Bluglass Open Day (LR)-22

Fund-raising and acquisition

BluGlass 28 March 2022 Update
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BluGlass

Fund-raising and acquisition

Tech hardware & equipment

Spotlight - Update

28 March 2022

Price

A$0.031

Market cap

A$31m

Share price graph

Share details

Code

BLG

Listing

ASX

Shares in issue (prior to placing)

1,005.2m

Net cash (A$m) at end December 2021 excluding finance leases

6.2m

Business description

BluGlass is an Australian technology company that is developing and commercialising a breakthrough compound semiconductor technology for the production of high-efficiency GaN laser diodes.

Bull

Strong demand for GaN laser diodes.

BluGlass’s proprietary technology provides a route to making higher power laser diodes.

Proposed acquisition represents a highly cost-effective route for bringing processing steps in-house.

Bear

BluGlass has yet to finish resolving reliability issues with its first-generation laser diodes.

Higher power RPCVD devices still under development.

Proposed acquisition substantially increases the cost base for up to 12 months.

Analysts

Anne Margaret Crow

+44 (0)20 3077 5700

Dan Ridsdale

+44 (0)20 3077 5729

BluGlass is a research client of Edison Investment Research Limited

BluGlass has raised A$3.4m through a placement at A$0.03/share to purchase a laser diode fabrication facility (fab) in California’s Silicon Valley. It intends to raise up to A$7.5m through an entitlement offer to existing shareholders, also at A$0.03/share, which closes on 12 April 2022 using the proceeds to convert the fab to GaN laser diode production. The transaction is in line with management’s stated aim of bringing third-party processes in-house, but BluGlass is proceeding with this much sooner than originally planned because of the opportunity to purchase a fab for a fraction of the price of building a new one.

Historical data

Year
end

Revenue
(A$m)

EBITDA
(A$m)

PBT*
(A$m)

EPS*
(c)

DPS
(c)

P/E
(x)

06/18

0.7

(3.8)

(3.8)

(0.97)

0.00

N/A

06/19

0.4

(5.1)

(5.1)

(1.21)

0.00

N/A

06/20

0.7

(3.6)

(4.8)

(1.01)

0.00

N/A

06/21

0.4

(4.6)

(6.8)

(0.94)

0.00

N/A

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

Purchase of laser diode fabrication facility

BluGlass is to acquire the facility lease and manufacturing equipment of a full-suite InP (indium phosphide) laser diode front- and back-end fab in California. It intends to use the fab for volume manufacture of blue GaN (gallium nitride) laser diodes, potentially including proprietary tunnel junction diodes made using its patented remote plasma chemical vapour deposition (RPCVD) process, which will potentially be higher power and higher brightness than any currently available.

Accelerating volume ramp-up of laser diodes

Longer term, the proposed transaction will quadruple the volume of laser diodes that BluGlass can sell. BluGlass is one of only four end-to-end GaN laser diode manufacturers globally, so the capacity expansion will potentially enable it to take a larger share of a market that Strategies Unlimited forecasts will reach US$735m by 2025. Management expects that bringing third-party processes in-house will improve gross margins longer term. Importantly, it will enable BluGlass to complete design iterations more quickly, thus potentially reducing the time it will take to bring the next generation of higher power laser diodes to market and maximising the market opportunity.

Valuation: Acquiring fab for a fraction of the cost of building a new one

Of the A$10.9m that BluGlass intends to raise, A$9.3m will be allocated to purchasing the facility and adapting it to GaN laser diode production, with the remainder earmarked for operational expenditure and recruitment. Management estimates that it would cost c US$40m (A$54m) to build an equivalent facility.

Opportunity to acquire working laser diode fab

Exhibit 1: Compound semiconductor fab in California

Exhibit 2: Floorplan of compound semiconductor fab

Source: BluGlass

Source: BluGlass

Exhibit 1: Compound semiconductor fab in California

Source: BluGlass

Exhibit 2: Floorplan of compound semiconductor fab

Source: BluGlass

BluGlass has agreed terms to acquire the facility lease and manufacturing equipment of a laser diode fab in Fremont, California. The fab is currently manufacturing indium phosphide (InP) laser diodes for high-speed telecoms/datacoms applications on 2” and 4” diameter wafers (BluGlass’s Silverwater facility processes 2” wafers) but the work is being moved to a different location. The fab takes in epitaxial wafers that already have deposited on them the multiple layers of compound semiconductor material forming the active part of laser diodes. The fab then adds the conductive metal layers that are required to complete the laser diode structure to the top of the epitaxial wafer, cuts the wafers into individual die, coats the sides of the die where the laser light is emitted, mounts the die into packages and tests them. The fab therefore has the ability to carry out the processing steps on laser diodes that BluGlass currently has to outsource, and can potentially provide additional capacity for steps such as testing, which BluGlass currently carries out in-house (see Exhibit 3). The Fremont fab already has the infrastructure in place to add additional deposition equipment for future growth.

Exhibit 3: Demonstration of RPCVD-grown RGB LEDs fabricated into devices

Source: BluGlass

BluGlass intends to adapt the Fremont process so it is suitable for making GaN laser diodes rather than InP diodes. It has already made contingent offers to key personnel, including laser fabrication engineers, wafer processing technicians and facility and maintenance people familiar with the equipment.

The facility lease and manufacturing equipment are being acquired for US$2.5m (c A$3.3m) made up of US$2.0m cash and US$0.5m in new BluGlass shares. BluGlass expects to spend A$3.5m, which includes working capital, adapting the facility for GaN laser diode production, which management estimates will take up to six months with an additional US$1.8m (A$2.5m) needed for coating equipment and reliability burn-in racks for volume production. Management estimates that it would cost c US$40m (A$54m) to build an equivalent facility.

Accelerating strategy

In-house capability speeds up the design of new laser diodes

BluGlass is currently addressing the reliability issues that have delayed the launch of its first blue laser diode products, which were expected to be available in 2021, by around a year. Problems with the third-party processing steps (see Exhibit 3) meant that the performance of the initial laser diodes degraded over time. Since identifying the issue, the company has strengthened its laser diode capability, for example appointing industry expert Jim Haden as President in September 2021, and progressed multiple design and development iterations of devices through the supply chain. As a result of this intensive activity, it has been able to demonstrate significant performance improvements across four prototypes: the 405nm and 420nm laser diodes in both single-mode and multi-mode devices, keeping the company on track to meet its revised goal of launching its first direct-to-market laser diodes in mid-calendar 2022.

The issue has highlighted that the length of time taken for a complete design iteration when relying on third parties means that only four or five full iterations can be carried out in a year (see Exhibit 4). Bringing the third-party processing steps in-house (see Exhibit 3) through the acquisition of the Fremont fab would enable BluGlass to complete up to 48 full iterations in a year. Acquiring the Fremont fab would not change the length of time required to solve the reliability issues with BluGlass’s first-generation laser diodes as the company intends to continue to work with its existing contract manufacturers for up to 12 months while the Fremont fab is transitioned to GaN manufacture. However, it would substantially reduce the time it will take to bring the next generation of RPCVD tunnel junction laser diodes to market. BluGlass’s next generation laser diodes will potentially be higher power and higher brightness than any currently available from competitors, so management is keen to bring them to market quickly to maximise the market opportunity. Having the in-house capability will also speed-up the development of green and ultra-violet laser diodes and enable BluGlass to progress multiple development programmes in parallel.

Improving revenues and profits from laser diodes

Exhibit 4: Financial benefits of proposed transaction

Metric

Contract manufacturer model

Owned-fab model

Annual epitaxial wafer capacity (Silverwater, Australia)

c 10,000 wafers

c 10,000 wafers

Annual wafer capacity

c 2,500 wafers

c 10,000 wafers

Annual development iteration capacity

c 4–5 full iterations
+10s of short loops

<48 full iterations
+100s of short loops

Annual revenue

c US$40m

c US$160m

Estimated gross margin

c 30%

c 45%

Cash flow positive

Year ending June 2025 (FY25)

Source: Company data.

Longer-term, bringing the third-party steps in-house would potentially have a highly beneficial impact on revenues and profits, quadrupling revenues and halving wafer production costs as BluGlass would not be sharing profits with contract manufacturers. The potential impact is summarised in Exhibit 4. Initially the additional cost associated with operating the Fremont facility would increase the cost per complete wafer, but the cost/wafer ratio will reduce as production scales. Management estimates that the production cost crossover would be reached in calendar 2024 (see Exhibit 5). As discussed in our initiation report, management has previously stated its intention of bringing processes in-house to improve margins, so the proposed acquisition is accelerating this aspect of its strategy.

Exhibit 5: Wafer fabrication costs

Source: BluGlass

Location in Silicon Valley

The acquisition potentially gives BluGlass an operating site in Silicon Valley, complementing its expitaxial wafer manufacturing facility in Australia and its testing facility in the Boston area of the US. Having a GaN manufacturing facility in the United States puts BluGlass in a much better position for winning US defence and government contracts and takes it closer to potential customers in key target markets such as miniaturised medical diagnostic devices, LiDAR and augmented reality/virtual reality. These applications and others are reviewed in our thematic report, Laser diodes – may the force be with you. Being in Silicon Valley will give BluGlass access to an exceptional talent pool including highly specialist engineers with laser diode expertise as well as better access to potential investors with in-depth understanding of the semiconductor sector.

Financing the proposed acquisition

Exhibit 6: Timeline

Event

Date

Offer announced

24 March 2022

Record date

29 March 2022

Entitlement offer opens

1 April 2022

Entitlement offer closes

5pm AEST, 12 April 2022

Allotment of new shares

29 April 2022

Event

Offer announced

Record date

Entitlement offer opens

Entitlement offer closes

Allotment of new shares

Date

24 March 2022

29 March 2022

1 April 2022

5pm AEST, 12 April 2022

29 April 2022

Source: Company data. Note: AEST = Australian Eastern Standard Time.

BluGlass intends to raise up to A$10.9m (gross) to finance the transaction. As noted above, A$9.3m of this will be allocated to purchasing the facility and adapting it to GaN laser diode production. It has also identified US$2.5m (A$3.3m) required for operational expenditure and recruitment. BluGlass has raised A$3.4m at A$0.03/share through a placing of 114.2m new shares to existing and new sophisticated and institutional investors, including institutional investors in both Australia and the US. In addition, it intends to raise up to A$7.5m (gross) through a non-renounceable 1:4 entitlement offer to eligible BluGlass shareholders, which will close on 12 April 2022 (see Exhibit 6), also at A$0.03/share. This will potentially result in the issue of 251.3m new shares. BluGlass also intends to carry out a pro-rata bonus options issue once the entitlement offer has completed. All eligible shareholders will receive one free listed bonus option for every eight shares they hold on the bonus options record date, with a strike price of $0.03.

Exhibit 7: Financial summary

A$'000s

2018

2019

2020

2021

30-June

AASB

AASB

AASB

AASB

INCOME STATEMENT

Revenue

 

 

714

425

656

364

Cost of Sales (excluding direct labour)

(1,158)

(1,745)

(1,898)

(3,070)

Gross Profit

(444)

(1,320)

(1,242)

(2,707)

EBITDA

 

 

(3,750)

(5,109)

(3,616)

(4,624)

Operating profit (before amort. and excepts.)

 

(3,941)

(5,287)

(4,687)

(6,757)

Amortisation of acquired intangibles

0

0

0

0

Exceptionals

0

(8,695)

0

0

Share-based payments

(56)

(674)

(1,237)

536

Reported operating profit

(3,997)

(14,656)

(5,925)

(6,221)

Net Interest

157

236

(69)

(78)

Profit Before Tax (norm)

 

 

(3,784)

(5,052)

(4,757)

(6,835)

Profit Before Tax (reported)

 

 

(3,840)

(14,421)

(5,994)

(6,298)

Reported tax

0

0

0

0

Profit After Tax (norm)

(3,784)

(5,052)

(4,757)

(6,835)

Profit After Tax (reported)

(3,840)

(14,421)

(5,994)

(6,298)

Average Number of Shares Outstanding (m)

389.4

418.3

473.1

724.6

EPS - normalised (c)

 

 

(0.97)

(1.21)

(1.01)

(0.94)

EPS - normalised fully diluted (c)

 

 

(0.97)

(1.21)

(1.01)

(0.94)

EPS - basic reported (c)

 

 

(0.99)

(3.45)

(1.27)

(0.87)

Dividend (c)

0.00

0.00

0.00

0.00

Revenue growth (%)

29.8%

-40.5%

54.5%

-44.6%

EBITDA Margin (%)

N/A

N/A

N/A

N/A

Normalised Operating Margin

N/A

N/A

N/A

N/A

BALANCE SHEET

Fixed Assets

 

 

8,954

5,395

7,883

5,840

Intangible Assets

8,695

0

0

0

Tangible Assets

259

5,395

7,883

5,840

Investments & other

0

0

0

0

Current Assets

 

 

17,716

8,558

8,547

7,718

Stocks

54

137

140

131

Debtors

2,253

2,262

2,919

3,351

Cash & cash equivalents

15,354

6,116

5,430

4,176

Other

55

43

58

59

Current Liabilities

 

 

(963)

(1,003)

(1,154)

(3,378)

Creditors

(530)

(473)

(408)

(566)

Lease liabilities

0

0

(168)

(184)

Short term borrowings (excluding lease liabilities)

0

0

0

(1,954)

Provisions

(433)

(530)

(578)

(674)

Long Term Liabilities

 

 

(318)

(1,306)

(2,882)

(2,670)

Long term borrowings (excluding lease liabilities)

0

0

0

0

Provisions and lease liabilities

(318)

(1,306)

(2,882)

(2,670)

Net Assets

 

 

25,389

11,644

12,393

7,509

Minority interests

0

0

0

0

Shareholders' equity

 

 

25,389

11,644

12,393

7,509

CASH FLOW

Operating Cash Flow

 

 

(3,514)

(4,931)

(4,348)

(4,809)

Capex

(114)

(4,308)

(1,681)

(90)

Acquisitions/disposals

0

0

0

0

Net interest

0

0

(9)

0

Equity financing

10,471

1

5,507

1,859

Dividends

0

0

0

0

Other

0

0

0

0

Net Cash Flow

6,843

(9,237)

(532)

(3,040)

Opening net debt/(cash)

 

 

(8,511)

(15,354)

(6,116)

(5,430)

FX

0

0

0

0

Other non-cash movements

0

0

(154)

(168)

Closing net debt/(cash)

 

 

(15,354)

(6,116)

(5,430)

(2,222)

Source: Company accounts

General disclaimer and copyright

This report has been commissioned by BluGlass and prepared and issued by Edison, in consideration of a fee payable by BluGlass. Edison Investment Research standard fees are £60,000 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 2022 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

1185 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

1185 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 BluGlass and prepared and issued by Edison, in consideration of a fee payable by BluGlass. Edison Investment Research standard fees are £60,000 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 2022 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

1185 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

1185 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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