Persistent 1QFY18

1. Anand Rathi Share and Stock Brokers Limited (hereinafter “ARSSBL”) is a full-service brokerage and equities-research firm and the views expressed therein are solely of
ARSSBL and not of the companies which have been covered in the Research Report. This report is intended for the sole use of the Recipient. Disclosures and analyst
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Anand Rathi Research India Equities
Technology
Company Update
India I Equities
Mohit Jain
Research Analyst
+9122 6626 6531
mohitjain@rathi.com
Shobit Singhal
Research Associate
+9122 6626 6511
shobitsinghal@rathi.com
Key financials (YE Mar) FY15 FY16 FY17 FY18e FY19e
Sales (` m) 18,913 23,123 28,784 30,783 34,575
Net profit (` m) 2,906 2,974 3,015 3,319 4,098
EPS (`) 36.3 37.2 37.7 41.5 51.2
Growth (%) 16.6 2.3 1.4 10.1 23.5
PE (x) 18.1 17.7 17.4 15.8 12.8
PBV (x) 3.7 3.2 2.8 2.5 2.2
RoE (%) 22.1 19.5 17.0 16.5 18.1
RoCE (%) 20.5 19.2 16.2 14.7 17.2
Dividend yield (%) 1.3 2.4 1.1 1.8 2.7
Net debt/equity (x) -0.4 -0.4 -0.4 -0.5 -0.5
Source: Company, Anand Rathi Research *Notes- Adjusted
sequentially.
,
Rating: Buy
Target Price: `800
Share Price: `657
Key data PSYS IN / PERS.BO
52-week high / low `710/ `501
Sensex / Nifty 32029/9915
3-m average volume $2.1m
Market cap `53bn/$819m
Shares outstanding 80m
Shareholding pattern (%) June'17 Mar'17 Dec'16
Promoters 30.7 35.0 36.2
- of which, Pledged
Free float 69.3 65.0 63.8
- Foreign institutions 22.3 20.8 21.5
- Domestic institutions 14.1 14.3 13.5
- Public 32.9 29.9 28.8
22 July 2017
Persistent Systems
Revenues in-line, deferred wage hikes to help margins; Buy
Persistent had an operationally good quarter with US$ revenues
growing at 3.6%qoq, top 10 clients growing at 9%qoq, 3 accounts
moving to >US$3m bracket, and revenue per client going up. This was
achieved with reduction in headcount (-64 net). However, margin
performance was weak for two reasons – currency (offshore rev are
59%) and SG&A investments (PARX acquisition, visa exp, and hiring).
Wage hikes are deferred to 2H and hence, 1Q miss can be reversed
during FY18. We maintain buy rating with TP of `800.
Traditional business bounces back; Digital takes a breather. Persistent
reported in-line revenues at US$113m, +3.6%qoq and +7.8%yoy. The
surprise this quarter was growth in the two traditional businesses (Services
+5%qoq and Alliance – ex IoT, +10%qoq). The focus businesses of Digital
and Accelerite disappointed with a decline of -1.3%qoq and -10%qoq, pulling
down margins (Digital margins -351bps qoq, Accelerite -473bps qoq). In
addition, 70bps one-time expenses were incurred towards visa and acquisition
related travel. EBITDA margins were 14.3%, -257bps qoq* and -73bps yoy.
Acquires PARX (Salesforce Platinum Partner in Europe) for US$8.5m
(+US$7.5m earn-outs after 3Y). PARX (CY16 Rev US$8.5m, +28% over
CY15-17) has worked for 300 customers and has operations in Switzerland,
Germany, and Austria. Focus industry verticals are consumer goods,
manufacturing, and services but works across industries. Interesting
acquisition as it fetches enterprise customers and improves PSYS’ Europe
footprint (just 6% of Rev currently). Margins were not disclosed but we are
building in ~6% EBITDA in our estimates.
Estimates largely retained adj for currency, maintain Buy. We cut our
earnings estimates by ~4%/2% each for FY18/FY19e, factoring in
Rs64.5/US$, deferred wage hikes, and PARX. We retain a Buy, with target of
`800, at 16x FY19e EPS. Risk: Sharp rupee appreciation.
Relative price performance
Source: Bloomberg
PSYS
Sensex
550
600
650
700
750
Jul-16
Aug-16
Sep-16
Oct-16
Nov-16
Dec-16
Jan-17
Feb-17
Mar-17
Apr-17
May-17
Jun-17
Jul-17
Estimates revision (%) FY18e FY19e
Sales($) 1.6 2.1
EBITDA (9.3) (4.7)
PAT (4.2) (2.0)
Change in Estimates  Target  Reco 

2. 22 July 2017 Persistent Systems – Revenues in-line, deferred wage hikes to help margins; Buy
Anand Rathi Research 2
Quick Glance – Financials and Valuations
Fig 1 – Income statement (`m)
Year-end: Mar FY15 FY16 FY17 FY18e FY19e
Net revenues 18,913 23,123 28,784 30,783 34,575
Revenue growth (%) 13.3 22.3 24.5 6.9 12.3
- Oper. expenses 15,007 18,952 24,131 25,942 28,585
EBIDTA 3,906 4,171 4,653 4,842 5,990
EBITDA margins (%) 20.7 18.0 16.2 15.7 17.3
- Interest - - - - -
- Depreciation 939 965 1,490 1,548 1,621
+ Other income 932 750 843 1,106 1,050
- Tax 993 983 992 1,080 1,320
Effective tax rate (%) 25.5 24.8 24.8 24.6 24.4
+ Associates/(minorities) - - - - -
Adjusted PAT 2,906 2,974 3,015 3,319 4,098
+ Extraordinary items - - - - -
Reported PAT 2,906 2,974 3,015 3,319 4,098
Adj. FDEPS (`/sh) 36.3 37.2 37.7 41.5 51.2
Adj. FDEPS growth (%) 16.6 2.3 1.4 10.1 23.5
Source: Company, Anand Rathi Research
Fig 3 – Cash-flow statement (`m)
Year-end: Mar FY15 FY16 FY17 FY18e FY19e
Adjusted PAT 2,906 2,974 3,015 3,319 4,098
+ Non-cash items 939 965 1,490 1,548 1,621
Cash profit 3,845 3,939 4,505 4,867 5,719
- Incr./(decr.) in WC 186 1,594 614 34 347
Operating cash-flow 3,659 2,344 3,891 4,833 5,372
- Capex 670 1,477 2,511 569 1,150
Free cash-flow 2,989 868 1,379 4,264 4,222
- Dividend 667 1,251 578 963 1,393
+ Equity raised -405 613 163 -0 -
+ Debt raised -62 84 -172 - -
- Investments 1,854 297 716 1,627 2,115
- Misc. items - - - - -
Net cash-flow 0 16 76 1,675 714
+ Op. cash & bank bal. 1,416 1,416 1,432 1,510 3,184
Cl. Cash & bank bal. 1,416 1,432 1,510 3,184 3,898
Source: Company, Anand Rathi Research
Fig 5 – Price movement
Source: Bloomberg
Fig 2 – Balance sheet (`m)
Year-end: Mar FY15 FY16 FY17 FY18e FY19e
Share capital 800 800 800 800 800
Reserves & surplus 13,258 15,593 18,193 20,549 23,254
Net worth 14,058 16,393 18,993 21,349 24,054
Total debt 25 26 22 22 22
Minority interest - - - - -
Def. tax liab. (net) -315 -233 -401 -401 -401
Capital employed 13,767 16,186 18,614 20,970 23,675
Net fixed assets 3,097 3,031 2,817 3,021 3,162
Intangible assets 1,019 1,597 2,832 1,648 1,037
Investments 6,749 7,046 7,761 9,388 11,503
- of which, Liquid 4,620 4,828 5,422 7,049 9,163
Working capital 1,486 3,080 3,694 3,728 4,075
Cash 1,416 1,432 1,510 3,184 3,898
Capital deployed 13,767 16,186 18,614 20,970 23,675
Working capital (days) 29 49 47 44 43
Book value (`/sh) 175.7 204.9 237.4 266.9 300.7
Source: Company, Anand Rathi Research
Fig 4 – Ratio analysis@ `657
Year-end: Mar FY15 FY16 FY17 FY18e FY19e
P/E (x) 18.1 17.7 17.4 15.8 12.8
Cash P/E (x) 13.7 13.3 11.7 10.8 9.2
EV/EBITDA (x) 11.9 11.1 9.8 8.7 6.6
EV/sales (x) 2.5 2.0 1.6 1.4 1.1
P/B (x) 3.7 3.2 2.8 2.5 2.2
RoE (%) 22.1 19.5 17.0 16.5 18.1
RoCE (%) 20.5 19.2 16.2 14.7 17.2
Dividend yield (%) 1.3 2.4 1.1 1.8 2.7
Dividend payout (%) 23.0 42.1 19.2 29.0 34.0
Net debt/equity (x) -0.4 -0.4 -0.4 -0.5 -0.5
Debtor (days) 69 67 60 60 60
Inventory (days) - - - - -
Payables (days) 10 26 15 15 15
CFO:EBITDA% 79.8 60.9 61.5 85.3 73.8
FCF:EBITDA% 55.3 21.1 14.8 61.6 54.6
Source: Company, Anand Rathi Research
Fig 6 – Digital revenue
Source: Company
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1,000
Jul-12
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(`)
PSYS
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1QFY17
2QFY17
3QFY17
4QFY17
1QFY18
($m)

3. 22 July 2017 Persistent Systems – Revenues in-line, deferred wage hikes to help margins; Buy
Anand Rathi Research 3
Result Highlights
Q1FY18 Results at a Glance
Fig 8 – Quarterly result
Year-end: Mar Q1FY18 % qoq % yoy FY17 FY16 % yoy
Sales ($ m) 113 3.6 7.8 429 352 22.0
Sales (`m) 7,280 0.1 3.7 28,784 23,123 24.5
EBITDA (`m) 1,044 (19.8) (1.3) 4,653 4,171 11.6
EBITDA margin (%) 14.3 -357 bps -73 bps 16.2 18.0 -187 bps
EBIT (`m) 652 (28.2) (8.8) 3,163 3,206 (1.3)
EBIT margin (%) 9.0 -353 bps -123 bps 11.0 13.9 -287 bps
PBT (`m) 1,019 8.8 5.3 4,007 3,956 1.3
Tax (`m) (269) 28.8 14.2 (992) (983) 1.0
Tax rate (%) (26.3) -407 bps -205 bps (24.8) (24.8) 8 bps
Net Income (`m) 751 3.1 2.5 3,015 2,974 1.4
Source: Company
Fig 7 – Segment-wise results
Q1FY17 Q2FY17 Q3FY17 Q4FY17 Q1FY18 QoQ% YoY%
Revenues ($ m) 105 105 110 109 113 3.6% 7.8%
Growth YoY % 33% 27% 23% 9% 8% -73bps -2543bps
Volume growth % ND ND ND ND ND
Revenues (` m) 7,018 7,040 7,455 7,271 7,280 0% 4%
Eff. exchange rate 67.0 66.9 67.8 66.7 64.4 -3% -4%
Employees (EoP) 8,698 8,612 8,562 8,808 8,744
Revenue Productivity ($ ‘000/employee) 12.0 12.2 12.9 12.4 12.9 4% 7.3%
Gross Utilization (IT services) 75.3% 74.2% 78.9% 77.8% 77.2% -61bps 190bps
Attrition 16.7% 15.9% 15.8% 15.7% 15.5% -20bps -120bps
CoR (excluding D&A) (4,585) (4,539) (4,751) (4,644) (4,783) 3% 4%
As % of Revenues -65% -64% -64% -64% -66% -183bps -37bps
SG&A (1,376) (1,394) (1,518) (1,326) (1,453) 10% 6%
As % of Revenues -20% -20% -20% -18% -20% -173bps -36bps
EBITDA 1,058 1,108 1,187 1,302 1,044 -20% -1%
EBITDA margins % 15% 16% 16% 18% 14% -357bps -73bps
EBIT 715 741 800 907 652 -28% -9%
EBIT margins % 10% 11% 11% 12% 9% -353bps -123bps
Other Income 172 203 143 57 183 224% 6%
Forex gain/loss 81 41 174 (28) 184 -768% 128%
Interest expense
PBT 968 984 1,118 936 1,019 9% 5%
PBT margins % 14% 14% 15% 13% 14% 112bps 21bps
Taxes (235) (250) (299) (209) (269) 29% 14%
ETR % -24% -25% -27% -22% -26% 407bps 205bps
PAT 733 735 819 728 751 3% 2%
PAT Margin % 10% 10% 11% 10% 10% 30bps -13bps
Source: Company, Anand Rathi Research

4. 22 July 2017 Persistent Systems – Revenues in-line, deferred wage hikes to help margins; Buy
Anand Rathi Research 4
Conference Call Takeaways
Company
 Impact on margins in Q1FY18- lower offshore utilization impacted
40bps, Currency impacted 120bps, visa cost and PARX acquisition
impacted 70bps, incremental onsite hiring impacted 30bps and
provisioning of bad debts impacted 40bps.
 Hike in wages is deferred from July to October for some employees
and from July to January for others.
 The rise in `200m for cost of professional is due to hiring of special
skill professional for new projects which is of recurring nature.
 Acquisition of PARX- Acquired for consideration of upfront $8.5mn
and $7.5m after 3 years based on earn-outs. PARX reported revenues
of CHF 8mn (~`54cr) in 2016 and consists of 80 people in its
workforce (including contractors). The company is profitable although
PSYS did not disclose its EBITDA margins.
 Management restated that last quarter they managed to move some
IBM employees to lower cost geographies. Thus, can expect better
management on margins in the IBM alliance going forward.
 The company’s product business, Accelerite declined sequentially this
quarter due to settlement dispute with one of the customers. Overall
pipeline is robust and expects this segment to do well.
Notes from the last two quarters’ conference calls
From Q4FY17
 Revenue growth is expected to be in double digits as Accelerite,
Alliance and Digital are expected to continue their growth momentum.
Services may continue to be a drag on overall growth rates.
 FY18 margins are likely to be better than FY17, as IoT breakseven and
some benefits of non-linearity start coming in.
From Q3FY17
 The services business (44% of revenue) may have constrained growth
but the balance (56% of revenue) would grow fast.
 The IBM IoT business is likely to break even in FY18. Costs are fixed
and hence may not increase in FY18. There are additional levers to
reduce costs.

5. 22 July 2017 Persistent Systems – Revenues in-line, deferred wage hikes to help margins; Buy
Anand Rathi Research 5
Factsheet
Fig 9 – Revenue split
(%) Q1FY17 Q2FY17 Q3FY17 Q4FY17 Q1FY18
Effort-Led 71.8 72.2 71.6 72.4 72.8
IP-Led 28.2 27.8 28.4 27.6 27.2
Source: Company
Fig 10 – Revenue-split, by region
(%) Q1FY17 Q2FY17 Q3FY17 Q4FY17 Q1FY18
North America 87.0 85.4 86.6 86.5 85.5
Europe 5.2 6.1 5.3 5.3 5.9
Asia-Pacific 7.8 8.5 8.1 8.2 8.6
Source: Company
Fig 11 – Revenue-split, by segment
($m) Q1FY17 Q2FY17 Q3FY17 Q4FY17 Q1FY18
Services 49.9 49.0 48.3 47.9 50.3
Digital 15 16 19 21 20
Alliance 31.4 30.9 33.7 30.1 33.0
Accelerite 9 9 9 10 9
Source: Company
Fig 12 – Client concentration
(%) Q1FY17 Q2FY17 Q3FY17 Q4FY17 Q1FY18
Top 1 29.0 28.4 29.5 26.5 27.9
Top 5 44.7 44.3 46.0 43.3 45.7
Top 10 52.7 52.8 54.6 52.4 55.2
Source: Company
Fig 13 – Workforce
(%) Q1FY17 Q2FY17 Q3FY17 Q4FY17 Q1FY18
Employee Movement
Technical(EOP) 8,698 8,612 8,562 8,808 8,744
Net Adds (Qtr) 80 -86 -50 246 -64
Net Adds (LTM) 888 707 228 190 46
Utilization % 75.3 74.2 78.9 77.8 77.2
Attrition % 16.7 15.9 15.8 15.7 15.5
Sales(EOP) 204 207 200 193 210
Net Adds (Qtr) 3 3 (7) (7) 17
Net Adds (LTM) (12) (1) (3) (8) 6
Source: Company

6. 22 July 2017 Persistent Systems – Revenues in-line, deferred wage hikes to help margins; Buy
Anand Rathi Research 6
Fig 14 – Revenue-split, by delivery type and billing rates
Q1FY17 Q2FY17 Q3FY17 Q4FY17 Q1FY18
Delivery type (%)
On-site 26.3 26.3 26.7 27.8 29.9
Offshore 45.5 45.5 44.9 44.6 42.9
Reported billing rates ($ /hr)
On-site 82.6 86.1 84.0 85.1 85.8
Offshore 23.1 22.9 22.8 22.7 22.5
Source: Company
Fig 15 – Key geographies and horizontals growth (%)
(%) Q1FY17 Q2FY17 Q3FY17 Q4FY17 Q1FY18
Horizontals growth (qoq)
Services NA -1.7% -1.5% -0.9% 5.0%
Digital NA 7.5% 16.3% 10.8% -1.3%
Alliance NA -2% 9% -11% 10%
Accelerite NA 8% 2% 11% -10%
Key area-wise growth (yoy)
North America 37.4 25.6 24.6 9.1 6.0
Europe 10.0 13.7 3.3 (14.1) 22.4
Asia-Pacific 11.8 54.0 18.3 23.6 18.9
Source: Company
Fig 16 – Segment-wise growth (yoy)
(%) Q1FY17 Q2FY17 Q3FY17 Q4FY17 Q1FY18
Effort-Led 17.4 9.2 10.0 9.5 9.2
IP-Led 103.7 117.7 73.5 6.1 4.3
Source: Company

7. 22 July 2017 Persistent Systems – Revenues in-line, deferred wage hikes to help margins; Buy
Anand Rathi Research 7
Valuations
The stock trades at 12.8x FY19e EPS of `51.2. This, we reckon, is
attractive, given that Persistent has a differentiated range of service
offerings and is expected to grow at a faster-than-industry rate of ~10%,
organically.
With a strong balance sheet (cash balance: ~$140m) and cash-flow
generation (CFO:NI ~90%), it is one of the best midcap IT stocks, which
could command a higher multiple if growth accelerates. The company is
likely to touch $536m in revenue by FY19, helping it morph into a
reasonably large and differentiated IT-services company.
Also, it has margin levers in the business, primarily the offshore mix and
utilisation to absorb potential headwinds in margins. More than 50% of
Persistent’s business is non-linear (or not dependent on T&M billing),
giving it a potential margin upswing if the growth here turns out to be
higher.
Its reliance on one client is at present a high 28%, but that gives it a better
positioning to grow faster by aligning its interests with its largest client.
We value Persistent based on a target PE of 16x FY19e EPS, similar to
Mindtree and Cyient. This reflects constrained profitability and the
potential to grow faster than the industry.
Fig 17 – Change in estimates
FY18 FY19
New Old Chg % New Old Chg %
Revenues ($m) 477 470 1.6 536 525 2.1
Revenues (`m) 30,783 31,335 (1.8) 34,575 35,001 (1.2)
EBITDA (`m) 4,842 5,336 (9.3) 5,990 6,287 (4.7)
EBITDA margin % 16% 17% (130) 17% 18% (64)
EBIT (`m) 3,294 3,742 (12.0) 4,369 4,574 (4.5)
EBIT margin % 10.7% 11.9% (124) 12.6% 13.1% (43)
PBT 4,399 4,563 (3.6) 5,419 5,510 (1.7)
Net profit 3,319 3,464 (4.2) 4,098 4,183 (2.0)
Source: Anand Rathi Research
Fig 18 – PE band
Source: Bloomberg, Anand Rathi Research
Risks
 Sharp rupee appreciation.
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PSYS

8. Appendix
Analyst Certification
The views expressed in this Research Report accurately reflect the personal views of the analyst(s) about the subject securities or issuers and no part of the
compensation of the research analyst(s) was, is, or will be directly or indirectly related to the specific recommendations or views expressed by the research
analyst(s) in this report. The research analysts are bound by stringent internal regulations and also legal and statutory requirements of the Securities and Exchange
Board of India (hereinafter “SEBI”) and the analysts’ compensation are completely delinked from all the other companies and/or entities of Anand Rathi, and have
no bearing whatsoever on any recommendation that they have given in the Research Report.
Important Disclosures on subject companies
Rating and Target Price History (as of 21 July 2017)
Persistent
10
7
1
2
3
4
5
6 8
9
400
500
600
700
800
900
1000
Jan-14
Apr-14
Jul-14
Oct-14
Jan-15
Apr-15
Jul-15
Oct-15
Jan-16
Apr-16
Jul-16
Oct-16
Jan-17
Apr-17
Jul-17
Date Rating
TP
(`)
Share
Price (`)
1 30-Sep-14 Buy 975 693
2 05-Jan-15 Buy 1,000 932
3 28-Jan-15 Hold 975 902
4 09-Apr-15 Buy 930 780
5 24-Jun-15 Buy 860 647
6 08-Apr-16 Buy 950 727
7 26-Jul-16 Buy 900 664
8 25-Oct-16 Buy 875 662
9 21-Dec-16 Buy 840 609
10 25-Apr-17 Buy 800 568
Anand Rathi Ratings Definitions
Analysts’ ratings and the corresponding expected returns take into account our definitions of Large Caps (>US$1bn) and Mid/Small Caps (<US$1bn) as described
in the Ratings Table below:
Ratings Guide (12 months)
Buy Hold Sell
Large Caps (>US$1bn) >15% 5-15% <5%
Mid/Small Caps (<US$1bn) >25% 5-25% <5%
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Statements on ownership and material conflicts of interest, compensation - ARSSBL and Associates
Answers to the Best of the knowledge and belief of ARSSBL/ its Associates/ Research Analyst who is preparing this report
ARSSBL/its Associates/ Research Analyst/ his Relative have actual/beneficial ownership of one per cent or more securities of the subject company, at the end of
the month immediately preceding the date of publication of the research report?
No
ARSSBL/its Associates/ Research Analyst/ his Relative have actual/beneficial ownership of one per cent or more securities of the subject company No
ARSSBL/its Associates/ Research Analyst/ his Relative have any other material conflict of interest at the time of publication of the research report? No
ARSSBL/its Associates/ Research Analyst/ his Relative have received any compensation from the subject company in the past twelve months No
ARSSBL/its Associates/ Research Analyst/ his Relative have managed or co-managed public offering of securities for the subject company in the past twelve
months
No
ARSSBL/its Associates/ Research Analyst/ his Relative have received any compensation for investment banking or merchant banking or brokerage services from
the subject company in the past twelve months
No
ARSSBL/its Associates/ Research Analyst/ his Relative have received any compensation for products or services other than investment banking or merchant
banking or brokerage services from the subject company in the past twelve months
No
ARSSBL/its Associates/ Research Analyst/ his Relative have received any compensation or other benefits from the subject company or third party in connection
with the research report
No
ARSSBL/its Associates/ Research Analyst/ his Relative have served as an officer, director or employee of the subject company. No
Other Disclosures pertaining to distribution of research in the United States of America
This report was prepared, approved, published and distributed by the Anand Rathi Share and Stock Brokers Limited (ARSSBL) located outside of the United States (a “non-
US Group Company”). This report is distributed in the U.S. by Enclave Capital LLC, a U.S. registered broker dealer, on behalf of ARSSBL only to major U.S. institutional
investors (as defined in Rule 15a-6 under the U.S. Securities Exchange Act of 1934 (the “Exchange Act”)) pursuant to the exemption in Rule 15a-6 and any transaction
effected by a U.S. customer in the securities described in this report must be effected through Enclave Capital. ARSSBL accepts responsibility for its contents. Any US
customer wishing to effect transactions in any securities referred to herein or options thereon should do so only by contacting a representative of Enclave Capital LLC at 646-
454-8600
Neither the report nor any analyst who prepared or approved the report is subject to U.S. legal requirements or the Financial Industry Regulatory Authority, Inc. (“FINRA”) or
other regulatory requirements pertaining to research reports or research analysts. No non-US Group Company is registered as a broker-dealer under the Exchange Act or is a
member of the Financial Industry Regulatory Authority, Inc. or any other U.S. self-regulatory organization.
This material was produced by ARSSBL, solely for information purposes and for the use of the recipient. It is not to be reproduced under any circumstances and is not to be
copied or made available to any person other than the recipient. It is distributed in the United States of America by Enclave Capital LLC (19 West 44th Street, Suite 1700, New
York, NY 10036) and elsewhere in the world by ARSSBL or an authorized affiliate of ARSSBL (such entities and any other entity, directly or indirectly, controlled by ARSSBL,
the “Affiliates”). This document does not constitute an offer of, or an invitation by or on behalf of ARSSBL or its Affiliates or any other company to any person, to buy or sell
any security. The information contained herein has been obtained from published information and other sources, which ARSSBL or its Affiliates consider to be reliable. None
of ARSSBL or its Affiliates accepts any liability or responsibility whatsoever for the accuracy or completeness of any such information. All estimates, expressions of opinion
and other subjective judgments contained herein are made as of the date of this document. Emerging securities markets may be subject to risks significantly higher than more
established markets. In particular, the political and economic environment, company practices and market prices and volumes may be subject to significant variations. The
ability to assess such risks may also be limited due to significantly lower information quantity and quality. By accepting this document, you agree to be bound by all the
foregoing provisions.
1. ARSSBL or its Affiliates may or may not have been beneficial owners of the securities mentioned in this report.
2. ARSSBL or its affiliates may have or not managed or co-managed a public offering of the securities mentioned in the report in the past 12 months.
3. ARSSBL or its affiliates may have or not received compensation for investment banking services from the issuer of these securities in the past 12 months and do not expect
to receive compensation for investment banking services from the issuer of these securities within the next three months.
4. However, one or more of ARSSBL or its Affiliates may, from time to time, have a long or short position in any of the securities mentioned herein and may buy or sell those
securities or options thereon, either on their own account or on behalf of their clients.
5. As of the publication of this report, ARSSBL does not make a market in the subject securities.
6. ARSSBL or its Affiliates may or may not, to the extent permitted by law, act upon or use the above material or the conclusions stated above, or the research or analysis on
which they are based before the material is published to recipients and from time to time, provide investment banking, investment management or other services for or solicit
to seek to obtain investment banking, or other securities business from, any entity referred to in this report.
Enclave Capital LLC is distributing this document in the United States of America. ARSSBL accepts responsibility for its contents. Any US customer wishing to effect
transactions in any securities referred to herein or options thereon should do so only by contacting a representative of Enclave Capital LLC.
© 2016. This report is strictly confidential and is being furnished to you solely for your information. All material presented in this report, unless specifically indicated otherwise,
is under copyright to ARSSBL. None of the material, its content, or any copy of such material or content, may be altered in any way, transmitted, copied or reproduced (in
whole or in part) or redistributed in any form to any other party, without the prior express written permission of ARSSBL. All trademarks, service marks and logos used in this
report are trademarks or service marks or registered trademarks or service marks of ARSSBL or its affiliates, unless specifically mentioned otherwise.
Additional information on recommended securities/instruments is available on request.
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