Interim Results

Majedie Investments PLC 19 May 2000 INTERIM RESULTS for the six months ended 31 March 2000 Financial Highlights * net assets per share increased by 18.3% to 453.3p * earnings per share decreased by 17.3% to 3.77p * interim dividend unchanged at 3.1p Performance * net asset value total return of +19.4% * share price total return of -4.5% * benchmark total return of +14.6% Chairman, Henry Barlow comments: I am pleased to report that the total return generated by the portfolio in the six months ended 31 March 2000 was 19.4% compared with our benchmark return of 14.6%. The trend in the share price over the six month period has been disappointing - showing a reduction of 5.7% from 367p to 346p at 31 March. This reflects a significant widening in the discount from a relatively narrow 4.2% at 30 September 1999 to an abnormally wide 23.7% at 31 March 2000, explained partly by the exclusion of Majedie from the FTSE All-Share Index last December. It is particularly disappointing that this widening of the discount occurred at a time when the underlying investment performance of the portfolio was very strong. The good net asset value performance was due in large part to the adoption of a more technologically-aware investment approach described below. Interim Dividend The interim distribution is 3.1p per share and is unchanged compared with last year. It will be paid on 7 July 2000 to shareholders on the register at the close of business on 23 June 2000. Portfolio Over the last six months, the portfolio has continued to be restructured, as strategic long term decisions have been implemented. These are based on four main criteria: the business cycle in a global context, trends in long term industrial growth, the strength of individual companies and finally the impact of the internet. As a result of the evidence of economic recovery in Europe, South East Asia and Japan, these areas were taken overweight during the period. However, after its dramatic rise last year, Japan has now been returned to a neutral weighting. At an industry level, the fund now has good representation worldwide in technology, telecommunications and media from China Telecom in the east to Vodafone in the west. Elsewhere industry leaders in mobile and internet infrastructure, semiconductors and software were added to the portfolio. These include Nokia, Ericsson, Phillips, ST Microelectronics, Energis, Kudelski, Mannesmann, Sema, CMG, Sage, Logica, TCL and Cisco. Many of the 'old economy' stocks around the world suffered severe price collapses during 1999 and some sectors became severely undervalued. In order to protect the fund from a sudden change in direction a reasonable weighting was carried in interest rate sensitive and undervalued sectors such as construction and building materials, mining, banks and insurance which have all seen a revival over recent weeks. Debenture Issue One of the advantages of an investment trust structure is the ability to use borrowings to enhance investment performance. On 18 May we announced that we had raised £25 million through the creation of a 7.25% long term debenture. The Board believes that over the next few months there will be good opportunities to invest these funds for long term growth. Outlook The economic outlook remains strong, although there are signs of overheating. US GDP was growing at 6% at the end of 1999 and wage inflation is now of concern both in the US and UK. As a result interest rates are forecast to continue to rise in the US, UK, and Europe. Core inflation worldwide remains comparatively subdued, but concerns about personal gearing and strains in the employment market have caused some short term volatility in the US which has been imitated in other world stock markets to a lesser degree. This is a healthy response to market levels that had been discounting forward too much in the short term. However, the Federal Reserve Board's aim remains to temper growth rather than cause a hard landing. Whilst considerable market volatility may continue in the short term as interest rates are raised, the long term outlook remains one of steady growth worldwide. Henry S Barlow Chairman 19 May 2000 For further information please contact Robert Clarke on 020 7626 1243; E-mail: rec@majedie.co.uk UNAUDITED CONSOLIDATED STATEMENT OF TOTAL RETURN for the half year ended 31 March 2000 Half year ended 31 March 2000 Revenue Capital Total £000 £000 £000 Total capital return on investments 37,720 37,720 Dividends and 2,657 2,657 interest Rents and other income Continuing activities 42 42 ------- ------- ------- Gross revenue and 2,699 37,720 40,419 capital return Administrative expenses Continuing (400) (623) (1,023) activities ------- ------- ------- Return on ordinary activities before finance costs and taxation Continuing 2,299 37,097 39,396 activities Debenture stock (179) (536) (715) interest payable ------- ------- ------- Return on ordinary activities before taxation 2,120 36,561 38,681 Taxation on ordinary (135) 106 (29) activities ------- ------- ------- Return on ordinary 1,985 36,667 38,652 activities after taxation attributable to equity shareholders Dividends Interim ordinary 3.1p (1,634) (1,634) (1999: 3.1p) ------- ------- ------- Transfer to reserves 351 36,667 37,018 ------- ------- ------- Basic return per 3.77p 69.65p 73.42p ordinary share Diluted return per 3.77p 69.64p 73.41p ordinary share Half year ended 31 March 1999 Revenue Capital Total £000 £000 £000 as as restated restated Total capital return on investments 40,940 40,940 Dividends and 2,972 2,972 interest Rents and other income Continuing activities 244 244 Discontinued 124 124 activities ------- ------- ------- Gross revenue and 3,340 40,940 44,280 capital return Administrative expenses Continuing (416) (727) (1,143) activities Discontinued (197) (197) activities ------- ------- ------- Return on ordinary activities before finance costs and taxation Continuing 2,800 40,213 43,013 activities Discontinued (73) (73) activities Debenture stock (179) (537) (716) interest payable ------- ------- ------- Return on ordinary 2,548 39,676 42,224 activities before taxation Taxation on ordinary (153) 94 (59) activities ------- ------- ------- Return on ordinary 2,395 39,770 42,165 activities after taxation attributable to equity shareholders Dividends Interim ordinary 3.1p (1,632) (1,632) (1999: 3.1p) ------- ------- ------- Transfer to reserves 763 39,770 40,533 ------- ------- ------- Basic return per 4.56p 75.70p 80.26p ordinary share Diluted return per 4.56p 75.65p 80.21p ordinary share Year ended 30 September 1999 Revenue Capital Total £000 £000 £000 as as restated restated Total capital return on investments 37,979 37,979 Dividends and 5,797 5,797 interest Rents and other income Continuing activities 460 460 Discontinued 251 251 activities ------- ------- ------- Gross revenue and 6,508 37,979 44,487 capital return Administrative expenses Continuing (915) (1,618) (2,533) activities Discontinued (394) (394) activities ------- ------- ------- Return on ordinary activities before finance costs and taxation Continuing 5,342 36,361 41,703 activities Discontinued (143) (143) activities Provision for loss on (123) (123) disposal of private client fund management business Debenture stock (357) (1,071) (1,428) interest payable ------- ------- ------- Return on ordinary 4,719 35,290 40,009 activities before taxation Taxation on ordinary (464) 340 (124) activities ------- ------- ------- Return on ordinary 4,255 35,630 39,885 activities after taxation attributable to equity shareholders Dividends Interim ordinary 3.1p (1,632) (1,632) (1999: 3.1p) Final ordinary of (2,263) (2,263) 4.3p ------- ------- ------- Transfer to reserves 360 35,630 35,990 ------- ------- ------- Basic return per 8.09p 67.76p 75.85p ordinary share Diluted return per 8.09p 67.71p 75.80p ordinary share The revenue column of this statement is the Consolidated Profit and Loss Account of the Group. The results for the first six months should not be taken as a guide to the results for the full year. UNAUDITED CONSOLIDATED BALANCE SHEET 31 March 31 March 30 September 2000 1999 1999 £000 £000 £000 Tangible fixed assets 178 262 199 Fixed asset investments 250,479 217,144 207,171 Cash at bank and on 3,615 2,733 10,098 deposit Dividends (1,634) (1,632) (2,263) Other assets and 1,052 2,551 1,314 liabilities Debenture stock (14,813) (14,808) (14,811) ------- ------- ------- Total net assets 238,877 206,250 201,708 ------- ------- ------- Called up share capital 5,270 5,263 5,263 Share premium account 746 601 602 Capital redemption 37 37 37 reserve Capital reserve - 96,066 89,976 94,104 realised Capital reserve - 110,344 83,907 75,639 unrealised Revenue reserve 26,414 26,466 26,063 ------- ------- ------- Shareholders' funds 238,877 206,250 201,708 ------- ------- ------- Net asset value per share 453.3p 391.9p 383.3p NOTES 1. As from 1 October 1999 the Company has adopted Financial Reporting Standard 16 - Current Tax. This has resulted in a change of accounting policy in respect of investment income whereby imputed tax credits are no longer included in both income and the tax charge. Consequently the comparative figures for the half year ended 31 March 1999 and year ended 30 September 1999 have been restated. The effect of this change is to decrease 'dividends and interest' and 'taxation on ordinary activities' by £234,000 for the half year ended 31 March 2000 (half year ended 31 March 1999: £243,000; year ended 30 September 1999: £482,000). The change has no effect on total shareholders' funds. 2. Basic and diluted returns per ordinary share in each period are based on the return on ordinary activities after taxation attributable to equity shareholders. Basic return per ordinary share is based on 52,646,885 shares, being the weighted average number of shares in issue (half year ended 31 March 1999: 52,538,516 shares; year ended 30 September 1999: 52,584,384). Diluted return per ordinary share is based on 52,655,341 shares, the weighted average number of shares in issue adjusted for the exercise of outstanding options (half year ended 31 March 1999: 52,570,385 shares; year ended 30 September 1999: 52,619,053 shares). 3. The figures and the financial information for the year ended 30 September 1999 have been compiled from an extract of the latest published accounts, adjusted for the change in accounting policy (see note 1), and do not constitute the statutory accounts for the year. Those accounts have been delivered to the Registrar of Companies and included the report of the auditors which was unqualified and did not contain a statement under either Section 237(2) or Section 237(3) of the Companies Act 1985. 4. The Company's Year 2000 compliance project was completed satisfactorily and no material or significant problems affecting the Company have arisen from the Year 2000 date change. The total cost of the compliance project is not considered to be significant. 5. An agreement for the sale of the private client fund management business carried on by a Group company was reached in September 1999. The income and costs of this operation are shown as discontinued activities in the comparative figures. INTERIM REPORT The Interim Report will be sent to shareholders on 30 May 2000 from which time copies will be available to the public at the Company's registered office: 1 Minster Court, Mincing Lane, London EC3R 7ZZ. DIVIDEND The dividend of 3.1p per share will be paid on 7 July 2000 to shareholders on the register at the close of business on 23 June 2000. NOTES FOR EDITORS Majedie Investments PLC is an investment trust with total assets under management of over £250 million. The Company's objective is to maximise total shareholder return over the long term whilst increasing dividends by more than the rate of inflation. Our benchmark is 70% FTSE All-Share Index and 30% FT/S&P World Ex. UK Index (sterling) on a total return basis (net income reinvested). The Majedie Share Plan is a straightforward and low cost way of investing in Majedie shares with a minimum lump sum of £250, or on a regular monthly basis with £25 or more. The Majedie Corporate ISA provides a tax efficient way of investing or saving in Majedie shares at extremely low cost. There is no initial or annual management fee. Both maxi and mini ISAs are available with a minimum lump sum investment of £500 or £50 per month for direct debit subscribers.

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