Final Results

MAJEDIE INVESTMENTS PLC 18 November 2004 PRELIMINARY ANNOUNCEMENT OF UNAUDITED RESULTS for the year ended 30 September 2004 Summary (per ordinary share) Year ended 30 Year ended 30 % change September 2004 September 2003 Share price total return +19.3% +10.5% Net asset value total +11.6% +7.4% return Benchmark +13.3% +17.8% Dividend 8.75p 8.45p +3.6 Sources: Majedie; The WM Company; benchmark is 70% FTSE All-Share Index + 30% FTSE World ex UK Index. Highlights * Total shareholder return for the year: 19.3%; * Dividend up 3.6%: above inflation increase for 15th consecutive year; * Majedie Asset Management's assets under management reach £1 billion within two years of launch of business; * 14% reduction in costs of core investment trust business to £1.8m. Chairman's Statement During the last twelve months stock markets have made reasonable progress as global economic recovery has continued at a steady pace. The Majedie share price increased by 14.9% during the year from 198p to 227.5p and the total return for shareholders including dividends was 19.3%. In the portfolio on a total return basis, net assets have increased during the year by 11.6% compared with the benchmark return of 13.3% whereas the underlying investment performance of total assets during the year was 13.6%, which was 0.3% ahead of the benchmark. Our objective is to maximise total investment return. Over the last year greater emphasis has been placed on maximising the capital element as opposed to the income element of our investment returns as market conditions have favoured a greater representation of lower rather than higher yielding stocks in the portfolio. Total income of £6.4m is 5.7% less than last year. Within this figure, investment income from the investment trust portfolio was £4.8m, which is 27.8% lower than last year. However, it is the total return that matters to shareholders, and so it is important to focus on the combined picture of income and capital. During the financial year the Company achieved a capital return on investments of £16.7m. After adding income and deducting: costs, interest, tax and dividends there is an overall total surplus in the combined revenue and capital account of £10.7m, which has been transferred to reserves. The costs of the core investment trust portfolio business have been reduced during the year by 14% to £1.8m compared with £2.1m in 2003. This partly resulted from a greater proportion of central costs being borne by Majedie Asset Management Limited as planned. A final dividend of 5.55 pence per share is proposed. This gives a total for the year of 8.75 pence per share representing an above inflation increase of 3.6% on last year. This is the fifteenth consecutive year in which the dividend has been increased by more than inflation. The Company Revenue Account shows a deficit of £1.4m for the year and this is covered through a transfer from revenue reserves which presently amount to £26.1m. These reserves are more substantial than at most other investment trusts and provide a good support for our current dividend policy. At the very end of the financial year we took advantage of a specific opportunity to buy back holdings in our two debenture stocks of £5.8m at an attractive valuation. This will not only reduce our overall annual interest bill by £454,250 but will also reduce the balance of debt against which we have recently been holding cash balances to reduce the gearing effect. As a result the maximum potential gearing level has reduced from 30.6% to 24.3%. This is much closer to the maximum level which the Board has set for effective gearing within the portfolio. Current stock market conditions and outlook are very different compared with when we originally launched the debentures and in my statement last year I explained our policy in this area. Following this recent transaction we expect that progress in stock market values will now result in our remaining debentures being fully employed rather earlier than previously was the case. In assessing the merits of this opportunity the Board balanced shorter term considerations against longer term opportunities and the nature of the debenture instruments. Majedie Asset Management Limited has had an excellent year: investment performance has been strong, whilst assets under management increased from £ 151m a year ago to £884m as at 30 September 2004. Income increased to £1.5m from £62,000 last year. Since the end of the financial year assets under management have increased further to just over £1 billion. The business has therefore reached its original five year target within two years of the launch in January 2003. As the business has grown its cost base has increased to £2.1m from £1.7m last year as planned. The business recently achieved break even and is now generating operating profits much earlier than originally forecast. We continue to seek other business development opportunities with strong prospects of generating superior investment returns. Sir John Barlow has been a director of the Company since 1978. After twenty six years, twenty two as Chairman, he will be retiring at the forthcoming Annual General Meeting. During the early stages of his directorship he played a leading role in a restructuring in which several quoted, but related companies, were absorbed into the new Majedie group. On completion of this process, but before the Company obtained investment trust status in 1985, he was appointed Executive Chairman, a post he held until 1993 when he became non-executive. I would like to offer him our warmest thanks for his significant contribution and wish him a long and happy retirement. After six years David Ritchie will also be retiring from the Board in January. We have benefited from his sound advice and extensive experience. We thank David for his participation in Board discussions and in the development of policy and extend to him our best wishes for the future. We have concluded that in future after the forthcoming AGM it will be appropriate for the needs of the business to have six directors. The Board considers that all directors exercise their judgement in an independent manner. However from the point of view of the Combined Code on Corporate Governance as it relates to smaller listed companies the Board will in due course comprise two independent external directors, two Barlow family directors and two executive directors. The future structure of the Board and other corporate governance matters will be referred to in further detail in the report on Corporate Governance in the Company's Annual Report. This year has been one of hard work both in the parent company and in Majedie Asset Management Limited, with a significant expansion of business in the latter. I would like to thank the staff for their considerable efforts and my colleagues on the Board for their wise and supportive advice. Henry S Barlow Chairman 18 November 2004 For further information please contact Robert Clarke, Chief Executive on 020 7645 8711; e-mail: rec@majedie.co.uk CONSOLIDATED STATEMENT OF TOTAL RETURN for the year ended 30 September 2004 Restated* Notes Year ended 30 September Year ended 30 September 2004 2003 Revenue Capital Total Revenue Capital Total £000 £000 £000 £000 £000 £000 Net realised gains/ 7,479 7,479 (6,350) (6,350) (losses) on sales Increase in unrealised 9,238 9,238 14,981 14,981 appreciation Total capital return on 16,717 16,717 8,631 8,631 investments Dividends and interest 4,783 4,783 6,671 6,671 Other income 1,574 1,574 71 71 Gross revenue and capital 6,357 16,717 23,074 6,742 8,631 15,373 return Administrative expenses (2,874) (1,069) (3,943) (2,346) (1,226) (3,572) Return on ordinary 3,483 15,648 19,131 4,396 7,405 11,801 activities before finance costs and taxation Finance costs (836) (2,507) (3,343) (813) (2,437) (3,250) Premium on debenture (992) (992) stock repurchased for cancellation Return on ordinary 2,647 12,149 14,796 3,583 4,968 8,551 activities before taxation Taxation on ordinary (93) (93) (77) (77) activities Return on ordinary 2,554 12,149 14,703 3,506 4,968 8,474 activities after taxation Minority interest 1 184 184 421 421 Return attributable to 2,738 12,149 14,887 3,927 4,968 8,895 equity shareholders Dividends 2 (4,562) (4,562) (4,413) (4,413) Transfer (from)/to (1,824) 12,149 10,325 (486) 4,968 4,482 reserves Basic and diluted 3 5.25p 23.28p 28.53p 7.52p 9.51p 17.03p return per ordinary share 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. *Restated for the change in accounting treatment for own shares - See note 2. COMPANY STATEMENT OF TOTAL RETURN for the year ended 30 September 2004 Notes Year ended 30 September Restated* 2004 Year ended 30 September 2003 Revenue Capital Total Revenue Capital Total £000 £000 £000 £000 £000 £000 Net realised gains/ 7,451 7,451 (6,350) (6,350) (losses) on sales Increase in unrealised 9,238 9,238 14,981 14,981 appreciation Total capital return on 16,689 16,689 8,631 8,631 investments Dividends and interest 4,762 4,762 6,658 6,658 Other income 74 74 39 39 Gross revenue and capital 4,836 16,689 21,525 6,697 8,631 15,328 return Administrative expenses (745) (1,069) (1,814) (897) (1,226) (2,123) Return on ordinary 4,091 15,620 19,711 5,800 7,405 13,205 activities before finance costs and taxation Finance costs (836) (2,507) (3,343) (813) (2,437) (3,250) Premium on debenture (992) (992) stock repurchased for cancellation Return on ordinary 3,255 12,121 15,376 4,987 4,968 9,955 activities before taxation Taxation on ordinary (93) (93) (77) (77) activities Return attributable to 3,162 12,121 15,283 4,910 4,968 9,878 equity shareholders Dividends 2 (4,562) (4,562) (4,413) (4,413) Transfer (from)/to (1,400) 12,121 10,721 497 4,968 5,465 reserves Basic and diluted 3 6.06p 23.22p 29.28p 9.40p 9.51p 18.91p return per ordinary share The revenue column of this statement is the profit and loss account of the Company. All revenue and capital items in the above statement derive from continuing operations. No operations were acquired or discontinued in the year. *Restated for the change in accounting treatment for own shares - See note 2. CONSOLIDATED BALANCE SHEET Restated* Notes 30 September 30 September 2004 2003 £000 £000 Fixed assets: Intangible assets 425 458 Tangible assets 435 450 Investments 4 167,386 152,185 168,246 153,093 Current assets: Debtors 5,159 1,278 Cash at bank and on deposit 13,537 17,372 18,696 18,650 Creditors: Amounts falling due within one 14,798 3,742 year Net current assets 3,898 14,908 Total assets less current liabilities 172,144 168,001 Creditors: Amounts falling due after more 33,687 39,382 than one year Net assets 138,457 128,619 Capital and reserves Called up share capital 5,253 5,253 Share premium account 785 785 Capital redemption reserve 56 56 Capital reserve - realised 79,498 76,587 Capital reserve - unrealised 30,696 21,458 Revenue reserve 23,753 25,577 Own shares reserve (1,148) (906) Equity shareholders' funds 138,893 128,810 Minority interest 1 (436) (191) 138,457 128,619 Net asset value per share 5 266.5p 246.6p *Restated for the change in accounting treatment for own shares - see note 2. COMPANY BALANCE SHEET Restated* Notes 30 September 30 September 2004 2003 £000 £000 Fixed assets: Investments 4 167,386 152,185 Investment in subsidiaries 3,452 2,952 170,838 155,137 Current assets: Debtors 4,395 1,564 Cash at bank and on deposit 12,982 15,992 17,377 17,556 Creditors: Amounts falling due within one 14,094 3,356 year Net current assets 3,283 14,200 Total assets less current liabilities 174,121 169,337 Creditors: Amounts falling due after more 33,687 39,382 than one year Net assets 140,434 129,955 Capital and reserves Called up share capital 5,253 5,253 Share premium account 785 785 Capital redemption reserve 56 56 Capital reserve - realised 79,467 76,584 Capital reserve - unrealised 29,890 20,652 Revenue reserve 26,131 27,531 Own shares reserve (1,148) (906) Equity shareholders' funds 140,434 129,955 *Restated for the change in accounting treatment for own shares - see note 2. CONSOLIDATED CASH FLOW STATEMENT for the year ended 30 September 2004 30 September 30 September 2004 2003 £000 £000 Operating activities Cash received from investments 3,839 6,270 Cash received from fee income 718 13 Interest received 534 797 Cash payments (2,769) (3,850) Net cash inflow from operating activities 2,322 3,230 Servicing of finance Interest paid (3,238) (3,237) Premium on debenture stock repurchased for (992) cancellation Net cash outflow from servicing of finance (4,230) (3,237) Taxation Tax recovered 16 17 Capital expenditure and financial investment Purchases of investments (139,895) (58,073) Sales of investments 148,546 63,220 Purchases of tangible assets (140) (218) Sales of tangible assets 9 Net cash inflow from capital expenditure and 8,511 4,938 financial investment Equity dividends paid (4,412) (4,256) Cash inflow before financing 2,207 692 Financing Debenture stock repurchased (5,800) Purchases of own shares (242) Minority interest purchase of shares in subsidiary 150 Net cash (outflow)/inflow from financing (6,042) 150 (Decrease)/increase in cash in the year (3,835) 842 NOTES 1 Majedie Asset Management Limited The Company's holding in Majedie Asset Management Limited reduced from 70% of the equity share capital to 65% with effect from 1 April 2004 as a result of the business reaching a pre-agreed target. The results of that company for the year ended 30 September 2004 amount to a loss of £610,000 and are included in the consolidated Statement of Total Return within 'Return on ordinary activities before finance costs and taxation' (2003: loss of £1,404,000). The minority interest figure disclosed on the Consolidated Statement of Total Return represents 30% of Majedie Asset Management Limited's loss from ordinary activities after taxation for the first six months of the year to 30 September 2004 and 35% of the loss for the latter six months (2003: 30% of the loss for the year ended 30 September 2003). The minority interest figure disclosed on the Consolidated Balance Sheet relates to 35% (2003: 30%) of the net deficit attributable to Majedie Asset Management Limited's equity shareholders having taken into account the rights attaching to preference shares and other creditors. 2 Discretionary share option scheme Options in issue and shares held Following the granting of further share options to directors and employees on 18 March 2004 under the Discretionary Share Option Scheme, 107,922 own shares costing £242,000 were purchased by the Majedie Investments PLC Employee Incentive Trust during the year ended 30 September 2004. The total number of options granted by the Company is now 630,647 and the total shareholding of the Majedie Investments PLC Incentive Trust is 409,331 ordinary shares. The shares will be held by the trust until the relevant options are exercised or until they lapse and are accounted for in accordance with the recently issued UITF Abstract 38: 'Accounting for ESOP Trusts'. This requires that the consideration paid for own shares be presented as a deduction from shareholders' funds and not recognised as an asset. Previously, such shares were included as investments at the lower of market value or exercise price, and unrealised appreciation or depreciation accounted for through the unrealised capital reserve. Restatement As required by UITF 38, the comparative figures have been restated for the change noted above. The effect on the prior year figures in the Balance Sheet is to decrease net assets at 30 September 2003 by £594,000, increase the unrealised capital reserve at that date by £312,000 and introduce an own shares reserve of £(906,000). In the Statement of Total Return, the unrealised appreciation on capital items is reduced by £29,000. Returns per share and net asset values per share remain unaffected, as own shares are excluded from these calculations. Dividends The Employee Incentive 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 (Consolidated and Company) Basic returns per ordinary share are based on 52,188,484 ordinary shares (2003: 52,226,591), 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. There is no dilution to the basic return per ordinary share shown for the years ended 30 September 2003 and 2004 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 investments are valued at closing mid-market value. Unlisted investments are stated at the Board's estimate of their fair value. 5 Net Asset Value per ordinary share The net asset value per share has been calculated based on the Group equity shareholders' funds of £138,893,000 (2003: £128,810,000) and on 52,118,669 (2003: 52,226,591) ordinary shares, being the shares in issue at the year end having deducted the number of shares held by the Employee Incentive Trust. 6 Financial information for the years ended 30 September 2004 and 2003 The preliminary unaudited figures for the year ended 30 September 2004 are an extract from the Company's latest accounts, prepared under the same accounting standards and policies, consistently applied, and the audited financial statements for the year ended 30 September 2003, with the exception of accounting treatment for own shares - see note 2. The financial information set out above does not constitute the Company's statutory accounts for the years ended 30 September 2004 or 2003. The financial information for the year ended 30 September 2003 is derived from the statutory accounts for that year which have been delivered to the Registrar of Companies. The auditors have reported on those accounts; their report was unqualified and did not contain statements under Section 237(2) or Section 237(3) of the Companies Act 1985. The statutory accounts for the year ended 30 September 2004 will be finalised on the basis of the financial information presented by the directors in this preliminary announcement and will be delivered to the Registrar of Companies following the Company's Annual General Meeting. ANNUAL REPORT The annual report and accounts will be sent to shareholders on 6 December 2004 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 19 January 2005 at the London Underwriting Centre, 3 Minster Court, Mincing Lane, London EC3R 7DD. DIVIDEND The proposed final dividend of 5.55p per share will be paid on 25 January 2005 to shareholders on the register at the close of business on 7 January 2005. NOTES FOR EDITORS Majedie Investments PLC is a self managed investment trust with total portfolio assets under management of over £170 million. Our specialist fund management subsidiary, Majedie Asset Management Limited, has client assets of over £1 billion at 18 November 2004. 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.

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