Correction : Annual Financial Report

This announcement replaces the previous release made on 25 November 2011. The 'Enquiries' section has now been amended, no other changes have been made to the release. MAJEDIE INVESTMENTS PLC ANNUAL FINANCIAL REPORT FOR THE YEAR ENDED 30 SEPTEMBER 2011 The full Annual Report and Accounts can be accessed via the Company's website at www.majedie.co.uk or by contacting the Company Secretary on telephone number 01392 412122. The Directors present the results of the Company for the year ended 30 September 2011. 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 Javelin Capital LLP, though it may invest in unquoted securities up to levels set periodically by the Board, including its investment in Majedie Asset Management Limited. Investments in unquoted securities, other than those managed by Javelin Capital LLP, (measured by reference to the Company's cost of investment) will not exceed 10 per cent 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 per cent of the value of its gross assets. 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 are split into four major groups. These are the Core Portfolio, funds managed by Javelin Capital LLP, and the Company's investments in Majedie Asset Management Limited and Javelin Capital LLP. Benchmark The Company does not have one overall benchmark, rather each distinct group of assets is viewed independently. For the actively managed Core Portfolio the benchmark comprises 70 per cent FTSE All-Share Index and 30 per cent FTSE World ex UK Index (Sterling) on a total return basis. Any investments made into Javelin Capital LLP products are measured against the relevant fund benchmark as contained in the fund's prospectus. 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 longer term debentures. The Board has the ability to borrow up to 100 per cent. of adjusted capital and reserves. The Board also reviews the level of net 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 per cent, and any additional indebtedness is not to exceed 20 per cent, and any additional indebtedness is not to exceed 20 per cent, of adjusted capital and reserves. Highlights for 2011 Total shareholder return: -23.2% Net asset value total return: -0.4% Final dividend (per share): 6.3p Total dividends (per share): 10.5p Directors' valuation of investment in Majedie Asset Management Limited: Â£39m Investment in Javelin Capital LLP of: Â£7m Group Summary Total assets* Â£145.7m Shareholders' funds Â£111.6m Market capitalisation Â£73.3m Capital structure 10p ordinary shares 52,528,000 Â£13.5m 9.5% debenture stock Debt 2020 Â£20.7m 7.25% debenture stock 2025 Up to Â£10,680 for 2011/12 tax ISA Status year. * Represents total assets less current liabilities as at 30 September 2011. Year's Summary Financial* 2011 2010 % as at 30 September Total assets less current liabilities Â£145.7m Â£150.9m (3.4) Shareholders' funds Â£111.6m Â£117.2m (4.8) Net asset value per share 214.5p 225.2p (4.8) Share price 139.5p 191.5p (27.2) Discount to net assets (debt at par value) 35.0% 15.0% Discount to net assets (debt at fair value) 29.8% 9.4% Revenue return before tax Â£2.6m Â£6.3m (58.7) Earnings per share 4.6p 11.8p (61.0) Core dividends per share** 10.5p 10.5p Total dividends per share** 10.5p 13.0p Group costs (administrative expenses) Â£4.8m Â£5.1m (5.9) Company costs/average Company net assets 1.7% 2.4% Company costs/average Company total assets 1.3% 1.8% Maximum potential gearing 30.3% 28.8% * Financial information is disclosed in respect of the consolidated accounts unless otherwise stated. ** Both core and total dividends per share represent dividends that relate to the Company's financial year. However under IFRS dividends are not accrued until paid or approved. Year's high/low 2011 2010 Share price high 203.5p 214.7p low 133.8p 167.5p Net asset value high 214.8p 256.6p low 196.3p 210.4p Discount (debt at par) high 32.3% 24.7% low 13.1% 15.0% Discount (debt at fair value) high 26.3% 20.6% low 8.8% 9.9% Chairman's Statement In what has been a turbulent and volatile year in world equity markets the Company's Net Asset Value (NAV) has fared relatively well which reflects the restructuring of the investment portfolio undertaken last year and in particular a much reduced volatility. During the year to 30 September 2011 the NAV and share price, both on a total return basis, returned -0.4% and -23.2% respectively. I highlight various aspects of performance for the year below which is further detailed and explained in the Investment Manager's report below. Results and Dividends The Group results for the year ended 30 September 2011 include the consolidation of the investment made in the Javelin Capital Global Equity Strategies Fund (QIF) in accordance with IFRS. This requirement, due to the Company's controlling interest in the QIF, results in various large presentational and disclosure impacts, including the recognition of a non-controlling interest, but has had no material effect on the results for the year. The Group's net revenue return before tax for the year to 30 September 2011 was Â£2.6m compared to Â£6.3m for the prior year period. Group income for the period was Â£5.5m which is Â£4.6m lower than the prior year period primarily reflecting the fall in total revenue from Majedie Asset Management Limited (MAM). Total revenue from MAM was Â£1.9m compared to Â£6.2m in the prior year period which included a special dividend of Â£5.4m. Underlying dividend income for the period from MAM, in accordance with the new shareholder's agreement, increased from Â£ 0.8m to Â£1.9m. Group income for the period was enhanced by improved dividend receipts from investee companies which offset the anticipated lower level of income from our Â£20m investment into the absolute return QIF. Finally essentially all income from Javelin Capital for the year is in fact derived from within the Group and is eliminated on consolidation. Total group costs were Â£4.8m for the period compared to Â£5.1m in the prior year period. This decrease reflects the one off nature of some setup costs written off last year and the inclusion of Javelin Capital LLP and QIF operating costs over the year. Additionally core Company costs continued to reduce to just under Â£2m for the year as compared to Â£2.2m for the prior period. Cost control remains a key focus of the Board. The Board has decided that the final dividend is to be maintained at 6.3 pence per share which is consistent with previous years. The final dividend will be paid on 25 January 2012 to shareholders on the register on 6 January 2012. The investment in MAM is held at fair value in both the Company and Group accounts and its valuation is reviewed by the Board regularly. The Board has determined that the carrying value of our holding will be increased from Â£30m to Â£39m as at 30 September 2011 as I explain in the investment portfolio section below. In contrast the investment in Javelin Capital is consolidated in the Group accounts at net asset value as required under IFRS but is held in the Company accounts as an investment at cost in accordance with our policy for subsidiaries. The Board has reviewed the valuation of Javelin Capital following the restructuring and recapitalisation that was completed during the year and has determined that as at 30 September 2011 the valuation of Javelin Capital will be kept at cost, being Â£7m, in the Company accounts. Investment Portfolio The Investment Manager's report below provides the detailed commentary on the Company's investment activity and performance. However, I would like to provide an overview of the key issues affecting the outturn for the year. Firstly, the Core Portfolio, which has performed slightly below its benchmark. The primary cause of this underperformance has related to stock selection in the Asia Pacific portfolio as discussed in the Investment Manager's report. Secondly, I would highlight the performance of MAM which has had another successful year, not only producing strong relative performance for its clients but also commencing the development of a global product to augment the existing UK products. The global team have got off to a good start and we wish them and the whole MAM team every success in the year ahead. As a result of the progress at MAM, the Board of MI has increased the valuation of the investment from Â£30m to Â£39m on a basis consistent with prior years. Thirdly, I would like to turn to funds managed by Javelin Capital LLP. This comprises, to date, QIF, which aims to produce an absolute return irrespective of underlying stock market performance from a highly liquid and diverse portfolio. In the first 12 months the QIF produced a small positive return. This was commendable given the conservative constraints placed on the fund, by the manager, during the start up phase and its relative showing in comparison to the peer group. Overall the fund was in the top decile of all hedge funds for the period. Moreover the Board feels that the decision to invest part of the Company's investment portfolio in an absolute return product has been confirmed by providing a more diverse risk and return profile for its assets, particularly so during a period of weak global stock markets as was the case in the quarter to 30 September 2011. Suffice to say that in this quarter a "benchmark return", as in the Core Portfolio, would have produced a diminution in value of some 13.5% as compared to the positive QIF return of 5% resulting in a benefit to the Company of over Â£3m. Javelin Capital I would like to comment on developments at Javelin Capital in addition to the performance of its flagship fund, mentioned above. Following the General Meeting and successful shareholder vote to invest further capital into Javelin in order to secure its long term funding until profitability is reached, considerable progress has been made. The cost base of Javelin has been reduced substantially, by approximately 37% on an annual run rate basis. This has been achieved whilst retaining all the key partners and staff. Overall this cost saving has reduced the breakeven level in terms of assets under management from over Â£300m to approximately Â£100m. The task of raising external funds remains paramount but the performance of the flagship fund over the first 12 months will, hopefully, make this task more realistic in what remains a very difficult environment for all asset management ventures. I would like to take this opportunity to thank all the Javelin employees for their contribution both to performance and the reorganisation process. Board Composition There have been a number of changes on the Board during the year. Firstly in conjunction with restructuring of Javelin Capital LLP, Mr Gerry Aherne resigned from the Board and retired as a partner of Javelin Capital on 21 April 2011. Secondly and also in conjunction with changes at Javelin Capital, Mr William Barlow became Chief Operating Officer of Javelin Capital on 27 June 2011 and became an executive director of the Company from that date. Thirdly, Mr Chris Arnheim resigned from the Board on 21 September 2011. Finally following a thorough search, Mr David Henderson was appointed to the Board on 22 September 2011. I am delighted to welcome David to the Board, where I believe the range and breadth of his skills will prove very beneficial. Annual General Meeting The AGM will be held on 18 January 2012 at 12.30pm at Pewterers' Hall, Oat Lane, London EC2V 7DE. As in prior years there will be presentations and an opportunity to ask questions. I do hope you will be able to attend. Outlook The uncertainty surrounding the euro area which has received much publicity, does not appear closer to a positive resolution. This is destabilising capital markets and arguably producing a negative effect in terms of economic growth not only in the euro region but elsewhere. Combined with other uncertainties such as the lack of political stability in the Middle East, it is difficult to generate much enthusiasm for the short term performance of capital markets. Fortunately the corporate sector is in reasonable financial shape and not expensively rated. However this alone is insufficient reason to generate much optimism in the short to medium term. Until the outlook improves we will continue with our conservative asset allocation strategies. Andrew J Adcock Chairman 24 November 2011 Investment Manager's Report The Company's assets are managed in four separate major groups which the Board continues to believe provide the correct balance in order to achieve the Investment Objective of maximising shareholder return whilst looking to increase dividends by more than the rate of inflation over the long term. The chart in the Annual Report demonstrates the impact that each investment group and other characteristics of the Company has made on the Net Assets Performance during the year. Note that the reports below are based on the aggregate total value of the total assets of the Group. Core Portfolio The Core Portfolio comprises holdings in large-cap UK and international stocks and a small number of carefully selected mid-cap companies, managed under an equity income investment mandate. The portfolio is benchmarked to perform against an index of 70% in UK listed companies and 30% overseas. During the early summer of 2011, a decision was taken to raise cash levels substantially in anticipation of future problems within the Eurozone. In the circumstances, this proved to be a timely decision as events unfolded. Companies such as Alstom and ArcelorMittal were disposed of in their entirety, both companies which were thought to be particularly susceptible to faltering global growth. In the United States both Hewlett-Packard and BMC Software were sold before sharp price falls and in the Far East both Acer, the computer manufacturer and China Railway were sold particularly advantageously. Nevertheless, as a result of some poor trading news from both Toyota and Nintendo in particular the portfolio underperformed its benchmark by some margin in Japan and the Far East. This had a decidedly negative impact on overall portfolio performance. As a result, a new investment approach for this area of the market is to be implemented which will hopefully neutralise this negative influence on the overall portfolio. During the last quarter of 2010 and the spring and early summer of 2011 markets tended to gain ground as hopes grew of a solidly built rebound in global growth after the traumas of 2008 and 2009. However, the investment mood began to change in July as data indicated a slowing in the economic recovery and increased debt stress in peripheral parts of the Eurozone, most notably in Greece. Markets fell sharply in the early part of August and for the next two months became range-bound as fears continued to grow concerning the viability of the euro. Politicians in Europe staged a number of summit meetings to try and relieve the upward pressure on sovereign debt yields in Greece, Portugal, Spain and Italy and although the ECB began to buy bonds in the latter two countries relatively aggressively, markets remained unconvinced that sufficient funding was being made available to cope with the overall problem. Elsewhere in the world, unemployment in the USA stayed at historically high levels and fears about a stuttering in the economic recovery emerged over the summer; China, too, saw growth subside a little as efforts were made to cope with rising levels of inflation in the domestic economy. Emerging markets were not immune from these factors and failed to decouple from the developed world, falling sharply in the late summer as investors repatriated funds from these hitherto popular markets. Absence of liquidity became a key factor in markets as banks became increasingly unwilling to lend to each other, fearing potential defaults from their counterparties. The plight of Dexia, the Belgium based banking group which had to be rescued by its government, was a particularly graphic demonstration of the problems faced by the sector as liquidity dried up. During the year, the Core Portfolio Total Return was -4.9%, an underperformance of its investment benchmark of 0.7%. The Core Portfolio lost ground relatively against the market as risk appetite returned for investors but outperformed in the last two quarters as sentiment became increasingly risk averse. This change in investor sentiment towards more defensive, income producing stocks favoured the investment style of the portfolio, but even these stocks were not immune to the downward pressure on equity markets during the third quarter of 2011. In fact, markets globally and the stocks within them have tended recently to show a greater propensity to rise and fall in tandem as investors' appetite for risk changes. Over time, this will provide stock pickers with greater opportunities to trade stocks caught up in the current general market volatility. The portfolio remains orientated towards sound income generating stocks which should be well placed to participate in an equity market rally when investors become somewhat more risk seeking. During the year, new positions were taken in stocks such as Centrica, IG Group and Jardine Lloyd Thompson in the UK, DuPont and Carnival in the USA, Siemens and Telenor in Europe and Axiata, one of the largest Asian telecommunications companies in the Far East, all companies with resilient business models and judged capable of withstanding the high levels of volatility currently being seen in the world economy. The portfolio remains underexposed to financial stocks and to domestic consumers who it is felt will continue to struggle for some considerable time. Major oil stocks such as Royal Dutch Shell, pharmaceutical companies such as GlaxoSmithKline and Roche and utility companies such as Scottish and Southern Energy, all held in the Core Portfolio, have proved notably resistant during recent market falls. Mining companies, star performers during the early part of 2011 were very hard hit by the switch in investor risk appetite in the late summer; the fund had, however, been realising profits in this area and is currently underweight in the sector. At current levels, equity markets appear to be modestly rated and pricing in a dip in economic activity for the coming year but history has shown before that a recovery from a financial and credit crisis can take substantially longer to resolve than a periodic trade recession. In particular, there seems to be no great imperative actively to redeploy the cash raised in the early summer back into the market until there is a clear and credible path forward to resolving the problems of Greece, Spain and Italy. A substantial proportion of this cash is likely to be used to seed the new Javelin UCITS fund. Finally, we continue to manage a small non-core realisation portfolio, consisting of small-cap and early stage investments that were initiated between 2005 and 2008. The objective is to maximise the return available by exiting from these stocks wherever possible, although by their very nature all of them tend to be illiquid and hard to sell. However, a number of realisations were made during the year and at 30 September 2011 the value of the non-core realisation portfolio was Â£3.5m, representing less than 2.5% of the Company's Total Assets. Further realisations are expected over time but at the moment markets are very unreceptive to the flotation of new issues and investors have become increasingly wary following the disappointing performance of high profile issues such as Glencore last June. Javelin Capital Global Equity Strategies Fund In late September 2010 an investment was made as seed capital into the first flagship product to be launched by Javelin Capital LLP. The fund has been managed by an investment team of experienced portfolio managers and has utilised a range of long-short equity strategies. Using proprietary models, the team has analysed and implemented the strategies most appropriate for different regions and sectors. The strategies are uncorrelated to each other and hence the combination within the fund has resulted in lower volatility and reduced risk. By seeding this fund, the Company has benefitted from adopting a risk averse strategy in the form of an allocation of resources to an absolute return strategy that has returned 1.65% during the year in sterling terms. This strategy was particularly important during the third quarter of 2011 when the All Share Index fell by 13.5% whilst the Global Equity Strategies fund rose in sterling terms by 5%. As at 30 September 2011, the value of this holding was Â£20.1m representing 13.8% of the Company's Total Assets MajedieAsset Management (MAM) MAM was launched in 2002 using finance provided by the Company, which retains a 29.9% interest. The business has grown to approximately Â£5.6bn in assets under management, predominantly long-only equity mandates for institutional clients. Its market leading investment performance has been recognised by the industry though the Financial News award of UK Asset Management Firm of the Year in October 2011. It remains well financed and highly profitable and during the year, Â£1.9m was received in dividend income from MAM. Taking account of, inter alia, MAM's current and forecasted financial performance the Board has decided to increase its valuation of the Company's holding from Â£30m to Â£39m, representing 26.8% of the Company's Total Assets. Javelin Capital LLP The Company launched Javelin Capital LLP on 1 September 2010. An initial Â£4.5m was invested by the Company to finance the start-up, initial operating costs and regulatory capital. However, in the difficult market environment of 2011, it became apparent that it would take appreciably longer to gain traction within third party and outsourced funds for its initial investment product and thus further investment would be necessary to grow the investment proposition. A restructuring of the business was completed and further funding was secured of up to Â£3.5m, of which Â£2.5m was provided in June 2011. Javelin Capital is now focused on gaining assets under management in accordance with its revised business plan. The Company holds an equity participation of 75% whilst the remaining 25% is held by partners. Further details of this new agreement are provided in the Business Review section below. The performance of the Javelin Capital Global Equity Strategies Fund has been encouraging over its first year and considerable efforts will now be put in place to market its achievement against similar funds over what has been a very volatile year. A further fund launch of a UCITS long-short product in Emerging Markets is anticipated in the near future. As at 30 September 2011, the net assets in Javelin Capital LLP have been included in the Consolidated Report & Accounts at Â£1.9m, representing 1.3% of the Company's Total Assets. This represents the original investment less start-up costs and losses incurred to date and is in accordance with consolidation accounting rules. In the Company accounts the value of the investment in Javelin Capital LLP has been valued at cost, being Â£7m. Development of Net Asset Value The chart in the Annual Report demonstrates the Net Asset Value of the Company during the year to 30 September 2011. In aggregate, the NAV has decreased by Â£ 5.6m, having incurred administration and finance costs of Â£6.8m, which include Javelin Capital LLP, and having paid out Â£5.5m in dividends. The core portfolio lost Â£3.5m after allowance for receipt of dividends, whilst MAM provided a contribution of Â£10.9m, being dividends of Â£1.9m and an increase in the valuation of our investment by Â£9m. The JCGESF contributed Â£0.3m. Outlook The outlook for capital markets is very unclear and the debt problems within the Eurozone seem likely to be dragged out into 2012 despite the recent changes in government in both Greece and Italy. Growth remains particularly subdued throughout the West and levels of unemployment, particularly amongst the young and unskilled are high and show little sign of falling in the short term. On the other hand, the corporate sector in the developed world is far better capitalised than was the case in 2008 and there has been some evidence, particularly in the United States of a small pick-up in merger and acquisition activity. Equity markets are unlikely to make substantial progress until a clear path forward for the Eurozone can be envisaged so we continue to maintain a cautious and defensive overall stance. Nick Rundle Investment Director Javelin Capital LLP 24 November 2011 Twenty Largest UK Investments at 30 September 2011 2011 2010 % of Market Value Market Value Company Â£000 Fund Â£000 % of Fund Majedie Asset ManagementÂ¹ 39,000 26.8 30,000 19.9 Royal Dutch Shell 'B' 4,426 3.0 5,385 3.6 HSBC 3,727 2.6 5,644 3.7 Vodafone 3,533 2.4 4,006 2.7 BP 3,302 2.3 3,850 2.6 GlaxoSmithKline 3,199 2.2 4,014 2.7 Vostok EnergyÂ¹ 1,926 1.3 2,906 1.9 BHP Billiton 1,912 1.3 2,835 1.9 Rio Tinto 1,878 1.3 3,163 2.1 Legal & General 1,256 0.9 1,501 1.0 CentricaÂ² 1,191 0.8 Antofagasta 1,158 0.8 1,792 1.2 Aviva 1,145 0.8 1,855 1.2 BG Group 1,117 0.8 1,846 1.2 Barclays 1,049 0.7 1,648 1.1 Unilever 1,011 0.7 1,657 1.1 UBM (formally United Business Media) 1,010 0.7 944 0.6 BAE Systems 989 0.7 1,095 0.7 Babcock 988 0.7 826 0.5 Sainsbury (J) 962 0.7 1,172 0.8 74,779 51.5 76,139 51.5 Ten Largest Overseas Investments at 30 September 2011 2011 2010 Market Value Market Value Company Â£000 % of Fund Â£000 % of Fund Canon Inc. (Japan) 927 0.6 929 0.6 Roche (Switzerland) 831 0.6 828 0.5 McDonalds (USA)Â² 817 0.6 Johnson & Johnson (USA) 777 0.5 884 0.6 Altria (USA) 774 0.5 800 0.5 Wells Fargo (USA) 774 0.5 796 0.5 Philippine Long Distance (Asia) 773 0.5 491 0.3 AT&T (USA) 769 0.5 907 0.6 Sanofi ( formerly Sanofi-Aventis) (France) 765 0.5 1,006 0.7 Toyota (Japan) 736 0.5 932 0.6 7,943 5.3 7,573 4.9 Â¹ Unlisted Â² There is no comparative for the investments listed as they represent new holdings. Board of Directors Andrew J Adcock* MA Chairman Hubert V Reid* Deputy Chairman J William M Barlow BA Paul D Gadd* R David C Henderson* FCA * Non-executive Extracts from the Directors' Report The directors submit their report and the accounts for the year ended 30 September 2011. Introduction The Directors' Report includes the Business Review, Corporate Governance Statement and the Report on Directors' Remuneration which can be found in the Annual Report and Accounts. A review of the developments during the year is contained in 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 received written confirmation from HM Revenue & Customs that it was an approved investment trust for taxation purposes under Sections 1158/9 of the Corporation Tax Act 2010 in respect of the year ended 30 September 2010. In the opinion of the directors the Company has subsequently directed its affairs so as to enable it to continue to qualify for such approval and the Company will continue to request formally written confirmation of investment trust status each year. Results and Dividend Consolidated net revenue return before taxation amounted to Â£2,624,000 (2010: Â£ 6,287,000). The directors recommend a final ordinary dividend of 6.3p per ordinary share, payable on 25 January 2012 to shareholders on the register at the close of business on 6 January 2012. Together with the interim dividend of 4.2p per share paid on 29 June 2011, this makes a total distribution of 10.5p per share in respect of the financial year (2010: 13.0p per share). Business Review Introduction The purpose of the Business Review is to provide a review of the business of the Company by: â€¢ analysing development and performance using appropriate Key Performance Indicators ("KPIs"); â€¢ outlining the principal risks and uncertainties affecting the Company; â€¢ describing how the Company manages these risks; â€¢ setting out the Company's environmental, social and ethical policy; â€¢ providing information about persons with whom the Company has contractual or other arrangements which are essential to the business of the Company; â€¢ outlining the main trends and factors likely to affect the future development, performance and position of the Company's business; and â€¢ explaining the future business plans of the Company. 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, International Financial Reporting Standards, Listing, Prospectus and Disclosure 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 such, it analyses its Statement of Comprehensive Income between profits available for distribution by way of dividends and capital profits. The financial statements report on these profits, the changes in equity, the balance sheet position and the cash flows in the current and prior financial period. This is in compliance with current International Financial Reporting Standards, supplemented by the Revised Statement of Recommended Practice for Investment Trust Companies and Venture Capital Trusts (SORP) issued in January 2009. The principal accounting policies of the Company are set out in note 1 to the accounts. The Auditors' opinion on the financial statements, which is unqualified, appears in the Report of the Independent Auditors. In addition to the annual and half-yearly results and Interim Management Statements, the Company makes weekly net asset value (NAV) announcements via an authorised Stock Exchange regulatory information service. The Company also reports to shareholders on performance against benchmark, corporate governance and investment activities. The directors meet with larger shareholders outside the Annual General Meeting as appropriate. Meetings are also held with investment trust analysts and stockbroking firms. The Company has three investor savings schemes which provide shareholders with cost effective and convenient ways of investing. Communication of up-to-date information is provided through the website at www.majedie.co.uk. At least one shareholders' meeting is held in each year in January to allow shareholders to vote on the appointment of directors and the Auditors, the payment of dividends, authority for share buybacks and any other special business. The business of the next such shareholders' meeting, being the Annual General Meeting, scheduled for 18 January 2012 is set out in the full Annual Report and Accounts. A General Meeting was held on 29 June 2011 at which proposals for the provision of further contributions to Javelin Capital LLP and proposed modifications to the Company's investment objective and policy were approved. The Company is subject to corporation tax on its net revenue profits but is exempt from corporation tax on capital gains, provided it complies at all times with Sections 1158 to 1162 of the Corporation Tax Act 2010. These sections broadly require that: â€¢ the Company's revenue (including dividend and interest receipts but excluding profits on the sale of shares and securities) should be derived wholly or mainly from shares and securities; â€¢ the Company must not retain in respect of any accounting period more than 15% of its income from shares and securities; â€¢ no holding in a company should represent more than 15% by value of the Company's investments in shares and securities unless the holding was acquired previously and the value has risen to exceed the 15% limit; and â€¢ realised profits on the sale of shares and securities may not be distributed by way of dividend. Compliance with these rules is proved annually in retrospect to HM Revenue and Customs ("HMRC"). HMRC approval of the Company as an investment trust is granted 'subject to there being no subsequent enquiry under corporation tax self-assessment'. Such approval has been received in respect of all relevant years up to and including the year ended 30 September 2010, since when the Company has continued to comply with these rules. The government has completed a review of these rules resulting in changes which it is anticipated will come into force for accounting periods commencing from 1 January 2012. The review seeks to modernise tax rules for investment trusts in-line with other collective investment schemes. Changes include a new spread of risk test, an approved transactions white list, advance approval process for investment trust status and a reform of the income requirements to allow income from a wider range of sources. The Board welcomes these changes which will have a positive impact on the Company. Capital Structure As part of its corporate governance the Board keeps under review the capital structure of the Company. At 30 September 2011 the Company had a nominal issued share capital of Â£5,252,800, comprising 52,528,000 ordinary shares of 10p each, carrying one vote each. The Board seeks each year to renew the authority of the Company to make market purchases of its own shares. However, the Board is only likely to use such authority in special circumstances. In general the directors believe that the discount to net assets will be reduced sustainably over the long term by the creation of value through the development of the business. In 1994 and 2000 the Company issued two long term debentures: Â£15m 9.5% debenture stock 2020 and Â£25m 7.25% debenture stock 2025 respectively. In 2004 the Company redeemed Â£1.5m of the 2020 issue and Â£4.3m of the 2025 issue as an opportunity arose to redeem at an attractive price. The Board is responsible for setting the overall gearing range within which the Investment Manager may operate. Net gearing as at 30 September is negative reflecting the substantial cash balances held, partially due to impending seeding monies for the new Javelin UCITS Fund. 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 following a takeover bid. 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 26 to the accounts. The Company has a range of equity investments including substantial investments in two unlisted asset management businesses, large cap global equities and a new investment in a global equities absolute return fund. The major risk for the Company remains, investment risk, primarily market risk, however it is recognised that the investments in the two unlisted asset management businesses, and in particular the investment in Majedie Asset Management, represent a degree of concentration risk for 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 Management Agreement the Investment Manager manages the Company's assets. The Core Portfolio is managed with various specific limits for individual stocks and market sectors which are employed to restrict risk levels. The level of portfolio risk in the Core Portfolio is assessed in relation to the benchmark utilising various portfolio risk management tools. It should be noted that whilst we have a benchmark in the Core Portfolio, the portfolio is constructed independently and can be significantly different. Therefore the Core Portfolio can experience periods of volatility over the short term. 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: i. Strategy Risk: an inappropriate investment strategy could result in poor returns for shareholders and a widening of the discount of the share price to the NAV per share. The Board regularly reviews strategy with the Investment Manager in relation to a range of issues including the allocation of assets between geographic regions and industrial sectors, level and effect of gearing and currency exposure; ii. Business Risk: inappropriate management or controls in either Majedie Asset Management and/or Javelin Capital LLP could result in financial loss, reputational risk and regulatory censure. The Group has representation on both entities' governing boards to monitor business financial performance and operations; iii. Compliance Risk: failure to comply with regulations could result in the Company losing its listing and/or being subjected to corporation tax on its capital gains. The Board receives and reviews regular reports from the fund administrator on its controls in place to prevent non-compliance of the Company with rules and regulations. The Board also receives regular investment listings and income forecasts as part of its monitoring of compliance with Sections 1158 to 1162 of the Corporation Tax Act 2010; and iv. Operational Risk: Inadequate financial controls and failure by an outsourced supplier to perform to the required standard could result in misappropriation of assets, loss of income and debtor receipts and mis-reporting of NAVs. The Board regularly reviews statements on internal controls and procedures and subjects the books and records of the Company to an external annual audit. The Board has representation on the governing board of Javelin Capital LLP who will also monitor the performance of other outsourced service providers. The financial risks are set out in more detail in note 26. The systems in place to manage the Company's internal controls are described further in the Corporate Governance Statement in the full Annual Report. Management of Assets and Shareholder Value The Company invests around the world in markets, sectors and companies that the Board and Investment Manager believe will generate long term growth in capital and income for shareholders. The Company now manages its assets by allocating resources to the following major groups: â€¢ Core Portfolio; â€¢ Funds managed by Javelin Capital LLP; â€¢ MAM; and â€¢ Javelin Capital LLP. The Board believes that the groups will enable a spread of risk and deliver a higher quality of earnings. The Investment Manager manages the Core Portfolio by analysing potential and current investments against a range of parameters. Many potential investments are considered each year. Investment risks are spread through holding a range of securities across a range of sectors and countries. In respect of funds managed by Javelin Capital LLP, the Company currently invests in the Javelin Capital Global Equity Strategies Fund (an Irish listed Qualifying Investment Fund (QIF)) which employs an approach that involves a range of strategies, analysis and algorithms. Investment risks are managed by having a spread of investments, a range of strategies and sophisticated risk management techniques. Finally the Company has significant investments in Majedie Asset Management Limited (MAM) and Javelin Capital LLP, both asset management businesses. The Board believes that these investments provide or will provide a valuable source of future return. The Board has representation on both entities' governing boards in order to monitor strategy and financial performance. The Board reviews the investment performance of the Company against a range of measures relevant to each investment group. Performance Highlights The Board uses the following Key Performance Indicators (KPIs) to help assess progress against the Company's objectives. The KPIs are commented on within the Chairman's Statement and Investment Manager's Report. â€¢ NAV total return and total shareholder return. â€¢ Investment group portfolio return: see the chart in the Investment Manager's Report in the full Annual Report. â€¢ Share price discount: The level of the discount at the end of the financial year calculated with debt at par was 35.0% and was higher than at the start of the year. This partially reflects revisions to the Company's unlisted investments, primarily MAM, contained in this Annual report, were not reflected in the share price at the year end. â€¢ Net Asset Value performance The Company's Net Asset Value has decreased by 4.8% in the year to 30 September 2011, compared with a decrease of 5.7% over the same period last year. The net assets decreased by Â£5.6 million to Â£111.6 million. The performance of the Net Asset Value is discussed within the Chairman's statement. â€¢ Total expense ratio The total expense ratio of the Company for the year ended 30 September 2011 was 1.7% (2009: 2.4%). Dividend growth Dividend growth over the long term (as recognised for this purpose as from 1985 when the Company became an investment trust), has been at 5%, 5.7% including special dividends, which is ahead of inflation over the same period. Further details regarding the results and dividends can be found in the Chairman's Statement above. Total Return Philosophy & Dividend Policy The directors believe that investment returns will be maximised if a total return policy is followed whereby the Investment Manager pursues the best opportunities. The Company has a comparatively high level of revenue reserves for the investment trust sector. At Â£25.8m, the revenue reserves represent more than four times the current annual core dividend distribution. The strength of these reserves will from time to time assist in underpinning our progressive dividend policy in years when the income from the portfolio is insufficient to cover completely the annual distribution. The policy aim is to increase dividends by more than the rate of inflation over the long term. This objective was approved by shareholders at a General Meeting held on 29 June 2011. Corporate Social Responsibility In common with many investment trust companies, the Group has no direct impact on the environment. When considering its day-to-day operations, the Company aims to conduct itself responsibly, ethically and fairly. The Company has appointed Javelin Capital LLP to manage its portfolio of investments. Javelin has been tasked with managing the portfolio, and its operations, with a view to achieving the Company's investment objective and in doing so takes account of social, environmental and ethical factors, where appropriate. Costs The Company's expense ratio over net assets is 1.7% which compares with the investment trust sector average of 1.6%. The Company's core operating costs have decreased from Â£2.2m to Â£2.0m this year but the ratio has been negatively impacted by the lower average asset base in the current period. The Board pays close attention to cost control and the current situation is referred to further in the Chairman's Statement above. Material Contracts â€¢ Javelin Capital LLP i. LLP Agreement The investment in Javelin Capital LLP is in accordance with the terms of a Limited Liability Partnership Agreement dated 31 August 2010, which was subsequently amended and restated on 29 June 2011. The revised terms include: â€¢ The Company will provide Â£4.5m initial capital and a further capital contribution of Â£2.5m. Both will attract interest at a commercial rate, until it is repaid from future Javelin Capital LLP profits. This repayment has priority over other distributions from residual profits. Further capital can be provided at the Company's discretion, and at the General Meeting held on 29 June 2011 shareholder approval was obtained for a further Â£1 million contribution upon Board approval. â€¢ The Company has a 75% interest in Javelin Capital LLP with the other partners holding the remaining 25%. On achieving certain pre-set financial targets, which were revised in conjunction with the restructuring in June 2011, the Company will reduce its interest to ultimately 55%. â€¢ The agreement provides for various types of profit share including performance fee, bonus and residual profit share. Under the agreement the Company is to receive an entitlement to profits equal to its capital contribution plus accumulated interest first before other partners are entitled to bonus or residual profit shares. â€¢The Board has representation on the Javelin Capital Management Board (Javelin governance is outlined in the Corporate Governance Statement in the full Annual Report, including the appointment of the Chairman. This includes various control, meeting and voting rights. The agreement also provides for the requirement to obtain Majedie approval in a variety of areas including anything considered a restricted matter. The Board can appoint or remove the Managing Partner/Chief Executive who has day to day operational control and also must approve his remuneration. â€¢ In the event of a sale proposed by the Company the agreement includes drag along provisions including certain pre-emption rights to the other partners. There are also two side letters that relate to the LLP Agreement which provide for a possible change in control rights and provide for the liability of partners in respect of their capital and current account balances. ii. Management and Administration Services Agreements The Board has appointed Javelin Capital LLP as its investment manager and general administrator. The terms of the appointment are defined under a Management Agreement and Administration Services Agreement dated 31 August 2010. The agreement divides the Company's investments into distinct portfolios which are the Core Portfolio, non-core portfolio, MAM, Javelin Capital Funds and the Treasury account. The fees payable under the Management Agreement are detailed below: Fund/Portfolio Management Fee* Performance Fee Core Portfolio*** 0.70% p.a. 10%â€ Treasury Account 0.70% p.a. NIL MAM NIL NIL** Javelin Capital Global Equity Strategies Fundâ•ª 1.25% p.a. 20%â€ * The management fee is on a sliding scale ranging from 0.7% p.a. to 0.4% p.a. based on the combined value of the core and non-core portfolios. â€ The performance fee is based on outperformance against the benchmark on a rolling three year basis. # The Javelin Capital Global Equity Strategies Fund is a sub-fund of Javelin Capital Strategies plc, which is an Irish Qualifying Investment Fund (QIF) listed on the Irish Stock Exchange. This is the first fund managed by Javelin Capital LLP and further sub-funds can be launched in due course. ** The agreements provide for a fee of Â£60,000 per annum in respect of MAM duties. â€¡ The fees are as set in the supplement to the fund prospectus for the QIF. The performance fee entitlement only occurs once the hurdle has been exceeded and is calculated on a high water mark basis using an equalisation method. *** The non-core portfolio attracts a management fee of 0.70% p.a. and no performance fee. The Management Agreement entitles either party to terminate the arrangement with six months' notice after an initial period of three years. Additionally the Company can terminate the Manager's appointment in respect of a distinct portfolio if the performance of that portfolio falls below a nominated benchmark. The Administration Services Agreement delegated, to Javelin Capital LLP, various rights to enable it to act as general administrator. Fees payable under the Administration Services Agreement are capped at Â£265,000 per annum with fees agreed on a cost only basis. The Administration Services Agreement may be terminated on three months' notice. iii. IntraGroup Asset Lease Agreement The asset lease agreement with Javelin Capital Services Limited identifies certain assets to be leased to and used by Javelin. Javelin will pay a lease charge equal to the depreciation suffered by the Company on those assets. The agreement provides for these assets to be transferred to Javelin at a future date at net book value. â€¢ Capita Sinclair Henderson Ltd The Board has appointed Capita Sinclair Henderson Ltd (trading as Capita Financial Group - Specialist Fund Services) to act as Company Secretary and undertake certain administration services. The terms of Capita Sinclair Henderson Ltd's appointment are defined under a secretarial and administration services agreement dated 17 November 2000. The agreement entitles either party to terminate the arrangement with twelve months' notice. Policy on Payment of Suppliers It is the Company's policy to settle all investment transactions in accordance with the terms and conditions of the relevant market in which it operates. All other expenses are paid on a timely basis in the ordinary course of business. At 30 September 2011 the Group and the Company had fourteen and twenty-one days respectively of suppliers' invoices outstanding in respect of trade creditors (2010: Group and Company four days). MajedieAsset Management Limited Majedie Asset Management is an investment management boutique specialising in UK and Global equities which launched in 2003. Having started with a 70% shareholding the Company now retains a 30% interest. The relevant developments during the year are referred to in the Investment Manager's report and further referred to in note 13 below. Javelin Capital LLP Javelin Capital LLP commenced operations on 1 September 2010. On that date Javelin Capital LLP assumed responsibility for managing the Company's investments and the provision of general administration services. All previous Majedie employees transferred to Javelin Capital LLP under the new arrangements. On 20 September 2010 the Company invested Â£20m into the Javelin Capital Global Equity Strategies Fund (QIF), the first fund launch by Javelin Capital LLP. The characteristics of this investment are detailed in the Investment Manager's Report section. The Company initially provided Â£4.5m in operational and regulatory capital for Javelin Capital LLP. At a General Meeting on 29 June 2011, the shareholders approved a further investment of up to Â£3.5m in Javelin Capital LLP to provide additional operational and regulatory capital, of which Â£2.5 million was paid on 29 June 2011. The Company has an initial 7 5% ownership. This will fall to 55% if the partnership achieves certain preset financial targets. The Chairman's Statement above and additionally the notes to the accounts below provide further information on developments. Continued Appointment of the Manager The Board has concluded that it is in shareholders interests that Javelin Capital LLP should continue as Manager of the Company on the existing terms. The Board considers the arrangements for the provision of investment management and other services to the Company on an annual basis. The principal terms of the agreement with the Investment Manager have been set out above. The full Annual Report contains the following statements regarding responsibility for the Annual Report and financial statements (references in the following statements are to pages in the Annual Report). Statement of Directors' Responsibilities The directors are responsible for preparing the Annual Report and the Group financial statements in accordance with applicable United Kingdom law and those International Financial Reporting Standards as adopted by the European Union. Under Company Law the directors must not approve the Group financial statements unless they are satisfied that they present fairly the financial position, financial performance and cash flows of the Group for that period. In preparing the Group financial statements the directors are required to: â— select suitable accounting policies in accordance with IAS 8: Accounting Policies, Changes in AccountingEstimates and Errors and then apply them consistently; â— present information, including accounting policies, in a manner that provides relevant, reliable, comparable and understandable information; â— provide additional disclosures when compliance with the specific requirements in IFRSs is insufficient to enable users to understand the impact of particular transactions, other events and conditions on the Group's financial position and financial performance; â— state that the Group has complied with IFRSs, subject to any material departures disclosed and explained in the financial statements; and â— make judgements and estimates that are reasonable and prudent. The directors are responsible for keeping adequate accounting records that are sufficient to show and explain the Group's transactions and disclose with reasonable accuracy at any time the financial position of the Group and enable them to ensure that the Group financial statements comply with the Companies Act 2006 and Article 4 of the IAS Regulation. They are also responsible for safeguarding the assets of the Group and hence for taking reasonable steps for the prevention and detection of fraud and other irregularities. By order of the Board Andrew J Adcock Chairman 24 November 2011 NON-STATUTORY ACCOUNTS The financial information set out below does not constitute the Company's statutory accounts for the years ended 30 September 2011 and 2010 but is derived from those accounts. Statutory accounts for 2010 have been delivered to the Registrar of Companies, and those for 2011 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.majedie.co.uk. Consolidated Statement of Comprehensive Income for the year ended 30 September 2011 2011 2010 Revenue Capital Total Revenue Capital return return return return Total Notes Â£000 Â£000 Â£000 Â£000 Â£000 Â£000 Investments Gains/(losses) on investments at fair value through profit or loss 13 2,233 2,233 (2,361) (2,361) Net investment result 2,233 2,233 (2,361) (2,361) Income Income from investments 3 5,434 5,434 10,011 10,011 Other income 3 106 106 82 82 Total income 5,540 5,540 10,093 10,093 Expenses Administration expenses 5 (2,195) (2,633) (4,828) (3,105) (2,017) (5,122) Return/loss before finance costs and taxation 3,345 (400) 2,945 6,988 (4,378) 2,610 Finance costs 8 (721) (2,165) (2,886) (701) (2,101) (2,802) Net return/loss before taxation 2,624 (2,565) 59 6,287 (6,479) (192) Taxation 9 (200) (200) (131) (131) Net return/loss after taxation for the year 2,424 (2,565) (141) 6,156 (6,479) (323) Other comprehensive income - exchange differences on translation of foreign operations (37) (37) Total comprehensive income for the year 2,424 (2,602) (178) 6,156 (6,479) (323) Net return/loss after taxation attributable to: Equity holders of the Company 2,427 (2,568) (141) 6,156 (6,479) (323) Non-controlling interest (3) 3 2,424 (2,565) (141) 6,156 (6,479) (323) Return/loss per ordinary share: pence pence pence pence pence pence Basic and diluted 11 4.6 (4.9) (0.3) 11.8 (12.4) (0.6) The total column of this statement is the Consolidated Statement of Comprehensive Income of the Group prepared in accordance with International Financial Reporting Standards (IFRS). The supplementary revenue return and capital return columns are prepared under guidance published by the Association of Investment Companies (AIC). All revenue and capital items in the above statement derive from continuing operations. No operations were acquired or discontinued in the year. The notes below form part of these accounts. Company Statement of Comprehensive Income for the year ended 30 September 2011 2011 2010 Revenue Capital Revenue Capital return return Total return return Total Notes Â£000 Â£000 Â£000 Â£000 Â£000 Â£000 Investments Gains/(losses) on investments at fair value through profit or loss 13 1,547 1,547 (2,361) (2,361) Net investment result 1,547 1,547 (2,361) (2,361) Income Income from investments 3 5,382 5,382 10,011 10,011 Other income 3 19 19 130 130 Total income 5,401 5,401 10,141 10,141 Expenses Investment Management fees 4 (418) (519) (937) (34) (44) (78) Administration expenses 5 (730) (320) (1,050) (1,038) (1,735) (2,773) Return/loss before finance costs and taxation 4,253 708 4,961 9,069 (4,140) 4,929 Finance costs 8 (701) (2,102) (2,803) (701) (2,101) (2,802) Net return/loss before taxation 3,552 (1,394) 2,158 8,368 (6,241) 2,127 Taxation 9 (121) (121) (131) (131) Net return/loss after taxation for the year 3,431 (1,394) 2,037 8,237 (6,241) 1,996 Return/loss per ordinary share: pence pence pence pence pence pence Basic and diluted 11 6.5 (2.6) 3.9 15.8 (12.0) 3.8 The total column of this statement is the Statement of Comprehensive Income of the Company prepared under IFRS. The supplementary revenue return and capital return columns are prepared under guidance published by the AIC. All revenue and capital items in the above statement derive from continuing operations. No operations were acquired or discontinued in the year The notes below form part of these accounts. Consolidated Statement of Changes in Equity for the year ended 30 September 2011 Capital Share Own Currency Non- Share Share redemption options Capital Revenue share translation controlling capital premium reserve reserve reserve reserve reserve reserve interest Total Notes Â£000 Â£000 Â£000 Â£000 Â£000 Â£000 Â£000 Â£000 Â£000 Â£000 Year ended 30 September 2011 As at 1 October 2010 5,253 785 56 (220) 86,945 26,042 (1,702) 117,159 Net loss for the year (2,568) 2,427 (141) Other comprehensive income - exchange differences on translation of foreign subsidiary (37) (37) Share options expense 25 116 116 Dividends declared and paid in year 10 (5,463) (5,463) Consolidation of subsidiary 248 248 Own shares (sold)/ purchased by Employee Incentive Trust(EIT) (74) 74 As at 30 September 2011 5,253 785 56 (178) 84,377 23,006 (1,628) (37) 248 111,882 Year ended 30 September 2010 As at 1 October 2009 5,253 785 56 (284) 93,424 26,649 (1,702) 124,181 Net loss for the year (6,479) 6,156 (323) Share options expense 25 64 64 Dividends declared and paid in year 10 (6,763) (6,763) As at 30 September 2010 5,253 785 56 (220) 86,945 26,042 (1,702) 117,159 The notes below form part of these accounts. Company Statement of Changes in Equity for the year ended 30 September 2011 Capital Share Own Share Share redemption options Capital Revenue shares capital premium reserve reserve reserve reserve reserve Total Notes Â£000 Â£000 Â£000 Â£000 Â£000 Â£000 Â£000 Â£000 Year ended 30 September 2011 As at 1 October 2010 5,253 785 56 (220) 87,461 27,843 (1,702) 119,476 Net profit for the year (1,394) 3,431 2,037 Share options expense 25 116 116 Dividends declared and paid in year 10 (5,463) (5,463) Own shares (sold)/purchased by Employee Incentive Trust (EIT) (74) 74 As at 30 September 2011 5,253 785 56 (178) 86,067 25,811 (1,628) 116,166 Year ended 30 September 2010 As at 1 October 2009 5,253 785 56 (284) 93,702 26,369 (1,702) 124,179 Net profit for the year (6,241) 8,237 1,996 Share options expense 25 64 64 Dividends declared and paid in year 10 (6,763) (6,763) As at 30 September 2010 5,253 785 56 (220) 87,461 27,843 (1,702) 119,476 The notes below form part of these accounts. Consolidated Balance Sheet as at 30 September 2011 2011 2010 Notes Â£000 Â£000 Non-current assets Property and equipment 12 410 531 Investments held at fair value through profit or loss 13 112,822 145,423 113,232 145,954 Current assets Derivative instruments held at fair value through profit or loss 14 136 Trade and other receivables 16 5,817 1,691 Cash and cash equivalents 17 37,553 5,538 43,506 7,229 Total assets 156,738 153,183 Current liabilities Financial liabilities held at fair value through profit or loss 12 (3,311) Derivative instruments held at fair value through profit or loss 14 (99) Trade and other payables 18 (7,645) (2,243) (11,055) (2,243) Total assets less current liabilities 145,683 150,940 Non-current liabilities Debentures 18 (33,801) (33,781) Total liabilities (44,856) (36,024) Net assets 111,882 117,159 Represented by: Ordinary share capital 19 5,253 5,253 Share premium 785 785 Capital redemption reserve 56 56 Share options reserve (178) (220) Capital reserve 84,377 86,945 Revenue reserve 23,006 26,042 Own shares reserve 20 (1,628) (1,702) Currency translation reserve (37) Equity Shareholders' Funds 111,634 117,159 Non-controlling interest 248 Total equity 111,882 117,159 Net asset value per share pence pence Basic and fully diluted 21 214.5 225.2 Approved by the Board of Majedie Investments PLC (Company no. 109305) and authorised for issue on 24 November 2011. Andrew J Adcock Hubert V Reid Directors The notes below form part of these accounts. Company Balance Sheet as at 30 September 2011 Notes 2011 2010 Non-current assets Â£000 Â£000 Property and equipment 12 178 221 Investments held at fair value through profit or loss 13 127,176 145,423 Investments in subsidiaries 13 7,171 4,671 134,525 150,315 Current assets Trade and other receivables 16 1,180 1,676 Cash and cash equivalents 17 15,245 3,057 16,425 4,733 Total assets 150,950 155,048 Current liabilities Trade and other payables 18 (983) (1,791) Total assets less current liabilities 149,967 153,257 Non-current liabilities Debentures 18 (33,801) (33,781) Total liabilities (34,784) (35,572) Net assets 116,166 119,476 Represented by: Ordinary share capital 19 5,253 5,253 Share premium 785 785 Capital redemption reserve 56 56 Share options reserve (178) (220) Capital reserve 86,067 87,461 Revenue reserve 25,811 27,843 Own shares reserve 20 (1,628) (1,702) Equity Shareholders' Funds 116,166 119,476 Approved by the Board of Majedie Investments PLC (Company no. 109305) and authorised for issue on 24 November 2011. Andrew J Adcock Hubert V Reid Directors The notes below form part of these accounts. Consolidated Cash Flow Statement for the year ended 30 September 2011 2011 2010 Notes Â£000 Â£000 Net cash flow from operating activities Consolidated net return before taxation 59 (192) Adjustments for: (Gains)/losses on investments 13 (2,233) 2,361 Dividends reinvested (5) (45) Share based remuneration 116 64 Depreciation 208 84 Purchases of investments* (1,300,122) (57,963) Sales of investments* 1,319,735 55,741 Adjustment to non-current asset investments on consolidation 20,000 Proceeds from derivative contracts 483 Exchange gains on translation of foreign investments (109) Increase in non-controlling interest 248 38,380 50 Finance costs 2,886 2,802 Operating cashflows before movements in working capital 41,266 2,852 Increase in trade and other payables 139 410 Increase in trade and other receivables (758) (18) Net cash inflow from operating activities before tax 40,647 3,244 Tax recovered 29 10 Tax on unfranked income (245) (163) Net cash inflow from operating activities 40,431 3,091 Investing activities Purchases of tangible assets (87) (420) Disposals of tangible assets 29 Net cash outflow from investing activities (87) (391) Financing activities Interest paid (2,866) (2,783) Dividends paid (5,463) (6,763) Net cash outflow from financing activities (8,329) (9,546) Increase/(decrease) in cash and cash equivalents for year 22 32,015 (6,846) Cash and cash equivalents at start of year 5,538 12,384 Cash and cash equivalents at end of year 37,553 5,538 . * The large increase in investment transactions in the year to 30 September 2011 reflects the high volume trading activity in the QIF in line with its investment approach and industry peers. The notes below form part of these accounts. Company Cash Flow Statement for the year ended 30 September 2011 2011 2010 Notes Â£'000 Â£000 Net cash flow from operating activities Company net return before taxation 2,158 2,127 Adjustments for: (Gains)/losses on investments 13 (1,547) 2,361 Dividends reinvested (5) (45) Share based remuneration 116 64 Depreciation 47 64 Purchases of investments (15,692) (57,963) Sales of investments 35,546 55,741 20,623 2,349 Finance costs 2,803 2,802 Operating cashflows before movements in working capital 23,426 5,151 Increase in trade and other payables (210) (41) (Increase)/decrease in trade and other receivables (141) 86 Net cash inflow from operating activities before tax 23,075 5,196 Tax recovered 29 10 Tax on unfranked income (166) (163) Net cash inflow from operating activities 22,938 5,043 Investing activities Purchases of tangible assets (4) (90) Disposals of tangible assets 29 Purchases of subsidiaries (2,500) (4,510) Net cash outflow from investing activities (2,504) (4,571) Financing activities Interest paid (2,783) (2,783) Dividends paid (5,463) (6,763) Net cash outflow from financing activities (8,246) (9,546) Increase/(decrease) in cash and cash equivalents for year 22 12,188 (9,074) Cash and cash equivalents at start of year 3,057 12,131 Cash and cash equivalents at end of year 15,245 3,057 The notes below form part of these accounts. Notes to the Accounts General Information Majedie Investments PLC is a company incorporated 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 Tower 42, 25 Old Broad Street, London, EC2N 1HQ. The nature of the Group's operations and its principal activities are set out in the Business Review above and in note 2. Use of estimates and judgements The preparation of financial statements requires the Group to make estimates and assumptions that affect items reported in the Balance Sheets and Statements of Comprehensive Income and the disclosure of contingent assets and liabilities at the date of the financial statements. Although these estimates are based on management's best knowledge of current facts, circumstances and to, some extent, future events and actions, actual results ultimately may differ from those estimates, possibly significantly. The only estimates and assumptions that may cause material adjustment to the carrying value of assets and liabilities relate to the valuation of unquoted investments. These are valued in accordance with the policies as set out in the full Annual Report. At the year end, unquoted investments represent 38.0% of shareholders funds. 1 Significant Accounting Policies The principal accounting policies adopted are set out as follows: The accounts above comprise the audited results of the Company and its subsidiaries for the year ended 30 September 2011, and are presented in pounds sterling rounded to the nearest thousand, as this is the functional currency in which the Group and Company transactions are undertaken. Going Concern The Directors have a reasonable expectation that the Company has sufficient resources to continue operational existence for the foreseeable future. Accordingly the Financial Statements have been prepared on a going concern basis. Basis of Accounting The accounts of the Group and the Company have been prepared in accordance with International Financial Reporting Standards (IFRS). They comprise standards and interpretations approved by the International Accounting Standards Board and International Financial Reporting Committee, interpretations approved by the International Accounting Standards Committee that remain in effect, to the extent they have been adopted by the European Union. Where presentational guidance set out in the Statement of Recommended Practice (SORP) regarding the Financial Statements of Investment Trust Companies and Venture Capital Trusts issued by the Association of Investment Companies in January 2009 is not inconsistent with the requirements of IFRSs, the directors have sought to prepare the financial statements on a basis compliant with the recommendations of the SORP. All the companies' activities are continuing. Basis of Consolidation The Consolidated Accounts incorporate the accounts of the Company and entities controlled by the Company (its subsidiaries) made up to 30 September each year. Control is achieved where the Company has the power to govern the financial and operating policies of an investee entity so as to obtain benefits from its activities. The results of subsidiaries acquired or disposed of during this year are included in the Consolidated Statement of Comprehensive Income from the effective date of acquisition or disposal as appropriate. All Group entities have the same year end date. Non-controlling interests in the net assets of consolidated subsidiaries are identified separately from the Group's equity therein. Non-controlling interests consist of the amount of those interests at the date of the original business combination and the non-controlling's share of changes in equity since the date of combination. Losses applicable to the non-controlling interest in excess of the non-controlling's interest in the subsidiary's equity are allocated against the interest of the Group except to the extent that the non-controlling interest has a binding obligation and is able to make an additional investment to cover losses. Where necessary, adjustments are made to the financial statements of subsidiaries to bring the accounting policies used into line with those used by the Group. All intra-group transactions, balances, income and expenses are eliminated on consolidation. 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: International Accounting Standards (IAS/IFRSs) Effective date IFRS 9 Financial Instruments: Classification & Measurement 1 January 2013 IFRS 10 Consolidated Financial Statements 1 January 2013 IFRS 12 Disclosure of Interests in Other Entities 1 January 2013 IFRS 13 Fair Value Measurement 1 January 2013 IAS 24 Related Party Disclosures (revised) 1 January 2011 The directors anticipate that the adoption of the above Standards and Interpretations in future periods will have no material impact on the financial statements of the Group, with the exception of additional disclosure requirements. Presentation of Statement of Comprehensive Income In order to reflect better the activities of an investment trust company and in accordance with guidance issued by the AIC, supplementary information which analyses the Statement of Comprehensive Income between items of a revenue and capital nature has been presented alongside the Statement of Comprehensive Income. In accordance with the Company's status as a UK investment company under section 833 of the Companies Act 2006, net capital returns may not be distributed by way of dividend. Additionally the net revenue is the measure that the directors believe to be appropriate in assessing the Company's compliance with certain requirements set out in section 1158 of the Corporation Tax Act 2010. Foreign Currencies The individual financial statements of each Group company are presented in the currency of the primary economic environment in which it operates (its functional currency). For the purpose of the consolidated financial statements, the results and financial position of each Group company are expressed in pounds sterling, which is the functional currency of the Company, and the presentation currency for the consolidated financial statements. In preparing the financial statements, transactions in currencies other than the entity's functional currency (foreign currencies) are recorded at the rates of exchange prevailing on the dates of the transactions. At each balance sheet date, monetary assets and liabilities that are denominated in foreign currencies are retranslated at the rates prevailing on the balance sheet date. Non-monetary items carried at fair value that are denominated in foreign currencies are translated at the rates prevailing at the date when the fair value was determined. Non-monetary items that are measured in terms of historical cost in the foreign currency are not retranslated. Exchange differences arising on the settlement of monetary items, and on the retranslation of monetary items, are included in profit or loss for the period. Exchange differences arising on the retranslation of non-monetary items carried at fair value are included in profit or loss for the period except for differences arising on the retranslation of non-monetary items in respect of which gains and losses are recognised as other comprehensive income. For such non-monetary items, any exchange component of that gain or loss is also recognised as other comprehensive income. The assets and liabilities of foreign operations are translated into sterling at the rates of exchange ruling at the balance sheet date. Income and expenses are translated at weighted average exchange rates for the year. The resulting exchange differences are recognised in other comprehensive income. Segmental Reporting A segment is a distinguishable component of the Group that is engaged in business activities from which it may earn revenues and incur expenses (including intra-group revenues and expenses), for which discrete financial information is available and whose operating results are regularly renewed by the entity's chief decision maker who can make decisions on resource allocation and performance assessment. An operating segment could engage in business activities for what it has yet to earn revenues. Income Dividend income from investments is taken to the revenue account on an ex-dividend basis. UK dividends are included net of tax credits. Overseas dividends are included gross of any withholding tax. Where the Company has elected to receive scrip dividends in the form of additional shares rather than in cash, the amount of the cash dividend foregone is recognised as income. Any excess in the value of the shares received over the amount of the cash dividend is recognised in the capital column. The fixed return on a debt security is recognised on a time apportionment basis so as to reflect the effective yield on the debt security. Deposit interest and other interest receivable is included on an accruals basis. Special dividends are taken to the revenue or capital account depending on their nature. Expenses All expenses are accounted for on an accruals basis. In respect of the analysis between revenue and capital items presented within the Statement of Comprehensive Income, all expenses have been presented as revenue items except as follows: â€¢ Expenses which are incidental to the acquisition or disposal of an investment are treated as capital costs and separately identified and disclosed (see note 13). â€¢ Expenses are split and presented partly as capital items where a connection with the maintenance or enhancement of the value of the investments held can be demonstrated, and accordingly the investment management expenses have been allocated 75% to capital, in order to reflect the directors' expected long-term view of the nature of the investment returns of the Company. â€¢ The investment management performance fee, which is based on capital out-performance, is charged wholly to capital. Pension Costs Payments made to the Group's defined contribution group personal pension plan are charged as an expense as they fall due. Finance Costs 75% of finance costs arising from the debenture stocks are allocated to capital at a constant rate on the carrying amount of the debt; 25% of the finance costs are charged on the same basis to the revenue account. Premiums payable on early repurchase of debenture stock are charged 100% to capital. In addition, other interest payable is allocated 75% to capital and 25% to the revenue account. Share Based Payments The Group has applied the requirements of IFRS 2: Share-based Payments. In accordance with the transitional provisions, IFRS 2 has been applied to all grants of equity instruments after 7 November 2002 that were unvested as of 1 October 2004. The Group issues equity-settled share-based payments to certain employees. Equity-settled share-based payments are measured at fair value determined at the date of grant, which is expensed on a straight-line basis over the vesting period, based on the Group's estimate of the number of shares that will eventually vest. Fair value is measured by use of the Black-Scholes model. The expected life used in the model has been adjusted, based on management's best estimate, for the effects of non-transferability, exercise restrictions, and behavioural considerations. 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 Group's liability for current tax is calculated using tax rates that have been enacted or substantively enacted by the balance sheet date. In line with the recommendations of the SORP, the allocation method used to calculate tax relief on expenses presented against capital returns in the supplementary information in the Statement of Comprehensive Income is the marginal basis. Under this basis, if taxable income is capable of being offset entirely by expenses presented in the revenue return column of the Statement of Comprehensive Income, then no tax relief is transferred to the capital return column. Deferred tax is the tax expected to be payable or recoverable on differences between the carrying amounts of assets and liabilities in the financial statements and the corresponding tax bases used in the computation of taxable profit, and is accounted for using the balance sheet liability method. Deferred tax liabilities are recognised for all taxable temporary differences and deferred tax assets are recognised to the extent that it is probable that taxable profits will be available against which deductible temporary differences can be utilised. No provision is made for tax on capital gains since the Company operates as an investment trust for tax purposes. Property and Equipment Property and equipment are stated at cost less accumulated depreciation and any recognised impairment loss. Leasehold improvements are written off in equal annual instalments over the minimum period of the lease whereas depreciation for other tangible assets is provided for at 25% to 33% per annum using the straight-line method. Leasing Leases are classified as finance leases whenever the terms of the lease transfer substantially all the risks and rewards of ownership to the lessee. All other leases are classified as operating leases. Rentals payable under operating leases are charged to profit or loss on a straight-line basis over the term of the relevant lease. Investments Held at Fair Value Through Profit or Loss 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 classified as fair value through profit or loss as defined by IAS 39. 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, 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. These may include recent arm's length market transactions, the current fair value of another instrument which is 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. 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. Investment in Subsidiaries In its separate financial statements the Company recognises its investment in subsidiaries at cost, less any impairment or if they are investment vehicles they are valued at fair value. Financial Instruments Financial assets and financial liabilities are recognised on the Group's Balance Sheet when the Group becomes a party to the contractual provisions of the instrument. Derivative Financial Instruments Derivatives financial instruments are initially recognised on trade date and are measured at fair value. After initial recognition, derivative financial instruments are measured at fair value. Contracts for Difference (CFDs) represent agreements that obligate two parties to exchange cash flows at specified intervals based upon or calculated by reference to changes in specified prices or rates for a specified amount of an underlying asset or otherwise deemed notional amount. The ultimate gain or loss depends upon the prices at which the underlying financial instruments of the CFD is valued at the CFDs settlement date. Realised and movements in unrealised gains and losses are included in the Consolidated Statement of Comprehensive Income. Short sales are those in which a borrowed security is sold in anticipation of a decline in the market value of that security, or for various arbitrage transactions. Short sales are classified as financial liabilities at fair value through profit and loss. Futures are contractual obligations to buy or sell financial instruments on a future date at a specified price established in an organised market. The futures contracts are collateralised by cash and marketable securities; changes in the futures contracts' value are settled daily with the exchange. Interest rate futures are contractual obligations to receive or pay a net amount based on changes in interest rates at a future date at a specified price, established in an organised financial market. Futures are settled on a net basis. Changes in the fair value of derivative financial instruments are recognised as they arise in the Statement of Comprehensive Income. Trade Receivables Trade receivables do not carry any interest and are stated at carrying value which equates to their fair value as reduced by appropriate allowances for estimated irrecoverable amounts. Cash and Cash Equivalents Cash and cash equivalents comprise cash deposited with banks, cash balances at brokers and short-term highly liquid investments with maturities of three months or less from the date of acquisition. Prime broker cash balances are held with Goldman Sachs International and Morgan Stanley & Co International. Short and long cash positions held with these brokers can be netted off as per the prime broker agreements. Collateral Cash held at brokers Collateral cash consists of margin cash held as collateral for open derivative positions with the prime brokers, Goldman Sachs International and Morgan Stanley & Co International. Short and long cash positions held with these brokers can be netted off as per the prime broker agreements. Financial Liabilities and Equity Financial liabilities and equity instruments are classified according to the substance of the contractual arrangements entered into. An equity instrument is any contract that evidences a residual interest in the assets of the Group after deducting all of its liabilities. Financial liabilities are classified as financial liabilities at fair value through profit or loss and are recognised initially at fair value. Financial liabilities are subsequently measured at fair value and changes in fair value are recognised in the statement of comprehensive income. Debentures All debentures are recorded at proceeds received, net of direct issue costs and held at amortised cost with the interest expense being recognised on an effective yield basis. Trade Payables Trade payables are not interest bearing and are stated at carrying value which equates to their fair value. Reserves Gains and losses on the sale of investments and investment holding gains and losses are accounted for in the capital reserve. The translation reserve is used to record exchange differences arising from the translation of the financial statements for the Group's foreign subsidiary. Own Shares Own shares held under option are accounted for in accordance with IFRS 2: Share-based Payments. This requires that the consideration paid for own shares held be presented as a deduction from shareholders' funds, and not recognised as an asset. 2. Business segments For management purposes, the Group is currently organised into the following two principal activities: 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 in the full Annual Report and exposure to different currencies is disclosed in note 26. Investment management services To complement this investment objective and create income and capital for the Group, Javelin Capital LLP has been launched to market a range of funds to third party investors and provide investment management and advisory services. Group Group 2011 2010 Investment Investment management management Investing and Investing and advisory advisory activities services Eliminations Total activities services Eliminations Total Â£000 Â£000 Â£000 Â£000 Â£000 Â£000 Â£000 Â£000 Income from investment management services 1,318 (1,318) Other 5,537 3 5,540 10,091 2 10,093 operating and investment income Intra-group (25) 25 50 92 (142) income 5,512 1,321 (1,293) 5,540 10,141 94 (142) 10,093 Performance shares and options fair value charge (116) (116) (64) (64) Other (1,304) (2,979) (4,283) (2,054) (2,356) (4,410) administrative costs Intra-group (1,318) 1,318 (85) (25) 110 expenses Other 13 (442) (429) (648) (648) operating expenses (2,725) (3,421) 1,318 (4,828) (2,851) (2,381) 110 (5,122) Operating 2,787 (2,100) 25 712 7,290 (2,287) (32) 4,971 profit/(loss) Finance costs (2,886) (2,886) (2,802) (2,802) Intra-group 25 (25) (25) 25 finance costs Gains/(losses) on fair value through profit and loss 2,233 2,233 (2,361) (2,361) Profit/(loss) 2,134 (2,075) 59 2,127 (2,312) (7) (192) before tax Dividends (5,463) (5,463) (6,763) (6,763) Total assets 152,949 3,789 156,738 150,241 2,942 153,183 Total (44,131) (725) (44,856) (35,571) (453) (36,024) liabilities Intra-group 7,419 (419) (7,000) 4,801 (301) (4,500) assets/ (liabilities) Net assets 116,237 2,645 (7,000) 111,882 119,471 2,188 (4,500) 117,159 3. Income Group Group Company Company 2011 2010 2011 2010 Â£000 Â£000 Â£000 Â£000 Income from investments Franked investment incomeâ€ 4,153 8,778 4,153 8,778 UK unfranked investment income 138 21 138 21 Overseas dividends 1,105 1,156 1,053 1,156 Fixed interest and convertible bonds 38 56 38 56 5,434 10,011 5,382 10,011 Other income Deposit interest 68 44 6 43 Other interest 19 19 25 Sundry income 19 38 (6) 62 106 82 19 130 Total income 5,540 10,093 5,401 10,141 Total income comprises: Dividends 5,396 9,955 5,344 9,955 Interest 125 100 63 124 Other income 19 38 (6) 62 5,540 10,093 5,401 10,141 Income from investments Listed UK 2,377 2,618 2,377 2,618 Listed overseas 1,143 1,156 1,091 1,156 Unlisted 1,914 6,237 1,914 6,237 5,434 10,011 5,382 10,011 â€ Includes MAM special dividend income of Â£nil (2010: Â£5,400,000). 4. Management Fees Company Company 2011 2010 Revenue Capital Revenue Capital return return Total return return Total Â£000 Â£000 Â£000 Â£000 Â£000 Â£000 Investment management 173 519 692 14 44 58 Administration 245 245 20 20 418 519 937 34 44 78 A summary of the terms of the Management Agreement for the Company with Javelin Capital LLP is given in the Business Review. At 30 September 2011, an amount of Â£49,000 was outstanding for payment of investment management fees when due (2010: Â£58,000) and outstanding administration fees of Â£22,000 (2010: Â£20,000). The Manager is also entitled to a performance fee from the Company in accordance with the provisions of the Management Agreement, the calculation of which is also described in the Business Review. No performance fee is due in respect of the year ended 30 September 2011 (2010: Â£nil). 5. Administrative Expenses Group Group Company Company 2011 2010 2011 2010 Â£000 Â£000 Â£000 Â£000 Staff costs - note 7 1,385 851 122 768 Other staff costs and directors' fees 354 232 239 232 Advisers' costs 715 498 379 444 Restructuring costs 265 139 Information costs 738 129 52 82 Establishment costs 119 132 113 Operating lease rentals - premises 123 132 132 Depreciation on tangible assets 208 84 47 64 Auditors' remuneration 103 66 55 52 (see below) Pre start-up costs 195 2,516 627 Other expenses 623 482 17 259 4,828 5,122 1,050 2,773 A charge of Â£2,633,000 (2010: Â£2,017,000 inclusive of Â£627,000 pre-start-up costs) to capital and an equivalent credit to revenue has been made in the Group and a charge of Â£319,000 (2010: Â£1,167,000) in the Company has been made to recognise the accounting policy of charging 75% of direct investment management expenses to capital. Total fees charged by the auditors for the year, all of which were charged to revenue, comprised: Group Group Company Company 2011 2010 2011 2010 Â£000 Â£000 Â£000 Â£000 Audit services - statutory audit 96 60 48 46 Other non-audit services 7 6 7 6 103 66 55 52 6. Directors' Emoluments Company Company 2011 2010 Â£000 Â£000 Salaries and fees 243 332 Other benefits 1 244 332 The Report on Directors' Remuneration in the full Annual Report explains the Company's policy on remuneration for directors for the year. It also provides further details of directors' remuneration. 7. Staff Costs including Executive Directors Group Group Company Company 2011 2010 2011 2010 Â£000 Â£000 Â£000 Â£000 Salaries and other payments 1,089 684 607 Social security costs 129 73 6 67 Pension contributions 51 30 30 Share based remuneration - note 25 116 64 116 64 1,385 851 122 768 Group Group Company Company 2011 2010 2011 2010 Number Number Number Number Average number of employees: Management and office staff 11 17 7 8. Finance Costs Group Group 2011 2010 Revenue Capital Revenue Capital return return Total return return Total Â£000 Â£000 Â£000 Â£000 Â£000 Â£000 Interest on 9.5% debenture stock 2020 321 962 1,283 321 962 1,283 Interest on 7.25% debenture stock 2025 375 1,125 1,500 375 1,125 1,500 Amortisation of expenses associated with debenture issue 5 15 20 5 14 19 Other interest payable 20 63 83 721 2,165 2,886 701 2,101 2,802 Company Company 2011 2010 Revenue Capital Revenue Capital return return Total return return Total Â£000 Â£000 Â£000 Â£000 Â£000 Â£000 Interest on 9.5% debenture stock 2020 321 962 1,283 321 962 1,283 Interest on 7.25% debenture stock 2025 375 1,125 1,500 375 1,125 1,500 Amortisation of expenses associated with debenture issue 5 15 20 5 14 19 701 2,102 2,803 701 2,101 2,802 Further details of the debenture stocks in issue are provided in note 18. 9. Taxation Analysis of tax charge Group Group Company Company 2011 2010 2011 2010 Â£000 Â£000 Â£000 Â£000 Tax on overseas dividends 200 131 121 131 Reconciliation of tax charge: The current taxation for the year is higher than the standard rate of corporation tax in the UK -27% (2010: 28%). The differences are explained below: Group Group Company Company 2011 2010 2011 2010 Â£000 Â£000 Â£000 Â£000 Net return before taxation 59 (192) 2,158 2,127 Taxation at UK Corporation Tax rate of 27% (2010: 28%) 16 (54) 583 595 Group 2011 Â£000 Group 2010 Â£000 Company 2011 Â£000 Company 2010 Â£000 Effects of: - UK dividends which are not taxable (1,158) (2,455) (1,158) (2,455) - foreign dividends which are not taxable (278) (302) (278) (302) - (losses)/gains on investments which are not taxable (603) 661 (417) 661 - expenses not deductible for tax purposes 53 221 57 227 - excess expenses for current year 1,970 1,929 1,213 1,274 - overseas taxation which is not recoverable 200 131 121 131 Actual current tax charge 200 131 121 131 Group After claiming relief against accrued income taxable on receipt, the Group has unrelieved excess expenses of Â£61,728,000 (2010: Â£54,432,000). It is not yet certain that the Group will generate sufficient taxable income in the future to utilise these expenses and therefore no deferred tax asset has been recognised. Company After claiming relief against accrued income taxable on receipt, the Company has unrelieved excess expenses of Â£56,597,000 (2010: Â£52,093,000). It is not yet certain that the Company will generate sufficient taxable income in the future to utilise these expenses and therefore no deferred tax asset has been recognised. The allocation of expenses to capital does not result in any tax effect. Due to the Company's status as an investment trust, and the intention to continue meeting the conditions required to obtain approval in the foreseeable future, the Company has not provided deferred tax on any capital gains and losses arising on the revaluation or disposal of investments. 10. Dividends The following table summarises the amounts recognised as distributions to equity shareholders in the period: Group and Group and Company Company 2011 2010 Â£000 Â£000 2009 Final dividend of 6.30p paid on 27 January 2010 3,277 2010 Special dividend of 2.50p paid on 8 March 2010 1,301 2010 Interim dividend of 4.20p paid on 30 June 2010 2,185 2010 Final dividend of 6.30p paid on 26 January 2011 3,277 2011 Interim dividend of 4.20p paid on 29 June 2011 2,186 5,463 6,763 2011 2010 Â£000 Â£000 Proposed final dividend for the year ended 30 September 2011 of 6.30p (2010: final dividend of 6.30p) per ordinary share 3,279 3,277 3,279 3,277 The proposed final dividend has not been included as a liability in these accounts in accordance with IAS 10: Events after the Balance Sheet date. Set out below is the total dividend to be paid in respect of the financial year. This is the basis on which the requirements of Section 1158 of the Corporation Tax Act 2010 are considered. 2011 2010 Â£000 Â£000 Interim dividend for the year ended 30 September 2011 of 4.20p (2010: 4.20p) per ordinary share 2,186 2,185 Proposed final dividend for the year ended 30 September 2011 of 6.30p (2010: 6.30p) per ordinary share 3,279 3,277 Special dividend for the year ended 30 September 2011 of nil (2010: 2.50p) per ordinary share 1,301 5,465 6,763 11. Return/(loss) per Ordinary Share Basic return/(loss) per ordinary share is based on 52,029,833 (2010: 52,022,510) ordinary shares, being the weighted average number of shares in issue having adjusted for the shares held by the Employee Incentive Trust referred to in note 20. Basic returns per ordinary share are based on the net return after taxation attributable to equity shareholders. There is no dilution to the basic return/(loss) per ordinary share shown for the years ended 30 September 2011 and 2010 since the share options referred to in note 20 would, if exercised, be satisfied by the shares already held by the Employee Incentive Trust. Group Group 2011 2010 Â£000 Â£000 Basic and diluted revenue returns are based on net revenue after taxation of: 2,427 6,156 Basic and diluted capital returns are based on net capital return/(loss) of: (2,568) (6,479) Basic and diluted total returns are based on return/(loss) of: (141) (323) Company Company 2011 2010 Â£000 Â£000 Basic and diluted revenue returns are based on net revenue after taxation of: 3,431 8,237 Basic and diluted capital returns are based on net capital return/(loss) of: (1,394) (6,241) Basic and diluted total returns are based on return/(loss) of: 2,037 1,996 12. Property and Equipment Group Group Group Leasehold Office Improvements Equipment Total Â£000 Â£000 Â£000 Cost: At 1 October 2010 171 494 665 Additions 87 87 Disposals At 30 September 2011 171 581 752 Depreciation: At 1 October 2010 23 111 134 Charge for year 17 191 208 Disposals At 30 September 2011 40 302 342 Net book value: At 30 September 2011 131 279 410 At 30 September 2010 148 383 531 Company Company Company Leasehold Office Improvements Equipment Total Â£000 Â£000 Â£000 Cost: At 1 October 2010 171 164 335 Additions 4 4 Disposals At 30 September 2011 171 168 339 Depreciation: At 1 October 2010 23 91 114 Charge for year 17 30 47 Disposals At 30 September 2011 40 121 161 Net book value: At 30 September 2011 131 47 178 At 30 September 2010 148 73 221 13. Investments at Fair Value Through Profit or Loss Group Group 2011 2010 Listed Unlisted Total Listed Unlisted Total Â£000 Â£000 Â£000 Â£000 Â£000 Â£000 Opening cost at beginning of year 110,166 14,034 124,200 104,461 13,450 117,911 Gains/(losses) at beginning of year 369 20,854 21,223 6,796 22,584 29,380 Opening fair value at beginning of year 110,535 34,888 145,423 111,257 36,034 147,291 Transfer on consolidation of QIF (20,000) (20,000) Purchases at cost* 1,305,385 1,305,385 55,988 55,988 Sales - proceeds* (1,322,570) (512) (1,323,082) (55,401) (94) (55,495) (Losses)/ gains on sales (3,791) (660) (4,451) 5,903 (107) 5,796 (Decrease)/increase in investment holding gains (2,564) 8,728 6,164 (6,427) (1,730) (8,157) Adjustments for listing/delisting during financial year (785) 785 Foreign exchange gains on retranslation of Foreign investment 72 72 Closing fair value at end of year 67,067 42,444 109,511 110,535 34,888 145,423 Closing cost at end of year 69,262 12,862 82,124 110,166 14,034 124,200 (Losses)/gains at end of year (2,195) 29,582 27,387 369 20,854 21,223 Closing fair value at end of year 67,067 42,444 109,511 110,535 34,888 145,423 * The large increase in investment transactions in the year to 30 September 2011 reflects the high volume trading activity in the QIF in line with its investment approach and industry peers. Investments are disclosed as investments held at fair value of Â£112,822,000 less financial liabilities held at fair value of Â£3,311,000. Company 2011 Related and subsidiary Listed Unlisted companies Total Company Â£000 Â£000 Â£000 Â£000 Opening cost at beginning of year 110,166 13,986 5,510 129,962 Gains/(losses) at beginning of year 369 20,902 (839) 20,432 Opening fair value at beginning of year 110,535 34,888 4,671 150,094 Purchases at cost 15,094 2,500 17,594 Sales - proceeds (34,376) (512) (34,888) Losses on sales (4,054) (660) (4,714) (Decrease)/increase in investment holding gains (2,467) 8,728 6,261 Adjustments for listing/delisting during financial year Closing fair value at end of year 84,732 42,444 7,171 134,347 Closing cost at end of year 86,830 12,814 8,010 107,654 (Losses)/gains at end of year (2,098) 29,630 (839) 26,693 Closing fair value at end of year 84,732 42,444 7,171 134,347 Company 2010 Related and subsidiary Listed Unlisted companies Total Â£000 Â£000 Â£000 Â£000 Opening cost at beginning of year 104,461 13,450 1,000 118,911 Gains/(losses) at beginning of year 6,796 22,584 (839) 28,541 Opening fair value at beginning of year 111,257 36,034 161 147,452 Purchases at cost 55,988 4,510 60,498 Sales - proceeds (55,401) (94) (55,495) Gains/(losses) on sales 5,903 (107) 5,796 (Decrease)/increase in investment holding gains (6,427) (1,730) (8,157) Adjustments for listing/delisting during financial year (785) 785 Closing fair value at end of year 110,535 34,888 4,671 150,094 Closing cost at end of year 110,166 14,034 5,510 129,710 Gains/(losses) at end of year 369 20,854 (839) 20,384 Closing fair value at end of year 110,535 34,888 4,671 150,094 All operating subsidiaries are held at cost, less any impairment, unless considered to be an investment fund and then held at fair value. Unlisted investments include an amount of Â£3,186,000 in 20 various companies, Â£ 39,000,000 for our investment in MAM and Â£258,000 (2010: Â£558,000) of loan or convertible notes that pay a fixed rate of interest. The valuation of investments includes 8 unlisted investments of over Â£100,000 (including MAM). During the year the Company incurred transaction costs amounting to Â£151,000 (2010: Â£296,000) of which Â£74,000 (2010: Â£186,000) related to the purchases of investments and Â£77,000 (2010: Â£110,000) related to the sales of investments. These amounts are included in gains/(losses) on investments at fair value through profit or loss, as disclosed in the Consolidated and Company Statement of Comprehensive Income. The composition of the investment return is analysed below: Group Group Company Company 2011 2010 2011 2010 Â£000 Â£000 Â£000 Â£000 Net (losses)/gains on sales of equity investments (4,451) 5,796 (4,714) 5,796 Increase/(decrease) in holding gains on equity investments 6,164 (8,157) 6,261 (8,157) Proceeds on sale of derivative contracts 483 Unrealised gains on derivative contracts (Note 14) 37 Net return on investments 2,233 (2,361) 1,547 (2,361) Fair value hierarchy disclosures The Group has adopted the amendment to IFRS 7, effective 1 January 2009. This requires the Group to classify fair value measurements using a fair value hierarchy that reflects the significance of the inputs used in making the measurements. The fair value hierarchy consists of the following three levels: â€¢ Level 1 - Quoted prices (unadjusted) in active markets for identical assets or liabilities. An active market is a market in which transactions for the asset or liability occur with sufficient frequency and volume on an ongoing basis such that quoted prices reflect prices at which an orderly transaction would take place between market participants at the measurement date. Quoted prices provided by external pricing services, brokers and vendors are included in Level 1, if they reflect actual and regularly occurring market transactions on an arms length basis. â€¢ Level 2 - Inputs other than quoted prices included within level 1 that are observable for the asset or liability, either directly (that is, as prices) or indirectly (that is, derived from prices). Level 2 inputs include the following: â€¢ quoted prices for similar (ie not identical) assets in active markets. â€¢ quoted prices for identical or similar assets or liabilities in markets that are not active. Characteristics of an inactive market include a significant decline in the volume and level of trading activity, the available prices vary significantly over time or among market participants or the prices are not current. â€¢ inputs other than quoted prices that are observable for the asset (for example, interest rates and yield curves observable at commonly quoted intervals). â€¢ inputs that are derived principally from, or corroborated by, observable market data by correlation or other means (market-corroborated inputs). â€¢ Level 3 - Inputs for the asset or liability that are not based on observable market data (unobservable inputs). The level in the fair value hierarchy within which the fair value measurement is categorised in its entirety is determined on the basis of the lowest level input that is significant to the fair value measurement in its entirety. For this purpose, the significance of an input is assessed against the fair value measurement in its entirety. If a fair value measurement uses observable inputs that require significant adjustment based on unobservable inputs, that measurement is a level 3 measurement. Assessing the significance of a particular input to the fair value measurement in its entirety requires judgement, considering factors specific to the asset or liability. The determination of what constitutes 'observable' requires significant judgement by the Group. The Group considers observable data to investments actively traded in organised financial markets, fair value is generally determined by reference to Stock Exchange quoted market bid prices at the close of business on the balance sheet date, without adjustment for transaction costs necessary to realise the asset. The table sets out fair value measurements of financial assets in accordance with the IFRS fair value hierarchy system: Group Group 2011 2010 Level 1 Level 2 Level 3 Total Level 1 Level 2 Level 3 Total Financial Â£000 Â£000 Â£000 Â£000 Â£000 Â£000 Â£000 Â£000 assets Financial assets designated at fair value through profit or loss Equities and managed funds Listed 70,009 70,009 110,464 110,464 equity securities Unlisted 42,182 42,182 34,325 34,325 equity securities Unlisted 4 4 71 5 76 preference shares Exchange 369 369 traded funds Interest bearing securities Unlisted 258 258 558 558 convertible bonds Derivatives financial assets Contracts 136 136 for difference 70,009 505 42,444 112,958 110,535 34,888 145,423 Financial liabilities Financial liabilities designated at fair value through profit or loss Listed 2,093 2,093 equities Exchange 1,218 1,218 traded funds Derivatives Contracts 96 96 for difference Index 3 3 futures Financial liabilities measured at amortised cost 9.5% 13,392 13,392 13,384 13,384 Debenture stock 2020 7.25% 20,409 20,409 20,397 20,397 Debenture stock 2025 3,314 33,897 37,211 33,781 33,781 Company Company 2011 2010 Level 1 Level 2 Level 3 Total Level 1 Level 2 Level 3 Total Financial Â£000 Â£000 Â£000 Â£000 Â£000 Â£000 Â£000 Â£000 assets Financial assets designated at fair value through profit or loss Equities and managed funds Listed 84,732 84,732 110,464 110,464 equity securities Unlisted 49,353 49,353 38,996 38,996 equity securities Unlisted 4 4 71 5 76 preference shares Interest bearing securities Unlisted 258 258 558 558 convertible bonds 84,732 49,615 134,347 110,535 39,559 150,094 Financial liabilities Financial liabilities measured at amortised cost 9.5% 13,392 13,392 13,384 13,384 Debenture stock 2020 7.25% 20,409 20,409 20,397 20,397 Debenture stock 2025 33,801 33,801 33,781 33,781 Investments whose values are based on quoted market prices in active markets, and therefore classified within level 1, include active listed equities. The Group does not adjust the quoted price for these instruments. Financial instruments that trade in markets that are not considered to be active but are valued based on quoted market prices, dealer quotations or alternative pricing sources supported by observable inputs are classified within level 2. As level 2 investments include positions that are not traded in active markets and/or are subject to transfer restrictions, valuations may be adjusted to reflect illiquidity and/or non-transferability, which are generally based on available market information. Investments 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 Group has used valuation techniques to derive the fair value. In respect of unquoted instruments, or where the market for a financial instrument is not active, fair value is established by using recognised valuation methodologies, in accordance with International Private Equity and Venture Capital ("IPEVC") Valuation Guidelines. New investments are initially carried at cost, for a limited period, being the price of the most recent investment in the investee. This is in accordance with IPEVC Guidelines as the cost of recent investments will generally provide a good indication of fair value. Fair value is the amount for which an asset could be exchanged between knowledgeable, willing parties in an arm's length transaction. The following table presents the movement in level 3 instruments for the year ended 30 September 2011: Group 2011 Equity Convertible Convertible Preference Total investments bonds loan notes shares Â£000 Â£000 Â£000 Â£000 Â£000 Opening balance 34,888 34,325 260 298 5 Purchases Transfers from Level 1 Sales - proceeds (512) (217) (295) Total gains/(losses) for the year included in the income statement 8,068 8,074 (2) (3) (1) 42,444 42,182 258 4 Group 2010 Opening balance 36,034 35,465 274 294 1 Purchases Transfers from Level 1 785 785 Sales - proceeds (94) (94) Total (losses)/gains for the year included in the income statement (1,837) (1,831) (14) 4 4 34,888 34,325 260 298 5 Company 2011 Equity Convertible Convertible Preference Total investments bonds loan notes shares Â£000 Â£000 Â£000 Â£000 Â£000 Opening balance 39,559 38,996 260 298 5 Purchases 2,500 2,500 Transfers from Level 1 Sales - proceeds (512) (217) (295) Total gains/(losses) for the year included in the income statement 8,068 8,074 (2) (3) (1) 49,615 49,353 258 4 Company 2010 Opening balance 36,195 35,626 274 294 1 Purchases 4,510 4,510 Transfers from Level 1 785 785 Sales - proceeds (94) (94) Total (losses)/gains for the year included in the income statement (1,837) (1,831) (14) 4 4 39,559 38,996 260 298 5 Substantial Share Interests The Group has a number of investee company holdings where its investment is greater than 3% of any class of capital in those companies. Those that are considered material (excluding MAM and the QIF which are disclosed separately below) in the context of these accounts are shown below: Fair Value % of Â£000 Class Held AOI Medical 152 4.76 Sutherland Health 39 4.30 The Group does not exercise significant influence over the operating and financial policies of the above companies which are therefore not considered to be associated companies. Javelin Capital Global Equity Strategies Fund (QIF) The Company has invested Â£20m of seed capital to the QIF and currently has a 98.77% interest in the QIF. As such and in accordance with IFRS, the QIF is consolidated into the group accounts for the year to 30 September 2011. The QIF is being actively marketed to potential external investors and it is forecast that the Company's interest will reduce significantly in the future which will result in the QIF being deconsolidated. The results of the QIF for the period ended 30 September 2011 are shown in note 15. MajedieAsset Management (MAM) MAM is a UK based asset management firm, which provides investment management and advisory services relating to UK equities. The carrying value of the Company's investment in MAM is included in the Consolidated Balance Sheet as part of investments at fair value through profit or loss: 2011 2010 Â£000 Â£000 Deemed cost of investment 1,207 1,207 Holding gains 37,793 28,793 Fair value at 30 September 39,000 30,000 The carrying value of MAM in the 30 September 2011 Consolidated Financial Statements is its fair value as assessed at 30 September 2011. The above valuation exercise was carried out by the Board in accordance with the Company's accounting policy for the valuation of unlisted investments. The approach adopted involved the consideration of earnings for the 2011 and the 2012 financial years, the inclusion of estimated performance fee income on a discounted basis, the application of a relevant market-based multiple to earnings and an overall illiquidity discount. The results of MAM for the year ended 30 September 2011 show a net profit after taxation of Â£ 10,630,000 (2010: Â£14, 633,000) and shareholders' funds of Â£ 25,134,000 (2010: Â£18, 892,000). As the Company does not exercise significant influence over the operating and financial policies of MAM it is not considered to be an associate, and theIR results are not consolidated in the Group's results but are incorporated into the directors' valuation of the fair value of MAM as detailed above. During the year ended 30 September 2011 the Company had a 30% equity shareholding in MAM. MAM has established aN Employee Benefit Trust and in accordance with the revised shareholders' agreement, the founding shareholders will sell a certain number of shares to the EBT, usually annually and at the prescribed price (calculated in accordance with the shareholder agreement). On 26 October 2011, the Company sold 590 ordinary 0.1p shares to the EBT for a consideration of Â£166,000 and a realised gain of Â£160,000. Following this transaction the Company holds 127,981 ordinary 0.1p shares representing a 29.9% equity shareholding. 14. Derivative financial instruments Introduction The Company and its subsidiaries may invest in both exchange traded and OTC financial derivative instruments. There were no investments held by the Company in derivative instruments at the reporting date. However, through the Company's investment in Javelin Capital Global Equity Strategies (QIF) the Fund has invested in the following financial derivative instruments at the reporting date: a) Contracts for differences ("CFD"s) Details of how the QIF uses CFDs are disclosed in the accounting policies note as above. Also, as at 30 September 2011, the fair value of CFDs is disclosed below and on the Balance Sheet. b) Futures Details of how the QIF uses futures are disclosed in the accounting policies as above. Also as at 30 September 2011, the fair value of open future positions is disclosed below and on the Balance Sheet. 30 September 2011 Assets Liabilities Net Â£000 Â£000 Â£000 Derivatives instruments Contracts for difference 136 (96) 40 Index Funds (3) (3) 136 (99) 37 15. Investment in Subsidiaries a) Subsidiary undertakings at 30 September 2011 Company Country of Profit after Registration Number and Capital tax for the Incorporation class of Group Reserves year shares at ended Company and business and Operation held by group Holding 30.09.11 30.09.11 Â£000 Â£000 Majedie Portfolio Management Limited UK 1,000,000 100% 162 - Majedie share plan Ordinary manager, authorised and regulated by the FSA shares Majedie Unit Trust UK 10,000 100% (1,605) (1,615) - Unauthorised unit Units trust to receive Javelin Capital income Javelin Capital LLP UK 75% 75% 1,897 (1,848) - Asset Management, interest authorised and regulated by the FSA Javelin Capital Services Limited UK 100 75% - Administration Ordinary Services shares Javelin Capital Fund Management Limited Ireland 125,000 75% 125 7 - Asset Management Ordinary shares Javelin Capital Ireland 310,840 98.7% 20,166 (46) Strategies Plc (subfund: Javelin Capital Global Equity Strategies Fund) - Qualifying Investment Redeemable Fund (QIF), supervised Participating by the Central Bank of shares Ireland) Javelin Capital Services Limited, Javelin Capital Fund Management Limited and the Javelin Capital EBT are all wholly owned subsidiaries of Javelin Capital LLP. Following a review of the Javelin group the Javelin Capital EBT was wound up and it ceased to be a partner in Javelin Capital LLP on 30 September 2011. (b) Non-Controlling Interest The non-controlling interest reflected in the Consolidated Statement of Comprehensive Income and Balance Sheet represents the other investors in the QIF as recognised in accordance with IFRS. In respect of the consolidation of the Javelin Capital entities into the group accounts, in accordance with the Company's accounting policies and the income and loss recognition provisions of the Limited Liability Partner Agreement for Javelin Capital LLP there is no minority interest to be recognised in the Consolidated Statement of Comprehensive Income or Balance Sheet. 16. Trade and Other Receivables Group Group Company Company 2011 2010 2011 2010 Â£000 Â£000 Â£000 Â£000 Sales for future settlement 4,179 832 174 832 Payments in advance 1,256 451 193 36 Dividends receivable 298 346 298 346 Accrued income 18 17 8 17 Taxation recoverable 66 45 66 45 Amounts due from subsidiary undertakings 441 400 5,817 1,691 1,180 1,676 The directors consider that the carrying amounts of trade and other receivables approximates to their fair value. 17. Cash and Cash Equivalents Group Group Company Company 2011 2010 2011 2010 Â£000 Â£000 Â£000 Â£000 Deposits at banks 17,051 4,903 14,809 2,686 Collateral cash held with brokers 2,115 Non collateral cash held with brokers 17,575 Other balances 812 635 436 371 37,553 5,538 15,245 3,057 Cash used for collateral is restricted. 18. Trade and Other Payables Amounts falling due within one year: Group Group Company Company 2011 2010 2011 2010 Â£000 Â£000 Â£000 Â£000 Purchases for future settlement 5,861 598 598 Accrued expenses 285 449 276 522 Other creditors 1,499 1,196 707 671 7,645 2,243 983 1,791 The Directors consider that the carrying amounts of trade and other receivables approximates to their fair value. Amounts falling due after more than one year: Group Group Company Company 2011 2010 2011 2010 Â£000 Â£000 Â£000 Â£000 Â£13.5m (2010: Â£13.5m) 9.5% debenture stock 2020 13,392 13,384 13,392 13,384 Â£20.7m (2010: Â£20.7m) 7.25% debenture stock 2025 20,409 20,397 20,409 20,397 33,801 33,781 33,801 33,781 Both debenture stocks are secured by a floating charge over the Company's assets. Expenses associated with the issue of debenture stocks were deducted from the gross proceeds and are being accounted for, at a constant rate, the effect of which is immaterially different to applying the effective interest rate method, over the life of the debentures. Further details on interest and the amortisation of issue expenses are provided in note 8. 19. Called Up Share Capital Company Company 2011 2010 Â£000 Â£000 Allotted and fully paid at 30 September: 52,528,000 (2010: 52,528,000) ordinary shares of 10p each 5,253 5,253 There are 483,387 (2010: 505,490) ordinary shares of 10p each held by the Employee Incentive Trust. See note 20. Ordinary shares carry one vote each on a poll. 20. Own Shares The total number of options outstanding at the date of this report is 188,756 under the LTIP and the total shareholding of the Employee Incentive Trust is 483,387 ordinary shares. The shares will be held by the Trust until the relevant options are exercised or until they lapse. They are presented on the Balance Sheet as a deduction from shareholders' funds, in accordance with the policy detailed in note 1. Group and Company Own Shares Number of Reserve Shares Â£000 As at 1 October 2010 505,490 (1,702) Options exercised (22,103) 74 As at 30 September 2011 483,387 (1,628) 21. Net Asset Value The consolidated net asset value per share has been calculated based on equity shareholders' funds of Â£111,634,000 (2010: Â£117,159,000) and on 52,044,613 (2010: 52,022,510) ordinary shares, being the shares in issue at the year end having deducted the number of shares held by the EIT. 22. Analysis of Changes in Net Funds/(Debt) At 30 Non At 30 September Cash Cash September 2010 Flows Items 2011 Group Â£000 Â£000 Â£000 Â£000 Cash at bank and with brokers 5,538 32,015 37,553 Debt due after one year (33,781) (20) (33,801) (28,243) 32,015 (20) 3,752 At 30 Non At 30 September Cash Cash September 2010 Flows Items 2011 Company Â£000 Â£000 Â£000 Â£000 Cash at bank 3,057 12,188 15,245 Debt due after one year (33,781) (20) (33,801) (30,724) 12,188 (20) (18,556) 23. Operating Lease Commitments The Group has a 10 year non-cancellable operating lease (with a break clause in 5 years) in respect of premises, including a rent free period. The rent free element has been apportioned over the lease up to the date of the break clause. The Group has an annual commitment at 30 September 2011 under the lease of Â£ 145,000 (2010: Â£145,000). This operating lease commitment is disclosed in the table below. Expiry Date 2011 2010 Â£000 Â£000 Within one year 145 145 Between one and two years 145 145 Between two and three years 32 145 Between three and four years 35 Five years and above 322 470 24. Financial Commitments At 30 September 2011 the Group had no financial commitments which had not been accrued for (2010: none). 25. Share-based Payments The Group currently operates one share-based payment scheme being the 2006 Long Term Incentive Plan (LTIP) which in turn has two sections relating to TSR-based Awards and Matching Awards. With the introduction of Javelin Capital LLP and resultant employee transfers from the Company no further awards will be made under the LTIP. Javelin Capital LLP does not operate any share-based payment schemes. Long Term Incentive Plan: TSR-based Awards Awards of restricted shares up to a maximum value of one year's salary have performance conditions based on total shareholder return in relation to two separate performance conditions over a period of five years. The performance conditions contain higher and lower thresholds that determine the extent of the vesting of the award. Long Term Incentive Plan: Matching Awards Executive directors and senior executives receive a certain percentage of their overall bonus for the year in deferred shares. The shares granted according to these matching awards only vest once the executive has completed three years' further service. There are no other performance conditions. Group 2011 TSR - based Matching Awards Awards Weighted Weighted No. Average No. Average of Exercise of Exercise Options Price (p) Options Price (p) Outstanding at 1 October 2010 291,268 0.0 17,812 0.0 During the year: Awarded Forfeited Exercised (13,430) 0.0 (8,673) 0.0 Expired (122,965) 0.0 Increase in awards due to dividends paid 23,446 0.0 1,298 0.0 Outstanding at 30 September 2011 178,319 0.0 10,437 0.0 Exercisable at 30 September 2011 10,437 Group 2010 Discretionary Share Option TSR-based Matching Scheme 2000 Awards Awards Weighted Weighted Weighted No. Average No. Average No. Average of Exercise of Exercise of Exercise Options Price (p) Options Price (p) Options Price (p) Outstanding at 1 October 2009 106,656 330.03 166,427 0.0 17,071 0.0 During the year: Awarded 112,721 0.0 Forfeited Exercised Expired (106,656) 330.03 Increase in awards due to dividends paid 12,120 0.0 741 0.0 Outstanding at 30 September 2010 291,268 0.0 17,812 0.0 Exercisable at 30 September 2010 There were no awards made during the year (2010: Â£154,000 relating to the aggregate estimated fair value of 112,721 TSR-based options granted on 4 December 2008). On 31 March 2011, 5,701 share options were exercised at a share price of 180p with a resultant gain to the former employee of Â£10,000. Additionally on 24 June 2011, 16,402 share options were exercised at a share price of 172.50p giving a gain to the former employee of Â£28,000. During the year 122,965 share options lapsed in accordance with the leaving agreement for a former employee. The awards outstanding at 30 September 2011 had a weighted average remaining contractual life of 3.4 years and 0.1 years in respect of the TSR-based Awards and Matching Awards respectively (2010; 0.2 years for the Discretionary Share Options Scheme 2000 and then 3.9 years and 2.1 years respectively). Awards and Options are usually forfeited if the employee leaves employment before vesting. The following table lists the assumptions and weighted average inputs used in the Black Scholes model for share awards granted in the year: 2011 2010 TSR-based TSR-based Awards Awards Weighted Average share price n/a 200.0p Weighted Average exercise price n/a 0.0p Expected Volatility n/a 34.0% Expected Life n/a 5yrs Risk Free rate n/a 2.5% Expected dividends n/a 5.25% Expected volatility was determined by calculating the historical volatility of the Company's share price over the last three years. The expected life used in the model had been adjusted, based on the management's best estimate, for the effects of non-transferability, exercise restrictions and behaviouralconsiderations. For the year ended 30 September 2011, the Company recognised a total share options expense of Â£116,000 (2010: Â£64,000 including a one-off vesting charge of Â£59,000 (2010: nil)) relating to share-based payment transactions in the year ended 30 September 2011. 26 Financial Instruments and Risk Profile As an investment trust, the Company invests in securities for the long term in order to achieve its investment objective as stated above. Accordingly it is the Board's policy that no trading in investments or other financial instruments be undertaken. The Company's financial instruments comprise its investment portfolio - see note 13 - cash balances, debtors and creditors that arise directly from its operations such as sales and purchases awaiting settlement and accrued income, and the debenture loans used to finance its operations. The Company is unlikely to use derivatives for hedging purposes and then only in exceptional circumstances with the specific prior approval of the Board. In pursuing its investment objective the Company is exposed to various risks which could cause short term variation in its net assets and which could result in both or either a reduction in its net assets or a reduction in the profits available for distribution by way of dividend. The main risk exposures for the Company from its financial instruments are market risk (including currency risk, interest rate risk and other price risk), liquidity risk and credit risk. The Board sets the overall investment strategy and has in place various controls and limits and receives various reports in order to monitor the Company's and Group's exposure to these risks. The risk management policies identified in this note have not changed materially from the previous accounting period in respect of the Company. In respect of the Javelin Capital Global Equity Strategies Fund (QIF), the QIF invests in order to meet its objectives utilising the Investment Manager's strategy by investing primarily in global equity markets, including both developed and emerging markets. The portfolio it holds is expected to be well diversified across countries and sectors, with no specific, or permanent, regional or sector focus. In order to achieve its objectives, the QIF takes both long and short positions. Such long exposure is attained through investing in equity and equity-related securities. The QIF maintains flexibility and may invest in the following financial instruments without limitation: â€¢ a full range of financial instruments in both developed and emerging markets including equities, equity-related securities, futures, options, warrants and other access products; â€¢ other financial instruments may be used, including, but not limited to, index futures, structured products, swaps and contracts for difference ("CFDs"); â€¢ commodity futures and commodity-related exchange traded funds ("ETFs"); â€¢ spot and forward foreign currency exchange contracts, options and related instruments; and â€¢ cash on deposit or cash equivalents may be held; these deposits may, or may not, be held through the Prime Brokers and its Custodian. The QIF Board ensures that the QIF is operating in accordance with its prospectus and Irish QIF regulations. The QIF Board receives regular reports from its various service providers so that it can monitor the QIF's exposure to these risks. Similar to the Company the QIF is also exposed to various risks as it pursues its investment objective which are the same as those for the Company. Market Risk The principal risk in the management of the portfolio is market risk i.e. the risk that values and future cashflows will fluctuate due to changes in market prices. This comprises: â€¢ foreign currency risk; â€¢ interest rate risk; and â€¢ other price risk i.e. movements in the value of investment holdings caused by factors other than interest rate or currency movements These risks are taken into account when setting investment policy and making investment decisions. Foreign Currency Risk Exposure to foreign currency risk arises through investments in securities listed on overseas stock markets. A proportion of the net assets of the Group and Company are denominated in currencies other than sterling, with the effect that the balance sheet and total return can be materially affected by currency movements. The Group's and Company's exposure to foreign currencies through its investments in overseas securities as at 30 September 2011 was Â£24,640,000 and Â£22,210,000 respectively (2010: Â£51,648,000 Group and Company). In respect of the Company, the Investment Manager monitors the Company's exposure to foreign currencies and the Board receives reports on a regular basis. In making investment decisions the Investment Manager is mindful of the Company's Core Portfolio benchmark allocation to foreign currencies but takes independent positions based on a long term view on the relative strengths and weaknesses of currencies. Additionally the currency of investment is not the only relevant factor considered as many portfolio investment companies are global in scope and nature. The Company does not normally hedge against foreign currency movements. In respect of the QIF its functional currency is the US dollar and in addition to its investments in securities it has large cash balances in US dollars. The investment manager manages all foreign currency risk from a US dollar perspective utilising various strategies and diversification of investments held. The Company does not currently hedge its QIF investment in pounds sterling. The currency risk of the Group and Company's non-sterling monetary financial assets and liabilities at the Balance Sheet date was: Group 2011 Group 2010 Net Total Net Total Overseas monetary currency Overseas monetary currency investments assets exposure investments assets exposure Currency exposure Â£000 Â£000 Â£000 Â£000 Â£000 Â£000 US Dollar 12,304 19,417 31,722 37,124 37,124 Euro 3,905 285 4,190 6,573 6,573 Yen 2,134 2,134 2,462 2,462 Other non-sterling 6,297 (12) 6,285 5,489 5,489 24,640 19,690 44,330 51,648 51,648 Company 2011 Company 2010 Net Total Net Total Overseas monetary currency Overseas monetary currency investments assets exposure investments assets exposure Currency exposure Â£000 Â£000 Â£000 Â£000 Â£000 Â£000 US Dollar 12,361 12,361 37,124 37,124 Euro 4,013 4,013 6,573 6,573 Yen 2,134 2,134 2,462 2,462 Other non-sterling 3,702 3,702 5,489 5,489 22,210 22,210 51,648 51,648 Sensitivity analysis If the pound had strengthened by 5% relative to all currencies on the reporting date, with all the other variables held constant, the income and the net assets attributable to equity holders of the parent would have decreased by the amounts shown below. The analysis is performed on the same basis for 2010. The revenue impact is an estimated figure for 12 months based on the relevant cash balances at the reporting date Group Group Company Company Income Statement 2011 2010 2011 2010 Â£000 Â£000 Â£000 Â£000 Revenue return (1) Capital return (1,232) (2,582) (1,110) (2,582) Net assets (1,233) (2,582) (1,110) (2,582) A 5% weakening of sterling against the above currencies would have resulted in an equal and opposite effect on the above amounts, on the basis that all other variables remain constant. Interest Rate Risk The Company's direct interest rate risk exposure affects the interest received on cash balances and the fair value of its fixed rate portfolio investments and debentures. Indirect exposure to interest rate risk arises through the effect of interest rate changes on the valuation of the investment portfolio. The vast majority of the financial assets held by the Company are equity shares, which pay dividends, not interest. The Company may however from time to time hold small investments which pay a fixed rate of interest. The Board sets limits for cash balances and receives regular reports on the cash balances of the Company. The Company's fixed rate debentures introduce an element of gearing to the Company which is monitored within limits and reported to the Board. Cash balances are used to manage the level of gearing within a range set by the Board. The Board sets an overall investment strategy and also has various limits on the investment portfolio which aim to spread the portfolio investments to reduce the impact of interest rate risk on company valuations. Regular reports are received by the Board in respect of the Company's investment portfolio and the respective limits. In respect of the QIF, it has substantial cash balances at its Prime Brokers and uses leverage as part of its investment activities that expose the Fund to interest rate risk. The Fund sets limits on gearing employed and monitors cash and borrowings daily. Additionally both cash balances held and borrowings are short term in nature. Cash held at brokers earns a return similar to the overnight money market less client protection charges and whilst substantial gives rise to limited interest rate risk. The interest rate risk profile of the financial assets and liabilities at the Balance Sheet date was: Group Group Company Company 2011 2010 2011 2010 Â£000 Â£000 Â£000 Â£000 Floating rate financial assets UK sterling 17,746 5,538 22,245 7,557 US dollars 19,807 Fixed rate financial assets Euros As referred to in note 13 258 558 258 558 Financial assets not carrying interest 118,927 147,087 128,447 146,933 Total assets 156,738 153,183 150,950 155,048 Fixed rate financial liabilities UK sterling (33,801) (33,781) (33,801) (33,781) Financial liabilities not carrying interest UK sterling (11,055) (2,243) (983) (1,791) Total Liabilities (44,856) (36,024) (34,784) (35,572) Net assets 111,882 117,159 116,166 119,476 Floating rate financial assets usually comprise collateral cash and also cash on deposit with banks and prime brokers which is repayable on demand and receive a rate of interest based on the base rates in force over the period. The Company balance includes the Â£ 7.0m (2010: Â£4.5m) investment in Javelin Capital LLP which receives a commercial rate of interest from 31 August 2010 until full repayment occurs in accordance with the terms of the LLP Agreement. Fixed rate financial assets comprise convertible bonds or loan notes. The fixed rate financial liabilities comprise the Group and Company's debentures totalling Â£34.2m nominal. They pay a weighted average rate of interest of 8.1% per annum and mature in 2020 (Â£13.5m) and 2025 (Â£20.7m). Sensitivity analysis Based on closing cash balances held on deposits with banks and with Prime brokers, a 0.50% decrease (0.50%) in base interest rates would have the following effect on net assets of the Group and Company: Group Group Company Company Income Statement 2011 2010 2011 2010 Â£000 Â£000 Â£000 Â£000 Revenue Return (184) (25) (74) (13) Net assets (184) (25) (74) (13) A 0.50% increase (0.5%) in interest rates would have resulted in proportionate equal and opposite effect on the above amounts on the basis that all other variables remain constant. The above analysis is based on closing balances only and is not representative of the year as a whole. Other Price Risk Exposure to market price risk is significant and comprises mainly movements in the market prices and hence value of the Company's listed equity investments which are disclosed in note 13. The Company also has unlisted investments which are indirectly impacted by movements in listed equity prices and related variables. The Board sets an overall investment strategy to achieve a spread of investments across sectors and regions in order to reduce risk. The Board receives reports on the investment portfolio, performance and volatility on a regular basis in order to ensure that the investment portfolio is in accordance with current strategy. In respect of the QIF, it has equity securities and related derivative instruments that are also susceptible to other price risk arising from uncertainties about the future prices of the instruments. With regards to the changes in actual market prices, the QIF is managed on an absolute return basis and does not have a benchmark as such. The Investment Manager's policy is to manage risk through a combination of monitoring the exposure to individual securities, industry and geographic sectors, whilst maintaining a constant awareness in real time of the portfolio exposures in accordance with the investment strategy. The QIF Board receive quarterly reports from the Investment Manager detailing portfolio composition. The closing fair value of equities and related derivatives exposed to price risk is shown as part of note 13. Individual significant positions are disclosed in the portfolio of investments in the full Annual Report. Furthermore, the QIF typically invests in highly liquid securities for which price discovery is easily undertaken. Concentration of exposure to other price risks An analysis of the Group's investment portfolio is shown in the full Annual Report. This shows that the largest amount of equity investments by value is in UK companies (31.3%), with just over 14.8% of total investments listed or exposed to overseas countries. It also shows the concentration of investments in various sectors. The following table details the exposure to market price risk on its quoted and unquoted equity investments: Group Group Company Company 2011 2010 2011 2010 Â£000 Â£000 Â£000 Â£000 Fixed Asset Investments at Fair Value through Profit or Loss Listed equity investments 70,378 110,535 84,732 110,535 Unlisted 42,444 34,888 42,444 34,888 Related and Subsidiary Companies 7,171 4,671 Unsettled derivatives contracts 136 112,958 145,423 134,347 150,094 Financial Liabilities at Fair Value through Profit and Loss Listed equity investments - sold short (3,311) Unsettled derivatives contracts (99) (3,410) Sensitivity analysis If share prices on listed equity investments had decreased by 10% at the reporting date with all other variables remaining constant, the income and the net assets attributable to the equity holders of the Group would have decreased by the amounts shown below. The analysis for last year assumed a share price decrease of 5%. Group Group Company Company 2011 2010 2011 2010 Â£000 Â£000 Â£000 Â£000 Income Statement Capital return (6,706) (11,054) (4,237) (5,527) Net assets (6,706) (11,054) (4,237) (5,527) A 10% increase (5% increase) in share prices would have resulted in a proportionate equal and opposite effect on the above amounts on the basis that all other variables remain constant. Credit Risk Credit risk is the risk of other parties failing to discharge an obligation causing the Group financial loss. The Group's exposure to credit risk is managed by the following: â€¢ The Company's listed investments are held on its behalf by RBC Dexia Investor Services Trust, the Company's custodian which if it became bankrupt or insolvent could cause the Company's rights with respect to securities held to be delayed. The Company receives regular internal control reports from the Custodian which are reviewed by Management and reported to the Board. â€¢ Investment transactions are undertaken by the Investment Manager with a number of approved brokers in the ordinary course of business. All new brokers are reviewed by the Investment Manager for credit worthiness and added to an approved brokers list if not considered to be a credit risk. â€¢ Cash is held at banks that are considered to be reputable and high quality. Cash balances are spread across a range of banks to reduce concentration risk. â€¢ Where the Company makes an investment in a loan or other security with credit risk, that credit risk is assessed and considered as part of the investment decision making process by the Investment Managers. The Board receives regular reports on the composition of the investment portfolio. â€¢ The QIF is exposed to credit risk, through its exposure in respect of assets it holds at Prime Brokers and its Custodian. Certain liens exist over the assets of the QIF that arise from time to time in the normal course of business and the Prime Brokers and Custodian have at all times a floating charge over the assets of the QIF. The QIF will rank as one of the Prime Brokers' unsecured creditors in relation to assets which the Prime Brokers use for their own account, or that of any other customer. In the event of insolvency of a Prime Broker or its Custodian, the QIF may not be able to recover equivalent assets from that Prime Broker or Custodian in full. â€¢ Derivatives used by the QIF may be exchange traded or OTC. The risk of default is considered minimal as the vast majority of securities are dematerialised and thus the book entry is made for cash settlement at the same time as the book entry for the transfer of the security. Exchange traded derivatives transactions are also considered to create minor risk of default, as the exchange involved will generally guarantee trade effected on the exchange. The QIF is also exposed to counterparty credit risk on trading equity securities, cash and cash equivalents, and other receivable balances. All transactions in equity securities are settled/paid for upon delivery using approved brokers. The risk of default is considered minimal, as delivery of securities sold is only made once the broker has received payment. Credit Risk Exposure At the reporting date the financial assets exposed to credit risk amounted to the following: Group Group Company Company 2011 2010 2011 2010 Â£000 Â£000 Â£000 Â£000 Investments in debt instruments 258 558 258 558 Cash on deposit and at banks 17,863 5,538 15,245 3,057 Collateral cash held with brokers 2,115 Non-collateral cash held with brokers 17,575 Sales of future settlement 4,179 832 174 832 Unsettled derivatives contracts 136 Interest, dividends and other receivables 1,638 859 1,006 844 43,764 7,787 16,683 5,291 Maximum exposure during the year 6,552 7,787 2,815 5,290 Minimum exposure during the year 50,099 16,373 16,683 16,210 All amounts included in the analysis above are based on their carrying values. None of the financial assets were past due or impaired at the reporting date. Liquidity Risk Liquidity risk is the risk that the Group or Company will encounter difficulties meeting its obligations as they fall due. Liquidity risk is not significant as the majority of the Group's assets are investments in quoted equities and other quoted securities that are readily realisable. The Board has various limits in respect of how much of the Group's resources can be invested in any one company. The unlisted investments in the portfolio are subject to liquidity risk but such investments are subject to limits set by the Board and liquidity risk is taken into account by the directors when arriving at their valuation. The Company does have exposure to concentration risk due to its two investments in MAM and Javelin Capital, primarily in relation to MAM at 26.8% of the Company's investment portolio. The Company closely monitors these investments and receives regular financial reports and believes that the current concentration risk is inline with the Company's objective of diversifying its investment portfolio into four major groups. The Group maintains an appropriate level of cash balances in order to finance its operations and the Investment Manager regularly monitors the Group's cash balances to ensure all known or forecasted liabilities can be met. The Board receives regular reports on the level of the Groups's cash balances. The Group does not have any overdraft or other borrowing facilities to provide liquidity. In respect of the QIF, it manages its liquidity risk by investing predominantly in securities it expects to liquidate within 3 days, without substantial market impact, and by financing its trading activities through the use of margin loans with its Prime Brokers. Additionally, trading limits are in place to limit the extent to which liabilities may be extended to the QIF. A maturity analysis of financial liabilities showing the remaining contractual maturities is detailed below: Group 2011 Undiscounted cash flows Due within Due between Due between Due 3 years 1 year 1 and 2 years 2 and 3 years and beyond Total Â£000 Â£000 Â£000 Â£000 Â£000 9.5% debenture stock 2020 13,500 13,500 7.25% debenture stock 2025 20,700 20,700 Interest on financial liabilities 2,783 2,783 2,783 23,650 31,999 Listed investments sold short 3,311 3,311 Derivative instruments 99 99 Trade payable and other liabilities (excluding social security and sundry taxes) 7,645 7,645 13,838 2,783 2,783 57,850 77,254 Group 2010 Undiscounted cash flows Due within Due between Due between Due 3 years 1 year 1 and 2 years 2 and 3 years and beyond Total Â£000 Â£000 Â£000 Â£000 Â£000 9.5% debenture stock 2020 13,500 13,500 7.25% debenture stock 2025 20,700 20,700 Interest on financial liabilities 2,783 2,783 2,783 26,433 34,782 Trade payable and other liabilities (excluding social security and sundry taxes) 2,243 2,243 5,026 2,783 2,783 60,633 71,255 Company 2011 Undiscounted cash flows Due within Due between Due between Due 3 years Company 1 year 1 and 2 years 2 and 3 years and beyond Total 2011 Â£000 Â£000 Â£000 Â£000 Â£000 9.5% debenture stock 2020 13,500 13,500 7.25% debenture stock 2025 20,700 20,700 Interest on financial liabilities 2,783 2,783 2,783 23,650 31,999 Trade payable and other liabilities (excluding social security and sundry taxes) 983 983 3,766 2,783 2,783 57,850 67,182 Company 2010 Undiscounted cash flows Due within Due between Due between Due 3 years 1 year 1 and 2 years 2 and 3 years and beyond Total Â£000 Â£000 Â£000 Â£000 Â£000 9.5% debenture stock 2020 13,500 13,500 7.25% debenture stock 2025 20,700 20,700 Interest on financial liabilities 2,783 2,783 2,783 26,433 34,782 Trade payable and other liabilities (excluding social security and sundry taxes) 1,791 1,791 4,574 2,783 2,783 60,633 70,773 Categories of financial assets and liabilities The following table analyses the carrying amounts of the financial assets and liabilities by categories as defined in IAS 39: Group Group Company Company 2011 2010 2011 2010 Financial assets Â£000 Â£000 Â£000 Â£000 Financial assets at fair value through profit or loss Equity and debt securities 112,822 145,423 134,347 150,094 Derivatives contracts 136 112,958 145,423 134,525 150,094 Other financial assetsÂ¹ 43,370 7,229 16,425 4,733 156,328 153,652 150,772 154,827 Financial liabilities Financial liabilities at fair value through profit or loss Equities 3,311 Derivatives contracts 99 3,410 36,024 34,784 35,572 Financial liabilities measured at amortised costÂ² 44,856 36,024 34,784 35,572 Â¹ Other financial assets include: cash and cash equivalents, due from brokers, cash collateral on securities borrowed, dividend and interest receivables, other receivables and prepayments. Â² Financial liabilities measured at amortised cost include: debenture stock issued, due to brokers, fees and other payables and accrued expenses. The investment portfolio has been valued in accordance with the accounting policy in note 1 to the accounts, i.e at the fair value. The fair value of the debenture stock is calculated using Discounted Cash Flow analysis and by reference to the redemption yields of a similar companies debt instrument, with an appropriate margin spread added. Fair Fair Book Value Value Value Group and Company Book Value 2011 2010 2011 2010 Financial liabilities Â£000 Â£000 Â£000 Â£000 Â£13.5m (2010: Â£13.5m) 9.5% debenture stock 2020 13,392 13,384 17,168 17,532 Â£20.7m (2010: Â£20.7m) 7.25% debenture stock 2025 20,409 20,397 24,790 23,473 33,801 33,781 41,958 41,005 Capital Management Policies and Procedures The Company's capital management objectives are: â€¢ to ensure that it is able to continue as a going concern; and â€¢ to maximise the revenue and capital returns to its equity shareholders through an appropriate mix of equity capital and debt. The Board sets a range for the Company's net debt (comprised of debentures less cash) at any one time which is maintained by management of the Company's cash balances. Capital at 30 September comprises: Group Company 2010 2010 Â£ 000 Financial assets Group 2011 Â£000 Â£000 Company 2011 Â£000 Net (funds)/debt Cash and cash equivalents (37,553) (5,538) (15,245) (3,057) Debentures 33,801 33,781 33,801 33,781 Sub total (3,752) 28,243 18,556 30,724 Equity Equity share capital 5,253 5,253 5,253 5,253 Retained earnings and other reserves 106,381 111,906 110,913 114,223 Sub total 111,634 117,159 116,166 119,476 Net debt as a percentage of net assets (3.4%) 24.1% 16.0% 25.7% The Board monitors and reviews the broad structure of the Company's capital on an ongoing basis. The review includes: â€¢ the level of net gearing, taking into account the Investment Managers's views on the market; â€¢ the level of the Company's free float of shares as the Barlow family owns approximately 55% of the share capital of the Company; and â€¢ the extent to which revenue in excess of that required to be distributed should be retained. These objectives, policies and processes for managing capital are unchanged from the prior period. The Company is subject to various externally imposed capital requirements: â€¢ the debentures are not to exceed in aggregate 662/3% of adjusted share capital and reserves in accordance with the respective Trust Deeds; and â€¢ the Company has to comply with statutory requirements regarding minimum share capital and restriction tests relating to dividend distributions. These requirements are unchanged since last year and the Company has complied with them. 27. Related Party Transactions Javelin Capital LLP Javelin Capital LLP (Javelin Capital) is the investment manager and general administrator to the Company and is also the parent entity of Javelin Capital Fund Management Limited (JCFM) and Javelin Capital Services Limited (JCS) all of which are consolidated in the Group accounts. Javelin Capital Strategies Plc is an Irish Stock Exchange listed Qualifying Investment Fund (QIF). It currently has one sub-fund called the Javelin Capital Global Equity Strategies Fund, which due to the relative size of the Company's investment in the sub-fund is also consolidated into the Group accounts. Javelin Capital and JCFM act as investment manager and manager for the QIF respectively and are entitled to receive management and performance fees. In addition to any fees received from the QIF, Javelin Capital is also entitled to receive management, performance and administration fees from the Company itself in accordance with the relevant agreements. These agreements take account of any fees charged in the QIF so that no double charging occurs. JCS provides administrative services to the Group. In performing these services it incurs expenses which are recovered by way of recharges and management fees. The Company allows the Javelin Capital entities use of various assets to perform their respective functions for which it receives a lease fee, however this can be waived by the Company at its discretion. Following approval by shareholders at a General Meeting of the Company held on 29 June 2011, the Company provided additional capital to Javelin Capital at Â£ 2.5m. The Company has a Â£20m investment in the Javelin Capital Global Equity Strategies Fund. This investment is subject to management and performance fees in accordance with the fund's prospectus and supplement. Javelin Capital as investment manager is required to, or chooses to do so, under certain circumstances make paymentsto the QIF in order to reimburse the fund for expense rebates or compensation payments. The Company pays certain costs on behalf of Majedie Portfolio Management Limited (MPM) in connection with the Majedie Investments PLC Share Plan and additionally is charged a management fee by MPM. Any such costs paid by the Company are recharged to MPM net of any management fees due. The table below discloses the transactions and balances between those entities: 2011 2010 Transactions during the period: Â£000 Â£000 QIF fee revenue due to Javelin Capital 284 7 QIF fee revenue due to JCFM 206 Company management fee revenue due to Javelin Capital 692 58 Company administration fee revenue due to Javelin Capital 265 25 Company lease charge to JCS - 4 JCS management fee income from Javelin Capital 3,033 2,356 Javelin Capital payments to the QIF 5 MPM costs recharged by the Company 34 35 MPM Management fees charged to the Company 33 34 Balances outstanding at the end of the period: Between JCS and the Company 348 283 Between JCS and Javelin Capital 133 37 Between JCS and JCFM 10 Between the Company and MPM 93 92 Between JCFM and Javelin Capital 55 Between the QIF and Javelin Capital 5 Between JCFM and the QIF 48 7 Transactions between group companies during the year were made on terms equivalent to those that occur in arm's length transactions. MajedieAsset Management (MAM) MAM is accounted for as an investment in both the Company and Group accounts and is valued at fair value through profit or loss. During the year the Company received dividends from MAM of Â£1,914,000 of which none was outstanding at year end (2010: Â£6,181,000 and nil). The Company has no investments in any MAM funds. Remuneration The remuneration of the directors, who are the key management personnel of the Company, is set out below in aggregate for each of the categories specified in IAS24: Related Party Disclosures. Further information about the remuneration of individual directors is provided in the audited part of the Report on Directors' Remuneration in the full Annual Report. 2011 2010 Â£'000 Â£'000 Short term employee benefits 244 332 Share-based payments 244 332 National Storage Mechanism A copy of the Annual Report and Financial Statements will be submitted shortly to the National Storage Mechanism ("NSM") and will be available for inspection at the NSM, which is situated at: www.hemscott.com/nsm.do. A copy of the Annual Report and Accounts and Notice of Annual General Meeting will be delivered to shareholders shortly and can also be found at www.majedie.co.uk. Annual General Meeting The Company's Annual General Meeting will be held on 18 January 2012 at 12.30 pm at Pewterers' Hall, Oat Lane, London EC2V 7DE. ENQUIRIES If you have any enquiries regarding this announcement please contact Mr William Barlow on 020 7382 8185. END Neither the contents of the Company's website nor the contents of any website accessible from hyperlinks on this announcement (or any other website) is incorporated into, or forms part of, this announcement.

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