10 Stocks to Buy Pre-Election. JB Hi-fi (JBH) (NAB) (WBC)

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1 investment watch September 2013 Stockmarket wins the election Assuming a clear winner emerges, the Federal Election should boost the Australian sharemarket, regardless of who the winning party is. We believe this will be driven by the wall of cash sitting on the sidelines waiting for confidence to return to the stockmarket. Buy Australian large cap stocks paying a good yield in the lead up to the election. Our analysis has shown that Federal Election outcomes are positive for the Australian stockmarket, regardless of who the winning party is. A look back at the last 30 years and 11 elections, has seen the Australian stockmarket increase by 1.31% each month on average in the three months following an election. That equates to an almost 4% gain for the quarter immediately following an election. Business confidence is at its lowest level since November 2012, despite the fact that a falling Australian dollar and low interest rates should be easing some of the pressures on business. Consumer confidence is still below levels seen in 2010, when consensus was that the worst of the GFC had passed. Our Chief Economist Michael Knox highlights that an election outcome usually boosts both business and consumer confidence. This increasing confidence acts like a reduction to the risk premium and is similar in its effect to an interest rate cut in that the flow-through to GDP has a lag of about five quarters. Therefore, we should see the more long lasting result from an election outcome continuing on throughout The election outcome could provide a trigger for the wall of cash sitting on the sidelines waiting for the confidence to return to the stockmarket before it is invested; particularly given that declining interest rates leave investors with a lack of alternatives for returns. We also think a return to a more stable government, and the removal of the unpopular Minerals Resource Rent Tax (MRRT) and carbon tax, if the Coalition is successful, will see the return of some foreign investors to the Australian stockmarket. Our recommendation is to buy Australian shares in the lead up to the election and focus on the large cap stocks paying good yield. Watch Michael Knox discuss this: 10 Stocks to Buy Pre-Election Wesfarmers (WES) Ramsay Healthcare JB Hi-fi (JBH) (RHC) National Aust. Bank Telstra (TLS) (NAB) Aurizon (AZJ) Westpac Banking BHP Billiton (BHP) (WBC) Oil Search (OSH) Suncorp (SUN) Important disclosures regarding companies that are the subject of this report and an explanation of recommendations and volatility can be found at the end of this document. RBS Morgans Limited (A.B.N ) AFSL A Participant of ASX Group A Professional Partner of the Financial Planning Association of Australia Level 29, Riverside Centre, 123 Eagle Street, Brisbane QLD 4000, Australia Phone:

2 2 investment watch September 2013 Economic update Europe, US, China, Australia Europe Indicators such as the Purchasing Manager s Index (PMI) and official measures such as GDP growth for the Euro Area both improved in July. For July the Euro zone PMI rose to This was almost a two year high and the first time it had been above 50 since January The behaviour of individual country PMI s suggest that growth in Germany actually increased in both the manufacturing sector and the services sector. In France, Italy and Spain, the rate of contraction of these economies became smaller. France and Italy improved to the point where output is close to stable. The actual levels of GDP published by the official statistician Eurostat showed that GDP rose by 0.3% in both the Euro area and in the whole of the European Union in the second quarter of Our best judgment from both sets of numbers provided by the PMI and by GDP is that the European Union is now at the end of its recession and is at long last returning to a period of growth. US The US economy has been growing at a surprisingly soft 1.5% average for the first and second quarters. We think this will improve in the second half lifting the full year average growth rate to 1.6%. The reason for the softness in growth is the significant fiscal tightening which is occurring in calendar This reduces the budget deficit from 7% of GDP in 2012 to 4.7% of GDP in The most important growth sector is housing starts. Housing starts have improved from 780,000 in 2012 to 940,000 in By 2014, total housing starts should increase to 1.2 million. This lift in the housing sector should mean that growth should rise from 1.6% in 2013 to 2.7% in China The outlook for the Chinese economy improved significantly between June and July. The Purchasing Manager s Index for China s non-manufacturing sector rose from 53.9 in June to 54.1 in July. The Manufacturing purchasing manager s index also rose from 50.1 in June to 50.3 in July. Most importantly, industrial production rose. The Chinese talk about industrial production as growth in value-added of industry. The growth in value-added of industry rose by 9% in the year to June to 9.7% in the year to July. This was a significant kick in output in only one month. Manufacturing and processing of ferrous metals, which of course consume iron ore, accelerated from a 7.7% growth rate in the year to June to 11.8% growth rate for the year to July. This suggests a significant kick both in the demand for steel and in steel making activity. Australia The Australian economy grew by 0.6% in the March quarter to bring growth for the year to March 2013 to 2.5%. The RBA suggests that growth has continued at the same rate in the second quarter. Australia remains in a growth recession with employment growth slower than the growth in the labour force. This means that unemployment is drifting by around 0.7% per annum. The RBA is attempting to counter-act this increase in unemployment by reducing interest rates. Since the end of 2011, this has brought down short term interest rates by 2.25% to the current level of 2.5%. In spite of these dramatic rate cuts, the outlook for recovery in growth is only modest. It is true that motor vehicle sales have risen significantly since 2011 from around 40,000 units per month to just under 50,000 units per month. More importantly, there is the beginning of a recovery in housing. Housing loan approvals have risen since 2011 and house prices have been drifting up since Loan approvals for new dwellings have risen from a little over 6,000 per month in 2011 to a little over 8,000 now. Unfortunately, the result of all of these positive trends has been countered by the fall in mining investment which has happened at the same time. The result is to leave the economy flat. The best that can be hoped for at the moment is that the economy recovers to trend growth rate in the second half of This will stabilise unemployment at a higher level than it currently is. We need further positive influences in the form of even lower interest rates being kept low for an extended period to generate enough growth to take up excess unemployment. This suggests the only way forward is lower interest rates kept at that level for longer. This month we look at... Economics update: Europe, US, China, Australia Winner Full Service Stockbroker of the Year Emerging Healthcare: attracts interest Technical analysis: Amcor Resources: is China ready for a recovery in resources? Infrastructure: Buy SP AusNet for yield and stability Oil and Gas: Rediscovering the Cooper with Beach Energy Consumer spotlight: two attractive investments Property: 360 Capital Industrial Fund: pure industrial Fixed Interest: update High Conviction picks: top 100 and ex 100 Watch our Chief Economist Michael Knox discuss the global economic outlook.

3 September 2013 investment watch 3 Emerging Healthcare attracts interest Over the last few months we have noticed an increase in interest across our universe of emerging healthcare and life science companies, driven in part by a rotation out of resources and the lower Australian dollar. Companies which have attracted most interest are those which have a product/service on market and are generating revenue and profit. The table below highlights a number of trends including: an outstanding performance from the NASDAQ Biotech Index which has rallied almost 40% this year; the RBSM Life Science Index has remained flat for most of this year but since June has rallied strongly (reflecting improved share prices in Sirtex, GI Dynamics, Starpharma and Allied Healthcare); and volumes across our coverage universe has increased on average from around $30 million per week earlier in the year to almost $50 million per week. We believe these favourable trends are likely to continue for the balance of this year and as a result we recommend conservative clients consider increasing their exposure to Virtus Healthcare and more aggressive clients should consider Allied Healthcare and Alchemia. RBS Morgans Life Sciences Index Traded Value (A$m) Winner Full Service Stockbroker of the Year We are delighted to announce Morgans has been named as the winner in the Investment Category as the Full Service Broker of the Year at the Australian Financial Review s Smart Investor Blue Ribbon Awards The annual awards acknowledge the leading provider of products and services in the field of investment, finance, banking and insurance. These results highlight the continued efforts, and the ongoing success that our experienced and professional teams have had in providing our clients with quality products, services and advice. This recognition, coupled with our recently announced alliance with one of Asia s Leading Investment Banks, CIMB, further highlights our commitment to providing clients with the best possible outcomes Aug-12 Sep-12 Oct-12 Nov-12 Dec-12 Jan-13 Feb-13 Mar-13 Mar-13 Apr-13 May-13 Jun-13 Jul-13 Aug-13 Weekly RBSM Index Traded Value (rhs) S&P/ASX200 NASDAQ Biotech Index RBSM Life Sciences Index S&P/ASX Small Ordinaries Collection House Limited Share Purchase Plan (SPP) Following the sucessful completion of a $13 million Placement, Collection House has announced an SPP to provide eligible shareholders who were on the record date as at 7.00pm Tuesday, 27 August 2013 with the opportunity to apply for up to $15,000 worth of new ordinary shares. The SPP is underwritten to up to $5 million and is capped at $6 million. The SPP closes on Thursday, 19 September RBS Morgans Corporate Limited is Joint Lead Manager and Underwritier to the Placement and SPP. Contact your Adviser today to find out more about the Collection House SPP. Technical Corner Amcor has been trading in a strong up trend over the past four years, which remains firmly intact. The current pull back has approached its previous support of $10.10, where initial buying interest is likely to arise. Momentum indicators have approached oversold territory, suggesting that the price is likely to bounce soon. The potential upside price target in the month(s) ahead is in the range between $10.80 and $ August 2012 October November December January 2013 Source: RBS Morgans February March April May June July August

4 4 investment watch September 2013 Resources Is China ready for a recovery in resources? Economic data coming from China is confounding market expectations of a hard landing. As Michael Knox explained in his Economic update, the July China Purchasing Manager s Index (PMI) and Trade data saw a strong rebound after 6 months of declines, and recent tax incentives and an increase in railway investment by the Chinese government is translating into positive productivity and trade data. So what does this mean for equities? In last month s edition of Investment Watch we commented that there is a broad agreement that mining producers are cheap due to doubts around Chinese growth and the lack of conviction for stronger commodities prices. We think the positive momentum is set to continue and we see further upside potential as the diversified miners close their discounts to valuations as concerns over the outlook for China ease and perhaps most importantly, that sentiment improves. In terms of commodities, iron ore demand came into focus in August, as the Chinese aggressively restocked local supplies driving up iron ore prices to their highest level in 5 months. We also saw copper and energy demand gain from the positive growth in Chinese consumption. On the equities front we are happy to accumulate the big names leveraged to the uptick in Copper, Energy and Iron ore demand, namely BHP Billiton, Oil Search and Rio Tinto as they often attract the bulk of new investor attention in any recovery in the sector. Oil and Gas Rediscovering the Cooper with Beach Energy The East Coast Gas thematic is getting stronger. Deal flow has increased and we expect further gas contracts to be signed at higher prices. This is the basis for our recent initiation on Beach Energy with an Outperform rating. Beach Energy s key asset is a significant acreage position in the Cooper Basin, South Australia. The company holds interests in assets both as an independent operator and as a partner in the Cooper Basin Joint Venture with Santos and Origin Energy. Three key positives for Beach Energy include: 1) its exposure to East Coast gas market through recently signed gas contracts with Origin Energy and the Cooper Basin Joint Venture, 2) its partnership with Chevron in its deep gas cooper basin acreage, which we think helps de-risk this early stage play, and 3) expanding oil production due to its western flank positioning with Drillsearch Energy and Senex Energy. Further upside potential exists from its Tanzanian permit which Beach Energy expects to farm out in the next 12 months. We think the company will have a strong reserves increase this year due to its new gas contracts, which should allow it to move resources to reserves. Infrastructure Buy SP AusNet for yield and stability In August, we initiated research coverage of SP AusNet with a 12 month price target of $1.24 per share and an Outperform rating. The issues that have previously dampened our enthusiasm for SP AusNet are the lack of merger and acquisition appeal (given Singapore Power s controlling stake), SP AusNet s tax issues, and the class actions the company is facing with respect to the Victorian bushfires. We think the purchase by State Grid Corporation of China (SGCC) of a 19.9% stake in SP AusNet from Singapore Power now adds the potential for further merger and acquisition activity, and our research discusses why we think the second two issues will be resolved with limited valuation impact. What we find attractive in SP AusNet s underlying business is its regulated, inflation-linked revenues, its strong balance sheet (BBB+ credit rating), and the ongoing growth in its Regulated Asset Base that anchors long-term earnings and value. These defensive qualities are comforting in a market where stocks with negative earnings surprises are being punished. From an investment perspective, the stock offers one of the highest grossed-up yields in the energy infrastructure sector (~8%), with a potential total 12 month return of approximately 11%. Management internalisation could add another 5 cents per share to our price target. We also note that if APA Group is successful in acquiring Envestra there may be a flow of funds into SP AusNet as investors redeploy capital into one of the remaining regulated utilities in the sector. Key risks include regulatory reviews and corporate governance. Recent company presentations During reporting season, the senior management of a number of Australia s biggest companies presented at our morning meeting. We heard from Richard Goyder, CEO of Wesfarmers; David Knox, Managing Director of Santos; David Craig, Chief Financial Officer of Commonwealth Bank; and Craig Dunn, CEO of AMP; among others. For a summary of these presentations visit our website: /about-us/ Media-and-Events/Media-Releases

5 September 2013 investment watch 5 Consumer spotlight two attractive investments Over the course of reporting season, two consumer stocks produced not only very solid results but provided us with various reasons to turn more positive. We have long highlighted Super Retail Group as one of the best retail stocks you can own. The solid result, strong trading update and investment in platforms that will underpin future growth provided us with even more conviction. We are also attracted to Super Retail Group s future cash flow prospects - post peak capex in FY14 and an approximate $75 million working capital release in FY15/FY16, Super Retail Group will generate significant cash flow (net debt could conceivably fall from $330 million currently to around $100 million in FY16). We believe strong earnings and dividend growth is still readily achievable making Super Retail Group worthy of inclusion in any portfolio. Property 360 Capital Industrial Fund: pure industrial We recently initiated coverage on 360 Capital Industrial Fund a small cap property trust with a market capitalisation of around $176 million. 360 Capital is the only AREIT focussed on Australian industrial assets and owns a portfolio comprising 20 industrial assets located across Australia. The portfolio is valued at $340 million with a weighted average lease expiry of 5.1 years. Cash flows are supported by 77% of the portfolio providing 3.5% rental growth per annum. Gearing (net debt/assets) currently sits at approximately 46%. The group has a diversified tenant exposure with the top 10 tenants representing 58.8% of property income. Occupancy stands at 98.4%. External valuations undertaken on 100% of the portfolio as at 30 June 2013 (excluding assets held for sale) resulted in a 0.9% increase in portfolio value. Consequently, Net Tangible Assets (NTA) increased 3 cents to $ Capital offers investors: exposure to the only listed REIT (real estate investment trust) with a pure focus on Australian industrial property; cashflows supported by stable rents which are underpinned by long-term leases (and low incentives) which average 3.5% rental growth pa; strong industry drivers including leverage to the growing demand from online retailers/demand for tighter delivery times; an attractive distribution yield of 9% versus sector average of 6%; future growth potential from new acquisitions which includes an exclusive first right of refusal on all industrial properties developed by Walker Corporation until June 2017; and organic growth opportunities in the existing portfolio. Management s focus remains on increasing the quality of the portfolio. Ardent Leisure s result was in line with our expectations, but what really impressed us was the strong trading update and the leverage available to each business as top-line revenue improves. Ardent Leisure offers a rare and attractive combination of solid earnings growth, an attractive yield (approximately 6.9%) and leverage to an improving domestic tourism environment. Fixed Interest update In the last edition of Investment Watch we suggested that one defence against falling interest rates was to consider securities offering higher credit margins. These securities still deliver an attractive headline interest rate despite the falling RBA cash rate and help maintain a healthy level of income. An equally important consideration is to ensure that you have sufficient portfolio diversification. Focusing on the absolute interest rate level in isolation may lead to a portfolio that is too highly skewed to a single sector or security type. You should ask your adviser to review your holdings and, if you haven t already, review our recently updated publication What are Fixed Interest Securities, which explains the different types of securities.

6 6 investment watch September 2013 High Convictions Stocks top 100 We add Sydney Airport and Super Retail Group to our High Conviction list. We remove Wesfarmers following its strong run into the result. It remains a core portfolio holding. Aurizon AZJ Price $4.54 PE (x) 19.0 Price Target $5.00 Yield 3.2% Upside 10.1% Gross Yield 4.6% Aurizon Holdings is Australia s largest rail freight operator (above rail). It also controls the regulated coal track infrastructure (below rail) in the Bowen Basin. Volume growth, contract re-pricing, costout, improved productivity, and ramp-up in major project earnings should drive strong earnings growth. Dividends should grow in line with earnings growth. The regulatory regime protects the revenues of the below rail business. Guidance is for an increasing proportion of above rail revenue to be sourced from fixed revenues (45% currently, over 70% by FY17) as legacy contracts are replaced by new form contracts. AZJ s balance sheet is conservatively geared, and we expect the business to produce positive free cashflow from FY15. BHP Billiton BHP Price $34.64 PE (x) 12.3 Price Target $39.40 Yield 3.9% Upside 13.7% Gross Yield 5.5% BHP Billiton is the world s largest mining company, comprising of assets located predominantly in Australia, Latin America, North America and Southern Africa. Its major assets include iron ore, copper, petroleum and coal. Exploration and Development is multi-commodity, with a current emphasis on potash. As owner of numerous Tier 1 assets, BHP enjoys the security of a low cost production position for its key products, ensuring profitable operations through the commodity cycle. BHP looks offers solid valuation upside with a lower risk profile relative to peers. As the sector leader, BHP is likely to be a major beneficiary of any improvement in the outlook for global growth, commodities demand (including China) and risk appetite. Oil Search OSH Price $8.10 PE (x) 29.6 Price Target $9.10 Yield % Upside 12.3% Gross Yield 1.4% Oil Search is an oil and gas producer and explorer focused primarily in PNG. OSH has a 29% interest in the PNG LNG Project, operated by ExxonMobil. First LNG sales are expected in Exploration activities in PNG have been encouraging; with early results indicating opportunity for expansion. Oil exploration activities have also been successful, with wells in PNG and Kurdistan finding oil. Partnered with a major global player with a strong reputation for successfully bringing on large projects. Opportunities for growth from expansion of the current LNG project, as well as via international oil and gas exploration. Earnings are expected to significantly increase following first sales, which may lead to additional capital management. Suncorp SUN Price $12.82 PE 12.9 Price Target $13.52 Yield 5.6% Upside 5.5% Gross Yield 8.0% Suncorp Group is a diversified financials company offering general insurance, life insurance, and retail and business banking. SUN s diversity gives it a number of levers for growth and we believe the business will continue to reward shareholders with solid yield along the way. A transformation over the past three years, means SUN is now a simpler, de-risked business. SUN s focus has moved from stabilisation to growth, and it now has the capital structure and systems to drive this. SUN is well capitalised and we see potential for further special dividends to be paid over the next months, adding to its underlying dividend yield of 5.5%. Super Retail Group SUL Price $12.62 PE (x) 17.6 Price Target $13.98 Yield 3.6% Upside 10.8% Gross Yield 5.1% Super Retail Group is a specialty retailer: Auto (Super Cheap Auto); Leisure (BCF, Ray s Outdoors and FCO); and Sports (Rebel and Amart Sports). Strong earnings growth profile (3-year EPS CAGR of 14%). $75-100m of working capital will be released over FY15/FY16 and capex will peak in FY14 (SUL will spin off significant cash flow thereafter). SUL has an exceptional management team with a strong track record of delivering top-line and margin growth. Sydney Airport SYD Price $3.59 PE (x) 48.2 Price Target $3.90 Yield 6.5% Upside 8.7% Gross Yield 6.5% Sydney Airport holds an 84.8% (soon to be 100%) economic interest in Sydney Airport. These airport facilities include commercial operations and property management. Strong competitive position. Passenger growth has shown a consistent upward trend over the long-term. SYD s strategy is to grow distributable cash faster than passenger growth, so as to produce solid dividend growth. By end 2013 SYD will acquire the minority interests in Sydney Airport, settle with the ATO regarding its tax dispute, and simplify its corporate structure. By clicking on the tables of each company it ll take you to our latest reasearch. Source: IRESS, RBS Morgans, financial information priced as at 29 August 2013, for FY14

7 September 2013 investment watch 7 High Conviction Stocks ex 100 This month we add Virtus Healthcare, a defensive and sustainable investment in the healthcare sector. ERM Power EPW Price $2.45 PE (x) 21.1 Price Target $3.07 Yield 4.7% Upside 25.1% Gross Yield 6.7% ERM Power is an integrated energy provider that sells electricity to businesses across Australia, owns and operates electricty generation assets, and has interests in gas exploration and production. Despite market noise around a potential bid for the NSW Government owned MacGen (which we believe will be unsuccessful or great value), our view is that SME electricity sales will be the primary growth driver over the next 12 to 24 months remains unchanged. Probable SME contract award announcements over the next six months remain the primary share price catalyst, in our view. We retain our high conviction call on EPW with an expectation that its return on equity will increase toward 20% over the next three years and it will continue to pay a good dividend. iinet IIN Price $5.93 PE (x) 11.7 Price Target $7.29 Yield 4.9% Upside 23.0% Gross Yield 7.0% iinet is Australia s third largest household Internet Service Provider (ISP) and leading challenger in the telecommunications market. They provide super-fast internet connectivity (ADSL broadband and voice) to 15% of Australian households. IIN has a rare combination of defensive earnings, EPS growth and value. It s return on equity is an enviable 20%+ which means IIN was recently able to upgraded their payout ratio and therefore dividends paid to investors. We believe IIN is well positioned to continue growing its earnings under either political party as regional Australia becomes accessible. IIN provide services to 25% of NBN enabled households. Kathmandu KMD Price $2.58 PE (x) 13.1 Price Target $2.86 Yield 4.2% Upside 10.9% Gross Yield 4.2% Kathmandu designs and sells clothing and equipment for travel and adventure. KMD continues to trade at a material discount to the broader retail sector (<12x FY14F PE vs sector on >14x). KMD has one of the best earnings growth profiles in the sector (14% 3--year EPS CAGR). Growth is underpinned by: optimisation of existing stores as leases expire, new store rollout, online growth, increasing brand penetration in Australia and continued Summit Club membership growth. The key risk to our investment view is the concentration of sales in KMD s key Winter sale period. M2 Telecommunications MTU Price $6.16 PE (x) 11.5 Price Target $7.50 Yield 4.4% Upside 21.8% Gross Yield 6.3% M2 Telecommunications is Australia s fifth largest ISP and better known for their Dodo challenger brand. Around half of MTU s revenue comes from providing telecommunications services (broadband and voice) to households with the balance from SMEs. MTU has been sold off recently and we believe this has created an opportunity. MTU has provided guidance for nearly 50% underlying profit growth this year, and in our view this makes its P/E of 12x look cheap. Over the next 6 months the company is renegotiating its supplier agreement and we believe they will get a better gross profit due to much improved purchasing power. Should this or corporate activity occur in the next 6 months we believe both would see shareholders well rewarded. Virtus Health VRT Price $7.48 PE (x) 18.5 Price Target $8.64 Yield 3.2% Upside 15.5% Gross Yield 3.2% Virtus Health is a leading provider of Assisted Reproductive Services (ARS), conducting approximately 35% of the in vitro fertilisation cycles in Australia last year. There is a growing trend for use of ARS. VRT offered a vertically integrated model including advanced diagnostic services and day hospitals. VRT has delivered solid profit growth over the last three years. By clicking on the tables of each company it ll take you to our latest reasearch. Source: IRESS, RBS Morgans, financial information priced as at 29 August 2013, for FY14

8 QUEENSLAND PORT MACQUARIE (02) BRISBANE (07) SCONE (02) BUNDABERG (07) SYDNEY LEVEL 9 (02) CAIRNS (07) SYDNEY LEVEL 33 (02) CALOUNDRA (07) SYDNEY MACQUARIE STREET (02) CAPALABA (07) SYDNEY MACQUARIE STREET (Parramatta) (02) CHERMSIDE (07) SYDNEY REYNOLDS EQUITIES (02) EDWARD STREET (07) WOLLONGONG (02) EMERALD (07) GLADSTONE (07) ACT GOLD COAST (07) CANBERRA (02) IPSWICH (07) MACKAY (07) VICTORIA MILTON (07) MELBOURNE (03) NOOSA (07) BRIGHTON (03) REDCLIFFE (07) CAMBERWELL (03) ROCKHAMPTON (07) CARLTON (03) SPRING HILL (07) FARRER HOUSE (03) SUNSHINE COAST (07) GEELONG (03) TOOWOOMBA (07) RICHMOND (03) TOWNSVILLE (07) SOUTH YARRA (03) YEPPOON (07) TRARALGON (03) WARRNAMBOOL (03) NEW SOUTH WALES SYDNEY (02) WESTERN AUSTRALIA ARMIDALE (02) PERTH (08) BALLINA (02) BALMAIN (02) SOUTH AUSTRALIA CHATSWOOD (02) ADELAIDE (08) COFFS HARBOUR (02) NORWOOD (08) GOSFORD (02) HURSTVILLE (02) NORTHERN TERRITORY MERIMBULA (02) DARWIN (08) NEUTRAL BAY (02) NEWCASTLE (02) TASMANIA NEWPORT (02) HOBART (03) ORANGE (02) DISCLAIMER The information contained in this report is provided to you by RBS Morgans Limited as general advice only, and is made without consideration of an individual s relevant personal circumstances. 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RBS Morgans or CIMB Securities Australia may previously have acted as manager or co-manager of a public offering of any such securities. RBS Morgans' affiliates or CIMB Securities Australia affiliates may provide or have provided banking services or corporate finance to the companies referred to in the report. The knowledge of affiliates concerning such services may not be reflected in this report. Each of RBS Morgans and CIMB Securities Australia advises that it may earn brokerage, commissions, fees or other benefits and advantages, direct or indirect, in connection with the making of a recommendation or a dealing by a client in these securities. Some or all of RBS Morgans' Authorised Representatives may be remunerated wholly or partly by way of commission. STATUTORY DISCLOSURES SXY: A Director of RBS Morgans Limited is a Director of Senex Energy Limited and will earn fees in this regard. CBA: RBS Morgans Corporate Limited was a lead broker to the public offer of Hybrid Securities by CBA in September 2012 and received fees in this regard. NAB: RBS Morgans was a Joint Lead Manager to the Issue of the NAB CPS and received fees in this regard. RBS Morgans Corporate Limited is a Joint Lead Manager to the public offer of Subordinated Debt Securities by NAB in February 2013 and may receive fees in this regard SUN: RBS Morgans Corporate Limited was a lead broker to the public offer of Hybrid Securities by SUN in October 2012 and received fees in this regard. RBS Morgans Corporate Limited is a lead broker to the public offer of subordinated debt securities by SUN in April 2013 and received fees in this regard. VRT: RBS Morgans Corporate Limited is a participating broker to the public offer of shares by Virtus Health Limited in April 2013 and may receive fees in this regard. 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