TIDMMAJE
RNS Number : 0225G
Majedie Investments PLC
24 May 2017
Majedie Investments PLC
Half-Yearly Financial Report
31 March 2017
The Directors announce the unaudited half-yearly financial
report for the six months to 31 March 2017 as follows:
Copies of the half yearly-report can be obtained from the
following website:
www.majedieinvestments.com
Financial Highlights for the half year ended 31 March 2017
Total shareholder return (including dividends): +16.6%
Net asset value (NAV) total return (debt at
par including dividends): +8.4%
NAV per share (Debt at par value): 338.8p
NAV per share (Debt at fair value): 322.7p
Revenue Return per share: 6.8p
Interim Dividend: 3.5p
Directors' valuation of investment in Majedie GBP58.3m
Asset Management Limited:
Total assets*: GBP215.0m
* Total assets are defined as total assets less
current liabilities
Investment Objective and Policy Statement
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 its investment manager,
though it may invest in unquoted securities up to levels set
periodically by the Board, including its investment in Majedie
Asset Management Limited (MAM). Investments in unquoted securities,
other than those managed by its investment manager or made prior to
the date of the adoption of this investment policy, (measured by
reference to the Company's cost of investment) will not exceed 10%
of the Company's gross assets.
Risk diversification
Whilst the Company will at all times invest and manage its
assets in a manner that is consistent with spreading investment
risk, there will be no rigid industry, sector, region or country
restrictions. The overall approach is based on an analysis of
global economies sector trends with a focus on companies and
sectors judged likely to deliver strong growth over the long term.
The number of investments held, together with the geographic and
sector diversity of the portfolio, enable the Company to spread its
risks with regard to liquidity, market volatility, currency
movements and revenue streams.
The Company will not invest in any holding that would, at the
time of investment, represent more than 15% of the value of its
gross assets save that the Company may invest up to 25% of its
gross assets in any single fund managed by its investment manager
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 will be allocated principally between
investments in publicly quoted companies worldwide and in
investments intended to provide an absolute return (in each case
either directly or through other funds or collective investment
schemes managed by the Company's investment manager) and the
Company's investment in MAM itself.
Benchmark
The Company does not have one overall benchmark, rather each
distinct group of assets is viewed independently. Any investments
made into funds managed by the Company's investment manager will be
measured against the benchmark or benchmarks, if any, whose
constituent investments appear to the Company to correspond most
closely to those investments. 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% of adjusted capital and
reserves. The Board also reviews the level of net gearing
(borrowings less cash) on an on-going basis and sets a range at its
discretion as appropriate. The Company's current debenture
borrowings are limited by covenant to 66 2/3% and any additional
indebtedness is not to exceed 20%, of adjusted capital and
reserves.
Chief Executive's Report
In the six months to March 2017 the NAV (Net Asset Value with
debt at par) rose by 8.4% on a total return basis and the share
price rose by 16.6% also on a total return basis. Stock markets
rose strongly led by the US following the presidential election,
increased investor optimism about the global economy and latterly a
more stable political background in Europe following recent
elections. Over the six months the FTSE All-Share and the MSCI
World indices rose 8.1% and 12.4% respectively, in sterling
terms.
It is pleasing that the discount at which the Company's shares
trade has narrowed over the six months to 31 March 2017 from 14.2%
to 8.9% (debt at fair value). The Chairman and Chief Executive have
previously commented that a large holding in the Company was
transferred to Aviva Investors, who are not expected to be a long
term investor. We have met with representatives of Aviva Investors
to understand their views and they confirmed that they are
comfortable holders in the medium term given the uniqueness of the
Company's investment proposition. This notwithstanding, the Board
has and will continue to explore options to help Aviva Investors to
exit their position as and when they might wish.
Results and Dividends
The capital return in the six months to 31 March 2017 was
GBP12.1m and the total income from investments was GBP4.4m compared
to GBP3.5m in the six months to 31 March 2016. The increase in
income is due to an increase of GBP0.9m in the dividend received
from Majedie Asset Management (MAM), to GBP3.0m, and smaller
increases in dividends from the MAM UK Income Fund and UK Equity
Segregated Portfolio. Total administrative expenses and management
fees have fallen from GBP1.1m to GBP0.9m, which reflects lower
property costs and other reductions in expenses. Costs remain a key
focus for the Board though the main benefits of earlier Board
decisions are now largely reflected in the Company's results.
The net revenue return after taxation for the six months to 31
March 2017 was GBP3.7m compared to GBP2.7m in the six months to 31
March 2016.
The Board has declared an interim dividend of 3.50 pence per
share (2016: 3.00 pence), which will be paid on 16 June 2017 to
shareholders on the register on 2 June 2017.
Investment Performance
The Company invests through a number of investment strategies
managed by MAM and retains an equity holding in MAM of 16.8%. The
Company has no overall benchmark; rather each fund has its own
benchmark. The Company's total assets were GBP215.0m at 31 March
2017.
The largest allocation of GBP64.1m, which represents 29.8% of
the Company's total assets, is in a segregated portfolio that is
managed alongside the MAM UK Equity Fund. The funds are
predominantly invested in UK equities, with overseas equities
limited to 20%, and the strategy incorporates a dedicated
allocation to UK smaller companies. It is the flagship product of
MAM and since inception in March 2003 the Fund has returned 13.2%
per annum net of fees, which is an outperformance of 3.6% per annum
compared to its benchmark the FTSE All-Share Index. In the six
months to 31 March 2017 our portfolio returned 10.3% net of fees,
which is an outperformance of 2.2%. The positive contributors to
performance were overweight positions in Banks, Miners and the MAM
UK Smaller Companies Fund whilst the detractors were overweight
positions in Telecoms and General Retailers and an underweight
position in Life Insurance. In January 2017 GBP3.75m was redeemed
by the Company from the segregated portfolio.
The MAM Tortoise Fund is a global long/short equity fund which
since inception in August 2007 has returned 9.2% per annum net of
fees. At 31 March 2017 the Company has an allocation of GBP37.7m,
which represents 17.5% of total assets. Our holding in the Fund
returned 1.3% net of fees in the six months to 31 March 2017. The
positive contributors at a sector level were long positions in
Mining, Banks and Telecoms whilst the detractors were short
positions in Distributors, Luxury Goods and Healthcare Providers.
In January 2017 the Company increased its allocation to the MAM
Tortoise Fund by GBP5.0m.
The MAM UK Income Fund aims to maintain an attractive yield
whilst outperforming the FTSE All Share Index over the longer term,
with at least 80% of the Fund invested in UK equities. Since
inception in December 2011 the Fund has returned 15.7% per annum
net of fees, which is an outperformance of 4.7% per annum. At 31
March 2017 the Company has an allocation of GBP16.9m, which
represents 7.9% of total assets. In the six months to 31 March 2017
our holding in the Fund returned 7.6% net of fees, which is an
underperformance of 0.5%. The positive contributors at the sector
level were overweight positions in Life Insurance, Financial
Services and Travel & Leisure whilst the detractors were
overweight positions in Electronic Equipment and underweight
positions in Oil & Gas and Banks. In January 2017 the Company
redeemed GBP3.75m from the MAM UK Income Fund.
The MAM Global Equity and Global Focus funds were launched in
June 2014. Since inception our holding in the funds have returned
15.7% and 14.6% per annum net of fees respectively for the sterling
share classes, which represents an underperformance of 0.4% and
1.4% against their benchmark MSCI ACWI (Developed and Emerging
Markets). At 31 March 2017 the Company has an allocation of
GBP20.9m and GBP7.3m to the MAM Global Equity and Global Focus
Funds, respectively representing 9.7% and 3.4% of total assets. In
the six months to 31 March 2017 the Funds returned 11.1% and 9.9%
respectively, which represents an underperformance of 1.3% and
2.5%. The positive contributors at the sector level were overweight
positions in Software and Semiconductors and an underweight
position in Consumer Goods, whilst the detractors were overweight
positions in Technology and Telecoms and an underweight position in
Banks.
The MAM US Equity Fund was launched in June 2014 and since its
inception has returned 20.3% per annum net of fees for the sterling
share class, which represents an underperformance of 1.2% per annum
against the S&P 500 Index. At 31 March 2017 the Company had an
allocation of GBP8.3m, which represents 3.9% of total assets and in
the six months ended 31 March 2017 the Fund returned 13.6%, which
represents an underperformance of 0.4%. The positive contributors
at a sector level were overweight positions in Consumer Services,
Software and Oil & Gas whilst the detractors were overweight
positions in Distributors, Mining and Professional Services.
The aggregate geographic and sector exposures of the MAM UK
Equity Segregated Portfolio, MAM UK Income Fund, MAM Global Equity
Fund, MAM Global Focus Fund and MAM US Equity Fund are shown below.
In order to enhance the transparency for shareholders, each of the
MAM fund factsheets are available on the Company's website. The
factsheets show the five largest overweight and underweight stocks
and other relevant information for investors.
Majedie Asset Management
The Company retains its holding of 16.8% of MAM, having not sold
any shares in MAM in the six months to 31 March 2017. The Company
has no current intention to sell any shares in MAM, other than the
obligation, if required, to sell a limited number of shares
annually, in proportion to other shareholders, to the MAM EBT. The
Board has increased the value of its holding in MAM to GBP58.3m.
The valuation is formulaic and reflects three year average earnings
and the Board believes it reflects fair value. The holding
represents 27.1% of the Company's total assets.
MAM's assets under management increased from GBP12.2bn to
GBP14.0bn in the six months to 31 March 2017, which reflects strong
performance from stock markets and positive net fund flows
particularly into the Global Focus Fund, the UK Equity Fund, the US
Equity Fund and the Tortoise Fund. The increase in the dividend
from MAM reflects a change to a more flexible dividend policy, good
operational performance and a strong balance sheet.
Summary
The Total Return after Taxation of GBP14.1m reflects stock
markets returning to all-time highs, which in the case of the UK,
was last seen in December 1999. In light of recent equity market
performance and potential future economic headwinds the Company
modestly reduced its holdings in the MAM UK Equity Segregated
Portfolio and MAM UK Income Fund. The proceeds were largely
invested in the MAM Tortoise Fund which should be more resilient if
markets turn more volatile. In aggregate, the Company's investments
are more cautiously positioned than at 30 September 2016. The Board
remains confident that the Company's well diversified portfolio and
an excellent track record of the funds managed by MAM, will provide
the Company with resilience and growth in its assets.
Development of Net Asset Value (NAV)
The chart below shows the NAV development during the six months
to 31 March 2017. In aggregate the NAV has increased by GBP11.0m,
having recorded total investment income and gains of GBP16.4m,
having incurred net administration and finance costs of GBP2.3m,
and having paid out dividends of GBP3.1m.
NAV 30.09.2016 GBP170.0m
-------------------------- ----------
UKES Segregated Portfolio +GBP6.7m
MAM +GBP4.2m
MAM Funds +GBP5.5m
Admin Costs & Other (GBP0.9m)
Finance Costs (GBP1.4m)
Dividend Paid (GBP3.1m)
NAV 31.03.2017 GBP181.0m
Allocation of Total Assets at 31 March 2017
Value % of Total
GBP000s Assets
------------------------------------ --------- -----------
MAM UK Equity Segregated Portfolio 64,121 29.8
MAM UK Income Fund 16,920 7.9
MAM Global Equity Fund 20,930 9.7
MAM Global Focus Fund 7,306 3.4
MAM US Equity Fund 8,348 3.9
MAM Tortoise Fund 37,682 17.5
MAM 58,328 27.1
Net cash/realisation portfolio* 1,352 0.7
--------- -----------
214,987 100.0
--------- -----------
* Net cash and realisation portfolio does not include cash held
in the MAM UK Equity Segregated Portfolio or MAM funds.
MAM Fund Performance
6 months to 31 March 2017 Since MI invested
% % % % % %
Fund Benchmark Relative Fund Benchmark Relative
return return performance return return performance
--------------- -------- ----------- ------------- -------- ----------- -------------
MAM UK Equity
Segregated
Portfolio 10.3 8.1 2.2 24.1 22.5 1.6
MAM UK Income
Fund 7.6 8.1 (0.5) 28.0 26.7 1.3
MAM Global
Equity Fund 11.1 12.4 (1.3) 49.3 50.7 (1.4)
MAM Global
Focus Fund 9.9 12.4 (2.5) 45.6 50.7 (5.1)
MAM US Equity
Fund 13.6 14.0 (0.4) 66.5 71.0 (4.5)
MAM Tortoise
Fund 1.3 9.2
Notes:
All Fund returns are shown in cumulative terms, net of fees.
The initial investment in MAM UK Equity Segregated Portfolio was
made on 22 January 2014.
The initial investment in the MAM UK Income Fund was made on 29
January 2014.
The initial investments in MAM Global Equity Fund, MAM Global
Focus Fund and MAM US Equity Fund were made on 30 June 2014 and 27
June 2014 respectively, at the inception of each fund. The Company
is invested in the Sterling share classes.
The initial investment in the MAM Tortoise Fund was made on 29
January 2014.
William Barlow
Chief Executive
For and on behalf of the Board
23 May 2017
Fund Analysis
at 31 March 2017
Geographic and Sector Analysis at 31 March 2017
% % % %
United North % Emerging Asia % %
Kingdom America Europe Markets Pacific Cash Total
-------------------- --------- --------- --------- ---------- --------- ------- --------
Basic Materials 6.0 2.1 0.4 0.2 8.7
Consumer Goods 1.5 2.3 0.2 0.5 0.2 4.7
Consumer Services 12.1 2.5 1.0 1.3 0.7 17.6
Financials 14.0 3.3 0.9 0.7 0.1 19.0
Health Care 2.4 2.4 0.6 5.4
Industrials 6.9 0.6 1.4 0.1 9.0
Oil & Gas 12.0 1.5 13.5
Technology 1.3 4.4 1.3 7.0
Telecommunications 3.3 0.4 3.6 1.1 8.4
Utilities 2.3 0.3 2.6
Cash 4.1 4.1
--------- --------- --------- ---------- --------- ------- --------
61.8 19.8 7.7 4.3 2.3 4.1 100.0
--------- --------- --------- ---------- --------- ------- --------
Notes:
The assets analysed above are the aggregate exposure of MAM UK
Equity Segregated Portfolio, MAM UK Income Fund, MAM Global Equity
Fund, MAM Global Focus Fund and MAM US Equity Fund. The aggregate
represents a total of 54.7% of the Company's total assets.
Exposures are classified on the stock exchange on which the
underlying equity is listed and FTSE sector classification.
Twenty Largest MAM UK Equity Segregated Portfolio Holdings
at 31 March 2017
Market value % of MAM UK Equity
Company GBP000 Segregated Portfolio
-------------------------- ------------- ----------------------
MAM UK Smaller Companies
Fund 5,625 8.8%
Royal Dutch Shell PLC 4,502 7.0%
BP PLC 3,798 5.9%
HSBC Holdings PLC 3,263 5.0%
Tesco PLC 2,291 3.6%
GlaxoSmithKiline PLC 2,167 3.4%
Vodaphone Group PLC 2,091 3.3%
WM Morrison Supermarkets
PLC 1,914 3.0%
Barclays PLC 1,833 2.9%
Anglo American PLC 1,654 2.6%
BT Holdings PLC 1,473 2.3%
Centrica PLC 1,472 2.3%
Orange SA 1,442 2.2%
Standard Chartered PLC 1,303 2.0%
Barrick Gold Corporation 1,248 1.9%
Rentokil Initial PLC 1,207 1.9%
Royal Bank of Scotland
PLC 1,143 1.8%
Electrocomponents PLC 938 1.5%
Marks and Spencer Group
PLC 931 1.5%
J Sainsbury PLC 909 1.4%
------------- ----------------------
Sub-total 41,204 64.3%
Other (Including cash) 22,917 35.7%
------------- ----------------------
Total 64,121 100.0%
------------- ----------------------
Interim Management Report
The important events that have occurred during the period under
review, the key factors influencing the financial statements and
the principal uncertainties for the remaining six months of the
financial year are set out in the Chief Executive's Report above.
This half-yearly financial report has not been audited or reviewed
by the Company's auditor.
The financial statements continue to be prepared on a going
concern basis. The approach used for the Annual Report is applied,
including proper consideration of financial and cashflow forecasts,
and it is believed that the Company has adequate financial
resources to continue to operate for the foreseeable future.
The principal risks facing the Company are unchanged since the
date of the Annual Report for the year ended 30 September 2016 as
set out in the Business Review within the Strategic Report in that
report (pages 15 and 16) with no particular subsequent heightened
uncertainty. Risks faced by the Company include, but are not
limited to, market risk, discount volatility, regulatory risk,
financial risk, risks associated with banking and hedging and
non-compliance with Section 1158 of the Corporation Tax Act
2010.
Responsibility Statement of the Directors in respect of the
Half-Yearly Financial Report
In accordance with the Disclosure Guidance and Transparency
Rules 4.2.7R and 4.2.8R, we confirm that to the best of our
knowledge:
(a) the condensed set of financial statements has been prepared
in accordance with International Accounting Standard (IAS) 34,
Interim Financial Reporting, as adopted by the European Union, as
required by the Disclosure Guidance and Transparency Rule 4.2.4R,
and gives a true and fair view of the assets, liabilities and
financial position of the Company;
(b) the Chief Executive's Report includes a fair review of the
information required to be disclosed under the Disclosure Guidance
and Transparency Rule 4.2.7R, interim management report. This
includes (i) an indication of important events that have occurred
during the first six months of the financial year, and their impact
on the condensed set of financial statements presented in the
Half-Yearly Financial Report and (ii) a description of the
principal risks and uncertainties for the remaining six months of
the financial year; and
(c) there were no changes in the transactions or arrangements
with related parties as described in the Group's Annual Report for
the year ended 30 September 2016 that would have had a material
effect on the financial position or performance of the Group in the
first six months of the current financial year.
Andrew J Adcock
Chairman
For and on behalf of the Board
23 May 2017
Condensed Consolidated Statement of Comprehensive Income
for the half year ended 31 March 2017
Half year ended Half year ended Year ended
31 March 2017 31 March 2016 30 September 2016
(unaudited) (unaudited) (audited)
Revenue Capital Revenue Capital Revenue Capital
return return Total return return Total return return Total
Notes GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000
Investments
Gains on
investments at
fair
value through
profit or loss 12,063 12,063 4,112 4,112 21,919 21,919
-------- -------- -------- -------- -------- --------- --------- --------- ---------
Net investment
result 12,063 12,063 4,112 4,112 21,919 21,919
-------- -------- -------- -------- -------- --------- --------- --------- ---------
Income
Income from
investments 2 4,378 4,378 3,431 3,431 6,433 6,433
Other income 2 30 30 30 30 47 47
-------- -------- -------- -------- -------- --------- --------- --------- ---------
Total income 4,408 4,408 3,461 3,461 6,480 6,480
Expenses
Management fees (61) (185) (246) (53) (159) (212) (109) (325) (434)
Performance
fees (5) (5)
Administration
expenses (345) (338) (683) (394) (455) (849) (712) (779) (1,491)
-------- -------- -------- -------- -------- --------- --------- --------- ---------
Return before
finance costs
and taxation 4,002 11,535 15,537 3,014 3,498 6,512 5,659 20,815 26,474
Finance costs (351) (1,056) (1,407) (351) (1,055) (1,406) (703) (2,110) (2,813)
-------- -------- -------- -------- -------- --------- --------- --------- ---------
Net return
before
taxation 3,651 10,479 14,130 2,663 2,443 5,106 4,956 18,705 23,661
Taxation 3 (3) (3) (5) (5) (17) (17)
-------- -------- -------- -------- -------- --------- --------- --------- ---------
Net return
after
taxation
for the
period 3,648 10,479 14,127 2,658 2,443 5,101 4,939 18,705 23,644
-------- -------- -------- -------- -------- --------- --------- --------- ---------
Return per
ordinary share: pence pence pence pence pence pence pence pence pence
Basic 4 6.8 19.6 26.4 5.0 4.6 9.6 9.3 35.0 44.3
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) as adopted by
the European Union. The supplementary revenue return and capital
return columns are prepared under guidance published by the
Association of Investment Companies (AIC).
See notes 1 to 17.
Condensed Consolidated Statement of Changes in Equity
for the half year ended 31 March 2017
Capital
Share Share redemption Capital Revenue
capital premium reserve reserve reserve Total
Notes GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000
--------- --------- ------------ --------- --------- ---------
Half year ended 31
March 2017
(unaudited)
30 September 2016 5,344 3,054 56 141,648 19,884 169,986
Net return after
taxation for the
period 10,479 3,648 14,127
Dividends declared
and paid in period 6 (3,073) (3,073)
--------- --------- ------------ --------- --------- ---------
31 March 2017 5,344 3,054 56 152,127 20,459 181,040
--------- --------- ------------ --------- --------- ---------
Half year ended 31
March 2016
(unaudited)
30 September 2015 5,313 2,280 56 122,943 19,215 149,807
Net return after
taxation for the
period 2,443 2,658 5,101
12,
Share issue 13 31 775 806
Share issue expenses 13 (1) (1)
Dividends declared
and paid in period 6 (2,667) (2,667)
--------- --------- ------------ --------- --------- ---------
31 March 2016 5,344 3,054 56 125,386 19,206 153,046
--------- --------- ------------ --------- --------- ---------
Year ended 30 September
2016
(audited)
30 September 2015 5,313 2,280 56 122,943 19,215 149,807
Net return after
taxation for the
period 18,705 4,939 23,644
12,
Share issue 13 31 775 806
Share issue expenses 13 (1) (1)
Dividends declared
and paid in year 6 (4,270) (4,270)
--------- --------- ------------ --------- --------- ---------
30 September 2016 5,344 3,054 56 141,648 19,884 169,986
--------- --------- ------------ --------- --------- ---------
Condensed Consolidated Balance Sheet
at 31 March 2017
31 March 31 March 30 September
2017 2016 2016
(unaudited) (unaudited) (audited)
Notes GBP'000 GBP'000 GBP'000
------------- ------------- -------------
Non-current assets
Property and equipment 63 52 52
Investments at fair value
through profit or loss 7, 8 210,403 185,356 201,359
------------- ------------- -------------
210,466 185,408 201,411
Current assets
Trade and other receivables 385 382 356
Cash and cash equivalents 5,215 2,159 3,467
------------- ------------- -------------
5,600 2,541 3,823
Total assets 216,066 187,949 205,234
------------- ------------- -------------
Current liabilities
Trade and other payables (1,079) (988) (1,317)
Total assets less current
liabilities 214,987 186,961 203,917
------------- ------------- -------------
Non-current liabilities
Debentures 8 (33,947) (33,915) (33,931)
------------- ------------- -------------
Total liabilities (35,026) (34,903) (35,248)
------------- ------------- -------------
Net assets 181,040 153,046 169,986
------------- ------------- -------------
31 March 31 March 30 September
2017 2016 2016
(unaudited) (unaudited) (audited)
Notes GBP'000 GBP'000 GBP'000
------------- ------------- -------------
Represented by:
Ordinary share capital 12 5,344 5,344 5,344
Share premium account 13 3,054 3,054 3,054
Capital redemption reserve 56 56 56
Capital reserve 152,127 125,386 141,648
Revenue reserve 20,459 19,206 19,884
Equity Shareholders' Funds 181,040 153,046 169,986
------------- ------------- -------------
Net asset value per share pence pence pence
Basic 11 338.8 286.4 318.1
Condensed Consolidated Cash Flow Statement
for the half year ended 31 March 2017
Half year Half year
ended ended Year ended
31 March 31 March 30 September
2017 2016 2016
(unaudited) (unaudited) (audited)
Notes GBP'000 GBP'000 GBP'000
------------- ------------- ---------------
Net cash inflow from operating
activities 14 6,236 2,545 6,857
------------- ------------- ---------------
Investing activities
Purchase of tangible assets (23) (56) (66)
------------- ------------- ---------------
Net cash outflow from investing
activities (23) (56) (66)
------------- ------------- ---------------
Financing activities
Interest paid (1,392) (1,392) (2,783)
Dividends paid 6 (3,073) (2,667) (4,270)
Net proceeds from share issues 1,192 1,192
------------- ------------- ---------------
Net cash outflow from financing
activities (4,465) (2,867) (5,861)
------------- ------------- ---------------
Increase/(decrease) in cash
and cash equivalents for
period 1,748 (378) 930
------------- ------------- ---------------
Cash and cash equivalents
at start of period 3,467 2,537 2,537
------------- ------------- ---------------
Cash and cash equivalents
at end of period 5,215 2,159 3,467
------------- ------------- ---------------
Notes to the Accounts
as at 31 March 2017
1. Accounting Policies
The Condensed Consolidated Financial Statements above comprise
the unaudited results of the Company and subsidiary, Majedie
Portfolio Management Limited (MPM) for the six months to 31 March
2017 and are presented in pounds sterling, as this is the
functional currency of the Group.
MPM was liquidated in the period and has been removed from the
Group as its carrying value with no gain or loss on disposal. The
removal of MPM means that consolidated accounts will not be
required from the next financial year.
The Condensed Consolidated Financial Statements have been
prepared in accordance with IAS 34 "Interim Financial Reporting".
They do not include all financial information required for full
annual financial statements. The Condensed Consolidated Financial
Statements have been prepared using the accounting policies adopted
in the audited financial statements for the year ended 30 September
2016.
New standards, interpretations and amendments adopted by the
Group
The accounting policies adopted in the preparation of the
interim condensed consolidated financial statements are consistent
with those followed in the preparation of the Group's annual
consolidated financial statements for the year ended 30 September
2016, and since 1 October 2016 no new standards were adopted.
2. Income
Half year ended Half year ended Year ended
31 March 31 March 30 September
2017 2016 2016
GBP'000 GBP'000 GBP'000
Income from investments
UK investment income* 4,235 3,283 5,944
Accumulated income 119 104 328
Overseas dividends 24 44 161
4,378 3,431 6,433
-------------------- ---------------- --------------
Other income
Deposit interest 1
Sundry income 30 30 46
-------------------- ---------------- --------------
30 30 47
-------------------- ---------------- --------------
Total income 4,408 3,461 6,480
-------------------- ---------------- --------------
Total income comprises:
Dividends 4,378 3,431 6,433
Interest 1
Other income 30 30 46
-------------------- ---------------- --------------
4,408 3,461 6,480
-------------------- ---------------- --------------
Income from investments
Listed UK 1,363 1,305 3,016
Listed overseas** 24 44 184
Unlisted 2,991 2,082 3,233
-------------------- ---------------- --------------
4,378 3,431 6,433
-------------------- ---------------- --------------
* Includes MAM dividend income of GBP2,991,000 (half year to 31
March 2016: GBP2,082,000 and year ended 30 September 2016:
GBP3,233,000).
** Includes accumulation income of GBPnil (half year to 31 March
2016: GBPnil and year ended 30 September 2016: GBP23,000).
3. Taxation
The charge for the half year to 31 March 2017 is GBP3,000 (half
year to 31 March 2016: GBP5,000; year ended 30 September 2016:
GBP17,000). These amounts represent irrecoverable withholding tax
paid on overseas investment income.
The Company has an effective corporation tax rate of 0%. As
investment gains are exempt from tax owing to the Company's status
as an approved Investment Trust, and as there is expected to be an
excess of management expenses over taxable income there is no
charge for corporation tax.
4. Calculation of Returns per ordinary share
Basic returns per ordinary share in each period are based on the
return on ordinary activities after taxation attributable to equity
shareholders. Basic return per ordinary share for the period is
based on 53,439,000 shares (half year ended 31 March 2016:
53,293,143; year ended 30 September 2016: 53,366,070), being the
weighted average number of shares in issue.
5. Business segments
For management purposes the Group is organised into one
principal activity, being investing 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 above.
6. Dividends
In accordance with IAS 10: Events After the Balance Sheet Date,
interim dividends are not accounted for until paid. The following
table summarises the amounts recognised as distributions to equity
holders in the relevant period:
Half year ended Half year ended Year ended
31 March 31 March 30 September
2017 2016 2016
GBP'000 GBP'000 GBP'000
---------------- ---------------- --------------
2016 Final dividend of 5.75p
paid on
25 January 2017 3,073
2016 Interim dividend of
3.00p paid on
24 June 2016 1,603
2015 Final dividend of 5.00p
paid on
27 January 2016 2,667 2,667
---------------- ---------------- --------------
3,073 2,667 4,270
---------------- ---------------- --------------
Distributable reserves of the Company comprise the Capital and
Revenue Reserves.
Dividends for the half year ended 31 March 2017 (and for half
year ended 31 March 2016; year ended 30 September 2016) have been
solely made from the Revenue Reserve.
7. Investments
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.
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 (IPEV). These may include
recent arm's length market transactions, the current fair value of
another instrument which has 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.
8. Fair Value Hierarchy
Except for the Company's 9.50% 2020 and 7.25% 2025 Debenture
Stock, which are measured at amortised cost under the effective
interest rate method, financial assets and liabilities of the
Company are carried in the Balance Sheet at their fair value (re
investments) of the balance sheet amount is a reasonable
approximation of fair value (re amounts due from brokers, dividends
receivable, accrued income, cash at bank and amounts owing to
brokers). The fair value is the amount at which the asset could be
sold or the liability transferred in a current transaction between
market participants, other than a forced or liquidation sale.
The table below sets out fair value measurements of financial
assets in accordance with the IFRS fair value hierarchy system:
Group
Half year ended 31 March 2017
Level 1 Level 2 Level 3 Total
GBP'000 GBP'000 GBP'000 GBP'000
Financial assets
Financial assets
held at fair value
through profit
or loss
Equities and managed
funds
Listed equity securities 151,933 23 151,956
Unlisted equity
securities 58,447 58,447
151,933 23 58,447 210,403
-------- -------- -------- --------
Group
Half year ended 31 March 2016
Level 1 Level 2 Level 3 Total
GBP'000 GBP'000 GBP'000 GBP'000
Financial assets
Financial assets
held at fair value
through profit
or loss
Equities and managed
funds
Listed equity securities 132,054 132,054
Unlisted equity
securities 53,302 53,302
132,054 53,302 185,356
-------- -------- -------- --------
Group
Year ended 30 September 2016
Level 1 Level 2 Level 3 Total
GBP'000 GBP'000 GBP'000 GBP'000
Financial assets
Financial assets
held at fair value
through profit
or loss
Equities and managed
funds
Listed equity securities 144,121 144,121
Unlisted equity
securities 57,238 57,238
144,121 57,238 201,359
-------- -------- -------- --------
There have been no transfers during the period between Levels 1
and 2, and one transfer out of Level 3 into Level 2 (see table
below).
Investments whose values are based on quoted market prices in
active markets, and are therefore classified as Level 1, include
active listed equities. The Company does not adjust the quoted
price for these instruments in normal market conditions (although
it may invoke its fair value pricing policy in times of market
disruption - this was not the case in 31 March 2017, 31 March 2016
or 30 September 2016).
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 as Level 2. As Level 2
instruments 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.
Instruments 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 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 IPEV Valuation Guidelines. New instruments are
initially valued at cost, for a limited period, being the price of
the most recent in the investee. This is in accordance with IPEV
Guidelines as the cost of recent investments will generally provide
a good indication of fair value. Fair value is the price that would
be received to sell and asset or paid to transfer a liability in an
orderly transaction between market participants at the measurement
date.
The Company's current level 3 classified investments comprise
certain immaterial unlisted investments, which total in aggregate
GBP119,000, and the investment in MAM valued at GBP58,328,000. The
carrying value of MAM is normally assessed twice a year by the
Audit Committee and is approved by the Board. The fair value of MAM
is based on a price at which the Company may sell its shares back
to MAM and its employees, which is currently considered to be the
sole market for the Company's shares. The significant input in
assessing the price is the earnings of MAM and a 5.0%
increase/decrease in MAM's earnings would result in an
increase/decrease of 4.4% in the carrying value of MAM.
The table below sets out the movement in Level 3 instruments for
the period:
31 March 2017
Total Equity investments
Group GBP'000 GBP'000
--------- -------------------
Opening balance 57,238 57,238
Transfer to Level 2 re a
listing (transfer restricted
until December 2017)*
Total gain for the period
included in the Condensed
Consolidated Statement of
Comprehensive Income 1,209 1,209
--------- -------------------
58,447 58,447
--------- -------------------
*Transfer occurred at GBPnil market value.
The fair value of the Company's debenture stocks are calculated
using a standard present value methodology and by reference to the
market yields of a comparable UK Treasury Bond instrument with a
2.50% risk premium being added.
Year ended
Half-year ended Half-year ended 30 September
31 March 2017 31 March 2016 2016
Group Book Fair Book Fair Fair
Financial liabilities value value value value Book value value
GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000
GBP13.5m (2016:
GBP13.5m) 9.50%
2020 debenture
stock 13,452 16,159 13,438 16,745 13,445 16,605
GBP20.7m (2016:
GBP20.7m) 7.25%
2025 debenture
stock 20,495 26,373 20,477 26,183 20,486 27,111
--------- --------- --------- --------- ----------- ---------
33,947 42,532 33,915 42,928 33,931 43,716
--------- --------- --------- --------- ----------- ---------
The above financial liabilities would be classified as Level 2
financial investments in the Fair Value Hierarchy.
9. Principal financial risks
The principal financial risks which the Company faces include
exposure to:
-- Market risk
-- Foreign currency risk
-- Interest rate risk
-- Other price risk
-- Credit risk
-- Liquidity risk
Further details of the Company's management of these risks and
the exposure to them are set out in Note 25 of the Company's Annual
Report for the year ended 30 September 2016, as issued on 2
December 2016. There have been no changes to the management of or
exposure to these risks since that date.
10. Majedie Asset Management Limited (MAM)
As at 31 March 2017, the Company has a 16.8% equity shareholding
in MAM, which provides investment management and advisory services
across a range of UK and global equity strategies.
The carrying value of the investment in MAM is included in the
Condensed Consolidated Balance Sheet as part of investments at fair
value through profit or loss:
31 March 31 March 30 September
2017 2016 2016
GBP'000 GBP'000 GBP'000
Deemed cost of investment 540 540 540
Holding gains 57,788 52,669 56,580
--------- --------- -------------
Fair value at period end 58,328 53,209 57,120
--------- --------- -------------
The carrying value of MAM in the 31 March 2017 Condensed
Consolidated Financial Statements is its fair value as assessed by
the Audit Committee and approved by the Board as at 31 March
2017.
11. Net Asset Value
The consolidated net asset value per share has been calculated
based on Equity Shareholders' Funds and on 53,439,000 (31 March
2016: 53,439,000 and 30 September 2016: 53,439,000) ordinary
shares, being the number of shares in issue at the period end.
12. Ordinary Share Capital
31 March 2017 31 March 2016 30 September 2016
Number GBP'000 Number GBP'000 Number GBP'000
----------- ---------- ------------- ---------- ------------- ----------
Opening
balance 53,439,000 5,344 53,133,000 5,313 53,133,000 5,313
Ordinary
10p shares
issued 306,000 31 306,000 31
----------- ---------- ------------- ---------- ------------- ----------
Closing
balance 53,439,000 5,344 53,439,000 5,344 53,439,000 5,344
----------- ---------- ------------- ---------- ------------- ----------
All shares are allotted fully paid up, and are of one class
only, being ordinary 10p shares. New shares can only be issued at a
premium to the relevant NAV (with debt at fair value).
Ordinary shares carry one vote each on a poll. The Companies Act
2006 abolished the requirement for the Company to have authorised
share capital. The Company adopted new Articles of Association on
20 January 2010 which, inter alia, reflected the new legislation.
Accordingly the Company has no authorised share capital. The
directors' will still be limited in the number of shares they can
allot at any one time as the Companies Act 2006 requires that
directors seek authority from the shareholders for the allotment of
new shares.
13. Share Premium
Half year ended Half year ended Year ended
31 March 2017 31 March 2016 30 September
GBP'000 GBP'000 2015
GBP'000
---------------- ------------------------------ ------------------------------
Opening balance 3,054 2,280 2,280
Ordinary 10p
shares issued 775 775
Issue costs (1) (1)
---------------- ------------------------------ ------------------------------
Closing balance 3,054 3,054 3,054
---------------- ------------------------------ ------------------------------
14. Reconciliation of Operating Profit to Operating Cash
Flow
Half year ended Half year ended Year ended
31 March 31 March 30 September
2017 2016 2016
GBP'000 GBP'000 GBP'000
---------------- ---------------- --------------
Consolidated net return
before taxation 14,130 5,106 23,661
Adjustments for:
Gains on investments (12,063) (4,112) (21,919)
Accumulation dividends (119) (104) (329)
Loss on disposal of tangible
assets 58
Depreciation 12 10 78
Unrealised FX gains/(losses)
on dividend tax recoverables 2 (10)
Purchases of investments (18,447) (6,994) (13,378)
Sales of investments 21,470 7,297 15,838
4,985 1,261 3,941
Finance costs 1,407 1,406 2,813
---------------- ---------------- --------------
Operating cash flows
before movements in working
capital 6,392 2,667 6,754
Decrease in trade and
other payables (4) (88) (11)
(Increase)/decrease in
trade and other receivables (170) (23) 146
---------------- ---------------- --------------
Net cash flow from operating
activities before tax 6,218 2,556 6,889
Tax recovered 22 2
Tax on unfranked income (4) (11) (34)
---------------- ---------------- --------------
Net cash inflow from
operating activities 6,236 2,545 6,857
---------------- ---------------- --------------
15. Reconciliation of Net Cash Flow to Movement in Net Debt
Half year ended Half year ended Year ended
31 March 31 March 30 September
2017 2016 2016
GBP'000 GBP'000 GBP'000
Increase/(decrease) in
cash 1,748 (378) 930
Non cash items (16) (14) (30)
---------------- ---------------- --------------
Change in net debt 1,732 (392) 900
Net debt beginning of
period (30,464) (31,364) (31,364)
---------------- ---------------- --------------
Net debt at end of period (28,732) (31,756) (30,464)
---------------- ---------------- --------------
16. Related Party Transactions
Majedie Asset Management (MAM)
MAM is the Company's Investment Manager providing investment
management services under an Investment Agreement. The agreement
provides for MAM to manage the Company's investment assets on both
a segregated portfolio basis and also by investments into various
MAM funds. Details of the Investment Agreement are contained in the
material contracts section of the Directors' Report in the
Company's Annual Report for the year ended 30 September 2016. As
Investment Manager MAM is entitled to receive investment management
fees. In respect of the segregated portfolio these are charged
directly to the Company and are shown as an expense in its
accounts. Any management fees due in respect of the investments
made into MAM funds are charged in the fund and are therefore
included as part of the investment value of the relevant holding.
MAM is also entitled to performance fees in respect of the
investment in the MAM Tortoise fund. The fees crystallise annually
on 30 September and are calculated and charged against each
individual investor. As such these are also shown as an expense in
the Company's accounts and are charged wholly to capital. Details
concerning the Company's investments in the period in the MAM funds
are shown in the Chief Executive's Report above.
In addition to the above, the Company retains an investment in
MAM itself. Mr JWM Barlow is a non-executive director of MAM but
receives no remuneration for this role. MAM is accounted for as an
investment in both the Group and Company accounts and is valued at
fair value through profit or loss. Details concerning the Company's
investment in MAM are included in the Chief Executive's Report
above.
Majedie Portfolio Management (MPM)
MPM was the manager of the Majedie Investments PLC Share Plan.
The Share Plan was closed in June 2016 and the Company has been
liquidated in the period. As such there are no transactions or
balance information for the period. Upon being liquidated, MPM was
removed from the Group at its carrying value resulting in no gain
or loss on disposal. The removal of MPM, means that consolidated
accounts will not be required from the next financial year.
The table below discloses the transactions and balances between
those entities:
Half year Half year
ended ended Year ended
31 March 31 March 30 September
2017 2016 2016
GBP'000 GBP0'000 GBP'000
Transactions during
the period:
Dividend income received
from MAM 2,991 2,082 3,233
MPM costs recharged
by the Company 18 28
Investment management
fee income due to MAM
(segregated portfolio
only) 246 212 434
Performance fee income
due to MAM (MAM Tortoise
fund only) 5
---------- ---------- -------------
Balances outstanding
at the end of the period:
Between the Company
and MAM (investment
management fees) 119 104 115
Company's investment
in MAM 58,328 53,209 57,120
Between the Company
and MPM 96 162
---------- ---------- -------------
Transactions between group companies during the period were made
on terms equivalent to those that occur in arm's length
transactions.
17. Financial Information
The financial information contained in this Half-Yearly
Financial Report does not constitute full statutory accounts as
defined in section 434 of the Companies Act 2006.
The information for the year ended 30 September 2016 has been
extracted from the latest published audited accounts. Those
accounts have been filed with the Registrar of Companies and
included the report of the auditors which was unqualified and did
not contain a statement under section 498(2) or (3) of the
Companies Act 2006. Those statutory accounts were prepared in
accordance with IFRS, as adopted by the European Union.
Company Information
Board of Directors Depository
A J Adcock, Chairman BNY Mellon Trust & Depositary
P D Gadd (UK) Limited
R D C Henderson BNY Mellon Centre
J W M Barlow (Executive) 160 Queen Victoria Street
All Directors are non-executive London
unless indicated EC4V 4LA
Registered Office The Depositary also has delegated
1 King's Arms Yard the safe keeping of the Company's
London EC2R 7AF assets to the Custodian, the
Bank of New York Mellon SA/NV,
London Branch.
Telephone: 020 7382 8170 Registrars
E-mail: majedie@majedieinvestments.com Computershare Investor Services
Registered number: 109305 PLC
England The Pavilions
Bridgwater Road
Company Secretary Bristol BS99 6ZZ
Capita Company Secretarial Telephone: 0870 707 1159
Services Limited
The Registry Auditors
34 Beckenham Road Ernst & Young LLP
Beckenham 25 Churchill Place
Kent BR3 4TU Canary Wharf
London E14 5EY
Investment Manager
Majedie Asset Management Limited Stockbrokers
10 Old Bailey J.P. Morgan Cazenove
London EC4M 7NH 25 Bank Street
Telephone: 020 7618 3900 London
Email: info@majedie.com E14 5JP
Website
www.majedieinvestments.com
Financial Calendar
Year end 30 September
Annual results December
Half year results May
Annual General Meeting January
Dividends paid January and June
2017 Interim Dividend
Timetable
The interim dividend for the period ended 31 March 2017
is 3.50p per share.
Ex-dividend date 1 June
Record date 2 June
Payment date 16 June
This information is provided by RNS
The company news service from the London Stock Exchange
END
IR OKNDPPBKDPPB
(END) Dow Jones Newswires
May 24, 2017 02:00 ET (06:00 GMT)
Majedie Investments (LSE:MAJE)
Historical Stock Chart
From Apr 2024 to May 2024
Majedie Investments (LSE:MAJE)
Historical Stock Chart
From May 2023 to May 2024