Growth Opportunities Remain Intact, Introducing YE2011 Target Price

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1 Latin American Equity Research Mexico City, August 2, 2010 Company Report Mexico Healthcare GENOMMA LAB Growth Opportunities Remain Intact, Introducing YE2011 Target Price Joaquin Ley* BUY Daniel Gewehr* Mexico: Banco Santander S.A. Brazil: Banco Santander S.A (7/28/10) CURRENT PRICE: M$43.01/US$3.38 TARGET PRICE: M$61.00/US$4.60 What s Changed Rating Unchanged at Buy Price Target (M$) Introducing YE11 at EBITDA Estimates (US$ Mn) 10 to 128 from to 179 from to 216 from 209 Company Statistics Bloomberg LABB 52-Week Range (US$) E P/E Rel to the IPC Index (x) E P/E Rel to Health Care (x) 0.8 IPC (US$) 2,568 3-Yr EPS CAGR (09-12E) 40 Market Capitalization (US$ Mn) 1,780 Float (%) 46 3-Mth Avg Daily Vol (US$000) 6,860 Shares Outst - Mn 526 Net Debt/Equity (x) -0.1 Book Value per Share (US$) 0.61 Estimates and Valuation Ratios E 2011E 2012E Net Earn (M$ Mn) 758 1,059 1,575 2,097 Current EPS Net Earn (US$ Mn) Current EPS P/E (x) P/Sales (x) P/CE (x) FV/EBITDA (x) FV/Sales (x) FCF Yield (%) Div per Share (US$) Div Yield (%) Sources: Bloomberg, company reports, and Santander estimates. Investment Thesis: We are introducing our YE2011 target price of M$61.00 (US$4.60) per share for Genomma, replacing our YE2010 target price of M$50.00 (US$3.80), and maintaining our Buy rating. Although the stock price has soared 250% in the last 12 months in U.S. dollars (outperforming the IPC Index by 220 percentage points), the shares still trade at a 2011E P/E of 14.9x, which we view as still inexpensive considering the company s earnings growth prospects and that it does not sell at a premium to international peers. EBITDA growth in 2Q10 was 38%, fueled by the ongoing development of the OTC and PC categories in Mexico, the launching of the generic drugs product line in Mexico, and the growth of the international operations including the start-ups in Brazil and the U.S. The top-line increase in the quarter, although strong, was negatively impacted by the price war among large food retailers in Mexico, which forced Genomma to lower inventories at the points of sale. Considering that the sell-out of Genomma s products showed a far stronger performance than the sell-in, we believe inventories at food retailers should eventually return to normal levels. The pillars of Genomma s growth story remain intact: (1) ongoing new product launches in the OTC and PC categories in Mexico; (2) development of the generic drugs category in Mexico; (3) development of international operations, including the Brazilian and U.S. start-ups; and (4) potential acquisitions. All things considered, we expect EBITDA and EPS CAGRs of 39% and 40%, respectively, for In addition to the sustained positive earnings momentum we expect in the upcoming quarters and years, we believe that the likelihood of Genomma s shares being incorporated into the IPC Index in September 2010 will be a short-term catalyst for the share price. Reasons for Estimate Changes: Our 2010, 2011, and 2012 EBITDA and EPS estimates in local currency have not changed materially. Valuation and Risks: Our YE2011 target price is based on DCF analysis, with a WACC of 9.6% and a perpetuity growth rate of 2.5%. Our target price suggests 36% price-appreciation potential in U.S. dollars, which compares with the 10.9% return we anticipate for the Mexican benchmark over the same period. Risks include lower-than-expected sales of the existing product base, less success than expected from new launches/ventures, the possibility of not obtaining registration renewal of some pharmaceutical products, and fiscal changes involving VAT. U.S. investors inquiries should be directed to Santander Investment Securities Inc. at (212) / (212) * Employed by a non-us affiliate of Santander Investment Securities Inc. and is not registered/qualified as a research analyst under FINRA rules.

2 Genomma Lab: Growth Opportunities Remain Intact, Introducing YE2011 Target Price Genomma Lab Internacional develops, advertises, and sells OTC medicines, interchangeable generic prescription drugs, and personal-care products in Mexico, and personal care products and OTC medicine in other Latin American countries. The company produces its own advertising campaigns and manufactures its products through outsourced companies (95% of its products are manufactured in Mexico and 5% abroad). The company ended 2009 with more than 53 different brands. Genomma Lab recently signed a strategic alliance agreement with Televisa to sell and distribute personal care and OTC pharmaceutical products in the U.S. and Puerto Rico through a company owned 49% by Genomma and 51% by Televisa. In 2009, Genomma posted total sales, EBITDA, and net income of US$339 million, US$86 million, and US$58 million, respectively. Banco Invex Trust 414 has a 46% share in the company and Nexxus an 8% share, while 46% free floats on the Mexican Bolsa. GROWTH PILLARS REMAIN INTACT The ongoing development of the OTC and PC product categories in Mexico support further market share gains, in our opinion. As of December 2009, Genomma had a portfolio of 171 SKUs within the personal care and over-the-counter medicines categories in Mexico. We expect 35 product launches in 2010 (including line extensions and new brands), as well as some 40 launches per year for 2011 and This implies increased rates in the base of SKUs of 20%, 19%, and 16% for 2010, 2011, and 2012, respectively. Indeed, as of the writing of this report, the company has nearly 200 SKUs for OTC (over the counter) and PC (personal care) products in the pipeline; or 117% of the SKU base as of YE2009. This should support further market share gains, if we consider that the OTC drug industry is expected to grow 6% to 8% p.a. going forward, and the PC industry growth will probably also be within the same range. For 2010, we expect the PC and OTC markets in Mexico to represent some 70% of the company s consolidated revenues. Figure 1. Genomma Lab OTC and PC SKUs in Mexico, 2008A 2012E % % % 19.4% % 70.0% 60.0% 50.0% 40.0% 30.0% 20.0% 10.0% E 2011E 2012E OTC/PC SKUs Grow th 0.0% Sources: Genomma Lab, Santander estimates. 2 U.S. investors inquiries should be directed to Santander Investment Securities Inc. at (212) / (212)

3 Figure 2. Market Shares in the Mexican OTC Market as of March 2010 Others 38% Bayer 10% Genomma 10% Boehringer 8% Source: Genomma Lab. Procter & Gamble 3% Merck 3% Wyeth 3% Jonhson &Jonhson 4% Bms Sm Novartis 5% 4% Sanofi-Aventis 6% Sp Chc 6% Figure 3. Genomma Lab Market Share Evolution within the Mexican OTC Market 10% 9% 8% 7% 6% 5% 4% 3% 2% 1% 0% 4% March % March % March 2010 Source: Genomma Lab. The generic drugs product line could represent one of the most important growth engines for Genomma going forward. Based on information from the Health Ministry, the generic drugs market in 2008 was worth some M$35 billion, or 20% of the country s total private medicine industry. The Mexican Health Ministry expects that share to climb to 30% by 2011; thus, the generic drugs market segment could reach a value close to M$55 billion. The penetration of generic drugs would be still well below that of developed economies (in excess of 50%). Genomma s management is confident that it will become the largest player in the generic drugs market in Mexico in less than two years. Thus, from sales of M$344 million in generics in 2009, we aim for M$2 billion in In other words, of the M$6.7 billion incremental sales we anticipate for , we expect 25% to come from generics in Mexico. As of March 2010, Genomma had 330 SKUs of generic drugs, and it aims to reach around 400 in the next 12 months. As for margins, we expect the generic drugs line to be decretive for the consolidated gross margin. (We assume a gross margin of 55% for generics versus roughly 70% for OTC and PC products.) However, in our opinion, the operating leverage to be generated in terms of advertising expenses through generic drugs implies that the EBITDA margin of the generic business should not differ materially from Genomma s current margin (i.e., around 25%). U.S. investors inquiries should be directed to Santander Investment Securities Inc. at (212) /(212)

4 Genomma Lab: Growth Opportunities Remain Intact, Introducing YE2011 Target Price Figure 4. Genomma Lab Expected Evolution of Generic Drugs, 2009A 2012E 2,500 2,000 1,500 1, , % 14.7% 1, % 7.8% E 2011E 2012E Generic Drugs Sales in Mexico Proportion of Consolidated Revenues 20.0% 18.0% 16.0% 14.0% 12.0% 10.0% 8.0% 6.0% 4.0% 2.0% 0.0% Sources: Genomma Lab, Santander estimates. International operations. These operations should be another important catalyst for Genomma s earnings growth, in our opinion. There are two important differences when comparing the operation in Mexico with those abroad. First, while OTC in Mexico accounts for some 65% of domestic sales (ex generics), in the international operations, PC products represent the bulk, or roughly 85%, of sales. Also, while the success ratio in Mexico is some 70%, in international operations it is in excess of 90%, as the products launched abroad have already proven successful in Mexico. As of the writing of this report, the number of OTC and PC SKUs in the international operation approaches 140, not far from the approximately 200 we expect Mexico to have at year-end As such, growth in the international operations will rely primarily on new product launches and expansion of the client base, in our opinion. However, the recent start-ups in Brazil and the U.S. should add to growth of the international operations. Brazil is the third largest PC products market (US$12.9 billion in 2009) in the world, following the U.S. and Japan. Genomma launched the first two brands in Brazil in 1Q10, and, based on management feedback, results are positive. In the 2Q10 earnings call, management commented that in terms of sell-out, Brazil is already the largest international operation for the company after only less than six months of operations. Eventually, the development of suppliers in Brazil is a possibility, and that would notably reduce logistic costs for the South American operation. In the U.S., the JV with Televisa is proceeding slightly more slowly than we expected, based on the required negotiations with the main retailers the JV will have as clients (such as Wal-Mart, Target, HEB, etc.). We believe the launch will be supported by the 25 million Mexicans living in the U.S., who have five times the purchasing power of Mexicans living in Mexico. Moreover, they are familiar with Genomma s brands, and the operation is being supported by Televisa through Univision, which seems to contain the right ingredients for a good recipe. 4 U.S. investors inquiries should be directed to Santander Investment Securities Inc. at (212) / (212)

5 Figure 5. Genomma Lab International Operations as a Proportion of Consolidated Revenues, 2009A 2012E 14% 19% 23% 25% 0% 1% 2% 5% 7% 14% 16% 5% 13% 7% 11% E 2011E 2012E International ex Brazil and ex USA Brazil USA Total International Sources: Genomma Lab, Santander estimates. Acquisitions. Although we do not include potential acquisitions in our estimates, acquisitions of existing brands have been an important growth driver for Genomma s earnings growth. Top-ofmind brands in Mexico such as Goicechea or Tio Nacho, which were mismanaged, were acquired, by Genomma and reformulated, the image/packaging changed and relaunched, to regain market leadership. Also, the multiples paid by Genomma in its acquisitions have usually been accretive (pre-synergies) to shareholders. In 2009, Genomma acquired brands belonging to Sanborns, as well as Jockey Club, which were relaunched in 2Q10. Sales of these brands were some M$140 million (3% of 2009A consolidated revenues) at the time of the acquisitions, but we expect significant growth rates going forward supported by the change in image, larger distribution support, and marketing activity. In 2Q10, the company acquired the English Leather, Micotex, Nasalub, and Ossart brands (combined sales of M$100 million), and Genomma plans to relaunch these products in REVISED ESTIMATES Following the results for the first half of 2010, we fine-tuned our estimates for 2010, 2011, and 2012, making no material changes. The decrease in our 2010 projection for net income in local currency largely reflects the destruction of inventories that failed to pass quality tests, aid to Haiti and strategic markdowns in 1Q10, lower sales in the food retailing distribution channel in 2Q10, and increased depreciation on accelerated amortization of the improvement works carried out in the company s leased corporate headquarters. All these factors are one-offs; thus, they do not affect our estimates for 2011 and U.S. investors inquiries should be directed to Santander Investment Securities Inc. at (212) /(212)

6 Genomma Lab: Growth Opportunities Remain Intact, Introducing YE2011 Target Price Figure 6. Genomma Lab Estimate Revisions, 2010E 2012E (Mexican Pesos in Millions*) 2010E 2011E 2012E Previous Current Change Previous Current Change Previous Current Change Revenue 6,488 6,415-1% 8,756 8,823 1% 10,860 11,156 3% Op. Profit 1,621 1,567-3% 2,223 2,316 4% 2,811 2,943 5% Op. Margin 25.0% 24.4% -0.5% 25.4% 26.2% 0.9% 25.9% 26.4% 0.5% EBITDA 1,676 1,636-2% 2,294 2,368 3% 2,896 3,009 4% Net Income 1,114 1,059-5% 1,547 1,575 2% 2,025 2,097 4% EPS % % % *Except per share data. Sources: Company reports and Santander estimates. Figure 7. Genomma Lab Estimate Revisions, 2010E 2012E (U.S. Dollars in Millions*) 2010E 2011E 2012E Previous Current Change Previous Current Change Previous Current Change Revenue % % % Op. Profit % % % Op. Margin 25.0% 24.4% -0.5% 25.4% 26.2% 0.9% 25.9% 26.4% 0% EBITDA % % % Net Income % % % EPS % % % *Except per share data. Sources: Company reports and Santander estimates. VALUATION We reached a year-end 2011 target price of M$61.00 (US$4.60) per share through a DCF analysis. We calculated a WACC of 9.6%, which coincides with the cost of equity. We assumed a risk-free rate of 5.1%, an equity risk premium of 5.5%, and a beta of We assumed a capital structure of 100% equity. The perpetuity growth rate used is 2.5%. For perpetuity, we assumed an EBITDA margin of 27.0%, which seems feasible when looking at international peers. (The average of OTC drugs and personal care companies exceeds 30%.) Capex is low, as the company outsources its manufacturing. The largest use of resources is in working capital investment, mainly in terms of inventories. Figure 8. Genomma Lab Free Cash Flows, 2012E 2021E (U.S. Dollars in Millions) 2012E 2013E 2014E 2015E 2016E 2017E 2018E 2019E 2020E 2021E EBIT Tax Rate 31.0% 30.0% 30.0% 30.0% 30.0% 30.0% 30.0% 30.0% 30.0% 30.0% NOPLAT Depreciation Changes in WC Capex Deferred Liabilities FCF WC: Working capital. Source: Santander estimates. 6 Figure 9. Genomma Lab DCF, 2012E 2021E (U.S. Dollars in Millions a ) 2012E 2013E 2014E 2015E 2016E 2017E 2018E 2019E 2020E 2021E Residual WACC 9.6% 9.6% 9.6% 9.6% 9.6% 9.6% 9.6% 9.6% 9.6% 9.6% 9.6% Discounted CFs ,235 NPV of CFs 1,045 Additions 142 Deductions 1 Target Mkt Cap 2,421 Target Price 4.60 a Except for per share prices. Additions include cash and non-consolidated subsidiaries. Deductions include debt and minorities. Source: Santander estimates. U.S. investors inquiries should be directed to Santander Investment Securities Inc. at (212) / (212)

7 On a 2011E EV/EBITDA basis, Genomma shares currently trade at 9.2 times, in line with other international personal care and OTC medicine companies, excluding Johnson & Johnson. At the same time, with Genomma trading at a 2011E P/E of 14.9 times, it also trades in line with the abovementioned peer group, including companies such as Perrigo, Pharmastandard, and Hypermarcas. Considering the 2011E P/E and the EPS growth we expect for , we reach a PEG of 0.5 times. On balance, we consider the current valuation multiples as inexpensive, given our outlook for potential earnings growth. Figure 10. Peer Group Valuation (Prices as of July 28, 2010) EV/EBITDA P/E Company Ticker Price M. Cap 2010E 2011E 2010E 2011E Perrigo PRGO US , Pharmstandard PHST RU , Hypermarcas HYPE3 BZ , Johnson & Johnson JNJ US , Church & Dwight CHD US , Omega Pharma OME BB , Atrium Innovations ATB CN Average Average ex J&J Genomma Lab LABB , Sources: Bloomberg, Santander estimates. Genomma s shares trade at a 12-month-forward P/E of 18.3 times, or 45% above its historical average. However, since Genomma s IPO took place in June 2008, right before the collapse of the equity markets, the company s average P/E is negatively affected by the abnormally low valuations during most of 2008 and Our target price implies a target 12- month-forward P/E of 15.3 times, still 21% above that average, but 16% below current levels. Figure 11. Genomma Lab 12-Month-Forward P/E, June 2008 to Date SD SD 17.5 Average SD 7.6-2SD 2.7 Current /06/ /07/ /08/ /09/ /10/ /11/ /12/ /01/ /02/ /03/ /04/ /05/ /06/ /07/ /08/ /09/ /10/ /11/ /12/ /01/ /02/ /03/ /04/ /05/ /06/ /07/2010 Sources: Company reports, Santander estimates, Bloomberg. U.S. investors inquiries should be directed to Santander Investment Securities Inc. at (212) /(212)

8 Genomma Lab: Growth Opportunities Remain Intact, Introducing YE2011 Target Price RISKS Risks include (1) lower-than-expected sales of the existing product base, (2) a lower level of success than we expect from new launches, (3) stronger-than-expected competition in both sectors in which the company operates, (4) the possibility of not obtaining renewal of the registration of some of its OTC pharmaceutical products by COFEPRIS, (5) stronger regulations in the sectors in which the company operates, (6) potential temporary stock overhang as Nexxus (private equity fund owning 8% of the shares) might eventually seek to monetize its investment in Genomma, and (7) potential fiscal changes involving VAT. 8 U.S. investors inquiries should be directed to Santander Investment Securities Inc. at (212) / (212)

9 FINANCIAL STATEMENTS Figure 12. Genomma Lab Income Statement, Balance Sheet, and Cash Flow Statement, E (U.S. Dollars in Millions) Income Statement E 2011E 2012E % Sales Cost of Sales Gross Profit Oper. and Adm. Expenses Operating Profit Depreciation EBITDA Financing Costs Interest Paid Interest Earned Monetary Gain/Loss FX Gain/Loss Other Financial Operations Profit before Taxes Tax Provision Profit after Taxes Subsidiaries Extraordinary Items Minority Interest Net Profit Balance Sheet E 2011E 2012E Assets Short-Term Assets Cash and Equivalents Accounts Receivable Inventories Other Short-Term Assets Long-Term Assets Fixed Assets Deferred Assets Other Assets Liabilities Short-Term Liabilities Suppliers Short-Term Loans Other Short-Term Liabilities Long-Term Loans Deferred Liabilities Other Liabilities Majority Net Worth Net Worth Minority Interest Cash Flow E 2011E 2012E Net Majority Earnings Non-Cash Items Changes in Working Capital Capital Increases/Dividends Change in Debt Capital Expenditures Net Cash Flow Beginning Treasury Ending Treasury Sources: Company reports and Santander estimates. U.S. investors inquiries should be directed to Santander Investment Securities Inc. at (212) /(212)

10 Genomma Lab: Growth Opportunities Remain Intact, Introducing YE2011 Target Price Figure 13.Genomma Lab Income Statement, Balance Sheet, and CF Statement, E (Millions of Mexican Pesos) Income Statement E 2011E 2012E % Sales 4, , , , Cost of Sales -1, , , , Gross Profit 3, , , , Oper. and Adm. Expenses -2, , , , Operating Profit 1, , , , Depreciation EBITDA 1, , , , Financing Costs Interest Paid Interest Earned Monetary Gain/Loss FX Gain/Loss Other Financial Operations Profit before Taxes 1, , , , Tax Provision Profit after Taxes , , , Subsidiaries Extraordinary Items Minority Interest Net Profit , , , Balance Sheet E 2011E 2012E Assets 4, , , , Short-Term Assets 3, , , , Cash and Equivalents 1, , , , Accounts Receivable 1, , , , Inventories , , Other Short-Term Assets Long-Term Assets Fixed Assets Deferred Assets Other Assets Liabilities 1, , , , Short-Term Liabilities 1, , , , Suppliers , , Short-Term Loans Other Short-Term Liabilities , Long-Term Loans Deferred Liabilities Other Liabilities Majority Net Worth 3, , , , Net Worth 3, , , , Minority Interest Cash Flow E 2011E 2012E Net Majority Earnings , , ,097.3 Non-Cash Items Changes in Working Capital Capital Increases/Dividends Capital Expenditures Net Cash Flow Beginning Treasury ,289.1 Ending Treasury 1, , , ,873.2 Sources: Company reports and Santander estimates. 10 U.S. investors inquiries should be directed to Santander Investment Securities Inc. at (212) / (212)

11 IMPORTANT DISCLOSURES Genomma Lab 12-Month Relative Performance (U.S. Dollars) Genom m a Lab IPC 80 J-09 S-09 N-09 J-10 M-10 M-10 J-10 Sources: Bloomberg and Santander. Genomma Lab Three-Year Stock Performance (U.S. Dollars) *Initiation of Coverage B $ /1/08 B $1.20 4/6/09 B $1.45 6/15/09 B $ /8/09 B $3.80 2/25/10 B $2.00 B $ /27/08* 10/1/ J-08 A-08 S-08 O-08 D-08 J-09 M-09 A-09 J-09 J-09 S-09 O-09 D-09 J-10 M-10 A-10 J-10 3,500 Analyst Recommendations 3,000 and Price Objectives B: Buy 2,500 H: Hold UP: Underperform 2,000 UR: Under Review 1,500 1, Genomma (L Axis) IPC (R Axis) Source: Santander. U.S. investors inquiries should be directed to Santander Investment Securities Inc. at (212) /(212)

12 Key to Investment Codes IMPORTANT DISCLOSURES Rating Definition % of Companies Covered with This Rating % of Companies Provided Investment Banking Services in the Past 12 Months Buy Expected to outperform the local market benchmark by more than 10% % 55.26% Hold Expected to perform within a range of 0% to 10% above the local market benchmark % 44.74% Underperform/Sell Expected to underperform the local market benchmark. 6.28% -- Under review The numbers above reflect our Latin American universe as of Tuesday, July 13, For a discussion, if applicable, of the valuation methods used to determine the price targets included in this report and the risks to achieving these targets, please refer to the latest published research on these stocks. Research is available through your sales representative and other electronic systems. Target prices are 2010 year-end unless otherwise specified. Recommendations are based on a total return basis (expected share price appreciation + prospective dividend yield) unless otherwise specified. Stock price charts and rating histories for companies discussed in this report are also available by written request to Santander Investment Securities Inc., 45 East 53 rd Street, 17 th Floor (Attn: Research Disclosures), New York, NY USA. Ratings are established when the firm sets a target price and/or when maintaining or reiterating the rating. Ratings may not coincide with the above methodology due to price volatility. Management reserves the right to maintain or to modify ratings on any specific stock and will disclose this in the report when it occurs. Valuation methodologies vary from stock to stock, analyst to analyst, and country to country. Any investment in Latin American equities is, by its nature, risky. A full discussion of valuation methodology and risks related to achieving the target price of the subject security is included in the body of this report. The benchmark used for local market performance is the country risk of each country plus the 1-year U.S. Treasury yield plus 5.5% of equity risk premium, unless otherwise specified. The benchmark plus the 10.0% differential used to determine the rating is time adjusted to make it comparable with the total return of the stock over the same period. For additional information about our rating methodology, please call (212) This research report ( report ) has been prepared by Santander Investment Securities Inc. ("SIS"; SIS is a subsidiary of Santander Investment I, S.A. which is wholly owned by Banco Santander, S.A. ["Santander"]) on behalf of itself and its affiliates (collectively, Grupo Santander) and is provided for information purposes only. This report must not be considered as an offer to sell or a solicitation of an offer to buy any relevant securities (i.e., securities mentioned herein or of the same issuer and/or options, warrants, or rights with respect to or interests in any such securities). Any decision by the recipient to buy or to sell should be based on publicly available information on the related security and, where appropriate, should take into account the content of the related prospectus filed with and available from the entity governing the related market and the company issuing the security. This report is issued in Spain by Santander Investment Bolsa, Sociedad de Valores, S.A. ( Santander Investment Bolsa ) and in the United Kingdom by Banco Santander, S.A., London Branch. Santander London is authorized by the Bank of Spain. This report is not being issued to private customers. SIS, Santander London and Santander Investment Bolsa are members of Grupo Santander. The following analysts hereby certify that their views about the companies and their securities discussed in this report are accurately expressed, that their recommendations reflect solely and exclusively their personal opinions, and that such opinions were prepared in an independent and autonomous manner, including as regards the institution to which they are linked, and that they have not received and will not receive direct or indirect compensation in exchange for expressing specific recommendations or views in this report, since their compensation and the compensation system applying to Grupo Santander and any of its affiliates is not pegged to the pricing of any of the securities issued by the companies evaluated in the report, or to the income arising from the businesses and financial transactions carried out by Grupo Santander and any of its affiliates: Joaquin Ley*, Daniel Gewehr*. *Employed by a non-us affiliate of Santander Investment Securities Inc. and not registered/qualified as a research analyst under FINRA rules, and is not an associated person of the member firm, and, therefore, may not be subject to the FINRA Rule 2711 and Incorporated NYSE Rule 472 restrictions on communications with a subject company, public appearances, and trading securities held by a research analyst account. As per the requirements of the Brazilian CVM, the following analysts hereby certify that I do not maintain a relationship with any individual working for the companies whose securities were evaluated in the disclosed report. That I do not own, directly or indirectly, securities issued by the company evaluated. That I am not involved in the acquisition, disposal and intermediation of such securities on the market: Daniel Gewehr. Grupo Santander receives non-investment banking revenue from the subject company. Santander or its affiliates and the securities investment clubs, portfolios and funds managed by them do not have any direct or indirect ownership interest equal to or higher than one percent (1%) of the capital stock of any of the companies whose securities were evaluated in this report, and are not involved in the acquisition, disposal and intermediation of such securities on the market. The information contained within this report has been compiled from sources believed to be reliable. Although all reasonable care has been taken to ensure the information contained within these reports is not untrue or misleading, we make no representation that such information is accurate or complete and it should not be relied upon as such. All opinions and estimates included within this report constitute our judgment as of the date of the report and are subject to change without notice. From time to time, Grupo Santander and/or any of its officers or directors may have a long or short position in, or otherwise be directly or indirectly interested in, the securities, options, rights or warrants of companies mentioned herein. 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