AUSTRALIA KAR AU Price (at 05:10, 29 Mar 2017 GMT) Outperform A$1.83 Valuation A$ - DCF (WACC 11.1%, beta 1.7, ERP 5.0%, RFR 3.3%) 2.79 12-month target A$ 2.40 12-month TSR % +31.5 Volatility Index High GICS sector Energy Market cap A$m 447 30-day avg turnover A$m 0.9 Number shares on issue m 245.2 Investment fundamentals Year end 30 Jun 2016A 2017E 2018E 2019E Revenue m 0.0 0.0 0.0 0.0 EBIT m -23.5-25.4-29.4-20.4 Reported profit m -105.1-18.7-27.9-20.2 Adjusted profit m -22.1-24.0-27.9-20.2 Gross cashflow m -16.2-19.4-14.4-16.1 CFPS -6.6-7.9-5.9-6.6 CFPS growth % 1.2-20.6 26.1-11.9 EPS adj -9.0-9.8-11.4-8.2 EPS adj growth % -2.5-8.6-16.5 27.6 Total DPS 0.0 0.0 0.0 0.0 Total div yield % 0.0 0.0 0.0 0.0 ROA % -2.3-2.8-3.2-2.0 ROE % -2.4-2.8-3.3-2.1 EV/EBITDA x 0.2 0.2 0.2 0.2 Net debt/equity % -55.9-47.4-7.1-0.5 P/BV x 0.5 0.5 0.5 0.4 KAR AU vs Small Ordinaries, & 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 2017 (all figures in AUD unless noted) Losing the deal Event KAR has announced that Petrobras (PBR US, US$9.66, Neutral, TP: US$9.30) has withdrawn the appeal process for Baúna and Tartaruga Verde, effectively ending the initial sales process for the final negotiation rights. Impact Negotiation agreement terminated PBR has withdrawn the injunction appeal with the Federal Supreme Court (STF) for the divestment of 100% of Baúna and 50% of Tartaruga Verde. The withdrawal effectively terminates the agreement for KAR and a potential JV partner, speculated to be Woodside Petroleum (WPL AU, A$31.94, Neutral, TP: A$30.00), to acquire the fields. but still hoping for acquisition: Despite the disappointment, management indicated it believes the assets would be back on the market in the imminent future, following the competitive process methodology desired by the Brazilian Federal Accounting Court (TCU). KAR stated it would remain committed to acquiring the two fields if such a process were to happen. A disappointing outcome: While we are disappointed by the outcome, we had not attributed any value to the deal. The termination removes the possibility of being tied up in courts and allows the parties to progress with a court-approved methodology. Earnings and target price revision No change. We do not include either project in our modelling. Price catalyst 12-month price target: A$2.40 based on a DCF methodology. Catalyst: Quarterly report. Action and recommendation Retain Outperform: As previously highlighted, we did not attribute the value of Baúna and Tartaruga in our company valuation, with our core valuation incorporating the Echidna/Kangaroo fields, risked at ~30%. However, we see it as likely that the stock will trade at much lower levels without any near-term catalysts for use of its significant cash balance. 30 March 2017 Macquarie Securities (Australia) Limited Please refer to page 5 for important disclosures and analyst certification, or on our website www.macquarie.com/research/disclosures.
Fig 1 financials (KAR) Share Price: A$1.50 Outperform Shares: 244.9m Profit & Loss 2H16a 1H17e FY16a FY17e FY18e FY19e Price assumptions 2H16a 1H17e FY16a FY17e FY18e FY19e Sales Revenue A$m - - - - - - US$/A$ 0.75 0.74 0.73 0.75 0.74 0.74 add other income A$m 0 1 0 1 - - Domestic gas A$/GJ NA NA 7.75 7.30 7.34 7.51 Total revenue A$m 0 1 0 1 - - Oil-WTI US$/bbl 39.39 46.99 41.88 50.24 55.00 53.63 less operating costs A$m (10) (11) (18) (19) (16) (16) EBITDAX A$m (10) (10) (18) (18) (16) (16) Production 2H16a 1H17e FY16a FY17e FY18e FY19e less exploration expensed A$m (1) (0) (2) (0) (9) - Natural gas PJ - - - - - - EBITDA A$m (10) (11) (19) (18) (25) (16) Crude mmbbl - - - - - - less dep. & amort. A$m (1) (1) (1) (1) (1) (1) Condensate mmbbl - - - - - - less other non-cash costs A$m - - - - - - LPG k tonnes - - - - - - EBIT A$m (13) (13) (24) (23) (30) (21) LNG m tonnes - - - - - - less net interest A$m 0 0 1 2 1 0 Total production mmboe - - - - - - Pre-tax operating profit A$m (12) (12) (22) (21) (29) (21) less tax expense (incl PRRT) A$m - 0-0 - - Net operating profit A$m (12) (12) (22) (21) (29) (21) 2.00 mmboe Gas Crude Condensate LPG LNG add non-recurring items A$m (9) 11 (83) 11 - - 1.80 Reported profit A$m (21) (1) (105) (10) (29) (21) 1.60 Adjusted profit A$m (12) (12) (22) (21) (29) (21) 1.40 EPS (Adjusted) Acps (5) (5) (9) (9) (12) (8) EPS Grow th % (23%) (1%) (2%) 4% (37%) 28% DPS (Ordinary & Special) Acps - - - - - - Franking % 100% 100% 100% 100% 100% 100% EFPOWA shares on issue m 245 245 245 245 245 245 0.00 3Q15 3Q16 3Q17 3Q18 3Q19 3Q20 Cashflow Analysis 2H16a 1H17e FY16a FY17e FY18e FY19e Reserves FY16a FY17e FY18e FY19e Cash from operations A$m 2 1 3 3 1 0 Natural gas Tcf - - - - less operating costs A$m (10) (11) (20) (19) (16) (16) Condensate mmbbl - - - - less interest paid A$m (0) (0) (0) (0) - - Oil mmbbl - - - - less tax paid A$m (13) - (13) - - - Total 2P reserves mmboe - - - - Gross cashflow from operation A$m (22) (10) (30) (16) (15) (16) Contingent resources mmbbl - - - - less exploration & evaluation A$m (15) (30) (55) (150) (383) (294) Total reserves & resources mmboe - - - - less acq./inv. A$m (0) 0 0 (20) - - add other A$m - - - - - - 2P Reserves / production years nmf nmf nmf nmf less dividends A$m - - - - - - EV / 1P reserves A$/boe nmf nmf nmf nmf add debt movements A$m - - - - - - EV / 2P reserves A$/boe nmf nmf nmf nmf add equity movements A$m (1) (1) (3) (1) 100 310 EV / Total resources A$/boe nmf nmf nmf nmf Net cashflow A$m (37) (40) (88) (187) (298) - EV / 1P reserves US$/boe nmf nmf nmf nmf add exchange rate adj. A$m (6) 11 14 11 - - EV / 2P reserves US$/boe nmf nmf nmf nmf Increase in cash A$m (44) (29) (74) (176) (298) - EV / Total resources US$/boe nmf nmf nmf nmf Net debt at year end A$m (480) (450) (480) (303) (5) (5) 1.20 1.00 0.80 0.60 0.40 0.20 Balance sheet 2H16a 1H17e FY16a FY17e FY18e FY19e Per bbl statistics 2H16a 1H17e FY16a FY17e FY18e FY19e Cash & cash eq. A$m 480 450 480 303 5 5 Sales Revenue / boe US$/boe nmf nmf nmf nmf nmf nmf Current assets A$m 490 460 490 313 15 15 EBIT / boe US$/boe nmf nmf nmf nmf nmf nmf Fixed assets A$m 428 457 428 596 969 1,261 Profit / boe US$/boe nmf nmf nmf nmf nmf nmf Total assets A$m 917 917 917 910 984 1,276 Opex/boe US$/boe nmf nmf nmf nmf nmf nmf Current liabilities A$m 14 14 14 14 14 14 Capex/boe US$/boe nmf nmf nmf nmf nmf nmf Total liabilities A$m 59 59 59 59 59 59 DDA/boe US$/boe nmf nmf nmf nmf nmf nmf Shareholder equity A$m 858 858 858 850 924 1,217 Cash flow /boe US$/boe nmf nmf nmf nmf nmf nmf Ratio analysis 2H16a 1H17e FY16a FY17e FY18e FY19e NPV @ WACC of 11.0% ND/ND+E % nmf nmf (126.8%) (55.5%) (0.5%) (0.4%) Discovered assets A$m A$ps % Interest cover x (108.9 x) (97.0 x) (112.4 x) (173.0 x) nmf nmf Santos Basin, Brazil - Discovered 478 0.95 Dividend payout ratio % - - - - - - Static assets & exploration ROA % (1.4%) (1.4%) (2.6%) (2.5%) (3.0%) (1.6%) Brow se Basin, Aus - Exploration 15 0.06 ROE % (1.4%) (1.4%) (2.4%) (2.5%) (3.3%) (1.9%) Santos Basin, Brazil - Exploration 5 0.02 ROIC % (3.7%) (3.3%) (6.0%) (4.9%) (4.1%) (2.0%) Tumbes Basin, Peru - Exploration 36 0.14 Effective tax rate % - 0.4% - - - - Maranon Basin, Peru - Exploration 3 0.01 EBITDA margin % nmf nmf nmf nmf nmf nmf EBIT margin % nmf nmf nmf nmf nmf nmf Financial assets Free cash flow A$m (37) (40) (85) (166) (398) (310) Cash & Investments 450 1.80 PV of Risked Origin consideration 6 0.02 Valuation 2H16a 1H17e FY16a FY17e FY18e FY19e Cash raised from exercise of options - - EV/EBITDAX ratio x nmf nmf nmf nmf nmf nmf Debt - - P/E ratio x nmf nmf nmf nmf nmf nmf Corporate costs (62) (0.25) P/CEPS ratio x nmf nmf nmf nmf nmf nmf Core NPV 931 2.76 FCF yield % nmf nmf nmf nmf nmf nmf Shareprice prem/(disc) to NPV (46%) Dividend yield % - - - - - - - core NPV per share (A$) 2.44 - risked NPV per share (A$) 2.76 Sensitivities (Adjusted earnings) NPV FY16a FY17e FY18e FY19e - unrisked NPV per share (A$) 22.88 Oil price (+US$1/bbl) A$m 2.76 (22) (21) (29) (50) delta 0.00 - - - (29) 0.1% - - - 139.4% Currency (+1c) A$m 2.74 (22) (21) (29) (32) delta (0.01) - - 0 (11) (0.5%) - - (0.4%) 54.4% Source: Company data, Macquarie Research, March 2017 30 March 2017 2
Fig 2 NAV breakdown - Valuation 30 Mar17 Discovered Assets Interest Unrisked Unrisked Risk Risked Risked USD/boe Aps Aps % NPV Sensitivity mmboe AUD (m) mmboe AUD (m) risked unrisked -$10 Base +$10 BrazilKangaroo / Echidna (Santos) - P 100% 116 729 30% 35 219 4.7 0.87 2.91 32% 1.06 0.87 1.12 BrazilBilby (Santos) - Eocene/Maastric 100% 100 360 15% 15 20 3.0 0.08 1.44 3% 0.08 0.08 0.08 Sub Total 216 1,089 50 239 7.7 0.95 4.34 35% 1.14 0.95 1.20 Static Assets & Exploration BrazilTaipan (Santos) - Tertiary 100% 128 400 10% 13 16 2.5 0.06 1.59 2% 0.06 0.06 0.06 BrazilPlatypus (Santos) 100% 100 317 6% 6 4 2.5 0.02 1.27 1% 0.02 0.02 0.02 BrazilJoey (Santos) 100% 20 76 12% 2 (5) 3.5 (0.02) 0.30 (1%) (0.01) (0.02) (0.01) BrazilEmu Updip (Santos) 100% 20 76 12% 2 (5) 3.5 (0.02) 0.30 (1%) (0.01) (0.02) (0.01) BrazilPuggle (Santos) 100% 20 76 12% 2 (5) 3.5 (0.02) 0.30 (1%) (0.01) (0.02) (0.01) Peru Merluza (Peru - Tumbes) 75% 142 374 1% 2 1 2.0 0.00 1.49 0% 0.00 0.00 0.00 Peru Marina (Peru - Tumbes) 75% 240 624 4% 9 8 2.0 0.03 2.49 1% 0.03 0.03 0.03 Peru Bonito (Peru - Tumbes) 75% 416 1,094 4% 16 28 2.0 0.11 4.36 4% 0.11 0.11 0.11 Peru Marlin (Peru - Tumbes) 75% 93 245 1% 1 (0) 2.0 (0.00) 0.97 (0%) (0.00) (0.00) (0.00) Peru Maranon Basin - Peru (onshore) 50% 45 120 3% 1 3 2.0 0.01 0.48 0% 0.01 0.01 0.01 Aust Elvie (WA-314-P) 100% 526 853 5% 24 15 1.3 0.06 3.40 2% 0.06 0.06 0.06 Sub Total 1,750 4,255 78 59 0.6 0.24 16.96 9% 0.26 0.24 0.27 Financial Assets Cash & Investments 450 450 1.80 1.80 65% 1.80 1.80 1.80 PV of Risked Origin consideration 6 0.02 0.02 1% 0.02 0.02 0.02 Cash raised from exercise of options - - - - - - - - Debt - - - - - - - - Corporate costs (62) (62) (0.25) (0.25) (9%) (0.25) (0.25) (0.25) Sub Total 388 394 1.57 1.57 57% 1.57 1.57 1.57 Overall total 1,965 mmboe 128 692 AUDm 2.76 22.88 100% 2.97 2.76 3.04 - core NPV per share (A$) 50 2.44 2.63 2.44 2.69 - risked NPV per share (A$) 128 2.76 2.97 2.76 3.04 - unrisked NPV per share (A$) 1,965 22.88 23.74 22.88 24.01 Diluted number of shares (m) 250.8 Ordinary Shares on Issue (m) 244.9 Post money shares - In-the-money options outstanding (m) 5.9 Exchange Rate 0.75 WACC (post tax) 11.0% Share Price 1.50 Price premium (discount) to NPV (46%) Source: Company data, Macquarie Research, March 2017 30 March 2017 3
Macquarie Quant View The quant model currently holds a reasonably negative view on. The strongest style exposure is Price Momentum, indicating this stock has had strong medium to long term returns which often persist into the future. The weakest style exposure is Profitability, indicating this stock is not efficiently converting investments to earnings; proxied by ratios like ROE or ROA. 321/550 Global rank in Energy % of BUY recommendations 100% (4/4) Number of Price Target downgrades 0 Number of Price Target upgrades 0 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 (Energy) 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. -0.1 0.8-0.7-0.7-2.2-1.8-3.0-2.0-1.0 0.0 1.0 2.0 3.0-100% -80% -60% -40% -20% 0% 20% 40% 60% 80% 100% 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. 0.1-1.2-0.9 0.2 0.4-0.4-3.0-2.0-1.0 0.0 1.0 2.0 3.0-100% -50% 0% 50% 100% 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. Price Upside Consensus Recommendation Price to Sales FY0 Interest Cover 3m Earnings Revisions Momentum 6 Month Price to Earnings NTM Price to Earnings FY1-25% -28% -29% -24% Negatives Positives 24% 24% 24% 29% -30% -20% -10% 0% 10% 20% 30% 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 -0.66-1.05-0.73-1.53-0.06 0.35-0.29-0.16-1.74-0.74-0.23 Percentile relative to sector(/550) Percentile relative to market(/421) 0 50 100 0 50 100 0 0 1 1 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) 30 March 2017 4
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 >+10% Neutral expected return from -10% to +10% Underperform expected return <-10% Macquarie South Africa Outperform expected return >+10% Neutral expected return from -10% to +10% Underperform expected return <-10% 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 3000 index return Neutral (Hold) return within 5% of Russell 3000 index return Underperform (Sell) return >5% below Russell 3000 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 60 100% in a year investors should be aware this stock is highly speculative. High stock should be expected to move up or down at least 40 60% in a year investors should be aware this stock could be speculative. Medium stock should be expected to move up or down at least 30 40% in a year. Low medium stock should be expected to move up or down at least 25 30% 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 2016 AU/NZ Asia RSA USA CA EUR Outperform 57.53% 50.72% 45.57% 42.28% 60.58% 52.79% (for global coverage by Macquarie, 8.71% of stocks followed are investment banking clients) Neutral 33.90% 33.97% 43.04% 50.11% 37.23% 35.62% (for global coverage by Macquarie, 8.05% of stocks followed are investment banking clients) Underperform 8.56% 15.30% 11.39% 7.61% 2.19% 11.59% (for global coverage by Macquarie, 4.63% of stocks followed are investment banking clients) KAR AU vs Small Ordinaries, & rec history PBR US vs S&P 500, & rec history WPL AU vs ASX 100, & rec history (all figures in AUD currency unless noted) (all figures in USD 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 2017 12-month target price methodology KAR AU: A$2.40 based on a DCF methodology PBR US: US$9.30 based on a DCF methodology WPL AU: A$30.00 based on a DCF methodology Company-specific disclosures: KAR AU: Macquarie and its affiliates collectively and beneficially own or control 1% or more of any class of Australia Limited's equity securities. MACQUARIE SECURITIES (AUSTRALIA) LIMITED or one of its affiliates is managed an on market buyback for Australia Ltd, in the past 12 months. WPL AU: Macquarie Group Limited together with its affiliates beneficially owns 1% or more of the equity securities of Woodside Petroleum Limited. Important disclosure information regarding the subject companies covered in this report is available at www.macquarie.com/research/disclosures. Date Stock Code (BBG code) Recommendation Target Price 03-Feb-2017 KAR AU Outperform A$2.40 01-Feb-2017 KAR AU Outperform A$2.70 03-Aug-2016 KAR AU Outperform A$2.90 08-Jan-2016 KAR AU Outperform A$3.00 18-Sep-2015 KAR AU Outperform A$3.50 09-Sep-2015 KAR AU Outperform A$2.80 06-Aug-2015 KAR AU Outperform A$3.40 15-Apr-2015 KAR AU Outperform A$3.75 20-Mar-2015 KAR AU Outperform A$4.00 09-Dec-2014 KAR AU Outperform A$4.30 08-Oct-2014 KAR AU Outperform A$5.00 16-May-2014 KAR AU Outperform A$5.25 Target price risk disclosures: KAR 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. 30 March 2017 5
This publication was disseminated on 30 March 2017 at 09:44 UTC. Macquarie Wealth Management PBR US: 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. WPL 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. General disclosure: This research has been issued by Macquarie Securities (Australia) Limited ABN 58 002 832 126, AFSL 238947, a Participant of the ASX and Chi-X Australia Pty Limited. This research is distributed in Australia by Macquarie Wealth Management, a division of Macquarie Equities Limited ABN 41 002 574 923 AFSL 237504 ("MEL"), a Participant of the ASX, and in New Zealand by Macquarie Equities New Zealand Limited ( MENZ ) an NZX Firm. Macquarie Private Wealth s services in New Zealand are provided by MENZ. Macquarie Bank Limited (ABN 46 008 583 542, AFSL No. 237502) ( MBL ) is a company incorporated in Australia and authorised under the Banking Act 1959 (Australia) to conduct banking business in Australia. None of MBL, MGL or MENZ is registered as a bank in New Zealand by the Reserve Bank of New Zealand under the Reserve Bank of New Zealand Act 1989. Apart from Macquarie Bank Limited ABN 46 008 583 542 (MBL), any MGL subsidiary noted in this research,, is not an authorised deposit-taking institution for the purposes of the Banking Act 1959 (Australia) and that subsidiary s obligations do not represent deposits or other liabilities of MBL. MBL does not guarantee or otherwise provide assurance in respect of the obligations of that subsidiary, unless noted otherwise. This research contains general advice and does not take account of your objectives, financial situation or needs. Before acting on this general advice, you should consider the appropriateness of the advice having regard to your situation. We recommend you obtain financial, legal and taxation advice before making any financial investment decision. 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Opinions expressed are subject to change without notice. The Macquarie Group accepts no liability whatsoever for any direct, indirect, consequential or other loss arising from any use of this research and/or further communication in relation to this research. The Macquarie Group produces a variety of research products, recommendations contained in one type of research product may differ from recommendations contained in other types of research. The Macquarie Group has established and implemented a conflicts policy at group level, which may be revised and updated from time to time, pursuant to regulatory requirements; which sets out how we must seek to identify and manage all material conflicts of interest. The Macquarie Group, its officers and employees may have conflicting roles in the financial products referred to in this research and, as such, may effect transactions which are not consistent with the recommendations (if any) in this research. The Macquarie Group may receive fees, brokerage or commissions for acting in those capacities and the reader should assume that this is the case. The Macquarie Group s employees or officers may provide oral or written opinions to its clients which are contrary to the opinions expressed in this research. Important disclosure information regarding the subject companies covered in this report is available at www.macquarie.com/disclosures Macquarie Group 30 March 2017 6