Slow start. Investor Calendar: Attention: Please note important background and customer information at the end of this report

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1 Equity Equity Research - Friday, January 09, 2015 Baltic Indices Oct 27-Oct 11-Nov 26-Nov 11-Dec 26-Dec Baltic Benchmark OMX Tallinn OMX Riga OMX Vilnius Index value, Swedbank OMX Tallinn % 2.1% OMX Riga % 2.6% OMX Vilnius % 1.8% OMX Baltic Bench % 6.3% OMX Baltic % 2.4% S&P 500 2, % 0.2% STOXX Europe % -0.2% STOXX EU Enlarged % 1.5% RTS % -2.1% Top gainers: Last Close ( ) Latvian Shipping Company % Grindeks % Silvano Fashion Group % Arco Vara % Klaipedos Nafta % Top losers: Last Close ( ) Baltika % Ekspress Grupp % Invalda % Harju Elekter % Linas Agro Group % Most active: Last Close ( ) Tallinna Vesi % Tallink % TEO LT % Silvano Fashion Group % Siauliu Bankas % YTD Turnover ( th) Turnover ( th) Turnover ( th) Top company and macro news Tallink: Brighter outlook compared to tough 2014 Apranga: Competition to continue in 2015 Tallinna Kaubamaja: Supermarket chain recovering Estonia: Prices declined by 0.5% in December Lithuania: Inflation to remain low in 2015 Slow start The year s first trading week with no trading holidays got off to a slow start. However, activity picked up on Friday and weekly turnover totaled EUR 2.13m. The most actively traded stocks were Tallink (+2.18% w/w) and Tallinna Vesi (flat w/w), which both contributed more than EUR 0.5m in weekly turnover. On Monday, Tallink (+2.18% w/w) released its December and Q4 sales figures. In December, the company transported 682,455 passengers (-6.5% y/y). The number of passenger vehicles came in at 81,080 (-1.7% y/y) and the number of cargo units amounted to 22,908 (+2.8% y/y). In Q4 2014, Tallink transported 2,051,410 passengers (-4.5% y/y). The number of passenger vehicles totaled 244,018 (-1.7% y/y) and the number of cargo units came in at 77,816 (-1.2% y/y). Tallinna Kaubamaja (+3.3% w/w) released its Q4 and 2014 sales figures after market close on Thursday sales revenue was EUR 533.3m (+6.9% y/y). In Q4, sales revenue totaled EUR 143.8m (+4.0% y/y). The share price closed at EUR 5.27 on Friday. All Baltic indexes moved higher, and the Tallinn OMX index rose to (+1.37% w/w). The NASDAQ OMX Riga index rose by 2.60% w/w, thus starting the year on a positive note. The most actively traded shares during the week were Olainfarm and Grindeks, with turnover in Olainfarm exceeding EUR 225,000 and turnover in Grindeks at about EUR 148,000. The price of Grindeks moved higher w/w, while Olainfarm s share price was basically changed. The OMX Vilnius index climbed for five consecutive days, rising by 1.4% w/w. Total turnover amounted to EUR 1.2m. The most liquid stocks were TEO LT (0.91% w/w) and Siauliu Bankas (0.74% w/w). On Monday, Klaipedos Nafta stated that it reloaded 5.584m tons of oil products into its storage tanks in 2014, which was 4.2% less than in However, preliminary sales revenue for the company s oil terminal rose by 5.5% y/y in December The share price increased by 6.26% w/w, to EUR 0.339, with more than EUR 116,000 in weekly turnover. Also on Monday, Apranga announced that its retail turnover increased by 8.3% y/y in Q Apranga plans to increase its turnover by 11% y/y in The share price decreased by 0.37% w/w with weekly turnover amounting to EUR 156,000. Investor Calendar: Date Issuer/Country Description Period Jan Estonia Unemployment rate December 12 Jan Estonia Exports/Imports YoY November 12 Jan Lithuania PPI MoM/YoY December 13 Jan Olympic Entertainment Group Sales figures Jan-Dec Jan Latvia CPI MoM/YoY December Jan Latvia Unemployment rate December Source: Nasdaq OMX, Bloomberg Equity Research Swedbank AS, Large Corporates & Institutions Page 1 of 9

2 Macro news In December, consumer prices in Estonia decreased by 0.5% y/y and did not change m/m. Prices were pushed down the most by cheaper motor fuels, which dropped by 14% y/y and by 9% m/m. In addition, the prices of education, food and clothing declined. In 2014, consumer prices changed by -0.1%. Cheaper prices for energy, especially for electricity and motor fuels, were behind the lower prices. For 2015, consumer prices are expected to show modest growth. An increase in excise-tax rates should lift inflation by around 0.5 p.p. at the beginning of the year. The prices of imports are being pushed higher by the cheaper EUR. Strong wage growth adds to the pressure on the prices of labor-intensive goods and services produced locally. The prices of motor fuels are expected to decline in 2015, but by less than the global prices of crude oil in USD, as the EUR is likely to weaken against the USD and as taxes amount to half of the retail price of gasoline. Swedbank will publish its new macro forecast at the end of January. In December 2014, the prices of consumer goods and services in Lithuania declined by 0.3% in annual terms and by 0.6% in monthly terms. On average, consumer prices were 0.1% higher y/y in In December, consumer prices were pushed down the most by fuels, which were 10.4% cheaper y/y. The drop in the price of fuels resulted from the declining global oil prices since the peak reached in June 2013, the price of Brent crude oil (in EUR) has declined by 50%. Lower prices for communications, heating, gas and electricity also had negative effects on annual inflation. Meanwhile, more expensive solid fuels, restaurant services, sewerage-collection services and rentals for housing were the main drivers of annual inflation in December. The declining prices for energy products have recently had a significant negative effect on consumer price inflation in Lithuania. They have pushed headline inflation down to the lowest level since Meanwhile, core inflation, which excludes the prices of energy products, has been above headline inflation, and it has been diverging from it. In general, the prices of goods in Lithuania declined by 1.1% in December, while the prices of services increased by 2.4% in annual terms. This divergence is likely to continue in 2015e. In 2015, inflation is expected to pick up somewhat, but it should remain low. The introduction of the EUR is likely to create some additional inflation in accommodation, catering and leisure services, while the weakening of the EUR should push up the prices of imported goods. Oil prices are unlikely to rebound quickly and the much cheaper energy (including gas) should keep a lid on inflation this year. Although the ECB is concerned about deflationary trends in the eurozone, it is not a problem in Lithuania. The only source of deflation is cheaper oil and gas, which is good news for Lithuanian consumers and companies. At the same time, there are no deflationary expectations, and wages continue to rise at a healthy pace in Q3, they were 4.3% higher y/y and they are likely to continue growing at a similar pace. Volatility Snapshot Global stocks rebounded on Wednesday after declining for five consecutive days. 180 OMXB10 Index 30 The VIX Index crossed 22 before retreating with advances in equities The OMXB10 Index enjoyed a nice start to the year, rising 2.4% in this year. Gains were led by Silvano, City Service and Tallink. The implied volatility on the OMXB10 Index was lower for the week due to the rebalancing of the index. Volatilities in individual names was mixed, with Silvano and Tallinna Department Store higher, and OEG and Tallink slightly lower. OEG's sales figures, which will be published next Tuesday, will be closely watched by option traders Jan-14 Mar-14 May-14 Jul-14 Sep-14 Nov-14 Close (ls) 1m Realized Volatility (rs) 1m Implied Volatility (rs) an-14 Mar-14 May-14 Jul-14 Sep-14 Nov-14 Close (ls) 3m Realized Volatility (rs) 3m Implied Volatility (rs) Implied Volatility Overview (as of close on January 8, 2015) YTD Last Price Price Close Eurostoxx 50 3, % -0.4% 23.3% 6.9% 22.0% 0.5% S&P 500 2, % 0.2% 14.2% 12.7% 14.9% 6.4% OMX 30 1, % -0.5% 17.6% 10.7% 17.3% 5.5% OMXB % 1.9% 18.5% -4.9% 18.2% -5.2% VIX % -11.4% Sources: Bloomberg, Swedbank AS estimates and calculations Implied Volatility (ATM, mid-market) vs Previous Week 1 month 3 months Volatility s on Most Actively Traded Options (as of close on January 8, 2015) 1M ATM 1M ATM 1M 3M ATM 3M ATM 3M 3M Implied Vol Price Realized Implied ATM Imp. Realized Implied ATM Imp. divided by Vol Vol Vol Vol Vol Vol 3M Realized Vol c2 c5 c6 c7 c9 c11 c12 c14 sortcol TKM1T 1.6% 14.8% 14.5% 7.4% 11.0% 14.3% 3.6% 1.29 APG1L -0.8% 13.7% 17.0% 0.0% 14.0% 17.0% 0.0% 1.21 OEG1T -0.6% 19.4% 20.3% 0.0% 17.4% 19.8% -1.3% 1.14 TAL1T 1.4% 22.1% 23.5% -1.1% 24.6% 22.8% -1.1% 0.92 SFG1T 4.9% 60.4% 35.0% 0.0% 50.1% 33.8% 0.0% 0.67 Sources: Bloomberg, Swedbank AS estimates and calculations. Implied vols are all mid-market Note: Published OMXB10 Index implied volatilities are computed by Swedbank and are for informational purposes only. Swedbank has not traded the index in the past nor currently plans to do so in the future. Equity Research Swedbank AS, Large Corporates & Institutions Page 2 of 9

3 Company News Company & expected share impact Positive Neutral Negative Brighter outlook compared to tough 2014 Drop in crude prices offset premium for higher quality fuel We expect ticket prices and passenger volumes to remain roughly at last year s levels Target price raised to EUR 0.9 (EUR 0.85), recommendation raised to Strong Buy (Buy) On January 5, ferry operator Tallink released its December statistics. While the numbers showed that passenger volumes had declined by 6.5% y/y, it was mostly due to the decrease in capacity on the Latvia-Sweden route, where since August Tallink has operated with just one ship instead of two. Also the 11% drop in cargo volumes in the Finland-Sweden segment stood out, caused by cargo ferry M/S Sea Wind being taken from the Turku-Stockholm route in December, to be allocated to Estonia-Finland segment in Tallink Recommendation: Strong Buy Target Price: 0.9 Price: 0.71 Analyst: Marek Randma Tel: In 2014, Tallink s passenger volumes fell by 0.23m or 2.6%, out of which 0.1m was due to the capacity decrease on the Riga-Stockholm route. Another 0.1m was the result of Sweden-Finland routes, where also capacity was reduced in connection with the M/S Silja Europa rental to Australia. According to the Port of Tallinn, passenger volume between Helsinki and Tallinn increased by 5% y/y, but Tallink lost market share on the route as competitors Eckerö Line and Viking Line lowered prices and increased capacity on the route, increasing their market share. Cargo volume increase was partly helped by Eckerö Line decreasing its cargo capacity in We make several changes to our models, mostly to reflect the fast declining crude oil price. Swedbank expects average crude price to drop by a third in 2015 in USD terms to nearly USD 70/bbl. As EUR is expected to lose value against USD, our expected oil price fall in EUR terms is 25% in Combined with the oil price drop in 2014, compared to 2013, we note that we expect the total fuel expense to be lower than in 2013, even despite the average 40% premium for the 0.1% sulfur content fuel compared to the 1% sulfur content fuel. We therefore anticipate that ticket prices will remain at rather low levels, but passenger volumes will also remain relatively stable. We expect fuel prices to grow in 2016 and it is likely that this will partly be shifted to customers, resulting in higher revenues, but also higher costs. We expect 2015e EBITDA to grow to EUR 153m (EUR 147m) and net profit to rise to EUR 39m. Our expectations imply 2015e P/E of 12.2x, EV/EBITDA of 7.1x and 2015e dividend yield of 4% with our raised 2015e dividend of EUR 0.03 (EUR 0.02). We raise our target price to EUR 0.9 (EUR 0.85) and raise our recommendation to Strong Buy (Buy). Equity Research Swedbank AS, Large Corporates & Institutions Page 3 of 9

4 Competition to continue in 2015 Warm weather and increased competition affected December sales 2015e sales growth reads 8.1%, while Apranga expects 11% Target price of EUR 3.00 and Buy recommendation reiterated On January 5, the leading Lithuanian apparel retailer, Apranga, released its December sales figures, thereby concluding a highly competitive year. Retail turnover (including VAT) stayed relatively flat y/y, at EUR 17m, which represents a sharp deceleration from the 11% y/y growth in November. We calculate that sales efficiency (calculated as sales per m2) decreased by around 4% y/y, while it increased by around 5% y/y in November and by around 3% y/y in Q4. Apranga Recommendation: Buy Target Price: 3.0 Price: 2.65 Analyst: Andrej Rodionov, CFA Tel: We believe a combination of factors was behind the weak sales in December. The most obvious factors were the relatively warm weather and increased pressure from the main competitor, H&M, which grew its operating area by 9%, to around 42,210 m2, in November and December (more than doubled from around 18,150 m2 in 2013). H&M opened one store in Riga on November 15 (in the Domina shopping mall; total area: 2,150 m2) and another in Panevėžys on December 6 (in the Babilonas I shopping mall; total area: 1,200 m2), bringing the total number of operated stores to 19. This concluded the aggressive rollout seen in the past 16 months, during which H&M opened 17 stores with total operating area of around 38,000 m2. We estimate that Apranga s sales (excluding VAT) increased by 8.3% y/y, to around EUR 41m, in Q4, which exceeds our estimate by 3%. As in Q3, most of the growth came from Estonia (+23.7% y/y in Q4; 20.9% y/y in Q3), helped by the increase in the number of stores, while Latvia and Lithuania trailed with sales growth of 6.2% y/y. In 2015, Apranga expects to open or renovate stores, and to increase sales by 11%, to EUR 204m including VAT or around EUR 162m excluding VAT. We estimate that this implies an increase in sales efficiency of around 5% in contrast to around 3% in However, we expect sales in the eleven H&M stores opened in the Baltics in 2014 to gain full strength in 2015, which should result in continued competition. As a result, our 2015e sales growth reads 8.1%, which is below the company s target. Our estimate implies a more modest increase in sales efficiency of around 2%, similar to that seen in However, we expect Apranga to outpace the expected average increase in nominal consumption of around 5.6% in the Baltics (see the Swedbank Economic Outlook, November 6, 2014). With no major changes to our estimates, we reiterate our target price of EUR 3.00, which values the company at a 2015e EV/EBITDA of 7.5x. This is in line with the average for the last five years. The current share price values Apranga at a 2015e EV/EBITDA of 7x. We also argue that a 5.6% pre-tax dividend yield is attractive, and we reiterate our Buy recommendation. Equity Research Swedbank AS, Large Corporates & Institutions Page 4 of 9

5 Supermarket chain recovering Selver supermarket chain s like-for-like sales turn to growth s to Estonian value-added-tax regulations lead to lower car sales EUR 5.8 target price and Buy recommendation reiterated Tallinn Department Store released its Q4 sales figure on January 8, while the full Q4 report will be released on February 11. The consolidated sales figure was very close to our expectation, missing our forecast by just 0.3%. Most of the 4% y/y growth was the result of the 6.2% y/y growth in the supermarket chain Selver. We calculate that the chain s average sales area grew by roughly 5% y/y, implying sales-efficiency growth of 1%. We note that the Estonian retail market is still growing at a fast pace, as retailsales growth in non-specialized food stores grew by 8.5% in October-November, according to Statistics Estonia. Tallinna Kaubamaja Recommendation: Buy Target Price: 5.8 Price: 5.27 Analyst: Marek Randma Tel: The good sales figure in supermarkets was offset by a slight disappointment in car sales, which declined by 1.4% y/y. This was likely due to the new value-added-tax law in Estonia, which came into effect on December 1. Under the new law, companies can only declare half of the value-added tax on cars as costs if the cars are also used for personal reasons. Therefore, we assume that many companies purchased cars prior to December 1 in order to declare the full value-added tax. We note that the footwear sales decline of 22% y/y is roughly comparable to the decline seen in the two previous quarters, when the company was forced to close or move two of its highest revenue footwear stores in Tallinn. In addition, the real-estate segment saw its sales to third parties decline, which we believe is the result of renovation work at the Tartu department store. Sales in the department-stores segment matched our expectations exactly. We make no major changes to our models, as the sales figures basically matched our expectations. We expect sales growth to decline to 5% in 2015 from 7% in 2014 as the group s investments have declined. However, we expect the lower investments to allow for the continuation of high dividends of EUR 0.35 per share, which implies a dividend yield of nearly 7%. We keep our target price at EUR 5.8 and reiterate our Buy recommendation. Equity Research Swedbank AS, Large Corporates & Institutions Page 5 of 9

6 Baltic Equity Trading Statistics Swedbank Baltic Coverage Last* Bloomberg Price Upside/ M.Cap, Return 3m Avg. Daily 52w Name ticker GICS Sector/ Sub-Industry Country ( ) Target ( ) Dow nside Reco. meur 1w 1m 6m YTD 52w Turnover th Volatility Apranga APG1L LH Apparel Retail LT % Buy 147 0% -1% -3% 1% 0% 46 16% City Service CTS1L LH Environmental & Facilities Ser LT % Buy 56 5% 4% 0% 5% -3% 9 22% Ekspress Grupp EEG1T ET Publishing EE % Strong Buy 33-4% 0% 8% -3% 1% 5 Grindeks GRD1R LR Pharmaceuticals LV % Neutral 68 10% 18% 3% 10% -26% 27 28% Linas Agro Group LNA1L LH Agricultural Products LT % Buy 110-1% 1% -1% 0% 3% 26 16% Merko Ehitus MRK1T ET Construction & Engineering EE % Buy 130 3% 5% 2% 3% -5% 17 17% Nordecon International NCN1T ET Construction & Engineering EE % Strong Buy 32 2% 2% -1% -2% -1% 5 27% Olympic Entertainment Group OEG1T ET Casinos & Gaming EE % Strong Buy 257-1% -4% -13% 0% -11% % Olainfarm OLF1R LR Pharmaceuticals LV % Strong Buy 84 0% -12% -26% 0% -23% 30 26% Silvano Fashion Group SFG1T ET Apparel Retail EE % Neutral 53 9% -19% -25% 13% -45% 37 34% Tallink TAL1T ET Marine EE % Strong Buy 472 2% 0% -6% 4% -22% % Tallinna Kaubamaja TKM1T ET Food Retail EE % Buy 215 3% 4% 4% 3% -1% 54 13% Tallinna Vesi TVEAT ET Water Utilities EE % Buy 262 0% 0% -2% 0% 8% 75 14% *Date for prices: 9 January :45 Selection of Others Last* Bloomberg Price M.Cap, Return Name ticker GICS Sector/ Sub-Industry Country ( ) meur 1w 1m 6m YTD 52w Arco Vara ARC1T ET Diversified Real Estate Activi EE % 2% -17% 6% -38% 4 Source: Swedbank LC&I, Bloomberg Baltika BLT1T ET Apparel, Accessories & Luxury EE % -3% -9% 0% -16% 2 44% Grigiskes GRG1L LH Paper Products LT % 14% 27% 6% 45% 16 21% Harju Elekter HAE1T ET Electrical Components & Equipm EE % -4% -1% -3% -1% 15 Invalda IVL1L LH Multi-Sector Holdings LT % -7% 1% -4% -13% 1 Klaipedos Nafta KNF1L LH Oil & Gas Storage & Transporta LT % 13% 14% 9% 9% 7 21% Lietuvos Dujos LDJ1L LH Gas Utilities LT % 0% -6% 1% 3% 6 22% LESTO LES1L LH Electric Utilities LT % 5% 15% 4% 25% 17 19% Latvian Shipping Company LSC1R LR Oil & Gas Storage & Transporta LV % 14% -17% 11% -27% 4 Premia Foods PRF1T ET Packaged Foods & Meats EE % -4% -5% 0% -7% 7 Pieno Zvaigzdes PZV1L LH Packaged Foods & Meats LT % 0% -17% 0% -23% 1 Panevezio Statybos Trestas PTR1L LH Construction & Engineering LT % 0% -29% 5% -24% 19 27% Rokishkio Suris RSU1L LH Packaged Foods & Meats LT % 0% -15% 1% -14% 2 Siauliu Bankas SAB1L LH Diversified Banks LT % -3% -7% 2% 6% 38 19% SAF Tehnika SAF1R LR Communications Equipment LV % -3% 18% 6% -12% 3 TEO LT TEO1L LH Integrated Telecommunication S LT % -1% -4% 0% 3% 28 15% Zemaitijos Pienas ZMP1L LH Packaged Foods & Meats LT % -2% -17% 0% -13% 3 Ventspils Nafta VNF1R LR Oil & Gas Storage & Transporta LV % -2% -7% 1% -19% 0 AVERAGE (both groups) % 1% -4% 3% -8% % MEDIAN (both groups) % 0% -4% 1% -7% % *Date for prices: 9 January :45 3m avg. Daily Turnover th Equity Research Swedbank AS, Large Corporates & Institutions Page 6 of 9 52w Volatility

7 Baltic Equity Fundamentals Swedbank Baltic Coverage Div. Div. Net Bloomberg EV P/E P/E P/BV P/BV P/S P/S EV/ EV/ DPS Div. Yield Yield EBITDA Operating Debt to Name ticker meur P/E F P/BV F P/S 2013F 2014F EBITDA Sales ROE ROA EUR Yield F margin margin EBITDA Apranga APG1L LH % 16% % 5% 6% 13% 9% 0.2 City Service CTS1L LH % 5% % 2% 3% 6% 4% 0.7 Ekspress Grupp EEG1T ET % 3% 3% 3% 14% 8% 2.6 Grindeks GRD1R LR % 6% 16% 11% 0.8 Linas Agro Group LNA1L LH % 5% % 1% 1% 4% 2% 4.7 Merko Ehitus MRK1T ET % 4% % 6% 6% 6% 5% 0.0 Nordecon International NCN1T ET % 2% % 3% 5% 4% 3% 3.2 Olympic Entertainment Group OEG1T ET % 21% % 6% 7% 25% 20% -0.9 Olainfarm OLF1R LR % 17% 27% 23% 0.6 Silvano Fashion Group SFG1T ET % 7% % 23% 11% 8% 7% -1.5 Tallink TAL1T ET 1, % 2% % 4% 3% 15% 7% 5.1 Tallinna Kaubamaja TKM1T ET % 6% % 3% 7% 6% 4% 2.6 Tallinna Vesi TVEAT ET % 9% % 7% 7% 57% 46% 2.1 Selection of Others Bloomberg EV EV/ EV/ DPS Div. Name ticker meur P/E P/BV P/S EBITDA Sales ROE ROA EUR Yield Arco Vara ARC1T ET % 7% % Source: Swedbank LC&I, Bloomberg Baltika BLT1T ET % -3% 4% 2% 3.8 Grigiskes GRG1L LH % 6% % 13% 7% 2.4 Harju Elekter HAE1T ET % 14% % 4% Invalda IVL1L LH % 11% % Klaipedos Nafta KNF1L LH % 4% 47% 24% 0.1 Lietuvos Dujos LDJ1L LH % -9% % 17% 14% -0.6 LESTO LES1L LH % 1% % 18% 2% 1.3 Latvian Shipping Company LSC1R LR % -2% % 55% 37% 2.9 Premia Foods PRF1T ET % 3% % 5% 3% 2.6 Pieno Zvaigzdes PZV1L LH % -1% 4% 0% 3.9 Panevezio Statybos Trestas PTR1L LH % 3% 6% 5% -0.7 Rokishkio Suris RSU1L LH % 2% 5% 2% 0.6 Siauliu Bankas SAB1L LH % 1% % 8% SAF Tehnika SAF1R LR % 2% 6% 2% -8.1 TEO LT TEO1L LH % 13% 22% Zemaitijos Pienas ZMP1L LH % 4% 5% 3% -1.0 Ventspils Nafta VNF1R LR % -4% 38% 25% 0.5 AVERAGE (both groups) % 5% 0.1 6% 6% 5% 16% 11% 35% MEDIAN (both groups) % 4% 0.0 4% 4% 6% 11% 7% 67% EBITDA margin Operating margin Net Debt to EBITDA Equity Research Swedbank AS, Large Corporates & Institutions Page 7 of 9

8 Background Information: Recommendation structure Large Corporations & Institutions recommendation structure consists of six recommendations: Buy, Accumulate, Hold, Reduce, Sell and Avoid. The recommendations are based on an absolute return for the security 12 months forward. The absolute return includes share price appreciation and dividend yield combined. The recommendations for the securities mentioned in this report are based on risk and return considerations. The higher the risk category of the investment, the higher the required return. For equity investments, returns are defined as capital appreciation and dividends received over the investment horizon of 12 months forward. The expected capital appreciation is the ratio of a stock s target price over the current price. A company risk rating depends on its stock price volatility, liquidity and business outlook. The target price depends on a company s fundamentals as well as the market valuation of peer stocks, and can be changed at any time if the relevant changes occur within a company/market perception of the peer group. Buy, accumulate, hold, reduce, sell and avoid recommendations may be used in this report. The table below presents the relationship between recommendations and target prices compared to risk level of the stock. These are indicative ranges and actual recommendations may deviate from the indications if other relevant issues are considered. Strong Buy (SB) The absolute return is estimated to be in excess of 15% Buy (B) The absolute return is estimated to be between 5% and 25% Neutral (N) The absolute return is estimated to be between 0% and 10% Reduce (R) The absolute return is estimated to be between 5% and -10% Sell (S) The absolute return is estimated to be less than -5% Share price target Our expectations of the absolute return on a 12-month horizon The recommendation by Large Corporations & Institutions Equity Research department is based on a variety of standard valuation models. However, the base for the calculation of the target price is our DCF model (DCF = discounted cash flow) with the exception of financial and investment companies. The DCF model discounts future cash flow at present value. In preparation of this report different valuation methods have been used, including, but not limited to, discounted free cash-flow and comparative analysis. The selection of methods depends on the industry, the company, the nature of the stock and other circumstances. The target price (previous fair value) takes into account the DCF value, the relative valuation of the share versus others peers (national or international) and news that can have a positive or negative effect on the share price. Relative and absolute multiples that we consider are: EV/EBITDA, EV/EBIT, PE, PEG and Net Asset models for companies with liquid markets for their assets and other industry specific ratios when available. Break-up valuation models are also sometimes considered. Recommendations by the 09 Jan 2015 No of shares Part of total Strong Buy 5 38% Buy 6 46 Neutral 2 15% Equity Research Swedbank AS, Large Corporates & Institutions Page 8 of 9

9 Information to the customer: Issuer and recipients This report by Large Corporations & Institutions Equity Research is issued by Large Corporations & Institutions business area within Swedbank AB (publ) ( Swedbank ). Swedbank is under the supervision of the Swedish Financial Inspection Authority (Finansinspektionen) and other financial supervisory bodies where Swedbank have offices. Swedbank is a public limited liability company and a member of the stock exchanges in Stockholm, Helsinki, Oslo and Reykjavik as well as being a member of EUREX. Swedbank AS disseminates this report in Estonia. Swedbank AS is under the supervision of the Estonian Financial Supervisory Authority (Finantsinspektsioon). Swedbank AB disseminates the report in Lithuania. Swedbank AB is under the supervision of the Lithuanian Financial Supervisory Authority (Lietuvos Respublikos vertybinių popierių komisija) in Lithuania. Swedbank AS disseminates this report in Latvia. 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Conflicts of interest All research reports are produced by Large Corporations & Institutions Research department, which is separated from the rest of its activities by a Chinese wall. Statistical and other parts of the report on which the price target or investment recommendation of a particular financial instrument is not based on may be based on information derived from other departments of LC&I. The analysts at Large Corporations & Institutions own securities mentioned in this report, representing no more than 5% of the total share capital or voting rights of any company mentioned in this report if not indicated otherwise. Internal guidelines are implemented in order to ensure the integrity and independence of research analysts. The guidelines include rules regarding, but not limited to, contacts with covered companies, personal involvement in covered companies, participation in investment banking activities and supervision and review of research reports. 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Company specific disclosures and potential conflicts of interest In view of Swedbank s position in its markets, recipients of this report should assume that it may currently (or may in the coming three months and beyond) be providing or seeking to provide confidential investment banking services to the companies referred to in this report and that an agreement regarding such services may have been in effect over the previous 12 months, under which Swedbank may have received payments. Recipients of this report should also note that it may happen that Swedbank, its directors, its employees or its subsidiary companies at various times have had, or have sought, positions, advisory assignments in connection with corporate finance transactions, investment or merchant banking assignments and/or lending as regards companies and/or financial instruments covered by this report. It may also occur that Large Corporations & Institutions may act as sponsor in trading with financial instruments covered by this report. Swedbank has not been lead manager or co-lead manager over the previous 12 months of any publicly disclosed offer of financial instruments of any company mentioned in this report. Planned updates An investment recommendation for a company that Large Corporations & Institutions monitors is normally updated when the company has published an interim report. An update is made after the publication as soon as possible considering the circumstances. In certain cases, a recommendation may be updated in the days leading up to the said report. When required for example, if the company has some extraordinary items of news an investment recommendation may also be updated during the period in between the reporting dates. Reproduction and dissemination This material may not be reproduced without permission from Large Corporations & Institutions. 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