Improving ongoing business footprint

Epwin Group 7 May 2019 Update
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Epwin Group

Improving ongoing business footprint

FY18 results

Construction & materials

7 May 2019

Price

83.0p

Market cap

£118m

Net debt (£m) at end December 2018

24.8

Shares in issue

142.9m

Free float

67%

Code

EPWN

Primary exchange

AIM

Secondary exchange

N/A

Share price performance

%

1m

3m

12m

Abs

14.6

7.6

(6.6)

Rel (local)

12.1

3.6

(4.4)

52-week high/low

90.0p

68.0p

Business description

Epwin Group supplies functional low-maintenance exterior building products (including windows, doors, roofline and rainwater goods) into a number of UK market segments and is a modest exporter. It has a vertically integrated model in windows and doors, and a leading market position in roofline products.

Next events

FY18 final DPS 3.20p ex dividend

9 May

AGM

21 May

FY18 final DPS to be paid

3 June

Analyst

Toby Thorrington

+44 (0)20 3077 5721

Epwin Group is a research client of Edison Investment Research Limited

Steps were successfully taken by Epwin to consolidate its ongoing operational footprint in FY18, a challenging trading year. We expect growth to resume this year with a small contribution from PVS (acquired after the year-end) also. It is too soon to call a significant uptick in market conditions but the start to FY19 has been encouraging according to management comments. An 8.3x P/E multiple offers a reasonable entry point and investors can collect a 3.9% yield with the final dividend payment (and 6.0% prospectively for FY19).

Year end

Revenue (£m)

PBT*
(£m)

EPS*
(p)

DPS
(p)

P/E
(x)

Yield
(%)

12/17**

292.8

22.4

13.4

6.7

6.7

8.1

12/18

281.1

16.5

9.8

4.9

8.5

5.9

12/19e

291.3

17.6

10.1

5.0

8.3

6.0

12/20e

296.2

18.7

10.7

5.3

7.8

6.3

Note: *PBT and EPS (fully diluted) are normalised, excluding intangible amortisation and exceptionals. **Restated to exclude discontinued operations.

Some positive signals in tough FY18 trading year

FY18 results matched our expectations with respect to earnings and year-end net debt levels in subdued market conditions. Epwin did post both volume and price uplifts in underlying terms for the ongoing businesses and both divisions recorded increased profitability from these operations in H2. Some successful restructuring actions were taken during the year though the effects of client losses in the prior year together with input cost pressures pared back headline revenues and underlying EBIT by 4% and 23%, respectively. Cash flow control was evident with a stable net debt position at c £25m despite the profit reduction and increased capex, with working capital inflows contributing well to this outturn.

PVS adds to an encouraging start to FY19

FY19 to date has seen a continuation of the positive volume and price momentum referred to above and the additions of Amicus (March 2018) and PVS (January 2019) will contribute to the forward momentum that we expect in the current year. Significant restructuring work has been undertaken and with a further warehouse consolidation move planned for later this year, the ongoing operational footprint changes should be substantially complete in Q120 Our earnings estimates are marginally lower for FY19 and higher for FY20 (versus our prior estimates) and we expect to see year-on-year growth in all three forecast years.

Valuation: Resuming growth

After a period of decline to a March low of 68p, Epwin’s share price has rebounded well following the FY18 results, returning to levels last seen in October last year. We expect FY18 to have been the trough earnings year; while our compound growth expectations are currently modest, corporate messaging is likely to become more positive in our view as restructuring activities taper down. The current year P/E and EV/EBITDA multiples are 8.3x and 5.1x, respectively, with a prospective 6.0% dividend yield (or 3.9% with the FY18 final).

FY18 results overview

FY18 saw lower headline revenues and operating profit reflecting the annualised effects of two significant client losses towards the end of the prior year, compounded by input cost pressures in the year and, as flagged with the FY17 results, management rebased the full year dividend. That said, underlying trading contained some positive indicators – including volume and price increases – and a number of restructuring projects were successfully completed in the year. Year-end net debt was stable at c £25m, or 0.9x EBITDA.

Exhibit 1: Epwin Group divisional and interim splits

£m

2017

2017R

2018

FY

% chg y-o-y

Group revenue

298.3

292.8

281.1

-4.0%

Extrusion & Moulding

183.6

183.6

177.4

-3.4%

Fabrication & Distribution

114.7

109.2

103.7

-5.0%

Group underlying operating profit

22.3

24.2

18.7

-22.7%

Extrusion & Moulding

21.5

21.5

17.5

-18.6%

Fabrication & Distribution

2.4

4.3

2.9

-32.6%

Group costs

(1.6)

(1.6)

(1.7)

Source: Epwin, Edison Investment Research. Note: 2017 was restated (R) at the end of FY18 for discontinued operations (ie the Northampton-based glass-sealed unit operations). H118 was presented before the disposal and, as the numbers were not comparable, we have not shown an H1/H2 split.

Extrusion & Moulding (E&M): Primarily PVC-based window profile systems, roofline and rainwater goods extrusion activities with wood composite decking products and glass reinforced plastic building products also in the portfolio.

Headline revenue and operating profitability fell by c 3% and c 19%, respectively, in FY18. The annualised effect of client status changes1 in FY17 collectively more than accounted for the year-on-year reductions in revenue and profitability (c £16.7m and c £4.9m attributed, respectively). Adjusting for this suggests underlying revenue growth of c 6% with EBIT up c 5%; price and sales volume increases were the main positive contributors to this underlying performance and input cost inflation (only partly covered in the period by price increases) constrained further profit growth.

  August 2017: Sale of SIG’s plastic building products branches to competitor GAP, Entu enters administration. March 2018: Acquisition of Amicus – becomes an internal group customer and moves external sales to F&D on consolidation.

Window systems – just under half of divisional revenues – grew strongly (+11% overall including +16% for the relatively new Profile 22 Optima range); we believe that this would have been driven by annualised effects of new Optima fabricators added in FY17, new ones secured during FY18 and higher prices. In other product groups, roofline was most affected by the SIG/Entu changes but ongoing volumes grew modestly otherwise, while rainwater/drainage goods and Stormking’s GRP moulding products both rose by c 6%, reflecting exposure to the newbuild housing sector. Decking product volumes rose modestly also.

The divisional footprint underwent further consolidation in FY18 with the relocation of extrusion lines from Macclesfield to other group sites, which was completed by the end of the year. The proposed construction of a new warehouse facility at Telford – commencing in H219, completing Q120 – would represent the final phase of major consolidation activity in this division in our view. This would accommodate four smaller satellite facilities and leave Telford, Tamworth and Scunthorpe as the core extrusion sites focused on specific profile market and segments giving rise to operational efficiencies and capacity to grow.

Fabrication & Distribution (F&D): Downstream manufacture of finished windows and doors (using profiles from E&M), and multi-channel (including own branches) B2B distribution of these and other group and third-party finished products.

As shown in Exhibit 1, reported revenue (-5%) and EBIT (c -33%) declined in FY18. Sales volumes and price increases both made modest positive underlying contributions to FY18 performance. The bigger influences were structural in nature, being:

the prior year administration of customer Entu (as in E&M, but a bigger negative impact here including Epwin’s sale of its Indigo Products subsidiary at the end of FY17);

closure of the Cardiff window fabrication facility (during H2); and

acquisition of Amicus Building Products (in March).

Excluding Amicus, like-for-like revenues were down 18% for the ongoing businesses and in the order of 30% for operating profit. (Note that glass sealed unit operations, which were previously reported in this division, were sold in January 2019 and classified as discontinued, hence not included in the above figures.)

We estimate that Distribution activities now represent around two-thirds of annualised sales in this division and Fabrication the remaining one-third. For the ongoing businesses, the former grew sales by c 5% in FY18, while the Fabrication top line (including the Cardiff and Indigo effects) declined by c 30%. There are now 83 distribution branches (including 15 with Amicus) carrying a range of plastic building products. Epwin has retained independent branding for the clusters of branches that it has brought into the group over time, but there is evidence of increasing commonality in lines carried and we expect ranges and administrative support platforms to evolve jointly. After restructuring and disposals, Epwin now has just three fabrication facilities: at Telford (Wrekin Windows), Paignton (Sierra Windows) and Upton-on-Severn (Safedoor/Permadoor). Since the year end, Epwin has acquired PVS, a decking installation business located in the east of England with a range of public and private sector customers. Potential synergies here include product supply from other group companies and expanding the installer base into other parts of the country from its current base.

Stable net debt position currently, reducing by end FY21

Year-end net debt stood at c £25m, marginally down from a year earlier. Free cash flow (FCF) of c £9m and, as the Amicus acquisition was cash neutral (ie net of cash acquired with the business), after the reduced cash dividend payout (at £8.8m), there was a small net cash inflow overall for the year.

EBITDA declined by c £5m y-o-y to £27m, but this was more than compensated for by an improved working capital performance, from an outflow of £7m in the prior year to a c £5m inflow in FY18. Inventory reduction inflows were achieved at the half-year stage and substantially retained at the year end. For the year overall, there was a modest receivables inflow (generated in H2, possibly from lower year-end activity levels) and a stronger positive payables effect. Non-trading outflows relating to restructuring and discontinued activities were comparable in both years at £6–7m. As a result, FY18 operating cash inflow (after all discontinued cash effects) was c £26m.

The other notable cash flow item was a step-up in capex in the year to £12.5m in total, of which £12m related to tangible fixed assets. The largest component of the c £7m increase arose from site moves (essentially consolidating Macclesfield equipment into the Telford and Scunthorpe facilities) at a cost approaching £4m. There was also spend of below £1m relating to a new aluminium profile window system, which is expected to be launched shortly. The base, maintenance level of capex has risen gradually over the last four years to £4.5m in FY18; this and the total capex spend compares to the £8.3m depreciation charge in the year.

Cash flow outlook: We expect a neutral cash flow performance in FY19, with a small FCF increase applied to acquisitions (c £2.8m covering PVS and a small deferred payment for Amicus) and the rebased dividend (£7.0m). Thereafter, we expect FCF to rise to c £13m and c £16m in FY20 and FY21, respectively, covering cash dividend payments by around 2x. Consequently, there is a meaningful reduction in our projected net debt by the end of FY21 as currently modelled. The new warehouse facility in Telford is expected to start construction in H2 with completion in early FY20 and is likely to be leased by the company.

Estimates now include PVS acquisition

Management is not flagging any material changes in market conditions, although reported an encouraging start to FY19 supported by recovery of input cost increases, core volume growth (unquantified) and some benefits from the reshaped manufacturing footprint starting to come through. New decking and window system products in FY19 are positive markers of renewed outward focus in our view, following a period of internal restructuring.

Our earnings estimates are broadly unchanged overall. In underlying terms, our revenue expectations have been adjusted downwards slightly from the FY18 base level and we have made small margin changes in the two divisions (E&M lower, F&D higher). The resulting small net reduction is matched by our expected PVS EBIT contribution in FY19. Hence the mild downward PBT movement for this year is effectively an interest cost effect. In FY20, PVS moves our estimates marginally ahead (versus our prior estimate).

Exhibit 2: Epwin Group revised estimates

EPS, fully diluted, normalised (p)

PBT, normalised (£m)

EBITDA (£m)

Old

New

% chg.

Old

New

% chg.

Old

New

% chg.

FY18

9.7

9.8

0.5

17.0

16.5

-2.9

27.2

27.0

-0.7

FY19e

10.2

10.1

-1.8

17.9

17.6

-1.7

28.2

28.2

---

FY20e

10.6

10.7

0.7

18.6

18.7

0.8

28.9

29.5

+1.9

FY21e

N/A

11.1

N/A

N/A

19.4

N/A

N/A

30.3

N/A

Source: Edison Investment Research. Note: 2018 old = estimate, new = actual.


Exhibit 3: Financial summary

£m

2013

2014

2015

2016

2017

2017

2018

2019e

2020e

2021e

Year end 31 December

IFRS

IFRS

IFRS

IFRS

IFRS

IFRS

IFRS

IFRS

IFRS

IFRS

PROFIT & LOSS

 

 

 

 

 

 

 

Restated

 

 

 

 

Revenue

 

 

255.3

259.5

256.0

293.2

298.3

292.8

281.1

291.3

296.2

300.9

Cost of Sales

 

 

(185.8)

(186.7)

(178.6)

(200.6)

(207.5)

(201.5)

(196.4)

(203.3)

(206.8)

(210.0)

Gross Profit

 

 

69.5

72.8

77.4

92.6

90.8

91.3

84.8

88.0

89.5

90.9

EBITDA

 

 

21.4

24.5

25.6

33.3

30.3

32.1

27.0

28.2

29.5

30.3

Operating Profit (before GW and except.)

15.6

19.5

20.1

25.6

22.3

24.2

18.7

19.7

20.7

21.3

Intangible Amortisation

 

 

(1.7)

(1.7)

(0.0)

(1.1)

(1.1)

(1.1)

(1.2)

(0.5)

(0.5)

(0.5)

Exceptionals

 

 

(5.1)

2.3

(0.6)

(0.2)

(7.4)

(7.4)

(2.0)

0.0

0.0

0.0

Other

 

 

0.0

(0.8)

(0.4)

(0.3)

(0.6)

(0.6)

(0.7)

(0.7)

(0.7)

(0.7)

Operating Profit

 

 

8.8

19.3

19.1

24.0

13.2

15.1

14.8

18.5

19.5

20.1

Net Interest

 

 

(1.0)

(0.7)

(0.5)

(1.0)

(1.2)

(1.2)

(1.5)

(1.4)

(1.3)

(1.2)

Profit Before Tax (norm)

 

 

14.6

18.0

19.2

24.3

20.5

22.4

16.5

17.6

18.7

19.4

Profit Before Tax (FRS 3)

 

 

7.9

18.6

18.6

23.0

12.0

13.9

13.3

17.1

18.2

18.9

Tax

 

 

(1.3)

(3.5)

(3.3)

(3.4)

(1.9)

(2.3)

(2.5)

(3.2)

(3.4)

(3.5)

Profit After Tax (norm)

 

 

12.4

14.4

15.9

20.9

17.6

19.1

14.0

14.4

15.3

15.9

Profit After Tax (FRS 3)

 

 

5.1

15.1

15.3

19.6

10.1

11.6

10.8

13.9

14.8

15.4

 

 

 

 

 

 

 

 

 

 

 

 

 

Average Number of Shares Outstanding (m) 

122.3

128.0

135.2

141.5

142.6

142.6

142.9

142.9

142.9

142.9

EPS - normalised (p)

 

 

10.1

11.2

11.8

14.8

12.4

13.4

9.8

10.1

10.7

11.1

EPS - normalised (p) FD

 

 

 

11.2

11.7

14.7

12.4

13.4

9.8

10.1

10.7

11.1

EPS - FRS 3 (p)

 

 

4.2

11.8

11.3

13.8

7.1

7.1

4.1

9.7

10.4

10.8

Dividend per share (p)

 

 

0.0

4.2

6.4

6.6

6.7

6.7

4.9

5.0

5.3

5.5

 

 

 

 

 

 

 

 

 

 

 

 

 

Gross Margin (%)

 

 

27.2

28.1

30.2

31.6

30.4

31.2

30.2

30.2

30.2

30.2

EBITDA Margin (%)

 

 

8.4

9.4

10.0

11.3

10.2

11.0

9.6

9.7

9.9

10.1

Operating Margin (before GW and except.) (%)

6.1

7.5

7.9

8.7

7.5

8.3

6.7

6.7

7.0

7.1

 

 

 

 

 

 

 

 

 

 

 

 

 

BALANCE SHEET

 

 

 

 

 

 

 

 

 

 

 

 

Fixed Assets

 

 

54.7

53.8

93.5

108.5

106.2

 

111.7

113.9

113.6

113.1

Intangible Assets

 

 

26.4

24.7

59.7

70.2

69.6

 

73.7

75.2

74.7

74.2

Tangible Assets

 

 

25.1

26.2

33.1

37.9

36.0

 

37.3

38.0

38.2

38.2

Other

 

 

3.2

2.9

0.7

0.4

0.6

 

0.7

0.7

0.7

0.7

Current Assets

 

 

62.1

62.3

87.2

82.6

82.2

 

75.7

80.9

83.6

89.2

Stocks

 

 

21.7

22.4

23.6

28.2

29.6

 

29.2

32.2

33.3

33.8

Debtors

 

 

40.1

37.6

41.5

41.4

45.3

 

40.4

42.6

44.2

45.2

Cash

 

 

0.3

2.3

22.1

13.0

7.3

 

6.1

6.1

6.1

10.2

Current Liabilities

 

 

(54.5)

(49.0)

(68.8)

(79.2)

(79.2)

 

(69.3)

(74.1)

(68.9)

(66.2)

Creditors

 

 

(51.5)

(48.6)

(53.2)

(62.9)

(58.2)

 

(63.7)

(63.7)

(64.7)

(66.2)

Short term borrowings

 

 

(3.0)

(0.4)

(15.6)

(16.3)

(21.0)

 

(5.6)

(10.4)

(4.2)

0.0

Long Term Liabilities

 

 

(25.7)

(4.3)

(31.8)

(21.0)

(15.5)

 

(28.1)

(23.8)

(23.8)

(23.8)

Long term borrowings

 

 

(16.0)

(0.8)

(20.9)

(17.3)

(11.4)

 

(25.3)

(21.0)

(21.0)

(21.0)

Other long term liabilities

 

 

(9.7)

(3.5)

(10.9)

(3.7)

(4.1)

 

(2.8)

(2.8)

(2.8)

(2.8)

Net Assets

 

 

36.6

62.8

80.1

90.9

93.7

 

90.0

96.9

104.5

112.3

 

 

 

 

 

 

 

 

 

 

 

 

 

CASH FLOW

 

 

 

 

 

 

 

 

 

 

 

 

Operating Cash Flow

 

 

12.1

19.8

23.8

30.8

19.9

18.1

25.8

23.4

26.8

29.4

Net Interest

 

 

(0.9)

(0.7)

(0.5)

(1.0)

(1.0)

(1.0)

(1.3)

(1.4)

(1.3)

(1.2)

Tax

 

 

(0.9)

(1.7)

(2.3)

(3.8)

(2.7)

(2.7)

(2.6)

(2.7)

(2.9)

(3.0)

Capex

 

 

(4.9)

(5.6)

(9.0)

(12.7)

(7.1)

(5.3)

(12.5)

(9.3)

(9.3)

(9.3)

Acquisitions/disposals

 

 

(0.2)

0.0

(20.9)

(10.2)

(3.9)

(3.9)

0.0

(2.8)

0.0

0.0

Financing

 

 

0.0

10.0

0.0

0.0

0.0

0.0

(0.0)

0.0

0.0

0.0

Dividends

 

 

0.0

(1.9)

(6.7)

(9.1)

(9.5)

(9.5)

(8.8)

(7.0)

(7.2)

(7.6)

Net Cash Flow

 

 

5.2

19.9

(15.6)

(6.1)

(4.3)

(4.3)

0.5

0.2

6.2

8.3

Opening net debt/(cash)

 

 

23.2

18.7

(1.1)

14.4

20.6

20.6

25.1

24.8

25.3

19.1

HP finance leases initiated

 

 

(0.5)

(0.3)

0.4

1.9

(1.4)

(1.4)

(1.1)

(0.7)

0.0

0.0

Other

 

 

(0.1)

0.2

(0.3)

(2.1)

1.2

1.2

0.9

(0.0)

(0.0)

0.0

Closing net debt/(cash)

 

 

18.6

(1.1)

14.4

20.6

25.1

25.1

24.8

25.3

19.1

10.8

Source: Epwin accounts, Edison Investment Research. Note: FY13 to FY17 EPS benefited in part from recovered tax losses. FY17 restated for discontinued operations.

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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

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

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United States of America

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NSW 2000, Australia

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Australia

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

New Zealand

The research in this document is intended for New Zealand resident professional financial advisers or brokers (for use in their roles as financial advisers or brokers) and habitual investors who are “wholesale clients” for the purpose of the Financial Advisers Act 2008 (FAA) (as described in sections 5(c) (1)(a), (b) and (c) of the FAA). This is not a solicitation or inducement to buy, sell, subscribe, or underwrite any securities mentioned or in the topic of this document. For the purpose of the FAA, the content of this report is of a general nature, is intended as a source of general information only and is not intended to constitute a recommendation or opinion in relation to acquiring or disposing (including refraining from acquiring or disposing) of securities. The distribution of this document is not a “personalised service” and, to the extent that it contains any financial advice, is intended only as a “class service” provided by Edison within the meaning of the FAA (i.e. without taking into account the particular financial situation or goals of any person). As such, it should not be relied upon in making an investment decision.

United Kingdom

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

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