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									                                                   Irish Equity Morning Note

                                                                                                                                   October 3, 2011
     Equity Desk: +353 1 670 2233
     Equity Research: +353 1 611 5611                                                                 Market                       Latest   1d%     6m%
                                                                                                      S&P 500 INDEX                1152.7   -0.7    -15.1
                                                                                                      NASDAQ COMPOSITE INDEX       2467.6   -0.5    -13.4
                                                                                                      FTSEUROFIRST 300 INDEX        923.4   -1.1    -19.1
       Today’s News                                                                                   FTSE 100 INDEX               5101.7   -1.8    -14.7
                                                                                                      NIKKEI 225                   8700.3    0.0    -11.9
                                                                                                      SHANGHAI A SHARES            2581.4   -0.3    -21.1
               Economic Update                                                                        IRISH OVERALL INDEX          2503.2   -0.3    -14.9
               NCB September 2011 PMI
                                                                                                      Forex                        Latest   1d%     6m%
                                                                                                      Euro/$                       1.3453   -0.9     -6.3
               Kerry Group (€26.20) – BUY                                                             Euro/Stg
               Denmark imposes “fat tax”                                                              $/Yen                         77.08    0.1     9.0

                                                                                                      Bond Yields                  Latest   1d bp   6m bp
               Paddy Power (€38.50) – HOLD                                                            US 10yr                       1.90     -1.7   -154.5
               Light at the end of the tunnel for Full Tilt Poker as French tycoon looks to           German 10yr                   1.85     -3.2   -151.7
               acquire                                                                                UK 10yr                       2.43     -3.2   -151.7
                                                                                                      Japanese 10yr                 1.02     -0.5    -20.1
                                                                                                      Irish 10yr                    7.64     5.5    -246.5
                                                                                                      Spain 10yr                    5.14     4.0      -7.1
                                                                                                      Irish/German 10yr Spread      5.79     8.7     -94.8
                                                                                                      Spain/German 10yr Spread      3.28     7.2    144.6

                                                                                                      Corporate Bond Yields        Latest   1d%     6m%
                                                                                                      Moody's AAA Indices           4.01    -2.2    -22.6
                                                                                                      Moody's BAA Indices           5.29    -1.7    -13.1

                                                                                                      US Corporate Bond Spreads    Latest   1d%     6m%
                                                                                                      (over US 10yr Treasury)
                                                                                                      Moody's AAA Indices           2.11    -2.7    -75.7
                                                                                                      Moody's BAA Indices           3.39    -1.7    -64.6

                                                                                                      Official CB Interest Rates   Latest   1d%     6m%
                                                                                                      ECB Rate                     1.500     0.0    50.0
                                                                                                      UK Base Rate                 0.500     0.0     0.0
                                                                                                      US Fed Funds                 0.250     0.0     0.0
       Disclosures begin on page 4                                                                    JPY Rate                     0.100     0.0     0.0

                                                                                                      Money Market Rates           Latest   1d%     6m%
                                                                                                      Euribor EUR 3M               1.554     0.3    26.2
                                                                                                      Libor GBP 3M                 0.953     0.3    16.7
                                                                                                      Libor USD 3M                 0.374     0.6    22.9

                                                                                                      Money Market Spreads         Latest   1d%     6m%
                                                                                                      (over Official CB Rates)
                                                                                                      Euribor EUR 3M Spread        0.054    -7.4    -76.6
                                                                                                      Libor GBP 3M Spread          0.453    -0.7     43.1
                                                                                                      Libor USD 3M Spread          0.124    -1.8    128.1

                                                                                                      Commodities                  Latest   1d%     6m%
                                                                                                      WTI Crude Future              77.8    -1.4    -28.9
                                                                                                      Gold                          1633     0.3     14.5
                                                                                                      CRB US Spot Foodstuff         460     -1.4     -7.6
                                                                                                      CRB US Spot Metals            861     -0.8    -20.5
                                                                                                      Baltic Dry Index              1899    -0.7     24.1

                                                                                                      Upcoming Events…..
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Distributed by the members of ESN       (see last page of this report)                                            on Bloomberg: “ESNR” <go>

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                                                                     Morning News & Views

Economic Update                                                                                                                          Ireland/Economy

                                                               •     NCB September 2011 PMI
                                                               •     The NCB PMI, a composite index, dipped lower in September (47.3 from 49.7). The
                                                                     output component contracted this month unlike last month when it increased despite
                                                                     the fall in the composite index (49.8 from 52.4. New orders fell sharply on the month
                                                                     to reach 45.8 from 47.7, with new export orders falling for the first time in 11 months
                                                                     (49.2 from 53.5). These figures highlight the slowdown in the global economy over
                                                                     the last couple of months. We had already pencilled in a slowdown in our Irish 2011
                                                                     GDP and expect it to contract marginally, unlike the consensus who expect
                                                                     expansion. We still, however, expect Ireland to hit its EU/IMF deficit targets despite
                                                                     this slower growth.
                                                                                                        Brian Devine +353 1 611 5847 brian.devine@ncb.ie

Kerry Group                                    €26.20          BUY                                                              Ireland/Food & Beverage

 Key financials (EUR )         12/10    12 /11 e   12/12e
                                                               •     Denmark imposes “fat tax”
Sale s (m )                     4,960    5 ,34 1     5,599
EBITDA (m)                        581       62 5       654
EBITDA mar gin                1 1.7%    11.7%      1 1.7 %
                                                               •     The Facts: Denmark has imposed a tax on saturated fat in food products. The tax
EBIT (m )                         454       48 1       502           amounts to 16 DKK (c.€2.11) per kilogram of saturated fat content in a product.
EBIT m argin                   9.2%      9.0%       9.0 %
Net Pr ofit (adj.)(m)            337       37 0       400      •     Our Analysis: The tax will add c.€0.10 to the price of a burger and €0.29 to a small
ROC E                         11.6%     1 1.9 %    12.1%             pack of butter. This tax is the latest in a number of its kind introduced in Europe to
Net debt/(c ash) (m)           1,112       91 7       673
Net Debt/Equity                  0.7        0.5        0.3
                                                                     encourage healthier eating; Denmark already has a tax on high sugar content foods
Debt/EBITD A                     1 .9       1.5        1 .0          while Hungary introduced a tax on high sugar, salt, carbohydrate and caffeine
Int. cover(EBITDA/Fin. int)      9 .6      12.9       18 .3          content products earlier this year. In addition, France proposes to quadruple the VAT
EV/Sales                         1 .1       1.1        1 .0
EV/EBITDA                        9 .7       9.0        8 .2
                                                                     rate on drinks with added sugar from January 1.
EV/EBITDA (adj.)                 9 .7       9.0        8 .2
EV/EBIT                         12 .4      11.7       10 .7    •     Conclusion & Action: Ingredients companies such as Kerry Group, that can help
P/E (adj.)                      13 .0      12.4       11 .5          food manufacturers reduce the fat and sugar content of their products, have been
P/BV                             2 .7       2.4         2 .1         benefiting from increased demand for healthier products. The introduction and threat
OpFC F yield                   9.5%      9.8%      1 0.5 %
Div idend yield                1.1%      1.2%       1.3 %            of introduction of these health taxes is likely to speed up the move by food
EPS (adj.)                      1.92       2.1 1     2.28            manufacturers to develop healthier products and we believe Kerry is likely to benefit
BVPS                            9.27     1 1.0 9    12.77
DPS                             0.29       0.3 2     0.35
                                                                     from this trend. Kerry trades on 12.4x our 2011E earnings and 9.0x 2011E
                                                                     EV/EBITDA and we rate the stock BUY.

                                                                                             Darren Greenfield +353 1 611 5918 darren.greenfield@ncb.ie

  NCB Stockbrokers Ltd is regulated by the Central Bank of Ireland. NCB Stockbrokers Ltd is a member of the Irish Stock Exchange and the London
  Stock Exchange
                                                                     Morning News & Views

Paddy Power                                     €38.50           HOLD                                                                       Ireland/Gaming

 Key financials (EUR )
Sale s (m )
                                          12 /11 e
                                           4 ,46 7
                                                                 •   Light at the end of the tunnel for Full Tilt Poker as French
EBITDA (m)                        110         12 4      138          tycoon looks to acquire
EBITDA mar gin                  2.9%       2.8%       2.8 %
EBIT (m )                         104         11 2      126      •   The Facts: It has been reported that French business tycoon Bernard Tapie’s
EBIT m argin                    2.7%       2.5%       2.5 %
                                                                     investment firm has agreed to acquire the business and assets of troubled online
Net Pr ofit (adj.)(m)              83          94       104
ROC E                         106.8%      6 8.2 %    85.4%           gambling company Full Tilt Poker.
Net debt/(c ash) (m)            (156 )     (16 1)     (235)
Net Debt/Equity                  -0.6        -0.5       -0.7     •   Our Analysis: Full Tilt has not been far from the spotlight of late, thanks to
Debt/EBITD A                      -1 .4       -1.3       -1 .7       allegations that the Internet gambling site was operating an illegal $440m Ponzi
Int. cover(EBITDA/Fin. int)   (777 .6 )    (83.8)    (100 .7)                                                 th
EV/Sales                           0 .3        0.4        0 .3
                                                                     scheme, to say nothing of the April 15 indictment of key principals of Full Tilt Poker
EV/EBITDA                        11 .9       13.0       11 .7        with a list of offences including bank fraud, money laundering and illegal gambling.
EV/EBITDA (adj.)                 11 .9       13.0       11 .7
EV/EBIT                          12 .6       14.4       12 .9    •   With Full Tilt's state of the art software platform and its significant level of brand
P/E (adj.)                       17 .9       20.0       18 .1
                                                                     awareness, one can easily see Groupe Bernard Tapie's rationale for taking a closer
P/BV                              6 .5        6.2        5 .2
OpFC F yield                  1 1.0%       8.1%       8.5 %          look at a potential acquisition. There are, however, a number of hurdles facing any
Div idend yield                 1.7%       2.0%       2.1 %          potential revival of the stricken poker site, including the favourable resolution of all
EPS (adj.)                       1.72       1.9 3      2.13
                                                                     outstanding legal issues and the repayment of former players' funds, believed to be in
BVPS                             4.74       6.2 3      7.40
DPS                              0.64       0.7 6      0.80          excess of $300m.
                                                                 •   While this news may be seen as a glimmer of hope for Full Tilt Poker, it is by no
                                                                     means out of the woods yet. If successful, the Managing Director of Groupe Bernard
                                                                     Tapie hopes to have the poker site back up and running by January 2012 - a tall
                                                                     order in our view.
                                                                 •   Conclusion & Action: This latest development will be welcomed by Full Tilt’s
                                                                     customers who will look to seize the opportunity to withdraw their funds from frozen
                                                                     online accounts. While significant issues remain before any deal can be agreed,
                                                                     there may well be a future for Full Tilt if the rejuvenation of the well known brand is
                                                                     handled carefully.

                                                                                 Gaming Specialist Sales +353 1 611 5839 gaming.specialistsales@ncb.ie

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    1.   Ratios where share price is an input are calculated using (a) the respective fiscal year average share price for historic years
         and (b) the current share price for current and future years.

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