Tom Russo, General Partner, Gardner & Russo.

1. Global Value Equity
Investing
Thomas A. Russo
Value Investing Forum 2009
Mexico City
December 7-8, 2009

5. Musings on “Global Value” Equity Investing
I. Background, philosophy and approach
A. Stanford Business School early 1980s lecture
II. The “value vs. growth” paradox
III. Be mindful of agency costs
A. Family controlled companies
IV. Invest for the long term
A. Tax efficiency
B. Shareholder value vs. reported profits
V. Value of global perspective
VI. Focus, focus, focus, focus
VII. Virtues of low expectations
A. Reduce panic factor
VIII. Global value company investment examples
A. Nestlé – 35 year horizon
B. Pernod Ricard – credit default swap mayhem
C. SABMiller – emerging market specialist
IX. Final musings

8. Business Description
Nestle S.A., through its subsidiaries, provides nutrition, health, and wellness products worldwide. The company offers various food and beverage products, including bottled water, baby
foods, breakfast cereals, chocolate and confectionary products, coffee, dairy products, ice creams, nutrition and health products, beverages, prepared kitchen foods, and pet care products.
Its products include various sauces and salads. The company offers its products primarily under the KitKat, PowerBar, Nescafe Dolce Gusto, NaturNes, Nesquik, Purina, Perrier, Chocapic,
Nido, and Maggi brand names. Nestle S.A. also provides pharmaceutical, and health and beauty products. The company was founded in 1866 and is headquartered in Vevey, Switzerland.
Key Financials
LTM²
For the Fiscal Period Ending 12 months 12 months 12 months 12 months 12 months 12 months 12 months 12 months
Dec-31-2011E Dec-31-2010E Dec-31-2009E Jun-30-2009A Dec-31-2008A Dec-31-2007A Dec-31-2006A Dec-31-2005A
Currency CHF CHF CHF CHF CHF CHF CHF CHF
Total Revenue 114,825.6 110,629.5 108,573.5 109,109.0 109,908.0 107,552.0 98,458.0 91,115.0
Growth Over Prior Year 3.8% 1.9% (1.2%) (0.4%) 2.2% 9.2% 8.1% 7.6%
Gross Profit - - - 62,253.0 62,569.0 62,515.0 57,745.0 53,198.0
Margin % - - - 57.1% 56.9% 58.1% 58.6% 58.4%
EBITDA 19,893.2 19,041.1 18,872.2 18,566.0 18,449.0 17,776.0 16,363.0 14,604.0
Margin % 17.3% 17.2% 17.4% 17.0% 16.8% 16.5% 16.6% 16.0%
EBIT 17,215.0 15,778.8 15,549.4 15,718.0 15,676.0 15,024.0 13,302.0 11,876.0
Margin % 15.0% 14.3% 14.3% 14.4% 14.3% 14.0% 13.5% 13.0%
Earnings from Cont. Ops. - - - 17,896.0 18,039.0 10,649.0 9,123.0 8,095.0
Margin % - - - 16.4% 16.4% 9.9% 9.3% 8.9%
Net Income - - - 17,896.0 18,039.0 10,649.0 9,197.0 8,081.0
Margin % - - - 16.4% 16.4% 9.9% 9.3% 8.9%
Diluted EPS Excl. Extra Items³ 3.637 3.514 2.907 4.89 4.844 2.761 2.356 2.063
Growth Over Prior Year 3.5% 20.9% 0.9% 69.0% 75.5% 17.2% 14.2% 23.9%

9. Current Capitalization (Millions of CHF)
Currency CHF
Share Price as of Dec-01-2009 48.5
x Shares Out. 3,615.6
= Market Capitalization 175,357.0
- Cash & Short Term Investments 7,591.0
+ Total Debt 25,040.0
+ Pref. Equity -
+ Total Minority Interest 4,247.0
= Total Enterprise Value (TEV) 197,053.0
Book Value of Common Equity 50,361.0
+ Pref. Equity -
+ Total Minority Interest 4,247.0
+ Total Debt 25,040.0
= Total Capital 79,648.0
Valuation Multiples based on Current Capitalization
LTM
For the Fiscal Period Ending 12 months 12 months 12 months† 12 months 12 months
Dec-31-2011E Dec-31-2010E Dec-31-2009E Jun-30-2009A Dec-31-2008A
TEV/Total Revenue 1.7x 1.8x 1.8x 1.8x 1.8x
TEV/EBITDA 9.9x 10.3x 10.4x 10.1x 10.0x
TEV/EBIT 11.4x 12.5x 12.7x 11.8x 11.6x
P/Diluted EPS Before Extra 13.3x 13.8x 16.7x 9.9x 10.0x
P/BV - - - 3.5x 3.5x
Price/Tang BV - - - 14.6x 13.2x
Ratios
LTM
For the Fiscal Period Ending 12 months 12 months 12 months 12 months 12 months 12 months
Jun-30-2009 Dec-31-2008 Dec-31-2007 Dec-31-2006 Dec-31-2005 Dec-31-2004
Profitability
Return on Assets % 8.9% 8.8% 8.6% 8.1% 7.8% 6.5%
Return on Capital % 12.0% 12.1% 11.7% 11.0% 10.5% 8.6%
Return on Equity % 37.1% 34.9% 20.6% 18.5% 18.7% 17.3%
Return on Common Equity % 37.1% 34.9% 20.6% 18.5% 18.7% 17.3%
Margin Analysis
Gross Margin % 57.1% 56.9% 58.1% 58.6% 58.4% 58.3%
EBITDA Margin % 17.0% 16.8% 16.5% 16.6% 16.0% 16.0%
EBITA Margin % 14.6% 14.4% 14.1% 14.0% 13.4% 13.1%
EBIT Margin % 14.4% 14.3% 14.0% 13.5% 13.0% 10.8%
Earnings from Cont. Ops Margin % 16.4% 16.4% 9.9% 9.3% 8.9% 7.8%
Net Income Margin % 16.4% 16.4% 9.9% 9.3% 8.9% 7.8%

10. Business Description
Pernod Ricard SA, together with its subsidiaries, engages in the production and distribution spirits and wines in France and internationally. It offers whisky, ouzo, anis-based spirits,
liqueurs, cognacs and brandies, white spirits and rums, wine-based aperitifs, champagne, vodka, distilled spirits, gin, rum, coolers, tequila, and bitters. The company provides its products
under ABSOLUT, Ricard Pastis, Ballantine’s, Chivas Regal, The Glenlivet Scotch, Jameson Irish, Martell, Havana Club, Beefeater, Kahlúa, Malibu, Mumm, Perrier-Jouët, Jacob’s Creek,
and Montana brand names. Pernod Ricard was founded in 1975 and is headquartered in Paris, France.
Key Financials
For the Fiscal Period Ending 12 months 12 months 12 months 12 months 12 months 12 months 12 months 12 months
Jun-30-2012E Jun-30-2011E Jun-30-2010E Jun-30-2009A Jun-30-2008A Jun-30-2007A Jun-30-2006A Jun-30-2005A
Currency EUR EUR EUR EUR EUR EUR EUR EUR
Total Revenue 7,596.6 7,272.6 7,342.2 7,203.0 6,589.0 6,443.0 6,066.0 3,611.0
Growth Over Prior Year 4.5% (0.9%) 1.9% 9.3% 2.3% 6.2% 68.0% NA
Gross Profit - - - 4,208.0 3,766.0 3,587.0 3,578.0 2,156.0
Margin % - - - 58.4% 57.2% 55.7% 59.0% 59.7%
EBITDA 2,261.2 2,112.4 1,999.0 1,920.0 1,632.0 1,630.0 1,338.0 842.0
Margin % 29.8% 29.0% 27.2% 26.7% 24.8% 25.3% 22.1% 23.3%
EBIT 2,086.2 1,928.4 1,816.6 1,763.0 1,466.0 1,481.0 1,190.0 741.0
Margin % 27.5% 26.5% 24.7% 24.5% 22.2% 23.0% 19.6% 20.5%
Earnings from Cont. Ops. - - - 937.0 840.0 831.0 582.0 484.0
Margin % - - - 13.0% 12.7% 12.9% 9.6% 13.4%
Net Income - - - 945.0 840.0 831.0 639.0 484.0
Margin % - - - 13.1% 12.7% 12.9% 10.5% 13.4%
Diluted EPS Excl. Extra Items³ 4.795 4.32 3.969 3.884 3.576 3.79 2.712 2.782
Growth Over Prior Year 11.0% 8.8% (12.8%) 8.6% (5.6%) 39.7% (2.5%) NA

11. Current Capitalization (Millions of EUR)
Currency EUR
Share Price as of Dec-01-2009 57.49
x Shares Out. 263.9
= Market Capitalization 15,170.6
- Cash & Short Term Investments 520.0
+ Total Debt 11,221.0
+ Pref. Equity -
+ Total Minority Interest 185.0
= Total Enterprise Value (TEV) 26,056.6
Book Value of Common Equity 7,431.0
+ Pref. Equity -
+ Total Minority Interest 185.0
+ Total Debt 11,221.0
= Total Capital 18,837.0
Valuation Multiples based on Current Capitalization
For the Fiscal Period Ending 12 months 12 months 12 months† 12 months 12 months
Jun-30-2012E Jun-30-2011E Jun-30-2010E Jun-30-2009A Jun-30-2008A
TEV/Total Revenue 3.4x 3.6x 3.5x 3.6x 4.0x
TEV/EBITDA 11.5x 12.3x 13.0x 13.6x 16.0x
TEV/EBIT 12.5x 13.5x 14.3x 14.8x 17.8x
P/Diluted EPS Before Extra 12.0x 13.3x 14.5x 14.8x 16.1x
P/BV - - - 2.0x 2.0x
Price/Tang BV - - - NM NM
Ratios
Fiscal Press Release
For the Fiscal Period Ending 12 months 12 months 12 months 12 months 12 months Year 12 months
Jun-30-2009 Jun-30-2008 Jun-30-2007 Jun-30-2006 Jun-30-2005 Change Dec-31-2004
Profitability FYC
Return on Assets % 5.1% 4.8% 4.7% 5.6% NA FYC 6.5%
Return on Capital % 6.9% 7.0% 7.1% 8.5% NA FYC 8.7%
Return on Equity % 13.5% 13.2% 13.9% 14.1% NA FYC 17.2%
Return on Common Equity % 13.5% 13.2% 13.9% 14.1% NA FYC 17.2%
Margin Analysis FYC
Gross Margin % 58.4% 57.2% 55.7% 59.0% 59.7% FYC 65.8%
EBITDA Margin % 26.7% 24.8% 25.3% 22.1% 23.3% FYC 23.6%
EBITA Margin % 24.8% 22.7% 23.9% 20.0% 20.7% FYC 20.8%
EBIT Margin % 24.5% 22.2% 23.0% 19.6% 20.5% FYC 20.4%
Earnings from Cont. Ops Margin % 13.0% 12.7% 12.9% 9.6% 13.4% FYC 13.6%
Net Income Margin % 13.1% 12.7% 12.9% 10.5% 13.4% FYC 13.6%

14. Business Description
SABMiller plc, through its subsidiaries, engages in the manufacture, distribution, and sale of beverages worldwide. It products primarily include beer, soft drinks, and fruit juices. The
company also involves in hop farming. It offers its products primarily under Pilsner Urquell, Peroni Nastro Azzurro, Miller Genuine Draft, Grolsch, Aguila, Castle, Miller Lite, Snow,
and Tyskie brand names. SABMiller also operates as a bottler for Coca-Cola products. The company has a strategic alliance with Castel. SABMiller plc was founded in 1895 and is
headquartered in London, the United Kingdom.
Key Financials
LTM²
For the Fiscal Period Ending 12 months 12 months 12 months 12 months 12 months 12 months 12 months 12 months
Mar-31-2012E Mar-31-2011E Mar-31-2010E Sep-30-2009A Mar-31-2009A Mar-31-2008A Mar-31-2007A Mar-31-2006A
Currency GBP GBP GBP GBP GBP GBP GBP GBP
Total Revenue 13,256.3 12,554.5 11,764.2 8,112.6 10,365.3 7,541.7 7,116.7
8,585.6
Growth Over Prior Year 5.6% 6.7% (22.6%) (25.3%) (12.7%) 14.8% 20.1% 16.7%
Gross Profit - - - 5,407.8 6,555.0 4,847.7 4,482.3
5,490.5
Margin % - - - 66.7% 63.2% 64.0% 64.3% 63.0%
EBITDA 3,201.1 2,957.4 2,636.3 2,082.1 2,881.2 2,065.3 1,846.7
2,285.7
Margin % 24.1% 23.6% 22.4% 25.7% 27.8% 26.6% 27.4% 25.9%
EBIT 2,559.2 2,330.0 2,041.0 1,488.7 2,189.6 1,609.1 1,467.3
1,787.9
Margin % 19.3% 18.6% 17.3% 18.4% 21.1% 20.8% 21.3% 20.6%
Earnings from Cont. Ops. - - - 894.7 1,310.0 836.8 827.9
1,018.3
Margin % - - - 11.0% 12.6% 11.9% 11.1% 11.6%
Net Income - - - 894.7 1,310.0 836.8 827.9
1,018.3
Margin % - - - 11.0% 12.6% 11.9% 11.1% 11.6%
Diluted EPS Excl. Extra Items³ 1.243 1.136 0.98 0.584 0.868 0.556 0.6
0.675
Growth Over Prior Year 9.5% 15.9% 19.2% (43.4%) (7.1%) 22.4% 5.1% (12.9%)

15. Current Capitalization (Millions of GBP)
Currency GBP
Share Price as of Dec-01-2009 17.95
x Shares Out. 1,574.2
= Market Capitalization 28,248.9
- Cash & Short Term Investments 278.8
+ Total Debt 6,019.1
+ Pref. Equity -
+ Total Minority Interest 400.2
= Total Enterprise Value (TEV) 34,389.4
Book Value of Common Equity 11,546.7
+ Pref. Equity -
+ Total Minority Interest 400.2
+ Total Debt 6,019.1
= Total Capital 17,966.0
Valuation Multiples based on Current Capitalization
LTM
For the Fiscal Period Ending 12 months 12 months 12 months† 12 months 12 months
Mar-31-2012E Mar-31-2011E Mar-31-2010E Sep-30-2009A Mar-31-2009A
TEV/Total Revenue - - - 4.4x 3.8x
TEV/EBITDA - - - 13.8x 12.2x
TEV/EBIT - - - 17.9x 15.6x
P/Diluted EPS Before Extra 14.4x 15.8x 18.3x 32.0x 24.0x
P/BV - - - 2.4x 3.1x
Price/Tang BV - - - 14.3x 16.2x
Ratios
LTM
For the Fiscal Period Ending 12 months 12 months 12 months 12 months 12 months 12 months
Sep-30-2009 Mar-31-2009 Mar-31-2008 Mar-31-2007 Mar-31-2006 Mar-31-2005
Profitability
Return on Assets % 4.2% 5.8% 6.8% 7.1% 7.5% 9.2%
Return on Capital % 5.2% 7.3% 8.9% 9.1% 9.6% 11.9%
Return on Equity % 7.9% 11.4% 12.7% 12.0% 13.6% 21.4%
Return on Common Equity % 7.9% 11.4% 12.7% 12.0% 13.6% 21.4%
Margin Analysis
Gross Margin % 66.7% 63.2% 64.0% 64.3% 63.0% 60.8%
EBITDA Margin % 25.7% 27.8% 26.6% 27.4% 25.9% 25.3%
EBITA Margin % 19.5% 22.2% 21.7% 22.4% 21.5% 20.8%
EBIT Margin % 18.4% 21.1% 20.8% 21.3% 20.6% 20.5%
Earnings from Cont. Ops Margin % 11.0% 12.6% 11.9% 11.1% 11.6% 14.3%
Net Income Margin % 11.0% 12.6% 11.9% 11.1% 11.6% 14.3%