Other Research Disclosures

Recommendation Scheme

Landsbanki Securities (UK) Limited, Landsbanki Kepler, Merrion and Landsbanki's rating system consists of three recommendations: Buy, Hold and Reduce. For a Buy rating, the minimum expected upside is 10% over 12 months. For a Hold rating the expected upside is below 10%. A Reduce rating is applied when there is expected downside on the stock. Target prices are set on all stocks under coverage, based on a 12-month view. Equity ratings and valuations are issued in absolute terms, not relative to any given benchmark. Landsbanki Securities (UK) Limited, Kepler Equities, Merrion and Landsbanki’s strategy teams’ sector allocations rate each sector Overweight, Underweight or Neutral.

Quarterly Ratings Distribution

Landsbanki Securities (UK)Valuation Methodology

• Landsbanki Securities (UK) uses various techniques when assessing the appropriate valuation of and recommendation for a stock. These techniques can vary according to the characteristics of individual stocks and sectors. Where appropriate, details of the analytical methodology will be specified in research products. 
• In arriving at Target Prices, Landsbanki Securities (UK) uses a range of conventional analysis techniques, which may include peer-group and market comparisons, sum-of-the-parts valuations, discounted cash flow (DCF) analysis, and a range of conventional analysis techniques.  
• Where Landsbanki Securities (UK) uses discounted cash flow analysis to help assess the value of a company, analysts would normally use (and make explicit) the following assumptions:
  o An appropriate risk-free rate (corresponding to prevailing expectations of the inflation rate and real yield).
  o An appropriate equity risk premium.
  o We also make explicit the values we use for the beta of the particular stock, the expected debt/equity ratio, and the assumed tax rate (all of which vary by company).
• These assumptions enable us to calculate a Weighted Average Cost of Capital (WACC), which will be used to discount future cash flows, and against which rates of Return on Capital Invested can be compared. 
• We typically publish a minimum of two years of detailed forecasts, and these are normally incorporated into our longer-term DCF analysis. The duration of that analysis will vary by company and sector, but typically will be between eight and twelve years. We will also make explicit our assumption of long-term growth rates, where these are used to calculate the terminal values of cash flows. 
• Using standard DCF methodology, we then arrive at a value for the discounted value of the company’s expected cash flows.
• On occasions, analysts will also use a "reverse" DCF process to solve for the terminal growth rate, which can be assessed in the context of the growth expected for similar or a wider group of companies.
  

Source: Landsbanki Kepler, Landsbanki Securities (UK) Limited, Merrion Stockbrokers Limited and Landsbanki Islands hf.

Landsbanki Kepler is authorised and regulated by both Banque de France and Autorité des Marchés Financiers.

Landsbanki Securities (UK) Limited is authorised and regulated by the Financial Services Authority, and is entered in its Register under Firm Reference Number 186677. Landsbanki Securities (UK) Limited is also a member of the London Stock Exchange Plc.

Merrion Stockbrokers Limited is authorised by the Irish Financial Services Regulatory Authority under the Stock Exchange Act, 1995. Merrion Stockbrokers Limited is also a member firm of the Irish and London Stock Exchanges.

Landsbanki Islands hf. in Iceland is authorised by Fjármálaeftirlitið (The Financial Supervisory Authority, Iceland). Landsbanki Islands hf. is member firm of the OMX Nordic Exchange and the Oslo Børs.

Landsbanki Islands hf. in the UK is authorised and regulated by the Financial Services Authority, and is entered in its Register under Firm Reference Number 207250. Landsbanki Islands hf. in the UK is also a member of the London Stock Exchange Plc.

Legal Information

Landsbanki’s Research publications are not for retail clients.

The information contained in research publications are obtained from various sources believed to be reliable, but have not been independently verified by Landsbanki or its affiliate(s)*. Landsbanki or its affiliate(s)* does not warrant the completeness or accuracy of such information and does not accept any liability with respect to the accuracy or completeness of such information, except to the extent required by applicable law.

Research publications are for information purposes only and shall not be construed as an offer or solicitation for the subscription or purchase or sale of any securities, or as an invitation, inducement or intermediation for the sale, subscription or purchase of any securities, or for engaging in any other transaction. Research publications are not for private individuals. Any opinions, projections, forecasts or estimates in research reports are those of the author only, who has acted with a high degree of expertise. They reflect only the current views of the author at the date of the report and are subject to change without notice. Landsbanki or its affiliate(s)* has no obligation to update, modify or amend any publication or to otherwise notify a reader or recipient of a publication in the event that any matter, opinion, projection, forecast or estimate contained herein, changes or subsequently becomes inaccurate, or if research on the subject company is withdrawn. The analysis, opinions, projections, forecasts and estimates expressed in research reports were in no way affected or influenced by the issuer. The authors of research publications benefit financially from the overall success of Landsbanki or its affiliate(s)*.

The investments referred to in  research publications may not be suitable for all recipients. Recipients are urged to base their investment decisions upon their own appropriate investigations that they deem necessary. Any loss or other consequence arising from the use of the material contained in a research publication shall be the sole and exclusive responsibility of the investor and Landsbanki or its affiliate(s)* accepts no liability for any such loss or consequence. In the event of any doubt about any investment, recipients should contact their own investment, legal and/or tax advisers to seek advice regarding the appropriateness of investing. Some of the investments mentioned in research publications may not be readily liquid investments. Consequently it may be difficult to sell or realize such investments. The past is not necessarily a guide to future performance of an investment. The value of investments and the income derived from them may fall as well as rise and investors may not get back the amount invested. Some investments discussed in research publications may have a high level of volatility. High volatility investments may experience sudden and large falls in their value which may cause losses. International investing includes risks related to political and economic uncertainties of foreign countries, as well as currency risk.

To the extent permitted by applicable law, no liability whatsoever is accepted for any direct or consequential loss, damages, costs or prejudices whatsoever arising from the use of research publications or their contents.

The Landsbanki Group of Companies have written procedures designed to identify and manage potential conflicts of interest that arise in connection with its research business. The Group’s research analysts and other staff involved in issuing and disseminating research reports operate independently of the Group’s Investment Banking business. Chinese Wall procedures are in place between the research analysts and staff involved in securities trading for the account of Landsbanki Group companies or clients to ensure that price sensitive information is handled according to applicable laws and regulations.

*: affiliates: Landsbanki Kepler, Landsbanki Securities (UK) Limited, Merrion Stockbrokers Limited.
 
United Kingdom: Research publications are for persons who are Eligible Counterparties or Professional Clients only and is exempt from the general restriction in section 21 of the Financial Services and Markets Act 2000 on the communication of invitations or inducements to engage in investment activity on the grounds that it is being distributed in the United Kingdom only to persons of a kind described in Articles 19(5) (Investment professionals) and 49(2) (High net worth companies, unincorporated associations etc) of the Financial Services and Markets Act 2000 (Financial Promotion) Order 2005 (as amended).  It is not intended to be distributed or passed on, directly or indirectly, to any other class of persons.  Any investments to which the research publications relate are available only to such persons, and other classes of person should not rely on the research publications. For the purpose of UK regulation, Landsbanki Securities (UK) Limited produces non independent research which is a marketing communication under the FSA Conduct of Business rules and has not been prepared in accordance with the legal requirements to promote independence of investment research nor is it subject to the prohibition on dealing ahead of the dissemination of investment research. However, the firm does have procedures in place to manage conflicts which may arise in the production of research , please refer to Landsbanki Securities (UK) Limited research policy, which, inter alia, prevents dealing ahead. The research policy may be found here.

United States: Research reports are distributed in the United States by Kepler Equities Inc. and are intended for distribution in the United States to only "major U.S. institutional investors" as defined in Rule 15a-6 promulgated under the U.S. Securities Exchange Act of 1934, as amended. Landsbanki Kepler is a broker-dealer registered with the Comité des Etablissements de Crédit et des Entreprises d’Investissements in France, and is not registered with the U.S Securities and Exchange Commission (SEC). U.S. persons seeking more information about any of the securities discussed in this report, or wishing to execute a transaction in these securities, should contact Kepler Equities Inc. (KEI), 600 Lexington Avenue, New York, NY 10022, phone (212) 710-7600. KEI is a broker-dealer registered with the SEC and is a NASD member firm. Nothing herein excludes or restricts any duty or liability to a customer that KEI has under applicable law. Investment products provided by or through KEI are not FDIC insured, may lose value and are not guaranteed by Landsbanki Kepler. Investing in non-U.S. securities may entail certain risks. The securities of non-U.S. issuers may not be registered with or subject to SEC reporting and other requirements. The information available about non-U.S. companies may be limited, and non-U.S. companies are generally not subject to the same uniform auditing and reporting standards as U.S. companies. Securities of some non-U.S. companies may not be as liquid as securities of comparable U.S. companies.

France: Research publications are issued and distributed in accordance with art. L 544-1 and seq of the Code Monétaire et Financier and with the articles 321-122 to 321-138 of the General Regulations of the Autorité des Marchés Financiers (AMF).

Italy: Information is for institutional clients only as defined by art. 31 of CONSOB reg. 11522/98. Reports on companies listed on the Italian exchange are approved and distributed to over 500 clients in accordance with art. 69 of CONSOB Regulation 11971/1999 for enforcement of the Consolidation Act on financial brokerage (legislative decree 24/2/1998). According to this article Landsbanki Kepler, branch of Milano warns on potential specific interests in securities mentioned. Equities discussed are covered on a continuous basis with regular reports at results release. Reports are released on date shown on cover and distributed via print and e-mail. Landsbanki Kepler, branch of Milano analysts are not affiliated with any professional groups or organizations. All estimates are by Landsbanki Kepler unless otherwise stated.

Spain: Reports on Spanish companies are issued and distributed by Landsbanki Kepler, branch of Madrid, registered in Spain by the Comisión Nacional del Mercado de Valores (CNMV) in the foreign investments firms registry (member of the Madrid exchange). Reports and any supplemental documentation or information have not been filled with the CNMV. Neither verification nor authorization or compliance revision by the CNMV regarding this document and related documentation or information has been made.

Switzerland: Research publications are intended to be distributed to professional investors in circumstances such that there is no public offer. This publication does not constitute a prospectus within the meaning of Articles 652a and 1156 of the Swiss Code of Obligations.

Canada: The information provided in Research publications are not intended to be distributed or circulated in any manner in Canada and therefore should not be construed as any kind of financial recommendation or advice provided within the meaning of Canadian securities laws.

Other countries: Laws and regulations of other countries may also restrict the distribution of this report. Persons in possession of Research publications should inform themselves about possible legal restrictions and observe them accordingly.