Santos. Lifting the veil at GLNG. Earnings and target price revision. Price catalyst. Action and recommendation

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1 AUSTRALIA STO AU Price (at 1:51, 17 Aug 212 GMT) Outperform A$11.78 Volatility index Low/Medium 12-month target A$ month TSR % Valuation A$ - DCF (WACC 1.6%, beta 1.1, ERP 5.%, RFR 6.1%) GICS sector Energy Market cap A$m 11,256 3-day avg turnover A$m 4. Number shares on issue m Investment fundamentals Year end 31 Dec 211A 212E 213E 214E Revenue m 2,53. 3, , ,295.2 EBIT m , ,526.3 Reported profit m Adjusted profit m Gross cashflow m 1,259. 1, , ,882.2 CFPS CFPS growth % PGCFPS x PGCFPS rel x EPS adj EPS adj growth % PER adj x PER rel x Total DPS Total div yield % Franking % ROA % ROE % EV/EBITDA x Net debt/equity % P/BV x STO AU vs ASX 1, & 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, August 212 (all figures in AUD unless noted) 17 August 212 Macquarie Securities (Australia) Limited Lifting the veil at GLNG Event NPAT 7% ahead of consensus: Despite beating consensus by 7%, this result was 3% below our forecasts at the EBITDAX level. Indeed, rather than operational outperformance, the beat was principally a function of a lower tax rate and higher capitalised interest. Impact Moomba an unambiguously excellent result : This first shale test is producing at a stabilised rate of 2.6mcf/d or ~25-45% higher than BPT's shale results to date. Along with encouraging geology, this result also demonstrates the advantages of STO s infrastructural position in the Cooper (with no route to market, BPT s wells were shut-in after 6 week tests). But with STO still seeing in-fill drilling next on the Cooper cost curve, it is difficult to determine what this is worth or when shale may make a meaningful contribution. New GLNG detail is well received but confirms poor project economics: However given that the market had already largely written this project off, we see the incremental detail provided as a vast improvement on previous uncertainty. That said, at least two questions remain: first if Fairview wells are producing ahead of expectations and Roma wells are in-line, why the panic for extra drilling? Second, notwithstanding commercial sensitivities, did FID plans really intend to initially source all of train 2 feed gas from outside GLNG acreage? if so, shareholders deserved at least some warning. Falling GLNG returns : Despite initial return guidance of 11-14%, we now estimate GLNG s IRR at 9.7% (at U$14/bbl) which is comfortably below STO s WACC. Certainly this stand-alone return does not justify the large capex, environmental and community risks associated with this project. create pressure to see a rising east coast gas price: As GLNG returns fall, STO appears to be getting increasingly greedy on east coast gas prices in order to justify the project from a wider portfolio perspective. However, short term greed risks commercialising Bass Straight and Cooper shale resources or alternatively could trigger government intervention to cap prices. Either way this could see STO lose its current stranglehold on the east coast market. Earnings and target price revision 212 earnings up 2.3%: This rise is driven by higher forecast interest receipts in 2H which more than offsets a 2% fall in EBITDAX (largely reflecting the modest operational miss at this result). 213 & 14 are largely unchanged. NAV falls 3% to A$17.79: Despite model roll-forward, our STO NAV falls slightly due to the dwindling value of GLNG. However at 34%, STO continues to trade at the sector s largest discount to NAV (even without GLNG). Price catalyst 12-month price target: A$17. based on a DCF methodology. Catalyst: With BG possibly closing in on a buyer for a stake in QCLNG, the market may get a look-through valuation for GLNG in coming months. Action and recommendation Maintain Outperform & A$17/sh target: Despite dominating sentiment, at 67c/sh, GLNG now only accounts for 3.8% of NAV. This compares to the Horizon contract (merely feeding GLNG) at 87c/sh and PNG LNG at 396c/sh. Please refer to the important disclosures and analyst certification on inside back cover of this document, or on our website

2 Macquarie Private Wealth Fig 1 STO 1H12 interim result key issues The good The bad The interesting NPAT 7% ahead of consensus: Despite the strong bottom-line, this result was 3% below at the EBITDAX level. Indeed, rather than operational outperformance, the beat was principally a function of a 31% corporate tax rate (compared to FY guidance of 34%) and more capitalised interest than we were expecting at $86m. Despite a net debt balance of $616m, STO reported net finance income of A$46m reflecting not only capitalised interest but also low interest US$ debt and higher interest A$ deposits. Operating cash flow of A$712m (perhaps a fairer reflection of the result) was in-line with our forecasts. Moomba Unambiguously an excellent result : This first shale test well is producing at a stabilised rate of 2.6mcf/d which is ~25-45% higher than BPT's Cooper shale results to date. What's more, we understand that only REM shale formations were fracced suggesting the deeper Patchawarra is unlikely to be significantly contributing to the result. Along with encouraging geology, this result demonstrates the advantages of STO s infrastructural position in the Cooper (with no route to market BPT s wells were shut-in after 6 week tests). STO has deemed Moomba-191 commercial meaning there is now every chance that it will lead to the Cooper's first shale gas reserves booking. The objective of this well was merely to flow gas to surface; however the result is so successful that management is now reexamining the pace and scale of its Cooper shale programme. As encouraging as this well is, with STO still seeing in-fill drilling next on the Cooper cost curve, it is difficult to determine exactly what this is worth (we attribute A$1.13/sh in our NAV to STO s in-fill resource which should keep them busy for some time yet). PNG LNG looking good: Management appeared more confident on the start-up schedule at PNG LNG than at GLNG and the tone of the commentary suggests this development continues to make strong progress. Source: Macquarie Research, August 212 New detail confirms poor GLNG project economics: However given that the market had already largely written this project off (as we have now almost done in our valuation), we see the incremental detail provided as a vast improvement on previous uncertainty. For us, the major surprises were Train 2 potentially not reaching nameplate until 219 (why then the urgency for 3 rd party gas and capex acceleration?), guidance of 3 wells/yr post start-up (which compares to our previous estimate of ~22) and the suggestion that despite two 3 rd party gas deals and 3 extra wells, GLNG is still ~7TJ/d short of initial feed gas needs. While we appreciate the new detail, two questions remain 1). If Fairview wells are producing ahead of expectations and Roma wells are in-line, why the panic for extra drilling? -2). Commercial sensitivities aside, did FID plans really intend to initially source all of train 2 feed gas from outside GLNG acreage? if so, shareholders deserved at least some warning. What is also clear is that STO simply doesn t have all the answers. Indeed, with apparently little visibility beyond 22, STO is relying on statistical probabilities for flow rate and well projections. Given how much STO has already had to adjust plans over the past 18 months, these projections are likely to be wrong. The justification for GLNG is changing: Rather than originally being a robust standalone investment, management s emphasis now appears to rest more on the impact GLNG exports are likely to have on domestic gas prices and therefore STO s large east coast resource position. Despite initial return guidance of 11-14%, we now estimate GLNG s IRR at 9.7% (at U$14/bbl) albeit including a projected 2% cost overrun (as we do for all Australian projects). If instead we use STO s favoured U$9/bbl and A$/U$.9, GLNG s return falls to 6.5% with over-runs or 8.1% without. Certainly these stand-alone returns do not justify the huge capex, environmental and community risks associated with this project. This in turn puts added pressure on evidence of rising east coast prices to underwrite the development. Under pressure to see a rising gas price: As returns at GLNG fall, STO appears to be getting increasingly greedy on east coast gas prices in order to justify the project. Given its huge reserves and infrastructural advantages, STO is well placed to drive east coast gas prices higher. Indeed, with STO demanding prices above what buyers seem willing to pay while at the same time sitting on a 55% uncontracted reserve position suggests STO is already doing exactly this. However, short term greed risks commercialising Bass Straight and Cooper shale resources or alternatively could see government intervention to cap prices. Either way, this could see STO lose its current stranglehold on the east coast market. What s more, while the Moomba-191 result is hugely encouraging, STO can t both forecast rising gas prices forever while also claiming that Cooper shale can ultimately be produced with a similar cost structure to that currently seen in the US. If the shale is really this good, it is likely to cap prices. GLNG only accounts for 3.8% of NAV: As returns at GLNG fall, so does its value with both trains combined now only worth 67c/sh in our valuation. This compares to STO s share of the Cooper Horizon contract (which merely feeds into the GLNG project) at 87c/sh. Meanwhile STO s share of PNG LNG is worth a much more significant 396c/sh. Still well funded but it s getting closer: Management reaffirmed its commitment to a BBB+ credit rating with S&P and stressed that despite the GLNG capex acceleration, no equity raising will be needed. Our analysis supports management s view with an estimated A$8m of funding wriggle room in the key 214 window if the DRP is maintained for the entire development period and GLNG is delivered on-time and on-budget (Fig 8). However, if GLNG is delivered 2% over budget, then we see STO as A$2m short of BBB+ stipulations (which is likely to be within tolerance levels). 17 August 212 2

3 Jan-5 Jan-6 Jan-7 Jan-8 Jan-9 Jan-1 Jan-11 Jan-12 Jan-13 Jan-14 Jan-15 Macquarie Private Wealth Fig 2 1H12 Financial Results Summary Macquarie vs. Actual A$m Actual Macq Delta Comments Production (mmboe) % Production rose 1% on pcp due to growing contribution from Chim Sao, Halyard & Reindeer/ Oil & Gas Revenue 1,493 1,493.% Gas realisations of A$5.1/GJ were higher on pcp. Changed reporting for 3rd party oil sales. Other Revenue % Pipeline tariffs and tolls fell 83% compared to 2H11. Operating Costs % Cash production costs of $13.3/boe were 17% higher on pcp (but largely driven by one-offs). Other Costs % Higher 3rd party crude costs following changed reporting offset by lower corporate costs. EBITDAX % The operating result was 3% below of our forecast. Exploration expensed % ~64% of exploration capex was expensed. DD&A % DD&A/boe up 18% y/y to A$15./boe, reflecting higher assumed remediation costs. Other non-cash 9 nmf EBIT % Higher operational costs contributed to the underperformance. Net Financing Costs nmf Higher capitalised interest of A$86m and higher than expected interest income. Income Tax % Despite FY guidance of 34%, the actual tax rate was only 31% in 1H. PRRT Royalty % STO maintained guidance for 212 PRRT expense of $8-$1m. Minority interests nmf Adjusted NPAT % 7% beat was largely due to the lower tax rate and higher net financing income. Significant Items -21 Sangu impairment and higher abandonment costs of non-operated offshore oil assets. Reported Profit % Adjusted EPS % DPS % Dividend flat y/y (inline with guidance) with an underwritten DRP still in place. Source: Macquarie Research, August 212 Fig 3 STO is trading at a sector-leading 34% discount to risked NAV, suggesting considerable upside if investor confidence in management s development credentials returns Fig 4 Rather than the typical P/E inflation during the construction period as the market banks future earnings growth, STO s P/E has fallen reflecting the market s growing doubts surrounding GLNG $23 $21 NAV (A$/sh) 4. x 3.5 x FY1 PER rel to ASX2 GLNG construction period $19 $17 $15 $13 $11 $9 3. x 2.5 x 2. x 1.5 x 1. x $7.5 x $5 Jan-9 Aug-9 Mar-1 Sep-1 Apr-11 Oct-11 May-12. x Core Risked Share Price Source: IRESS, Macquarie Research, August August 212 3

4 Core, Producing Near-term developments Exploration (risked) GLNG 1&2 (unrisked) Horizon contract PNG LNG 1&2 (unrisked) PNG LNG 3 (unrisked) Unrisked Cooper basin shale East coast gas price Long-term upside Q7 2Q8 2Q9 2Q1 2Q11 2Q12 2Q13 2Q14 2Q15 2Q16 2Q17 Macquarie Private Wealth Fig 5 While we still expect STO to deliver production CAGR of ~6% to 22, a slower ramp up at GLNG hits our nearer term forecasts Fig 6 Although back on track relative to initial drilling schedules, revised drilling plans mean STO will need to maintain an aggressive tempo over coming years 85 8 STO Production (mmboe) 2, 1,8 GLNG - # of development wells 75 1, ,4 1,2 1, STO guidance Macq old forecast Macq new forecast Fig 7 STO s interests in PNG LNG and the Horizon (Cooper) supply contract are now both worth materially more than its interest in GLNG Planned at EIS Actual Required Fig 8 Following the acceleration of U$2.5bn of gross GLNG capex, we see less of a funding surplus but no need for panic A$ps Current Share Price 5.x 4.5x 4.x 3.5x 3.x 2.5x 2.x 1.5x 1.x.5x.x TD/FFO BBB+ credit rating TD/FFO < 3.3x No cost overrun 2% cost overrun No cost overrun + DRP Fig 9 GLNG s returns stack up poorly against international and local projects: Wood Mackenzie estimates a break-even gas price for GLNG of U$1.2/mmBtu; however based on a 2% cost overrun we see this rising to ~U$13.6/mmbtu 16 Break-even gas price required to return 1% (US$/mscf) 14 GLNG Global average FOB gas price required to yield a 1% project IRR 4 2 Darwin Nth Wst Shlf Source: STO, Wood Mackenzie, Macquarie Research, August 212 PNG LNG Ichthys Prelude Gorgon Pluto Wheatstone APLNG WoodMac QCLNG Browse Macq (on budget) Macq (2% overrun) 17 August 212 4

5 Macquarie Private Wealth Fig 1 financials (STO-AU) Share Price: A$11.78 Outperform Shares: 954.9m Profit & Loss 1H12A 2H12E 211A 212E 213E 214E Price Assumptions 1H12A 2H12E 211A 212E 213E 214E Sales revenue A$m 1,493 1,639 2,53 3,132 3,686 4,295 US$/A$ add other income A$m Domestic gas A$/Gj Total revenue A$m 1,523 1,679 2,641 3,22 3,768 4,382 Oil-Brent US$/bbl less operating costs A$m (649) (71) (1,6) (1,35) (1,593) (1,728) EBITDAX A$m ,581 1,852 2,175 2,655 Production 1H12A 2H12E 211A 212E 213E 214E less exploration expensed A$m (86) (11) (167) (187) (16) (16) Natural gas PJ EBITDA A$m ,414 1,665 2,15 2,495 Crude mmbbl less dep. & amort. A$m (377) (411) (641) (788) (893) (969) Condensate mmbbl less other non-cash costs A$m LPG k tonnes EBIT A$m ,122 1,526 LNG k tonnes less net interest A$m Total production mmboe Pre-tax operating profit A$m ,224 1,528 Third party sales mmboe less tax expense (incl PRRT) A$m (182) (246) (413) (428) (592) (774) Total sales mmboe Net operating profit A$m add non-recurring items A$m (21) - 3 (21) - - Reported profit A$m add (goodwill amm - pref div) A$m Adjusted profit A$m EPS (Adjusted) Acps EPS Growth % 26% -7% 12% 14% 14% 18% DPS (Ordinary & Special) Acps Franking % 1% 1% 1% 1% 1% 1% EFPOWA shares on issue m Cashflow Analysis 1H12A 2H12E 211A 212E 213E 214E Reserves 211A 212E 213E 214E Cash receipts from operations A$m 3,397 3,466 3,67 3,466 3,87 4,387 Natural gas PJ 3,458 3,247 3,9 2,767 less operating costs A$m (1,572) (1,55) (1,263) (1,55) (1,593) (1,728) Oil mmbbl less gross interest paid A$m (96) (27) (175) (123) 63 (3) Condensate mmbbl less tax paid A$m (42) (224) (357) (266) (59) (628) LPG k tonnes 2,7 1,845 1,566 1,276 Cashflow from operations A$m ,234 1,495 1,727 1,984 Total 2P reserves mmboe 1,364 1,311 1,252 1,19 less development & exploration A$m (1,434) (2,337) (2,915) (3,771) (3,936) (2,387) Contingent resources mmbbl 2,162 2,162 2,162 2,162 less acq./inv. A$m (73) - (6) (73) - - Total reserves & resources mmboe 3,526 3,473 3,414 3,352 add divestment A$m less dividends paid A$m (78) (143) (155) (221) (288) (291) 2P reserve life years add debt movements A$m (31) 426 1,2 61 EV/ 1P reserves A$/boe add equity movements/other A$m EV / 2P reserves A$/boe Net cashflow A$m (411) (1,461) (979) (1,872) (1,362) 24 EV / Total resources A$/boe add exchange rate adj. A$m (6) - (8) (6) - - EV/ 1P reserves US$/boe Increase in cash A$m (417) (1,461) (987) (1,878) (1,362) 24 EV / 2P reserves US$/boe Net debt at year end A$m 616 2,256 (71) 2,256 4,638 5,215 EV / Total resources US$/boe Balance Sheet 1H12A 2H12E 211A 212E 213E 214E Per Barrel Statistics 1H12A 2H12E 211A 212E 213E 214E Cash & cash eq. A$m 2,915 1,454 3,332 1, Sales revenue / boe US$/boe Current assets A$m 4,123 2,662 4,752 2,662 1,3 1,324 EBIT / boe US$/boe Fixed assets A$m 12,451 14,294 11,62 14,294 17,218 18,519 Profit / boe US$/boe Total assets A$m 16,574 16,955 15,814 16,955 18,518 19,844 Opex/boe US$/boe Current liabilities A$m 1,362 1,385 1,524 1,385 1,468 1,613 Capex/boe US$/boe Total liabilities A$m 7,284 7,485 6,851 7,485 8,589 9,336 DDA/boe US$/boe Shareholder equity A$m 9,29 9,47 8,963 9,47 9,929 1,58 Cash flow/boe US$/boe Ratio Analysis 1H12A 2H12E 211A 212E 213E 214E WACC of 1.6% ND/ND+E % 6% 19% -1% 19% 32% 33% Producing assets A$m A$ps % Interest cover x 9.9 x 9.1 x 9.3 x 9.5 x 11.4 x 1.2 x Cooper Basin Area 2, Dividend payout ratio % 5% 54% 36% 54% 46% 39% Onshore Queensland CSG Assets ROA % 3% 3% 5% 5% 6% 8% Otway Gas ROE % 3% 3% 5% 6% 7% 7% WA Gas 2, ROIC % 3% 3% 5% 5% 4% 5% WA Oil Effective tax rate % 3% 37% 37% 34% 34% 34% South East Asia 1, EBITDA margin % 53% 53% 56% 53% 55% 58% Bayu-Undan 1, EBIT margin % 28% 28% 31% 28% 3% 36% Developing assets Free cash flow A$m (41) (1,583) (1,5) (1,984) (2,27) (36) Kipper risked 1% Glastone LNG train 1&2 risked 1% Valuation 1H12A 2H12E 211A 212E 213E 214E Cooper Basin - 2C risked 5% 1, EV/EBITDAX ratio x 15. x 12.1 x 6.8 x 6.4 x 5.5 x 4.5 x Cooper Basin/GLNG gas supply risked 1% EV/DACF ratio x 18.7 x 15.8 x 9.3 x 8.2 x 7. x 6.1 x Fletcher/Finucane risked 1% P/E ratio x 44.3 x 42.4 x 23.3 x 2.4 x 18. x 15.2 x PNG LNG trains 1 & 2 risked 1% 3, P/CEPS ratio x 33.6 x 29. x 8.4 x 7.4 x 6.7 x 6.1 x Static assets & exploration FCF yield % nmf nmf nmf nmf nmf nmf PNG LNG train 3 risked 5% Dividend yield % 1.1% 1.3% 2.5% 2.5% 2.5% 2.5% Discoveries 1, Exploration Sensitivities (Adjusted Earnings) Valuation 211A 212E 213E 214E Financial assets Oil price (+US$1/bbl) A$m Corporate/tariffs/other (4) (.49) delta Cash & Investments 2, %.%.6% 1.1% 1.4% Debt (2,557) (2.66) Currency (+1c) A$m Risked NPV 17, delta Shareprice prem/(disc) to NPV -34%.%.% -.4% -.8% -.9% - core NPV per share (A$) risked NPV per share (A$) unrisked NPV per share (A$) mmboe Gas Crude Condensate LPG LNG Source: Company data, Macquarie Research, August August 212 5

6 Macquarie Private Wealth Fig 11 NAV breakdown Producing Assets Interest Unrisked Unrisked Risk Risked Risked USD/boe A$ps A$ps % NPV Sensitivity mmmboe AUD (m) mmmboe AUD (m) risked unrisked -$1 Base +$1 Cooper Basin - 2P 63.% 28 2,352 1% 28 2, % Surat / Denison various % % Fairview 3.% % % Casino & Henry 5.% % % Minerva 1.% % % Bayu-Undan 11.5% 55 1,146 1% 55 1, % John Brookes 45.% 69 1,258 1% 69 1, % Spar/Halyard (Aus) 45.% % % Reindeer/Carabou 45.% % % Thevernard Island 35.7% 19 1% % Barrow Island 28.6% % % Stag 66.7% % % Mutineer / Exeter 33.4% % % Maleo & Pelung 67.5% % % SE Gobe 9.4% 6 1% % Chim Sao & Dua (Vietnam) 31.9% % % Oyong & Wortel 45.% % % Sub Total 491 7, , % Developing Assets Kipper 35.% % % Glastone LNG train 1&2 3.% % % (.2) Cooper Basin - 2C 63.% 444 2,112 5% 222 1, % Cooper Basin/GLNG gas supply 66.6% % % PNG LNG trains 1 & % 234 3,84 1% 234 3, % Fletcher/Finucane 44.% % % Mereenie - 2P 1.% % % Gunnedah Basin (3P) 8.% 386 1,158 5% % Sub Total 1,647 9,341 1,232 7, % Static Assets PNG LNG train 3 (hides upside) 13.5% 11 1,217 5% % Mereenie - 2C 1.% % % Caldita/Barossa 25.% % % Bonaparte LNG 4.% % % Sub Total 386 2, , % Exploration Ichthys N (Aus) 3.% % % Zola (Contingent) 24.8% % % Zola (Prospective) 24.8% % % Burnside-1 (Aus) 47.8% % % Winchester-1 (Aus) 75.% % % Crown-1 (Aus) 3.% % % Beam-1 (Aus) 45.% % % Hoss-1 (Aus) 37.3% % % Sangu exploration (2 wells) 1.% % % Gunnedah Basin (2C) 8.% 497 1,788 1% % Cooper Basin - Shale 63.% % % Sub total 1,29 3, % Financial & Corporate Cash & investments 2, % Debt & hybrid (2,557) (2.66) (2.66) -15% (2.66) (2.66) (2.66) Potential Mudflows Liability 18.% 1% (73) (.8) (.8) % (.8) (.8) (.8) Base business carbon (451) (.47) (.47) -3% (.47) (.47) (.47) LNG projects carbon (143) (143) (.15) (.15) -1% (.15) (.15) (.15) ORR, Tariffs % Third Party Sales % Corporate overheads (569) (.59) (.59) -3% (.59) (.59) (.59) Sub Total (112) (.12) (.12) -1% (.12) (.12) (.11) Overall total 1,746 mmboe 17,92 AUDm % core NPV per share (A$) 1, risked NPV per share (A$) 2, unrisked NPV per share (A$) 3, Diluted number of shares (m) 96.6 Ordinary Shares on Issue (m) In-the-money options outstanding (m) 4.9 Exchange Rate.82 WACC (post tax) 1.6% Share Price Price premium (discount) to NPV -34% Proportion of NAV from LNG 37% Franking credits (risked at 5% - A$ps).52 Source: Macquarie Research, August August 212 6

7 Macquarie Private Wealth 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 >+1% Neutral expected return from -1% to +1% Underperform expected return <-1% Macquarie First South - South Africa Outperform expected return >+1% Neutral expected return from -1% to +1% Underperform expected return <-1% 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 3 index return Neutral (Hold) return within 5% of Russell 3 index return Underperform (Sell) return >5% below Russell 3 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 6 1% in a year investors should be aware this stock is highly speculative. High stock should be expected to move up or down at least 4 6% in a year investors should be aware this stock could be speculative. Medium stock should be expected to move up or down at least 3 4% in a year. Low medium stock should be expected to move up or down at least 25 3% in a year. Low stock should be expected to move up or down at least 15 25% in a year. * Applicable to 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 3 June 212 AU/NZ Asia RSA USA CA EUR Outperform 55.67% 61.% 53.43% 42.58% 69.23% 46.6% (for US coverage by MCUSA, 9.5% of stocks followed are investment banking clients) Neutral 3.5% 22.11% 36.99% 52.41% 28.2% 33.69% (for US coverage by MCUSA, 8.14% of stocks followed are investment banking clients) Underperform 13.83% 16.89% 9.59% 5.1% 2.75% 19.71% (for US coverage by MCUSA,.45% of stocks covered are investment banking clients) Company Specific Disclosures: Macquarie Bank Limited makes a market in the securities in respect of Limited. 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 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. 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The Macquarie Group, its officers and employees may have conflicting roles in the financial products referred to in this research and, as such, may effect transactions which are not consistent with the recommendations (if any) in this research. 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 August 212 7