Trading up at half-year

BCA Marketplace 5 December 2018 Update
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BCA Marketplace

Trading up at half-year

Interim results

Industrial support services
 

5 December 2018

Price

210p

Market cap

£1,675m

Net debt (£m) at 30 September

264

Shares in issue

797.5m

Free float

100%

Code

BCA

Primary exchange

LSE

Secondary exchange

N/A

Share price performance

%

1m

3m

12m

Abs

(1.4)

(10.2)

(1.9)

Rel (local)

(0.4)

(3.8)

2.1

52-week high/low

242.0p

149.6p

Business description

In the UK, BCA Marketplace owns and operates the largest used vehicle exchange and is the leading provider of vehicle buying services through We Buy Any Car. BCA also provides exchange and buying services across Europe and its Automotive Services division provides transport, storage and technical expertise.

Next events

FY results

June 2019

Analysts

Andy Chambers

+44 (0)20 3681 2525

Annabel Hewson

+44 (0)20 3077 5700

BCA Marketplace is a research client of Edison Investment Research Limited

Interim results indicate the resilience of BCA’s model in the face of still challenging UK market fundamentals. The company delivered top-line growth of 22% and adjusted EBITDA growth of 12.7% and is able to maintain its expectation that market forecasts for FY19 will be achieved. While the uncertainties in new car markets persist, largely due to supply-side constraints and the looming Brexit, we maintain our EBITDA estimates for this year and next despite some divisional mix changes. The FY20 P/E multiple of just 15.7x is undemanding in our view given BCA’s investment proposition delivering healthy cash flows.

Year end

Revenue (£m)

PBT* (£m)

EPS* (p)

DPS (p)

P/E (x)

Yield (%)

03/17

2,030

97.4

9.1

6.75

23.1

3.2

03/18

2,432

120.9

11.4

8.55

18.4

4.1

03/19e

2,849

129.0

12.4

9.35

16.9

4.5

03/20e

3,084

139.1

13.4

10.15

15.7

4.8

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

Strong performance delivered in the first half

BCA remained largely unaffected by the disruption in new car markets experienced during the period as a result of the introduction of the new Worldwide Harmonised Light Vehicle Test Procedure (WLTP) emission testing regime, which affected new car supply across Europe. The group increased revenues by 22%, adjusted EBITDA by 13%, adjusted PBT by 17% and fully diluted adjusted EPS by 19% in H119. The interim dividend was raised by 15% to 3.0p per share. The improvement was delivered by strong performances across the vehicle remarketing activities in the UK and across Europe, as well as continued double-digit growth of We Buy Any Car (WBAC) vehicle buying. The WLTP disruption primarily affected the Automotive Services division where activities such as storage, pre-delivery inspections, transportation and refurbishment suffered from lower vehicle supply levels. We feel the growth in volumes and EBITDA per vehicle validates the belief that BCA’s model is resilient to short-term car market volatility and may in fact benefit from it.

Challenging market conditions expected to persist

The rest of FY19 may prove to be less volatile as the WLTP supply-side impacts should diminish and Brexit looms at the year end. At present we feel it is prudent to assume the strength of the H119 performance is likely to prove hard to maintain, but we expect volume trends to continue to be positive in both vehicle remarketing and buying activities. We anticipate good progress to be maintained in FY20 despite Brexit. While we maintain our adjusted EBITDA estimates, PBT and EPS rise 1.4% in FY19e and FY20e due to lower depreciation.

Valuation: Rating constrained by UK uncertainties

Our DCF valuation returns 251p, which compares to 237p at the time of our initiation note. The current FY20 P/E multiple is 15.7x, a c.20% discount to its remarketing peer group average, and the shares also offer an attractive dividend yield in excess of 4%.

Interim results
H119 results

Results for H119 showed excellent progress, with strong growth apparent as healthy progress in vehicle remarketing and buying activities more than offset a disrupted period for the Automotive Services activities. Key financial highlights of the results were:

■

Group revenues rose by 22% to £1.43bn (H118 £1.17bn) driven by higher volumes and higher average vehicle selling prices in the remarketing divisions and continued strong volume growth in vehicle buying activities. Growth of outsourced remarketing contracts, where full vehicle selling prices are recognised, also continues to inflate UK remarketing revenues.

■

Group adjusted EBITDA rose 12.7% to £85.4m (H118 £75.8m).

■

Group adjusted PBT was 16.7% higher at £66.5m.

■

Adjusted fully diluted EPS rose by 18.5% to 6.4p (H118 5.4p).

■

Interim dividend was increased by 15.4% to 3.0p (H118 2.6p).

■

Net debt of £264.0m was £23.4m lower than at the same time last year. It compared to £193.5m at the start of FY19, the outflow mainly reflecting seasonal working capital demands.

Exhibit 1: Interim results summary

Six months ended September (£m)

H118

H119

% change

Revenue

UK vehicle remarketing

456.7

581.6

27.3

Vehicle remarketing international

72.1

86.4

19.8

Vehicle buying

467.8

581.6

24.3

Automotive services

175.0

180.1

2.9

Group total

1,171.6

1,429.7

22.0

Adjusted EBITDA

UK vehicle remarketing

47.3

55.4

17.1

Vehicle remarketing International

12.8

15.8

23.4

Vehicle buying

11.7

12.6

7.7

Automotive services

10.9

8.4

(22.9)

Unallocated central costs

(6.9)

(6.8)

(1.4)

Group total

75.8

85.4

12.7

EBITDA margin

UK vehicle remarketing

10.4%

9.5%

Vehicle remarketing international

17.8%

18.3%

Vehicle buying

2.5%

2.2%

Automotive services

6.2%

4.7%

Group total

6.5%

6.0%

 

 

 

Adjusted EBITDA

75.8

85.4

12.7

Adjusted operating profit

63.0

71.4

13.3

(Loss)/profit before tax

34.9

45.7

30.9

Adjusted profit before tax

57.00

66.50

16.7

Adjusted EPS (p)

5.4

6.4

DPS (p)

2.6

3.0

Net debt

287.4

264.0

Source: BCA Marketplace reports

Excellent H1 for UK remarketing operations

Vehicle remarketing in the UK saw revenues rise by 27% with volume of vehicles sold rising by 3.1% to 528k (H118 512k). Revenue per vehicle continues to be inflated by the accounting treatment of cars flowing from outsourced remarketing contracts where the title has to be taken temporarily and the full sale price has to be reflected in revenues, compared to just agency fees and commissions in the normal auction activity. Nevertheless, average hammer prices at auction were higher, reflecting a lower average age of vehicles sold, improved vehicle quality and strong demand which also served to improve conversion rates of cars sold first time.

Demand and pricing were in part supported by the disruption in the UK new car market resulting from the introduction of the WLTP emissions testing regime in the EU from 1 September 2018. It severely distorted new car registrations in August and September and has led to supply shortages from some manufacturers, who have had regulatory approval delays for certain models. The demand for good quality nearly new cars has thus increased and in some cases vehicle replacement or defleeting exercises have been deferred. However, from BCA’s perspective the willingness of those who are selling to accept hammer prices seems to have improved during the period, which has boosted conversion rates.

The increased volumes and quality of vehicles provided operational efficiencies with increased utilisation of BCA transport and operations. The result is much stronger adjusted EBITDA per vehicle. The £105 per vehicle achieved in H119 compared to just £92 in H118. However, the margin reduced to 9.5% from 10.4% due to the inflationary aspect on revenues from the outsourced remarketing contracts.

BCA Partner Finance also continued to enhance performance by adding liquidity and buyer demand, with over £0.5bn of vehicle transactions funded during the period. The reduction in live dealers followed an audit of low use accounts, with inactive accounts being closed. Penetration of all BCA vehicles sold increased to 12.8% at the period end.

Exhibit 2: BCA Partner Finance development

H118

H119

Change

Number of live dealers

1,172

1,135

-3%

Live credit lines (£m)

182

234

29%

Utilisation

68%

72%

Actual loan book (£m)

123.7

160.5

30%

Facility drawdown (£m)

74.4

114.7

54%

BCA penetration at period end

11.3%

12.8%

+150bp

Source: BCA Marketplace reports

International development continues apace

The International Vehicle Remarketing operation also continued to develop strongly. The number of vehicles sold rose 8% to 189k (H118 175k) and revenue per vehicle increased by 10.9% to £457. Spain was down marginally (0.5%) but all other markets were up, with Scandinavia (+19.3%) and France (+13.0%) particularly strong. Cross-border buyers account for 18.2% of the volume sold, compared to 15.4% in the comparable period. Online sales accounted for 70.5% of volume sold, up from 69.5% in 2017.

Overall revenues rose 19.8% to £86.4m (H118 £72.1m) and adjusted EBITDA per vehicle rose 23.4%, with margin rising 50bps to 18.3%.

WBAC delivers double-digit volume growth

Vehicle buying continued its strong growth with volumes rising in double digits once more. In the UK, WBAC saw revenues grow 20.3% to £535.2m (H118 £444.9m), with 122k vehicles sold up 14% compared to H118, and average revenue per vehicle rising 5.5%. Adjusted EBITDA rose 6.0% to £12.4m, a margin of 2.3% healthily within the targeted range for the operation. The company increased the number of braches by 9% during the period to 247 locations, reducing average customer drive time to a location to just 14 minutes. In addition, the company’s pursuit of a trust-based marketing approach has increased repeat customer trading in turn supporting volume growth.

The international operations in Europe are run primarily to source vehicles and raise awareness of auction activity. They also grew strongly, more than doubling revenues to £46.4m with 75% more vehicles sold, a total of 9.1k vehicles.

WLTP supply issues constrains Automotive Services

BCA provides services in the UK that touch vehicles throughout their lifecycle from arrival at the docks to end of life. Primary among these is the vehicle transporter fleet of BCA Automotive, which is the largest in the UK by some distance, moving over 1.1m cars in H119. However, with a lower volume of cars being imported due to WLTP, other activities such as storage, handling and inspection would also have been experiencing challenging conditions.

Revenues rose 2.9% to £180.1m (H118 £175.0m) despite this, in part due to a new operation at Southampton docks. The delay of refurbishment of vehicles coming out of corporate fleets and leasing operations, combined with the reduced requirement for technical services work on new cars also adversely affected margins. Adjusted EBITDA fell 22.9% to £8.4m (H118 £10.9m), a margin of 4.7% (H118 6.2%).

Exhibit 3: BCA Marketplace half-yearly analysis

Year end March (£m)

H118

H218

FY18

H119

H219E

FY19E

Revenue

Vehicle remarketing UK

456.7

484.7

941.4

581.6

582.3

1,163.9

Vehicle remarketing international

72.1

82.2

154.3

86.4

82.0

168.4

Vehicle buying

467.8

512.7

980.5

581.6

573.0

1,154.6

Automotive services

175.0

180.3

355.3

180.1

182.3

362.4

Group total revenue

1,171.6

1,259.9

2,431.5

1,429.7

1,419.5

2,849.2

Adjusted EBITDA

Vehicle remarketing UK

47.3

51.5

98.8

55.4

54.5

109.9

Vehicle remarketing international

12.8

17.3

30.1

15.8

16.2

32.0

Vehicle buying

11.7

11.3

23.0

12.6

13.6

26.2

Automotive services

10.9

10.6

21.5

8.4

9.0

17.4

Unallocated central costs

(6.9)

(7.0)

(13.9)

 

(6.8)

-7.9

-14.7

Group total adjusted EBITDA

75.8

83.7

159.5

85.4

85.4

170.8

Adjusted EBITDA margin

Vehicle remarketing UK

10.4%

10.6%

10.5%

9.5%

9.4%

9.4%

Vehicle remarketing international

17.8%

21.0%

19.5%

18.3%

19.8%

19.0%

Vehicle buying

2.5%

2.2%

2.3%

2.2%

2.4%

2.3%

Automotive services

6.2%

5.9%

6.1%

4.7%

4.9%

4.8%

Group Total

6.5%

6.6%

6.6%

6.0%

6.0%

6.0%

 

 

 

 

 

Adjusted EBITDA

75.8

83.7

159.5

85.4

85.4

170.8

D&A

(12.8)

(14.1)

(26.9)

(14.0)

(16.3)

-30.3

Adjusted operating profit

63.0

69.6

132.6

71.4

69.0

140.4

PPA intangible amortisation

(20.0)

-20.2

940.2)

(20.1)

(20.1)

-40.2

Exceptional items:

(2.1)

-2.7

(4.8)

(0.7)

0.0

-0.7

Operating (loss)/profit

40.9

46.7

87.6

50.6

48.9

99.5

Finance income

0.2

0.1

0.3

0.2

0.2

0.4

Finance costs

(6.2)

(5.8)

(12.0)

 

(5.1)

(6.7)

-11.8

(Loss)/profit before tax

34.9

41.0

75.9

45.7

42.4

88.1

Adjusted Profit before tax

57.0

63.9

120.9

66.5

62.5

129.0

Source: BCA Marketplace reports, Edison Investment Research estimates

Outlook

The effects of WLTP are expected to diminish as BCA’s financial year progresses, which may mean reduced H219 volume volatility, especially in new cars. Volume growth in remarketing is expected to be similar to H119. Q4 is normally the most significant for the UK vehicles remarketing operations, but the mixture of WLTP and Brexit looming at the end of March leads us to err on the cautious side for H219. However, the refurbished site at Nottingham has come on stream, which should provide a fillip, with an increased capacity of 100k vehicles. The strong growth of WBAC is expected to continue, with a new advertising campaign over the festive season likely to continue to build trustworthy brand status. Automotive Services should benefit from any return to normality in new vehicle supply, but is still likely to make a reduced adjusted EBITDA contribution in H219 compared to H218.

Our adjusted EBITDA remains unchanged for FY19e and FY20e despite a change in divisional mix. However, we have reduced our depreciation charge forecast, leaving both adjusted PBT and adjusted EPS 1.4% higher in each year. Our dividend expectations remain unchanged. We feel we are reflecting an element of caution, with second-half performance showing more modest year-on-year progression than H119.

Exhibit 4: BCA Marketplace earnings estimates revisions

Year to March (£m)

2019e

 

2020e

 

 

Old

New

% change

Old

New

% change

Vehicle remarketing UK

1,008.5

1,163.9

15.4

1,069.8

1,215.6

13.6

Vehicle remarketing international

165.5

168.4

1.7

177.6

180.7

1.7

Vehicle buying

1,108.4

1,154.6

4.2

1,252.4

1,303.4

4.1

Automotive services

380.2

362.4

(4.7)

403.0

384.2

(4.7)
Total group revenue

2,662.5

2,849.2

7.0

2,902.8

3,083.9

6.2

 

 

 

 

 

 

Vehicle remarketing UK

105.8

109.9

3.9%

112.2

112.6

0.3%

Vehicle remarketing international

31.4

32.0

1.7%

33.8

34.3

1.7%

Vehicle buying

26.0

26.2

0.6%

29.4

30.0

1.9%

Automotive services

23.6

17.4

-26.2%

25.0

23.0

-7.7%

HQ (other and intersegment

-16.0

-14.7

-8.1%

-16.5

-16.0

-3.0%

Adjusted EBITDA

170.8

170.8

0.0%

183.9

183.9

0.0%

 

 

 

 

 

 

Underlying PTP

127.2

129.0

1.4%

137.1

139.1

1.4%

 

 

 

 

 

 

EPS - underlying continuing (p)

12.3

12.4

1.4%

13.2

13.4

1.4%

DPS (p)

9.35

9.35

0.0%

10.15

10.15

0.0%

Net cash / (debt)

(186.6)

(210.9)

13.0%

(160.0)

(196.7)

23.0%

Source: Edison Investment Research estimates

 

Exhibit 5: Financial summary

£m

2016

2017

2018

2019e

2020e

Year end 31 March

IFRS

IFRS

IFRS

IFRS

IFRS

PROFIT & LOSS

Revenue

 

 

1,153.1

2,029.7

2,431.5

2,849.2

3,083.9

Cost of Sales

(844.5)

(1,624.5)

(1,983.4)

(2,324.2)

(2,515.5)

Gross Profit

308.6

405.2

448.1

525.1

568.3

EBITDA

 

 

98.5

135.6

159.5

170.8

183.9

Operating Profit (before amort. and except).

90.7

121.3

143.0

150.8

160.8

Intangible Amortisation

(9.2)

(10.9)

(10.4)

(10.4)

(10.4)

Exceptionals

(65.2)

(36.1)

(45.0)

(40.9)

(40.2)

Other

0.0

4.9

0.0

0.0

0.0

Operating Profit

16.3

79.2

87.6

99.5

110.2

Net Interest

(12.4)

(17.9)

(11.7)

(11.5)

(11.3)

Other financial costs

0.0

4.9

0.0

0.0

0.0

Profit Before Tax (norm)

 

 

69.1

97.4

120.9

129.0

139.1

Profit Before Tax (FRS 3)

 

 

3.9

56.4

75.9

88.1

98.9

Tax

3.8

(15.3)

(18.9)

(20.3)

(22.7)

Profit After Tax (norm)

55.2

72.4

92.9

99.3

107.1

Profit After Tax (FRS 3)

7.7

41.1

57.0

67.8

76.1

Average Number of Shares Outstanding (m)

630.2

780.2

786.2

797.5

797.5

EPS - fully diluted (p)

 

 

8.6

9.1

11.4

12.4

13.4

EPS - normalised (p)

 

 

8.8

9.3

11.8

12.4

13.4

EPS - (IFRS) (p)

 

 

1.2

5.2

7.2

8.5

9.5

Dividend per share (p)

6.0

6.8

8.6

9.4

10.2

Gross Margin (%)

26.8

20.0

18.4

18.4

18.4

EBITDA Margin (%)

8.5

6.7

6.6

6.0

6.0

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

7.9

6.0

5.9

5.3

5.2

BALANCE SHEET

Fixed Assets

 

 

1,565.0

1,692.8

1,660.0

1,623.2

1,591.3

Intangible Assets

1,449.5

1,559.5

1,528.6

1,489.0

1,449.4

Tangible Assets

115.5

133.3

131.4

134.2

141.9

Investments

0.0

0.0

0.0

0.0

0.0

Current Assets

 

 

347.9

491.6

596.1

675.3

721.1

Stocks

19.3

58.3

59.1

71.3

79.5

Debtors

210.0

337.1

389.7

456.7

494.3

Cash

102.4

84.4

135.3

135.3

135.3

Other

16.2

11.8

12.0

12.0

12.0

Current Liabilities

 

 

(266.4)

(523.2)

(620.4)

(474.6)

(507.4)

Creditors

(226.2)

(364.2)

(444.9)

(474.6)

(507.4)

Short term borrowings

(40.2)

(159.0)

(175.5)

0.0

0.0

Long Term Liabilities

 

 

(525.0)

(299.8)

(276.1)

(469.8)

(455.8)

Long term borrowings

(273.1)

(254.9)

(256.9)

(451.7)

(437.5)

Other long term liabilities

(251.9)

(44.9)

(19.2)

(18.1)

(18.3)

Net Assets

 

 

1,121.5

1,361.4

1,359.6

1,354.1

1,349.1

CASH FLOW

Operating Cash Flow

 

 

6.9

86.6

171.2

122.2

164.7

Net Interest

(5.8)

(8.8)

(8.3)

(8.5)

(8.3)

Tax

(3.7)

(13.3)

(21.4)

(20.3)

(22.7)

Capex

(37.9)

(64.7)

(69.7)

(53.7)

(41.8)

Acquisitions/disposals

(1,184.7)

(109.5)

(15.8)

0.0

0.0

Financing

1,001.1

39.5

32.2

10.0

(0.0)

Dividends

(15.6)

(48.4)

(55.8)

(69.1)

(77.6)

Net Cash Flow

(239.7)

(118.6)

32.4

(19.3)

14.2

Opening net debt/(cash)

 

 

(28.8)

170.7

260.5

191.6

210.9

HP finance leases initiated

0.0

0.0

0.0

0.0

0.0

Other

40.2

28.8

36.5

(0.0)

0.0

Closing net debt/(cash)

 

 

170.7

260.5

191.6

210.9

196.7

Source: BCA Marketplace reports, Edison Investment Research estimates

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The research in this document is intended for New Zealand resident professional financial advisers or brokers (for use in their roles as financial advisers or brokers) and habitual investors who are “wholesale clients” for the purpose of the Financial Advisers Act 2008 (FAA) (as described in sections 5(c) (1)(a), (b) and (c) of the FAA). This is not a solicitation or inducement to buy, sell, subscribe, or underwrite any securities mentioned or in the topic of this document. For the purpose of the FAA, the content of this report is of a general nature, is intended as a source of general information only and is not intended to constitute a recommendation or opinion in relation to acquiring or disposing (including refraining from acquiring or disposing) of securities. The distribution of this document is not a “personalised service” and, to the extent that it contains any financial advice, is intended only as a “class service” provided by Edison within the meaning of the FAA (i.e. without taking into account the particular financial situation or goals of any person). As such, it should not be relied upon in making an investment decision.

United Kingdom

Neither this document and associated email (together, the "Communication") constitutes or form part of any offer for sale or subscription of, or solicitation of any offer to buy or subscribe for, any securities, nor shall it or any part of it form the basis of, or be relied on in connection with, any contract or commitment whatsoever. Any decision to purchase shares in the Company in the proposed placing should be made solely on the basis of the information to be contained in the admission document to be published in connection therewith.

This Communication is being distributed in the United Kingdom and is directed only at (i) persons having professional experience in matters relating to investments, i.e. investment professionals within the meaning of Article 19(5) of the Financial Services and Markets Act 2000 (Financial Promotion) Order 2005, as amended (the "FPO") (ii) high net-worth companies, unincorporated associations or other bodies within the meaning of Article 49 of the FPO and (iii) persons to whom it is otherwise lawful to distribute it. The investment or investment activity to which this document relates is available only to such persons. It is not intended that this document be distributed or passed on, directly or indirectly, to any other class of persons and in any event and under no circumstances should persons of any other description rely on or act upon the contents of this document (nor will such persons be able to purchase shares in the placing).

This Communication is being supplied to you solely for your information and may not be reproduced by, further distributed to or published in whole or in part by, any other person.

United States

1 APKS Note: Amended as the report prepared does not fall within the regulatory definition of "Investment Research".

2 APKS Note: Please confirm that any such shareholdings are held subject to the personal dealing/conflict policy.

The Investment Research is a publication distributed in the United States by Edison Investment Research, Inc. Edison Investment Research, Inc. is registered as an investment adviser with the Securities and Exchange Commission. Edison relies upon the "publishers' exclusion" from the definition of investment adviser under Section 202(a) (11) of the Investment Advisers Act of 1940 and corresponding state securities laws. This report is a bona fide publication of general and regular circulation offering impersonal investment-related advice, not tailored to a specific investment portfolio or the needs of current and/or prospective subscribers. As such, Edison does not offer or provide personal advice and the research provided is for informational purposes only. No mention of a particular security in this report constitutes a recommendation to buy, sell or hold that or any security, or that any particular security, portfolio of securities, transaction or investment strategy is suitable for any specific person.

Frankfurt +49 (0)69 78 8076 960

Schumannstrasse 34b

60325 Frankfurt

Germany

London +44 (0)20 3077 5700

280 High Holborn

London, WC1V 7EE

United Kingdom

New York +1 646 653 7026

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

General disclaimer and copyright

This report has been commissioned by BCA Marketplace and prepared and issued by Edison, in consideration of a fee payable by BCA Marketplace. Edison Investment Research standard fees are £49,500 pa for the production and broad dissemination of a detailed note (Outlook) following by regular (typically quarterly) update notes. Fees are paid upfront in cash without recourse. Edison may seek additional fees for the provision of roadshows and related IR services for the client but does not get remunerated for any investment banking services. We never take payment in stock, options or warrants for any of our services.

Accuracy of content: All information used in the publication of this report has been compiled from publicly available sources that are believed to be reliable, however we do not guarantee the accuracy or completeness of this report and have not sought for this information to be independently verified. Opinions contained in this report represent those of the Edison analyst at the time of publication. Forward-looking information or statements in this report contain information that is based on assumptions, forecasts of future results, estimates of amounts not yet determinable, and therefore involve known and unknown risks, uncertainties and other factors which may cause the actual results, performance or achievements of their subject matter to be materially different from current expectations.

Exclusion of Liability: To the fullest extent allowed by law, Edison shall not be liable for any direct, indirect or consequential losses, loss of profits, damages, costs or expenses incurred or suffered by you arising out or in connection with the access to, use of or reliance on any information contained on this note.

No personalised advice: The information that we provide should not be construed in any manner whatsoever as, personalised advice. Also, the information provided by us should not be construed by any subscriber or prospective subscriber as Edison’s solicitation to effect, or attempt to effect, any transaction in a security. The securities described in the report may not be eligible for sale in all jurisdictions or to certain categories of investors.

Investment in securities mentioned: Edison has a restrictive policy relating to personal dealing and conflicts of interest. Edison Group does not conduct any investment business and, accordingly, does not itself hold any positions in the securities mentioned in this report. However, the respective directors, officers, employees and contractors of Edison may have a position in any or related securities mentioned in this report, subject to Edison's policies on personal dealing and conflicts of interest.

Copyright: Copyright 2018 Edison Investment Research Limited (Edison). All rights reserved 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.

Australia

Edison Investment Research Pty Ltd (Edison AU) is the Australian subsidiary of Edison. Edison AU is a Corporate Authorised Representative (1252501) of Myonlineadvisers Pty Ltd who holds an Australian Financial Services Licence (Number: 427484). This research is issued in Australia by Edison AU and any access to it, is intended only for "wholesale clients" within the meaning of the Corporations Act 2001 of Australia. Any advice given by Edison AU is general advice only and does not take into account your personal circumstances, needs or objectives. You should, before acting on this advice, consider the appropriateness of the advice, having regard to your objectives, financial situation and needs. If our advice relates to the acquisition, or possible acquisition, of a particular financial product you should read any relevant Product Disclosure Statement or like instrument.

New Zealand

The research in this document is intended for New Zealand resident professional financial advisers or brokers (for use in their roles as financial advisers or brokers) and habitual investors who are “wholesale clients” for the purpose of the Financial Advisers Act 2008 (FAA) (as described in sections 5(c) (1)(a), (b) and (c) of the FAA). This is not a solicitation or inducement to buy, sell, subscribe, or underwrite any securities mentioned or in the topic of this document. For the purpose of the FAA, the content of this report is of a general nature, is intended as a source of general information only and is not intended to constitute a recommendation or opinion in relation to acquiring or disposing (including refraining from acquiring or disposing) of securities. The distribution of this document is not a “personalised service” and, to the extent that it contains any financial advice, is intended only as a “class service” provided by Edison within the meaning of the FAA (i.e. without taking into account the particular financial situation or goals of any person). As such, it should not be relied upon in making an investment decision.

United Kingdom

Neither this document and associated email (together, the "Communication") constitutes or form part of any offer for sale or subscription of, or solicitation of any offer to buy or subscribe for, any securities, nor shall it or any part of it form the basis of, or be relied on in connection with, any contract or commitment whatsoever. Any decision to purchase shares in the Company in the proposed placing should be made solely on the basis of the information to be contained in the admission document to be published in connection therewith.

This Communication is being distributed in the United Kingdom and is directed only at (i) persons having professional experience in matters relating to investments, i.e. investment professionals within the meaning of Article 19(5) of the Financial Services and Markets Act 2000 (Financial Promotion) Order 2005, as amended (the "FPO") (ii) high net-worth companies, unincorporated associations or other bodies within the meaning of Article 49 of the FPO and (iii) persons to whom it is otherwise lawful to distribute it. The investment or investment activity to which this document relates is available only to such persons. It is not intended that this document be distributed or passed on, directly or indirectly, to any other class of persons and in any event and under no circumstances should persons of any other description rely on or act upon the contents of this document (nor will such persons be able to purchase shares in the placing).

This Communication is being supplied to you solely for your information and may not be reproduced by, further distributed to or published in whole or in part by, any other person.

United States

1 APKS Note: Amended as the report prepared does not fall within the regulatory definition of "Investment Research".

2 APKS Note: Please confirm that any such shareholdings are held subject to the personal dealing/conflict policy.

The Investment Research is a publication distributed in the United States by Edison Investment Research, Inc. Edison Investment Research, Inc. is registered as an investment adviser with the Securities and Exchange Commission. Edison relies upon the "publishers' exclusion" from the definition of investment adviser under Section 202(a) (11) of the Investment Advisers Act of 1940 and corresponding state securities laws. This report is a bona fide publication of general and regular circulation offering impersonal investment-related advice, not tailored to a specific investment portfolio or the needs of current and/or prospective subscribers. As such, Edison does not offer or provide personal advice and the research provided is for informational purposes only. No mention of a particular security in this report constitutes a recommendation to buy, sell or hold that or any security, or that any particular security, portfolio of securities, transaction or investment strategy is suitable for any specific person.

Frankfurt +49 (0)69 78 8076 960

Schumannstrasse 34b

60325 Frankfurt

Germany

London +44 (0)20 3077 5700

280 High Holborn

London, WC1V 7EE

United Kingdom

New York +1 646 653 7026

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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