Solid H118 lending volumes stabilising earnings

Umweltbank 13 August 2018 Update
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UmweltBank

Solid H118 lending volumes stabilising earnings

Interim results

Banks

13 August 2018

Price

€9.30

Market cap

€259m

Total assets (€bn) at end-June 2018

3.6

Shares in issue

27.9m

Free float

84.4%

Code

UBKX

Primary exchange

Munich

Secondary exchange

Xetra

Share price performance

%

1m

3m

12m

Abs

(2.2)

(3.3)

(25.4)

Rel (local)

(0.7)

1.3

(27.9)

52-week high/low

€13.00

€7.70

Business description

UmweltBank is a specialised lender with total assets of €3.6bn, providing financing of renewable energy projects (solar, wind, hydro and biomass), as well as loans for new construction or renovation of sustainable residential, community and commercial real estate.

Next events

m.access Conference

17 October 2018

Analyst

Milosz Papst

+44 (0)20 3077 5700

UmweltBank is a research client of Edison Investment Research Limited

UmweltBank’s (UBK’s) lending activity in H118 illustrates the considerable demand for green construction financing amid high residential demand in Germany. Moreover, the impact of recent regulatory changes in the renewable energy segment so far seems to be less pronounced than initially expected. A successful placement of the junior green bond, which is currently underway, would equip the bank with a capital base allowing it to leverage these favourable trends and further grow its loan portfolio. UBK shares continue to trade at a P/BV of 1.2x in 2018e, which looks low relative to the bank’s ROE (which we forecast at 11.8% in FY18).

Year end

Net interest income (€m)

EPS*
(€)

DPS
(€)

P/BV*
(x)

P/E*
(x)

ROE*
(%)

Yield
(%)

12/16

53.6

1.16

0.34

1.4

8.0

18.0

3.7

12/17

52.2

0.99

0.32

1.2

9.4

13.7

3.4

12/18e

52.5

0.93

0.34

1.2

10.0

11.8

3.7

12/19e

52.1

0.87

0.36

1.1

10.7

10.5

3.9

12/20e

53.8

0.86

0.38

1.1

10.8

9.9

4.1

Note: *Based on net profit before allocation to reserves for general banking risks and tangible book value including reserves for general banking risks.

H118 results assisted by sustainable building loans

UBK’s new lending volume reached €311m in H118, doubling from €154m in H117, with the key driver being solid expansion of the green construction portfolio. As a result, UBK’s loan including commitments increased by a healthy 6.2% ytd and (together with positive one-off items) allowed the bank to report a slight 1.0% y-o-y increase in pre-tax profit to €18.4m. Execution of strategic initiatives led to a headcount increase and investments in IT systems, which (on top of higher banking tax and deposit insurance charges) translated into a G&A expense rise of 14.0% y-o-y and a cost income ratio of 33.5% (vs 29.1% in H117).

Initiatives to strengthen capital base in progress

UBK’s management is working towards securing additional capital for future lending business growth. As part of this, the bank has launched a junior green bond issuance programme aimed at raising up to €30.6m of net new tier 2 capital. The offering consists of an exchange offer for holders of UBK’s profit participation capital issued in the period 2003-06, as well as a public offer to a wide investor community. Management has also highlighted a possible share issuance over the next few months in line with the current board authorisation. Moreover, 50% of UBK’s shareholders accepted a stock dividend instead of a cash payment (compared with 35% last year), which added c €3.0m to the bank’s equity.

Valuation: Trading at a discount to peers

UBK’s shares are trading at a P/BV ratio of 1.2x in 2018e (vs a peer average of 1.3x), which in our opinion is not fully reflecting its earnings potential. Our updated P/BV-ROE valuation yields a fair value of €11.3 per share (slightly up from the previous €11.1 per share), implying 21.3% upside potential. UBK offers a dividend yield of c 3.5%, which is above the average level offered by large banks (c 3%).

H118 results review: Healthy new lending volumes

UBK reported robust H118 results ahead of initial management expectations despite the continued low interest rate environment, with a broadly stable pre-tax profit of €18.4m (up 1.0% y-o-y). UBK’s loan portfolio (including commitments) rose by 6.2% ytd to €2.88bn and 8.6% y-o-y, which is ahead of our earlier conservative FY18 growth forecast of 2.1%. This was a result of strong new lending volumes in H118, which reached €311m vs €154m in H117, largely assisted by solid performance in the green construction loans segment, in particular rental housing (which is fuelled by the considerable structural apartment shortage in Germany). However, renewable energy financing (mainly wind and solar) also provided meaningful tailwinds, contributing nearly 40% to new lending volumes, despite recent regulatory changes introducing the auction system for wind projects with a capacity in excess of 750 kilowatts. Importantly, UBK also experienced good business progress in the segment of smaller projects up to 750 kilowatts. The expansion of the lending business was accompanied by solid growth in customer deposits, which rose by 5.0% ytd (or 7.2% y-o-y). Overall, UBK’s customer base as at end-June 2018 was broadly comparable with end-2017. Despite the lending business growth, UBK’s capital adequacy ratio improved slightly to 12.5 from 12.4 as at end-2017.

Net interest and financial income improved 5.4% y-o-y to €26.1m. Management has highlighted that interest income increased slightly, although it was assisted by one-off effects, in particular early repayment fees achieved on two sizeable loans and the recognition of distribution fees related to equity funds in this line (previously it was booked under net commission and fee income). UBK also benefited from the solid increase in loan commitments, which triggered additional commitment interest. On the other hand, the net commission and fees result was visibly below last year (€1.2m vs €1.6m in H117). The two main factors behind this are the fact that current market conditions do not allow UBK to charge arrangement fees on new loans and the lack of recognition of the above-mentioned distribution fees.

Furthermore, personnel expenses were higher at €4.5m (up 8.6% y-o-y), which is not surprising given UBK’s agenda for team expansion (average headcount was up to 161 employees from 149 in FY17). There was also some drag from higher other administrative expenses (€4.5m in H118 vs €3.8m last year), mainly due to higher banking tax and deposit insurance (see Exhibit 1), as well as investments in IT systems as part of UBK’s strategic initiative related to the digitalization of processes. As a consequence, the cost income ratio reached 33.5% compared with 29.1% in H117 and our original FY18 expectations at 32.7%. Net income came in at €12.4m, slightly below H117 (€12.6m).

Exhibit 1: UBK’s income statement in H118

€’000s

H118

H117

Change y-o-y

Net interest and financial income

26,085

24,750

5.4%

Net commissions and fee expense

1,177

1,574

(25.2%)

G&A expenses (ex-D&A)

(9,067)

(7,951)

14.0%

Personnel expenses

(4,520)

(4,162)

8.6%

Other administrative expenses

(4,547)

(3,789)

20.0%

thereof, banking tax and deposit insurance

(983)

(600)

63.8%

Other operating income (expense)

242

(119)

N/M

Pre-tax profit

18,437

18,254

1.0%

Income taxes

(6,022)

(5,692)

5.8%

effective tax rate

32.7%

31.2%

148bp

Net income

12,415

12,562

(1.2%)

New lending volume (€m)

311

154

101.4%

Cost Income Ratio (CIR)

33.5%

29.1%

440bp

Source: UmweltBank, Edison Investment Research

Exhibit 2: UBK’s balance sheet in H118

 

H118

FY17

Change ytd

Business volume

4,075

3,776

8.2%

Loans (incl. commitments)

2,877

2,710

6.2%

Customer deposits

2,264

2,157

5.0%

Total assets

3,642

3,485

4.5%

Equity

288

282

2.4%

Total capital adequacy ratio

12.5

12.4

-

CET1 ratio

9.1

8.9

-

Source: UmweltBank, Edison Investment Research

Securing additional capital base to fuel growth

In line with its earlier intentions, UBK recently announced details of a junior green bond offering. The bank plans to issue up to €40m in the form of unsecured subordinated bonds in order to strengthen its capital base and facilitate further loan portfolio growth. The offering consists of: 1) two exchange offers directed to holders of UBK's profit participation rights issued in the period 2003-05 and 2006 of up to €18.8m (with a 1:1 parity); and 2) a public offering for both (semi)professional and retail investors of at least €21.2m and up to €40.0m (as the amount unallocated during the exchange offers will be moved to the public offering). UBK’s tier 2 capital increase under different allotment scenarios is presented in Exhibit 3. Please note that in our calculations we assume (in line with management intensions) that the profit participation rights which are not exchanged will be called and redeemed by UBK.

Exhibit 3: UBK’s additional tier 2 capital depending on the offering outcome

Profit participation rights exchange subscription rate 

Public offering subscription rate

0%

20%

40%

60%

80%

100%

0%

-9.4

-5.6

-1.9

1.9

5.6

9.4

20%

-1.4

1.6

4.6

7.6

10.6

13.6

40%

6.6

8.9

11.1

13.4

15.6

17.9

60%

14.6

16.1

17.6

19.1

20.6

22.1

80%

22.6

23.3

24.1

24.9

25.6

26.4

100%

30.6

30.6

30.6

30.6

30.6

30.6

Source: Edison Investment Research

The exchange offer is aimed at refinancing the profit participation capital, which is gradually losing its tier 2 status under the new regulations (as it includes a put option). Consequently, the exchange offer will not translate into additional cash inflow for UBK. The coupon rate will be set at 2.0% (fixed over a period of six years) and constitutes up to 0.75pp of upside to the current interest rate offered by the profit participation rights. After the initial six-year fixed rate period, the interest rate will be set once every five years based on the prevailing five-year swap rate plus the respective margin established during the bond offering. The issuance will be also directed to new retail investors, as the minimum bid price stands at an accessible €2,500.

The bond has no defined maturity, but may be callable after 10 years (or earlier on meeting certain regulatory conditions) on every interest payment date. UBK intends to create a secondary market for the junior bonds by working as an intermediary between potential buyers and sellers, but will not purchase the bonds on its own book for subsequent re-sale. The expected costs of the offering equal c €22,000 (or 0.1% of raised proceeds in the case of full allocation).

The table below shows our projections for UBK's capital adequacy ratio (TCR) as at end-2019 depending on the final volume of the exchange offer and the public offering. We believe that with no additional tier 2 capital raised (and the not exchanged profit participation rights being called and redeemed), UBK’s TCR would reach the level of 12.5 (compared to the regulatory requirement of 12.0). Assuming that all holders of the profit participation capital decide to accept the exchange offer and there is no demand for the remaining bonds, UBK's equity capital will increase by €11.3m as at end-2019 and translate into a TCR of 13.2 (but with no cash injection though). If the exchange offer is conducted in full and all remaining bonds are purchased by new investors, the equity base will increase by €32.5m and result in a TCR of 14.1 (as well as gross cash proceeds of €21.2m).

Exhibit 4: UBK’s capital adequacy ratio FY19e sensitivity analysis

Profit participation rights exchange subscription rate

Public offering subscription rate

0%

20%

40%

60%

80%

100%

0%

12.5

12.6

12.8

12.9

13.1

13.2

20%

12.8

12.9

13.0

13.2

13.3

13.4

40%

13.1

13.2

13.3

13.4

13.5

13.6

60%

13.4

13.5

13.6

13.6

13.7

13.7

80%

13.8

13.8

13.8

13.9

13.9

13.9

100%

14.1

14.1

14.1

14.1

14.1

14.1

Source: Edison Investment Research

In addition to the debt issuance management does not rule out a share issuance over the coming months to broaden the equity base in line with current board authorisations. This could further improve the CET1 ratio and potentially allow for a reduction of UBK’s special buffer (1.5%) currently added by the German regulator on top of the standard Basel III TCR requirement of 10.5% by 2019

Finally, some contribution to the strengthening of UBK’s capital base comes from the introduction of a stock dividend, which investors may choose as an alternative to a cash dividend. In the case of the dividend paid out of 2017 earnings, the stock dividend adoption rate was 50%, up from 35% last year when it was introduced for the first time. This provides UBK with additional c €3.0m of equity.

GLS Bank as the new shareholder

On 24 April, UmweltVermögen Beteiligungs announced that it had entered into an agreement to sell its 15.6% stake in UmweltBank to GLS Bank, one of UBK’s competitors in the sustainable banking sector. It remains to be seen whether GLS intends to be a minority shareholder or decides to acquire a majority stake in UBK at some stage. Irrespective of which scenario materialises in the end, an extension of the supervisory board to accommodate GLS’s representative(s) seems quite likely. GLS has already made an unsuccessful attempt to introduce two representatives during the last AGM and UBK’s management board is open to prospective discussions on this topic. From a business perspective, closer co-operation between GLS and UBK may translate into certain synergies, eg in the area of investments funds or current account products.

Outlook and forecast revisions

Our forecast revisions are summarised in Exhibit 5. The solid new loan volumes in the green construction segment in H118, coupled with the favourable outlook for the German residential market (most notably in the affordable housing segment), has encouraged us to increase our forecasts for UBK’s green construction loan portfolio growth in FY18 and FY19 to 15.0% and 10.0% y-o-y respectively (compared with our earlier assumptions at 7.0% and 8.0% y-o-y, respectively). We have also slightly raised our expectations with respect to wind and solar project portfolio growth in FY18 and FY19. For wind projects, we now forecast growth of c 1% y-o-y in FY18 and FY19 (vs our earlier estimates of -2.5% and -1.3% y-o-y, respectively). The higher average feed-in tariff (FiT) premiums seen during the last onshore wind capacity auction in May (5.73 ct/kWh vs 4.64 ct/kWh on average during prior auctions), coupled with lower average project size (5.4MW vs c 9-16MW during earlier auctions) should support UBK’s lending business, as the former improves the creditworthiness of the projects while the latter translates into a growing market niche for projects that are too small to attract the interest of large banks (and which often constitute citizen projects). On the other hand, the fact that the allocated capacity was below the tendered capacity still leaves a degree of uncertainty. We now anticipate UBK’s solar project portfolio to post an increase of 3% y-o-y in both FY18 and FY19 (compared with 0.5% y-o-y earlier). On the back of solid customer deposit growth in H118 (5.0% ytd), we increase our expectations for FY18 to 7.5% y-o-y.

The current pressure on UBK’s net interest margin seems to be broadly in line with last year, but it is too early to conclude that it is bottoming out. Consequently, we have made only a minor upward revision to our NIM assumptions (+4bp in FY18 and +3bp in FY19), also associated with the fact that the coupon rate offered by UBK’s junior green bonds is below our initial assumptions. We have adjusted our net commissions and fee expense forecasts downwards to reflect the lack of arrangement fees and distribution fees mentioned earlier. Finally, we have increased our G&A expense projections, arriving at a cost income ratio in FY18 at 33.0% (compared with 32.7% previously). Consequently, our pre-tax profit forecasts have been moderately revised upwards. Our new lower estimates of capital adequacy ratios shown in Exhibit 5 are largely a function of higher loan portfolio growth expectations. The above revisions resulted in a moderate increase in our UBK share valuation to €11.3 from €11.1 previously.

Exhibit 5: Forecast revisions table

2018e

2019e

€000s

Old

New

Change

y-o-y

Old

New

Change

y-o-y

Net interest and financial income

53,188

55,618

4.6%

1.0%

53,048

55,124

3.9%

-0.9%

Net commissions and fee expense

2,950

2,253

-23.6%

-24.7%

2,957

2,274

-23.1%

0.9%

Pre-tax profit

36,956

38,565

4.4%

-4.2%

35,522

36,788

3.6%

-4.6%

Net income after taxes

25,315

26,186

3.4%

-5.3%

24,333

25,200

3.6%

-3.8%

Customer loans

2,321,028

2,426,195

4.5%

6.7%

2,393,540

2,554,801

6.7%

5.3%

Customer deposits

2,264,855

2,318,780

2.4%

7.5%

2,355,449

2,434,719

3.4%

5.0%

CET1 ratio (pp)

9.6

9.1

-54bp

-

10.0

9.6

-39bps

-

Tier-1 ratio (pp)

11.0

10.4

-63bp

-

11.4

10.9

-46bps

-

TCR (pp)

14.4

13.6

-85bp

-

14.7

14.1

-64bps

-

Source: Edison Investment Research

Exhibit 6: Financial summary

Year Ending

2014

2015

2016

2017

2018e

2019e

2020e

2021e

2022e

Income Statement

 

 

 

 

 

 

 

 

 

Net interest income

49,153

52,838

53,600

52,166

52,519

52,078

53,753

56,482

60,370

Net financial income

1,972

4,023

5,937

2,909

3,099

3,046

3,241

3,371

3,501

Net interest and financial income

51,125

56,861

59,537

55,075

55,618

55,124

56,994

59,854

63,872

Provisions (-)

638

443

(2,228)

(355)

(365)

(961)

(1,391)

(1,249)

(1,435)

Total administrative expenses

(12,024)

(13,163)

(15,563)

(16,466)

(18,628)

(19,351)

(20,126)

(20,535)

(21,224)

Earnings before administrative costs and taxes

56,130

61,340

61,570

56,739

57,193

56,139

57,664

60,754

64,679

PBT

44,106

48,177

46,007

40,273

38,565

36,788

37,538

40,219

43,455

Net profit after tax

27,542

34,087

32,155

27,661

26,186

25,200

25,714

27,550

29,767

Reported EPS

0.53

0.56

0.58

0.60

0.64

0.64

0.66

0.70

0.71

Adjusted EPS

0.99

1.23

1.16

0.99

0.93

0.87

0.86

0.89

0.93

DPS

0.26

0.28

0.34

0.32

0.34

0.36

0.38

0.40

0.42

Balance sheet

 

 

 

 

 

 

 

 

 

Cash and balances at Central Banks

36,910

33,171

54,591

32,460

28,281

48,318

94,664

123,430

131,166

Claims on banks

294,248

321,602

149,281

122,622

100,724

82,737

67,961

55,825

45,856

Claims on customers

1,876,476

2,098,150

2,229,817

2,273,561

2,426,195

2,554,801

2,672,608

2,834,270

3,021,793

Bonds and other fixed-interest securities

373,146

288,437

747,214

1,023,677

1,095,334

1,095,334

1,084,381

1,051,849

1,020,294

Tangible assets, Goodwill and Intangible assets

729

759

1,174

1,202

1,202

1,202

1,202

1,202

1,202

Other assets

13,903

15,553

24,165

31,479

35,479

39,479

41,479

43,479

45,479

Total assets

2,595,412

2,757,672

3,206,242

3,485,001

3,687,216

3,821,872

3,962,296

4,110,056

4,265,790

Liabilities to banks

572,399

570,938

860,728

1,011,950

1,011,950

1,011,950

1,011,950

1,011,950

1,011,950

Liabilities to customers

1,808,041

1,938,174

2,055,684

2,157,005

2,318,780

2,434,719

2,556,455

2,684,278

2,818,492

Accruals and deferred expense

510

1,440

1,220

1,012

839

695

577

478

396

Deferred tax liabilities

0

0

231

148

148

148

148

148

148

Other liabilities

132,824

157,095

189,952

206,873

236,069

242,569

248,569

254,569

261,569

Total liabilities

2,513,774

2,667,647

3,107,816

3,376,987

3,567,786

3,690,081

3,817,698

3,951,423

4,092,555

Total shareholders' equity

81,638

90,025

98,426

108,013

119,430

131,790

144,597

158,633

173,235

BVPS

2.9

3.3

3.6

3.9

4.2

4.5

4.8

5.1

5.3

TNAV per share

5.1

6.0

6.9

7.6

8.1

8.5

8.9

9.2

9.6

Ratios

 

 

 

 

 

 

 

 

 

NIM

1.98%

2.06%

1.87%

1.62%

1.53%

1.45%

1.45%

1.47%

1.51%

Costs/Income

21.5%

22.0%

26.9%

29.4%

33.0%

34.9%

35.4%

34.2%

33.2%

ROE

21.3%

22.2%

18.0%

13.7%

11.8%

10.5%

9.9%

9.9%

9.9%

CET1 Ratio

7.5%

8.1%

8.5%

8.9%

9.1%

9.6%

10.0%

10.2%

10.4%

Tier 1 ratio

8.2%

8.7%

9.9%

10.4%

10.4%

10.9%

11.1%

11.2%

11.3%

Capital adequacy ratio

10.8%

11.0%

12.0%

12.4%

13.6%

14.1%

14.3%

14.2%

14.2%

Payout ratio (%)

26.1%

22.7%

29.3%

32.3%

37.2%

42.1%

44.9%

45.5%

45.7%

Customer loans/Total assets

72.3%

76.1%

69.5%

65.2%

65.8%

66.8%

67.5%

69.0%

70.8%

Loans/Deposits

103.8%

108.3%

108.5%

105.4%

104.6%

104.9%

104.5%

105.6%

107.2%

Source: UmweltBank, Edison Investment Research

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Copyright 2018 Edison Investment Research Limited. All rights reserved. This report has been commissioned by UmweltBank 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 UmweltBank 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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