Hunter Hall Investor Presentation

Peter Hall AM, Founder and Chief Investment Officer Introduction to Hunter Hall

• Founded in 1993 by Peter Hall and listed in 2001 • International and Australian equities • Value investor • Bias to mid and small cap shares • Five retail investment funds • Listed investment company launched 2004 • One of ’s largest dedicated ethical investment managers with FUM of $1.1bn • Given 5% of pre tax profit each year to charity (now over $10 million)

2 Only the Paranoid Schizophrenics Survive

Peter Hall AM Chief Investment Officer Hunter Hall Investment Management May 2016 Schizophrenia

1. Investing is NOT a competition. Its objectives are to preserve capital and to make money NOT to outperform indices or other managers.

2. However, the investment management industry IS a competition. Its objectives are outperform benchmarks and other managers.

3. It is therefore highly prone to dangerous behaviours such as being fully invested at all times, index-hugging, selling positions because they have become a large part of the portfolio or favouring momentum over value.

4 Value Growth Trust: 2 May 1994 to 2 May 2016

$180,000 VGT $170,136

$160,000

$140,000

$120,000

$100,000

$80,000 All Ords $62,745

$60,000

$40,000

$20,000 MSCI World $37,285 $0

Source: Hunter Hall, Bloomberg. 5 Happy 22nd Birthday

• Annual return: + 13.8% p.a. for 22 years • MSCI World A$: + 6.2% p.a. (+ 7.6% p.a. outperformance) • All Ords: + 8.8% p.a. (+ 5% p.a. outperformance) • Maximum loss in any financial year: - 22.0% (2009) • Maximum gain in any financial year: + 53.7% (1997) • Positive absolute returns: 18 years • Negative absolute returns: 4 years • Years outperforming MSCI World: 16 of 22 (72.7%) • Years outperforming All Ords: 15 of 22 (68.2%)

Financial year end 6 How did we do it?

• Temperament – resolve, agility, paranoia • Value investment strategy • Ethical policy • Long time horizon/go anywhere • Small to mid cap bias • Option stocks = Operating and/or financial leverage

• Our biggest winners include Sirtex Medical, , PZ Cussons, M2 Telecommunications, Virgin Media, Macmahon, Woongjin Thinkbig, JDS Uniphase

7 What is Value?

Momentum investing:

What a stock can be sold for = “exchange” value

Value investing:

The cash a stock will generate = “utility” value

8 Utility Value = Intrinsic Value

Intrinsic Value =

The Net Present Value of Future Cashflows after

• Capital Investment to maintain Operating Capital • Capital investment to maintain Competitive Position • Capital Investment for Growth • Tax • Inflation

9 Momentum Investing Price movement as a Guide to Investment decisions

Share Price

10 Value Investing Intrinsic Value as a Guide to Investment decisions

$1.50

Share Price Intrinsic $1.00 Margin Of Value Safety Potential for $0.50 Capital Growth

$0.00 Investment Zone

11 Discount to Intrinsic Value

Targeted return 15% per annum 20% per annum

3 years 66c 58c

5 years 50c 40c

For example: $486

3 years at 15% $739

5 years at 20% $1209

12 Value Investing applied to Alphabet Inc

15% over 3 20% over 5 Paranoid $ billion Current years years View Market Capitalisation $486 Implied Intrinsic Value $739 $1208 $391 Net Profit (2015) $16.1 Years to Payback (P/E) 46 75 Implied Discount Rate 10% 8% 8% Implied annual Growth +21% + 18% p.a. +11% p.a. +10% Rate Implied Life span 40 years 20 years 40 years 20 years 0.025% to Share of world GDP 0.4% 0.65% 0.1% 20.3%

13 Value Investing applied to

15% over 3 20% over 5 $ billion Current Notes years years Market Capitalisation $128 Implied Intrinsic Value $194 $317 Net Profit (2015) $9 Years to Payback (P/E) 22 35 Implied Discount Rate 8% 8% Implied annual Growth + 6.5% + 4.5% p.a. +7.3% 2008 – 2015 Rate Implied Intrinsic Value assuming a 6.5% growth $274 rate and 8% discount rate

14 Distribution of Opportunities in the Stock Market

Overvalued Undervalued

15

Macro Issues

Economic: • Valuation of equities extended • Weak sovereign balance sheets • Further monetary expansion difficult for Japan/US/Europe • Weak banking systems in Europe and China (NPLs as much as 10% of all loans and 10% of GDP) • ZIRP/NIRP • Unfunded pension/health/environmental liabilities

Environmental • Global warming • Biodiversity loss • Drought/disease/overpopulation/war/immigration

18 Arctic Sea Ice Extent - down 1 million km2

Source: National Snow & Ice Data Center, Daily Image Update 19 Share of World Trade

Source: Grants Interest Rate Observer Conference, April 2016, Scott Bessent, Keysquare 20 Japan on the brink (2016 Budget)

• Total government debt: 1225 trillion (1.225 quadrillion) • = 236% of GDP • = A$15.5 trillion (as compared with current Australian government debt of about $400 billion or 39x) • Tax revenues: 57.6 trillion yen • Expenditures: 96.7 trillion yen • Net deficit: 34.4 trillion yen • Interest payments on Debt: 9.9 trillion yen (=17% of tax revenues) • Interest rate on debt: 0.81%

21 Sovereign debt

Source: Ministry of Finance Japan, Japanese Public Finance Factsheet, December 2015, www.mof.go.jp 22 A fragile truce between the big four

• Europe/Japan/US industrial activity and employment very vulnerable to a weakening Chinese currency • Pressure to increase US rates • Japan/China and Europe very sensitive to higher interest rates • Vulnerable to economic slowdown • Collapse of European Union or currency system

23 VGT/HHV Portfolio structure – the Barbell

1. 20- 25% cash

2. 20% gold stocks

• St Barbara • Doray Minerals • Beadell Resources • Richmont Mines • Novagold

3. 55 - 60% other equities

24 Gold Discoveries have fallen since 1980s

Source: Grants Interest Rate Observer Conference, April 2016, Pierre Lassonde, Franco Nevada Corp. 25 Gold Demand up about 3% a year since 1980

Source: Grants Interest Rate Observer Conference, April 2016, Pierre Lassonde, Franco Nevada Corp. 26 ZIRP tending towards NIRP

Source: Bloomberg; World Gold Council * As of 21 March 2016. Includes sovereign debt from Australia, Canada, Denmark, Euro area (investment grade), Japan, Sweden, Switzerland, the United Kingdom and the United States. Real yields computed as nominal yield minus the most recently available year-on-year CPI inflation rate. Totals may not equal 100% due to rounding 27 Equities to Gold Valuation

Source: Grants Interest Rate Observer Conference, April 2016, Pierre Lassonde, Franco Nevada Corp. 28 St Barbara Limited (‘SBM’ )

• Australian-domiciled gold miner • One of the lowest cost mines in Australia • Large reserves with potential to grow • Financially leveraged • Short term upside to $3.00 • Excellent management might be able to deploy cashflow into new projects and grow a major mining house, further upside to $3 or $4. • Not a bad time to be looking at long term resource investments

29 Share Price movement

Price ($)

5.00 Bought conv. notes at $5.34 Final Exit Not invested Re-entered 4.50 and ord. shares at $2.40 at $1.54 at 10.25c

4.00 Started Started Allied Gold selling selling acquisition 3.50 at $2.80 at $2.50 announced

3.00 Converted notes reducing cost to $1.86 2.50 2.00 1.50 1.00 0.50 0.00 Feb-09 Feb-10 Feb-11 Feb-12 Feb-13 Feb-14 Feb-15 Feb-16 Aug-09 Nov-09 Aug-10 Nov-10 Aug-11 Nov-11 Aug-12 Nov-12 Aug-13 Nov-13 Aug-14 Nov-14 Aug-15 Nov-15 May-09 May-10 May-11 May-12 May-13 May-14 May-15

Chart Source: Morningstar, daily closing prices for SBM 13 Feb 2009 – 3 May 2016. 30 St Barbara Operations

Source: St Barbara 31 Large, low cost reserves

Source: St Barbara 32

St Barbara Valuation

2015 2016 e 2017 e 2018 e

Share Price $1.43 $2.30 $2.30 $2.30

Shares on issue (m) 495 519 519 519

Market Cap (m) $706 $1194 $1194 $1194

Net Debt (m) $ 270 $134 ($45) ($201)

Enterprise Value (m) $ 976 $1328 $1149 $993

Free Cashflow (m) $113 $220 $200 $ 240

EV/FCF 8.6 x 6.0x 5.7x 4.1x

Source: Bloomberg, St Barbara, Hunter Hall 36 Base Resources

Price ($) $0.70

$0.60

$0.50 Entered at $0.03

$0.40

$0.30

$0.20

$0.10

$0.00 Jul-11 Jul-12 Jul-13 Jul-14 Jul-15 Jan-12 Jan-13 Jan-14 Jan-15 Jan-16 Mar-12 Mar-13 Mar-14 Mar-15 Mar-16 Sep-11 Nov-11 Sep-12 Nov-12 Sep-13 Nov-13 Sep-14 Nov-14 Sep-15 Nov-15 May-11 May-12 May-13 May-14 May-15

Source: Morningstar Direct, share price movements from May 2011 to May 2016 37 Base Resources

• Operates rutile/zircon mine at Kwale, Kenya • Second highest margin mineral sands mine in the world • C 5 million tonnes of HM reserves with exploration potential • Mine cost c $420m to build • Mineral sands prices have fallen more than 50% since 2012 as a result of new supply and industrial slowdown • In recent months supply reduced by and Iluka • High operating and financial leverage • Good management

38 Kenyan operations

39 Base Resources Valuation

30 June ($m) 2015 2016 (e) 2017 (e) 2018 (e) Price 5c 6c 6c 6c Issued Capital 563m 795m 795m 795m Market Cap $28 $48 $48 $48 Net Debt $241 $250 $200 $170 Enterprise Value $269 $298 $248 $218 Net Tangible Assets $220 $220 $220 $220 Revenues $145 $170 $190 $190 EBITDA $55 $60m $80 $80 EV/EBITDA 4.9x 4.8x 3.1x 2.7x Price: NTA 13% 13% 13% 13%

40 Medical portfolio

Gain/Loss Activity on Cost Sirtex Medical cancer treatment + 54% Photocure bladder cancer diagnostics - 8% Medical Developments pain control + 58% Fitbit health monitoring + 4% Avita Medical skin repair + 48% Nanobiotix cancer treatment + 1% Mesoblast stem cells - 8% Gilead Sciences pharmaceuticals -16% Rex Bionics exoskeletons - 73% Factor Therapeutics wound care + 9% GI Dynamics removable bariatric device - 95% Viralytics virology 0% 41 Value Growth Trust Performance (after fees)

MSCI World Relative 30 April 2016 VGT (AUD)¹ Returns 6 months 3.4% -7.5% 10.9% 1 year 14.3% -1.0% 15.2% 3 years 20.6% 17.8% 2.8% 5 years 11.1% 13.9% -2.8% 10 years 6.4% 4.1% 2.3% 15 years 10.1% 1.8% 8.3% 20 years 14.5% 5.9% 8.6% Since inception ² - compound 13.7% 6.1% 7.5% annual

Source: Hunter Hall, Bloomberg. Returns beyond 1 year are compound annual returns. ¹ ‘MSCI World’ refers to the MSCI World Total Return Index, Net Dividends Reinvested, in Australian Dollars. ² Inception: 2 May 1994. 42 Value Growth Trust Portfolio Holdings

30 April 2016

Top 10 Holdings Main Business Country % St Barbara gold explorer and producer Australia 13.8 Sirtex Medical treatments USA 8.2 Vocus telecommunications Australia 6.6 Doray Minerals gold explorer and producer Australia 4.5 Prada fashion Italy 3.6 Lumentum hardware USA 2.4 Viavi Solutions communications equipment USA 2.4 Gategroup airline caterer Switzerland 2.3 Genworth Financial insurer USA 2.1 RCG Corp consumer discretionary Australia 2.0 Other 28.9 Cash 23.3 The Value Growth Trust holds 56 stocks in total

43 Global Value Limited (ASX: HHV) Performance

Relative 30 April 2016 HHV PRE-TAX MSCI (AUD)¹ Returns MSCI¹

6 months 4.3% -7.5% 11.8%

1 year 14.3% -1.0% 15.2%

3 years 21.9% 17.8% 4.1%

5 years 13.0% 13.9% -0.9%

7 years 14.3% 11.1% 3.2%

10 years 5.6% 4.1% 1.5%

Since inception 2 - compound annual 8.3% 5.9% 2.3% Performance quoted excludes the impact of tax and the exercise of options and assumes dividends have been reinvested. Source: Hunter Hall, Bloomberg. Returns beyond 1 Year are Compound Annual Returns. The performance figures indicate the achievement of the investment manager in managing the HHV portfolio, not the returns to shareholders as measured by movements in the HHV share price, which is dependent on market sentiment towards the HHV shares. ¹ MSCI (A$) refers to the MSCI World Total Return Index, Net Dividends Reinvested in Australian Dollars. 44 2 Inception: 19 March 2004 Global Value Limited (ASX: HHV) Regular and consistent dividends since 2013

Our objective is to deliver regular and consistent stream of fully franked dividends to our shareholders

Cents per share 10.0

4.0* 5.0

6.0 5.0 3.5* 4.0* 4.0* 2.5* 3.0* 3.0 1.7* 0.0 Jun-08 Jun-10 Dec-12 Jun-13 Dec-13 Jun-14 Dec-14 Jun-15 Dec-15 Jan-00 Reporting Period

Dividend for the half year ended 31 December 2015 of 3 cents is fully franked which is approx. 4 cents grossed up

*Partially franked or unfranked dividends. 45 High Conviction Equities Trust Seeded on 11 December 2014

• Managed by Peter Hall AM

• Ethically screened global equities • Concentrated, high conviction, high risk, unconstrained portfolio of max 20 holdings • Return objective to outperform RBA Cash Rate target +3%

• 180.1% cumulative net return since inception

• Net assets $27.2m (of which HH & PH = c$13m)

Performance to 30 April 2016. 46 High Conviction Equities Trust Performance (after fees)

11 Dec 2014 – 30 April 2016 30 April 2016 HCT

$30,000 HCT, 26,032 3 months 30.6% $25,000

$20,000 6 months 34.1%

$15,000

$10,000 RBA 1 year 105.7% +3%, $5,000 10,676 Since inception $0 (compound annual) 110.3% May… Jul-15 Jan-16 Jan-15 Jun-15 Oct-15 Feb-16 Feb-15 Sep-15 Dec-15 Dec-14 Apr-15 Mar-16 Mar-15 - 11 Dec 2014 Aug-15 Nov-15 Nov-14

Source: Hunter Hall, Bloomberg. 47 High Conviction Equities Trust Top 10 Portfolio Holdings at 30 April 2016

Top 10 Holdings Main Business Country % St Barbara gold explorer and producer Australia 29.2 Base Resources mineral sands Australia 14.2 Doray Minerals gold explorer and producer Australia 13.2 Sirtex Medical liver cancer treatments USA 7.6 Medical Developments pharmaceuticals Australia 6.2 Avita Medical Ltd skin repair Australia 4.5 SRG Ltd engineering services Australia 3.7 Onterran Ltd non-residential building constr Australia 1.9 Viralytics virology Australia 0.9 Talisman materials Australia 0.8

Cash 17.3

48 Q&A