Improving growth profile

Ebiquity 21 March 2018 Update
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Ebiquity

Improving growth profile

FY17 results; forecasts reduced

Media

21 March 2018

Price

73p

Market cap

£57m

Net debt (£m) at end FY17

28.9

Shares in issue

78.4m

Free float

99%

Code

EBQ

Primary exchange

AIM

Secondary exchange

N/A

Share price performance

%

1m

3m

12m

Abs

(11.7)

(26.3)

(36.0)

Rel (local)

(9.8)

(22.1)

(33.8)

52-week high/low

123.50p

74.5p

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

Interim results

September 2018

Analysts

Bridie Barrett

+44 (0)20 3077 5700

Fiona Orford-Williams

+44 (0)20 3077 5739

Ebiquity is a research client of Edison Investment Research Limited

Headwinds in the US affected overall performance in FY17 and we pare back FY18 EPS forecasts by 5%. However, remedial action has been taken, activity in H2 has picked up and we continue to forecast an acceleration in like-for-like revenue growth in FY18. Ebiquity’s (EBQ’s) growth profile should be further improved by the proposed divestment of AdIntel, paving the way for an unwinding of its discount to the peer group. An in-line EV/EBIT rating would point to a value of around 90p.

Year end

Revenue (£m)

EBIT*
(£m)

PBT*
(£m)

EPS*
(p)

DPS
(p)

P/E
(x)

Yield
(%)

12/16

83.6

13.0

11.8

11.3

0.65

6.5

0.9

12/17

87.4

12.0

11.0

9.4

0.71

7.8

1.0

12/18e

91.2

11.3

10.2

8.9

0.78

8.2

1.1

12/19e

96.5

12.1

11.2

9.7

0.84

7.6

1.2

Note: *Normalised and diluted , excluding amortisation of acquired intangibles, exceptional items and share-based payments.

Pick-up in growth in H2

As indicated in the pre-close trading update, group like-for-like revenue growth of 0.8% continued to be affected by headwinds in the US with a consequential impact on operating margins. In MVM (+9.3% revenue growth), this was more than compensated for by an excellent performance from its contract compliance business, FirmDecisions, which continues to benefit from increasing demand for media transparency. However, within MPO, despite a strong performance outside the US, client churn in the US-based Multi-Channel Analytics (MCA) practice resulted in a 2.3% decrease in revenues. In MI, revenues decreased by 0.9%.

New leadership teams have now been put in place in both the US Media and the US MCA practice. In the US, H2 revenues in MCA improved over H1 and we forecast an acceleration in like-for-like revenue growth in FY18 and FY19.

AdIntel disposal transforms the profile of the group

On 13 February, EBQ announced the disposal of its Advertising Intelligence (AdIntel) practice, subject to UK Competition and Markets Authority (CMA) approval. The disposal will enable the group to focus resources on the areas of its business with greatest growth potential and higher margins, in line with management’s Growth Acceleration Plan. The £26m sale proceeds will reduce the pro forma net debt/EBITDA ratio from 2.1x to 1.0x at December 2017, adding flexibility to invest in enhancing the group’s tech-enabled consultancy offering.

Valuation: AdIntel disposal could trigger re-rating

The shares trade on 8.2x P/E and 7.3x EV/EBIT in FY18e. At a c 25% discount to UK agency peers, we believe this rating undervalues the growth potential of the MPO and MVM businesses. This is more evident on a pro-forma basis, where the shares would be on similar multiples despite the much improved growth outlook and balance sheet. Assuming the divestment of AdIntel, on this pro forma basis an FY18e peer average EBIT multiple of 10.0x would suggest a share price of 90p.

FY17 results

Ebiquity’s revenues increased by 4.6% to £87.4m, of which 3.4% of growth is accounted for by currency movements and 0.4% from the September acquisition of Australian digital analytics business, Digital Balance (for up to A$5m subject to performance hurdles to 31 December 2021). The mix of revenue growth is consistent with the first half; a strong performance from the MVM practice outside the US was offset by the US MCA and US media business, with MI stable overall. Like-for-like constant currency growth of 0.8% signifies a better underlying growth rate in the second half.

EBITA margins decreased by 2pp to 13.8%, in part a result of the group’s strategy to invest an increasing share of revenues in enabling its consultants with market-leading technology, and in part owing to continued weakness from its US businesses. Consequently, normalised PBT decreased by 7% to £11.0m. Reported PBT of £4.5m includes £6.5m of one-off or non-cash items. These relate to acquisitions and restructuring costs (£3.8m), deferred consideration and share-based payments (£0.7m), and amortisation of acquired intangibles (£1.9m).

Underlying cash conversion from operating profits remains strong at 93% and the board is proposing a dividend of 0.71p (+10% y-o-y). Year-end net debt remained broadly stable at £28.9m, 2.1x EBITDA.

In February, Michael Higgins, chairman for 12 years, announced his retirement with effect from 9 May 2018. He will be replaced by Rob Woodward, who has significant experience in the TMT industry. Rob was CEO of STV Group for 11 years to January 2018, prior to which he was commercial director at Channel 4 Television. Earlier in his career he was MD with UBS Corporate Finance and the lead partner for Deloitte’s TMT industry group in Europe. Rob is also non-executive chairman at AIM-listed Blancco Technology Group.

Exhibit 1: Summary FY17 results vs forecasts

£000s

FY16

FY17
(forecast)

FY17
(reported)

Y-o-y
growth (%)

Change vs
forecasts (%)

MVM

47,161

51,105

51,482

9

1

MI

23,360

24,828

23,146

(1)

(7)

MPO

13,048

13,700

12,746

(2)

(7)

Total revenues

83,569

89,633

87,374

5

(3)

Operating profit:

MVM

12,124

13,287

14,037

16

6

MI

3,902

3,724

3,163

(19)

(15)

MPO

3,739

2,603

1,646

(56)

(37)

Central costs

(6,806)

(6,900)

(6,820)

0

(1)

Total normalised operating profit

12,959

12,715

12,026

(7)

(5)

Operating margin

MVM

25.7%

26.0%

27.3%

MI

16.7%

15.0%

13.7%

MPO

28.7%

19.0%

12.9%

Total operating margin

15.5%

14.2%

13.8%

Highlighted items

(5,202)

(5,000)

(6,491)

25

30

Reported operating profit

7,757

7,715

5,535

(29)

(28)

Net finance cost

(1,132)

(1,000)

(1,044)

(8)

4

Share of associates

PBT (adjusted)

11,827

11,715

10,982

(7)

(6)

Tax

(2,570)

(3,046)

(2,897)*

13

(5)

Net profit

9,257

8,669

8,085

(13)

(7)

MI

(245)

(525)

(384)

57

(27)

Adj. diluted EPS (p)

11.3

10.1

9.4

(17)

(7)

Source: Ebiquity (actuals), Edison Investment Research (forecasts). Note: *£0.9m of FY17 tax relates to tax on highlighted items and the movement on deferred liabilities.

Divisional performance: US headwinds to growth

Excluding the MI division, which contains the soon to be divested AdIntel business, like-for-like revenue growth was 5.5% in H217, compared to 2.3% across the year.

MPO (15% group revenues, 20% FY18 pro forma revenues): total revenues decreased 2.3% y-o-y (7.7% like-for-like) and the weakness in MCA had a material impact on margins, which decreased to 12.9% (FY16: 28.7%).

US MCA business: as flagged at the interim results, the US-based MCA business, which has a high concentration of revenues with its largest clients, saw a number of these clients reduce spend and opt to bring services in house during 2017. After three years of 50%+ CAGR in revenues, US revenues decreased by 19.8%. A new leadership team has now been put in place and there are early signs that this US practice is getting back on track; Q4 includes a significant new client (Citibank), and H2 revenues were up slightly on H1, although still down year-on-year.

Outside the US, revenues increased by 6.4%, with the UK Marketing Effectiveness (ME) business performing particularly well (+17.1%). The roll-out of ME services, previously only available in the UK and Spain, to the US, France, Australia and Singapore, is underway and should start to make a more meaningful contribution to revenues from 2018. The acquisition of Digital Balance further strengthens capabilities in Asia Pacific.

MVM (59% group revenues, 80% FY18 pro forma revenues): revenues increased by 9.3% (5.2% like-for-like) with an operating margin of 27.3% broadly as expected. In a continuation of the trend seen in H1, the contract compliance division, FirmDecisions, performed very well, benefiting from the visible step-up in the group’s marketing efforts and the industry’s increased engagement on the issue of media transparency. The media benchmarking business outside the US also performed well, but the US business continues to be under pressure from lower overall media spend and the trend towards zero-based budgeting. During Q417 and Q118 a new leadership team was recruited to re-energise the US Media practice.

MI (26% group revenues, 0% FY18 pro forma revenues): revenues decreased by 0.9% (3.1% like-for-like), reflecting stability in the AdIntel business and continued declines in the project-based reputation business, which now accounts for only £1.3m of revenues. This reputation business has subsequently been divested.

Divesting AdIntel releases headwind to growth

In February EBQ announced the proposed sale of its Advertising Intelligence business (AdIntel) to Nielsen for £26m in cash before taxes and transaction costs. The transaction is expected to complete during Q218. However, as CMA approval is required, this could be delayed to Q4 should it require a more detailed Phase 2 investigation.

The AdIntel business accounted for the majority of EBQ’s MI division, comprising £21m revenues and £4.4m EBITA (before central overhead allocation).

In 2016 management presented its plan to accelerate growth, principally by investing in the faster growing MVM and MPO practices. The proposed divestment of AdIntel is entirely consistent with this strategy, leaving a more focused group with the balance sheet flexibility to accelerate growth opportunistically:

Faster growth profile: over the last few years, the AdIntel division has struggled in the face of pricing pressure and the rapid rise in digital advertising. An upgrade to the Portfolio platform was introduced last year and, to complement its services in traditional media, in H117 it launched its Digital platform. Although this has helped stabilise divisional revenues, the growth outlook remains inferior to MPO and MVM, as do the operating margins (see Exhibits 2 and 3 below).

Exhibit 2: Like-for-like revenue growth

Exhibit 3: Operating margins (pre-central costs)

Source: Ebiquity (historic), Edison Investment research (forecasts)

Source: Ebiquity (historic), Edison Investment research (forecasts)

Exhibit 2: Like-for-like revenue growth

Source: Ebiquity (historic), Edison Investment research (forecasts)

Exhibit 3: Operating margins (pre-central costs)

Source: Ebiquity (historic), Edison Investment research (forecasts)

Streamlined business: the divestment would enable a simpler group structure, focused on the higher-growth consulting services, which operate similar relationship-based business models. As well as simplifying the overall business model, management sees the potential to reduce central overheads by up to £0.7m over time. Reflecting the more aligned structure, EBQ is rebranding its divisions as Ebiquity Media (MVM), Ebiquity Analytics (MPO) and Ebiquity Tech.

Strengthened balance sheet: the pro forma net debt to EBITDA gearing of the group would reduce from 2.0x at December 2017 to 1.0x, providing flexibility to invest to accelerate growth in MVM and MPO; in particular in terms of its data science capabilities.

Forecasts and pro forma forecasts

Much of the 3pp revenue shortfall compared to our forecasts came through the MPO division. While the US MCA issues knocked growth off course during 2017, the client losses appear fairly isolated, action has been taken to bring the US back on track and the performance of the division outside the US remains strong. We rebase our forecasts for FY17 results, but maintain our 10% revenue growth forecast in this division in FY18 and 7% in MVM. Net of small changes to tax (24%) and finance costs, we reduce our FY18 adjusted diluted EPS forecast by 5% to 8.9p. We also introduce forecasts for FY19, which assume a similar growth rate in revenues and margins.

Given the uncertainty on timing of the divestment of the AdIntel business, at this stage we have not carved it out of our forecasts, but present FY18 and FY19 pro forma figures in Exhibit 4 to demonstrate the shape of the business assuming it is divested as of 1 January 2018.

On a pro forma basis, the sale of AdIntel translates to a c 2pp uplift to our revenue growth rate in each year. In our pro forma operating margins, we assume that a full £0.7m of savings is achieved by 2019. Despite this saving, allocating higher central costs to a smaller business means that we believe pro forma operating margins of c 11.6% are achievable in 2019, approximately 1pp below our forecast for the ongoing business.

Exhibit 4: Forecasts and pro forma forecasts

£000s

FY17
(reported)

FY18e

FY19e

 

FY18e
pro forma

FY19e
pro forma

MVM

51,482

55,086

58,942

55,086

58,942

MI

23,146

22,100

22,100

MPO

12,746

14,021

15,423

14,021

15,423

Total revenues

87,374

91,206

96,464

69,106

74,364

Operating profit:

MVM

14,037

13,496

14,293

13,496

14,293

MI

3,163

3,163

3,163

MPO

1,646

2,454

2,714

2,454

2,714

Central costs

(6,820)

(7,800)

(8,112)

(8,450)

(8,354)

Total normalised operating profit

12,026

11,313

12,058

7,500

8,654

Operating margin

MVM

27.3%

24.5%

24.3%

24.5%

24.3%

MI

13.7%

14.3%

14.3%

MPO

12.9%

17.5%

17.6%

17.5%

17.6%

Total operating margin

13.8%

12.4%

12.5%

10.9%

11.6%

Highlighted items

(6,491)

(4,550)

(2,900)

(3,830)

(2,230)

Reported operating profit

5,535

6,763

9,158

3,670

6,424

Net finance cost

(1,044)

(1,100)

(808)

(400)

(250)

Share of associates

0.0%

PBT (adjusted)

10,982

10,213

11,250

7,100

8,404

Tax

(2,897)

(2,451)

(2,700)

(1,704)

(2,017)

Net profit

8,085

7,762

8,550

5,396

6,387

MI

(384)

(585)

(600)

(585)

(600)

Adj diluted EPS (p)

9.4

8.9

9.7

6.0

7.0

Source: Ebiquity (historic), Edison Investment Research (forecasts)

Valuation

The difficult trading environment in the US, paired with a declining margin, has weighed on the shares’ performance over the last year and the shares now trade at a c 25% discount to small-cap agency peers. However, we believe this rating undervalues the MPO and MVM practices, where we forecast a pick-up in like-for-like revenue growth in FY18. Should the divestment of the slower growing, lower-margin AdIntel division proceed as proposed, we expect the overall growth profile of the group to improve, in which case an in-line rating may be more appropriate. A 10x EV/EBIT multiple (broadly in line with the peer average) applied to FY18e pro forma earnings would suggest a share value of c 90p.

Exhibit 5: Peer comparison

Name

Market
cap (m)

Year end

Sales growth (%)

EBITDA margin (%)

EBIT margin (%)

EV/Sales (x)

EV/EBITDA (x)

EV/EBIT (x)

PE (x)

FY1

FY2

FY1

FY1

1FY

FY2

FY1

FY2

FY1

FY2

FY1

FY2

Ebiquity

56

12/2017

4.4

5.8

14.9

12.4

1.0

0.9

6.5

6.1

7.7

7.3

8.2

7.5

M&C Saatchi

326

12/2016

12.7

6.1

11.9

10.7

1.3

1.3

11.2

10.1

12.5

11.3

17.0

15.9

Huntsworth

324

12/2017

6.8

5.1

15.6

13.8

1.7

1.6

10.9

10.1

12.4

11.5

15.1

13.6

Next Fifteen

344

01/2017

14.9

12.2

17.8

15.3

1.9

1.7

10.5

8.9

12.2

10.4

16.6

14.5

MMG

36

12/2016

NA

4.9

14.4

11.9

0.7

0.6

4.6

4.2

5.6

5.1

6.1

5.4

Cello

129

12/2016

3.8

2.9

7.9

6.8

0.8

0.8

10.0

9.4

11.7

10.9

15.4

14.7

Reply

1,899

12/2017

10.7

8.7

14.3

12.9

1.9

1.7

13.2

12.1

14.5

13.3

21.5

19.5

Peer average

(0.6)

6.7

13.6

11.9

1.4

1.3

10.1

9.1

11.5

10.4

17.3

15.7

Source: Bloomberg. Note: Prices as at 20 March 2018.

Exhibit 6: Financial summary

£'k

2015

2016

2017

2018e

2019e

31-December

IFRS

IFRS

IFRS

IFRS

IFRS

INCOME STATEMENT

31-Dec

31-Dec

31-Dec

31-Dec

31-Dec

Revenue

 

 

76,584

83,569

87,374

91,206

96,464

EBITDA

 

 

14,161

14,574

14,035

13,556

14,458

Normalised operating profit

 

 

12,411

12,959

12,026

11,313

12,058

Amortisation of acquired intangibles

(1,327)

(1,865)

(1,952)

(1,950)

(1,900)

Exceptionals

(6,541)

(2,777)

(3,801)

(1,600)

0

Share-based payments

(900)

(560)

(738)

(1,000)

(1,000)

Reported operating profit

3,643

7,757

5,535

6,763

9,158

Net Interest

(1,199)

(1,132)

(1,044)

(1,100)

(808)

Joint ventures & associates (post tax)

18

0

0

0

0

Exceptionals

0

0

0

0

0

Profit Before Tax (norm)

 

 

11,230

11,827

10,982

10,213

11,250

Profit Before Tax (reported)

 

 

3,135

6,625

4,491

5,663

8,350

Reported tax

(2,497)

(2,230)

(2,043)

(2,451)

(2,700)

Profit After Tax (norm)

8,733

9,257

8,085

7,762

8,550

Profit After Tax (reported)

638

4,395

2,448

3,212

5,650

Minority interests

(229)

(245)

(384)

(585)

(600)

Discontinued operations

0

0

0

0

0

Net income (normalised)

8,504

9,012

7,701

7,177

7,950

Net income (reported)

409

4,150

2,064

2,627

5,050

Basic average number of shares outstanding (m)

76.8

77.2

77.9

78.1

78.9

EPS - basic normalised (p)

 

 

11.1

11.7

9.7

9.2

10.1

EPS - diluted normalised (p)

 

 

10.8

11.3

9.4

8.9

9.7

EPS - basic reported (p)

 

 

0.5

5.4

2.7

3.4

6.4

Dividend per share (p)

0.40

0.65

0.71

0.78

0.84

EBITDA Margin (%)

18.5

17.4

16.1

14.9

15.0

Normalised Operating Margin

16.2

15.5

13.8

12.4

12.5

BALANCE SHEET

Fixed Assets

 

 

73,594

75,855

75,771

74,978

73,878

Intangible Assets

68,354

72,079

72,440

71,947

71,197

Tangible Assets

2,928

2,438

1,829

1,529

1,179

Investments & other

2,312

1,338

1,502

1,502

1,502

Current Assets

 

 

33,073

35,078

37,241

40,638

47,972

Stocks

0

0

0

0

0

Debtors

16,283

19,291

20,978

21,607

22,256

Cash & cash equivalents

8,755

6,662

4,732

7,500

14,186

Other

8,035

9,125

11,531

11,531

11,531

Current Liabilities

 

 

(27,473)

(25,912)

(24,549)

(24,771)

(25,000)

Creditors

(20,672)

(17,809)

(20,066)

(20,288)

(20,517)

Tax and social security

(2,000)

(1,850)

(1,598)

(1,598)

(1,598)

Short term borrowings

(4,801)

(4,476)

(1,572)

(1,572)

(1,572)

Other

0

(1,777)

(1,313)

(1,313)

(1,313)

Long Term Liabilities

 

 

(36,785)

(32,728)

(35,481)

(34,231)

(34,231)

Long term borrowings

(32,615)

(30,210)

(32,000)

(30,750)

(30,750)

Other long term liabilities

(4,170)

(2,518)

(3,481)

(3,481)

(3,481)

Net Assets

 

 

42,409

52,293

52,982

56,614

62,620

Minority interests

808

761

1,040

1,040

1,040

Shareholders' equity

 

 

43,217

53,054

54,022

57,654

63,660

CASH FLOW

Op Cash Flow before WC and tax

14,161

14,574

14,035

13,556

14,458

Working capital

(871)

(2,835)

(2,002)

(407)

(420)

Exceptional & other

(1,775)

(957)

(4,085)

(1,600)

0

Tax

(1,062)

(166)

(2,207)

(2,451)

(2,700)

Net operating cash flow

 

 

10,453

10,616

5,741

9,097

11,339

Capex

(1,976)

(2,351)

(2,231)

(2,500)

(2,600)

Acquisitions/disposals

(4,530)

(4,431)

(3,082)

(900)

(600)

Net interest

(999)

(1,074)

(921)

(1,100)

(808)

Equity financing

224

26

160

0

0

Dividends

(291)

(838)

(495)

(580)

(644)

Other

(178)

(1,017)

(46)

0

0

Net Cash Flow

2,703

931

(874)

4,018

6,686

Opening net debt/(cash)

 

 

31,248

28,661

28,024

28,840

24,822

FX

(116)

(633)

58

0

0

Other non-cash movements

0

339

0

0

0

Closing net debt/(cash)

 

 

28,661

28,024

28,840

24,822

18,136.1

Source: Ebiquity (historic), Edison Investment Research (forecasts). Note: Reported net debt differs slightly from cash net debt due to the inclusion of loan arrangement fees which have been paid but which are amortised over the life of the facility.

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 Pty 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 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 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 Pty 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 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 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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