gam citywire france presentation 2013

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European Equities

September 2013

Niall Gallagher Investment Director

For Professional Clients Only



Performance and process

Introduction

● 15 years experience investing in equities

Strategy managed Dates managed

BlackRock Global & European Teams –

various analytical & funds responsibilities Jan 98 – Sep 03

BlackRock European Dynamic Fund Sep 03 – Oct 06

BlackRock European Growth Fund May 05 – Oct 06

T. Rowe Price Europe ex UK Fund Mar 07 – May 09

T. Rowe Price European Fund Mar 07 – May 09

GAM European Equities Since Nov 09

GAM Star

Continental

Europe Equity

EUR 462.2m

GAM Star

European

Equity

EUR 61.6m

GAM European Equities: EUR 523.8m

GAM Assets under Management:

Source: GAM as at 30 Aug 2013 3

GAM Star Continental European Equity – EUR Performance from 30 Nov 2009 to 30 Aug 2013

Presented as supplemental information only. Please refer to the relevant GIPS compliant report and the GIPS supplemental text.

Past performance is not indicative of future performance. Performance is provided net of fees.

Source: GAM, MSCI 4 4

GAM Star European Equity – EUR Performance from 30 Nov 2009 to 30 Aug 2013

Presented as supplemental information only. Please refer to the relevant GIPS compliant report and the GIPS supplemental text.

Past performance is not indicative of future performance. Performance is provided net of fees.

Source: GAM, MSCI 5

Process overview

● Bottom up unconstrained approach

– Primarily large cap investor with some exposure to mid caps

● Aim for detailed understanding of each position

– High conviction research driven stock selection

– Focused portfolio of 30 – 50 stocks

– Long-term (3 – 5 year) investment horizon

● Absolute, cash-flow based valuation approach augmented by a range of

multiples incorporating entire capital structure

– Free Cash Flow Equity / Enterprise Value %

– EV/Sales

– EV/CE

– EV/EBIT

– Analysis of all metrics vs. long-term historical range

● Embedded ‘bias’

– Preference for High Return on Capital Employed businesses

– Preference for strong Free Cash Flow generation

– Requirement for ‘appropriate’ balance sheets

– No preference for structural, defensive or quality over cyclical

● Portfolio construction techniques aim to maximise risk-adjusted returns and

reduce risk concentrations

Return target (net) Benchmark + 300 – 400bps pa

Typical tracking error 4 – 6% pa

Implied information

ratio 0.75

Active Share >85%

Peer group comparison Achieve first quartile ranking

6

High conviction, fundamentally driven investing

Source: GAM

There is no guarantee that targets will be achieved.

Allocations and holdings are subject to change.

Process snapshot

GAM

Star Continental

European

Equity

Active

Sh

are

Tracking Error

Low

High Low

Hig

h

0

0

Diversified

stock picks

Closet

indexing

Factor

Bets

Concentrated

stock picks

Pure indexing

A fully active style:

• Bottom up, totally unconstrained stock

picking approach

• Fundamentally driven stock selection

with a high emphasis on

diversification

• Produces a concentrated but

diversified portfolio with high active

share and medium tracking error

indicating a true stock- specific, non-

thematic style of investing

Medium

Mediu

m

Views are those expressed by the manager at the time of writing

Source: GAM 7

8

Investment team Managing Pan European and Continental European long-only strategies

James Davidson

Head of Investment

Administration

– 24 years’ experience

– Joined GAM in 1997

John Paul Hodder-Williams

Head Dealer



Supported by two additional members of the dealing team

Trading and Administration

Niall Gallagher

Investment Director



– Responsible for all portfolio decisions

James Wigley

Investment Analyst



Source: GAM as at 28 Jun 2013

Swetha Ramachandran

Investment Analyst

– 13 years’

experience

– Joined GAM

in 2012

Jessica Williams

Investment Analyst

– 1 years’

experience

– Joined GAM

in 2009

8



The Case for Europe

10

Europe over the past 3 years

● Low economic growth for region as a whole

– Moderate growth in northern & central Europe

– Significant contraction in economies of southern & peripheral Europe

● Significant sovereign and financial sector stresses

– Balance of payment ‘sudden stops’ across southern & peripheral Eurozone

– Multiple sovereign and financial sector bail outs

● Weak policymaking infrastructure, particularly during early part of period

– Earlier generation of policymakers were unaware of full extent of crises

– Denial and consistently inadequate responses

● Unquantifiable tail risks, principally Eurozone break- up

– Concerns fuelled by many of the worlds most “prestigious” (??) economists

– Not helped by poor and inconsistent policymaking

European equities were considered uninvestable


Source: GAM

0

100

200

300

400

500

600

03 04 05 06 07 08 09 10 11 12 13

US investors remain under positioned in European equities Cumulative purchases of European equities since 2003 (US$ bn)

Source: US Treasury, Haver, Datastream, Goldman Sachs Global ECS Research

Actual US cumulative buying of

European shares since 2003

Buying based on trend

1978-2008

Buying based on trend

2003-08

11

12

2012 confounded expectations

● Eurozone did not fall apart

– Many Anglo- Saxon commentators significantly underestimated economic, cultural and

historic commitment to a common currency

● Significant improvement in policymaking

– Change in ECB management and board

– Greater engagement from Angela Merkel (the most important policymaker in Europe)

● Banking system did not collapse or experience significant convulsions

– Stronger banks boosted capital through strong profitability and retained earnings

– Many peripheral banks raised equity and diversified funding

– ECB provided significant assistance to banking sector (LTRO, OMT)

● Significant bounce in European equities

– Starting levels were heavily oversold

– Asset class is heavily misunderstood


Source: GAM

13

2013 continues to surprise

● Economists expectations for the region have been proved wrong (again)

● Economic growth is re-accelerating in core

● Signs of ‘inflection’ in southern & peripheral economies

– Shorter term cyclical indicators are turning positive

– Longer- term structural indicators have improved significantly

● Policymaking remains focused and adept

● Economic data confirms what we have been hearing from companies “bottom- up”

– From May onwards increasing signs and commentary that activity across many sectors and

domestic economies have bottomed

● Need to maintain perspective

– Activity is bottoming and starting to expand from very low levels

– This is not a vigorous economic environment

● So far this is primarily an ‘expectational adjustment’

14

Northern and central Eurozone / Europe

● Northern and central Europe are heavily exposed to global trends

– Strong export sectors and core competitive advantage

– Stronger fiscal positions

● This creates virtuous feedback loops

– Record levels of employment → decent wage growth

– Decent wage growth → strong domestic demand

– Strong domestic demand → improving fiscal positions

● Monetary policy is set for peripheral Europe

– Interest rates too low for northern Europe

– Exchange rate very competitive for northern Europe


Source: GAM

15

Southern & peripheral Europe

● Very significant improvement in current account positions in southern & peripheral Europe

– Reduced domestic demand (lower imports)

– Strong export performance

– Most economies now in current account surplus from -10 to -15% of GDP in 2007

– Eurozone region in current account surplus

● Significant improvement in fiscal positions but more to do

– Primary surplus in most peripheral economies but high debt costs leave fiscal deficits

– Debt to GDP stabilising

– Economic impacts from fiscal drag will be less going forward

● Improvements in competitiveness

– Reductions in unit labour costs

– Competitiveness often obscured by CPI increases, due to rises in taxation & ‘administered

prices’

● Shorter term economic indicators are improving such as PMIs and short-term GDP forecasts


Source: GAM

16

Current account – % of GDP

Source: Citigroup August 2013 Global Economic Outlook and Strategy

2012 2013 2014 2015 2016

Eurozone 1.2 2.5 2.3 2.3 2.3

Germany 7.0 6.9 6.0 5.4 4.9

Switzerland 12.8 12.9 13.0 12.9 14.0

Sweden 6.9 7.1 6.9 6.7 6.8

Denmark 6.7 5.3 4.7 4.2 4.0

Netherlands 10.1 9.4 8.9 9.4 9.5

France -2.2 -1.6 -0.8 -0.2 0.3

Italy -0.5 1.4 2.1 2.2 2.3

Spain -1.1 1.2 2.0 3.0 3.6

Portugal -1.5 1.2 3.2

Greece -3.4 -0.4 0.8 1.4 3.9

Ireland 4.4 4.6 7.1 7.8 8.5

US -2.7 -2.8 -2.8 -3.0 -3.0

UK -3.7 -3.3 -2.9 -2.7 -2.6

Select current accounts as % of GDP

Italy

Eurozone

Source: UBS Global Economics, Eurostat/Haver

Current account balances, % of GDP

-15

-10

-5

0

5

10

Q100 Q101 Q102 Q103 Q104 Q105 Q106 Q107 Q108 Q109 Q110 Q111 Q112 Q113Spain

Portugal

Ireland

17

18

Fiscal position – % of GDP

Source: Citigroup August 2013 Global Economic Outlook and Strategy

2012 2013 2014 2015 2016

Eurozone -3.7 -2.9 -2.5 -1.9 -1.6

Germany 0.2 -0.1 0.3 0.5 0.5

Switzerland 0.5 0.7 0.9 0.8 0.8

Sweden -0.6 -1.5 -1.5 -0.4 0.7

Denmark -4.3 -2.0 -1.5 -1.0 0.5

Netherlands -4.1 -3.9 -3.4 -2.9 -2.3

France -4.8 -3.8 -3.2 -2.8 -2.4

Italy -3.0 -3.5 -3.0 -2.8 -2.7

Spain -10.6 -6.5 -5.9 -4.6 -3.7

Portugal -10.6 -9.8 -9.2

Greece -10.0 -5.3 -4.9 -3.7 -2.4

Ireland -7.6 -8.2 -5.4 -3.4 -2.7

US -8.1 -4.8 -4.3 -3.8 -3.8

UK -6.3 -6.9 -5.8 -4.7 -2.8

Select primary fiscal accounts as % of GDP

Source: UBS Global Economics, Eurostat/Haver

Primary budget balance, % of GDP

-12

-10

-8

-6

-4

-2

0

2

4

6

8

2005 2006 2007 2008 2009 2010 2011 2012 2013

Greece

Spain

Portugal

France

Ireland

Germany

19

Select unit labour costs

Source: UBS European Economics Team, Haver

Unit labour costs, Q1 2000 = 100

France

Italy

Ireland

Greece

Portugal

Spain

Germany

-12

-10

-8

-6

-4

-2

0

2

4

6

8

Q1-2000 Q1-2003 Q1-2006 Q1-2009 Q1-2012

20

21

European equities remain cheap on ‘normalised’ metrics

● Cyclically Adjusted Price Earnings ratio (CAPE / Shiller PE)

– Current valuation of 13.5x

– 32 year average value of 17.5x implies a 22% discount to ‘normal’

– 40% discount to the US CAPE vs. a 32 year average discount of 14%

● Other ‘normalised’ metrics reach conclusion

● Not all of the difference is pure valuation

– ‘Normalised’ profitability in US is closer to peak

– ‘Normalised’ profitability in Europe is closer to trough

– Some of the profit destruction in Europe is permanent; Telecoms, Utilities, Banks

Source: Morgan Stanley (European Strategy Team) as at 31 Dec 2012

Shiller PE Late 1979 to summer 2013

Note: European inflation data is based on market cap weighted aggregation of constituent country inflation rates

Past performance is not indicative of future performance.

Source: MSCI, OECD, various national sources, Haver, Morgan Stanley Research - European Strategy Team, Source: MSCI, OECD, various national sources, Haver, Morgan Stanley Research -

European Strategy Team

22

Shiller PE Europe vs US

22

Alternative valuation metrics

Source: MSCI, Morgan Stanley Research

Note : Average relative valuation across PB, PD, PCE. Sector neutral valuation assumes

European Valuation Premium / Discount Relative to USA, %

-50

-40

-30

-20

-10

0

10

75 80 85 90 95 00 05 10

23

Sector Neutral Premium /

Discount %

Premium / Discount %

Europe vs. USA profitability

Source: MSCI, Morgan Stanley Research

European vs USA ROE %

6

8

10

12

14

16

18

20

75 80 85 90 95 00 05 10 USA

Europe

24

25

Some important context on European equities

● European equities are global not local

– 50% of revenues are from outside of Europe

– 30% of revenues are from emerging markets

– Significantly less exposure to € currency than assumed

● European equity market is not homogeneous

– Significant divergences in ‘geographic exposures’ within the market

– Some sectors / stocks are almost completely global

– Some sectors / stocks are almost completely local

● In many industries European companies are the global leaders

Europe is not a good proxy for European equities


Source: GAM

Revenue composition for Europe

Source: Redburn Securities

0%

10%

20%

30%

40%

50%

60%

70%

80%

90%

100%

1990 91 92 93 94 95 96 97 98 99 00 01 02 03 04 05 06 07 08 09 10 11 12 13 14 2015

Europe Japan USA and Canada Other Americas Asia ex Japan Rest of World

26

27

Longer term investing context

● Global economic growth forecast by IMF and other forecasters at 3–4%

● Significant regional divergences are likely in the long- term

– Global growth will primarily led by emerging economies

– Emerging economies strong(er)

– Developed economies weak(er)

– US economy somewhere in between

● In a developed world characterised by low growth focus on companies that possess

– Good revenue growth prospects, ideally indexed to Global Nominal GDP

– High Return on Capital Employed (ROCE)

– High Free Cash Flow conversion

– Strong balance sheets


Source: GAM

28

How to find growth?

● Geographic positioning of companies

– Presence in growth markets vs no growth markets

– Total geographic composition of revenues

● Industry / technological positioning

– Innovation and evolution

– Market leadership

– Barriers to entry

● Structural vs cyclical growth

– Growth does not just imply defensiveness

– Many attractive global growth companies have embedded cyclicality


Source: GAM

29

Conclusion

● European equities remain very cheap on normalised metrics

● The factors that kept investors away from Europe are dissipating

● Economic growth is recovering in the core and the periphery

● Structural improvements in the periphery are real

● Over medium- to- longer term the best growth opportunities will be those companies with best

geographical footprints

– Although Europe is getting better it is still a low growth footprint

– Companies that can index to global nominal GDP are best placed

● European equities are far more global than local

Europe contains main world class and world leading businesses that are

attractively valued


Source: GAM



GAM Star Continental European Equity

GAM Star Continental European Equity Investments Top 10 holdings (of 41) as at 30 Aug 2013

Allocations and holdings are subject to change. Totals may not sum due to rounding. Reference to a security is not a recommendation.

Source: GAM 31 31

32

GAM Star Continental European Equity Investments

Stocks % Overweight

Paddy Power 4.6

Kone 4.1

Wirecard 4.0

Schindler Holding-Part Cert 3.8

Fresenius Se & Co Kgaa 3.5

Gas Natural 3.4

Continental 3.3

Ryanair Holdings 3.3

Swatch Group 3.0

Cie Financiere Richemon-Br A 2.7

Most overweight and underweight stocks versus MSCI Europe ex UK as at 30 Aug 2013

Source: GAM/UBS PAS

Allocations and holdings are subject to change. Reference to a security is not a recommendation

Stocks % Underweight

Nestle -4.2

Total Sa -2.3

SANOFI -2.3

Bayer -1.8

Siemens -1.7

Banco Santander Sa -1.5

Ubs Ag-Reg -1.4

Novartis -1.4

Novo Nordisk A/s-B -1.3

Daimler Ag-Registered Shares -1.3


Sectors % Overweight

Capital Goods 7.3

Consumer Durables & Apparel 6.2

Software & Services 4.5

Consumer Services 4.3

Automobiles & Components 4.1

Health Care Equipment & Services 3.6

Household & Personal Products 2.7

Retailing 1.7

Transportation 1.6

Media 1.4

33 33

Most overweight and underweight sectors versus MSCI Europe ex UK as at 30 Aug 2013

Source: GAM/UBS PAS


Sectors % Underweight

Pharmaceuticals, Biotechnology & Life

Sciences -8.9

Banks -5.9

Insurance -5.9

Food, Beverage & Tobacco -4.7

Telecommunication Services -3.2

Diversified Financials -3.1

Energy -2.2

Materials -1.5

Food & Staples Retailing -1.3

Semiconductors & Semiconductor

Equipment -0.9

GAM Star Continental European Equity – EUR Industry Analysis as at 30 Aug 2013

Allocations and holdings are subject to change. Totals may not add to 100% due to rounding of data at source.

Source: GAM, MSCI 34 34

GAM Star Continental European Equity – EUR Geographic Analysis as at 30 Aug 2013


Source: GAM, MSCI 35

36


36

Market cap quintile as at 30 Aug 2013

GAM Star Continental European Equity - EUR

MSCI Europe ex UK Index - EUR

Source: GAM, FactSet


37


37 Source: GAM, UBS/PAS


Style analysis as at 30 Aug 2013

GAM Star Continental European Equity Risk-based performance attribution

Economic Sector

Portfolio Benchmark* Variation Attribution analysis

Total

effect

Average

weight

Total

return

Contrib. to

return

Average

weight

Total

return

Contrib. to

return

Average

weight

Total

return

Contrib. to

return

Factors

effect

Selection

effect

Transaction

effect

Total 100.00 68.08 68.08 100.00 34.34 34.34 -- 33.74 33.74 5.18 23.57 4.99 33.74

Consumer

Discretionary 20.13 174.01 24.59 9.52 102.32 7.44 10.61 71.69 17.15 2.69 13.45 2.18 18.32

Industrials 19.95 90.41 16.47 13.09 55.71 6.47 6.86 34.70 10.00 1.92 8.26 -0.34 9.83

Utilities 3.80 69.82 2.87 5.34 -24.46 -1.99 -1.54 94.28 4.86 0.44 5.11 0.53 6.09

[Unassigned] 5.15 115.81 4.99 1.06 48.56 0.41 4.09 67.25 4.58 -0.11 4.86 0.55 5.30

Telecommunication

Services 0.59 19.70 0.29 6.35 -7.48 -0.59 -5.76 27.17 0.88 1.07 0.40 0.38 1.84

Information

Technology 6.74 76.22 3.38 4.06 47.06 1.77 2.68 29.16 1.61 0.06 1.86 -0.80 1.11

Materials 4.34 62.17 2.70 7.97 32.93 2.45 -3.63 29.23 0.25 0.20 -1.02 0.95 0.13

[Cash] 0.84 1.13 0.03 -- -- -- 0.84 1.13 0.03 -0.52 0.55 0.01 0.03

Consumer Staples 10.30 92.34 8.75 12.50 68.60 8.10 -2.20 23.73 0.65 1.33 -1.99 0.17 -0.50

Energy 4.72 17.02 2.13 6.78 21.70 1.83 -2.06 -4.67 0.30 0.13 -1.46 0.36 -0.97

Health Care 11.12 53.08 7.00 12.58 81.34 9.39 -1.46 -28.25 -2.39 -1.29 -2.07 -0.29 -3.65

Financials 12.32 19.66 -5.12 20.76 0.45 -0.93 -8.44 19.20 -4.19 -0.73 -4.36 1.30 -3.79

Source: BARRA

* MSCI Europe Ex-United Kingdom

Data as of 30 Nov 2009 to 9 Sep 2013

38


Source: BARRA

Note : Benchmark MSCI Europe Ex-United Kingdom, data as of 30 Nov 2009 to 9 Sep 2013

Risk factor names

Average managed

exposure

Average active

exposure

Compounded

factor return

Compounded

factor impact

Total 2.96 -1.84 5.18

EUR Momentum 0.28 0.23 8.34 3.20

EUR Size -0.29 -0.55 -2.17 1.86

EUR Liquidity 0.16 -0.12 -0.59 0.15

EUR Financial Leverage -0.19 -0.25 -0.10 0.11

EUR Growth 0.13 0.15 -0.32 -0.16

EUR Dividend Yield -0.49 -0.55 0.27 -0.21

EUR Volatility 0.02 -0.06 5.04 -0.40

EUR Earnings Yield -0.17 -0.20 4.36 -1.41

EUR Value -0.44 -0.46 6.59 -4.47

39


Source: BARRA

Data as of 30 Nov 2009 to 9 Sep 2013

-5

0

5

10

15

20

25

30

35

40



GAM Star European Equity

GAM Star European Equity Investments Top 10 holdings (of 42) as at 30 Aug 2013

Allocations and holdings are subject to change. Totals may not sum due to rounding. Reference to a security is not a recommendation

Source: GAM 42

GAM Star European Equity Investments

Stock % Overweight

Paddy Power 4.3

Kone 4.1

Henkel Ag & Co Kgaa Vorzug 4.1

Schindler Holding Ag-Reg 4.1

Wirecard 3.7

Gas Natural 3.6

Fresenius Se & Co Kgaa 3.5

Ryanair Holdings 3.3

Swatch Group 3.2

Continental Ag 3.2

43 43

Stock % Underweight

Nestle Sa-Reg -2.8

HSBC Holdings -2.5

Vodafone Group -2.0

Bp -1.7

Glaxosmithkline -1.6

Royal Dutch Shell A -1.6

Total Sa -1.5

SANOFI -1.5

Bayer Ag-Reg -1.2

Royal Dutch Shell B -1.1

Most overweight and underweight stocks versus MSCI Europe as at 30 Aug 2013

Source: GAM/UBS PAS

Allocations and holdings are subject to change. Reference to a security is not a recommendation

44


Sector % Overweight

Consumer Durables & Apparel 8.6

Capital Goods 6.0

Software & Services 4.8

Automobiles & Components 4.7

Health Care Equipment & Services 3.8

Consumer Services 3.4

Household & Personal Products 2.6

Retailing 2.4

Transportation 2.1

Technology Hardware & Equipment 1.1

44

Most overweight and underweight sectors versus MSCI Europe as at 30 Aug 2013

Sector % Underweight

Banks -7.6

Pharmaceuticals, Biotechnology & Life

Sciences -7.1

Insurance -5.5

Telecommunication Services -4.3

Materials -3.8

Food, Beverage & Tobacco -3.6

Energy -1.7

Food & Staples Retailing -1.7

Diversified Financials -1.6

Real Estate -1.0

Source: GAM/UBS PAS


GAM Star European Equity – EUR Industry Analysis as at 30 Aug 2013



GAM Star European Equity – EUR Geographic Analysis as at 30 Aug 2013



47


47

GAM Star European Equity – EUR

MSCI Europe Index – EUR

Market cap quintile as at 30 Aug 2013

Source: GAM/FactSet

48


48

Style analysis as at 30 Aug 2013

Source: GAM/UBS PAS




Stock Ideas

Gas Natural 29 Aug 2003 to 30 Aug 2013

Gas Natural Spanish Utility

Reference to a security is not a recommendation to buy or sell that security. Views are those expressed by the manager at the time of writing

Source: Thomson Reuters

Quasi regulated electric/gas assets in Spain & Latam

Regulatory risk under control

Growth prospects in LNG supply & Latam networks

Strong balance sheet

Outstanding free cash flow generation

Decent returns 11% ROE, 10% ROIC

Valuation

— 10x PE, 7.5% FCFE/EV, 15% FCFE 2014

— Dividend yield 6.2%, >2x covered

— Leverage 3x

— Market Cap / EV only 45%

Extraordinary value opportunity for long–term oriented investors

50

Continental 29 Aug 2003 to 30 Aug 2013

Continental Automotives Tyres and Parts

Source: Thomson Reuters 51

Excellent tyre business – replacement tyres have controlled

distribution & strong pricing power.

Well positioned in auto parts – strong growth & margin

potential in powertrain.

High pre-tax ROIC c.20% despite goodwill burden – tangible

returns substantially higher.

Strong reinvestment opportunities to drive growth.

Balance sheet getting stronger after heavy debt burden

following 2007 acquisition

Potential to reduce interest costs substantially over next few

years as refinance & deleverage.

Significant shareholder overhang creates value opportunity.

Valuation

— 8x PE 2014

— 7% FCFE/EV 2014

Significant value opportunity for long–term oriented investors


Duerr 29 Aug 2003 to 30 Aug 2013

Duerr Automotive Paint Shop Systems


Global #1 for automotive paint shop systems

Dominant player in Chinese market

Emerging market auto penetration drives growth

Prepayments and low capex lead to high ROIC

Significant opportunity from monetising installed base

Net cash balance sheet


Excellent returns 39% ROIC 2011

Valuation

— 10% FCFE/EV 2014

— Dividend yield 2.8%.

Extraordinary wealth creation for long–term oriented investors


Paddy Power 29 Aug 2003 to 30 Aug 2013

Paddy Power Traditional sports 'bookmaker'


Betting shops in Ireland and UK

Expansion into online sports bookmaking

and online gaming

— Acquired largest online sports bookmakers in

Australia

Online now 80% of profits

Mobile internet and expansion into Italy

Canada and Australia offer huge growth potential

Financial metrics

— 53% Return on Capital Employed in 2011

— Net cash of EUR 136m at end of 2011

— 10 year EPS compound annual average growth

rate of 18%

— Share price performance of almost 27x in 12 years



Schindler 29 Aug 2003 to 30 Aug 2013

Schindler Global Elevator Installed Base

Source: Thomson Reuters

2nd largest installed base of elevators globally

Installed base provides highly stable earnings

Emerging market urbanisation drives growth

Prepayments ensure high ROIC

Significant long term margin upside

Over CHF2bn of net cash for acquisitions available


Excellent returns >100% ROIC

Valuation

— 7.5% FCFE/EV 2014

— Dividend yield 1.5%

— 20% discount to peer Kone


54


Elekta 29 Aug 2003 to 30 Aug 2013

Elekta Radiation Therapy Equipment


Global duopoly in radiation therapy equipment

Significant barriers to entry due to high switching costs

Installed base provides stable recurring revenue base

Demographic tailwind of aging population

Very low penetration rates today in emerging markets

Outstanding growth opportunities

Excellent returns >30% ROIC

Valuation

— 5% FCFE/EV 2014

— Dividend yield 1.3%



Henkel 29 Aug 2003 to 30 Aug 2013

Henkel German HPC and Adesives


Global adhesive market leader – adhesives is a GDP plus

growth industry

Strong consumer brands e.g. Schwarzkopf, Persil – steady

growth

Long term restructuring – margins have doubled over 10

years – and still rising

Working capital focus has reduced capital intensity – more

gains to go for.

High ROIC and should continue to grow with further

restructuring

Rising capex indicates high level of re-investment

opportunities within the business

Rapidly deleveraging with balance sheet capacity to make

acquisitions – strong track record

Valuation attractive 2014 – unleveraged PE of 15.4x,

7% FCFE/EV. Ords at 15% discount to Prefs.



Inditex 29 Aug 2003 to 30 Aug 2013

Inditex Largest clothing retailer in the world


Key brands:

— Zara, Zara Home, Massimo Dutti, Pull & Bear,

Bershka, Oysho, Stradivarius, Uterque

Significant global expansion over last 10 years

— Spain was 46% of revenues in 2003 and 27% of

revenues in 2012

— Growth in fast growing countries

Financial metrics

— 28% Return on Capital Employed (lease adjusted)

— 10 year compound growth of 16%

— 5 year compound sales growth of 11%

— €3.5bn net cash on balance sheet as of last

reporting period

— Shares up 7x since IPO in 2001





Appendix

Niall Gallagher

Investment Director

Niall Gallagher is an Investment Director responsible for European markets. Prior to joining

GAM in November 2009, Niall worked as a portfolio manager managing Pan-European equities

and Continental European equities at T. Rowe Price for two years. Before that, he was at

BlackRock for nine years, where he worked as an investment analyst before managing both

continental European and pan-European equity strategies. He began his career as an

economist at the Bank of England. Niall holds a BA in Economics from Manchester

Metropolitan University and an MSc in Economics and Finance from Warwick University, and is

a CFA Charterholder. He is based in London.

59

60

GIPS Supplemental Information

All GAM's discretionary assets have been allocated to appropriate GIPS

composites. GAM's funds often are structured as investment pools with

underlying currency classes and it is at the investment pool level that GIPS

composite allocations have been made. Supplemental information shown in

GAM's materials, including performance, geographic/industrial asset

allocations, attribution details and other statistical analyses are based on a

sample account of the relevant composite that represents the management

style. Other accounts in the composite may have slightly different portfolio

characteristics. In some cases sample accounts have history that pre-dates

GAM's compliance with GIPS of 30 June 1996. Indices other than the

benchmark are sometimes used in presentations for illustrative purposes.

Please refer to the relevant GIPS compliant report.

GAM Continental European Equity Composite (G026)

Composite Performance 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 YTD

Composite Returns % 11.24 18.92 34.23 20.67 10.20 -35.98 26.80 16.34 -10.66 35.87 10.70

Benchmark Returns* % 19.49 13.60 28.30 22.00 5.94 -42.20 29.77 9.56 -11.63 20.66 10.14

Composite Standard Dev 3Yr % 16.35 13.82 10.13 8.74 9.68 14.96 17.74 18.75 16.36 14.53 13.65

Benchmark Standard Dev 3Yr % 22.68 20.06 12.73 8.52 9.35 16.89 21.25 22.08 18.71 14.57 13.89

Number of Portfolios in Composite < 6 < 6 < 6 < 6 < 6 < 6 < 6 < 6 < 6 < 6 < 6

High Return % N/A N/A N/A N/A N/A N/A N/A N/A N/A N/A N/A

Low Return % N/A N/A N/A N/A N/A N/A N/A N/A N/A N/A N/A

Composite Asset value (DEXm) 12 14 84 77 124 75 67 192 232 343 463

Total Firm Assets (DEXm) 21,464 27,844 46,881 51,702 51,833 28,205 34,412 42,284 36,395 38,443 40,114

1: Established in 1983, GAM delivers active investment management to private clients, institutions and intermediaries. All GAM's assets are included in the GIPS definition of the firm, except for clients who set up separately-managed accounts which are administered by an independent third party for their fixed income hedge strategy and/or currency hedge strategy.

2: GAM claims compliance with the Global Investment Performance Standards ('GIPS®') and has prepared and presented this report in compliance with the GIPS standards. GAM has been independently verified from 1 January 1996 through 31 December 2011. In May 2009, GAM acquired Augustus Asset Managers Limited ('Augustus') and subsequently claims compliance for a single firm representing the combined business. Having determined that the GIPS portability criteria were satisfied, the pre and post acquisition performance records of Augustus are linked. Augustus has been subject to independent verification testing from 1 January 2000, the date from which Augustus performance results are first displayed. The verification reports are available upon request. Verification assesses whether (1) the firm has complied with all the composite construction requirements of the GIPS standards on a firm-wide basis and (2) the firm's policies and procedures are designed to calculate and present performance in compliance with the GIPS standards. Verification does not ensure the accuracy of any specific composite presentation.

3: The composite consists of actively managed portfolios of European equities (excluding the United Kingdom). Mid to large capitalisation stocks are selected from attractive sectors based on existence of or potential for above average Cash Flow Return on Investment.

4: Derivatives may be used in the portfolios to gain market exposure as well as for hedging purposes. Further details are available on request in the relevant product documentation. 5: Composite results are presented gross of investment management fees and net of trading expenses and net of withholding taxes on dividends, capital gains and interest. Benchmarks are gross of withholding taxes on

dividends. 6: The composite was created in Nov 2002 and applied retrospectively. 7: The maximum investment management fee for accounts is 1.5% per annum. Management fees may vary by product and jurisdiction. 8: High and low returns (for those constituents present in the composite throughout each period) are presented above to demonstrate dispersion within the composite. Dispersion information is only required by GIPS where there

are 6 or more portfolios in the composite. 9: From 01 Dec 2009 Niall Gallagher took over as manager from John Bennett. 10: The benchmark shown is MSCI Europe ex UK Index. 11: DEX - The reporting currency for this composite is EUR. Prior to Dec 1998, this composite was denominated in DEM. 12: Policies for valuing portfolios, calculating performance and preparing compliant presentations are available on request. 13: In 2005 GAM changed its methodology for calculating its Total Firm Assets (TFA) to follow the principles and guidelines of FINMA, resulting in TFA as of Nov 2005 increasing by 38%. In May 2009, GAM acquired Augustus

resulting in an increase of 22% in TFA and a change in the Firm definition to incorporate an exclusion of certain assets as detailed above. Current data is as at 30 June 2013. 14: FX rates used for valuation of funds and portfolios within the composite are those at 23:00 hours GMT. FX rates for benchmark and composition calculation are those at 16:00 hours GMT. 15: Where there are fewer than 36 monthly returns for the Composite, Standard Deviation 3Yr% is shown as ‘N/A’ for both the Composite and the Benchmark.

GAM has prepared and presented this report

in compliance with the Global Investment

Performance Standards (GIPS®). A

complete list and description of composites is

available on request.

Source: GAM as at 31 Aug 2013

* The benchmark shown is for comparative

purposes only. The composite is not

managed to a specific benchmark.

There is no guarantee that targets will be

achieved.

GAM European Equity Composite (G025)

Composite Performance 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 YTD

Composite Returns % 13.72 16.76 28.56 20.56 6.60 -38.85 26.94 11.26 -9.71 30.76 9.81

Benchmark Returns* % 15.76 12.65 26.68 20.18 3.17 -43.29 32.55 11.75 -7.51 18.09 8.85

Composite Standard Dev 3Yr % 16.81 15.20 10.92 7.90 9.22 15.21 18.20 18.91 15.91 13.69 12.88

Benchmark Standard Dev 3Yr % 20.15 17.85 11.31 7.37 8.73 16.22 20.21 20.84 16.98 13.00 12.34

Number of Portfolios in Composite < 6 < 6 < 6 < 6 < 6 < 6 < 6 < 6 < 6 < 6 < 6

High Return % N/A N/A N/A N/A N/A N/A N/A N/A N/A N/A N/A

Low Return % N/A N/A N/A N/A N/A N/A N/A N/A N/A N/A N/A

Composite Asset value (DEXm) 581 647 874 1,255 1,412 718 406 277 190 52 62

Total Firm Assets (DEXm) 21,464 27,844 46,881 51,702 51,833 28,205 34,412 42,284 36,395 38,443 40,114

1: Established in 1983, GAM delivers active investment management to private clients, institutions and intermediaries. All GAM's assets are included in the GIPS definition of the firm, except for clients who set up separately-managed accounts which are administered by an independent third party for their fixed income hedge strategy and/or currency hedge strategy.

2: GAM claims compliance with the Global Investment Performance Standards ('GIPS®') and has prepared and presented this report in compliance with the GIPS standards. GAM has been independently verified from 1 January 1996 through 31 December 2011. In May 2009, GAM acquired Augustus Asset Managers Limited ('Augustus') and subsequently claims compliance for a single firm representing the combined business. Having determined that the GIPS portability criteria were satisfied, the pre and post acquisition performance records of Augustus are linked. Augustus has been subject to independent verification testing from 1 January 2000, the date from which Augustus performance results are first displayed. The verification reports are available upon request. Verification assesses whether (1) the firm has complied with all the composite construction requirements of the GIPS standards on a firm-wide basis and (2) the firm's policies and procedures are designed to calculate and present performance in compliance with the GIPS standards. Verification does not ensure the accuracy of any specific composite presentation.

3: The composite consists of actively managed portfolios of European equities (including the United Kingdom). Stocks are selected from attractive sectors primarily on a cash-flow based valuation approach and the fundamental long- term growth prospects of the business.

4: Derivatives may be used in the portfolios within the composite to gain market exposure as well as for hedging purposes. Please note that further detail is available on request. 5: Composite results are presented gross of investment management fees and net of trading expenses and net of withholding taxes on dividends, capital gains and interest. Benchmarks are gross of withholding taxes on

dividends. 6: The maximum investment management fee for accounts is 1.5% per annum. Management fees may vary by product and jurisdiction. 7: The composite was created in Nov 2002 and applied retrospectively. 8: High and low returns (for those constituents present in the composite throughout each period) are presented above to demonstrate dispersion within the composite. Dispersion information is only required by GIPS where there

are 6 or more portfolios in the composite. 9: From 01 Dec 2009 Niall Gallagher took over as manager from John Bennett. 10: The benchmark shown is MSCI Europe Index. 11: DEX - The reporting currency for this composite is EUR. Prior to Dec 1998, this composite was denominated in DEM. 12: Policies for valuing portfolios, calculating performance and preparing compliant presentations are available on request. 13: In 2005 GAM changed its methodology for calculating its Total Firm Assets (TFA) to follow the principles and guidelines of FINMA, resulting in TFA as of Nov 2005 increasing by 38%. In May 2009, GAM acquired Augustus

resulting in an increase of 22% in TFA and a change in the Firm definition to incorporate an exclusion of certain assets as detailed above. Current data is as at 30 June 2013. 14: FX rates used for valuation of funds and portfolios within the composite are those at 23:00 hours GMT. FX rates for benchmark and composition calculation are those at 16:00 hours GMT. 15: Where there are fewer than 36 monthly returns for the Composite, Standard Deviation 3Yr% is shown as ‘N/A’ for both the Composite and the Benchmark.

GAM has prepared and presented this report

in compliance with the Global Investment

Performance Standards (GIPS®). A

complete list and description of composites is

available on request.

Source: GAM as at 31 Aug 2013

* The benchmark shown is for comparative

purposes only. The composite is not

managed to a specific benchmark.

There is no guarantee that targets will be

achieved.

63

Disclaimer

Source: GAM unless otherwise stated. (Unless otherwise noted, where shown, performance is shown net of fees, on a NAV to NAV basis). This material is confidential and is intended solely for the use of the person or persons to whom it is given or sent and may not be reproduced, copied or given, in whole or in part, to any other person. It is aimed at sophisticated, professional, eligible, institutional and/or qualified investors who have the knowledge and financial sophistication to understand and bear the risks associated with the investments described herein. This material is confidential and is intended solely for the use of the person or persons to whom it is given or sent and may not be reproduced, copied or given, in whole or in part, to any other person. Nothing contained herein constitutes investment, legal, tax or other advice nor is it to be solely relied on in making an investment or other decision. It is not an invitation to subscribe and is by way of information only. The fund is a sub-fund of GAM Star Fund plc. GAM Star Fund plc is an umbrella fund with segregated liability between sub-funds. GAM Star Fund plc is authorised as a UCITS pursuant to the European Communities (Undertakings for Collective Investment in Transferable Securities) Regulations, 2011 (S.I. No.352 of 2011) and is a recognised scheme under the Financial Services and Markets Act 2000. The fund is managed by GAM Fund Management Limited which is regulated by the Central Bank of Ireland. Subscriptions will only be received and shares or units (‘Shares’) issued on the basis of the current prospectus for the fund. Copies of the fund’s prospectus, key investor information document (KIID) and financial statements can be obtained free of charge from GAM Fund Management Limited, George’s Court, 54-62 Townsend Street, Dublin 2, from the centralising agent for France, BNP Paribas Securities Services, 66 rue de la Victoire, 75009 Paris, from its representative in Switzerland GAM Anlagefonds AG, Klausstrasse 10, CH - 8034 Zurich, from the information agent in Germany Bank Julius Baer Europe AG, An der Welle 1, D-60322 Frankfurt am Main ,from the information agent in Austria, UniCredit Bank Austria, Schottengasse 6 - 8, A-1010 Vienna. Paying Agent in Switzerland is State Street Bank GmbH, Zurich Branch, Beethovenstrasse 19, CH-8027 Zurich. Shares are not available for sale in any state or jurisdiction in which such sale would be prohibited. In Hong Kong, this material is restricted to professional investors (as defined in the Securities and Futures Ordinance (Cap 571)) only. In Singapore, this material is limited to institutional investors (as defined in the Securities and Futures Act (Cap. 289)) ('SFA') only. The fund is not authorised or recognised by the Monetary Authority of Singapore and Shares in the fund are not allowed to be offered to the retail public in Singapore; and any written material issued in connection with the offer is not a prospectus as defined in the SFA and, accordingly, statutory liability under the SFA in relation to the content of prospectuses would not apply. In other countries in the Asia Pacific region, this document should only be distributed in accordance with the applicable laws in the relevant jurisdiction. In Japan, the fund mentioned herein shall not be disclosed publicly pursuant to the Financial Instruments and Exchange Law (the “FIEL”) nor registered for public sale or private placement pursuant to the Law on Investment Trusts and Investment Companies. Therefore, none of the shares of the fund mentioned herein may be solicited in Japan or to residents in Japan. This material is intended for circulation to professional, institutional and/or qualified investors only. Any person in receipt of this material is not allowed to distribute it to residents in Japan nor communicate to residents in Japan about the fund mentioned herein. The Shares of the fund have not been registered under the US Securities Act of 1933, as amended (the “Securities Act”), and the fund is not registered under the US Investment Company Act of 1940, as amended (the “Company Act”). Accordingly, unless an exemption is available, such shares may not be of fered, sold or distributed in the United States or to US persons. However, pursuant to an exemption from registration under the Securities Act and the Company Act, the shares may be sold or resold in the United States or to certain qualified US investors in transactions that do not constitute a public offering. The views expressed herein are those of the manager at the time and are subject to changes. The price of Shares may go down as well as up and the price will depend on fluctuations in financial markets outside GAM's control, as a result an investor may not get back the amount invested. Past performance is not indicative of future performance and reference to a security is not a recommendation to buy or sell that security. Prices quoted refer to accumulation Shares unless otherwise stated. Historic data may be subject to restatement from time to time. In the United Kingdom, this material has been issued and approved by GAM London Ltd, 12 St James's Place, London SW1A 1NX, authorised and regulated by the Financial Conduct Authority. Issued in Switzerland by GAM Anlagefonds AG.

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