Positioning the business for growth

SNP Schneider-Neureither & Partner 3 November 2017 Update
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SNP Schneider-Neureither & Partner

Positioning the business for growth

Q3 results

Software & comp services

3 November 2017

Price

€28.85

Market cap

€158m

Net debt (€m) at 30 September 2017

7.5

Shares in issue

5.5m

Free float

53.0

Code

SHF

Primary exchange

Frankfurt (Xetra)

Secondary exchange

N/A

Share price performance

%

1m

3m

12m

Abs

(15.6)

(12.3)

(20.1)

Rel (local)

(18.9)

(20.5)

(38.3)

52-week high/low

€49.1

€28.5

Business description

SNP Schneider-Neureither & Partner (SNP) is a software and consulting business focused on supporting customers in implementing change, and rapidly and economically tailoring IT landscapes to new situations. It has developed a proprietary software suite, CrystalBridge and Transformation Backbone with SAP LT (T-B), which automatically analyses and applies and tracks changes in IT systems.

Next events

German Equity Forum

27/28 November 2017

Preliminary results

31 January 2018

Annual report

28 March 2018

Q1 results

27 April 2018

Analysts

Richard Jeans

+44 (0)20 3077 5700

Katherine Thompson

+44 (0)20 3077 5730

SNP Schneider-Neureither & Partner is a research client of Edison Investment Research Limited

2017 has been a year of major change for SNP, including two major acquisitions, debt and equity capital raisings, corporate restructurings, new product offerings launched and new training centres established. This has involved significant cost in both financial terms and management time. There has been €4m in one off costs, and management expects to report break-even at the EBIT level in FY17. Excluding one-off costs, the FY17 EBIT margin is expected be c 3.3%. Following the acquisitions, the group now has a presence in most major regions globally. Hence, SNP now looks better positioned to deliver on its goal to be the global leader in software-based transformation projects. Following the recent correction, we believe the shares look increasingly attractive on c 18x our FY19e EPS.

Year end

Revenue
(€m)

PBT*
(€m)

EPS*
(c)

DPS
(c)

P/E
(x)

Yield
(%)

12/15

56.2

3.4

58.8

34.0

49.1

1.2

12/16

80.7

5.7

94.4

39.0

30.6

1.4

12/17e

120.0

(1.2)

(20.5)

45.0

N/A

1.6

12/18e

149.2

6.4

77.1

52.0

37.4

1.8

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

Investment case: Huge transformation opportunities

SNP’s T-B is the only off-the-shelf software that automates the process of combining, upgrading or carving out data from ERP systems. The industry is driven by the need to transform, adapt and harmonise data, which is initiated by M&A activity, system consolidation, cloudification and the need for simplification. The industry is growing apace and is potentially large. Only around a third of transformation work is outsourced with just a tiny percentage involving software-based tools.

Q3 results: 2% organic growth with record backlog

Q3 revenue growth of 68% was driven by acquired businesses ADEPCON, BCC and Harlex and included c 2% organic growth. A €1m normalised pretax loss was partly due to delayed software sales and investment in growth. However, order backlog was at record levels and the book-to-bill remained healthy at 1.13x. Additionally, utilisation rates returned to normal levels after a slow start to the year.

Guidance and forecasts: Revenues up, profits down

Management upgraded FY17 revenue guidance by €10m to €120m, reflecting the acquisition of ADEPCON, effective from 1 August. However, it now only expects break-even at the EBIT level, reflecting the increased investment going into the business. We have adjusted our FY17 forecasts in line with management guidance, while also increasing revenues and cutting margins in subsequent years.

Valuation: Strong growth play in the ERP space

The stock trades on c 37x our FY18e EPS, which falls to c 18x in FY19e. Our discounted cash flow valuation (based on c 7.6% organic revenue CAGR over 10 years, 10% WACC, 16% long-term margin and 2% terminal growth) is €40.75/share, 41% above the current share price.

Q3 results: 2% organic growth in Q3, 5% in 9M17

Q3 revenues grew by 68% to €33.0m, including c 2% organic growth and contributions from Harlex (consolidated into the accounts from 1 October 2016), Innoplexia (1 May 2017), BCC (1 May 2017) and ADEPCON (1 August 2017). The group recorded a €953k normalised pre-tax loss, partly due to postponed sales of its proprietary software. While Q3 licence revenues jumped 82% to €5.9m, this includes a significant amount of low-margin software sales relating to the two recent acquisitions. Within 9M licence revenues, c €5m were third-party licence re-sales and own software was c €1m lower. The business benefits from software re-sales as it typically leads to project work. As own software sales were delayed, management anticipates a very busy Q4.

Incoming orders jumped by 43% to a record €37.4m in Q3, while the backlog rose by 70% to a record €62.2m. Utilisation rates have returned to normal levels after a slow start to the year and the book-to-bill remained positive at 1.13x. For 9M17, revenues rose by 41% to €81.0m, with a normalised loss of €3.6m after the €4m of one-off costs. Most of these one-off costs were in the first half, including €2.65m in Q1. We outlined these items in our Q1 note, published in early May, and have treated these items within normal operating expenses. This is because most of the costs are operational in nature such as legal fees and restructuring costs.

During 2017 the group has expanded its software product portfolio with the launch of CrystalBridge (used to blueprint projects) and Interface Scanner (enables customers to gather insights into their system landscape and any changes that have occurred over time). Both products were developed internally. CrystalBridge is a crucial component in the planning of SAP S/4HANA transformations and it operates on a recurring Software-as-a-Service revenue model. The recently acquired Innoplexia also broadens the offering – as a provider of market information, it enables customers to see what is going on in their particular industries.

Exhibit 1: Quarterly analysis

€000s

Q116

Q216

Q316

Q416

FY16

Q117

Q217

Q317

Q417

FY17e

FY18e

Professional services

15,516

16,558

15,953

18,613

66,640

19,089

22,151

25,936

30,776

97,952

125,399

Licences

2,216

2,425

3,258

4,101

12,000

1,733

3,042

5,935

7,090

17,800

18,800

Maintenance

742

457

416

430

2,045

776

1,237

1,140

1,047

4,200

5,050

Total revenue

18,474

19,440

19,627

23,144

80,685

21,598

26,430

33,011

38,913

119,952

149,249

Other operating income

200

148

150

730

1,228

235

295

171

 

 

 

Cost of materials

(1,928)

(2,037)

(1,965)

(2,346)

(8,276)

(2,260)

(3,244)

(7,037)

 

 

 

Personnel costs

(10,604)

(11,382)

(11,399)

(13,822)

(47,207)

(14,657)

(15,511)

(18,849)

 

 

 

Other operating expenses

(4,174)

(3,986)

(4,209)

(5,442)

(17,811)

(6,692)

(6,461)

(7,156)

 

 

 

Other taxes

(22)

(27)

(21)

(25)

(95)

(28)

(277)

(32)

 

 

 

Op costs (before depreciation)

(16,528)

(17,284)

(17,444)

(20,905)

(72,161)

(23,402)

(25,198)

(32,903)

(35,452)

(116,955)

(138,292)

Adjusted EBITDA

1,946

2,156

2,183

2,239

8,524

(1,804)

1,232

108

3,460

2,996

10,957

Depreciation

(323)

(372)

(399)

(573)

(1,667)

(594)

(690)

(843)

(850)

(2,977)

(3,543)

Adjusted operating profit (EBIT)

1,623

1,784

1,784

1,666

6,857

(2,398)

542

(735)

2,611

20

7,415

Operating Margin

8.8%

9.2%

9.1%

7.2%

8.5%

(11.1%)

2.1%

(2.2%)

6.7%

0.0%

5.0%

Net interest

(191)

(268)

(141)

(537)

(1,137)

(577)

(181)

(218)

(224)

(1,200)

(1,000)

Edison profit before tax (norm)

1,432

1,516

1,643

1,129

5,720

(2,975)

361

(953)

2,387

(1,180)

6,415

Associates

0

(1)

0

9

8

0

(1)

12

0

0

0

Exceptional items

0

0

0

0

0

0

0

0

0

0

0

Profit before tax (FRS 3)

1,432

1,515

1,643

1,138

5,728

(2,975)

360

(941)

2,387

(1,180)

6,415

New orders and backlog

Incoming orders

26,200

19,900

26,200

23,300

95,600

24,400

33,200

37,400

 

 

 

Quarterly revenues

18,474

19,440

19,627

23,144

80,685

21,598

26,430

33,011

 

 

 

Book-to-bill ratio

1.42

1.02

1.33

1.01

1.18

1.13

1.26

1.13

 

 

 

Backlog

28,700

29,300

36,200

39,300

 

40,800

48,500

62,200

 

 

 

Source: SNP Schneider-Neureither & Partner accounts, Edison Investment Research

During the period, the company established a strategic partnership with NTT Data. The aim of the partnership is to jointly offer software-based transformation services for enterprises in Asia Pacific.

In October, SNP had a successful Transformation World customer conference with 240 attendees, up from 160 in the previous year. There were the first presentations given in English, reflecting the increasingly international perspective, and considerable interest was shown in the new products.

The cash outflow from operating activities eased to €2.9m in Q3 from €8.0m in H1. There were acquisition costs of c €7m in Q3 relating to ADEPCON, and the company raised €18.3m in a share placement. After c €0.8m capex and €0.2m of currency movement, net debt fell by €7.4m over the quarter to €7.5m. Our estimated adjusted net debt eases by €0.5m to €24.3m, after including of our assumed cost over the remaining 40% of ADEPCON.

Exhibit 2: Balance sheet development

€m

31-Dec-16

31-Mar-17

30-Jun-17

30-Sep-17

Cash

(31.9)

(53.9)

(26.5)

(33.3)

Short-term debt

12.8

2.1

1.7

1.2

Long-term debt

0.4

39.6

39.6

39.7

Net debt/(cash)

(18.7)

(12.2)

14.9

7.5

RSP acquisition liabilities

2.5

2.5

2.5

2.5

Astrums/Hartung acquisition liabilities

1.9

1.9

1.9

1.9

Harlex acquisition liabilities

4.0

4.0

4.0

4.0

ADEPCON acquisition liabilities

6.9

Pension deficit

1.5

1.5

1.5

1.5

Adjusted net debt/(cash)

(8.7)

(2.3)

24.8

24.3

Source: SNP, Edison Investment Research

Outlook: Strong business drivers in M&A and data migrations

Management raised its revenue guidance for FY17 to €120m from €110m. It now expects to generate EBITDA margin, before the c €4m in one-off costs, of c 5% and an EBIT margin of 3%. After one-off costs, management anticipates a broadly neutral (zero) EBIT margin. It expects own software sales to reach c €10m for the year, with Q4 proprietary software sales helping the group return to profit in the final quarter. Management has given no guidance beyond FY17.

The group’s medium-term growth is largely driven by M&A-related factors, with around 40,000 mergers each year around the globe, while longer-term vision is around the potential tsunami of data migrations building up across the globe, particularly around SAP S/4HANA. SNP estimates that some 125 S4 migrations are required per week to meet the goal of achieving SAP’s end-of-life target. SNP argues that this can only be achieved through automation.

Forecast changes: Revenues up, margins come back

We have adjusted our FY17 forecasts in line with management guidance, while also increasing revenues and cutting margins in subsequent years. We forecast the FY17e EBIT margin at zero. Stripping out €4m of one-off costs, the EBIT margin would be 3.4%, while the EBITDA margin would be 5.8%. Our FY18 EBIT margin forecast is 5%. The gain reflects the dropping out of one-off costs, improving utilisation rates, merger synergies and increased proprietary software sales.

We forecast strong cash generation in Q417 and for the group to end FY17 with a small net cash position. However, this moves back to net debt at end-FY18 after follow-on acquisition payments. We have maintained our assumptions for outstanding acquisition liabilities as shown in Exhibit 2.

Exhibit 3: Forecast changes

€000s

2017e

2018e

2019e

Revenue

Old

New

Change (%)

Old

New

Change (%)

Old

New

Change (%)

Professional services

92,991

97,952

5.3

116,292

125,399

7.8

127,025

136,975

7.8

Software licences

14,000

17,800

27.1

15,000

18,800

25.3

16,425

20,586

25.3

Software maintenance

3,000

4,200

40.0

3,850

5,050

31.2

4,216

5,530

31.2

Total software

17,000

22,000

29.4

18,850

23,850

26.5

20,641

26,116

26.5

Group revenue

109,991

119,952

9.1

135,142

149,249

10.4

147,665

163,090

10.4

Growth (%)

36.3

48.7

 

22.9

24.4

 

9.3

9.3

 

Professional services contribution

6,650

980

(85.3)

11,513

6,145

(46.6)

13,020

10,958

(15.8)

Software contribution

4,250

2,640

(37.9)

5,655

4,770

(15.6)

6,915

6,529

(5.6)

Non-segment-related expenses

(3,400)

(4,000)

17.6

(3,350)

(4,000)

19.4

(3,417)

(4,080)

19.4

Other operating income & other taxes

500

400

(20.0)

510

500

(2.0)

520

510

(2.0)

Operating expenses

(101,991)

(119,932)

17.6

(120,814)

(141,834)

17.4

(130,627)

(149,173)

14.2

Adjusted operating profit (EBIT)

8,000

20

(99.8)

14,328

7,415

(48.3)

17,038

13,917

(18.3)

Operating profit margin (%)

7.3

0.0

 

10.6

5.0

 

11.5

8.5

 

Net interest

(800)

(1,200)

50.0

(750)

(1,000)

33.3

(700)

(800)

14.3

Profit before tax norm

7,200

(1,180)

(116.4)

13,578

6,415

(52.8)

16,338

13,117

(19.7)

Profit before tax

7,200

(1,180)

(116.4)

13,578

6,415

(52.8)

16,338

13,117

(19.7)

Taxation

(2,160)

354

(116.4)

(4,073)

(1,924)

(52.8)

(4,901)

(3,935)

(19.7)

Non-controlling interests

(248)

(248)

0.0

(267)

(267)

0.0

(289)

(289)

0.0

FRS 3 net income

4,792

(1,074)

(122.4)

9,237

4,223

(54.3)

11,148

8,893

(20.2)

Adjusted EPS (c)

91.7

(20.5)

(122.4)

168.7

77.1

(54.3)

203.6

162.4

(20.2)

P/E - Adjusted EPS

 

N/A

 

37.4

 

17.8

Source: Edison Investment Research


Exhibit 4: Financial summary

€'000s

2014

2015

2016

2017e

2018e

2019e

Year end 31 December

IFRS

IFRS

IFRS

IFRS

IFRS

IFRS

PROFIT & LOSS

Revenue

 

 

30,480

56,236

80,685

119,952

149,249

163,090

Cost of sales

0

0

0

0

0

0

Gross Profit

30,480

56,236

80,685

119,952

149,249

163,090

EBITDA

 

 

862

5,484

8,524

2,996

10,957

17,862

Adjusted Operating Profit*

 

 

(66)

4,222

6,857

20

7,415

13,917

Amortisation of acquired intangibles

0

0

0

0

0

0

Exceptionals

1,505

356

0

0

0

0

Associates

0

(3)

8

0

0

0

Operating Profit

1,439

4,575

6,865

20

7,415

13,917

Net Interest

(66)

(828)

(1,137)

(1,200)

(1,000)

(800)

Profit Before Tax (norm)

 

 

(132)

3,394

5,720

(1,180)

6,415

13,117

Profit Before Tax (FRS 3)

 

 

1,373

3,747

5,728

(1,180)

6,415

13,117

Tax

(344)

(1,195)

(1,517)

354

(1,924)

(3,935)

Profit After Tax (norm)

(477)

2,198

4,203

(826)

4,490

9,182

Profit After Tax (FRS 3)

1,028

2,552

4,211

(826)

4,490

9,182

Minority interest

(40)

0

(147)

(248)

(267)

(289)

Adjustments for normalised earnings

0

0

0

0

0

0

Net income (norm)

(517)

2,198

4,056

(1,074)

4,223

8,893

Net income (FRS 3)

988

2,552

4,064

(1,074)

4,223

8,893

Average Number of Shares Outstanding (m)

3.7

3.7

4.3

5.2

5.5

5.5

EPS - normalised (c)

 

 

(13.9)

58.8

94.4

(20.5)

77.1

162.4

EPS - normalised & fully diluted (c)

 

 

(13.9)

58.8

94.4

(20.5)

77.1

162.4

EPS - FRS 3 (c)

 

 

26.6

68.3

94.6

(20.5)

77.1

162.4

Dividend per share (c)

13.00

34.00

39.00

45.00

52.00

60.00

Gross Margin (%)

100.0

100.0

100.0

100.0

100.0

100.0

EBITDA Margin (%)

2.8

9.8

10.6

2.5

7.3

11.0

Adjusted Operating Margin (%)

-0.2

7.5

8.5

0.0

5.0

8.5

BALANCE SHEET

Fixed Assets

 

 

8,291

15,243

29,054

69,835

69,278

68,595

Intangible Assets

5,190

11,675

24,179

62,939

62,939

62,939

Tangible Assets

1,231

1,999

3,161

5,582

5,024

4,341

Other

1,871

1,570

1,714

1,314

1,314

1,314

Current Assets

 

 

17,882

29,996

59,478

83,465

78,719

83,135

Stocks

0

0

0

0

0

0

Debtors

11,286

16,084

27,201

40,439

50,315

54,982

Cash

5,681

13,769

31,914

42,663

28,041

27,790

Current Liabilities

 

 

(9,782)

(13,703)

(34,382)

(33,211)

(42,463)

(46,371)

Creditors

(9,182)

(11,101)

(21,583)

(31,111)

(40,363)

(44,271)

Short term borrowings

(600)

(2,602)

(12,799)

(2,100)

(2,100)

(2,100)

Long Term Liabilities

 

 

(2,501)

(15,513)

(5,576)

(52,440)

(40,366)

(32,792)

Long term borrowings

(1,650)

(12,344)

(434)

(40,434)

(35,434)

(30,434)

Other long term liabilities

(851)

(3,169)

(5,141)

(12,005)

(4,931)

(2,357)

Net Assets

 

 

13,890

16,024

48,575

67,650

65,169

72,567

CASH FLOW

Operating Cash Flow

 

 

2,579

1,879

1,005

(876)

10,211

17,046

Net Interest

(66)

(167)

53

(1,200)

(1,000)

(800)

Tax

(1,102)

(554)

(412)

331

(1,796)

(3,673)

Capex

(701)

(1,779)

(3,451)

(5,398)

(2,985)

(3,262)

Acquisitions/disposals**

(500)

(3,228)

(5,923)

(27,770)

(11,701)

(1,716)

Shares issued

0

0

30,129

18,293

0

0

Dividends

(335)

(483)

(1,264)

(1,932)

(2,352)

(2,847)

Net Cash Flow

(124)

(4,332)

20,137

(18,552)

(9,623)

4,749

Opening net debt/(cash)

 

 

(3,505)

(3,431)

1,176

(18,681)

(129)

9,494

HP finance leases initiated

0

0

0

0

0

0

Other

51

(275)

(281)

0

0

0

Closing net debt/(cash)

 

 

(3,431)

1,176

(18,681)

(129)

9,494

4,744

Source: SNP Schneider-Neureither & Partner accounts, Edison Investment Research. Note: *Includes c €4m exceptional costs in FY17. **Includes additional payments for ADEPCON in FY18 and FY19, and final payments for RSP, Astrums/Hartung and Harlex in FY18.

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 SNP Schneider-Neureither & Partner 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

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 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 SNP Schneider-Neureither & Partner 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

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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