of 6.30p) per ordinary share
Group and
Company
2012
£000
3,279
2,186
2012
£000
3,279
Group and
Company
2011
£000
3,277
2,186
5,465
5,463
2011
£000
3,279
3,279
3,279
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 2012
of 4.20p (2011: 4.20p) per ordinary share
Proposed final dividend for the year ended 30 September
2012 of 6.30p (2011: 6.30p) per ordinary share
11 Return/(Loss) per Ordinary Share
2012
£000
2,186
3,279
2011
£000
2,186
3,279
5,465
5.465
Basic return/(loss) per ordinary share is based on 52,044,613 (2011: 52,029,833) 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 2012 and 2011 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 return/(loss) of:
Basic and diluted total returns are based on
return/(loss) of:
Group
2012
£000
2, 552
3, 445
Group
2011
£000
2,427
(2,568)
5,997
(141)
REPORT & ACCOUNTS 2012 61
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 return/(loss) of:
Company
2012
£000
3,402
3,505
Company
2011
£000
3,431
(1,394)
Basic and diluted total returns are based on return of:
6,907
2,037
12 Property and Equipment
Group
Leasehold
Improvements
£000
171
Group
Office
Equipment
£000
581
3
(1)
Group
Total
£000
752
3
(1)
171
58 3
75 4
40
17
302
14 9
(1)
342
16 6
(1)
57
114
131
4 50
133
2 79
50 7
247
410
Company
Leasehold
Improvements
£000
Company
Office
Equipment
£000
171
168
Company
Total
£000
339
171
168
339
40
17
121
28
161
45
57
114
131
149
19
47
206
133
178
Cost:
At 1 October 2011
Additions
Disposals
At 30 September 2012
Depreciation:
At 1 October 2011
Charge for year
Disposals
At 30 September 2012
Net book value:
At 30 September 2012
At 30 September 2011
Cost:
At 1 October 2011
Additions
Disposals
At 30 September 2012
Depreciation:
At 1 October 2011
Charge for year
Disposals
At 30 September 2012
Net book value:
At 30 September 2012
At 30 September 2011
62
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
2012
Unlisted
£000
12,862
29,582
Listed
£000
69,262
(2,195)
Group
2011
Total
£000
82,124
27,387
Listed
£000
110,166
369
Unlisted
£000
14,034
20,854
Total
£000
124,200
21,223
Opening fair value at beginning of year
67,067
42,444
109,511
110,535
34,888
145,423
Transfer on consolidation of QIF
Purchases at cost
Sales – proceeds
Gains/(losses) on sales
Increase/(decrease) in investment
holding gains
Foreign exchange (losses)/gains on
retranslation of foreign investment
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
110,270
(120,422)
1,500
(574)
(1,957)
110,270
(120,996)
(457)
(20,000)
1,305,385
(1,322,570)
(3,791)
(20,000)
1,305,385
(1,323,082)
(4,451)
(512)
(660)
7,904
2,022
9,926
(2,564)
8,728
6,164
(37)
66,282
60,573
5,709
66,282
(37)
72
72
41,935
108,217
67,067
42,444
109,511
10,331
31,604
70,904
37,313
69,262
(2,195)
12,862
29,582
82,124
27,387
41,935
108,217
67,067
42,444
109,511
The comparative figures for the Group investments on the Balance Sheet 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
(Losses)/gains at beginning of year
Opening fair value at beginning of year
Purchases at cost
Sales – proceeds
Losses on sales
Increase in investment holding gains
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
Company
2012
Listed
£000
86,830
(2,098)
84,732
32,901
(43,196)
(973)
6,962
80,426
75,562
4,864
80,426
Unlisted
£000
12,814
29,630
42,444
(574)
(1,957)
2,022
4 1,935
10,283
3 1,652
4 1,935
Related and
subsidiary
companies
£000
Total
£000
8,010
(839)
107,654
26,693
7,171
134,347
1,000
21
33,901
(43,770)
(2,930)
9,005
8,192
130,553
9,010
(818)
94,855
35,698
8,192
130,553
REPORT & ACCOUNTS 2012 63
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
Opening fair value at beginning of year
Purchases at cost
Sales – proceeds
Losses on sales
(Decrease)/increase in investment holding gains
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)
129,662
20,432
4,671
150,094
2,500
17,594
(34,888)
(4,714)
6,261
Unlisted
£000
13,986
20,902
34,888
(512)
(660)
8,728
Listed
£000
110,166
369
110,535
15,094
(34,376)
(4,054)
(2,467)
84,732
42,444
7,171
134,347
86,830
(2,098)
84,732
12,814
29,630
42,444
8,010
(839)
107,654
26,693
7,171
134,347
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 £2,93 5,000 in 1 8 various companies (2011: £3,186,000 in
20 companies), £ 39,000,000 (2011: £39,000,000) for our investment in MAM as detailed on pages 68 and 69 and
£nil (2011: £258,000) of loan or convertible notes that pay a fixed rate of interest. The valuation of investments on
pages 14 and 15 includes 6 unlisted investments of over £100,000 (including MAM).
During the year the Company incurred transaction costs amounting to £ 113,000 (2011: £151,000) of which
£59,000 (2011: £74,000) related to the purchases of investments and £54,000 (2011: £77,000) 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 on sales of
equity investments
Net loss on sale of Javelin UCITS
investment classified as an asset
held for sale (page 68)
Increase in holding gains on
equity investments
Decrease in value of Javelin UCITS
investment classified as an asset
held for sale (page 68)
Proceeds on sale of
derivative contracts (note 14)
Unrealised gains on
derivative contracts (note 14)
Group
2012
£000
Group
2011
£000
Company
2012
£000
Company
2011
£000
(457)
(4,451)
(2,930)
(4,714)
(10)
9,926
(716)
(911)
6,164
9,005
6,261
483
37
183
Net return on investments
7,832
2,233
6,258
1,547
64
MAJEDIE INVESTMENTS PLC
13 Investments at Fair Value Through Profit or Loss continued
Fair value hierarchy disclosures
The Group is required 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 be 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 2012 65
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
Listed 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
Listed exchange traded funds
Derivatives
Contracts for difference
Index futures
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
Listed exchange traded funds
Interest bearing securities
Unlisted convertible bonds
Group
2012
Group
2011
Level 1
£000
Level 2
£000
Level 3
£000
Total
£000
Level 1
£000
Level 2
£000
Level 3
£000
Total
£000
66,089
41,935
193
66,089
41,935
193
70,009
66,089
193
41,935 108,217
70,009
42,182
4
258
70,009
42,182
4
369
258
136
42,444 112,958
369
136
505
2,093
1,218
3
3,314
96
96
Company
2011
2,093
1,218
96
3
3,410
Company
2012
Level 1
£000
Level 2
£000
Level 3
£000
Total
£000
Level 1
£000
Level 2
£000
Level 3
£000
Total
£000
80,233
50,127
193
80,233
50,127
193
84,732
49,353
4
84,732
49,353
4
258
258
80,233
193
50,127 130,553
84,732
49,615 134,347
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.
66
MAJEDIE INVESTMENTS PLC
13 Investments at Fair Value Through Profit or Loss continued
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.
The following table presents the movement in Level 3 instruments for the year ended 30 September 2012:
Opening balance
Purchases
Transfers from Level 1
Sales – proceeds
Total gains/(losses) for the year included in
the Statement of Comprehensive Income
Opening balance
Purchases
Transfers from Level 1
Sales – proceeds
Total gains/(losses) for the year included in
the Statement of Comprehensive Income
Opening balance
Purchases
Transfers from Level 1
Sales – proceeds
Total gains/(losses) for the year included in
the Statement of Comprehensive Income
Group
2012
Equity
investments
£000
42,182
Convertible
bonds
£000
258
Convertible Preference
shares
loan notes
£000
£000
4
(324)
(2 43)
7 7
(15)
(7)
3
Total
£000
42,444
( 574)
65
41,93 5
41,93 5
Group
2011
34,888
34,325
260
298
5
(512)
(217)
8,068
42,444
8,074
42,182
(2)
258
(295)
(3)
(1)
4
Company
2012
Total
£000
49,615
1,000
(5 74)
8 6
Equity
investments
£000
49,353
1,000
Convertible
bonds
£000
258
Convertible Preference
shares
loan notes
£000
£000
4
(324)
(243)
9 8
(15)
(7)
3
50,12 7
50,12 7
REPORT & ACCOUNTS 2012 67
Notes to the Accounts
13 Investments at Fair Value Through Profit or Loss continued
Opening balance
Purchases
Transfers from Level 1
Sales – proceeds
Total gains/(losses) for the year included in
the Statement of Comprehensive Income
39,559
2,500
38,996
2,500
(512)
(217)
8,068
49,615
8,074
49,353
(2)
258
(295)
(3)
(1)
4
Company
2011
260
298
5
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 Javelin Funds which are
disclosed separately below) in the context of these accounts are shown below:
AOI Medical
Fair
Value
£000
152
% of
Class Held
4.76
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 (JCGES)
The Company invested £20m of seed capital into the JCGES fund on 20 September 2010. During the year, after a
review by Javelin Capital, it was agreed to close the fund. As such on 21 September 2012 the Company, at that time
the only remaining shareholder, redeemed its participating redeemable shares for £17.7m and a loss of £2.3m
(excluding a gain of £0.8m received from the FX hedging programme undertaken on the investment). The Company
has a residual interest in the JCGEF as the only holder of subscriber shares in the umbrella company, Javelin Capital
Strategies plc, and will receive any surplus assets on liquidation. Due to its controlling interest in the JCGES fund, the
holding was fully consolidated into the group accounts during the year in accordance with IFRS. The results for the
JCGES fund for the year are shown in note 15 on page 7 1.
Javelin Capital Emerging Markets Alpha Fund (JCEMA)
The Company invested £15m of seed capital into the JCEMA fund on 16 January 2012 and as at 30 September
2012 has an 82.15% controlling interest. On 24 February 2012 a small holding was transferred into a different share
class in the fund resulting in a loss of £10,000. This holding is consolidated into the group accounts in accordance
with IFRS 5 under the classification of Assets held for sale. Further information is on page 69. The results for the
JCEMA fund for the year are shown in note 15 on page 7 1.
On 2 November 2012, the Company subscribed to an additional 194,571 Class D GBP shares in the Javelin Capital
Emerging Markets Alpha Fund at a cost of £18.15m.
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
2012
£000
1,197
37, 803
2011
£000
1,207
37, 793
39,000
39,000
68
MAJEDIE INVESTMENTS PLC
13 Investments at Fair Value Through Profit or Loss continued
The carrying value of MAM in the 30 September 2012 Consolidated Financial Statements is its fair value as assessed
at 30 September 2012. 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 2012 and the 2013 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 2012 show a net profit after taxation of £ 17,296,000 (2011:
£10,630,000) and shareholders’ funds of £ 30,041,000 (2011: £25,134,000). 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
their 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.
In accordance with the revised shareholders’ agreement, the founding shareholders (including the Company) will sell a
certain number of shares to the MAM Employee Benefit Trust, usually annually and at the prescribed price (as
calculated in accordance with the revised shareholders’ agreement). During the year on 27 October and 16 December
2011 the Company sold 590 and 431 shares to the MAM Employee Benefit Trust for an overall consideration of
£324,000 and a gain of £314,000. Following these transactions the Company holds 127,550 ordinary 0.1p shares
representing a 29.8% shareholding.
Assets classified as held-for-sale
As noted on page 68, the Company has made investments into JCEMA which result in a controlling interest. At the
time of the initial investment (and which currently remains the case), the fund is thought more attractive to investors
and along with active marketing it was considered that the Company’s interest could become non-controlling within
12 months. The fund therefore could be consolidated in accordance with IFRS 5, which was not available to the
JCGES fund, under a new classification called asset classified as held for sale. Within that timeframe if the
Company’s interest becomes non-controlling it will be reclassified to investments held at fair value through profit or
loss, however should this not be the case the investment will be accounted for in accordance with IFRS 10 and the
investment entities exemptions, as appropriate .
14 Derivative financial instruments
Introduction
Typically, derivative contracts serve as components of the Group’s investment strategy and are utilised primarily to
structure and hedge investments, to enhance performance and reduce risk to the Group (the Group does not
designate any derivative as a hedging instrument for hedge accounting purposes). The derivative contracts that the
Group typically holds in the portfolio include:
(cid:129) Futures and forward contracts relating to foreign currencies, market indices and bonds
(cid:129) Options relating to foreign currencies, market indices, equities and interest rates
(cid:129) Swaps relating to equity indices and Contracts for Difference (CFDs)
(cid:129) Short selling equities
As explained above, the Group uses derivative financial instruments to economically hedge its risks associated
primarily with interest rate and foreign currency fluctuations. Derivative financial instruments may also be used for
trading purposes where the Investment Manager believes this would be more effective than investing directly in the
underlying financial instruments.
The notional amount of certain types of financial instruments provides a basis for comparison with instruments
recognised on the balance sheet but does not necessarily indicate the amount of future cash flows involved or the
current fair value of the derivatives.
REPORT & ACCOUNTS 2012 69
Notes to the Accounts
14 Derivative financial instruments continued
The derivative instruments become favourable (assets) or unfavourable (liabilities) as a result of fluctuations in market
interest rates, indices, security prices or foreign exchange rates relative to the derivatives terms. The aggregate
contractual or notional amount of derivative financial instruments held, the extent to which instruments are
favourable or unfavourable and thus the aggregate fair values of derivative financial assets and liabilities can fluctuate
significantly from time to time.
Derivatives often reflect, at their inception, only a mutual exchange of promises with little or no transfer of tangible
consideration. However, these instruments frequently involve a high degree of leverage and are very volatile. A
relatively small movement in the underlying of a derivative contract may have a significant impact on the profit or loss
of the Group.
OTC derivatives may expose the Group to the risks associated with the absence of an exchange market on which
to close out an open position.
The Group’s investment objective sets limits on investments in derivatives with high risk profile. The Investment
Manager is instructed to closely monitor the Group’s exposure under derivative contracts as part of the overall
management of the Group’s market risk (see also note 26).
As mentioned in note 13, included within the composition of investment return for the year is a realised derivatives
gain of £0.8m in relation to the FX hedging programme undertaken on the Javelin Capital Global Equity Strategies
Fund (JCGES) – a US denominated Irish listed fund.
Additionally, during the year, the Company purchased some FTSE 100 put options for portfolio protection purposes.
These were held until expiry and expired out of the money resulting in a loss of £0.6m. Details of the Group and
Company’s unsettled derivatives are below:
Group
2012
Assets
£000
Liabilities
£000
Net
£000
Derivatives instruments
Contracts for difference
Index futures
Assets
£000
136
Group
2011
Liabilities
£000
(96)
(3)
Net
£000
40
(3)
136
(99)
37
70
MAJEDIE INVESTMENTS PLC
15 Investment in Subsidiaries
a) Subsidiary undertakings at 30 September 2012
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#
– Not trading
Javelin Capital Strategies Plc^
(subfund: Javelin Capital Global
Equity Strategies Fund)
– Qualifying Investment Fund (QIF),
supervised by the Central Bank in
Ireland – Not trading
Serviced Platform SICAV†
(subfund: Javelin Capital Emerging
Markets Alpha Fund)
– Undertakings for Collective
Investment in Transferable Securities
(UCITS), supervised by the
Commission de Surveillance du
Secteur Financier (CSSF)
Company
Country of
Registration
Incorporation
and Operation
Number and
class of shares
held by group
Group
Holding
Capital
Reserves at
30.09.12
£000
Profit after
tax for the
year ended
30.09.12
£000
100%
162
100%
(3,458)
(1,852)
75%
2,625
(714)
75%
75%
100%
2 1
(1,391)
82.2%
UK
UK
UK
UK
Ireland
Ireland
LUX
1,000,000
Ordinary
shares
10,000
Units
75%
interest
100
Ordinary
shares
2
Ordinary
shares
2
Subscriber
shares
140,000
Class D
GBP shares
5,000
Class D
USD shares
10,407
Class E
USD shares
Javelin Capital Services Limited (JCS) and Javelin Capital Fund Management Limited (JCFM) are all wholly owned
subsidiaries of Javelin Capital LLP.
# JCFM ceased trading on 19 June 2012 and its regulatory capital was returned to Javelin Capital LLP.
^ The QIF ceased trading on 21 September 2012 with all redeemable preference shares being redeemed. The Company own s 2 subscriber shares
which will receive any surplus on liquidation.
† The Javelin Capital Emerging Markets Alpha Fund is a sub-fund of the Services Platform SICAV. The SICAV has a financial year end of December
with its first accounts being in respect of the period to 31 December 2012.
b) Non-Controlling Interest
Following the closure of the QIF on 21 September 2012, the non-controlling interest previously reflected in the
Consolidated Statement of Comprehensive Income and Balance Sheet , and including its proportion of results for the
current period of the QIF up to the date of closure, represent ing the other investors in the QIF has been
derecognised in accordance with IFRS.
REPORT & ACCOUNTS 2012 71
Notes to the Accounts
15 Investment in Subsidiaries continued
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 Partnership
Agreement for Javelin Capital LLP there is no Non- controlling Interest to be recognised in the Consolidated
Statement of Comprehensive Income or Balance Sheet.
16 Trade and Other Receivables
Sales for future settlement
Prepayments
Dividends receivable
Accrued income
Taxation recoverable
Amounts due from subsidiary
undertakings
Group
2012
£000
1,11 1
254
3
50
Group
2011
£000
4,179
1,256
298
18
66
Company
2012
£000
27
254
3
50
521
Company
2011
£000
174
193
298
8
66
441
The directors consider that the carrying amounts of trade and other receivables approximates to their fair value.
1,41 8
5,817
855
1,180
17 Cash and Cash Equivalents
Deposits at banks
Collateral cash held with brokers
Cash held with brokers
Other balances
Group
2012
£000
22,129
91
1,067
Group
2011
£000
17,051
2,115
17,575
812
Company
2012
£000
20,431
Company
2011
£000
14,809
491
436
23,287
37,553
20,922
15,245
Cash used for collateral is restricted.
18 Trade and Other Payables
Amounts falling due within one year:
Purchases for future settlement
Accrued expenses
Other creditors
Group
2012
£000
313
943
Group
2011
£000
5,861
285
1,499
Company
2012
£000
Company
2011
£000
249
752
276
707
1,256
7,645
1,001
983
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 (201 1: £13.5m) 9.5%
debenture stock 2020
£20.7m (201 1: £20.7m) 7.25%
debenture stock 2025
Group
2012
£000
13,401
20,422
Group
2011
£000
13,392
20,409
Company
2012
£000
Company
2011
£000
13,401
20,422
13,392
20,409
33,823
33,801
33,823
33,801
72
MAJEDIE INVESTMENTS PLC
18 Trade and Other Payables continued
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 amortised over the life of the
debentures. Further details on interest and the amortisation of issue expenses are provided in note 8.
19 Called Up Share Capital
Company
2012
£000
Company
2011
£000
Allotted and fully paid at 30 September:
52,528,000 (2011: 52,528,000) ordinary shares of 10p each
5,253
5,253
There are 483,387 (2011: 483,387) 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 201,601 under the Long Term Incentive Plan
("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 2011
Options exercised
As at 30 September 2012
21 Net Asset Value
Number of
Shares
483,387
Group and
Company
Own Shares
Reserve
£000
(1,628)
483,387
(1,628)
The consolidated net asset value per share has been calculated based on equity shareholders’ funds of £112,23 4,000
(201 1: £111,634,000) and on 52,044,613 (2011: 52,044,613) ordinary shares, being the shares in issue at the year
end having deducted the number of shares held by the EIT.
22 Analysis of Changes in Net Cash/(Debt)
At 30
September
2011
£000
Group
Cash
Flows
£000
Cash at bank and with brokers
37,553
(14,266)
Debt due after one year
(33,801)
Non
Cash
Items
£000
(22)
At 30
September
2012
£000
23,287
(33,823)
3,752
(14,266)
(22)
(10,536)
Company
Cash at bank
Debt due after one year
At 30
September
2011
£000
15,245
(33,801)
Cash
Flows
£000
5,677
Non
Cash
Items
£000
(22)
At 30
September
2012
£000
20,922
(33,823)
(18,556)
5,677
(22)
(12,901)
REPORT & ACCOUNTS 2012 73
Notes to the Accounts
23 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 2012 under the lease of £145,000 (2011:
£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
24 Financial Commitments
Group
2012
£000
145
34
Group
2011
£000
145
145
32
179
322
At 30 September 2012 the Group had no financial commitments which had not been accrued for (2011: none).
25 Share-based Payments
The Group currently operates one share-based payment scheme being the 2006 LTIP which in turn has two
sections relating to Total Shareholder Return (“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 .
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
2012
TSR-based
Awards
Matching
Awards
Weighted
No. Average
of Exercise
Options Price (p)
0.0
178,319
Weighted
No. Average
of Exercise
Options Price (p)
0.0
10,437
12,134
190,453
0.0
0.0
711
11,148
11,148
0.0
0.0
0.0
Outstanding at 1 October 2011
During the year:
Awarded
Forfeited
Exercised
Expired
Increase in awards due to dividends paid
Outstanding at 30 September 2012
Exercisable at 30 September 2012
74
MAJEDIE INVESTMENTS PLC
25 Share-based Payments continued
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
Group
2011
TSR-based
Awards
Matching
Awards
Weighted
No. Average
of Exercise
Price (p)
0.0
Options
291,268
Weighted
No. Average
of Exercise
Price (p)
0.0
Options
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
0.0
The awards outstanding at 30 September 201 2 had a weighted average remaining contractual life of 1.4 years and
nil in respect of the TSR-based Awards and Matching Awards respectively (201 1: 3. 4 years and 0.1 years
respectively).
Awards and options are usually forfeited if the employee leaves employment before vesting .
For the year ended 30 September 2012, the Company recognised a total share options expense of £31,000 (2011:
£116,000 including a one-off vesting charge of £ 59,000) relating to share-based payment transactions in the year
ended 30 September 201 1.
26 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 risk management processes of the Company are aligned with those of the Group as
a whole and it is at the Group level that the majority of the risk management procedures are performed. Where
relevant and materially different to the Group position, Company specific risk exposures are explained alongside
those of the Group. The following risk and sensitivity analysis included in this note are based on the ongoing
operations of the Group and Company therefore does not include disclosures in relation to the investment in the QIF
(previously consolidated as a subsidiary and which closed during September 2012) .
Management of market risk
Management of market risk is fundamental to the Group’s investment objective and the investment portfolio is
continually monitored to ensure an appropriate balance of risk and reward.
Exposure to any one entity is monitored by the Board and senior management. The Company has complied with the
requirement of the relevant tax legislation for an investment trust not to invest more than 15% of the total value of its
investments in the securities of any one group at the time of the initial acquisition, or subsequent purchase.
REPORT & ACCOUNTS 2012 75
Notes to the Accounts
26 Financial Instruments and Risk Profile continued
From time to time, the Group may seek to reduce or increase its exposure to stock markets and currencies by
taking positions in currency forward contracts, index futures and options relating to one or more stock markets.
These instruments are used for the purpose of hedging some or all of the existing exposure within the Group’s
investment portfolio to those currencies or particular markets or to enable increased exposure when deemed
appropriate and with the specific approval of the Board.
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 its net assets and which could result in both or either a reduction in its 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 :
(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.
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 2012
was £ 24, 793,000 and £ 2 5, 653,000 respectively (201 1: £ 24,640,000 and £22,210,000 respectively).
76
MAJEDIE INVESTMENTS PLC
26 Financial Instruments and Risk Profile continued
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.
The Group is able, although unlikely, to enter into forward currency contracts as a means of limiting or increasing its
exposure to particular currencies. Such contracts can be used for the purpose of hedging the existing currency
exposure of elements of the Group’s portfolio (as a means of reducing risk) or to enable increased exposure when
this is deemed appropriate.
During the year, part of the Company’s portfolio currency exposure in respect of its £20m US dollar investment in
Javelin Capital Global Strategies Fund (QIF) was managed by a hedging programme until the fund was closed on
21 September 2012 (as discussed on page 6 8). There were no other forward currency contracts undertaken during
the year.
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
2012
Net
monetary
assets
£000
91
Total
currency
exposure
£000
16,150
2,729
1,540
4,465
Overseas
investments
£'000
12,304
3,905
2,134
6,297
Group
2011
Net
monetary
assets
£000
19,417
285
(12)
Total
currency
exposure
£000
31,721
4,190
2,134
6,285
91
24,884
24,640
19,690
44,330
Company
2012
Net
monetary
assets
£000
Total
currency
exposure
£000
16,920
2,729
1,540
4,464
25,653
Overseas
investments
£'000
12,361
4,013
2,134
3,702
22,210
Company
2011
Net
monetary
assets
£000
Total
currency
exposure
£000
12,361
4,013
2,134
3,702
22,210
Overseas
investments
£000
16,059
2,729
1,540
4,465
24,793
Overseas
investments
£000
16,920
2,729
1,540
4,464
25,653
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 201 1. The revenue impact is an estimated
figure for 12 months based on the relevant cash balances at the reporting date.
REPORT & ACCOUNTS 2012 77
Notes to the Accounts
26 Financial Instruments and Risk Profile continued
Income Statement
Revenue return
Capital return
Net assets
Group
2012
£000
(1,240)
Group
2011
£000
(1)
(1,232)
Company
2012
£000
Company
2011
£000
(1,283)
(1,110)
(1,240)
(1,233)
(1,283)
(1,110)
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. The Company’s exposure has been calculated as
at the year end and may no be representative of the year as a whole.
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.
Derivative contracts are not used to hedge against the exposure to interest rate risk.
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.
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
2012
£000
23,196
91
Group
2011
£000
17,746
19,807
258
Company
2012
£000
Company
2011
£000
28,922
22,245
258
1 09, 882
118,927
1 23, 541
128,447
1 33, 16 9
156,738
1 52, 463
150,950
Fixed rate financial liabilities
UK sterling
Financial liabilities not
carrying interest
(33,823)
(33,801)
(33,823)
(33,801)
(1, 256)
(11,055)
(1,0 01)
(983)
(35, 079)
(44,856)
(34,8 24)
(34,784)
78
MAJEDIE INVESTMENTS PLC
26 Financial Instruments and Risk Profile continued
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 £ 8.0m (2011: £7.0m) investment in Javelin Capital LLP which receives a
commercial rate of interest from 31 August 2010 until full repayment occurs in accordance with the terms of the LLP
Agreement. Fixed rate financial assets comprise convertible bonds or loan notes. The fixed rate financial liabilities
comprise the Group and Company’s debentures totalling £34.2m nominal. They pay a weighted average rate of
interest of 8.1% per annum and mature in 2020 (£13.5m) and 2025 (£20.7m).
Sensitivity analysis
Based on closing cash balances held on deposits with banks , a 0.50% decrease (2011: 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
2012
£000
(106)
Group
2011
£000
(184)
Company
2012
£000
(95)
Company
2011
£000
(74)
(106)
(184)
(95)
(74)
A 0.5% increase (2011: 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 63. 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.
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. Derivative positions are marked to market and exposure to
counterparties is also monitored on a daily basis by the investment manager; the Board review it on a quarterly
basis.
As mentioned earlier, the Investment Manager may use derivative instruments in order to ‘hedge’ the market risk,
including foreign currency risk, inherent in the portfolio. The Investment Manager reviews the risk associated with
individual investments and where they believe it appropriate may use derivatives to mitigate the risk of adverse
market or currency movements. The Investment Manager discusses the hedging strategy with the Board at its
quarterly meetings.
At the year end there were no derivative contracts open. During the year, the Company entered into two Index Put
Options contracts to provide a limited degree of protection from a fall in the value of the FTSE 100 index.
These contracts incurred net losses of £ 0.6m and are included within the investment return in note 13.
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 ( 30.4%), with 24.8% of total investments listed or exposed to overseas
countries (including listed Javelin funds). It also shows the concentration of investments in various sectors.
REPORT & ACCOUNTS 2012 79
Notes to the Accounts
26 Financial Instruments and Risk Profile continued
The following table details the exposure to market price risk on its quoted and unquoted equity investments:
Non-current 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
2012
£000
66,282
41,935
Group
2011
£000
70,378
42,444
136
Company
2012
£000
80,426
41,935
8,192
Company
2011
£000
84,732
42,444
7,171
108,217
112,958
130,553
134,347
(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.
Group
2012
£000
Group
2011
£000
Company
2012
£000
Company
2011
£000
Income Statement
Capital return
Net assets
(6,628)
(6,706)
(8,043)
(4,237)
(6,628)
(6,706)
(8,043)
(4,237)
A 10% increase (2011: 10% ) 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. The analyses has been calculated on the
investments held at the year end and this may not be representative of the year as a whole.
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)
The Company’s listed investments are held on its behalf by RBC Investor Services , 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.
A credit exposure could arise in respect of derivatives contracts entered into by the Group if the counterparty
were unable to fulfill its contractual obligations.
80
MAJEDIE INVESTMENTS PLC
26 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
Cash held with brokers
Sales for future settlement
Unsettled derivatives contracts
Interest, dividends and
other receivables
Group
2012
£000
22,129
91
1,067
1,419
Group
2011
£000
258
17,863
2,115
17,575
4,179
136
1,638
Company
2012
£000
20,922
Company
2011
£000
258
15,245
174
848
1,006
24,706
43,764
21,770
16,683
Minimum exposure during the year
44,524
Maximum exposure during the year
24,706
50,099
6,552
21,777
3,118
16,683
2,815
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 (2011: none).
Liquidity Risk
Liquidity risk is the risk that the Group or Company will encounter difficulties meeting its obligations as they fall due.
The Company may periodically invest in derivatives contracts and debt securities that are traded over the counter.
The Company is exposed to the daily settlement of margin calls on derivatives.
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% (2011: 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.
Collateral
Collateral is posted by the Group in relation to derivative transactions. These are transacted under auspices of the
International Swaps and Derivatives Association and may require collateral to be posted from time to time. The
Group does not hold collateral from other counterparties.
At the year end there were no financial assets pledged as collateral.
REPORT & ACCOUNTS 2012 81
Notes to the Accounts
26 Financial Instruments and Risk Profile continued
A maturity analysis of financial liabilities showing the remaining contractual maturities is detailed below:
Group
2012
Undiscounted cash flows
9.5% debenture stock 2020
7.25% debenture stock 2025
Interest on financial liabilities
Trade payables and other liabilities
(excluding social security and sundry taxes)
Due within
1 year
£000
2,783
1,256
4,039
Due between Due between Due 3 years
and beyond
2 and 3 years
1 and 2 years
£000
£000
£000
13,500
20,700
20, 029
2,783
2,783
Total
£000
13,500
20,700
2 8,378
1,256
2,783
2,783
5 4,229
6 3,834
Due within
1 year
£000
Due between
1 and 2 years
£000
2,783
Group
2011
Due between Due 3 years
and beyond
2 and 3 years
£000
£000
13,500
20,700
23,650
2,783
Total
£000
13,500
20,700
31,999
3,311
99
7,645
2,783
2,783
57,850
77,254
Company
2012
Due between Due between Due 3 years
and beyond
2 and 3 years
1 and 2 years
£000
£000
£000
13,500
20,700
20, 029
2,783
2,783
Total
£000
13,500
20,700
2 8,378
1,001
2,783
2,783
5 4,229
6 3,579
2,783
3,311
99
7,645
13,838
Due within
1 year
£000
2,783
1,001
3,784
Due within
1 year
£000
Due between
1 and 2 years
£000
2,783
2,783
983
3,766
Company
2011
Due between Due 3 years
and beyond
2 and 3 years
£000
£000
13,500
20,700
23,650
2,783
Total
£000
13,500
20,700
31,999
983
2,783
2,783
57,850
67,182
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)
Undiscounted cash flows
9.5% debenture stock 2020
7.25% debenture stock 2025
Interest on financial liabilities
Trade payables 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)
82
MAJEDIE INVESTMENTS PLC
26 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
2012
£000
108,217
Group
2011
£000
Company
2012
£000
Company
2011
£000
112,822
136
130,553
134,347
108,217
112,958
130,553
134,347
Other financial assets1
24,705
43,370
21,777
16,425
132,922
156,328
152,330
150,772
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
35,079
41,446
34,824
34,784
35,079
44,856
34,824
34,784
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 companies’ debt instrument, with an appropriate margin spread added.
Group and Company
Financial liabilities
£13.5m (2011: £13.5m) 9.5%
debenture stock 2020
£20.7m (2011: £20.7m) 7.25%
debenture stock 2025
Book
Value
2012
£000
13,401
20,422
Book
Value
2011
£000
13,392
20,409
Fair
Value
2012
£000
18,895
25,815
Fair
Value
2011
£000
17,168
24,790
33,823
33,801
44,710
41,958
REPORT & ACCOUNTS 2012 83
Notes to the Accounts
26 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 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:
Debt/(Net Cash)
Adjusted cash and
cash equivalents
Debentures
Sub total
Equity
Equity share capital
Retained earnings and
other reserves
Shareholders’ funds
Gearing
Group
2012
£000
Group
2011
£000
Company
2012
£000
Company
2011
£000
(23,449)
33,823
(35,725)
33,801
(20,776)
33,823
(15,442)
33,801
10,374
(1,924)
13,047
18,359
5,253
5,253
5,253
5,253
106,981
106,381
112,386
110,913
112,234
111,634
117,639
116,166
Debt/(Net Cash) as a percentage
of shareholders’ funds
9.2%
(1.7%)
11.1%
15.8%
Maximum potentinal gearing represents the highest gearing percentage on the assumption that the Group or
Company held no cash. As at 30 September 2012, in respect of the Group and the Company, this was 30.1% and
28.8% respectively (2011: Group and Company; 30.3% and 29.1% respectively).
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.
84
MAJEDIE INVESTMENTS PLC
27 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 MI group accounts as part of the Javelin Capital group of entities. During the
year, following a review of the Javelin Capital group structure, it was determined that JCFM was no longer required.
JCFM ceased operations in June 2012 with its management company functions being undertaken by the QIF
directly. As part of its closure JCFM received Central Bank of Ireland approval to cease as a regulated entity and
with the resultant capital structure reorganisation, JCFM’s existing regulatory share capital of £125,000 was returned
to Javelin Capital. New nominal share capital of €2 was introduced and JCFM will be wound up in due course.
Javelin Capital Strategies Plc is an Irish Stock Exchange listed Qualifying Investment Fund (QIF). It s one sub-fund,
the Javelin Capital Global Equity Strategies Fund was closed in September 201 2 with all participating redeemable
preference share funds being returned to investors. The QIF will be liquidated in due course. JC and JCFM (until
June 2012) acted as investment manager and manager for the QIF respectively and were entitled to receive
management or advisory and performance fees. Javelin Capital Emerging Markets Alpha Fund is a sub-fund of the
Serviced Platform SICAV, a Luxembourg Undertakings for Collective Investment Scheme (UCITS), as established by
Goldman Sachs International. Javelin Capital acts as investment manager to the sub-fund and is entitled to receive
management and performance fees.
In addition to any fees received from the QIF and UCITS, Javelin Capital is also entitled to receive management,
performance and administration fees from the Company in accordance with the relevant agreements. These
agreements take account of any fees charged in the QIF and UCITS so that no double charging occurs.
JCS provides administrative services to the group and in performing these services it incurs expenses. Additionally
for administrative reasons the Company pays certain expenses on behalf of the Group. In both cases recharges
and/or management fees are used such that each group entity bears its appropriate relevant portion of the group
expenses incurred. The Company allows Javelin Capital group 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.
Javelin Capital, as investment manager to its various funds or accounts, is required to, or chooses to do so, under certain
circumstances make payments to reimburse the fund or account for expense rebates or compensation payments.
The Company provided an additional £1.0m of partner capital to Javelin Capital on 25 September 2012.
On 20 September 2010 the Company invested £20m into the Javelin Capital Global Equity Strategies Fund (QIF)
which was followed on 16 February 2012 by £15m being invested into the second Javelin Capital fund, the Javelin
Capital Emerging Markets Alpha Fund (UCITS). Following a review by Javelin Capital in 2012 which it became
apparent that the UCITS fund was more attractive to investors the QIF was closed with all remaining investor funds
being redeemed in September 2012. The Company redeemed its entire redeemable preference shares for £17.7m
and a loss of £2.3m (which excludes a gain of £0.8m received as a result of an FX hedging programme undertaken
by the Company on this investment). It was proposed that the Company’s investment in the QIF would be
redeployed into the UCITS fund. After the Company’s shareholders approved a change to the Company’s
investment policy on 9 October 2012 to permit this £18.15m was invested in November 2012. These investments
are subject to management and performance fees in accordance with the relevant prospectus.
The Company pays certain costs on behalf of Majedie Portfolio Management Limited (MPM) for operating 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.
REPORT & ACCOUNTS 2012 85
Notes to the Accounts
27 Related Party Transactions continued
The table below discloses the transactions and balances between those entities:
Transactions during the period:
QIF fee revenue due to JCFM
Advisory fee revenue due to Javelin Capital from JCFM
Company management fee revenue due to Javelin Capital
Company administration fee revenue due to Javelin Capital
JCS management fee income from Javelin Capital
Javelin Capital LLP payments made to funds
MPM costs recharged by 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
2012
£000
179
145
549
265
1,878
1
35
426
131
1
95
18
2011
£000
270
209
692
265
3,033
5
35
348
133
10
93
55
5
48
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 £2,215,000 and proceeds of
£324,000, as a result of the sale of shares to the MAM Employee Benefit Trust, of which none was outstanding at
year end (2011: £1,914,000 of dividends 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 32 to 34.
Short term employee benefits
2012
£000
348
2011
£000
244
348
244
86
MAJEDIE INVESTMENTS PLC
Ten Year Record
to 30 September 2012
Share-
Total† holders’
Assets
£000
NAV
Funds Per Share
Pence
£000
Share
Price Discount Earnings Dividend
Pence
Pence
Pence
%
Maximum
Gearing/ Potential
Total
Company
Costs
Ratio/
Net (Net Cash) Gearing Ongoing
Charges
%
Ratio
%
Ratio
%
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** 2 4.11
28.83
145,683 111,634
214.5
139.5
34.96
146,05 7 112,23 4
215.6
155. 8
27.7 4
4.66
4.90
10.50** – 1.72
30.28
10.50**
9.24
30.14
1.67
1.36
1.19
1.28
1.24
1.61
2.06
2.36
1. 92#
1.83#
Year
End
2003
2004
2005
2006*
2007*
2008
2009
2010
2011
2012
The Gearing Ratio is calculated as shown on note 26 on page 84. The Maximum Potential Gearing Ratio is calculated as total assets less
minority interest divided by shareholders’ funds.
* 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.
# As from May 2012, Ongoing Charges replace previous cost ratios. Ongoing Charges provides a percentage of the normal annual running
costs of a company. The 2011 figure has been restated for co mparative purposes.
REPORT & ACCOUNTS 2012 87
Notice of Meeting
Notice is hereby given that the one hundred and first Annual General Meeting of Majedie Investments PLC will be
held at City of London Club, 19 Old Broad Street, London EC2N 1DS on Wednesday, 16 January 2013 at 12 .00
noon for the purpose of transacting the following:
To consider and, if thought fit, pass the following Resolutions of which Resolutions 1 to 6 will be proposed as
Ordinary Resolutions and Resolutions 7 to 9 shall be proposed as Special Resolutions.
Ordinary Business
1. To receive and adopt the Directors’ Report and Accounts for the year ended 30 September 2012.
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 2012.
4. To re-appoint PD Gadd as a director.
5. To re-appoint JWM Barlow as a director.
6. To appoint Ernst & Young LLP as auditors and to authorise the directors to fix their remuneration.
Special Business
7. 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 4 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.
8. 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.
88
MAJEDIE INVESTMENTS PLC
9. THAT the Articles of the Company be amended by:
(a) substituting Article 127 with the following:
"127 Establishment of reserve
127.1 The directors may, from time to time, set aside out of the profits of the Company such sums as
they think proper as a reserve or reserves which shall, at the discretion of the directors, be applicable for
any purpose to which the profits of the Company may be properly applied, and pending such
application may, at the like discretion, either be employed in the business of the Company or be
invested in such investments as the directors think fit. The directors may divide the reserve into such
special funds as they think fit, and may consolidate into one fund any special funds or any parts of any
special funds into which the reserve may have been divided they think fit. The directors may also without
placing the same to reserve carry forward any profits which they may think prudent not to divide.
127.2 The directors shall establish a reserve to be called the "Capital Reserve". All surpluses arising
from the realisation of investments and all other moneys realised on or derived from the realisation of or
dealing with any capital asset in excess of the book value and all other moneys which are in the nature
of accretion to capital shall be credited to the Capital Reserve. Any loss realised on the sale repayment
or payment of any investments or other capital assets may be carried to the debit of the Capital Reserve
except so far as the directors may in their discretion decide to make good the same out of the other
funds of the Company. All sums carried and standing to the credit of the Capital Reserve may be
applied for any of the purposes to which sums standing to any revenue reserve are applicable. The
directors may determine whether any amount received by the Company is to be dealt with as income or
capital or partly in one way and partly in the other and may determine whether any cost, liability or
expense (including any costs withheld or sums expended in connection with the management of assets
or any interest charge) is to be treated as a cost, liability or expense, chargeable to capital or to revenue
or partly one and partly the other having regard, inter alia, to the investment objectives of the Company."
(b) deleting Article 130 in its entirety and substituting it with the following:
"130 Restriction on dividends
No dividend or interim dividend shall be paid otherwise than in accordance with the provisions of the
Statutes."
Registered Office
Tower 42
25 Old Broad Street
London EC2N 1HQ
By order of the Board
Capita Sinclair Henderson Limited
Company Secretary
4 December 2012
Registered in England Number: 109305
REPORT & ACCOUNTS 2012 89
Notice of Meeting
Note 1
To be entitled to attend and vote at the meeting (and for the purpose of the determination by the Company of the
number of votes they may cast) members must be entered on the Company’s register of members at 6.00 pm on
1 4 January 201 3 (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 12 .00 noon on Monday
1 4 January 201 3.
Note 3
In the case of joint holders, where more than one of the joint holders purports to appoint a proxy, only the appointment
submitted by the most senior holder will be accepted. Seniority is determined by the order in which the names of the
joint holders appear in the register of members in respect of the joint holding (the first-named being the most senior).
Note 4
Any person to whom this notice is sent who is a person nominated under Section 146 of the Companies Act 2006 to
enjoy information rights (a “Nominated Person”) may, under an agreement between him/her and the member by whom
he/she was nominated, have a right to be appointed (or to have someone else appointed) as a proxy for the Annual
General Meeting. If a Nominated Person has no such proxy appointment right or does not wish to exercise it, he/she
may, under any such agreement, have a right to give instructions to the member as to the exercise of voting rights.
The statements of the rights of members in relation to the appointment of proxies in Note 2 above does not apply to a
Nominated Person. The rights described in that Note can only be exercised by registered members of the Company.
Note 5
Pursuant to regulation 41(1) of the Uncertificated Securities Regulations 2001, only those shareholders registered in the
register of members of the Company as at 6.00 pm on 14 January 201 3 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 1 4 January 201 3 (“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
90
MAJEDIE INVESTMENTS PLC
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.
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.
REPORT & ACCOUNTS 2012 91
Notice of Meeting
Note 9
A person authorised by a corporation is entitled to exercise (on behalf of the corporation) the same powers as the
corporation could exercise if it were an individual member of the Company. On a vote on a resolution on a show of
hands, each authorised person has the same voting rights as the corporation would be entitled to. On a vote on a
resolution on a poll, if more than one authorised person purports to exercise a power in respect of the same shares:
a) if they purport to exercise the power in the same way as each other, the power is treated as exercised in that way;
b) if they do not purport to exercise the power in the same way as each other, the power is treated as not exercised.
Note 10
Shareholders should note that it is possible that, pursuant to requests made by shareholders of the Company under
section 527 of the Companies Act 2006, the Company may be required to publish on a website a statement setting
out any matter relating to: (i) the audit of the Company’s accounts (including the Auditors’ Report and the conduct of
the audit) that are to be laid before the Annual General Meeting; or (ii) any circumstance connected with an auditor of
the Company ceasing to hold office since the previous meeting at which annual accounts and reports were laid in
accordance with section 437 of the Companies Act 2006. The Company may not require the shareholders requesting
any such website publication to pay its expenses in complying with sections 527 or 528 of the Companies Act 2006.
Where the Company is required to place a statement on a website under section 527 of the Companies Act 2006, it
must forward the statement to the Company’s auditor not later than the time when it makes the statement available
on the website. The business which may be dealt with at the Annual General Meeting includes any statement that
the Company has been required under section 527 of the Companies Act 2006 to publish on a website.
Note 11
Members satisfying the thresholds in section 338 of the Companies Act 2006 may require the Company to give, to
members of the Company entitled to receive notice of the AGM, notice of a resolution which those members intend
to move (and which may properly be moved) at the AGM. A resolution may properly be moved at the AGM unless (i)
it would, if passed, be ineffective (whether by reason of any inconsistency with any enactment or the Company’s
constitution or otherwise); (ii) it is defamatory of any person; or (iii) it is frivolous or vexatious. The business which
may be dealt with at the AGM includes a resolution circulated pursuant to this right. A request made pursuant to this
right may be in hard copy or electronic form, must identify the resolution of which notice is to be given, must be
authenticated by the person(s) making it and must be received by the Company not later than 6 weeks before the
date of the AGM.
Note 12
Members satisfying the thresholds in section 338A of the Companies Act 2006 may request the Company to include
in the business to be dealt with at the AGM any matter (other than a proposed resolution) which may properly be
included in the business at the AGM. A matter may properly be included in the business at the AGM unless (i) it is
defamatory of any person or (ii) it is frivolous or vexatious. A request made pursuant to this right may be in hard
copy or electronic form, must identify the matter to be included in the business, must be accompanied by a
statement setting out the grounds for the request, must be authenticated by the person(s) making it and must be
received by the Company not later than 6 weeks before the date of the AGM.
Note 13
A copy of this notice and any subsequent notices in respect of section 388A of the Companies Act 20 06 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.
92
MAJEDIE INVESTMENTS PLC
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 £1 1, 280 for the
201 2/1 3 tax year. Investments can be split between a cash ISA (up to a limit of £5, 640) and a stocks and shares ISA (up to a limit
of £1 1, 280).
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: 0845 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).
REPORT & ACCOUNTS 2012 93
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.
94
MAJEDIE INVESTMENTS PLC
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 2013
Ex-dividend date
Record date
Annual General Meeting
2011/12 final dividend pa yable
Interim results announcement
2012/13 interim dividend pa yable
Financial year end
Final results announcement
Annual report mailed to
shareholders
9 January 2013
11 January 2013
16 January 2013
23 January 2013
May 2013
June 2013
30 September 2013
December 2013
December 2013
Website
www.majedie.co.uk
Share Price
The share price is quoted daily in The Times, Financial
Times, The Daily Telegraph, The Independent and
London Evening Standard. Shares may be bought
through the Majedie Share Plan or Majedie Corporate
ISA (details of which are set out on page 93). You may
transfer an existing PEP or ISA to the Majedie General
ISA (page 93). 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.
Notes
Notes
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