Executing the Growth Acceleration Plan

Ebiquity 29 March 2017 Update
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Ebiquity

Executing the Growth Acceleration Plan

FY16 results –
introducing FY18 forecasts

Media

29 March 2017

Price

117p

Market cap

£90m

Net debt (£m) at 31 December 2016

28.2

Shares in issue

78m

Free float

99%

Code

EBQ

Primary exchange

AIM

Secondary exchange

N/A

Share price performance

%

1m

3m

12m

Abs

12.2

18.6

(15.1)

Rel (local)

11.0

13.7

(27.7)

52-week high/low

135.5p

88.0p

Business description

Ebiquity is an independent marketing analytics specialist providing a range of business-critical data, analysis and consultancy services to advertisers and media owners on an international basis. It operates across three divisions: MPO (Marketing Performance Optimisation), MVM (Media Value Measurement) and MI (Market Intelligence).

Next events

AGM

May 2017

Interim results

September 2017

Analysts

Bridie Barrett

+44 (0)20 3077 5700

Fiona Orford-Williams

+44 (0)20 3077 5739

Dan Ridsdale

+44 (0)20 3077 5729

Katherine Thompson

+44 (0)20 3077 5730

Ebiquity is a research client of Edison Investment Research Limited

Ebiquity’s FY16 results reflect a continuation of trends seen at H116 and the early stages of the Growth Acceleration Plan. With additional services due to launch in FY17, we retain our forecasts for an acceleration of revenue growth in FY17 and introduce FY18 estimates. The transition to a more sustainable margin translates to a lower EPS figure overall but improves the quality of the earnings base and the sustainability of revenue growth. The c 12x P/E rating is unchallenging versus peers.

Year end

Revenue (£m)

EBIT

(£m)

PBT*
(£m)

EPS*
(p)

DPS
(p)

P/E
(x)

Yield
(%)

12/15***

76.6

12.4

11.2

10.8

**0.40

10.8

0.3

12/16

83.6

13.0

11.8

11.3

0.65

10.4

0.5

12/17e

92.0

13.3

12.3

10.3

0.70

11.4

0.6

12/18e

99.3

12.3

11.5

9.5

0.75

12.4

0.6

Note: *PBT and EPS (diluted) are normalised, excluding amortisation of acquired intangibles, exceptional items and share-based payments. ***Pro-forma 12-month period to December.

FY16: Implementing the new strategy

FY16 results were as indicated in January’s update. Of the 9.1% revenue growth, 2.1% was organic and 5.8% currency. MPO continues to be the main driver of growth (+21% lfl) and MVM had a solid year (+3.6% lfl). As previously flagged, weakness in the projects based reputation business within MI was a drag on overall growth (-8.5% lfl); excluding this the advertising intelligence services were more stable (-1.7% lfl). The early stages of the implementation of the group’s Growth Acceleration Plan, and continued softness in the contract compliance business resulted in a 0.7pp reduction in the operating margin to 15.5%, lower than our forecast (16.3%); however, a lower effective tax rate meant that EPS of 11.3p was 3% ahead. A dividend of 0.65p per share has been proposed.

Pick-up in activity: We introduce FY18 forecasts

As additional services are launched during FY17, and the faster growing MPO’s geographic footprint expanded, we expect the pace of revenue growth to accelerate towards the 10% CAGR targeted by management over the next five years. We leave our FY17 EPS forecast broadly unchanged at 10.3p and introduce FY18 forecasts, which reflect the strategy to transition to a faster growing, but lower margin group. In FY18 we factor in a decline in operating margins to the middle of management’s target range (12-13%) and so despite the faster growth and a declining interest burden, we forecast EPS to decline to 9.5p in FY18.

Valuation: Unchallenging

With a strong brand, a global footprint and relationships with 80% of the world’s largest 100 advertisers, Ebiquity stands to benefit from the increasing demand for accountability in a complex media landscape. Earnings growth is being sacrificed as the company improves the quality of its earnings base and secures a more robust longer-term growth profile. Nevertheless, we consider the rating unchallenging; the 10% revenue CAGR targeted by management for the five years to 2021 would put it at the top end of its peer group, while the c 12x FY18e P/E is below its small-cap peer average of 14x.

FY16 results: Financial overview

Revenues increased by 9.1% to £83.6m. The acquisition of Fairbrother Marsh Company (FMC) in Ireland in March 2016 and the full year impact of 2015’s acquisition of Media Value (Spain) contributed 1.2% to growth, and with 68% of revenues denominated in non-sterling currencies, 5.8% was attributable to sterling’s depreciation. Underlying like-for-like constant currency (lfl) revenue growth was 2.1%, similar to the rate in H116.

Adjusted operating profit increased by 4.4% y-o-y to £13.0m with an operating margin of 15.6%, lower than we forecast (16.3%). Adjusted operating profit excludes £5.2m of highlighted items. Of this, £2.5m is non-cash (£1.9m amortisation of acquired intangibles and £0.7m share-based payments) and £2.8m non-recurring cash items. Of the non-recurring items, £2m are acquisition related and include a £0.8m increase in the earnout consideration for Stratigent (US) and a £0.6m impact of FX adjustments related to future earnout payments. The balance of acquisition-related costs concerns the acquisition of the remaining 50% interest in Irish media consultancy FMC. A further £0.7m relates to integration costs following recent acquisitions.

While operating profit was slightly short of our estimate, EPS of 11.3p was 3% ahead, reflecting a lower underlying effective tax charge (21.7%) than we had forecast, with a larger base of taxable profit shifting to the UK.

Operating cash flow at 87% of underlying earnings (110% in CY15) was affected by a £4m increase in the year-end receivable balanced to £28m. After payments for the cash exceptional items, capital expenditure and capitalised development costs totalling £2.4m, £4.4m of acquisition-related costs (earnouts for Stratigent, China Media and Media Value, as well as the initial payments for the March 2016 acquisition of the remaining 50% of FMC), dividends (£0.8m) and interest (£1.1m), year-end net debt decreased to £28.2m.

A dividend of 0.65p per share has been proposed, which implies an 8% pro rata increase on the 0.4p paid for the eight-month period to December 2015, in line with the board’s progressive final dividend policy.

Exhibit 1: Summary FY16 results

(£000s)

CY15a

FY16e

FY16a

diff. to forecasts

y-o-y

% change

FY17e

FY18e

Total revenues

76,584

84,500

83,569

-1.1%

9.1%

91,961

99,318

Operating profit

12,411

13,800

12,959

-6.1%

4.4%

13,333

12,266

Operating margin

16.2%

16.3%

15.6%

14.5%

12.4%

Highlighted items

(8,768)

(5,444)

(5,202)

-4.4%

-40.7%

(4,500)

(4,500)

Reported operating profit

3,643

8,356

7,757

-7.2%

112.9%

8,833

7,766

Net finance cost

(1,199)

(1,100)

(1,132)

2.9%

-5.6%

(1,000)

(795)

Share of associates

18

10

PBT – adjusted

11,230

12,710

11,827

-6.9%

5.3%

12,333

11,472

EPS – normalised, diluted (p)

10.8

11.0

11.3

2.7%

4.6%

10.3

9.5

Source: Historic – Ebiquity, forecasts – Edison Investment Research

Operational update: MPO continues rapid growth

The strong performance of Marketing Performance Optimisation (MPO) and solid growth from Media Value Measurement (MVM) continue to underpin revenue growth, with Market Intelligence (MI) continuing to act as a drag on revenues, affected, as flagged at the interims, by a difficult period for the project based business.

Ebiquity is in the early stages of execution of its Growth Acceleration strategy announced last summer. It has implemented a new matrix organisational structure with global practice responsibilities, unifying its network of independently run local organisations under a common global structure with the sales effort reorganised toward a client first approach in order to optimise cross-selling opportunities. Investment is being increased across the divisions in order to ensure it attracts, retains and equips its talent with the appropriate skills and technology to deliver the best services to its clients. In parallel it is launching new services and is expanding the geographic footprint of its fastest growing MPO division, and stepping up its marketing efforts in order to better capitalise on its brand as a trusted independent advisor.

Exhibit 2: FY16 divisional performance and forecasts

Revenues

CY15a

FY16e

FY16a

y-o-y

% change

lfl const. ccy growth %

FY17e

FY18e

MVM - Media Value Measurement

41,998

47,335

47,161

12.3%

3.6%

51,405

55,004

MI - Market Intelligence

24,650

23,000

23,360

-5.2%

-8.5%

23,594

24,301

MPO - Marketing Performance Optimization

9,936

14,165

13,048

31.3%

21.6%

16,962

20,013

Total revenues

76,584

84,500

83,569

9.1%

2.1%

91,961

99,318

Operating profit:

MVM

12,057

13,250

12,124

0.6%

12,594

12,376

MI

3,668

3,220

3,902

6.4%

3,941

3,888

MPO

2,802

4,330

3,739

33.4%

4,098

3,802

Central costs

(6,116)

(7,000)

(6,806)

11.3%

(7,300)

(7,800)

Total operating profit

12,411

13,800

12,959

4.4%

13,333

12,266

Operating margin

MVM

28.7%

28.0%

25.7%

24.5%

22.5%

MI

14.9%

14.0%

16.7%

16.7%

16.0%

MPO

28.2%

30.6%

28.7%

24.2%

19.0%

Total operating margin

16.2%

16.3%

15.6%

14.5%

12.4%

Source: Historic – Ebiquity, Forecasts – Edison Investment Research

MPO (16% revenues) Revenue growth of 31.3% (21.6% excluding currency), while slower than the phenomenal 53% reported in H116, continues to reflect the increasing demand for data-driven analytics in marketing. Strong growth was reported from both the multichannel analytics and the marketing effectiveness services. Operating margins of 28.7%, while slightly ahead of CY15 (28.2%) are expected to decrease in future periods as the group executes its rollout plan. Marketing effectiveness services are being rolled out in Germany, France and the Asia-Pacific region, where first projects were delivered in H216. Investment is also being directed towards developing and launching a digital attribution model (in Q217) to complement its existing services.

MVM (56% revenues) Against a strong basis of comparison in CY15 (15% revenue growth), FY16 revenue growth slowed to 3.6% lfl. Growth in the contract compliance business was affected by some clients in the US delaying spend in advance of the publication of last summer’s ANA report. We had expected this to bounce back in the second half of the year; however, activity has started to pick up in 2017. Excluding this business (now 10% of MVM revenues), growth for MVM was a solid 6.6%. Operating margins decreased by 3pp to 25.7%, a consequence of the weakness in contract compliance and increased investment in its resources in China and the US.

MI (28% revenues) Revenues decreased 5.2% or 8.5% lfl. The loss of one significant client in the project based reputation business 2015 resulted in project-based research business declining sharply. This business now accounts for only 10% of divisional revenues. As flagged at the time of the interims, within the larger platform-based advertising intelligence business, the loss of three US clients early in H116 affected growth. However, it has received encouraging feedback following the launch of the new version of its platform globally last year (Portfolio Media) and the 1.7% lfl decline for the year in this business suggests a more stable second half (H116 lfl revenues for this business decreased 4.5%). Tight cost control and a change in the business mix resulted in an increase in operating margins to 16.7% (CY15: 14.9%).

Forecasts: We introduce FY18e, reflecting growth plan

Management is targeting an acceleration in revenue growth to a CAGR of 10% over the next five years, with margins moving to a more sustainable 12-13% (from the historic three-year average of 16%).

We leave our FY17 forecasts broadly unchanged (we increase FY17 EPS by 2%) and introduce FY18 forecasts reflecting this transition to a faster growing, but lower margin group.

In FY17 we factor in a pick-up in organic growth to 6% and a 4% benefit from currency, with operating margins decreasing to 14.5%. In FY18, we forecast 8% revenue growth with margins of 12.4%. More specifically:

At MPO we expect the strong, double-digit growth to continue as existing and new services are extended to new geographies. The rollout of the marketing effectiveness business has already started in Europe and Asia; this will be followed by the rollout of the multichannel effectiveness services in the US later in FY18.

Within MVM, we believe Ebiquity is well placed to capitalise on the raised awareness regarding media transparency following last year’s ANA review. While this has not yet been the case, the contract compliance business has picked up and the pipeline is strong. The widened service offering should also start to contribute to growth; in Q416, Ebiquity formally launched its new strategic consultancy, it continues with the development of a digital paid media performance measurement platform (Optix) and plans the launch of a data management platform (Connect).

Within MI, the rollout of Portfolio Digital has started in Asia-Pacific, and the UK launch is planned in Q217. While management has received good feedback relating to the new Portfolio platform, pricing pressure remains intense, particularly in the US and we assume only slight growth in revenues year-on-year.

Net debt of £28.2m comprises a £3.75m term loan (repayable on a quarterly basis) and a revolving credit facility of £30m (£29m drawn), both of which have a maturity date of 2 July 2018 (and covenants set at 2.5x EBITDA). In addition, the group has an accordion option to increase these facilities by a further £20m.

Over the last few years Ebiquity has been funding the earnout payments on the acquisitions of Stratigent (2013), China Media (2012), Billets America (2014) and Media Value (2015). Consequently, net debt has remained relatively stable. The last significant payment related to acquisitions was in FY16 (£4.4m). We forecast acquisition-related payments to decrease to £1.8m in FY17. Inclusive of these payments, capital expenditure (£3m) and the dividend, we forecast year-end net debt to decrease to £24.6m.

Our forecasts are presented in full in Exhibit 4.

Valuation and investment case

Having been marked down by approximately 40% over the course of 2016, the shares have recovered 20% in recent weeks. However, the 12.4x P/E (FY18) and 9.9x EV/EBITA ratings remain unchallenging. Larger agency and consulting peers trade on average FY17 P/E and EV/EBITA multiples of 16x and 11x, respectively, while small-cap agencies trade on average 14x P/E and 11x EV/EBITA multiples. Although the step-up in investment means that despite the accelerating revenue profile, EPS is unlikely to expand over the forecast period this reflects the initial investment phase of Ebiquity’s more ambitious growth strategy, which we expect to result in a higher quality earnings base and a more sustainable growth profile over the medium to longer term. Investors should consider:

Independence is becoming increasingly valued in this industry and Ebiquity recently received high-profile recognition when it was contracted by the ANA to draft a framework to provide media business practice clarity.

Ebiquity can leverage its existing network. It is a market leader in media benchmarking and auditing and one of the largest media monitoring providers globally. It has an international presence and relationships including 80 of the world’s largest 100 advertisers. 21% of clients took two or more services in FY16 (up from 18% in FY15). With the new matrix structure now in place, there is considerable scope to improve this over the medium term.

The group has considerable know-how. It owns two of the largest international media databases, employs c 900 employees, has deep sector knowledge in several verticals (automotive, FMCG, finance) and has a significant understanding of media technology.

The higher growth MPO and MVM divisions now account for 72% of revenues, meaning the slower growth MI division should prove less of a drag to growth over time.

Exhibit 3: Peer valuation comparison

Name

Market cap

Sales growth (%)

EBIT margin (%)

EPS growth (%)

EV/sales

(x)

EV/EBIT

(x)

P/E

(x)

Div yield (%)

Year

end

(m)

1FY

2FY

1FY

2FY

1FY

2FY

1FY

2FY

1FY

2FY

1FY

2FY

1FY

EBIQUITY PLC

£85

10

8

14.5

12.4

-9

-7

1.3

1.2

9.1

9.9

11.4

12.4

0.6

12/2016

Small cap peers average

21.0

7.0

11.7

14.2

23

19

1.3

1.4

10.6

10.6

14.1

13.7

2.1

BRAINJUICER

£94

25.1

7

20

21.1

34

21

2.7

2.5

13.8

13.8

19.5

17.9

0.7

12/2016

M&C SAATCHI

£269

27.1

6

11

11.5

161

8

1.2

1.1

10.8

10.8

15.4

14.3

2.7

12/2016

HUNTSWORTH

£143

10.1

5

N/A

N/A

(132)

4

1.0

0.9

N/A

N/A

11.2

9.9

4.1

12/2016

NEXT FIFTEEN

£286

30.5

12

14

14.9

141

35

1.8

1.6

12.4

12.4

17.7

15.5

1.4

01/2016

MMG

£36

27.0

N/A

5

N/A

N/A

N/A

0.3

N/A

5.6

5.6

5.9

N/A

4.0

12/2016

NAHL GROUP PLC

£74

4.1

8

27

25.7

(37)

(7)

1.5

1.4

5.6

5.6

6.8

8.5

9.9

12/2016

MDC PARTNERS

$495

6.4

5

8

9.4

(152)

40

1.0

1.0

12.4

12.4

19.7

13.1

0.0

12/2016

Large cap average

7.0

4.6

14.4

14.6

10

8

1.6

1.5

11.2

11.2

16.3

15.0

2.8

ACCENTURE

$82,329

(0.5)

7

14.8

14.9

(9)

9

2.3

2.1

15.4

15.4

21.6

19.8

1.9

08/2016

INTERPUBLIC

$9,570

1.9

4

12.5

12.9

(2)

11

1.3

1.3

10.4

10.4

16.7

15.0

2.9

12/2016

WPP

£21,262

24.6

5

15.4

15.4

33

7

1.7

1.6

11.0

11.0

13.2

12.3

3.8

12/2016

OMNICOM

$19,855

1.4

4

13.4

13.6

6

9

1.4

1.4

10.8

10.8

16.7

15.4

2.7

12/2016

HAVAS

€3,500

9.4

3

14.1

14.2

19

6

1.5

1.4

10.5

10.5

16.7

15.8

2.4

12/2016

PUBLICIS

€14,047

5.5

4

16

17

12

9

1.5

1.4

9.3

9.3

13.0

12.0

3.2

12/2016

Source: Bloomberg, Edison Investment Research (EBQ). Note: Prices as at 28 March.

Sensitivities: FX, people, competition

Ebiquity competes against large, global consulting groups in a price-sensitive market place. As a people-based business, the tight labour market for consultants with appropriate skill sets may affect the pace and cost of management’s expansion plan. 68% of revenues are non-sterling denominated and fluctuations in exchange rates may affect forecasts as there are no active hedging policies.

Exhibit 4: Financial summary

£000s

2014

2015

2015

2014*

2015*

2016

2017e

2018e

Year

Year

8 months

Year

Year

Year

Year

Year

Period ending

30-Apr

30-Apr

31-Dec

31-Dec

31-Dec

31-Dec

31-Dec

31-Dec

IFRS

IFRS

IFRS

IFRS

IFRS

IFRS

IFRS

IFRS

PROFIT & LOSS

Revenue

 

 

68,452

73,874

43,310

69,106

76,584

83,569

91,961

99,318

Cost of Sales

(30,008)

(32,383)

(22,514)

N/A

N/A

(38,282)

(42,302)

(45,686)

Gross Profit

38,444

41,491

20,796

N/A

N/A

45,287

49,658

53,632

EBITDA (norm)

 

 

12,768

13,463

1,151

9,572

14,161

14,574

15,583

14,666

Operating Profit (before GW and except.)

 

10,441

11,729

(3)

7,962

12,411

12,959

13,333

12,266

Intangible Amortisation

(1,873)

(2,030)

(1,327)

(1,997)

(1,327)

(1,865)

(1,900)

(1,900)

Exceptionals (inc share-based charges)

(4,854)

(3,883)

(5,329)

(5,818)

(7,441)

(3,337)

(2,600)

(2,600)

Other (inc share of profit of associates)

19

12

13

10

18

0

0

0

Operating Profit

4,631

5,828

(6,646)

157

3,643

7,757

8,833

7,766

Net Interest

(1,191)

(1,171)

(800)

(1,164)

(1,199)

(1,132)

(1,000)

(794)

Profit Before Tax (norm)

 

 

10,167

10,570

(790)

6,808

11,230

11,827

12,333

11,472

Profit Before Tax (FRS 3)

 

 

3,440

4,657

(7,446)

(1,007)

2,464

6,625

7,833

6,972

Tax

5

(538)

1,332

N/A

N/A

(2,230)

(3,000)

(3,212)

Profit After Tax (norm)

8,082

8,877

(214)

N/A

N/A

9,257

8,880

8,260

Profit After Tax (FRS 3)

3,445

4,119

(6,114)

N/A

N/A

4,395

4,833

3,760

Minorities

(421)

(496)

(107)

N/A

N/A

(245)

(525)

(408)

Net Income (norm)

7,661

8,346

(336)

N/A

N/A

8,987

8,355

7,851

Net Income (FRS 3)

3,024

3,623

(6,221)

N/A

N/A

4,150

4,308

3,351

EPS - normalised (p)

 

 

10.3

11.0

(0.4)

N/A

N/A

11.6

10.7

9.9

EPS - normalised and fully diluted (p)

 

9.0

10.7

(0.4)

N/A

10.8

11.3

10.3

9.5

EPS - FRS 3 (p)

 

 

4.1

4.8

(8.1)

N/A

N/A

5.4

5.5

4.2

Dividend per share (p)

0.0

0.4

0.4

0.0

0.40

0.65

0.70

0.75

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

15.0

15.8

neg

0.0

16.2

15.6

14.5

12.4

BALANCE SHEET

Fixed Assets

 

 

74,173

77,908

73,594

N/A

73,594

75,855

76,482

74,857

Intangible Assets

69,547

73,274

68,354

N/A

68,354

72,079

72,256

70,381

Tangible Assets

3,162

3,194

2,928

N/A

2,928

2,438

2,888

3,138

Other

1,464

1,440

2,312

N/A

2,312

1,338

1,338

1,338

Current Assets

 

 

33,386

39,174

33,073

N/A

33,073

35,078

37,624

42,287

Trade Debtors

15,683

17,390

16,283

N/A

16,283

19,291

20,724

21,838

Other

11,182

12,489

8,035

N/A

8,035

9,125

9,125

9,125

Cash (Inc.overdraft)

6,521

9,295

8,755

N/A

8,755

6,662

7,775

11,324

Current Liabilities

 

 

(29,184)

(29,161)

(27,473)

N/A

(27,473)

(25,712)

(26,545)

(27,255)

Trade Creditors

(4,989)

(3,866)

(20,567)

N/A

(20,567)

(17,809)

(18,442)

(19,152)

Other

(21,252)

(21,473)

(2,105)

N/A

(2,105)

(3,631)

(3,631)

(3,631)

Short term borrowings

(2,943)

(3,822)

(4,801)

N/A

(4,801)

(4,272)

(4,272)

(4,272)

Long Term Liabilities

 

 

(33,858)

(39,263)

(36,785)

N/A

(36,785)

(32,966)

(30,766)

(29,516)

Long term borrowings

(26,235)

(31,880)

(32,615)

N/A

(32,615)

(30,448)

(27,948)

(26,698)

Other long term liabilities

(7,623)

(7,383)

(4,170)

N/A

(4,170)

(2,518)

(2,818)

(2,818)

Net Assets

 

 

44,517

48,658

42,409

N/A

42,409

52,055

56,795

60,373

CASH FLOW

Operating Cash Flow

 

 

6,799

7,927

5,028

N/A

13,290

10,782

13,183

12,663

Net Interest

(841)

(1,623)

(588)

N/A

(1,009)

(1,074)

(1,000)

(794)

Tax

(1,159)

(1,618)

(892)

N/A

(1,062)

(166)

(2,700)

(3,212)

Capex

(2,552)

(3,128)

(1,328)

N/A

(1,986)

(2,351)

(3,000)

(2,650)

Acquisitions/disposals

(9,308)

(5,462)

(4,107)

N/A

(4,530)

(4,431)

(1,777)

(25)

Financing

(94)

127

261

N/A

344

26

0

0

Dividends and other items

0

0

(291)

N/A

(291)

(1,734)

(1,093)

(1,181)

Net Cash Flow

(7,155)

(3,777)

(1,917)

N/A

2,981

1,052

3,613

4,800

Opening net debt/(cash)

 

 

15,308

22,657

26,407

N/A

31,563

28,661

28,242

24,629

HP finance leases initiated

0

0

0

N/A

0

0

0

0

FX & Other

(194)

27

(337)

N/A

(79)

(633)

0

0

Closing net debt/(cash)

 

 

22,657

26,407

28,661

31,563

28,661

28,242

24,629

19,830

Source: Ebiquity accounts, Edison Investment Research. Note: *Pro forma data as supplied by Ebiquity. Year end changed to December from April in 2015.

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 Ebiquity 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

245 Park Avenue, 39th Floor

10167, 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

245 Park Avenue, 39th Floor

10167, 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 Ebiquity 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

245 Park Avenue, 39th Floor

10167, 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

245 Park Avenue, 39th Floor

10167, New York

US

Sydney +61 (0)2 8249 8342

Level 12, Office 1205

95 Pitt Street, Sydney

NSW 2000, Australia

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