Commodities Comment

GLOBAL LME cash price

Aluminium Copper Lead Nickel Tin Zinc Cobalt Molybdenum

US$/tonne 1,791 6,101 1,851 15,029 19,897 2,128 31,368 20,316

% change day on day 0.1 -1.1 -0.3 -1.4 1.8 -0.8 0.0 0.0

Other prices

1,227 16.52 1,233 806 46.54 1.182 0.816

% change day on day 0.7 1.7 0.7 1.4 -2.5 -0.1 -0.4

Tonnes 4,157,050 187,400 23,651 220,150 414,732 12,110 670,875

Change -9,775 -75 -375 -625 -432 -25 -2,300

Gold (US$/oz) Silver (US$/oz) Platinum (US$/oz) Palladium (US$/oz) Oil WTI USD:EUR exchange rate AUD:USD exchange rate LME/COMEX stocks Aluminium LME copper Comex copper Lead Nickel Tin Zinc

Source: LME, Comex, Nymex, SHFE, Metal Bulletin, Reuters, LBMA, Macquarie Research, January 2015

2015 aluminium outlook: Headwinds remain  For the aluminium market, 2014 was a year of change and no little surprise as

the market finally shifted into deficit after multiple years of surplus. We review the supply-demand balance for 2015, which shows the market will continue to be in a moderate deficit this year. However, headwinds remain from the prospects of ex-China restarts and ever-growing Chinese supply driven by new capacity additions and cost reduction at existing operations. Meanwhile, although the growth rate is set to be slower than in 2014, there are still some bright spots to watch in terms of aluminium demand this year.

Latest news  Reallocation away from commodities caused continued carnage for oil on

Monday as Brent Crude slid another 5% to a low of $47.23/bbl, before rebounding slightly to end the day near $47.5/bbl. Metals were also hit: Copper touched more than five-year lows of $5,966/t intraday basis LME 3month on Monday, after aggressive selling in the LME’s second ring dragged the price down $95/t in half an hour, slicing through the $6,000/t level on the way without pause. The “5” handle was short-lived, however, as the half-hour onslaught took us to 9pm Shanghai time, at which point SHFE night trading began with a bid tone, lifting the metal back above the $6,000/t threshold. A touch of buoyancy at the close then saw a final curb settlement of $6,017/t for LME 3-month copper. Most of the other base metals also fell at the same time on Monday, with cash nickel closing down 1.4% to $15,029/t and zinc down 0.8% to $2,128/t. Lead and aluminium, however, managed to rally later in the London afternoon, while tin took its own path, gaining 1.8% to reach $19,900/t, before moving to $20,000/t post-close. Meanwhile, the Steel

Index 62%Fe CFR China iron ore assessment fell 1.9% to $68.5/t, the th lowest since 29 December, with no sign of a Chinese steel production pick-up.  Preliminary December port data for India shows zero iron ore exports to

China for the first time in well over 10 years. With the Platts 52%Fe CFR China assessment averaging $37.9/t over the month (down 58% YoY), there was zero exports from Goa once more with the entirety of the 443kt export in the month coming from the East Coast port of Vizag. Full year Indian exports look to have totalled 8.7 million tonnes, down 6.9 mt YoY and only ~7% of the 119mt shipped in 2009. Exports to China totalled 6mt, making its share 69%, compared to 90% in 2013. Meanwhile, over Q4 2014 Indian import volumes totalled ~4mt, making India a net importer of iron ore of around 1.05mt per month (12.5mtpa).  Chinese domestic alumina prices were reportedly trading around RMB2,670-

13 January 2015

2,760/t ($438-452/t) at the end of last week, 1.8% lower than the previous week, according to Metal Bulletin. The local alumina market’s weakness is in line with domestic aluminium pricing, which is also trending lower. China imported 443kt alumina in November, an increase of 63% from October 2014, but we expect December data to be significantly lower than the previous month. Chinese smelters are having a hard time as aluminium prices have fallen more than raw material inputs, squeezing margins. We estimate 65% of Chinese smelters are in loss-making territory with nearly 4 million tonnes of capacity having already been cut.

Please refer to page 8 for important disclosures and analyst certification, or on our website www.macquarie.com/research/disclosures.

Macquarie Wealth Management

Commodities Comment

2015 Aluminium outlook: Headwinds remain  For the aluminium market, 2014 was a year of change and no little surprise as the market finally

shifted into deficit after multiple years of surplus. With cutbacks having largely run their course at smelters worldwide, the prospects for further production falls are diminishing, and instead the attention is turning to restarts in 2015. The Chinese aluminium market may see a small improvement as new capacity growth slows, but it will remain in surplus this year and a slowing macro environment is not conductive to acceleration in demand growth. However, the transport sector is expected to remain strong and infrastructure sector may see a boom in some new projects. A number of Chinese smelters are expecting to reduce power cost as a result of weak coal prices and progressing power reforms, but lower costs usually mean smelters have more room to slash prices amid competition.  This year, the material flow will be even more difficult to monitor. In China, the increased use of

liquid aluminium and direct production of casting products such as billets will continue to cause less visibility of metals potentially misleading general understanding of the supply and demand condition. With liquid aluminium increasing to nearly 60% of China’s aluminium consumption, less aluminium ingots will be left for futures and spot markets to trade. Outside of China, even though the returns from cash and carry financing trade are diminished, it is still profitable to attract stocks to be stored outside of the LME system, thus the shift to less visible off-market facilities will continue. Even with the normalisation of interest rates, the clearing of these ‘financing’ stocks is going to be a long process. Meanwhile the regular tendency of the LME forward curve to shift from contango into backwardation will itself increase the volatility of premium.  If there is any potential “black swan” event for the aluminium market in 2015, it could be China

adjusting its export tax on aluminium. The 15% export tax on primary aluminium has helped to keep the surplus within China, leaving the ex-China market vulnerable to supply constraints. There is also a 15% tax on aluminium alloys and non-alloyed aluminium bars and rods. Export tax reduction to any of those could potentially change market dynamics significantly.

Divergence in supply prospects  Non-Chinese production is the major uncertainty for supply in 2015: With North America

expected to evolve into an even deeper deficit market this year, consumers will have to seek greater quantities of imported metal from alternative sources such as Middle East. This is particularly pertinent as their traditional ingot supplier, Brazilian smelters, are likely to keep capacity offline this year as low reservoir levels in Brazil continue to impact the energy market. The announcement of Novelis' decision to close its 51ktpa Ouro Preto smelter in Brazil by the end of 2014 has further highlighted the deteriorating operating conditions, and we therefore don’t expect restarts in Brail to occur anytime soon. However in Russia, the prospects of restarts are rising as Russian smelters see improved profitability owing to the significant rouble devaluation. Rusal has idled nearly 500ktpa of capacity since 2013, accounting for around 22% of total curtailments outside China. Meanwhile, Russian output has been broadly stable over the course of 2014 with the last significant curtailment taking place in Q3 2013 (Fig 2). If any Russian smelters resume production then, together with Rusal’s Boguchansky smelter to commencing a ramp up of 149ktpa capacity in mid-2015, Russian production could surprise on the upside this year.  In Europe, the fact that a couple of smelters have already restarted idled potlines while some

others are planning to follow in their footsteps may be a harbinger of a turning point. Norsk Hydro has already restarted 50ktpa of idled capacity at their Sunndal plant in Norway, and Trimet was ramping up idled capacity at St Jean De Maurienne and Voerde smelters (total 90ktpa), while the most recent news was that Aldel smelter in Netherlands was planning a restart at a rate of 100ktpa in early 2015 as it has signed a deal to connect German grid to access cheaper power. All these proposed revivals are evidence that even the most cost-challenged European smelters can make a margin at the current “all-in” price level (Fig 3).  Elsewhere, we expect production to expand in India by 13.8% YoY in 2015 (compared with 10.5%

in 2014), though this is subject to the Indian government’s reallocation process for coal blocks. Like many smelters in China, coal is the major source for power supply for Indian smelters who would be globally competitive should they be vertically integrated into coal. Major smelters such as Hindalco have lost some coal mines which are to support their captive power plants of the greenfield Mahan (359ktpa) smelter and Aditya smelters. Angul and Korba smelter’s expansion plan may also be affected due to the uncertainty over coal supply. 13 January 2015

2

Macquarie Wealth Management

Commodities Comment

 In the Middle East, EMAL’s 740ktpa Ma’aden greenfield project has been operating at full

capacity, and we expect no more greenfield projects in the Middle East in the next five years (but expect some brownfield capacity projects to take place in the region in 2017). As such, we expect production in the Middle East to keep at a similar level in 2015 with that seen at end-2014.  Given all the uncertainties over restarts and production disruptions due to power shortage, we

currently forecast ex-China production to grow by 1% YoY in 2015 compared with 1% contraction last year (Fig 4). However, given Chinese output will continue to grow, our forecast for world aluminium production growth is 5.3% YoY.

Fig 2 … prospects of restarts in Russia are rising on an improved profitability outlook

Russian aluminium production (annualised)

Jan-11 Apr-11 Jul-11 Oct-11 Jan-12 Apr-12 Jul-12 Oct-12 Jan-13 Apr-13 Jul-13 Oct-13 Jan-14 Apr-14 Jul-14 Oct-14

4,200 4,100 4,000 3,900 3,800 3,700 3,600 3,500 3,400 3,300 3,200

Oct-14

Jul-14

Apr-14

Jan-14

Oct-13

Jul-13

Apr-13

Jan-13

Oct-12

Jul-12

'000t

Brazilian aluminium production (annualised)

Apr-12

1,600 1,500 1,400 1,300 1,200 1,100 1,000 900 800 700 600

Jan-12

'000t

Fig 1 While we don’t expect restarts in Brail to occur anytime soon...

Source: CRU, Macquarie Research, January 2015

Source: CRU, Macquarie Research, January 2015

Fig 3 Even the most cost-challenged European smelters make money at the current “all-in” price level

Fig 4 While Chinese production growth remains high, ex-China looks set for a second year of stagnation

0

5000 10000 15000 20000 North America Europe Middle East Other CIS Volume (kt)

25000

Source: Wood Mackenzie, LME, CRU, Macquarie Research, January 2015

13 January 2015

Ex-China

-

-1%

2015

CIS

500

2014

Gulf

1,000

+1%

India

1,500

China

2,000

Europe

All-in Price

2,500

Production growth

25% 20% 15% 10% 5% 0% -5% -10% -15% -20% -25%

SA

Aluminium Smelter Cost

NA

$/tonne 3,000

Source: CRU, Macquarie Research, January 2015

3

Macquarie Wealth Management

Commodities Comment

 China remains the growth engine for global production: China is still adding new low-cost

capacities, which means supply will keep growing in 2015 albeit at a slower pace. Last year, we estimate China brought on 3.75mt of new capacity. In 2015, more than 3mt of new capacity are expected to be put into operation. Xinjiang and Shandong remain the key regions driving production growth. In Xinjiang, about 1.2mt of new smelting capacity is expected to come online over 2015, compared with about 1.4mt last year (Fig 5). In Shandong, Weiqiao will bring another 1mt of new capacity to reach total capacity of 5mt per year. As a result Weiqiao will become the top aluminium smelter in China (usurping Chalco) and the third largest aluminium producer in the world.  In 2015, a number of Chinese smelters are expecting to see lower power costs as a result of weak

coal prices and progressing power reform. We’ve discussed already in a recent note that smelters with captive power plants have been capable of reducing production cost owing to lower coal price, and as much as 60% of current Chinese smelting capacities are backed by self-generators. Smelters using grid power may also see a cut in power tariffs soon, according to China’s coalelectricity price linkage policy. As a result, we expect overall Chinese aluminium smelting cost to have moved even lower over mid-late 2014. However, in a surplus market lower costs usually mean smelters have more room to slash prices amid competition – this is a key factor for the global market in 2015.  The remaining 40% of Chinese capacities have to purchase power from the state grid which is

more expensive. Although there are ongoing talks about the processing power reforms in China (which call for direct power purchase between aluminium smelters and power plants), thus far we understand few smelters have ultimately entered the deal. In addition to obstructions from the State Grid itself, power plants are facing risks to fix term contracts with aluminium smelters as were smelters to make price-induced production cuts during the term period, power plants would face local power oversupply. Furthermore, the direct purchase philosophy may lose its advantages in some provinces where smelters are aided by local government in the form of power subsidies. In Qinghai province for example, contract prices from direct purchase are still higher than the current ‘assisted’ power price by RMB0.05/kWh. Nevertheless, direct power purchases have been implemented in provinces such as Shanxi, Gansu, Liaoning, Fujian, Inner Mongolia and Ningxia (Fig 6), and smelters in these provinces could save as much as RMB0.05-0.06/kWh on average in electricity, which equates to about a RMB700/t ($115/t) fall in terms of total operation cost.

Fig 5 Xinjiang and Shandong continue to develop as smelting capacity hubs

Chinese new capacity additions in 2015

1,600 1,400

1,000

1,200

RMB per tonne

1,200

800 600 400 200

Cost saving under direct power purchase

1,000 800

600 400

13 January 2015

Inner Mongolia

Shanxi

Fujian

Ningxia

Guangxi

Yunan

Qinghai

Gansu

Inner Mongolia

Shandong

Xinjiang

Source: CRU, Macquarie Research, January 2015

0

Liaoning

200

0

Gansu

1,400

Fig 6 Although direct power purchase has not been implemented nationwide, it has helped save RMB700/t on average for smelters in 6 provinces so far

Source: Aladdiny, Macquarie Research, January 2015

4

Macquarie Wealth Management

Commodities Comment

Demand not matching 2014, but still positive  Chinese President Xi has said the “New Normal” of Chinese economic growth has emerged. This

philosophy will be the main logic for economic growth for some years. Beijing has clearly held off embarking on economic stimulus like the one used in 2008, but rather undertaken more fine tuning measures such as boosting the flagging real estate sector by loosening mortgage requirements. For base metals consumption, we think the market process to adjust to the slower underlying growth rate is underway, but still has a way to run.  We forecast Chinese aluminium consumption to remain positive in 2015 though at a slower rate.

Our forecast for growth is 9% this year compared with 12% in 2014. However, there should be some bright spots to watch this year.  Ultra-high voltage (UHV) power lines: The wire and cable sector will be supported by

investment in high voltage transmission lines. China has been ambitious on constructing ultra-high voltage (UHV) power lines since 2008 in order to sustain urbanisation and promote clean economic development, with Beijing recently speeding up approvals of long-distance transmission grid lines. By the end of this decade a total of 27 UHV transmission lines are expected to be put into operation while over 2015 alone, 13 UHV transmission lines are scheduled to be built with total investment reaching 300 billion RMB ($48 billion). We think the massive investment on UHV construction will help aluminium demand significantly as most transmission lines are formed of steel-cored aluminium alloy (Fig 7), meaning aluminium consumption in the power sector could grow 10% YoY.  The “One Belt and One Road” Proposal: President Xi Jinping’s proposal to develop the Silk

Road Economic Belt and the Maritime Silk Road (One Belt and One Road) is intended to expand cooperation between China and other South-east Asian countries, plus Africa and Europe. With China pledging $40 billion to the Silk Fund used for building infrastructure and other development projects, this may in turn help export China’s production capacity in oversupplied areas such as steel and aluminium. We consider it bullish for base metals consumption and in particular aluminium, as the construction of railways and power transmissions lines are aluminium intensive.  Transportation: The transport sector is the second largest end use sector for aluminium in China.

The central government is currently promoting applications of aluminium products in the transport sector particularly the use of high-strength aluminium alloys. While we believe steel will remain dominant in the Chinese auto industry, the increased use of aluminium in high-end cars sees a higher than average growth rate. We expect a 10% YoY growth rate in Chinese consumption for transportation over 2015.  Meanwhile, compared with other base metals ex-China consumption remains robust at 3% in

2015 with India, Middle East and North America leading the growth (Fig 8).  The Indian government has taken wider initiatives to improve the country’s infrastructure, which is

supportive for aluminium usage in the electric sector, and demand from the auto sector is also expected to improve as auto production remains strong. Meanwhile in the Middle East, newly built semis capacity is expected to see record semis production which counts as consumption of primary aluminium (even if it is later exported). For example, the rolling mill at Ma’aden and Alcoa’s joint venture complex commenced operation last year and is expected to reach full capacity by 2017.  For North America, 2015 is set to be another good year for consumption as demand from the

transport sector remains strong. The increased demand for automotive body sheet and prospects has seen us raise our aluminium demand forecast in the region to 5.1% in 2015 from 4.6% in 2014. If Ford’s F-150 pickup trucks and other light vehicles prove more popular than expected, it will result in a demand spike in either the sheet or extrusion market, and the North American market will get even tighter. However, it is worth remembering the tight market is more artificial than real given a huge amount of stocks sitting in warehouses both on and off exchange. Our basic assumption is that the premium will be under some downward pressure in 2015 as the volatility of LME spreads continue. In turn, this will help release greater quantities of metal to the wider market, helping alleviate some of the supply pressure in North America.

13 January 2015

5

Macquarie Wealth Management

Commodities Comment

Nov-14

Aug-14

Feb-14

May-14

Nov-13

Aug-13

Feb-13

May-13

Nov-12

Aug-12

May-12

Feb-12

Nov-11

Aug-11

May-11

-20%

Source: NBS, Macquarie Research, January 2015

2015

Ex-China

0%

CIS

20%

Gulf

40%

India

60%

2014

China

80%

Feb-11

Consumption growth

14% 12% 10% 8% 6% 4% 2% 0% -2% -4%

Europe

Chinese ACSR cable output growth YoY

NA

100%

Fig 8 Ex-China demand remains strong at 3% in 2015 led by India, Middle East and North America

SA

Fig 7 Heavy Chinese investment in the UHV network requires higher supply of aluminium wire and cable

Source: CRU, Macquarie Research, January 2015

The global aluminium market continues to be in a moderate deficit this year with ample visible inventory  We estimate the world balance to remain in slight deficit in 2015, with the Chinese surplus

expected to slightly widen this year compared with 2014 level. Re-starts outside of China pose the biggest risks on the supply side, while Chinese export policy and warehouse metal flows could also make the year full of uncertainty. We maintain the view that the aluminium fundamentals are slowly improving, but it can hardly be considered a bull market as it really needs to continue generating supply deficits for several years to draw the current excessive stock levels down to historical norms.

Fig 9

Aluminium supply and demand balance

'million tonnes World Consumption % Change Y-o-Y of which: China

2012 47.08 4% 21.38

2013 50.05 6% 24.60

2014 53.75 7% 27.49

2015F 56.96 6% 29.96

2016F 60.45 6% 32.36

2017F 63.80 6% 34.62

2018F 65.98 3% 35.83

2019F 67.36 2% 36.55

2020F 68.37 2% 37.10

World Production % Change Y-o-Y of which: China

47.15 2% 22.20

50.08 6% 24.36

53.55 7% 27.95

56.67 6% 30.70

60.18 6% 32.93

63.28 5% 35.03

65.20 3% 36.22

66.53 2% 36.83

67.32 1% 37.34

0.06

0.04

-0.20

-0.28

-0.27

-0.52

-0.78

-0.83

-1.05

14.02 15.48

14.36 14.92

14.16 13.70

13.88 12.67

13.61 11.70

13.08 10.66

12.30 9.70

11.47 8.86

10.42 7.93

Global balance Estimated total stocks Weeks of World Demand

Source: CRU, IAI, Macquarie Research, January 2015

13 January 2015

6

Macquarie Wealth Management

Commodities Comment

Monday 12 January 2015 Prices Closing price * 12-Jan-15 12-Jan-15 US$/tonne US¢/lb

Closing price * 09-Jan-15 09-Jan-15 US$/tonne US¢/lb

% ch. day on day

2015 YTD US$/tonne

Ave 2014 US$/tonne

LME Cash Aluminium Aluminium Alloy NAASAC Copper Lead Nickel Tin Zinc Cobalt Molybdenum

1,791 1,828 1,841 6,101 1,851 15,029 19,897 2,128 31,368 20,316

81 83 84 277 84 682 903 97 1,423 922

1,790 1,827 1,819 6,167 1,856 15,236 19,548 2,146 31,371 20,321

81 83 83 280 84 691 887 97 1,423 922

0.1 0.0 1.2 -1.1 -0.3 -1.4 1.8 -0.8 0.0 0.0

1,786 1,802 1,769 6,200 1,834 15,132 19,602 2,156 31,774 21,071

1,867 1,951 2,086 6,862 2,096 16,867 21,893 2,164 31,251 25,548

LME 3 Month Aluminium Aluminium Alloy NAASAC Copper Lead Nickel Tin Zinc Cobalt Molybdenum

1,810 1,845 1,875 6,017 1,867 15,100 19,900 2,138 31,500 20,500

82 84 85 273 85 685 903 97 1,429 930

1,810 1,845 1,855 6,090 1,870 15,300 19,550 2,156 31,500 20,500

82 84 84 276 85 694 887 98 1,429 930

0.0 0.0 1.1 -1.2 -0.2 -1.3 1.8 -0.8 0.0 0.0

1,813 1,814 1,811 6,132 1,850 15,211 19,598 2,168 31,857 21,071

1,894 1,974 2,117 6,828 2,113 16,935 21,887 2,167 31,287 25,548

0.7 1.7 0.7 1.4 -2.5 -0.1 -0.4

1,204 16.15 1,216 796 49.02 1.188 0.813

1,266 19.07 1,384 803 93.36 1.329 0.903

Cancelled warrants 2,317,275 -

End-14 stocks 4,205,225 207,428 4,412,653

Ch. since end-14 -48,175 -5,100 -53,275

* LME 2nd ring price - 1300 hrs London time. Year-to-date averages calculated from official fixes.

Gold - London PM Fix (US$/oz) Silver - LBMA Silver Price (US$/oz) Platinum - LBMA PM Price (US$/oz) Palladium - LBMA PM price (US$/oz) Oil WTI - NYMEX latest (US$/bbl) EUR : USD exchange rate - latest AUD : USD exchange rate - latest

1,227 16.52 1,233 806 46.54 1.182 0.816

1,218 16.24 1,225 795 47.71 1.183 0.820

Exchange Stocks (tonnes) LME Aluminium Shanghai Aluminium Total Aluminium

Change since last report Volume Percent -9,775 -0.2% 0 0.0% -9,775 -0.2%

12-Jan-15 4,157,050 202,328 4,359,378

09-Jan-15 4,166,825 202,328 4,369,153

LME Copper Comex Copper Shanghai Copper Total Copper

187,400 23,651 112,666 323,717

187,475 24,026 112,666 324,167

-75 -375 0 -450

0.0% -1.6% 0.0% -0.1%

24,450 -

177,025 24,150 111,915 313,090

10,375 -499 751 10,627

LME Zinc Shanghai Zinc Total Zinc

670,875 87,090 757,965

673,175 87,090 760,265

-2,300 0 -2,300

-0.3% 0.0% -0.3%

170,675 -

690,825 83,471 774,296

-19,950 3,619 -16,331

LME Lead Shanghai Lead Total Lead

220,150 56,937 277,087

220,775 56,937 277,712

-625 0 -625

-0.3% 0.0% -0.2%

9,700 -

221,975 63,604 285,579

-1,825 -6,667 -8,492

Aluminium Alloy NASAAC Nickel Tin

26,520 80,020 414,732 12,110

26,520 80,120 415,164 12,135

0 -100 -432 -25

0.0% -0.1% -0.1% -0.2%

20 17,580 90,036 2,335

26,520 80,700 414,900 12,135

0 -680 -168 -25

Source: CME, LBMA, LME, Reuters, SHFE, Macquarie Research

13 January 2015

7

Macquarie Wealth Management Important disclosures:

Commodities Comment

Recommendation definitions

Volatility index definition*

Financial 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

This is calculated from the volatility of historical price movements.

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

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% Neutral – expected return from -10% to +10% Underperform – expected 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

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

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).

Recommendations – 12 months Note: Quant recommendations may differ from Fundamental Analyst recommendations

Recommendation proportions – For quarter ending 31 December 2014 Outperform Neutral Underperform

AU/NZ 51.80% 31.80% 16.39%

Asia 58.06% 27.37% 14.57%

RSA 45.07% 30.99% 23.94%

USA 44.42% 50.10% 5.48%

CA 60.54% 35.37% 4.08%

EUR 46.81% (for US coverage by MCUSA, 5.29% of stocks followed are investment banking clients) 33.51% (for US coverage by MCUSA, 3.08% of stocks followed are investment banking clients) 19.68% (for US coverage by MCUSA, 0.44% of stocks followed are investment banking clients)

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13 January 2015

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