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Life sciences helping the COVID-19 fight

Mercia Asset Management 14 October 2020 Update
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Mercia Asset Management

Life sciences helping the COVID-19 fight

Portfolio update

Investment companies

14 October 2020

Price

21.4p

Market cap

£94m

Net cash (£m) at 31 March 2020

30.2

Shares in issue

440.1m

Free float

68.6%

Code

MERC

Primary exchange

AIM

Secondary exchange

N/A

Share price performance

%

1m

3m

12m

Abs

18.9

4.4

(25.4)

Rel (local)

19.4

6.6

(11.2)

52-week high/low

33.5p

13.8p

Business description

Mercia Asset Management is a regionally focused specialist asset manager. Its stated intent is to become the leading regional provider of supportive balance sheet, venture, private equity and debt capital in transaction sizes typically below £10m.

Next event

Half-year results

December 2020

Analysts

Richard Williamson

+44 (0)20 3077 5700

Rob Murphy

+44 (0)20 3077 5700

Mercia Asset Management is a research client of Edison Investment Research Limited

Life sciences is one of Mercia’s areas of focus and investment expertise. Seven of Mercia’s top 20 holdings at 31 March 2020 were in life sciences, valued at £29m in aggregate or 33% of total portfolio value (all of which had originated through Mercia’s third-party managed funds), with another c 40 earlier-stage life sciences investments across its third-party managed funds. COVID-19 has accelerated the opportunity for a new generation of novel and recombinant vaccines. This explosion of potential new treatments will require new diagnostics and bio-manufacturing support to scale supply once they are approved. These are areas where Mercia is already invested.

Period end

Net cash* (£m)

Direct
investments (£m)

FUM
(£m)

NAV
(£m)

NAV per share (p)

P/NAV
(x)

03/17

59.6

52.0

336.5

121.4

40.4

0.53

03/18

49.4

66.1

400.0

123.5

40.7

0.53

03/19

29.8

87.7

381.0

126.1

41.6

0.51

03/20

30.2

87.5

658.0

141.5

32.1

0.67

Note: *Includes liquid securities but not funds held on behalf of EIS investors.

Mercia remains well funded

Mercia ended FY20 with £30m of unrestricted balance sheet cash and short-term liquidity investments included within total liquidity of c £320m across all asset classes. This means it is in a strong position to continue to deploy capital, both through its managed funds as well as in direct investments on its balance sheet.

Overall beneficial impact from COVID-19

Although Mercia’s engineering/materials related investments have experienced the most negative impact from COVID-19, some of these have started to show signs of recovery. However, 80% of Mercia’s direct investment portfolio is in sectors that have seen positive benefits from COVID-19, such as life sciences (33% of the direct investment portfolio) and software (49% of the direct investment portfolio), providing a strong underpinning for FY21.

Valuation: 0.67x NAV + £20m for MFM

Mercia’s shares continue to trade at a discount to NAV (0.67x), even before considering the embedded value of Mercia’s fund management operations (MFM), which we estimate could be worth an additional £20m (c 4.5p per share) on top of NAV. Catalysts for a re-rating include further scaling of the business, commercialisation of the direct investment portfolio and/or further successful exits similar to that of The Native Antigen Company announced in July 2020.

Mercia’s life sciences portfolio

COVID-19 presses the accelerator

For many years, life sciences has been a significant growth sector globally, with new technologies and techniques being applied across numerous specialist fields. The UK is a global leader in life sciences, with new businesses being set-up or spun out of universities across the breadth of the country. COVID-19, and the search for better diagnostics, vaccines and bio-manufacturing, has delivered a boost for the sector, with momentum anticipated to continue even once new vaccines have been found.

Mercia has a 15-year track record in the life sciences sector, which is not surprising given most of the UK’s fast-growing life sciences’ industry is based in the UK’s regions and, as such, life sciences is one of Mercia’s three principal sectors.

Mercia and its life sciences portfolio companies have issued a series of announcements in 2020 (including the sale of The Native Antigen Company announced in July 2020):

In early April, two of Mercia’s direct portfolio companies, The Native Antigen Company and Oxford Genetics (OXGENE), announced the formation of a new strategic partnership to scale up COVID-19 antigen production. This was followed in early May by the announcement of a £3m funding round into OXGENE, with Mercia investing a further £1m alongside Canaccord Genuity Wealth Management. OXGENE’s technology accelerates the design, discovery and manufacture of new biologics.

14 May 2020 – Medherant, a transdermal drug delivery company, announced a partnership agreement with Cycle Pharmaceuticals to develop new products using Medherant's proprietary TEPI Patch technology. Under the agreement, Medherant will receive upfront payments for each candidate drug targeted and royalty payments on future product sales.

1 July 2020 – MIP Diagnostics completed a £5.1m funding round to scale production of its polymer antibodies, with Mercia committing £0.5m alongside the Business Growth Fund, Downing Ventures, Calculus Capital and MIP management.

9 July 2020 – Mercia announced the sale of The Native Antigen Company for up to £18m in cash, with management expecting to realise £5.2m (1.2p per share) for the group’s 29.4% direct investment. The Native Antigen Company was held at £3.5m on the balance sheet at 31 March 2020, with the sale representing a fair value gain of up to £1.9m – an 8.4x return on Mercia’s initial December 2014 direct investment and an internal rate of return (IRR) of 65%.

Given the significant progress made in FY20, Mercia provided an update on its life sciences portfolio on 18 September 2020 to highlight the unrecognised value in the portfolio.

Life sciences in the context of the overall portfolio

Life sciences is one of Mercia’s areas of focus and investment expertise.

Seven of Mercia’s top 20 holdings at 31 March 2020 were in life sciences, valued at £29m in aggregate or 33% of total portfolio value (all of which had originated through Mercia’s third-party managed funds) with another c 40 earlier-stage investments across its third-party managed funds. In FY20 to date, £4.2m has been invested into six of Mercia’s direct life sciences investments, with a further £1.6m invested in the sector through Mercia's managed funds.

At 31 March 2020, Mercia held £30m of unrestricted cash and short-term liquidity investments within total liquidity of c £320m across all asset classes. This financial firepower means Mercia is in a strong position to continue to deploy capital through its managed funds as well as directly from its balance sheet.

Although Mercia’s engineering/materials related investments have experienced the most negative impact from COVID-19, a number of these have started to show signs of recovery over the past few months. However, over 80% of the portfolio is in sectors that have responded positively to the COVID-19 pandemic, such as life sciences (a third of the direct investment portfolio), software and digital entertainment (49% of the direct investment portfolio), providing a strong underpinning for FY21.

Exhibit 1: Direct investment portfolio

£000s

Net value
1 April 2019

Net cash invested FY20

Fair value change
FY20

Net value
31 March 2020

Fair value change
FY20

Mercia’s holding at
31 March 2020

Estimated enterprise value** at
31 March 2020

£000s

£000s

£000s

£000s

%

%

£000s

nDreams

15,120

1,000

-

16,120

-

36.4

44,300

OXGENE

10,161

-

1,582

11,743

16

30.2

38,900

Intechnica

6,677

500

-

7,177

-

27.5

26,100

Medherant

5,205

1,500

-

6,705

-

30.1

22,300

Voxpopme

3,026

2,000

1,004

6,030

33

17.1

35,300

Ton UK (Intelligent Positioning)

5,473

400

(1,519)

4,354

(28)

28.2

15,400

Impression Technologies

5,381

2,000

(3,087)

4,294

(57)

25.9

16,600

Faradion

3,525

500

-

4,025

-

15.6

25,800

Warwick Acoustics

7,904

1,065

(5,313)

3,656

(67)

52.9

6,900

The Native Antigen Company*

2,863

-

630

3,493

22

29.4

11,900

Soccer Manager

2,099

300

135

2,534

6

34.8

7,300

Edge Case Games

2,300

-

-

2,300

-

21.2

10,800

Locate Bio

500

1,750

-

2,250

-

17.4

12,900

VirtTrade (Avid Games)

3,938

550

(2,288)

2,200

(58)

25.8

8,500

PsiOxus Therapeutics

2,377

160

(344)

2,193

(15)

1.4

156,600

sureCore

1,834

333

-

2,167

-

22.0

9,900

W2 Global Data Solutions

2,000

-

-

2,000

-

15.2

13,200

Eyoto Group

1,755

875

(878)

1,752

(50)

15.7

11,200

One Touch Apps (Clear Review)

-

500

-

500

-

3.9

12,800

Concepta

1,133

750

(1,408)

475

(124)

22.4

2,100

Other direct investments

4,388

1,473

(4,358)

1,503

 

Total

87,659

15,656

(15,844)

87,471

Source: Mercia. Note: Excludes post year-end investments. *The sale of The Native Antigen Company was announced at the start of July 2020 for up to £18m in cash, a c 50% uplift on fair value. **Enterprise values are estimated from fully diluted shareholding percentages.

Update on life sciences portfolio

We have provided a summary of Mercia’s seven direct investments in Exhibit 3, but Mercia’s full announcement, including commentary on the managed fund investments in the sector can be found here.

We have also recorded an Edison TV interview, where Dr Mark Payton (CEO with responsibility for OXGENE, Medherant and MIPs), Peter Dines (COO and previous head of life sciences with responsibility for Sense Bio, Locate Bio, The Native Antigen Company and Axis) and Dr Mark Wyatt (investment director with responsibility for Abingdon Health) discuss Mercia’s approach to investment in the life sciences sector, the impact of COVID-19 and what this might mean for Mercia’s future investment strategy in life sciences.

Exhibit 2: Management interview video - Mercia’s approach to life sciences

Source: Edison Investment Research

Mercia’s approach to investment in life sciences

Mercia’s investment track record in the life sciences sector stretches back over 15 years. Today, Mercia manages a portfolio of over 400 businesses through its venture capital, private equity and debt managed funds, of which c 10% by number are in the life sciences sector. Together with its focus on the regions and wide network of offices (eight locations around the country), Mercia has privileged, early access to deal flow from the regions. This provides a filtered pipeline of future direct investments at the parent level. It is notable that all seven life science investments in Mercia’s top 20 holdings originated through its managed funds.

It is also worth making the point that life sciences is a very broad investment category. Within the Mercia senior management team, Dr Mark Payton, Peter Dines and Dr Mark Wyatt, all have industry expertise in the sector as well as a long-term investment track record. However, given the breadth of the sector, the team benefits from Mercia’s collective network of contacts to validate and undertake diligence on potential investment opportunities in specific fields. Mercia has built relationships with 19 university partners to support the business. With over 40 life sciences companies in the group, Mercia also has access to a network of non-executive directors, each a source of potential deal flow and sector contacts.

Given its financial resources, Mercia targets businesses with relatively modest capital needs, typically up to c £20m in total across multiple rounds. Given that leading biotechs often raise hundreds of millions of dollars of pure risk capital, this constrained access to capital means Mercia tends to look for opportunities in relatively unloved sectors such as diagnostics, medtech (although recent valuations have been picking up) and improvements in bio-manufacturing production.

COVID-19 has accelerated investment in life sciences

COVID-19 has also had a major impact. As has happened with the acceleration of the transition to a digital economy, COVID-19 has also significantly accelerated vaccine development, with five years of normal development time being compressed into just months. In the last 20 years, no more than a handful of new vaccines have been approved for use on the public. However, in response to COVID-19, c 40 new vaccines are under clinical development, with six in Phase III trials, of which five are based on novel recombinant technologies. Another 100+ are in pre-clinical trials.

For Mercia, COVID-19 has accelerated the opportunity for a new generation of novel and recombinant vaccines. There is unlikely to be a single vaccine, with multiple vaccines a more probable outcome to be used amongst different groups by governments around the world. This explosion of potential new treatments will all require new diagnostics to measure their efficacy, as well as bio-manufacturing support to scale supply once they are approved. These are areas where Mercia has invested.

Exhibit 3: Mercia’s direct investments in life sciences

OXGENE

Stage: Series B

Bio-manufacturing – gene therapy, gene editing and antibody discovery

Valuation: £38.9m

Direct stake: 30.2% fully diluted

Mercia direct funding as at 31/3/20: £5.1m

Managed funds: c 10% fully diluted stake

Strategic partnership with Fujifilm Diosynth Biotechnologies

100%+ annual revenue growth (FY18–20)

Co-investors: Canaccord Genuity Wealth Management

Indirect spin-out from Oxford University

 

 

Medherant

 

Stage: Series A

Medtech – transdermal drug-in-adhesive patches

Valuation: £19.2m

Direct stake: 30.1% fully diluted

Mercia direct funding as at 31/3/20: £5.2m

Managed funds: c 16% fully diluted stake

Co-investors: Cycle Pharma, Innovate UK

University of Warwick

In June 2020, the company completed a £2.8m syndicated round, with Mercia investing £1.4m

In May 2020, Medherant announced a strategic partnership with Cycle Pharma to commercialise the TEPI Patch® technology

 

 

Locate Bio

 

Stage: Seed

Orthobiologics – therapies include bone protein to overcome lower back pain and biological renewal of the intervertebral disc

Valuation: £12.9m

Direct stake: 17.4% fully diluted

Mercia direct funding as at 31/3/20: £2.3m

Managed funds: c 17% fully diluted stake

New CEO appointed (ex ApaTech)

University of Nottingham 

Co-investors: Wellcome Trust, Heraeus Medical, Future Fund

In July 2020, Locate secured a syndicated investment of £2.5m of which Mercia made a direct investment of £0.8m.

 

 

MIP Diagnostics

 

Stage: Series A

Diagnostics – development and manufacture of synthetic affinity reagents, polymers designed to bind to specific target molecules for detection, purification or extraction

Valuation: £12.9m

Direct stake: 3.3% fully diluted

Mercia direct funding as at 31/3/20: £0.3m

Managed funds: c 30% fully diluted stake

Co-investors: Downing, Calculus, BGF

University of Leicester

£5.1m syndicated funding round in July 2020 to accelerate global expansion

Partnership with Stream Bio to develop a rapid COVID-19 viral infection detection assay

 

 

The Native Antigen Company

 

Stage: Exited

Diagnostics – leading producer of infectious disease reagents that include antigens for COVID-19 antibody test kits

Valuation: £18.0m (50% premium to book value)

Direct stake: 29.4% fully diluted

Mercia direct funding as at 31/3/20: £0.1m

Managed funds: c 30% fully diluted stake

Co-investors: Angel investors

University of Birmingham

Sold to global life sciences tools company LGC in July 2020

The exit generated an 8.4x return and a 65% IRR on Mercia’s original direct investment and a 12.1x return, a 31% fund IRR, on Mercia’s blended managed fund investments

Source: Edison Investment Research, Crunchbase, Mercia Asset Management

Exhibit 4: Financial summary

£'000

2015

2016

2017

2018

2019

2020

Year end 31 March

IFRS

IFRS

IFRS

IFRS

IFRS

IFRS

INCOME STATEMENT

Revenue

 

 

508

1,755

6,660

10,197

10,675

12,747

Cost of Sales

(10)

(79)

(92)

0

0

0

Gross Profit

498

1,676

6,568

10,197

10,675

12,747

Operating costs

(1,495)

(4,011)

(9,051)

(10,633)

(12,115)

(12,661)

Fair value changes

3,934

896

4,268

2,823

3,916

(15,844)

Realised gains

0

0

839

871

0

0

Normalised operating profit

 

 

2,937

(1,439)

2,624

3,258

2,476

(15,758)

Amortisation of acquired intangibles

0

(17)

(301)

(301)

(301)

(852)

Exceptionals

(1,018)

(372)

(1,125)

(1,125)

0

(695)

Share-based payments

(44)

(230)

(395)

(497)

(171)

(528)

Reported operating profit

1,875

(2,058)

803

1,335

2,004

(17,833)

Net Interest

93

361

186

274

562

220

Joint ventures & associates (post tax)

0

0

0

0

0

0

Profit Before Tax (norm)

 

 

3,030

(1,078)

2,810

3,532

3,038

(15,538)

Profit Before Tax (reported)

 

 

1,968

(1,697)

989

1,609

2,566

(17,613)

Reported tax

0

0

54

54

54

159

Profit After Tax (norm)

3,030

(1,078)

2,810

3,532

3,038

(15,538)

Profit After Tax (reported)

1,968

(1,697)

1,043

1,663

2,620

(17,454)

Minority interests

0

0

0

0

0

0

Discontinued operations

0

0

0

0

0

0

Net income (normalised)

3,030

(1,078)

2,810

3,532

3,038

(15,538)

Net income (reported)

1,968

(1,697)

1,043

1,663

2,620

(17,454)

Basic average number of shares outstanding (m)

212

212

224

302

303

341

EPS – basic normalised (p)

 

 

1.43

(0.51)

1.26

1.17

1.00

(4.55)

EPS – diluted normalised (p)

 

 

1.43

(0.51)

1.21

1.13

1.00

(4.55)

EPS – basic reported (p)

 

 

0.93

(0.80)

0.47

0.55

0.86

(5.11)

Dividend (p)

0.00

0.00

0.00

0.00

0.00

0.00

Revenue growth (%)

(29.7)

245.5

279.5

53.1

4.7

19.4

Gross Margin (%)

98.0

95.5

98.6

100.0

100.0

100.0

Normalised Operating Margin

578.1

-82.0

39.4

32.0

23.2

-123.6

BALANCE SHEET

Fixed Assets

 

 

27,121

50,103

63,693

77,428

98,724

124,899

Intangible Assets

2,455

11,815

11,514

11,213

10,912

36,705

Tangible Assets

49

145

151

145

153

125

Right of use assets

0

0

0

0

0

598

Investments & other

24,617

38,143

52,028

66,070

87,659

87,471

Current Assets

 

 

54,349

31,730

64,576

53,965

31,180

31,951

Stocks

0

0

0

0

0

0

Debtors

716

798

747

1,057

782

1,298

Cash & cash equivalents

23,633

20,932

28,829

42,908

25,210

24,438

Short term liquidity investments

30,000

10,000

35,000

10,000

5,188

6,215

Current Liabilities

 

 

(631)

(1,521)

(6,698)

(7,760)

(3,730)

(6,659)

Creditors

(631)

(1,521)

(6,698)

(7,760)

(3,730)

(4,805)

Tax and social security

0

0

0

0

0

0

Lease liabilities

0

0

0

0

0

(118)

Short term borrowings

0

0

0

0

0

0

Other (incl deferred consideration)

0

0

0

0

0

(1,736)

Long Term Liabilities

 

 

0

(271)

(217)

(163)

(109)

(8,731)

Long term borrowings

0

0

0

0

0

0

Lease liabilities

0

0

0

0

0

(473)

Other long term liabilities

0

(271)

(217)

(163)

(109)

(8,258)

Net Assets

 

 

80,839

80,041

121,354

123,470

126,065

141,460

Minority interests

0

0

0

0

0

0

Shareholders' equity

 

 

80,839

80,041

121,354

123,470

126,065

141,460

NAV per share (p)

38.13

37.46

40.37

40.71

41.56

32.14

CASH FLOW

Op Cash Flow before WC and tax

2,943

(1,406)

2,700

3,339

2,560

(15,685)

Working capital

(20)

650

5,250

(87)

(3,724)

533

Exceptional & other

(4,952)

(1,268)

(5,107)

(3,694)

(3,916)

15,149

Depreciation of right-of-use assets

0

0

0

0

0

139

Tax

0

0

0

0

0

0

Net operating cash flow

 

 

(2,029)

(2,024)

2,843

(442)

(5,080)

136

Capex

(27)

(113)

(82)

(75)

(92)

(45)

Acquisitions/disposals

(11,563)

(20,939)

(8,779)

(10,664)

(17,673)

(28,056)

Net interest

22

397

165

260

531

245

Equity financing

67,230

(22)

38,750

0

(196)

30,000

Dividends

0

0

0

0

0

0

Other

(30,000)

20,000

(25,000)

25,000

4,812

(3,052)

Net Cash Flow

23,633

(2,701)

7,897

14,079

(17,698)

(772)

Opening net debt/(cash)

 

 

(39)

(23,633)

(20,932)

(28,829)

(42,908)

(25,210)

FX

0

0

0

0

0

0

Other non-cash movements

(39)

0

0

0

0

0

Closing net debt/(cash)

 

 

(23,633)

(20,932)

(28,829)

(42,908)

(25,210)

(24,438)

Closing net debt/ (cash) inc short-term liquidity investments (not EIS)

(53,633)

(30,932)

(59,601)

(49,435)

(29,769)

(30,186)

Source: Mercia Asset Management accounts

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

This Communication is being distributed in the United Kingdom and is directed only at (i) persons having professional experience in matters relating to investments, i.e. investment professionals within the meaning of Article 19(5) of the Financial Services and Markets Act 2000 (Financial Promotion) Order 2005, as amended (the "FPO") (ii) high net-worth companies, unincorporated associations or other bodies within the meaning of Article 49 of the FPO and (iii) persons to whom it is otherwise lawful to distribute it. The investment or investment activity to which this document relates is available only to such persons. It is not intended that this document be distributed or passed on, directly or indirectly, to any other class of persons and in any event and under no circumstances should persons of any other description rely on or act upon the contents of this document (nor will such persons be able to purchase shares in the placing).

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

United States

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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This report has been commissioned by Mercia Asset Management and prepared and issued by Edison, in consideration of a fee payable by Mercia Asset Management. 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.

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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

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

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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