Majedie Inv. Regulatory News (MAJE)

MAJEDIE INVESTMENTS PLC

ANNUAL FINANCIAL REPORT FOR THE YEAR ENDED 30 SEPTEMBER 2018

The full Annual Report and Accounts will shortly be available via the Company's website at www.majedieinvestments.com or by contacting the Company Secretary on telephone number 020 7954 9531.

The Directors present the results of the Company for the year ended 30 September 2018.

INVESTMENT OBJECTIVE

The Company's investment objective is to maximise total shareholder return whilst increasing dividends by more than the rate of inflation over the long term.

YEAR'S SUMMARY

Notes:

Alternative Performance Measures (APM) definitions used in the Annual Report are as follows:

1. Total Assets: Total assets are defined as total assets less current liabilities.

2. Debt at par or fair value: Par value is the 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.

3. Net Asset Value: The Net Asset Value (NAV) is the value of all of the Company's assets less all liabilities. The NAV is usually expressed as an amount per share.

4. Gearing and Potential Gearing: Gearing represents the amount of borrowing that a company has and is calculated using the Association of Investment Companies (AIC) guidance. It is usually expressed as a percentage of equity shareholders' funds and a positive percentage or ratio above one shows the extent of the level of borrowings. Gearing is calculated as borrowings less net current assets to arrive at a net borrowings figure. Potential Gearing excludes cash from the calculation. Details of the calculation for the Company are in note 22 below.

5. Total Return: Total returns include any dividends paid as well as capital returns as a result of an increase or decrease in a company's share price or NAV.

6. Ongoing Charges Ratio (OCR): Ongoing charges are a measure of the normal ongoing costs of running a company. Further information is shown in the Business Review section of the Strategic Report below.

7. Adjusted Capital and Reserves: This is as defined in the debenture Trust Deed. It essentially removes unrealised gains from reserves.

TEN YEAR RECORD

to 30 September 2018

Notes:

† Calculated in accordance with AIC guidance.

ˆ Includes both continuing and discontinued operations.

# As from May 2012, under AIC guidance, Ongoing Charges replace previous cost ratios.

** Dividends disclosed represent dividends that relate to the Company's financial year. Under International Financial Reporting Standards (IFRS) dividends are not accrued until paid or approved. Total dividends include special dividends paid, if any.

STRATEGIC REPORT

CHAIRMAN'S STATEMENT

In the year ended 30 September 2018 the NAV at par and NAV at FV (net asset value with debt at par and fair value) rose by 0.9% and 2.7% respectively on a total return basis. The redemption of the 2020 9.5% Debentures in December 2017 resulted in dilution of 1.6% to the NAV at par and 0.6% to the NAV at FV. The share price rose by 2.1% over the period, also on a total return basis. The FTSE All Share Index and MSCI World Index (in sterling terms) rose by 5.9% and 12.9% respectively, on a total return basis.

Results and Dividends

The Company had a capital loss for the twelve months to 30 September of £5.1m which includes a charge of £2.9m being the premium paid to the 2020 Debenture holders. The total income from investments was £7.9m compared to £7.5m in 2017. The uplift in income reflects an increase in dividends received from Majedie Asset Management (MAM) to £4.6m from £4.1m in 2017 whilst income from the MAM Funds was lower by £0.1m, reflecting the sale of assets to finance the early repayment of the 2020 Debentures. Total administration expenses and management fees have fallen from £1.8m to £1.7m due mainly to lower investment management fees. Finance costs fell by £1.1m to £1.8m due to the repayment of the 2020 Debentures. In the year to 30 September 2019 finance costs will fall further to £1.5m, reflecting the full year effect of repayment.

The ongoing charges ratio (OCR) has fallen to 1.3%. The self-managed nature of the Company and its size mean costs are higher than average, though the investment management fees that are paid to MAM and included in the OCR are more than offset by the dividend received from MAM. Costs remain a key area of focus for the Board. 

The net revenue return after tax for the year to 30 September 2018 was £6.7m compared to £6.0m in the year to 30 September 2017. The Board increased the interim dividend by 14.3% to 4.0p partially to rebalance the split between interim and final dividend. The Board is recommending a final dividend of 7.0p which is an increase of 12.8% for the full year. The final dividend will be payable on 23 January 2019 to shareholders on the register on 11 January 2019. The Board retains its policy to increase dividends above the rate of inflation over the long term and since rebasing the dividend in 2014 has increased it by 46.7%. It is very pleasing and reflects well on the reorganisation made in 2014 that the dividend now exceeds the dividend of 2013 and that it is fully covered by earnings.

Asset Allocation and Performance

The Company's asset allocation gives exposure to funds managed by a highly regarded boutique manager across all geographies. The Company retains a significant stake of 17.1% in the manager. No shares in MAM have been traded by the Company though there was a buyback for cancellation of shares by MAM from other shareholders, which increased the Company's percentage stake. The asset allocation provides key areas of differentiation from the Company's peers in the Global Growth Sector.

First the holding in MAM is calculated by a long standing and formulaic methodology. Over the longer term this provides a fair assessment of value, but can produce distortions in the short term. Due to the current market and political volatility the Directors have decided to include a discount in the MAM valuation to reflect fair value at 30 September 2018. 

Secondly the Company's holding in the MAM Tortoise Fund, an absolute return fund, is designed in part, to reduce the downside volatility of returns to shareholders. The returns of the fund will not replicate the underlying stock markets and the fund was too defensively positioned in the past year. If stock markets roll over after a bull run of ten years the MAM Tortoise should recoup its recent losses and provide some downside protection.

Thirdly, the Company's asset allocation is more UK centric than its peers and since the Brexit vote the UK stock market has materially underperformed Global Markets. Whilst political uncertainty is not helpful for markets the scale of the underperformance has led to the UK Stock Market looking undervalued compared to Global Markets with its free cash flow yield at its highest level since 1986 and a dividend yield of over 4%. The current valuation of the UK market is presenting a good investment opportunity over the medium term especially as over 70% of the FTSE All Share's earnings are derived from overseas. The attractive valuation of UK companies is being recognised by overseas companies, particularly US corporates, who have made sizable acquisitions in the UK market in the last twelve months.

The Board views the key Company's differentiators as positive for shareholders over the medium term and recognises that its defensive positioning has caused the Company to underperform its peers over the last year. Since the year end market volatility has picked up markedly as concerns about rising inflation, the end of Quantitative Easing, rising bond yields, trade wars and a febrile political climate in the US, Europe and the UK cause investors to question market levels.

The Board is concerned that since the year end, the level of the Company's discount has widened. In general, volatile markets have led to investment company discounts widening across the sector.

Board

The Board has initiated a search for a new Non-executive Director to replace Paul Gadd who has served on the Board for over nine years. Once the appointment has been finalised, it is intended that Paul will resign from the Board and I personally, and on behalf of the Board, would like to thank him for his sound and helpful advice.

AGM

The AGM will be held on 16 January 2019 at 12.00 noon at the City of London Club, London EC2N 1DS. Details are set out in the notice of meeting on page 83 of the full Annual Report. There will be presentations from the Board and MAM and there will be an opportunity to ask questions. I hope you will be able to attend.

Andrew J Adcock

Chairman

4 December 2018

STRATEGIC REPORT

CHIEF EXECUTIVE'S REPORT

The Company's assets are allocated at the discretion of the Board between a number of investment strategies managed by MAM, and the Company retains an equity holding in MAM of 17.1%. The Company has no overall benchmark; rather each fund has its own benchmark. The monthly factsheets of each of the relevant MAM funds are on the Company's website. The Company's total assets at 30 September 2018 were £199.2m, as defined above. The main changes to the Company's asset allocation during the year were the sales of investments to finance the early repayment of the debenture in December 2017. There were no sales of MAM shares during the year.

MAM Funds and Investment Performance

The UK Equity Fund is the flagship product of MAM, having started in March 2003, and since inception to 30 September 2018 has returned 12.2% per annum net of fees with a relative outperformance against its benchmark the FTSE All-Share Index of 2.9% per annum. The Company's assets are invested in a segregated portfolio that is managed pari passu to the MAM UK Equity Fund. The funds are predominantly invested in UK equities with overseas equities limited to 20% and the strategy incorporates a dedicated allocation to UK smaller companies. The sum invested in the MAM UK Equity Segregated Portfolio at 30 September 2018 was £58.3m which represents 29.3% of the Company's total assets. In the year to 30 September 2018, the MAM UK Equity Segregated Portfolio returned 3.0% net of fees, which is an underperformance of 2.9% against its benchmark. At a sector level, the largest positive contributors to performance over the year were Food Retail, Oil (both overweight) and Tobacco (underweight); detractors were General Retail, Gold Mining and Fixed Line Telecoms (all overweight). Positive stock contributors to performance over the year were British American Tobacco (underweight), Tesco and BP (both overweight); detractors were Barrick Gold, Saga (both overweight) and AstraZeneca (not held).

The table below shows the principal overweight and underweight sector positions of the MAM UK Equity Segregated Portfolio at 30 September 2018 relative to the FTSE All-Share Index, in %.

The MAM UK Income Fund started in December 2011. Its objective is to maintain an attractive yield whilst outperforming the FTSE All-Share Index over the longer term, with up to 20% of the Fund invested in overseas equities. The historic yield is 4.8%. Since inception to 30 September 2018, the Fund has returned 14.2% per annum net of fees, which is an outperformance of 4.2% per annum against its benchmark. At 30 September 2018 the Company has an allocation of £16.0m which represents 8.0% of the Company's total assets. In the year to 30 September 2018 the Fund returned 9.3% net of fees which represents an outperformance against its benchmark of 3.4%. At a sector level, the largest positive contributors to performance over the year were Oil, Media (both overweight) and Tobacco (underweight); detractors were Pharmaceuticals, Mining (both underweight) and Mobile Telecommunications (overweight). Positive stock contributors to performance over the year included Pearson, Genel Energy (both overweight) and British American Tobacco (not held); detractors were Ophir Energy, Kenmare Resources and Centrica (all overweight).

The table below shows the principal overweight and underweight sector positions of the MAM UK Income Fund at 30 September 2018 relative to the FTSE All-Share Index, in %.

The MAM Global Equity and MAM Global Focus Funds were launched in June 2014. Their objectives are to provide a total return in excess of the MSCI All Country World Index over the long term through investment in a diversified portfolio (MAM Global Equity Fund) or concentrated portfolio (MAM Global Focus Fund) of global equities including emerging markets. Since inception the funds have returned 14.1% and 13.5% per annum net of fees for the sterling share classes which represents an outperformance 0.2% per annum for the MAM Global Equity Fund and an underperformance of 0.4% per annum for the MAM Global Focus Fund against their benchmark, the MSCI All Country World Index. At 30 September 2018, the Company has allocations of £22.5m and £7.9m respectively to the MAM Global Equity Fund and MAM Global Focus Fund, representing 11.3% and 4.0% of total assets. In the year to 30 September 2018, the funds returned 12.1% and 11.4% net of fees respectively, which represents an underperformance of 0.8% and 1.5% respectively. At a sector level, the largest positive contributors to performance over the year for MAM Global Equity Fund were Consumer Staples (underweight), Oil and Healthcare (both overweight); detractors were Information Technology, Consumer Discretionary (both overweight) and Industrials (underweight). Positive stock contributors to MAM Global Equity Fund performance over the year were Tullow Oil, Kering and Mosaic (all overweight); detractors were KPN, Sohu.com and Barrick Gold (all overweight).

For the MAM Global Focus Fund, the largest positive contributors to performance at a sector level were Consumer Staples, Oil (both overweight) and Financials (underweight); detractors were Information Technology (overweight), Consumer Discretionary and Industrials (both underweight). Positive stock contributors to MAM Global Focus Fund performance over the year were Softbank, Royal Dutch Shell and Kao (all overweight); detractors were Apple, Microsoft (both not held) and Amazon.com (underweight).

The table below shows the principal overweight and underweight sector positions of the MAM Global Equity Fund at 30 September 2018 relative to the MSCI All Country World Index, in %.

The table below shows the principal overweight and underweight sector positions of the MAM Global Focus Fund at 30 September 2018 relative to the MSCI All Country World Index, in %.

The MAM US Equity Fund was launched in June 2014. Since inception to 30 September 2018 the Fund has returned 16.2% per annum net of fees for the sterling share class. This represents an underperformance of 2.3% per annum against its benchmark S&P 500 Index. At 30 September 2018 the Company had an allocation of £8.7m, which represents 4.4% of total assets, and in the year the Fund returned 15.1% net of fees which represents an underperformance of 5.5%. At a sector level, the largest positive contributors to performance over the year for MAM US Equity Fund were Industrials, Consumer Staples (both underweight) and Telecoms (overweight); detractors were Information Technology, Financials and Consumer Discretionary (all overweight). Positive stock contributors to performance over the year were Anthem, TJX (both overweight) and General Electric (not held); detractors were Amazon.com, Apple (both underweight) and Barrick Gold (overweight).

The table below shows the principal overweight and underweight sector positions of the MAM US Equity Fund at 30 September 2018 relative to the S&P 500 Index, in %.

The MAM Tortoise Fund is a global equity absolute return fund which started 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 to 30 September 2018, the Fund has returned 6.7% per annum net of fees. At 30 September 2018, the Company has an allocation of £26.5m, which represents 13.3% of total assets. The Fund returned -6.6% net of fees in the year to 30 September 2018. At a sector level the largest positive contributors to performance were Consumer Staples, Energy and Healthcare (all long); detractors were Industrials, Consumer Discretionary (both short) and Materials (long). Positive stock contributors to performance over the year were Tesco, J Sainsbury and Mosaic (all longs); detractors were Gold Fields, Telecom Italia and Barrick Gold (all longs).

The table below shows the principal net long and short sector positions (on a net basis) of the MAM Tortoise Fund at 30 September 2018, in %.

Majedie Asset Management

The Company retains its holding in MAM. The percentage holding has increased from 16.8% to 17.1% following a small buyback of stock, for cancellation, by MAM from other shareholders in January 2018. The Company has no current intention to sell any shares in MAM other than the obligation, if required, to sell shares in proportion to other founder shareholders to the MAM Employee Benefit Trust, up to a maximum of 1% per annum. The value of the Company's holding in MAM was increased at the 31 March 2018 interim accounts date to £59.8m, including the value of the £1.1m interim dividend which the Company received from MAM subsequently. The Board has retained the value of its holding in MAM at £58.7m, which represents 29.5% of total assets. The valuation is based on a formula which has been used in prior years and reflects three year historic average earnings and cash held on the balance sheet. However, in light of recent market conditions, and prevailing valuations of listed fund managers, the Board has felt it appropriate not to increase the value of its holding in MAM; the retained valuation represents a discount to the formulaic valuation of £4.1m. MAM's assets under management declined over the year from £14.6bn to £14.1bn which reflects stock market movements and a net outflow of funds; inflows into the Global equity funds were more than offset by liability-driven outflows from institutional UK equity clients.

The Directors of MAM have considered the potential implications of Brexit and identified and prepared the appropriate actions as may be required.

Summary

The Company redeemed the 9.5% 2020 Debenture in December 2017 in order to reduce its gearing as markets were at all time highs. The cost of early repayment was £2.9m with debt valued at par or £0.9m with debt valued at fair value, and the Company's gearing has reduced to 10.0% at 30 September 2018.

Against a background of rising political concerns notably Brexit in the UK, but also in the US and Europe and rising economic concerns as Quantitative Easing turns to Quantitative Tightening, interest rate rises due to inflationary concerns, early signs of leading economic indicators rolling over and the Chinese economy slowing; the Company's positioning has been defensive throughout the year. In retrospect this was too early but the recent market turbulence suggests the defensive positioning will be more appropriate in the current year.

Development of Net Asset Value

The chart below outlines the change in the Company's Net Asset Value (debt at par) over the year ended 30 September 2018. In aggregate, the NAV has decreased by £3.9m, comprised of investment gains of £8.0m being offset by expenses and interest of £3.5m, the premium paid on the redemption of the March 2020 debenture of £2.9m and dividends paid to shareholders of £5.5m.

Allocation of Total Assets as at 30 September 2018

* Net cash and the Realisation fund does not include cash held in the MAM UK Equity Segregated Portfolio or MAM funds.

MAM Fund Performance

Notes:

All Fund returns are quoted in Sterling, net of fees.

The initial investment in the MAM UK Equity Segregated Portfolio was made on 22 January 2014.

The initial investment in the MAM UK Income Fund was made on 29 January 2014.

The initial investments in the MAM Global Equity Fund, MAM Global Focus Fund and MAM US Equity Fund were made on 30 June 2014 and 26 June 2014 respectively, at the inception of each fund. The Company is invested in the Sterling share classes.

The initial investment in the MAM Tortoise Fund was made on 29 January 2014.

William Barlow

CEO

4 December 2018

FUND ANALYSIS

at 30 September 2018

For this year we have amended the fund analysis and twenty largest investment holdings information. In order to aid shareholder understanding of the Company's investment portfolio both cases have been completed on a look through basis into the MAM funds themselves. This includes the MAM Tortoise Fund, which invests through CFDs, on a net exposure basis. As the MAM Tortoise Fund is an absolute return fund, the percentages do not sum to 100%.

The sector and geographic fund analysis excludes the Company's investment in MAM, however the top twenty investment holdings are on the Company's total assets.

Geographic and Sector Analysis at 30 September 2018

Notes:

The assets analysed above are the net exposure of the MAM UK Equity Segregated Portfolio, MAM UK Income Fund, MAM Global Equity Fund, MAM Global Focus Fund, the MAM US Equity Fund and MAM Tortoise Fund. The MAM Tortoise Fund, as an absolute return fund, invests through CFDs and the net exposure of the fund is shown in the table. The aggregate of the funds represents a total of 70.3% of the Company's total assets. In previous years the MAM Tortoise Fund was not disclosed.

Exposures are classified by the stock exchange on which the underlying is listed and by the relevant FTSE sector classification.

Twenty Largest Portfolio Holdings

at 30 September 2018

Notes: 

The assets analysed above show the Company's largest twenty holdings on a look through basis across all assets. This differs from previous years disclosure which showed the largest twenty holdings in the MAM UK Equity Segregated Portfolio.

BUSINESS REVIEW

Introduction and Strategy

Majedie Investments PLC (the Company) is a listed investment trust 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 below) were both last approved by shareholders at a General Meeting of the Company on 27 February 2014.

The Company is subject to the Alternative Investment Fund Managers Directive (AIFMD). The AIFMD regulates the Alternative Investment Fund Managers (AIFMs) of AIFs. The Company's status under the AIFMD is that it is a self-managed AIF (meaning that it is an AIFM as well as an AIF). This requires the Company to be authorised and regulated by the Financial Conduct Authority (FCA). The AIFMD also requires the appointment of a depositary and the Company has appointed The Bank of New York Mellon (International) Limited to be its depositary. Further details concerning the Company's regulatory environment are set out below.

The Company's broker is J.P. Morgan Cazenove, and the Company is a member of the AIC (the trade body for closed-ended investment companies).

The purpose of the Strategic Report is to inform the shareholders of the Company and help them assess how the Directors have performed their duty to promote the success of the Company in accordance with section 172 of the Companies Act 2006 by:

· analysing development and performance using appropriate Key Performance Indicators (KPIs);

· providing a fair and balanced review of the Company's business;

· outlining the principal risks and uncertainties affecting the Company;

· describing how the Company manages these risks;

· setting out the Company's environmental, social and ethical policy;

· outlining the main trends and factors likely to affect the future development, performance and position of the Company's business; and

· explaining the future business plans of the Company.

Business Model

The Company has been streamlining its operations in recent times, resulting in the removal of all other group entities and as such this Annual Report is in respect of the Company only.

The business model currently used by the Company delegates certain arrangements to other service providers. These delegations are in accordance with the AIFMD (the details of the material delegations can be found below, but the Board, as 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 undertakes all administration operations itself under the Company's business model.

The Company's Employee, Social, Environmental, Ethical and Human Rights policy is contained in the Directors' Report below.

Investment Objective

The Company's investment objective is to maximise total shareholder return whilst increasing dividends by more than the rate of inflation over the long term.

Investment Policy

· General

The Company invests principally in securities of publicly quoted companies worldwide and in funds managed by its investment manager, though it may invest in unquoted securities up to levels set periodically by the Board, including its investment in MAM. Investments in unquoted securities, other than those managed by its investment manager or made prior to the date of adoption of this investment policy (measured by reference to the Company's cost of investment), will not exceed 10% of the Company's gross assets.

· Risk Diversification

Whilst the Company will at all times invest and manage its assets in a manner that is consistent with spreading investment risk, there will be no rigid industry, sector, region or country restrictions. The overall approach is based on an analysis of global economies sector trends with a focus on companies and sectors judged likely to deliver strong growth over the long term. The number of investments held, together with the geographic and sector diversity of the portfolio, enable the Company to spread its risks with regard to liquidity, market volatility, currency movements and revenue streams.

The Company will not invest in any holding that would, at the time of investment, represent more than 15% of the value of its gross assets save that the Company may invest up to 25% of its gross assets in any single fund managed by its Investment Manager where the Board believes that the investment policy of such funds is consistent with the Company's objective of spreading investment risk.

The Company may utilise derivative instruments including index-linked notes, contracts for difference, covered options and other equity-related derivative instruments for efficient portfolio management and investment purposes.

Any use of derivatives for investment purposes will be made on the basis of the same principles of risk spreading and diversification that apply to the Company's direct investments, as described above.

Investment restrictions

For the avoidance of doubt, as a listed investment company, if and for so long as required by the Listing Rules in relation to closed-ended investment companies, the Company will also continue to comply with the following investment and other restrictions:

· the Company will, at all times, invest and manage its assets in a way which is consistent with its object of spreading investment risk and in accordance with its published investment policy;

· the Company will not conduct any trading activity which is significant in the context of the Company (or, if applicable, its Group as a whole); and

· not more than 10% in aggregate of the value of the gross assets of the Company at the time the investment is made will be invested in other closed-ended investment funds which are listed on the Official List (except to the extent that those funds have published investment policies to invest no more than 15% of their gross assets in other investment companies which are listed on the Official List). However, no more than 15% of the gross assets of the Company at the time the investment is made will be invested in other closed-ended investment funds which are listed on the Official List.

· Asset Allocation

The assets of the Company will be allocated principally between investments in publicly quoted companies worldwide and in investments intended to provide an absolute return (in each case either directly or through other funds or collective investment schemes managed by the Company's investment manager) and the Company's investment in MAM itself.

· Benchmark

The Company does not have one overall benchmark, rather each distinct group of assets is viewed independently. Any investments made into funds managed by the Company's investment manager will be measured against the benchmark or benchmarks, if any, whose constituent investments appear to the Company to correspond most closely to those investments. It is important to note that in all cases investment decisions and portfolio construction are made on an independent basis. The Board however sets various specific portfolio limits for stocks and sectors in order to restrict risk levels from time to time, which remain subject to the investment restrictions set out in this section.

· Gearing

The Company uses gearing currently via long-term debentures. The Board has the ability to borrow up to 100% of adjusted capital and reserves. The Board also reviews the level of gearing (borrowings less cash) on an ongoing basis and sets a range at its discretion as appropriate. The Company's current debenture borrowings are limited by covenant to 66 2/3%, and any additional indebtedness is not to exceed 20%, of adjusted capital and reserves.

Regulatory and Competitive Environment

The Company is an investment trust and has a premium listing on the London Stock Exchange. It is subject to United Kingdom and European legislation and regulations including UK company law, IFRS, the Listing Rules, the Prospectus Rules and the Disclosure Guidance and Transparency Rules, taxation law and the Company's own Articles of Association. The Directors are charged with ensuring that the Company complies with its objectives as well as these regulations.

Under the Companies Act 2006, section 833, the Company is defined as an investment company.

As outlined previously the Company is subject to the AIFMD. The AIFMD requires that all AIFs are managed by a regulated AIFM in accordance with the requirements of the Directive. These requirements are in respect of risk management, conflicts of interest, leverage, liquidity management, delegation, the requirement to appoint a depositary, regulatory capital, valuations, disclosure of information to investors or potential investors, remuneration and marketing.

The financial statements report on profits, the changes in equity, the balance sheet position and the cash flows in the current and prior financial period. This is in compliance with current IFRS as adopted by the EU, supplemented by the Statement of Recommended Practice for Investment Trust Companies and Venture Capital Trusts (SORP) issued in January 2017. The principal accounting policies of the Company are set out in note 1 to the accounts below.

Total Return Philosophy & Dividend Policy

The Directors believe that investment returns will be maximised if a total return policy is followed whereby the Investment Manager pursues the best opportunities. The policy aim is to increase dividends by more than inflation over the long term. Further details are under the Dividend Growth section below. The Company has a comparatively high level of revenue reserves for the investment trust sector. At £25.8m, the revenue reserves represent over four times the current annual dividend distribution. The strength of these reserves will assist in underpinning the Company's progressive dividend policy in years when the income from investments is insufficient to completely cover the annual distribution.

Performance Management

The Board uses the following KPIs to help assess progress against the Company's objectives. Further comments on these KPIs are contained in the Chairman's Statement and Chief Executive's Report sections of the Strategic Report respectively.

· NAV and Total Shareholder Return:

The Board believes that 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 measure long-term shareholder return. The Board, at each meeting, receives reports detailing the Company's NAV and shareholder total return performance, asset allocation and related analyses. Details of the NAV and share price total return performance for the year are shown in the Year's Summary above.

· Investment Group performance:

The Board believes that, after asset allocation, the performance of each of the investment groups is the key driver of NAV return and hence shareholder return. The Board receives, at each meeting, detailed reports showing the performance of the investment groups which also includes relevant attribution analysis. The Chief Executive's Report provides further detail on each investment group's performance for the year.

· Share price premium/discount:

As a closed-ended listed investment company, the share price of the Company can and does differ from that of the NAV. This can give rise to either a premium or discount and as such is another component of Total Shareholder Return. During the year the discount has moved within a range 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 outperforming the gain in the Company's NAV (with debt at par).

The Board continually monitors the Company's premium or discount, and does have the ability to buy back shares if thought appropriate, although it must be noted that this ability is limited by the majority shareholding held by members of the Barlow family. Additionally the Board has approval (and is seeking to renew such approval for another year) to issue new shares, at a premium to the relevant NAV (with debt at fair value), in order to meet any natural market demand. Details of movements in the Company's share price discount or premium over the year are shown in the Year's Summary above.

· Expenses:

The Board is aware of the impact of costs on returns and is conscious of seeking to minimise

these (taking into account the Company's self-managed status). The 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 and investment dealing costs, as a percentage of average equity shareholders' funds. Any investments made into pooled funds are included using the Company's share of estimated ongoing fund running costs. The Chairman's Statement above provides further details on the expenses during the year. Details of the OCR for the year are shown in the Year's Summary above.

· Dividend Growth:

Dividends paid to shareholders are an important component of Total Shareholder Return and this has been included in the Company's investment objective. The Board is aware of the importance of this objective to the Company's shareholders but wishes to be prudent and is of the view that a sustainable and progressive dividend policy, paying dividends out of current year income and not reserves is appropriate.

The Board receives detailed management accounts and forecasts which show the actual and forecast financial outturns for the Company. For the 4 years to 30 September 2018, which is for the period after the rebasing of the dividend in 2014, average dividend growth has been 10.1% per annum, which is well ahead of inflation.

Principal Risks

The principal risks and the Company's policies for managing these risks and the policy and practices with regard to financial instruments are summarised below and in note 22 to the accounts.

i. Investment Risk:

The Company has a range of equity investments, including a substantial investment in an unlisted asset management business, UK and global equities (both on a direct basis (via the MAM UK Equity Segregated Portfolio (UKES)) and via collective investment vehicles (the MAM Funds), and an investment in an absolute return fund, the MAM Tortoise Fund. The major risk for the Company remains investment risk, primarily market risk; however it is recognised that the investment in MAM continues to represent concentration risk for the Company. Additionally rising political concerns, notably Brexit in the UK, but also in the US, Europe and China, provide another element 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 Investment Manager manages the majority of the Company's investment assets. The portfolios of MAM UK Equity Segregated Portfolio 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 MAM UK Equity Segregated Portfolio and the MAM Funds' returns will differ from the benchmark returns. The MAM Tortoise Fund is an absolute return fund whose returns are not correlated to equity markets.

The investment risks are moderated by strict control of position sizing, low use of leverage and investing in liquid stocks. Also the level of risk at a net asset value level increases with gearing. In certain circumstances cash balances may be raised to reduce the effective level of gearing. This would result in a lower level of risk in absolute terms.

Other risks faced by the Company include the following:

ii. Strategy Risk:

An inappropriate investment strategy could result in poor returns for shareholders and the introduction or widening of the discount of the share price to the NAV per share. It is important to note that the investments in the 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 policy and objective, the allocation of assets between investment groups, the level and effect of gearing and currency or geographic exposure.

iii. Business Risk:

Inappropriate management or controls in the Company or at MAM could result in financial loss, reputational risk and regulatory censure. The Board has representation on the MAM governing board to monitor business financial performance and operations and receives detailed reports from Company management on financial and non--financial performance.

iv. Compliance Risk:

Failure to comply with regulations could result in the Company losing its listing, losing its FCA authorisation as a self-managed AIF or being subjected to corporation tax on its capital gains.

The Board receives and reviews regular reports from its service providers and Company management on the controls in place to prevent non-compliance of the Company with rules and regulations. The Board also receives regular investment listings and income forecasts as part of its monitoring of compliance with section 1158 of the Corporation Tax Act 2010.

v. Operational Risk:

Inadequate financial controls, failure by an outsourced supplier to perform to the required standard, or dependency on a small number of individuals could result in misappropriation of assets, loss of income and debtor receipts and mis-reporting of NAVs. The Board and Audit Committee regularly review statements on internal controls and procedures and subject the books and records of the Company to an annual external audit. In addition, the Company's Depositary provides an additional level of oversight over the Company's operations.

The Corporate Governance statement and the Report of the Audit Committee in the Company's Annual Report and Accounts provide further information in respect of internal control systems and risk management procedures.

Lastly, given the nature of the Company's operations, the Board believes that Brexit is likely to have a minimal impact on the operational risks facing the Company.

On behalf of the Board

Andrew J Adcock

Chairman

4 December 2018

DIRECTORS' REPORT

The Directors submit their report and the accounts for the year ended 30 September 2018.

Introduction

The Directors' Report includes the Corporate Governance Statement, the Report of the Audit Committee and the Directors' Remuneration Report. A review of the Company's business is contained in the Strategic Report (which includes the Chairman's Statement) and should be read in conjunction with the Directors' Report.

Principal Activity and Status

The Company is a public limited company and an investment company under section 833 of the Companies Act 2006. It operates as an investment trust and is not a close company. The Company has been a member of the AIC since 20 January 2014.

The Company has received historic written confirmation from HM Revenue & Customs that it meets the eligibility conditions and is an approved investment trust for taxation purposes under section 1158 of the Corporation Tax Act 2010, with effect from 1 October 2012, subject to it continuing to meet the eligibility conditions and on-going requirements. In the opinion of the Directors, the Company continues to direct its affairs so as to enable it to continue to qualify as an approved investment trust.

Results and Dividend

The net revenue return before taxation arising from operations amounted to £6,680,000 (2017: net revenue return of £5,964,000).

The Directors recommend a final ordinary dividend of 7.00p per ordinary share, payable on 23 January 2019 to shareholders on the register at the close of business on 11 January 2019. Together with the interim dividend of 4.00p per share paid on 22 June 2018, this makes a total distribution of 11.00p per share in respect of the financial year (2017: 9.75p per share).

Risk Management and Objectives

The Company, as an investment trust, is subject to various risks in pursuing its objectives. 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.

Directors

The Directors in office at the date of this report are listed on page 20 of the Company's Annual Report and Accounts.

Directors' retirement by rotation and appointment is subject to the minimum requirements of the Company's Articles of Association and the AIC Code of Corporate Governance.

The Company's Articles of Association require that at every AGM any Director who has not retired from office at the preceding two AGMs and who was not appointed by the Company in general meeting at either such meeting shall retire from the office and be eligible for re-election or election respectively, by the Company. However, the Board have agreed that it is good practice that all Directors be re-elected annually. As such Messrs. AJ Adcock, PD Gadd and RDC Henderson will retire at the forthcoming AGM and, being eligible, will offer themselves for re-election.

The Board is aware of the new requirements regarding tenure in the UK Corporate Governance Code and have initiated a search for a new non-executive director to replace Mr PD Gadd, who has served on the Board for over nine years. Once the appointment has been finalised Mr PD Gadd will resign. The Board wishes to thank him for his sound and helpful advice over that time.

In accordance with Listing Rule 15.2.13A, Mr JWM Barlow, being a non-executive Director of Majedie Asset Management Limited, the Investment Manager, must submit himself for annual re-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.

Qualifying Third Party Indemnity Provisions

There are no qualifying third party indemnity provisions or qualifying pension scheme indemnity provisions which would require disclosure under section 236 of the Companies Act 2006.

Directors' Interests

Beneficial interests in ordinary shares as at:

Non-beneficial interests in ordinary shares as trustees for various settlements as at:

On 5 June 2008, Mr Barlow became the trustee of 282,859 shares held in trust on behalf of his children. These shares were incorrectly included in his beneficial shareholding total and should have been included in his non-beneficial shareholding total. Following this amendment, made on 23 November 2018, Mr Barlow holds 409,224 shares beneficially, and 3,111,110 shares non-beneficially.

Substantial Shareholdings

At 30 September 2018, the Company has been notified of the following substantial holdings in shares carrying voting rights:

The substantial voting rights disclosed above include the total holdings of shares within certain trusts where there are other beneficiaries.

As reported, Mr Barlow became the trustee of 282,859 shares held in trust on behalf of his children. These shares were incorrectly included in his beneficial shareholding total and should have been included in his non-beneficial shareholding total. The Company's records were updated accordingly, after 30 September 2018, to reflect the correct position. Following this amendment, at the date of this report, Mr Barlow holds 3,111,110 shares non-beneficially, which equates to 5.82% of the Company's issued share capital.

AGM

The AGM will be held at City of London Club, 19 Old Broad Street, London EC2N 1DS on Wednesday, 16 January 2019 at 12 noon. The notice convening the AGM is available on the Company's website.

The Board considers that Resolutions 1 to 13 are likely to promote the success of the Company and are in the best interests of the Company and its shareholders as a whole. The Directors unanimously recommend that you vote in favour of the Resolutions as they intend to do in respect of their own beneficial holdings.

Issue and Buyback of Shares

The Board is of the view that an increase of the Company's stock in issue provides benefits to shareholders including a dilution of the Company's gearing and cost of its debentures, a reduction in the Company's administrative expenses on a per share basis and increased liquidity in the Company's shares. As such the Board sought and received approval, at the AGM on 17 January 2018, to allot new shares for cash, and without first offering them to existing shareholders in proportion to their holdings, up to a maximum of 5,338,556 shares (being approximately 9.99% of the Company's existing share capital at that time). These two existing authorities will expire at the 2019 AGM.

During the year no shares have been allotted (2017: 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 5,338,556 shares (being approximately 9.99% of the Company's existing share capital). The renewed authority will expire at the 2020 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.

Since 1 October 2017, and up to the date of this report, the Company has made no buybacks for cancellation of its ordinary shares. At the AGM in 2018 the Directors were given power to buy back 8,010,506 ordinary shares (being 14.99% of the Company's existing share capital). Since the AGM the Directors have not bought any shares under this authority. This authority will also expire at the 2019 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 8,010,506 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 2020 AGM.

Capital Structure

As part of its corporate governance the Board keeps under review the capital structure of the Company.

At 30 September 2018, the Company had a nominal issued share capital of £5,343,900, comprising 53,439,000 ordinary shares of 10p each, carrying one vote each. All of the shares of the Company are listed on the London Stock Exchange, which is a regulated market. 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.

Given the gearing held by the Company and the state of world equity markets it was decided that it would be beneficial to reduce the previous gearing level of the Company. As such on 6 December 2017 the Company redeemed the entire outstanding holdings, being £13.5m nominal, of the March 2020 9.50% debentures. Further details are in the Chief Executive's Report and the Chairman's Statement above, and in note 8 to the Accounts.

The limits on the ability to borrow are described in the investment policy above. The Board is responsible for managing the overall gearing of the Company. Details of gearing levels are contained in the Year's Summary above, and in note 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 affect its control or trigger any compensatory payments for Directors, following a takeover bid.

Notice period for general meetings

The Board believes that it is in the best interests of shareholders of the Company to have the ability to call meetings on 14 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.

Future Developments

The Chairman's Statement and the Chief Executive's Report above provide details concerning relevant future developments of the Company in the forthcoming year.

Employee, Social, Environmental, Ethical and Human Rights policy

The Company, as an investment trust, has limited direct impact upon the environment. In carrying out its activities and relationships with its employees, suppliers and the community, the Company aims to conduct itself responsibly, ethically and fairly.

The Company falls outside the scope of the Modern Slavery Act 2015 as it does not meet the turnover requirements under that act. The Company does operate by outsourcing significant parts of its operations to reputable professional companies, including investment management to MAM. In doing so MAM complies with all the relevant laws and regulations and also takes account of social, environmental, ethical and human rights factors, where appropriate.

Carbon Reporting

In accordance with the Companies Act 2006 (Strategic Report and Directors' Reports) Regulations 2013, the Company is required to report on its greenhouse gas emissions. In accordance with the regulations, the Company has determined that its organisational boundary, to which entities the regulations apply, is consistent with its accounts.

The Company operates in the financial services sector, and in common with many organisations employs outsourcing such that most of its activities are performed by other outside organisations which do not give rise to any reportable emissions by the Company.

However, the Company, as a self-managed investment trust, does undertake activities at its sub-leased premises. In accordance with the provision of the centrally provided building services (including heating, light, cooling etc) to all lessees in the building by the landlord, and by the superior lessee, it is considered that the Company does not have emissions responsibility in respect of these services, which rather rest with the landlord or superior lessee. The Company does however have responsibility for various other emissions in the usage of electricity by its office equipment in the course of undertaking its duties but it is not able to determine their amounts as compared to those provided by the landlord or superior lessee.

Additionally, the Company has many investments in companies around the world, 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 Directors believe that the Company has no reportable emissions for the year ended 30 September 2018 (2017: nil).

Donations

The Company made no political or charitable donations during the year (2017: nil) to organisations either within or outside of the EU.

Gender Diversity

The Board are aware of the recommendations made in the Hampton-Alexander Review in respect of gender diversity in the boardroom. The Company's policy on diversity is included in the section on the Nomination Committee on page 30 of the Annual Report and this is applied when a new appointment to the Board is required. At the year end all directors of the Board were male. The composition of the Company's employees is 66.6% male and 33.3% female.

Material Contracts

· Majedie Asset Management Limited

The Board has appointed MAM as its investment manager, the terms of which are defined under an Investment Agreement dated 13 January 2014. The agreement divides the Company's investment assets into a combination of a segregated portfolio and the MAM in-house funds, with the Board having the ability, subject to certain capacity constraints in respect of the MAM funds, for the determination of the asset allocation of its investment assets, both initially and on an on-going basis.

The Investment Agreement provides that the segregated portfolio is to be managed on the same basis as the MAM UK Equity Fund, with other investments being made into the various MAM Funds, as decided by the Board as part of their asset allocation requirements. Further details on the allocation of the investments managed by MAM are included in the Chief Executive's Report above.

 The fees payable under the Investment Agreement are detailed below:

* The fees are calculated under the terms of the Investment Agreement or the relevant fund prospectus. The Management fee for the MAM UK Equity Segregated Portfolio reduced to 0.70% from 1 July 2018.

ˆ The fees charged to the MAM UK Equity Segregated Portfolio are charged directly to the Company's Statement of Comprehensive Income. All other fund fees are charged within the relevant fund.

† The performance fee entitlement only occurs once the 5% p.a. hurdle has been exceeded and is calculated on a high water mark basis.

** The management fee range reflects the investments made into different share classes.

The Investment Agreement entitles either party to terminate the arrangement with six months' notice.

· The Bank of New York Mellon (International) Limited 

The Company appointed BNY Mellon Trust & Depositary (UK) Limited to provide depositary services as required by the AIFMD and certain other associated services under the terms of a depositary agreement dated 19 June 2014. This agreement was novated to The Bank of New York Mellon (International) Limited (BNYMIL) with effect from 1 March 2018. The services provided by BNYMIL as Depositary for the Company include:

· general oversight responsibilities over the issue and cancellation of the Company's share capital, the carrying out of net asset value calculations, the application of income, and the ex-post review of investment transactions;

· monitoring of the Company's cash flows and ensuring that all cash is booked in appropriate accounts in the name of the Company or BNYMIL acting on behalf of the Company; and

· safekeeping of the assets held within the Company's investment portfolio, including those classed as financial instruments for the purpose of the 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 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 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.

· Link Market Services Limited (Link)

Company Secretarial services are provided by Link, following their acquisition of Capita Asset Services on 6 November 2017. Such services continue to be provided under the previous 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 and to be based on a fixed annual amount and be subject to annual RPI increases with either party to give notice to terminate the agreement with 12 months' notice.

Listing Rule Disclosure

The Company confirms that there are no items which require disclosure under Listing Rule 9.8.4R in respect of the year ended 30 September 2018.

AIFMD

The 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:

· Remuneration

Total remuneration details for the Directors (who are considered to be code staff under the Directive) are shown in the Report on Directors' Remuneration. Remuneration details for staff are included in Note 7 to the accounts. There was variable remuneration due during the year.

· Leverage

Under the AIFMD, the Company is required to disclose its actual leverage (calculated in accordance with the Directive under the Gross & Commitment methods) and it must also set a limit in respect of leverage it can use. The Company has set a limit of 1.5 times (1 times being defined as no leverage) and as at 30 September 2018 had leverage of 1.10 times under the Gross method and 1.12 times under the Commitment method. Note 22 to the accounts provides further details.

· Investor Pre-investment information

The AIFMD requires that potential investors are provided with certain information. The Company provides this information on its website at www.majedieinvestments.com. This has been updated in the year reflecting various small changes, including the change in Depositary, all of which are described in this Annual Report.

Disclosure of Information to Auditors

As far as each of the Directors are aware:

· there is no relevant audit information of which the Company's Auditors are unaware; and

· they have taken all steps that they ought to have taken as Directors in order to make themselves aware of any relevant audit information and to establish that the Company's Auditors are aware of that information.

This confirmation is given and should be interpreted in accordance with the provisions of Section 418 of the Companies Act 2006.

Auditors

Ernst & Young LLP were re-appointed as Auditors on 17 January 2018. Ernst & Young LLP have indicated their willingness to continue in office and a resolution will be proposed at the AGM to re-appoint them as Auditors.

Viability

The Directors have assessed the prospects of the Company over the five year period to September 2023. The Directors believe that this period is appropriate as the Company is a long-term investor in equity markets.

In their assessment of the viability of the Company, the Directors have considered each of the Company's principal risks and uncertainties. The Directors have also considered the Company's income and expenditure projections, the level of borrowings (leverage of 1.10 times (Gross method) and 1.12 times (Commitment method) are well below the 1.5 times limit. In addition the current borrowings of £20.5m are over 9 times covered by the current total assets) plus as the Company's investments primarily comprise readily realisable securities (equal to 70.3% of total assets as at 30 September 2018), these can be sold to meet funding requirements as necessary.

Based on the Company's processes for monitoring expenses, share price discounts or premium, the allocation in its investment portfolio to an absolute return fund, the Investment Manager's compliance with the investment restrictions and objective, concentration and liquidity risk, the current large margin of safety over the covenants on its debentures and financial controls, the Directors have concluded that there is a reasonable expectation that the Company will be able to continue in operation and meet its liabilities as they fall due over the five year period to September 2023.

Going Concern

The Directors believe, after review and due consideration of future forecast and cashflow projections that the Company has adequate financial resources to continue in operational existence for a period of at least 12 months from the date that the financial statements were approved. For this reason and taking account of the large number of readily realisable investments held within its portfolio, the Board continues to adopt the going concern basis in preparing the financial statements.

By Order of the Board

Link Company Matters Limited

Company Secretary

4 December 2018

STATEMENT OF DIRECTORS' RESPONSIBILITIES

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 have elected to prepare the financial statements in accordance with IFRS, as adopted by the European Union (IFRS). 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:

· select suitable accounting policies in accordance with IAS 8: Accounting Policies, Changes in Accounting Estimates and Errors and then apply them consistently;

· present information, including accounting policies, in a manner that provides relevant, reliable, comparable and understandable information;

· provide additional disclosures when compliance with the specific requirements in IFRS is insufficient to enable users to understand the impact of particular transactions, other events and conditions on the Company's financial position and financial performance;

· state that the Company has complied with IFRS, subject to any material departures disclosed and explained in the financial statements;

· make judgements and estimates that are reasonable and prudent; and

· state that the Annual Report, taken as a whole, is fair, balanced and understandable and provides sufficient information to allow shareholders to assess the Company's performance.

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 20 of the Annual Report, each confirm to the best of their knowledge that:

· the financial statements, which have been prepared in accordance with applicable accounting standards, give a true and fair view of the assets, liabilities, financial position and profit of the Company;

· the Annual Report includes a fair review of the development and performance of the business and the position of the Company, together with a description of the principal risks and uncertainties that it faces; and

· they consider that the Annual Report, taken as a whole, is fair, balanced and understandable and provides the information necessary for shareholders to assess the Company's performance, business model and strategy.

By order of the Board

Andrew J Adcock

Chairman

4 December 2018

REPORT OF THE DEPOSITARY

Report of the Depositary to the shareholders of Majedie Investments PLC

Depositary's responsibilities

The Depositary is responsible for the safekeeping of all custodial assets of the Company, for verifying and maintaining a record of all other assets of the Company and for the collection of income that arises from those assets.

It is the duty of the Depositary to take reasonable care to ensure that the Company is managed in accordance with the Alternative Investment Fund Managers Directive (AIFMD), the FUND Sourcebook and the Company's Instrument of Incorporation, in relation to the calculation of the net asset value per share and the application of income of the Company. The Depositary also has a duty to monitor the Company's compliance with investment restrictions and leverage limits set in its offering documents.

Report of the Depositary to the shareholders of Majedie Investments PLC for the year ended 30 September 2018

Having carried out such procedures as we consider necessary to discharge our responsibilities as Depositary of the Company, it is our opinion, based on the information available to us and the explanations provided, that in all material respects the Company, acting through the AIFM has been managed in accordance with AIFMD, the FUND sourcebook, the Instrument of Incorporation of the Company in relation to the calculation of the net asset value per share, the application of income of the Company; and with investment restrictions and leverage limits set in its offering documents.

For and on behalf of

The Bank of New York Mellon (International) Limited

One Canada Square

London E14 5AL

NON-STATUTORY ACCOUNTS

The financial information set out below does not constitute the Company's statutory accounts for the years ended 30 September 2018 and 30 September 2017 but is derived from those accounts. Statutory accounts for 2017 have been delivered to the Registrar of Companies, and those for 2018 will be delivered in due course. The Auditors have reported on those accounts; their report was (i) unqualified, (ii) did not include a reference to any matters to which the Auditors drew attention by way of emphasis without qualifying their report and (iii) did not contain a statement under Section 498 (2) or (3) of the Companies Act 2006. The text of the Auditors' report can be found in the Company's full Annual Report and Accounts at www.majedieinvestments.com.

STATEMENT OF COMPREHENSIVE INCOME

for the year ended 30 September 2018

The total column of this statement is the Statement of Comprehensive Income of the Company prepared in accordance with IFRS as adopted by the European Union. The supplementary revenue return and capital return columns are prepared under guidance published by the AIC.

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.

STATEMENT OF CHANGES IN EQUITY

for the year ended 30 September 2018

BALANCE SHEET

as at 30 September 2018

Approved by the Board of Majedie Investments PLC (Company no. 109305) and authorised for issue on 4 December 2018.

Andrew J Adcock

Chairman

CASH FLOW STATEMENT

for the year ended 30 September 2018

* Includes dividends received in the year of £7,392,000 (2017: £7,040,000) and interest received of £Nil (2017: £3,000).

NOTES TO THE ACCOUNTS

General Information

Majedie Investments PLC is a company incorporated and domiciled in England under the Companies Act 2006. The Company is registered as a public limited company and is an investment company as defined by Section 833 of the Companies Act 2006. The address of the registered office is given below. The nature of the Company's operations and its principal activities are set out in the Business Review section of the Strategic Report above.

Significant Accounting Judgements, Estimates and Assumptions

The preparation of financial statements in conformity with IFRS 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

Unquoted investments are valued at management's best estimate of fair value in accordance with IFRS having regard to International Private Equity and Venture Capital Valuation guidelines as recommended by the British Venture Capital Association. The principles which the Company applies are set out below. The inputs into the valuation methodologies adopted include historical data such as earnings or cash flow as well as more subjective data such as earnings forecasts, discount rates and earnings multiples. As a result of this the determination of fair value requires management judgement. At the year end, unquoted investments (including the investment in MAM but excluding the MAM funds) represent 32.9% (2017: 33.8%) of Equity Shareholders Funds.

1 SIGNIFICANT ACCOUNTING POLICIES

The principal accounting policies adopted are set out as follows:

The accounts above comprise the audited results of the Company for the year ended 30 September 2018, and are presented in pounds Sterling rounded to the nearest thousand, as this is the functional currency in which the Company transactions are undertaken.

Going Concern

The Directors have a reasonable expectation that the Company has sufficient resources to continue in operational existence for a period of at least 12 months from the date that the financial statements were approved. Accordingly, the financial statements have been prepared on a going concern basis.

Presentation of Statement of Comprehensive Income

In order to reflect better the activities of an investment trust company and in accordance with guidance issued by the AIC, supplementary information which analyses the Statement of Comprehensive Income between items of a revenue and capital nature has been presented alongside the Statement of Comprehensive Income. Additionally the net revenue is the measure that the Directors believe to be appropriate in assessing the Company's compliance with certain requirements set out in section 1158 of the Corporation Tax Act 2010.

Basis of Accounting

The accounts of the Company have been prepared in accordance with IFRS. They comprise standards and interpretations approved by the International Accounting Standards Board and International Financial Reporting Committee, interpretations approved by the International Accounting Standards Committee that remain in effect, to the extent they have been adopted by the European Union.

Where presentational guidance set out in the SORP regarding the financial statements of investment trust companies and venture capital trusts issued by the AIC in November 2014, and updated in January 2017, is not inconsistent with the requirements of IFRS, the Directors have sought to prepare the financial statements on a basis compliant with the recommendations of the SORP.

Standards Issued But Not Yet Effective

At the date of authorisation of these financial statements, the following relevant Standards and Interpretations have not been applied in these financial statements since they were in issue but not yet effective and/or adopted:

In respect of IFRS 9 and IFRS 15, which will both be first adopted by the Company during the year ended 30 September 2019, an assessment was undertaken of the impact of both IFRS 9 and IFRS 15 on the financial statements.

For IFRS 9, the Company's assets essentially comprise equity investments, and these met the criteria for being valued at fair value through profit or loss (as they are currently), as they fail the test of contractual cash flows. The Company does not have any debt investments and its other assets are immaterial. Lastly its financial liabilities are accounted for under IFRS 9 in the same manner as they are currently. For these reasons, it is not expected that the adoption will have any material impact on the financial statements.

For IFRS 15, with the Company's business model as a self-managed investment trust in which the vast majority of its revenue is dividend income from its investment portfolio, again it is not expected that the adoption will have any material impact on the financial statements.

In respect of IFRS 16, which will be first adopted by the Company during the year ended 30 September 2020, a detailed assessment of any quantitative impact on the adoption of this standard will be undertaken in the year ended 30 September 2019.

Management anticipates that all of the relevant pronouncements will be adopted in the relevant accounting period in which the standard is effective.

New standards interpretations and amendments adopted by the Company

The accounting policies adopted in the preparation of the financial statements are consistent with those followed in the preparation of the prior year's financial statements. On 1 October 2017, the Disclosure Initiative Amendments to IAS 7 Statement of Cash Flows have been adopted by the Company. This has resulted in additional disclosure, see note 19, but has had no impact on the Company's financial performance or position.

Foreign Currencies

Transactions in currencies other than Sterling are recorded at the rate of exchange prevailing on the dates of the transactions. At each balance sheet date, monetary items and non-monetary assets and liabilities that are fair valued and are denominated in foreign currencies are re-translated at the rates prevailing on the balance sheet date.

Income

Dividend income from investments is taken to the revenue account on an ex-dividend basis. UK dividends are included net of tax credits. Overseas dividends are included gross of any withholding tax. Where the Company has elected to receive scrip dividends in the form of additional shares rather than in cash, the amount of the cash dividend foregone is recognised as income. Any excess in the value of the shares received over the amount of the cash dividend is recognised in the capital column.

Special dividends are taken to the revenue or capital account depending on their nature.

Deposit interest and other interest receivable is included on an accruals basis.

Expenses

All administrative expenses are accounted for on an accruals basis. In respect of the analysis between revenue and capital items presented within the Statement of Comprehensive Income, all expenses have been presented as revenue items except as follows:

• Expenses which are incidental to the acquisition or disposal of an investment are treated as capital costs and separately identified and disclosed (see note 13).

• Expenses are split and presented partly as capital items where a connection with the maintenance or enhancement of the value of the investments held can be demonstrated, and accordingly the investment management expenses have been allocated 75% to capital, in order to reflect the Directors' expected long-term view of the nature of the investment returns of the Company.

• The investment management performance fee, which is based on capital out-performance, is charged wholly to capital.

Pension Costs

Payments made to the defined contribution personal pension plan are charged as an expense as they fall due on an accruals basis.

Finance Costs

75% of finance costs arising from the debenture stocks are allocated to capital; 25% of the finance costs are charged on the same basis to the revenue account. Premiums payable on early repurchase of debenture stock are charged 100% to capital. In addition, other interest payable is allocated 75% to capital and 25% to the revenue account. Finance costs are debited on an accruals basis using the effective interest method.

Taxation

The tax charge represents the sum of the tax currently payable and deferred tax.

The tax currently payable is based on taxable profit for the year. Taxable profit differs from profit as reported in the Statement of Comprehensive Income because it excludes items of income or expense that are taxable or deductible in other years and it further excludes items that are never taxable or deductible. The Company's liability for current tax is calculated using tax rates that have been enacted or substantively enacted by the balance sheet date.

In line with the recommendations of the SORP, the allocation method used to calculate tax relief on expenses presented against capital returns in the supplementary information in the Statement of Comprehensive Income is the marginal basis. Under this basis, if taxable income is capable of being offset entirely by expenses presented in the revenue return column of the Statement of Comprehensive Income, then no tax relief is transferred to the capital return column.

Deferred tax is the tax expected to be payable or recoverable on differences between the carrying amounts of assets and liabilities in the financial statements and the corresponding tax bases used in the computation of taxable profit, and is accounted for using the balance sheet liability method. Deferred tax liabilities are recognised for all taxable temporary differences and deferred tax assets are recognised to the extent that it is probable that taxable profits will be available against which deductible temporary differences can be utilised.

No provision is made for tax on capital gains since the Company operates as an investment trust for tax purposes.

Property and Equipment

Property and equipment are stated at cost less accumulated depreciation and any recognised impairment loss. Leasehold improvements are depreciated in equal annual instalments over the minimum period of the lease whereas depreciation for other tangible assets is provided for at 25% to 33% per annum using the straight-line method.

Leasing

Leases are classified as finance leases whenever the terms of the lease transfer substantially all the risks and rewards of ownership to the lessee. All other leases are classified as operating leases.

Rentals payable under operating leases are charged to profit or loss on a straight-line basis over the term of the relevant lease.

Financial Instruments

Financial assets and financial liabilities are recognised on the Balance Sheet when the Company becomes a party to the contractual provisions of the instrument. Financial assets and financial liabilities are initially measured at fair value.

Investments Held at Fair Value Through Profit or Loss

The Company classifies its investments in debt and equity securities as financial assets or financial liabilities at fair value through profit or loss, as defined by IAS 39.

When a purchase or sale is made under a contract, the terms of which require delivery within the timeframe of the relevant market, the investments concerned are recognised or derecognised on the trade date.

All investments are designated upon initial recognition as held at fair value through profit or loss, and are measured at subsequent reporting dates at fair value, which is either the bid price or the last traded price for listed securities, depending on the convention of the exchange on which the investment is quoted. Investments in unit trusts or open ended investment companies are valued at the closing price, the bid price or the single price as appropriate, released by the relevant investment manager.

Fair values for unquoted investments, or investments for which the market is inactive, are established by using various valuation techniques in accordance with the International Private Equity and Venture Capital Valuation (IPEV) Guidelines. These may include recent arm's length market transactions, the current fair value of another instrument which has substantially the same earnings multiples, discounted cash flow analysis and option pricing models. Where there is a valuation technique commonly used by market participants to price the instrument and that technique has been demonstrated to provide reliable estimates of prices obtained in actual market transactions, that technique is utilised.

The 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.

Trade Receivables

Trade receivables do not carry any interest and are stated at carrying value, which equates to their fair value, as reduced by appropriate allowances for estimated irrecoverable amounts.

Cash and Cash Equivalents

Cash equivalents are short term, highly liquid investments that are readily convertible to known amounts of cash and that are subject to an insignificant risk of changes in value.

Non current liabilities

The debenture is are initially recognised at cost, being the fair value of the consideration received less issue costs where applicable. After initial recognition, all interest-bearing loans and borrowings are subsequently measured at amortised cost using the effective interest rate. The effective interest rate is the rate that exactly discounts estimated future payments over the expected life of the financial liabilities to the net carrying amount on initial recognition.

Trade Payables

Trade payables are not interest bearing and are stated at carrying value, which equates to their fair value.

Capital Reserve

Gains and losses on the sale of investments and investment holding gains and losses are accounted for in the Statement of Comprehensive Income and subsequently in the Capital Reserve. Additionally and as detailed above, finance costs and expenses are allocated to the Capital Reserve.

Share Premium Account

Share premium account represents the excess over nominal value of consideration received for equity shares, net of expenses of the share issue.

Revenue Reserve

The net revenue return for the year is included in the Revenue Reserve along with dividends to shareholders (when they are paid or approved in general meetings).

Dividends payable to shareholders

Dividends to shareholders are accounted for in the period in which they are paid or approved in general meetings. Dividends payable to shareholders are recognised in the Statement of Changes in Equity.

2 BUSINESS SEGMENTS

For management purposes the Company is organised into one principal activity, being investing activities, as detailed below:

Investing activities

The Company's investment objective is to maximise total shareholder return whilst increasing dividends by more than the rate of inflation over the long term. The Company operates as an investment trust company and its portfolio contains investments in companies listed in a number of countries. Geographical information about the portfolio is provided above and exposure to different currencies is disclosed in note 22 below.

3 INCOME

* Includes MAM Ordinary income of £4,602,000 (2017: £4,142,000) and Property Income Distribution (PID) dividend income of £7,000 (2017: Nil).

4 MANAGEMENT AND PERFORMANCE FEES

The investment management fees are payable to MAM in accordance with an Investment Agreement. Further details on the terms of this Investment Agreement are given in the Directors' Report above. The investment management fees charged and shown are only in respect on the investment in the MAM UKES Segregated Portfolio. Investment 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. These costs are however included in the Company's OCR as disclosed above on a best estimates basis. At 30 September 2018, an amount of £103,000 was outstanding for payment of investment management fees due to MAM on the UKES Segregated Portfolio (2017: £122,000).

Performance fees are also payable to MAM in respect of the investment in the MAM Tortoise fund, but not on any other MAM fund investment. The performance fees are calculated in accordance with the fund's prospectus using an equalisation method. As these fees are individual to each investor they are charged to each investor and not the fund. The MAM Tortoise fund charges performance fees on the basis of its fund year and there are no performance fees due this year (2017: £4,000). In accordance with the AIC SORP these fees are charged wholly to capital. There were no amounts outstanding as at 30 September 2018 (2017: Nil).

5 ADMINISTRATIVE EXPENSES

A charge of £638,000 (2017: £650,000) to capital and an equivalent credit to revenue 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:

Other audit related services relate to a review of the Company's debenture covenant in 2018 (2017: other related audit services relate to a review of the Company's debenture covenant and liquidation services relate to the liquidation of Majedie Portfolio Management Limited).

6 DIRECTORS' EMOLUMENTS

The Report on Directors' Remuneration on pages 37 to 40 of the Annual Report explains the Company's policy on remuneration for Directors for the year. It also provides further details of Directors' remuneration.

7 STAFF COSTS INCLUDING CEO

8 FINANCE COSTS

On 6 November 2017, irrevocable notice was given to redeem all of the Company's outstanding March 2020 debenture stock, with settlement occurring on 6 December 2017. The total cost of the redemption was £16,563,000 which included interest of £236,000. This resulted in a premium of £2,869,000, which was charged 100% to capital. Further details concerning the redemption of the March 2020 debenture are contained in note 16 and note 19 and in the Chief Executive's Report above.

Further details of the debenture stock in issue are provided in note 16, 19 and 22.

9 TAXATION

Analysis of tax charge

Reconciliation of tax charge:

The current taxation rate for the year is lower (2017: lower) than the standard rate of corporation tax in the UK of 19.0% (2017: 19.5%). The differences are explained below: