EARNINGS THOMSON REUTERS IBES ESTIMATES SHOW HEALTHY GROWTH IN Q AFTER A ROBUST Q1 (SEE ALSO: APPENDIX, EXHIBITS 11-13)

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1 PROPRIETARY RESEARCH MARKET COMMENTARY REPORTING ANALYST: Amitesh Kumar June 11, 2010 Volume VI Issue 12 EARNINGS THOMSON REUTERS IBES ESTIMATES SHOW HEALTHY GROWTH IN Q AFTER A ROBUST Q1 (SEE ALSO: APPENDIX, EXHIBITS 11-13) The Q blended earnings growth rate (combines actual results for companies that have reported and estimates for companies yet to report) for the Dow Jones STOXX 600 Index once again slightly improved, to 56.0% from 55.7% two weeks ago. The estimated growth rate was 42.7% on March 31, Improvement over the last fortnight can be attributed to better-than-expected earnings results in Basic Materials. Actual earnings growth in Basic Materials improved to 693% from 652% in the previous fortnight. Consumer Goods (3,939%), Basic Materials (539%), and Technology (213%) continue to lead the growth rates in blended earnings. Financials and Industrials are each also showing substantial growth, at 125% and 67%, respectively. The actual earnings growth rate for Q slightly declined to 37.1% from 37.3%, based on 288 companies actual results. The decline in actual earnings from last fortnight is attributed to a slight decline in Consumer Services and Industrials. The actual growth rates for these sectors are down to 35.3% and 15.6% from 45.3% and 15.8%, respectively, from the previous fortnight. Through June 11, 2010, 288 companies in the DJ STOXX 600 have reported Q earnings. Of these, 65.5% reported earnings above analyst expectations, 1% reported in line with expectations, and 33.5% reported below expectations. Overall, Q reported earnings thus far beat estimates by 9.5% compared to 9.4% two weeks ago. The estimated growth rate for Q earnings continued to improve, and once again advanced, to 44.2% from 43.5% two weeks ago. The improvement could mainly be attributed to higher expected growth in Consumer services, which rose to 16% from 8% for the previous fortnight. Financials is expected to lead with an improved estimated earnings growth rate, at 120% from the previous fortnight s 124%, followed by Consumer Goods, at 56%, down from 57%. Technology and Oil & Gas are expected to record robust growth of 90% and 42%, respectively. The expected earnings for Basic Materials also slipped to 102% from 105% in the previous fortnight. Utilities continue to be the weakest sector, with an 8% fall. The outlook for full-year 2010 DJ STOXX 600 earnings growth slipped, for the first time since the beginning of Q2 2010, to 33.5% from the 34.2% forecasted two weeks ago, while 2011 is expected to see 20.5% growth, slightly down from 20.9%. Basic Materials, Financials, Technology and Consumer Goods are expected to drive the 2010 growth rate, with anticipated earnings growth rates of 79%, 75%, 54% and 55%, respectively. ECONOMICS ECB AND BOE TO KEEP HANDS TIGHT, THOUGH PUT A WATCH ON INFLATION DYNAMICS The incoming data continues to suggest that the recovery is progressing at a tepid pace. However, the concerns have been over the growth outlook and the risks of a double-dip recession globally. For the Eurozone, these risks manifest themselves via the fiscal austerity that many Eurozone nations are being asked to deliver. As the fiscal stimulus reverses, and the European Central Bank (ECB) looks to shorten the duration of its liquidity operations, the risks are certainly real. We do not look for the ECB to be in a position to hike interest rates at least until Q The double-dip risks are greater for the UK, as the growth there has been bumping along the bottom. Delivering fiscal austerity, and plans for more are a real threat to the recovery. As with the ECB, the Bank of England (BoE) is not expected to hike rates until Q1 2012, but we would keep an eye on inflation dynamics and the risks to inflation expectations as these may force the BoE's hand and deliver early tightening. We do not see UK inflation below 3.0% this year. Europe Market Commentary, published fortnightly, recaps and reviews recent European economic and financial markets action. It compiles the latest data and cross-content insights of Thomson Reuters market experts, highlighting key activity of the previous two weeks, and previewing noteworthy developments for the coming fortnight for corporate earnings estimates, economic data, fixed income analysis, M&A, private equity, director dealings, market valuation metrics, and more. Thomson Reuters Datastream, ThomsonONE.com Investment Banking, Thomson ONE Analytics, and Thomson Reuters StreetEvents are used to create the tables. View all Thomson Reuters Proprietary Research subscription channels Thomson Reuters. All marks herein are used under license.

2 Exhibit 1. Key Forthcoming European (EUR) Economic Releases Date Region Releases Unit Period IFR Est. Previous Estimate Median Jun 14 EUR Ind Prod y/y % Apr Jun 15 EUR Employment y/y % Q Jun 15 EUR Foreign Trade b Apr Jun 15 GER ZEW Current Idx Jun Jun 15 GER ZEW index Idx Jun Jun 16 EUR HICP x f&e y/y % May Jun 16 EUR HICP final y/y % May Jun 16 EUR Labour cost y/y % Q Jun 16 EUR Wages % Q Jun 18 GBP Money Supply % May Jun 14 EUR Ind Prod y/y % Apr Jun 15 EUR Employment y/y % Q Source: Thomson Reuters IFR Markets. BONDS EUROPEAN GOVERNMENT BONDS COME OFF THE ROPES, THOUGH CONFIDENCE REMAINS FRAGILE European government bonds remain beholden to the tone in risk markets which have come off the ropes in recent sessions, but, despite this, confidence remains fragile. Deep-rooted concerns over the health of both sovereigns and also the financial sector are yet to be put to bed, and while this remains the case, safe havens such as bunds are likely to retain an underlying bid. Levels are extremely elevated, however, with 10-year yields dipping as low as 2.50% this week, and therefore are vulnerable to a setback on any improvement in risk tone. Two-year yields are essentially stuck in a range, pivoting around 0.5%, which suggests a top is forming. Exhibit 2. Europe Debt Issuance (YTD Issuance) Year Proceeds Amount ($M) Total Issuance 2005 $1,147,267 2, ,407,274 2, ,603,048 2, ,039,219 1, ,236,197 1, ,070 1,677 Source: ThomsonONE.com Investment Banking. MERGERS & ACQUISITIONS EUROPEAN DEALS ACTIVITY SHOWS DECENT 47% GROWTH FROM PREVIOUS YEAR In the largest deal of the fortnight, Austria s Raiffeisen International Bank acquired stakes in Cembra Beteiligungs GmbH, an Austrian holding company, for $1.8B. European deals proceeds quarter-to-date in Q2 2010, managed to grow a healthy 35.2% from the same span in the previous quarter, despite a lower number of deals. Year-over-year deal activity recorded significant growth of around 46.7% quarter-to-date in Q The year-to-date M&A proceeds, however, are $194B, down around 20% from 2009, and the lowest for this period in the last five years Thomson Reuters. All marks herein are used under license. TRPR_83800_16 2

3 Exhibit 3. Quarterly Deal Values, All European Involvement Quarter Total Deal Value ($M) Through quarter s 11 TH week Total Deal Numbers Through quarter s 11 TH week Total Deal Value ($M) For quarter Total Deal Numbers For quarter Q $89,399 2,521 $89,399 2,521 Q ,103 2, ,242 3,319 Q ,867 2, ,978 3,764 Q ,389 2, ,296 3,285 Q ,922 2, ,675 3,386 Source: ThomsonONE.com Investment Banking. Exhibit 4. Annual Deal Values, All European Involvement Year Total Annual Deal Value, YTD ($M) Total Deal Numbers, YTD Total Annual Deal Value ($M) Total Annual Deal Numbers 2010 $193,641 5,840 $193,641 5, ,239 5, ,265 13, ,064 6,126 1,171,403 13, ,914 6,675 1,595,529 14, ,272 5,332 1,324,143 12,769 Source: ThomsonONE.com Investment Banking. THOMSON REUTERS MARKET MODEL A slight increase in the DJ STOXX 600 price level and the 12-month forward earnings was offset by a slight drop in the 10-year Treasury rate, resulting in the Thomson Reuters Market Model Risk Premium staying at 13.9%, the same as the previous fortnight. The United Kingdom and Germany saw a drop of 0.1 ppt in the Thomson Reuters Market Model Risk Premium, a gauge of investors risk perception and required rate of return to invest in the market, while the model rose 0.1 ppt for France. This is the first time when the market premium saw almost a halt in upward movement since the debt problem in Europe caught the attention of the market in March Exhibit 5. Equity Risk Premiums Index Current Historical Average Historical Low Historical High STOXX % 11.0% (Since 1999) 5.8% (Jan 20, 2000) 16.6% (Oct 17, 2008) FTSE % 9.3% (Since 1987) 4.4% (Aug 20, 1987) 17.8% (Oct 17, 2008) CAC % 9.8% (Since 1988) 5.0% (Feb 17, 2000) 17.2% (Oct 17, 2008) DAX % 10.0% (Since 1991) 4.9% (Jan 20, 2000) 17.6% (Oct 17, 2008) Source: Thomson Reuters. 20.0% THOMSON REUTERS MARKET MODEL - DJ STOXX % 12.0% 8.0% 4.0% 0.0% Nov-99 May-00 Nov-00 May-01 Nov-01 May-02 Nov-02 May-03 Nov-03 May-04 Nov-04 May-05 Nov-05 May-06 Nov-06 May-07 Nov-07 May-08 Nov-08 May-09 Nov-09 May Thomson Reuters. All marks herein are used under license. TRPR_83800_16 3

4 APPENDIX EXHIBITS 6-16 Exhibit 6. DJ STOXX 600 Market Valuation Metrics 5 Exhibit 7. Major European Indices Key Market Valuation Metrics 5 Exhibit 8. Major National Indices Closing Values 5 Exhibit 9. Key Country Economic Data 6 Exhibit 10. Currency Exchange Matrix 6 Exhibit 11. DJ STOXX 600 Blended Earnings Summary Current Quarter 7 Exhibit 12. DJ STOXX 600 Next-Quarter Estimated Earnings Growth 7 Exhibit 13. DJ STOXX 600 Blended Earnings Growth Current and Next Calendar Years 7 Exhibit 14. DJ STOXX 600 Country-Based Earnings Current and Next Calendar Years 8 Exhibit 15. Europe Blended Earnings Growth Current and Next Calendar Years 8 Exhibit 16. Major Upcoming Earnings Releases 9 Data Tables Methodology Thomson Reuters. All marks herein are used under license. TRPR_83800_16 4

5 Exhibit 6. DJ STOXX 600 Market Valuation Metrics Industry Earnings Weight Price Weight Current Dividend Yield EPS Growth LTG Forward- 12M P/E PEG YTD Price Change 2009 Price Change Basic Materials 6% 9% 2.3% 13% % 71.4% Consumer Goods 11% 15% 3.0% 12% % 31.5% Consumer Services 7% 7% 3.3% 12% % 24.6% Financials 33% 22% 3.3% 18% % 35.2% Health Care 6% 10% 4.4% 6% % 13.2% Industrials 9% 12% 2.8% 13% % 37.0% Oil & Gas 12% 9% 6.4% 14% % 24.2% Technology 2% 3% 2.4% 16% % 20.5% Telecommunications 8% 6% 6.4% 5% % 11.3% Utilities 6% 6% 6.2% 5% % 1.0% STOXX % 12.3% % 28.0% Source: Thomson Reuters Datastream. Exhibit 7. Major European Indices Key Market Valuation Metrics Index Current Dividend Yield EPS Growth LTG Forward 12M P/E PEG Ratio (P/E-to-Growth) FTSE % 12.6% CAC % 11.0% DAX % 11.7% Source: Thomson Reuters Datastream. Exhibit 8. Major National Indices Closing Values YTD Change (%) 2008 Change (%) MTD Change (%) Two-Week Change (%) Index Last High YTD Low YTD AEX % ASX % CAC % DAX % FTSE % FTSE % IBEX % OMX Copenhagen % OMX Helsinki % OMX Stockholm % SWX % Dow Jones STOXX % Dow Jones Industrials % S&P % Source: Thomson Reuters Datastream Thomson Reuters. All marks herein are used under license. TRPR_83800_16 5

6 Exhibit 9. Key Country Economic Data Country QoQ Annualized GDP Benchmark Rate Unemployment Rate Australia Q Denmark Q Finland Q France Q Germany Q Ireland Q Italy Q Netherlands Q Spain Q Sweden Q Switzerland Q United Kingdom Q United States Q Source: Thomson Reuters Datastream. Exhibit 10. Currency Exchange Matrix Currency Australian Dollar China Yuan Euro GB Pound Japanese Yen Swiss Franc US Dollar Australian Dollar China Yuan Euro GB Pound Japanese Yen Swiss Franc US Dollar Source: Thomson Reuters Datastream Thomson Reuters. All marks herein are used under license. TRPR_83800_16 6

7 Exhibit 11. DJ STOXX 600 Blended Earnings Summary Q Industry Number of Companies in Index Available Q Number of Companies Blended Earnings Growth Number of Companies Reported to Date Surprise Diff % Actual vs. Estimate Diff % Actual vs. YA Actual Basic Materials % % 693.3% Consumer Goods % % % Consumer Services % % 35.3% Financials % % 80.0% Health Care % % 11.2% Industrials % % 15.6% Oil & Gas % % 19.3% Technology % % 299.7% Telecommunications % % 4.2% Utilities % % -20.2% STOXX % % 37.1% STOXX ex-energy % % 41.9% STOXX ex-financials % % 25.9% Source: Thomson ONE Analytics. Exhibit 12. DJ STOXX 600 Q Estimated Earnings Growth Industry Number of Companies in Index Q to Date Number of Company Estimates Q to Date Earnings Growth Estimate Basic Materials % Consumer Goods % Consumer Services % Financials % Health Care % Industrials % Oil & Gas % Technology % Telecommunications % Utilities % STOXX % Source: Thomson ONE Analytics. Exhibit 13. DJ STOXX 600 Blended Earnings Growth CY 2010 & 2011 Number of 2010 CY 2011 CY Industry Companies in Index Blended Earnings Growth Blended Earnings Growth Basic Materials 48 79% 30% Consumer Goods 67 53% 23% Consumer Services 72 10% 20% Financials % 32% Health Care 36 10% 6% Industrials % 21% Oil & Gas 39 34% 20% Technology 24 54% 25% Telecommunications 20-4% 4% Utilities 31-4% 5% DJ STOXX % 20.5% Number of Companies Source: Thomson ONE Analytics Thomson Reuters. All marks herein are used under license. TRPR_83800_16 7

8 Exhibit 14. DJ STOXX 600 Country-Based Earnings CY 2010 & 2011 Country Number of Companies in Index Blended Earnings Growth CY2010 Blended Earnings Growth CY2011 Austria % 42.7% Belgium 16 49% 14.1% Denmark % 37.1% Finland % 20.4% France % 20.1% Germany % 19.3% Greece % 21.9% Ireland % % Italy % 20.1% Luxembourg % 51.0% Netherlands % 20.9% Norway % 28.2% Portugal 9 0.9% 16.3% Spain % 11.1% Sweden % 21.1% Switzerland % 13.0% United Kingdom % 21.3% Europe, ex.-uk % 19.5% Source: Thomson ONE Analytics. Exhibit 15. Europe Blended Earnings Growth CY 2010 & 2011 Index Number of Companies in Index Blended Earnings Growth CY2010 Blended Earnings Growth CY2011 DJ STOXX % 20.5% FTSE % 19.1% DAX % 17.5% CAC % 21.8% Source: Thomson ONE Analytics Thomson Reuters. All marks herein are used under license. TRPR_83800_16 8

9 Exhibit 16. Major Upcoming Earnings Releases IBES Local Ticker Company Name Report Date Currency CQ Estimate Year-Ago SGC.GB STAGECOACH GROUP PLC Jun 22 BPN -- HMB.SE HENNES & MAURITZ AB Jun 23 SEK 3.04 BKG.GB BERKELEY GROUP HOLDINGS PLC Jun 23 BPN -- CCL.GB CARNIVAL PLC Jun 14w USD 0.28 PAH3.DE PORSCHE AUTOMOBIL HOLDING SE Jun 14w EUR -- DCO.DK DANISCO Jun 16w DKK 4.78 KESA.GB KESA ELECTRICALS Jun 17w BPN -- PAH3.DE PORSCHE AUTOMOBIL HOLDING SE Jun 17w EUR Source: Thomson Reuters StreetEvents Thomson Reuters. All marks herein are used under license. TRPR_83800_16 9

10 DATA TABLES METHODOLOGY Exhibit 1. Key Forthcoming European (EUR) Economic Releases Exhibit 2. Europe Debt Issuance Exhibit 3. Quarterly Deal Values, All European Involvement Exhibit 4. Annual Deal Values, All European Involvement Exhibit 5. Equity Risk Premiums The Thomson Reuters Market Model is an objective mathematical estimate of the level of risk premium currently imbedded in the European equity market, as benchmarked by the Dow Jones STOXX 600 Index. Our calculated risk premium seeks to estimate the level of anticipated returns currently required by investors to justify investing in European equities as opposed to the risk-free 10-year Treasury note. When investors anticipate a low-risk environment, they are willing to accept the prospect of lower equity market returns relative to what is available in bonds, and vice versa. All Thomson Reuters Market Model-related return calculations are purely hypothetical simulated returns, which do not include any transaction-based costs, such as commissions, brokerage fees, execution slippage, or advisory fees. Hypothetical returns also exclude the possibility of reinvestment of dividends, but do include the compounding of hypothetical capital gains. The model utilizes the Thomson Reuters 12-month forward earnings estimate mean for the STOXX 600 to compute the earnings yield, adds the historical earnings growth rate, and then subtracts the 10-year Treasury note yield. The methodology assumes the following: Ignoring capital gains or losses, the earnings yield approximates the rate of return expected by investors from the stock market, which is directly comparable to bond yields. Investors expected equity market capital gains are assumed to grow at a rate similar to the rate of shortterm earnings growth. The Thomson Reuters Market Model is foremost a relative market valuation tool comparing investors expected rates of return from the European equity market to the available yield to maturity in risk-free Treasuries. The model is not a product of market backtesting or any portfolio optimization exercises. While the model is periodically updated to include hypothetical performance results based on a number of base-case scenarios, past performance is not indicative of expected future results, and hypothetical returns may differ from reported results depending on the starting date of other performance simulations. Exhibit 6. DJ STOXX 600 Market Valuation Metrics Earnings Weight Earnings weight of each industry in the STOXX600 index for the current year. Price Weight Price weighting of each industry for the current year. Current Dividend Yield Weighted annualized dividend yield. EPS Growth LTG Weighted median value for long-term growth rate. F12M P/E Price/Earnings ratio based on earnings for the next 12 months. PEG (P/E-to-Growth) Based on the F12M P/E and EPS Growth LTG, the PEG allows for a comparison of P/E and LTG rates across industries. YTD Price Change Change in price since January 1. Previous Year Price Change Change in price for the previous year. Exhibit 7. Major European Indices Key Market Valuation Metrics 2010 Thomson Reuters. All marks herein are used under license. TRPR_83800_16 10

11 Exhibit 8. Major National Indices Closing Values Columns are Last close, High for the year, Low for the year, Percentage change since January 1, Last year's percentage change, Percentage change for the month to date, and Percentage change since the last Europe Market Commentary was published, two weeks ago. Exhibit 9. Key Country Economic Data Exhibit 10. Currency Exchange Matrix Exhibit 11. DJ STOXX 600 Blended Earnings Summary Current Quarter Industry Based on Industry Classification Benchmark (ICB). Number of companies in each index. Available [current quarter] Number of Companies Number of companies for which either the actual or estimated EPS is available in our database for the quarter. Blended Earnings Growth Earnings growth rate, which combines actual numbers for companies that have reported and estimates for companies yet to report. Number of Companies Reported to Date Number of companies that have reported their quarterly actual earnings. Surprise Differential % Actual vs. Estimate Also known as the surprise factor, it describes how analyst estimates compare to company actuals. Exhibit 12. DJ STOXX 600 Next-Quarter Estimated Earnings Growth Industry Based on Industry Classification Benchmark (ICB). Number of companies in each index. [Next-Quarter] to Date Number of Company Estimates Number of companies used in calculating the next quarter s estimated earnings growth. [Next-Quarter] to Date Earnings Growth Estimate Growth rate based on estimated net income to be reported by companies. Exhibit 13. DJ STOXX 600 Blended Earnings Growth Current and Next Calendar Years Industry Based on Industry Classification Benchmark (ICB). Number of companies in each index CY Blended Earnings Growth Growth rate based on aggregate net income estimated to be reported for CY2010 vs. CY2009 actuals CY Blended Earnings Growth Growth rate based on aggregate net income estimated to be reported for CY2011 vs. CY2010 estimates. Exhibit 14. DJ STOXX 600 Country-Based Earnings Current and Next Calendar Years Country Key European countries. Number of companies in each country index. Blended Earnings Growth CY 2010 Growth rate based on aggregate net income estimated to be reported for CY2010 vs. CY2009 actuals. Blended Earnings Growth CY 2010 Growth rate based on aggregate net income estimated to be reported for CY2011 vs. CY2010 estimates. Exhibit 15. Europe Blended Earnings Growth Current and Next Calendar Years Exhibit 16. Major Upcoming Earnings Releases 2010 Thomson Reuters. All marks herein are used under license. TRPR_83800_16 11

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