Insurance Australia Group

Transcription

1 AUSTRALIA IAG AU Price (at CLOSE#, 16 Jun 2015) Underperform A$5.81 Valuation A$ DCF (WACC 9.1%, beta 0.9, ERP 5.0%, RFR 4.5%, TGR 3.0%) 12-month target A$ month TSR % -2.1 Volatility Index Low GICS sector Insurance Market cap A$m 13, day avg turnover A$m 46.3 Number shares on issue m 2,342 Investment fundamentals Year end 30 Jun 2014A 2015E 2016E 2017E NEP m 8,644 10,313 8,573 8,689 Underwriting Result m 1, , Investment Income m 885 1, Reported profit m 1, Net Op Income m 1,254 1,014 1, EPS adj PER adj x PER rel x DPS Dividend yield % Franking % Total SH Funds m 6,794 6,769 7,552 7,799 BV/S ROE % ROA % P/BV x IAG AU vs ASX 100, & rec history Note: Recommendation timeline - if not a continuous line, then there was no Macquarie coverage at the time or there was an embargo period. Source: FactSet, Macquarie Research, June 2015 (all figures in AUD unless noted) 17 June 2015 Macquarie Securities (Australia) Limited Berkshire bump as conditions worsen Event IAG has announced a strategic partnership with Berkshire Hathaway (BHSI) including a 20% quota share arrangement, $500m equity raising and other strategic initiatives. Impact For IAG: The impact of the 20% quota share arrangement will reduce premiums retained by IAG ~20% with offsetting benefits that include: 1) boost the IAG insurance margin (~200bps) with reduced volatility, 2) release regulatory capital (~$700m over 4-5 yrs, with $400m in FY16), 3) support medium-term ROE of 15% (subject to effective reallocation of capital). We did not consider the $500m equity raise from BHSI as necessary. For BHSI: Berkshire Hathaway captures investment earnings on the float (i.e. premiums pre the payment of claims, expenses and exchange commission). The quota share program also means that BHSI capture traditional outwards reinsurance performance. Reduced competition: In addition, IAG and BHSI have delineated the market segments in which IAG and BHSI will compete (i.e. BHSI will no longer compete in the personal lines market via the Steadfast Direct initiative and IAG have stepped away from large corporate property and liability business). Underlying market conditions worsen: In addition to the impact of the transaction described above, IAG s FY16 earnings guidance suggests that premium rate pressure continues to deteriorate versus expectations and we have cut our earnings forecasts to reflect the conditions. Earnings and target price revision Price target $5.40 (previously $5.70). EPS changes: No change to FY15 estimates, FY %, FY %, FY18-7.5%. Price catalyst 12-month price target: A$5.40 based on a DCF methodology. Catalyst: FY15 result release on 21 August. Action and recommendation Underperform (from Neutral). While the Berkshire Hathaway partnership cedes 20% of premiums it has also provided: 1) a boost to the insurance margin of ~200bps, 2) IAG retains almost all the underwriting contribution as a result of the exchange commission arrangement, 3) capital is released and 4) the potential for ROE to be boosted should IAG allocate capital to accretive investments. We believe that IAG needs to provide greater clarity on capital management and investment initiatives. In the absence of clarity from management we expect that IAG will underperform given current insurance market conditions (increased premium rate competition, margin pressure, and loss of market share), and uncertainty re capital management and potential allocation of additional capital to the Asia initiative. Please refer to page 7 for important disclosures and analyst certification, or on our website

2 FY15 and FY16 earnings IAG confirmed existing FY15 earnings guidance and provided initial FY16 earnings guidance with the announcement. FY15 Guidance unchanged: IAG s FY15 reported insurance margin guidance range remains unchanged from the %. FY16 Guidance: IAG expects its FY16 reported insurance margin to be in the range of 14-16% (Macquarie underlying 14.8%, reported 16.9%). This includes further realisation of benefits from the Wesfarmers Insurance integration and the new Australian operating model, as well as the effect of the Berkshire Hathaway quota share arrangement. The latter is expected to enhance the reported insurance margin by ~ 200bps, driven by the exchange commission paid by Berkshire Hathaway to IAG. IAG s expectations for FY16 GWP growth are in the range of 0-3%. IAG and Berkshire Hathaway strategic relationship IAG and Berkshire Hathaway have entered into a strategic relationship that includes: Reinsurance capital: a 20% quota share for a period of 10 years. Equity capital: $500m IAG equity placement to Berkshire Hathaway (~3.7% of expanded capital). Strategic considerations: In addition to the direct financial impact which we review below, we also consider the strategic rationale behind the relationship. Reinsurance capital: New Quota Share reinsurance arrangement 20% quota share: The key component of the IAG and Berkshire strategic relationship is the 20% whole of account quota share agreement. 10 years initial agreement: The new Quota Share arrangement means that IAG will effectively pay ~20% of all IAG consolidated entities earned premiums to BHSI for an initial period of 10 years. What is captured under the agreement: The agreement covers all consolidated entities of IAG and includes the key Australian and New Zealand operations but excludes the minority interest positions IAG has in a number of its joint ventures in Asia (including India and China). Only IAG s share of the IMA JV will be subject to the new arrangement. The financial impact is as follows: Premiums: 20% of IAG s Gross Earned Premium will pass to Berkshire Hathaway and recorded as a reinsurance expense by IAG. The arrangement will allow IAG to reduce their other reinsurance expense. This impact means that our FY16 NEP forecast is cut by only 17.4% versus the headline 20% quota share agreement. IAG s Gross Written Premium is not impacted. Reduced other reinsurance expense: The reduced other reinsurance expense noted above is a result of reduced commercial risks (typically with high natural catastrophe risk) and reduced peak level exposures. Claims and Underwriting expenses: In return for 20% of IAG s Gross Earned Premium, BHSI will pay 20% of all claims and underwriting expenses. Exchange commission: In addition to Berkshire paying 20% of all claims and underwriting expenses, IAG will receive an exchange commission (this is typical of such arrangements). Based on IAG disclosed insurance margin impact we estimate that the exchange commission is ~$190m in FY June

3 Underwriting result and Insurance Margin: The combination of the above is that the underwriting result for IAG in FY16, FY17 and beyond is impacted by less than 1%. The Insurance Margin is impacted to a greater extent as the payment of premiums to Berkshire Hathaway reduces the investment float and therefore the investment income earned by IAG. Despite the reduced investment income, the insurance margin is boosted by ~200bps, driven by the implied exchanged commission. Volatility: The quota share arrangement (and supported by other elements of the strategic relationship) should reduce earnings volatility. We estimate that 15% of the underwriting result is now effectively received as a fee (i.e. exchange commission). Capital Impact: The quota share and other elements of the strategic relationship reduce capital requirements by ~$700m within 4-5 years and ~$400m of this in FY16. ROE Target: Maintain IAG s 15% ROE target. This will be supported by the lower volatility of the exchange commission in exchange for underwriting volatility. Fig 1 For the next 10 years BHSI will receive 20% of GEP... Item FY17 BHSI IAG GWP $11,659m GEP $11,742m NEP $10,861m $2,172m $8,689m Net Claims Incurred -$7,032m -$1,406m -$5,625m UW Expense -$2,918m -$736m -$2,182m UW Result $912m $30m $881m Inv. On Technical Reserves $490m $98m $392m ITR $1,401m $128m $1,273m Note: we have elected to illustrate using FY17 as the CY16 aggregate reinsurance cover boosts 1H16 profitability which will stay with IAG. Source: Macquarie Research, June 2016 Equity capital: Issuance of ~90m shares with another ~120m under option In addition to the quota share described above, Berkshire Hathaway will subscribe for new shares equating to ~3.7% of IAG s expanded capital base. BHSI will purchase 89.8m ordinary shares at $5.57 (close Monday 15 June 2015) equating to a ~3.7% ownership of IAG for $500m. IAG have a further put option to issue 120m new ordinary shares at any time in the next 2 years, priced at the 5 day VWAP (capped at $6.50). There is a standstill clause for the term of the agreement limiting BHSI from purchasing more than 14.9% ownership of IAG and BHSI must maintain their stake for the duration of the quote share arrangement (10 years). Strategic consideration: Further investment in Asia expected In addition to the quota share and equity stake discussed above, the IAG and Berkshire relationship also covers additional strategic considerations. We consider that the arrangement will be negligible for both IAG and BHSI in terms of premiums but the arrangement clearly delineates the market segments in which IAG and BHSI will compete (i.e. BHSI will no longer compete in the personal lines market via the Steadfast Direct initiative and IAG have stepped away from large corporate property and liability business). BHSI will acquire the renewal rights to IAG s book for large corporate property and liability business: IAG advised that this accounts for less than 1% of GWP, of which ~A$15m was acquired in the transaction from Wesfarmers Insurance. 17 June

4 Macquarie expect that renewals from 1 July will be on BHSI paper. Macquarie expect headcount to be transferred from IAG to BHSI, equating to ~60 people. This may explain why BHSI has been so slow to hire underwriters and provides them with instant bench strength and market share in their core market. IAG will acquire BHSI s book for Personal lines and SME: This includes the Steadfast Direct arrangement which Macquarie estimate to be worth between ~$350m-$390m with ~$70m by FY16. IAG repeated their desire to not be above capital targets in the medium term. This is a clear view that further investment will be made in IAG s target markets in Asia: IAG reaffirmed its intention to expand its stake in India (SBI) from 26% to 49% when government FDI limits are lifted. IAG expect this to be completed by the end of CY15 and cost ~A$150m. Additional capital for Chinese expansion, although Macquarie believe this will not be material for the stock and require many years to break even. Options to expand operations in Malaysia, although Macquarie believe there are limited opportunities here given the large footprint and leading market position (17% Motor share and 9.8% GI share). The recent investment in Indonesia is expected to be a precursor to an arrangement with a local distribution partner but the Indonesian market is extremely small and fragmented, making scale and meaningful profitability difficult in the short term. Additional capital supports IAG in the anticipated consolidation of the Thailand market, but again a long-term view must be taken for profitability and material results. Fig 2 IAG footprint in Asia Country (Asia) IAG Brand Total GI Market Size (2013 USD) Personal LoB IAG Market Share % Ownership % China Bohai $125,844m 75% 0.29% 20.0% India SBI $13,401m 50% 1.49% 26.0% Thailand Safety $6,663m 65% 4.00% 98.6% Malaysia AmGeneral $5,161m 55% 9.80% 49.0% Indonesia Parolamas $4,254m 45% 0.41% 49.0%* Vietnam AAA $1,131m 45% 2.15% 63.2% Asia $156,454m 71% 0.71% n/a Note: * Macquarie Estimate Source: Regulatory reports, Macquarie Research, June Macquarie believe that IAG will likely reinvest in Asia, potentially with green fields diversification into Commercial lines. This next step will leverage the benefits of prior Personal lines expansion through the: Regional network which is now in place; Cultural understanding developed; Brand awareness created; and Data collected. Given IAG s history in Australia and New Zealand, expansion into SME risks in Commercial lines creates an opportunity to access larger and more profitable risks in these geographies as well as develop a market in an underpenetrated region. IAG maintained their 50-70% of cash earnings payout ratio. 17 June

5 Price: 5.81 Year ending June 30 Underwriting Accounts ($m) FY11A FY12A (UK adj) FY13A FY14A 1H15A 2H15E FY15E FY16E FY17E Gross Written Premium 8,050 8,495 9,498 9,779 5,603 5,864 11,467 11,531 11,659 Movement in Unearned Premium (192) (449) (363) (58) 202 (91) Gross Earned Premium 7,858 8,046 9,135 9,721 5,805 5,773 11,578 11,614 11,742 Reinsurance Expense (620) (700) (817) (1,077) (651) (613) (1,264) (3,041) (3,053) Net Earned Premium 7,238 7,346 8,318 8,644 5,154 5,159 10,313 8,573 8,689 Immunised Net Claims (5,105) (4,895) (5,210) (5,151) (3,287) (3,428) (6,715) (5,319) (5,641) Discount rate adjustment 16 (526) 228 (50) (194) 22 (172) Net Claims Incurred (5,089) (5,421) (4,982) (5,201) (3,481) (3,406) (6,887) (5,126) (5,625) Underwriting Expenses (1,978) (1,994) (2,178) (2,303) (1,407) (1,415) (2,822) (2,165) (2,182) Underwriting Result 171 (69) 1,158 1, , Investment income on technical reserves Insurance Trading Result ,428 1, ,185 1,446 1,273 Fee Income Associates (1) (3) Net corporate expenses (1) (56) (54) (68) (44) (126) (170) 0 0 Borrowing costs (86) (97) (95) (98) (52) (52) (104) (103) (103) Pre-tax business profit ,301 1, ,377 1,208 Normalised investment income on SHF's Investment income market adjustment 0 (117) Profit Before Tax ,648 1, ,172 1,621 1,499 Income tax expense (276) (177) (424) (472) (68) (131) (199) (478) (444) Amortisation, impairment & discontinued items (176) (349) (342) (21) (43) (43) (86) (86) (86) Minority interest (88) (58) (106) (97) (63) (8) (71) (79) (66) Reported profit , Adjusted profit ,118 1, ,014 1, Cash profit ,156 1, ,045 1, Divisional GWP ($m) FY11A FY12A FY13A FY14A 1H15A 2H15E FY15E FY16E FY17E Personal (Direct) lines 3,891 4,299 4,584 5,335 2,802 2,781 5,583 5,597 5,653 Commercial (Intermediated) lines 2,463 2,759 3,028 2,268 1,514 1,738 3,252 3,248 3,265 Australia 6,354 7,058 7,612 7,603 4,316 4,519 8,835 8,845 8,917 New Zealand 956 1,210 1,575 1,846 1,116 1,170 2,286 2,321 2,355 Asia (excl share from associates) International 1,145 1,429 1,870 2,163 1,280 1,341 2,621 2,676 2,732 Insurance Ratios (%) FY11A FY12A (UK adj) FY13A FY14A 1H15A 2H15E FY15E FY16E FY17E GWP Growth Unearned Premium / GWP (2.4) (5.3) (3.8) (0.6) 3.6 (1.5) Reinsurance Outwards NEP Growth (16.9) 1.3 Net Claims Ratio Underwriting Expense Ratio Combined Ratio Reported Insurance Margin Underlying Insurance Margin Insurance ROE Cash ROE Normalised Investment Return PCA/MCR (x) CET1 (x) Gearing (%) Investment Fundamentals FY11AA (UK adj) FY13A FY14A 1H15A 2H15E FY15E FY16E FY17E EPS (Reported, Diluted) EPS (Adjusted, Diluted) EPS (Cash, Diluted) EPS growth (Adjusted) (14.3) (34.6) (22.8) 0.4 (7.0) PER (Adjusted) PER (Normalised) DPS Dividend yield Payout ratio (on cash earnings) Franking (%) Effective tax rate (%) EFPOWA 2,079 2,079 2,181 2,344 2,458 2,472 2,472 2,567 2,567 NAB ps NTA ps NTA (+PM's) ROA - normalised ROE - normalised Balance Sheet ($m) FY13A FY14A FY15E FY16E Valuation Summary Assets Cash PV of distributable cash profit (DCP) 8,957 Investments 14,193 15,949 16,553 16,862 Terminal value 4,353 Other Assets 5,503 6,490 7,109 7,703 Total DCP DCF valuation 13,310 Intangibles 1,911 3,540 3,552 3,466 Shares on issue 2,567 Total Assets 22,001 26,426 27,474 28,296 Value per share $ 5.18 Liabilities Unearned Premiums 5,089 5,147 5,035 4,952 Net Outstanding Claims 7,616 8,756 9,941 10,546 Share price target $ 5.40 Corporate Debt 1,620 1,752 1,774 1,777 % upside/downside -7.1% Other Liabilities 2,688 3,977 4,007 3,469 1yr fwd Dividend yield 5.0% Total Liabilities 17,013 19,632 20,758 20,744 TSR -2.1% Net Assets 4,988 6,794 6,717 7,552 Outside Equity Interest Shareholder's Equity 4,786 6,568 6,495 7,305 Recommendation Underperform Source: Company data, Macquarie Research, June June

6 Fundamentals Macquarie Wealth Management Macquarie Quant View The quant model currently holds a reasonably negative view on Insurance Australia Group. The strongest style exposure is Profitability, indicating this stock is efficiently converting its investments to earnings as proxied by ratios such as ROE, ROA etc. The weakest style exposure is Valuations, indicating this stock is over-priced in the market relative to its peers. 239/247 Global rank in Insurance % of BUY recommendations 19% (3/16) Number of Price Target downgrades 1 Number of Price Target upgrades 0 Attractive Quant Local market rank Global sector rank Displays where the company s ranked based on the fundamental consensus Price Target and Macquarie s Quantitative Alpha model. Two rankings: Local market (Australia & NZ) and Global sector (Insurance) Macquarie Alpha Model ranking A list of comparable companies and their Macquarie Alpha model score (higher is better). Factors driving the Alpha Model For the comparable firms this chart shows the key underlying styles and their contribution to the current overall Alpha score. AMP 0.5 AMP Genworth Mortgage Insuran Challenger QBE Insurance Suncorp Genworth Mortgage Insuran Challenger QBE Insurance Suncorp % -80% -60% -40% -20% 0% 20% 40% 60% 80% 100% Valuations Growth Profitability Earnings Momentum Price Momentum Quality Macquarie Earnings Sentiment Indicator The Macquarie Sentiment Indicator is an enhanced earnings revisions signal that favours analysts who have more timely and higher conviction revisions. Current score shown below. Drivers of Stock Return Breakdown of 1 year total return (local currency) into returns from dividends, changes in forward earnings estimates and the resulting change in earnings multiple. AMP Genworth Mortgage Insuran Challenger QBE Insurance Suncorp AMP Genworth Mortgage Insuran Challenger QBE Insurance Suncorp % -20% -10% 0% 10% 20% 30% Dividend Return Multiple Return Earnings Outlook 1Yr Total Return What drove this Company in the last 5 years Which factor score has had the greatest correlation with the company s returns over the last 5 years. Sales Growth FY1 IRR Dividend Disc. Model BPS Growth FY1 Sales to EV NTM Capex to Sales FY0 Incremental Capex PEG Ratio Inverted Change in PPE FY0-25% -25% -27% -28% Negatives Positives 21% 21% 21% 28% -30% -20% -10% 0% 10% 20% 30% How it looks on the Alpha model A more granular view of the underlying style scores that drive the alpha (higher is better) and the percentile rank relative to the sector and market. Alpha Model Score Valuation Growth Profitability Earnings Momentum Price Momentum Quality Capital & Funding Liquidity Risk Technicals & Trading Normalized Score Percentile relative to sector(/247) Percentile relative to market(/414) Source (all charts): FactSet, Thomson Reuters, and Macquarie Research. For more details on the Macquarie Alpha model or for more customised analysis and screens, please contact the Macquarie Global Quantitative/Custom Products Group (cpg@macquarie.com) 17 June

7 Important disclosures: Recommendation definitions Macquarie - Australia/New Zealand Outperform return >3% in excess of benchmark return Neutral return within 3% of benchmark return Underperform return >3% below benchmark return Benchmark return is determined by long term nominal GDP growth plus 12 month forward market dividend yield Macquarie Asia/Europe Outperform expected return >+10% Neutral expected return from -10% to +10% Underperform expected return <-10% Macquarie First South - South Africa Outperform expected return >+10% Neutral expected return from -10% to +10% Underperform expected return <-10% Macquarie - Canada Outperform return >5% in excess of benchmark return Neutral return within 5% of benchmark return Underperform return >5% below benchmark return Macquarie - USA Outperform (Buy) return >5% in excess of Russell 3000 index return Neutral (Hold) return within 5% of Russell 3000 index return Underperform (Sell) return >5% below Russell 3000 index return Volatility index definition* This is calculated from the volatility of historical price movements. Very high highest risk Stock should be expected to move up or down % in a year investors should be aware this stock is highly speculative. High stock should be expected to move up or down at least 40 60% in a year investors should be aware this stock could be speculative. Medium stock should be expected to move up or down at least 30 40% in a year. Low medium stock should be expected to move up or down at least 25 30% in a year. Low stock should be expected to move up or down at least 15 25% in a year. * Applicable to Asia/Australian/NZ/Canada stocks only Recommendations 12 months Note: Quant recommendations may differ from Fundamental Analyst recommendations Financial definitions All "Adjusted" data items have had the following adjustments made: Added back: goodwill amortisation, provision for catastrophe reserves, IFRS derivatives & hedging, IFRS impairments & IFRS interest expense Excluded: non recurring items, asset revals, property revals, appraisal value uplift, preference dividends & minority interests EPS = adjusted net profit / efpowa* ROA = adjusted ebit / average total assets ROA Banks/Insurance = adjusted net profit /average total assets ROE = adjusted net profit / average shareholders funds Gross cashflow = adjusted net profit + depreciation *equivalent fully paid ordinary weighted average number of shares All Reported numbers for Australian/NZ listed stocks are modelled under IFRS (International Financial Reporting Standards). Recommendation proportions For quarter ending 31 March 2015 AU/NZ Asia RSA USA CA EUR Outperform 48.99% 59.51% 49.30% 43.79% 59.59% 52.20% (for US coverage by MCUSA, 7.42% of stocks followed are investment banking clients) Neutral 34.12% 26.62% 35.21% 50.29% 34.93% 31.32% (for US coverage by MCUSA, 5.68% of stocks followed are investment banking clients) Underperform 16.89% 13.87% 15.49% 5.93% 5.48% 16.48% (for US coverage by MCUSA, 0.87% of stocks followed are investment banking clients) IAG AU vs ASX 100, & rec history (all figures in AUD currency unless noted) Note: Recommendation timeline if not a continuous line, then there was no Macquarie coverage at the time or there was an embargo period. Source: FactSet, Macquarie Research, June month target price methodology IAG AU: A$5.40 based on a DCF methodology Company-specific disclosures: IAG AU: Macquarie and its affiliates collectively and beneficially own or control 1% or more of any class of Limited's equity securities. Important disclosure information regarding the subject companies covered in this report is available at Date Stock Code (BBG code) Recommendation Target Price 04-Jun-2015 IAG AU Neutral A$ Apr-2015 IAG AU Outperform A$ Mar-2015 IAG AU Neutral A$ Feb-2015 IAG AU Neutral A$ Jan-2015 IAG AU Neutral A$ Nov-2014 IAG AU Neutral A$ Jul-2014 IAG AU Neutral A$ Jul-2014 IAG AU Outperform A$ Feb-2014 IAG AU Outperform A$ Jan-2014 IAG AU Outperform A$ Dec-2013 IAG AU Outperform A$ Sep-2013 IAG AU Outperform A$ Jul-2013 IAG AU Neutral A$ Apr-2013 IAG AU Neutral A$ Feb-2013 IAG AU Neutral A$ Jan-2013 IAG AU Neutral A$ Jan-2013 IAG AU Neutral A$ Dec-2012 IAG AU Neutral A$ Dec-2012 IAG AU Neutral A$ Aug-2012 IAG AU Outperform A$ Jul-2012 IAG AU Outperform A$3.84 Target price risk disclosures: 17 June

8 IAG AU: Any inability to compete successfully in their markets may harm the business. This could be a result of many factors which may include geographic mix and introduction of improved products or service offerings by competitors. The results of operations may be materially affected by global economic conditions generally, including conditions in financial markets. The company is exposed to market risks, such as changes in interest rates, foreign exchange rates and input prices. From time to time, the company will enter into transactions, including transactions in derivative instruments, to manage certain of these exposures. Analyst certification: The views expressed in this research reflect the personal views of the analyst(s) about the subject securities or issuers and no part of the compensation of the analyst(s) was, is, or will be directly or indirectly related to the inclusion of specific recommendations or views in this research. The analyst principally responsible for the preparation of this research receives compensation based on overall revenues of Macquarie Group Ltd (ABN , AFSL No ) ( MGL ) and its related entities (the Macquarie Group ) and has taken reasonable care to achieve and maintain independence and objectivity in making any recommendations. General disclosure: This research has been issued by Macquarie Securities (Australia) Limited (ABN , AFSL No ) a Participant of the Australian Securities Exchange (ASX) and Chi-X Australia Pty Limited. This research is distributed in Australia by Macquarie Equities Limited (ABN , AFSL No ) ("MEL"), a Participant of the ASX, and in New Zealand by Macquarie Equities New Zealand Limited ( MENZ ) an NZX Firm. Macquarie Private Wealth s services in New Zealand are provided by MENZ. Macquarie Bank Limited (ABN , AFSL No ) ( MBL ) is a company incorporated in Australia and authorised under the Banking Act 1959 (Australia) to conduct banking business in Australia. None of MBL, MGL or MENZ is registered as a bank in New Zealand by the Reserve Bank of New Zealand under the Reserve Bank of New Zealand Act Any MGL subsidiary noted in this research, apart from MBL, is not an authorised deposit-taking institution for the purposes of the Banking Act 1959 (Australia) and that subsidiary s obligations do not represent deposits or other liabilities of MBL. MBL does not guarantee or otherwise provide assurance in respect of the obligations of that subsidiary, unless noted otherwise. This research is general advice and does not take account of your objectives, financial situation or needs. Before acting on this general advice, you should consider the appropriateness of the advice having regard to your situation. We recommend you obtain financial, legal and taxation advice before making any financial investment decision. 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The Macquarie Group may receive fees, brokerage or commissions for acting in those capacities and the reader should assume that this is the case. The Macquarie Group s employees or officers may provide oral or written opinions to its clients which are contrary to the opinions expressed in this research. Important disclosure information regarding the subject companies covered in this report is available at 17 June