High-margin sensor technology acquisition

discoverIE Group 21 October 2019 Update
Download PDF

discoverIE Group

High-margin sensor technology acquisition

Acquisition and placing

Electronic & electrical equipment

21 October 2019

Price

469p

Market cap

£416m

€1.16/NOK11.8/£

Net debt (£m) at end FY19

63.3

Shares in issue

88.7m

Free float

96%

Code

DSCV

Primary exchange

LSE

Secondary exchange

N/A

Share price performance

%

1m

3m

12m

Abs

5.6

9.3

15.5

Rel (local)

7.4

13.0

12.8

52-week high/low

469p

325p

Business description

discoverIE is a leading international designer and manufacturer of customised electronics to industry, supplying customer-specific electronic products and solutions to 25,000 industrial manufacturers.

Next events

H120 results

28 November

Analyst

Katherine Thompson

+44 (0)20 3077 5730

discoverIE Group is a research client of Edison Investment Research Limited

discoverIE has announced the acquisition of Sens-Tech for an initial cash consideration of £58m, partially funded by a £33m placing at 415p per share. Sens-Tech designs and manufactures specialist sensing technology and fits with discoverIE’s strategy to buy businesses supplying niche, highly customised products for critical applications. The business increases the group’s international revenues and boosts its presence in target markets such as transportation and healthcare. This is discoverIE’s largest acquisition since Noratel in FY15; we estimate the deal is immediately earnings enhancing (FY20e EPS +2%, FY21e +5%).

Year end

Revenue (£m)

PBT*
(£m)

Diluted EPS*
(p)

DPS
(p)

P/E
(x)

Yield
(%)

03/18

387.9

22.6

23.0

9.0

20.4

1.9

03/19

438.9

28.4

28.4

9.6

16.5

2.0

03/20e

472.8

33.9

29.5

10.0

15.9

2.1

03/21e

495.7

37.9

31.4

10.4

15.0

2.2

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

High margin Design & Manufacturing acquisition

Sens-Tech is a UK-based designer and manufacturer of specialist sensing and data acquisition modules for X-ray and optical detection applications to the transport security, medical, food processing and industrial markets. It provides customised solutions to industries with high regulatory and certification requirements, resulting in high barriers to entry and long product lifecycles. In FY18, Sens-Tech generated revenues of £15.0m at a 35% operating margin, well ahead of the Design & Manufacturing (D&M) division’s 11.2% in FY19. Management expects the deal to enhance D&M margins by c 1.2pp and group margins by c 0.8pp. With c 70% of revenues generated in North America and Asia, discoverIE estimates that on a pro-forma basis, Sens-Tech increases D&M non-European revenues by 2pp to 29%.

Upgrading EPS estimates

Management expects the deal to be immediately enhancing to underlying EPS; we upgrade our normalised diluted EPS forecasts by 2% in FY20e and 5% in FY21e. While the acquisition increases net debt/EBITDA from 1.2x to 1.7x by the end of FY20e, this is still within the company’s target range of 1.5–2.0x. We estimate that by FY21e, D&M will make up 65% of group revenues and 82% of operating profit.

Valuation: D&M focus supports upside

discoverIE continues to trade at a discount to peers (13% discount based on FY20e P/E, 8% FY21e). Further progress in increasing the weighting of business towards the higher growth and margin D&M business (64% of H120 revenues vs 61% in FY19), combined with maintaining the profitability of the Custom Supply business, should help to reduce the discount. The stock is supported by a dividend yield above 2%.

Acquisition of Sens-Tech

Background on Sens-Tech

Sens-Tech is a UK-based designer and manufacturer of specialist sensing and data acquisition modules for X-ray and optical detection applications. The company was founded in 1994 following a management buy-out from Thorn EMI and was acquired by current management through a subsequent buy-out in 2010.

Sens-Tech supplies OEMs in the transport security, medical, food processing and industrial markets with customised products. Systems are typically used in industries with high regulatory and certification requirements, which creates high barriers to entry and results in long product life cycles. Examples of applications include baggage screening at airports, bone density measurement and food inspection. As Sens-Tech systems are used in critical applications and the cost of a Sens-Tech system makes up a relatively small proportion of the final OEM product cost, the customer’s focus tends to be on functionality rather than price.

The majority of revenues are generated from the US (51%), with a further 29% from Europe (ex-UK) and 17% from Asia. Only 3% of revenues are generated in the UK. The business outsources the manufacturing of product components and undertakes final assembly and testing at its facility in Egham, Surrey.

In FY18 (year to 31 March 2018, the most recently available audited results), Sens-Tech generated revenue of £15.0m, EBIT1 of £5.3m (35% EBIT margin) and PBT of £4.4m. The business is significantly more profitable than the existing Design & Manufacturing business, which generated an EBIT margin of 11.2% in FY19. The company estimates that the addition of the business will increase D&M margins by c 1.2pp and group margins by c 0.8pp.

  Adjusted to exclude shareholder and associated costs.

The business will sit within the D&M division and will retain its own brand identity. Sens-Tech sees scope for good future growth in the X-ray detector market from the following areas:

growing demand for air and public transportation driving the need for better transport security;

the increasing trend towards preventative screening in healthcare; and

increasing requirements for screening and testing in food safety and industrial markets.

Sens-Tech is also investigating additional opportunities in medical diagnostics, computerised tomography (CT) security screening, plastic detection and industrial inspection and measurement.

Terms of the deal

discoverIE Is acquiring Sens-Tech for £58m in initial cash consideration, on a debt-free/cash-free basis. It may also pay contingent cash consideration of up to £12m, dependent on the achievement of profit growth targets over the next three years. The initial consideration will be satisfied from existing debt facilities and proceeds from the placing.

Based on the initial consideration, this values Sens-Tech at EV/trailing EBIT of 10.9x (discoverIE 13.0x).

Placing to raise £33m

The company is placing 8,034,840 shares (9.96% of shares outstanding) at a price of 415p per share to generate gross proceeds of £33.3m. Net proceeds are expected to be c £32m. The shares are to be admitted on 21 October. The placing price is at a 3.9% discount to the closing price of 432p on 16 October, but we note that over the course of the last two weeks, the share has traded in the range 405–445p.

Changes to forecasts

The table below summarises the changes to our forecasts. Based on annualising the EBITDA increase in FY20, we estimate that net debt/EBITDA increases from 1.2x to 1.7x in FY20 (within the company’s target range of 1.5–2.0x) and from 0.9x to 1.4x in FY21.

Exhibit 1: Changes to estimates

£m

FY20e old

FY20e new

Change

y-o-y

FY21e old

FY21e new

Change

y-o-y

Revenues

465.8

472.8

1.5%

7.7%

479.2

495.7

3.4%

4.8%

Custom supply

174.4

174.4

0.0%

1.0%

176.2

176.2

0.0%

1.0%

Design & manufacturing

291.3

298.3

2.4%

12.1%

303.0

319.5

5.4%

7.1%

Gross margin

33.0%

33.2%

0.2%

0.1%

33.0%

33.3%

0.3%

0.1%

EBITDA

41.2

43.5

5.6%

17.5%

42.4

48.1

13.4%

10.5%

EBITDA margin

8.8%

9.2%

0.4%

0.8%

8.8%

9.7%

0.9%

0.5%

Underlying operating profit

34.5

36.8

6.6%

20.2%

35.5

41.2

16.0%

11.9%

Underlying operating profit margin

7.4%

7.8%

0.4%

0.8%

7.4%

8.3%

0.9%

0.5%

Normalised operating profit

35.8

38.1

6.4%

19.8%

36.8

42.5

15.4%

11.5%

Normalised operating margin

7.7%

8.1%

0.4%

0.8%

7.7%

8.6%

0.9%

0.5%

Normalised PBT

32.1

33.9

5.6%

19.3%

33.2

37.9

14.1%

11.9%

Normalised net income

24.1

25.5

6.0%

18.9%

24.9

28.6

14.8%

12.2%

Normalised diluted EPS (p)

29.1

29.5

1.6%

3.8%

30.0

31.4

4.7%

6.2%

Reported basic EPS (p)

18.2

19.1

5.0%

(4.7%)

19.1

21.5

12.4%

12.8%

Net (debt)/cash

(49.7)

(77.3)

55.3%

22.0%

(39.2)

(68.4)

74.8%

(11.4%)

Net debt/EBITDA (x)

1.2

1.7

0.9

1.4

Source: Edison Investment Research

Exhibit 2: Financial summary

£m

2015

2016

2017

2018

2019

2020e

2021e

Year end 31 March

IFRS

IFRS

IFRS

IFRS

IFRS

IFRS

IFRS

PROFIT & LOSS

Revenue

 

 

271.1

287.7

338.2

387.9

438.9

472.8

495.7

Cost of Sales

(186.7)

(195.1)

(227.2)

(261.2)

(293.9)

(316.0)

(330.6)

Gross Profit

84.4

92.6

111.0

126.7

145.0

156.8

165.1

EBITDA

 

 

16.6

19.8

24.3

29.3

37.0

43.5

48.1

Operating Profit (before am, SBP and except.)

14.0

17.0

20.6

25.2

31.8

38.1

42.5

Operating Profit (before am. and except.)

 

13.4

16.3

20.0

24.5

30.6

36.8

41.2

Amortisation of acquired intangibles

(2.1)

(2.8)

(3.9)

(4.9)

(5.9)

(8.0)

(8.0)

Exceptionals

(5.2)

(2.1)

(8.4)

(2.3)

(2.0)

(3.2)

(3.2)

Share-based payments

(0.6)

(0.7)

(0.6)

(0.7)

(1.2)

(1.3)

(1.3)

Operating Profit

6.1

11.4

7.7

17.3

22.7

25.6

29.9

Net Interest

(1.6)

(1.8)

(2.8)

(2.6)

(3.4)

(4.2)

(4.6)

Profit Before Tax (norm)

 

 

12.4

15.2

17.8

22.6

28.4

33.9

37.9

Profit Before Tax (FRS 3)

 

 

4.3

9.4

4.8

14.6

19.3

21.2

25.3

Tax

(1.4)

(2.2)

(1.3)

(4.0)

(4.7)

(5.2)

(6.2)

Profit After Tax (norm)

10.0

11.8

13.6

17.1

21.5

25.5

28.6

Profit After Tax (FRS 3)

2.9

7.2

3.5

10.6

14.6

16.0

19.1

Average Number of Shares Outstanding (m)

57.6

63.3

65.4

70.8

73.0

83.9

88.7

EPS - normalised & diluted (p)

 

 

16.4

17.8

19.9

23.0

28.4

29.5

31.4

EPS - IFRS basic (p)

 

 

5.0

11.4

5.3

15.0

20.0

19.1

21.5

EPS - IFRS diluted (p)

 

 

4.8

10.9

5.1

14.2

19.4

18.5

20.9

Dividend per share (p)

7.6

8.1

8.5

9.0

9.6

10.0

10.4

Gross Margin (%)

31.1

32.2

32.8

32.7

33.0

33.2

33.3

EBITDA Margin (%)

6.1

6.9

7.2

7.6

8.4

9.2

9.7

Operating Margin (before am, SBP and except.) (%)

5.2

5.9

6.1

6.5

7.2

8.1

8.6

BALANCE SHEET

Fixed Assets

 

 

88.6

108.4

122.2

136.4

149.2

216.1

209.0

Intangible Assets

69.9

88.2

100.7

107.2

119.7

185.5

177.4

Tangible Assets

13.8

14.7

16.0

23.4

24.4

25.5

26.5

Deferred tax assets

4.9

5.5

5.5

5.8

5.1

5.1

5.1

Current Assets

 

 

127.3

128.3

147.1

165.9

179.1

180.1

192.4

Stocks

39.8

42.9

48.8

58.1

66.2

71.2

74.7

Debtors

60.2

65.5

77.3

84.6

88.7

103.6

108.6

Cash

26.7

19.9

21.0

21.9

22.9

3.9

7.8

Current Liabilities

 

 

(62.1)

(61.7)

(78.1)

(94.0)

(96.0)

(102.9)

(106.3)

Creditors

(61.9)

(60.9)

(77.1)

(87.6)

(94.3)

(101.2)

(104.6)

Short term borrowings

(0.2)

(0.8)

(1.0)

(6.4)

(1.7)

(1.7)

(1.7)

Long Term Liabilities

 

 

(61.1)

(73.1)

(68.7)

(81.5)

(97.6)

(92.1)

(84.0)

Long term borrowings

(45.5)

(57.2)

(50.0)

(67.9)

(84.5)

(79.5)

(74.5)

Other long term liabilities

(15.6)

(15.9)

(18.7)

(13.6)

(13.1)

(12.6)

(9.5)

Net Assets

 

 

92.7

101.9

122.5

126.8

134.7

201.2

211.0

CASH FLOW

Operating Cash Flow

 

 

6.6

14.6

20.5

21.7

30.0

28.5

41.2

Net Interest

(1.6)

(1.8)

(2.8)

(2.6)

(3.4)

(4.2)

(4.6)

Tax

(3.3)

(4.3)

(3.0)

(3.7)

(3.8)

(8.4)

(9.3)

Capex

(2.5)

(2.3)

(3.4)

(4.3)

(5.4)

(6.4)

(6.5)

Acquisitions/disposals

(37.3)

(19.8)

(11.8)

(25.4)

(22.4)

(74.9)

(3.0)

Financing

52.7

0.0

13.6

(1.5)

0.1

60.0

0.0

Dividends

(3.6)

(4.9)

(5.2)

(6.2)

(6.7)

(8.6)

(9.0)

Net Cash Flow

11.0

(18.5)

7.9

(22.0)

(11.6)

(14.0)

8.8

Opening net cash/(debt)

 

 

1.8

(19.0)

(38.1)

(30.0)

(52.4)

(63.3)

(77.3)

HP finance leases initiated

0.0

0.0

0.0

0.0

0.0

0.0

0.0

Other

(31.8)

(0.6)

0.2

(0.4)

0.7

(0.0)

(0.0)

Closing net cash/(debt)

 

 

(19.0)

(38.1)

(30.0)

(52.4)

(63.3)

(77.3)

(68.4)

Source: discoverIE, Edison Investment Research


General disclaimer and copyright

This report has been commissioned by discoverIE Group and prepared and issued by Edison, in consideration of a fee payable by discoverIE 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 research department of Edison 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 Crown Wealth Group Pty Ltd who holds an Australian Financial Services Licence (Number: 494274). 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

This document is prepared and provided by Edison 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.

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.

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

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 discoverIE Group and prepared and issued by Edison, in consideration of a fee payable by discoverIE 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 research department of Edison 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 Crown Wealth Group Pty Ltd who holds an Australian Financial Services Licence (Number: 494274). 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

This document is prepared and provided by Edison 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.

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.

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

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

You may be interested in