BUY (previous: BUY) (previous: 2.20)

Transcription

1 May 04, 2017 Basic Report Update Analyst: Dr. Roger Becker, CEFA, Biologist Evaluation result Fair value BUY 2.26 (previous: BUY) (previous: 2.20) Find BankM Research on Bloomberg, CapitalIQ, Factset, ResearchPool, Thomson Reuters, vwd and Operational milestones achieved Sales revenues in the fourth quarter of 2016 and FY 2016 show that the strategic focus on extending sales activities has been a success. The related investment in staff and marketing in the past two years has clearly had a positive impact on revenue. Particularly strong sales growth of 37% year-on-year was reported for the final quarter of the year. The company ended the financial year with sales up 16%. The increase was principally due to sales momentum in Europe, especially the UK, and in Asia. According to the annual report, this momentum is partly due to strong growth in business with new customers, which should strengthen the volume basis in the future. Year-on-year, volume sales stabilized in German and the Americas. On a quarterly basis, sales were recently down in these regions (in the USA this was due to reorganization of the US subsidiary and preparation of the sales structures to enter the orthopedics market; in Germany it was attributable to withdrawal of a low-margin product), but they are now back at the prior-year level. Earnings were minus 2.1m, which was within the guidance, but were influenced by deferred tax income of 750k due to the capitalization of deferred taxes. Three aspects related to the strategic goal of broadening the sales base deserve special mention: Gaining a strategic investor with a strong industry-related network (April 2016) Marketing approval for an orthopedic product for the US market (December 2016) Exclusive new partnership with a Chinese distributor, which will also support additional registrations in the domestic market (April 2017) The company conducted two capital increases in 2016, with combined net proceeds of around 2.23m. We assume there will be a further capital increase to meet the capital requirements for 2017 and Based on our balance sheet forecast, they are likely to be in the region of 3.0m. On the basis of the annual report, we have adjusted our DCF model and updated our peer group analysis. Taking into account the new shares, we derive a fair value of 2.26 per share and still rate the share as a buy. Sector WKN ISIN Bloomberg/Reuters Accounting standard Financial year Financial reporting Q1 Market segment Transparency standard Financial ratios 2017e 2018e 2019e EV/Sales EV/EBITDA* neg EV/EBIT neg. neg P/E adj. neg. neg Price/Bookvalue Price/FCF neg. neg. neg. ROE (in %) Dividend yield (in %) *2018: not meaningful due to low denominator Number of shares outs. (in mln) MarketCap / EV (in m) 15.2 / 16.2 Free float (in %) Ø daily trading vol. (3M, in ) 12M high / low (in ; close) Price May 3, 2017 (in ; close) Medical Devices DE CUR GY/CURG.DE Performance 1M 6M 12M IFRS Dec 31 May 18, 2017 Regulated Market General Standard / absolute (in %) relative (in %) Benchmark index Daxsubsec. All Pharmaceuticals Perf. Key data / Earnings (in mln) Year Sales EBITDA EBIT EBT Net Profit EPS ( ) EBIT- Margin Net- Margin 2015a % -56.4% 2016a % -32.1% 2017e % -22.2% 2018e % -3.9% 2019e % 6.2% 2020e % Source: curasan AG, BankM Research (e) May 2016 Aug 2016 Nov 2016 Feb 2017 May 2017 curasan AG (red/grey) vs.daxsubsector All Pharmaceuticals Performance (black) Source: Bloomberg This document has been prepared due to a service agreement with the respective issuer. Equity investments generally involve high risks. Potential investors should take into account that share prices may fall and rise and that income from an investment may fluctuate considerably. Investors may lose some or all of the money invested. Investors make their decisions at their own risk. biw Bank für Investments und Wertpapiere AG, Frankfurt, is responsible for the preparation of this document. THIS DOCUMENT MAY NOT BE TAKEN OR TRANSMITTED INTO OR DISTRIBUTED IN THE UNITED STATES, AUSTRALIA, CANADA OR JAPAN OR ANY U.S. PERSON.

2 - 2/12 - Earnings, financial and asset position / forecast May 04, 2017 Earnings, financial and asset position / forecast Substantial sales growth, especially in Q4 Income statement In the 2016 financial year, the company grew adjusted gross sales by 16.1%. Adjustments were made to enhance the comparability of the company s performance. These reduced the prior-year revenue base by approx. 100k. This adjustment resulted from withdrawal of the low-margin trading product Cytoplast. After taking into account trade discounts, sales were up 15.8% (net sales). The fourth quarter was particularly good, with sales growth of 37% (yoy). Regionally, the year-on-year sales growth was mainly in Asia and Europe; sales in the Middle East, the Americas and Germany were constant. While the operating result was positive in the previous year due to the one-off impact of a 4.5m payment from Stryker, an operating loss of 2.7m was recorded for FY 2016, as expected. Overall, the company made a net loss of 2.1m. Contributory factors included capitalization of deferred taxes of 750k in connection with loss carryforwards. As outlined repeatedly in our previous research reports, the Executive Board has defined regional expansion in key target markets as a central strategic goal. Special attention is being paid to the markets in the USA, China, the Middle East and the UK. Having gained a strategic investor with excellent contacts in the Chinese medical technology segment through a private placement in April 2016, this April an exclusive distribution alliance was concluded with a company in the Fosun Group in China. The agreement includes a strategic component that goes beyond distribution and focuses on processes for registering new products for the Chinese market. Together with marketing approval for the orthopedic product Cerasorb Ortho Foam in the USA, which was granted in December 2016, we believe that the company has achieved key milestones in the realization of its corporate objectives. The Executive Board's guidance for 2017 is for gross sales in a range of m and Group net income of between minus 1.6m and minus 2.0m. We take this as a guide and assume that sales after adjustment for trade discounts will come in at 8.2m, with earnings in the middle of the guidance range. Sales momentum driven by regional expansion of sales 1. Sales In subsequent years, the investment in the operating business and the milestones achieved should be clearly visible in sales. In our model, we assume growth of 26% and 30% in the next two years. The necessary momentum should come, in particular, from expansion of distribution in China and USA. The CERASORB product family has already been approved for dental applications in China and for orthopedics in the USA. Further expansion of distribution in both countries should give a considerable boost to sales revenues because of their market size. Overall, we expect sales to be less oriented on the overall market for (synthetic and non-synthetic) bone replacements and its growth. In the short to mid term, curasan's market share should grow faster than the market as a whole as it increases its market share, until growth momentum moves into line with the overall market level. Our sales forecast therefore focuses on the increase in market penetration as a result of sales and marketing activities. We have not taken into account the licensing of products to partners under potential alliances with OEMs.

3 May 04, 2017 Earnings, financial and asset position / forecast - 3/12-1. Cost of materials In 2016 the material cost ratio (ratio of material costs to total output) was 39.0%, compared with 40.8% in the previous year. That greatly reduced inventory duration (days inventory out, DIO) from 171 days in 2015 to 134 days in 2016, bringing it closer to the mean DIO for the pharmaceuticals and life science sector, which is around 110 days (pwc, 2016 Annual Working Capital Opportunity - Sector analysis; see discussion of balance sheet). Owing to the gradual rise in sales of higher-margin bone replacement materials compared relative to trade products (Curavisc, stypro and membranes), and economies of scale due to rising capacity utilization in the production process, we forecast that the material cost ratio will drop further to 38% in the coming years. Reduction in the material cost ratio 2. Personnel expense In 2016, the headcount was virtually constant year on year at 34 employees (2015: 35). Marketing & Sales remains very strong with 16 employees, underscoring the Executive Board s strategy of stepping up placement of its products on the market. In our forecasting model, we assume that personnel expense will rise by 2% p.a., in addition to the cost of 76k for the stock option program. Strengthening marketing and sales 3. Other operating expenses We do not anticipate a significant change in administrative expenses. Moreover, R&D spending is likely to remain constant. We assume this item will rise by 2% p.a. 4. Other operating income Since we do not forecast any reversals of provisions in our model, we are leaving other operating income unchanged at 10k from research subsidies. 5. Taxes In view of the loss carryforward of around 37m, in the long term curasan AG will not report any income tax payments, or such payments will be reduced by the utilization of deferred tax assets. For our forecasting period up to 2020 and in our DCF analysis (up to 2024), we therefore explicitly factor in the tax benefits of the loss carryforwards using the fiscal 60%/40% rule and also calculate the present value of the tax benefit from 2025 (see discussion of balance sheet and valuation). In 2016, deferred taxes of 750k from loss carryforwards were capitalized. These deferred tax assets significantly improved net income. Use of substantial tax loss carryforwards According to our assumptions, which imply that the increase in sales and marketing activities will prove successful, the company should break even in 2018/19.

4 - 4/12 - Earnings, financial and asset position / forecast May 04, 2017 Profit & Loss account Fiscal Year (IFRS) 2015a 2016a 2017e 2018e 2019e 2020e in ths. Net sales 5,619 6,504 8,200 10,660 12,792 15,350 Growth rate (in %) Changes in inventory Total operating income 5,692 6,320 8,200 10,660 12,792 15,350 Cost of materials 2,322 2,465 3,116 4,051 4,861 5, Gross profit 3,370 3,855 5,084 6,609 7,931 9,517 Other operating income 4, in % of total sales Personnel expenses 3,040 3,207 3,376 3,442 3,509 3,578 in % of total sales Other operating expenses 3,142 3,002 3,000 3,060 3,121 3, EBITDA 2,127-2,144-1, ,311 2,766 Depreciation and amortization EBIT 1,594-2,662-1, ,316 Interest income Interest expense EBT 1,346-2,789-1, ,336 Taxes on Income (Exp.+/Inc.-) t/o corporate tax t/o defereed tax Net profit 1,333-2,085-1, ,176 Adjustements -4, Adjusted net profit -3,167-2,085-1, ,176 No. of shares (Ø outstanding) 9,150 10,109 14,418 14,418 14,418 14,418 Net profit / share (EPS) Adj. net profit / share (adj. EPS) P&L margins Margins (in %) 2015a 2016a 2017e 2018e 2019e 2020e Gross profit margin EBITDA margin EBIT margin EBT margin Net profit margin Cash flow statement Cash flow negative again As expected, the operating cash flow was negative in 2016, with a cash outflow of 2.1m. Here too, there is a big difference between FY 2016 and the previous year, which included the payment from Stryker, leading to an operating cash flow of 2.2m. Liquidity was strengthened by the net cash inflow from two capital increases, which brought net proceeds of 2.23m. After investment and after deduction of a

5 May 04, 2017 Earnings, financial and asset position / forecast - 5/12 - payment to Riemser for a partial repayment of liabilities, the cash outflow was 582k. Since there will not be any one-offs like the Stryker payment, the free cash flow will remain negative in 2017 and 2018, before breaking even in Our model therefore assumes a capital increase of 3.0m in 2017 (alternatively: 2.0m in 2017, 1.0m in 2018). Since the issue price cannot be forecast, we assume 1 per share based on the nominal value on the balance sheet. Capital increase needed Cash flow statement Fiscal Year (IFRS) 2015a 2016a 2017e 2018e 2019e 2020e in ths. EBT 1,333-2,085-1, ,176 + Depreciation and amortization Chg. in long-term provisions = Cash Earnings 1,868-1,545-1, ,331 2,625 - Chg. in net working capital , Financial result Others deferred tax = Operating Cash Flow 2,151-2,111-1, ,842 - Capex Payments to Riemser 2, , = Free Cash Flow ,609-3, ,742 + Increase in share capital 954 2,162 3, Bank and other loans Other net items (financial result) = Incr. in Cash (+)/Decr. in Cash (-) ,762 Balance sheet curasan had a cumulative tax-relevant loss carryforward of around 37m as of December 31, At year-end 2016, only 10.1m of this was recognized on the balance sheet as a loss carry forward. In view of the loss carryforward (which could increase to 38.5m by 2018), our balance sheet forecast indicates that the company will have to pay little or no income tax, even beyond our short to midterm forecasting period (up to 2024). In our model, deferred taxes are offset without impacting earnings and cash flow until the tax benefit is reduced to zero in We calculate that the net present value of the tax benefit is 1.949m (see Valuation, DCF model). Overall, we calculate that the net present value of the tax benefits is 4.543m. Cash and cash equivalents were 1.0m on the reporting date, including the net proceeds from the two capital increases in the financial year. In 2016, 375k was used to repay part of the liability to Riemser. In our forecast for the balance sheet, we assume full repayment of the current portion in 2017 and of the non-current portion by Our analysis of the productivity of working capital shows a considerable improvement in DIO to 134 days, and thus a reduction in tied capital. This indicator has therefore moved closer to the benchmark of around 110 days (Pharmaceuticals & Life Sciences Sector, pwc: 2016 Annual Working Capital Opportunity Sector analysis). Overall, the cash conversion cycle has improved from 222 days to 197 days. Offsetting of loss carryforwards; tax benefits until 2029 Considerable improvement in DIO

6 - 6/12 - Earnings, financial and asset position / forecast May 04, 2017 To finance working capital, the company has a factoring line, which we include in receivables and present separately for information. The equity ratio increased from 70.3% to 71%. Balance sheet Fiscal Year (IFRS) 2015a 2016a 2017e 2018e 2019e 2020e in ths. Assets Total Fixed Assets 6,913 7,209 6,776 6,345 5, ,552 Tangible assets 1,368 1,198 1, Intangible assets 1,331 1,291 1,214 1,131 1, Goodwill 2,776 2,776 2,776 2,776 2,776 2,776 Client base 1,379 1,194 1, Deferred tax Total Current Assets 5,664 5,405 5,743 5,357 6,559 9,179 Inventories 2,621 2,137 2,606 3,388 4,065 4,878 Accounts receivable 1,260 2,106 2,148 1,643 2,235 2,280 Factoring (for information purpose) Total liquid funds 1,588 1, ,865 Other current assets Balance Sheet Total 12,577 12,614 12,520 11,702 12,461 14,731 Shareholder's Equity / Liabilities Shareholders Equity 8,840 8,953 10,211 9,876 10,739 12,991 Subscribed capital 9,436 11,418 14,418 14,418 14,418 14,418 Share premium 7,371 7,627 7,703 7,779 7,855 7,931 Other reserves -7,967-10,092-11,909-12,321-11,533-9,357 Total Liabilities 3,737 3,661 2,308 1,826 1,722 1,740 Long Term Liabilities 2,320 1,702 1, t/o Provisions t/o Pension provisions t/o Other liabilities 1,762 1, Short Term Liabilities (< 1 year) 1,417 1,959 1,106 1,124 1,142 1,160 t/o Acc. payable & pre-paymts t/o Bank loans t/o Provisions t/o other current liabilties Balance Sheet Total 12,577 12,614 12,520 11,702 12,461 14,731 Balance sheet ratios In % of Balance Sheet Total 2015a 2016a 2017e 2018e 2019e 2020e Total Fixed Assets Total Current Assets Inventories Trade receivables Total liquid funds Shareholder's Equity Long Term Liabilites Short Term Liabilities Total Liabilities

7 May 04, 2017 The share - 7/12 - The share At year-end 2016, following the two capital increases, there were m shares in the company. A private placement with a strategic Chinese investor took place in April. The issue price of the 943,604 new shares was In December, 1,037,964 shares were placed at an issue price of 1.04 per share. The net proceeds were 2.23m. Shareholder structure 4,6% 8,8% 8,3% 3,1% Riemser Pharma Alto Invest Yinan Xiong 69,1% 2,2% 3,9% Vorstand Aufsichtsrat Isar Holding Free Float Source: curasan AG Current performance In the past 12 months the share price has risen 32% from 1.01 to 1.33 (closing price on May 3, 2017). In the same period, the benchmark index DAX Subsector Pharmaceuticals gained 37%. Since the start of this year shares in curasan have gained 21% while the benchmark index is up 14%. Based on daily returns within the past 12 months, the annualized volatility is around 48% with an average daily trading volume of nearly 17,000 shares. The trading volume has increased steadily in the past 12 months and was 41,623 shares per day last month (with a far higher volatility of 81%).

8 - 8/12 - Valuation May 04, 2017 Valuation To derive a fair value, we performed a fundamental analysis using a DCF model. The result is compared with a peer group analysis, which uses multiples to show the current valuation of comparable public companies. The results of both methods are given an equal weighting. DCF model We used a three-phase model to analyse the free cash flow: Phase I (short-term planning horizon) Phase II (mid-term forecast) Phase III Terminal value Calculation of cost of equity Our estimate of future cash flows is based on the following sources: Discussions with the Executive Board and members of the management Annual report 2016 Discussion of calculation of the cost of equity: Our expectations for the risk premium are based on the 10-year return on the S&P 500. To derive a beta factor, we performed a regression analysis of the weekly returns on the benchmark index DAX Subsector All Pharmaceuticals Performance versus the STOXX Europe 600 for the past 2 years. This gives a beta of 0.9. With an explained variance of 58%, we believe this is a relatively good reflection of curasan AG's company-specific risk. The non-explained risk component is reflected in a company-specific risk premium of 3%. For the terminal value, we assume an EBIT margin of 25%, based on the assumption of a sustained shift in the product mix towards high-margin products. Our model assumes that there is no borrowing. We only assume a leverage effect for the terminal value and therefore alter our target capital structure in this phase (equity/debt 80/20). Net debt and intrinsic value of the tax benefit To supplement the assumptions shown in the tables, below we explain how we derive net debt and calculate the present value of the tax benefit of the loss carryforwards. Net debt: We consider the present cash position to be necessary for operations and therefore disregard it. The liabilities to Riemser are included in investments in non-current assets so net debt includes current liabilities to banks of just 2k. Net present value of the tax benefit: This is factored into our model until the tax benefit is used up (2029). The deferred tax assets (= income tax payments avoided) are discounted in each period with the WACC used in the terminal value calculation. In this way, we derive a present value of 1.961m for the period We explicitly include the annual tax benefit up to 2024.

9 Growth rate Terminal Value Growth rate Terminal Value curasan AG May 04, 2017 Valuation - 9/12 - DCF analysis Phase I 2016a 2017e 2018e 2019e 2020e 2021e 2022e 2023e 2024e in ths. Basis Terminal Value Growth 26.1% 30.0% 20.0% 20.0% 15.0% 12.0% 12.0% 10.0% 2.0% Revenues 6,504 8,200 10,660 12,792 15,350 17,653 19,771 22,144 24,358 24,845 EBIT -2,662-1, ,316 3,514 4,722 6,057 6,090 6,211 - Tax ,863 + Depreciation and amortization Change in long-term provisions Change in net working capital , Other non-cash items Capex 498 1, = Free Cash Flow -2,609-3, ,666 3,391 4,417 5,582 5,557 4,348 Terminal Value 46,274 Discount factor n.a Phase II NPV of Free Cash Flows n.a. -2, ,107 2,021 2,358 2,664 2,361 NPV of Terminal Value 19,661 Valuation Proportion of EV Result of Future Cash Flows 6,847 26% + Result of Terminal Value 19,661 74% = Value of the Entity 26,508 + NPV of tax credit after ,949 + Net debt (as of Dec 31,.2016)* 2 * Liablities to Riemser as of Dec 31/Jan 1 (Buy back of the dental business) = Value of Equity 28,455 are considered in "Capex" from 2017 onwards Current No. of Shares (in ths.) 14,418 Price per Share 1.97 Source: BankM Research Model assumptions Source 2017e 2018e 2019e 2020e 2021e 2022e 2023e 2024e TV Risk free return* Bloomberg -0.73% -0.72% -0.66% -0.53% -0.37% -0.25% -0.13% 0.01% 0.82% Expected Market Return - S&P 500 Bloomberg 9.20% 9.20% 9.20% 9.20% 9.20% 9.20% 9.20% 9.20% 9.20% Market risk premium 9.93% 9.92% 9.86% 9.73% 9.57% 9.45% 9.33% 9.19% 8.38% Sector beta (Daxsubsec. Pharmaceut. Vs. SXXR index Bloomberg Company-specific risk premium 3.00% 3.00% 3.00% 3.00% 3.00% 3.00% 3.00% 3.00% 3.00% Cost of Equity 10.55% 10.56% 10.62% 10.75% 10.91% 11.03% 11.15% 11.29% 13.02% Target weight 100% 100% 100% 100% 100% 100% 100% 100% 80% Cost of Debt 7.00% 7.00% 7.00% 7.00% 7.00% 7.00% 7.00% 7.00% 7.00% Target weight 0% 0% 0% 0% 0% 0% 0% 0% 20% Tax shield 30% 30% 30% 30% 30% 30% 30% 30% 30% WACC 10.55% 10.56% 10.62% 10.75% 10.91% 11.03% 11.15% 11.29% 11.40% Sensitivity analysis 9.00% 10.00% 11.00% 11.40% 12.00% 13.00% 14.00% 1.00% % % % % EBIT margin in Terminal Value 23.50% 24.00% 24.50% 25.00% 25.50% 26.00% 26.50% 1.00% % % % %

10 - 10/12 - Valuation May 04, 2017 Peer Group analysis Mkt Cap* EV* EV/sales Peer Group prev. Day prev. Day 2016** 2017e 2018e 2019e Anika Therapeutics Inc RTI Surgical Inc Wright Medical Group NV 2,850 3, Median 2,584 3, Median (for information only) 7,147 8, Curasan AG *closing prices prev. Day; if not available: current prices; **Multiples 2016 are based on historical prices as of Dec Enterprise value n.a Net debt as of Dec 31,2016 n.a Value of the Equity n.a Calculation of price per share - based on EV/sales ( m) Number of shares (in Ths.) 14,418 14,418 14,418 Price/share ( ) Year 2017e 2018e 2019e Implicit price per share Source: Bloomberg, BankM Research 2017e 2018e 2019e Fair value per share: 2.26 Valuation conclusion Our DCF analysis puts the per-share value at From our peer group analysis based on 2017, we derive a valuation of Giving both results equal weighting, we derive a fair value of Based on the present share price, this indicates considerable price potential.

11 May 04, 2017 Important information, disclosures and disclaimer - 11/12 - Important information, disclosures and disclaimer A. Important information Equity investments generally involve high risks. Investors may lose some or all of the money invested. Potential investors should take into account that share prices may fall and rise and that income from an investment may fluctuate considerably. Past performance is no guarantee for future results. Investors make their decisions at their own risk. B. Disclosures according to Section 34b of the German Securities Trading Act (WpHG) and the Ordinance on the Analysis of Financial Instruments (FinAnV): I. Information about author, company held accountable, regulatory authority: Responsible for the content of this document: biw Bank für Investments und Wertpapiere AG (biw AG), Frankfurt, Germany. Author: Dr. Roger Becker, CEFA, Analyst. Regulatory authority for biw AG is the Bundesanstalt für Finanzdienstleistungsaufsicht (BaFin), Graurheindorfer Straße 108, Bonn, Germany and Lurgiallee 12, Frankfurt am Main, Germany. Issuer of the analysed instruments is curasan AG. Notice according to sec N o 4 FinAnV (previous publications regarding the issuer within the last 12 months): Analyst Date Evaluation Result Fair Value Dr. Roger Becker, CEFA August 21, 2015 Buy 2.24 Dr. Roger Becker, CEFA May 24, 2016 Buy 2.04 Dr. Roger Becker, CEFA August 23, 2016 Buy 2.14 Dr. Roger Becker, CEFA November 15, 2016 Buy 2.23 Dr. Roger Becker, CEFA January 20, 2017 Buy 2.20 II. Additional Information: 1. Sources of information: Main sources of information for the compilation of this document are publications in national and international media and information services (e.g. Reuters, VWD, Bloomberg, dpa-afx, ACMR-IBIS World and others), financial newspapers and magazines (e.g. Börsenzeitung, Handelsblatt, Frankfurter Allgemeine Zeitung, Economist and others), specialist media, published statistics, rating agencies as well as publications by peer group companies and the company itself. Furthermore talks with the management of the issuer have been held. This document was made available to the issuer before publication to ensure the accuracy of the information provided. This resulted in no changes in content. 2. Summary of the valuation principles and methods used to prepare this document: BankM Repräsentanz der biw Bank für Investments und Wertpapiere AG (BankM) uses a 3-tier absolute rating model. The ratings are the evaluation results and refer to a fair value pricing reflecting a time-horizon of up to 12 months. BUY: The calculated fair value of the company s stock is at least 15 % higher than the current market price at the time of the compilation of this document. HOLD: The calculated fair value of the company s stock lies between 15% and +15 % of the current market price at the time of the compilation of this document. SELL: The calculated fair value of the company s stock is at least 15 % lower than the current market price at the time of the compilation of this document. The following valuation methods are being used: Multiple-based models (Price/Earnings, Price/Cash-flow, Price/Book value, EV/Sales, EV/EBIT, EV/EBITA, EV/EBITDA), peer-group comparisons, historical valuation approaches, discount models (DCF, DDM), break-up value and sum-of-the-parts-approaches, assetbased evaluation methods or a combination of the above. The used valuation models depend on macroeconomic factors, such as interest rates, exchange rates, raw materials and on basic assumptions about the economy. Additionally, market sentiment affects the valuation of companies. The valuation is also based on expectations that might change rapidly and without notice, depending on developments specific to individual industries. Rendered evaluation results and fair values derived from the models might therefore change respectively. The evaluation results in general relate to a 12-month horizon. However, evaluation results are subject to changing market conditions and represent only the situation at a given point of time. The evaluation results and fair value prices may in fact be achieved more quickly or slowly than expected by the analysts. Also, the evaluation results and fair value prices might need to be revised upward or downward. 3. Date of first publication of this document: May 4, Date and time of prices of the instruments quoted in this document: Closing prices of May 3, Updates: A specific date or time for an update of this document has not been set. The information given in this document reflects the author s judgement on the date of this publication and is subject to change without notice; it may be incomplete or condensed and it may not contain all material information concerning the company covered. It is in the sole responsibility of BankM to decide on a potential update of this document. III. Disclosures about potential conflicts of interest: 1. BankM s business model is based on economic relationships with issuers and equity transactions to be performed relating to the issuer s stock. BankM has entered into an agreement about the preparation of this document with the issuer that is, or whose financial instruments are, the subject of this document.

12 - 12/12 - Important information, disclosures and disclaimer May 04, 2017 BankM (incl. subsidiaries and affiliates), the authors of this document as well as other persons that were involved in the compilation of this document or affiliated parties: do not have a major shareholding (shareholding exceeding 5%) of the share capital of the issuers have not, within the past twelve months, participated in leading a consortium for the issue via public offer of the financial instruments that are, or whose issuers are, the subject of this document, have not, within the past twelve months, been party to an agreement on the provision of investment banking services with the issuer, that is, or whose financial instruments are, subject of this document and have not received or will not receive a compensation under the terms of this agreement during the same period, have no other significant economic interests relating to the issuer that is, or whose financial instruments are, the subject of this analysis. 2. BankM s internal organisation is aligned with the prevention of conflict of interests in producing and distributing research reports. Possible conflicts of interests will be treated adequately. In particular, physical and non-physical boundaries were installed to keep analysts from gaining access to information that possibly could constitute a conflict of interest for the bank. Insiders dealings according to 12 WpHG in conjunction with Art. 14 directive (EU) 596/2014 categorically are prohibited. All staff members of biw AG and BankM that have access to inside information categorically have to disclose all dealings in financial instruments to the internal compliance department. The compliance of legal requirements and supervisory regulations is subject to continuous supervision and control of the compliance department of biw AG. In this regard, the right to restrict employees dealings in financial instruments is reserved. 3. The remuneration of the analysts mentioned above is not dependent on any investment banking transactions of BankM or its affiliates. The analysts that compiled this document did not receive or acquire shares in the issuer that is, or whose financial instruments are, the subject of this document at any time. The analysts mentioned above herby certify that all of the views expressed accurately reflect their personal views about the issuer and that no part of their compensation was, is or will be, directly or indirectly, related to the specific evaluation result or views expressed by the analyst in this document. 4. Updated information according to sec. 5 para. 4 N o. 3 FinAnV is is available at: C. 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