Challenger (CGF) Expanding the potential. A broader and more robust business emerging. Earnings revisions SOURCE: BELL POTTER SECURITIES ESTIMATES

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1 14 February 2017 Analyst Lafitani Sotiriou Associate Analyst James Filius Authorisation TS Lim Challenger (CGF) Expanding the potential Recommendation Buy (unchanged) Price $11.40 Target (12 months) $13.00 (previously 12.50) Expected Return Capital growth 14.0% Dividend yield 3.0% Total expected return 17.0% Company Data & Ratios Enterprise value Market cap $6,432m $6,517m Issued capital 571.7m Free float 100% Avg. daily val. (52wk) 26.8m 12 month price range $6.76-$11.89 GICS sector Price Performance Diversified Financials (1m) (3m) (12m) Price (A$) Absolute (%) Rel market (%) Absolute Price $14.0 $12.0 $10.0 $8.0 $6.0 $4.0 $2.0 $0.0 Jun 15 Dec 15 Jun 16 Dec 16 SOURCE: IRESS CGF S&P 300 Rebased A broader and more robust business emerging CGF s business is expanding on multiple-fronts and the underlying EPS growth should accelerate as these initiatives mature. We estimate CGF delivering 10% EPS growth in FY17e, with this expanding to 16% in FY18e. The growth is supported by the following expansion initiatives: Growing local partnerships. CGF announced BT Financial Group will join AMP to launch Challenger annuities on the respective platforms in 1Q18; Expanding global opportunity. MS Global (in Japan) has started strong, and new partnership with Standard Life to aid Funds Management growth profile; New product launched. CGF continues to innovate, commencing the Challenger Index Plus Fund during the period with $150m in sales achieved; Regulatory tailwind remains, with Deferred Lifetime Annuities on track to commence in 1Q18, providing further growth potential; and Leading to record annuity sales, with $2.2 billion achieved during the half. The company has emerged with more growth options than it ever has, with a much broader base than as recent as a few years ago. This sets CGF up for a multi-year growth phase, and we continue to recommend the stock as a key Buy in the sector. Result highlights Normalised NPAT $196.6m, 1.5% ahead of our $193.7m estimate; and Interim dividend of 17.0cps (fully franked), in line with our estimate. Earnings revisions We have upgraded our estimates for normalised EPS by 0.1%, 0.2% and 1.5% for FY17e, FY18e and FY19e respectively. The earnings revision is driven by a higher growth profile, and offset, to a degree, by a lower COE margin estimate. We have upgraded our Price Target to $13.00 per share (previously $12.50) and reiterate our Buy recommendation. Earnings Forecast Year end June e 2018e 2019e Revenue (A$m) NPAT (reported) (A$m) NPAT (underlying) (A$m) EPS underlying fully diluted (cps) Fully diluted EPS growth (%) 7% 10% 16% 18% Fully diluted PER (x) Price/book (x) EV/EBITDA (x) Price/CF (x) Dividend ( ps) Yield % 2.9% 3.0% 3.5% 4.1% ROE (%) 13.8% 14.3% 15.3% 16.5% Franking (%) 100% 100% 100% 100% SOURCE: BELL POTTER SECURITIES ESTIMATES BELL POTTER SECURITIES LIMITED ACN AFSL DISCLAIMER AND DISCLOSURES THIS REPORT MUST BE READ WITH THE DISCLAIMER AND DISCLOSURES ON PAGE 9 THAT FORM PART OF IT. Page 1

2 Expanding opportunities Growing distribution A key success of CGF s strategy is its ability to continue expanding its distribution and product breadth. In the 1H17 result, CGF announced BT Financial Group (BTFG) will join AMP and Colonial in offering annuities on its platform. AMP is scheduled to offer Challenger annuities on the platform in 1Q18, at the same time as BTFG s scheduled launch. This includes three of the five major platform players in the market, with Macquarie (MQG) and IOOF (IFL), remaining the last two big opportunities. In addition to these larger players which target retail superannuation, CGF has been busy building out its platform to access other areas, such as Industry superannuation. In Figure 1 below we capture the key distribution initiatives in Australia over recent years. Further Growth Opportunities In the half, CGF have reported a positive start to its Japanese relationship with MS Primary, attracting $125m in term sales attributable to CGF in the first 8 weeks since the November launch. While this occurred in a seasonably strong period, this relationship has the ability to accelerate the total book growth, and possibly double the current rate over the next few years as little outflows are expected given the demand for longer dated AUD denominated annuities. CGF have also flagged 2 Fund launches and strategic distribution arrangement with Standard Life: Standard Life will distribute an low risk absolute return bond product via the Challenger Brand and distribution in Australia; New Fund launched in Fidante Partners, Global Asset Manager Avenir Capital; and New Challenger Index Fund Product launched in Life Company, to sit alongside GIR. Figure 1 - Expanding distirbution in Australia VicSuper Colonial First State Link Group Launched in June Launched Australia's first CIPR supported by Challenger - Average tenor of 20 years for FY16 sales Launched on the FirstWrap and FirstChoice platform in August ~90% uplift in annual volume compared to FY15 CBA channel - Supported by recommendation of 25% lifetime annuity allocation by retirement income models Technology build on Link's administation platform complete in May Allows for new industry funds to quickly adopt Challenger annuities FY17 distribution initiatives Colonial First State Introduction of CarePlus product onto FirstChoice platform in September 2016 Link Group Local Government Super launched Challenger annuities in 1Q17 LegalSuper launched Challenger annuities in 1Q17 CareSuper scheduled to launch Challenger annuities in 1Q17 ClearView ClearView Wealth platform to offer Challenger annuities via a private label CFS platform in 1Q17 Suncorp MS Primary AMP BTFG Suncorp branded term and lifetime annuities sheduled to launch in 2Q17 - Lifetime annuities to be included in Suncorp retirment income models MS Primary will offer 5, 10 and 20 year CGF Australian dollar fixed rate term-annuities into Japan from November 2017 FY18 distribution initiatives Introduction of annuity products To AMP investment platforms (North, MyNorth, AMP Flexible Super and Corporate Super channel) in 1Q18 BT Financial Group plans to introduce CGF annuities on its Panaroma platform in 1Q18, which is the platform BT Wrap and Asgard will migrate to in the coming months SOURCE: COMPANY DATA AND BELL POTTER SECURITIES FY16 distribution initiatives Page 2

3 Result highlights Group Challenger delivered a beat with its 1H17 result, achieving record annuity sales and underpinning strong earnings with a record low cost to income ratio. Normalised NPAT grew 8% versus pcp to $196.6m, ahead of our $193.7m estimate. Statutory NPAT fell versus pcp to $201.5m as 1H16 was adjusted for significant one off profit from the sale of Kapstream Capital. CGF has declared an interim dividend of 17.0cps (fully franked), a 6.3% increase on 1H16 which was in line with our estimates. Life The Life business exhibited strong growth reporting its third consecutive quarter of over $1 billion in Life Annuity Sales. Term Sales for 1H17 were $1.6 billion, up 16.2% versus pcp, and 38% ahead of our $1.2 billion estimate. This translated to normalised EBIT growth of 7.2% YOY to $267m with Life COE growing 8% versus pcp to $316m, ahead of our $314m estimate. Life capital position remains intact with $0.9 billion in excess capital, representing 1.4x regulatory PCA. This is on the lower end of companies target range of 1.3x to 1.6x and CGF have flagged its intent to issue new tier 1 capital in 3Q17 to further bolster its capital position. Funds Management Funds Management delivered a 1H17 EBIT of $21m, a 5% decline on 1H16 resulting from a decline in CIP net income, this compares to our $18m estimate; Average FUM increased 8% YOY to $59.1 billion with net flows for 1H17 of $3.2 billion. Page 3

4 Valuation and earnings revisions DCF & SOTFP valuation We have altered our valuation methodology to incorporate an increased weighting (70%) on our DCF valuation relative to our Sum-Of-The-Parts valuation (30%) to more adequately capture the longer term growth profile of CGF. Based on our new valuation, our Price Target increases to $13.00 per share (previously $12.50). Following the update we maintain our Buy recommendation with the full details below noted in the valuation table below: Figure 2 - Valuation Division Multiple NPAT Valuation PE FY17e ($m) Life 15.0x 418 6,264 Wealth 16.0x Corporate 10.0x Effective tax rate applied 23% Net-cash 115 Total 6,450 Share count (m) 572 Sum-of-the Parts Valuation ($ per share) DCF Valuation ($ per share) Weighted average of tw o valuation methods ($ per share) SOURCE: BELL POTTER SECURITIES ESTIMATES Figure 3 - Earnings revisions SOURCE: BELL POTTER SECURITIES ESTIMATES Earnings revisions We have upgraded our estimates for normalised EPS by 0.1%, 0.2% and 1.5% for FY17e, FY18e and FY19e respectively. The earnings revision is driven by a higher growth profile, and offset, to a degree, by a lower COE margin estimate. Earnings Revisions FY17e FY17e FY18e FY18e % Change (new) (previous) (new) (previous) % Change FY19e FY19e (new) (previous) % Change EPS underlying fully dilluted (cps) % % % Dividend ( ps) % % % Page 4

5 Assumptions Figure 4 - Life Fund Flows ($m) Life FY15 1Q 2Q 3Q 4Q FY16 1Q 2Q 3Qe 4Qe FY17e 1Qe 2Qe 3Qe 4Qe FY18e Jun-15 Sep-15 Dec-15 Mar-16 Jun-16 Jun-16 Sep-16 Dec-16 Mar-17 Jun-17 Jun-17 Sep-17 Dec-17 Mar-18 Jun-18 Jun-18 Asset allocation Debt investment, cash, receivables 8,514 8,336 8,488 8,280 9,316 9,316 9,518 9,521 9,932 10,275 10,275 10,631 11,028 11,344 11,867 11,867 infrastructure assets Property 2,884 3,218 3,063 3,243 3,150 3,150 3,183 3,328 3,321 3,436 3,436 3,555 3,688 3,794 3,968 3,968 Equity and other assets ,060 1,042 1,079 1,079 1,079 1,232 1,126 1,165 1,165 1,205 1,250 1,286 1,345 1,345 Total 12,795 13,021 13,147 13,102 14,112 14,112 14,316 14,607 14,938 15,455 15,455 15,990 16,587 17,062 17,849 17,849 Retail annuities (policy liabilities) 8,693 8,847 8,868 8,838 9,559 9,559 9,697 9,894 10,118 10,469 10,469 10,831 11,235 11,557 12,090 12,090 Sales for the quarter Fixed term annuity sales Lifetime annuity sales Total retail annuity sales 2, ,135 3,351 1,033 1, ,369 4,304 1,173 1, ,552 4,881 Figure 5 - Funds Management FUM and Flows ($m) Funds Management FY15 1Q 2Q 3Q 4Q FY16 1Q 2Q 3Qe 4Qe FY17e 1Qe 2Qe 3Qe 4Qe FY18e Jun-15 Sep-15 Dec-15 Mar-16 Jun-16 Jun-16 Sep-16 Dec-16 Mar-17 Jun-17 Jun-17 Sep-17 Dec-17 Mar-18 Jun-18 Jun-18 Fidante Partners Equities 17,323 17,096 18,754 17,929 18,317 18,317 19,124 20,833 21,430 22,158 22,158 22,774 23,529 24,184 24,973 24,973 Fixed Income 23,085 17,273 17,305 17,707 18,364 18,364 19,065 19,726 20,142 20,644 20,644 21,069 21,585 22,031 22,565 22,565 Infrastructure / Alternatives 4,259 6,141 5,546 5,880 6,331 6,331 6,332 6,399 6,495 6,592 6,592 6,691 6,792 6,894 6,997 6,997 Total Fidante Partners 44,667 40,510 41,605 41,516 43,012 43,012 44,521 46,958 48,067 49,395 49,395 50,534 51,906 53,108 54,536 54,536 Property: Insto Mandates 4,004 4,498 4,552 4,680 4,591 4,591 4,669 4,798 4,886 4,975 4,975 5,065 5,155 5,247 5,339 5,339 Fixed Income 9,231 8,532 8,541 8,425 9,059 9,059 9,703 10,357 10,621 10,887 10,887 11,156 11,427 11,701 11,978 11,978 Challenger Investment Partners 13,235 13,030 13,093 13,105 13,650 13,650 14,372 15,155 15,507 15,862 15,862 16,220 16,582 16,948 17,318 17,318 Total FUM 57,902 53,540 54,698 54,621 56,662 56,662 58,893 62,113 63,573 65,256 65,256 66,754 68,488 70,056 71,853 71,853 Net-flow estimates Boutique partnerships (Fidante) 6,104-3, , , , ,604 Aligned and other 1, , Total 7,739-4, ,081-2, , , ,404 Figure 6 - Fixed term annuity sales ($m) Figure 7 - Lifetime annuity sales ($m) 1, Care Annuity discontinued November 2014 CarePlus reintroduced mid-1h16 Figure 8 - Annuity Book ($Bn) 16 Figure 9 - Funds under management ($Bn) 70, Steady growth 60,000 50,000 40,000 30,000 20,000 10,000 0 Fidante Partners Challenger Investment Partners Page 5

6 Challenger overview Company description Challenger (CGF) is a diversified financial Holding Group, made up of a Life Company (specialising in annuities) and a funds management business. CGF s model has changed in recent years following the divestment of the Mortgage Management and Financial Planning businesses. The company is focused on maximising its leverage to Australia s growing superannuation sector through its two core businesses, with Life accounting for the majority of Group earnings. Investment strategy We believe CGF has appropriately repositioned its business to benefit from growth in superannuation and the shift of baby boomers into retirement with new products and a greater distribution reach. Risks Key risks for the stock include: Key people risk Similar to other wealth management businesses, the loss of any key investment personnel may result in the loss of investment mandates, which is particularly relevant for the funds management business; Performance risk Investors are wary of investment managers that charge active management fees and that have underperformed the index over a prolonged period of time. It is important for the funds management division to maintain reputable performance metrics across its product offering; Interest rate and currency risk The Life Company is exposed to interest rate and currency movements on its asset book. There is hedging in place to smooth out the exposures, with the company providing an update on the sensitivities each year via the annual report; and Regulatory risk The appeal of annuities can be impacted by favourable or unfavourable government policies, particularly when it relates to tax outcomes. Page 6

7 Interim earnings Figure 10 - Interim earnings INCOME STATEMENT Y/e June 30 ($m) 1H16 2H H17 2H17e 2017e 1H18e 2H18e 2018e 1H19e 2H19e 2019e Life operating earnings Funds Mgmt - net income Corporate - net income Total Revenue Operating expenses EBITDA Depreciation & Amortisation EBIT Net Interest Pre-tax profit Tax Adjusted profit Investment experience One-off items Reported net profit DIVISIONALS Y/e June 30 1H16 2H H17 2H17e 2017e 1H18e 2H18e 2018e 1H19e 2H19e 2019e Life Investment yield - policiy holder funds ($m) ,075 Interest expenses ($m) Fees and commissions paid ($m) Product margin ($m) Investment yield - shareholder funds ($m) Cash spread earnings ($m) Normalised capital growth ($m) Normalised COE ($m) Life expenses ($m) Life EBIT ($m) Product margin 2.70% 2.70% 2.71% 2.81% 2.70% 2.77% 2.70% 2.70% 2.70% 2.68% 2.68% 2.68% Investment yield (shareholder funds) 1.00% 1.00% 1.02% 0.87% 0.88% 0.88% 0.90% 0.92% 0.91% 0.92% 0.92% 0.92% Normalised capital growth 0.80% 0.78% 0.79% 0.71% 0.73% 0.72% 0.70% 0.70% 0.70% 0.70% 0.70% 0.70% Total COE spread 4.50% 4.48% 4.49% 4.39% 4.31% 4.36% 4.30% 4.32% 4.31% 4.30% 4.30% 4.30% Normailsed capital growth margins: Cash, fixed interest and debt -0.4% -0.4% -0.4% -0.4% -0.4% -0.4% -0.4% -0.4% -0.4% -0.4% -0.4% -0.4% Infrastructure 4.0% 4.0% 4.0% 4.0% 4.0% 4.0% 4.0% 4.0% 4.0% 4.0% 4.0% 4.0% Property (net) 2.0% 2.0% 2.0% 2.0% 2.0% 2.0% 2.0% 2.0% 2.0% 2.0% 2.0% 2.0% Equity and other 4.5% 4.5% 4.5% 4.5% 4.5% 4.5% 4.5% 4.5% 4.5% 4.5% 4.5% 4.5% Total average investment ($m) 13,002 13,369 13,189 14,287 15,031 14,659 16,021 17,218 16,619 18,440 19,736 19,088 Funds Management - new format 1H16 2H H17 2H17e 2017e 1H18e 2H18e 2018e 1H19e 2H19e 2019e Boutique net income ($m) Aligned and other net income ($m) Total net income ($m) Funds Management expenses ($m) Funds Management EBIT ($m) Average FUM - Boutique ($bn) Average FUM - Aligned/other ($bn) Average FUM - Total ($bn) Corporate 1H16 2H H17 2H17e 2017e 1H18e 2H18e 2018e 1H19e 2H19e 2019e Corporate EBIT ($m) Page 7

8 Challenger as at 14 February 2017 Recommendation Buy Price $11.40 Target (12 months) $13.00 Table 1 - Financial summary Challenger (CGF) Price Target (A$) Share Price (A$) Recommendation: Buy Market Cap (A$m) 6,517 INCOME STATEMENT VALUATION DATA Y/e June 30 ($m) e 2018e 2019e Y/e June 30 ($m) e 2018e 2019e Life operating earnings Net profit adj ($m) Funds management - net Basic reported EPS (c) income Corporate - net income Basic adjusted EPS (c) Total Revenue Basic P/E ratio (x) Operating expenses Fully diluted adjusted EPS (c) EBITDA Fully diluted P/E ratio (x) Depreciation & Amortisation EPS growth (%) -5% 7% 10% 16% 18% EBIT DPS (c) Net Interest Yield (%) 2.6% 2.9% 3.0% 3.5% 4.1% Pre-tax profit Franking (%) 86% 100% 100% 100% 100% Tax EV/EBITDA (x) Adjusted profit Price/CF (x) Investment experience Price/book (x) One-off items NTA ($) Reported net profit PROFITABILITY RATIOS OPERATING CASHFLOW Y/e June 30 ($m) e 2018e 2019e Y/e June 30 ($m) e 2018e 2019e EBIT/sales (%) 66% 65% 67% 69% 72% EBITDA Return on assets (%) 3.4% 3.2% 3.3% 3.4% 3.5% Net interest Return on equity (%) 14.2% 13.8% 14.3% 15.3% 16.5% Tax paid Dividend cover (x) Other Effective tax rate (%) 23% 23% 23% 23% 23% Operating cashflow Dividends paid LIQUIDITY AND LEVERAGE RATIOS Free cashflow Y/e June 30 ($m) e 2018e 2019e Net debt/(cash) ($m) BALANCE SHEET Net debt/equity (%) -4% -3% -3% -7% -4% Y/e June 30 ($m) e 2018e 2019e Net debt/ebitda (x) Assets (Life Company) Cash, fixed income and debt 8,514 9,316 10,275 11,867 13,590 INTERIMS Infrastructure Half end December 31 ($m) 1H15 1H16 1H17 1H18e 1H19e Property (net) 2,884 3,150 3,436 3,968 4,545 Sales revenue Equity and other 883 1,079 1,165 1,345 1,541 EBIT Total Life assets 12,795 14,112 15,455 17,849 20,441 Pre tax profit Cash and cash equivilants Adjusted profit Total other assets 923 1,087 1,087 1,087 1,087 One-off items and invest. Exp Total assets (inc Life) 13,816 15,283 16,628 19,149 21,658 Reported profit Interim DPS (cents) Total Life liabilities 10,542 11,789 12,912 15,171 17,375 Interim basic adjusted EPS (cps) Recourse debt Other liabilities DIVISIONALS Total liabilities (inc Life) 11,273 12,602 13,725 15,985 18,188 Y/e June e 2018e 2019e Life Shareholders equity 1,527 1,547 1,554 1,561 1,569 Investment yield - policy holder funds ( ,075 Total controlling equity 2,543 2,681 2,903 3,164 3,469 Interest expenses ($m) Total equity 2,639 2,684 2,906 3,167 3,473 Fees and commissions paid ($m) Product margin ($m) W/A shares (fully dilluted) Investment yield - s/h funds ($m) W/A shares (basic) Cash spread earnings ($m) Normalised capital growth ($m) Normalised COE ($m) Life expenses ($m) Life EBIT ($m) Product margin 2.8% 2.7% 2.8% 2.7% 2.7% Investment yield (shareholder funds) 1.0% 1.0% 0.9% 0.9% 0.9% Normalised capital growth 0.7% 0.8% 0.7% 0.7% 0.7% Total COE spread 4.47% 4.49% 4.36% 4.31% 4.30% Normalised capital growth margins: Cash, fixed interest and debt -0.4% -0.4% -0.4% -0.4% -0.4% Infrastructure 4.0% 4.0% 4.0% 4.0% 4.0% Property (net) 2.0% 2.0% 2.0% 2.0% 2.0% Equity and other 6.0% 4.5% 4.5% 4.5% 4.5% Total average investment ($m) 12,176 13,189 14,659 16,619 19,088 Funds Management - new format e 2018e 2019e Boutique net income ($m) Aligned and other net income ($m) Total net income ($m) Funds Management expenses ($m) Funds Management EBIT ($m) Average FUM - Boutique ($bn) Average FUM - Aligned/other ($bn) Average FUM - Total ($bn) Corporate e 2018e 2019e Corporate EBIT ($m) SOURCE: BELL POTTER SECURITIES ESTIMATES Page 8

9 Recommendation structure Buy: Expect >15% total return on a 12 month view. For stocks regarded as Speculative a return of >30% is expected. Research Team Staff Member TS Lim Sam Haddad Jonathon Higgins Title/Sector Head of Research Phone tslim shaddad jhiggins Hold: Expect total return between -5% John O Shea joshea and 15% on a 12 month view Chris Savage csavage Sell: Expect <-5% total return on a 12 month view Jonathan Snape Tim Piper John Hester Healthcare jsnape tpiper jhester Speculative Investments are either start-up enterprises with nil or only prospective operations or recently commenced operations with only forecast cash flows, or companies that have commenced operations or have been in operation for some time but have only forecast cash flows and/or a stressed balance sheet. Such investments may carry an Tanushree Jain Financials TS Lim Lafitani Sotiriou Resources Peter Arden David Coates Associates James Filius Healthcare/Biotech Banks/Regionals Diversified Resources Resources Associate Analyst tnjain tslim lsotiriou parden dcoates jfilius exceptionally high level of capital risk and volatility of returns. Bell Potter Securities Limited ACN Level 38, Aurora Place 88 Phillip Street, Sydney 2000 Telephone The following may affect your legal rights. Important Disclaimer: This document is a private communication to clients and is not intended for public circulation or for the use of any third party, without the prior approval of Bell Potter Securities Limited. In the USA and the UK this research is only for institutional investors. It is not for release, publication or distribution in whole or in part to any persons in the two specified countries. In Hong Kong this research is being distributed by Bell Potter Securities (HK) Limited which is licensed and regulated by the Securities and Futures Commission, Hong Kong. This is general investment advice only and does not constitute personal advice to any person. Because this document has been prepared without consideration of any specific client s financial situation, particular needs and investment objectives ( relevant personal circumstances ), a Bell Potter Securities Limited investment adviser (or the financial services licensee, or the representative of such licensee, who has provided you with this report by arraignment with Bell Potter Securities Limited) should be made aware of your relevant personal circumstances and consulted before any investment decision is made on the basis of this document. While this document is based on information from sources which are considered reliable, Bell Potter Securities Limited has not verified independently the information contained in the document and Bell Potter Securities Limited and its directors, employees and consultants do not represent, warrant or guarantee, expressly or impliedly, that the information contained in this document is complete or accurate. Nor does Bell Potter Securities Limited accept any responsibility for updating any advice, views opinions, or recommendations contained in this document or for correcting any error or omission which may become apparent after the document has been issued. Except insofar as liability under any statute cannot be excluded. Bell Potter Limited and its directors, employees and consultants do not accept any liability (whether arising in contract, in tort or negligence or otherwise) for any error or omission in this document or for any resulting loss or damage (whether direct, indirect, consequential or otherwise) suffered by the recipient of this document or any other person. Disclosure of interest: Bell Potter Securities Limited, its employees, consultants and its associates within the meaning of Chapter 7 of the Corporations Law may receive commissions, underwriting and management fees from transactions involving securities referred to in this document (which its representatives may directly share) and may from time to time hold interests in the securities referred to in this document. Lafitani Sotiriou owns 5000 shares in CGF. James Filius owns 400 shares in CGF. ANALYST CERTIFICATION Each research analyst primarily responsible for the content of this research report, in whole or in part, certifies that with respect to each security or issuer that the analyst covered in this report: (1) all of the views expressed accurately reflect his or her personal views about those securities or issuers and were prepared in an independent manner and (2) no part of his or her compensation was, is, or will be, directly or indirectly, related to the specific recommendations or views expressed by that research analyst in the research report. Page 9