Asia Pacific Equity Research

16 February 2012

Gateway Distriparks Ltd

Company Visit Note: Right Side of the Tracks
GDPL is an operator focused on the high margin EXIM container railway segment, which has been investing in building an ICD network across northern India. The railway segment turnover almost doubled over FY09-11 as EXIM revenues now account for over 85% of turnover. Management has highlighted that they are expanding capacity by c.33% as their new terminals come onstream. Focused operator in the EXIM segment: GDPL has focused on the high margin EXIM segment, which accounts for c.85% of its rail segment turnover. The company has invested in setting up ICD terminals in northern India including Garhi, Ludhiana and the soon to be commissioned terminal at Faridabad. Besides, the company has tied up ICD facilities in Rajasthan and Gujarat recently, which will deepen their service network. Healthy growth in turnover: The railway segment turnover almost doubled over FY09-11, despite slowing industry growth - driven by a low base and market share gains. Management highlighted that they are expanding capacity by 33% to 28 rakes over the next 15 months as utilization levels are currently at c.90%. In Ludhiana, Gateways market share has risen to c.45% in the EXIM business. However, in the NCR market, their market share is at 8% - as the new terminal commences operations in 2QFY13, the management is expecting to gain share. EXIM trade likely to benefit from improving global sentiment: J.P. Morgans global PMI has recorded strong gains recorded in January. Our economics team is forecasting a broader underlying shift in growth momentum and the risks to 1H global growth forecast have shifted significantly to the upside. ( Please refer to Global Data watch, Kasman et al, 3 February 2012). In India, we believe that the industrial cycle will revive from hereon given expectations of monetary easing, which should benefit container TEU volumes. CFS segment could benefit from terminal expansions: The management highlighted that they will be expanding facilities in Chennai and Kochi as well as de-bottlenecking facilities at Mumbai CFS II, which could partially offset slowing growth at the JNPT facility. Currently, consolidated debt:equity ratio of 0.6x as the company generates significant cash from its CFS facilities. The company offers a dividend yield of 4%

Not Covered
GATE.NS, GDPL IN Price: Rs143.85

India Indian Autos Aditya Makharia

AC

(91-22) 6157-3596 aditya.s.makharia@jpmorgan.com

Ritesh Gupta
(91-22) 6157 3585 ritesh.z.gupta@jpmorgan.com J.P. Morgan India Private Limited
Price Performance
150 140 Rs 130 120 110 100
Feb-11 May-11 Aug-11 Nov-11 Feb-12

Abs

YTD 11.7%

1m 9.7%

3m 7.2%

12m 26.6%

Figure 1: Gateway Distriparks Rail TEUs

160,000 120,000 80,000 40,000 36,700 66,500 112,444 131,337 124,913

Source: Company

NOTE: THIS DOCUMENT IS INTENDED AS INFORMATION ONLY AND NOT AS A RECOMMENDATION FOR ANY STOCK. IT CONTAINS FACTUAL INFORMATION, OBTAINED BY THE ANALYST DURING MEETINGS WITH MANAGEMENT. J.P. MORGAN DOES NOT COVER THIS COMPANY AND HAS NO RATING ON THE STOCK.

See page 13 for analyst certification and important disclosures, including non-US analyst disclosures.
J.P. Morgan does and seeks to do business with companies covered in its research reports. As a result, investors should be aware that the firm 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. www.morganmarkets.com

Aditya Makharia (91-22) 6157-3596 aditya.s.makharia@jpmorgan.com

Asia Pacific Equity Research 16 February 2012

Table 1: Gateway Distriparks Consolidated Financial Snapshot (Rs. In M)

Net sales Net profit EPS (Rs) DPS (Rs) Net sales growth (%) EPS growth (%) ROE (%) BVPS (Rs) P/E (x) Div. Yield (%)
Source: Company Reports

FY08 2,714 736 6.4 2.0 68.6 -24.5 11.4 55.9 22.6 1.4

FY09 4,520 796 7.4 2.0 66.6 16.1 12.8 57.9 19.5 1.4

FY10 5,166 791 7.3 3.5 14.3 -0.7 11.9 61.6 19.6 2.4

FY11 5,991 968 9.0 6.0 16.0 22.2 14.1 63.7 16.1 4.2

52-week range (Rs) Market cap (Rs B) Market cap (US$ B) Shrs outsting (MM) Free float (%) Avg daily value (Rs MM) Avg daily value (US$ MM) Avg dly volume (MM shs) BSE sensex Exchange rate (Rs/US$)

106.3-153.5 15,538 317 107.9 50 23.8 0.5 0.7 18,109 49.0

Operator in the EXIM segment: GDPL is among the few private railway operators that has focused on the high margin EXIM segment, which accounts for c.85% of its turnover. The company has invested in setting up ICD terminals in northern India, including Garhi, Ludhiana and a soon-to be-commissioned terminal at Faridabad. Besides, the company has tied up ICD facilities in Rajasthan and Gujarat recently, which will deepen their service network.
Figure 2: Gateway Rail Freight Segment Mix (%) FY12YTD

GDPL is focusing on the high margin EXIM segment

Domestic, 13%

EXIM, 87%

Source: Company

Healthy growth in turnover: The railway segment turnover almost doubled in FY09-11, despite slowing industry growth - driven by a low base and market share gains. As the contribution of the railway business has grown, it now accounts for 50% of Gateways consolidated turnover.
Table 2: Gateway Rail Freight P&L Statement (in Rs. M)
TEU's Sales EBITDA Margin (%) PAT
Source: Company

FY09 66,500 1,838 145 7.9 (262)

FY10 112,444 2,906 302 10.4 (127)

FY11 131,337 3,226 438 13.6 (39)

FY12 YTD 124,913 2,869 494 17.2 147

Aditya Makharia (91-22) 6157-3596 aditya.s.makharia@jpmorgan.com

Asia Pacific Equity Research 16 February 2012

Figure 3: Revenue Breakup

8% 40% 7% 8% 6% 51%

Figure 4: EBITDA Breakup

3% 9% 6% 22% 6% 25% 4% 26%

55%

53%

88% 53% 38% FY10 CFS Business

Source: Company

72%

68%

70%

40% FY11 Rail Business

43%

FY09

FY12YTD Snowman

FY09

FY10 CFS Business

FY11 Rail Business

FY12YTD Snowman

Source: Company

The company is expanding capacity by 33% to 28 rakes over the next 15 months as utilization levels are currently at c.90%. In Ludhiana, Gateways market share has risen to c.45% in the EXIM business. However, in the NCR market, their market share is at 8% - as the new terminal commences operations in 2QFY13, the management is expecting to gain share.
Figure 5: Rail Business Segment Annual TEUs
150,000 112,444 100,000 66,500 50,000 36,700 131,337 124,913 100% 80% 60% 40% 20% FY08 FY09 TEUs
Source: Company.

0% FY10 Growth (%) FY11 FY12YTD

Aditya Makharia (91-22) 6157-3596 aditya.s.makharia@jpmorgan.com

Asia Pacific Equity Research 16 February 2012

Figure 6: Rail Business Segment PAT (Rs Mn)

60 40 20 (20) (40) (60) 1QFY11 2QFY11 3QFY11 PAT (LHS)

Source: Company.

17.6% 11.6% 12.8% 13.0% 3 (43) (34) 38

17.8% 46

17.1% 51

16.8% 51

20% 15% 10% 5% 0%

4QFY11

1QFY12

2QFY12

3QFY12

EBITDA Margin (%, RHS)

EXIM trade likely to benefit from improving global sentiment: J.P. Morgans global PMI has recorded strong gains recorded in January. Our economics team is forecasting a broader underlying shift in growth momentum and the risks to 1H global growth forecast have shifted significantly to the upside. (For more information please refer to Global Data watch, Kasman et al, 3 February 2012). In India, we believe that growth rates will revive from hereon, given expectations of monetary easing ahead. Sou

Source: J.P. Morgan Economic Research (forecast for the rest for FY12)

Aditya Makharia (91-22) 6157-3596 aditya.s.makharia@jpmorgan.com

Asia Pacific Equity Research 16 February 2012

Figure 7: Container Traffic at Major Ports (in 000 TEUs)

2,040 16% 16% 12% 7% 1,800 9% 7% 4% 5% 5% 8% 4% 0% Q1FY11
Given the high growth in Mundra Port, the railway mix is tilting with exports growing from JNPT and imports growing from Mundra.

1,920

1,680 Q2FY11 Q3FY11 Q4FY11 Q1FY12 Q2FY12 Q3FY12 TEU (in '000 nos) - LHS
Source: GoI.

Growth (%) - RHS

Figure 8: Mundra Port Container Traffic (in 000 TEUs)

450 400 350 300 250 200 1QFY11 2QFY11 3QFY11 4QFY11 1QFY12 2QFY12 3QFY12 TEU (in '000 nos) - LHS
Source: Company.

50% 44% 38% 28% 278 314 325 312 23% 343 23% 16% 365 391 40% 30% 20% 20% 10% 0% % Growth - RHS

CFS segment could benefit from terminal expansions: The management highlighted that they will be expanding facilities in Chennai and Kochi as well as debottlenecking facilities at Mumbai CFS II, which could partially offset slowing growth at its Mumbai CFS facility.
Table 3: CFS Business P&L Statement (Rs Mn)
FY09 TEUs (in units) Sales EBITDA EBITDA Margin (%) PAT
Source: Company reports

FY10 303,963 2,015 994 49.30% 897

FY11 333,422 2,418 1174 48.60% 973

FY12YTD 257,096 2,463 1,348 54.70% 827

324,400 2,443 1,384 56.70% 1,063

The growth in the CFS segment has been impacted by lower volumes in the Mumbai CFS due to sedate growth in port volume at JNPT, lower utilization rates at Punjab Conware (due to a fire) as well as market share losses.

Aditya Makharia (91-22) 6157-3596 aditya.s.makharia@jpmorgan.com

Asia Pacific Equity Research 16 February 2012

Figure 9: CFS Business Segment Annual TEUs

400,000 330,800 300,000 10% 200,000 0% 100,000 -2% -6% -10% FY08 FY09 CFS TEUs
Source: Company.

Figure 10: Contribution of Mumbai in Overall TEUs

30%

90%

324,400

303,963

333,422 257,096 5% 10%

76% 70%

76% 71% 69% 65%

FY10 FY11 Growth (%) FY12YTD

50% FY08
Source: Company Data.

FY09

FY10

FY11

FY12YTD

However, realizations have benefited given longer dwell times as well as price hikes. This has driven revenues and profitability.
Figure 11: CFS Business Segment Realisations (Rs/TEU)
12,000 7,770 8,193 9,146 9,452 10,221

8,000

6,291

6,653

4,000

1QFY11 2QFY11 3QFY11 4QFY11 1QFY12 2QFY12 3QFY12

Source: Company

Figure 12: Gateways CFS Business Segment Revenues (Rs Mn) and EBITDA margin trend
1000 44.3% 750 500 250 0 1QFY11 2QFY11 3QFY11 4QFY11 1QFY12 2QFY12 3QFY12 CFS Revenues (Rs Mn)
Source: Company.

46.2%

48.7%

52.3%

55.8%

54.3%

54.1%

60.0%

40.0% 717 831 821 811

477

556

673

20.0%

0.0% EBITDA Margin

The Snowman Cold Chain operations have benefitted from market share gains from the unorganized segment the organized segment accounts for just 20% of the
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Aditya Makharia (91-22) 6157-3596 aditya.s.makharia@jpmorgan.com

Asia Pacific Equity Research 16 February 2012

overall volumes. Thus, management expects to gain share from the unorganized market, given its superior product offering.
Table 4: Snowman Logistic Limited P&L Summary
FY09 Sales 348 FY10 369 FY11 475 FY12YTD 447

EBITDA Margin (%) PAT

Source: Company

51 14.7 (6)

78 21.1 22

114 24.1 34

118 26.3 26

Gearing Ratios under check: Currently, the consolidated debt:equity ratio is at 0.6x as the company generates significant cash from its CFS facilities. While Gateway Rail has debt on its books, it includes the Rs.3B infusion from Blackstone private equity, which is issued in the form of compulsory convertible bonds, with a conversion that will take place in five years. The infusion will give Blackstone a stake of between 37.3% - 49.9% in the rail subsidiary, based on certain milestones. The company offers a dividend yield of 4%.
Table 5: Gateway Distriparks Consolidated Balance Sheet as of Dec11 (Rs Mn)
BALANCE SHEET Equity Capital Reserves Net Worth CCPS in GRFL Debt Minority Interest Deferred Tax Liabilities 104 43 116 4,253 6,908 CFS 1,082 2,909 3,990 2,861 2,861 2,958 1,049 40 521 35 1,226 670 670 Rail Snowman Consolidated 1,082 6,440 7,521 2,958 1,153 604 151 12,388

Fixed Assets (Net) Liquid Funds Current Assets (Net) Capital Employed
Source: Company

2,500 1,292 461 4,253

6,616 102 191 6,909

899 204 124 1,226

10,014 1,598 776 12,388

Aditya Makharia (91-22) 6157-3596 aditya.s.makharia@jpmorgan.com

Asia Pacific Equity Research 16 February 2012

Company Profile
Gateway Distriparks has three verticals Container Freight Stations (CFS), Inland Container Depots (ICD) with rail movement of containers to major maritime ports, and Cold Chain Storage and Logistics. GDL operates two Container Freight Stations at Navi Mumbai, one at Chennai and one at Visakhapatanam.. A new CFS at Kochi will be operational by FY12. GDLs rail operations are handled by a subsidiary, Gateway Rail Freight Limited (GatewayRail) in which The Blackstone Group of USA has made a private equity investment. Gateway Rail provides inter-modal logistics and operates its own Inland Container Depots/Dry Ports. GatewayRail operates rail linked facilities at Garhi-Harsaru (Gurgaon, Haryana), Ludhiana (Punjab) and Kalamboli (Navi Mumbai). Its upcoming terminal at Asaoti (Faridabad, Haryana) will be operational by FY12E as well. Gateway Rail owns and operates a fleet of 21 trains at its rail linked terminals. Gateway Rail operates regular container train service from these ICDs / Dry Ports to NhavaSheva, Mundra and Pipavav, transporting import and export as well as domestic containers. The third vertical consists of cold chain logistics solutions out of 19 locations in India through the subsidiary, Snowman Logistics Limited in which Mitsubishi, Nicherei and IFC (World Bank) are investors. Snowman is a leading Logistics Services Provider and Indias first cold supply chain company with a nationwide network connecting more than 100 cities and more than 4,400 outlets. Snowman has a pan-India presence that offers comprehensive warehousing, transportation and distribution services.
Figure 13: Gateway Distriparks Shareholding Pattern
Non-Institutions, 16.4 Total Promoters, 40.5

FIIs, 27.7

DIIs, 15.5
Source: BSE India

Aditya Makharia (91-22) 6157-3596 aditya.s.makharia@jpmorgan.com

Asia Pacific Equity Research 16 February 2012

Figure 14: Gateway Distriparks Limited Holding Structure

Gateway Distriparks (South) Private Limited 100%

Gateway Distriparks Limited

Gateway Distriparks (Kerala) Limited 60%

Gateway Rail Freight Limited 97.3%

Snowman Logistics Limited 52.2%

Gateway East India Private Limited 100%

Source: Company reports

Aditya Makharia (91-22) 6157-3596 aditya.s.makharia@jpmorgan.com

Asia Pacific Equity Research 16 February 2012

Figure 15: Segmental Quarterly Earnings Summary (Rs Mn)

Jun-10 GDL Sales % Growth EBITDA Margin (%) PBT PAT after MI Grail Sales % Growth EBITDA Margin (%) PBT PAT after MI Snowman Sales % Growth EBITDA Margin (%) PBT PAT after MI Consolidated Sales % Growth EBITDA Margin (%) PBT PAT after MI
Source: Company

Sep-10 556 12% 257 46.2 221 233

Dec-10 673 27% 328 48.7 283 267

Mar-11 717 40% 375 52.3 330 307

Jun-11 831 74% 464 55.8 416 281

Sep-11 821 48% 446 54.3 399 276

Dec-11 811 20% 438 54.1 390 270

477 0% 211 44.3 166 175

720 3% 83 11.6 (45) (43)

742 -2% 95 12.8 (35) (33)

808 21% 105 13.0 3 3

849 8% 150 17.6 42 38

903 26% 161 17.8 47 46

960 29% 165 17.1 53 51

1,006 24% 169 16.8 52 51

105 34% 23 22.2 15 8

106 14% 23 21.4 13 5

120 32% 34 28.2 23 10

144 23% 31 21.8 5

139 32% 36 25.8 22 8

142 33% 36 25.6 23 8

167 39% 46 27.5 31 11

1,301 4% 318 24.4 135 140

1,404 5% 374 26.7 199 205

1,601 24% 467 29.2 309 280

1,710 21% 556 32.5 372 350

1,873 44% 661 35.3 485 334

1,923 37% 647 33.6 474 335

1,983 24% 653 32.9 473 331

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Asia Pacific Equity Research 16 February 2012

Gateway Distriparks Ltd: Summary of Financials (Consolidated)

Profit and Loss statement Rs in millions, year-end Mar Revenues % change Y/Y EBITDA % change Y/Y EBITDA Margin (%) Other Income Depreciation EBIT Interest Charges Earnings before tax % change Y/Y Tax as % of EBT Net Income (After MI) % change Y/Y Shares Outstanding EPS (pre exceptional) % change Y/Y DPS (Rs) Balance sheet Rs in millions, year-end Mar Cash Accounts receivable Others Current assets LT investments Net fixed assets Total assets FY08A 2,714 69% 1,024 26% 37.7% 144 292 876 20 856 -6% 136 15.9% 736 -5% 116 6.4 -24% 2 FY08A 957 317 207 1,481 0 6,651 8,132 FY09A 4,520 67% 1,471 44% 32.6% 109 445 1,135 202 934 9% 159 17.0% 796 8% 108 7.4 16% 2 FY09A 593 529 280 1,402 230 8,132 9,764 FY10A 5,166 14% 1,249 -15% 24.2% 125 455 919 195 724 -22% (79) -11.0% 791 -1% 108 7.3 -1% 3 FY10A 795 682 531 2,008 150 8,703 10,860 FY11A 5,991 16% 1,597 28% 26.7% 129 502 1,223 182 1,041 44% 44 4.2% 968 22% 108 9.0 22% 6 FY11A 1,506 624 754 2,884 130 9,832 12,846 Cash flow statement Rs in millions, year-end Mar EBIT Depreciation & amortisation Dec/(Inc) in Working Capital Taxes Cash flow from operations Extra ordinary Items Net Capex Net Interest (Paid)/ Recd Free cash flow Income from Investments (Inc) / Dec in LT Investment Equity raised/ (repaid) Debt raised/ (repaid) Other Dividends paid Cash generated during the year Beginning cash Ending cash Ratio Analysis %, year-end Mar EBITDA margin Net profit margin Sales growth Net profit growth EPS growth Dividend Payout Ratio Dividend Yield EBITDA margin Net profit margin Price to Book Value (x) Net debt to total capital Sales/assets Assets/equity ROE ROCE FY08A 732 292 202 (118) 1,108 (2,180) (20) (1,092) 144 (156) 141 168 (316) (1,111) 2,068 957 FY08A 37.7 26.5 69 -5 -24 42 1.4 37.7 26.5 2.6 0.0 0.4 1.2 11.4 11.7 FY09A 1,027 445 (223) (143) 1,105 (1,926) (202) (1,022) 109 (230) (740) 1,829 (9) (300) (364) 957 593 FY09A 32.6 17.1 67 8 16 37 1.4 32.6 17.1 2.5 0.2 0.5 1.5 12.8 12.5 FY10A 794 455 55 82 1,386 (1,025) (195) 165 125 80 55 55 8 (286) 202 593 795 FY10A 24.2 15.5 14 -1 -1 55 2.4 24.2 15.5 2.3 0.2 0.5 1.4 11.9 9.6 FY11A 1,094 502 (681) (92) 824 (1,632) (182) (989) 129 20 25 (945) 2,913 (442) 710 795 1,505 FY11A 26.7 16.6 16 22 22 76 4.2 26.7 16.6 2.3 0.1 0.5 1.7 14.1 10.4

Liabilities Payables Others Total current liabilities Total debt Deferred Tax Total liabilities Shareholders' equity Minority Interest Networth BVPS (Rs. per share)

363 282 645 215 169 1,030 6,467 636 7,103 56

377 315 692 2,045 185 2,922 6,237 606 6,842 58

1,019 287 1,307 2,099 187 3,593 6,642 625 7,267 62

672 433 1,105 1,154 140 2,399 6,878 3,568 10,446 64

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Asia Pacific Equity Research 16 February 2012

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Important Disclosures

Client: J.P. Morgan currently has, or had within the past 12 months, the following company(ies) as clients: Gateway Distriparks Ltd.

Company-Specific Disclosures: Important disclosures, including price charts, are available for compendium reports and all J.P. Morgan covered companies by visiting https://mm.jpmorgan.com/disclosures/company, calling 1-800-477-0406, or emailing research.disclosure.inquiries@jpmorgan.com with your request.
Gateway Distriparks Ltd (GATE.NS, GDPL IN) Price Chart

240

200

160 Price(Rs) 120

80

40

0 Feb 09 May 09 Aug 09 Nov 09 Feb 10 May 10 Aug 10 Nov 10 Feb 11 May 11 Aug 11 Nov 11 Feb 12

Source: Bloomberg and J.P. Morgan; price data adjusted for stock splits and dividends.

The chart(s) show J.P. Morgan's continuing coverage of the stocks; the current analysts may or may not have covered it over the entire period. J.P. Morgan ratings: OW = Overweight, N= Neutral, UW = Underweight Explanation of Equity Research Ratings and Analyst(s) Coverage Universe: J.P. Morgan uses the following rating system: Overweight [Over the next six to twelve months, we expect this stock will outperform the average total return of the stocks in the analyst's (or the analyst's team's) coverage universe.] Neutral [Over the next six to twelve months, we expect this stock will perform in line with the average total return of the stocks in the analyst's (or the analyst's team's) coverage universe.] Underweight [Over the next six to twelve months, we expect this stock will underperform the average total return of the stocks in the analyst's (or the analyst's team's) coverage universe.] In our Asia (ex-Australia) and UK small- and mid-cap equity research, each stocks expected total return is compared to the expected total return of a benchmark country market index, not to those analysts coverage universe. If it does not appear in the Important Disclosures section of this report, the certifying analysts coverage universe can be found on J.P. Morgans research website, www.morganmarkets.com. Coverage Universe: Makharia, Aditya: Ashok Leyland (ASOK.BO), Bajaj Auto (BAJA.BO), Bosch Limited (BOSH.BO), Container Corporation of India Ltd (CCRI.BO), Hero Motocorp Ltd. (HROM.BO), Mahindra & Mahindra (MAHM.BO), Maruti Suzuki India Ltd (MRTI.BO), Tata Motors (TAMO.BO)

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Asia Pacific Equity Research 16 February 2012

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*Percentage of investment banking clients in each rating category. For purposes only of FINRA/NYSE ratings distribution rules, our Overweight rating falls into a buy rating category; our Neutral rating falls into a hold rating category; and our Underweight rating falls into a sell rating category.

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Malaysia: This material is issued and distributed in Malaysia by JPMorgan Securities (Malaysia) Sdn Bhd (18146-X) which is a Participating Organization of Bursa Malaysia Berhad and a holder of Capital Markets Services License issued by the Securities Commission in Malaysia. Pakistan: J. P. Morgan Pakistan Broking (Pvt.) Ltd is a member of the Karachi Stock Exchange and regulated by the Securities and Exchange Commission of Pakistan. Saudi Arabia: J.P. Morgan Saudi Arabia Ltd. is authorized by the Capital Market Authority of the Kingdom of Saudi Arabia (CMA) to carry out dealing as an agent, arranging, advising and custody, with respect to securities business under licence number 35-07079 and its registered address is at 8th Floor, Al-Faisaliyah Tower, King Fahad Road, P.O. Box 51907, Riyadh 11553, Kingdom of Saudi Arabia. Dubai: JPMorgan Chase Bank, N.A., Dubai Branch is regulated by the Dubai Financial Services Authority (DFSA) and its registered address is Dubai International Financial Centre - Building 3, Level 7, PO Box 506551, Dubai, UAE. Country and Region Specific Disclosures U.K. and European Economic Area (EEA): Unless specified to the contrary, issued and approved for distribution in the U.K. and the EEA by JPMSL. Investment research issued by JPMSL has been prepared in accordance with JPMSL's policies for managing conflicts of interest arising as a result of
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Aditya Makharia (91-22) 6157-3596 aditya.s.makharia@jpmorgan.com

Asia Pacific Equity Research 16 February 2012

publication and distribution of investment research. Many European regulators require a firm to establish, implement and maintain such a policy. This report has been issued in the U.K. only to persons of a kind described in Article 19 (5), 38, 47 and 49 of the Financial Services and Markets Act 2000 (Financial Promotion) Order 2005 (all such persons being referred to as "relevant persons"). This document must not be acted on or relied on by persons who are not relevant persons. Any investment or investment activity to which this document relates is only available to relevant persons and will be engaged in only with relevant persons. In other EEA countries, the report has been issued to persons regarded as professional investors (or equivalent) in their home jurisdiction. Australia: This material is issued and distributed by JPMSAL in Australia to "wholesale clients" only. JPMSAL does not issue or distribute this material to "retail clients". 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Clients should contact analysts and execute transactions through a J.P. Morgan subsidiary or affiliate in their home jurisdiction unless governing law permits otherwise. "Other Disclosures" last revised January 6, 2012.

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