Groups Results 1H2015 1H2015 Highlights The Group continued to - - PowerPoint PPT Presentation

Group’s Results – 1H2015

2

1H2015 Highlights

The Group continued to develop its business with Total Customers’ Deposits (Direct Deposits, AUM, Insurance Reserves and AUC) growing by more than €4.5 billion year on year (+8.7%), of which €2.7 billion only in the last semester (+5.0% on 2014 year-end figures) Strong increase also on Loans to Customers (+€1.1 billion year on year: +5.3%), which were back to 2014 year-end value, after the usual seasonality that penalized the first quarter

• f the year

The quality and the sustainability of the growth is confirmed by: The LtD ratio* at 1.03, despite loan growth, vs.1.06 at the end of 2014 86% of corporate loans to customers belonging to the best 4 rating classes (new historical peak) Net Impaired Loans on Total Loans at 3.7% continuously decreasing since 2013 CET1 ratio at 11,4%** (11.6% if considering the Credem consolidated perimeter

• nly) vs. 11.1% at the end of 2014 (11.1% at Credem level)

Despite current growth strategy, Profit for the Period was €119.4 million, up by more than 20% YoY

(*) Loans to Customers are net of Repos with Institutional sand Loans to Group’s SPVs . Deposits include Bonds issued to Institutional (**) Capital ratio related to the new group’s statutory perimeter that includes Credemholding

3

Income Statement

• Operating Income net of Trading and Performance Fees Performance was close to 2014 figures

thank to a Net Fee strong improvement which almost offset the securities portfolio’s lower contribution, due to a diminished exposure to Italian government bonds, and to interest rates at historical low

• Thank also to Trading performance, the Profit for the Period is up by more than 20% year on year

Euro, million 2Q14 1Q15 2Q15 % vs. 2Q14 % vs. 1Q15 1H14 1H15 % YoY Operating Income 256.0 353.1 257.9 0.7%

• 27.0%

542.7 611.1 12.6% Operating Income net of Trading and Performance Fees 249.6 253.0 239.8

• 3.9%
• 5.2%

497.1 492.8

• 0.9%

Operating Costs

• 164.2
• 175.5
• 173.7

5.8%

• 1.0%
• 330.9
• 349.2

5.5% D&A

• 9.8
• 9.5
• 10.0

2.0% 5,3%

• 19.0
• 19,5

2,6% Operating Profit 82.0 168.1 74.2

• 9.5%
• 55,9%

192.8 242.3 25.7% Net value Adj. to Loans

• 17.6
• 36.8
• 27.3

55.1%

• 25.8%
• 31.1
• 64.1
• 106.1%

Provision for Risks and Charges

• 1.6
• 9.4

0.0 n.a. n.a.

• 3.9
• 9.4

n.a.

• Extraord. Income/Expenses

2.0 5.4

• 2.6

n.a. n.a. 0.4 3.1 n.a. Profit Before Tax 64.8 127.3 44.3

• 31.6%
• 65.2%

158.2 171.6 8.5% Income Taxes/Minorities

• 22.8
• 43.3
• 8.9
• 61.0%
• 79.4%
• 59.2
• 52.2
• 11.8%

Profit for the Period 42.0 84.0 35.4

• 15.7%
• 57.9%

99.0 119.4 20.6%

0.30% 0.31% 0.17% 0.08% 0.05% 0.01% 196 159 154 146 116 127 50 100 150 200 250 0.0% 0.1% 0.2% 0.3% 0.4% Euribor 3 months Spread BTP vs. Bund (10 years)

123.6 122.2 125.6 119.4 106.2 103.8 70 80 90 100 110 120 130 1Q14 2Q14 3Q14 4Q14 1Q15 2Q15

4 Euro, million

Interest Margin (1/3)

Interest Margin is down 2% QoQ as a result of a reverted increasing competition on lending which, along with Euribor rates trend, penalized Credem’s average loans’ rates, and the full impact of the €200 million subordinated debt issuance performed in March Actions finalized to funding cost reduction continued, even if they weren’t able to fully

• ffset average loan rate decrease

Quarterly Interest Margin Quarterly Customers’ Spread

(Credem SpA management reporting)

Euribor and BTP/Bund: Spread Evolution

bps 2.38 2.36 2.22 2.11 2.14 2.12 3.38 3.31 3.12 2.96 2.92 2.76 1.00 0.94 0.90 0.85 0.78 0.64 0.0 0.5 1.0 1.5 2.0 2.5 3.0 3.5 4.0 1Q14 2Q14 3Q14 4Q14 1Q15 2Q15 spread average loan rate average deposit rate %

1.29 1.22 0.92 0.85 0.78 0.64 2.09 1.96 1.68 1.53 1.40 1.36

• 0.50

1.00 1.50 2.00 2.50 2012 2013 2014 4Q14 1Q15 2Q15 Credem: Average deposit rate Industry: Average deposit rate 3.52 3.33 3.18 2.96 2.92 2.76 3.96 3.79 3.79 3.65 3.59 3.45

• 0.50

1.00 1.50 2.00 2.50 3.00 3.50 4.00 4.50 2012 2013 2014 4Q14 1Q15 2Q15 Credem: Average loan rate Industry: Average loan rate 2.23 2.11 2.26 2.11 2.14 2.12 1.87 1.82 2.10 2.12 2.19 2.09 0.00 0.50 1.00 1.50 2.00 2.50 2012 2013 2014 4Q14 1Q15 2Q15 Credem: spread Industry: spread 5 %

The Group commercial policy, more oriented to increase volumes, brought to a differential with the average industry loans’ rate of ~68/69 bps in comparison with ~45 bps seen in the past. On the other hand, a decrease in cost of funding higher than the industry (the gap moves from 63 bps to 71 bps), even if was not enough to improve the level

• f

the customers’ spread, allowed to a slight improvement towards industry's customers spread

0.80% 0.74% 0.76% %

• 0.46%
• 0.44%

0.29% 0.36%

• 0.61%

0.68% 0.16% %

• 0.69%
• 0.02%
• 0.67%

0.63% 0.03%

• 0.68%

0.71%

• 0.05%

Interest Margin (2/3)

Evolution of Average Loan Rate

(Credem SpA management reporting)

Evolution of Average Deposit Rate

(Credem SpA management reporting)

Evolution of Average Customers’ Spread

(Credem SpA management reporting)

Source: ABI Monthly Outlook July 2015

13% 15% 17% 14% 10% 11% 10% 9% 16% 18% 60% 57% 62% 56% 13% 20% 0% 10% 20% 30% 40% 50% 60% 70% 80% 90% 100% 2013 2014 1Q15 1H15

Other non-Italy

• Gov. Other/ EFSF/ EIB

Other Italy

• Gov. Italy

6

In 2Q15 there was a fine tuning on the Banking Group securities’ portfolio exposure to «Italy», moved from 23% as of the end March 2015 to 29%, also benefitting from the volatility

• n

European markets that drove to a rise

• n yields

However, the breakdown

• f

the portfolio doesn’t change significantly, with 57% invested in «core» European countries and supranational securities

5,902 6,219 6,154 6,743

Interest Margin (3/3)

Securities’ Portfolio Breakdown

(Credem Group management reporting)

Banking Group securities’ portfolio (€ mln)

205 20 39 9 218 25 45 9 246 32 113 10 50 100 150 200 250 300

1H13 1H14 1H15

52 51.9 51.9 54.9 58.1 61.2 60.9 61.8 68.5 74.1 10.5 9.9 7.3 9.7 11.8 13.4 11.6 9.7 24 7.6 51.3 49.2 49.9 52.5 49.5 47.9 48.4 52.5 49.3 48.9 4 4.5 4.5 5.6 4.5 4.9 3.8 4.3 5 5.4 27.6 11.8 5 3.4 39.1 5.4 13.2 3.4 97.1 15.9 10.7 10 3 2.2 50 100 150 200 250 1Q13 2Q13 3Q13 4Q13 1Q14 2Q14 3Q14 4Q14 1Q15 2Q15 € Million Performance Fees Trading Other Banking Services Comm. Insurance Income Management & Brokerage Comm.

7

Non Interest Margin

Non Interest Margin, net of «non recurrent items» continued to grow progressively Over the last two years, with the Interest Margin penalized by rates decrease, the Group was able to increase Net fees and commissions by 20% and insurance revenues by 55%

117.8 115.5 113.6 122.7 123.9 145,8 127,7 118,7 136,8 163,1 133,8 127.4 138,9 124.7 141,7 128.3 146.8 246,9 136.0 154,1

Non Interst Margin: YoY Comparison

+20% vs. 1H13 +55% vs. 1H13

Non Interest Margin: Quarterly Evolution

NIM net of Trading and Perform. Fees

20,923 24,616 26,866 27,129 15,000 20,000 25,000 30,000 2013 2014 1Q15 2Q15

1% 1% 1% 39% 33% 26% 40% 45% 50% 20% 21% 23% 0% 20% 40% 60% 80% 100% 2013 2014 1H15 Money Market Bonds Balanced/ Flexible Equity 12% 9% 8% 49% 49% 44% 33% 35% 42% 6% 7% 7% 0% 20% 40% 60% 80% 100% 2013 2014 1H15 Money Market Bonds Balanced/ Flexible Equity

8

AUM and Insurance Reserves

Mutual Funds and SICAVs Breakdown by Asset Class (management reporting data) The growth of AUM fees has being driven by the continuous increase of AUM volumes, up by 30% since the end of 2013 and by 10% during the 1H15 Such trend is paired by a favorable «mix effect» with increasing volumes for those asset classes characterized by an higher risk profile and an higher profitability +30% AUM and Insurance Reserves Evolution Mutual Funds and SICAVs Breakdown by Asset Class (management reporting data)

1,0021,006 885 795 750 770 785 804 500 1,000 1,500 5,993 5,740 5,5445,5195,6045,609 5,7635,852 5,200 5,400 5,600 5,800 6,000 6,200 2008 2009 2010 2011 2012 2013 2014 1H15

113 113 109 122 121 117 54 52 48 45 55 57

50 100 150 200 1Q14 2Q14 3Q14 4Q14 1Q15 2Q15 Personnel costs Other administrative costs 158 217 272 359 353 394 381 200 400 600

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Operating Costs

Euro, Million

The quarterly Operating Costs evolution (+5.8% YoY,

• 1.0%

QoQ) rebates Credem Group investment strategy which is confirmed also by the growth of the headcount (+1.5% compared to 2014 year end) and volumes Networks 166.7 164.2 Employees Financial Advisers 156.8 167.1 175.5 173.7 Operating Costs: Quarterly Evolution Creacasa and Salary Backed Loans Agents

7,484 7,667 8,114 8,296 8,742 9,075 9,834 9,527 1,941 1,935 2,001 2,042 2,014 2,052 2,100 2,156 5,534 5,845 6,282 6,241 6,127 6,115 6,235 6,280 2,577 3,323 3,324 3,370 3,056 3,129 3,339 3,485 3,000 6,000 9,000 12,000 15,000 18,000 21,000 2009 2010 2011 2012 2013 1H14 2014 1H15

Short-Term Loans Leasing Residential Mortgage Other Loans

10

Loans went back to the 2014 year-end amount (+2.9% QoQ and +5.3% YoY) after the usual seasonality of the aggregate that had impacted the 1Q15 performance In the YoY comparison, it is quite remarkable the increase of all M/L Term aggregates (Leasing +2.7%, Residential Mortgages +0.7%, Other Long Term Loans +4.4%) Credit quality hit an historical peak with 86% of corporate loans to customers belonging to the top 4 rating classes

17,536

€ Mil.

18,770 19,721 19,949 17,536 18,884 20,643 19,938 19,938 20,372 21,508 21,695 20,372 21,448 19,995 21,499

Loans to Customers

Loans to Customers (net of Repos with Institutional and Loans to Group’s SPVs) Corporate Loans Distribution by Rating

(Credem SpA management reporting) Loans to Customers (B.S. – Line 70)

67% 73% 77% 77% 78% 84% 86% 50% 60% 70% 80% 90% 2009 2010 2011 2012 2013 2014 1H15

% of loans to corporate customers in top 4 rating classes

0.55% 0.45% 0.44% 0.43% 0.40% 0.40% 0.40% 0.3% 0.4% 0.4% 0.5% 0.5% 0.6% 0.6% dec. 2010 dec. 2011 dec. 2012 dec. 2013 dec. 2014 mar. 2015 may. 2015 MS on Gross NPLs 1.07% 1.16% 1.20% 1.28% 1.45% 1.40% 1.43% 1.0% 1.1% 1.2% 1.3% 1.4% 1.5% dec. 2010 dec. 2011 dec. 2012 dec. 2013 dec. 2014 mar. 2015 may. 2015 MS on performing loans 4.2% 2.2%

• 1.1%
• 3.9%
• 1.3%
• 0.6%

7.0% 5.1% 1.2%

• 0.1%

7.9% 5.3%

• 6.0%
• 4.0%
• 2.0%

0.0% 2.0% 4.0% 6.0% 8.0% 10.0% 2010 2011 2012 2013 2014 1H15

Industry Credem 11

Loans: Comparison with the Industry

Credem over- performance (∆ %)

2.8 2.9 2.2 5.9 3.8 1Q seasonality effect is evident looking at market shares evolution, which backed to grow in May, confirming last 4 year’s trend Credem Group’s outperformance compared with the industry was confirmed: in the 1H15 the difference in volumes’ growth amounted to almost 6% 9.2 Loans to Retail and Public Sectors Growth Rates Market shares on retail and corporate customers and small business (net of financial institutions)

(Credem SpA management reporting)

Source: ABI Monthly Outlook July 2015; Bankit data: data flows from “Matrice dei Conti Bankit “(Bastra1) since December 2011, Bankit Public database (Bollettino Bankit) until November 2011

2.10% 2.18% 2.15% 2.16% 2.22% 2.25% 2.00% 2.05% 2.10% 2.15% 2.20% 2.25% 2.30% 2010 2011 2012 2013 2014 1H15

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Residential Mortgages: Comparison with the Industry

While Residential Mortgages’ stock was up 0.7% on 2014 year-end and 2.7% year on year, inflows showed a significant improvement as they grew by almost 40% year on year Market shares are progressively improving, reaching the historical peak since 2008, 50% higher compared to the one on Total Loans Inflows: +38% Residential Mortgages Inflows

(Credem SpA management reporting)

Residential Mortgages’ Stock: Market Share

Source: ABI for market shares

4.39 4.40 4.55 4.56 4.27 4.39 4.33 4.29 4.1 4.2 4.3 4.4 4.5 4.6 2011 2012 2013 2014

Credem Industry*

4.43% 5.59% 4.53% 5.90% 1.21% 1.61% 1.41% 1.46% 0% 1% 2% 3% 4% 5% 6% 7% 2011 2012 2013 2014

Credem Industry*

13

The growth of Loans to customers and AUM is perfectly coherent with Credem customers’ base expansion that, in 2014, was 4 times higher than the Industry While the base of customers is expanding, also the quality of the relationship with clients is improving: over the last four years, Cross Selling has been steadily increasing, widening the gap with the industry Cross Selling Ratio - clients with a bank account

(Credem SpA management reporting)

(*) Data referred to the Panel ABI

112,800 new customers acquired in 2014, equal to 11.2% of the customers’ base as at the end of 2013 Number of Customers with a Current Account: Net Increase (%)

Retail Customers’ Evolution: Comparison with the Industry

1.14 1.14 1.10 1.06 1.03 1.00 1.05 1.10 1.15 2011 2012 2013 2014 2Q15

14 Euro, million

2012 2013 1H14 2014 1H15 Current/ Saving Accounts 13,066 13,625 13,686 15,335 15,696 CD and Other Deposits 256 260 308 333 456 Repos

• Deposits

13,322 13,885 13,994 15,668 16,152 Bonds

• Institutional
• Retail

4,149 879 3,270 4,187 1,131 3,056 4,349 1,381 2,968 4,718 2,105 2,613 4,633 2,300 2,333 Deposits & Retail Bonds 16,592 16,941 16,962 18,281 18,485 Insurance Reserves 2,617 3,236 3,921 4,409 5,127 Portfolio Management 3,747 3,766 4,258 4,481 5,061 Mutual Funds 2,944 3,051 3,279 3,420 3,999 SICAVs 5,047 5,314 5,935 5,882 6,142 Other and Third Parties products 4,478 5,556 6,050 6,425 6,800 AUM 16,216 17,687 19,522 20,208 22,002

The strong growth in 1H15 of AUM (+€1.8 billion; +8.9%) and Insurance Reserves (+€0.7 billion; +16,3%) took place without penalize Deposits and Retail Bonds that increased by €200 million (+1.1%) in the same period The Group has been able to paired AUM growth with the necessity to keep a good liquidity profile, also considering strong Loans strong growth: consequently LtD improved at 1.03 compared to 1.06 at the end of 2014 Loan to Deposit Ratio *

Deposits, Bonds and AUM

(*) Loans are net of Repo with Institutional and loans to Group SPVs, Deposits include bonds to Institutional

807.8 423.0 113.6 837.9 416.0 111.1 870.5 428.1 96.1 200 400 600 800 1000 Gross NPLs Gross Unlikely to pay Gross Past Due € Million 2014 1Q15 1H15

15

Credit Quality

3.7 9.2 1.9 0.5

• Gross Impaired Loans quarterly inflows

were confirmed at around €25 million

• Looking at the incidence of Impaired

Loans

• n

Total Loans, the Group continued to perform better than the Industry, with the differential enlarging steadily

3.9 9.5 1.9 0.5 3.9 10.1* 1.9 0.4

70 25 27 42 46 26 25

• 10

20 30 40 50 60 70 80 2009 2010 2011 2012 2013 2014 1H15

6.6 6.6 0,6 0.6

Gross Impaired Loans Quarterly Average Gross Impaired Loans’ Net Inflows (€, Million)**

% on Loans (Credem) % on Loans (Industry)

Source: ABI; internal calculation on Bank of Italy figures (*) Value at May 2015 (source: ABI Monthly Outlook) (**) 2014 amounts were calculated according to the following formula: (Gross Impaired Loans as at the end of the year, €1,334 million + NPLs disposed, €44 million – Gross Impaired Loans as at the end of the previous year, €1,285 million) divided by 4

16

Impaired Loans’ Coverage

Net Impaired Loans have been remaining substantially stable,

• ver

the last 6 quarters. Consequently Net Impaired Loans’ Ratio, given the growth of loans’ volumes has been decreasing significantly in the same period Coverage ratios remained stable: the NPL’s Coverage was above 59% and the Impaired Loans’ Coverage was close to 43%

Euro, Million

2013 1Q14 1H14 9M14 2014 1Q15 1H15 NPLs 318.9 327.1 337.4 334.4 341.7 355.6 Unlikely to Pay 349.6 365.1 355.9 362.8 348.9 359.4 Past-due 108.3 106.5 116.9 100.2 96.6 82.6 Total Net Impaired Loans 788.4 776.8 798.7 810.2 797.4 787.2 797.6 Net Impaired Loans’ Ratio* 4.0% 4.0% 3.9% 4.0% 3.7% 3.8% 3.7%

Net Impaired Loans

57,4 56,0 55,4 58,2 58,6 59,1 50 52 54 56 58 60 2010 2011 2012 2013 2014 1H15 36,3 35,8 35,0 38,7 40,7 42,8 30 32 34 36 38 40 42 44 2010 2011 2012 2013 2014 1H15

* Ratio calculated on Loans to Customers net of Repos with Institutional and Loans to Group’s SPVs

Net Impaired Loans NPL’s Coverage (%) Impaired Loans’ Coverage (%)

59 27 31 52 55 70 60 47 37 39 41 45 39 39

• 10

20 30 40 50 60 70 2013 1Q14 1H14 9M14 2014 1Q15 1H15 Cost of risk Cost of risk (net of "non reccurrent" items)

21 31 70 7 19 20 35 35 62 34 27 44 59 55 10 20 30 40 50 60 70 80 20012002200320042005200620072008200920102011201220132014 17

Cost of Risk (bps)

Cost of Risk

After the non recurrent provisioning adopted in the 1Q15 (to deliberately increase the coverage of Unlikely to Pay and Past-Due), the Cost of Risk in 1H15 decreased by 10 bps, close to 2014 year-end figure At a normalized level the cost of risk is in line with 2014, at 39 bps: in 2Q15 were accounted €6 million provisioning to increase the coverage of performing loans

Crack Parmalat

Cost of Risk: history (bps)

2,300 2,935 443 500 735 15,802 2,472 4,942 2,405 2,300 3,229 603

• 1,750

16,152 2,333 5,127 2,376 5,000 10,000 15,000 20,000 1Q15 1H15

194 8 5,952 4,696 373 21,347 153 8 6,582 5,153 353 21,499 7,000 14,000 21,000

• Fin. Assets

held for trading*

• Fin. Assets at

fair value*

• Fin. Assets
• av. for sale*
• Fin. Assets

(insurance companies)** Loans to banks Loans to customers 1Q15 1H15

Equity

18

Clientele

On the liabilities’ side, Customers’ Deposits and TLTRO funding grew, providing stability to the funding structure

• n

the medium term Short term funding («Other - Institutional» aggregate) increased marginally (+€300 million) Looking at the assets’ side, Loans went up (even if the growth is less visible taking into consideration that 1Q15 accounting figure includes repos for €500 million that were zero in 1H15), as well as Banking Group securities’ portfolio (+€600 million) and insurance assets (+€450 million)

Assets & Liabilities

Assets (Euro, Million) Liabilities (Euro, Million)

(*) Figures based on internal calculation

Institutional

19

NSFR LCR Both ratios showed levels remarkably above future thresholds set by the regulation, with NSFR increasing further compared to 2014 ECB eligible securities at the end of 1H15 were €2.4 billion (about 7% of Total Assets)

Source: internal calculation as at June, 30 2015

149% 179% 131% 50% 70% 90% 110% 130% 150% 170% 190% 2013 2014 1H15 124% 116% 124% 50% 60% 70% 80% 90% 100% 110% 120% 130% 2013 2014 1H15E

Liquidity position

1,860.8 1,915.8 1,969.1 2,189.0 630 844 500 1,000 1,500 2,000 2,500 2014 1H15 1,863.8 1,952.3 1,958.2 2,233.2 620 888 500 1,000 1,500 2,000 2,500 2014 1H15

Common Equity Tier 1 (CET1) Tier Total Capital Excess Capital

20

Capital Ratios

Credemholding Consolidated Capital Ratios In front of lending volumes substantially stable, capital ratios continued to strengthen moving from 11.1% at FY2014, to 11.3% at 1Q15, and to 11.4% at 1H15 (Credemholding perimeter) Notice that the larger difference between «Phased in» and «Fully phased» ratios at Credemholding level, compared to Credem level, is due to the progressive deduction of the equity related to minorities (Credemholding owns a 77% stake of Credem capital) 11.1% 11.8% 11.4% 13.0%

Fully phased ratios: CET1 at 10.5%; Tier Total 12.5%

Credem Consolidated Capital Ratios 11.6% 13.3% 11.1% 11.7%

Fully phased ratios: CET1 at 11.6%; Tier Total 13.3%)

21

Disclaimer and Contacts

Investor Relations Team

Daniele Morlini – Head of IR dmorlini@credem.it +39 0522582785 Paolo Pratissoli ppratissoli@credem.it +39 0522583029

The manager responsible for preparing the company’s financial reports Mr. Paolo Tommasini of Credito Emiliano S.p.A., declares, pursuant to paragraph 2 of Article 154 bis of the Consolidated Law on Finance, that the accounting information contained in this presentation corresponds to the document results, books and accounting records. ***

This presentation includes certain forward looking statements, projections, objectives and estimates reflecting the current views of the management of the Company with respect to future events. Forward looking statements, projections, objectives, estimates and forecasts are generally identifiable by the use of the words “may,” “will,” “should,” “plan,” “expect,” “anticipate,” “estimate,” “believe,” “intend,” “project,” “goal” or “target” or the negative of these words or other variations on these words or comparable terminology. These forward-looking statements include, but are not limited to, all statements other than statements of historical facts, including, without limitation, those regarding the Company’s future financial position and results of

• perations, strategy, plans, objectives, goals and targets and future developments in the markets where the Company participates or is seeking to
• participate. Due to such uncertainties and risks, readers are cautioned not to place undue reliance on such forward-looking statements as a prediction
• f actual results. The Group’s ability to achieve its projected objectives or results is dependent on many factors which are outside management’s
• control. Actual results may differ materially from (and be more negative than) those projected or implied in the forward-looking statements. Such

forward-looking information involves risks and uncertainties that could significantly affect expected results and is based on certain key assumptions. All forward-looking statements included herein are based on information available to the Company as of the date hereof. The Company undertakes no

• bligation to update publicly or revise any forward-looking statement, whether as a result of new information, future events or otherwise, except as may

be required by applicable law. All subsequent written and oral forward-looking statements attributable to the Company or persons acting on its behalf are expressly qualified in their entirety by these cautionary statements.