r r

INDEPENDENT RESEARCH UPDATE Pernod Ricard

8th September 2014 Contact with company: green shoots are growing Beverages Fair Value EUR103 (price EUR90.06) BUY

Bloomberg RI FP Reuters PERP.PA 12-month High / Low (EUR) 94.3 / 79.4 Market capitalisation (EURm) 23,904 Enterprise Value (BG estimates EURm) 32,256 Avg. 6m daily volume ('000 shares) 478.1 Free Float 79.4% 3y EPS CAGR 5.5% Gearing (06/13) 78% Dividend yield (06/14e) 1.82%

Gradual improvement in China. Following a 23% plunge in organic sales in China in FY 13/14, Pernod Ricard has witnessed some signs of improvement with Martell depletions up 5% in Q4 13/14. This trend has been confirmed over the first two months of FY 14/15. Stock levels are reported back to normal and management highlighted that sales in July and August returned to positive territory, suggesting some acceleration in Q1 and Q2 14/15.

Benefits from the Allegro project. The project should deliver cost savings of EUR150m over the next two years (EUR30m already incurred in FY 13/14), with a reinvestment in brands of at least 30%. We have adopted a scenario with reinvestment in brands reaching 50%, and adjusted our organic EBIT growth estimates for the next three years. EBIT is now expected to increase 4.6% in FY 14/15, 4.5% in FY 15/16 and 5.4% in FY 16/17 vs. previous estimates of 3.7%, 4%, and 4.5% respectively.

Positive FX effect next year. In FY 13/14, Pernod Ricard was affected by significant FX headwinds. The negative FX impact was 6.2% on sales and 8.9% on EBIT. With the appreciation of the USD and assimilated currencies vs EUR, our FX impact estimate for FY 14/15 sales is now +0.8% vs. -1.5% previously. The EBIT sensitivity is greater since a large part of production and operating costs is denominated in euros, hence a 1.5% positive FX impact on FY 14/15 EBIT vs. -2.2% previously.

Buy recommendation maintained. The share has performed well year to date but with momentum and organic EBIT delivery improving, we expect the stock to continue to move towards our FV of EUR103 stemming from our DCF model. Pernod Ricard is currently trading at forward P/E multiples of 18.2x for FY 14/15 and 16.8x for FY 15/16, which are, respectively, 27% and 21% below the peer average (Diageo, Campari, Rémy Cointreau).

YE June 06/13 06/14e 06/15e 06/16e Revenue (EURm) 8,575 7,945 8,260 8,581 EBIT (EURm) 2,230 2,056 2,181 2,280 Basic EPS (EUR) 4.66 4.50 5.06 5.46 Diluted EPS (EUR) 4.61 4.46 5.01 5.41 EV/Sales 3.8x 4.1x 3.9x 3.7x EV/EBITDA 13.1x 14.1x 13.3x 12.5x EV/EBIT 14.6x 15.7x 14.8x 13.9x P/E 19.5x 20.2x 18.0x 16.6x ROCE 9.7 8.8 9.2 9.5

89

94

99

104

109

114

PERNOD-RICARD STOXX EUROPE 600

08/09/14

Source Thomson Reuters

Analyst: Sector Analyst Team: Virginie Roumage Loïc Morvan 33(0) 1.56.68.75.22 Cédric Rossi vroumage@bryangarnier.com Antoine Parison

Pernod Ricard

2

Simplified Profit & Loss Account (EURm) 30/06/11 30/06/12 30/06/13 30/06/14e 30/06/15e 30/06/16e 30/06/17e Revenues 7,643 8,215 8,575 7,945 8,260 8,581 8,987 Change (%) 7.9% 7.5% 4.4% -7.3% 4.0% 3.9% 4.7% Gross profit 4,610 5,047 5,351 4,987 5,181 5,369 5,624 Contribution after A&P 3,169 3,476 3,707 3,484 3,609 3,736 3,925 Adjusted EBITDA 2,111 2,320 2,489 2,294 2,429 2,537 2,673 Recurring EBIT 1,909 2,114 2,230 2,056 2,181 2,280 2,403 Change (%) 6.3% 10.7% 5.5% -7.8% 6.1% 4.5% 5.4% Financial results (458) (548) (554) (485) (456) (409) (259) Pre-tax profits 1,395 1,421 1,564 1,332 1,664 1,821 2,094 Tax (318) (247) (374) (305) (429) (470) (540) Minority interests / discontinued operations (31.0) (27.0) (19.0) (11.0) (20.0) (22.0) (25.0) Net profit group share 1,046 1,147 1,171 1,016 1,214 1,329 1,528 Restated net profit group share 1,092 1,201 1,227 1,185 1,331 1,438 1,577 Change (%) 9.0% 10.0% 2.2% -3.4% 12.4% 8.0% 9.6% Cash Flow Statement (EURm) Operating cash flows 1,916 2,064 2,440 2,263 2,308 2,467 2,722 Change in working capital (32.0) 55.0 294 319 176 180 227 Capex, net 213 251 294 274 350 257 270 Financial investments / tax paid 734 803 906 831 885 879 800 Dividends 389 411 435 448 436 479 517 Other(s) (934) 869 (147) 351 (200) 0.0 0.0 Net debt 9,038 9,363 8,726 8,352 8,349 7,873 7,265 Free cash flow 1,001 955 946 839 896 1,151 1,425 Balance Sheet (EURm) Tangible fixed assets 2,156 2,477 2,506 2,594 2,697 2,802 2,934 Intangibles assets 16,037 17,360 16,753 16,449 16,449 16,449 16,449 Cash & equivalents 774 787 620 503 906 27.0 (20.1) current assets 6,066 6,522 6,499 6,646 7,284 6,643 6,898 Other assets 1,463 2,017 1,779 1,928 1,926 1,926 1,926 Total assets 25,722 28,375 27,537 27,617 28,356 27,820 28,207 L & ST debt 9,791 10,176 8,606 8,092 8,443 7,112 6,529 Others liabilities 6,434 7,219 7,751 7,746 7,806 8,868 8,945 Shareholders' funds 9,496 10,972 11,179 11,778 12,106 11,841 12,733 Total liabilities 16,225 17,395 16,357 15,838 16,249 15,979 15,474 Capital employed 21,520 23,347 22,924 23,492 23,771 24,056 24,416 Ratios Gross profit margin 60.32 61.44 62.40 62.77 62.73 62.57 62.58 A&P as % of sales 18.85 19.12 19.17 18.92 19.04 19.03 18.84 Contribution after A&P as % of sales 41.46 42.31 43.23 43.85 43.69 43.54 43.68 Recurring operating margin 24.98 25.73 26.01 25.88 26.40 26.57 26.74 Effective tax rate 22.80 17.38 23.91 22.90 22.90 22.90 22.90 Underlying tax rate 22.01 23.49 26.18 25.80 25.80 25.80 25.80 Net margin group share 13.69 13.96 13.66 12.79 14.70 15.49 17.01 ROE (after tax) 11.34 10.70 10.65 8.72 10.20 11.41 12.20 ROCE (after tax) 8.87 9.05 9.73 8.75 9.17 9.48 9.84 Gearing 95.17 85.34 78.06 70.91 66.57 63.64 54.59 Pay out ratio 34.95 34.88 35.60 35.60 35.60 35.60 35.60 Number of shares, diluted 265,032 265,148 266,353 265,817 265,817 265,817 265,817 Data per Share (EUR) Restated basic EPS 4.16 4.57 4.66 4.50 5.06 5.46 5.99 Restated diluted EPS 4.12 4.53 4.61 4.46 5.01 5.41 5.93 % change 8.9% 9.9% 1.7% -3.2% 12.4% 8.0% 9.6% BVPS 35.83 41.38 41.97 44.31 45.54 44.54 47.90 Operating cash flows 7.23 7.78 9.16 8.51 8.68 9.28 10.24 FCF 3.78 3.60 3.55 3.16 3.37 4.33 5.36 Net dividend 1.44 1.58 1.64 1.64 1.80 1.94 2.13

Source: Company Data; Bryan, Garnier & Co ests.

Company description Pernod Ricard was formed in 1975 from the merger of two French anis groups (Pernod and Ricard). Through organic development and various acquisitions (Seagram in 2001, Allied Domecq in 2005, V&S in 2008), Pernod Ricard has now become the second largest wine and spirits group worldwide. The company commands a global 18% share behind Diageo (28%). The group’s strategy is based on three pillars: decentralization, premiumisation and innovation.

Pernod Ricard

3

1. Gradual improvement in China Brief feedback on FY results: China posted a 23% organic sales decline, due to the anti-extravagance policy and the macro-economic slowdown. As for strategic brands, volumes dropped 20%, as the group proceeded with significant destocking, and the mix decreased 5%, driven by the underperformance of the most premium segments. The price effect stood at +1%, strongly decelerating vs. last year (+6%) but still reflecting the strict pricing policy of the group which did not have recourse to unreasonable discounts in China. The performance by channel was mixed with a sharp fall in the traditional channels such as KTVs and gifting while family KTVs and modern bars showed better resilience.

The Chinese market is showing signs of life. The trend improved in Q4 13/14, especially for cognac. Martell depletions in volume at tier 1 and tier 2 wholesalers rose 5%, strongly accelerating vs. 9M (-7%). Chivas depletions posted a 8% decline vs. -16% in 9M. At the end of June 2014, stocks were reported to be back at normal levels, i.e. 60 days for Martell and slightly more for whisky. During the conference call, management reported that depletions in the first two months of FY14/15 were in line with Q4 and that shipments had returned to positive territory, suggesting some acceleration in sales in Q1 and Q2 14. Nevertheless, the true inflection in sales should occur in H2 14/15 due to a favourable comparison base with a Chinese New Year later than last year (19 February vs. 31 January LY).

Pernod Ricard is well positioned to lead the recovery on the Chinese market. Firstly, the group has a balanced exposure between the XO and VSOP cognac categories. Even though the medium-term prospects of XO are positive, we consider VSOP should be the first to benefit from the rebound in the Chinese market, the proof being that over the last year Noblige (VSOP sold at a RSP of EUR45) has consistently shown better performance than Cordon Bleu (XO at EUR100). In FY14/15, Pernod Ricard is expected to intensify its A&P expenditures on Noblige vs. Cordon Bleu.

Fig. 1: Breakdown of cognac categories

Source: Companies, Bryan, Garnier & Co

20%

50%40%

70%

50%60%

10%

Pernod Ricard Rémy Cointreau Hennessy

VS VSOP XO

Pernod Ricard

4

Secondly, the group has a diversified portfolio which should enable it to reap the benefits of a higher penetration of western spirits other than cognac and whisky. Western-style alcohols still only have a low level of market penetration in the Chinese market. They account for only 1% of the country’s total alcohol volumes, a figure well below that of other emerging markets as shown in the graph below.

Fig. 2: Share of Western-style alcohols in total alcohol volumes

Source: Euromonitor

In our initiation of coverage note, we had highlighted the future increased penetration, as confirmed by the 2013 IHS Global Insight study which forecasts a 7% CAGR (in volume) for premium Western-style spirits between FY 2012/13 and FY 2016/17. Several factors should favour the trend, the most significant one being the development of a middle class which is more inclined to consume Western products. This is expected to grow annually by an average of 4% between 2013 and 2020, accounting for 25% of the Chinese population in 2020 compared to 12% in 2013. We think that the anti-extravagance policy should accelerate the increase in penetration as consumers should favour more affordable products such as vodka, liqueurs... Following the implementation of the anti-extravagance policy, the group stepped up the launch of other categories. Absolut, Malibu RTD (which targets women) and Ballantine’s Finest can be cited as examples. The group considers that these brands represent the future growth drivers in China.

Consequently, we expect China to show 3% organic sales growth next year (-5% before) while the whole Asia/ROW should respectively increase 4.3%, 5% and 6% over the next three years vs. previous estimates of 2%, 3% and 4%. Of note, in the medium term, the group is targeting in China a high single digit growth overall and a low double digit growth in cognac which should come half from volumes and half from price/mix.

8.7%

5.3%

1.3% 0.9%

0%

1%

2%

3%

4%

5%

6%

7%

8%

9%

10%

Brazil India Russia China

Pernod Ricard

5

2. Allegro project to fuel organic growth The detail. During the conference call, management provided details about the Allegro project. This has three distinct objectives: 1/ simplification of structures and processes, 2/mutualisation with the sharing of resources and expertise, and 3/ prioritisation which implies the clarification of roles and responsibilities. From a financial perspective, Allegro should cost EUR180m and generate EUR150m of cost savings over the next three years, of which EUR30m has already been incurred in FY 13/14. EUR75m is planned for FY 14/15 with the balance in FY 15/16 and FY 16/17. SG&A expenses are expected to be stable next year and to increase 2% in FY 15/16. As a comparison, SG&A expenses have risen by a CAGR of 8% over the past three years and a normalised CAGR is estimated to be 4.5%.

Fig. 3: Half of savings expected in FY14/15 Fig. 4: Slowing in the growth of SG&A expenses

Source: Pernod Ricard

Change in estimates. Part of the savings should be reinvested in the brands in FY14/15 and FY15/16, at least 30% and up to 50% depending on the evolution of the market environment. We adopt a scenario with a rate of reinvestment of 50%, leading to A&P expenditures as a % of sales of 19% in FY14/15 and FY15/16. Consequently, EBIT is expected to increase 4.6% in FY14/15, 4.5% in FY15/16 and 5.4% in FY16/17 vs. previous estimates of 3.7% in FY14/15, 4% in FY15/16 and 4.5% in FY16/17. The margin should respectively increase 50bp, 20bp and 10bp over the next three years.

30

75

45

150

-10

10

30

50

70

90

110

130

150

FY13/14 FY14/15 FY15/16 & FY16/17 Total

6.6%

8.4%

7.5%

1.0%0%

2.0%

0%

1%

2%

3%

4%

5%

6%

7%

8%

9%

FY10/11 FY11/12 FY12/13 FY13/14 FY14/15 FY15/16

CAGR over 3 years: +8%

CAGR over 3 years: +1%

Pernod Ricard

6

Fig. 5: Evolution of organic EBIT growth and SG&A expenses as a % of sales

Source: Pernod Ricard, Bryan, Garnier & Co

3. A dollar call As at all spirits groups, Pernod Ricard’s foreign exchange exposure arises from both translation and economic effects. The group uses few derivatives for hedging purposes and prefers having recourse to a natural currency hedge by structuring its debt by currency.

Consequently, currency headwinds were significant in FY13/14 characterised by the devaluation of the USD and emerging currencies vs EUR. The negative FX impact was 6.2% on sales and 8.9% on EBIT, mainly related to the devaluation of the USD and Indian rupee.

The table below summarises the sensitivity of certain items to a 1% appreciation of the USD and linked currencies (Chinese yuan and Hong Kong dollar) vs EUR:

Fig. 6: Sensitivity to the US dollar and linked currencies

Impact of a 1% USD (and linked currencies) appreciation on our estimates

Impact on sales +0.3%

Impact on profit from recurring operations +0.7%

Impact on EPS +0.9%

Impact on net debt +0.6%

Source: Pernod Ricard; Bryan, Garnier & Co

Following the recent movement in currencies, we reviewed our proprietary FX model which is based on spot rates and takes into account a large number of countries. Mainly due to the appreciation of the USD and assimilated currencies vs EUR, our FX estimate for FY14/15 sales is now +0.8% vs. -1.5% previously. On EBIT, we anticipate a positive FX effect of 1.5% vs. -2.2% previously. On October 23rd, we expect management to guide for 3-5% for the upcoming year vs. our current estimate of 4.6%.

18.0%

17.3%

17.0% 16.9%

1.6%

4.6% 4.5%

5.4%

0%

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3%

4%

5%

6%

16.0%

16.5%

17.0%

17.5%

18.0%

FY13/14 FY14/15 FY15/16 FY16/17

SG&A as % of sales Organic EBIT growth (rhs)

Pernod Ricard

7

4. Stock market performance

Between the end of May and the beginning of September 2014, Pernod Ricard’s share price declined by 1.7%, while the food & beverage sector rose by 7.9%.

Fig. 7: Pernod Ricard’s stock price vs Euro Stoxx food&beverage

Source: Thomson Reuters

5. Valuation

Pernod Ricard is currently trading at forward P/E multiples of 18.2x for FY 14/15 and 16.8x for FY 15/16, which are, respectively, 27% and 21% below the peer average (Diageo, Campari, Rémy Cointreau). The group’s average EPS growth is 10%, broadly in line with the sector. As a result, the group’s valuation appears attractive.

Our new FV of EUR103 takes into account the changes in our estimates (both FX and organic) and in the financial structure. Firstly, the cost of debt is expected to decrease to 4.5% next year. Secondly, FY13/14 net debt amounted to EUR8.3bn, implying a EUR374m decline (including EUR209m positive FX impact), stronger than anticipated.

75

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95

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105

31/0

5/20

13

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13

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13

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13

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30/0

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14

31/0

7/20

14

31/0

8/20

14

PERNOD-RICARD EURO STOXX FOOD & BEV E

Pernod Ricard

8

6. Appendices

As shown in the graphs below, Pernod Ricard has a balanced geographic presence.

Fig. 1: Breakdown of the group’s sales by region, FY 2013/14

Fig. 2: Breakdown of the group’s operating profit by region, FY 2013/14

Source of all charts: Pernod Ricard; Bryan, Garnier & Co

The group’s flagship brands are grouped within the “Top 14”, which represents 63% of sales. Pernod Ricard’s portfolio is comprehensive, with the share of whisk(e)ys amounting to 51%.

Fig. 3: Breakdown of the group’s sales by product, FY 2013/14

Fig. 4: Sales volumes by spirits category, 2012

Source: Pernod Ricard Source: IWSR

Asia-ROW38%

Americas27%

Europe35%

Asia-ROW43%

Americas28%

Europe29%

Asia-ROW43%

Americas28%

Europe29%

Scotch whiskies; 18%

Other whiskies; 33%

White spirits and rums; 28%

Liqueurs; 8%

Anised-based spirits; 6%

Cognac and brandies; 5%

Bitters; 2%

Pernod Ricard

9

Fig. 1: Evolution of sales organic growth between 2007/08 and 2013/14

Fig. 2: Evolution of EBIT organic growth between 2007/08 and 2013/14

Source of all charts: Pernod Ricard

Fig. 3: SWOT analysis

STRENGTHS WEAKNESSES Decentralised structure: easier adaptation to changing consumer tastes

Very diversified portfolio: large number of

categories, local and international brands

Premiumisation strategy: premium categories account for

76% of sales

Balanced geographic exposure: between Asia, Europe and the

Americas

Very well-known brands: Absolut, Chivas Regal, Martell…

Stable management: only 3 CEOs over 40 years

Seasonality of sales: year-end festivities, the Chinese New Year and the Moon Festival in China

Financial structure: with a net debt/EBITDA ratio of 3.5x at the end of June 2013, the group still has a debt level greater

than the sector average

Lack of critical size in the US: The group’s market share in the US is 12% compared with 18% globally

OPPORTUNITIES THREATS Presence in India: a reduction in import taxes could have

positive consequences for the group’s sales in the

country

Exchange rate fluctuations: cost base mainly in EUR and GBP Structural changes in consumer behaviours: changes in tastes, long-term migration from the “on-trade” channel to the

“off-trade”

Increase in excise taxes

Source: Pernod Ricard; Bryan, Garnier & Co

-8%

-4%

0%

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8%

12%

16%

2007

/08

2008

/09

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/10

2010

/11

2011

/12

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/13

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/14

Asia-ROW Americas Europe Group

-5%

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25%

2007

/08

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/09

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/10

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/11

2011

/12

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/13

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/14

Asia-ROW Americas Europe Group

Pernod Ricard

10

Price Chart and Rating History

Pernod Ricard

Ratings

Date Ratings Price

29/08/14 BUY EUR88.75

Target Price

Date Target price

29/08/14 EUR103

55.68

60.68

65.68

70.68

75.68

80.68

85.68

90.68

95.68

100.68

26/05/11 26/11/11 26/05/12 26/11/12 26/05/13 26/11/13 26/05/1

PERNOD-RICARD Source Thomson Reuters

Pernod Ricard

11

Bryan Garnier stock rating system For the purposes of this Report, the Bryan Garnier stock rating system is defined as follows: Stock rating

BUY Positive opinion for a stock where we expect a favourable performance in absolute terms over a period of 6 months from the publication of a recommendation. This opinion is based not only on the FV (the potential upside based on valuation), but also takes into account a number of elements including a SWOT analysis, positive momentum, technical aspects and the sector backdrop. Every subsequent published update on the stock will feature an introduction outlining the key reasons behind the opinion.

NEUTRAL Opinion recommending not to trade in a stock short-term, neither as a BUYER or a SELLER, due to a specific set of factors. This view is intended to be temporary. It may reflect different situations, but in particular those where a fair value shows no significant potential or where an upcoming binary event constitutes a high-risk that is difficult to quantify. Every subsequent published update on the stock will feature an introduction outlining the key reasons behind the opinion.

SELL Negative opinion for a stock where we expect an unfavourable performance in absolute terms over a period of 6 months from the publication of a recommendation. This opinion is based not only on the FV (the potential downside based on valuation), but also takes into account a number of elements including a SWOT analysis, positive momentum, technical aspects and the sector backdrop. Every subsequent published update on the stock will feature an introduction outlining the key reasons behind the opinion.

Distribution of stock ratings

BUY ratings 57.7% NEUTRAL ratings 34% SELL ratings 8.2%

Research Disclosure Legend

1 Bryan Garnier shareholding in Issuer

Bryan Garnier & Co Limited or another company in its group (together, the “Bryan Garnier Group”) has a shareholding that, individually or combined, exceeds 5% of the paid up and issued share capital of a company that is the subject of this Report (the “Issuer”).

No

2 Issuer shareholding in Bryan Garnier

The Issuer has a shareholding that exceeds 5% of the paid up and issued share capital of one or more members of the Bryan Garnier Group.

No

3 Financial interest A member of the Bryan Garnier Group holds one or more financial interests in relation to the Issuer which are significant in relation to this report

No

4 Market maker or liquidity provider

A member of the Bryan Garnier Group is a market maker or liquidity provider in the securities of the Issuer or in any related derivatives.

No

5 Lead/co-lead manager In the past twelve months, a member of the Bryan Garnier Group has been lead manager or co-lead manager of one or more publicly disclosed offers of securities of the Issuer or in any related derivatives.

No

6 Investment banking agreement

A member of the Bryan Garnier Group is or has in the past twelve months been party to an agreement with the Issuer relating to the provision of investment banking services, or has in that period received payment or been promised payment in respect of such services.

No

7 Research agreement A member of the Bryan Garnier Group is party to an agreement with the Issuer relating to the production of this Report.

No

8 Analyst receipt or purchase of shares in Issuer

The investment analyst or another person involved in the preparation of this Report has received or purchased shares of the Issuer prior to a public offering of those shares.

No

9 Remuneration of analyst The remuneration of the investment analyst or other persons involved in the preparation of this Report is tied to investment banking transactions performed by the Bryan Garnier Group.

No

10 Corporate finance client In the past twelve months a member of the Bryan Garnier Group has been remunerated for providing corporate finance services to the issuer or may expect to receive or intend to seek remuneration for corporate finance services from the Issuer in the next six months.

No

11 Analyst has short position The investment analyst or another person involved in the preparation of this Report has a short position in the securities or derivatives of the Issuer.

No

12 Analyst has long position The investment analyst or another person involved in the preparation of this Report has a long position in the securities or derivatives of the Issuer.

No

13 Bryan Garnier executive is an officer

A partner, director, officer, employee or agent of the Bryan Garnier Group, or a member of such person’s household, is a partner, director, officer or an employee of, or adviser to, the Issuer or one of its parents or subsidiaries. The name of such person or persons is disclosed above.

No

14 Analyst disclosure The analyst hereby certifies that neither the views expressed in the research, nor the timing of the publication of the research has been influenced by any knowledge of clients positions and that the views expressed in the report accurately reflect his/her personal views about the investment and issuer to which the report relates and that no part of his/her remuneration was, is or will be, directly or indirectly, related to the specific recommendations or views expressed in the report.

Yes

15 Other disclosures Other specific disclosures: Report sent to Issuer to verify factual accuracy (with the recommendation/rating, price target/spread and summary of conclusions removed).

Yes

Summary of Investment Research Conflict Management Policy is available www.bryangarnier.com

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Important information This report is prepared by Bryan Garnier & Co Limited, registered in England no 3034095 and is being distributed only to clients of Bryan Garnier & Co Limited (the "Firm"). Bryan Garnier & Co Limited is authorised and regulated by the Financial Conduct Authority (the "FCA") and is a member of the London Stock Exchange. Registered address : 110 Bishopsgate, London EC2N 4AY. This Report is provided for information purposes only and does not constitute an offer, or a solicitation of an offer, to buy or sell relevant securities, including securities mentioned in this Report and options, warrants or rights to or interests in any such securities. This Report is for general circulation to clients of the Firm and as such is not, and should not be construed as, investment advice or a personal recommendation. No account is taken of the investment objectives, financial situation or particular needs of any person. The information and opinions contained in this Report have been compiled from and are based upon generally available information which the Firm believes to be reliable but the accuracy of which cannot be guaranteed. All components and estimates given are statements of the Firm, or an associated company’s, opinion only and no express representation or warranty is given or should be implied from such statements. All opinions expressed in this Report are subject to change without notice. To the fullest extent permitted by law neither the Firm nor any associated company accept any liability whatsoever for any direct or consequential loss arising from the use of this Report. Information may be available to the Firm and/or associated companies which are not reflected in this Report. The Firm or an associated company may have a consulting relationship with a company which is the subject of this Report. This Report may not be reproduced, distributed or published by you for any purpose except with the Firms’ prior written permission. The Firm reserves all rights in relation to this Report. Past performance information contained in this Report is not an indication of future performance. The information in this report has not been audited or verified by an independent party and should not be seen as an indication of returns which might be received by investors. Similarly, where projections, forecasts, targeted or illustrative returns or related statements or expressions of opinion are given (“Forward Looking Information”) they should not be regarded as a guarantee, prediction or definitive statement of fact or probability. Actual events and circumstances are difficult or impossible to predict and will differ from assumptions. A number of factors, in addition to the risk factors stated in this Report, could cause actual results to differ materially from those in any Forward Looking Information.

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