12 Nov 2007 Bulletin

Monday, 12 November 2007

Topic Page Number

Overnight Summary 2

US Equities 3

US Bonds 3

Commodities 3

International Markets 4

US Economic Action 4

Australian Market Summary 5

Australian Equity Market Movers (Sector) 5

Australian Equity 5 Best / Worst Stocks 5

Australian Companies Ex-Dividend 6

Australian Equity Snapshots 7

Summary of Daily Research Reports 8

ST GEORGE BANK LIMITED

SHARE PRICE AS AT 09 November 2007

Last Sale $37.51

Changes +$0.61

Total Volume 2,966,963

Web Address: www.stgeorge.privatebank.com.au

www.banksa.privatebank.com.au

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Daily Bulletin 12 November 2007

Overnight Markets

US stocks dived for the third day as investor confidence tookanother battering from big writedowns by Wachovia and FannieMae, a poor outlook for technology stocks and near record highoil prices.

Australian Market Summary

The Australian share market rose in early trading following strongleads from overseas markets. The market traded sideways for theremainder of the day. The All Ordinaries index ended Fridaytrading up 52 points.

Flashnotes

Bank of Qld. (BOQ) - Tier 1 capital rasingCommonwealth Bank (CBA) - IWL’s Scheme of Arrangement tobe acquired by CBA receives Court approvalCoates Hire (COA) - Approval and release of Scheme Booklet onNED Group proposalHills Industries (HIL) - HIL AGM - summarising another recordprofitColes Group (CGJ) - Removing research from our web siteColes Group (CGJ) - CGJ shares suspended from officialquotationAbacus Property Group (ABP) - Update on U Stow It takeoverbidPerpetual Limited (PPT) - FUM declines $100M in Octoberlargely from institutional outflowsFlight Centre (FLT) - Trading HaltTabcorp (TAH) - Court allows tax deduction claims for Star CityBrambles (BXB) - Asciano statement regarding marketspeculationAsciano Group (AIO) - Statement regarding market speculationWA Newspapers (WAN) - 1Q08 result: Reported profit declines19% due to Hoyts saleLinQ Resources Fund (LRF) - October NTA is $2.13 pre-taxWesfarmers Ltd (WES) - Supreme Court approves scheme ofarrangementWorleyParsons Ltd (WOR) - Contracts awarded by ExxonMobiland PetrobrasColes Group (CGJ) - Supreme Court approves scheme ofarrangementTap Oil (TAP) - Woollybutt-6H appraisal well disappointsRio Tinto (RIO) - RIO explores options to sell Rio Tinto EnergyAmericaLend Lease (LLC) - A$800M contract signedBendigo Bank (BEN) - The Federal Treasurer approves theproposed Adelaide Bank and BEN mergerAdelaide Bank (ADB) - The Federal Treasurer approves theproposed ADB and Bendigo Bank mergerTranspacific Industries (TPI) - TPI announces $250Mconvertible noteFortescue Metals (FMG) - Capital works program requires anadditional $100MNews Corporation (NWS) - NWS prices issue of US$1.25B ofnew debtFortescue Metals (FMG) - FMG seek shareholder approval for10:1 share splitAust. Infrastructure Fund (AIX) - AIX acquires incrementalstakes through BAA assetsNational Aust Bank (NAB) - NAB delivers a strong FY07 resultRio Tinto (RIO) - Rio Tinto rejects approach from BHPBillitonBHP Billiton Limited (BHP) - Rio Tinto rejects approach fromBHPBilliton

Foreign EquitiesIndex/Security Close Chg %ChgDow Jones (US) 13,043 -223.6 -1.7S&P 500 1,454 -21.1 -1.4NASDAQ 2,628 -68.1 -2.5FTSE 100 (UK) 6,305 -77.0 -1.2DAX 30 (Germany) 7,812 -7.1 -0.1CAC 40 (France) 5,524 -107.5 -1.9Nikkei (Japan) 15,583 -188.2 -1.2

Figures as at 12/11/2007 8:30 AM AEST

Australian Market SummaryIndex/Security Close Chg %ChgAll Ordinaries 6,607 +38.9 +0.6ASX 200 6,546 +24.0 +0.4ASX Small Ords 4,034 +4.9 +0.1Industrials 6,957 -63.3 -0.9Fin.-x-Prop Trusts 7,506 +7.9 +0.1Materials 15,454 +244.2 +1.6Cons. Staple 8,501 -93.0 -1.1Telecom Serv. 1,664 -17.4 -1.010y Bond Yield 6.00 -0.19 -3.1

Figures as at 09/11/2007 4:30 PM AEST

CommoditiesIndex/Security Close Chg %Chg UnitsBase MetalsCRB Index 354.5 +0.69 +0.2Aluminium 2,563 -20.0 -0.8 USD/tCopper 7,001 -185.0 -2.6 USD/tLead 3,574 +70.0 +2.0 USD/tNickel 33,510 +1,110.0 +3.4 USD/tTin 16,785 +185.0 +1.1 USD/tZinc 2,742 -49.0 -1.8 USD/tPrecious MetalsGold 832 -0.1 0.0 USD/OzSilver 15.4 +0.0 +0.2 USD/OzEnergyOil (West Texas) 96.3 +0.9 +0.9 USD/Bar

Figures as at 12/11/2007 8:30 AM AEST

CurrenciesIndex/Security Close Chg %Chg UnitsAUD / USD 0.904 -0.024 -2.5 $USAUD / Euro 0.621 -0.011 -1.8 $AAUD / STG 0.440 -0.001 -0.3 GBPAUD / Yen 105 0.0 +0.0 YenUSD / Yen 113 0.0 0.0 YenEuro / USD 1.47 +0.00 +0.2 $US

Figures as at 09/11/2007 4:30 PM AEST

Private Bank Daily Bulletin

Daily Research Reports

Peptech (PTD) - FY07 Result: Dominated by profit on sale of Domantis, as Peptech becomes AranaAGL Energy (AGK) - AGM comments - reaffirms FY08 guidanceNational Aust Bank (NAB) - FY07: strong result but recommendation downgraded due to share price riseTranspacific Industries (TPI) - TPI rolls debt with a new $250M convertible noteWA Newspapers (WAN) - 1Q08 result: Profit below expectationsFortescue Metals (FMG) - News of increased liquidity measures is sobered by the need for an additional $100MCaltex Aust (CTX) - Review of price targetBHP Billiton Limited (BHP) - BHP makes offer for RIOGoodman Fielder (GFF) - Pricing pressures remain a concernJubilee Mines (JBM) - Premium added to maintain recommendationRio Tinto (RIO) - BHP makes offer for RIO

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US EquitiesUS stocks dived for the third day as investor confidence took another battering from big writedowns by Wachovia and FannieMae, a poor outlook for technology stocks and near record high oil prices.

Wachovia reported a 3Q pre-tax loss of US$1.3B after the value of its mortgage-linked investments plunged by US$1.1B.Shares in the nation’s fourth largest bank initially tumbled over 4%, but managed to end up 0.9%. Perhaps investors wererelieved that Wachovia’s total CDO exposure now stands at US$676M after the 3Q writedown, or that the value of its US$2.1Bportfolio of more traditional sub-prime mortgage-backed bonds held steady in October due to its hedging strategies. Wachoviahas also increased its bad debt provisions to between US$500-600M for the 4Q.

Fannie Mae reported profits that fell by more than half in the last nine months due to rising credit losses and mortgagedelinquencies. Shares in the largest buyer and backer of home loans in the US plummeted by almost 10%, but recovered to enddown 1.6%.

Surprisingly, the financial stocks weathered Friday’s sell down well, thanks to bargain hunting in the downtrodden sector.Citigroup rose 0.6%, while Morgan Stanley gained 1%.

The same could not be said for technology stocks. Losses in the technology sector outpaced the broader market after wirelesstechnology firm Qualcomm issued a 2008 forecast that was below analysts’ expectations and its shares sank 4.2%. Theforecast comes a day after Cisco warned about waning demand for its products from banking and automotive clients. Untilrecently, technology stocks have been leading the market.

On the M&A front, the mortgage insurance sector jumped on news that Old Republic had taken a large stake in two companiesin the sector. One of the mortgage insurers is PMI Group and its shares surged almost 34%.

Other notable movers include Merck and Walt Disney. Merck gained over 2% after it said it would pay US$4.85B to resolvemost of the 27K claims involving its Vioxx medication. Disney went the other way, dropping 2.7%, although it reported earningsthat beat expectations.

Market breadth was negative on above average volumes, with all NYSE sector indices finishing in the red. For the week, theNASDAQ posted the worse performance, falling 6.9%. The Dow Jones Industrial Average and S&P 500 are down 4.1% and3.7%, respectively.

US BondsUS Treasury bond prices jumped on rising fears that US banks faced many more billions in sub-prime related writedowns.

The two- and five-year notes tumbled 0.12 to 3.43% and 3.75%, respectively. Meanwhile the yield on 30-year Treasury notedropped 0.05 4.60%.

US EQUITIES US BONDS

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CommoditiesCrude oil prices bounced from the previous session’s loss due to the weak US dollar and supply worries ahead of winter.

Traders said that options expiration could push oil to US$100/barrel by Tuesday, but warned that this could set the stage for aheavy sell-off from profit takers.

Gold prices failed to follow oil higher due to profit taking as gold failed to overcome resistance at US$850/ounce. Gold hadfinished higher in the last five consecutive sessions.

Copper also lost ground, held back by persistent worries about slowing economic growth and rising inventories. London MetalExchange inventories of the red metal rose again on Friday and are now up 75% since July. Copper stockpiles monitored by theShanghai Futures Exchange rose 5% to 59,208 tonnes.

COPPER & NICKEL OIL

GOLD

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International MarketsEuropean stocks fell to their lowest level in almost two months as European equities continued to be weighted down by their UScounterparts. Banking and technology stocks took the brunt of Friday’s sell off.

The major European exchanges had opened higher as sentiment got a boost from BHP Billiton’s audacious bid for Rio Tinto.However, that soon changed when US-based Wachovia and Fannie Mae announced massive losses due to the sub-primefallout.

The news added to jitters that European banks could be facing more shocking writedowns in the coming quarter. UBS tumbled4.1%, while the Royal Bank of Scotland lost 3% and BNP Paribas fell 2.7%. For the year, these three banks have lost 31%,39%, and 17% respectively.

Also adding to worries was the latest EU growth forecast. The EU is expecting growth to slow to 2.4% for the next two years,down from 2.9% this year, due to the US sub-prime turmoil and high oil prices.

The technology sector was another to be hit hard after Qualcomm issued a 2008 profit and sales guidance in the US that wasbelow expectations. Nokia plunged 4.2%, Alcatel Lucent gave up 3.9% and Ericsson lost 3.5%.

Meanwhile, Rio Tinto continued to bask in the afterglow of BHP’s bid. Rio shares surged another 6.2% on speculation that BHPwould sweeten the offer to win support from Rio’s board. If that fails, there is talk that BHP would attempt a hostile takeover ofits rival. The Financial Times reported that BHP has secured a US$70B credit line from Citigroup.

Amongst the major European exchanges, France’s CAC has fell the hardest, losing 1.91%. The FTSE 100 was close behindwith a 1.21% loss, while the DAX only inched down 0.09%.

Risk aversion was the dominant theme. The Japanese yen hit an 18-month high against the US dollar as traders exited carrytrades due to the waning risk appetite. The yen also rose on crosses.

In early AEST trade, the British pound slipped to US$2.0849 as UK banks struggled with their own credit issues, while theAustralian and New Zealand dollar lost over 1% each on the unwinding carry trades.

FTSE EURO TOP 100 $US/$A VS EUR/$A

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Australian Stock Prices OvernightIn New York, News Corp fell by US$0.45 to US$22.13, equivalent to A$24.45, A$0.61 above its last close on the ASX.

ResMed rose by US$0.69 to US$43.54, equivalent to A$4.81, A$0.18 above its last close on the ASX.

In London, Rio Tinto rose 328.0 pence to £56.24, A$7.52 higher in Australian currency terms.

BHP-Billiton fell 28.0 pence to £16.28, A$0.64 lower in Australian currency terms.

Henderson Group Plc fell 8.5 pence to £1.54, A$0.19 lower in Australian currency terms.

US Economic ActionIn sign that the housing and mortgage turmoil is hitting consumers, the preliminary Michigan Consumer Sentiment Index fell to75.0 in November from 80.9 the month before. Economists had expected a more modest dip to 80.0.

The US Trade Balance improved in September to -US$56.5B compared to -US$56.8B in the previous month. The falling USdollar helped boost exports. The market expected the Trade Balance to blow out further to -US$58.5B.

However, economic news on the day failed to move the markets.

� Pending Home Sales (for September, released Wed AEST, F/cast: -2.0%, Prior: -6.5%)

� Treasury Budget (for October, released Wed AEST, F/cast: -US$53.0B, Prior: -US$49.3B)

� Retail Sales (for October, released Thurs AEST, F/cast: 0.2%, Prior: 0.6%)

� Retail Sales excluding auto (for October, released Thurs AEST, F/cast: 0.3%, Prior: 0.4%)

� PPI (for October, released Thurs AEST, F/cast: 0.2%, Prior: 1.1%)

� Core PPI (for October, released Thurs AEST, F/cast: 0.2%, Prior: 0.1%)

� Business Inventories (for September, released Thurs AEST, F/cast: 0.3%, Prior: 0.1%)

� Crude Inventories (for week of 09 November, released Thurs AEST, Prior: -821K)

� CPI (for October, released Fri AEST, F/cast: 0.3%, Prior: 0.3%)

� Core CPI (for October, released Fri AEST, F/cast: 0.2%, Prior: 0.2%)

� Initial Claims (for week of 11 November, released Fri AEST, Prior: 317K)

� NY Empire State Index (for November, released Fri AEST, F/cast: 21.0, Prior: 28.8)

� Philadelphia Fed (for November, released Fri AEST, F/cast: 6.0, Prior: 6.8)

� Net Foreign Purchases (for September, released Sat AEST, Prior: -US$69.3B)

� Industrial Production (for October, released Sat AEST, F/cast: 0.1%, Prior: 0.1%)

� Capacity Utilisation (for October, released Sat AEST, F/cast: 82.1%, Prior: 82.1%)

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Australian Market Summary: As at 09 November 2007

OverviewAUSTRALIAN EQUITIES MARKET: The Australian share market rose in early trading following strong leads from overseasmarkets. The market traded sideways for the remainder of the day. The All Ordinaries index ended Friday trading up 52 points.

The S&P/ASX 200 rallied by 39 points. Energy and Materials powered ahead on buying in Woodside Petroleum (+$1.52), OilSearch (+$0.26), Paladin Resources (+$0.33), Rio Tinto (+$18.59) and Fortescue Metals (+$5.90). Financials’ gain was led byNational Australia Bank (+$1.62), Macquarie Group (+$2.74) and St George Bank (+$0.48). Key contributors to Healthcare’sincrement were CSL (+$0.86) and Cochlear (+$0.53). Other notable moves of the day belonged to Computershare (+$0.96),Woolworths (-$0.25), Coles Group (-$0.13) and Wesfarmers (-$0.66).

In market news, National Australia Bank reported FY07 cash NPAT of $4,394M, up 12.6% on FY06. The result reflected stronglending, deposit and FUM growth, cost containment, which were partly offset by a modest decline in the net interest margin andan increase in the charge for bad debts. BHP Billiton (-$0.84) has made an offer the RIO Board proposing the acquisition of RIOby BHP. Under the proposal each RIO share would be exchanged for three BHP shares. The RIO Board has rejected BHP'soffer stating that it significantly undervalues RIO. West Australian Newspapers (+$0.03) reported 1Q08 net profit of $21M, down19% on the pcp. The fall was mainly due to a $7M loss recorded on the disposal of WAN's 50% stake in Hoyts (which is stillsubject to regulatory approval), and Hoyts' contributions being disclosed as discontinued operations.

AUSTRALIAN BOND MARKET: Australian Treasury bond yields fell 4 basis points at the short end, while yield increments of 1-2 basis points were seen at the medium-long end of the curve.

AUSTRALIAN DOLLAR: There was little change to the Australian dollar with the currency trading slightly higher against the USdollar. By day’s end, the Australian dollar was trading near the US0.929 mark.

AUSTRALIAN ECONOMIC STATISTICS: NO MAJOR AUSTRALIAN ECONOMIC STATS WERE RELEASED IN FRIDAYTRADING. The next major economic release of note is the Reserve Bank Quarterly Monetary Policy Statement on Monday 12November.

Market Movers

SECTOR PERFORMANCE

5 BEST / WORST STOCKS

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Companies Ex-Dividend

Ex Date Sub Type Security Div Amt(cents) Franking

26-Nov-07 Final Year Result Astron Limited (ATR) 20 026-Nov-07 Special Event HFA Accelerator Plus Limited (HAP) 5 100

26-Nov-07 Final Year Result Insurance Australia Group Reset Preference Shares (RPS1)(IAGPA) 282.32 100

26-Nov-07 Final Year Result Insurance Australia Group Reset Preference Shares (RPS2)(IAGPB) 226.12 100

23-Nov-07 Final Year Result St George Bank Limited (SGB) 86 10022-Nov-07 Final Year Result Linden & Conway Limited (LDN) 30 100

22-Nov-07 Final Year Result Linden & Conway Limited 5% Fixed Preference Share(LDNPA) 10 100

19-Nov-07 Half Yearly Result Fisher & Paykel Appliances Holdings Limited (FPA) 9 019-Nov-07 First Quarter Result Telecom Corporation of New Zealand Limited (TEL) 8.2353 016-Nov-07 Half Yearly Result Luminus Systems Limited (LSL) 0.016 10015-Nov-07 Special Event Canada Land Limited (CDL) 0.58 015-Nov-07 Final Year Result CP1 Limited (CPK) 6 33.3315-Nov-07 Special Event Indigo Pacific Capital Limited (IPA) 6 10015-Nov-07 Final Year Result Village Roadshow Limited (VRL) 9 100

13-Nov-07 First Quarter Result ANZ Stapled Exchangeable Preferred Security (StEPS)(ANZPA) 198.62

13-Nov-07 Half Yearly Result CSR Limited (CSR) 6 10012-Nov-07 Final Year Result Brickworks Limited (BKW) 26 100

12-Nov-07 Final Year Result Brickworks Preferred Adjustable Variable ExchangeableResettable Shares (PAVERS) (BKWPA) 329 100

12-Nov-07 Final Year Result Coles Group Limited (CGJ) 25 10012-Nov-07 Final Year Result Collection House Limited (CLH) 2 10012-Nov-07 Special Event Crusade Global Trust No. 1 of 2006 - Class A-3 Notes (CTJ)12-Nov-07 Final Year Result Desane Group Holdings Limited (DGH) 3 012-Nov-07 Final Year Result eservglobal Limited (ESV) 2 012-Nov-07 Final Year Result Joyce Corporation Limited (JYC) 3 012-Nov-07 Final Year Result Money3 Corporation Limited (MNY) 3 10012-Nov-07 Final Year Result TFS Corporation Limited (TFC) 2.5 10012-Nov-07 Final Year Result Waterco Limited (WAT) 2 100

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Flashnotes

BOQ proposes to raise $150M (with the ability to accept up to $50M in oversubscriptions) in Tier 1 capital via the issue of BOQPerpetual Equity Preference Shares (BOQ PEPS). The semi-annual dividends will be priced at 2% above the 180-day Bank BillSwap Rate. The dividends are expected to be fully franked. BOQ intends to use the proceeds to fund growth. The offer openson 19 November 2007 and closes on 10 December 2007. The preference shares will be listed on the ASX.

The Supreme Court of Victoria has approved IWL’s Scheme of Arrangement to be acquired by CBA. The Scheme is expectedto be implemented on 26 November 2007. While this is a small deal for CBA, we believe that IWL will be a good strategic fitwithin CBA’s equities business as it provides more growth options over the longer term.

COA has announced that the Federal Court has approved the Scheme Booklet relating to the proposed acquisition of COA. TheScheme Meeting is scheduled to commence at 10:00am in Sydney on 17 December 2007. The Scheme Booklet, whichcontains the Independent Expert's Report, will be dispatched to COA shareholders on or about 16 November 2007. TheIndependent Expert declared the overall proposal to be in the best interests of COA shareholders and ascribed a value range of$6.27 to $6.93 per share.

HIL held its AGM on 9 Nov 07. The meeting was hosted by the company Chairman Ms Jennifer Hill-Ling who summarised theFY07 result and the current trading conditions HIL are facing, which were described as favourable. Management highlightedtheir focus on improving group profitability going forward. Both Ms Jennifer Hill-Ling and Mr Geoff Hill were re-elected asdirectors.

CGJ shares will be suspended from official quotation at the close of trading today, 9 November 2007. As such, we shall removeour research from our web site on Friday, 16 November 2007.

CGJ shares will be suspended from official quotation at the close of trading today, 9 November 2007. The WES ordinary shares& WES partially protected shares (PPS), are expected to commence trading on a deferred settlement basis on 12 November2007. WES' ordinary shares issued to CGJ shareholders will have the ASX code ‘WESNA’ during deferred settlement trading &will revert to the code ‘WES’ at normal trading. WES' PPS will have the code ‘WESN’ during deferred settlement & normaltrading.

Bank of Qld. (BOQ) - Tier 1 capital rasing 09-Nov-07 18:31

Commonwealth Bank (CBA) - IWL’s Scheme of Arrangement to be acquired by CBA receives Court approval09-Nov-07 17:55

Coates Hire (COA) - Approval and release of Scheme Booklet on NED Group proposal 09-Nov-07 17:34

Hills Industries (HIL) - HIL AGM - summarising another record profit 09-Nov-07 17:13

Coles Group (CGJ) - Removing research from our web site 09-Nov-07 16:47

Coles Group (CGJ) - CGJ shares suspended from official quotation 09-Nov-07 16:30

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ABP has acquired more than 50% (now 51.54%) of shares in U Stow It Holdings Ltd under its previously announced off-markettakeover bid. The bid, which is now unconditional, has been recommended by U Stow It's directors and values U Stow at~$40M. U Stow It owns and operates a number of self-storage assets in Canberra and Queanbeyan. These assets are beingacquired and warehoused by ABP ahead of a potential launch of a second storage fund. The takeover offer has been extendeduntil 22 Nov 2007.

PPT announced that funds under management (FUM) as at 31 October 2007 were $39.4B. This includes outflows of $400Mfrom institutional clients, three quarters of which was Australian Equities, and one quarter Enhanced Cash. FUM as at 30September 2007 was $39.5B.

FLT announced that has made a request to the ASX for its shares to be placed in a trading halt. FLT shares will remain in pre-open until the earlier of the commencement of normal trading on Tuesday, 13 November 2007 or when an announcement isreleased to the market.

The Federal Court has allowed in full Star City's tax deduction claims against the Australian Tax Office (ATO). Star City hadclaimed deductions for $120M in fees that it prepaid in relation to the occupancy of its Sydney casino site. The ATO haddisallowed the deductions and imposed penalties. TAH inherited this issue, which arose in 1994, when it acquired Star City in1999. TAH disclosed in its FY07 Financial Report that it had provided for unpaid tax of $32M and penalties and charges of$27M.

Asciano announced that it has no current intention of making a takeover bid for BXB. It also advised that it presently intends toretain its 4.09% shareholding in BXB.

AIO announced that it has no current intention of making a takeover bid for Brambles. It also advised that it presently intends toretain its 4.09% shareholding in Brambles.

Abacus Property Group (ABP) - Update on U Stow It takeover bid 09-Nov-07 16:27

Perpetual Limited (PPT) - FUM declines $100M in October largely from institutional outflows 09-Nov-07 15:13

Flight Centre (FLT) - Trading Halt 09-Nov-07 14:22

Tabcorp (TAH) - Court allows tax deduction claims for Star City 09-Nov-07 13:39

Brambles (BXB) - Asciano statement regarding market speculation 09-Nov-07 13:25

Asciano Group (AIO) - Statement regarding market speculation 09-Nov-07 13:21

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WAN's 1Q08 reported net profit declined 19% on the pcp to $21M. The fall was mainly due to a $7M loss recorded on thedisposal of WAN's 50% stake in Hoyts (which is still subject to regulatory approval), and Hoyts' contributions being disclosed asdiscontinued operations. Normalised net profit for 1Q08 increased 5% on the pcp to $28M on an underlying basis. Salesrevenue was up 4% on the pcp to $117M, while adjusted EBIT rose 5% to $45M. The result was below our expectations.

LRF has released its monthly net tangible asset (NTA) update. LinQ Resources Fund's unaudited NTA backing was $2.13 (pre-tax) per share as at 31 October 2007, this is an increase of 12% on the 30 September NTA of $1.90. Allowing for a notional taxadjustment of 30%, the post-tax NTA would be $1.77 on 31 October 2007 (30 Sept 2007: $1.61)

The Supreme Court of Victoria has approved the Scheme of arrangement following the approval of the Scheme at the ColesGroup shareholders meeting on 7 November 2007. The Scheme of arrangement for Coles Group to be acquired by WES isexpected to be implemented on Friday 23 November 2007.

WOR has been awarded a US$110M contract by Petrobras to provide integration and project management services and toexecute front-end engineering design for utilities and offsites for the COMPERJ refinery project. WOR and its 50% joint venturepartner Foster Wheeler (who have been working with ExxonMobil on detailed studies for the construction of a petrochemicalplant in Singapore) have been given the go ahead to conduct EPCM for the facility. The price of the contract has not beendisclosed.

WA Newspapers (WAN) - 1Q08 result: Reported profit declines 19% due to Hoyts sale 09-Nov-07 13:20

LinQ Resources Fund (LRF) - October NTA is $2.13 pre-tax 09-Nov-07 11:56

Wesfarmers Ltd (WES) - Supreme Court approves scheme of arrangement 09-Nov-07 11:55

WorleyParsons Ltd (WOR) - Contracts awarded by ExxonMobil and Petrobras 09-Nov-07 11:50

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CGJ announced that the Supreme Court of Victoria has approved the Scheme of arrangement following the approval of theScheme at its shareholders meeting on 7 November 2007. The Scheme of arrangement for CGJ to be acquired by Wesfarmersis expected to be implemented on Friday 23 November 2007.

The Woollybutt-6H appraisal well is located between two previous oil discoverys. The Woollybutt-6H appraisal well hasintersected to reservoir section at a depth below the oil/water contact observed in the offset wells. As a result the well will beplugged and abandoned. This is a disappointing result for TAP. This result does not impact the successful Woollybutt-4Happraisal well that was recently drilled. Woollybutt-4H is expected to begin production in 2Q08.

As part of the strategic review following the Alcan acquisition RIO has decided to explore options for the sale of some or all ofRio Tinto Energy America. Rio Tinto Energy America is the second largest coal producer in the US.

LLC has signed a A$800M development and management contract for a 40-acre site in Media City, Manchester, UK. The site,alongside the Manchester Ship Canal, will eventually cover up to 200 acres and be home to a number of industries associatedwith the media industry. The project will include office blocks, residential housing units, leisure and retail facilities as well asinfrastructure and road works. Construction is expected to start immediately, with completion due December 2010.

The Federal Treasurer has given approval for the proposed merger between Adelaide Bank (ADB) and (BEN), under theFinancial Sector (Shareholdings) Act. This is another key condition of the proposed deal, which has been met. The next hurdleis ADB shareholder approval at the meeting scheduled for 12 November 2007.

The Federal Treasurer has given approval for the proposed merger between ADB and Bendigo Bank (BEN), under the FinancialSector (Shareholdings) Act. This is another key condition of the proposed deal, which has been met. The next hurdle is ADBshareholder approval at the meeting scheduled for 12 November 2007.

Coles Group (CGJ) - Supreme Court approves scheme of arrangement 09-Nov-07 11:46

Tap Oil (TAP) - Woollybutt-6H appraisal well disappoints 09-Nov-07 11:43

Rio Tinto (RIO) - RIO explores options to sell Rio Tinto Energy America 09-Nov-07 11:38

Lend Lease (LLC) - A$800M contract signed 09-Nov-07 11:30

Bendigo Bank (BEN) - The Federal Treasurer approves the proposed Adelaide Bank and BEN merger 09-Nov-07 11:06

Adelaide Bank (ADB) - The Federal Treasurer approves the proposed ADB and Bendigo Bank merger 09-Nov-07 11:06

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TPI intends to place a $250M convertible note, due December 2014. The offering is still subject to receipt of all necessaryregulatory approvals in relevant jurisdictions. The note will carry a 6.75% coupon with a redemption value at maturity equal tothe principal amount. The conversion price has been set at A$14.8648 per share, a 36% premium to the closing price on 8 Nov2007. TPI intends to list the notes on the Singapore Stock Exchange. Proceeds will be used to repay existing bridge loans.

With FMG still aiming to have its first shipment of ore by May 2008, the company feels that it needs to allocate additionalresources toward rail construction, in particular earthworks and track laying progress. The cost of these initiatives, together withindications coming from a full review conducted on the rail works program to date, suggest that an additional $100M will need tobe drawn from the FMG’s existing cost over-run and back up reserve accounts.

NWS subsidiary News America Incorporated has announced the pricing of an issuance of US$1.25B of 6.65% Senior NotesDue 2037. The offering is expected to close on 14 November 2007 and is subject to customary closing conditions. NewsAmerica will receive gross proceeds of US$1.25B from the offering and expects to use the net proceeds for general corporatepurposes.

A resolution had been passed by the FMG board to seek shareholder approval for a share split to be set at 10 shares for every1 share held. It is expected that a meeting of shareholders will be called in the near future to consider this proposal. If approvedby shareholders, we would expect it would significantly increase the liquidity in FMG stock.

Hastings Fund Management has announced the acquisition of BAA International Holdings (BAAIH) from BAA Limited forA$775M. BAAIH owns 19.8% of APAC (Melbourne and Launceston airports), 10% in Northern Territory airport, 15% of PerthAirport and 15% of the convertible notes issued at Perth airport. AIX will initially invest $146.3M and intends to acquire atminimum 2.0% in APAC, 4.4% in Perth, 15% of Perth convertible notes and 2.8% in NT airports. AIX intends to use existingfacilities and cash.

FY07 cash NPAT of $4,394M, was up 12.6% on FY06 and below our $4,422M forecast. In terms of ongoing operations, cashNPAT was up 17.7%. The result reflected strong lending, deposit and FUM growth, cost containment, which were partly offsetby a modest decline in the net interest margin and an increase in the charge for bad debts. NAB noted that asset qualitymeasures are up from historical lows, but within expectations. The final dividend increase of 11cps to 95cps (ff) was a pleasantsurprise.

BHP has made an offer the RIO Board proposing the acquisition of RIO by BHP. Under the proposal each RIO share would beexchanged for three BHP shares. The RIO Board has rejected BHP's offer stating that it significantly undervalues RIO.


Transpacific Industries (TPI) - TPI announces $250M convertible note 09-Nov-07 10:24

Fortescue Metals (FMG) - Capital works program requires an additional $100M 09-Nov-07 10:11

News Corporation (NWS) - NWS prices issue of US$1.25B of new debt 09-Nov-07 10:10

Fortescue Metals (FMG) - FMG seek shareholder approval for 10:1 share split 09-Nov-07 09:52

Aust. Infrastructure Fund (AIX) - AIX acquires incremental stakes through BAA assets 09-Nov-07 09:35

National Aust Bank (NAB) - NAB delivers a strong FY07 result 09-Nov-07 09:31

Rio Tinto (RIO) - Rio Tinto rejects approach from BHPBilliton 09-Nov-07 09:02

BHP Billiton Limited (BHP) - Rio Tinto rejects approach from BHPBilliton 09-Nov-07 08:57

Page 14


Daily Research Reports

PTD reported FY07 revenue of $34.6M, up 46% on pcp, while reported NPAT was $133.4M, largely due to the profit on sale ofits stake in Domantis. Management did not declare a final dividend. Shareholders voted in favour of a name change to AranaTherapeutics Limited. Management also delivered a new strategic plan for the business focused on expanding and acceleratingits internal and clinical pipeline and increasing its technology platforms to in-license new drug candidates.

At its AGM, AGL advised it has completed the review in relation to the revised earnings guidance, and reconfirm its revisedFY08 NPAT guidance range of $330M-$360M. AGL also announced on 6 November that its 50/50 JV with Arrow Energy willacquire the gas merchant and pipeline businesses of the Enertrade from the QLD Government. The 50% acquisition of the gasmerchant business will result in at least 1cps earning increment in each of FY08 and FY09.

FY07 cash NPAT of $4,394M, was up 12.6% on FY06 and below our $4,422M forecast. In terms of ongoing operations, cashNPAT was up 17.7%. The result reflected strong lending, deposit and FUM growth and good cost containment. Partly offsettingthis, there was a modest decline in the net interest margin and an increase in the charge for bad debts. NAB noted thatdelinquent assets are up from historical lows, but within expectations. The final dividend increased by 11cps to 95cps (ff).

Peptech (PTD) - FY07 Result: Dominated by profit on sale of Domantis, as Peptech becomes Arana

AGL Energy (AGK) - AGM comments - reaffirms FY08 guidance

National Aust Bank (NAB) - FY07: strong result but recommendation downgraded due to share price rise

Page 15


TPI announced that it intends to place a $250M subordinated convertible note due December 2014. The offering, which has a$14.8648 strike price is subject to all necessary regulatory approvals in relevant jurisdictions and carries a 6.75% coupon, with aredemption value equal to the principal amount. The note is expected to be listed on the Singapore Stock Exchange.

WAN's 1Q08 reported NPAT declined 19% on the pcp to $21M. The fall was mainly due to a $7M loss recorded on the disposalof WAN's 50% stake in Hoyts, and Hoyts' contributions being disclosed as discontinued operations. Adjusted NPAT declined 2%on the pcp to $30M in 1Q08. However, 1Q07 comprised 14 weeks compared to 13 weeks in 1Q08. When the extra trading weekis taken into account, normalised NPAT increased 5% to $28M on an underlying basis.

FMG has announced the results of its AGM.

We have reviewed our long term refining margin assumptions for the refining business of Caltex. This has resulted in a review ofour price target.


We have reviewed our valuation assumptions due to concerns regarding the increasing pricing pressures being experienced bythe company.

JBM has received a takeover offer of $23 per share cash from Xstrata. The offer values the company at approximately $3.1B.The Board of Directors at JBM has unanimously recommended Xstrata’s offer in the absence of a superior one.

BHP has made an offer to RIO's board proposing the acquisition of RIO by BHP. Under the proposal, each RIO share would beexchanged for three BHP shares. RIO's board has rejected BHP's offer stating that it significantly undervalues RIO.

Transpacific Industries (TPI) - TPI rolls debt with a new $250M convertible note

WA Newspapers (WAN) - 1Q08 result: Profit below expectations

Fortescue Metals (FMG) - News of increased liquidity measures is sobered by the need for an additional $100M

Caltex Aust (CTX) - Review of price target

BHP Billiton Limited (BHP) - BHP makes offer for RIO

Goodman Fielder (GFF) - Pricing pressures remain a concern

Jubilee Mines (JBM) - Premium added to maintain recommendation

Rio Tinto (RIO) - BHP makes offer for RIO

Page 16

Health CareJohn Hynd

ASX: PTD Bloomberg: PTD AU Reuters: PTD.AX 09 November 2007

PeptechFY07 Result: Dominated by profit on saleof Domantis, as Peptech becomes Arana

EventPTD reported FY07 revenue of $34.6M, up 46% on pcp while profitfrom continued operations increased 1,953% to $139.4M, primarily as aresult of the sale of PTD's stake in Domantis. Reported NPAT for FY07was $133.4M. Management did not declare a final dividend.Shareholders also voted in favour of an official name change to AranaTherapeutics Limited. Management has developed and released a newstrategic plan for the business. The new company will be focused onexpanding and accelerating its internal and clinical pipeline, increasingits technology platforms and in-licensing new drug candidates.Management believes that this will minimize the development risk indrug development and attract commercial partnerships in drugdevelopment. Arana expects to have 2-3 Phase II/III assets, 2-3 PhaseI or Investigational New Drugs, 3-4 pre clinical programs and anexpanded IP portfolio as well as revenue generating technologyassets. Management plans to sell the animal health business as it isnot aligned with the company's new strategy.

ImplicationsThe merger with EvoGenix provided Arana with a pipeline of earlystage compounds. Arana's lead compound, ARA621, is due tocommence phase II trials in CY08. Following the recent sale of itsinterest in Domantis, Arana now has large cash assets and a veryhealthy balance sheet, continued revenue streams from its licensingagreements and an enhanced product pipeline, which differentiate itfrom other Australian biotechnology companies. We view the changesthat the board and management are making to the companypositively. Following this result, we have reduced the value of theBiosceptre JV, which PTD has exited, to zero. Our sum of the partsvaluation has decreased by 6% to $1.73.

Investment OpinionEffective 1 September 2007, the research on this company has beencommissioned and as such Aegis has received a fee for its ongoingresearch coverage. (Prior to this date, the company was covered aspart of the Aegis 200 universe.)

No part of either the fee received by Aegis or the compensation paid toits analysts involved in preparing this report was, is or will be directly orindirectly, related to the valuation, earnings forecast or viewsexpressed in this report.

Key Information

Price Performance

Market Statistics

Key Assumptions

Share Price $1.19Valuation $1.73

Market Cap (M) $278

Shares (M) 234.9

% of Market 0.01

% of Sector 0.49

12 Month Range $1.06 - $1.97

Company Risk

Share Price Risk

Ethical rating

Performance against indices (%)3 Months 6 Months 12 Months

PTD (13.8) (32.7) (6.3)Sector 6.4 5.2 27.9Market 6.8 4.2 22.4

Beta: 1.5

Market risk premium (%): 5.5

Risk free rate (%): 6.1

WACC (%): 13.6

Forecast cashflow (years): 10

Residual value % of total valuation: 136.7

Nominal terminal growth rate (%): 3.0

Earnings Summary

1 NPAT and EPS are adjusted by removing non-recurring items. All the above statistics are derived from normalised earnings.

Yr to Sep NPATRep $M

NPAT1

Adj $MEPS1

cEPS chg

%PER

xPER rel

All Ords xPER rel

Sector xDPS

cYield

%Franking

%ROE

%

2006A 5.1 5.1 3.2 (80.3) 37.6 1.8 1.1 0.0 0.0 0 6.3

2007A 133.4 2.7 1.6 (50.0) 75.3 4.0 2.6 0.0 0.0 0 1.3

2008F 9.7 9.7 4.1 161.6 28.8 1.8 1.2 0.0 0.0 0 3.1

2009F 22.7 22.7 9.7 135.0 12.2 0.9 0.6 0.0 0.0 0 6.9

Peptech

Year end Sep. All figures in A$M

Notes:1. The risk ratings are on a 12 month perspective, where five stars denotes low risk and one star denotes high risk. Company risk takes into account expectedfinancial, strategic and execution risks associated with the company. Share price risk is a measure of the expected volatility of the price and other trading factors.2. The Ethical rating rates a company on an ethical investment basis where five stars denote very good and one star a poor rating. The score is based on four key factors:areas of operating, environmental, corporate governance and social factors. For more information see www.aegis.com.au.

Valuation: $1.73 Company risk 1: Share Price risk 1: Ethical rating 2:

Profit & loss summary 2006A 2007A 2008F 2009F

Operating revenue 22.5 25.9 32.3 48.5Invest & other income 0.0 0.0 0.0 0.0

EBITDA 4.9 (4.0) 2.9 20.2Depreciation/Amort (0.9) (2.8) (0.4) (0.4)

EBIT 4.0 (6.8) 2.5 19.8Net Interest 2.3 9.7 11.4 12.8

Pre-tax profit 6.3 2.9 13.9 32.6Tax expense (1.2) (0.2) (4.3) (9.9)

Minorities/Assoc./Prefs 0.0 0.0 0.0 0.0

NPAT 5.1 2.7 9.7 22.7Non recurring items 0.0 130.8 0.0 0.0

Reported profit 5.1 133.4 9.7 22.7NPAT add Goodwill & Pref 0.0 0.0 0.0 0.0

Adjusted profit 5.1 2.7 9.7 22.7

Cashflow summary 2006A 2007A 2008F 2009F

EBITDA 4.9 (4.0) 2.9 20.2Working capital changes 2.1 5.4 0.0 0.0

Interest and tax (3.2) 7.0 8.6 5.7

Other operating items (0.9) (5.3) (1.8) 0.0

Operating cashflow 2.9 3.1 9.8 25.9Required capex (0.3) (0.8) (0.8) (1.0)

Maintainable cashflow 2.6 2.3 9.0 24.9Dividends 0.0 0.0 0.0 0.0

Acq/Disp (0.4) 145.9 17.6 0.0

Other investing items (2.5) (23.2) 0.0 0.0

Free cashflow (0.2) 125.0 26.6 24.9Equity 0.5 3.5 0.0 0.0

Debt inc/(red'n) 0.0 0.0 (26.6) (24.9)

Balance sheet 2006A 2007A 2008F 2009FCash & deposits 40.7 169.0 195.6 220.5

Inventories 0.6 0.0 0.0 0.0

Trade debtors 5.0 25.5 7.8 7.8

Other curr assets 0.9 0.9 0.9 0.9

Total current assets 47.1 195.4 204.3 229.2Prop., plant & equip. 3.0 1.2 1.7 2.3

Non-curr intangibles 8.1 129.9 129.9 129.9

Non-curr investments 40.2 0.0 0.0 0.0

Other non-curr assets 1.9 2.9 2.9 2.9

Total assets 100.2 329.5 338.8 364.3Trade creditors 0.0 0.0 0.0 0.0

Curr borrowings 0.0 3.7 3.7 3.7

Other curr liabilities 13.6 2.4 3.1 5.9

Total current liab. 13.6 6.2 6.8 9.6Borrowings 0.0 0.0 0.0 0.0

Other non-curr liabilities 0.7 14.1 13.1 13.1

Total liabilities 14.3 20.2 19.9 22.7Minorities/Convertibles 0.0 0.0 0.0 0.0

Shareholders equity 85.9 309.2 318.9 341.6

Ratio analysis 2006A 2007A 2008F 2009FRevenue growth (%) (51.2) 15.0 24.8 50.2

EBITDA growth (%) (85.7) n/a n/a 586.8

EPS growth (%) (80.3) (50.0) 161.6 135.0

EBITDA/Sales margin (%) 21.8 (15.4) 9.1 41.6

EBIT/Sales margin (%) 17.6 (26.4) 7.8 40.8

Tax rate (%) 18.9 7.5 30.7 30.3

Net debt/equity (%) (47.3) (53.5) (60.2) (63.5)

Net debt/net debt + equity (%) (89.9) (114.8) (151.0) (173.7)

Net interest cover (x) n/a n/a n/a n/a

Payout ratio (%) 0.0 0.0 0.0 0.0

Capex to deprec'n (%) 55.0 192.7 187.8 234.7

NTA per share ($) 0.47 0.76 0.81 0.90

ROA (%) 4.2 (3.0) 0.8 5.6

ROE (%) 6.3 1.3 3.1 6.9

Multiple analysis 2006A 2007A 2008F 2009FMarket cap (M) 278

Net debt ($M) 0.0

Peripheral assets ($M) (0.0)

Enterprise value ($M) 278.4

EV/EBIT (x) 70.3 (40.8) >99 14.1

EV/EBITDA (x) 56.8 (69.8) 94.7 13.8EV/EBITDA All Ind (x) 10.2 9.1 8.1 7.5

EV/EBITDA rel All Ind (x) 5.5 (7.7) 11.7 1.8

P/E (x) 37.6 75.3 28.8 12.2P/E rel All Ind (x) 1.7 3.9 1.7 0.8

P/E rel All Ind ex banks (x) 1.5 3.7 1.7 0.8

P/E sector (x) 34.8 28.6 24.1 20.5

P/E rel sector (x) 1.1 2.6 1.2 0.6

Assumptions 2006A 2007A 2008F 2009FGDP growth (%) 2.76 2.67 3.18 3.62

Interest Rates (%) 5.85 6.44 6.31 6.30

Inflation (%) 3.42 2.60 2.60 2.50

Copyright © 2000 - 2007 Aegis Equities Holdings Pty Limited. All rights reserved.This information must be read in conjunction with the Legal Notice which can be located at http://www.aegis.com.au/public/disclaimer.aspx.

Peptech

TABLE 2: PTD FULL YEAR RESULTS

Source: PTD/Aegis Equities

Result Highlights

� Revenue – Revenue for FY07 increased by 49% to $34.6M, including sales, and licensing and royalty revenues. Royaltyrevenue increased marginally to $16.6M. The minimal growth in royalties was due in part to the appreciating AUD. Salesand licensing income increased 68% to $8.1M, due to incrementing fees on newly licensed products.

� NPAT – NPAT for the period increased 2,520% to $133.4M. This large increase was the result of the $136.1M gain onthe sale of the investment in Domantis, and a one month contribution from EvoGenix.

� Balance Sheet – Arana’s balance sheet continues to remain strong. Cash assets now stand at $169M, largely driven bythe cash proceeds from the Domantis investment. Arana also has $25.5M in trade and other receivables.

� Investments – Unlisted investments reduced to zero after the sale of the Domantis Investment.

� Debt - Arana incurred finance costs of $0.8M, up from zero in pcp. These costs were incurred from the discount non-current liabilities for the deferred consideration payable on the Promics and Scanwell acquisitions. These costs areexpected to continue as the discounts are rolled out.

� Cash Flow – Cash inflows from continuing operations increased $4M on pcp to $5.9M. This was due to increasedspending on research and development being offset by increased receipts and interest income.

Program UpdatesAutoimmune and inflammatory disease program

� ART621 was developed initially by Domantis as a domain antibody and is the first such compound to be used in humantrials. It is currently in a testing program for rheumatiod arthritis, which is an autoimmune disorder. ATR 621 targets aprotein called tumour necrosis factor, considered to play a key causative role in rheumatiod arthritis.

� In Oct-07, ART621 successfully completed a phase I clinical trial. The trial involved giving escalating doses of the drug,either subcutaneously or intravenously, to 30 healthy volunteers. In the trial, ART621 was shown to be well tolerated.Preclinical animal trials of ART621 showed that it produced a similar effect to one of the three currently approvedblockbuster anti-TNF drugs. Preclinical work has also demonstrated the compound to have favourable stability andduration of action properties.

� A phase II trial is scheduled for CY08. If ART621 demonstrates expected efficacy in the phase II trial, we believe thiswould be a valuable molecule and an attractive licensing target for big pharma.

� Domantis (now part of GSK) is obligated to develop two more domain antibodies for Arana to targets yet to be selectedby Arana. These represent future options of considerable value for the company.

pcp Aegis Actual ChangeFor the 12 months ended**: Sep-06 Sep-07 Sep-07 pcp AegisSales revenue :$M 22.5 26.3 25.9 +15% -2%EBITDA :$M 4.9 -5.3 -4.0 -181% -25%Depreciation & amort :$M -0.9 -0.3 -2.8EBIT :$M 4.0 -5.6 -6.8 -272% +22%Net Int Expense :$M 2.3 8.8 9.7 +317% +11%Profit Before Tax :$M 6.3 3.2 2.9 -54% -10%Tax on Recurring :$M -1.2 -0.9 -0.2 -82% -77%Profit After Tax :$M 5.1 2.2 2.7 -48% +19%Minorities/Associates :$M 0.0 0.0 0.0Preference Dividends :$M 0.0 0.0 0.0NPAT :$M 5.1 2.2 2.7 -48% +19%Non Recurring (net of Tax) :$M 0.0 136.1 130.8 -4%Reported Profit :$m 5.1 138.3 133.4 +2520% -4%** All numbers are adj. for non-recurring items except Reported ProfitPER SHARE DATA Sep-06 Sep-07 Sep-07Average weighted Capital, fully diluted :M 163 170 170 +5% +0%E.P.S. on Adj profit :cents 3.1 1.3 1.6 -50% +17%D.P.S. :cents 0.0 0.0 0.0Franking :% 0 0 0Payout Ratio 0% 0% 0% +0% +0%

RATIOS Sep-06 Sep-07 Sep-07EBITDA Margin :% 21.8 -20.3 -15.4 -37% +5%EBIT Margin :% 17.6 -21.3 -26.4 -44% -5%Effective Tax rate :% 18.9 29.7 7.5 -11% -22%


Peptech

PMX53

� PMX53 is a small cyclic peptide in the preclinical phase of development that treats inflammatory diseases. PMX53targets a different protein to TNF.

� PMX53 is still at preclinical development, and the company has been focusing more resources at developing ART621.

Cancer ProgramART010

� ART010 is being developed to treat osteoporosis and bone cancer. The drug is a variant of a naturally occurring proteincalled osteoprotegerin (OPG) that slows the processes that break bone down. ART010 could be effective at treatingcancer-related bone loss. ART010 is hoped to be more effective than OPG as the latter may also interfere with thebody's natural cancer detecting mechanisms. ART010 has therefore been designed to retain the bone breakdownslowing properties, while not incorporating other potentially deleterious characteristics.

� Arana is finalising the structure of an ART010 candidate which would then be put into clinical development, andsimultaneously placed into a GMP manufacture program.

ART150

� ART150 is being developed as a therapy for lung cancer and melanoma. It targets complex molecules(gangliosides) present in cell membranes that are made of carbohydrate and lipid.

� ART150 has been shown to completely inhibit tumour development in a mouse model of human lung cancer. Thiscompound is targeted to complete preclinical development in CY09.

ART104

� ART104 is being developed for solid tumours and may improve the effects of certain chemotherapies. The drugwas initially developed for colorectal cancer, but Arana believes ART104 may also be useful for other solid tumours.

� This drug is three to six months ahead of ART150 in its development. Arana hopes to be able to select a specific form ofART104 to take into the clinic within 18 months. The company is engaged in discussions with a third party interested inlicensing ART104.

Protein engineering platform

� The EvoGenix acquisition strengthened Arana's pipeline and strengthened the company's protein engineeringcapabilities. EvoGenix's Superhumanisation technology makes the antibody more "human-like", thereby reducing thelikelihood of rejection by the body's immune system. The EvoGene technology is used to enhance the affinity andspecificity of the "superhumanised" antibody for its target.

� Utilising the combined technologies available on its protein engineering platform, Arana is able to develop potent, non-immunogenic antibodies, which should make attractive licensing candidates.

Partnership deals

� Arana now is deriving recurring revenues from six companies, including GSK, Centocor, Abbott andCSL, and management has set up strategic commercial agreements with leading drug distribution companies.

� Management has also entered into a commercial agreement with Vegenics, involving upfront and milestone paymentsand royalties, in relation to humanising and optimising Vegenics' major product.

� Arana and AVEO pharmaceuticals have also established a partnership allowing AVEO to utilise Arana’sSuperhumanisation technology.

Name change

� Shareholders voted in favour of an official name change to Arana Therapeutics Limited. The company’s ASX code willbe changed to AAH on 12 Nov 07 as a result of the name change, which follows the recent merger between Peptechand EvoGenix. This name change underlines the company's desire for investors to recognise the new business modeland point of differentiation in the market.

New Strategy

� The board has approved a new business strategy which will be focused on expanding and accelerating the company'spreclinical and clinical pipeline, and increasing its technology platforms to take advantage of the recurring revenuesstream that are made available once commercial agreements are established.


Peptech

Summary

� Arana is in a very strong cash position following the recent sale of its interest in Domantis. The company now has anenhanced product pipeline and a very healthy balance sheet with continued revenue streams from its licensingagreements, large cash assets and developing commercial agreements.

� The company's new strategy has the objective of achieving 2-3 Phase II/III assets, 2-3 Phase I or investigational newdrugs and 3-4 pre clinical candidates within the next one to two years. Arana plans to use its large cash balance toacquire or in-license suitable candidates to expand its IP portfolio. The animal health business, which has performedpoorly for years, has been earmarked for sale.

� We view the changes that the board and management are making to the company positively. The company is focusedon deriving recurring revenue and a robust late stage pipeline, which together with the large cash reserves, willdifferentiate it from other Australian biotechnology companies.

� In light of Arana's exit from the Biosceptre joint venture, we have removed forecast cashflows from these programs fromour model and reduced the value of this JV to zero. We have also reduced the expected value of royalties from Centocordue to the stronger A$. The net effect of our changes has been a 6% fall in our sum of the parts valuation to $1.73.


UtilitiesWilbur Tong

ASX: AGK Bloomberg: AGK AU Reuters: AGK.AX 09 November 2007

AGL EnergyAGM comments - reaffirms FY08 guidance

EventAt its AGM, AGL advised it has completed the review in relation tounderlying the revised earnings guidance, and reconfirm its revisedFY08 earnings guidance of range $330M-$360 NPAT. AGK alsoannounced on the 6 November that its 50/50 JV with Arrow Energy willacquire the gas merchant and pipeline businesses of the Enertradefrom the QLD Government, for a total consideration of $268M plustransaction costs of c.$12M. AGK intends to on-sell its share of thepipeline infrastructure by FY08. AGL will initially fund its share of theacquisition price from cash reserves and debt facilities. Acquisition of50% of the gas merchant business will result in an average incrementto AGK’s earnings by more than 1cps in both FY08 and FY09.However, this transaction does not change on its FY08 earningsguidance.

ImplicationsTo restore investors' confidence, AGK's board and the new CEO seemto satisfactorily address the key issues facing the company: (1)wholesale costs control by levering its leading retail position to acquirepower generation and upstream gas business; and (2) retail marginimprovement by capturing economy of scale to drive down cost toserve, and to better target its high-value customers. Given the modestnature of the accretion of the Enertrade acquisition, and AGK’sreconfirmation of FY08 guidance, our estimates and valuation remainunchanged. Therefore, we retain our HOLD recommendations on both12-month and long-term investment horizons.

Investment OpinionAGK is the leading energy utility in Australia with the greatest retailmarket share and customer base. The AGL-Alinta demerger processand Powerdirect acquisition have further reshaped the group'soperations.

Our investment view on AGK remains cautious, due to: (1) the recentintensified competition in the Retail market, as reflected in theincreasing churn rate and lower margins; (2) high wholesale gas price;and (3) risks in successfully implementing its restructuring planexpected to realise full benefits in the medium term.

Key Information

Price Performance

Market Statistics

Key Assumptions

Share Price $12.8912 month view HOLD12 month target return (%) 15.8

12 month target price $14.40

Long Term View HOLDLong Term Target Return (% pa) 13.0

3 year target price n/a

Market Cap (M) $5,646

Shares (M) 438

% of Market 0.28

% of Sector 15.92

12 Month Range $11.96 - $18.23

Company Risk

Share Price Risk

Ethical rating


AGK (15.8) (16.6) (14.4)Sector (4.2) (8.9) 8.4Market 11.9 6.3 23.3

Beta: 1.1



WACC (%): 10.3




Earnings Summary


Yr to Jun NPATRep $M

NPAT1

Adj $MEPS1

cEPS chg

%PER

xPER rel

All Ords xPER rel

Sector xDPS

cYield

%Franking

%ROE

%

2006A 251 340 74.3 86.8 17.3 0.8 0.6 17.0 1.3 100 9.6

2007A 410 520 132.6 78.4 9.7 0.5 0.4 35.5 2.8 100 19.6

2008F 421 333 76.1 (42.6) 16.9 1.1 0.9 52.0 4.0 100 5.6

2009F 323 323 73.7 (3.2) 17.5 1.3 1.0 53.6 4.2 100 4.9

AGL Energy

Year end Jun. All figures in A$M

Notes: 1. The 12M recommendation rates stocks on a 12 month, absolute basis based on the total return (capital and dividends). BUY denotes an expectation of 15% ormore total return; SELL 5% or less; HOLD within the range of 5-15%. ACCEPT OFFER relates to a situation where there is a public offer for shares and our view is toaccept that offer.2. The Long Term Recommendation rates stocks on a long term, absolute basis based on the average total return per annum (capital and dividends). BUY denotes a longterm expectation of 1% or more above the cost of equity (also known as the required return, which measures the the return required by investors given the company's risk);HOLD within the range of 1% above and 3% below the cost of equity; SELL more than 3% below the cost of equity but above a total forecast annual return for the stock of0%; AVOID denotes a long term expectation of a total annual return below 0%. ACCEPT OFFER relates to a situation where there is a public offer for shares and our viewis to accept that offer.

12M Recommendation1: HOLD 12M Target: $14.40 Long Term Recommendation 2: HOLD Long Term Target Return: 13.0% pa


Operating revenue 4,269 3,760 5,194 4,967Invest & other income 0 0 0 0

EBITDA 757 923 789 765Depreciation/Amort (206) (163) (179) (184)

EBIT 551 760 610 581Net Interest (125) (95) (134) (120)

Pre-tax profit 426 665 476 461Tax expense (187) (181) (143) (138)

Minorities/Assoc./Prefs 101 36 0 0

NPAT 340 520 333 323Non recurring items (88) (110) 88 0

Reported profit 251 410 421 323NPAT add Goodwill & Pref 0 0 0 0

Adjusted profit 340 520 333 323


EBITDA 757 923 789 765Working capital changes 216 (76) 159 0

Interest and tax (314) (146) (419) (260)

Other operating items (191) (411) 1 0

Operating cashflow 468 290 530 504Required capex (270) (150) (156) (149)

Maintainable cashflow 198 139 374 355Dividends (288) (36) (228) (231)

Acq/Disp (2,007) (1,880) 357 (80)

Other investing items (11) (237) 125 0

Free cashflow (2,109) (2,014) 628 44Equity (21) 912 0 0

Debt inc/(red'n) 1,886 1,342 (628) (44)

Balance sheet 2006A 2007A 2008F 2009FCash & deposits 58 280 150 150

Inventories 22 28 29 29

Trade debtors 209 1,702 1,564 1,565

Other curr assets 419 5,148 5,148 5,148

Total current assets 708 7,159 6,891 6,892Prop., plant & equip. 845 1,102 722 767

Non-curr intangibles 847 3,205 3,205 3,205

Non-curr investments 550 1,106 1,106 1,106

Other non-curr assets 43 1,420 1,420 1,420

Total assets 2,993 13,991 13,343 13,389Trade creditors 59 1,482 1,504 1,505

Curr borrowings 2,273 406 317 317

Other curr liabilities 166 2,226 2,121 2,119

Total current liab. 2,497 4,114 3,943 3,941Borrowings 223 2,041 1,372 1,328

Other non-curr liabilities 143 1,434 1,435 1,435

Total liabilities 2,864 7,590 6,750 6,704Minorities/Convertibles 0 0 0 0

Shareholders equity 130 4,214 6,594 6,685

Ratio analysis 2006A 2007A 2008F 2009FRevenue growth (%) (11.2) (11.9) 38.2 (4.4)

EBITDA growth (%) 61.5 22.1 (14.6) (3.1)

EPS growth (%) 86.8 78.4 (42.6) (3.2)

EBITDA/Sales margin (%) 17.7 24.6 15.2 15.4

EBIT/Sales margin (%) 12.9 20.2 11.7 11.7

Tax rate (%) 44.0 27.2 30.0 30.0

Net debt/equity (%) >1000 51.4 23.3 22.4

Net debt/net debt + equity (%) 94.9 34.0 18.9 18.3

Net interest cover (x) 4.4 8.0 4.6 4.9

Payout ratio (%) 22.9 26.8 68.3 72.7

Capex to deprec'n (%) 131.3 91.9 87.2 81.1

NTA per share ($) (1.57) 2.30 7.74 7.94

ROA (%) 7.2 10.5 4.5 4.3

ROE (%) 9.6 19.6 5.6 4.9

Multiple analysis 2006A 2007A 2008F 2009FMarket cap (M) 5,646

Net debt ($M) 1,539

Peripheral assets ($M) 571

Enterprise value ($M) 6,615

EV/EBIT (x) 12.0 8.7 10.8 11.4

EV/EBITDA (x) 8.7 7.2 8.4 8.7EV/EBITDA All Ind (x) 10.1 9.0 8.1 7.5

EV/EBITDA rel All Ind (x) 0.9 0.8 1.0 1.2



P/E sector (x) 30.6 25.3 19.3 16.8

P/E rel sector (x) 0.6 0.4 0.9 1.0


Interest Rates (%) 5.73 6.38 6.34 6.30

Inflation (%) 3.20 3.09 2.47 2.50

Notes To AccountsIn an attempt to capture the essence of the transformed AGK, ourprojections for FY07 adopt the use of the pro forma financials, which,in effect, have been prepared after taking into account the completionof the scheme proposal. However, we stress that these numbers are,as a result, quite fluid, and will only firm up as more definitivefinancials for the still-evolving AGK come to hand.


AGL Energy

AGM Highlights

� AGL has been working hard to restore market confidence in the company. A full review of the integrity of the forecastingsystems, risk management systems, business operations and assumptions is being undertaken by the management andErnst & Young, and is expected to be completed by 2007. To-date, no issues were identified with respect to the integrityof the forecasting systems. Its $40B hedge book is performing in line with expectations.

� In relation to the review on the analysis and information underlying the revised earnings guidance, AGL has reconfirmedits revised FY08 NPAT guidance range of $330M-$360M.

� Although there is no change in AGL's strategy, the new CEO seems to place more focus on the execution. AGL is veryactively executing its vertically integrated strategy to capture higher value, by levering its leading retail position toacquire power generation and upstream gas business. Last week saw the announcement to sell its 33% stake inAlintaAGL, and this week the company announced its third wind farm project development and the 50% acquisition ofEnertrade via its JV with Arrow.

Enertrade Businesses Acquisition

Gas Pipeline Assets

AGL does not consider the asset as core to its long term strategy and intends to on-sell its share of the pipeline before the endof FY08. With the gas pipeline component of the transaction representing most of the acquisition cost, the net cost of AGL’sinvestment is expected to reduce to less than $40M after the sale of the pipeline. AGL does not expect the 50% acquisition ofthe pipeline assets will have a material impact on the company's earnings.

Gas Merchant Business

comprises two key parts:1. Purchase of gas from the Moranbah Gas Project (MGP) coal seam gas operations to sell to large customers in

Townsville; and

2. Dispatch management of the 230MW Yabulu Power Station (YPS) in Townsville into the National Electricity Market(NEM).

The Gas Purchase Agreement with the MGP JV is for up to approximately 20 PJ per year for 15 years. The Agreementcommenced in 2005.

� With very thin retail margin and market volatility inwholesale costs (currently $2B electricity and $1Bgas), AGL seeks to maintain more control on thewholesale costs by securing power generationassets and upstream gas business.

� Project Phoenix, the IT integration initiative toreplace all the legacy systems of its acquiredbusinesses into one single centralised platform, is onschedule and on budget. A successfullimplementation could increase retail margin andcreate the basis for differentiation by capturingeconomy of scale to drive down the cost to serve, andto better target its high-value customers.

� AGL mentioned the retail industry has recentlyexperienced a decline in churn rate. This could beattributed to the reduced volatility experienced afterwinter, and the industry consolidation of the smallerplayers as a result of the QLD market privatisation.Whether it is short-term in nature remains to be seen.

FIGURE 2: VERTICALLY INTEGRATED STRATEGY

Source: AGL AGM presentation


AGL Energy

The first part of the Gas Merchant Business is the supply of gas to two large industrial customers in Townsville and to EnertradeElectricity Trading under a:

� Gas Supply Agreement with Queensland Nickel Industries for up to 6 PJ per year;

� Gas Supply Agreement with Copper Refineries Pty Ltd for up to 0.25 PJ per year; and

� Self-supply arrangement for the balance of the Gas Purchase Agreement volumes to service the YPS Power PurchaseAgreement (PPA).

The second part of the Gas Merchant Business is the right to dispatch the electricity generated from the 230MW YPS under along term PPA with Transfield Services for about 17 years.

Natural gas coal seams will be processed from MGP, compressed and transported for sale to two major industrial customers inTownsville and also for supply into the YPS. Under the terms of the agreement reached with Arrow, AGL will manage the gasmerchant business for the JV and manage dispatch and control the output of electricity generated at YPS. Arrow will continue tooperate the reconfigured upstream gas business which will now include the Enertrade processing and compression facilities atMoranbah.

Strategic Implications

� The Enertrade gas merchant business is a natural extension of the existing Moranbah coal seam gas JV, as Enertradeis the major customer for gas produced at Moranbah.

� This acquisition provides an immediate exposure for AGL to a "whole of the energy value chain" from gas productionthrough to electricity sales. It secures the upstream gas business and wholesale energy costs by immediately gainingexposure to the wholesale electricity generation market at a time of historically high electricity pool prices.

� This deal will not only allow AGL and Arrow to capture more of the upside value from gas produced at Moranbah, butalso provides growth opportunities for AGL's north Queensland project portfolio.

� AGL will gain the dispatch rights to the 230MW Yabulu combined cycle power station located in Townsville andconnected to the NEM. This will lift AGL’s generating dispatch capacity in QLD to in excess of 500MW when combinedwith the recently acquired Oakey Power Station dispatch rights.

� The Central Queensland Gas Pipeline developmentto build a 440km high pressure gas transmissionpipeline from Moranbah to Gladstone, will serve as amissing link for the gas supply between theinterconnection of North Queensland Gas Pipelineand the North Bowen Basin and Gladstone, whichhas access to the NSW and SA markets. This dealeffectively creates a mid-size integrated energycompany in the high growth energy market of theGladstone to Townsville corridor and furtherenhances the business alignment of AGL and Arrow.

FIGURE 3: CENTRAL QUEENSLAND GAS PIPLINE

Source: AGL AGM presentation


AGL Energy

Investment View

� To restore investors' confidence, AGL's board and the new CEO seem to satisfactorily address the key issues facing thecompany:

1. vertically integrated strategy to control wholesale costs and capture value, by levering its leading retail position toacquire power generation and upstream gas business; and

2. create the basis for differentiation to improve retail margin by capturing economy of scale to drive down the costto serve, and to better target its high-value customers.

� However, the lesson to learn from the recent profit downgrade is that no system control or strategy is failsafe, unless thesenior management places proper care and diligence on its daily operations and the business execution.

� Another concern is the company's reporting practice, specifically the lack of transparency behind its hedge book, andthat of the AGL's pro-forma results, as opposed to the statuary reported figures.

� AGK indicated the 50% of Enertrade’s gas merchant business acquisition will result in a small accretion to AGL’searnings by at least one cps for each of FY08 and FY09. However, there is no change to AGL’s revised FY08 earningsguidance. The EBITDA from the gas merchant business was approximately $20M in FY07 (for 50% share), which waslargely driven by revenue from electricity sales.

� Given the modest nature of the accretion of the Enertrade acquisition, and AGL’s reconfirmation of FY08 NPATguidance range of $330M-$360M, our estimates and valuation remain unchanged. Therefore, we retain our HOLDrecommendations on both 12-month and long-term investment horizons.

FIGURE 4: LOCATION OF ENERTRADE'S GAS BUSINESS ASSETS

Source: Company/Aegis Equities

Copyright © 2000 - 2007 Aegis Equities Holdings Pty Limited. All rights reserved.

This information must be read in conjunction with the Legal Notice which can be located at http://www.aegis.com.au/public/disclaimer.aspx.

FinancialsPeter Rae

ASX: NAB Bloomberg: NAB AU Reuters: NAB.AX 09 November 2007

National Aust BankFY07: strong result but recommendationdowngraded due to share price rise

EventFY07 cash NPAT of $4,394M, was up 12.6% on FY06 and below our$4,422M forecast. In terms of ongoing operations, cash NPAT was up17.7%. The result reflected strong lending, deposit and FUM growthand good cost containment. Partly offsetting this, there was a modestdecline in the net interest margin and an increase in the charge for baddebts. NAB noted that delinquent assets are up from historical lows,but within expectations. The final dividend increased by 11cps to 95cps(ff).

ImplicationsThis was a good result, demonstrating that NAB continues to buildmomentum across its business. The strong performances in AustralianBanking and Wealth Management are expected to continue and stronglending growth in 2H07 establishes a platform for earnings growth in1H08. The UK continues to improve and NAB appears well placed todeliver further growth in New Zealand despite a competitiveenvironment. Based on the outlook and the momentum in the FY07result, we expect NAB will continue achieve double-digit earningsgrowth. We have not made any major changes to ourforecasts. FY08 is down by less than 1% and FY09 is up by less than1%. We have increased our 12-month share price target from $45.32 to$46.40. Following the recent strong share price performance we havedowngraded our short-term recommendation to HOLD.

Investment OpinionNAB has a very strong banking franchise in Australia and NewZealand, but remains sub-scale in the UK despite owning some strongregional bank brands and expanding its presence into the south ofEngland. Margins are also under pressure in the UK. NAB has a strongwealth management brand in MLC. We have a neutral medium-termview of the stock.

NAB has demonstrated that it has now clearly turned the corner andthe outlook is for further growth going forward. In our view, there arefurther opportunities for NAB to achieve improvements in its businessand this, combined with a favourable banking and wealth managementenvironment, should see NAB achieve double-digit earnings growthover the next few years. However, at the current share price we have aHOLD recommendation on NAB on a 12-month view.

Key Information

Price Performance

Market Statistics

Key Assumptions






Shares (M) 1,648

% of Market 3.55

% of Sector 10.87

12 Month Range $36.22 - $44.70

Company Risk

Share Price Risk

Ethical rating


NAB 11.3 (2.1) 8.0Sector 3.0 (2.3) 10.4Market 6.8 4.2 22.4

Beta: 1.1



WACC (%): 12.2




Earnings Summary


Yr to Sep NPATRep $M

NPAT1

Adj $MEPS1

cEPS chg

%PER

xPER rel

All Ords xPER rel

Sector xDPS

cYield

%Franking

%ROE

%

2006A 4,138 3,903 241.5 15.0 18.0 0.8 0.8 167.0 3.8 85 17.0

2007A 4,295 4,394 268.7 11.3 16.2 0.9 0.9 182.0 4.2 95 15.3

2008F 4,905 4,905 299.8 11.5 14.5 0.9 1.0 198.0 4.6 90 18.4

2009F 5,531 5,531 334.5 11.6 13.0 0.9 1.0 218.0 5.0 90 18.8

National Aust Bank

Year end Sep. All figures in A$M



Profit & loss summary 2006A 2007A 2008F 2009FNet interest income 8,686 9,744 10,595 11,503

Non interest income 6,450 4,959 5,394 5,807

Total revenue 15,136 14,703 15,989 17,310Operating expenses (7,213) (7,020) (7,163) (7,421)

Depreciation/Amort (434) (474) (509) (530)

Bad debts (606) (790) (946) (1,100)

Pre-tax profit 6,883 6,419 7,371 8,260Tax expense (1,977) (1,742) (2,175) (2,437)

Minorities (749) 0 0 0

Pref. Distributions (254) (283) (292) (292)

NPAT 3,903 4,394 4,905 5,531Non recurring items 235 (99) 0 0

Reported profit 4,138 4,295 4,905 5,531

Adjusted profit 3,903 4,394 4,905 5,531

Ending balance sheet 2006A 2007A 2008F 2009FLoans 304,963 345,329 389,842 431,847

Acceptances 41,726 49,322 49,322 49,322

Goodwill 553 565 565 565

Other Assets 137,543 169,418 197,686 224,362

Total assets 484,785 564,634 637,415 706,097

Total liabilities 456,813 534,749 605,482 671,378

Shareholders equity 27,972 29,885 31,933 34,719

Average balance sheet 2006A 2007A 2008F 2009FInterest earning assets 387,262 440,897 497,729 551,359

Non interest earning assets 88,381 99,529 112,358 124,465

Total assets 475,643 540,426 610,087 675,824Interest bearing liabilities 357,400 403,331 455,320 504,381

Non interest bearing liabilities 91,388 104,479 123,757 137,751

Avg Ttl Liabilities 448,788 507,810 579,078 642,132

Avg ord sh'holders equity 26,855 32,616 31,009 33,692

Ratio analysis 2006A 2007A 2008F 2009FInterest Margin (%) 2.24 2.21 2.13 2.09

Cost / Income (%) 50.5 51.0 48.0 45.9

Tax rate (%) 28.7 27.1 29.5 29.5

Payout ratio (%) 69.1 67.7 66.1 65.2

ROE (%) 17.0 15.3 18.4 18.8

EPS growth (%) 15.0 11.3 11.5 11.6

NTA per share ($) 14.24 15.12 16.29 17.77

Tier 1 Capital (%) 7.4 6.7 6.8 6.8

Total Capital (%) 10.8 10.0 9.7 9.4

BDD/avg loans (%) 0.21 0.24 0.25 0.26

Ttl prov/non accruals (%) 111.0 91.6 126.9 155.8

Multiple analysis 2006A 2007A 2008F 2009F



P/E sector (x) 21.1 17.5 14.6 13.2

P/E rel sector (x) 0.8 0.9 1.0 1.0


National Aust Bank

TABLE 2: RESULTS SUMMARY

Source: Company

OverviewThis was a good result from NAB, with underlying earnings from the ongoing businesses up by 17.7%. All businessesperformed well, Australian Banking and Wealth Management being standout performers. The result benefited from strongrevenue growth and modest cost growth.

The key drivers of growth in the underlying performance are as follows:

� Good volume growth. Total lending grew by 13.8% compared to 30 September 2006. The momentum was maintainedthrough the second half, with lending up 7.7% in 2H07. Non-housing lending performed exceptionally well (+19.2% forthe year) driven by strong business lending. Australian housing lending remained weak (+8.6%) and was well belowsystem growth. NAB continues to rely heavily on its proprietary distribution channels and does not make major use ofbrokers, a key distribution channel for many of its competitors. UK lending was a little disappointing, with housinglending up 4.7% and non-housing lending up 10.6%. Given the strategy to grow through the integrated FinancialServices model (iFS) we would have expected higher growth from the region. New Zealand performed reasonably wellgiven the difficult market environment, with housing lending up 10.1% and non-housing up 9.3%.

� Good margin management, with the group interest margin falling by five basis points (bp). This was a good outcomeconsidering the ongoing decline in the UK margin (-48 bp) due to the repositioning of the business, and a further 12 bpdecline in the New Zealand margin. The Australian Banking interest margin was flat, a very good performance in acompetitive environment. Reductions in lending margins and an adverse deposit mix change were offset by the benefitsof deposit margin management and a higher capital allocation.

� A strong performance from Wealth Management, with Wealth Management Australia earnings up by 30.5% due tostrong growth in funds under management and inforce premiums.

� A strong performance on costs which were up by just 0.9% for the year. This saw the banking cost to income ratioimprove, declining from 54.5% to 50.8%.

� The charge for bad and doubtful debts was up significantly (+30.6%), but this was from an unsustainably low base.Overall asset quality remains good, although there has been a slight deterioration in Australian impaired assets, whichNAB attributed to the weak NSW economy.

Period: 1H07A 2H07A FY06A FY07A 2H07A FY07A$M v. 1H07A v. FY06ANet Interest Income 4,799 4,966 8,777 9,765 3.5% 11.3%Non Interest Income 1,723 1,796 3,554 3,519 4.2% -1.0%Wealth Mgt Net Operating Income 609 677 1,123 1,286 11.2% 14.5%Total Income 7,131 7,439 13,454 14,570 4.3% 8.3%Operating Costs -3,709 -3,719 -7,360 -7,428 0.3% 0.9%Underlying Earnings 3,422 3,720 6,094 7,142 8.7% 17.2%Bad Debts Charge -390 -400 -605 -790 2.6% 30.6%Profit before tax 3,032 3,320 5,489 6,352 9.5% 15.7%Tax -845 -877 -1,563 -1,722 3.8% 10.2%Investment Income on Shareholders Funds 21 18 56 39 -14.3% -30.4%Pref Div -137 -146 -254 -283 6.6% 11.4%Cash NPAT (post prefs) ongoing operations 2,071 2,315 3,728 4,386 11.8% 17.7%Cash NPAT (post prefs) disposed operations 24 -16 175 8 n/a n/aCash NPAT (post prefs) 2,095 2,299 3,903 4,394 9.7% 12.6%Non-Cash Items -96 -3 235 -99 n/a n/aReported Profit (post prefs) 1,999 2,296 4,138 4,295 14.9% 3.8%

Cash EPS (cps) ongoing operations 126.2 142.1 230.6 268.5 12.6% 16.4%DPS (cps) 87 95 167 182 9.2% 9.0%Franking 90% 100% 85% 95%


National Aust Bank

Result AnalysisNote: Our comments are on the basis of on-going operations.

� Net interest income increased by a very impressive 11.3% in FY07 and a more modest 3.5% in 2H07 comparedto 1H07. The strong full year performance reflects the good volume growth in both loans and customer deposits, partlyoffset by the modest decline in the interest margin. The second half growth was impacted by a larger drop in the interestmargin due to increased competitive pressures in Australia and New Zealand. Given the lending momentum in 2H07 weexpect further strong growth in net interest income in FY08.

� Non-interest income fell 1% in FY07 but was up by 4.2% in 2H07 compared to 1H07. Underlying lending andaccount fees were up by $80M for the year, but this was offset by a number of factors including: the loss of revenue fromthe provision of transitional services provided to Danske Bank; and adverse effects of hedging impacts in groupfunding/treasury. NAB has also been impacted by the migration of customers to lower fee products. We expect modestgrowth in non-interest income in FY08 with the benefit of volume growth partly offset by further migration to lower feeproducts.

� Group operating expenses rose by just 0.9% in FY07 and 0.3% in 2H07 compared to 1H07. This was a goodperformance and reflected the benefits of NAB’s restructuring program which delivered gains of $654M in FY07.Personnel expenses rose by 10.6%, due to salary increases and increases in performance based remuneration, but thiswas partly offset by a decline in general expenses. NAB continues to invest in the business and has increased thenumber of frontline staff, while reducing administrative functions, and also continues to invest in growth in its variousregions. NAB has repeated its guidance of cost growth at less than the inflation rate and has extended this guidance outto FY10.

� Non-cash items of -$99M after-tax comprised:

� Treasury shares: -$123M to remove the impact of the change in the value of NAB shares held by the groupstatutory life funds and consolidated managed investment vehicles.

� Revaluation gains/losses on exchangeable capital units: -$86M to remove the impact of foreign exchange gainsor losses related to NAB’s exchangeable capital units.

� Discount rate variation impact of -$44M on Investment Earnings on Shareholders’ Funds.

� Fair value and hedge ineffectiveness impact $154M

Asset Quality

� Bad debt expense increased by $10M over the half and $185M over the year. NAB stated that this growth waswithin expectations and was mainly due to a softening in credit conditions and a lower level of write-backs compared toFY06. Overall asset quality remains sound. NAB noted that loan delinquencies are up from historical lows, but withinexpectations.

� Gross non-accrual loans came in at $1,094M as at 30 September 2007 compared to $769M as at 31 March 2007and $904M as at 30 September 2006. The level of gross impaired assets to gross loans and acceptances increased0.02% to 0.28% over the year, however these remain well covered by provisions at 2.1 times. 90-days past due loansamounted to $1,207M compared to $1,132M as at 31 March 2007 and $893M as at 30 September 2006.

Capital Management and Dividends

� Capital Adequacy. NAB remains well capitalised. Its Adjusted Common Equity (ACE) ratio, which measures tier onecapital less preference shares and deductions was 4.90%, at the top end of its target range of 4.25%-5.00%. NAB’s Tier1 capital ratio of 6.67% was also at the top end of its revised target range of 6.00%-6.75%. NAB has lowered its Tier 1target range from 6.25%-7.00% to run a more efficient capital structure.

� Dividends. The increase in the final dividend from 84cps (90% franked) to 95cps (100% franked) was a pleasantsurprise. The full year dividend has increased from 167cps (85% franked) to 182cps (95% franked). NAB stated that ithas a medium-term payout ratio target of 65%, with franking in the 80% to 100% range.


National Aust Bank

Summary and Outlook

� This was a good result from NAB, broadly in line with our forecast, and shows that the group continues to buildmomentum across most of its businesses. The good performances in Australian Banking and Wealth Management areexpected to continue and the strong lending growth in 2H07 establishes a platform for further good earnings growth in1H08. However, with NAB losing market share in domestic housing, we believe there is more work that needs to bedone to restore Australian Banking to full potential. The weaker performance in domestic housing lending is largely dueto less focus on broker-originated business, with NAB focusing on its proprietary channels. Overall, we expect lendinggrowth to remain in double-digits in FY08, with business lending remaining particularly strong.

� While NAB has done relatively well to minimise the decline in the interest margin in FY07, we expect this will be difficultto achieve in FY08 given domestic banking industry competition and the ongoing decline in the UK margin. We areforecasting a slightly larger decline in the interest margin in FY08.

� The UK continues to benefit from NAB’s strategy to rollout its iFS strategy, although the momentum in underlyingearnings was not as strong in FY07 as we would have liked. Margins continue to fall significantly as the business shiftsaway from its traditional high margin products to the new lower margin offerings. The bank reached a number ofmilestones in its restructuring but, clearly there is more work to be done. We expect the iFS centres and ongoingrestructuring to be the key drivers of growth in the UK in FY08.

� Wealth Management should continue to benefit from the strong investment climate and compulsory superannuationregime and is expected to remain a key earnings growth driver for the group.

� New Zealand delivered a credible result in a difficult environment. We expect competitive pressures to remain strong inNew Zealand and lending growth may slow given the high interest rate environment. However, NAB appears well placedto deliver further good growth in New Zealand in FY08 with a strong focus on margin and cost management.

� NAB did well to contain its cost growth to less than 1% for the year and this reflects a strong focus on improvingefficiency within the group and the benefits of its restructuring program. We expect NAB will be able to contain costincreases to less than the inflation rate over the next few years, in line with its guidance. However, we expect FY08 costgrowth to be above the 0.9% achieved in FY07.

� While we do not expect any major deterioration in asset quality over the next year, we expect impaired loans to continuerising from their current low levels. We also expect that bad debt charges will continue to increase given that the creditcycle appears to have turned. Our forecasts allow for bad debt expense to increase at a faster rate than asset growth inFY08 although, given the strong revenue growth, this will not be a major issue.

� NAB does not give earnings guidance, but in its earnings outlook noted that it aims to grow revenue at better thansystem growth rates, particularly in key customer segments such as integrated Financial Services, Agribusiness andWealth Management.

� NAB also identified a number of strategic areas to drive value for the group, including:

� integrated Financial Services – rolling out the strategy in Australia and New Zealand;

� Agri banking – expansion of the business in niche areas and identification of opportunities in North America;

� Capturing more opportunities in the wealth management space by making direct investments in boutique fundmanagers. We think that this is unlikely to be a major revenue source for NAB in the short- to medium-term.

Forecasts and Valuation

� Based on the outlook and the apparent momentum in the FY07 result, we expect NAB will continue achieve double-digitearnings growth.

� Given the FY07 result was broadly in line with our expectations, we have not made any major changes to our forecasts.Our FY08 forecast is down by less than 1% and FY09 is up by less than 1%.

� We have increased our 12-month share price target from $45.32 to $46.40, largely reflecting an increase in the marketPE multiple since we last valued NAB. A component of our valuation is based on a PE multiple relative to the overallmarket.

Recommendation

� This was a good result from NAB and demonstrates the continued momentum in the business. We expect thismomentum to be maintained in FY08, with a continuation of double-digit earnings growth over the next few years.However, following the recent strong share price performance, we believe this is now reflected in the current share price.Accordingly we are downgrading our 12-month recommendation from Buy to HOLD. We retain our HOLDrecommendation on a long-term view.


National Aust Bank

Divisional Analysis

TABLE 3: DIVISIONAL RESULTS

Source: Company

Note: Our divisional comments are on the basis of on-going operations.

Australia

� Australian Banking saw cash earnings grow 11.2% HoH and 21.2% YoY. The yearly result reflected balance sheetgrowth, in particular business lending and deposits, combined with cost and margin management. It is worth noting thatthe division did benefit from the free funds impact of increased capital allocation. However, this was partly offset by anincrease in the charge of bad and doubtful debts which was up 39.5% (or $110M) due to lending growth and higherdelinquencies in consumer loans. NAB said that asset quality remains sound.

� Australian Wealth Management cash earnings climbed 19.7% HoH and 30.5% YoY. Within Investments, earnings roseon the back of growth in funds under management and administration (+21.8% to $110.2B). The insurance profit rosefollowing a 15% increase in sales, though this was offset by a slightly higher claims experience and the impact of anunfavourable movement in the valuation of policy liabilities.

United Kingdom

� Total United Kingdom cash earnings improved by only 1.4% HoH, but were stronger over the year with YoY growth of14.3%. Excluding the impact of currency movements, cash earnings were up 5.9% HoH and 13.6% YoY. The yearlyperformance was driven by strong lending and deposit growth, the benefit of restructuring initiatives and a lower chargefor bad debts, however the net interest margin fell 48bps due to the change in lending mix and higher wholesale fundingcosts. The credit quality of the portfolio has improved due to a lower risk profile reflecting the increased mix of securedlending.

New Zealand

� Total New Zealand cash earnings were up by 7.1% HoH and 18.1% YoY. In local currency terms, cash earnings wereup 6.7% HoH and 18.1% YoY. The main drivers of the yearly increase were strong growth in lending, solid growth inretail deposits, flat costs and a static charge for bad debts. These were partly offset by a 12bps drop in the net interestmargin due to competition, changed product mix and increased cost of wholesale funding. According to the bank, overallcredit quality remains sound.

Period: 1H07A 2H07A FY06A FY07A 2H07A FY07A$M v. 1H07A v. FY06AAustralia RegionAustralian Banking 1,170 1,301 2,038 2,471 11.2% 21.2%Wealth Mgt. Australia 183 219 308 402 19.7% 30.5%Other including Asia 0 1 -5 1 n/a n/aTotal Australia Region 1,353 1,521 2,341 2,874 12.4% 22.8%

UK Region 294 298 518 592 1.4% 14.3%

New Zealand Region 183 196 321 379 7.1% 18.1%

nabCapital 338 377 613 715 11.5% 16.6%

Central Functions 19 51 133 70 168.4% -47.4%

Investment Income on Shareholders Funds 21 18 56 39 -14.3% -30.4%

Cash NPAT (before prefs) - ongoing operations 2,208 2,461 3,982 4,669 11.5% 17.3%Pref Div -137 -146 -254 -283 6.6% 11.4%Cash NPAT (after prefs) - ongoing operations 2,071 2,315 3,728 4,386 11.8% 17.7%


National Aust Bank

nabCapital (previously known as Institutional Markets and Services)

� Cash earnings climbed 11.5% HoH and 16.6% YoY. Underlying profit was up by 29% reflecting origination activity inCorporate Finance, increased deal flow in both the higher yielding origination and distribution business and an improvedperformance by the Markets business. Cost growth was contained to 3.3%, well below revenue growth of 16.0%. Thecharge for bad debts was up from a $24M net write-back to a $69M cost, which has reverted back to more normal levels.NAB stated that asset quality was strong with 92.9% of exposures assessed as investment grade.

Central Functions

� Central functions cash earnings contribution fell by $63M due the increase in capital paid by the Funding Group to otherregions and non-recurring income earned in FY06. However these were partly offset by a lower tax expense due to anadjustment for the over provision of tax in relation to FY06.


IndustrialsJohn Hynd

ASX: TPI Bloomberg: TPI AU Reuters: TPI.AX 09 November 2007

Transpacific IndustriesTPI rolls debt with a new $250Mconvertible note

EventTPI announced Friday that it has placed a $250M subordinatedconvertible note due December 2014. The offering, which has a$14.8648 conversion price, is subject to all necessary regulatoryapprovals in relevant jurisdictions and will carry a 6.75% coupon, with aredemption value equal to the principal amount. The note is expectedto be listed on the Singapore Stock Exchange.

ImplicationsThis new debt instrument will account for approximately 11% of TPI'scurrent and non-current borrowings. Management has advised thatthey will be using the new issue to replace an existing bridge loan of asimilar amount as part of the company's refinancing project, as such ithas had no effect of our EPS forecast. Using management guidancewe have decreased our maintenance Capex by 10% and have alsolowered our depreciation figures marginally. The net result of thesechanges was a marginal decrease in EPS for both FY08 andFY09. Our 12 month price target has decreased 5% and now standsat $12.01. We retain our Hold recommendation for both the short- andlong-term investment horizons.

Investment OpinionTPI owns a quality group of businesses operating in industries that areexpected to exhibit steady long-term growth. Senior management isheavily invested in the business and has a track record in creatingshareholder value, particularly via acquisitions. On the basis of thecurrent stock price, we have a neutral view on the stock on a longerterm time frame.

We expect strong earnings growth from TPI in the next few years,coming both organically and from acquisitions. Despite having madenumerous acquisitions in recent times, the company still has a numberof growth options across all divisions. At current earnings multiples, weview TPI as fairly priced and have a neutral stance on a 12-month timeframe.

Key Information

Price Performance

Market Statistics

Key Assumptions






Shares (M) 293.2

% of Market 0.16

% of Sector 1.69

12 Month Range $7.95 - $14.56

Company Risk

Share Price Risk

Ethical rating


TPI (11.0) (15.6) 32.2Sector (0.7) (0.5) 20.3Market 6.8 4.2 22.4

Beta: 1.2



WACC (%): 10.5




Earnings Summary



NPAT1

Adj $MEPS1

cEPS chg

%PER

xPER rel

All Ords xPER rel

Sector xDPS

cYield

%Franking

%ROE

%

2006A 47.5 46.2 22.4 86.7 48.1 2.2 1.3 9.3 0.9 100 31.6

2007A 103.1 98.1 40.5 80.4 26.7 1.4 0.9 11.7 1.1 100 13.9

2008F 174.0 174.0 54.7 35.2 19.7 1.3 1.0 16.0 1.5 100 10.2

2009F 233.5 233.5 71.0 29.8 15.2 1.1 0.9 20.5 1.9 100 11.8

Transpacific Industries





Operating revenue 634.3 1,256.1 2,073.8 2,190.0Invest & other income 0.0 0.0 0.0 0.0

EBITDA 104.9 295.5 511.7 578.7Depreciation/Amort (24.8) (70.1) (100.0) (103.0)

EBIT 80.1 225.4 411.7 475.7Net Interest (16.0) (88.5) (141.9) (121.2)





Adjusted profit 46.2 98.1 174.0 233.5


EBITDA 104.9 295.5 511.7 578.7Working capital changes (5.8) (131.0) (81.1) (14.3)

Interest and tax (31.2) (104.5) (222.3) (230.0)

Other operating items 3.7 58.3 (61.8) 4.9


Maintainable cashflow 49.4 31.2 58.4 247.7Dividends (20.5) (24.0) (44.0) (55.3)

Acq/Disp (123.5) (2,416.3) (9.8) 0.0

Other investing items 0.0 (34.1) 0.0 0.0

Free cashflow (94.5) (2,443.2) 4.6 192.4Equity 0.8 824.3 481.0 0.0

Debt inc/(red'n) 109.7 1,781.0 (485.6) (192.4)


Inventories 67.8 128.5 215.8 226.8

Trade debtors 96.4 313.2 388.5 408.3



Non-curr intangibles 146.3 2,480.5 2,480.5 2,480.5



Total assets 609.7 4,027.5 3,969.7 3,993.5Trade creditors 95.8 242.3 323.7 340.2



Total current liab. 155.3 340.8 459.6 494.0Borrowings 260.2 2,275.8 1,567.8 1,375.4


Total liabilities 428.3 2,732.5 2,061.7 1,905.4Minorities/Convertibles 3.3 9.8 11.8 13.8

Shareholders equity 181.4 1,295.6 1,908.0 2,088.1

Ratio analysis 2006A 2007A 2008F 2009FRevenue growth (%) 39.2 98.0 65.1 5.6

EBITDA growth (%) 57.9 181.8 73.1 13.1

EPS growth (%) 86.7 80.4 35.2 29.8



Tax rate (%) 29.0 24.0 30.0 30.0

Net debt/equity (%) 128.4 161.5 83.9 67.4



Payout ratio (%) 41.4 28.9 29.2 28.9

Capex to deprec'n (%) 89.3 124.3 88.0 88.9

NTA per share ($) 0.16 (4.28) (1.85) (1.28)

ROA (%) 15.3 10.4 10.4 12.0

ROE (%) 31.6 13.9 10.2 11.8


Net debt ($M) 2,076.7


Enterprise value ($M) 5,302.3

EV/EBIT (x) 66.2 23.5 12.9 11.1





P/E sector (x) 36.3 30.0 20.3 17.5

P/E rel sector (x) 1.3 0.9 1.0 0.9


Interest Rates (%) 5.73 6.38 6.34 6.30

Inflation (%) 3.20 3.09 2.47 2.50


Consumer DiscretionaryBen Holgate

ASX: WAN Bloomberg: WAN AU Reuters: WAN.AX 09 November 2007

WA Newspapers1Q08 result: Profit below expectations

EventWAN's 1Q08 reported NPAT declined 19% on the pcp to $21M. The fallwas mainly due to a $7M loss recorded on the disposal of WAN's 50%stake in Hoyts (which is still subject to regulatory approval), and Hoyts'contributions being disclosed as discontinued operations. AdjustedNPAT (excluding non-recurring items) declined 2% on the pcp to $30Min 1Q08. However, 1Q07 comprised 14 weeks compared to 13 weeksin 1Q08. When the extra trading week is taken into account, normalisedNPAT increased 5% to $28M on an underlying basis. Sales revenuewas up 4% on the pcp to $117M, while adjusted EBIT rose 5% to$45M. The result was below our expectations.

ImplicationsThis is a slightly disappointing result following WAN’s strong FY07performance, even taking into account the extra trading week in thepcp. Underlying 1Q08 sales revenue growth at The West Australian,which generates 80% of group revenues, was 12% up on the pcpcompared to 13% in FY07. However, the newspaper’s reported salesgrowth in the 1Q08 was only up 3%. Although margins held firm,increased finance costs due to the Herdsman Press upgrade weremore than we expected. Management’s guidance for 2Q08 is that thefirst four weeks have had strong advertising growth. Nevertheless, wehave revised down our sales growth forecasts for the remainder ofFY08 from low teens to high single digits, and downgraded our salesforecasts in the medium term. As a result of our changes, our EPSforecasts decline 8% and 3% for FY08 and FY09, respectively. Ourvaluation declines 6% to $12.99 while our 12-month target price falls5% to $14.18. We retain our neutral view on the stock.

Investment OpinionWAN has been operating a tightly run ship and has consistentlydelivered strong earnings growth. It derives about 80% of group EBITfrom The West Australian newspaper, which operates as a virtualmonopoly in Perth. We expect positive material benefit from theHerdsman printing press upgrade now that has been commissioned.We have a long-term neutral view on the stock.

WAN continues to benefit from the strong Western Australian economyon the back of the resources boom. The Herdsman Press upgrade willreduce costs, especially from FY09, and create new revenueopportunities. WAN may eventually be a target for SEV, which has a17% stake in WAN. We believe the stock is trading at reasonablevalue, and have a neutral position at the current price.

Key Information

Price Performance

Market Statistics

Key Assumptions






Shares (M) 208.6

% of Market 0.14

% of Sector 1.46

12 Month Range $10.24 - $17.00

Company Risk

Share Price Risk

Ethical rating


WAN (8.8) (20.1) 23.2Sector (3.1) (10.1) 4.0Market 6.8 4.2 22.4

Beta: 1.0



WACC (%): 10.3




Earnings Summary



NPAT1

Adj $MEPS1

cEPS chg

%PER

xPER rel

All Ords xPER rel

Sector xDPS

cYield

%Franking

%ROE

%

2006A 69.3 107.7 51.5 11.7 25.2 1.2 1.1 50.0 3.8 100 70.2

2007A 54.0 128.4 61.6 19.6 21.1 1.1 1.1 61.0 4.7 100 98.6

2008F 118.9 128.2 61.5 (0.1) 21.1 1.4 1.1 61.5 4.7 100 162.7

2009F 151.4 151.4 72.6 18.1 17.9 1.3 1.0 72.5 5.6 100 167.4

WA Newspapers





Operating revenue 395.2 446.5 486.4 525.2Invest & other income 0.0 0.0 0.0 0.0





NPAT 107.7 128.4 128.2 151.4Non recurring items (38.4) (74.4) (9.3) 0.0


Adjusted profit 107.7 128.4 128.2 151.4


EBITDA 173.2 189.2 225.9 254.2Working capital changes (1.6) (5.6) 6.5 2.0

Interest and tax (67.3) 32.1 (69.9) (75.4)

Other operating items (6.3) (121.8) 55.2 1.0


Maintainable cashflow (19.2) 46.3 204.9 168.2Dividends (91.9) (119.1) (120.6) (137.8)

Acq/Disp (12.4) (16.5) 148.5 0.0

Other investing items 0.7 0.0 0.0 0.0

Free cashflow (122.7) (89.3) 232.8 30.4Equity 4.9 4.3 0.0 0.0

Debt inc/(red'n) 116.0 89.0 (232.8) (30.4)


Inventories 10.0 11.2 12.3 13.3

Trade debtors 53.6 66.1 62.3 62.7














EBITDA growth (%) 10.2 9.3 19.4 12.5

EPS growth (%) 11.7 19.6 (0.1) 18.1



Tax rate (%) 31.9 29.8 29.9 29.8

Net debt/equity (%) 280.3 571.8 305.9 232.0



Payout ratio (%) 97.1 99.1 100.0 99.8

Capex to deprec'n (%) 648.8 257.3 46.5 45.2

NTA per share ($) 0.12 (0.20) (0.21) (0.14)

ROA (%) 25.2 26.1 39.6 50.1

ROE (%) 70.2 98.6 162.7 167.4


Net debt ($M) 489.5



EV/EBIT (x) 20.9 19.0 16.3 14.4





P/E sector (x) 22.6 20.1 19.8 18.5

P/E rel sector (x) 1.1 1.1 1.1 1.0


Interest Rates (%) 5.73 6.38 6.34 6.30

Inflation (%) 3.20 3.09 2.47 2.50

Notes To AccountsAll P&L items (except Reported profit) exclude Goodwill Amortisationas per AIFRS requirements.


WA Newspapers

TABLE 2: FIRST QUARTER PROFIT & LOSS SUMMARY


Result Highlights and Overview

� Profit: Reported NPAT declined 19% on the pcp to $21M in 1Q08. The fall was mainly due to a $7M loss recorded onthe disposal of WAN's 50% stake in Hoyts (which is still subject to regulatory approval), and Hoyts' contributions beingdisclosed as discontinued operations (see below). Adjusted NPAT (excluding non-recurring items) declined 2% on thepcp to $30M in 1Q08. However, 1Q07 comprised 14 weeks compared to 13 weeks in 1Q08. When the extra tradingweek is taken into account, normalised NPAT increased 5% to $28M on an underlying basis.

� Revenue: Total sales revenue was up 4% on the pcp to $117M, compared to 13% revenue growth in FY07.

� EBIT: Adjusted EBIT (excluding contributions from associates) was up 5% on the pcp to $45M in 1Q08. The rise wasmainly due to The West Australian newspaper increasing its EBIT by 8% on the pcp to $43M.

� Margins: The group EBIT margin held steady at 39% of sales revenue. However, The West Australian is alreadystarting to benefit from the Herdsman Press upgrade, with the newspaper expanding its EBIT margin by 2% on the pcpto 47% in 1Q08.

� Finance costs: Net interest expense increased 79% on the previous quarter to $7.7M, with the full expense of the$210M Herdsman Press upgrade now accounted for. Interest expense will decline once the Hoyts sale proceeds arereceived.

� EPS: The company reported diluted EPS for 1Q08 as being 9.9cps, down 19% on the pcp.

� Non-recurring items: One-off items totalled $9.3M and included: accelerated depreciation on Herdsman Press printingequipment ($5.9M); a net loss from Hoyts ($3.3M, see below); and $0.1M in staff redundancies.

� Hoyts: On 24 September 2007, WAN announced it had entered into an agreement with private equity group PacificEquity Partners to sell its 50% interest in cinema operator Hoyts (partner PBL is also selling its 50% stake in Hoyts). Thesale is subject to regulatory approval and is expected to be complete by the end of November 2007. WAN recorded a$6.8M loss on the disposal of its Hoyts stake. The company also disclosed Hoyts’ $3.5M after-tax contributions for 1Q08as discontinued operations, rather than as an associate accounted for using the equity method, as in previous years.The above resulted in a net loss from Hoyts of $3.3M.

� Seven Network (SEV): SEV, which now has a 17% stake in WAN and is the publisher's largest shareholder, hasrequested a seat on the WAN board of directors. WAN's board has offered to commence discussions on the issue.

� Outlook: Management’s guidance for 2Q08 is that the first four weeks in the quarter had seen strong advertisinggrowth, and that costs associated with the Herdsman Press installation were reducing. Beyond the current quarter,management commented in general terms that with a continuing buoyant WA economy the outlook for WAN isfavourable.

$(M) 1Q07 1Q08 Changeon pcp

Sales revenue 112.8 117.2 4%Costs -64.4 -66.2 3%EBITDA 48.4 51.0 5%EBITDA Margin 42.9% 43.5% 0.6%Depreciation & amortisation -4.8 -5.3 10%EBIT 43.6 45.7 5%EBIT Margin 38.7% 39.0% 0.3%Net interest expense -4.3 -7.7 79%Profit Before Tax 39.3 38.0 -3%Tax expense -10.0 -9.7 -3%Profit After Tax 29.3 28.3 -3%Associates * 1.3 1.6 23%Adjusted NPAT 30.6 29.9 -2%Non-recurring items -5.1 -9.3 n/aReported NPAT 25.5 20.6 -19%* Associates includes Community Newspapers


WA Newspapers

TABLE 3: DIVISIONAL PERFORMANCE


Divisional Summary

� The West Australian: Reported EBIT growth was 8% on the pcp to $43M, compared to normalised EBIT Growth of15%. Reported revenue rose 3% in the pcp to $91.5M in 1Q08, while underlying gross advertising revenue was up 12%.Underlying revenue for Display increased 12%, with Classifieds up 10%. Circulation revenue rose 1% following a coverprice increase. Total underlying expenses rose 6% due to increased advertising volumes, more commercial inserts andissues relating to the commissioning of new printing and publishing equipment. However, the newspaper’s main expenseitem, personnel, which now accounts for 38% of total expenses, fell 7% on the pcp due to a 15% reduction in staffnumbers following installation of the new printing press.

� The West Magazines: Reported EBIT increased 25% on the pcp to $1M, while revenue increased 33% to $3.6M. Duringthe quarter, the West Magazine was expanded to become a what’s on guide called Seven Days, and a new product,WestWeekend Magazine, was launched.

� Online: The fledgling digital division’s revenue increased 50% to $0.3M, as the EBIT loss increased by $0.6M to $1M, asexpected.

� Regionals (including Countryman): EBIT was up 45% to $3.2M on the back of strong performances in the resources-based areas such as Kalgoorlie and Geraldton.

� Colourpress: Revenue fell 17% on the pcp to $2.5M in 1Q08, as the division recorded an operating loss of $0.8Mcompared to an EBIT profit of $0.9M in the pcp. The loss was expected and is the result of printing on two sites while theHerdsman Press upgrade is fully commissioned throughout 1H08. Colourpress is expected to return to profitability in2H08 once printing at the Victoria Park site stops.

� Quokka: EBIT was flat at $0.8M. WAN plans to launch a revamped classified and auction website in CY08.

� Radio: Revenue increased 31% on the pcp to $2.1M, while EBIT was up 75% to $0.7M. The regional radio groupbenefited from economic activity in north-west WA and the mining sites in remote WA.

� Community Newspapers (49.9% interest): NPAT was up 19% on the pcp to $1.6M in 1Q08, with advertising growth of11%.

Investment View and Outlook

� This is a slightly disappointing result following WAN’s strong FY07 performance on the back of the dynamic WAeconomy, even taking into account the extra trading week in the pcp. Underlying 1Q08 sales revenue growth at TheWest Australian newspaper, which generates about 80% of group revenues, was 12% up on the pcp compared to 13% inFY07. However, the newspaper’s reported sales growth in 1Q08 was only up 3%.

� Although margins held firm, increased finance costs due to the Herdsman Press upgrade were more than we expected.

� Management’s guidance for 2Q08 is that the first four weeks have had strong advertising growth. Nevertheless, we haverevised down our sales growth forecasts for the remainder of FY08 from low teens to high single digits, to moreaccurately reflect the normal trading period compared to the extra week in FY07. We have also slightly downgraded oursales forecasts in the medium term. However, we have slightly revised upward our margins in FY08 due to the positiveimpact of the Herdsman Press, which will be fully commissioned by mid-FY08.

� As a result of our changes, our EPS forecasts decline 8% and 3% for FY08 and FY09, respectively. Our valuationdeclines 6% to $12.99 while our 12-month target price falls 5% to $14.18. We retain our neutral view on the stock.

Division Sales Revenue EBIT EBIT Margin1Q07 1Q08 Change 1Q07 1Q08 Change 1Q07 1Q08 Change

$M $M $M $M $M $MThe West Australian 89.2 91.5 3% 39.8 42.9 8% 45% 47% 2%The West Magazines 2.7 3.6 33% 0.8 1.0 25% 30% 28% -2%Online 0.2 0.3 50% -0.4 -1.0 n/a n/a n/a n/aRegionals (incl Countryman) 11.2 12.4 11% 2.2 3.2 45% 20% 26% 6%Colourpress printing 3.0 2.5 -17% 0.9 -0.8 -189% 30% -32% -62%Quokka 2.6 2.4 -8% 0.8 0.8 0% 31% 33% 3%Radio 1.6 2.1 31% 0.4 0.7 75% 25% 33% 8%West Australian Publishers 1.2 1.1 -8% 0.4 0.3 -25% 33% 27% -6%Other 1.1 1.3 18% -1.3 -1.4 8% n/a n/a n/aTotal 112.8 117.2 4% 43.6 45.7 5% 39% 39% 0%


MaterialsGaius King

ASX: FMG Bloomberg: FMG AU Reuters: FMG.AX 09 November 2007

Fortescue MetalsNews of increased liquidity measures issobered by the need for an additional$100M

EventFMG has announced the results of its AGM. A resolution had beenpassed by the FMG board to seek shareholder approval for a sharesplit to be set at 10 shares for every 1 share held. It is expected that ameeting of shareholders will be called in the near future to consider thisproposal. If approved by shareholders, we would expect it tosignificantly increase the liquidity in FMG stocks. In addition to thisproposal, the company has announced that it will require an additional$100M to be drawn from FMG’s existing cost overrun and backupreserve accounts. FMG is still aiming to have its first shipment of ore byMay 2008. Consequently, the company feels that it needs to allocateadditional resources toward rail construction, in particular earthworksand track-laying progress. The cost of these initiatives, together withindications came from a full review conducted on the rail worksprogram to date.

ImplicationsAs a result of continued delays in rail infrastructure, we have loweredforecast production for FY08. As a result of the above changes, andincluding adding an additional $100M of expansionary capex, our 12-month target has decreased 3% to $58.56 per share. We maintain our12-month BUY and long-term HOLD recommendations.

Investment OpinionChina has embarked on a phase of rapid economic industrialisation,including an unprecedented level of infrastructure development. We donot see any dramatic change in iron-ore demand, with forwardestimates suggesting that fixed investment in China will remain strongfor the foreseeable future. The current shortfall is being filled by high-cost domestic production. As the Chinese economy matures, webelieve that demand for iron ore will moderate, driving our long-termneutral view.

FMG is currently in its construction phase, which will continue to April2008. On a 12-month view, we still perceive there to be significant riskassociated with the successful implementation of FMG's surface minermethod. Given the strength of global iron ore demand and the potentialfor future iron ore price increases, we hold a positive view at theselevels.

Key Information

Price Performance

Market Statistics

Key Assumptions

Share Price $50.4912 month view BUY12 month target return (%) 16.0





Shares (M) 282.1

% of Market 0.68

% of Sector 2.07

12 Month Range $8.95 - $56.20

Company Risk

Share Price Risk

Ethical rating


FMG 47.2 71.7 >99Sector 14.9 19.8 40.1Market 6.2 3.6 21.7

Beta: 1.7



WACC (%): 12.2




Earnings Summary



NPAT1

Adj $MEPS1

cEPS chg

%PER

xPER rel

All Ords xPER rel

Sector xDPS

cYield

%Franking

%ROE

%

2006A (2.1) 0.3 0.1 n/a >99 >99 >99 0.0 0.0 0 0.6

2007A (68.6) (68.6) (25.2) n/a (<99) (10.7) (12.3) 0.0 0.0 0 (20.4)

2008F (212.7) (212.7) (74.7) n/a (67.6) (4.3) (5.1) 0.0 0.0 0 (46.4)

2009F 363.5 363.5 126.1 n/a 40.0 2.9 3.4 38.0 0.8 100 50.6

Fortescue Metals



12M Recommendation1: BUY 12M Target: $58.56 Long Term Recommendation 2: HOLD Long Term Target Return: 14.1% pa


Operating revenue 0.8 0.0 (14.7) 1,078.5Invest & other income 0.0 (7.7) (3.0) (3.0)

EBITDA (4.3) (20.6) (63.0) 786.1Depreciation/Amort (0.7) (2.7) (71.9) (72.9)

EBIT (5.0) (23.3) (134.9) 713.2Net Interest 5.3 (80.5) (168.9) (194.0)

Pre-tax profit 0.3 (103.8) (303.8) 519.2Tax expense 0.0 35.2 91.1 (155.8)


NPAT 0.3 (68.6) (212.7) 363.5Non recurring items (2.4) 0.0 0.0 0.0

Reported profit (2.1) (68.6) (212.7) 363.5NPAT add Goodwill & Pref 0.0 0.0 0.0 0.0

Adjusted profit 0.3 (68.6) (212.7) 363.5


EBITDA (4.3) (20.6) (63.0) 786.1Working capital changes (1.4) (189.9) 189.2 (110.4)

Interest and tax 0.0 (41.6) (168.9) (237.5)

Other operating items (123.5) (63.0) 3.0 3.0

Operating cashflow (129.1) (315.1) (39.7) 441.2Required capex (3.4) 0.0 (11.0) (12.0)

Maintainable cashflow (132.5) (315.1) (50.7) 429.3Dividends 0.0 0.0 0.0 (30.1)

Acq/Disp (0.1) (1,083.6) (1,120.5) (30.0)

Other investing items 0.0 0.0 0.0 0.0

Free cashflow (132.6) (1,398.7) (1,171.2) 369.2Equity 0.0 425.9 300.0 0.0

Debt inc/(red'n) 67.3 2,766.9 871.2 (369.2)

Balance sheet 2006A 2007A 2008F 2009FCash & deposits 18.1 1,682.2 100.0 200.0

Inventories 0.0 0.0 2.1 112.5

Trade debtors 1.4 257.5 0.0 0.0


Total current assets 19.9 1,941.1 103.4 313.8Prop., plant & equip. 3.9 1,525.4 2,555.0 2,494.1




Total assets 221.0 3,689.7 2,999.8 3,176.3Trade creditors 0.0 66.2 0.0 0.0

Curr borrowings 16.7 265.8 265.8 265.8


Total current liab. 16.7 332.1 265.8 378.1Borrowings 67.3 2,645.8 1,934.8 1,665.6


Total liabilities 83.9 3,193.1 2,415.9 2,259.0Minorities/Convertibles 0.0 0.0 0.0 0.0


Ratio analysis 2006A 2007A 2008F 2009FRevenue growth (%) (52.2) (100.0) 0.0 (<1000)

EBITDA growth (%) n/a n/a n/a n/a

EPS growth (%) n/a n/a n/a n/a

EBITDA/Sales margin (%) (513.1) 0.0 429.9 72.9

EBIT/Sales margin (%) (599.0) 0.0 920.6 66.1

Tax rate (%) 0.0 33.9 30.0 30.0

Net debt/equity (%) 48.1 247.6 359.8 188.8


Net interest cover (x) n/a (0.3) (0.8) 3.7

Payout ratio (%) 0.0 0.0 0.0 30.1

Capex to deprec'n (%) 473.5 0.0 15.3 16.4

NTA per share ($) (0.19) 1.74 1.91 2.98

ROA (%) (5.4) (0.8) (4.7) 22.9

ROE (%) 0.6 (20.4) (46.4) 50.6


Net debt ($M) 1,229.4



EV/EBIT (x) (<99) (<99) (<99) 20.8

EV/EBITDA (x) (<99) (<99) (<99) 18.8EV/EBITDA All Ind (x) 10.2 9.1 8.1 7.5

EV/EBITDA rel All Ind (x) (<99) (91.2) (29.1) 2.5

P/E (x) >99 (<99) (67.6) 40.0P/E rel All Ind (x) >99 (10.3) (4.1) 2.7

P/E rel All Ind ex banks (x) >99 (9.9) (3.9) 2.6

P/E sector (x) 17.7 16.3 13.3 11.7

P/E rel sector (x) >99 (12.3) (5.1) 3.4


Iron Ore Lump (US$/t) 53.31 58.56 65.23 73.50

Iron Ore Fines (US$/t) 39.87 43.82 50.03 58.50


EnergyTony Stepcich

ASX: CTX Bloomberg: CTX AU Reuters: CTX.AX 09 November 2007

Caltex AustReview of price target

EventWe have reviewed our long term refining margin assumptions for therefining business of Caltex. This has resulted in a review of our pricetarget.

ImplicationsThere are two factors at play in refining margins. The seasonalvariances due to the US summer and winter periods of high demandand changes in global reining capacity. The seasonal variances inrefining margins do not concern us. A long term structural shift inrefining margins is of concern. We have reviewed our long term refiningmargin assumptions for the refining business of Caltex. As the result ofthis review our 12-month price target for CTX has reduced by 15% to$24.30. With the CTX share price currently at $20.54, our 12-monthprice target of $24.30 represents a 23% return from current levels. Wetherefore maintain our 12-month BUY recommendation. We alsomaintain our longterm BUY recommendation.

Investment OpinionCTX is benefiting from ongoing energy demand and good refiningmargins, boosted by a shortage of refining capacity worldwide. Duringthe late 1990s, the refined petroleum industry was oversupplying themarket; this changed to an undersupply situation a few years agofollowing refinery closures and a resurgence of demand in the Asianregion. CTX, Australia's largest petrol retailer, has two refineries. Untilrefining capacity in the region is increased, the company should delivergood returns.

Earnings strength has been steady in recent months now that the costof the Clean Fuels Project has been absorbed. Our expectation is for apremium over the industry refiner margin to be maintained duringCY07. Although CTX should provide an improving yield, its share pricewill continue to display periods of volatility.

Key Information

Price Performance

Market Statistics

Key Assumptions

Share Price $20.3812 month view BUY12 month target return (%) 24.1


Long Term View BUYLong Term Target Return (% pa) 16.2



Shares (M) 270.0

% of Market 0.29

% of Sector 4.54

12 Month Range $20.00 - $28.06

Company Risk

Share Price Risk

Ethical rating


CTX (10.0) (14.2) (4.7)Sector 15.1 15.7 36.7Market 6.2 3.6 21.7

Beta: 1.3



WACC (%): 12.6




Earnings Summary


Yr to Dec NPATRep $M

NPAT1

Adj $MEPS1

cEPS chg

%PER

xPER rel

All Ords xPER rel

Sector xDPS

cYield

%Franking

%ROE

%

2006A 430.0 430.0 159.3 3.9 12.8 0.6 0.5 80.0 3.9 100 18.7

2007F 610.9 497.9 184.4 15.8 11.1 0.6 0.4 92.0 4.5 100 18.8

2008F 531.2 531.2 196.8 6.7 10.4 0.7 0.6 98.5 4.8 100 18.1

2009F 553.9 553.9 205.1 4.3 9.9 0.7 0.6 102.5 5.0 100 17.3

Caltex Aust

Year end Dec. All figures in A$M


12M Recommendation1: BUY 12M Target: $24.30 Long Term Recommendation 2: BUY Long Term Target Return: 16.2% pa

Profit & loss summary 2006A 2007F 2008F 2009F

Operating revenue 18,441.4 17,774.2 18,051.7 18,336.6Invest & other income 23.7 0.0 0.0 0.0


EBIT 700.4 751.7 763.9 778.9Net Interest (45.6) (40.0) (4.5) 12.7


Minorities/Assoc./Prefs (5.1) (0.6) (0.4) (0.3)



Adjusted profit 430.0 497.9 531.2 553.9

Cashflow summary 2006A 2007F 2008F 2009F

EBITDA 852.7 921.9 941.6 958.2Working capital changes 6.2 240.1 (11.5) (11.8)

Interest and tax (372.6) (187.2) (225.5) (220.2)

Other operating items (20.8) 29.5 2.2 2.3

Operating cashflow 465.6 1,004.3 706.9 728.5Required capex (386.8) (199.8) (200.0) (200.0)


Acq/Disp (11.4) 1.2 0.0 0.0

Other investing items (6.0) (9.9) 0.0 0.0

Free cashflow (109.0) 539.1 249.0 257.2Equity 0.0 0.0 0.0 0.0

Debt inc/(red'n) 136.1 (375.0) (249.0) (257.2)

Balance sheet 2006A 2007F 2008F 2009FCash & deposits 55.6 55.0 213.7 470.9

Inventories 1,100.0 1,095.5 1,112.5 1,130.0

Trade debtors 809.4 833.5 846.5 859.8


Total current assets 2,029.1 2,017.8 2,206.5 2,494.6Prop., plant & equip. 2,288.4 2,331.7 2,354.0 2,374.6




Total assets 4,417.4 4,469.2 4,680.2 4,988.9Trade creditors 1,194.2 1,190.7 1,209.2 1,228.3

Curr borrowings 130.8 130.8 130.8 130.8


Total current liab. 1,405.4 1,469.6 1,496.1 1,520.8Borrowings 463.8 90.3 0.0 0.0


Total liabilities 1,974.9 1,669.2 1,606.5 1,632.4Minorities/Convertibles 10.7 11.1 11.5 11.7

Shareholders equity 2,442.5 2,799.9 3,073.7 3,356.5

Ratio analysis 2006A 2007F 2008F 2009FRevenue growth (%) 9.7 (3.6) 1.6 1.6

EBITDA growth (%) 14.3 8.1 2.1 1.8

EPS growth (%) 3.9 15.8 6.7 4.3



Tax rate (%) 33.5 30.0 30.0 30.0

Net debt/equity (%) 22.2 6.0 (2.7) (10.2)

Net debt/net debt + equity (%) 18.1 5.6 (2.8) (11.3)

Net interest cover (x) 15.4 18.8 NaN n/a

Payout ratio (%) 50.2 49.9 50.1 50.0

Capex to deprec'n (%) 262.6 119.0 114.1 113.0

NTA per share ($) 8.80 10.10 11.12 12.16

ROA (%) 16.0 16.4 16.5 15.9

ROE (%) 18.7 18.8 18.1 17.3

Multiple analysis 2006A 2007F 2008F 2009FMarket cap (M) 5,746

Net debt ($M) 490.3



EV/EBIT (x) 8.9 8.3 8.1 8.0





P/E sector (x) 26.5 28.3 18.7 16.6

P/E rel sector (x) 0.5 0.4 0.6 0.6

Assumptions 2006A 2007F 2008F 2009FOil (US$/bbl) 66.13 69.80 73.35 68.30

GDP growth (%) 2.66 2.63 3.47 3.49

Inflation (%) 3.54 2.51 2.50 2.50

Notes To AccountsAll P&L items (except Reported profit) now exclude GoodwillAmortisation as per the new IFRS requirements.


Caltex Aust

CaltexFigure 1 shows the Singapore crack spread from which the Caltex Refining margin is derived. A crack spread is basically thedifference between the price of a barrel of crude and the price of a barrel of refined product. Refined product being the weightedaverage price of a barrel of the diesel, gasoline jet fuel etc produced.

There are two factors at play in the crack spread.

� The seasonal variances due to the US summer and winter periods of high demand.

� Changes in global reining capacity

FIGURE 1: REFINING MARGIN- SINGAPORE CRACK SPREAD

Source: Bloomberg/Aegis Equities

Seasonal VariancesThe US summer driving season is now over, leading to a lull in gasoline demand. The next big surge in demand will be the USwinter, spring and autumn are traditionally quiet periods for gasoline demand. With the surge in the price of crude oil and a lackof demand for gasoline in the US the crack spread has been narrowed, reducing refining margins. This seasonal cyclicality canbe seen in Figure 1. As we move into the US winter months demand for refined product should increase thus widening therefining margin to more acceptable levels.

Refinery CapacityIt can be seen from Figure 1 that the Singapore crack spread was lower during 2000 to 2003, and higher for the period 2004-2007. The surge in demand caused by a strong global economy from 2004 onwards was not met by a similar surge in refiningcapacity. Years of under investment in capacity due to low margins resulted in refiners being a bottleneck in the global supplychain, and thus refining margins increased. Over the next 10 years we expect additional refining capacity to come on stream,and refining margins to return to long term averages.

Investment ViewThe seasonal variances in refining margins do not concern us. A long term structural shift in refining margins is of concern. Wehave reviewed our long term refining margin assumptions for the refining business of Caltex. As the result of this review our 12-month price target for CTX has reduced by 15% to $24.30. With the CTX share price currently at $20.54, our 12-month pricetarget of $24.30 represents a 23% return from current levels. We therefore maintain our 12-month BUY recommendation. Wealso maintain our longterm BUY recommendation.


MaterialsTony Stepcich

ASX: BHP Bloomberg: BHP AU Reuters: BHP.AX 09 November 2007

BHP Billiton LimitedBHP makes offer for RIO

EventBHP has made an offer the RIO Board proposing the acquisition of RIOby BHP. Under the proposal each RIO share would be exchanged forthree BHP shares. The RIO Board has rejected BHP's offer stating thatit significantly undervalues RIO.

ImplicationsWe expect BHP's offer to just be the opening shot in what could be aprotracted battle. BHP will have to increase its offer if it is serious abouttaking over RIO. If BHP increases its offer using scrip it may have adilutive effect on BHP's shareholders and benefit RIO's shareholders.We have a 12-month price target on RIO of $150, we would not expecta deal to be done below this level. We maintain our current HOLDrecommendation on BHP until the risks of dilution become clearer by ahigher bid price being put on the table. Our 12-month price target forBHP remains at $50. On a long term basis we also maintain our HOLDrecommendation on BHP.

Investment OpinionBHP has a good portfolio of long-life, low-cost assets and a string ofmajor projects in petroleum, base metals, coal and iron ore that will addto the company’s underlying value and production base over the nextfive years. The company’s project development and expansion plansexceed US$10B over a five-year period. The increasing productionprofile makes BHP an attractive investment opportunity.

Record iron ore contract prices along with strong oil and base metalsprices underpin the excellent earnings outlook for BHP. It is wellpositioned to benefit from an extended cycle driven by Chinese andAsian demand generally. The demand-side support of commodityprices is central to BHP's ability to generate significant profits.

Key Information

Price Performance

Market Statistics

Key Assumptions






Shares (M) 5,866

% of Market 12.66

% of Sector 38.62

12 Month Range $23.86 - $47.70

Company Risk

Share Price Risk

Ethical rating


BHP 20.8 37.0 53.2Sector 14.9 19.8 40.1Market 6.2 3.6 21.7

Beta: 1.2



WACC (%): 11.2




Earnings Summary



NPAT1

Adj $MEPS1

cEPS chg

%PER

xPER rel

All Ords xPER rel

Sector xDPS

cYield

%Franking

%ROE

%

2006A 14,049 13,650 228.4 66.3 18.5 0.9 1.1 48.8 1.2 100 48.2

2007A 16,144 16,144 282.3 23.6 15.0 0.8 0.9 56.6 1.3 100 48.9

2008F 19,529 19,529 332.8 17.9 12.7 0.8 1.0 83.3 2.0 100 48.4

2009F 23,385 23,385 398.3 19.7 10.6 0.8 0.9 99.8 2.4 100 40.5

BHP Billiton Limited





Operating revenue 52,948 53,854 53,226 60,668Invest & other income (1,438) (375) (342) (352)

EBITDA 22,327 25,057 31,241 36,133Depreciation/Amort (3,066) (2,913) (2,653) (2,926)

EBIT 19,261 22,143 28,587 33,208Net Interest (684) (469) (554) 343


Minorities/Assoc./Prefs (4) (96) (94) (101)

NPAT 13,650 16,144 19,529 23,385Non recurring items 398 0 0 0

Reported profit 14,049 16,144 19,529 23,385NPAT add Goodwill & Pref 0 0 0 0

Adjusted profit 13,650 16,144 19,529 23,385


EBITDA 22,327 25,057 31,241 36,133Working capital changes (1,681) 0 867 (470)

Interest and tax (5,101) (4,888) (9,613) (8,818)

Other operating items (1,411) 3,141 (3,744) 940

Operating cashflow 14,134 23,309 18,750 27,784Required capex (809) (1,685) (1,483) (1,525)

Maintainable cashflow 13,325 21,625 17,267 26,260Dividends (3,798) (2,815) (5,417) (5,331)

Acq/Disp (8,539) (6,721) (3,764) (1,759)

Other investing items 2,191 (4,543) 0 0

Free cashflow 3,179 7,546 8,086 19,169Equity 0 (7,081) 0 0

Debt inc/(red'n) (3,872) 1,661 (8,086) (19,169)

Balance sheet 2006A 2007A 2008F 2009FCash & deposits 1,044 2,331 573 17,390

Inventories 3,676 3,966 2,989 3,563

Trade debtors 6,241 5,643 4,484 5,345

Other curr assets 846 1,402 1,334 1,380

Total current assets 11,807 13,342 9,380 27,679Prop., plant & equip. 47,469 44,170 44,291 45,820

Non-curr intangibles 919 740 704 728

Non-curr investments 1,403 7,148 6,802 7,036

Other non-curr assets 3,673 4,598 4,246 4,392

Total assets 65,271 69,998 65,423 85,655Trade creditors 1,840 5,685 4,484 5,345

Curr borrowings 5,453 2,243 1,734 1,320

Other curr liabilities 4,507 4,406 2,840 3,957

Total current liab. 11,800 12,333 9,057 10,622Borrowings 10,905 11,897 1,985 0

Other non-curr liabilities 9,665 9,765 5,868 6,541

Total liabilities 32,371 33,995 16,911 17,163Minorities/Convertibles 319 302 382 495


Ratio analysis 2006A 2007A 2008F 2009FRevenue growth (%) 37.9 1.7 (1.2) 14.0

EBITDA growth (%) 63.5 12.2 24.7 15.7

EPS growth (%) 66.3 23.6 17.9 19.7



Tax rate (%) 26.5 25.1 30.0 30.0

Net debt/equity (%) 47.0 33.1 6.5 (23.6)

Net debt/net debt + equity (%) 32.0 24.9 6.1 (30.9)

Net interest cover (x) 38.1 56.8 58.8 n/a

Payout ratio (%) 21.3 20.6 25.0 25.0

Capex to deprec'n (%) 26.3 57.8 55.9 52.1

NTA per share ($) 5.36 6.12 8.05 11.35

ROA (%) 31.4 35.0 44.2 44.7

ROE (%) 48.2 48.9 48.4 40.5


Net debt ($M) 12,110

Peripheral assets ($M) 1,254


EV/EBIT (x) 13.7 11.9 9.3 8.0





P/E sector (x) 17.7 16.3 13.3 11.7

P/E rel sector (x) 1.1 0.9 1.0 0.9

Assumptions 2006A 2007A 2008F 2009FUS$/A$ ($) 0.74 0.79 0.87 0.86

Oil (US$/bbl) 66.96 63.47 74.44 71.20

Copper (US$/lb) 2.42 3.23 3.30 2.89

Iron Ore Lump (US$/t) 53.31 58.56 65.23 73.50

Coking Coal (US$/t) 122.50 111.25 111.25 107.50

Notes To AccountsAll P&L items (except Reported profit) now exclude GoodwillAmortisation as per the new IFRS requirements. BHP Billiton uses theUS$ as its functional currency, and we display the numbers translatedto A$.


Consumer StapleClaire Aitchison

ASX: GFF Bloomberg: GFF AU Reuters: GFF.AX 01 November 2007

Goodman FielderPricing pressures remain a concern

EventWe have reviewed our valuation assumptions due to concernsregarding the increasing pricing pressures being experienced by thecompany.

ImplicationsWe reviewed our sales growth and EBITDA margin assumptions for allbusiness divisions. For the most part we increased our salesgrowth forecasts as we believe the previous assumptions were overlyconservative given opportunities going forward from new product lines,the integration of recent acquisitions and new partnership ventures.However, this was offset by the decrease in EBITDA marginassumptions across all divisions largely due to the increasing pricingpressures being experienced. In addition to this we increased ourcapex assumptions, with the company set to continue with therationalisation of the manufacturing operations and the expansion ofthe business units through acquisitions. As a result, our forecast EPSfor FY08 and FY09 decreased 6.9% and 13.2%, respectively and our12-month price target dropped 15.5% to $2.12. We maintain our neutralview on the stock over both the short- and long-term.

Investment OpinionGFF is a food manufacturer and distributor operating in Australia andNew Zealand. The company is a market leader in most of the productcategories it caters for. GFF has strategies to mitigate the key risks toearnings (cost and availability of raw materials and fuel, and marginpressure from large supermarket chain customers), however organicgrowth is limited, with the company seeking to drive growth largelythrough acquisition. We have a neutral view on the stock on a long-term basis.

Key challenges for GFF in FY08 will include downward marginpressure from strong commodity costs and new competitors, continuingNZ$ volatility and the performance of the Dairy Fresh division. Arecovery in the performance of the dairy business and management'sability to extract margin-improving operational efficiencies will,therefore, be key positives for the stock in the short term. Following therelease of GFF's FY07 results, we maintain our neutral stance on thestock.

Key Information

Price Performance

Market Statistics

Key Assumptions






Shares (M) 1,325.0

% of Market 0.14

% of Sector 1.31

12 Month Range $2.00 - $2.80

Company Risk

Share Price Risk

Ethical rating


GFF (19.3) (15.5) (2.9)Sector 9.9 1.3 26.0Market 6.2 3.6 21.7

Beta: 1.1



WACC (%): 10.1




Earnings Summary



NPAT1

Adj $MEPS1

cEPS chg

%PER

xPER rel

All Ords xPER rel

Sector xDPS

cYield

%Franking

%ROE

%

2006A (41.5) 194.9 14.7 n/a 13.6 0.6 0.5 5.5 2.8 65 11.4

2007A 239.9 218.8 16.5 12.3 12.1 0.6 0.5 13.5 6.8 54 12.0

2008F 202.8 209.8 15.8 (4.1) 12.6 0.8 0.6 13.0 6.5 65 11.2

2009F 216.7 216.7 16.4 3.3 12.2 0.9 0.7 13.0 6.5 65 11.3

Goodman Fielder





Operating revenue 2,379.0 2,423.7 2,541.4 2,653.5Invest & other income 0.0 0.0 0.0 0.0




Minorities/Assoc./Prefs (2.6) (3.4) (3.5) (3.6)

NPAT 194.9 218.8 209.8 216.7Non recurring items (236.4) 21.1 (7.0) 0.0

Reported profit (41.5) 239.9 202.8 216.7NPAT add Goodwill & Pref 0.0 0.0 0.0 0.0

Adjusted profit 194.9 218.8 209.8 216.7


EBITDA 413.1 431.4 435.8 440.6Working capital changes 37.8 (62.7) 10.6 (7.6)

Interest and tax (64.0) (136.2) (144.6) (159.3)

Other operating items (297.5) 12.3 10.3 4.2



Acq/Disp (3,026.0) (170.3) 0.0 0.0

Other investing items (296.9) 0.0 (10.0) 0.0

Free cashflow (3,472.4) (128.1) 63.1 48.7Equity 2,584.6 0.0 0.0 0.0

Debt inc/(red'n) 988.5 105.9 (63.1) (48.7)


Inventories 138.3 153.5 164.9 172.5

Trade debtors 268.3 307.8 312.7 327.1



Non-curr intangibles 1,972.4 2,199.9 2,199.9 2,199.9



Total assets 3,072.8 3,359.6 3,335.1 3,355.4Trade creditors 293.8 285.8 312.7 327.1



Total current liab. 361.5 343.4 393.0 411.0Borrowings 931.0 1,095.8 998.9 951.3


Total liabilities 1,335.8 1,478.7 1,433.3 1,405.6Minorities/Convertibles 8.6 7.2 10.7 14.3

Shareholders equity 1,737.0 1,880.9 1,901.7 1,949.8


EBITDA growth (%) n/a 4.4 1.0 1.1

EPS growth (%) n/a 12.3 (4.1) 3.3



Tax rate (%) 31.0 26.6 29.1 29.1

Net debt/equity (%) 47.9 54.0 50.1 46.5



Payout ratio (%) 37.4 81.8 82.1 79.5

Capex to deprec'n (%) 68.8 91.8 89.2 96.2

NTA per share ($) (0.18) (0.25) (0.23) (0.20)

ROA (%) 11.4 11.6 11.3 11.4

ROE (%) 11.4 12.0 11.2 11.3


Net debt ($M) 1,011.4



EV/EBIT (x) 10.4 9.9 10.0 9.8





P/E sector (x) 26.6 24.4 20.2 17.8

P/E rel sector (x) 0.5 0.5 0.6 0.7


Interest Rates (%) 5.73 6.38 6.34 6.30

Inflation (%) 3.20 3.09 2.47 2.50

Notes To AccountsAll P&L items (except Reported profit) now exclude GoodwillAmortisation as per the new IFRS requirements.


MaterialsGaius King

ASX: JBM Bloomberg: JBM AU Reuters: JBM.AX 09 November 2007

Jubilee MinesPremium added to maintainrecommendation

EventJBM has received a takeover offer of $23 per share cash from Xstrata.The offer values the company at approximately $3.1B. The board ofdirectors at JBM has unanimously recommended Xstrata’s offer in theabsence of a superior one.

ImplicationsAccording to our financial model, to justify the bid price of $23 pershare, a long-term nickel price of around US$9.50/lb would have to beassumed. This is 44% higher than our long-term estimate ofUS$6.60/lb. We have added a takeover premium of 30% to ourprevious target price of $18.41 to give a new target price for JBM of$24.03. We maintain our current 12-month and long-term HOLDrecommendations.

Investment OpinionJBM operates the Cosmos mine in WA, producing nickel inconcentrate, which is sold to BHP for processing. The company is nothedged, leaving it fully exposed to the nickel spot price and exchangerate volatility. Any significant decline in global stainless steel demandwill have an adverse effect on the nickel price and JBM's profitability. Inthe long term, nickel prices are expected to ease significantly, drivingour neutral view.

Exploration around the Cosmos and Sinclair deposits is continuing toprove that both regions are highly prospective. JBM have entered into abinding agreement for an all cash offer with Xstrata to acquire all of theissued shares by way of a recommended off-market offer. At $23 pershare, this is a 25% premium to our 12-month price target of $18.41per share.

Key Information

Price Performance

Market Statistics

Key Assumptions






Shares (M) 130.6

% of Market 0.15

% of Sector 0.47

12 Month Range $10.90 - $24.25

Company Risk

Share Price Risk

Ethical rating


JBM 66.2 29.8 69.1Sector 14.9 19.8 40.1Market 6.2 3.6 21.7

Beta: 1.5



WACC (%): 11.7




Earnings Summary



NPAT1

Adj $MEPS1

cEPS chg

%PER

xPER rel

All Ords xPER rel

Sector xDPS

cYield

%Franking

%ROE

%

2006A 103.4 103.4 80.3 12.1 29.1 1.4 1.7 40.0 1.7 100 49.1

2007A 173.1 173.1 133.7 66.6 17.5 0.9 1.1 67.0 2.9 100 59.1

2008F 168.3 168.3 128.9 (3.6) 18.1 1.2 1.4 54.5 2.3 100 44.6

2009F 179.8 179.8 137.7 6.8 17.0 1.2 1.5 58.5 2.5 100 37.7

Jubilee Mines





Operating revenue 293.4 387.6 390.1 438.4Invest & other income (27.0) (24.8) (15.0) (15.0)


EBIT 147.5 236.4 222.1 237.5Net Interest 4.0 12.5 18.4 19.4





Adjusted profit 103.4 173.1 168.3 179.8


EBITDA 175.4 258.7 242.3 264.0Working capital changes (39.1) 97.9 (30.6) (0.5)

Interest and tax (32.5) (25.3) (48.1) (54.4)

Other operating items 31.6 (52.3) 75.6 15.6



Acq/Disp (55.0) (39.7) (160.0) (90.0)

Other investing items 0.0 (1.3) 0.0 0.0

Free cashflow 23.6 155.4 (7.8) 54.2Equity 4.8 8.8 0.0 0.0

Debt inc/(red'n) (32.4) 4.2 7.8 (54.2)


Inventories 5.8 18.3 6.8 7.3

Trade debtors 84.8 3.0 45.0 45.0














EBITDA growth (%) 20.8 47.5 (6.3) 9.0

EPS growth (%) 12.1 66.6 (3.6) 6.8



Tax rate (%) 31.7 30.5 30.0 30.0

Net debt/equity (%) (55.1) (87.5) (67.2) (63.9)

Net debt/net debt + equity (%) (122.9) (698.5) (205.1) (176.7)

Net interest cover (x) n/a n/a n/a n/a

Payout ratio (%) 49.8 50.1 42.3 42.5

Capex to deprec'n (%) 28.6 39.2 39.4 30.1

NTA per share ($) 1.43 2.10 2.67 3.38

ROA (%) 50.4 57.2 37.9 33.8

ROE (%) 49.1 59.1 44.6 37.7


Net debt ($M) (293.1)



EV/EBIT (x) 18.8 11.7 12.5 11.7





P/E sector (x) 17.7 16.3 13.3 11.7

P/E rel sector (x) 1.7 1.1 1.4 1.5

Assumptions 2006A 2007A 2008F 2009FNickel (US$/lb) 7.30 18.00 14.77 13.13

Copper (US$/lb) 2.42 3.23 3.30 2.89

US$/A$ ($) 0.74 0.79 0.87 0.86


MaterialsTony Stepcich

ASX: RIO Bloomberg: RIO AU Reuters: RIO.AX 09 November 2007

Rio TintoBHP makes offer for RIO

EventBHP has made an offer to RIO's board proposing the acquisition of RIOby BHP. Under the proposal, each RIO share would be exchanged forthree BHP shares. RIO's board has rejected BHP's offer stating that itsignificantly undervalues RIO.

ImplicationsWe see BHP's offer as a first shot across the bow, in what couldbecome a long takeover battle. BHP's offer for RIO is a sign ofconfidence in the global economy and signifies that they expectcommodity prices to remain elevated, moving forward. When BHP tookover WMC, the market at the time believed BHP paid a full price. Inretrospect the price BHP paid for WMC now seems cheap. BHP's bidfor RIO could result in a significant increase in valuations for the miningsector as BHP's optimism towards commodity prices is absorbed by themarket. We have added a takeover premium of 30% to our previoustarget price of $115 to give a new target price for RIO of $150. Wemaintain our current HOLD recommendation on RIO, with a 12-monthprice target of $150. We added the same premium to our long-termprice target and our long-term recommendation for RIO remains HOLD.

Investment OpinionRio Tinto offers quality exposure to the Resources sector as one of theindustry leaders. Diversified across most commodities and continents,the company has earnings resilience and offers a low-risk entry to thesector. It has a good track record for most of its businesses, a pipelineof major projects under development and a well-respectedmanagement team.

Earnings for RIO in this cycle are expected to be strong through 2007and 2008, underwritten by elevated commodity prices for most mineralproducts. The company is in a very strong cash generation position.The outlook for China remains good, provided the global growth seenin recent years continues.

Key Information

Price Performance

Market Statistics

Key Assumptions






Shares (M) 1,283

% of Market 7.26

% of Sector 22.15

12 Month Range $69.35 - $115.00

Company Risk

Share Price Risk

Ethical rating


RIO 30.3 24.1 38.3Sector 14.9 19.8 40.1Market 6.2 3.6 21.7

Beta: 1.2



WACC (%): 11.7




Earnings Summary


Yr to Dec NPATRep $M

NPAT1

Adj $MEPS1

cEPS chg

%PER

xPER rel

All Ords xPER rel

Sector xDPS

cYield

%Franking

%ROE

%

2006A 9,743 9,613 715.5 51.1 18.7 0.9 1.1 134.9 1.0 100 46.0

2007F 9,363 9,363 726.8 1.6 18.4 1.0 1.1 138.3 1.0 100 38.3

2008F 12,689 12,689 989.0 36.1 13.5 0.9 1.0 127.3 1.0 100 37.5

2009F 15,502 15,502 1,209.1 22.2 11.1 0.8 0.9 141.0 1.1 100 32.2

Rio Tinto

Year end Dec. All figures in A$M



Profit & loss summary 2006A 2007F 2008F 2009F

Operating revenue 33,871 33,428 37,834 41,655Invest & other income 66 1,518 (1,014) (285)

EBITDA 13,964 15,513 20,445 22,841Depreciation/Amort (2,453) (2,609) (2,841) (2,957)

EBIT 11,511 12,904 17,603 19,884Net Interest (72) (59) 492 1,371


Minorities/Assoc./Prefs 1,251 342 751 893

NPAT 9,613 9,363 12,689 15,502Non recurring items 130 0 0 0

Reported profit 9,743 9,363 12,689 15,502NPAT add Goodwill & Pref 0 0 0 0

Adjusted profit 9,613 9,363 12,689 15,502

Cashflow summary 2006A 2007F 2008F 2009F

EBITDA 13,964 15,513 20,445 22,841Working capital changes 0 (78) (405) (157)

Interest and tax (3,843) (3,648) (5,019) (5,252)

Other operating items 275 644 2,537 1,763

Operating cashflow 10,395 12,431 17,557 19,195Required capex (5,104) (3,189) (1,730) (1,800)

Maintainable cashflow 5,291 9,242 15,828 17,395Dividends (160) (1,941) (1,537) (1,780)

Acq/Disp (792) (544) (1,845) (1,152)

Other investing items 511 55 0 0

Free cashflow 4,850 6,812 12,445 14,463Equity (6,260) (1,693) 0 0

Debt inc/(red'n) (887) (4,917) (12,445) (14,463)

Balance sheet 2006A 2007F 2008F 2009FCash & deposits 932 2,706 15,294 30,670

Inventories 3,217 1,826 2,081 2,266

Trade debtors 3,721 2,739 3,122 3,399

Other curr assets 837 398 406 426

Total current assets 8,707 7,669 20,903 36,761Prop., plant & equip. 28,124 27,225 27,621 28,718

Non-curr intangibles 1,065 1,592 1,627 1,703

Non-curr investments 3,003 3,021 2,491 2,482

Other non-curr assets 2,786 4,191 4,479 4,770

Total assets 43,685 43,699 57,121 74,434Trade creditors 3,411 2,739 3,122 3,399

Curr borrowings 1,905 348 355 372

Other curr liabilities 2,005 2,043 2,746 2,908

Total current liab. 7,320 5,131 6,223 6,679Borrowings 2,542 0 0 0

Other non-curr liabilities 9,273 8,834 8,801 9,334

Total liabilities 19,135 13,965 15,024 16,013Minorities/Convertibles 1,460 1,775 2,304 2,843


Ratio analysis 2006A 2007F 2008F 2009FRevenue growth (%) 54.5 (1.3) 13.2 10.1

EBITDA growth (%) 40.1 11.1 31.8 11.7

EPS growth (%) 51.1 1.6 36.1 22.2



Tax rate (%) 27.1 29.8 34.0 31.3

Net debt/equity (%) 15.2 (6.1) (35.9) (53.3)

Net debt/net debt + equity (%) 13.2 (6.5) (56.0) (114.0)

Net interest cover (x) NaN NaN n/a n/a

Payout ratio (%) 19.0 19.0 12.9 11.7

Capex to deprec'n (%) 223.5 122.1 62.5 62.5

NTA per share ($) 17.02 21.15 29.53 41.43

ROA (%) 28.5 30.0 34.8 29.9

ROE (%) 46.0 38.3 37.5 32.2

Multiple analysis 2006A 2007F 2008F 2009FMarket cap (M) 145,464

Net debt ($M) 4,078

Peripheral assets ($M) 3,323


EV/EBIT (x) 12.7 11.3 8.3 7.4





P/E sector (x) 17.7 16.3 13.3 11.7

P/E rel sector (x) 1.1 1.1 1.0 0.9

Assumptions 2006A 2007F 2008F 2009FUS$/A$ ($) 0.75 0.84 0.87 0.84

Copper (US$/lb) 3.03 3.35 3.12 2.61

Iron Ore Lump (US$/t) 55.90 61.28 70.41 74.50

Coking Coal (US$/t) 117.50 107.50 112.50 102.50

Steaming Coal (US$/t) 52.63 54.00 64.75 59.75

Notes To AccountsNote:1. RIO reports in USD and all the data have been translated into AUDin this table. Financial statements are prepared in accordance withIFRS.2. Alcan pro forma accounts not included.


Rio Tinto

BHP bids for RIOBHP has made an offer to RIO's board proposing the acquisition of RIO by BHP. Under the proposal each RIO share would beexchanged for three BHP shares. RIO's board has rejected BHP's offer stating that it significantly undervalues RIO. We seeBHP's offer as a first shot across the bow, in what could become a long takeover battle.

BHP's offer for RIO is a sign of confidence in the global economy and signifies that they expect commodity prices to remainelevated moving forward. The current market jitters related to the US sub-prime issues no longer appear that relevant as weinfer BHP's faith in the industrialisation of the developing world. Mining is BHP's business and we assume that they have aconsidered view of what commodity prices will do in the future. We do not believe BHP would make such a bid if they thoughtthere was only one or two years left of the current strong commodity prices. BHP takes a 20-30 year view of its investments,and it sees value in RIO at its current historical highs. When BHP took over WMC, the market at the time believed BHP paid afull price. In retrospect the price BHP paid for WMC now seems cheap. BHP's bid for RIO could result in a significant increase invaluations for the mining sector, as BHP's optimism towards commodity prices is absorbed by the market.

We have added a takeover premium of 30% to our previous target price of $115 to give a new target price for RIO of $150. Wemaintain our current HOLD recommendation on RIO with a 12-month price target of $150. We added the same premium to ourlong-term price target and our long-term recommendation for RIO remains HOLD.


Andrew Black Neil Verringer General Manager, St George Private Bank Head of BSA Private Bank [email protected] [email protected] Phone +61 2 9236 3056 Phone + 61 088424 54 87 St.George Private Bank & BankSA Private Bank Locations Sydney Level 4, 182 George Street, Sydney, NSW 2000 Phone (02) 9236 1882 Melbourne Level 8, 530 Collins Street, Melbourne, VIC 3000 Phone (03) 9274 4850 Brisbane Central Plaza, Level 4, 345 Queen Street, Brisbane, QLD 4000 (07) 3232 8888 Perth 152-158 St Georges Terrace, Perth, WA 6000 Phone (08) 9265 7510 Adelaide BankSA Private Bank Level 1, 97 King William Street Adelaide, SA 5000 (08) 8424 4141 Staff Directory Private Bank Directors Warren Acworth Brisbane [email protected] Richard Battifuoco Adelaide [email protected] David Gray Sydney [email protected] David Scannell Sydney [email protected] David Wyndham Sydney [email protected] Private Bank Relationship Managers – Financial Advi ce Peter Coulthard Melbourne [email protected] Jason Whitaker Sydney [email protected] Terri Ho Sydney [email protected] Andrew Smith Sydney [email protected] Damien Ferguson Brisbane [email protected] Gerry Duffy Sydney [email protected] ROXANNE GORMAN SYDNEY [email protected] Private Bank Relationship Managers – Banking Jeanette McCann Sydney [email protected] Brett Edwards Sydney [email protected] Anne Fraser Sydney [email protected] Scott Heyes Melbourne [email protected] Andrew Horsnell Adelaide [email protected] Bruce Kleem Sydney [email protected] Lisa Marks Melbourne [email protected] Kishore Mudaliar Sydney [email protected] Richard Northey Sydney [email protected] Josie Prasad Sydney [email protected] Geoffrey Bell Sydney [email protected] Josephine Prasad Sydney [email protected]

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12 Nov 2007 Bulletin

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