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Pointer Telocation — New Microsoft AI collaboration

Pointer Telocation — New Microsoft AI collaboration

Pointer Telocation has announced a new collaboration with Microsoft Israel to create an AI-powered driver monitoring and prediction tool. We see the potential for this to give Pointer an important edge in the driver monitoring space in which it is already competing strongly. Q118 results showed a recovery in product sales from Q4 (up 29% q-o-q), but only 5.6% y-o-y growth arising from low demand for non-LTE enabled devices and Latin American (Latam) currency declines. Nevertheless, the group continued to deliver on local currency service revenues, margin gains and cash flow generation but, with Latam currencies continuing to weaken in Q2, despite expected boosts to sales later in the year, we have trimmed our current year EBITDA and EPS forecasts by 10% and 22%, respectively giving rise to a peer-based valuation of $19.1/NIS68.3, and DCF value of $18.1/share or NIS64.6/share.

Analyst avatar placeholder

Written by

Pointer Telocation

New Microsoft AI collaboration

Q118 results and Microsoft collaboration

Tech hardware & equipment

29 May 2018

Price*

$14.25/NIS48.89

Market cap

$115m/NIS394m

US$/NIS3.59

*Priced at 29 May 2018

Net debt ($m) at 31 March 2018

1.1

Shares in issue

8.1m

Free float

81.5%

Code

PNTR

Primary exchange

NASDAQ

Secondary exchange

TASE

Share price performance

%

1m

3m

12m

Abs

(1.0)

(7.5)

30.7

Rel (local)

(5.0)

(16.8)

17.1

52-week high/low

US$19.6

US$10.3

Business description

Pointer Telocation is a leading provider of mobile resource management services and products to the automotive and insurance industries. Key services are asset tracking, fleet management and monitoring goods in transit/IoT. Its main markets are Israel, Brazil, Argentina, Mexico and Europe.

Next events

AGM

14 June 2018

Q218 results

August 2018

Analysts

Anna Bossong

+44 (0)20 3077 5737

Richard Jeans

+44 (0)20 3077 5700

Pointer Telocation has announced a new collaboration with Microsoft Israel to create an AI-powered driver monitoring and prediction tool. We see the potential for this to give Pointer an important edge in the driver monitoring space in which it is already competing strongly. Q118 results showed a recovery in product sales from Q4 (up 29% q-o-q), but only 5.6% y-o-y growth arising from low demand for non-LTE enabled devices and Latin American (Latam) currency declines. Nevertheless, the group continued to deliver on local currency service revenues, margin gains and cash flow generation but, with Latam currencies continuing to weaken in Q2, despite expected boosts to sales later in the year, we have trimmed our current year EBITDA and EPS forecasts by 10% and 22%, respectively giving rise to a peer-based valuation of $19.1/NIS68.3, and DCF value of $18.1/share or NIS64.6/share.

Year end

Revenue ($m)

PBT*
($m)

EPS*
(c)

DPS
(c)

EV/EBITDA
(x)

P/E
(x)

Yield
(%)

12/16

64.4

6.6

81

0.0

11.9

17.6

N/A

12/17

78.2

10.4

116

0.0

8.4

12.3

N/A

12/18e

83.6

10.4

113

0.0

8.1

12.6

N/A

12/19e

94.0

12.4

133

33.4

7.0

10.7

2.3

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

Strategy on track for margin gains

Pointer Telocation’s strategy continued to yield results in Q118, with the normalised EBITDA margin expanding 60bp from Q417 to 17.6%. We see this as putting the group on track to achieve its target of a 20%+ EBITDA margin in 2020 (as part of its overall three- to five-year target of a 25% EBITDA margin). Management is actively pursuing acquisition targets principally in the US and other existing markets, which should further feed into expanded margins via the group’s high operating leverage.

LTE a short-term problem but long-term opportunity

Since Q417, US product sales have been affected by Pointer not having launched its own LTE-enabled devices (this should happen in Q418) The situation should improve substantially once this happens and Pointer can take advantage of US customers refitting their fleets with these devices. The planned launch of a new telematics unit for the Indian passenger transit market around Q318, which is compliant with new regulations, is also likely to feed into higher H2 sales.

Valuation: Share price weakness exposes good value

Pointer’s shares have lost c 30% since their high of $19.55 at the start of the year. We believe they represent good value at present, trading at a c 28% discount to the sector on current year EV/EBITDA, despite having a high degree of exposure to fast-growth segments of the market such as connected car, IoT, driver safety and emerging markets. Based on an average of FY1 and FY2 valuations derived from parity EV/EBITDA multiples, we value the shares at of $19.1/NIS68.3. Our DCF valuation of $18.1/share or NIS64.6/share still indicates 27% upside potential.

Microsoft AI cooperation: Ready to be monetised

The addition of AI will bring driver monitoring to the next level: in recent days Microsoft Israel and Pointer’s management have announced a new cooperation agreement to work together to create an AI system for modelling and understanding driver behaviour. Pointer Telocation’s management is looking to base the system on the large volume of data already collected and being collected on an ongoing basis by the group’s devices currently deployed across multiple fleets of commercial and passenger vehicles. This, together with environmental data such as speed limits, weather conditions and road types, will be used to analyse driver behaviour and create a highly enriched predictive system which should have the ability to forecast which drivers are most likely to have accidents based on their driving history. It will also be used real-time to provide drivers with tips to improve their safety.

The collaboration brings together Pointer’s expertise in fleets, driver behaviour and data collection via its IoT and telocation systems and Microsoft Azure’s cloud-based AI system.

Pointer already has the market and clients ready to adopt this technology: we believe that Pointer is in a strong position to develop this technology rapidly, based on the existing data at hand and its already high level of expertise in driver monitoring. Perhaps more importantly we expect Pointer to be able to rapidly monetise this new technology already being a major player in driver monitoring and assessment systems, with the service an important component of its commercial fleet offering. Last year the group extended its market reach into the ride-hail market with the winning (together with Mobileye) of a driver monitoring contract for ride-hail firms in New York. The ability to offer cutting-edge technology to passenger fleets – where safety is a key potential service differentiator – should provide a strong edge to help gain new contracts.

Pointer is undoubtedly not alone in work to incorporate AI into its driver monitoring systems, but to the extent that the use of AI enriched systems is likely to make current systems obsolete, we see this step likely to lead to expanding market share in the short term and as a key to maintaining growth in the longer term.

First-quarter results summary

Q118 affected by FX weakness and impending LTE switch

EBITDA and revenues reported in the first quarter were slightly below expectation at 23.8% and 23.0%, respectively, of our full-year expectations. The key influences on earnings were as follows:

Sluggish product revenues arising from the planned switch over from 3G to LTE (4G) in the US. The upcoming switch to LTE/4G networks in the US is leading fleets to either buy directly from vendors selling LTE-enabled telematics devices or delay purchases of new equipment until LTE devices are available from their preferred vendor (as in the case with Pointer, which does not expect to have its LTE-enabled devices ready until Q418). Concerns that 3G systems may be switched off in the next year or two by carriers in the US is driving a strong downturn in demand for existing 3G enabled equipment, that otherwise would still be saleable at a discount to LTE equipment. This follows speculation that carriers are preparing to switch off their 3G networks – with AT&T preventing new 3G devices from being certified as long ago as June last year.

Currency weakness affected dollar revenues. Q1 saw considerable weakness in Latam currencies, particularly the Argentinian peso. This had a negative effect on dollar-denominated service ARPUs, which fell 3% y-o-y in the first quarter. Over the first quarter the Argentinian and Mexican currencies weakened 7.5% and 7.3% (with the Brazilian real remaining flat).

Exhibit 1: Quarterly results summary

$m

Q118

Q117

Change y-o-y (%)

Q417

2018e

2017

Change y-o-y (%)

Product revenues

7.06

6.68

5.6

5.46

28.30

26.18

8.1

Change (%)

5.6

21.3

N/A

(6.5)

8.1

14.9

N/A

Services revenues

13.82

12.35

11.9

13.39

55.30

51.97

6.4

Change (%)

11.9

32.5

N/A

15.8

6.4

25.0

N/A

Revenue

20.88

19.03

9.7

18.85

83.60

78.16

7.0

Change (%)

9.7

28.4

N/A

8.4

7.0

21.4

N/A

Cost of products

(4.22)

(4.28)

(1.2)

(3.24)

(17.60)

(16.07)

9.5

Gross profit products

2.84

2.41

17.8

2.22

10.70

10.11

5.8

Gross margin products (%)

40.2

36.0

N/A

40.6

37.8

38.6

N/A

Cost of services

(5.71)

(5.36)

6.5

(5.62)

(22.86)

(21.91)

4.3

Gross profit services

8.11

6.99

16.1

7.77

32.44

30.06

7.9

Gross margin services (%)

58.7

56.6

N/A

58.0

58.7

57.8

N/A

Cost of sales

(9.94)

(9.64)

3.1

(8.86)

(40.46)

(37.99)

6.5

Gross profit

10.95

9.39

16.6

9.99

43.14

40.17

7.4

Gross margin (%)

52.4

49.4

N/A

53.0

51.6

51.4

N/A

Research and development

(1.24)

(0.97)

27.5

(1.03)

(4.78)

(4.05)

18.0

Selling and marketing

(3.87)

(3.31)

17.0

(3.68)

(15.55)

(14.04)

10.8

General and administrative

(2.89)

(2.75)

5.0

(2.81)

(11.94)

(11.28)

5.9

EBITDA (norm./continuing operations)

3.67

3.22

14.2

3.20

14.40

13.89

3.7

EBITDA margin

17.6%

16.9%

N/A

17.0%

17.2%

17.8%

N/A

Operating profit normalised

3.10

2.48

25.0

2.55

11.25

11.43

(1.6)

Operating margin normalised

14.8%

13.0%

N/A

13.5%

13.5%

14.6%

N/A

One-off items

(0.26)

0.00

N/A

(0.03)

(0.36)

(0.03)

1,031.3

Operating profit

2.57

2.26

13.8

2.31

10.10

10.31

(2.1)

Operating margin (%)

12.30

11.85

N/A

12.27

12.08

13.19

N/A

Net finance costs

(0.33)

(0.16)

108.8

(0.30)

(0.81)

(1.00)

(19.7)

Other expenses

(0.02)

0.00

N/A

(0.01)

0.00

(0.01)

(100.0)

PBT normalised

2.75

2.32

18.5

2.25

10.45

10.42

0.2

PBT

2.22

2.10

5.8

2.01

9.29

9.30

(0.1)

Reported tax

(0.45)

(0.53)

(15.1)

9.10

(2.04)

7.22

(128.3)

Profit after tax reported

1.77

1.57

12.9

11.11

7.25

16.52

(56.1)

Profit after tax normalised (continuing ops)

2.30

1.79

28.4

3.13

9.40

9.43

(0.3)

EPS - basic ($)

0.22

0.20

10.8

1.38

0.90

2.07

(56.5)

EPS - diluted ($)

0.21

0.20

9.3

1.35

0.87

2.03

(57.0)

EPS - basic normalised ($)

0.29

0.23

26.0

0.39

1.17

1.18

(1.1)

EPS - diluted normalised ($)

0.28

0.22

24.3

0.38

1.13

1.16

(2.3)

Source: Pointer Telocation, Edison Investment Research

Despite FX headwinds service revenues still grew 12% on 15% y-o-y subscriber growth Management reported overall positive conditions across its markets, including South Africa and this was reflected in strong service revenue growth. A 15% y-o-y increase in subscribers compared with Q117 helped Q118 service revenues grow 11.7% y-o-y despite the FX headwinds. With no acquisitions during the quarter, net subscriber additions of 7,000 in the first quarter (down 22.2% y-o-y) represented lower annualised growth of 11%.

Gross margins on products were affected by weaker sales growth. The gross margin on product sales fell from 40.6% in Q417 to 40.2% in the first quarter. The gross margin on services expanded from 58.0% in Q4 to 58.7% in Q1 helped by 12% y-o-y sales growth and ongoing operating leverage (new customers having much higher margins than existing due to their low marginal fixed costs).

Opex affected by rising R&D and S&M costs, and one-time expensed acquisition costs. Management undertook an increase in R&D (up 28% y-o-y) and marketing expenses (up 17% y-o-y) in Q118 to pursue growth objectives, the results of which should be seen in product releases and increased sales in Q3 and Q4, as discussed above. The group also incurred one-time acquisition costs of $262,000, which arose from undertaking due diligence on a target, but pulling out of the deal when conditions proposed rendered it unattractive.

Exhibit 2: Key data

$m

Q118

Q117

Change y-o-y (%)

Q417

2018e

2017

Change y-o-y (%)

MRM subscribers (including CC* subs)

265,000

231,000

14.7

258,000

292,600

258,000

13.4

Net additions

7,000

9,000

(22.2)

9,000

34,600

36,000

(3.9)

of which subscriber acquisitions

0

0

N/A

2,400

0

2,400

(100.0)

Avg. service rev. per MRM subscriber ($/mth)

17.6

18.2

(3.0)

17.6

16.7

18.0

(7.2)

Cash flow/balance sheet summary

Operating cash flow

2.32

1.51

54.1

0.00

12.61

9.70

30.0

Cash conversion (operating CF to op. profit, %)

90.3

66.7

N/A

0.0

124.9

94.1

N/A

Cash flows from investment

(0.93)

(0.75)

24.1

0.00

(4.79)

(3.15)

52.1

Purchases of property, plant and equipment

(0.96)

(0.77)

24.7

0.00

(4.99)

(3.03)

64.7

Cash & cash equivalents

7.77

5.75

35.0

7.38

10.37

7.38

40.6

Net debt/(cash)($m)

1.08

8.06

(86.6)

2.74

(4.27)

2.74

(255.9)

Net debt/(cash)/equity (%)

1.65

17.20

N/A

4.32

(5.97)

4.32

N/A

Current ratio

1.44

1.32

N/A

1.44

1.63

1.44

N/A

Quick ratio

1.16

1.05

N/A

1.13

1.31

1.13

N/A

Source: Pointer Telocation, Edison Investment Research. Note: *Connected car.

Outlook

Various headwinds, and most particularly ongoing currency weakness in Latam markets, have led us to cut our earnings forecasts for 2018 and 2019 as per Exhibit 3. We believe that FX weakness and the lack of LTE-enabled products in the US will continue to exert a negative influence in Q2, but depending on the ongoing currency direction, the trend should improve from late Q3 and through Q418 as a number of factors come together to improve revenues and earnings, as discussed below.

Exhibit 3: Pointer Telocation change in earnings forecasts

$m

Revenues ($m)

EBITDA* ($m)

EPS (c)**

 

Old

New

% chg.

Old

New

% chg.

Old

New

% chg.

2017

N/A

78.2

N/A

N/A

13.9

N/A

N/A

116.0

N/A

2018e

87.7

83.6

-4.7

16.0

14.4

-10.0

144.5

113.3

-21.6

2019e

98.6

94.0

-4.7

18.5

16.6

-10.1

169.2

133.4

-21.1

Source: Edison Investment Research. Note: *Normalised, continuing operations. **Diluted normalised.

Currency weakness will almost certainly continue to affect US dollar denominated earnings in Q2 and likely Q3, also. As mentioned above both the Argentinean and Mexican pesos fell 9% against the dollar over the course of the first quarter. Since the end of Q118 they have fallen a further 20% and 9%, respectively with the Brazilian real adding its own 9% decline after having firmed 1% in the first quarter. We expect this weakness to feed through into an 8.5% y-o-y decline in service ARPUs (average revenues per user) in Q218 to $16.7 after the 3% y-o-y decline to $17.6 in Q1. Quarter to date (to 22 May 2018), the Argentinean, Brazilian and Mexican currencies are down 27%, 8% and 2% vs Q217 while the NIS is up 0.8%. As a result we have cut our forecast of Q2 annualised revenue growth to 4.9% after 9.7% in Q1. The impact on EBITDA should be diminished by the positive impact of FX weakness on local expenses.

Exhibit 4: Average quarterly FX rates to US$ rebased to 100 at Q316

Source: Bloomberg

We expect the revenue situation to improve later in the year, however. Sales of Pointer’s internet of things tracking device, CelloTrack Nano should grow more rapidly from Q318 as deliveries should begin under the recurring $2-3m per year contract announced in 2017. The group plans to launch LTE enabled devices in Q3 which should increase US sales, with complete migration of the products to an updated platform by Q4.

We expect sales of LTE/4G-enabled telematics products to also recover significantly after the planned launch of Pointer’s product in late Q3/early Q418, with the potential double-positive of increased sales of replacement products to fleet managers looking to future-proof their fleets for the eventual switch-off of 3G systems.

In India, the introduction of regulation AIS140 under the government’s Intelligent Transportation System programme will require the installation of new telematics units in all passenger transit vehicles. These will transmit data to the government and to the service provider. Pointer, which has operations in India and already supplies telematics to the passenger transit segment, is hoping to be the one of the first companies to bring the product to market and to start generating sales from Q3.

We also expect the group to make a substantial increase in sales of connected car products this year. Sales from the contracts with car importers in Israel as well as Nissan India commenced in India in Q317 and Israel in Q417. We estimate that they contributed $0.1-0.3m to 2017 revenues. We forecast this to increase to $1.1m this year based on a full year of operation in both cases.

We also introduced a normalised tax rate of 10.0% for FY18 and FY19 to bring it into line with the Q118 figure of 10.1%. This has a negative impact on the adjusted EPS forecast, but otherwise has no impact on the company’s underlying value.

We believe that further acquisitions are likely this year. The group is pursuing several acquisition targets, particularly in North America as well as in other existing markets, including India. In addition, management is hoping to secure major contracts in areas such as the ride-hail market, which could provide a further boost to margins and profits.

Valuation

Peer valuation

We have updated our peer-based valuation for Pointer Telocation to include the downward revision in our earnings forecasts and note that there have been increases in sector multiples since our last update. Based on the application of an average of the FY1 and FY2 valuations derived from the application of the peer EV/EBTIDA multiples to Pointer’s EBITDA and net debt data, we calculate the fair value of the shares at $19.1 (NIS68.3) down from a previous $20.8/share (NIS71.8/share).

Exhibit 5: Peer valuation

Main focus

Share price (LC)

Market cap ($m)

Sales FY1 ($m)

EV/Sales FY1 (x)

EV/EBITDA FY1 (x)

EV/EBITDA FY2 (x)

P/E
FY1 (x)

P/E
FY2 (x)

Last div

yield (%)

Pointer Telocation

Israel, Latam, SA, US

13.8

111

84

1.3

7.8

6.7

12.1

10.3

0.0

CalAmp

NAM

21.0

752

388

1.9

12.5

10.7

16.6

14.6

0.0

ID Systems

NAM

5.9

104

54

1.8

67.3

16.6

69.4

16.4

0.0

Ituran Location and Control

Isr,,Brzl,Arg

31.3

655

262

2.4

8.1

7.4

14.5

12.7

3.0

MiX Telematics

SA

242.5

463

1,839

3.1

10.8

9.5

813.6

650.0

N/A

ORBCOMM

US/Europe

9.6

751

296

3.3

17.0

11.8

(40.0)

162.2

0.0

Sierra Wireless

NAM

17.6

631

793

0.8

10.8

8.2

20.1

14.0

0.0

Trakm8 Holdings

UK

0.9

43

32

1.1

7.0

5.7

12.6

9.1

0.0

QUALCOMM

NAM

57.4

85,088

22,007

3.1

10.7

8.1

17.9

16.4

3.8

Quartix Holdings

UK

3.8

242

25

6.9

23.2

26.4

30.4

34.5

1.8

Telit

IoT, Global

2.0

263

411

0.7

8.1

6.2

0.4

0.2

0.0

Median

463

296

1.9

10.8

8.2

16.6

14.6

0.0

Average/Median MCAP<$300m

173

336

1.6

12.3

8.6

21.5

13.3

0.0%

Pointer premium/(discount) to peers

(30.8)

(27.9)

(17.4)

(26.8)

(29.3)

N/A

Source: Bloomberg, Edison Investment Research. Note: Priced at 15 May 2018.

DCF valuation

Our DCF valuation has fallen 13% to $18.1/share (NIS64.6) per share following the rolling forward of the model and the reduction in our forecasts. We note that the above-mentioned peer valuation of $19.4/share can be achieved with an increase in the TV growth assumption from 2.5% to 3.2% or a reduction in the WACC from the current 10.1% to 9.7%.

Exhibit 6: Pointer Telocation DCF sensitivity

Terminal growth rate

20.797

1.50%

2.00%

2.50%

3.00%

3.50%

WACC

13.0%

12.3

12.5

12.8

13.1

13.5

12.0%

13.6

13.9

14.3

14.7

15.2

11.0%

15.1

15.6

16.1

16.6

17.3

10.1%

16.8

17.4

18.1

18.8

19.7

9.0%

19.5

20.3

21.3

22.4

23.8

8.0%

22.7

23.9

25.3

27.1

29.2

7.0%

27.0

28.9

31.2

34.0

37.7

6.0%

33.3

36.4

40.4

45.6

53.0

5.0%

43.3

48.9

56.9

68.8

88.6

4.0%

61.1

74.0

95.4

138.2

266.8

Source: Edison Investment Research

Exhibit 7: Financial summary

$m

2015

2016

2017

2018e

2019e

2020e

31 December

US GAAP

US GAAP

US GAAP

US GAAP

US GAAP

US GAAP

INCOME STATEMENT

Revenue

 

 

60.57

64.35

78.16

83.60

93.97

105.74

Cost of Sales

(31.31)

(32.58)

(37.99)

(40.46)

(45.39)

(50.91)

Gross Profit

29.25

31.78

40.17

43.14

48.58

54.84

EBITDA

 

 

8.80

9.76

13.89

14.40

16.61

19.17

Normalised operating profit

 

 

7.10

7.64

11.43

11.25

12.87

14.80

Amortisation of acquired intangibles

(0.54)

(0.47)

(0.46)

(0.41)

(0.36)

(0.33)

Exceptionals

(0.91)

(0.60)

(0.28)

(0.36)

0.00

0.00

Share-based payments (incl. in COGS)

(0.31)

(0.32)

(0.38)

(0.39)

(0.40)

(0.40)

Reported operating profit

5.34

6.25

10.31

10.10

12.11

14.07

Net Interest

(0.73)

(1.05)

(1.00)

(0.81)

(0.51)

(0.34)

Joint ventures & associates (post tax)/other

(0.01)

(0.01)

(0.01)

0.00

0.00

0.00

Exceptionals

0.00

0.00

0.00

0.00

0.00

0.00

Profit before tax (norm)

 

 

6.36

6.59

10.42

10.45

12.37

14.47

Profit before tax (reported)

 

 

4.60

5.19

9.30

9.29

11.61

13.73

Reported tax

(1.13)

(1.85)

7.22

(2.04)

(2.55)

(3.02)

Profit after tax (norm)

5.23

6.46

9.43

9.40

11.13

13.02

Profit after tax (reported)

3.47

3.35

16.52

7.25

9.05

10.71

Minority interests

0.08

(0.02)

0.00

0.00

0.00

0.00

Discontinued operations

0.33

0.15

0.00

0.00

0.00

0.00

Net income (normalised)

5.30

6.44

9.43

9.40

11.13

13.02

Net income (reported)

3.87

3.48

16.52

7.25

9.05

10.71

Basic average number of shares outstanding (m)

7.73

7.82

8.00

8.06

8.07

8.07

EPS – basic normalised ($)

 

 

0.69

0.82

1.18

1.17

1.38

1.61

EPS – diluted normalised ($)

 

 

0.67

0.81

1.16

1.13

1.33

1.55

EPS – basic reported ($)

 

 

0.50

0.44

2.07

0.90

1.12

1.33

Dividend ($)

0.00

0.00

0.00

0.00

0.33

0.39

Revenue growth (%)

N/A

6.25

21.45

6.96

12.41

12.53

Gross margin (%)

48.30

49.38

51.40

51.60

51.69

51.86

EBITDA margin (%)

14.52

15.16

17.78

17.23

17.68

18.13

Normalised operating margin (%)

11.71

11.87

14.63

13.46

13.70

14.00

BALANCE SHEET

Fixed assets

 

 

68.78

51.61

64.01

64.72

65.08

65.16

Intangible assets

31.83

40.29

42.95

42.74

42.58

42.25

Tangible assets

3.28

5.61

5.85

7.52

8.95

10.46

Investments & other

33.67

5.71

15.22

14.47

13.56

12.46

Current assets

 

 

34.66

25.28

30.45

34.91

46.39

57.46

Stocks

4.70

5.24

6.55

6.98

7.83

8.78

Debtors

9.49

11.46

13.66

14.61

16.42

18.48

Cash & cash equivalents

7.25

6.07

7.38

10.37

19.10

27.06

Other

13.21

2.50

2.87

2.95

3.04

3.13

Current liabilities

 

 

(30.45)

(19.83)

(21.20)

(21.36)

(23.48)

(25.88)

Creditors

(9.82)

(13.96)

(15.21)

(16.33)

(18.33)

(20.59)

Short-term borrowings

(4.82)

(4.84)

(5.10)

(4.08)

(4.08)

(4.08)

Other

(15.81)

(1.04)

(0.89)

(0.95)

(1.07)

(1.21)

Long-term liabilities

 

 

(17.95)

(14.36)

(9.85)

(7.05)

(7.26)

(7.48)

Long-term borrowings

(8.39)

(10.18)

(5.02)

(2.02)

(2.02)

(2.02)

Other long-term liabilities

(9.57)

(4.18)

(4.83)

(5.03)

(5.24)

(5.46)

Net assets

 

 

55.04

42.69

63.42

71.22

80.74

89.26

Minority interests

1.07

(0.16)

(0.28)

(0.28)

(0.28)

(0.28)

Shareholders' equity

 

 

56.10

42.53

63.13

70.94

80.45

88.97

CASH FLOW

Operating cash flow before WC and tax

8.80

10.23

14.36

14.81

16.98

19.50

Working capital

0.77

0.41

(2.14)

(0.28)

(0.63)

(0.70)

Exceptional & other

3.12

(0.43)

(0.71)

(0.77)

(0.36)

(0.33)

Tax

0.18

(0.12)

(0.80)

(1.14)

(1.37)

(1.60)

Net operating cash flow

 

 

12.87

10.08

10.71

12.61

14.61

16.86

Capex

(3.62)

(4.13)

(3.03)

(4.99)

(5.62)

(6.38)

Acquisitions/disposals

0.00

(8.65)

(0.23)

(0.20)

(0.20)

0.00

Net interest

(0.89)

(1.05)

(1.00)

(0.81)

(0.51)

(0.34)

Equity financing

0.02

0.10

0.39

0.00

0.00

0.00

Dividends

0.00

0.00

0.00

0.00

0.00

(2.69)

Other, incl.PPE sales

1.26

1.11

(0.10)

0.40

0.45

0.51

Net cash flow

9.63

(2.54)

6.74

7.01

8.73

7.96

Opening net debt/(cash)

 

 

11.90

5.95

8.95

2.74

(4.27)

(13.01)

FX

(0.71)

(0.46)

(0.53)

0.00

0.00

0.00

Other non-cash movements

(2.97)

0.00

0.00

0.00

0.00

0.00

Closing net debt/(cash)

 

 

5.95

8.95

2.74

(4.27)

(13.01)

(20.97)

Source: Company data, Edison Investment Research

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

EDISON ISRAEL DISCLAIMER

Disclosure regarding the scheme to enhance the awareness of investors to public companies in the technology and biomed sectors that are listed on the Tel Aviv Stock Exchange and participate in the scheme (hereinafter respectively “the Scheme”, “TASE”, “Participant” and/or “Participants”). Edison Investment Research (Israel) Ltd, the Israeli subsidiary of Edison Investment Research Ltd (hereinafter respectively “Edison Israel” and “Edison”), has entered into an agreement with the TASE for the purpose of providing research analysis (hereinafter “the Agreement”), regarding the Participants and according to the Scheme (hereinafter “the Analysis” or “Analyses”). The Analysis will be distributed and published on the TASE website (Maya), Israel Security Authority (hereinafter “the ISA”) website (Magna), and through various other distribution channels. The Analysis for each participant will be published at least four times a year, after publication of quarterly or annual financial reports, and shall be updated as necessary after publication of an immediate report with respect to the occurrence of a material event regarding a Participant. As set forth in the Agreement, Edison Israel is entitled to fees for providing its investment research services. The fees shall be paid by the Participants directly to the TASE, and TASE shall pay the fees directly to Edison. Subject to the terms and principals of the Agreement, the Annual fees that Edison Israel shall be entitled to for each Participant shall be in the range of $35,000-50,000. As set forth in the Agreement and subject to its terms, the Analyses shall include a description of the Participant and its business activities, which shall inter alia relate to matters such as: shareholders; management; products; relevant intellectual property; the business environment in which the Participant operates; the Participant's standing in such an environment including current and forecasted trends; a description of past and current financial positions of the Participant; and a forecast regarding future developments in and of such a position and any other matter which in the professional view of the Edison (as defined below) should be addressed in a research report (of the nature published) and which may affect the decision of a reasonable investor contemplating an investment in the Participant's securities. To the extent it is relevant, the Analysis shall include a schedule of scientific analysis of an expert in the field of life sciences. An "equity research abstract" shall accompany each Equity Research Report, describing the main points addressed. The full scope reports and reports where the investment case has materially changed will include a thorough analysis and discussion. Short update notes, where the investment case has not materially changed, will include a summary valuation discussion. The Agreement with TASE regarding the participation of Edison in the scheme for the research analysis of public companies does not and shall not constitute an approval or consent on the part of TASE or the ISA or any other exchange on which securities of the Company are listed, or any other securities’ regulatory authority which regulates the issuance of securities by the Company to the content of the Report or to the recommendation contained therein. A summary of this report is also published in the Hebrew language. In the event of any contradiction, inconsistency, discrepancy, ambiguity or variance between the English Report and the Hebrew summary of said Report, the English version shall prevail; and a note to this effect shall appear in any Hebrew summary of a Report. Edison is regulated by the Financial Conduct Authority. According to Article 12.3.2, Chapter 12 of the Conduct of Business Sourcebook, Edison, which produces or disseminates non-independent research, must ensure that it: 1) is clearly identified as a marketing communication; and 2) contains a clear and prominent statement that (or, in the case of an oral recommendation, to the effect that) it: a) has not been prepared in accordance with legal requirements designed to promote the independence of investment research; and b) is not subject to any prohibition on dealing ahead of the dissemination of investment research. The financial promotion rules apply to non-independent research as though it were a marketing communication.

EDISON INVESTMENT RESEARCH DISCLAIMER

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

Tel Aviv +44 (0)20 3734 1007
Medinat Hayehudim 60

Herzilya Pituach,46766

Israel

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

Tel Aviv +44 (0)20 3734 1007
Medinat Hayehudim 60

Herzilya Pituach,46766

Israel

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

EDISON ISRAEL DISCLAIMER

Disclosure regarding the scheme to enhance the awareness of investors to public companies in the technology and biomed sectors that are listed on the Tel Aviv Stock Exchange and participate in the scheme (hereinafter respectively “the Scheme”, “TASE”, “Participant” and/or “Participants”). Edison Investment Research (Israel) Ltd, the Israeli subsidiary of Edison Investment Research Ltd (hereinafter respectively “Edison Israel” and “Edison”), has entered into an agreement with the TASE for the purpose of providing research analysis (hereinafter “the Agreement”), regarding the Participants and according to the Scheme (hereinafter “the Analysis” or “Analyses”). The Analysis will be distributed and published on the TASE website (Maya), Israel Security Authority (hereinafter “the ISA”) website (Magna), and through various other distribution channels. The Analysis for each participant will be published at least four times a year, after publication of quarterly or annual financial reports, and shall be updated as necessary after publication of an immediate report with respect to the occurrence of a material event regarding a Participant. As set forth in the Agreement, Edison Israel is entitled to fees for providing its investment research services. The fees shall be paid by the Participants directly to the TASE, and TASE shall pay the fees directly to Edison. Subject to the terms and principals of the Agreement, the Annual fees that Edison Israel shall be entitled to for each Participant shall be in the range of $35,000-50,000. As set forth in the Agreement and subject to its terms, the Analyses shall include a description of the Participant and its business activities, which shall inter alia relate to matters such as: shareholders; management; products; relevant intellectual property; the business environment in which the Participant operates; the Participant's standing in such an environment including current and forecasted trends; a description of past and current financial positions of the Participant; and a forecast regarding future developments in and of such a position and any other matter which in the professional view of the Edison (as defined below) should be addressed in a research report (of the nature published) and which may affect the decision of a reasonable investor contemplating an investment in the Participant's securities. To the extent it is relevant, the Analysis shall include a schedule of scientific analysis of an expert in the field of life sciences. An "equity research abstract" shall accompany each Equity Research Report, describing the main points addressed. The full scope reports and reports where the investment case has materially changed will include a thorough analysis and discussion. Short update notes, where the investment case has not materially changed, will include a summary valuation discussion. The Agreement with TASE regarding the participation of Edison in the scheme for the research analysis of public companies does not and shall not constitute an approval or consent on the part of TASE or the ISA or any other exchange on which securities of the Company are listed, or any other securities’ regulatory authority which regulates the issuance of securities by the Company to the content of the Report or to the recommendation contained therein. A summary of this report is also published in the Hebrew language. In the event of any contradiction, inconsistency, discrepancy, ambiguity or variance between the English Report and the Hebrew summary of said Report, the English version shall prevail; and a note to this effect shall appear in any Hebrew summary of a Report. Edison is regulated by the Financial Conduct Authority. According to Article 12.3.2, Chapter 12 of the Conduct of Business Sourcebook, Edison, which produces or disseminates non-independent research, must ensure that it: 1) is clearly identified as a marketing communication; and 2) contains a clear and prominent statement that (or, in the case of an oral recommendation, to the effect that) it: a) has not been prepared in accordance with legal requirements designed to promote the independence of investment research; and b) is not subject to any prohibition on dealing ahead of the dissemination of investment research. The financial promotion rules apply to non-independent research as though it were a marketing communication.

EDISON INVESTMENT RESEARCH DISCLAIMER

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

Tel Aviv +44 (0)20 3734 1007
Medinat Hayehudim 60

Herzilya Pituach,46766

Israel

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

Tel Aviv +44 (0)20 3734 1007
Medinat Hayehudim 60

Herzilya Pituach,46766

Israel

Pluristem Therapeutics — FDA gives two programs the green light with IND

In April 2018, Pluristem announced that the FDA had given two pipeline programs IND clearance: PLX-PAD for femoral neck fracture (FNF) healing and PLX-R18 for acute radiation syndrome (ARS). The company plans to initiate the Phase III trial investigating PLX-PAD for FNF healing later this year. IND approval of the PLX-R18 program allows for potential use of the product in the event of radiological emergencies for investigational purposes, which could provide in-human data.

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