TOCQUEVILLEVALUEEUROPE

Ourbirthday,guidingprinciplesandholdings

DON FITZGERALD, CFAFund Manager

7th Annual Value Investing Seminar Trani Italy July 13 14 2010

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Trani, Italy July 13-14, 2010

TocquevilleValueEurope10yearanniversary

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TocquevilleValueEurope10yearanniversary

No. 2 of 67 funds marketed in France - European Equities category

Compared to MSCI EUROPE total return

3Source:Europerformance.Pastperformanceisnoindicationastofutureperformanceandisnotconstantovertime

Compared to MSCI EUROPE total return

TocquevilleValueEurope10yearanniversary

With volatility well below the market...

Volatility Tocqueville Value Europe MSCI Europey Europe

1 month 16.64 21.52

1 year 16.19 19.87

3 years 19.18 20.85y

5 years 16.11 17.49

Since inception 14 99 17 16Since inception 14.99 17.16

4Source:Europerformance at31/05/10,pastperformanceisnoindicationastofutureperformanceandisnotconstantovertime

OurValueInvestingPrinciples

Independence of thoughtIndependenceofthought

Contrarianstance

Evaluate fundamentalstodetermineintrinsicvalue

Investwithmarginofsafetytointrinsicvalue

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OurValueInvestingPrinciples

Independenceofthought

Confidentinownjudgement

Mindset buyasmallpartofabusiness

Ignoremarketsnoise,capitaliseonoccasionalinefficiencies

Indexnotafactorinportfolioconstruction

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DCC - Buying where others exit

DCC Buyingwhereothersexit

DCC 1.5 Bn market cap / Dublin Listed5 divisions 21 operating businesses

Energy EnvironmentalSerCom Healthcare Food & Beverage

Distributor of IT & Distributor of Distributor of

Recycling and waste

Distributor of Oil & LPG

consumer electronics p

Distributor of consumables to

hospitals ghealth food &

beveragesmanagement

services

13%

OperatingProfitSplit 18%

13%

UK

Ireland

Restofworld

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69%

Source : Company accounts, Tocqueville estimates

DCC Buyingwhereothersexit

Strategy

Building leading positions

Focus on high returns on capital

Financial discipline Financial discipline

Contrarian perspective - Invest capital where others exit

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DCC Buyingwhereothersexit

Reasonstoavoid

Fortopdowninvestor Foreventdrivenhedgefund Exposed to weak economies

Conglomerate structure

Limited Catalysts

Inefficient capital structureg

Difficult to forecast

p

Helped by favourable weather

Under-researched

Boring

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DCC Buyingwhereothersexit

Whystayinvested?

Management - careful steward of shareholders capital and owners

Portfolio optimization may continue

Favourable environment for bolt-on acquisitions

Solid balance sheet

Defensive business model basic needs, below the radar business

Track record solid EPS growth 10% last 10 years11Source : Company accounts, Tocqueville estimates

DCC Buyingwhereothersexit

Whystayinvested?

Valuation Modest

EV ca. 10x Net Operating profit after taxes FCF yield before acquisitions to Enterprise Value ca. 10%

Growing (5 years CAGR 14%) stable dividend (3.6% yield)

Limited risks Weather related, GBP/EUR

Mini Catalysts Portfolio changes, Acquisitions & earnings upgrades

12Source : Company accounts, Tocqueville estimates

OurValueInvestingPrinciples

Contrarian stance

Bewareofpassingfads Becountercyclical

Our hunting ground:

Profit warnings Profitwarnings Turnaroundsituations Fallen angels Fallenangels Limitedanalystcoverage Disappointing IPOs DisappointingIPOs Companybreakups Inefficient balance sheets

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Inefficientbalancesheets

KESA The good, the bad & the ugly

KESA thegood,thebad&theugly

European consumer electronics (number 3 in Europe) and household European consumer electronics (number 3 in Europe) and household appliance retailing group

London-listed

Sales - GBP 5Bn; EV - GBP 800m

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Kingfisher spin-off 2003

KESA thegood,thebad&theugly

Thegood Darty France

Market leader -13% market share S i d i b d Service-driven brand

Well located, small stores

Generates over 100% of the group EBIT

EBIT margin ca 5% (pre crisis ca 7%) EBIT margin ca. 5% (pre-crisis ca. 7%)

Own real estate of 1/3 of stores

Grows by internet penetration & share gains from independents

We estimate the value of the Darty retail business alone at ca GBP 1 Bn vs

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We estimate the value of the Darty retail business alone at ca. GBP 1 Bn vscurrent EV of GBP 800m

Source : Company accounts, Tocqueville estimates

KESA thegood,thebad&theugly

Thegoodcontinued

Profitable established operations in:Profitable established operations in:

Belgium, Netherlands, Czech Republic (each with 5% - 8% market share) Combined ca. GBP 20 to 25m EBIT p.a.

Getting Better - DartyBox - internet service, FranceGetting Better DartyBox internet service, France

Break even next year if subscribers reach 350k

Getting Better - 36 stores in Turkey & Italy ca. 1% market share

Currently lose ca GBP 20m p a Currently lose ca. GBP 20m p.a. Need scale to breakeven

17Source : Company accounts, Tocqueville estimates

KESA thegood,thebad&theugly

Thebad COMET,UKWeak no. 3 in very competitive market y p

Intensifying competitive pressure from:

Service-led propositions of reinvigorated Currys, John Lewis and arrival of Best Buy.

Price-led propositions of Argos / Supermarkets

Pre-crisis avg. EBIT of GBP 40m / 2.5% EBIT margin

Annual rental bill ca. GBP 75m

Can remain viable by: Can remain viable by:

Better mix (e.g. push on accessories, service), leveraging synergies with web avoiding price war

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with web, avoiding price war

Source : Company accounts, Tocqueville estimates

KESA thegood,thebad&theugly

Theugly Darty Spain(formerlyMenaje delHogar)

Bought 2007 for ca. GBP 100m (.6x sales) GBP 37m losses inBought 2007 for ca. GBP 100m (.6x sales) GBP 37m losses in 2008/09

Competition MediaMarkt / Corte Ingls; Large independent sector Competition MediaMarkt / Corte Ingls; Large independent sector

New management finally restructuring:

21 stores closed out of 71

Service concept / Conversion to Darty banner

Losses ca GBP15m in 2009/10

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Losses ca. GBP15m in 2009/10

Source : Company accounts, Tocqueville estimates

KESA thegood,thebad&theugly

PreviousManagement

Rejected KKR bid for group at 325p in 2006

However, off-loaded But (2006) at attractive price

Disastrous Spanish acquisition

Back-tracked on share buyback

Comet claim purchasing synergies no obvious buyer

20Source : Company accounts, Tocqueville estimates

KESA thegood,thebad&theugly

NewCEO/CFOteamsince2009.Initiatives:

Dartyzation of the network

Common sourcing

Improved internet strategy

Sold Switzerland

21Source : Company accounts, Tocqueville estimates

KESA thegood,thebad&theugly

Sowhatsitallworth?

lMay2010 July 2010

EV ca.GBP650m ca.GBP800m

Share Price 100p 125pShare Price 100p 125p

Darty retail France + profitable international pro-rata central costs = ca. GBP 140m EBIT vs ca. GBP 95m at group level. ca. GBP 140m EBIT vs ca. GBP 95m at group level. On 3 year view - eliminate start-up losses and maintain Comet close to breakevenbreakeven

Pays 5p dividend

22Source : Company accounts, Tocqueville estimates

KESA thegood,thebad&theugly

Kesa Sum oftheparts

Worst C tBase C t

Darty retail france 1020 8,5x EBIT - market leader 1020GBP 300m freehold

CaseComments scenario Com ments

GBP 300m freehold

Dartybox 55 EUR 200 per subscriber 0Comet 160 5% of sales - ca 4x avg. EBIT -100 Managed exit over

several years yBenelux, Czech 140 7x EBIT 140Italy, Turkey 18 .5m per store 18Spain 0 -40 4 years of lossesInvestment Properties 30 estimateInvestment Properties 30 estimate Fair EV 1423 1038Average debt over year -50 -50Pension obligation -117 Adjusted upwards due to m ore -117

realistic discount rateCapitalized costs -149 9x annual -149Equity Value 1107 722Value per share 2 09 1 36

23Source : Company accounts, Tocqueville estimates

Value per share 2,09 1,36Note - Excludes GBP300m of core retail property

GATEGROUP - Waiting for clouds to clear

GATEGROUP Waitingforcloudstoclear

ProvidesoutsourcedservicestoairlineindustryCHF650mMarketCapZ i h li d i 05/09Zurichlisted since 05/09

25Source: Company data & Tocqueville estimates

GATEGROUP waitingforcloudstoclear

Providesoutsourcedservicestoairlineindustry

(2008) (2008)

26Source: Company data & Tocqueville estimates

GATEGROUP waitingforcloudstoclear

Mediumtermprospectsforairlinecatering?

Global passenger growth Low Cost CarriersVS

Outsourcing trend Down-trading in food

Catering factor of differentiation Less business travel?

Overall market growth below global passenger growth

27Source: Company data & Tocqueville estimates

GATEGROUP waitingforcloudstoclear

GATEGROUPisoutgrow