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Majedie Investments PLC released its Half-Yearly Financial Report for the six months ended 31 March 2022, reporting a total shareholder return of -12.5% and total assets of £157.0 million. The company announced a realised gain of £20.2 million from the sale of its 17.6% investment in Majedie Asset Management Limited to Liontrust Asset Management PLC, which completed on 1 April 2022, and declared an interim dividend of 4.4 pence per share.
| Date | 25 May 2022 |
| Time | 07:00:04 |
| Category | Results |
| ID | 6741M |
Majedie Investments PLC
Half-Yearly Financial Report
31 March 2022
The Half-Yearly Financial Report for the six months ended 31 March 2022 can be found on the Majedie Investments PLC website:
https://www.majedieinvestments.com/reporting
Financial Highlights
|
|
Half Year ended 31 March 2022 |
|
Total shareholder return (including dividends): |
-12.5% |
|
Net asset value (NAV) total return (debt at par including dividends): |
-8.2% |
|
NAV total return (debt at fair value including dividends): |
-7.7% |
|
|
|
|
NAV per share (debt at par value): |
257.0p |
|
NAV per share (debt at fair value): |
253.2p |
|
|
|
|
Revenue Return per share: |
2.7p |
|
Interim Dividend: |
4.4p |
|
Realised gain on the sale of the investment in Majedie Asset Management Limited: |
£20.2m |
|
Total assets*: |
£157.0m |
|
|
|
|
* Total assets are defined as total assets less current liabilities. |
|
Investment Objective and Policy Statement
Investment Objective
The Company's investment objective is to maximise total shareholder return whilst increasing dividends by more than the rate of inflation over the long term.
General
The Company invests principally in securities of publicly quoted companies worldwide and in funds managed by its investment manager, though it may invest in unquoted securities up to levels set periodically by the Board, including its investment in Majedie Asset Management Limited (MAM). Investments in unquoted securities, other than those managed by its investment manager or made prior to the date of adoption of this investment policy, (measured by reference to the Company's cost of investment) will not exceed 10% of the Company's gross assets.
Risk Diversification
Whilst the Company will at all times invest and manage its assets in a manner that is consistent with spreading investment risk, there will be no rigid industry, sector, region or country restrictions. The overall approach is based on an analysis of global economies sector trends with a focus on companies and sectors judged likely to deliver strong growth over the long term. The number of investments held, together with the geographic and sector diversity of the portfolio, enable the Company to spread its risks with regard to liquidity, market volatility, currency movements and revenue streams.
The Company will not invest in any holding that would, at the time of investment, represent more than 15% of the value of its gross assets save that the Company may invest up to 25% of its gross assets in any single fund managed by its investment manager where the Board believes that the investment policy of such funds is consistent with the Company's objective of spreading investment risk.
The Company may utilise derivative instruments including index-linked notes, contracts for difference, covered options and other equity-related derivative instruments for efficient portfolio management and investment purposes.
Any use of derivatives for investment purposes will be made on the basis of the same principles of risk spreading and diversification that apply to the Company's direct investments, as described above.
Asset Allocation
The assets of the Company will be allocated principally between investments in publicly quoted companies worldwide, in investments intended to provide an absolute return (in each case either directly or through other funds or collective investment schemes managed by the Company's investment manager) and the Company's investment in MAM itself.
Benchmark
The Company does not have one overall benchmark, rather each distinct group of assets is viewed independently. Any investments made into funds managed by the Company's investment manager will be measured against the benchmark or benchmarks, if any, whose constituent investments appear to the Company to correspond most closely to those investments. It is important to note that in all cases investment decisions and portfolio construction are made on an independent basis. The Board however sets various specific portfolio limits for stocks and sectors in order to restrict risk levels from time to time, which remain subject to the investment restrictions set out in this section.
Gearing
The Company uses gearing currently via long term debentures. The Board has the ability to borrow up to 100% of adjusted capital and reserves. The Board also reviews the level of net gearing (borrowings less cash) on an on-going basis and sets a range at its discretion as appropriate. The Company's current debenture borrowings are limited by covenant to 662/3%, and any additional indebtedness is not to exceed 20%, of adjusted capital and reserves.
Chief Executive's Report
In the six months ended 31 March 2022 the NAV at par and the NAV at FV (net asset value with debt at par and fair value) fell by 8.2% and 7.7% respectively, on a total return basis. The share price fell by 12.5% over the period, also on a total return basis. Over the six months the FTSE All-Share index rose by 4.7% and the MSCI All Country Index rose by 3.4% in sterling terms.
The sale of Majedie Asset Management (MAM), in which the Company had a stake of 17.6%, to Liontrust Asset Management PLC (Liontrust) was announced in December 2021, went unconditional in March 2022 and completed on 1 April 2022. Following the sale, the investment team responsible for the management of the Company's assets have joined Liontrust as its new Global Fundamental Team, retaining their flexible investment process based on detailed company research.
As a result of this transaction, the Company received a combination of shares in Liontrust and cash which was valued at £22.4m on the announcement date, compared with the valuation of the Company's holding in MAM at 30 September 2021 of £25.2m. Subsequent to the announcement the share price of Liontrust has fallen and at 31 March 2022 the transaction value had reduced by £6.3m to £16.1m. Excluding the Company's investment in MAM (now Liontrust) the managed portfolio, which represents 90.2% of total assets, fell by 1.5%.
Stock markets performed well in the final quarter of 2021 as the global economy recovered more strongly than expected as the impact of COVID-19 faded. Inflation, though a concern, was thought to be transitory and was expected to weaken in the second half of 2022 as supply side bottlenecks eased and Central Banks tightened their expansionary monetary policy. The invasion of Ukraine, apart from the horrendous human cost, has changed that optimistic outlook. It has proved a major shock to the global economy as commodity prices, particularly oil and wheat, have spiked. It is evident that inflation is now more persistent and that Central Banks were behind the curve. They have signalled a more hawkish stance and some commentators are concerned that the global economy is moving towards stagflation, a period of elevated inflation accompanied by low economic growth. Stock markets reacted by de-rating growth stocks as their valuations appeared stretched in a world of higher interest rates. The UK Market, in which the Company has an overweight position, has performed well and continues to do so due to its relatively large exposure to commodities and low exposure to highly valued technology stocks.
Results and Dividends
The Company had a capital loss for the six months to 31 March 2022 of £13.7m which includes the loss on the holding in MAM.
Total income received from investments fell to £2.0m compared to £3.7m in the six months to 31 March 2021. This was due to a smaller dividend from MAM of £1.2m compared to £2.8m for the six months to 31 March 2021. Total administrative expenses and management fees of £0.8m were unchanged as were finance costs of £0.8m. The net revenue after tax was £1.4m compared to £3.1m in the six months to 31 March 2021.
The dividend from MAM has, in recent years, represented a significant proportion of the Company's total income that will not be fully replaced by the income from its Liontrust shares or other assets. Notwithstanding this, the Board has decided to maintain the interim dividend at 4.4p pence per share. The Board notes the Company's substantial revenue reserves of £22.0m and understands the importance placed on dividend payments by many of its shareholders.
The dividend will be payable on 24 June 2022 to shareholders on the register at 6 June 2022 and the shares will go ex-dividend on 1 June 2022.
Management Arrangements
As a self managed trust, Majedie has managed its holding in MAM in addition to allocating the Company's assets between the various MAM/Liontrust funds.
Following the sale of MAM to Liontrust, the Board is considering the Company's investment objective together with the range of assets that should be considered for inclusion in the Company's portfolio, as well as its own responsibilities for portfolio allocation. The Board will update shareholders on this matter later in 2022.
The Board is in discussion with Liontrust regarding the terms of the locked up Liontrust shares received as part of the transaction.
Allocation of Total Assets at 31 March 2022
|
|
Value |
% of Total |
|
UK Equity Segregated Portfolio |
63,450 |
40.4 |
|
Global Equity Fund |
42,413 |
27.0 |
|
International Equity Fund |
12,235 |
7.8 |
|
Tortoise Fund |
23,575 |
15.0 |
|
Liontrust |
8,424 |
5.4 |
|
Net cash/realisation fund* |
6,888 |
4.4 |
|
Total Assets |
156,985 |
100.0 |
*Net cash and realisation fund does not include cash held in funds.
The sale of MAM has resulted in a higher cash position than usual as the Company received a pre completion cash payment of £6.5m in addition to shares in Liontrust. The Company has no overall benchmark, rather each fund has its own benchmark and it is expected that performance will be generated by stock picking at the fund level. The allocation to the Tortoise Fund, an absolute return fund is to reduce the downside volatility of the overall return for the Company, as the fund can short individual stocks and indices. The International Equity Fund gives overseas exposure particularly to developed markets and emerging markets excluding North America. The monthly factsheets of the relevant Liontrust Funds are available on the Company's website as are the Company's monthly factsheets which show the allocation between funds and the top twenty holdings on a look through basis. The Company's total assets were £157.0m at 31 March as defined on page 1.
In early January 2022 the Board took the decision to disinvest £3.5m from the UK Segregated Portfolio, Global Equity and International Equity Funds at higher market levels than at 31 March 2022.
MAM/ Liontrust Funds and Investment Performance
The performance of the MAM/Liontrust Funds relative to their respective benchmarks has been disappointing with the notable exception of the Tortoise Fund which has demonstrated its resilience in a period of market turbulence and remains a key differentiator for the Company. The asset allocation between the funds has been positive with a relatively high weighting to the UK Equity Market, compared to peers, and to the Tortoise Fund. After several years of UK equities underperforming Global markets, UK equities are valued at close to thirty year lows. The structure of the UK equity market with high exposure to oil, commodities and pharmaceuticals with a low exposure to technology is attractive in the current market and therefore the overweight will be retained.
Performance Table
|
|
6 months to 31 March 2022 |
Since MI invested (annualised) |
||||
|
|
% Fund return |
% Benchmark return |
% Relative performance |
% Fund return |
% Benchmark return |
% Relative performance |
|
UK Equity Segregated Portfolio |
(2.9) |
4.7 |
(7.6) |
3.9 |
5.4 |
(1.5) |
|
Global Equity Fund |
(1.9) |
3.4 |
(5.3) |
13.1 |
12.5 |
0.6 |
|
International Equity Fund |
(5.9) |
(1.1) |
(4.8) |
13.0 |
6.2 |
7.8 |
|
Tortoise Fund |
7.9 |
|
|
2.8 |
|
|
|
MAM/ Liontrust |
(36.0) |
|
|
|
|
|
Development of Net Asset Value
The chart below outlines the change in the Company's NAV (debt at par) over the six months to 31 March 2022. In aggregate the NAV decreased by £16.0m, comprised of net investment losses at the MAM/Liontrust Funds, including the UK Equity Segregated Portfolio, of £1.6m, a loss on the investment in MAM/Liontrust of £9.1m net of dividends received, administration expenses and finance costs of £1.6m and dividends paid to shareholders of £3.7m.
|
Nav 30.09.21 |
£152.2m |
|
UK Equity Segregated Portfolio |
(£1.6m) |
|
Tortoise Fund |
£1.7m |
|
Global Equity Fund |
(£0.8m) |
|
International Equity Fund |
(£0.9m) |
|
MAM/ Liontrust |
(£9.1m) |
|
Admin Costs & Other |
(£0.8m) |
|
Finance Costs |
(£0.8m) |
|
Dividend Paid |
(£3.7m) |
|
NAV 31.03.22 |
£136.2m |
UK Equity Segregated Portfolio
The objective of the UK Equity Segregated Portfolio is to produce total return in excess of the FTSE All-Share Index after costs, over any five year period, through a diversified portfolio of predominately UK Equities with the flexibility to invest up to 20% in shares listed outside of the UK. The portfolio is managed pari passu to the UK Equity Fund and includes a dedicated investment in smaller companies. Since the Company invested on 22 January 2014 the segregated portfolio has returned on an annualised basis 3.92% net of fees, which is an underperformance of 1.5% per annum compared to the benchmark return. In the six months to 31 March 2022, the UK Equity Segregated Portfolio returned -2.9% net of fees which is an underperformance of 7.6%.
The most significant positive and negative stock contributors to the relative performance of the UK Equity Segregated Portfolio for the six months to 31 March 2022, in %
|
Flutter Entertainment |
0.44 |
Underweight |
|
Prudential |
0.43 |
Underweight |
|
Barclays |
0.31 |
Underweight |
|
Scottish Mortgage Investment Trust |
0.27 |
Underweight |
|
Centrica |
0.25 |
Overweight |
|
Fevertree Drinks |
-0.59 |
Overweight |
|
HSBC |
-0.63 |
Underweight |
|
Glencore |
-0.70 |
Underweight |
|
AVEVA |
-0.79 |
Overweight |
|
UK Smaller Companies |
-1.48 |
Overweight |
|
|
|
|
The most significant positive and negative sector contributors to the relative performance of the UK Equity Segregated Portfolio for the six months to 31 March 2022, in %
|
Financials |
0.04 |
Underweight |
|
Real Estate |
-0.05 |
Underweight |
|
Telecommunications |
-0.10 |
Underweight |
|
Utlities |
-0.23 |
Underweight |
|
Industrials |
-0.25 |
Overweight |
|
Energy |
-0.32 |
Underweight |
|
Health Care |
-0.74 |
Underweight |
|
Basic Materials |
-0.83 |
Underweight |
|
Consumer Staples |
-0.86 |
Underweight |
|
Technology |
-1.00 |
Overweight |
|
Consumer Discretionary |
-1.35 |
Overweight |
The principal overweight and underweight stock positions of the UK Equity Segregated Portfolio at 31 March 2022 relative to the FTSE All-Share Index, in %
|
Electrocomponents |
2.75 |
Overweight |
|
NatWest |
2.62 |
Overweight |
|
Ascential |
2.47 |
Overweight |
|
3i |
2.27 |
Overweight |
|
Serco |
1.86 |
Overweight |
|
Rio Tinto |
-2.71 |
Underweight |
|
HSBC |
-2.85 |
Underweight |
|
Diageo |
-2.94 |
Underweight |
|
BP |
-2.95 |
Underweight |
|
British American Tobacco |
-2.99 |
Underweight |
The principal overweight and underweight sector positions of the UK Equity Segregated Portfolio at 31 March 2022 relative to the FTSE All-Share Index, in %
|
Industrials |
10.96 |
Overweight |
|
Consumer Discretionary |
5.62 |
Overweight |
|
Technology |
3.93 |
Overweight |
|
Telecommunications |
-1.43 |
Underweight |
|
Utilities |
-1.92 |
Underweight |
|
Energy |
-2.34 |
Underweight |
|
Health Care |
-2.60 |
Underweight |
|
Real Estate |
-3.31 |
Underweight |
|
Consumer Staples |
-4.52 |
Underweight |
|
Basic Materials |
-5.11 |
Underweight |
|
Financials |
-8.93 |
Underweight |
The Global Equity Fund
The Global Equity Fund was launched in June 2014. Its objective is to produce a total return in excess of the MSCI All Country World Index after costs over any five year period through an investment in a diversified portfolio of global equities. Since inception to 31 March 2022 the Global Equity Fund has returned on an annualised basis 13.1% net of fees for the sterling share class which is an outperformance of 0.6% per annum compared to the benchmark. In the six months to 31 March 2022 the Global Equity Fund returned -1.9% which is an underperformance of 5.3%.
The most significant positive and negative stock contributors to the relative performance of the Global Equity Fund for the six months to 31 March 2022, in %
|
Sociedad Quimica y Minera de Chile |
0.65 |
Overweight |
|
Anglo American |
0.63 |
Overweight |
|
Anthem |
0.45 |
Overweight |
|
Credicorp |
0.41 |
Overweight |
|
NVIDIA |
0.36 |
Overweight |
|
Frontdoor |
-0.53 |
Overweight |
|
M3 |
-0.66 |
Overweight |
|
Meta Platforms |
-0.78 |
Overweight |
|
Vertiv |
-0.78 |
Overweight |
|
Apple |
-0.79 |
Underweight |
The most significant positive and negative sector contributors to the relative performance of the Global Equity Fund for the six months to 31 March 2022, in %
|
Materials |
1.92 |
Overweight |
|
Information Technology |
0.13 |
Underweight |
|
Real Estate |
-0.06 |
Underweight |
|
Utilities |
-0.26 |
Underweight |
|
Consumer Stapes |
-0.27 |
Underweight |
|
Financials |
-0.27 |
Underweight |
|
Industrials |
-0.51 |
Overweight |
|
Energy |
-0.73 |
Underweight |
|
Health Care |
-1.40 |
Overweight |
|
Communication Services |
-1.63 |
Overweight |
|
Consumer Discretionary |
-1.99 |
Overweight |
The principal overweight and underweight stock positions of the Global Fund at 31 March 2022 relative to the MSCI All Country Index, in %
|
KPN |
2.2 |
Overweight |
|
Electronic Arts |
2.2 |
Overweight |
|
Zimmer Biomet |
2.2 |
Overweight |
|
Fiserv |
2.2 |
Overweight |
|
Sociedad Quimica y Minera de Chile |
1.9 |
Overweight |
|
Berkshire Hathaway |
-0.7 |
Underweight |
|
Johnson & Johnson |
-0.7 |
Underweight |
|
UniteHealth Group |
-0.7 |
Underweight |
|
Tesla |
-1.4 |
Underweight |
|
Apple |
-4.3 |
Underweight |
|
|
|
|
Geographic analysis of the Global Equity Fund at 31 March 2022, in %
|
Europe Ex-UK |
13.5 |
|
|
United Kingdom |
3.1 |
|
|
Emerging Markets |
14.6 |
|
|
Asia Pacific |
6.3 |
|
|
North America |
61.7 |
|
|
Cash |
0.9 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
International Equity Fund
The International Equity Fund was launched in December 2019 and its objective is to produce a total return in excess of the MSCI All Country World Index (ex US) after costs over any five year period. It is a high conviction fund which captures developed and emerging market opportunities and can invest up to 10% in US equities. Since inception the International Equity Fund has returned on an annualised basis 13.0% net of fees, for the sterling share class, which is an outperformance of 7.8% against its benchmark. In the six months to 31 March 2022 the International Equity Fund returned -5.9% which is an underperformance of 4.8%.
The most significant positive and negative stock contributors to the relative performance of the International Equity Fund for the six months to 31 March 2022, in %
|
Anglo American |
1.90 |
Overweight |
|
Sociedad Quimica y Minera de Chile |
1.86 |
Overweight |
|
Credicorp |
1.22 |
Overweight |
|
A.P. Moller - Maersk |
0.77 |
Overweight |
|
Vifor Pharma |
0.77 |
Overweight |
|
Sberbank Russia |
-1.03 |
Overweight |
|
Prosus |
-1.04 |
Overweight |
|
Ambu |
-1.06 |
Overweight |
|
Sea |
-1.58 |
Overweight |
|
M3 |
-1.62 |
Overweight |
The most significant positive and negative sector contributors to the relative performance of the International Equity Fund for the six months to 31 March 2022, in %
|
Materials |
3.62 |
Overweight |
|
Industrials |
0.67 |
Underweight |
|
Information Technology |
0.26 |
Overweight |
|
Real Estate |
0.03 |
Underweight |
|
Utilities |
-0.23 |
Underweight |
|
Energy |
-0.48 |
Underweight |
|
Consumer Stapes |
-0.66 |
Underweight |
|
Communication Services |
-1.56 |
Overweight |
|
Financials |
-1.59 |
Underweight |
|
Consumer Discretionary |
-1.91 |
Overweight |
|
Healthcare |
-3.05 |
Overweight |
The principal overweight and underweight stock positions of the International Equity Fund at 31 March 2022 relative to the MSCI All Country Index (ex US), in %
|
Sociedad Quimica y Minera de Chile |
4.7 |
Overweight |
|
Anglo American |
4.6 |
Overweight |
|
MercadoLibre |
4.0 |
Overweight |
|
Novo Nordisk |
4.0 |
Overweight |
|
Samsung SDI |
3.9 |
Overweight |
|
Alibaba |
-0.8 |
Underweight |
|
Tencent |
-1.1 |
Underweight |
|
ASML |
-1.1 |
Underweight |
|
Roche |
-1.1 |
Underweight |
|
Nestle |
-1.4 |
Underweight |
Geographic analysis of the International Equity Fund at 31 March 2022, in %
|
Europe Ex-UK |
24.7 |
|
|
United Kingdom |
7.4 |
|
|
Emerging Markets |
38.1 |
|
|
Asia Pacific |
16.6 |
|
|
North America |
11.6 |
|
|
Cash |
1.6 |
|
The Tortoise Fund
The Tortoise Fund is a global equity absolute return fund which was launched in August 2007. Its objective is to achieve positive absolute returns in all market conditions, through investment in long and synthetic short positions in equities over rolling three year time periods, with less volatility than a conventional long only equity fund. Since the Company invested on 29 January 2014 the fund has returned on an annualised basis 2.8% net of fees. In the six months to 31 March 2022 the Tortoise Fund has returned 7.9% net of fees. Currently the gross exposure of the fund is 147.7% of NAV and net exposure is 18.7% of NAV and the short positions are focused on S&P 500 and Nasdaq 100 futures.
The most significant positive and negative stock contributors to the absolute performance of the Tortoise Fund for the six months to 31 March 2022, in %
|
Gold Fields |
1.35 |
Long |
|
Freeport-McMoRan |
0.89 |
Long |
|
Newmont |
0.75 |
Long |
|
Shell |
0.70 |
Long |
|
Barrick Gold |
0.63 |
Long |
|
THG |
-0.30 |
Long |
|
Danone |
-0.33 |
Long |
|
HeidelbergCement |
-0.36 |
Long |
|
Union Pacific |
-0.38 |
Short |
|
Rolls-Royce |
-0.41 |
Long |
The most significant positive and negative sector contributors to the absolute performance of the Tortoise Fund for the six months to 31 March 2022, in %
|
Materials |
3.66 |
|
|
Health Care |
1.76 |
|
|
Energy |
1.40 |
|
|
Communication Services |
0.88 |
|
|
Financials |
0.72 |
|
|
Utilities |
0.67 |
|
|
Real Estate |
0.50 |
|
|
Industrials |
0.47 |
|
|
Information Technology |
0.40 |
|
|
Consumer Staples |
0.34 |
|
|
Consumer Discretionary |
-1.17 |
|
|
S&P and Nasdaq Futures |
-2.34 |
|
The principal long and short stock positions of the Tortoise Fund at 31 March 2022
|
Alibaba |
2.4 |
Long |
|
Gold Fields |
2.2 |
Long |
|
Barrick Gold |
2.1 |
Long |
|
Newmont |
2.0 |
Long |
|
Zimmer Biomet |
2.0 |
Long |
|
Pool Corporation |
-0.5 |
Short |
|
Advanced Micro Devices |
-1.0 |
Short |
|
Coinbase Global |
-1.1 |
Short |
|
Union Pacific |
-1.3 |
Short |
The principal long and short sector positions of the Tortoise Fund at 31 March 2022
|
Health Care |
15.1 |
|
|
Industrials |
13.4 |
|
|
Materials |
10.5 |
|
|
Consumer Stales |
8.8 |
|
|
Communication Services |
8.2 |
|
|
Consumer Discretionary |
7.2 |
|
|
Information Technology |
4.5 |
|
|
Energy |
4.1 |
|
|
Financials |
4.0 |
|
|
Utilities |
2.6 |
|
|
Real Estate |
1.0 |
|
|
S&P and Nasdaq Futures |
-60.7 |
|
Geographic and Sector Analysis at 31 March 2022
|
|
% Europe ex UK |
% United Kingdom |
% Emerging Markets |
% Asia Pacific |
% |
% Cash |
% Total |
|
Basic Materials |
|
1.8 |
1.6 |
|
2.9 |
|
6.3 |
|
Consumer Stapes |
0.3 |
5.3 |
|
|
1.4 |
|
7.0 |
|
Consumer Discretionary |
1.2 |
8.3 |
1.9 |
0.6 |
5.3 |
|
17.3 |
|
Financials |
0.6 |
6.7 |
0.8 |
0.5 |
2.1 |
|
10.7 |
|
Real Estate |
|
|
|
|
0.2 |
|
0.2 |
|
Health Care |
4.3 |
3.5 |
0.5 |
0.6 |
4.7 |
|
13.6 |
|
Industrials |
2.7 |
10.5 |
0.1 |
0.7 |
3.8 |
|
17.8 |
|
Energy |
0.9 |
3.4 |
|
|
0.5 |
|
4.8 |
|
Technology |
0.3 |
2.9 |
4.1 |
0.3 |
5.4 |
|
13.0 |
|
Telecommunications |
2.1 |
0.2 |
|
0.8 |
|
|
3.1 |
|
Utilities |
0.3 |
0.9 |
|
|
|
|
1.2 |
|
Cash |
|
|
|
|
|
5.0 |
5.0 |
|
|
|
|
|
|
|
|
|
|
|
12.7 |
43.5 |
9.0 |
3.5 |
26.3 |
5.0 |
100.0 |
|
Futures* |
|
|
|
|
(10.1) |
|
|
Notes:
The assets analysed above are the net exposures of the UK Equity Segregated Portfolio, Global Equity Fund, International Equity Fund and the Tortoise Fund. The Tortoise Fund as an absolute return fund invests through equities, CFDs and futures. The net exposure of the fund is shown in the table. The aggregate of the funds represents a total of 90.2% of the Company's total assets.
Exposures are classified by the stock exchange on which the underlying stocks is listed and by the relevant FTSE sector classification.
*The Tortoise Fund has short positions on the S&P 500 and the Nasdaq 100 indices.
Thirty Largest Portfolio Holdings
at 31 March 2022
|
Company |
Fair Value £000 |
% of Total Assets |
|
Liontrust Asset Management PLC |
8,424 |
5.4 |
|
Shell plc |
4,799 |
3.1 |
|
AstraZeneca plc |
2,636 |
1.7 |
|
Anglo American plc |
2,414 |
1.5 |
|
NatWest Group PLC |
2,082 |
1.3 |
|
Royal KPN NV |
2,075 |
1.3 |
|
RS Group plc (formerly Electrocomponents PLC) |
1,877 |
1.2 |
|
Tesco PLC |
1,863 |
1.2 |
|
3i Group plc |
1,786 |
1.1 |
|
Amazon.com, Inc. |
1,782 |
1.1 |
|
RELX PLC |
1,692 |
1.1 |
|
Microsoft Corporation |
1,661 |
1.1 |
|
Newmont Corporation |
1,655 |
1.1 |
|
Ascential PLC |
1,639 |
1.0 |
|
Unilever plc |
1,572 |
1.0 |
|
Barrick Gold Corporation |
1,556 |
1.0 |
|
Compass Group plc |
1,544 |
1.0 |
|
Fevertree Drinks PLC |
1,500 |
1.0 |
|
Zimmer Biomet Holdings, Inc. |
1,417 |
0.9 |
|
Sociedad Quimica y Minera de Chile S.A. |
1,411 |
0.9 |
|
Alphabet Inc. |
1,349 |
0.9 |
|
NVIDIA Corporation |
1,349 |
0.9 |
|
Taiwan Semiconductor Manufacturing Co., Ltd. |
1,330 |
0.8 |
|
Ashtead Group PLC |
1,288 |
0.8 |
|
Weir Group PLC |
1,275 |
0.8 |
|
St. James Place PLC |
1,270 |
0.8 |
|
TotalEnergies SE |
1,266 |
0.8 |
|
Thales SA |
1,262 |
0.8 |
|
Novo Nordisk A/S |
1,254 |
0.8 |
|
Samsung Electronics Co., Ltd |
1,254 |
0.8 |
|
Total |
58,282 |
37.2% |
The Tortoise Fund holds two short future positions in S&P500 and Nasdaq 100 that are, in aggregate 9.1% of total assets.
Discount
The Board continues to monitor the Company's discount to NAV and will take action when appropriate. The Company bought back 7,092 shares in the six months to 31 March 2022.
Outlook
Stock markets volatility has continued and growth stocks, in particular, have suffered a further de-rating. Investor sentiment is unsurprisingly low, faced with the headwinds of inflation, hawkish Central Banks, a slowing economy and war in Europe. Markets are rated at 30% below their peak last year and, apart from the US, are below their long term medians. In general corporate earnings, thus far, have been resilient and though earnings revisions have sharply decelerated from last year, they remain positive. It seems likely that there will be a significant slowdown in the second half of 2022, the only question is the magnitude.
The current volatility reflects the wide range of outcomes that could occur for the global economy and earnings. In such an uncertain background fund managers such as the Global Fundamental Team at Liontrust, that focus on detailed, research based stock selection, should thrive. Their flexible approach allows them to invest in companies that are significantly mis-priced and avoid the rigid selection criteria that style based managers face.
In terms of asset allocation it is encouraging the UK equity market has continued its relative good performance as investors recognise its low relative and historic valuation. Takeover bids from corporates and private equity remain a feature and validate the attractive valuation. The company retains a relatively high exposure to the UK. The holding in the Tortoise Fund remains a key differentiating factor for the Company and as a Global Equity Long/Short Fund with a value bias it has successfully navigated the volatile markets and continues to perform well.
William Barlow
Chief Executive
For and on behalf of the Board
24 May 2022
Interim Management Report
The important events that have occurred during the period under review, the key factors influencing the financial statements and the principal uncertainties for the remaining six months of the financial year are set out in the Chief Executive's Report above. This Half- Yearly Financial Report has not been audited or reviewed by the Company's auditor.
The financial statements continue to be prepared on a going concern basis. The approach used for the Annual Report is applied, giving proper consideration to financial and cashflow forecasts, including any on-going COVID-19 impacts, and it is believed that the Company has adequate financial resources to continue to operate for a period of at least twelve months from the date on which these financial statements were approved.
The principal risks facing the Company remain unchanged since the date of the Annual Report for the year ended 30 September 2021, as set out in the Business Review section of the Strategic Report (pages 25 to 26). The recovery from COVID-19 continues to add uncertainty to global equity markets, both economically and politically, with the impact on the Company as set out in the Chief Executive's Report. The Company and its service providers continue to maintain operations and service levels effectively. Risks faced by the Company include, but are not limited to, market risk, operational risk, discount volatility, compliance risk (including non-compliance with Section 1158 of the Corporation Tax Act 2010) and financial risk.
In accordance with the Disclosure Guidance and Transparency Rules 4.2.7R and 4.2.8R, we confirm that to the best of our knowledge:
(a) the condensed set of financial statements has been prepared in accordance with International Accounting Standard (IAS) 34, Interim Financial Reporting, as required by the Disclosure Guidance and Transparency Rule 4.2.4R, and gives a true and fair view of the assets, liabilities and financial position of the Company;
(b) the Chief Executive's Report includes a fair review of the information required to be disclosed under the Disclosure Guidance and Transparency Rule 4.2.7R, interim management report. This includes (i) an indication of important events that have occurred during the first six months of the financial year, and their impact on the condensed set of financial statements presented in the Half-Yearly Financial Report and (ii) a description of the principal risks and uncertainties for the remaining six months of the financial year; and
(c) except as disclosed in the Chief Executive's Report, and in note 15, in respect of the sale of the Company's investment in MAM to Liontrust, there were no changes in the transactions or arrangements with related parties as described in the Annual Report for the year ended 30 September 2021 that would have had a material effect on the financial position or performance of the Company in the first six months of the current financial year.
Christopher D Getley
Chairman
For and on behalf of the Board
24 May 2022
Condensed Statement of Comprehensive Income
for the half year ended 31 March 2022
|
|
|
Half year ended (unaudited) |
Half year ended (unaudited) |
Year ended (audited) |
||||||
|
|
Notes |
Revenue |
Capital |
Total |
Revenue |
Capital |
Total |
Revenue |
Capital |
Total |
|
|
|
|
|
|
|
|
|
|
|
|
|
Investments |
|
|
|
|
|
|
|
|
|
|
|
(Losses)/ gains on investments at fair value through profit or loss |
|
|
(12,650) |
(12,650) |
|
18,808 |
18,808 |
|
23,839 |
23,839 |
|
Net investment result |
|
|
(12,650) |
(12,650) |
|
18,808 |
18,808 |
|
23,839 |
23,839 |
|
Income |
|
|
|
|
|
|
|
|
|
|
|
Income from investments |
2 |
1,994 |
|
1,994 |
3,662 |
|
3,662 |
6,078 |
|
6,078 |
|
Other income |
2 |
43 |
|
43 |
44 |
|
44 |
70 |
|
70 |
|
Total income |
|
2,037 |
|
2,037 |
3,706 |
|
3,706 |
6,148 |
|
6,148 |
|
Management fees |
|
(40) |
(121) |
(161) |
(35) |
(106) |
(141) |
(76) |
(228) |
(304) |
|
Administration expenses |
|
(349) |
(319) |
(668) |
(366) |
(324) |
(690) |
(681) |
(573) |
(1,254) |
|
Return/(loss) before finance costs and |
|
1,648 |
(13,090) |
(11,442) |
3,305 |
18,378 |
21,683 |
5,391 |
23,038 |
28,429 |
|
Finance costs |
|
(193) |
(573) |
(766) |
(194) |
(572) |
(766) |
(387) |
(1,145) |
(1,532) |
|
Net return/(loss) before taxation |
|
1,455 |
(13,663) |
(12,208) |
3,111 |
17,806 |
20,917 |
5,004 |
21,893 |
26,897 |
|
Taxation |
3 |
(13) |
|
(13) |
(9) |
|
(9) |
(15) |
|
(15) |
|
Net return/(loss) after taxation for the |
|
1,442 |
(13,663) |
(12,221) |
3,102 |
17,806 |
20,908 |
4,989 |
21,893 |
26,882 |
|
Return per ordinary share: |
|
pence |
pence |
pence |
pence |
pence |
pence |
pence |
pence |
pence |
|
Basic |
4 |
2.7 |
(25.8) |
(23.1) |
5.9 |
33.6 |
39.5 |
9.4 |
41.3 |
50.7 |
|
|
|
|
|
|
|
|
|
|
|
|
|
The total column of this statement is the statement of Comprehensive Income of the Company. The supplementary revenue return and capital return columns are prepared under guidance published by the Association of Investment Companies (AIC).
See notes 1 to 16. |
||||||||||
Condensed Statement of Changes in Equity
for the half year ended 31 March 2022
|
|
Notes |
Share |
Share |
Capital |
Capital Reserve £'000 |
Retained Earnings £'000 |
Total £'000 |
|
|
|
|
|
|
|
|
|
|
Half year ended 31 March 2022 (unaudited) |
|
|
|
|
|
|
|
|
1 October 2021 |
|
5,300 |
3,054 |
100 |
119,393 |
24,306 |
152,153 |
|
Share buybacks for |
12 |
(1) |
|
1 |
(16) |
|
(16) |
|
Net return after taxation for |
6 |
|
|
|
(13,663) |
1,442 |
(12,221) |
|
Dividends declared and paid |
|
|
|
|
|
(3,710) |
(3,710) |
|
31 March 2022 |
|
5,229 |
3,054 |
101 |
105,714 |
22,038 |
136,206 |
|
|
|
|
|
|
|
|
|
|
Half year ended 31 March 2021 (unaudited) |
|
|
|
|
|
|
|
|
1 October 2020 |
|
5,301 |
3,054 |
99 |
97,518 |
25,361 |
131,333 |
|
Net return after taxation |
|
|
|
|
17,806 |
3,102 |
20,908 |
|
Dividends declared and paid |
6 |
|
|
|
|
(3,711) |
(3,711) |
|
31 March 2021 |
|
5,301 |
3,054 |
99 |
115,324 |
24,752 |
148,530 |
|
|
|
|
|
|
|
|
|
|
Year ended 30 September 2021 (audited) |
|
|
|
|
|
|
|
|
1 October 2020 |
|
5,301 |
3,054 |
99 |
97,518 |
25,361 |
131,333 |
|
Share buybacks for |
12 |
(1) |
|
1 |
(18) |
|
(18) |
|
Net return/(loss) after taxation |
|
|
|
|
21,893 |
4,989 |
26,882 |
|
Dividends declared and paid |
6 |
|
|
|
|
(6,044) |
(6,044) |
|
30 September 2021 |
|
5,300 |
3,054 |
100 |
119,393 |
24,306 |
152,153 |
Condensed Balance Sheet
as at 31 March 2022
|
|
Notes |
31 March (unaudited) |
31 March (unaudited) |
30 September (audited) |
|
Non-current assets |
|
|
|
|
|
Property and equipment |
|
214 |
277 |
244 |
|
Investments at fair value through profit or loss |
7, 8 |
148,026 |
164,567 |
170,550 |
|
|
|
148,240 |
164,844 |
170,794 |
|
Current assets |
|
|
|
|
|
Trade and other receivables |
|
598 |
546 |
400 |
|
Cash and cash equivalents |
|
9,295 |
5,256 |
3,162 |
|
|
|
9,893 |
5,802 |
3,562 |
|
Total assets |
|
158,133 |
170,646 |
174,356 |
|
|
|
|
|
|
|
Current liabilities |
|
|
|
|
|
Trade and other payables |
|
(1,148) |
(1,307) |
(1,405) |
|
Total assets less current liabilities |
|
156,985 |
169,339 |
172,951 |
|
|
|
|
|
|
|
Non-current liabilities |
|
|
|
|
|
Debentures and lease liability |
14 |
(20,779) |
(20,809) |
(20,798) |
|
Total liabilities |
|
(21,927) |
(22,116) |
(22,203) |
|
Net assets |
|
136,206 |
148,530 |
152,153 |
|
|
|
|
|
|
|
Represented by: |
|
|
|
|
|
Ordinary share capital |
12 |
5,299 |
5,301 |
5,300 |
|
Share premium account |
|
3,054 |
3,054 |
3,054 |
|
Capital redemption reserve |
|
101 |
99 |
100 |
|
Capital reserve |
|
105,714 |
115,324 |
119,393 |
|
Revenue reserve |
|
22,038 |
24,752 |
24,306 |
|
Equity Shareholders' Funds |
|
136,206 |
148,530 |
152,153 |
|
Net asset value per share |
|
pence |
pence |
pence |
|
Basic |
11 |
257.0 |
280.2 |
287.1 |
Condensed Cash Flow Statement
for the half year ended 31 March 2022
|
|
Notes |
Half year ended (unaudited) |
Half year ended (unaudited) |
Year ended (audited) |
|
|
|
|
|
|
|
Net cash inflow from operating activities |
13 |
10,662 |
2,218 |
3,223 |
|
Investing activities |
|
|
|
|
|
Purchase of tangible assets |
|
|
(2) |
(1) |
|
Initial direct costs incurred for the right-of-use asset |
|
|
(6) |
(15) |
|
Net cash outflow from investing |
|
|
(8) |
(16) |
|
Financing activities |
|
|
|
|
|
Interest paid on debentures |
14 |
(750) |
(750) |
(1,501) |
|
Interest paid on lease liability |
14 |
(2) |
(4) |
(6) |
|
Dividends paid |
6 |
(3,710) |
(3,711) |
(6,044) |
|
Lease liability principal payments |
14 |
(33) |
(14) |
(19) |
|
Share buybacks for cancellation |
|
(34) |
|
|
|
|
|
|
|
|
|
Net cash outflow from financing |
|
(4,529) |
(4,479) |
(7,570) |
|
Increase/decrease in cash and cash |
|
6,133 |
(2,269) |
(4,363) |
|
|
|
|
|
|
|
Cash and cash equivalents at start of period |
|
3,162 |
7,525 |
7,525 |
|
|
|
|
|
|
|
Cash and cash equivalents at end of period |
|
9,295 |
5,256 |
3,162 |
Notes to the Accounts
as at 31 March 2022
1. Accounting Policies
The Condensed Financial Statements above comprise the unaudited results of the Company for the six months to 31 March 2022 and are presented in pounds sterling, as this is the functional currency of the Company.
The Condensed Financial Statements have been prepared in accordance with IAS 34 "Interim Financial Reporting". They do not include all financial information required for full financial statements. The Condensed Financial Statements have been prepared using the accounting policies adopted in the audited financial statements for the year ended 30 September 2021.
New standards, interpretations and amendments adopted by the Company
The accounting policies adopted in the preparation of the interim condensed financial statements are consistent with those followed in the preparation of the Company's annual financial statements for the year ended 30 September 2021. Since 1 October 2021 the following new standards or amendments were adopted - being amendments to IFRS 9, IAS 39, IFRS 7, IFRS 4 and IFRS 16 and COVID-19 related rent concessions amendment to IFRS 16. The Directors note that the adoption of these amendments will not have any material impact on the Company.
2. Income
|
|
|
|
|
|
|
Half year ended |
Half year ended |
Year ended 30 September |
|
Income from investments |
|
|
|
|
Dividend income* |
1,741 |
3,528 |
5,647 |
|
Accumulation dividend income |
167 |
76 |
326 |
|
Overseas dividend income |
86 |
58 |
105 |
|
|
1,994 |
3,662 |
6,078 |
|
Other income |
|
|
|
|
Interest income |
|
|
|
|
Sundry income |
43 |
44 |
70 |
|
|
43 |
44 |
70 |
|
Total income |
2,037 |
3,706 |
6,148 |
|
Income from investments |
|
|
|
|
Listed UK |
591 |
440 |
1,408 |
|
Listed overseas |
86 |
58 |
105 |
|
Unlisted - MAM Funds |
167 |
288 |
538 |
|
Unlisted |
1,150 |
2,876 |
4,027 |
|
|
1,994 |
3,662 |
6,078 |
|
|
|
|
|
* Includes MAM dividend income of £1,150,000 (half year to 31 March 2021: £2,876,000 and the year ended 30 September 2021: £4,027,000).
3. Taxation
The charge for the half year to 31 March 2022 is £13,000 (half year to 31 March 2021: £9,000; year ended 30 September 2021: £15,000). These amounts represent irrecoverable withholding tax paid on overseas investment income.
The Company has an effective corporation tax rate of 0%. As investment gains are exempt from tax owing to the Company's status as an approved Investment Trust, and as there is currently an excess of management expenses over taxable income, there is no charge for corporation tax.
4. Calculation of returns per ordinary share
Basic returns per ordinary share in each period are based on the return on ordinary activities after taxation attributable to equity shareholders. Basic return per ordinary share for the period is based on 52,999,278 shares (half year ended 31 March 2021: 53,013,887 shares, and the year ended 30 September 2021: 53,013,842), being the weighted average number of shares in issue.
5. Business segments
For management purposes the Company is organised into one principal activity, being investing activities, as described 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.
6. Dividends
In accordance with IAS 10: Events After the Balance Sheet Date, interim dividends are not accounted for until paid. The following table summarises the amounts recognised as distributions to equity holders in the relevant period:
|
|
Half year ended 31 March £'000 |
Half year ended 31 March £'000 |
Year ended 30 September £'000 |
|
2021 Final dividend of 7.00p paid on |
3,710 |
|
|
|
2021 Interim dividend of 4.40p paid on |
|
|
2,333 |
|
2020 Final dividend of 7.00p paid on 26 January 2021 |
|
3,711 |
|
|
|
3,710 |
3,711 |
6,044 |
Distributable reserves of the Company comprise the Capital and Revenue Reserves.
Dividends for the half year ended 31 March 2022 (and for the half year ended 31 March 2021 and the year ended 30 September 2021) have been solely made from the Revenue Reserve.
7. Investments
All investments are designated upon initial recognition as held at fair value through profit or loss, and are measured at subsequent reporting dates at fair value, which is either the bid price or the last traded price for listed securities, depending on the convention of the exchange on which the investment is quoted. Investments in unit trusts or open ended investment companies are valued at the closing price, the bid price or the single price as appropriate, released by the relevant investment manager.
Fair values for unquoted investments, or investments for which the market is inactive, are established by using various valuation techniques in accordance with the International Private Equity and Venture Capital Valuation Guidelines (IPEV). These may include recent arm's length market transactions, the current fair value of another instrument which has substantially the same earnings multiples, discounted cash flow analysis and option pricing models. Where there is a valuation technique commonly used by market participants to price the instrument and that technique has been demonstrated to provide reliable estimates of prices obtained in actual market transactions, that technique is utilised.
8. Fair Value Hierarchy
Except for the Company's 7.25% 2025 Debenture Stock, which is measured at amortised cost under the effective interest rate method, financial assets and liabilities of the Company (re investments) are carried in the Balance Sheet at their fair value. Additionally the balance sheet amount is a reasonable approximation of fair value (re amounts in respect of sales for future settlement, dividends receivable, cash at bank, purchases for future settlement and the lease liability). The fair value is the amount at which the asset could be sold or the liability transferred in a current transaction between market participants, other than a forced or liquidation sale.
The table below sets out fair value measurements of financial assets in accordance with the IFRS 13 fair value hierarchy:
|
|
Half year ended 31 March 2022 |
|||
|
|
Level 1 |
Level 2 |
Level 3 |
Total |
|
Financial assets |
£'000 |
£'000 |
£'000 |
£'000 |
|
Financial assets held at fair value |
|
|
|
|
|
Equities and managed funds |
|
|
|
|
|
Listed equity securities |
65,507 |
|
|
65,507 |
|
Unlisted equity securities (Liontrust Funds) |
|
82,477 |
|
82,477 |
|
Unlisted equity securities |
|
|
42 |
42 |
|
|
65,507 |
82,477 |
42 |
148,026 |
|
|
Half year ended 31 March 2021 |
|||
|
|
Level 1 |
Level 2 |
Level 3 |
Total |
|
Financial assets |
£'000 |
£'000 |
£'000 |
£'000 |
|
Financial assets held at fair value |
|
|
|
|
|
Equities and managed funds |
|
|
|
|
|
Listed equity securities |
55,917 |
|
|
55,917 |
|
Unlisted equity securities (MAM Funds) |
|
83,305 |
|
83,305 |
|
Unlisted equity securities |
|
|
25,345 |
25,345 |
|
|
55,917 |
83,305 |
25,345 |
164,567 |
|
|
|
|||
|
|
Year ended 30 September 2021 |
|||
|
|
Level 1 |
Level 2 |
Level 3 |
Total |
|
Financial assets |
£'000 |
£'000 |
£'000 |
£'000 |
|
Financial assets held at fair value |
|
|
|
|
|
Equities and managed funds |
|
|
|
|
|
Listed equity securities |
60,563 |
|
|
60,563 |
|
Unlisted equity securities (MAM Funds) |
|
84,786 |
|
84,786 |
|
Unlisted equity securities |
|
|
25,201 |
25,201 |
|
|
60,563 |
84,786 |
25,201 |
170,550 |
There have been no transfers during the period between Levels 1, 2 and 3.
Investments whose values are based on quoted market prices in active markets, and are therefore classified as Level 1, include active listed equities. The Company does not adjust the quoted price for these instruments in normal market conditions (although it may invoke its fair value pricing policy in times of market disruption - this was not the case for 31 March 2022, 31 March 2021 or 30 September 2021).
Financial instruments that trade in markets that are not considered to be active but are valued based on quoted market prices, dealer quotations or alternative pricing sources supported by observable inputs are classified as Level 2. As Level 2 instruments include positions that are not traded in active markets and/or are subject to transfer restrictions, valuations may be adjusted to reflect illiquidity and/or non-transferability, which are generally based on available market information (the MAM/ Liontrust funds are priced daily, remain highly liquid and are not subject to any such adjustments).
Instruments classified within Level 3 have significant unobservable inputs. Level 3 instruments include private equity and corporate debt securities. As observable prices are not available for these securities, the Company has used valuation techniques to derive fair value. In respect of unquoted instruments, or where the market for a financial instrument is not active, fair value is established by using recognised valuation methodologies, in accordance with IPEV Valuation Guidelines. New instruments are initially valued at cost, for a limited period, being the price of the most recent investment in the investee. This is in accordance with IPEV Guidelines as the cost of recent investments will generally provide a good indication of fair value. Fair value is the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date.
The Company's current level 3 classified investments comprise certain individually immaterial unlisted investments, which total in aggregate £42,000. The investment in MAM was sold during the period and further details are contained in note 10 and the Chief Executive's Report.
The table below sets out the movement in Level 3 instruments for the period:
|
|
31 March 2022 |
|
|
|
Total |
Equity investments |
|
Opening balance |
25,201 |
25,201 |
|
Total consideration re the sale of the investment in MAM |
(20,783) |
(20,783) |
|
Total net loss for the period included in the Condensed |
(4,376) |
(4,376) |
|
|
42 |
42 |
The fair value of the Company's debenture stock is calculated using a standard present value methodology and by reference to the market yields of a comparable UK Treasury Bond instrument with a 2.50% risk premium being added.
|
|
Half year ended 31 March 2022 |
Half year ended 31 March 2021 |
Year ended 30 September 2021 |
|||
|
Financial liabilities |
Book value |
Fair value |
Book value |
Fair value |
Book value |
Fair value |
|
£20.7m (2017: £20.7m) 7.25% |
20,609 |
22,600 |
20,582 |
24,208 |
20,595 |
23,617 |
|
Lease liability (including |
235 |
235 |
282 |
282 |
268 |
268 |
|
|
20,844 |
22,835 |
20,864 |
24,490 |
20,863 |
23,885 |
The above financial liabilities would be classified as Level 3 financial instruments in the IFRS 13 Fair Value Hierarchy.
9. Principal financial risks
The principal risks which the Company faces include exposure to:
• Market risk
• Foreign currency risk
• Interest rate risk
• Other price risk
• Credit risk
• Liquidity risk
Further details of the Company's management of these risks and the exposure to them are set out in Note 22 of the Company's Annual Report for the year ended 30 September 2021, as issued on 13 December 2021. There have been no changes to the management of these risks since that date, although the Company's exposure to liquidity and concentration risk has substantially reduced following the sale of the investment in MAM.
10. Majedie Asset Management Limited (MAM)
On 7 December 2021 Liontrust Asset Management PLC (Liontrust) announced that it had entered into a conditional agreement to purchase the entire share capital of MAM, in which the Company had a 17.6% shareholding. The transaction became unconditional on 25 March 2022 with completion in two parts, initially on 1 April 2022 and a final completion which is expected to be finalised and paid in June 2022.
The consideration for MAM shareholders is made up of shares in Liontrust and cash.
Also before completion MAM shareholders will receive a 2021 year final dividend and a special dividend. The 2021 year final dividend has been taken to income (see note 2 above).
Additionally there is further deferred consideration of cash and Liontrust shares which may potentially be due three years after completion that is dependent on future investment performance and growth in assets under management.
In accordance with IFRS 3 the transaction has been accounted for as follows:
|
|
Half Year ended 31 March 2022 |
|
|
|
|
|
|
Consideration |
£'000 |
£'000 |
|
Liontrust Shares* |
14,057 |
|
|
Cash & Liontrust shares - to be finalised and due in June 2022^ |
255 |
|
|
Cash - Special Dividend |
6,471 |
|
|
|
|
|
|
Total consideration recognised |
|
20,783 |
|
Book cost |
|
540 |
|
|
|
|
|
Realised gain on the Sale of MAM holding |
|
20,243 |
* The consideration for the Liontrust shares is valued as per the reference price included in the agreement. The value of these shares using the share price of Liontrust shares as at 31 March 2022 is £8.2m.
^ The actual consideration will be known at final completion in June 2022 and includes Liontrust shares valued using the reference price as per the agreement. The consideration received will be amended once final figures are derived. The value of the consideration due using the Liontrust share price as at 31 March 2022 is £0.2m.
The additional deferred consideration aspect of the transaction has also been analysed to determine how and what value should be assigned to it. It has been determined that, at this time, no value should be assigned to the deferred consideration, however this will be reviewed regularly as required under IFRS 3.
11. Net Asset Value
The net asset value per share has been calculated based on Equity Shareholders' Funds and on 52,998,795 (31 March 2021: 53,013,887 and 30 September 2021: 53,005,887) ordinary shares, being the number of shares in issue at the relevant period end.
12. Share capital
|
|
Half year ended |
Half year ended |
Year ended |
|
Opening balance |
53,005,887 |
53,013,887 |
53,013,887 |
|
Shares purchased for cancellation |
(7,092) |
|
(8,000) |
|
Closing balance |
52,998,795 |
53,013,887 |
53,005,887 |
Share buybacks are debited against the Capital Reserve in accordance with the Company's articles.
13. Reconciliation of Operating Profit to Operating Cash Flow
|
|
Half year ended |
Half year ended |
Year ended |
|
Net (loss)/gain before taxation |
(12,208) |
20,917 |
26,897 |
|
Adjustments for: |
|
|
|
|
Losses/(gains) on investments |
12,650 |
(18,808) |
(23,839) |
|
Accumulation dividends |
(167) |
(76) |
(326) |
|
Depreciation |
31 |
34 |
66 |
|
Foreign exchange (losses)/gains |
|
(2) |
2 |
|
Purchases of investments |
(13,936) |
(39,344) |
(47,536) |
|
Sales of investments |
23,671 |
38,787 |
46,496 |
|
|
10,041 |
1,508 |
1,760 |
|
|
|
|
|
|
Finance costs |
766 |
766 |
1,532 |
|
Operating cash flows before movements in |
10,807 |
2,274 |
3,292 |
|
(Decrease)/increase in trade and other payables |
(28) |
18 |
42 |
|
(Increase)/decrease in trade and other receivables |
(96) |
(80) |
(106) |
|
Net cash flow from operating activities before tax |
10,683 |
2,212 |
3,228 |
|
Tax recovered |
2 |
17 |
19 |
|
Tax on overseas dividends |
(23) |
(11) |
(24) |
|
Net cash inflow from operating activities |
10,662 |
|
3,223 |
14. Reconciliation of changes in liabilities arising from financing activities
|
|
1 October 2021 |
Cash flows £000 |
Other (non cash) |
Amortisation of expenses (non cash) £000 |
2022 £000 |
|
Long term borrowings |
|
|
|
|
|
|
£20.7m 7.25% 2025 debenture stock |
20,595 |
|
|
14 |
20,609 |
|
Lease Liability |
203 |
(33) |
|
|
170 |
|
Interest payable on debenture stock |
|
(750) |
|
750 |
|
|
Interest payable on lease liability |
|
(2) |
|
2 |
|
|
Total liabilities from financing |
20,798 |
(785) |
|
766 |
20,779 |
|
|
1 October 2020 £000 |
Cash flows £000 |
Other (non cash) |
Amortisation of expenses (non cash) £000 |
31 March 2021 £000 |
|
Long term borrowings |
|
|
|
|
|
|
£20.7m 7.25% 2025 debenture stock |
20,570 |
|
|
12 |
20,582 |
|
Lease Liability |
250 |
(14) |
(9) |
|
227 |
|
Interest payable on debenture stock |
|
(4) |
|
4 |
|
|
Interest payable on lease liability |
|
(750) |
|
750 |
|
|
Total liabilities from financing |
20,820 |
(768) |
(9) |
766 |
20,809 |
|
|
1 October 2020 £000 |
Cash flows £000 |
Other (non cash) |
Amortisation of expenses (non cash) £000 |
30 September 2021 £000 |
|
Long term borrowings |
|
|
|
|
|
|
£20.7m 7.25% 2025 debenture stock |
20,570 |
|
|
25 |
20,595 |
|
Lease liability |
250 |
(25) |
(28) |
6 |
203 |
|
Interest payable on |
|
(1,501) |
|
1,501 |
|
|
Total liabilities from financing activities |
20,820 |
(1,526) |
(28) |
1,532 |
20,798 |
15. Related Party Transactions
Majedie Asset Management (MAM) & Liontrust Asset Management PLC (Liontrust)
MAM was the Company's Investment Manager until 25 March 2022 (Liontrust subsequently, following its acquisition of MAM) providing investment management services under an Investment Agreement. The agreement provides for MAM/Liontrust to manage the Company's investment assets on both a segregated portfolio basis and also by investments into various collective investment vehicles or funds. Details of the Investment Agreement are contained in the material contracts section of the Directors' Report in the Company's Annual Report for the year ended 30 September 2021. As Investment Manager, MAM/Liontrust is entitled to receive investment management fees. In respect of the Segregated Portfolio these are charged directly to the Company and are shown as an expense in its accounts. Any management fees due in respect of the investments made into any funds are charged in the fund and are therefore included as part of the investment value of the relevant holding. MAM/Liontrust is also entitled to performance fees in respect of the investment in the Tortoise fund. The fees crystallise annually on 31 December and are calculated and charged against each individual investor. As such these are also shown as an expense in the Company's accounts and are charged wholly to capital. Details concerning the Company's investments in the period in the funds are shown in the Chief Executive's Report above.
In addition to the above, the Company did have an investment in MAM itself but this has now been sold following the acquisition of MAM by Liontrust. Mr JWM Barlow was a non-executive director of MAM until 15 March 2022 but received no remuneration for this role. Details concerning the sale of the Company's investment in MAM are included in the Chief Executive's Report above and in note 10.
The table below discloses the transactions and balances between the Company and those entities:
|
|
Half year ended |
Half year ended |
Year ended |
|
|
31 March 2022
|
31 March 2021
|
30 September 2021
|
|
Transactions during the period: |
£'000 |
£'000 |
£'000 |
|
|
|
|
|
|
Dividend income received from MAM |
1,150 |
2,876 |
4,027 |
|
Consideration re the sale of the Company's holding In MAM |
20,783 |
|
|
|
Management fee income due to MAM/ Liontrust (Segregated Portfolio only) |
161 |
141 |
304 |
|
Balances outstanding at the period end: |
|
|
|
|
Between the Company and MAM/ Liontrust (Segregated Portfolio investment management fees) |
77 |
70 |
81 |
|
Value of the Company's investment in Liontrust |
8,207 |
|
|
|
Value of the Company's investment in MAM |
|
25,310 |
25,161 |
Transactions between related party companies during the period were made on terms equivalent to those that occur in arm's length transactions.
16. Financial Information
The financial information contained in this Half-Yearly Financial Report does not constitute full statutory accounts as defined in section 434 of the Companies Act 2006.
The information for the year ended 30 September 2021 has been extracted from the latest published audited accounts. Those accounts have been filed with the Registrar of Companies and included the report of the auditors which was unqualified and did not contain a statement under section 498(2) or (3) of the Companies Act 2006. Those statutory accounts were prepared in accordance with International Accounting Standards in conformity with the requirements of the Companies Act 2006.
Company Information
|
Board of Directors |
Depositary |
|
CD Getley Chairman |
The Bank of New York Mellon |
|
J M Lewis |
(International) Limited |
|
J W M Barlow (Executive) |
1 Canada Square |
|
A M J Little |
London E14 5AL |
|
R W Killingbeck All Directors are non-executive unless indicated
|
The Depositary acts as global custodian and may delegate safekeeping to one or more global sub-custodians. The Depositary has delegated safe keeping of the assets of the Company to The Bank of New York Mellon SA/NV and the Bank of New York Mellon. |
|
Registered Office 1 King's Arms Yard London EC2R 7AF Telephone: 020 7382 8170 E-mail: [email protected] Registered number: 109305 England
Company Secretary Link Company Matters Limited 6th Floor 65 Gresham Street London EC2V 7NQ
Fund Manager Liontrust Investment Partners LLP 2 Savoy Court London WC2R OEZ Telephone: 020 7412 1700 E-mail: [email protected]
|
AIFM Majedie Investments PLC
Registrars Computershare Investor Services PLC The Pavilions Bridgwater Road Bristol BS99 6ZZ Telephone: 0370 707 1159
Auditors Ernst & Young LLP 25 Churchill Place Canary Wharf London E14 5EY
Stockbrokers J.P. Morgan Cazenove 25 Bank Street London E14 5JP
|
|
Solicitor Dickson Minto W.S. 16 Charlotte Square Edinburgh EH2 4DF |
Website www.majedieinvestments.com |
|
|
|
|
Financial Calendar |
|
|
Year end |
30 September |
|
Annual results |
December |
|
Half year results |
May |
|
Annual General Meeting |
January |
|
Dividends paid |
January and June |
|
|
|
|
2022 Interim Dividend Timetable |
|
|
The interim dividend for the period ended 31 March 2022 is 4.4p per share. |
|
|
|
|
|
Ex-dividend date |
1 June |
|
Record date |
6 June |
|
Payment date |
24 June |
|
|
|