GFT — Update 15 November 2016

GFT — Update 15 November 2016

GFT

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GFT

Q3 organic growth remains robust at 12%

Q3 results

Software & comp services

15 November 2016

Price

€18.91

Market cap

€498m

Net debt (€m) at 30 September 2016

60.3

Shares in issue

26.3m

Free float

64%

Code

GFT

Primary exchange

Frankfurt (Xetra)

Secondary exchange

N/A

Share price performance

%

1m

3m

12m

Abs

9.7

(8.4)

(34.9)

Rel (local)

8.5

(8.2)

(34.8)

52-week high/low

€32.28

€16.39

Business description

GFT (legal name: GFT Technologies SE) is a global technology services business primarily focused on banks and insurance companies.

Next events

German Equity Forum

21-23 November

Q4 results

Early March 2017

Annual report

Late March 2017

Q1 results

May 2017

AGM

June 2017

Analysts

Richard Jeans

+44 (0)20 3077 5700

Dan Ridsdale

+44 (0)20 3077 5729

GFT is a research client of Edison Investment Research Limited

Q3 numbers were in line with expectations and management has maintained both its FY16 and long-term guidance. The backdrop remains broadly unchanged, with demand for IT projects (predominantly digitisation) in the European commercial banking sector outweighing weakness in the Anglo Saxon investment banking markets. A recovery in the latter is largely dependent on improvements in the financial performance of investment banks. However, we note the investment banking sector needs to invest in IT to remain competitive. Given that the outlook is sustained, we believe the shares are attractive on c 13x our FY18 earnings.

Year
end

Revenue (€m)

EBT*
(€m)

EPS*
(c)

Adj EPS**
(c)

P/E
(x)

Yield
(%)

12/14

279.2

25.4

75.8

96.5

19.6

1.3

12/15

373.5

32.5

96.2

119.5

15.8

1.6

12/16e

420.0

33.0

92.9

115.2

12.2

1.7

12/17e

460.0

39.4

105.1

127.1

14.9

1.9

Note: *Earnings before tax and EPS are statutory, after the amortisation of acquired intangibles and exceptional items. **Adjusted EPS is before amortisation and exceptionals.

Investment case: Scaling up, outsourcing benefits

GFT is diversifying geographically and broadening its stable customer base, and we estimate that two-thirds of its revenues are recurring. It benefits from high levels of IT spending and complex business requirements in the financial services industry. It also benefits from favourable outsourcing trends in banking and has significant near-shore centres in Spain, Brazil, Poland and Costa Rica.

Q3 results: Total group revenue up 15% in Q3

Q3 organic revenue grew 12% (FX impact was negligible). Revenue from Adesis Netlife, acquired in June 2015, and Habber Tec, acquired in April 2016, took total Q3 revenue to €106.3m. Q3 adjusted EBITDA rose by 8% to €12.5m, reflecting a 43bp decline in the margin. For the nine-month period, organic revenue grew 12%, or 14% at constant currencies, to €300.6m. Acquisitions took the total nine-month revenue to €314.3m, up 16%. Net debt slipped from €70.3m to €60.3m over the period, and we note the group typically generates its strongest cash flows in Q4. Outstanding acquisition liabilities of €16.1m take adjusted net debt to €76.4m.

Forecasts: Revenues and margins maintained

We have maintained our forecasts, but have eased the tax charge in FY17 from 31% to 30% and from 30% to 29% in FY18. This pushes EPS up by 1% in each of FY17 and FY18. We continue to forecast end FY16 with net debt of €22.7m.

Valuation: Attractive if it can sustain the growth

The stock trades on 1.2x FY17e EV/sales and 10.0x EV/EBITDA, broadly in line with its larger global IT services peers, which typically trade in the ranges of c 1.5-2.1x revenues and c 8.4-11.3x EBITDA. Our DCF model (which assumes a WACC of 9%, 10% pa revenue growth to 2020 and 12% long-term EBITDA margins) values the shares at €27.37, c 45% above the current share price.

Q3 results review

Q3 constant currency organic revenue growth decelerated to a still respectable 12%, down from 19% in Q2 but above the 8% growth achieved in Q1. The backdrop remains unchanged as strong demand for digitisation projects in the commercial banking sector in Europe outweighed weak Anglo Saxon investment banking markets. Commercial banks require modern digital infrastructure to reduce costs, improve sales strategies and boost customer loyalty. However, investment banks have been deferring IT projects mainly because of poor financial results across the sector and, to a lesser degree, due to the uncertainties created from the Brexit vote. The deferrals have resulted in lower utilisation on the Anglo Saxon markets (c 50% in the US and c 67% in the UK); this continues to weigh on margins, as shown in the Americas and UK segment in Exhibit 1.

Exhibit 1: Revenue and EBITDA per segment

Revenue

Growth

EBITDA

EBITDA margins

€m

9M15

9M16

Organic

M&A

FX

Total

9M15

9M16

Change

9M15

9M16

Americas and UK

157.11

166.24

5.9%

3.8%

(3.9%)

5.8%

15.72

11.34

(28.0%)

10.0%

6.8%

Continental Europe

114.37

145.62

23.5%

4.3%

0.0%

27.8%

17.89

22.10

24.0%

15.6%

15.2%

Others

2.42

N/A

N/A

N/A

N/A

(2.31)

0.56

N/A

N/A

23.1%

GFT

271.48

314.28

14.0%

4.0%

(2.1%)

15.9%

31.30

34.00

9.0%

11.5%

10.8%

Source: GFT

UK revenue fell 12% in 9M16 to represent 34% of total group revenues. While this is down from 45% a year earlier, the UK remains the group’s largest market. Around half of UK revenue is billed in sterling, with the balance in euros; UK revenue is closely linked to US revenues as customers’ budgets can move freely. Revenue in Spain jumped 77% to €56.7m, bolstered by a project for Banco Sabadell, which involved the integration of TSB in the UK. Consequently, 60-70% of revenues from Spain are non-recurring, which means this performance is not likely to be sustained. US revenues rose 51% to €41.6m, although this number includes c €10m from two customers that switched their billing from the UK. Revenues from Germany rose by 29% to €39.6m, which is entirely organic. Brazil grew 136% to €12.3m, including the acquisition of Haber Tec.

Exhibit 2: Revenue by country (9M15)

Exhibit 3: Revenue by country (9M15)

Source: GFT

Source: GFT

Exhibit 2: Revenue by country (9M15)

Source: GFT

Exhibit 3: Revenue by country (9M15)

Source: GFT

58% of group costs are denominated in euros along with 64% of revenues, sterling represents 17% of costs and 21% of revenues and the US dollar represents 7% of costs and 8% of revenues. Deutsche Bank generates c 40% of revenues but is expected to grow at a slower pace than the rest of the group.

Group headcount rose from 4,493 to 4,749 over the quarter, driven by growth in the group’s offshore/nearshore facilities in Spain, Brazil and Poland. GFT is also expanding its nearshore facility in Costa Rica, where it recently opened new offices, to service the North American markets. The decision to expand the Costa Rican nearshoring operation was due to the similar cultures and the availability of candidates with strong technical expertise.

Management does not expect the US election result to affect the group. There is some concern about exporting services to the group’s nearshore centres outside of the US. However, we note these are highly skilled jobs that might not be possible to fill in the US.

The operating cash outflow (after interest and tax) was €2.0m in the first nine months of 2016, compared with a €20.6m inflow in the corresponding period in 2015. Therefore, the group generated €12.8m of operating cash flow in Q3, compared with €22.5m in the corresponding period. However, we note a project involving the implementation of an Avaloq core banking system for BHF-Bank has grown c 60% to €16m, of which €10-11m remains outstanding. The project has been put on hold due to a dispute between the software vendor and the bank and GFT has recently billed the software vendor for the outstanding amount.

Exhibit 3: Quarterly analysis

Quarterly analysis

2015

2016

€000s

Q1

Q2

Q3

Q4

FY

Q1

Q2

Q3

Q4e

FYe

GFT (continuing)

88,510

90,250

89,910

98,370

367,040

94,086

105,669

100,848

97,601

398,204

Adesis Netlife

 

 

2,810

3,610

6,420

3,300

3,750

3,090

6,406

16,546

WG Systems (Habber Tec)

 

 

 

 

 

 

1,220

2,320

1,710

5,250

Other/misc

0

0

0

50

50

0

0

0

0

0

Total revenue

88,519

90,243

92,720

102,030

373,510

97,386

110,639

106,258

105,717

420,000

Cost of materials

(16,229)

(14,968)

(15,329)

(15,963)

(62,489)

(14,614)

(15,963)

(15,080)

(17,343)

(63,000)

Gross profit

72,290

75,274

77,391

86,067

311,021

82,772

94,676

91,178

88,374

357,000

Op costs before depreciation

(62,735)

(65,029)

(65,886)

(71,853)

(265,504)

(72,554)

(83,285)

(78,717)

(75,874)

(310,430)

Adjusted EBITDA

9,555

10,245

11,504

14,213

45,517

10,218

11,391

12,461

12,500

46,570

Depreciation

(1,222)

(1,237)

(1,280)

(1,415)

(5,154)

(1,356)

(1,405)

(1,538)

(1,301)

(5,600)

Adjusted operating profit

8,333

9,008

10,224

12,798

40,363

8,862

9,986

10,923

11,199

40,970

Operating Margin

9.4%

10.0%

11.0%

12.5%

10.8%

9.1%

9.0%

10.3%

10.6%

9.8%

Net interest

(313)

(423)

(338)

(630)

(1,703)

(344)

(503)

(440)

(813)

(2,100)

Edison profit before tax (norm)

8,020

8,585

9,886

12,169

38,660

8,518

9,483

10,483

10,386

38,870

Associates

(4)

(5)

(14)

(8)

(30)

(15)

22

4

(12)

0

Amortisation of acquired intangibles*

(1,136)

(1,227)

(1,355)

(2,387)

(6,105)

(1,467)

(1,522)

(1,380)

(1,500)

(5,869)

Exceptionals - other

0

0

0

0

0

0

(421)

0

0

0

Profit before tax (FRS 3)

6,881

7,353

8,517

9,774

32,525

7,036

7,563

9,107

8,874

33,001

Source: GFT (actuals), Edison Investment Research (forecasts)

Outlook and guidance

GFT expects increasing demand for solutions to digitize business processes will lead to further growth in the Continental Europe segment. The company anticipates that investments in projects to implement regulatory requirements will continue despite Brexit. However, growth in earnings is slightly lower than hoped due to the devaluation of sterling and lower utilization in the Anglo-Saxon markets.

We have maintained our forecasts, although we have eased the tax charge from FY17. We forecast a higher tax charge in Q416 and beyond as tax benefits in Spain have been exhausted. Hence our forecasted tax rates are 26% in FY16 (unchanged), 30% in FY17 (from 31%) and 29% in FY18 (from 30%). This pushes EPS up by 1% in each of FY17 and FY18. The Q4 mix is likely to differ slightly from Exhibit 1, as Adesis Netlife has been performing below expectations, while Habber Tec is beating them. Nevertheless, our forecasts are for Q4 continuing revenues (including Adesis Netlife) of €104m, which is unchanged sequentially over Q2 and €2m above the corresponding period in 2015.

Exhibit 4: Presentation of GFT and Edison definitions, based on GFT guidance

Actual

Actual

GFT guidance

Edison numbers

€000s

FY14

FY15

FY16e

FY16e

Group revenue

279.235

373.507

420.000

420.000

Profit measures

GFT

38.268

48.857

Holding company

(4.081)

(3.370)

(A) Operating profit (GFT definition)

34.187

45.486

46.570

46.570

Add back: exceptional items, misc

1.040

0.000

0.000

0.000

Add back: associates

0.012

0.030

0.000

0.000

Adjusted EBITDA (Edison definition)

35.239

45.516

46.570

46.570

(E) Normal depreciation

(3.365)

(5.154)

(5.600)

(5.600)

Adjusted operating profit (Edison definition)

31.874

40.362

40.970

40.970

Total net interest

(1.015)

(1.703)

(2.100)

(2.100)

Profit before tax norm (Edison definition)

30.859

38.659

38.870

38.870

(B) Earn-out accruals

0.309

0.000

0.000

0.000

(C) PPA order book (amort of acquired)

(1.675)

(0.931)

(0.070)

(0.070)

(F) PPA amortisation (amort of acquired)

(3.036)

(5.174)

(5.800)

(5.800)

Exceptional items, misc

(1.040)

0.000

0.000

0.000

Associates

(0.012)

(0.030)

0.000

0.000

EBT (GFT definition)

25.406

32.524

33.000

33.000

(D) EBITDA (GFT definition) (A+B+C)

32.821

44.555

46.500

46.500

EBIT (GFT definition) (D+E+F)

26.421

34.227

35.100

35.100

Source: GFT, Edison Investment Research

Financial position

GFT receives a disproportionate level of cash in Q4, as some of its largest customers utilise their budgets at the end of the financial year. Q1 and Q2 typically have weaker cash flows.

The remaining acquisition liabilities relate to Sempla and Habber Tec. The group limits its net debt to around 2x EBITDA, which leaves cash acquisition headroom of c €31m on our estimates.

Exhibit 5: Financial position

€m

31-Dec-14

31-Mar-15

30-Jun-15

30-Sep-15

31-Dec-15

31-Mar-16

30-Jun-16

03-Sep-16

Cash

(38.1)

(32.5)

(31.2)

(56.8)

(47.0)

(42.9)

(42.2)

(44.1)

Financial debt

80.2

94.3

96.3

112.0

83.4

91.9

112.6

104.4

Net (cash)/debt

42.0

61.8

65.1

55.2

36.5

49.0

70.3

60.3

Investments

0.0

0.0

0.0

0.0

0.0

0.0

0.0

0.0

Outstanding acquisition liabilities

12.8

12.8

12.9

13.0

13.9

14.1

15.9

16.1

Adjusted net (cash)/debt

54.9

74.6

78.0

68.2

50.4

63.1

86.2

76.4

Source: GFT accounts. Note: *Includes earn-outs and deferred payments. Excludes €1m deferred payment for emagine.

Peer analysis

GFT trades at a modest premium to its peers in terms of EV/EBITDA and P/E, which reflects the group’s attractive offshore/nearshore business model and strong revenue growth rates.

Exhibit 6: Peers

Share price

Market cap

EV/sales (x)

EV/EBITDA (x)

PE (x)

local curr

local curr (m)

Year 1

Year 2

Year 1

Year 2

Year 1

Year 2

GFT Technologies

18.91

498

1.26

1.15

11.4

10.0

16.4

14.9

1) European-based IT services / financial sector consulting

REPLY (€m)

109.3

1,022

1.27

1.16

9.3

8.2

15.8

13.8

Cap Gemini (€)

72.64

12,507

1.18

1.15

8.96

8.4

13.7

12.6

Devoteam (€m)

49.51

406

0.67

0.62

8.1

7.0

20.8

16.3

First Derivatives (£m)

2073

512

3.77

3.40

19.8

17.7

36.4

33.4

Indra Sistemas (€m)

9.721

1,596

0.84

0.82

9.97

8.1

19.3

12.3

2) US-based IT services / financial sector consulting

Accenture ($m)

117.25

76,130

2.0

1.9

12.1

11.3

19.8

18.0

Cognizant ($m)

53.95

32,732

2.0

1.9

9.3

9.1

15.9

14.7

Luxoft ($m)

54.85

1,821

2.0

1.8

11.9

10.5

19.3

16.0

EPAM ($m)

61.95

3,162

2.1

2.0

12.5

11.6

21.0

17.9

3) Indian-based IT services / financial sector consulting

HCL Technologies (Rs m)

770.75

1,087,340

2.2

2.1

10.1

9.5

13.4

12.1

Tata Consultancy Svcs (Rs m)

2121.3

4,179,869

3.1

2.9

11.6

10.8

16.0

14.8

Wipro (Rs m)

447.95

1,088,844

1.6

1.5

7.8

7.5

12.9

11.7

Medians excluding GFT

2.0

1.9

10.0

9.3

17.7

14.7

Source: GFT calculated by Edison Investment Research, others Bloomberg data. Note: Priced as at 15 November 2016.

Exhibit 7: Financial summary

€'000s

2013

2014

2015

2016e

2017e

2018e

Year end 31 December

IFRS

IFRS

IFRS

IFRS

IFRS

IFRS

PROFIT & LOSS

Revenue

 

264,285

279,235

373,507

420,000

460,000

506,000

Cost of Materials

(108,559)

(52,194)

(62,486)

(63,000)

(69,000)

(75,900)

Gross Profit

155,726

227,042

311,021

357,000

391,000

430,100

EBITDA

 

22,256

32,822

44,556

46,501

52,900

59,202

Adjusted EBITDA

 

20,845

35,240

45,517

46,570

52,900

59,202

EBIT

 

17,760

26,421

34,228

35,101

41,120

46,824

Adjusted Operating Profit

 

18,599

31,875

40,363

40,970

46,920

52,624

Amortisation of acquired intangibles

(2,250)

(4,711)

(6,105)

(5,869)

(5,800)

(5,800)

Exceptionals

1,420

(731)

0

0

0

0

Associates

(9)

(12)

(30)

0

0

0

Operating Profit

17,760

26,421

34,228

35,101

41,120

46,824

Net Interest

(241)

(1,015)

(1,703)

(2,100)

(1,700)

(1,450)

Profit Before Tax (norm)

 

18,358

30,860

38,660

38,870

45,220

51,174

Earnings Before Tax

 

17,519

25,406

32,525

33,001

39,420

45,374

Tax

(3,890)

(6,819)

(5,979)

(8,551)

(11,757)

(13,305)

Net inc from discontinued ops

0

1,368

(1,209)

0

0

0

Profit After Tax (norm)

14,468

25,409

31,472

30,319

33,463

37,869

Profit After Tax (FRS 3)

13,628

19,955

25,336

24,450

27,663

32,069

Average Number of Shares Outstanding (m)

26.3

26.3

26.3

26.3

26.3

26.3

EPS - normalised (c)

 

55.0

96.5

119.5

115.2

127.1

143.8

EPS - normalised & fully diluted (c)

 

55.0

96.5

119.5

115.2

127.1

143.8

EPS - FRS 3 (c)

 

51.8

75.8

96.2

92.9

105.1

121.8

Dividend per share (c)

25.00

25.00

30.00

33.00

36.00

40.00

Gross Margin (%)

58.9

81.3

83.3

85.0

85.0

85.0

EBITDA Margin (%)

8.4

11.8

11.9

11.1

11.5

11.7

Adjusted Operating Margin (%)

7.0

11.4

10.8

9.8

10.2

10.4

BALANCE SHEET

Fixed Assets

 

80,761

148,732

173,451

180,451

177,871

173,083

Intangible Assets

68,210

125,852

139,480

143,680

137,880

132,080

Tangible Assets

7,666

17,780

26,488

29,288

32,508

33,520

Other

4,885

5,100

7,484

7,484

7,484

7,484

Current Assets

 

125,616

152,921

153,357

178,897

212,512

245,593

Stocks

0

0

0

0

0

0

Debtors

73,010

108,216

94,828

106,632

116,787

128,466

Cash

47,149

38,129

46,978

60,714

84,173

105,576

Current Liabilities

 

(70,769)

(140,614)

(90,628)

(102,659)

(113,010)

(124,914)

Creditors

(70,037)

(94,582)

(90,017)

(102,048)

(112,399)

(124,303)

Short term borrowings

(732)

(46,032)

(611)

(611)

(611)

(611)

Long Term Liabilities

 

(48,460)

(60,628)

(111,733)

(111,733)

(111,733)

(111,733)

Long term borrowings

(27,006)

(34,131)

(82,817)

(82,817)

(82,817)

(82,817)

Other long term liabilities

(21,453)

(26,497)

(28,916)

(28,916)

(28,916)

(28,916)

Net Assets

 

87,148

100,412

124,447

144,957

165,640

182,030

CASH FLOW

Operating Cash Flow

 

9,531

23,357

54,019

46,570

52,900

59,202

Net Interest

384

231

109

(2,100)

(1,700)

(1,450)

Tax

(2,091)

(8,152)

(11,424)

(7,774)

(10,853)

(12,282)

Capex

(5,484)

(9,680)

(14,456)

(8,400)

(9,200)

(7,590)

Acquisitions/disposals

(15,254)

(58,472)

(16,760)

(6,662)

1,000

(7,000)

Shares issued

587

(1,494)

(620)

0

0

0

Dividends

(3,949)

(6,584)

(6,584)

(7,898)

(8,688)

(9,477)

Net Cash Flow

(16,276)

(60,794)

4,284

13,736

23,459

21,403

Opening net debt/(cash)

 

(35,912)

(19,410)

42,034

36,449

22,713

(746)

Other

(225)

(650)

1,301

0

0

0

Closing net debt/(cash)

 

(19,410)

42,034

36,449

22,713

(746)

(22,149)

Source: Edison Investment Research (forecasts). Note: *€1m receipt in FY17 is a deferred payment relating to the disposal of emagine. The €7m payment in FY18 relates to the acquisition of GFT Italy

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Copyright 2016 Edison Investment Research Limited. All rights reserved. This report has been commissioned by GFT Technologies 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

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Germany

London +44 (0)20 3077 5700

280 High Holborn

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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 GFT Technologies 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

Foresight Autonomous Holdings — Update 15 November 2016

Foresight Autonomous Holdings

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