Focusing on organic growth

SNP Schneider-Neureither & Partner 18 April 2018 Update
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SNP Schneider-Neureither & Partner

Focusing on organic growth

Annual report

Software & comp services

18 April 2018

Price

€33.80

Market cap

€185m

Net debt (€m) at 31 December 2017

26.8

Shares in issue

5.5m

Free float

53.0

Code

SHF

Primary exchange

Frankfurt (Xetra)

Secondary exchange

N/A

Share price performance

%

1m

3m

12m

Abs

(4.6)

(2.2)

(15.6)

Rel (local)

(6.1)

2.5

(18.8)

52-week high/low

€43.4

€28.5

Business description

SNP Schneider-Neureither & Partner 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 suite, CrystalBridge and Transformation Backbone with SAP LT (T-B), which automatically analyses and applies and tracks changes in IT systems.

Next events

Q1 results

27 April

AGM

30 May

Q2 results

2 August

Q3 results

31 October

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 has undertaken a series of acquisitions over the last few years that have transformed the scale and the geographical footprint of the business. The goal is to position the group for the anticipated surge in data migrations globally, particularly around SAP S/4HANA, and SNP has already completed more than 30 S/4 projects. In FY18, management is focused on driving organic growth. We have maintained our headline forecasts, although adjusted net debt rises due to higher-than-expected FY17 net debt. Given the favourable industry drivers and the potential for margin recovery, the shares look attractive on c 21x our FY19e earnings.

Year end

Revenue
(€m)

PBT*
(€m)

EPS*
(c)

DPS
(c)

P/E
(x)

Yield
(%)

12/16

80.7

5.7

94.4

39.0

35.8

1.2

12/17

122.3

(1.8)

(46.4)

0.0

N/A

0.0

12/18e

151.2

6.4

76.9

30.0

44.0

0.9

12/19e

165.3

13.1

162.7

40.0

20.8

1.2

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

FY17 results: Organic revenue growth was 8%

FY17 revenue jumped by 52% to €122.3m, including 8% organic growth, with additional contributions from five acquisitions. The group reported a loss before tax of €1.8m, after a series of one-off costs. EBITDA was €3.3m, while on the company’s non-IFRS basis, adjusted EBITDA was €6.9m, down from €8.1m in FY16. The group finished the year with net debt of €26.8m, up by €35.1m.

Strategy: CrystalBridge to be the new core platform

Following the splurge in acquisitions, which has seen headcount jump from 250 in 2014 to 1300+ now, the group is focusing on organic growth in FY18. Particular attention is on North America and Asia where key management appointments have been made to drive the business forward. CrystalBridge, launched last October, is destined to become SNP’s central software platform and all the group’s core software is expected to be integrated into the CrystalBridge platform in time.

Forecasts: Broadly maintained, FY20 introduced

We have maintained our FY18 and FY19 revenue and profit forecasts, although we have amended the revenue split, increasing the level of software sales. We have also introduced FY20 numbers. Our net debt forecast increases due to an accounting change (primarily includes acquisition liabilities), and higher-than-expected end FY17 net debt. We have pared back our dividend forecasts.

Valuation: Strong growth play in the ERP space

The stock trades on c 44x our FY18e EPS, which falls to c 21x in FY19e and c 16x in FY20. Our discounted cash flow valuation (based on c 7% organic revenue CAGR over 10 years, 10% WACC, 15.8% long-term margin and 2% terminal growth) is €40.50/share, 20% above the current share price. Increasing the organic revenue CAGR to 10% increases the valuation to c €53/share, while a 15% CAGR takes the valuation to c €83/share, with other variables remaining constant.

FY17 results: Total revenue growth was 52%

SNP had an extremely busy FY17, with two major acquisitions (BCC and Adepcon) and separate debt and equity fund-raisings. It also increased its shareholding in Innoplexia from 20% to 80% and acquired a small company, ERST European Retail Systems Technology, late in the year. In addition, new corporate entities were established in the US and Germany and the parent company converted to a European stock corporation. The primary goal in FY18 is to adapt the newly acquired businesses and make adjustments to the group while focusing on driving organic growth with an emphasis on pushing software sales.

As stated in the preliminary announcement, FY17 organic revenue growth was c 8%, along with the impact of five acquisitions. In aggregate, revenues grew by 52% to €122.3m, including €35m from acquisitions. The newly consolidated businesses included Harlex (90% owned), acquired in late 2016, along with BCC (100%), Innoplexia (80%), Adepcon (60%) and ERST (100%), which were acquired during 2017. This is the group’s first public announcement of the ERST acquisition. ERST is a small nine-person data transformation company, based in Hamburg, which operates its own proprietary middleware platform. Additionally, during 2017 the group increased its stake in SNP Transformations SEA from 51% to 81%. The group’s acquisition strategy has shifted away from consulting businesses to acquiring businesses that will broaden the group’s software expertise.

Exhibit 1: Quarterly analysis

€000

FY16

Q117

Q217

Q317

Q417

FY17

FY18e

Professional services

66,640

19,089

22,151

25,936

31,157

98,333

116,757

Licences

11,982

1,733

3,042

5,935

8,389

19,099

27,671

Maintenance

2,063

776

1,237

1,140

1,758

4,911

6,821

Total revenue

80,685

21,598

26,430

33,011

41,304

122,343

151,249

Other operating income

1,228

235

295

171

1,217

1,918

 

Cost of materials

(8,276)

(2,260)

(3,244)

(7,037)

(6,674)

(19,215)

 

Personnel costs

(47,207)

(14,657)

(15,511)

(18,849)

(22,455)

(71,472)

 

Other operating expenses

(17,811)

(6,692)

(6,461)

(7,156)

(9,626)

(29,935)

 

Other taxes

(95)

(28)

(277)

(32)

(196)

(533)

 

Op costs (before depreciation)

(72,161)

(23,402)

(25,198)

(32,903)

(37,572)

(119,075)

(140,367)

EBITDA

8,524

(1,804)

1,232

108

3,732

3,268

10,882

Depreciation

(1,667)

(594)

(690)

(843)

(1,649)

(3,776)

(3,488)

Adjusted operating profit (EBIT)

6,857

(2,398)

542

(735)

2,083

(508)

7,394

Operating margin

8.5%

(11.1%)

2.1%

(2.2%)

5.0%

(0.4%)

4.9%

Net interest

(1,137)

(577)

(181)

(218)

(351)

(1,327)

(1,000)

Edison profit before tax (norm)

5,720

(2,975)

361

(953)

1,732

(1,835)

6,394

Associates

8

0

(1)

12

(35)

(24)

0

Exceptional items

0

0

0

0

0

0

0

Profit before tax (FRS 3)

5,728

(2,975)

360

(941)

1,697

(1,859)

6,394

New orders and backlog

FY16

Q117

Q217

Q317

Q417

FY17

 

Incoming orders

95,600

24,400

33,200

37,400

35,700

130,700

 

Quarterly revenues

80,685

21,598

26,430

33,011

41,304

122,343

 

Book-to-bill ratio

1.18

1.13

1.26

1.13

0.86

1.07

 

Backlog

 

40,800

48,500

62,200

61,300

 

 

Source: Company accounts, Edison Investment Research

The group’s DACH (Germany, Austria and Switzerland) businesses have been performing well, while the Asian and North American markets have been more challenging. Hence, the primary focus in FY18 is on turning around the Asian and North American businesses.

Revenue from the DACH countries grew by 8% to €64.0m, but fell from 73% of the total to 52%, reflecting the group’s internationalisation strategy. The rest of Europe jumped from €1.4m to €23.6m, mainly reflecting the acquisition of Adepcon. The US grew by 21% to €15.9m, largely reflecting a large order from a US chemicals company. South America jumped from zero to €12.0m while Asia eased by 3% to €6.9m.

Software sales jumped 71% to €24.0m, helped by a strong Q4 (up 105%), while professional services rose by 48% to €98.3m. The SNP Transformation Backbone with SAP LT grew revenues by 9% to €10.4m, while Interface Scanner generated €1.1m of revenue in its first year.

SNP has decided not to pay a dividend for FY17 to strengthen the group’s capital base.

The cash outflow from operating activities was €5.3m in FY17. After interest of €0.8m, tax of €1.4m and capex of €5.2m, the free cash outflow was €12.7m. There were acquisition costs of c €28.8m and the company raised €18.3m in a share placement. After the €1.9m dividend and €10.0m of other movements, including foreign exchange, net debt jumped by €35.1m to €26.8m. There is also a €1.5m pension deficit that takes the adjusted position to €28.4m.

Exhibit 2: Balance sheet position

€m

31 Dec 16

31 Dec 17

Cash

(31.9)

(33.9)

Corporate bond

10.7

0.0

Short-term bank debt

2.1

1.0

Long-term bank debt

0.4

39.6

Net debt / (cash) (old presentation)

(18.7)

6.7

Purchase price obligations (current)

5.3

9.8

Purchase price obligations (non-current)

5.1

9.1

Leasing obligations (current)

0.0

0.3

Leasing obligations (non-current)

0.0

0.3

Other financial liabilities (current)

0.0

0.1

Other financial liabilities (non-current)

0.0

0.5

Net debt / (cash)

(8.3)

26.8

Pension deficit

1.5

1.5

Adjusted net debt / (cash)

(6.8)

28.4

Source: Company accounts

Evolving software platform

The new CrystalBridge software platform was unveiled at SNP’s Transformation World trade show in October 2017 and is intended to become SNP’s central software platform. CrystalBridge offers a graphical and interactive visualisation of entire SAP systems with the goal of supporting and accelerating business transformations, and is a crucial component in the planning of SAP S/4HANA transformations. All the group’s core software is expected to be integrated into the CrystalBridge platform, with T-Bone in the development phase. CrystalBridge is mainly offered on a hosted SaaS rental basis, but SNP also offers one time on-premise licences for larger projects. The other important software launch in 2017 is the SNP Interface Scanner, which enables customers to analyse the interfaces between SAP systems and their surrounding IT landscapes.

Research and development costs were €14.0m in FY17 (or 11.4% of sales), up from €11.0m in FY16 (13.7% of sales) and the development team more than doubled from 43 to 91 people.

Management changes

The group implemented a new organisational and management structure at the end of FY17. There are now six positions on the executive board: chief executive officer, chief revenue officer, global head of services, global head of product development, chief financial officer and global head of human resources.

Henry Göttler has stepped down from the executive board to focus on driving the group’s business in Asia. Mr Göttler is fluent in Cantonese and has strong knowledge of the Asian region. Earlier this year, SNP appointed David Kenneson, a software industry veteran, in the new role of chief revenue officer to head the global sales effort. The role is based in Philadelphia, US, supported by a small team. Dieter Matheis rejoined the company as CFO late last year. He was chairman of the SNP supervisory board from 2002 and 2011 and before that was CFO of SAP. Mr Matheis has made a number of changes to the accounts, including to the balance sheet position (as shown in Exhibit 2) and to the contribution breakdown (Exhibit 3).

Outlook

Management continues to expect FY18 group revenue of between €150m and €155m along with an operating earnings margin (EBIT margin) in the mid-single digits. As in previous years, it is assumed that in FY18, revenue will be much stronger in the second half of the year. Software revenue is expected to reach 23% of group revenues.

The EBIT margin excluding non-segment-related expenses is expected to fall within the mid-single digit percentage range in the professional services business segment. For the software business segment, management expects an EBIT margin in the lower- to mid-double digit percentage range.

The group order book stood at c €131m at the end of December, including €16m of software and maintenance revenue. Around two-thirds of the orders are from the DACH region, with the remaining c €43m from the rest of the world.

Forecasts: Key FY18 and FY19 numbers maintained

We have maintained our revenues, normalised PBT and EPS numbers for FY18 and FY19, although we have amended the revenues split, increasing the level of software sales. Following the recent acquisitions, and internal development, there is an expanded software portfolio and software also includes third-party software licence re-sales. We have also introduced FY20 numbers. Our year-end net debt forecasts increase due to the accounting change and higher-than-expected end FY17 net debt. The latter was partly due to the €1.5m (net) consideration paid for ERST in Q417. Consequently, we forecast end FY18 net debt to be €24.7m higher than our previous estimates at €34.2m, while end FY19 rises by €23.5m to €28.3m.

We have conservatively pared back our dividend forecasts.

Exhibit 3: Updated forecasts

 €000s

2015

2016

2017

2018e

2019e

2020e

Professional services

46,868

66,640

98,333

116,757

127,527

138,340

Software licences

7,437

11,982

19,099

27,671

30,300

33,035

Software maintenance

1,931

2,063

4,911

6,821

7,469

8,143

Total software

9,368

14,045

24,010

34,492

37,769

41,178

Group revenue

56,236

80,685

122,353

151,249

165,297

179,518

Growth (%)

84.5

43.5

51.6

23.6

9.3

8.6

Professional services contribution

4,936

4,938

276

5,838

8,519

10,321

Software contribution

2,290

5,927

4,902

7,556

11,536

13,607

Non-segment-related expenses

(3,272)

(4,009)

(5,685)

(6,000)

(6,120)

(6,242)

Other operating income & other taxes

268

0

0

0

0

0

Operating expenses

(52,014)

(73,828)

(123,022)

(143,855)

(151,362)

(161,833)

Capitalisation of dev costs (net)

 

 

161

(32)

(32)

(32)

Adjusted operating profit (EBIT)

4,222

6,857

(508)

7,394

13,935

17,685

Operating profit margin (%)

7.5

8.5

(0.4)

4.9

8.4

9.9

Net interest

(828)

(1,137)

(1,327)

(1,000)

(800)

(600)

Profit before tax (norm)

3,394

5,720

(1,835)

6,394

13,135

17,085

Amortisation of acquired intangibles

0

0

0

(1,600)

(1,600)

(1,600)

Associates

(3)

8

0

0

0

0

Exceptional items

356

0

0

0

0

0

Profit before tax

3,747

5,728

(1,835)

4,794

11,535

15,485

Taxation

(1,195)

(1,517)

(807)

(1,918)

(3,940)

(5,126)

Non-controlling interests

0

(147)

234

(267)

(289)

(312)

FRS 3 net income

2,552

4,064

(2,407)

2,609

7,306

10,048

Adjusted EPS (c)

58.8

94.4

(46.4)

76.9

162.7

212.8

P/E - Adjusted EPS (x)

57.5

35.8

N/A

44.0

20.8

15.9

Source: Company accounts, Edison Investment Research

Exhibit 4: Financial summary

PROFIT & LOSS

€'000s

2015

2016

2017

2018e

2019e

2020e

Revenue

 

 

56,236

80,685

122,343

151,249

165,297

179,518

Cost of sales

0

0

0

0

0

0

Gross Profit

56,236

80,685

122,343

151,249

165,297

179,518

EBITDA

 

 

5,484

8,524

3,268

10,882

17,838

21,540

Adjusted Operating Profit

 

 

4,222

6,857

(508)

7,394

13,935

17,685

Amortisation of acquired intangibles

0

0

0

(1,600)

(1,600)

(1,600)

Exceptionals

356

0

0

0

0

0

Associates

(3)

8

(24)

0

0

0

Operating Profit

4,575

6,865

(532)

5,794

12,335

16,085

Net Interest

(828)

(1,137)

(1,327)

(1,000)

(800)

(600)

Profit Before Tax (norm)

 

 

3,394

5,720

(1,835)

6,394

13,135

17,085

Profit Before Tax (FRS 3)

 

 

3,747

5,728

(1,859)

4,794

11,535

15,485

Tax

(1,195)

(1,517)

(807)

(1,918)

(3,940)

(5,126)

Profit After Tax (norm)

2,198

4,203

(2,642)

4,476

9,194

11,960

Profit After Tax (FRS 3)

2,552

4,211

(2,666)

2,876

7,594

10,360

Minority interest

0

(147)

234

(267)

(289)

(312)

Adjustments for normalised earnings

0

0

0

0

0

0

Net income (norm)

2,198

4,056

(2,407)

4,209

8,906

11,648

Net income (FRS 3)

2,552

4,064

(2,431)

2,609

7,306

10,048

Average Number of Shares Outstanding (m)

3.7

4.3

5.2

5.5

5.5

5.5

EPS - normalised (c)

 

 

58.8

94.4

(46.4)

76.9

162.7

212.8

EPS - normalised & fully diluted (c)

 

 

58.8

94.4

(46.4)

76.9

162.7

212.8

EPS - FRS 3 (c)

 

 

68.3

94.6

(46.8)

47.7

133.5

183.5

Dividend per share (c)

34.00

39.00

0.00

30.00

40.00

50.00

Gross Margin (%)

100.0

100.0

100.0

100.0

100.0

100.0

EBITDA Margin (%)

9.8

10.6

2.7

7.2

10.8

12.0

Adjusted Operating Margin (%)

7.5

8.5

(0.4)

4.9

8.4

9.9

BALANCE SHEET

Fixed Assets

 

 

15,243

30,109

75,171

73,076

70,846

68,949

Intangible Assets

11,675

24,179

67,012

65,380

63,748

62,115

Tangible Assets

1,999

3,161

5,187

4,724

4,127

3,862

Other

1,570

2,769

2,972

2,972

2,972

2,972

Current Assets

 

 

29,996

58,424

78,614

76,686

82,657

92,300

Stocks

0

371

371

459

502

545

Debtors

16,084

25,652

43,781

54,125

59,152

64,241

Cash

13,769

31,914

33,877

21,517

22,419

26,929

Current Liabilities

 

 

(13,703)

(32,631)

(40,531)

(50,322)

(54,621)

(58,913)

Creditors

(11,101)

(14,523)

(29,295)

(39,086)

(43,385)

(47,676)

Short term borrowings

(2,602)

(18,108)

(11,236)

(11,236)

(11,236)

(11,236)

Long Term Liabilities

 

 

(15,513)

(7,327)

(53,157)

(41,083)

(33,509)

(25,935)

Long term borrowings

(12,344)

(5,531)

(49,487)

(44,487)

(39,487)

(34,487)

Other long term liabilities

(3,169)

(1,796)

(3,670)

3,404

5,978

8,552

Net Assets

 

 

16,024

48,575

60,097

58,357

65,373

76,402

CASH FLOW

Operating Cash Flow

 

 

1,879

1,005

(5,316)

10,157

17,044

20,674

Net Interest

(167)

53

(798)

(1,000)

(800)

(600)

Tax

(554)

(412)

(1,366)

(1,790)

(3,678)

(4,784)

Capex

(1,779)

(3,451)

(5,234)

(3,025)

(3,306)

(3,590)

Acquisitions/disposals

(3,228)

(5,923)

(28,783)

(11,701)

(1,716)

0

Shares issued

0

30,129

18,293

0

0

0

Dividends

(483)

(1,264)

(1,932)

0

(1,642)

(2,190)

Net Cash Flow

(4,332)

20,137

(25,136)

(7,360)

5,902

9,510

Opening net debt/(cash)

 

 

(3,431)

1,176

(8,275)

26,847

34,206

28,305

HP finance leases initiated

0

0

0

0

0

0

Other

(275)

(10,686)

(9,985)

()

0

0

Closing net debt/(cash)

 

 

1,176

(8,275)

26,847

34,206

28,305

18,794

Source: Company accounts, Edison Investment Research. Note: *Includes exceptional costs in FY17. **Includes additional payments for ADEPCON in FY18 and FY19, and final payments for RSP, Astrums/Hartung and Harlex in FY18.

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DISCLAIMER
Copyright 2018 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 Investment Research Pty Ltd (Corporate Authorised Representative (1252501) of Myonlineadvisers Pty Ltd (AFSL: 427484)) and any access to it, is intended only for "wholesale clients" within the meaning of the Corporations Act 2001 of Australia. 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 2018. “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. Edison Germany is a branch entity of Edison Investment Research Limited [4794244]. www.edisongroup.com

DISCLAIMER
Copyright 2018 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 Investment Research Pty Ltd (Corporate Authorised Representative (1252501) of Myonlineadvisers Pty Ltd (AFSL: 427484)) and any access to it, is intended only for "wholesale clients" within the meaning of the Corporations Act 2001 of Australia. 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 2018. “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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