Strong growth in core services October 19, 2015 Govind Agarwal govindagarwal@plindia.com +91 22 66322300 Hussain Kagzi hussainkagzi@plindia.com +91 22 66322242 Rating BUY Price Rs494 Target Price Rs625 Implied Upside 26.5% Sensex 27,226 Nifty 8,238 (Prices as on October 16, 2015) Trading data Market Cap. (Rs bn) 29.7 Shares o/s (m) 60.2 3M Avg. Daily value (Rs m) 93.7 Major shareholders Promoters 30.87% Foreign 28.08% Domestic Inst. 24.07% Public & Other 16.98% Stock Performance (%) 1M 6M 12M Absolute 8.9 30.2 30.9 Relative 4.0 35.2 26.2 How we differ from Consensus EPS (Rs) PL Cons. % Diff. 2016 45.4 40.6 11.8 2017 49.0 47.1 4.0 Price Performance (RIC: NITT.BO, BB: NITEC IN) (Rs) 600 500 400 300 200 100 0 Oct 14 Dec 14 Source: Bloomberg Feb 15 Apr 15 Jun 15 Aug 15 Oct 15 (NIIT Tech) reported a strong Q2FY16 performance with revenue and margin beat. Company expects further margin improvement in H2FY16, which should support earnings upgrade. Beat on revenue was despite lower hardware sale, a result of the company strategy to de focus on it s Government business. Margins were the strongest in last 3 years. However, a soft order intake of $80m ( 18% QoQ) was one negative. NIIT Tech, after a tepid performance in FY15, is coming back on track. Retain our BUY rating. Strong beat on revenue and margin: NIIT Tech reported an overall revenue growth of 3.5% QoQ in USD terms to US$104.7m (PLe: US$104.2m, Cons.: US$104.1m), and 5.7% QoQ in INR terms to Rs6,779m (PLe: Rs6,774m, Cons: Rs6,769m). Excluding hardware drop, core services revenues grew 6.1% QoQ in CC terms. Organic CC core services revenue growth was 4.3% QoQ. EBITDA margins expanded by 134bps QoQ at 17.6% (PLe: 16.7%, Cons: 16.7%) due to the increased focused on International business. This is the highest margin the company has reported in the last 14 Quarters. EPS for the quarter grew by 16.8% QoQ to Rs11.2 (PLe: Rs10.2, Cons: Rs10.2). The impact of lower Other income was negated by lower than expected Tax Rate. Order book soft: Fresh Order intake for NIIT Tech was $80m (5yr avg.: $117m) driven by 36% win from the US and 42% from Europe, that includes higher component of new engagements from new logos. The order executable over the next 12 months was stable QoQ at $300m. Valuation & Recommendation Retain BUY, with revise TP of Rs625 based on 12x Sep 17 EPS: Client specific issues are behind and run down in Govt. business is almost over. Core markets (US and Europe) have done well in H1FY16. We expect further margin improvement in FY16 and revenue recovery in FY17. Revise our TP to Rs625 (Old Rs550) as we raise FY16/17 EPS by 7.8%/6.3%. Key financials (Y/e March) 2014 2015 2016E 2017E Revenues (Rs m) 23,050 23,724 27,437 30,017 Growth (%) 14.0 2.9 15.6 9.4 EBITDA (Rs m) 3,516 3,456 4,711 5,163 PAT (Rs m) 2,307 1,939 2,772 2,990 EPS (Rs) 38.0 31.8 45.4 49.0 Growth (%) 7.3 (16.4) 42.9 7.9 Net DPS (Rs) 9.0 12.0 15.0 18.0 Profitability & Valuation 2014 2015 2016E 2017E EBITDA margin (%) 15.3 14.6 17.2 17.2 RoE (%) 19.1 14.5 19.1 18.1 RoCE (%) 18.9 14.4 18.9 18.0 EV / sales (x) 1.2 1.2 1.0 0.9 EV / EBITDA (x) 7.9 8.0 5.9 5.1 PE (x) 13.0 15.5 10.9 10.1 P / BV (x) 2.3 2.2 1.9 1.7 Net dividend yield (%) 1.8 2.4 3.0 3.6 Source: Company Data; PL Research Q2FY16 Result Update Prabhudas Lilladher Pvt. Ltd. and/or its associates (the 'Firm') does and/or seeks to do business with companies covered in its research reports. As a result investors should be aware that the Firm may have a conflict of interest that could affect the objectivity of the report. Investors should consider this report as only a single factor in making their investment decision. Please refer to important disclosures and disclaimers at the end of the report
Exhibit 1: Earnings Change Summary Valuing NITEC at 12x FY17 EPS (Rs m) FY16 FY17 Revenue (US$) 422.1 461.8 Change 0.3% 1.3% Growth (YoY) 8.8% 9.4% Revenue 27,437 30,017 Change 0.3% 1.3% Growth (YoY) 15.6% 9.4% EBITDA 4,711 5,163 Change 4.8% 4.7% Growth (YoY) 36.3% 9.6% EBITDA Margin (%) 17.2% 17.2% Change 87bps 100bps Growth (YoY) 260bps 3bps Net Profit 2,772 2,990 Change 9.2% 6.6% Growth (YoY) 42.9% 7.9% EPS (Rs) 45.4 49.0 Change 9.1% 6.7% Growth (YoY) 42.9% 7.9% Exhibit 2: PE Multiple of other Mid cap stocks compared to NIIT Tech FY16 FY17 25.0 20.0 15.0 10.0 18.3 18.2 16.3 15.5 11.1 8.6 19.2 16.7 17.6 15.0 10.8 8.6 16.1 14.0 10.9 10.2 5.0 eclerx* Hexawre KPIT* Mindtree Persistent Polaris* Cyient* NIIT Tech, * Bloomberg Estimates October 19, 2015 2
Exhibit 3: Strong overall performance by the company (Rs m) Y/e March Q2FY16 Q1FY16 QoQ Q2FY15 YoY Consensus PLe Variance(PL vs. Actual) Revenue (US$ m) 104.7 101.2 3.5% 97.2 7.7% 104.1 104.2 0.5% Revenue 6,779 6,411 5.7% 5,883 15.2% 6,769 6,774 0.1% EBITDA 1,194 1,043 14.5% 822 45.3% 1,129 1,131 5.5% EBITDA Margin 17.6% 16.3% 134 bps 14.0% 364 bps 16.7% 16.7% 91 bps Pre Tax Income 942 846 11.3% 564 67.0% 789 922 2.2% Tax 216 219 1.4% 154 40.3% 148 249 13.2% Tax Rate 23% 26% 296 bps 27% 438 bps 19% 27% 407 bps PAT 683 587 16.4% 400 70.8% 641 623 9.6% EPS (Rs) 11.2 9.6 16.8% 6.6 70.8% 10.5 10.2 10.1%, Conference call highlights: 1) Organic Services Revenue: +4.3% in CC terms) 2) Q2FY16 Revenue GIS: Rs311m (Margin: 4%); Morris Rs405m (9%); Proyecta: Rs147m (flat margins); NITL: Rs528m (30%) 3) Currency impact of +10bps on margins 4) 15% Digital revenue share 50% from Digital Experience and 40% from Incessant Digital integration 5) Incessant contribution Revenue: Rs345m (Incremental: Rs124m) ; Margin: 30%; 6) DSO: 89 days (Q1FY16: 92 days) 7) Capex for Q2FY16: Rs365m (Q1FY16: Rs482m); 8) Cash and Cash Equivalent: Rs2,950m. 9) Hedges outstanding: US$58.5m @ Rs67.46; 13.05m @ Rs103.95; 4.5m @ Rs77.05. Exhibit 4: New deal wins 400 350 300 250 200 150 100 50 0 145 84 377 New Deal Wins 144 124 103 109 89 97 80 Q1FY14 Q2FY14 Q3FY14 Q4FY14 Q1FY15 Q2FY15 Q3FY15 Q4FY15 Q1FY16 Q2FY16 October 19, 2015 3
Exhibit 5: Orders wins across different geographies Q3FY15 Q4FY15 Q1FY16 Q2FY16 70 60 61 50 40 30 20 39 43 29 34 29 31 25 23 21 23 17 10 0 USA EMEA ROW Exhibit 6: Orders executable in next 12 months Quite stable in the last few quarters Executable order book 310 300 290 280 270 260 250 240 230 263 248 265 290 295 298 296 295 300 300 Q1FY14 Q2FY14 Q3FY14 Q4FY14 Q1FY15 Q2FY15 Q3FY15 Q4FY15 Q1FY16 Q2FY16 October 19, 2015 4
Exhibit 7: Geographic split USD growth Revenue contribution QoQ YoY Americas 46.0% 5.8% 12.6% EMEA 35.0% 3.5% 0.8% RoW 19.0% 1.7% 13.7% Exhibit 8: Vertical split USD growth Revenue contribution QoQ YoY Finance Insurance & Banking 37.0% 8.7% 29.2% Transportation 37.0% 5.7% 1.5% Manufacturing & Retail 8.0% 41.0% 31.7% Others 15.0% 0.9% 15.2% Government 3.0% 36.6% 15.2% Exhibit 9: Services split USD growth Revenue contribution QoQ YoY Application Development & Management 66.0% 10.8% 20.7% IP Assets 9.0% 19.0% 15.2% Managed Services 16.0% 5.7% 2.4% Systems Integration & Package Implementation 4.0% 47.1% 15.2% BPO Solutions 5.0% 5.7% 4.0% Exhibit 10: Client concentration Client data Q3FY14 Q4FY14 Q1FY15 Q2FY15 Q3FY15 Q4FY15 Q1FY16 Q2FY16 1 5mn 48 47 46 45 46 48 54 56 5 10mn 11 12 12 11 11 12 12 12 >10mn 9 7 6 7 7 6 5 5 Exhibit 11: Headcount metrics Billable Personnel Q3FY14 Q4FY14 Q1FY15 Q2FY15 Q3FY15 Q4FY15 Q1FY16 Q2FY16 Onsite 1,862 1,844 1,834 1,786 1,781 1,785 1,855 1,845 Offshore 5,636 5,787 5,774 5,815 5,606 6,037 6,662 7,008 Total Billable 7,498 7,631 7,608 7,601 7,387 7,822 8,517 8,853 Sales & Marketing (Excl GIS) 141 143 140 140 134 137 139 144 Sales & Marketing (GIS) 48 49 46 51 52 65 65 68 Others 473 467 488 496 486 470 507 527 Grand Total 8,160 8,290 8,282 8,288 8,059 8,494 9,228 9,592 October 19, 2015 5
Exhibit 12: A brief overview of the operating metrics over the last few quarters Revenue by verticals (%) Q3FY14 Q4FY14 Q1FY15 Q2FY15 Q3FY15 Q4FY15 Q1FY16 Q2FY16 Finance Insurance & Banking 35.0% 35.0% 34.0% 33.0% 33.0% 33.0% 36.0% 37.0% Transportation 38.0% 37.0% 39.0% 42.0% 40.0% 38.0% 37.0% 37.0% Manufacturing & Retail 7.0% 7.0% 7.0% 7.0% 7.0% 8.0% 6.0% 8.0% Others 14.0% 16.0% 14.0% 15.0% 15.0% 15.0% 16.0% 15.0% Government 6.0% 5.0% 6.0% 3.0% 5.0% 6.0% 5.0% 3.0% Revenue by services (%) Application Development & Management 66.0% 64.0% 62.0% 63.0% 60.0% 59.0% 63.0% 66.0% IP Assets 8.0% 9.0% 9.0% 9.0% 9.0% 9.0% 8.0% 9.0% Managed Services 13.0% 12.0% 16.0% 18.0% 18.0% 18.0% 16.0% 16.0% Systems Integration & Package Implementation 7.0% 9.0% 7.0% 4.0% 7.0% 9.0% 8.0% 4.0% BPO Solutions 6.0% 6.0% 6.0% 6.0% 6.0% 5.0% 5.0% 5.0% Revenue by geography (%) USA 44.0% 45.0% 44.0% 44.0% 44.0% 44.0% 45.0% 46.0% Europe 38.0% 38.0% 36.0% 38.0% 35.0% 35.0% 35.0% 35.0% APAC 18.0% 17.0% 20.0% 18.0% 21.0% 21.0% 20.0% 19.0% Revenue by clients (%) Top 5 37.0% 35.0% 34.0% 34.0% 34.0% 34.0% 35.0% 32.0% Top 10 49.0% 47.0% 48.0% 47.0% 47.0% 46.0% 46.0% 43.0% Top 20 65.0% 63.0% 64.0% 62.0% 62.0% 62.0% Revenue by location (%) Onsite 65.0% 65.0% 63.0% 65.0% 63.0% 62.0% 61.0% 59.0% Offshore 35.0% 35.0% 37.0% 35.0% 37.0% 38.0% 39.0% 41.0% DSO Days 96 89 95 90 94 93 92 89 October 19, 2015 6
Exhibit 13: US$ revenue growth trend Revenue (US $) QoQ YoY Exhibit 14: INR revenue growth trend Revenue (INR mn) QoQ YoY 106 104 102 100 98 96 94 92 90 10% 8% 6% 4% 2% 0% 2% 7,000 6,500 6,000 5,500 5,000 20.0% 15.0% 10.0% 5.0% 0.0% Q2FY15 Q3FY15 Q4FY15 Q1FY16 Q2FY16 Q2FY15 Q3FY15 Q4FY15 Q1FY16 Q2FY16 Exhibit 15: EBIDTA margin and EBITDA growth trend EBITDA Margin QoQ YoY Exhibit 16: NET Profit growth trends QoQ YoY 17% 16% 15% 14% 13% 12% 50% 40% 30% 20% 10% 0% 10% 20% 60% 40% 20% 0% 20% 40% Q2FY15 Q3FY15 Q4FY15 Q1FY16 Q2FY16 Q2FY15 Q3FY15 Q4FY15 Q1FY16 Q2FY16 October 19, 2015 7
Income Statement (Rs m) Net Revenue 23,050 23,724 27,437 30,017 Raw Material Expenses 15,166 15,656 17,304 18,965 Gross Profit 7,884 8,068 10,133 11,052 Employee Cost Other Expenses 4,368 4,612 5,422 5,889 EBITDA 3,516 3,456 4,711 5,163 Depr. & Amortization 619 916 1,114 1,245 Net Interest Other Income 288 19 179 201 Profit before Tax 3,185 2,559 3,776 4,119 Total Tax 803 541 925 1,050 Profit after Tax 2,382 2,018 2,851 3,069 Ex Od items / Min. Int. 75 (1,521) 79 79 Adj. PAT 2,307 1,939 2,772 2,990 Avg. Shares O/S (m) 60.7 61.0 61.0 61.0 EPS (Rs.) 38.0 31.8 45.4 49.0 Cash Flow Abstract (Rs m) C/F from Operations 1,453 2,580 2,131 3,869 C/F from Investing (997) (1,772) (1,372) (1,501) C/F from Financing (312) (736) (461) (1,099) Inc. / Dec. in Cash 144 72 299 1,269 Opening Cash 2,022 2,166 2,238 2,536 Closing Cash 2,166 2,238 2,536 3,805 FCFF 1,160 2,470 680 2,289 FCFE 1,153 2,465 680 2,289 Key Financial Metrics Growth Revenue (%) 14.0 2.9 15.6 9.4 EBITDA (%) 6.7 (1.7) 36.3 9.6 PAT (%) 8.2 (16.0) 42.9 7.9 EPS (%) 7.3 (16.4) 42.9 7.9 Profitability EBITDA Margin (%) 15.3 14.6 17.2 17.2 PAT Margin (%) 10.0 8.2 10.1 10.0 RoCE (%) 18.9 14.4 18.9 18.0 RoE (%) 19.1 14.5 19.1 18.1 Balance Sheet Net Debt : Equity (0.2) (0.2) (0.2) (0.2) Net Wrkng Cap. (days) 51 45 37 37 Valuation PER (x) 13.0 15.5 10.9 10.1 P / B (x) 2.3 2.2 1.9 1.7 EV / EBITDA (x) 7.9 8.0 5.9 5.1 EV / Sales (x) 1.2 1.2 1.0 0.9 Earnings Quality Eff. Tax Rate 25.2 21.1 24.5 25.5 Other Inc / PBT 9.0 0.7 4.7 4.9 Eff. Depr. Rate (%) 8.2 9.8 10.4 10.2 FCFE / PAT 50.0 127.2 24.5 76.6. Balance Sheet Abstract (Rs m) Shareholder's Funds 13,239 13,573 15,509 17,479 Total Debt 53 49 49 49 Other Liabilities 499 527 527 527 Total Liabilities 13,790 14,149 16,084 18,054 Net Fixed Assets 5,820 6,782 7,040 7,296 Goodwill Investments 551 554 554 554 Net Current Assets 6,642 5,679 7,356 9,071 Cash & Equivalents 2,212 2,692 2,536 3,805 Other Current Assets 8,654 8,605 10,755 11,758 Current Liabilities 4,224 5,618 5,935 6,493 Other Assets 778 1,134 1,134 1,134 Total Assets 13,790 14,149 16,084 18,054 Quarterly Financials (Rs m) Y/e March Q3FY15 Q4FY15 Q1FY16 Q2FY16 Net Revenue 5,953 6,112 6,411 6,779 EBITDA 862 997 1,043 1,194 % of revenue 14.5 16.3 16.3 17.6 Depr. & Amortization 231 242 276 265 Net Interest Other Income 53 (66) 79 13 Profit before Tax 684 689 846 942 Total Tax 178 47 219 216 Profit after Tax 482 (176) 587 683 Adj. PAT 482 624 587 683 Key Operating Metrics Revenue ($ mn) 381 388 422 462. October 19, 2015 8
Prabhudas Lilladher Pvt. Ltd. 3rd Floor, Sadhana House, 570, P. B. Marg, Worli, Mumbai 400 018, India Tel: (91 22) 6632 2222 Fax: (91 22) 6632 2209 Rating Distribution of Research Coverage PL s Recommendation Nomenclature % of Total Coverage 50% 40% 30% 20% 10% 0% 44.1% 43.1% 12.7% 0.0% BUY Accumulate Reduce Sell BUY : Over 15% Outperformance to Sensex over 12 months Accumulate : Outperformance to Sensex over 12 months Reduce : Underperformance to Sensex over 12 months Sell : Over 15% underperformance to Sensex over 12 months Trading Buy : Over 10% absolute upside in 1 month Trading Sell : Over 10% absolute decline in 1 month Not Rated (NR) : No specific call on the stock Under Review (UR) : Rating likely to change shortly DISCLAIMER/DISCLOSURES ANALYST CERTIFICATION We/I, Mr. Govind Agarwal, B.E. and PG Diploma in Management, Mr. Hussain Kagzi (BMS), Research Analysts, authors and the names subscribed to this report, hereby certify that all of the views expressed in this research report accurately reflect our views about the subject issuer(s) or securities. We also certify that no part of our compensation was, is, or will be directly or indirectly related to the specific recommendation(s) or view(s) in this report. Terms & conditions and other disclosures: Prabhudas Lilladher Pvt. Ltd, Mumbai, India (hereinafter referred to as PL ) is engaged in the business of Stock Broking, Portfolio Manager, Depository Participant and distribution for third party financial products. PL is a subsidiary of Prabhudas Lilladher Advisory Services Pvt Ltd. which has its various subsidiaries engaged in business of commodity broking, investment banking, financial services (margin funding) and distribution of third party financial/other products, details in respect of which are available at www.plindia.com This document has been prepared by the Research Division of PL and is meant for use by the recipient only as information and is not for circulation. This document is not to be reported or copied or made available to others without prior permission of PL. It should not be considered or taken as an offer to sell or a solicitation to buy or sell any security. The information contained in this report has been obtained from sources that are considered to be reliable. However, PL has not independently verified the accuracy or completeness of the same. Neither PL nor any of its affiliates, its directors or its employees accepts any responsibility of whatsoever nature for the information, statements and opinion given, made available or expressed herein or for any omission therein. Recipients of this report should be aware that past performance is not necessarily a guide to future performance and value of investments can go down as well. The suitability or otherwise of any investments will depend upon the recipient's particular circumstances and, in case of doubt, advice should be sought from an independent expert/advisor. Either PL or its affiliates or its directors or its employees or its representatives or its clients or their relatives may have position(s), make market, act as principal or engage in transactions of securities of companies referred to in this report and they may have used the research material prior to publication. PL may from time to time solicit or perform investment banking or other services for any company mentioned in this document. PL is in the process of applying for certificate of registration as Research Analyst under Securities and Exchange Board of India (Research Analysts) Regulations, 2014 PL submits that no material disciplinary action has been taken on us by any Regulatory Authority impacting Equity Research Analysis activities. PL or its research analysts or its associates or his relatives do not have any financial interest in the subject company. PL or its research analysts or its associates or his relatives do not have actual/beneficial ownership of one per cent or more securities of the subject company at the end of the month immediately preceding the date of publication of the research report. PL or its research analysts or its associates or his relatives do not have any material conflict of interest at the time of publication of the research report. PL or its associates might have received compensation from the subject company in the past twelve months. PL or its associates might have managed or co managed public offering of securities for the subject company in the past twelve months or mandated by the subject company for any other assignment in the past twelve months. PL or its associates might have received any compensation for investment banking or merchant banking or brokerage services from the subject company in the past twelve months. PL or its associates might have received any compensation for products or services other than investment banking or merchant banking or brokerage services from the subject company in the past twelve months PL or its associates might have received any compensation or other benefits from the subject company or third party in connection with the research report. PL encourages independence in research report preparation and strives to minimize conflict in preparation of research report. PL or its analysts did not receive any compensation or other benefits from the subject Company or third party in connection with the preparation of the research report. PL or its Research Analysts do not have any material conflict of interest at the time of publication of this report. It is confirmed that Mr. Govind Agarwal, B.E. and PG Diploma in Management, Mr. Hussain Kagzi (BMS), Research Analysts of this report have not received any compensation from the companies mentioned in the report in the preceding twelve months Compensation of our Research Analysts is not based on any specific merchant banking, investment banking or brokerage service transactions. The Research analysts for this report certifies that all of the views expressed in this report accurately reflect his or her personal views about the subject company or companies and its or their securities, and no part of his or her compensation was, is or will be, directly or indirectly related to specific recommendations or views expressed in this report. The research analysts for this report has not served as an officer, director or employee of the subject company PL or its research analysts have not engaged in market making activity for the subject company Our sales people, traders, and other professionals or affiliates may provide oral or written market commentary or trading strategies to our clients that reflect opinions that are contrary to the opinions expressed herein, and our proprietary trading and investing businesses may make investment decisions that are inconsistent with the recommendations expressed herein. In reviewing these materials, you should be aware that any or all o the foregoing, among other things, may give rise to real or potential conflicts of interest. PL and its associates, their directors and employees may (a) from time to time, have a long or short position in, and buy or sell the securities of the subject company or (b) be engaged in any other transaction involving such securities and earn brokerage or other compensation or act as a market maker in the financial instruments of the subject company or act as an advisor or lender/borrower to the subject company or may have any other potential conflict of interests with respect to any recommendation and other related information and opinions. DISCLAIMER/DISCLOSURES (FOR US CLIENTS) ANALYST CERTIFICATION The research analysts, with respect to each issuer and its securities covered by them in this research report, certify that: All of the views expressed in this research report accurately reflect his or her or their personal views about all of the issuers and their securities; and No part of his or her or their compensation was, is or will be directly related to the specific recommendation or views expressed in this research report Terms & conditions and other disclosures: This research report is a product of Prabhudas Lilladher Pvt. Ltd., which is the employer of the research analyst(s) who has prepared the research report. The research analyst(s) preparing the research report is/are resident outside the United States (U.S.) and are not associated persons of any U.S. regulated broker dealer and therefore the analyst(s) is/are not subject to supervision by a U.S. broker dealer, and is/are not required to satisfy the regulatory licensing requirements of FINRA or required to otherwise comply with U.S. rules or regulations regarding, among other things, communications with a subject company, public appearances and trading securities held by a research analyst account. This report is intended for distribution by Prabhudas Lilladher Pvt. Ltd. only to "Major Institutional Investors" as defined by Rule 15a 6(b)(4) of the U.S. Securities and Exchange Act, 1934 (the Exchange Act) and interpretations thereof by U.S. Securities and Exchange Commission (SEC) in reliance on Rule 15a 6(a)(2). If the recipient of this report is not a Major Institutional Investor as specified above, then it should not act upon this report and return the same to the sender. Further, this report may not be copied, duplicated and/or transmitted onward to any U.S. person, which is not the Major Institutional Investor. In reliance on the exemption from registration provided by Rule 15a 6 of the Exchange Act and interpretations thereof by the SEC in order to conduct certain business with Major Institutional Investors, Prabhudas Lilladher Pvt. Ltd. has entered into an agreement with a U.S. registered broker dealer, Marco Polo Securities Inc. ("Marco Polo"). Transactions in securities discussed in this research report should be effected through Marco Polo or another U.S. registered broker dealer. October 19, 2015 9