South32. Wind in the sails. S32 AU/S32 LN/S32 SJ Outperform Price (at 13:20, 03 Mar 2017 GMT) A$2.70/ 1.66/R26.70

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1 AUSTRALIA/UNITED KINGDOM/SOUTH AFRICA S32 AU/S32 LN/S32 SJ Outperform Price (at 13:2, 3 Mar 217 GMT) A$2.7/ 1.66/R26.7 Valuation A$ 2.78/ 1.67/R DCF (WACC 1.%, beta 1.1, ERP 5.%, RFR 3.3%) 12-month target A$ 3.8/ 2.3/R month TSR % Volatility Index High GICS sector Materials Market cap A$m 14,375 3-day avg turnover A$m 93.6 Number shares on issue m 5,324 Investment fundamentals Year end 3 Jun 216A 217E 218E 219E Revenue m 5,812. 7, , ,457.1 EBIT m , ,977. 1,584. Reported profit m , , ,1.3 Adjusted profit m , , ,1.3 Gross cashflow m , ,38.3 1,861.2 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 % 46 1 ROA % ROE % EV/EBITDA x Net debt/equity % P/BV x S32 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, March 217 (all figures in USD unless noted, TP in AUD) 6 March 217 Wind in the sails Event Top line upside risk for S32 is building momentum. The proposed winter supply cuts could provide a boost in aluminium and alumina prices while the resumption of the 276 working day policy in some form could see thermal and metallurgical coal prices continue to recover from current levels. The outlook for nickel prices could also improve depending on the outcome of the Philippines mine audit appeal process. Impact Chinese supply side policy blowing in S32 s favour: Our Commodities team recently highlighted the potential upside risks should potential changes in Chinese government policies become a reality. The impact of the proposed winter curtailments on aluminium and alumina output and a resumption of the 276 working day policy in some form are the key measures under consideration and both could provide material upside to our base case commodity price forecasts if fully implemented. Potential share buy-back forecast to be as high as US$5m: At its 1HFY17 result, S32 disappointed market expectations, returning only the agreed minimum dividend to shareholders despite lifting its net cash position to US$859m at the end of December. However management noted at the result it remained committed to returning cash to shareholders. After completing the US$2m Metropolitan acquisition and unwinding working capital, we estimate net cash could rise to over US$9m by the end of the 3QFY17, at which point management indicated surplus cash above US$5m would be returned to shareholders, most likely in the form of an on market buy-back. Earnings and target price revision No change. Price catalyst 12-month price target: A$3.8 based on a NPV / 5.5x EV/Ebitda blend methodology. Catalyst: Confirmation on changes in Chinese policy present the most material external catalyst for S32. The formal announcement of the previously flagged share buy-back is also a potential positive catalyst for the stock in the next few months. Action and recommendation Maintain Outperform: S32 is trading at a discount to its peers on EV/Ebitda multiples, even under a spot price scenario which factors in a +US$9/t ironore price. The stock is trading on forward EV/Ebitda multiples below 4.x and a P/E multiple of 8.x. A spot price scenario delivers only modest upgrades to our earnings forecasts, and with our forecasts already 15% and 27% higher than Bloomberg consensus for FY17 and FY18 respectively we believe that S32 s share price is not factoring in any upside in its core commodities prices from current levels, which could benefit from favourable outcomes in both Chinese policy decisions. Please refer to page 8 for important disclosures and analyst certification, or on our website

2 Buy-back announcement expected in April S32 noted that it remained committed to returning surplus cash to shareholders. After factoring the dividend and Metropolitan acquisition, S32 s net cash position falls to US$467m. Our estimates suggest that favourable working capital movements, delayed shipments and increased distributions from the Manganese business could boost 3QFY17 cash to US$919m (adjusted for the interim dividend). On the subsequent analyst call management indicated a return of surplus cash could occur in the next few months, and we believe S32 could announce a ~US$4-5m buy-back or special dividend with the 3QFY17 production result., with an on market buy-back the most likely due to a lack Fig 1 We estimate S32 could announce a US$4-5m buy-back or special dividend Cash movements US$m Net cash end December 859 1HFY17 dividend* (192) Metropolitan acquisition (2) Working Capital unwind (Illawarra) 5 Additional Manganese distribution 1 Underlying free cash flow 32 Adjusted net cash end March* 919 Source: *Adjusted cash position for interim dividend declared, Macquarie Research, March 217 Only modest upside to our earnings forecasts under spot prices Breaking out the contributors to S32 s spot price scenario upside for CY17 highlight that aluminium and thermal coal are the key positive contributors, although these are largely offset by strong operating currencies and the downside risk to our metallurgical coal price forecasts. The upside case for S32 is more unified in CY18. Only silver and nickel do not contribute to the bullish spot price scenario in CY18 with the only material negative being stronger operational exchange rates. Fig 2 S32 offers limited upside in CY17 Fig 3 But FY18 spot price scenario is much higher S32- Spot Impact on Underlying Earnings by Commodity (US$m) 1, S32- Spot Impact on FY18 Underlying Earnings by Commodity (US$m) Source: IRESS, Bloomberg, Macquarie Research, March 217 Source: IRESS, Bloomberg, Macquarie Research, March 217 S32 looks cheap on Macquarie forecasts and spot prices Despite the material pull back in some of its core commodities, we note that S32 still looks cheap under a spot price scenario. We note that on our forecasts S32 is trading on FY17 P/E multiples of 7.9x and a free cash flow yield of 12%. For FY18 and FY19 there is a more material divergence between our forecasts and a spot price scenario. The company s earnings look attractive on our base case forecasts for FY18 and FY19, but under a spot price scenario the stock looks extremely cheap, trading on 6-7x P/E multiples and free cash flow yields of ~2%. 6 March 217 2

3 Fig 4 S32 s earnings multiples look attractive both on Macquarie forecasts and spot prices Macquarie forecasts Spot price scenario Y/E June FY17e FY18e FY19e Y/E June FY17e FY18e FY19e P/E 7.9x 8.8x 11.1x P/E 8.5x 7.1x 6.x EV/EBITDA 3.4x 3.2x 3.2x EV/EBITDA 3.6x 2.7x 1.9x Gearing (15%) (26%) (35%) Gearing (15%) (27%) (4%) Dividend yield 5.9% 5.7% 3.6% Dividend yield 5.5% 7.% 6.7% FCF Yield 12% 17% 13% FCF Yield 12% 19% 21% Source: S32, Platts, Bloomberg, IRESS, Macquarie Research, March 217 *Note multiples differ on front page due to calculation variances S32 is trading on a significant discount to its peers (BHP Billiton (BHP AU, A$25.34, Outperform, TP: A$33., Hayden Bairstow) and Rio Tinto (RIO AU, A$6.92, Outperform, TP: A$79., Hayden Bairstow) on EV/Ebitda multiples, even under a spot price scenario which factors in a +US$9/t iron-ore price. For the peer group analysis we look at December year end rather than S32 s June Y/E. S32 is comfortably the cheapest stock on P/E and EV/Ebitda multiples on Macquarie forecasts and still looks cheaper than BHP and RIO on EV/Ebitda multiples. Fig 5 Attractive earnings multiples using spot prices (December Y/E comparison Y/E Dec EV/Ebitda Y/E Dec P/E Y/E Dec FCF Yield Company Macquarie Spot Company Macquarie Spot Company Macquarie Spot BHP Billiton 5.6x 4.x BHP Billiton 14.7x 8.7x BHP Billiton 1% 18% Rio Tinto 5.2x 3.x Rio Tinto 12.2x 6.x Rio Tinto 11% 2% 2.9x 2.7x 7.x 6.6x 16% 16% Source: Macquarie Research, March 217 A volatile few months for S32 s core commodities It has been a volatile few months for a number of S32 s key commodities. Hard coking coal has grabbed many of the headlines, spiking at over US$3/t in the spot market and the 1QCY17 contract price of US$285/t a record in Australian dollar terms. However since the agreement for the quarterly contract price was made, prices fell +5% to ~US$15/t but have since recovered to ~US$16/t. Thermal coal prices have also seem some volatility, but nothing like for coking coal. Spot thermal coal prices peaked at ~US$11/t and have since fallen back to ~US$8/t a decline of less than 3%. Despite the decline we note that spot prices remain below our forecasts for the 2HFY17, partially offsetting the downside to coking coal in our earnings estimates for S32. Fig 6 Hard coking coal prices have fallen back Fig 7 Thermal coal prices still higher than Macq 35 Premium HCC FOB Aus (US$/t) Hard Coking Coal (US$/t) - Macq 12 Thermal coal (US$/t) - Spot Thermal coal (US$/t) - Macq Source: Platts, S32, Macquarie Research, March 217 Source: Bloomberg, S32, Macquarie Research, March March 217 3

4 Manganese ore prices were the other major headline grabber for S32 over the past six months. Spot manganese ore prices for the company s high grade GEMCO product surged from US$2.1/mtu to over US$9./mtu over the course of 216, a rise of 333%. Spot prices have started to fall back and now sit ~US$4.6/mtu, well below our forecast for the 1QCY17. We note that the low grade manganese ore price (37%) has fallen more significantly than the higher grade benchmark, down 61% from the peak to US$3.2/mtu, compared to 49% for the higher grade benchmark. Surprisingly, Ferromanganese prices have kept climbing, although we note that ferromanganese prices are far less meaningful to S32 than the manganese ore price. Fig 8 Manganese ore prices have begun to correct Fig 9 Ferromanganese prices have stayed high Manganese Ore (US$mtu) - Spot (44%) Manganese Ore (US$/mtu) - Macq Manganese Ore (US$mtu) - Spot (37%) 1,5 1,4 1,3 1,2 Ferromanganese (US$mtu) - Spot Ferromanganese (US$/mtu) - Macq 5. 1,1 4. 1, Source: Platts, S32, Macquarie Research, March 217 Source: Platts, S32, Macquarie Research, March 217 Spot alumina prices enjoyed a strong rise in the 4QCY16 increasing from US$23/t to US$35/t in just a few months, a rise of more than 5%. Prices have held the gains for the past month, falling back less than 1% and are trading in line with our 1QCY17 forecast of US$35/t, although we note our forecasts call for alumina to average US$325/t in the 2HCY17. Aluminium prices have also begun to move higher, but at a much slower pace than most of S32 s core commodities. Spot LME prices are have recently moved above US$.85/lb, having slowly climbed from the US$.65/lb low in late 215. We note there is near-term upside risk to our forecasts for aluminium based on current spot prices. Fig 1 Alumina has held the price move Fig 11 Aluminium prices moving higher Alumina (US$/t) - Spot Alumina (US$/t) - Macq 1.3 Aluminium (US$/lb) - Spot Aluminium (US$/lb) - Macq Source: Platts, S32, Macquarie Research, March 217 Source: IRESS, S32, Macquarie Research, March March 217 4

5 Fig 12 S32 NPV by asset Fig 13 S32 NPV by commodity 2,5 2, 1,5 1, 5 Nickel 6% Coking Coal 18% Energy Coal 14% Aluminium 22% Alumina 19% Manganese 9% Ag/Pb/ZN 2% Source: S32, Macquarie Research, March 217 Source: S32, Macquarie Research, March 217 Fig 14 S32 Australian cost base Fig 15 S32 South African cost base Cannington (A$m) Illawarra Metallurgical Coal (A$m) Material moved cost (A$/t) 4, 3,5 3, Australia Manganese (A$m) Worsley Alumina (A$m) 5 4 Mozal Aluminium (ZARm) South Africa Manganese (ZARm) Southern African cost base 5, 4, South Africa Aluminium (ZARm) South Africa Energy Coal (ZARm) ,5 2, 3 3, 15 1,5 2 2, 1 1, 5 1 1, 5 FY16 FY17e FY18e FY19e FY2e FY16 FY17e FY18e FY19e FY2e Source: S32, Macquarie Research, March 217 Source: S32, Macquarie Research, March 217 Fig 16 S32 earnings margins Fig 17 S32 cumulative cash flow generation 45% 4% 35% Ebitda margin (%) Ebit margin (%) Earnings margin (%) 16, 14, Net cash / (debt) (US$m) Market Capitalisation (US$m) 3% 12, 25% 1, 2% 8, 15% 6, 1% 4, 5% 2, % FY12 FY13 FY14 FY15 FY16 FY17e FY18e FY19e FY2e Source: S32, Macquarie Research, March 217 Source: S32, Macquarie Research, March March 217 5

6 Fig 18 S32 summary financials ASX: S32 Price: (A$ps) 2.7 Mkt cap: (A$m) 14,51 Year end: Jun Rating: Outperform Up/dn TSR LSE S32 Price: ( $ps) 1.66 Mkt cap: (US$m) 11,197 Diluted shares (m) 5,374 ASX Target: % 47% JSE S32 Price: (ZARps) 26.7 LSE Target: % 44% JSE Target: % 44% ASSUMPTIONS FY14 FY15 FY16 FY17e FY18e FY19e FY2e ASSUMPTIONS FY14 FY15 FY16 FY17e FY18e FY19e FY2e FY21e Exchange Rate A$/US$ Commodity prices Exchange Rate USDBRL Aluminium (US$/lb) Exchange Rate USDZAR Alumina (US$/t) RATIO ANALYSIS FY14 FY15 FY16 FY17e FY18e FY19e FY2e Manganese ore (US$mtu) Diluted share capital m 5,324 5,324 5,324 5,374 5,374 5,374 5,374 Ferromanganese (US$/t) 1,44 1, , ,8 EPS (diluted and pre sig. items) US Nickel (US$/lb) P/E x 24.9x 19.3x 8.4x 7.9x 8.8x 11.1x 13.7x Thermal coal (US$/t) CFPS US Coking coal (US$/t P/CF x 1.1x 7.8x 14.4x 9.x 7.1x 8.1x 9.4x Silver (US$/oz) DPS US Lead (US$/lb) Dividend yield %.%.%.5% 5.9% 5.7% 3.6% 2.9% Zinc (US$/lb) Franking Level % % % % % 5% 1% 1% Book value per share US$ps Production by commodity P/Book value x.9x 1.x 1.2x 1.x.9x.8x.8x Alumina R.O.E. (pre sig items) % 1% % -17% 14% 1% 8% 6% Worsley (kt) 3,916 3,819 3,961 3,974 3,965 4, 4, 4, R.O.A. (pre sig items) % 4% 6% 3% 14% 13% 1% 7% Alumar (kt) 1,262 1,328 1,335 1,313 1,35 1,32 1,28 1,28 Interest Cover x -2.x -1.9x.2x -.9x -1.x -1.x -1.x Total alumina (kt) 5,178 5,147 5,296 5,287 5,315 5,32 5,28 5,28 EBITDA per share US$ps Aluminium EV/EBITDA x 8.x 6.3x 9.6x 3.4x 3.2x 3.2x 2.5x Hillside (kt) ROIC % 3.3% 5.% 1.5% 12.3% 4.7% 5.1% 4.6% Bayside (kt) 89 FCF Yield % 9% 15% 6% 12% 17% 13% 1% Mozal (kt) EARNINGS FY14 FY15 FY16 FY17e FY18e FY19e FY2e Alumar (kt) 14 4 Sales Revenue US$m 8,344 7,743 5,812 7,378 7,555 7,457 7,12 Total aluminium (kt) 1,184 1, Other Revenue US$m Coal Total Revenue US$m 8,344 7,743 5,812 7,378 7,555 7,457 7,12 South Africa Energy Coal (mt) Operating Costs US$m (6,918) (5,892) (4,826) (4,845) (4,957) (5,148) (5,22) Illawarra Coking Coal (mt) Operational EBITDA US$m 1,426 1, ,532 2,597 2,39 1,9 Manganese ore Associates US$m 62 (6) (23) GEMCO (kt) 2,865 2,942 3,71 3,124 3,125 3,125 3,125 3,125 Corporate & Other Costs US$m (5) (9) Hotazel (kt) 1,566 2,355 1,711 1,84 1,74 1,74 1,74 1,74 Underlying Ebitda US$m 1,483 1,849 1,131 2,84 2,747 2,435 2,44 Total manganese ore (kt) 4,431 5,297 4,782 4,928 4,865 4,865 4,865 4,865 D&A US$m (823) (848) (775) (75) (77) (851) (811) Other Underlying Ebit US$m 66 1, ,134 1,977 1,584 1,233 Cerro Matoso Nickel (kt) Adjustments US$m (323) (482) (1,797) 166 Cannington Silver (moz) Profit from Operations US$m (1,441) 2,3 1,977 1,584 1,233 Cannington Lead (kt) Net Interest US$m (187) (6) (14) (148) (137) (119) (49) Cannington Zinc (kt) Profit Before Tax US$m (1,545) 2,152 1,84 1,465 1,184 Tax Expense US$m (47) (431) (7) (598) (572) (455) (367) EBITDA BY COMMODITY Minorities US$m Aluminium Alumina Nickel Manganese Ag/Pb/ZN Coking Coal Energy Coal Net Earnings US$m (1,615) 1,554 1,268 1, ,5 Earnings Adjustments US$m ,753 (141) Underlying Earnings US$m ,413 1,268 1, , 2,5 CASHFLOW FY14 FY15 FY16 FY17e FY18e FY19e FY2e Profit from Operations US$m (1,441) 2,3 1,977 1,584 1,233 2, Interest/Tax/D&A US$m 1,67 1,433 2,451 (373) (28) ,5 Working Capital/other US$m 15 (114) (13) (322) Net Operating Cashflow US$m 1,419 1, ,65 2,54 1,81 1,54 1, Capital Expenditure US$m (59) (629) (387) (618) (373) (421) (57) 5 Acquisitions/(Disposals) US$m Dividends received US$m Free cash flow US$m 1,35 1, ,373 1,855 1,489 1,158 FY14 FY15 FY16 FY17e FY18e FY19e FY2e Dividends US$m (245) (811) (511) (365) VALUATION New Equity US$m (4) (12) Projects US$m US$ A$m A$/sh GBPm GBP ZARm ZAR Debt Drawdown/(Repayment) US$m (658) (96) 193 (54) (25) (19) Worsley Alumina 1, , , Net Financing Cashflow US$m (658) (1) (64) (865) (536) (385) South Africa Aluminium 1, ,6.37 1, , Net change in cash US$m 1,35 1, , Mozal Aluminium , Brazil Aluminium , South Africa Energy Coal 1, , , , BALANCE SHEET FY14 FY15 FY16 FY17e FY18e FY19e FY2e Illawarra Metallurgical Coal 1, , , , Cash US$m ,225 2,536 3,526 4,479 5,252 Australia Manganese , PP&E & Mine Development US$m 1,353 9,55 8,651 8,565 8,168 7,738 7,634 South Africa Manganese , Other US$m 6,968 5,295 3,498 4,388 3,97 4,315 4,416 Cerro Matoso , Total Assets US$m 17,685 15,489 13,374 15,489 15,61 16,531 17,33 Cannington 2,2.37 2, , , Debt US$m 1,24 1, ,97 1,43 1, Third party products Total Liabilities US$m 4,735 4,454 3,952 4,554 3,447 3,263 3,156 Group and unallocated.... Total Net Assets / Equity US$m 12,95 11,35 9,422 1,935 12,154 13,269 14,147 Cash 2, , , , Net Debt / (Cash) US$m (312) (1,439) (2,482) (3,46) (4,253) Debt (1,19) (.21) (1,479) (.28) (887) (.17) (14,416) (2.68) Gearing (net debt/(nd + equity)) % 5% 4% (3%) (15%) (26%) (35%) (43%) Net Equity Value (@ 1% Nom) 11, , , , Gearing (net debt/equity) % 5% 4% (3%) (13%) (2%) (26%) (3%) Price Target (5% 5.5x EV/Ebitda/5% NPV) AUD 3.8 GBP 2.3 ZAR 37. Source: S32, Macquarie Research, March March 217 6

7 Macquarie Quant View The quant model currently holds a strong positive view on. The strongest style exposure is Growth, indicating this stock has good historic and/or forecast growth. Growth metrics focus on both top and bottom line items. The weakest style exposure is Profitability, indicating this stock is not efficiently converting investments to earnings; proxied by ratios like ROE or ROA. 26/1544 Global rank in Materials % of BUY recommendations 57% (12/21) Number of Price Target downgrades 3 Number of Price Target upgrades 16 Fundamentals Attractive Quant Local market rank Global sector rank Displays where the company s ranked based on the fundamental consensus Price Target and Macquarie s Quantitative Alpha model. Two rankings: Local market (Australia & NZ) and Global sector (Materials) Macquarie Alpha Model ranking A list of comparable companies and their Macquarie Alpha model score (higher is better). Factors driving the Alpha Model For the comparable firms this chart shows the key underlying styles and their contribution to the current overall Alpha score. Rio Tinto 1.8 Rio Tinto BHP Billiton BHP Billiton Orica James Hardie Industries Amcor Newcrest Mining Orica James Hardie Industries Amcor Newcrest Mining % -8% -6% -4% -2% % 2% 4% 6% 8% 1% Valuations Growth Profitability Earnings Momentum Price Momentum Quality Macquarie Earnings Sentiment Indicator The Macquarie Sentiment Indicator is an enhanced earnings revisions signal that favours analysts who have more timely and higher conviction revisions. Current score shown below. Drivers of Stock Return Breakdown of 1 year total return (local currency) into returns from dividends, changes in forward earnings estimates and the resulting change in earnings multiple. Rio Tinto BHP Billiton Orica James Hardie Industries Amcor Newcrest Mining Rio Tinto BHP Billiton Orica James Hardie Industries Amcor Newcrest Mining % -5% % 5% 1% Dividend Return Multiple Return Earnings Outlook 1Yr Total Return What drove this Company in the last 5 years Which factor score has had the greatest correlation with the company s returns over the last 5 years. Momentum 3 Month Relative Turnover Cash to Total Assets FY Capex to Sales FY Piotroski Score Turnover(USD) 125 Day Operating Leverage Inc. Turnover (USD) 25 Day -3% -24% -24% -25% Negatives Positives 2% 17% 21% 2% -3% -2% -1% % 1% 2% 3% How it looks on the Alpha model A more granular view of the underlying style scores that drive the alpha (higher is better) and the percentile rank relative to the sector and market. Alpha Model Score Valuation Growth Profitability Earnings Momentum Price Momentum Quality Capital & Funding Liquidity Risk Technicals & Trading Normalized Score Percentile relative to sector(/1544) Percentile relative to market(/422) Source (all charts): FactSet, Thomson Reuters, and Macquarie Research. For more details on the Macquarie Alpha model or for more customised analysis and screens, please contact the Macquarie Global Quantitative/Custom Products Group (cpg@macquarie.com) 6 March 217 7

8 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 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 Asia/Australian/NZ/Canada stocks only Recommendations 12 months Note: Quant recommendations may differ from Fundamental Analyst recommendations Financial definitions All "Adjusted" data items have had the following adjustments made: Added back: goodwill amortisation, provision for catastrophe reserves, IFRS derivatives & hedging, IFRS impairments & IFRS interest expense Excluded: non recurring items, asset revals, property revals, appraisal value uplift, preference dividends & minority interests EPS = adjusted net profit / efpowa* ROA = adjusted ebit / average total assets ROA Banks/Insurance = adjusted net profit /average total assets ROE = adjusted net profit / average shareholders funds Gross cashflow = adjusted net profit + depreciation *equivalent fully paid ordinary weighted average number of shares All Reported numbers for Australian/NZ listed stocks are modelled under IFRS (International Financial Reporting Standards). Recommendation proportions For quarter ending 31 December 216 AU/NZ Asia RSA USA CA EUR Outperform 57.53% 5.72% 45.57% 42.28% 6.58% 52.79% (for global coverage by Macquarie, 8.71% of stocks followed are investment banking clients) Neutral 33.9% 33.97% 43.4% 5.11% 37.23% 35.62% (for global coverage by Macquarie, 8.5% of stocks followed are investment banking clients) Underperform 8.56% 15.3% 11.39% 7.61% 2.19% 11.59% (for global coverage by Macquarie, 4.63% of stocks followed are investment banking clients) S32 AU vs ASX 1, & rec history S32 LN vs FTSE 1, & rec history S32 SJ vs FTSE/JSE, & rec history (all figures in AUD currency unless noted) BHP AU vs ASX 1, & rec history (all figures in GBP currency unless noted) RIO AU vs ASX 1, & rec history (all figures in ZAR currency unless noted) (all figures in AUD currency unless noted) (all figures in AUD currency unless noted) Note: Recommendation timeline if not a continuous line, then there was no Macquarie coverage at the time or there was an embargo period. Source: FactSet, Macquarie Research, March month target price methodology S32 AU: A$3.8 based on a NPV / 5.5x EV/Ebitda blend methodology S32 LN: 2.3 based on a NPV / 5.5x EV/Ebitda blend methodology S32 SJ: R37. based on a NPV/5.5x EV/Ebitda blend methodology BHP AU: A$33. based on a NPV - 7.5x EV/Ebitda blend methodology RIO AU: A$79. based on a 5/5 Blend 6.5x EV/Ebitda and NPV methodology Company-specific disclosures: S32 AU: Macquarie and its affiliates collectively and beneficially own or control 1% or more of any class of Limited's equity securities. S32 LN: Macquarie Group Limited together with its affiliates, beneficially owns 1% or more of a class of common equity securities of Ltd. BHP AU: Macquarie and its affiliates collectively and beneficially own or control 1% or more of any class of BHP Billiton Limited's equity securities. RIO AU: Macquarie Capital (USA) Inc. or one of its affiliates, expects to receive or intends to seek compensation for investment banking services from Rio Tinto Ltd in the next three months. Important disclosure information regarding the subject companies covered in this report is available at 6 March 217 8

9 Date Stock Code (BBG code) Recommendation Target Price 17-Feb-217 S32 AU Outperform A$3.8 4-Feb-217 S32 AU Outperform A$ Jan-217 S32 AU Outperform A$3.8 2-Dec-216 S32 AU Outperform A$ Dec-216 S32 AU Outperform A$ Nov-216 S32 AU Outperform A$ Oct-216 S32 AU Outperform A$3.3 2-Oct-216 S32 AU Outperform A$2.9 2-Sep-216 S32 AU Outperform A$ Aug-216 S32 AU Underperform A$1.5 6-Jul-216 S32 AU Underperform A$ May-216 S32 AU Underperform A$ Feb-216 S32 AU Neutral A$1.2 6-Feb-216 S32 AU Neutral A$1. 21-Jan-216 S32 AU Neutral A$ Dec-215 S32 AU Neutral A$ Oct-215 S32 AU Outperform A$1.8 7-Oct-215 S32 AU Outperform A$ Sep-215 S32 AU Outperform A$1.8 1-Jul-215 S32 AU Outperform A$ May-215 S32 AU Outperform A$ May-215 S32 AU Outperform A$2.4 Target price risk disclosures: S32 AU: Any inability to compete successfully in their markets may harm the business. This could be a result of many factors which may include geographic mix and introduction of improved products or service offerings by competitors. The results of operations may be materially affected by global economic conditions generally, including conditions in financial markets. The company is exposed to market risks, such as changes in interest rates, foreign exchange rates and input prices. From time to time, the company will enter into transactions, including transactions in derivative instruments, to manage certain of these exposures. S32 LN: Any inability to compete successfully in their markets may harm the business. This could be a result of many factors which may include geographic mix and introduction of improved products or service offerings by competitors. The results of operations may be materially affected by global economic conditions generally, including conditions in financial markets. The company is exposed to market risks, such as changes in interest rates, foreign exchange rates and input prices. From time to time, the company will enter into transactions, including transactions in derivative instruments, to manage certain of these exposures. S32 SJ: Any inability to compete successfully in their markets may harm the business. This could be a result of many factors which may include geographic mix and introduction of improved products or service offerings by competitors. The results of operations may be materially affected by global economic conditions generally, including conditions in financial markets. The company is exposed to market risks, such as changes in interest rates, foreign exchange rates and input prices. From time to time, the company will enter into transactions, including transactions in derivative instruments, to manage certain of these exposures. BHP AU: Any inability to compete successfully in their markets may harm the business. This could be a result of many factors which may include geographic mix and introduction of improved products or service offerings by competitors. The results of operations may be materially affected by global economic conditions generally, including conditions in financial markets. The company is exposed to market risks, such as changes in interest rates, foreign exchange rates and input prices. From time to time, the company will enter into transactions, including transactions in derivative instruments, to manage certain of these exposures. RIO AU: Any inability to compete successfully in their markets may harm the business. This could be a result of many factors which may include geographic mix and introduction of improved products or service offerings by competitors. The results of operations may be materially affected by global economic conditions generally, including conditions in financial markets. The company is exposed to market risks, such as changes in interest rates, foreign exchange rates and input prices. From time to time, the company will enter into transactions, including transactions in derivative instruments, to manage certain of these exposures. Analyst certification: We hereby certify that all of the views expressed in this report accurately reflect our personal views about the subject company or companies and its or their securities. We also certify that no part of our compensation was, is or will be, directly or indirectly, related to the specific recommendations or views expressed in this report. The Analysts responsible for preparing this report receive compensation from Macquarie that is based upon various factors including Macquarie Group Limited (MGL) total revenues, a portion of which are generated by Macquarie Group s Investment Banking activities. 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10 This publication was disseminated on 3 March 217 at 14:54 UTC. Macquarie Wealth Management Macquarie Group 6 March 217 1