Diversification supports profits growth

Carr's Group 15 April 2019 Update
Download PDF

Carr's Group

Diversification supports profits growth

H119 results

Basic materials

15 April 2019

Price

153.5p

Market cap

£141m

Net debt (£m) at 2 March 2019

23.3

Shares in issue

91.9m

Free float

84.5%

Code

CARR

Primary exchange

LSE

Secondary exchange

N/A

Share price performance

%

1m

3m

12m

Abs

(2.5)

(1.1)

16.4

Rel (local)

(6.1)

(7.7)

14.3

52-week high/low

173p

130p

Business description

Carr’s Agriculture division serves farmers in the North of England, South Wales, the Welsh Borders and Scotland, the US, Germany and New Zealand. The Engineering division offers remote-handling equipment and fabrications to the global nuclear and oil and gas industries.

Next event

FY19 results

November 2019

Analyst

Anne Margaret Crow

+44 (0)20 3077 5700

Carr's Group is a research client of Edison Investment Research Limited

Once again, Carr’s diversified model has enabled it to deliver profit growth despite well-publicised issues in the UK agriculture sector. Pre-exceptional PBT grew by 4.5% to £11.4m as a flat result from the Agriculture division was enhanced by a year-on-year performance improvement in Engineering. Group H119 revenues rose by 3.0% year-on-year to £206.2m, reflecting commodity price inflation and sales from Animax, which was acquired in September 2018. Noting this resilience, we leave our estimates and valuation unchanged.

Year end

Revenue (£m)

PBT*
(£m)

EPS*
(p)

DPS
(p)

P/E
(x)

Yield
(%)

08/17

346.2

11.9

9.4

4.0

16.3

2.6

08/18

403.2

17.7

15.2

4.5

10.1

2.9

08/19e

418.8

18.1

15.3

4.7

10.0

3.1

08/20e

425.5

18.9

16.0

4.9

9.6

3.2

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

Strong profits growth in Engineering during H119

Growth in the US feed block market and the Engineering division more than offset reduced volumes of feed, feed blocks, fuel and animal health products caused by the mild autumn and winter in the UK and lower revenues from sales of machinery. Machinery sales are linked to farmer confidence, which weakened recently because of continued uncertainty over Brexit. Net debt rose by £7.9m during the period to £23.3m. As well as the seasonal increase in working capital, there was £4.7m (net) paid out for Animax.

Management’s expectations for FY19 unchanged

Second-half performance is typically dominated by the Engineering division, as farmers require less feed and other inputs during the summer. Prospects here are positive as the order books for the UK manufacturing and US Engineering businesses are at record levels. Looking further out, the $8.5m contract won by the German engineering business in the US bodes well for awards from the US in the future and underpins capacity utilisation during FY20.

Valuation: Unchanged at 182p/share

Our DCF analysis gives an indicative value of 182p/share (unchanged). At the current share price, Carr’s is trading below its peers with regards to mean EV/EBITDA (6.5x vs 8.8x) and mean P/E (10.0x vs 14.6x) for the year ending August 2019. Carr’s share price dropped by 13% following Wynnstay’s profits warning in March, which was attributable to uncertainty over Brexit affecting UK farmer confidence, particularly over future lamb exports. Carr’s share price has completely recovered since then as investors have recognised how Carr’s more diversified business means it is less affected by factors influencing UK farming. Confirmation that Carr’s diversified business model can continue to address issues caused by Brexit uncertainty plus news of further Engineering orders should, in our view, help close the valuation gap compared with the mean.

Investment summary

Divisional analysis of H119 results

Exhibit 1: Divisional analysis

Year end 31 August (£m)

H118

FY18

H119

FY19e

FY20e

FY20e

Agriculture revenues

178.3

359.6

185.2

372.6

378.2

382.0

Engineering revenues

21.8

43.6

21.0

46.2

47.3

48.5

Group revenues

200.1

403.2

206.2

418.8

425.5

430.5

Agriculture EBITA – excluding JVs and associates

7.8

10.0

7.7

10.4

10.7

11.0

Engineering EBITA

1.4

4.3*

2.0

4.6

5.0

5.2

Reported group EBITA

9.2

14.2

9.7

15.1

15.7

16.2

Share of profits of JVs and associates

2.1

3.2**

2.2

3.0

3.0

3.0

Source: Company data, Edison Investment Research. Note: *Excluding £0.2m loss attributable to JV. **Including £0.2m loss attributable to Engineering JV.

Agriculture (£185.2m revenues, £10.0m EBITA including JV)

As flagged at the AGM in January, US feed block volumes continued to rise as penetration of the eastern states of the US has increased following the commissioning of the low-moisture feed block plant in Tennessee in January 2018. Despite wetter weather conditions muting demand, volumes rose by 5.6% year-on-year. Mild weather in the UK and mainland Europe contrasted with much colder and wetter conditions during the same period the previous year and resulted in feed block volumes decreasing by 14.1% in the UK and 9.9% in mainland Europe (0.5% decline globally). Management mitigated the impact on profitability through improved efficiencies and better procurement. As flagged at the AGM, the mild, dry weather reduced demand for compound feed (volumes down 4.1%), fuel (volumes down 6.0%) and animal health products. Weaker demand for the latter affected the retail activity (down 5.5% like-for-like, 0.4% reduction including acquisitions). UK farmer confidence has taken a tumble since January, reflecting concerns about the likelihood of a no-deal Brexit. This has manifested as a 10.2% drop in machinery revenues, albeit against record high comparatives. As with feed blocks, management addressed these issues through a combination of improved efficiencies and good procurement, helped by supportive raw materials positions. Divisional revenues increased by 3.9% year-on-year, boosted by £3.1m revenues from Animax (acquired September 2018) and commodity price inflation. Adjusted operating profit (including profit from JVs) was the same as H118 at £10.0m.

Looking forward, the division continues to perform in line with management’s expectations for the full year despite the knock to UK farmer confidence caused by the prolonged Brexit negotiations. The integration of Animax with its complementary animal health product portfolio is progressing well. At this point in the financial year it is not possible to predict whether this summer will be a repeat of last year, when there was unusually high demand for feed because of the lack of forage caused by the prolonged drought. We therefore take the prudent view and model a small year-on-year drop in total JV profits during FY19. In the longer term, we expect divisional revenue to benefit from the formation of a direct sales operation for feed blocks in New Zealand and growing feed block sales in South America. We expect management to continue to make small acquisitions to add to the Country Store portfolio. These will be both within the existing geographical footprint and in adjacent regions where the offer is compatible. We do not expect significant expansion eastwards in the UK into predominantly arable farmland.

Engineering (£21.0m revenues, £2.0m EBITA)

The UK Manufacturing business performed well as it worked on a strong order book backed by long-term contracts from the nuclear industry and a buoyant oil and gas market. Importantly, changes in management in both the fabrication and precision engineering businesses helped raise profitability and delivered a significant uplift in the forward order book and opportunity pipeline. The recent $8.5m US contract for remote handling equipment from the German business demonstrates how working with NuVision (acquired August 2017) is securing access to the hitherto impenetrable US market. While the contract helps top up Wälischmiller’s order book following completion of the substantial Chinese orders in FY18, most of the revenues under the contract will not be realised until the manufacturing phase commences in FY20. NuVision’s own order book benefitted from two significant Mechanical Stress Improvement Process contracts won during the summer, which extend to FY21. Funding from the US Department of Energy to develop a small-scale working prototype of NuVision’s passive cooling technology, which is intended to prevent a repeat of the Fukushima tragedy, potentially opens a new product area longer term.

The strength of the divisional order book, which is based on long-term contracts from the nuclear industry, indicates the division continues to perform in line with management expectations and the strong performance is set to continue during FY19. The extension of the German premises, which are now complete, provides additional capacity. Although Wälischmiller’s order book is weaker than last year following the completion of the substantial Chinese orders, management remains confident of securing further sales of German equipment in the US through NuVision’s sales channels. We note that Brexit uncertainty may be beneficial for the UK manufacturing businesses, which are seeing increased levels of enquiries from potential UK customers who typically source pressure vessels from mainland Europe.

Group performance

P&L

Group H119 revenues rose by 3.0% year-on-year to £206.2m, reflecting commodity price inflation and the Animax acquisition. Pre-exceptional PBT (excluding amortisation of acquired intangibles, acquisition expenses and a £0.8m charge relating to an increase in pension liabilities following the High Court ruling to equalise Guaranteed Minimum Pensions for men and women) rose by 4.5% to £11.4m as a flat result from the Agriculture division was enhanced by a year-on-year performance improvement in Engineering . An interim dividend payment of 1.125p/share (1.075p/share H118) has been declared. (Note: the group pays two interim dividends each year.)

Cash flow and balance sheet

Net debt rose by £7.9m during the period to £23.3m. This is primarily attributable to a £7.3m increase in working capital requirements, which is the typical seasonal pattern; £1.8m capex, £4.7m payable for the Animax acquisition (net of cash) and £3.2m dividend payments. The retirement benefit surplus reduced from £10.1m at end FY18 to £6.8m at end H119. The group no longer makes deficit reduction contributions because the pension scheme was fully funded at the last full actuarial valuation.

Estimates

We leave our estimates unchanged from the minor revision following the prelims in November. These model a 2.5% year-on-year rise in group PBT (adjusted for share-based payments and amortisation of intangibles) to £18.1m in FY19. This is driven by continued growth in US feed block volumes, the Animax acquisition and a strong order book in the UK manufacturing businesses.

We model net debt increasing by £6.1m during FY19 to £21.5m at the year end because of the consideration payable for Animax and the deferred consideration associated with the NuVision acquisition. Net debt then reduces to £14.8m by the end of FY21. We expect capital expenditure (which is included within ‘investment activities’ in our financial summary table along with purchase of intangibles) during the forecast period to be higher than FY18 (£5.0m in FY18, £4.5m in FY19 and FY20 vs £4.3m in FY18). This includes completion of the group’s Enterprise Resource Planning system.

Valuation

DCF methodology

Exhibit 2: DCF calculation (p/share)

Discount rate (post-tax, nominal)

187

9.0%

9.5%

10.0%

10.5%

11.0%

Terminal growth

0.0%

189

178

168

159

151

1.0%

208

194

182

172

162

1.5%

219

204

191

179

169

2.0%

232

215

201

188

176

3.0%

264

243

224

208

194

Source: Edison Investment Research

Our valuation methodology is based on a DCF analysis, supplemented with a comparison of peer group multiples. We continue to use a conservative 10.0% WACC and a 1.0% terminal growth rate for our DCF calculation. This gives a fair value of 182p/share (unchanged). The valuation gap should close once there is clarity on trading arrangements post-Brexit and news of further contracts to replenish Wälischmiller’s order book.

Peer-based multiples

Exhibit 3: Peer multiple analysis

Company name

Market cap (£m) 

EV/EBITDA (x)

August 2019 

EV/EBITDA (x)
August 2020 

P/E (x)
August 2019

P/E (x)
August 2020

Anpario

86

12.9

11.7

20.6

19.4

BayWa

756

13.8

12.8

18.5

13.9

NWF Group

74

6.4

6.3

10.5

10.1

Origin Enterprises

571

10.0

9.6

10.2

9.6

Ridley Corporation

231

9.4

8.3

18.4

17.4

Wynnstay Group

60

5.4

5.0

9.5

8.7

Mean

8.8

8.2

14.6

13.2

Carr's Group @ 153.5p/share

140

6.5*

6.3*

10.0

9.6

Carr's Group @ 182p/share

166

7.6*

7.4*

11.9

11.4

Source: Refinitiv estimates, Edison Investment Research. Note: *Including JVs. Prices at 11 April 2019. Grey shading indicates exclusion from mean.

In Exhibit 3 we compare Carr’s EV/EBITDA and P/E multiples for the years ended August 2019 and August 2020 with calendarised multiples for listed peers in the agricultural sector. At the current share price (153.5p), on our estimates (which are unchanged since the upwards revision following the FY18 results in November) Carr’s is trading below its peers with regards to the mean EV/EBITDA multiple (6.5x vs 8.8x) and P/E (10.0x vs 14.6x) multiples for the year ending August 2019. At the indicative value of 182p/share derived from our DCF calculation, Carr’s implied EV/EBITDA multiple for the year ending August 2019 is remains below the peer group average (7.6x vs 8.8x), as is the P/E multiple (11.9x vs 14.6x).

Exhibit 4: Financial summary

£m

2017

2018

2019e

2020e

2021e

Year-end Aug

Restated

PROFIT & LOSS

Revenue

 

 

346.2

403.2

418.8

425.5

430.5

EBITDA

 

 

13.9

19.9

21.0

21.5

22.0

Operating Profit (before amort. and except.)

 

 

9.8

15.4

16.4

16.8

17.3

Amortisation of acquired intangibles

(0.1)

(0.3)

(0.2)

(0.2)

(0.2)

Share-based payments

(0.5)

(1.1)

(1.1)

(1.1)

(1.1)

Exceptionals

(1.3)

(0.8)

(0.2)

0.0

0.0

Operating Profit

7.9

13.2

14.9

15.5

16.0

Net Interest

(0.7)

(0.9)

(1.3)

(1.0)

(1.0)

Share of post-tax profits in JVs and associates

2.8

3.2

3.0

3.0

3.0

Profit Before Tax (norm)

 

 

11.9

17.7

18.1

18.9

19.3

Profit Before Tax (FRS 3)

 

 

10.0

15.5

16.6

17.6

18.0

Tax

(1.7)

(1.9)

(2.6)

(2.8)

(2.9)

Profit After Tax (norm)

9.9

15.6

15.5

16.1

16.5

Profit After Tax (FRS 3)

8.3

13.6

14.0

14.8

15.2

Minority interest

(1.3)

(1.8)

(1.5)

(1.5)

(1.5)

Net income (norm)

8.6

13.9

14.0

14.6

15.0

Net income (FRS 3)

7.0

11.9

12.5

13.3

13.7

Average Number of Shares Outstanding (m)

91.4

91.4

91.4

91.4

91.4

EPS - normalised (p)

 

 

9.4

15.2

15.3

16.0

16.4

EPS (p)

 

 

9.4

14.8

15.0

15.6

16.0

EPS - FRS 3 (p)

 

 

7.7

13.0

13.6

14.5

15.0

Dividend per share (p)

4.0

4.5

4.7

4.9

5.1

EBITDA Margin (%)

4.0

4.9

5.0

5.0

5.1

Operating Margin (before GW and except.) (%)

2.8

3.8

3.9

4.0

4.0

BALANCE SHEET

Fixed Assets

 

 

87.6

96.5

101.9

101.8

101.7

Intangible Assets

26.6

26.5

27.0

27.1

27.3

Tangible Assets, Deferred tax assets and Pension surplus

61.1

70.0

74.9

74.7

74.4

Current Assets

 

 

120.9

134.7

133.9

138.2

142.6

Stocks

37.0

42.4

47.0

51.3

51.9

Debtors

60.0

67.7

71.3

73.6

74.5

Cash

23.9

24.6

15.5

13.3

16.2

Current Liabilities

 

 

(73.9)

(99.5)

(83.7)

(81.8)

(79.6)

Creditors including tax, social security and provisions

(56.9)

(64.5)

(66.7)

(67.8)

(68.6)

Short term borrowings

(17.1)

(35.0)

(17.0)

(14.0)

(11.0)

Long Term Liabilities

 

 

(28.7)

(10.8)

(25.8)

(25.8)

(25.8)

Long term borrowings

(21.0)

(5.0)

(20.0)

(20.0)

(20.0)

Retirement benefit obligation

0.0

0.0

0.0

0.0

0.0

Other long term liabilities

(7.8)

(5.8)

(5.8)

(5.8)

(5.8)

Net Assets

 

 

105.9

121.0

126.3

132.5

138.9

Minority interest

(14.4)

(15.7)

(16.7)

(17.7)

(18.7)

Shareholders equity

 

 

91.5

105.3

109.6

114.8

120.2

CASH FLOW

Operating Cash Flow

 

 

15.1

15.0

14.9

16.0

21.4

Net Interest

(0.7)

(1.0)

(1.3)

(1.0)

(1.0)

Tax

(1.2)

(2.5)

(2.6)

(2.8)

(2.9)

Investment activities

(1.1)

(2.8)

(5.3)

(4.8)

(4.8)

Acquisitions/disposals

(13.2)

(4.2)

(8.8)

(2.3)

(2.3)

Equity financing and other financing activities

0.1

(0.1)

0.0

0.0

0.0

Dividends to shareholders

(19.5)

(3.8)

(4.1)

(4.3)

(4.5)

Net Cash Flow

(20.4)

0.5

(7.3)

0.8

5.9

Opening net debt/(cash)

 

 

(8.1)

14.1

15.4

21.5

20.7

HP finance leases initiated

0.0

0.0

0.0

0.0

0.0

Other

1.9

1.7

(1.2)

0.0

0.0

Closing net debt/(cash)

 

 

14.1

15.4

21.5

20.7

14.8

Source: Company data, Edison Investment Research

General disclaimer and copyright

This report has been commissioned by Carr's Group and prepared and issued by Edison, in consideration of a fee payable by Carr's Group. Edison Investment Research standard fees are £49,500 pa for the production and broad dissemination of a detailed note (Outlook) following by regular (typically quarterly) update notes. Fees are paid upfront in cash without recourse. Edison may seek additional fees for the provision of roadshows and related IR services for the client but does not get remunerated for any investment banking services. We never take payment in stock, options or warrants for any of our services.

Accuracy of content: 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 and have not sought for this information to be independently verified. Opinions contained in this report represent those of the Edison analyst at the time of publication. 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.

Exclusion of Liability: To the fullest extent allowed by law, Edison shall not be liable for any direct, indirect or consequential losses, loss of profits, damages, costs or expenses incurred or suffered by you arising out or in connection with the access to, use of or reliance on any information contained on this note.

No personalised advice: The information that we provide should not be construed in any manner whatsoever as, personalised advice. Also, 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 securities described in the report may not be eligible for sale in all jurisdictions or to certain categories of investors.

Investment in securities mentioned: Edison has a restrictive policy relating to personal dealing and conflicts of interest. 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, subject to Edison's policies on personal dealing and conflicts of interest.

Copyright: Copyright 2019 Edison Investment Research Limited (Edison). All rights reserved FTSE International Limited (“FTSE”) © FTSE 2019. “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.

Australia

Edison Investment Research Pty Ltd (Edison AU) is the Australian subsidiary of Edison. Edison AU is a Corporate Authorised Representative (1252501) of Myonlineadvisers Pty Ltd who holds an Australian Financial Services Licence (Number: 427484). This research is issued in Australia by Edison AU and any access to it, is intended only for "wholesale clients" within the meaning of the Corporations Act 2001 of Australia. Any advice given by Edison AU is general advice only and does not take into account your personal circumstances, needs or objectives. You should, before acting on this advice, consider the appropriateness of the advice, having regard to your objectives, financial situation and needs. If our advice relates to the acquisition, or possible acquisition, of a particular financial product you should read any relevant Product Disclosure Statement or like instrument.

New Zealand

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. 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 (i.e. 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.

United Kingdom

Neither this document and associated email (together, the "Communication") constitutes or form part of any offer for sale or subscription of, or solicitation of any offer to buy or subscribe for, any securities, nor shall it or any part of it form the basis of, or be relied on in connection with, any contract or commitment whatsoever. Any decision to purchase shares in the Company in the proposed placing should be made solely on the basis of the information to be contained in the admission document to be published in connection therewith.

This Communication is being distributed in the United Kingdom and is directed only at (i) persons having professional experience in matters relating to investments, i.e. investment professionals within the meaning of Article 19(5) of the Financial Services and Markets Act 2000 (Financial Promotion) Order 2005, as amended (the "FPO") (ii) high net-worth companies, unincorporated associations or other bodies within the meaning of Article 49 of the FPO and (iii) persons to whom it is otherwise lawful to distribute it. The investment or investment activity to which this document relates is available only to such persons. It is not intended that this document be distributed or passed on, directly or indirectly, to any other class of persons and in any event and under no circumstances should persons of any other description rely on or act upon the contents of this document (nor will such persons be able to purchase shares in the placing).

This Communication is being supplied to you solely for your information and may not be reproduced by, further distributed to or published in whole or in part by, any other person.

United States

The Investment Research is a publication distributed in the United States by Edison Investment Research, Inc. Edison Investment Research, Inc. is registered as an investment adviser with the Securities and Exchange Commission. Edison 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. This report is a bona fide publication of general and regular circulation offering impersonal investment-related advice, not tailored to a specific investment portfolio or the needs of current and/or prospective subscribers. As such, Edison does not offer or provide personal advice and the research provided is for informational purposes only. No mention of a particular security in this report constitutes a recommendation to buy, sell or hold that or any security, or that any particular security, portfolio of securities, transaction or investment strategy is suitable for any specific person.

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

1,185 Avenue of the Americas

3rd Floor, New York, NY 10036

United States of America

Sydney +61 (0)2 8249 8342

Level 4, Office 1205

95 Pitt Street, Sydney

NSW 2000, Australia

General disclaimer and copyright

This report has been commissioned by Carr's Group and prepared and issued by Edison, in consideration of a fee payable by Carr's Group. Edison Investment Research standard fees are £49,500 pa for the production and broad dissemination of a detailed note (Outlook) following by regular (typically quarterly) update notes. Fees are paid upfront in cash without recourse. Edison may seek additional fees for the provision of roadshows and related IR services for the client but does not get remunerated for any investment banking services. We never take payment in stock, options or warrants for any of our services.

Accuracy of content: 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 and have not sought for this information to be independently verified. Opinions contained in this report represent those of the Edison analyst at the time of publication. 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.

Exclusion of Liability: To the fullest extent allowed by law, Edison shall not be liable for any direct, indirect or consequential losses, loss of profits, damages, costs or expenses incurred or suffered by you arising out or in connection with the access to, use of or reliance on any information contained on this note.

No personalised advice: The information that we provide should not be construed in any manner whatsoever as, personalised advice. Also, 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 securities described in the report may not be eligible for sale in all jurisdictions or to certain categories of investors.

Investment in securities mentioned: Edison has a restrictive policy relating to personal dealing and conflicts of interest. 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, subject to Edison's policies on personal dealing and conflicts of interest.

Copyright: Copyright 2019 Edison Investment Research Limited (Edison). All rights reserved FTSE International Limited (“FTSE”) © FTSE 2019. “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.

Australia

Edison Investment Research Pty Ltd (Edison AU) is the Australian subsidiary of Edison. Edison AU is a Corporate Authorised Representative (1252501) of Myonlineadvisers Pty Ltd who holds an Australian Financial Services Licence (Number: 427484). This research is issued in Australia by Edison AU and any access to it, is intended only for "wholesale clients" within the meaning of the Corporations Act 2001 of Australia. Any advice given by Edison AU is general advice only and does not take into account your personal circumstances, needs or objectives. You should, before acting on this advice, consider the appropriateness of the advice, having regard to your objectives, financial situation and needs. If our advice relates to the acquisition, or possible acquisition, of a particular financial product you should read any relevant Product Disclosure Statement or like instrument.

New Zealand

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. 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 (i.e. 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.

United Kingdom

Neither this document and associated email (together, the "Communication") constitutes or form part of any offer for sale or subscription of, or solicitation of any offer to buy or subscribe for, any securities, nor shall it or any part of it form the basis of, or be relied on in connection with, any contract or commitment whatsoever. Any decision to purchase shares in the Company in the proposed placing should be made solely on the basis of the information to be contained in the admission document to be published in connection therewith.

This Communication is being distributed in the United Kingdom and is directed only at (i) persons having professional experience in matters relating to investments, i.e. investment professionals within the meaning of Article 19(5) of the Financial Services and Markets Act 2000 (Financial Promotion) Order 2005, as amended (the "FPO") (ii) high net-worth companies, unincorporated associations or other bodies within the meaning of Article 49 of the FPO and (iii) persons to whom it is otherwise lawful to distribute it. The investment or investment activity to which this document relates is available only to such persons. It is not intended that this document be distributed or passed on, directly or indirectly, to any other class of persons and in any event and under no circumstances should persons of any other description rely on or act upon the contents of this document (nor will such persons be able to purchase shares in the placing).

This Communication is being supplied to you solely for your information and may not be reproduced by, further distributed to or published in whole or in part by, any other person.

United States

The Investment Research is a publication distributed in the United States by Edison Investment Research, Inc. Edison Investment Research, Inc. is registered as an investment adviser with the Securities and Exchange Commission. Edison 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. This report is a bona fide publication of general and regular circulation offering impersonal investment-related advice, not tailored to a specific investment portfolio or the needs of current and/or prospective subscribers. As such, Edison does not offer or provide personal advice and the research provided is for informational purposes only. No mention of a particular security in this report constitutes a recommendation to buy, sell or hold that or any security, or that any particular security, portfolio of securities, transaction or investment strategy is suitable for any specific person.

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

1,185 Avenue of the Americas

3rd Floor, New York, NY 10036

United States of America

Sydney +61 (0)2 8249 8342

Level 4, Office 1205

95 Pitt Street, Sydney

NSW 2000, Australia

Share this with friends and colleagues