Annual Report • Dec 14, 2021
Annual Report
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Majedie Investments PLC Annual Report 30 September 2021
This Annual Report has been prepared for the members of Majedie Investments PLC (the Company) and no one else. The Company, its Directors or agents do not accept or assume responsibility to any other person in connection with this document and any such responsibility or liability is expressly disclaimed.
This Annual Report contains certain forward-looking statements with respect to the principal risks and uncertainties facing the Company. By their nature, these statements and forecasts involve risk and uncertainty
because they relate to events and depend on circumstances that may or may not occur in the future. There are a number of factors that could cause actual results or developments to differ materially from those expressed or implied by these forward-looking statements and forecasts. The forward looking statements reflect the knowledge and information available at the date of preparation of this Annual Report and will not be updated during the year. Nothing in this Annual Report should be construed as a profit forecast.
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 | 2021 | 2020 |
|---|---|---|
| Total shareholder return (including dividends): | 37.1% | -27.6% |
| Net asset value total return (debt at fair value including dividends): |
22.5% | -11.7% |
| Net asset value total return (debt at par including dividends): |
20.6% | -11.6% |
| Total dividends (per share): | 11.4p | 11.4p |
| Directors' valuation of investment in Majedie Asset Management Limited: |
£25.2m | £31.0m |
| Capital Structure | Notes (See below) |
2021 | 2020 | % |
|---|---|---|---|---|
| As at 30 September | ||||
| Total assets | 1 | £173.0m | £152.2m | +13.7 |
| Which are attributable to: | ||||
| Financial liabilities (debt at par value) | 2 | £20.8m | £20.9m | |
| Equity Shareholders Funds | £152.2m | £131.3m | +15.9 | |
| Gearing | 4 | 12.3% | 11.0% | |
| Potential Gearing | 4 | 13.7% | 15.9% | |
| Total returns (capital growth plus dividends) | 5 | |||
| Net asset value per share (debt at par value) | 3 | +20.6% | -11.6% | |
| Net asset value per share (debt at fair value) | 3 | +22.5% | -11.7% | |
| Share price | +37.1% | -27.6% | ||
| Capital returns | ||||
| Net asset value per share (debt at par value) | 3 | 287.1p | 247.7p | +15.9 |
| Net asset value per share (debt at fair value) | 281.4p | 239.5p | +17.5 | |
| Share price | 230.0p | 176.5p | +30.3 | |
| Discount of share price to net asset value per share | ||||
| Debt at par value | 19.9% | 28.7% | ||
| Debt at fair value | 18.3% | 26.3% | ||
| Revenue and dividends | ||||
| Net revenue available to Equity Shareholders | £5.0m | £4.8m | ||
| Net revenue return per share | 9.4p | 9.1p | +3.3 | |
| Total dividends per share | 11.4p | 11.4p | 0.0 | |
| Total administrative expenses and management fees | £1.6m | £1.7m | ||
| Ongoing Charges Ratio | 6 | 1.2% | 1.3% |
Alternative Performance Measures (APM) definitions used in the Annual Report are as follows:
Total Assets: Total assets are defined as total assets less current liabilities.
Debt at par or fair value: Par value is the carrying value of the debenture which will equate to the nominal value 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.
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 22 on page 92.
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.
Ongoing Charges Ratio (OCR): Ongoing charges are a measure of the regular ongoing administration costs of running a company, as calculated in accordance with AIC guidance. Further information is shown in the Business Review section of the Strategic Report on page 25.
Adjusted Capital and Reserves: This is as defined in the debenture Trust Deed. It essentially removes unrealised gains from the Company's reserves (see investment policy on page 22).
Adjusted Equity Shareholders' Funds: Equity Shareholders' Funds restated to include debt at its fair value, rather than par value (see note 22 on page 92).
| Year's high/low | 2021 | 2020 | ||
|---|---|---|---|---|
| Share price | high | 252.5p | 265.0p | |
| low | 176.0p | 138.5p | ||
| Net asset value – debt at par | high | 304.2p | 313.6p | |
| low | 245.0p | 221.0p | ||
| Discount – debt at par | high | 30.0% | 37.8% | |
| low | 13.3% | 4.1% | ||
| Discount – debt at fair value | high | 27.9% | 35.4% | |
| low | 11.2% | 0.6% |
to 30 September 2021
| Year End |
Total Assets £000 |
Equity share holders' Funds £000 |
NAV Per Share (Debt at par value) Pence |
Share Price Pence |
Discount % |
Earnings Pence |
Total Dividend** Pence |
Gearing† % |
Potential Gearing† % |
Ongoing Charges Ratio# % |
|---|---|---|---|---|---|---|---|---|---|---|
| 2012 | 146,057 | 112,234 | 215.6 | 155.8 | 27.74 | 4.90 | 10.50 | 9.24 | 30.14 | 1.83 |
| 2013 | 159,013 | 125,166 | 240.5 | 160.0 | 33.47 | 6.80 | 10.50 | 21.47 | 27.04 | 1.73 |
| 2014 | 167,934 | 134,061 | 256.7 | 229.0 | 10.79 | 9.36 | 7.50 | 23.39 | 25.27 | 1.66 |
| 2015 | 183,708 | 149,807 | 281.9 | 257.3 | 8.74 | 9.42 | 8.00 | 21.25 | 22.63 | 1.88 |
| 2016 | 203,917 | 169,986 | 318.1 | 257.1 | 19.18 | 9.25 | 8.75 | 18.46 | 19.96 | 1.58 |
| 2017 | 216,507 | 182,544 | 341.6 | 281.5 | 17.59 | 11.14 | 9.75 | 17.09 | 18.61 | 1.54 |
| 2018 | 199,151 | 178,626 | 334.3 | 277.5 | 16.99 | 12.47 | 11.00 | 10.01 | 11.49 | 1.33 |
| 2019 | 175,621 | 155,074 | 292.3 | 256.0 | 12.42 | 12.92 | 11.40 | 11.50 | 13.25 | 1.34 |
| 2020 | 152,153 | 131,333 | 247.7 | 176.5 | 28.74 | 9.11 | 11.40 | 10.97 | 15.85 | 1.34 |
| 2021 | 172,951 | 152,153 | 287.1 | 230.0 | 19.89 | 9.41 | 11.40 | 12.26 | 13.67 | 1.25 |
** Dividends disclosed represent dividends that relate to the Company's financial year. Under International Accounting Standards dividends are not accrued until paid or approved. Total dividends include special dividends paid, if any.
† Calculated in accordance with AIC guidance.
In the year ended 30 September 2021 the NAV at par and fair value (net asset value with debt at par and fair value) rose by 20.6% and 22.5% respectively on a total return basis. The share price rose by 37.1% also on a total return basis as the discount narrowed from 29% to 20%. By way of comparison, the FTSE All-Share Index rose by 27.9% and the MSCI All Country Index rose by 22.1% in sterling terms and in both cases, on a total return basis.
On 7 December 2021 Liontrust Asset Management PLC (Liontrust) announced that it had entered into a conditional agreement to purchase the entire share capital of Majedie Asset Management Limited (MAM) for up to £120 million. The consideration is made up of shares in Liontrust and cash and payable partly upon completion of the transaction and partly at later dates upon satisfaction of certain conditions. The entire investment team managing the MAM Funds into which the Company invests will move across to Liontrust and the investment approach will remain unchanged.
The initial stage of the transaction is expected to complete on 1 April 2022 and therefore the valuation methodology for MAM at 30 September 2021 is the same as in prior quarters. Please see the section in the CEO's report for further details about the valuation of MAM.
In the twelve months to 30 September the Company increased in capital value by £21.9m despite a reduction in value for the Company's holding in MAM from £31.0m to £25.2m, excluding the dividends received from MAM.
Total Income received from investments was £6.1m compared to £6.0m in the twelve months to 30 September 2020. The dividend received from MAM was £4.0m, the same as in the previous year and the income from MAM Funds was £2.1m compared to £1.9m in 2020. Total administration costs and management fees were £1.6m compared to £1.7m and finance costs were unchanged at £1.5m. The ongoing charges ratio is 1.2%.
The net revenue return after tax increased from £4.8m in the year to 30 September 2020 to £5.0m in the year to 30 September 2021. The interim dividend was maintained at 4.4p and the Board is recommending a final dividend of 7.0p which is the same as in the prior year. The total paid in dividends to shareholders, and proposed for this year, is £6.0m and the Company holds £24.3m in revenue reserves. In view of the exceptional circumstances since March 2020, the Board believes it is appropriate to draw £1.0m from revenue reserves to maintain the level of the dividend.
The final dividend will be payable on 28 January 2022 to shareholders on the register at 14 January 2022 and the Company's shares go ex-dividend on 13 January 2022.
The Company's asset allocation gives exposure to funds across all geographies that are managed by MAM (84.9% of total assets), and a stake in MAM itself, (14.5% of total assets).
MAM's assets under management fell from £8.1bn to £6.0bn during the year to 30 September. The reasons for the outflows are twofold. First, the flows reflect an ongoing trend by pension fund trustees de-risking their portfolios by selling equities and buying bonds and MAM, as a significant investment manager to these schemes, has inevitably suffered withdrawals. Second, a large, longstanding client, St James' Place, took the decision to move to a more style specific investment approach meaning that MAM's flexible investment style was no longer deemed to be appropriate. The Funds were not redeemed until mid July, but the Company has reflected the reduced earnings in its valuation of MAM since 31 March 2021.
The investment performance across MAM Funds in which the Company is invested has been good with only one fund marginally underperforming through the year. The Company has a higher proportion of its
assets in UK equities than many of its peers in the AIC Global Income Sector and the Board has retained this position. It is particularly encouraging that the UK Equity market after five years of underperformance, outperformed Global Equities in the year to 30 September 2021.
In the aftermath of the pandemic and its consequences, opinions on the Global economy vary in the extreme. The most obvious questions relate to Inflation: muted for 20 years, but it is now rising and there is considerable debate whether this is of a transient nature or the beginning of something more persistent. Interest rates remain at historically low levels and but are expected to rise.
In a background of economic uncertainty, The Board is confident that investing in MAM Funds whose style is flexible and one that can react quickly to new information will provide good returns for shareholders over the longer term. MAM's investment process is built on highly detailed fundamental stock analysis and given the wide range of macroeconomic outcomes, such an investment process should provide a sound basis for good investment returns. The strong performance of the funds in the last two years show the strength of a flexible investment process in a period of unprecedented market volatility.
After three years as Chairman and ten years as a non-executive director I am retiring from the Board following the AGM in January. The Board has undertaken a thorough selection process for my replacement and I am pleased that Christopher Getley will take my place as Chairman. Christopher has extensive knowledge of the investment industry and Investment Companies. Further information about Christopher can be found on page 29.
The Board considers Responsible Investing to be of the great importance and it is very supportive of the proactive and detailed approach taken by MAM. A summary of their processes is presented on page 20.
MAM is a signatory to the Stewardship Code 2020 and to the Principles of Responsible Investing. In February 2021, it joined the Net Zero Asset Managers Initiative.
The Company normally conducts marketing through face to face meetings with the Chief Executive together with research from Kepler to targeted wealth managers. Lockdowns have prevented meetings in person and, in their place, a number of webinars have been convened which have reached a wide audience. It is increasingly evident that Investment Companies are particularly attractive to retail investors and in order to reach this broader audience the Company has joined doceo, a new web portal that provides, to retail investors, financial information and video presentations by the MAM managers who are responsible for the funds in which the Company invests together with an overview of the Company. The link to the Majedie Investments page on doceo is
https://doceo.tv/funds/majedie-investments.
A recent addition to the Company's website is the Global Infusions podcast series where two of MAM's Global fund managers discuss topical investment themes. The podcasts are available on the Company's website.
The AGM will, once again, be held at the City of London Club, 19 Old Broad Street, London EC2N 1DS at 12.00pm on Wednesday 19 January 2022. I very much look forward to welcoming shareholders after last year's meeting was not able to be held as a public event.
Shareholders should check the Company's website for updates about arrangements for the AGM before they travel in case Government guidelines require changes to be made.
R David C Henderson Chairman 13 December 2021
The Company's assets are allocated at the discretion of the Board between four investment strategies managed by MAM and an equity holding in MAM of 17.6%. The Company has no overall benchmark; rather each fund has its own benchmark. The monthly factsheets of the relevant MAM funds are available on the Company's website, as are the monthly factsheets of the Company which show the allocation between the funds and the top twenty holdings on a look through basis. The Company's total assets at 30 September 2021 were £173.0m as defined on page 2.
There were no transactions, by the Company, in MAM shares over the period, though a small buyback by MAM of their own shares resulted in the Company's stake in MAM increasing from 17.2% to 17.6%. During the year the Board took the decision to consolidate its fund holdings and redeemed its holdings in the UK Income Fund and the US Equity Fund and reinvested the proceeds into the UK Equity Segregated Portfolio and Global Equity Fund respectively. The reallocation has reduced the exposure to US equities and increased exposure to Emerging Markets and Europe. UK equity exposure is broadly unchanged.
| Value £000 |
% of Total Assets |
|
|---|---|---|
| UK Equity Segregated Portfolio | 67,107 | 38.8 |
| Global Equity Fund | 44,217 | 25.6 |
| International Equity Fund | 13,593 | 7.9 |
| Tortoise Fund | 21,848 | 12.6 |
| MAM | 25,161 | 14.5 |
| Net cash/realisation fund* | 1,025 | 0.6 |
| Total Assets | 172,951 | 100.0 |
* Net cash and realisation fund does not include cash held in the MAM UK Equity Segregated Portfolio or any MAM funds.
During the year ended 30 September 2021 the value of the MAM shareholding has fallen from £31.0m to £25.2m and the Company has received a dividend of £4.0m.
The methodology for valuing MAM annualises the most recent quarter's earnings (excluding performance fees) and applies a median peer group price earnings multiple adjusted for an unlisted liquidity discount of 20%. Performance fee earnings are rolling twelve month actual numbers, to avoid seasonality. The price earnings multiple, for performance fee earnings, is then discounted by a further 50%. Surplus net assets are then added after deducting 200% of Regulatory Capital. The valuation is updated quarterly and the Board believes it enhances the transparency of the Company's investment in MAM. The methodology is the same as used last year, the Board having taken external advice on valuation in May 2020.
| Earnings after tax (last 3 months annualised ex notified outflows) | ||||
|---|---|---|---|---|
| Peer median group multiple | 13.7 | |||
| Liquidity discount | 20% | |||
| Peer Group Multiple after liquidity discount | 11.0 | |||
| Performance Fee earnings after tax (12 month rolling) | £3.7m | |||
| 50% of peer group median multiple and 20% liquidity discount | 5.5 | |||
| Surplus net assets having deducted 200% of Regulatory Capital | £34.5m | |||
| Valuation of MAM | £143.2m | |||
| Valuation of the Company's 17.6% holding in MAM | £25.2m |
As noted in the Chairman's statement Liontrust has entered into a conditional agreement to acquire the entire share capital of MAM. The consideration for MAM shareholders is made up of shares in Liontrust and cash. On completion the Company is expected to be paid £7.7m in the form of dividends and special dividends. At the share price of Liontrust on 7 December 2021, the value of the share consideration is £14.7m. This initial consideration of £22.4m is £2.8m below the year end valuation of £25.2m. There is a further deferred consideration of cash and shares of up to £5.6m which may potentially be due three years after completion and dependent on future investment performance and growth in assets under management. The investment in MAM, though latterly disappointing, has been a great sucess for the Company with an IRR in excess of 20% per annum over 19 years. Following the announcement of the transaction, the Company's daily NAV announcements will value MAM using the value Liontrust shares and cash that is due to be received in dividends and special dividends. At this stage no value has been placed on the deferred consideration.
It is encouraging that the MAM funds largely outperformed their respective benchmarks in the twelve months to 30 September and is a sound endorsement of MAM's flexible investment process. The underlying portfolio has many different investment themes. In particular, the Tortoise Fund has had a particularly strong year whilst retaining its downside market protection. The Tortoise Fund has historically performed well in periods of market turbulence and given the current market uncertainties, the holding is viewed as a key differentiator for the Company.
A further feature has been the significant swings in style and sentiment that the Investment Managers have successfully navigated and shows the resilience of the investment process.
| 12 months to 30 September 2021 | Since MI invested (% annualised) | |||||
|---|---|---|---|---|---|---|
| % Fund return | % Benchmark return |
% Relative performance |
% Fund return | % Benchmark return |
% Relative performance |
|
| UK Equity Segregated Portfolio |
29.1 | 27.9 | 1.2 | 40.7 | 47.1 | (6.4) |
| Global Equity Fund | 24.0 | 22.2 | 1.8 | 164.6 | 140.1 | 24.5 |
| International Equity Fund | 18.1 | 18.7 | (0.6) | 40.4 | 16.0 | 24.4 |
| Tortoise Fund | 36.0 | 16.0 |
The chart below outlines the change in the Company's NAV (debt at par) over the year to 30 September 2021. In aggregate the NAV has increased by £20.9m, comprised of net investment gains at the MAM Funds, including the UK Equity Segregated Portfolio, of £31.7m, a write down of the investment in MAM of £5.8m (after dividends received from MAM of £4.0m), expenses and finance costs of £3.0m and dividends paid to shareholders of £6.0m.
* MAM Funds comprise the UK Income Fund, Global Equity Fund, International Equity Fund, US Equity Fund and Tortoise Fund.
The UK Equity Fund launched in March 2003. Its objective is to produce a total return in excess of the FTSE All-Share Index after costs, over any five year period, through a diversified portfolio of predominantly UK Equities with the flexibility to invest up to 20% in shares listed outside the UK. The fund incorporates a dedicated investment in smaller companies. Since inception to 30 September 2021 the fund has returned 548.2% net of fees compared to the benchmark return of 334.7%. The Company's assets are invested in a segregated portfolio that is managed pari passu to the UK Equity Fund. In the year to 30 September 2021, the UK Equity Segregated Portfolio returned 29.1% net of fees which is an outperformance of 1.2% against its benchmark.
The most significant positive and negative sector contributors to the relative performance of the UK Equity Segregated Portfolio for the twelve months to 30 September 2021, in %
The table below shows most significant positive and negative stock contributors to the relative performance of the UK Equity Segregated Portfolio for the year to 30 September 2021, in %
The table below shows the principal overweight and underweight positions of the UK Equity Segregated Portfolio at 30 September 2021 relative to the FTSE All-Share Index, in %
The Global Equity Fund was launched in June 2014 and its objective is to produce a total return in excess of the MSCI All Country World Index after costs over any five year period through investment in a diversified portfolio of global equities. Since inception to 30 September 2021 the Global Equity Fund has returned 164.6% net of fees for the sterling share class, which represents an outperformance of 24.5% against its benchmark. In the year to 30 September 2021 the Global Equity Fund returned 24.0% net of fees which represents an outperformance of 1.8%.
The most significant positive and negative sector contributors were to the relative performance of the Global Equity Fund for twelve months to 30 September 2021, in %
The table below shows most significant positive and negative stock contributors to the relative performance of the Global Equity Fund for the year to 30 September 2021, in %
The principal overweight and underweight sector positions of the Global Equity Fund at 30 September 2021 relative to the MSCI All Country Index, in %
The table below shows the principal overweight and underweight positions of the Global Equity Fund at 30 September 2021 relative to the MSCI All Country Index, in %
The International Equity Fund was launched in December 2019 and its objective is to produce a total return in excess of the MSCI All Country World Index ex US after costs over any period of five years. It is a high conviction portfolio which captures developed and emerging market opportunities and can invest up to a maximum of 10% in US equities. Since inception the International Equity Fund has returned 40.4% net of fees for the sterling share class, which represents an outperformance of 24.4% against it benchmark. In the year to 30 September 2021 the International Equity Fund returned 18.1% net of fees which represents an underperformance of 0.6%.
The most significant positive and negative sector contributors to relative performance of the International Equity Fund for the twelve months to 30 September 2021, in %
The table below shows most significant positive and negative stock contributors to the relative performance of the International Equity Fund for the year to 30 September 2021, in %
The principal overweight and underweight sector positions of the International Equity Fund at 30 September 2021 relative to the MSCI All Country Index ex US, in %
The table below shows the principal overweight and underweight positions of the International Equity Fund at 30 September 2021 relative to the MSCI All Country Index ex US, in %
The Tortoise Fund is a global absolute return fund which was launched in August 2007. Its objective is to achieve positive absolute returns in all market conditions, through investment primarily in long and synthetic short positions in equities over rolling three year periods, with less volatility than a conventional long only equity fund. Since inception the Tortoise Fund has returned 147.5% net of fees. In the year to 30 September 2021 the Tortoise Fund returned 36.0% net of fees.
The table below shows most significant positive and negative stock contributors to the relative performance of the Tortoise Fund for the year to 30 September 2021, in %
The table below shows most significant positive and negative stock contributors to the relative performance of the Tortoise Fund for the year to 30 September 2021, in %
The table below shows the principal long and short stock positions of the Tortoise Fund at 30 September 2021, in %
| Europe Ex UK |
UK | Emerging Markets |
Asia Pacific |
North America |
Cash | Total | |
|---|---|---|---|---|---|---|---|
| Basic Materials | 1.8 | 1.0 | 1.5 | 4.3 | |||
| Consumer Staples | 0.3 | 6.2 | 0.1 | 1.0 | 7.6 | ||
| Consumer Discretionary | 1.7 | 10.4 | 1.5 | 0.4 | 7.8 | 21.8 | |
| Financials | 1.1 | 7.1 | 0.8 | 0.5 | 2.4 | 11.9 | |
| Real Estate | 0.6 | 0.6 | |||||
| Health Care | 4.0 | 3.0 | 0.7 | 3.6 | 11.4 | ||
| Industrials | 2.6 | 9.8 | 0.1 | 0.8 | 3.4 | 16.7 | |
| Energy | 0.8 | 2.5 | 0.2 | 3.5 | |||
| Technology | 0.4 | 3.6 | 4.2 | 0.5 | 7.1 | 15.8 | |
| Telecommunications | 1.8 | 0.3 | 0.9 | 0.1 | 3.1 | ||
| Utilities | 0.3 | 0.5 | 0.8 | ||||
| Cash | 2.5 | 2.5 | |||||
| Total | 13.0 | 45.2 | 7.6 | 3.9 | 27.7 | 2.5 | 100.0 |
| Futures* | (6.5) |
The assets analysed above are the net exposure of the UK Equity Segregated Portfolio, Global Equity Fund, International Equity Fund and the Tortoise Fund. The Tortoise Fund, an absolute return fund invests through equities, CFDs for short positions and futures. The net exposure is shown in the table. The aggregate of the funds represents 84.9% of the Companies total assets.
Exposures are classified by the stock exchange on which the underlying equity is listed and by the relevant FTSE sector classification.
* The Tortoise Fund has short futures positions on the S&P 500 and NASDAQ 100 indices.
| Value £000 |
% of Total Assets |
|
|---|---|---|
| Majedie Asset Management Limited | 25,161 | 14.5 |
| Royal Dutch Shell PLC | 3,574 | 2.1 |
| AstraZeneca PLC | 2,458 | 1.4 |
| NatWest Group PLC | 2,232 | 1.3 |
| Tesco PLC | 2,128 | 1.2 |
| Electrocomponents plc | 1,899 | 1.1 |
| Facebook, Inc. | 1,884 | 1.1 |
| Ascential Plc | 1,872 | 1.1 |
| Unilever PLC | 1,788 | 1.0 |
| RELX PLC | 1,758 | 1.0 |
| Anglo American PLC | 1,747 | 1.0 |
| Amazon.com, Inc. | 1,743 | 1.0 |
| 3i Group plc | 1,686 | 1.0 |
| Ashtead Group plc | 1,613 | 0.9 |
| Royal KPN NV | 1,604 | 0.9 |
| AVEVA Group plc | 1,542 | 0.9 |
| Taiwan Semiconductor Manufacturing Co., Ltd. | 1,498 | 0.9 |
| Alphabet Inc. | 1,496 | 0.9 |
| A.P. Moller - Maersk A/S Class B | 1,449 | 0.8 |
| Samsung SDI Co., Ltd | 1,418 | 0.8 |
| St. James's Place Plc | 1,415 | 0.8 |
| Fevertree Drinks Plc | 1,377 | 0.8 |
| Microsoft Corporation | 1,375 | 0.8 |
| Equifax Inc. | 1,333 | 0.8 |
| Compass Group PLC | 1,324 | 0.8 |
| SoftBank Group Corp. | 1,311 | 0.8 |
| MercadoLibre, Inc. | 1,293 | 0.7 |
| Daily Mail and General Trust plc | 1,287 | 0.7 |
| Weir Group PLC | 1,287 | 0.7 |
| Serco Group plc | 1,265 | 0.7 |
| 73,817 | 42.7 |
The strong rebound in markets throughout the year has led to stock markets reaching all time highs in the US. The initial recovery from the sell off was prompted by fiscal and monetary stimulus on a massive scale and, following the successful vaccine roll out and general opening up of economies, growth has been higher than expected. Corporate earnings in Q3 2021 have again been higher than forecast in the US, Europe and the UK. Importantly, corporate earnings guidance has been revised up for the full year. Inflation remains a concern, having been driven by the massive dislocations caused by the pandemic. Initially, consumer spending switched from services to goods whilst the supply of goods was constrained by the supply chain being out of kilter. At the same time labour markets tightened rapidly, as a significant proportion withdrew from the work force causing upward pressure on the price of goods and labour. As economies reopen, the global supply chain will rebalance and the labour market pressures will ease causing the initial inflationary pressures to slow. In the medium term economies are expected to have higher level in inflation than the abnormally low levels seen in the last ten years.
The UK equity market having under performed Global markets since the Brexit vote in 2016, is at a 40% discount to the MSCI All Country World Index with a forward PE multiple of 12 times. It has been argued that the higher representation of Banks and Energy explain the discount, but this is not the case. If these sectors are excluded, the discount is still close to its historic record. It is also notable that the dividend expectations for the UK market have risen throughout the year. Logic suggests the discount anomaly will narrow. The significant corporate activity, across the market, in the last year shows global companies view the UK as significantly undervalued. The valuation gap presents a good opportunity and the Company retains a high weighting in the UK, in part through its holding in MAM, compared to its peers in the AIC Global Income Sector.
At a stock level the massive uncertainty through the pandemic and subsequent corporate upheaval has presented a good opportunity for fundamental investors such as MAM to own companies that the market has materially mispriced. The performance of the funds in which the Company invests over the last two years, suggest the managers are well placed in the current environment to continue to perform well.
J William M Barlow CEO 13 December 2021
This section on responsible capitalism has been produced by Majedie Asset Management and has been included with their permission.
At Majedie Asset Management, stewardship is a part of who we are. We believe that knowing our companies and being active in our relationship with them is fundamental to our investment decisions. We engage our companies regularly on matters central to their longer-term well-being. We integrate our assessment of a company's key risks and opportunities into our investment decisions and proxy voting. Being involved with our holdings and knowing what we own is our hallmark.
For us, the components of stewardship, or Responsible Capitalism, all sit under one roof. We see the management of assets as going hand in hand with engagement, proxy voting, and reporting. We make our own voting decisions and, as part of our fundamental investment process, undertake materiality assessment on the key risks and opportunities that our investments face. We don't expect our investments to be perfect or to solve all the world's problems, but we do expect them to manage their business in a way that benefits shareholders and stakeholders.
There are times when we need to escalate our engagement with our holdings. In these instances, we state our objectives, targets, and the time scales we have in mind. We communicate our expectations, as well as the rationale for these expectations, to our investee companies. Any subsequent actions by the company (or lack thereof) directly impact our investment decisions.
Our clients are vital to our stewardship framework, as well. We have built long term relationships with our clients and engage them frequently so we know what matters most to them. We report to our clients and in the public domain on developments in our holdings and how our investment decisions are impacted by the actions our companies take.
Majedie is a signatory to the Stewardship Code 2020 and to the Principles of Responsible Investment. We engage collectively through our memberships with the Investor Forum and Climate Action 100+. In February 2021, Majedie also joined the Net Zero Asset Managers' Initiative through which we are committed to achieve net zero in our funds and in our business by 2050.
For further detail on our approach in this area please see our Responsible Capitalism Report 2020 on our website or follow this link: www.majedie.com.
• Anglo American
In November 2020, we engaged with Anglo American, the multinational mining company. We invest in Anglo as we feel the group is a welldiversified miner with attractive growth in copper. Anglo continues to invest in sustainable technologies for its mines and the company is now set to reap the rewards from this as it rolls out sustainable initiatives across its operations.
The objectives of our engagement with Anglo included encouraging the group to demerge from its thermal coal assets and also stressing the need for the group to link pay more directly to progress towards its net zero target.
We engaged Anglo by virtual meeting and followed up by writing a letter to the group's Chairman to encourage Anglo to sell down its thermal coal holdings (which focused on its Carrejon JV assets and its South African asset, Thungela Resources). We were concerned that Anglo's time frame (at least 2.5 years) for parting with these assets was too elongated, especially as investors are finding it increasingly difficult to justify holding companies with exposure to thermal coal. (Thermal coal constitutes one of the largest contributors, along with methane, to Anglo's total carbon emissions.) We also asked the group to link more closely its climate transition targets to pay and LTIP.
Anglo noted our concern and in June 2021 entered into an agreement to sell these assets. Anglo has a target to be carbon neutral across its operations by 2040, with an interim target of reducing its GHG emissions by 30% by 2030. In terms of pay, Anglo stated that it has a 20% weighting in its bonus objectives to SHE (social, health, environmental). Within the group's LTIP, there is also a 20% weighting for ESG factors, which include metrics for energy efficiency and GHG emissions. Anglo expects to develop these metrics further so that they will be aligned with its 2030 commitments.
We have attributed an average resiliency score to Anglo, as the group is implementing sustainabilityoriented technology and has a climate target. Our conviction score remains unchanged.
In April 2021, we met with Newmont, the world's largest gold mining company, which has its headquarters in Colorado, USA. We invest in Newmont as we remain reasonably bullish on the gold price in the medium term, given the prevailing political and monetary policy environment. Newmont has a high-quality asset base in North America, South America, Australia, and Africa. The group anticipates 6-7 million ounces of production each year for the next decade with averages slightly higher in the medium term. Also, the group's CEO, previously a senior manager at Rio Tinto, is bringing a greater level of industrialised operational rigour to Newmont.
The objectives of our engagement included learning more about the group's safety programmes and safety spending, especially following Covid, and understand the group's tax situation.
We engaged the group on its safety performance, which has remained excellent, during the disruption of the pandemic and its mines being ramped up and down. Newmont changed the metric it looks at regarding safety – switching from a lagging metric of injuries and fatalities to a more holistic consideration of the causes or indicators of fatality and injury risks. This gives the group more of a heads-up on what might happen rather than looking solely backwards. The group feels it now has a proper focus on critical controls; it has moved people off-site (a positive outcome from the pandemic) which has helped reduce distractions for those still at the mine.
In terms of its tax situation, Newmont had previously suggested there might be some political pressure in Nevada for miners to pay higher taxes given that the state had lost some gambling revenue during the pandemic. Newmont values operating in countries where there is tax and governmental stability and works to maintain a good working relationship with state and local government.
We have attributed an average resiliency score to Newmont, given the group's ability to operate safe and efficient mines across the world and provide employment and tax revenue in remote and often reasonably poor places. Our conviction score remains unchanged.
Majedie Investments PLC, (the Company), is a listed investment company and an Alternative Investment Fund (AIF), which invests in companies around the world. The investment objective is 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 on pages 22 and 23) were both last approved by shareholders at a General Meeting of the Company on 27 February 2014. The Board does not envisage any change in the Company's activity in the future.
Following the UK's exit from the EU and the end of the transition period on 31 December 2020, the Company is now subject to the UK Alternative Investment Fund Managers Directive (UK AIFMD) which generally maintains the previous rules set out in the AIFMD. The UK AIFMD regulates the Alternative Investment Fund Managers (AIFMs) of AIFs. The Company is a selfmanaged AIF (i.e., it is an AIFM and an AIF), which requires it to be authorised and regulated by the Financial Conduct Authority (FCA).
The Company's broker is J.P. Morgan Cazenove, and the Company is a member of the AIC.
The purpose of the Strategic Report is to inform the shareholders of the Company by:
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;
The self-managed business model deployed by the Company means that it undertakes all administrative operations but also delegates certain arrangements to other service providers including fund management to MAM. These delegations are in accordance with the UK AIFMD (details of the material delegations can be found on pages 33 to 35 of the Annual Report), but the Board, as AIFM, and in accordance with the Company's investment objective and policy, directs and monitors the overall performance, operations and direction of the Company.
The Company's Employee, Social, Environmental, Ethical and Human Rights policy is contained in the Directors' Report on page 32.
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 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.
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.
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:
• 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.
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.
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.
The Company uses gearing currently via a long-term debenture. 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.
The Company is an investment company with a premium listing on the London Stock Exchange. This year, following the end of the transition period on 31 December 2020 after the UK's exit from the EU, EU rules and regulations no longer apply in the UK. The Company remains subject to United Kingdom legislation and regulations including UK company law, UK AIFMD, the Listing Rules, the Prospectus Rules, the Disclosure Guidance and Transparency Rules, taxation law (all as were required to be amended to include EU rules and regulations as a consequence of Brexit) 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 section 833 of the Companies Act 2006 the Company is defined as an investment company.
The Company's requirements under the UK AIFMD are in respect of risk management, conflicts of interest, leverage, liquidity management, delegation, the requirement to appoint a depositary (the Company has appointed The Bank of New York Mellon (International) Limited), 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 international accounting standards in conformity with the requirements of the Companies Act 2006, supplemented by the Statement of Recommended Practice for Investment Trust Companies and Venture Capital Trusts (SORP) issued in October 2019. The principal accounting policies of the Company are set out in note 1 to the accounts on pages 65 to 72.
The Board believes that investment returns will be maximised if a total return policy is followed. The policy aim is to increase dividends by more than inflation over the long term. Further details are under the Dividend Growth section on page 25. The Company has a comparatively high level of revenue reserves for the investment trust sector and at £24.3m, revenue reserves represent over four times the current annual dividend distribution. The strength of these reserves will assist in underpinning the Company's dividend policy in years when the income from investments is insufficient to completely cover the annual distribution.
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 the NAV 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 assess 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 on page 2.
The Board believes that, after asset allocation, the performance of each of the investment groups, being the MAM Funds (including the UK Equity Segregated Portfolio – UKES) and MAM, 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.
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 the discount has decreased marginally, ending the year at a lower value to that at the start of the year (with the NAV with debt at par), resulting in the Company's share price gain being more than 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 for shares. Details of movements in the Company's share price discount over the year are shown in the Year's Summary on page 2.
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 selfmanaged status). The current industry-wide measure for investment trusts is the OCR, which seeks to quantify the ongoing costs of running the Company. This measures the annual ongoing running costs of an investment trust, excluding performance fees, one-off expenses, marketing costs, finance costs 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 on page 4 provides further details on the expenses incurred during the year. Details of the OCR for the year are shown in the Year's Summary on page 2.
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. As such, a sustainable and progressive long-term dividend policy which pays dividends out of current year income is the goal, but recognising that using reserves may be required in certain circumstances.
The Board receives detailed management accounts and forecasts which show the actual and forecast financial outturns for the Company. For the 7 years to 30 September 2021, following the rebasing of the dividend in 2014, average dividend growth has been 6.3% per annum, which is well ahead of inflation.
The emerging and principal risks and the Company's policies for managing these risks and the policy and practices are summarised below and in note 22 to the accounts.
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 UKES, and via collective investment vehicles (the MAM Funds)), and an investment in an absolute return fund, the Tortoise Fund. The major risk for the Company remains investment risk, primarily market risk; however, it is recognised that the investment in MAM is a concentration risk for the Company. Furthermore, this year political concerns, notably the US and China, and the nascent inflation led recovery from the COVID-19 pandemic are an emerging risk, which provide heightened uncertainty to the investment risk faced by 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 Fund Manager manages the majority of the Company's investment assets. The portfolios of the 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 the UKES and the MAM Funds' returns will differ from the benchmark returns. The 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:
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 UKES and 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 objective and policy, the allocation of assets between investment groups, the level and effect of gearing and sector, currency and geographic exposure.
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 nonfinancial performance.
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 portfolio reports and income forecasts as part of its monitoring of compliance with section 1158 of the Corporation Tax Act 2010.
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 mis-reporting of NAVs. The Board and Audit Committee regularly review statements on internal controls and procedures, receive detailed reports and presentations from the Company's depositary and the Company is subject to an annual external audit. The COVID-19 pandemic continues, however both the Company and its service providers implemented business continuity plans and service levels have been maintained.
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.
Under Section 172(1) of the Companies Act 2006, directors of a company must act in a way that they consider, in good faith, would be most likely to promote the success of the company for the benefit of its members as a whole. In doing so they should have regard to, inter alia, the likely long-term consequences of their decisions, the interests of the company's employees, fostering relationships with suppliers, customers and others, the impact of operations on the community and environment, maintaining a reputation for high standards and lastly to act fairly as between shareholders of the company.
The Company is a self-managed investment company and its key stakeholders comprise its one and only class of shareholders (it does not have customers), its employees, and also its third-party service providers (including its Company Secretary, Fund Manager, Custodian, Depositary, Stockbroker, Registrar, Auditor and Solicitor – see Shareholder Information on page 104). Additionally, the Company interacts with the wider community and the environment primarily through its holdings in investee companies worldwide.
In accordance with its duty to promote the success of the Company, the Board utilises the investment objective (see page 22), various comprehensive procedures and policies, including the Company's investment policy (see page 22), and committees with defined roles and responsibilities against which executive management and third-party providers are monitored, challenged and assessed. The Board regularly reviews the objective, procedures and policies and Committee responsibilities to ensure they remain effective.
In performing its duties, the Board receives regular and detailed reporting from both executive management and third-party service providers. As an investment company, investment performance is fundamentally important and, as such, a significant portion of the Board's time is spent in this area. The Company has been established for a very long time, with a cornerstone shareholder base, and as a closed ended listed investment company is a long-term investor in global equity markets and the Board is mindful of this in undertaking its duties.
The Board recognises the importance of having experienced, trained and motivated staff as an integral part of the successful running of the Company. As such it has ensured that appropriate HR policies and procedures are in place, with staff being appropriately remunerated. As a small Company, the Board, which includes an Executive Director, has a close relationship and regular engagement with staff, monitors morale and the Company has a very low staff turnover.
The Company, in conducting its operations, utilises its third-party service providers as listed previously. The Board believes that maintaining effective continuing relationships is important to its duty under s172(1). In particular the relationship with the Fund Manager is of critical value to the Company and its long-term success. The relationship is strong and includes the Chief Executive sitting on their board as a non-executive director. The Board receives regular detailed reports and presentations from the Fund Manager from an investment and business perspective and marketing updates from Kepler Partners. The Company's other service providers provide regular reports and advice with the Board ensuring two-way communications are in place. All major service providers have relevant metrics which are used to measure performance. The Board monitors operations to ensure that in undertaking its operations the Company operates to the standard befitting an FCA regulated LSE listed investment company.
The Company is a small investment company with a very limited physical presence in the City of London. The Board is conscious of its community and its direct environmental impact and seeks to be aware of these when making decisions. The Company invests, indirectly, in many investee companies worldwide through its Fund Manager. The Fund Manager has a long-standing focus on ESG (it is a signatory to the FRC 2020 Stewardship Code) which is embedded in its investment decision making process (see the Responsible Capitalism section page 20 and 21), which includes a dedicated ESG manager and it engages regularly with investee companies in this area. The Fund Manager makes available to the Board an extensive amount of information on these activities in this area.
The Board recognises the need for good communications with its shareholders and is committed to listening to their views. Further details on how the Board interacts with its shareholders are described on page 40. In addition, the Board consults with them, where appropriate, concerning major decisions before they are taken.
The Board, as part of the MAM fund restructuring exercise, agreed certain reductions in management fees with MAM resulting in a material reduction in fund management costs. The Board remains committed to ensuring that costs are appropriate for the Company, taking into account its self-managed nature and size;
As the recovery from the COVID-19 pandemic has continued the Board ensured, through discussions with providers and employees, that the Company's operational performance continued to remain robust and employees continued to manage the risks associated with the virus. The nascent recovery, along with the MAM business performance, meant that the Board had to carefully consider the future dividend levels for the Company after taking into account known shareholder views in this area. The Board received a detailed revenue forecast and projections to take account of the changing outlook for dividend receipts from investee companies and MAM. The Board decided to maintain the current year dividend utilising reserves to do so;
On behalf of the Board
R David C Henderson Chairman 13 December 2021
This page forms part of the Directors' Report
Mr Henderson, a Chartered Accountant, is currently Chairman of Alder Investment Management and Ecclesiastical Insurance Office plc and is also a Non Executive Director of MM&K Limited and The Farmington Trust Limited. Previously he was Senior Advisor to Kleinwort Hambros, Non Executive Director of Edentree Investments Management, and Chairman of Kleinwort Benson Private Bank from 2004 to 2008 having held various senior roles in the Kleinwort Benson Group since 1995. Prior to that he spent 11 years at Russell Reynolds Associates, which followed 10 years at Morgan Grenfell & Co and 6 years at what is now RSM. He was appointed as a Director of Majedie on 22 September 2011 and is Chairman of the Board, Nomination Committee and Management Engagement Committee, and a member of the Audit and Remuneration Committees.
Mr Barlow was appointed Chief Executive Officer of Majedie from 1 April 2014, before which he was a member and Chief Operating Officer at Javelin Capital LLP. Prior to Javelin Capital LLP, he was at Newedge Group (part of the Societe Generale Group). He joined Skandia Asset Management Limited as an equity portfolio manager in 1991. He was Managing Director of DnB Asset Management (UK) Limited in 2002. Mr Barlow was appointed a Non Executive Director of the Company in July 1999 and was made an executive director in June 2011. He is a Non Executive Director of Majedie Asset Management Limited. He is also Chairman of Racing Welfare and a Non Executive Director of Strategic Equity Capital PLC.
Ms Lewis was appointed as a Director of Majedie on 1 January 2019. She was, until 2013, a director of corporate finance and broking at Winterflood Investment Trusts. She is Chairman of Invesco Perpetual UK Smaller Companies Investment Trust PLC and Non Executive Director of BMO Capital and Income Investment Trust PLC, The Scottish Investment Trust PLC and BlackRock World Mining Trust PLC. Ms Lewis is Chairman of the Remuneration Committee and a member of the Management Engagement, Nomination and Audit Committees.
Mr Little was appointed as a Non Executive Director of Majedie on 23 May 2019. He has an extensive knowledge of the investment industry, having previously served as the Managing Director of Barclays Wealth Scotland and Northern Ireland. Prior to this role he was Global Head of Automotive Research at Deutsche Bank having previously qualified as a Chartered Accountant with Price Waterhouse. He is currently a Non Executive Director of Securities Trust of Scotland and Blackrock Smaller Companies Trust Plc, where he chairs the audit committees. He also acts as a consultant to Lindsays LLP and North Capital Wealth Management. Mr Little is Chairman of the Audit Committee and a member of the Remuneration, Management Engagement and Nomination Committees.
Mr Getley was appointed as a Non Executive Director of Majedie on 1 July 2020. He has over 25 years' experience at senior level in financial services, specifically in fund management and investment banking. He was a Partner and Fund Manager at Cazenove & Co and a Director at Deutsche Asset Management. Subsequently, he was CEO of Westhouse Securities, an institutional stockbroker. In his current roles of Executive Chairman of AgPlus Diagnostics Limited and Non-Executive Chairman of Masawara PLC, he utilises his comprehensive knowledge of developing, implementing and communicating strategy. Mr Getley is a member of the Remuneration, Audit, Management Engagement and Nomination Committees.
Mr Killingbeck was appointed as a Non Executive Director of Majedie on 1 July 2020. He has over 35 years' experience in the financial services sector, initially as a fund manager and latterly in a number of senior management roles within the wealth management sector. He was previously Chief Executive officer of WH Ireland PLC and is currently Managing Director of Harris Allday, a division of EFG Private Bank. He retired as the Non-Executive Chairman of Bankers Investment Trust PLC in 2019 and is currently a trustee of the London Stock Exchange Benevolent Fund. Mr Killingbeck is a member of the Remuneration, Audit, Management Engagement and Nomination Committees.
* Independent Non Executive.
The Directors submit their report and the accounts for the year ended 30 September 2021.
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.
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 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.
The net revenue return before taxation arising from operations amounted to £5,004,000 (2020: net revenue return of £4,843,000).
The Directors recommend a final ordinary dividend of 7.0p per ordinary share, payable on 28 January 2022 to shareholders on the register at the close of business on 14 January 2022. Together with the interim dividend of 4.4p per share paid on 18 June 2021, this makes a total distribution of 11.4p per share in respect of the financial year (2020: 11.4p per share).
The Company, as an investment company, is subject to various risks in pursuing its objective. The nature of these risks and the controls and policies in place that are used to minimise these risks are further detailed in the Strategic Report and in note 22 of the Accounts.
The general powers of the Directors are contained within the relevant UK legislation and the Company's Articles. The Directors are entitled to exercise all powers of the Company, subject to any limitations imposed by the Articles or applicable legislation.
The Directors in office at the date of this report are listed on page 29 of the Company's Annual Report and Accounts.
Mr RDC Henderson will retire following the 2022 AGM and will be replaced as Chairman by Mr CD Getley (see page 39 for further details).
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 (AIC Code).
The Company's Articles of Association require that at every AGM any Director who has not retired from office at the preceding two AGMs and who was not appointed by the Company in a general meeting, at either such meeting, shall retire from office and be eligible for re-election or election respectively, by the Company.
However, in accordance with the AIC Code, all Directors are to be re-elected annually. As such Messrs. CD Getley, RW Killingbeck, AMJ Little and Ms JM Lewis will retire at the forthcoming AGM and, being eligible, will offer themselves for re-election. Mr RDC Henderson will retire following the 2022 AGM and will not offer himself for re-election.
In accordance with Listing Rule 15.2.13A, Mr JWM Barlow, being a Non Executive Director of Majedie Asset Management Limited, the Fund Manager, must submit himself for annual re-election.
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 Directors' performance within the annual Board performance evaluation, hereby recommend that shareholders vote in favour of the proposed re-elections.
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.
Beneficial interests in ordinary shares as at:
| 30 September 2021 |
1 October 2020 |
|
|---|---|---|
| Mr RDC Henderson | 24,700 | 24,700 |
| Mr JWM Barlow | 409,224 | 409,224 |
| Mr AMJ Little | 9,879 | 9,879 |
| Ms JM Lewis | 8,000 | 5,803 |
| Mr CD Getley | 36,830 | 33,830 |
| Mr RW Killingbeck | 20,000 | 20,000 |
Non-beneficial interests in ordinary shares as trustees for various settlements as at:
| 30 September 2021 |
1 October 2020 |
|
|---|---|---|
| Mr JWM Barlow | 3,111,110 | 3,111,110 |
At 30 September 2021, the Company has been notified of the following substantial holdings in shares carrying voting rights:
| Mr HS Barlow | 15,017,619 | 28.10% |
|---|---|---|
| Mr JWM Barlow Non-Beneficial |
3,111,110 | 5.82% |
| 1607 Capital Partners LLC | 2,654,600 | 5.01% |
| Miss AE Barlow | 2,029,148 | 3.80% |
| Mr MHD Barlow | 1,776,241 | 3.32% |
| Oakwood Nominees Limited | 1,631,602 | 3.05% |
| Aviva plc | 1,432,574 | 2.70% |
The substantial voting rights disclosed above include the total holdings of shares within certain trusts where there are other beneficiaries.
The Company has not been notified any change in substantial holdings from 1 October 2021 up to the date of this report.
In accordance with government directives currently in effect, arrangements for the AGM include a physical meeting at the City of London Club, 19 Old Broad Street, London EC2N 1DS. Shareholders should check the Company's website for updates about arrangements for the AGM in case Government guidelines require changes to be made.
The Board considers that Resolutions 1 to 14 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.
The Board continues to be 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 AGM on 20 January 2021, to allot new shares for cash, and without first offering them to existing shareholders in proportion to their holdings, up to a maximum of 5,296,087 shares (being approximately 9.99% of the Company's existing share capital at that time). These two existing authorities will expire at the 2022 AGM.
During the year, as the Company's shares remained at a discount, no shares have been allotted (2020: Nil).
The Board continues 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 5,294,579 shares (being approximately 9.99% of the Company's existing share capital). The renewed authority will expire at the 2023 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.
In response to the continued excessive share price discount, in part, reflecting the COVID-19 pandemic, and in the best interests of shareholders, the Company has maintained its intention to buyback for cancellation its ordinary shares, noting however the restrictions that exist for the Company in respect of share buybacks. Since 1 October 2020 and up to the date of this report the Company bought back for cancellation 15,092 ordinary shares with a nominal value of £1,509.20, and at a total cost of £34,000. At the AGM in 2021 the Directors were given power to buy back 7,951,130 ordinary shares (being 14.99% of the Company's existing share capital). This authority will also expire at the 2022 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 AGM 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 shall be 7,944,519 ordinary shares (being approximately 14.99% of the Company's 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 2023 AGM.
As part of its corporate governance the Board keeps under review the capital structure of the Company.
At 30 September 2021, the Company had a nominal issued share capital of £5,300,589, comprising 53,005,887 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. The Company holds no shares in Treasury.
The Company deploys gearing through long-term debt being a £20.7m 7.25% debenture stock 2025, of which £25m was issued in 2000 with £4.3m being re-purchased in 2004.
The limits on the ability to borrow are described in the investment policy on page 23. The Board is responsible for managing the overall gearing of the
Company. Details of gearing levels are contained in the Year's Summary on page 2, and in note 22 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 change or fall away on a change of control or trigger any compensatory payments for Directors, following a takeover bid.
The Board believes that it is in the best interests of shareholders of the Company to have the ability to call meetings on 14 clear days' notice should a matter require urgency. The Board will therefore, as last year, propose a resolution at the AGM 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.
The Chairman's Statement on page 5 and the Chief Executive's Report on page 19 provide details concerning relevant future developments of the Company in the forthcoming year.
The Company, as an investment company, 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 outsources significant parts of its operations to reputable professional companies, including fund management to MAM. MAM complies with all the relevant laws and regulations and also takes account of social, environmental, ethical and human rights factors, where appropriate.
In accordance with the Companies Act 2006 (Strategic Report and Directors' Reports) Regulations 2013, and the Companies (Directors' Report) and Limited Liability Partnership (Energy and Carbon Report) Regulations 2018, the Company is required to report on its carbon dioxide emissions and quantity of energy consumed. In accordance with the regulations, the Company has determined that its organisational boundary, to which entities the regulations apply, is consistent with its 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 matters by the Company.
However, the Company, as a self-managed investment company, 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, either directly or through the MAM Funds; 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 Board believes that the Company has no reportable matters for the year ended 30 September 2021 (2020: nil).
The Company made no political or charitable donations during the year (2020: nil) to organisations either within or outside of the UK.
The Board is aware of the recommendations made in the Hampton-Alexander and Parker Review in respect of gender and ethnic diversity in the boardroom. The Company does not have a formal policy on diversity, but details on how diversity is taken into account when making new appointments to the Board is included in the section on the Nomination Committee on page 39. At the year end, 83.3% of the directors of the Board were male and 16.6% were female. The composition of the Company's employees is 66.6% male and 33.3% female.
The Board has appointed MAM as its fund 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 on pages 6 and 7.
The fees payable under the Investment Agreement are detailed below:
| Portfolio/Fund* | Management Feeˆ |
Performance Feeˆ |
|---|---|---|
| UKES | 0.48% p.a. | Nil |
| Tortoise Fund | 1.00% p.a. | 20%† |
| Global Equity Fund | 0–0.65% p.a.** | Nil |
| International Equity Fund | 0.25% p.a. | Nil |
The Investment Agreement entitles either party to terminate the arrangement with six months' notice.
• safekeeping of the assets held within the Company's investment portfolio, including those classed as financial instruments for the purpose of the UK AIFMD, and ensuring the Company's financial instruments are held in segregated accounts so that they can be clearly identified as belonging to the Company and maintaining records sufficient for verification of the Company's ownership rights in relation to assets other than financial instruments.
BNYMIL or any BNY Mellon affiliates may have an interest, relationship or arrangement that is in conflict with or otherwise material in relation to services it provides to the Investment Manager and the Company. Should a conflict of interest arise, BNYMIL shall manage conflicts of interest fairly and transparently. As a regulated business, the Depositary is required to prevent, manage and, where required, disclose information regarding any actual or potential conflict of interest incidents to relevant clients. The Depositary is required to and does maintain and operate effective organisational and administrative arrangements with a view to taking all reasonable steps designed to prevent conflicts of interest from adversely affecting the interests of its clients. 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 UK AIFMD in relation to use of delegates by depositaries, BNYMIL 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 BNYMIL continues unless and until terminated: without cause upon the Company and BNYMIL giving not less than 90 days' notice and upon BNYMIL 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.
Company Secretarial services are provided by Link, under the Company Secretarial Services Agreement dated 25 April 2016. The agreement mandates that Link Company Matters Limited will act as Link's nominated corporate secretary. The agreement also provides for fees to be paid quarterly, 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.
The Company confirms that there are no items which require disclosure under Listing Rule 9.8.4R in respect of the year ended 30 September 2021.
The UK AIFMD 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:
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 due during the year.
The UK AIFMD requires the Company to disclose its actual leverage (calculated under the Gross & Commitment methods) and also to set a limit in respect of leverage it can use. The Company has set a limit of 1.5 times (1 being no leverage) and as at 30 September 2021 had leverage of 1.12 times under the Gross method and 1.14 times under the Commitment method. Note 22 to the accounts provides further details.
The UK AIFMD requires that potential investors are provided with certain information. The Company provides this information on its website at www.majedieinvestments.com. This has been updated in the year reflecting various small changes, all of which are described in this Annual Report.
As far as each of the Directors are aware:
This confirmation is given and should be interpreted in accordance with the provisions of Section 418 of the Companies Act 2006.
Ernst & Young LLP were re-appointed as Auditors on 20 January 2021. 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.
The Board has assessed the prospects of the Company over the five year period to September 2026. The Board believes that five years is appropriate given the long-term nature of the Company's objective and the risks arising from investing in equity markets.
In undertaking their assessment of the viability of the Company, the Board has first considered the Company's prospects utilising the following factors:
The assessment process provided the following matters which are considered relevant, being:
As part of the assessment the Board remains very conscious of the impact of COVID-19, both short and long-term, on the Company as noted previously and how this uncertainty might affect the Company's future prospects. However, the Board considers that the Company's investment strategy is appropriate and looking forward from the period under review, a global equity investment with a good dividend yield should be considered attractive. As such, the Board has 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 2026.
In assessing the Company's ability to continue as a going concern, the Board considered the nature of its investment portfolio, its investment objective and policy (see page 22 and 23), its risk management systems, its financial income and expenditure projections, and its financial and operational structure.
As part of this assessment the Board took into consideration the continuing uncertainties generated by the COVID-19 pandemic on the Company's ability to generate income, sell its assets as or if required to meet liabilities, and ability to operate under any restrictions imposed by the pandemic. The Board stress tested a downside scenario showing income from investments falling by, on average, 50% and investment values by 45% which would still leave the Company with adequate financial resources to be in a going concern position.
It should also be noted that the Company continues to have had no need to make use of any of the governmental pandemic economic support packages made available.
The sale of MAM to Liontrust as announced on 7 December 2021 is expected to complete by June 2022 and will not have any material impact on the going concern position of the Company.
As such the Board is of the view that the Company will be able to meet its obligations to 13 December 2022, being twelve months from the date of the approval of the financial statements, and therefore continues to adopt the going concern basis in preparing the financial statements.
By Order of the Board
Link Company Matters Limited Company Secretary 13 December 2021
The Corporate Governance Statement forms part of the Directors' Report.
This section of the Annual Report describes how the Company, as a member of the AIC, has applied the principles of the UK Corporate Governance Code as published by the Financial Reporting Council (FRC) in July 2018, as required by the FCA. A copy of the UK Corporate Governance Code can be found at www.frc.org.uk. The Board has considered the principles and recommendations of the AIC Code of Corporate Governance (AIC Code), as published in February 2019. The AIC Code, addresses all the principles set out in the UK Corporate Governance Code, as well as setting out additional principles and recommendations on issues that are of specific relevance to the Company, being self-managed. A copy of the AIC Code can be found at www.theaic.co.uk.
The Board considers that reporting against the principles and recommendations of the AIC Code (which incorporates the UK Corporate Governance Code), will provide shareholders with full details of the Company's corporate governance compliance. The Company has complied with the recommendations of the AIC Code throughout the year ended 30 September 2021 except as set out below:
Provision 6.2.14: Senior Independent Director – The Directors have determined that the size of the Company's Board does not warrant the appointment of a senior independent director.
The description of the main features of the Company's internal control and risk management system in relation to the FRC's guidance can be found on page 45 in the Report of the Audit Committee.
The Company has a long history of self management, and is a self-managed AIF under the UK AIFMD. In complying with the more detailed aspects of best corporate governance practice, the Board takes into account that the Company is a listed investment company and the Barlow family, as a whole, owns approximately 54% of the shares in issue.
Although the family shareholding in total is significant, there are a number of individual family members and trusts represented by many separate shareholdings.
The principal objective of the Board continues to be to maximise total shareholder return for all shareholders.
The Board is responsible for the overall stewardship of the Company, including its purpose, strategy, operations and governance. In undertaking this responsibility, and also taking into account its selfmanaged status and as a AIFM, the Board has set an investment objective and policy, both approved by shareholders, established governance arrangements, risk management and operating systems, policies and procedures, including those relating to its employees. In setting and seeking alignment across these components the Board have considered the Company's culture, including its long history and background and seeks to embed expected values, such as fairness, integrity and professionalism across the Company. The Chairman is responsible for leadership of the Board and ensuring its effectiveness in all aspects of its role, and that all Directors receive accurate, timely and clear information. In line with the requirements of the AIC Code, the responsibilities of the Chairman have been agreed by the Board and are available to view on the Company's website. The Board's composition satisfies the requirements of the AIC Code comprised of an independent Chairman, four other independent Non-Executive Directors and Mr JWM Barlow is the CEO.
Biographical details of the Directors are shown on page 29.
All Non-Executive Directors are considered to be independent as defined by the AIC Code as, in the opinion of the Board, each is independent in character and judgment and there are no relationships or circumstances relating to the Company that are likely to affect their judgment. Mr RDC Henderson will retire following the Company's AGM in 2022, being replaced by Mr CD Getley as the Company's Chairman. Both Mr Henderson's and Mr Getley's other commitments are in their biographies on page 29.
The Board meets at least five times in each calendar year and its principal focus is the strategic development of the Company, investment policy and the control of the business. Key matters relating to these areas, including the monitoring of financial performance, any changes to the asset allocation, cash or gearing limits, and the buying back of shares or the repayment of long term borrowings are reserved for the Board and set out in a formal statement.
During the year ended 30 September 2021, the Company held 5 Board meetings, 3 Audit Committee meetings, 1 Management Engagement Committee meeting, 1 Nomination Committee meeting and 1 Remuneration Committee meeting. Attendance at these Board and Committee meetings is detailed below.
| Number of meetings | ||||||
|---|---|---|---|---|---|---|
| Board Audit Management Engagement |
Remuneration | Nomination | ||||
| Directors | ||||||
| RDC Henderson | 5 | 3 | 1 | 1 | 1 | |
| JWM Barlow | 5 | n/a | n/a | n/a | n/a | |
| JM Lewis | 5 | 3 | 1 | 1 | 1 | |
| AMJ Little | 5 | 3 | 1 | 1 | 1 | |
| CD Getley | 5 | 3 | 1 | 1 | 1 | |
| RW Killingbeck | 5 | 3 | 1 | 1 | 1 |
During the year, the Directors undertook a comprehensive performance evaluation and also considered the output from the previous year's evaluation. The process was led by the Chairman and was designed to assess the strengths, areas of improvement and independence of the board together with the performance of its committees, the Chairman and individual Directors. The 2020 evaluation continued to highlight succession planning a key area for focus. As disclosed elsewhere in this report, Mr Henderson will retire following the AGM in 2022, and be replaced by Mr CD Getley as the Company's Chairman.
The evaluation questionnaire also covered a range of areas including strategy, processes and effectiveness, size and composition, and corporate governance and was intended to analyse the focus of meetings and assess whether they are appropriate, or if any additional information may be required to facilitate future Board discussions. The evaluation of the Chairman was carried out by the other Directors of the Company. The results of the Board evaluation process were reviewed and discussed by the Board and several areas of improvement were identified for the Company to focus on in the coming year, including enhancing ESG reporting, and continuing to identify means to enhance investor awareness of the Company.
The Board, concluded that the Board and its Committees continue to function effectively and that the Chairman's and Directors' other commitments are such that all Directors are capable of devoting sufficient time to the Company.
The Board has agreed and established a procedure for Directors in furtherance of their duties to take independent professional advice if necessary, at the Company's expense.
The Board recognises the need for new Directors to receive an appropriate induction. Existing Directors receive regular updates on regulatory and governance matters, and development and training needs were discussed as part of the Board evaluation process.
• The Audit Committee comprises: Mr AMJ Little (Chairman), and all of the Non-Executive Directors. Mr JWM Barlow and representatives of the Auditors are invited to attend meetings of the Committee.
The Board has agreed the terms of reference for the Audit Committee, which meets at least three times a year.
Further details on the work of the Audit Committee are detailed in the Report of the Audit Committee on pages 42 to 45.
Mr RDC Henderson (Chairman) and all of the Non-Executive Directors. Mr JWM Barlow attends meetings at the request of the Committee, from time to time. The approach of the Committee is to consider appointments to the Board of Directors in the context of the requirements of the business, its need to have a balanced and effective Board and succession planning. As part of this, gender and ethnic diversity are carefully considered by the Committee and are fully taken into account when evaluating the skills, knowledge and experience desirable to fill each vacancy and all appointments to the Board are made on merit. The Committee has not set any measurable objectives in respect of diversity.
The Company's Articles of Association require a Director appointed during the year to retire and seek election by shareholders at the next AGM and all Directors must seek re-election at least every three years. However, as noted previously, in accordance with the AIC Code all Directors will be re-elected annually. The Articles of Association can be amended by shareholders at a General Meeting.
The rules relating to the appointment and removal of directors are set out in the Companies Act 2006 and the Company's Articles of Association.
Non-Executive Directors are appointed for a term of three years, subject to earlier termination, including provision for early termination by either party on one month's notice. The terms and conditions for all Non-Executive Director appointments are set out in letters of appointment (they do not have service contracts), which are available for inspection at the Company's registered office and will be available 15 minutes before the start of and during the Company's AGM. The letters of appointment set out the time commitment expected of Non-Executive Directors who, on appointment, undertake that they will have sufficient time to meet their requirements.
The Board's policy on tenure for the Non-Executive Directors is that it is expected that individual director's should be able to serve for up to nine years before retiring. However, this limit is flexible in order to facilitate effective succession planning.
Details of the CEO's employment contract can be found in the Report on Directors' Remuneration on page 47.
The Nomination Committee met once during year on 20 October 2020 to consider the re-election of Directors at the Company's AGM.
Based on the outcome of the Board performance evaluation process and on the basis that they continued to make valuable contributions, exercise judgement and express opinions in an independent manner, the Committee has decided to recommend the re-election and election of all Directors as appropriate.
The Committee considers that the current Directors provide the necessary breadth of skills, experience, length of service and knowledge of the business to effectively manage the Company.
Furthermore, during the year, Mr Henderson formally advised the Board of his intention to retire following the AGM in 2022. A formal selection process was conducted and the results reported to the Nomination Committee on 20 October 2021. At that meeting the Committee agreed that Mr CD Getley would replace Mr Henderson as Chairman, and put forward for election at the AGM in 2022, with the relevant announcement to be made. No external consultants were used as part of the process.
• The Remuneration Committee comprises: Ms JM Lewis (Chairman) and all of the Non-Executive Directors. Mr JWM Barlow is invited to attend and participate as appropriate. Further details on the work of the Remuneration Committee are included in the Report on Directors' Remuneration on pages 46 to 49.
Mr RDC Henderson (Chairman) and all of the Non-Executive Directors. Mr JWM Barlow attends meetings, at the request of the Committee, from time to time. The Board has agreed terms of reference for the Committee, which meets at least once a year to consider the performance of the Fund Manager, the terms of the Fund Manager's engagement and to consider the continued appointment of the Fund Manager. The MEC met once on 20 October 2021 and recommended that MAM be retained as Fund Manager. In determining their recommendation, the MEC concluded that MAM have an excellent long- term track record and offer a broad range of products to meet the Company's investment policy.
Following the recommendation from the MEC, the Board has concluded that it is in the best interests of shareholders that MAM should continue to be the Fund Manager of the Company under its existing terms.
In addition to the Fund Management role, the Board has delegated to external third parties the Depositary, including custodial services, company secretarial services and share administration and registration services.
The MEC annually reviews their performance and their contracts.
The terms of reference of the Company's Committees are available on request from the Company Secretary or from the Company's website.
The Directors have declared any conflicts or potential conflict of interest to the Board which has the authority to approve such situations. The Company Secretary maintains the Register of Directors' Conflicts of Interests which is reviewed quarterly by the Board and when changes are notified. The Directors advise the Company Secretary and Board as soon as they become aware of any conflicts of interest. Directors who have conflicts of interest do not take part in discussions which relate to any of their conflicts.
It is the responsibility of each individual Director to avoid an unauthorised conflict situation arising. Directors must request authorisation from the Board as soon as they become aware of the possibility of a situational conflict arising.
The Board is responsible for considering Directors' requests for authorisation of situational conflicts and for deciding whether or not the situational conflict should be authorised. The factors to be considered will include whether the situational conflict could prevent the Director from properly performing his duties, whether it has, or could have, any impact on the Company and whether it could be regarded as likely to affect the judgement and/or actions of the Director in question. When the Board is deciding whether to authorise a conflict or potential conflict, only Directors who have no interest in the matter being considered are able to participate in the relevant decision, and in taking the decision the Directors must act in a way they consider, in good faith, will be most likely to promote the Company's success. The Directors are able to impose limits or conditions when giving authorisation if they think this is appropriate in the circumstances.
The Directors must also comply with the statutory rules requiring company directors to declare any interest in an actual or proposed transaction or arrangement with the Company.
The CEO undertakes regular visits and presentations to shareholders and potential investors around the UK, discussing, inter alia, Company performance and strategy. Kepler Partners and doceo are engaged to provide support in this area and they provide detailed analysis reports to the Board.
Additionally, members of the Board hold meetings with the Company's principal shareholders and prospective investors to develop an understanding of the views of shareholders and to discuss the Company's strategy and financial and investment performance.
Any issues raised by shareholders are reported to the full Board. Shareholders are encouraged to attend the AGM and to participate in proceedings. Shareholders wishing to contact the Directors to raise specific issues can do so directly at the AGM or by writing to the Company Secretary.
In the Annual Report each year the Directors seek to provide shareholders with information in sufficient detail to allow them to obtain a reasonable understanding of recent developments affecting the business and the prospects for the Company in the year ahead. The various sections of the Strategic Report provide further information.
The Company has an investor savings scheme which provides shareholders with tax effective and convenient way of investing. Communication of up-to-date information is provided through the Company's website at www.majedieinvestments.com.
The exercise of voting rights attached to the Company's investment portfolio has been delegated to MAM in the absence of explicit instructions from the Board. MAM subscribes to the NAPF Voting Issues Service (ISS) which forms part of their voting process. MAM provides a quarterly report detailing the voting activity on the Company's investment portfolio which includes details of the votes made as well as the reasons explaining the rationale for the voting decision.
MAM is required to include on their website a disclosure about the nature of their commitment to the FRC's Stewardship Code and details may be found at www.majedie.com.
The Company's Shareholder Engagement Policy, as required under the Shareholder Rights Directive II, utilises the MAM policy and is available on the Company's website.
The Board acknowledges that it is responsible for the risk management and internal control relating to the Company and for reviewing the effectiveness of those systems. An ongoing process is in existence to identify, evaluate, manage and monitor risks faced by the Company. The UK AIFMD also requires that the Board, acting as AIFM, implements effective risk management policies and procedures and the appointment of a Depositary provides an additional check over the Company's operations. Key procedures are also in place to provide effective financial control over the Company's operations.
The risk management process and systems of internal control are designed to manage rather than eliminate the risk of failure to achieve the Company's objectives. It should be recognised that such systems can only provide reasonable, not absolute, assurance against material misstatement or loss.
A review of internal control and risk management systems is undertaken by the Board or the Audit Committee in the context of the Company's overall investment objective.
The review covers business strategy, investment management, operational, compliance and financial risks facing the Company. In arriving at its judgement of the nature of the risks facing the Company, the Board or the Audit Committee has considered the Company's operations in the light of the following factors:
Further details relating to risk management, risk assessments and internal controls are contained in the Report of the Audit Committee on page 45.
In accordance with the AIC and the UK Corporate Governance Code, the Board has carried out a review of the effectiveness of the system of internal controls as it has operated over the year and up to the date of approval of the report and accounts.
By Order of the Board
Company Secretary 13 December 2021
The Report of the Audit Committee forms part of the Corporate Governance Statement.
There was no change to the composition of the Audit Committee during the year, and includes the Company Chairman as a member. In accordance with the 2019 AIC code, this is considered appropriate given Mr RDC Henderson's background with the Company and his financial experience. Additionally, it is considered that the Audit Committee Chairman, Mr AMJ Little, who is a Chartered Accountant, has appropriate recent financial experience to continue in the role. The Board recognises the requirement for the Audit Committee as a whole to have competence relevant to the sector in which the Company operates. The Directors have a combination of financial, investment and business experience, specifically with respect to the investment trust sector.
The Committee usually meets three times a year in which it reviews the Half-Yearly Financial Report and Annual Report, and agrees the auditor's terms of engagement.
The Company Secretary, Link Company Matters Limited (trading as Company Matters), acts as Secretary to the Committee and its terms of reference are available on request or may be obtained from the Company's website.
The Committee's responsibilities include:
In respect of the year under review the Committee met three times, in December 2020 and May and July 2021. Since the year end it has also met in December 2021. The purpose of the meetings was to review the Company's Half-Yearly Financial Report and Annual Report respectively, to review the internal control environments of outsourced service providers and to oversee the relationship with the Auditor (which includes recommendations on fees, approval of their terms of engagement and assessing their independence and effectiveness).
Significant issues related to the Financial Statements In respect of the year ended 30 September 2021, and following a robust assessment of the risks facing the Company, the Committee considered the following issues to be significant to the financial statements:
The Company is an investment company which invests in many companies around the world, the majority of which are quoted and traded on a recognised stock exchange. These investments are made directly via the UKES or in Funds managed by MAM.
However, a very small number of the Company's investments are in companies that are not quoted or traded on a recognised stock exchange and for which price discovery requires careful analysis and judgement. The only such investment that is significant to the determination of the Company's net asset value is the investment in MAM (see note 13 on page 82).
Investments in quoted companies are valued using prices from a third-party pricing source. These prices are reviewed against other third-party sources and additionally those that exceed a pre-determined movement threshold, or do not change, are subject to further verification. Investments made in the various MAM funds are priced using prices published by the relevant fund administrator (MAM use the Bank of New York Mellon).
The COVID-19 pandemic and the recovery provide heightened volatility in world equity markets. The Committee noted that fair value pricing was not required to be used and operations and service levels continued as normal.
For unquoted investments, the CEO provides detailed valuation papers and analyses and recommends a fair value for the relevant investment to the Committee, using the Company's policy as set out in note 1 to the Accounts on pages 65 to 72. The unquoted investment papers are reviewed by the Committee, who challenge assumptions, methodologies and inputs used. They are also subject to review by the Auditor.
The methodology for the valuation of MAM annualises the most recent quarterly earnings of MAM, applies a median of a peer group price earnings multiple with an unlisted liquidity discount of 20% (although the Committee may adjust the discount depending on market conditions). Performance fee earnings multiples are further discounted by 50%. Surplus net assets are then added, having deducted 200% of regulatory capital.
The valuation is updated each quarter and is announced to the market. The valuation as at 30 September 2021 is shown in the Chief Executive's Report on page 6 and shows the fair value of the stake in MAM at £25.2m. This represents a decrease from 30 September 2020 of 18.8%. A 5% increase/ decrease (with all other variables held constant) in:
The Company's investments are held in safe custody by BNYMIL as Depositary. BNYMIL acts as global custodian and may delegate safekeeping of the assets of the Company to one or more global sub-custodians (such delegation may include the powers of sub-delegation).
BNYMIL has delegated safekeeping of the assets of the Company to The Bank of New York Mellon SA/NV and The Bank of New York Mellon. The Committee receives regular reports on BNYMIL's internal controls.
The Company's principal income is dividend receipts from its investment holdings, including MAM. As such inaccurate recognition of income, or incomplete controls in this area, could result in the Company misstating such receipts.
The Committee receives regular detailed management accounts during the year and also reviews and approves the Company's forecast for the year and dividend income is subject to extensive substantive testing by the auditor.
The Chairman of the Committee will be available at the AGM to answer any questions relating to the Annual Report.
The Company's external auditor, Ernst & Young LLP, was initially appointed on 18 January 2008. In accordance with the EU Audit Directive and Regulation, the Company completed a competitive tender process in 2017, which resulted in Ernst & Young LLP being re-appointed as auditor. Legislation allows for a further period of up to ten years at which time a mandatory rotation is required.
Additionally, Auditing Practices Board requirements require that the engagement partner serve for up to 5 years. Mr A Coups has been engagement partner since 2019.
The notice of the Annual General Meeting on page 95 includes a resolution, to be approved by shareholders, that Ernst & Young LLP be re-appointed as Auditor.
The Company engages Ernst & Young LLP to undertake the annual year end audit. It is not considered necessary to have a review of the Half Yearly Financial Report. Ernst & Young LLP attended the annual accounts Audit Committee meeting in December, and an audit planning meeting in July.
In determining the effectiveness of the external audit, the Committee takes account of the following factors:
| Factor | Assessment |
|---|---|
| The Audit Partner | Extent to which the partner demonstrates a strong understanding of the business and industry and the challenges that the Company faces. Additionally, they are committed to audit quality, whose opinion is valued and sought after. |
| The Audit Team | Extent to which the audit team understand the business and industry, are properly resourced and experienced. |
| The Audit approach | The Audit approach is discussed with management and targets the significant issues early (and any new requirements as a result of new regulations etc), is communicated properly, is appropriate for the Company's business and industry and includes an appropriate level of materiality. |
| The role of management | Information provided by management is timely and correct with proper work papers. Accounting systems and internal controls work properly to enable proper information and an audit trail to be provided. |
| The communications and formal reporting by the Auditor |
Management and the Committee kept appropriately informed as the audit progresses – a no surprises basis is adopted. The formal report is appropriate and contains all the relevant material matters. |
| The support, insights and added value provided to the Committee |
Guidance given to the Committee for best practice with provision of updates and/or briefings between Committee meetings. |
| The independence and objectivity of the Auditor |
Complies with the FRC ethical standards and has the required degree of objectivity. |
In assessing the effectiveness of the audit, the Committee receives management assessments and reports from the Auditor and additionally does, from time to time, receive assessments on the Auditor from the FRC.
As a result of its review, the Committee is satisfied that, in respect of the year ended 30 September 2021, the external audit process is effective and it recommends the appointment of Ernst & Young LLP as Auditors at the forthcoming AGM.
Fees related to external audit services are disclosed in note 5 to the Accounts.
The Company has a policy in place in respect of nonaudit services which meets the requirements of the Revised Ethical Standard 2019, as issued by the Financial Reporting Council. The policy prohibits the external auditor from providing certain services, e.g. tax, and places a cap on the value of these fees, as compared to the external auditor's statutory audit fees. It also allows for the external auditor to provide non-audit services provided they fall
within the list of permitted non-audit services e.g. covenant reporting, as detailed in the Revised Ethical Standard 2019. As was the case last year, during the year the only non-audit service provided by the Auditor was a review of the Company's debenture covenant reporting, to the trustee for the debenture holders, which is separately disclosed as Other Audit Related Services in the Accounts (see note 5 to the Accounts). Any areas of concern are raised with the Board of the Company.
In determining auditor independence, the Committee assesses all relationships with the auditor and receives from the auditor information on its independence policy along with safeguards and procedures it has developed to counter perceived threats to its objectivity. The auditor also provides confirmation that it is independent within the meaning of all regulatory and professional requirements and that the objectivity of the audit is not impaired. Following its review, the Committee is satisfied that they are independent having fulfilled their obligations to both the Company and its shareholders.
The Company operates risk management and internal control systems appropriate for entities operating in the financial services sector and in-line with the size and the scope of its activities. In reviewing these systems, the Committee, and/or the Board, receive regular reports, which include those from the Company's Depositary. The Committee also receives control reports from its key third party outsourced service providers on the effectiveness of their own internal control systems and procedures. Any particular issues identified are documented and followed up by the Committee or the Board in subsequent meetings.
The Company does not have an internal audit function. The Committee has considered this matter and is of the opinion that there is no need at the present time for the Company to have an internal audit function since there are considered to be adequate checks and balances in operation. In particular, the Company operates with fund management services being undertaken by MAM, company secretarial functions by Link Company Matters Limited and depositary services by BNYMIL (with custody being delegated to The Bank of New York Mellon SA/NV and The Bank of New York).
For the year ended 30 September 2021 the Company's risk management and internal controls were subject to review by the Committee, which included internal controls in place to support the Company's fund administration activities. The COVID-19 pandemic and recovery continue to provide uncertainty across many risks faced by the Company, primarily market and operational risk. The Committee remained satisfied that the Company's risk management and internal controls functioned as planned. The Committee noted that the Company's business continuity plan continued to work as intended and operations and service levels were maintained. The Committee also noted that the major service provider operations and service levels were maintained.
The Committee notes that Mr JWM Barlow, CEO of the Company, is a Non-Executive Director of MAM and is Chairman of their Audit & Risk Committee. In this capacity he receives detailed reports on MAM's internal control environment, including their on-going responses to the pandemic.
Lastly, the Committee noted the audit approach undertaken by the auditor in the course of the year end audit. These, together with the Committee's own review, meant that the Committee considers that the Company's risk management and internal controls have been, and are, adequate and effective.
The Audit Committee considered the requirements of the AIC Code which require a robust assessment of the emerging and principal risks facing the Company, including those that would threaten its business model, future performance, solvency or liquidity. The principal and emerging risks facing the Company and how they are being managed are detailed on pages 25 and 26 in the Business Review section of the Strategic Report. The Committee reviews these risks and mitigating controls in its meetings in May and December. The Board, at each meeting, receives reports on operational matters and reviews a Key Risks Summary which outlines the key and emerging risks, and changes thereto.
The Company uses outsourced service providers for certain arrangements as part of its operations. The Committee and the Board receive reports regarding the internal control environment and compliance function of the Fund Manager and other major service providers, including procedures for whistleblowing and for detecting fraud and bribery.
The Committee also seeks assurances from service providers that their appropriate whistleblowing procedures enable their staff to raise concerns about possible improprieties in a confidential manner.
The Company has in place a compliance manual, tailored to its size and the nature of its business, which has procedures and policies in place to provide for whistleblowing and fraud detection.
On behalf of the Board
Chairman of the Audit Committee 13 December 2021
There were no changes to the composition of the Board and the Committee during the year. The Company Secretary, Link Company Matters Limited, acts as Secretary to the Committee, and the terms of reference are available on request or may be obtained from the Company's website.
At its meeting in October 2021, the Remuneration Committee decided that, in implementing the Company's remuneration policy:
In reaching their decisions the Remuneration Committee considered the remuneration rates of comparable investment entities and the prevailing rate of inflation. No external consultants were used.
Additionally, Mr JWM Barlow, under the approved bonus scheme, is entitled to a bonus of £25,000 in any financial year in which the Company's issued share capital is increased by at least 5%, rising to £50,000 on a straight-line basis if it increases by 10%. No bonus will be paid in the absence of any such increase, and no other bonus arrangements have been proposed.
During the financial year ended 30 September 2021 no shares were issued. Mr Barlow did not therefore qualify for a performance bonus under this bonus scheme.
No discretion was exercised during the year in relation to directors' remuneration. Save as set out above there are no changes to the way in which the Board intends to implement the Company's remuneration policy.
During the year, the Remuneration Committee received material advice from the Company Secretary on changes to law, regulations and practice as part of their normal services to the Company.
Chairman of the Remuneration Committee 13 December 2021
In accordance with the requirements of Schedule 8 of the Large and Medium Sized Companies and Groups (Accounts and Reports) (Amendment) Regulations 2013, as amended, (the Regulations), an ordinary resolution to approve the new Directors' Remuneration Policy was approved at the Company's Annual General Meeting on 20 January 2021. It is proposed that the approved new policy remain in force until the Annual General Meeting of the Company in 2024, at which time a further resolution will be proposed. The approved policy is available for inspection by shareholders on the Company's website at www.majedieinvestments.com.
The remuneration of the Directors for the year ended 30 September 2021 was as follows:
| Salary Taxable & Fees Benefits Bonus |
Total Remuneration |
|||||||||
|---|---|---|---|---|---|---|---|---|---|---|
| 2021 £000 |
2020 £000 |
2021 £000 |
2020 £000 |
2021 £000 |
2020 £000 |
2021 £000 |
2020 £000 |
|||
| Non Executive Directors | ||||||||||
| Mr RDC Henderson | 55 | 55 | 55 | 55 | ||||||
| Mr CD Getley | 32 | 8 | 32 | 8 | ||||||
| Ms JM Lewis | 35 | 32 | 35 | 32 | ||||||
| Mr AMJ Little | 35 | 35 | 35 | 35 | ||||||
| Mr RW Killingbeck | 32 | 8 | 32 | 8 | ||||||
| Mr PD Gadd | 29 | 29 | ||||||||
| Fees sub-total | 189 | 167 | 189 | 167 | ||||||
| Executive Director Mr JWM Barlow |
192 | 191 | 9 | 10 | 201 | 201 | ||||
| Total | 381 | 358 | 9 | 10 | 390 | 368 |
Total Remuneration for the year, and prior year, is classed as fixed remuneration (there were no bonuses due in either period). Mr JWM Barlow's taxable benefits relate to healthcare costs (he receives no pension contributions). Directors' fees were set at £55,000 per annum for the Chairman and £31,500 basic, per annum, for each of the other Non-Executive Directors. In addition, there is a £3,500 per annum supplement for the Chairman of each of the Audit and Remuneration Committees.
There have been no payments to past Directors during the financial year ended 30 September 2021, whether for loss of office or otherwise.
incentive schemes.
The Company does not have any requirement or guidelines for any Director to own shares in the Company.
The interests of the Directors' of the Company, including their connected persons, in securities of the Company are as follows:
| No of fully paid ordinary 0.1p shares |
|||
|---|---|---|---|
| Directors' Interests | Type of holding | 30 September 2021 |
30 September 2020 |
| Mr RDC Henderson | Beneficial | 24,700 | 24,700 |
| Mr CD Getley | Beneficial | 36,830 | 33,830 |
| Ms JM Lewis | Beneficial | 8,000 | 5,803 |
| Mr AMJ Little | Beneficial | 9,879 | 9,879 |
| Mr RW Killingbeck | Beneficial | 20,000 | 20,000 |
| Mr JWM Barlow | Beneficial | 409,224 | 409,224 |
| Non-beneficial | 3,111,110 | 3,111,110 |
There were no changes in the Directors' interests between 30 September and 13 December 2021.
Set out below is a graph showing the total shareholder return attributable to the ordinary shares in the Company in respect of the ten financial years ended 30 September 2021, and to a hypothetical portfolio constructed according to a benchmark equity index, calculated as 70% FTSE All-Share Index and 30% FTSE World ex UK Index (Sterling) to September 2016 and the MSCI All Country World Index (Sterling) in the same proportions thereafter. This composite is the comparator for the purpose of this graph as it includes a global equity weighting appropriate to a global equity trust and was (using the pre-September 2016 indices), the Company's benchmark at the start of the ten-year period.
The table below sets out the remuneration of the Director of the Company who fulfils a role most closely corresponding to that of chief executive officer (CEO) over the preceding ten financial years:
| Year ended | Director undertaking role of CEO |
Total remuneration |
Current year variable remuneration awarded vrs maximum potential value |
Prior year or future year awards vested vrs maximum potential value |
|---|---|---|---|---|
| 30 Sep 2021 | Mr JWM Barlow | £201,828 | 0% | 0% |
| 30 Sep 2020 | Mr JWM Barlow | £201,122 | 0% | 0% |
| 30 Sep 2019 | Mr JWM Barlow | £196,178 | 0% | 0% |
| 30 Sep 2018 | Mr JWM Barlow | £190,511 | 0% | 0% |
| 30 Sep 2017 | Mr JWM Barlow | £185,618 | 0% | 0% |
| 30 Sep 2016 | Mr JWM Barlow | £180,559 | 0% | 0% |
| 30 Sep 2015 | Mr JWM Barlow | £215,649 | 44%* | 0% |
| 30 Sep 2014 | Mr JWM Barlow | £153,358 | 0% | 0% |
| 30 Sep 2013 | Mr JWM Barlow | £143,531 | 0% | 0% |
| 30 Sep 2012 | Mr JWM Barlow | £166,640 | 0% | 0% |
* Reflects the £40,000 bonus as against the maximum bonus potential of £90,000.
The table below sets out the changes in the disclosed elements of the remuneration of each Director as compared to employees of the Company:
| Period & Type |
Notes | Mr RDC Henderson |
Mr PD Gadd |
Ms JM Lewis |
Mr AMJ Little |
Mr CD Getley |
Mr RW Killingbeck |
Mr JWM Barlow |
Staff |
|---|---|---|---|---|---|---|---|---|---|
| Salary & Fees |
|||||||||
| 30 September 2021 |
5 & 6 | +0.0% | +0.0% +0.0% | +0.0% | +0.0% | +0.0% | +1.0% | +1.0% | |
| 30 September 2020 |
2-6 | -6.7% | +0.0% +11.1% +0.0% | N/a | N/a | +2.0% | +2.0% | ||
| Taxable Benefits |
|||||||||
| 30 September 2021 |
7 | -11.8% | -8.3% | ||||||
| 30 September 2020 |
7 | +13.3% | +8.3% | ||||||
| Bonus | |||||||||
| 30 September 2021 |
8 | +0.0% | +0.0% | ||||||
| 30 September 2020 |
8 | +0.0% | -100.0% |
Notes:
The table shows the average annual percentage change in each Director's remuneration as compared to the average employee (on a Full Time Equivalent basis). In accordance with the regulations this is for the two financial years as shown above, being the only financial years since 10 June 2019. The Non-Executive Directors are not eligible for benefits or variable remuneration.
The Board supports any Executive Director taking up appointments outside the Company to broaden their knowledge and experience, from which they may retain any fee. External appointments are subject to agreement and reported to the Board. Any external appointment must not conflict with the Director's duties and commitments to the Company.
During the year, Mr JWM Barlow was a non-executive director of Strategic Equity Capital PLC for which he received fees on the basis of £25,250 for the year to 30 June 2021, and £27,500 thereafter.
The table below sets out, in respect of the financial year ended 30 September 2021 and the preceding financial year:
Admin Expenses Total Staff Remuneration Dividends/Buybacks Statement of implementation of Remuneration Policy in respect of the financial year ending 30 September 2022
The Remuneration Committee has reviewed Directors' fees during the financial year, and does not expect to recommend any further change in the absence of unforeseen circumstances.
The Remuneration Committee intends to review the salary of the CEO in light of prevailing market conditions. It intends to operate Mr JWM Barlow's bonus scheme in accordance with its terms as set out in the Remuneration Policy.
During the financial year, the members of the Remuneration Committee were Ms JM Lewis (chair), Mr RDC Henderson, Mr CD Getley, Mr AMJ Little and Mr RW Killingbeck. No person provided services or advice to the Remuneration Committee which materially assisted the Committee.
At the annual general meeting of the Company held on 20 January 2021, a resolution was proposed by the Company to approve the Report on Directors' Remuneration for the year ended 30 September 2020. For this resolution 99.9% of the votes cast were in favour with 0.1% against and 0.0% of the votes being withheld.
Also at the annual general meeting of the Company held on 20 January 2021, a resolution was proposed by the Company to approve the new Directors' Remuneration Policy. For this resolution 99.9% of the votes cast were in favour with 0.1% against and 0.0% of the votes being withheld.
This report has been prepared in accordance with the requirements of Schedule 8 of the Large and Medium Sized Companies and Groups (Accounts and Reports) (Amendment) Regulations 2013, as amended, as required by the Companies Act 2006. The report also meets the relevant requirements of the Listing Rules of the Financial Conduct Authority and describes how the Board has applied the principles relating to the Directors' remuneration.
The Report on Directors' Remuneration on pages 46 to 49 was approved by the Board on 13 December 2021.
On behalf of the Board
Chairman of the Remuneration Committee 13 December 2021
The Directors are responsible for preparing the Annual Report and the Company financial statements in accordance with applicable United Kingdom law. Under that Law, the Directors are required to prepare the financial statements in accordance with international accounting standards in conformity with the requirements of the Companies Act 2006. Under Company Law the Directors must not approve the Company financial statements unless they are satisfied that they present fairly the financial position, financial performance and cash flows of the Company for that period. In preparing the Company financial statements the Directors are required to:
The Directors are responsible for keeping adequate accounting records that are sufficient to show and explain the Company's transactions and disclose with reasonable accuracy at any time the financial position of the Company and enable them to ensure that the Company financial statements comply with the Companies Act 2006. They are also responsible for safeguarding the assets of the Company 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 shown on page 29 of this Report, each confirm to the best of their knowledge that:
By order of the Board
R David C Henderson Chairman 13 December 2021
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 UK Alternative Investment Fund Managers Directive (UK 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.
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 UK 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 The Bank of New York Mellon (International) Limited One Canada Square London E14 5AL
Independent Auditor's Report to the Members of Majedie Investments PLC
We have audited the financial statements of Majedie Investments PLC for the year ended 30 September 2021 which comprise the Statement of Comprehensive Income, the Statement of Changes in Equity, the Balance Sheet, the Cash Flow Statement and the related notes 1 to 24, including a summary of significant accounting policies. The financial reporting framework that has been applied in their preparation is applicable law and International Accounting Standards in conformity with the requirements of the Companies Act 2006.
In our opinion, the financial statements:
We conducted our audit in accordance with International Standards on Auditing (UK) (ISAs (UK)) and applicable law. Our responsibilities under those standards are further described in the Auditor's responsibilities for the audit of the financial statements section of our report. We are independent of the Company in accordance with the ethical requirements that are relevant to our audit of the financial statements in the UK, including the FRC's Ethical Standard as applied to listed public interest entities, and we have fulfilled our other ethical responsibilities in accordance with these requirements.
We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our opinion.
• have been prepared in accordance with the requirements of the Companies Act 2006.
In auditing the financial statements, we have concluded that the Directors' use of the going concern basis of accounting in the preparation of the financial statements is appropriate. Our evaluation of the Directors' assessment of the Company's ability to continue to adopt the going concern basis of accounting included:
Based on the work we have performed, we have not identified any material uncertainties relating to events or conditions that, individually or collectively, may cast significant doubt on the Company's ability to continue as a going concern for the period to 13 December 2022, which is at least 12 months from when the financial statements are authorised for issue.
In relation to the Company's reporting on how they have applied the UK Corporate Governance Code, we have nothing material to add or draw attention to in relation to the Directors' statement in the financial statements about whether the Directors considered it appropriate to adopt the going concern basis of accounting.
Our responsibilities and the responsibilities of the Directors with respect to going concern are described in the relevant sections of this report. However, because not all future events or conditions can be predicted, this statement is not a guarantee as to the Company's ability to continue as a going concern.
| Key audit matters | • Risk of incomplete or inaccurate revenue recognition, including the classification of special dividends as revenue or capital items in the Statement of Comprehensive Income. |
|---|---|
| • Risk of incorrect valuation or ownership of the investment in Majedie Asset Management Limited ('MAM'). |
|
| • Risk of incorrect valuation or ownership of the investments other than MAM. |
|
| Materiality | • Overall materiality of £1.52m which represents 1% of the net asset value of the Company as at 30 September 2021. |
Independent Auditor's Report to the Members of Majedie Investments PLC
Our assessment of audit risk, our evaluation of materiality and our allocation of performance materiality determine our audit scope for the company. This enables us to form an opinion on the financial statements. We take into account size, risk profile, the organisation of the company and effectiveness of controls, including controls and changes in the business environment when assessing the level of work to be performed.
Key audit matters are those matters that, in our professional judgment, were of most significance in our audit of the financial statements of the current period and include the most significant assessed risks of material misstatement (whether or not due to fraud) that we identified. These matters included those which had the greatest effect on: the overall audit strategy, the allocation of resources in the audit; and directing the efforts of the engagement team. These matters were addressed in the context of our audit of the financial statements as a whole, and in our opinion thereon, and we do not provide a separate opinion on these matters.
| Risk | Our response to the risk | Key observations communicated to the Audit Committee |
|---|---|---|
| Risk of incomplete or inaccurate revenue recognition, including the classification of special dividends as revenue or capital items in the |
We performed the following procedures: • Walked through the revenue recognition and classification of |
The results of our procedures identified no material misstatement in relation to the risk of incomplete or inaccurate revenue recognition, including the |
| Statement of Comprehensive Income Refer to the Report of the Audit Committee (page 43); Accounting policies (page 67); and Note 3 of the |
special dividends processes and obtained an understanding of the design and implementation of the controls; |
classification of special dividends as revenue or capital items in the Statement of Comprehensive Income. |
| Financial Statements (page 73). The Company has reported revenue of £6.15m (2020: £6.03m). |
• For a sample of dividends received, we recalculated the income by multiplying the investment holdings at the ex-dividend date, traced from |
|
| During the year, the Company received special dividends amounting to £0.62m (2020: £0.04m), of which £0.13m (2020: £0.04m) was classified as revenue and £0.49m (2020: £nil) as capital. |
the accounting records, by the dividend rate as agreed to an independent data vendor. We agreed the amounts received to bank statements and, where applicable, we also agreed the |
|
| There is a risk of incomplete or inaccurate recognition of revenue |
exchange rates to an external source; |
|
| through failure to recognise proper income entitlements or to apply an appropriate accounting treatment. |
• To test completeness of recorded income, for a sample of investee companies we tested that all |
|
| In addition to the above, the Directors may, in certain circumstances, exercise judgment in determining whether income received in the form of special dividends should be classified as 'revenue' or 'capital' in the Statement |
expected dividends had been recorded as income with reference to investee company announcements obtained from an independent data vendor; |
of Comprehensive Income.
| Risk | Our response to the risk | Key observations communicated to the Audit Committee |
|---|---|---|
| • For all dividends accrued at the year end, we reviewed the investee company announcements to assess whether the obligation arose prior to 30 September 2021. We agreed the dividend rate to corresponding announcements made by the investee company, recalculated the amount receivable and agreed the subsequent cash receipts to post-year end bank statements where applicable; and |
||
| • Identified which of the dividends above our testing threshold are special dividends and assessed the appropriateness of the Company's classification of these special dividends by reviewing the underlying rationale of the distributions. |
||
| Risk of incorrect valuation or ownership of the Investment in Majedie Asset Management Limited ('MAM') Refer to the Report of the Audit Committee (page 43; Accounting policies (pages 65 to 71); and Note 13 of the Financial Statements (pages 79 to 82). The valuation of investment in MAM was £25.16m as at the year-end (2020: £31.00m). The investment in MAM is an unquoted investment and, accordingly, its valuation requires estimation and judgement giving rise |
We performed the following procedures: • Walked through the MAM valuation process to obtain an understanding of the design of the controls surrounding valuation of investments (including selection of valuation methodology, sources of inputs and review) to assess the design and implementation of controls; • Involved our valuation specialists in the valuation model testing and held discussions with management to understand the assumptions used in the valuation; |
The results of our procedures identified no material misstatement in relation to the risk of incorrect valuation or ownership of the investment in MAM. |
| to a greater risk that the valuation of the investment is materially misstated. The incorrect valuation of MAM, or a failure to maintain proper legal title of the investment held by Company, could have a significant impact on the return generated for shareholders. |
• Confirmed that the valuation methodology was consistent with the International Private Equity and Venture Capital Valuation Guidelines (the "IPEV Guidelines"); |
Independent Auditor's Report to the Members of Majedie Investments PLC
| Risk | Our response to the risk | Key observations communicated to the Audit Committee |
|---|---|---|
| • Obtained the multiples used in the calculation and compared them to a range of comparatives obtained independently from external sources of information and tested that the multiples used were reasonable; |
||
| • Agreed and challenged the inputs and assumptions used in the valuation of MAM to supporting evidence (including the financial statements of MAM) and concluded that they were consistent with the valuation methodology; and |
||
| • We compared the Company's investment holding in MAM at 30 September 2021 to independent confirmation received directly from the Company's Custodian and Depositary. |
||
| Incorrect valuation or ownership of investments other than MAM |
We performed the following procedures: |
The results of our procedures identified no material misstatement in |
| (2021: £145.1m, including £0.04m of investments of unquoted investments other than MAM, 2020: £114.47m, and £0.04m respectively). Refer to the Report of the Audit |
• Walked through the investment valuation process to obtain an understanding of the design of the controls surrounding valuation of investments; |
relation to the risk of incorrect valuation or ownership of investments other than MAM. |
| Committee (page 42); Accounting policies (pages 65 to 71); and Note 13 of the Financial Statements (pages 79 to 82). |
• For listed equity investments and investments in MAM funds, we compared the market prices and exchange rates applied to an independent pricing vendor and |
|
| The valuation of the assets held in the investment portfolio is the key driver of the Company's net asset value and |
recalculated the investment valuations as at the year-end; |
|
| total return. Incorrect asset pricing or a failure to maintain proper legal title of the assets held by the Company could have a significant impact on the |
• We inspected the stale pricing report to identify prices that had not changed and verified whether the listed price is a valid fair value; and |
|
| portfolio valuation and the return generated for shareholders. The fair value of listed investments is determined using quoted market bid prices at close of business on the reporting date. |
• We compared the Company's investment holdings at 30 September 2021 to independent confirmation received directly from the Company's Custodian and Depositary. |
In the prior year, our auditor's report included a key audit matter in relation to the impact of COVID-19. The impact of COVID-19 on going concern continued to be relevant to our audit of the Company and we considered this as part of our overall work on going concern which is set out under "Conclusions relating to going concern".
We apply the concept of materiality in planning and performing the audit, in evaluating the effect of identified misstatements on the audit and in forming our audit opinion.
The magnitude of an omission or misstatement that, individually or in the aggregate, could reasonably be expected to influence the economic decisions of the users of the financial statements. Materiality provides a basis for determining the nature and extent of our audit procedures.
We determined materiality for the Company to be £1.52m (2020: £1.32m), which is 1% (2020: 1%) of the Company's Net Asset Value. We believe that Net Asset Value provides us materiality aligned to the key measure of the Company's performance.
The application of materiality at the individual account or balance level. It is set at an amount to reduce to an appropriately low level the probability that the aggregate of uncorrected and undetected misstatements exceeds materiality.
On the basis of our risk assessments, together with our assessment of the Company's overall control environment, our judgement was that performance materiality was 75% (2020: 75%) of our planning materiality, namely £1.14m (2020: £0.99m). We have set performance materiality at this percentage due to our past experience of the audit that indicates a lower risk of misstatements, both corrected and uncorrected.
Given the importance of the distinction between revenue and capital for investment trusts, we also applied a separate testing threshold for the revenue column of the Statement of Comprehensive Income of £0.25m (2020: £0.24m) being 5% (2020: 5%) of revenue profit before tax.
An amount below which identified misstatements are considered as being clearly trivial.
We agreed with the Audit Committee that we would report to them all uncorrected audit differences in excess of £0.08m (2020: £0.07m), which is set at 5% of planning materiality, as well as differences below that threshold that, in our view, warranted reporting on qualitative grounds.
We evaluate any uncorrected misstatements against both the quantitative measures of materiality discussed above and in light of other relevant qualitative considerations in forming our opinion.
The other information comprises the information included in the annual report other than the financial statements and our auditor's report thereon. The Directors are responsible for the other information contained within the annual report.
Our opinion on the financial statements does not cover the other information and, except to the extent otherwise explicitly stated in this report, we do not express any form of assurance conclusion thereon.
Our responsibility is to read the other information and, in doing so, consider whether the other information is materially inconsistent with the financial statements or our knowledge obtained in the course of the audit or otherwise appears to be materially misstated. If we identify such material inconsistencies or apparent material misstatements, we are required to determine whether there is a material misstatement in the financial statements themselves. If, based on the work we have performed, we conclude that there is a material misstatement of the other information, we are required to report that fact.
We have nothing to report in this regard.
Independent Auditor's Report to the Members of Majedie Investments PLC
In our opinion the part of the Directors' remuneration report to be audited has been properly prepared in accordance with the Companies Act 2006.
In our opinion, based on the work undertaken in the course of the audit:
In the light of the knowledge and understanding of the Company and its environment obtained in the course of the audit, we have not identified material misstatements in the Strategic report or Directors' report.
We have nothing to report in respect of the following matters in relation to which the Companies Act 2006 requires us to report to you if, in our opinion:
The Listing Rules require us to review the Directors' statement in relation to going concern, longer-term viability and that part of the Corporate Governance Statement relating to the company's compliance with the provisions of the UK Corporate Governance Code specified for our review.
Based on the work undertaken as part of our audit, we have concluded that each of the following elements of the Corporate Governance Statement is materially consistent with the financial statements or our knowledge obtained during the audit:
As explained more fully in the Directors' responsibilities statement set out on page 50, the Directors are responsible for the preparation of the financial statements and for being satisfied that they give a true and fair view, and for such internal control as the Directors determine is necessary to enable the preparation of financial statements that are free from material misstatement, whether due to fraud or error.
In preparing the financial statements, the Directors are responsible for assessing the Company's ability to continue as a going concern, disclosing, as applicable, matters related to going concern and using the going concern basis of accounting unless the Directors either intend to liquidate the Company or to cease operations, or have no realistic alternative but to do so.
Our objectives are to obtain reasonable assurance about whether the financial statements as a whole are free from material misstatement, whether due to fraud or error, and to issue an auditor's report that includes our opinion. Reasonable assurance is a high level of assurance, but is not a guarantee that an audit conducted in accordance with ISAs (UK) will always detect a material misstatement when it exists. Misstatements can arise from fraud or error and are considered material if, individually or in the aggregate, they could reasonably be expected to influence the economic decisions of users taken on the basis of these financial statements.
Irregularities, including fraud, are instances of non-compliance with laws and regulations. We design procedures in line with our responsibilities, outlined above, to detect irregularities, including fraud. The risk of not detecting a material misstatement due to fraud is higher than the risk of not detecting one resulting from error, as fraud may involve deliberate concealment by, for example, forgery or intentional misrepresentations, or through collusion. The extent to which our procedures are capable of detecting irregularities, including fraud is detailed below.
However, the primary responsibility for the prevention and detection of fraud rests with both those charged with governance of the Company and management.
• We obtained an understanding of the legal and regulatory frameworks that are applicable to the company and determined that the most significant are International Accounting Standards in conformity with the requirements of the Companies Act 2006, the Companies Act 2006, the Listing Rules, the UK Corporate Governance Code, the Association of Investment Companies' Code and Statement of Recommended Practice, and Section 1158 of the Corporation Tax Act 2010, and the Companies (Miscellaneous Reporting) Regulations 2018.
A further description of our responsibilities for the audit of the financial statements is located on the Financial Reporting Council's website at https://www.frc.org.uk/ auditorsresponsibilities. This description forms part of our auditor's report.
• Following the recommendation from the Audit Committee, we were initially appointed by the Company on 18 January 2008 to audit the financial statements for the year ending 30 September 2008 and subsequent financial periods. Following a competitive tender process, we were reappointed as auditor of the Company for the period ending 30 September 2017 and subsequent financial periods.
The period of total uninterrupted engagement including previous renewals and reappointments is 14 years, covering the years ending 2008 to 2021.
Independent Auditor's Report to the Members of Majedie Investments PLC
This report is made solely to the Company's members, as a body, in accordance with Chapter 3 of Part 16 of the Companies Act 2006. Our audit work has been undertaken so that we might state to the Company's members those matters we are required to state to them in an auditor's report and for no other purpose. To the fullest extent permitted by law, we do not accept or assume responsibility to anyone other than the Company and the Company's members as a body, for our audit work, for this report, or for the opinions we have formed.
Ashley Coups (Senior statutory auditor) For and on behalf of Ernst & Young LLP, Statutory Auditor London 13 December 2021
for the year ended 30 September 2021
| 2021 | 2020 | ||||||
|---|---|---|---|---|---|---|---|
| Notes | Revenue return £000 |
Capital return £000 |
Total £000 |
Revenue return £000 |
Capital return £000 |
Total £000 |
|
| Investments | |||||||
| Gains/(losses) on investments at fair value through profit or loss |
13 | 23,839 | 23,839 | (20,385) | (20,385) | ||
| Net Investment Result | 23,839 | 23,839 | (20,385) | (20,385) | |||
| Income | |||||||
| Income from investments | 3 | 6,078 | 6,078 | 5,958 | 5,958 | ||
| Other income | 3 | 70 | 70 | 76 | 76 | ||
| Total income | 6,148 | 6,148 | 6,034 | 6,034 | |||
| Expenses | |||||||
| Management fees | 4 | (76) | (228) | (304) | (68) | (203) | (271) |
| Administration expenses | 5 | (681) | (573) | (1,254) | (742) | (704) | (1,446) |
| Return/(loss) before finance costs and taxation |
5,391 | 23,038 | 28,429 | 5,224 | (21,292) | (16,068) | |
| Finance costs | 8 | (387) | (1,145) | (1,532) | (381) | (1,143) | (1,524) |
| Net return/(loss) before taxation | 5,004 | 21,893 | 26,897 | 4,843 | (22,435) | (17,592) | |
| Taxation | 9 | (15) | (15) | (10) | (10) | ||
| Net return/(loss) after taxation for the year |
4,989 | 21,893 | 26,882 | 4,833 | (22,435) | (17,602) | |
| Return/(loss) per Ordinary Share | pence | pence | pence | pence | pence | pence | |
| Basic | 11 | 9.4 | 41.3 | 50.7 | 9.1 | (42.3) | (33.2) |
The total column of this statement is the Statement of Comprehensive Income of the Company. There is no other comprehensive income for the year and hence the net return/(loss) after taxation for the year is also total comprehensive income. All amounts relate to continuing operations.
for the year ended 30 September 2021
| Notes | Share capital £000 |
Share premium £000 |
Capital redemption reserve £000 |
Capital reserve £000 |
Revenue reserve £000 |
Total £000 |
|
|---|---|---|---|---|---|---|---|
| Year ended 30 September 2021 | |||||||
| As at 1 October 2020 | 5,301 | 3,054 | 99 | 97,518 | 25,361 | 131,333 | |
| Share buybacks for cancellation | 17 | (1) | 1 | (18) | (18) | ||
| Net return for the year | 21,893 | 4,989 | 26,882 | ||||
| Dividends declared and paid in year | 10 | (6,044) | (6,044) | ||||
| As at 30 September 2021 | 5,300 | 3,054 | 100 | 119,393 | 24,306 | 152,153 | |
| Year ended 30 September 2020 | |||||||
| As at 1 October 2019 | 5,305 | 3,054 | 95 | 120,046 | 26,574 | 155,074 | |
| Share buybacks for cancellation | 17 | (4) | 4 | (93) | (93) | ||
| Net (loss)/return for the year | (22,435) | 4,833 | (17,602) | ||||
| Dividends declared and paid in year | 10 | (6,046) | (6,046) | ||||
| As at 30 September 2020 | 5,301 | 3,054 | 99 | 97,518 | 25,361 | 131,333 |
| Notes | 2021 £000 |
2020 £000 |
|
|---|---|---|---|
| Non-current assets | |||
| Property and equipment | 12 | 244 | 309 |
| Investments at fair value through profit or loss | 13 | 170,550 | 145,471 |
| 170,794 | 145,780 | ||
| Current assets | |||
| Trade and other receivables | 14 | 400 | 269 |
| Cash and cash equivalents | 15 | 3,162 | 7,525 |
| 3,562 | 7,794 | ||
| Total assets | 174,356 | 153,574 | |
| Current liabilities | |||
| Trade and other payables | 16 | (1,405) | (1,421) |
| Total assets less current liabilities | 172,951 | 152,153 | |
| Non-current liabilities | |||
| Debenture and lease liability | 16/19 | (20,798) | (20,820) |
| Total liabilities | (22,203) | (22,241) | |
| Net assets | 152,153 | 131,333 | |
| Represented by: | |||
| Ordinary share capital | 17 | 5,300 | 5,301 |
| Share premium account | 3,054 | 3,054 | |
| Capital redemption reserve | 100 | 99 | |
| Capital reserve | 119,393 | 97,518 | |
| Revenue reserve | 24,306 | 25,361 | |
| Equity Shareholders' Funds | 152,153 | 131,333 | |
| Net asset value per share | 18 | pence | pence |
| Basic | 287.1 | 247.7 |
Approved by the Board of Majedie Investments PLC (Company no 109305) and authorised for issue on 13 December 2021.
R David C Henderson Chairman
for the year ended 30 September 2021
| Notes | 2021 £000 |
2020 £000 |
|
|---|---|---|---|
| Net cash flow from operating activities | |||
| Net return/(loss) before taxation* Adjustments for: |
26,897 | (17,592) | |
| (Gains)/losses on investments | 13 | (23,839) | 20,385 |
| Accumulation dividends | 3 | (326) | (253) |
| Depreciation | 12 | 66 | 17 |
| Foreign exchange losses/(gains) | 2 | (2) | |
| Purchases of investments | (47,536) | (41,824) | |
| Sales of investments | 46,496 | 49,500 | |
| 1,760 | 10,231 | ||
| Finance costs | 1,532 | 1,524 | |
| Operating cashflows before movements in working capital | 3,292 | 11,755 | |
| Increase/(decrease) in trade and other payables | 42 | (21) | |
| (Increase)/decrease in trade and other receivables | (106) | 42 | |
| Net cash inflow from operating activities before tax | 3,228 | 11,776 | |
| Tax recovered on overseas dividend income | 19 | 11 | |
| Tax on overseas dividend income | (24) | (17) | |
| Net cash inflow from operating activities | 3,223 | 11,770 | |
| Investing activities | |||
| Purchase of tangible assets | (1) | (1) | |
| Initial direct costs incurred for the right-of-use asset | (15) | (2) | |
| Net cash outflow from investing activities | (16) | (3) | |
| Financing activities | |||
| Interest paid on debentures | 19 | (1,501) | (1,501) |
| Interest paid on lease liability | 19 | (6) | |
| Dividends paid | 10 | (6,044) | (6,046) |
| Lease liability principal repayments | 19 | (19) | |
| Share buybacks for cancellation | 17 | (93) | |
| Net cash outflow from financing activities | (7,570) | (7,640) | |
| (Decrease)/increase in cash and cash equivalents for the year | (4,363) | 4,127 | |
| Cash and cash equivalents at start of year | 7,525 | 3,398 | |
| Cash and cash equivalents at end of year | 3,162 | 7,525 |
* Includes dividends received in the year of £5,652,000 (2020: £5,748,000) and interest received of £Nil (2020: £Nil).
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 on page 104. The nature of the Company's operations and its principal activities are set out in the Business Review section of the Strategic Report on pages 22 to 28.
The preparation of financial statements in accordance with International Accounting Standards in conformity with the requirements of the Companies Act 2006 requires management to exercise its judgement in the process of applying the Company's accounting policies. It also requires the use of certain significant estimates and assumptions.
In the course of preparing the financial statements, no critical judgements have been made in the process of applying the Company's accounting policies, apart from those involving estimates, which are shown separately below, that have had a significant effect on the amounts recognised in the financial statements.
The following are the areas where critical estimates and assumptions have been used:
Unquoted investments are valued at management's best estimate of fair value in accordance with International Accounting Standards having regard to International Private Equity and Venture Capital Valuation guidelines as recommended by the British Venture Capital Association. The principles which the Company applies are set out on pages 69 to 71. 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 the investment in MAM but excluding the MAM funds) represent 14.6% (2020: 20.4%) of Equity Shareholders' Funds.
The principal accounting policies adopted are set out as follows:
The accounts on pages 61 to 94 comprise the audited results of the Company for the year ended 30 September 2021, and are presented in pounds Sterling rounded to the nearest thousand, as this is the functional currency in which the Company transactions are undertaken.
The Directors have considered the ongoing impact from the COVID-19 pandemic and remain of the view that this will have a limited financial impact on the Company's resources and continuing existence. As part of the assessment of going concern the Directors took into account the uncertain economic outlook associated with the pandemic which included the level of cash and cash equivalents and readily realisable securities which could meet short-term commitments, the ability of the Company to meet its liabilities and on-going expenses from investments, revenue forecasts for the forthcoming year, the ability of the Company and its service providers to continue to meet service levels and lastly performing stress testing (see page 36). After completing the assessment the Directors have a reasonable expectation that the Company will be able to meet its obligations to 13 December 2022, being twelve months from the date of approval of the financial statements and therefore the financial statements have been prepared on a going concern basis.
In order to reflect the activities of an investment company and in accordance with guidance issued by the AIC, supplementary information which analyses the Statement of Comprehensive Income between items of a revenue or 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 as set out in section 1158 of the Corporation Tax Act 2010.
The accounts of the Company have been prepared in accordance with International Accounting Standards in conformity with the requirements of the Companies Act 2006.
Where presentational guidance set out in the SORP regarding the financial statements of investment companies and venture capital companies issued by the AIC in October 2019 is not inconsistent with the requirements of international accounting standards, the Directors have sought to prepare the financial statements on a basis compliant with the recommendations of the SORP.
At the date of authorisation of these financial statements, the following relevant Standards and Interpretations have not been applied in these financial statements since there were in issue but not yet effective and/or adopted:
| Amendments to IFRS 9, IAS 39, IFRS 7, IFRS 4 and IFRS 16 | International Accounting Standards and Interpretations (IAS/IFRS/IFRICs) | Effective Date |
|---|---|---|
| 1 January 2021 | ||
| COVID-19 Related rent concessions amendment to IFRS 16 | 1 April 2021 | |
| Amendments to the conceptual framework for financial reporting | 1 January 2022 | |
| Amendments to IAS 1 and IAS 8 | 1 January 2023 |
The Directors do not anticipate that the adoption of these standards will have a material impact on the Company.
The Company applied in the financial year ended 30 September 2021, for the first time, certain standards which are effective for annual periods beginning on or after 1 January 2020. These were amendments to IFRS 9, IAS 39, IFRS 7, IAS 1, IAS 8 and the conceptual framework for financial reporting. None of these amendments has had an impact on the Company's financial position or performance.
Transactions during the period, including purchases and sales of securities, income and expenses, are translated at the rate of exchange prevailing on the date of the transaction.
Monetary assets and liabilities denominated in foreign currencies are retranslated at the functional currency rate of exchange ruling at the balance sheet date. Non-monetary items that are measured in terms of historical cost in a foreign currency are translated at using the exchange rates as at the dates of initial transactions. Non-monetary items measured at fair value in a foreign currency are translated using the exchange rates at the date when fair value was determined.
Foreign currency transaction gains and losses on financial instruments classified as FVPL are included in profit or loss in the Statement of Comprehensive Income as part of the "Losses on investments at fair value through profit or loss".
Dividend income is recognised on the date when the Company's right to receive the payment is established. Dividend revenue is presented gross of any non-recoverable withholding taxes, which are separately disclosed in the Statement of Comprehensive Income. Where the Company has elected to receive scrip dividends in the form of additional shares rather than cash, the amount of the cash dividend foregone is recognised as income. Special dividends are recognised as capital or revenue in accordance with the underlying nature of the transaction.
Interest income is recognised on an accrual basis.
All expenses or fees are recognised on an accruals basis. This includes any pension payments made to the Company's defined contribution personal pension plan. In accordance with the SORP concerning the classification of expense items between capital and revenue, all items are presented as revenue except for as follows:
Interest expense is recognised for all interest bearing financial instruments using the effective interest rate method.
In accordance with the SORP, finance costs in respect of financing investments or financing activities aimed at maintaining or enhancing the value of investments are allocated 75% to capital. Any premiums paid on the early repurchase of debenture stock are charged wholly to capital.
Interest expense on lease liabilities is recognised in accordance with IFRS 16.
In accordance with the SORP, finance costs in respect of financing investments or financing activities aimed at maintaining or enhancing the value of investments are allocated 75% to capital. As such property lease liability finance costs are charged wholly to revenue.
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 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 Company's liability for current tax is calculated using tax rates that have been enacted or substantively enacted by the balance sheet date.
In accordance with the SORP, the allocation method used to calculate tax relief on expenses presented against capital returns 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 method. Deferred tax liabilities are recognised for all temporary taxable 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 as the Company operates as an approved investment trust for tax purposes.
Property and equipment are stated at initial cost less accumulated depreciation and any recognised impairment loss. Leasehold right-of-use assets are accounted for in accordance with IFRS 16. Depreciation for other tangible assets is calculated using the straight line method and at rates of 25% to 33% per annum.
The Company applies IFRS 16 and the policies applied under that standard are as follows:
The Company recognises right-of-use assets at the commencement date of the lease (i.e. the date the underlying asset is available for use). Right-of-use assets are measured at cost and the cost includes the amount of lease liabilities recognised, initial direct costs incurred, and lease payments made at or before the commencement date less any lease incentives received. Unless the Company is reasonably certain to obtain ownership of the leased asset at the end of the lease term, the recognised right-of-use assets are depreciated on a straight line basis over the shorter of its estimated useful life and the lease term. Right-of-use assets are subject to impairment.
At the commencement date of the lease, the Company recognises lease liabilities measured at the present value of lease payments to be made over the lease term. The lease payments can include fixed payments, less any lease incentives receivable, variable lease payments linked to an index or rate and payments or penalties for terminating a lease – only if reasonably certain to exercise the termination option.
In calculating the present value of lease payments, the Company uses the incremental borrowing rate at the lease commencement date if the interest rate implicit in the lease is not readily determinable. After the commencement date, the amount of lease liabilities is increased to reflect the accretion of interest and reduced for the lease payments made. In addition, the carrying amount of lease liabilities is remeasured if there is a modification, a change in the lease term, a change in the in-substance fixed lease payments or a change in the assessment to purchase the underlying asset.
As and if applicable, the Company would apply the short-term lease recognition exemption to any short term leases (being leases that have a lease term of 12 months or less without a purchase option) and the low-value recognition exemption to leases that are considered of low value (being below £5,000). Lease payments on any such leases would be recognised as an expense on a straight-line basis over the lease term.
The Company applies IFRS 9 Financial Instruments and the policies applied under that standard are as follows:
In accordance with IFRS 9, the Company classifies its financial assets and liabilities at initial recognition into the categories of financial assets and liabilities as shown below:
The Company classifies its financial assets as subsequently measured at amortised cost or measured at fair value through profit or loss, on the basis of both:
A debt instrument is measured at amortised cost if it is held within a business model whose objective is to hold financial assets in order to collect contractual cash flows and its contractual terms give rise, on specified dates, to cash flows that are solely payments of principal and interest on the principal amount outstanding. The Company includes in this category short term non-financing receivables including accrued income and trade and other receivables.
The Company includes in this category its equity investments.
This category includes all financial liabilities. The Company includes in this category debentures and other short term payables.
The Company recognises a financial asset or liability when it becomes a party to the contractual provisions of the instrument. In respect of purchases or sales of financial instruments that require delivery of assets within a time frame generally established by regulation or convention in a market place are recognised on a trade date basis.
Financial assets and liabilities at FVPL are recorded in the Statement of Financial Position at fair value. All transaction costs for such instruments are recognised in profit or loss in "(Losses)/gains on investments at fair value through profit and loss" in the Statement of Comprehensive Income. Financial liabilities held at amortised cost are initially recognised at cost, being the fair value of the consideration received less issue costs where applicable.
After initial measurement the Company measures financial instruments which are classified as at FVPL, at fair value. Subsequent changes in the fair value of those financial instruments are recorded in "Gains/(losses) on investments at fair value through profit and loss" in the Statement of Comprehensive Income. Any dividends or interest earned on these instruments are recorded separately under "Income" in the Statement of Comprehensive Income".
Financial liabilities are measured at amortised cost using the effective interest method. Gains and losses are recognised in profit or loss when the liabilities are derecognised, as well as through the amortisation process.
The effective interest rate method is a method of calculating the amortised cost of a financial asset or liability and of allocating and recognising the interest income or expense in profit or loss over the relevant period. The effective interest rate is the rate that exactly discounts estimated future cash payments or receipts through the expected life of the financial asset or liability to the gross carrying amount of financial asset or to the amortised cost of the financial liability.
A financial asset (or where applicable, a part of a financial asset or a part of a group of similar financial assets) is derecognised where the rights to receive cash flows from the asset have expired. Or the Company has transferred its rights to receive cash flows from the asset, and the Company has transferred substantially all of the risks and rewards of the asset or has transferred control of the asset.
A financial liability is derecognised by the Company when the obligation under the liability is discharged, cancelled or expired.
The Company holds only trade receivables with no financing component and which have maturities of less than 12 months at amortised cost. Therefore the Company has chosen to apply an approach similar to the simplified approach for expected credit losses under IFRS 9 to all its trade receivables. The Company does not track changes in credit risk, but instead recognises a loss allowance, if any, based on the lifetime expected credit losses at each balance sheet date.
The Company measures its investments in financial instruments, such as equity instruments, at fair value at each balance sheet date.
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 balance sheet date. The fair value for financial instruments traded in active markets at the balance sheet date is based on their quoted price (bid price for long positions), without any deduction for transaction costs. The fair value for financial instruments that are either unit trusts or open ended investment companies are based on their closing price, the bid price or the single price as appropriate, as released by the relevant fund administrator.
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 Company identifies transfers between levels in the hierarchy by re-assessing the categorisation (based on the lowest level input that is significant to the fair value measurement as a whole), and deems transfers to have occurred at the beginning of each reporting period.
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.
Cash and cash equivalents comprise cash on hand and short-term deposits in banks that are readily convertible to known amounts of cash and that are subject to an insignificant risk of changes in value.
Upon the issuance of Ordinary 10p shares, the consideration received is included in equity. Transaction costs incurred by the Company in issuing its own equity instruments are accounted for as a deduction from equity. Any excess consideration over the nominal value of any Ordinary 10p shares issued, before transaction costs, is credited to the Share Premium Account.
Own equity instruments that are repurchased for cancellation are deducted from Equity Shareholders Funds and accounted for at amounts equal to the consideration paid, including any directly attributable incremental costs. In accordance with the Company's Articles, the total cost of any such transactions will be deducted from the Capital Reserve.
The Capital Reserve includes gains and losses on the sale of financial instruments, and investment holding gains or losses, as reported in the Statement of Comprehensive Income. Additionally any finance costs and expenses charged to capital in accordance with the Company's policy, and as detailed above, the cost of any shares repurchased for cancellation, are debited against the Capital Reserve.
The net revenue for the year is included in the Revenue Reserve along with dividends to shareholders, when approved.
Dividends are at the discretion of the Company. A dividend to the Company's shareholders is accounted for as a deduction from the Revenue Reserve. An interim dividend is recognised as a liability in the period in which it is irrevocably declared by the Board of Directors. A final dividend is recognised as a liability in the period in which it is approved by the Company's shareholders in a Annual General Meeting.
For management purposes the Company is organised into one principal activity, being investing activities, as detailed below:
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 company and its portfolio contains investments in companies listed in a number of countries. Geographical information about the portfolio is provided on page 17 and exposure to different currencies is disclosed in note 22 on page 87.
| 2021 £000 |
2020 £000 |
|
|---|---|---|
| Income from investments† | ||
| Dividend income* | 5,647 | 5,631 |
| Accumulation dividend income | 326 | 253 |
| Overseas dividend income | 105 | 74 |
| 6,078 | 5,958 | |
| Other income | ||
| Interest income | ||
| Sundry income | 70 | 76 |
| 70 | 76 | |
| Total income | 6,148 | 6,034 |
| Income from investments | ||
| Listed UK | 1,408 | 1,167 |
| Listed overseas | 105 | 74 |
| Unlisted – MAM funds | 538 | 690 |
| Unlisted | 4,027 | 4,027 |
| 6,078 | 5,958 |
† Special dividends received during the year and not recognised in income but rather as a return of capital were £489,000 (2020: Nil).
* Includes MAM Ordinary income of £4,027,000 (2020: £4,027,000) and Property Income Distribution (PID) dividend income of £Nil (2020: £13,000).
| 2021 | 2020 | ||||||
|---|---|---|---|---|---|---|---|
| Revenue return £000 |
Capital return £000 |
Total £000 |
Revenue return £000 |
Capital return £000 |
Total £000 |
||
| Fund management | 76 | 228 | 304 | 68 | 203 | 271 | |
| 76 | 228 | 304 | 68 | 203 | 271 |
The fund management fees are payable to MAM in accordance with the Investment Agreement and the material terms are disclosed in the Directors' Report on page 33. The fund management fees charged and shown are only in respect on the investment in the MAM UKES Segregated Portfolio. Fund management 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. At 30 September 2021, an amount of £81,000 was outstanding for payment of fund management fees due to MAM on the UKES Segregated Portfolio (2020: £65,000).
| 2021 £000 |
2020 £000 |
|
|---|---|---|
| Staff costs – note 7 | 468 | 464 |
| Other staff costs and directors' fees | 224 | 243 |
| Advisers' costs | 228 | 305 |
| Information costs | 117 | 117 |
| Establishment costs | 39 | 41 |
| Operating lease rentals – premises | 59 | |
| Depreciation on tangible assets | 66 | 17 |
| Auditor's remuneration (see below) | 51 | 41 |
| Other expenses | 61 | 159 |
| 1,254 | 1,446 |
A charge of £573,000 (2020: £704,000) to capital and an equivalent credit to revenue has been made in the Company has been made to recognise the accounting policy of 75% of direct investment administration expenses to capital.
Total fees charged by the Auditor for the year, all of which were charged to revenue, comprised:
| 2021 £000 |
2020 £000 |
|||
|---|---|---|---|---|
| Audit services – statutory audit | 49 | 40 | ||
| Other audit related services | 2 | 1 | ||
| 51 | 41 |
Other audit related services relate to a review of the Company's debenture covenant.
| 2021 £000 |
2020 £000 |
|
|---|---|---|
| Fees | 189 | 167 |
| Salary | 192 | 191 |
| Other benefits | 9 | 10 |
| 390 | 368 |
The Report on Directors' Remuneration on pages 46 to 49 explains the Company's policy on remuneration for Directors for the year. It also provides further details of Directors' remuneration.
| 2021 £000 |
2020 £000 |
||
|---|---|---|---|
| Salaries and other payments | 387 | 383 | |
| Social security costs | 50 | 50 | |
| Pension contributions | 31 | 31 | |
| 468 | 464 | ||
| 2021 Number |
2020 Number |
||
| Average number of employees: | |||
| Management and office staff | 3 | 3 |
| 2021 | 2020 | |||||
|---|---|---|---|---|---|---|
| Revenue return £000 |
Capital return £000 |
Total £000 |
Revenue return £000 |
Capital return £000 |
Total £000 |
|
| Interest on 7.25% 2025 debenture | ||||||
| stock | 375 | 1,126 | 1,501 | 375 | 1,126 | 1,501 |
| Amortisation of debenture stock | ||||||
| issue expenses | 6 | 19 | 25 | 6 | 17 | 23 |
| Lease liability interest expense | 6 | 6 | ||||
| 387 | 1,145 | 1,532 | 381 | 1,143 | 1,524 |
Further details of the debenture stock in issue are provided in note 16 and note 22, and the lease liability in note 20.
| 2021 £000 |
2020 £000 |
|
|---|---|---|
| Tax on overseas dividends | 15 | 10 |
The current taxation rate for the year is lower (2020: lower) than the standard rate of corporation tax in the UK of 19.0% (2020: 19.0%). The differences are explained below:
| 2021 £000 |
2020 £000 |
|
|---|---|---|
| Net return/(loss) before taxation | 26,897 | (17,592) |
| Taxation at UK Corporation Tax rate of 19.0% (2020: 19.0%) | 5,110 | (3,342) |
| Effects of: | ||
| – UK dividends which are not taxable | (1,128) | (1,129) |
| – foreign dividends which are not taxable | (38) | (15) |
| – (gains)/losses on investments which are not taxable | (4,338) | 3,873 |
| – expenses which are not deductible for tax purposes | 88 | 87 |
| – excess expenses for the current year | 306 | 526 |
| – overseas taxation which is not recoverable | 15 | 10 |
| Actual current tax charge | 15 | 10 |
After claiming relief against accrued income taxable on receipt, the Company has unrelieved excess expenses of £97,190,000 (2020: £93,627,000). It is not yet certain that the Company will generate sufficient taxable income in the future to utilise these expenses are 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.
The following table summarises the amounts recognised as distributions to equity shareholders in the period:
| 2021 £000 |
2020 £000 |
|||
|---|---|---|---|---|
| 2019 Final dividend of 7.0p paid on 28 January 2020 | 3,713 | |||
| 2020 Interim dividend of 4.4p paid on 19 June 2020 | 2,333 | |||
| 2020 Final dividend of 7.0p paid on 26 January 2021 | 3,711 | |||
| 2021 Interim dividend of 4.4p paid on 18 June 2021 | 2,333 | |||
| 6,044 | 6,046 | |||
| 2021 £000 |
2020 £000 |
|||
| Proposed final dividend for the year ended 30 September 2021 of 7.0p | ||||
| (2020: final dividend of 7.0p) per ordinary share | 3,710 | 3,711 | ||
| 3,710 | 3,711 |
The proposed final dividend has not been included as a liability in these accounts in accordance with IAS 10: Events after the Reporting Period.
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:
| 2021 £000 |
2020 £000 |
|
|---|---|---|
| Interim dividend for the year ended 30 September 2021 of 4.40p (2020: 4.40p) per ordinary share. |
2,333 | 2,333 |
| Final dividend for the year ended 30 September 2021 of 7.0p (2020: 7.0p) per ordinary share. |
3,710 | 3,711 |
| 6,043 | 6,044 |
Distributable reserves of the Company comprise the Capital and Revenue Reserves.
Dividends have been made solely from the Revenue Reserve.
Basic return per ordinary share is based on 53,013,842 ordinary shares, being the weighted average number of shares in issue (2020: Basic return based on 53,027,870 ordinary shares). Basic returns per ordinary share are based on the net return after taxation attributable to equity shareholders.
| 2021 £000 |
2020 £000 |
|
|---|---|---|
| Basic revenue returns are based on net revenue after taxation of: | 4,989 | 4,833 |
| Basic capital returns are based on net capital return/(loss) of: | 21,893 | (22,435) |
| Basic total returns are based on a return/(loss) of: | 26,882 | (17,602) |
| Right-of-Use asset £000 |
Leasehold Improvements £000 |
Office Equipment £000 |
Total £000 |
|||||
|---|---|---|---|---|---|---|---|---|
| Cost: | ||||||||
| At 1 October 2020 Additions Disposals |
304 | 28 | 251 1 |
583 1 |
||||
| At 30 September 2021 | 304 | 28 | 252 | 584 | ||||
| Depreciation: | ||||||||
| At 1 October 2020 | 1 | 28 | 245 | 274 | ||||
| Charge for year Disposals |
61 | 5 | 66 | |||||
| At 30 September 2021 | 62 | 28 | 250 | 340 | ||||
| Net book value: | ||||||||
| At 30 September 2021 | 242 | 2 | 244 | |||||
| At 30 September 2020 | 303 | 6 | 309 |
The Right-of Use Asset is in respect of a leasehold interest in office premises. Further details concerning leases are contained in note 20 on page 85.
| Right-of-Use asset £000 |
Leasehold Improvements £000 |
Office Equipment £000 |
Total £000 |
|||||
|---|---|---|---|---|---|---|---|---|
| Cost: | ||||||||
| At 1 October 2019 Additions Disposals |
304 | 28 | 250 1 |
278 305 |
||||
| At 30 September 2020 | 304 | 28 | 251 | 583 | ||||
| Depreciation: | ||||||||
| At 1 October 2019 | 21 | 236 | 257 | |||||
| Charge for year Disposals |
1 | 7 | 9 | 17 | ||||
| At 30 September 2020 | 1 | 28 | 245 | 274 | ||||
| Net book value: | ||||||||
| At 30 September 2020 | 303 | 6 | 309 | |||||
| At 30 September 2019 | 7 | 14 | 21 |
| 2021 | 2020 | |||||||
|---|---|---|---|---|---|---|---|---|
| Unlisted (MAM |
Unlisted (MAM |
|||||||
| Listed £000 |
Funds) £000 |
Unlisted £000 |
Total £000 |
Listed £000 |
Funds) £000 |
Unlisted £000 |
Total £000 |
|
| Opening book cost | 42,756 | 64,004 | 2,331 | 109,091 | 48,714 | 68,092 | 2,331 | 119,137 |
| Opening investment holding (losses)/gains |
(4,109) | 11,778 | 28,711 | 36,380 | (325) | 15,547 | 38,555 | 53,777 |
| Opening fair value | 38,647 | 75,782 | 31,042 | 145,471 | 48,389 | 83,639 | 40,886 | 172,914 |
| Opening fair value | ||||||||
| Purchases at cost | 32,771 | 15,003 | 47,774 | 27,869 | 14,496 | 42,365 | ||
| Sales proceeds received | (21,896) | (24,638) | (46,534) | (28,601) | (20,822) | (49,423) | ||
| Gains/(losses) on | ||||||||
| investments | 11,041 | 18,639 | (5,841) | 23,839 | (9,010) | (1,531) | (9,844) | (20,385) |
| Closing fair value | 60,563 | 84,786 | 25,201 | 170,550 | 38,647 | 75,782 | 31,042 | 145,471 |
| Closing book cost | 53,473 | 61,365 | 2,331 | 117,169 | 42,756 | 64,004 | 2,331 | 109,091 |
| Closing investment holding gains/(losses) |
7,090 | 23,421 | 22,870 | 53,381 | (4,109) | 11,778 | 28,711 | 36,380 |
| Closing fair value | 60,563 | 84,786 | 25,201 | 170,550 | 38,647 | 75,782 | 31,042 | 145,471 |
The Company received £46,534,000 (2020: £49,423,000) from investments sold in the year. The book cost of these investments when they were purchased was £39,696,000 (2020: £52,411,000). These investments have been revalued over time and until they were sold any unrealised gains/losses were included in the fair value of the investments.
Unlisted investments include an amount of £40,000 in a company (2020: £37,000 in a company) and £25,161,000 (2020: £31,005,000) for the Company's investment in MAM as detailed on page 82. Also, further details concerning the investments in the MAM Funds are shown on page 81.
During the year the Company incurred transaction costs amounting to £157,000 (2020: £145,000), of which £147,000 (2020: £125,000) related to the purchase of investments and £10,000 (2020: £20,000) related to the sales of investments. These amounts are included in "Gains/(losses) on investments at fair value through profit or loss", as disclosed in the Statement of Comprehensive Income.
The composition of the investment return is analysed below:
| 2021 £000 |
2020 £000 |
|
|---|---|---|
| Net gains/(losses) on sales of equity investments | 6,838 | (2,988) |
| Increase/(decrease) in holding gains on equity investments | 17,001 | (17,397) |
| Gains/(losses) on investments | 23,839 | (20,385) |
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:
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:
| 2021 | 2020 | |||||||
|---|---|---|---|---|---|---|---|---|
| Level 1 £000 |
Level 2 £000 |
Level 3 £000 |
Total £000 |
Level 1 £000 |
Level 2 £000 |
Level 3 £000 |
Total £000 |
|
| Financial assets held at fair value through profit or loss – equities and managed funds: |
||||||||
| Listed equity securities | 60,563 | 60,563 | 38,647 | 38,647 | ||||
| Unlisted equity securities (MAM Funds) Unlisted equity securities |
84,786 | 25,201 | 84,786 25,201 |
75,782 | 31,042 | 75,782 31,042 |
||
| 60,563 | 84,786 | 25,201 | 170,550 | 38,647 | 75,782 | 31,042 | 145,471 |
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 2021 or 2020).
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 no transfers (2020: Nil) between Level 1 and Level 2.
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:
| 2021 | 2020 | |||
|---|---|---|---|---|
| Total £000 |
Equity investments £000 |
Total £000 |
Equity investments £000 |
|
| Opening balance Total losses for the year included in the Statement of |
31,042 | 31,042 | 40,886 | 40,886 |
| Comprehensive Income | (5,841) | (5,841) | (9,844) | (9,844) |
| 25,201 | 25,201 | 31,042 | 31,042 |
The Company has a number of investments in investment funds managed by MAM. Details of those investments are:
| 30 September 2021 | 30 September 2020 | |||
|---|---|---|---|---|
| Investment Value £000 |
Proportion Held % |
Investment Value £000 |
Proportion Held % |
|
| MAM Tortoise Fund | 21,848 | 5.4 | 16,066 | 4.6 |
| MAM Income Fund | 9,394 | 6.6 | ||
| MAM Global Equity Fund | 44,217 | 72.6 | 27,403 | 68.1 |
| MAM International Equity Fund | 13,593 | 61.0 | 11,484 | 64.5 |
| MAM US Equity Fund | 8,490 | 4.4 | ||
| MAM UK Smaller Companies Fund* | 5,128 | 4.0 | 2,945 | 1.5 |
| 84,786 | 75,782 |
* 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 on page 33.
In addition, the total value of all investments managed by MAM at 30 September 2021 was £146.8 million (2020: £115.3 million). Further details on the investments in the MAM funds are contained in the Chief Executive's Report on pages 6 to 19.
The Company's investments in the MAM Global Equity Fund and the MAM International Equity Fund, with a cost of £28.1 million and £10.0 million respectively, are each a substantial interest in those funds at 30 September 2021 (2020: MAM Global Equity Fund and MAM International Equity Fund of £16.5 million and £10 million). As the Company meets the definition of a investment entity under IFRS 10, these holdings are not treated as a subsidiary or associate, rather each is accounted for as an investment held at fair value through profit or loss, in accordance with IAS 28 and IFRS 9.
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 Balance Sheet as part of investments held at fair value through profit or loss.
| 2021 £000 |
2020 £000 |
||
|---|---|---|---|
| Cost of investment | 540 | 540 | |
| Holding gains | 24,621 | 30,465 | |
| Fair value of investment at balance sheet date | 25,161 | 31,005 |
Under the valuation approach used the carrying value is usually assessed and approved quarterly by the Board following the relevant recommendation by the Audit Committee. The valuation basis annualises the most recent quarterly earnings of MAM, applies a median of a peer group price earnings multiple with an unlisted liquidity discount of 20% (although this can be adjusted depending on market conditions). Performance fee earnings multiples are further discounted by 50%. Surplus net assets are then added, having deducted 200% of regulatory capital. A 5% increase/decrease (with all other variables held constant) in:
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 (2020: nil).
As at 30 September 2021, the Company holds 57,523 ordinary 0.1p shares representing a 17.6% shareholding in MAM (2020: 57,523 ordinary 0.1p shares representing a 17.2% shareholding).
| 2021 £000 |
2020 £000 |
|
|---|---|---|
| Sales for future settlement | 160 | 122 |
| Prepayments | 53 | 46 |
| Dividends receivable | 129 | 30 |
| Taxation recoverable | 58 | 71 |
| 400 | 269 |
The Directors' consider that the carrying amounts of trade and other receivables approximates to their fair value.
| 2021 £000 |
2020 £000 |
|
|---|---|---|
| Deposits at banks Other cash balances* |
2,377 785 |
6,756 769 |
| 3,162 | 7,525 |
* Other cash balances represent unclaimed dividends by shareholders. Such cash is held in a separate account by the Company's registrar and is not used by the Company for day-to-day operations.
| 2021 £000 |
2020 £000 |
|
|---|---|---|
| Purchases for future settlement | 282 | 370 |
| Accrued expenses | 255 | 245 |
| Other creditors | 803 | 769 |
| Current portion of lease liability | 65 | 37 |
| 1,405 | 1,421 |
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: | ||
|---|---|---|
| 2021 £000 |
2020 £000 |
|
| £20.7m (2020: £20.7m) 7.25% 2025 debenture stock | 20,595 | 20,570 |
| Lease liability | 203 | 250 |
| 20,798 | 20,820 |
Debenture stock(s) 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 on page 75.
Further details on the lease liability are contained in note 20 on page 85.
| Number | 2021 £000 |
Number | 2020 £000 |
|
|---|---|---|---|---|
| As at 1 October | 53,013,887 | 5,301 | 53,055,483 | 5,305 |
| Ordinary 10p shares bought back for cancellation | (8,000) | (1) | (41,596) | (4) |
| As at 30 September | 53,005,887 | 5,300 | 53,013,887 | 5,301 |
All shares are allotted fully paid up, and are of one class only. During the year 8,000 Ordinary 10p shares were bought back for cancellation at a total cost of £18,000. In accordance with the Company's articles this was debited against the Capital Reserve. There are no Ordinary 10p shares in Treasury.
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 2006 requires that directors seek authority from the shareholders for the allotment of new shares.
The net asset value per share has been calculated based on Equity Shareholders' Funds of £152,153,000 (2020: £131,333,000), and on 53,005,887 (2020: 53,013,887) ordinary shares, being the number of shares in issue at the year end.
| Non-cash charges | |||||
|---|---|---|---|---|---|
| Long term borrowings | At 30 September 2020 £000 |
Cash Flows £000 |
Other £000 |
Effective interest rate accrual £000 |
At 30 September 2021 £000 |
| £20.7m 7.25% 2025 | |||||
| debenture stock | 20,570 | 25 | 20,595 | ||
| Lease liability | 250 | (25) | (28) | 6 | 203 |
| Interest payable on debenture stock | (1,501) | 1,501 | |||
| Total liabilities from financing activities | 20,820 | (1,526) | (28) | 1,532 | 20,798 |
| Non-cash charges | ||||||
|---|---|---|---|---|---|---|
| Long term borrowings | At 30 September 2019 £000 |
Cash Flows £000 |
New Lease £000 |
Other £000 |
Effective interest rate accrual £000 |
At 30 September 2020 £000 |
| £20.7m 7.25% 2025 debenture stock Lease liability |
20,547 | 287 | (37) | 23 | 20,570 250 |
|
| Interest payable on debenture stock |
(1,501) | 1,501 | ||||
| Total liabilities from financing activities |
20,547 | (1,501) | 287 | (37) | 1,524 | 20,820 |
The Other column includes the effect of the reclassification of the current portion of the lease liability. Further details on the lease liability on contained in note 20.
This is in respect of its premises which by way of a sub-lease arrangement with a superior lessee, which commenced in September 2020 for a term of five years.
Set out below are the carrying amounts of lease liabilities and the movements during the period:
| 2021 £000 |
2020 £000 |
|
|---|---|---|
| At 1 October | ||
| Additions | 287 | 287 |
| Payments made under the lease | (25) | |
| Accretion of interest | 6 | |
| At 30 September | 268 | 287 |
| Disclosed as: | ||
| Current | 65 | 37 |
| Non-current | 203 | 250 |
The following are the amounts recognised in profit or loss under its IFRS 16 lease:
| 2021 £000 |
2020 £000 |
|
|---|---|---|
| Depreciation expense of right of use assets | 61 | 1 |
| Interest expense on lease liabilities | 6 | |
| Total amount recognised in profit or loss | 67 | 1 |
The Company has had no expenses relating to short-term leases, variable lease payments or leases of low-value assets.
The Company's total cash outflows for its IFRS 16 lease in the year ended 30 September 2021 were £25,000 (2020: £Nil). Future cash outflows of a fixed amount under the IFRS 16 lease are as follows:
| Expiry Date | 2021 £000 |
2020 £000 |
|---|---|---|
| Within one year | 70 | 35 |
| Between one and two years | 70 | 70 |
| Between two and three years | 70 | 70 |
| Between three and four years | 70 | 70 |
| Between four and five years | 70 | |
| 280 | 315 |
At 30 September 2021, the Company had no financial commitments which had not been accrued for (2020: none).
As an investment company, the Company invests in securities for the long term in order to achieve its investment objective as stated on page 1. 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. COVID-19 continues to provide uncertainty and its impact on the Company is mainly in terms of market risk and operational risk (see Business Review on page 25).
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 MAM (the Fund Manager). 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.
MAM as Fund 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 UKES in the period (2020: None). Certain 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 for future settlement, accrued income, lease liability under IFRS 16 and the debenture loan 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. COVID-19 continues to provide uncertainty into global equity markets however as a closed ended investment company with a long-term objective this increased short term volatility can be managed and is within stress testing limits. MAM continue to monitor their fund portfolios and positioning in light of the pandemic and have made adjustments as and if required.
The Board does set the overall investment strategy and allocation. It 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 changed materially from the previous accounting period.
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:
These risks are taken into account when setting investment policy or allocation and when making investment decisions.
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 2021 was £4,945,000 (2020: £5,394,000).
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 Fund Manager, monitors the Company's exposure to foreign currencies and the Board receives regular reports on exposures. The Company does not hedge any foreign currency exposures back to Sterling.
The currency risk of the non-sterling monetary financial assets and liabilities at the reporting date was:
| 2021 | 2020 | ||||
|---|---|---|---|---|---|
| Currency exposure | Overseas Investments £000 |
Total Currency Exposure £000 |
Overseas Investments £000 |
Total Currency Exposure £000 |
|
| US Dollar | 2,031 | 2,031 | 2,783 | 2,783 | |
| Swiss Franc | 606 | 606 | 1,314 | 1,314 | |
| Euro | 1,832 | 1,832 | 997 | 997 | |
| Yen | 1 | 1 | |||
| Other non-Sterling | 476 | 476 | 299 | 299 | |
| 4,945 | 4,945 | 5,394 | 5,394 |
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 preformed on the same basis for 2020. The revenue impact is an estimated annualised figure based on the relevant foreign currency denominated balances at the reporting date.
| Income statement | 2021 £000 |
2020 £000 |
|---|---|---|
| Capital return | (247) | (270) |
| Net assets | (247) | (270) |
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.
The Company's direct interest rate risk exposure affects the interest received on cash balances and the fair value of its debenture. Indirect exposure to interest rate risk arises through the effect of interest rate changes on the valuation of the investment portfolio. All of the financial assets held by the Company are equity shares, which pay dividends, not interest. The Company may, from time to time, hold investments which pay interest.
The Board sets limits for cash balances and receive regular reports on the cash balances of the Company. The Company's fixed rate debenture introduces gearing to the Company which is monitored within limits and is also reported to the Board 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 have 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:
| 2021 £000 |
2020 £000 |
|
|---|---|---|
| Floating rate financial assets: | ||
| UK Sterling | 3,162 | 7,525 |
| Financial assets not carrying interest | 170,950 | 145,740 |
| 174,112 | 153,265 | |
| Fixed rate financial liabilities: | ||
| UK Sterling | (20,863) | (20,857) |
| Financial liabilities not carrying interest | (1,340) | (1,384) |
| (22,203) | (22,241) |
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-Sterling 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 lease liability under IFRS 16 (see note 20) which total £268,000 and accrue interest at a rate of 2.25% and the Company's debenture, totalling £20.7 million in total on a nominal basis. It pays a rate of interest of 7.25% per annum and will mature in March 2025 (2020: Debenture totalling £20.7 million nominal, maturing in March 2025, with an interest rate of 7.25% per annum. Lease liability under IFRS 16 of £287,000 with an effective interest rate of 2.25%).
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, due to the extremely low rates at the moment.
A 0.5% increase in interest rates would result in a larger impact, as is shown in the table below.
| Income statement | 2021 £000 |
2020 £000 |
|---|---|---|
| Revenue return | 12 | 34 |
| Net assets | 12 | 34 |
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 and its investments in the unlisted MAM Funds, (although the funds themselves are unlisted they are primarily invested in listed equity securities), which are both disclosed in note 13 on pages 79 to 82. 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 Fund 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. At the year end the Company itself did not hold any derivatives (2020: None).
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 may occur in the MAM funds and there have been no derivatives used in the MAM UKES. The Board has regular presentations from MAM on their investment strategy and approach.
The following table details the exposure to market price risk on the listed and unlisted equity investments:
| 2021 £000 |
2020 £000 |
|
|---|---|---|
| Non-current investments held at fair value through profit or loss | ||
| Listed equity investments | 60,563 | 38,647 |
| Unlisted equity investments (MAM Funds) | 84,786 | 75,782 |
| Unlisted equity investments | 25,201 | 31,042 |
| 170,550 | 145,471 |
If share prices on listed equity security investments and the unlisted equity investments (MAM Funds) 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 on page 82.
| Income statement | 2021 £000 |
2020 £000 |
|---|---|---|
| Capital return | 14,535 | 11,443 |
| Net assets | 14,535 | 11,443 |
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.
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 UK 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.
The table below sets out the financial assets exposed to credit risk as at the reporting date:
| 2021 £000 |
2020 £000 |
|
|---|---|---|
| Cash on deposit and at banks Sales for future settlement |
3,162 160 |
7,525 122 |
| Interest, dividends and other receivables | 182 3,504 |
147 7,794 |
| Minimum exposure during the year | 3,272 | 3,153 |
| Maximum exposure during the year | 21,863 | 19,943 |
All amounts included in the analysis above are based on their carrying values.
None of the financial assets were past due at the current or prior reporting date.
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 (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 in realisation mode and represent a very small part of the portfolio. Nonetheless limits remain for any such investments and liquidity risk would always be considered when making investment decisions in such securities. The Company is subject to concentration risk due to its investment in MAM, at 14.5% (2020: 20.4%) of the Company's total assets. 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 within the MAM business itself.
The Company maintains an appropriate level of non-investment related cash balances in order to finance its operations. The Company regularly monitors such 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:
| 2021 | |||||
|---|---|---|---|---|---|
| Undiscounted cash flows | Due within 1 year £000 |
Due between 1 and 2 years £000 |
Due between 2 and 3 years £000 |
Due 3 years and beyond £000 |
Total £000 |
| 7.25% 2025 debenture stock | 20,700 | 20,700 | |||
| Interest on debenture stock | 1,501 | 1,501 | 1,501 | 750 | 5,253 |
| Payments due in respect of the lease liability | 70 | 70 | 70 | 70 | 280 |
| Trade payables and other liabilities* | 1,340 | 1,340 | |||
| 2,911 | 1,571 | 1,571 | 21,520 | 27,573 |
| 2020 | |||||
|---|---|---|---|---|---|
| Undiscounted cash flows | Due within 1 year £000 |
Due between 1 and 2 years £000 |
Due between 2 and 3 years £000 |
Due 3 years and beyond £000 |
Total £000 |
| 7.25% 2025 debenture stock | 20,700 | 20,700 | |||
| Interest on debenture stock | 1,501 | 1,501 | 1,501 | 2,251 | 6,754 |
| Payments due in respect of the lease liability | 35 | 70 | 70 | 140 | 315 |
| Trade payables and other liabilities* | 1,384 | 1,384 | |||
| 2,920 | 1,571 | 1,571 | 23,091 | 29,153 |
* Excludes the current portion of the lease liability.
The following table analyses the carrying amounts of the financial assets and liabilities by categories as defined in IFRS 9:
| Financial assets | 2021 £000 |
2020 £000 |
|---|---|---|
| Financial assets at fair value through profit or loss | ||
| Equity securities | 170,550 | 145,471 |
| 170,550 | 145,471 | |
| Other financial assets* | 3,562 | 7,794 |
| 174,112 | 153,265 | |
| Financial liabilities | ||
| Financial liabilities measured at amortised cost** | 22,203 | 22,241 |
| 22,203 | 22,241 |
* 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, lease liability, purchases for future settlement, investment management fees, 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 lease liability carrying value is considered to be its fair value. The debenture stock is classified as level 3 under the fair value hierarchy. The fair value of the debenture stock is calculated using a standard bond pricing method, using a redemption yield of a similar UK Gilt stock with a appropriate margin being applied.
| Book Value 2021 £000 |
Book Value 2020 £000 |
Fair Value 2021 £000 |
Fair Value 2020 £000 |
|
|---|---|---|---|---|
| £20.7m (2020: £20.7m) 7.25% 2025 debenture stock |
20,595 | 20,570 | 23,617 | 24,939 |
| 20,595 | 20,570 | 23,617 | 24,939 |
The Company's capital management objectives are:
| 2021 £000 |
2020 £000 |
|
|---|---|---|
| Net Debt | ||
| Adjusted cash and cash equivalents* | (2,092) | (6,410) |
| Debentures | 20,595 | 20,570 |
| Lease liability | 268 | 280 |
| Sub total | 18,771 | 14,440 |
| Equity | ||
| Equity share capital | 5,300 | 5,301 |
| Retained earnings and other reserves | 146,853 | 126,032 |
| Equity Shareholders Funds | 152,153 | 131,333 |
| Gearing | ||
| Net debt as a percentage of Equity Shareholders' Funds | 12.3% | 11.0% |
* Adjusted cash and cash equivalents comprise cash plus current assets less current liabilities (excluding the current portion of the lease liability).
Maximum potential gearing represents the highest gearing percentage on the assumption that the Company had no net current assets. As at 30 September 2021 this was 13.7% (2020: 15.9%).
The Board monitors and reviews the broad structure of the Company's capital on an ongoing basis. The review includes:
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:
Leverage is similar to gearing (as calculated in accordance with AIC guidelines previously), but the UK AIFMD mandates a certain calculation methodology which must be applied. Leverage as calculated under the UK AIFMD methodology for the Company is:
| Gross Method | 2021 £000 |
2020 £000 |
|---|---|---|
| Investments held at fair value through profit or loss | 170,550 | 145,471 |
| Total investments at exposure value as defined under the UK AIFMD | 170,550 | 145,471 |
| Shareholders' funds | 152,153 | 131,333 |
| Leverage (times) | 1.12 | 1.11 |
| Commitment Method | 2021 £000 |
2020 £000 |
| Investments held at fair value through profit or loss Cash and cash equivalents |
170,550 3,162 |
145,471 7,525 |
| Total investments at exposure value as defined under the UK AIFMD | 173,712 | 152,996 |
| Shareholders' funds | 152,153 | 131,333 |
| Leverage (times) | 1.14 | 1.16 |
The leverage figures calculated above represent leverage as calculated under the gross and commitment methods as defined under the UK AIFMD (a figure of 1 represents no leverage or gearing). 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 debenture by including the value of investments purchased by those borrowings, rather than their balance sheet value. The Company's leverage limit under the UK AIFMD is 1.5 times, which equates to a borrowing level of 50% (the Company has not exceeded this limit at any time during the year or the prior year).
These requirements are unchanged from the prior year and the Company has complied with them.
MAM is the Fund Manager to the Company, under the terms of an Investment Agreement which 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 on pages 33 and 34. As Fund Manager, MAM is entitled to receive fund 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 managed by MAM are shown in the Chief Executive's Report on page 6 to 19.
MAM is also entitled to receive performance fees on the Company's investment in the MAM Tortoise Fund. There are no performance fees due currently.
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 the Company's 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 on page 6 and on note 13 on page 82.
The table below discloses the transactions and balances for the related party:
| Transactions during the period: | 2021 £000 |
2020 £000 |
|---|---|---|
| Dividend income received from MAM | 4,027 | 4,027 |
| Management fee income due to MAM (Segregated Portfolio only) | 271 | |
| Balances outstanding at the end of the period: | ||
| Between the Company and MAM (Segregated Portfolio investment management fees) | 81 | 65 |
| Value of the Company's investment in MAM | 25,161 | 31,005 |
The remuneration of the Directors, who are the key management personnel of the Company, is 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 2021 for Directors fees or salary (2020: Nil). Further information about the remuneration of individual Directors is provided in the audited section of the Report on Directors' Remuneration on page 47.
| 2021 £000 |
2020 £000 |
|
|---|---|---|
| Short term employee benefits | 390 | 368 |
| 390 | 368 |
On 7 December 2021, an announcement from Liontrust Asset Management PLC was made that it had entered into an agreement to acquire the Company's Fund Manager, Majedie Asset Management Limited in a transaction that was due to complete in June 2022. The Company has a 17.6% shareholding in MAM.
In accordance with IAS 10, this transaction is not an adjusting event and hence the financial statements have been completed with the value of MAM as at 30 September 2021 as calculated under the existing methodology.
The consideration for MAM shareholders is made up of shares in Liontrust and cash. On completion the Company is expected to be paid £7.7m in the form of dividends and special dividends. At the share price of Liontrust on 7 December 2021, the value of the share consideration is £14.7m. There is further deferred consideration of cash and shares of up to £5.6m which may potentially be due three years after completion that is dependent on future investment performance and growth in assets under management.
This Notice of Meeting is an important document. If shareholders are in any doubt as to what action to take, they should consult an appropriate independent advisor.
Notice is hereby given that the one hundred and eleventh Annual General Meeting of Majedie Investments PLC will be held at the City of London Club, 19 Old Broad Street, London EC2N 1DS on Wednesday, 19 January 2022 at 12 noon for the purpose of transacting the following:
To consider and, if thought fit, pass the following Resolutions of which Resolutions 1 to 11 will be proposed as Ordinary Resolutions and Resolutions 12 to 14 shall be proposed as Special Resolutions. All business to be transacted at the AGM is Ordinary Business for the purpose of the Listing Rules.
By order of the Board Link Company Matters Limited Company Secretary 13 December 2021
1 King's Arms Yard London EC2R 7AF
Registered Office Registered in England Number: 109305
The Directors are required to present the financial statements, Directors' report, and Auditor's report to the meeting. These are contained in the Company's Annual Report and Financial Statements 2021. A resolution to receive the financial statements, together with the Directors' report and the Auditor's report on those accounts for the financial period ended 30 September 2021 is included as an ordinary resolution.
Reflecting the remuneration reporting regime which came into effect on 1 October 2013, shareholders have an annual advisory vote on the report on Directors' remuneration. Accordingly, shareholders are being asked to vote on the receipt and approval of the Directors' Remuneration Report as set out on pages 46 to 49 of the 2021 Annual Report.
The Board proposes a final dividend of 7.0 pence per share in respect of the year ended 30 September 2021. If approved, the recommended final dividend will be paid on 28 January 2022 to all ordinary shareholders who are on the register of members on 14 January 2022. The shares will be marked ex-dividend on 13 January 2022.
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-election by the Company. Despite this, and in line with good corporate governance, the Directors have chosen to put themselves up for annual re-election.
Mr Getley and Mr Killingbeck will retire at the forthcoming Annual General Meeting and being eligible, will offer themselves for election.
Ms Lewis and Mr Little will retire at the forthcoming Annual General Meeting, and being eligible, will offer themselves for re-election.
Mr Barlow, having served for over nine years and being a Non-Executive Director of Majedie Asset Management, the Investment Manager, must submit himself for annual re-election.
Full biographies of all the Directors are set out in the Company's 2021 Annual Report and are also available for viewing on the Company's website http://www.majedieinvestments.com/overview.
Mr Barlow has extensive experience within, and knowledge of, the investment management sector. This enables him to rigorously assess and challenge the Investment Manager on strategy and performance. Mr Barlow's tenure with Majedie Investments PLC gives him invaluable insight into the Company which allows him to give unparalleled support on continuity following the recent appointment to the Board and his experience places him in a strong position to advise on matters such as asset allocation. Following a thorough Board evaluation, the Board agrees that Mr Barlow continues to be an effective member of the Board and recommends him for re-election.
Ms Lewis is an investment trust specialist with extensive experience within the sector. Her position as Chairman of Invesco Perpetual UK Smaller Companies Investment Trust PLC along with her other investment trust directorships allow her to provide invaluable insights and to rigorously assess and challenge the performance of the Investment Manager. Following a thorough Board evaluation, the Board agrees that Ms Lewis continues to be an effective member of the Board and recommends her for re-election.
Mr Little has an extensive knowledge of the investment industry, having previously served as the Managing Director of Barclays Wealth Scotland and Northern Ireland. Prior to this role he was Global Head of Automotive Research at Deutsche Bank having previously qualified as a Chartered Accountant with Price Waterhouse. He is currently a Non-Executive Director of Securities Trust of Scotland and Blackrock Smaller Companies Trust Plc, where he chairs the audit committees. He also acts as a consultant to Lindsays LLP and North Capital Wealth Management. Mr Little is Chairman of the Audit Committee and a member of the Renumeration, Management Engagement and Nomination Committees.
Mr Getley has over 25 years' experience at senior level in financial services. He has extensive knowledge of the investment industry as a Partner and Fund Manager at Cazenove & Co and as a Director at Deutsche Asset Management. Subsequently, he was CEO of Westhouse Securities, an institutional stockbroker. He is currently Executive Chairman of AgPlus Diagnostics Limited and Non-Executive Chairman of Masawara PLC, an investment company focused on patient private equity capital in Southern Africa.
Mr Killingbeck brings to the Board over 35 years' experience in the financial services sector. He is currently Managing Director at Harris Allday, managing circa £3bn AUM, bringing to the Board valuable knowledge in asset allocation and management. This allows Mr Killingbeck to be able to effectively assess and challenge the Investment Manager on performance and strategy. In addition, in his role as director and latterly Chairman of the Bankers Investment Trust, he brings broad investment trust experience to the Board.
At each meeting at which the Company's financial statements are presented to its members, the Company is required to appoint an auditor to serve until the next such meeting. The Board, on the recommendation of the Audit Committee, recommends the re-appointment of Ernst & Young LLP and gives authority to the Audit Committee to determine the auditor's remuneration.
Resolution 11 authorises the Board to allot ordinary shares generally and unconditionally in accordance with Section 551 of the Companies Act 2006 up to a maximum number of 5,294,579 Ordinary Shares, representing approximately 9.99% of the issued ordinary share capital at the date of the Notice. The Company does not hold any shares in treasury.
No ordinary shares will be issued at a price less than the prevailing net asset value per Ordinary Share at the time of issue. This authority shall expire at the Annual General Meeting to be held in 2023.
Resolution 12 is a special resolution which is being proposed to authorise the Directors to disapply the pre-emption rights of existing shareholders in relation to issues of ordinary shares under Resolution 11 (being a maximum number of 5,294,579 Ordinary Shares, representing approximately 9.99% of the issued ordinary share capital at the date of the Notice). This authority shall expire at the Annual General Meeting to be held in 2023.
Resolution 13 is a special resolution that will grant the Company authority to make market purchases of up to 7,944,519 Ordinary Shares, representing 14.99% of the ordinary shares in issue as at the date of the Notice.
The maximum price which may be paid for each Ordinary Share must not be more than the higher of (i) 105% of the average of the mid-market values of the Ordinary Shares for the five business days before the purchase is made or (ii) the higher of the price of the last independent trade and the highest current independent bid for the Ordinary Shares. The minimum price which may be paid for each ordinary share is £0.10.
The Directors would not exercise the authority granted under this resolution unless they consider it to be in the best interests of shareholders. Purchases would be made in accordance with the provisions of the Companies Act 2006 and the Listing Rules. This authority shall expire at the Annual General Meeting to be held in 2023 when a resolution to renew the authority will be proposed.
Resolution 14 is a special resolution that will give the Directors the ability to convene general meetings, other than annual general meetings, on a minimum of 14 clear days' notice. The minimum notice period for annual general meetings will remain at 21 clear days. This authority would provide the Company with flexibility where action needs to be taken quickly but will only be used where the Directors consider it in the best interests of shareholders to do so and the matter is required to be dealt with expediently. The approval will be effective until the Company's Annual General Meeting to be held in 2023, at which it is intended that renewal will be sought.
Full details of the above resolutions are contained in the Notice. The Directors consider that all the resolutions to be proposed at the Annual General Meeting are in the best interests of the Company and its members as a whole. The Directors unanimously recommend that shareholders vote in favour of all the resolutions, as they intend to do in respect of their own beneficial holdings.
To be entitled to attend and vote at the meeting (and for the purpose of the determination by the Company of the number of votes they may cast) members must be entered on the Company's register of members at close of business on 17 January 2022 (or, in the event of any adjournment, close of business on the date which is two days (excluding weekends and bank holidays) before the time of the adjourned meeting). Changes to the register of members after the relevant deadline shall be disregarded in determining the rights of any person to attend and vote at the meeting.
A member entitled to attend and vote at this meeting may appoint one or more persons as his/her proxy to attend, speak and vote on his/her behalf at the meeting. A proxy need not be a member of the Company. If multiple proxies are appointed, they must not be appointed in respect of the same shares. To be effective, a copy of the enclosed personalised form of proxy, together with any power of attorney or other authority under which it is signed or a certified copy thereof, should be lodged at the office of the Company's Registrar, not later than 48 hours before (excluding weekends and bank holidays) the time of the meeting or any adjustment thereof. The appointment of a proxy will not prevent a member from attending the meeting and voting in person if he/she so wishes. A member present in person or by proxy shall have one vote on a show of hands. On a vote by poll every member present in person or by proxy shall have one vote for every ordinary share of which he/she is the holder. The termination of the authority of a person to act as proxy must be notified to the Company in writing.
To appoint more than one proxy, shareholders will need to complete a separate proxy form in relation to each appointment (you may photocopy the proxy form), stating clearly on each proxy form how many shares the proxy is appointed in relation to. A failure to specify the number of shares each proxy appointment relates to or specifying an aggregate number of shares in excess of those held by the member will result in the proxy appointment being invalid. Please indicate if the proxy instruction is one of multiple instructions being given. All proxy forms must be signed and should be returned together in the same envelope.
Shareholders may cast a vote electronically rather than completing a hard copy proxy form. To do so, go to Computershare's URL: www.investorcentre.co.uk/eproxy where the following details, which can be found on your proxy card or in an email received from Computershare, will be required:
For the electronic proxy to be valid it must be received by Computershare no later than 12.00 noon on Monday 17 January 2022.
In the case of joint holders, where more than one of the joint holders' purports to appoint a proxy, only the appointment submitted by the most senior holder will be accepted. Seniority is determined by the order in which the names of the joint holders appear in the register of members in respect of the joint holding (the first-named being the most senior).
Any person to whom this notice is sent who is a person nominated under Section 146 of the Companies Act 2006 to enjoy information rights (a Nominated Person) may, under an agreement between him/her and the member by whom he/she was nominated, have a right to be appointed (or to have someone else appointed) as a proxy for the Annual General Meeting. If a Nominated Person has no such proxy appointment right or does not wish to exercise it, he/she may, under any such agreement, have a right to give instructions to the member as to the exercise of voting rights. The statements of the rights of members in relation to the appointment of proxies in Note 2 above does not apply to a Nominated Person. The rights described in that Note can only be exercised by registered members of the Company.
Pursuant to regulation 41(1) of the Uncertificated Securities Regulations 2001, only those shareholders registered in the register of members of the Company as at close of business on 17 January 2022 shall be entitled to attend and vote at the aforesaid Annual General Meeting in respect of the number of shares registered in their name at the that time. Changes to entries on the relevant register of members after close of business on 17 January 2022 (the specified time) shall be disregarded in determining the rights of any person to attend or vote at the meeting. If the meeting is adjourned to a time not more than 48 hours after the specified time applicable to the original meeting, that time will also apply for the purpose of determining the entitlement of members to attend and vote (and for the purpose of determining the number of votes they may cast) at the adjourned Meeting. If, however, the Meeting is adjourned for a longer period then, to be so entitled, members must be entered on the Company's register of members at the time which is 48 hours before the time fixed for the adjourned Meeting or, if the Company gives notice of the adjourned Meeting, at the time specified in that notice.
CREST members who wish to appoint a proxy or proxies through the CREST electronic proxy appointment service may do so for this meeting and any adjournment(s) thereof by using the procedures described in the CREST Manual, which is available to download from the Euroclear website (www.euroclear.com/CREST). CREST Personal Members or other CREST sponsored members, and those CREST members who have appointed a voting service provider(s), should refer to their CREST sponsor or voting service provider(s), who will be able to take the appropriate action on their behalf.
In order for a proxy appointment or instruction made using the CREST service to be valid, the appropriate CREST message (a "CREST Proxy Instruction") must be properly authenticated in accordance with Euroclear's specifications and must contain the information required for such instructions, as described in the CREST Manual. The message, regardless of whether it constitutes the appointment of a proxy or to an amendment to the instruction given to a previously appointed proxy must, in order to be valid, be transmitted so as to be received by the issuer's agent (ID 3RA50) by the latest time(s) for receipt of proxy appointments specified in the notice of meeting. For this purpose, the time of receipt will be taken to be the time (as determined by the timestamp applied to the message by the CREST Applications Host) from which the issuer's agent is able to retrieve the message by enquiry to CREST in the manner prescribed by CREST. After this time any change of instructions to proxies appointed through CREST should be communicated to the appointee through other means.
CREST members and, where applicable, their CREST sponsors or voting service providers should note that Euroclear does not make available special procedures in CREST for any particular messages. Normal system timings and limitations will therefore apply in relation to the input of CREST Proxy Instructions. It is the responsibility of the CREST member concerned to take (or, if the CREST member is a CREST personal member or sponsored member or has appointed a voting service provider(s), to procure that his CREST sponsor or voting service provider(s) take(s)) such action as shall be necessary to ensure that a message is transmitted by means of the CREST system by any particular time. In this connection, CREST members and, where applicable, their CREST sponsors or voting service providers are referred, in particular, to those sections of the CREST Manual concerning practical limitations of the CREST system and timings.
The Company may treat as invalid a CREST Proxy Instruction in the circumstances set out in Regulation 35(5) (a) of the Uncertificated Securities Regulations 2001.
As at the date of this Notice, the Company's issued share capital and total voting rights amounted to 52,998,795 Ordinary Shares carrying one vote each.
In accordance with Section 319A of the Companies Act 2006, the Company must cause any question relating to the business being dealt with at the meeting put by a member attending the meeting to be answered. No such answer need be given if:
c) it is undesirable in the interests of the Company or the good order of the meeting that the question be answered.
Any corporation which is a member can appoint one or more corporate representative(s) who may exercise, on its behalf, all its powers as a member provided that no more than one corporate representative exercises powers in relation to the same shares.
Shareholders should note that it is possible that, pursuant to requests made by shareholders of the Company under section 527 of the Companies Act 2006, the Company may be required to publish on a website a statement setting out any matter relating to: (i) the audit of the Company's accounts (including the Auditors' Report and the conduct of the audit) that are to be laid before the Annual General Meeting; or (ii) any circumstance connected with an auditor of the Company ceasing to hold office since the previous meeting at which annual accounts and reports were laid in accordance with section 437 of the Companies Act 2006. The Company may not require the shareholders requesting any such website publication to pay its expenses in complying with sections 527 or 528 of the Companies Act 2006. Where the Company is required to place a statement on a website under section 527 of the Companies Act 2006, it must forward the statement to the Company's auditor not later than the time when it makes the statement available on the website. The business which may be dealt with at the Annual General Meeting includes any statement that the Company has been required under section 527 of the Companies Act 2006 to publish on a website.
A copy of this notice and any subsequent notices in respect of section 388A and any information required under section 311A of the Companies Act 2006 will be available on the Company's website www.majedieinvestments.com.
The terms and conditions of appointment of Directors will be available for inspection at the registered office of the Company during usual business hours on any weekday (except Saturdays, Sundays and public holidays) until the date of the Meeting and at the place of the Meeting for a period of fifteen minutes prior to and during the Meeting.
You may not use any electronic address provided either in this Notice of Meeting or any related documents (including the form of proxy) to communicate with the Company for any purposes other than these expressly stated.
If a shareholder receiving this notice has sold or transferred all shares in the Company, this notice and any other relevant documents (e.g., form of proxy) should be passed to the person through whom the sale or transfer was affected, for transmission to the purchaser.
Personal data provided by shareholders at or in relation to the Meeting will be processed in line with the Company's privacy policy.
Before investing in the Company's shares, potential investors must read the Key Information Document and the Investor Disclosure Document. They are available on the Company's website at www.majedieinvestments.com, under the investing section.
The Majedie Corporate ISA (Individual Savings Account) provides a tax effective way to invest or save in the shares of Majedie Investments PLC. There are no initial charges and no annual management fees. Halifax Share Dealing Limited is the Majedie Corporate ISA Manager.
ISA's provide the following benefits:
The Majedie Corporate ISA provides the additional benefit of extremely low cost. There are no initial charges and no annual management charges. Furthermore there is no brokerage charge on purchases as part of the weekly bulk dealing for the scheme. However there is Government Stamp Duty on purchases, currently at 0.5%, and there is also an additional charge should you wish to make use of the Real Time Dealing Service*.
Shares may be purchased either by way of a lump sum payment or through regular monthly payments. The minimum lump sum investment is £500, while the minimum direct debit subscription is £20. The maximum permitted investment is £20,000 for the 2021/22 tax year. Investments can be split between a cash ISA and a stocks and shares ISA. Income may be paid direct to your bank or building society on a half-yearly basis or reinvested.
| Investment | Lump sum | from £50 |
|---|---|---|
| Monthly savings | from £20 | |
| ISA Charges | Initial | Nil |
| Annual | Nil | |
| Dealing Charges* Online | £12.50 | |
| Telephone | From £25.00 |
The Majedie Corporate ISA is provided in conjunction with Halifax Share Dealing Limited (HSDL) who act as an HM Revenue & Customs Approved ISA Manager. To apply please contact Halifax Share Dealing on 03457 22 55 25, quoting Stock Code: MXMJ. Telephone calls may be recorded for security purposes and may be monitored under the Bank's quality control procedures.
The value of investments and income from them can go down as well as up and you may not get back the amount you originally invested. Any tax concessions are not guaranteed and may be changed at any time. The value of any tax concessions will depend on your individual circumstances.
Halifax Share Dealing Limited. Registered in England and Wales no. 3195646. Registered Office: Trinity Road, Halifax, West Yorkshire, HX1 2RG. Authorised and regulated by the Financial Conduct Authority under registration number 183332. A Member of the London Stock Exchange and an HM Revenue & Customs Approved ISA Manager.
* Please call 03457 22 55 25 for further information
You are no longer able to put new money into a PEP. However, your existing PEP investments remain sheltered from tax in an ISA.
Please note that ISA limits apply and taxation levels and bases are subject to change. Past performance of investments is not a guide to future performance as their value can go down as well as up.
Further details may be obtained from the Company's ISA Manager, The Share Centre, PO Box 2000, Aylesbury, Buckinghamshire HP21 8ZB (website: www.share.com).
1 King's Arms Yard London EC2R 7AF Telephone: 020 7382 8170 E-mail: [email protected] Registered Number: 109305 England
Link Company Matters Limited 6th Floor 65 Gresham Street London EC2V 7NQ
Majedie Asset Management Limited 10 Old Bailey London EC4M 7NG Telephone: 020 7618 3900 Email: [email protected]
The Bank of New York Mellon (International) Limited 1 Canada Square London E14 5AL
The Depositary acts as global custodian and may delegate safekeeping to one or more global subcustodians. The Depositary has delegated safekeeping of the assets of the Company to The Bank of New York Mellon SA/NV and The Bank of New York Mellon.
Majedie Investments PLC
Dickson Minto W.S. 16 Charlotte Square Edinburgh EH2 4DF
Website www.majedieinvestments.com
Computershare Investor Services PLC The Pavilions Bridgwater Road Bristol BS99 6ZZ Telephone: 0370 707 1159
Shareholders should notify all changes of name and address in writing to the Registrars. Shareholders may check details of their holdings, historical dividends, graphs and other data by accessing www.investorcentre.co.uk.
Shareholders wishing to receive communications from the Registrars by email (including notification of the publication of the annual and interim reports) should register on-line at www.investorcentre.co.uk/ecomms. Shareholders will need their shareholder number, shown on their share certificate and dividend vouchers, in order to access both of the above services.
Ernst & Young LLP 25 Churchill Place Canary Wharf London E14 5EY
J.P. Morgan Cazenove 25 Bank Street London E14 5JP
Ordinary: GB0005555221 Debenture 7.25% 31/03/2025: GB0006733058
Ordinary: MAJE Debenture 7.25% 31/03/2025: BD22
Ordinary: 0555522 Debenture 7.25% 31/03/2025: 0673305
| Ex-dividend date | 13 January 2022 |
|---|---|
| Record date | 14 January 2022 |
| Annual General Meeting | 19 January 2022 |
| 2020/21 final dividend payable | 28 January 2022 |
| Interim results announcement | May 2022 |
| 2021/22 interim dividend payable | June 2022 |
| Financial year end | 30 September 2022 |
| Final results announcement | December 2022 |
| Annual Report mailed to | |
| shareholders | December 2022 |
www.majedieinvestments.com
The share price is quoted daily in The Times, Financial Times, The Daily Telegraph, The Independent and London Evening Standard. Shares may be bought through Majedie Corporate ISA (details of which are set out on page 102). You may transfer an existing PEP or ISA to the Majedie ISA (page 102). You may also purchase shares through an web-based investment platform or via your stockbroker or bank.
The Company announces its net asset value daily through the London Stock Exchange and on its website. The Financial Times publishes daily estimates of the net asset value and discount.
For capital gains tax purposes the adjusted market price of the Company's shares at 31 March 1982 was 35.875p per 10p share. Former shareholders of Barlow Holdings PLC are recommended to consult their professional advisers in this regard.
Please be aware that there has been an increase in reports of share scams, where fraudsters cold-call investors offering a range of financial propositions. Majedie Investments PLC has not and would not instruct any third party to make an offer to our shareholders or to act on our behalf in this way. Therefore, Majedie Investments PLC would like to remind its shareholders to remain vigilant at all times. If you are in any doubt, or have any concerns, regarding an offer to purchase shares by a third party, please contact Computershare.
To find out more information on how you can protect yourself, please visit the Financial Conduct Authority (FCA) website: www.fca.org.uk/scamsmart, or call the FCA's consumer helpline: 0800 111 6768.
1 King's Arms Yard London EC2R 7AF
Telephone 020 7382 8170 E-mail [email protected]
www.majedieinvestments.com
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