IOOF Presentation. Peter Mahoney. April 2012

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1 IOOF Presentation Peter Mahoney April

2 contents 1. philosophy & process 2. investment team 3. performance 4. stock insight & strategy 5. summary 6. appendices 2

3 1 proven investment approach the way we invest We are style-neutral investment managers who pick stocks using fundamental analysis to exploit market inefficiencies in forecasts and valuations. Fundamental analysis is optimised by career-long analysts being empowered and rewarded as portfolio managers. 3

4 1.1 investment process Philosophy or Style change none Investment Process change none Risk Management Policy changes none 4

5 2 investment team Investment Team changes: Lisa Domagala accepted role as ESG Analyst Michael Bell taken responsibility for Steel from 1 July 2011 Lorana Szeto joined Solaris investment team on 3 October 2011 John Hodder resigned from Solaris investment team effective 31 January Lorana Szeto has taken responsibility for Diversified Metals & Mining, Aluminium and Precious Metals. No further changes currently anticipated. 5

2.1 stable & experienced investment team

Experience Average 16 years Denis Donohue

Years with team Andrew Gatenby Analyst 10

Bell Analyst Sean Martin Analyst 16 Years of

Analyst 17 Years of experience 12 Years with

Earnshaw Analyst 15 Years of experience 12

of experience 16 Years with team Damien Keune

Years with team 17 Years of experience 5 Years

team Gus Roberts Dealer Lisa Domagala ESG

6 2.1 stable & experienced investment team Investment Team Average 12 years Industry Experience Average 16 years Denis Donohue Managing Director 27 Years of experience 23 Years with team Andrew Gatenby Analyst 10 Years of experience 10 Years with team Michael Bell Analyst Sean Martin Analyst 16 Years of experience 11 Years with team Bernard Machen Analyst 17 Years of experience 12 Years with team Rob Pownall Portfolio Analyst Will Earnshaw Analyst 15 Years of experience 12 Years with team Lorana Szeto Analyst 16 Years of experience 16 Years with team Damien Keune Head of Dealing 17 Years of experience 15 Years with team 17 Years of experience 5 Years with team 10 Years of experience 6 Years with team Gus Roberts Dealer Lisa Domagala ESG Analyst 6 Years of experience 2 Years with team 21 Years of experience 16 Years with the team 6

7 3 performance Core Fund* Portfolio Returns Month Quarter 1 year 2 Years p.a. 3 Years p.a. Inception p.a. Solaris Core Australian Equity Fund (Performance Fee Option) APIR: WHT0017AU Retail investors Inception Date: 20 Mar 2009 Portfolio Net Return 2.42% 7.09% -6.73% 0.06% % Benchmark Return # 1.91% 5.64% -6.57% 0.75% % Active Return (Net) 0.51% 1.45% -0.16% -0.70% % * as at 29 February 2012 # S&P/ASX200 Accumulation Index The performance data above is based on month end prices before tax. Net performance is calculated after management fees and operating costs, excluding taxation. 7

8 3.1 volatility and correlation Volatility- 60 day standard deviation of stock returns for each stock, then market cap weighted. Correlation- Correlations of stocks across the index. Calculated daily on a rolling 60 day basis. 8

9 3.2 historical performance EOFY actives Performance prior to January 2008 is the Suncorp Australian Equities Trust (source: Morningstar); performance from January 2008 is the Solaris Core Australian Equity Fund. Gross performance is stated excluding all fees, cost and taxation. 9

10 3.3 historical performance monthly actives 3.00% 2.50% 2.00% 1.50% 1.00% 0.50% 0.00% -0.50% -1.00% -1.50% Performance prior to January 2008 is the Suncorp Australian Equities Trust (source: Morningstar); performance from January 2008 is the Solaris Core Australian Equity Fund. Gross performance is stated excluding all fees, cost and taxation. 3.00% 2.50% 2.00% 1.50% 1.00% 0.50% 0.00% -0.50% -1.00% -1.50% 10 Jan-1999 Jun-1999 Nov-1999 Apr-2000 Sep-2000 Feb-2001 Jul-2001 Dec-2001 May-2002 Oct-2002 Mar-2003 Aug-2003 Jan-2004 Jun-2004 Nov-2004 Apr-2005 Sep-2005 Feb-2006 Jul-2006 Dec-2006 May-2007 Oct-2007 Mar-2008 Aug-2008 Jan-2009 Jun-2009 Nov-2009 Apr-2010 Sep-2010 Feb-2011 Jul-2011 Dec-2011 Solaris Core Strategy - Long Term Performance Monthly Active Return (LHS) Cumulative Active (pa) (RHS)

11 3.4 significant overweights Overweight positions as at 29 February 2012 Stock Active weight Henderson Group 1.92% Iluka Resources Limited 1.81% QR National Limited 1.69% National Australia Bank 1.69% Lend Lease Group 1.58% Rationale Valuation now showing material upside to the share price with the market misinterpreting the degree of EPS that is under their control. 50% of any effects of market declines can be offset by cost control which, combined with the Gartmore (on track) integration sees HGG able to source strong EPS growth in the next 2 years. HGG is on 8x FY12 making for a very attractive opportunity in all but the direst of markets. Strong competitive position in the concentrated high grade mineral sands feedstock segment. Rising pricing due to constrained supply and growing demand result in significant earnings and dividend distributions. Produced a strong underlying result with cost & revenue improvements largely offsetting the one-off impacts of the flood. The market, while warming to the story from a low base, still fails to realise the large opportunity that exists for continued cost, revenue and capital efficiency improvements. Furthermore, balance sheet is materially underleveraged, the rectification of which over the next months will significantly improve return. Finally, the winning of the WICCET project is a return accretive transaction. NAB's earnings growth is the best and ROE maintenance is one of the best among the major banks. Amongst other things, this is because it has gained market share (credit growth) and continuing to do so as a consequence of its (largely pricing) strategies. Lend Lease is currently being priced on cyclical low earnings, however the business continues to transform itself and is in an excellent position to capitalise on an engineering and construction recovery across a number of markets. The negative press on Barangaroo is excessive and the upside from an announcement on Phase 1 of the iconic project should support the share price. Their work book is growing at a greater rate than depletions, and the excess returns on offer at the current trading price are very attractive. 11

12 3.5 significant underweights Underweight positions as at 29 February 2012 Stock Active weight Telstra Corporation Limited -2.46% Rationale After strong rally, is now expensive relative to recent history. Needs future earnings announcements and NBN transition to go seamlessly to retain rating. ANZ Banking Group Limited -2.11% Fully priced relative to the other banks leading to a negative excess return. Westfield Group -1.82% Westpac Banking Corp -1.36% A lot of negative catalysts (retailer distress, internet retailing, poor consumer sentiment and spending) with few positive catalysts that will move the dial for Westfield. The valuation does not offer an excess return so funds are better utilised elsewhere. WBC has the largest negative excess return in the sector, lowest EPS growth and least attractive ROE profile. AMP Limited -1.12% Currently not cheap enough, troubled business model. 12

13 4 stock insight QR National Limited (QRN) Strong underlying result misinterpreted $180m of flood impact offset by > $120m of sustainable cost & revenue improvements EPS growth of 50% & 20% for the next 2 years Expected return of 40% and a top 5 active position Macquarie Group Limited (MQG) Continues to face headwinds in short-term BUT Being priced at 8x FY 2012 and 70% of book. This effectively prices in a disintegration of the current franchise Only a slight change in conditions would see a large re-rating in the price while even in tough markets a large amount of bad news is priced in Expected return of >50% and a top 5 active position 13

14 4.1 portfolio positioning 14

15 4.2 strategy Current Strategy: Select stocks using fundamental analysis to exploit market inefficiencies in forecasts and valuations. Meet our investment objective of exceeding the benchmark by 300 bps p.a. over rolling 3 year periods. Strategy for next quarter: As above. 15

16 5 summary Portfolio well positioned to deliver outperformance Risk managed, robust business designed for longevity Stable team No change to process 16

17 17

18 6 appendices 1. risk management 18

19 6.1.1 regular team meetings Daily Analysts meetings (all investment team) Pre-trading meeting of 30-minutes duration Stock issues, market news & previous day s orders Monthly Analysts meetings (all investment team) Peer review of portfolio positions of 2-hour duration Procedural reviews of stocks & portfolio positions Monthly Portfolio Analytics meetings Attendees Managing Director, Product Specialists & Portfolio Analyst Formal review of portfolio positions & structure Annual investment strategy days (all Solaris team) Formal performance reviews Strategic initiatives 19

20 6.1.2 risk management portfolio management Analysts monitor the following re their allocated sectors: Stock s Excess Return aligned with active position Active sector positions are appropriate & within guidelines Performance contribution derived from active positions Orders initiated to amend stock positions as required Managing Director: Reviews all active positions Reinforces the sell discipline Reviews overall portfolio structure using portfolio analytics 20

21 6.1.3 risk management portfolio analytics Automated daily mandate checks. Risk reviewed via Goldman Sachs JB Were Portfolio Analyser: Total risk Individual stock risk Sectoral risk Style risk including growth, value, cyclical, defensive Size risk Stock and portfolio liquidity risk Monthly risk meeting with MD, Portfolio Analyst and the investment team. 21

22 6.1.4 portfolio s major active positions 22

This presentation has been prepared by Solaris Investment Management Limited ABN 72 128 512 AFSL 330 505 (Solaris) and is supplied on the following conditions which are expressly accepted and agreed

23 This presentation has been prepared by Solaris Investment Management Limited ABN AFSL (Solaris) and is supplied on the following conditions which are expressly accepted and agreed to by each interested party (Recipient). The information in this presentation is not financial product advice and has been prepared without taking into account the objectives, financial situation or needs of any particular person. This presentation does not purport to contain all of the information that may be required to evaluate the Solaris Core Australian Equity Fund (the Fund) and the Recipient should conduct their own independent review, investigations and analysis of the Fund and of the information contained or referred to in this presentation. None of Solaris or their representatives and their respective employees or officers (collectively, the Beneficiaries) make any representation or warranty, express or implied, as tothe accuracy, reliability or completeness of the information contained in this presentation or subsequently provided to the Recipient by any of the Beneficiaries, including, without limitation, any historical information, performance and anyother financial information derived there from, and nothing contained in this presentation is, or shall be relied upon, as a promise or representation, whether as to the past or the future. Past performance is not a reliable indicator of future performance. The information in this presentation is not personal financial product advice and has been prepared without taking into account the objectives, financial situation or needs of any particular person. Before making a decision to invest or continue to hold investments in any of the Solaris Funds, you should obtain, read and consider the respective Product Disclosure Documents, as supplemented from time to time and available from our website Except insofar as liability under any law cannot be excluded, the Beneficiaries shall have no responsibility arising in respect of the information contained in this presentation or subsequently provided by them or in any other way for errors or omissions (including responsibility to any person by reason of negligence). 23

UBS Emerging Companies Conference - 17 October 2007

UBS Emerging Companies Conference - 17 October 2007 October 2007 1 Important Notice This presentation has been prepared by HFA Holdings Limited (HFA) and is supplied on the following conditions which are