MAJEDIE INVESTMENTS PLC: Interim Management Statement
Majedie Investments PLC
Interim Management Statement
The Board of Majedie Investments PLC announces its first Interim Management Statement for the year ending 30 September 2014, as required by the UK Listing Authority's Disclosure and Transparency Rules. This Statement is in respect of the period from 1 October 2013.
Majedie Investments PLC is an investment trust listed on the London Stock Exchange. The original company was established in 1910 and owned several rubber estates in Malaysia. It evolved into an investment company and obtained investment trust status in 1985.
The Company owns a significant stake in the asset management boutique, Majedie Asset Management Limited (MAM), and on 13 January 2014 it appointed MAM to manage the Company's assets.
To maximise total shareholder return whilst increasing dividends by more than the rate of inflation over the long term.
Key Facts at 31 December 2013
Share Price 200.0p
NAV per Share (debt at par) 251.2p
Dividend Yield (excluding 5.3% special)
Five Year Dividend Growth 10.8%
Net Gearing 18.9%
Net Assets £130.7m
Market Capitalisation £105.1m
Total Assets £164.5m
Sector Global Growth
% Performance to 31 December 2013
Total Return 3 Months to 31 Calendar Year Fiscal Year
December 2013 2013 2013
Net Asset Value 4.4% 18.8% 16.9%
Share Price 25.0% 32.9% 9.7%
Core Portfolio 6.1% 19.2% 17.4%
Balance Sheet at 31 December 2013
£ Mil % Notes Total Assets Core Portfolio 81.8 50% Long-only equity portfolio invested in mainstream global stocks with a focus on dividends. Its benchmark is 70% FTSE All-Share & 30% FTSE World ex. UK Index (sterling) on a total return basis. Javelin Capital 29.5 18% A UCITS absolute return, emerging markets Emerging Markets equity market neutral fund. Alpha Fund
Non Core Portfolio 5.7 3% Investments in private equity and listed
equities with low liquidity. Also includes cash held awaiting reinvestment. Total Equities 117.0 71% Majedie Asset 45.0 28% A 26.2% stake in an unlisted asset Management management company.
Javelin Capital LLP 2.6 1% 75% stake in an unlisted asset management
partnership. Other Assets (0.1) 0% Total Assets 164.5 100% Debentures (33.8) Net Assets 130.7 Top Ten Investments at 31 December 2013 Majedie Asset Management 27.3%
Javelin Capital Emerging Markets Alpha 18.0% Fund
Royal Dutch Shell 2.5%
BP PLC 1.7%
Rio Tinto 1.3%
Barclays PLC 1.3%
Figures are % of total assets
Regional Allocation in Core Portfolio at 31 December 2013
North America 17%
Europe ex UK 9%
Rest of World 5%
Sector Allocation in Core Portfolio at 31 December 2013
Basic Materials 11%
Consumer Goods 9%
Consumer Services 11%
Equity Investment 0% Instruments
Health Care 8%
Oil & Gas 14%
Material Events or transactions
UK and Eurozone equities trended higher over the second half of 2013, outperforming in sterling equity markets in the US, Japan and the Pacific Rim. Guidance that UK interest rates would remain at historically very low levels for the foreseeable future, combined with some strong evidence of an acceleration in UK economic growth, provided a supportive background for equities. Sovereign bond markets in both the US and UK were unsettled by the prospects for renewed growth and a potential upwards move in interest rates during 2014. Best performing areas of the UK equity market were Mobile Telecoms, where the expectation of a large return of capital to shareholders during 2014 excited investment interest in Vodafone, followed by Life Insurance where both Prudential and Aviva enjoyed reratings. After a torrid first half of 2013, mining stocks selectively came back into fashion; the scaling back of capital commitments by some of the major companies was greeted positively and Rio Tinto attracted renewed interest having reached a low point during early July. On a negative tack, emerging markets remained somewhat depressed as concerns over a slowdown in economic growth in China intensified. Major banking stocks with exposure to Far East markets such as HSBC and Standard Chartered Bank were lacklustre over the second half of 2013, as was Unilever, given its exposure to consumer end-markets in Asia. Hopes of strengthening economic growth in the UK caused a rotation away from more defensive areas of the market such as utilities and here two of the major stocks in the sector, Centrica and SSE, were also negatively impacted by a policy initiative from the Labour Party calling for an energy price freeze.
In 4Q 2013, the Company's NAV and share price returned 4.4% and 25.0% respectively. The Core Portfolio returned 6.1% and the investment in the UCITS Javelin Capital Emerging Markets Alpha Fund was down by 3.5% over the quarter.
Majedie Asset Management (MAM) paid a final 2013 dividend to the Company of £ 2.7 million in December 2013, whilst the Company itself raised £1.1 million through the sale of MAM stock to the MAM Employee Benefit Trust which reduced the Company's holding to 26.2%.
On 13 January 2014, the Company announced that it appointed MAM to manage the Company's assets with immediate effect. At the same time the Company had decided to close Javelin Capital LLP, and to rebase the Company's dividend policy.
Additionally MAM has agreed to repurchase 10% of its capital from the Company by, at the latest, 31 March 2014 which will realise approximately £18 million. The Company has also agreed to progressively reduce its stake in MAM by up to 2.5% per annum over each of the following four years.
Following the appointment of MAM the Company is transferring the Core portfolio to MAM to be managed as a separate portfolio under a mandate intended to replicate the performance of MAM's UK Equity Fund. The Company intends to invest the £18 million sale proceeds in MAM's UK Income Fund. The Company intends to realise its investment in the Javelin Capital Emerging Markets Alpha Fund as soon as practicable and to use the proceeds by investing approximately £30 million into MAM's Tortoise Fund, so retaining the Company's current absolute return allocation.
To allow the target investments in the Tortoise Fund and the UK Income Fund proposed by the Board, and to reflect the change in investment manager generally, it will be necessary to change the Company's investment policy. In accordance with the Listing Rules, any material amendments to the Company's investment policy require the approval of the Company's shareholders. Accordingly, a shareholder circular setting out the proposed changes to the investment policy and a notice of an Extraordinary General Meeting to approve such changes will be published in due course.
There have been no other material events or transactions that have taken place between 31 December 2013 and the date of publication of this statement.
This Interim Management Statement has been issued by Majedie Investments PLC on 15January 2014. The news, information, and data in this statement should not be deemed as a financial promotion or recommendation. Majedie Investments PLC is not authorised to give financial advice
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