Strong Q3 profits recovery

SNP Schneider-Neureither & Partner 2 November 2018 Update
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SNP Schneider-Neureither & Partner

Strong Q3 profits recovery

Q3 results

Software & comp services

2 November 2018

Price

€16.04

Market cap

€88m

Net debt (€m) at 30 September 2018

32.8

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)

(2.7)

(44.6)

Rel (local)

(9.1)

8.1

(34.9)

52-week high/low

€36.8

€15.4

Business description

SNP Schneider-Neureither & Partner 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

26/27 November 2018

Prelim FY18 results

31 January 2019

Annual report

29 March 2019

Q1 results

30 April 2019

Analysts

Richard Jeans

+44 (0)20 3077 5700

Katherine Thompson

+44 (0)20 3077 5730

Q3 results reveal that SNP is stabilising after the July profit warning. While underlying revenues showed a small contraction, profits recovered strongly. This indicates that cost saving measures are beginning to have an impact. Additionally, SNP has recently won several small S/4HANA migration contracts, which indicates that the S/4HANA business is beginning to gain momentum. We have increased our FY18 profits forecasts while maintaining revenues. While the shares look punchy on c 23x our FY19e earnings, the rating could fall quickly as new projects come through.

Year end

Revenue
(€m)

PBT*
(€m)

EPS*
(c)

DPS
(c)

P/E
(x)

Yield
(%)

12/16

80.7

6.0

100.4

39.0

16.0

2.4

12/17

122.3

3.8

61.9

0.0

25.9

0.0

12/18e

137.9

(1.1)

(19.5)

0.0

N/A

0.0

12/19e

153.4

5.9

70.7

30.0

22.7

1.9

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

9M18 results: Nine-month adjusted EBITDA of €0.8m

9M18 revenue rose by 22% to €98.8m, including €18.5m from acquisitions and a c 1% organic contraction. Adjusted EBITDA expanded to €0.8m in 9M18 from a loss of €1.7m in H118. SNP increased its FY18 profit guidance but maintained revenue guidance. In H2, SNP initiated a globally oriented programme to improve efficiencies, with a focus on improving cost structures and increasingly concentrating on free cash flow.

SAP S/4HANA contracts are beginning to flow

SNP has recently won several small S/4HANA migrations, including with Volkswagen Saxony, a wholly owned subsidiary of Volkswagen.

Proposed capital increase via subscription rights

In August, SNP said that it was making preparations for a capital increase in Q418. Shareholders will be entitled to apply for new shares that will result in the issue of up to 1.127m new bearer shares. While SNP does not require the funds immediately, the money will provide the group with extra financial flexibility.

Forecasts: FY18 profits upgrade

We have increased our FY18 operating profit forecast to break-even, in line with guidance, from a €2.8m loss. While we have retained our revenues, we have amended the split. We have reduced our capex and depreciation forecasts. We now forecast the group to end FY18 with net debt of €40.2m (previously €42.8m).

Valuation: Strong growth play in the ERP space

The stock trades on c 23x our earnings in FY19e, falling to c 12x in FY20e. Our discounted cash flow valuation (based on c 7% organic revenue CAGR over 10 years, 10% WACC, 14.8% long-term margin and 2% terminal growth) is €32/share, double the current share price. Increasing the organic revenue CAGR to 10% increases the valuation to c €44/share, with other variables remaining constant.

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

Q3 results: Q3 adjusted EBITDA was €2.5m

Revenue for the first nine months of 2018 (9M18) rose by 22% to €98.8m, including €18.5m from acquisitions and a c 1% organic contraction. This compared with a 2% organic gain in H1, although the company has not divulged exchange rate impacts on revenues. The main considerations are the US$, which has weakened by 7% against the euro (9M18 vs 9M17) and strengthened by 1% (Q318 vs Q317) and the Argentine peso, which has plummeted. Professional services fared well, with 9M18 organic revenues down 3.9%, compared with 6.0% at the halfway stage. Adjusted EBITDA rose to €0.8m in 9M18 from a loss of €1.7m in H1. Statutory IFRS EBITDA was €0.3m lower at €0.5m, as a €2m benefit from a reduction in the earnout for Adepcon was more than cancelled by €2.1m in restructuring costs, €1.8m of which was incurred in H1, along with €0.2m of currency-related factors.

Q3 adjusted EBITDA rose to €2.5m (7.4% margin) from a loss in Q2 and small profit in Q317. The Q3 IFRS EBITDA was a record €4.0m, boosted by a €1.5m reduction in the earnout for Adepcon. The renewed profitability was aided by the recent restructurings and consequently significantly improved utilisation rates. Headcount stood at 1,324 at end-September, down from 1,350 at end June and 1,363 at end-March.

€2.4m was spent on acquisitions during the quarter, which related to Harlex and the final 20% of Innoplexia. Capex costs were relatively subdued at €2.4m. Net debt fell by €3.0m to €32.8m from €35.8m at end June. This was largely due to the reduction in the Adepcon earnout.

SNP increased its FY18 profit guidance (both statutory and adjusted EBITDA in the low- to mid-single digit million range) while maintaining revenue guidance (€135-140m).

Exhibit 1: Quarterly analysis

€000s

Q117

Q217

Q317

Q417

FY17

Q118

Q218

Q318

Q418e

FY18e

FY19e

Professional services

19,089

22,151

25,936

31,157

98,333

25,441

26,867

25,996

26,547

104,851

117,267

Cloud

 

 

 

 

 

424

565

1,158

1,200

3,347

3,665

Licences

1,733

3,042

5,935

8,389

19,099

3,697

3,888

4,408

9,204

21,197

23,211

Maintenance

776

1,237

1,140

1,758

4,911

1,991

2,172

2,165

2,171

8,499

9,306

Total revenue

21,598

26,430

33,011

41,304

122,343

31,553

33,492

33,727

39,123

137,895

153,449

Other operating income*

235

295

171

1,217

1,918

833

1,015

2,391

 

 

 

Cost of materials

(2,260)

(3,244)

(7,037)

(6,674)

(19,215)

(5,135)

(5,346)

(6,050)

 

 

 

Personnel costs

(14,657)

(15,511)

(18,849)

(22,455)

(71,472)

(21,363)

(23,010)

(19,184)

 

 

 

Other operating expenses

(6,692)

(6,461)

(7,156)

(9,626)

(29,935)

(7,183)

(7,875)

(6,738)

 

 

 

Impairments on receivables etc

 

 

 

 

 

 

(225)

(13)

 

 

 

Other taxes

(28)

(277)

(32)

(196)

(533)

(118)

(137)

(95)

 

 

 

Exceptional items

200

1,700

500

1,200

3,600

200

1,600

(1,500)

 

 

 

Op costs (before depreciation)

(23,202)

(23,498)

(32,403)

(36,372)

(115,475)

(32,766)

(33,978)

(31,189)

(36,618)

(134,551)

(142,566)

Adjusted EBITDA

(1,604)

2,932

608

4,932

6,868

(1,213)

(486)

2,538

2,504

3,343

10,883

Depreciation*

(344)

(390)

(493)

(528)

(1,755)

(808)

(936)

(754)

(790)

(3,288)

(3,644)

Adjusted operating profit

(1,948)

2,542

115

4,404

5,113

(2,021)

(1,422)

1,784

1,714

55

7,239

Operating Margin

(9.0%)

9.6%

0.3%

10.7%

4.2%

(6.4%)

(4.2%)

5.3%

4.4%

0.0%

4.7%

Net interest

(577)

(181)

(218)

(351)

(1,327)

(287)

(351)

(201)

(361)

(1,200)

(1,300)

Edison profit before tax (norm)

(2,525)

2,361

(103)

4,053

3,786

(2,308)

(1,773)

1,583

1,353

(1,145)

5,939

Amortisation of acq'd intangis*

(250)

(300)

(350)

(1,121)

(2,021)

(400)

(400)

(400)

(400)

(1,600)

(1,600)

Associates

0

(1)

0

(23)

(24)

0

0

0

0

0

0

Exceptional items

(200)

(1,700)

(500)

(1,200)

(3,600)

(200)

(1,600)

1,500

0

(300)

0

Earnings before tax

(2,975)

360

(953)

1,709

(1,859)

(2,908)

(3,773)

2,683

953

(3,045)

4,339

New orders and backlog

 

 

 

Incoming orders

24,400

33,200

37,400

35,700

130,700

40,900

26,300

31,500

 

 

 

Quarterly revenues

21,598

26,430

33,011

41,304

122,343

31,553

33,492

33,727

 

 

 

Book-to-bill ratio

1.13

1.26

1.13

0.86

1.07

1.30

0.79

0.93

 

 

 

Backlog

40,800

48,500

62,200

61,300

 

70,200

63,300

61,400

 

 

 

Source: Company accounts, Edison Investment Research. Note: *Quarterly amortisation of acquired intangibles are estimated data.

The company now has two managing directors, following the appointment of Dr Uwe Schwellbach, CFO, as managing director in September. He joins Dr Andreas Schneider-Neureither, CEO, and SNP is making progress in the hunt for a chief operating officer (COO).

New contract win with Volkswagen Saxony

Volkswagen Saxony has mandated SNP to migrate its IT systems to SAP S/4HANA. Volkswagen Saxony is a wholly owned subsidiary of Volkswagen and has plants in Zwickau, Dresden and Chemnitz. We see this as an introductory S/4HANA migration project and, if successful, it has the potential to be extended more broadly across the Volkswagen group.

In addition to migrating data to S/4HANA, the project involves complex adjustments such as client merges, company code merges and plant relocations. There is a tight deadline to complete the S/4HANA migration (1 January 2019), which reflects SNP’s highly effective, automated, proprietary software-based transformation approach. The project includes the transfer of master and transaction data from various modules of the SAP system to the S/4HANA target system. The standard software SNP Transformation Backbone will be used for the migration.

Forecast changes: Increase FY18 profitability

We have increased our FY18 operating profit forecast to break-even, which is in line with management guidance, from a €2.8m loss previously. While we have retained our revenue forecast, we have amended the revenue split, increasing cloud revenues and software maintenance while reducing software licences (which is a mix of proprietary licences and resales). We have reduced our capex, depreciation and FY18 net interest forecasts. We now forecast the group to end FY18 with net debt of €40.2m (previously €42.8m).

Exhibit 2: Forecast changes

2018e

2019e

2020e

 

Old

New

Change (%)

Old

New

Change (%)

Old

New

Change (%)

Revenue

 

 

 

 

 

 

Professional services

104,851

104,851

0.0

117,267

117,267

0.0

127,158

127,158

0.0

Cloud

2,000

3,347

67.4

2,190

3,665

67.4

2,388

3,996

67.4

Software licences

22,804

21,197

(7.0)

24,971

23,211

(7.0)

27,224

25,306

(7.0)

Software maintenance

8,239

8,499

3.2

9,022

9,306

3.2

9,836

10,146

3.2

Total software

31,043

29,696

(4.3)

33,992

32,517

(4.3)

37,060

35,452

(4.3)

Group revenue

137,895

137,895

0.0

153,449

153,449

0.0

166,606

166,606

0.0

Growth (%)

12.7

12.7

 

11.3

11.3

 

8.6

8.6

 

Professional services contribution

0

2,621

N/A

4,691

4,984

6.3

8,265

8,583

3.8

Cloud contribution

100

167

67.4

146

246

67.9

178

300

68.2

Software contribution

3,104

3,267

5.2

8,498

8,129

(4.3)

10,192

9,749

(4.3)

Non-segment-related expenses

(6,000)

(6,000)

0.0

(6,120)

(6,120)

0.0

(6,242)

(6,242)

0.0

Operating expenses

(140,690)

(137,839)

(2.0)

(146,234)

(146,211)

(0.0)

(154,214)

(154,216)

0.0

Capitalisation of dev costs (net)

(32)

(32)

0.0

(32)

(32)

0.0

(32)

(32)

0.0

Adjusted operating profit (EBIT)

(2,796)

55

(102.0)

7,215

7,239

0.3

12,393

12,390

(0.0)

Operating profit margin (%)

(2.0)

0.0

 

4.7

4.7

 

7.4

7.4

 

Growth (%)

(284.8)

(98.9)

 

(358.1)

13,009.7

 

71.8

71.2

 

Net interest

(1,300)

(1,200)

(7.7)

(1,300)

(1,300)

0.0

(1,100)

(1,100)

0.0

Profit before tax norm

(4,096)

(1,145)

(72.0)

5,915

5,939

0.4

11,293

11,290

(0.0)

Amortisation of acquired intangibles

(1,600)

(1,600)

0.0

(1,600)

(1,600)

0.0

(1,600)

(1,600)

0.0

Exceptional items

0

(300)

 

 

0

 

 

0

 

Profit before tax

(5,696)

(3,045)

(46.5)

4,315

4,339

0.5

9,693

9,690

(0.0)

Taxation

1,229

343

(72.0)

(1,775)

(1,782)

0.4

(3,388)

(3,387)

(0.0)

Non-controlling interests

(267)

(267)

0.0

(289)

(289)

0.0

(312)

(312)

0.0

FRS 3 net income

(4,734)

(2,969)

(37.3)

2,252

2,268

0.7

5,993

5,991

(0.0)

Adjusted EPS (c)

(57.3)

(19.5)

(65.9)

70.4

70.7

0.4

138.7

138.7

(0.0)

P/E - Adjusted EPS

 

N/A

 

22.7

 

11.6

Source: Edison Investment Research.

Exhibit 3: Financial summary

€'000s

2015

2016

2017

2018e

2019e

2020e

Year end 31 December

IFRS

IFRS

IFRS

IFRS

IFRS

IFRS

PROFIT & LOSS

Revenue

 

 

56,236

80,685

122,343

137,895

153,449

166,606

Cost of sales

0

0

0

0

0

0

Gross Profit

56,236

80,685

122,343

137,895

153,449

166,606

EBITDA

 

 

5,484

8,124

6,868

3,343

10,883

16,162

Adjusted Operating Profit

 

 

4,222

7,114

5,113

55

7,239

12,390

Amortisation of acquired intangibles

0

(657)

(2,021)

(1,600)

(1,600)

(1,600)

Exceptionals

356

400

(3,600)

(300)

0

0

Associates

(3)

8

(24)

0

0

0

Operating Profit

4,575

6,865

(532)

(1,845)

5,639

10,790

Net Interest

(828)

(1,137)

(1,327)

(1,200)

(1,300)

(1,100)

Profit Before Tax (norm)

 

 

3,394

5,977

3,786

(1,145)

5,939

11,290

Profit Before Tax (FRS 3)

 

 

3,747

5,728

(1,859)

(3,045)

4,339

9,690

Tax

(1,195)

(1,517)

(807)

343

(1,782)

(3,387)

Profit After Tax (norm)

2,198

4,460

2,980

(801)

4,157

7,903

Profit After Tax (FRS 3)

2,552

4,211

(2,666)

(2,701)

2,557

6,303

Minority interest

0

(147)

234

(267)

(289)

(312)

Adjustments for normalised earnings

0

0

0

0

0

0

Net income (norm)

2,198

4,313

3,214

(1,069)

3,868

7,591

Net income (FRS 3)

2,552

4,064

(2,431)

(2,969)

2,268

5,991

Average Number of Shares Outstanding (m)

3.7

4.3

5.2

5.5

5.5

5.5

EPS - normalised (c)

 

 

58.8

100.4

61.9

(19.5)

70.7

138.7

EPS - normalised & fully diluted (c)

 

 

58.8

100.4

61.9

(19.5)

70.7

138.7

EPS - FRS 3 (c)

 

 

68.3

94.6

(46.8)

(54.2)

41.4

109.4

Dividend per share (c)

34.00

39.00

0.00

0.00

30.00

40.00

Gross Margin (%)

100.0

100.0

100.0

100.0

100.0

100.0

EBITDA Margin (%)

9.8

10.1

5.6

2.4

7.1

9.7

Adjusted Operating Margin (%)

7.5

8.8

4.2

0.0

4.7

7.4

BALANCE SHEET

Fixed Assets

 

 

15,243

30,109

75,171

73,698

72,258

71,018

Intangible Assets

11,675

24,179

67,012

65,380

63,748

62,115

Tangible Assets

1,999

3,161

5,187

5,346

5,538

5,931

Other

1,570

2,769

2,972

2,972

2,972

2,972

Current Assets

 

 

29,996

58,424

78,614

60,885

62,567

67,131

Stocks

0

371

371

418

466

506

Debtors

16,084

25,652

43,781

44,346

49,348

53,579

Cash

13,769

31,914

33,877

15,535

12,168

12,461

Current Liabilities

 

 

(13,703)

(32,631)

(40,531)

(40,517)

(44,862)

(48,353)

Creditors

(11,101)

(14,523)

(29,295)

(29,281)

(33,626)

(37,117)

Short term borrowings

(2,602)

(18,108)

(11,236)

(11,236)

(11,236)

(11,236)

Long Term Liabilities

 

 

(15,513)

(7,327)

(53,157)

(45,583)

(40,583)

(35,583)

Long term borrowings

(12,344)

(5,531)

(49,487)

(44,487)

(39,487)

(34,487)

Other long term liabilities

(3,169)

(1,796)

(3,670)

(1,096)

(1,096)

(1,096)

Net Assets

 

 

16,024

48,575

60,097

48,483

49,380

54,213

CASH FLOW

Operating Cash Flow

 

 

1,879

1,005

(5,316)

2,686

10,148

15,362

Net Interest

(167)

53

(798)

(1,200)

(1,300)

(1,100)

Tax

(554)

(412)

(1,366)

321

(1,663)

(3,161)

Capex

(1,779)

(3,451)

(5,234)

(3,447)

(3,836)

(4,165)

Acquisitions/disposals*

(3,228)

(5,923)

(28,783)

(11,701)

(1,716)

0

Shares issued

0

30,129

18,293

0

0

0

Dividends

(483)

(1,264)

(1,932)

0

0

(1,642)

Net Cash Flow

(4,332)

20,137

(25,136)

(13,342)

1,633

5,293

Opening net debt/(cash)

 

 

(3,431)

1,176

(8,275)

26,847

40,188

38,555

Other

(275)

(10,686)

(9,985)

0

()

0

Closing net debt/(cash)

 

 

1,176

(8,275)

26,847

40,188

38,555

33,262

Source: Company accounts, Edison Investment Research. Note: *Includes additional payments for Adepcon in FY18 and FY19, and final payments for RSP, Astrums/Hartung, Harlex and Innoplexia 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 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 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 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 4, Office 1205

95 Pitt Street, Sydney

NSW 2000, Australia

Frankfurt +49 (0)69 78 8076 960

Schumannstrasse 34b

60325 Frankfurt

Germany

London +44 (0)20 3077 5700

280 High Holborn

London, WC1V 7EE

United Kingdom

New York +1 646 653 7026

295 Madison Avenue, 18th Floor

10017, New York

US

Sydney +61 (0)2 8249 8342

Level 4, 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 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 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 4, Office 1205

95 Pitt Street, Sydney

NSW 2000, Australia

Frankfurt +49 (0)69 78 8076 960

Schumannstrasse 34b

60325 Frankfurt

Germany

London +44 (0)20 3077 5700

280 High Holborn

London, WC1V 7EE

United Kingdom

New York +1 646 653 7026

295 Madison Avenue, 18th Floor

10017, New York

US

Sydney +61 (0)2 8249 8342

Level 4, Office 1205

95 Pitt Street, Sydney

NSW 2000, Australia

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