Final Results
MAJEDIE INVESTMENTS PLC
20 November 2003
PRELIMINARY ANNOUNCEMENT OF RESULTS
for the year ended 30 September 2003
Financial Highlights (per ordinary share)
Year ended Year ended % change
30 September 30 September
2003 2002
Net asset value 246.6p 238.1p +3.6
Share price 198.0p 187.5p +5.6
Dividends 8.45p 8.15p +3.7
Earnings 7.52p 9.97p -24.6
Performance (total return per ordinary share)
Year ended Year ended
30 September 30 September
2003 2002
Investment portfolio
return (total assets) +9.7% -14.5%
Net asset value +7.4% -21.4%
Share price +10.5% -20.3%
Benchmark +17.8% -21.5%
Sources: Majedie; The WM Company; benchmark is 70% FTSE All-Share Index + 30%
FTSE World ex UK Index.
Dividend
The proposed final dividend of 5.25p will be paid on 30 January 2004 to
shareholders on the register at the close of business on 16 January 2004.
Chairman's Statement
Twelve months ago I reported on a financial year which had seen a large fall in
stock market values. The effect of this on the portfolio had been significantly
reduced through investment in defensive stocks and sectors and the holding of a
large cash balance to reduce our effective gearing. For much of the financial
year ended 30 September 2003 the Board continued to be cautious and the
defensive stance in sector weightings and in stock selection was maintained.
This was the main reason for the underperformance against the benchmark return
of 17.8%, Majedie Investments' net assets having increased by 7.4% on a total
return basis.
In the longer term context of the last four years since the Investment Director
joined the Company, the underlying investment performance of the portfolio of
total assets has fallen 6.2% less than the benchmark. The element of portfolio
gearing provided by our long term debentures has been a drag on results in
recent years and, as markets fell, the Board took steps to prevent effective
gearing reaching unacceptably high levels by requiring cash or bonds to be held
to offset part of the debentures. With the recovery in markets in this current
year net gearing has been of some benefit, even allowing for the fact that
total assets include around £15m in cash deposits as a partial offset of our £
39m of debentures. These cash or bond holdings will be an on-going element of
our total assets in the near term, though I hope that in time stock markets
will recover to levels that allow us to utilise our debenture gearing in full.
Meanwhile the invested assets portfolio will be managed in relation to our 70/
30 benchmark leaving out of account any cash or bonds held specifically to
offset part of the fixed gearing.
Our new fund management subsidiary, Majedie Asset Management, has been
established with some considerable success. Total costs of £3.6m included, as
planned, £1.5m relating to the new business. In last year's annual report we
referred to the effect of these costs on our operating results during the
initial period while the new business establishes its revenue base. This is
part of the down-payment on our investment in the new company. Nevertheless
Majedie Asset Management has got away to a flying start since FSA approval was
received last December and recorded £150.7m of assets under management as at 30
September 2003. Furthermore the investment performance achieved since launch
has been strong. These achievements both represent a considerable improvement
on our original estimates and bode well for the future.
Group revenue return before tax for the year was £3.6m compared with the
previous year's £5.3m. This reduction results from the planned increase in the
cost base of the new business referred to above and a reduction in income from
the investment trust portfolio - down from £7.2m last year to £6.7m in the year
just ended. Nevertheless we are proposing a dividend of 5.25p per share, which,
added to the interim of 3.2p gives a total of 8.45p per share: an increase of
3.7% over the previous year.
Further details regarding the management of the portfolio of investments and
the analysis of business performance will be provided in the Annual Report
which will be sent to shareholders on 5 December 2003. I am confident that in
the current climate of modest stock market recovery from the ravages of the
past three years, the Company is well placed to face the future.
Following the early success in establishing Majedie Asset Management, we will
continue to look for business development opportunities which will complement
our current businesses and build on our existing capabilities.
I would like to conclude by warmly thanking my colleagues on the boards of both
Majedie Investments and Majedie Asset Management, and all the staff, for their
unstinting support and hard work in the course of a year which has at times
been highly challenging.
Henry S Barlow Chairman
19 November 2003
For further information please contact Robert Clarke, Managing Director on 020
7645 8711;
e-mail: rec@majedie.co.uk
CONSOLIDATED STATEMENT OF TOTAL RETURN
for the year ended 30 September 2003
Notes Year ended 30 September Year ended 30 September
2003 2002
Revenue Capital Total Revenue Capital Total
£000 £000 £000 £000 £000 £000
Net realised losses on (6,350) (6,350) (12,987) (12,987)
sales
Increase /(decrease) in 15,010 15,010 (22,473) (22,473)
unrealised depreciation
Total capital return on 8,660 8,660 (35,460) (35,460)
investments
Dividends and interest 6,671 6,671 7,180 7,180
Other income 71 71 25 25
Gross revenue and capital 6,742 8,660 15,402 7,205 (35,460) (28,255)
return
Administrative expenses (2,346) (1,226) (3,572) (1,143) (1,340) (2,483)
Return on ordinary 4,396 7,434 11,830 6,062 (36,800) (30,738)
activities before finance
costs and taxation
Finance costs (813) (2,437) (3,250) (812) (2,437) (3,249)
Return on ordinary 3,583 4,997 8,580 5,250 (39,237) (33,987)
activities before
taxation
Taxation on ordinary (77) (77) (102) (102)
activities
Return on ordinary 3,506 4,997 8,503 5,148 (39,237) (34,089)
activities after taxation
Minority interest 1 421 421 69 69
Return attributable to 3,927 4,997 8,924 5,217 (39,237) (34,020)
equity shareholders
Dividends 2 (4,413) (4,413) (4,250) (4,250)
Transfer (from)/to (486) 4,997 4,511 967 (39,237) (38,270)
reserves
Basic and diluted return 7.52p 9.51p 17.03p 9.97p (74.55)p (64.58)p
per ordinary share 3
The revenue column of this statement is the consolidated profit and loss
account of the Group.
All revenue and capital items in the above statement derive from continuing
operations. No operations were acquired or discontinued in the year.
CONSOLIDATED BALANCE SHEET
Notes 30 30 September
September
2002
2003
£000 £000
Fixed assets:
Intangible assets 458 458
Tangible assets 450 378
Investments 4 152,779 147,474
153,687 148,310
Current assets:
Debtors 1,278 3,505
Cash at bank and on 17,372 16,530
deposit
18,650 20,035
Creditors: Amounts 3,742 4,001
falling due
within one year
Net current assets 14,908 16,034
Total assets less 168,595 164,344
current
liabilities
Creditors: Amounts 39,382 39,370
falling due
after more than one year
Net assets 129,213 124,974
Called up share capital 5,253 5,253
Share premium account 785 785
Capital redemption 56 56
reserve
Capital reserve - 76,587 86,600
realised
Capital reserve - 21,146 6,136
unrealised
Revenue reserve 25,577 26,063
Equity shareholders' 129,404 124,893
funds
Minority interest 1 (191) 81
129,213 124,974
Net asset value per 246.6p 238.1p
share 5
CONSOLIDATED CASH FLOW STATEMENT
for the year ended 30 September 2003
30 September 30 September
2003
2002
£000 £000
Operating activities
Cash received from investments 6,283 6,442
Interest received 797 237
Cash payments (3,850) (2,003)
Net cash inflow from operating 3,230 4,676
activities
Servicing of finance
Interest paid (3,237) (3,237)
Net cash outflow from servicing of (3,237) (3,237)
finance
Taxation
Tax recovered 17 76
Capital expenditure and financial
investment
Purchases of investments (58,073) (71,807)
Sales of investments 63,220 84,074
Purchases of tangible assets (218) (348)
Sales of tangible assets 9 -
Net cash inflow from capital 4,938 11,919
expenditure and financial investment
Equity dividends paid (4,256) (4,188)
Cash inflow before financing 692 9,246
Financing
Ordinary shares purchased for - (546)
cancellation
Minority interest purchase of shares 150 150
in subsidiary
Net cash inflow/(outflow) from 150 (396)
financing
Increase in cash in the year 842 8,850
NOTES
1 Majedie Asset Management Limited
Majedie Asset Management Limited was incorporated on 24 May 2002. Majedie
Investments PLC owns 70% of the equity of the company. The results for the year
ended 30 September 2003 amount to a loss of £1,404,000 and are included within
Return on ordinary activities before finance costs and taxation (2002: loss of
£231,000) The minority interest figure disclosed on the Statement of Total
Return represents 30% of the company's loss from ordinary activities after
taxation. The minority interest figure disclosed on the Consolidated Balance
Sheet relates to 30% of the net assets attributable to the company's ordinary
shareholders having taken into account the rights attaching to preference
shares and creditors.
2 Dividends
Following the granting of further share options to directors and employees on
22 November 2002 under the Majedie Investments PLC Discretionary Share Option
Scheme 2000, the total number of options granted by the Company is 469,023 and
the total shareholding of the Majedie Investments PLC Incentive Trust is
301,409 ordinary shares. The shares will be held by the trust until the
relevant options are exercised or until they lapse and are included on the
balance sheet as an asset of the Company according to UITF 13: Accounting for
ESOP Trusts. The trust has waived its rights to receive dividends from the
Company and therefore the total dividend included in the Statement of Total
Return has been reduced accordingly.
3 Calculation of returns per ordinary share
Basic return per ordinary share is based on 52,226,591 ordinary shares (2002:
52,342,057), being the weighted average number of shares in issue having
adjusted for the shares held by the employee incentive trust referred to above.
Basic returns per ordinary share are based on the return on ordinary activities
after taxation attributable to equity shareholders, excluding any unrealised
appreciation/(depreciation) in respect of the Company's own shares held in the
employee incentive trust referred to above.
There is no dilution to the basic return per ordinary share shown for the years
ended 30 September 2002 and 2003 since the share options referred to above
would, if exercised, be satisfied by the shares already held by the employee
incentive trust.
4 Fixed Asset Investments
Listed fixed asset investments are stated at market value except for the own
shares held in the employee incentive trust as referred to in note 2. The
shares held by the trust under option are stated at the lower of market value
and exercise price. The value of these shares included within the fixed asset
investments amounts to £594,000 (2002: £565,000).
5 Net Asset Value per ordinary share
The net asset value per share has been calculated in accordance with the
principles of Financial Reporting Standard No 14: Earnings per Share, i.e.
after deducting the carrying value of the shares held by the employee incentive
trust from net assets and the number of shares in question from the shares in
issue at the year end.
6 Financial Information for the years ended 30 September 2003 and 2002
The preliminary figures for the year ended 30 September 2003 are an extract
from the Company's latest accounts, prepared under the same accounting
standards and policies, consistently applied, as the audited financial
statements for the year ended 30 September 2002.
The financial information set out above does not constitute the Company's
statutory accounts for the years ended 30 September 2003 or 2002, but is
derived from those accounts. Statutory accounts for 2002 have been delivered to
the Registrar of Companies, and those for 2003 will be delivered following the
Annual General Meeting. The auditors have reported on those accounts; their
reports were unqualified and did not contain statements under Section 237(2) or
Section 237(3) of the Companies Act 1985.
ANNUAL REPORT
The annual report and accounts will be sent to shareholders on 5 December 2003
from which time copies will be available to the public at the Company's
registered office: 1 Minster Court, Mincing Lane, London EC3R 7ZZ.
ANNUAL GENERAL MEETING
The Annual General Meeting will be held at 12.15pm on Wednesday 14 January 2004
at the London Underwriting Centre, 3 Minster Court, Mincing Lane, London EC3R
7DD.
DIVIDEND
The proposed final dividend of 5.25p per share will be paid on 30 January 2004
to shareholders on the register at the close of business on 16 January 2004.
NOTES FOR EDITORS
Majedie Investments PLC is a self managed investment trust with total assets
under management of over £160 million. The Company's objective is to maximise
total shareholder return over the long term whilst increasing dividends by more
than the rate of inflation. The Company's benchmark is 70% FTSE All-Share Index
and 30% FTSE World ex UK Index (sterling) on a total return basis.
The Majedie Share Plan is a straightforward and low cost way of investing in
Majedie shares with a minimum lump sum of £250, or on a regular monthly basis
with £25 or more. The Majedie Corporate ISA provides a tax efficient way of
investing or saving in Majedie shares at extremely low cost. There is no
initial or annual management fee. Both maxi and mini ISAs are available with a
minimum lump sum investment of £500 or £50 per month for direct debit
subscribers.
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