Flexible Prescient Fund

1. Bateleur Capital
Presentation to the Senate Group
March 2017

2. Bateleur Capital – timeline
• Company founded as a hedge fund management company
• Strong focus on capital preservation
• Apply a consistent investment process across all funds
2
2004
Bateleur Capital
was founded by
Kevin Williams
2005
Long/short Hedge Fund
launched
Portfolio Manager:
Kevin Williams
2008
Market Neutral Hedge
Fund launched
Portfolio Manager:
Charl Gous
2010
Flexible Unit Trust
Fund launched
Portfolio Manager:
Kevin Williams
2016
Converted hedge
fund to CIS
structures
2012
Segregated Equity
Mandates launched
Portfolio Manager:
Galen Hossack
2015
Equity Unit Trust
launched
Portfolio Manager:
Galen Hossack

3. Independent and owner managed
3
Key differentiators
Focused: Limited range of equity centric funds
Flexible: Not constrained to any specific investment style
Nimble: Flat structure, enabling swift portfolio adjustments, if required
Independent and 100% owner managed
Staff complement of 12
Investment Team
6 Investment Professionals
Combined experience of 68 years
4 CFA; 1 CA (SA); 1 B.Econ
Operations Team
Team of 5
Combined experience of 63 years
1 CA (SA); 1 LLB; 1 CIMA; 1 B.COM
Bateleur Academy
1 x B. Bus Sci (Finance)
Bursary scheme (2 students)

4. 4
Consistent process across all investment products
Consistent process across all investment products
Strategies we manage
Long/ short
Fund
•A regulated flexible hedge fund suitable for high net worth individuals, institutions, family
offices and HFoF’s
•Investment objective is to generate returns in excess of inflation (CPI +4%) over time,
while placing a premium on protecting investor capital
Market
Neutral
Fund
•A regulated relative value hedge fund suitable for high net worth individuals, institutions,
family offices and HFoF’s
•Investment objective is to generate returns in excess of cash (STeFI) on an annual basis,
while placing a premium on protecting investor capital
Flexible
Fund
•An actively managed South African multi-asset class fund formed under the Collective
Investment Schemes Control Act (2002)
•Investment objective is to generate a return in excess of inflation over time, while placing
a premium on protecting investor capital
Equity Fund
•An actively managed South African general equity fund formed under the Collective
Investment Schemes Control Act (2002)
•Investment objective is to generate returns in excess of the JSE Shareholder weighted
index (SWIX) over the medium to long term*

5. Feeder
Fund
R140m
Assets under management
Market Neutral
R1.1bn
Source: Bateleur
Equity Only R3.1bn
Unit Trusts R1.8bn
Long/Short R2.5bn
Assets by fund strategy (R8.5bn) Consistent measured growth in AUM (Rbn)
5
0.0
1.0
2.0
3.0
4.0
5.0
6.0
7.0
8.0
9.0
2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016
R8.5bn

6. Investment philosophy
Achieving the investment objective will lead to outperformance of equity markets over the medium to long term
6
Philosophy
Objective
Practically
Fundamental, bottom up investing combined with a top down macro overlay
To generate returns in excess of inflation whilst placing a premium on protecting investor capital
Keep pace with equity markets in good times and protect capital in periods of market stress

7. 1 000
2 000
3 000
4 000
5 000
6 000
7 000
8 000
9 000
2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017
2015/16
Bateleur +15.2%
JSE All Share +7.9%
2008
Bateleur -4.8%
JSE All Share -23.2%
Investment philosophy – Capital preservation a key objective
2011
Bateleur +12.0%
JSE All Share +2.6%
Source: Bloomberg Returns to 28 February 2017
7
Unit price
Bateleur L/S fund (net) 17.9%
CPI+4% Index 10.1%
JSE All Share(TR) 15.4%
The Bateleur investment process has historically led to outperformance when markets are weak

8. Process includes
• Fiscal and monetary policy analysis (interest rates, inflation, QE)
• Macro economic drivers & outlook (GDP growth)
• Long term capital market valuations vs. trend
Impacts asset allocation decisions
• Bonds/equities/cash/property/commodities/currencies
Which equity sectors to focus on/avoid
• Defensive/cyclical/interest rate sensitive/high yield/Rand hedge/resources
Investment process – bottom up stock picking dominates
Top down macro focus
30%
Bottom up stock picking
70%
Process includes
• Identify securities that trade at a discount to underlying value
• Initial screen using conventional valuation measures (PE, DY, ROE and EPS growth)
• Financial modelling incorporating through the cycle and long term margin analysis
• Focus on qualitative factors (business sustainability, barriers to entry)
• Emphasis placed on established management teams with proven track record
• Focus on earnings predictability and cashflow generation
8

9. 9
Risk management
• Sell when prices exceed fair value
• Prudent cash weighting
• Wary of overleveraged, cyclical and highly capital intensive businesses
• Wary of acquisitive (roll-up) companies
• Analyse cash vs. accounting earnings
• Monitor portfolio liquidity risk closely

10. Flexible Fund - historical performance
JSE All Share (TR) 13.8%
Bateleur (net) 17.1%
CPI+4% Index 9.5%
CAGR since inception
10Source: Bloomberg, Bateleur All performance numbers to 28 February 2017
Returns YTD 1 Year 3 Year 5 Year
Bateleur Flexible Fund 1.2% 2.2% 10.6% 15.9%
CPI+4% (benchmark) 1.7% 10.6% 9.7% 9.7%
JSE All Share (TR) 1.1% 6.3% 5.7% 11.6%
Unit price
* 2016 Morningstar and Raging Bull award winning fund – best flexible fund over 5 years on a risk adjusted basis.
100
140
180
220
260
300
Jun 10 Dec 10 Jun 11 Dec 11 Jun 12 Dec 12 Jun 13 Dec 13 Jun 14 Dec 14 Jun 15 Dec 15 Jun 16 Dec 16

11. 11
Flexible Fund – returns vs. 30 day volatility
Bateleur Flexible Fund vs. JSE All Share: returns vs. 30 day volatility
Source: Bloomberg, Bateleur
0
5
10
15
20
25
30
-8.0% -6.0% -4.0% -2.0% 0.0% 2.0% 4.0% 6.0% 8.0% 10.0% 12.0%
30Dvolatility
Monthly return
Bateleur Flexible Prescient Fund JSE All Share

12. 2017 outlook - current macro backdrop
12
Sustainability of
commodity prices
Rand vs. major trading
partners
Growth vs. Value
Global capital market
valuations
Portfolio
Construction

13. -50
-30
-10
10
30
50
70
0
5
10
15
20
25
30
35
40
45
1996 1998 2000 2002 2004 2006 2008 2010 2012 2014 2016
China Money Supply YoY% (LHS)
CRB commodity index YoY% (RHS)
13
2017 outlook – sustainability of commodity prices
China Money Supply vs. CRB Commodity Index
• Commodity prices rallied in 2016, driven by Chinese monetary & fiscal stimulus, which has peaked
• China remains a far more important driver of commodity prices than the US
• Should China prioritise structural reform ahead of growth, bulk commodity prices are at risk
Source: Bloomberg, Bateleur, RMB Morgan Stanley
China and the US share of commodity demand (%)
0%
10%
20%
30%
40%
50%
60%
70%
80%
Oil Copper Steel Th coal Met coal Iron ore
US share of commodity demand
Chinese share of commodity demand

14. 40
60
80
100
120
140
160
2004 2006 2008 2010 2012 2014 2016
SA real ex rate vs USD
SA real ex rate vs GBP
SA real ex rate vs EUR
14
2017 outlook – Rand
SA real exchange rates vs. major trading partners
• Rand is marginally under-valued vs major trading partners, but a sharp appreciation in 2017 is unlikely
• An improving trade and fiscal deficit from increased commodity exports and taxes will be supportive of the Rand
• Risk of a sovereign downgrade, while dissipating, would be negative for the Rand
Source: Bloomberg, Bateleur, RMB Morgan Stanley
Rand undervalued
Rand overvalued
SA budget balance as % of GDP
-10
-8
-6
-4
-2
0
2
1993 1997 2000 2003 2006 2009 2012 2016
SA Budget Balance (% of GDP) SA Budget Balance (% of GDP) forecast

15. 15
2017 outlook – Growth vs. value
-10%
0%
10%
20%
30%
40%
50%
60%
2014 2015 2016
Naspers share price growth (%) Naspers core EPS growth (%)
-5%
10%
25%
40%
55%
70%
85%
100%
Barloworld Imperial
2016 share price return 2016 EPS growth 2017 EPS growth
Naspers price vs. EPS growthBarloworld/ Imperial price vs. EPS growth
• In 2016 value outperformed growth, although not through earnings growth
• Value P/E multiples expanded (re-rated) while growth P/E multiples contracted (de-rated)
• Comfortable paying a fair multiple for a high quality company with good growth prospects & earnings visibility
Source: Bloomberg, Bateleur
Note: Naspers core EPS growth is calculated on a calendar year basis.

16. 0
2
4
6
8
10
12
14
1985 1989 1993 1997 2001 2005 2009 2013 2017
S&P 500 Forward Earnings Yield US 10 yr Bond Yield
0
5
10
15
20
25
30
1985 1989 1993 1997 2001 2005 2009 2013 2017
S&P 500 12M FWD P/E (times) average
16
2017 outlook – Global and domestic capital markets
S&P 500 long run forward P/E multiple since 1985 S&P 500 12M forward EY vs. US 10Y bond yield (%)
• Equity markets valuations are above trend, but unlike bonds not in bubble territory
• Strong preference for global equities vs. global bonds, given rising GDP, low interest rates and inflation trending higher
Source: Global Financial Data, Bloomberg, RMB Morgan Stanley
US equity markets are
above long term average
US equity/ bond
yield gap is 3.2%

17. 4
6
8
10
12
14
16
18
2003 2005 2007 2008 2010 2011 2013 2015 2016
JSE P/E ex Naspers average
17
2017 outlook – Global and domestic capital markets
JSE All Share P/E (trailing) JSE 12M forward P/E ex Naspers
JSE 12M forward EY vs. SA 10Y bond yield (%)
0
2
4
6
8
10
12
14
16
2003 2005 2007 2009 2011 2013 2014 2016
SA 10Y Bond Yield
JSE Earnings Yield (ex Naspers)
JSE 12M forward P/E ex Naspers currently 12.8 timesJSE 12M trailing P/E as at 31 December 2016 : 20.6 times times
• JSE appears expensive over the long term
• Includes depressed resource earnings
• Inflated by heavy weighting of Naspers
• On a forward P/E basis, appears more palatable
• Includes expected resource earnings growth
• Excludes Naspers
Source: Bloomberg, Bateleur, Global Financial Data, RMB Morgan Stanley
0
5
10
15
20
25
1960 1968 1976 1984 1992 2000 2008 2016
JSE All Share P/E (trailing) average

18. 18
2017 outlook – in summary
• Equity valuations are above trend globally and in SA, return expectations need to be tempered
• Equities offer superior risk/return vs. bonds and cash given inflation and US rate hikes
• SA GDP improving off a low base, could assist corporate earnings especially:
• Agriculture and mining companies (as well as those providing services & product into these sectors)
• GDP trend growth (3%) still some way off, requires broad corporate investment
• Rand close to fair value, no obvious preference for local vs. offshore equities based on currency
• No specific theme in the portfolio i.e. cyclicals, interest rate sensitive stocks
• Fund holdings dominated by stock specific opportunities, as opposed to top down themes
• Lack of “dripping roast” opportunities, leads to a higher no. of individual stock positions

19. Flexible Fund – current fund positioning
Source: Bateleur
19
SA Industrial KAP, Mpact, AECI & Hudaco
Direct offshore Google, PayPal, Wells Fargo & S&P 500
IT Naspers & EOH
Rand hedge Bidcorp, BTI & Reinet
Financials Old Mutual & Barclays Group Africa
Retail and food producer Shoprite, Oceana & Italtile
Resources Sasol & Mondi
Healthcare Adcock & Spire Healthcare
Offshore property Capital & Regional, Stenprop & Sirius
Other small holdings Various
Cash - Rand
Sector Select Holdings

20. Adcock – improving execution supports investment case
20Source: Bloomberg, Bateleur
Adcock operating margin improving and below trend Strong balance sheet – moving into a net cash position (Rm)
-5%
0%
5%
10%
15%
20%
25%
30%
35%
40%
2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017e2018e
Operating profit margin (%) average
Bidvest acquires
initial stake (34.5%)
in Adcock
• Sharp turnaround evident over the past two years, following the Bidvest acquisition (currently own 38.4%)
• Strong balance sheet – moving to a net cash position
• Excellent portfolio of over the counter (OTC) brands - Corenza C, Panado, Citro-soda, Allergex, Bioplus
-1500
-1000
-500
0
500
1000
1500
2013 2014 2015 2016 2017e 2018e 2019e

21. -30%
-20%
-10%
0%
10%
20%
30%
40%
50%
2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017
SEP price increase (%) ZAR vs USD (%)
Adcock – improving execution supports investment case
21Source: Bloomberg, Bateleur
Margin supported by stronger ZAR and pricing Forward P/E (times) valuation attractive, result of organic growth
Margin support from
lower API input cost from
a stronger ZAR and price
recovery form SEP
increase
• Will benefit in 2017/18 from a stronger Rand and single exit pricing (SEP) increases
• High quality cash generation with low capex requirements – having already invested meaningfully in facilities
• Attractive valuation and potential acquisition target
Rand weakness
Rand strength
16.3
12.8
14.2
18.5
45.0
31.5
19.6
17.1
14.5
12.6
0
5
10
15
20
25
30
35
40
45
50
2010 2011 2012 2013 2014 2015 2016 2017e 2018e 2019e
PE forecast to unwind through
improved operational focus,
input cost benefits and a
deleveraged balance sheet

22. 0
100
200
300
400
500
600
700
800
900
1000
2007 2008 2009 2010 2011 2012 2013 2014 2015 2016
Shoprite HEPS (cents) Shoprite DPS (cents)
Source: Bateleur
22
Shoprite – Africa becoming meaningful
Consistent earnings and dividend growthAfrican operations expansion continues
• African operations contribution finally becoming meaningful
• Sustained investment despite macro backdrop created a strong leadership position
• Contributed 19% of group profits in 1H 2017 vs. 14% in 1H 2016
• Investment in operations (existing and expansion) a strong driver of earnings and dividend growth
Shoprite has grown HEPS and
DPS at 18% CAGR since 2007
December 2015 368 stores in Africa
2016 added 49 stores in Africa
December 2016 417 stores in Africa
2017/18 will add 66 stores in Africa
June 2018 483 stores in Africa

23. 0
500
1 000
1 500
2 000
2 500
3 000
3 500
4 000
4 500
5 000
2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016
Pick n Pay capex (Rm) Spar capex (Rm) Shoprite capex (Rm)
0
5
10
15
20
25
30
35
40
2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018
Shoprite trailing P/E Shoprite FWD P/E
Average trailing PE
Source: RMB Morgan Stanley
23
Shoprite – Africa becoming meaningful
Shoprite has invested in growth ahead of its competition Shoprite forward P/E (times) attractive relative to history
Since 2006 Shoprite has invested a
cumulative R30.8bn in capex vs. Pick
n Pay’s R13.2bn and Spar R3.8bn.
• Shoprite has invested significantly ahead of peers, positioning the group for future growth
• Business is strongly cash generative with a favourable working capital cycle
• Steinhoff transaction overhang lifted, management can focus on growth initiatives
• We were strongly opposed to the potential transaction
Shoprite P/E unwinds to 18.7x to
June 2017 and 16.1x to June 2018.

24. • Foodservice as an industry has attractive and growing dynamics
• Steadily growing consumption of food away from home drives growth in a fragmented market
• Translates into predictable and strong earnings growth prospects for Bidcorp
• Bidcorp operates in 20 countries, has 260 distribution centers and employs 24 500 people
• 2016 turnover reported at R140.5bn and trading profit of R5.2bn (trading margin of 3.7%)
30%
35%
40%
45%
50%
55%
60%
65%
70%
1975 1978 1981 1984 1987 1990 1993 1996 1999 2002 2005 2008 2011 2014
Food at home Food away from home
Share of total expenditure on food
away from home increased from
36% in 1975 to 50% in 2014
Source: USDA, Bateleur
24
Bidcorp – well positioned in an attractive growth industry
Cash earnings consistently ahead of headline earningsUS market as a proxy - structural growth in foodservice
0
1 000
2 000
3 000
4 000
5 000
6 000
2013 2014 2015 2016 2017e
Headline earnings (Rm) Cash earnings before dividends and capex (Rm)

25. Source: Bateleur
25
Bidcorp – well positioned in an attractive growth industry
Cash generative business with little debt Bidcorp 12M forward P/E (times) stacks up well vs peers
• Bidcorp is highly cash generative (negative working capital cycle)
• Strong balance sheet (underutilised) with little debt
• Attractively valued vs. global peers at an estimated 19.2x 12M forward P/E
• Highly regarded management team in place led by Bernard Berson
19.2
18.4
22.9
16.5
18.5
19.3 19.2
0
5
10
15
20
25
Sysco PFG Booker US Food Sodexho Compass Bidcorp
-3 000
-2 500
-2 000
-1 500
-1 000
-500
0
500
1 000
-7
-6
-5
-4
-3
-2
-1
0
2013 2014 2015 2016 2017e 2018e
Net Debt Rm (RHS) Net working capital days (LHS)

26. Source: RMB Morgan Stanley
26
Hudaco – improving fundamentals and low earnings base
Operating margins below trend, set to improve with growth
• Provides predominantly imported products into the SA manufacturing, mining and consumer industries
• Earnings base is low and margins are below trend
• Seeing signs of improvement in economy, from mining in particular
Global mining capex ($ billions)
0
10
20
30
40
50
60
70
80
90
2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016
$bln
Total global mining capex
10%
11%
12%
13%
14%
15%
16%
17%
18%
0
100
200
300
400
500
600
700
2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016
Operating profit Rm (LHS) Operating profit margin %
Average operating margin

27. Source: RMB Morgan Stanley
27
Hudaco – improving fundamentals and low earnings base
P/E (times) is attractive given low earnings base and improving outlook
• Low capex distribution business, highly cash generative
• Experienced and respected management team led by Graham Dunford
• Attractively valued at an estimated 10x P/E to November 2017 and a potential acquisition target
Consistent cash generation and good capital allocation
0
100
200
300
400
500
600
700
800
2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016
Cash Generated (Rm) Capex (Rm) Acquisitions (Rm)
0
2
4
6
8
10
12
14
16
18
2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018
Hudaco trailing P/E
Hudaco forward P/E
Average trailing P/E

28. Conclusion
We remain confident in delivering on the investment
objectives of the funds that we manage
28

29. Caveat and disclaimer
This presentation is confidential, is not for circulation
or publication and is for the information of the
addressee only. This presentation may not be
disclosed to any third party without the written
consent of Bateleur Capital (Pty) Ltd (“Bateleur”). This
presentation has been prepared for the benefit and
information of the addressee to whom this
presentation is submitted in good faith and who is
deemed by Bateleur to have accepted that the
confidentiality of this presentation will be maintained
at all times.
This presentation has been prepared by Bateleur.
Whilst every care has been taken by Bateleur in
compiling the information contained in this
presentation neither Bateleur nor its director give any
warranties, express or implied, as to the accuracy,
reliability or completeness of this presentation or any
other information of whatever kind whether in oral or
written form, made available to any interested party
and any liability therefore is hereby expressly
disclaimed.
Bateleur is an authorised financial services provider.
FSP no. 18123.
29