RARE WEBINAR Quarter ending 31 March RARE Infrastructure Limited ABN AFSL

Transcription

1 RARE WEBINAR Quarter ending 31 March 2018 RARE Infrastructure Limited ABN AFSL

2 Our investment philosophy Infrastructure assets, regardless of whether they are listed or unlisted, exhibit the same characteristics and operating cash flows. RARE believes that by using a longer-term fundamental valuation approach when investing in listed markets through the cycle, significant opportunities arise as listed markets misprice infrastructure assets short-term. Through accessing listed infrastructure markets, RARE views both the liquidity and investible opportunity set as greater, further allowing for enhanced infrastructure returns to investors. 2

3 Contents 1 RARE business overview 4 2 Q sell off 6 3 Outlook and Investment ideas for

4 01 RARE business overview

5 Business update FUM FUM AUD USD Global Value Strategy 4.3bn 3.3bn Emerging Markets Strategy 0.3bn 0.3bn Income Strategy 0.9bn 0.7bn Smart Beta 43.5mn 33.4mn Research travel Analyst / PM Location Key themes Shane Hurst US US Utilities Charles Hamieh US US Utilities David Maywald US Satellites Key personnel changes Investment / Distribution / Support No changes Note As at 31 March

6 02 Q sell off

7 Recent sell off impacted infrastructure severely Rollover in 12mth performance more pronounced in infra than global equities Value and Income against Global Equities and Infra Indices Rolling 12mth Gross Performance (USD) of Value & Income vs Infra Indices and Global Equities 30% 25% 20% 15% 10% 5% 0% -5% -10% -15% Mar-15 Jun-15 Sep-15 Dec-15 Mar-16 Jun-16 Sep-16 Dec-16 Mar-17 Jun-17 Sep-17 Dec-17 Infra Index range (MSCI, S&P, DJB, FTSEs) Value Income MSCI World 30% 25% 20% 15% 10% 5% 0% -5% -10% -15% As at 28 February FactSet Research Systems and RARE calculations. 7

8 Key factors impacting infrastructure equities Bond yields, growth and Inflation Bond Yields Short term rates are rising (2yr rates) Dividend yields on infrastructure stocks look less attractive Drags on market prices in the near term Long end expectations and how quickly we get there Market starting to converge on US 10T yields in 3% to 3.5% in medium term Expectation is that we will get there sooner (i.e., this year) Think Taper Tantrum of 2013 Different impact for utilities than for infrastructure stocks Growth & Inflation Expectations Inflation concerns coming through Logic goes Inflation (particularly wage) higher than expected, therefore Central Banks (Fed in particular) will need to tighten faster, therefore slowing growth and ending this cycle Note that inflation generally less of a concern for infrastructure, more about real growth Also, soft data (PMIs, inventories, etc.) starting to grow less quickly (i.e., rolling over). We re still getting real growth but it looks like it will slow a bit 8

9 Bond yields Market price vs fundamental value implications of structural rise Value (theory) Regulated Utilities Increase in rates passed through at next regulatory reset Cash flows increase, discount rate increases Neutral to value User Pays Infrastructure No change in cash flows (assumes inflation rate is unchanged) Discount rate increases Negative to value Price (market) Dividend yield less attractive compared with bond yields Stock initially sells off (impacts defensive utilities more than growth utilities) If real rates increase because economy is better then usage (traffic, passengers, carloads, volumes etc.) increases Stock initially rises 9

10 US 10yr Treasury Yield Expectations Bond yields Recent move in expectations for US 10-year treasuries Utility rotation zone Feb - 18 ~50 bps change in expectations Dec Spot Market Implied 1/12/17 Market Implied 14/2/18 RARE IAB F/cast As at March 2018 Market implied data Bloomberg Other RARE calculations 10

11 Value portfolio contribution by sector & region Absolute contribution, basis points, local currency Electric Gas Water Toll Roads Airports Rail Ports Comms Cash USA & Canada Western Europe Asia Pacific Developing Latin America Middle East Asia Pacific Developed Cash RARE Calculations from 31 December 2017 to 31 March 2018 FactSet Research Systems, holdings based returns, (Portfolio Code - CLIENT:/PUBLISHER/RIVAF.ACCT) The above information is included for illustrative purposes only and does not constitute specific investment advice or recommendations on any particular securities. 11

12 Stock, sector & regional contribution Absolute contribution, basis points, local currency Top Three / Bottom Three Regions Contribution (bps) Latin America 20 Middle East -10 Asia Pacific Developing -62 Asia Pacific Developed -82 USA & Canada -232 Western Europe -259 Top Six Stocks Contribution (bps) Groupe Eurotunnel 28 Aeroports de Paris 26 Cesp 16 Grupo Mexico Transportes 8 Sempra 8 OHL Mexico 7 Top Three / Bottom Three Sectors Contribution (bps) Airports -14 Rail -24 Ports -45 Comms -97 Water -113 Gas -192 Bottom Six Stocks Contribution (bps) United Utilities -44 SES -45 Williams Co -45 Pennon -48 Eutelsat Communications -51 Enbridge Inc -95 RARE Calculations from 31 December 2017 to 31 March 2018 FactSet Research Systems (Portfolio Code - CLIENT:/PUBLISHER/RIVAF.ACCT) The above information is included for illustrative purposes only and does not constitute specific investment advice or recommendations on any particular securities. 12

13 Portfolio Weight Contribution to Return Value Strategy Portfolio exposures and contribution EU Infrastructure Other DM Infrastructure NA Pipelines Other Utility UK Water US Utility Emerging Markets Satellite Open Weight (LHS) Closing Weight (LHS) Contribution (RHS) RARE Calculations from 31 December 2017 to 31 March 2018 FactSet Research Systems, holdings based returns, RARE Infrastructure Value Rep Mandate The above information is included for illustrative purposes only and does not constitute specific investment advice or recommendations on any particular securities. 13

14 Income portfolio contribution by sector & region Absolute contribution, basis points, local currency Electric Gas Water Toll Roads Airports Ports Comms Cash USA & Canada Western Europe Asia Pacific Developing Latin America Asia Pacific Developed Cash RARE Calculations from 31 December 2017 to 31 March 2018 FactSet Research Systems, holdings based returns, (Portfolio Code - CLIENT:/PUBLISHER/RIRSVL.ACCT) The above information is included for illustrative purposes only and does not constitute specific investment advice or recommendations on any particular securities. 14

15 Stock, sector & regional contribution Absolute contribution, basis points, local currency Top / Bottom Regions Contribution (bps) Latin America 63 Asia Pacific Developing 25 Asia Pacific Developed -47 Western Europe -339 USA & Canada -354 Top Six Stocks Contribution (bps) Cesp 49 Guangdong Investment 25 Taesa 14 Glow Energy 11 Gas Natural Fenosa 4 CFE Transmission 1 Top Three / Bottom Three Sectors Contribution (bps) Ports -6 Airports -8 Toll Roads -46 Comms -112 Electric -155 Gas -263 Bottom Six Stocks Contribution (bps) Williams Co -44 United Utilities -45 Eutelsat Communications -49 SES -63 Enbridge Inc -72 Pattern Energy -77 RARE Calculations from 31 December 2017 to 31 March 2018 FactSet Research Systems (Portfolio Code - CLIENT:/PUBLISHER/RIRSVL.ACCT) The above information is included for illustrative purposes only and does not constitute specific investment advice or recommendations on any particular securities. 15

16 Portfolio Weight (%) Contribution to return (%) Income strategy Portfolio exposures and contribution EU Infrastructure Other DM Infrastructure NA Pipelines Other Utilities UK Water Yield Co Emerging Markets Satellites Open Weight (LHS) Close Weight (LHS) Contribution (RHS) RARE Calculations from 31 December 2017 to 31 March 2018 FactSet Research Systems, holdings based returns, RARE Infrastructure Income Rep Mandate The above information is included for illustrative purposes only and does not constitute specific investment advice or recommendations on any particular securities.

17 EM portfolio contribution by sector & region Absolute contribution, basis points, local currency Electric Gas Water Toll Roads Airports Rail Ports Comms Cash Asia Pacific Developing Latin America Cash RARE Calculations from 31 December 2017 to 31 March 2018 FactSet Research Systems, holdings based returns, (Portfolio Code - CLIENT:/PUBLISHER/RIRSEM.ACCT) The above information is included for illustrative purposes only and does not constitute specific investment advice or recommendations on any particular securities. 17

18 Stock, sector & regional contribution Absolute contribution, basis points, local currency Top / Bottom Regions Contribution (bps) Latin America 61 Asia Pacific Developing -520 Top Six Stocks Contribution (bps) Cesp 58 Copasa 54 China Gas Holdings 44 ENN Energy 40 Sabesp 22 Gujarat Pipavav 18 Top Three / Bottom Three Sectors Contribution (bps) Rail -0 Electric -14 Water -25 Gas -79 Comms -87 Toll Roads -164 Bottom Six Stocks Contribution (bps) Light -61 Bharti Infratel -68 China Merchants Holdings -75 Beijing Enterprises Water -99 Gujarat State Petronet -99 Jasa Marga -158 RARE Calculations from 31 December 2017 to 31 March 2018 FactSet Research Systems (Portfolio Code - CLIENT:/PUBLISHER/RIRSEM.ACCT) The above information is included for illustrative purposes only and does not constitute specific investment advice or recommendations on any particular securities. 18

19 03 Outlook and investment ideas for 2018

20 Investment Outlook Growth Major synchronised global growth In danger of running too hot, USA, Germany of concern Growth is good for usage / patronage based infrastructure Economic themes Some inflation is important, need wage inflation to reduce underemployed and increase participation rates. Central bank activity likely to drive rates. Politics and geopolitics still has a role to play. Inflation Divergence of views on wage inflation Some inflation is good, too much results in central bank intervention Inflation is positive for infrastructure Infrastructure themes Asset-based growth, no issues with funding, it's more about the opportunities. Price elasticity of demand for economically sensitive assets could interrupt usage/patronage. Early days, but may begin to see some differentiation on potential technology disruption. 20

21 Economic outlook 12 to 18 month view Revised scenarios by region* US BEAR CASES Policy errors and currency stress 150% Protectionist measures from the Trump administration are the maincause downside risk to for US and trading partner growth. Productivity remains stagnant, leading to growth well below historic trend. Risk of financial stress initiated by tightening of financial conditions. US corporates have increased leverage, with some pockets showing credit stress. CENTRAL CASES Goldilocks 6570% Above ttrend GDP growth in the medium-term, plus a notional amount from fiscal stimulus (impact ). Gradual normalisation of monetary policy. Bond yields are lower for longer (versus history) reflecting international monetary conditions. US dollar and oil prices remain range-bound. US is moving toward over-heating in 2019 BULL CASES Overheating 20% Strong increase in consumer spending resulting from high wage growth and lower savings rates, combined with buoyant corporate investment, and US housing continues to recover sharply. Increase in participation rate. Productivity growth returns to historic averages. Oil prices rise, pushing up headline inflation. No negative impact from global currency stress. Bond yields rise to high 3% range, driven by inflation. EU Fiscal policy and reform inertia slows growth, particularly Italy. While financial risks appear to have eased, political risks continue, due to Brexit and a series of Eurozone elections. Potential for social issues including migration to challenge current political establishment, and derail reforms required to improve productivity. UK faces lower growth from Brexit ECB ends their large scale asset purchases in late 2018, and lifts interest rates in Growth across the Eurozone is temporarily above trend. Domestic demand strength closes the Output Gap, with higher core inflation boosting bond yields in the medium-term. Brexit reduces economic growth in the UK, and expected to marginally hit growth in Europe. EU growth is abovetrend (1Q18 anomaly) Combination of supportive ECB action and global growth leads to broad expansion of credit cycle. Signposts likely to include relaxation of Germany s hard line on austerity sufficiently to lead to new growth agenda, common regulation and back-stop support for EZ banks (Italy & Portugal) and other related measures. Japan Headwinds from global currency stress, potential trade/currency war. BOJ engages in further unconventional monetary policy, with unintended consequences. Regional instability, caused by geopolitical tension. Sustained modest Japanese growth resulting from looser monetary policy (continuing to undershoot the 2% inflation target), and fiscal stimulus. Microeconomic reforms fail to lift productivity, but corporate governance continues to improve. Lending to firms continues to improve. Japanese institutional investors progressively shift asset allocation away from bonds into equities. Japan has been in a sweetspot, risk from high FX Progressive transformation of the Japanese economy resulting from a long-term improvement in productivity, more relaxed monetary policy, boosting corporate and consumer confidence. Microeconomic reforms slowly improve productivity and change corporate behaviour. Note As at 31 March 2018 * % represents RARE s opinion of probability of scenarios Opinions may change without notice. 21

22 Economic outlook 12 to 18 month view (cont d) Revised scenarios by region* BEAR CASES Policy errors and currency stress 150% CENTRAL CASES Goldilocks 6570% BULL CASES Overheating 20% China Mismanagement of structural transition to consumer-led economy in China, including failure of central government to support local government and the banks, leading to disorderly slowdownmanage financial risks. Potential for significant bad debts impacting liquidity in key areas of the economy (property & financial institutions in particular). Commodity prices & currencies transmit Chinese crisis to the global economy. Chinese growth continues to slow in the medium-term, with policy moving from strong stimulus to less accommodative. Civil unrest remains contained. Active management of the capital account. Slower trade growth is a headwind for employment, investment and consumer demand. The One Belt, One Road initiative provides stimulus for China and trading partners. Increased geopolitical influence. China managing for slower but higher quality growth Policy measures in China (domestic demand growth and financial liberalisation) and continued pick-up in export demand supports stable growth. Middle class consumer emerges as a demand pull for Asian (and lesser extent global) products increasing intra-asian and global trade. Harnessing technological innovation in higher value-added industries. EMs Capital flows are volatile in response to global monetary policy, resulting in tightening financial conditions in EMs in particular those with high deficits, and limited scope for effective policy response. Slower trade growth triggers protectionist responses. Asian trade rebounds, with an improvement in exports & some areas of governance/policy. Mexican growth is reduced in the medium-term, with lower exports and investment, but no harsh outcome from NAFTA renegotiation. Weak underlying economic and political environment in Brazil (election in Q4 2018). The Indian government is successful in implementing reform agenda facilitating upswing in investment (including Foreign Direct Investment). Capital flows into EMs return, and growth in Developed Markets supports reflation and releveraging. Positive multiplier effect from Chinese investment and leverage. EMs have low inflation, output gaps, and benefit from low US dollar ROW Weak capex in resources is not offset by balanced growth in other sectors (potential danger of investment bubbles, such as property). Households susceptible to an increase in real interest rates. Benefiting from global economic momentum. Borrowing costs get dragged up by movements in US interest rates (and normalisation of term premia). Canada & Australia have benefited from synchronised global growth Australian and Canadian economies rebound on the back of higher global growth, and associated inbound investment. Note As at 31 March 2018 * % represents RARE s opinion of probability of scenarios Opinions may change without notice. 22

23 Regional / sectoral attractiveness Asia Pacific Developed Asia Pacific Developing Eastern Europe Latin America Middle East USA & Canada Western Europe Electricity Gas Water Airports Rail Toll Roads Ports Comms Note As at 31 March 2018 Opinions may change without notice. The above information is included for illustrative purposes only and does not constitute specific investment advice or recommendations on any particular securities. 23

24 EV / EBITDA Infrastructure multiples range bound since 2013 Strong earnings growth underpinned by investment in asset base Sector (RARE 200) consensus EV / EBITDA EV / EBITDA - Historical trend using FY1 EBITDA 12x 11x 10x 9x 8x 7x 6x RARE Universe As at 31 March FactSet Research Systems and RARE calculations. Arithmetic average, RARE 200 constituents, current EV divided forward consensus EBITDA, EV = Market Cap + Net Debt + Minority Interest and Preferred Stock. 24

25 EV / EBITDA However, MSCI World steadily more expensive Utility vs Infrastructure consensus EV / EBITDA EV / EBITDA - Historical trend using FY1 EBITDA 16x 14x 12x 10x 8x 6x 4x MSCI World Utilities Infrastructure As at 31 March FactSet Research Systems and RARE calculations. Arithmetic average, current EV divided forward consensus EBITDA, EV = Market Cap + Net Debt + Minority Interest and Preferred Stock. 25

26 Relative EV / EBITDA Infrastructure now cheapest relative in 5yrs Uncertain global equity earnings growth plays infra earnings transparency User Pays Infra, Utility & Aggregated Sector Multiples Relative to MSCI World Rolling 3mth EV / EBITDA - Historical trend using FY1 EBITDA 1.5x 1.4x 1.3x 1.2x 1.1x 1.0x Utes vs MSCI User Pays vs MSCI Infra Sector vs MSCI As at 14 February FactSet Research Systems and RARE calculations. Arithmetic rolling 3mth average, current EV divided forward consensus EBITDA, EV = Market Cap + Net Debt + Minority Interest and Preferred Stock. 26

27 Standardised past performance Local Rolling period returns (%) Rolling 12 month performance to March RARE Infrastructure Value Representative Mandate, Local Gross RARE Emerging Markets Representative Mandate, Local Gross RARE Infrastructure Income Fund Rep Mandate, Local Gross Past performance is not a reliable indicator of future results Currency exchange rate fluctuations may impact the value of your investment RARE as at 31 March

28 Conclusion Why RARE One Team, One Process, Differentiated Portfolios One of the largest team in the peer group. Senior members together for an average of 9 years Long term cash flow analysis using long term cost of capital assumptions Utilising RARE s proven process to construct portfolios targeting differentiated investment objectives RARE are infrastructure specialists managing funds not fund managers managing infrastructure RARE are a boutique investment house wholly focused on investing in infrastructure The investment team consists of specialists with experience across the infrastructure asset lifecycle Unique portfolio construction approach aims to provide long term stable returns 28

29 Important information While the information contained in this document has been prepared with all reasonable care, RARE Infrastructure Limited ( RARE ) and its related companies accept no responsibility or liability for any errors, omissions or misstatements however caused. This information is not personal advice. This information has been prepared without taking account of your objectives, financial situation or needs. Potential investors should seek independent advice as to the suitability of any products to their investment needs. The fact that shares in a particular company may have been mentioned should not be interpreted as a recommendation to buy, sell or hold that stock. Any opinions or outlook contained in this document is subject to change without notice and do not constitute investment advice or recommendations. The distribution of this document may be restricted in your jurisdiction and you are not authorised to distribute this information. This document does not constitute an offer or solicitation in any jurisdiction in which to make such an offer or solicitation would be unlawful. Legg Mason Asset Management Australia Limited (AFSL No ; ABN ) ( Legg Mason Australia ) is the responsible entity for the RARE Infrastructure Value Fund Hedged (ARSN ), RARE Infrastructure Value Fund Unhedged (ARSN ), RARE Infrastructure Income Fund (ARSN ) and RARE Emerging Markets Fund (ARSN ). Applications to invest can only be made on the application form accompanying the Fund Product Disclosure Statement (PDS) dated 30 September, Potential investors should consider the PDS and the Additional Information Booklet (AIB) before deciding whether to invest, or continue to invest in the Fund(s). The PDS and AIB can be obtained on or by contacting RARE on (02) , or by writing to RARE Infrastructure Limited, Level 13, 35 Clarence Street, Sydney, NSW 2000, by fax on (02) or at operations@rareinfrastructure.com. Legg Mason Australia can be contacted by writing to Legg Mason Australia, Level 47, 120 Collins Street, Melbourne, VIC 3000, by telephone on or by fax on (03) Past performance is not indicative of future performance. Legg Mason Australia does not guarantee any rate of return or the return of capital invested. Investments are subject to risks, including, but not limited to, possible delays in payments and loss of income or capital invested. Investment Advisers This presentation has been prepared for investment advisers only. This presentation presents information in a manner which is not suitable for retail investors and RARE does not authorise the provision of this presentation to retail investors.

30 Portfolio positioning Value Strategy At 31 March 2018 Top Stocks Country Sector Weight (%) Vinci France Toll Roads 6.2 Enbridge Inc Canada Gas 5.4 Spark Infrastructure Group Australia Electric 4.4 Atlantia Italy Toll Roads 4.1 Crown Castle USA Comms 4.0 Groupe Eurotunnel France Rail 3.6 National Grid UK Electric 3.5 East Japan Railway Japan Rail 3.3 Williams Co USA Gas 3.3 United Utilities UK Water 3.3 Key Portfolio Statistics ¹ Avg Market Capitalisation 30.1bn RARE Div Yield (Fwd) Gross² 4.4% DPS Growth (Est. 5 Year) ² 7.6% Gearing (Current) 38.3% Interest Cover (Historic) 4.3x EV/EBITDA (Forward) ³ 11.4x Regional exposure Sector exposure RARE Calculations at 31 March FactSet Research Systems (Portfolio Code - CLIENT:/PUBLISHER/RIVAF.ACCT) 1. Based on weighted averages. 2. RARE Div Yield (Fwd) Gross and DPS Growth forward estimates are based on RARE research and forecasts. 3. EV means Enterprise Value (market capitalisation + preferred equity, if any + net debt) and EBITDA means earnings before interest, tax, depreciation & amortisation. The above information is included for illustrative purposes only and does not constitute specific investment advice or recommendations on any particular securities. 30

31 IRR Expected returns from the Value Strategy Equity IRR has been reasonable predictor (see portfolio performance) Portfolio companies currently offering a 5yr equity IRR of circa 12.7% on average well above cost of equity Portfolio stocks (expected 5 year returns annualised from RARE financial models) 18% Value Portfolio IRR Value Portfolio Average IRR 16% 14% 12% 10% 8% Target return 6% Mar 12 Sep 12 Mar 13 Sep 13 Mar 14 Sep 14 Mar 15 Sep 15 Mar 16 Sep 16 Mar 17 Sep 17 Mar 18 RARE calculations as at 31 March 2018 Portfolio Weighted average of RARE calculated 5 year IRR for Value Strategy portfolio stocks, monthly. Average represents average of observations over graph period. Figures are RARE s expected returns based on RARE research. There is no guarantee these targets will be met. RARE s opinions may change at any time without notice. 31

32 Portfolio positioning Income Strategy At 31 March 2018 Top Stocks Country Sector Weight (%) Taesa Brazil Electric 6.0 Spark Infrastructure Group Australia Electric 5.9 Iberdrola Spain Electric 5.0 Atlantia Italy Toll Roads 4.7 Enbridge Inc Canada Gas 4.1 Pattern Energy USA Electric 4.0 SSE UK Electric 3.8 Enagas Spain Gas 3.8 AltaGas Ltd Canada Gas 3.6 NRG Yield USA Electric 3.5 Key Portfolio Statistics ¹ Avg Market Capitalisation 16.7bn RARE Div Yield (Fwd) Gross² 6.2% DPS Growth (Est. 5 Year) ² 8.1% Gearing (Current) 42.8% Interest Cover (Historic) 3.9x EV/EBITDA (Forward) ³ 9.4x Regional exposure Sector exposure RARE Calculations at 31 March FactSet Research Systems (Portfolio Code - CLIENT:/PUBLISHER/RIRSVL.ACCT) 1. Based on weighted averages. 2. RARE Div Yield (Fwd) Gross and DPS Growth forward estimates are based on RARE research and forecasts. 3. EV means Enterprise Value (market capitalisation + preferred equity, if any + net debt) and EBITDA means earnings before interest, tax, depreciation & amortisation. The above information is included for illustrative purposes only and does not constitute specific investment advice or recommendations on any particular securities. 32

33 IRR Expected returns from the Income Strategy Equity IRR has been reasonable predictor of returns (see portfolio performance) Companies in Portfolio currently offering a 5yr equity IRR of circa 12.9% on average well above cost of equity Portfolio stocks (expected 5 year returns annualised from RARE financial models) 18% Income Portfolio IRR Income Portfolio Average IRR 16% 14% 12% 10% 8% Target return 6% Mar 11 Sep 11 Mar 12 Sep 12 Mar 13 Sep 13 Mar 14 Sep 14 Mar 15 Sep 15 Mar 16 Sep 16 Mar 17 Sep 17 Mar 18 RARE calculations as at 31 March 2018 Portfolio Weighted average of RARE calculated 5 year IRR for Income Strategy portfolio stocks, monthly. Average represents average of observations over graph period. Figures are RARE s expected returns based on RARE research. There is no guarantee these targets will be met. RARE s opinions may change at any time without notice. 33

34 Portfolio positioning At 31 March 2018 Top Stocks Country Sector Weight (%) Malaysia Airports Malaysia Airports 5.9 Gujarat State Petronet India Gas 5.8 Bharti Infratel India Comms 5.6 NTPC LTD India Electric 4.9 Copasa Brazil Water 4.7 China Merchants Holdings China Ports 4.4 Telesites Mexico Comms 4.4 Jasa Marga Indonesia Toll Roads 4.2 Power Grid India Electric 4.1 Enel Americas Chile Electric 3.9 Key Portfolio Statistics ¹ Avg Market Capitalisation 8.2bn RARE Div Yield (Fwd) Gross² 3.2% DPS Growth (Est. 5 Year) ² 9.9% Gearing (Current) 26.6% Interest Cover (Historic) 7.5x EV/EBITDA (Forward) ³ 9.7x Regional exposure Sector exposure RARE Calculations at 31 March FactSet Research Systems (Portfolio Code - CLIENT:/PUBLISHER/RIRSEM.ACCT) 1. Based on weighted averages. 2. RARE Div Yield (Fwd) Gross and DPS Growth forward estimates are based on RARE research and forecasts. 3. EV means Enterprise Value (market capitalisation + preferred equity, if any + net debt) and EBITDA means earnings before interest, tax, depreciation & amortisation. The above information is included for illustrative purposes only and does not constitute specific investment advice or recommendations on any particular securities. 34

35 IRR Expected returns from the Emerging Markets Strategy Equity IRR has been reasonable predictor (see portfolio performance) Portfolio companies currently offering a 5yr equity IRR of circa 17.4% on average well above cost of equity 21% Portfolio IRR Portfolio Average IRR 19% 17% 15% 13% Target return 11% 9% Mar 15 Sep 15 Mar 16 Sep 16 Mar 17 Sep 17 Mar 18 RARE calculations as at 31 March 2018 Portfolio Weighted average of RARE calculated 5 year IRR for Emerging Market Strategy portfolio stocks, monthly. Average represents average of observations over graph period. Figures are RARE s expected returns based on RARE research. There is no guarantee these targets will be met. RARE s opinions may change at any time without notice. 35