Annual Financial Report
MAJEDIE INVESTMENTS PLC
ANNUAL FINANCIAL REPORT FOR THE YEAR ENDED 30 SEPTEMBER 2016
The full Annual Report and Accounts will shortly be available via the Company's website at www.majedieinvestments.com or by contacting the Company Secretary on telephone number 020 7954 9531.
The Directors present the results of the Company for the year ended 30 September 2016.
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.
|
Highlights |
2016 |
2015 |
|
Total shareholder return (including dividends): |
3.0% |
15.7% |
|
Net asset value total return (debt at par including dividends): |
16.0% |
12.9% |
|
Total dividends (per share): |
8.75p |
8.00p |
|
Directors' valuation of investment in Majedie Asset Management Limited: |
£57.1m |
£52.3m |
YEAR'S SUMMARY
|
Group Capital Structure |
Note |
2016 |
2015 |
% |
|
As at 30 September |
|
|
|
|
|
Total assets |
1 |
£203.9m |
£183.7m |
+11.0 |
|
Which are attributable to: |
|
|
|
|
|
Debenture holders (debt at par value) |
2 |
£33.9m |
£33.9m |
|
|
Equity Shareholders |
|
£170.0m |
£149.8m |
+13.5 |
|
Gearing |
4 |
18.5% |
21.3% |
|
|
Potential Gearing |
4 |
20.0% |
22.6% |
|
|
Group total returns (capital growth plus dividends) |
5 |
|
|
|
|
Net asset value per share (debt at par value) |
3 |
+16.0% |
+12.9% |
|
|
Net asset value per share (debt at fair value) |
3 |
+16.3% |
+13.0% |
|
|
Share price |
|
+3.0% |
+15.7% |
|
|
Group capital returns |
|
|
|
|
|
Net asset value per share (debt at par value) |
3 |
318.1p |
281.9p |
+12.8 |
|
Net asset value per share (debt at fair value) |
|
299.8p |
265.5p |
+12.9 |
|
Share price |
|
257.1p |
257.3p |
-0.1 |
|
Discount of share price to net asset value per share |
|
|
|
|
|
Debt at par value |
|
19.2% |
8.7% |
|
|
Debt at fair value |
|
14.2% |
3.1% |
|
|
Group revenue and dividends |
|
|
|
|
|
Net revenue available to Equity Shareholders |
|
£4.9m* |
£4.9m |
|
|
Net revenue return per share |
|
9.3p* |
9.4p |
-0.1 |
|
Total dividends per share |
|
8.75p |
8.00p |
+9.4 |
|
Total administrative expenses |
|
£1.9m* |
£2.1m |
|
|
Ongoing Charges Ratio: |
6 |
|
|
|
|
Group and Company |
|
1.6% |
1.9% |
|
Notes:
Definitions used in the above summary are as follows:
1. Total Assets: Total assets are defined as total assets less current liabilities.
2. Debt at par or fair value: Par value is the nominal or face value attached to the debentures which will be paid by the Company to the debenture holders at maturity. Fair value is the estimated market value the Company would pay (on the relevant reporting date), as a willing buyer, to a debenture holder, as a willing seller, in an arms-length transaction.
3. Net Asset Value: The Net Asset Value (NAV) is the value of all of the Company's assets less all liabilities. The NAV is usually expressed as an amount per share.
4. Gearing and Potential Gearing: Gearing represents the amount of borrowing that a company has and is calculated using the Association of Investment Companies (AIC) guidance. It is usually expressed as a percentage of equity shareholders' funds and a positive percentage or ratio above one shows the extent of the level of borrowings. Gearing is calculated as borrowings less net current assets to arrive at a net borrowings figure. Potential Gearing excludes cash from the calculation. Details of the calculation for the Company are in note 25 below.
5. Total Return: Total returns include any dividends paid as well as capital returns as a result of an increase or decrease in a company's share price or NAV.
6. Ongoing Charge Ratio (OCR): Ongoing charges are a measure of the normal ongoing costs of running a company. Further information is shown in the Business Review section of the Strategic Report below.
* Includes both continuing and discontinued operations.
|
Year's high/low |
|
2016 |
2015 |
|
Share price |
high |
272.3p |
281.0p |
|
|
low |
240.0p |
213.3p |
|
Net asset value - debt at par |
high |
318.1p |
294.2p |
|
|
low |
260.1p |
229.2p |
|
Discount - debt at par |
high |
19.2% |
14.2% |
|
|
low |
2.6% |
1.4% |
|
(Premium)/Discount - debt at fair value |
high |
14.3% |
8.4% |
|
|
low |
(3.4%) |
(5.5%) |
TEN YEAR RECORD
to 30 September 2016
|
Year |
Total† |
Equity |
NAV |
Share |
Discount |
Earningsˆ |
Ordinary Dividend** Pence |
Total Dividend |
Gearing† |
Potential |
Company |
|
2007* |
286,944 |
253,216 |
490.7 |
413.3 |
15.77 |
13.60 |
10.00 |
14.50 |
10.65 |
13.32 |
1.00 |
|
2008 |
187,209 |
153,465 |
296.5 |
250.0 |
15.68 |
12.45 |
10.50 |
12.75 |
16.69 |
21.99 |
1.30 |
|
2009 |
157,943 |
124,181 |
238.7 |
189.8 |
20.51 |
8.14 |
10.50 |
10.50 |
17.22 |
27.19 |
1.71 |
|
2010 |
150,940 |
117,159 |
225.2 |
191.5 |
15.00 |
11.83 |
10.50 |
13.00 |
24.11 |
28.83 |
1.85 |
|
2011 |
145,683 |
111,634 |
214.5 |
139.5 |
34.96 |
4.66 |
10.50 |
10.50 |
(1.72) |
30.28 |
1.92 |
|
2012 |
146,057 |
112,234 |
215.6 |
155.8 |
27.74 |
4.90 |
10.50 |
10.50 |
9.24 |
30.14 |
1.83 |
|
2013 |
159,013 |
125,166 |
240.5 |
160.0 |
33.47 |
6.80 |
10.50 |
10.50 |
21.47 |
27.04 |
1.73 |
|
2014 |
167,934 |
134,061 |
256.7 |
229.0 |
10.79 |
9.36 |
7.50 |
7.50 |
23.39 |
25.27 |
1.66 |
|
2015 |
183,708 |
149,807 |
281.9 |
257.3 |
8.74 |
9.42 |
8.00 |
8.00 |
21.25 |
22.63 |
1.88 |
|
2016 |
203,917 |
169,986 |
318.1 |
257.1 |
19.18 |
9.25 |
8.75 |
8.75 |
18.46 |
19.96 |
1.58 |
Notes:
† Calculated in accordance with AIC guidance.
ˆ Includes both continuing and discontinued operations.
# As from May 2012, Ongoing Charges replace previous cost ratios.
* Restated to reflect the review of the treatment of the investment in Majedie Asset Management.
** Dividends disclosed represent dividends that relate to the Company's financial year. Under International Financial Reporting Standards (IFRS) dividends are not accrued until paid or approved. Total dividends include special dividends paid, if any.
STRATEGIC REPORT
CHAIRMAN'S STATEMENT
In the year ended 30 September 2016 the NAV (net asset value with debt at par) rose by 16.0% on a total return basis whilst the share price rose by 3.0%, also on a total return basis. The Board is recommending a total dividend for the year of 8.75p per share, an increase of 9.4%. The FTSE All Share Index and MSCI World Index (in Sterling terms) rose by 16.8% and 30.6% respectively, on a total return basis.
The Company's shares which had traded periodically at a premium to NAV (debt at fair value) in the first half of the year traded at a discount in the second half of the year. This reflects increased volatility in both stock markets and currency markets in the wake of the European Referendum result that impacted the Investment Company sector in general. Specifically in relation to the Company a large holding in the Company has been transferred to a new fund management group which is not expected to be a long term investor. The Board is uncomfortable with the level of the discount and is looking at all opportunities to reduce it.
Results and Dividends
The Company had a capital return for the year of £18.7m compared to £12.5m in 2015. Total income for the Company was £6.5m compared to £6.6m in 2015. The small decrease in income reflects a variety of factors, namely the sale of 2.5% of Majedie Asset Management (MAM) shares in December 2014 and a reallocation in August 2015 of £10m from the higher yielding UK Equity Segregated Portfolio to the lower yielding MAM Global Equity Fund. This was partially offset by a higher dividend per share from MAM and increased income from the MAM UK Income Fund. The allocation from the UK Equity Segregated Portfolio to the Global Fund has however benefitted the capital return. There were no further sales of MAM shares over the year.
Total administrative expenses and management fees have fallen to £1.9m from £2.1m in 2015 which largely reflects a reduction in property costs and general cost reductions. Further benefits should be achieved in 2017 as one off costs associated with moving office fall away and the fund administration function is insourced. Notwithstanding these actions, the self-managed nature of the Company and its current size mean costs will be somewhat higher than average, though costs will continue to be an area of focus for the Board.
The net revenue return after taxation for the year to 30 September 2016 was £4.9m compared to £4.9m in the year to 30 September 2015.
The Board increased the total dividend by 6.7% to 8.0p in 2015 and, having paid an interim dividend of 3.0p, the Board is recommending a final dividend of 5.75p, an increase of 9.4% for the full year. The final dividend will be paid on 25 January 2017 to shareholders on the register on 13 January 2017.
Corporate Broker
The Company announced on 29 November 2016 that it has appointed J.P. Morgan Cazenove as its Corporate Broker.
AGM
The AGM will be held on 18th January 2017 at 12.00 noon at the City of London Club, 19 Old Broad Street, London EC2N 1DS. Details are set out in the notice of the meeting in the full Annual Report. There will be presentations from MAM and the Board and an opportunity to ask questions. I hope you will be able to attend.
Majedie Share Plan
Following a review we decided to close the Company's share plan and adopt a replacement share plan operated by Equiniti. There should be no changes for investors as the Company subsidises the costs and the share plan represents an efficient way to invest in the Company's shares.
Summary
It is disappointing that the discount has widened following two years of the shares trading at historically tighter discounts and at times, a premium. One of our aims has been to grow the Company through share issuance, and to this end the Company has permission to issue up to 10% of its equity at a premium to the prevailing NAV (debt at fair value). In the year to 30 September 2016 the Company issued 306,000 shares at a premium. The benefits to shareholders of further share issuance will be to dilute the cost of the debentures, to reduce the ratio of ongoing charges and to increase the liquidity of the Company's shares. It is intended to renew this permission at the AGM.
The Board maintains an asset allocation that provides a unique exposure to funds that are run by a highly regarded boutique investment manager in which the Company retains a significant stake of 16.7%. The geographic exposure of the Company's portfolio is shown below. We are conscious that our exposure appears to be more UK-centric than other Investment Companies in the Global Growth sector. However on a look through basis, determined by earnings, the Company's portfolio is more heavily exposed to overseas earnings because the UK Market (FTSE All Share) derives 70% of its earnings from overseas. UK listed equities also pay a higher dividend yield than equities that are listed overseas. The yield from the segregated mandate, the funds and the dividend from MAM enables the Company to pay an attractive dividend from its current year income without recourse to its sizable revenue reserves. The Company also retains exposure to an absolute return fund that will reduce volatility of returns for shareholders.
The past year has been extraordinary in terms of political shocks with the European Referendum result and more recently the US Presidential election. The economic consequences and the effect on the stock markets were and remain difficult to predict. I am confident however that the broad spread of the Company's holdings and the good long term track record of the funds managed by MAM will provide your Company with resilience and growth in its assets.
Andrew J Adcock
Chairman
2 December 2016
EXTRACTS FROM THE STRATEGIC REPORT
CHIEF EXECUTIVE'S REPORT
The Company's assets are allocated at the discretion of the Board between a number of investment strategies managed by MAM and the Company retains an equity holding in MAM. The Company has no overall benchmark; rather each fund has its own benchmark. The Company's total assets were £203.9m at 30 September 2016. In the year, the main change in asset allocation was a reduction in the MAM UK Equity Segregated Portfolio by £3.4m; there were no sales of MAM shares during the year.
MAM Funds and Investment Performance
The MAM UK Equity Fund is the flagship product of MAM, having started in March 2003, and since inception to 30 September 2016 has returned 12.9% per annum net of fees with a relative outperformance against its benchmark FTSE All Share Index of 3.6% per annum. The Company's assets are invested in a segregated portfolio that is managed in parallel to the MAM UK Equity Fund. The funds are predominately invested in UK equities with overseas equities limited to 20% and the strategy incorporates a dedicated allocation to UK smaller companies. The sum invested in the Segregated Portfolio at 30 September 2016 was £61.2m which represents 30.0% of the Company's total assets. In the year to 30 September 2016 the Segregated Portfolio returned 14.4% net of fees, which is an underperformance of 2.4% against its benchmark. The positive contributors at a sector level over twelve months were overweight positions in Mining, Support Services and Oil whilst the negative contributors were overweight positions in Banks, Tobacco and Fixed Line Telecoms.
The MAM Tortoise Fund is a global equity absolute return fund which started in August 2007 and since inception has returned 9.6% per annum net of fees. At 30 September 2016, the Company has an allocation of £32.4m, which represents 15.9% of total assets. The fund returned 17.5% net of fees in the year to 30 September 2016. The positive contributors at a sector level were long positions in Mining, Oil and Software whilst the detractors were long positions in Banks and short positions in REITs and Distributors. The Tortoise Fund has capacity restrictions.
The MAM UK Income Fund started in December 2011. Its objective is 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 the fund has returned 15.7% per annum net of fees, which is an outperformance of 5.3% per annum. At 30 September 2016 the Company has an allocation of £19.8m, which represents 9.7% of total assets. In the year to 30 September 2016 the fund returned 2.6% net of fees, which represents an underperformance of 14.2%. The positive contributors at the sector level were overweight positions in Travel and Leisure, Food Producers and Nonlife Insurers whilst the detractors were overweight Life Insurers and underweight Oil and Mining.
The MAM Global Equity and Global Focus funds were launched in June 2014. Since inception the funds have returned 14.0% and 13.3% per annum net of fees for the Sterling share classes. This represents a flat performance for the Global Equity Fund and an underperformance of 0.6% per annum for the Global Focus Fund against their benchmark MSCI ACWI (Developed and Emerging Markets). At 30 September 2016 the Company has an allocation of £18.7m and £6.6m to the MAM Global Equity and Global Focus Funds, respectively representing 9.1% and 3.2% of total assets. In the year to 30 September 2016 the funds returned 28.7% and 22.6% net of fees respectively, which represents an underperformance of 1.9% and 7.9%. The absolute returns of the funds have benefitted from the weakness of Sterling though there was no effect in relative terms because the Company is invested in the Sterling share class. The positive contributors at the sector level were overweight positions in Software, Mining and Diversified Financials whilst the detractors were overweight positions in Telecoms, Banks and Biotechnology.
The MAM US Equity Fund was launched in June 2014 and since its inception has returned 18.4% per annum net of fees for the Sterling share class. This represents an underperformance of 1.2% per annum against its benchmark S&P 500 Index. At 30 September 2016 the Company had an allocation of £7.3m, which represents 3.6% of total assets and in the year ended 30 September 2016 the fund returned 22.8% net of fees, which represents an underperformance of 10.9%. The Company is invested in the Sterling share class. The positive contributors at a sector level were overweight positions in Diversified Financials, Software and Media whilst the detractors were overweight positions in Consumer Services, Leisure and Healthcare Providers.
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 on each of the MAM funds the factsheets are available on the Company's website. The factsheets show the five largest overweight and underweight stocks and other relevant information for investors on the funds.
Majedie Asset Management
The Company retains its holding of 16.7% of MAM, having not sold any shares in MAM in the year to 30 September 2016. The Company has no current intention to sell any shares in MAM, other than the obligation, if required, to sell shares in proportion to other shareholders to the MAM EBT, up to a maximum of 1.0% in each year. The Board has increased the value of its holding in MAM to £57.1m. The valuation is formulaic and reflects three-year historic average earnings and the Board believes it reflects fair value. The holding represents 28.0% of the Company's total assets and in the year ended 30 September 2016 the Company received dividends of £3.3m from MAM.
MAM's AUM increased to £12.3bn from £11.2bn during the year, which reflects stock market movement especially in the second half of the year. The increase in AUM is creditable with the UK fund management industry, as a whole, facing large outflows in the 2nd and 3rd quarters of 2016. In terms of relative performance the MAM long-only funds had a testing year, though the upturn in relative performance over recent months builds on the strong medium to long term track record. It is pleasing that the MAM Tortoise Fund had a good year. The MAM Global Equity, MAM Global Focus and MAM US Equity Funds continue to receive enquiries and in October the MAM Global Focus Fund received a sizeable allocation from a major UK Company Pension Fund.
Realisation Portfolio
The realisation portfolio is now immaterial for the Company though the remaining holdings are monitored in case further value can be achieved. It is now less than 0.1% of total assets and therefore will no longer be commented on in future reports.
Summary
Stock markets in the past year have seen a major divergence in sector performance. Until August, sector and stock selection was largely driven by investors adding to positions in income producing stocks as bond yields fell to record low levels. The so called bond proxy sectors rose to historically expensive valuations. Broadly the MAM funds underperformed until the final quarter as they were underweight the bond proxy sectors, overweight commodity producers and value stocks in the expectation that inflation expectations were too low and bond rates would begin to rise. In recent months the market has seen a significant sector rotation that has caused the funds to outperform. The performance of the MAM UK Income Fund was impacted by the market reaction to the European Referendum result because it was overweight UK Financial Services companies that underperformed the market. I am pleased, however, that the relative performance of the fund stabilised in the final quarter of the financial year.
Development of Net Asset Value
The table below outlines the change in the Company's Net Asset Value (debt at par) over the year ended 30 September 2016. In aggregate, the NAV has increased by £20.2m, comprised of investment gains of £28.3m and inflows from the issue of new shares of £0.8m being offset by expenses and interest of £4.6m and dividends paid to shareholders of £4.3m.
|
NAV 30.09.2015 |
£149.8m |
|
MAM UKES Portfolio |
+£8.3m |
|
MAM |
+£8.0m |
|
MAM Funds |
+£12.0m |
|
Realisation Portfolio |
Nil |
|
Share Issues |
£0.8m |
|
Admin Costs & Other |
(£1.8m) |
|
Finance Costs |
(£2.8m) |
|
Dividend Paid |
(£4.3m) |
|
NAV 30.09.2016 |
£170.0m |
Allocation of Total Assets as at 30 September 2016
|
|
Value |
|
% of |
|
MAM UK Equity Segregated Portfolio |
61,200 |
|
30.0 |
|
MAM UK Income Fund |
19,752 |
|
9.7 |
|
MAM Global Equity Fund |
18,735 |
|
9.1 |
|
MAM Global Focus Fund |
6,617 |
|
3.2 |
|
MAM US Equity Fund |
7,326 |
|
3.6 |
|
MAM Tortoise Fund |
32,382 |
|
15.9 |
|
MAM |
57,100 |
|
28.0 |
|
Net cash/realisation portfolio* |
805 |
|
0.5 |
|
|
203,917 |
|
100.0 |
* Net Cash and realisation portfolio excludes cash held in the MAM UK Equity Segregated portfolio or MAM funds.
MAM Fund Performance
|
|
12 months to 30 September 2016 |
|
|
Since MI invested |
% benchmark return |
% Relative Performance |
|
MAM UK Equity Segregated Portfolio |
14.4 |
16.8 |
(2.4) |
11.6 |
13.4 |
(1.8) |
|
MAM UK Income Fund |
2.6 |
16.8 |
(14.2) |
19.0 |
17.3 |
1.7 |
|
MAM Global Equity Fund |
28.7 |
30.6 |
(1.9) |
34.2 |
34.1 |
0.1 |
|
MAM Global Focus Fund |
22.6 |
30.6 |
(8.0) |
32.5 |
34.1 |
(1.6) |
|
MAM US Equity Fund |
22.8 |
33.7 |
(10.9) |
46.5 |
50.0 |
(3.5) |
|
MAM Tortoise Fund |
17.5 |
|
|
7.9 |
|
|
Notes:
All fund returns are shown net of fees.
The MAM UK Equity Segregated Portfolio commenced 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. 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
CEO
2 December 2016
FUND ANALYSIS
at 30 September 2016
Geographical Analysis
|
|
% of Total |
|
UK |
64.5 |
|
Europe |
7.7 |
|
North America |
18.2 |
|
Asia Pacific |
2.4 |
|
Emerging Markets |
3.9 |
|
Cash |
3.3 |
|
|
100.0 |
Sector Analysis
|
|
% of Total |
|
Basic Materials |
8.8 |
|
Consumer Goods |
4.9 |
|
Consumer Services |
17.2 |
|
Financials |
20.3 |
|
Healthcare |
6.7 |
|
Industrials |
8.8 |
|
Oil & Gas |
11.9 |
|
Technology |
6.0 |
|
Telecommunications |
10.4 |
|
Utilities |
1.7 |
|
Cash |
3.3 |
|
|
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 55.6% 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 30 September 2016
|
Company |
Fair Value |
|
% of UK |
|
MAM UK Smaller Companies Fund |
5,312 |
|
8.7 |
|
BP PLC |
4,356 |
|
7.1 |
|
Royal Dutch Shell PLC |
4,303 |
|
7.0 |
|
HSBC Holdings PLC |
4,186 |
|
6.8 |
|
Vodafone Group PLC |
2,523 |
|
4.1 |
|
GlaxoSmithKline PLC |
2,401 |
|
3.9 |
|
Tesco PlC |
2,228 |
|
3.6 |
|
Anglo American PLC |
2,115 |
|
3.5 |
|
Barclays Bank PLC |
1,887 |
|
3.1 |
|
Rentokil Initial PLC |
1,721 |
|
2.8 |
|
BHP Billiton PLC |
1,670 |
|
2.7 |
|
BT Holdings PLC |
1,606 |
|
2.6 |
|
WM Morrison Supermarkets PLC |
1,415 |
|
2.3 |
|
Standard Chartered PLC |
1,382 |
|
2.3 |
|
Orange SA |
1,179 |
|
1.9 |
|
Royal Bank of Scotland PLC |
1,157 |
|
1.9 |
|
AstraZeneca PLC |
900 |
|
1.5 |
|
Rio Tinto PLC |
782 |
|
1.3 |
|
Barrick Gold Corporation |
766 |
|
1.3 |
|
Ryanair Holdings PLC |
755 |
|
1.3 |
|
Sub-total |
42,644 |
|
69.7 |
|
Other (Including Cash) |
18,556 |
|
30.3 |
|
Total |
61,200 |
|
100.0 |
BUSINESS REVIEW
Introduction and Strategy
Majedie Investments PLC (the Company) is an investment trust company and an Alternative Investment Fund (AIF), with an investment objective to maximise total shareholder return, whilst increasing dividends by more than the rate of inflation over the long term. In seeking to achieve this objective, the Board has determined an investment policy and related guidelines or limits. The investment objective and policy (as detailed below) were both last approved by shareholders at a General Meeting of the Company on 27 February 2014.
The Company is subject to the Alternative Investment Fund Managers Directive (AIFMD). The AIFMD regulates the Alternative Investment Fund Managers (AIFMs) of AIFs. The Company's status under the AIFMD is that it is a self-managed AIF (meaning that it is an AIFM as well as an AIF), which requires the Company to be authorised and regulated by the Financial Conduct Authority (FCA). The AIFMD also requires the appointment of a depositary and the Company has appointed Bank of New York Mellon UK (BNYM (UK)) to be its depositary. Further details concerning the Company's regulatory environment are set out below.
Since January 2014, the Company has been a member of the AIC (the trade body for closed-ended investment companies).
The purpose of the Strategic Report (which is the Strategic Report for the Group) is to inform the shareholders of the Company and help them assess how the directors have performed their duty to promote the success of the Company in accordance with section 172 of the Companies Act 2006 by:
· analysing development and performance using appropriate Key Performance Indicators (KPIs);
· providing a fair and balanced review of the Company's business;
· outlining the principal risks and uncertainties affecting the Company;
· describing how the Company manages these risks;
· setting out the Company's environmental, social and ethical policy;
· outlining the main trends and factors likely to affect the future development, performance and position of the Company's business; and
· explaining the future business plans of the Company.
Business Model
In pursuing its investment objective, the Company's business model includes one other entity which together form the Group. During the year the Majedie Share Plan was closed, with a replacement share plan scheme being provided by Equiniti Financial Services Limited. As such Majedie Portfolio Management Limited (MPM) has ceased operations and is in the process of being de-authorised by the FCA and then liquidated. As this has not occurred by 30 September 2016, MPM remains in the Group for the year. Further details about MPM can be found in note 15 (discontinued operations) to the Accounts below.
The business model currently used by the Company delegates certain arrangements to other service providers. These delegations are in accordance with the AIFMD (the details of the material delegations can be found below), but the Board, as an AIFM and in accordance with the Company's investment objective and policy, directs, controls and monitors the overall performance, operations and direction of the Company. During the year and as previously advised, Capita Sinclair Henderson Limited was replaced as fund administrator by an in-house solution, utilising existing company resources. This approach is considered appropriate as it provides for more effective and efficient fund administration operations under the Company's business model.
The Company's Employee, Social, Environmental, Ethical and Human Rights policy is contained in the Directors' Report on below.
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 MAM. Investments in unquoted securities, other than those managed by its investment manager or made prior to the date of 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.
· Investment Restrictions
For the avoidance of doubt, as a listed investment company, if and for so long as required by the Listing Rules in relation to closed-ended investment companies, the Company will also continue to comply with the following investment and other restrictions:
· The Company will at all times, invest and manage its assets in a way which is consistent with its object of spreading investment risk and in accordance with its published investment policy;
· The Company will not conduct any trading activity which is significant in the context of the Company (or, if applicable, its Group as a whole); and
· Not more than 10% in aggregate of the value of the gross assets of the Company at the time the investment is made will be invested in other closed-ended investment funds which are listed on the Official List (except to the extent that those funds have published investment policies to invest no more than 15% of their gross assets in other investment companies which are listed on the Official List). However, no more than 15% of the gross assets of the Company at the time the investment is made will be invested in other closed-ended investment funds which are listed on the Official List.
· 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 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%, and any additional indebtedness is not to exceed 20%, of adjusted capital and reserves.
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, IFRS, 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 outlined previously the Company is subject to the AIFMD. The AIFMD requires that all AIFs are managed by a regulated AIFM in accordance with the requirements of the Directive. These requirements are in respect of risk management, conflicts of interest, leverage, liquidity management, delegation, the requirement to appoint a depositary, regulatory capital, valuations, disclosure of information to investors or potential investors, remuneration and marketing.
The financial statements report on 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 IFRS as adopted by the EU, supplemented by the Statement of Recommended Practice for Investment Trust Companies and Venture Capital Trusts (SORP) issued in November 2014. The principal accounting policies of the Company are set out in note 1 to the accounts below.
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 policy aim is to increase dividends by more than inflation over the long term. Further details are under the Dividend Growth section below. The Company has a comparatively high level of revenue reserves for the investment trust sector. At £23.6m, the revenue reserves represent over five times the current annual dividend distribution. The strength of these reserves will assist in underpinning the Company's progressive dividend policy in years when the income from the portfolio is insufficient to cover completely the annual distribution.
Performance Management
The Board uses the following KPIs to help assess progress against the Company's objectives. Further comments on these KPIs are contained in the Chairman's Statement and Chief Executive's Report sections of the Strategic Report respectively.
· NAV and Total Shareholder Return:
The Board believes that asset return is fundamental to delivering value over the long-term and is a key determinant of shareholder return. The Board further believes that, in accordance with the Company's objective, the total return basis (which includes dividends paid out to shareholders) is the best measure of how to measure long-term shareholder return. The Board, at each meeting, receives reports detailing the Company's NAV and shareholder total return performance, asset allocation and related analyses. Details of the NAV and share price total return performance for the year are shown in the Year's Summary above.
· Investment Group performance:
The Board believes that after asset allocation, the performance of each of the investment groups is the key driver of NAV return and hence shareholder return. The Board receives, at each meeting, detailed reports showing the performance of the investment groups which also includes relevant attribution analysis. The Chief Executive's Report provides further detail on each investment group's performance for the year.
· Share price premium/discount:
As a closed-ended listed investment company, the share price of the Company can and does differ from that of the NAV. This can give rise to either a premium or discount and as such is another component of Total Shareholder Return. During the year, and in common with other companies in the sector, the discount widened substantially in the case of the Company (with the NAV with Debt at par), resulting in the Company's share price gain underperforming the gain in the Company's NAV (with Debt at par).
The Board continually monitors the Company's premium or discount, and does have the ability to buy back shares if thought appropriate, although it must be noted that this ability is limited by the majority shareholding held by members of the Barlow family. Additionally the Board has approval (and is seeking to renew such approval for another year) to issue new shares, at a premium to the relevant NAV (with debt at fair value), in order to meet any natural market demand. Details of movements in the Company's share price discount or premium over the year are shown in the Year's Summary above.
· Expenses:
The Board is aware of the impact of costs on returns and is conscious of seeking to minimise these (taking into account the Company's self-managed status). The industry-wide measure for investment trusts is the OCR, which seeks to quantify the ongoing costs of running the Company. This measures the annual normal ongoing costs of an investment trust, excluding performance fees, one-off expenses and investment dealing costs, as a percentage of average equity shareholders' funds. Any investments made into pooled funds are included using the Company's share of estimated ongoing fund running costs. The Chairman's Statement above provides further details on the expenses during the year. Details of the OCR for the year are shown in the Year's Summary above.
· Dividend Growth:
Dividends paid to shareholders are an important component of Total Shareholder Return and this has been included in the Company's investment objective. The Board is aware of the importance of this objective to the Company's shareholders but wishes to be prudent and is of the view that moving to a sustainable and progressive dividend policy, paying dividends out of current year income and not reserves is appropriate.
The Board receives detailed management accounts and forecasts which show the actual and forecast financial outturns for the Company and the Group. For the 2 years to 30 September 2016, which is for the period after the rebasing of the dividend in 2014, average dividend growth has been 8.0% per annum, which is ahead of inflation.
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 25 to the accounts.
i. Investment Risk:
The Company has a range of equity investments, including a substantial investment in an unlisted asset management business, UK and global equities (both on a direct basis (via the MAM UK Equity Segregated Portfolio (UKES)) and via collective investment vehicles (the MAM Funds), and an investment in an absolute return fund, the MAM Tortoise Fund. The major risk for the Company remains investment risk, primarily market risk; however it is recognised that the investment in MAM continues to represent 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 Investment Agreement, the Investment Manager manages the majority of the Company's investment assets. The portfolios of UKES and the MAM Funds are actively managed by MAM against benchmarks and each have specific limits for individual stocks and market sectors that are monitored in real time. It should be noted that UKES and the MAM Funds' returns will differ from the benchmark returns. The MAM Tortoise Fund is an absolute return fund whose returns are not correlated to equity markets.
The investment risks are moderated by strict control of position sizing, low use of leverage and investing in liquid stocks. 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:
ii. Strategy Risk:
An inappropriate investment strategy could result in poor returns for shareholders and the introduction or widening of the discount of the share price to the NAV per share. It is important to note that the investments in the MAM funds do provide the Company with exposure to a range of strategies. The Board regularly reviews strategy in relation to a range of issues including investment policy and objective, the allocation of assets between investment groups, the level and effect of gearing and currency or geographic exposure;
iii. Business Risk:
Inappropriate management or controls in the Company or at MAM could result in financial loss, reputational risk and regulatory censure. The Board has representation on the MAM governing board to monitor business financial performance and operations and receives detailed reports from Company management on financial and non-financial performance;
iv. Compliance Risk:
Failure to comply with regulations could result in the Company losing its listing, losing its FCA authorisation as a self-managed AIF or being subjected to corporation tax on its capital gains.
The Board receives and reviews regular reports from its service providers and Company management on the 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 section 1158 of the Corporation Tax Act 2010; and
v. Operational Risk:
Inadequate financial controls, failure by an outsourced supplier to perform to the required standard, or dependency on a small number of individuals could result in misappropriation of assets, loss of income and debtor receipts and misreporting of NAVs. The Board and Audit Committee regularly review statements on internal controls and procedures and subject the books and records of the Company to an annual external audit. In addition the Company's Depositary provides an additional level of oversight over the Company's operations. The Corporate Governance statement and the Report of the Audit Committee in the Company's Annual Report and Accounts provide further information in respect of internal control systems and risk management procedures.
On behalf of the Board
Andrew J Adcock
Chairman
2 December 2016
DIRECTORS' REPORT
The directors submit their report and the accounts for the year ended 30 September 2016.
Introduction
The Directors' Report includes the Corporate Governance statement, the Report of the Audit Committee, and the Directors' Remuneration Report. A review of the Company's business is contained in the Strategic Report (which includes 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 been a member of the AIC since 20 January 2014.
The Company has received historic written confirmation from HM Revenue & Customs that it meets the eligibility conditions and is an approved investment trust for taxation purposes under section 1158 of the Corporation Tax Act 2010, with effect from 1 October 2012, subject to it continuing to meet the eligibility conditions and on-going requirements. In the opinion of the directors, the Company continues to direct its affairs so as to enable it to continue to qualify as an approved investment trust.
Results and Dividend
The consolidated net revenue return before taxation arising from continuing operations amounted to
£4,956,000 (2015: £4,966,000), and the net loss before taxation arising from discontinued operations was nil (2015: none). The discontinued operations relate to the closure of The Majedie Share Plan which was managed by MPM. The replacement savings plan, which will have similar operating costs borne by the Company, is the Equiniti Investment Account, managed and operated by Equiniti Financial Services Limited. MPM has ceased operating and is currently being de-authorised and will then be placed into liquidation.
The directors recommend a final ordinary dividend of 5.75p per ordinary share, payable on 25 January 2017 to shareholders on the register at the close of business on 13 January 2017. Together with the interim dividend of 3.0p per share paid on 24 June 2016, this makes a total distribution of 8.75p per share in respect of the financial year (2015: 8.0p per share).
Risk Management and Objectives
The Company as an investment trust, and the Group, are subject to various risks in pursuing their objectives. The nature of these risks and the controls and policies in place across the Group that are used to minimise these risks are further detailed in the Strategic Report and in note 25 of the Accounts.
Directors
The directors in office at the date of this report are listed in the Company's Annual Report and Accounts.
Directors' retirement by rotation and appointment is subject to the minimum requirements of the
Company's Articles of Association and the AIC Code of Corporate Governance.
The Company's 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. However, the Board have agreed that it is good practice that all directors be re-appointed annually. As such Messrs. AJ Adcock, PD Gadd and RDC Henderson will retire at the forthcoming Annual General Meeting and, being eligible, will offer themselves for re-appointment.
In accordance with Listing Rule 15.2.13A, Mr JWM Barlow, being a non-executive director of Majedie
Asset Management Limited, the Investment Manager, must submit himself for annual re-appointment.
The Board believes that the performance of the directors continues to be effective, that they demonstrate commitment to their roles and that they have a range of business, financial and asset management skills and experience relevant to the direction and control of the Company.
The Board, having considered the retiring directors' performance within the annual Board performance evaluation, hereby recommends that shareholders vote in favour of the proposed re-appointments.
Qualifying Third Party Indemnity Provisions
There are no qualifying third party indemnity provisions or qualifying pension scheme indemnity provisions which would require disclosure under section 236 of the Companies Act 2006.
Directors' Interests
Beneficial interests in ordinary shares as at:
|
|
30 September |
|
1 October |
|
Mr AJ Adcock |
50,000 |
|
50,000 |
|
Mr JWM Barlow |
692,083 |
|
692,083 |
|
Mr PD Gadd |
52,589 |
|
41,198 |
|
Mr RDC Henderson |
24,700 |
|
4,700 |
Non-beneficial interests in ordinary shares as trustees for various settlements as at:
|
|
30 September |
|
1 October |
|
Mr JWM Barlow |
2,828,251 |
|
1,959,165 |
It has been identified that on 23 January 2015, Mr PD Gadd acquired 750 shares in the Company pursuant to a dividend reinvestment plan. The Company's Annual Report and Accounts for the year ended 30 September 2015 incorrectly stated Mr PD Gadd's beneficial holding as being 40,448 ordinary shares. The figures shown in the table above reflect the correct beneficial holdings at their respective dates.
There have been no changes to any of the above holdings between 30 September 2016 and the date of this report.
Substantial Shareholdings
At 30 November 2016, the Company has been notified of the following substantial holdings in shares carrying voting rights:
|
Mr HS Barlow |
|
15,017,619 |
28.26% |
|
Aviva plc |
|
6,969,798 |
12.99% |
|
Mr MHD Barlow |
|
1,776,241 |
3.34% |
|
Miss AE Barlow |
|
2,048,448 |
3.83% |
|
Mr JWM Barlow |
Non-beneficial |
2,828,251 |
5.32% |
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 November 2016 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, 18 January 2017 at 12 noon. The notice convening the Annual General Meeting is available on the Company's website.
The Board considers that Resolutions 1 to 13 are likely to promote the success of the Company and are in the best interests of the Company and its shareholders as a whole. The Directors unanimously recommend that you vote in favour of the Resolutions as they intend to do in respect of their own beneficial holdings.
Issue and Buyback of Shares
The Board is of the view that an increase of the Company's stock in issue provides benefits to shareholders including a dilution of the Company's gearing and cost of its debentures, a reduction in the Company's administrative expenses on a per share basis and increased liquidity in the Company's shares. As such the Board sought and received approval, at the Annual General Meeting (AGM) on 20 January 2016, to allot new shares for cash, and without first offering them to existing shareholders in proportion to their holdings, up to a maximum of 5,300,000 shares (being approximately 9.99% of the Company's existing share capital at that time). These two existing authorities will expire at the 2017 AGM. The directors undertake not to allot any such new shares unless they are allotted at a price representing a premium to the Company's then prevailing NAV per share, with debt at fair value.
During the year a total of 306,000 shares have been allotted (for total consideration of £806,000 with issue costs of £1,000), 275,000 shares under the prior authority that expired at the 2016 AGM, with an additional 31,000 shares under the current authority, being from the date of the AGM to 30 September 2016, or subsequently to the date of this report (2015: 605,000 shares issued for a total consideration of £1,557,000 with issue costs of £2,000).
The Board continue to be prepared to issue new shares in order to meet natural market demand, subject to the restriction that any new shares will be issued at a premium, and as such shareholder approval is sought at the AGM to renew the authority to issue new shares, without first offering them to existing shareholders in proportion to their holdings, up to a maximum of 5,338,000 shares (being approximately 9.99% of the Company's existing share capital). The renewed authority will expire at the 2018 AGM.
Since 1 October 2015, and up to the date of this report, the Company has made no buybacks for cancellation of its ordinary shares. At the AGM in 2016 the directors were given power to buy back 7,964,636 ordinary shares (being 14.99% of the Company's existing share capital). Since the AGM the directors have not bought any shares under this authority. This authority will also expire at the 2017 AGM.
In order to provide maximum flexibility, the directors consider it appropriate 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 buybacks of its own shares. The maximum number of shares which may be purchased is 14.99% of the issued share capital. Any shares so purchased will be cancelled or held in treasury. The restrictions on such purchases (including minimum and maximum prices) are outlined in the Notice of Meeting. The Authority will be used where the directors consider it to be in the best interests of the shareholders and will expire at the 2018 AGM.
Capital Structure
As part of its corporate governance the Board keeps under review the capital structure of the Company. At 30 September 2016, the Company had a nominal issued share capital of £5,343,900, comprising 53,439,000 ordinary shares of 10p each, carrying one vote each. All of the shares of the Company are listed on the London Stock Exchange, which is a regulated market.
As described previously, the directors consider that new shares should be issued to meet natural market demand, so long as any such shares are issued at a premium to the Company's NAV (as measured with debt at fair value). During the year and following demand for the Company's shares, a total of 306,000 10p ordinary shares were allotted.
Additionally the Board has each year renewed the authority of the Company to make market buybacks of its own shares. However, the Board is only likely to use such authority in special circumstances. In general the directors believe that a discount to net assets will be reduced sustainably over the long term by the creation of value through the development of the Company.
The Company deploys gearing through two long-term debentures: £15m 9.5% debenture stock 2020 and £25m 7.25% debenture stock 2025, which were issued in 1994 and 2000 respectively. In 2004 the Company redeemed £1.5m of the 2020 issue and £4.3m of the 2025 issue as an opportunity arose to redeem at an attractive price.
The limits on the ability to borrow are described in the investment policy above. The Board is responsible for managing the overall gearing of the Company. Details of gearing levels are contained in the Year's Summary above, and in note 25 to the Accounts.
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 or trigger any compensatory payments for directors, following a takeover bid.
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 the authority unless immediate action is required.
Future Developments
The Chairman's Statement and the Chief Executive's report above provide details as concerning relevant future developments of the Company in the forthcoming year.
Employee, Social, Environmental, Ethical and Human Rights policy
The Company, as an investment trust, has limited direct impact upon the environment. In carrying out its activities and relationships with its employees, suppliers and the community, the Company aims to conduct itself responsibly, ethically and fairly.
The Company falls outside the scope of the Modern Slavery Act 2015 as it does not meet the turnover requirements under that act. The Company does operate by outsourcing significant parts of its operations to reputable professional companies, including investment management to MAM. In doing so MAM complies with all the relevant laws and regulations and also takes account of social, environmental, ethical and human rights factors, where appropriate.
Carbon Reporting
In accordance with the Companies Act 2006 (Strategic Report and Directors' Reports) Regulations 2013, the Company is required to report on its greenhouse gas emissions. In accordance with the regulations, the Company has determined that its organisational boundary, to which entities the regulations apply, is consistent with its consolidated accounts.
The Company operates in the financial services sector, and in common with many organisations employs outsourcing such that most of its activities are performed by other outside organisations which do not give rise to any reportable emissions by the Group.
However the Company, as a self-managed investment trust, does undertake activities at its sub-leased premises. In accordance with the provision of the centrally provided building services (including heating, light, cooling etc) to all lessees in the building by the landlord, and by the superior lessee, it is considered that the Company does not have emissions responsibility in respect of these services, which rather rest with the landlord or superior lessee. The Company does however have responsibility for various other emissions in the usage of electricity by its office equipment in the course of undertaking its duties but it is not able to determine their amounts as compared to those provided by the landlord or superior lessee.
Additionally, the Company has many investments in companies around the world; however the Company does not have the ability to control the activities of these investee companies and as such has no responsibility for their emissions. Therefore, the directors believe that the Group has no reportable emissions for the year ended 30 September 2016 (2015: nil).
Donations
The Company made no political or charitable donations during the year (2015: nil) to organisations either within or outside of the EU.
Gender Diversity
The Board are aware of the recommendations made in the Lord Davies Review in 2011 in respect of Board diversity. The Company's policy on diversity is included in the section on the Nomination Committee in the Company's Annual Report and Accounts and this is applied when a new appointment to the Board is required. There has been no change in the Board and at the year end the composition of the Board was that all the directors were male. The composition of the Company's employees is 66.6% male and 33.3% female.
Post Balance Sheet Events
There have been no significant post balance sheet events of the Company or its subsidiary.
Material Contracts
· Majedie Asset Management Limited
The Board has appointed MAM as its investment manager the terms of which are defined under an Investment Agreement dated 13 January 2014. The agreement divides the Company's investment assets into a combination of a segregated portfolio and the MAM in-house funds, with the Board having the ability, subject to certain capacity constraints in respect of the MAM funds, for the determination of the asset allocation of its investment assets, both initially and on an on-going basis.
The Investment Agreement provides that the segregated portfolio is to be managed on the same basis as the MAM UK Equity Fund, with other investments being made into the various MAM Funds, as decided by the Board as part of their asset allocation requirements. Further details on the allocation of the investments managed by MAM are included in the Chief Executive's Report above.
The fees payable under the Investment Agreement are detailed below:
|
Portfolio/Fund* |
Management |
Performance |
|
MAM UK Equity Segregated Portfolio |
0.75% p.a. |
Nil |
|
MAM Tortoise Fund |
1.50% p.a. |
20%† |
|
MAM UK Income Fund |
0.75% p.a. |
Nil |
|
MAM Global Equity Fund |
0-0.75% p.a.** |
Nil |
|
MAM Global Focus Fund |
0-1.00% p.a.** |
Nil |
|
MAM US Equity Fund |
0.75% p.a. |
Nil† |
* The fees are calculated under the terms of the Investment Agreement or the relevant fund prospectus.
ˆ The fees charged to the MAM UK Equity Segregated Portfolio are charged directly to the Company's Statement of Comprehensive Income. All other fund fees are charged within the relevant fund.
† The performance fee entitlement only occurs once the 5% p.a. hurdle has been exceeded and is calculated on a high water mark basis.
** The management fee range reflects the investments made into different share classes.
The Investment Agreement entitles either party to terminate the arrangement with six months' notice after an initial period which ended on 31 December 2015.
· BNY Mellon Trust & Depositary (UK) Limited
The Company has appointed BNYM (UK) Limited (BNYM (UK)) to provide depositary services as required by the AIFMD and certain other associated services under the terms of a depositary agreement dated 19 June 2014. The services provided by BNYM (UK) as Depositary for the Company include:
· general oversight responsibilities over the issue and cancellation of the Company's share capital, the carrying out of net asset value calculations, the application of income, and the ex-post review of investment transactions;
· monitoring of the Company's cash flows and ensuring that all cash is booked in appropriate accounts in the name of the Company or BNYM (UK) acting on behalf of the Company; and
· ensuring that the Bank of New York Mellon SA/NV, London Branch (BNYM) (to whom BNYM (UK) has delegated the safekeeping of all assets held within the Company's investment portfolio, including those classed as financial instruments for the purpose of the AIFMD), in accordance with the terms of a Global Custody Agreement, retains custody of the Company's financial instruments in segregated accounts so that they can be clearly identified as belonging to the Company and maintains records sufficient for verification of the Company's ownership rights in relation to assets other than financial instruments.
No specific conflicts have been identified as arising as a result of the delegation of the provision of custody and safekeeping services by BNYM (UK) to BNYM. The terms of the depositary agreement provide that, where certain assets of the Company are invested in a country whose laws require certain financial instruments to be held in custody by a local entity and no such entity is able to satisfy the requirements under the AIFMD in relation to use of delegates by depositaries, BNYM (UK) may still delegate its functions to such a local entity and be fully discharged of all liability for loss of financial instruments of the Company by such local entity.
The Depositary receives an annual fee for its services based on a sliding scale on the total gross portfolio assets of the Company, payable monthly in arrears. The depositary agreement in place with BNYM (UK) and the related custody agreement in place with BNYM continues unless and until terminated: without cause upon the Company and BNYM (UK) giving not less than 90 days' notice and upon BNYM (UK) giving notice expiring not less than 18 months after the date of the agreement, in each case such notice to be effective only if a new Depositary has been appointed.
· Capita Sinclair Henderson Limited
As advised last year, the Board decided to in-source fund administration activities and therefore the arrangements with Capita Sinclair Henderson were terminated with effect from 30 September 2016. The agreement did provide for fees to be based on a fixed annual amount and to be subject to an annual RPI increase, with fees to be paid monthly in arrears.
· Capita Registrars Limited
Also as previously advised in conjunction with the in-sourcing of its fund administration activities, the Board has agreed to continue with Company Secretarial services from Capita. Such services are provided under the new Company Secretarial Services Agreement dated 25 April 2016. The agreement mandates that Capita Company Secretarial Services Limited will act as Capita's nominated corporate secretary. The agreement also provides for fees to be paid quarterly and to be based on a fixed annual amount and be subject to annual RPI increases with either party to give notice to terminate the agreement with 12 months' notice.
Listing Rule Disclosure
The Company is listed on the London Stock Exchange and is subject to the UKLA listing rules. These require, inter alia, various disclosures, which are included in this report, and now also include the requirement, under Listing Rule 9.8.4R, to disclose, where applicable, certain specific items separately. These, as they apply to the Company, in respect of the year ended 30 September 2016, are:
· that the Company has not capitalised any interest during the year (all interest charged has been included in the Group and Company's respective Statement of Comprehensive Income);
· that no director waived or has agreed to waive any entitlements during the year, nor for any future periods;
· that the Company had no contracts of significance; and
· that no shareholder has agreed to waive its entitlement to dividends in respect of its holdings of Company shares.
AIFMD
The Company is subject to the AIFMD, which requires certain financial and non-financial disclosures in respect of Annual Reports.
These disclosures are met by the Company in its Annual Report. In addition certain specific disclosures are required which are:
· Remuneration
Total remuneration details for the directors (who are considered to be code staff under the Directive) are shown in the Report on Directors' Remuneration. Remuneration details for staff are included in Note 7 to the accounts. There was no variable remuneration paid during the year.
· Leverage
Under the AIFMD, the Company is required to disclose its actual leverage (calculated in accordance with the Directive under the Gross & Commitment methods) and it must also set a limit in respect of leverage it can use. The Company has set a limit of 1.5 times (1 times being defined as no leverage) and as at 30 September 2016 had leverage of 1.18 times under the Gross method and 1.20 times under the Commitment method. Note 25 to the accounts provides further details.
· Investor Pre-investment information
The AIFMD requires that potential investors are provided with certain information. The Company provides this information on its website at www.majedieinvestments.com and there have been no material changes over the year to the date of this report.
Disclosure of Information to Auditors
As far as each of the directors are aware:
· there is no relevant audit information of which the Company's Auditors are unaware; and
· 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 20 January 2016. Ernst & Young LLP have indicated their willingness to continue in office and a resolution will be proposed at the AGM to re-appoint them as Auditors.
Viability
The Directors have assessed the prospects of the Company over the five year period to September
2021. The Directors believe that this period is appropriate as the Company is a long-term investor in equity markets, and it includes the maturity of the Company's 9.50% 2020 debenture stock.
In their assessment of the viability of the Company, the Directors have considered each of the Company's principal risks and uncertainties. The Directors have also considered the Company's income and expenditure projections, the level of borrowings (leverage of 1.18 times (Gross method) and 1.20 times (Commitment method) is well below the 1.5 times limit. In addition the current borrowings of £33.9m are over 6 times covered by the current total assets) plus as the Company's investments primarily comprise readily realisable securities (equal to 72.9% of total assets as at 30 September 2016), these can be sold to meet funding requirements as necessary.
Based on the Company's processes for monitoring expenses, share price discounts or premium, the
allocation in its investment portfolio to an absolute return fund, the Investment Manager's compliance with the investment restrictions and objective, concentration and liquidity risk, the current large margin of safety over the covenants on its debentures and financial controls, the Directors have concluded that there is a reasonable expectation that the Company will be able to continue in operation and meet its liabilities as they fall due over the five year period to September 2021.
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 a period of at least 12 months from the date that the financial statements were approved. 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 Company Secretarial Services Limited
Company Secretary
2 December 2016
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 IFRS 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:
· select suitable accounting policies in accordance with IAS 8: Accounting Policies, Changes in Accounting Estimates and Errors and then apply them consistently;
· present information, including accounting policies, in a manner that provides relevant, reliable, comparable and understandable information;
· provide additional disclosures when compliance with the specific requirements in IFRS 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;
· state that the Group has complied with IFRS, subject to any material departures disclosed and explained in the financial statements;
· make judgements and estimates that are reasonable and prudent; and
· state that the Annual Report, taken as a whole, is fair, balanced and understandable and provides sufficient information to allow shareholders to assess the Group's performance.
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.
Under applicable law and regulations, the Directors are also responsible for preparing a Strategic Report, a Corporate Governance Statement, a Directors' Remuneration Report and a Directors' Report that comply with that law and those regulations.
The Directors of the Company, whose names are in the Company's Report and Accounts, each confirm to the best of their knowledge that:
· the financial statements, which have been prepared in accordance with applicable accounting standards, give a true and fair view of the assets, liabilities, financial position and profit or loss of the Group;
· the Annual Report includes a fair review of the development and performance of the business and the position of the Group, together with a description of the principal risks and uncertainties that it faces; and
· they consider that the Annual Report, taken as a whole, is fair, balanced and understandable and provides the information necessary for shareholders to assess the Company's performance, business model and strategy.
By order of the Board
Andrew J Adcock
Chairman
2 December 2016
REPORT OF THE DEPOSITARY
Report of the Depositary to the shareholders of Majedie Investments PLC
Depositary's responsibilities
The Depositary is responsible for the safekeeping of all custodial assets of the Company, for verifying and maintaining a record of all other assets of the Company and for the collection of income that arises from those assets.
It is the duty of the Depositary to take reasonable care to ensure that the Company is managed in accordance with the Alternative Investment Fund Managers Directive (AIFMD), the FUND Sourcebook and the Company's Instrument of Incorporation, in relation to the calculation of the net asset value per share and the application of income of the Company. The Depositary also has a duty to monitor the Company's compliance with investment restrictions and leverage limits set in its offering documents.
Report of the Depositary to the shareholders of Majedie Investments PLC for the year ended 30 September 2016
Having carried out such procedures as we consider necessary to discharge our responsibilities as Depositary of the Company, it is our opinion, based on the information available to us and the explanations provided, that in all material respects the Company, acting through the AIFM has been managed in accordance with AIFMD, the FUND sourcebook, the Instrument of Incorporation of the Company in relation to the calculation of the net asset value per share, the application of income of the Company; and with investment restrictions and leverage limits set in its offering documents.
For and on behalf of
BNY Mellon Trust & Depositary (UK) Limited
160 Queen Victoria Street
London EC4V 4LA
NON-STATUTORY ACCOUNTS
The financial information set out below does not constitute the Company's statutory accounts for the years ended 30 September 2016 and 2015 but is derived from those accounts. Statutory accounts for 2015 have been delivered to the Registrar of Companies, and those for 2016 will be delivered in due course. The Auditors have reported on those accounts; their report was (i) unqualified, (ii) did not include a reference to any matters to which the Auditors drew attention by way of emphasis without qualifying their report and (iii) did not contain a statement under Section 498 (2) or (3) of the Companies Act 2006. The text of the Auditors' report can be found in the Company's full Annual Report and Accounts at www.majedieinvestments.com.
CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME
for the year ended 30 September 2016
|
|
|
|
2016 |
|
|
|
2015 |
|
|
|
Notes |
Revenue |
Capital |
Total |
|
Revenue |
Capital |
Total |
|
Investments |
|
|
|
|
|
|
|
|
|
Gains on investments at fair value through profit or loss |
13 |
|
21,919 |
21,919 |
|
|
15,854 |
15,854 |
|
Net investment result |
|
|
21,919 |
21,919 |
|
|
15,854 |
15,854 |
|
Income |
|
|
|
|
|
|
|
|
|
Income from investments |
3 |
6,433 |
|
6,433 |
|
6,534 |
2 |
6,536 |
|
Other income |
3 |
47 |
|
47 |
|
38 |
|
38 |
|
Total income |
|
6,480 |
|
6,480 |
|
6,572 |
2 |
6,574 |
|
Expenses |
|
|
|
|
|
|
|
|
|
Management fees |
4 |
(109) |
(325) |
(434) |
|
(123) |
(369) |
(492) |
|
Administrative expenses |
5 |
(712) |
(779) |
(1,491) |
|
(780) |
(844) |
(1,624) |
|
Net return before finance cost and taxation |
|
5,659 |
20,815 |
26,474 |
|
5,669 |
14,643 |
20,312 |
|
Finance costs |
8 |
(703) |
(2,110) |
(2,813) |
|
(703) |
(2,108) |
(2,811) |
|
Net return before taxation |
|
4,956 |
18,705 |
23,661 |
|
4,966 |
12,535 |
17,501 |
|
Taxation |
9 |
(17) |
|
(17) |
|
(32) |
|
(32) |
|
Net return after taxation for the year from continuing operations |
|
4,939 |
18,705 |
23,644 |
|
4,934 |
12,535 |
17,469 |
|
Discontinued operations |
|
|
|
|
|
|
|
|
|
Net return after taxation for the year from discontinued operations |
15 |
|
|
|
|
|
|
|
|
Total comprehensive income for the year |
|
4,939 |
18,705 |
23,644 |
|
4,934 |
12,535 |
17,469 |
|
|
|
|
|
|
|
|
|
|
|
Return per Ordinary Share: |
|
pence |
pence |
pence |
|
pence |
pence |
pence |
|
Basic and diluted for continuing operations |
11 |
9.3 |
35.0 |
44.3 |
|
9.4 |
24.0 |
33.4 |
|
Basic and diluted for discontinued operations |
11 |
|
|
|
|
|
|
|
|
Basic and diluted total |
11 |
9.3 |
35.0 |
44.3 |
|
9.4 |
23.9 |
33.4 |
The total column of this statement is the Consolidated Statement of Comprehensive Income of the Group prepared in accordance with IFRS as adopted by the European Union. The supplementary revenue return and capital return columns are prepared under guidance published by the AIC.
The notes below form part of these accounts.
COMPANY STATEMENT OF COMPREHENSIVE INCOME
for the year ended 30 September 2016
|
|
|
|
2016 |
|
|
|
2015 |
|
|
|
Notes |
Revenue |
Capital |
Total |
|
Revenue |
Capital |
Total |
|
Investments |
|
|
|
|
|
|
|
|
|
Gains on investments at fair value through profit or loss |
13 |
|
21,919 |
21,919 |
|
|
15,853 |
15,853 |
|
Net Investment Result |
|
|
21,919 |
21,919 |
|
|
15,853 |
15,853 |
|
Income |
|
|
|
|
|
|
|
|
|
Income from investments |
3 |
6,433 |
|
6,433 |
|
6,534 |
2 |
6,536 |
|
Other income |
3 |
47 |
|
47 |
|
38 |
|
38 |
|
Total income |
|
6,480 |
|
6,480 |
|
6,572 |
2 |
6,574 |
|
Expenses |
|
|
|
|
|
|
|
|
|
Management fees |
4 |
(109) |
(325) |
(434) |
|
(123) |
(369) |
(492) |
|
Administrative expenses |
5 |
(712) |
(779) |
(1,491) |
|
(779) |
(844) |
(1,623) |
|
Net return before finance costs and taxation |
|
5,659 |
20,815 |
26,474 |
|
5,670 |
14,642 |
20,312 |
|
Finance costs |
8 |
(703) |
(2,110) |
(2,813) |
|
(703) |
(2,108) |
(2,811) |
|
Net return before taxation |
|
4,956 |
18,705 |
23,661 |
|
4,967 |
12,534 |
17,501 |
|
Taxation |
9 |
(17) |
|
(17) |
|
(32) |
|
(32) |
|
Net return after taxation for the year |
|
4,939 |
18,705 |
23,644 |
|
4,935 |
12,534 |
17,469 |
|
|
|
|
|
|
|
|
|
|
|
Return per Ordinary Share: |
|
pence |
pence |
pence |
|
pence |
pence |
pence |
|
Basic and diluted |
11 |
9.3 |
35.0 |
44.3 |
|
9.4 |
24.0 |
33.4 |
The total column of this statement is the Statement of Comprehensive Income of the Company prepared under IFRS as adopted by the European Union. The supplementary revenue return and capital return columns are prepared under guidance published by the AIC.
The notes below form part of these accounts.
CONSOLIDATED STATEMENT OF CHANGES IN EQUITY
for the year ended 30 September 2016
|
|
Notes |
Share |
|
Share |
|
Capital |
|
Share |
|
Capital |
|
Revenue |
|
Own shares |
|
Total |
|
Year ended 30 September 2016 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
As at 1 October 2015 |
|
5,313 |
|
2,280 |
|
56 |
|
|
|
122,943 |
|
19,215 |
|
|
|
149,807 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net return for the year from continuing operations |
|
|
|
|
|
|
|
|
|
18,705 |
|
4,939 |
|
|
|
23,644 |
|
Net return for the year from discontinued operations |
15 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Share issue |
19 |
31 |
|
775 |
|
|
|
|
|
|
|
|
|
|
|
806 |
|
Share issue expenses |
|
|
|
(1) |
|
|
|
|
|
|
|
|
|
|
|
(1) |
|
Dividends declared and paid in year |
10 |
|
|
|
|
|
|
|
|
|
|
(4,270) |
|
|
|
(4,270) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
As at 30 September 2016 |
|
5,344 |
|
3,054 |
|
56 |
|
|
|
141,648 |
|
19,884 |
|
|
|
169,986 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Year ended 30 September 2015 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
As at 1 October 2014 |
|
5,253 |
|
785 |
|
56 |
|
(104) |
|
110,910 |
|
18,200 |
|
(1,039) |
|
134,061 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net return for the year from continuing operations |
|
|
|
|
|
|
|
|
|
12,535 |
|
4,934 |
|
|
|
17,469 |
|
Share options expense |
|
|
|
|
|
|
|
3 |
|
(8) |
|
|
|
|
|
(5) |
|
Sale of own shares by EBT |
|
|
|
|
|
|
|
|
|
(147) |
|
|
|
793 |
|
646 |
|
Share options exercised |
|
|
|
|
|
|
|
(246) |
|
|
|
|
|
246 |
|
|
|
Transfer between reserves |
|
|
|
|
|
|
|
347 |
|
(347) |
|
|
|
|
|
|
|
Share Issue |
19 |
60 |
|
1,497 |
|
|
|
|
|
|
|
|
|
|
|
1,557 |
|
Share issue expenses |
|
|
|
(2) |
|
|
|
|
|
|
|
|
|
|
|
(2) |
|
Dividends declared and paid in year |
10 |
|
|
|
|
|
|
|
|
|
|
(3,919) |
|
|
|
(3,919) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
As at 30 September 2015 |
|
5,313 |
|
2,280 |
|
56 |
|
|
|
122,943 |
|
19,215 |
|
|
|
149,807 |
The notes below form part of these accounts.
COMPANY STATEMENT OF CHANGES IN EQUITY
For the year ended 30 September 2016
|
|
Notes |
Share |
|
Share |
|
Capital |
|
Share |
|
Capital |
|
Revenue |
|
Own shares |
|
Total |
|
Year ended 30 September 2016 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
As at 1 October 2015 |
|
5,313 |
|
2,280 |
|
56 |
|
|
|
119,244 |
|
22,914 |
|
|
|
149,807 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net return for the year |
|
|
|
|
|
|
|
|
|
18,705 |
|
4,939 |
|
|
|
23,644 |
|
New shares issued |
19 |
31 |
|
775 |
|
|
|
|
|
|
|
|
|
|
|
806 |
|
Share issue expenses |
|
|
|
(1) |
|
|
|
|
|
|
|
|
|
|
|
(1) |
|
Dividends declared and paid in year |
10 |
|
|
|
|
|
|
|
|
|
|
(4,270) |
|
|
|
(4,270) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
As at 30 September 2016 |
|
5,344 |
|
3,054 |
|
56 |
|
|
|
137,949 |
|
23,583 |
|
|
|
169,986 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Year ending 30 September 2015 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
As at 1 October 2014 |
|
5,253 |
|
785 |
|
56 |
|
(104) |
|
107,212 |
|
21,898 |
|
(1,039) |
|
134,061 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net return for the year |
|
|
|
|
|
|
|
|
|
12,534 |
|
4,935 |
|
|
|
17,469 |
|
Share options expense |
|
|
|
|
|
|
|
3 |
|
(8) |
|
|
|
|
|
(5) |
|
Sale of own shares by EBT |
|
|
|
|
|
|
|
|
|
(147) |
|
|
|
793 |
|
646 |
|
Transfer between reserves |
|
|
|
|
|
|
|
347 |
|
(347) |
|
|
|
|
|
|
|
Share Options exercised |
|
|
|
|
|
|
|
(246) |
|
|
|
|
|
246 |
|
|
|
New Shares issued |
19 |
60 |
|
1,497 |
|
|
|
|
|
|
|
|
|
|
|
1,557 |
|
Share issue expenses |
|
|
|
(2) |
|
|
|
|
|
|
|
|
|
|
|
(2) |
|
Dividends declared and paid in year |
10 |
|
|
|
|
|
|
|
|
|
|
(3,919) |
|
|
|
(3,919) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
As at 30 September 2015 |
|
5,313 |
|
2,280 |
|
56 |
|
|
|
119,244 |
|
22,914 |
|
|
|
149,807 |
The notes below form part of these accounts.
CONSOLIDATED BALANCE SHEET
as at 30 September 2016
|
|
Notes |
2016 |
|
2015 |
|
Non-current assets |
|
|
|
|
|
Property and equipment |
12 |
52 |
|
64 |
|
Investments held at fair value through profit or loss |
13 |
201,359 |
|
181,644 |
|
|
|
201,411 |
|
181,708 |
|
Current assets |
|
|
|
|
|
Trade and other receivables |
16 |
356 |
|
799 |
|
Cash and cash equivalents |
17 |
3,467 |
|
2,537 |
|
|
|
3,823 |
|
3,336 |
|
Total assets |
|
205,234 |
|
185,044 |
|
|
|
|
|
|
|
Current liabilities |
|
|
|
|
|
Trade and other payables |
18 |
(1,317) |
|
(1,336) |
|
|
|
|
|
|
|
Total assets less current liabilities |
|
203,917 |
|
183,708 |
|
|
|
|
|
|
|
Non-current liabilities |
|
|
|
|
|
Debentures |
18 |
(33,931) |
|
(33,901) |
|
|
|
|
|
|
|
Total liabilities |
|
(35,248) |
|
(35,237) |
|
|
|
|
|
|
|
Net assets |
|
169,986 |
|
149,807 |
|
|
|
|
|
|
|
Represented by: |
|
|
|
|
|
Ordinary share capital |
19 |
5,344 |
|
5,313 |
|
Share premium account |
20 |
3,054 |
|
2,280 |
|
Capital redemption reserve |
|
56 |
|
56 |
|
Capital reserve |
|
141,648 |
|
122,943 |
|
Revenue reserve |
|
19,884 |
|
19,215 |
|
|
|
|
|
|
|
Equity Shareholders' Funds |
|
169,986 |
|
149,807 |
|
|
|
|
|
|
|
Net asset value per share |
|
pence |
|
pence |
|
Basic |
22 |
318.1 |
|
281.9 |
Approved by the Board of Majedie Investments PLC (Company no. 109305) and authorised for issue on 2 December 2016.
Andrew J Adcock
Chairman
The notes below form part of these accounts.
COMPANY BALANCE SHEET
as at 30 September 2016
|
|
Notes |
2016 |
|
2015 |
|
Non-current assets |
|
|
|
|
|
Property and equipment |
12 |
52 |
|
64 |
|
Investments held at fair value through profit or loss |
13 |
201,359 |
|
181,644 |
|
Investment in subsidiaries |
13 |
162 |
|
162 |
|
|
|
201,573 |
|
181,970 |
|
Current assets |
|
|
|
|
|
Trade and other receivables |
16 |
356 |
|
894 |
|
Cash and cash equivalents |
17 |
3,467 |
|
2,280 |
|
|
|
3,823 |
|
3,174 |
|
Total assets |
|
205,396 |
|
185,044 |
|
|
|
|
|
|
|
Current liabilities |
|
|
|
|
|
Trade and other payables |
18 |
(1,479) |
|
(1,336) |
|
|
|
|
|
|
|
Total assets less current liabilities |
|
203,917 |
|
183,708 |
|
|
|
|
|
|
|
Non-current liabilities |
|
|
|
|
|
Debentures |
18 |
(33,931) |
|
(33,901) |
|
|
|
|
|
|
|
Total liabilities |
|
(35,410) |
|
(35,237) |
|
|
|
|
|
|
|
Net assets |
|
169,986 |
|
149,807 |
|
|
|
|
|
|
|
Represented by: |
|
|
|
|
|
Ordinary share capital |
19 |
5,344 |
|
5,313 |
|
Share premium account |
20 |
3,054 |
|
2,280 |
|
Capital redemption reserve |
|
56 |
|
56 |
|
Capital reserve |
|
137,949 |
|
119,224 |
|
Revenue reserve |
|
23,583 |
|
22,914 |
|
|
|
|
|
|
|
Equity Shareholders' Funds |
|
169,986 |
|
149,807 |
|
|
|
|
|
|
Approved by the Board of Majedie Investments PLC (Company no. 109305) and authorised for issue on 2 December 2016.
Andrew J Adcock
Chairman
The notes below form part of these accounts.
CONSOLIDATED CASH FLOW STATEMENT
for the year ended 30 September 2016
|
|
Notes |
2016 |
|
2015 |
|
Net cash flow from operating activities |
|
|
|
|
|
Consolidated net return before taxation from continuing operations* |
|
23,661 |
|
17,501 |
|
Consolidated net return before taxation from discontinued operations |
|
|
|
|
|
Adjustments for: |
|
|
|
|
|
Gains on investments relating to continuing operations |
13 |
(21,919) |
|
(15,854) |
|
Accumulation dividends |
|
(329) |
|
(183) |
|
Share based remuneration |
|
|
|
3 |
|
Depreciation |
|
78 |
|
17 |
|
Unrealised foreign exchange gains on dividend tax recoverables |
|
(10) |
|
|
|
Purchases of investments |
|
(13,378) |
|
(44,053) |
|
Sales of investments |
|
15,838 |
|
43,806 |
|
|
|
3,941 |
|
1,237 |
|
Finance costs |
|
2,813 |
|
2,811 |
|
|
|
|
|
|
|
Operating cashflows before movements in working capital |
|
6,754 |
|
4,048 |
|
Decrease in trade and other payables |
|
(11) |
|
(108) |
|
Decrease in trade and other receivables |
|
146 |
|
20 |
|
|
|
|
|
|
|
Net cash outflow from operating activities before tax |
|
6,889 |
|
3,960 |
|
Tax recovered |
|
2 |
|
11 |
|
Tax on unfranked income |
|
(34) |
|
(57) |
|
|
|
|
|
|
|
Net cash inflow from operating activities |
|
6,857 |
|
3,914 |
|
|
|
|
|
|
|
Attributable to: |
|
|
|
|
|
Net cash inflow from operating activities from continuing operations |
|
6,857 |
|
3,914 |
|
Net cash outflow from operating activities from discontinued operations |
|
|
|
|
|
|
|
|
|
|
|
Investing activities |
|
|
|
|
|
Purchase of tangible assets |
|
(66) |
|
(1) |
|
|
|
|
|
|
|
Net cash outflow from investing activities |
|
(66) |
|
(1) |
|
|
|
|
|
|
|
Financing activities |
|
|
|
|
|
Interest paid |
|
(2,783) |
|
(2,783) |
|
Dividends paid |
|
(4,270) |
|
(3,919) |
|
Net proceeds from share issues |
|
1,192 |
|
1,168 |
|
Proceeds from sale of own shares by EBT |
|
|
|
646 |
|
|
|
|
|
|
|
Net cash outflow from financing activities |
|
(5,861) |
|
(4,888) |
|
|
|
|
|
|
|
Increase/(Decrease) in cash and cash equivalents for year |
22 |
930 |
|
(975) |
|
Cash and cash equivalents at start of year |
|
2,537 |
|
3,512 |
|
|
|
|
|
|
|
Cash and cash equivalents at end of year |
|
3,467 |
|
2,537 |
* Includes dividends received in the year of £6,132,000 (2015: £6,583,000) and interest received of £1,000 (2015: £nil).
The notes below form part of these accounts.
COMPANY CASH FLOW STATEMENT
for the year ended 30 September 2016
|
|
Notes |
2016 |
|
2015 |
|
Net cash flow from operating activities |
|
|
|
|
|
Company net return before taxation* |
|
23,661 |
|
17,501 |
|
Adjustments for: |
|
|
|
|
|
Gains on investments |
13 |
(21,919) |
|
(15,853) |
|
Accumulation dividends |
|
(329) |
|
(183) |
|
Share based remuneration |
|
|
|
3 |
|
Depreciation |
|
78 |
|
17 |
|
Unrealised foreign exchange gains on dividend tax recoverables |
|
(10) |
|
|
|
Purchases of investments |
|
(13,378) |
|
(44,053) |
|
Sales of investments |
|
15,838 |
|
43,806 |
|
|
|
|
|
|
|
|
|
3,941 |
|
1,238 |
|
|
|
|
|
|
|
Finance costs |
|
2,813 |
|
2,811 |
|
|
|
|
|
|
|
Operating cashflows before movements in working capital |
|
6,754 |
|
4,049 |
|
|
|
|
|
|
|
Increase/(decrease) in trade and other payables |
|
151 |
|
(108) |
|
Decrease in trade and other receivables |
|
241 |
|
19 |
|
|
|
|
|
|
|
Net cash inflow from operating activities before tax |
|
7,146 |
|
3,960 |
|
|
|
|
|
|
|
Tax recovered |
|
2 |
|
11 |
|
Tax on unfranked income |
|
(34) |
|
(57) |
|
|
|
|
|
|
|
Net cash inflow from operating activities |
|
7,114 |
|
3,914 |
|
|
|
|
|
|
|
Investing activities |
|
|
|
|
|
Proceeds from liquidation of subsidiaries |
|
|
|
9 |
|
Purchase of tangible assets |
|
(66) |
|
(1) |
|
|
|
|
|
|
|
Net cash (outflow)/inflow from investing activities |
|
(66) |
|
8 |
|
|
|
|
|
|
|
Financing activities |
|
|
|
|
|
Interest paid |
|
(2,783) |
|
(2,783) |
|
Dividends paid |
|
(4,270) |
|
(3,919) |
|
Net proceeds from share issues |
|
1,192 |
|
1,168 |
|
Proceeds from sale of own shares by EBT |
|
|
|
646 |
|
|
|
|
|
|
|
Net cash outflow from financing activities |
|
(5,861) |
|
(4,888) |
|
|
|
|
|
|
|
Increase/(decrease) in cash and cash equivalents for the year |
22 |
1,187 |
|
(966) |
|
Cash and cash equivalents at start of year |
|
2,280 |
|
3,246 |
|
|
|
|
|
|
|
Cash and cash equivalents at end of year |
|
3,467 |
|
2,280 |
* Includes dividends received in the year of £6,132,000 (2015: £6,583,000) and interest received of £1,000 (2015: £nil).
The notes below form part of these accounts.
NOTES TO THE ACCOUNTS
General Information
Majedie Investments PLC is a company incorporated and domiciled 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 below. The nature of the Group's operations and its principal activities are set out in the Business Review section of the Strategic Report above.
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.
Assessment as investment entity
Entities that meet the definition of an investment entity within IFRS 10 are required to measure their subsidiaries at fair value through profit or loss rather than consolidate them, unless their main purpose and activities are providing services that relate to the investment entity's investment activities. The criteria which define an investment entity are, as follows:
· obtains funds from one or more investors for the purpose of providing those investors with investment services;
· commits to its investors that its business purpose is to invest funds solely for returns from capital appreciation, investment income or both; and
· measures and evaluates the performance of substantially all of its investments on a fair value basis.
The Board has agreed with the recommendation of the Audit Committee that the Company meets the definition of an investment entity. This conclusion will be reassessed on an annual basis, if any of these criteria or characteristics change.
The Company's subsidiary MPM provides investment management services and is not itself an investment entity and as such is consolidated into the Group accounts.
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 below. The inputs into the valuation methodologies adopted include historical data such as earnings or cash flow as well as more subjective data such as earnings forecasts, discount rates and earnings multiples. As a result of this, the determination of fair value requires management judgement. At the year end, unquoted investments (including MAM) represent 33.7% (2015: 35.0%) of consolidated shareholders' funds.
1 SIGNIFICANT ACCOUNTING POLICIES
The principal accounting policies adopted are set out as follows:
The accounts above comprise the audited results of the Company and its subsidiary for the year ended 30 September 2016, 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 in operational existence for a period of at least 12 months from the date that the financial statements were approved. Accordingly, the financial statements have been prepared on a going concern basis.
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. 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.
Basis of Accounting
The accounts of the Group and the Company have been prepared in accordance with 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 SORP regarding the financial statements of investment trust companies and venture capital trusts issued by the AIC in November 2014 is not inconsistent with the requirements of IFRS, the directors have sought to prepare the financial statements on a basis compliant with the recommendations of the SORP.
Discontinued operations
Following a review of the provision of savings plans to the Company, it was decided that the Majedie Share Plan, as managed by MPM, would close. On 4 June 2016, the Majedie Share Plan was closed, MPM ceased operations and is now in the process of being de-authorised and liquidated. Accordingly, these have been classified as discontinued operations of the Group.
Discontinued operations are excluded from the results of continuing operations and are presented as a single amount as profit or loss after tax from discontinued operations in the Consolidated Statement of Comprehensive Income.
Additional disclosures are provided in note 15. All other notes to the financial statements include amounts for continuing operations, unless otherwise mentioned.
Basis of Consolidation
The Company is an investment entity as defined by IFRS 10 and, as such, does not consolidate the entities it controls unless they provide investment related services to the Company. Instead, interests in such entities are classified as fair value through profit or loss, and measured at fair value.
The Consolidated Accounts incorporate the accounts of the Company and entities controlled by the Company which provide investment related services made up to 30 September each year. An investor controls an investee when it is exposed, or has rights, to variable returns from its involvement with the investee and has the ability to affect those returns through its power over the investee.
The results of subsidiaries acquired or disposed of 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.
Where necessary, adjustments are made to the financial statements of the subsidiary 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.
Standards Issued But Not Yet Effective
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 and/or adopted:
|
International Accounting Standards and Interpretations (IAS/IFRS/IFRICs) |
Effective date |
|
|
IFRS 9 |
Financial Instruments: Classification & Measurement |
1 January 2018 |
|
IFRS 15 |
Revenue from Contracts with Customers |
1 January 2018 |
|
IFRS 16 |
Leases |
1 January 2019 |
The Directors do not anticipate that the adoption of the above Standards and Interpretations would have a material impact on the financial statements in the period of initial application.
Management anticipates that all of the relevant pronouncements will be adopted in the relevant accounting period in which the standard is effective.
Changes in accounting policies and disclosures
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.
Income
Dividend income from investments is taken to the revenue account on an ex-dividend basis. UK dividends are included net of tax credits. Overseas dividends are included gross of any withholding tax. Where the Company has elected to receive scrip dividends in the form of additional shares rather than in cash, the amount of the cash dividend foregone is recognised as income. Any excess in the value of the shares received over the amount of the cash dividend is recognised in the capital column.
Special dividends are taken to the revenue or capital account depending on their nature.
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.
Expenses
All administrative 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:
· 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.
· 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 accruals basis.
Finance Costs
75% of finance costs arising from the debenture stocks are allocated to capital; 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 accruals basis using the effective interest method.
Share Based Payments
The Group has issued 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.
Property and Equipment
Property and equipment are stated at cost less accumulated depreciation and any recognised impairment loss. Leasehold improvements are depreciated 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, as financial assets or financial liabilities at fair value through profit or loss.
When a purchase or sale is made under a contract, the terms of which require delivery within the timeframe of the relevant market, the investments concerned are recognised or derecognised on the trade date.
All investments are classified as fair value through profit or loss as defined by IAS 39.
All investments are designated upon initial recognition as held at fair value through profit or loss, and are measured at subsequent reporting dates at fair value, which is either the bid price or the last traded price 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 (IPEV) Guidelines. 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.
The fair value of an investment at the beginning of the year is used when an investment is transferred between hierarchy levels.
Changes in the fair value of investments and gains on the sale of investments are recognised as they arise in the Statement of Comprehensive Income.
Investment in Subsidiary
In its separate financial statements the Company recognises its investment in its subsidiary 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.
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 equivalents are short term, highly liquid investments that are readily convertible to known amounts of cash and that are subject to an insignificant risk of changes in value.
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 rate. The effective interest rate is the rate that exactly discounts estimated future payments over the expected life of the financial liabilities to the net carrying amount on initial recognition.
Trade Payables
Trade payables are not interest bearing and are stated at carrying value which equates to their fair value.
Capital Reserve
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. Additionally and as detailed in these notes, finance costs and expenses are allocated to the Capital Reserve.
Share Premium Account
Share premium account represents the excess over nominal value of consideration received for equity shares, net of expenses of the share issue.
Revenue Reserve
The net revenue return for the year is included in the Revenue Reserve along with dividends to shareholders (when they are paid or approved in general meetings).
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.
2 BUSINESS SEGMENTS
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 reviewed 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.
For management purposes the Company and Group are organised into one principal activity, being investing activities, as detailed below:
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 and exposure to different currencies is disclosed in note 25 below.
3 INCOME
|
|
Group |
|
|
Group |
|
|
Company |
|
|
Company |
|
|
Income from investments |
|
|
|
|
|
|
|
|
|
|
|
|
Franked dividend income* |
5,944 |
|
|
6,086 |
|
|
5,944 |
|
|
6,086 |
|
|
Accumulation dividend income |
328 |
|
|
183 |
|
|
328 |
|
|
183 |
|
|
Overseas dividends |
161 |
|
|
267 |
|
|
161 |
|
|
267 |
|
|
|
|
6,433 |
|
|
6,536 |
|
|
6,433 |
|
|
6,536 |
|
Other income |
|
|
|
|
|
|
|
|
|
|
|
|
Deposit interest |
1 |
|
|
1 |
|
|
1 |
|
|
1 |
|
|
Sundry income |
46 |
|
|
37 |
|
|
46 |
|
|
37 |
|
|
|
|
47 |
|
|
38 |
|
|
47 |
|
|
38 |
|
Total income |
|
6,480 |
|
|
6,574 |
|
|
6,480 |
|
|
6,574 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total income comprises: |
|
|
|
|
|
|
|
|
|
|
|
|
Dividends |
6,433 |
|
|
6,536 |
|
|
6,433 |
|
|
6,536 |
|
|
Interest |
1 |
|
|
1 |
|
|
1 |
|
|
1 |
|
|
Other income |
46 |
|
|
37 |
|
|
46 |
|
|
37 |
|
|
|
|
6,480 |
|
|
6,574 |
|
|
6,480 |
|
|
6,574 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Income from investments |
|
|
|
|
|
|
|
|
|
|
|
|
Listed UK |
3,016 |
|
|
2,996 |
|
|
3,016 |
|
|
2,996 |
|
|
Listed overseas** |
184 |
|
|
267 |
|
|
184 |
|
|
267 |
|
|
Unlisted |
3,233 |
|
|
3,273 |
|
|
3,233 |
|
|
3,273 |
|
|
|
|
6,433 |
|
|
6,536 |
|
|
6,433 |
|
|
6,536 |
* Includes MAM Ordinary dividend income of £3,233,000 (2015: £3,273,000)
** Includes accumulation income of £23,000 (2015: nil)
4 MANAGEMENT FEES
|
|
Group and Company |
|
Group and Company |
||||
|
|
Revenue |
Capital |
Total |
|
Revenue |
Capital |
Total |
|
Investment management |
109 |
325 |
434 |
|
123 |
369 |
492 |
|
|
109 |
325 |
434 |
|
123 |
369 |
492 |
The investment management fees are payable to MAM in accordance with an Investment Agreement. Further details on the terms of this Investment Agreement are given in the Directors' Report above. The fees charged and shown are only in respect on the investment in the MAM UKES Segregated Portfolio. Fees in respect of the investments made in the other MAM funds are charged directly in the relevant fund and included in the relevant fund's published net asset value price and hence form part of that investment's valuation in the Company's accounts. These costs are however included in the Company's OCR calculation above on a best estimates basis. At 30 September 2016, an amount of £115,000 was outstanding for payment of investment management fees due to MAM on the UKES Segregated portfolio (2015: £106,000).
5 ADMINISTRATIVE EXPENSES
|
|
Group |
|
|
Group |
|
|
Company |
|
|
Company |
|
|
Staff costs - note 7 |
414 |
|
|
485 |
|
|
414 |
|
|
485 |
|
|
Other staff costs and directors' fees |
178 |
|
|
172 |
|
|
178 |
|
|
172 |
|
|
Advisers' costs |
352 |
|
|
348 |
|
|
352 |
|
|
348 |
|
|
Information costs |
93 |
|
|
83 |
|
|
93 |
|
|
83 |
|
|
Establishment costs |
56 |
|
|
164 |
|
|
56 |
|
|
164 |
|
|
Operating lease rentals - premises |
79 |
|
|
133 |
|
|
79 |
|
|
133 |
|
|
Depreciation on tangible assets |
78 |
|
|
17 |
|
|
78 |
|
|
17 |
|
|
Auditor's remuneration (see below) |
34 |
|
|
40 |
|
|
34 |
|
|
40 |
|
|
Relocation costs |
72 |
|
|
|
|
|
72 |
|
|
|
|
|
Other expenses |
135 |
|
|
182 |
|
|
135 |
|
|
182 |
|
|
|
|
1,491 |
|
|
1,624 |
|
|
1,491 |
|
|
1,623 |
A charge of £779,000 (2015: £844,000) to capital has been made in the Group and the Company has been made to recognise the accounting policy of 75% of direct investment administration expenses to capital.
Administration expense disclosures are in respect of continuing operations only. Further details on discontinued operations are in note 15 below.
Total fees charged by the Auditor for the year, all of which were charged to revenue, comprised:
|
|
Group |
|
|
Group |
|
|
Company |
|
|
Company |
|
|
Audit services - statutory audit |
33 |
|
|
38 |
|
|
33 |
|
|
38 |
|
|
Other assurance services |
1 |
|
|
2 |
|
|
1 |
|
|
2 |
|
|
|
|
34 |
|
|
40 |
|
|
34 |
|
|
40 |
Other assurance related services relate to a review of the Company's debenture covenant in 2016 and in 2015.
6 DIRECTORS' EMOLUMENTS
|
|
Group and Company |
|
|
Group and Company |
|
|
Fees |
143 |
|
|
143 |
|
|
Salary |
173 |
|
|
169 |
|
|
Other benefits |
8 |
|
|
7 |
|
|
Bonuses/Partnership profit shares |
|
|
|
40 |
|
|
|
|
324 |
|
|
359 |
The Report on Directors' Remuneration in the Company's Annual Report and Accounts, explains the Company's policy on remuneration for directors for the year. It also provides further details of directors' remuneration.
7 STAFF COSTS INCLUDING CEO
|
|
Group |
|
|
Group |
|
|
Company |
|
|
Company |
|
|
Salaries and other payments |
341 |
|
|
376 |
|
|
341 |
|
|
376 |
|
|
Social security costs |
45 |
|
|
77 |
|
|
45 |
|
|
77 |
|
|
Pension contributions |
28 |
|
|
29 |
|
|
28 |
|
|
29 |
|
|
Share based remuneration |
|
|
|
3 |
|
|
|
|
|
3 |
|
|
|
|
414 |
|
|
485 |
|
|
414 |
|
|
485 |
|
|
Group |
|
|
Group |
|
|
Average number of employees: |
|
|
|
|
|
|
Management and office staff |
|
3 |
|
|
3 |
8 FINANCE COSTS
|
|
Group and Company |
|
Group and Company |
||||
|
|
Revenue |
Capital |
Total |
|
Revenue |
Capital |
Total |
|
Interest on 9.5% 2020 debenture stock |
321 |
961 |
1,282 |
|
321 |
961 |
1,282 |
|
Interest on 7.25% 2025 debenture stock |
375 |
1,126 |
1,501 |
|
375 |
1,126 |
1,501 |
|
Amortisation of issue expenses on the debenture stocks |
7 |
23 |
30 |
|
7 |
21 |
28 |
|
|
703 |
2,110 |
2,813 |
|
703 |
2,108 |
2,811 |
Further details of the debenture stocks in issue are provided in note 18.
9 TAXATION
Analysis of tax charge
|
|
Group |
|
|
Group |
|
|
Company |
|
|
Company |
|
|
Tax on overseas dividends |
17 |
|
|
32 |
|
|
17 |
|
|
32 |
|
Reconciliation of tax charge:
The current taxation rate for the year is lower (2015: lower) than the standard rate of corporation tax in the UK of 20.5% (2015:20.5%). The differences are explained below:
|
|
Group |
|
|
Group |
|
|
Company |
|
|
Company |
|
|
Net return before taxation for the year from continuing operations |
23,661 |
|
|
17,501 |
|
|
23,661 |
|
|
17,501 |
|
|
Net return before taxation for the year from discontinued operations |
|
|
|
|
|
|
|
|
|
|
|
|
Net return before taxation |
|
23,661 |
|
|
17,501 |
|
|
23,661 |
|
|
17,501 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Taxation at UK Corporation Tax rate of 20.0% (2015: 20.5%) |
4,732 |
|
|
3,588 |
|
|
4,732 |
|
|
3,588 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Effects of: |
|
|
|
|
|
|
|
|
|
|
|
|
- UK dividends which are not taxable |
(1,189) |
|
|
(1,293) |
|
|
(1,189) |
|
|
(1,293) |
|
|
- foreign dividends which are not taxable |
(37) |
|
|
(55) |
|
|
(37) |
|
|
(55) |
|
|
- gains on investments which are not taxable |
(4,384) |
|
|
(3,250) |
|
|
(4,384) |
|
|
(3,250) |
|
|
- expenses which are not deductible for tax purposes |
23 |
|
|
12 |
|
|
23 |
|
|
12 |
|
|
- excess expenses for the current year |
855 |
|
|
998 |
|
|
855 |
|
|
998 |
|
|
- overseas taxation which is not recoverable |
17 |
|
|
32 |
|
|
17 |
|
|
32 |
|
|
Actual current tax charge |
|
17 |
|
|
32 |
|
|
17 |
|
|
32 |
Group
After claiming relief against accrued income taxable on receipt, the Group has unrelieved excess expenses of £78,499,000 (2015: £73,914,000). 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 £78,471,000 (2015: £73,886,000). 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.
The allocation of expenses to capital does not result in any tax effect. Due to the Company's status as an approved investment trust, and the intention to continue meeting the required conditions in the foreseeable future, the Company has not provided for deferred tax on any capital gains and losses arising on the revaluation or disposal of its investments.
10 DIVIDENDS
The following table summarises the amounts recognised as distributions to equity shareholders in the period:
|
|
Group and |
|
|
Group and |
|
|
2014 Final dividend of 4.50p paid on 21 January 2015 |
|
|
|
2,350 |
|
|
2015 Interim dividend of 3.00p paid on 27 June 2015 |
|
|
|
1,569 |
|
|
2015 Final dividend of 5.00p paid on 27 January 2016 |
2,667 |
|
|
|
|
|
2016 Interim dividend of 3.00p paid on 24 June 2016 |
1,603 |
|
|
|
|
|
|
|
4,270 |
|
|
3,919 |
|
|
|
|
|
|
|
|
|
2016 £000 |
|
|
2015 |
|
|
Proposed final dividend for the year ended 30 September 2016 of 5.75p (2015: final dividend of 5.00p) per ordinary share |
3,073 |
|
|
2,657 |
|
|
|
|
3,073 |
|
|
2,657 |
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.
|
|
2016 |
|
|
2015 |
|
|
Interim dividend for the year ended 30 September 2016 of 3.00p (2015: 3.00p) per ordinary share |
1,603 |
|
|
1,569 |
|
|
Final dividend for the year ended 30 September 2016 of 5.75p (2015: 5.00p) per ordinary share |
3,073 |
|
|
2,657 |
|
|
|
|
4,676 |
|
|
4,226 |
Distributable reserves of the Company comprise the Capital and Revenue Reserves.
Dividends for the year (and for 2015) have been solely made from the Revenue Reserve.
11 RETURN PER ORDINARY SHARE
Basic return per ordinary share from continuing and discontinued operations is based on 53,366,070 ordinary shares, being the weighted average number of shares in issue (2015: 52,355,999 being the weighted average number of shares in issue having adjusted for the shares held by the Employee Benefit Trust). Basic returns per ordinary share from continuing and discontinued operations are based on the net return after taxation attributable to equity shareholders. (2015: There are no potentially dilutive shares arising from the share options. These do not give rise to a material dilution to the return per ordinary share and therefore no diluted return per ordinary share has been calculated).
|
|
Group |
|
|
Group |
|
|
Basic and diluted revenue returns from continuing operations are based on net revenue after taxation of: |
4,939 |
|
|
4,934 |
|
|
Basic and diluted revenue returns from discontinued operations are based on net revenue after taxation of: |
|
|
|
|
|
|
Basic and diluted capital returns from continuing operations are based on net capital return of: |
18,705 |
|
|
12,535 |
|
|
Basic and diluted capital returns from discontinued operations are based on net capital return of: |
|
|
|
|
|
|
Basic and diluted total returns are based on a return of: |
|
23,644 |
|
|
17,469 |
|
|
|
|
|
|
|
|
|
Company |
|
|
Company |
|
|
Basic and diluted revenue returns are based on net revenue after taxation of: |
4,939 |
|
|
4,935 |
|
|
Basic and diluted capital returns are based on net capital return of: |
18,705 |
|
|
12,534 |
|
|
Basic and diluted total returns are based on a return of: |
|
23,644 |
|
|
17,469 |
12 PROPERTY AND EQUIPMENT
|
|
|
Group |
|
|
Group and Company |
|
|
Total |
|
|
Cost: |
|
|
|
|
|
|
|
|
|
|
At 1 October 2015 |
|
171 |
|
|
169 |
|
|
340 |
|
|
Additions |
|
28 |
|
|
38 |
|
|
66 |
|
|
Disposals |
|
(171) |
|
|
|
|
|
(171) |
|
|
At 30 September 2016 |
|
|
28 |
|
|
207 |
|
|
235 |
|
|
|
|
|
|
|
|
|
|
|
|
Depreciation: |
|
|
|
|
|
|
|
|
|
|
At 1 October 2015 |
|
108 |
|
|
168 |
|
|
276 |
|
|
Charge for year |
|
67 |
|
|
11 |
|
|
78 |
|
|
Disposals |
|
(171) |
|
|
|
|
|
(171) |
|
|
At 30 September 2016 |
|
|
4 |
|
|
179 |
|
|
183 |
|
|
|
|
|
|
|
|
|
|
|
|
Net book value: |
|
|
|
|
|
|
|
|
|
|
At 30 September 2016 |
|
|
24 |
|
|
28 |
|
|
52 |
|
At 30 September 2015 |
|
|
63 |
|
|
1 |
|
|
64 |
13 INVESTMENTS AT FAIR VALUE THROUGH PROFIT OR LOSS
|
|
Group 2016 |
|
|
|
Group 2015 |
|
|
||||
|
|
Listed |
|
Unlisted |
|
Total |
|
Listed |
|
Unlisted |
|
Total |
|
Opening cost at beginning of year |
133,565 |
|
2,530 |
|
136,095 |
|
124,723 |
|
4,083 |
|
128,806 |
|
(Losses)/gains at beginning of year |
(4,348) |
|
49,897 |
|
45,549 |
|
(1,036) |
|
37,572 |
|
36,536 |
|
Opening fair value at beginning of year |
129,217 |
|
52,427 |
|
181,644 |
|
123,687 |
|
41,655 |
|
165,342 |
|
Purchases at cost |
13,701 |
|
|
|
13,701 |
|
44,333 |
|
|
|
44,333 |
|
Sales - proceeds |
(15,905) |
|
|
|
(15,905) |
|
(38,114) |
|
(5,771) |
|
(43,885) |
|
Gains on sales |
968 |
|
|
|
968 |
|
2,323 |
|
4,518 |
|
6,841 |
|
Increase/(Decrease) in investment holding gains |
16,290 |
|
4,661 |
|
20,951 |
|
(3,312) |
|
12,325 |
|
9,013 |
|
Transfer on delisting/listing of shares |
(150) |
|
150 |
|
|
|
300 |
|
(300) |
|
|
|
Closing fair value at end of year |
144,121 |
|
57,238 |
|
201,359 |
|
129,217 |
|
52,427 |
|
181,644 |
|
Closing cost at end of year |
132,179 |
|
2,680 |
|
134,859 |
|
133,565 |
|
2,530 |
|
136,095 |
|
Gains/(losses) at end of year |
11,942 |
|
54,558 |
|
66,500 |
|
(4,348) |
|
49,897 |
|
45,549 |
|
Closing fair value at end of year |
144,121 |
|
57,238 |
|
201,359 |
|
129,217 |
|
52,427 |
|
181,644 |
|
|
Company |
||||||
|
|
Listed |
|
Unlisted |
|
Subsidiary |
|
Total |
|
Opening cost at beginning of year |
133,565 |
|
2,508 |
|
1,000 |
|
137,073 |
|
Adjustment to opening cost* |
|
|
22 |
|
|
|
22 |
|
(Losses)/gains at beginning of year |
(4,348) |
|
49,897 |
|
(838) |
|
44,711 |
|
Opening fair value at beginning of year |
129,217 |
|
52,427 |
|
162 |
|
181,806 |
|
Purchases at cost |
13,701 |
|
|
|
|
|
13,701 |
|
Sales - proceeds |
(15,905) |
|
|
|
|
|
(15,905) |
|
Gains on sales |
968 |
|
|
|
|
|
968 |
|
Increase in investment holding gains |
16,290 |
|
4,661 |
|
|
|
20,951 |
|
Transfer on delisting of shares |
(150) |
|
150 |
|
|
|
|
|
Closing fair value at end of year |
144,121 |
|
57,238 |
|
162 |
|
201,521 |
|
Closing cost at end of year |
132,179 |
|
2,680 |
|
1,000 |
|
135,859 |
|
Gains at end of year |
11,942 |
|
54,558 |
|
(838) |
|
65,662 |
|
Closing fair value at end of year |
144,121 |
|
57,238 |
|
162 |
|
201,521 |
|
|
|
|
|
|
|
|
|
* The opening cost adjustment reflects a realignment of Group and Company costs in respect of the investment in MAM.
|
|
Company |
||||||
|
|
Listed |
|
Unlisted |
|
Subsidiary |
|
Total |
|
Opening cost at beginning of year |
124,723 |
|
4,059 |
|
1,010 |
|
129,792 |
|
(Losses)/gains at beginning of year |
(1,036) |
|
37,596 |
|
(838) |
|
35,722 |
|
Opening fair value at beginning of year |
123,687 |
|
41,655 |
|
172 |
|
165,514 |
|
Purchases at cost |
44,333 |
|
|
|
|
|
44,333 |
|
Sales - proceeds |
(38,114) |
|
(5,771) |
|
(9) |
|
(43,894) |
|
Gains/(losses) on sales |
2,323 |
|
4,520 |
|
(1) |
|
6,842 |
|
(Decrease)/increase in investment holding gains |
(3,312) |
|
12,323 |
|
|
|
9,011 |
|
Transfer on listing of shares |
300 |
|
(300) |
|
|
|
|
|
Closing fair value at end of year |
129,217 |
|
52,427 |
|
162 |
|
181,806 |
|
Closing cost at end of year |
133,565 |
|
2,508 |
|
1,000 |
|
137,073 |
|
(Losses)/gains at end of year |
(4,348) |
|
49,919 |
|
(838) |
|
44,733 |
|
Closing fair value at end of year |
129,217 |
|
52,427 |
|
162 |
|
181,806 |
Unlisted investments include an amount of £118,000 in 3 various companies (2015: £127,000 in 3 companies) and £57,120,000 (2015: £52,300,000) for the Company's investment in MAM as detailed below.
During the year the Company incurred transaction costs amounting to £84,000 (2015: £186,000), of which £71,000 (2015: £160,000) related to the purchase of investments and £13,000 (2015: £26,000) related to the sales of investments. These amounts are included in gains 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:
|
|
Group |
|
|
Group |
|
|
Company |
|
|
Company |
|
|
Net gains on sales of equity investments |
968 |
|
|
6,841 |
|
|
968 |
|
|
6,842 |
|
|
Increase/(Decrease) in holding gains on equity investments |
20,951 |
|
|
9,013 |
|
|
20,951 |
|
|
9,011 |
|
|
Net return on investments |
|
21,919 |
|
|
15,854 |
|
|
21,919 |
|
|
15,853 |
Fair value hierarchy disclosures
The Company 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:
· 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 arm's length basis.
· 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:
· quoted prices for similar (i.e. not identical) assets in active markets.
· inputs other than quoted prices that are observable for the asset (e.g. interest rates and yield curves observable at commonly quoted intervals).
· inputs that are derived principally from, or corroborated by, observable market data by correlation or other means (market corroborated inputs).
· 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 an asset or liability is categorised is determined on the basis of the lowest level input that is significant to the fair value measurement of the asset. For this purpose, the significance of an input is assessed against the fair value measurement of an asset or liability 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 requires judgement, considering factors specific to the asset or liability.
The determination of what constitutes 'observable' requires significant judgement by the Company. The Company 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.
The table below sets out fair value measurements of financial assets in accordance with the IFRS fair value hierarchy system:
|
|
Group |
|
Group |
||||||
|
|
Level 1 |
Level 2 |
Level 3 |
Total |
|
Level 1 |
Level 2 |
Level 3 |
Total |
|
Financial assets held at fair value through profit or loss - equities and managed funds: |
|
|
|
||||||
|
|
|||||||||
|
Listed equity securities |
144,121 |
|
|
144,121 |
|
129,217 |
|
|
129,217 |
|
Unlisted equity securities |
|
|
57,238 |
57,238 |
|
|
|
52,427 |
52,427 |
|
|
144,121 |
|
57,238 |
201,359 |
|
129,217 |
|
52,427 |
181,644 |
|
|
|
|
|
|
|
|
|
|
|
|
|
Company |
|
Company |
||||||
|
|
Level 1 |
Level 2 |
Level 3 |
Total |
|
Level 1 |
Level 2 |
Level 3 |
Total |
|
Financial assets held at fair value through profit or loss - equities and managed funds: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Listed equity securities |
144,121 |
|
|
144,121 |
|
129,217 |
|
|
129,217 |
|
Unlisted equity securities |
|
|
57,238 |
57,238 |
|
|
|
52,589 |
52,589 |
|
|
144,121 |
|
57,238 |
201,359 |
|
129,217 |
|
52,589 |
181,806 |
Investments whose values are based on quoted market prices in active markets, and therefore are classified within Level 1, include active listed equities. The Company does not normally adjust the quoted price for these instruments (although it may invoke its fair value pricing policy in times of market disruption - this was not the case for 30 September 2016 or 2015).
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 liquidity and/or non-transferability, which are generally based on available market information. During the year there were transfers of £nil (2015: £nil) between Level 2 and Level 1 for listed exchange traded funds.
Investments classified within Level 3 have significant unobservable inputs. As observable prices are not available for these securities, the Company 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 IPEV Valuation Guidelines. New investments are initially held at cost, for a limited period, then at the price of the most recent investment 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 an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date.
The following table presents the movement in Level 3 instruments for the year:
|
|
Group |
|
Group |
||
|
|
Total |
Equity |
|
Total |
Equity |
|
Opening balance |
52,427 |
52,427 |
|
41,655 |
41,655 |
|
Transfers from/(to) Level 1 |
150 |
150 |
|
(300) |
(300) |
|
Sales - proceeds |
|
|
|
(5,771) |
(5,771) |
|
Total gains for the year included in the Statement of Comprehensive Income |
4,661 |
4,661 |
|
16,843 |
16,843 |
|
|
57,238 |
57,238 |
|
52,427 |
52,427 |
|
|
|
|
|
|
|
|
|
Company |
|
Company |
||
|
|
Total |
Equity |
|
Total |
Equity |
|
Opening balance |
52,589 |
52,589 |
|
41,827 |
41,827 |
|
Transfers from/(to) Level 1 |
150 |
150 |
|
(300) |
(300) |
|
Sales - proceeds |
(162) |
(162) |
|
(5,780) |
(5,780) |
|
Total gains for the year included in the Statement of Comprehensive Income |
4,661 |
4,661 |
|
16,842 |
16,842 |
|
|
57,238 |
57,238 |
|
52,589 |
52,589 |
Investments in Investment Funds
The Company has a number of investments in investment funds managed by MAM. Details of these investments are:
|
|
2016 |
|
2015 |
||
|
|
Investment |
Proportion |
|
Investment |
Proportion |
|
MAM Tortoise Fund |
32,382 |
3.2 |
|
27,547 |
2.8 |
|
MAM Income Fund |
19,752 |
2.2 |
|
20,470 |
2.0 |
|
MAM Global Equity Fund |
18,735 |
45.1 |
|
14,564 |
45.2 |
|
MAM Global Focus Fund |
6,617 |
31.9 |
|
5,397 |
33.8 |
|
MAM US Equity Fund |
7,326 |
4.2 |
|
5,970 |
6.1 |
|
MAM UK Smaller Companies Fund* |
5,312 |
1.3 |
|
5,202 |
1.0 |
* The MAM UK Smaller Companies Fund forms part of the MAM UK Equity Segregated Portfolio.
The fees charged on these investments are disclosed in the material contracts section of the Directors' Report above.
In addition, the total value of all investments managed by MAM at 30 September 2016 was £146.0 million (2015: £130.2 million). Further details on the investments in the MAM investment funds are contained in the Chief Executive's Report above.
Substantial Share Interests
The Company has invested £15 million and £5 million in the MAM Global Equity Fund and MAM Global Focus Fund respectively which are substantial interest in those funds at 30 September 2016 and 2015. These holdings are accounted for as an investment held at fair value through profit or loss, in accordance with IFRS 10.
Majedie Asset Management
MAM is a UK based asset management firm providing 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 Consolidated and Company Balance Sheet as part of investments held at fair value through profit or loss.
|
|
2016 |
|
|
2015 |
|
|
Deemed cost of investment |
540 |
|
|
540 |
|
|
Holding gains |
56,580 |
|
|
51,760 |
|
|
Fair value at 30 September |
|
57,120 |
|
|
52,300 |
The fair value is usually assessed and approved twice a year by the directors following the relevant recommendation by the Audit Committee. The fair value calculation is formulaic, with the significant input in assessing the price (and hence fair value), being the earnings of MAM together with earnings multiples applied to those earnings. A 5% increase/(decrease) in MAM's earnings would result in an increase/(decrease( of 4.4% in the fair value of MAM.
In accordance with the revised shareholders' agreement, the Company may sell a certain number of shares to the MAM Employee Benefit Trust at the relevant prescribed price (as calculated in accordance with the revised shareholders' agreement). The Company sold no shares during the year (2015: 9,305 shares for a total consideration of £5,746,000 with a realised gain of £5,659,000).
As at 30 September, the Company holds 57,523 ordinary 0.1p shares representing a 16.7% shareholding in MAM (2015: 57,523 ordinary 0.1p shares representing a 16.7% shareholding).
14 INVESTMENT IN SUBSIDIARY
MPM (registered and incorporated in the UK) ceased to trade on 4 June 2016 and is in the process of being de-authorised and liquidated. The Company's investment in MPM represents 1 million ordinary shares which is 100% of MPM.
15 DISCONTINUED OPERATIONS
Following a review of the provision of savings plans for the Company it was decided that the Majedie Share Plan, as managed by MPM, would close. The Board however wished to continue to offer a share plan to investors and as such a new share plan, the Equiniti Investment Account (EIA), managed and operated by Equiniti Financial Services Limited, was offered. In conjunction with the closure of the Majedie Share Plan existing investors were able to transfer to the new EIA. On 4 June 2016 the Share Plan was closed and MPM ceased operations. MPM is now in the process of being de-authorised and liquidated after completing all regulatory requirements with the closure of the Majedie Share Plan.
In accordance with the provision of its services, MPM charged the Company a fee for managing the Majedie Share Plan on a cost recovery basis only (MPM does not receive any fees from investors). All expenses incurred by MPM were paid for by the Company and netted off against any management fees due. As such MPM reports a nil net return and all such revenues and expenses incurred by it are eliminated on consolidation.
16 TRADE AND OTHER RECEIVABLES
|
|
Group |
|
|
Group |
|
|
Company |
|
|
Company |
|
|
Sales for future settlement |
191 |
|
|
124 |
|
|
191 |
|
|
124 |
|
|
Prepayments |
47 |
|
|
131 |
|
|
47 |
|
|
131 |
|
|
Dividends receivable |
42 |
|
|
104 |
|
|
42 |
|
|
104 |
|
|
Amounts due from share issues |
|
|
|
387 |
|
|
|
|
|
387 |
|
|
Taxation recoverable |
76 |
|
|
53 |
|
|
76 |
|
|
53 |
|
|
Amounts due from subsidiary undertakings |
|
|
|
|
|
|
|
|
|
95 |
|
|
|
|
356 |
|
|
799 |
|
|
356 |
|
|
894 |
The directors consider that the carrying amounts of trade and other receivables approximates to their fair value.
17 CASH AND CASH EQUIVALENTS
|
|
Group |
|
|
Group |
|
|
Company |
|
|
Company |
|
|
Deposits at banks |
2,857 |
|
|
1,674 |
|
|
2,857 |
|
|
1,674 |
|
|
Cash attributable to discontinued operations |
|
|
|
257 |
|
|
|
|
|
|
|
|
Other cash balances* |
610 |
|
|
606 |
|
|
610 |
|
|
606 |
|
|
|
|
3,467 |
|
|
2,537 |
|
|
3,467 |
|
|
2,280 |
*Other cash balances includes £602,000 (2015: £573,000) in relation to unclaimed dividends by shareholders. Such cash is held in a separate account by the Company's registrar and is not available to the Company for general operations.
18 TRADE AND OTHER PAYABLES
Amounts falling due within one year:
|
|
Group |
|
|
Group |
|
|
Company |
|
|
Company |
|
|
Purchases for future settlement |
318 |
|
|
325 |
|
|
318 |
|
|
325 |
|
|
Accrued expenses |
300 |
|
|
211 |
|
|
300 |
|
|
211 |
|
|
Amounts due to subsidiary undertakings |
|
|
|
|
|
|
162 |
|
|
|
|
|
Other creditors |
699 |
|
|
800 |
|
|
669 |
|
|
800 |
|
|
|
|
1,317 |
|
|
1,336 |
|
|
1,479 |
|
|
1,336 |
The directors consider that the carrying amounts of trade and other payables approximates to their fair value.
Amounts falling due after more than one year:
|
|
Group |
|
|
Group |
|
|
Company |
|
|
Company |
|
|
£13.5m (2015: £13.5m) 9.50% 2020 debenture stock |
13,445 |
|
|
13,433 |
|
|
13,445 |
|
|
13,433 |
|
|
£20.7m (2015: £20.7m) 7.25% 2025 debenture stock |
20,486 |
|
|
20,468 |
|
|
20,486 |
|
|
20,468 |
|
|
|
|
33,931 |
|
|
33,901 |
|
|
33,931 |
|
|
33,901 |
Both debenture stocks are secured by a floating charge over the Company's assets. Expenses associated with the issue of the debenture stocks were deducted from the gross proceeds at issue and are being amortised over the life of the debentures. Further details on interest and the amortisation of the issue expenses are provided in note 8.
19 ORDINARY SHARE CAPITAL
|
|
Number |
Company |
|
Number |
Company |
|
As at 1 October |
53,133,000 |
5,313 |
|
52,528,000 |
5,253 |
|
Ordinary 10p shares issued |
306,000 |
31 |
|
605,000 |
60 |
|
As at 30 September |
53,439,000 |
5,344 |
|
53,133,000 |
5,313 |
All shares are allotted fully paid up, and are of one class only. New ordinary 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 as to the number of shares they can allot at any one time as the Companies Act 2016 requires that directors seek authority from the shareholders for the allotment of new shares.
20 SHARE PREMIUM
|
|
Group and |
|
|
Group and |
|
|
As at 1 October |
2,280 |
|
|
785 |
|
|
Ordinary 10p shares issued |
775 |
|
|
1,497 |
|
|
Issue costs |
(1) |
|
|
(2) |
|
|
As at 30 September |
|
3,054 |
|
|
2,280 |
21 NET ASSET VALUE
The net asset value per share, (Group and Company), has been calculated based on equity shareholders' funds of £169,986,000 (2015: £149,807,000), and on 53,439,000 (2015: 53,133,000) ordinary shares, being the number of shares in issue at the year end.
22 ANALYSIS OF CHANGED IN NET DEBT
|
Group |
|
At 30 |
|
|
Cash |
|
|
Non |
|
|
At 30 |
|
|
Cash at bank and other cash balances |
|
2,537 |
|
|
930 |
|
|
|
|
|
3,467 |
|
|
Debt due after one year |
|
(33,901) |
|
|
|
|
|
(30) |
|
|
(33,931) |
|
|
|
|
|
(31,364) |
|
|
930 |
|
|
(30) |
|
|
(30,464) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Company |
|
At 30 |
|
|
Cash |
|
|
Non |
|
|
At 30 |
|
|
Cash at bank and other cash balances |
|
2,280 |
|
|
1,187 |
|
|
|
|
|
3,467 |
|
|
Debt due after one year |
|
(33,901) |
|
|
|
|
|
(30) |
|
|
(33,931) |
|
|
|
|
|
(31,621) |
|
|
1,187 |
|
|
(30) |
|
|
(30,464) |
23 OPERATING LEASE COMMITMENTS
The Company operates in its premises by way of a sub-lease arrangement with a superior leasee, which has four years remaining. The arrangement allows for participation in rent reviews as they occur. During the year a new rent was agreed following a rent review. Under the new terms the Company has an annual commitment of £60,000 under its sub-lease arrangement (2015: £69,000 based on estimated rent review outcome). This operating lease commitment is disclosed in the table below:
|
Expiry Date |
Group |
|
|
Group |
|
|
Not later than one year |
60 |
|
|
86 |
|
|
Later than one year and not later than five years |
180 |
|
|
276 |
|
|
Later than five years |
|
|
|
|
|
|
|
|
240 |
|
|
362 |
24 FINANCIAL COMMITMENTS
At 30 September 2016 the Company had no financial commitments which had not been accrued for (2015: none).
25 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 above. Accordingly the Company is a long term investor and it is the Board's policy that no trading in investments or other financial instruments be undertaken. Given the nature of the Group, the risk management processes of the Company have primacy but are aligned with those of the Group as a whole. Therefore the disclosures in this note primarily reflect that of the Company but are shown separately where materially different to the Group position.
Management of Market Risk
Management of market risk is fundamental to the Company's investment objective and the investment portfolio is regularly monitored to ensure an appropriate balance of risk and reward.
Exposure to any one entity is monitored by the Board and the Investment Manager (MAM). The Board has complied with the investment policy requirement not to invest more than 15% of the total value of the Company's gross assets, save that the Company can invest up to 25% of its gross assets in any single fund managed by MAM where the Board believes that the investment policy of such funds is consistent with the Company's objective of spreading investment risk.
From time to time the Company itself may seek to reduce or increase its exposure to equity markets and currencies by taking positions in index futures and/or options relating to one or more equity markets or currency forward contracts. There are no such positions as at 30 September 2016 or 2015. These instruments are used for the purpose of hedging some, or all, of the existing exposure with the Company's investment portfolio to those particular currencies or equity markets, or to enable increased exposure when deemed appropriate, and with the specific approval of the Board. In addition, MAM as Investment Manager, can utilise derivative instruments for efficient portfolio management and investment purposes as it sees fit. There have been no derivatives used in the MAM UK equity Segregated Portfolio in the period (2015: none). Some MAM funds do use derivatives to meet their investment objectives.
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, accrued income, and the debenture loans used to partially finance its operations.
In the pursuit of 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 revenue 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, concentration risk and credit risk.
The Board does set the overall investment strategy and allocation and has in place various controls and limits and receives various reports in order to monitor the Company's exposure to these risks. The risk management policies identified in this note have not change materially from the previous accounting period.
Market Risk
The principal risk in the management of the investment portfolio is market risk - i.e. the risk that values and future cashflows will fluctuate due to changes in market prices. Market risk is comprised of:
· foreign currency risk; and
· interest rate risk; and
· other price risk i.e. movements in the value of investment portfolio holdings caused by factors other than interest rates or currency movements.
These risks are taken into account when setting the investment policy or allocation and when making investment decisions.
Foreign Currency Risk
Exposure to foreign currency risk arises primarily and directly through investments in securities listed on overseas equity markets. A proportion of the net assets of the 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 Company's exposure to foreign currencies through its investments in overseas securities as at 30 September 2016 was £5,791,000 (2015: Group and Company: £9,154,000 respectively).
The Company's investments in the MAM funds are in Sterling denominated share classes. These share classes themselves are not hedged within the relevant MAM fund. The Company also has Sterling denominated investments which may pay dividends in foreign currencies. Additionally the investment portfolio is subject to indirect foreign currency risk impacts by having investments in investee companies that, whilst listed in the UK, have global operations and as such are subject to currency impacts on their assets and revenues. It is not possible to accurately quantify these exposures and impacts.
MAM, as Investment Manager, monitors the Company's exposure to foreign currencies and the directors receive regular reports on exposures.
The Company is able, though 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 an existing currency exposure of the Company's investment portfolio (as a means of reducing risk), or to enable increased exposure when this is deemed appropriate.
The currency risk of the non-Sterling monetary financial assets and liabilities at the reporting date was:
|
|
Group and Company |
|
Group and Company |
||
|
Currency exposure |
Overseas |
Total |
|
Overseas |
Total |
|
US Dollar |
945 |
945 |
|
589 |
589 |
|
Euro |
4,026 |
4,026 |
|
8,020 |
8,020 |
|
Yen |
595 |
595 |
|
478 |
478 |
|
Other non-Sterling |
225 |
225 |
|
67 |
67 |
|
|
5,791 |
5,791 |
|
9,154 |
9,154 |
Sensitivity Analysis
If Sterling had strengthened by 5% relative to all currencies on the reporting date, with all other variables held constant, the income and net assets would have decreased by the amounts shown in the table below. The analysis was performed on the same basis for 2015. The revenue impact is an estimated annualised figure based on the relevant foreign currency denominated balances at the reporting date.
|
Income Statement |
|
Group and Company |
|
|
Group and Company |
|
|
Revenue return |
|
|
|
|
|
|
|
Capital return |
(290) |
|
|
(458) |
|
|
|
Net assets |
|
(290) |
|
|
(458) |
A 5% weakening of Sterling against the same currencies would have resulted in an equal and opposite effect on the above amounts, on the basis that all other variables remain constant. It should also be noted that the calculations are done at the reporting date and may not be representative of a 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 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, from time to time, hold small investments which pay interest.
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 gearing to the Company which is monitored within limits and is also reported to the directors regularly. Cash balances can also be used to manage the level of gearing to within the range as set by the Board. The Board sets the overall investment strategy and allocation 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 investee company valuations. Regular reports are received by the Board in respect of the Company's investment portfolio and the relevant limits.
The interest rate risk profile of the financial assets and liabilities at the reporting date was:
|
|
Group and Company 2016 £000 |
|
|
Group |
|
|
Company |
|
|
Floating rate financial assets: UK Sterling |
3,467 |
|
|
2,537 |
|
|
2,280 |
|
|
Financial assets not carrying interest |
201,715 |
|
|
182,443 |
|
|
182,700 |
|
|
|
|
205,182 |
|
|
184,980 |
|
|
184,980 |
|
|
|
|
|
|
|
|
|
|
|
Fixed rate financial liabilities: |
|
|
|
|
|
|
|
|
|
UK Sterling |
(33,931) |
|
|
(33,901) |
|
|
(33,901) |
|
|
Financial liabilities not carrying interest |
(1,317) |
|
|
(1,336) |
|
|
(1,336) |
|
|
|
|
(35,248) |
|
|
(35,237) |
|
|
(35,237) |
Floating rate financial assets usually comprise cash on deposit with banks which is repayable on demand and receives a rate of interest based, in part, on the UK base rates in force over the period. The Company does not normally hold non-UK cash as all foreign currency receivables or payables are converted back into Sterling at the settlement date of the relevant transaction. The fixed rate financial liabilities comprise the Company's debentures, totalling £34.2 million in total. They pay an average rate of interest of 8.1% per annum and mature in March 2020 (£13.5 million nominal) and March 2025 (£20.7 million nominal).
Sensitivity Analysis
Based on closing cash balances held as on deposit with banks, a notional 0.5% decrease in the UK base interest rates would have no effect on net assets and the net revenue return before tax of the Company.
A 0.5% increase in interest rates would result in a larger impact due to the extremely low rates at the moment as is shown in the table below. Both analyses are solely based on balances at the reporting date and is not representative of the year as a whole.
|
Income Statement |
Group and Company |
|
|
Group and Company |
|
|
Revenue return |
14 |
|
|
8 |
|
|
Net assets |
|
14 |
|
|
8 |
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 security investments which are disclosed in note 13 above. The Company also has unlisted investments which are indirectly impacted by movements in listed equity prices and related variables. The Board sets the overall investment strategy and allocation which aims 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 the investment policy.
MAM's policy as Investment Manager 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. Any derivative positions are marked to market and exposure to counterparties is also monitored on a daily basis by MAM.
As mentioned earlier, MAM may, and do, use derivative instruments including index-linked notes, contracts for difference, covered options and other equity-related derivative instruments for efficient portfolio management and investment purposes. As also noted previously this occurs in the MAM funds and there have been no derivatives used in the MAM UK Equity Segregated Portfolio. The directors have regular presentations from MAM on their investment strategy and approach.
The following table details the exposure to market price risk on the quoted and unquoted equity investments:
|
|
|
Group and Company |
|
|
Group |
|
|
Company |
|
|
Non-current investments at fair value through profit or loss |
|
|
|
|
|
|
|
|
|
|
Listed equity investments |
|
144,121 |
|
|
129,217 |
|
|
129,217 |
|
|
Unlisted equity investments |
|
57,238 |
|
|
52,427 |
|
|
52,427 |
|
|
Subsidiary Company |
|
|
|
|
|
|
|
162 |
|
|
|
|
|
201,359 |
|
|
181,644 |
|
|
181,806 |
Sensitivity Analysis
If share prices on listed equity security investments had decreased by 10% at the reporting date with all other variables remaining constant, the net return before tax and the net assets would have decreased by the amounts shown below. Details of the sensitivity analysis in respect of the investment in MAM is shown in note 13 above.
|
Income Statement |
|
Group and Company |
|
|
Group and Company |
|
|
Capital return |
|
(14,412) |
|
|
(12,922) |
|
|
Net assets |
|
|
(14,412) |
|
|
(12,922) |
A 10% increase in listed equity security share prices would have resulted in a proportionately equal and opposite effect on the above amounts on the basis that all other variables remain constant. The analysis has been calculated on the investment portfolio held at the reporting date 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 Company financial loss. The Company's exposure to credit risk is managed by the following:
· The Company's investments are held on its behalf by the Company's Depositary, who delegates safekeeping to the Custodian, the Bank of New York Mellon SA/NV, London branch, which if it became bankrupt or insolvent could cause the Company's rights with respect to securities held to be delayed. However under the AIFMD, the Depositary provides certain indemnities in respect of the Company's investments. The Company receives regular internal control reports from the Custodian which are reported to and reviewed by the Audit Committee.
· Investment transactions are undertaken by MAM with a number of approved brokers in the ordinary course of business on a contractual delivery versus payment basis. MAM has procedures in place whereby all new brokers are subject to credit checks and approval by them prior to any business being undertaken. MAM utilises the services of a large range of approved brokers thereby mitigating credit risk by diversification.
· Company cash is held at banks that are considered to be reputable and of high quality. Cash balances above a certain threshold are spread across a range of banks to reduce concentration risk.
· If the Company makes an investment in a loan or any other security with credit risk, that credit risk would be assessed and considered as part of the investment decision making process. There are regular reports to the directors on the composition of the investment portfolio.
· A credit exposure could arise in respect of non-exchange traded (being Over The Counter or OTC) derivative contracts. Any such contracts would only be entered into with approved counterparties whose credit risk has been assessed as within limits.
Credit Risk Exposure
The table below sets out the financial assets exposed to credit risk as at the reporting date:
|
|
|
Group and Company |
|
|
Group |
|
|
Company |
|
|
Cash on deposit and at banks |
|
3,467 |
|
|
2,537 |
|
|
2,280 |
|
|
Sales for future settlement |
|
191 |
|
|
124 |
|
|
124 |
|
|
Interest, dividends and other receivables |
|
165 |
|
|
675 |
|
|
770 |
|
|
|
|
|
3,823 |
|
|
3,336 |
|
|
3,174 |
|
|
|
|
|
|
|
|
|
|
|
|
Minimum exposure during the year |
|
2,163 |
|
|
2,733 |
|
|
2,562 |
|
|
Maximum exposure during the year |
|
5,549 |
|
|
5,548 |
|
|
5,377 |
|
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 current or prior reporting date.
Liquidity Risk
Liquidity risk is the risk that the Company will encounter difficulties in meeting its obligations as they fall due.
Liquidity risk is monitored, although it is recognised that the majority of the Company's assets are invested in quoted equities and other quoted securities that are readily realisable (All MAM fund investments are highly liquid). The Board has various limits in respect to how much of the Company's assets can be invested in any one company. The unlisted investments in the portfolio are subject to liquidity risk but such investments (excluding MAM) are a very small part of the portfolio and are in realisation mode. Nonetheless limits remain for any such investments and liquidity risk is always considered when making investment decisions in such securities. The Company is subject to concentration risk due to its investment in MAM, at 28.3% (2015: 28.8%) of the Company's investment portfolio. This investment is closely monitored by the Board who receive regular financial and operational reports, and it is believed that the current concentration risk here is mitigated somewhat by the diversification undertaken with the MAM business itself, and additionally, the investment in MAM is one of the investment groups used to diversify its investment portfolio as per the investment policy.
The Company maintains an appropriate level of non-investment related cash balances in order to finance its operations. The Company regularly monitors its non-investment related cash balances to ensure all known or forecasted liabilities can be met. The Board receives regular reports on the level of the Company's cash balances. The Company does not have any overdraft or other undrawn borrowing facilities to provide liquidity.
A maturity analysis of financial liabilities showing remaining contractual maturities is detailed below;
|
|
Group and Company |
||||
|
Undiscounted cash flows |
Due within |
Due between |
Due between |
Due 3 years |
Total |
|
9.5% 2020 debenture stock |
|
|
|
13,500 |
13,500 |
|
7.25% 2025 debenture stock |
|
|
|
20,700 |
20,700 |
|
Interest on financial liabilities |
2,783 |
2,783 |
2,783 |
8,895 |
17,244 |
|
Trade payables and other liabilities |
1,317 |
|
|
|
1,317 |
|
|
4,100 |
2,783 |
2,783 |
43,095 |
52,761 |
|
|
|
|
|
|
|
|
|
Group and Company |
||||
|
Undiscounted cash flows |
Due within |
Due between |
Due between |
Due 3 years |
Total |
|
9.5% debenture stock 2020 |
|
|
|
13,500 |
13,500 |
|
7.25% debenture stock 2025 |
|
|
|
20,700 |
20,700 |
|
Interest on financial liabilities |
2,783 |
2,783 |
2,783 |
11,680 |
20,029 |
|
Trade payables and other liabilities |
1,336 |
|
|
|
1,336 |
|
|
4,119 |
2,783 |
2,783 |
45,880 |
55,565 |
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 |
Group and Company |
|
|
Group |
|
|
Company |
|
|
Financial assets at fair value through profit or loss |
|
|
|
|
|
|
|
|
|
Equity securities |
201,359 |
|
|
181,644 |
|
|
181,806 |
|
|
|
|
201,359 |
|
|
181,644 |
|
|
181,806 |
|
Other financial assets* |
|
3,823 |
|
|
3,336 |
|
|
3,174 |
|
|
|
205,182 |
|
|
184,980 |
|
|
184,980 |
|
|
|
|
|
|
|
|
|
|
|
Financial liabilities |
|
|
|
|
|
|
|
|
|
Financial liabilities measured at amortised cost** |
35,248 |
|
|
35,237 |
|
|
35,237 |
|
|
|
|
35,248 |
|
|
35,237 |
|
|
35,237 |
* Other financial assets include cash and cash equivalents, sales for future settlement, dividend and interest receivable and other receivables.
** Financial liabilities measured at amortised cost include; debenture stock in issue, purchases for future settlement, investment management 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 debenture stocks are classified as level 3 under the fair value hierarchy. The fair value of the debenture stocks is calculated using a standard bond pricing method, using a redemption yield of a similar UK Gilt stock with an appropriate margin being applied.
|
Group and Company |
Book |
|
|
Book |
|
|
Fair |
|
|
Fair |
|
|
£13.5m (2015: £13.5m) 9.50% |
13,445 |
|
|
13,433 |
|
|
16,605 |
|
|
16,839 |
|
|
£20.7m (2015: £20.7m) 7.25% |
20,486 |
|
|
20,468 |
|
|
27,111 |
|
|
25,805 |
|
|
|
|
33,931 |
|
|
33,901 |
|
|
43,716 |
|
|
42,644 |
Capital Management Policies and Procedures
The Company's capital management objectives are:
· to ensure that it is able to continue as a going concern; and
· to maximise the revenue and capital returns to its shareholders through a mix of equity capital and debt. The directors set a range for the Company's net debt (comprised as debentures less cash) at any one time which is maintained by management of the Company's cash balances.
|
|
Group and Company |
|
|
Group |
|
|
Company |
|
|
Net Debt |
|
|
|
|
|
|
|
|
|
Adjusted cash and cash equivalents* |
(2,506) |
|
|
(2,000) |
|
|
(1,838) |
|
|
Debentures |
33,931 |
|
|
33,901 |
|
|
33,901 |
|
|
Sub total |
|
31,425 |
|
|
31,901 |
|
|
32,063 |
|
Equity |
|
|
|
|
|
|
|
|
|
Equity share capital |
5,344 |
|
|
5,313 |
|
|
5,313 |
|
|
Retained earnings and other reserves |
164,642 |
|
|
144,494 |
|
|
144,494 |
|
|
Shareholders' funds |
|
169,986 |
|
|
149,807 |
|
|
149,807 |
|
Gearing |
|
|
|
|
|
|
|
|
|
Net debt as a percentage of shareholders' funds |
|
18.5% |
|
|
21.3% |
|
|
21.4% |
*Adjusted cash and cash equivalents comprise cash plus current assets less current liabilities.
Maximum potential gearing represents the highest gearing percentage on the assumption that the Company had no net current assets. As at 30 September 2016 this was 20.0% (2015: Group and Company: 22.6%).
The Board monitors and reviews the broad structure of the Company's capital on an ongoing basis. The review includes:
· the level of gearing, taking into account MAM's views on capital markets; and
· the level of the Company's free float of shares as the Barlow family owns approximately 53% of the share capital of the Company; and
· 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 also subject to various externally imposed capital requirements which are that:
· the debentures are not to exceed, in aggregate, 66 2/3% of the adjusted share capital and reserves in accordance with the relevant Trust Deeds; and
· the Company has to comply with statutory requirements relating to dividend distributions; and
· the AIFMD imposes a requirement for all AIFs to have in place a limit on the amount of leverage that they may hold. It is then the responsibility of the relevant AIFM to ensure that this limit is not exceeded, which in this case is the Company (being a self-managed AIF).
Leverage is similar to gearing (as calculated in accordance with AIC guidelines previously), but the AIFMD mandates a certain calculation methodology which must be applied. Leverage as calculated under the AIFMD methodology for the Company is:
|
Gross method |
Company 2016 £000 |
|
Group |
|
Company |
|
Investments held at fair value through profit or loss |
201,359 |
|
181,644 |
|
181,644 |
|
Investments in subsidiaries held at fair value through profit or loss |
|
|
|
|
162 |
|
Total investments at exposure value as defined under the AIFMD |
201,359 |
|
181,644 |
|
181,806 |
|
|
|
|
|
|
|
|
Shareholders' Funds |
169,986 |
|
149,807 |
|
149,807 |
|
|
|
|
|
|
|
|
Leverage (times) |
1.18 |
|
1.21 |
|
1.21 |
|
|
|
|
|
|
|
|
Commitment Method |
Company 2016 £000 |
|
Group |
|
Company |
|
Investments held at fair value through profit or loss |
201,359 |
|
181,644 |
|
181,644 |
|
Investments in subsidiaries held at fair value through profit or loss |
|
|
|
|
162 |
|
Cash and cash equivalents |
3,467 |
|
2,537 |
|
2,280 |
|
Total investments at exposure value as defined under the AIFMD |
204,826 |
|
184,181 |
|
184,085 |
|
|
|
|
|
|
|
|
Shareholders' Funds |
169,986 |
|
149,807 |
|
149,807 |
|
|
|
|
|
|
|
|
Leverage (times) |
1.20 |
|
1.23 |
|
1.23 |
The leverage figures calculated above represent leverage as calculated under the gross and commitment methods as defined under the AIFMD (and a figure of 1x represents no leverage or borrowings). The two methods differ in their treatment of amounts outstanding under derivative contracts with the same counterparty, which are not applicable to the Company, and of the treatment of cash balances. In both methods the Company has included the debentures by including the value of investments purchased by those borrowings, rather than their balance sheet value. The Company's leverage limit under the AIFMD is 1.5x, which equates to a borrowing level of 50% (the Company has not exceeded this limit at any time during the past or prior year).
These requirements are unchanged from the prior year and the Company has complied with them.
26 RELATED PARTY TRANSACTIONS
Majedie Asset Management
MAM became Investment Manager to the Company from 13 January 2014 under the terms of 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 collective investment vehicles or funds. Details of the Investment Agreement are contained in the material contracts section of the directors' report above. As Investment Manager, MAM is entitled to receive investment management fees. In respect of the segregated portfolio investment these are charged directly to the Company and are shown as an expense in its accounts. Any fees due in respect of investments made into any MAM funds are charged in the fund's accounts and are therefore included as part of the investment value of the relevant holdings. Details concerning the Company's investments in the period in the MAM funds are shown in the Chairman's & 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 Company and Group accounts and is valued at fair value through profit or loss. Details concerning the Company's investment in MAM are included in the Chairman's & Chief Executive's Report above and on note 12 above.
Majedie Portfolio Management
The Company did pay certain costs on behalf of MPM for operating the Company's Majedie Share Plan and was additionally charged a management fee by MPM. Any such costs that had been paid by the Company were recharged to MPM, net of any management fees due. Following a review of the provision of the Company's share savings plans, the Majedie Share Plan closed on 4 June 2016. MPM has now ceased operations and is being de-authorised and liquidated.
The table below discloses the transactions and balances between those entities:
|
Transactions during the year: |
2016 |
2015 |
|
Dividend income received from MAM |
3,233 |
3,273 |
|
MAM share sale realised gains |
|
5,659 |
|
MPM costs recharged by the Company |
28 |
36 |
|
Management fee income due to MAM (segregated account only) |
434 |
492 |
|
|
|
|
|
Balances outstanding at the end of the year: |
|
|
|
Between the Company and MAM (segregated portfolio investment management fees) |
115 |
106 |
|
Value of the Company's investment in MAM |
57,120 |
52,300 |
|
Between the Company and MPM |
162 |
96 |
Transactions between group companies during the year were made on terms equivalent to those that occur in arm's length transactions.
Remuneration
The remuneration of the directors, who are the key management personnel of the Company, are set out below in aggregate for each of the categories specified in IAS 24: Related Party disclosures. There are no amounts outstanding at 30 September 2015 for directors fees or salary (2015: nil). Further information about the remuneration of individual directors is provided in the audited section of the Report on Directors' Remuneration in the Company's Report and Accounts.
|
|
2016 |
2015 |
|
Short term employee benefit |
324 |
359 |
|
|
324 |
359 |
|
Registered Office |
Registrars |
|
1 King's Arms Yard |
Computershare Investor Services PLC |
|
London EC2R 7AF |
The Pavilions |
|
Telephone: 020 7626 1243 |
Bridgwater Road |
|
Fax: 020 7374 4854 |
Bristol BS99 6ZZ |
|
E-mail: majedie@majedieinvestments.com |
Telephone: 0370 707 1159 |
|
Registered Number: 109305 England |
|
|
|
Shareholders should notify all changes of name |
|
Company Secretary |
and address in writing to the Registrars. |
|
Capita Company Secretarial Services Limited |
Shareholders may check details of their holdings, |
|
The Registry |
historical dividends, graphs and other data by |
|
34 Beckenham Road |
accessing www.computershare.com. |
|
Beckenham |
|
|
Kent BR3 4TU |
Shareholders wishing to receive communications |
|
|
from the Registrars by email (including |
|
Investment Manager |
notification of the publication of the annual and |
|
Majedie Asset Management Limited |
interim reports) should register on-line at |
|
10 Old Bailey |
|
|
London EC4M 7NG |
Shareholders will need their shareholder number, |
|
Telephone: 020 7618 3900 |
shown on their share certificate and dividend |
|
Email: info@majedie.com |
vouchers, in order to access both of the above |
|
|
services. |
|
Depositary |
|
|
BNY Mellon Trust & Depositary (UK) Limited |
Auditors |
|
BNY Mellon Centre |
Ernst & Young LLP |
|
160 Queen Victoria Street |
25 Churchill Place |
|
London EC4V 4LA |
Canary Wharf |
|
|
London E14 5EY |
|
The Depositary has delegated the safe keeping |
|
|
of the Company's assets to the Custodian, The |
Stockbrokers |
|
Bank of New York Mellon SA/NV, London |
J.P. Morgan Cazenove |
|
Branch. |
25 Bank Street |
|
|
London E14 5JP |
|
AIFM Majedie Investments PLC |
|
National Storage Mechanism
A copy of the Annual Report and Financial Statements will be submitted shortly to the National Storage Mechanism ("NSM") and will be available for inspection at the NSM, which is situated at: http://www.morningstar.co.uk/uk/NSM.
A copy of the Annual Report and Accounts and Notice of Annual General Meeting will be delivered to shareholders shortly and can also be found at www.majedieinvestments.com.
Annual General Meeting
The Company's Annual General Meeting will be held on 18 January 2017 at 12.00 pm at City of London Club, 19 Old Broad Street, London EC2N 1DS.
ENQUIRIES
If you have any enquiries regarding this announcement please contact Mr William Barlow on 020 7382 8185.
END
Neither the contents of the Company's website nor the contents of any website accessible from hyperlinks on this announcement (or any other website) is incorporated into, or forms part of, this announcement.
This information is provided by RNS
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