Telecom Egypt Recharging for the future Upgraded to BUY In this note we update our Telecom Egypt [ETEL] model in view of its 9M10 results, which to us indicate slightly higher 2010e earnings when compared to our old April 2010 forecasts. Although ETEL's 3Q10 earnings missed CICRe, the miss came mostly from below-the-line items for ETEL and Vodafone Egypt (VFE). Also, higher promotional cost and salary increases pressured EBITDA margin, but capex came below our estimates. Putting 3Q10 results behind, we keep revenues almost unchanged over the forecast period (2010e-14e). Matching ETEL management's guidance, we cut margins as well as capex both offsetting one another. This yields a 16% higher DCF-based LTFV of EGP24.8 due to: (i) higher net cash of EGP3.3bn and (ii) removing the 20% liquidity discount previously applied to VFE's valuation, given its better performance versus ECMS'. We also upgrade our TP by 11% to EGP21/share (a 20% upside) on higher ECMS target price and no discount applied to VFE. We, therefore, upgrade our rating from Hold to Buy with the same Moderate Risk rating. Change in estimates. We keep our revenue projections almost unchanged throughout our forecast period (2010e-14e), implying a 1% 5-year CAGR. We estimate the retail segment will be flat over the next 5 years as lower voice revenues should be offset by high demand for ADSL and triple-play services. Going forward, we expect the price war led by mobile operators to somewhat cool off, limiting ARPU erosion and easing competitive pressures on ETEL s revenues. Meanwhile, we expect cable revenues to drive wholesale revenues to grow at a 5- year CAGR of 2%. In line with ETEL management's guidance, we cut 2010e EBITDA margin (after provisions) from 45% to 42.7% and lower capex by 37% to EGP1.1bn or 11% of revenues. 3Q10 results wrap-up. In 3Q10, ETEL reported 7% year-on-year (YoY) lower net earnings of EGP766mn (-21% QoQ), falling short of CICRe by 20% due to: (i) lower margins, (ii) an impairment loss, and (iii) a lower-than-expected investment income, mostly from VFE. Excluding impairment losses, ETEL's adjusted net earnings would be 11% below CICRe. ETEL's net revenues grew 2% YoY, while EBITDA margin was pressured by promotional cost and salary increases, falling 4 percentage points QoQ to 47.6%. (Please read our Newsflash dated November 11th, 2010.) Valuation and recommendation. ETEL continues to bolster its net cash position, recently standing at EGP3.3bn by end of September 2010 (up from EGP1.4bn at end of December 2009), thanks to lower debt as well as capex. We, therefore, increased our DCF-based LTFV by 16% to EGP24.8/share. We also upgraded our TP by 11% to EGP21/share, based on a 2011e EV/EBITDA of 4x for the fixed-line business and ECMS' 2011e PER for ETEL's stake in VFE after removing the 20% liquidity discount we used to apply. Given a 20% upside potential, we upgrade our rating a notch from Hold to Buy with the same Moderate Risk rating. EGP mn 2008 A 2009 A 2010 F 2011 F 2012 F Revenues 10,117 9,960 10,059 10,062 10,154 Growth rate -1.5% 1.0% 0.0% 0.9% EBITDA 4,671 4,687 4,298 4,257 4,253 Growth rate 0.3% -8.3% -0.9% -0.1% EBITDA margin 46.2% 47.1% 42.7% 42.3% 41.9% Net income 2,790 3,051 3,134 3,222 3,151 Growth rate 9.4% 2.7% 2.8% -2.2% Net margin 27.6% 30.6% 31.2% 32.0% 31.0% PER 10.7x 9.8x 9.5x 9.3x 9.5x P/BV 1.1x 1.2x 1.2x 1.1x 1.1x EV/EBITDA 3.2x 2.8x 2.6x 2.1x 1.6x Net debt/ebitda 0.1x -0.3x -0.8x -1.3x -1.8x Dividend yield 7.4% 7.4% 7.3% 7.5% Source: Telecom Egypt and CICR estimates 7.4% 1 COMPANY SYNOPSIS BUY (UPGRADED) LTFV EGP24.8 (UPGRADED) TP EGP21.0 (UPGRADED) Delivering on its promise to privatize its state-run telecom company, the Government of Egypt (GoE) first transformed its Arab Republic of Egypt National Telecommunication Organization (ARENTO) into a joint stock company in 1998 according to Law No. 19/1998. Subsequently, ARENTO became known as Telecom Egypt (TE), truly reflecting its scope of business. TE is Egypt's sole fixed-line telecom operator offering retail telecommunication services including access, voice, and internet and data through its subsidiary TE Data. Further, it is the sole provider of wholesale services including broadband capacity leasing to ISPs, national and international interconnection services. TE is one of the largest providers of fixed-line services in the Middle East & Africa with more than 9.4mn subscribers as of September 2010, implying a penetration rate of c.12%. TE participates in the growth story of Egypt s fast-growing mobile market through its 45% stake in Vodafone Egypt (VFE), the second largest mobile operator in Egypt in terms of subs. TE s ISP subsidiary TE Data has a leading market share of 62%. SHAREHOLDER STRUCTURE Government of Egypt (GoE) 80.0% Free Float 20.0% Total 100.0% STOCK DATA Reuters; Bloomberg ETEL.CA/ETELq.L; ETEL EY Recent price as of 25-Nov-10 EGP 17.51 No. of O/S shares 1,707 mn Market cap EGP 29,890.8 mn 52-wk high / low EGP 20.59/ EGP 14.88 Avg. daily volume / turnover 1.28 mn / EGP 22.9 mn STOCK PERFORMANCE 52 WEEKS EGP 25 20 15 10 5 0 Nov-09 Jan-10 Mar-10 May-10 Jul-10 Sep-10 Nov-10 Source: Reuters Volume ETEL EGX 30 - rebased mn shares 12.0 10.0 8.0 6.0 4.0 2.0 MOHAMED HAMDY MOHAMED.HAMDY@CICH.COM.EG AMR HUSSEIN ELALFY, CFA AMR.ELALFY@CICH.COM.EG -
Change in estimates We expect net disconnections to amount to 110,000 throughout 2010 due to ETEL s new credit policy of disconnecting inactive subs. ETEL management reiterated their guidance for 2010 revenue growth between 0% to 2% YoY. Yet, we think ETEL may be able to end the year with total revenues growing by 1% YoY to EGP10,059mn. This includes cable revenues of c. EGP600mn without which total revenues would be otherwise down 5% YoY. The Egyptian government is unlikely to offer a second fixed-line license before 2013 as the idea lost its economic merit due to the drop in the number of active lines. We believe competition from mobile operators will continue to exert pressure on ETEL s retail revenues (with wireless on-net minute rates approaching fixed-tofixed rates). However, we expect the price war instigated by mobile operators to somewhat cool off going forward, thus limiting ARPU erosion and easing competitive pressures on ETEL s revenues. Going forward, lower voice revenues is expected to be offset by strong anticipated growth in internet and data revenues, thanks to (i) TE Data (ETEL's ISP arm) and (ii) introduction of triple-play services in gated compounds. These two catalysts should help revive retail revenue growth starting 2012. Furthermore, ETEL plans to become an integrated operator in 2011 and expects more clarity on the MVNO license in 1Q11. We note that we have not included in our forecasts any potential revenue (or value) from an MVNO license until the company provides more visibility on the subject. We expect slightly higher wholesale revenues in 2011. ETEL management expects EGP600-800mn of cable-related revenues to be booked in 2010 and almost the same amount in 2011. Management stated that its cable project will be completed in 1Q11. Wholesale revenues should stabilize further if ETEL succeeded to sign another long-term wholesale agreement with ECMS. Overall, we project total revenues to grow at a 5-year CAGR (2009a-14e) of 1% on growing ALIS (a 1% CAGR) and ADSL subs (a 26% CAGR) over the same period. We estimate retail revenues to record a 0% CAGR and wholesale revenues to grow by an average annual growth rate of 2%, partially due to cable revenues. As per ETEL management's guidance, we cut 2010 EBITDA margin (after provisions) from 45% to 42.7%. 2010 revenues: Minimal growth in 2010 Retail revenues: TE Data and triple-play services to help topline performance; MVNO not factored in CICRe yet Wholesale revenues: Expected stability, thanks to cable-related revenues Cutting after-provision EBITDA margins to low-40s Having succeeded to get better prices from its suppliers, ETEL lowered its capex guidance from EGP1.5-2bn to EGP1-1.2bn. Hence, we cut our estimated capex for 2010 by 37% to EGP1.1bn (11% of total revenues) and onwards. This ultimately resulted in a 19% higher simple FCFF in 2010e versus our old estimates back in April 2010. Absent M&A deals, we expect ETEL's dividend payout ratio to normalize at 70%, implying an average dividend yield of 7% over 2010e-14e. Figure 1 Change in estimates Cash flow improves further by lower expected capex 2010 e 2011 e 2012 e 2013 e 2014 e Old New % change Old New % change Old New % change Old New % change Old New % change ALIS (000) 9,534 9,444-1% 9,891 9,624-3% 10,573 9,820-7% 10,855 9,934-8% 11,033 10,043-9% EGP mn Revenues 9,984 10,059 1% 10,016 10,062 0% 10,276 10,154-1% 10,343 10,210-1% 10,485 10,271-2% Gross Profits 6,478 6,409-1% 6,673 6,440-3% 6,886 6,496-6% 6,949 6,533-6% 7,064 6,571-7% EBITDA after provisions 4,501 4,298-4.5% 4,480 4,257-5.0% 4,585 4,253-7.2% 4,581 4,239-7.5% 4,622 4,218-8.7% EBITDA margin 45.1% 42.7% (235bps) 44.7% 42.3% (242bps) 44.6% 41.9% (273bps) 44.3% 41.5% (277bps) 44.1% 41.1% (302bps) NPAUIMI 3,074 3,134 2% 3,042 3,222 6% 3,066 3,151 3% 2,999 3,041 1% 2,920 2,929 0% Capex 1,751 1,111-37% 1,644 1,312-20% 1,542 1,229-20% 1,406 1,191-15% 1,277 1,155-10% Capex / revenues 17.5% 11.0% (649bps) 16.4% 13.0% (337bps) 15.0% 12.1% (290bps) 13.6% 11.7% (193bps) 12.2% 11.2% (94bps) Simple FCFF 2,399 2,845 19% 2,489 2,857 15% 2,640 2,678 1% 2,836 2,725-4% 2,994 2,748-8% Source: CICR estimates 2
Valuation and recommendation So far, ETEL has managed to bolster its net cash position in 2010 to EGP3.3bn by end of September 2010, up from EGP1.4bn at end of December 2009. This was the result of ETEL's ability to reduce debt and cut capex. Hence, our DCF-based fair value has increased by 16% to EGP24.8 /share (vs. our previous LTFV of EGP21.3) due to: (i) a higher net cash of EGP3.3bn (vs. EGP1.4bn in previous update) and (ii) removing the 20% liquidity discount we used to apply to our valuation for VFE, given its relatively better performance versus ECMS in 2010. Meanwhile, we upgraded our target price by 11% to EGP21/share, based on: (i) a 2011e EV/EBITDA of 4x for the fixed-line business and (ii) ECMS' 2011e PER for ETEL's stake in VFE (no discount). Given a 20% upside, we upgraded our rating by one notch from Hold to Buy with the same Moderate Risk rating. Upgrading recommendation to Buy with a LTFV of EGP24.8 and TP of EGP21 Investment rationale Capitalizing on mobile sector growth through VFE and internet via TE Data. Potential growth opportunity to offer services through MVNO. Triple-play services to stimulate subs growth. High net cash position of EGP3.3bn. TE North to generate USD500mn over 15 years. Risks to our recommendation Slow pace of growth in fixed-line revenues. Intensified pressure from wireless competition by offering lower-priced tariffs. Interconnection dispute with mobile operators could hit ETEL s profitability. The Egyptian government, ETEL s major shareholder, may be reluctant to approve of new regional expansion plans, especially after bad experience with LACOM, ETEL's Algerian fixed-line venture. 3
Figure 2 DCF-based LTFV valuation (sum of the parts) 2010 e 2011 e 2012 e 2013 e 2014 e FCFF Calculation EBITDA EGP mn 4,298 4,257 4,253 4,239 4,218 Less: Taxes on EBIT EGP mn (349) (339) (326) (312) (303) Less: Capex EGP mn (1,111) (1,312) (1,229) (1,191) (1,155) Plus: Change in WI EGP mn 8 251 (20) (12) (13) FCFF 2,845 2,857 2,678 2,725 2,748 TV (end of 2014) - based on TGR 1.0% 19,206 TV (end of 2014) - based on EV/EBITDA multiple 4.0x 20% discount to mobile 16,870 Average terminal value (end of 2014) 18,038 2010 e 2011 e 2012 e 2013 e 2014 e Discount rate & PV of FCFF Beta 1.00 Equity weight 97.1% 97.6% 98.1% 98.5% 99.0% Risk-free rate 8.9% Debt weight 2.9% 2.4% 1.9% 1.5% 1.0% Equity market premium 8.0% Total 100.0% 100.0% 100.0% 100.0% 100.0% Cost of Equity (CoE) 16.9% CoE 16.9% 16.9% 16.9% 16.9% 16.9% Before-tax cost of debt (CoD) 12.1% AT CoD 9.7% 9.7% 9.7% 9.7% 9.7% Tax rate 20.0% WACC 16.7% 16.7% 16.8% 16.8% 16.8% After-tax cost of debt (AT CoD) 9.7% Terminal Growth Rate 1.0% Terminal WACC 15.5% ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------ WACC 16.7% 16.7% 16.8% 16.8% 16.8% Discount factor 0.98 0.84 0.72 0.62 0.53 Cumulative discount factor 1.00 0.00 0.00 0.00 0.00 0.00 PV of FCFF 2,802 2,411 1,934 1,684 1,452 Sum of PV of FCFF EGP mn 10,283 Long-term fair value PV of Terminal Value 9,534 Enterprise Value 19,817 Less: (Net debt) / Plus: Net cash 30-Sep-10 3,254 Cost of equity Equity value (fixed-line business) 23,070 24.8 15.9% 16.9% 17.9% Equity long-term value (fixed-line business) 26,968 0.0% 24.7 24.6 24.4 Vodafone Egypt LTFV equity stake 44.95% 15,332 1.0% 25.0 24.8 24.6 Total Telecom Egypt Group equity value 42,300 2.0% 25.2 25.0 24.8 No. of shares mn 1,707 Maximum Base case Minimum Growth LT Fair value per share (in 12M) EGP/share 24.8 25.2 24.8 24.4 Source: Telecom Egypt and CICR estimates 4
Balance Sheet (EGP mn) 2008A 2009A 2010F 2011F 2012F 2013F 2014F Assets Cash & Cash Equivalent 2,735 2,453 4,309 6,481 8,408 10,393 12,371 Net Receivables 2,965 2,821 2,701 2,450 2,473 2,486 2,501 Total Inventory 473 414 480 476 481 484 487 Advance Payment 64 47 52 52 52 53 53 Other Trading Assets 0 0 0 0 0 0 0 Total Current Assets 6,237 5,734 7,542 9,459 11,414 13,415 15,411 Net Plant 18,640 17,368 15,948 14,717 13,340 11,867 10,335 Long-Term Investments 7,024 7,731 7,779 7,843 7,888 7,875 7,855 Prepaid Exp. 0 0 0 0 0 0 0 Other Non-current Assets 1,814 1,490 1,787 1,966 2,163 2,379 2,617 Intangibles 155 138 79 44 9 0 0 Total Assets 33,870 32,461 33,135 34,028 34,813 35,536 36,218 Liabilities & Equity Short-Term Debt 7 7 0 0 0 0 0 CP of Long-Term Debt 1,113 179 152 147 144 144 115 Bonds 400 0 0 0 0 0 0 Accounts Payable 216 159 170 169 170 171 172 Accrued Expenses 246 347 350 347 351 353 355 Down Payments 297 331 276 276 278 280 281 Taxes Payable 746 616 634 634 640 643 647 Dividends Payable 1 2,220 2,194 2,255 2,205 2,129 2,050 Other Current Liabilities 1,953 2,119 2,041 2,041 2,042 2,043 2,044 Total Current Liabilities 4,979 5,977 5,816 5,869 5,831 5,763 5,665 Total Long-Term Debt 1,226 858 742 595 451 308 193 Bonds 400 0 0 0 0 0 0 Other Non-Current Liabilities 287 236 236 236 236 236 236 Total Liabilities 6,892 7,071 6,794 6,700 6,518 6,307 6,094 Other Provisions 309 341 352 372 392 412 428 Minority Interest 38 41 41 42 43 44 45 Shareholders' Equity 26,631 25,008 25,948 26,915 27,860 28,772 29,651 Total Liab. & Equity 33,870 32,461 33,135 34,028 34,813 35,536 36,218 Income Statement (EGP mn) 2008A 2009A 2010F 2011F 2012F 2013F 2014F Yearend ALIS ('000) 11,703 9,554 9,444 9,624 9,820 9,934 10,043 Yearend ADSL ('000) 424 625 878 1,128 1,399 1,692 2,009 Access 1,999 2,049 1,769 1,657 1,585 1,569 1,584 Voice 3,015 2,618 2,034 1,741 1,586 1,475 1,411 Internet, Data, & Others 1,167 1,096 1,379 1,678 1,981 2,331 2,660 Retail Revenues 6,181 5,764 5,182 5,076 5,152 5,374 5,655 Domestic 1,058 1,029 1,190 1,244 1,244 1,244 1,244 International 2,878 3,168 3,687 3,741 3,758 3,591 3,372 Wholesale Revenues 3,936 4,197 4,877 4,986 5,003 4,836 4,616 Revenues 10,117 9,960 10,059 10,062 10,154 10,210 10,271 Cost of Revenues (3,365) (3,269) (3,650) (3,622) (3,658) (3,677) (3,700) Gross Profit 6,752 6,691 6,409 6,440 6,496 6,533 6,571 SG&A (1,588) (1,643) (1,769) (1,911) (1,969) (2,018) (2,082) EBITDA before provisions 5,163 5,048 4,640 4,529 4,527 4,515 4,490 Provisions (3) (30) (11) (20) (20) (20) (15) Release of unused provision 8 0 0 0 0 0 0 Impairment loss (497) (331) (332) (252) (254) (255) (257) EBITDA after provisions 4,671 4,687 4,298 4,257 4,253 4,239 4,218 Depreciation & Amortization (2,744) (2,742) (2,551) (2,560) (2,623) (2,681) (2,704) EBIT 1,927 1,945 1,747 1,697 1,630 1,558 1,513 Interest Expense (361) (137) (23) (18) (15) (11) (8) Interest Income 158 132 188 343 344 344 345 Investment Income 1,316 1,411 1,340 1,358 1,339 1,281 1,274 Other Non-Operating Income 263 173 327 327 327 327 245 Other Non-Operating Expenses 4 (13) 4 0 0 0 0 EBT 3,308 3,510 3,583 3,707 3,625 3,499 3,370 Taxes (512) (453) (448) (482) (471) (455) (438) NPAT 2,795 3,057 3,135 3,225 3,154 3,044 2,932 Minority Interest (6) (5) (2) (3) (3) (3) (3) Extraordinary Items 0 0 0 0 0 0 0 Attributable Profits 2,790 3,051 3,134 3,222 3,151 3,041 2,929 5
Cash Flow (EGP mn) 2008A 2009A 2010F 2011F 2012F 2013F 2014F NOPAT 1,858 1,685 1,530 1,487 1,440 1,384 1,352 Depreciation & Amortization 2,744 2,742 2,551 2,560 2,623 2,681 2,704 Gross Cash Flow (COPAT) 4,602 4,427 4,081 4,048 4,063 4,065 4,056 Working Investments Change 420 298 8 251 (20) (12) (13) Other Current Items 107 194 0 0 0 0 0 Cash After Current Operations 5,129 4,919 4,089 4,298 4,043 4,052 4,043 Financing Payments (2,188) (1,650) (202) (171) (162) (155) (152) Cash Before LT Use 2,942 3,269 3,887 4,128 3,882 3,898 3,892 Net Plant Change (1,137) (1,446) (1,111) (1,312) (1,229) (1,191) (1,155) FCFF 3,993 3,473 2,978 2,986 2,814 2,862 2,888 Others 1,468 935 1,270 1,549 1,529 1,482 1,369 Cash Before Financing 3,273 2,758 4,046 4,364 4,182 4,189 4,106 Short-Term Debt (1) (0) (7) 0 0 0 0 Long-Term Debt (12) (589) 36 0 0 0 0 Networth 317 (2,455) 0 0 0 0 0 Grey Area (21) 5 0 1 1 1 1 Dividends (2,219) (0) (2,220) (2,194) (2,255) (2,205) (2,129) Change in Cash 1,338 (282) 1,856 2,172 1,927 1,985 1,978 Key ratios & multiples 2008A 2009A 2010F 2011F 2012F 2013F 2014F ROE 10.5% 12.2% 12.1% 12.0% 11.3% 10.6% 9.9% ROS 27.6% 30.6% 31.2% 32.0% 31.0% 29.8% 28.5% ROA 8.2% 9.4% 9.5% 9.5% 9.0% 8.6% 8.1% ROIC (incl. VFE) 12.7% 15.2% 13.5% 12.8% 12.1% 11.1% 10.6% EBITDA Margin (Before prov.) 51.0% 50.7% 46.1% 45.0% 44.6% 44.2% 43.7% EBITDA Margin (After prov.) 46.2% 47.1% 42.7% 42.3% 41.9% 41.5% 41.1% EPS 1.63 1.79 1.84 1.89 1.85 1.78 1.72 DPS 1.3 1.3 1.3 1.3 1.3 1.2 1.2 DIV./NPAUI 80% 73% 70% 70% 70% 70% 70% P/E 10.7x 9.8x 9.5x 9.3x 9.5x 9.8x 10.2x Dividend Yield 7.4% 7.4% 7.3% 7.5% 7.4% 7.1% 6.9% P/ Revenue 3.0x 3.0x 3.0x 3.0x 2.9x 2.9x 2.9x EV/Sub (US$) $444 $518 $487 $436 $391 $349 $309 P/ EBITDA 6.4x 6.4x 7.0x 7.0x 7.0x 7.1x 7.1x Net Debt/ EBITDA 0.1x -0.3x -0.8x -1.3x -1.8x -2.3x -2.9x EV/ EBITDA 3.2x 2.8x 2.6x 2.1x 1.6x 1.1x 0.6x P/ BV 1.1x 1.2x 1.2x 1.1x 1.1x 1.0x 1.0x Source: Telecom Egypt and CICR estimates 1
Contacts and Disclaimer: CI CAPITAL RESEARCH Mark Rorison Group Director, Head of Research Mark.Rorison@cich.com.eg Amr Hussein Elalfy, CFA Director Amr.Elalfy@cich.com.eg Mona Mansour Director Mona.Mansour@cich.com.eg CI CAPITAL SECURITIES BROKERAGE (EGYPT & UAE) Khaled Abd El Rahman MD & Global Head of Securities Brokerage Khaled.Abdelrahman@cich.com.eg DYNAMIC SECURITIES CI CAPITAL HOLDING 8, Nadi El-Seid Street, Third Floor Dokki, Giza Egypt Reuters pages: COIW, COIX, COIY, and COIZ Bloomberg page: COIB <GO> For more information, please contact CI Capital Research on +2 (02) 33 38 62 59, send e-mail to Research@cich.com.eg or visit our website at www.cich.com.eg Ahmed Roushdy Managing Director Ahmed.Roushdy@cich.com.eg RATING SYSTEM In February 2009, CI Capital Research (CICR) launched a new rating system to give analysts more freedom to be market responsive. This is to make one element of our research more dynamic, namely the advertising of target prices and recommendations. What we did not change is our assessment of the Long Term Fair Value (LTFV), nor have we stopped our detailed industry and company research. What we did is changing the target price to trade in the balance of where a share should trade and where we think it w ill trade. LTFV: As before we continue to estimate a fundamental valuation, largely DCF and/or NAV based. Target Price: The target price, which is not necessarily the LTFV, is where the analyst, given all (qualitative as well as financial) information available, thinks the share price can get to within the next 3-12 months. This can be changed at any time on changing facts, and perceptions. Recommendations: Our new rating system falls out from the total return relating to the share price performance to the target price, and including any distributions as may not be included in the target price calculation. This is shown in the table below, and to be BUY must return over 19%, an arbitrary hurdle rate we think reasonable given prevailing interest rates and risks. (Please see table below.) Recommendation structure: Change to Target Price Strong BUY > 30% Strong Conviction BUY > 20% < 30% Hold > 10% < 20% Underw eight > 0% < 10% SELL < 0% DISCLAIMER The information used to produce this market commentary is based on sources that CI Capital Research (CICR) believes to be reliable and accurate. This information has not been independently verified and may be condensed or incomplete. CICR does not make any guarantee, representation or warranty and accepts no responsibility or liability to the accuracy and completeness of such information. Expression of opinion contained herein is based on certain assumptions and w ith the use of specific financial techniques that reflect the personal opinion of the authors of the commentary and is subject to change without notice. It is acknowledged that different assumptions can always be made and that there is a wide choice of techniques that can be adopted each of which can lead to a different conclusion. Therefore, all that is stated herein is of an indicative and informative nature as forward-looking statements, projections, and fair values quoted may not be realized. Accordingly, CICR does not take any responsibility for decisions made on the basis on the content of this commentary. This commentary is made for the sole use of CICR s customers and no part or excerpt of its content may be redistributed, reproduced or conveyed in any form, w ritten or oral, to any third party without the prior written consent of CICR. This commentary does not constitute a solicitation or an offer to buy or sell securities.