Equity Strategy. FY1 EPS Downgrades (LHS) CRZ SKE GPT AMP ILU WES HGG DMP DOW AWC. Source: I/B/E/S, Macquarie Research, August 2012

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1 AQP AWC CRZ DOW HGG ILU AMP SKE GPT DMP WES MND ARP IAG CGF PRY GFF BHP FBU MBN TAH RIO AUT APN NCM PNA OZL EGP ARI WSA BSL AUSTRALIA Macquarie s bottom-up market & sector EPS growth (%) Pro-rated to June FY11A FY12E FY13E Consensus market & sector EPS growth (%) Current 1 yr All Companies Banks Property Trusts Resources Industrials (All Cos ex Res, LPTs, Banks) Pro-rated to June FY11A FY12E FY13E Current 1 yr fwd All Companies Banks Property Trusts Resources Industrials (All Cos ex Res, LPTs, Banks) Earnings summary to date Jun HY12 F cast Actual Diff Diff $Am $Am $Am % 1 ex Res, LPTs, & Banks^ 1,7 1, Ex1 ex Res, LPTs, & Banks 1,99 2, Resources^^ 8,88 9, Banks** 3,94 3, Listed Property 2,6 2, All Aust stocks^ 26,9 27, NZ stocks^ (NZ$m) Earnings/dividend surprises to date Number Earnings Dividend reported + ve -ve + ve -ve 1 ex Res, LPTs, & Banks^ Ex1 ex Res, LPTs, & Banks Resources Banks 2 1 Listed Property 13 1 All Aust stocks^ NZ stocks^ * Earnings surprise: adjusted net profit > % from forecast at 19 Jul 212 * Dividend surprise: > % from forecast (forecasts as at 19 Jul 212) ^ Includes Telecom NZ Source (for all above): I/B/E/S, Macquarie Research, August 212 Reporting season update #3 Industrials the stand out...but focus shifting to FY13 Event We analyse the Australian profit results for the JunHY12 reporting season over this last week. 141 companies have now reported in this August corporate reporting season (as at COB 23 Aug), representing 67% of companies to report by number and 86% by market capitalisation. Impact Macquarie s aggregated All Companies FY12 EPSg (Jun pro-rated) forecast edged up this third week of the reporting season to stand at -3.2%. In contrast, however, (and unsurprisingly) the FY13E EPSg forecast was downgraded to stand at +6.9% (-.6 ppts on the week and nearly 2ppts lower than the prereporting estimate). That said, the market s overall earnings revision ratio for both the Market and sector level remains weak and still firmly below x with FY1 (.7x) and FY2 notably weaker (.6x) still seeing net downgrades. The positive earnings surprise trend seen this reporting season to date continued this week with MRE s count of 4 +ve earnings surprises (Adj. NPAT >% pre-reporting forecast 19 Jul) and 26 ve earnings surprises (<- %). DPS surprise also improved this week to more closely reflect the momentum of earnings, with 31 +ve & 2 ve surprises by week s end. Stocks of note to surprise +vely this week include IAG, ILU. QRN, MND, SUL and SKE while the tail of stocks to vely surprise is BSL, FMG, SUN and TRS. Outlook Industrials remain the stand-out sector this reporting season, in sharp contrast to the sector s earnings delivery in each of the last eight consecutive reporting seasons. The most encouraging trend is the sector s 2HY12 EPSg which, at +1.8%, is strong but now above MRE s pre-reporting season forecast +9.%. Consensus EPS revisions more balanced this reporting season... (+ve) CRZ, DOW, AMP, GPT & DMP while (-ve) BSL, WSA, EGP, OZL,& NCM FY1 EPS revisions (last 4 weeks) 1 % change to FY1 EPS forecast (since 19 Jul) 3% 2% 27 August 212 Macquarie Securities (Australia) Limited - FY1 EPS Downgrades (LHS) -1 FY1 EPS Upgrades (LHS) % chg to EPS (RHS) (-3) - Source: I/B/E/S, Macquarie Research, August 212 % % -% -% -2% -3% Please refer to the important disclosures and analyst certification on inside back cover of this document, or on our website

2 <1= Net downgrades >1= Net upgrades Macquarie Private Wealth FY12 EPSg forecast still holding... FY13 EPSg forecasts still too high but coming down This past week s profit reporting, the largest in terms of company number and market cap, continued to see the Market s FY12 EPSg forecast edge up to now stand at -3.2%, up.3ppts across this week but largely unchanged from our pre-reporting season forecast (-3.3% as at 19 July). In contrast, however, the Market s FY13 EPSg forecast has continued to be revised down with the current 6.9% forecast now nearly 2ppts point lower than pre-reporting season. Fig 1 FY12 EPSg forecast holding around -3% but FY13 now >+7% Forecast EPS growth for year shown (%) Profile of eps growth forecasts (LHS) FY4 FY3 FY Australian market EPSg profile FY6 FY7 FY8 Weekly reporting season update FY11 FY1 FY13 FY12 FY1 Earnings revisions (x) Profile of FY1 earnings revisions (RHS) Jan-3 Jan-4 Jan- Jan-6 Jan-7 Jan-8 Jan-9 Jan-1 Jan-11 Jan-12 Sep-12 Monthly Source: I/B/E/S, Macquarie Research, August, 212 FY9 Industrials remain the stand-out sector this reporting season, in sharp contrast to the sector s earnings delivery in each of the reporting seasons over the last four years, where Industrials delivered the largest disappointment! MRE s Industrial (mkt ex res, banks & LPTs) June pro-rated FY12 EPSg forecast stands at +1.9% (23 August close), marginally above our pre-reporting season forecast of +1.6%. The most encouraging trend however is the sector s 2HY12 earnings performance, which is not only strong (+1.8%) but now above our pre-reporting season EPSg forecast for the sector (+9.%). Fig 2 Revisions ratio has improved steadily for most sectors. We note, however, that revisions ratio remain below <x, although the momentum of downgrades has slowed. Revisions Ratio (x) Jun 19-Jul 31-Jul 1-Aug 1.6 Revisions Ratio (x) Aug 24-Aug Market Industrials Resources Banks LPTs Source: I/B/E/S, Macquarie Research, August August 212 2

3 Macquarie Private Wealth 27 August Fig 3 Tracking the changes to Macquarie s market and sector P&L & EPSg aggregate forecasts across this reporting season Half year to June 12 (E) (%chg vs. pcp) Full year to June 12 (E) (%chg vs. pcp) Full year to June 13 (E) (%chg vs. pcp) Date of forecast 19 Jul 1-Aug 17-Aug 24-Aug 31-Aug 19 Jul 1-Aug 17-Aug 24-Aug 31-Aug 19 Jul 1-Aug 17-Aug 24-Aug 31-Aug All companies (ex infr)** Total revenue growth EBITDA consolidated growth EBITDA margin Net interest expense growth Tax consolidated growth Adjusted NPAT growth Adjusted EPS growth Growth in Total Dividends Payout ratio Industrials (market ex resources, banks, LPTs & infrastructure) Total revenue growth EBITDA consolidated growth EBITDA margin Net interest expense growth Tax consolidated growth Adjusted NPAT growth Adjusted EPS growth Growth in Total Dividends Payout ratio Resources** Total revenue growth EBITDA consolidated growth EBITDA margin Net interest expense growth Tax consolidated growth Adjusted NPAT growth Adjusted EPS growth Growth in Total Dividends Payout ratio LPTs Total revenue growth EBITDA consolidated growth EBITDA margin Net interest expense growth Tax consolidated growth nmf nmf nmf nmf nmf nmf nmf nmf Adjusted NPAT growth Adjusted EPS growth Growth in Total Dividends Payout ratio Banks* Half year to Sep 12 (E) Full year to Sep 12 (E) Full year to Sep 13 (E) Total revenue growth EBITDA consolidated growth EBITDA margin Tax consolidated growth Adjusted NPAT growth Adjusted EPS growth Growth in Total Dividends Payout ratio Source: Company Data, Macquarie Research, August 212

4 <1= Net downgrades >1= Net upgrades <1= Net downgrades >1= Net upgrades <1= Net downgrades >1= Net upgrades <1= Net downgrades >1= Net upgrades Macquarie Private Wealth The drivers of this strong 2HY12 EPSg performance for Industrials are as important as the result itself. As highlighted in the P&L & EPSg forecast progression analysis presented in Fig 3 above, the dis-aggregation of the sector s EPSg in the last HY reveals two key performance factors: Revenue growth has exceeded MRE s expectations, although we note that growth HoH is sequentially lower (+6.9% 2HY12 vs +7.3% 1HY12); and EBITDAg is strongly positive (+9.1% 2HY12 vs. 2HY11), although slightly lower than MRE s pre-reporting season forecast. Furthermore, absolute EBITDA margin has expanded on those delivered in 1HY12 (14.4% 2HY12 vs. 13.4%). This result lifts the sector s EBITDA margins back to the level last seen in Jun HY9, and is the most significant lift across since FY8. We would also note on a lower-quality basis, Industrial s 2HY12 EPSg beat also reflects the lower Net Interest expense growth (+.6% vs. +7.%) and a lower-than-forecast tax expense (+18.1% vs %). Resources, by contrast, have seen constant slippage in 2HY12 EPSg forecast reflecting a significantly EBITDA margin compression (-16% vs. -9.8%), which has been significantly offset by lower-than-forecast net interest expense growth in the half (+% vs. pre-reporting season forecast +1.1%). We would also note the higher-that-forecast payout ratio as a result of the lower-than-expected EPSg with the 2HY12 payout ratio lifting in excess of 43%. LPT s and Bank (Sept HY12) 2HYEPSg forecasts have drifted lower across this reporting season, although we note that for LPT this entirely reflects the SGP downgrades (sector 2HY12 EPSg stands at +1.7% vs. +1.1% when SGP is excluded). Fig 4 Industrials FY12 EPSg forecast held at the upgrade, but downgrades to FY13 EPSg continue Forecast EPS growth for year shown (%) 2 Profile of EPSg 2 forecasts (LHS) FY3 FY4 FY Industrials (mkt ex res, LPT's & banks) EPSg FY6 FY7 FY8 Weekly reporting season update FY1 FY9 FY13 FY12 FY11 Earnings revisions FY1 (x) Profile of FY1 earnings revisions - (RHS) Jan-3 Jan-4 Jan- Jan-6 Jan-7 Jan-8 Jan-9 Jan-1 Jan-11 Jan-12 Sep-12 Monthly Fig 6 LPTs FY12E EPSg forecast is slightly lower driven by SGP downgrades...fy13 EPSg is unchanged (NB the lower FY13 EPSg forecast reflects significant asset sales for WDC) Forecast EPS growth for year shown (%) 3 Profile of eps growth 2 forecasts (LHS) 2 1 FY3 FY4 FY FY6 LPTs EPSg profile FY7 FY8 Weekly reporting season update FY9 FY12 FY13 FY Profile of FY1 earnings revisions FY1-3 (RHS) Jan-3 Jan-4 Jan- Jan-6 Jan-7 Jan-8 Jan-9 Jan-1 Jan-11 Jan-12 Sep-12 Monthly Earnings revisions FY1 (x) Fig Res FY12 EPSg forecast also held this week but... FY13 EPSg also continued to see downgrades Forecast EPS growth for year shown (%) 8 Profile of eps growth 7 forecasts (LHS) FY4 FY FY6 Resources EPSg FY7 FY8 Weekly reporting season update FY1 FY11 Earnings revisions FY1 (x) FY13 FY3-1 FY12-2 Profile of FY1 earnings revisions (RHS) FY9-3 Jan-3 Jan-4 Jan- Jan-6 Jan-7 Jan-8 Jan-9 Jan-1 Jan-11 Jan-12 Sep-12 Monthly Fig 7 After ongoing downgrades, Bank FY12 & FY13 EPSg forecasts have held at negligible growth rates across this reporting season Forecast EPS growth for year shown (%) 3 Profile of EPS growth forecasts (LHS) FY3 FY FY4 FY6 Banks sector EPSg FY7 FY8 FY1 Weekly reporting season update FY11 FY13 FY FY9-2 Profile of FY1 earnings revisions -2 Jan-3 Jan-4 Jan- Jan-6 Jan-7 Jan-8 Monthly Jan-9 Jan-1 Jan-11 Jan-12 Sep Earnings revisions FY1 (x) Source (for all above): I/B/E/S, Macquarie Research, August August 212 4

5 Macquarie Private Wealth Relative returns & EPS revision ratio Investors have responded rationally to the Jun HY results We have analysed the share price responses to stocks JunHY12 results and the ensuing up/downgrades to consensus JunHY12 earnings (see Figs 8 & 9 below). This analysis highlights that stock share prices have broadly been rewarded (or punished) commensurate with their respective delivered earnings surprise. This can be seen by the analysis presented below. Interestingly, we note that group of stocks that have seen their JunHY12 EPS deliver belowconsensus expectations and yet have seen relative share price outperformance (to varying degrees) to date. These stocks include: SUN, BXB, BLD, AIO and QBE. These stocks can broadly be characterised as those that delivered EPS that was below consensus and whose respective relative share price returns appear to be incommensurate with these earnings results. Fig 8 Stocks relative return vs. changes to Jun HY12 consensus estimates (S&P ASX 1 index stocks) Excess return (vs. ASX2) from reporting date to today (ppts) 2 2 PRY DOW QBE WRT SWM AIO SUN GPT RMD CPU TWE ANN AMP SEK IAG COH WES GMG WDC CWN MND BLD CCL CSL BXB MGR CFX CPA LEI AGK NWS RHC TTS EGP CBA BEN SHL AMC FXJ ASX JBH CGF TLS SGP QRN - TAH -2 UGL JunHY12 consensus EPS revision (%) Fig 9 Stocks relative return vs. changes to Jun HY12 consensus estimates (S&P ASX Ex 1 index stocks) Excess return (vs. ASX2) from reporting date to today (ppts) 2 EGG BKN OKN 1 - RWH CDD SAI MAH ARP MRM NVT IFL SUL FWD TGR GFF FXL HGG AAX MIO TPI EPW DMP MIN NHF FAN IIN SGN CAB SMX RKN GUD WTF CRZ REA SKE IVC ENV KSC AAD CLO RCR -1 ABC PBG PTM EHL - APN JunHY12 consensus EPS revision (%) Source for all above: Capital IQ, IRESS, Macquarie Research, August August 212

6 Macquarie Private Wealth Industrials sector delivering positive upgrades to JunHY12! The Industrials JunHY12E EPSg forecast remains above our pre-reporting season estimate at +1.8% (vs +9.4% forecast). As set out in previous discussions of the sector s progression of EPSg and key P&L metrics across this reporting season, revenue growth of +6.9% vs. pcp and EBITDA margin expansion against the previous HY suggests that companies intense focus on cost cutting have begun to benefit company bottom lines. We note that QRN, QBE, IAG, AMP, BXB and DOW have been the largest contributors to the upgrades to the JunHY12 EPSg forecast across the reporting season. The current HY positive momentum in EBITDA margin expansion is expected to continue into FY13. Stronger EBITDAg together with ongoing modest revenue growth are forecast to be the most significant contributors to the current +11.1% FY13 EPSg forecast. Not withstanding the 2HY12 stronger EPSg performance, there remains downside risk to the FY13E EPSg forecast, and. While FY13E EPSg forecasts have fallen (downgraded from +13%) this reporting season, we note our top down FY13 Industrials EPSg forecast of +7% which, in our view, therefore suggests there are still substantial downgrades to navigate in coming months. Fig 1 JunHY12E EPSg +1.9% continues to deliver slightly ahead of pre-reporting season estimates Fig 11 Meanwhile FY13E EPS is being revised down to more realistic levels % Industrials FY12E EPSg % QRN QBE TWE TOL BXB GFF BKN CWN DUE DOW AIO GFF IAG QUB TLS AMP PPX % Industrials FY12E EPSg CSV WES Others 1.9% 2. SUN % Industrials FY13E EPSg % SUN WES PPX Positive Contributors BXB TCL Negative Contributors QRN AMP QBE % Industrials FY13E EPSg 14. TLS % Others 1 8. Positive Contributors Negative Contributors Jul Aug Jul Aug-12 Source (for all above): Macquarie Research, August 212 As highlighted in our Reporting Season Update #2 (refer to Essentials 2 August 12), forecasts are still approaching FY13 with a more realistic sense of earnings growth in a still-tough and grinding environment. Stocks to already have downgrades to their respective FY13E EPSg forecasts post this reporting season include: TLS, QBE, AMP, QRN, TCL and BXB. Fig 12 Reflecting the JunHY12 EPSg which have +vely surprised for the first time in a while has seen some incremental upgrades to FY12 EPSg. FY13E EPSg, however, has been downgraded through reporting season, which is also in contrast to previous years ppt contribution to EPS growth FY12E EPSg decomposition FY13E EPSg decomposition Industrials sector (June pro-rated) -1 Jul 11 Apr 12 Pre-RS 19 Jul 12 Source: Macquarie Research, August 212 TODAY Jul 11 Apr 12 Pre-RS 19 Jul 12 TODAY Sales revenue EBITDA margin Net interest Depn/amortisation Tax rate Net Assoc & Minority Other Dilution EPS growth normalised 27 August 212 6

7 Macquarie Private Wealth Resources 2HY12 EPS down over 2% with lower commodity prices & higher costs significantly pressuring margins Resource FY12 EPSg forecast is broadly unchanged across this week (-14.%) reporting season to date, however the sector s 2HY12 EPSg of -2.6% is the most notable aspect of the sector s results. This sector s 16% fall in EBITDA this HY reflects the twin effects of lower commodity prices combined with still-rising operating cost pressures, through which margin compression has become amplified. It is notable that lower Net interest expense growth but lower-than-expected tax expense growth (which contributed $1.B positively to the sector s PBT) have served to offset the sector s $3.8B EBITDA decline in the HY. We note that Resource FY13 (Jun pro-rated) EPSg forecast has fallen a further 2ppts this week, with RIO s result and FY12 & FY13 EPSg revisions now included, the key driver of this downgrade. That said, the sector s FY13 EPSg remains positively framed at +9.2% premised upon MRE s current FY13 commodity price forecasts which remain well above current spot prices. The balance of earnings revision risks are therefore firmly tilted to the downside. Fig 13 Res FY12 EPSg (Jun pro-rated) holding at - 14.% with little individual stock forecast changes... Fig 14 but FY13 EPSg forecast has been downgraded sharply driven by a long tail of stocks RIO, NCM, BHP % Resources FY12E EPSg forecast 19-Jul % Resources FY12E EPSg forecast 24-Aug % Resources FY13E EPSg forecast 16 WPL ROC STO ARI 13.7% AUT SBM AWC OZL % Resources FY13E EPSg forecast BHP NCM RIO Positive Contributors Negative Contributors Positive Contributors Negative Contributors Others 9.2% % RIO ILU AWC AUT BSL ORG BHP WPL Others -14.% Jul Aug-12 NB Excludes YAL & BHP JunHY12 results Source (for all above): I/B/E/S, Macquarie Research, August 212 Fig Resources FY12E EPSg forecast remains largely unchanged at -% but downgrades to FY13 EPSg forecast reflects lowering of EBITDAg expectations ppt contribution to EPS growth Jul 11 Apr 12 Pre-RS 19 Jul 12 NB Excludes YAL, BHP JunHY12 results Source: Macquarie Research, August 212 FY12E EPSg decomposition Resources sector (June pro-rated) FY13E EPSg decomposition TODAY Jul 11 Apr 12 Pre-RS 19 Jul 12 TODAY Sales revenue EBITDA margin Net interest Depn/amortisation Tax rate Net Assoc & Minority Other Dilution EPS growth normalised 27 August 212 7

8 Macquarie Private Wealth Banks weak revenue growth & lower NIMs driving a continued cost focus in the pursuit of sustaining current profits With the 3Q update from ANZ and BEN s FY12 result this week, the June Bank reporting season was concluded. The FY12 EPSg forecast (June pro-rated) has edged lower, with MRE s forecast for the sector now +.6%, just.1ppts lower across the last month (refer Fig 16). CBA s Jun HY result was the major contributor to the sector s FY12 EPSg slippage (.3pts) together with BEN, which was offset by upgrades resulting from the 3Q updates for ANZ, NAB and to a lesser extent WBC. The Banks central theme of weak demand growth is shared however we note that ANZ s quarterly trading update cash profit was above MRE and consensus expectation, leaving ANZ ( & NAB) to deliver upgrades to the sector FY12 & FY13 EPSg forecasts. Fig 16 Banks conclude their JunHY12 reporting season in line with EPSg broadly intact but Fig 17 Bank s FY13E EPSg (Jun pro-rated) forecast has been downgraded led by WBC and NAB % Banks FY12E EPSg forecast.9 ANZ.8.7%.7 NAB WBC BEN % Banks FY12E EPSg forecast CBA.9.8.6%.7 % Banks FY13E EPSg forecast 2. CBA 1.9% 2. BEN ANZ NAB % Banks FY13E EPSg forecast 2. WBC % % Positive Contributors Negative Contributors.4 Positive Contributors Negative Contributors Jul Aug Jul Aug-12 Source (for all above): I/B/E/S, Macquarie Research, August 212 Our decomposition analysis of the trend in EPSg forecasts (refer Fig 18 below) flags weaker net interest margin (NIM) has been the main driver of the sectors EPSg forecast slippage across the last four months, although offset somewhat by better-than-forecast credit growth. This same analysis highlights the more significant falls in the sector s FY13 EPSg forecast over the last four months with lower credit growth forecasts and a lift in the forecast B&DD charge key to the sector s 3.8ppts downgrade to FY13 EPSg (Sept pro rated) from +4.2% to just +1.2%. Fig 18 Banks FY12E EPSg remains barely positive with NIM the growth drag notable, however, is the downgrades to FY13 EPSg forecast driven by higher BDD charge ppt contribution to EPS growth FY12E EPSg decomposition FY13E EPSg decomposition Bank Sector (pro-rated to Sep) - Jul 11 Apr 12 Pre-RS 19 Jul 12 TODAY Jul 11 Apr 12 Pre-RS 19 Jul 12 TODAY Int earning assets Interest margin Non interest income Operating costs Bad/doubtful debts Tax rate Net Assoc & Minority Other Dilution EPS growth normalised Source: Macquarie Research, August August 212 8

9 Macquarie Private Wealth LPTs +4% FY12 EPSg forecast has slipped to +3.% but FY13 EPSg forecast has held The LPT sector s FY12 EPSg forecast was unchanged across the week holding at +3.%. A number of smaller REIT profit results delivered largely in line with MRE s forecasts, while MRG s result led to a +1.7ppt upgrade to the sector s FY12 EPSg. There remains a tail of stocks in the sector to report across the last week of reporting season. It is important to note the impact of the WDC asset sales on the sector s FY13 EPSg forecast which would stand currently at +2.3% (vs. +1.%), although this forecast is still below this adjusted sector EPSg forecast as at pre-reporting season (+2.7%). SGP remains the sector s most disappointing result and has been the only negative contributor to the sector s revised FY13 EPSg forecast. It is notable (refer Fig 3 previously) that the sector s 2HY12 revenue and EBITDA growth (-.% & +4.8%) remain well above MRE s pre-reporting season forecast, however higher-than-forecast net interest and tax expenses have driven the slightly below expectation EPSg (+2.% vs. +3.3%). Fig 19 LPT s FY12 EPSg forecast is largely unchanged this week with MGR result lifting the sector forecast... % LPTs FY12E EPSg forecast LEP MGR CPA CFX GMG WRT 4.1% DXS SGP WDC Positive Contributors Negative Contributors % LPTs FY12E EPSg forecast Others % Fig 2 without the impact WDC, the LPT FY13EPSg forecast would have been revised from +2.7% to +2.3% % LPTs FY13E EPSg forecast % WDC SGP GPT WRT GMG IOF GOZ CPA CQR CFX LEP APZ Positive Contributors Negative Contributors % LPTs FY13E EPSg forecast Others 1.1% Jul Aug Jul Aug-12 Source (for all above): I/B/E/S, Macquarie Research, August 212 Fig 21 LPTs continue to demonstrate earnings stability with FY12E (and FY13E) EPSg largely unchanged ppt contribution to EPS growth FY12E EPSg decomposition FY13E EPSg decomposition LPTs sector (June pro-rated) -3 Jul 11 Apr 12 Pre-RS 19 Jul 12 TODAY Jul 11 Apr 12 Pre-RS 19 Jul 12 TODAY Sales revenue EBITDA margin Net interest Depn/amortisation Tax rate Net Assoc & Minority Other Dilution EPS growth normalised Source: Macquarie Research, August August 212 9

10 Macquarie Private Wealth 27 August The good The disappointing The interesting STO reported NPAT 7% ahead of MRE and consensus estimates. Despite the strong bottom-line performance, this result was 2% below MRE forecasted EBITDAX as "other revenue" was below forecasts while operating costs were in line. Corporate tax rate of 31% was below guidance of 34% (given a month ago) and capitalised interest was higher than expected at $86m (despite a net debt balance of $616m, STO reported net finance income of $46m reflecting low interest US debt and higher interest A$ deposits). Moomba-191, is producing at a stabilised rate of 2.6mcf/d (since 27th July) which is ~3-4% higher than BPT's best result to date. The share price was up 3.2% on the day CSL reported NPAT of $983m for the year (up 16% yoy) with 21% EPS growth, a strong result on the back of growth in Immunoglobulin, Albium and Specialty Products. EBITDA margin was 31.3% (32.4% pcp).the company flagged plans for a $9m share buyback over the year which MRE estimates could add.6% to 2.2% to FY13E and FY14E EPS. A tax rate of 19.2% was lower than MRE estimates of 2.7%. The share price was up 1.6% on the day. MAH delivered a FY12 return to profit of $6.1m from $m on the pcp, which was hampered by a $48.9m provision for RGP. The result was in line with management s upgraded guidance in Dec of $-6m. Both revenue and margins were strong across Mining and Construction. FY13 NPAT guidance of 2% growth expected to be supported by strong order book ($3.1b currently) and tender pipeline of $4.1b. Net debt of $82.6m was much higher than our $2.2m expectation due to weaker than expected operating CF ($86.8m). The market rewarded the result, outperforming +.7ppts on the day. MND strong 2H12/FY12 adj. profit surprise ($69.m/$128.1m, +7% ahead of consensus) was driven by very strong revenue contributions across all businesses but in particular Maintenance and Industrial division (FY % on the pcp). Group margins were slightly softer (-26bps) over the year however potential margin opportunity in FY13. Cash conversion was strong at 92%. 2H12 dividend came in much stronger than expected at 7cps (vs. MRE forecast of 6cps), equating to FY12 payout ratio of 89%. FY13 outlook commentary also strong, driven by a growing pipeline of work (record $2.b work in past 12m). MND s share price outperformed the market strongly by +6.8ppts on the day. QBE reported disappointing 1H12 adj. profit (US$888.m) against the market, although exceeding MRE s estimate by +7.%. The market was again disappointed by the insurance margin (13.7% vs. 14.3% consensus) and hence the implied downgrade to its FY12 insurance margin (13% to 12%). This was despite better than expected catastrophe & claims experience vs. the pcp (8% of net earned premium vs..3% FY11A and 9.% FY1A). On a valuation basis, the stock is still trading at a premium to its global peers. The stock fell 4.% on the day, underperforming the market by.4ppts. BLD 2H12 and hence FY12 profit exceeded our expectation although it is important to recognise that BLD s underlying NPAT was still down 42% YoY. On the back of the result MRE has downgraded FY13 & FY14 EPS by % and 2% respectively leaving our EPSg forecasts at +22% and +69% respectively. A clear message from the result was the focus that management now has on balance sheet and gearing. As a result capex rationing was clearly signalled, with forecast expenditure flagged to be at least A$M lower in FY13. On top of this A$2M A$3M in asset sales is also being targeted, as well as BLD expecting to continue fully underwriting its DRP. Operating cashflow was another disappointing aspect of the result, $133M in FY12 down from $31M in FY11, highlighting the stress and hence focus on relieving the balance sheet. While the US operations did show improvement (FY12 EBIT loss of A$84M an improvement from the A$99M loss) however progress here is slow. Ultimately the investment case here depends on not only the company improving its key performance metrics (cost control, cashflow improvement and reduction in balance sheet stress), the overall macro outlook remains critical both here and in the US. With the company indicating that conditions are likely to remain challenging, particularly Australian housing, the macro outlook remains key to BLD going any where close to delivering the strong (+22%) EPSg (yet again) forecast for the coming year. ANZ s 3Q profit was 3.4% above market & MRE expectations, with the result flagging some positive revenue momentum as well as stable NIM. Asset quality was stable with the FY12 BDD forecast still expected to be in line with FY11 at $1.2B. Importantly as with the CBA result, ANZ is continuing to focus on costs with CTI ratio targeted to fall 2ppts from the FY12 forecast of 4.4% implying 43.4% by FY14. BEN FY12 profit result was broadly in line with MRE subdued growth expectations (MRE defined cash earnings were -7.% vs FY11). The all important dividend was delivered at 3cps. BEN s capital position increased over the period to a core Tier 1 of 8.9%. A negative of the result was the further drift of BEN s cost to income ratio to 9.1% well up from the long-term target of %. FY13 EPSg forecast was unchanged at +17.4% (incorporating a full year of the Bank of Cyprus acquisition). CGF - Following the announcement of APRA s capital standard that provided for a more generous transition, CGF reported its FY12 slightly better than MRE expectation. FY12 EPS was revised 3.3ppts higher, however FY13 & 14 EPS were both revised lower leaving FY13 EPSg forecast at -.4%. A notable concern in the result was the experience variance impact was larger than MRE expectations as we note that the gap between statutory and normalised profits keeps widening FY12 -$19M vs. MRE` forecast of -$167M. ARI FY12 result highlighted that the company continues to struggling to breakeven in a difficult environment. There were signs however that its manufacturing division was seeing a turn around with a 2H12 EBIT HoH improvement to $1.m (from -$7.2m on 1H12), although it is yet to break even on a cash basis. Mining consumables was the FY12 highlight the only division to deliver earnings growth on the pcp (+17% to $13.2m EBIT). This helped to drive operating cash flow growth to $47m, +2% YoY. Critically, gearing (net debt to equity) fell marginally from 1H12, however, remains relatively high (48% at FY12 end). While no FY13 guidance was provided, ARI s return to positive EBIT in 2H12 was the key takeaway and was rewarded with the stock outperforming on the date by more than +1ppts.

11 Macquarie Private Wealth 27 August The good The disappointing The interesting MGR has reported \FY12 net profit of $416.1m with a flat earnings outlook for FY13. Excluding specific non-cash and significant items, underlying operating profit was $366.3m equating to EPS of 1.7cps (MRE estimate of 1.6cps), largely due to lower debt costs resulting from the termination of $463.8m of interest rate hedges. Flat earnings growth was as expected. The share price was down -1% on the day of reporting CQR reported EPS growth (factoring the dilutive sale of Jena) at +2.4% and +4.1% at the lower end of recent guidance. FY12 operating profit was $86.3m, in line with MRE estimates. Statutory profit was $9.7m. NOI growth from Australian property was down to 3.% (4.3% for the pcp) due to a more subdued rental market. FY12 releasing spreads where at +4.9% in the Australian market and The share price underperformed by -.2% on the day CFX delivered FY12 net profit after tax of $49.2m with distributable income was up 6.1% yoy to $371.m, in line with MRE forecast. The earnings stream remains resilient with EPSg FY13E of 4% unchanged. Excluding DFO, leasing spreads averaged -1.%. Occupancy rates were stable at 99.7%. FY13 Distribution guidance of cpu. Despite the drag from sub-regional assets for the last year, MRE believes NOI will be resilient. The share price was down.8% on the day. CPA reported FY12 net profit after tax of $26.3m and distributable income of $182.2m, in line with MRE forecasts. A reduction in tenant incentives in FY13 will increase free cashflow. ~4.% of shares were bought back during the year, with capacity to buyback another ~.%. Debt to equity is at 2%. The performance fee benchmark has been changed from UBS Commercial Property Index to the S&P/ASX 2 Property Accumulation Index. The share price underperformed 1.4% on the day of the result. IAG delivered a FY12 $4m in line with expectations. Strong growth in GWP (+13.6% 2H12) & insurance margins (+14% 2H12). The result saw much uncertainty about their capital position alleviated with IAG s 1HY x minimum capital requirement rising to 1.74x in 2H12 with much of this move due to premium strength and lower interest rates on outstanding claims. This strong capital position was reflected in DPS of 12cps (DRP in place). While not truly a disappointing result, BHP s 2HY12 and FY12 profit result flagged the impact of the weaker commodity price and higher A$ on profits potentially for beyond just this result. NPAT of US$1.7B was marginally ahead of consensus, but still left FY12 EPSg down 21.9% YoY. After months of increasing commentary around project re-sequencing this result flagged project withdrawal with Olympic Dam on hold for now awaiting a cheaper development option that could potentially draw on new but as yet undisclosed technology. The silence on Outer Harbour also provided further confirmation that the operating environment was leading to a much more capital constrained BHP. While BHP s FY12 return on capital remained (26%) remained high, we note that this 17ppts decline YoY. MRE s FY13 EPSg forecast was unchanged post the result at a modest +.1% this remains premised on a strong recovery of commodity prices. We would also note that MRE s FY13 forecast suggests, notwithstanding what would currently appear to be optimistic commodity price forecasts, net cashflow is forecast to be negative in FY13 post Capex and dividends paid. ORG A FY12 result delivered within consensus expectations belied the disappointing EBITDA. Underlying EBITDA was 4% below forecast as a result of a weaker result from the Energy Markets business. The growth outlook for the next three years is subdued and following the EPS downgrade, the FY13 growth forecast stands at -.2%. APLNG continues to be the dominating issue for ORG, with the intended sale of equity looking more complicated with BG seeking to do the same. Furthermore, there appears to be increasing regulatory risk following the recent QCA s decision, which suggests that the risk to earnings could be potentially greater than ORG has previously flagged. With the result reinforcing market concerns around the weaker growth, balance sheet concerns, growth risks to the core business and uncertainty around APLNG sale process and value realised, ORG s share price weakened notably on the result, down.% and underperforming the market by.7ppts. OSH the 1HY12 result of NPAT of A$17M was slightly (3.%) ahead of consensus. That said the current profit result is of secondary interest to the update the result provided on PNG LNG and news on the drilling programme. The most pleasing aspect of the result was the predictable progress reported on PNG LNG with 6%of the development progressed & 7% of the project capex spent. OSH confirmed that first planes are due to begin arriving at the Komo airstrip by year end. Also positive was the confidence expressed by management around the prospect of train 3. MRE has increased its price target 4.7% to A$9/sh.MRE estimates the NAV of OSH s 29% stake in PNG LNG is currently $,42/sh which will lift to $7.3/sh on day 1 of start up and first cargoes could lift the valuation to $12.62s/sh. Upside from here exists should additional trains over and above the current contracted 2, or the drilling program delivers additional gas. WPL reported 1H12 result with NPAT up 3% pcp to $86m. Despite the announcement of a 6cps dividend (up 18%) the share price was down -3.1%. Cash flow of US$1,49m was supported by a ~US$3m working capital, presumably from Pluto starting up, which will drive FY13 earnings growth with a full year of production. Pluto 2 and 3 seem some way off. Sunrise remains locked in political stalemate with the East Timorese government. Investors were slightly disappointed again with the lack of progress on Pluto expansion, selling off - 3.1% on the day. SWM reported FY12 NPAT of $227m and declared a 6cps FF dividend. The 3% increase in revenue was underpinned by AFL content, however this was offset by higher cost. Costs remain a focus. SWM has not impaired its license or newspapers despite structural challenges. Newspaper and Other FY12 margins contracting to 37.% from 41.4%. The share price outperformed by +1.4% on the day. MRM reported 2H12/FY12 results, +18% on the pcp. Gearing (as measured by net debt/equity) was much lower than anticipated (at 31.9% vs. expectation of 38.3%) sure to strong operating cash flow performance outlook expected to be strong given leverage to WA oil and gas activity.

12 Macquarie Private Wealth 27 August The good The disappointing The interesting SUL delivered a +71% FY12 profit increase (on the pcp) with 2H12/FY12 adj. NPAT of $49.8m/$9m. While the result was assisted by the initial contribution of its Rebel Sports acquisition, strong sales momentum was seen in the SCA and BCF formats. The company also delivered 2H12/FY12 EBITDA margins of 11.%/11.4%, a +7bps/+13bps lift on the pcp. The overall result came in +6.3% ahead of MRE forecasts and impressed given the current state of the domestic retail environment. Despite this, the stock underperformed the market by -2.3ppts. Similarly, despite the tough retail environment, niche retailer TRS also delivered strong FY12 profit growth of 23.3% on the pcp ($3.4m/$2m 2H12/FY12 adj. NPAT), with increasing momentum highlighted in sequential like-for-like sales growth. Further, the company announced a FY12 dividend of 18cps (9.cps final and 8.cps special dividend). The market was pleased with this result, particularly given the return to full capacity following flood disruptions in the pcp. While no explicit FY13 guidance was given, its store rollout program is expected to underpin FY13 sales growth. The stock outperformed the market by +8.2ppts. PNA 1H12 result was well received by the market, with the share price up % on the day. has released 1H13 financial results with NPAT down % year-on-year to US$66M (MRE $69m). A dividend of 3cps was declared with optional DRP. Revenue up 1% yoy to US$36m, where increased gold production offset by lower realised copper prices down 12% pcp, EBITDA at lower end of guidance PanAust production guidance was reiterated as 64,t copper, 13,oz gold (~, from Phu Kham and 8, from ban Houayxai) and 6,oz silver. ILU 1H12 results saw NPAT of $274m, up 88% yoy due to the higher commodity prices more than doubling. Free cash flow was down $4m due to capex spend and tax. Reduced capex (deferral of SR1 kiln) and opex guidance (lower mining production) was given saving $13m. FY12 sales were downgraded due to weak demand. Slowed zircon production still exceeds forecast sales with 33kt produced v 2kt sold. A 2cps dividend FF was 8cps higher than MRE estimates and the share price was up 4% on the news. FXJ continuing the string of weaker profit results, FXJ s FY12 EPSg of -2% was consistent with recent guidance, however MRE has downgraded FY13 and FY14 EPS by 12% & 19%, respectively. The result brought to market the long awaited asset value write down ($2.8B) reinforcing the view of no expectation of early recovery. The result and asset write down has driven a further decline in the MRE s target share price now to 48cps (from from 6 cps). Most notably management flagged that FY13 YTD revenues were again down 1% YoY, while on the cost front disappointing news was that the specific cost initiatives expected to deliver $91M in savings in FY13 is now expected to be offset by $6M in general cost inflation and additional costs associated with the digital platform. Looking forward MRE s EPSg forecasts for FY13, FY14, & FY stand at -33%, -11.1% and -1.9% respectively. TWE Delivered against the FY11 proforma financials, TWE delivered adj NPAT of $119.8M. Top line growth a notably absent in this result, even on a constant currency basis (- 2.9%) and gross profit also fell 4.9%. although EBITS adjusted for ISI s rose 18.6% reflecting overhead cost savings. MRE increased FY13 & FY14 EPS by 2.% and 2.7% leaving MRE s FY13 EPSg forecast at +11.9%. MRE retained an underperform on the stock given the hefty forward PER of 22.1x and we note the continued exceedingly weak FY12 ROE & ROA of 4.2% and % respectively. FMG reported FY12 NPAT of US$1.6b (Macq: US$1.47b) with net operating cashflow of US$2.3b (MRE US$2.3b). A final dividend of 4cps FF was declared. Capex guidance of US$6.2bn for FY13 and US$1.bn for FY14. Plans to expand to mtpa are moving ahead, with key items (train unloaders, Christmas Creek second OPF, first ore from Solomon) to be completed by end CY12. FMG has secured a further US$1.bn senior capacity). At an iron ore price of US$/dmt 62% Fe CFR China over the next 12 months, MRE believes ~US$1bn of capital will be needed. At US$1/dmt no capital would be needed. Current spot is ~US$1/dmt. The share price outperformed.6% on the day. CCL reported a 1HY12 NPAT result of $247m with an interim dividend of 24cps. Beverage revenue was up 7.4% and while revenue per case increased by 2.7%, costs per case increased 3.4%. CCL maintained its consistent growth delivery with EPSg of 32.% this HY. CCL announced a joint venture with Casella to expand its Griffith brewery s production volumes to % of the premium beer market. This is a strong signal to the market as it re-enters that product space where it is targeting $3m EBIT. The share price was +.4% on the day. AGK The FY12 result was slightly better than market expectations ($482M vs. MRE forecast $478M) however quality was good with EBITDA & EBIT broadly in line with expectations. Minor adjustments (both +ve & -ve) to FY13- FY EPS forecasts leaving MRE s EPSg forecasts at +17.7%, +9.8% and +12.2% respectively. While this result provides insight into the current performance of the business, and strong underlying growth is likely, like ORG future developments around retail regulation and increasing pricing competition, the performance of LYA, as well as ongoing uncertainty around the impact of a possible carbon pricing policy change, will be key to AGK share price performance from here. We note the share price fell.4% on the day and has continued to weaken down being down 2.9% since the result at the time of writing (& -3.7% relative to market return). QAN a better-than-expected FY12 profit result (PBT $9M vs MRE forecast $7M) & EPS upgraded 7%, plus the announcement of plane order cancellations (3 x Boeing 787-9) was received positively by the market (QAN share price closed +2.6% on the day). FY13 EPS was upgraded 13.6% leaving EPSg forecast at +374%. QAN s 2HY12 free cashflow swung +ve in the first in three HYs while cash EBITDA was a health $1B+. As well as plane order cancellations & hence the return of partial delivery payments, immediate balance pressures have eased and we now expect gearing (net debt/equity) has peaked will fall to gradually back >% over the next two years. That said the measures announced in this result flag the struggle for growth in QAN s mainline business which is now unlikely to grow for a number of years. The continued decline in this key business remains QAN s Achilles heel given the importance of the international arm as a feeder to QAN domestic and Jetstar. MRE s share price target has been lifted to $1.46 from $1.21.

13 Macquarie Private Wealth 27 August As expected AMC 2H12/FY12 result came in line with MRE forecasts at $33.2m/$634.m. The result continued to highlight the resilience of its core Flexibles business which saw increase +1% on the pcp (FY12 EBIT). Group EBIT margins improved +6bps to 8.7% for the full year. The highlight of the result was the very strong operating cash flow performance of $1,4m, which was exceeded MRE s forecast by $214m. This resulted in a very strong 2H cash conversion of 1% (vs. 98% in pcp). The FY13 outlook commentary was slightly weaker than anticipated driven by weak growth expectations for the Australian business, which is further expected to offset Botany benefits. Given the stock Is currently trading at a premium to the Market and global peers, the result saw share price move slightly lower. SHL delivered 2H12/FY12 profit of $173.m/$316.m (+1.2% ahead of MRE estimates). Management guidance of -1% FY13 EBITDA growth, which allows for potential fee cuts in Australia and Germany. Australia and Germany pathology businesses were the highlight, which managed to deliver on volumes and margin expansion while NZ disappointed. The company also reinstated their dividend reinvestment plan (DRP). SYD A strong operating cashflow of $243M in 1HY12, 11% above MRE s forecast ($218M) and a DPS of 21cps as expected, and fully cash covered were the stand out features of SYD profit result. The still driving aspect of SYD s outlook remains international passenger volumes, and growth of % in this period was the strongest since 1HY1. The key financial performance metrics of the asset Sydney Airport (revenue growth +6.8%, Cost growth +1.6%, EBITDA +18.1%) were strong and while MRE s FY13 forecasts are for growth to moderate (EBITDAg +6.9%) with still solid passenger growth expected we expect this current solid EBITDAg to be sustainable over the coming tow years. SYD s share price has responded positively +2.2% and strongly outperforming the market (+3% at the time of writing). RHC continued delivering strong profit growth again in FY12 with adj. FY12 NPAT ($23.m) a strong +14.8% vs. pcp, led by a strong +87bps margin expansion across the Australian division. Australia and Indonesia were the standouts. UK and France growth remains subdued at 2%. The company again guided for double digit earnings growth (1-12%) for FY13 and despite this strong result (top of guidance and in line with consensus) the stock underperformed by -3.4ppts the slight correction in stock price on the back of the result largely reflects the recent run up in share price (to trade at 7% premium to the market). MRM FY12 result +18% on the pcp to $43.2m, driven by overall strong revenue growth from both Vessel and Supply base divisions, margins were slightly softer across both areas from FY11. 2H12 momentum for Vessels slowed due to completion of recent work on shorter term Gorgon related projects, while Supply base picked up momentum into the 2H12 benefitting from recent BIS acquisition, recovered from strike and lower exploration activity. FY13E remains highly leveraged to WA oil & gas activity. RCR RCM delivered +38.% FY12 profit growth, reflecting strong revenue growth (+33.2% YoY), while EBITDA margins were slightly softer (-3bps from FY11 at 6.%). The Resources business was the standout division with FY12 sales increasing more than 1%, with the contribution of its recently signed $6m Fortescue contract coming into effect. The benefit was also reflected in its Power earnings. The contract is expected to be a powerful driver of FY13 EPSg while the forward order book ($618m currently) remains strong. The business remains highly leveraged to the domestic Energy and Resource cycle.

14 Macquarie Private Wealth Fig 22 Adjusted profit results this reporting season to date: forecasts vs. actuals Code Company Name 1H12/ Rep Net Profit Adj. Net Profit Curr. Diff (Adj. NPAT) Surprise^ 2H12 ($m) ($m) Dividend Surprise Forecast Actual Forecast Actual $ (%) +ve -ve Forecast Actual +ve -ve ASX/S&P 1 ex Property ex Resources AGK AGL Energy 2H12 AUD AIO Asciano 2H12 AUD AMC Amcor 2H12 AUD AMP AMP 1H12 AUD ANN Ansell 2H12 USD ASX ASX 2H12 AUD BEN Bendigo and Adelaide Bank 2H12 AUD BLD Boral 2H12 AUD BXB Brambles 2H12 USD CBA Commonwealth Bank 2H12 AUD CCL Coca-Cola Amatil 1H12 AUD CGF Challenger 2H12 AUD COH Cochlear 2H12 AUD CPU Computershare 2H12 USD CSL CSL 2H12 AUD CWN Crown 2H12 AUD DOW Downer EDI 2H12 AUD DUE DUET Group 2H12 AUD EGP Echo Entertainment Group 2H12 AUD FXJ Fairfax Media 2H12 AUD IAG Insurance Australia Group 2H12 AUD JBH JB Hi-Fi 2H12 AUD LEI Leighton Holdings 1H12 AUD MND Monadelphous Group 2H12 AUD NWS News Corporation 2H12 USD PRY Primary Healthcare 2H12 AUD QAN Qantas 2H12 AUD QBE QBE Insurance 1H12 USD QRN QR National 2H12 AUD RHC Ramsay Health Care 2H12 AUD RMD Resmed 2H12 USD SEK Seek 2H12 AUD SHL Sonic Healthcare 2H12 AUD SUN Suncorp 2H12 AUD SWM Seven West Media 2H12 AUD TAH TABCorp Holdings 2H12 AUD TCL Transurban City Link 2H12 AUD TLS Telstra Corporation 2H12 AUD TTS Tatts Group 2H12 AUD TWE Treasury Wine Estates 2H12 AUD UGL UGL 2H12 AUD WES Wesfarmers 2H12 AUD ASX/S&P ex 1 ex Property ex Resources ABC Adelaide Brighton 1H12 AUD APA APA Group 2H12 AUD APN APN News & Media 1H12 AUD ARP ARB Corporation 2H12 AUD BKN Bradken 2H12 AUD CDD Cardno 2H12 AUD CLO Clough 2H12 AUD CMJ Consolidated Media Hldings 2H12 AUD CRZ Carsales.com 2H12 AUD DMP Domino's Pizza Enterprises 2H12 AUD EHL Emeco 2H12 AUD EPW ERM Power 2H12 AUD FAN Fantastic Holdings 2H12 AUD FWD Fleetwood Corporation 2H12 AUD FXL FlexiGroup 2H12 AUD GFF Goodman Fielder 2H12 AUD GWA GWA Group 2H12 AUD HTA Hutchison Telecomms. 1H12 AUD IIN iinet 2H12 AUD IVC Invocare 1H12 AUD Excludes EGG, HGG ^ Surprise is defined as a result +>% or -<% compared to MRE s pre-reporting season expectations as at 19-Jul-12 Source: Company Data, Macquarie Research, August August