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PLEXOR's Method

NAME OF THE PERSON RESPONSIBLE FOR THE PRODUCTION OF THE OPINION AND INDIVIDUAL WHO PREPARES THE OPINION: PLEXOR (herein after referred as "the Financial Blogger"), AN INDEPENDENT FINANCIAL BLOGGER (JOB TITLE). The opinion is produced by the Financial Blogger taking care to ensure that: facts are clearly distinguished from interpretations, estimates, opinions and other types of non-factual information; all sources are reliable or, where there is any doubt as to whether a source is reliable, this is clearly indicated; all projections, forecasts and price targets are clearly labelled as such and the material assumptions made in producing or using them are indicated. Substantially used material sources: publicly available information about the relevant issuer (for example, reports known as 10-ks, 10-qs, 20-fs, along with the relevant issuer's quarterly and annual reports, recent conference call transcripts and presentations the relevant issuer has held). The opinion isn't by rule, disclosed to the relevant issuer. If the opinion is disclosed to the relevant issuer and amended following this disclosure before its dissemination, it is indicated along with the opinion. Basis of valuation or methodology used to evaluate a financial instrument or an issuer of a financial instrument, or to set a price target for a financial instrument: 1) Fundamental analysis - Intrinsic Valuation (an assessment of the fair value of the company by itself [discounted cash flow]). Future cash flows are estimated and a number of variables including risk assessment and structure of the company's capital are incorporated. Then the present value of a company's stock is determined and compared to its current price. The result: the intrinsic value of a company's stock. In respect of financial service firms, the excess return model is used. In such a model, the value of a firm can be written as the sum of capital invested currently in the firm and the present value of excess returns that the firm expects to make in the future. The excess returns may be defined as follows: Excess Equity return = (Return on equity - Cost of equity) (Equity capital invested); 2) Fundamental analysis - Relative Valuation (assessment of the company value compared to its peers based on my industry classification using appropriate financial ratios (care is taken to categorize companies with similar characteristics such as size.) and a proprietary evaluation model (PEA© - Peers Evaluation Analysis). Sometimes the SWOT (Strengths, Weaknesses, Opportunities and Threats) methodology may be used to evaluate firms. Detailed information about the valuation or methodology and the underlying assumptions of the DCF (discounted cash flow) model and of the WACC (Weighted Average Cost of Capital) notion, are directly and easily accessible here and here. Material information about the proprietary model PEA© Peers Evaluation Analysis, are directly and easily accessible here. When a target price is set, the Financial Blogger estimates both the specific risk/reward profile of the issuer or the financial instrument (primarily by the means of the fundamental analysis) and the systematic (or market) risk/reward profile (primarily by the means of the macroeconomic analysis); the Financial Blogger also weights each single component of the cumulative estimated risk/reward. The evaluation of systematic risk/reward profile and the weighting process are uncertain by nature and they are characterized by an high degree of subjectivity; for example the weights vary over time with the greatest contribution when periodic results or material information are disclosed to the market by the issuer. Detailed information about the concept of specific and systematic risk are directly and easily accessible here and here. Meaning of opinion made: long - actual price should be higher; short - actual price should be lower; hold - actual price is believed to be fair or roughly fair. Ranking system of estimated value versus price: under 16% / from 11% to 16% lower / from 6% to 10% lower / close / from 6% to 10% higher / from 11% to 16% higher / over 16%. When a target price is set, the meaning of the opinions "long", "short" or "hold", is that the Financial Blogger, for the length of time of the investment to which the opinions relate, expects that the market price of the financial instrument may reach (opinions "long" or "short") the target price or stay unchanged (opinion "hold"). The meaning of the opinion "avoid" is that the Financial Blogger believes that it is impossible to deliver any opinion on the value of the issuer. Principles of valuation: the valuation process is kept as simple as possible. In respect of non-financial services firms and non-insurance services firms, the main focus is on the free cash flows for the last twelve trailing months or FCF (defined as net cash provided by operating activities or OCF less purchases of property, plant and equipment or CAPEX) and on the estimate of a sustainable annual growth rate of the firm for the short and medium term or CFG, based primarily on the observation of the evolution of its past data. The projection of the sustainable growth rate to the future is intended as a substitute of more sophisticated forecasts methods. Sometimes more sophisticated forecasts methods are employed. FCF is a useful measure of performance that may be used as an indication of the strength of a company and its ability to generate cash. Among relevant assumptions, the following are usually also estimated: WACC - Weighted Average Cost of Capital; CFG - sustainable annual growth rate of the free cash flows up to a 10 year projection; PGR - perpetual annual growth rate of the free cash flows beyond 10 years; OLC - operating lease converted into debt; UPO - Retirement/Postretirement unfunded obligations; SOV - Stock Options Value and of the RSU (Restricted Stock Units). In respect of financial and insurance services firms: MPR - modified dividend payout ratio; ROE - return on Equity; COE - cost of Equity; Spread - ROE minus COE; TG - perpetual annual growth rate of the excess return beyond 10 years. Time horizon of the investment to which the opinions relate: until the publication of the periodic results by the issuer (quarterly, semi-annual and annual) subsequent to those already known at the time of the production of the single opinions or until any eventual communication of material facts and/or information (price-sensitive) by the issuer (or by third parties in any way connected to it) to the market, if earlier. Risk warning: general risks in the investments may be accessed here. Specific risks are disclosed within the companies' reports. Every reasonable investor should always bear in mind that investors may not get back the full amount invested, as prices of shares and the income from them may fall as well as rise. Equity securities are more volatile than bonds and subject to greater risks. Small and mid-sized company stocks involve greater risks than those customarily associated with larger companies. Bonds are subject to interest-rate, price and credit risks. Prices tend to be inversely affected by changes in interest rates. Exchange rate changes may cause the value of any overseas investments to rise or fall. Past performance is not a guide to future performance and may not be repeated. Sensitivity analysis of the relevant assumptions: included in the single opinion in a clear and prominent manner (it refers exclusively to the specific risk and therefore may be only partially meaningful). Frequency of updates of the opinions: no specific frequency of updates of the opinions is, by rule, planned. However if planned, it is indicated along with the opinion. Further disclosures indicated in the opinions: major changes in the policy cover previously announced; the date at which the opinion was first released for distribution; the relevant date and time for any financial instrument price mentioned; the change and the date of the earlier opinion where a opinion differs from a opinion concerning the same financial instrument or issuer, issued during the 12-month period immediately preceding its release. Relationships and circumstances that may reasonably be expected to impair objectivity of the opinions: THE FINANCIAL BLOGGER DOESN'T HAVE, BY RULE, ANY SIGNIFICANT FINANCIAL INTEREST IN ANY FINANCIAL INSTRUMENT WHICH IS THE SUBJECT OF THE OPINION, NOR A SIGNIFICANT CONFLICT OF INTEREST WITH THE ISSUER. THE FINANCIAL BLOGGER DOESN'T OWN, BY RULE, ANY NET POSITION (LONG OR SHORT) EXCEEDING THE THRESHOLD OF 0,5 % OF THE TOTAL ISSUED SHARE CAPITAL OF THE ISSUER, CALCULATED IN ACCORDANCE WITH PERTINENT REGULATIONS; NO SIGNIFICANT FINANCIAL INTERESTS HELD BY THE FINANCIAL BLOGGER EXISTS, IN RELATION TO THE ISSUER. THE FINANCIAL BLOGGER ISN'T, BY RULE, PARTY WITH THE ISSUER TO ANY AGREEMENT: RELATING TO THE PROVISION OF FINANCIAL OR INVESTMENT BANKING SERVICES; IN EFFECT, DURING THE 12 MONTHS BEFORE THE RECOMMENDED RELEASE OR GIVING RISE DURING THE SAME PERIOD TO THE PAYMENT OF COMPENSATION OR TO THE PROMISE TO GET COMPENSATION PAID; RELATING TO THE PRODUCTION OF THE OPINION. IN SPECIFIC CASES, RELATIONSHIPS AND CIRCUMSTANCES THAT MAY REASONABLY BE EXPECTED TO IMPAIR OBJECTIVITY OF THE OPINION, IF ANY, ARE INDICATED IN THE OPINION ITSELF.