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Exceptional performance

Tinexta 7 August 2020 Update
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Tinexta

Exceptional performance

H120 results

Professional services

7 August 2020

Price

€17.90

Market cap

€846m

Net debt (€m) at 30 June 2020

113

Shares in issue

47.2m

Free float

34%

Code

TNXT

Primary exchange

Borsa Italiana STAR

Secondary exchange

N/A

Share price performance

%

1m

3m

12m

Abs

39.0

64.8

54.6

Rel (local)

42.3

45.3

63.5

52-week high/low

€17.96

€7.28

Business description

Tinexta has three business divisions: Digital Trust – solutions to increase trust in digital transactions; Credit Information & Management – information services to help manage corporate credit; and Innovation & Marketing Services – consulting services to help clients develop and/or grow their businesses

Next events

Q320 results

12 November 2020

FY20 results

February 2021

Analysts

Russell Pointon

+44 (0)20 3077 5700

Fiona Orford-Williams

+44 (0)20 3077 5700

Tinexta is a research client of Edison Investment Research Limited

Tinexta’s Q220 results were much better than consensus expectations, as all business units produced improved organic growth trends versus Q120, in the face of the COVID-19 lockdown, and cost control helped improve profitability. The group is well positioned to benefit from structural growth drivers, including the digitisation of economies. We increase our EBITDA forecasts for FY20 by 7.6%, taking us 6.6% above management’s reiterated and recent guidance for FY20.

Year end

Revenue (€m)

PBT*
(€m)

EPS*
(€)

DPS
(€)

P/E
(x)

Yield
(%)

12/18

238.7

52.3 **

0.77**

0.23

23.1

1.3

12/19

258.7

55.0 **

0.80**

0.00

22.5

0.0

12/20e

266.6

53.3

0.80

0.24

22.2

1.3

12/21e

277.5

56.6

0.86

0.25

20.9

1.4

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

Q220: Revenue and EBITDA surprises

Tinexta’s organic revenue and EBITDA growth of 2.3% and 11.6%, respectively during Q220, were much better than expected in the face of the COVID-19 lockdown. Indeed, the rate of organic revenue growth/declines improved quarter-on-quarter for all business units. Digital Trust benefited from continued structural demand growth with no discernible macroeconomic impact on client demand, while Credit Information & Management and Innovation & Marketing Services benefited by repositioning quickly to satisfy heightened demand from specific products, with trends in other business relatively consistent with the start of the year. Expenses were well controlled, which led to higher profitability, free cash flow generation and a lower net debt position.

FY20: New forecasts above management guidance

We upgrade our forecasts for both FY20 and FY21. In FY20, our revenue forecast increases 6.3% to €266.6m and EBITDA increases by 7.6% to €76.7m. We have upgraded forecasts for all business units, reflecting the improved outlook versus our prior expectations, plus the carry forward of Tinexta’s outperformance from Q220. The upgrades place our forecasts 6.6% above management guidance for FY20 revenue above €250m and EBITDA of €72m. The new CFO states that he will have a strong focus on free cash flow generation and improving ROCE for the group as a whole, which should bode well in future years.

Valuation: Re-rated as uncertainty lifts

The share price has rebounded strongly and is trading at an all-time high, which reflects the improved outlook despite the COVID-19 crisis. EV/EBITDA is 12.4x in FY20e and 11.8x in FY21e versus the long-term average since IPO in 2014 of 8.5x. Tinexta justifies a higher multiple given the improved business mix, with potential for better growth and higher profitability than previously.

H120 results: Exceptional performance

Tinexta reported very strong results for Q220, which we and consensus anticipated would be weak for the company given the potential effects of COVID-19 on some of its businesses. The results are notable as all business units saw an improvement in the rate of organic revenue growth/declines from Q120 to Q220, whereas we anticipated declines for all.

Credit Information & Management and Innovation and Marketing Services reported a higher EBITDA margin in Q220 versus the comparison period in FY19. Digital Trust, which has lower margins in the early phases of solutions sales, reported a minor inflection in EBITDA margin. Management commentary suggests that most businesses saw a relatively quick and clear recovery from May.

Exhibit 1: H120 results

€m

Q119

Q219

H119

Q120

Q220

H120

Revenue

- Digital Trust

25.2

26.6

51.7

25.9

29.1

55.0

- Credit Information & Management

19.4

18.5

37.9

17.0

18.0

35.0

- Innovation & Marketing Services

15.2

21.8

36.9

12.0

21.7

33.7

Total

59.7

66.9

126.6

54.9

68.8

123.7

Organic growth y-o-y (%)

- Digital Trust

9.5

10.5

10.0

2.9

9.6

6.3

- Credit Information & Management

(3.1)

(10.2)

(6.7)

(12.3)

(2.7)

(7.6)

- Innovation & Marketing Services

32.9

7.6

16.7

(22.3)

(2.2)

(10.5)

Total

10.2

3.3

6.4

(8.4)

2.3

(2.7)

Adjusted EBITDA

- Digital Trust

6.0

7.4

13.4

5.9

8.0

14.0

- Credit Information & Management

5.3

4.2

9.5

3.6

6.6

10.2

- Innovation & Marketing Services

5.9

11.5

17.4

3.4

11.6

15.0

Subtotal

17.2

23.1

40.3

12.9

26.2

39.2

-Other

(1.7)

(1.9)

(3.6)

(1.9)

(2.3)

(4.2)

Total

15.5

21.2

36.7

11.0

23.9

35.0

Margin (%)

- Digital Trust

23.7

27.8

25.8

22.8

27.6

25.4

- Credit Information & Management

27.5

22.9

25.1

21.1

36.4

29.0

- Innovation & Marketing Services

38.7

52.6

47.1

28.3

53.3

44.4

Subtotal

28.7

34.6

31.8

23.5

38.1

31.7

Total

25.9

31.6

29.0

20.0

34.7

28.2

Source: Company accounts

For Q220, total revenue grew by 3.1%, including 2.3% organic growth and adjusted EBITDA (ie before stock options) grew by 13.0%, including 11.6% organic growth. Following the relatively weak Q120 results (due to prior year phasing, seasonality and some impact from the COVID-19 lockdown), total revenue growth declined by 2.2% in H120, including an organic decline of 2.7%, and adjusted EBITDA fell by 4.8%, including an organic decline of 5.8%.

Digital Trust (45% of H120 revenue, 36% of H120 adj. EBITDA)

Digital Trust’s organic revenue growth accelerated to 9.6% in Q220 from 2.9% in Q120, which had in part been affected by the underperformance of Camerfirma, the Spanish subsidiary; these performance issues have been subsequently resolved. The strong Q220 performance was mainly due to ongoing demand from clients to digitise and streamline their operations, a trend which should continue to provide structural growth for the business in the long term, in the face of macroeconomic uncertainty during the period. The commentary highlights that Q220 was driven by strong growth from Enterprise Solutions in particular, which grew by 23.3% in H120, and other Digital Products grew by 4.7%. Digital Trust’s Trusted Onboarding Platform (TOP) continued to win clients through H120, including in overseas markets such Croatia and Colombia, bringing the total to 13 non-domestic clients, and the number of transactions (for which the business generates a fee) on the platform continues to grow quickly. Similarly, the GoSign product continued to win new clients domestically and overseas. The EBITDA margin of 27.6% was marginally down y-o-y as management highlights that the initial margin on Enterprise Solutions prior to ramp-up are lower than for Digital Products.

Credit Information & Management (28% of H120 revenue, 26% of H120 adjusted EBITDA)

Credit Information & Management provided the greatest surprise in terms of improved performance, reducing its Q120 organic revenue decline of 12.3% to a Q220 decrease of 2.7%. Demand for the core information products from financial and corporate clients is still weak and price competition remains. However, the company benefited from a very strong performance from PromozioniServizi, a consultancy that helps SMEs apply for financing and a relatively small proportion of the business unit, as its offer was well positioned to help clients gain access to Guarantee Funds, the government-backed financial assistance plan implemented in response to COVID-19. What was also important, however, was management's decision to reallocate commercial resources to enlarge greatly PromozioniServizi's bank clientele, thereby significantly increasing the number of potential SME clients in search of government-guaranteed, low-cost funding. This not only helped reverse a declining EBITDA margin trend, but also propelled its margin to 36.4% in Q220. Management believes the margin is sustainable, but is less certain about the sustainability of the revenue growth rate beyond FY20.

Innovation & Marketing Services (27% of H120 revenue, 38% of H120 adjusted EBITDA)

Organic revenue and EBITDA declined by 2.2% and 1.8% respectively in Q220 and the two core business in Innovation & Marketing Services – Co.Mark and Warrant Hub – saw differing operating trends in Q220. Warrant Hub grew as clients continued to require support in applying for tax credits for R&D etc, and there has been increasing demand for consulting services with respect to obtaining subsidised finance from the EU, national and regional bodies. Co.Mark’s performance was affected by the economic lockdown and travel restrictions, which meant that consultants were not able to travel to clients, for example. Management believes the outlook for Co.Mark is more positive given the easing of lockdown restrictions and the announcement of another government incentive scheme to subsidise Co.Mark’s services via tax vouchers to clients, although the timing of the potential benefit of this is uncertain.

Group H1 P&L: Higher profitability, lower financing & lower tax

Overall, the EBITDA margin for the entire group was 20.0% in Q120, 34.7% in Q220 and therefore 28.2% in H120, increasing in Q220 due to improved profitability in all individual business units as highlighted above, but lower for H120 compared to the previous year due to the change in mix, ie the lower-margin businesses, Digital Trust and Credit Information & Management, represented a larger proportion on the group.

Group operating expenses were well controlled, down 1.7% y-o-y in the first six months on an underlying basis, ie excluding stock option costs. All expense items decreased except for ‘raw materials’, the line item that includes a high proportion of costs most responsive to the growth rate of the Digital Trust business unit, in which revenue grew during the period. Cost controls helped drive reported operating profit ahead by 3.4% y-o-y to €21.7m in H120 and by 16.6% in Q220, to give a margin of 24.7% versus 18.0% in Q219.

Net financial expenses declined by 67% y-o-y to €419k in H120, helped by an underlying lower net debt position (highlighted later) and the one-off benefit from financings concluded in the period. Higher operating profit and lower net financial expense combined to drive reported profit before tax growth of 6.1% in H120. A lower reported tax rate of 25% was helped by the one-off benefit from a non-recurring Italian government COVID-19 related relief, as well as residual tax benefits from FY19.

Cash flow and balance sheet: Improved cash generation

The net debt position at end H120 of €113.4m reduced from €128.0m at the end of FY19, and compares to €139.1m at end H119. The improvement in net debt was mainly due to free cash flow generation of €28.9m (€23.7m in H119) offset in part by the purchase of treasury shares of €9m to cover the new 2020–22 executive stock option plan. Key drivers of the improvement in free cash flow were higher profitability and an improvement in working capital due to an inflow on trade debtors (better collections and slightly lower revenue versus the prior year) and increased deferred income, which included c €1.7m received from the government during lockdowns for staff on furlough. Investment in tangibles and intangibles of €5.5m was relatively stable y-o-y. During Q220, free cash flow generation was €8.8m versus €5.8m in Q219, an increase of 51% y-o-y, following €20.1m in Q120. We forecast that, excluding M&A, the net debt position will improve from €128m at end FY19 to €98m at end-FY20.

Outlook: Guidance for FY20 reiterated

Management has reiterated its recent (introduced in June) guidance for FY20, having earlier withdrawn it due to the COVID-19 pandemic. It guides to revenue above €250m (a decline of c 3.4% at most vs €258.7m in FY19) and EBITDA of €72m (an increase of at least 1% vs €71.3m in FY19), which represents a slight improvement in EBITDA margin compared to FY19.

In our view, this guidance looks conservative given that just under half of guided annual revenue (49.5%) and EBITDA (47.7%) has already been achieved during H120, and Tinexta typically generates a greater proportion of its revenue and profit in the final six months of the financial year. On the conference call, management claimed to be very confident of meeting the new guidance, which it has not increased despite the better than expected results, exhibiting understandable caution against the backdrop of the current uncertain economic environment given COVID-19.

In the first results presentation hosted by the newly appointed CFO, Oddone Pozzi, he highlighted that a key priority will be to improve ROCE and free cash flow generation.

New forecasts

It is clear from the Q220 results that the businesses have weathered the lockdown better than we expected in our previous notes published in April and May. Therefore, we increase our forecasts for FY20 and FY21 as highlighted in Exhibit 2 below.

Exhibit 2: New forecasts for FY20 and FY21

€m

FY19

FY20e new

FY20e old

Change %

FY21e new

FY21e old

Change %

Revenue

- Digital Trust

106.655

115.4

108.1

6.8

126.9

118.9

6.8

- Credit Information & Management

72.286

69.7

65.0

7.2

65.0

63.1

3.1

- Innovation & Marketing Services

79.781

81.5

77.6

5.0

85.6

81.5

5.0

Total

258.7

266.6

250.8

6.3

277.5

263.5

5.3

Organic growth y-o-y (%)

- Digital Trust

11.1

8.2

1.3

6.9

10.0

10.0

0.0

- Credit Information & Management

(7.5)

(3.6)

(9.1)

5.5

(5.0)

(3.0)

(2.0)

- Innovation & Marketing Services

12.9

2.5

(5.5)

8.0

5.0

5.0

0.0

Total

5.9

2.7

(3.2)

5.8

4.5

5.1

(0.5)

EBITDA

- Digital Trust

29.6

31.5

29.6

6.7

35.0

32.8

6.7

- Credit Information & Management

17.5

15.1

11.7

29.5

13.9

11.1

25.2

- Innovation & Marketing Services

37.9

38.8

37.0

4.9

40.8

39.0

4.9

Subtotal

85.0

85.5

78.3

9.2

89.8

82.9

8.3

- Other

(8.2)

(8.8)

(7.0)

25.7

(9.2)

(7.4)

25.7

Total

76.8

76.7

71.3

7.6

80.5

75.5

6.6

EBITDA margin (%)

- Digital Trust

27.7

27.3

27.4

(0.1)

27.6

27.6

(0.1)

- Credit Information & Management

24.2

21.7

18.0

20.9

21.4

17.6

21.5

- Innovation & Marketing Services

47.6

47.6

47.7

(0.1)

47.7

47.8

(0.1)

Subtotal

32.9

32.1

31.2

2.7

32.3

31.4

2.8

Total

29.7

28.8

28.4

1.2

29.0

28.7

1.2

Source: Company accounts, Edison Investment Research

We raise our revenue forecast for FY20 by 6.3% to €266.6m and lift our EBITDA forecast by 7.6% to €76.7m. We note that this sets our FY20 revenue and EBITDA forecasts 6.6% above management guidance outlined above. Our forecasts now represent organic revenue growth of 2.7% on FY19 versus our previous estimate of a 3.2% decline. Our new EBITDA (pre-exceptionals) forecast of €76.7m (previously €71.3m) is broadly stable vs €76.8 pre-exceptionals in FY19 and 7.6% higher on a reported basis.

For Digital Trust, we had assumed that the deteriorating macroeconomic outlook would affect demand for solutions, transactions processed and consultancy services for the rest of the year. In the event, Digital Trust performed better than expected through Q2, which we anticipated to be the period most affected by the lockdown. As a result, we increase our forecast for organic revenue growth for Q320 and Q420 to 10% to give growth of 8.2% for the full year vs 1.3% previously. These are marginally higher than the 9.6% growth in Q220 and more in line with the recent double-digit growth rates that we had been modelling prior to COVID.

For Credit Information & Management, our upgrade reflects the new revenue streams for PromozioniServizi from helping corporates gain access to the government-backed COVID funding for the remainder of the year, which have a much higher margin than the rest of the business unit, plus the outperformance in Q220. We assume a reduction in this revenue stream in FY21.

For Innovation & Marketing Services, we retain our existing revenue forecasts for H220, as we had already assumed a recovery through the remainder of the year. The revenue estimate for both FY20 and FY21 increases due to the better performance from Q220 flowing through.

Valuation

The share price has recovered strongly from the low of €7.28 in March, and at €17.90 is trading around its all-time high.

On our new forecasts, EV/EBITDA is 12.4x in FY20e and 11.8x in FY21e. This compares with the long-term average since IPO in 2014 of 8.5x. The previous highest multiple under the current business structure was 10.3x in FY19. Tinexta should attract a higher multiple than it has historically, given it has a more attractive business mix, with the potential for higher growth rates than in previous years, as well as higher margins. The new CFO’s focus on ROCE and improving cash flow generation should bode well for future returns.

Exhibit 3: Financial summary

€m

2018

2019

2020e

2021e

31-December

IFRS

IFRS

IFRS

IFRS

INCOME STATEMENT

Revenue

 

 

238.7

258.7

266.6

277.5

Operating costs

(172.1)

(181.9)

(189.9)

(197.0)

EBITDA before non-recurring costs

 

 

66.6

76.8

76.7

80.5

EBITDA

 

 

66.0

71.3

76.7

80.5

Normalised operating profit

 

 

54.3*

59.0*

56.6

59.8

Amortisation of acquired intangibles

(5.8)

(5.9)

(5.8)

(5.8)

Exceptionals

(0.6)

(5.5)

0.0

0.0

Share-based payments

0.0

0.0

0.0

0.0

Reported operating profit

47.9

47.5

50.8

54.0

Net Interest

(2.5)

(4.1)

(1.5)

(2.0)

Joint ventures & associates (post tax)

0.1

(1.1)

(1.1)

(1.1)

Exceptionals

0.0

0.0

0.0

0.0

Profit Before Tax (norm)

 

 

52.3*

55.0*

53.3

56.6

Profit Before Tax (reported)

 

 

45.5

42.2

48.2

50.8

Reported tax

(12.6)

(13.4)

(14.2)

(15.0)

Profit After Tax (norm)

36.8*

38.3*

37.5

39.9

Profit After Tax (reported)

32.9

28.8

34.0

35.8

Minority interests

(0.6)

(0.6)

(0.4)

(0.5)

Discontinued operations

0.0

0.0

0.0

0.0

Net income (normalised)

36.2*

37.7*

37.1

39.5

Net income (reported)

32.4

28.2

33.5

35.4

Average number of shares outstanding (m)

46.6

47.0

46.1

46.1

EPS - normalised (€)

 

 

0.78*

0.80*

0.80

0.86

EPS - normalised fully diluted (€)

 

 

0.77*

0.80*

0.80

0.86

EPS - basic reported (€)

 

 

0.69

0.60

0.73

0.77

Dividend (€)

0.23

0.00

0.24

0.25

Revenue growth (%)

36.6

8.4

3.0

4.1

EBITDA Margin before non-recurring costs (%)

27.9

29.7

28.8

29.0

Normalised Operating Margin

22.8

22.8

21.2

21.5

BALANCE SHEET

Fixed Assets

 

 

307.1

316.7

308.6

300.4

Intangible Assets

272.1

269.9

267.3

264.5

Tangible Assets

8.2

21.2

15.8

10.3

Investments & other

26.8

25.6

25.6

25.6

Current Assets

 

 

143.4

139.4

172.1

207.3

Stocks

1.3

1.1

1.2

1.2

Debtors

86.3

89.8

92.5

96.3

Cash & cash equivalents

35.1

33.6

63.6

94.9

Other financial assets

8.2

6.6

6.6

6.6

Other

12.4

8.2

8.2

8.2

Current Liabilities

 

 

(194.4)

(160.4)

(161.2)

(163.3)

Creditors

(93.9)

(92.7)

(93.4)

(95.5)

Tax and social security

(0.7)

(2.9)

(2.9)

(2.9)

Short term borrowings

(97.4)

(62.0)

(62.0)

(62.0)

Other

(2.4)

(2.9)

(2.9)

(2.9)

Long Term Liabilities

 

 

(110.8)

(146.2)

(146.2)

(146.2)

Long term borrowings

(70.7)

(107.0)

(107.0)

(107.0)

Other long-term liabilities

(40.2)

(39.2)

(39.2)

(39.2)

Net Assets

 

 

145.4

149.4

173.4

198.2

Minority interests

(3.8)

(3.9)

(4.3)

(4.8)

Shareholders' equity

 

 

141.6

145.6

169.1

193.4

CASH FLOW

Operating cash flow

 

 

43.4

55.2

53.5

56.8

Capex

(13.1)

(13.5)

(12.0)

(12.5)

Acquisitions/disposals

(33.2)

(47.5)

(28.0)

0.0

Net interest

(1.4)

(2.5)

(1.5)

(2.0)

Equity financing

1.1

1.1

(10.0)

0.0

Dividends

(12.1)

(16.4)

0.0

(11.1)

Borrowings

17.3

23.7

0.0

0.0

Other

(3.9)

(1.7)

28.0

0.0

Net Cash Flow

(1.9)

(1.5)

30.0

31.3

Opening net debt/(cash)

 

 

103.8

123.8

128.0

98.0

FX

0.0

0.0

0.0

0.0

Other non-cash movements

(18.1)

(2.6)

0.0

0.0

Closing net debt/(cash)

 

 

123.8

128.0

98.0

66.7

Source: Company accounts, Edison Investment Research. Note: *Restated for exceptionals and amortisation.


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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

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

General disclaimer and copyright

This report has been commissioned by Tinexta and prepared and issued by Edison, in consideration of a fee payable by Tinexta. Edison Investment Research standard fees are £49,500 pa for the production and broad dissemination of a detailed note (Outlook) following by regular (typically quarterly) update notes. Fees are paid upfront in cash without recourse. Edison may seek additional fees for the provision of roadshows and related IR services for the client but does not get remunerated for any investment banking services. We never take payment in stock, options or warrants for any of our services.

Accuracy of content: 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 and have not sought for this information to be independently verified. Opinions contained in this report represent those of the research department of Edison at the time of publication. 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.

Exclusion of Liability: To the fullest extent allowed by law, Edison shall not be liable for any direct, indirect or consequential losses, loss of profits, damages, costs or expenses incurred or suffered by you arising out or in connection with the access to, use of or reliance on any information contained on this note.

No personalised advice: The information that we provide should not be construed in any manner whatsoever as, personalised advice. Also, 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 securities described in the report may not be eligible for sale in all jurisdictions or to certain categories of investors.

Investment in securities mentioned: Edison has a restrictive policy relating to personal dealing and conflicts of interest. 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, subject to Edison's policies on personal dealing and conflicts of interest.

Copyright: Copyright 2020 Edison Investment Research Limited (Edison).

Australia

Edison Investment Research Pty Ltd (Edison AU) is the Australian subsidiary of Edison. Edison AU is a Corporate Authorised Representative (1252501) of Crown Wealth Group Pty Ltd who holds an Australian Financial Services Licence (Number: 494274). 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

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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