TRANSPORTATION 5 November, 2020 TORG (Buy tp NOK190): 10x P/E, cash equivalent 20% of mcap and 11% FCF yield

Lars-Daniel Westby Petter Kongslie Phone : (+47) 24 14 74 16 Phone : (+47) 24 14 74 96 Mobile : (+47) 90 03 96 65 Mobile : (+47) 98 41 1080 E-mail : [email protected] E-mail : [email protected] 10x P/E, cash equivalent 20% of mcap and 11% FCF yield Reiterate our Buy rec. and target set at NOK190, which is 2021 P/E of 15x + 6% stake in NTS During Covid-19 and the following complete shutdown of society, TORG has demonstrated an impressive resilient business model driven by a combination of being an very important Norwegian infrastructure giant (Ferry, Bus, Air) with leading market position in all its verticals with high share of gross contracts (no risk on price and volume). Where Ferry revenues are down only 12% in 1H20 and Air only -18.7% YoY, Bus revenues is actually up 1% in 1H20 due to star-up in Sweden and new contracts in Norway. Moreover, with cost initiatives implemented, the blended EBITDA margin is set to decline only 1.2pp from 14.1% to 12.9%. The investment case in TORG is therefore highly compelling as we see it at a 2021 P/E of 10x adj. for the 6% ownership stake in NTS. Indeed, with a order backlog of NOK42bn with a duration of 7-8 years, TORG is set for significant revenue growth from a trough in 2020 (CAGR of 16% between 2006-2019). Moreover, with a lower fixed cost base and fall through from scale, EBITDA margin rebound is set for both Bus (5.5% EBITDA margin in 1H20 vs. 7.5% in 2019) and Air (7.7% margin in 1H20 vs. 10.1% in 2019) post 2020. Coupled with peak capex last four years, TORG is set to generate NOK14 per share in FCF in 2021, which on last close correspond to ~11% yield. On top is a strong balance sheet with NIBD/EBITDA of ~2x, of which cash equivalent to 20% of mcap. Consequently, we reiterate our Buy rec. and set target at NOK190, which correspond to 2021 P/E of 15x + 6% stake in NTS

Source: SB1M, TORG, Bloomberg 2 High share of gross contracts show strength during Covid-19 TORG trades at 2021 P/E of ~10x adj. for the 6% ownership in NTS Estimates Comments

Torghatten ASA History New NOKm 2016A 2017A 2018A 2019E 2020E 2021E Ferries;

Revenues 9.386 9.740 10.209 11.401 9.946 10.622 Expenses -8.040 -8.426 -8.790 -9.793 -8.661 -9.041 - Revenues down 12% in 1H20 EBITDA 1.345 1.314 1.419 1.608 1.285 1.581 EBITDA-margin 14.3% 13.5% 13.9% 14.1% 12.9% 14.9% DA&I -612 -689 -734 -782 -731 -766 - EBITDA margin of 30% EBIT 733 625 684 826 554 815 Net financials and other -143 -67 -3 -140 -94 -141 Pre-tax profit 590 558 681 686 460 674 Tax & Minorities -244 -153 -137 -189 -106 -192 Net income to TORG 346 405 544 497 354 482 EPS to TORG (adj. for treasury shares) 7.4 8.7 12.0 11.1 7.9 10.7 Bus; Adj. EPS (excl. treasury shares) 8.0 7.1 9.8 11.3 6.6 11.6

P/E adj. for NTS at current price 9x 11x 10x 10x 17x 10x - Revenues up 1% in 1H20 due to start-up in Sweden and P/E adj. for NTS at target 16x 27x 15x new contracts in Norway

Sea Revenues 2.354 2.483 2.567 3.186 2.708 2.844 - EBITDA margin of 5.5% EBITDA 502 561 742 882 812 910 EBITDA % 21.3% 22.6% 28.9% 27.7% 30.0% 32.0%

Bus Revenues 2.100 2.450 2.606 2.773 2.800 2.912 EBITDA 191 186 193 209 140 204 Air; EBITDA % 9.1% 7.6% 7.4% 7.5% 5.0% 7.0%

Air - Revenues down 18.7% YoY in 1H20 Revenues 4.560 4.449 4.721 5.088 4.070 4.477 EBITDA 646 548 441 515 326 448 EBITDA % 14.2% 12.3% 9.3% 10.1% 8.0% 10.0% - EBITDA margin of 7.7%

Other Maritime Revenues 330 309 260 287 310 325 EBITDA 35 27 50 13 15 26 EBITDA % 10.6% 8.7% 19.1% 4.7% 5.0% 8.0%

Other Revenues 42 49 56 68 58 64 EBITDA -29 -8 -7 -11 -9 -6

Source: SB1M, TORG 3 This is how it looks like today Ferries based on FJORD ferry valuation, Bus on Nobina and Air on ~30% discount to air peers

Torghatten Valuation To Torghatten NOKm Methodology '21e multiple EV NIBD Equity Value Ownership Equity Value Per Share

Ferry Transport FJORD ferry EV/EBITDA 8.5x 7.735 2.495 5.240 95% 4.978 105 Bus Transport Nobina P/E 12.4x 1.220 106 1.114 98% 1.092 23 Air Transport EV/EBITDA (Peers at 8.3x) 5.5x 2.462 352 2.110 66% 1.393 29 Other Maritime Avergage of Ferry, Bus and Air 8.8x 173 246 -74 100% -74 -2

NTS ASA Market value 9.661 6% 627 13 Treasury shares ~2.6m shares 309 0 309.4 100% 309 7 Other investments Book value 25 1

2021 FCF 750 90% 677 14

Total 11.899 3.199 19.112 9.028 190 Upside (Downside) on last close 59.7%

Source: SB1M, TORG, Bloomberg 4 Torghatten is a Norwegian infrastructure giant Focus on decentralized organization with centralized capital allocation Company structure Valuation break-down

Other investments 0% 2021 FCF Other Maritime 8% -1% NTS ASA 7%

Air Transport 16% Ferry Transport 56%

Bus Transport 12%

MCAP 6082 Airplanes 44 NIBD (last reported) 3199 Ferries 67 19A Revenues ('06-'19 CAGR) 11401 (16%) Busses 1570 19A EBITDA ('06-'19 CAGR) 1608 (14%) Express boats 18 Employees 7000 Backlog (NOKbn) 42

Source: SB1M, TORG 5 Impressive track-record with steady growth for many years… The increase from 2013 to 2014 driven by higher share of ownership in Widerøe

12000 18%

16% 10000 14%

8000 12%

10%

6000 NOKm 8% Margin

4000 6%

4% 2000 2%

- 0% 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019

Revenues EBITDA EBIT EBITDA-margin EBIT-margin

Source: SB1M, TORG 6 …where the growth also have been highly profitable, even with lots of cash… NOK26 cash per share, NIBD / EBITDA of 2.7x on avg. between 2011-2019 and 2.5x as of 1H20 Pre-tax ROCE and ROE Cash on the balance sheet (NOKm)

1.252 1.158

19.6% 19.9% 19.5% 18.2% 942 16.8% 828 800 815 13.5% 13.3% 754 12.0% 12.0% 11.8% 640 580 8.9% 9.2% 9.4% 8.8% 9.4% 8.0% 7.3% 6.1%

2011 2012 2013 2014 2015 2016 2017 2018 2019

ROCE ROE 2011 2012 2013 2014 2015 2016 2017 2018 2019

Source: SB1M, TORG 7 …and the cash balance is high moving into a period with less capex Total investments in PPE in NOKm (including sale of PPE and air- bus- and sea investments) Capex (NOKm) NIBD/EBITDA (x)

2011 2012 2013 2014 2015 2016 2017 2018 2019 2020E 2021E 4.1 0

-200 3.5 3.2 -400 3.0 -385 -600 -460 2.3 2.3 -610 2.2 -659 2.1 -800 -689 -711 2.0 1.8

NOKm -1.000 -941 1.3 -1.200 -1.146 -1.186 -1.227 -1.400

-1.600 -1.593 -1.800 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020E 2021E

Source: SB1M, TORG 8 Environmental focus – TORG to be an ESG outsider? TORG adopt new technological solutions that ensure lowest possible impact 1. The Worlds first hybrid Ferry 2. Investment in gas and battery ferries (16) 3. 35 electric busses out of a fleet of 1.5k buses. Moreover, 30% of the busses are on biofuel or gas 4. TORG has ordered 3 low emissions jet airplanes 5. All companies in the bus-segment and most of the ferry-companies are ISO 14001 certified » Meaning; commits to active effort to control and recued external environmental impact

Source: SB1M, TORG 9 Sea

10 TORG Sea Transportation Take away; 1) competitive advantage and 2) share of gross contracts Natural competitive advantage in each region Increased share of contracted revenues

3.500 20% 18% 3.000 16% 2.500 14%

2.000 12%

NOKm 10% 1.500 8% 1.000 6% 4% 500 2% 0 0% 2011 2012 2013 2014 2015 2016 2017 2018 2019 Ticket revenues Contract revenues Other EBIT-margin

Source: SB1M, TORG 11 TORG is one of the larges ferry companies in a consolidated market Trend over the least years has been towards 1) public to private ownership and 2) less players Market share (PCE) Market share (connections)

Source: SB1M, TORG, FJORD 12 TORG has improved its position considerably over the last couple of years TORG has gone from 1 of the top 10 connections to operate three out of the top 10 connections 10 largest ferry connections: 2017 10 largest ferry connections: 2019

2017 2019e # Connection Company Comment PCE 2016* Avg. per day # Connection Company Comment PCE 2016* Avg. per day 1 Moss - Horten Torghatten 3,475,843 9,497 1 Moss - Horten Torghatten End 2026 3,475,843 9,497 2 Mortavika - Årsvågen Fjord1 2,831,842 7,737 2 Mortavika - Årsvågen Fjord1 Start up 1.1.19 2,831,842 7,737 3 Sandvikvåg - Halhjem Fjord1 1,854,016 5,066 3 Sandvikvåg - Halhjem Torghatten Start up 1.1.19 1,854,016 5,066 4 Molde - Vestnes Fjord1 1,558,869 4,259 4 Molde - Vestnes Fjord1 Start up 1.1.21 1,558,869 4,259 5 Fodnes - Mannheller Fjord1 1,223,280 3,342 5 Fodnes - Mannheller Fjord1 End 2025 1,223,280 3,342 6 Hareid - Sulesund Nordled 1,218,901 3,330 6 Hareid - Sulesund Fjord1 Start up 1.1.19 1,218,901 3,330 7 Sykkylven - Magerholm Fjord1 1,170,630 3,198 7 Sykkylven - Magerholm Fjord1 Start up 1.1.20 1,170,630 3,198 8 Festøya - Solavågen Fjord1 1,168,776 3,193 8 Festøya - Solavågen Fjord1 Start up 1.1.20 1,168,776 3,193 9 Oppedal - Lavik Nordled 1,095,517 2,993 9 Oppedal - Lavik Nordled End 2024 1,095,517 2,993 10 Flakk - Rørvik Fjord1 1,019,811 2,786 10 Flakk - Rørvik Torghatten Start up 1.1.19 1,019,811 2,786 Total top 10 16,617,485 45,401 Total top 10 16,617,485 45,401

Source: SB1M, TORG, FJORD 13 Contract length often 8-10 years + options with solid counterparts TORG backlog of ~NOK20bn

For illustrative purposes only as the contract overview is FJORD

Source: SB1M, FJORD 14 Share of Non-Diesel ferries in FJORD from ‘20e is above 50% Green shift means higher capex and hence higher required EBITDA margin – same ROCE

90. 60% 80. 51% 50% 70. 60. 40% 50. 34% 31% 30% 40. 24% 30. 20% 20. 10% 10. - 0% 2018 2018 1H19 2H19

Diesel EL LNG Non-Diesel share of ferries (%)

Source: SB1M, FJORD 15 Ferry index adjustment rather than KPI Declining risk on prices, volume and zero risk on interest rates nor oil price

109.0

107.0

105.0

103.0

101.0

99.0

97.0

95.0 2016K4 2017K1 2017K2 2017K3 2017K4 2018K1 2018K2 2018K3 2018K4 2019K1 2019K2

Delindeks, fartøy - Ferger Delindeks, kostnad - Mannskap Delindeks, kostnad - Reparasjon og vedlikehold Delindeks, kostnad - Administrative Delindeks, kostnad - Øvrige Delindeks, kostnad - Kapital - Slit Delindeks, kostnad - Kapital - Rente

Source: SB1M, SSB 16 Public and administrative support for increased spending on ferries 37% increase in public ferry spending on capacity

Source: SB1M, Nasjonal transportplan 17 Bus

18 TORG Bus Transportation High share of contracted revenues where revenues and revenues grew 1% YoY in 1H20 vs. 1H19

3.000 13.0%

2.500 11.0%

9.0% 2.000 7.0%

NOKm 1.500 5.0% 1.000 3.0%

500 1.0%

0 -1.0% 2011 2012 2013 2014 2015 2016 2017 2018 2019 Ticket revenues Contract revenues Other EBIT-margin

Source: SB1M, TORG 19 TORG has become the second largest bus operator

Market share per region Market share bus operators in Norway

100% 5.7% 90% 6.0% 80%

70% 7.5% 28.6% Nettbuss 60% Torghatten 50% Tide 40% 10.0% Boreal 30% Nobina 20% Andre 10% Unibuss 0% Region Midt Region North Region South Region West Region East Region 19.8% 22.5% Oslo/Akershus

Andre Boreal Nettbuss Nobina Tide Torghatten Unibuss

Source: SB1M, TORG, kollektivtrafikk.no 20 Increased share of route production on public tenders This means increased addressable market % of production on tender Snip from Nasjonal transportplan

120%

97% 100% 93%

80% 80% 68% 65%

60% 51%

38% 40% 26% 28%

% % of production on tender 17% 20% 7% 1% 2% 0% 1995 1999 2001 2003 2005 2007 2009 2001 2012 2013 2014 2017 2019

The past 20 years have seen a great shift in how municipalities procure bus transport services. In the early 1990s, all route production was operated directly by local authorities. However, in 1994 the Norwegian government opened up for competitive tendering. So today, around 97% of all route production is sourced through this bidding process and by 2020, close to all route production in Norway will be on tender.

Source: SB1M, TORG, Nasjonal transportplan (s. 151) 21 Impressive return on equity

40.0%

35.0% 35.0% 31.6% 30.0%

25.0% 24.7% 25.4% 25.4%

20.0% 19.4% ROE

15.0% 15.7%

10.0%

5.0%

0.0% 2013 2014 2015 2016 2017 2018 2019

Source: SB1M, TORG 22 Air

23 Impressive track-record in Widerøe with no losses since 1999

6.000 18.0%

16.0% 5.000 14.0%

4.000 12.0%

10.0% 3.000

NOKm 8.0%

2.000 6.0%

4.0% 1.000 2.0%

0 0.0% 2000 2002 2004 2006 2008 2010 2012 2014 2016 2018

Revenues EBITDA EBITDA-margin Net Profit-margin

Source: SB1M, TORG, Widerøe 24 10y run-way before mid-life update and new landing systems in Norway

Widerøe operates a fleet of 44 aircrafts Widerøe flight network: 33% share commercial

Source: SB1M, TORG, Avinor 25 13% of total revenues come from contracted revenues Down from 19% in 2013 Airport overview Airport breakdown by runway length

Source: SB1M, TORG 26 Widerøe important to Norwegian infrastructure Air has potential to become the most environmental friendly transport solution on short range

Source: SB1M, TORG, Widerøe, theconversation.com 27 Valuation and estimates

28 Estimates TORG trades at 2021 P/E of 10x adj. for the 6% ownership in NTS Estimates Comments

Torghatten ASA History New NOKm 2016A 2017A 2018A 2019E 2020E 2021E Ferries;

Revenues 9.386 9.740 10.209 11.401 9.946 10.622 Expenses -8.040 -8.426 -8.790 -9.793 -8.661 -9.041 - Revenues down 12% in 1H20 EBITDA 1.345 1.314 1.419 1.608 1.285 1.581 EBITDA-margin 14.3% 13.5% 13.9% 14.1% 12.9% 14.9% DA&I -612 -689 -734 -782 -731 -766 - EBITDA margin of 30% EBIT 733 625 684 826 554 815 Net financials and other -143 -67 -3 -140 -94 -141 Pre-tax profit 590 558 681 686 460 674 Tax & Minorities -244 -153 -137 -189 -106 -192 Net income to TORG 346 405 544 497 354 482 EPS to TORG (adj. for treasury shares) 7.4 8.7 12.0 11.1 7.9 10.7 Bus; Adj. EPS (excl. treasury shares) 8.0 7.1 9.8 11.3 6.6 11.6

P/E adj. for NTS at current price 9x 11x 10x 10x 17x 10x - Revenues up 1% in 1H20 due to start-up in Sweden and P/E adj. for NTS at target 16x 27x 15x new contracts in Norway

Sea Revenues 2.354 2.483 2.567 3.186 2.708 2.844 - EBITDA margin of 5.5% EBITDA 502 561 742 882 812 910 EBITDA % 21.3% 22.6% 28.9% 27.7% 30.0% 32.0%

Bus Revenues 2.100 2.450 2.606 2.773 2.800 2.912 EBITDA 191 186 193 209 140 204 Air; EBITDA % 9.1% 7.6% 7.4% 7.5% 5.0% 7.0%

Air - Revenues down 18.7% YoY in 1H20 Revenues 4.560 4.449 4.721 5.088 4.070 4.477 EBITDA 646 548 441 515 326 448 EBITDA % 14.2% 12.3% 9.3% 10.1% 8.0% 10.0% - EBITDA margin of 7.7%

Other Maritime Revenues 330 309 260 287 310 325 EBITDA 35 27 50 13 15 26 EBITDA % 10.6% 8.7% 19.1% 4.7% 5.0% 8.0%

Other Revenues 42 49 56 68 58 64 EBITDA -29 -8 -7 -11 -9 -6

Source: SB1M, TORG 29 This is how it looks like today Ferries based on FJORD ferry valuation, Bus on Nobina and Air on ~30% discount to air peers

Torghatten Valuation To Torghatten NOKm Methodology '21e multiple EV NIBD Equity Value Ownership Equity Value Per Share

Ferry Transport FJORD ferry EV/EBITDA 8.5x 7.735 2.495 5.240 95% 4.978 105 Bus Transport Nobina P/E 12.4x 1.220 106 1.114 98% 1.092 23 Air Transport EV/EBITDA (Peers at 8.3x) 5.5x 2.462 352 2.110 66% 1.393 29 Other Maritime Avergage of Ferry, Bus and Air 8.8x 173 246 -74 100% -74 -2

NTS ASA Market value 9.661 6% 627 13 Treasury shares ~2.6m shares 309 0 309.4 100% 309 7 Other investments Book value 25 1

2021 FCF 750 90% 677 14

Total 11.899 3.199 19.112 9.028 190 Upside (Downside) on last close 59.7%

Source: SB1M, TORG, Bloomberg 30 This is how it looks on precedent transactions EV/EBITDA ferry operations from 8.5x –> 10x (based on Norled transaction), all else constant

Torghatten Valuation To Torghatten NOKm Methodology '21e multiple EV NIBD Equity Value Ownership Equity Value Per Share

Ferry Transport FJORD ferry EV/EBITDA 10.0x 9.100 2.495 6.605 95% 6.275 132 Bus Transport Nobina P/E 12.4x 1.220 106 1.114 98% 1.092 23 Air Transport EV/EBITDA (Peers at 8.3x) 5.5x 2.462 352 2.110 66% 1.393 29 Other Maritime Avergage of Ferry, Bus and Air 9.3x 183 246 -64 100% -64 -1

NTS ASA Market value 9.661 6% 627 13 Treasury shares ~2.6m shares 309 0 309.4 100% 309 7 Other investments Book value 25 1

2021 FCF 750 90% 677 14

Total 13.274 3.199 20.486 10.334 218 Upside (Downside) on last close 82.8%

Source: SB1M, TORG, Bloomberg 31 Unlikely that Norway ends up as Sweden Different wording, same message

Source: Siste partiprogram fra Høyre, AP, SP, SV og FrP 32 Majority of GDP in Norway is generated outside of “ring 3” Demonstrating the importance of district politics GDP Norway – per region Norway – share of GDP

35.0%

30.0%

Nord-Norge, 8.6% 25.0% Trøndelag, 8.1% Oslo/Akershus, 32.4% 20.0%

15.0%

Vestlandet, 10.0% 26.1%

5.0%

Rest East, 20.2% Sørlandet, 4.5% 0.0% 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018

Oslo/Akershus Rest East Sørlandet Vestlandet Trøndelag Nord-Norge

Source: SB1M, SSB 33 Appendix

34 Disclaimer

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This document contains certain forward-looking statements relating to the business, financial performance and results of the issuer and/or the industry in which it operates. Forward- looking statements concern future circumstances and results and other statements that are not historical facts, sometimes identified by the words “believes”, “expects”, “predicts”, “intends”, “projects”, “plans”, “estimates”, “aims”, “foresees”, “anticipates”, “targets”, and similar expressions. The forward-looking statements contained in this document, including assumptions, opinions and views of the issuer or cited from third party sources are solely opinions and forecasts which are subject to risks, uncertainties and other factors that may cause actual events to differ materially from any anticipated development.

Conflicts of interest SB1 Markets, affiliates and staff may perform services for, solicit business from, hold long or short positions in, or otherwise be interested in the investments (including derivatives) in any securities mentioned in this report. To mitigate possible conflicts of interest and counter the abuse of confidential information and insider knowledge, SB1 Markets has set up effective information barriers between divisions in possession of material, non-public information and other divisions of the firm. Our research team is well versed in the handling of confidential information and unpublished research material, contact with other departments of SB1 Markets, and restrictions on personal account dealing. Source: SB1M, TORG 35 Disclaimer

IMPORTANT DISCLOSURES

Previous company reports For an overview of previous recommendations regarding the financial instruments or issuer subject to this report, consult the chart below:

3-Year Price, Target Price and Rating Change History Chart for TORG NO

TORG NO Closing Target 180

Date Price Price Rating 160 165

21/01/2018 85.75 115 BUY 140 140 29/09/2018 94.5 125 BUY 120 125 115 12/06/2019 119 140 BUY 100 28/03/00 30/12/2019 142.5 165 BUY 80 05/11/2020 119 190 BUY 60 40

20

0

06/11/17

06/02/18

06/05/18

06/08/18

06/11/18

06/02/19

06/05/19

06/08/19

06/11/19

06/02/20

06/05/20 06/08/20

Closing Price Target Price Rating

B=Buy, H=Hold, S=Sell

Source: SB1M, TORG 36 Disclaimer

Planned updates SB1 Markets generally update company reports and recommendations following the publication of new figures or forecasts by the issuer, or upon the occurrence of other events that could potentially have a material effect.

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Recommendation categories Our equity recommendations are based on a six-month horizon, and on absolute performance. We operate with three recommendation categories where Buy indicates an expected annualized return of greater than +10%; Neutral, from 0% to +10%; Sell, less than 0%.

Recommendation distribution Find below an overview of SB1 Markets’ recommendation distribution as of the date of this report:

Current recommendations of the Research Department Recommendation Percentage of Percentage of companies under coverage for companies under which SB1 Markets has provided investment coverage with this banking services in the past 12 months recommendation Buy 60.7% 14.7% Neutral 25.0% 12.5% Sell 14.3% 0.0% Total 100% Source: SB1M, TORG 37

Disclaimer

NOTICE TO U.S. INVESTORS

If this report is being furnished directly to U.S. recipients by a non-U.S. SpareBank 1 Markets entity in reliance on section (a)(2) of Rule 15a-6 under the U.S. Securities Exchange Act of 1934, as amended (each a “direct U.S. recipient”), each such direct U.S. recipient of this report represents and agrees, by virtue of its acceptance thereof, that it is “major U.S. institutional investor” (as such term is defined in section (b)(4) of Rule 15a-6) and that it understands the risks involved in executing transactions in such securities. Any direct U.S. recipient of this report that wishes to discuss or receive additional information regarding any security or issuer mentioned herein, or engage in any transaction to purchase or sell or solicit or offer the purchase or sale of such securities, should contact a registered representative of SpareBank 1 Capital Markets Inc. (“SpareBank 1 Capital Markets”), a registered U.S. broker-dealer and member of FINRA and SIPC.

In certain cases, unless prohibited by the provisions of Regulations under the U.S. Securities Act of 1933, as amended, this report may be provided by SpareBank 1 Capital Markets to a U.S. recipient (a “SpareBank 1 Capital Markets U.S. recipient”), in which case each such SpareBank 1 Capital Markets U.S. recipient of this report represents and agrees, by virtue of its acceptance thereof, that it is “major U.S. institutional investor” (as such term is defined in section (b)(4) of Rule 15a-6), or that it is a U.S. institutional investor (as such term is defined in section (b)(7) of Rule 15a-6), and that it understands the risks involved in executing transactions in such securities. In such cases, SpareBank 1 Capital Markets accepts responsibility for the content of this report; however, although it has accepted responsibility for the content of this report in such cases, SpareBank 1 Capital Markets did not contribute to the preparation of this report, and the specific authors of the report are not employed by, and are not associated persons of, SpareBank 1 Capital Markets. The SpareBank 1 Markets entity that prepared the report, and the authors of this report, may not be subject to all of the registration, qualification, disclosure, independence and other U.S. regulatory requirements that apply to SpareBank 1 Capital Markets and its employees and associated persons. Any SpareBank 1 Capital Markets U.S. recipient of this report that wishes to discuss or receive additional information regarding any security or issuer mentioned herein, or to engage in any transaction to purchase or sell or solicit or offer the purchase or sale of such securities, should contact a registered representative of SpareBank 1 Capital Markets.

Any transaction in the securities discussed in this report by U.S. persons (other than a registered U.S. broker-dealer or bank acting in a broker-dealer capacity) must be effected with or through SpareBank 1 Capital Markets.

The securities referred to in this report may not be registered under the U.S. Securities Act of 1933, as amended, and the issuer of such securities may not be subject to U.S. reporting and/or other requirements. Available information regarding the issuers of such securities may be limited, and such issuers may not be subject to the same auditing and reporting standards as U.S. issuers.

Such information is provided for informational purposes only and does not constitute a solicitation to buy or an offer to sell any securities under the Securities Act of 1933, as amended, or under any other U.S. federal or state securities laws, rules or regulations. The investment opportunities discussed in this report may be unsuitable for certain investors depending on their specific investment objectives, risk tolerance and financial position. In jurisdictions where SpareBank 1 Capital Markets is not registered or licensed to trade in securities, commodities or other financial products, transactions may be executed only in accordance with applicable law and legislation, which may vary in jurisdiction and which may require that a transaction be made in accordance with applicable exemptions from registration or licensing requirements.

The information in this publication is based on carefully selected sources believed to be reliable, but SpareBank 1 Capital Markets does not make any representation with respect to its completeness or accuracy. All opinions expressed herein reflect the author’s judgment at the original time of publication, without regard to the date on which you may receive such information, and are subject to change without further notice.

The information contained herein may include forward-looking statements as described above within the meaning of U.S. federal securities laws that are subject to risks and uncertainties. Factors that could cause a company’s actual results and financial condition to differ from expectations include, without limitation: political uncertainty, changes in general economic conditions that adversely affect the level of demand for the company’s products or services, changes in foreign exchange markets, changes in international and domestic financial markets and in the competitive environment, and other factors relating to the foregoing. All forward-looking statements contained in this report are qualified in their entirety by this cautionary statement.

Source: SB1M, TORG 38