Review Credit Research 27 November 2015

Transcription

1 Review Credit Research 27 November 2015 Norsk Gjenvinning AS B+ Industry (GICS): Commercial Services & Supplies Negative Sector (Nordea): Business Services Key info Country Bloomberg debt Bloomberg equity Moody's S&P Market cap. (bn) Norway VVHLDG Corp Z NO NR/--- NR/--- n.a. Nordea Markets - Analysts Rickard Hellman Chief Analyst, Credit [email protected] Elisabeth Adebäck Senior analyst, Credit [email protected] Spread development, NOK Jan15 Apr15 Jul15 Oct15 CURATO 0 11/22/18 VVHLDG 0 07/10/19 LINDOR 0 08/15/20 Source: Bloomberg and Nordea Markets Withstanding the headwinds NG has been able to defend its margins despite the challenging market currently and a drop of 6.1% y/y on the top line. However, persistent headwinds will be hard to fully offset with margin management and cost reductions and we reiterate our Negative outlook on our B+ shadow rating. The current price discount on VVHLDG 2019 to other names in the same rating category is fair, in our view. Margins defended Thanks to margin management and cost cutting, NG was able to defend its EBITDA margin despite the soft top line. Raw material prices are working against NG and although the majority of its exposure is hedged, volumes in the Metal division are down. Stronger metrics but free cash flow is constraining Metrics improved over the past 12 months, although they are still weak. Free cash flow generation in particular is concerning and we only expect moderate improvements. Weak short-term outlook justifies Negative outlook Management stated that margins were at risk in Q4 owing to the low metal prices and the weak demand in the industrial sector. We expect the implemented efficiency measurements to support profitability in 2016 but the risk is on the downside and we reiterate our Negative outlook. Should NG fail to offset the soft market and improve its earnings and credit metrics sustainably in particular FOCF/debt we may downgrade our shadow rating to B. Price discount motivated Given the weakened credit profile and challenging outlook, we deem a spread towards other names in the same rating category as fair. Key credit metrics and ratios (adjusted numbers) NOKm E 2016E 2017E EBITDA margin n.m. n.m. n.m. n.m. 11% 12% 13% 14% 14% 15% EBIT margin n.m. n.m. n.m. n.m. 5% 5% 4% 4% 4% 6% Shareholders' equity Debt ,164 3,293 3,478 3,432 3,444 3,457 Debt/(Debt+Equity) n.m. n.m. n.m. n.m FFO/Debt n.m. n.m. n.m. n.m. 11.4% 8.5% 5.7% 8.3% 8.7% 10.3% FOCF/Debt n.m. n.m. n.m. n.m. 5.8% -4.7% -3.8% -2.6% -2.7% -1.8% DCF/Debt n.m. n.m. n.m. n.m. 5.8% -4.7% -3.8% -2.7% -2.7% -1.8% EBITDA interest coverage n.m. n.m. n.m. n.m Debt/EBITDA n.m. n.m. n.m. n.m ROC n.m. n.m. n.m. n.m. 16.5% 7.0% 4.3% 4.2% 4.6% 6.8% IMPORTANT INFORMATION AND DISCLOSURES AT THE END OF THIS REPORT Markets

2 Relative value and bond details We view the pricing of VVHLDG 2019, with a spread towards stronger credits such as LINDOR 2020 (BB-/ Stable) and CURATO (B+/Positive) as fair given the weakening credit trend and the challenging outlook. Moreover, the reliance on a single bond tranche as funding results in refinancing risks, especially if operations do not improve. Spread development NOK, disc margin Jan15 Feb15 Mar15 Apr15 May15 Jun15 Jul15 Aug15 Sep15 Oct15 Nov15 Dec15 CURATO 0 11/22/18 VVHLDG 0 07/10/19 LINDOR 0 08/15/20 Key bond details Call option structure Selected bank debt details Shareholder loans and equity Bond details First lien in inventory, machinery and plant and shares in subsidiaries. Put option at 101% if a change-of-control event occurs. The change-of-control event is triggered if any entity other than Altor gains control of a majority of the shares. Incurrence test is met if net debt/ebitda is not greater than i) 5.0x prior to the date falling 18 months after issue date, ii) 4.5x prior to the date falling four years after the issue date and iii) 4.0x thereafter. At the sum of % and the applicable premium up to July At % from July 2016 up to July At % from July 2017 up to July At % thereafter. NOK 200m revolving credit facility, undrawn as of 31 March NOK 270m leasing facility, of which NOK 67m was drawn as of 30 September NOK 50m revolving guarantee facility, of which NOK 7m was drawn as of 30 September NOK 134m in shareholder loans, maturing in 2020, accumulating yearly with 8% interest (no cash interest), treated as debt by us. Total equity of NOK 210m as of 30 September Nordea Markets 2

3 Recent developments Challenging markets are putting pressure on NG's operations, and despite its ability to defend its margin, NG's operating cash flow is declining. Moreover, the short-term outlook is harsh with no help from raw material prices or general economic activity. Q3 discussion The challenging market continues to burden NG and revenue was down 6.1% owing to the weak demand in the industrial sector and in the oil and offshore sector. Moreover, the Metal division faced a severe price decline for metals, leading to much lower revenue, partly due to lower sales revenue and partly to lower production volumes (less metal offered for collection). Raw material prices, index 01/01/2014= Price decline in metals, while prices on papers are supportive but declining Jan14 Feb14 Mar14 Apr14 May14 Jun14 Jul14 Aug14 Sep14 Oct14 Nov14 Dec14 Jan15 Feb15 Mar15 Apr15 May15 Jun15 Jul15 Aug15 Sep15 Oct15 Nov15 Dec15 LME Nickel, cash Steel Scrap Shredded fob Rotte LME Copper, cash LME Aluminum FOEX PIX Recovered Paper Index 100 Source: Bloomberg and Nordea Markets Unfavourable market equilibrium in the RDF market The mild winter has also cut the demand for refuse-derived fuel (RDF) and in combination with the supply from the UK (in turn supported by the strong GBP), gate fees have increased, hurting profitability in the Recycling division. On the positive side, NG's cost-cutting programme and the focused margin management in the Metal division boosted profitability and the group's gross margin was unchanged y/y. The underlying EBITDA margin fell 40 bp to 12.8% (the reported EBITDA margin increased to 13.0% from 12.3%). The cost-cutting programme will likely accelerate in 2016 According to management, the NG200 cost-cutting programme is proceeding as planned with costs already down NOK 58m. The net effect on costs is, however, less so since the costs from acquired business, implementation costs and startup costs for new contracts in household collection almost offset the improvements. In 2016, the effect will likely be stronger and only small integration costs are expected for the second phase of the programme, most of which has already been invested. Moreover, given that market conditions are even worse than feared, NG will likely initiate another round of cost cutting. Nordea Markets 3

4 Divisional sales development, NOKm Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q Recycling Metal Industry & Offshore Household collection Divisional EBITDA margins, % 25.0% 20.0% 15.0% 10.0% 5.0% 0.0% Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q Recycling Metal Industry & Offshore Household collection Cash interest hitting FOCF Credit metrics improved Equity buffer is low Increased interest payments burden free operating cash flow In Q1-Q3 2015, operating cash flow was down to NOK 92m compared with NOK 125m in The favourable cash effect from working capital was wiped out by the increased interest paid (following the refinancing last year). Capex was lowered to NOK 130m compared to NOK 145m last year. FOCF for the LTM was barely positive on a reported basis but negative at NOK -61m after our credit adjustments. This was still an improvement on the comparable figure in 2014 (NOK -131m). Credit metrics improved in general and debt/ebitda was 6.2x, down from 6.5x. The equity ratio remained weak though, and was 6.5%. The low share of equity is credit negative from an asset protection point of view. The NOK 134m in shareholder loans is treated as debt but could be viewed as a potential buffer if needed, assuming a conversion. Including the shareholder loan in equity, the ratio would be 10.6%. Lost tender for Statoil NG lost its contract with Statoil in a waste management and tank-cleaning tender. This will render a loss of NOK 50m in annual revenue. The oil and offshore industry is really weak at the moment, and although NG has direct revenue exposure to the industry of roughly 5%, the indirect effects hurt the other sectors as well. Liquidity deemed adequate With expected operating cash flow at NOK 215m in 2016 and liquidity reserves of NOK 376m (NOK 133m of which is cash), we deem it sufficient to cover maintenance capex of NOK 160m. In addition, NG has roughly NOK 203m in undrawn leasing facilities. Market is still weak Outlook slightly more bearish Management reiterated its growth outlook for 2015 as flat, highlighting the challenging market conditions. Although this was not news, the improvements seen in Q2 left us hoping for some growth. Moreover, NG expects the gross margin in both the Recycling and the Metal divisions to be under pressure in Q4 given the high incineration gate fees and low metal prices. Maintenance capex of NOK 160m was reiterated. Nordea Markets 4

5 Company description Norsk Gjenvinning is the leading waste management company in Norway, with an overall domestic market share of approximately 25%. The group has over 1,400 employees, around 40,000 customers and an annual turnover exceeding NOK 4bn. Revenue distribution, H Other 9% Industry & offshore 14% Household collection 8% Recycling 47% Metal 22% EBITDA distribution Other 9% Industry & offshore 14% Household collection 8% Recycling 47% Metal 22% Revenue and EBITDA margin, NOKm 4,500 4,000 3,500 3,000 2,500 2,000 1,500 1, LTM Q2'15 Revenues EBITDA-margin 12.0% 10.0% 8.0% 6.0% 4.0% 2.0% 0.0% Brief overview Norsk Gjenvinning collects and sorts waste in Norway, Sweden, Denmark and the UK. Norway is by far the largest single geographical market, generating approximately 95% of group turnover. Upstream operations in which Norsk Gjenvinning is engaged are collection, sorting and treatment/ recycling of mixed industrial waste, paper, plastics, wood chips, ferrous and non-ferrous materials, including vehicles and electrical waste and other non-hazardous waste fractions. Norsk Gjenvinning sells secondary raw materials (recycled, sorted and treated) to industry in Europe and Asia. Ownership Altor is the majority owner of Norsk Gjenvinning, controlling 87% of the shares. Altor s ownership is organised through Altor Fund III, which is based in Jersey. Management and leading employees control the remaining 13% of the shares in Norsk Gjenvinning. Business operations Norsk Gjenvinning has four major business areas: Division Recycling. Collection, sorting and treatment of waste and operations of municipal recycling stations. Division Metal. Collection, sorting and treatment of ferrous and nonferrous materials (including vehicles and electrical waste) into higherquality fractions. Division Industry & Offshore. Cleaning and processing services on site, and collection, repackaging and reloading of hazardous waste. Division Household Collection. Collection of household waste in Sweden and Norway. Pure logistics service with public tender contracts. In addition, the group has the following smaller business areas: NG Downstream (downstream sales of processed waste) NG Makulering (secure handling and destruction of documents) NG Miljøprosjekt (development and operation of landfill projects) R3 Entreprenør (demolition and restoration of buildings, etc) Nordea Markets 5

6 Credit-supportive factors Norway s leading waste management company. The group is the market leader in most waste management segments and has a total 25% market share of waste management. Favourable structural trends and legislation. Focus on climate and resource challenges leads to increased waste processing and recycling. Furthermore, harder compliance demand from authorities favours larger and established players such as NG. Stable and predictable revenue. Demand is fairly predictable and correlates with the general GDP development, even during economic downturns. Longstanding relationship with leading customers. Including commercial, industrial, municipal and residential customers. Strong customer diversity. NG has a strong and diversified customer base of approximately 40,000 customers, the ten largest of which account for 12% of revenue. Broad geographical coverage and strong local presence. NG has comprehensive geographical coverage from north to south in Norway with 94 sites across the country. Supportive financial risk management. NG hedges its exchange change risk and its interest rate risk through forward contracts and swaps. The known exposure to raw material prices is hedged or sold back to back. Credit-constraining factors Fragmented industry. The Norwegian waste management industry is fragmented with close to 440 individual players, some of them with only local presence. Further consolidation due to increased regulatory requirements is, however, on the cards. Limited size and geographical diversification. NG is relatively small, with revenue slightly above NOK 4bn and more or less all revenue generated in Norway. Exposed to contract risks. NG's business operations are to a large extent contract-based, with durations from one to three years. Relatively high capital intensity for a service business. NG has relatively high capital intensity compared with other service segments, partly due to household collections, with tender requirements of new vehicles. As a result, the free operating cash flow is weak. Highly Leveraged financial risk profile. NG's financial risk profile is considered Highly Leveraged with weak credit metrics. Exposure to swings in raw material prices. Although the known exposure is fully hedged, NG also has exposure to metals still in the process of being sorted. Moreover, lower prices on metals give less headroom for margins in the metal-trading business and despite prudent hedging, revenue from the Metal division will still fluctuate with raw material prices. Weak outlook for Industry & Offshore division. Owing to the weak fundamentals for the offshore industry in Norway, the exposure to offshore represents around 5% of total revenue. Meaningful seasonal swings in liquidity owing to the large cash outflows during the first half of the year. Nordea Markets 6

7 B+ shadow rating with a Negative outlook Business risk profile Satisfactory/Fair We view NG's business risk as Satisfactory bordering on Fair. The strong market position in the Norwegian market with nationwide coverage, the stable and predictable revenue and the broad and diversified customer base all support our view. On the other hand, the limited size and the narrow geographical diversification, together with the high capex needs, act as constraining factors. Our Negative outlook is based on the weakened business risk profile The low activity in the Norwegian economy, in particular in the oil and offshore sector, has burdened revenue and led to a less profitable business mix in NG. In addition, increases in the incineration gate fees (from increased exports from the UK) and falling prices on raw materials have put pressure on NG's business risk profile. To counteract these market challenges, NG has launched a cost-cutting initiative, called NG200, with the aim of saving NOK 200m annually by The weakened economic environment and earnings are reflected in our Negative outlook. Highly Leveraged based on its weak credit metrics Financial risk Highly Leveraged With the leverage level and the weak credit-adjusted credit metrics, especially FOCF/debt, we view NG's financial risk profile as Highly Leveraged. With only limited deleveraging potential, owing to the accumulating non-cash interest rate on its shareholder loan and the expected weak free cash flow, we do not expect NG to strengthen its financial risk profile during our forecast horizon. Moreover, the ownership of Altor can be viewed as financial sponsorship, giving a Highly Leveraged financial risk profile by default, in line with S&P's criteria. We might lower our shadow rating one notch Negative outlook We changed our outlook to Negative on NG's shadow rating in March 2015 to reflect the increased market challenges and weaker profitability than our expectations. Should NG not be able to offset these weaknesses and sustainably improve its earnings and credit metrics in particular FOCF/debt, we may change our shadow rating to B. S&P rating matrix Financial risk profile Minimal Modest Intermediate Significant Aggressive Highly leveraged Excellent aaa/aa+ aa a+/a a- bbb bbb-/bb+ Strong aa/aa- a+/a a-/bbb+ bbb bb+ bb Satisfactory a/a- bbb+ bbb/bbb- bbb-/bb+ bb b+ Fair bbb/bbb- bbb- bb+ bb bb- b Weak bb+ bb+ bb bb- b+ b/b- Vulnerable bb- bb- bb-/b+ b+ b b- Business risk profile Financial risk profile Core ratios Supplementary coverage ratios Supplementary payback ratios FFO/debt Debt/EBITDA FFO/Cash interest(x) EBITDA/interest(x) CFO/debt(%) FOCF/debt(%) DCF/debt(%) Minimal >60 <1.5 >13 >15 >50 >40 >25 Modest Intermediate Significant Aggressive Highly leveraged <12 >5 <2 <2 <10 <5 <2 Nordea Markets 7

8 Nordea Markets' forecast We expect NG to maintain its Highly Leveraged financial risk profile. Sources and uses of cash Q3 LTM 2015E 2016E 2017E CF before changes in NWC Changes in NWC Capex Net investments Dividends Absolute debt to be constant Balanced risks in our forecasts Our forecast is based on a top-line improvement slightly above the expected GDP development in Norway for 2016 and Such a development also reflects a pickup in prices from the increased value creation but is balanced by a continuation of the challenging market conditions and a less favourable business mix. In addition, we expect a minor decrease in revenue from the NG200 programme. Profitability will improve thanks to the cost-reduction programme, although at this point we do not account for the whole NOK 200m impact on EBITDA, which management expects. EBITDA margins will, however, eventually improve to historical levels of 10%. We expect the cash effect from working capital to be positive in 2015, despite a buildup of inventory in Q4. Thereafter, we expect the effect to fade out and be neutral in Free operating cash flow will remain weak, although it should improve thanks to increased EBITDA and lower capex spent relative to sales. Reported debt will increase with the accumulation of interest in the shareholder loan. Our forecast implies moderate deleveraging based solely on EBITDA expansion since the total cash flow will be roughly zero under our forecast horizon. We do not expect NG to improve its financial risk profile enough to leave the Highly leveraged assessment. We identify risks to our forecast in terms of raw material price development, which may have both a negative and positive impact in 2016 and 2017 depending on the outcome. Moreover, growth in household collection might be higher than we expect, opening up some growth opportunities for NG. However, this will be negative for free operating cash flow given the high capex needs for such growth. Credit adjusted debt/ebitda Credit adjusted FOCF/debt 7.0 x 8.0% 6.0 x 6.0% 5.0 x 4.0% 4.0 x 2.0% 3.0 x 0.0% 2.0 x -2.0% 1.0 x -4.0% 0.0 x Q3 LTM 2015E 2016E 2017E -6.0% Q3 LTM 2015E 2016E 2017E Debt/EBITDA FRP, Highly leveraged FOCF/debt FRP, Highly leveraged Nordea Markets 8

9 Forecast summary NOK(m) Q3 LTM 2015E 2016E 2017E Revenues 4,074 4,151 4,136 4,138 4,129 4,211 4,337 EBITDA margin 11% 12% 13% 14% 14% 14% 15% Debt 2,164 3,293 3,478 3,501 3,432 3,444 3,457 Equity FFO Change in NWC OCF Capex FOCF Net acquisitions Dividends FFO/debt 11.4% 8.5% 5.7% 7.1% 8.3% 8.7% 10.3% FOCF/debt 5.8% -4.7% -3.8% -1.7% -2.6% -2.7% -1.8% DCF/debt 5.8% -4.7% -3.8% -1.7% -2.7% -2.7% -1.8% Debt/EBITDA EBITDA/interest Adjustments to reported figures We make standard credit adjustments to the reported financial figures in order to reflect off-balance sheet items such as operating leasing and pension liabilities. In our forecasts, we make adjustments based on the reported items in Summary of credit adjustments NOKm E 2016E 2017E Debt, reported 2, , , , ,382.3 Operating leases , , ,055.3 Pensions Debt, adj. 2, , , , ,444.1 EBITDA, reported Operating leases Capex, reported Operating leases Capex, adj Nordea Markets 9

10 Reported numbers and forecasts Income statement NOKm E 2016E 2017E Total revenue ,074 4,151 4,136 4,129 4,211 4,337 - growth n.a. n.a. n.a. n.a. n.a. 1.9% -0.3% -0.2% 2.0% 3.0% Gross profit ,874 2,036 2,107 2,081 2,127 2,208 - margin n.m. n.m. n.m. n.m. 46.0% 49.1% 50.9% 50.4% 50.5% 50.9% EBITDA margin n.m. n.m. n.m. n.m. 10.6% 10.1% 8.4% 8.8% 9.0% 10.0% EBITA margin n.m. n.m. n.m. n.m. 7.0% 6.3% 4.2% 4.3% 4.5% 6.0% EBIT margin n.m. n.m. n.m. n.m. 5.2% 4.5% 2.2% 2.0% 2.2% 4.0% Net finance Pre-tax profit Taxes Net profit, continuing operations Discontinued operations Net profit to equity EBITDA (credit adj) EBIT (credit adj) Interest expense (credit adj) Balance Sheet NOKm E 2016E 2017E Goodwill ,140 1,218 1,222 1,222 1,222 1,222 Other intangibles Tangible assets ,031 1,089 1,141 1,182 1,246 Shares associates Interest bearing assets Deferred tax assets Other non-interest bearing non-current assets Other non-current assets Non-current assets ,398 2,575 2,609 2,569 2,556 2,600 Inventory Accounts receivable Other current assets Cash and cash equivalents Current assets , Assets held for sale Total assets ,446 3,548 3,528 3,489 3,465 3,544 Shareholders equity Minority interest Deferred tax Convertible debt Long term interest bearing debt ,156 2,111 2,361 2,371 2,382 2,395 Non-current liabilities Pension provisions Other long-term provisions Other long-term liabilities Non-current liabilities ,406 2,334 2,606 2,634 2,609 2,663 Short-term provisions Accounts payable Other current liabilities Short term interest bearing debt Current liabilities Liabilities for assets held for sale Total liabilities and equity ,446 3,548 3,528 3,489 3,464 3,544 Cash and cash eq (credit adj) Total assets (credit adj) ,446 4,510 4,581 4,543 4,520 4,601 Shareholders equity (credit adj) Debt (credit adj) ,164 3,293 3,478 3,432 3,444 3,457 Nordea Markets 10

11 Cash flow statement NOKm E 2016E 2017E EBITDA Adj due to change in group structure Change in Provisions Other non-cash adjustments Net financials Dividends received Paid taxes Other Operating cash flow before NWC Change in NWC Operating cash flow CAPEX Free operating cash flow Dividends paid Share issues / buybacks Discretionary cash flow Other investments / divestments Other Proceeds from sale of assets Net change to group borrowing/repayments Other Change in cash Adjusted metrics Funds from operations (FFO) (adj) Operating cash flow (OCF) (adj) Free operating cash flow (FOCF) (adj) Discretionary cash flow (DCF) (adj) Key ratios Profitability E 2016E 2017E ROC n.m. n.m. n.m. n.m. 16.5% 7.0% 4.3% 4.2% 4.6% 6.8% ROIC after tax n.m. n.m. n.m. n.m. 0.0% 0.0% 0.0% 0.0% 0.0% 0.0% ROE after tax n.m. n.m. n.m. n.m. 20.1% 0.3% -50.6% -64.1% -67.1% -28.2% Debt & Interest coverage E 2016E 2017E FFO/Debt n.m. n.m. n.m. n.m. 11.4% 8.5% 5.7% 8.3% 8.7% 10.3% FOCF/Debt n.m. n.m. n.m. n.m. 5.8% -4.7% -3.8% -2.6% -2.7% -1.8% DCF/Debt n.m. n.m. n.m. n.m. 5.8% -4.7% -3.8% -2.7% -2.7% -1.8% EBITDA interest coverage n.m. n.m. n.m. n.m FFO cash interest coverage n.m. n.m. n.m. n.m Leverage E 2016E 2017E Debt/EBITDA n.m. n.m. n.m. n.m Equity ratio n.m. n.m. n.m. n.m. 9.8% 9.3% 5.9% 4.0% 3.3% 3.4% Debt/(Debt+Equity) n.m. n.m. n.m. n.m Capital expenditure E 2016E 2017E CAPEX/Depreciation and amortisation n.m. n.m. n.m. n.m CAPEX/Sales n.m. n.m. n.m. n.m Working capital ratios E 2016E 2017E Inventory turnover (days) n.m. n.m. n.m. n.m Receivables turnover (days) n.m. n.m. n.m. n.m Days sales outstanding (days) n.m. n.m. n.m. n.m Per share data E 2016E 2017E EPS EPS (adj.) DPS BVPS n.m. n.m. n.m. n.m. n.m. n.m. n.m. n.m. n.m. n.m. Equity valuation and yield E 2016E 2017E Market cap. n.a. n.a. n.a. n.a. n.a. n.a. n.a. n.a. n.a. n.a. Enterprise value n.a. n.a. n.a. n.a. n.a. n.a. n.a. n.a. n.a. n.a. P/E n.a. n.a. n.a. n.a. n.a. n.a. n.a. n.a. n.a. n.a. P/BV n.a. n.a. n.a. n.a. n.a. n.a. n.a. n.a. n.a. n.a. EV/Sales n.a. n.a. n.a. n.a. n.a. n.a. n.a. n.a. n.a. n.a. EV/EBITDA n.a. n.a. n.a. n.a. n.a. n.a. n.a. n.a. n.a. n.a. Dividend yield n.a. n.a. n.a. n.a. n.a. n.a. n.a. n.a. n.a. n.a. Payout ratio n.m. n.m. n.m. n.m. 0.0% 0.0% 0.0% n.m. n.m. n.m. Nordea Markets 11

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13 Analyst Shareholding Nordea Markets analysts do not hold shares in the companies that they cover. No holdings or other affiliations by analysts or associates. Market-making obligations and other significant financial interest Nordea Markets has no market-making obligations in Norsk Gjenvinning AS Recommendation definitions Outperform Over the next three months, the fixed income instrument's total return is expected to exceed the total return of the relevant Market perform Over the next three months, the fixed income instrument's total return is expected to be in line with the total return of the relevant Investment banking transactions Nordea Markets has no ongoing or completed public investment banking transactions with Norsk Gjenvinning AS In view of Nordea s position in its markets readers should however assume that the bank may currently or may in the coming three months and beyond be providing or seeking to provide confidential investment banking services to the company/companies Underperform Over the next three months, the fixed income instrument's total return is expected to be below the total return of the relevant All research is produced on an ad hoc basis and will be updated when the circumstances require it. Distribution of recommendations Recommendation Count % distribution Outperform 88 17% Market perform % Under perform % Total % As of 1 January 2015 Issuer Review This report has not been reviewed by the Issuer prior to publication. Nordea Bank AB (publ) Nordea Bank Danmark A/S Nordea Bank Finland Plc Nordea Bank Norge ASA Nordea Markets Division, Equities Nordea Markets Division, Equities Nordea Markets Division, Equities Nordea Markets Division, Equities Hamngatan 10 Strandgade 3 (PO Box 850) Aleksis Kiven katu 9, Helsinki Essendropsgate 7 SE Stockholm DK-0900 Copenhagen C FI Nordea N-0368 Oslo Sweden Denmark Finland Norway Tel: Tel: Tel: Tel: Fax: Fax: Fax: Fax: Reg.no Reg.no Reg.no Reg.no Stockholm Copenhagen Helsinki Oslo