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Swiss Prime Site

Industry Revenue diversification thanks to Services : With the acquisition of Wincasa in 2012 (real estate service Real Estate provider), assisted living businesses (Tertianum 2013, SENIOcare + Boas in 2015) and the growing SPIF Rating Price Target (investment foundation), SPS has well diversified its revenue streams by taking advantage of new growth Hold CHF 90.0 potential on the real estate side, also due to an additional pipeline of development sites. The service Ticker SPSN SE segment achieved an operating profit of CHF 48.6 mn in FY17 (CHF 38.7 mn in FY16). Share price CHF 81.8

Mkt cap. (mns) CHF 6,212 High dividend yield : Historically, SPS has offered a Free float (%) 100.0 % high dividend payout, resulting in an above peer group Trad. vol. (mns) CHF 14.2 average dividend yield, which currently stands at 4.6%.

Trading at a decent premium to NAV: Trading at a Investment Case 32% premium to prospective NAV (or 20% excluding Solid diversification across regions and type of use: "Services"), a lot of good news is priced into the stock. Investment properties are located in Zurich (42%), Geneva We confirm our Hold and CHF 90 price target. (23%) and the Basel region (13%). The company's key focus is on commercial properties. 40% of rental income stems from office space and 33% from retail. Including Jelmoli (acquired in 2009), SPS has the highest retail exposure among peers. Vacancy rate stands at 4.7% and guidance is for a level below 5%.

Recent Newsflow Next Catalysts & Events

24-10-18 1H18 28-02-19 Investor Day confirming financial targets and providing FY18 results insight into portfolio and developments in Western Switzerland 26-03-19 AGM 09-08-18 1H18 Solid real estate results, modest progress on service side. We trim our EPS FY18/19E estimates 8% and 4%, respectively.

01-03-18 FY17 results Solid results, announcement of CHF 3.8 dividend, signaling confident outlook.

Analyst

Stefan Schürmann , MSc HEC +41 58 283 63 42 [email protected] 2/10 Swiss Prime Site / Pocket Guide Vontobel

Criteria analysis

Weak Strong Comment Growth profile 1 2 3 4 5 6 – A still challenging transaction market Pricing power 1 2 3 4 5 6 – Market share too small to have an impact Margin resilience 1 2 3 4 5 6 – Solid margins driven by top locations Corporate governance 1 2 3 4 5 6 – Has been improving Financial metrics 1 2 3 4 5 6 – Balance sheet strength at low end of peers Valuation – Trading at a premium to listed Swiss peers 1 2 3 4 5 6

Business description Performance

Property management: SPS is a real estate investment company and was founded in 1999. The company has a history of consolidation. In FY17, the portfolio was worth CHF 10.6bn. Key focus areas for properties are the major Swiss economic regions, with priority on commercial real estate.

Good diversification: 42% of properties are based in the Zurich region, 23% in Geneva, 13% in Northern Switzerland, 8% in Bern, 7% in Central Switzerland and 5% in Eastern Switzerland. 40% of rental income is from office, 32% from retail, 7% assisted living, 5% storage, 5% parking, 6% restaurants/cinema and only 1% residential.

Risks to our investment case

Increasing vacancy rate: SPS’s vacancy rates would be higher should there be a substantial deterioration in the Swiss office market. In addition, its retail exposure is more cyclical and highly dependent on the current economic situation of Switzerland.

Spike in interest rates: A potential spike in interest rates would have a negative impact on market valuation, which would put NAV under pressure.

Execution risk: Execution risk exists in relation to major on-going development projects such as Espace Tourbillon in Geneva, the Stücki Park in Basel or the YOND facility in Zurich.

Sensitivity analysis

Low High Comment Cyclicality 1 2 3 4 5 6 – Low from a 12-month perspective Earnings visibility 1 2 3 4 5 6 – Guidance helps but visibility could be better Operating leverage 1 2 3 4 5 6 – Less conservative than most peers Dependence on FX movements 1 2 3 4 5 6 – NA Dependence on raw material prices 1 2 3 4 5 6 – NA Dependence on key customers 1 2 3 4 5 6 – 5 biggest tenants account for ~20% of income Dependence on key suppliers – NA 1 2 3 4 5 6

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Corporate governance Management

Investor communication Chairman Management available for roadshows and conferences (CEO, CFO and IR) and for Hans Peter Wehrli meetings in Zurich. Quarterly results. since 2002

Track record during last downturn CEO Less volatile than European peers. René Zahnd since 2016 Remuneration & incentives Members of the Board of Directors receive fixed compensation (min. 50% in form of CFO shares). Members of the Executive Board receive fixed annual compensation as well as Markus Meier performance- and profit-based variable compensation (max. 50% of fixed salary; based on since 2015 quantitative and individual targets; 30% NAV net, 40% EPS adj. and 30% individual targets).

SWOT analysis

– Top quality locations in major Swiss cities (Zurich, – Lower equity and loan to value ratios compared to

Geneva, Basel, Bern). peers. – Good diversification across regions and type of use. – Lower NAV growth compared to peers in the past – Liquid stock with a high free float. years. – Strong track record with regards to acquisitions. – The increasing number of business divisions make it more and more difficult to correctly interpret the consolidated figures. STRENGTHS WEAKNESSES

– SPS can further benefit from the low interest rate – Reduction in office rental prices has a considerable environment. impact on SPS. – Development project pipeline offers further growth in – Volatility in the Swiss retail market environment has an rental income. impact on the company. – Improving corporate governance by setting up an – Declining net yields reduce cash earnings potential. independent structure and organization. – Thanks to Tertianum, SPS is set to benefit from trends such as aging population. THREATS OPPORTUNITIES

Guidance vs Vontobel and consensus estimates

Guidance: Vacancy rate below 5% and 2018 operating profit above previous year. ROE target of 6-8%.

Vs Vontobel estimates: Vacancy rate of 4.7% in FY18E, ROE of 6.4% in FY18E

Vs consensus: NA 4/10 Swiss Prime Site / Pocket Guide Vontobel

Divisions (all figures as % share of total)

Real estate services Revenues FY18E CHF 611 (53%) EBITDA (ex. CHF 418 (90%)

Description SPS is the biggest stock market listed property asset manager focusing on the commercial sector, with a balanced focus on office and retail.

Drivers Growth: So far it has been the most successful consolidator with the latest acquisitions outside its key focus area (Wincasa in Sept. 2012 and Tertianum in June 2013).

Profitability: Further potential for debt cost optimisation. The new independent structure could potentially change the cost base in case of transactions.

Market shares VTe: around 1% market share of Swiss commercial property market (both office and retail).

Competitors PSP, Allreal, Mobimo, Axa, Swiss Life, major real estate funds and pension schemes.

Customers Largest tenants Coop (6.2% in rental income), Migros (5.3%), Swisscom (3.3%), Inditex S.A. (2.7%) and Zurich Insurance Group (2.6%) account for 20.1% of total rental income

Suppliers NA

Retail Revenues FY18E CHF 135 (12%) EBITDA (ex. CHF 8.4 (2%)

Description SPS owns the Jelmoli House of Brands on Bahnhofstrasse Zurich and is also in charge of its retail management. Retail turnover is currently suffering due to an overall sluggish retail market environment.

Drivers Growth: Consumer sentiment has the largest impact followed by Jelmoli's offering. On-going refurbishment of in-house stores is expected to pay off going forward.

Profitability: Based on an estimated recovering top line, underlying profitability and gross margin are gradually expected to increase.

Market shares NA

Competitors Shopping centres such as Shilcity or Glatt. Companies: Valora, Manor, Coop, Globus/Migros.

Customers Some third-party leases within Jelmoli accounted for VTe CHF 18 mn.

Suppliers NA

Assisted Living Revenues FY18E CHF 397 (35%) EBITDA (ex. CHF 38.3 (8%)

Description Tertianum (4 brands: Tertianum Residences, Vitadomo, Perlavita and Permed) is the largest private operator of senior residences and geriatric care services in Switzerland. The real estate portfolio comprises 12 operating businesses situated in Zurich, Bern and Eastern Switzerland. An additional 11 properties are rented.

Drivers Growth: The needs of a continuously aging society are based on residential living with an extensive range of services in addition to assisted living and care with à la carte as well as stationary services revolving around senior healthcare. The SENIOcare acquisition will fuel additional growth.

Profitability: So far limited visibility.

Market shares Tertiannum: NA; in Switzerland 40% private and 60% public enterprises (Total ~1,576).

Competitors Tertianum #1, Senevita #2, SENIOcare #3, Di Gallo #4 in Switzerland.

Customers Elderly people.

Suppliers NA

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Financials

Criteria analysis Segment Information by division Revenues 2013 2014 2015 2016 2017 2018E 2019E 2020E Real Estate (rental income) CHF mns 420 443 446 453 470 486 498 527 Real estate services CHF mns 98.6 100 109 133 142 149 154 159 Retail CHF mns 156 152 137 134 136 135 138 142 Assisted Living CHF mns 85.7 153 184 328 360 397 411 432 Others CHF mns 19.3 7.23 87.4 44.1 44.5 37.6 37.9 37.1 Total operating income CHF mns 780 856 964 1,092 1,153 1,205 1,239 1,296 Revenues (growth) 2013 2014 2015 2016 2017 2018E 2019E 2020E Real Estate (rental income) % 2.8 5.5 0.6 1.6 3.7 3.4 2.4 5.8 Real estate services % 601 1.5 9.3 21.6 6.9 5.0 3.0 3.5 Retail % -1.8 -2.8 -9.9 -2.4 1.9 -0.5 2.0 2.5 Assisted Living % NA 78.9 20.2 78.2 9.7 10.3 3.5 5.0 Others % 70.5 -62.5 1108 -49.5 1.0 -15.6 0.8 -2.1 Total operating income % 31.5 9.7 12.6 13.3 5.6 4.6 2.8 4.6 Revenues (in % total) 2013 2014 2015 2016 2017 2018E 2019E 2020E Real Estate (rental income) % 53.9 51.8 46.3 41.5 40.8 40.3 40.2 40.6 Real estate services % 12.6 11.7 11.4 12.2 12.3 12.4 12.4 12.3 Retail % 20.0 17.7 14.2 12.2 11.8 11.2 11.2 10.9 Assisted Living % 11.0 17.9 19.1 30.1 31.2 33.0 33.2 33.3 Others % 2.5 0.8 9.1 4.0 3.9 3.1 3.1 2.9 Total operating income % 100 100 100 100 100 100 100 100

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Income Statement 2013 2014 2015 2016 2017 2018E 2019E 2020E Rental income CHF mns 420 443 446 453 470 486 498 527 Revaluation of property assets CHF mns 187 113 125 60.5 65.9 58.4 45.0 40.0 Total income CHF mns 951 967 1,049 1,127 1,169 1,228 1,247 1,299 Real estate operating expenses CHF mns -27.8 -29.7 -27.9 -34.5 -28.8 -29.4 -30.1 -31.0 Real estate maintenance expenses CHF mns -20.8 -19.9 -22.0 -20.0 -21.1 -21.7 -22.4 -23.1 Total operating expenses CHF mns -436 -519 -546 -684 -728 -768 -787 -812 EBITDA CHF mns 566 498 575 520 487 493 492 516 EBITDA (adjusted) CHF mns 379 385 450 460 421 435 447 476 Impairment and amortization CHF mns 20.7 24.8 29.2 43.2 16.5 19.1 18.2 17.4 EBIT CHF mns 539 463 545 477 471 474 474 499 Net financial result CHF mns -98.8 -97.2 -96.1 -81.1 -75.8 -76.0 -74.2 -77.2 Pretax profit CHF mns 440 366 449 396 395 398 400 422 Taxes CHF mns -96.6 -79.0 -102 -67.5 -89.3 -79.6 -79.9 -84.4 Group net profit CHF mns 344 286 348 330 306 318 320 337 Minority interests CHF mns 0.00 -0.90 0.84 0.96 0.15 0.00 0.00 0.00 Shareholders' net profit CHF mns 344 286 348 330 306 318 320 337 Adjusted net profit CHF mns 223 236 281 277 307 304 311 317 Growth rates income statement (%) 2013 2014 2015 2016 2017 2018E 2019E 2020E Rental income % 2.8 5.5 0.6 1.6 3.7 3.4 2.4 5.8 Total income % 21.9 1.6 8.5 7.5 3.7 5.0 1.6 4.2 Total income (ex-revaluation) % 28.9 11.6 8.3 15.4 3.4 6.0 2.8 4.8 EBITDA % 6.8 -12.0 15.4 -9.4 -6.4 1.2 -0.2 4.9 EBITDA (adj) % 10.7 1.4 17.0 2.2 -8.4 3.2 2.9 6.5 Net profit % 10.5 -16.9 21.7 -5.3 -7.3 4.2 0.4 5.5 Net profit adjusted % 8.7 5.9 19.0 -1.4 11.1 -1.2 2.3 2.2

Margin analysis 2013 2014 2015 2016 2017 2018E 2019E 2020E Revaluation in % property assets % 2.2 1.3 1.4 0.6 0.6 0.5 0.4 0.3 Vacancy rate % 6.4 6.6 6.7 6.1 5.2 4.7 4.5 4.5 EBITDA margin % 59.5 51.5 54.8 46.2 41.7 40.2 39.5 39.7 EBITDA (adj) margin % 49.6 45.1 48.7 43.1 38.2 37.2 37.2 37.8 Interest coverage (adj) % 346.8 384.8 454.5 524.4 541.1 570.7 598.7 613.2 Tax rate % 21.9 21.6 22.8 17.0 22.6 20.0 20.0 20.0 Net profit margin % 36.1 29.6 33.2 29.2 26.1 25.9 25.6 26.0 Net profit margin (adjusted) % 29.1 27.7 30.4 25.9 27.9 26.0 25.9 25.2

Revenues by division 2018E Revenues by segment 2018E

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Balance Sheet 2013 2014 2015 2016 2017 2018E 2019E 2020E Cash and marketable securities CHF mns 204 257 235 160 159 406 241 248 Receivables CHF mns 131 136 108 103 91.6 117 120 127 Other current assets CHF mns 454 46.9 38.6 34.9 37.3 -283 -283 -283 Current assets CHF mns 815 466 407 327 319 269 107 122 Goodwill CHF mns 82.6 78.1 80.5 7.57 12.6 12.3 12.1 11.9 Real estate for development CHF mns 27.8 45.7 0.00 0.00 0.00 0.00 0.00 0.00 Total real estate assets CHF mns 8,530 8,653 8,792 10,079 10,618 11,365 11,883 12,095 Other non-current assets CHF mns 342 604 1,192 -102 -98.7 210 209 200 Total fixed assets CHF mns 10,404 10,713 11,179 10,218 10,761 11,505 12,027 12,240 Total assets CHF mns 10,512 10,602 10,691 10,558 11,095 11,774 12,134 12,363 Trade and other payables CHF mns 15.5 16.2 13.3 15.0 17.9 14.5 14.9 15.7 Short-term interest-bearing debt CHF mns 1,090 714 572 678 622 552 552 472 Short-term liabilities CHF mns 1,480 1,094 887 941 943 894 903 843 Long-term debt CHF mns 3,966 4,252 3,689 3,806 4,229 4,529 4,769 4,939 Other long-term liabilities CHF mns 66.7 91.6 122 0.00 0.57 1.13 3.05 4.18 Deferred taxes CHF mns 892 963 1,036 1,066 1,145 1,196 1,257 1,317 Shareholders' equity CHF mns 4,107 4,202 4,956 4,747 4,777 5,154 5,202 5,259 Minority interests CHF mns 0.00 0.00 0.00 -0.72 -0.57 -0.57 -0.57 -0.57

Balance sheet analysis 2013 2014 2015 2016 2017 2018E 2019E 2020E Net working capital (NWC) CHF mns -275 -249 -165 -351 -303 -283 -445 -349 Equity ratio % 39.1 39.6 46.4 45.0 43.1 43.8 42.9 42.5 Loan-to-value % 54.1 50.7 44.0 44.4 45.6 44.7 44.8 44.7 Net debt CHF mns 5,384 5,038 5,608 5,527 5,562 5,642 5,864 5,855 Net debt to equity x 1.31 1.20 1.13 1.16 1.16 1.09 1.13 1.11 Net debt/EBITDA x 9.51 10.1 9.76 10.6 11.4 11.4 11.9 11.3 Average duration of financing Month 48 59 53 54 56 54 57 60

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Cash flow statement 2013 2014 2015 2016 2017 2018E 2019E 2020E Cash flow CHF mns -203 709 390 205 398 391 402 418 Inc. (-)/dec. (+) in NWC CHF mns 85.5 -31.9 22.5 -74.4 141 -69.7 6.14 6.94 CF from operating activities CHF mns -191 730 388 278 466 390 407 430 Capex CHF mns 254 339 193 377 316 380 380 350 Operating free cash flow (FCF) CHF mns -445 391 195 -98.8 150 9.97 26.8 79.7 Acquisitions CHF mns -268 0.41 -145 -55.0 -72.6 -125 -75.0 -50.0 Divestments CHF mns 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 Inc. (+)/decr(-) in interest bearing debt CHF mns 763 -70.1 -578 366 287 300 100 200 Increase (+)/decrease (-) in cash CHF mns 1.90 53.5 -22.3 -74.6 -1.14 247 -165 6.53

Cash flow analysis 2013 2014 2015 2016 2017 2018E 2019E 2020E Operating free cash flow margin % -105.9 88.2 43.8 -21.8 31.8 2.1 5.4 15.1 Acquisitions in % investment properties % -3.1 0.0 -1.7 -0.5 -0.7 -1.1 -0.6 -0.4 Change in working capital as % sales increase % 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0

Price 2013 2014 2015 2016 2017 2018E 2019E 2020E Price (year-end or current) CHF 69.05 73.00 78.50 83.35 90.00 81.80 81.80 81.80 High CHF 78.45 76.00 87.80 90.65 91.00 94.30 NA NA Low CHF 66.35 68.95 70.65 74.95 82.25 77.45 NA NA Average basic shares outstanding ('000) 60,369 60,513 67,128 70,781 71,479 73,713 75,946 75,946 Year-end basic shares outstanding ('000) 60,484 60,818 69,649 71,479 71,479 75,946 75,946 75,946 Average fully diluted shares ('000) 66,340 66,339 69,499 73,849 73,850 78,318 78,318 78,318 Market capitalization CHF mns 4,176 4,440 5,467 5,958 6,433 6,212 6,212 6,212

Per -share data 2013 2014 2015 2016 2017 2018E 2019E 2020E EPS (reported) CHF 5.70 4.72 5.30 4.64 4.27 4.32 4.21 4.44 EPS (cash) CHF 3.69 3.90 4.20 3.91 4.30 4.12 4.09 4.18 FCF CHF -7.37 6.46 2.91 -1.40 2.09 0.14 0.35 1.05 Net cash (+) / net debt (-) CHF 89.0 82.8 80.5 77.3 77.8 74.3 77.2 77.1 NAV (gross) CHF 82.6 84.8 85.7 81.3 82.9 83.5 85.0 86.5 NAV (net) CHF 67.9 69.1 71.2 66.4 66.8 67.9 68.5 69.3 Dividend CHF 3.60 3.70 3.70 3.70 3.80 3.80 3.90 4.00 Payout ratio % 97.5 94.9 88.1 94.6 88.4 92.2 95.3 95.7

Valuation 2013 2014 2015 2016 2017 2018E 2019E 2020E P/E (reported) x 12.1 15.5 14.8 18.0 21.1 18.9 19.4 18.4 P/E (cash) x 18.7 18.7 18.7 21.3 20.9 19.9 20.0 19.6 P/NAV (gross) x 0.84 0.86 0.92 1.02 1.09 0.98 0.96 0.95 P/NAV (net) x 1.02 1.06 1.10 1.26 1.35 1.21 1.19 1.18 P/Op. free cash flow x -21.8 6.05 13.6 21.2 13.8 15.5 15.3 14.5 FCF yield % -10.7 8.80 3.57 -1.66 2.33 0.16 0.43 1.28 Dividend yield % 5.21 5.07 4.71 4.44 4.22 4.65 4.77 4.89

Profitability ratios 2013 2014 2015 2016 2017 2018E 2019E 2020E Implied gross yield % 5.2 5.3 5.3 4.6 4.6 4.8 4.6 4.7 Implied net yield % 4.2 4.1 3.9 3.7 3.8 3.7 3.7 3.8 ROE % 9.10 7.00 7.60 6.60 6.40 6.21 5.98 6.25 ROE (adjusted) % 6.1 5.9 6.1 5.7 6.3 6.2 6.1 5.9 ROA % 3.3 2.6 3.0 3.0 2.8 2.8 2.7 2.8

Enterprise value 2013 2014 2015 2016 2017 2018E 2019E 2020E Market capitalization CHF mns 4,176 4,440 5,467 5,958 6,433 6,212 6,212 6,212 Net Debt (+) / net cash (-) CHF mns 5,384 5,038 5,608 5,527 5,562 5,642 5,864 5,855 Value of minorities CHF mns 0.00 0.00 0.00 -0.72 -0.57 -0.57 -0.57 -0.57

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Disclaimer & Disclosures – Equity Research

Criteria analysis 1. Analyst declaration This Vontobel Report has been produced by the organizational unit responsible for investment research (Research unit, sell-side analysis) of Bank Vontobel AG. Bank Vontobel AG is subject to supervision by the Swiss Financial Market Supervisory Authority (FINMA). The authors listed on page 1 confirm that this report gives a complete and precise reflection of their opinion of the analysed company and that they have neither directly nor indirectly received compensation for their assessment or opinion. The compensation of the authors of this report is not directly related to the investment banking volume generated between Vontobel Group and the analysed company. The author(s) of this document owns securities in the analysed companies: None The document was not submitted to the analysed companies before publication or distribution

2. Disclosure of conflicts of interest As an internationally active company, Vontobel Group is subject to a number of provisions in drawing up and distributing its investment research documents. The maker and distributors of this financial analysis point out the following potential conflicts of interests: The author and its associated companies – will or are attempting to generate investment banking business with the analysed companies within the next three months, – conduct transactions with securities of the analysed companies from time to time – have participated in capital market transactions/the issue of securities of the following analysed companies in the last 12 months: Swiss Prime Site – have been active as Market Maker in equities of the following analysed companies in the last 12 months: None – have provided other publicly known Investment Banking services for the following companies mentioned in this report in the last 12 months: None – have received compensation for products and services outside Investment Banking from the following analysed companies: None – hold mandatory disclosable (%) of the voting rights of the following analysed companies: None – have executives who are members of the board of the analysed companies: Swiss Prime Site(1) and – have executives who are members of the board of Bank Vontobel AG or affiliated companies: Swiss Prime Site(1) – have no significant financial interest in the analysed companies and – have reached no agreement with the analysed companies regarding this financial analysis.

3. Research rating history The Ratings and/or Rating Outlook of the analysed companies were last changed as follows: Swiss Prime Site[SPSN.S] was last changed from Buy to Hold on 20-06-17

4. Global rating breakdown VT Research universe VT Research universe Share of VT IB clients in rating category No. As % As % Buy 33 30 24 Hold 73 66 26 Reduce 4 4 0

The table above is revised at the beginning of each quarter, i.e. it currently reflects the status as at 30 September 2018.

5. Rating plotter charts The data used for the share price and/or price target chart may have to be adjusted to reflect corporate actions undertaken by the company.

Not Rated: Currently Restricted, Suspended Coverage, or no rating assigned to company due to e.g. advising of analysed company in a capital market transaction, temporary suspension of analyst coverage or a similar reason.

For company specific disclosures, such as Research rating history or Rating plotter charts, please refer to the most recent company specific information provided by Bank Vontobel under "https://research.vontobel.com/en/disclaimers/companies" and/or contact Bank Vontobel for further information.

6. Methodology/Rating system Bank Vontobel’s financial analysts apply a variety of valuation methodologies (e.g. DCF and EVA modelling, 'sum-of-the-parts', break-up and event-related analysis, peer group and market multiple comparisons) to their own financial projections for the companies they cover. Overall, our investment recommendations take into consideration an assessment of the company in its entirety and of the sector to which it belongs ("bottom-up approach"). Price target calculation is based on a number of factors, observations and assumptions, including but not limited to: key business performance indicators and ratios, public and private valuation multiples, comparison with one or more peer groups of comparable companies, overall equity market valuations, and with the company's own history and track record.

The stock recommendations published by Vontobel’s research team are defined as follows:

Rating Definition

Large Cap SLI Index (incl. tolerance)/non-Swiss stocks of similar market capitalisation Buy Price target (when set) implies 10% or more upside on a 12-month horizon Hold Price target (when set) implies 0-10% upside on a 12-month horizon Reduce Price target (when set) implies downside on a 12-month horizon

Mid & small cap Other Swiss stocks/non-Swiss stocks of similar market capitalisation Buy Price target (when set) implies 15% or more upside on a 12-month horizon Hold Price target (when set) implies 0-15% upside on a 12-month horizon Reduce Price target (when set) downside on a 12-month horizon

Restricted Coverage is temporarily restricted (no price target) Suspended Coverage Coverage is temporarily suspended (no price target)

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Analysts are required to review their recommendations under the following conditions: Buy: When upside to price target falls below 5% (all caps). Hold: When upside to price target reaches or exceeds 15% for large caps or 20% for mid & small cap; when downside to price target reaches or exceeds 5% (all caps). Reduce: When upside to price target reaches or exceeds 5% (all caps). We reserve the right to waive repeated changes of recommendation during periods of unusually high equity market or specific stock price volatility

The use of the valuation methods does not rule out the risk that the stock fails to achieve the "fair value" within the projected period. Numerous factors influence share price performance. Unforeseen changes can arise from the emergence of competitive pressure, from a change in demand for the products of an issuer, technological development, from macroeconomic activity, exchange rate fluctuation or from a shift in society’s moral concept. Changes in taxation law or supervisory regulations can often have a grave, unforeseen impact. This discourse on valuation methods and risk factors does not claim completeness.

For more information on our methodology and rating system see www.vontobel.ch.

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