SENATE CONFERENCE 2013

• As a division of the Sasfin Group, Sasfin Wealth has for over 120 years been providing trusted advice and wealth management solutions.

• We have a national presence and consult to and manage in excess of R70 billion.

SASFIN WEALTH

FOOTPRINT

Johannesburg

Pretoria

Cape Town Port Elizabeth

George

Bloemfontein Durban

Hong Kong

Investment team

Investment Process

Competitive advantage

• Experienced investment team

• Superior ability to read markets

• Adaptive investment style

• High conviction

• We optimise risk adjusted returns by consistently adding increments

of return

Awards

2012: Raging Bull

• Best broad-based Domestic Equity Fund on a straight performance basis, being the

fund with the highest Profile Data total investment return ranking over three years in

the ASISA Domestic Equity General, Value and Growth sectors

2012: Raging Bull

• Best Domestic Equity Value Fund

Sasfin Securities

• Our heritage dates back to 1890 when Otto Pollock became a member of the JSE.

• Today we have in excess of R60 billion of assets under administration which makes us one of the largest and most experienced private client stockbroking businesses in South Africa.

• We pride ourselves on our ability to offer truly bespoke investment solutions both locally and internationally, coupled with uncompromising levels of client support.

We identified 6 traits which are non-negotiable when it comes to successful investment management.

• Relationship: The successful investor interacts and builds a sound relationship with an investment professional that truly understand their needs and carefully manages the emotional aspects of investing.

• Independence: The successful investor chooses an advisor whose independence is unconstrained by investment bias.

• Trust: The successful investor invests with a wealth management company who they can trust – an entity that has a solid reputation and extensive history of successful wealth management.

• Expertise: The successful investor entrusts their wealth to capable and astute professionals who have the ability to navigate through difficult market cycles.

• Simplicity: The successful investor has a clear understanding of their portfolio and related fees. They steer clearfrom opaque investment products that aren’t fully understood.

• Global: The successful investor requires a globally diversified portfolio which is managed locally.

Offering

• Full Discretion: Sasfin assumes full responsibility for the management of the underlying portfolio.

• Referral managed: Sasfin advises on the underlying securities while the client is ultimately the decision maker.

• Deal & Execution: Our clients will be required to formulate and implement their own investment strategy.

• Offshore: Our global trading platforms and international research allow us to think globally while executing locally.

• Personalised share portfolio: We manage your client’s compulsory and voluntary money in a tax effective manner.

Foundation Portfolios

• Foundation Fund Fact Sheets

• Client proposal

Our offering is available through:

• Glacier & Glacier International (Sanlam)

• Investec

• Momentum

• Old Mutual International.

Thank You

• This presentation has been compiled by Sasfin Financial Advisory Services (Pty) Ltd - Co. No.1997/010819/07; a licensed Financial Services Provider - FSP No. 5711 (use the one or other as appropriate)

• Sasfin Asset Managers (Pty) Ltd - Co. No. 2007/018275/07; a licensed Financial Services Provider - FSP No. 21664

• in the context of the services it provides. The contents are proprietary and may not be copied or disclosed without consent. Information and opinions are general and subjective in nature and do not constitute advice. Any references to historical data, assumptions, targets, benchmarks or examples are as indicators / illustrations only and are not fixed or guaranteed. Past investment performance is not necessarily indicative of future performance. While care is taken to provide current and accurate information, no liability is accepted for errors, omissions or subsequent changes and this presentation remains subject to revision, verification and amendment without notice and without liability to compensate or reimburse any party. Anyone acting on this presentation before taking appropriate advice does so at their own risk

DISCLAIMER

World Markets

Balancing the risks

Shut happens!

20

Past few weeks underscored by the debt ceiling debate,

improving economic numbers and talk of tapering

Tea Party echoing same thinking Republican moderates have

expressed for years, except at higher volume

Abhorrence of ObamaCare, loathing of government, faith in tax cuts and

free market etc.

Tactics nearly forced US default

Caused grievous harm to Republican brand – 53% of

Americans blamed Republicans versus 29% Obama

Damaged Republicans’ business leaning image

Sequester lowered growth – Grand Bargain on spending

cuts sought

Shutdown and debt ceiling protests hurt business

confidence – cost of shutdown estimated at $24bn

Tapering delay until there is clear evidence that the economic

recovery is on a sustainable path

US economy – chugging along

21

Employment rising

24 months of successive job increases

Oct job numbers well ahead of consensus

Housing recovering

New houses sold double 2011 lows

Retail spending improving

Above pre-crash levels

Trade balance shrinking

Half ‘08 highs of -$70bn

Budget deficit falling

An increased level of tax receipts and lower government spending

Oil & gas production exploding

US fastest growing producer in 2012 lifting output by 1m barrels per day to 8.9m

Lower birth rate projections, aging work force and slowing productivity

Gains likely to reduce GDP to 1.9% between 2012 and 2032 from post-war average of 3.5%

S&P500

22

1990 - 2000 2000 - 2010

2010 - 2020

Tech revolution

Globalisation

Cell phone

Internet

GFC (Collapse of Lehman)

China emerges

9/11 crisis

End of commodity super cycle

Shale, oil, gas revolution

IT & communication transformation

3D printing, big data

Aging demographics: US, Japan, China, Europe

What the Frack ?

Hydraulic Fracturing

24

The Natural Gas Revolution

25

Fracking has allowed energy companies to dig deeper than

before unlocking unconventional oil deposits

North America has largest stores of unconventional oil

50% more than total conventional crude in the Middle East

US could overtake Saudi Arabia as the world’s largest oil

producer by 2020

Making it less dependent on oil from foreign nations whose

interests conflict with theirs

Imports are down to 40% from 60% in 2005

Crude Oil net Imports

Crude Oil net Exports

The Natural Gas Revolution

26

Fracking has produced an abundance of inexpensive natural gas

Natural gas used to power ships, trains, heavy goods vehicles and

power stations

Natural gas power stations have half the emissions of conventional

coal plants

Emissions fallen 12% since 2007 on conversions

Boom in oil and gas drilling creating jobs in states hard hit by

recession

Cheaper energy input costs attracting manufacturing back to the US

1m manufacturing jobs could be added by 2025

Plentiful oil will diminish incentives to reduce reliance on fossil fuels

BNSF carry 650k barrels

a day, soon to increase to

750k barrels a day, will

eventually reach over 1m

barrels a day

Global Economy

Size of economy

US 21.6%

China 10.4%

EU 26%

Japan 8.4%

Brazil 3.6%

UK 3.5%

Russia 2.6%

Est. growth 2014

China 8.2%

India 6.2%

Russia 3.8%

Brazil 4%

US 3%

Australia 3%

UK 1.5%

Europe 1.1%

World 4.00%

Emerging Regions 5.70%

Advanced Economies 2.20%

Europe’s deficit problem

28

Europe: signs of economic recovery are visible

29

Recovery still fragile – deflation becoming the biggest danger

Forecast growth for 2014 at 0.5%

Short of the pace needed to head off deflation & address the on-going debt crisis

Germany and France slowing but Italy and Spain performing better

Spain, Italy & Portugal also showing economic gains Spain out of recession, growing at 0.1% in Q3

EU needs to increase growth potential, enhance job creation &

boost European competitiveness

The origins of the disaster lies with excessive private borrowing

Greece got into trouble because its government spent too much and

collected too little in taxes

The bust followed a private sector binge: mortgage debt in Ireland

and Spain, corporate borrowing in Portugal and Spain

Without growth, zombie firms are unable to invest or grow

Much like those wafting through Japan in the 1990s

Euro zone blighted by private

debt even more than Govt debt

Euro zone expected to

expand by 1.2%

UK: economy accelerates to fastest growth since 2010

30

UK economy growing at its fastest rate in 6 years

Unemployment at 3 year low

Recovery beginning to take hold

2013 growth upgraded to 1.6% from 1.4%

Forecast growth 2.8% for 2014

Interest rates could begin rising sometime in 2015, once

employment falls to 7%

Unlikely that the recovery will fade significantly:

- Revival of the British housing market

- Youth unemployment falling

- Confidence returning

- Obstacles home and abroad remain

“The economy is growing

robustly as lifting uncertainty &

thawing credit conditions start

to unlock pent up demand”

Mark Carney

Governor BOE / Chairman MPC

31

Japan: “Abenomics” a mix designed to jolt the economy

Japan’s economy will remain on track as the

government prepares a 5 trillion yen ($50.6bn)

stimulus package to offset the drag from a sales

tax increase scheduled for next April.

Economists expect the majority of the stimulus

package to be spent on infrastructure and tax

breaks for the corporate sector.

Reuters

CPI

Electrifying a nation that had lost faith in its political class

Nikkei

Japan’s economy recovering at moderate pace

despite slowing exports

Imports likely to remain strong due to solid

domestic demand, while business sentiment is

improving

Emerging Markets continue to disappoint

33

China grows at the slowest pace in 13 years

Indian Rupee falls to record lows – rates rising to stem outflows

Brazil’s fundamentals deteriorate on incoherent economic policy

Russia down on falling energy prices and tight corporate credit

Investors continue to withdraw from emerging markets even in the

face of Fed tapering talk

S&P500 vs MSCI Emerging Markets Index

Emerging Markets

Developed Markets

“Investors looking for

emerging market-like growth

rates should look to the US”

Meredith Whitney

China’s tectonic shift – the dawn of a new era

New regime acting more carefully, balancing growth, shifting

from a production oriented economy to one centred around

household consumption

Third Plenum:

Supported land reform, fiscal reform and judicial system

Disappointed on financial liberalisation, one-child policy & residency reform

Demand slowly recovering, expect growth around 7.5%

Structural reforms designed to improve the supply side of the

economy

Reforms would help sustain the growth of productive capacity,

improving the allocation of capital and labour

Cutting red tape and other regulatory barriers to entry would

help private firms invest in industries now dominated by state-

owned enterprises

• Home to 20% of the world’s

population

• Household consumption

accounts for 38% of GDP

(US ~70%)

• World’s largest car market,

19.3m cars sold in 2012

• Largest internet market in

the world

• Reduced the per-watt cost of

solar power from over $3

(2008) to under $1 (2011)

- 23% + 24%

Consumption expected to overtake investment as the largest contributor to GDP

Investment Consumption

42% (2010 – 2020) 41% (2010 – 2020)

34% (2020 – 2030) 51% (2020 – 2030)

China’s growing middle class is demanding more

Western brands sell a lifestyle / image aiming to attract the aspirant Chinese consumer

Adidas

Nike

Paul Frank

McDonalds

Starbucks Haagan-Dazs

South Africa

37

Widespread labour unrest disrupting mining and manufacturing output

Falling commodity prices putting pressure on mine earnings

Rising input costs, electricity constraints, squeezing manufacturing

margins

Slowdown in household spending

Continued shift in fiscal policy to social spending from infrastructure

Corruption, poor skills, inefficiency

WEC ranks SA’s education system 146 out of 148 countries and last in Maths & Science

Hesitant domestic and foreign investor confidence

Pessimism about the long term outlook for the economy

Debt downgrade possible if deficits continue to deteriorate

JSE trading at all time highs

0 200000 400000 600000 800000 1000000 1200000

Aspen

Barclarys

Kumba Iron Ore

Old Mutual

Vodacom

Firstrand

Standard Bank

Sasol

Anglo American

MTN

Naspers

Richemont

Billiton

SABMiller

British Am Tobacco

Breakdown of the JSE: +23% from 1st Nov 2012

The top 15 companies make up over 70% of the JSE (12 month return)

Market cap (ZAR)

25%

41%

12%

85%

69%

29%

-11%

37%

19%

29%

9%

-21%

36%

9%

75%

Market Cap

Pick ‘n Pay 23bn

Telkom 14bn

Adcock 12bn

JD Group 7bn

1.1 tr

859 bn

655 bn

536 bn

385 bn

368 bn

335 bn

328 bn

203 bn

202 bn

172 bn

158 bn

137 bn

129 bn

124 bn

Xstrata/Glencore Market cap: R714bn

Local Investment Ideas: Stick with the winners

2) Emerging market consumption growth SABMiller, British American Tobacco, Richemont

40

Companies expanding offshore into high growth regions Naspers, Aspen, Bidvest, BHP Billiton, Sasol, Glencore

Emerging market consumption growth SABMiller, British American Tobacco, Richemont

Superior retail business models continue to hold Famous Brands, Woolworths, Mr Price

Expansion into Africa Imperial, MTN, Omnia, Shoprite

Expanding middle class exploring medicare options Life Healthcare, Mediclinic, Discovery

JSE is more of a convenience store than a supermarket

41

JSE Global Markets

Create a champions league portfolio

42

JSE Global Markets

A guideline to our team’s offshore investment ideas

2) Emerging market consumption growth SABMiller, British American Tobacco, Richemont

43

Escalating prosperity in developing nations LVMH, Daimler, Prada, BMW

Increasing urbanisation L’Oreal, Altria, Anheuser-Busch InBev

Competitive companies focusing on the consumer

Nestle, Unilever, Adidas, J&J

High yield in a low yielding environment Royal Dutch Shell, AstraZeneca, Sanofi, Allianz, Vodafone

America: The next emerging market General Electric, Wells Fargo, JPMorgan, Berkshire Hathaway

IT: Tech players transforming our lives Google, Amazon, Microsoft

Thank You

44

David Shapiro Deputy Chairman / Director

david.shapiro@sasfin.com

Kavita Patel Portfolio Manager kavita.patel@sasfin.com

Craig Diesel Portfolio Manager

craig.diesel@sasfin.com

Carmen Solomons Portfolio Assistant

carmen.solomons@sasfin.com