Continuing to focus on asset management growth

DeA Capital 31 May 2019 Update
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DeA Capital

Continuing to focus on asset management growth

Q119 results

Financial services

31 May 2019

Price

€1.27

Market cap

€329m

Holding company net financial position (€m) at 31 March 2019

92.5

Shares in issue

259.3m

Free float

24.4%

Code

DEA

Primary exchange

BIT

Secondary exchange

N/A

Share price performance

%

1m

3m

12m

Abs

(18.3)

(5.2)

2.8

Rel (local)

(10.5)

(1.6)

12.4

52-week high/low

€1.56

€1.20

Business description

DeA Capital, a De Agostini group company, is Italy’s leading alternative asset manager of real estate, private equity and NPLs, with AUM of c €11.9bn at 31 March 2019. The investment portfolio, including co-investment in funds managed, investment in the asset management platform and direct investment, amounted to c €372m.

Next events

Payment of FY19 distribution

22 May 2019

Half-year results

5 September 2019

Analysts

Martyn King

+44 (0)20 3077 5745

Andrew Mitchell

+44 (0)20 3681 2500

DeA Capital is a research client of Edison Investment Research Limited

DeA Capital produced a solid performance in Q119, with the alternative asset management division benefiting from performance-related fees, continuing its platform development, and launching new funds. NAV and the net cash position remained robust, and an unchanged €0.12 per share dividend was paid on 22 May 2019. We forecast a similar distribution in FY19, representing a prospective yield of more than 9%. Following the dividend payment, our adjusted net asset value per share is €1.75.

Year end

Closing AUM (€bn)

AAM fees* (€m)

NAV/share
(€)

DPS (declared)
(€)

P/NAV
(x)

Yield
(%)

12/16

10.6

61.0

2.03

0.12

0.63

9.4

12/17

11.7

59.8

1.92

0.12

0.66

9.4

12/18

11.9

63.3

1.84

0.12

0.69

9.4

12/19e

12.2

62.4

1.73

0.12

0.74

9.4

Note: NAV as reported, including goodwill. *Divisional AAM fees before group consolidation adjustment for own funds managed.

Strong AAM fees in Q119

Alternative AUM was c €11.9bn at end-Q119, similar to Q418 but up from €11.6bn at end-Q118. Commission income was a strong €16.9m compared with €14.4m in Q118, and benefiting from performance-related fees. Fund launches have continued, with the DeA Capital Alternative Funds-managed DeA Endowment Fund, aimed specifically at banking foundations. Group NAV increased slightly compared to FY18, but fell c 1% in per-share terms, reflecting treasury shares issued in exchange for the remaining minority in DeA Capital Real Estate. The holding company financial position remains strong, at €92.5m, or c 20% of NAV, ahead of the c €31m dividend distribution later in May, substantially matched by c €23m of dividend upstreaming from the AAM business. Shareholders have approved the cancellation of 40m treasury shares, with effect from August. This will have no impact on liquidity, NAV or EPS.

Platform investment

Already a leader in Italy in alternative assets, providing an integrated platform comprising private equity, real estate and non-performing loans, DeA has a strong, liquid balance sheet, with high levels of cash flow, to support further growth in Italy and into wider Europe. 100% ownership of DeA Capital Real Estate represents a simpler, more flexible and potentially more efficient base from which to expand the real estate platform from Italy into broader Europe. The recent creation of real estate advisory and consultancy subsidiaries in Spain and France are the first steps in this development.

Valuation: Cash flow for yield and growth

The discount to IFRS NAV (€1.70 after payment of dividend) has narrowed over the past year (to c 25%), but DeA still has the lowest P/BV among a range of peers. The discount to our adjusted NAV (see page 5) of €1.75 (ex-dividend) is slightly larger still. A strong balance sheet and cash flow position support an attractive yield, and provide resources for investment to grow AAM further.

Summary of Q119 developments

The main developments in Q119 involve the continuing development of DeA’s alternative asset management platform, including completion of the buyout of minorities in DeA Capital Real Estate. The key features of the Q119 financial report and other recent developments were:

As at 31 March 2019 (Q119), alternative assets under management (AUM) were c €11.9bn, up from c €11.6bn at end-Q118 and at a similar level to end FY18. Commission income was significantly ahead, at €16.9m compared with €14.4m in Q118.

In Q119, AAM commission income continued to benefit from performance fees earned on the Investitori Associati IV private equity fund, originally promoted by Investitori Associati SGR but managed in run-off by DeA Capital Alternative Funds since 2015. We believe the Q119 performance fee contribution was c €2.5m, a similar level to Q418. Although the performance fees are non-recurring in nature, DeA management is hopeful that the continuing run-off process will generate further payments, while over the medium term it hopes to benefit from performance fees/carried interest in other funds.

The year-on-year increase in AUM includes a significant contribution from new fund launches, partially offset by fund maturities and liquidations. During FY18 new funds launched and managed by DeA’s alternative asset management platform amounted to c €1.3bn, including eight new DeA Capital Real Estate funds (c €1.0bn), and the launches of IDeA Capital Agro Fund (€80m commitment) and the shipping segment (‘CCR Shipping’) of the IDeA Corporate Credit Recovery II Fund (€170m commitment). During Q119, DeA Capital Alternative Funds launched the DeA Endowment Fund, a closed-end fund of funds intended for investment by banking foundations, and was awarded the management of a portion of Azimut Capital managed ‘Azimut Private Debt’ closed-end fund. Together, these new mandates added €114m to AUM.

DeA Capital’s measure of the AAM platform operating performance came to €4.2m, compared with €3.2m in Q118.

The group investment portfolio, comprising its investment in the AAM platform (€202.6m), as well as its direct (€48.9m) and fund investments (€120.9m), was €372.4m at end-Q119 compared to €365.4m at end-FY18. The value of the AAM platform benefited from the further elimination of minority interests, while generally negative revaluation movements slightly reduced the value of the direct and fund investments.

In March 2019, DeA acquired the remaining 6% minority interest in DeA Capital Real Estate from Fondazione Carispezia, a private foundation that remains one of the main shareholders in the Italian bank, Credit Agricole Carispezia. The €8m consideration, at book value, was settled with DeA treasury shares, which are subject to a six-month lock-up. The agreement also includes a maximum earnout of €0.9m. DeA Capital now owns 100% of the subsidiary, underlining its focus on the growth of its AAM platform, increasing the share of AAM earnings within the group, and simplifying the corporate structure.

The net financial position of the holding company remained strongly positive, at €92.5m or c 20% of NAV. Group NAV increased c 1% in Q119 compared with end-FY18, to €471.1m, but was slightly lower in per-share terms at €1.82 (cum-div) compared with €1.84. The number of shares in issue (excluding treasury shares) was increased by c 5.2m (to 259.3m) by the treasury share settlement of the DeA Capital Real Estate minority acquisition.

Since the end of Q119, the holding company net financial position has benefited from a €22.9m dividend distribution from the AAM business, a significant increase from €7.5m in 2018.

On 18 April 2019, the shareholders meeting approved the cancellation of 40m treasury shares (approximately 17% of the share capital), acquired over the past few years under its ongoing share repurchase programme. Although this will have no impact on reported liquidity, NAV, earnings or EPS, as the treasury shares are deducted from this calculation, we welcome the move as we believe it shows that management believes its significant net positive financial position is sufficient to support its current growth plans without the need to reissue the shares. Should this situation change, management can make the case for new share issuance based on the merits of the investment opportunity. As the shares are in any case withdrawn from the market, cancellation should have no negative impact on share trading liquidity.

The reason for the cancellation is that with ongoing repurchases, the free float has recently fallen beneath the minimum level that is required to maintain DeA’s listing in the STAR market segment of Borsa Italiana’s Mercato Telematico Azionario (MTA) equity market. Following the cancellation, which takes effect in August, the parent company, De Agostini, will own 67.1% of the shares (currently 17.3%), with 2.5% remaining in treasury and a free float of 30.4% (currently 24.4%).

The shareholder meeting also approved the payment of a €0.12 per share distribution on 22 May 2019, maintaining DeA’s strong cash distribution record, supported by a highly liquid balance sheet and strong cash flow, the latter benefiting from ongoing maturing fund investments.

Exhibit 1: Group financial position

31-Mar-19

31-Dec-18

€m

€ per share

€m

€ per share

Alternative Asset Management (AAM)

DeA Capital Real Estate

151.5

0.58

140.4

0.55

DeA Capital Alternative Funds

45.5

0.18

43.4

0.17

Other (inc YARD, DeA Capital RE France/Spain)

5.6

0.02

5.6

0.02

Total AAM

202.6

0.78

189.4

0.75

Private Equity Investment

Private equity/real estate funds

120.9

0.47

125.0

0.49

Kenan Investments (Migros)

17.3

0.07

19.4

0.08

Other (inc IDeaMI, Cellularline)

31.6

0.12

31.6

0.12

Total Private Equity investment

169.8

0.65

176

0.69

Total investment portfolio

372.4

1.44

365.4

1.44

Other net assets/(liabilities)

6.2

0.02

0.5

0.00

Holding company net financial position

92.5

0.36

100.6

0.40

Net asset value (NAV) – before payment of €0.12 dividend in May

471.1

1.82

466.5

1.84

Source: DeA Capital

Forecasts and valuation

AAM

The Q119 performance fee income was not included in our forecasts and represents a positive development. Despite this, and also our expectation of growth in AUM, we have reduced our FY19 AAM division adjusted earnings forecast by approximately 7% of c €0.9m, substantially reflecting:

Investment in the pan-European real estate platform development, likely to be c €2.5–3.0m in FY19 with no immediate revenue benefit. In Exhibit 2 this is reflected in the ‘other’ segment loss of c €1.2m, with investment costs partly offset by other activities including 45%-owned associate YARD, which provides property services to the real estate sector.

The deconsolidation of SPC.

A reduction in assumed underlying (excluding performance fee) asset management revenue margins reflecting recent performance.

The revised Edison adjusted AAM net income after tax and minorities for FY19 is now €11.6m compared with €12.5m previously.

Exhibit 2: Alternative Asset Management divisional summary

€m unless stated otherwise

Reported

New

Old

2015

2016

2017

2018

2019e

 

2019e

Change

Period-end AUM (€bn)

DeA Capital Alternative Funds

1.643

1.937

2.190

2.430

2.534

2.430

0.104

DeA Capital Real Estate

7.884

8.672

9.542

9.451

9.711

9.951

(0.240)

Total period-end AUM (€bn)

9.527

10.609

11.732

11.881

12.245

12.381

(0.136)

Period average AUM (€bn)

DeA Capital Alternative Funds

1.581

1.844

1.944

2.230

2.521

2.430

0.091

DeA Capital Real Estate

8.600

8.059

9.282

9.266

9.491

9.701

(0.210)

Total period average AUM (€bn)

10.181

9.903

11.226

11.495

12.012

12.131

(0.119)

Management fees/AUM (bp)

DeA Capital Alternative Funds

107

112

95

105

87

85

2

DeA Capital Real Estate

55

50

45

43

43

43

(0)

INCOME STATEMENT

DeA Capital Real Estate

47,725

40,261

41,381

39,768

40,383

41,472

(1,088)

DeA Capital Alternative Funds

16,947

20,724

18,438

23,483

22,055

20,655

1,400

Total alternative asset management fees

64,672

60,985

59,819

63,251

62,438

62,127

311

Income from equity investments

(359)

531

822

717

1,160

1,197

(37)

Other income/expense

(88)

1,088

1,676

(4,212)

2,545

2,336

209

Income from services

18,549

8,336

703

1,867

3

1,400

(1,397)

Revenue

82,774

70,940

63,020

61,623

66,146

67,060

(914)

Total expenses

(120,285)

(60,245)

(91,116)

(47,539)

(46,928)

(47,616)

688

Finance income/expense

616

19

13

(39)

(100)

(100)

Profit before tax

(36,895)

10,714

(28,083)

14,045

19,118

19,444

(326)

Taxation

(409)

(3,405)

(2,991)

(4,817)

(6,607)

(6,000)

(608)

Profit after tax

(37,304)

7,309

(31,074)

9,228

12,511

13,444

(933)

Minority interests

16,631

1,178

13,575

(109)

190

(100)

290

Attributable profits

(20,673)

8,487

(17,499)

9,119

12,701

13,344

(643)

Adjustments (net of tax & minorities)

PPA

1,042

592

543

688

770

(82)

SFP

1,494

2,460

632

Goodwill

24,897

Other income/expense

(1,017)

(839)

2,948

(1,781)

(1,635)

(146)

Provisions against investment impairment

Adjusted attributable earnings

10,006

9,611

13,242

11,608

12,479

(872)

o/w DeA Capital Real Estate

5,058

5,889

7,103

8,260

9,039

(779)

o/w DeA Capital Alternative Funds

3,776

3,153

6,114

4,513

3,637

876

o/w Other (inc YARD and real estate European platform investment )

1,173

570

25

(1,165)

-197

-969

Source: DeA Capital, Edison Investment Research

Other group

As previously, in addition to our estimates for the AAM profit contribution, our NAV forecasts seek to capture at least part of the potential for growth in NAV from the majority of the investment portfolio that is not captured in the AAM segment. This includes the private equity fund holdings and the direct investments (Kenan Investments/Migros, Crescita/Cellularline and IDeaMI). We assume 7.5% per year ‘normalised’ growth in the carried value of all of the private equity fund investments and 4% per year for real estate funds (substantially representing the expected income returns), whether carried as available for sale investments, consolidated or equity accounted. We believe this is a useful way to capture at least some of the returns that may be earned on these investments, even though our approach differs from the way these assets are actually managed, seeking to maximise IRR. Our forecasts assume no change to the last published value of (or income from) the quoted investments, Migros (Kenan Investments), Cellularline (formerly Crescita) and IDeaMI, although for valuation purposes our adjusted NAV (see below) does mark these to market values.

On this basis, our forecast FY19 IFRS NAV per share is now €1.73 compared with €1.77 previously. We also forecast a continuing strong holding company net financial balance of more than €90m including the May payment of c €30m in shareholder distributions. Although net flows from funds were modest in Q119 we allow for a pick up for the year as a whole, generating a net positive c €20m in cash.

Edison adjusted NAV per share now €1.75 (ex-dividend)

Our adjusted NAV replaces the stated book value of the alternative asset management platform with our assessment of a fair value based on P/E multiples observed across a global peer group of both alternative and more conventional asset management companies. We also mark to market DeA’s quoted investments. For a detailed explanation of our methodology and the peer group, please see our December 2018 update note.

In the AAM division, from the stated NAV of €202.6m we have reallocated the real estate funds owned (with a reduced adjustment for minority interests still applicable at year end) to what we call the ‘investments’ division. We value the division at €162.2m on an increased multiple of 14.0x our forecast FY19 adjusted earnings of €11.6m. We have increased the multiple from 13.0x to better recognise the near-term drag of pan-European real estate investment and the potential for accelerated future growth, and to bring the multiple more in line with the updated peer group average. An increase or reduction in the multiple to 15.0x/13.0x would lift or reduce adjusted NAV by c €0.04.

The ‘investments’ shown in Exhibit 3 include the €169.8m of direct and fund investments shown in the breakdown of NAV in Exhibit 1, plus the reallocated real estate funds. We have also marked to market the indirect investment in Migros held through Kenan Holdings using a Migros share price of TRY11.99 and a TRY/€ exchange rate of 6.72. Both the Migros share price and the value of the TRY are lower than at end-Q119. The market values of Cellularline and IDeaMI show no significant change from end-Q119.

The ‘other’ column represents the holding company net financial position (predominantly cash) and other net assets, shown in Exhibit 1.

Exhibit 3: Summary of Edison adjusted NAV

AAM

Investments

Other

Total

Per share

NAV

202.6

169.8

98.7

471.1

1.82

Adjustments

-55.2

55.2

Kenan mark to market

(2.6)

Adjustment to earnings valuation

15.1

Adjusted NAV before dividend payment

162.5

222.4

98.7

483.6

1.87

€0.12 per share dividend payment 22 May 2019

(30.5)

(30.5)

Adjusted NAV after dividend payment

162.5

222.4

68.2

453.2

1.75

FY19 earnings

12.7

-8.2

4.5

Adjustments

-1.1

Adjusted earnings

11.6

P/E (x)

14.0

Source: Edison Investment Research

Exhibit 4: Financial summary

Period ending 31 December (€000's)

2014

2015

2016

2017

2018

2019e

IFRS

IFRS

IFRS

IFRS

IFRS

IFRS

PROFIT & LOSS

Alternative Asset Management fees (after inter-company eliminations)

66,045

62,416

59,114

57,944

62,422

61,608

Income (loss) from equity investments

(786)

(539)

524

3,898

(59)

1,618

Other investment income/expense

(56,149)

72,464

12,338

8,633

37,848

141

Income from services

19,176

18,496

8,509

2,208

2,505

104

Other income

3,204

288

144

141

0

Revenue

28,286

156,041

80,773

72,827

102,857

64,077

Expenses

(87,957)

(128,514)

(66,888)

(98,616)

(56,232)

(55,355)

Net Interest

2,905

4,982

(1,220)

(84)

485

181

Profit Before Tax (norm)

(56,766)

32,509

12,665

(25,873)

47,110

11,009

Tax

1,720

6,452

(199)

(420)

(5,765)

(2,724)

Profit After Tax (norm)

(55,046)

38,961

12,466

(26,293)

41,345

7,389

Profit from discontinued operations

(887)

286

0

682

0

0

Profit after tax

(55,933)

39,247

12,466

(25,611)

41,345

7,389

Minority interests

(1,668)

1,825

(39)

13,959

(30,275)

(1,191)

Net income (FRS 3)

(57,601)

41,072

12,427

(11,652)

11,070

6,198

Profit after tax breakdown

Private equity

(60,739)

78,322

7,859

8,327

39,152

(3,245)

Alternative asset management

9,464

(37,304)

7,309

(31,073)

9,228

12,511

Holdings/Eliminations

(4,658)

(1,771)

(2,702)

(2,865)

(7,035)

(3,694)

Total

(55,933)

39,247

12,466

(25,611)

41,345

7,389

Average Number of Shares Outstanding (m)

273.8

266.6

263.1

258.3

253.8

258.9

IFRS EPS - normalised (c)

(21.0)

15.4

4.7

(4.5)

4.4

2.4

Distributions per share (declared basis)

0.30

0.12

0.12

0.12

0.12

0.12

BALANCE SHEET

Fixed Assets

786,141

558,086

559,335

454,156

372,650

363,340

Intangible Assets (inc. goodwill)

229,711

167,134

156,583

117,233

114,768

114,493

Other assets

39,988

38,590

35,244

10,305

8,939

25,601

Investments

516,442

352,362

367,508

326,618

248,943

223,246

Current Assets

117,585

173,882

141,521

178,161

185,446

186,142

Debtors

50,711

20,694

15,167

32,955

18,729

16,811

Cash

55,583

123,468

96,438

127,916

143,767

142,521

Other

11,291

29,720

29,916

17,290

22,950

26,810

Current Liabilities

(36,193)

(31,294)

(26,979)

(34,783)

(37,902)

(40,905)

Creditors

(35,833)

(30,643)

(25,757)

(34,583)

(37,698)

(38,279)

Short term borrowings

(360)

(651)

(1,222)

(200)

(204)

(2,626)

Long Term Liabilities

(40,911)

(15,514)

(12,830)

(12,475)

(14,414)

(28,893)

Long term borrowings

(5,201)

0

(19)

0

(2,859)

(17,280)

Other long term liabilities

(35,710)

(15,514)

(12,811)

(12,475)

(11,555)

(11,613)

Net Assets

826,622

685,160

661,047

585,059

505,780

479,685

Minorities

(173,109)

(138,172)

(131,844)

(95,182)

(39,299)

(32,490)

Shareholders' equity

653,513

546,988

529,203

489,877

466,481

447,195

Year-end number of shares m

271.6

263.9

261.2

255.7

253.8

258.9

NAV per share

2.41

2.07

2.03

1.92

1.84

1.73

CASH FLOW

Operating Cash Flow

188,419

188,492

19,148

91,146

96,408

29,466

Acquisitions/disposals

(1,476)

70

(290)

(633)

(275)

(202)

Financing

(157,756)

(38,148)

(4,362)

(26,073)

(46,994)

(7,606)

Dividends

0

(82,432)

(33,494)

(32,962)

(33,098)

(32,264)

Other

Cash flow

29,187

67,982

(18,998)

31,478

16,041

(1,245)

Other items

0

(97)

(8,032)

0

(190)

0

Opening consolidated cash

26,396

55,583

123,468

96,438

127,916

143,767

Closing consolidated cash

55,583

123,468

96,438

127,916

143,767

142,522

Financial debt

(5,561)

(651)

(1,241)

(200)

(3,063)

(19,906)

Closing consolidated net (debt)/cash

50,022

122,817

95,197

127,716

140,704

122,616

Holding company net financial position

40,600

90,016

79,739

92,301

100,600

93,455

Source: DeA Capital, Edison Investment Research

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New Zealand

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. 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 (i.e. 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.

United Kingdom

This document is prepared and provided by Edison 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.

This Communication is being distributed in the United Kingdom and is directed only at (i) persons having professional experience in matters relating to investments, i.e. investment professionals within the meaning of Article 19(5) of the Financial Services and Markets Act 2000 (Financial Promotion) Order 2005, as amended (the "FPO") (ii) high net-worth companies, unincorporated associations or other bodies within the meaning of Article 49 of the FPO and (iii) persons to whom it is otherwise lawful to distribute it. The investment or investment activity to which this document relates is available only to such persons. It is not intended that this document be distributed or passed on, directly or indirectly, to any other class of persons and in any event and under no circumstances should persons of any other description rely on or act upon the contents of this document.

This Communication is being supplied to you solely for your information and may not be reproduced by, further distributed to or published in whole or in part by, any other person.

United States

The Investment Research is a publication distributed in the United States by Edison Investment Research, Inc. Edison Investment Research, Inc. is registered as an investment adviser with the Securities and Exchange Commission. Edison 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. This report is a bona fide publication of general and regular circulation offering impersonal investment-related advice, not tailored to a specific investment portfolio or the needs of current and/or prospective subscribers. As such, Edison does not offer or provide personal advice and the research provided is for informational purposes only. No mention of a particular security in this report constitutes a recommendation to buy, sell or hold that or any security, or that any particular security, portfolio of securities, transaction or investment strategy is suitable for any specific person.

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Copyright: Copyright 2019 Edison Investment Research Limited (Edison). All rights reserved FTSE International Limited (“FTSE”) © FTSE 2019. “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.

Australia

Edison Investment Research Pty Ltd (Edison AU) is the Australian subsidiary of Edison. Edison AU is a Corporate Authorised Representative (1252501) of Myonlineadvisers Pty Ltd who holds an Australian Financial Services Licence (Number: 427484). This research is issued in Australia by Edison AU and any access to it, is intended only for "wholesale clients" within the meaning of the Corporations Act 2001 of Australia. Any advice given by Edison AU is general advice only and does not take into account your personal circumstances, needs or objectives. You should, before acting on this advice, consider the appropriateness of the advice, having regard to your objectives, financial situation and needs. If our advice relates to the acquisition, or possible acquisition, of a particular financial product you should read any relevant Product Disclosure Statement or like instrument.

New Zealand

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. 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 (i.e. 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.

United Kingdom

This document is prepared and provided by Edison 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.

This Communication is being distributed in the United Kingdom and is directed only at (i) persons having professional experience in matters relating to investments, i.e. investment professionals within the meaning of Article 19(5) of the Financial Services and Markets Act 2000 (Financial Promotion) Order 2005, as amended (the "FPO") (ii) high net-worth companies, unincorporated associations or other bodies within the meaning of Article 49 of the FPO and (iii) persons to whom it is otherwise lawful to distribute it. The investment or investment activity to which this document relates is available only to such persons. It is not intended that this document be distributed or passed on, directly or indirectly, to any other class of persons and in any event and under no circumstances should persons of any other description rely on or act upon the contents of this document.

This Communication is being supplied to you solely for your information and may not be reproduced by, further distributed to or published in whole or in part by, any other person.

United States

The Investment Research is a publication distributed in the United States by Edison Investment Research, Inc. Edison Investment Research, Inc. is registered as an investment adviser with the Securities and Exchange Commission. Edison 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. This report is a bona fide publication of general and regular circulation offering impersonal investment-related advice, not tailored to a specific investment portfolio or the needs of current and/or prospective subscribers. As such, Edison does not offer or provide personal advice and the research provided is for informational purposes only. No mention of a particular security in this report constitutes a recommendation to buy, sell or hold that or any security, or that any particular security, portfolio of securities, transaction or investment strategy is suitable for any specific person.

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

1,185 Avenue of the Americas

3rd Floor, New York, NY 10036

United States of America

Sydney +61 (0)2 8249 8342

Level 4, Office 1205

95 Pitt Street, Sydney

NSW 2000, Australia

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