June 2008

June 08Neville ChesterNeville Chester

Long term

investing

Culture of excellence

1. Deeply ingrained in company culture that CLIENTS COME FIRST

� Independent asset manager

� majority of assets on 24 hours notice

� No Bank, no Life office, no retail distribution……

� Asset size

� Reject asset gatherer business model (jealously guard capacity)

� Will close funds when necessary (Absolute funds 2005-2009)� Will close funds when necessary (Absolute funds 2005-2009)

� Returns

� All clients get survey returns (‘Coronation DNA’)

� Recently won sizeable mandates for this reason

� Emphasize long-term sustainable client relationship

� Retrospectively introduced caps on performance fees1

� Won’t be tempted by silos - serve shareholders and not clients

12005 Absolute funds

The value of independence

� Before it became popular…

� We are independent from a bank or life company or platform

� No proprietary interests

� No conflict of interests

� Retirement savings and LT incentives, we eat our own cooking

� Staff incentivised appropriately: In line with clients best interests

� Long term, sustainable

“they’re buying something from you, and you are betting against it. And you want people to trust you. I wouldn’t trust you,” Levin told Blankfein

Quote from Senate hearings into Goldman Sachs

“they’re buying something from you, and you are betting against it. And you want people to trust you. I wouldn’t trust you,” Levin told Blankfein

Quote from Senate hearings into Goldman Sachs

Equity investment philosophy

� Long time horizon

� We don’t time markets

� Any period less than 5 years not meaningful

� Common-sense, valuation-driven process

� Not thematic investors

� Build portfolios of most undervalued assets

Valuation-driven

� Proprietary research

� Independent research deeply ingrained in culture

�Meetings with unlisted competitors, regulators, suppliers etc…

� Local research benefits from GEM research� Local research benefits from GEM research

� SA market uniquely absent international players

� Competitive advantage from international research (GEM team)

– SA stocks increasingly priced by foreign investors

– Intra-sector returns highly correlated across markets

Valuation-driven

� Encourage a “generalist” mindset

� As opposed to the industry “specialist” model

� Strongly encourage ‘out the box’ thinking and minority views

� Key differentiators in process

� Analysts assigned responsibilities across sectors

� Stocks rotated every few years to challenge biases

� Team based as opposed to isolation

Coronation Top 20 fund

� Coronations ‘flagship’ equity fund

� Concentrated, high conviction positions based on Coronation research

� Focus on best risk adjusted returns, benchmark is irrelevant

� For long term investors (5 years +) It is equity!

� Higher risk ≠ Higher return

� Higher risk = Higher return over long term

Cumulative Performance Coronation Top 20 Fund periods ending 31 March 2010

9 years of exceptional stock picking9 years of exceptional stock picking

790.77

430.96

468.14

400

500

600

700

800

900

Coronation Top 20

FTSE/JSE Top 40 Index

FTSE/JSE All Share Index

Morningstar as at 31 March 2010

430.96

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Consistent long term alpha with short term volatility

Rolling Alpha

4.0%

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12.0% Rolling Alpha against Top40

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Rolling 3 year alpha

Rolling 3 Year Alpha

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Coro Eqt Alpha UTTOP Alpha

Rolling 5 year alpha

Rolling 5 Year Alpha

2.00%

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12.00%

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Coro Eqt Alpha UTTOP Alpha

A case studyHow common sense investing is not so common

� Richemont

� Retailer of luxury goods (Top end jewellery, watches, pens, accessories)

� Long history of being listed if somewhat clouded by structure

� Controlled by the Rupert's, built up over the years (Separate structure since 1988)structure since 1988)

� Luxury goods sales are cyclical

� How deeply cyclical is the question

� Own great brands with long history

� Post IT bubble - 9/11 downturn Richemont’s margins were smashed

� Has grown organically and by acquisition of key brands where available

Richemont brands - Cartier

Richemont brands - Watches

Jaeger le Coultre

Vacheron Constantin

IWC

Panerai

Baume & Mercier

Jaeger le Coultre

Vacheron Constantin

IWC

Panerai

Baume & Mercier

A tough sell

� 2008/2009 the worst recession since 1930’s

� Bankers and their ilk were large purchasers of luxury goods

� Newly spun out Richemont was listed at peak of negativity

� Previous cycles had seen precipitous decline in profits

� How do you justify buying a cyclical luxury goods company heading into the great depression II?

� Broad shoulders and long term outlook!

� Understanding what was similar to past cycles and what was different

� What was in the price and what was the probability of various outcomes

Past experience: EBIT margin

15%

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0%

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1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009

Inauspicious listing

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Short term thinking

� January 2009:

� November 2008:

� “We believe it is too early to invest in the Brands sector despite

material upside to intrinsic valuations.” Morgan Stanley

Anchoring

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The Cycle

Growth in Wristwatch Sales by Price Category

In Value

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Total

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0

The wheel turns

� Unprecedented monetary and fiscal policy reduced the impact of the recession in the developed world

� The emerging markets suffered much shallower recessions some not at all

� Turns out people still like to buy expensive jewellery and fashionable watches

� As equity markets turned and forecasts for economic recovery started to appear short term perceptions changedappear short term perceptions changed

� Swiss watch sales indicators turned

� Richemont came out with surprisingly robust results

� Good cost control

� Margin protection

� Stronger top line

� Market began focussing on intrinsic value once again

Successful investment

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Case studyLong term investment in progress

� MTN, it looks ugly out there

� There is a laundry list of issues:

� Interconnect (SA)

� Interconnect (Nigeria)

� RICA (SA)

� KYC (Nigeria)

� Bharti (Nigeria)

� Retail price focus by ICASA

� Price Caps (Nigeria)

� Potential Acquisition (Algeria)

What matters for investment case

� Probabilities

� Price

� When expectations are low returns are high and vice versa

� Accounting earnings vs cash earnings

� Geographic exposures at risk

� Ex growth or not ex-growth is not a relevant argument

Market dominance

SyriaMarket position 2/2Market share 45%

Iran

Competition landscape in MTN marketsCompetition landscape in MTN markets

MTN footprint MTN Hot spot

IranMarket position 2/3Market share 40%

SudanMarket position 2/3Market share 28%

South AfricaMarket position 2/3Market share 32%

NigeriaMarket position 1/5Market share 50%

GhanaMarket position 1/6Market share 55%

Source: Company Reports and CIRA

The investment case

� Still dominant telco operator in large fast growing African and Middle Eastern markets

� Markets that are maturing (SA) will become very cash flow positive

� Data and other services are still very strong growth vectors in markets where voice is ex-growth

� Minutes of Use (MOU) are fairly stable and predictable� Minutes of Use (MOU) are fairly stable and predictable

� Geographic diversification helps offset some regulatory risk

� Currency diversification

� Just added 7.6m Subs for Q1, this is not ex-growth!

� >11% post tax FCF yield (2011) or SAGB 8% pre tax yield

Free cash flow: History and projections

0.0%

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-50.0%

1998

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2000

2001

2002

2003

2004

2005

2006

2007

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2010F

2011F

2012F

2013F

2014F

2015F

MTN valuation

76.1% 49% 98% 70% 95% 85%SA Nigeria Iran Ghana Cameroon Uganda Sudan Others Total

Normalised revenue 37097 50181 18288 7800 5776 7271 4246 24230 154890

Normalised EBITDA 12613 28102 6035 3588 2599 2545 1274 11686 68441Normalised EBITDA margin 34% 56% 33% 46% 45% 35% 30% 48% 44.2%

Tax -2560 -6905 -914 -721 -712 -480 -289 -283930% 32% 25% 28% 38.5% 30% 40%

Capex -4081 -6524 -2377 -1014 -751 -945 -552 -3150 -1939411% 13% 13% 13% 13% 13% 13%

FCF 5973 14673 2743 1853 1137 1120 433 5697

Minorities 0 -3510 0 -37 -341 -56 -65 -905

MTN FCF share 5973 11163 2743 1816 796 1064 368 4792

Multiple 14.6 12.5 10.0 10.0 10.0 10.0 10.0 11.3 12.212.6% 13.5% 14.9% 14.9% 14.9% 14.9% 14.9% 13.5%

Value 87349 139541 27432 18163 7957 10637 3681 54299 34905925% 40% 8% 5% 2% 3% 1% 16% 100%

PV 267898Dividends 25071

Total value 292969

SISS 1844

Fair value 158.87

Share price 107.99

Upside 47%

SASOL: 60 years young…

SASOL:The good, the bad and the ugly

� The bad

� Poor recent operating history

� Secunda production peaked in 2004 (currently 9% below that level)

� Poor cost performance

– 6% per year 2000 - 2006

– 19% per year 2007 - 2009

� Poor recent project delivery – have not seen much return from R40bn invested seen much return from R40bn invested over the last 5 years

� Large future capex plans – wants to spend R40 billion in the next 2 years

� Lots of stay-in-business capital required

�Questions on ability of new projects to add value, worries over capital allocation

SASOL:The good, the bad and the ugly

� The ugly

� Project Turbo (R14bn spent) was a terrible project – reduced stability and capacity at the core plant, increased costs, now has inefficient surplus plastic production capacity

� Capex for EGTL in Nigeria increased by 3 � Capex for EGTL in Nigeria increased by 3 times from original estimates – and 4 years late

SASOL:The good, the bad and the ugly

� The good

� Existing business (though impacted by Turbo) still intact

�High barriers to entry

�Good cash flows (R10bn – R30bn per year)

� Ability to reduce costs

� Chemical business will recover

� Projects invested in over the last few � Projects invested in over the last few years still has to fully deliver

�Oryx, Arya almost there; Gas and Synfuels expansion a long way to go

� Optionality on higher long-term oil prices – existing business and growth opportunities

� Exceptional world-first projects delivered: Oryx GTL in Qatar, natural gas pipeline from Mozambique

SASOLFocussing on the bad and the ugly

Source :I-Net

SASOL

� Sasol is a better than average oil company

� Both long-life (35 years v 11 year average for peers) and low cost assets

� Sasol earns more per barrel of product sold than their international oil company counterparts

� Sell higher value products

� Pay less taxes and royalties

�No production sharing agreements

� Sasol have a great deal of control over their input costs

� Sasol have much more opportunities to expand their production by multiples

SASOL

� Despite it’s cyclicality, Sasol has grown its earnings faster than the general market over a long period

Source :I-Net

SASOL: Valuation

� Normal earnings = R30

� @ Oil price of $68 per barrel and R9/$

� Current business valued at R375

� No value for future opportunities

� Conclusion:

� Will be driven by the rand oil price in the short-term

� We are positive on the long term outlook for oil

� We expect decent returns for patient long-term investors

� Optionality on higher long-term oil prices, GTL, CTL and exchange rates (rand geared stock)

Top 10 holdingsCoronation Top 20 Fund

% 1 yr fwd PE DY

Sasol 10.21% 11.6 3.3%

MTN 9.88% 9.9 4.0%

British American Tobacco Plc 8.85% 12.8 5.1%

Standard Bank Group 7.70% 10.3 3.9%

Anglo American Plc 7.56% 15.5 0.6%Anglo American Plc 7.56% 15.5 0.6%

Naspers 6.59% 16.9 1.0%

Bidvest Group 5.59% 10.6 3.7%

Nedbank 5.28% 9.6 4.3%

SABMiller Plc 5.15% 16.2 2.5%

Vodacom 4.38% 9.2 5.7%

71.18% 12.2 3.4%

as at 28 April 2010

Market outlookMarket outlook

SA : the good news!

8

9

10

11

Greece (Euro)

South Africa (ZAR)

Source: Bloomberg

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5

6

7

Jan-08 Apr-08 Jul-08 Oct-08 Jan-09 Apr-09 Jul-09 Oct-09 Jan-10 Apr-10

Headlines we don’t have to read

12:08 29Apr10

RTRS-GREECE DISCUSSING WITH EU/IMF HIKING VAT TO 23-25 PCT AS PART OF 3-YR DEAL - SOURCES

12:08 29Apr10

RTRS-GREECE, EU/IMF TALKS LOOKING AT HIKING TOBACCO, ALCOHOL, FUEL TAXES BY AT LEAST 10 PCT - SOURCES

12:08 29Apr10

RTRS-CUTS TO SALARY BONUSES, PUBLIC PAY ALLOWANCES ALSO PART

12:14 29Apr10

RTRS-Greece, EU/IMF discuss new austerity steps-sources

RTRS-CUTS TO SALARY BONUSES, PUBLIC PAY ALLOWANCES ALSO PART OF GREECE'S EU/IMF TALKS - SOURCES

"All these are on the table," said one of the sources, who requested anonymity. "They are not final yet."

"All these are on the table," said one of the sources, who requested anonymity. "They are not final yet."

Belt tightening needed

SA: The bad news

Source :I-Net

South Africa: macro environment

� Growth: at least 3% this year:

� Inflation: back in target helped by strong rand and low food prices

� Rand: still supported by global risk appetite

� Interest rates: March rate cut was the last in the down cycle. Rates could rise in 2011

Risk appetiteBack to pre-Lehman levels

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Overall market around fair value

SA equity positioning

� Foreign buying has pushed many domestic stocks significantly higher

� On a relative basis selected resources shares becoming attractive

� We still favour SA stocks with an international angle such as

� Naspers, MTN, South African Breweries, British American Tobacco, � Naspers, MTN, South African Breweries, British American Tobacco, Liberty international, Richemont, Bidvest

� Banks due for a strong earnings recovery over next 2 years as bad debt cycle normalizes

� Favour more defensive businesses with strong cash earnings

Gold

� Despite the dollar gold bull market

� SA gold producers have been major underperformers

Prices of some gold shares getting closer to buy territory� Prices of some gold shares getting closer to buy territory

� Fundamental concerns remain

Gold Demand - tonnes

Gold Demand

1,500

2,000

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3,000

Tonnes

Source: World Gold Council

-

500

1,000

1,500

Jewellery Industrial and dental Investment demand

Tonnes

1995-2008 Avg. 3 yr avg 5 yr avg 10 yr avg 2009

Inflation outlook

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Target band

. Forecast period

Source: Stats SA, CFM forecast

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Global valuations are reasonable

MSCI World P/BV World PE (on 10 Yr average E)

Absolute ValuationsMore stable measures

Absolute ValuationsMore stable measures

Source: CIRA, Factset

Asset allocation

� Global equities still preferred

� SA equity now closer to fair value, therefore a more neutral weighting advised

Within bonds we have built a substantial position in inflation linkers and � Within bonds we have built a substantial position in inflation linkers and corporate bonds

� No strong view on property, neutral value

Coronation Market Plus FundCoronation Market Plus Fund

Coronation Market Plus fund

� Flexible asset allocation fund

� Aggressive equity portfolio

� Tactical asset allocation

� Non Reg 28, take advantage of all asset types� Non Reg 28, take advantage of all asset types

� Build consistent views across asset classes

� Play off relative yield, return and risk differentials

� Strong consistent track record

Cumulative performanceCoronation Market Plus fundsince inception ending 31 March 2010

494.07

358.72

410.50

280

330

380

430

480

530

Coronation Market Plus

Benchmark

FTSE/JSE All Share Index

80

130

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280

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Asset allocation: 9 year history

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EQT Foreign Equity

GLT ILB's

Prefs Foreign Cash

Foreign Bonds PROPERTY

PROPERTY International CASH

Why invest with Coronation?

� One single investment philosophy

� Owner-managed business

� Committed and experienced investment team

� A proven 16 year track record of consistent alpha generation

Questions?

Coronation Asset Management is an Authorised Financial Service Provider.

The content of this presentation and any information provided may be of a general nature and may not be

based on any analysis of the investment objectives, financial situation or particular needs of the client.

(as defined in the Financial Advisory Intermediary Services Act) As a result, there may be limitations as

to the appropriateness of any information given. It is therefore recommended that the client first obtain

Disclaimer

the appropriate legal, tax, investment or other professional advice and formulate an appropriate

investment strategy that would suit the risk profile of the client prior to acting upon such information and

to consider whether any recommendation is appropriate considering the client’s own objectives and

particular needs.

Any opinions, statements and any information made, whether written, oral or implied are expressed in

good faith.

Thank you!