Special Safer and Stronger Communities Overview and Scrutiny Committee

Date Thursday 13 November 2014 Time 10.00 am Venue and Fire and Rescue Authority Headquarters, Belmont Business Park, DH1 1TW

Business

Part A

Items during which the Press and Public are welcome to attend. Members of the Public can ask questions with the Chairman's agreement.

1. Apologies for Absence 2. Substitute Members 3. Declarations of Interest, if any 4. Any items from Co-opted Members or Interested Parties 5. Integrated Risk Management Plan (IRMP) 2015/16 to 2017/18 - Consultation: (Pages 1 - 36) (i) Report of the Deputy Chief Fire Officer, County Durham and Darlington Fire and Rescue Authority. (ii) Presentation by the Deputy Chief Fire Officer, County Durham and Darlington Fire and Rescue Authority (iii) Tour of the County Durham and Darlington Fire and Rescue Authority Headquarters. 6. Such other business as, in the opinion of the Chairman of the meeting, is of sufficient urgency to warrant consideration

Colette Longbottom Head of Legal and Democratic Services

County Hall Durham 5 November 2014

To: The Members of the Safer and Stronger Communities Overview and Scrutiny Committee

Councillor D Boyes (Chairman) Councillor T Nearney (Vice-Chairman)

Councillors J Armstrong, J Charlton, P Conway, J Cordon, S Forster, J Gray, D Hall, C Hampson, B Harrison, M Hodgson, G Holland, J Maitland, N Martin, J Measor, K Shaw, W Stelling, P Stradling, J Turnbull and C Wilson

Co -opted Members: Mr A J Cooke and Mr J Welch

Co -opted Employees/Officers: S Errington and Chief Superintendent G Hall

Contact: Martin Tindle Tel : 03000 269 713

Agenda Item 5

Safer and Stronger Communities Overview and Scrutiny Committee

13 November 2014

Integrated Risk Management Plan (IRMP) 2015/16 to 2017/18 Consultation

Report of Stuart Errington, Deputy Chief Fire Officer, County Durham & Darlington Fire & Rescue Authority

Purpose of the Report

1. To provide the Safer Stronger Communities Overview and Scrutiny Committee with background to the Fire Authority’s IRMP consultation for 2015/16 – 2017/18. The Committee will be provided with a presentation setting out details of the consultation and key issues for the Fire Authority going forward.

Background

2. The Fire and Rescue Service National Framework for (published in July 2012 by the Department of Communities and local Government) places a statutory responsibility on all Fire and Rescue Authorities to produce an IRMP.

3. The IRMP must be publicly available (currently on the County Durham and Darlington Fire and Rescue Service website, attached at Appendix 2) and cover at least a three year timescale. The Framework requires that an IRMP must also:

° Be regularly reviewed and reflect up to date risk information and evaluation of the outcomes of delivering our service; ° Identify and assess all foreseeable fire and rescue related risks that could affect the community; ° Have regard to existing analyses of risk to communities completed by partners such as Local and Regional Resilience Forums; ° Reflect effective consultation during its development and at all review stages with representatives of all sections of the community and those who have a stake in the local area; ° Demonstrate how prevention, protection and response activities will be best used to reduce the impact of risk on communities in a cost effective way; ° Provide details of how Fire and Rescue Authorities deliver their objectives and meet the needs of communities through working with partners.

4. The IRMP will be equality impact assessed to ensure County Durham and Darlington Fire and Rescue Service’s activities and proposals satisfy the requirements of equality legislation.

Page 1

5. The Fire Authority has a statutory duty to consult on the contents of its IRMP. The views of all relevant stakeholders will be considered by the Authority before it finalises the IRMP for the three year period. .

6. The consultation on the IRMP will include Area Action Partnerships, Parish and Town Councils, Service Personnel and Social Media as in previous years. The Authority is also holding a number of specific consultation events in the areas most impacted by the potential changes.

7. The consultation period commenced on 28 July and ends on 01 December 2014.

The 2015/16 – 2017/18 IRMP

8. The format and content of the IRMP reflects the requirements of the Fire and Rescue Service National Framework and is focused on the public as the main recipient of the information it contains. This IRMP consultation covers the Authority’s second phase of Service Transformation.

9. The IRMP will set out how the Authority will implement a number of cost saving measures whilst mininimsing the impact on the local communities, including:

• Sharing fire stations with our partners; • Responding to specific medical emergencies with trained firefighters in support of the North East Ambulance Service; • Changing the crewing arrangements for the Arial Ladder Platform at Darlington; • Reviewing the number of emergency response fire officers we employ; • Reviewing the staffing model at Fire Station.

FUTURE IRMP’s

10. In addition to setting out the options covering the period 2015/16 – 2017/18 the Authority will also publish an annual action plan providing details of the individual options being taken forward each year throughout the three year period.

Recommendations

11. Members are requested to

(i) Consider and note the content of the IRMP consultation for 2015/16 – 2017/18which will be presented at the meeting. (ii) Provide feedback on the IRMP for 2015/16 – 2017/18.

Contact: Michael Pearson, Organisational Development , County Durham & Darlington Fire and Rescue Authority Tel: 0191 375 5661 E-mail: [email protected]

Page 2

Appendix 1: Implications

Finance – None

Staffing – None

Risk - None

Equality and Diversity / Public Sector Equality Duty – None

Accommodation - None

Crime and Disorder – None

Human Rights – None

Consultation – Outcomes from this report and presentation will raise Members awareness of the Fire Authority’s consultation on its Integrated Risk Management Plan.

Procurement – None

Disability Issues – None

Legal Implications – None

Page 3 This page is intentionally left blank

Page 4 Appendix 2

6DIHVW3HRSOH6DIHVW3ODFHV

7KUHH\HDUVWUDWHJLFSODQ  &RQVXOWDWLRQGRFXPHQW

2XUWKUHH\HDUVWUDWHJLFSODQKLJKOLJKWVWKHNH\ULVNVDQGFKDOOHQJHV ZHIDFHZLWKLQ&RXQW\'XUKDPDQG'DUOLQJWRQDQGKRZZHLQWHQGWRPage 5 DOLJQRXUUHVRXUFHVWRWKRVHULVNVRYHUWKHQH[WWKUHH\HDUV 6DIHVW3HRSOH6DIHVW3ODFHV

&RQWHQWV

:HOFRPHDQGIRUHZRUG  

.HHSLQJFRPPXQLWLHVVDIH   2XUSULRULWLHV   ,GHQWLI\LQJDQGDVVHVVLQJULVNV   7KHULVNVZHIDFH   5LVNVLQVSHFLILFDUHDV   $GGUHVVLQJWKHULVNV±SUHYHQWLRQSURWHFWLRQDQGUHVSRQVH 

3HUIRUPDQFH  

$VVXUDQFH   2SHUDWLRQDODVVXUDQFH   )LQDQFLDODQGJRYHUQDQFHDVVXUDQFH  

)LQDQFH   7KHILQDQFLDOFKDOOHQJH   (IILFLHQF\   +RZWKH)LUH$XWKRULW\LVIXQGHG   2XUPHGLXPWHUPILQDQFLDOSODQ   (VWDWHVLPSURYHPHQWSURJUDPPH  

&RQVXOWDWLRQ  

 7KUHH

:HOFRPH DQGIRUHZRUG

:HOFRPHWRWKHFRQVXOWDWLRQGRFXPHQWRQRXUODWHVWWKUHH\HDUVWUDWHJLF SODQZKLFKH[SODLQVKRZZHVHUYHWKHSHRSOHRI&RXQW\'XUKDPDQGWKH %RURXJKRI'DUOLQJWRQVHWVRXWWKHNH\ULVNVDQGFKDOOHQJHVZHIDFHDQG KRZZHLQWHQGWRDOORFDWHRXUUHVRXUFHVWRPHHWWKRVHULVNV

5HGXFWLRQVLQFHQWUDOJRYHUQPHQWIXQGLQJRYHUWKHSDVWIRXU\HDUVKDYH 6XVDQ-RKQVRQ PHDQWZHKDYHKDGWRILQGRYHU PRIVDYLQJVIURPRXUEXGJHWVLQFH &KLHI([HFXWLYH $FKLHYLQJWKHVHVDYLQJVKDVPHDQWPDNLQJVLJQLILFDQWFKDQJHVWR &RXQW\'XUKDPDQG'DUOLQJWRQ KRZZHGHOLYHURXUVHUYLFH+RZHYHUVRIDUZHKDYHEHHQDEOHWRGR )LUHDQG5HVFXH$XWKRULW\ WKLVZLWKRXWLQFUHDVLQJULVNLQORFDOFRPPXQLWLHV

/RRNLQJDKHDGWKHQH[WWKUHH\HDUVDUHOLNHO\WREHHYHQPRUH FKDOOHQJLQJDVZHZLOOQHHGWRILQGDIXUWKHU PRIVDYLQJVWRPHHW WKHH[SHFWHGUHGXFWLRQVLQJRYHUQPHQWIXQGLQJ7KHRSWLRQVZHKDYH DYDLODEOHWREDODQFHWKHEXGJHWIRUWKHILUHDQGUHVFXHVHUYLFHZLOOEH LQFUHDVLQJO\GLIILFXOWWRLPSOHPHQWPHDQLQJZHQHHGWRWKLQNGLIIHUHQWO\ DERXWKRZZHGHOLYHUVHUYLFHVDFURVV&RXQW\'XUKDPDQGWKH%RURXJK RI'DUOLQJWRQ

'HOLYHULQJRQRXUYLVLRQRI6DIHVW3HRSOH6DIHVW3ODFHVUHPDLQVWKH IRFXVRIRXUZRUNDQGWKH$XWKRULW\KDVSURGXFHGWKLVSODQWRHQDEOH &RXQFLOORU0LFKHOH+RGJVRQ ORFDOSHRSOHWRVHHKRZWKHLUILUHDQGUHVFXHVHUYLFHZLOOZRUNZLWKWKHP &KDLU&RXQW\'XUKDPDQG DQGZLWKSDUWQHURUJDQLVDWLRQVWRHQVXUHWKDWORFDOFRPPXQLWLHVDUH 'DUOLQJWRQ)LUHDQG5HVFXH VDIHGHVSLWHWKHILQDQFLDOFKDOOHQJHV $XWKRULW\

7KUHH

$ 6DIHVW3HRSOH6DIHVW3ODFHV 6XQGHUODQG %XUQRSILHOG Page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y VKLIW LPPHGLDWHKRXUUHVSRQVHXVLQJ :KHDWOH\ :LOOLQJWRQ &UR[GDOH +LOO IXOOWLPHILUHILJKWHUV :ROVLQJKDP 6KHUDWRQ y  'D\FUHZHG LPPHGLDWHGD\WLPHUHVSRQVHXVLQJ  7ULPGRQ IXOOWLPHILUHILJKWHUV0RQGD\WR)ULGD\ZLWKDQRQ &URRN $ FDOOUHVSRQVHXVLQJSDUWWLPHILUHILJKWHUVDWQLJKW 6SHQQ\PRRU DQGZHHNHQGV +DUZRRG &RUQIRUWK +DUWOHSRRO y 'D\FUHZLQJSOXV LPPHGLDWHGD\WLPHUHVSRQVH /DQJGRQ%HFN (VFRPE %LVKRS0LGGOHKDP ZLWKIXOOWLPHILUHILJKWHUVRQFDOOIURP (WWHUVJLOO 5HGIRUG +DPVWHUOH\ DFFRPPRGDWLRQQH[WWRWKHVWDWLRQDWQLJKW 6HGJHILHOG %LVKRS$XFNODQG &KLOWRQ  $ y 5HWDLQHG RQFDOOSDUWWLPHILUHILJKWHUVSURYLGLQJD 1HZELJJLQ  UHVSRQVHZLWKLQILYHPLQXWHV 0RUOH\ %XWWHUNQRZOH 6KLOGRQ 0RUGRQ 0LGGOHWRQLQ7HHVGDOH 2XUIOHHW LQFOXGHV  (JJOHVWRQ (YHQZRRG   &RFNILHOG $ y IURQWOLQHILUHHQJLQHV 1HZWRQ$\FOLIIH 7KULQJDUWK 0LFNOHWRQ $ y DHULDOODGGHUSODWIRUPV +HLJKLQJWRQ 5RPDOGNLUN %RODP *UHDW6WDLQWRQ y VSHFLDOLVWYHKLFOHV 6WDLQGURS y WDUJHWHGUHVSRQVHYHKLFOHV &RWKHUVWRQH %LVKRSWRQ *UDRQVR¶WK¶%HFN 6WDLQWRQ y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

 7KUHH

:HSURYLGH DQHIILFLHQW DQG HIIHFWLYH HPHUJHQF\ UHVSRQVH VHUYLFH

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y 3URWHFWSHRSOHDQGSURSHUWLHV SURILOHIRU&RXQW\'XUKDPDQG DQGORZHFRQRPLFDFWLYLW\ DQGSUHYHQWLQFLGHQWVIURP 'DUOLQJWRQDQGE\XQGHUVWDQGLQJ 'HVSLWHUHDOLPSURYHPHQWVLQ KDSSHQLQJ RXUORFDODUHDZHFDQGHWHUPLQH UHFHQW\HDUVHGXFDWLRQDO y ,QYHVWLQWKHSHRSOHZKRZRUN ZKHUHZHQHHGWRDOORFDWH DWWDLQPHQWLVEHORZWKHQDWLRQDO IRUXVWRHQVXUHZHJHWWKH UHVRXUFHVLQRUGHUWRPLWLJDWH DYHUDJH0DQ\SDUWVRIWKHDUHD EHVWFRQWULEXWLRQIURPWKHP WKHVHULVNV DOVRKDYHKRXVLQJVWRFNWKDWLV y &RQWLQXHWRLPSURYHRXU VXEVWDQGDUGIDOOLQJEHORZ VHUYLFHLQDVXVWDLQDEOHZD\ DFFHSWHGGHFHQF\OHYHOV WKDWRIIHUVYDOXHIRUPRQH\

 7KUHH

7KUHH

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

 7KUHH

5LVNRIWHUURULVW DFWLYLW\

(YHQWVRYHUWKHODVWIHZ\HDUV ERWKDWKRPHDQGDEURDGKDYH LQFUHDVHGWKHULVNRIWHUURULVW DFWLYLW\LPSDFWLQJRQRXUVRFLHW\ 7KH)LUHDQG5HVFXH6HUYLFHSOD\V DPDMRUUROHLQSURWHFWLQJWKH FRPPXQLW\LQWKHHYHQWRIVXFK DQLQFLGHQWDQGDORQJZLWKWKH RWKHUEOXHOLJKWVHUYLFHV FRQWULEXWHVVLJQLILFDQWO\WRWKH SODQQLQJDQGWUDLQLQJIRUVXFK HYHQWV

7KUHH

5LVNVLQVSHFLILFDUHDV

:HDUHDZDUHWKDWWKHUHDUHGLIIHUHQWULVNVVSHFLILFWRFHUWDLQSDUWVRIRXUDUHD:HPDQDJHWKHVHULVNVWKURXJK RXUGLVWULFWVWUXFWXUHDQGORFDOULVNSODQVZKLFKHQDEOHXVWRWDUJHWRXUUHVRXUFHVEDVHGRQORFDONQRZOHGJHDQG LQWHOOLJHQFH

:HDUDQG7HHV 'HUZHQWVLGH 'DUOLQJWRQGLVWULFW GLVWULFW GLVWULFW 'DUOLQJWRQDQG %LVKRS$XFNODQG &RQVHWWDQG+LJK %DUQDUG&DVWOHILUH 6WDQKRSHDQG +DQGHQKROGILUH VWDWLRQV

0LGGOHWRQLQ7HHVGDOH VWDWLRQV 'DUOLQJWRQLVDODUJHPDUNHWWRZQ ILUHVWDWLRQV ZLWKDSRSXODWLRQRI 7KHVSHFLILFULVNVLGHQWLILHGZLWKLQ DSSUR[LPDWHO\UHVLGHQWV WKH'HUZHQWVLGHGLVWULFWDUHD 7KH'DUOLQJWRQDUHDFRPSULVHV 7KH:HDUDQG7HHVGLVWULFWDUHDLV UHODWHWRDVLJQLILFDQWOHYHORI ODUJHVFDOHLQGXVWULDOFRPPHUFLDO ORFDWHGLQWKHKHDUWRIRXUDUHD VRFLDOGHSULYDWLRQ7KHDUHD DQGUHVLGHQWLDODUHDVUHVXOWLQJLQ 7KHUHLVDPL[RILQGXVWULDO DURXQG&RQVHWWKDVVHHQDODUJH DEURDGPL[RIULVNV7KHUHDUHD FRPPHUFLDOUHVLGHQWLDODQGUXUDO LQFUHDVHLQWKHQXPEHURIQHZ ODUJHQXPEHURI+RXVHVLQ DUHDVWKDWUHSUHVHQWDYDULHG KRPHVEXLOWDQGVXSSRUWLQJ 0XOWLSOH2FFXSDWLRQ +L02 DQG UDQJHRIULVNVWKDWQHHGWREH DPHQLWLHVJLYLQJWKHDUHDDYDULHG VHYHUDOODUJHVRFLDOKRXVLQJ PDQDJHGHIIHFWLYHO\7KLVLQFOXGHV ULVNSURILOH7KHDUHDDOVRLQFOXGHV HVWDWHV7KH$0PRWRUZD\UXQV DQXPEHURIODUJHLQGXVWULDO WKHODUJHVWRSHQDLUPXVHXPLQ WKURXJKWKH'DUOLQJWRQDUHDDQG HVWDWHVZDWHUULVNVUHODWLQJ (XURSHDW%HDPLVK/RFDOLQGXVWU\ WKH(DVW&RDVWPDLQOLQHSDVVHV VSHFLILFDOO\WR6WDQKRSHDQG FRQVLVWVRIWUDGLWLRQDOOLJKW WKURXJKWKHWRZQVHUYLQJDPDMRU 0LGGOHWRQDQXPEHURIEXV\ $  HQJLQHHULQJDQGPRUHPRGHUQ UDLOVWDWLRQ%DUQDUG&DVWOHLV URDGVDQGDQXPEHURIODUJH VHUYLFHLQGXVWU\VLWHV SUHGRPLQDQWO\UXUDOZLWKVPDOO VRFLDOKRXVLQJHVWDWHVWKDWGRQRW VFDOHUHVLGHQWLDODUHDVDKRVSLWDO PHHWPRGHUQVWDQGDUGV DQGD\RXQJRIIHQGHU VSULVRQ $OVRORFDWHGZLWKLQWKHWRZQLV %RZHV0XVHXPDPDMRUKHULWDJH VLWHKRXVLQJPDQ\LPSRUWDQW ZRUNVRIDUW7KHWRZQLVDOVR KRPHWRDODUJHVFDOH SKDUPDFHXWLFDOSURGXFWLRQVLWH

 7KUHH

7KUHH

KRPHILUHVDIHW\FKHFNV FDUULHGRXW

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y $UHRYHU\HDUVRIDJH HDFK\HDU+RZHYHULWPD\ y /LYHDORQH EHFRPHPRUHGLIILFXOWWRVXVWDLQ y +DYHPHQWDOKHDOWKLVVXHV WKHVHOHYHOVVKRXOGWKHUHGXFWLRQV y 6XIIHUPRELOLW\RUKHDULQJORVV LQJRYHUQPHQWIXQGLQJFRQWLQXH LVVXHV y +DYHDOFRKRORUGUXJ GHSHQGHQF\ y 6PRNH y +DYHDOHDUQLQJGLVDELOLW\

 7KUHH

5HGXFLQJURDG 5HGXFLQJ 3URWHFWLQJ\RXQJ WUDIILFFROOLVLRQV GHOLEHUDWHILUHV SHRSOH

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

7KUHH

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

 7KUHH

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

7KUHH

3HUIRUPDQFH

$FFRXQWDELOLW\WR $OORIRXUILQDQFLDODQGSHUIRUPDQFHLQIRUPDWLRQLVDYDLODEOHYLDWKH ZHEVLWHZZZGGILUHJRYXN ORFDOFRPPXQLWLHV

:HDUHFRPPLWWHGWRVKDULQJWKH LQIRUPDWLRQZHKROGLQUHODWLRQWR ULVNVIDFLQJORFDOFRPPXQLWLHVDQG EXVLQHVVHVVRWKDWZHFDQOHDUQ IURPWKHH[SHULHQFHVRISHRSOH ZKROLYHDQGZRUNLQRXUDUHD

,QRUGHUWRHQVXUHWKDWWKH LQIRUPDWLRQZHSXEOLVKLV DFFHVVLEOHZHPDNHLWDYDLODEOHRQ RXUZHEVLWH:HDOVRSURYLGH VSHFLILFGRFXPHQWVLQRWKHU IRUPDWVVKRXOGWKH\EH UHTXHVWHG

'HFLVLRQPDNLQJ

2XU)LUH$XWKRULW\PHHWLQJ LQIRUPDWLRQDQGUHSRUWVDUHDOVR DYDLODEOHRQOLQHDQGPHPEHUVRI WKHSXEOLFDUHZHOFRPHWRDWWHQG )LUH$XWKRULW\PHHWLQJVDV REVHUYHUVWRVHHKRZZHPDQDJH WKH6HUYLFH

 7KUHH

$VDQHPHUJHQF\VHUYLFHLWLV H[WUHPHO\LPSRUWDQWWKDWZH UHJXODUO\UHYLHZRXUSHUIRUPDQFH DFURVVDUDQJHRIPHDVXUHV:H ORRNFORVHO\DWSHUIRUPDQFH WUHQGVWRVHHKRZZHOOZHDUH GRLQJDQGZHFRPSDUHRXU SHUIRUPDQFHDJDLQVWRWKHUILUH DQGUHVFXHVHUYLFHVRQDUHJXODU EDVLV7KHIROORZLQJVHFWLRQVHWV RXWDVQDSVKRWRIRXU SHUIRUPDQFHLQDQXPEHURINH\ DUHDV)XUWKHULQIRUPDWLRQLV DYDLODEOHIURPWKHZHEVLWHRUE\ FRQWDFWLQJXV

$FFLGHQWDOKRXVH   ILUHV      $FFLGHQWDOKRXVHILUHVDUHORZHU   WKDQILYH\HDUVDJRGXHWRRXU LQFUHDVHGSUHYHQWLRQZRUN  IRFXVVLQJRQKRPHILUHVDIHW\  YLVLWVSDUWLFXODUO\WDUJHWLQJWKRVH PRVWYXOQHUDEOHDQGDWULVN  +RZHYHUWKH\UHPDLQDSULRULW\ DUHDIRUXV     

1XPEHURIDFFLGHQWDOKRXVHILUHV +RPHILUHVDIHW\ YLVLWV   7KHQXPEHURIKRPHILUHVDIHW\  YLVLWVZKLFKDUHFDUULHGRXWE\    RXUILUHILJKWHUVKDVLQFUHDVHG VLJQLILFDQWO\RYHUWKHODVWIHZ  \HDUVDVWKHFKDQJHVZHKDYH   LQWURGXFHGWRZRUNURXWLQHVKDYH  LPSURYHGWKHDPRXQWRI  SURGXFWLYHWLPHDYDLODEOH0RUH WKDQRIWKHYLVLWVXQGHUWDNHQ  DUHFDUULHGRXWLQKLJKULVNDUHDV  RULQYROYHYXOQHUDEOHSHRSOH7KLV LQFUHDVHLQSHUIRUPDQFHKDVKDG      DGLUHFWLPSDFWRQGULYLQJGRZQ ILUHVLQSHRSOH VKRPHV 1XPEHURIKRPHILUHVDIHW\FKHFNVXQGHUWDNHQ

7KUHH

,QMXULHVWRWKH 

SXEOLFLQDFFLGHQWDO    KRXVHILUHV     :KLOVWZHKDYHUHGXFHGWKH QXPEHURIDFFLGHQWDOKRXVHILUHV  WKHQXPEHURILQMXULHVWRWKH   SXEOLFKDVUHPDLQHGJHQHUDOO\ VWDWLF:HDQDO\VHWKH  FLUFXPVWDQFHVZKHUHLQMXULHVDUH  RFFXUULQJDQGZHZLOOFRQWLQXHWR XVHWKLVLQIRUPDWLRQWRLQIRUPWKH SUHYHQWLRQZRUNWKDWZH      XQGHUWDNHLQIXWXUH\HDUVWR 1XPEHURIKRXVHILUHLQMXULHV UHGXFHLQMXULHVIURPILUHLQWKH KRPH

+RXVHILUHIDWDOLWLHV

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

 7KUHH

1RQGRPHVWLF 

SURSHUW\ILUHV  

   7KHVHILJXUHVLQFOXGHILUHVLQ   SXEOLFFRPPHUFLDODQGLQGXVWULDO  SUHPLVHV$OWKRXJKRXU  SHUIRUPDQFHKDVLPSURYHGRYHU WKHODVWILYH\HDUVZHDLPWR  FRQWLQXHWRLPSURYHRXU  SHUIRUPDQFHLQWKLVNH\DUHDDV WKLVW\SHRIILUHFDQKDYHD      VLJQLILFDQWLPSDFWRQRXUORFDO HFRQRP\ 1RQGRPHVWLFSURSHUW\ILUHV

)LUHVDIHW\DXGLWV    %\LQWURGXFLQJQHZZRUNLQJ URXWLQHVRQILUHVWDWLRQVDQG     WUDQVIHUULQJZRUNWRIURQWOLQH   ILUHILJKWHUVZHKDYHEHHQDEOHWR GHOLYHUDVLJQLILFDQWLQFUHDVHLQ  WKHQXPEHURISUHPLVHVUHFHLYLQJ  DILUHVDIHW\DXGLWGHVSLWHD UHGXFWLRQLQWKHQXPEHURI      FHQWUDOO\EDVHGILUHVDIHW\VWDII 1XPEHURIILUHVDIHW\DXGLWV ILYH\HDUWUHQGV

7KUHH

7KHZHWVXPPHURIOHG WRDQXQXVXDOO\ORZQXPEHU RIVPDOOILUHVWKDW\HDU

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

7KHUHLVDUHFRJQLVHGOLQN EHWZHHQGHOLEHUDWHO\VHWVPDOO ILUHVDQGRWKHUIRUPVRIDQWLVRFLDO EHKDYLRXU5HVHDUFKKDVVKRZQ WKDWDGLVSURSRUWLRQDWHQXPEHURI GHOLEHUDWHILUHVDUHVWDUWHGE\ FKLOGUHQDQG\RXQJSHRSOH WKHUHIRUHHGXFDWLRQDQG HQJDJHPHQWZLWKWKLVJURXSLV NH\WRUHGXFLQJWKHVHLQFLGHQWV

 7KUHH

(PHUJHQF\UHVSRQVHVWDQGDUGV   2XUHPHUJHQF\UHVSRQVHVWDQGDUGVVHWRXWKRZTXLFNO\ZHDLPWRUHVSRQGWRFHUWDLQW\SHVRIHPHUJHQF\ LQFLGHQWV

7KHVWDQGDUGVUHODWHWRWKHWLPHLWWDNHVWRJHWWKHILUVWILUHDSSOLDQFHWRWKHVFHQHIURPWKHWLPHLWLVDOHUWHGE\ RXU)LUH&RQWURO&HQWUH

&XUUHQWUHVSRQVHUDWHV   5HVSRQVHVWDQGDUG      WDUJHW DFWXDO

RIKRXVHILUHVDWWHQGHGZLWKLQPLQXWHV      

RIKRXVHILUHVDWWHQGHGZLWKLQPLQXWHV      

RIQRQGRPHVWLFSURSHUW\ILUHVDWWHQGHGZLWKLQPLQXWHV    

RIQRQGRPHVWLFSURSHUW\ILUHVDWWHQGHGZLWKLQPLQXWHV    

RIURDGWUDIILFFROOLVLRQVDWWHQGHGZLWKLQPLQXWHV     

RIURDGWUDIILFFROOLVLRQVDWWHQGHGZLWKLQPLQXWHV     

$FKLHYHPHQWRIRXUUHVSRQVHVWDQGDUGVKHOSVXVWRPDLQWDLQDQH[FHOOHQWUHVSRQVHVHUYLFHWRRXUORFDO FRPPXQLWLHV,IWKH6HUYLFHLVWRFRQWLQXHWRPHHWWKHVHVWDQGDUGVRYHUWKHPHGLXPWHUPZHQHHGWRFRQVLGHU GLIIHUHQWZD\VRIZRUNLQJJLYHQWKHDQWLFLSDWHGRQJRLQJUHGXFWLRQVLQIXQGLQJ

7KUHH

2XURSHUDWLRQDOVWDIIDUH WUDLQHGWRH[FHSWLRQDOO\ KLJKVWDQGDUGV

$VVXUDQFH

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

 7KUHH

)LQDQFHDQGUHVRXUFHV

7KHILQDQFLDO LPSOHPHQWHGWKHYDVWPDMRULW\RI ([DPSOHVRIKRZZHKDYH WKHFRVWVDYLQJVPHDVXUHV DFKLHYHGDQH[WUHPHO\HIILFLHQW FKDOOHQJH LGHQWLILHGDVEHVWSUDFWLFH VHUYLFHPRGHOLQFOXGH GHPRQVWUDWLQJWKDWRXUILUHDQG :HDUHIDFLQJWKHPRVWVLJQLILFDQW UHVFXHVHUYLFHLVDOUHDG\OHDQDQG y 2SHUDWLRQDOVWDIIDJUHHLQJWR ILQDQFLDOFKDOOHQJHLQRXUKLVWRU\ HIILFLHQW DOWHUWKHVKLIWV\VWHPVWR DVDILUHDQGUHVFXHDXWKRULW\2XU VKRUWHQQLJKWVKLIWVDQG FHQWUDOJRYHUQPHQWIXQGLQJKDV 2XUFUHZLQJDUUDQJHPHQWVDQG UHPRYLQJQRQSURGXFWLYHWLPH EHHQFXWE\VLQFH VKLIWV\VWHPVDUHDPRQJVWWKH PHDQLQJDUHGXFWLRQLQWKH PRVWHIILFLHQWLQWKHFRXQWU\ y 5HGXFHGFUHZLQJRQPXOWL PRQH\ZHKDYHWRSURYLGH GHVSLWHKDYLQJVRPHRIWKH SXPSVWDWLRQV VHUYLFHVRI 0EHWZHHQ EXVLHVWILUHDSSOLDQFHVQDWLRQDOO\ y ,QWURGXFLQJQHZGXW\V\VWHPV DQG ZLWKVRPHVWDWLRQVFRYHULQJDUHDV RQORZHUFDOOYROXPHVWDWLRQV WZLFHWKHQDWLRQDODYHUDJH:H 6RIDUZHKDYHEHHQDEOHWR DOVRKDYHDYHU\OHDQVXSSRUW y ,QWURGXFLQJDQQXDOLVHGKRXUV UHGXFHRXUFRVWVE\SURYLGLQJ VWDIIDQGPDQDJHPHQWVWUXFWXUH IRUDOORSHUDWLRQDOVWDII VHUYLFHVLQGLIIHUHQWZD\VZLWKRXW  LQFUHDVLQJULVNLQORFDO :HDOZD\VVWULYHWRLGHQWLI\QHZ y ,QWURGXFLQJVHOIURVWHULQJIRU FRPPXQLWLHV ZD\VRIZRUNLQJWKDWGRQRW GD\FUHZLQJVWDWLRQV LQFUHDVHULVNLQORFDO y 5HVSRQGLQJWRVPDOOILUHVXVLQJ FRPPXQLWLHV+RZHYHUWKLVLV (IILFLHQF\ VPDOOHUILUHDSSOLDQFHV EHFRPLQJPRUHDQGPRUH :HKDYHLPSOHPHQWHGVLJQLILFDQW GLIILFXOWSDUWLFXODUO\DVWKH y ,QWURGXFLQJDPL[HGFUHZLQJ FKDQJHVLQWKHZD\ZHSURYLGHDOO PDMRULW\RIRXUVHUYLFHVDUH DUUDQJHPHQWDOORZLQJIXOODQG RIRXUVHUYLFHVRYHUDQXPEHURI VWDWXWRU\DQGEHFDXVHRXUVHUYLFH SDUWWLPHVWDIIWRZRUN \HDUV:HKDYHDOUHDG\ PRGHOLVDOUHDG\YHU\HIILFLHQW WRJHWKHUPRUHHIIHFWLYHO\

7KUHH

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

+RZWKHPRQH\LVVSHQW 

 (PSOR\HHV 

 3UHPLVHV 

 7UDQVSRUW 

6XSSOLHVDQG   VHUYLFHV

&DSLWDO   )LQDQFLQJ

 &RQWLQJHQFLHV 

 7KUHH

$WDWLPHZKHQWKHIXWXUHLVVR 7RWDOJRYHUQPHQWIXQGLQJ    XQFHUWDLQLWLVLPSRUWDQWWKDWZH KDYHDPHGLXPWHUPILQDQFLDO /RFDOQRQGRPHVWLFUDWHVLQFRPH    SODQLQSODFH7KLVZLOODOORZXVWR &RXQFLOWD[LQFRPH    ZRUNWRZDUGVEDODQFLQJWKH EXGJHWRYHUWKHPHGLXPWHUP 7RWDOIXQGLQJ    WDNLQJDFFRXQWRIRXU H[SHFWDWLRQVRIIXWXUHFHQWUDODQG ORFDOIXQGLQJ 7RWDOQHWVSHQG   

2XUPHGLXPWHUPILQDQFLDOSODQ /HVVVDYLQJVDOUHDG\LGHQWLILHG    IRUWRLVVHWRXW EHORZ:HKDYHDVVXPHGWKDW 5HYLVHGWRWDOQHWVSHQG    y IXQGLQJUHGXFWLRQVIRU ZLOOEHDQDYHUDJHRIWKH )XQGLQJJDS    SUHYLRXVWZR\HDUV y SD\DZDUGVZLOOEHHDFK \HDU y FRXQFLOWD[LQFUHDVHVE\ HDFK\HDU

7KUHH

(VWDWHVLPSURYHPHQWSURJUDPPH

'HVSLWHWKHFKDOOHQJHVRI :HKDYHVKDUHGRXUILUHVWDWLRQLQ UHGXFWLRQVLQUHYHQXHEXGJHWV 'DUOLQJWRQZLWKWKH1RUWK(DVW SUXGHQWILQDQFLDOSODQQLQJKDV $PEXODQFH6HUYLFHIRUVHYHUDO HQDEOHGWKH$XWKRULW\WRLQYHVWLQ \HDUV)URPWKLV\HDUDPEXODQFH PRGHUQLVLQJILUHVWDWLRQVWUDLQLQJ FUHZVZLOODOVRRSHUDWHIURPRXU IDFLOLWLHVDQGSURYLGLQJDILWIRU ILUHVWDWLRQLQ0LGGOHWRQLQ SXUSRVHKHDGTXDUWHUVEXLOGLQJ 7HHVGDOH

6HYHUDORIWKHSURMHFWVKDYH ,QZHHVWDEOLVKHGWKHILUVW DOUHDG\EHHQGHOLYHUHGZLWKD MRLQWILUHSROLFHVWDWLRQLQ1HZWRQ QXPEHURIRWKHUVLQWKHEXLOG $\FOLIIH SKDVH7KH\UHSUHVHQWSDUWRID ZLGHUSURJUDPPHRIFROODERUDWLRQ :HDUHZRUNLQJZLWK'XUKDP WKDWZLOOGHOLYHUVLJQLILFDQW &RQVWDEXODU\WRRSHQDMRLQW ILQDQFLDOVDYLQJVDQGRSHUDWLRQDO )LUH3ROLFH7UDLQLQJ&HQWUHLQ LPSURYHPHQWVDVZHOODVUHDO WKDWZLOOEHWUXO\LQQRYDWLYH EHQHILWVWRORFDOFRPPXQLWLHV DQGSRVVLEO\WKHILUVWRILWVNLQGLQ 7KHSURJUDPPHVXSSRUWVWKH WKH8. *RYHUQPHQW¶VSROLF\GLUHFWLRQ DURXQGLQFUHDVHGFROODERUDWLRQ :HDUHVHHNLQJJRYHUQPHQW DQGLQWHJUDWLRQRIHPHUJHQF\ IXQGLQJWRGHOLYHULPSURYHPHQWV VHUYLFHVDQGDOORZVHIILFLHQFLHVWR WRVHYHUDORIRXUILUHVWDWLRQVWKDW EHUHDOLVHGZLWKRXWUHGXFLQJ DUHQRORQJHUILWIRUSXUSRVH IURQWOLQHVHUYLFHV

 7KUHH

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y %DUQDUG&DVWOH )LUH LQVHFXULQJJRYHUQPHQWIXQGLQJ RXUFRPPXQLWLHV7REHWWHU 3ROLFH$PEXODQFHDQG WREXLOGDMRLQWILUHSROLFHWUDLQLQJ XQGHUVWDQGWKHYLHZVRISHRSOH 0RXQWDLQ5HVFXH FHQWUHDW%RZEXUQ'XHWRRSHQ OLYLQJDQGZRUNLQJLQ&RXQW\ y 6WDQKRSH )LUHDQG LQWKHVKDUHGIDFLOLW\ 3ROLFH 'XUKDPDQG'DUOLQJWRQZHDUH UHSUHVHQWVDWUXO\LQQRYDWLYH y &URRN )LUHDQG3ROLFH  VHHNLQJWKHYLHZVRIORFDOSHRSOH DSSURDFKWRWUDLQLQJWKH y 6HGJHILHOG )LUHDQG RXUVWDIISDUWQHUVDQGRWKHU HPHUJHQF\VHUYLFHVDQGLV $PEXODQFH VWDNHKROGHUVRQWKHIROORZLQJ EHOLHYHGWREHWKHILUVWRILWVNLQG SURSRVDOV LQWKHFRXQWU\

7KUHH

3URSRVDOWZRH[SDQGWKHUROHRIRXUILUHILJKWHUVWRLQFOXGH UHVSRQGLQJWRVSHFLILFPHGLFDOHPHUJHQFLHV

,QUHFHQW\HDUVZHKDYH &RUHVSRQGHUILUHILJKWHUVZLOOEH VXFFHVVIXOO\UHGXFHGWKHQXPEHU ILUVWDQGIRUHPRVW&RXQW\ 4 'R\RXVXSSRUWRXU RIILUHVDQGRWKHUHPHUJHQFLHV 'XUKDPDQG'DUOLQJWRQ)LUHDQG LQWHQWLRQWRKDYH WKDWRXUILUHILJKWHUVDUHFDOOHGWR 5HVFXH6HUYLFHHPSOR\HHV7KH DSSURSULDWHO\WUDLQHG DWWHQG+RZHYHUWKHQXPEHURI SULRULW\LVWRHQVXUHRXUILUH ILUHILJKWHUVUHVSRQGWR PHGLFDOHPHUJHQFLHVWKDWRXU VWDWLRQVPDLQWDLQDGHTXDWH VSHFLILFPHGLFDO FROOHDJXHVLQWKH1RUWK(DVW HPHUJHQF\UHVSRQVHFRYHUDQGLI HPHUJHQFLHVLQVXSSRUW $PEXODQFH6HUYLFH 1($6 DWWHQG VXIILFLHQWFRYHULVDYDLODEOHWKHQ RIWKH1RUWK(DVW HDFK\HDUKDVLQFUHDVHG DILUHILJKWHUPD\FRUHVSRQGWR $PEXODQFH6HUYLFH VLJQLILFDQWO\SODFLQJJUHDWHU PHGLFDOHPHUJHQFLHVVXFKDV 1($6 " GHPDQGRQWKHLUHPHUJHQF\ y UHVSRQGHUV &DUGLDFDUUHVW y 6HULRXVXQFRQWUROODEOH EOHHGLQJ 2XUILUHILJKWHUVDOUHDG\ZRUN y %UHDWKLQJGLIILFXOWLHV FORVHO\ZLWKRXU1($6FROOHDJXHV y 8QFRQVFLRXVSDWLHQW DQGWUDLQUHJXODUO\VRZHFDQ y &KRNLQJ SURYLGHDQH[FHOOHQWVHUYLFHZKHQ y 6LJQVRIVKRFN DWWHQGLQJHPHUJHQFLHVWRJHWKHU y 'LDEHWLFHSLOHSWLF 2XUSULRULW\KDVDOZD\VEHHQ HPHUJHQF\ DERXWSXWWLQJWKHSDWLHQWILUVWDQG y 6XVSHFWHGVWURNH WKLV$XWKRULW\KDVLQYHVWHGLQ y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

 7KUHH

7KLV$XWKRULW\FXUUHQWO\PDLQWDLQV 7KH$/3EDVHGDW'DUOLQJWRQILUHVWDWLRQDWWHQGVDURXQGFDOOVSHU WZRVSHFLDOLVWYHKLFOHVFDOOHG \HDUDFURVVWKH&RXQW\'XUKDPDQG'DUOLQJWRQDUHDDQGDOVRSURYLGHV $HULDO/DGGHU3ODWIRUPV $/3 WKDW VXSSRUWWRRXUQHLJKERXULQJILUHDQGUHVFXHVHUYLFHVLQ1RUWK

$Q$/3KDVWKHFDSDELOLW\RI UHDFKLQJIORRUVLQEXLOGLQJVZKLFK DUHKLJKHUWKDQWKHODGGHUV FDUULHGRQRXUILUHDSSOLDQFHVFDQ UHDFK7KH\DUHXVHGHLWKHUWR SURYLGHDKLJKSODWIRUPIURP ZKLFKILUHILJKWHUVFDQILJKWDILUH RUWRHQDEOHILUHILJKWHUVWRJDLQ DFFHVVWRKLJKSODFHV7KH$/3 DSSOLDQFHVDUHRQO\VHQWRXWWR HPHUJHQF\LQFLGHQWVZKHQDQ LQFLGHQWFRPPDQGHUDWWKHVFHQH GHFLGHVWKH$/3LVQHHGHG

,QZHFKDQJHGWKHZD\ZH FUHZWKH$/3EDVHGDWWKHILUH VWDWLRQLQ'XUKDP3UHYLRXVO\WZR IXOOWLPHILUHILJKWHUVZHUHDVVLJQHG WRFUHZWKHYHKLFOHKRXUVD GD\7KHFKDQJHLQYROYHGPRYLQJ WRDGXDOFUHZLQJV\VWHPZKHUH /RFDWLRQVRILQFLGHQWVDWWHQGHG E\'DUOLQJWRQ$/3LQ WKHIXOOWLPHILUHILJKWHUVFUHZLQJ WKHRWKHUILUHDSSOLDQFHVEDVHGDW 'XUKDPILUHVWDWLRQZLOOWUDQVIHU :HLQWHQGWRUHYLHZKRZZHFUHZWKH$/3DSSOLDQFH RYHUWRWKH$/3ZKHQLWLVQHHGHG EDVHGDW'DUOLQJWRQWRLGHQWLI\LIZHFDQGHOLYHUIXUWKHU 7KH\DUHVXSSRUWHGE\UHWDLQHG VDYLQJVZLWKRXWLQFUHDVLQJFRPPXQLW\ULVN GXW\V\VWHPILUHILJKWHUVEDVHGDW 'XUKDP 4 'R\RXDJUHHWKDW )ROORZLQJLPSOHPHQWDWLRQRXU ZHVKRXOGVWDIIWKH DQDO\VLVVKRZVWKHUHVSRQVH WLPHVRIWKH$/3DSSOLDQFHDW $HULDO/DGGHU3ODWIRUPDW 'XUKDPDUHODUJHO\XQDIIHFWHGE\ 'DUOLQJWRQLQDVLPLODU WKHFKDQJHVEXWZHGHOLYHUHG ZD\WRKRZZHVWDIIWKH VDYLQJVRIDURXQG NSHU\HDU $HULDO/DGGHU3ODWIRUPDW E\UHGXFLQJWKHQXPEHURI ILUHILJKWHUVQHHGHGDW'XUKDPILUH 'XUKDP" VWDWLRQ $HULDO/DGGHU3ODWIRUP

7KUHH

3URSRVDOIRXUUHYLHZWKHQXPEHURIHPHUJHQF\UHVSRQVHILUH RIILFHUV

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

 7KUHH

:HRSHUDWHDUDQJHRIGXW\V\VWHPVWRHQVXUHZHKDYHWKHULJKWQXPEHURIVNLOOHGILUHILJKWHUVDYDLODEOHDWWKH ULJKWWLPHDQGLQWKHULJKWSODFHWRUHVSRQGWRHPHUJHQFLHV

$VSDUWRIRXUUHVHDUFKDQGHYDOXDWLRQRIQXPHURXVRSWLRQVIRUGHOLYHULQJHIILFLHQF\VDYLQJVZLWKRXWLQFUHDVLQJ ULVNWRRXUFRPPXQLWLHVZHKDYHXVHGFRPSXWHUPRGHOOLQJWRDVVHVVWKHLPSDFWRIFKDQJLQJWKHORFDWLRQRIRXU ILUHVWDWLRQVDQGKRZZHFUHZRXUILUHDSSOLDQFHV

$VWKHJUDSKEHORZVKRZVRXUDQDO\VLVRIDFWLYLW\OHYHOVUHYHDOWKDWWKHILUVWILUHHQJLQHDW6SHQQ\PRRU FDOOVLJQ3 LVWKHOHDVWEXV\RIRXUILUHDSSOLDQFHVWKDWDUHFUHZHGE\IXOOWLPHILUHILJKWHUVRQDQLPPHGLDWH UHVSRQVHEDVLV

7ZRRIRXUWZHQW\VHYHQIURQWOLQHILUHDSSOLDQFHVDUHEDVHGDWRXUILUHVWDWLRQLQ6SHQQ\PRRU7KHILUVW DSSOLDQFHLVFUHZHGXVLQJIXOOWLPHILUHILJKWHUVZKRZRUNWKHGD\FUHZLQJGXW\V\VWHPWRSURYLGHDQLPPHGLDWH GD\WLPHUHVSRQVH0RQGD\WR)ULGD\$WQLJKWDQGDWZHHNHQGVFUHZLQJRIWKHILUVWDSSOLDQFHLVXQGHUWDNHQE\ UHWDLQHGGXW\V\VWHPILUHILJKWHUVZKRDUH RQFDOO IURPZRUNRUKRPHWRUHVSRQGWRWKHILUHVWDWLRQZLWKLQILYH PLQXWHV

:HUHPDLQFRPPLWWHGWRQRWUHGXFLQJWKHQXPEHURIILUHDSSOLDQFHVRUILUHVWDWLRQVZHSURYLGHDFURVVWKH &RXQW\'XUKDPDQG'DUOLQJWRQDUHD+RZHYHUWKHUHODWLYHO\ORZQXPEHURIFDOOVWKDWWKHILUVWILUHDSSOLDQFH EDVHGDW6SHQQ\PRRUILUHVWDWLRQUHVSRQGVWRKDVOHGXVWRFRQVLGHUUHYLHZLQJKRZZHFUHZWKHILUVWILUH DSSOLDQFHWREHWWHUUHIOHFWORFDOULVNDQGDFWLYLW\OHYHOV

&KDQJLQJWKHFUHZLQJV\VWHPWRDIXOO\ RQFDOO V\VWHPXVLQJUHWDLQHGGXW\V\VWHPILUHILJKWHUVZRXOGGHOLYHU VLJQLILFDQWVDYLQJVEXWZRXOGUHVXOWLQDUHGXFWLRQLQIXOOWLPHFRYHUGXULQJWKHGD\LQ6SHQQ\PRRUDQGUHGXFH WKHOHYHORIFRYHULQWKHFHQWUDOSDUWRIRXUVHUYLFHDUHD

4 'R\RXDJUHHWKDWZHVKRXOGUHYLHZRXUVWDIILQJPRGHODW6SHQQ\PRRU)LUH6WDWLRQ"

7KUHH

7KLVLV\RXUILUHDQGUHVFXHVHUYLFHDQGZHZHOFRPH\RXUYLHZV WDNLQJWKHPLQWRDFFRXQWZKHQZHPDNHGHFLVLRQV

3OHDVHOHWXVNQRZ\RXUYLHZVRQRXUSURSRVDOVE\DQVZHULQJWKHILYH TXHVWLRQVEHORZ

&RQVXOWDWLRQ

4XHVWLRQ             3OHDVHWLFN

4 'R\RXDJUHHWKDWZHVKRXOGVKDUHWKHIROORZLQJILUHVWDWLRQV 

4 'R\RXVXSSRUWRXULQWHQWLRQWRKDYHDSSURSULDWHO\WUDLQHG  

4 'R\RXDJUHHWKDWZHVWDIIWKH$HULDO/DGGHU3ODWIRUPDW'DUOLQJWRQ

4 'R\RXDJUHHZHVKRXOGUHYLHZWKHQXPEHURIHPHUJHQF\  

4 'R\RXDJUHHWKDWZHVKRXOGUHYLHZRXUVWDIILQJPRGHODW  

&RPPHQWV 



1DPHDQGDGGUHVV RSWLRQDO  



 7KUHH

)LQG2XW0RUH &RQWDFW8V

2XUZHEVLWHSURYLGHVPRUHLQIRUPDWLRQDERXWXVZKDWZHGRZKHUH ZHDUHORFDWHGODWHVWQHZVDQGPXFKPRUH

ZZZGGILUHJRYXN

$OWHUQDWLYHO\\RXFDQFRQWDFWXVDW

&RXQW\'XUKDPDQG'DUOLQJWRQ)LUHDQG5HVFXH6HUYLFH+HDGTXDUWHUV %HOPRQW%XVLQHVV3DUN 'XUKDP '+7:

7HO )D[ 0LQLFRP (PDLO6HUYLFH+4#GGILUHJRYXN

+42SHQLQJ7LPHV  DPSP0RQGD\7KXUVGD\ DPSP)ULGD\

,I\RXZRXOGOLNHWKLVGRFXPHQWLQDGLIIHUHQWIRUPDW XVHWKHFRQWDFWGHWDLOVDERYHWROHWXVNQRZ

Page 36