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Looking forward to recovery

Tinexta 26 May 2020 Update
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Tinexta

Looking forward to recovery

H120 results

Professional services

26 May 2020

Price

€11.32

Market cap

€534m

Net debt (€m) at 31 March 2020

110

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

(4.6)

(11.6)

(12.1)

Rel (local)

(8.3)

15.2

1.7

52-week high/low

€14.36

€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

Guidance for FY20

June 2020

H120 results

4 August 2020

Q320 results

12 November 2020

Analysts

Russell Pointon

+44 (0)20 3077 5757

Fiona Orford-Williams

+44 (0)20 3077 5700

Tinexta is a research client of Edison Investment Research Limited

Management believes the COVID-19 pandemic will have the greatest impact on Tinexta’s profitability in the current financial quarter, before an anticipated recovery later in FY20. There is a confident message on cost savings and ongoing efficiencies to help mitigate some of the expected decline in revenue. We downgrade our forecasts to reflect a slower recovery in Digital Trust and a lower margin in Credit Information & Management. The EV/EBITDA multiple for FY20e is 8.9x.

Year end

Revenue (€m)

PBT*
(€m)

EPS*
(€)

DPS
(€)

P/E
(x)

Yield
(%)

12/18

238.7

48.3

0.74

0.23

15.3

2.0

12/19

258.7

45.7

0.65

0.00

17.4

0.0

12/20e

250.8

48.6

0.71

0.23

15.9

2.0

12/21e

263.5

53.8

0.79

0.26

14.3

2.3

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

Q120 results: Affected by COVID-1

Tinexta’s Q120 results showed the first impacts of the COVID-19 pandemic, with an organic revenue decline of 8.4% and a decline in adjusted EBITDA of 29.6%. The revenue declines were greater than we anticipated in Digital Trust and Innovation & Marketing Services, albeit the latter had a very strong comparative in Q119. All business units saw a decline in profitability given the speed and extent of the slowdown towards the end of the period. On the positive side, free cash flow generation improved significantly due to positive management of working capital. Management has said that it will provide new financial guidance for FY20 in late June: Q220 is expected to be the weakest period for growth, but recovery is anticipated thereafter.

Forecasts: FY20 EBITDA downgraded by 5.8%

We downgrade our FY20 EBITDA forecast by 5.8% due to a combination of declines reported in Q120, the assumption of a slower recovery in Digital Trust and a greater margin impact on Credit Information & Management. The downgrade takes our EBITDA forecast for FY20 to €71.3m, which is in line with reported EBITDA for FY19. Although there is no formal guidance, management does not expect ‘great discontinuities compared to the previous year’, as further cost savings and efficiencies are sought.

Valuation: Strong rebound in valuation

Multiples have increased given the recent strong share price performance and our downgrades to estimates. The EV/Sales multiples for FY20e and FY21e are 2.5x and 2.4x respectively. These compare with the long-term average since IPO of 1.8x, reflecting a better medium-term growth outlook from the newer group structure following M&A, and the resulting higher EBITDA margin of 29.7% in FY19 versus 18.8% in FY15.The EV/EBITDA multiples for FY20e and FY21e are 8.9x and 8.5x versus the long-term average since IPO of 8.5x.

Q120 results: Affected by COVID-19

Tinexta’s Q120 results showed the first signs of the impact of COVID-19 against a strong comparative in Q119. The first quarter is typically a seasonally less important quarter in the financial year. Organic revenue declined by 8.4% and organic EBITDA before non-recurring items declined by 25.5% at the business unit level. At the group level, ie including central corporate costs, the organic decline for adjusted EBITDA was 29.6% to €11.0m, as central costs increased by 12.6% to €1.9m.

Exhibit 1: Tinexta’s quarterly revenue and profitability progression

€000s

Q119

Q219

H119

Q319

Q419

H219

FY19

Q120

Revenue

- Digital Trust

25,192

26,553

51,745

25,067

29,843

54,910

106,655

25,932

- Credit Information & Management

19,364

18,548

37,912

14,804

19,570

34,374

72,286

16,987

- Innovation & Marketing Services

15,178

21,757

36,935

14,705

28,141

42,846

79,781

11,992

Total

59,734

66,858

126,592

54,576

77,554

132,130

258,722

54,911

Organic growth y-o-y (%)

- Digital Trust

9.5

10.5

10.0

11.2

12.9

12.1

11.1

2.9

- Credit Information & Management

(3.1)

(10.2)

(6.7)

(13.9)

(3.8)

(8.3)

(7.5)

(12.3)

- Innovation & Marketing Services

32.9

7.6

16.7

(10.0)

24.1

9.8

12.9

(22.3)

Total

10.2

3.3

6.4

(2.5)

11.8

5.4

5.9

(8.4)

EBITDA (before non-recurring items)

- Digital Trust

5,984

7,374

13,358

7,710

8,502

16,212

29,570

5,919

- Credit Information & Management

5,289

4,240

9,529

3,144

4,809

7,953

17,482

3,584

- Innovation & Marketing Services

5,927

11,451

17,378

5,821

14,749

20,570

37,948

3,396

Subtotal (before central costs)

17,200

23,065

40,265

16,675

28,060

44,735

85,000

12,899

EBITDA Margin (%)

- Digital Trust

23.8

27.8

25.8

30.8

28.5

29.5

27.7

22.8

- Credit Information & Management

27.3

22.9

25.1

21.2

24.6

23.1

24.2

21.1

- Innovation & Marketing Services

39.0

52.6

47.1

39.6

52.4

48.0

47.6

28.3

Total

28.8

34.5

31.8

30.6

36.2

33.9

32.9

23.5

Organic growth y-o-y (%)

- Digital Trust

10.1

4.5

6.9

14.2

15.9

15.1

11.3

(1.1)

- Credit Information & Management

15.6

(2.5)

6.9

(19.6)

1.1

(7.8)

(0.4)

(32.2)

- Innovation & Marketing Services

98.3

10.8

30.2

(27.3)

16.3

(0.3)

11.7

(44.0)

Total

33.5

6.3

16.3

(10.6)

13.4

3.3

9.0

(25.5)

Source: Tinexta accounts, Edison Investment Research

Versus the expectations set out in our update note published on 15 April 2020, revenue growth for Digital Trust and Innovation & Marketing Services was lower than expected, but revenue growth for Credit Information & Management was roughly in line.

Digital Trust was affected by a significant slowdown in the Camerfirma business in Spain, as the start of the economic slowdown coincided with a number of contract renewals, as well as a smaller impact on the other businesses (InfoCert, Sixtema and Visura). Management believes the impact on Camerfirma should be short-lived and its near-term outlook is more positive than during Q120.

For Credit Information & Management, the real estate business was flat, performing better than we expected as existing work sustained the business through the early part of the lockdown. Conversely, the core credit information business was marginally worse than expected, with economic weakness affecting both financial and corporate customers.

Quarterly trends for Innovation & Marketing Services, notably for Warrant Hub, tend to be quite volatile, as can be seen by the organic growth trends in Exhibit 1. The comparative from Q119 was very strong, when organic revenue growth of 32.9% y-o-y was recorded.

The decline in EBITDA was greater than expected, most notably in Credit Information & Management. In the near term, a higher level of operational gearing reflected the speed and extent of the economic lockdown. Performance in Credit Information & Management suggests that it may be becoming more difficult to find further cost savings following the cost cutting, which helped improve its margin in FY19 to 24.2% from 21.2% in FY18 despite an organic revenue decline of 7.5%. On area of potential growth post the COVID-19 pandemic is that of consultancy to SMEs to obtain Italian government guarantees that allow banks to offer very low cost financing.

Cash flow & balance sheet: Strong improvement in FCF

Free cash flow (FCF) improved to €20.1m from €17.9m in Q119 despite lower profitability, representing an improvement in FCF generation (relative to sales) of 36.6% from 30.0% in Q119. Operating cash flow improved by 7%, by €1.5m to €22.4m, with a strong improvement in working capital, and the investment in tangible and intangibles assets declined by €0.7m, from €3.0m to €2.3m.

At the period end, the net financial position had improved to €111.4m from €129.1m at the end of FY19. The total net financial position, which includes non-current financial assets, reduced from €128.0m to €110.1m.

Outlook: Revised FY20 guidance expected in late June

Management continues to believe the current outlook is too uncertain to provide updated financial guidance for FY20. It now expects to provide guidance by the end of June 2020, ie a month before the Q220 results. However, at the group level it does not expect to see ‘great discontinuities compared to the previous year’, which we assume to mean at the reported EBITDA level, ie €71.3m in FY19. This compares with our prior EBITDA forecast for FY20 of €75.6m. The current financial quarter should be the period that witnesses the greatest impact of COVID-19 and the lockdowns. By the end of June, management will have better visibility on group performance through to the end of May. Thereafter, management expects performance to improve.

The current financial year should benefit from the internal initiatives on the implementation of CRM, and management is proactively reducing costs. For example, personnel costs have been a great focus, with up to 170 employees from a total of c 1,300 employees placed on furlough.

Forecast changes

Our group revenue forecast for FY20 is relatively unchanged, with a reduction in our organic revenue growth assumption of 20bp from -3.0% to -3.2%. Our forecast for EBITDA before non-recurring costs in FY20 falls by 5.8% to €71.3m from €75.6m. Following our downgrade on 15 April, the cumulative downgrade to FY20e EBITDA is 11% (from €80.0m).

Exhibit 2: Forecast changes

€000s

FY19

FY20e

FY21e

Old

New

Change %

Old

New

Change %

Revenue

- Digital Trust

106,655

110,522

108,091

(2.2)

121,574

118,900

(2.2)

- Credit Information & Management

72,286

61,189

65,046

6.3

59,354

63,095

6.3

- Innovation & Marketing Services

79,781

79,319

77,635

(2.1)

83,284

81,517

(2.1)

Total

258,722

251,030

250,772

(0.1)

264,212

263,511

(0.3)

Organic growth y-o-y (%)

- Digital Trust

11.1

3.6

1.3

(2.3)

10.0

10.0

0.0

- Credit Information & Management

(7.5)

(13.9)

(9.1)

4.8

(3.0)

(3.0)

0.0

- Innovation & Marketing Services

12.9

(1.1)

(5.5)

(4.4)

5.0

5.0

0.0

Total

5.9

(3.0)

(3.2)

(0.2)

5.3

5.1

(0.2)

EBITDA before non-recurring costs

- Digital Trust

29,570

30,730

29,570

(3.8)

34,046

32,813

(3.6)

- Credit Information & Management

17,482

14,153

11,690

(17.4)

13,602

11,105

(18.4)

- Innovation & Marketing Services

37,948

37,763

37,010

(2.0)

39,746

38,951

(2.0)

sub-total

85,000

82,646

78,270

(5.3)

87,394

82,868

(5.2)

- Other

(8,173)

(7,000)

(7,000)

0.0

(7,350)

(7,350)

0.0

Total

76,827

75,646

71,270

(5.8)

80,044

75,518

(5.7)

EBITDA Margin (%)

- Digital Trust

27.7

27.8

27.4

(0.4)

28.0

27.6

(0.4)

- Credit Information & Management

24.2

23.1

18.0

(5.2)

22.9

17.6

(5.3)

- Innovation & Marketing Services

47.6

47.6

47.7

0.1

47.7

47.8

0.1

sub-total

32.9

32.9

31.2

(1.7)

33.1

31.4

(1.6)

Total

29.7

30.1

28.4

(1.7)

30.3

28.7

(1.6)

Source: Edison Investment Research

The FY20e revenue change reflects lower revenue growth in Q120, as well as a reduction in the rate of recovery for Digital Trust in H220e to c 3% from c 5% and a shallower downturn for the real estate business, ReValuta, in the Credit Information & Management business unit.

We assume a lower EBITDA margin in FY20e for Digital Trust given the lower revenue growth mentioned above, and a lower margin for Credit Information given the impact on its margin in Q120.

Our underlying assumptions for FY21 are unchanged, with the absolute changes due to lower base forecasts flowing through from FY20.

Valuation

The share price has rebounded strongly to €11.32 following the sell-off due to concerns about the impact of COVID-19, which took it down to €7.28. When coupled with our downgrades, the relative valuation has increased. At the current share price, the EV/Sales multiples for FY20e and FY21e are 2.5x and 2.4x respectively. These compare with the long-term average since IPO of 1.8x, which reflects a better medium-term growth outlook and higher EBITDA margin of 29.7% in FY19 versus 18.8% in FY15.

The EV/EBITDA multiples for FY20e and FY21e are 8.9x and 8.5x versus the long-term average since IPO of 8.5x.


Exhibit 3: Financial summary

€'k

2016

2017

2018

2019

2020e

2021e

31-December

IFRS

IFRS

IFRS

IFRS

IFRS

IFRS

INCOME STATEMENT

Revenue

 

 

146,920

174,790

238,701

258,722

250,772

263,511

Operating costs

(116,673)

(135,938)

(172,119)

(181,895)

(179,502)

(187,993)

EBITDA before non-recurring costs

 

 

30,247

38,852

66,582

76,827

71,270

75,518

EBITDA

 

 

29,274

40,630

65,958

71,287

71,270

75,518

Normalised operating profit

 

 

18,447

28,959

50,763

51,027

51,816

56,923

Amortisation of acquired intangibles

0

0

0

0

0

0

Exceptionals

(1,029)

(1,861)

(2,849)

(3,529)

0

0

Share-based payments

0

0

0

0

0

0

Reported operating profit

17,418

27,098

47,914

47,498

51,816

56,923

Net Interest

(1,042)

1,523

(2,520)

(4,149)

(1,924)

(1,624)

Joint ventures & associates (post tax)

13

4

106

(1,139)

(1,253)

(1,503)

Exceptionals

0

0

0

0

0

0

Profit Before Tax (norm)

 

 

17,418

30,486

48,349

45,739

48,640

53,796

Profit Before Tax (reported)

 

 

16,389

28,625

45,500

42,210

48,640

53,796

Reported tax

(4,784)

(8,420)

(12,564)

(13,432)

(14,349)

(15,870)

Profit After Tax (norm)

12,334

21,519

34,998

31,184

34,291

37,926

Profit After Tax (reported)

11,605

20,205

32,936

28,778

34,291

37,926

Minority interests

(51)

(78)

(586)

(597)

(711)

(787)

Discontinued operations

0

0

0

0

0

0

Net income (normalised)

12,283

21,441

34,412

30,587

33,581

37,141

Net income (reported)

11,554

20,127

32,350

28,181

33,580

37,139

Average number of shares outstanding (m)

37

46

46.6

46.9

47.2

47.2

EPS - basic normalised (€)

 

 

0.33

0.46

0.74

0.65

0.71

0.79

EPS - diluted normalised (€)

 

 

0.33

0.46

0.74

0.65

0.71

0.79

EPS - basic reported (€)

 

 

0.31

0.43

0.69

0.60

0.71

0.79

Dividend (€)

0.09

0.14

0.23

0.00

0.23

0.26

Revenue growth (%)

18.3

19.0

36.6

8.4

(-3.1)

5.1

EBITDA Margin before non-recurring costs (%)

20.6

22.2

27.9

29.7

28.4

28.7

Normalised Operating Margin

12.6

16.6

21.3

19.7

20.7

21.6

BALANCE SHEET

Fixed Assets

 

 

216,369

275,773

307,147

316,738

309,284

303,298

Intangible Assets

200,690

260,630

272,104

269,935

267,560

265,065

Tangible Assets

7,050

8,287

8,232

21,215

16,136

12,646

Investments & other

8,629

6,856

26,811

25,588

25,588

25,588

Current Assets

 

 

122,590

125,844

143,406

139,350

178,770

214,090

Stocks

1,001

2,072

1,344

1,145

1,110

1,166

Debtors

50,948

80,285

86,321

89,775

87,016

91,437

Cash & cash equivalents

60,431

36,987

35,136

33,600

75,814

106,657

Other financial assets

6,352

4,311

8,186

6,593

6,593

6,593

Other

3,858

2,189

12,419

8,237

8,237

8,237

Current Liabilities

 

 

(89,792)

(102,868)

(194,356)

(160,441)

(158,115)

(160,605)

Creditors

(33,185)

(47,725)

(93,905)

(92,675)

(90,349)

(92,839)

Tax and social security

(1,481)

(6,125)

(704)

(2,911)

(2,911)

(2,911)

Short term borrowings

(36,947)

(21,723)

(97,380)

(62,001)

(62,001)

(62,001)

Other

(18,179)

(27,295)

(2,367)

(2,854)

(2,854)

(2,854)

Long Term Liabilities

 

 

(119,246)

(155,535)

(110,823)

(146,220)

(146,220)

(146,220)

Long term borrowings

(100,839)

(123,800)

(70,667)

(107,039)

(107,039)

(107,039)

Other long term liabilities

(18,407)

(31,735)

(40,156)

(39,181)

(39,181)

(39,181)

Net Assets

 

 

129,921

143,214

145,374

149,427

183,719

210,564

Minority interests

(187)

(537)

(3,757)

(3,859)

(4,570)

(5,357)

Shareholders' equity

 

 

129,734

142,677

141,617

145,568

179,149

205,207

CASH FLOW

Operating cash flow

 

 

20,038

32,151

43,404

55,214

56,136

56,158

Capex

(5,745)

(6,486)

(13,095)

(13,527)

(12,000)

(12,610)

Acquisitions/disposals

(36,993)

(61,072)

(33,182)

(47,463)

(28,000)

0

Net interest

(1,017)

(1,526)

(1,441)

(2,472)

(1,924)

(1,624)

Equity financing

48,179

1,078

1,080

1,078

0

0

Dividends

(3,820)

(6,977)

(12,067)

(16,396)

0

(11,081)

Borrowings

19,398

15,170

17,317

23,714

0

0

Other

1,076

4,219

(3,866)

(1,683)

28,000

0

Net Cash Flow

41,116

(23,443)

(1,850)

(1,535)

42,213

30,843

Opening net debt/(cash)

 

 

46,879

68,333

103,844

123,792

127,974

85,761

FX

0

0

0

0

0

0

Other non-cash movements

(62,570)

(12,068)

(18,098)

(2,647)

0

0

Closing net debt/(cash)

 

 

68,333

103,844

123,792

127,974

85,761

54,918

Source: Company accounts / Edison Investment Research

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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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