PSG Asset Management March 2017 Copyright PSG Disclaimer

Introduction to PSG Asset Management 3 Copyright © PSG

PSG Corporate Structure Part of a successful listed company PSGK Listed: June 2014 4

PSG Asset Management Company background • PSG House, Cape Town • First unit trust

Simple, comprehensive product suite PSG Equity PSG Flexible Returns PSG Balanced PSG Stable PSG

Our primary role: stewardship “Is this in the best long-term interests of our investors?

A quick snapshot of the past 18 months 8 Copyright © PSG

2016: a lesson in grey thinking 9 Copyright © PSG

European elections Italy, Germany and the Netherlands “Brexit could be followed by Grexit, Departugal,

A challenging environment for making investment decisions Page 12

ANC: NEC elections A tough battle Page 13

Two factors that could impact future returns 1 Uncertainty 2 Asset Page 15 Valuations

Looking back at Equity Markets 16 Copyright © PSG

4. 00 Yield % The yield conundrum continues Unprecedented monetary conditions 10. 00 8.

End Of 2015 – Very Consensual Views Black or white thinking & extrapolation of

Our portfolios offer a margin of safety P/E ratios indicative of margin of safety

The Rand: Still relatively undervalued Dollar/rand on a purchasing power parity basis 16 Actual

How do we manage money in volatile times? 22 Copyright © PSG

Investing in times of turbulence Don’t forecast Think long-term Patience Grab the opportunities that

Our equity philosophy A simple checklist to keep us focused QUALITY ASSESSMENT Moat Margin

Buying with a margin of safety The market cycle creates opportunities Greed Fear Source

Our process protects capital over the long-term Managing risk is embedded in our process

Areas of potential mispricing's A review of what we said at the beginning of

Our track record: PSG Flexible Fund 28 Copyright © PSG

PSG Flexible Fund Equity like returns at lower levels of risk • Flexible asset

Margin of Safety applied consistently Our equity portfolio is above average quality at below

The importance of capital protection Benchmark beating returns PSG Flexible Fund JSE All Share

Delivering on our clients’ objectives over the long run Annualised performance to 31 December

PSG Wealth Fund of Funds 34 Copyright © PSG

Conclusion • Disciplined • Diversified portfolios - • Cash - • Protection and firepower:

PSG Asset Management (Pty) Ltd is an authorised financial services provider. FSP 29524 Copyright

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PSG Asset Management Company background • PSG House, Cape Town • First unit trust launched: Jan 1998 • Pure asset management business: R 32 bn • Assets under administration: R 82 bn • Staff compliment: 77 • Investment professionals: 14 Page 5

Simple, comprehensive product suite PSG Equity PSG Flexible Returns PSG Balanced PSG Stable PSG Global Flexible PSG Global Equity PSG Diversified Income PSG Money Market 0% 6 Copyright © PSG Max 10% Max 40% Max 75% Between 0% - 100% Average risk (Equity Exposure) Fully invested 6

Our primary role: stewardship “Is this in the best long-term interests of our investors? ” Our framework for answering this question: Think and act long-term Be prudent in deploying our clients’ assets Have an obsessive focus on research 7 Copyright © PSG

US elections Page 10

European elections Italy, Germany and the Netherlands “Brexit could be followed by Grexit, Departugal, Italeave, Czechout, Oustria, Finish, Byegium. Only Remania will stay” Page 11

A challenging environment for making investment decisions Page 12

ANC: NEC elections A tough battle Page 13

Treasury Page 14

Two factors that could impact future returns 1 Uncertainty 2 Asset Page 15 Valuations

The impact of the 2008 crisis Page 17

4. 00 Yield % The yield conundrum continues Unprecedented monetary conditions 10. 00 8. 00 6. 00 2. 00 0. 00 Jun-16 Oct-15 Feb-15 Jun-14 Oct-13 Feb-13 Jun-12 Oct-11 Feb-11 Jun-10 Oct-09 Feb-09 Jun-08 Oct-07 Feb-07 Jun-06 Oct-05 Feb-05 Jun-04 Oct-03 Feb-03 Jun-02 Oct-01 Feb-01 Jun-00 Oct-99 Feb-99 Jun-98 Oct-97 Feb-97 Jun-96 Oct-95 Feb-95 Jun-94 Oct-93 Feb-93 Jun-92 Oct-91 Feb-91 Jun-90 -2. 00 Source: Bloomberg Page 18 German 10 Year Bid Yield US 10 Year Mid Yield

End Of 2015 – Very Consensual Views Black or white thinking & extrapolation of recent conditions • Interest rates will be low for a very long time • Own quality and growth (especially tech) • Avoid cyclical businesses 19 Copyright © PSG

Our portfolios offer a margin of safety P/E ratios indicative of margin of safety 27. 1 26. 5 22. 8 21. 5 17. 9 16. 5 16. 0 13. 5 11. 5 6. 5 Dec-04 11. 0 Dec-05 Dec-06 Dec-07 Dec-08 Dec-09 PSG equity portfolio* Source: PSGAM, I-Net * Using PSG Flexible fund data 20 Copyright © PSG Dec-10 ALSI Dec-11 Dec-12 JSE Industrials Dec-13 Dec-14 Dec-15 Dec-16

The Rand: Still relatively undervalued Dollar/rand on a purchasing power parity basis 16 Actual USD/ZAR 12. 50 14 ? PPP USD/ZAR 12 [VALUE] 10 8 6 4 2 1994 Source: RMB 21 Copyright © PSG 1996 1998 2000 2002 2004 2006 2008 2010 2012 2014 2016

Investing in times of turbulence Don’t forecast Think long-term Patience Grab the opportunities that arise in times of panic Buy with a margin of safety (Price) Page 23

Areas of potential mispricing's A review of what we said at the beginning of the year and our current thinking 2016 (Jan) High quality/blue chip SA equities are expensive Government bonds Property Offshore equities Local cyclical equities (SA Inc. ) Cash 27 Copyright © PSG 2017 (Jan)

PSG Flexible Fund Equity like returns at lower levels of risk • Flexible asset allocation mandate - Equity exposure can vary between 0% to 100% Able to invest up to 25% directly offshore • Asset allocation is done based on opportunity: - If we can find many undervalued shares, we have a higher equity exposure and lower cash exposure • Benchmark: The fund aims to achieve high returns (inflation + 6% after fees) while maintaining relatively low levels of risk - “Equity-like returns at lower levels of risk” • Fund size: R 10 bn as at 29 Feb 2017 • Received three Raging Bull Awards Page 29

Margin of Safety applied consistently Our equity portfolio is above average quality at below average prices PE - Fund PE - ALSI Ave PE Fund Ave PE ALSI 100% Asset allocation % 80% 60% 40% 20% 0% Dec-04 Sep-05 Jun-06 Mar-07 Dec-07 Sep-08 Jun-09 Mar-10 Dec-10 Sep-11 Jun-12 Mar-13 Dec-13 Sep-14 Jun-15 Mar-16 Dec-16 25 24 23 22 21 20 19 18 17 16 15 14 13 12 11 10 9 8 7 6 PE Ratio % Cash Source: PSG Asset Management Research PE of Fund has always been lower than that of the JSE All Share Index (“ALSI”). Current PE of Source: I-Net 11. 5 is in line with the long term average PE of 10. 9. Page 30

The importance of capital protection Benchmark beating returns PSG Flexible Fund JSE All Share (incl. dividends) 135 115 105 Fund new high in Aug 2009 ALSI new high in Nov 2010 95 85 Fun d -2 % 75 . 4 45 I- S AL 7. 3 % 65 May/08 Page 31 Aug/08 Nov/08 Feb/09 May/09 Aug/09 Nov/09 Feb/10 55 May/10 Aug/10 Source: PSG Asset Management Research During the ‘ 08/’ 09 financial crisis the PSG Flexible Fund fell less than the JSE All Share Index (incl. dividends) and reached a new high after 15 months, whereas the JSE All Share Index took 30 months Indexed return: 15 May 08 = 100 125

Delivering on our clients’ objectives over the long run Annualised performance to 31 December 2016 after fees, including income: PSG Flexible Fund Sinception (1 Nov 04) 10 years 5 years 3 years 1 year Volatility (5 years) Source: Morningstar, Inc. All Rights Reserved; PSG Asset Management Research 32 Copyright © PSG Fund Sector Rank Ave cash FTSE/ JSE ALSI 17. 2% 1 st out of 13 26. 5% 16. 1% 14. 1% 2 nd out of 30 25. 3% 10. 5% 15. 7% 5 th out of 48 28. 4% 13. 0% 11. 5% 5 th out of 57 31. 7% 6. 2% 17. 6% 7. 8% 3 rd out of 65 27. 9% 2. 6% 10. 5%

PSG Wealth Fund of Funds Exposure to PSG Asset Management Risk Profile Benchmark PSG Wealth (PSG AM) Fund of Funds PSG Asset Management Aggressive CPI + 6% Creator Fo. F PSG Equity Moderate CPI + 5% Moderate Fo. F PSG Balanced Conservative CPI + 3% Preserver Fo. F PSG Stable Fixed Interest CPI + 1% Enhanced Interest PSG Diversified Inc Source: Morningstar, Inc. All Rights Reserved; PSG Asset Management Research 35 Copyright © PSG

Conclusion • Disciplined • Diversified portfolios - • Cash - • Protection and firepower: its value is underappreciated Long-term - Page 37 For various market conditions Do no take binary macro bets Patience when investing Our clients should do the same to benefit from our process