Global Listed Infrastructure

5 Years and 5 Myths

Citywire Berlin conference - November 2012

Peter Meany Head of Global Listed Infrastructure

For professional clients only

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Investment focus

We value infrastructure companies with the following characteristics: Barriers to entry – monopoly assets providing essential services Structural growth – organic growth less dependent on the economic cycle Pricing power – inflation protection with recovery of uncontrollable costs Financial strength – balance sheet flexibility and capital discipline Management quality – sound strategy, execution, positive alignment Sustainable culture – responsible approach to all stakeholders

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Strong performance over 5 years

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5 myths of investing in Global Listed Infrastructure

1. Listed Infrastructure is highly correlated to equities

2. Infrastructure assets are low growth

3. Already gain exposure through traditional equities

4. Infrastructure is highly geared and therefore less defensive

5. Infrastructure is dependent on government funding

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Myth 1 – Listed Infrastructure is correlated to equities

• Global listed infrastructure has delivered higher returns with lower risk

• In the last decade the sector has provided 90% of the upside in rising global equity markets but only 60% of the downside in falling markets

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Myth 2 – Infrastructure assets are low growth

• Growth in infrastructure assets is often driven by structural rather than cyclical change

• Structural drivers include urban congestion, globalisation of trade, decades of government under-investment, mobility of communications and security of energy supplies

• Demand for wireless towers and energy storage has produced double-digit growth outcomes

% %

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Myth 3 – Gain exposure through traditional equities

• Exposure to infrastructure represents less than 2% of typical global equities portfolios

• Niche sectors like roads, airports, energy storage, mobile towers, satellites and mid-cap utilities are often poorly researched

• Global opportunity set allows specialists to identify mispricing

Sydney Zurich

EBITDA multiple 15.5x 7.5x

5YR growth

Passengers 4% 5%

EBITDA 7% 6%

Distributions 12% 26%

Airport comparison

Source: CFSGAM

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Myth 4 – Highly geared and therefore less defensive

• Most infrastructure stocks are sensibly geared and run for shareholders

• Earnings were stable in 2008/09 compared to a 60% fall for general equities

• Dividends actually grew by 6% pa from 2008-11 due to strong balance sheets

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Myth 5 – Dependent on government funding

• Governments present both risks and opportunities for infrastructure investors

• Cautious where investors are complacent about the risk of government intervention

• Optimistic about the productivity improvements from privatised infrastructure

• Institutional investors have significant capital to invest

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Outlook for listed infrastructure

Demand for listed infrastructure

• Consistent and growing dividends will become more attractive relative to cash and bonds

• Growth from structural change will stand out during an extended period of de-leveraging

• Demand from pension and sovereign wealth funds will result in further takeovers

Portfolio investment themes

• Growth from structural change and restructuring

• Deep value opportunities in Europe for patient investors

• Indirect exposure to emerging markets growth

Source: CFSGAM

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Performance (% before fees and expenses) 1 year 2 years pa 3 years pa Since Launch pa

Fund* 11.0 9.3 9.9 6.3

Benchmark** 10.0 5.8 6.3 1.7

Active performance 1.0 3.5 3.7 4.6

*Source: Lipper. Performance shown to 30 September 2012. **Benchmark Since Inception to 01 June 2008: S&P Global Infrastructure Index. From 01 June 2008 onwards: UBS Global Infrastructure & Utilities 50-50 Index. Since launch performance calculated from 31 Oct 07 for GBP share class and 1 May 08 for EUR share class. Performance is for A shares (retail class). Index returns are gross of tax.

Strong performance over 5 years

GBP Share Class

EUR Share Class

Performance (% before fees and expenses) 1 year 2 years pa 3 years pa Since Launch pa

Fund* 20.4 13.3 14.9 5.9

Benchmark** 18.9 10.3 11.2 6.1

Active performance 1.5 3.0 3.7 -0.2

Appendix Investment philosophy, team, process, portfolio, themes

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Investment philosophy

• Preserve capital We are conservative investors of our clients capital, recognising that capital preservation is critical to achieving long-term capital growth. We focus on fundamental value and conduct thorough due diligence to minimise downside. We place strong emphasis on proprietary research and direct contact with companies and regulators.

• Quality companies

We invest in quality companies. Real infrastructure assets with barriers to entry and pricing power are a good start. For infrastructure to deliver its full potential, we also require management alignment, independent boards, appropriate gearing, transparent regulation and cultures which are working to sustain their licence to operate.

• Long-term perspective

We believe investing in long-dated assets requires a long-term perspective. We spend as much time understanding the history of a company as we do forecasting its future. When short-term market sentiment overrides long-term fundamentals, we believe it’s in our clients interests to capture mispricing through active management.

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Infrastructure team

Peter Meany Head of Listed Infrastructure Experience: 17 / 6 Coverage: Energy Storage

Edmund Leung Analyst 7 / 6 Airports Rail Towers Satellites

Rebecca Sherlock Senior Analyst 11 / 5 Regulated Utilities Water Waste

Andrew Greenup Senior Portfolio Manager 17 / 8 Integrated Utilities Ports

Ofer Karliner Senior Analyst 17 / 2 Toll Roads Energy Pipelines

Trent Koch Investment Specialist 15 / 5

Experienced

Specialists

Jessica Johnson Analyst 3 / 3 Midcap Utilities

Experience refers to years in Industry / with First State Investments

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Investment process

Screening

Fundamental research

Value ranking

Quality ranking

Security selection

Macro risk management

Portfolio construction

Global Listed Infrastructure

portfolio

Peer review

Remove high risk assets, markets and illiquid stocks

Detailed industry research, 500+ company visits per year

Discounted cash flow valuation in a consistent framework

Focus on other stock drivers like management, leverage and sustainability

High conviction, bottom-up portfolio with sensible diversification

Stress macro risks on bottom-up selections, leverage global CFSGAM resources

Ratings based on value, quality and catalysts

Rigorous peer review to eliminate analyst bias and reinforce conviction

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Travel diary Ofer Karliner

European austerity is forcing rationality

The clearest example of the previous excesses and current austerity was on a high-speed rail project along the southern coast of Spain. According to the Spanish Ministry of Public Works, the original project was to fully build out a new standard gauge line (Spain has a narrow-gauge rail system) for the full length at a cost of €30bn. Now they are simply adding a third rail along the existing route to accommodate the standard gauge trains. Cost: €1.5bn.

Europeans searching for growth elsewhere

One of the highlights of the trip was the AdP investor day, including a pre-opening tour of the Sat 4 terminal at Charles de Gaulle airport and a presentation from Turkish airport operator TAV (in which AdP recently acquired a 38% stake). The push into emerging markets has been a recurring theme from European companies. Acquisitions to date have been fairly valued, but there is a rising risk of material overpayment in the scramble to find growth.

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Value and quality ranking

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Portfolio weights

First State Global Listed Infrastructure Fund as at 30 September 2012

Source: First State Investments

Integrated Utilities 22%

Regulated Utilities 20%

Toll Roads 17%

Towers & Satellites 7%

Airports 8%

Freight Rail 7%

Passenger Rail 5%

Ports 3%

Energy Storage 3%

Water & Waste 2%

Energy Pipelines 1%

Other 0%

Cash 4%

USA 35%

France 11%

Australia 11%

UK 11%

Japan 9%

Italy 4%

Germany 3%

Switzerland 3%

Netherlands 3%

Spain 3%

China 2%

Hong Kong 2%

Cash 4%

Sector Weighting Country Weighting

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Portfolio analytics

First State Global Listed Infrastructure Securities Fund at 30 September 2012 , multiples are 2013 forecast

Source: First State Investments

Top 10 Holdings Sector % Portfolio Portfolio metrics

Vinci Toll Roads 5.8 Number of stocks 39

PPL Corp Com Regulated Utilities 4.8 EV/EBITDA 8.4x

Crown Castle International Towers & Satellites 4.6 Price / Earning 13.5x

Transurban Group Toll Roads 4.3 Price / Book 1.9x

Asciano Group Freight Rail 4.2 Dividend Yield (Gross) 4.2%

Atlantia Toll Roads 4.0 Net Debt / EBITDA 3.7x

Scottish & Southern Energy Integrated Utilities 3.7 Cash Interest Cover 3.5x

National Grid Regulated Utilities 3.6 Emerging Markets exposure (direct + indirect)

10%

Exelon Corp Integrated Utilities 3.5

GDF Suez Integrated Utilities 3.5

Top 10 42.2

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Sector positioning

• Sector weights are generally a reflection of our bottom-up stock calls but can provide some colour on our current positioning.

• Toll roads are mispriced on fears of higher debt costs and changes to tariff structures.

• Integrated utilities offer significant value reflecting depressed gas and electricity prices and sovereign risks in Europe. Concerns over falling demand for coal has impacted Rail operators in Australia/US.

• Regulated utilities and energy pipelines have attractive qualities but upside is limited following recent outperformance on low bond yields, takeovers and shale gas.

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Government unable to invest Transurban

Leading toll road operator in Australia Quality urban roads in congested corridors Toll increases linked to inflation (or more) Electronic tolling supports 75%+ margins Independent Board, open share register Gearing high (7x EBITDA) but appropriate Growth rates (CityLink 2005-12 pa):

Traffic +3%, Tolls +4.5%, EBITDA +9% Key stock drivers: + Capacity expansions on CityLink, M2, M5 + Australian interest rates - Opening of Capital Beltway HOT lanes - Strategy of new CEO

Melbourne CityLink Sydney orbital network

Source: Transurban. Improvements on CityLink post construction works

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Restructuring to deliver growth PPL Corp

Electric and gas utility based in Pennsylvania

Acquired distribution networks from E.ON in Kentucky and Midlands (UK), transforming the PPL business from 25% to 75% regulated

Significant opportunity to improve operational performance > customer satisfaction > regulatory outcomes

Key stock drivers:

+ Growth in regulated asset base 8% pa

+ Improvement in acquired operations

+ Option value in generation recovery

- Regulation forces sharing of synergies

- Headwind from deferred equity issuance

Source: PPL Corp

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Demand for wireless data Crown Castle

Largest owner of mobile towers in the US 5-15 year leases with annual price escalators High cash generation due to low opex and capex (60%+ margins) Customers (wireless carriers) upgrading networks to support mobile data growth Growth rates (2007-11 pa):

Prices 4%, Revenue +10%, Cashflow +14% Key stock drivers: + Customers upgrading cell sites to 4G + REIT conversion, dividend potential - Technology risk, customer consolidation

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Changing global gas markets Vopak

Leader in independent bulk liquid storage 84 terminals in 31 countries for 28 million m3

Contracts for capacity, not throughput 50% EBITDA from Asia, Middle East, LatAm Takeover limited by shareholder structure Capex funded from free cash flows Growth rates (2007-11 pa):

Capacity +6%, Revenue +10%, EPS +13% Key stock drivers: + Capacity expansion to 34mn m3 +22%

+ LNG startup losses turn to operating profits + Integrated oil disposing non-core assets - High returns attract competition

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Indirect exposure to EM growth Asciano

Bulk haulage rail and ports operator in Australia Coal volumes: long-term linked to China growth, medium-term protected by take-or-pay 2-3 player markets maintain pricing power Independent Board, new management, lower gearing (7x > 3x EBITDA) Growth rates (2006-11 pa):

Coal volumes +6%, Container volumes +3% Revenue +5%, EBITDA +11% Key stock drivers: + New coal contract wins in Queensland + Improving return on capital focus - Impacts of weather and industrial disputes - Third port operator from 2013+ (Hutchison)

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Important information

This presentation is directed at professional clients only and is not intended for, and should not be relied upon by, other clients. The information included within this presentation and any supplemental documentation provided is confidential and should not be copied, reproduced or redistributed without the prior written consent of First State Investments. Any investment with First State Investments should form part of a diversified portfolio and be considered a long term investment. Prospective investors should be aware that returns over the short term may not match potential long term returns. Investors should always seek independent financial advice before making any investment decision. Past performance should not be used as a guide to future performance, which is not guaranteed. The value of an investment and any income from it may go down as well as up. An investor may not get back the amount invested. Currency movements may affect both the income received and the capital value of investments in overseas markets. Where a fund or strategy invests in fast growing economies or limited or specialist sectors it may be subject to greater risk and above average market volatility than an investment in a broader range of securities covering different economic sectors. Telephone calls with First State Investments may be recorded. Funds referred to in this presentation may be sub-funds of First State Investments ICVC, an open-ended investment company with variable capital, regulated by the Financial Services Authority, incorporated in England and Wales with number IC23 whose authorised corporate director is First State Investments (UK) Limited; or First State Global Umbrella Fund plc, an umbrella investment company with variable capital and with segregated liability between sub-funds incorporated with limited liability under the laws of Ireland with registered number 288284 authorised in the Republic of Ireland. Detailed information about each of First State Investments ICVC and First State Global Umbrella Fund plc (the “Companies”) and their sub funds is contained in the relevant company’s Prospectus and Simplified Prospectus which are available free of charge by writing to: Client Services, First State Investments (UK) Limited, 23 St Andrew Square, Edinburgh, EH2 1BB, by telephoning 0800 587 4141 between 9am and 5pm Monday to Friday, or by visiting www.firststate.co.uk. The distribution or purchase of shares in each of the Companies or entering into an investment agreement with First State Investments may be restricted in certain jurisdictions. No person in any such jurisdiction should treat this presentation as constituting an offer, invitation or inducement to distribute or purchase shares or enter into an investment agreement unless in the relevant jurisdiction such an offer, invitation or inducement could lawfully be made to them. This presentation therefore does not constitute an offer, invitation or inducement to distribute or purchase shares or to enter into an investment agreement by First State Investments in any jurisdiction in which such offer, invitation or inducement is not lawful or in which First State Investments is not qualified to do so or to anyone to whom it is unlawful to make such offer, invitation or inducement. Investors should take their own legal advice prior to making any investment. In particular, investors should make themselves aware of the risks associated with any investment before entering into any investment activity. This presentation has been issued by First State Investments (UK) Limited (in relation to investments in a sub-fund of the Companies); or by First State Investments International Limited or First State Investment Management (UK) Limited (in relation to investments which are not in either of the Companies). First State Investments (UK) Limited (company number 2294743), First State Investments International Limited (company number SC79063) and First State Investment Management (UK) Limited (company number SC47708), are each authorised and regulated by the Financial Services Authority. For more information please visit www.firststate.co.uk.