AUSTRALIA CRZ AU Price (at 9:48, 18 Feb 15 GMT) Outperform A$1.23 Valuation A$ 12.59 - DCF (WACC 8.1%, beta 1.2, ERP 5., RFR 3.8%, TGR 3.) 12-month target A$ 12.3 12-month TSR % +24.1 Volatility Index Low/Medium GICS sector Software & Services Market cap A$m 2,445 3-day avg turnover A$m 8.1 Number shares on issue m 239. Investment fundamentals Year end 3 Jun 14A 15E 16E 17E Revenue m 235.6 315.9 351.6 388. EBIT m 138.5 161. 182.3 3.3 Reported profit m 95.5 13.6 117.4 131.2 Adjusted profit m 95.5 13.6 117.4 131.2 Gross cashflow m 99.6 111.6 126.1 14.6 CFPS 41.9 46.9 53. 59.1 CFPS growth % 14.9 11.8 13. 11.5 PGCFPS x 24.4 21.8 19.3 17.3 PGCFPS rel x 2.55 2.22 2.14 1.98 EPS adj 4.2 43.6 49.4 55.2 EPS adj growth % 13.4 8.3 13.4 11.7 PER adj x 25.4 23.5.7 18.5 PER rel x 1.51 1.37 1.3 1.23 Total DPS 32.1 35.9 4.7 45.4 Total div yield % 3.1 3.5 4. 4.4 Franking % 1 1 1 1 ROA % 42.8 36.3 37.6 41.6 ROE % 56.4 51.7 52.2 53.1 EV/EBITDA x 19. 16.8 15.1 13.9 Net debt/equity % 79.3 85.2 69. 55.1 P/BV x 13.1 11.3 1.3 9.4 CRZ 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, February 15 (all figures in AUD unless noted) 18 February 15 Macquarie Securities (Australia) Limited Motoring along nicely Event CRZ reported 1H15 NPAT of $46.7m, up 7% on pcp. Impact Solid first half: While the result and accompanying outlook statement does imply small downgrades to consensus.earnings, the overall result was a solid outcome. The negatives were signs of some maturity in growth drivers that have propelled the business for a number of years. In particular, Data Services growth slowed to 8% after countless periods of double-digit growth. Display advertising spend fell to 2.7%, which was boosted by the consolidation of a niche auto vertical ad business. There is some cyclicality to Display, but the soft growth rate was also impacted by deterioration in Carsales new car ecosystem. On the positive side, Dealer and Private revenues demonstrated strong growth, although the latter was boosted to an extent by growth in Tyresales. Cost growth was muddied by the Stratton acquisition and the expansion of Tyresales, however management noted the margins for traditional Carsales businesses expanded by ~6bps. Core value proposition from Auto remains compelling: Carsales did produce some statistics to highlight its dominance over its nearest competitors in Carsguide and Gumtree. Of note, 86% of its audience doesn t visit the site of its nearest competitor and collectively it captures more than 25x the total session minutes than its nearest competitor. These statistics speak to the strong market position that Carsales holds and the value its site delivers, and hence speaks to its capacity to implement price rises over time. We currently assume a modest 4% price rise in Dealer enquiry fees from 31 March, and believe Carsales has capacity to implement similar rises on an annual basis going forward. If conversion rates and time-to-sell continue to fall over time, it is possible that Carsales is more aggressive than this. Non-auto, International, Tyresales and Stratton also loom as growth drivers going forward: Incremental to growing Auto returns, Carsales continues to invest in growth in adjacencies and international businesses. Management remain upbeat on each of these opportunities, although the financial contributions are muted, given the ongoing investment for mediumterm growth. SK Encar saw 38% revenue growth, mostly driven by dealer volume growth and display, with yield growth expected to pick up in FY16. Earnings and target price revision EPS changes: FY15-4.6%, FY16-2.9%. TP increased by 45cps to $12.3/sh. Price catalyst 12-month price target: A$12.3 based on a DCF methodology. Catalyst: FY15 result (August 15). Action and recommendation Maintain Outperform. We believe the business remains well positioned longer-term as it leverages its strong core market position and through International opportunities and other adjacencies. In the current market environment, an FY16 PER of.7x does not appear challenging given the growth prospects. Please refer to page 8 for important disclosures and analyst certification, or on our website www.macquarie.com/research/disclosures.
Result overview This was a solid result from Carsales, with the delivery of growth across most key revenue drivers, albeit in most cases at a slower rate than 2H14 growth rates. Overall EBITDA and NPAT were 2% and 7% below our first half estimates. Margins, as expected, came under pressure given the increased contributions from Stratton and Tyresales. Margins fell from 56. in 1H14 to 48.3% in 1H15. Traditional Carsales business margins expanded by 6bps. Fig 1 CRZ P&L summary FY12 FY13 1H14 2H14 FY14 1H15 2H15e FY15e FY16e Dealer 83.3 97. 49.9 55.3 15.2 53.8 59.2 113. 121.8 % ch vs pcp 16. 16.4% 11.4% 5.9% 8. 7.8% 7. 7.4% 7.8% Private 33.3 35.7 18.3 21.6 39.9 21.2 24.2 45.4 49.8 % ch vs pcp 3.4% 7.2% 7. 16.1% 11.8% 15.8% 12.2% 13.9% 9.6% Display 43.7 54.5 3.1 28.7 58.8 3.9 29.6 6.5 63.5 % ch vs pcp 46. 24.9% 8.7% 7.1% 7.9% 2.7% 3. 2.8% 5. Dealer & Data Services 24. 27.9 14. 17.7 31.7 15.2 19.1 34.3 36.5 % ch vs pcp 26. 16. 11.8% 15.1% 13.6% 8. 8. 8.2% 6.4% Stratton Finance 28.5 31.5 6. 77.3 % ch vs pcp 28.8% International 1.4 1.4 2.7 2.7 Total Revenues 184.2 215.1 112.3 123.3 235.6 15.9 165. 315.9 351.6 % ch vs pcp.8% 16.8% 1. 9.1% 9. 34.4% 33.8% 34.1% 11.3% Revenues (ex-stratton) 184.2 215.1 112.3 123.3 235.6 121.1 132.1 253.2 271.6 % ch vs pcp.8% 16.8% 1. 9.1% 9. 7.8% 7.1% 7. 7.3% Opex 82.9 95. 48.8 48.4 97.2 78. 8.8 158.8 177.2 % ch vs pcp.8% 14. 1.2% 3.4% 2.3% 59.8% 67. 63.4% 11.6% EBITDA 11.3 1.1 63.5 74.9 138.4 72.9 84.1 157. 174.4 % ch vs pcp.8% 18.6% 17.8% 13.2% 15.2% 14.8% 12.3% 13. 11.1% EBITDA margin (%) 55. 55.8% 56. 6.7% 58.7% 48.3% 51. 49.7% 49.6% Source: Company data, Macquarie Research, February 15 Segment analysis Segment revenue contributions were robust but broadly slower than previous periods. Dealer revenues were up 8% with auto dealer used car enquiry up 7%, more than offsetting a fall in new car enquiry. Private revenues were up 16%, boosted by growth from Tyresales as well as a price rise in auto listings costs in December 13. This was a solid outcome given weak volumes and reflects a quicker time to sell. Display revenue growth of just 2.7% was a disappointment for the period, attributable to macro impacts as well as the loss of New car inventories. Data and Research revenue growth of 9% is solid, but follows 5 years of double-digit growth rates. 18 February 15 2
Fig 2 Dealer revenues (1H12 2H15E) Fig 3 Private revenues (1H12 2H15E) $m 7 $m 3 6 5 4 3 1 39.3 44. 44.8 52.2 49.9 55.3 53.8 59.2 18% 16% 14% 12% 8% 6% 4% 2% 25 15 1 5 16. 17.3 17.1 18.6 18.3 21.6 21.2 24.2 1 1H12 2H12 1H13 2H13 1H14 2H14 1H15 2H15E Dealer revenue % ch vs pcp 1H12 2H12 1H13 2H13 1H14 2H14 1H15 2H15E Private revenue % ch vs pcp Source: Company sources, Macquarie Research, February 15 Source: Company sources, Macquarie Research, February 15 Fig 4 Display revenues (1H12 2H15E) Fig 5 Dealer & Data Services revenues (1H12 2H15E) $m 35 3 25 15 1 21.7 22. 27.7 26.8 3.1 28.7 3.9 29.6 6 5 4 3 $m 25 15 1 1.4 13.5 12.5 15.4 14. 17.7 15.2 19.1 3 2 1 5 5 1H12 2H12 1H13 2H13 1H14 2H14 1H15 2H15E Display revenue % ch vs pcp 1H12 2H12 1H13 2H13 1H14 2H14 1H15 2H15E Dealer & Data Services revenue % ch vs pcp Source: Company sources, Macquarie Research, February 15 Source: Company sources, Macquarie Research, February 15 Outside of these segments, the high level indicators for the International businesses, particularly Brazil and South Korea, look positive and bode well for medium-term growth contributions, as does Tyresales..au listing inventories We continue to track listing inventories, although we also note the growing limitations in using them as a guide to Carsales s Auto revenue trends. Arguably they are most relevant for New cars, given that enquiry rates on used cars have only limited sensitivity now to listing volumes (while a more direct correlation exists between New car listings and enquiry). After a sharp drop in August 14, New Car listings remained in decline. While not a material revenue driver for Carsales today, the weak listing trend suggests that a turnaround in momentum for this potential growth driver is not on the horizon. 18 February 15 3
Fig 6 CRZ Dealer Inventories New Fig 7 CRZ Dealer Inventories New (% ch) 7 65 6 55 5 45 4 35 3 12 13 14 15 4 3 - - -3 13 14 15 Source: carsales.com.au, Macquarie Research, February 15 Source: carsales.com.au, Macquarie Research, February 15 Private listing volumes have historically been a reasonable indicator of the health of that segment, although there was a divergence last half when velocity picked up. As a result, in 1H15 volume growth out-paced listings growth (or declines) for Private during the period. Fig 8 CRZ Inventories Private Fig 9 CRZ Inventories Private (% ch) 9 85 8 75 7 65 6 12 13 14 15 2 1 - - -1 13 14 15 Source: carsales.com.au, Macquarie Research, February 15 Source: carsales.com.au, Macquarie Research, February 15 Used car inventory levels remained robust. Given the revenue model is based on enquiry, and both enquiry rates and velocity of sales can change, it is difficult to translate these trends to revenue outcomes. Of note in 1H15, management did suggest that conversion rates for Dealers were improving on Used cars, which may in part support a move by Carsales to put through their first price rise for enquiries since February 13. 18 February 15 4
Fig 1 CRZ Dealer Inventories Used (k) Fig 11 CRZ Dealer Inventories Used (% ch) 11 15 1 95 9 85 8 75 7 65 6 12 13 14 15 1 - - 13 14 15 Source: carsales.com.au, Macquarie Research, February 15 Source: carsales.com.au, Macquarie Research, February 15 Fig 12 CRZ Dealer Inventories New & Used (k) Fig 13 CRZ Dealer Inventories New & Used (% ch) 17 16 15 14 13 1 11 1 12 13 14 15 2 1 - - -1 13 14 15 Source: carsales.com.au, Macquarie Research, February 15 Source: carsales.com.au, Macquarie Research, February 15 18 February 15 5
EBITDA ($m) EBITDA margin Macquarie Wealth Management Carsales Ltd (CRZ.ASX) Year end 3 June 1H14A 2H14A 1H15A 2H15E FY13A FY14A FY15E FY16E Profit & loss Revenue + Private 18.3 21.6 21.2 24.2 35.7 39.9 45.4 49.8 + Dealer 49.9 55.3 53.8 59.2 97. 15.2 113. 121.8 + Corporate display 3.1 28.7 3.9 29.6 54.5 58.8 6.5 63.5 + Data and research 14. 17.7 15.2 19.1 27.9 31.7 34.3 36.5 + Stratton Finance.. 28.5 31.5.. 6. 77.3 Sales revenue 112.3 123.3 15.9 165. 215.1 235.6 315.9 351.6 % growth 1. 9.1% 34.4% 33.8% 16.8% 9. 34.1% 11.3% Total op expenses 48.8 48.4 78. 8.8 95. 97.2 158.8 177.2 % growth 1.2% 3.4% 59.8% 67. 14. 2.3% 63.4% 11.6% Total EBITDA 63.5 74.9 72.9 84.1 1.1 138.4 157. 174.4 % growth 17.8% 13.2% 14.8% 12.3% 18.6% 15.2% 13. 11.1% + Total D&A 1.5 1.8 2.1 2.4 2.5 3.3 4.5 4. EBIT + Recurring 62. 73.1 7.8 81.8 117.6 135.1 152.6 17.4 + Equity accounted profit 1.5 1.9 2.5 5.9 -.2 3.4 8.4 12.5 + Non-recurring........ Total EBIT 63.5 75. 73.3 87.6 117.4 138.5 161. 182.9 % growth.6% 15.9% 15. 16.7% 19.9% 18. 16.2% 13.6% Total net interest expense 1.1 1.8 4.1 4.7-1.3 2.9 8.8 9.2 Total EBT 62.4 73.2 69.2 83. 118.7 135.6 152.2 173.7 Total Tax 18.5.9.6 24.5 35.2 39.3 45.1 51.2 Reported NPAT 43.9 51.5 46.8 56.8 83.5 95.5 13.6 117.8 - Non-recurring items........ Adjusted NPAT 43.9 51.5 46.8 56.8 83.5 95.5 13.6 117.8 % growth 17. 12.2% 6.4% 1.3% 16.6% 14.3% 8. 13.8% EFPOWA (m) 237 238 238 238 235 237 238 238 Reported EPS 18.5 21.7 19.7 23.9 35.5 4.2 43.6 49.5 Adjusted EPS 18.5 21.7 19.7 23.9 35.5 4.2 43.6 49.5 % growth 15.9% 11.4% 6. 1.3% 15.7% 13.4% 8.3% 13.8% DPS 14.7 17.4 16.2 19.7 28.3 32.1 35.9 4.8 Special DPS........ Payout ratio 79% 8 82% 82% 8 8 82% 82% Franking 1 1 1 1 1 1 1 1 Year end 3 June 1H14A 2H14A 1H15A 2H15E FY13A FY14A FY15E FY16E Cashflow EBITDA 63.5 74.9 72.9 84.1 1.1 138.4 157. 174.4 - Inc. in Working capital 2.8 (2.2). 1. (2.3).6 1.1 1.2 - Net Interest Paid 1.1 1.5 4. 4.7 (1.3) 2.6 8.6 9.2 - Tax Paid 18.2 16.1 23.6.6 34.5 34.3 44.3 48.1 + Other 2. (4.1) (4.7) - 1.5 (2.2) (4.7) - Net Cash in Op Activities 43.3 55.3 4.6 57.8 9.8 98.7 98.4 115.9 + Proc. of P,P&E -. - -.. - - + Proc. of Businesses & Inv - - - - - - - - - Capex 2.9 1.9.7 2.5 2.8 4.8 3.2 3.2 - Acquisitions & Inv 8.8 13.5 55.1-14.4 139.3 55.1 - + Other -.7 - - 2.4.7 - - Net Cash in Investing (11.7) (131.8) (55.8) (2.5) (14.8) (143.4) (58.3) (3.2) - Dividends Paid (as Reported) 37.1 35. 38. 38.5 75.1 72. 76.6 91.4 + Equity Movements (as Reported) 7.2.3 2.3-8.4 7.5 2.3 - + Debt Movements 8.5 111.7 58.9 (16.8) 55. 1.2 42.2 (21.2) + Other - - - - - - - - Net Cash in Financing (21.3) 77. 23.2 (55.3) (11.7) 55.6 (32.1) (112.7) Net Cash/Borrowing movement 1.4.5 7.9 - (25.8) 1.9 7.9 - FY13A FY14A FY15E FY16E Charts 18 16 14 1 1 8 6 4 - Dealer 36% FY15 revenue split Private 14% 138.4 157. 174.4 FY14A FY15E FY16E EBITDA Corporate display 19% Margin Data and research 11% Other 1 Source: Company data, Macquarie Research February 15 9 8 7 6 5 4 3 Balance sheet Cash & Liquid 15.1 26. 34. 34. Trade Debtors - Current 31.3 35.4 4. 44.1 Inventory - - 1.5 1.5 Other Current Assets - - - - Total Current Assets 46.4 61.4 75.5 79.6 Fixed Assets 4.7 4.4 5.7 5. Goodwill 77.4 85.9 85.9 85.9 Other Non Current Assets 6.6 5.9 - - Total Long Term Assets 196.7 343. 47.3 46.5 Total Assets 243.2 44.4 482.8 486.1 Trade Creditors - Current 19.2 22.7 27.9 3.7 Short Term Debt 54.5 9.8 69.6 69.6 Provisions 3.3 3.8 4.8 4.8 Other Current Liabilities 12.8 14.9 14.4 14.4 Total Current Liabilities 89.9 51.3 116.6 119.5 Long Term Debt - 164.8 148.1 126.9 Provisions.7.9 1. 1. Other Non Current Liabilities - - 1.3 2.2 Total Non Current Liabilities.7 165.8 15.4 13.1 Total Liabilities 9.6 217.1 267. 249.5 + Ordinary Equity 7.1 77.6 84.2 84.2 Reserves 14.9 17.7 24.3 24.3 Retained Earnings 67.5 9.9 16.2 126.9 Total Shareholder Funds 152.5 187.4 215.8 236.5 Net debt 39.4 148.6 183.7 162.5 Net debt to Net debt + Equity. 44.2% 46. 4.7% Ratios ROA 58% 42% 34% 3 ROE 59% 56% 52% 52% 18 February 15 6
Fundamentals Macquarie Wealth Management Macquarie Quant View The quant model currently holds a marginally positive view on. The strongest style exposure is Profitability, indicating this stock is efficiently converting its investments to earnings as proxied by ratios such as ROE, ROA etc. The weakest style exposure is Price Momentum, indicating this stock has had weak medium to long term returns which often persist into the future. 75/8 Global Alpha Model Sector Rank % of BUY recommendations 5 (5/1) Number of Price Target downgrades 2 Number of Price Target upgrades 1 Attractive Quant Rank within Country Rank within Sector Displays where the company s ranked based on the fundamental consensus Price Target and Macquarie s Quantitative Alpha model. The rankings are displayed relative to the sector and country. 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. Seek.4.7 Seek Automotive Holdings Group. Automotive Holdings Group Trade Me Group -.4 Trade Me Group Zillow -1. Zillow Trulia -1.7 Trulia -3. -2. -1.. 1. 2. 3. -1-8 -6-4 - 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. Seek Automotive Holdings Group Trade Me Group Zillow Trulia.8 -.4-1.3 -.7 -.3.2 Seek Automotive Holdings Group Trade Me Group Zillow Trulia -3. -2. -1.. 1. 2. 3. -1-5 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. Dividend Yield LTM Price to Earnings LTM Price to Sales LTM Dividend Yield FY DPS Revisions 3 Month BPS Growth FY1 EBITDA Revisions 3 Month CPS Revisions 3 Month Negatives Positives -24% -2-29% -31% 32% 3 3 44% -6-4 - 4 6 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 country Alpha Model Score Valuation Growth Profitability Earnings Momentum Price Momentum Quality Capital & Funding Liquidity Risk Technicals & Trading Normalized Score.41 -.4.17 1.61 -.5 -.16.1.31-1.56 -.19 1.22 Percentile relative to sector(/8) Percentile relative to country(/24) 5 1 5 1 1 1 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) 18 February 15 7
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 >+ Neutral expected return from - to + Underperform expected return <- Macquarie First South - South Africa Outperform expected return >+ Neutral expected return from - to + Underperform expected return <- Macquarie - Canada Outperform return > in excess of benchmark return Neutral return within of benchmark return Underperform return > below benchmark return Macquarie - USA Outperform (Buy) return > in excess of Russell 3 index return Neutral (Hold) return within of Russell 3 index return Underperform (Sell) return > 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 2 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 14 AU/NZ Asia RSA USA CA EUR Outperform 51.8 58.6% 45.7% 44.42% 6.54% 46.81% (for US coverage by MCUSA, 5.29% of stocks followed are investment banking clients) Neutral 31.8 27.37% 3.99% 5. 35.37% 33.51% (for US coverage by MCUSA, 3.8% of stocks followed are investment banking clients) Underperform 16.39% 14.57% 23.94% 5.48% 4.8% 19.68% (for US coverage by MCUSA,.44% of stocks followed are investment banking clients) CRZ AU vs ASX 1, & rec history (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, February 15 12-month target price methodology CRZ AU: A$12.3 based on a DCF methodology Company-specific disclosures: CRZ AU: Macquarie and its affiliates collectively and beneficially own or control 1% or more of any class of Limited's equity securities. Macquarie Securities Korea Limited or one of its affiliates advised SK C&C Co Ltd in connection with the acquisition of a shareholding in online assets of SK Encar by Carsales.Com Ltd in the past 24 months, for which it received compensation. Important disclosure information regarding the subject companies covered in this report is available at www.macquarie.com/disclosures. Date Stock Code (BBG code) Recommendation Target Price 13-Aug-14 CRZ AU Outperform A$11.85 26-Jun-14 CRZ AU Outperform A$12.15 12-Feb-14 CRZ AU Outperform A$1.5 3-Feb-14 CRZ AU Outperform A$1.4 15-Aug-13 CRZ AU Neutral A$9.4 13-Feb-13 CRZ AU Neutral A$8. 15-Aug-12 CRZ AU Neutral A$6.6 Target price risk disclosures: CRZ 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: The views expressed in this research reflect the personal views of the analyst(s) about the subject securities or issuers and no part of the compensation of the analyst(s) was, is, or will be directly or indirectly related to the inclusion of specific recommendations or views in this research. The analyst principally responsible for the preparation of this research receives compensation based on overall revenues of Macquarie Group Ltd (ABN 94 122 169 279, AFSL No. 31862) ( MGL ) and its related entities (the Macquarie Group ) and has taken reasonable care to achieve and maintain independence and objectivity in making any recommendations. 18 February 15 8
General disclosure: This research has been issued by Macquarie Securities (Australia) Limited (ABN 58 2 832 126, AFSL No. 238947) a Participant of the Australian Securities Exchange (ASX) and Chi-X Australia Pty Limited. This research is distributed in Australia by Macquarie Equities Limited (ABN 41 2 574 923, AFSL No. 23754) ("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 8 583 542, AFSL No. 23752) ( 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. Any MGL subsidiary noted in this research, apart from MBL, is not an authorised deposit-taking institution for the purposes of the Banking Act 1959 (Australia) and that subsidiary s obligations do not represent deposits or other liabilities of MBL. MBL does not guarantee or otherwise provide assurance in respect of the obligations of that subsidiary, unless noted otherwise. This research is 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. This research has been prepared for the use of the clients of the Macquarie Group and must not be copied, either in whole or in part, or distributed to any other person. If you are not the intended recipient, you must not use or disclose this research in any way. If you received it in error, please tell us immediately by return e-mail and delete the document. We do not guarantee the integrity of any e-mails or attached files and are not responsible for any changes made to them by any other person. Nothing in this research shall be construed as a solicitation to buy or sell any security or product, or to engage in or refrain from engaging in any transaction. This research is based on information obtained from sources believed to be reliable, but the Macquarie Group does not make any representation or warranty that it is accurate, complete or up to date. We accept no obligation to correct or update the information or opinions in it. 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. 18 February 15 9