EQUITY STRATEGY 18 December 2012

Extract from a report

French Compass
Frances new tax credit allowance A significant impact on selected sectors and companies
Contributing analysts
Alain Kayayan (Equity Strategy) (44) 20 7676 6933
alain.kayayan@sgcib.com

Michel Martinez (Economics) (33) 1 42 13 34 21

michel.martinez@sgcib.com

Patrick Jousseaume (Equity Rsch) ((33) 1 42 13 66 62

patrick.jousseaume@sgcib.com

The proposed CICE tax credit for competitiveness and employment currently being examined by the French parliament should be adopted by the beginning of next year. The tax credit will benefit companies that employ workers earning between 1x and 2.5x the French minimum wage (SMIC), with an upper bound of 42,900 gross on a yearly basis. The 20bn annual cut in labour costs budgeted by the government will help to offset the withholding taxes that have been applied to French companies over the past six months. A number of French companies will be positively impacted by the tax credit, particularly those with low margins and a large proportion of employees in France. Overall, we see the measure as positive. First, the tax credit is an olive branch extended to businesses that we believe is not yet fully priced in. It shows that after months of ratcheting up the tax burden on firms, the socialist government elected last June recognises the fact that French businesses pay higher labour costs than many of their competitors in the rest of Europe. Second, we think a number of sectors stand to gain substantially from this move, particularly IT services, construction, environment, utilities and retailers, as well as companies whose results are poor or recovering. The projected average impact on the companies in our sample (100+ companies for which we have calculated the tax credits expected impact) is just over 2% of net income for the first year of the tax credit operating at full regime, i.e. based on a 6% tax credit. The CICE tax credit comes on the heels of several fiscal measures that will have an adverse impact on companies and appears to constitute a transfer of wealth between companies, from the most profitable and international to those with lower paid employees and mainly based in France. Third, the measure enables companies to boost their competitive positions by reinvesting part of the tax credit proceeds in prices or new hires. So while the tax credit may not have an immediate impact on earnings, it should have a positive impact in the long run. Below are some of the companies that SG analysts believe will benefit the most from the new scheme on an ongoing basis (as the proposed legislation currently stands).
Our selection of companies that would benefit the most from CICE
Impact on 2014e Net Income Impact on 2014e Net Income Suez Environnement Thales Capgemini Faurecia France Tlcom Safran 7% 6% 6% 5% 5% 5%

Equity Strategy Team

Paul Jackson (44) 20 7762 5921 paul.jackson@sgcib.com Alain Kayayan (44) 20 7676 6933 alain.kayayan@sgcib.com Yoann Charenton Research Associate

Air France-KLM Eiffage Veolia Environnement Bouygues Vinci Areva

18% 17% 11% 10% 9% 7%

Source: SG Cross Asset Research

Societe Generale (SG) does and seeks to do business with companies covered in its research reports. As a result, investors should be aware that SG may have a conflict of interest that could affect the objectivity of this report. Investors should consider this report as only a single factor in making their investment decision. PLEASE SEE APPENDIX AT THE END OF THIS REPORT FOR THE ANALYST(S)

CERTIFICATION(S), IMPORTANT DISCLOSURES AND DISCLAIMERS AND THE STATUS OF NON-US RESEARCH ANALYSTS.
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Which companies will be the most impacted?

Facts. The CICE tax credit bill recently approved by the French National Assembly will benefit companies that employ workers in France earning between 1x and 2.5x the French minimum wage (SMIC) that is set to rise to 1,430 gross starting from January 2013. This translates to an annual gross salary range of 17,160 to 42,900, i.e. 85% of French employees. The bill is now back before the National Assembly after having been rejected by the French upper house and should be voted into law shortly, following a final back and forth. At the end of the day, the National Assembly has the last word. The tax credit allowance will be paid to companies starting in 2013 and will be calculated as 4% of the gross payroll in 2013 and 6% in 2014 and beyond, for a total annual amount of 20bn. As some parliamentarians have pointed to the threshold effect of the bill in its current form, the current figures and rates could be modified in its second reading in parliament. Fifty percent of the initiative will be financed by a VAT increase, with the remainder financed by public spending cuts. The proposed 20bn annual reduction in labour costs is equal to 40% of total income taxes paid by French corporations (52bn according to the 2013 budget bill). The CICE tax credit aims to boost competitiveness by favouring businesses that employ workers in France, whether French or foreign. The bill was drawn up partly on the basis of the recommendations of report by the former CEO of aerospace group EADS, Louis Gallois, who was appointed by the government to examine ways to make French companies more competitive. (Please refer to Michel Martinezs contribution directly below and on pages 6-11). Neutral impact at first glance. The 20bn tax credit granted by the government will simply offset the increase in the corporate withholding tax that the socialist government introduced in June 2012. Our economists estimate this at 23bn over 18 months (cap on interest deductions reduced to 85% in 2013 and 75% in 2014, tax on dividends, higher taxes on stock options, withholding taxes for oil companies as well as specific levies on banks and insurers, VAT hikes, impact of planned government spending cuts on industries like construction and defence, etc.). Since some companies may decide to reinvest part of the saving in price cuts or new hires, not all the benefits of the tax measures will flow immediately into earnings. The CICE bill signals a shift in the governments position regarding the corporate sector. The new tax credit highlights the governments willingness to ease the burden on French companies compared with the more unfavourable stance taken at the beginning of its mandate. By choosing to support business, the French authorities will find it more difficult to turn back the clock and raise taxes again. In addition, we believe the positive impact of the tax credit has not yet been fully priced in by market participants who in our view have tended to overprice the escalating tax burden for French companies in the past few months. Looking beyond the measures limited overall effect, we find that some sectors and companies to the detriment of others are likely to reap great benefits. We have examined the tax credits impact on about 100 representative listed French companies. For most, the impact on 2014 earnings will be minimal (less than 2% on average), particularly companies with a significant international presence or those with high margins and with fewer than average workers with wages equal to or below the 2.5x minimum wage threshold. However, some sectors or companies stand to benefit substantially from the tax credit.

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These include:

IT services companies: 2014 earnings should be impacted by more than 5% on average. The two largest-listed French food retailers: Carrefour and Casino should see their 2014

earnings increase by c.17% on average (not covered by SG equity research analysts).

Construction: the average impact of around 5% in 2014 should partly offset the negative

effects from the reduction in public expenditure and lower deductibility of interest charges.

-Environmental services: positive impact of 9% in 2014. The tax credit bill has not yet been voted. The bill was adopted by the French National

Assembly but was rejected by the Senate, the upper house, on 15 December. It is now back before Parliament and could undergo a number of amendments, such as the inclusion of conditions governing the use of the tax credit (for example, it has already been decided that it cannot be used for management remuneration or paid as dividends), a change in the rates (initially the government was considering three rates, 3% in 2013, 4.5% in 2014 and 6% in 2015) and possibly a sliding scale of tax credits to avoid a threshold effect beyond the level of 2.5x minimum wage.

Our analysts have estimated the impact on all of the companies in our sample using their

own estimates as many companies were unwilling to communicate on the impact of the new tax measure on their earnings. We have taken into account the impact on 2014e earnings estimates; however, we acknowledge the likely impact is not representative for some companies such as Peugeot and Aperam, which are in recovery mode.

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Which sectors should be the most impacted?

Sector Impact on 2014e Net Income Comment

Food & Drug Retail Casino Carrefour Environmental Services Veolia Environnement Suez Environnement

>10% >10% >10% 7.5-10% >10% 5-7.5%

Non-covered stocks. These two leading retailers are among the biggest beneficiaries of the CICE tax credit as they employ numerous employees in France with salaries below the 2.5x minimum wage threshold. Assuming a 6% rate, we estimate the impact will be well over 100m for each company. As pricing power is quite low, we expect retailers to pass part of the CICE benefit on to customers. Highly geared and labour intensive water and waste businesses should benefit materially from the CICE which could even fully offset the previous tax increases voted in the budget (e.g. tax deductibility cap on interest and the 3% tax on the cash dividends). With French water tariffs indexed to a basket of costs that include labour costs, municipalities may receive or seek some of the gains in the form of lower prices, although in the more labour-intensive waste division market participants could seek to retain all of the benefit to restore depressed profitability. Given the weight of staff costs on IT Service companies income statements the biggest item being billable engineers wages our initial estimate is that the CICE tax credit could boost net earnings significantly. All else equal, we believe Devoteam could benefit the most. We assume the bulk of the gains could be returned to clients given fierce competition in the sector. We see Axway as the only player able to keep most of the CICE benefit given it is a leader in the MFT segment (high-end positioning limiting pricing pressure).

IT Services Devoteam Aubay Sopra Group Altran Technologies Alten Steria Capgemini Atos CGI Group Axway Software Construction & Materials Eiffage Vinci Saint-Gobain Imerys Vicat Lafarge Telecoms Bouygues France Tlcom Iliad Auto & Components Peugeot Citroen PSA Faurecia Plastic Omnium Valeo Renault Michelin

5-7.5% >10% >10% >10% >10% >10% 7.5-10% 5-7.5% 2-5% <2% <2% 2-5% >10% 7.5-10% 2-5% <2% <2% <2% 2-5% >10% 2-5% <2% 2-5% >10% 2-5% 2-5% 2-5% <2% <2%

We don't think construction and materials companies will pass on the tax benefits to customers as they have been struggling with cost increases for some time; some could use the CICE benefits to offset other tax increases. Eiffage, which has an important France-based labour force, will benefit the most from the CICE. The company is also highly impacted by increases in income tax and would use it to offset this impact. Given its high employee base in France, Vinci could be one of the biggest beneficiaries of the CICE. It will help the business offset the increase in income tax (limited deductibility of financial costs).

Since these three companies compete directly with each other, it is difficult to imagine them adopting very different attitudes. Indeed, the past VAT increases have led to identical competitive behavior by the three players. We believe that Iliad and Bouygues could pass part or all of the benefits on to their customers and that competitors would immediately replicate this move. Auto companies and equipment suppliers are likely to pass most of the CICE benefit on to clients. As for Peugeot, we admit the positive impact on earnings is clearly misleading and is mainly due to the high cyclicality of PSA's earnings. In absolute terms, the full impact should be around 120m in 2015e or a c.3% saving on its total payroll costs in France (66,000 eligible employees, of which 8,400/15m for Faurecia). We expect PSA to report net losses of respectively 1.9bn and 0.6bn in 2012 and 2013. PSA should only break even in 2014e (0.1bn) and be back in the black only in 2015e (0.9bn).

Source: SG Cross Asset Research Strategist team analysis, Companys data.

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Which companies should be the most impacted? (figures have not been normalised for cyclicality*)
Impact on 2014e Net Income Impact on 2014e Net Income

Peugeot Citroen PSA* Aperam Aubay Pierre & Vacances Norbert Dentressangle Devoteam Derichebourg LISI Air France-KLM Casino Club Med Eiffage Bnteau Carrefour Sopra Group Altran Technologies Alten Veolia Environnement Bouygues Boiron Lectra Seche Environnement Steria Vinci Areva Capgemini Manitou Medica Orpea Suez Environnement Thales Trigano Alcatel-Lucent Atos BioMrieux EADS EDF Eramet Faurecia France Tlcom GDF Suez Gemalto Groupe Seb Haulotte Group Ipsen Lagardre Mersen Nexans PagesJaunes Plastic Omnium Safran Saft Saint-Gobain Stallergnes Teleperformance Valeo Zodiac Aerospace

91% 44% 39% 34% 32% 28% 23% 20% 18% 17% 17% 17% 16% 16% 16% 14% 12% 11% 10% 7.5-10% 7.5-10% 7.5-10% 7.5-10% 7.5-10% 5-7.5% 5-7.5% 5-7.5% 5-7.5% 5-7.5% 5-7.5% 5-7.5% 5-7.5% 2-5% 2-5% 2-5% 2-5% 2-5% 2-5% 2-5% 2-5% 2-5% 2-5% 2-5% 2-5% 2-5% 2-5% 2-5% 2-5% 2-5% 2-5% 2-5% 2-5% 2-5% 2-5% 2-5% 2-5% 2-5%

Air Liquide Alstom ArcelorMittal Arkema AXA Axway Software BNP Paribas Bourbon Bureau Veritas Cegedim CGGVeritas CNP Assurances Crdit Agricole SA Danone Euler Hermes Foncire des Rgions Gecina GL events Havas Icade Iliad Imerys Ipsos JCDecaux Klepierre Lafarge Legrand L'Oral M6 Michelin Natixis Neopost Pernod Ricard Publicis Groupe Rmy Cointreau Renault Rexel Sanofi Schneider Scor Solvay SA STMicroelectronics Technip TF1 Total Vallourec Vicat Vivendi

<2% <2% <2% <2% <2% <2% <2% <2% <2% <2% <2% <2% <2% <2% <2% <2% <2% <2% <2% <2% <2% <2% <2% <2% <2% <2% <2% <2% <2% <2% <2% <2% <2% <2% <2% <2% <2% <2% <2% <2% <2% <2% <2% <2% <2% <2% <2% <2%

Source: SG Cross Asset Research, Company data. *The above table shows the likely impact on 2014e net income which may be exceptionally high for some companies given unfavourable conditions for certain of their businesses. For Peugeot, see the detailed comment on cyclicality of results that has been made in the sector-centered table on prior page.

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Assessing the macroeconomic impact of CICE

Michel Martinez (33) 1 42 13 34 21
michel.martinez@sgcib.com

What is the CICE?

On 6 November PM Ayrault announced several measures to boost French competitiveness with a material impact expected from 2014. Of these, the CICE (Crdit dIimpt pour la Comptitivit et l'Emploi) is the key measure.

Taxes on companies will be reduced by 20bn (1.0% of GDP) by 2016 to be financed by

cuts in public spending, a VAT hike and green taxes. The CICE tax credit allowance will rise progressively to reach 20bn (1.0% of GDP) over two years. The rebate should be 10-14bn in 2014 (calculated on 2013 corporate income), increasing to 20bn-23bn in 2015 (applying to 2014 corporate incomes). 6% of gross wages equal to or less than 2.5 times the minimum wage. The tax credit allowance applies for salaried staff employed in France earning equal to or less than 2.5 times

the minimum wage (SMIC) and will paid at a rate of 4% gross payroll in 2014 and 6% in 2015. On average, it will concern 85% of employees, most of whom work for SMEs. The payroll basis is gross wages, i.e. labour compensation minus employer social contribution. The basis includes overtime and bonuses, but excludes profit sharing and employee savings schemes. Companies that do not pay income tax will receive a check from the Treasury. Fiscal devaluation: The purpose of the CICE is to improve competitiveness. It implies a shift in the tax burden sometimes known as a fiscal devaluation. Three measures will offset the

negative impact of the new tax credit on the public finances. First, it will be financed by 10bn in public spending cuts (5bn in 2014 and 5bn in 2015) which still need to be specified and could be politically costly. Second, VAT hikes in January 2014 will bring 6bn in tax receipts: the government plans to raise the standard VAT rate to 20% from 19.6% at the beginning of January 2014, while the medium rate will be increased from 7% to 10% (hotel and restaurants, maintenance services, property repairs) and the reduced rate (food, electricity and gas) will be lowered to 5% from 5.5%. The super reduced rate of 2.1%, which mainly applies to cultural goods and services, remains unchanged. According to our estimates, the overall impact is equivalent to a VAT hike of 0.6% across the board. Lastly, green taxes have to be specified over the summer 2013 (3-4bn).

Assessing the impact of fiscal tightening in 2012-13

At first sight, the tax credit move is significant and represents 6.3% of 2011 corporate profits (EBITDA) and 8% of profits after tax. However, the move only offsets the recent fiscal tightening given that French corporates will be taxed to the tune of 23bn between mid-2012 and end-2013. Hence, the CICE on its own will not materially strengthen French corporate competitiveness relative to its position in the first half of 2012.

Low corporate savings still a real hurdle in 2013: We have often stated that weak

corporate profitability is one of the main weaknesses of the French economy and one of the main causes of the decline in French competitiveness. The margin rate of French corporates is the lowest in Europe according to Eurostat (Chart 1). Corporate profit margins (EBITDA) remained near an all-time low at 28.2% of value added in Q2 2012 vs a historical average of 31.1%. Chart 2 below represents French corporate gross savings (or profits after taxes). It shows that the share of earnings available to pay for dividends or finance investment has consistently diminished over the past ten years. With the impact of fiscal tightening in 2012 and 2013, it is doubtful that this share can recover next year.

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Chart 1: Profit share (EBIT/value added, %) Q2 2012

60% 55% 50% 45% 40% 35% 30% 25% 20%

Chart 2: French corporate gross savings (% of GDP)

10% 9%

9% 8% 8% 7% 7% 6%
95 96 97 98 99 00 01 02 03 04 05 06 07 08 09 10 11 12

Source: Eurostat, SG Cross Asset Research / Economics

Source: Datastream, SG Cross Asset Research/Economics

Corporates taxed to the tune of 23bn between mid-2012 and end-2013: The

government has tightened fiscal policy on corporates since the summer, first with the 2012 supplementary bill in July and then with the 2013 budget law. The government has implemented a 3% tax on dividends and other payouts, and the social charge levied on employee profit sharing programmes was increased from 8% to 20%. The tax on financial transactions was raised. An additional tax was applied to the banking sector and another on oil product inventories, which would bring in some 0.55bn to government coffers. Other measures include a significant reduction in corporate tax breaks, the reduction of the tax exemption on capital gains on the sale of securities and the payment of a corporate tax to be pushed forward.

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Table 1: cumulative impact of 2012-2013 fiscal tightening on companies (bn)

Total impact Higher taxation on profit sharing/company savings (from 8% to 20%) Reduction in corporate tax optimization Financial transactions tax (0.2%) Tax on dividends and other payouts (3.0%) Reduction in social security contribution exemptions for overtime Contribution from the banking sector Contribution from the oil industry Increase in employers pension contributions Stock options and bonus shares taxation Reduction in corporation tax breaks (interests) Corporate tax pushed forward Reduction of advantages in gains on sales of securities Smaller loss carry-forwards Reform of social security system for independents Higher taxation of insurance reserves Higher pension contribution from hospital and local authorities Tax on wages in the financial industry Higher social contributions for independent professions Hike in social contributions on severance payments Tax on transportation of gas and electricity Hike in contributions for work accidents 23.5 2.6 2.2 1.3 0.8 0.7 0.6 0.5 0.5 0.3 4.0 3.1 2.0 1.0 1.0 0.8 0.6 0.5 0.3 0.3 0.2 0.2

Source: SG Cross Asset Research/Economics. Measures in italic were voted during the July 2012 supplementary bill. Others have been voted in the 2013 budget bill

20bn represents 8% of corporate profits after tax: Hence, we have a situation where

fiscal tightening is slightly higher than 20bn in 2012-2013 and is gradually offset by the CICE tax credit up to 2015. Those amounts are meaningful: 20bn represents 8% of corporate profits after taxes (251bn, see Table 2). This amount compares to 73bn of net dividends paid by corporations and 215bn of fixed investment savings in 2011.
Table 2: French corporate profits in 2011 (bn)

Corporations Non financial Financial Gross value added Labour compensation Profit (EBITDA) - other - net interests - taxes on corporate incomes - Profits after tax - net dividends - Gross savings - Gross investment - Cash flow 1091 752 316 56 -36 45 251 73 178 215 -37 corporations corporations 1003 88 696 56 286 30 16 40 12 -48 33 225 90 135 202 -65 12 26 -17 43 14 29

Source: INSEE, SG Cross Asset Research/Economics

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Measuring the impact of the CICE tax credit

The CICE could have a positive impact sooner than generally expected. The governments action in favour of the corporate sector could augur well for companies in the future. Corporates might also anticipate the payment of the CICE. However, the financing of the CICE still needs to be clarified, and as long as uncertainty remains, companies could pursue a wait and see approach regarding hiring and spending decisions.

Our macroeconomic models suggest that the CICE framework will enhance French

competitiveness and boost GDP by 1.0% in the long run. We used INSEEs MESANGE model to simulate the impact of those measures on the French economy and French inflation. The table below shows the combined impact of: 1) a VAT hike worth 6bn in 2014; 2) a decrease in corporate taxes worth 10bn in 2014 rising to 15bn in 2015 and 20bn in 2016; 3) cuts in public investment spending worth 5bn in 2015 rising to 10bn in 2015; and 4) a green tax worth 3bn in 2016. We make the following two assumptions: a) the cuts in public expenditures will broadly target public investment; b) the green tax is equivalent to a VAT hike. Our first observation is that the effect of CICE on both economic growth and prices will be limited, reflecting the relatively small amounts involved and the fact that it has an ex-ante neutral impact on public finances (i.e. an unchanged public deficit). In the long run, the GDP level will be raised by 1.0% and 205k jobs would be created, while the unemployment rate would be reduced by 0.8pp. Those developments reflect the improvement in competitiveness which would be far greater if the cuts in corporate taxes were matched by an equivalent reduction in social security spending, rather than being partially paid for with higher VAT. Our second observation is that the impact on economic activity would be negative in the short term, reflecting the cut in public spending.

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Macroeconomic simulation of government measures starting in 2014: % change from central scenario level (situation in 2013)
GDP Households consumption Investment Exports Imports Household real disposable income Savings rate CPI (level) CPI inflation Producer prices (level) Export prices (level) import prices (level) Real wage Real cost of labor Employment (k) Unemployment rate (in pp) Trade balance (% of GDP) Primary budget balance (% of GDP) 1Y -0.2 -0.1 -1.3 0.0 -0.3 -0.1 0.0 0.0 0.3 0.3 -0.1 2Y -0.4 0.1 -2.7 0.1 -0.4 0.0 0.0 0.0 0.1 -0.3 -0.4 3Y -0.3 0.1 -2.6 0.3 -0.4 0.1 0.0 0.0 -0.1 -0.2 -0.9 10Y Long term 0.4 1.0 0.5 1.0 -2.1 -1.6 0.9 1.3 -0.5 -0.7 0.5 0.0 0.0 -1.9 -0.2 -2.7 1.0 0.0 0.0 -3.0 0.0 -3.9 -2.4 -2.1 1.3 -0.1 205 -0.8 0.5 0.4

0.0 -0.3 -0.6 -1.7 -0.1 -0.2 -0.4 -1.3 -0.1 0.2 0.2 0.6 -0.8 -1.2 -1.5 -0.9 17 29 46 143 -0.1 -0.1 -0.2 -0.6 0.1 0.1 0.1 0.3

0.0 0.0 -0.1 0.2

Source: SG Cross Asset Research/Economics., based on INSEE MESANGE macroeconomic model

Signaling the right direction: The Pact for Competitiveness and the CICE are doubtless a

major move. First, all political parties now recognise that corporate profitability is one of the main weaknesses of the French economy. Hence, there is a need to shift the tax burden from corporates onto households (either the consumer or the taxpayer) in the long term. Second, when it comes to improving cost competiveness there is no free lunch and government administrations will have to cut back spending. For the ruling party, such a move has probably been not so easy. Just after the CICE announcement, Le Monde editorial wrote that with this new competitiveness pact, President Hollande breaks three taboos for the Socialists: 1) the acceptance that labour costs are one cause of the industrial decline in France; 2) the cut in public expenditure to finance the 10bn of the cost reduction for businesses, earlier considered impossible; and 3) the rise in VAT; after having unwind during the summer the rise in the main VAT rate to 21.2% proposed by the former conservative government. To put it simply, the Pact for Competitiveness and the CICE probably open the door for calls for further reforms at a future date. Companies could feel less uncertain about future developments.

Corporates might anticipate the positive impact of the CICE as soon as 2013. For

instance, French banks said they are ready to lend SMEs an equivalent amount to the expected 2014 CICE, providing they have sufficient guarantees. And a few companies said they would consider a securitisation of this tax credit allowance as soon as the Law is enacted.

Uncertainties remain as the CICE is not yet financed. Les Echos reported on 12

December that 81% of companies think they will not change their hiring or investment spending decisions despite the CICE. The government expects to cut 60bn in public spending from 2014 to 2017 with the aim of financing the CICE and cutting public deficit. The point is that the bulk of those expected cuts still need to be specified. As long as this remains
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the case, companies may fear that the government will raise other taxes to fill the public finances gap. Le Echos quotes that firms fear future cuts in the social contribution rebate on low wages, the so-called Allgment Fillon, which represented just 23bn in 2011In our mind, this seems unlikely as it would be contrary to the message that has just been sent with the CICE (i.e. lowering taxes on corporates). However, companies do not like uncertainty.

We wish to acknowledge the contribution of Yoann Charenton in the preparation of this report.

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APPENDIX
COMPANIES MENTIONED Air France-KLM (AIRF.PA, Hold) Air Liquide (AIRP.PA, Hold) Alcatel-Lucent (ALUA.PA, Sell) Alstom (ALSO.PA, Buy) Alten (LTEN.PA, Buy) Altran Technologies (ALTT.PA, Buy) Aperam (APAM.AS, Sell) ArcelorMittal (ISPA.AS, Buy) Areva (AREVA.PA, Hold) Arkema (AKE.PA, Buy) Atos Origin (ATOS.PA, Buy) Aubay (AUBT.PA, Hold) Axway Software (AXW.PA, Buy) Bnteau (CHBE.PA, Hold) BioMrieux (BIOX.PA, Hold) BNP Paribas (BNPP.PA, Hold) Boiron (BOIR.PA, Hold) Bourbon (GPBN.PA, Buy) Bouygues (BOUY.PA, Hold) Bureau Veritas (BVI.PA, Buy) Capgemini (CAPP.PA, Buy) Cegedim (CGDM.PA, Hold) Centrica (CNA.L, Buy) CGGVeritas (GEPH.PA, Buy) CGI Group (GIBa.TO, Hold) Club Med (CMIP.PA, Buy) Crdit Agricole (CAGR.PA, Hold) Danone (DANO.PA, Hold) Derichebourg (DBG.PA, Buy) Devoteam (DVTM.PA, Buy) EADS (EAD.PA, Buy) EDF (EDF.PA, Buy) Eiffage (FOUG.PA, Hold) Enagas (ENAG.MC, Hold) Eramet (ERMT.PA, Buy) Faurecia (EPED.PA, Hold) Foncire des Rgions (FDR.PA, Buy) France Tlcom (FTE.PA, Hold) GDF Suez (GSZ.PA, Buy) Gecina (GFCP.PA, Hold) Gemalto (GTO.PA, Buy) GL events (GLTN.PA, Buy) Groupe SEB (SEBF.PA, Buy) Haulotte Group (PYHE.PA, Buy) Havas (EURC.PA, Buy) Iliad (ILD.PA, Buy) Imerys (IMTP.PA, Hold) Ipsen (IPN.PA, Hold) Ipsos (ISOS.PA, Buy) JCDecaux (JCDX.PA, Sell) Lafarge (LAFP.PA, Buy) Lagardre (LAGA.PA, Buy) Lectra (LECS.PA, Buy) Legrand (LEGD.PA, Buy) LISI (GFII.PA, Buy) L'Oral (OREP.PA, Buy) M6 (MMTP.PA, Buy) Manitou (MANP.PA, Buy) Medica (MDCA.PA, Buy) Mersen (CBLP.PA, Buy) Michelin (MICP.PA, Buy)
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Natixis (CNAT.PA, Hold) Neopost (NPOS.PA, Hold) Nexans (NEXS.PA, Buy) Norbert Dentressangle (GNDP.PA, Hold) Orpea (ORP.PA, Buy) PagesJaunes (PAJ.PA, Buy) Pernod Ricard (PERP.PA, Buy) Peugeot Citroen PSA (PEUP.PA, Hold) Pierre & Vacances (PVAC.PA, Buy) Plastic Omnium (PLOF.PA, Buy) Publicis Groupe (PUBP.PA, Hold) Rmy Cointreau (RCOP.PA, Sell) Renault (RENA.PA, Buy) Rexel (RXL.PA, Hold) Safran (SAF.PA, Hold) Saft (S1A.PA, Buy) Saint-Gobain (SGOB.PA, Buy) Sanofi (SASY.PA, Buy) Schneider (SCHN.PA, Buy) Scor (SCOR.PA, Buy) Sch Environnement (CCHE.PA, Hold) Sopra Group (SOPR.PA, Buy) Stallergnes (GENP.PA, Hold) Steria (TERI.PA, Buy) STMicroelectronics (STM.N, Buy) Suez Environnement (SEVI.PA, Buy) Technip (TECF.PA, Buy) Teleperformance (ROCH.PA, Buy) TF1 (TFFP.PA, Hold) Thales (TCFP.PA, Buy) Trigano (TRIA.PA, Buy) Valeo (VLOF.PA, Buy) Vallourec (VLLP.PA, Hold) Veolia Environnement (VIE.PA, Buy) Vicat (VCTP.PA, Hold) Vinci (SGEF.PA, Buy) Vivendi (VIV.PA, Buy) Zodiac Aerospace (ZODC.PA, Hold)
ANALYST CERTIFICATION The following named research analyst(s) hereby certifies or certify that (i) the views expressed in the research report accurately reflect his or her or their personal views about any and all of the subject securities or issuers and (ii) no part of his or her or their compensation was, is, or will be related, directly or indirectly, to the specific recommendations or views expressed in this report: Alain Kayayan, Michel Martinez, Patrick Jousseaume The analyst(s) who author research are employed by SG and its affiliates in locations, including but not limited to, Paris, London, New York, Hong Kong, Tokyo, Bangalore, Madrid, Milan, Warsaw and Moscow.

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SG EQUITY RESEARCH RATINGS on a 12 months period (in effect as of March 14, 2012) BUY: absolute total shareholder return forecast of 15% or more over a 12 month period. HOLD: absolute total shareholder return forecast between 0% and +15% over a 12 month period. SELL: absolute total shareholder return forecast below 0% over a 12 month period. Total shareholder return means forecast share price appreciation plus all forecast cash dividend income, including income from special dividends, paid during the 12 month period. Ratings are determined by the ranges described above at the time of the initiation of coverage or a change in rating (subject to limited management discretion). At other times, ratings may fall outside of these ranges because of market price movements and/or other short term volatility or trading patterns. Such interim deviations from specified ranges will be permitted but will become subject to review by research management. Sector Weighting Definition on a 12 months period: The sector weightings are assigned by the SG Equity Research Strategist and are distinct and separate from SG research analyst ratings. They are based on the relevant MSCI. OVERWEIGHT: sector expected to outperform the relevant broad market benchmark over the next 12 months. NEUTRAL: sector expected to perform in-line with the relevant broad market benchmark over the next 12 months. UNDERWEIGHT: sector expected to underperform the relevant broad market benchmark over the next 12 months

Equity rating and dispersion relationship

300 Updated on 03/12/12
47%

250 200 150 100 50 0

Buy
Companies Covered
Source: SG Cross Asset Research

37%

54%
16%

41%

35%

Hold

Sell

Cos. w/ Banking Relationship

SG EQUITY RESEARCH RATINGS on a 12 months period (in effect through March 13, 2012) BUY: expected upside of 10% or more over a 12 month period. HOLD: expected return between -10% and +10% over a 12 month period. SELL: expected downside of -10% or worse over a 12 month period. Sector Weighting Definition on a 12 months period: The sector weightings are assigned by the SG Equity Research Strategist and are distinct and separate from SG research analyst ratings. They are based on the relevant MSCI. OVERWEIGHT: sector expected to outperform the relevant broad market benchmark over the next 12 months. NEUTRAL: sector expected to perform in-line with the relevant broad market benchmark over the next 12 months. UNDERWEIGHT: sector expected to underperform the relevant broad market benchmark over the next 12 months. Ratings and/or price targets are determined by the ranges described above at the time of the initiation of coverage or a change in rating or price target (subject to limited management discretion). At other times, the price targets may fall outside of these ranges because of market price movements and/or other short term volatility or trading patterns. Such interim deviations from specified ranges will be permitted but will become subject to

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review by research management.

MSCI DISCLAIMER: The MSCI sourced information is the exclusive property of Morgan Stanley Capital International Inc. (MSCI). Without prior written permission of MSCI, this information and any other MSCI intellectual property may not be reproduced, redisseminated or used to create any financial products, including any indices. This information is provided on an as is basis. The user assumes the entire risk of any use made of this information. MSCI, its affiliates and any third party involved in, or related to, computing or compiling the information hereby expressly disclaim all warranties of originality, accuracy, completeness, merchantability or fitness for a particular purpose with respect to any of this information. Without limiting any of the foregoing, in no event shall MSCI, any of its affiliates or any third party involved in, or related to, computing or compiling the information have any liability for any damages of any kind. MSCI, Morgan Stanley Capital International and the MSCI indexes are service marks of MSCI and its affiliates or such similar language as may be provided by or approved in advance by MSCI.

IMPORTANT DISCLOSURES Air France-KLM SG has sold Amadeus shares in the context of a hedging transaction with Air France-KLM on part of its stake in Amadeus (collar). Air Liquide SG acted as joint book runner in Air Liquide's inaugural Euro denominated Socially Responsible Investment bond issue. Alstom SG acted as joint bookrunner the accelerated bookbuilding of Alstom's primary shares. Alstom SG acted as joint bookrunner in Alstom's senior bond issue (3.875% 02/03/16 EUR). Alten SGSP managed a liquidity contract including production of research on behalf of Alten ArcelorMittal SG acted as joint bookrunner in ArcelorMittal's bond issue (4.5% 29/03/18 EUR). ArcelorMittal SG acted as passive joint bookrunner in ArcelorMittal's bond issue. (USD) Areva SG acted as financial advisor and is providing financing to Weather Investments II in the acquisition of the Areva's 63%-stake in La Mancha Resources. Areva SG has acted as financial advisor to Areva notably to give a fairness opinion on its stake in Eramet to be sold to the FSI. Areva SG is acting as financial advisor to Areva Arkema SG acted as joint bookrunner in Arkema's bond issue (TAP 3.85% 30/04/20 EUR). Aubay SGSP managed a liquidity contract including production of research on behalf of Aubay AXA SG acted as joint bookrunner in AXA BE's covered bond issue (EUR 2.25% 19/04/2017). BNP Paribas SG is acting as financial advisor to SFPI, 100% owned by the Belgian State, which holds a 25% stake in Fortis Bank SA/NV Boiron SGSP managed a liquidity contract on behalf of Boiron Bouygues SG acted as joint bookrunner in Bouygues's bond issue (3.625% 16/01/23 EUR). Bouygues SG acted as joint bookrunner in Bouygues's senior bond issue. Bureau Veritas SG acted as joint bookrunner in the Bureau Veritas's bond issue. (Maturity : 24th May 2017). Carrefour SG is acting as joint bookrunner in Carrefour's bond issue. (5yr) Carrefour SG acted as joint bookrunner in Carrefour Banque's bond issue (2.875% 25/09/15 EUR). Carrefour SG acted as exclusive financial advisor to Carrefour in Guyenne et Gascogne's acquisition. Carrefour SGSP managed a liquidity contract on behalf of Carrefour Casino SG acted as joint bookrunner in Casino's bond issue (3.157% 06/08/19 EUR). Casino SG is acting as financial advisor to Galeries Lafayette in the disposal of their Monoprix's stakes to Casino Casino SG has had and has IB relationships with Casino in context of several transactions. CGGVeritas SG is acting as joint bookrunner in CGGVeritas' convertible bonds due 2019. CGGVeritas SG was one of the financing bank to CGG Veritas in Fugro's Geo Science Division acquisition and acted as joint bookrunner in the right issue. Citigroup SG acted ng as co-manager of Citigroup's bond issue. (Perp NC10) Citigroup SG acted as a senior co-manager in the Citigroup's bond issue. (Perp NC10 - 5,950%) Citigroup SG acted as co manager in Citigroup's High Grade bond issue. Crdit Agricole SG acted as joint bookrunner in Crdit Agricole's covered bond issue. Danone SG acted as active joint bookrunner in Danone's bond issue (1.125% 27/11/17 EUR). Danone SG acted as joint bookrunner for Danone's bond issue. (USD) Derichebourg SG is one of the main lenders to Derichebourg EADS SG is acting as lead arranger of the loan granted to Republic of Brazil to finance the acquisition of helicopters from EADS Group. EDF SG acted as active joint bookrunner in EDF's bond issue (2.75% 10/03/23 EUR). EDF SG acted has joint bookrunner in EDF's bond issue (15yr). EDF SG acted as joint bookrunner of EDF's senior bond issue (3.875% 18/01/22 EUR). EDF SG has acted as financial advisor to Iren in the restructuring of the shareholding of Edison and Edipower. EDF Energies SG acted as active joint bookrunner in EDF's bond issue (2.75% 10/03/23 EUR). Nouvelles EDF Energies SG acted has joint bookrunner in EDF's bond issue (15yr). 18 December 2012 15

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Nouvelles EDF Nouvelles EDF Nouvelles Eiffage Enagas Eramet

Energies SG acted as joint bookrunner of EDF's senior bond issue (3.875% 18/01/22 EUR). Energies SG has acted as financial advisor to Iren in the restructuring of the shareholding of Edison and Edipower.

SG is acting as financial advisor to Eiffarie in the purchase of the shares it does not own in APRR. SG acted as joint bookrunner in Enagas's bond issue (4.25% 05/10/17 EUR). SG has acted as financial advisor to Areva notably to give a fairness opinion on its stake in Eramet to be sold to the FSI. Faurecia SG acted as sole global coordinator and joint bookrunner in Faurecia's convertible bond issue. Faurecia SG acted as joint bookrunner in Faurecia's high yield bond issue (tap - 9.375% 15/12/16 EUR) Foncire des Rgions SG acted as joint bookrunner in Fonciere des Regions' inaugural bond issue. France Tlcom SG acted as co-lead Manager in France Telecom's bond issue (maturity 15/06/22 3 euros) GDF Suez SG acted as as passive Joint Bookrunner in the USD GDF SUEZ' bond issue. Gecina SG acted as joint bookrunner in Gecina's bond issue (7y). Icade SG is acting as financial advisor to Silic for the potential combination between Icade and Silic. Iliad SG is one of the main lenders to Iliad Ipsos SGSP managed a liquidity contract including production of research on behalf of Ipsos. Lafarge SG acted as joint bookrunner in the Lafarge Bond issue (5.875% 09/07/19 EUR). Lagardre SG has acted as dealer manager in Lagardre's partial Tender Offer on the outstanding 2014 bond and joint bookrunner in the consecutive bond issue (4.125% 31/10/17 EUR). Lagardre SG has acted as financial advisor to Lagardre in the sale of its radio division in Russia. Lectra SGSP managed a liquidity contract including production of research on behalf of Lectra. Manitou SG holds between 5% and 10% of Manitou Mersen SG is acting as exclusive arranger and subscriber in the Carbone Lorraine's PACEO (Optional Step Up Equity Offering) Michelin SG acted as joint bookrunner in Michelin's bond issue (maturity 02/06/19 2,75 EUR) Nexans SG is acting as joint bookrunner in Nexan's bond issue. (6yr, 4.625% ) Nexans SG acted as joint bookrunner in Nexans' convertible bond issue. Orpea SG acted as joint bookrunner in ORPEA's capital increase. Pernod Ricard SG acted as joint bookrunner in the disposal of Pernod-Ricard's stakes by Groupe Bruxelles Lambert. Pernod Ricard SG acted as passive joint bookrunner in Pernod-Ricard's bond issue (5yr, 10.5yr, 30yr). Pernod Ricard SGSP managed a liquidity contract on behalf of Pernod-Ricard. Peugeot Citroen PSA SG acted as joint global coordinator and joint bookrunner in Peugeot Citroen PSA's capital increase. Peugeot Citroen PSA SG acted as joint bookrunner in Banque PSA Finance's bond issue (6% 16/07/14 EUR).. Publicis Groupe SGSP managed a liquidity contract on behalf of Publicis. Range Resources SG acted as co-manager in Range Resources Corporation's high yield bond issue.. Renault SG acted as joint bookrunner in Renault's bond issue (4.625% 18/09/17 EUR). Renault SG acted as joint bookrunner of RCI Banque's bond issue. (4.25% 27/04/17 EUR). Renault SG acted as joint bookrunner in RCI Banque's bond issue (18mth). Renault SG acted as joint bookrunner of RCI Banque's bond issue. (4% 02/12/13 EUR). Schneider SG is acting as passive bookrunner in Schneider's USD bond issue. Sopra Group SG holds between 10% and 20% of Sopra Stallergnes SGSP managed a liquidity contract on behalf of Stallergnes. Steria SGSP managed a liquidity contract on behalf of Steria. Technip SG was sole financial advisor to Technip in the exclusive negotiations for the acquisition of 45.7 % stake in Cybernetix. Total SG acted as passive joint bookrunner in Total's USD bond issue (2 tranches 3.5-yr and 10.5-yr). Valeo SG acted as Joint Dealer Manager and Joint Bookrunner in Valeo's tender offer (5.75% 19/01/17 EUR). Vallourec SG acted as joint bookrunner in Vallourec's bond issue (Maturity: 14/02/2017). Veolia Environnement SG acted as Structuring Advisor and Coordinator for Veolia Environnement's tender offer (FR0000474975; FR0010750497; FR0010397927; FR0000474983) and joint bookrunner in the new bond issue (4.625% 30/03/27 EUR). Vinci SG acted as joint bookrunner in Vinci's bond issue. Vivendi SG acted as joint bookrunner in Vivendi's bond issue (2.5% 15/01/20 EUR). Vivendi SG acted as passive joint bookrunner in Vivendi's USD bond issue (3yr/5yr/10yr). Vivendi SG acted as joint bookrunner of Vivendi's bond issue (4.125% 18/07/17 EUR). Director: A senior employee, executive officer or director of SG and/ or its affiliates is a director and/or officer of AXA, Alstom, Axway Software, Publicis Groupe, Safran, Saint-Gobain, Sanofi, Solvay SA, Sopra Group, Veolia Environnement, Vinci, Vivendi. SG and its affiliates beneficially own 1% or more of any class of common equity of Alcatel-Lucent, ArcelorMittal, Arkema, Bnteau, Manitou, Orpea, Scor, Sopra Group, Vivendi. SG or its affiliates act as market maker or liquidity provider in the equities securities of AXA, Air France-KLM, Air Liquide, Alcatel-Lucent, Alstom, ArcelorMittal, BNP Paribas, Bouygues, Capgemini, Carrefour, Casino, Crdit Agricole SA, Danone, EADS, EDF, Enagas, France Tlcom, GDF Suez, L'Oral, Lafarge, Lagardre, M6, Michelin, Natixis, Pernod Ricard, Peugeot Citroen PSA, Publicis Groupe, Renault, Saint-Gobain, Sanofi, Schneider, Scor, Suez Environnement, TF1, Technip, Thales, Total, Vallourec, Veolia Environnement, Vinci, Vivendi. SG or its affiliates expect to receive or intend to seek compensation for investment banking services in the next 3 months from AXA, Air France-KLM, Alcatel-Lucent, Alstom, Altran Technologies, ArcelorMittal, Areva, Arkema, BNP Paribas, Bouygues, Bureau Veritas, CGGVeritas, Carrefour, Casino, Cegedim, Centrica, Danone, Derichebourg, EADS, EDF Energies Nouvelles, EDF, Eiffage, Enagas, Foncire des Rgions, France Tlcom, GDF Suez, Icade, Iliad, JCDecaux, L'Oral, Lafarge, Lagardre, Legrand, Neopost, Nexans, Pernod Ricard, Peugeot Citroen PSA, Publicis Groupe, Range Resources, Renault, Safran, Saint-Gobain, Sanofi, Schneider, Solvay SA, Steria, Suez Environnement, Technip, Teleperformance, Thales, Total, Valeo, Veolia Environnement, Vicat, Vinci, Vivendi. SG or its affiliates had an investment banking client relationship during the past 12 months with AXA, Air France-KLM, Air Liquide, Alstom, 18 December 2012

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Alten, ArcelorMittal, Areva, Arkema, Aubay, Boiron, Bouygues, Bureau Veritas, CGGVeritas, Carrefour, Casino, Citigroup, Crdit Agricole SA, Danone, Derichebourg, EDF, Eiffage, Enagas, Eramet, Faurecia, Foncire des Rgions, France Tlcom, GDF Suez, Gecina, Icade, Iliad, Ipsos, Lafarge, Lagardre, Lectra, Mersen, Michelin, Nexans, Orpea, Pernod Ricard, Peugeot Citroen PSA, Publicis Groupe, Range Resources, Renault, Schneider, Stallergnes, Steria, Technip, Total, Valeo, Vallourec, Veolia Environnement, Vinci, Vivendi. SG or its affiliates have received compensation for investment banking services in the past 12 months from AXA, Air France-KLM, Air Liquide, Alstom, Alten, ArcelorMittal, Areva, Arkema, Aubay, Boiron, Bouygues, Bureau Veritas, CGGVeritas, Carrefour, Casino, Citigroup, Crdit Agricole SA, Danone, Derichebourg, EDF, Eiffage, Enagas, Eramet, Faurecia, Foncire des Rgions, France Tlcom, GDF Suez, Gecina, Icade, Iliad, Ipsos, Lafarge, Lagardre, Lectra, Mersen, Michelin, Nexans, Orpea, Pernod Ricard, Peugeot Citroen PSA, Publicis Groupe, Range Resources, Renault, Schneider, Stallergnes, Steria, Technip, Total, Valeo, Vallourec, Veolia Environnement, Vinci, Vivendi. SG or its affiliates managed or co-managed in the past 12 months a public offering of securities of AXA, Air France-KLM, Air Liquide, Alstom, ArcelorMittal, Arkema, Bouygues, Bureau Veritas, CGGVeritas, Carrefour, Casino, Citigroup, Crdit Agricole SA, Danone, EDF, Eiffage, Enagas, Faurecia, Foncire des Rgions, France Tlcom, GDF Suez, Gecina, Lafarge, Lagardre, Mersen, Michelin, Nexans, Orpea, Pernod Ricard, Peugeot Citroen PSA, Range Resources, Renault, Schneider, Technip, Total, Valeo, Vallourec, Veolia Environnement, Vinci, Vivendi. SG received compensation for products and services other than investment banking services in the past 12 months from AXA, Air FranceKLM, Air Liquide, Alcatel-Lucent, Alstom, Alten, Altran Technologies, Aperam, ArcelorMittal, Arkema, Atos, Aubay, BNP Paribas, Bourbon, Bouygues, Bureau Veritas, Bnteau, CGGVeritas, CGI Group, CNP Assurances, Capgemini, Carrefour, Casino, Cegedim, Centrica, Citigroup, Club Med, Crdit Agricole SA, Danone, Derichebourg, Devoteam, EADS, EDF, Eiffage, Enagas, Eramet, Foncire des Rgions, France Tlcom, GDF Suez, GL events, Gecina, Gemalto, Groupe Seb, Haulotte Group, Havas, Iliad, Imerys, Ipsen, Ipsos, JCDecaux, L'Oral, LISI, Lafarge, Lagardre, Lectra, Legrand, Medica, Mersen, Michelin, Neopost, Nexans, Orpea, PagesJaunes, Peugeot Citroen PSA, Pierre & Vacances, Publicis Groupe, Range Resources, Refer, Renault, Rexel, Rmy Cointreau, STMicroelectronics, Safran, Saft, Saint-Gobain, Sanofi, Schneider, Scor, Seche Environnement, Solvay SA, Sopra Group, Steria, Suez Environnement, Technip, Teleperformance, Thales, Total, Trigano, Valeo, Vallourec, Veolia Environnement, Vicat, Vinci, Vivendi, Zodiac Aerospace. SGAS had a non-investment banking non-securities services client relationship during the past 12 months with AXA, Air France-KLM, AlcatelLucent, Altran Technologies, ArcelorMittal, Arkema, BNP Paribas, Bouygues, CGI Group, CNP Assurances, Citigroup, Club Med, Crdit Agricole SA, Danone, EDF, France Tlcom, GDF Suez, Ipsen, JCDecaux, Lafarge, Lagardre, Michelin, PagesJaunes, Peugeot Citroen PSA, Range Resources, Renault, Safran, Sanofi, Schneider, Scor, Solvay SA, Suez Environnement, Thales, Vallourec, Veolia Environnement, Vicat, Vinci, Vivendi, Zodiac Aerospace. SGAS had a non-investment banking securities-related services client relationship during the past 12 months with AXA, BNP Paribas, CNP Assurances, Citigroup, Club Med, Crdit Agricole SA. SGAS received compensation for products and services other than investment banking services in the past 12 months from AXA, Air FranceKLM, Alcatel-Lucent, Altran Technologies, ArcelorMittal, Arkema, BNP Paribas, Bouygues, CGI Group, CNP Assurances, Citigroup, Club Med, Crdit Agricole SA, Danone, EDF, France Tlcom, GDF Suez, Ipsen, JCDecaux, Lafarge, Lagardre, Michelin, PagesJaunes, Peugeot Citroen PSA, Range Resources, Renault, Safran, Sanofi, Schneider, Scor, Solvay SA, Suez Environnement, Thales, Vallourec, Veolia Environnement, Vicat, Vinci, Vivendi, Zodiac Aerospace.

FOR DISCLOSURES PERTAINING TO COMPENDIUM REPORTS OR RECOMMENDATIONS OR ESTIMATES MADE ON SECURITIES OTHER THAN THE PRIMARY SUBJECT OF THIS RESEARCH REPORT, PLEASE VISIT OUR GLOBAL RESEARCH DISCLOSURE WEBSITE AT http://www.sgresearch.com/compliance.rha or call +1 (212).278.6000 in the U.S.

The analyst(s) responsible for preparing this report receive compensation that is based on various factors including SGs total revenues, a portion of which are generated by investment banking activities. Non-U.S. Analyst Disclosure: The name(s) of any non-U.S. analysts who contributed to this report and their SG legal entity are listed below. U.S. analysts are employed by SG Americas Securities LLC. The non-U.S. analysts are not registered/qualified with FINRA, may not be associated persons of SGAS and may not be subject to the FINRA restrictions on communications with a subject company, public appearances and trading securities held in the research analyst(s) account(s): Alain Kayayan Socit Gnrale London Michel Martinez Socit Gnrale Paris, Patrick Jousseaume Socit Gnrale Paris

IMPORTANT DISCLAIMER: The information herein is not intended to be an offer to buy or sell, or a solicitation of an offer to buy or sell, any securities and has been obtained from, or is based upon, sources believed to be reliable but is not guaranteed as to accuracy or completeness. Material contained in this report satisfies the regulatory provisions concerning independent investment research as defined in MiFID. Information concerning conflicts of interest and SGs management of such conflicts is contained in the SGs Policies for Managing Conflicts of Interests in Connection with Investment Research which is available at https://www.sgresearch.com/Content/Compliance/Compliance.aspx SG does, from time to time, deal, trade in, profit from, hold, act as market-makers or advisers, brokers or bankers in relation to the securities, or derivatives thereof, of persons, firms or entities mentioned in this document and may be represented on the board of such persons, firms or entities. SG does, from time to time, act as a principal trader in equities or debt securities that may be referred to in this report and may hold equity or debt securities positions. Employees of SG, or individuals connected to them, may from time to time have a position in or hold any of the investments or related investments mentioned in this document. SG is under no obligation to disclose or take account of this document when advising or dealing with or on behalf of customers. The views of SG reflected in this document may change without notice. In addition, SG may issue other reports that are inconsistent with, and reach different conclusions from, the information presented in this report and is under no obligation to ensure that such other reports are brought to the attention of any recipient of this report. To the maximum extent possible at law, SG does not accept any liability whatsoever arising from the use of the material or information contained herein. This research document is not intended for use by or targeted to retail customers. Should a retail customer obtain a copy of this report he/she should not base his/her investment decisions solely on the basis of this document and must seek independent financial advice.

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The financial instrument discussed in this report may not be suitable for all investors and investors must make their own informed decisions and seek their own advice regarding the appropriateness of investing in financial instruments or implementing strategies discussed herein. The value of securities and financial instruments is subject to currency exchange rate fluctuation that may have a positive or negative effect on the price of such securities or financial instruments, and investors in securities such as ADRs effectively assume this risk. SG does not provide any tax advice. Past performance is not necessarily a guide to future performance. Estimates of future performance are based on assumptions that may not be realized. Investments in general, and derivatives in particular, involve numerous risks, including, among others, market, counterparty default and liquidity risk. Trading in options involves additional risks and is not suitable for all investors. An option may become worthless by its expiration date, as it is a depreciating asset. Option ownership could result in significant loss or gain, especially for options of unhedged positions. Prior to buying or selling an option, investors must review the "Characteristics and Risks of Standardized Options" at http://www.optionsclearing.com/publications/risks/riskchap.1.jsp. Notice to French Investors: This publication is issued in France by or through Socit Gnrale ("SG") which is authorised and supervised by the Autorit de Contrle Prudentiel and regulated by the Autorite des Marches Financiers. Notice to U.K. Investors: This publication is issued in the United Kingdom by or through Socit Gnrale ("SG"), London Branch . Socit Gnrale is a French credit institution (bank) authorised and supervised by the Autorit de Contrle Prudentiel (the French Prudential Control Authority). Socit Gnrale is subject to limited regulation by the Financial Services Authority (FSA) in the U.K. Details of the extent of SG's regulation by the FSA are available from SG on request. The information and any advice contained herein is directed only at, and made available only to, professional clients and eligible counterparties (as defined in the FSA rules) and should not be relied upon by any other person or party. Notice to Polish Investors: this document has been issued in Poland by Societe Generale S.A. Oddzial w Polsce (the Branch) with its registered office in Warsaw (Poland) at 111 Marszakowska St. The Branch is supervised by the Polish Financial Supervision Authority and the French Autorit de Contrle Prudentiel. This report is addressed to financial institutions only, as defined in the Act on trading in financial instruments. The Branch certifies that this document has been elaborated with due dilligence and care. Notice to U.S. Investors: For purposes of SEC Rule 15a-6, SG Americas Securities LLC (SGAS) takes responsibility for this research report. This report is intended for institutional investors only. Any U.S. person wishing to discuss this report or effect transactions in any security discussed herein should do so with or through SGAS, a broker-dealer registered with the SEC and a member of FINRA, with its registered address at 1221 Avenue of the Americas, New York, NY 10020. (212)-278-6000. Notice to Canadian Investors: This document is for information purposes only and is intended for use by Permitted Clients, as defined under National Instrument 31-103, Accredited Investors, as defined under National Instrument 45-106, Accredited Counterparties as defined under the Derivatives Act (Qubec) and "Qualified Parties" as defined under the ASC, BCSC, SFSC and NBSC Orders Notice to Singapore Investors: This document is provided in Singapore by or through Socit Gnrale ("SG"), Singapore Branch and is provided only to accredited investors, expert investors and institutional investors, as defined in Section 4A of the Securities and Futures Act, Cap. 289. Recipients of this document are to contact Socit Gnrale, Singapore Branch in respect of any matters arising from, or in connection with, the document. If you are an accredited investor or expert investor, please be informed that in SG's dealings with you, SG is relying on the following exemptions to the Financial Advisers Act, Cap. 110 (FAA): (1) the exemption in Regulation 33 of the Financial Advisers Regulations (FAR), which exempts SG from complying with Section 25 of the FAA on disclosure of product information to clients; (2) the exemption set out in Regulation 34 of the FAR, which exempts SG from complying with Section 27 of the FAA on recommendations; and (3) the exemption set out in Regulation 35 of the FAR, which exempts SG from complying with Section 36 of the FAA on disclosure of certain interests in securities. Notice to Hong Kong Investors: This report is distributed in Hong Kong by Socit Gnrale, Hong Kong Branch which is licensed by the Securities and Futures Commission of Hong Kong under the Securities and Futures Ordinance (Chapter 571 of the Laws of Hong Kong) ("SFO"). This document does not constitute a solicitation or an offer of securities or an invitation to the public within the meaning of the SFO. This report is to be circulated only to "professional investors" as defined in the SFO. Notice to Japanese Investors: This publication is distributed in Japan by Societe Generale Securities (North Pacific) Ltd., Tokyo Branch, which is regulated by the Financial Services Agency of Japan. This document is intended only for the Specified Investors, as defined by the Financial Instruments and Exchange Law in Japan and only for those people to whom it is sent directly by Societe Generale Securities (North Pacific) Ltd., Tokyo Branch, and under no circumstances should it be forwarded to any third party. The products mentioned in this report may not be eligible for sale in Japan and they may not be suitable for all types of investors. Notice to Australian Investors: This document is issued in Australia by Socit Gnrale (ABN 71 092 516 286) ("SG"). SG is regulated by APRA and ASIC and holds an AFSL no. 236651 issued under the Corporations Act 2001 (Cth) ("Act"). The information contained in this document is only directed to recipients who are wholesale clients as defined under the Act. http://www.sgcib.com. Copyright: The Socit Gnrale Group 2012. All rights reserved. This publication may not be reproduced or redistributed in whole in part without the prior consent of SG or its affiliates.

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