DeA Capital — Update 18 November 2016

DeA Capital (MI: DEA)

Last close As at 27/03/2024

1.32

0.01 (0.61%)

Market capitalisation

352m

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Research: Financials

DeA Capital — Update 18 November 2016

DeA Capital

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Written by

Financials

DeA Capital

AUM growing again

Q316 results

Financial services

18 November 2016

Price

€1.09

Market cap

€285m

Holding co net financial position at end September 2016 – see page 6 (€m)

83.7

Shares in issue (ex-treasury)

261.5m

Free float

27%

Code

DEA

Primary exchange

BIT

Secondary exchange

N/A

Share price performance

%

1m

3m

12m

Abs

2.4

9.1

(25.1)

Rel (local)

3.1

9.2

(0.9)

52-week high/low

€1.48

€1.00

Business description

DeA Capital, a De Agostini group company, is one of Italy’s leading players in alternative investments and asset management. At end September 2016 it had an investment portfolio of c €450m and assets under management of c €10.8bn.

Next events

FY16 results

March 2017

Analysts

Julian Roberts

+44 (0)20 3077 5748

Andrew Mitchell

+44 (0)20 3681 2500

DeA Capital is a research client of Edison Investment Research Limited

DeA Capital (DeA) has a strategic focus on its alternative asset management business, which is among the largest players in Italy, and also holds a portfolio of fund and direct investments. Assets under management in both the private equity and real estate asset management subsidiaries grew in Q3, reflecting new fund launches and a more stable appetite for real estate funds. The shares trade at a wide discount which, along with the diverse portfolio and the prospect of cash inflows as private equity fund investments mature, should provide a measure of protection against any rise in market volatility.

Year
end

Ave. AUM (€bn)

Fees from AAM (€m)*

NAV/share
(€)

DPS
(€)

P/NAV
(x)

Yield
(%)

12/14

10.5

68.5

2.41

0.00

0.45

0.0

12/15

10.2

64.7

2.07

0.30

0.53

27.5

12/16e

9.6

61.9

2.05

0.12

0.53

11.0

12/17e

10.1

65.1

2.02

0.12

0.54

11.0

Note: NAV is stated NAV, including goodwill. AUM is ex-SPC. *Before interco eliminations.

AUM and NAV strengthen

Since the end of 2015 DeA’s AUM has increased from €9.5bn to €9.9bn (+4%) or €10.8bn (+13%) including the SPC (debt recovery) business acquired in July. While Q3 asset management fees were down 10% y-o-y, still showing the impact of earlier outflows from property funds, they have been on a rising trend from Q216. NAV growth in the third quarter from €1.98 to €2.03 mainly resulted from retained profits and changes in the fair value of the IDeA I and IDeA EESS funds.

Potential for continuing net realisations

The net financial position of DeA’s holding company strengthened further to €84m at the end of September compared with €58m at the year end. Contributing to this were €11m of net distributions from private equity funds. Management indicates that, subject to market conditions, around €150m of further realisations could arise in the next three to four years, given the relative maturity of some of the private equity fund holdings. These could potentially make a significant sum available for reinvestment in further new fund launches, co-investments or distribution to shareholders, even after meeting outstanding investment commitments.

Valuation: Discount remains wide

Our sum-of-the-parts valuation arrives at a very similar figure to the stated NAV (€2.01 per share versus €1.94 previously). The variable parts of this are the remaining share in Migros (due to its share price and the exchange rate) and the P/E valuation applied to the alternative asset management business (see page 5). The c 45% discount to NAV appears conservative given the growth potential in DeA’s alternative asset management business, the diversity of its investment portfolio and the potential to realise investments at around NAV in the medium term. It could therefore be attractive to investors seeking a blend of Italian and international private equity exposure.

Company description: Alternative asset manager

Within a fragmented market, DeA Capital is among the largest alternative asset management companies in Italy, with c €10.8bn of assets under management, and has a portfolio of direct and fund investments valued at nearly €280m at end Q3. The majority shareholder, with 58.3% of the shares, is the De Agostini Group, a family-owned group with other investments in the publishing, media, games and services sectors. DeA’s net asset value at 30 September was €530.8m, or €2.03 per share, comprising the net assets of the alternative asset management business (32%), investments in private equity and real estate funds (36%), direct investments (16%), with the net financial position accounting for almost all the balance (16%).

The asset management business comprises DeA’s subsidiaries IDeA FIMIT (real estate fund management, 64.3% owned), IDeA Capital Funds (private equity funds, 100% owned) and SPC (debt recovery, 66.32% owned). The IRE business, formerly a subsidiary, is now 45% owned and provides property management and brokerage services. Development of alternative asset management has been the company’s strategic focus in recent years, a shift from its previous profile as a more traditional investment company, with significant holdings in Turkish retailer Migros (now 6.9% owned) and the French healthcare company Générale de Santé (sold).

Exhibits 1 and 2 show the breakdown of DeA’s NAV at 30 September and the evolution of its assets under management since 2013. The AUM decline seen at IDeA FIMIT since H115 reversed in Q316, reflecting a stabilisation of investor interest in real estate, with continued growth at IDeA Capital Funds reflecting successful launches of new funds such as IDeA Corporate Credit Recovery I (CCR I) in the first half and the third closing of the IDeA Taste of Italy private equity fund in Q3. The effects on fee income are examined in the next section. To make the like-for-like trend clear, Exhibit 2 excludes the newly acquired stake in SPC Credit Management from the Q316 figure. SPC has €0.9bn under management, taking DeA’s total to €10.8bn, the highest level in its history.

Exhibit 1: DeA Capital NAV analysis

Exhibit 2: Asset management AUM

Source: DeA Capital. Note: As at 30 September 2016.

Source: DeA Capital

Exhibit 1: DeA Capital NAV analysis

Source: DeA Capital. Note: As at 30 September 2016.

Exhibit 2: Asset management AUM

Source: DeA Capital

Q316 report

Beginning with alternative asset management activities, we show the progression of fee income by half year in Exhibit 3 (the hatched area indicates potential Q4 fee income on a similar run rate to Q3) and a comparison of fee income in the first nine months of 2016 and 2015.

Fee income follows similar trends to assets under management and has contracted since 2013, although both Q2 and Q3 of 2016 have shown growth. Q3 was up 7.8% quarter-on-quarter to €15.9m (Q216: €14.8m), and up 9.0% on Q116 (€14.6m). As with AUM, this has been driven mainly by IDeA Capital Funds. Comparing the first nine months of 2016 to the same period in 2015, overall fee income is down 9% from €50m to €45.4m. However, while IDeA FIMIT fee income fell 19%, IDeA Capital Funds fee income rose 18% (Exhibit 4).

Exhibit 3: Asset management fees

Exhibit 4: Share of fee income

Source: DeA Capital, Edison Investment Research

Source: DeA Capital, Edison Investment Research

Exhibit 3: Asset management fees

Source: DeA Capital, Edison Investment Research

Exhibit 4: Share of fee income

Source: DeA Capital, Edison Investment Research

As can been seen in Exhibit 5, the differences in fee income trends between IDeA FIMIT and IDeA Capital Funds are due in part to fee margins as well as AUM trends. The recent margin strength at IDeA Capital Funds reflects the launches of new funds with a tighter focus that command higher fees.

At IDeA FIMIT the gentle downward trend in fee margin is a result of changes in mix and the introduction of fee caps on some funds because of the difficult market faced by real estate funds. At the half-year, management expected that IDeA FIMIT’s 30 June AUM would mark the low point and that €8bn would be reached by year-end. To have reached that level by the end of Q3 is positive and revenue from the growth in AUM will come through fully in 2017. Reflecting the trends in AUM and fee margins, IDeA Capital Funds’ share of fee income has grown from 21% to 38% since 2013.

Exhibit 5: Fee margin

Exhibit 6: Share of fee income

Source: DeA Capital, Edison Investment Research

Source: DeA Capital, Edison Investment Research

Exhibit 5: Fee margin

Source: DeA Capital, Edison Investment Research

Exhibit 6: Share of fee income

Source: DeA Capital, Edison Investment Research

Exhibit 7 is a summary of the profit and loss account for the alternative asset management segment. Income from services relates to IRE/IRE Advisory, which is now accounted for as an associate following the sale of 55% of the business in June. It is hoped that third-party sales at IRE will improve with its increased independence from DeA, and the strength of the Q3 performance is encouraging.

The decrease in other expenses on a nine-month or Q3 comparison is partly a result of the impairments in 2015 relating to accrued performance fees and the carrying values of IDeA FIMIT and IDeA Capital Funds. This limited the y-o-y reduction in pre-tax profit, while a lower tax charge and minority interests in 2016 meant that net income was up 53% in the nine months to end September 2016 versus the equivalent period in 2015, and almost doubled from Q315 to Q316.

Exhibit 7: Alternative asset management P&L analysis

€000s unless stated, periods to end September

9M15

9M16

Q315

Q316

Average AUM (€bn)

FIMIT

8.79

7.94

8.80

7.91

Cap. Funds

1.56

1.79

1.63

1.91

Fees/average AUM (bp)

FIMIT

56

51

56

50

Cap. Funds

116

120

129

127

P&L

FIMIT fees

37,138

30,260

12,363

9,860

Cap Funds fees

12,830

15,109

5,245

6,089

Total fee income

49,968

45,369

17,608

15,949

Income/(loss) from equity investments

(126)

500

0

547

Other investment income/expense

1,761

1,257

929

(10)

Income from services

9,295

8,100

723

737

Other expenses

(43,266)

(39,109)

(11,658)

(10,562)

Financial income & expense

5

47

(1)

(17)

PBT

17,637

16,164

7,601

6,644

Tax

(9,251)

(5,012)

(5,295)

(2,245)

Profit/(loss) for the period

8,386

11,152

2,306

4,399

Minority

(1,864)

(1,160)

(403)

(657)

Attributable profit/(loss) for the period

6,521

9,992

1,902

3,742

Source: DeA Capital, Edison Investment Research

An analysis of net asset value changes is shown in Exhibit 8. NAV has increased in the quarter and since the year end after adjusting for the 12c dividend paid in May. The holding company’s net financial position saw a marked increase, up 43% from €58m to €84m in nine months (adjusted for the €31.6m dividend paid in May). Contributing to this was the part-sale of IRE which, together with a pre-sale dividend, generated over €9m. The IRE sale also accounts for the reduction in other assets compared with the year end, partly offset in Q3 by the investment in SPC. Changes in the value of the stake in Migros since 30 June are due to a rise of 11.9% in its share price, combined with 4.7% decline in the value of the Turkish lira against the euro.

Exhibit 8: Net asset value analysis

€m

FY15

H116

Q316

% change vs FY15

% of total

Private equity investments

Kenan (Migros)

76.3

74.1

75.3

-1%

14

Private equity/real estate funds

194.1

191.8

192.4

-1%

36

Sigla & other

11.7

11.7

11.7

0%

2

Total

282.1

277.6

279.4

-1%

53

Alternative asset management

IDeA FIMIT SGR

121.7

121.2

123.4

1%

23

IDeA Capital Funds SGR

39.7

36.7

38.7

-3%

7

IRE and SPC

11.3

4.7

5.9

-48%

1

Total

172.7

162.6

168.0

-3%

32

Investment portfolio

454.8

440.2

447.4

-2%

84

Other

2.2

1.6

-0.3

-114%

0

Net financial position

58.4

78.2

83.7

43%

16

Net asset value

515.4

520.0

530.8

1%

100

NAV per share

1.95

1.99

2.03

Source: DeA Capital. Note: FY15 figures adjusted for a dividend of 12c per share (€31.6m) paid in May 2016.

During the quarter DeA acquired a 66.3% stake in SPC Credit Management through its subsidiary DeA Capital Real Estate. SPC has operated for 15 years as a restructurer and outsourced manager of non-performing loans. It focuses on banking, leasing, consumer and commercial loans, mainly secured ones, and has €0.9bn under management. It contributed €0.2m to group net profit in the quarter.

Net distributions/calls from funds in the private equity segment of the portfolio were €11m for the first nine months of the year, €5.3m in Q3 and have generated further net reimbursements of €5.3m since the period end.

Since the end of Q3 DeA has invested further in IDeA Efficienza Energetica e Sviluppo Sostenibile (IDeA EESS), purchasing 15.1% of the fund for €5.35m, representing a c 20% discount to its NAV; other things being equal, this should give rise to a valuation uplift at the next reporting date. DeA now holds 30.4% of the EESS fund.

Financials

Exhibit 9 shows changes in our estimates since our last note published in October. We have assumed slightly higher average AUM following higher than expected growth in Q3. This could prove conservative depending on the balance of maturing funds and new fund launches, where DeA reports a healthy pipeline in development. Our assumption is for H116 fee margin levels to be maintained at both IDeA Capital Funds and IDeA FIMIT and this could also prove to be cautious as DeA is looking to achieve higher margins on new products. Combined with a good Q316 result, AUM growth feeds through to higher fee income and NAV. We have maintained our 2017 dividend forecast of 12c. A summary of our forecasts and the historical consolidated results are shown in Exhibit 14 at the end of this note.

Exhibit 9: Changes to estimates

Ave. AUM (€bn)

Fees from AAM* (€m)

NAV/Share (€)

Dividend (€)

Old

New

% chg.

Old

New

% chg.

Old

New

% chg.

Old

New

% chg.

2016e

9.6

9.6

0.5

59.5

61.9

4.1

1.99

2.05

2.6

0.12

0.12

0.0

2017e

10.0

10.1

0.7

62.7

65.1

3.8

1.95

2.02

6.3

0.12

0.12

0.0

Source: Edison Investment Research. Note: *Before intercompany eliminations.

Valuation

As in previous notes, we use a sum-of-the-parts approach to value DeA, similar to the company’s NAV analysis shown in Exhibit 8. In Exhibit 10 we further analyse the two parts of the Migros stake: DeA owns c 17.11% of Kenan Investments, which in turn owns 40.25% of Migros (giving DeA an interest of c 6.9%). Of the 40.25%, 30.5% is a direct shareholding and 9.75% is under a put/call option agreed with a Turkish conglomerate, Anadolu Holdings. The option is at a strike price of TRY26.0 plus 7.5% pa from 30 April 2015 for each share in Migros and is exercisable for six months from April 2017. We have valued the Migros stake using a share price of TRY17.67 and an exchange rate of TRY/€0.283 (as at 14 November).

Exhibit 10: Sum-of-the-parts valuation

€m except where stated

Value (€m)

Comment

Kenan 17.11% (Migros option value on 9.75% of share cap)

24.4

Anadolu bid

Kenan 17.11% (Migros 30.5% of share capital)

46.5

Share price (14 Nov 2016)

Sigla and other direct investments

11.7

From Q3 report - FV/net equity

Private equity/real estate funds

192.4

From Q3 report - FV/net equity

Direct and fund investments

275.0

IDeA FIMIT and IDeA Capital Funds

160.0

Average of peer 2016 and 2017 P/E multiples

IRE & SPC

5.9

From Q3 report - net equity

Other assets

-0.3

From Q3 report

Net financial position

83.7

From Q3 report

Group total

524.3

Shares outstanding (m)

261.5

Sum-of-the-parts per share (€)

2.01

Source: DeA Capital, Edison Investment Research

The other variable element of the valuation relates to the alternative asset management businesses. We value these using a multiple applied to net income after minority interests, taking consensus P/E multiples for a number of specialist and conventional asset managers in Europe and North America. Performance fees and one-off effects mean that the private equity managers have a wide range of FY16 multiples, from 6.2x to 26.1x. The average multiples across all categories are 14.7x 2016e earnings and 12.9x 2017e. Applied to our forecast earnings for those years, these give a range of €149m to €172m for DeA’s alternative asset management business. The average of these is €160m, modestly below the balance sheet value of €168m. The alternative asset management business is DeA’s strategic focus and accounts for around 30% of NAV, so it constitutes an important part of the valuation and the indicative peer multiple comparison is similar to the reported NAV figure.

Exhibit 11: Asset manager average consensus earnings and book multiples by category

Averages

2016 P/E (x)

2017 P/E (x)

P/BV (x)

Dividend yield (%)

Private equity

15.2

14.0

4.7

5.5

Specialist

12.8

10.5

3.7

8.0

Conventional

15.6

13.7

2.7

4.0

All

14.7

12.9

3.5

5.5

Source: Bloomberg, Edison Investment Research

The sum-of-the-parts valuation includes the holding company’s net financial position of €83.7m, which is derived from the group balance sheet as shown in Exhibit 12. The resulting sum-of-the parts value of €2.01 is similar to the stated NAV (€2.03) and above our previous valuation of €1.94.

Exhibit 12: Net financial position

€m  

FY 15

H116

Q316

Q-o-Q change

Cash & equivalents

123.5

84.1

106.1

22.1

Available-for-sale financial assets

7.5

5.2

4.2

(0.8)

Financial receivables

3.5

9.4

6.4

(2.6)

Non-current financial liabilities

0.0

0.0

(0.0)

(0.0)

Current financial liabilities

(0.7)

(0.2)

(0.4)

(0.2)

Consolidated net financial position

133.8

98.5

116.3

18.5

o/w Alternative Asset Management

40.4

19.2

22.7

3.5

o/w Private Equity Investments

3.4

1.1

9.9

8.8

o/w Holdings

90.0

78.2

83.7

6.2

Source: DeA Capital, Edison Investment Research

DeA continues to trade at a wider discount to NAV than the private equity fund sector, as represented by the LPX50 index of 50 leading listed private equity funds (see Exhibit 13). While both saw a narrowing of their discounts following the financial crisis, DeA’s discount has widened again in the last two years, perhaps reflecting concerns over the Italian economy and difficulties in its banking sector. There are concerns relating to the outcome of the Italian referendum on 4 December 2016 and efforts to stabilise weaker banks, but the current discount of nearly 45% builds in a significant cushion should there be negative surprises. The growth potential of the alternative asset management business is encouraging for the long term, while the relatively diverse and mature investments in private equity funds are likely to generate additional net distributions, strengthening the net financial position and making funds available for distributions to shareholders.

Exhibit 13: DeA and LPX50 discounts to NAV

Source: Bloomberg, Edison Investment Research

Exhibit 14: Financial summary

Year-end December (€000s)

2014

2015

2016e

2017e

PROFIT & LOSS

 

 

Alternative Asset Management fees

 

 

66,045

62,416

59,985

63,080

Income (loss) from equity investments

 

 

(786)

(539)

946

1,459

Other investment income/expense

 

 

(56,149)

72,464

9,996

8,424

Income from services

 

 

19,176

21,700

8,896

0

Other income

 

 

Revenue

 

 

28,286

156,041

79,823

72,963

Expenses

 

 

(87,957)

(128,514)

(57,342)

(52,678)

Net Interest

 

 

2,905

4,982

(1,223)

35

Profit Before Tax (norm)

 

 

(56,766)

32,509

21,258

20,320

Tax

 

 

1,720

6,452

(3,734)

(4,073)

Profit After Tax (norm)

 

 

(55,046)

38,961

17,523

16,247

Profit from discontinued operations

 

 

(887)

286

0

0

Profit after tax (inc. discontinued operations)

 

 

(55,933)

39,247

17,523

16,247

Minority interests

 

 

(1,668)

1,825

(330)

(6,377)

Net income (FRS 3)

 

 

(57,601)

41,072

17,193

9,870

Profit after tax breakdown

 

 

Private equity

 

 

(60,739)

78,322

(2,653)

7,387

Alternative asset management

 

 

9,464

(37,304)

15,306

14,061

Holdings/Eliminations

 

 

(4,658)

(1,771)

(3,188)

(5,200)

Total

 

 

(55,933)

39,247

9,465

16,247

Average Number of Shares Outstanding (m)

 

 

273.8

266.6

262.7

261.5

EPS – (FRS 3) (c)

 

 

(21.0)

15.4

6.5

3.8

Dividend per share (c)

0.0

0.0

12.0

12.0

Exceptional capital distribution per share (c)

0.0

30.0

0.0

0.0

 

 

BALANCE SHEET

 

 

Fixed Assets

 

 

786,141

558,086

561,516

562,460

Intangible Assets (inc. g'will)

 

 

229,711

167,134

159,966

153,780

Other assets

 

 

39,988

38,590

38,808

38,808

Investments

 

 

516,442

352,362

362,742

369,872

Current Assets

 

 

117,585

173,882

148,626

143,036

Debtors

 

 

50,711

25,261

14,291

14,291

Cash

 

 

55,583

123,468

112,826

107,236

Other

 

 

11,291

25,153

21,509

21,509

Current Liabilities

 

 

(36,193)

(31,294)

(19,125)

(19,125)

Creditors

 

 

(35,833)

(30,643)

(17,859)

(17,859)

Short term borrowings

 

 

(360)

(651)

(1,266)

(1,266)

Long Term Liabilities

 

 

(40,911)

(15,514)

(15,503)

(15,503)

Long term borrowings

 

 

(5,201)

0

(48)

(48)

Other long term liabilities

 

 

(35,710)

(15,514)

(15,455)

(15,455)

Net Assets

 

 

826,622

685,160

675,514

670,867

Minorities

 

 

(173,109)

(138,172)

(136,471)

(142,848)

Shareholders' equity

 

 

653,513

546,988

539,043

528,020

Year-end number of shares m

 

 

271.6

263.9

262.7

261.5

NAV per share

 

 

2.41

2.07

2.05

2.02

 

 

CASH FLOW

 

 

Operating Cash Flow

 

 

188,419

188,492

26,252

25,789

Acquisitions/disposals

 

 

(1,476)

70

(267)

0

Financing

 

 

(157,756)

(38,148)

4,900

0

Dividends

 

 

0

(82,432)

(33,492)

(31,380)

Other

 

 

Cash flow

 

 

29,187

67,982

(2,607)

(5,591)

Other items

 

 

0

(97)

(8,035)

0

Opening net debt/(cash)

 

 

163,220

(50,022)

(122,817)

(111,512)

Movement in debt

 

 

(184,055)

(4,910)

663

0

Closing net debt/(cash)

 

 

(50,022)

(122,817)

(111,512)

(105,922)

Source: DeA Capital, Edison Investment Research

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Copyright 2016 Edison Investment Research Limited. All rights reserved. This report has been commissioned by DeA Capital 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 2016. “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

Wellington +64 (0)48 948 555

Level 15, 171 Featherston St

Wellington 6011

New Zealand

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

Wellington +64 (0)48 948 555

Level 15, 171 Featherston St

Wellington 6011

New Zealand

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, Sydney and Wellington. 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 2016 Edison Investment Research Limited. All rights reserved. This report has been commissioned by DeA Capital 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 2016. “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

Wellington +64 (0)48 948 555

Level 15, 171 Featherston St

Wellington 6011

New Zealand

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

Wellington +64 (0)48 948 555

Level 15, 171 Featherston St

Wellington 6011

New Zealand

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