Arvind SmartSpaces Ltd Management Discussions.

Global Outlook

World economy registered strong growth in 2017 followed by a similar cycle in early 2018, which slowed down considerably in second half of 2018, reflecting a confluence of factors affecting major economies. Global economy in 2019 is expected to grow at 3.3 percent, downgraded from earlier estimate of 3.9 percent as much has changed now: the escalation of US-China Trade tensions, disruptions in auto sector in Germany, tighter credit policies in China, and normalization of monetary policy in larger advanced economies. Improvements are expected in second half of 2019 and global economic growth in 2020 is expected to return to 3.6 percent. Beyond 2020, growth is expected to stabilize around 3.5 percent, bolstered mainly by growth in China and India and their increasing weights in world income.

Forecast by IMF envisages that growth prospects may level off in second half of 2019 on the back of de-escalation of trade tensions, upswing in other euro economies.

Amid high policy uncertainty and weakening prospects for global demand, industrial production decelerated, particularly for capital goods in part because of global trade tensions.

Global energy prices declined by 17 percent between October 2018 to March 2019 as oil prices dropped from a four-year peak of $81 per barrel in October 2018 to $61 per barrel in March 2019. While supply influences dominated initially-notably a temporary waiver in US sanctions to certain countries for Iranian Oil exports and record high US oil production added downward pressure on prices towards the end of 2018. However, in the first quarter of 2019-oil prices have again recovered owing to production cuts by oil-exporting countries. Prices of base metals have increased by 7.6 percent since August 2018 as a result of supply disruptions in some metal markets more than offsetting subdued global demand.

Consumer prices inflation remained muted across advanced economies, given the drop in commodity prices. In all major advanced economies, the inflation remained well below the central bank targets of advanced economies despite the pickup in domestic demand. Among emerging market economies, core inflation has remained below 2 percent in China as activity has moderated. In other cases, inflation pressure has eased towards the lower bound of the central banks target range with drop in commodity prices in Indonesia and slowdown in food inflation in India.

India Economic Outlook

With real GDP gains in line with the countrys estimated 7-7.5% potential growth rate, it is expected that India will continue to be growth leader among major economies globally and is likely to grow at an average of 7.1% for the next two years i.e. FY 20 and FY 21. Although this forecast is down by 30 basis point reflecting weaker sentiment and softer demand conditions globally. It may so be assessed that this growth of India may even reach higher over the years on the back of the countrys favorable demographics and continued streamlining of the Goods and Service tax structure. Implementation of labour and land reforms would bolster Indias longer-term growth outlook further.

India 2017 2018 2019f 2020f
Real GDP (annual % change) 6.7 7.3 7.0 7.3
CPI (y/y % eop) 5-2 2.1 5.1 5.0
Central bank policy rate (%, eop) 6.00 6.50 6.00 6.00
Indian rupee (USDINE, eop) 63.9 69.8 68.0 66.0
Source : Scotiabank Economics

Domestic demand will be the key driver of the Indian economy in foreseeable future as the country is less-export oriented than China, which gives the economy some protection from global headwinds. Fixed capital investment continued to outperform the economys growth rate of 7.3% year-on-year in 2018, expanding by 11.1% year-on-year. Public Infrastructure spending by current government coupled with robust business confidence and bank credit growth point to continuing activity; the Reserve Bank of Indias (RBI) monetary policy should further support business investment prospects. The signs of some worry for India was that, momentum in eight core industries-electricity, steel, refinery products, crude oil, coal, cement, natural gas and fertilizers has slowed in recent months, which warrants close monitoring as weaker industrial activity and higher spare capacity could have an adverse impact on investment. Consumer spending will continue to be supported by rising incomes and the governments fiscal measures, such as tax rebates and support to small scale farmers. Indeed, Indias February 1stInterim Union Budget for fiscal year 2019-20

(April-March) is expansionary, arguably reflecting the imminent general election. The government expects the fiscal deficit in the FY2019-20 to be 3.4% of GDP, vis-a-vis the original target of 3.1% of GDP.

Nevertheless, RBI has taken steps to stimulate the economy. During its Monetary Policy Committees (MPC) bimonthly meeting concluded in April first week, the benchmark repo rate was cut by 25 basis points to 6.0%, marking a second consecutive interest rate reduction. Indias inflation signals are mixed. Core inflation has been decelerating gradually in recent months but remains elevated at 5 1/3% y/y, vis-a-vis slightly over 6% in October 2018. Nevertheless, we note that the recent disinflation has not been broad-based across all index components. Meanwhile, headline inflation has been soft in recent months on the back of lower food and energy prices, yet the trend is now reversing. After reaching the low point of 2% y/y in January 2019, inflation has rebounded to the current level of 2 2/3%. The year-ago base effect will likely continue to inch the headline inflation rate higher over the coming months. Nevertheless, headline inflation is estimated to remain within the RBIs 4% 2% target through 2020. There seems to be following risks to inflation: (1) financial market volatility and potential depreciation pressure on the Indian rupee; (2) volatile food prices;

(3) international crude oil price developments; (4) ongoing global trade tensions that may cause a growth slowdown and softer commodity prices; (5) the approaching southwest monsoon (June-September) that will have an impact on food prices and rural incomes; and (6) fiscal measures announced in the Interim Union Budget that may trigger inflationary implications.

In India, GDP growth is expected to keep up its pace and projected to 7.3 percent in 2019 and 7.5 percent in 2020, supported by the continued recovery of investment and robust consumption amid a more expansionary stance of monetary policy, easing of infrastructure bottlenecks, continued implementation of structural reforms and some expected impetus from fiscal policy. However, continued implementation of structural and financial reforms with efforts to reduce public debt remains essential to secure the economys growth prospects.

India Real Estate Outlook

The year 2018 has remained a year of brisk activities for Indian real estate and year 2019 is expected to bring in both challenges and opportunities with ongoing elections, changing dynamics of credit growth and focus on infrastructure improvements driving the market. Year 2018 could be termed as year of consolidation and adjusting to new policy requirements for real estate industry. However, these structural changes to industry also brought much needed increased transparency and accountability among buyers. RERA has remained pivotal in bringing this change and driving the consolidation process wherein non-serious players are phasing out ensuring that credible developers drive the market. Affordable housing and massive infrastructure augmentation by the GoI, including significant capital expenditure for roads, railways, development of smaller airports and expansion of schools and hospitals are going to become the pillars of real estate growth in India.

It is expected that Indian real estate will reach a market size of US$ 1 Trillion by 2030 from US$ 120 Billion in 2017 and could contribute as much as 13 percent of the countrys GDP by 2025. Institutional investment in real estate sector touched $5.5 billion in 2018, the highest since 2009, on the back of transformative policy reforms and a growing risk appetite of foreign and domestic institutional investors. In 2018, investment by PE in Indian real estate sector witnessed a growth of 35 percent in value terms as compared to 2018 and deal volume increased by 28 percent. There were 76 deals of value greater than US$ 100 million in 2018.

Residential Outlook

The residential market has seen more prudent launches, however the asset valuations have remained stable during last five years and this has worked to improve affordability for buyers. Affordable housing remains the key in residential segment as 90 percent of housing shortfall is in the low-income segment. Series of policy intervention such as low-cost home loan and lower GST rates, by Government of India, has further helped strengthen this segment of residential real estate. Further, regulations imposed by the Government such as RERA, GST and Benami Transactions Act, 2016 have laid the foundations of a healthy end users market.

With these eve nts taking shape in year 2018, by and large the organized players in this segment found stabilization and are taking poised steps which can be seen by the recovery in the volume of apartments launched in 2018.

The year 2018 has been the year of right-sizing and right-pricing of new residential products. This improved the buyer confidence which resulted in 76 percent YoY growth in units launched in 2018 and a modest 6 percent YoY growth during the same period for sales. This YoY growth in Sales and launches during 2018 is totally exceptional that this is the first year that saw YoY growth in both sales and supply during this decade.

Residsntial Market

India Market Snapshot
Parameter H2 Change YoY 2017 2018 Change YoY
Launches (housing units) 89,509 119% 103,570 182,207 76%
Sales (housing units) 118,040 10% 228,072 242,328 6%
Unsold inventory (housing units) 528,494 468,372 -11%
Quarters to sell 11.2 10.2

Note : 1 square metre (sq m) = 10.764 square feet (sq. ft)

Source : Knight Frank Research

Although 2018 is the year when sales have increased YoY during the decade, the sales volumes are still far from peak of 2011 highs. The most YoY growth among the top eight cities was witnessed by Bengaluru with sales increasing by more than 27 percent for 2018. The city buyers have shown more flexibility and openness to the relaxations in the qualification criteria for projects under PMAY category such as increase in the extent of carpet area to 160 square meters for MIG-I and 200 square meters for MIG-II.

If we see the current Quarters-to-sell level which is 10.2 quarters in 2018 stand lower than 2017 number of 11.2 quarters. This is primarily due to higher sales and lower unsold inventory levels which signifies that buyers are showing more interest in Ready-to-move homes. The weighted-average prices across cities have witnessed correction and average house sale value has decreased primarily due to focus of players in affordable segment. This shift of paradigm in pricing methodology appears to be a healthy sign and step towards market recovery as it would boost contemporary home buyers needs, boost affordability and eventually gets buyers back to market.

Parameter H2 2018 Change 2017 2018 Change
YoY YoY
Launches (housing units) 11,826 41% 22,410 27,382 22%
Sales (housing units) 17,973 35% 34,546 43,776 27%
Price (weighted average) र50,390/sq.m 2% र.49,400/sq.m र50,390/sq.m 2%
Unsold Inventory (housing units) (र4,68Vsq.ft) -15% र4,589/sq.ft) (र4,681/sq.ft) -15%
Quarters to sell 92,718 109,112 92.718
Age of unsold inventory 10.3 10.6 10.3
(in quarters) 12.7 13.0 12.7

Note : 1 square metre (sq m) = 10.764 square feet (sq. ft)

Source : Knight Frank Research

Though these trends suggests that the residential market is on the recovery path considering current trends of growth and there are more issues such as liquidity crunch which needs immediate attention, the residential market still holds the promise of more sustained recovery.

Opportunities & Challenges:

Opportunities & Strengths

? Policy Reforms like implementation of RERA and GST

? Well accepted Brand

? Well-designed Projects at strategic locations & Long term value creating projects

? Strong balance sheet and consistent financial performance even in challenging market conditions

? Increased revenue and profit to be recognized in the next 3 to 4 years from the ongoing projects

? Highly qualified team in terms of execution and implementation

? Strong and well-defined internal control systems

? To set industry benchmarks in:

• Innovative Design & Architecture

• Customer Relationship Management

? New geographies-B+ tier cities such as Pune, Hyderabad etc.

? Strong Government /Local networking

? Credibility in the industry

• Continuous Project acquisitions

• Satisfied Confidence

? Technology leverage-Touchscreens, ERP, customer portal

? Significant leveraging opportunity for further expansions

Challenges:

? Unanticipated delays in project approval

? Increased cost of construction and manpower

? Availability of skilled and trained labor force

? Over regulated environment

Threats and Weaknesses

? Time to Market

? Weak real estate market

? Unsold inventory in the market

? Presence in limited geographies

? Mainly into residential segment

Arvind SmartSpaces Limited ("ASL") is primarily into residential segment operating in and around Ahmedabad, Bengaluru and Pune market. ASL is currently executing 8 projects through own land, Joint Ventures and Joint Development model. ASL has also successfully executed 7 projects till date.

The description of all projects of the Company till date is provided in the table below:

Sr. No. Project Est. Area (Sq. ft.) Area booked till date (Sq. ft.) Inventory as on date (Sq. ft.) Booking value till date ( रin lacs ) Revenue recognised till date ( रin lacs ) Project completion (%) Avg. Price C/Sq. ft.)
1 Alcove 10,32,660 9,76,734 55,926 2,288 2,288 100 234
2 Parishkaar 9,15,809 9,15,809 25,423 25,423 100 2,776
3 Trade Square
4 Megatrade 80,914 67,502 13,412 2,797 2,797 100 4,143
5 Expansia 1,40,276 1,33,983 6,293 7,045 7,105 100 5,258
6 Citadel 1,01,859 1,01,859 - 5,515 5,515 100 5,415
7 Sporcia 4,92,062 4,78,709 13,353 22,542 19,651 100 4,709
8 Uplands (Phase I) 31,92,901 23,87,663 8,05,238 33,960 4,486 79 1,422
9 Megaestate (Phase I) 63,119 27,533 35,586 800 - 100 2,906
10 Skylands 4,91,111 2,00,660 2,90,451 9,915 - 70 4,941
11 Megapark 9,23,391 3,33,900 5,89,491 1,789 1,611 100 536
12 Beyond Five 66,74,310 1,68,930 65,05,380 1,186 - - 702
13 Oasis 5,47,428 2,09,768 3,37,660 10,310 - 20 4,915
14 Aavishkaar 11,39,549 1,86,700 9,52,848 4,807 - 10 2,575
15 Elan 1,34,952 11,240 1,23,712 1,654 - - 14,712
Total 1,59,30,341 62,00,990 97,29,350 1,30,031 68,876

ASL is about to launch one new project namely The Edge by Arvind.

Financial Performance (Standalone)

Equity Share Capital: The equity share capital of the Company as on 31st March, 2019, stood at र3523 lacs. The change in the share capital of the Company as compared with the previous financial year (र 3187 lacs) is due to allotment of equity shares to the promoters on preferential basis and to the eligible employee under AIL ESOP 2013 Scheme.

Debt Equity: The debt equity ratio of the Company as on 31st March, 2019, is at 0.54:1.

Revenue: The total revenue of the Company has increased to र250007 lacs in the FY 2018-19 against र14216 lacs in FY 2017-18, an increase by 76%.

EBITDA: EBITDA margin during the financial year 2018-19 stood at 32% as compared to 36% for the previous financial year.

Finance Costs: Interest & Financial Charges for the financial year 201819 is र2014 lacs as compared to र1465 lacs in the previous year, an increase by 37%, which is predominantly on account of Line of Credit facility and unsecured loan from financial institution.

Net Profit: Net profit available for appropriation for the year 2018-19 stood at र4603 lacs as compared to र2978 lacs in the previous year, an increase of 55%.

Dividend: The Board has recommended a dividend of र1.50 per share on equity shares of र10 each (i.e. 15%) subject to approval of members of the Company at the forthcoming Annual General Meeting.

Earnings Per Share (EPS):

The Companys Basic Earnings Per Share (EPS) during the current year is र13.35 as compared to र9.88 in the previous year and Diluted EPS is र13.00 as compared to र9.57 in the previous year.

[EPS of previous year has been recalculated]

Financial Performance (Consolidated)

Equity Share Capital: The equity share capital of the Company as on 31st March, 2019, stood at र3523 lacs. The change in the share capital of the Company as compared with the previous financial year (र 3187 lacs) is due to allotment of equity shares to the promoters on preferential basis and to the eligible employee under AIL ESOP 2013 Scheme.

Debt Equity: The debt equity ratio of the Company as on 31st March, 2019, is at 0.62:1.

Revenue: The total revenue of the Company has increased to र26435 lacs in the FY 2018-19 against र20224 lacs in FY 2017-18, an increase by 31%.

EBITDA: EBITDA margin during the financial year 2018-19 stood at 27% as compared to 32% for the previous financial year.

Finance Costs: Interest & Financial Charges for the financial year 2018-19 is र2126 lacs as compared to र1539 lacs in the previous year, an increase by 38%.

Net Profit: Net profit available for appropriation for the year 2018-19 stood at almost the same level i.e. र3118 lacs as compared to र3144 lacs in the previous year.

Dividend: The Board has recommended a dividend of र1.50 per share on equity shares of र10 each (i.e. 15%) subject to approval of members of the Company at the forthcoming Annual General Meeting.

Earnings Per Share (EPS): The Companys Basic Earnings Per Share (EPS) during the current year is र8.90 as compared to र10.01 in the previous year and Diluted EPS is र8.66 as compared to र9.70 in the previous year.

[EPS of previous year has been recalculated]

Ind AS 115 Revenue from Contracts with Customers replaces the existing revenue recognition requirements with effect from 1st April, 2018. The application of Ind AS 115 has impacted the Companys accounting of revenue recognition from its real estate projects. The Company has opted to apply the modified retrospective approach and in respect of the contracts which are not completed on or before 1st April, 2018 (being the transition date), the Company has reversed the revenue recognised and costs thereof and debited the resultant difference to the retained earnings and non-controlling interest amounting to र8,034.68 lacs (net of tax). Accordingly, the comparative figures have not been restated and are hence not comparable with current period figures.

Risk Management

ASL is committed to high standard of business conduct with effective risk management policies to achieve sustainable business growth, safeguard interest of stakeholders and to ensure compliance with applicable legal requirements. In line with this objective, ASL has laid out a well-established Risk Management Policy which helps identify the risks and prioritize its mitigation according to their expected impact as well as likeliness of occurrence.

Following are some of the major risk that ASL faces in its business activities along with their respective mitigating measures:

Economic risks

Indian economy has weathered many challenges successfully in recent times and is currently placed on a cyclical upturn, on the back of strong policies and a whiff of new optimism. Though, presently there are signs of improvement on inflation front yet any significant upward revision in crude oil prices may result in increased inflation which can eventually result in increase in interest rates. This can have a direct impact on the performance of the real estate sector and ASL.

ASL is conscious of these risks and is taking measures to mitigate them. For instance, the Companys focus on both residential and township developments has been a significant source of comfort during periods of poor economic performance. Besides, the Companys prudent financial management has also kept it relatively insulated from the economic downturn.

Operational risks

Key operational risks faced by ASL include longer gestation period for procurement of land, time taken for approvals, delay in completion and delivering projects according to the schedule leading to additional cost of construction, lower customer satisfaction etc.

ASL addresses these issues within a well-structured framework which identifies the desired controls and assigns ownership to monitor and mitigate these risks. ASL has also invested in Enterprise Resource Planning (ERP) for developing in-house systems to ensure strict monitoring of project activities and raising flags for exceptions, if any. The Companys Corporate Governance policies ensure transparency in operations, timely disclosures and adherence to regulatory compliance s, leading t o enhance d stakeholder value.

Liquidity risks

Weak Sales and delay in payments from the customers may create liquidity crunch and can hamper progress of the projects.

Mitigation Measures: ASL ensures that all the projects are completed in the stipulated time. ASL is a well-known brand in West and South India which ensures that the upcoming projects get good response. This helps to maintain the short term credit facilities with the vendors.

Execution risks

Execution depends on several factors which include labour availability, raw material prices, receipt of approvals and regulatory clearances, access to utilities such as electricity and water, weather conditions and the absence of contingencies such as litigation. ASL manages the adversities with cautious approach, meticulous planning and by engaging established and reputed contractors.

Outlook (FY 19-20)

After the successful implementation of various structural reforms in the real estate sector and easing out of liquidity crunch in financial markets, the residential demand seems to be on an upward trend. The same is also indicated in our overall sales performance for FY2018-19 where we have achieved a record pre-sale of र277 crores.

The governments continuous thrust of giving priority to the real estate sector is making it more attractive to the customers. Initiatives like reduction in GST rates on residential projects, tax incentives for home buyers, gradual easing of interest rates etc. are helping further in improving demand for end consumption. However, some medium-term challenges still remain. Liquidity crisis and corresponding interest rates for real estate developers are yet to come down to the pre-crisis level. Demand, although better as compared to a few quarters earlier is yet to fully recover and comparative lower interest of investors in real estate as an asset class are some of the challenges that the industry still faces. Overall, the industry outlook is positive and there are several indicators which point towards further stabilization and improvement in overall demand cycle. The company is poised to take advantages of these positive macro environment indicators and opportunities.

Human Resources

The Companys business is managed by a team of competent and passionate people, capable of enhancing your Companys standing in the competitive market. The Companys employees have a defining role in significantly accelerating its growth and transformation, thereby enhancing its position as one of the leading Real Estate Company. The Company has a structured recruitment process. The focus is on recruiting people who have the right mindset for working at ASL, supported by structured training programs and internal growth opportunities. The Companys focus is on unlocking the people potential and further developing their functional, operational and behavioral competencies.

Industry Relations/Initiatives

The Company has taken various initiatives during the FY 2018-19 to promote itself as a reputed brand in the real estate industry. ASL participated into various industry specific events/awards to present its key projects to its prospective buyers/customers and fellow developers.

Awards & Recognition

A. Gujarat Real Estate Awards-April 2018

Arvind Uplands-Creating High Quality Lifestyle villas in Gujarat

B. Realty Plus Award-June 2018

Arvind Uplands -Design Project of the Year

C. Prestigious Brands of Asia 2018-19, Venue-Dubai, Category-Real Estate:

The Global Business Symposium 2018 was held on 26th September 2018 at Madinat Jumeirah, Dubai featuring Arvind SmartSpaces as most trusted Prestigious brands and labels from across Asia.

D. ET Now Award-Feb 2019

Arvind Aavishkaar -Best affordable project

E. ET Now Award-Feb 2019

Arvind Oasis -Residential project of the year

CRM & Customer related

A. Customer Portal: Arvind CARE

With the objective of providing a one-stop solution for customer needs and working towards our achieving transparency in all the transactions, we have introduced the customer portal-Arvind CARE. It has "Do It Yourself" features like updating your personal details, details of Relationship Manager, writing to us for any queries or clarifications, view your units financial details, project overview, construction, updates, details of promotional activities like referral schemes and many more. All kinds of change requests are also received through this portal. The portal has helped in faster resolution of customer queries and complaints because of monitoring mechanism in place in the portal. A personalised service with an assigned and dedicated Relationship Manager to each of the customer is being provided. The initiative has been well appreciated by many customers.

B. Customer Survey

We conduct Customer Surveys to understand our customers better, know their needs, measure satisfaction with our products and services. It further helps us get inputs from the customers to improve our services and products. The first C-Sat survey for Sporcia customers was conducted in Jan15, which was focussed on understanding the customers demographics and property purchase behaviour and preferences. Since then we have been conducting regular annual surveys across our projects to improve our services. The last survey conducted in Mar19 was for our project, Skylands. The survey indicated that our customers are overall happy with the services being provided to them by our team. The feedback received on various parameters has been discussed and action taken, wherever found necessary. We have also started giving small token gifts to our customers who participate in the survey.

C. Welcome Kit

To mark the beginning of a fresh relationship, we give Welcome Kit to all the new bookings. It gives our new customers, a personalized feeling with an introductory note, welcome letter and access to Customer Portal, chocolates and Ganesha Statue. It also gives them the contact details of Customer Relationship Team along with the cards to refer their friends and give their feedback and suggestions.

D. Newsletter: Spotlight

Spotlight has been started with the purpose of giving our customers periodic news and updates of our company. It showcases our awards and achievement and also sends construction updates for all our projects.

E. Diwali Gifts

Diwali is a festival of joy and lights. We celebrate this festival with our customers by presenting them with a Diwali Gift every year. We, as a company, put great emphasis on using eco-friendly material. We try to present innovative gifts every year to our customers. This year we gifted a beautiful box containing brass diyas and home-made chocolates to our customers.

F. New Year Calendars

We send the New Year wishes to our customers in the form of Calendar every year. This year we presented photo frame styled elegant table top calendars to our customers.

G. Birthday Cakes

Birthday is a special occasion for every person. To make it extra special for our customers, we have started the birthday cake activity. We send birthday cake to the customer on their birthday (Ahmedabad and Bangalore region). This activity has been quite appreciated by all our members.

In house ERP

The company has also focused on upgrading the IT infrastructure-both in terms of hardware and software. The company is in the process of developing in-house customized ERP systems which will cater to the ever-changing business needs to facilitate informed decisions.

The company has developed and implemented procurement and contracting module in the in-house ERP. Further, the Company is in the process of developing lead management & CRM Module. Later on all these modules will be integrated with the finance and accounts module.

Legal Compliance Tool

In order to ensure transparency and full compliance of the applicable laws, Company has developed a comprehensive tool which covers the entire gamut of compliances applicable to the companys business. The same has been made operational during the current financial year.

This tool will enable the company to track and ensure compliance to the regulations in the prescribed time frame. At the same time, it also provides opportunity to develop an efficient plan for go-to market strategy for its projects.

Internal Control & its Adequacy

The Company has adequate internal control systems to commensurate with the size and nature of its business. The system is supported by documented policies, guidelines and procedures to monitor business and operational performance which are aimed at ensuring business integrity and promoting operational efficiency.

Company has an Internal Audit function which conducts periodical audits to ensure adequacy of internal control systems, adherence to management policies and compliance with applicable laws and regulations. The internal auditors present to the management the findings of their audit, recommend better practices and report on the status of implementation of their recommendations.

Cautionary Statement

This report contains forward-looking statements, identified by words like ‘plans, ‘expected, ‘will, ‘anticipates, projects, ‘estimates and so on. Statements in this report on Management Discussions and Analysis describing the Companys objectives, estimates and expectations or projections about the future, but not limited to the Companys strategy for growth, product development, market position, expenditures and financial results, are forward-looking statements based on certain assumptions and expectations of future events and reflect the Companys current analysis of existing trends, information and plans. These forward-looking statements are subject to a number of risks and uncertainties that could cause actual results to differ substantially or materially from those expressed or implied. The Companys actual results, performance or achievements could thus differ from those projected in any forward-looking statements. The Company assumes no responsibility nor is under any obligation to publicly amend, modify or revise any forward-looking statements on the basis of any subsequent developments, information or events. The Company disclaims any obligation to update these forward-looking statements, except as may be required by law. All forward-looking statements are qualified in their entirety by this cautionary statement.