Evidence that investment is paying off

Share 28 March 2019 Update
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Share

Evidence that investment is paying off

FY18 results

Financial services

28 March 2019

Price

26p

Market cap

£36m

Net cash (£m) at end December 2018

9.0

Shares in issue

139.8m

Free float

31%

Code

SHRE

Primary exchange

LSE

Secondary exchange

N/A

Share price performance

%

1m

3m

12m

Abs

2.0

10.9

(1.9)

Rel (local)

1.1

1.8

(4.0)

52-week high/low

27.0p

22.8p

Business description

Share’s main subsidiary is The Share Centre, which is a self-select retail stockbroker that also offers share services for corporates and employees.

Next events

Q1 trading update

May 2019

Analysts

Andrew Mitchell

+44 (0)20 3681 2500

Martyn King

+44 (0)20 3077 5745

Share is a research client of Edison Investment Research Limited

Share’s full-year results were similar to our expectations with revenue growth of over 12%, despite the equity market downturn in the final quarter. The group is now drawing to the end of its investment programme to achieve a digital transformation and has succeeded in making further acquisitions to gain greater scale. With a pipeline of further transactions and full benefits of its IT spend still to come, earnings should respond in a geared fashion, reducing the current high earnings multiples substantially on a medium-term view.

Year end

Revenue (£m)

PBT*
(£m)

EPS*
(p)

DPS
(p)

P/E
(x)

Yield
(%)

12/17

18.7

0.4

0.27

0.40

94.6

1.5

12/18

21.0

0.7

0.45

0.55

58.1

2.1

12/19e

22.3

1.3

0.75

0.70

34.9

2.7

12/20e

23.0

1.5

0.86

0.75

30.2

2.9

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

FY18 results

Revenue growth was over 12%, benefiting in part from the full inclusion of the Computershare partnership (started May 2017). Fee income was up 8% whereas commission was more modestly ahead (+3%), with the second half (-9% vs H217) affected by the significant weakness in equity markets in Q4. Interest income more than doubled, reflecting higher rates and customer cash balances. There was an EBITDA profit of £0.5m (loss £0.4m) and operating loss of £0.3m (£0.79m). Normalised EPS was up from 0.27p to 0.45p and the full-year dividend was increased from 0.40p to 0.55p. Operationally, significant progress was made on the investment programme with key customer-evident outcomes including a new website launch and functionality added to The Share Centre App. The acquisition of the Beaufort Securities accounts has gone well, with 17,000 accounts transferred and a 78% retention rate recorded to end February.

Outlook

The uncertain macro background was unhelpful in Q418 and early this year, but Share has seen an increase in activity among its customers recently. It remains to be seen how resilient investor confidence will be but Share should benefit from completion of its digital transformation and hence a levelling out in its related expenditure. Full benefits from the enhanced customer experience should become evident over time as will the scale benefits of its acquisition and partnership strategy with a further tranche of 22,000 accounts due to transfer in Q3 this year. Our estimate for revenues increases modestly (+3%) but this feeds through to a 19% increase in PBT forecast for 2019 (see page 6).

Valuation: Increased to reflect improving profitability

We still focus on a DCF valuation given the group is at a relatively early point in its improvement in profitability. Reflecting increased estimates our central valuation is now 32p (was 31p – see page 7).

FY18 results show progress on several fronts

To provide a longer-term context for the 2018 results, we show assets under administration (AUA) and revenue since 2008 in Exhibits 1 and 2. AUA have grown at a compound rate of 18% over the period, outpacing the FTSE 100 price index, which had a CAGR of 4%. Share has augmented growth in AUA arising from asset appreciation and individual client additions by securing corporate partnerships such as those with Henderson and Barclays and by buying books of business (most recently from the administrator of Beaufort Securities, last year). AUA grew by 3% in 2018 to £4.9bn, despite a 13% decline in the UK equity market. At the end of February this year AUA stood at over £5bn. The fund-of-fund offering (providing an easy entry point for those new to investing) increased AUM from £101m to £110m. Revenues are not directly linked to AUA as flat administration fees are charged but growth in AUA is likely to generate greater volume of trading and hence dealing commission.

The analysis of revenues over this period shows how interest income declined as rates fell following the financial crisis. From 2013 to 2016 overall revenue trod water as the introduction of a flat administration fee structure and the ending of trail commissions following the Retail Distribution Review also took effect. The last two years have seen a return to growth helped in part by book acquisitions and partnerships.

Exhibit 1: Share AUA

Exhibit 2: Share revenue analysis

Source: Share plc

Source: Share plc

Exhibit 1: Share AUA

Source: Share plc

Exhibit 2: Share revenue analysis

Source: Share plc

The profit and loss figures for H218 and FY18 are compared with prior periods in Exhibit 3 and we highlight key points below, referencing the full-year comparison unless stated.

Group revenue increased by more than 12% with the largest contributor to growth being interest income, which more than doubled, benefiting from higher cash held on behalf of customers (+15% to £446m), higher rates and the ability to use term deposits (permitted by the FCA from April 2017). Fee income was 8% up, helped by a 5% increase in the number of customer accounts containing assets to 271,000; this was after closure of dormant, empty and deceased accounts equivalent to nearly 3% of the opening level. Dealing commission was up 3%, held back by the market downturn in Q4 and, reflecting this, second-half commissions were 9% and 12% down on H217 and H118, respectively.

Costs increased by 9% with the largest contributor being an 11% increase in staff costs and a 9% increase in headcount to 244 as the customer service and dealing teams were enlarged to facilitate expansion of the customer base. Transaction costs rose 9%, reflecting sharing of commission with Computershare, which is included within costs. Marketing costs fell as more of this activity was undertaken in-house.

Normalised pre-tax profit doubled to £0.7m, while there was only a marginal reported loss for the full year and a profit in the second half (£0.25m versus H118 loss of £0.28m).

Normalised EPS increased from 0.27p to 0.45p and the full-year dividend increased from 0.40p to 0.55p.

Exhibit 3: FY18 and H218 profit and loss analysis

Year-end 31 December (£000)

H217

H118

H218

H217 vs H216 %

FY17

FY18

% change*

Account fees

3,667

3,603

4,197

14.4

7,200

7,800

8.0

Dealing Commissions

5,608

5,791

5,109

(8.9)

10,600

10,900

3.0

Interest and other income

576

781

1,558

170.6

926

2,339

150.0

Revenue

9,851

10,175

10,864

10.3

18,726

21,039

12.4

Total costs

(10,445)

(10,695)

(10,659)

2.0

(19,519)

(21,354)

9.4

Operating profit

(594)

(520)

205

(134.5)

(793)

(315)

(60.3)

Investment revenues

18

245

48

166.7

225

293

30.2

Other losses and gains

(16)

0

0

(100.0)

51

0

(100.0)

Non-recurring items

900

0

0

(100.0)

900

0

(100.0)

Pre-tax profit

308

(275)

253

(17.9)

383

(22)

(105.7)

Normalising adjustments:

Other gains and losses

(884)

0

0

(100.0)

(951)

0

(100.0)

Non-recurring items incl. FSCS

301

171

207

(31.2)

397

378

(4.8)

One-off/restructuring

114

13

130

14.0

114

143

25.4

Share-based payments

242

267

284

17.4

513

551

7.4

Profit share impact of above

74

(94)

(106)

(243.2)

9

(200)

(2,322.2)

Normalised pre-tax profit

41

69

638

1,456.1

351

707

101.4

Tax

(11)

(4)

(43)

290.9

(73)

(47)

(35.6)

Post-tax profit

297

(279)

210

(29.3)

310

(69)

(122.3)

Normalised post-tax profit

128

50

576

350.0

383

626

63.4

Source: Share plc. Note: *Rounded segmental revenue % change as reported for FY18/17.

Exhibits 4 and 5 show revenue performance in 2018 compared with peers and revenue market share. The peer group data is collated by Compeer and comprises 15 other retail stockbroking companies including Hargreaves Lansdown.1 The revenue comparison shows Share ahead of the group on dealing commission but below on fees, with the peer fee performance probably reflecting adjustments to fee structure following the integration of Interactive Investor and TD Direct. The dramatic relative increase in Share’s interest income reflects recovery from a low level while some peers may have benefited previously from their position as subsidiaries of banks. Market share has been broadly stable during 2018 and, although marginally lower than in 2017, has shown progress over the period shown.

  Full list: AJ Bell; Alliance Trust Savings; Barclays Stockbrokers; Equiniti; Halifax Share Dealing; Hargreaves Lansdown; HSBC Stockbrokers; iDealing.com; Interactive Investor; ITI Capital; Jarvis Investment Management; Saga Personal Finance; Selftrade; Thomas Grant & Co; and Yorkshire Building Society.

Exhibit 4: Revenue performance versus peers

Exhibit 5: Revenue market share

Source: Share plc

Source: Compeer, Share plc

Exhibit 4: Revenue performance versus peers

Source: Share plc

Exhibit 5: Revenue market share

Source: Compeer, Share plc


Share has continued to make progress against its strategic objectives: putting customers first; focus on the core business; and strategic partnerships and acquisitions.

Addressing the customer first and core focus objectives, Share has now largely completed its digital transformation plan initiated in 2016. The new website was launched in April 2018 and the functionality of the mobile app was also enhanced, increasing the usability and appeal of both methods of accessing The Share Centre’s services. The app now regularly accounts for 8% of trades. During 2018 the group also adapted its processes and systems to deal with regulatory changes including MiFID II, PRIIPs and GDPR. Earlier elements in the IT investment programme included renewing key elements of the group’s IT infrastructure, including migrating customers to a new database. More recent work has included the introduction of survey software to provide rapid feedback on customer contact centre performance, enhancement of back-office systems and new solutions to improve the efficiency of staff training. Following completion of the programme investment will continue but at a lower level. In addition to benefiting from the improved customer experience arising from investments in technology, it can be argued that Share now has a more sustainable (less risky) platform for development of the business.

On the acquisitions, Share announced at the first-half stage that it had reached three agreements for the acquisition of a combined c 39,000 customer accounts and over £1.5bn of assets under administration. One was the acquisition from the administrator of Beaufort Securities of c 17,500 clients with reported assets of c £570m and cash of £50m (Financial Times, 9 August). The consideration has not been disclosed but the apparent absence of substantial uptick within the investment items in cash flow for H218 suggests it was relatively small. Share reports that over 17,000 accounts have been transferred and that more than 78% of these have been retained: a higher than expected level given the poor experience of these investors at the previous firm.

The second transaction has involved the transfer of a small number of accounts and a position as preferred destination for Premier Asset Management clients. The third agreement has not been disclosed but a further transfer of c 22,000 accounts is expected in Q3 this year. Exhibit 6 puts this transfer in context. We have used an illustrative retention rate of 60% (higher than we previously assumed for all three acquisitions but below the rate for Beaufort Securities accounts to date). On this basis the transfer would add 5% to the number of accounts and would increase the average AUA.

Exhibit 6: Third acquisition – numbers in context

AUA and client accounts

% of end 2018

End 2018 AUA (£bn)

4,900

End 2018 client accounts

271,000

Estimated AUA to be added (£bn)

930

19%

Retention rate

60%

AUA retained (£bn)

558

11%

Accounts to be added

22,000

8%

Retention rate

60%

Accounts retained

13,200

5%

AUA per end 2018 account (£)

18,081

AUA per account added (£)

42,273

134%

Source: Edison Investment Research, Share plc

Background and outlook

UK equity market performance and volatility are illustrated in the next two charts, showing the Q418 market dip and spike in volatility followed by a recovery and reduced volatility in the current year, despite continuing macro uncertainties.

Exhibit 7: FTSE All-Share Index (total return)

Exhibit 8: FTSE 100 Implied Volatility Index

Source: Refinitiv

Source: Refinitiv

Exhibit 7: FTSE All-Share Index (total return)

Source: Refinitiv

Exhibit 8: FTSE 100 Implied Volatility Index

Source: Refinitiv

As a measure of retail investor confidence and appetite for investment, we show the level of UK retail equity fund sales, as reported by the Investment Association. The annual series shows that 2018 as a whole saw much reduced but still positive net flows, while the more volatile monthly series on the right shows a move into negative flows in the four months to end January this year.

On this front, Share has seen some recovery in its own volumes more recently, suggesting the recovery in equity market level has fed through to a greater willingness to invest and trade.

Exhibit 9: Annual retail equity fund net sales

Exhibit 10: Recent monthly equity fund sales

Source: Investment Association

Source: Investment Association

Exhibit 9: Annual retail equity fund net sales

Source: Investment Association

Exhibit 10: Recent monthly equity fund sales

Source: Investment Association

Prospectively, Share’s near-term revenue progression will be dependent on market trends and further evolution of investor confidence. Leaving these macro-influenced factors aside, the level of client retention on newly acquired accounts may be a material factor, while the investment in technology should be positive for both individual client retention and recruitment and securing partnership deals. Otherwise, interest income should continue to benefit from higher rates and customer balances through the current year with a smaller increase likely in the following year. (See estimate revisions set out in the next section and financial summary on page 8.)

The FCA published its final report on the investment platforms market study recently. This indicated it wishes to make switching between platforms simpler, including the ability to transfer in specie and flexibility in moving between fund unit classes to facilitate this, and it believes a ban on exit fees would be appropriate to reduce consumer harm. From Share’s perspective, this has a minimal impact given the relatively low exit charge of £25 per account levied by Share, while there could be a positive effect from easing the transfer process from other platforms. On this front the ongoing impact of MiFID II mandated disclosure of costs could encourage migration to Share’s flat fee structure.

The next section provides a summary of estimate changes and the financial position.

Financials

Changes in the key lines from our estimate for 2019 and new numbers for 2020 are shown below. The overall change in revenue assumption is small (+3%) but because the group was previously expected to record only a marginal operating profit (before investment income, which is expected to be relatively stable), the impact on pre-tax profit is significant (+19%). Further detail from our forecasts is included in Exhibit 14.

Exhibit 11: Estimate revisions

Revenue (£m)

PBT* (£m)

EPS* (p)

Dividend (p)

Old

New

% chg

Old

New

% chg

Old

New

% chg

Old

New

% chg

2018

20.5

21.0

3%

0.8

0.7

-7%

0.44

0.45

2%

0.55

0.55

0%

2019e

21.6

22.3

3%

1.1

1.3

19%

0.63

0.75

19%

0.70

0.70

0%

2020e

-

23.0

N/A

-

1.5

N/A

-

0.86

N/A

-

0.75

N/A

Source: Edison Investment Research. Note: *PBT and EPS are normalised, excluding exceptional items and share-based payments. For 2018 “old” figures are estimated and “new” actual.

Share ended the year with cash of £9.0m and no debt. This compared with cash of £10.5m in 2017. The primary source of the outflow was investment of £1.4m in intangible and tangible assets (primarily related to IT expenditure but also including the purchase of the Beaufort Securities accounts). We expect such spending to be lower at between £0.6m and £0.7m for 2019 and 2020. From a regulatory capital perspective, the group’s capital requirement has been reduced from £5m for 2018 to £3.9m for 2019 (reflecting improved profitability). It holds 3.8x the required level of capital providing sufficient headroom to accommodate the opportunities in its acquisition/ partnership pipeline, for example.

Valuation

We have updated a comparative table used in our previous notes comparing a number of measures for Share, Hargreaves Lansdown and now AJ Bell (replacing Alliance Trust Savings, which has been taken over by Interactive Investor). We have set the surplus capital adjustment to allow for 2x coverage (Share’s target level). This shows Share trading at an adjusted value of 1.4x revenue compared with 17.9x and 13.8x for Hargreaves Lansdown and AJ Bell, respectively. Similarly, for value as a percentage of AUA, Share is significantly lower at 0.6% versus 9.8% and 2.8%, respectively.

Exhibit 12: Peer comparison

£m unless stated

Share

Hargreaves Lansdown

AJ Bell

Market capital

36

8,443

1,266

Surplus capital (at 2x requirement)

7

(1)

26

Adjusted value

29

8,444

1,240

Revenue

21

473

90

Assets under administration (AUA)

4,900

85,900

44,200

Accounts (number of active clients for HL)

271,000

1,136,000

204,483

Adjusted value/revenue (x)

1.4

17.9

13.8

Adjusted value/AUA (%)

0.6

9.8

2.8

Descriptive metrics

Revenue/average AUA (bps)

44

52

21

Market/stated value per account

133

7,432

6,191

AUA per account (£)

18,081

75,616

216,155

Revenue per account (£)

81

425

495

Adjusted value per account (£)

107

7,433

6,066

Source: Edison Investment Research, companies’ disclosure. Note: Share AUA and revenue FY18, Hargreaves Lansdown, H119 and AJ Bell, FY18 and Q119 update. Priced on 27 March.

We have also updated our DCF valuation using assumptions that include intermediate growth (2021–23) of c 20% to capture operational gearing (lower than previously as profitability has already improved), long-term growth of 4%, a discount rate of 10% and a terminal multiple of 10x. Allowing for changes to our FY19 assumptions, our central value (see sensitivity in Exhibit 13) increases from 31p to 32p.

Exhibit 13: Discounted cash flow valuation sensitivity (pence per share)

Discount rate

Long-term growth

8%

9%

10%

11%

12%

2%

33.6

31.7

30.1

28.6

27.3

3%

34.7

32.8

31.0

29.4

28.0

4%

35.9

33.8

32.0

30.3

28.8

5%

37.2

35.0

33.0

31.2

29.6

Source: Edison Investment Research

Exhibit 14: Financial summary

£000

2014

2015

2016

2017

2018

2019e

2020e

Year end 31 December

PROFIT & LOSS

Account fees

6,610

6,400

6,784

7,200

7,800

8,346

8,638

Dealing Commissions

6,610

6,400

7,040

10,600

10,900

10,737

11,059

Interest and other income

1,800

1,250

786

926

2,339

3,214

3,349

Revenue

 

15,042

14,050

14,610

18,726

21,039

22,297

23,046

Administrative expenses (exc amortisation and depreciation)

(14,579)

(14,812)

(15,727)

(19,169)

(20,536)

(20,620)

(21,180)

EBITDA

 

463

(762)

(1,117)

(443)

503

1,677

1,866

Depreciation

 

(104)

(111)

(121)

(127)

(120)

(140)

(140)

Amortisation

(11)

(21)

(108)

(223)

(698)

(1,170)

(1,200)

Operating profit (pre exceptional)

 

348

(894)

(1,346)

(793)

(315)

367

526

Exceptionals

0

0

0

900

0

0

0

Other

60

1,479

2,119

51

0

0

0

Investment revenues

308

276

248

225

293

265

265

Profit Before Tax (FRS 3)

 

716

861

1,021

383

(22)

632

791

Profit Before Tax (norm)

 

1,615

584

(46)

351

707

1,287

1,485

Tax

(109)

(196)

(284)

(73)

(47)

(120)

(150)

Profit After Tax (FRS 3)

 

607

665

737

310

(69)

512

641

Profit After Tax (norm)

 

1,416

555

4

383

626

1,043

1,203

Average Number of Shares Outstanding (m) - exc treasury

143.5

139.2

139.3

139.4

139.8

139.8

139.8

EPS - normalised (p)

 

0.99

0.40

0.00

0.27

0.45

0.75

0.86

EPS - FRS3 (p)

 

0.42

0.48

0.53

0.22

(0.05)

0.37

0.46

Dividend per share (p)

0.62

0.74

0.25

0.40

0.55

0.70

0.75

EBITDA Margin (%)

3.1%

(5.4%)

(7.6%)

(2.4%)

2.4%

7.5%

8.1%

Normalised operating margin (%)

8.3%

2.2%

(2.0%)

0.7%

2.0%

4.6%

5.3%

BALANCE SHEET

Fixed Assets (mainly Investments)

 

9,405

8,083

8,341

9,986

12,516

11,906

11,116

Current Assets

 

21,316

19,716

23,883

35,300

26,064

28,704

30,408

Total Assets

 

30,721

27,799

32,224

45,286

38,580

40,610

41,524

Current Liabilities

 

(8,450)

(7,681)

(13,384)

(25,942)

(17,671)

(19,398)

(20,050)

Long term Liabilities

(1,594)

(1,418)

(1,096)

(1,155)

(1,442)

(1,442)

(1,442)

Net Assets

 

20,677

18,700

17,744

18,189

19,467

19,770

20,032

CASH FLOW

Operating Cash Flow

 

199

(2,104)

492

1,147

415

1,584

2,093

Net cash from investing activities

(434)

1,990

483

(1,293)

(1,075)

(435)

(285)

Net cash from (used in) financing

(736)

(878)

(1,217)

(735)

(886)

(769)

(979)

Net Cash Flow

 

(971)

(992)

(242)

(881)

(1,546)

380

829

Opening net (debt)/cash

 

13,626

12,655

11,663

11,421

10,540

8,994

9,374

Closing net (debt)/cash

 

12,655

11,663

11,421

10,540

8,994

9,374

10,203

Source: Company accounts, Edison Investment Research


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Neither this document and associated email (together, the "Communication") constitutes or form part of any offer for sale or subscription of, or solicitation of any offer to buy or subscribe for, any securities, nor shall it or any part of it form the basis of, or be relied on in connection with, any contract or commitment whatsoever. Any decision to purchase shares in the Company in the proposed placing should be made solely on the basis of the information to be contained in the admission document to be published in connection therewith.

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 (nor will such persons be able to purchase shares in the placing).

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

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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Australia

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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

Neither this document and associated email (together, the "Communication") constitutes or form part of any offer for sale or subscription of, or solicitation of any offer to buy or subscribe for, any securities, nor shall it or any part of it form the basis of, or be relied on in connection with, any contract or commitment whatsoever. Any decision to purchase shares in the Company in the proposed placing should be made solely on the basis of the information to be contained in the admission document to be published in connection therewith.

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 (nor will such persons be able to purchase shares in the placing).

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

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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