NICE. Two positives, one negative. Hold (maintained) Company Update. 16 March 2016 MARKET PRICE: EUR2.24 TARGET PRICE: EUR2.30 (from EUR2.

(1)

NICE

Company Update

Hold (maintained)

16 March 2016

MARKET PRICE: EUR2.24

TARGET PRICE: EUR2.30 (from EUR2.86)

Home Automation

Data

Shares Outstanding (m):

116.0 Market Cap.

(EURm)

:

259.8 Enterprise Value

(EURm)

:

270.1 Free Float (%):

21.5%

Av. Daily Trad. Vol. (m):

0.02 Main Shareholder:

Lauro Buoro

69.7%

Reuters/Bloomberg:

NICE.MI NICE IM

52-Week Range (EUR)

1.9

3.3 Performance

1m

3m

12m

Absolute

10.3% -10.5% -31.3%

Rel. to FTSE

IT

0.5%

1.0% -18.3%

Graph area Absolute/Relative 12 M

Marco Cristofori

[email protected]

Tel. +39 0277814393

Website:

www.ubibanca.it

Two positives, one negative

Three main factors emerged from 4Q15 results: 1) France and Italy

revenues recovered (+2% and +12.2% respectively) after many

quarters of slowdown and this trend should continue in the coming

quarters. This is particularly positive as these countries always

reported a higher margin and therefore higher sales improve the mix;

2) DPS increased by nearly 50% giving an attractive dividend yield of

3.2%; 3) the EBITDA margin remained well below our expectations

(10.7% vs. our 14.3% estimate), with lower gross margins related to

a worsening product and geographic mix and slightly higher fixed

costs. The company anticipates single digit growth this year for both

the top line and EBITDA, meaning that margins should improve

modestly. As a result, we have downgraded our 2016-17 estimates

(and introduced 2018), cutting EBITDA expectations by 8% on

average and net profit estimates by 9%. Even considering the share

price drop of 35% in the past 12 months, we believe a significant

upturn of the share price can occur only in the presence of

sustainable EBITDA margin growth, which is still not evident. We

confirm our Hold rating with a new target price of EUR2.30 (from

EUR2.86).

> 4Q15 revenues rose 5.9% (+6.5% in the full year and +7.6% at

constant exchange rates) but margins remained under pressure due

to the worsening product and geographical mix. The net profit

improved compared with last year as 4Q14 was impacted by

significant non-recurring costs. Net cash was limited to EUR0.5

million at Dec-15 as the company made substantial investments in

2015 (EUR11.3 million of capex and EUR13.2 million in acquisitions).

Nice announced a dividend of EUR0.0703 per share (+48% vs. 2014,

51% pay-out, 3.2% yield).

> Management anticipates single digit figure growth in 2016 sales and

EBITDA, with recovery in France and Italy and a further increase in

capex which could rise to EUR15-20 million, plus eventual

acquisitions that remain a target for the company. The Net financial

position is expected to remain positive.

> We have trimmed our target price by 19.5% to EUR2.30 per share

from EUR2.86 due to our estimates downgrade and a more cautious

terminal value. The shares are currently trading 40% below Somfy at

EV/EBITDA level, but this is justified by the higher profitability of the

French peer.

Financials

2015

2016E

2017E

2018E

Revenues (EURm)

287.8

302.5

317.5

333.0 EBITDA (EURm)

41.6

45.1

49.0

54.6 EBITDA margin (%)

14.5%

14.9%

15.4%

16.4%

Ratios

2015

2016E

2017E

2018E

P/E(x)

16.7

12.4

10.9

9.2 P/CF(x)

10.6

8.6

7.8

6.8

(2)

NICE

16 March 2016

Key Financials

(EURm)

2015

2016E

2017E

2018E

Revenues

287.8

302.5

317.5

333.0 EBITDA

41.6

45.1

49.0

54.6 EBIT

33.1

36.4

39.8

45.0 NOPAT

17.2

21.1

23.1

26.1 Free Cash Flow

-1.5

10.7

14.0

17.5 Net Capital Employed

202.1

214.4

226.7

239.8 Shareholders’ Equity

204.6

218.6

234.5

253.4 Net Financial Position

-0.5

-2.5

-6.4

-12.6

Source: Company data, UBI Banca estimates

Key Profitability Drivers

2015

2016E

2017E

2018E

Net Debt/Ebitda (x)

0.0 -0.1

-0.1

-0.2

Net Debt/Equity (x)

0.0 -0.0

-0.0

Interest Coverage (%)

7.9

0.0

0.0 Free Cash Flow Yield (%)

-0.6%

4.1%

5.4%

6.7%

ROE (%)

7.5%

9.6%

10.2%

11.2%

ROI (%)

8.2%

9.4%

9.8%

10.6%

ROCE (%)

15.9%

16.3%

17.0%

18.2%

Key Valuation Ratios

2015

2016E

2017E

2018E

P/E (x)

16.7

12.4

10.9

9.2 P/BV (x)

1.2

1.1

1.0 P/CF (x)

10.6

8.6

7.8

6.8 Dividend Yield (%)

3.2%

2.8%

3.2%

3.8%

EV/Sales (x)

0.9

0.8

0.8 EV/EBITDA (x)

6.4

6.0

5.4

4.8 EV/EBIT (x)

8.1

7.4

6.7

5.8 EV/CE (x)

1.3

1.2

1.1 Key Value Drivers

(%)

2015

2016E

2017E

2018E

Payout

53.5%

35.0%

Cost of Equity

8.0%

WACC

8.0%

NWC/Sales

26.3%

26.0%

25.5%

25.4%

Capex/Sales

3.9%

5.5%

5.4%

5.3%

(3)

NICE

16 March 2016

Recent Developments

>

Although 4Q15 revenues were broadly in line with our forecasts, EBITDA

missed our expectations due to higher COGS relating to a less favourable

product and geographic mix which once again impacted the gross profit margin

(53.4% vs. 54.4% in 4Q14). Adding higher fixed costs, the EBITDA margin

declined to 10.7% (vs. 13.7% in 4Q14). The net result was up 32% but we

remained that 4Q14 was affected by EUR2.3 million of non-recurring costs

compared with less than EUR1 million in 4Q15 for the fair value of financial

liabilities for the acquisition of minorities in Elero.

>

The company announced a dividend of EUR0.0703 per share (+48% vs. 2014

and well above our expectations), with a pay-out ratio of 511% and a yield of

3.2% at the current market price. The management stated that 2015 pay out

ration is exceptional and that the dividend was increased to demonstrate the

strength of the group to shareholders.

>

Net cash was EUR0.5 million at 15 compared with EUR11.6 million at

Dec-14 and with EUR7.8 million net debt at Sept-15. NWC slightly increased to

EUR75.8 million or 25.8% of sales vs. EUR74.4 million or 27.5% of sales in

2014). Capex were EUR11.3 million in 2015 (vs. EUR6.4 million in 2014) and

Nice also invested EUR11.3 million in a small acquisition in South Africa at the

beginning of 2015.

>

Management guidance indicates low single digit figure growth in 2016 sales,

with further growth outside Europe, France growing gradually after +2% in 4Q15

and Italy remaining broadly stable. The EBITDA margin is expected to expand

due to an improved gross margin and lower operating costs.

Figure 1 - 4Q15 and 2015 Results

The gross margin deteriorated by 40 bps in 2015 (54.5% vs. 54.9% in 2014) and fixed

costs were also up 7.5%, reducing EBITDA margin by 80 bps

EURm 4Q14A 4Q15A Chg. YoY 4Q15E Delta vs. UBI 2014A 2015A Chg. YoY Sales 69.3 73.4 5.9% 74.2 -1.1% 270.9 287.8 6.2% EBITDA 9.5 7.8 -17.2% 10.6 -26.3% 41.5 41.6 0.3% EBITDA margin 13.7% 10.7% 14.3% 15.3% 14.5% EBIT 7.0 5.4 -21.9% 8.6 -36.5% 33.2 33.1 -0.2% EBIT margin 10.0% 7.4% 11.6% 12.3% 11.5% Net Income 2.2 2.8 32.5% 3.7 -36.5% 15.5 15.2 -1.4%

(4)

NICE

16 March 2016

Figure 2 – Weight of revenues from Italy and France and trend in the quarterly gross margin

As the following chart shows, there is a strong correlation between the gross margin

and the weight of Italian and French sales on total revenues (R2 >0.8) and we believe

it could be extremely difficult to increase margins without a sustainable recovery in

sales in France and Italy. For this reason the positive performance of Italy (+12.2% in

4Q15) and France (+2%) is a very positive news

48,0%

50,0%

52,0%

54,0%

56,0%

58,0%

60,0%

62,0%

64,0%

66,0%

0,0%

10,0%

20,0%

30,0%

40,0%

50,0%

60,0%

1Q10 3Q10 1Q11 3Q11 1Q12 3Q12 1Q13 3Q13 1Q14 3Q14 1Q15 3Q15

Italy and France sales (% on total)

Gross margin

Source: UBI Banca using Company data

Figure 3 - Sales breakdown by area

(EURm) 4Q14A 4Q15A 2014A 2015A

France 9.9 10.1 41.2 40.1 Italy 8.2 9.2 35.7 36.7 Europe at 15 18.8 20.2 77.1 81.4 Rest of Europe 15.1 14.6 56.4 53.7 Rest of World 17.2 19.4 60.4 76.0 Total Sales 69.3 73.4 270.9 287.8 As % of Total France 14.3% 13.8% 15.2% 13.9% Italy 11.8% 12.5% 13.2% 12.8% Europe at 15 27.1% 27.5% 28.5% 28.3% Rest of Europe 21.9% 19.8% 20.8% 18.6% Rest of World 24.9% 26.4% 22.3% 26.4% % Growth France 0.0% 2.0% -5.7% -2.7% Italy -8.9% 12.2% -7.0% 2.8% Europe at 15 7.4% 7.4% 8.0% 5.5% Rest of Europe 3.0% -3.9% 2.8% -4.9% Rest of World 15.7% 12.2% 8.5% 25.7% Total Sales 5.0% 5.9% 2.6% 6.2%

(5)

NICE

16 March 2016

Financial Projections

>

Following 2015 results, we have revised our estimates for 2016-17 and

introduced 2018 forecasts. We have merely fine-tuned our top line estimates

implying a CAGR of 5.0% to 2018.

>

While the gross operating margin should remain broadly stable for the coming

years (vs. a gradual improvement expected before), EBITDA should slightly

improve thanks to a slight reduction in 2016-18 fixed costs reaching 16.4% in

2018 (which, however, remains well below the average of >22% in the past 10

years). Altogether, our 2016-17 EBITDA estimates have been reduced by

around 8% and net profit forecast by an average 9%.

>

Given management indications, we have increased our capex expectations

which now point to EUR16.5 million this year and EUR17 million in 2017-18.

NWC should remain about 25-26% of sales (vs. our previous expectation of

26-27%). Altogether, Nice should remain cash positive (excluding possible new

acquisitions) achieving a net cash position of EUR2.5 million at Dec-16 with

significant further improvements in the coming years.

Figure 4 - Old vs. new estimates

2014 net income included EUR2.3 million of non-recurring costs for the impairment of

goodwill (EUR0.6 million) and for the fair value of financial liabilities for the

acquisition of minorities in Elero (EUR1.7 million).

(EURm) 2015A 2016E 2017E 2018E Old New Old New New Sales 287.8 302.9 302.5 317.7 317.5 333.0 % change -0.1% -0.1% 0.0% EBITDA 41.6 48.3 45.1 53.8 49.0 54.6 % change -2.3% -6.6% -8.9% Margin 14.5% 16.0% 14.9% 16.9% 15.4% 16.4% Net Income 15.2 22.9 21.0 26.8 23.9 28.4 % change -4.7% -8.1% -10.7%

Net debt (cash) -0.5 -12.6 -2.5 -23.3 -6.4 -12.6

% change -80.3% -72.5%

(6)

NICE

16 March 2016

Figure 5 – Gross margin evolution

Our assumptions for fixed and variable costs indicate a sales breakeven point of

EUR223 million in 2016E, which implies there is a good safety margin of 26% based

on our estimate of 2016E revenues.

30% 35% 40% 45% 50% 55% 60% 65% 0 20 40 60 80 100 120 140 160 180 200

2008 2009 2010 2011 2012 2013 2014 2015 2016E 2017E 2018E

COGS Gross Margin COGS as % on net sales GM as % on net sales

Figure 6 – Cost structure and DOL (degree of operating leverage) evolution

Fixed costs declined to 38.9% of total costs in 2015. This level should remain

broadly stable in coming years while variable costs are expected to fall slightly from

54% of revenues in 2015 to 53.1% expected for 2018. DOL should see some

improvements in 2016-18, although it is likely to remain lower than in recent years.

1,5 2,0 2,5 3,0 3,5 4,0 4,5 0 20 40 60 80 100 120 140 160 180 200

2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016E 2017E 2018E

Variable Costs Fixed Costs DOL (rhs)

(7)

NICE

16 March 2016

Valuation

>

The share price has fallen 8.7% since the beginning of the year, mostly in line

with the market. However, we believe that outperformance could come only if

the company is able to increase its EBIT margins which have fallen continuously

since 2010. As a result, we maintain our Hold rating on the stock.

>

Our target price derives from a weighted average of a DCF analysis and an

EV/ROACE approach. We excluded a valuation based on Somfy as the French

company is constantly reporting EBITDA margins well above Nice and therefore

its multiples deserve a premium. Following our downgrade in estimates, our

target price has fallen by 20% to EUR2.30 per share (from EUR2.86).

>

Nice is currently trading at 5.9x EV/EBITDA16E, or 40% below Somfy, the only

comparable listed company, while Nice’s P/E is 21% below its peer.

Figure 7 – Valuation Summary

Method Fair Value (EUR) weight

DCF 2.27 50%

EV/ROACE 2.33 50%

Target Price 2.30

Price per share (actual) 2.24

Increase/decrease % 2.8%

Source: UBI Banca estimates

Figure 8 - P/E and EV/EBITDA vs. main peers

P/E EV/EBITDA 2016E 2017E 2016E 2017E

Somfy 15.6 14.6 10.0 9.1

Nice 12.4 10.9 6.0 5.4

Premium/(discount) -20.9% -25.6% -40.3% -40.5%

Source: Factset, UBI Banca estimates

Figure 9 - WACC estimate

Risk free rate = 3.00% D = 0%

beta = 1.10 E = 100%

k (E) = 8.0% T = 27.5%

Market premium = 4.5% k (D) = 3.6%

WACC 8.0%

(8)

NICE

16 March 2016

Figure 10 - Cash Flow projections

Compared with our previous DCF valuation, we have lowered our EBIT margin at

terminal value to 13% vs. 14.5% before. Also capex were significantly increased

(EURm) FY13A FY14A FY15A FY16E FY17E FY18E TV

Net Sales 264.3 270,9 287.8 302.5 317.5 333.0 343.0

growth yoy (%) -3.8% 2,5% 6.2% 5.1% 5.0% 4.9% 3.0%

EBIT 33.1 33,2 33.1 36.4 39.8 45.0 44.6

ROS % 12.5% 12,3% 11.5% 12.0% 12.5% 13.5% 13.0%

growth yoy (%) -28.0% 0,5% -0.2% 9.7% 9.6% 12.9% -0.8% Cash taxes on EBIT (11.5) (11,8) (13.4) (15.5) (16.2) (16.9) (16.7)

NOPAT 21.6 22.7 19.7 20.9 23.7 28.1 27.9

D&A 7.6 8,3 8.5 8.8 9.2 9.7 13.7 (Capex) (7.4) (8,6) (11.3) (16.5) (17.0) (17.5) (17.2) (NWC requirements) 7.9 5,7 (1.0) (2.9) (2.5) (3.4) (2.7)

Free Cash Flow 29.7 26,8 15.9 10.3 13.4 16.9 21..8 Discounted FCF 7.6 13.4 10.7 Implied ratios FY13A FY14A FY15E FY16E FY17E FY18E TV

Sales/Capital Employed 1.31 1.40 1.51 1.51 1.51 1.50 1.58 Capex/D&A 0.97 1.04 1.33 1.88 1.85 1.81 1.25 Capex/Sales 2.8% 3.2% 3.9% 5.5% 5.4% 5.3% 5.0% Capex/CE 3.7% 4.4% 5.9% 8.2% 8.1% 7.9% 7.9% NWC/Sales 32.0% 29.1% 27.8% 27.4% 26.9% 26.6% 26.6% Source: UBI Banca estimates

Figure 11 - DCF fair value estimate

Our Terminal Value represents ca 88% of Nice’s EV .

(A) Discounted free cash flow 2016-2018 (EUR million) 31.6

WACC 8.0%

Terminal growth 2.0%

Terminal Value (EURm) 366.1

(B) Discounted terminal value (EURm) 231.4 (A+B) Operating activities Value (EURm) 263

Cash (Net Debt) FY14 (EURm) 0.5

Equity Value (EURm) 263.5

Number of shares (m) 116.0

Value per share (EUR) 2.27

(9)

NICE

16 March 2016

Income Statement

(EURm)

2015

2016E

2017E

2018E

Net Revenues

287.8

302.5

317.5

333.0 EBITDA

41.6

45.1

49.0

54.6 EBITDA margin

14.5%

14.9%

15.4%

16.4%

EBIT

33.1

36.4

39.8

45.0 EBIT margin

11.5%

12.0%

12.5%

13.5%

Net financial income /expense

-4.2

0.4

0.6

0.6 Associates & Others

0.0

0.0 Profit before taxes

28.9

36.8

40.4

45.6 Taxes

-13.4

-15.4

-16.2

-16.9

Minorities & discontinuing ops

-0.3

Net Income

15.2

21.0

23.9

28.4

Source: Company data. UBI Banca estimates

Balance Sheet

(EURm)

2015

2016E

2017E

2018E

Net working capital

75.8

78.6

81.1

84.4 Net Fixed assets

141.8

150.5

159.7

168.6 M/L term funds

-15.5

-14.7

-14.0

-13.3

Capital employed

202.1

214.4

226.7

239.8 Shareholders' equity

204.6

218.6

234.5

253.4 Minorities

-2.0

-1.7

-1.4

-1.0

Shareholders' funds

202.6

216.9

233.2

252.4 Net financial debt/(cash)

-0.5

-2.5

-6.4

-12.6

Cash Flow Statement

(EURm)

2015

2016E

2017E

2018E

NFP Beginning of Period

-11.6

-0.5

-2.5

-6.4

Group Net Profit

15.2

21.0

23.9

28.4 Minorities

0.3

0.3 D&A

8.5

8.8

9.2

9.7 Change in Funds & TFR

0.0

0.0 Gross Cash Flow

24.0

30.1

33.5

38.4 Change In Working Capital

-1.0

-2.9

-2.5

-3.4

Other

0.0

0.0 Operating Cash Flow

23.0

27.2

31.0

35.0 Net Capex

-11.3

-16.5

-17.0

-17.5

Other Investments

-13.2

0.0

0.0 Free Cash Flow

-1.5

10.7

14.0

17.5 Dividends Paid

-5.3

-7.8

-7.0

-8.0

Other & Chg in Consolid. Area

-4.4

-1.0

-3.0

-3.3

Chg in Net Worth & Capital Incr.

0.0

(10)

NICE

16 March 2016

Financial Ratios

(%)

2015

2016E

2017E

2018E

ROE

7.5%

9.6%

10.2%

11.2%

ROI (%)

8.2%

9.4%

9.8%

10.6%

Net Fin. Debt/Equity (x)

0.0 -0.0

-0.0

Net Fin. Debt/EBITDA (x)

0.0 -0.1

-0.1

-0.2

Interest Coverage

7.9

0.0

0.0 NWC/Sales

26.3%

26.0%

25.5%

25.4%

Capex/Sales

3.9%

5.5%

5.4%

5.3%

Pay Out Ratio

53.5%

35.0%

Per Share Data

(EUR)

2015

2016E

2017E

2018E

EPS

0.1

0.2

0.2 DPS

0.1

0.1 Op. CFPS

0.2

0.3

0.3 Free CFPS

-0.0

0.1

0.2 BVPS

1.8

1.9

2.0

2.2 Stock Market Ratios

(x)

2015

2016E

2017E

2018E

P/E

16.7

12.4

10.9

9.2 P/OpCFPS

11.1

9.6

8.4

7.4 P/BV

1.2

1.1

1.0 Dividend Yield (%)

3.2%

2.8%

3.2%

3.8%

Free Cash Flow Yield (%)

-0.6%

4.1%

5.4%

6.7%

EV (EURm)

267.7

270.1

265.9

259.4 EV/Sales

0.9

0.8

0.8 EV/EBITDA

6.4

6.0

5.4

4.8 EV/EBIT

8.1

7.4

6.7

5.8 EV/Capital Employed

1.3

1.2

1.1 Growth Rates

(%)

2015

2016E

2017E

2018E

Growth Group Net Sales

6.2%

5.1%

5.0%

4.9%

Growth EBITDA

0.3%

8.4%

8.7%

11.4%

Growth EBIT

-0.2%

9.7%

9.6%

12.9%

Growth Net Profit

-1.4%

37.8%

13.9%

18.5%

(11)

NICE

16 March 2016

Disclaimer

Analyst Declaration

The analyst who prepared this report. and whose name and role appear on the front page. certifies that: a. the views expressed on the Company mentioned herein accurately reflects his personal views.

It does not represent the views or opinions of the management of UBI Banca or any other company in or affiliated to the UBI Banca Group. It is possible that individuals employed by UBI Banca. or any other company in or affiliated to the UBI Banca Group. may disagree with the views expressed in this report;

b. no direct or indirect compensation has been or will be received in exchange for any views expressed;

c. the analyst does not own shares of the Company;

d. neither the analyst nor any member of the analyst’s household serves as an officer. director or advisory board member of the Company;

e. the analyst does not receive bonuses. salaries. or any other form of compensation that is based upon specific investment banking transactions.

About UBI Banca

This document has been prepared by UBI Banca. a bank authorized by the Bank of Italy to provide investment services pursuant to Article 1. Paragraph 5. letter a). b). c). c-bis). e) and f) of Legislative Decree. 24 February 1998. n° 58.

General warning

This document is for information purposes only. This document (i) is not. nor may it be construed. to constitute. an offer for sale or subscription of or a solicitation of any offer to buy or subscribe for any securities issued or to be issued by the Company. (ii) should not be regarded as a substitute for the exercise of the recipient’s own judgement. In addition. the information included in this document may not be suitable for all recipients. Therefore the recipient should conduct his own investigations and analysis of the Company and securities referred to in this document and make his own investment decisions without undue reliance on its contents. Neither UBI Banca. nor any other company of the UBI Banca Group. nor any of its directors. managers. officers or employees. accepts any liability whatsoever (in negligence or otherwise). and accordingly no liability whatsoever shall be assumed by. or shall be placed on. UBI Banca. or any other company of the UBI Banca Group. or any of its directors. managers. officers or employees. for any loss howsoever arising from any use of this document or its contents or otherwise arising in connection with this document.

The information provided and the opinions expressed in this document are based upon information and data provided to the public by the Company or news otherwise public and refers to the date of publication of the document. The sources (press publications. financial statements. current and periodic release. as well as meetings and telephone conversations with Company representatives) are believed to be reliable and in good faith. but no representation or warranty. express or implied. is made by UBI Banca as to their accuracy. completeness or correctness. Past performance is not a guarantee of future results. Any opinions. forecasts or estimates contained herein constitute a judgement as at the date of this document. and there can be no assurance that the future results of the Company and/or any future events will be consistent with any such opinions. forecasts or estimates. Any information herein is subject to change. update or amendment without notice by UBI Banca subsequent to the date of this document. with no undertaking by UBI Banca to notify the recipient of this document of such change. update or amendment.

Organizational and administrative arrangements to prevent conflicts of interests

UBI Banca maintains procedures and organizational mechanism (physical and non physical barriers designed to restrict the flow of information between Business Analysis Unit and the other areas/departments of UBI Banca) to prevent and professionally manage conflicts of interest in relation to investment research. For further information please see UBI Banca’s website (www.ubibanca..it) “Meccanismi organizzativi ed amministrativi posti in essere per prevenire ed evitare conflitti di interesse in rapporto alle Ricerche”.

Disclosure of potential conflicts of interest

The outcome of the checks carried out is reported below:

> UBI Banca acts as Specialist for Nice Spa.

On the basis of the checks carried out no other conflict of interest arose.

Frequency of updates

UBI Banca aims to provide continuous coverage of the companies in conjunction with the timing of periodical accounting reports and any exceptional event that occurs affecting the issuer’s sphere of

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NICE

16 March 2016

Valuation methodology

UBI Banca’s analysts value the Company subject to their recommendations using several methods among which the most prevalent are: the Discounted Cash Flow method (DCF). the Economic Value Added method (EVA). the Value map method. the Multiple comparison method.

For further information please refer to www.ubibanca.it.

Ranking system

UBI Banca’s analysts use an “absolute” rating system. not related to market performance. The explanation of the rating system is listed below:

Buy: if the target price is 10% higher than the market price. Hold: if the target price is 10% below or 10% above the market price. Sell: if the target price is 10% lower than the market price.

Target price: the market price that the analyst believes that the share may reach within a one-year time horizon.

Market price: closing price on the day before the issue date of the report. appearing on the first page.

Distribution

This document is intended for distribution only by electronic and ordinary mail to “Professional Clients” and “Qualified Counterparties” as defined in Consob Regulation n. 16190 dated 29.10.2007..

This document may be distributed in the USA by a United States Securities and Exchange Commission (“SEC”) registered broker dealer.

This document may not be distributed in Canada. Japan or Australia.

Copyright

This document is being supplied solely for the recipient’s information and may not be reproduced. redistributed or passed on. directly or indirectly to any other person or published. in whole or in part. for any purpose without prior written consent by UBI Banca.

The copyright and intellectual property rights on the data are owned by UBI Banca Group. unless otherwise indicated. The data. information. opinions and valuations contained in this document may not be subject to further distribution or reproduction. in any form or via any means. even in part. unless expressly consented by UBI Banca.

By accepting this document the recipient agrees to be bound by all of the forgoing provisions.

Distribution of ratings

For further information regarding quarterly rating statistics and descriptions. please refer to www.ubibanca.it.

Historical ratings and target prices

Date Rating Target Price (EUR) Market Price (EUR)

20/03/2012 BUY 3.4 2.8 30/08/2012 BUY 3.2 2.8 20/11/2012 BUY 3.2 2.6 03/05/2013 BUY 3.2 2.5 23/09/2013 BUY 3.1 2.7 21/04/2014 HOLD 3.10 3.31 15/09/2014 HOLD 3.25 3.01 17/03/2015 HOLD 3.33 3.19 07/09/2015 HOLD 2.86 2.62