Majedie Investments

STRATEGIC REPORT

CHAIRMAN'S STATEMENT

During the year ended 30 September 2023 Majedie Investments has successfully implemented the transition to a liquid endowment investment policy* following its approval at the AGM in January 2023, principally through transferring responsibility for management of the Company's assets to Marylebone Partners LLP ("Marylebone" or the "Investment Manager"). The Net Asset Value (with debt at fair value) grew by 14.1% during the year and the discount closed somewhat from 25.8% at the start of the financial year to 18.7% at its close.

Investment conditions were challenging throughout the year as global equity and bond markets were volatile as inflationary expectations and political events created uncertainty for investors and governments. A growing acceptance that interest rates are to remain considerably higher for some time, together with a weaker than expected economic recovery in China after its pandemic restrictions were removed in January 2023, also put pressure on the broader equity markets. Notably, the US equity market was one of the best performers, once again driven by a very narrow selection of technology stocks.

The background to market performance helps explain the decision of your Board in late 2022 to appoint Marylebone as the Company's portfolio manager. It also reinforces the central view that the ending of a thirty year down trend of interest rates is likely to lead to significant change in the sources of investment returns. The Board focused on identifying an endowment style strategy that would enable the Company to grow over time through strong performance, developing the Company's culture and clear differentiation that uses the benefits of the investment trust structure. Whilst still in its very early days, the liquid endowment portfolio has now been in place since February 2023, the Board believes that the evidence to date vindicates its decision. In addition to the distinctive and compelling investments that feature in the portfolio, the Board notes that virtually all of its underlying assets are priced frequently by an independent source.

The investment approach includes three complementary strategies comprising, at September 2023: External Managers (62%), Direct Investments (20%) and Special Investments (9%). The remaining 9% was in cash and UK gilts pending investment into additional Special Investment opportunities. Whilst remaining equity-centric, the drivers of the investments are fundamental, idiosyncratic and generally not macro-predicated. The Board is confident that this style of investing will stand the test of time and achieve the clear targets set out by the Manager Review carried out in 2022.

Subsequent to the approval of the new investment policy by shareholders, the Board has also transferred responsibilities under the AIFMD to Marylebone. Further, the remaining administration arrangements for Majedie that had been carried out internally have now been outsourced to Juniper Partners Limited ("Juniper"). The Board looks forward to developing both of these important new relationships. These steps have however resulted in Majedie's offices in Kings Arms Yard being vacated† and I would like to take this opportunity to record our thanks to the Majedie executive team for their consistent and professional contribution throughout this period despite the consequences to their own positions.

Of particular note through this year has been the development of the shareholder base, which was one of the key aims of the Manager Review. Approximately 25% of the shares in issue have changed hands during the year and the Company remains fortunate in having a supportive Barlow family shareholder group. The increased marketing presence of the Company, well supported by the Marylebone team and a refreshed website with explanatory short videos, has been helpful in achieving this important step towards growth.

The Board has enjoyed a year of stability and I am grateful for the commitment and wise counsel of my colleagues. Formal internal Board reviews are carried out annually in October. The principal areas for further focus in 2022 involved concluding and effectively implementing the Manager Review conclusions and increasing the demand for the Company's shares. In 2023 the Board has identified targets relating to the development and monitoring of the relationships with Marylebone and Juniper, planning for Board member succession and building on the progress made on expanding the shareholder base.

The Company's policy on dividends also changed following the introduction of the new investment policy. Quarterly dividends of approximately 0.75% of the NAV have been declared, albeit that in this transition year the first quarterly payment to December 2022 was paid in January 2023 as a Special Dividend of 1.8p accrued in the prior year. Going forward the Board hopes that the clarity of quarterly dividend payments, equating to approximately 3% of NAV over the year, is helpful to shareholders.

It is a core function of an investment trust Board to bear down on costs where possible. The Board notes that investments through External Managers as a significant part of the portfolio has increased the cost measured by the Ongoing Charges Ratio ("OCR") from 1.3% in 2022 to 2.0% in September 2023. The skills in specialist areas that require substantial original research work inevitably come with additional cost. However, in terms of true active management of a liquid endowment style strategy the Board understands this requirement whilst also noting that the costs associated with the External Managers is expected to fall over time as the exposure to Special Investments grows, as they typically have low additional management fees. The remaining underlying costs are made up of core management, administrative and transaction costs; as all activities are now outsourced the Board expects that these costs will also fall in 2024. Overall the OCR is expected to fall in 2024.

In terms of investment outlook, Marylebone believes that this is an excellent juncture at which to be deploying capital. Following a transition from a multi-year regime that was characterised by low interest rates, abundant liquidity and generally rising asset prices, the Board expects the period ahead to be defined by structurally higher rates, variable liquidity, more geopolitical and cyclical volatility, and greater fundamental price dispersion within markets. This is precisely the sort of environment in which a highly selective, fundamental approach that features distinctive bottom-up investments should thrive. Marylebone is confident that current and future Special Investments are capable of achieving their ambitious return targets for this component of the portfolio. With respect to External Managers, those with an equity-centric profile should be capable of annualised returns that are substantially better than broad markets, whilst providing shareholders with positions and style diversification away from the indices. In addition, the External Manager allocation features a significant exposure to leading practitioners in the specialist credit strategies arena, an area of true differentiation for Marylebone who see the best risk-adjusted return opportunity here for many years. Finally, the Direct Investments component of the new portfolio features an eclectic mix of positions that have been researched and identified by Marylebone's inhouse team. These provide not only return potential in the low-teens over a multi-year period but also benefit the portfolio in terms of its overall liquidity.

The Board was very pleased that the 2022 Annual General Meeting could be held in person as it enabled a welcome opportunity to meet again and learn directly from our shareholders. This year's AGM will be held at Pewterers' Hall, Oat Lane, London EC2V 7DE at 12.00pm on Wednesday 17th January 2024. The Investment Manager will present the details of the portfolio, its strategy and outlook. My colleagues and I look forward to welcoming shareholders to that meeting. Following the AGM the Investment Manager's presentation will be available on the Company's website for those who cannot attend.

In the meantime, I thank you for both trusting and supporting Majedie Investments.

Christopher D Getley

Chairman

15 December 2023

* Please refer to page 6 of the Investment Manager's Report in the Company's Annual Report

† Please refer to note 20 on page 74 of the Company's Annual Report for more information.

INVESTMENT MANAGER'S REPORT

Strategy

Marylebone Partners' appointment as the investment manager of Majedie Investments PLC ("Majedie") marked a significant milestone. We are excited about the prospect of pursuing our distinctive approach for Majedie's shareholders, especially when the recent transition of the market regime has created so many opportunities for discriminating bottom-up investors. We welcome Majedie's shareholders to our Partnership, by virtue of the membership stake granted to the Company in a demonstration of our alignment. Given the importance of this mandate to our business, it is only right that Majedie's shareholders should participate in our future success.

What exactly do we mean when we refer to the 'liquid endowment' model we deploy for Majedie? The 'endowment' element evokes a truly long-term investment mentality that is behind the success of the elite university endowments (mostly based in the United States). These institutions have harnessed differentiated - and sometimes alternative - return sources, eschewing market timing or tactical trading in favour of active fundamental strategies designed to compound wealth at an attractive rate, after the potential effects of inflation.

We aim to replicate this success for Majedie's shareholders by identifying and assessing compelling, long-term investment opportunities, few of which ever come onto the radars of our industry peers. Unlike many university endowments, however, we refrain from allocating to deeply illiquid and hard-to-price asset classes such as private equity, venture capital, real estate, or infrastructure. Our proficiency lies in more liquid markets, and we do not believe it is necessary to lock up capital for extended periods to generate attractive total returns.

Our ambition over the years ahead is to provide Majedie's shareholders with an alternative to generic investment offerings or strategies whose historic success depended on cheap leverage, abundant liquidity, and rising asset prices. Ultimately, a shareholder in Majedie is buying into our people and our process. We believe that more challenging conditions should only highlight the merits of our approach as the fortunes of individual enterprises, sectors, geographic regions, and asset classes diverge.

The Company delivered strong returns over the financial year, investment performance between February 2023 (when we assumed investment management responsibility) and the financial year-end was effectively flat as contributions at the position level offset one another. We implemented the transition towards the new portfolio in a swift and cost-effective manner, with legacy positions exited and holdings in place by the end of March. As part of this exercise, we have substantially sold down the strategic holding in Liontrust PLC and it is now below 0.5%.

The portfolio

The portfolio is eclectic and focused. It features high-conviction investments of differing profiles and with varying underlying return drivers. Although of course there can be no guarantee of success, we believe that Majedie's most conservative investments can achieve target returns over the next few years, while some of its more ambitious positions have the potential to deliver much stronger outcomes. It was simply not possible to achieve portfolio balance, whilst striving for returns of this magnitude, in the latter stages of the pre-COVID era.

The portfolio comprises three primary elements:

1. Special Investments. We identify co-investments, Special Purpose Vehicles, and thematic opportunities, through a proprietary ideas network built over nearly three decades. To earn a place in the Majedie portfolio, a Special Investment must originate from a trusted source, and have the potential to deliver annualised returns of at least 20% over a time horizon of typically 2-3 years. As an important aside, our investments are all marked-to-market at least quarterly. So Majedie's shareholders should be confident that the stated Net Asset Value is representative.

It will take time for us to build the portfolio's exposure to Special Investments to its initial target of 20% (by definition, these opportunities are situation specific and the bar for inclusion is extremely high). Nevertheless, we had already made five allocations by the Company's financial year-end, plus another three on 1st October. These include targeted activist co‑investments in public equities, a thematic investment in the listed Uranium sector, a unique factoring strategy and two stressed/distressed credit co-investments. We have a strong pipeline of new ideas.

2. External Managers. We have selected a total of 14 funds managed by third-party managers, each of whom specialises in a niche sector or geographic region that is structurally inefficient and therefore offers potential for skill-based returns ('alpha'). These managers work within owner-operated boutiques that are largely unknown to/inaccessible by most allocators. In keeping with Majedie's longstanding philosophy, nine of the managers we have selected pursue equity-centric strategies. Their role is to add value through stock-picking in areas as diverse as midcap biotechnology, value-style activism, Scandinavian equities, software, Greater China, and Continental European value stocks. To supplement nine managers with an equity-centric profile, we have identified five leading managers who seek to deliver less-correlated absolute returns, mostly though specialist credit strategies. We believe the stressed/ distressed credit markets offer extremely attractive risk-to-reward characteristics at the present time.

At 62% of the total, the portfolio's initial allocation to external managers is higher than one should expect over the medium term. The weighting to this category should naturally decrease over time, as we identify more Special Investments. In turn, this should help to reduce look-through costs, although our primary concern is always to maximise the net returns to shareholders whilst achieving portfolio balance. In the meantime, we feel confident about the performance potential of this group and believe they represent a very attractive and differentiated combination of active managers.

3. Direct Investments. Our in-house team has carefully selected 15 public equities, listed in the developed markets, each of which meets our stringent criteria regarding growth potential, business profitability and quality. Valuation also plays an important part of our decision-making process; this sub-portfolio of eclectic, factor-diverse and catalyst-rich stocks currently trades on quite reasonable multiples of earnings and cash flow.

Its largest weightings are to the Industrials, Consumer, Services and Healthcare sectors. By geography, the sub portfolio is well spread across companies listed in the United States, Europe, and our un-loved home market, the U.K. Reflecting much higher valuation differentials, there is a mid-cap bias to our portfolio and no exposure to the handful of mega-cap technology stocks that are so heavily represented in the major indices.

Largest Five Holdings in each strategy at 30 September 2023

As we await entry points in certain investments, we have maintained liquidity to take advantage of currently high short-term interest rates by purchasing short-dated gilts.

To follow the progress of the portfolio and our approach, we encourage you to visit the refreshed Majedie website where we post video clips with examples along with a quarterly Portfolio Manager commentary. We intend to be very transparent with shareholders.

Outlook

Markets have largely completed a transition to a new regime that will be characterised by higher interest rates, variable liquidity, and more geopolitical and cyclical volatility. Many of the tailwinds upon which the fortunes of conventional investment strategies rode have turned into headwinds. Against a backdrop that is likely to be more challenging, an investor's ability to identify - and capitalise upon - idiosyncratic, bottom-up situations will be critical to success. The portfolio represents a distinctive mix of fundamental bottom-up ideas with low cross-correlation to one another. This results in a proposition that should not only be capable of achieving inflation-beating returns over the medium-term but also act as a complementary investment for shareholders.

The global economic outlook is uncertain and is likely to remain so. When framing our decisions, we do not dismiss the possibility of a recession over the next 12-24 months. We can identify numerous possible threats to the equilibrium of markets, which include a sharper-than-expected economic slowdown, geopolitical instability, a possible resurgence of inflation (which would most likely be caused by rising commodity prices), or some other extraneous variable. The 'equity risk premium' is low by historic standards, i.e. the projected earnings yield on equities is very close to the yield on long-dated government bonds, which suggests that stocks are expensive at an aggregate level.

Hence, at an asset class level, we are not especially bullish. However, we also believe it is a mistake to generalise, especially at a time of widening dispersion at an individual-security level.

There is no shortage of attractive bottom-up situations that meet our selection criteria, especially when one hunts for them in areas that are off the beaten track. Selectivity, and an ability to identify differentiated fundamental return sources, will be the key to unlocking good investment outcomes over the years ahead.

Portfolio as at 30 September 2023

Dan Higgins

Marylebone Partners LLP

15 December 2023

ANNUAL GENERAL MEETING

The Company's Annual General Meeting will be held on Wednesday 17 January 2024 at Pewterers' Hall, Oat Lane, London EC2V 7DE at 12 noon.

FURTHER INFORMATION

The Annual Report and Accounts for the year ended 30 September 2023 can be obtained from the Company's website at www.majedieinvestments.com.

A copy of the Annual Report and Accounts will be submitted shortly to the National Storage Mechanism ("NSM") and will be available for inspection at the NSM, which is situated at: https://data.fca.org.uk/#/nsm/nationalstoragemechanism, in accordance with DTR 6.3.5(1A) of the Financial Conduct Authority's Disclosure Guidance and Transparency Rules.

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.

LEI: 2138007QEY9DYONC2723