InVision

(CDAX, Software/IT)

CO M M E N T Published 07.02.2017 08:15 1

A n a l y s t

Fel ix El lmann fellmann@warburg-research.com

+49 40 309537-120

Value Indicators: EUR Share data: Description:

DCF: 70.37

Bloomberg: IVX GR

Reuters: IVXG

ISIN: DE0005859698

InVision is a leading supplier of software for WFM and for online training

Market Snapshot: EUR m Shareholders: Risk Profile (WRe): 2016e

Buy

EUR 70.00 (EUR 73.00)

Price EUR 35.59

Upside 96.7 %

Market cap: 79.5

No. of shares (m): 2.2

EV: 80.7

Freefloat MC: 22.7

Ø Trad. Vol. (30d): 26.71 th

Freefloat 28.5 %

InVision Holding GmbH 21.9 %

Peter Bollenbeck 17.0 %

Armand Zohari 17.0 %

Fidelity 4.3 %

Beta: 1.8

Price / Book: 7.3 x

Equity Ratio: 69 %

Net Fin. Debt / EBITDA: 0.1 x

Net Debt / EBITDA: 0.1 x

Significant increase in personnel envisaged

Stated Figures Q4/2016: Comment on Figures: in Mio. EUR Q4/16 Q4/16e Q4/15 yoy 2016 2016e 2015 yoy

Umsatz 3,1 3,4 3,5 -11,0% 12,4 12,7 12,7 -2,4%

EBIT 1,0 1,0 1,0 -0,5% 3,5 3,6 2,7 32,5%

Marge 31,1% 30,3% 27,9% 28,5% 28,3% 21,1%

� On February 7, InVision AG presented its figures for the year 2017 (prel.). In Q4, these were around 10% below expectations (sales) and are thus within the typical fluctuation range.

� In particular, the company succeeded in reducing project business in 2016 from EUR 2.2 million (2015) to an insignificant share in 2016 (EUR 1.1 million, -50%).

� The decisive factor is the significant increase in the number of employees planned for the coming years and the corresponding earnings prospects.

The core message of the presented figures was the information to increase the number of employees from currently 106 by 180 to 286 in four areas (1-4) by 2018. The choice of the timing is due to the fact that the management is now able to plan the sales processes in the key segments: In the past, the processes for customer acquisition and, in particular, the "implementation" of customers in the area of workforce management (1) have become very highly automated. Although the degree of automation is increased further, it has now reached a level where sales and customer satisfaction allow sales-employees to be monetised highly efficiently (flanked by statistical significance owing to a very high number of leads). The addressable target market in this segment is around EUR 300m per year. In the Call Center School (2), the delivery model was converted into an "a-la-carte" model (customers purchase what they need) in Q4 / 16. Here, too, statistics are available based on a simple sales and customer care process. The very high number of individual users (in each case very small) also allows a relatively precise planning of the efficiency of new sales employees. The addressable market is around EUR 400m a year. Both areas are characterised by an unprecedented number of leads even before the planned investment in marketing (3) is to be done. In addition, both offers are to be automated / developed further, so that the area of software development (4) will need further staff. In particular, the long-term impact of this capacity expansion should be substantial on the revenue side. At the same time, the risks resulting from the measurability of the employee success are manageable. Nevertheless, owing to the very significant structural change in the company, the already very high risk adjustment is once again clearly increased (beta from 1.6 to 1.8). The Invision share is continued to be rated with a "Buy" with a revised price target of EUR 70 (73).

Changes in Estimates: Comment on Changes: FY End: 31.12. in EUR m

2016e (old)

+ / - 2017e (old)

+ / - 2018e (old)

+ / -

Sales 12.7 -2.0 % 14.8 -1.4 % 18.8 47.9 %

EBIT 3.6 -2.0 % 4.2 -67.1 % 7.1 2.5 %

EPS 1.15 -2.6 % 1.66 -75.9 % 2.80 2.9 %

DPS 0.00 0.0 % 0.00 0.0 % 0.00 0.0 %

� For 2017 no sales effect is expected yet. 2017 is mainly characterized by strong personnel development and latencies in the training of employees as well as the fact that the existing organization is strongly challenged. Significantly higher costs greatly reduce the result. In 2018 an earnings level above the previous expectation is anticipated.

� In 2019 and beyond, earnings are increasing even more significantly on a higher sales basis

Rel. Performance vs CDAX:

1 month: -4.4 %

6 months: -23.3 %

Year to date: -2.5 %

Trailing 12 months: -42.3 %

Company events:

FY End: 31.12. in EUR m

CAGR (15-18e) 2012 2013 2014 2015 2016e 2017e 2018e

Sales 29.8 % 13.2 13.6 13.4 12.7 12.4 14.6 27.8

Change Sales yoy 6.8 % 2.5 % -1.1 % -5.2 % -2.4 % 17.7 % 90.4 %

Gross profit margin 97.4 % 97.6 % 98.2 % 97.1 % 98.0 % 98.0 % 98.5 %

EBITDA 36.8 % 1.2 2.1 4.5 3.2 4.2 2.0 8.2

Margin 8.8 % 15.2 % 33.6 % 25.2 % 33.5 % 13.5 % 29.5 %

EBIT 39.3 % 0.8 1.8 4.1 2.7 3.5 1.4 7.2

Margin 6.2 % 12.9 % 30.8 % 21.1 % 28.5 % 9.5 % 26.0 %

Net income 44.5 % 0.6 1.6 4.2 2.1 2.5 0.9 6.4

EPS 43.7 % 0.29 0.71 1.90 0.97 1.12 0.40 2.88

EPS adj. 43.2 % 0.31 0.79 1.94 0.98 1.12 0.40 2.88

DPS - 0.00 0.00 1.00 0.00 0.00 0.00 0.00

Dividend Yield n.a. n.a. 2.2 % n.a. n.a. n.a. n.a.

FCFPS 0.34 1.36 -1.48 -0.02 0.64 -0.34 1.33

FCF / Market cap 3.1 % 7.0 % -3.3 % 0.0 % 1.8 % -0.9 % 3.7 %

EV / Sales 2.0 x 2.8 x 7.3 x 8.2 x 6.4 x 5.5 x 2.8 x

EV / EBITDA 22.9 x 18.4 x 21.9 x 32.6 x 19.2 x 40.9 x 9.5 x

EV / EBIT 32.7 x 21.6 x 23.9 x 39.0 x 22.6 x 58.2 x 10.8 x

P / E 46.0 x 27.5 x 23.6 x 47.9 x 31.8 x 89.0 x 12.4 x

P / E adj. 43.1 x 24.7 x 23.1 x 47.4 x 31.8 x 89.0 x 12.4 x

FCF Yield Potential 2.9 % 5.3 % -1.7 % 0.3 % 1.5 % -0.6 % 6.8 %

Net Debt -2.5 -4.6 -0.4 1.8 0.4 1.2 -1.8

ROCE (NOPAT) 51.2 % n.a. 97.9 % 23.4 % 23.5 % 7.3 % 43.9 % Guidance: n.a.

InVision

CO M M E N T Publ ished 07 .02 .2017 2

Sales development in EUR m

Source: Warburg Research

Cloud Computing in USD

Source: Warburg Research

EBIT development in EUR m

Source: Warburg Research

Company Background

� InVision supplies call centre employees with workforce management software and e-learning solutions

� Since 2011 InVision has been providing new cloud-based software products (software as a service, SaaS, cloud) which represent an

increasingly important source of earnings for the company

Competitive Quality

� InVision has many years of experience in the call centre and WFM field

� Cloud-based products were further developed in 2011, making InVision a first mover in the field of cloud-based WFM solutions. This

was also the case for the firm's second product range, cloud-based training

� The products in the field of SaaS possesses a very modern software architecture and structure (decentralised approach)

� Significant market entry barriers posed are development costs, acquired customer base and technological lead (first mover)

� The SaaS model is mainly of interest for the huge market of smaller users.

EBT development in EUR m

Source: Warburg Research

Sales by segments 2016; in %

Source: Warburg Research

Net income development in EUR m

Source: Warburg Research

InVision

CO M M E N T Publ ished 07 .02 .2017 3

DCF model

Detailed forecast period Transitional period Term. Value

Figures in EUR m 2016e 2017e 2018e 2019e 2020e 2021e 2022e 2023e 2024e 2025e 2026e 2027e 2028e

Sales 12.4 14.6 27.8 34.8 42.7 51.3 60.5 71.4 78.6 86.4 95.1 104.6 115.0

Sales change -2.4 % 17.7 % 90.4 % 25.0 % 23.0 % 20.0 % 18.0 % 18.0 % 10.0 % 10.0 % 10.0 % 10.0 % 10.0 % 3.0 %

EBIT 3.5 1.4 7.2 9.4 11.5 13.8 16.3 19.3 21.2 23.3 25.7 28.2 31.1

EBIT-margin 28.5 % 9.5 % 26.0 % 27.0 % 27.0 % 27.0 % 27.0 % 27.0 % 27.0 % 27.0 % 27.0 % 27.0 % 27.0 %

Tax rate (EBT) 28.6 % 36.0 % 11.1 % 10.0 % 11.0 % 12.0 % 13.0 % 14.0 % 15.0 % 16.0 % 17.0 % 18.0 % 19.0 %

NOPAT 2.5 0.9 6.4 8.4 10.3 12.2 14.2 16.6 18.0 19.6 21.3 23.2 25.2

Depreciation 0.6 0.6 1.0 0.7 0.9 1.0 1.2 1.4 1.6 1.7 1.9 2.1 2.3

in % of Sales 5.0 % 4.0 % 3.5 % 2.0 % 2.0 % 2.0 % 2.0 % 2.0 % 2.0 % 2.0 % 2.0 % 2.0 % 2.0 %

Changes in provisions 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0

Change in Liquidity from

- Working Capital -0.2 0.3 2.3 1.3 1.0 0.9 0.9 0.9 0.2 0.2 0.1 0.0 -0.1

- Capex 1.9 1.9 2.1 0.7 0.9 1.0 1.2 1.4 1.6 1.7 1.9 2.1 2.3

Capex in % of Sales 15.5 % 13.2 % 7.6 % 2.0 % 2.0 % 2.0 % 2.0 % 2.0 % 2.0 % 2.0 % 2.0 % 2.0 % 2.0 %

Other 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0

Free Cash Flow (WACC Model)

1.5 -0.8 3.0 7.2 9.3 11.2 13.3 15.7 17.8 19.4 21.2 23.2 25.3 25

PV of FCF 1.5 -0.7 2.4 5.3 6.1 6.7 7.1 7.5 7.6 7.5 7.3 7.2 7.0 84 share of PVs 2.07 % 44.34 % 53.59 %

Model parameter Valuation (m)

Derivation of WACC: Derivation of Beta: Present values 2028e 73

Terminal Value 84

Debt ratio 0.00 % Financial Strength 1.50 Financial liabilities 3

Cost of debt (after tax) 4.2 % Liquidity (share) 1.50 Pension liabilities 0

Market return 7.00 % Cyclicality 2.00 Hybrid capital 0

Risk free rate 1.50 % Transparency 2.00 Minority interest 0

Others 2.00 Market val. of investments 0

Liquidity 4 No. of shares (m) 2.2

WACC 11.40 % Beta 1.80 Equity Value 157 Value per share (EUR) 70.37

Sensitivity Value per Share (EUR)

Terminal Growth Delta EBIT-margin

Beta WACC 2.25 % 2.50 % 2.75 % 3.00 % 3.25 % 3.50 % 3.75 % Beta WACC -1.5 pp -1.0 pp -0.5 pp +0.0 pp +0.5 pp +1.0 pp +1.5 pp

1.98 12.4 % 58.76 59.46 60.20 60.99 61.81 62.68 63.60 1.98 12.4 % 57.35 58.56 59.77 60.99 62.20 63.41 64.62

1.89 11.9 % 62.79 63.61 64.48 65.40 66.37 67.40 68.49 1.89 11.9 % 61.51 62.81 64.10 65.40 66.70 67.99 69.29

1.85 11.7 % 64.98 65.87 66.81 67.81 68.87 69.99 71.18 1.85 11.7 % 63.79 65.13 66.47 67.81 69.15 70.49 71.83

1.80 11.4 % 67.30 68.26 69.29 70.37 71.52 72.75 74.05 1.80 11.4 % 66.20 67.59 68.98 70.37 71.76 73.15 74.54

1.75 11.2 % 69.75 70.80 71.92 73.10 74.36 75.70 77.13 1.75 11.2 % 68.78 70.22 71.66 73.10 74.54 75.98 77.42

1.71 10.9 % 72.36 73.50 74.72 76.01 77.38 78.85 80.42 1.71 10.9 % 71.52 73.02 74.51 76.01 77.51 79.00 80.50

1.62 10.4 % 78.09 79.45 80.90 82.45 84.11 85.88 87.79 1.62 10.4 % 77.60 79.21 80.83 82.45 84.07 85.68 87.30

� High demand for cloud solutions are the basis for the revenue and earnings expectations.

� Growth stimulus is expected in the SaaS/Cloud area, which should continually increase its share of revenues.

� A tax-optimised company structure and high loss carry-forwards have an additional positive effect.

� Comment: Buying of real estate in 2014.

InVision

CO M M E N T Publ ished 07 .02 .2017 4

Valuation

2012 2013 2014 2015 2016e 2017e 2018e

Price / Book 6.6 x 8.1 x 11.7 x 12.3 x 7.3 x 6.8 x 4.4 x

Book value per share ex intangibles 1.50 1.97 3.47 3.49 4.55 4.89 7.71

EV / Sales 2.0 x 2.8 x 7.3 x 8.2 x 6.4 x 5.5 x 2.8 x

EV / EBITDA 22.9 x 18.4 x 21.9 x 32.6 x 19.2 x 40.9 x 9.5 x

EV / EBIT 32.7 x 21.6 x 23.9 x 39.0 x 22.6 x 58.2 x 10.8 x

EV / EBIT adj.* 32.7 x 21.6 x 23.9 x 39.0 x 22.6 x 58.2 x 10.8 x

P / FCF 32.8 x 14.3 x n.a. n.a. 55.5 x n.a. 26.7 x

P / E 46.0 x 27.5 x 23.6 x 47.9 x 31.8 x 89.0 x 12.4 x

P / E adj.* 43.1 x 24.7 x 23.1 x 47.4 x 31.8 x 89.0 x 12.4 x

Dividend Yield n.a. n.a. 2.2 % n.a. n.a. n.a. n.a.

Free Cash Flow Yield Potential 2.9 % 5.3 % -1.7 % 0.3 % 1.5 % -0.6 % 6.8 %

*Adjustments made for: -

Company Specific Items

2012 2013 2014 2015 2016e 2017e 2018e

Market Potential Cloud Computing (Gartner) n.a. n.a. n.a. n.a. n.a. n.a. n.a. Market Potential Cloud Computing (Forrester) n.a. n.a. n.a. n.a. n.a. n.a. n.a.

InVision

CO M M E N T Publ ished 07 .02 .2017 5

Consolidated profit & loss

In EUR m 2012 2013 2014 2015 2016e 2017e 2018e

Sales 13.2 13.6 13.4 12.7 12.4 14.6 27.8

Change Sales yoy 6.8 % 2.5 % -1.1 % -5.2 % -2.4 % 17.7 % 90.4 %

Increase / decrease in inventory 0.0 0.0 0.0 0.0 0.0 0.0 0.0

Own work capitalised 0.0 0.0 0.0 0.0 0.0 0.0 0.0

Total Sales 13.2 13.6 13.4 12.7 12.4 14.6 27.8

Material expenses 0.3 0.3 0.2 0.4 0.2 0.3 0.4

Gross profit 12.9 13.2 13.2 12.3 12.2 14.3 27.4

Gross profit margin 97.4 % 97.6 % 98.2 % 97.1 % 98.0 % 98.0 % 98.5 %

Personnel expenses 8.6 7.6 6.5 6.3 5.8 9.8 14.7

Other operating income 0.3 0.2 0.8 0.1 0.4 0.2 0.3

Other operating expenses 3.5 3.7 2.9 2.9 2.6 2.8 4.7

Unfrequent items 0.0 0.0 0.0 0.0 0.0 0.0 0.0

EBITDA 1.2 2.1 4.5 3.2 4.2 2.0 8.2

Margin 8.8 % 15.2 % 33.6 % 25.2 % 33.5 % 13.5 % 29.5 %

Depreciation of fixed assets 0.4 0.3 0.4 0.5 0.6 0.6 1.0

EBITA 0.8 1.8 4.1 2.7 3.5 1.4 7.2

Amortisation of intangible assets 0.0 0.0 -0.1 0.0 0.0 0.0 0.0

Goodwill amortisation 0.0 0.0 0.0 0.0 0.0 0.0 0.0

EBIT 0.8 1.8 4.1 2.7 3.5 1.4 7.2

Margin 6.2 % 12.9 % 30.8 % 21.1 % 28.5 % 9.5 % 26.0 %

EBIT adj. 0.8 1.8 4.1 2.7 3.5 1.4 7.2

Interest income 0.0 0.0 0.0 0.0 0.0 0.0 0.0

Interest expenses 0.0 0.0 0.0 0.0 0.0 0.0 0.0

Other financial income (loss) -0.1 -0.2 0.0 0.0 0.0 0.0 0.0

EBT 0.7 1.5 4.1 2.7 3.5 1.4 7.2

Margin 5.3 % 11.4 % 30.2 % 21.0 % 28.2 % 9.5 % 26.0 %

Total taxes -0.1 0.0 -0.2 0.5 1.0 0.5 0.8

Net income from continuing operations 0.9 1.6 4.2 2.1 2.5 0.9 6.4

Income from discontinued operations (net of tax) 0.0 0.0 0.0 0.0 0.0 0.0 0.0

Net income before minorities 0.9 1.6 4.2 2.1 2.5 0.9 6.4

Minority interest 0.2 0.0 0.0 0.0 0.0 0.0 0.0

Net income 0.6 1.6 4.2 2.1 2.5 0.9 6.4

Margin 4.7 % 11.4 % 31.3 % 16.8 % 20.1 % 6.1 % 23.1 %

Number of shares, average 2.2 2.2 2.2 2.2 2.2 2.2 2.2

EPS 0.29 0.71 1.90 0.97 1.12 0.40 2.88

EPS adj. 0.31 0.79 1.94 0.98 1.12 0.40 2.88

*Adjustments made for:

Guidance: n.a.

Financial Ratios 2012 2013 2014 2015 2016e 2017e 2018e

Total Operating Costs / Sales 91.2 % 84.8 % 66.4 % 74.8 % 66.5 % 86.5 % 70.5 %

Operating Leverage n.a. 46.2 x -124.0 x 6.7 x -13.3 x -3.4 x 4.7 x

EBITDA / Interest expenses n.a. n.a. n.a. n.a. n.a. n.a. n.a.

Tax rate (EBT) -20.7 % -0.6 % -3.7 % 20.1 % 28.6 % 36.0 % 11.1 %

Dividend Payout Ratio 0.0 % 0.0 % 52.5 % 0.0 % 0.0 % 0.0 % 0.0 %

Sales per Employee 95,165 116,867 128,931 139,644 136,264 160,440 305,495

Sales, EBITDA in EUR m

Source: Warburg Research

Operating Performance in %

Source: Warburg Research

Performance per Share

Source: Warburg Research

InVision

CO M M E N T Publ ished 07 .02 .2017 6

Consolidated balance sheet In EUR m 2012 2013 2014 2015 2016e 2017e 2018e

Assets

Goodwill and other intangible assets 1.0 0.9 0.7 0.6 0.7 0.8 0.9

thereof other intangible assets 1.0 0.9 0.7 0.6 0.7 0.8 0.9

thereof Goodwill 0.0 0.0 0.0 0.0 0.0 0.0 0.0

Property, plant and equipment 0.3 0.7 6.8 8.8 10.0 11.2 12.2

Financial assets 0.0 0.0 0.0 0.0 0.0 0.0 0.0

Other long-term assets 0.0 0.0 0.0 0.0 0.0 0.0 0.0

Fixed assets 1.3 1.6 7.5 9.4 10.7 12.0 13.2

Inventories 0.0 0.0 0.0 0.0 0.0 0.0 0.0

Accounts receivable 2.8 1.6 2.0 2.8 2.5 2.8 5.3

Liquid assets 2.5 4.6 4.4 1.4 1.8 0.1 2.1

Other short-term assets 1.6 1.1 1.3 0.7 0.7 0.7 0.7

Current assets 6.9 7.3 7.7 4.8 5.0 3.5 8.0

Total Assets 8.2 8.9 15.2 14.2 15.7 15.6 21.2

Liabilities and shareholders' equity

Subscribed capital 2.2 2.2 2.2 2.2 2.2 2.2 2.2

Capital reserve 21.2 9.2 8.0 1.2 1.2 1.2 1.2

Retained earnings 0.0 1.3 1.3 0.0 2.5 3.4 9.8

Other equity components -19.0 -7.5 -3.1 4.9 4.9 4.9 4.9

Shareholders' equity 4.4 5.2 8.5 8.4 10.9 11.8 18.2

Minority interest 0.0 0.0 0.0 0.0 0.0 0.0 0.0

Total equity 4.4 5.2 8.5 8.4 10.9 11.8 18.2

Provisions 1.2 1.6 0.9 0.6 0.6 0.6 0.6

thereof provisions for pensions and similar obligations 0.0 0.0 0.0 0.0 0.0 0.0 0.0

Financial liabilities (total) 0.0 0.0 4.0 3.3 2.3 1.3 0.3

thereof short-term financial liabilities 0.0 0.0 0.0 0.0 0.0 0.0 0.0

Accounts payable 0.1 0.4 0.1 0.1 0.1 0.1 0.3

Other liabilities 2.5 1.6 1.7 1.9 1.9 1.9 1.9

Liabilities 3.9 3.6 6.8 5.9 4.9 3.9 3.1

Total liabilities and shareholders' equity 8.2 8.9 15.2 14.2 15.7 15.6 21.2

Financial Ratios 2012 2013 2014 2015 2016e 2017e 2018e

Efficiency of Capital Employment

Operating Assets Turnover 4.5 x 7.1 x 1.5 x 1.1 x 1.0 x 1.0 x 1.6 x

Capital Employed Turnover 6.9 x 20.1 x 1.7 x 1.2 x 1.1 x 1.1 x 1.7 x

ROA 46.5 % 97.5 % 55.7 % 22.6 % 23.3 % 7.4 % 48.8 %

Return on Capital

ROCE (NOPAT) 51.2 % n.a. 97.9 % 23.4 % 23.5 % 7.3 % 43.9 %

ROE 15.2 % 32.2 % 61.3 % 25.3 % 25.9 % 7.8 % 42.9 %

Adj. ROE 16.4 % 35.8 % 62.5 % 25.6 % 25.9 % 7.8 % 42.9 %

Balance sheet quality

Net Debt -2.5 -4.6 -0.4 1.8 0.4 1.2 -1.8

Net Financial Debt -2.5 -4.6 -0.4 1.8 0.4 1.2 -1.8

Net Gearing -56.6 % -87.2 % -4.6 % 22.0 % 3.8 % 9.9 % -10.0 %

Net Fin. Debt / EBITDA n.a. n.a. n.a. 57.6 % 10.0 % 59.0 % n.a.

Book Value / Share 2.0 2.3 3.8 3.7 4.9 5.3 8.1

Book value per share ex intangibles 1.5 2.0 3.5 3.5 4.5 4.9 7.7

ROCE Development

Source: Warburg Research

Net debt in EUR m

Source: Warburg Research

Book Value per Share in EUR

Source: Warburg Research

InVision

CO M M E N T Publ ished 07 .02 .2017 7

Consolidated cash flow statement In EUR m 2012 2013 2014 2015 2016e 2017e 2018e

Net income 0.6 1.6 4.2 2.1 2.5 0.9 6.4

Depreciation of fixed assets 0.4 0.3 0.4 0.5 0.6 0.6 1.0

Amortisation of goodwill 0.0 0.0 0.0 0.0 0.0 0.0 0.0

Amortisation of intangible assets 0.0 0.0 -0.1 0.0 0.0 0.0 0.0

Increase/decrease in long-term provisions -0.4 0.3 -0.5 -0.3 0.0 0.0 0.0

Other non-cash income and expenses -0.3 -0.5 -0.2 0.7 0.0 0.0 0.0

Cash Flow before NWC change 0.4 1.7 3.7 3.1 3.1 1.5 7.4

Increase / decrease in inventory 0.0 0.0 0.0 0.0 0.0 0.0 0.0

Increase / decrease in accounts receivable 1.0 1.3 -0.5 -0.7 0.3 -0.3 -2.5

Increase / decrease in accounts payable -0.1 0.0 -0.2 0.0 0.0 0.0 0.2

Increase / decrease in other working capital positions 0.0 0.0 0.0 0.0 0.0 0.0 0.0

Increase / decrease in working capital (total) 0.9 1.3 -0.6 -0.7 0.2 -0.3 -2.3

Net cash provided by operating activities [1] 1.3 3.0 3.1 2.3 3.4 1.2 5.1

Investments in intangible assets 0.3 0.0 0.0 0.0 0.1 0.1 0.1

Investments in property, plant and equipment 0.1 0.1 6.3 2.4 1.8 1.8 2.0

Payments for acquisitions 0.0 0.0 0.0 0.0 0.0 0.0 0.0

Financial investments 0.0 0.0 -1.0 1.0 0.0 0.0 0.0

Income from asset disposals 0.0 0.0 0.2 0.0 0.0 0.0 0.0

Net cash provided by investing activities [2] -0.5 -0.1 -7.2 -1.4 -1.9 -1.9 -2.1

Change in financial liabilities 0.0 0.0 4.0 -0.8 -1.0 -1.0 -1.0

Dividends paid 0.0 0.0 0.0 0.0 0.0 0.0 0.0

Purchase of own shares 0.0 -0.9 -0.2 0.0 0.0 0.0 0.0

Capital measures 0.1 0.0 -0.9 -2.2 0.0 0.0 0.0

Other 0.0 0.0 0.0 0.0 0.0 0.0 0.0

Net cash provided by financing activities [3] 0.1 -0.9 2.9 -3.0 -1.0 -1.0 -1.0

Change in liquid funds [1]+[2]+[3] 0.8 2.1 -1.2 -2.0 0.4 -1.8 2.0

Effects of exchange-rate changes on cash 0.0 0.0 0.0 0.0 0.0 0.0 0.0

Cash and cash equivalent at end of period 2.5 4.6 3.4 1.4 1.8 0.1 2.1

Financial Ratios 2012 2013 2014 2015 2016e 2017e 2018e

Cash Flow

FCF 0.7 3.0 -3.3 0.0 1.4 -0.8 3.0

Free Cash Flow / Sales 6.7 % 21.8 % -24.3 % -0.3 % 11.5 % -5.1 % 10.7 %

Free Cash Flow Potential 0.8 2.0 -1.7 0.3 1.2 -0.5 5.3

Free Cash Flow / Net Profit 142.9 % 190.8 % -77.6 % -1.7 % 57.4 % -84.6 % 46.4 %

Interest Received / Avg. Cash 0.6 % 0.3 % -0.7 % -1.4 % -2.5 % 0.0 % 0.0 %

Interest Paid / Avg. Debt 0.0 % n.a. 0.0 % 0.0 % 0.0 % 0.0 % 0.0 %

Management of Funds

Investment ratio 3.0 % 0.5 % 47.3 % 18.6 % 15.5 % 13.2 % 7.6 %

Maint. Capex / Sales 4.2 % 0.5 % 47.3 % 18.6 % 15.5 % 13.2 % 7.6 %

Capex / Dep 114.3 % 20.2 % 1674.5 % 450.1 % 309.8 % 328.9 % 218.0 %

Avg. Working Capital / Sales 23.9 % 14.4 % 11.6 % 17.8 % 20.3 % 17.5 % 13.8 %

Trade Debtors / Trade Creditors 1889.4 % 420.1 % 1486.2 % 2370.9 % 2500.0 % 2800.0 % 1766.7 %

Inventory Turnover 28.0 x 28.5 x 246879.0 x 373738.0 x n.a. n.a. n.a.

Receivables collection period (days) 78 42 55 79 74 70 70

Payables payment period (days) 161 420 202 114 147 125 263

Cash conversion cycle (Days) -145 -405 -202 -114 n.a. n.a. n.a.

CAPEX and Cash Flow in EUR m

Source: Warburg Research

Free Cash Flow Generation

Source: Warburg Research

Working Capital

Source: Warburg Research

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LEGAL DISCLAIMER

This research report (“investment recommendation” or “recommendation”) was prepared by the Warburg Research GmbH, a fully owned subsidiary of

the M.M.Warburg & CO (AG & Co.) KGaA and is passed on by the M.M.Warburg & CO (AG & Co.) KGaA. It contains selected information and does not

purport to be complete. The report is based on publicly available information and data ("the information") believed to be accurate and complete.

Warburg Research GmbH neither examines the information for accuracy and completeness, nor guarantees its accuracy and completeness. Possible

errors or incompleteness of the information do not constitute grounds for liability of M.M.Warburg & CO (AG & Co.) KGaA or Warburg Research GmbH

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plans or other details contained in these analyses concerning the examined companies, their affiliated companies, strategies, economic situations,

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DISCLOSURE ACCORDING TO §34B OF THE GERMAN SECURITIES TRADING ACT (WHPG), THE ORDINANCE ON THE ANALYSIS OF FINANCIAL INSTRUMENTS (FINANV) AND MAR INCL. COMMISSION DELEGATED REGULATION (EU) 2016/958

The valuation underlying the investment recommendation for the company analysed here is based on generally accepted and widely used methods of

fundamental analysis, such as e.g. DCF Model, Free Cash Flow Potential, Peer Group Comparison or Sum of the Parts Model. The result of this

fundamental valuation is modified to take into consideration the analyst’s assessment as regards the expected development of investor sentiment and

its impact on the share price.

Independent of the applied valuation methods, there is the risk that the price target will not be met, for instance because of unforeseen changes in

demand for the company’s products, changes in management, technology, economic development, interest rate development, operating and/or

material costs, competitive pressure, supervisory law, exchange rate, tax rate etc. For investments in foreign markets and instruments there are further

risks, generally based on exchange rate changes or changes in political and social conditions.

This commentary reflects the opinion of the relevant author at the point in time of its compilation. A change in the fundamental factors underlying the

valuation can mean that the valuation is subsequently no longer accurate. Whether, or in what time frame, an update of this commentary follows is not

determined in advance.

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All prices of financial instruments given in this investment recommendation are the closing prices on the last stock-market trading day before the

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BaFin. M.M.Warburg & CO (AG & Co.) KGaA is additionally subject to the supervision of the European Central Bank (ECB).

SOURCES

All data and consensus estimates have been obtained from FactSet except where stated otherwise.

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CO M M E N T Publ ished 07 .02 .2017 9

Additional information for clients in the United States

1. This research report (the “Report”) is a product of Warburg Research GmbH, Germany, a fully owned subsidiary of M.M.Warburg & CO (AG & Co.)

KGaA, Germany (in the following collectively “Warburg”). Warburg is the employer of the research analyst(s), who have prepared the Report. The

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to the supervision of any U.S. regulated broker-dealer.

2. The Report is provided in the United States for distribution solely to "major U.S. institutional investors" under Rule 15a-6 of the U.S. Securities

Exchange Act of 1934.

3. Any recipient of the Report should effect transactions in the securities discussed in the Report only through J.P.P. Euro-Securities, Inc., Delaware.

4. J.P.P. Euro-Securities, Inc. does not accept or receive any compensation of any kind for the dissemination of the research reports from Warburg.

Reference in accordance with section 34b of the German Securities Trading Act (WpHG), the Ordinance on the Analysis of Financial Instruments (FinAnV), MAR and Commission Delegated Regulation (EU) regarding possible conflicts of interest with companies analysed:

-1- Warburg Research, or an affiliated company, or an employee of one of these companies responsible for the compilation of the research, hold

a share of more than 5% of the equity capital of the analysed company.

-2- Warburg Research, or an affiliated company, within the last twelve months participated in the management of a consortium for an issue in

the course of a public offering of such financial instruments, which are, or the issuer of which is, the subject of the investment

recommendation.

-3- Companies affiliated with Warburg Research manage financial instruments, which are, or the issuers of which are, subject of the

investment recommendation, in a market based on the provision of buy or sell contracts.

-4- MMWB, Warburg Research, or an affiliated company, reached an agreement with the issuer to provide investment banking and/or

investment services and the relevant agreement was in force in the last 12 months or there arose for this period, based on the relevant

agreement, the obligation to provide or to receive a service or compensation - provided that this disclosure does not result in the disclosure of

confidential business information.

-5- The company compiling the analysis or an affiliated company had reached an agreement on the compilation of the investment

recommendation with the analysed company.

-6- Companies affiliated with Warburg Research regularly trade financial instruments of the analysed company or derivatives of these.

-6a- Warburg Research, or an affiliated company, holds a net long position of more than 0.5% of the total issued share capital of the analysed

company.

-6b- Warburg Research, or an affiliated company, holds a net short position of more than 0.5% of the total issued share capital of the analysed

company.

-6c- The issuer holds shares of more than 5% of the total issued capital of Warburg Research or an affiliated company.

-7- The company preparing the analysis as well as its affiliated companies and employees have other important interests in relation to the

analysed company, such as, for example, the exercising of mandates at analysed companies.

This report has been made accessible to the company analysed.

Company Disclosure Link to the historical price targets and rating changes (last 12 months)

InVision 3, 5 http://www.mmwarburg.com/disclaimer/disclaimer_en/DE0005859698.htm

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CO M M E N T Publ ished 07 .02 .2017 10

INVESTMENT RECOMMENDATION

Investment recommendation: expected direction of the share price development of the financial instrument up to the given price target in the opinion of

the analyst who covers this financial instrument.

-B- Buy: The price of the analysed financial instrument is expected to rise over the next 12 months.

-H- Hold: The price of the analysed financial instrument is expected to remain mostly flat over the next 12

months.

-S- Sell: The price of the analysed financial instrument is expected to fall over the next 12 months.

“-“ Rating suspended: The available information currently does not permit an evaluation of the company.

WARBURG RESEARCH GMBH – ANALYSED RESEARCH UNIVERSE BY RATING

Rating Number of stocks % of Universe

Buy 117 61

Hold 67 35

Sell 7 4

Rating suspended 1 1

Total 192 100

WARBURG RESEARCH GMBH – ANALYSED RESEARCH UNIVERSE BY RATING L

L taking into account only those companies which were provided with major investment services in the last twelve months.

Rating Number of stocks % of Universe

Buy 27 71

Hold 10 26

Sell 0 0

Rating suspended 1 3

Total 38 100

PRICE AND RATING HISTORY INVISION AS OF 07.02.2017

Markings in the chart show rating changes by Warburg Research

GmbH in the last 12 months. Every marking details the date and

closing price on the day of the rating change.

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CO M M E N T Publ ished 07 .02 .2017 11

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