"The best place to hide something is in plain sight" Edgar Allan Poe We have spent countless hours these past few years hunting for asymmetric opportunities. We have uncovered these in many forms but 2 common sources have been: Companies trading below book value (ORG, NUF, ASB, SM1) and Companies with underappreciated/hidden property value (Ramsay, Casinos, Aged Care, Energy, Agribusiness, etc) Source: Old El Paso Commercial Meme, the Internet In a recent review of Real Estate Investment Trusts (REITs) we were struck with the thought that the most obvious example of underappreciated property value might actually be hiding within a property stock, trading at less than book value. We detail this company below. I preface this work with a disclaimer that along with my love of food, movies and mining, I love property but am a generalist on the topic and hence have (potentially crudely) attempted to generalise this note. Background to Stockland As we know it today Stockland (SGP) is a stapled security and represents a combination of passive income streams within a trust: Retail ‘Town Centres’, Office ‘Workplaces’, Industrial ‘Logistics’ and Retirement / Land lease communities; and development income streams within a corporation: Residential is mainly master planned communities (MPC), Commercial Developments and Land lease communities. Stockland is regarded as one of Australia’s most recognised brands and develops on average 6,000 lots p.a. sold within MPCs. In June 2021 SGP announced the appointment of a new CEO, Tarun Gupta whose appointment has coincided with a refinement in the company’s strategy. This refinement in strategy includes a reallocation in sector capital and a refocus on targeted returns. This has seen SGP divest its Retirement Living business and acquire Halcyon a land lease communities business, as well as enter into multiple (capital) partnerships to accelerate SGP’s development pipeline. A summary of these targeted measures is presented in the images below. Source: Stockland Investor Update, November 2021 We are cognisant of the rising interest rate environment and implications it may have on Australia’s property market and hence SGP’s earnings (predominantly the development earnings) but the argument presented herein is both an absolute and relative valuation argument vs REIT 'peers'. Underappreciated Land Value For those that have never looked at REITs, simplistically the majority of a REIT’s value[1] is marked to market at each reporting date via external valuations predicated on the capitalisation of recurring income streams, i.e., cap rates, which adjust according to market conditions including changes in yields. This is true of SGP’s trust assets. The component of most REITs that isn’t as simple is the development portfolio[2] which is often recorded at cost. As noted above SGP is a combination of a trust and a corporation[3] and is somewhat unique in the weight of the business towards development. Lend Lease (LLC) and Mirvac (MGR) are possibly the only 2 other ASX property stocks that are development heavy. With the uniqueness of SGP’s development pipeline vs REIT ‘peers’ it is understandable that its upside value is potentially being overlooked. If we consider the net tangible asset (NTA) or book value of SGP, notably the landbank is recorded at cost and being approximately 10 years old the land recognized on SGP’s balance sheet grossly understates its market value. This clearly begs the question how much the land is actually worth which we have attempted to answer below. Source: SGP FY2022 Results Presentation Annexure On our first attempt at estimating land value, we considered what is being reported by SGP, being a AUD3.5bn cost base for the ~10 years old landbank (refer image above). From review of prior announcements and company discussions however we have discovered that the AUD3.5bn of book value at cost included development and other costs, interest capitalised, etc. Hence we needed to refine the true cost of land we were considering, refer below. Source: SGP FY2022 Account Statements, note 6 Inventories page 126 I.e., Of the AUD3.5bn of book value, AUD2,737m of that is ‘cost of acquisition’. Per the accounts that includes legal, valuation and stamp duty costs which we have assumed at ~7.5%, hence our estimated raw acquisition cost (AUD2,546m below) is adjusted for these estimated costs. Furthermore, the average age of SGP’s landbank, although stated at 10 years, is being inflated by project Aura on the Sunshine Coast, which was effectively purchased as part of SGP’s acquisition of Foster’s Lensworth Group in 2004 (for AUD846m)[4]. Ex Aura the average age of the landbank is actually closer to 8 years. The image below which shows select land value movements across Australia since FY2011 highlights the material uplift in land seen over the past 10 years which we have utilised in our analysis. Source: Stockland FY2022 Results Presentation, page 29 Below we have tabled our estimate of what this might mean for the current value of SGP’s landbank, relying on the average move per city (representative of the respective state), presuming[5] that the landbank was acquired on average 8 years ago. We further note that it is important to realise that SGP make acquisitions with a through-cycle acquisition price assumption (3.5% p.a.) embedded into the acquisition to justify the price paid for the land, hence we need to adjust for this. In addition there are also liabilities (of ~AUD1.4bn) that offset this gross value of land on SGP's balance sheet that reflect cost to complete provisions and deferred payments, some of which are revenue based and adjust with land price movements. I.e. there are definitely some complexities in calculating what the land is really worth! Source: Chester Asset Management with sources referred to in Notes above * On Aura, it was reported Terry Snow’s Capital Property Group (CPG) invested ~AUD175m (AUD150-200m) for 50% of the project at a reported 30% premium[6]. Hence we presume book value for the remaining 50% is recorded at ~AUD135m (AUD175m/1.4). From a similar exercise to that above we estimate this land is now worth ~AUD270m vs AUD205m implied by the ~50% (75%x70%) factored above so we add an extra AUD65m. NTA The first point to make about SGP trading at a discount to book value is that this is the case for almost all REITs. Hence for comparison below we present our REITs database, removing fund managers (CHC, CNI, GMG and HMC) and included SGP at the adjusted NTA calculated above. Furthermore, this table excludes retirement living operators/developers (LIC and INA) and property developer LLC. Source: Chester Asset Management, with data from IRESS and company accounts, as at 15 September 2022 The comparison table above highlights that when adjusting SGP NTA for a more appropriate view of land value we observe a 32% discount to NTA vs the REIT average of 22%. I.e., If our estimate of SGP’s land value is correct SGP has ~15% upside just to trade at the average of the REIT’s index (AUD4.00/share). Or put another way SGP is currently trading at <0.7x our estimate of adjusted NTA. Property Developer Premium Above we noted that SGP on an adjusted basis trades at a material discount to the average of REIT peers[7]. Arguably, as has historically been the case, developers should trade at a greater premium[8] to NTA than pure REITs. This is because the NTA doesn’t capture the value of future development earnings (outside of the land value being realised). Hence why LIC has traded at >3x NTA, INA 1.5x and LLC has traditionally traded at an ~30-50% premium. SGP itself currently trades at an ~20% discount to its reported NTA vs a long term average premium of 10-15%. We could have left it there and said SGP has >35% to trade back to its historic premium to NTA but why make it easy? Instead we have performed an additional exercise to the land adjustment above to consider ‘development value’. The challenge in doing so though is in defining what is the development profit, particularly when we believe land value is being grossly understated. If we were to count development profits on top of adjusted NTA we would effectively be counting the land uplift twice. In the table below we have attempted to isolate the profit attributable to the land mark-to-market and the residual development profit and quantify this value. For simplicity (and somewhat materiality) we have only included development upside for standard residential lots (i.e., excluded any development upside for land lease and commercial portfolios). Source: Chester Asset Management with sources referred to in Notes above This compares to the NAV/share reported in IRESS for each of these companies below. Source: Chester Asset Management, with data from IRESS and company accounts, as at 15 September 2022 Notably Rural Funds Group (RFF) present in their accounts adjusted NAV per unit which adjusts the book value of water entitlements to an independent valuation rather than at cost. Unlike SGP RFF trades reasonably in line with this adjusted NAV. The discount of REITs is ~21% to their NAV. Assuming this average discount applied to SGP the comparable price would be ~AUD4.90/share, +40% to where SGP is trading. I.e., SGP is trading at ~0.55x this adjusted NAV. Cap Rates above peers We appreciate comparing the cap rate of one property play to another doesn’t necessarily account for differences in asset quality but per Chester analysis in aggregate SGP have cap rates above the average of the REIT peer group: Retail 0.78% higher than peers, Office in line. and Industrial ~0.23% lower than peers. Assuming this is just conservatism and not due to lower quality assets than peers SGP’s investment properties should trade at a lower discount than peers (i.e., <21% discount). Source: Chester Asset Management, with data from company accounts Gearing more conservative than peers With the sale of Retirement, divestments and capital partnering deals SGP’s pro-forma gearing is actually 500bpts better than last reported at ~18%. Given this is below SGP’s targeted gearing of 20-30% the company may re-gear but SGP is also looking to scale further via the use of 3rd party capital to obtain better operating leverage and generate recurring fee income. For comparative purposes below we have tabled how SGP’s balance sheet compares to peers. Source: Chester Asset Management, with data from company accounts As is evident in the table above vs peers SGP has: a lower level of gearing; a higher level of hedging; longer dated maturity; and also, a higher starting debt cost, which we see as a positive as there is less of a future headwind from debt repricing. Higher Yield It is worth pointing out the difference in dividend yield vs peers. We had heard the bear argument that with the sale of the Retirement business SGP is entering a tax paying position that the market wasn’t on top of. This came through at the FY22 results with FY23 FFO guidance inclusive of tax payable at 5-10%. With Development targeted to represent ~40% of profits this would mean as a stapled security the normalised forward tax rate would increase from ~7.5% to ~12% (30% x 40%) which should now be in consensus. We further note the dividend could be franked to ~33% so the gross dividend would be higher than this vs REITs (Trusts) that pay unfranked distributions. Source: Chester Asset Management, with data from IRESS as at 15 September 2022 Developers should be paying a lower dividend so it doesn’t really make sense that the SGP dividend, despite now incorporating tax payments (and hence potentially franking) is still materially above that of pure REITs (except if the buyside are anticipating material downgrades to consensus). Closing You could argue that development profits will dry up in the near term and the market may need to adjust FY23 to FY25 earnings expectations for the recession/property market downturn but we still see a pretty asymmetric opportunity for SGP on a valuation basis. We have tried to represent this in the graph below that if we were to adjust land on SGP’s balance sheet for its hidden value we see upside to at least AUD4.00/share at the absolute minimum (to reflect the average REIT discount) and upside beyond that dependant on how much additional value to include for SGP’s development pipeline(s). Source: Chester Asset Management, refer note above for detail [1] And we are ignoring Funds Management REITS here [2] Which is generally a nominal component of asset value [3] Which houses SGP’s development portfolio [4] (VIEW LINK) [5] with the exception of Aura which we have factored in below [6] (VIEW LINK) [7] Non-Fund Manager REITs [8] Or lower discount (to NTA)

“Ten years ago we were saying that the 15 to 20-year timeline was looking bleak. Now we’re saying, ‘Oh boy, in 5 to 10 years, things can get rough. Investment needs to increase and it needs to increase beyond what we were spending during the last boom in exploration” — Kevin Murphy SandP Global Commodity Insights Analyst, March 2022 Last month the world witnessed Lionel Messi lead Argentina to a famous World Cup victory in an air-conditioned stadium in the Qatari desert, midway through the European football season. If ever there was an endorsement that anything is possible with willpower and the right (government) support aka funding, it’s Qatar hosting the 2022 World Cup. The task seemed almost insurmountable when announced but Qatar was able to construct 7 stadiums over the course of 12 years with a reported price tag (for the entire event) of USD220bn, changing almost 100 years of football history in the process. Bill Shakly once famously quipped "football isn’t a matter of life and death... it is much more important than that". And as we sit here today, looking forward 12 years, Benchmark Minerals are estimating we need to construct over 380 lithium, nickel, cobalt and graphite mines (plus plenty more copper & rare earth mines, plus other infrastructure) to fuel the world's energy transition, requiring not billions but trillions of dollars, in an issue of similar importance to football. Refer below for a fantastic visual. Source: Benchmark Minerals Intelligence, for further info contact info@benchmarkminerals.com We don’t want to labour a point that has been well covered but it is obvious we are in a new era for mining as the energy transition theme moves from mainly a China story to a whole of world story. With this note we revisit a paper we wrote 2 years ago titled Return of the Explorer (“ROTE”) where we theorised the energy transition was one of multiple factors that could be leading to an upcycle in commodity exploration. We further expand on the premise we need more exploration with the statement we urgently need more development as the supply side of the equation is looking challenged. Notably the grey line, in the graph below isn’t a trend line but a separate data source. It shouldn't take a degree in data analytics to identify that exploration and development capex are highly symbiotic! Sources: Chester Asset Management, S&P Global Intelligence and GlobalData, refer section on Lycopodium for copy of GlobalData graph this data relates to. There are multiple ways to play this needed development boom and we explore this in five categories below. Exploration companies Single (and multi) mine development companies Development contractors Non energy transition commodities (sounds counterintuitive but we explain below) Production enhancing opportunities Exploration Companies (Update) In ROTE, after the drawdown in 2020 we theorised we were in the early innings of an exploration boom that could replicate previous upcycles. Under this premise we expected exploration companies such as Imdex (IMD) and ALS Limited (ALQ) to benefit with increased revenue (top-line beats) and operating leverage (margin beats). Although the path hasn’t necessarily been smooth for those names, that thesis has played out. However, 2 years into a cycle we thought might last for at least 4 years S&P are now calling for 2023 global exploration expenditure to decrease by 10-20% before recommencing its upward trajectory into 2024. Despite the weight of evidence that rapid development and exploration is needed[1], arguing with S&P’s latest analysis here might be somewhat futile[2]. The reasoning we are guessing is the US/global recession expected in 2023. That was the same explanation given to us by others when IMD and ALQ both experienced share price pullbacks in 1H CY22. We have hence included a graph of US GDP growth vs global exploration to investigate the relationship between the two. Note with only annual exploration figures we lack data points for a regression analysis but agree that the GFC and COVID did align with down years in exploration expenditure. However, the prolonged downcycle from 2013 to 2016 was in spite of a period of reasonable US GDP growth of ~2% so the relationship between exploration and GDP seems somewhat spurious. Source: Chester Asset Management with data from S&P Global Intelligence, Trading economics Outside of S&P, which we said we wouldn’t argue with, one of the more recent datapoints came with Major Drilling’s Q2 FY23 results[3]. While they acknowledged a “slight softening in activity from the junior miners” they further noted that “customer demand for CY23 looks to remain strong… (and) the growing supply shortfall in most mineral commodities continues to drive demand for … (Major’s) services”. Hence, we believe if S&P are accurate in their projection for CY2023 it would most likely be more evident in the second half. Digressing back to the football analogy with a quote from one of the game's most iconic leaders Ted Lasso "There's two buttons I never like to hit: that's panic and snooze". We feel that pausing exploration and development now would be like hitting the snooze button the day of a life changing meeting and it may require more than a few shots of strong coffee to recover from. Hence despite us finding S&P’s projection pessimistic we have aligned our global exploration model to this ~15% drop in CY23 to ~USD11bn before recovering to ~USD13bn in CY24 (CY22 levels). It is there the panic button may be hit and we expect the upcycle to continue and likely accelerate. For reference we demonstrate what this scenario, and recent trading might imply for IMD and ALQ below. IMDEX Below is IMD’s historical half year revenue, translated into USD, updated to 2H FY2022. Sources: Chester Asset Management, Imdex results announcements, S&P Global Intelligence In October 2022 IMD reported Q1 FY23 revenue of AUD106m representing growth on pcp of 22%, or 19% in constant currency. We assume that growth rate has continued into Q2 and IMD can deliver 1H revenue >AUD200m. Where revenue lands in 2H FY23 (1H CY23) is the million-dollar question but notably, per above there aren’t many instances of a negative 2H after growing double digit 1H or material drops (in AUD revenue) after double digit 1H growth (2H FY15 in USD the starkest). Furthermore IMD’s recent AGM announcements included comments that resource companies are maintaining or increasing their exploration budgets and that drilling contractors have “strong order books”, with most regions described as “strong” or steady”. This compares to the commentary accompanying the 1H FY16 results of a “Decrease in exploration expenditure in key markets”. Chester FY23 projections are presented below[4]. Source, Chester Asset Management, Imdex AGM announcement Assuming our number in 1H FY23 is close, it implies 2H consensus revenue of ~AUD170m which would represent a -17% half on half (h-o-h) decline. We project ~AUD190m revenue in the 2H and even feel that is somewhat inconsistent with AGM commentary. Hence see room for a revenue beat in FY23. We further assume with recent acquisitions and lower level of junior exposure vs market (15% vs 40%) ex Blast Dog IMD can maintain a market share slightly higher than our 2022 calculation[5] at 2.1%. This has recently proven[6] and could continue to prove too conservative an assumption due to acquisitions, mix or a range of other factors. Source: Chester Asset Management with data from S&P Global, IRESS and Imdex results announcements We have tried to reflect this USD revenue market share in projections out to FY25 noting the high degree of uncertainty in these projections. Source: Chester Asset Management To the base revenue scenario projections we further add Blast Dog revenue and show what they imply vs consensus below. Refer Blast Dog Example below for more details. Source(s): Chester Asset Management, IRESS Without being too cute with our projections, using the S&P scenario and assumed market share level we can see potential for a revenue beat in FY23, meet/miss in FY24 but a material beat in FY25, particularly if Blast Dog is successful. ALS As a refresher, exploration (‘Commodities’ division) currently only represents ~40% of ALS Limited (ALQ’s) revenue. At ALQ’s recent 1H FY23 result Commodities revenue grew at a very impressive 31%[7] with EBITDA margins expanding by 191bpts to 36.3%. It affirmed our belief of the operating leverage achievable in an upcycle. Not to take away from the strong result, it has notably been buoyed by junior miners representing ~40% of current volumes[8]. Sample volumes in Geochem were up 17% vs pcp, with organic revenue growth of 31.4%, I.e. price/mix benefit of ~14%, driven by growth in junior samples. Furthermore, Q2 sample growth slowed to 11%, following 22% in Q1. Although the market isn’t necessarily projecting growth to sustain, and ALQ appear to have picked up market share, the evolving softening in junior exploration is something to be mindful of. As has been recounted to us by industry participants there is still ample demand from intermediaries and majors as juniors slow so even if volumes are stable there may be a reversal of recent mix benefits. We have performed a similar exercise to IMD to project ALQ Commodities earnings. Based on this exercise we see potential for ALQ to exceed market expectations in FY23, however under the S&P’s 10-20% 2023 drop scenario, we believe it implies risk to FY24 before recovering to a reasonably in line FY25. Source: Chester Asset Management, ALQ results announcements Sources: Chester Asset Management, Various anonymous broker reports The Development = Alpha phase of a mining project Recently we have witnessed a host of ASX developers[9] undertake capital raisings prior to declaring commercial production. Justifications are aplenty including the need to “accelerate” and derisk developments. Hence it begs the question why invest in the ‘risky’ development phase of a project with the threat of overruns and dilutive equity raisings? The answer lies in the telling image below, essentially a Lassonde Curve[10]. Source: The Visual Capitalist What the image illustrates, is that there is actually a material derisking period during development for key mining projects that leads to share price outperformance. Bellevue Gold (BGL) a single, gold mine developer that is <12 months from production has provided an interesting backdrop to this with reference to 5 of the more successful recent single, gold mine developments. Source: BGL Macquarie Presentation, November 2022 We have tabled the key statistics of these companies below and expanded on the data to also include the share price performance of these companies 3 and 12 months post declaring production. Sources: Chester Asset Management, BGL presentation material, IRESS Conscious the BGL list represents a somewhat favourable sample, we have added to it, but focused exclusively on ASX names. Source: Chester Asset Management, BGL presentation material, IRESS As a demonstrative example rather than a complete universe this list only includes gold companies (we are supposed to be on holidays). However, we are conscious of biases inherent within this analysis including survivorship bias. We believe focusing on gold developments is worthwhile as a tried and tested commodity so reflective enough of the value add of developments. For context we have provided a sample of other ASX commodity developments below. Source: Chester Asset Management, BGL presentation material, IRESS Notwithstanding the biases it demonstrates to us a few interesting points: There is a genuine (alpha) opportunity to invest in companies within the development phase of a project For those select names in our sample that didn’t generate alpha the drawdown is actually quite small, even for companies that were later proven to be unsuccessful developments! The re-rate potential of development far exceeds that of production, I.e. on average there isn’t necessarily much benefit in holding these companies once into production (Lassonde Curve agrees with this) The return from this development phase can actually be greatest in riskier jurisdictions, i.e. WAF, ROX, EMR, TIE Hence we believe it worth considering factors that may make one company more successful in the development phase than another: Management development experience Contractors utilised and terms of contracting - fixed price, lump sum, etc. Development type - brownfields or greenfields? Balance sheet strength Portfolio diversification Flow sheet complexity Preparatory works including resource definition drilling and mine plan Pre-development NPV discount With increased prevalence of single mine companies and the outcome of the samples above it presents as a reminder not to ignore all companies entering the development phase of a mining cycle. Tabled at the end of this article are some of the development opportunities that exist on the ASX (mainly single mine but some multis). We have further highlighted some of the companies within our portfolio and on our watchlist we are watching more closely. In alphabetical order: ADT, AMI, BGL, CHN, COI, DEG, DVP, GMD, INR, JRV, LLL, NXG, PMT, STX/WGO. One thing we will highlight here though in relation to the lithium names is the re-emergence of direct shipping ore, also referred to as DSO. This was a feature of the last mini lithium boom of 2017/2018, when at the time MIN were the innovator shipping DSO from Wodgina accompanied by PLS shipping Pilgangoora DSO. This time around there is no shortage of companies lining up to espouse the merits of DSO. Given: the lengthy time to commercialization, the strong demand and the spare capacity available in China to process and concentrate lithium it makes complete sense that aspirants would want to access this early form of project funding. Core Lithium (CXO) were one of the first movers this boom, last month shipping 15k dmt of 1.4% DSO at a price of USD951/dmt CIF tendered via an auction that reportedly attracted 30 bidders. In addition to CXO; GL1, RDT, LLL and WIN are just some of the names we have heard from recently investigating the option of DSO. The discussion was also followed with the commentary in many cases “we see no reason lithium prices should soften in the near term”. Hence DSO remains an area we are cautiously watching as well as near term Chinese demand. Development Contractors As we pointed out in ROTE one way to play this kind of thematic is a pick and shovels approach. I.e., invest in companies leveraged to development. Tabled below are some of the key ASX names that fits this criteria. Sources: Chester Asset Management, various company announcements WORLEY PARSONS We have investigated Worley Parsons’ (WOR’s) past results for what a future boom might infer for earnings; however, it is challenging given WOR's heavy exposure to hydrocarbons which have largely seen declining development. The task is made even more complicated by multiple material acquisitions, segment reclassifications, corporate cost reclassifications, accounting changes and cost rationalization programs. Despite this we believe there is a level of operational leverage available as we enter into a boom period for sustainable developments. At the very least however WOR currently show that margins on sustainability work is undertaken at more favourable margins (35-40% higher[11]) than traditional work so theoretically benefits from mix shift as the book becomes more sustainability weighted. Source: WOR FY2022 Results Presentation There are arguments for and against the sustainability of sustainability margin premiums however we also believe there is opportunity for margin expansion (leverage) in traditional project work as demand ramps up to mitigate ‘lost’ Russian hydrocarbons. However, without making a call and assuming the margin differential is maintained and consensus revenue is reasonable[12] there is reason to expect an upward bias to market’s expectations for future margins as we show in the table below. Source: Chester Asset Management based on WOR data in FY2022 results presentation LYCOPODIUM We also completed analysis on Lycopodium’s (LYL) past results as a relative pure play in resource project developments. The graph below[13] represents a reasonable guide to global development capex and hence the environment in which LYL have operated in. If exploration does drop by 10-20% in 2023 we would expect a similar decline in development in 2023/2024 but outside of that, similar to exploration we would expect a reasonably swift recovery in development expenditure given the increasing urgency to satisfy transition demand. Based on the following graph Lycopodium has traditionally achieved 0.15-0.30% of the capex of the 20 leading miners 2010-2022, average ~0.25%. Sources: Chester Asset Management, Lycopodium historic results, GlobalData Sources: Chester Asset Management, Lycopodium historic results, GlobalData Although a small sample size the data suggests stronger margins during the upcycle of capex periods. As we demonstrated in ROTE this could provide opportunity for upside surprise on margins (as well as top-line surprise) in a development upcycle. Non-Energy Transition Commodities Capital is scarce and in a world of declining liquidity becoming scarcer. This is evident in the relative multiples the market is prepared to pay for non-energy transition (NET) commodities. The lack of capital being afforded to NET commodities has and will continue to create opportunities. At the extreme ends of the scale governments are now providing backing to select projects to assist in their development: Refer the loans program of the US Inflation reduction act (IRA) 2022[14] and the recent award of USD2.8bn in grants via the Infrastructure Bill to boost US production of EV batteries and associated minerals including up to USD220m to Syrah (SYR). Or closer to home the Australian Government's AUD1.05bn non-recourse loan to Illuka (ILU) to assist in the construction of the Eneabba Rare Earths refinery. On the alternate side of the ledger many banks including Australia’s Big 4 have ceased lending to coal miners and governments globally are imposing price caps on oil and gas, dislocating markets and stunting their development. Not covering any revelationary grounds we think this differential in costs of capital will continue to see an underinvestment in hydrocarbons and provide long term support for coal and oil and gas prices. We aren’t sure that is necessarily reflected in long term consensus oil price forecasts of USD65-70/bbl. We believe a similar phenomenon to the underinvestment in oil and gas may be occurring in precious metals, particularly the gold mining space where globally multiples have contracted, production has recently been declining, reserves depleting and grades reducing. Despite recent strength in the USD, the gold price is back around 2011 highs and yet gold miners are trading at multiples akin to trough periods like the GFC. This is despite unprecedented strength in gold miner balance sheets, record share buybacks and healthy dividends. We believe this could provide the backdrop for a strong period of gold performance and for gold miners to rerate. Sources: Chester Asset Management, Bloomberg Recovery Optimisation Given the imperative to extract more commodities than we have historically, beyond mine development there is also opportunity for resource recovery optimisation. 2 key areas that stand to benefit are: Recycling. Neometals (NMT) is the key name here we believe that stands to benefit from transition metal recycling but at this stage we are unsure of the business model they will eventually utilize. Sims Metal (SGM) may also benefit however we are unsure of their ultimate exposure to energy transition metals. Technology providers. There are a host of technologies eloquently referred to as ‘precision mining’ tools which have the benefit of extracting more metal with less waste. Forms of precision mining include but are not limited to: Ore sorting technology, Autonomous trucks (SVW), Novel assay services (C79), Orebody intelligence and mining optimisation (RUL, ORI, IMD, PRN), Blasting solutions (ORI, IMD). BLASTING SOLUTIONS - BLAST DOG (IMD) EXAMPLE For those uninitiated Blast Dog is a commodity agnostic, semi-autonomously deployed blast-hole sensing and measurement technology providing real time orebody knowledge for logging material properties and blast hole characteristics. It can facilitate improved blast designs and optimize explosive costs. It also enables IMD to enter the mining production space, providing revenue away from purely exploration, enhancing the visibility and reducing the cyclicality of future earnings. When we first invested in IMD in late 2019 part of our thesis was the material upside from new technologies: Corevibe, Xtracta, Maghammer and Blast Dog. Over the past 3 years the lack of progress with this new tech has disappointed with these technologies, ex Blast Dog now largely written off. On face value 3 of the 4 technologies ceasing would presumably mean the majority of future upside diminishing but the reality is[15] Blast Dog was by far the most material and accounted for ~2/3 of our upside assessment. In contrast recent Blast Dog progress has hence been pleasing and we found the latest AGM updates encouraging, in which IMD reported an acceleration of Blast Dog’s roll-out at Iron Bridge. Additionally, the fact there are now 6 commercial prototypes planned for FY23 (and multiple more opportunities in the pipeline) highlights momentum with the technology. Source: IMD FY2022 AGM Presentation, October 2022 Although yet to claim Blast Dog a guaranteed slam dunk, these updates arguably point to higher probability of commercial success and partial derisking of the success case in our valuation. Source(s): Chester Asset Management, Imdex announcements Closing Whether the projected dip in exploration expenditure eventuates in 2023, analysis is clear that the world is nearing an inflection point in the development of energy transition metals. We trust this has provided some insights into the opportunities available from this potential boom and hope despite S&P’s forecast, 2023 can be a year of development for us all and our football teams. Appendix – ASX Explorers / Resource Delineation and Development Plays Sources: Chester Asset Management, various company announcements [1] As S&P’s own analyst, Kevin Murphy per the introductory quote stated not less than 12 months prior [2] We do point out though that the gold price has rallied over 10% since S&P’s analysis which may be one reason to reconsider the expected decline [3] Quarter ending October 31 [4] FY22 Q3 and Q4 are estimates, Currency assumes ~spot for the remainder of the year [5] But we may be wrong on IMD revenue and global exploration spend here. [6] In 2020 and 2021 market share appears to have increased 20bpts and 10bpts respectively [7] In Constant Currency [8] vs IMD ~15% of volumes being from Juniors [9] BGL, JRV, MCR, RED, MCR, PNR, TUL, STA (April 2022) [10] Which is reused from ROTE [11] Based on measuring graphs in WOR FY2022 Results material, assumes graphs are to scale [12] To which we see upward bias [13] Which we have relied on for the data in the first graph but [14] (VIEW LINK) [15] from an investigation of TAM, customer proposition and potential price

“Life moves pretty fast. If you don’t stop and look around once in a while you could miss it” — Ferris Bueller’s Day Off Despite being released only a year after this writer was born Ferris Bueller was one of our favourite movies growing up. A movie about living in the moment, friendship and self discovery – what was there not to like? For us it highlighted the importance of fun (we try to enjoy ourselves irrespective of performance) and the occasional break from routine so we don’t miss out on what life is really all about. Most of us in markets would confess to at some point having focused on the day to day rather than zooming out a bit. Whether it be the minutia of the macro watch on inflation, growth and hence interest rates, it can have us sometimes miss the forest for the trees. At Chester Asset Management we do keep an eye on the economic environment as it is increasingly influential in where we invest, particularly in a macro heavy market such as the ASX, however we acknowledge that trying to pick winners and losers off short term macro data can be inherently fraught with danger due to the impacts of government intervention in stimulating specific sectors of the economy. One way we try to circumvent this is to focus on underlying megatrends. Some of our investors or people who have heard from us may be familiar with a version of the below slide, we have been rolling with it for 7 years with minimal changes, because that’s the thing about megatrends. Source: Chester Asset Management Below we try to summarise the key points around demographics for the two most populous nations on the planet; China and India, as well as Australia and try to provide insights in how these demographic trends may influence key market sectors into the future. China Demographics – The cyclical impacts of famine and ‘feasting’ As a consequence of questionable economic policies in China from 1958-1959 when millions of farmers were pulled off the land to engage in ill-advised rural industries, China suffered near famine conditions between 1959 and 1962. It is estimated (given the Government never officially acknowledged the famine) that it caused up to 40 million deaths. The presumed psychological impact of the famine (I know what I want to do when I’m hungry) was a heightened fertility rate, which saw the population boom between 1963 to 1973, from ~680 to 880 million people. The growth was so rapid the Government was shocked into action, introducing the “later, longer, fewer” campaign which encouraged later marriage, longer gaps between kids and fewer children. The fertility rate (children per woman) in the 1970s subsequently dropped from 5.8 to 2.4. Despite the drop the Government went one step further in the 1980s by introducing the infamous one child policy. The combination of the famine, baby boom, government reaction and fertility decline created what became known as a demographic dividend, evident from the dependency ratio; the number of young people (under 15) and old people (over 65) for every 100 working age people falling from 80 in 1975 to 36 in 2010! The demographic dividend helped contribute to China’s rapid growth over this time. However, as all market participants (except maybe the crypto and tech bros) know about tailwinds they will eventually become headwinds, it just depends on your time reference. Hence, as the baby boom workers from the 1960s and 1970s become retirees and the impact of the one child policy shrinks the workforce it leads to an increasing dependency ratio. I.e. in 2022 it is estimated that there were under 50 people outside the working age population (i.e. aged 0 to 14 or >65) to 100 people in it. Focusing on just the over 65 dependents, at present, each retiree is supported by the contributions of five workers. The ratio is half what it was a decade ago and, per the graph below is trending towards 4-to-1 in 2030 and 2-to-1 in 2050. Some specific actions to combat this dependency issue are: Relaxing the one child policy. This policy update was announced in 2016 to two children and amended to three children in 2021. Increasing the retirement age and trying to shift to more of a service based economy so the labour force can work for longer. The current retirement age in China is ~60 years old for men, 55 for female civil servants and 50 for female workers. In 2023 reports emerged that China was planning to raise its retirement age gradually and in phases to cope with this demographic challenge they face. The president of the Chinese Academy of Labour and Social Sciences in 2023 was quoted as stating that there was a “progressive, flexible and differentiated path to raising the retirement age” i.e. there is no specific timeline to implementation. Instituting a universal pension plan. The pension plan now effectively consists of three pillars the first of which was introduced in 1997 with a basic pension system in the 1990s. The second layer, enterprise annuities was introduced in 2004 and in 2022 the third layer, individual retirement accounts (IRAs) were launched. There was a notable push for adoption between 2009 and 2013 when China effectively tripled the number of people covered by the old-age pension system. Increasing the level of automation (and or focusing on productivity). We suspect the government will provide further incentives for automation and R&D into AI but there is another underlying issue at play in China that this can impact so it is a delicate situation. China’s youth unemployment rate is currently hovering around 15. On another note, China has net negative migration, more people permanently leaving the country than entering which further exacerbates the issue around working age population. In 2023 alone the WorldBank estimated China’s net migration at (310k). Note this contrasts with Australia, where some of the issues of the Baby Boomer generation have been somewhat circumvented by an expansionary migration policy, refer comments below. India Demographics – A more sustainable dividend Similar to China, India's demographic dynamics have been influenced by government actions, economic conditions, and social norms, leading to significant shifts in its population structure over the decades. India was rocked during the mid 20th century by famines, the first of which, the Bengal famine of 1943, occurred during World War II as a combination of food procurement for the war and crop failure. The Bengal Famine was thought to have caused the deaths of some 3 million people. Famine conditions also re-occurred in 1966 and 1972 as a result of drought but not to the same extent. The situation began to improve with the ‘Green Revolution’ in the 1960s, which introduced high-yielding variety seeds, improved irrigation infrastructure, and modern agricultural techniques such as mechanized farm tools, pesticides and fertilisers. This transformation in agriculture not only helped avert famine but also led to a significant increase in food production. The improved food security contributed to a population boom. However, India also benefited from improvement in living standards which helped see a meaningful decline in mortality rates as health conditions improved and life expectancy increased. Between 1960 and 1980, India's population grew from approximately 450 million to 700 million. Recognizing the challenges of managing such a large and rapidly growing population, the Indian Government initiated various family planning programs. During ‘the Emergency Period’ from 1975 to 1977, under prime minister Indira Gandhi, a controversial and coercive sterilization campaign was launched. There were even reports of police cordoning off villages and dragging men to surgery. It was believed that during 1975 ~6m Indian men were sterilized in just a year, a number reported to be 15x the number of people sterilized by the nazis in World War II(1). This led to a decline in the fertility rate but also sparked public outrage and political backlash. Whether it kickstarted the decline in the fertility rate further we’ll never know but the drop, per the graph below is quite stark since the Emergency Period began. In the subsequent decades, the Government shifted to more voluntary and incentive-based family planning measures. The introduction of widespread education about family planning, improved access to contraception, and economic incentives for smaller families gradually led to a decline in fertility rates. For context this has seen the fertility rate drop from ~6 children per woman in the 1960s to 3-4 in the 1990s and closer to 2.2 today. Source: Statista 2024 India's population, unlike China’s has created a demographic dividend, defined as the economic growth potential resulting from changes in a country's age structure. This began to emerge prominently in the late 20th century. With a larger proportion of the population entering the working-age group, the dependency ratio declined. This shift provided India with a substantial labour force, contributing to economic growth and increased productivity. From 1991 to 2018 India experienced a period of rapid economic growth, often attributed to liberalisation policies, increased foreign investment, and the rise of the IT sector. The growing working-age population played a crucial role in this economic expansion, as it fueled consumer demand, increased savings, and enhanced the labor supply. This period of prosperity has contributed to ongoing population growth with India reportedly overtaking China as the most populous nation in 2023 but unlike China, India’s population is anticipated to keep growing until ~2065. Today India has ~65% of its population under 35 years old! As the country’s population continues to age though, the demographic dividend is gradually diminishing. By 2050, the proportion of people aged 60 and over is expected to increase significantly, leading to a rising dependency ratio. UN estimates that the number of people aged 60 and over will increase from 149m in 2022 to 347m in 2050. Source: UN Population statistics Promoting higher fertility rates: Unlike China, India's fertility rate of around 2.1, remains close to replacement level. However, efforts are being made to ensure it does not fall below sustainable levels through initiatives that support families, such as parental leave policies and financial incentives. Improving healthcare and social security: The government is working to strengthen healthcare infrastructure and expand social security programs to support the ageing population. This includes initiatives like the National Health Mission and the Pradhan Mantri Jan Arogya Yojana (PM-JAY), which aim to provide affordable healthcare to all citizens. Encouraging skill development: To harness the potential of the young working-age population, India is investing heavily in skill development programs. Initiatives like Skill India and the National Skill Development Mission aim to equip the workforce with the necessary skills to meet the demands of a modern economy. Boosting economic growth through innovation: The Indian government is promoting innovation and entrepreneurship to create new job opportunities and drive economic growth. Programs like Startup India and Make in India are designed to foster a business-friendly environment and attract investments. By investing in healthcare, education, and skill development, and by fostering a conducive environment for economic innovation, India can navigate its demographic transition and continue its journey toward sustainable development and prosperity. We further note however that India’s national elections have just concluded with a surprise result that unlike 2015 and 2019 the Bhartiya Janata Party (BJP) didn’t win in a landslide. Hence despite Modi securing a third term he has had to form a coalition government for the first time. This means that Modi won’t have the same level of support during this term and will need to navigate coalition politics. Australia Demographics – Why continue to build local when it’s easier to import? Australia’s demographic landscape is a fascinating reflection of its economic policies, migration trends, and social changes. Over the past several decades, these factors have shaped the country's population dynamics, leading to significant shifts in age structure and workforce composition. It bears many similarities to a number of other western countries such as the US. In the aftermath of World War II, Australia embarked on an ambitious immigration program to boost its population and workforce. The government actively encouraged immigration from Europe, resulting in a significant influx of new residents. This period saw Australia's population grow rapidly from ~7.5 million to over 13 million people by the early 1970s. The increase in population was driven not only by immigration but also by a post-war baby boom. The fertility rate peaked in the late 1950s and early 1960s, with an average of 3.5 children per woman. My grandparents helped lift the average! This population growth provided a substantial boost to the economy, as a larger workforce supported industrial expansion and infrastructure development. By the 1970s, Australia began to experience a decline in fertility rates, similar to trends observed in other developed countries. Several factors contributed to this decline, including increased access to contraception, greater participation of women in the workforce, and shifts in social attitudes towards family size. By the 1980s, the fertility rate had fallen to around 1.9 children per woman. In response to these demographic changes, the Australian government implemented policies aimed at supporting families and encouraging higher fertility rates, some of which are addressed below. Migration has also continued to play a crucial role in shaping Australia's demographic profile. The government has maintained a robust immigration program, targeting skilled migrants to address labour shortages and support economic growth. This approach has helped offset the natural decline in fertility rates and ensured a steady increase in population. In recent years, Australia has also focused on attracting international students and temporary workers, further diversifying the population and contributing to the economy. The combination of permanent and temporary migration has allowed Australia to maintain a relatively young and dynamic workforce compared to other developed nations. Australia's own demographic dividend became evident as the proportion of working-age individuals increased relative to dependents. From the 1970s to the early 2000s, the dependency ratio declined, providing a boost to the economy. During this period, Australia experienced sustained economic growth, supported by a strong labour force, high levels of productivity, and a favourable global economic environment. The mining boom in the early 2000s further fueled economic expansion, attracting investment and creating jobs. Similar to India, as Australia's population continues to age, the demographic dividend is reducing. The proportion of people aged 65 and over is projected to increase significantly, leading to a rising dependency ratio. By 2050, it is expected that there will be around 3 working-age individuals for every senior citizen, compared to around 5 in the late 2000s. Australia’s dependency ratio, Source: ABS Data The current fertility rate in Australia is 1.6, well below the replacement rate of ~2.1 births per woman. Source: Propel Funerals, May 2024 Presentation To address the challenges of an ageing Baby Boomer generation, the Australian government is implementing several measures: Encouraging higher birth rates: The government continues to support families through policies such as paid parental leave[2], childcare subsidies[3], and family tax benefits[4]. These measures aim to make it easier for families to have children and balance work and family responsibilities. Peter Costello’s 2004 baby bonus catch-cry of “one for mum, one for dad, one for the country” didn’t exactly lead to a wave of procreation. Jim Chalmers said in May 2024 “It would be better if birth rates were higher”, he doesn’t quite capture the headlines like Costello but the sentiment is there! Promoting skilled migration: Australia's immigration program remains a key strategy for addressing labor shortages and supporting economic growth. By attracting skilled migrants, the government aims to maintain a dynamic and productive workforce. Notably however after a recent high intake of ~740k migrant arrivals in FY2023 (net 528k) Australia has budgeted for a reduction in the number of migrant intakes for 2024-2025 down to net 260k Investing in health and social services: To support the ageing population, the Australian government is investing in healthcare and social services. Initiatives such as the National Disability Insurance Scheme (NDIS) and aged care reforms aim to improve the quality of life for older Australian. There are plenty of issues we can see with the NDIS but the sentiment behind it is a positive one. In our opinion the NDIS is in need of meaningful reform Enhancing workforce participation: The government is encouraging greater workforce participation among older individuals through policies that promote flexible work arrangements and lifelong learning. This approach aims to extend the working lives of older Australians and reduce the dependency ratio Source: ABS Statistics Demographic Impacts on ASX sectors Tabled below we have summarized some of the potential impacts across all ASX sectors Source: Chester Asset Management For those that prefer to visualize we have compiled some key graphs below Australia’s demographics are set to lead to a ‘death boom’ Source: Property Funerals, May 2024 Presentation Recent ABS Data suggests the growth in spending per capita is growing at a faster rate the older we are. Is this indicating a structural tailwind as we age? Source: Property Update, ABS Data Asian demand for seaborne metallurgical coal appears to be increasing, driven by India Source: Wood Mackenzie / Whitehaven Coal Presentation August 2023 While Chinese steel production appears to be peaking. Source: Chester Asset Management, Bloomberg Does 16% of the world’s population still need to produce 53% of the world’s steel? Particularly if their population is declining and there is an oversupply of houses! (~1/3 of Chinese steel demand is driven from housing). Meanwhile medical spending increases rapidly with age Source: Peter G Peterson Foundation Retirement villages in Australia have a double tailwind from the ageing population and underpenetrated market. Source: The Weekly Source Closing Although each portfolio holding has idiosyncratic merit underpinning it (a combination of quality, value and insight), demographics can be partly responsible for some of our positioning below. Healthcare (overweight) – CSL, RMD, TLX Agribusiness (increased protein intake and need for yield) – RIC, NUF Energy and Energy infrastructure – AZJ, AGL Real Estate (retirement living) – EGH Materials (Iron Ore underweight) – limited exposure ex MIN You're still here? It's over. Go home. Go. [1] (VIEW LINK) [2] (VIEW LINK) [3] (VIEW LINK) [4] (VIEW LINK)

Is the AI boom starting to look like late 1998? Where are the greatest risks and opportunities for investors right now? Rob Tucker shares his high-conviction views on the forces shaping markets and how he is positioning portfolios in response. From the questionable sustainability of the global AI CapEx boom… to Australia’s subdued business confidence and the case for gold and gold equities, Rob explores the themes he believes will matter most for investors over the year ahead. He also discusses Chester’s approach to balancing predictable cash flows, tactical cyclical opportunities and sources of diversification as markets navigate an increasingly complex environment. Rob’s views were recorded for David Clark’s Inside the Rope series. Watch the full conversation below. IMPORTANT INFORMATION This video is for general information purposes only and does not take into account the specific investment objectives, financial situation or particular needs of any specific reader. As such, before acting on any information contained in this video, viewers should consider the appropriateness of the information to their needs. This may involve seeking advice from a qualified financial adviser. Copia Investment Partners Ltd (AFSL 229316) (Copia) is the issuer of the Chester High Conviction Fund (the Fund). A current PDS and Target Market Determination is available at chesteram.com.au. A person should consider the PDS and TMDs before deciding whether to acquire or continue to hold an interest in the Fund. Any opinions or recommendation contained in this video are subject to change without notice and Copia is under no obligation to update or keep any information contained in this video current. Past performance is not a reliable indicator of future performance. Total returns assume the reinvestment of all distributions. The performance is quoted net of all fees and expenses. The reference indices do not incur these costs. This information is provided for general comparative purposes. Positive returns, which the Fund is designed to provide, are different regarding risk and investment profile to index returns.

We are pleased to announce the appointment of Katherine Holyoake, commencing in August 2026. Katherine brings a strong blend of investment, strategy and consulting experience. Most recently an Investment Analyst at Cooper Investors, she has developed deep expertise across multiple sectors including technology, healthcare and consumer markets, with a focus on financial modelling, valuation and high-conviction stock selection. She has a proven ability to generate differentiated insights through detailed fundamental research, regular engagement with company management and deep industry analysis. Prior, Katherine worked in Corporate Strategy at The Walt Disney Company and in Management Consulting at KPMG, where she advised on strategic growth, M&A opportunities and operational improvements. In her new role, Katherine will focus on fundamental research and contributing directly to portfolio decision making. This will include detailed financial modelling and scenario analysis, assessing company and industry dynamics, engaging with senior management teams and developing differentiated investment insights. Her strong analytical skillset, intellectual curiosity and ability to communicate ideas will support the continued evolution of Chester’s investment process. “Katherine is an outstanding addition to our investment team. She combines rigorous fundamental research with strong commercial judgement and brings experience analysing businesses across a range of sectors. Our investment process is built on disciplined company research, independent thinking and a long-term investment horizon. Katherine's analytical capability and investment mindset are an excellent fit with that approach, and we are pleased to welcome her to Chester." Rob Tucker, Managing Director and Portfolio Manager Katherine’s appointment reflects our continued commitment to strengthening our investment capability as the business grows, while maintaining our collaborative and high-performing team culture.

The biotechnology sector is showing renewed signs of life, with improving funding conditions, increased M&A activity and a stronger focus on companies advancing high-quality clinical programs. As sentiment shifts back towards innovation and execution, the next generation of drug developers could present compelling opportunities for long-term investors. "Taking on a challenge is a lot like riding a horse; if you're comfortable while you're doing it, you're probably doing it wrong." — Ted Lasso In this latest article, Portfolio Manager Anthony Kavanagh explores why the environment for drug developers is improving, what is driving renewed investor interest, and the characteristics they believe separate the most promising companies from the rest. Click here to read the full article on Livewire. Click here to download the PDF version.

The following video summarises key themes from the quarterly update. To read the full quarterly report, click here. Video view time: 8:32 0:05 What are the major themes running through equity markets in 2026? 3:09 How does Chester combat this as an Australian equity investor? 4:28 How is the portfolio positioned? Transcript Q1. What are the major themes running through equity markets in 2026? We think there's been four major themes that have impacted markets in the first six months of 2026. Clearly, the semiconductor trade for hardware associated with AI computing has been the major driver of global market returns. We would think we're in a bubble. That doesn't mean it's going to pop tomorrow because EPS momentum is still very strong, but we're increasingly nervous that the development of far cheaper Chinese models offering similar outcomes at a fraction of the cost is going to really lead to the risk of overdevelopment in the US models. And I think there's a very strong chance these large language models, OpenAI, Anthropic, never generate an acceptable return. So that's been the first theme. The second theme clearly has been geopolitical conflict with Iran that's now ongoing again, new strikes in the last week or so, and Russia and Ukraine, where there's still supply chain risk. There's Russian refineries being knocked out last week. We're all very concerned with the Strait of Hormuz in March and April, and I think we should still be concerned with that remaining shut going forward. So we don't, we think the energy complex is underpricing the risk of those ongoing geopolitical conflicts. So we think that's the other theme that's driven through markets, which I think the market's probably been too sanguine on, to be honest, over the first six months. The other thing which has been around for four or five years now is really the permeation of passive investing and a lot of the trend of industry funds to lower the tracking error of their overall portfolios by investing in the top 20 names. So we've seen this huge dispersion between the top 20 names and the rest of the market in Australia. And so we think fundamentally it's very difficult for us to pay 26 times earnings for CBA or 33 times earnings for Wesfarmers. And that's created this dislocation, we think, in markets, and we can see it every day. I reverse that and say, well, I think the good news is from this point into July 2026 as a starting point, that dispersion is unlikely to continue because I do think that deterioration of fundamentals for that part of the market is occurring in real time. It's really driven by the fourth trend which has emerged in May, which is the changes to the Australian government, or the budget changes that were implemented in May around negative gearing and capital gains tax. And I think that's led to a real slowdown in investor lending, which has led to a slowdown in auction clearance rates and clearly a slowdown in house prices. So when you think about CBA and Wesfarmers, very in tune with those trends, I think they're now facing headwinds for the first time. So we do think the starting point from July 2026 for the top 20 to continue that form is far harder. So they're kind of the four major themes we've witnessed over the last six months. Q2. How does Chester combat this as an Australian equity investor? We've been grappling with this sort of rise of passive investing and some of these themes for a little while. And so we strip back to what we do, we think, well, which is patience. So we think the best way for a long-term fundamental investor to outperform over the medium to long term is demonstrate that patience and invest fundamentally on cash flow-based outcomes. So we do tend to think with contrarian mindsets. A lot of our ideas come from unlocked, underappreciated or undiscovered assets. And we think we've got a really strong portfolio full of those names over the next two to three years. Over the last 12 years, some of the best ideas have taken three to four years to play out. So we are still quite confident that some of the names in the portfolio are far better priced and there's far more asymmetry to the trades than we can witness in the top 20 names right now. I think, given the geopolitical turmoil and some of the uncertainty around the AI CapEx spend, the quote we used from the quarterly was Ray Dalio, who said you should have a strategic asset allocation mix that assumes you don't know what the future is going to hold. I mean, I think that's never been more apparent than right now. So we think having a diverse portfolio across different sectors is the best way to combat some of the uncertainty that we'll see in 2026. Q3. How is the portfolio positioned? What we try and do, obviously with that diversification in mind, is find asymmetry of trades across different sectors. So we've mentioned a few names, and one of the biggest ones at the moment is Nufarm. We see Nufarm as trading at 50 cents in the dollar of book value, well diversified across crop protection, which is cyclical, but the seeds portfolio we think is dramatically undervalued in this conglomerate structure, the way Nufarm is trading now. We think the seeds business has really strong organic growth over the next two to three years that isn't being yet rewarded by the market. Light & Wonder is another one of our holdings. It's the number two player in the gaming software space to Aristocrat. It's trading on nine times PE one year forward. Aristocrat's trading at 21 times. That dispersion, we think, for the certainty of cash flows and the reliability and predictability of those cash flows for Light & Wonder, we think is materially mispriced and undervalued. So if they actually generate their returns, and they reiterated guidance last week, we can see Light & Wonder putting on 40 to 50% from this point over the next 12 or 18 months. Ampol is one that we've held for almost a year and clearly it's been in a strong upgrade cycle because of refining margins being far stronger in 2026 than last year. The market's been trying to look through that and reprice refining margins back to $10 a barrel. They're currently $40 a barrel. Each $1 a barrel above $10 is about 2% earnings. So we think there's still material upgrades to come with Ampol, and it is critical infrastructure having refining assets onshore in Australia. So we still think that is probably, arguably, underpriced in today's environment. Another one we've held for a little while, which has been a bit frustrating this year, is AUB Group, an insurance broker. And it sort of sold off in the first quarter on fears around AI disruption to the insurance broking industry, as many other insurance brokers globally did. But we would lean into that, thinking insurance broking is a very relationship-driven, human-to-human business, writing bespoke commercial lines for individual businesses. So we think AUB is still really well set up to deliver double-digit earnings into the future, all for a discount of about 25% of what it's historically traded on. So we think, again, the asymmetry of owning AUB here is really quite compelling on a two to three-year view. And the other one I'll mention is Lendlease. It's been actually quite frustrating for us. It's been the worst-performing stock in the portfolio over the last 12 months. Lendlease, three years ago, decided to separate their Australian business, investments, developments and construction, from the international assets, which they decided to divest, and bucket all these international assets into what they call the CRU, the Capital Release Unit. They've taken a long time to divest those assets, but they're now about 70% of the way through that divestment process. And because they've taken so long, they've had an inflated cost base as they've carried incremental costs to release those assets. It's led to some downgrades in 2026. It was a trough year of earnings anyway. At $3, our adjusted book value is $5.50, so we still think we're buying assets at a really big discount to the book value. There's a new CEO, Nick O'Neill, who I think will add stability and rigour to the process of Lendlease's operating business. And I think we'll see a far better Lendlease operating business over the next two years than we have seen for the last three years. So I think from this point, the asymmetry of owning Lendlease here is really quite compelling. A couple of names that are really quite contrarian and unloved, but we think, and over the last 12 years, that's what we've done, is find these ideas. And the alpha we've generated has come from this approach over the last 12 years. So we're optimistic that we can continue to find these ideas that deliver really strong risk-adjusted returns over the next two to three years.

Chester Asset Management is pleased to announce that the Chester High Conviction Fund has been named a finalist in the Australian Large Cap Equity category at the 2026 Money Management Fund Manager of the Year Awards. The recognition highlights the strength of Chester’s disciplined investment approach and continued focus on identifying long-term value opportunities in an evolving market environment. Rob Tucker, Managing Director and Portfolio Manager at Chester Asset Management, said: “Chester is thrilled to be nominated for this award. Given the rise of passive investing, we believe it’s more important than ever to stay disciplined around our valuation framework and patient with our conviction. Some of our best ideas have come from unloved, underappreciated, or undiscovered assets. Our long-held view is that inflation is a far more structural challenge throughout this decade than the previous two decades, which lends itself to the notion that valuation discipline will be increasingly important over the coming years.” The Fund Manager of the Year Awards recognise excellence, innovation and leadership across Australia’s investment management industry, with winners to be announced in June 2026. Chester Asset Management is honoured to be recognised alongside a strong field of finalists and congratulates all nominees across this year’s awards program. This logo relates to a 2026 Fund Manager of the Year Award (‘Award’) for the Chester High Conviction Fund in the Australian Large Cap Equity category that was announced May 2026. The Awards Program is owned by Prime ABN 92 126 853 085. Lonsec Research Pty Ltd AFSL 421 445 is the Exclusive Partner of the Awards Program The Awards Programs’ judging panel applies a robust methodology to determine Award finalists. An Award logo is limited to general advice. Investors should obtain the product PDS, consider the PDS and seek independent financial advice before making any decision about whether to acquire the product. An Award logo is not a recommendation to purchase, sell or hold the product. Past performance is not a reliable indicator of future performance.

Chester Asset Management is proud to announce that we have won the Australian Equities – Large Cap category at the 2025 Zenith Investment Partners Fund Awards. The annual awards, hosted by Zenith Investment Partners, recognise excellence across Australia’s funds management industry, celebrating outstanding investment performance, process, and client engagement. This recognition reflects the strength of Chester’s investment team, the consistency of its process, and a continued commitment to delivering long-term value for investors. At Chester, we believe that enduring results are built on a clear investment philosophy, disciplined portfolio construction, and genuine collaboration. This award reaffirms that our approach continues to deliver outcomes that matter. We thank our investors and partners for their ongoing trust and support, and Zenith Investment Partners for acknowledging our continued focus on excellence in Australian equities. More about the Zenith Fund Awards: https://www.zenithpartners.com.au/zenith-fund-awards-2025/

We’re happy to be named a finalist in the 2025 Zenith Fund Awards, in the Australian Equities – Large Cap category. This recognition reflects the Chester High Conviction Fund’s strong long-term performance, driven by our experienced team. A big thank you to Zenith Investment Partners for this recognition, and to the Chester and Copia teams for your hard work and dedication. Zenith Investment Partners Pty Ltd ABN 27 103 132 672 AFSL 226872 Fund Awards issued 23 October 2025 are solely statements of opinion and not a recommendation in relation to making any investment decisions. Fund Awards are current for 12 months and subject to change at any time. Fund Awards for previous years are for historical purposes only. Full details on Zenith Fund Awards at https://www.zenithpartners.com.au/zenith-fund-awards-2025/

In his latest quarterly review, Rob Tucker discusses the implications of the recently passed US “One Big Beautiful Bill,” highlighting how fiscal stimulus and political pressure on interest rates are driving a shift toward fiscal dominance. He explains that this environment is likely to benefit real assets such as gold, infrastructure, and commodities, while supporting a broader rotation toward valuation-driven investing. Rob also highlights standout opportunities within the portfolio, including CSL, which he believes is poised for a multi-year recovery, and Nufarm, which he sees as significantly undervalued with potential catalysts from a proposed sale of its seeds business. Watch the full video below.

Chester Asset Management is proud to announce that the Chester High Conviction Fund has been selected as one of three new additions to the Third Link Growth Fund, alongside Australian Eagle and Firetrail Investments. Third Link is a unique Australian equities fund of funds that donates its management fee, net of expenses, to charity. Since inception, the fund has given more than $23 million to not-for-profit organisations focused on youth, education and employment, while delivering strong, long-term investment performance. This is made possible by the generosity of underlying managers, like Chester, who rebate their management and performance fees in full. Chester’s High Conviction Fund brings a focused, research-driven portfolio of 25–40 high-conviction Australian equities. With over $1.5 billion in funds under management, the strategy has outperformed the S&P/ASX 300 Accumulation Index by 5.8% p.a. after fees since 2013¹ and has been recognised with industry accolades, including Money magazine’s Best Australian Shares Fund  (2023 & 2024) and Financial Newswire Fund Manager of the Year  (2023). “We are thrilled to be part of the Third Link Growth Fund and support its dual mandate of returns and impact,” said Rob Tucker, Portfolio Manager at Chester. “We are proud to contribute to a fund with such a meaningful purpose.” Third Link’s founder and portfolio manager Chris Cuffe AO added: “We’re thrilled to welcome Australian Eagle, Chester, and Firetrail to the Third Link Growth Fund. Their inclusion strengthens what is now a stellar line-up of investment managers. By leveraging their expertise, we aim to enhance investment performance for our investors, while continuing to support our nominated charities through the generous rebate of all management and performance fees.” Chester is honoured to contribute to Third Link’s mission, delivering strong investment outcomes while making a tangible difference in the community. ¹As at 30 April 2025