Organic ARR growth rises to 3.2%

StatPro Group 5 August 2019 Update
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StatPro Group

Organic ARR growth rises to 3.2%

Interim results

Software & comp services

5 August 2019

Price

147.50p

Market cap

£97m

Net debt* (£m) at 30 June 2019
*Excluding lease liabilities

24.2

Shares in issue

65.8m

Free float

82%

Code

SOG

Primary exchange

AIM

Secondary exchange

N/A

Share price performance

%

1m

3m

12m

Abs

(2.3)

14.3

(6.4)

Rel (local)

(0.3)

14.2

(3.4)

52-week high/low

158.0p

105.0p

Business description

StatPro Group provides cloud-based portfolio analytics solutions to the global investment community.

Next events

Q3 trading update

October 2019

FY19 trading update

January 2020

FY19 results

March 2020

Analysts

Richard Jeans

+44 (0)20 3077 5700

Richard Williamson

+44 (0)20 3077 5700

StatPro Group is a research client of Edison Investment Research Limited

StatPro produced a solid set of interim results, with organic annualised recurring revenue (ARR) growth accelerating to 3.2% from 1.1% at end-2018. The EBITDA margin continued to expand and the group has a widening range of growth drivers in place. After many years of development on the group’s Revolution cloud platform and new divisions in place, which also creates opportunities in the data space, the focus is increasingly shifting onto driving sales. Given the group’s c £57.3m recurring revenue book, the rating (c 16x FY20e) looks attractive, especially in light of the active M&A backdrop in the financial software sector.

Year
end

Revenue (£m)

PBT*
(£m)

EPS*
(p)

DPS
(p)

P/E
(x)

Yield
(%)

12/17

49.3

3.3

5.8

2.9

25.4

2.0

12/18

54.8

4.8

7.1

2.9

20.8

2.0

12/19e

58.4

5.5

7.8

2.9

19.0

2.0

12/20e

61.8

6.8

9.1

2.9

16.3

2.0

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

H1 results: EBITDA margin rises by 90bp to 20.1%

Group revenue grew by 3.2% over H118 at constant currencies to £28.3m, including the regulatory risk services bureau acquired from ODDO BHF, which was consolidated from 1 July 2018. The group EBITDA margin expanded by 110bp to 20.1%. The margin in both periods is boosted by more than 300bp as a result of the adoption of IFRS 16. The more forward-looking ARR grew by an underlying 3.2% to £56.5m. After the period end, StatPro acquired an ESG research and index business for €2.9m that has an ARR of c £0.8m. Net debt, excluding leases, rose by £0.8m over the six months to stand at £24.2m. In addition, there are £7.8m of lease liabilities in the balance sheet, following the adoption of IFRS 16, which compares with £1.3m of finance leases at 31 December 2018, under the previous accounting standard.

Forecasts: Adjusted for IFRS 16

We have broadly maintained our forecasts, but the EBITDA numbers are boosted by the first-time inclusion of IFRS 16. The impact on adjusted operating profit is broadly neutral while our EPS forecasts are eased slightly. We have incorporated the new divisions for the first time.

Valuation: Highly scalable cloud computing upside

StatPro’s stock trades on c 19x our FY19e EPS, which falls to c 16x in FY20e and to c 13x in FY21e. Alternatively, the shares trade on c 2.1x FY20 EV/Sales, around a third of the level of StatPro’s larger US financial software peers and a quarter of the level of US-based pure Software-as-a-Service companies. Our DCF model, when incorporating 10-year organic revenue CAGR of c 3.7%, terminal growth of 2%, a long-term operating margin target of 24.0% and a WACC of 9%, values the shares at 235p, 71% above the current share price.

Interim results: New divisional structure drives growth

The key ARR metric grew by 5.7%, or an underlying 3.2%, to £56.5m. After the period end, StatPro acquired an ESG research and index business for €2.9m that has an ARR of c £0.8m, which takes the ARR to a pro forma c £57.3m. All divisions showed growth.

Exhibit 1: Movement in annualised recurring revenue (ARR)

As at 20/6/18

Net impact of FX

As at 1/7/18

ARR from acquisitions

Net new contracted revenue/increases

Net increase/decrease

Recurring licence fees as at 30/6/19

Change in total ARR

Change in ARR at constant FX

Change in ARR at constant FX excluding acquisitions

Revolution

42.18

0.80

42.98

1.33

1.15

2.48

45.46

7.8%

5.8%

2.7%

Infovest

4.67

0.16

4.83

0.36

0.36

5.19

11.2%

7.5%

7.5%

Source: StatPro

5.4

0.23

5.63

0.20

0.20

5.83

8.0%

3.6%

3.6%

Total

52.25

1.19

53.44

1.33

1.71

3.04

56.48

8.1%

5.7%

3.2%

Source: StatPro

Group revenue grew by 3.2% over H118 at constant currencies to £28.3m, including the regulatory risk services bureau acquired from ODDO BHF, which was consolidated from 1 July 2018. The reason that underlying recognised revenue growth lagged underlying ARR was due to a 58% slide in professional services revenues (the only non-recurring part of the business) to £0.6m. Professional services continue to be de-emphasised as the cloud business grows. The group EBITDA margin expanded by 110bp to 20.1%, which also reflects the impact of first-time adoption of the IFRS 16 accounting standard.

Exhibit 2: Half-by-Half Analysis

2018

2019e

 

H1a

H2a

FYa

H1a

H2e

FYe

Revolution

22,230

22,270

44,500*

22,991

24,179

47,170

Infovest

2,571

2,729

5,300*

2,561

2,951

5,512

Source: StatPro

2,436

2,564

5,000*

2,701

3,049

5,750

Total Revenue

27,237

27,604

54,841

28,253

30,179

58,432

Opex (before devt costs depn)

(22,795)

(22,576)

(45,371)

(22,759)

(25,096)

(47,855)

Capitalisation of dev costs (net)

734

505

1,239

185

443

628

Adjusted EBITDA

5,176

5,533

10,709

5,679

5,526

11,205

EBITDA Margin

19.0%

20.0%

19.5%

20.1%

18.3%

19.2%

Depreciation

(1,625)

(1,728)

(3,353)

(1,764)

(1,505)

(3,269)

Adjusted operating profit

3,551

3,805

7,356

3,915

4,021

7,936

Operating margin (%)

13.0%

13.8%

13.4%

13.9%

13.3%

13.6%

Net interest

(1,184)

(1,370)

(2,554)

(1,260)

(1,129)

(2,389)

Edison Profit Before Tax (norm)

2,367

2,435

4,802

2,655

2,892

5,547

Amortisation of acq'd intangibles

(1,518)

(1,643)

(3,161)

(1,510)

(1,651)

(3,161)

Share-based payments

(37)

(170)

(207)

(280)

(395)

(675)

Exceptional items

0

(3,608)

(3,608)

(1,126)

0

(1,126)

Profit before tax (FRS 3)

812

(2,986)

(2,174)

(261)

846

585

Source: StatPro, Edison Investment Research. Note: *Estimated.

Net debt, excluding leases, rose by £0.8m over the six months to stand at £24.2m. In addition, there are £7.8m of lease liabilities in the balance sheet, following the adoption of IFRS 16, which compares with £1.3m of finance leases as at 31 December 2018, under the previous standard.

Strategy

A priority remains on leveraging the group’s cloud-based analytics platform, Revolution, and completing the transition to cloud. The remaining customers on three legacy modules are being transitioned to the new platform, often with significant conversion premiums as exemplified by the recent deal with an insurance company, which involved a 77% uplift. The only remaining single-tenant module will be the highly successful GIPS Composites, which can be scaled on the AWS cloud platform. It stands to benefit from the implementation of GIPS 2020 standards next year. The completion of this transition of Seven to Revolution will involve a >£1m reduction in overlapping costs, while the transition of Delta to Revolution will remove c £1.5m of UBS support costs. The new strategic partnership with JP Morgan is also highlighted, and we note that the customer has chosen not to white-label the Revolution product, which is great news for the StatPro brand. Revolution will be integrated by end-October and StatPro says there are already numerous prospects.

The new StatPro: Source division has a range of potential for leveraging the group’s data assets. These cover the areas of valuations (equity and bonds), indexes (EBS and Freedom) and metadata (yield curves and factor models). The strategy involves cross-selling to the group’s client base and the recent acquisition of ESG Index adds a new dimension in a dynamic area, recently highlighted by MSCI as the fastest growing area of its business.

While much of the focus in recent years has been on software development, building relationships with fund administrators and integrating acquisitions, the focus now is shifting to leverage sales and growing the salesforce from 20 to 30 and eventually 40. However, management is looking for a very specific skillset, including people with the right contacts in the asset management industry, and clearly the rate of growth will depend on the availability of this talent.

Impact of IFRS 16

StatPro has restated its FY18 numbers for IFRS 16 and the SiSoft litigation. The main impact of IFRS 16 is the jump in EBITDA, with corresponding increase in depreciation and the finance charge. Net operating cash flow increased by £1.5m, with the corresponding lease payments now showing below the free cash flow line under financing, and hence boosting free cash flow by £1.5m in FY18 and beyond.

Exhibit 3: Accounting adjustments

£000s

2017

2018

2018

Group income statement

Pre-IFRS 16

Pre-IFRS 16

IFRS 16

& SiSoft

Revenue

49,260

54,841

54,841

Operating expenses before amortisation of intangible assets and other adjustments

(40,116)

(42,336)

(42,194)

Amortisation of acquired intangible assets

(2,243)

(3,161)

(3,161)

Amortisation of other intangible assets

(4,853)

(5,498)

(5,498)

Fair value movement on non-controlling interest put option

(404)

-

-

Increase in SiSoft legal provision

-

-

(1,030)

Acquisition-related and restructuring costs

(3,530)

(2,977)

(2,977)

Operating expenses

(51,146)

(53,972)

(54,860)

Operating profit/(loss)

(1,886)

869

(19)

Finance income

61

56

124

Finance credit - Fair value reduction in deferred consideration

-

399

399

Finance expense

(1,646)

(2,312)

(2,678)

Net finance expense

(1,585)

(1,857)

(2,155)

Loss before taxation

(3,471)

(988)

(2,174)

Taxation

1,173

476

506

Loss for the year

(2,298)

(512)

(1,688)

Profit attributable to non-controlling interests

131

21

21

Loss attributable to equity shareholders

(2,429)

(533)

(1,689)

 

(2,298)

(512)

(1,668)

Loss per share - basic and diluted (p)

(3.7)

(0.8)

(2.6)

CASH FLOW

Operating activities

Cash generated from operations

10,676

12,839

14,641

Finance income

61

56

124

Finance costs

(1,288)

(1,929)

(2,295)

Tax received

1,022

584

584

Tax paid

(1,166)

(1,347)

(1,347)

Net cash flow from operating activities

9,305

10,203

11,707

Investing activities

Acquisition of subsidiaries and other businesses (net of cash acquired)

(10,269)

(3,417)

(3,417)

Investment in intangible assets

(6,028)

(6,901)

(6,901)

Purchase of property, plant and equipment

(1,185)

(893)

(893)

Net cash flow used in investing activities

(17,482)

(11,211)

(11,211)

Financing activities

Net proceeds from bank loans and derivatives

9,966

2,089

2,089

Net payments on finance leases

(840)

(1,051)

Net payments of lease liabilities/proceeds on finance leases

(2,850)

Proceeds from financial assets

295

Proceeds from exercise of share options

926

147

147

Dividends paid to non-controlling interests

(135)

(76)

(76)

Dividends paid to shareholders

(1,877)

(1,904)

(1,904)

Net cash flow from financing activities

8,040

(795)

(2,299)

Net (decrease)/increase in cash and cash equivalents

(137)

(1,803)

(1,803)

Cash and cash equivalents at 1 January

4,356

4,311

4,311

Effect of exchange rate movements

92

63

63

Cash and cash equivalents at 31 December

4,311

2,571

2,571

Source: Company accounts


The introduction of IFRS 16 has boosted depreciation and consequently the adjusted EBITDA margin has risen by c 310bp.

Exhibit 4: IFRS 16 impacts on Adjusted EBITDA

2017

H118

H118

FY18

FY18

H119

Pre-IFRS 16

Pre-IFRS 16

IFRS 16

Pre-IFRS 16

IFRS 16

IFRS 16

Operating profit/(loss)

869

1,929

1,996

(1,886)

(19)

999

Add back: depreciation of property, plant and equipment

1,593

754

1,504

Add back: depn of PPE and right-of-use assets

1528

3149

1595

Add back: amortisation on purchased intangible assets

204

97

97

417

204

169

Add back: amortisation on acquired intangible assets

3,161

1,518

1,518

2,243

3,161

1,510

Add back: fair value mvnt on non-controlling interest put option

-

404

Add back: increase in SiSoft provision

-

1,030

-

Add back: acquisition-related and restructuring costs

2,977

-

3,530

2,977

1,126

Add back: share-based payments

207

37

37

626

207

280

Adjusted EBITDA

6,838

4,335

5,176

9,011

10,709

5,679

Adjusted EBITDA margin

13.9%

15.9%

19.0%

16.4%

19.5%

20.1%

Source: Company accounts

Forecast changes: Adjusted for IFRS 16

We have broadly maintained our forecasts, but the EBITDA numbers are boosted by the first-time inclusion of IFRS 16. Consequently, the changes in Exhibit 5 reflect the application of IFRS 16. We have also included the new divisions for the first time, as shown in Exhibit 2. We have excluded all lease liabilities from our headline net debt calculations, but show them as a standalone line in the financial summary below (see Exhibit 7 for more details).

Exhibit 5: Forecast changes

Revenue (£m)

Adjusted EBITDA (£m)

EPS (p)

Old

New

% chg.

Old

New

% chg.

Old

New

% chg.

2019e

58.4

58.4

0.0

9.5

11.2

17.9

8.0

7.8

(2.5)

2020e

61.8

61.8

0.0

10.7

12.3

15.0

9.2

9.1

(1.1)

2021e

65.1

65.1

0.0

12.5

14.1

12.8

11.4

11.2

(1.8)

Source: Edison Investment Research


Valuation: Attractive in terms of peer analysis and M&A

The attractions in terms of peer analysis and M&A are compounded in light of organic growth acceleration and margin expansion. In EV/Sales and P/E terms, the shares are attractive against all peers (see Exhibit 6). M&A activity remains elevated in the financial software and data industries, and the valuations of transactions make StatPro look attractive. For instance, Deutsche Börse recently acquired Axioma, a StatPro competitor in the risk space, for $850m or c 8.5x annual contract value (ACV) revenues, while in 2017, BISAM, a key competitor of StatPro, was acquired by FactSet for $205.2m or 7.3x sales.

Exhibit 6: Peer analysis

Share price

Market cap

Market cap

EV/sales

Operating margins

EV/EBITDA (x)

PE (x)

Local curr

Local curr m

£m

Year 1

Year 2

Year 1

Year 2

Year 1

Year 2

Year 1

Year 2

StatPro

147.50

97

97

2.2

2.1

13.6%

14.6%

11.4

10.4

19.0

16.3

1) US-quoted investment management software peers

MSCI

225.33

19,081

14551

13.6

12.4

49.5%

50.9%

25.0

22.3

36.0

31.4

SS&C

46.78

11,838

9027

4.2

4.1

36.8%

36.1%

10.8

10.2

12.8

11.7

FactSet

279.43

10,690

8152

7.6

7.2

32.1%

32.7%

21.1

19.9

28.3

26.5

Envestnet

70.08

3,635

2772

4.2

3.6

15.5%

16.6%

19.8

16.0

32.7

26.2

Averages

 

5.9

5.4

34.4%

34.4%

17.4

15.6

23.3

20.7

2) Investment management software peers quoted in other countries

SimCorp

621.00

25,127

2918

7.7

7.1

27.6%

27.9%

26.1

24.2

36.6

33.1

Iress

13.95

2,438

1333

5.1

4.6

22.3%

23.5%

19.2

16.9

29.7

25.4

Linedata

28.80

207

178

N/A

1.6

16.8%

16.8%

N/A

6.4

10.0

N/A

GBST

3.88

264

144

2.6

2.5

12.0%

12.6%

15.9

12.2

25.5

23.0

Averages

 

4.2

2.9

19.6%

20.2%

19.6

11.8

20.0

26.6

3) UK-quoted financial software peers

First Derivatives

2990.00

799

799

3.3

3.0

12.8%

13.0%

18.6

16.5

32.7

29.2

Microgen

560.00

347

347

4.8

4.4

17.8%

20.4%

23.0

18.8

48.2

37.8

Gresham

116.50

80

80

N/A

N/A

4.4%

6.5%

21.3

18.1

81.2

54.1

Brady

56.75

47

47

1.8

1.7

3.9%

7.7%

12.3

8.8

44.0

22.5

Averages

 

2.8

2.6

8.6%

10.3%

17.8

14.2

46.3

32.4

4) US companies with SaaS business models

Salesforce

150.81

117,463

89577

7.1

5.9

17.3%

19.1%

27.6

22.6

51.9

43.1

Workday

203.86

46,072

35135

12.7

10.3

12.4%

14.4%

64.9

48.4

119.6

89.6

Paycom Software

237.88

13,918

10614

19.0

15.4

36.4%

36.7%

44.4

36.1

70.2

56.8

Paylocity

101.48

5,376

4100

11.3

9.3

21.0%

21.9%

39.6

32.3

78.8

61.5

Cornerstone OnDemand

58.43

3,486

2658

6.0

5.2

14.4%

17.7%

27.6

21.3

55.9

41.3

Instructure

39.62

1,470

1121

5.5

4.6

(9.1%)

(5.4%)

N/A

N/A

N/A

N/A

Averages

 

8.4

7.1

15.9%

18.4%

36.9

29.3

69.0

54.1

Source: Edison Investment Research, Refinitiv. Note: prices as at 1 August 2019.

Exhibit 7: Financial summary

£'000s

2016

2017

2018

2019e

2020e

2021e

Year end 31 December

IFRS

IFRS

IFRS

IFRS

IFRS

IFRS

PROFIT & LOSS

Revenue

 

 

37,545

49,260

54,841

58,432

61,814

65,133

Cost of Sales

0

0

0

0

0

0

Gross Profit

37,545

49,260

54,841

58,432

61,814

65,133

EBITDA

 

 

5,104

6,838

10,709

11,205

12,295

14,092

Adjusted Operating Profit

 

 

3,461

4,917

7,356

7,936

9,032

10,770

Amortisation of acquired intangibles

(1,060)

(2,243)

(3,161)

(3,161)

(3,161)

(3,161)

Exceptionals

(11,378)

(3,934)

(3,608)

(1,126)

0

0

Share based payments

(361)

(626)

(207)

(675)

(700)

(725)

Operating Profit

(9,338)

(1,886)

380

2,974

5,171

6,884

Net Interest

(786)

(1,585)

(2,554)

(2,389)

(2,214)

(2,014)

Profit Before Tax (norm)

 

 

2,675

3,332

4,802

5,547

6,819

8,756

Profit Before Tax (FRS 3)

 

 

(10,124)

(3,471)

(2,174)

585

2,958

4,870

Tax

(489)

563

(111)

(416)

(818)

(1,313)

Profit After Tax (norm)

2,843

4,505

5,308

5,131

6,000

7,443

Profit After Tax (FRS 3)

(10,613)

(2,908)

(2,285)

169

2,139

3,557

Minority interests

(94)

(131)

(21)

0

0

0

Net income (norm)

2,186

3,764

4,670

5,131

6,000

7,443

Net income (statutory)

(10,707)

(3,039)

(2,306)

169

2,139

3,557

Average Number of Shares Outstanding (m)

65.3

64.8

65.7

65.9

66.2

66.5

EPS - normalised (p)

 

 

3.3

5.8

7.1

7.8

9.1

11.2

EPS - FRS 3 (p)

 

 

(16.4)

(4.7)

(3.5)

0.3

3.2

5.3

Dividend per share (p)

2.90

2.90

2.90

2.90

2.90

2.90

Gross Margin (%)

100.0

100.0

100.0

100.0

100.0

100.0

EBITDA Margin (%)

13.6

13.9

19.5

19.2

19.9

21.6

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

9.2

10.0

13.4

13.6

14.6

16.5

BALANCE SHEET

Fixed Assets

 

 

59,088

70,864

73,070

71,441

69,600

67,672

Intangible Assets

55,696

64,793

63,701

61,962

60,005

57,956

Tangible Assets

2,742

3,303

2,200

2,310

2,426

2,547

Other assets

650

2,768

7,169

7,169

7,169

7,169

Current Assets

 

 

19,081

20,912

18,810

20,629

27,084

35,146

Stocks

0

0

0

0

0

0

Debtors

14,725

16,601

16,239

17,302

18,304

19,287

Cash

4,356

4,311

2,571

3,327

8,780

15,859

Current Liabilities

 

 

(35,686)

(38,171)

(37,930)

(40,250)

(42,564)

(44,919)

Creditors

(27,227)

(30,720)

(30,908)

(33,228)

(35,542)

(37,897)

Short term borrowings

(8,459)

(7,451)

(7,022)

(7,022)

(7,022)

(7,022)

Long Term Liabilities

 

 

(9,897)

(22,989)

(27,732)

(26,033)

(25,333)

(24,634)

Long term borrowings

(5,961)

(17,076)

(18,900)

(18,201)

(17,501)

(16,802)

Other long term liabilities

(3,936)

(5,913)

(8,832)

(7,832)

(7,832)

(7,832)

Net Assets

 

 

32,586

30,616

26,218

25,787

28,786

33,265

CASH FLOW

Operating Cash Flow

 

 

7,454

10,676

14,641

16,283

18,932

21,022

Net Interest

(500)

(1,227)

(2,171)

(2,539)

(2,214)

(2,014)

Tax

(1,294)

(144)

(763)

(350)

(361)

(750)

Capex

(6,445)

(7,213)

(7,794)

(8,001)

(8,285)

(8,551)

Acquisitions/disposals

(4,786)

(10,269)

(3,417)

(2,026)

0

0

Equity financing

(2,079)

926

147

0

0

0

Dividends

(1,877)

(2,012)

(1,980)

(1,912)

(1,921)

(1,929)

Net Cash Flow

(9,527)

(9,263)

(1,337)

1,455

6,152

7,778

Opening net debt/(cash)

 

 

(1,283)

10,065

20,217

23,351

21,896

15,743

Other

(1,821)

(889)

(1,797)

()

0

0

Closing net debt/(cash)

 

 

10,065

20,217

23,351

21,896

15,743

7,965

Closing net debt/(cash) incl lease liabilities (IFRS16)

 

 

30,268

28,813

22,660

14,882

Source: StatPro accounts, Edison Investment Research. Note: IFRS 16 has been applied from FY18.


General disclaimer and copyright

This report has been commissioned by StatPro Group and prepared and issued by Edison, in consideration of a fee payable by StatPro 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 StatPro Group and prepared and issued by Edison, in consideration of a fee payable by StatPro 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

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