Activity picking up after a slow start to the year

SNP Schneider-Neureither & Partner 4 August 2017 Update
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SNP Schneider-Neureither & Partner

Activity picking up after a slow start to the year

Q2 results

Software & comp services

4 August 2017

Price

€31.85

Market cap

€174m

Net debt (€m) at 30 June 2017

14.9

Shares in issue

5.48m

Free float

66%

Code

SHF

Primary exchange

Frankfurt (Xetra)

Secondary exchange

N/A

Share price performance

%

1m

3m

12m

Abs

(17.1)

(17.2)

0.4

Rel (local)

(14.9)

(14.7)

(16.0)

52-week high/low

€49.1

€28.5

Business description

SNP Schneider-Neureither & Partner (SNP) is a software and consulting business focused on supporting customers in implementing change, and rapidly and economically tailoring IT landscapes to new situations. It has developed a proprietary software product called SNP Transformation Backbone with SAP Landscape Transformation software (T-B).

Next events

Q3 results

27 October

German Equity Forum

27-29 November

Analysts

Richard Jeans

+44 (0)20 3077 5700

Katherine Thompson

+44 (0)20 3077 5730

SNP Schneider-Neureither & Partner is a research client of Edison Investment Research Limited

SNP reported a 27% growth in H1 revenues, including 6% organic growth. While the growth was significantly lower than budgeted, management remains very buoyant, and activity has been picking up, with the book-to-bill ratio rising to 1.26 in Q2. The hyperactive acquisition strategy is based on the view that there is a potential tsunami of data migrations building up across the globe, particularly around SAP S/4HANA, with some 50,000 companies expected to upgrade to the new SAP ERP platform over the next few years. SNP’s goal is to be the global leader in software-based transformation projects and, following the recent correction, we believe the shares look increasingly attractive on c 16x our FY19e EPS.

Year end

Revenue
(€m)

PBT*
(€m)

EPS*
(c)

DPS
(c)

P/E
(x)

Yield
(%)

12/15

56.2

3.4

58.8

34.0

52.4

1.1

12/16

80.7

5.7

94.4

39.0

33.7

1.2

12/17e

110.0

7.2

91.7

45.0

34.7

1.4

12/18e

135.1

13.6

168.7

52.0

18.9

1.6

Note: *PBT and EPS are normalised, excluding amortisation of acquired intangibles, exceptional items and share-based payments.

Q2 results: Book-to-bill rises to 1.26x

SNP reported 36% growth in Q2 revenues and the group returned to a profit, after posting a loss in Q1 (after a host of one-off costs). The group finished Q2 with net debt of €14.9m and adjusted debt was c €24.8m. SNP maintained its guidance, in spite of the ADEPCON acquisition, which will contribute for five months in FY17. However, management plans to review the situation over the next one or two months after taking into account new orders, the backlog and the acquisition.

Acquisition of ADEPCON Group

In July, SNP announced that it was acquiring an initial 60% of ADEPCON, a SAP consultancy group that has subsidiaries in Argentina, Chile and Colombia, for an undisclosed price. ADEPCON has completed c 300 projects and has 250 employees. In FY16, It generated c $20m of revenues and a 9% EBIT margin.

Forecasts: Capital increase and ADEPCON added

Given SNP’s guidance, we maintain our headline revenue and profit figures, despite the ADEPCON acquisition. However, we have adjusted for the increased share count, in the wake of the capital increase. Consequently, FY17e EPS falls by 5% to 91.7c and FY18e EPS falls by 9% to 168.7c. We have also added ADEPCON to the balance sheet, and increased the FY17 working capital outflow by €3m to allow for M&A items and increased capex. We now expect the group to end FY17 with net cash of €1.9m, which swings to €2.4m net debt a year later.

Valuation: Strong growth play in the ERP space

The stock trades on c 35x our FY17e EPS, which falls to c 19x in FY18e and to c 16x in FY19e. Our discounted cash flow valuation (based on a conservative c 6% CAGR over 10 years, 10% WACC, 17% long-term margin and 2% terminal growth) is €40.75/share, 28% above the current share price.

H1 results: Organic growth was 6%

SNP reported a 36% growth in Q2 revenues and the group returned to a profit, after posting a loss in Q1. The Q1 loss was after a host of one-off costs. Utilisation rates at the start of the year were a bit slow, but management says they have picked up as the year has progressed.

Employee numbers rose to 1,077 at the end of the quarter, up 69% over 12 months, and rose to c 1,250 at the beginning of August. SNP has had an extremely busy year, with two major acquisitions (BCC and ADEPCON) and separate debt and equity fund-raisings. It also acquired a majority stake in Innoplexia. In addition, new corporate entities have been established in the US and Germany and the parent company has converted to a European stock corporation. On top of that, staff training schemes have been established in Germany (Berlin) and China in addition to the existing ones in Magdeburg, Eastern Germany, and Dallas, Texas. Meanwhile the group is busy delivering on a contract to combine the IT landscapes of two US chemical companies (we assume Dow Chemical and DuPont) that are merging, and it recently secured an extensive transformation project from one of the largest automotive suppliers in the world.

H1 operating cash outflow was €8.0m, including a €6.1m working capital outflow, of which around half related to staff bonuses paid in Q1 and half related to M&A items as is required under IFRS accounting standards. Capex jumped to €3.2m from €1.4m in H116, and acquisition of businesses amounted to €20.7m (this was before the initial 60% of ADEPCON acquired 1 August).

Exhibit 1: Quarterly analysis

€000

2016

2016

2016

2016

2016

2017

2017

2017

2017

2018

Q1

Q2

Q3

Q4

FY

Q1

Q2

Q3-Q4e

FYe

FYe

Professional services

15,516

16,558

15,953

18,613

66,640

19,089

22,151

51,751

92,991

116,292

Licences

2,216

2,425

3,258

4,101

12,000

1,733

3,042

9,225

14,000

15,000

Maintenance

742

457

416

430

2,045

776

1,237

987

3,000

3,850

Total revenue

18,474

19,440

19,627

23,144

80,685

21,598

26,430

61,963

109,991

135,142

Other operating income

200

148

150

730

1,228

235

295

 

 

 

Cost of materials

(1,928)

(2,037)

(1,965)

(2,346)

(8,276)

(2,260)

(3,244)

 

 

 

Personnel costs

(10,604)

(11,382)

(11,399)

(13,822)

(47,207)

(14,657)

(15,511)

 

 

 

Other operating expenses

(4,174)

(3,986)

(4,209)

(5,442)

(17,811)

(6,692)

(6,461)

 

 

 

Other taxes

(22)

(27)

(21)

(25)

(95)

(28)

(277)

 

 

 

Op costs (before depreciation)

(16,528)

(17,284)

(17,444)

(20,905)

(72,161)

(23,402)

(25,198)

(51,315)

(99,915)

(117,421)

Adjusted EBITDA

1,946

2,156

2,183

2,239

8,524

(1,804)

1,232

10,649

10,077

17,721

Depreciation

(323)

(372)

(399)

(573)

(1,667)

(594)

(690)

(793)

(2,077)

(3,393)

Adjusted operating profit (EBIT)

1,623

1,784

1,784

1,666

6,857

(2,398)

542

9,856

8,000

14,328

Operating Margin

8.8%

9.2%

9.1%

7.2%

8.5%

(11.1%)

2.1%

15.9%

7.3%

10.6%

Net interest

(191)

(268)

(141)

(537)

(1,137)

(577)

(181)

(42)

(800)

(750)

Edison profit before tax (norm)

1,432

1,516

1,643

1,129

5,720

(2,975)

361

9,814

7,200

13,578

Associates

0

(1)

0

9

8

0

(1)

0

0

0

Profit before tax (FRS 3)

1,432

1,515

1,643

1,138

5,728

(2,975)

360

9,814

7,200

13,578

New orders and backlog

2016

2016

2016

2016

2016

2017

2017

 

 

 

€000

Q1

Q2

Q3

Q4

FY

Q1

Q2

 

 

 

Incoming orders

26,200

19,900

26,200

23,300

95,600

24,400

33,200

 

 

 

Quarterly revenues

18,474

19,440

19,627

23,144

80,685

21,598

26,430

 

 

 

Book-to-bill ratio

1.42

1.02

1.33

1.01

1.18

1.13

1.26

 

 

 

Backlog

28,700

29,300

36,200

39,300

 

40,800

48,500

 

 

 

Source: SNP Schneider-Neureither & Partner accounts, Edison Investment Research

Guidance

SNP maintained its guidance for €110m revenue in FY17, with an EBIT margin between 7% and 12%. This was in spite of the ADEPCON acquisition, which will contribute for five months in FY17. Further, the outlook is underpinned by a record backlog of €48.5m. Hence, in our view, the guidance is conservative. The wide EBIT margin guidance reflects the uncertainly around high-margin software sales later in the year. SNP also says it plans to further improve market penetration via additional acquisitions and to tap into new sales markets. Management is very bullish on the industry drivers, hence its determination to position the business globally to take full advantage of an upcoming wave of transformations. Management expects software to take a greater share of transformation revenues, and this would drive margins higher.

Acquisition of ADEPCON Group

In July, SNP announced it was acquiring ADEPCON Group for an undisclosed price and completed the initial 60% on 1 August 2017.. ADEPCON Group has three subsidiaries in Argentina, Chile and Colombia, with respective offices in Buenos Aires, Santiago de Chile and Bogotá. The acquisitions will create SNP’s first significant presence in South America, and follow recent acquisitions in Asia, the UK and Poland. ADEPCON has c 250 employees, including more than 200 SAP and IT consultants. ADEPCON has completed more than 300 projects and it has 200+ clients including many high-quality names. The majority of its key clients are from Latin America and Europe, and mainly consist of insurance companies, private social security funds, media companies, pharma, retail, wholesale distributors, discrete production and utility companies. ADEPCON’s focus has been on projects with very large data volumes. All three consultancies are profitable and have generated robust revenue growth in recent years. In FY16, total revenue amounted to c $20m and EBIT margins have been c 9% in the previous few years. At the time of the announcement on 30 June, when the company said it was pursuing the acquisition, SNP said it expected an earnings contribution of $0.7m to $0.9m from the acquisition for the remaining six-month period in FY17, or $1.4m to $1.8m on an annualised basis.

Financial impact

We have assumed that SNP has acquired ADEPCON at 1x revenues, with 60% paid up front (c €10.3m) and the balance spread over three years.

10% capital increase completed in July

In early July, SNP carried out a 10% capital increase. The funds are being used to help finance the company’s growth strategy including the acquisition of ADEPCON. SNP successfully placed the maximum of 497,677 new shares, which were offered to selected institutional investors by means of an accelerated book-building process. New shares were placed at a price of €37.65, raising c €18.74m in gross proceeds. The shareholding of Dr Andreas Schneider-Neureither, CEO, subsequently fell from 20.03% to 18.21%.

Exhibit 2: Balance sheet development

€m

31 December 2015

31 December 2016

31 March

2017

30 June

2017

Capital increase

Acquisition of

ADEPCON

Pro forma

30 June 2017

Cash

(13.8)

(31.9)

(53.9)

(26.5)

(17.9)

10.3

(34.1)

Short-term debt

2.6

12.8

2.1

1.7

2.1

Long-term debt

12.3

0.4

39.6

39.6

39.6

Net debt/(cash)

1.2

(18.7)

(12.2)

14.9

7.6

RSP acquisition liabilities

2.5

2.5

2.5

2.5

2.5

Astrums/Hartungs acquisition liabilities

1.9

1.9

1.9

1.9

Harlex acquisition liabilities

4.0

4.0

4.0

4.0

ADEPCON acquisition liabilities

6.9

6.9

Corporate bond fair value premium

0.5

0.0

0.0

0.0

0.0

Pension deficit

1.2

1.5

1.5

1.5

1.5

Adjusted net debt/(cash)

5.4

(8.7)

(2.3)

24.8

24.4

Source: SNP, Edison Investment Research

Strategy

SNP’s goal is to become the global standard for software-based data transformation. SNP is pursuing this goal with three strategic approaches:

1.

Automation through software

The successful launch of the new version of the SNP Transformation Backbone

The embedding of SAP LT in the SNP Transformation Backbone

The introduction of additional software products, including

SNP CrystalBridge

SNP Interface Scanner

SNP BPA

SNP RESC

The expansion of the software portfolio through targeted acquisitions, including Harlex, BCC and Innoplexia

2.

Internationalisation

Internationalisation is critical in order to become a global standard and is primarily driven through an acquisition strategy. The latest acquisitions have been predominantly in important global markets. The acquisition history is outlined below.

3.

Ability to execute globally

In spite of the high degree of automation, transformation projects require appropriate customer interaction in the form of high-quality support. Consequently, a local presence is very important.

Acquisition strategy and history

The group has made seven significant acquisitions over the last four years (Exhibit 3), which have enabled SNP to become a provider of end-to end solutions, covering the entire value creation chain on the transformation market. SNP acquired GL Associates in 2013, to accelerate the group’s entry into the US and a software-based approach to Oracle ERP transformations. SNP acquired RSP in early 2015 to expand the group’s range of strategy- and process-related consultancy services. SNP acquired Hartung Consult and Astrums in early 2016 to target the Asian market and to support customers in international rollout projects. SNP acquired UK-based Harlex in September 2016 to target and deliver new business in the UK. In May 2017, SNP acquired BCC. The BCC deal broadened the group’s customer base in Central and Eastern Europe, widened its expertise in the areas of SAP service and cloud provisioning and brought on board c 250 SAP and IT consultants who can be cross-trained in transformation projects. ADEPCON extends the group’s presence into South America.

Consequently, SNP has established a proven track record of successfully integrating companies on several occasions, which now contribute to an improved market penetration. Management is on the lookout for other selective acquisitions that add to the product offerings, tap new markets, enhance technical expertise or simply expand capacity.

Exhibit 3: Recent acquisitions

Announced

Share-holding

Cost

Revenues

Main regions

Headcount

Notes

GL Associates

24/08/2013

Asset deal

€3.8m

>$5m in FY12

US

c 20

Gave SNP a US presence and extended SNP's offerings to Oracle transformations

RSP

18/12/2014

Initial 74.9%

€7.6m total

c €11m

Germany

65

Enabled SNP to expand its strategy- and process-oriented consulting services

Astrums Consulting

03/12/2015

Initial 51%

}

c €10m
combined

c €10m
combined
in 1st year

Singapore, Malaysia

77

Boosted SNP's presence in Asia, better positioning the group to handle transformations of global enterprises operating in Asia

Hartung Consult

22/12/2015

Initial 51%

Germany, China

86

Harlex Consulting

30/09/2016

Initial 90%

est €6m

c €5.6m

UK

25

Strengthened the group's position to target and deliver new business in the UK

BCC

04/05/2017

100%

est €20m

PLN95.4m

Central & E Europe

300

Broadened the group’s customer base, widens its expertise in the areas of SAP service and cloud provisioning and brings onboard c 250 SAP and IT consultants who can be cross-trained in transformation projects

Innoplexia

05/05/2017

From 20% to 80%

N/A

c €1m in FY16

Germany

24

Added artificial intelligence and software algorithms

ADEPCON Group

20/07/2017

Initial 60%

est $20m total

c $20m

Argentina, Chile, Colombia

250

Boosted SNP's presence in South America

Source: SNP Schneider-Neureither & Partner

Forecast changes

In line with SNP’s guidance, we have maintained our headline revenue and profits figures, in spite of the ADEPCON acquisition. However, we have adjusted for the increased share count, in the wake of the July capital increase. Consequently, FY17e EPS falls by 5% to 91.7c and FY18e EPS falls by 9% to 168.7c. We have also added ADEPCON to the balance sheet, increased the FY17 working capital outflow by €3m to allow for M&A items, increased capex by €2.8m and adjusted the dividend to the actual amount paid. We now expect the group to end FY17 with net cash of €1.9m, which swings to €2.4m net debt a year later.

Exhibit 4: Financial summary

€000s

2014

2015

2016

2017e

2018e

2019e

Year end 31 December

IFRS

IFRS

IFRS

IFRS

IFRS

IFRS

PROFIT & LOSS

Revenue

 

 

30,480

56,236

80,685

109,991

135,142

147,665

Cost of sales

0

0

0

0

0

0

Gross Profit

30,480

56,236

80,685

109,991

135,142

147,665

EBITDA

 

 

862

5,484

8,524

10,077

17,721

20,739

Adjusted Operating Profit

 

 

(66)

4,222

6,857

8,000

14,328

17,038

Amortisation of acquired intangibles

0

0

0

0

0

0

Exceptionals

1,505

356

0

0

0

0

Associates

0

(3)

8

0

0

0

Operating Profit

1,439

4,575

6,865

8,000

14,328

17,038

Net Interest

(66)

(828)

(1,137)

(800)

(750)

(700)

Profit Before Tax (norm)

 

 

(132)

3,394

5,720

7,200

13,578

16,338

Profit Before Tax (FRS 3)

 

 

1,373

3,747

5,728

7,200

13,578

16,338

Tax

(344)

(1,195)

(1,517)

(2,160)

(4,073)

(4,901)

Profit After Tax (norm)

(477)

2,198

4,203

5,040

9,505

11,437

Profit After Tax (FRS 3)

1,028

2,552

4,211

5,040

9,505

11,437

Minority interest

(40)

0

(147)

(248)

(267)

(289)

Adjustments for normalised earnings

0

0

0

0

0

0

Net income (norm)

(517)

2,198

4,056

4,792

9,237

11,148

Net income (FRS 3)

988

2,552

4,064

4,792

9,237

11,148

Average Number of Shares Outstanding (m)

3.7

3.7

4.3

5.2

5.5

5.5

EPS - normalised (c)

 

 

(13.9)

58.8

94.4

91.7

168.7

203.6

EPS - normalised & fully diluted (c)

 

 

(13.9)

58.8

94.4

91.7

168.7

203.6

EPS - FRS 3 (c)

 

 

26.6

68.3

94.6

91.7

168.7

203.6

Dividend per share (c)

13.00

34.00

39.00

45.00

52.00

60.00

Gross Margin (%)

100.0

100.0

100.0

100.0

100.0

100.0

EBITDA Margin (%)

2.8

9.8

10.6

9.2

13.1

14.0

Adjusted Operating Margin (%)

-0.2

7.5

8.5

7.3

10.6

11.5

BALANCE SHEET

Fixed Assets

 

 

8,291

15,243

29,054

70,287

69,597

68,849

Intangible Assets

5,190

11,675

24,179

62,939

62,939

62,939

Tangible Assets

1,231

1,999

3,161

6,033

5,343

4,595

Other

1,871

1,570

1,714

1,314

1,314

1,314

Current Assets

 

 

17,882

29,996

59,478

81,890

81,107

87,540

Stocks

0

0

0

0

0

0

Debtors

11,286

16,084

27,201

37,081

45,560

49,782

Cash

5,681

13,769

31,914

44,446

35,184

37,395

Current Liabilities

 

 

(9,782)

(13,703)

(34,382)

(30,134)

(38,041)

(41,576)

Creditors

(9,182)

(11,101)

(21,583)

(28,034)

(35,941)

(39,476)

Short term borrowings

(600)

(2,602)

(12,799)

(2,100)

(2,100)

(2,100)

Long Term Liabilities

 

 

(2,501)

(15,513)

(5,576)

(52,440)

(40,366)

(32,792)

Long term borrowings

(1,650)

(12,344)

(434)

(40,434)

(35,434)

(30,434)

Other long term liabilities

(851)

(3,169)

(5,141)

(12,005)

(4,931)

(2,357)

Net Assets

 

 

13,890

16,024

48,575

69,604

72,297

82,020

CASH FLOW

Operating Cash Flow

 

 

2,579

1,879

1,005

6,526

17,046

20,001

Net Interest

(66)

(167)

53

(800)

(750)

(700)

Tax

(1,102)

(554)

(412)

(2,016)

(3,802)

(4,575)

Capex

(701)

(1,779)

(3,451)

(4,950)

(2,703)

(2,953)

Acquisitions/disposals*

(500)

(3,228)

(5,923)

(31,496)

(11,701)

(1,716)

Shares issued

0

0

30,129

17,898

0

0

Dividends

(335)

(483)

(1,264)

(1,932)

(2,352)

(2,847)

Net Cash Flow

(124)

(4,332)

20,137

(16,769)

(4,262)

7,211

Opening net debt/(cash)

 

 

(3,505)

(3,431)

1,176

(18,681)

(1,912)

2,350

HP finance leases initiated

0

0

0

0

0

0

Other

51

(275)

(281)

0

0

0

Closing net debt/(cash)

 

 

(3,431)

1,176

(18,681)

(1,912)

2,350

(4,861)

Source: SNP Schneider-Neureither & Partner accounts, Edison Investment Research. Note: *Includes additional payments for ADEPCON in FY18 and FY19, and final payments for RSP, Astrums/Hartung and Harlex in FY18.

Edison is an investment research and advisory company, with offices in North America, Europe, the Middle East and AsiaPac. The heart of Edison is our world-renowned equity research platform and deep multi-sector expertise. At Edison Investment Research, our research is widely read by international investors, advisers and stakeholders. Edison Advisors leverages our core research platform to provide differentiated services including investor relations and strategic consulting. Edison is authorised and regulated by the Financial Conduct Authority. Edison Investment Research (NZ) Limited (Edison NZ) is the New Zealand subsidiary of Edison. Edison NZ is registered on the New Zealand Financial Service Providers Register (FSP number 247505) and is registered to provide wholesale and/or generic financial adviser services only. Edison Investment Research Inc (Edison US) is the US subsidiary of Edison and is regulated by the Securities and Exchange Commission. Edison Investment Research Limited (Edison Aus) [46085869] is the Australian subsidiary of Edison and is not regulated by the Australian Securities and Investment Commission. Edison Germany is a branch entity of Edison Investment Research Limited [4794244]. www.edisongroup.com

DISCLAIMER
Copyright 2017 Edison Investment Research Limited. All rights reserved. This report has been commissioned by SNP Schneider-Neureither & Partner and prepared and issued by Edison for publication globally. All information used in the publication of this report has been compiled from publicly available sources that are believed to be reliable, however we do not guarantee the accuracy or completeness of this report. Opinions contained in this report represent those of the research department of Edison at the time of publication. The securities described in the Investment Research may not be eligible for sale in all jurisdictions or to certain categories of investors. This research is issued in Australia by Edison Aus and any access to it, is intended only for "wholesale clients" within the meaning of the Australian Corporations Act. The Investment Research is distributed in the United States by Edison US to major US institutional investors only. Edison US is registered as an investment adviser with the Securities and Exchange Commission. Edison US relies upon the "publishers' exclusion" from the definition of investment adviser under Section 202(a)(11) of the Investment Advisers Act of 1940 and corresponding state securities laws. As such, Edison does not offer or provide personalised advice. We publish information about companies in which we believe our readers may be interested and this information reflects our sincere opinions. The information that we provide or that is derived from our website is not intended to be, and should not be construed in any manner whatsoever as, personalised advice. Also, our website and the information provided by us should not be construed by any subscriber or prospective subscriber as Edison’s solicitation to effect, or attempt to effect, any transaction in a security. The research in this document is intended for New Zealand resident professional financial advisers or brokers (for use in their roles as financial advisers or brokers) and habitual investors who are “wholesale clients” for the purpose of the Financial Advisers Act 2008 (FAA) (as described in sections 5(c) (1)(a), (b) and (c) of the FAA). This is not a solicitation or inducement to buy, sell, subscribe, or underwrite any securities mentioned or in the topic of this document. This document is provided for information purposes only and should not be construed as an offer or solicitation for investment in any securities mentioned or in the topic of this document. A marketing communication under FCA Rules, this document has not been prepared in accordance with the legal requirements designed to promote the independence of investment research and is not subject to any prohibition on dealing ahead of the dissemination of investment research.
Edison has a restrictive policy relating to personal dealing. Edison Group does not conduct any investment business and, accordingly, does not itself hold any positions in the securities mentioned in this report. However, the respective directors, officers, employees and contractors of Edison may have a position in any or related securities mentioned in this report. Edison or its affiliates may perform services or solicit business from any of the companies mentioned in this report. The value of securities mentioned in this report can fall as well as rise and are subject to large and sudden swings. In addition it may be difficult or not possible to buy, sell or obtain accurate information about the value of securities mentioned in this report. Past performance is not necessarily a guide to future performance. Forward-looking information or statements in this report contain information that is based on assumptions, forecasts of future results, estimates of amounts not yet determinable, and therefore involve known and unknown risks, uncertainties and other factors which may cause the actual results, performance or achievements of their subject matter to be materially different from current expectations. For the purpose of the FAA, the content of this report is of a general nature, is intended as a source of general information only and is not intended to constitute a recommendation or opinion in relation to acquiring or disposing (including refraining from acquiring or disposing) of securities. The distribution of this document is not a “personalised service” and, to the extent that it contains any financial advice, is intended only as a “class service” provided by Edison within the meaning of the FAA (ie without taking into account the particular financial situation or goals of any person). As such, it should not be relied upon in making an investment decision. To the maximum extent permitted by law, Edison, its affiliates and contractors, and their respective directors, officers and employees will not be liable for any loss or damage arising as a result of reliance being placed on any of the information contained in this report and do not guarantee the returns on investments in the products discussed in this publication. FTSE International Limited (“FTSE”) © FTSE 2017. “FTSE®” is a trade mark of the London Stock Exchange Group companies and is used by FTSE International Limited under license. All rights in the FTSE indices and/or FTSE ratings vest in FTSE and/or its licensors. Neither FTSE nor its licensors accept any liability for any errors or omissions in the FTSE indices and/or FTSE ratings or underlying data. No further distribution of FTSE Data is permitted without FTSE’s express written consent.

Frankfurt +49 (0)69 78 8076 960

Schumannstrasse 34b

60325 Frankfurt

Germany

London +44 (0)20 3077 5700

280 High Holborn

London, WC1V 7EE

United Kingdom

New York +1 646 653 7026

295 Madison Avenue, 18th Floor

10017, New York

US

Sydney +61 (0)2 8249 8342

Level 12, Office 1205

95 Pitt Street, Sydney

NSW 2000, Australia

Frankfurt +49 (0)69 78 8076 960

Schumannstrasse 34b

60325 Frankfurt

Germany

London +44 (0)20 3077 5700

280 High Holborn

London, WC1V 7EE

United Kingdom

New York +1 646 653 7026

295 Madison Avenue, 18th Floor

10017, New York

US

Sydney +61 (0)2 8249 8342

Level 12, Office 1205

95 Pitt Street, Sydney

NSW 2000, Australia

Edison is an investment research and advisory company, with offices in North America, Europe, the Middle East and AsiaPac. The heart of Edison is our world-renowned equity research platform and deep multi-sector expertise. At Edison Investment Research, our research is widely read by international investors, advisers and stakeholders. Edison Advisors leverages our core research platform to provide differentiated services including investor relations and strategic consulting. Edison is authorised and regulated by the Financial Conduct Authority. Edison Investment Research (NZ) Limited (Edison NZ) is the New Zealand subsidiary of Edison. Edison NZ is registered on the New Zealand Financial Service Providers Register (FSP number 247505) and is registered to provide wholesale and/or generic financial adviser services only. Edison Investment Research Inc (Edison US) is the US subsidiary of Edison and is regulated by the Securities and Exchange Commission. Edison Investment Research Limited (Edison Aus) [46085869] is the Australian subsidiary of Edison and is not regulated by the Australian Securities and Investment Commission. Edison Germany is a branch entity of Edison Investment Research Limited [4794244]. www.edisongroup.com

DISCLAIMER
Copyright 2017 Edison Investment Research Limited. All rights reserved. This report has been commissioned by SNP Schneider-Neureither & Partner and prepared and issued by Edison for publication globally. All information used in the publication of this report has been compiled from publicly available sources that are believed to be reliable, however we do not guarantee the accuracy or completeness of this report. Opinions contained in this report represent those of the research department of Edison at the time of publication. The securities described in the Investment Research may not be eligible for sale in all jurisdictions or to certain categories of investors. This research is issued in Australia by Edison Aus and any access to it, is intended only for "wholesale clients" within the meaning of the Australian Corporations Act. The Investment Research is distributed in the United States by Edison US to major US institutional investors only. Edison US is registered as an investment adviser with the Securities and Exchange Commission. Edison US relies upon the "publishers' exclusion" from the definition of investment adviser under Section 202(a)(11) of the Investment Advisers Act of 1940 and corresponding state securities laws. As such, Edison does not offer or provide personalised advice. We publish information about companies in which we believe our readers may be interested and this information reflects our sincere opinions. The information that we provide or that is derived from our website is not intended to be, and should not be construed in any manner whatsoever as, personalised advice. Also, our website and the information provided by us should not be construed by any subscriber or prospective subscriber as Edison’s solicitation to effect, or attempt to effect, any transaction in a security. The research in this document is intended for New Zealand resident professional financial advisers or brokers (for use in their roles as financial advisers or brokers) and habitual investors who are “wholesale clients” for the purpose of the Financial Advisers Act 2008 (FAA) (as described in sections 5(c) (1)(a), (b) and (c) of the FAA). This is not a solicitation or inducement to buy, sell, subscribe, or underwrite any securities mentioned or in the topic of this document. This document is provided for information purposes only and should not be construed as an offer or solicitation for investment in any securities mentioned or in the topic of this document. A marketing communication under FCA Rules, this document has not been prepared in accordance with the legal requirements designed to promote the independence of investment research and is not subject to any prohibition on dealing ahead of the dissemination of investment research.
Edison has a restrictive policy relating to personal dealing. Edison Group does not conduct any investment business and, accordingly, does not itself hold any positions in the securities mentioned in this report. However, the respective directors, officers, employees and contractors of Edison may have a position in any or related securities mentioned in this report. Edison or its affiliates may perform services or solicit business from any of the companies mentioned in this report. The value of securities mentioned in this report can fall as well as rise and are subject to large and sudden swings. In addition it may be difficult or not possible to buy, sell or obtain accurate information about the value of securities mentioned in this report. Past performance is not necessarily a guide to future performance. Forward-looking information or statements in this report contain information that is based on assumptions, forecasts of future results, estimates of amounts not yet determinable, and therefore involve known and unknown risks, uncertainties and other factors which may cause the actual results, performance or achievements of their subject matter to be materially different from current expectations. For the purpose of the FAA, the content of this report is of a general nature, is intended as a source of general information only and is not intended to constitute a recommendation or opinion in relation to acquiring or disposing (including refraining from acquiring or disposing) of securities. The distribution of this document is not a “personalised service” and, to the extent that it contains any financial advice, is intended only as a “class service” provided by Edison within the meaning of the FAA (ie without taking into account the particular financial situation or goals of any person). As such, it should not be relied upon in making an investment decision. To the maximum extent permitted by law, Edison, its affiliates and contractors, and their respective directors, officers and employees will not be liable for any loss or damage arising as a result of reliance being placed on any of the information contained in this report and do not guarantee the returns on investments in the products discussed in this publication. FTSE International Limited (“FTSE”) © FTSE 2017. “FTSE®” is a trade mark of the London Stock Exchange Group companies and is used by FTSE International Limited under license. All rights in the FTSE indices and/or FTSE ratings vest in FTSE and/or its licensors. Neither FTSE nor its licensors accept any liability for any errors or omissions in the FTSE indices and/or FTSE ratings or underlying data. No further distribution of FTSE Data is permitted without FTSE’s express written consent.

Frankfurt +49 (0)69 78 8076 960

Schumannstrasse 34b

60325 Frankfurt

Germany

London +44 (0)20 3077 5700

280 High Holborn

London, WC1V 7EE

United Kingdom

New York +1 646 653 7026

295 Madison Avenue, 18th Floor

10017, New York

US

Sydney +61 (0)2 8249 8342

Level 12, Office 1205

95 Pitt Street, Sydney

NSW 2000, Australia

Frankfurt +49 (0)69 78 8076 960

Schumannstrasse 34b

60325 Frankfurt

Germany

London +44 (0)20 3077 5700

280 High Holborn

London, WC1V 7EE

United Kingdom

New York +1 646 653 7026

295 Madison Avenue, 18th Floor

10017, New York

US

Sydney +61 (0)2 8249 8342

Level 12, Office 1205

95 Pitt Street, Sydney

NSW 2000, Australia

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