Outlook is maintained

StatPro Group 6 August 2018 Update
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StatPro Group

Outlook is maintained

Interim results

Software & comp services

6 August 2018

Price

158p

Market cap

£104m

Net debt (£m) at 30 June 2018

23.2

Shares in issue

65.6m

Free float

82%

Code

SOG

Primary exchange

AIM

Secondary exchange

N/A

Share price performance

%

1m

3m

12m

Abs

(8.4)

(12.5)

12.9

Rel (local)

(8.7)

(12.8)

10.2

52-week high/low

186.5p

138.0p

Business description

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

Next events

Q3 trading update

October 2018

FY18 trading update

January 2019

FY18 results

March 2019

Analysts

Richard Jeans

+44 (0)20 3077 5700

Dan Ridsdale

+44 (0)20 3077 5729

StatPro Group is a research client of Edison Investment Research Limited

The group’s annualised recurring revenue (ARR) was flat due to higher than normal churn. However, we believe this slowdown is temporary as StatPro is looking increasingly well positioned to benefit from the outsourcing shift in the global asset management industry. StatPro is the only SaaS provider of performance, attribution and risk solutions and it also offers APIs along with full managed services. We have increased our interest forecasts while also reducing tax, which results in EPS forecasts remaining unchanged. Given the ongoing active M&A backdrop in financial software and the scope for revenue acceleration and margin expansion, we continue to see strong upside potential in the shares.

Year
end

Revenue (£m)

PBT*
(£m)

EPS*
(p)

DPS
(p)

P/E
(x)

Yield
(%)

12/16

37.5

2.7

3.3

2.9

47.2

1.8

12/17

49.3

3.3

5.8

2.9

27.2

1.8

12/18e

56.8

5.0

7.0

2.9

22.7

1.8

12/19e

59.5

6.2

8.0

2.9

19.7

1.8

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

H1 results: Revolution’s ARR grew by 19%

H118 group revenue rose by 22% to £27.2m while adjusted EBITDA increased by 23% to £4.3m. Underlying group annualised recurring revenue (ARR) was flat due to higher than normal churn. Excluding the acquisitions of Alpha and Delta, which have specific issues, group ARR growth was 2%. Additionally, we note that H1 gross sales were higher than budgeted and the flagship Revolution grew its ARR by 19%. Earlier this month StatPro acquired ODDO BHF’s regulatory risk services bureau which will enable it to offer a complete risk managed service to customers across the globe. The service will be particularly attractive to smaller asset service providers (ASPs) that lack the specialist skills to operate StatPro’s software.

Forecasts: EBITDA unchanged, interest increased, tax cut

We have eased our revenue and cost forecasts, hence EBITDA remains unchanged across the forecast period. However, we have increased our interest charge forecast by £400k in FY18, £150k in FY19 and £100k in FY20. Further, we reduce our tax forecasts, which results in EPS being unchanged for all years.

Valuation: Highly scalable cloud computing upside

StatPro’s stock trades on c 23x our maintained FY18 EPS, which falls to c 20x in FY19 and to c 17x in FY20. Alternatively, the shares trade on c 2.2x FY19 EV/sales, around half of the level of StatPro’s larger US peers and around a third of US-based pure software as a service (SaaS) companies. M&A remains active in the financial software industry with SS&C buying Eze Software (31 July) for $1.45bn or c 5.2x revenues while State Street has acquired Charles River (20 July) for $2.6bn or c 8.7x revenues. When incorporating 10-year organic revenue growth of c 3.6%, a terminal growth of 2%, a long-term margin target of 24.0% and a WACC of 9%, our DCF model values the shares at 222p (previously 223p), c 41% above the current share price.

Interim results: Revolution’s ARR grew by 19%

Group revenue rose by 22% to £27.2m while adjusted EBITDA increased by 23% to £4.3m, resulting in the EBITDA margin rising by 20bp to 15.9%. Delta contributed a full six months compared with 1.5 months in the prior period. StatPro Revolution revenues, excluding Delta, rose by 15%. The normalised PBT rose by a more modest 12% due to the jump in the interest charge, which relates to the higher debt levels following the Delta acquisition. The H1 interest charged to the p&l account continues to exceed the cash interest paid, as the charge includes a non-cash component relating to the amortisation of facility setup fees. Free cash flow at £2.2m, was £1.3m lower than H117, due to a smaller increase in working capital. Following additional acquisition payments for Investor Analytics and InfoVest, totalling £2.5m, net debt increased by £3.0m over the six months to £23.2m as at the end of June. The interim dividend was maintained at 0.85p.

The group’s ARR slipped by 2% to £52.3m over 12 months and was flat at constant currencies. StatPro Revolution’s ARR grew by 19% while the legacy suite, StatPro Seven, saw its ARR, adjusted for conversions, eased by just 1%.The ARR is a forward-looking measure of revenue since the bulk of group revenues are recurring in nature albeit for professional services, which represents less than 4% of group revenue. The flat ARR was due to high than normal churn, which stood at 9% on an annualised basis, against the typical 6-7%. About a third of Revolution’s churn related to Alpha and a third to Delta. Alpha (previously Investor Analytics) was acquired in early 2016 and has lost a number of hedge fund clients which are less sticky than traditional fund managers. Delta operates on a legacy cloud platform and is being transitioned to the Revolution platform. Consequently, it is challenging to sell this product during the transition. Delta has seen some churn, but some customers have signed longer-term contracts, which are not reflected in the numbers.

Most of Revolution’s growth came from existing clients, with the average ARR per Revolution client rising by 16% to £86.9m. StatPro has just launched its Fixed Income Attribution (FIA) beta, which will be fully commercial in December, and will help drive additional conversions. FIA is also an important component in the Delta transition, with D-curves (yield curves) being added in January.

Exhibit 1: Half-by-half analysis

2017

2018e

 

H1

H2

FY

H1

H2e

FYe

StatPro Revolution (including Delta)

8,800

14,670

23,470

14,340

17,868

32,208

StatPro Seven

10,550

9,230

19,780

9,930

7,650

17,580

Data

2,030

2,040

4,070

2,000

2,151

4,151

Professional services

1,030

990

2,020

970

1,090

2,060

Total Revenue

22,408

26,852

49,260

27,237

29,514

56,751

Opex (before development costs and depreciation)

(19,562)

(24,440)

(44,002)

(23,632)

(25,313)

(48,945)

Capitalisation of development costs (net)

680

900

1,580

730

208

938

Adjusted EBITDA

3,526

3,312

6,838

4,335

4,408

8,743

EBITDA margin

15.7%

12.3%

13.9%

15.9%

14.9%

15.4%

Depreciation

(838)

(1,083)

(1,921)

(851)

(1,074)

(1,925)

Adjusted operating profit

2,688

2,229

4,917

3,484

3,334

6,818

Operating margin (%)

12.0%

8.3%

10.0%

12.8%

11.3%

12.0%

Net interest

(496)

(1,089)

(1,585)

(1,030)

(809)

(1,839)

Edison profit before tax (norm)

2,192

1,140

3,332

2,454

2,526

4,980

Amortisation of acq'd intangibles

(881)

(1,362)

(2,243)

(1,518)

(1,725)

(3,243)

Share-based payments

(144)

(482)

(626)

(37)

(613)

(650)

Exceptional items

(2,709)

(1,225)

(3,934)

0

0

0

Profit before tax (FRS 3)

(1,542)

(1,929)

(3,471)

899

188

1,087

Source: Company accounts, Edison Investment Research

The group implemented IFRS15, which had a minor impact on FY17 numbers. The application of IFRS15 resulted in a small increase in revenue at the start of a contract. It has given a 1% boost to H1 revenues but this is expected to reverse in H2.

Acquisition of ODDO BHF’s regulatory risk services bureau

Earlier this month StatPro acquired ODDO BHF’s regulatory risk services bureau which adds 10 new clients to StatPro’s client base in Germany and Luxembourg. This business will enable StatPro to offer a complete risk managed service to customers across the globe. This will be particularly attractive to smaller asset service providers which lack the specialist skills to operate StatPro’s software. The company has released further information on the acquisition with these results, revealing that the acquired business has recurring revenue of c €1.7m, and that StatPro paid an initial €1m for the business with a further €0.4m due in a year’s time. Hence, StatPro is paying 0.8x revenues for a business that management believes could generate 20-30% EBITDA margins and has considerable potential for growth. Importantly, the business added three asset service provider customers, as well as seven fund managers. StatPro is transitioning these customers from a legacy platform to StatPro Revolution, and, once this has completed, it will be in a position to market the service to customers across the globe.

Forecasts: EBITDA unchanged, interest increased

We have eased our revenue and cost forecasts, hence EBITDA remains unchanged across the forecast period. However, we have increased our interest charge forecast by £400k in FY18, £150k in FY19 and £100k in FY20. Further, we have reduced our tax forecasts. This results in EPS being unchanged for all years. We have also made some minor tweaks to the cash flow following new information on the acquisition of the regulatory risk services bureau from ODDO BHF. We now forecast the group to end FY18 with net debt of £22.3m (previously £22.7m). The lower debt level is due to the cost of acquiring the regulatory risk services bureau from ODDO BHF being lower than we had expected, and partly deferred into FY19. Our forecast end-2019 net debt eases to £20.3m (previously £20.6m) a year later.

Exhibit 2: Summary of revised forecasts

2018e

2019e

2020e

 

Old

New

Change

Old

New

Change

Old

New

Change

Revenues (£'000s)

 

 

 

 

 

 

StatPro Revolution

33,459

32,959

(1.5)

38,054

37,461

(1.6)

42,549

41,844

(1.7)

Traditional software rental

17,580

17,580

0.0

15,580

15,580

0.0

13,580

13,580

0.0

Data

4,151

4,151

0.0

4,359

4,359

0.0

4,555

4,555

0.0

Professional services

2,060

2,060

0.0

2,102

2,102

0.0

2,144

2,144

0.0

Group Revenue

57,251

56,751

(0.9)

60,095

59,501

(1.0)

62,828

62,123

(1.1)

Growth (%)

16.0

15.2

5.0

4.8

4.5

4.4

Gross Profit

57,251

56,751

(0.9)

60,095

59,501

(1.0)

62,828

62,123

(1.1)

Opex (before devt costs depn)

(49,446)

(48,945)

(1.0)

(51,230)

(50,637)

(1.2)

(52,879)

(52,174)

(1.3)

Capitalisation of dev costs (net)

938

938

(0.0)

647

647

(0.0)

506

507

0.1

Adjusted EBITDA

8,743

8,743

0.0

9,511

9,511

(0.0)

10,455

10,455

0.0

Depreciation

(1,925)

(1,925)

0.0

(1,869)

(1,869)

0.0

(1,813)

(1,813)

0.0

Adjusted operating profit

6,818

6,818

0.0

7,643

7,642

(0.0)

8,642

8,643

0.0

Operating margin (%)

11.9

12.0

12.7

12.8

13.8

13.9

Growth (%)

35.5

38.7

12.1

12.1

13.1

13.1

Net interest

(1,439)

(1,839)

27.8

(1,264)

(1,414)

11.9

(1,114)

(1,214)

9.0

Profit before tax norm

5,379

4,980

(7.4)

6,379

6,228

(2.4)

7,528

7,429

(1.3)

Amortisation of acquired intangibles

(3,243)

(3,243)

0.0

(3,243)

(3,243)

0.0

(3,243)

(3,243)

0.0

Share based payments

(650)

(650)

0.0

(675)

(675)

0.0

(700)

(700)

0.0

Exceptional items (net of tax)

0

0

0

0

0

0

Profit before tax

1,486

1,087

(26.9)

2,461

2,310

(6.1)

3,585

3,486

(2.8)

Taxation

(753)

(354)

(53.1)

(1,084)

(934)

(13.8)

(1,506)

(1,404)

(6.7)

Minority interest

(40)

(40)

0

0

0

0

Net income

693

693

0.0

1,377

1,376

(0.0)

2,080

2,082

0.1

Adjusted EPS (p)

7.0

7.0

0.0

8.0

8.0

(0.0)

9.1

9.1

0.0

P/E - Adjusted EPS

 

22.9

 

19.9

 

17.6

Source: Company accounts, Edison Investment Research

Growth drivers

StatPro is positioning itself to benefit from the outsourcing shift in the asset management industry by targeting asset service providers that resell the group’s software. According to StatPro, only c 10% of the crucial US market is outsourced, compared to c 95% in Australia, and there are strong commercial pressures that are encouraging asset managers to outsource. Indeed, that is why competitors that only supply fund managers are vulnerable.

StatPro is the only SaaS provider of performance, attribution and risk solutions and it also offers APIs and a full managed service. StatPro stands to benefit as customers increasingly become more relaxed about operating in the cloud.

Key growth drivers

Reseller channel (asset service providers). Around 20% of group revenues are from the reseller channel, principally fund administrators. StatPro expects this channel to continue to grow and to be a major factor in driving organic growth.

Outsourced managed services. StatPro sees this as a significant driver of growth, since many smaller asset service providers lack the technical skills and business knowledge to run StatPro’s software.

Under-utilised data assets. The group’s data business is a critical component of software services. As the focus has been on the cloud strategy, management has not spent time on commercialising the group’s data assets. However, the group has now appointed a CEO for its Source: StatPro data division who will concentrate on commercialising these assets. The analogy of stock exchanges growing their data assets into significant cash cows gives some indication of the potential here.

Acquisitions: Scaling up the platform is expected to boost margins. The acquisitions of Delta and the regulatory service bureau from ODDO BHF highlight the opportunities that are available to pick up assets at attractive prices to bolt on to the business.

Peer analysis

StatPro trades on c 2.2x FY19 EV/sales, around half of the level of StatPro’s larger US peers and around a third of US-based pure software as a service (SaaS) companies.

Exhibit 3: Peer analysis

Share price

Market cap

EV/sales

Operating margins

EV/EBITDA (x)

P/E (x)

Local curr

Local curr m

£m

Year 1

Year 2

Year 1

Year 2

Year 1

Year 2

Year 1

Year 2

StatPro

158

104

104

2.3

2.2

12.0%

12.8%

14.7

13.5

22.7

19.7

1) US-quoted investment management software peers

MSCI

169.11

15,199

11693

11.4

10.5

48.5%

49.9%

21.1

18.9

32.2

28.0

SS&C

54.51

12,978

9984

4.4

3.6

29.4%

30.8%

13.9

10.6

23.4

18.8

FactSet

201.73

7,738

5953

6.0

5.6

31.1%

32.0%

18.2

18.5

23.6

21.1

Envestnet

59.25

2,679

2061

3.7

3.3

9.0%

11.1%

20.0

16.6

32.7

26.8

Medians

 

5.2

4.6

30.3%

31.4%

19.1

17.5

27.9

24.0

2) Investment management software peers quoted in other countries

SimCorp

557.50

22,579

2696

7.9

7.3

27.1%

26.9%

27.8

25.7

37.3

33.9

Iress

11.63

2,014

1144

4.7

4.4

22.9%

23.9%

17.4

15.6

26.4

23.3

Linedata

35.15

256

228

1.9

1.9

16.3%

16.6%

8.0

7.8

13.9

13.3

GBST

2.21

150

85

1.5

1.4

6.3%

6.3%

13.6

11.5

24.3

21.0

Medians

 

3.3

3.2

19.6%

20.2%

15.5

13.5

25.4

22.2

3) UK-quoted financial software peers

First Derivatives

4000.00

1,035

1035

4.9

4.4

11.7%

11.7%

27.6

24.5

49.8

44.8

Microgen

406.00

247

247

3.6

3.4

22.7%

24.7%

15.2

13.3

22.6

19.7

Gresham

165.00

112

112

4.3

3.8

18.3%

19.9%

18.7

14.9

25.8

22.0

Brady

66.25

55

55

2.2

2.1

3.7%

6.1%

20.8

16.8

60.2

44.2

Medians

 

3.9

3.6

15.0%

15.8%

19.7

15.8

37.8

33.1

4) US companies with SaaS business models

Salesforce

140.24

104,180

80145

7.6

6.3

16.3%

17.7%

33.3

26.5

60.7

51.7

Workday

130.00

27,966

21514

9.7

7.9

12.1%

14.2%

52.4

38.9

103.4

78.5

Ultimate Software

283.83

8,689

6684

7.5

6.3

20.9%

21.7%

30.9

25.0

51.9

43.3

Paycom Software

135.00

7,790

5993

14.0

11.3

36.6%

35.9%

33.9

27.5

51.6

42.3

Paylocity

62.88

3,311

2547

8.5

7.0

14.3%

15.9%

39.4

30.8

55.9

60.5

Cornerstone OnDemand

51.09

2,948

2268

5.6

5.1

11.6%

16.1%

31.5

22.3

72.7

45.3

Instructure

37.95

1,322

1017

5.8

4.6

(15.1%)

(9.5%)

N/A

N/A

N/A

N/A

Medians

 

7.6

6.3

14.3%

16.1%

33.6

27.0

58.3

48.5

Source: Edison Investment Research, Bloomberg. Note: *These companies are predominantly in the human capital management software or CRM/ERP spaces and none is a direct competitor of StatPro. Prices as at 2 August 2018.

Exhibit 4: Financial summary

£'000s

2015

2016

2017

2018e

2019e

2020e

Year end 31 December

IFRS

IFRS

IFRS

IFRS

IFRS

IFRS

PROFIT & LOSS

Revenue

 

 

30,187

37,545

49,260

56,751

59,501

62,123

Cost of Sales

0

0

0

0

0

0

Gross Profit

30,187

37,545

49,260

56,751

59,501

62,123

EBITDA

 

 

4,044

5,104

6,838

8,743

9,511

10,455

Adjusted Operating Profit

 

 

2,852

3,461

4,917

6,818

7,642

8,643

Amortisation of acquired intangibles

(32)

(1,060)

(2,243)

(3,243)

(3,243)

(3,243)

Exceptionals

0

(11,378)

(3,934)

0

0

0

Share based payments

(121)

(361)

(626)

(650)

(675)

(700)

Operating Profit

2,699

(9,338)

(1,886)

2,925

3,724

4,700

Net Interest

(290)

(786)

(1,585)

(1,839)

(1,414)

(1,214)

Profit Before Tax (norm)

 

 

2,562

2,675

3,332

4,980

6,228

7,429

Profit Before Tax (FRS 3)

 

 

2,409

(10,124)

(3,471)

1,087

2,310

3,486

Tax

(788)

(489)

563

(354)

(934)

(1,404)

Profit After Tax (norm)

1,774

2,843

4,505

4,626

5,294

6,025

Profit After Tax (FRS 3)

1,621

(10,613)

(2,908)

733

1,376

2,082

Minority interests

0

(94)

(131)

(40)

0

0

Net income (norm)

1,774

2,186

3,764

4,586

5,294

6,025

Net income (statutory)

1,621

(10,707)

(3,039)

693

1,376

2,082

Average Number of Shares Outstanding (m)

67.6

65.3

64.8

65.7

66.0

66.3

EPS - normalised (p)

 

 

2.6

3.3

5.8

7.0

8.0

9.1

EPS - FRS 3 (p)

 

 

2.4

(16.4)

(4.7)

1.1

2.1

3.1

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 (%)

13.4

13.6

13.9

15.4

16.0

16.8

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

9.4

9.2

10.0

12.0

12.8

13.9

BALANCE SHEET

Fixed Assets

 

 

51,857

59,088

70,864

68,960

67,074

65,182

Intangible Assets

48,613

55,696

64,793

63,282

61,479

59,536

Tangible Assets

2,233

2,742

3,303

2,910

2,827

2,878

Other assets

1,011

650

2,768

2,768

2,768

2,768

Current Assets

 

 

10,665

19,081

20,912

20,684

22,861

25,167

Stocks

0

0

0

0

0

0

Debtors

8,462

14,725

16,601

19,125

20,052

20,936

Cash

2,203

4,356

4,311

1,559

2,809

4,231

Current Liabilities

 

 

(19,778)

(35,686)

(38,171)

(41,296)

(43,465)

(45,635)

Creditors

(19,660)

(27,227)

(30,720)

(33,845)

(36,014)

(38,184)

Short term borrowings

(118)

(8,459)

(7,451)

(7,451)

(7,451)

(7,451)

Long Term Liabilities

 

 

(1,227)

(9,897)

(22,989)

(22,290)

(19,363)

(16,437)

Long term borrowings

(801)

(5,961)

(17,076)

(16,377)

(15,677)

(14,978)

Other long term liabilities

(426)

(3,936)

(5,913)

(5,913)

(3,686)

(1,459)

Net Assets

 

 

41,517

32,586

30,616

26,058

27,106

28,277

CASH FLOW

Operating Cash Flow

 

 

6,548

7,454

10,676

14,600

15,713

17,090

Net Interest

(84)

(500)

(1,227)

(1,839)

(1,414)

(1,214)

Tax

(832)

(1,294)

(144)

(1,227)

(304)

(872)

Capex

(4,999)

(6,445)

(7,213)

(8,043)

(8,336)

(8,694)

Acquisitions/disposals

0

(4,786)

(10,269)

(3,663)

(1,803)

(2,274)

Equity financing

64

(2,079)

926

0

0

0

Dividends

(1,960)

(1,877)

(2,012)

(1,879)

(1,907)

(1,915)

Net Cash Flow

(1,263)

(9,527)

(9,263)

(2,052)

1,950

2,121

Opening net debt/(cash)

 

 

(2,680)

(1,283)

10,065

20,217

22,269

20,319

Other

(134)

(1,821)

(889)

()

0

0

Closing net debt/(cash)

 

 

(1,283)

10,065

20,217

22,269

20,319

18,198

Source: Company accounts, Edison Investment Research

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 StatPro Group 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 StatPro Group 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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