EQUITIES

IMPACT OF THE NEW FRENCH TAX LAW

A step in the right direction

17 DECEMBER 2012
Pierre-Olivier Beffy
(+44) 207 039 9526

pierre_olivier.beffy@exanebnpparibas.com

Laurent Gelebart, CFA

(+33) 1 44 95 21 56

laurent.gelebart@exanebnpparibas.com

A step in the right direction As part of efforts to improve the competitiveness of the French economy the government recently introduced measures to reduce the total cost of employment of low-paid workers. These include the implementation of a tax credit equivalent to a 6% decrease in employers tax contribution on wages below 2.5 times the minimum wage. We think that at the macro level the effect on competitiveness is likely to be rather limited. The legal barriers to companies lowering wages despite falling demand and high unemployment remain a structural hurdle. Many offsetting factors We model the impact of the reforms for a sample of French companies. We calculate the theoretical benefit and also estimate how much of this will actually flow through to the bottom line. In many cases the positive impact will be diluted or offset by other factors such as pricing pressure, contract renewals, or the delayed impact of previously adopted tax increases such as the VAT hike and the partial deductibility of financial charges. The food retail industry is in theory one of the major beneficiaries, but given the intense competition and the pressure on consumer budgets we estimate half of the gain will end up being re-invested in pricing. With a mid-single-digit percent potential net EPS benefit for Carrefour and Casino, we consider the tax credit to be positive for sentiment on both stocks but do not yet factor it into our forecasts. Nevertheless, some companies will benefit The impact is clearly greatest for companies that have high staff counts and face depressed earnings levels today. For French water utilities Suez Environnment and Veolia, the tax credit boosts our FY1315e EPS by an average of 9% and 18%, respectively. For Peugeot we see the tax credit reducing net losses by 6% in 2013 while for Eiffage we see it boosting EPS by 9%. Among French Mid Caps, we highlight the nursing homes (Orpea, Medica, Korian) as the main beneficiaries of the reform, as well as Club Med, N.Dentressangle, Derichebourg, Beneteau, and Trigano. All of these should see a positive EPS impact of at least 10% in 2013. We present a summary of our findings in a comprehensive table at the end of this report.

David Finch
+33 1 44 95 69 10

david.finch@exanebnpparibas.com

Jean-Christophe Liaubet
(+33) 1 44 95 35 76

jean-christophe.liaubet @exanebnpparibas.com

Please refer to important disclosures at the end of this report

Contents

Improving cost-competitiveness in France______________________ 3

A step in the right direction ______________________________________________ 3 The effect of the tax credit mechanism explained ____________________________ 5

Corporate impact _________________________________________ 8

The food retailers Carrefour and Casino __________________________________ 8 The Utilities Suez Environment and Veolia _______________________________ 10 Catering Sodexo ___________________________________________________ 10 Concessions ________________________________________________________ 10

Corporate impact Focus on Mid Caps ______________________ 12

Nursing homes ______________________________________________________ 12 Leisure and hotels____________________________________________________ 12

IMPACT OF THE NEW FRENCH TAX LAW 17 December 2012

Improving cost-competitiveness in France

A step in the right direction
As we explained in our two previous notes 1, the implementation of a tax credit mechanism to improve the cost-competitiveness of the French economy will be put in place by the end of the year. A modification of a budget law is always a complex process. The most important step is when the law is passed (and possibly amended) by the National Assembly, and this is now behind us. This means that the law is likely to be implemented in its current form despite opposition in the Senate. On the macro side, we acknowledge that this is a step in the right direction as the French industrial sector has been struggling to sustain international competitiveness over the last 15 years. There are several reasons behind the deterioration of the industrial sector, but the increasing tax pressure on wage compensation has played a major role in reducing the ability of French export companies to invest and specialise in upscale goods. In particular, Frances labour tax is at record high levels relative to other developed countries. Figure 1: Employers social contributions in France are too high compared to peers
% of GDP
Total of employees' and employers' social contribution 16.0 14.0 12.0 10.0 8.0 6.0 4.0 2.0 Denmark 0.0 0.0 2.0 4.0 6.0 8.0 10.0 12.0 USA Canada UK Ireland Japan Poland Germany Belgium Austria Portugal Spain Cz Rep Finland Italy Sweden

France

Employers social contribution

Source: OECD, Exane BNPP

Even though we have long advocated offsetting a reduction of employers social contributions with an increase in household taxation, we think the measure could have been more focused on the industrial sector where international competition is the most acute. In particular, workers close to the minimum wage will fully benefit from the measure. However, they mainly work in the services sector, and past reductions in social contributions paid by employers with employees earning roughly the minimum wage have proven quite inefficient over the last decade. As the competition is subdued in the services sector, it leads to some job creation, but also to an increase in wages. This could put upward pressure on wages in the manufacturing sector.

Competitiveness in baby steps and Competitiveness a pact without punch, 6 Nov. 2012

IMPACT OF THE NEW FRENCH TAX LAW 17 December 2012

Several issues have also been absent from the recent debate. First, there are no proposals to tackle the lack of flexibility in lowering salaries and the duality of the job market (with the employed enjoying too much protection and the unemployed unable to find work). It is striking that real wages have not decreased on average in France since the onset of the financial crisis. The inability of wages to react to a change in the unemployment situation shows the stickiness of the French labour market. This has resulted in a serious lack of adjustment of French unit labour costs within the Eurozone, at a time when peripheral countries are making great strides to become more competitive. All in all, this has caused a further dramatic compression of French companies profit margins. Figure 2: Frances cost-competitiveness is deteriorating versus peripheral countries
Unit Labour cost Index (2005 = 100)
1 50.0 Euro stat estimates

1 40.0 1 30.0

1 20.0

1 0.0 1 1 00.0

90.0 1 999 2000 2001 2002 2003 2004 2005 2006 2007 Spain 2008 2009 France 201 0 Italy 201 1 201 2 201 3 Ireland

Germany

Greece

Source: Eurostat, Exane BNPP

Figure 3: French companies margins are at their lowest level in the last 25 years
17% 33% 32% 16% 31% 15% 30% 29% 14% 28% 13% Q1 1990 27% Q1 1993 Q1 1996 Q1 1999 Q1 2002 Q1 2005 Q1 2008 Q1 2011

Employers' social contributions, % of added value (left)

Source: Insee, Exane BNPP

Profit margin (right)

In our view, many structural reforms need to be implemented to make the labour market more flexible, especially in the services sector. As a reminder, thanks to the

IMPACT OF THE NEW FRENCH TAX LAW 17 December 2012

implementation of some wage moderation and structural reforms in the 2000s, Germany benefits from much lower wages in the services sector. In turn, this has allowed German industrial companies to pay less for services, thereby maintaining wage moderation in the industrial sector. By contrast, in France, governments have tried to lower the social contributions paid by employers in the services sector. But as competition in the services sector is subdued, this has triggered an increase in wages that has spread to the manufacturing sector. This clearly suggests that the tax system is only one part of the problem. To conclude, we believe the transfer of employers social contributions to household taxation is a positive step in addressing the deterioration in Frances competitiveness. However, more structural reforms are needed to fully address the countrys lack of competitiveness given their political and social costs. The good news at least is that the governments commitment to reducing the fiscal deficit next year allows France to benefit from an extremely low cost of capital within the Eurozone.

The effect of the tax credit mechanism explained

To improve the competitiveness of the French economy, the government has decided to implement a EUR20bn (1% of GDP) tax credit. The mechanism will be applied gradually. The tax credit will amount to around EUR14bn at the end of 2013 and EUR20bn thereafter. The government chose to implement a tax credit mechanism rather than a decrease in employers social contributions because a cut in labour tax would have reduced government tax receipts as soon as January. On the contrary, a tax credit gives some visibility to companies, but will effectively begin to affect public finances in 2014. This is a way to postpone the adjustment by one year and avoids a further negative shock on consumer spending when the government has already committed to a EUR37.5bn fiscal tightening for next year. In terms of magnitude, a EUR20bn tax credit corresponds to a EUR30bn cut in labour costs. As the corporate tax rate is 33%, a EUR30bn reduction in labour cost improves companies net profits by EUR20bn. To give an order of magnitude, we estimate that this corresponds to around 25% of the loss in cost-competitiveness with Germany since the 2000s when France ran a trade surplus against Germany. The tax credit will be applied at the gross wage bill level (i.e. excluding employers social contribution). Thus it will not depend on the level of companies profits. For instance, a company with a post-tax loss will benefit from a form of cash transfer from the government. In other words, the base for the tax credit will be the gross wage bill, not post-tax profits, even though the tax credit will reduce corporate tax. The measure will also have a wage ceiling as it only applies to payrolls up to 2.5 times the minimum wage (this represents EUR3,562 gross per month). By way of context, 80% of French workers are paid less than 2.5 times the minimum wage and it corresponds to two thirds of the total wage bill of French companies.

IMPACT OF THE NEW FRENCH TAX LAW 17 December 2012

The tax credit will be equivalent to a 6% decrease in tax on gross wage compensation for payrolls below 2.5 times the minimum wage. As we noted above, the idea is to partly target the manufacturing industry, where the proportion of workers earning between 1.6 and 2.5 times the minimum wage is the highest. To a lesser extent, this also allows the government to target the services sector, where low wage workers are more concentrated, as payrolls below 1.6 times the minimum wage will also be targeted. Again, this second aspect will not really improve costcompetitiveness of the French economy, but it is likely to support the labour market and, to a lesser extent, wages. On the contrary, the measure will be of less benefit to the financial sector, technology or the energy/mining industries, where the proportion of low wage workers is limited. Figure 4: Cutting employer charges targets industrial and construction sectors
Share of minimum wage earners in 2011
40 35 30 25 20 15 10 5 0 Manufacturing Information and communication Energy generation and distribution Financial activities and insurance Construction Arts, spectacles and leisure Health and social services Other services activities Real Estate Shelter and catering Mining industries Retail

Source: Insee

Finally, there has been a lot of debate about the conditionality to be applied to the mechanism. But in fact, there is no effective form of conditionality imposed on the mechanism. The debate has essentially shifted to the question of how the tax credit will be financed. For instance, there has been a lot of debate around the VAT hike proposed by the government: from January 2014 by +0.4pt to 20% for the general rate and +3 points to 10% for the reduced rate. To compensate for the impact of the increase in the general VAT, the rate on basic necessities has been lowered by 0.5pt to 5% (see below the companies that could be affected).

IMPACT OF THE NEW FRENCH TAX LAW 17 December 2012

Figure 5: Potential VAT rate change and sector impact

VAT rate From 5.5% to 5% Products and services Food products Soft drinks including water Equipment and services for dependent persons (elderly or disabled) School canteens Subscription for supplies of gas and electricity Books (paper, audio and digital) Passenger transport Unprocessed agricultural products not intended for human consumption Non-refundable medicines Hotel accommodation, furnished rental, camping classified Food service and prepared meals (or take up) Theatres and fairgrounds Duties in zoos, museums, monuments, exhibitions and cultural sites Processed food Companies/sectors that should be impacted Food retail (Casino, Carrefour, Dia, Rallye) Nursing homes (Orpea, Medica, Korian, Groupe Noble Age) Catering (Sodexo, Compass) Utilities (EDF, GDF Suez, Veolia, Suez Environnement)

7%

10%-12%

Hotels and Leisure (Accor, Club Mediterranee, Pierre & Vacances) Compagnie des Alpes

19.6%

20%

Food retail (Casino, Carrefour, Dia, Rallye), Business Catering (Sodexo, Compass) Renovation work on construction activities Somfy All other goods and services activities

Source: Exane BNP Paribas estimates

The VAT change could increase tax receipts by a few billion Euros, but it will not be enough to finance the tax credit. The government has therefore proposed financing the rest of the measures through a cut in public spending and by imposing a new green tax. The same proposal includes in an appendix the possibility of a higher corporate tax at some point, to rebalance the effective corporate tax rate between small and big companies in favour of the former. Hence the way the cost-competitiveness will be financed could have some counter-productive effects, particularly for the larger companies that are quoted. However, nothing is really clear on this front and we wont have any details before at least next September. It also highlights the growing risk that beyond 2013 some fiscal slippage is likely in France. All in all, although the mechanism looks quite complex, it offsets part of the negative impact that the 2013 budget will have on companies. More importantly, it shows that the debate on promoting a better business environment in France is ongoing. The outcome of management/union negotiations on measures to make the labour market more flexible will be important to follow.

IMPACT OF THE NEW FRENCH TAX LAW 17 December 2012

Corporate impact
The bottom line benefits of the tax credit adoption are difficult to assess overall, precisely as its positive impact may be diluted or offset by several factors such as pricing pressure in some industries, contract renewals, or the delayed impact of previously adopted tax rises (VAT hike, partial deductibility of financial charges, increased taxation of employee benefits schemes). Our main views on both large caps and mid caps names are presented below.

The food retailers Carrefour and Casino

Figure 6: Calculation example for Carrefour and Casino
Benefits for the year 2013
Sector Company Country Sales (EURm) Personnel costs (EURm) Net profit (EURm) Net profit margin ...% from France % personnel costs / sales French sales (EURm) Estimate of French personnel costs (EURm) Estimate of proportion that falls within 1x to 2.5x min wage Restatement for employer charges (30%) Labour costs base benefiting from the tax credit (EURm) Estimated gross benefit (EURm) Estimated retention rate Estimated actual benefit (EURm) Estimates as a % of net profit Source: Exane BNP Paribas estimates Food retail Carrefour France 79,479 7,948 941 1.20% 45% 10% 35,736 3,574 75% 53% 1876 75 50% 38 4.00% Food retail Casino France 49,190 5,903 587 1.20% 38% 12% 18,829 2,259 75% 53% 1186 47 50% 24 4.00%

Big employers and low profit margins; gross impact could be material but much likely to be competed away
For all of both Casinos and Carrefours international diversification and domestic troubles, France still represents a large part of their business. Carrefour employs around 110,000 people in France and Casino around 80,000. Accordingly, both are large employers and with around 90% of those employees earning less than the 2.5x minimum wage threshold (we assume c.75% of the wage bill), the tax credit could be material, particularly in the context of low levels of profitability. The grocers dont typically disclose labour costs by geography, but in the case of Carrefour we estimate that it is around 10% of sales. Casino has slightly more wholesale sales but much lower levels of productivity. Accordingly, we believe 12% of sales is a good estimate.

IMPACT OF THE NEW FRENCH TAX LAW 17 December 2012

Gross impact of c8% in 2013E, 10%+ in 2014E

We estimate a gross benefit of EUR75m for Carrefour in 2013E (8% of net profit) and EUR47m for Casino (8%). In 2014E when the credit rises from 4% to 6%, we estimate a gross benefit of EUR115m for Carrefour and EUR79m for Casino (10% and 12% of net profit respectively).

The grocers look likely to qualify

The key questions are whether the conditionality rules applied could be met by the grocers and, if so, how much of the credit is competed away. It seems that the conditions required to qualify for the retrospective credit are not that onerous, even in the context of ongoing restructuring efforts at both Carrefour and Casino. Just what the union representative committee will assess in terms of how the credit is used we can but speculate, but the fact that there are no hard rules on staff or capital investment suggests that the grocers look more likely to qualify.

Enough French tax paid to claim the credit

In terms of payment, we understand that it will be a tax credit offset against French tax and CVAE paid. If the group does not pay sufficient tax to fully absorb the credit, then we believe it will be carried forward on the balance sheet. In Carrefours case, most of its debt is held in Belgian-registered corporate entities, and as such we assume that, broadly, the French taxable profit will be c.EUR850m+ in 2013. That equates to c.EUR290m of French tax payable before c.EUR90m of CVAE tax. As such, if the necessary conditions are met Carrefour should be able to benefit, in cash terms, from 2014 when the first credit will be issued. In the case of Casino, we estimate that it could pay as much as a 40% tax rate in France in 2013 as the result of tax losses the group cant offset elsewhere. We estimate net profit in France of around EUR230m after paying tax of around EUR170m. Though the details may be messy, Casino should also be able to receive a cash benefit.

Key question is how much will be competed awaywe assume most

If all the above comes to pass, the potential positive impact could be >10% on Carrefours and Casinos net profit. However, working on the basis that all grocers qualify for the employer social tax credit, we would expect most, if not all, of the credit will be competed-away. As such, we would only realistically envisage a low single digit percentage benefit to earnings.

But timing of payment has a short-term positive

What makes the structure of payment potentially more interesting, however, is that conditionality will be assessed at the end of the year and the tax credit will only be received in 2014. As such, for the first year at least, the retailers will not be fully certain of the benefit that will accrue and so wont know how much is available to fight for market share. For this reason, and the fact that the credit is a potential help to the French grocery industrys profitability, we think the proposed tax change is positive for sentiment. At this stage, however, we do not capture any benefit in our forecasts.

VAT change a positivebut again, competition is intense

Of the other proposed tax changes, the reduction of VAT on food from 5.5% to 5% should also be a small positive, more than offsetting the increase in VAT on non-food

IMPACT OF THE NEW FRENCH TAX LAW 17 December 2012

from 19.4% to 20%. However, the broader picture remains one where consumers likely will have to pay more in austerity measures in 2013 than 2012 and, hence, we maintain a cautious view on French consumption and only model flat l/l for Carrefour hypermarkets in 2013, despite their improved relative trading momentum.

The Utilities Suez Environment and Veolia

In the French utilities sector, the relative impact of the tax credit should be by far the highest for Veolia and Suez Environnement, who have a relatively higher personnel base and face depressed earnings levels today. Over time, we anticipate the effect of the tax credit to be increasingly passed through as clients (largely municipalities) will demand to share the benefits. In the meantime, the tax credit alone boosts our FY13 15e EPS by an average of 9% for SEV and 18% for Veolia. GDF Suez already guided for a c.EUR70m positive impact at the net level in FY13, and EUR100m in FY14. This is fully included in the companys net profit guidance provided at its latest investor day. For EDF, we estimate a theoretical c.EUR150m impact on FY13, rising to EUR220m in FY14. That said, it will depend very much on whether the regulator will allow these savings to be kept in the company's hands, as the regulator is currently reviewing network access tariffs. At the end, we think tariffs will adjust accordingly provided the law is finalized on time, before the regulator adjusts the tariffs (network tariffs are supposed to be adjusted for application in July 2013, for four years). Similarly, customer tariffs reflecting the full cost of nuclear are unlikely to allow a free lunch for nuclear profitability. EDF is thus unlikely to benefit significantly from this measure.

Catering Sodexo
The new French tax credits may enhance Sodexos 2013-14e EPS by 3-6%. This reflects Sodexos 15% exposure to France, its labour-intensive nature (personnel costs being 46% of sales) and its reliance on low-wage workers (85% of the workforce). Changes in the various VAT rates that Sodexo is exposed to (canteens from 5.5% to 5.0%, restaurants from 7% to 10%) should have a very limited impact on earnings. Indeed, the proposed VAT rates are unlikely to change consumers behaviour as they would only inflate meal prices by a few cents.

Business services Adecco and Randstad

Staffing companies Adecco and Randstad derive around 20-25% of their sales in France, where slightly more than half of their own employees fall within the 1x to 2.5x minimum wage. Under our calculation, and assuming a 70% retention rate, this may increase EPS by c.1%. However, the impact could be much bigger if the tax credit law is applicable to temp workers (not only to the staffing companies' own employees); this point remains unclear for the moment. However, it is worth noting that, if this proves to be the case, a large part of the benefit is likely to be shared with clients (more than half of the gain), and therefore the net benefit would highly depend on commercial negotiation with clients. In that situation, we assume that this may increase staffers EPS by around 5%.

Concessions
The competitiveness package should provide an earnings boost to the French Infra sector in two ways:

10

IMPACT OF THE NEW FRENCH TAX LAW 17 December 2012

1) For France-based concessions (ASF/Escota, Cofiroute and Vinci Park at Vinci, APRR at Eiffage, ADP, French business of Eurotunnel), we would expect companies to retain the tax rebate in full as these gains can hardly be competed away. One caveat though: for Eurotunnel, we see a risk French ferry competitors may reinvest the gains in lower pricing instead of keeping the gains to rebuild current razor-thin margins. The CICE measure would most heavily impact Eurotunnel (a relatively substantial boost as a % of earnings, but more modest in absolute terms at EUR3m4m) and ADP (+34% EPS boost), while toll road concessionaires would be less impacted (max +1% of Vincis and Eiffages group earnings, as wages are only 1011% of toll road concessionaires' revenues). 2) The Contracting business of Vinci and Eiffage would also benefit from the CICE measure. We have computed the potential impact cautiously, by assuming Vincis and Eiffages French contracting business would only be able to benefit on the contracts already in their backlogs. This stems from our belief that all contractors will adjust bids downwards on new tenders to discount the lower wage bills, such that this boost will be competed away. Nevertheless, we expect the benefits of the CICE measure to be substantial over 201314 in absolute terms for both groups and as a % of earnings for Eiffage due to its depressed earnings base. The CICE measure is a welcome boost to the sector. It comes on top of the sector successfully defending full interest expenses tax deductibility. Both measures provide room for material earnings upgrades, with the Outperform-rated Eiffage set to benefit the most.

11

IMPACT OF THE NEW FRENCH TAX LAW 17 December 2012

Corporate impact Focus on Mid Caps

Two categories of companies are likely to benefit: those with a large workforce and low profitability (or even loss-making), such as Derichebourg, LDC, Nortbert Dentresssangle, Beneteau and Trigano. (See the table at the end of the report for the EPS impacts). The second category of more structural beneficiaries would be as follows:

Nursing homes
Nursing home operators (Orpea, Medica, Korian) should benefit from the adoption of the tax credit as more than two-thirds of their total wage bill is accounted for by people paid less than 2.5x the minimum wage. We believe these companies will pass on c.50% of those gains. This could take the form of wage increases to improve motivation and so help reduce staff turnover and the associated costs. The gains could also be used to raise further the quality of nursing homes (day care, recreational activities), which could spur job creation in a second stage to the benefit of elderly residents. We do not rule out the implementation of compensation measures. Although initial accommodation prices are not regulated, their annual revaluation is: the price charged to a resident entering a nursing home in 2012 will be revalued in 2013 according to an index set by the MOF. Last year the revaluation was 2.2%. It could be lower this year; we should have a better idea in early January. We believe that this measure could offset some of the negatives that have confronted the service sector in the past year, notably the soaring impact of the CVAE tax (tax on the added value), higher tax on profit-sharing schemes. Finally, it should also help offset the negative impact of the partial deductibility of interest charges, which is a heavy burden for a sector with high leverage (capital intensive activity).

Leisure and hotels

For leisure and hotels groups the potential benefits of the reform are uncertain. Even though a high proportion of workers in the sector are paid between 1x and 2.5x the minimum wage, the VAT rise on accommodation prices is set to move from 7% to 10%. This is likely to hurt activity given the context of weak demand and fierce competition. One company at risk is Pierre & Vacances. We would therefore expect much of the tax credit to be used to reduce prices to offset the VAT hike. That said, leisure and services groups will benefit from a one-off positive from the tax credit in 2013 as the VAT hike will only apply as of 2014.

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IMPACT OF THE NEW FRENCH TAX LAW 17 December 2012

Estimated impact on 2013 EPS

Estimate of proportion that falls within 1x to 2.5x min wage Labour costs base benefiting from the tax credit (EURm) Estimate of French personnel costs (EURm) Estimates as a % of net profit 18.3% 3.0% 3% 9% 3% 76% 2.4% 1.1% 0.1% 0.4% 2.4% 1.7% Figure considers Vinci keeps wage cut benefit on contracts in backlog by Dec-12 only ! Figure considers Eiffage keeps wage cut benefit on contracts in backlog by Dec-12 only ! Internal study ongoing at ADP - too early to cross-check estimates Limited impact + risk it may be more aggressively taken away by French ferry competition Industry without pricing power so low retention rate Industry without pricing power so low retention rate Industry without pricing power so low retention rate Industry without pricing power so low retention rate Industry without pricing power so low retention rate Industry without pricing power so low retention rate

Restatement for employer charges (30%)

% personnel costs / sales

Personnel costs (EURm)

Estimated gross benefit (EURm)

Estimated actual benefit (EURm)

Estimated retention rate

French sales (EURm)

Net profit (EURm)

Net profit margin

% from France

Sales (EURm)

Company

Country

4.0% Utilities GDF Suez EDF FRA 74,583 FRA 78,919 5,710 3,003 13,000 4,092 4.0% 5.2% 48% 48% 8% 35,800 2,741 16% 37,881 6,240 85% 85% 75% 2056 75% 4680 82 187 80% 80% 66 150 2.2% Already included in guidance. No impact from the VAT adjustment. 3.7% EDF is unlikely to benefit significantly from this measure as from 2014. Conversion rate of the savings are likely to be low as the network access tariffs currently reviewed by the regulator are likely to adjust accordingly, provided the French tax law is finalized on time (network tariffs are supposed to be adjusted for application in July 2013, for 4 years). Similarly, customer tariffs reflecting the full cost of nuclear is unlikely to allow a free lunch for nuclear profitability. No impact from the VAT adjustment. 9.3%

Suez Environne- FRA 15,180 ment Veolia FRA 28,460 Telecom Operators France Telecom FRA Infrastructure Vinci FRA Eiffage FRA ADP FRA Eurotunnel FRA IT Services Alten FRA Altran FRA Atos FRA Capgemini FRA Sopra FRA Steria FRA Food retail Carrefour 41,826 38,740 13,816 2,696 992 1,298 1,499 9,032 10,750 1,258 1,856

3,700 7,900

381 310

2.5% 1.1% 7.2%

40% 30% 48%

24% 28%

6,072 1,480 8,538 2,370

85% 85% 68% 60% 60% 62% 65% 55% 25% 15% 20% 30% 40% 75%

75% 1110 75% 1778 48% 2225 42% 1,774 42% 1,262 43% 310 46% 65 39% 18% 11% 14% 21% 28% 213 87 50 178 137 97

44 71

80% 80%

36 57 89 59 24 11 2 2 1 1 2 1 1 38

9,103 3,000

22% 19,887 4,674 27% 24,117 4,233 26% 11,729 3,011 27% 2,696 718 22% 496 144 70% 66% 51% 60% 65% 57% 792 554 750 497 930 477 2,129 1,273 1,009 653 605 346

89 100% 71 50 12 3 9 3 2 7 5 4 75 83% 48% 90% 88% 25% 25% 25% 25% 25% 25% 50%

10,390 1,775 4.6% 62% 3,547 256 1.9% 85% 718 364 13.5% 100% 216 3 0.3% 50% 909 994 4,635 6,430 814 1,060 7,948 90 80 362 420 56 57 941 6.9% 5.3% 4.0% 3.9% 4.5% 3.1% 1.2% 61% 50% 10% 20% 80% 33% 45%

FRA 79,479

10% 35,736 3,574

53% 1,876

Casino

FRA 49,190

5,903

587

1.2%

38%

12% 18,829 2,259

75%

53% 1,186

47

50%

24

4.0% With the majority of products on the lower rate, there is a benefit from the cut. However, competition is intense and gains are often competed away. Of the other proposed tax changes, the reduction of VAT on food from 5.5% to 5% should also be a small positive more than offsetting the increase in VAT on non-food from 19.4% to 20%. However, the broader picture remains one where consumers likely will have to pay more in austerity measures in 2013 than 2012 and, hence, we maintain a cautious view on French consumption and only model flat LFL for Carrefour hypermarkets in 2013 despite their improved relative trading momentum. 4.0% With the majority of products on the lower rate, there is a benefit from the cut. However, competition is intense and gains are often competed away. With the majority of products on the lower rate, there is a benefit from the cut. However, competition is intense and gains are often competed away. Of the other proposed tax changes, the reduction of VAT on food from 5.5% to 5% should also be a small positive more than offsetting the increase in VAT on non-food from 19.4% to 20%. However, the broader picture remains one where consumers likely will have to pay more in austerity measures in 2013 than 2012 and, hence, we maintain a cautious view on French consumption.

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IMPACT OF THE NEW FRENCH TAX LAW 17 December 2012

Comments

Automotive Valeo Faurecia Peugeot SA Renault Michelin Media TF1 M6 JCDecaux Lagardere Ipsos Vivendi WPP Havas Publicis PagesJaunes

FRA FRA FRA FRA FRA

11,418 17,767 51,101 41,764 22,193

2,398 350 3.1% 3,198 191 1.1% 7,870 -1169 -2.3% 5,805 2140 5.1% 5,371 1853 8.3% 422 161 6.3% 259 117 8.6% 535 210 7.9% 1,664 388 5.2% 741 134 7.2% 3,371 2,446 8.4% 7,861 1,339 9.9% 1,098 143 8.0% 4,411 773 11.0% 335 150 14.2% 2,039 301 315 8,733 2,022 1,796 518 241 4.4% 10 0.7% 240 20.9% 530 2.8% 572 397 95 2.8% 2.3% 8.4%

13% 14% 30% 28% 10% 85% 95% 25% 34% 9% 54% 5% 11% 8% 89% 35% 45% 11% 15%

21% 1,484 18% 2,487 15% 15,330 14% 11,694 24% 2,264

561 448 4757 1625 548

75% 75% 75% 75% 70% 66% 66% 66% 66% 66% 66% 66% 66% 66% 66% 75% 90% 75% 85%

53% 295 53% 235 53% 2,497 53% 853 49% 268 46% 46% 46% 46% 46% 46% 46% 46% 46% 46% 53% 63% 53% 60% 166 114 62 261 31 841 182 56 163 138 375 85 18 779 141 82 33

12 9 100 34 11 7 5 2 10 1 34 7 2 7 6

70% 70% 70% 70% 70% 50% 50% 50% 50% 50% 50% 50% 50% 50% 50%

8 7 70 24 8 3 2 1 5 1 17 4 1 3 3 7 1 1 15 4 2 0.9

2.4% 3.4% 6.0% 1.1% 0.4% 2.1% 1.9% 0.6% 1.3% 0.5% 0.7% 0.3% 0.8% 0.4% 1.8% 3.1% 14.4% 0.3% 2.7% 0.7% Could be much bigger if the tax credit law is applicable to temp workers (not only to the companies' employees; unclear however at this stage) but a large part of the benefit is likely to be shared with clients. 0.6% Could be much bigger if the tax credit law is applicable to temp workers (not only the companies' employees) but a large part of the benefit is likely to be shared with clients. 1.0%

FRA 2,554 FRA 1,362 FRA 2,667 FRA 7,526 FRA 1,863 FRA 29,246 UK 13,495 FRA 1,794 FRA 7,052 FRA 1,053

17% 2,171 359 19% 1,294 246 20% 667 134 22% 2,559 566 40% 168 67 12% 15,793 1,820 58% 675 393 61% 197 121 63% 564 353 32% 937 298 37% 21% 28% 46% 1,909 714 660 135 126 35 2,860 1,310 5,103 2,961 204 366 214 93

Leisure & Services Accor FRA 5,453 Club Med 1,467 Edenred 1,146 Sodexo 19,068 Business services Adecco SWI 20,541 Randstad Eurofins NET 17,168 FRA 1,135

15 50% 3 50% 1 100% 21 70% 6 3 1.3 70% 70% 70%

26% 9.8% 17% 10.5% 18% 46%

55% 38.5% 55% 38.5% 50% 35%

14

IMPACT OF THE NEW FRENCH TAX LAW 17 December 2012

Mid Caps Capital Goods Lisi Nexans Rexel Haulotte Manitou Saft Group Derichebourg Lectra Mersen

FRA 1,124 FRA 7,679 FRA 14,189 FRA 402 FRA 1,167 FRA 672 FRA 3,504 FRA FRA 202 837 2,470 3,902 2,915 2,033 4,220 828 819 1,183 788 1,594 1,412 691 2,804 859 796 1,800

444 1,217 1,606 130 163 196 1,061 87 243 1,729 1,203 634 386 670 248 149 559 356 788 335 210 421 206 190 459

63 97 434 14 29 43 62 12 40 141 72 63 67

5.6% 1.3% 3.1% 3.5% 2.5% 6.4% 1.8% 6.1% 4.8% 5.7% 1.9% 2.2% 3.3%

34% 10% 17% 20% 35% 25% 58% 10% 10% 10% 56% 94% 35% 20% 42% 55% 68% 90% 89% 50% 77% 97% 46% 80% 25%

39% 16% 11% 32% 14% 29% 30% 43% 29% 70% 31% 22% 19% 16% 30% 18% 47% 45% 49% 24% 30% 15% 24% 24% 26%

382 768 2,412 80 408 168 2,032 20 84 247 2,185 2,740 712 844 348 450 804 709 1,419 706 532 2,720 395 637 450

151 122 273 26 57 49 499 31 56 173 674 596 135 375 198 82 380 320 701 168 162 408 95 152 115

66% 66% 66% 70% 70% 80% 90% 45% 66% 90% 85% 75% 70% 66% 80% 80% 75% 75% 66% 66% 66% 50% 66% 66% 60%

46% 46% 46% 49% 49% 56% 63% 32% 46% 63% 60% 53% 49% 46% 56% 56% 53% 53% 46% 46% 46% 35% 46% 46% 42%

70 56 126 13 28 27 314 10 26 109 401 313 66 173 111 46 200 168 324 77 75 143 44 70 48

3 50% 2 50% 5 50% 1 100% 1 100% 1 100% 13 70% 0 1 4 16 13 3 90% 80% 70% 50% 50% 50%

1 1 3 1 1 1 9 0 1 3.0 8.0 6.3 1.3 6 2 2 4 3 6 3 3 3 1 1.4 1.0

2.2% 1.2% 0.6% 3.6% 3.9% 2.6% Projects based contracts ie no price pressure 14.3% Retention rate is likely to be very high in metals recycling (mostly a local business) and in ground handling services (contracts usually run over 7 years). On the other hand, it is likely to be lower in multi-services given that most of the segments face significant competition and contracts are shorter. 2.9% World wide leader. No major competitor in France - Largest competitors are US & Chinese => very high retention rate 2.1% Mersen mostly operates niche markets with leading positions (#1 or #2 in each market) and market shares in excess of 20%. 2.2% 11.1% 9.9% 2.0% 2.6% 69.1% Part of the proceeds could be reinvested in price rebates in order to gain further market share abroad. 12.2% Proceeds to be used to restore margins 11.4% Compensation measures likely 6.3% Compensation measures likely 6.6% Compensation measures likely 61.9% 7.5% 2.4% Retention rate likely to be limited to 50% given tough competition with other property developers and pressure from clients to decrease selling prices 3.7% Retention rate likely to be high Venues and Events. Likely to be lower in Services (tough competition) 2.0% 0.3%

Support Services Teleperformance FRA Transport Norbert FRA Dentressangle Food & HPC LDC FRA Bonduelle FRA Consumer Goods SEB FRA Beneteau FRA Trigano FRA Nursing Home Korian FRA Medica FRA Orpea FRA Leisure and services Pierre & FRA vacances CDA FRA Property Nexity FRA Media GL events Insurance April Euler Hermes FRA FRA FRA

214 5.1% -3 -0.4% 15 1.8% 35 53 98 5 40 121 33 3.0% 6.7% 6.1% 0.4% 5.8% 4.3% 3.9%

7 80% 3 70% 2 100% 8 7 13 50% 50% 50%

3 100% 3 100% 6 2 3 2 50% 70% 50% 50%

70 8.8% 291 16.2%

15

IMPACT OF THE NEW FRENCH TAX LAW 17 December 2012

Estimated impact on 2014 EPS

Estimate of proportion that falls within 1x to 2.5x min wage Labour costs base benefiting from the tax credit (EURm) Estimate of French personnel costs (EURm) Estimates as a % of net profit

% personnel costs / sales

Personnel costs (EURm)

Estimated gross benefit (EURm)

Estimated actual benefit (EURm)

Restament for employer charges (30%)

Estimated retention rate

French sales (EURm)

Net profit (EURm)

Net profit margin

% from France

Sales (EURm)

Company

Country

6.0% Utilities GDF Suez EDF FRA 77265 FRA 79011 5710 13000 3196 4340 4.1% 5.5% 48% 7.4% 37,087 2,741 48% 16.5% 37,925 6,240 85% 75.0% 2,056 85% 75.0% 4,680 123 281 80% 0% 99 0 3.1% Already included in guidance. No impact from the VAT adjustment.

Suez FRA Environnement Veolia FRA Telecom operators France Telecom FRA Infrastructure Vinci FRA Eiffage FRA ADP FRA Eurotunnel FRA IT Services Alten FRA Altran FRA Atos FRA Capgemini FRA Sopra FRA Steria FRA Food Retail Carrefour FRA

15670 28800 41,177

3730 7930

436 366

2.8% 1.3% 7.2%

40%

24%

6,268 1,492 8,640 2,379

85% 85% 68% 60% 60% 62% 65% 55% 25% 15% 20% 30% 40%

75% 1,119 75% 1,784 48% 2225 41.9% 1,845 41.9% 1,262 43.1% 317 45.5% 67 38.5% 17.5% 10.5% 14.0% 21.0% 28.0% 218 90 50 182 142 98

67 107

70% 70%

0.0% EDF is unlikely to benefit significantly from this measure as from 2014. Conversion rate of the savings are likely to be low as the network access tariffs currently reviewed by the regulator are likely to adjust accordingly, provided the French tax law is finalized on time (network tariffs are supposed to be adjusted for application in July 2013, for 4 years). Similarly, customer tariffs reflecting the full cost of nuclear is unlikely to allow a free lunch for nuclear profitability. No impact from the VAT adjustment. 47 10.8% Retention rate likely to decrease over time through contract renegotiations with clients (largely municipalities). 75 20.5% Retention rate likely to decrease over time through contract renegotiations with clients (largely municipalities). 133 45 13 17 4 3.3 1.3 0.8 2.7 2.1 1.5 4.5% 2% 5% 4% 7% 3.5% 1.4% 0.2% 0.6% 3.4% 2.0% Figure considers Vinci keeps wage cut benefit on contracts in backlog by Dec-12 only ! Figure considers Eiffage keeps wage cut benefit on contracts in backlog by Dec-12 only ! Internal study ongoing at ADP - too early to cross-check estimates Limited impact + risk it may be more aggressively taken away by French ferry competition Industry without pricing power so low retention rate Industry without pricing power so low retention rate Industry without pricing power so low retention rate Industry without pricing power so low retention rate Industry without pricing power so low retention rate Industry without pricing power so low retention rate

30% 27.5% 47%

9,103 2,950

22% 19,165 4,674

133 100% 111 76 19 4 13 5 3 11 9 6 115 41% 18% 90% 88% 25% 25% 25% 25% 25% 25%

39,152 10,805 1,924 4.9% 62% 27.6% 24,357 4,402 13,714 3,547 264 1.9% 85% 25.9% 11,642 3,011 2,834 736 416 14.7% 100% 26.0% 2,834 736 1,036 221 48 4.6% 50% 21.3% 518 147 1357 1540 9231 11098 1302 1904 82772 945 1006 4708 6647 838 1080 8277 94 93 400 486 62 73 1102 6.9% 6.0% 4.3% 4.4% 4.8% 3.8% 1.3% 60% 69.6% 51% 65.3% 10% 51.0% 20% 59.9% 81% 64.4% 33% 56.7% 814 567 785 513 942 480 2,175 1,303 1,049 675 619 351

44% 10.0% 36,644 3,664

75% 52.5% 1,924

25% 28.9

Casino

FRA 53867

6464

681

1.3%

39% 12.0% 20,881 2,506

75% 52.5% 1,316

79

25% 19.7

2.6% With the majority of products on the lower rate, there is a benefit from the cut. However, competition is intense and gains are often competed away. Of the other proposed tax changes, the reduction of VAT on food from 5.5% to 5% should also be a small positive more than offsetting the increase in VAT on non-food from 19.4% to 20%. However, the broader picture remains one where consumers likely will have to pay more in austerity measures in 2013 than 2012 and, hence, we maintain a cautious view on French consumption. 2.9% With the majority of products on the lower rate, there is a benefit from the cut. However, competition is intense and gains are often competed away. With the majority of products on the lower rate, there is a benefit from the cut. However, competition is intense and gains are often competed away. Of the other proposed tax changes, the reduction of VAT on food from 5.5% to 5% should also be a small positive more than offsetting the increase in VAT on non-food from 19.4% to 20%. However, the broader picture remains one where consumers likely will have to pay more in austerity measures in 2013 than 2012 and, hence, we maintain a cautious view on French consumption.

16

IMPACT OF THE NEW FRENCH TAX LAW 17 December 2012

Comments

Automotive Valeo FRA Faurecia FRA Peugeot SA FRA Renault FRA Michelin FRA Media TF1 FRA M6 FRA JCDecaux FRA Lagardere FRA Ipsos FRA Vivendi FRA WPP UK Havas FRA Publicis FRA PagesJaunes FRA Leisure & Services Accor FRA Club Med Edenred Sodexo

12,252 18,616 51,906 43,056 23,413 2,659 1,385 2,736 7,567 1,862 29,687 14,016 1,849 7,317 1,015 5,184 1,504 1,250 19,996

2,573 3,351 7,786 6,028 5,619

430 3.5% 348 1.9% -824 -1.6% 2235 5.2% 1954 8.3%

12% 14% 28% 25% 10% 85% 95% 25% 34% 9% 54% 5% 11% 8% 89%

21% 1,470 18% 2,606 15% 14,534 14% 10,764 24% 2,341

309 469 2180 1507 562

75% 75% 75% 75% 70% 66% 66% 66% 66% 66% 66% 66% 66% 66% 66% 75% 90% 75% 85%

53% 162 53% 246 53% 1,145 53% 791 49% 275 46% 46% 46% 46% 46% 46% 46% 46% 46% 46% 52.5% 63.0% 52.5% 59.5% 172 116 63 269 31 866 188 57 168 134 356 87 19 817 141 83 33

10 15 69 47 17 10 7 4 16 2 52 11 3 10 8

70% 70% 70% 70% 70% 50% 50% 50% 50% 50% 50% 50% 50% 50% 50%

6.8 10.3 48.1 33.2 11.6 5 3 2 8 1 26 6 2 5 4

1.6% 3.0% 5.8% 1.5% 0.6% 3.4% 2.8% 0.8% 2.1% 0.7% 1.1% 0.4% 1.1% 0.6% 2.7% 3.2% 7.8% 0.4% 5.6% 0.9% 0.8% 1.2% VAT hike in 2014e will cost EUR54m to the company except if it can pass it to customers VAT hike will cost EUR5-6m in FY14e, roughly offsetting the benefits from tax credits VAT should have very limited impact on Edenred, which is a B2B company VAT hike to be limited as France is a fixed-price market so additional cost should be borne by both employers and employees

439 153 5.8% 265 123 8.9% 548 235 8.6% 1,714 388 5.1% 741 134 7.2% 3,472 2,446 8.2% 8,133 1,489 10.6% 1,128 153 8.3% 4,537 837 11.4% 325 150 14.7% 1,939 308 344 9,158 2,110 1,841 545 337 6.5% 34 2.2% 281 22.5% 618 3.1% 633 452 116 2.9% 2.5% 9.5%

17% 2,260 373 19% 1,316 252 20% 684 137 23% 2,573 583 40% 168 67 12% 16,031 1,875 58% 701 407 61% 203 124 62% 585 363 32% 904 289 1,814 679 677 139 132 36 2,999 1,374 366 5,359 217 3,109 211 94

35% 37.4% 45% 20.5% 11% 27.5% 15% 45.8% 25% 9.8% 17% 10.2% 17% 44.7%

21 50% 10.7 5 50% 2.6 1 100% 1.1 49 70% 34.3 8 5 2 70% 70% 70% 5.9 3.5 1.4

Business Services Adecco SWI 21568 Randstad Eurofins Mid Caps Capital Goods Lisi Nexans Rexel Haulotte Manitou Saft Group Utilities Derichebourg Lectra Mersen Support Services Teleperformance Transport Norbert Dentressangle Food & HPC LDC Bonduelle Consumer Goods SEB Beneteau Trigano NET 18,027 FRA 1,220

55% 38.5% 55% 38.5% 50% 35.0%

FRA 1,176 FRA 7,973 FRA 14,593 FRA 430 FRA 1284 FRA 721 FRA 3818 FRA 217.5 FRA 874.4 FRA FRA FRA FRA FRA FRA FRA

464 1,263 1,652 138 180 210 1061 89.3 253.6

73 131 475 21 31 47 80.3 17.5 45 158 76.2 65 77.8 233 17 20

6.2% 1.6% 3.3% 4.9% 2.4% 6.5% 2.1% 8.0% 5.1% 6.1% 1.9% 2.2% 3.7% 5.3% 1.8% 2.3%

34% 39.5% 10% 15.8% 17% 11.3% 20% 32.1% 35% 14.0% 25% 29.1% 58% 27.8% 10% 41.1% 10% 29.0% 10% 70.0% 56% 31.4% 94% 21.6% 35% 18.5% 15.6% 42% 28.1% 55% 18.2%

400 797 2,481 86 449 180 2,214 22 87 246 2,229 2,809 740 0 389 482

158 126 281 28 63 53 499 32 58 172 700 605 137 375 208 87

66% 66% 66% 70% 80% 80%

46.2% 46.2% 46.2% 49.0% 56.0% 56.0%

73 58 130 14 35 29 314 10 27 108 417 318 67 173 116 49

4 50% 4 50% 8 50% 1 100% 2 100% 2 100% 19 1 2 7 25 19 4 10 7 3

2.2 1.8 3.9 0.8 2.1 1.8

3.0% 1.3% 0.8% 3.9% 6.8% 3.8% Projects based contracts ie no price pressure

90% 63.0% 45% 31.5% 66% 46.2% 90% 63.0% 85% 59.5% 75% 52.5% 70% 49.0% 66% 46.2% 80% 56.0% 80% 56.0%

70% 13.2 16.4% 90% 0.5 3.1% 80% 1.3 2.9% 70% 4.6 2.9%

2586 1810.2 3980 2988 2113 4411 925 876 1250 644 390 690 260 159

50% 12.5 16.4% 50% 50% 80% 60% 70% 9.5 14.7% 2.0 2.6% 8.3 3.6% 4 24.7% VAT hike in 2014 will have to be absorbed or shared with distributors (from 19.6% to 20%) 2.1 10.3% VAT hike in 2014 to be partially absorbed by Trigano

17

IMPACT OF THE NEW FRENCH TAX LAW 17 December 2012

Nursing Homes Korian FRA Medica FRA Orpea FRA Leisure and services Pierre & FRA vacances CDA FRA Property Nexity Media GL events Utilities April Euler Hermes FRA

1239 849 1703 1425 713 2484

584 384 849 346 215 372.6 215.4 196 460

41 61 116 12 45 97.7 36.4

3.3% 7.2% 6.8% 0.8% 6.3% 3.9% 4.1%

68% 47.1% 90% 45.2% 85% 49.9% 50% 24.3% 77% 30.2% 97% 15.0% 46% 24.0% 80% 23.9% 25% 24.7%

843 764 1,448 713 549 2,409 413 656 466

397 346 722 173 166 361 99 157 115

75% 52.5% 75% 52.5% 66% 46.2% 66% 46.2% 66% 46.2% 50% 35.0% 66% 46.2% 66% 46% 60% 42.0%

208 181 333 80 76 126 46 72 48

13 11 20 5 5 8 3 -

50% 6.3 15.3% VAT rate reduction to 5% should benefit to the organic growth (for new residents) 50% 5.4 8.9% VAT rate reduction to 5% should benefit to the organic growth (for new residents) 50% 10.0 8.6% VAT rate reduction to 5% should benefit to the organic growth (for new residents) 0% 0% 50% 70% 50% 50% 0.0 0.0 3.8 1.9 0.0 0.0 0.0% Benefits to be eaten up by the VAT hike that should have a EUR11mimpact 0.0% VAT hike in FY14e would account for roughly EUR16m that would have to passed on to customers. No price competition on ski lift, more intense on leisure parcs. 3.9% 5.3% 0.0% VAT N/A specific taxation for insurance products 0.0% VAT N/A specific taxation for insurance products

FRA 897.4 FRA FRA 820 1862

74 9.0% 308 16.5%

Source: Exane BNP Paribas estimates

18

IMPACT OF THE NEW FRENCH TAX LAW 17 December 2012

Analyst location
As per contact details, analysts are based in the following locations: London, UK for telephone numbers commencing +44; Paris, France +33; Brussels, Belgium +32; Frankfurt, Germany +49; Geneva, Switzerland +41; Madrid, Spain +34; Milan, Italy +39; New York, USA +1; Singapore +65; Stockholm, Sweden +46

Rating definitions
Stock Rating (vs Sector) Outperform: The stock is expected to outperform the industry large-cap coverage universe over a 12-month investment horizon. Neutral: The stock is expected to perform in line with the industry large-cap coverage universe over a 12-month investment horizon. Underperform: The stock is expected to underperform the industry large-cap coverage universe over a 12-month investment horizon. Under review: The rating of the stock has been placed under review for following important news. Any possible change will be confirmed as soon as possible. Sector Rating (vs Market) Outperform: The sector is expected to outperform the STOXX Europe 50 over a 12-month investment horizon. Neutral: The sector is expected to perform in line with the STOXX Europe 50 over a 12-month investment horizon. Underperform: The sector is expected to underperform the STOXX Europe 50 over a 12-month investment horizon. Key ideas BUY: The stock is expected to deliver an absolute return in excess of 30% over the next two years. Exane BNP Paribas Key Ideas Buy List comprises selected stocks that meet this criterion.

Distribution of Exane BNP Paribas equity recommendations

As at 02/10/2012 Exane BNP Paribas covered 615 stocks. The stocks that, for regulatory reasons, are not accorded a rating by Exane BNP Paribas are excluded from these statistics. For regulatory reasons, our ratings of Outperform, Neutral and Underperform correspond respectively to Buy, Hold and Sell; the underlying signification is, however, different as our ratings are relative to the sector. 40% of stocks covered by Exane BNP Paribas were rated Outperform. During the last 12 months, Exane acted as distributor for BNP Paribas on the 1% of stocks with this rating for which BNP Paribas acted as manager or co-manager on a public offering. BNP Paribas provided investment banking services to 6% of the companies accorded this rating*. 37% of stocks covered by Exane BNP Paribas were rated Neutral. During the last 12 months, Exane acted as distributor for BNP Paribas on the 0% of stocks with this rating for which BNP Paribas acted as manager or co-manager on a public offering. BNP Paribas provided investment banking services to 4% of the companies accorded this rating*. 23% of stocks covered by Exane BNP Paribas were rated Underperform. During the last 12 months, Exane acted as distributor for BNP Paribas on the 0% of stocks with this rating for which BNP Paribas acted as manager or co-manager on a public offering. BNP Paribas provided investment banking services to 4% of the companies accorded this rating*. * Exane is independent from BNP Paribas. Nevertheless, in order to maintain absolute transparency, we include in this category transactions carried out by BNP Paribas independently from Exane. For the purpose of clarity, we have excluded fixed income transactions carried out by BNP Paribas.

Commitment of transparency on potential conflicts of interest

Complete disclosures, please see www.exane.com/compliance

Exane
Pursuant to Directive 2003/125/CE and NASD Rule 2711(h) Unless specified, Exane is unaware of significant conflicts of interest with companies mentioned in this report.
Company Investment banking Distributor Liquidity provider Corporate links Analyst's personal interest Equity stake US Law Equity stake French Law Amended after disclosure to company
NO NO NO NO NO NO NO NO NO NO NO NO

Additional material conflicts

Altran Technologies April Derichebourg Edenred Eiffage Ipsos Lectra M6 Mersen Norbert Dentressangle PagesJaunes Groupe Saft Groupe

NO NO NO NO NO NO NO NO NO NO NO NO

NO NO NO NO NO NO NO NO NO NO NO NO

YES YES YES YES YES YES YES YES YES YES YES YES

NO NO NO NO NO NO NO NO NO NO NO NO

NO NO NO NO NO NO NO NO NO NO NO NO

NO NO NO NO NO NO NO NO NO NO NO NO

NO NO NO NO NO NO NO NO NO NO NO NO

NO NO NO NO NO NO NO NO NO NO NO NO

Source: Exane See www.exane.com/disclosureequitiesuk for details

BNP Paribas
Exane is independent of BNP Paribas (BNPP) and the agreement between the two companies is structured to guarantee the independence of Exane's research, published under the brand name Exane BNP Paribas. Nevertheless, to respect a principle of transparency, we separately identify potential conflicts of interest with BNPP regarding the company/(ies) covered by this research document.
Potential conflicts of interest: Capgemini: As of 30/11/2012 BNPP owns 1,01% of CAP GEMINI Carrefour: As of 30/11/2012 BNPP owns 2,36% of CARREFOUR SA GDF Suez: As of 30/11/2012 BNPP owns 1,37% of GDF SUEZ Korian: BNPP is acting as advisor to Korian in its project of take over bid on Curanum AG Nexans: As of 30/11/2012 BNPP owns 1,05% of NEXANS SA Publicis Groupe: As of 30/11/2012 BNPP owns 1,73% of PUBLICIS GROUPE SEB: As of 30/11/2012 BNPP owns 1,32% of SEB SA Suez Environnement: BNP Paribas Fortis acted as joint Bookrunner for the GBL exchangeable bonds due Sept 21, 2015 for existing ordinary shares of SUEZ ENVIRONNEMENT (09/2012)

Source: BNP Paribas This document has been modified since its initial post on web to add Jean-Christophe Liaubets name as an author

19

IMPACT OF THE NEW FRENCH TAX LAW 17 December 2012

20

IMPACT OF THE NEW FRENCH TAX LAW 17 December 2012

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