Majedie Inv. Regulatory News (MAJE)

MAJEDIE INVESTMENTS PLC

ANNUAL FINANCIAL REPORT FOR THE YEAR ENDED 30 SEPTEMBER 2019

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 9583.

The Directors present the results of the Company for the year ended 30 September 2019.

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 (see investment policy below).

8. Adjusted Equity Shareholders' Funds: Equity Shareholders' Funds restated to include debt at its fair value, rather than par value (see note 18 below).

Ten Year Record

to 30 September 2019

Notes:

† Calculated in accordance with AIC guidance.

# As of May 2012, under AIC guidance, Ongoing Charges ratio replaced 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 2019 the NAV at par and NAV at fair value (net asset value with debt at par and fair value) fell by 9.3% and 9.9% respectively on a total return basis. The share price fell by 3.5% also on a total return basis. The FTSE All Share Index and MSCI World Index (in Sterling terms) rose by 2.7% and 7.3% respectively, on a total return basis.

Results and Dividends

The Company had a capital loss for the twelve months to 30 September 2019 of £23.4m, which reflects a write down in the carrying value of Majedie Asset Management (MAM) to £40.8m and underperformance of the MAM UK Equity Segregated Portfolio, the MAM UK Income Fund and the MAM Tortoise Fund. The MAM Global Funds and MAM US Equity Fund out-performed their respective benchmarks. The total income from investments was £8.0m compared to £7.9m in 2018. The dividend received from MAM was £4.6m, the same as in 2018, whilst the income from the MAM Funds, including the MAM UK Equity Segregated Portfolio, was higher by £0.1m. Total administration expenses and management fees were similar to 2018 at £1.7m. Finance costs were £1.5m, £0.3m lower than in 2018, reflecting a full year effect for the repayment of the 2020 Debenture in December 2017.

The ongoing charges ratio (OCR) is 1.3%. The self-managed nature of the Company and its size mean costs are higher than the peer group, though the investment management fees that are paid to MAM, and which are included in the OCR, are more than offset by the dividend received from MAM. Costs remain a key focus for the Board. The OCR will reduce in the year to 30 September 2020 due to lower investment management fees charged by MAM from 1 October 2019.

The net revenue return after tax increased from £6.7m in the year to 30 September 2018 to £6.9m in the year to 30 September 2019. The interim dividend was increased from 4.0p to 4.4p and the Board is recommending a final dividend of 7.0p, which is an increase of 3.6% for the full year. The final dividend will be payable on 28 January 2020 to shareholders on the register at 10 January 2020.

Performance and Asset Allocation

The Company's asset allocation gives exposure to funds managed by a highly regarded boutique fund manager across all geographies as well as a stake of 17.2% in the manager. No shares in MAM have been traded by the Company during the period. The Company's percentage holding in MAM has increased from 17.1% in 2018 following a small buyback of stock, for cancellation, by MAM from other shareholders in September 2019.

The NAV performance of the Company has been disappointing for four main reasons.

First, the reduction in the value of the Company's holding in MAM. The fair value is calculated with reference to a longstanding formulaic methodology, based on three-year historic earnings and surplus cash held on the balance sheet after deducting regulatory capital. However, in light of lower current market multiples for fund management companies due to industry-wide fee pressures, outflows from equity mandates and, specific to MAM, a strategic reduction in investment management fees, the weaker recent performance of certain of its funds and net outflows of assets under management, the Board felt it appropriate to reduce the valuation. The current valuation represents a discount to the formulaic valuation of 35%. Since 2003, the Company's investment in MAM has been very successful both in terms of dividends received by the Company and capital growth and the Board is confident of a return to growth by MAM in the future. It remains a highly regarded boutique fund manager with over 60 employees and 18 investment professionals.

Secondly, the MAM UK Equity Segregated Portfolio and MAM UK Income Fund have both underperformed the FTSE All Share Index during the period. In the context of the managers' excellent long term track record this performance is disappointing, but the managers have positioned the portfolio with a UK domestic bias and invested in companies that, whilst backed by low valuations and strong free cash flows, are currently unloved by the market due to uncertainty over Brexit. In time, as fundamentals assert themselves, we believe that our patience will be rewarded.

Thirdly, the Company's asset allocation is more UK-centric than its peers and since the Brexit vote the UK market has under-performed Global markets. The political vacuum in the UK has irked investors to the extent that the UK market is at its lowest relative valuation in thirty years. At the time of writing, a UK General Election has been called and its outcome, it is hoped, will provide some clarity over both Brexit and future policy direction after twelve months of political turmoil. Overseas corporates have taken this opportunity along with weak Sterling to acquire cheap UK assets. The current valuation of the UK market provides a good opportunity for strong future performance and is currently discounting, too heavily, we believe, many of the political and economic issues.

Fourthly, the Company's holding in the MAM Tortoise Fund, a global equity absolute return fund that has a value style bias has performed poorly in the momentum driven markets that prevailed in 2019. The MAM Tortoise Fund is held to reduce the downside volatility of the Company's assets in volatile markets and is defensively positioned.

The MAM Global Funds and the MAM US Equity Fund, which together account for 24.0% of net assets, have performed well. They now have attractive performance records and have reached their fifth anniversary since launch which is an important milestone to market the Funds to potential investors.

In response to the Company's shares trading at a wide discount throughout much of the year, we bought back 383,517 shares at a total cost of £0.9m at an average discount of 18.8% to net asset value. The Board will continue to monitor the discount and take appropriate action, although we are aware that discounts have widened across the sector.

Board

Sadly Andrew Adcock, who had joined the Board in 2008 and became Chairman in 2010, passed away in January 2019. Andrew's contribution to the Company has been immense and he is much missed by the Company and his colleagues.

I joined the Board in September 2011, became interim Chairman in December 2018 and Chairman on the passing of Andrew. I stepped down as Chairman of the Audit Committee in May 2019 on Mark Little's appointment.

Jane Lewis joined the Board as a Non Executive Director in January 2019. Jane brings a deep knowledge and understanding of Investment Companies, having worked in the sector for over twenty years. She was a director of corporate finance and broking at Winterflood Securities until 2013 and is a Non Executive Director of a number of Investment Companies.

Mark Little joined the Board as a Non Executive Director in May 2019 and was appointed Chairman of the Audit Committee. Mark is qualified as an accountant and has extensive knowledge of the investment industry as a former Managing Director of Barclays Wealth (Scotland and Northern Ireland) and is currently an investment director at Seven Investment Management. He is a Non Executive Director of a number of Investment Companies.

Non Executive Director appointments were made using an external search firm as disclosed on page 32 of the Annual Report and Accounts.

We intend to recruit a further new Non Executive Director during the coming year and, following their appointment, Paul Gadd will retire.

AGM

The AGM will be held on 22 January 2020 at 12.00 at the City of London Club, London EC2N 1DS. Details are set out in the notice of meeting on pages 88 - 89 of the full Annual Report. There will be presentations from the CEO and MAM and there will be an opportunity to ask questions. I hope you will be able to attend.

R David C Henderson

Chairman

10 December 2019

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 17.2%. The Company has no overall benchmark; rather each fund has its own benchmark. The monthly factsheets of each of the relevant MAM funds are available on the Company's website. The Company's total assets at 30 September 2019 were £175.6m, as defined above. There were no sales of MAM shares during the year.

On 1 July 2019, Link Fund Solutions was appointed Authorised Corporate Director (ACD) of the MAM UK Funds replacing MAM. There is no impact on the Company's investments and we continue to refer to them using their previous names.

MAM Funds and Investment Performance

The MAM UK Equity Fund is the flagship product of MAM, having started in March 2003, and since inception to 30 September 2019 has returned 11.2% per annum net of fees with a relative outperformance against its benchmark, the FTSE All-Share Index, of 2.4% 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 2019 was £54.1m which represents 30.8% of the Company's total assets.

In the year to 30 September 2019 the MAM UK Equity Segregated Portfolio returned -3.0% net of fees, which is an under-performance of 5.7% against its benchmark. At the sector level the largest positive contributors to performance over the year were Industrial Mining, Tobacco and Travel and Leisure (all underweight) and Fixed Line Telecommunications and Healthcare Equipment (both overweight) whilst the detractors were the MAM Smaller Companies Fund, Utilities, General Retailers, Food Retailers and Oil Equipment (all overweight). Positive stock contributors were Barrick Gold, Serco and Rentokil (all overweight) and British American Tobacco and Glencore (both not held) whilst negative contributors were Centrica, Valaris and Wm Morrison (all overweight) and Astra Zeneca and Diageo (both not held).

The table below shows the principal overweight and underweight stock positions of the MAM UK Equity Segregated Portfolio at 30 September 2019 relative to the FTSE All-Share Index in %.

The table below shows the principal overweight and underweight sector positions of the MAM UK Equity Segregated Portfolio at 30 September 2019 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 5.1%. Since inception to 30 September 2019 the Fund has returned 11.6% per annum net of fees, which is an outperformance of 2.6% per annum against its benchmark. At 30 September 2019 the Company has an allocation to the Fund of £14.3m, which represents 8.1% of the Company's total assets. In the year to 30 September 2019 the Fund returned -4.4% net of fees which represents an underperformance against its benchmark of 7.1%. At the sector level the largest positive contributors to performance over the year were Tobacco, General Retailers and Chemicals (all underweight) and Aerospace and Food Producers (both overweight), whilst the detractors were Utilities, Oil and Mobile Telephony (all overweight) and Beverages and REITS (both underweight). Positive stock contributors were Roche, Meggitt and Daily Mail & General Trust (all overweight) and British American Tobacco and Glencore (both not held) whilst negative contributors were Centrica, Vodafone and Aviva (all overweight) and Astra Zeneca and Diageo (both not held).

The table below shows the principal overweight and underweight stock positions of the MAM UK Income Fund at 30 September 2019 relative to the FTSE All-Share Index in %.

The table below shows the principal overweight and underweight sector positions of the MAM UK Income Fund at 30 September 2019 relative to the FTSE All-Share Index in %.

The MAM Global Equity and 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 (Global Equity Fund) or concentrated portfolio (Global Focus Fund) of global equities including emerging markets. Since inception the Funds have returned 13.2% and 12.8% per annum net of fees for the Sterling share classes, which represents an outperformance of 0.6% per annum for the MAM Global Equity Fund and 0.2% per annum for the MAM Global Focus Fund against their benchmark, the MSCI All Country World Index. At 30 September 2019 the Company had allocations of £24.0m and £8.3m respectively in the MAM Global Equity Fund and MAM Global Focus Fund, representing 13.7% and 4.7% of total assets. In the year to 30 September 2019 the Funds returned 9.5% and 9.8% net of fees respectively, which represents an outperformance of 2.2% and 2.5%.

For the MAM Global Equity Fund at the sector level, the largest positive contributors were Consumer Discretionary, Healthcare and Materials (all overweight) and Financials and Industrials (both underweight); detractors were Energy, Telecommunications (both overweight) and Consumer Staples, Real Estate and Utilities (all underweight). Positive stock contributors were Mercadolibre, Barrick Gold, New Oriental Education, frontdoor and KPN (all overweight); detractors were Softbank, Baidu, Tullow Oil, Mosaic and SQM (all overweight).

For the MAM Global Focus Fund, the largest positive contributors at a sector level were Consumer Discretionary and Materials (both overweight) and Financials, Healthcare and Industrials (all underweight); the detractors were Energy, Telecommunications and Consumer Staples (all overweight) and Real Estate and Utilities (both underweight). Positive stock contributors were frontdoor, Barrick Gold, KPN, New Oriental Education and Dollar General (all overweight); detractors were Softbank, Mosaic, Tullow Oil, Diamond Offshore Drilling and Royal Dutch Shell (all overweight).

The table below shows the principal overweight and underweight stock positions of the MAM Global Equity Fund at 30 September 2019 relative to the MSCI All Country World Index, in %.

The table below shows the principal overweight and underweight sector positions of the MAM Global Equity Fund at 30 September 2019 relative to the MSCI All Country World Index, in %.

The table below shows the principal overweight and underweight stock positions of the MAM Global Focus Fund at 30 September 2019 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 2019 relative to the MSCI All Country World Index, in %.

The MAM US Equity Fund was launched in June 2014. Since inception to 30 September 2019 the Fund has returned 16.2% per annum net of fees for the Sterling share class. This represents an underperformance of 0.6% per annum against its benchmark the S&P 500 Index. At 30 September 2019 the Company had an allocation of £9.9m in the Fund, which represents 5.6% of total assets, and in the year to 30 September 2019 the Fund returned 16.3% net of fees, which represents an outperformance of 6.6%. At the sector level the largest positive contributors were Financials, Consumer Discretionary and Telecommunications (all overweight) and Industrials and Information Technology (both underweight); detractors were Real Estate and Consumer Staples (both underweight). Positive stock contributors were frontdoor, Booz Allen Hamilton, Dollar General, American Electric Power and US Foods (all overweight); detractors were Parsley Energy, Cognizant Technology Solutions and LKQ (all overweight) and Proctor & Gamble (not held).

The table below shows the principal overweight and underweight stock positions of the MAM US Equity Fund at 30 September 2019 relative to the S&P 500 Index, in %.

The table below shows the principal overweight and underweight sector positions of the MAM US Equity Fund at 30 September 2019 relative to the S&P 500 Index, in %.

The MAM Tortoise Fund is a global equity absolute return product 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 the Fund has returned 5.4% per annum net of fees. At 30 September 2019, the Company had an allocation in the Fund of £24.0m, which represents 13.7% of total assets. The Fund returned -8.4% net of fees in the year to 30 September 2019. At the sector level the largest positive contributors were Materials and Healthcare (both long); detractors were Energy, Consumer Staples and Utilities (all long) and Consumer Discretionary and Information Technology (both short). Positive stock contributors were Goldfields, Barrick Gold, Sibanye Stillwater, Newmont and KPN (all long); detractors were Valaris, Sainsbury, Diamond Offshore Drilling and Centrica (all long) and Starbucks (short).

The table below shows the principal long/short stock positions of the MAM Tortoise Fund at 30 September 2019 in %.

The table below shows the principal long/short sector positions of the MAM Tortoise Fund at 30 September 2019 in %.

Majedie Asset Management

The Company retains its holding of 17.2% in MAM and has no current intention to sell any shares 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 at 31 March 2019, in the interim accounts, was reduced to £52.3m, including the value of the interim dividend of £1.1m which the Company received in June 2019.

The valuation of MAM is based on a formula which has been used in prior years and reflects historic three year average earnings with a single digit multiple and surplus cash after regulatory capital has been deducted. The surplus cash after regulatory capital has been deducted at 30 September 2019 was £62m. However, in light of market multiples of fund management peers contracting, industry fee pressures, the current UK political and economic uncertainty and, specifically to MAM, a fall in AUM from £14.1bn to £10.8bn and an announced reduction in investment management fees from 1 October 2019, the Board has deemed it appropriate to reduce the value of the stake in MAM to £40.8m. This represents a reduction from 30 September 2018 of 22.5% and a 35% discount from the formulaic valuation.

Summary

The cautious positioning of the Funds has resulted in a disappointing performance. In light of Global political worries, particularly the US/China Trade Wars, the US Political situation generally, riots in Hong Kong, the continued rise of populism and Brexit, the Board feels that defensive positioning is justified. In economic and market terms the current cycle is one of the longest since 1946 with low unemployment, lack of spare capacity and rising wage inflation, particularly in the US. Markets remain buoyed by an about-turn on interest rates by Central Banks in January 2019, though with low or even negative interest rates, further scope is limited. Against such a background, the MAM Funds are positioned to benefit from corporate self-help and independent drivers rather than overly depending on strong economic growth.

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 2019. In aggregate, the NAV has decreased by £23.5m, comprised of net investment losses at the MAM Funds, including MAM UK Equity Segregated Portfolio, of £0.2m, a net write down of MAM by £13.2m, expenses and interest of £3.2m, share buybacks of £0.9m and dividends paid to shareholders of £6.0m.

* MAM Funds comprise the MAM UK Income Fund, MAM Global Equity Fund, MAM Global Focus Fund, MAM US Equity Fund and MAM Tortoise Fund.

Allocation of Total Assets as at 30 September 2019

* 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 and MAM Global Focus Fund were made on 30 June 2014 and in the MAM US Equity Fund on 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.

J William M Barlow

CEO

10 December 2019

FUND ANALYSIS

at 30 September 2019

In order to aid shareholder understanding of the Company's investment portfolio both the sector and geographic analyses 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 geographic and sector fund analysis excludes the Company's investment in MAM.

Geographic and Sector Analysis at 30 September 2019

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, 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 76.6% of the Company's total assets. Prior to 2018 the MAM Tortoise Fund net exposures were not disclosed.

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

Twenty Largest Portfolio Holdings

at 30 September 2019

Notes: 

The assets analysed above show the Company's largest twenty holdings on a look through basis across all assets all Funds (all such holdings being cash positions).

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 of a self-managed AIF (i.e. it is an AIFM and 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. 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 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 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.

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 noted previously, the Company is subject to the AIFMD, which requires that all AIFs are managed by a regulated AIFM. The AIFMD 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. 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 £26.6m, the revenue reserves represent over 4 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 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 asses 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 performance:

The Board believes that, after asset allocation, the performance of each of the investment groups, being the MAM Funds (including the MAM UK Equity Segregated Portfolio) 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.

·; 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, 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 loss being less than the loss 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 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 incurred 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 5 years to 30 September 2019, which is after the rebasing of the dividend in 2014, average dividend growth has been 14.0% 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, continuing 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 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 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 portfolio reports 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 mis--reporting of NAVs. The Board and Audit Committee regularly review statements on internal controls and procedures and the books and records of the Company are subject to an annual external audit. In addition, the Company's Depositary provides another level of oversight over the Company's operations. 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.

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

On behalf of the Board

R David C Henderson

Chairman

10 December 2019

DIRECTORS' REPORT

The Directors submit their report and the accounts for the year ended 30 September 2019.

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 £6,911,000 (2018: net revenue return of £6,680,000).

The Directors recommend a final ordinary dividend of 7.00p per ordinary share, payable on 28 January 2020 to shareholders on the register at the close of business on 10 January 2020. Together with the interim dividend of 4.40p per share paid on 14 June 2019, this makes a total distribution of 11.40p per share in respect of the financial year (2018: 11.00p 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 22 of the Company's Annual Report and Accounts.

Mr AJ Adcock stepped down as Chairman on 13 December 2018 and he sadly passed away in January 2019. Andrew's contribution to the Company has been immense, in particular, he was instrumental in moving the investment management to MAM in 2014. He will be missed by the Company and his colleagues. Mr RDC Henderson was appointed Chairman on 13 December 2018. Ms JM Lewis and Mr AMJ Little were appointed to the Board on 1 January and 23 May 2019 respectively, and Mr Little became the Chairman of the Audit Committee on appointment. The Board believes that both Jane and Mark bring valuable experience and skills to the Company and welcomes them both to the Board.

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 a general meeting, at either such meeting, shall retire from 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. RDC Henderson and PD Gadd will retire at the forthcoming AGM and, being eligible, will offer themselves for re-election. Ms JM Lewis and Mr AMJ Little will retire at the forthcoming AGM and, being eligible, will offer themselves for election.

Following Mr Adcock unfortunately stepping down as chair of the Company, Mr PD Gadd has agreed to remain on the Board into 2020, when a search for a new Non Executive Director to replace him will conclude. Once this appointment has been finalised, Mr PD Gadd, who has served the Board for more than 10 years, will retire. The Board which to thank him for his continued assistance and support.

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 elections and re-elections, as appropriate.

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:

Mr AMJ Little has no beneficial interest in the Company.

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

Substantial Shareholdings

At 30 September 2019, 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.

The Company has not been notified of any changes in substantial holdings from 1 October 2019 up to the date of this report.

AGM

The AGM will be held at City of London Club, 19 Old Broad Street, London EC2N 1DS on Wednesday, 22 January 2020 at 12 noon. The notice convening the AGM can be found on pages 88 to 94 of the full Annual Report and is available on the Company's website.

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.

Issue and Buyback of Shares

The Board remains 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 16 January 2019, 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 2020 AGM.

During the year as the Company's shares remained at a discount, no shares have been allotted (2018: 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 5,298,985 shares (being approximately 9.99% of the Company's existing share capital). The renewed authority will expire at the 2021 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 a significant deterioration in the Company's share price discount in 2019, and in the best interests of shareholders, the Company announced 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 2018 and up to the date of this report the Company bought back for cancellation 396,101 ordinary shares, at a total cost of £966,000. At the AGM in 2019 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 same number of shares as detailed above have been bought back for cancellation under this authority. This authority will also expire at the 2020 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 7,951,130 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 2021 AGM.

Capital Structure

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

At 30 September 2019, the Company had a nominal issued share capital of £5,305,548, comprising 53,055,483 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 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 and the Companies (Directors' Report) and Limited Liability Partnership (Energy and Carbon Report) Regulations 2018, 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 2019 (2018: nil).

Donations

The Company made no political or charitable donations during the year (2018: 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 32 of the Company's full Annual Report and Accounts and this is applied when a new appointment to the Board is required. At the year end 80% of the directors of the Board were male and 20% were female. 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, and apply from 1 October 2019. Prior management fees were 0.70% pa for the MAM UK Equity Segregation Portfolio, 1.50% for the MAM Tortoise Fund, 0.75% for the MAM UK Income Fund, 0 - 0.75% for the MAM Global Equity Fund, 0 - 1.00% for the MAM Global Focus Fund and 0.75% for the MAM US Equity Fund.

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 hurdle has been exceeded (being the Sterling Overnight Index Average or "SONIA") and is calculated on a high water mark basis. This change to SONIA is effective from 1 October 2019 (previously a 5% hurdle rate was in effect).

** 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, 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 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 2019.

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

The 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 2019 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.

·; 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, 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 16 January 2019. 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 2024. The Directors believe that 5 years is appropriate given the long term nature of the Company's objective and the risks arising from investing in equity markets.

In their assessment of the viability of the Company, the Directors have considered how the Company is positioned against each of the Company's principal risks and uncertainties. In doing so the Directors have considered various metrics including; (a) the Company's income and expenditure forecasts and projections; (b) the level of borrowings (leverage of 1.12 times (Gross method) and 1.14 times (Commitment method) are well below the 1.5 times limit. In addition, the current borrowings of £20.5m are over 8 times covered by the current total assets); (c) the Company's investments primarily comprise readily realisable securities (equal to 76.6% of total assets as at 30 September 2019), and these highly liquid assets can be sold to meet funding requirements as necessary.

Based on the Company's processes for monitoring income and 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 2024.

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

10 December 2019

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 22 of the full 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 loss 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

R David C Henderson

Chairman

10 December 2019

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 2019

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 2019 and 30 September 2018 but is derived from those accounts. Statutory accounts for 2018 have been delivered to the Registrar of Companies, and those for 2019 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 2019

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 2019

BALANCE SHEET

as at 30 September 2019

Approved by the Board of Majedie Investments PLC (Company no. 109305) and authorised for issue on 10 December 2019.

R David C Henderson

Chairman

CASH FLOW STATEMENT

for the year ended 30 September 2019

* Includes dividends received in the year of £7,525,000 (2018: £7,392,000) and interest received of £2,000 (2018: £Nil).

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 on page 98 of the full Annual Report and Accounts. 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 26.4% (2018: 32.9%) of Equity Shareholder's 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 2019, 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 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 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.

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 and interpretations approved by the International Accounting Standards Committee and 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 consistent 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:

IFRS 16 requires lessees to account for all leases under a single on-balance sheet model in a similar way to a finance lease under IAS 17. The impact on the Company is in respect of its property lease (which is not material), for which it is the lessee, and which is currently treated as a operating lease. This would normally result in a lease liability being included on the balance sheet and additional expense and finance items being recorded in the Statement of Comprehensive Income. However under the transitional provisions the Company will apply the modified retrospective approach and utilise the full relief available for existing leases with less than 12 months' term remaining. As such there will be no impact on 1 October 2019 under the initial adoption of IFRS 16, however any future property leases will need to be accounted for as described above. The impact from the adoption of IFRS 16 will not be material on the financial statements.

New standards, Interpretations and Amendments adopted by the Company

The Company applied in the financial year ended 30 September 2019, for the first time, certain standards which are effective for annual periods beginning on or after 1 January 2018. The nature and impact of these new standards are described below:

IFRS 9 Financial Instruments

IFRS 9 replaces IAS 39 Financial Instruments: Recognition and Measurement, and introduces new requirements for (a) the classification and measurement, (b) impairment and (c) hedge accounting. IFRS 9 is not applicable to items that have already been derecognised at 1 October 2018, the date of initial application.

(a) Classification and Measurement

The Company has assessed the classification of financial instruments as at the date of initial application and has applied such classification retrospectively. Based on that assessment:

·; All financial assets previously held a fair value continue to be measured at fair value;

·; Equity instruments, which are not held for trading, are required to be held at Fair Value through Profit or Loss (FVPL), which again is the same as they were previously held (and no irrevocable elections to change this have been made);

·; Financial assets previously classified as receivables are held to collect contractual cashflows and give rise to cashflows representing payments solely of principal. As such these continue to be measured at amortised cost under IFRS 9;

·; The classification of financial liabilities under IFRS 9 remains largely the same as under IAS 39. The main impact on measurement from the classification of financial liabilities under IFRS 9 relates to the element of gains or losses for financial liabilities designated FVPL attributable to changes in credit risk. IFRS 9 requires that any such element be recognised in other comprehensive income, unless this treatment creates or enlarges an accounting mismatch in profit or loss, in which case, all gains or losses on that financial liability (including the effects of changes in credit risk) should be presented in profit or loss. The Company has not designated any financial liabilities at FVPL. Therefore, this requirement does not apply and financial liabilities continue to be held at amortised cost.

(b) Impairment

IFRS 9 requires the Company to record expected credit losses on all of its trade receivables, either on a 12 month or lifetime basis. Given the limited exposure of the Company to credit risk, this amendment has not had a material impact on the financial statements. The Company only holds trade receivables with no financing component and which all have maturities of less than 12 months at amortised cost, and therefore has adopted an approach similar to the simplified approach to expected credit losses.

(c) Hedge Accounting

The Company has not applied hedge accounting under IAS 39 nor will it apply hedge accounting under IFRS 9.

Impact of adoption of IFRS 9

The classification and measurement requirements of IFRS 9 have been adopted retrospectively as of the date of initial application on 1 October 2018. The Company has chosen the option of not restating the comparatives, and as such the 2018 figures are presented and measured under IAS 39. The table below shows the original measurement categories in accordance with IAS 39 and the new measurement categories under IFRS 9 for the Company's financial assets and liabilities as at 1 October 2018.

In line with the characteristics of the Company's financial instruments as well as its approach to their management, the Company neither revoked nor made any new designations on the date of initial application. IFRS 9 has not resulted in changes in the carrying amount of the Company's financial instruments due to changes in measurement categories. All financial assets that were classified as FVPL under IAS 39 are still classified as FVPL under IFRS 9. All financial assets that were classified as loans and receivables and measured at amortised costs continue to be.

In addition, the application of the expected credit loss model under IFRS 9 has not changed the carrying amounts of the Company's amortised cost financial assets.

The carrying amounts of amortised cost instruments continued to approximate these instruments fair values on the date of transition after transitioning to IFRS 9.

IFRS 15 Revenue from contracts with customers

The Company adopted IFRS 15 Revenue from contracts with customers on its effective date of 1 October 2018. IFRS 15 replaces IAS 18 Revenue and establishes a five step model to account for revenue arising from contracts with customers. In addition, guidance on interest and dividend income have been moved from IAS 18 to IFRS 9 without significant changes to the requirements. Therefore, there was no impact of adopting IFRS 15 for the Company.

Foreign Currencies

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)/gains on investments at fair value through profit or loss".

Income

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 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.

Expenses

All expenses or fees are recognised on an accrual 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:

·; Expenses incurred 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 separately 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 fees have been allocated 75% to capital, in order to reflect the Directors' expected long-term view of the nature of the investment returns to the Company;

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

Finance Costs

Interest expense is recognised for all interest bearing financial instruments using the effective interest rate method.

In accordance in 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.

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 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 since the Company operates as an investment trust for tax purposes.

Property and Equipment

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

Leasing

Under IAS 17, leases are classified as finance leases whenever the terms of the lease transfer substantially all of the risks and rewards of ownership to the lessee. All other leases are classified as operating leases.

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

Financial Instruments (policy effective from 1 October 2018 - IFRS 9)

In the current year the Company has adopted IFRS 9 Financial Instruments. Please see "New Standards, Interpretations and Amendments adopted by the Company" previously for an explanation of the impact. Comparative figures for the year ended 30 September 2018 have not been restated. Therefore, financial instruments in the comparative period are still accounted for in accordance with IAS 39 Financial Instruments: Recognition and Measurement.

(a) Classification

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:

Financial Assets

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:

·; the Company's business model, as an investment trust, for managing the financial assets;

·; the contractual cash flow characteristics of the financial asset.

Financial Assets Measured at Amortised Cost

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.

Financial Assets Measured at Fair Value Through Profit or Loss (FVPL)

A financial asset is measured at FVPL if:

a) its contractual terms do not give rise to cash flows on specified dates that are solely payments of principal and interest on the principal amount outstanding; or

b) it is not held within a business model whose objective is either to collect contractual cash flows, or to both collect contractual cash flows and sell; or

c) at initial recognition, it is irrevocably designated as measured at FVPL when doing so eliminates or significantly reduces a measurement or recognition inconsistency that would otherwise arise from measuring assets or liabilities or recognising the gains or losses on them on different bases.

The Company includes in this category its equity investments.

Financial Liabilities

Financial liabilities measured at amortised cost.

This category includes all financial liabilities. The Company includes in this category debentures and other short term payables.

(b) Recognition

The Company recognises a financial asset or liability when it becomes a party to the contractual provisions of the instrument. 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.

(c) Initial Measurement

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.

(d) Subsequent Measurement

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 "(Losses)/gains 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 rate 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.

(e) Derecognition

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 transfered control of the asset.

A financial liability is derecognised by the Company when the obligation under the liability is discharged, cancelled or expired.

(f) Impairment

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.

(g) Fair Value Measurement

The Company measures its investments in financial instruments, such as equity instruments and debentures, 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 or 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.

Financial Instruments (policy effective before 1 October 2018 - IAS 39)

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 latest trading 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 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 cashflow 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 used.

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

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.

Share Capital

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.

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 (and note 13). 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.

Revenue Reserve

The net revenue for the year is included in the Revenue Reserve along with dividends to shareholders, when approved.

Dividends Payable to Shareholders

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 irrecovably 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.

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 (2018: £4,602,000) and Property Income Distribution (PID) dividend income of £24,000 (2018: £7,000).

4 MANAGEMENT FEES

The investment management fees are payable to MAM in accordance with the Investment Agreement and the material terms are disclosed 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 calculation above, on a best estimates basis. At 30 September 2019, and amount of £93,000 was outstanding for payment of investment management fees due to MAM on the UKES Segregated Portfolio (2018: £103,000).

5 ADMINISTRATIVE EXPENSES