In a good place

WANdisco 21 March 2017 Update
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WANdisco

In a good place

Full year results

Software & comp services

21 March 2017

Price

431p

Market cap

£159m

US$1.2/£

Net cash ($m) at 31 December 2016

7.6

Shares in issue

37.1m

Free float

85%

Code

WAND

Primary exchange

AIM

Secondary exchange

N/A

Share price performance

%

1m

3m

12m

Abs

15.2

114.3

278.3

Rel (local)

13.2

102.4

218.2

52-week high/low

534.0p

122.5p

Business description

WANdisco is a distributed computing company. The company has developed a suite of solutions based around proprietary replication technology, which solve critical data management challenges prevalent across cloud computing, big data and the ALM software markets.

Next events

Q1 bookings update

April 2017

Analyst

Dan Ridsdale

+44 (0)20 3077 5729

WANdisco is a research client of Edison Investment Research Limited

WANdisco’s full year results confirmed the strong recovery in H2. We believe this is set to continue, driven by the company’s enviable exposure to the growth in cloud computing and partnerships with industry giants such as IBM, Amazon and Oracle. We suggest that the ingredients could be in place to support a more aggressive break out in financial performance than forecast, although the share price does demand this.

Year
end

Revenue ($m)

EBITDA
($m)

PBT*
($m)

EPS*
(c)

Net cash
($
m)

EV/sales
(x)

12/15

11.0

(16.0)

(26.4)

(87.7)

2.6

17.3

12/16

11.4

(7.5)

(16.4)

(46.9)

7.6

16.3

12/17e

14.8

(5.1)

(14.3)

(36.6)

3.8

12.8

12/18e

21.7

(0.5)

(10.0)

(25.1)

8.5

8.5

Note: *PBT and EPS are normalised and fully diluted, excluding intangible amortisation, exceptional items and share-based payments.

Strong Q4, lower costs than expected

Key bookings of $15.5m (up 72% y-o-y) and year-end net cash of $7.6m were as disclosed in the January trading update. While the full year figures show a substantial improvement, the relative H2 on H2 figures show a much stronger recovery, with bookings up 109% y-o-y to $9.6m, cash costs down 41% y-o-y to $9.7m (supported by a currency tailwind) and free cash outflow reduced to $3m from $12.5m. In Q4 bookings grew 97% y-o-y and cash burn reduced to $0.2m.

Well set for scalable growth

WANdisco has entered 2017 with a healthy pipeline and backlog and we believe that the company is now well placed to deliver sustained scalable growth. Through its exposure to cloud computing the company should benefit from the strongest structural trend in enterprise computing of this age. Partnerships with the likes of IBM, Oracle and Amazon provide channels for scalable growth and strengthen the company’s credentials elsewhere. The company has scope to extend these partnerships and add new ones.

Scalability being demonstrated, possible acceleration

Our estimates have not changed significantly, other than nudging up our end FY17 net cash estimate. However, we believe that the ingredients may now be in place to support a more aggressive break out in financial performance and our cost estimates also look conservative.

Valuation: Execution to provide upside

WANdisco’s FY17 EV/sales rating of 12.8x and our reverse DCF imply that the market is pricing in an acceleration in momentum from here. It is too early to say with certainty that this will happen, but we believe our estimates are conservative and further visibility on the contribution from IBM or progress with other partners could raise our growth assumptions. The company’s strategic attractiveness should also factor in the valuation equation.

Scale and focus

Big data

WANdisco’s big data business recovered progressively over the course of FY16. For the full year bookings grew by 184% to $7.1m with a $2.6m/$3.9m H1/H2 split. Revenues grew from $3.2m to $1.8m over the course of the year. The pipeline and backlog are also said to be strong entering FY17.

Building blocks to a recovery have been in place for some time

While it is still early days yet, the roots of WANdisco’s recovery in big data can be traced back to 2014 and 2015, when the company embarked on a substantial investment programme to reposition its offering within an evolved supplier landscape. Fusion was launched in April 2015, bringing with it two key innovations, support for multiple different file systems (as opposed to just Hadoop) and a non-invasive architecture to significantly reduce the integration required to deploy the product.

Addressable market substantially expanded

Prior to Fusion, the key use cases for deploying WANdisco’s big data products were improving resilience, flexibility and performance of on Hadoop based big data deployments. Fusion decoupled WANdisco from Hadoop enabling the company’s replication technology to be applied to a wider range of storage systems, most significantly, cloud storage systems. The forthcoming release of Fusion 3.0 with an API (Application Programming Interface) brings into play Network File Storage and other systems as well.

This ability to replicate data (while it is changing) between cloud and on-premise storage systems without loss or disruption brings significant benefits to enterprises implementing a cloud strategy – essentially breaking down the silo’s between previously discrete storage types, facilitating the movement of data between sources improving flexibility, hardware efficiency and resilience. Specific benefits include:

Accelerating data access – as Fusion replicates data as it streams in, files do not have to be fully written and closed before transferring data.

Eliminating downtime while replicating- all nodes can be in production whilst replicating data from on premises to cloud (and back).

The ability to “Burst” data to and from the cloud – for analytics for example

Resilience / disaster recovery – Through replicating data across the cloud and customer-premise

Reduced capex – through reducing the use of “standby” servers for disaster recovery etc

Exposure to the most significant structural trend influencing enterprise computing

We have previously commented that Cloud Replication could be WANdisco’s “killer application”, ie the use case that drives a step change in financial performance, and we believe that support for this view has strengthened since. Whereas uptake of Hadoop in its pure form has been relatively measured, the shift of storage and computing to the cloud is probably the most significant structural trend influencing enterprise computing today. To illustrate, AWS (Amazon Web Services) revenues grew 55% year-over-year to $12.2bn in FY16 (Q416 revenues +47% y-o-y to $3.5m. We estimate that Microsoft Azure’s annualised revenue run rate (ARR) is circa $4bn with growth close to 40%. In its Q4 results, IBM reported cloud revenue of $13.7bn, up 35% y-o-y with the exit ARR for cloud-as-a-service reported at $8.6bn, up 61% year-on-year.

The market for cloud migration services is significant and growing in its own right. In a recent report, market analyst Research and Markets estimated that the global cloud migration services market would reach $7.46bn by the end of 2022, with a CAGR of 24.2% from 2016 to 2021. Despite this rate of migration, it should also be borne in mind that the vast majority of enterprises will continue to operate on-premise storage in hybrid deployments together with the cloud. Analyst Markets and Markets forecasts that the hybrid cloud market will grow at a 22.5% CAGR from $33.28Bn in 2016 to $ 91.74Bn. WANdisco estimates that the market for WANdisco products in cloud deployments will grow at a c 35% CAGR from 2016 to reach over $6bn in 2020 (note that this estimate includes resilience, flexibility and performance use cases as well as migration).

Exhibit 1: Estimated addressable market for WANdisco’s product

Source: WANdisco

Strategic partnerships

WANdisco has secured an enviable roster of partnerships with major technology companies, including IBM, Amazon, Oracle, Microsoft and Google. Driving sales through these channel partners is key to establishing a platform for scalable operationally geared growth.

IBM has the scale and imperative to drive an inflection

From a strategic standpoint, the company’s OEM partnership with IBM provides the most obvious potential in the near term. Having announced the OEM partnership in April, a customised IBM-branded “IBM Big Replicate” version of Fusion has been embedded into IBM’s Big Insights solution set and circa 5,000 quota carrying sales staff have been trained on the product (vs less than 10 direct staff for WANdisco). The first deal with a major European bank closed in September and in December the relationship yielded a $1m deal with a major automotive manufacturer to move data between data centres and the cloud to support predictive maintenance and ultimately autonomous driving.

It is difficult to estimate the likely contribution via the IBM channel, but it seems clear that IBM has both the scale and rationale to generate significant volumes of business. IBM is a top five provider of cloud platform services globally and the analytics and cloud segments are the two primary drivers of the company’s growth strategy. IBM is also betting on hybrid-cloud services as a way to differentiate its products and “Big Replicate” is a key part of IBM’s solution for moving data to and from the cloud.

WANdisco gains some visibility on larger potential deployments through work on proof-of-concept trials and we understand that a number of large potential deals are being worked on. However, smaller deals may be signed with no input from WANdisco, meaning that WANdisco only gets visibility once the royalty reports is received 60 days into the following quarter, with the cash being transferred virtually in parallel.

Amazon relationship – one to watch

In November, WANdisco secured its first deal for the company’s Fusion Amazon S3 Cloud solution via Amazon’s AWS Marketplace, with Playtika, a provider of free-to-play games on social networks and mobile platforms. While not particularly meaningful in terms of scale, it is encouraging that this relationship is off the mark commercially. We also believe that there is scope for this relationship to expand, particularly with regards to reducing the time and disruption involved in migrating data from an enterprise to AWS. Given AWS’s pre-eminent position in cloud services, this could be a significant strategic catalyst.

Increased deal flow and deepening of other partnerships are key metrics for FY17

WANdisco’s partnership with Oracle was probably the most important in terms of revenue contribution in FY16. Notably the company secured a $1.5m order through Oracle for a major US bank, where the key use cases were disaster recovery and resilience. We believe that this relationship also has potential to accelerate, as deployments scale up and the market grows, although in its current form the potential is probably lower than that of the relationship with IBM. Fusion is certified Oracle Big Data Appliance Ready, and is included in tenders by Oracle and its integrator partners, typically when the appliances are being used in mission critical applications.

Scope for integrator lead sales to grow as solution becomes more tried and tested

We also believe that the credibility afforded to Fusion by the IBM partnership and others should benefit WANdisco’s direct sales and those through systems integrators seeking to offer best of breed solutions. In Q3 the company signed a $1.5m deal to support Dubai’s Smart City project where HPE was the primary contractor; HPE does not have a formal strategic relationship with WANdisco, but selected Fusion as the best solution for that project. As Fusion becomes increasingly tried and tested, it does not seem unreasonable to expect sales to be generated through a broader range of integrator partners and the scale and frequency of deal flow to increase.

SCM – benefiting from increased focus

The company’s Source Code Management (SCM) division (previously ALM) recovered over the course of FY16, benefiting from the establishment of a small sales team focused purely on SCM and on the core SVN and GIT product sets. Bookings grew by 29% to $8.4m over the course of the year, with H2 bookings up 53% y-o-y to $5.7m. Due this back-end weighting and the carryover from the drop in bookings from FY14 to FY15, revenues reduced to $8.2m from $9.2m the year before. Nevertheless, this is a relatively lean operation, with only two sales people and a focused development team. Consequently, SCM is now profitable at a divisional level before central costs.

Financials

Case for scalable growth strengthens in H2

Financial performance improved significantly over the course of the FY16, with bookings up $15m y-o-y and EBITDAC loss (EBITDA + capitalised development costs) reduced to $13.3m from $24.4m the year before. However, it was in H2 that the company’s strategic initiatives started to translate to scalable growth. H2 bookings grew 109% y-o-y to $9.6m, with big data bookings growing 255% y-o-y to $3.9m and SCM bookings up 63% to $5.7m.

Costs also reduced substantially. Full year cash costs (including capitalised development) were $23.4m vs. $34.6m in FY15. H2 cash costs reduced to $9.7m from $15m (albeit supported by weak sterling and we would expect some re-investment back in the business) and free cash outflow reduced to $3m in H2 from $12.5m. In Q4 bookings grew 97% y-o-y and cash burn reduced to $0.2m. Net cash at the year-end stood at $7.6m.

Estimates

Our estimates have not changed significantly, other than nudging up our end FY17 net cash estimate to $3.8m from $2.1m. We believe that our estimates should be cautious. In terms of bookings, we believe that a full year contribution from IBM and an increasing frequency of larger deals through all channels could quickly drive big data bookings ahead of our $11m estimate. While big data bookings growth was primarily driven by new customer wins in FY16, we also expect a greater contribution from scale ups as existing customers expand their big data/cloud deployments. It should also be noted that a strong performance from IBM would also accelerate the revenue recognition cycle – as revenues will be recognised as they come in with the royalty report, with cash transferred nearly simultaneously.

Our cost estimates also leave plenty of scope for upside or re-investment back into the business.

Our FY18 estimates are new and again assume strong but progressive growth. While we still forecast that the business will be loss making at the P&L level, we forecast positive free cash flows due to the company’s positive working capital model.

Exhibit 2: P&L model and estimate changes

$000s

2015

2016

2017e

2018e

Actual

Old

New

Change

Old

New

Change 

New

Bookings SCM

6,500

9,000

8,400

-7%

10,000

9,500

-5%

11,000

Bookings Big Data

2,500

6,000

7,100

18%

10,500

11,000

5%

16,000

Total Bookings

9,000

15,500

15,500

0%

20,500

20,500

0%

27,000

Revenue

10,994

11,439

11,379

-1%

14,969

14,752

-1%

21,722

Cost of Sales

(749)

(1,163)

(1,349)

16%

(1,538)

(1,784)

16%

(2,349)

Gross Profit

10,245

10,277

10,030

-2%

13,431

12,968

-3%

19,373

EBITDA

(15,988)

(8,924)

(7,464)

-16%

(4,869)

(5,133)

5%

(538)

Capitalised development cost

(8,369)

(6,500)

(5,860)

-10%

(6,500)

(6,497)

0%

(6,952)

EBITDAC (adjusted for capitalised development)

(24,357)

(15,424)

(13,324)

-14%

(11,369)

(11,630)

2%

(7,490)

Operating Profit (before amort and except)

(25,858)

(18,794)

(16,104)

-14%

(15,039)

(14,073)

-6%

(9,778)

Exceptionals

(614)

(200)

(32)

0

0

0

Share-based payments

(4,057)

(2,000)

(1,787)

(2,000)

(1,787)

-11%

(1,787)

Operating Profit

(30,529)

(20,994)

(17,923)

(17,039)

(15,860)

-7%

(11,565)

Net Interest

(506)

(150)

(268)

(150)

(268)

79%

(268)

Profit Before Tax (norm)

(26,364)

(18,944)

(16,372)

-14%

(15,189)

(14,341)

-6%

(10,046)

EPS - (IFRS) (c)

(103.9)

(48.4)

(27.9)

-42%

(44.7)

(41.9)

-6%

(30.6)

Closing net debt/(cash)

(2,555)

(7,566)

(7,558)

0%

(2,104)

(3,761)

79%

(8,494)

Source: WANdisco data, Edison Investment Research

Looking to the longer term, we believe that successful execution on the company’s strategy should support a high margin and strong cash flows. WANdisco operates a pure software model, with little service revenue and the indirect sales model adds further scalability. Successful companies operating similar models (eg VM Ware, Symantec, Citrix, Microsoft) typically attain high 20s to low 30s EBITDA margins once scale has been reached.

Valuation

We believe that WANdisco’s share price now prices in a somewhat more aggressive break out in financial performance than we have forecast. WANdisco’s FY17 EV/sales rating at 12.8x falling to 8.5x for FY18 is premium to its big data and cloud software peer group, which has a diverse range from 1.9x (Attunity) to 6.0x (Splunk). WANdisco’s FY17 forecast growth rate is towards the upper end of this peer group, but equally we believe that there is scope for upside in terms of bookings revenues and for cost estimates to reduce. The Q1 bookings update in mid-April should give us the first data point upon which to gauge this trajectory. Strong performance through IBM and the deepening of relationships with other major partners could be catalysts to forecast stronger growth further out.

A DCF scenario analysis supports this view, suggesting that a 431p share price requires the company to deliver sustained bookings growth in the mid to high 30s with EBITDAC (EBITDA + capitalised R&D) margins expanding to c 30%. While this may seem ambitious, it is worth highlighting that cloud service providers are currently sustaining similar margins on much higher revenue growth rates. Success with the indirect model should enable the business to scale very quickly and the market opportunity leaves plenty of headroom for the company to exceed these estimates.

Exhibit 3: DCF scenario analysis

Bookings growth FY17

25%

46%

50%

60%

70%

Bookings CAGR FY16/25

20%

37%

41%

49%

57%

Revenues 2020 ($000s)

31,220

43,822

46,815

54,309

62,581

Implied share price pence (excluding dilution)

Matured EBITDAC margin

15%

(53)

200

291

594

1,085

20%

(27)

276

384

753

1,328

25%

(2)

350

480

903

1,578

30%

21

427

570

1,058

1,816

35%

43

498

665

1,212

2,060

Source: Edison Investment Research. Note: *Cash flow break-even year.

Exhibit 4: Financial summary

$'000s

2014

2015

2016

2017e

2018e

Year end 31 December

IFRS

IFRS

IFRS

IFRS

IFRS

PROFIT & LOSS

Revenue

 

 

11,218

10,994

11,379

14,752

21,722

Cost of Sales

(2,165)

(749)

(1,349)

(1,784)

(2,349)

Gross Profit

9,053

10,245

10,030

12,968

19,373

EBITDA

 

 

(17,874)

(15,988)

(7,464)

(5,133)

(538)

Operating Profit (before amort and except)

 

 

(26,424)

(25,858)

(16,104)

(14,073)

(9,778)

Acquired Intangible Amortisation

0

0

0

0

0

Exceptionals

(1,586)

(614)

(32)

0

0

Share based payments

(11,907)

(4,057)

(1,787)

(1,787)

(1,787)

Operating Profit

(39,917)

(30,529)

(17,923)

(15,860)

(11,565)

Net Interest

557

(506)

(268)

(268)

(268)

Profit Before Tax (norm)

 

 

(25,867)

(26,364)

(16,372)

(14,341)

(10,046)

Profit Before Tax (FRS 3)

 

 

(39,360)

(31,035)

(10,047)

(16,128)

(11,833)

Tax

1,053

1,129

772

587

430

Profit After Tax (norm)

(24,814)

(25,235)

(15,600)

(13,754)

(9,616)

Profit After Tax (FRS 3)

(38,307)

(29,906)

(9,275)

(15,541)

(11,403)

Average Number of Shares Outstanding (m)

24.0

28.8

33.3

37.1

37.3

EPS - normalised (c)

 

 

(103.3)

(87.7)

(46.9)

(37.1)

(25.8)

EPS - normalised fully diluted (c)

 

 

(103.3)

(87.7)

(46.9)

(36.6)

(25.1)

EPS - (IFRS) (c)

 

 

(159.5)

(103.9)

(27.9)

(41.9)

(30.6)

Dividend per share (c)

0.0

0.0

0.0

0.0

0.0

Gross Margin (%)

80.7

93.2

88.1

87.9

89.2

EBITDA Margin (%)

N/A

N/A

N/A

N/A

N/A

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

N/A

N/A

N/A

N/A

N/A

BALANCE SHEET

Fixed Assets

 

 

10,224

8,813

6,253

4,110

2,121

Intangible Assets

9,814

8,583

5,977

3,708

1,593

Tangible Assets

410

230

276

402

528

Investments

0

0

0

0

0

Current Assets

 

 

16,933

9,283

13,703

12,307

19,088

Stocks

0

0

0

0

0

Debtors

14,452

6,728

6,145

8,546

10,594

Cash

2,481

2,555

7,558

3,761

8,494

Other

0

0

0

0

0

Current Liabilities

 

 

(8,474)

(6,439)

(9,409)

(10,587)

(12,425)

Creditors & Deferred Income

(8,474)

(6,439)

(9,409)

(10,587)

(12,425)

Short term borrowings

0

0

0

0

0

Long Term Liabilities

 

 

(6,067)

(6,060)

(6,980)

(12,150)

(15,221)

Long term borrowings

0

0

0

0

0

Deferred Income

(6,067)

(6,060)

(6,980)

(12,150)

(15,221)

Net Assets

 

 

12,616

5,597

3,567

(6,320)

(6,436)

CASH FLOW

Operating Cash Flow

 

 

(13,509)

(18,138)

(2,955)

2,681

11,822

Net Interest

58

59

(161)

(268)

(268)

Tax

(3)

552

690

587

430

Capex (inc capitalised R&D)

(9,515)

(8,464)

(5,924)

(6,797)

(7,252)

Acquisitions/disposals

0

0

0

0

0

Financing (net)

465

26,175

13,523

0

0

Dividends

0

0

0

0

0

Net Cash Flow

(22,504)

184

5,173

(3,797)

4,733

Opening net debt/(cash)

 

 

(25,673)

(2,481)

(2,555)

(7,558)

(3,761)

HP finance leases initiated

0

0

0

0

0

Other

(661)

(43)

(175)

0

0

Closing net debt/(cash)

 

 

(2,481)

(2,555)

(7,558)

(3,761)

(8,494)

Source: WANdisco data, Edison Investment Research

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Copyright 2017 Edison Investment Research Limited. All rights reserved. This report has been commissioned by WANdisco and prepared and issued by Edison for publication globally. All information used in the publication of this report has been compiled from publicly available sources that are believed to be reliable, however we do not guarantee the accuracy or completeness of this report. Opinions contained in this report represent those of the research department of Edison at the time of publication. The securities described in the Investment Research may not be eligible for sale in all jurisdictions or to certain categories of investors. This research is issued in Australia by Edison Aus and any access to it, is intended only for "wholesale clients" within the meaning of the Australian Corporations Act. The Investment Research is distributed in the United States by Edison US to major US institutional investors only. Edison US is registered as an investment adviser with the Securities and Exchange Commission. Edison US relies upon the "publishers’ exclusion" from the definition of investment adviser under Section 202(a)(11) of the Investment Advisers Act of 1940 and corresponding state securities laws. As such, Edison does not offer or provide personalised advice. We publish information about companies in which we believe our readers may be interested and this information reflects our sincere opinions. The information that we provide or that is derived from our website is not intended to be, and should not be construed in any manner whatsoever as, personalised advice. Also, our website and the information provided by us should not be construed by any subscriber or prospective subscriber as Edison’s solicitation to effect, or attempt to effect, any transaction in a security. The research in this document is intended for New Zealand resident professional financial advisers or brokers (for use in their roles as financial advisers or brokers) and habitual investors who are “wholesale clients” for the purpose of the Financial Advisers Act 2008 (FAA) (as described in sections 5(c) (1)(a), (b) and (c) of the FAA). This is not a solicitation or inducement to buy, sell, subscribe, or underwrite any securities mentioned or in the topic of this document. This document is provided for information purposes only and should not be construed as an offer or solicitation for investment in any securities mentioned or in the topic of this document. A marketing communication under FCA Rules, this document has not been prepared in accordance with the legal requirements designed to promote the independence of investment research and is not subject to any prohibition on dealing ahead of the dissemination of investment research.
Edison has a restrictive policy relating to personal dealing. Edison Group does not conduct any investment business and, accordingly, does not itself hold any positions in the securities mentioned in this report. However, the respective directors, officers, employees and contractors of Edison may have a position in any or related securities mentioned in this report. Edison or its affiliates may perform services or solicit business from any of the companies mentioned in this report. The value of securities mentioned in this report can fall as well as rise and are subject to large and sudden swings. In addition it may be difficult or not possible to buy, sell or obtain accurate information about the value of securities mentioned in this report. Past performance is not necessarily a guide to future performance. Forward-looking information or statements in this report contain information that is based on assumptions, forecasts of future results, estimates of amounts not yet determinable, and therefore involve known and unknown risks, uncertainties and other factors which may cause the actual results, performance or achievements of their subject matter to be materially different from current expectations. For the purpose of the FAA, the content of this report is of a general nature, is intended as a source of general information only and is not intended to constitute a recommendation or opinion in relation to acquiring or disposing (including refraining from acquiring or disposing) of securities. The distribution of this document is not a “personalised service” and, to the extent that it contains any financial advice, is intended only as a “class service” provided by Edison within the meaning of the FAA (ie without taking into account the particular financial situation or goals of any person). As such, it should not be relied upon in making an investment decision. To the maximum extent permitted by law, Edison, its affiliates and contractors, and their respective directors, officers and employees will not be liable for any loss or damage arising as a result of reliance being placed on any of the information contained in this report and do not guarantee the returns on investments in the products discussed in this publication. FTSE International Limited (“FTSE”) © FTSE 2017. “FTSE®” is a trade mark of the London Stock Exchange Group companies and is used by FTSE International Limited under license. All rights in the FTSE indices and/or FTSE ratings vest in FTSE and/or its licensors. Neither FTSE nor its licensors accept any liability for any errors or omissions in the FTSE indices and/or FTSE ratings or underlying data. No further distribution of FTSE Data is permitted without FTSE’s express written consent.

Frankfurt +49 (0)69 78 8076 960

Schumannstrasse 34b

60325 Frankfurt

Germany

London +44 (0)20 3077 5700

280 High Holborn

London, WC1V 7EE

United Kingdom

New York +1 646 653 7026

245 Park Avenue, 39th Floor

10167, New York

US

Sydney +61 (0)2 8249 8342

Level 12, Office 1205

95 Pitt Street, Sydney

NSW 2000, Australia

Edison is an investment research and advisory company, with offices in North America, Europe, the Middle East and AsiaPac. The heart of Edison is our world-renowned equity research platform and deep multi-sector expertise. At Edison Investment Research, our research is widely read by international investors, advisers and stakeholders. Edison Advisors leverages our core research platform to provide differentiated services including investor relations and strategic consulting. Edison is authorised and regulated by the Financial Conduct Authority. Edison Investment Research (NZ) Limited (Edison NZ) is the New Zealand subsidiary of Edison. Edison NZ is registered on the New Zealand Financial Service Providers Register (FSP number 247505) and is registered to provide wholesale and/or generic financial adviser services only. Edison Investment Research Inc (Edison US) is the US subsidiary of Edison and is regulated by the Securities and Exchange Commission. Edison Investment Research Limited (Edison Aus) [46085869] is the Australian subsidiary of Edison and is not regulated by the Australian Securities and Investment Commission. Edison Germany is a branch entity of Edison Investment Research Limited [4794244]. www.edisongroup.com

DISCLAIMER
Copyright 2017 Edison Investment Research Limited. All rights reserved. This report has been commissioned by WANdisco and prepared and issued by Edison for publication globally. All information used in the publication of this report has been compiled from publicly available sources that are believed to be reliable, however we do not guarantee the accuracy or completeness of this report. Opinions contained in this report represent those of the research department of Edison at the time of publication. The securities described in the Investment Research may not be eligible for sale in all jurisdictions or to certain categories of investors. This research is issued in Australia by Edison Aus and any access to it, is intended only for "wholesale clients" within the meaning of the Australian Corporations Act. The Investment Research is distributed in the United States by Edison US to major US institutional investors only. Edison US is registered as an investment adviser with the Securities and Exchange Commission. Edison US relies upon the "publishers’ exclusion" from the definition of investment adviser under Section 202(a)(11) of the Investment Advisers Act of 1940 and corresponding state securities laws. As such, Edison does not offer or provide personalised advice. We publish information about companies in which we believe our readers may be interested and this information reflects our sincere opinions. The information that we provide or that is derived from our website is not intended to be, and should not be construed in any manner whatsoever as, personalised advice. Also, our website and the information provided by us should not be construed by any subscriber or prospective subscriber as Edison’s solicitation to effect, or attempt to effect, any transaction in a security. The research in this document is intended for New Zealand resident professional financial advisers or brokers (for use in their roles as financial advisers or brokers) and habitual investors who are “wholesale clients” for the purpose of the Financial Advisers Act 2008 (FAA) (as described in sections 5(c) (1)(a), (b) and (c) of the FAA). This is not a solicitation or inducement to buy, sell, subscribe, or underwrite any securities mentioned or in the topic of this document. This document is provided for information purposes only and should not be construed as an offer or solicitation for investment in any securities mentioned or in the topic of this document. A marketing communication under FCA Rules, this document has not been prepared in accordance with the legal requirements designed to promote the independence of investment research and is not subject to any prohibition on dealing ahead of the dissemination of investment research.
Edison has a restrictive policy relating to personal dealing. Edison Group does not conduct any investment business and, accordingly, does not itself hold any positions in the securities mentioned in this report. However, the respective directors, officers, employees and contractors of Edison may have a position in any or related securities mentioned in this report. Edison or its affiliates may perform services or solicit business from any of the companies mentioned in this report. The value of securities mentioned in this report can fall as well as rise and are subject to large and sudden swings. In addition it may be difficult or not possible to buy, sell or obtain accurate information about the value of securities mentioned in this report. Past performance is not necessarily a guide to future performance. Forward-looking information or statements in this report contain information that is based on assumptions, forecasts of future results, estimates of amounts not yet determinable, and therefore involve known and unknown risks, uncertainties and other factors which may cause the actual results, performance or achievements of their subject matter to be materially different from current expectations. For the purpose of the FAA, the content of this report is of a general nature, is intended as a source of general information only and is not intended to constitute a recommendation or opinion in relation to acquiring or disposing (including refraining from acquiring or disposing) of securities. The distribution of this document is not a “personalised service” and, to the extent that it contains any financial advice, is intended only as a “class service” provided by Edison within the meaning of the FAA (ie without taking into account the particular financial situation or goals of any person). As such, it should not be relied upon in making an investment decision. To the maximum extent permitted by law, Edison, its affiliates and contractors, and their respective directors, officers and employees will not be liable for any loss or damage arising as a result of reliance being placed on any of the information contained in this report and do not guarantee the returns on investments in the products discussed in this publication. FTSE International Limited (“FTSE”) © FTSE 2017. “FTSE®” is a trade mark of the London Stock Exchange Group companies and is used by FTSE International Limited under license. All rights in the FTSE indices and/or FTSE ratings vest in FTSE and/or its licensors. Neither FTSE nor its licensors accept any liability for any errors or omissions in the FTSE indices and/or FTSE ratings or underlying data. No further distribution of FTSE Data is permitted without FTSE’s express written consent.

Frankfurt +49 (0)69 78 8076 960

Schumannstrasse 34b

60325 Frankfurt

Germany

London +44 (0)20 3077 5700

280 High Holborn

London, WC1V 7EE

United Kingdom

New York +1 646 653 7026

245 Park Avenue, 39th Floor

10167, New York

US

Sydney +61 (0)2 8249 8342

Level 12, Office 1205

95 Pitt Street, Sydney

NSW 2000, Australia

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