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Acal — Update 26 January 2017

discoverIE Group (LSE: DSCV)

Last close As at 19/04/2024

GBP6.91

▲ −16.00 (−2.26%)

Market capitalisation

GBP666m

More on this equity

Research: TMT

Acal — Update 26 January 2017

Acal

Katherine Thompson

Written by

Katherine Thompson

Director

TMT

Acal

Adding sensors to the Design & Manufacturing portfolio

Acquisition and fund raising

Industrial support services

26 January 2017

Price

233.0p

Market cap

£165m

€1.16/NOK10.4/£

Net debt (£m) at end Q317

41.1

Shares in issue (includes placing shares)

70.7m

Free float

96%

Code

ACL

Primary exchange

LSE

Secondary exchange

N/A

Share price performance

%

1m

3m

12m

Abs

3.0

(3.6)

(12.6)

Rel (local)

1.6

(5.7)

(27.3)

52-week high/low

280.00p

204.50p

Business description

Acal is a leading international supplier of customised electronics to industry. It designs, manufactures and distributes customer-specific electronic products and solutions to 25,000 industrial manufacturers.

Next events

Year end trading update

April 2017

FY17 results

June 2017

Analysts

Katherine Thompson

+44 (0)20 3077 5730

Dan Ridsdale

+44 (0)20 3077 5729

Acal is a research client of Edison Investment Research Limited

Acal’s acquisition of Variohm adds the first specialist sensor business to Design & Manufacturing and moves the company closer to its mid-term target of generating 75% of revenues from the division. The acquisition, costing up to £13.85m in cash, is being funded by the recent placing of 6.42m shares at 220p per share. Management expects the deal, together with the placing, to be earnings enhancing in FY18 and we lift our normalised FY18e EPS forecast by 3.4%. The stock is trading at a c 30% discount to its peer group, representing a good entry point in our view.

Year end

Revenue (£m)

PBT*
(£m)

EPS*
(p)

DPS
(p)

P/E
(x)

Yield
(%)

03/14

211.6

6.9

13.1

6.8

17.8

2.9

03/15

271.1

12.4

16.4

7.6

14.2

3.3

03/16

287.7

15.2

17.8

8.1

13.1

3.5

03/17e

326.0

16.8

18.4

8.4

12.7

3.6

03/18e

353.3

20.0

20.0

8.5

11.7

3.6

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

Design & Manufacturing acquisition; fund raising

Acal has acquired Variohm Holdings for an initial cash consideration of £12m and a contingent cash consideration of up to £1.85m. It funded the deal from its syndicated debt facility, which it will repay with the £13.6m in net proceeds from the recent placing of 6.42m shares at 220p per share. Variohm is a UK-based designer, manufacturer and distributor of specialist electronic sensors, switches and motion measurement systems, with c 50% of sales from France, Germany and the US.

Trading in line, upgrade to forecasts

The company also provided an update on trading, with pre-deal earnings expectations unchanged for FY17. Order intake increased 4% y-o-y in Q317 (on a constant currency organic basis) and organic constant currency revenues were flat with the expectation of revenue growth in Q417. We have revised our forecasts to take into account the acquisition and fund-raising. Our revenue forecasts increase 1.3% in FY17e and 6.6% in FY18e. Our normalised EPS forecast is essentially unchanged in FY17e and increases 3.4% in FY18e. We estimate that gearing will reduce to 1.6x by the end of FY18 (down from our previous 1.7x estimate).

Valuation: D&M progress to drive upside

On our revised forecasts, the stock is trading at a c 30% discount to the peer group average on EV/EBITDA and P/E multiples. The trading update indicating unchanged expectations for the remainder of FY17 combined with further progress in the strategy to grow the Design & Manufacturing side of the business provide confidence in both the near-term and longer-term outlook for the company. Continued growth in the proportion of revenue generated from design and manufacturing should support operating margin expansion, and should help to reduce the valuation discount. The stock is supported by a dividend yield above 3%.

Overview of Variohm acquisition

Variohm background

Variohm was founded by Roy Moffatt in 1974. It designs, manufactures and distributes sensors, switches and motion measurement systems. It has three own brands: Variohm Eurosensors, Herga and Heason. The company is based in the UK, with offices and manufacturing facilities in Towcester, Bury St Edmunds and Slinfold, as well as a sales office in Germany. The company works closely with customers to design solutions, and supplies third-party products as well as in-house manufactured products. Medical, transportation and industrial customers generate c 65% of sales; 50% of revenues are generated in the UK, with a further 50% sold to France, Germany and the US.

Financial performance

Exhibit 1 shows the financial performance of the company over the last three years. According to Acal, the business continues to grow in the current fiscal year. We would expect the EBITDA margin to improve once part of Acal as the business should be able to take advantage of central services and purchasing.

Exhibit 1: Variohm financial performance, FY14-16 (£m)

Year end 30 April

FY14

FY15

FY16

Revenue

18.3

18.5

19.4

Revenue growth

1.1%

4.9%

EBITDA

1.2

1.4

2.0

EBITDA margin

6.6%

7.6%

10.3%

PBT

1.6

PBT margin

8.2%

Source: Acal

Terms of the deal

Acal has paid an initial consideration of £12m in cash and will pay up to £1.85m in contingent cash consideration in FY19 based on targets set for FY18. The deal is on a cash-free, debt-free basis.

Based on the initial consideration, the business is valued at 6x trailing EBITDA, compared to Acal’s trailing EV/EBITDA of 9.4x and FY17e EV/EBITDA of 8.3x on pre-deal forecasts.

Funding the deal

The company has funded the acquisition through its syndicated debt facility. The company placed 6.418m shares at 220p per share on 20 January for gross proceeds of £14.1m and net proceeds of £13.6m. It will use these proceeds to repay the acquisition funding and to fund working capital and the contingent consideration.

Integration into Acal

Variohm will be integrated into Acal’s Design & Manufacturing division. While Acal’s Custom Distribution business supplies sensor products, this will be the first design and manufacturing business in this area. Connectivity is one of Acal’s four focus markets, and the addition of in-house sensor capability should help the company to support customers active in the Internet of Things (IoT) market. The management team will be retained and the products will continue to be sold under the existing brands. We would expect cross-selling to be a focus, and a potential widening of exports to other countries.

Trading update

Acal has also provided information on trading in Q317. For 1 October 2016 to 31 December 2016, trading was in line with expectations. Revenues grew 21% y-o-y in Q317, and 5% at constant exchange rates. Organic revenues (at constant exchange rates) were flat on a year-on-year basis, compared to -7% in H117, and the company expects to return to growth in Q417. Orders increased 4% at constant exchange rates. Gross margins held up and were higher than a year ago (H216 32.8%; our forecast for H217 is 33.0%). Management maintains earnings expectations for FY17. Net debt at the end of Q317 stood at £41.1m, flat versus end H117.

Changes to forecasts

We have reflected the acquisition of Variohm and the share issue. The company expects the deal to be earnings enhancing in the first full year after acquisition ie FY18. We estimate that Design & Manufacturing will contribute 56% of revenues in FY18 (up from 53%), helping drive up operating margins for the group. We estimate that the combination of the acquisition and the placing will reduce gearing.

Exhibit 2: Changes to estimates

£m

FY17e old

FY17e new

Change

y-o-y

FY18e old

FY18e new

Change

y-o-y

Revenues

321.7

326.0

1.3%

13.3%

331.3

353.3

6.6%

8.4%

Custom distribution

153.1

153.1

0.0%

2.0%

155.4

155.4

0.0%

1.5%

Design & manufacturing

168.6

172.9

2.5%

25.6%

175.8

197.8

12.5%

14.4%

Gross margin

33.0%

33.0%

0.0%

0.8%

33.0%

33.0%

0.0%

0.0%

Underlying operating profit

18.7

19.1

2.1%

17.0%

19.9

22.2

11.2%

16.2%

Underlying operating profit margin

5.8%

5.9%

0.0%

0.2%

6.0%

6.3%

0.3%

0.4%

Normalised operating profit

19.4

19.8

2.0%

16.3%

20.7

23.0

10.8%

16.2%

Normalised operating margin

6.0%

6.1%

0.0%

0.2%

6.3%

6.5%

0.2%

0.4%

Normalised PBT

16.4

16.8

2.4%

10.4%

17.7

20.0

12.6%

19.0%

Normalised net income

12.5

12.7

1.6%

7.8%

13.4

15.1

13.0%

18.8%

Normalised EPS (p)

18.4

18.4

-0.1%

3.0%

19.3

20.0

3.4%

8.8%

Net (debt)/cash

(43.1)

(42.7)

-1.1%

12.0%

(40.3)

(41.4)

2.8%

-3.0%

Net debt/annualised EBITDA

1.9x

1.7x

1.7x

1.6x

Source: Edison Investment Research

Valuation

We tabulate below the operating and valuation metrics for Acal’s peer group. Excluding companies that have been bid for, the stock is currently trading at a discount of 34% for FY17e and 33% for FY18e on a P/E basis and 24% for FY17e and 29% for FY18e on an EV/EBITDA basis. The trading update, indicating unchanged expectations for the remainder of FY17, combined with further progress in the company’s strategy to grow the Design & Manufacturing side of the business provide confidence in both the near-term and longer-term outlook for the company. Continued growth in the proportion of revenue generated from design and manufacturing should support operating margin expansion, and should help to reduce the valuation discount.

Exhibit 3: Peer group valuation metrics

 

EV/sales (x)

EV/EBITDA (x)

P/E (x)

Dividend yield

Last yr

This yr

Next yr

Last yr

This yr

Next yr

Last yr

This yr

Next yr

Last yr

This yr

Next yr

Acal

0.7

0.6

0.6

10.2

8.9

7.7

13.1

12.7

11.7

3.5%

3.6%

3.6%

Specialist distributors

Diploma

3.0

2.6

2.5

16.2

14.5

13.8

24.2

21.7

20.7

1.8%

2.2%

2.3%

Solid State

0.9

0.9

0.9

8.0

11.1

11.4

8.6

12.9

12.2

2.7%

2.8%

2.9%

High service & commodity distributors

Brammer*

0.4

0.4

0.4

7.4

10.9

8.7

11.1

15.7

12.0

6.5%

4.5%

5.1%

Electrocomponents

1.8

1.6

1.5

21.0

15.5

14.0

39.2

26.0

22.9

2.4%

2.4%

2.5%

Design & manufacturing

E2V*

2.6

2.4

2.3

11.7

10.7

10.1

18.9

19.0

17.5

1.9%

2.1%

2.2%

Gooch & Housego

3.0

2.6

2.4

14.8

12.8

11.5

26.8

23.7

21.2

0.8%

0.9%

1.0%

TT Electronics

0.6

0.5

0.5

8.8

6.2

5.8

17.6

13.8

12.5

3.5%

3.6%

3.7%

XP Power

3.2

2.7

2.5

11.7

10.9

9.8

17.4

16.9

15.1

3.6%

3.8%

4.0%

Average

1.9

1.7

1.6

12.5

11.6

10.5

20.5

18.7

16.8

2.9%

2.8%

3.0%

Average excluding bid for companies

2.1

1.8

1.7

13.4

11.8

10.9

22.3

19.2

17.4

2.5%

2.6%

2.7%

Source: Edison Investment Research, Bloomberg (as at 25 January). Note: *Subject to a takeover bid.

Exhibit 4: Peer group operating performance

 

Gross margin

EBITDA margin

EBIT margin

Revenue growth

Last yr

This yr

Next yr

Last yr

This yr

Next yr

Last yr

This yr

Next yr

Last yr

This yr

Next yr

Acal

32.2%

33.0%

33.0%

6.9%

7.0%

7.4%

5.9%

6.1%

6.5%

6.1%

13.3%

8.4%

Specialist distributors

Diploma

35.9%

36.5%

36.5%

18.3%

18.2%

18.3%

17.2%

15.9%

16.1%

14.6%

12.8%

4.1%

Solid State

31.8%

28.1%

28.2%

11.6%

8.4%

8.5%

10.2%

7.4%

7.7%

20.6%

-0.1%

4.0%

High service & commodity distributors

Brammer*

30.9%

30.0%

30.7%

6.0%

4.0%

4.8%

4.7%

2.1%

3.0%

-0.9%

2.3%

4.1%

Electrocomponents

43.5%

43.8%

43.9%

8.6%

10.3%

10.8%

6.4%

8.4%

9.1%

2.0%

13.8%

5.0%

Design & manufacturing

E2V*

40.3%

41.4%

41.6%

22.4%

22.6%

22.8%

17.8%

17.9%

18.1%

5.5%

8.2%

5.0%

Gooch & Housego

40.6%

41.6%

41.6%

20.3%

20.0%

20.7%

16.5%

16.1%

16.8%

6.0%

17.5%

7.1%

TT Electronics

18.1%

18.2%

18.2%

7.2%

9.2%

9.4%

1.7%

2.0%

2.1%

(2.7%)

10.4%

4.8%

XP Power

49.8%

49.2%

49.4%

27.1%

25.2%

25.9%

23.6%

21.8%

22.6%

8.5%

16.0%

7.2%

Average

32.7%

31.4%

33.6%

15.2%

14.7%

15.2%

12.3%

11.5%

11.9%

6.7%

10.1%

5.2%

Average excluding bid for companies

33.2%

31.8%

34.4%

15.5%

15.2%

15.6%

12.6%

11.9%

12.4%

8.2%

11.7%

5.4%

Source: Edison Investment Research, Bloomberg (as at 25 January). Note: *Subject to a takeover bid.

Exhibit 5: Financial summary

£m

2013

2014

2015

2016

2017e

2018e

Year end 31 March

IFRS

IFRS

IFRS

IFRS

IFRS

IFRS

PROFIT & LOSS

Revenue

 

 

177.4

211.6

271.1

287.7

326.0

353.3

Cost of Sales

(123.0)

(148.6)

(186.7)

(195.1)

(218.5)

(236.7)

Gross Profit

54.4

63.0

84.4

92.6

107.6

116.5

EBITDA

 

 

7.4

9.1

16.6

19.8

22.7

26.2

Operating Profit (before am, SBP and except.)

6.1

7.7

14.0

17.0

19.8

23.0

Operating Profit (before am. and except.)

 

5.5

7.1

13.4

16.3

19.1

22.2

Amortisation of acquired intangibles

(0.7)

(1.0)

(2.1)

(2.8)

(3.6)

(3.6)

Exceptionals

(3.4)

(0.9)

(5.2)

(2.1)

(10.4)

(3.5)

Share-based payments

(0.6)

(0.6)

(0.6)

(0.7)

(0.7)

(0.8)

Operating Profit

1.4

5.2

6.1

11.4

5.1

15.1

Net Interest

(0.5)

(0.8)

(1.6)

(1.8)

(3.0)

(3.0)

Profit Before Tax (norm)

 

 

5.6

6.9

12.4

15.2

16.8

20.0

Profit Before Tax (FRS 3)

 

 

0.7

4.2

4.3

9.4

1.9

11.9

Tax

1.4

(0.5)

(1.4)

(2.2)

(1.0)

(3.1)

Profit After Tax (norm)

4.6

6.0

10.0

11.8

12.7

15.1

Profit After Tax (FRS 3)

2.1

3.7

2.9

7.2

0.8

8.8

Average Number of Shares Outstanding (m)

39.2

43.1

57.6

63.3

65.4

70.7

EPS - normalised & diluted (p)

 

 

11.3

13.1

16.4

17.8

18.4

20.0

EPS - IFRS basic (p)

 

 

(4.8)

3.0

5.0

11.4

1.3

12.4

EPS - IFRS diluted (p)

 

 

(4.7)

2.8

4.8

10.9

1.2

11.6

Dividend per share (p)

6.2

6.8

7.6

8.1

8.4

8.5

Gross Margin (%)

30.7

29.8

31.1

32.2

33.0

33.0

EBITDA Margin (%)

4.2

4.3

6.1

6.9

7.0

7.4

Operating Margin (before am, SBP and except.) (%)

3.4

3.6

5.2

5.9

6.1

6.5

BALANCE SHEET

Fixed Assets

 

 

30.9

33.1

88.6

108.4

116.4

112.7

Intangible Assets

24.2

25.5

69.9

88.2

96.5

92.8

Tangible Assets

3.1

3.5

13.8

14.7

14.4

14.4

Deferred tax assets

3.6

4.1

4.9

5.5

5.5

5.5

Current Assets

 

 

81.8

92.7

127.3

128.3

134.1

145.3

Stocks

19.3

19.4

39.8

42.9

46.4

50.3

Debtors

44.7

48.3

60.2

65.5

72.3

78.4

Cash

17.8

18.1

26.7

19.9

15.3

16.6

Current Liabilities

 

 

(50.9)

(58.3)

(62.1)

(61.7)

(75.5)

(87.4)

Creditors

(46.6)

(51.5)

(61.9)

(60.9)

(69.7)

(76.6)

Short term borrowings

(4.3)

(6.8)

(0.2)

(0.8)

(5.8)

(10.8)

Long Term Liabilities

 

 

(10.3)

(19.0)

(61.1)

(73.1)

(68.1)

(63.1)

Long term borrowings

(1.7)

(9.5)

(45.5)

(57.2)

(52.2)

(47.2)

Other long term liabilities

(8.6)

(9.5)

(15.6)

(15.9)

(15.9)

(15.9)

Net Assets

 

 

51.5

48.5

92.7

101.9

106.9

107.5

CASH FLOW

Operating Cash Flow

 

 

5.7

6.1

6.6

14.6

11.1

20.1

Net Interest

(0.6)

(0.8)

(1.6)

(1.8)

(3.0)

(3.0)

Tax

(1.4)

(0.9)

(3.3)

(4.3)

(3.0)

(5.3)

Capex

(1.3)

(1.4)

(2.5)

(2.3)

(2.5)

(3.1)

Acquisitions/disposals

(0.5)

(9.2)

(37.3)

(19.8)

(15.2)

(1.5)

Financing

5.7

0.1

52.7

0.0

13.6

0.0

Dividends

(2.3)

(2.7)

(3.6)

(4.9)

(5.5)

(5.9)

Net Cash Flow

5.3

(8.8)

11.0

(18.5)

(4.6)

1.3

Opening net cash/(debt)

 

 

6.3

11.8

1.8

(19.0)

(38.1)

(42.7)

HP finance leases initiated

0.0

0.0

0.0

0.0

0.0

0.0

Other

0.2

(1.2)

(31.8)

(0.6)

0.0

0.0

Closing net cash/(debt)

 

 

11.8

1.8

(19.0)

(38.1)

(42.7)

(41.4)

Source: Acal, Edison Investment Research

Edison, the investment intelligence firm, is the future of investor interaction with corporates. Our team of over 100 analysts and investment professionals work with leading companies, fund managers and investment banks worldwide to support their capital markets activity. We provide services to more than 400 retained corporate and investor clients from our offices in London, New York, Frankfurt and Sydney. Edison is authorised and regulated by the Financial Conduct Authority. Edison Investment Research (NZ) Limited (Edison NZ) is the New Zealand subsidiary of Edison. Edison NZ is registered on the New Zealand Financial Service Providers Register (FSP number 247505) and is registered to provide wholesale and/or generic financial adviser services only. Edison Investment Research Inc (Edison US) is the US subsidiary of Edison and is regulated by the Securities and Exchange Commission. Edison Investment Research Limited (Edison Aus) [46085869] is the Australian subsidiary of Edison and is not regulated by the Australian Securities and Investment Commission. Edison Germany is a branch entity of Edison Investment Research Limited [4794244]. www.edisongroup.com

DISCLAIMER
Copyright 2017 Edison Investment Research Limited. All rights reserved. This report has been commissioned by Acal and prepared and issued by Edison for publication globally. All information used in the publication of this report has been compiled from publicly available sources that are believed to be reliable, however we do not guarantee the accuracy or completeness of this report. Opinions contained in this report represent those of the research department of Edison at the time of publication. The securities described in the Investment Research may not be eligible for sale in all jurisdictions or to certain categories of investors. This research is issued in Australia by Edison Aus and any access to it, is intended only for "wholesale clients" within the meaning of the Australian Corporations Act. The Investment Research is distributed in the United States by Edison US to major US institutional investors only. 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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. 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). 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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

245 Park Avenue, 39th Floor

10167, New York

US

Sydney +61 (0)2 9258 1161

Level 25, Aurora Place

88 Phillip St, 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

245 Park Avenue, 39th Floor

10167, New York

US

Sydney +61 (0)2 9258 1161

Level 25, Aurora Place

88 Phillip St, Sydney

NSW 2000, Australia

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DISCLAIMER
Copyright 2017 Edison Investment Research Limited. All rights reserved. This report has been commissioned by Acal and prepared and issued by Edison for publication globally. All information used in the publication of this report has been compiled from publicly available sources that are believed to be reliable, however we do not guarantee the accuracy or completeness of this report. Opinions contained in this report represent those of the research department of Edison at the time of publication. The securities described in the Investment Research may not be eligible for sale in all jurisdictions or to certain categories of investors. This research is issued in Australia by Edison Aus and any access to it, is intended only for "wholesale clients" within the meaning of the Australian Corporations Act. The Investment Research is distributed in the United States by Edison US to major US institutional investors only. Edison US is registered as an investment adviser with the Securities and Exchange Commission. Edison US relies upon the "publishers' exclusion" from the definition of investment adviser under Section 202(a)(11) of the Investment Advisers Act of 1940 and corresponding state securities laws. As such, Edison does not offer or provide personalised advice. We publish information about companies in which we believe our readers may be interested and this information reflects our sincere opinions. The information that we provide or that is derived from our website is not intended to be, and should not be construed in any manner whatsoever as, personalised advice. Also, our website and the information provided by us should not be construed by any subscriber or prospective subscriber as Edison’s solicitation to effect, or attempt to effect, any transaction in a security. The research in this document is intended for New Zealand resident professional financial advisers or brokers (for use in their roles as financial advisers or brokers) and habitual investors who are “wholesale clients” for the purpose of the Financial Advisers Act 2008 (FAA) (as described in sections 5(c) (1)(a), (b) and (c) of the FAA). This is not a solicitation or inducement to buy, sell, subscribe, or underwrite any securities mentioned or in the topic of this document. This document is provided for information purposes only and should not be construed as an offer or solicitation for investment in any securities mentioned or in the topic of this document. A marketing communication under FCA Rules, this document has not been prepared in accordance with the legal requirements designed to promote the independence of investment research and is not subject to any prohibition on dealing ahead of the dissemination of investment research. Edison has a restrictive policy relating to personal dealing. Edison Group does not conduct any investment business and, accordingly, does not itself hold any positions in the securities mentioned in this report. However, the respective directors, officers, employees and contractors of Edison may have a position in any or related securities mentioned in this report. Edison or its affiliates may perform services or solicit business from any of the companies mentioned in this report. The value of securities mentioned in this report can fall as well as rise and are subject to large and sudden swings. In addition it may be difficult or not possible to buy, sell or obtain accurate information about the value of securities mentioned in this report. Past performance is not necessarily a guide to future performance. Forward-looking information or statements in this report contain information that is based on assumptions, forecasts of future results, estimates of amounts not yet determinable, and therefore involve known and unknown risks, uncertainties and other factors which may cause the actual results, performance or achievements of their subject matter to be materially different from current expectations. For the purpose of the FAA, the content of this report is of a general nature, is intended as a source of general information only and is not intended to constitute a recommendation or opinion in relation to acquiring or disposing (including refraining from acquiring or disposing) of securities. The distribution of this document is not a “personalised service” and, to the extent that it contains any financial advice, is intended only as a “class service” provided by Edison within the meaning of the FAA (ie without taking into account the particular financial situation or goals of any person). As such, it should not be relied upon in making an investment decision. To the maximum extent permitted by law, Edison, its affiliates and contractors, and their respective directors, officers and employees will not be liable for any loss or damage arising as a result of reliance being placed on any of the information contained in this report and do not guarantee the returns on investments in the products discussed in this publication. FTSE International Limited (“FTSE”) © FTSE 2017. “FTSE®” is a trade mark of the London Stock Exchange Group companies and is used by FTSE International Limited under license. All rights in the FTSE indices and/or FTSE ratings vest in FTSE and/or its licensors. Neither FTSE nor its licensors accept any liability for any errors or omissions in the FTSE indices and/or FTSE ratings or underlying data. No further distribution of FTSE Data is permitted without FTSE’s express written consent.

Frankfurt +49 (0)69 78 8076 960

Schumannstrasse 34b

60325 Frankfurt

Germany

London +44 (0)20 3077 5700

280 High Holborn

London, WC1V 7EE

United Kingdom

New York +1 646 653 7026

245 Park Avenue, 39th Floor

10167, New York

US

Sydney +61 (0)2 9258 1161

Level 25, Aurora Place

88 Phillip St, 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

245 Park Avenue, 39th Floor

10167, New York

US

Sydney +61 (0)2 9258 1161

Level 25, Aurora Place

88 Phillip St, Sydney

NSW 2000, Australia

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