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| Share Name | Share Symbol | Market | Type | Share ISIN | Share Description |
|---|---|---|---|---|---|
| Majedie Investments Plc | LSE:MAJE | London | Ordinary Share | GB0005555221 | 10P |
| Price Change | % Change | Share Price | Bid Price | Offer Price | High Price | Low Price | Open Price | Shares Traded | Last Trade | |
|---|---|---|---|---|---|---|---|---|---|---|
| -2.00 | -0.81% | 244.00 | 242.00 | 246.00 | 17,130 | 16:35:06 |
| Industry Sector | Turnover | Profit | EPS - Basic | PE Ratio | Market Cap |
|---|---|---|---|---|---|
| Mgmt Invt Offices, Open-end | 21.27M | 16.27M | 0.3071 | 8.01 | 130.38M |
From Apr 2019 to Apr 2024
TIDMMAJE
RNS Number : 0225G
Majedie Investments PLC
24 May 2017
Majedie Investments PLC
Half-Yearly Financial Report
31 March 2017
The Directors announce the unaudited half-yearly financial report for the six months to 31 March 2017 as follows:
Copies of the half yearly-report can be obtained from the following website:
www.majedieinvestments.com
Financial Highlights for the half year ended 31 March 2017
Total shareholder return (including dividends): +16.6% Net asset value (NAV) total return (debt at par including dividends): +8.4% NAV per share (Debt at par value): 338.8p NAV per share (Debt at fair value): 322.7p Revenue Return per share: 6.8p Interim Dividend: 3.5p Directors' valuation of investment in Majedie GBP58.3m Asset Management Limited: Total assets*: GBP215.0m * Total assets are defined as total assets less current liabilities
Investment Objective and Policy Statement
Investment Objective
The Company's investment objective is to maximise total shareholder return whilst increasing dividends by more than the rate of inflation over the long term.
Investment Policy
General
The Company invests principally in securities of publicly quoted companies worldwide and in funds managed by its investment manager, though it may invest in unquoted securities up to levels set periodically by the Board, including its investment in Majedie Asset Management Limited (MAM). Investments in unquoted securities, other than those managed by its investment manager or made prior to the date of the adoption of this investment policy, (measured by reference to the Company's cost of investment) will not exceed 10% of the Company's gross assets.
Risk diversification
Whilst the Company will at all times invest and manage its assets in a manner that is consistent with spreading investment risk, there will be no rigid industry, sector, region or country restrictions. The overall approach is based on an analysis of global economies sector trends with a focus on companies and sectors judged likely to deliver strong growth over the long term. The number of investments held, together with the geographic and sector diversity of the portfolio, enable the Company to spread its risks with regard to liquidity, market volatility, currency movements and revenue streams.
The Company will not invest in any holding that would, at the time of investment, represent more than 15% of the value of its gross assets save that the Company may invest up to 25% of its gross assets in any single fund managed by its investment manager where the Board believes that the investment policy of such funds is consistent with the Company's objective of spreading investment risk.
The Company may utilise derivative instruments including index-linked notes, contracts for difference, covered options and other equity-related derivative instruments for efficient portfolio management and investment purposes.
Any use of derivatives for investment purposes will be made on the basis of the same principles of risk spreading and diversification that apply to the Company's direct investments, as described above.
Asset allocation
The assets of the Company will be allocated principally between investments in publicly quoted companies worldwide and in investments intended to provide an absolute return (in each case either directly or through other funds or collective investment schemes managed by the Company's investment manager) and the Company's investment in MAM itself.
Benchmark
The Company does not have one overall benchmark, rather each distinct group of assets is viewed independently. Any investments made into funds managed by the Company's investment manager will be measured against the benchmark or benchmarks, if any, whose constituent investments appear to the Company to correspond most closely to those investments. It is important to note that in all cases investment decisions and portfolio construction are made on an independent basis. The Board however sets various specific portfolio limits for stocks and sectors in order to restrict risk levels from time to time, which remain subject to the investment restrictions set out in this section.
Gearing
The Company uses gearing currently via long term debentures. The Board has the ability to borrow up to 100% of adjusted capital and reserves. The Board also reviews the level of net gearing (borrowings less cash) on an on-going basis and sets a range at its discretion as appropriate. The Company's current debenture borrowings are limited by covenant to 66 2/3% and any additional indebtedness is not to exceed 20%, of adjusted capital and reserves.
Chief Executive's Report
In the six months to March 2017 the NAV (Net Asset Value with debt at par) rose by 8.4% on a total return basis and the share price rose by 16.6% also on a total return basis. Stock markets rose strongly led by the US following the presidential election, increased investor optimism about the global economy and latterly a more stable political background in Europe following recent elections. Over the six months the FTSE All-Share and the MSCI World indices rose 8.1% and 12.4% respectively, in sterling terms.
It is pleasing that the discount at which the Company's shares trade has narrowed over the six months to 31 March 2017 from 14.2% to 8.9% (debt at fair value). The Chairman and Chief Executive have previously commented that a large holding in the Company was transferred to Aviva Investors, who are not expected to be a long term investor. We have met with representatives of Aviva Investors to understand their views and they confirmed that they are comfortable holders in the medium term given the uniqueness of the Company's investment proposition. This notwithstanding, the Board has and will continue to explore options to help Aviva Investors to exit their position as and when they might wish.
Results and Dividends
The capital return in the six months to 31 March 2017 was GBP12.1m and the total income from investments was GBP4.4m compared to GBP3.5m in the six months to 31 March 2016. The increase in income is due to an increase of GBP0.9m in the dividend received from Majedie Asset Management (MAM), to GBP3.0m, and smaller increases in dividends from the MAM UK Income Fund and UK Equity Segregated Portfolio. Total administrative expenses and management fees have fallen from GBP1.1m to GBP0.9m, which reflects lower property costs and other reductions in expenses. Costs remain a key focus for the Board though the main benefits of earlier Board decisions are now largely reflected in the Company's results.
The net revenue return after taxation for the six months to 31 March 2017 was GBP3.7m compared to GBP2.7m in the six months to 31 March 2016.
The Board has declared an interim dividend of 3.50 pence per share (2016: 3.00 pence), which will be paid on 16 June 2017 to shareholders on the register on 2 June 2017.
Investment Performance
The Company invests through a number of investment strategies managed by MAM and retains an equity holding in MAM of 16.8%. The Company has no overall benchmark; rather each fund has its own benchmark. The Company's total assets were GBP215.0m at 31 March 2017.
The largest allocation of GBP64.1m, which represents 29.8% of the Company's total assets, is in a segregated portfolio that is managed alongside the MAM UK Equity Fund. The funds are predominantly invested in UK equities, with overseas equities limited to 20%, and the strategy incorporates a dedicated allocation to UK smaller companies. It is the flagship product of MAM and since inception in March 2003 the Fund has returned 13.2% per annum net of fees, which is an outperformance of 3.6% per annum compared to its benchmark the FTSE All-Share Index. In the six months to 31 March 2017 our portfolio returned 10.3% net of fees, which is an outperformance of 2.2%. The positive contributors to performance were overweight positions in Banks, Miners and the MAM UK Smaller Companies Fund whilst the detractors were overweight positions in Telecoms and General Retailers and an underweight position in Life Insurance. In January 2017 GBP3.75m was redeemed by the Company from the segregated portfolio.
The MAM Tortoise Fund is a global long/short equity fund which since inception in August 2007 has returned 9.2% per annum net of fees. At 31 March 2017 the Company has an allocation of GBP37.7m, which represents 17.5% of total assets. Our holding in the Fund returned 1.3% net of fees in the six months to 31 March 2017. The positive contributors at a sector level were long positions in Mining, Banks and Telecoms whilst the detractors were short positions in Distributors, Luxury Goods and Healthcare Providers. In January 2017 the Company increased its allocation to the MAM Tortoise Fund by GBP5.0m.
The MAM UK Income Fund aims to maintain an attractive yield whilst outperforming the FTSE All Share Index over the longer term, with at least 80% of the Fund invested in UK equities. Since inception in December 2011 the Fund has returned 15.7% per annum net of fees, which is an outperformance of 4.7% per annum. At 31 March 2017 the Company has an allocation of GBP16.9m, which represents 7.9% of total assets. In the six months to 31 March 2017 our holding in the Fund returned 7.6% net of fees, which is an underperformance of 0.5%. The positive contributors at the sector level were overweight positions in Life Insurance, Financial Services and Travel & Leisure whilst the detractors were overweight positions in Electronic Equipment and underweight positions in Oil & Gas and Banks. In January 2017 the Company redeemed GBP3.75m from the MAM UK Income Fund.
The MAM Global Equity and Global Focus funds were launched in June 2014. Since inception our holding in the funds have returned 15.7% and 14.6% per annum net of fees respectively for the sterling share classes, which represents an underperformance of 0.4% and 1.4% against their benchmark MSCI ACWI (Developed and Emerging Markets). At 31 March 2017 the Company has an allocation of GBP20.9m and GBP7.3m to the MAM Global Equity and Global Focus Funds, respectively representing 9.7% and 3.4% of total assets. In the six months to 31 March 2017 the Funds returned 11.1% and 9.9% respectively, which represents an underperformance of 1.3% and 2.5%. The positive contributors at the sector level were overweight positions in Software and Semiconductors and an underweight position in Consumer Goods, whilst the detractors were overweight positions in Technology and Telecoms and an underweight position in Banks.
The MAM US Equity Fund was launched in June 2014 and since its inception has returned 20.3% per annum net of fees for the sterling share class, which represents an underperformance of 1.2% per annum against the S&P 500 Index. At 31 March 2017 the Company had an allocation of GBP8.3m, which represents 3.9% of total assets and in the six months ended 31 March 2017 the Fund returned 13.6%, which represents an underperformance of 0.4%. The positive contributors at a sector level were overweight positions in Consumer Services, Software and Oil & Gas whilst the detractors were overweight positions in Distributors, Mining and Professional Services.
The aggregate geographic and sector exposures of the MAM UK Equity Segregated Portfolio, MAM UK Income Fund, MAM Global Equity Fund, MAM Global Focus Fund and MAM US Equity Fund are shown below. In order to enhance the transparency for shareholders, each of the MAM fund factsheets are available on the Company's website. The factsheets show the five largest overweight and underweight stocks and other relevant information for investors.
Majedie Asset Management
The Company retains its holding of 16.8% of MAM, having not sold any shares in MAM in the six months to 31 March 2017. The Company has no current intention to sell any shares in MAM, other than the obligation, if required, to sell a limited number of shares annually, in proportion to other shareholders, to the MAM EBT. The Board has increased the value of its holding in MAM to GBP58.3m. The valuation is formulaic and reflects three year average earnings and the Board believes it reflects fair value. The holding represents 27.1% of the Company's total assets.
MAM's assets under management increased from GBP12.2bn to GBP14.0bn in the six months to 31 March 2017, which reflects strong performance from stock markets and positive net fund flows particularly into the Global Focus Fund, the UK Equity Fund, the US Equity Fund and the Tortoise Fund. The increase in the dividend from MAM reflects a change to a more flexible dividend policy, good operational performance and a strong balance sheet.
Summary
The Total Return after Taxation of GBP14.1m reflects stock markets returning to all-time highs, which in the case of the UK, was last seen in December 1999. In light of recent equity market performance and potential future economic headwinds the Company modestly reduced its holdings in the MAM UK Equity Segregated Portfolio and MAM UK Income Fund. The proceeds were largely invested in the MAM Tortoise Fund which should be more resilient if markets turn more volatile. In aggregate, the Company's investments are more cautiously positioned than at 30 September 2016. The Board remains confident that the Company's well diversified portfolio and an excellent track record of the funds managed by MAM, will provide the Company with resilience and growth in its assets.
Development of Net Asset Value (NAV)
The chart below shows the NAV development during the six months to 31 March 2017. In aggregate the NAV has increased by GBP11.0m, having recorded total investment income and gains of GBP16.4m, having incurred net administration and finance costs of GBP2.3m, and having paid out dividends of GBP3.1m.
NAV 30.09.2016 GBP170.0m -------------------------- ---------- UKES Segregated Portfolio +GBP6.7m MAM +GBP4.2m MAM Funds +GBP5.5m Admin Costs & Other (GBP0.9m) Finance Costs (GBP1.4m) Dividend Paid (GBP3.1m) NAV 31.03.2017 GBP181.0m
Allocation of Total Assets at 31 March 2017
Hot Features
Premium
Value % of Total
GBP000s Assets
------------------------------------ --------- -----------
MAM UK Equity Segregated Portfolio 64,121 29.8
MAM UK Income Fund 16,920 7.9
MAM Global Equity Fund 20,930 9.7
MAM Global Focus Fund 7,306 3.4
MAM US Equity Fund 8,348 3.9
MAM Tortoise Fund 37,682 17.5
MAM 58,328 27.1
Net cash/realisation portfolio* 1,352 0.7
--------- -----------
214,987 100.0
--------- -----------
* Net cash and realisation portfolio does not include cash held in the MAM UK Equity Segregated Portfolio or MAM funds.
MAM Fund Performance
6 months to 31 March 2017 Since MI invested
% % % % % %
Fund Benchmark Relative Fund Benchmark Relative
return return performance return return performance
--------------- -------- ----------- ------------- -------- ----------- -------------
MAM UK Equity
Segregated
Portfolio 10.3 8.1 2.2 24.1 22.5 1.6
MAM UK Income
Fund 7.6 8.1 (0.5) 28.0 26.7 1.3
MAM Global
Equity Fund 11.1 12.4 (1.3) 49.3 50.7 (1.4)
MAM Global
Focus Fund 9.9 12.4 (2.5) 45.6 50.7 (5.1)
MAM US Equity
Fund 13.6 14.0 (0.4) 66.5 71.0 (4.5)
MAM Tortoise
Fund 1.3 9.2
Notes:
All Fund returns are shown in cumulative terms, net of fees.
The initial investment in MAM UK Equity Segregated Portfolio was made on 22 January 2014.
The initial investment in the MAM UK Income Fund was made on 29 January 2014.
The initial investments in MAM Global Equity Fund, MAM Global Focus Fund and MAM US Equity Fund were made on 30 June 2014 and 27 June 2014 respectively, at the inception of each fund. The Company is invested in the Sterling share classes.
The initial investment in the MAM Tortoise Fund was made on 29 January 2014.
William Barlow
Chief Executive
For and on behalf of the Board
23 May 2017
Fund Analysis
at 31 March 2017
Geographic and Sector Analysis at 31 March 2017
% % % %
United North % Emerging Asia % %
Kingdom America Europe Markets Pacific Cash Total
-------------------- --------- --------- --------- ---------- --------- ------- --------
Basic Materials 6.0 2.1 0.4 0.2 8.7
Consumer Goods 1.5 2.3 0.2 0.5 0.2 4.7
Consumer Services 12.1 2.5 1.0 1.3 0.7 17.6
Financials 14.0 3.3 0.9 0.7 0.1 19.0
Health Care 2.4 2.4 0.6 5.4
Industrials 6.9 0.6 1.4 0.1 9.0
Oil & Gas 12.0 1.5 13.5
Technology 1.3 4.4 1.3 7.0
Telecommunications 3.3 0.4 3.6 1.1 8.4
Utilities 2.3 0.3 2.6
Cash 4.1 4.1
--------- --------- --------- ---------- --------- ------- --------
61.8 19.8 7.7 4.3 2.3 4.1 100.0
--------- --------- --------- ---------- --------- ------- --------
Notes:
The assets analysed above are the aggregate exposure of MAM UK Equity Segregated Portfolio, MAM UK Income Fund, MAM Global Equity Fund, MAM Global Focus Fund and MAM US Equity Fund. The aggregate represents a total of 54.7% of the Company's total assets.
Exposures are classified on the stock exchange on which the underlying equity is listed and FTSE sector classification.
Twenty Largest MAM UK Equity Segregated Portfolio Holdings
at 31 March 2017
Market value % of MAM UK Equity
Company GBP000 Segregated Portfolio
-------------------------- ------------- ----------------------
MAM UK Smaller Companies
Fund 5,625 8.8%
Royal Dutch Shell PLC 4,502 7.0%
BP PLC 3,798 5.9%
HSBC Holdings PLC 3,263 5.0%
Tesco PLC 2,291 3.6%
GlaxoSmithKiline PLC 2,167 3.4%
Vodaphone Group PLC 2,091 3.3%
WM Morrison Supermarkets
PLC 1,914 3.0%
Barclays PLC 1,833 2.9%
Anglo American PLC 1,654 2.6%
BT Holdings PLC 1,473 2.3%
Centrica PLC 1,472 2.3%
Orange SA 1,442 2.2%
Standard Chartered PLC 1,303 2.0%
Barrick Gold Corporation 1,248 1.9%
Rentokil Initial PLC 1,207 1.9%
Royal Bank of Scotland
PLC 1,143 1.8%
Electrocomponents PLC 938 1.5%
Marks and Spencer Group
PLC 931 1.5%
J Sainsbury PLC 909 1.4%
------------- ----------------------
Sub-total 41,204 64.3%
Other (Including cash) 22,917 35.7%
------------- ----------------------
Total 64,121 100.0%
------------- ----------------------
Interim Management Report
The important events that have occurred during the period under review, the key factors influencing the financial statements and the principal uncertainties for the remaining six months of the financial year are set out in the Chief Executive's Report above. This half-yearly financial report has not been audited or reviewed by the Company's auditor.
The financial statements continue to be prepared on a going concern basis. The approach used for the Annual Report is applied, including proper consideration of financial and cashflow forecasts, and it is believed that the Company has adequate financial resources to continue to operate for the foreseeable future.
The principal risks facing the Company are unchanged since the date of the Annual Report for the year ended 30 September 2016 as set out in the Business Review within the Strategic Report in that report (pages 15 and 16) with no particular subsequent heightened uncertainty. Risks faced by the Company include, but are not limited to, market risk, discount volatility, regulatory risk, financial risk, risks associated with banking and hedging and non-compliance with Section 1158 of the Corporation Tax Act 2010.
Responsibility Statement of the Directors in respect of the Half-Yearly Financial Report
In accordance with the Disclosure Guidance and Transparency Rules 4.2.7R and 4.2.8R, we confirm that to the best of our knowledge:
(a) the condensed set of financial statements has been prepared in accordance with International Accounting Standard (IAS) 34, Interim Financial Reporting, as adopted by the European Union, as required by the Disclosure Guidance and Transparency Rule 4.2.4R, and gives a true and fair view of the assets, liabilities and financial position of the Company;
(b) the Chief Executive's Report includes a fair review of the information required to be disclosed under the Disclosure Guidance and Transparency Rule 4.2.7R, interim management report. This includes (i) an indication of important events that have occurred during the first six months of the financial year, and their impact on the condensed set of financial statements presented in the Half-Yearly Financial Report and (ii) a description of the principal risks and uncertainties for the remaining six months of the financial year; and
(c) there were no changes in the transactions or arrangements with related parties as described in the Group's Annual Report for the year ended 30 September 2016 that would have had a material effect on the financial position or performance of the Group in the first six months of the current financial year.
Andrew J Adcock
Chairman
For and on behalf of the Board
23 May 2017
Condensed Consolidated Statement of Comprehensive Income
for the half year ended 31 March 2017
Half year ended Half year ended Year ended
31 March 2017 31 March 2016 30 September 2016
(unaudited) (unaudited) (audited)
Revenue Capital Revenue Capital Revenue Capital
return return Total return return Total return return Total
Notes GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000
Investments
Gains on
investments at
fair
value through
profit or loss 12,063 12,063 4,112 4,112 21,919 21,919
-------- -------- -------- -------- -------- --------- --------- --------- ---------
Net investment
result 12,063 12,063 4,112 4,112 21,919 21,919
-------- -------- -------- -------- -------- --------- --------- --------- ---------
Income
Income from
investments 2 4,378 4,378 3,431 3,431 6,433 6,433
Other income 2 30 30 30 30 47 47
-------- -------- -------- -------- -------- --------- --------- --------- ---------
Total income 4,408 4,408 3,461 3,461 6,480 6,480
Expenses
Management fees (61) (185) (246) (53) (159) (212) (109) (325) (434)
Performance
fees (5) (5)
Administration
expenses (345) (338) (683) (394) (455) (849) (712) (779) (1,491)
-------- -------- -------- -------- -------- --------- --------- --------- ---------
Return before
finance costs
and taxation 4,002 11,535 15,537 3,014 3,498 6,512 5,659 20,815 26,474
Finance costs (351) (1,056) (1,407) (351) (1,055) (1,406) (703) (2,110) (2,813)
-------- -------- -------- -------- -------- --------- --------- --------- ---------
Net return
before
taxation 3,651 10,479 14,130 2,663 2,443 5,106 4,956 18,705 23,661
Taxation 3 (3) (3) (5) (5) (17) (17)
-------- -------- -------- -------- -------- --------- --------- --------- ---------
Net return
after
taxation
for the
period 3,648 10,479 14,127 2,658 2,443 5,101 4,939 18,705 23,644
-------- -------- -------- -------- -------- --------- --------- --------- ---------
Return per
ordinary share: pence pence pence pence pence pence pence pence pence
Basic 4 6.8 19.6 26.4 5.0 4.6 9.6 9.3 35.0 44.3
The total column of this statement is the Consolidated Statement of Comprehensive Income of the Group, prepared in accordance with International Financial Reporting Standards (IFRS) as adopted by the European Union. The supplementary revenue return and capital return columns are prepared under guidance published by the Association of Investment Companies (AIC).
See notes 1 to 17.
Condensed Consolidated Statement of Changes in Equity
for the half year ended 31 March 2017
Capital
Share Share redemption Capital Revenue
capital premium reserve reserve reserve Total
Notes GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000
--------- --------- ------------ --------- --------- ---------
Half year ended 31
March 2017
(unaudited)
30 September 2016 5,344 3,054 56 141,648 19,884 169,986
Net return after
taxation for the
period 10,479 3,648 14,127
Dividends declared
and paid in period 6 (3,073) (3,073)
--------- --------- ------------ --------- --------- ---------
31 March 2017 5,344 3,054 56 152,127 20,459 181,040
--------- --------- ------------ --------- --------- ---------
Half year ended 31
March 2016
(unaudited)
30 September 2015 5,313 2,280 56 122,943 19,215 149,807
Net return after
taxation for the
period 2,443 2,658 5,101
12,
Share issue 13 31 775 806
Share issue expenses 13 (1) (1)
Dividends declared
and paid in period 6 (2,667) (2,667)
--------- --------- ------------ --------- --------- ---------
31 March 2016 5,344 3,054 56 125,386 19,206 153,046
--------- --------- ------------ --------- --------- ---------
Year ended 30 September
2016
(audited)
30 September 2015 5,313 2,280 56 122,943 19,215 149,807
Net return after
taxation for the
period 18,705 4,939 23,644
12,
Share issue 13 31 775 806
Share issue expenses 13 (1) (1)
Dividends declared
and paid in year 6 (4,270) (4,270)
--------- --------- ------------ --------- --------- ---------
30 September 2016 5,344 3,054 56 141,648 19,884 169,986
--------- --------- ------------ --------- --------- ---------
Condensed Consolidated Balance Sheet
at 31 March 2017
31 March 31 March 30 September
2017 2016 2016
(unaudited) (unaudited) (audited)
Notes GBP'000 GBP'000 GBP'000
------------- ------------- -------------
Non-current assets
Property and equipment 63 52 52
Investments at fair value
through profit or loss 7, 8 210,403 185,356 201,359
------------- ------------- -------------
210,466 185,408 201,411
Current assets
Trade and other receivables 385 382 356
Cash and cash equivalents 5,215 2,159 3,467
------------- ------------- -------------
5,600 2,541 3,823
Total assets 216,066 187,949 205,234
------------- ------------- -------------
Current liabilities
Trade and other payables (1,079) (988) (1,317)
Total assets less current
liabilities 214,987 186,961 203,917
------------- ------------- -------------
Non-current liabilities
Debentures 8 (33,947) (33,915) (33,931)
------------- ------------- -------------
Total liabilities (35,026) (34,903) (35,248)
------------- ------------- -------------
Net assets 181,040 153,046 169,986
------------- ------------- -------------
31 March 31 March 30 September
2017 2016 2016
(unaudited) (unaudited) (audited)
Notes GBP'000 GBP'000 GBP'000
------------- ------------- -------------
Represented by:
Ordinary share capital 12 5,344 5,344 5,344
Share premium account 13 3,054 3,054 3,054
Capital redemption reserve 56 56 56
Capital reserve 152,127 125,386 141,648
Revenue reserve 20,459 19,206 19,884
Equity Shareholders' Funds 181,040 153,046 169,986
------------- ------------- -------------
Net asset value per share pence pence pence
Basic 11 338.8 286.4 318.1
Condensed Consolidated Cash Flow Statement
for the half year ended 31 March 2017
Half year Half year
ended ended Year ended
31 March 31 March 30 September
2017 2016 2016
(unaudited) (unaudited) (audited)
Notes GBP'000 GBP'000 GBP'000
------------- ------------- ---------------
Net cash inflow from operating
activities 14 6,236 2,545 6,857
------------- ------------- ---------------
Investing activities
Purchase of tangible assets (23) (56) (66)
------------- ------------- ---------------
Net cash outflow from investing
activities (23) (56) (66)
------------- ------------- ---------------
Financing activities
Interest paid (1,392) (1,392) (2,783)
Dividends paid 6 (3,073) (2,667) (4,270)
Net proceeds from share issues 1,192 1,192
------------- ------------- ---------------
Net cash outflow from financing
activities (4,465) (2,867) (5,861)
------------- ------------- ---------------
Increase/(decrease) in cash
and cash equivalents for
period 1,748 (378) 930
------------- ------------- ---------------
Cash and cash equivalents
at start of period 3,467 2,537 2,537
------------- ------------- ---------------
Cash and cash equivalents
at end of period 5,215 2,159 3,467
------------- ------------- ---------------
Notes to the Accounts
as at 31 March 2017
1. Accounting Policies
The Condensed Consolidated Financial Statements above comprise the unaudited results of the Company and subsidiary, Majedie Portfolio Management Limited (MPM) for the six months to 31 March 2017 and are presented in pounds sterling, as this is the functional currency of the Group.
MPM was liquidated in the period and has been removed from the Group as its carrying value with no gain or loss on disposal. The removal of MPM means that consolidated accounts will not be required from the next financial year.
The Condensed Consolidated Financial Statements have been prepared in accordance with IAS 34 "Interim Financial Reporting". They do not include all financial information required for full annual financial statements. The Condensed Consolidated Financial Statements have been prepared using the accounting policies adopted in the audited financial statements for the year ended 30 September 2016.
New standards, interpretations and amendments adopted by the Group
The accounting policies adopted in the preparation of the interim condensed consolidated financial statements are consistent with those followed in the preparation of the Group's annual consolidated financial statements for the year ended 30 September 2016, and since 1 October 2016 no new standards were adopted.
2. Income
Half year ended Half year ended Year ended
31 March 31 March 30 September
2017 2016 2016
GBP'000 GBP'000 GBP'000
Income from investments
UK investment income* 4,235 3,283 5,944
Accumulated income 119 104 328
Overseas dividends 24 44 161
4,378 3,431 6,433
-------------------- ---------------- --------------
Other income
Deposit interest 1
Sundry income 30 30 46
-------------------- ---------------- --------------
30 30 47
-------------------- ---------------- --------------
Total income 4,408 3,461 6,480
-------------------- ---------------- --------------
Total income comprises:
Dividends 4,378 3,431 6,433
Interest 1
Other income 30 30 46
-------------------- ---------------- --------------
4,408 3,461 6,480
-------------------- ---------------- --------------
Income from investments
Listed UK 1,363 1,305 3,016
Listed overseas** 24 44 184
Unlisted 2,991 2,082 3,233
-------------------- ---------------- --------------
4,378 3,431 6,433
-------------------- ---------------- --------------
* Includes MAM dividend income of GBP2,991,000 (half year to 31 March 2016: GBP2,082,000 and year ended 30 September 2016: GBP3,233,000).
** Includes accumulation income of GBPnil (half year to 31 March 2016: GBPnil and year ended 30 September 2016: GBP23,000).
3. Taxation
The charge for the half year to 31 March 2017 is GBP3,000 (half year to 31 March 2016: GBP5,000; year ended 30 September 2016: GBP17,000). These amounts represent irrecoverable withholding tax paid on overseas investment income.
The Company has an effective corporation tax rate of 0%. As investment gains are exempt from tax owing to the Company's status as an approved Investment Trust, and as there is expected to be an excess of management expenses over taxable income there is no charge for corporation tax.
4. Calculation of Returns per ordinary share
Basic returns per ordinary share in each period are based on the return on ordinary activities after taxation attributable to equity shareholders. Basic return per ordinary share for the period is based on 53,439,000 shares (half year ended 31 March 2016: 53,293,143; year ended 30 September 2016: 53,366,070), being the weighted average number of shares in issue.
5. Business segments
For management purposes the Group is organised into one principal activity, being investing activities:
Investing activities
The Company's investment objective is to maximise total shareholder return whilst increasing dividends by more than the rate of inflation over the long term. The Company operates as an investment trust company and its portfolio contains investments in companies listed in a number of countries. Geographical information about the portfolio is provided above.
6. Dividends
In accordance with IAS 10: Events After the Balance Sheet Date, interim dividends are not accounted for until paid. The following table summarises the amounts recognised as distributions to equity holders in the relevant period:
Half year ended Half year ended Year ended
31 March 31 March 30 September
2017 2016 2016
GBP'000 GBP'000 GBP'000
---------------- ---------------- --------------
2016 Final dividend of 5.75p
paid on
25 January 2017 3,073
2016 Interim dividend of
3.00p paid on
24 June 2016 1,603
2015 Final dividend of 5.00p
paid on
27 January 2016 2,667 2,667
---------------- ---------------- --------------
3,073 2,667 4,270
---------------- ---------------- --------------
Distributable reserves of the Company comprise the Capital and Revenue Reserves.
Dividends for the half year ended 31 March 2017 (and for half year ended 31 March 2016; year ended 30 September 2016) have been solely made from the Revenue Reserve.
7. Investments
All investments are designated upon initial recognition as held at fair value through profit or loss, and are measured at subsequent reporting dates at fair value, which is either the bid price or the last traded price for listed securities, depending on the convention of the exchange on which the investment is quoted. Investments in unit trusts or open ended investment companies are valued at the closing price, the bid price or the single price as appropriate, released by the relevant investment manager.
Fair values for unquoted investments, or investments for which the market is inactive, are established by using various valuation techniques in accordance with the International Private Equity and Venture Capital Valuation Guidelines (IPEV). These may include recent arm's length market transactions, the current fair value of another instrument which has substantially the same earnings multiples, discounted cash flow analysis and option pricing models. Where there is a valuation technique commonly used by market participants to price the instrument and that technique has been demonstrated to provide reliable estimates of prices obtained in actual market transactions, that technique is utilised.
8. Fair Value Hierarchy
Except for the Company's 9.50% 2020 and 7.25% 2025 Debenture Stock, which are measured at amortised cost under the effective interest rate method, financial assets and liabilities of the Company are carried in the Balance Sheet at their fair value (re investments) of the balance sheet amount is a reasonable approximation of fair value (re amounts due from brokers, dividends receivable, accrued income, cash at bank and amounts owing to brokers). The fair value is the amount at which the asset could be sold or the liability transferred in a current transaction between market participants, other than a forced or liquidation sale.
The table below sets out fair value measurements of financial assets in accordance with the IFRS fair value hierarchy system:
Group
Half year ended 31 March 2017
Level 1 Level 2 Level 3 Total
GBP'000 GBP'000 GBP'000 GBP'000
Financial assets
Financial assets
held at fair value
through profit
or loss
Equities and managed
funds
Listed equity securities 151,933 23 151,956
Unlisted equity
securities 58,447 58,447
151,933 23 58,447 210,403
-------- -------- -------- --------
Group
Half year ended 31 March 2016
Level 1 Level 2 Level 3 Total
GBP'000 GBP'000 GBP'000 GBP'000
Financial assets
Financial assets
held at fair value
through profit
or loss
Equities and managed
funds
Listed equity securities 132,054 132,054
Unlisted equity
securities 53,302 53,302
132,054 53,302 185,356
-------- -------- -------- --------
Group
Year ended 30 September 2016
Level 1 Level 2 Level 3 Total
GBP'000 GBP'000 GBP'000 GBP'000
Financial assets
Financial assets
held at fair value
through profit
or loss
Equities and managed
funds
Listed equity securities 144,121 144,121
Unlisted equity
securities 57,238 57,238
144,121 57,238 201,359
-------- -------- -------- --------
There have been no transfers during the period between Levels 1 and 2, and one transfer out of Level 3 into Level 2 (see table below).
Investments whose values are based on quoted market prices in active markets, and are therefore classified as Level 1, include active listed equities. The Company does not adjust the quoted price for these instruments in normal market conditions (although it may invoke its fair value pricing policy in times of market disruption - this was not the case in 31 March 2017, 31 March 2016 or 30 September 2016).
Financial instruments that trade in markets that are not considered to be active but are valued based on quoted market prices, dealer quotations or alternative pricing sources supported by observable inputs are classified as Level 2. As Level 2 instruments include positions that are not traded in active markets and/or are subject to transfer restrictions, valuations may be adjusted to reflect illiquidity and/or non-transferability, which are generally based on available market information.
Instruments classified within Level 3 have significant unobservable inputs. Level 3 instruments include private equity and corporate debt securities. As observable prices are not available for these securities, the Group has used valuation techniques to derive fair value. In respect of unquoted instruments, or where the market for a financial instrument is not active, fair value is established by using recognised valuation methodologies, in accordance with IPEV Valuation Guidelines. New instruments are initially valued at cost, for a limited period, being the price of the most recent in the investee. This is in accordance with IPEV Guidelines as the cost of recent investments will generally provide a good indication of fair value. Fair value is the price that would be received to sell and asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date.
The Company's current level 3 classified investments comprise certain immaterial unlisted investments, which total in aggregate GBP119,000, and the investment in MAM valued at GBP58,328,000. The carrying value of MAM is normally assessed twice a year by the Audit Committee and is approved by the Board. The fair value of MAM is based on a price at which the Company may sell its shares back to MAM and its employees, which is currently considered to be the sole market for the Company's shares. The significant input in assessing the price is the earnings of MAM and a 5.0% increase/decrease in MAM's earnings would result in an increase/decrease of 4.4% in the carrying value of MAM.
The table below sets out the movement in Level 3 instruments for the period:
31 March 2017
Total Equity investments
Group GBP'000 GBP'000
--------- -------------------
Opening balance 57,238 57,238
Transfer to Level 2 re a
listing (transfer restricted
until December 2017)*
Total gain for the period
included in the Condensed
Consolidated Statement of
Comprehensive Income 1,209 1,209
--------- -------------------
58,447 58,447
--------- -------------------
*Transfer occurred at GBPnil market value.
The fair value of the Company's debenture stocks are calculated using a standard present value methodology and by reference to the market yields of a comparable UK Treasury Bond instrument with a 2.50% risk premium being added.
Year ended
Half-year ended Half-year ended 30 September
31 March 2017 31 March 2016 2016
Group Book Fair Book Fair Fair
Financial liabilities value value value value Book value value
GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000
GBP13.5m (2016:
GBP13.5m) 9.50%
2020 debenture
stock 13,452 16,159 13,438 16,745 13,445 16,605
GBP20.7m (2016:
GBP20.7m) 7.25%
2025 debenture
stock 20,495 26,373 20,477 26,183 20,486 27,111
--------- --------- --------- --------- ----------- ---------
33,947 42,532 33,915 42,928 33,931 43,716
--------- --------- --------- --------- ----------- ---------
The above financial liabilities would be classified as Level 2 financial investments in the Fair Value Hierarchy.
9. Principal financial risks
The principal financial risks which the Company faces include exposure to:
-- Market risk
-- Foreign currency risk
-- Interest rate risk
-- Other price risk
-- Credit risk
-- Liquidity risk
Further details of the Company's management of these risks and the exposure to them are set out in Note 25 of the Company's Annual Report for the year ended 30 September 2016, as issued on 2 December 2016. There have been no changes to the management of or exposure to these risks since that date.
10. Majedie Asset Management Limited (MAM)
As at 31 March 2017, the Company has a 16.8% equity shareholding in MAM, which provides investment management and advisory services across a range of UK and global equity strategies.
The carrying value of the investment in MAM is included in the Condensed Consolidated Balance Sheet as part of investments at fair value through profit or loss:
31 March 31 March 30 September
2017 2016 2016
GBP'000 GBP'000 GBP'000
Deemed cost of investment 540 540 540
Holding gains 57,788 52,669 56,580
--------- --------- -------------
Fair value at period end 58,328 53,209 57,120
--------- --------- -------------
The carrying value of MAM in the 31 March 2017 Condensed Consolidated Financial Statements is its fair value as assessed by the Audit Committee and approved by the Board as at 31 March 2017.
11. Net Asset Value
The consolidated net asset value per share has been calculated based on Equity Shareholders' Funds and on 53,439,000 (31 March 2016: 53,439,000 and 30 September 2016: 53,439,000) ordinary shares, being the number of shares in issue at the period end.
12. Ordinary Share Capital
31 March 2017 31 March 2016 30 September 2016
Number GBP'000 Number GBP'000 Number GBP'000
----------- ---------- ------------- ---------- ------------- ----------
Opening
balance 53,439,000 5,344 53,133,000 5,313 53,133,000 5,313
Ordinary
10p shares
issued 306,000 31 306,000 31
----------- ---------- ------------- ---------- ------------- ----------
Closing
balance 53,439,000 5,344 53,439,000 5,344 53,439,000 5,344
----------- ---------- ------------- ---------- ------------- ----------
All shares are allotted fully paid up, and are of one class only, being ordinary 10p shares. New shares can only be issued at a premium to the relevant NAV (with debt at fair value).
Ordinary shares carry one vote each on a poll. The Companies Act 2006 abolished the requirement for the Company to have authorised share capital. The Company adopted new Articles of Association on 20 January 2010 which, inter alia, reflected the new legislation. Accordingly the Company has no authorised share capital. The directors' will still be limited in the number of shares they can allot at any one time as the Companies Act 2006 requires that directors seek authority from the shareholders for the allotment of new shares.
13. Share Premium
Half year ended Half year ended Year ended
31 March 2017 31 March 2016 30 September
GBP'000 GBP'000 2015
GBP'000
---------------- ------------------------------ ------------------------------
Opening balance 3,054 2,280 2,280
Ordinary 10p
shares issued 775 775
Issue costs (1) (1)
---------------- ------------------------------ ------------------------------
Closing balance 3,054 3,054 3,054
---------------- ------------------------------ ------------------------------
14. Reconciliation of Operating Profit to Operating Cash Flow
Half year ended Half year ended Year ended
31 March 31 March 30 September
2017 2016 2016
GBP'000 GBP'000 GBP'000
---------------- ---------------- --------------
Consolidated net return
before taxation 14,130 5,106 23,661
Adjustments for:
Gains on investments (12,063) (4,112) (21,919)
Accumulation dividends (119) (104) (329)
Loss on disposal of tangible
assets 58
Depreciation 12 10 78
Unrealised FX gains/(losses)
on dividend tax recoverables 2 (10)
Purchases of investments (18,447) (6,994) (13,378)
Sales of investments 21,470 7,297 15,838
4,985 1,261 3,941
Finance costs 1,407 1,406 2,813
---------------- ---------------- --------------
Operating cash flows
before movements in working
capital 6,392 2,667 6,754
Decrease in trade and
other payables (4) (88) (11)
(Increase)/decrease in
trade and other receivables (170) (23) 146
---------------- ---------------- --------------
Net cash flow from operating
activities before tax 6,218 2,556 6,889
Tax recovered 22 2
Tax on unfranked income (4) (11) (34)
---------------- ---------------- --------------
Net cash inflow from
operating activities 6,236 2,545 6,857
---------------- ---------------- --------------
15. Reconciliation of Net Cash Flow to Movement in Net Debt
Half year ended Half year ended Year ended
31 March 31 March 30 September
2017 2016 2016
GBP'000 GBP'000 GBP'000
Increase/(decrease) in
cash 1,748 (378) 930
Non cash items (16) (14) (30)
---------------- ---------------- --------------
Change in net debt 1,732 (392) 900
Net debt beginning of
period (30,464) (31,364) (31,364)
---------------- ---------------- --------------
Net debt at end of period (28,732) (31,756) (30,464)
---------------- ---------------- --------------
16. Related Party Transactions
Majedie Asset Management (MAM)
MAM is the Company's Investment Manager providing investment management services under an Investment Agreement. The agreement provides for MAM to manage the Company's investment assets on both a segregated portfolio basis and also by investments into various MAM funds. Details of the Investment Agreement are contained in the material contracts section of the Directors' Report in the Company's Annual Report for the year ended 30 September 2016. As Investment Manager MAM is entitled to receive investment management fees. In respect of the segregated portfolio these are charged directly to the Company and are shown as an expense in its accounts. Any management fees due in respect of the investments made into MAM funds are charged in the fund and are therefore included as part of the investment value of the relevant holding. MAM is also entitled to performance fees in respect of the investment in the MAM Tortoise fund. The fees crystallise annually on 30 September and are calculated and charged against each individual investor. As such these are also shown as an expense in the Company's accounts and are charged wholly to capital. Details concerning the Company's investments in the period in the MAM funds are shown in the Chief Executive's Report above.
In addition to the above, the Company retains an investment in MAM itself. Mr JWM Barlow is a non-executive director of MAM but receives no remuneration for this role. MAM is accounted for as an investment in both the Group and Company accounts and is valued at fair value through profit or loss. Details concerning the Company's investment in MAM are included in the Chief Executive's Report above.
Majedie Portfolio Management (MPM)
MPM was the manager of the Majedie Investments PLC Share Plan. The Share Plan was closed in June 2016 and the Company has been liquidated in the period. As such there are no transactions or balance information for the period. Upon being liquidated, MPM was removed from the Group at its carrying value resulting in no gain or loss on disposal. The removal of MPM, means that consolidated accounts will not be required from the next financial year.
The table below discloses the transactions and balances between those entities:
Half year Half year
ended ended Year ended
31 March 31 March 30 September
2017 2016 2016
GBP'000 GBP0'000 GBP'000
Transactions during
the period:
Dividend income received
from MAM 2,991 2,082 3,233
MPM costs recharged
by the Company 18 28
Investment management
fee income due to MAM
(segregated portfolio
only) 246 212 434
Performance fee income
due to MAM (MAM Tortoise
fund only) 5
---------- ---------- -------------
Balances outstanding
at the end of the period:
Between the Company
and MAM (investment
management fees) 119 104 115
Company's investment
in MAM 58,328 53,209 57,120
Between the Company
and MPM 96 162
---------- ---------- -------------
Transactions between group companies during the period were made on terms equivalent to those that occur in arm's length transactions.
17. Financial Information
The financial information contained in this Half-Yearly Financial Report does not constitute full statutory accounts as defined in section 434 of the Companies Act 2006.
The information for the year ended 30 September 2016 has been extracted from the latest published audited accounts. Those accounts have been filed with the Registrar of Companies and included the report of the auditors which was unqualified and did not contain a statement under section 498(2) or (3) of the Companies Act 2006. Those statutory accounts were prepared in accordance with IFRS, as adopted by the European Union.
Company Information
Board of Directors Depository
A J Adcock, Chairman BNY Mellon Trust & Depositary
P D Gadd (UK) Limited
R D C Henderson BNY Mellon Centre
J W M Barlow (Executive) 160 Queen Victoria Street
All Directors are non-executive London
unless indicated EC4V 4LA
Registered Office The Depositary also has delegated
1 King's Arms Yard the safe keeping of the Company's
London EC2R 7AF assets to the Custodian, the
Bank of New York Mellon SA/NV,
London Branch.
Telephone: 020 7382 8170 Registrars
E-mail: majedie@majedieinvestments.com Computershare Investor Services
Registered number: 109305 PLC
England The Pavilions
Bridgwater Road
Company Secretary Bristol BS99 6ZZ
Capita Company Secretarial Telephone: 0870 707 1159
Services Limited
The Registry Auditors
34 Beckenham Road Ernst & Young LLP
Beckenham 25 Churchill Place
Kent BR3 4TU Canary Wharf
London E14 5EY
Investment Manager
Majedie Asset Management Limited Stockbrokers
10 Old Bailey J.P. Morgan Cazenove
London EC4M 7NH 25 Bank Street
Telephone: 020 7618 3900 London
Email: info@majedie.com E14 5JP
Website
www.majedieinvestments.com
Financial Calendar
Year end 30 September Annual results December Half year results May Annual General Meeting January Dividends paid January and June 2017 Interim Dividend Timetable The interim dividend for the period ended 31 March 2017 is 3.50p per share. Ex-dividend date 1 June Record date 2 June Payment date 16 June
This information is provided by RNS
The company news service from the London Stock Exchange
END
IR OKNDPPBKDPPB
(END) Dow Jones Newswires
May 24, 2017 02:00 ET (06:00 GMT)
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