1. Demographic Challenges & Investment Opportunities: Which companies are best positioned to tackle demographic challenges? SRI Roadshow, May 2011

2. 2 2011 SRI Roadshow Agenda I.Demographic Trends II.Challenges Posed by Demographic Trends  Workforce, Consumer Base and Resource Impacts III.Business Opportunities and Solutions to Demographic Challenges – The Investment Case  Overview of Business Solutions to Demographic Challenges  Skills Shortages – the Education Services Solution  Base/Bottom of the Pyramid – the Affordable Telecoms Solution  Ageing Population-focused Products – the Healthier Living & Quality-of-Life Solution  Resource Scarcity & Environmental Degradation – the Hygiene & Sanitation Solution IV.Stock Selection & Market Opportunities V.Conclusions

3. 3 2011 SRI Roadshow I. Demographic Trends Definition Demography is the study of population size, growth and age structure, and of the forces that lead to population change (fertility, mortality, migration) Global populations are expected to grow from current levels of almost 7 billion to over 9 billion by 2050 (UN) Global Population Growth & Projections Source: UNDP

4. 4 2011 SRI Roadshow Demographic Trends Demographic trends have impacts on different, yet interrelated outcomes  By 2050, 86% of the world’s population (almost eight billion people) will be concentrated in less developed regions of the world  By 2050, approx. two billion people will be aged 60 or over  By 2050, 6.3 billion people are expected to live in urban areas Annual population growth by major region, millions Source: SocGen, 2007 Population aged 60 or over between 1950-2050, millions Source: UN, 2009 Population living in urban areas, % Geographical Breakdown Age Structure Urbanisation Source: UN, 2006

5. 5 2011 SRI Roadshow Demographic Trends Two main demographic trends are emerging Growing Populations Ageing Populations  Higher population and economic growth rates, which results in: Increased international migration, and Growing rates of urbanisation  Increased life expectancy, particularly among women, and  Lower fertility rates, which results in: Higher share of elderly people

6. 6 2011 SRI Roadshow Changes in the Workforce II. Challenges Posed by Demographic Changes Three main challenges posed by demographic changes affect…(1) the workforce Skills shortages will primarily be present in:  Developing countries where educational shortfalls may exist  Developed markets where a significant proportion of the working population nears retirement age, with little prospect of worker replacement Working age population to total population, % Source: UN Population Database & Bank of America/ML, 2011

7. 7 2011 SRI Roadshow Challenges posed by Demographic Changes …(2) consumers Increasing product and service needs for:  Low-income consumers in developing markets  Consumers with higher disposable incomes in all markets  Ageing populations in developed markets Changes in the Consumer Base NEEDS A GRAPHIC HERE Worldwide, over three quarters of the population are low-income * PPP – Purchasing Power Parity Source: AT Kearney

8. 8 2011 SRI Roadshow Challenges posed by Demographic Changes …(3) resource scarcity and the wider environment Ability to provide products and services which lessen impacts on resource depletion and environmental degradation are key If current consumption rates continue, by 2050 a global population of over nine billion will require the biological capacity of two Earths Increasing Pressure on Resources and the Environment Population growth leads to rising consumption and increasing pressure on scarce resources Source: Goldman Sachs, 2010

9. 9 2011 SRI Roadshow III. Business Opportunities and Solutions to Demographic Challenges The Investment Case Base/Bottom of the Pyramid (BOP) Resource Scarcity & Environmental Degradation Ageing Population- focused Products Skills Shortages Changes in the Consumer Base Challenges Business Opportunities Wealthier Consumers Changes in the Workforce Pressure on Resources & the Environment Three main challenges resulting from demographic change have resulted in numerous business opportunities for companies

10. 10 2011 SRI Roadshow Business Opportunities and Solutions to Demographic Challenges Changes in the Workforce – Skills Shortages Base/Bottom of the Pyramid (BOP) Resource Scarcity & Environmental Degradation Ageing Population- focused Products Skills Shortages Affordable Healthcare Affordable Food & Nutrition Access to Transport Access to Telecoms Affordable Finance Access to Energy Fairtrade Systems Food Productivity Healthier Living & Quality of Life Education Services Hygiene & Sanitation Financial Security Employment & Outsourcing Services Management of Resources Automation Services Changes in the Consumer Base Challenges Business Opportunities Solutions Wealthier Consumers Aspirational Products Changes in the Workforce Pressure on Resources & the Environment

11. 11 2011 SRI Roadshow Business Opportunity – Skills Shortages Finding ways to maintain employee productivity offers solutions What is the issue?  Ageing workforce which is close to retirement age ► loss of skills and knowledge  Lack of education and vocational training ► lack of qualified new entrants into the labour market  Poor recruitment and employee retention policies and programmes ► lower productivity and higher turnover costs Business Solutions Education ServicesAutomation Services Employment & Outsourcing Services Source: Manpower, 2010; CEDEFOP, 2008 % Employers having difficulty filling jobs due to lack of available talent Projections of skills' requirement in the EU until 2020

12. 12 2011 SRI Roadshow Business Opportunity – Skills Shortages Business Solution Example Emerging and developing economies:  Lack of education is a major obstacle to development  New technologies and increased access to the Internet may assist in offering a cheaper alternative Developed economies:  Opportunities will increase for multi-skilled workers and those able to adapt to new technical or cultural environment Focus will be on companies providing educational material for educational systems with a significant client base in emerging and developing countries Source: UN Human Development Report, 2010 Gross Enrolment Ratio by Expected Years of Schooling, 1970-2007 Education Services

13. 13 2011 SRI Roadshow Skills Shortages – Education Services Well-positioned Company: Pearson Publisher with 70+% revenues derived from education-related services  Focus on the provision of education services ► education division is expected account for bulk of growth in revenues and profits in future  Opportunity in the shift to digital education programmes ► digital education revenue mix has increased from 30% to 44% over the period 2005 - 2010  Over 20% revenues derived from Asia and other parts of the world ► strong opportunities to expand in unsaturated media markets Recent Company Acquisitions * £228m paid for 70% with the balance to be paid in 2011 Source: Pearson, 2011 Growth in Emerging Markets, revenues USD million

14. 14 2011 SRI Roadshow Business Opportunities and Solutions to Demographic Challenges Changes in the Consumer Base – Base/Bottom of the Pyramid Base/Bottom of the Pyramid (BOP) Resource Scarcity & Environmental Degradation Ageing Population- focused Products Skills Shortages Affordable Healthcare Affordable Food & Nutrition Access to Transport Access to Telecoms Affordable Finance Access to Energy Fairtrade Systems Food Productivity Healthier Living & Quality of Life Education Services Hygiene & Sanitation Financial Security Employment & Outsourcing Services Management of Resources Automation Services Changes in the Consumer Base Challenges Business Opportunities Solutions Wealthier Consumers Aspirational Products Changes in the Workforce Pressure on Resources & the Environment

15. 15 2011 SRI Roadshow Business Opportunity – Base/Bottom of the Pyramid Emerging lower income consumers offer growth opportunities What is the issue?  Access to essential goods and services ► human right  Growing low-income populations ► over 4 billion people with a market opportunity estimated to be almost USD 5 trillion  Providing the right products ► affordability, availability, acceptability, accessibility Business Solutions Affordable HealthcareAffordable Finance Affordable Food & Nutrition Access to Telecoms Access to Energy Access to Transport Fairtrade Systems Estimated BOP market by sector, USD 5 trillion Source: WRI/IFC, April 2007

16. 16 2011 SRI Roadshow Business Opportunity – Base/Bottom of the Pyramid (BOP) Business Solution Example Main opportunities in mobile technologies and Internet access  Mobile telephony offers new ICT solutions to regions that used to be without access  Imbalance in Internet access BOP market size for ICT estimated to be worth USD 51 billion Focus will be on companies providing ICT services in emerging and developing countries, particularly those countries with low ICT penetration rates, as well as ICT providers with low-cost business models Digital Inclusion Index 2011 Source: Maplecroft, 2011 Access to Telecoms

17. 17 2011 SRI Roadshow Base/Bottom of the Pyramid – Access to Telecoms Well-positioned Company: Millicom International Cellular Offers mobile telephony and cable services in 13 emerging markets Market share in countries of operation Source: Millicom International Cellular, 2011  Operations in Latin America and Africa ► attractive markets due to relatively low penetration of telephony services  Low-cost ICT provider strategy ► operates in countries with low GDP/capita  Emphasis on ‘Affordability’ ► focus on prepaid services with low denomination charges using mass market distribution services  During Q4 2010, customers were up 14% and organic revenue growth was double digit ► revenue growth expected to remain double digit

18. 18 2011 SRI Roadshow Business Opportunities and Solutions to Demographic Challenges Changes in the Consumer Base – Ageing Population-focused Products Base/Bottom of the Pyramid (BOP) Resource Scarcity & Environmental Degradation Ageing Population- focused Products Skills Shortages Affordable Healthcare Affordable Food & Nutrition Access to Transport Access to Telecoms Affordable Finance Access to Energy Fairtrade Systems Food Productivity Healthier Living & Quality of Life Education Services Hygiene & Sanitation Financial Security Employment & Outsourcing Services Management of Resources Automation Services Changes in the Consumer Base Challenges Business Opportunities Solutions Wealthier Consumers Aspirational Products Changes in the Workforce Pressure on Resources & the Environment

19. 19 2011 SRI Roadshow Business Opportunity – Ageing Population-focused Products A growing senior population has different product needs What is the issue?  Rising generation of over-65s ► strong growth for certain products and services  Social perspective ► maintenance of quality of life and the increasing need for healthcare services  Economic perspective ► impacts on savings, investments and pensions and need for financial stability Business Solutions Source: UN, 2009 Percent of the population aged 60 or over, 2000- 2025 Source: United Nations 2008 Revision Healthier Living & Quality of Life Financial Security

20. 20 2011 SRI Roadshow Business Opportunity – Ageing Population-focused Products Business Solution Example Healthcare expenditure for over-65s are nearly four times that of younger people Functional foods present growing market opportunities Increasing shift towards managed healthcare services for elderly populations Focus will be on companies which: provide healthcare services and solutions for diseases prevalent among ageing populations offer specific products which aim to help consumers maintain a high living standard for as long as possible Healthier Living & Quality of Life Musculoskeletal Diagnoses by Age Source: McIlhargey, 2008

21. 21 2011 SRI Roadshow Ageing Population Products – Healthier Living & Quality of Life Well-positioned Company: Smith & Nephew Specialised in orthopaedics, endoscopy and wound management  Products tailored to meet ageing population needs ► orthopaedics (driven by hip and knee reconstruction) represents almost 60% of group revenues  Emphasis on quality products ► continued margin improvement in all divisions  Growth opportunities in emerging markets ► emerging market sales have risen 20% per year since 2006  Continued investment in emerging markets ► surgeon training centres and new manufacturing facilities in China Emerging Markets Revenue and Growth Source: Smith & Nephew, 2011 2009 Revenue by Regions

22. 22 2011 SRI Roadshow Business Opportunities and Solutions to Demographic Challenges Resources & the Environment – Resource Scarcity & Environmental Degradation Base/Bottom of the Pyramid (BOP) Resource Scarcity & Environmental Degradation Ageing Population- focused Products Skills Shortages Affordable Healthcare Affordable Food & Nutrition Access to Transport Access to Telecoms Affordable Finance Access to Energy Fairtrade Systems Food Productivity Healthier Living & Quality of Life Education Services Hygiene & Sanitation Financial Security Employment & Outsourcing Services Management of Resources Automation Services Changes in the Consumer Base Challenges Business Opportunities Solutions Wealthier Consumers Aspirational Products Changes in the Workforce Pressure on Resources & the Environment

23. 23 2011 SRI Roadshow Business Opportunity – Resource Scarcity & Env. Degradation Resource scarcity pressures require innovative solutions What is the issue?  If global population reaches 9.3 billion people by 2050, global grain production will have to feed an additional 2.5 billion people, an 40% increase  By 2025 1.8 billion people will live in regions with absolute water scarcity, including most countries in the Middle East and North Africa  Population growth is intensifying the demand for, and consumption of, non renewable energy sources Business Solutions Food Productivity Management of Resources Hygiene & Sanitation Food demand exceeds addition of available land for agriculture Source: Goldman Sachs, 2010; World Bank

24. 24 2011 SRI Roadshow Business Opportunity – Resource Scarcity & Environmental Degradation Business Solution Example Up to 90% of all wastewater in development countries is discharged untreated into the natural environment According to the UN/WHO, 2.2 million people die each year from diarrheal/water-linked disease Focus will be on companies offering waste and water treatment products and services, but also, personal hygiene products aimed at consumers, primarily in emerging and developing markets Ratio of Wastewater Treatment Source: UN Habitat, 2010 Hygiene & Sanitation

25. 25 2011 SRI Roadshow Resource Scarcity & Environmental Degradation – Hygiene & Sanitation Well-positioned Company: Suez Environnement Global environmental services (water and waste) provider Revenue Growth by Geography in 2010 Source: Suez Environnement  Servicing water and waste management needs globally ► over the last 15 years, it has brought drinking water to 11+ million people and wastewater services to 5+ million people  Environmental service growth driven by new infrastructure needs in emerging markets and upgrade of installations in developed markets ► presence in 25 countries worldwide  Continual innovation in product offer ► innovative technologies in water and waste (e.g. green energy production) and water resource preservation

26. 26 2011 SRI Roadshow IV. Stock Selection and Market Opportunities Stock selection of companies positioned to offer business solutions Relevant business solutions to demographic challenges will differ depending on the level of economic development

27. 27 2011 SRI Roadshow Stock Selection and Market Opportunities Stock selection of companies positioned to offer business solutions Stock selection of over 500 MSCI World, SMEs and emerging market companies aligned with demographic challenges and which offer tangible solutions Source: Dexia AM, 2011

28. 28 2011 SRI Roadshow Stock Selection and Market Opportunities Different business solutions present varying levels of opportunity Demographic Business Solutions offer a range of growth profiles during the next two years Current EV/EBITDA and EBITDA CAGR 2011-2013e of sector selected companies Source: Bloomberg and Dexia AM, 2011

29. 29 2011 SRI Roadshow V. Conclusions Demography is a complicated subject but it offers many investable opportunities Two interrelated demographic trends  Growing populations ► higher population and economic growth rates  Ageing populations ► higher share of elderly people Challenges implicate changes to the workforce, consumer base and even the wider environment and use of resources Business opportunities exist which offer both sustainable solutions and sound financial returns  Company stock selection needs to be sensitive to both product demands and geographic exposure  Small/medium-sized companies and emerging market companies generally offer more untapped ‘pure-play’ opportunities  The market currently appears to integrate demographic trends into company valuations and growth prospects of well-positioned companies  However, opportunities still exist for investors Trends Challenges Solutions & Market Opportunities

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31. 31 2011 SRI Roadshow Addresses Luxembourg Dexia Asset Management Luxembourg SA 136, route d’Arlon 1150 Luxembourg Tel.: + 352 2797-1 Belgium Dexia Asset Management Belgium Place Rogier 11 B-1210 Bruxelles Tel.: + 32 02 222 11 11 France Dexia Asset Management SA 40, rue Washington 75408 Paris Cedex 08 Tel.: + 33 1 53 93 40 00 Switzerland Dexia Asset Management Luxembourg SA succursale de Genève 2, rue de Jargonnant 1207 Genève Tel.: + 41 22 707 90 00 The Netherlands Dexia Asset Management Nederlands bijkantoor Lichtenauerlaan 102-120 3062 ME Rotterdam Tel.: + 31 10 204 56 53 Germany Dexia Asset Management Luxembourg SA Zweigniederlassung Deutschland An der Welle 4 60422 Frankfurt Tel.: + 49 69 7593 8823 Australia Ausbil Dexia Ltd Veritas House – Level 23 207 Kent Street Sydney NSW 2000 Tel.: + 61 2 925 90 200 Italy Dexia Asset Management Luxembourg SA Succursale Italiana Corso Italia 1 20122 Milano Tel.: + 39 02 31 82 83 62 Spain Dexia Asset Management Luxembourg SA Sucursal en España Calle Ortega y Gasset, 26 28006 Madrid Tel.: + 34 91 360 94 75 Bahrain Dexia Asset Management Luxembourg S.A., Middle East Representative Office Bahrain Financial Harbour, Financial Center, West Harbour Tower, Level 23 King Faisal Highway PO Box 75766 Manama Tel.: + 973 1750 99 00 Canada Dexia Asset Management Luxembourg SA Canadian Representative Office 155, Wellington Street West 6th floor Toronto, Ontario M5V 3L3 Tel.: + 1 416 974 9055

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